RESERVE FUNDS /NY/, DEFR14A, 1998-12-02

RESERVE FUNDS /NY/
DEFR14A, 1998-12-02

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>

THE RESERVE FUND
RESERVE TAX-EXEMPT TRUST
RESERVE NEW YORK TAX-EXEMPT TRUST
RESERVE INSTITUTIONAL TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.

(1) Title of each class of securities to which transaction applies:

------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

------------------------------------------------------------------------

(5) Total fee paid:

------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

------------------------------------------------------------------------

(3) Filing Party:

------------------------------------------------------------------------

(4) Date Filed:

------------------------------------------------------------------------
<PAGE> 2

[Bruce Bent PHOTO]

[RESERVE FUND LOGO]
Bruce R. Bent
Founders of President
"America's First Money Fund"
December 4, 1998
Dear Reserve Shareholder:

We are pleased to enclose the Notice and Proxy Statement for the Special
Meeting of Shareholders of The Reserve Funds.

YOU WERE AN INVESTOR IN THE RESERVE MONEY-MARKET FUNDS ON NOVEMBER 30, 1998,
EITHER IN CONJUNCTION WITH YOUR BROKERAGE ACCOUNT OR THROUGH AN INVESTMENT HELD
DIRECTLY BY YOU.

The meeting is being called because of the pending purchase of the Funds'
Adviser, Reserve Management Co., Inc., by incumbent management.

Rest assured that the proposed changes will in no way impact the management,
staff, operations or investment philosophy of The Reserve Funds: Dollar in,
dollar out plus a reasonable rate of return. This is why we created "America's
First Money Fund" in 1970 and is the same principle under which we intend to
continue the Funds in the future.

At the Meeting, you will be asked to consider and vote on the following
matters:

- To provide for the election of Trustees

- To approve new Investment Management Agreements

- To approve amendments to the Trust's Declaration of Trust to permit the
issuance of multiple classes of shares

- To approve amendments to the Declaration of Trust and certain investment
policies

- To allow for a Master Fund/Feeder Fund Structure

- To approve the authorization for the Board of Trustees to appoint, replace,
terminate or make changes to any of the sub-advisory agreements of the Fund
without additional shareholder approval

- To ratify the selection of PricewaterhouseCoopers LLP as independent public
accountants.

The Trustees, including a majority of the Independent Trustees of the Funds,
have reviewed the proposals and concluded they are in the best interests of the
Trusts and their shareholders. They recommend that you vote FOR each of the
proposals, which are described in more detail in the enclosed Proxy Statement.
<PAGE> 3

<TABLE>
<S> <C>
PLEASE NOTE: The Reserve Money-Market Funds are mutual
funds and as such are required by law to hold shareholder
meetings on these types of issues and a minimum of more than
50% of the outstanding shares must vote. Please take a
moment now to sign and return your ballot in the enclosed
postage-paid envelope or vote over the phone by calling
[Stop Sign ICON] 800-690-6903. Your vote is important regardless of the
number of shares you own and will only take a brief moment
of your time. Not completing the proxy impedes the ability
of the Funds in acting on these important matters and in the
opinion of the Independent Trustees is not in your best
interests.
</TABLE>

The Funds have retained Shareholder Communications Corporation ("SCC"), a
professional proxy solicitation firm, to assist shareholders in the voting
process. As the date of the Meeting approaches, if we have not already heard
from you, you may receive a telephone call from SCC reminding you to exercise
your right to vote. However, if you have any questions about the proxy material
or need voting assistance, please call SCC at 800-733-8481, ext. 448, as soon as
possible.

We appreciate your participation and prompt response in this matter and thank
you for your continued support.

Sincerely,

Bruce R. Bent
President
<PAGE> 4

THE RESERVE FUND
RESERVE TAX-EXEMPT TRUST
RESERVE NEW YORK TAX-EXEMPT TRUST
RESERVE INSTITUTIONAL TRUST

810 Seventh Avenue
New York, New York 10019

NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
To be held January 15, 1999 at 3:00 p.m.

Notice is hereby given that a Joint Special Meeting of Shareholders
("Meeting") of:

(1) THE RESERVE FUND (consisting of four Funds: Primary Fund, U.S. Government
Fund, U.S. Treasury Fund, and Strategist Money-Market Fund);

(2) RESERVE TAX-EXEMPT TRUST (consisting of seven Funds: California
Tax-Exempt Fund, Connecticut Tax-Exempt Fund, Florida Tax-Exempt Fund,
Massachusetts Tax-Exempt Fund, New Jersey Tax-Exempt Fund, Pennsylvania
Tax-Exempt Fund and Interstate Tax-Exempt Fund);

(3) RESERVE NEW YORK TAX-EXEMPT TRUST (consisting of one Fund: New York
Tax-Exempt Fund) and

(4) RESERVE INSTITUTIONAL TRUST (consisting of four Funds: Primary
Institutional Fund, U.S. Government Institutional Fund, U.S. Treasury
Institutional Fund, Interstate Tax-Exempt Institutional Fund)

will be held at The Reserve Funds, 810 Seventh Avenue, 17th Floor, New York, NY
10019, on January 15, 1999, at 3:00 p.m. Eastern Time, or at such adjourned time
as may be necessary to vote (the "Meeting") for the following purposes:

<TABLE>
<CAPTION>
PROPOSAL WHO WILL VOTE
- -------- -------------
<S> <C>
PROPOSAL 1
To provide for the election of Trustees Trust Vote
PROPOSAL 2
To approve new Investment Management Agreements All Funds
PROPOSAL 3
To approve amendments to the Trusts' Declaration of Trust For approval by The Reserve Fund,
to permit the issuance of multiple Trust classes of Reserve Tax-Exempt Trust, Reserve New
shares York Tax-Exempt
PROPOSAL 4
To approve the following proposed amendments:
A. To amend the Declaration of Trust to eliminate the Trust Vote
policy on pricing securities;
B. To amend the Declaration of Trust to permit non-material Trust Vote
amendments;
C. To amend the Declaration of Trust concerning the right Trust Vote
to vote portfolio securities;
D. To amend the Declaration of Trust concerning termination Trust Vote
or reorganization of the Trust;
E. To amend the Trusts' fundamental investment policy on All Funds
the issuance of senior securities;
F. To amend the Trusts' fundamental investment policy All Funds
regarding underwriting;
</TABLE>

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PAGE 1
<PAGE> 5

<TABLE>
<CAPTION>
PROPOSAL WHO WILL VOTE
- -------- -------------
<S> <C>
G. To change the designation of the Trusts' fundamental All Funds
investment policy on investing for control of portfolio
companies;
H. To eliminate the Trusts' fundamental investment policies All Funds
regarding certain portfolio transactions;
I. To eliminate the Trusts' fundamental investment policy All Funds
on investing in the securities of other investment
companies;
J. To amend the Trusts' By-Laws concerning amendments Trust Vote
thereto
PROPOSAL 5
To approve changes to the Trusts' Fundamental Investment All Funds
Policies to Permit a Master Fund/Feeder Fund Structure
PROPOSAL 6
To approve the authorization of the Board of Trustees to All Funds
appoint, replace or terminate sub-advisers recommended by
the adviser or amend the terms of any sub-advisory
agreement for the Funds without shareholder approval
PROPOSAL 7
To ratify the selection of PricewaterhouseCoopers LLP as Trust Vote
independent public accountants for the fiscal year ending
May 31, 1999; and
PROPOSAL 8
To transact such other business as may properly come before Such Funds as Necessary
the Meeting
</TABLE>

VOTING

Shareholders of record of each of the Funds at the close of business on
November 30, 1998 (the "Record Date") will be entitled to vote at the Meeting.
Each share of a Fund is entitled to one vote.

We urge you to sign, date and return your proxy in the enclosed addressed
envelope, which requires no postage and is intended for your convenience. If you
held shares of more than one Fund on the record date, you will receive separate
proxy materials for each Fund. Your prompt return of your proxy or proxies may
save the Funds the necessity and expense of further solicitations to ensure a
quorum at the Meeting. You may vote your shares in person at the Meeting.

By Order of the Board of Trustees

------------------------------------
MaryKathleen Foynes
Secretary
The Reserve Fund
Reserve Tax-Exempt Trust
Reserve New York Tax-Exempt Trust
Reserve Institutional Trust

New York, New York
December 4, 1998

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PAGE 2
<PAGE> 6

PROXY STATEMENT

THE RESERVE FUND
RESERVE TAX-EXEMPT TRUST
RESERVE NEW YORK TAX-EXEMPT TRUST
RESERVE INSTITUTIONAL TRUST

810 Seventh Avenue
New York, New York 10019

SPECIAL MEETING OF THE SHAREHOLDERS
To be held January 15, 1999 at 3:00 P.M.

This Proxy Statement and enclosed form of proxy are being furnished in
connection with THE SOLICITATIONS OF PROXIES BY THE TRUSTEES OF THE RESERVE
FUND, RESERVE TAX-EXEMPT TRUST, RESERVE NEW YORK TAX EXEMPT TRUST, AND RESERVE
INSTITUTIONAL TRUST (THE "TRUSTS") for a joint special meeting of Shareholders,
to be held at The Reserve Funds, 810 Seventh Avenue, 17th Floor, New York, NY
10019, on December 17, 1998, at 3:00 p.m. Eastern Time or at any adjournment or
adjournments thereof (the "Meeting"), for the purposes set forth in the
accompanying Notice of Meeting.

This Proxy Statement and the form of proxy are being mailed to shareholders
on or about January 15, 1999. Any shareholder giving a proxy has the power to
revoke it by mail (addressed to the Secretary of each Fund at the principal
executive office of the Funds, 810 Seventh Avenue, New York, NY 10019) or in
person at the Meeting, by executing a superseding proxy or by submitting a
notice of revocation to the Funds. All properly executed and unrevoked proxies
received in time for the Meeting will be voted as specified in the proxy or, if
no specification is made, for each proposal referred to in the proxy statement.

A COPY OF EACH FUND'S MOST RECENT ANNUAL REPORT AND SEMI-ANNUAL REPORT IS
AVAILABLE UPON REQUEST AND WITHOUT CHARGE BY CALLING THE FUNDS AT (800) 637-1700
AT THEIR PRINCIPAL EXECUTIVE OFFICE, 810 SEVENTH AVENUE, NEW YORK, NY 10019.

The following table describes each proposal that will be presented at the
Meeting and the Funds which will vote on them.

<TABLE>
<CAPTION>
PROPOSAL WHO WILL VOTE
- -------- -------------
<S> <C>
PROPOSAL 1
To provide for the election of Trustees Trust Vote
PROPOSAL 2
To approve new Investment Management Agreements All Funds
PROPOSAL 3
To approve amendments to the Trusts' Declaration of Trust For approval by the Reserve Fund,
to permit the issuance of multiple classes of shares Reserve Tax-Exempt Trust, and Reserve
New York Tax-Exempt Trust
PROPOSAL 4
To approve the following proposed amendments:
A. To amend the Declaration of Trust to eliminate the Trust Vote
policy on pricing securities;
B. To amend the Declaration of Trust to permit non-material Trust Vote
amendments;
C. To amend the Declaration of Trust concerning the right Trust Vote
to vote portfolio securities;
</TABLE>

--------

PAGE 1
<PAGE> 7

<TABLE>
<CAPTION>
PROPOSAL WHO WILL VOTE
- -------- -------------
<S> <C>
D. To amend the Declaration of Trust concerning termination Trust Vote
or reorganization of the Trust;
E. To amend the Trusts' fundamental investment policy on All Funds
the issuance of senior securities;
F. To amend the Trusts' fundamental investment policy All Funds
regarding underwriting;
G. To change the designation of the Trusts' fundamental All Funds
investment policy on investing for control of portfolio
companies;
H. To amend the Trusts' fundamental investment policies All Funds
regarding certain portfolio transactions;
I. To eliminate the Trusts' fundamental investment policy All Funds
on investing in the securities of other investment
companies; and
J. To amend the Trusts' By-Laws concerning amendments Trust Vote
thereto
PROPOSAL 5
To approve changes to the Funds' Fundamental Investment All Funds
Policies to Permit a Master Fund/Feeder Fund Structure
PROPOSAL 6
To approve the authorization of the Board of Trustees to All Funds
appoint, replace or terminate sub-advisers recommended by
the adviser or amend the terms of any sub-advisory
agreement for the Funds without shareholder approval
PROPOSAL 7
To ratify the selection of PricewaterhouseCoopers LLP as Trust Vote
independent public accountants for the fiscal year ending
May 31, 1999; and
PROPOSAL 8
To transact such other business as may properly come before Such Funds as Necessary
the Meeting
</TABLE>

VOTING

Shareholders of record for each Fund as of the close of business on November
30, 1998 (the "Record Date") are entitled to vote at the Meeting and at any
adjournment thereof on matters submitted to shareholders of that Fund.
Shareholders have one vote for each share held in a Fund. The presence at the
Meeting, in person or by proxy, of the holders of one-third of the shares
outstanding and entitled to vote shall constitute a quorum, permitting action on
matters related to that Fund.

With respect to Proposal 1, (Election of Trustees) 4j and 7, a majority of
the votes cast at the Meeting at which a quorum is present, must be cast in the
affirmative in order for the Trustee to be elected or the proposal to be
approved.

With respect to Proposals 3, 4a, 4b, 4c, 4d, a majority of the outstanding
shares of a Fund entitled to vote must be cast in the affirmative in order for
the Proposal to be approved.

Approval of Proposals 2, 4e, 4f, 4g, 4h, 4i, 5 and 6 requires the affirmative
vote, as to each affected Fund, of a majority of the outstanding voting
securities of that Fund. For this purpose, under applicable law, "vote of a
majority of the outstanding voting securities" of the Fund means the vote of (i)
67% or more of the voting securities of the Fund present at the Meeting, if the
holders of more than 50% of the

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PAGE 2
<PAGE> 8

outstanding voting securities of that Fund are present or represented by proxy;
or (ii) more than 50% of the outstanding voting securities of the Fund,
whichever is less.

All shares represented by the enclosed form of proxy will be voted in
accordance with the instructions indicated on the proxy if it is completed,
dated, signed and returned in time to be voted at the Meeting and is not
subsequently revoked. If the proxy is returned properly signed and dated, but no
instructions are given, the shares represented will be voted in favor of each of
the proposals. As set forth under Other Information -- Solicitation of Proxies,
proxies may be solicited in person or by telephone, telegraph, facsimile, oral
communication or electronic medium. Any proxy may be revoked by the timely
submission of a properly executed subsequent proxy, by a timely written
revocation, or by an oral revocation or vote at the Meeting prior to the
finalization of the vote on a particular proposal. Execution and submission of a
proxy does not affect a shareholder's right to attend the Meeting in person. Due
to applicable legal requirements that the proposals presented in this Proxy
Statement must be approved by specified percentages of a Trust's, or a Fund's,
outstanding shares in order to be adopted, an abstention by a shareholder from
voting on a particular proposal, either by proxy or in person at the Meeting,
will have the same effect as a negative vote as to that matter. Shares that are
held by a broker-dealer or other fiduciary as record owner for the account of a
beneficial owner will be counted for purposes of determining the presence of a
quorum and as votes on particular proposals if the beneficial owner has executed
and timely delivered the necessary instructions for the record owner to attend
the Meeting and vote the shares, or if the record owner has, and exercises
discretionary voting power. If the record owner does not have discretionary
voting power as to a particular proposal, but grants a proxy for the shares,
those shares will be counted toward the quorum but will have the effect of a
negative vote as to that proposal.

