<PAGE>
American Express Money Market Account is a cash management service offered by
The Reserve Funds through American Enterprise Investment Services Inc., a
subsidiary of American Express Financial Corporation. Shares offered are shares
of The Reserve Funds.
American Enterprise Investment Services Inc.
A subsidiary of American Express Financial Corporation
IDS Tower 10
Minneapolis, MN 55440
www.americanexpress.com
(Copyright) 1998 American Express Financial Corporation
All rights reserved.
This literature is not authorized for distribution to prospective investors
unless preceded or accompanied by an appropriate current prospectus.
Distributor -- Reserv partners, Inc.
AMEX/ANNUAL 07/99
AMERICAN EXPRESS
MONEY MARKET ACCOUNTS
OFFERED BY
THE RESERVE FUNDS
PRIMARY FUND
U.S. GOVERNMENT FUND
U.S. TREASURY FUND
INTERSTATE TAX-EXEMPT FUND
CONNECTICUT TAX-EXEMPT FUND
FLORIDA TAX-EXEMPT FUND
MASSACHUSETTS TAX-EXEMPT FUND
MICHIGAN TAX-EXEMPT FUND
NEW JERSEY TAX-EXEMPT FUND
NEW YORK TAX-EXEMPT FUND
OHIO TAX-EXEMPT FUND
PENNSYLVANIA TAX-EXEMPT FUND
ANNUAL REPORT
May 31, 1999
[LOGO]
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and the Board of Trustees of The Reserve Fund, Reserve New
York Tax-Exempt Trust and Reserve Tax-Exempt Trust:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of net assets,
operations and of changes in net assets and financial highlights present fairly,
in all material respects, the financial position of The Reserve Funds--Primary,
U.S. Government and U.S Treasury Funds (three of four series constituting the
Reserve Fund), Reserve New York Tax-Exempt Trust--New York Tax-Exempt Fund and
the Reserve Tax-Exempt Trust--Connecticut, Florida, Interstate, Massachusetts,
Michigan, New Jersey, Ohio and Pennsylvania Tax-Exempt Funds (the "Trust") at
May 31, 1999, and the results of their operations for the year then ended, the
changes in their net assets for the periods presented, and the financial
highlights for the periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at May 31, 1999 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
July 23, 1999
2
<PAGE>
THE RESERVE FUND--PRIMARY FUND
STATEMENT OF NET ASSETS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT NEGOTIABLE BANK CERTIFICATES OF DEPOSIT -- 62.7% (NOTE 1)
- ------------ ------------------------------------------------ ------------
<S> <C> <C>
DOMESTIC -- 15.6%
$100,000,000 BankBoston, NA, 4.89%, 7/27/99............................................................. $ 100,000,000
100,000,000 Bankers Trust Co., NY, 4.92%, 6/30/99...................................................... 100,000,597
150,000,000 Morgan Guaranty Trust Co., N.Y., 4.88%, 7/12/99............................................ 150,000,000
100,000,000 PNC Bank N.A., 4.79%, 7/27/99 (a).......................................................... 99,988,961
70,000,000 South Trust Bank of Alabama NA, 4.88%, 7/26/99............................................. 70,000,000
--------------
519,989,558
--------------
EURO -- 24.5%
150,000,000 Abbey National PLC, 4.90%, 7/7/99.......................................................... 150,000,989
86,000,000 Credit Agricole Indosuez, 4.89%, 7/12/99................................................... 86,000,000
86,000,000 Dresdner Bank, 4.85%, 6/21/99.............................................................. 86,000,000
45,000,000 Int'l Nederlanden ING Bank, 4.93%, 6/30/99................................................. 44,999,693
150,000,000 Nat'l Westminster Bank PLC, 4.98%, 9/2/99*................................................. 150,000,000
150,000,000 Norddeutsche Landesbank, Girozentrale, 4.88%, 8/16/99...................................... 150,001,564
150,000,000 Svenska Handelsbanken, 4.87%, 6/8/99....................................................... 150,000,144
--------------
817,002,390
--------------
YANKEES -- 22.6%
107,000,000 Banque Nationale de Paris, 4.89%, 6/7/99................................................... 107,000,000
43,000,000 Banque Nationale de Paris, 4.95%, 8/27/99.................................................. 43,000,000
150,000,000 BHF Bank AG, 4.86%, 6/18/99................................................................ 150,000,000
150,000,000 Canadian Imperial Bank of Commerce, 4.82%, 6/28/99......................................... 150,000,000
150,000,000 Lloyds Bank PLC, 4.90%, 7/26/99............................................................ 150,000,000
150,000,000 Westdeutsche Landesbank Girozentrale, 4.88%, 6/16/99....................................... 150,000,000
--------------
750,000,000
--------------
Total Negotiable Bank Certificates of Deposit (Cost $2,086,991,948)........................ 2,086,991,948
--------------
COLLATERALIZED PROMISSORY NOTES--5.6% (B)
36,000,000 ABN/AMRO, 4.82%, 7/19/99................................................................... 35,768,400
150,000,000 Societe Generale North America, Inc., 4.83%, 6/9/99........................................ 149,838,833
--------------
Total Collateralized Promissory Notes (Cost $185,607,233).................................. 185,607,233
--------------
REPURCHASE AGREEMENTS--34.0%
608,000,000 Bear, Stearns & Co. Inc., 4.90%, 6/1/99 (collateralized by FGPC 6.5% to 7.5% due 8/1/09 to
9/1/28 valued at $37,121,128, FGSI 0% due 1/1/29 valued at $329,392, FNMS 6.0% to 9.0% due
7/1/04 to 2/1/29 valued at $299,653,900 and GNMA, 6.0% to 8.5%, due 4/1/09 to 5/15/29
valued at $292,138,983).................................................................... 608,000,000
525,000,000 Salomon Smith Barney, 4.90%, 6/1/99 (collateralized by FNMA 5.5% to 8.07% due 2/1/04 to
5/1/29 valued at $402,133,889 and FMAC 5.50% - 8.07%, due 2/1/04 to 3/1/33 valued at
$139,705,433).............................................................................. 525,000,000