All costs associated with the Meeting, including the expenses of preparing,
printing and distributing the Proxy Statement, and legal expenses, will be borne
equally by Reserve Management Company, Inc. ("RMCI") and the Funds.

The Board of Trustees may seek one or more adjournments of the Meeting if
necessary to obtain a quorum or to obtain the vote required for approval of one
or more proposals. A vote may be taken at the Meeting, including any
adjournment, on any proposal for which there are sufficient votes even though
the Meeting is adjourned as to other proposals.

PROPOSAL 1

ELECTION OF TRUSTEES (Trust Vote)

The Trustees composing the Board of each Trust are elected to serve
indefinitely until his or her resignation or removal or until his or her
successor is duly elected and qualified. It is proposed, and the Board
recommends, that shareholders elect the nominees listed below, some of whom are
currently Trustees of the Trusts. The same group of individuals will serve as
Trustees for each of the Trusts.

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PAGE 3
<PAGE> 9

Proxies which do not contain specific instructions to the contrary will be
voted in favor of the election of the nominees shown below.

<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATIONS
NAME AND AGE THE TRUST DURING THE PAST FIVE YEARS
- ------------ ------------- --------------------------
<S> <C> <C>
Bruce R. Bent* President, Treasurer and Mr. Bent is President, Treasurer and
810 Seventh Avenue Trustee (1970 to present) Trustee of The Reserve Funds ("RF"),
New York, NY 10019 Reserve Institutional Trust ("RIT"),
Age: 61 Reserve Tax-Exempt Trust ("RTET"), Reserve
New York Tax-Exempt Trust ("RNYTET") and
Reserve Private Equity Series ("RPES");
Director, Vice President and Secretary of
Reserve Management Company, Inc. ("RMCI")
and Reserve Management Corporation ("RMC");
and Chairman and Director of Resrv
Partners, Inc. ("RESRV").

Edwin Ehlert, Jr. Trustee (1971 to present) Mr. Ehlert is retired. Until his
125 Elm Street retirement, he was President of Premier
Westfield, NJ 10019 Resources Inc. (a meeting and planning
Age: 66 company) from October 1989 to December 31,
1996 and CEO of Ehlert Travel Associates,
Inc. (a travel agency) from November 1978
to December 31, 1996. He is a Trustee of
RF, RIT, RTET, RNYTET and RPES.

Henri W. Emmet Trustee (1978 to present) From January 1995 to December 1995, Mr.
1535 Presidential Drive Emmet served as a Principal of Global
Columbus, OH 43212 Interaction, which provides consulting
Age: 72 services to international banking
interests. Mr. Emmet retired as the
Managing Director of Servus Associates,
Inc. in 1994, and U.S.A. Representative of
the First National Bank of Southern Africa
in 1996. He is currently Trustee of RF,
RIT, RTET, RNYTET, and RPES.

Donald J. Harrington Trustee (1987 to present) The Reverend Harrington is President of St.
St. John's University John's University, NY, a Trustee of RF,
Grand Central and RIT, RTET, RNYTET and RPES and a Director
Utopia Parkway of Bear Stearns Companies, Inc. since 1993.
Jamaica, NY 11439
Age: 53

Bruce R. Bent II* Senior Vice President and Mr. Bent II joined The Reserve Funds in
810 Seventh Avenue Assistant Secretary, Nominee 1992 and is Senior Vice President and
New York, NY 10019 for election as Trustee Assistant Secretary of RF, RIT, RNYTET,
Age: 32 RTET and RPES
</TABLE>

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<PAGE> 10

<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATIONS
NAME AND AGE THE TRUST DURING THE PAST FIVE YEARS
- ------------ ------------- --------------------------
<S> <C> <C>
William E. Viklund Trustee (1998 to present) Mr. Viklund is formerly President and COO
110 Grist Mill Lane of Bancorp and President and CEO of Long
Plandome Manor, NY 11030 Island Savings (1980-1996); Senior Vice
Age: 58 President/ Department Head of Bankers Trust
Corp. (1972-1980); and Vice President and
Mortgage Officer of Anchor Savings Bank
(1967-1972). He is currently Trustee of RF,
RIT, RTET, RNYTET, and RPES.

Vincent J. Mattone Nominee for election as Mr. Mattone is former member of the
12 Deep Hollow Drive, Trustee of RF, RIT, RTET, Executive Committee and the Board of
Locust, NJ 07760 RNYTET, and RPES Directors of the Bear Stearns Companies,
Age: 53 Inc. from 1985 to 1995. Prior to joining
Bear Stearns, he was employed by Salomon
Brothers from 1964 to 1979.

Diana P. Herrmann Nominee for election as Ms. Herrmann is President and COO of Aquila
380 Madison Avenue Trustee of RF, RIT, RTET, Management Corporation, sponsor of 14
Suite 2300 RNYTET, and RPES mutual funds with over $3 billion in
New York, NY 10017 assets, as of October 5, 1998. Prior to
Age: 40 joining Aquila in 1986, Ms. Herrmann was
employed with European American Bank in New
York and was board member and Secretary of
Bank Credit Association.

Richard Bassuk Nominee for election as From 1995 to present, Mr. Bassuk has been a
The Singer & Bassuk Trustee of RF, RIT, RTET, founding principal and President of The
Organization RNYTET, and RPES Singer & Bassuk Organization. From 1994 to
767 Third Avenue present, Mr. Bassuk served as Chairman of
28th floor R.E. Bases Enterprises Corporation.
New York, NY 10017 Previously, Mr. Bassuk joined Starrett
Age: 57 Housing Corporation in 1973 and was
President and COO from 1981 to 1993.
</TABLE>

- ---------------
* "Interested person" (as defined in the Investment Company Act of 1940) of the
Funds. Bruce R. Bent is the father of Bruce R. Bent II and each is considered
to be an "interested person."

Trustees other than those affiliated with Reserve Management Company, Inc.
("RMCI") and Resrv Partners, Inc. ("RESRV"), the Funds' Distributor, receive an
annual stipend of $3,500 for each joint Board meeting that they attend, and an
annual fee of $16,000 plus expenses for services to all of the Trusts in the
complex. For the fiscal year ended May 31, 1998 such fees and expenses
aggregated $75,811 for the non-interested Trustees as a group. During the fiscal
year ended May 31, 1998, there were four meetings of the Board. During this
period none of the incumbent Trustees attended less than 75% of the aggregate of
the total number of Board meetings and the total number of Committee meetings
for the Committees on which that Trustee serves.

Each Fund has a standing Review Committee, which functions similarly to an
Audit Committee, presently consisting of Messrs. Ehlert, Emmet, and Harrington.
The Review Committee reviews both the audit and non-audit work of each Fund's
independent public accountants, submits a recommendation to the Trustees as to
the selection of independent public accountants, and reviews generally the
maintenance of each Fund's records and the safekeeping arrangements of the
Funds' custodians. The Review Committee of each Fund held its annual meeting
last fiscal year.

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<PAGE> 11

For the fiscal year ended May 31, 1998, the current Trustees received the
following compensation from the Funds and from other Trusts for which RMCI is
Adviser:

I. THE RESERVE FUND

<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
NAME OF TRUSTEE COMPENSATION FROM ALL FIVE TRUSTS
NOMINEE FROM THE FUNDS* MANAGED BY RMCI
--------------- --------------- --------------------
<S> <C> <C>
Bruce R. Bent $ 0 $ 0
Edwin Ehlert, Jr. $ 22,512.76 $30,000
Henri W. Emmet $ 22,512.76 $30,000
Donald J. Harrington $ 22,512.76 $30,000
</TABLE>

II. RESERVE TAX-EXEMPT TRUST

<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM ALL FIVE TRUSTS
NAME OF NOMINEE FROM THE FUNDS* MANAGED BY RMCI
--------------- --------------- --------------------
<S> <C> <C>
Bruce R. Bent $ 0 $ 0
Edwin Ehlert, Jr. $ 5,433.94 $30,000
Henri W. Emmet $ 5,433.94 $30,000
Donald J. Harrington $ 5,433.94 $30,000
</TABLE>

III. RESERVE NEW YORK TAX-EXEMPT TRUST

<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM ALL FIVE TRUSTS
NAME OF NOMINEE FROM THE FUNDS* MANAGED BY RMCI
--------------- --------------- --------------------
<S> <C> <C>
Bruce R. Bent $ 0 $ 0
Edwin Ehlert, Jr. $ 1,166.07 $30,000
Henri W. Emmet $ 1,166.07 $30,000
Donald J. Harrington $ 1,166.07 $30,000
</TABLE>

IV. RESERVE INSTITUTIONAL TRUST

<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM ALL FIVE TRUSTS
NAME OF NOMINEE FROM THE FUNDS* MANAGED BY RMCI
--------------- --------------- --------------------
<S> <C> <C>
Bruce R. Bent $ 0 $ 0
Edwin Ehlert, Jr. $ 758.28 $30,000
Henri W. Emmet $ 758.28 $30,000
Donald J. Harrington $ 758.28 $30,000
</TABLE>

- ---------------
* The Funds do not pay any pension or retirement benefits to Trustees.

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<PAGE> 12

The following are the officers of the Funds who are not Trustees.

<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATIONS
NAME AND AGE WITH THE FUNDS DURING THE PAST FIVE YEARS
- ------------ -------------- --------------------------
<S> <C> <C>
MaryKathleen Foynes Counsel and Secretary Ms. Foynes is Counsel and Secretary of RF,
810 Seventh Avenue RIT, RNYTET, RTET, and RPES. Before joining
New York, NY 10019 The Reserve Funds in 1998, Ms. Foynes was a
Age: 29 staff attorney at PaineWebber, Inc. Prior
to that, Ms. Foynes worked in the House of
Representatives as District Manager for a
Member of Congress.
Arthur T. Bent III Vice President and Assistant Mr. Bent is Vice President and Assistant
810 Seventh Avenue Secretary Secretary of RF, RIT, RTET, RNYTET and
New York, NY 10019 RPES. Before joining The Reserve Funds in
Age: 30 1997, Mr. Bent was a private investor.
</TABLE>

For the most recently completed fiscal year, Bruce R. Bent, in his capacity
as President of the Funds received from The Reserve Fund $259,954.43 in
compensation; from the Reserve Tax-Exempt Trust $38,416.18 in compensation; from
the Reserve New York Tax-Exempt Trust $13,687.62 in compensation; and from the
Reserve Institutional Trust $9,474.50 in compensation. Mr. Bent's pension
benefits accrued as a part of fund expenses for 1997 are $125,000 with the
estimated annual benefit at age 65 being approximately $49,116.00. Mr. Bent's
aggregate compensation from the fund complex as President for the last fiscal
year was $325,000.

REQUIRED VOTE

The election of each of the above nominees requires the affirmative vote of a
majority of the votes cast at the Meeting at which a quorum is present.

PROPOSAL 2

TO APPROVE NEW INVESTMENT
MANAGEMENT AGREEMENTS (All Funds)

The Board of Trustees of each Fund is proposing that shareholders of each
Fund approve new Investment Management Agreements (the "New Agreements") to be
entered into between each Fund and Reserve Management Company, Inc. ("RMCI") )
located at 810 Seventh Avenue, New York, New York 10019. The new Investment
Advisory Agreements are substantially similar to the current Investment Advisory
Agreements, except that for certain of the Funds a new "comprehensive management
fee" structure is proposed. A form of the New Agreement is attached hereto as
Exhibit A.

Since November 15, 1971, RMCI, a registered investment adviser, and its
affiliates have provided investment advice to The Reserve Funds which as of
November 30, 1998 have assets in excess of $5.5 billion. RMCI currently serves
as investment manager to each Fund pursuant to the terms of (i) an Investment
Management Agreement entered into with each Fund, and (ii) a Service Agreement
entered into with each Fund, (collectively, the "Current Agreements"), which are
described more fully below (except in the case of Reserve U.S. Treasury Fund,
Strategist Money-Market Fund and Reserve Institutional Trust, which are
currently subject to an Investment Management Agreement with RMCI, which
Investment Management Agreement provides for both investment advisory and
administrative services by RMCI to the Funds under a single agreement.)

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THE CHANGE IN CONTROL OF RESERVE MANAGEMENT COMPANY, INC. (RMCI)

Presently, the voting stock of RMCI is owned equally by members of two
families -- the Browns and the Bents. Bruce R. Bent, has been President and
Treasurer of the Funds, since their inception, as well as the Chief Executive
Officer of RMCI for the past fourteen years. Mr. Bent and certain of his
immediate family members, control 50% of the voting stock of RMCI. The remaining
50% of the voting stock of RMCI is under the control of Mr. Henry B.R. Brown and
certain of his immediate family members. Mr. Brown, together with Mr. Bent,
founded RMCI which is a successor of Reserve Management Company, which was
founded in 1970.

The following persons currently own beneficially or of record 10% or more of
the outstanding voting securities of RMCI: Henry B.R. Brown; Alexander M.R.
Brown; Harriet R. B. Dickerson; Elizabeth S.B. Devlin; Peter F. Brown; Bruce R.
Bent; Bruce R. Bent II; and Arthur T. Bent III. The address of each such person
is c/o Reserve Management Company, Inc., 810 Seventh Avenue, New York, NY 10019.

It is currently proposed that members of Mr. Bent's immediate family will
acquire the remaining 50% interest in RMCI that is held by Mr. Brown and his
immediate family members, and this transaction is anticipated to be completed
after the shareholders of the Funds approve the New Agreements. While this
transaction will result in the assignment, and thus termination of, the Current
Agreements, there is no plan or understanding on the part of the Bent family to
change the operations of RMCI after the change in control is completed.

Section 15(a) of the 1940 Act prohibits any person from serving as an
investment adviser to a registered investment company except pursuant to a
written contract that has been approved by the shareholders of the company.
Section 15(a) also provides, as to the Current Agreements, for the automatic
termination of such agreements upon their assignment. An assignment is deemed to
include any change of control of the investment adviser.

Because the Current Agreements will be terminated upon the completion of the
change in control of RMCI, it is necessary to adopt new investment management
agreements for each Fund. Management of the Funds made a proposal to the
Trustees at a meeting held on October 7, 1998, for the adoption of the New
Agreements. With respect to certain of the Funds, the New Agreements differ from
the Current Agreements because they reflect a new management fee structure for
each of the Funds providing for a "comprehensive fee" structure. The Trustees at
this meeting approved this recommendation for the adoption of the New Agreements
reflecting the new "comprehensive fee" structure, and the Trustees are
recommending that shareholders approve the New Agreements.

In addition, the Funds intend to conform with the provisions of Section 15(f)
of the 1940 Act, which provides, in pertinent part, that an investment adviser
may receive any amount or benefit in connection with a sale of such investment
adviser which results in an assignment of an investment advisory contract if (1)
for a period of three years after the time of such event, 75% of the members of
the Board of Trustees of the investment company which it advises are not
"interested persons" (as defined in the 1940 Act) of the new or old investment
adviser; and (2) there is no "unfair burden" imposed on the investment company
as a result of the transaction.

1. THE CURRENT AGREEMENTS

Each of the Current Agreements have been previously approved by shareholders
in the ordinary course of obtaining shareholder approval of such agreements as
required by applicable law. The Current Agreement for Reserve Primary Fund is
dated September 17, 1986 and was last submitted to a vote of initial
shareholders on October 28, 1986; the Current Agreement for Reserve U.S.
Treasury Fund is dated October 1, 1991 and was last submitted to a vote of
initial shareholders on December 1, 1993; the Current Agreement for Reserve U.S.
Government Fund is dated October 1, 1991 and was last submitted to a vote of
initial shareholders on December 1, 1993; the Current Agreement for Strategist
Money Market Fund is dated April 30, 1996, and was last submitted to a vote of
initial shareholders on May 14, 1996; the Current

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Agreement for Interstate Tax-Exempt Fund is dated October 28, 1986 and was last
submitted to a vote of initial shareholders on October 28, 1986; the Current
Agreement for California Tax-Exempt Fund is dated October 16, 1994 and was last
submitted to a vote of initial shareholders on October 17, 1994; the Current
Agreement for New Jersey Tax-Exempt Fund is dated March 16, 1994 and was last
submitted to a vote of initial shareholders on November 14, 1994; the Current
Agreement for Connecticut Tax-Exempt Fund is dated October 28, 1986 and was last
submitted to a vote of initial shareholders on October 28, 1986; the Current
Agreement for Massachusetts Tax-Exempt Fund is dated October 30, 1989 and was
last submitted to a vote of initial shareholders on November 27, 1990; the
Current Agreement for Pennsylvania Tax-Exempt Fund is dated September 11, 1997
and was last submitted to a vote of initial shareholders on September 12, 1997;
the Current Agreement for Ohio Tax-Exempt Fund is dated September 24, 1996 and
was last submitted to a vote of initial shareholders on April 1, 1998; the
Current Agreement for Florida Tax-Exempt Fund is dated May 14, 1996 and was last
submitted to a vote of initial shareholders on June 24, 1996; the Current
Agreement for Reserve New York Tax-Exempt Fund is dated September 17, 1986 and
was last submitted to a vote of initial shareholders on October 28, 1986; the
Current Agreement for Primary Institutional Fund is dated October 14, 1997 and
was last submitted to a vote of initial shareholders on October 15, 1997; the
Current Agreement for U.S. Government Institutional Fund is dated September 14,
1997 and was last submitted to a vote of initial shareholders on September 15,
1997; the Current Agreement for U.S. Treasury Institutional Fund is dated
October 19, 1997 and was last submitted to the vote of initial shareholders on
October 20, 1998; and, the Current Agreement for Interstate Tax-Exempt
Institutional Fund is dated May 12, 1998 and was last submitted to a vote of
initial shareholders on May 13, 1997.

Under the terms of the Current Agreements, RMCI manages each Fund's
investments and provides all administrative and operational services to the
Funds. Under the terms of each Investment Management Agreement between RMCI and
each Fund (with the exception of Reserve U.S. Treasury Fund, Strategist
Money-Market Fund and Reserve Institutional Trust which have a separate fee
schedule set forth below), each Fund pays RMCI annual investment management fees
based on each Fund's average daily net assets. The fees are calculated for the
various funds as follows:

The Reserve Funds (with the exception of Reserve U.S. Treasury Fund and
Strategist Money-Market Fund):

(i) 0.50% per annum of the first $500 million of average daily net assets;
(ii) 0.475% per annum of the next $500 million of such assets; (iii) 0.45% per
annum of the next $500 million of such assets; (iv) 0.425% per annum of the next
$500 million of such assets; and (v) 0.40% of such assets in excess of $2
billion. For the fiscal year ended May 31, 1998, RMCI received a management fee
of 0.45% of the average daily net assets of the Primary Fund and 0.45% of the
average daily net assets of the U.S. Government Fund.

RESERVE TAX-EXEMPT TRUST:

RESERVE NEW YORK TAX-EXEMPT TRUST:

(i) 0.50% per annum of the first $500 million of average daily net assets;
(ii) 0.475% per annum of the next $500 million of such assets; (iii) 0.45% per
annum of the next $500 million of such assets; (iv) 0.425% per annum of the next
$500 million of such assets; and (v) 0.40% of such assets in excess of $2
billion. For the fiscal year ended May 31, 1998, RMCI received 0.50% of the
average daily net asset from the Fund.

Under the terms of each Service Agreement between RMCI and each Fund (with
the exception of Reserve U.S. Treasury Fund, Strategist Money-Market Fund and
Reserve Institutional Trust which
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<PAGE> 15

receive the following services under its Investment Management Agreement with
RMCI, as described more fully below), RMCI provides, at cost, all personnel
required by each Fund for all operations such as executive, administrative,
clerical, recordkeeping, bookkeeping, shareholder accounting and servicing, as
well as suitable office space and necessary equipment and supplies used by such
personnel in performing these functions.

Reserve U.S. Treasury Fund, Strategist Money-Market Fund and Reserve
Institutional Trust currently are subject only to an Investment Management
Agreement with RMCI pursuant to which U.S. Treasury Fund and Strategist
Money-Market Fund pay RCMI a "comprehensive" management fee at an annual rate of
0.80% as a percentage of average net assets and Reserve Institutional Trust pays
an annual rate of 0.25% as a percentage of average net assets. In accordance
with these agreements, RMCI provides all investment advisory services to these
Funds and also provides all operating services to the Funds including all
personnel required for administrative, clerical, recordkeeping, bookkeeping,
shareholder accounting and shareholder servicing functions. Accordingly, the
terms of the proposed New Agreement for those funds are essentially identical to
the terms of the Current Agreement for those funds since each such agreement
provides for a "comprehensive fee" payable to RMCI as outlined above.

Each of the Funds (but not all of the classes within a given Fund) is subject
to a Plan of Distribution and related agreements, in accordance with Rule 12b-1
of the 1940 Act. Under the terms of each such Plan of Distribution, the Funds
may make payments to certain brokers, financial institutions and others at an
annual rate of up to 0.20% with the exception of: Reserve Institutional, Class
C -- 0.25% as a percentage of average net assets; and Reserve Institutional,
Class D -- 0.50% as a percentage of average net assets.

Such payments are designed to facilitate the sale of Fund shares. Each Plan
of Distribution will remain in full force and effect for each Fund and will not
be changed or affected as a result of the matters addressed herein. In addition,
Management from time to time may pay additional amounts from its own resources
to facilitate the sale of Fund shares.

2. COMPARISON OF CURRENT AGREEMENTS AND THE NEW AGREEMENTS

The New Agreements would provide for a "comprehensive fee" structure. Under
this fee structure, RMCI would provide all investment services and
administrative services to each Fund at a single established level of
compensation under the terms of a single agreement.

The services to be provided by RMCI under the New Agreements and in
accordance with the comprehensive fee would consist of the following: all
investment advisory services relating to the research of and purchase and sale
of portfolio securities for the Funds; all personnel required for executive,
administrative, clerical, recordkeeping, bookkeeping and accounting and
servicing; all office space, equipment and supplies used by the Funds and such
personnel, and all other ordinary operating expenses of the Funds except those
specifically identified as being the direct responsibility of the Funds. Those
expenses that are specifically identified as being attributable to the Funds
consist solely of: interest charges, taxes, brokerage fees and commissions,
extraordinary legal and accounting fees and expenses, payments made pursuant to
each Fund's Distribution Plan, and the fees of the Trustees not affiliated with
RMCI.

Management of the Funds has indicated, and the Boards of Trustees of the
Funds have concurred, that the adoption of a comprehensive fee structure may be
beneficial and in the interests of shareholders because it could provide
shareholders with a more easily understood fee structure that offers greater
certainty in determining the total operating expenses of the Funds on an annual
basis.

Set forth below is comparative information regarding the fees payable under
the Current Agreements and the New Agreements for each Fund that does not have a
comprehensive fee for the fiscal year ended May 31, 1998, assuming for
illustrative purposes only that the New Agreements had been in effect for the
full fiscal year.

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<PAGE> 16

<TABLE>
<CAPTION>
FEES FOR FISCAL YEAR ENDED
MAY 31, 1998
------------------------------
FEES PERMITTED
UNDER THE FEES UNDER
CURRENT THE NEW
AGREEMENTS* AGREEMENTS**
-------------- ------------
<S> <C> <C>
THE RESERVE FUND
RESERVE PRIMARY FUND
Management Fees............................................. .45 .80
12b-1 Fees.................................................. .20 .20
Other Operating Expenses.................................... .35 .00
---- ----
Total Operating Expenses.................................... 1.00 1.00
==== ====
RESERVE U.S. GOVERNMENT FUND
Management Fees............................................. .49 .80
12b-1 Fees.................................................. .20 .20
Other Operating Expenses.................................... .31 .00
---- ----
Total Operating Expenses.................................... 1.00 1.00
==== ====
RESERVE TAX-EXEMPT TRUST
INTERSTATE TAX-EXEMPT FUND
Management Fees............................................. .50 .80
12b-1 Fees.................................................. .20 .20
Other Operating Expenses.................................... .30 .00
---- ----
Total Operating Expenses.................................... 1.00 1.00
==== ====
CALIFORNIA TAX-EXEMPT FUND
Management Fees............................................. .50 .80
12b-1 Fees.................................................. .20 .20
Other Operating Expenses.................................... .30 .00
---- ----
Total Operating Expenses.................................... 1.00 1.00
==== ====
CONNECTICUT TAX-EXEMPT FUND
Management Fees............................................. .50 .80
12b-1 Fees.................................................. .20 .20
Other Operating Expenses.................................... .30 .00
---- ----
Total Operating Expenses.................................... 1.00 1.00
==== ====
FLORIDA TAX-EXEMPT FUND
Management Fees............................................. .50 .80
12b-1 Fees.................................................. .20 .20
Other Operating Expenses.................................... .30 .00
---- ----
Total Operating Expenses.................................... 1.00 1.00
==== ====
MASSACHUSETTS TAX-EXEMPT FUND
Management Fees............................................. .50 .80
12b-1 Fees.................................................. .20 .20
Other Operating Expenses.................................... .30 .00
---- ----
Total Operating Expenses.................................... 1.00 1.00
==== ====
</TABLE>

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<PAGE> 17

- ---------------
* Adviser may have waived some of its fees so that fees actually charged may
have been less than those permitted under the current agreements.

** Under the terms of the New Agreements, other expenses are expected to be de
minimis on a per share basis.

3. DIRECTORS AND EXECUTIVE OFFICERS OF RMCI

The Directors and Executive Officers of RMCI are as follows:
Henry B.R. Brown, President and Treasurer
Bruce R. Bent, Vice President and Secretary
Bruce R. Bent II, Assistant Secretary

4. THE TRUSTEES' CONSIDERATIONS AND RECOMMENDATIONS

In approving the New Agreements and determining to submit them to
shareholders for approval, the Trustees concluded that the compensation to be
paid by each Fund to RMCI under the New Agreements is fair and reasonable. In
making this determination, the Trustees considered several factors. The factors
considered most important by the Trustees included: (1) the difference between
the current investment management fees payable under the Current Agreements and
those payable under the New Agreements; (2) the efforts and expenses of RMCI in
rendering its services to the Funds; (3) the nature, quality and extent of the
services as currently provided by RMCI to the Funds and to be provided under the
New Agreements; (4) the performance record of RMCI in connection with its
investment management of the Funds; (5) the fees charged by investment managers
operating funds with similar investment objectives; and (6) the likely benefits
to shareholders from the adoption of a "comprehensive fee" structure which may
provide shareholders with a more easily understood fee structure and with more
certainty in connection with the operating expenses for the Funds. In addition,
the Trustees noted that RMCI presently manages many of the Funds investment
companies under a comprehensive fee structure and it was determined that it
would be practical and efficient if RMCI were to operate all of the investment
companies under its management pursuant to a single consistent fee structure.

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<PAGE> 18

Moreover, the Trustees also considered the fact that a potential consequence
of the adoption of a comprehensive fee structure and the elimination of the
current system of breakpoints providing for lower management fees on larger
amounts of assets would be the loss of the possible ability to benefit from
economies of scale at higher asset levels. The Trustees concluded that such a
possibility is outweighed by the benefits that may result from a fee structure
that offers certainty and clarity in the establishment of operating expenses for
the Funds.

REQUIRED VOTE

With respect to each Fund, the approval of the New Investment Management
Agreement requires the affirmative vote of a majority of each respective Fund's
outstanding voting securities, which for these purposes means the vote (i) of
67% or more of the voting securities present at the Meeting, if the holders of
more than 50% of the outstanding voting securities of each such Fund are present
or represented by proxy, or (ii) of more than 50% of the outstanding voting
securities of each Fund, whichever is less.

THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE NEW
INVESTMENT MANAGEMENT AGREEMENTS, AND ANY SIGNED BUT UNMARKED PROXIES WILL BE SO
VOTED.

PROPOSAL 3

TO APPROVE AMENDMENTS TO EACH DECLARATION OF TRUST
TO PERMIT THE ISSUANCE OF MULTIPLE CLASSES OF SHARES
(The Reserve Fund, Reserve Tax-Exempt Trust,
Reserve New York Tax-Exempt Trust)

INTRODUCTION

At a meeting held on October 7, 1998, the Board of Trustees of each Trust,
including a majority of the Independent Trustees, considered and approved
amendments to the Declaration of Trust of each Trust. (As used, herein,
"Independent Trustees" means Trustees of each Fund who are not "interested
persons" of the Fund within the meaning of the 1940 Act.) The amendments would
authorize the Trustees to create two or more classes of shares of each Fund.
Shareholders are now being asked to approve the amendments to each Trust's
Declaration of Trust.

MULTIPLE CLASSES OF SHARES

An increasing number of investment companies are now offering multiple
classes of shares. In such "multi-class funds," shares of each class represent
interests in the same underlying portfolio of securities. The classes differ in
terms of their distribution arrangements and/or services provided to each class.

The Securities and Exchange Commission (the "Commission") has adopted Rule
18f-3 under the 1940 Act to allow investment companies to offer multiple classes
of shares without first obtaining an exemptive order from the Commission,
provided that the investment companies meet certain express conditions set forth
in the Rule. Rule 18f-3 requires certain differences in the expenses, rights and
obligations of different classes and permits certain other differences.
Furthermore, the Rule specifies certain matters on which class voting is
required. Income and expenses must be allocated among the different classes
according to the requirements of the Rule. Rule 18f-3 also imposes
responsibilities on the board of trustees of a multi-class fund to approve a
plan setting forth the distinct features of each class and providing for income
and expense allocation and other procedures in the best interests of each class
and of the fund as a whole. Finally, the Rule allows different classes to have
different exchange privileges and conversion rights.

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<PAGE> 19

Assuming that this Proposal is approved by the requisite vote of each Trust's
shareholders, it is expected that each Fund will adopt the requisite plans under
Rule 18f-3 to implement the multiple class structure as soon as practicable
thereafter.

PROPOSED AMENDMENTS TO EACH DECLARATION OF TRUST

In order for each Trust to establish multiple classes of shares, the
Declaration of Trust of each Fund must first be amended to authorize the Board
of Trustees to create separate classes of shares. The classes of shares created
would have the same rights, privileges and preferences, except that there may be
variations between different classes as to the allocation of expenses, right of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several classes shall have
separate voting rights.

The proposed amendments to each Trust's Declaration of Trust are identical
changes. Accordingly, set forth as Exhibit B is the proposed form of amendment
to each Trust's Declaration of Trust.

REASONS FOR THE TRUSTEES' RECOMMENDATION

At the meeting held on October 7, 1998, the Board of Trustees of each Trust,
including a majority of the Independent Trustees, considered and approved a
proposal to advise the shareholders of each Trust to approve amendments to the
Declarations of Trust to authorize the creation of multiple classes of shares.
In doing so, the Trustees considered several factors, including the following:
(1) the proposed amendments would enable the Boards of Trustees to respond to
the recent trend in the fund industry towards offering multiple classes of
shares; and (2) multiple classes of shares would enable investors to choose the
fee and service arrangements best suited to their individual preferences,
thereby potentially encouraging current shareholders to make additional
investments in the Funds and attracting new investors and assets to the Funds to
the benefit of the Funds and their shareholders.

Multi-class funds represent a distinct trend in the mutual fund industry, as
evidenced by the adoption of Rule 18f-3 and by the number of funds that
previously sought exemptive orders from the Commission to implement multiple
classes of shares prior to the adoption of Rule 18f-3. Amending the charter
documents of the Trusts will enable the Boards to be prepared to respond to this
trend by adopting multiple classes of shares in the future, thereby maintaining
the competitive position of the Funds in relation to other funds that have
implemented or are seeking to implement similar arrangements.

The multiple class arrangement addresses the differing requirements and
preferences of potential investors and allows the investor to choose the option
that is most beneficial under the investor's circumstances. In addition, it
should enable the Funds to compete with other similar mutual funds that offer
multiple classes of shares.

REQUIRED VOTE

With respect to each Trust, the approval of the amendments to each Trust's
Declaration of Trust requires the affirmative vote of more than 50% of the
outstanding voting securities of each Trust.

THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
AMENDMENTS TO EACH DECLARATION OF TRUST, AND ANY SIGNED BUT UNMARKED PROXIES
WILL BE SO VOTED.

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PROPOSAL 4

TO APPROVE AMENDMENTS AND REVISIONS TO DECLARATIONS
OF TRUST AND INVESTMENT RESTRICTIONS

The Trustees of each Trust are proposing that shareholders approve various
proposals that would provide for the "modernization" of certain of the operating
policies and procedures for the Funds. Many of these policies and procedures are
contained in the Declarations of Trust for the Trusts and have become outmoded
due to changes in the mutual fund industry. Most new mutual funds being created
today operate with these more modern provisions. Accordingly, to permit the
Funds to operate with the greatest amount of flexibility and to allow them to
more adequately compete with competitor funds, shareholders are being asked to
approve the following recommendations. The Trustees approved each of these items
at a meeting held on October 7, 1998.

The proposals are as follows:

A. TO AMEND EACH DECLARATION OF TRUST TO ELIMINATE THE POLICY ON PRICING
SECURITIES (TRUST VOTE)

It is recommended that the Trusts amend their Declarations of Trust by
deleting the policy on pricing securities in its portfolio that is set forth in
each Declaration of Trust. Article SEVENTH (13) of the Reserve Tax-Exempt Trust
and Reserve New York Tax-Exempt Trust, Article SEVENTH (12) of The Reserve Fund
and Article SEVENTH (12) of the Reserve Institutional Trust set forth rules
governing the manner in which Net Asset Value ("NAV") is computed. The manner in
which each Fund prices its securities may be set forth in the Fund's Statement
of Additional Information and each Fund's policy on pricing securities is not
required to be included in its Declaration of Trust. The purpose of the proposed
amendment is to provide the Funds with greater flexibility to respond to
regulatory and market developments in pricing its securities, should the need
arise. Although there is no current intention to change the manner in which each
Fund's portfolio securities are priced, the proposal, if adopted, would allow
the Board of Trustees to make changes in each Fund's policy on pricing, in a
manner consistent with applicable law, without seeking further shareholder
approval.

In addition, conforming amendments would be made in several other sections of
the Declarations of Trust. Article FOURTH (g) and (i), Article FIFTH (3)
reference NAV as determined in accordance with Article SEVENTH. If the proposal
is approved, these references will be amended to reference NAV as determined in
accordance with procedures set forth in each Fund's currently effective
Prospectus and Statement of Additional Information.

B. TO AMEND THE DECLARATION OF TRUST TO PERMIT NON-MATERIAL AMENDMENTS (TRUST
VOTE)

It is recommended that the Trusts amend Article FIFTH (1) of each Declaration
of Trust. Currently all amendments to the Declaration must be approved by
shareholders, necessitating the costs of soliciting proxies and holding a
special meeting of shareholders. Each Declaration as amended would require
shareholder approval of amendments to the Declaration, except as may be
necessary to conform the Declaration to provisions of federal or state laws or
regulations, or to the provisions of the Internal Revenue Code. The amendment
also would permit the Trustees to amend the Declaration without shareholder
approval if the Trustees deem it necessary to change the name of the Trust or
make other changes that do not materially adversely affect the rights of
shareholders.

The proposed amendment would add the following sentence to the end of Article
FIFTH (1):

The Trustees may also amend this Declaration without the vote or consent of
shareholders if they deem it necessary or desirable to (i) conform the
Declaration to provisions of federal or state laws or regulations, or to the
provisions of the Internal Revenue Code; (ii) change the name of the Trust;
or

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<PAGE> 21

(iii) make any other changes in the Declaration which do not materially
adversely affect the rights of shareholders hereunder.

In addition, conforming amendments would be required in another section of
the Declarations. Article EIGHTH provides that in the event of the termination
of the advisory contract with Reserve Management Company, resulting in the loss
of the Trust's right to use the name "Reserve," the shareholders, officers, and
Trustees shall promptly take action to change the name of the Trust. If the
proposal is approved, the reference to shareholder action would be deleted.

C. TO AMEND THE DECLARATION OF TRUST CONCERNING THE RIGHT TO VOTE PORTFOLIO
SECURITIES (TRUST VOTE)

It is recommended that the Trusts approve an amendment to the Declaration of
Trust of the above Trusts which would vest exclusive power to vote the portfolio
securities of the Trust in the Trustees or their delegates.

Article SEVENTH (10) of the Declarations of Trust for the Institutional and
Reserve Funds and SEVENTH (11) of the Reserve Tax-Exempt Funds and New York
Tax-Exempt Fund currently provide that:

Securities held by the Trust shall be voted in person or by proxy by the
Chairman, President, or Vice President, or such officer or officers of the
Trust as the Trustees shall designate for the purpose, or by a proxy or
proxies thereunto duly authorized by the Trustees, except as otherwise
ordered by vote of the holders of a majority of the Shares outstanding and
entitled to vote in respect thereto.

The provision permitting a majority of shareholders to order the Trust how to
vote such securities is not required by law, and runs contrary to the principles
set forth in Article SEVENTH (4) of each Declaration of Trust that the Trustees
shall be free from the control of shareholders in carrying on the business of
the Trust. Therefore, it is recommended that this provision be deleted.

If approved, Article SEVENTH (10) in the case of The Reserve Fund and Reserve
Institutional Fund and (11) in the case of Reserve Tax-Exempt Fund and Reserve
New York Tax-Exempt Fund would be amended as follows:

D. TO AMEND THE DECLARATION OF TRUST CONCERNING TERMINATION OR REORGANIZATION
OF THE TRUST (TRUST VOTE)

Article NINTH (4) of each Declaration of Trust provides that the Trustees,
with the approval of more than 50% of the outstanding shares, may sell the
assets of the Trust to another issuer, thus effecting a reorganization, or may
sell the assets of the Trust and distribute the cash to shareholders, resulting
in a termination of the Trust.

It is recommended that the Declarations be amended: (1) to clarify that a
series of the Trust, as well as the Trust as a whole, may be terminated or
reorganized; (2) to permit the Trustees to terminate a series or the Trust by an
instrument in writing signed by a majority of the Trustees; and (3) to provide
that the assets of the Trust or series may be merged, consolidated, leased, or
exchanged, as well as sold, to facilitate reorganizations structured in a manner
other than a sale of assets.

Article NINTH (4) of each Declaration of Trust currently provides:

This Trust shall continue without limitation of time but subject to the
provisions of sub-sections (a), (b), and (c) of this paragraph 4.

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(a) The Trustees, with the favorable vote of the holders of more than 50%
of the outstanding Shares entitled to vote may sell and convey the assets of
the Trust (which sale may be subject to the retention of assets for the
payment of liabilities and expenses) to another issuer. Upon making provision
for the payment of liabilities, by assumption by such issuer or otherwise,
the Trustees shall distribute the remaining proceeds ratably among the
holders of the Shares of the Trust then outstanding.

(b) The Trustees with the favorable vote of the holders of more than 50%
of the outstanding Shares entitled to vote, may at any time sell and convert
into money all the assets of the Trust. Upon making provision for the payment
of all outstanding obligations, taxes and other liabilities, accrued or
contingent, of the Trust, the Trustees shall distribute the remaining assets
of the Trust ratably among the holders of the outstanding Shares.

(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in sub-sections (a) and (b), the Trust shall
terminate and the Trustees shall be discharged of any and all further
liabilities and duties hereunder and the right, title and interest of all
parties shall be canceled and discharged.

If approved, Article NINTH (4) would be amended as follows:

(a) The Trustees, with the favorable vote of the holders of more than 50%
of the outstanding Shares entitled to vote may merge, consolidate, sell,
lease, exchange, or convey all or substantially all of the assets, including
its goodwill, of the Trust, or any series thereof, (which transaction may be
subject to the retention of assets for the payment of liabilities and
expenses) to any other corporation, association, trust, or other
organization. Upon making provision for the payment of liabilities, by
assumption by such other organization or otherwise, the Trustees shall
distribute the remaining proceeds ratably among the holders of the Shares of
the Trust or series then outstanding.

(b) The Trustees, by execution of an instrument in writing signed by a
majority of the Trustees, or by the favorable vote of the holders of more
than 50% of the outstanding Shares entitled to vote, may at any time sell and
convert into money all or substantially all of the assets of the Trust, or
any series thereof. Upon making provision for the payment of all outstanding
obligations, taxes and other liabilities, accrued or contingent, of the
Trust, the Trustees shall distribute the remaining assets of the Trust or
series ratably among the holders of the outstanding Shares.

(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in sub-sections (a) and (b), the Trust or series
shall terminate and the Trustees shall be discharged of any and all further
liabilities and duties hereunder with respect to the Trust or such series,
and the right, title and interest of all parties shall be canceled and
discharged.

E. TO AMEND THE TRUSTS' FUNDAMENTAL INVESTMENT POLICY ON THE ISSUANCE OF SENIOR
SECURITIES (ALL FUNDS)

It is recommended that the Funds amend each Fund's fundamental policy on
issuing senior securities, which would allow the Funds to issue senior
securities to the extent permitted under the 1940 Act. The new policy, if
adopted, would provide each Fund with greater flexibility in pursuing its
investment objective and program.

Each Fund's current fundamental policy on issuing senior securities is as
follows:

The Fund cannot issue securities senior to its capital stock.

As amended, each Fund's fundamental policy on issuing senior securities would
be as follows:

The Fund may not issue senior securities except in compliance with the
Investment Company Act of 1940.

The 1940 Act limits a Fund's ability to issue senior securities or engage in
investment techniques which could be deemed to create a senior security.
Although the definition of a "senior security" involves
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PAGE 17
<PAGE> 23

complex statutory and regulatory concepts, a senior security is generally
thought of as a class of security preferred over shares of a Fund with respect
to the Fund's assets or earnings. It generally does not include temporary or
emergency borrowings by a Fund (which might occur to meet shareholder redemption
requests) in accordance with federal law and the Fund's investment limitations.
Various investment techniques that obligate a Fund to pay money at a future date
(e.g., the purchase of securities for settlement on a date that is longer than
required under normal settlement practices) occasionally raise questions as to
whether a "senior security" is created. The Funds will utilize such techniques
only in accordance with applicable regulatory requirements under the 1940 Act.
Although the Funds have no current intention of issuing senior securities, the
proposed change will clarify the Funds' authority to issue senior securities in
accordance with the 1940 Act without the need to seek shareholder approval.

The new restriction would also conform the Funds' policies on issuing senior
securities to one which would become standard for all Reserve Funds.
Standardized policies will assist the Funds and the Adviser in monitoring
compliance with the various investment restrictions to which the Reserve Funds
are subject.

F. TO AMEND THE TRUSTS' FUNDAMENTAL INVESTMENT POLICY REGARDING UNDERWRITING
(ALL FUNDS)

It is recommended that the Funds amend their fundamental policies on
underwriting to conform such policy to one which would become standard for all
Reserve Funds. The proposed changes, if adopted, are not expected to lead to any
changes in the manner in which each Fund conducts its business.

Each of the above Funds' current fundamental policy on the underwriting of
the securities of others is as follows:

The Fund cannot act as an underwriter with respect to the securities of
others;

As amended, each Fund's fundamental policy on underwriting the securities of
others would be as follows:

The Fund may not act as an underwriter with respect to the securities of
others except to the extent that, in connection with the disposition of
portfolio securities, it may be deemed to be an underwriter under certain
federal securities laws.

The new restriction would conform the Funds' policies on underwriting the
securities of others to one which would become standard for all Reserve Funds.
Standardized policies will assist the Funds and the Adviser in monitoring
compliance with the various investment restrictions to which the Reserve Funds
are subject.

G. TO CHANGE THE DESIGNATION OF THE TRUSTS' FUNDAMENTAL INVESTMENT POLICY ON
INVESTING FOR CONTROL OF PORTFOLIO COMPANIES (ALL FUNDS)

It is recommended that each Fund's fundamental policy on investing for
control of portfolio companies be changed from a fundamental policy to an
identical operating policy. Fundamental policies may only be changed with
shareholder approval, while operating policies may be changed by vote of the
Board of Trustees without shareholder approval. While the Funds have no current
intention of investing in companies for the purpose of obtaining or exercising
control, the proposed change would allow the Funds to do so if the Board of
Trustees determined to change the new operating policy. No additional
shareholder vote would be necessary. The proposed amendment will provide the
Funds with greater flexibility to respond to market and regulatory developments.

Each Fund's current fundamental policy on investing for control of portfolio
companies is as follows:

The Fund cannot invest in voting securities or in companies for the purpose
of exercising control;

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<PAGE> 24

As redesignated, each Fund's operating policy on investing for control of
portfolio companies would be as follows:

As a matter of operating policy, the Fund may not invest for the purpose of
exercising control.

H. TO ELIMINATE THE TRUSTS' FUNDAMENTAL INVESTMENT POLICIES REGARDING CERTAIN
PORTFOLIO TRANSACTIONS (ALL FUNDS)

The fundamental policy of each of the Funds provides that a Fund may not
purchase or sell any securities (other than securities of the Fund) from or to
any officer or Trustee of a Fund, the investment adviser or affiliated person
except in compliance with the Investment Company Act of 1940. It is recommended
that the Funds eliminate the current fundamental policy of each Fund concerning
such transactions for the reasons set forth below.

This investment restriction imposes on the Funds restrictions that are
redundant to limitations imposed by Sections 17(a), 17(e), and 10(f) of the 1940
Act and the rules adopted by the SEC under these sections. These provisions of
the 1940 Act generally preclude the Funds from engaging in principal portfolio
transactions with, purchasing securities in underwritings from, or effecting
portfolio transactions through persons or entities that are "affiliated persons"
of the Fund, as such term is defined in the 1940 Act, unless certain conditions
are met. The provisions of these sections are intended to protect the Funds
against abuse or overreaching by, among others, an affiliated broker or dealer.

The restrictions imposed by the 1940 Act itself provide the Funds with
sufficient protection against potential abuse, especially when coupled with the
periodic review of portfolio transactions conducted by the Board in the exercise
of its supervisory responsibilities. The foregoing investment restriction simply
repeats what is already required of each Fund under law. No change of the
investment restrictions of the Funds will occur as a practical matter.

I. TO ELIMINATE THE TRUSTS' FUNDAMENTAL INVESTMENT POLICY ON INVESTING IN THE
SECURITIES OF OTHER INVESTMENT COMPANIES (ALL FUNDS)

It is recommended that the Funds eliminate each Fund's current fundamental
policy concerning investments in other investment companies.

The fundamental policy of each of the above Funds provides that:

The Fund cannot invest in the securities of other investment companies except
in compliance with the Investment Company Act of 1940;

The Investment Company Act of 1940, which regulates the Funds' activities,
contains the limitations applicable to the Funds' investment in other investment
companies.

This fundamental policy is thus redundant to the restrictions of the 1940
Act. For the purpose of simplifying the Funds' recital of investment
restrictions it is recommended this investment restriction be eliminated as a
fundamental policy of the Funds. The Funds will continue to be subject to the
restrictions imposed by the 1940 Act. See also Proposal 5.

J. TO AMEND THE TRUSTS' BY-LAWS CONCERNING AMENDMENTS THERETO (TRUST VOTE)

Article VIII of the Bylaws for each of the Funds provides that:

Except as set forth below, the Bylaws of the Trust may be altered, amended,
added to or replaced by the Shareholders or a majority vote of the entire
Board of Trustees; but any such alteration, amendment, addition or repeal of
the Bylaws by action of the Board may be altered or repealed by the
Shareholders. Article VII and Article VIII may be altered, amended or
repealed only by the vote of the holders of a majority of the Shares present
at a meeting of the Shareholders, provided that a quorum is present in person
or by proxy at such meeting.

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<PAGE> 25

Article VII, which as provided above may only be amended by shareholder vote,
concerns custodianship of the Fund's assets, and sets forth procedures for
retaining a successor in the event of the resignation of the custodian.
Custodial issues are governed by the 1940 Act and the Rules and interpretations
thereunder. The 1940 Act imposes sufficient regulation to safeguard the custody
of the Funds' assets, and accordingly, the requirement of obtaining shareholder
approval prior to amending the Bylaws regarding custody is unduly burdensome and
unnecessary. While the Funds have no current intention to change their custodial
arrangements, approval of the proposal would permit the Trustees to amend these
arrangements should future conditions warrant and applicable law allow.

If approved, Article VIII will be amended as follows:

The Bylaws of the Trust may be altered, amended, added to or replaced by the
Shareholders or a majority vote of the entire Board of Trustees. This Article
VIII may be altered, amended or repealed only by the vote of the holders of a
majority of the Shareholders present at a meeting of the Shareholders
provided that a quorum is present in person or by proxy at such meeting.

The amendment would also delete the provision permitting shareholders to
alter or repeal amendments made by the Trustees. However, shareholders will
still retain the right to amend the Bylaws, and thus could effectively still
reverse the amendments of the Trustees if they so desired.

REQUIRED VOTE

With respect to Proposals A through D, which provide for amendments to each
Fund's Declaration of Trust, the affirmative vote of more than 50% of the
outstanding voting securities of each respective Fund is required.

With respect to Proposals E through I, which provide for revisions to various
investment restrictions, the affirmative vote of a majority of each Fund's
outstanding voting securities is required, which for these purposes means the
vote (i) of 67% or more of the voting securities present at the Meeting, if the
holders of more than 50% of the outstanding voting securities are present or
represented by proxy, or (ii) of more than 50% of the outstanding voting
securities, whichever is less.

With respect to Proposal J, which provides for an amendment to each Fund's
Bylaws, the affirmative vote of a majority of the votes cast at the Meeting by
the shareholders of each respective Fund is required.

THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR THE FOREGOING PROPOSALS,
AND ANY SIGNED BUT UNMARKED PROXIES WILL BE SO VOTED.

PROPOSAL 5

TO APPROVE CHANGES TO THE TRUSTS'
FUNDAMENTAL INVESTMENT POLICIES TO PERMIT A
MASTER FUND/FEEDER FUND STRUCTURE (All Funds)

For greater investment flexibility, RCMI has recommended that each Fund adopt
a condition to its fundamental investment policies to permit each Fund to invest
all or substantially all of its investable assets, except to the extent required
to remain uninvested to satisfy near-term cash requirements, in another open-end
management investment company having the same investment objectives and
substantially similar policies and restrictions as the Fund (a "Master Fund").
The condition would provide that:

Notwithstanding the foregoing investment restrictions, the Fund may invest
substantially all of its assets in another open-end investment company with
substantially the same investment objective as the Fund.

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<PAGE> 26

Certain of each Fund's fundamental policies such as the amount a Fund may
invest in a particular industry may preclude the ability of a Fund to adopt a
Master Fund/Feeder Fund Structure. The proposed condition to each Fund's
fundamental investment policies would permit the Fund to adopt such a structure.
Rather than investing directly in a portfolio of securities, a Fund would be
authorized to pool its assets with other mutual funds for investment in a Master
Fund, making it a "Feeder Fund." A purpose of such an arrangement is to achieve
operational efficiencies, assuming that the assets of the Master Fund are
greater than the assets of any individual Feeder Fund. While the Board has not
determined that the Fund should convert to a Master Fund/Feeder Fund Structure
at this time, the Board believes it could be in the best interests of the Fund
at some future date, and in that case the Board could do so without further
approval by shareholders.

If the proposed changes in the investment policies are approved by
shareholders of the Fund, the Fund's Board could vote at some time in the future
to convert the Fund into a Feeder Fund, under which all or substantially all of
the investment assets of the Fund would be invested in a Master Fund. The Feeder
Fund would transfer its assets to a Master Fund in exchange for an interest in
the Master Fund having the same net asset value as the value of the assets
transferred. The ownership interests of the Fund's shareholders will not be
altered by this change.

Under each Trust's Declaration of Trust, a shareholder vote is required to
sell or transfer substantially all of the assets of a Fund. One way to convert a
Fund to a Master Fund/Feeder Fund Structure is through a sale or transfer of
assets. Thus, approval to convert a Fund into a Master Fund/Feeder Fund
Structure through a sale or transfer of assets requires, under a conservative
interpretation of each Trust's Declaration of Trust, the affirmative vote of a
majority of the shares of a Fund. Approval of this proposal by shareholders of a
Fund is also, therefore, deemed to constitute approval of the Board's
discretionary authority to convert that Fund into a Master Fund/Feeder Fund
Structure through a sale or transfer of assets.

Any Master Fund in which a Feeder Fund would invest would be required to have
the same investment objective and substantially similar policies and
restrictions as the Feeder Fund. Accordingly, by investing in a Master Fund, a
Feeder Fund would continue to pursue its present investment objectives and
policies in substantially the same manner as it does currently, except that it
would do so through its investment in the Master Fund rather than through direct
policies. The Master Fund, whose shares could be offered to institutional
investors in addition to a Feeder Fund, would invest in the same type of
securities in which a Fund would have invested directly, providing substantially
the same investment results to the Feeder Fund's shareholders. However, the
expense ratios, the yields and the total returns of other investors in the
Master Fund may be different from those of the Feeder Fund due to differences in
Feeder Fund expenses.

By investing substantially all of its assets in a Master Fund, a Feeder Fund
may be in a position to realize directly or indirectly certain economies of
scale, in that a larger investment portfolio resulting from multiple Feeder
Funds is expected to achieve a lower ratio of operation expenses to net assets.
A Master Fund may be offered to an undetermined number of institutional
investors. However, there can be no assurance that any such additional
investments in a Master Fund by other Feeder Funds will take place or that
economies of scale may be realized.

If a Fund invests substantially all of its assets in a Master Fund, the Fund
may no longer require active portfolio management services. In this event, if
the shareholders of a Fund approve the proposed policy changes and the Board
converts the Fund into a Feeder Fund, then the existing investment management
agreement may be terminated or no fee would be charged; in such case, the Fund's
Board would likely enter into an administration agreement for the provision of
certain administrative services to the Fund, likely including those currently
provided under the existing investment management agreement, with compensation
at such rates as may be approved by the trustees.

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<PAGE> 27

MASTER FUNDS

The investment objective of any Master Fund would be the same as the
investment objective of the applicable Feeder Fund that would invest in it. If
the Fund's Board votes to convert a Fund into a Feeder Fund, the Fund's assets
will no longer be directly invested in the securities of multiple issuers, but
rather will be invested in the securities of a single issuer, i.e., the Master
Fund, which would be registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"). A Master
Fund may have a different Board than the Feeder Fund.

A Feeder Fund may withdraw its investment in a Master Fund at any time if the
Board determines that it is in the best interest of the shareholders of the
Feeder Fund to do so or if the investment policies or restrictions of the Master
Fund were changed so that they were inconsistent with the policies and
restrictions of the Feeder Fund. Upon any such withdrawal, the Board of the
Feeder Fund would consider what action might be taken, including the investment
of all the assets of the Feeder Fund in another pooled investment entity having
substantially the same investment objective as the Feeder Fund or the retaining
of an investment adviser to directly invest the Fund's assets in accordance with
its investment objective and policies. If another pooled investment vehicle with
substantially the same investment objective could not be found, it might have a
significant impact on the investment of shareholders in the Feeder Fund.

Whenever a Feeder Fund is asked to vote on a proposal by the Master Fund, the
Feeder Fund will hold a meeting of shareholders if required by applicable law or
its policies, and cast its vote with respect to the Master Fund in the same
proportion as its shareholders vote on the proposal.

Once its assets are invested in a Master Fund, a Feeder Fund will value its
holdings (i.e., shares issued by the Master Fund) at their fair value, which
will be based upon the daily net asset value of the Master Fund. The net income
of the Feeder Fund will be determined at the same time and on the same days as
the net income of the Master Fund is determined, which are the same time and
days that the Feeder Fund uses for this purpose.

TAX CONSIDERATIONS

The possible implementation of a Master Fund/Feeder Fund structure is not
expected to have any adverse tax effects on the Fund or its shareholders.

Each Feeder Fund would be expected to continue to qualify and elect to be
treated as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). To so qualify, a Feeder Fund must
meet certain income, distribution, and diversification requirements. It is
expected that any Feeder Fund's investment in a Master Fund will satisfy these
requirements. Provided each Feeder Fund meets these requirements and distributes
all of its net investment income and realized capital gains to its shareholders
in accordance with the timing requirements imposed by the Code, the Feeder Fund
will not pay any Federal income or excise taxes.

BOARD RECOMMENDATION

As a result of its consideration of the foregoing facts, the Board of the
Fund voted unanimously to approve the change in fundamental investment policies
to permit a Master/Feeder Fund structure conversion at the Board's discretion
and to submit them to the shareholders for their approval.

REQUIRED VOTE

The affirmative vote of the majority of the outstanding voting securities of
the Funds is required for adoption of this proposal. For this purpose, under
applicable law, "vote of a majority of the outstanding voting securities" of the
Funds means the vote of (i) 67% or more of the voting securities of the Funds
present at the Meeting, if the holders of more than 50% of the outstanding
voting securities of the Funds

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<PAGE> 28

are present or represented by proxy; or, (ii) more than 50% of the outstanding
voting securities of the Funds whichever is less.

THE BOARD OF THE FUNDS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
NEW FUNDAMENTAL INVESTMENT POLICY PERMITTING CONVERSION, AT THE BOARD'S
DISCRETION, INTO A MASTER FUND/FEEDER FUND STRUCTURE.

PROPOSAL 6

TO APPROVE THE AUTHORIZATION OF THE BOARD OF TRUSTEES
TO APPOINT, REPLACE OR TERMINATE SUB-ADVISERS
RECOMMENDED BY THE ADVISER OR AMEND THE TERMS OF
ANY SUB-ADVISORY AGREEMENT FOR THE FUNDS WITHOUT
SHAREHOLDER APPROVAL (All Funds)

Section 15(a), of the 1940 Act requires that all contracts pursuant to which
persons serve as investment adviser to investment companies be approved by
shareholders. As interpreted, this requirement also applies to the appointment
of Sub-Advisers to the Funds. The SEC, however, has granted conditional
exemptions for the shareholder approval requirements for situations where a fund
utilizes a multi-manager approach to portfolio investing. The Adviser and the
Trust have obtained an exemption. If this proposal is approved by the
shareholders, the Board of Trustees of the Trust would, with respect the Funds,
without further shareholder approval, be able to appoint Sub-Advisers, terminate
Sub-Advisers, rehire Sub-Advisers whose agreements have been assigned (and thus
automatically terminated) and enter into or modify sub-investment advisory
agreements.

This Proposal is intended to facilitate the efficient operation of a
multi-manager structure and afford the Funds increased management flexibility.
Under the multi-manager structure, the Adviser, with the approval of the Board
of Trustees, would have the same authority and flexibility with respect to sub-
advisers that it has for its own internal portfolio managers; namely that the
Adviser can continually monitor their performance and replace them if the
Adviser, with the approval of the Board of Trustees, believes such action is
appropriate (for example, if performance is not satisfactory). Under the multi-
manager structure, the Adviser would continuously monitor the performance of
each sub-adviser and may from time to time recommend that the Board of Trustees
add, replace or terminate one or more sub-advisers or appoint additional
sub-advisers, depending on the Adviser's assessment of what combination of
Sub-Advisers it believes will optimize the Funds' chances of achieving their
investment objective.

If this proposal is approved by the shareholders, the Trustees will not be
required to call a shareholder meeting each time a new Sub-Adviser is approved
(or to reapprove a Sub-Adviser whose Sub-Advisory Agreement is automatically
terminated because it has been purchased by another entity) and accordingly,
shareholders will forego their existing privilege of having a vote on such
matters.

Shareholder meetings entail substantial costs, and may entail substantial
delays, which could reduce the desired benefits of the multi-manager structure.
These costs and delays must be weighed against the benefits of shareholder
scrutiny of proposed contracts with additional or replacement Sub-Advisers;
however, even in the absence of shareholder approval, any proposal to add or
replace Sub-Advisers would receive careful review. First, the Adviser would
assess the Fund's needs and, if it believed additional or replacement
Sub-Advisers could benefit a Fund, it would systematically search the relevant
universe of available investment managers. Second, any recommendation made by
the Adviser would have to be approved by a majority of the Trustees, including a
majority of the Trustees who are not interested persons of the Adviser within
the meaning of the 1940 Act. Third, any selections or additional sub-advisers or
replacement Sub-Advisers would have to comply with conditions contained in the
SEC'S exemptive order. Finally the Board of Trustees would not be able to
replace the Adviser as Investment Adviser for a Fund without obtaining
shareholder approval of the new investment Adviser.

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<PAGE> 29

BOARD RECOMMENDATION

As a result of its consideration of the foregoing facts, the Board of the
Fund voted unanimously to approve this proposal and to submit such proposal to
the shareholders for their approval.

REQUIRED VOTE

THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
PROPOSAL 6.

PROPOSAL 7

TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING MAY 31, 1999 (All Funds)

PricewaterhouseCoopers LLP 1301 Avenue of the Americas, New York, NY 10019
currently serves as independent public accountants for each of the Funds. The
Trustees are now seeking shareholder ratification of the selection of
PricewaterhouseCoopers LLP as independent public accountants for the Funds for
the fiscal year ending May 31, 1999.

Neither PricewaterhouseCoopers LLP nor any of its members have any material
direct or indirect financial interest in the Funds. Representatives of
PricewaterhouseCoopers LLP are not expected to be present at the Meeting but
will be available by telephone to respond to questions.

REQUIRED VOTE

With respect to The Reserve Fund, the ratification of the selection of
PricewaterhouseCoopers LLP requires the affirmative vote of a majority of The
Reserve Fund's outstanding voting securities, which for these purposes means the
vote (i) of 67% or more of the voting securities present at the meeting, if the
holders of more than 50% of the outstanding voting securities of such trust are
present or represented by proxy, or (ii) of more than 50% of the outstanding
voting securities of such trust, whichever is less.

With respect to Reserve Tax-Exempt Trust and Reserve Tax-Exempt New York
Trust, the ratification of the selection of PricewaterhouseCoopers LLP requires
the affirmative vote of a majority of the votes cast at the meeting by
shareholders of each respective trust.

THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FUNDS FOR THE FISCAL YEAR ENDING MAY 31, 1999.

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<PAGE> 30

PROPOSAL 8

TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING (Such Funds As Necessary)

OTHER INFORMATION

SHARE OWNERSHIP OF EACH FUND

The total amount of shares of beneficial interest of each Fund outstanding on
the Record Date was as follows:

<TABLE>
<CAPTION>
SHARES OUTSTANDING(1)
---------------------
<S> <C>
THE RESERVE FUND
Reserve Primary Fund 3,284,560,021
Reserve U.S. Government Fund 731,616,573
Reserve U.S. Treasury Fund 273,088,799
Strategist Money-Market Fund 54,474,396
RESERVE TAX-EXEMPT TRUST
Interstate Tax-Exempt Fund 367,041,394
California Tax-Exempt Fund 123,848,964
Connecticut Tax-Exempt Fund 39,553,864
Florida Tax-Exempt Fund 21,096,673
Massachusetts Tax-Exempt Fund 27,678,683
New Jersey Tax-Exempt Fund 42,765,841
Pennsylvania Tax-Exempt Fund 20,688,066
RESERVE NEW YORK TAX-EXEMPT TRUST
New York Tax-Exempt Fund 181,393,375
RESERVE INSTITUTIONAL TRUST
Primary Institutional Fund 247,013,754
U.S. Government Institutional Fund 11,137,001
U.S. Treasury Institutional Fund 11,442,543
Interstate Tax-Exempt Institutional Fund 12,568,042
</TABLE>

The following table sets forth the information concerning beneficial
ownership, as of the Record Date, of each Fund's shares by each person who
beneficially owns more than five percent of the voting securities of each Fund:

I. THE RESERVE FUND

A. RESERVE PRIMARY FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
Mesirow Financial, Inc. -- Special 377,334,185 11.49%
Custody a/c for the Exclusive Benefit
of Customers-Primary Omnibus a/c
350 North Clark St.
Chicago, IL 60610
</TABLE>

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PAGE 25
<PAGE> 31

B. RESERVE U.S. GOVERNMENT FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
Mesirow Financial Inc. -- Special 96,548,481 13.20%
Custody for the Exclusive Benefit
of Customers
350 North Clark Street
Chicago, IL 60610
</TABLE>

C. RESERVE U.S. TREASURY FUND*

D. RESERVE STRATEGIST MONEY-MARKET FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
American Enterprises Investments 4,838,033 8.88%
Account 30039648
733 Marquette Avenue
Minneapolis, MN 55440
American Enterprises Investments 3,292,601 6.04%
733 Marquette Avenue
Minneapolis, MN 55440
American Enterprises Investments 3,246,207 5.96%
Account 30075493
733 Marquette Avenue
Minneapolis, MN 55440
</TABLE>

II. RESERVE TAX-EXEMPT TRUST

A. INTERSTATE TAX-EXEMPT FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
Mesirow Financial, Inc. -- Special 61,830,189 16.85%
Custody a/c for the Exclusive Benefit
of Customers-Interstate Omnibus a/c
350 N. Clark St.
Chicago, IL 60610
</TABLE>

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PAGE 26
<PAGE> 32

B. CA TAX-EXEMPT FUND*

C. CT TAX-EXEMPT FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
Fiduciary Trust Co. International 5,598,118 14.15%
Customer Accounts
Attn: Felyce Porr
P.O. Box 3199 Church St. Station
New York, NY
Chase Manhattan Bank 3,781,620 9.56%
Attn: Client Services
c/o Seven Marinos/Mohamed Nasrudin
1211 Avenue of the Americas 33rd Fl.
New York, NY 10036
PaineWebber, Inc. 2,014,809 5.09%
Account HG 59170
10 State House Street
Hartford, CT 06103
</TABLE>

D. FL TAX-EXEMPT FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
Jobarr Securities 1,745,446 8.27%
Account 46D 10537
100 Church Street
New York, NY 10007
Fleet Securities 1,498,496 7.10%
Account 30038269
14 Wall Street
New York, NY 10005
Advantage Trading Group 1,327,748 6.29%
Florida Omnibus A/C
2170 W. St. Road Suite 124
Longwood, FL 32779
Palisade Capital Securities 1,200,761 5.69%
Account 0271860055613
1 Bridge Plaza, Suite 695
Fort Lee, NJ 07724
Jobarr Securities 1,089,130 5.16%
Account 46D 10536
100 Church Street
New York, NY 10007
</TABLE>

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PAGE 27
<PAGE> 33

E. MA TAX-EXEMPT FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
Jansco Marketing Inc. 1,556,084 5.62%
769 Plain Street
Marshfield, MA 02050
Friedman Billings Ramsey & Co. 4,309,418 15.57%
Account 278952310517
1001 19th St. No.
Rosslyn, VA 22209
Friedman Billings Ramsey & Co. 3,272,719 11.82%
Account 278952329517
1001 19th St. No.
Rosslyn, VA 22209
Morgan Schiff & Co. 3,341,265 12.07%
Account 276580073119
350 Park Avenue
New York, NY 10022
</TABLE>

F. NJ TAX-EXEMPT FUND*

G. PA TAX-EXEMPT FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
SW Ryan & Co. 1,144,154 5.53%
Account 275660030015
111 Presidential Blvd.
Bala Cynwyd, PA 19004
Bear Stearns Securities Corp. 1,604,088 7.75%
FBO 272205378017
245 Park Ave.
New York, NY 10167
Valley Forge Asset Management, Corp. 1,053,094 5.09%
Account 36812047
120 South Warner Road
King of Prussia, PA 19406
</TABLE>

III. RESERVE NEW YORK TAX-EXEMPT TRUST

A. NY TAX-EXEMPT FUND

--------

PAGE 28
<PAGE> 34

IV. RESERVE INSTITUTIONAL TRUST

A. PRIMARY INSTITUTIONAL FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
C.L. King Assoc., Inc. 107,169,160 43.39%
Account 500-01025
9 Elk Street
Albany, NY 12207
Mesirow Financial Inc. 17,874,943 7.23%
Special Custody a/c FBO
Customers -- Primary Treasurer's Trust
Omnibus A/C
350 North Clark Street
Chicago, IL 60610
</TABLE>

B. U.S. GOVERNMENT INSTITUTIONAL FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
Mesirow Financial, Inc. -- Special 4,783,213 42.95%
Custody A/C for the Exclusive Benefit
Of Customers-Government Class B
Omnibus A/C
350 North Clark Street
Chicago, IL 60610
Mesirow Financial, Inc. -- Special Custody 6,337,614 56.91%
A/C for the Exclusive Benefit of
Customers-Government Treasurer's
Trust Omnibus A/C
350 North Clark St.
Chicago, IL 60610
</TABLE>

C. U.S. TREASURY INSTITUTIONAL FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
W.H. Reaves & Co. Inc. 2,424,760 21.19%
"IRA Advisory" Customers
10 Exchange Place
Jersey City, NJ 07302
W.H. Reaves & Co., Inc. 9,017,782 78.81%
& Advisory Customers
10 Exchange Place
Jersey City, NJ 07302
</TABLE>

--------

PAGE 29
<PAGE> 35

D. INTERSTATE TAX-EXEMPT INSTITUTIONAL FUND

<TABLE>
<CAPTION>
NAME AND SHARES PERCENT
ADDRESS OF BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES OWNED
- ---------------- ------------ ------------
<S> <C> <C>
Carnes Capital Corp. 5,496,611 43.73%
Account 0279824113816
3003 Tamiami Trail North
Naples, FL 34103
Volunteer Limited Liability Co. 711,790 5.66%
483 Kyle Lane
Cleveland, TN 37312-6440
Wunderlich Securities, Inc. 1,327,927 10.57%
Account 274745075517
6305 Hemphreys Blvd.
Memphis, TN 38120-2300
Mesirow Financial, Inc. -- Special Custody 3,101,091 24.67%
A/C for the Exclusive Benefit of
Customers-Interstate Treasurer's
Trust Omnibus A/C
350 North Clark St.
Chicago, IL 60610
</TABLE>

- ---------------
* As of October 30, 1998, no person was known by the Fund to own of record or
beneficially 5% or more of the outstanding shares of the Fund.

(1) Fractional shares have been omitted.

SECURITY OWNERSHIP OF MANAGEMENT

As of the Record Date, the records of the Trusts do not reflect that the
Trustees and officers of the Trusts owned more than 1% of the outstanding shares
of beneficial interest of each of the Funds.

MANNER OF VOTING PROXIES

All proxies received by the management of the Funds will be voted on all
matters presented at the Meeting, and if not limited to the contrary, will be
voted FOR all Proposals.

Management knows of no other matters to be brought before the Meeting. If,
however, any other matters properly come before the Meeting, it is Management's
intention that proxies not limited to the contrary will be voted in accordance
with the judgment of the persons named in the enclosed form of proxy.

Broker "non-votes" (that is, proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will have the same effect
as abstentions in determining whether an issue has received the requisite
approval. Where the broker or nominee has no discretion to vote the shares as to
one or more proposals before the Meeting, the non-voted shares will be excluded
from the pool of shares voted on such issues. Thus, abstentions and non-votes
will have the same effect as a negative vote on issues requiring the affirmative
vote of a specified portion of a Fund's outstanding shares, but will not be
considered votes cast and thus will have no effect on matters requiring approval
of a specified percentage of votes cast.

In the event that, at the time any session of the Meeting is called to order,
a quorum is not present in person or by proxy, the persons named as proxies may
vote those proxies which have been received to

--------

PAGE 30
<PAGE> 36

adjourn the Meeting to a later date. In the event that a quorum is present but
sufficient votes in favor of any of the Proposals 1 through 4 set forth in the
Notice of Meeting have not been received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitations
of proxies with respect to those items. Any such adjournment will require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Meeting to be adjourned. The persons named as proxies will
vote those proxies which they are entitled to vote for any such item in favor of
such an adjournment, and will vote those proxies required to be voted against
any such item against any such adjournment. A shareholder vote may be taken on
one or more of the items in this Proxy Statement prior to such adjournment if
sufficient votes for its approval have been received and it is otherwise
appropriate.

SOLICITATION OF PROXIES

Solicitation of proxies is being made primarily by the mailing of this Notice
and Proxy Statement. Holders of this Trust whose shares of Common Stock are held
by nominees, such as brokers, can vote their proxies by contacting their
respective nominee. In addition to the solicitation of proxies by mail, officers
of the Trust and employees of The Reserve Funds and its affiliates, without
additional compensation, may solicit proxies in person or by telephone,
telegraph, facsimile, oral communication or electronic medium. The Trust has
retained Shareholder Communication Corporation ("SCC"), a professional proxy
solicitation firm, to assist with any necessary solicitation of proxies. As the
Meeting date approaches, certain shareholders of the Trust may receive a
telephone call from SCC asking the shareholder to vote if the Trust has not yet
received the shareholder's vote. Authorization to permit the execution of
proxies may be obtained by telephonic or electronically transmitted instructions
from shareholders of the Trust. In taking telephonic instructions, SCC will
follow procedures designed to ensure that the identity of the shareholder
casting the vote is accurately determined and that the voting instructions of
the shareholder are accurately determined. SCC is permitted to answer questions
about the process, but is not permitted to recommend to the shareholders how to
vote, other than to read any recommendation set forth in the proxy statement.
SCC will record the shareholder's instructions on the card. Within 72 hours, SCC
will send the shareholder a letter or mailgram to confirm the shareholder's vote
and asking the shareholder to call SCC immediately if the shareholder's
instructions are not correctly reflected in the confirmation. The costs
associated with such solicitation will be paid equally by the Funds and
Investment Manager, with the exception of U.S. Treasury and Strategist
Money-Market Fund, whose costs will be paid by the Investement Manager, although
the Investment Manager or its affiliates shall bear the expense of any
solicitation activities by their employees.

If any shareholder wishes to participate in the meeting of shareholders, but
does not wish to give his or her proxy by telephone, the shareholder may still
submit the proxy card originally sent with the proxy statement or attend in
person. Should shareholders require additional information regarding the proxy
or replacement proxy cards, they may contact SCC toll-free at 800-733-8481, ext.
448.

A shareholder may revoke a proxy at any time prior to its use by filing with
the Trust a written revocation or duly executed proxy bearing a later date. In
addition, any shareholder who attends the Meeting in person may vote by ballot
at the Meeting, thereby canceling any proxy previously given. The persons named
in the accompanying proxy will vote as directed by the proxy, but in the absence
of voting directions in any proxy that is signed and returned, they intend to
vote FOR each of the proposals and may vote at their discretion with respect to
other matters not now known to the Board of Trustees or the Trust that may be
presented at the Meeting.

INVESTMENT ADVISER, PRINCIPAL UNDERWRITER & ADMINISTRATOR

The Funds' Investment Adviser is Reserve Management Company Inc., 810 Seventh
Avenue, New York, NY 10019. Resrv Partners, Inc. is a principal underwriter to
The Reserve Fund, Reserve Tax-Exempt Trust, Reserve Institutional Trust, and
Reserve New York Tax-Exempt Trust. Pacific Global Fund Distributors, Inc.
("Pacific Global") also acts as a principal underwriter of The Reserve Fund and
--------

PAGE 31
<PAGE> 37

Reserve Tax-Exempt Trust. Mesirow Financial Inc. also acts as a principal
underwriter of Reserve Tax-Exempt Trust. NWNL/Northstar Distributors, Inc.
("Northstar") also acts as a principal underwriter for The Reserve Fund.

SUBMISSION OF CERTAIN PROPOSALS

Proposals of shareholders which are intended to be presented at a future
shareholders' meeting must be received by each Trust by a reasonable time prior
to the Trust's solicitation of proxies relating to such future meeting.
Shareholder proposals must meet certain requirements and there is no guarantee
that any proposal will be presented at a Shareholder meeting.

ADDITIONAL INFORMATION

The expense of the preparation, printing and mailing of the enclosed form of
proxy, this Notice and Proxy Statement and other expenses relating to the
Meeting will be borne equally by the Funds and RMCI. To obtain the necessary
representation at the Meeting, supplementary solicitations may be made by mail,
telephone, or interview by officers of the Funds and/or employees of RMCI and
others.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY

THE RESERVE FUND
RESERVE TAX-EXEMPT TRUST
RESERVE NEW YORK TAX-EXEMPT TRUST
RESERVE INSTITUTIONAL TRUST

December 4, 1998

--------

PAGE 32
<PAGE> 38

EXHIBIT A

"COMPREHENSIVE FEE"
INVESTMENT MANAGEMENT AGREEMENT

THIS AGREEMENT, dated the ________ day of __________, 1999, made and entered
into by and between ____________________ Trust, (the "Trust"), organized as an
unincorporated business trust under the laws of the Commonwealth of
Massachusetts, and RESERVE MANAGEMENT COMPANY, INC., (the "Manager"), a New
Jersey corporation having its principal place of business in 810 Seventh Avenue,
New York, NY 10019, on behalf of the ____________________ Fund (the
"Portfolio").

WHEREAS, the Trust is engaged as a non-diversified management investment
company and is registered as such under the Investment Company Act of 1940 (the
"1940 Act"); and

WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest, no par value, in separate series or classes of series, with
each such separate series representing an interest in a separate portfolio of
investment securities and other assets;

The parties agree as follows:

1. INVESTMENT SERVICES. The Manager shall select and manage the Portfolio's
investments and shall determine what investments shall be made or disposed of by
the Portfolio and shall effect such acquisitions and dispositions, all in
furtherance of the Portfolio's investment objective and policies, subject to the
overall control and direction of the Trust's Board of Trustees. The Manager
shall report on such activities to the Board of Trustees of the Trust and shall
submit such reports and other information thereon as the Board of Trustees shall
from time to time request. Notwithstanding any other provision hereof, the
Manager, with the approval of the Trust, may contract with one or more
Sub-Investment Managers to perform any of the investment management services;
provided, however, any compensation paid will be the sole responsibility of the
Manager.

2. OTHER SERVICES AND ASSUMPTION OF CERTAIN EXPENSES. The Manager shall
furnish to the Trust, on behalf of the Portfolio: (i) the services of a
President and such other executive officers as may be requested by the
Portfolio, (ii) office space and customary office facilities to the extent that
the Portfolio's activities occur in New York, (iii) maintain Portfolio records
not otherwise maintained by the Portfolio's custodian, distributor or
sub-investment managers, and (iv) all accounting, administrative, clerical,
secretarial and statistical services as may be required by the Portfolio for the
operation of its business and compliance with applicable laws. The Manager shall
pay the compensation of all officers of the Trust on behalf of the Portfolio and
all operating and other expenses of the Portfolio except interest charges,
taxes, brokerage fees and commissions, extraordinary legal and accounting fees
and other extraordinary expenses including expenses incurred in connection with
litigation proceedings, other claims and the legal obligations of the Trust to
indemnify its trustees, officers, employees, shareholders, distributors and
other agents of the Trust, payments made pursuant to the Trust's Distribution
Plan, and the fees of the disinterested Trustees. The Manager may contract with
other parties to perform any of the ordinary administrative services required of
the Manager; provided, however any such compensation will be the responsibility
of the Manager.

3. COMPENSATION OF THE MANAGER. The Portfolio shall pay to the Manager as
compensation for the services rendered hereunder and as full reimbursement for
all officers compensation and ordinary operating expenses of the Portfolio paid
by the Manager under paragraph 2 hereof, a Management fee at an annual rate of
____% of the average daily net asset value of the Portfolio.

The Management fee shall be computed and accrued daily and shall be paid by
the Portfolio to the Manager monthly.

4. COMPLIANCE WITH APPLICABLE REQUIREMENTS. This Agreement will be
performed in accordance with the requirements of the 1940 Act and the Investment
Advisers Act of 1940 and the rules and

---------

PAGE A-1
<PAGE> 39

regulations under such acts, to the extent that the subject matter of the
Agreement is within the purview of such acts and such rules and regulations. The
Manager will assist the Trust on behalf of the Portfolio in complying with the
requirements of the 1940 Act, and the Securities Act of 1933, and the rules and
regulations under such acts and in qualifying as a regulated investment company
under the Internal Revenue Code of 1986 and applicable regulations of the
Internal Revenue Service thereunder. In carrying out its obligations under this
Agreement the Manager shall at all times conform to the provisions of the
Declaration of Trust and By-Laws, the provisions of the currently effective
Registration Statement of the Trust under the 1940 Act and the Securities Act of
1933, and any other applicable provisions of state or Federal law.

5. TERMINATION. This Agreement shall be in effect until the close of
business on __________, 2000 and shall continue in effect from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually by (i) either the Board of Trustees of the Trust or a majority
vote of the outstanding voting securities of the Portfolio, provided, however,
that if the shareholders of the Portfolio fail to approve the Agreement, as
provided herein, the Manager may continue to serve in such capacity in the
manner and to the extent permitted by the 1940 Act, and the rules thereunder,
and (ii) the vote of a majority of the Trustees of the Trust who are not parties
to this Agreement or interested persons (as defined in the 1940 Act) of either
party of this Agreement, cast in person at a meeting called for the purpose of
voting on such approval.

Notwithstanding anything herein to the contrary, this Agreement may be
terminated at any time, without payment of any penalty, by the Board of Trustees
of the Trust or by vote of a majority of the outstanding voting securities of
the Portfolio, on 60 days' written notice to the Manager, or by the Manager on
like notice to the Trust.

The name Reserve shall be deemed to have been licensed to the Trust by the
Manager. In the event of termination of this Agreement, the Manager may
terminate or revoke such license on 90 days' written notice to the Trust. On or
before the date of such revocation or termination, the Trust will change its
name to another name which does not include the word "Reserve."

6. NON-ASSIGNABILITY. This Agreement shall not be assignable by either
party hereto and shall automatically terminate forthwith in the event of such
assignment (within the meaning of the 1940 Act).

7. APPROVAL OF AGREEMENT AND AMENDMENTS. This Agreement and any material
amendments hereto shall be approved by vote of the holders of a majority (as
defined in the 1940 Act) of the outstanding voting securities of the Portfolio,
provided, however, that if the shareholders of the Portfolio fail to approve the
Agreement as provided herein, the Manager may continue to serve in such capacity
in the manner and to the extent permitted by the 1940 Act and the rules
thereunder.

8. NON-EXCLUSIVITY. The services of the Manager to the Trust are not to be
deemed exclusive and the Trust agrees that the Manager is free to act as
investment manager to various investment companies and other managed accounts.
For purposes of this Agreement and the undertakings provided for herein, the
Manager shall at all times be considered as an independent contractor, and shall
not be considered as an agent of the Trust and shall have no authority to act
for or represent the Trust in any way.

9. LIABILITY OF THE MANAGER. In performing its duties hereunder, the
Manager may rely on all documentation and information furnished it by the Trust.
Except as may otherwise be provided by the 1940 Act, neither the Manager nor its
officers, directors, employees or agents shall be subject to any liability for
any act or omission in the course of, connected with or arising out of any
services to be rendered hereunder, except by reason of willful misfeasance, bad
faith or gross negligence in the performance of the Manager's duties or by
reason of reckless disregard of the Manager's obligations and duties under this
Agreement.

10. NOTICES. Any notices and communications required hereunder shall be in
writing and shall be deemed given when delivered in person or when sent by
first-class, registered or certified mail to the

---------

PAGE A-2
<PAGE> 40

Manager or to the Trust at 810 Seventh Avenue, New York, NY 10019, or at such
addresses as either party may from time to time specify by notice to the other.

11. GOVERNING LAW. The terms and provisions of this Agreement shall be
interpreted under and governed by the law of the State of New York.

12. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall be deemed to be severable.

13. SHAREHOLDER LIABILITY. The Manager understands and agrees that the
obligations of the Trust under this Agreement are not binding upon any
shareholder of the Trust personally, but bind only the Trust and the Trust's
property. The Manager represents that it has notice of the provisions of the
Declaration of Trust of the Trust disclaiming shareholder liability for acts or
obligations of the Trust.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed on the day and year first above written.

<TABLE>
<S> <C>
--------------------- TRUST

By
-------------------------------------------------
President
ATTEST:

- ---------------------------------------------------
Secretary
RESERVE MANAGEMENT COMPANY, INC.

By
-------------------------------------------------
President
ATTEST:

- ---------------------------------------------------
Secretary
</TABLE>

---------

PAGE A-3
<PAGE> 41

[This page intentionally left blank.]
<PAGE> 42

EXHIBIT B

FORM OF AMENDMENTS TO IMPLEMENT
MULTIPLE CLASSES OF SHARES

The proposed amendments to each Trust's Declaration of Trust are as follows:

The text of Article Fourth is deleted, and the following text is inserted in
its place:

FOURTH: The following provisions shall apply with respect to the shares of
beneficial interest:

1. BENEFICIAL INTEREST. The interest of the beneficiaries hereunder shall
be divided into transferable Shares of beneficial interest, all of one class,
except as provided in Sections 2 and 3 of this Article Fourth, par value $.001
per share. The number of Shares of beneficial interest authorized hereunder is
unlimited. All Shares issued hereunder including, without limitation, Shares
issued in connection with a dividend in Shares or a split of Shares, shall be
fully paid and nonassessable. The Trustees may from time to time divide or
combine the Shares into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust. Contributions to the Trust may
be accepted for, and Shares shall be redeemed as, whole Shares and/or 1/100ths
of a Share or integral multiples thereof.

2. SERIES DESIGNATION. The Trustees, at their discretion, may authorize the
division of Shares into two or more Series, and the different Series shall be
established and designated, and the variations in the relative rights and
preferences between the different Series shall be fixed and determined by the
Trustees; provided that all Shares shall be identical except that there may be
variations so fixed and determined between different Series as to investment
objective, purchase price, allocation of expenses, right of redemption, special
and relative rights as to dividends and on liquidation, conversion rights, and
conditions under which the several Series shall have separate voting rights. All
references to Shares in this Declaration shall be deemed to be Shares of any or
all series as the context may require.

If the Trustees shall divide the Shares of the Trust into two or more Series,
the following provisions shall be applicable:

(a) All provisions herein relating to the Trust shall apply equally to each
Series of the Trust except as the context requires otherwise.

(b) The number of authorized Shares and the number of Shares of each Series
that may be issued shall be unlimited. The Trustees may classify or reclassify
any unissued Shares or any Shares previously issued and reacquired of any Series
into one or more Series that may be established and designated from time to
time. The Trustees may hold as treasury Shares (of the same or some other
Series), reissue for such consideration and on such terms as they may determine,
or cancel any Shares of any Series reacquired by the Trust at their discretion
from time to time.

(c) All consideration received by the Trust for the issue or sale of Shares
of a particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to that Series for
all purposes, subject only to the rights of creditors of such Series and except
as may otherwise be required by applicable laws, and shall be so recorded upon
the books of account of the Trust. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Series, the Trustees
shall allocate them among any one or more of the Series established and
designated from time to time in such manner and on such basis as they, at their
sole discretion, deem fair and equitable. Each such allocation by the Trustees
shall be conclusive and binding upon the shareholders of all Series for all
purposes.

(d) The assets belonging to each particular Series shall be charged with the
liabilities of the Trust in respect of that Series and all expenses, costs,
charges and reserves attributable to that Series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as
----------

PAGE B-1
<PAGE> 43

belonging to any particular Series shall be allocated and charged by the
Trustees to and among any one or more of the Series established and designated
from time to time in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. Each allocation of liabilities, expenses,
costs, charges and reserves by the Trustees shall be conclusive and binding upon
the Shareholders of all Series for all purposes. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to determine which
items are capital; and each such determination and allocation shall be
conclusive and binding upon the Shareholders. The assets of a particular Series
of the Trust shall, under no circumstances, be charged with liabilities
attributable to any other Series of the Trust. All persons extending credit to,
or contracting with or having any claim against a particular Series of the Trust
shall look only to the assets of that particular Series for payment of such
credit, contract or claim. No Shareholder or former Shareholder of any Series
shall have any claim on or right to any assets allocated or belonging to any
other series.

(e) Each Share of a Series of the Trust shall represent a beneficial interest
in the net assets of such Series. Each holder of Shares of a Series shall be
entitled to receive his pro rata share of distributions of income and capital
gains made with respect to such Series. Upon redemption of his Shares or
indemnification for liabilities incurred by reason of his being or having been a
Shareholder of a Series, such shareholder shall be paid solely out of the funds
and property of such Series of the Trust. Upon liquidation or termination of a
Series of the Trust, Shareholders of such Series shall be entitled to receive a
pro rata share of the net assets of such Series. A Shareholder of a particular
Series of the Trust shall not be entitled to participate in a derivative or
class action on behalf of any other Series or the Shareholders of any other
Series of the Trust.

(f) The establishment and designation of any Series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such Series, or as otherwise provided in such instrument. The
Trustees may by an instrument executed by a majority of their number abolish any
Series and the establishment and designation thereof. Except as otherwise
provided in this Article Fourth, the Trustees shall have the power to determine
the designations, preferences, privileges, limitations and rights of each class
and Series of Shares. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration.

3. CLASS DESIGNATION. The Trustees, at their discretion, may authorize the
division of the Shares of the Trust, or, if any Series be established, the
Shares of any Series, into two or more Classes, and the different Classes shall
be established and designated, and the variations in the relative rights and
preferences between the different Classes shall be fixed and determined by the
Trustees; provided that all Shares of the Trust or of any Series shall be
identical to all other Shares of the Trust or the same Series, as the case may
be, except that there may be variations between different classes as to
allocation of expenses, right of redemption, special and relative rights as to
dividends and on liquidation, conversion rights, and conditions under which the
several Classes shall have separate voting rights. All references to Shares in
this Declaration shall be deemed to be Shares of any or all Classes as the
context may require.

If the Trustees shall divide the Shares of the Trust or any Series into two
or more Classes, the following provisions shall be applicable:

(a) All provisions herein relating to the Trust, or any Series of the Trust,
shall apply equally to each Class of Shares of the Trust or of any Series of the
Trust, except as the context requires otherwise.

(b) The number of Shares of each Class that may be issued shall be unlimited.
The Trustees may classify or reclassify any unissued Shares of the Trust or any
Series or any Shares previously issued and reacquired of any Class of the Trust
or of any Series into one or more Classes that may be established and designated
from time to time. The Trustees may hold as treasury Shares (of the same or some
other Class), reissue for such consideration and on such terms as they may
determine, or cancel any Shares of any Class reacquired by the Trust at their
discretion from time to time.
----------

PAGE B-2
<PAGE> 44

(c) Liabilities, expenses, costs, charges and reserves related to the
distribution of, and other identified expenses that should properly be allocated
to, the Shares of a particular Class may be charged to and borne solely by such
Class and the bearing of expenses solely by a Class of Shares may be
appropriately reflected (in a manner determined by the Trustees) and cause
differences in the net asset value attributable to, and the dividend, redemption
and liquidation rights of, the Shares of different Classes. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Classes for all purposes.

(d) The establishment and designation of any Class of Shares shall be
effective upon the execution of a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such Class, or as otherwise provided in such instrument. The
Trustees may, by an instrument executed by a majority of their number, abolish
any Class and the establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an amendment to this
Declaration.

4. The ownership of Shares shall be recorded in the books of the Trust or a
transfer agent. The Trustees may make such rules as they consider appropriate
for the transfer of Shares and similar matters. The record books of the Trust or
any transfer agent, as the case may be, shall be conclusive as to who are the
holders of Shares and as to the number of Shares held from time to time by each.
Anything in this Declaration of Trust to the contrary notwithstanding, when
Shares of the Trust are registered in the name of one Shareholder or another,
either Shareholder is entitled to act regarding the Shares so registered and
such Shareholders will indemnify and hold the Trust, its investment adviser,
principal underwriter, custodian or affiliates thereof, harmless for such
actions.

5. The Trustees shall accept investments in the Trust from such persons and
on such terms as they may from time to time authorize. After the date of the
initial contribution of capital (which shall occur prior to the initial public
offering of Shares of the Trust), the number of Shares to represent the initial
contribution shall be considered as outstanding and the amount received by the
Trustees on account of the contribution shall be treated as an asset of the
Trust. Subsequent to such initial contribution of capital, Shares (including
Shares which may have been redeemed or repurchased by the Trust) may be issued
or sold at a price which will net the Trust, before paying any taxes in
connection with such issue or sale, not less than the net asset value (as
defined in Article SEVENTH, Section 12) thereof; provided, however, that the
Trustees may, at their discretion, impose a sales charge upon investments in the
Trust.

6. Shareholders shall have no preemptive or other right to subscribe to any
additional Shares or other securities issued by the Trust or the Trustees.

In addition, Article FIFTH, Section 2 is amended as follows (deleted text is
bracketed):

2. [At] Except as provided herein, at all meetings of Shareholders each
Shareholder shall be entitled to one vote for each Share standing in his name
on the books of the Trust on the date, fixed in accordance with the By-Laws,
for determination of Shareholders entitled to vote at such meeting except for
Shares redeemed prior to the meeting[. Any], and any fractional Share shall
carry proportionately all the rights of a whole Share, including the right to
vote and the right to receive dividends. Notwithstanding the foregoing, the
Trustees may, in conjunction with the establishment of any Series or Class of
Shares, establish or reserve the right to establish conditions under which
the several Series or Classes shall have separate voting rights or, if a
Series or Class would not, in the sole judgment of the Trustees, be
materially affected by a proposal, no voting rights. The presence in person
or by proxy of the holders of one-third of the Shares outstanding and
entitled to vote thereat shall constitute a quorum at any meeting of the
Shareholders. If at any meeting of the Shareholders there shall be less than
a quorum present, the Shareholders present at such meeting may, without
further notice, adjourn the same from time to time until a quorum shall
attend, but no business shall be transacted at any such adjourned meeting
except such as might have been lawfully transacted had the meeting not been
adjourned.
----------

PAGE B-3
<PAGE> 45

[THE RESERVE FUNDS LOGO]

Founders of

"America's First Money Fund"
Est. 1970
<PAGE> 46

PROXY

THE RESERVE FUND

PRIMARY FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of Primary Fund held by the
undersigned at the Special Meeting of Shareholders of the Fund to be held at
3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds, 810
Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment thereof
(the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 47
III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 48
I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VI. To approve the authorization of the Board of Trustees to appoint,
replace or terminate sub-advisers recommended by the adviser or amend
the terms of any sub-advisory agreement for the Fund without
shareholder approval.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 49
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 50
PROXY

THE RESERVE FUND

U.S. GOVERNMENT FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the U.S. Government Fund held by
the undersigned at the Special Meeting of Shareholders of the Fund to be held
at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds, 810
Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment thereof
(the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 51
IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 52
J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 53
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 54
PROXY

THE RESERVE FUND

U.S. TREASURY FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the U.S. Treasury Fund held by
the undersigned at the Special Meeting of Shareholders of the Fund to be held
at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds, 810
Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment thereof
(the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD OF
TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF THE
FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

- ------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 55
IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 56
J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of Pricewaterhouse Coopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 57
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 58
PROXY

THE RESERVE FUND

STRATEGIST MONEY-MARKET FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Strategist Money-Market Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to
be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds,
810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 59
IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 60
J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of Pricewaterhouse Coopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 61
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 62

PROXY

RESERVE TAX-EXEMPT TRUST

CALIFORNIA TAX-EXEMPT FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the California Tax-Exempt Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to
be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds,
810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 63
III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 64
I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of Pricewaterhouse Coopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 65
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 66

PROXY

RESERVE TAX-EXEMPT TRUST

CONNECTICUT TAX-EXEMPT FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Connecticut Tax-Exempt Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to
be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds,
810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

- ------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 67
III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 68
I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of Pricewaterhouse Coopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 69
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 70

PROXY

RESERVE TAX-EXEMPT TRUST

FLORIDA TAX-EXEMPT FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Florida Tax-Exempt Fund held
by the undersigned at the Special Meeting of Shareholders of the Fund to be
held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds,
810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

- ------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 71
III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 72
I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VI. To approve the authorization of the Board of Trustees to appoint,
replace or terminate sub-advisers recommended by the adviser or
amend the terms of any sub-advisory agreement for the Fund without
shareholder approval.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of Pricewaterhouse Coopers LLP as independent
public accountants of the Trust for the fiscal year ending
May 31, 1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 73
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 74
PROXY

RESERVE TAX-EXEMPT TRUST

MASSACHUSETTS TAX-EXEMPT FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Massachusetts Tax-Exempt Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to
be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds,
810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 75
III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 76
I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of Pricewaterhouse Coopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 77
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 78
PROXY

RESERVE TAX-EXEMPT TRUST

NEW JERSEY TAX-EXEMPT FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the New Jersey Tax-Exempt Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to
be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds,
810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 79

IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 80
J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 81
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 82
PROXY

RESERVE TAX-EXEMPT TRUST

PENNSYLVANIA TAX-EXEMPT FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Pennsylvania Tax-Exempt Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to
be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds,
810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 83
III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 84
I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 85
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 86
PROXY

RESERVE TAX-EXEMPT TRUST

INTERSTATE TAX-EXEMPT FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Interstate Tax-Exempt Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to
be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds,
810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 87
IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 88
J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 89
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 90
PROXY

RESERVE NEW YORK TAX-EXEMPT TRUST

NEW YORK TAX-EXEMPT FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the New York Tax-Exempt Fund held
by the undersigned at the Special Meeting of Shareholders of the Fund to be
held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds,
810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

III. To approve amendments to the Trust's Declaration of Trust to permit
the issuance of multiple classes of shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 91
IV. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 92
J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To ratify selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VIII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 93
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 94
PROXY

RESERVE INSTITUTIONAL TRUST

PRIMARY INSTITUTIONAL FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Primary Institutional Fund
held by the undersigned at the Special Meeting of Shareholders of the Fund to
be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve Funds,
810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any adjournment
thereof (the "Meeting"), and instructs them to vote as indicated on the matters
referred to in the Proxy Statement for the Meeting, receipt of which is hereby
acknowledged, with discretionary power to vote upon such other business as may
properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 95
III. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 96
J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IV. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

V. To approve the authorization of the Board of Trustees to appoint,
replace or terminate sub-advisers recommended by the adviser or amend
the terms of any sub-advisory agreement for the Fund without
shareholder approval.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VI. To ratify selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 97
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 98
PROXY

RESERVE INSTITUTIONAL TRUST

U.S. TREASURY INSTITUTIONAL FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the U.S. Treasury Institutional
Fund held by the undersigned at the Special Meeting of Shareholders of the Fund
to be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve
Funds, 810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any
adjournment thereof (the "Meeting"), and instructs them to vote as indicated on
the matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 99
III. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 100
J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IV. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VI. To ratify selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 101
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 102
PROXY

RESERVE INSTITUTIONAL TRUST

U.S. GOVERNMENT INSTITUTIONAL FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the U.S. Government Institutional
Fund held by the undersigned at the Special Meeting of Shareholders of the Fund
to be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The Reserve
Funds, 810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any
adjournment thereof (the "Meeting"), and instructs them to vote as indicated on
the matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 103
III. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 104
J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IV. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VI. To ratify selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 105
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -
<PAGE> 106
PROXY

RESERVE INSTITUTIONAL TRUST

INTERSTATE TAX-EXEMPT INSTITUTIONAL FUND

SPECIAL MEETING OF SHAREHOLDERS

January 15, 1999

The undersigned hereby appoints MaryKathleen Foynes and Mary A. Belmonte
and each of them, his/her attorneys and proxies with full power of substitution
to vote and act with respect to all shares of the Institutional Interstate
Tax-Exempt Fund held by the undersigned at the Special Meeting of Shareholders
of the Fund to be held at 3:00 p.m., Eastern Time, on January 15, 1999, at The
Reserve Funds, 810 Seventh Avenue, 17th Floor, New York, NY 10019, and at any
adjournment thereof (the "Meeting"), and instructs them to vote as indicated on
the matters referred to in the Proxy Statement for the Meeting, receipt of
which is hereby acknowledged, with discretionary power to vote upon such other
business as may properly come before the Meeting.

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR EACH OF THE NOMINEES AND FOR EACH OF
THE FOLLOWING PROPOSALS:

I. Election of Trustees:

Bruce R. Bent Donald J. Harrington Vincent J. Mattone
Edwin Ehlert, Jr. Bruce R. Bent II Diana P. Herrmann
Henri W. Emmet William E. Viklund Richard Bassuk

[ ] FOR ALL [ ] AGAINST ALL [ ] FOR ALL
EXCEPT

------------------------------------------------------------------------
(Only use to withhold authority to vote on individual Nominees)

II. To approve a new Investment Management Agreement for the Fund.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 1 -
<PAGE> 107
III. To approve the following proposed amendments:

A. To amend the Declaration of Trust to eliminate the policy on
pricing securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

B. To amend the Declaration of Trust to permit non-material
amendments;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

C. To amend the Declaration of Trust concerning the right to vote
portfolio securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

D. To amend the Declaration of Trust concerning termination of or
reorganization of the Trust;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

E. To amend the Trust's fundamental investment policy on the
issuance of senior securities;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

F. To amend the Trust's fundamental investment policy regarding
underwriting;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

G. To change the designation of the Trust's fundamental investment
policy on investing for control of portfolio companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

H. To eliminate the Trust's fundamental investment policies
regarding certain portfolio transactions;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

I. To eliminate the Trust's fundamental investment policy on
investing in the securities of other investment companies;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

- 2 -
<PAGE> 108
J. To amend the Trust's Bylaws concerning amendments thereto;

[ ] FOR [ ] AGAINST [ ] ABSTAIN

IV. To approve changes to the Trust's fundamental investment policies to
permit a master fund/feeder fund structure.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VI. To ratify selection of PricewaterhouseCoopers LLP as independent
public accountants of the Trust for the fiscal year ending May 31,
1999.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

VII. To transact such other business as may properly come before the
Meeting

[ ] FOR [ ] AGAINST [ ] ABSTAIN

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.

Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.

Dated , 199
------------------------- -

------------------------------------------------
Name of Shareholder(s) -- Please print or type

------------------------------------------------
Signature(s) of Shareholder(s)

- 3 -
<PAGE> 109
This proxy must be signed by the beneficial owner of Fund shares. If signing
as attorney, executor, guardian or in some representative capacity or as an
officer of a corporation, please add title as such.

PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.

- 4 -