--------------
Total Repurchase Agreements (Cost $1,133,000,000).......................................... 1,133,000,000
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
THE RESERVE FUND--PRIMARY FUND
STATEMENT OF NET ASSETS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAXABLE MUNICIPAL BONDS -- 1.9% (A) (NOTE 1) (NOTE 1)
- ------------ -------------------------------------------- --------------
<S> <C> <C>
$ 39,400,000 Florida Housing Finance Agency Housing Revenue Bonds 1993 Series A (LOC UBS AG), 4.88%,
1/1/34..................................................................................... $ 39,400,000
25,100,000 Illinois Student Assistance, 4.85% (LOC Sallie Mae), 12/1/22............................... 25,100,000
--------------
Total Taxable Municipal Bonds (Cost $64,500,000)........................................... 64,500,000
--------------
TOTAL INVESTMENTS (COST $3,470,099,181)...................................... 104.2% 3,470,099,181
LIABILITIES, LESS OTHER ASSETS............................................... (4.2) (140,036,090)
------ -------------
NET ASSETS................................................................... 100.0% $3,330,063,091
------ --------------
------ --------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE BASED ON
3,330,063,091 SHARES OF BENEFICIAL INTEREST $.001 PAR VALUE OUTSTANDING..................... $ 1.00
------
------
</TABLE>
- ---------------
(a) The interest rates, as reported May 31, 1999, are subject to change
periodically. Securities are payable on demand and are collateralized by
letters of credit, other bank credit agreements or financial guaranty
assurance agencies.
(b) Collateralized by bank letters of credit.
* Represents when-issued security.
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
THE RESERVE FUND--U.S. GOVERNMENT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT REPURCHASE AGREEMENTS -- 99.7% (NOTE 1)
- ------------ ------------------------------ ------------
<S> <C> <C>
$224,000,000 Bear, Stearns & Co. Inc., 4.88%, 6/1/99 (collateralized by GNMA, 4.50%--7.00%, due from
12/15/08 to 4/15/29 valued at $231,821,502).................................................... $224,000,000
177,000,000 DLJ Securities Corporation, 4.875%, 6/1/99 (collateralized by GNMA, 5.00%--9.30%, due from
3/15/01 to 5/15/34 valued at $182,310,504)..................................................... 177,000,000
213,000,000 Salomon Smith Barney, 4.90%, 6/1/99 (collateralized by GNMA, 6.00%--8.00%, due from 1/20/26 to
1/15/29 value at $219,390,000)................................................................. 213,000,000
100,000,000 Lehman Brothers, 4.84%, 6/1/99 (collateralized by GNMA, 6.00%--10.50% due from 1/20/16 to
3/15/29 valued at $102,988,383) 100,000,000
------------
TOTAL REPURCHASE AGREEMENTS (COST $714,000,000).................................... 99.7% 714,000,000
OTHER ASSETS, LESS LIABILITIES..................................................... .3 2,193,928
------ ------------
NET ASSETS......................................................................... 100.0% $716,193,928
------ ------------
------ ------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICES PER SHARE BASED ON 716,193,928
SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING...................................... $1.00
------
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
THE RESERVE FUND--U.S. TREASURY FUND
STATEMENT OF NET ASSETS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT U.S. TREASURY BILLS -- 99.0% (NOTE 1)
- ------------ ---------------------------- ------------
<S> <C> <C>
$ 28,500,000 4.30%-4.37%, 6/3/99............................................................................ $ 28,493,087
33,700,000 4.32%-4.49%, 6/10/99........................................................................... 33,662,516
25,200,000 4.445%-4.48%, 6/24/99.......................................................................... 25,127,936
38,500,000 4.315%-4.48%, 8/5/99........................................................................... 38,197,597
22,500,000 4.455%-4.475%, 8/12/99......................................................................... 22,298,725
37,000,000 4.41%-4.485%, 8/19/99.......................................................................... 36,636,830
38,000,000 4.515%, 8/26/99................................................................................ 37,590,138
36,700,000 4.29%-4.36%, 9/2/99............................................................................ 36,291,141
22,000,000 4.48%-4.51%, 9/9/99............................................................................ 21,726,139
4,000,000 4.48%-4.56%, 9/16/99........................................................................... 3,946,381
------------
TOTAL U.S. TREASURY BILLS (COST $283,970,490)...................................... 99.0% $283,970,490
OTHER ASSETS, LESS LIABILITIES..................................................... 1.0 2,731,575
------ ------------
NET ASSETS......................................................................... 100.0% $286,702,065
------ ------------
------ ------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICES PER SHARE BASED ON 286,702,065 SHARES OF
BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING............................................. $1.00
-----
-----
</TABLE>
GLOSSARY
FGPC -- FHLMC Gold Mortgage-Backed Pass-Through Participation Certificates
FGSI -- Freddie MAC Gold Strip Interest Portion
FNMS -- FNMA Mortgage-Backed Pass-Through Securities
FNMA -- Federal National Mortgage Association
FHLMC -- Federal Home Loan Mortgage Corporation
GNMA -- Government National Mortgage Association
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS -- 99.7% (NOTE 1)
- ------------ ------------------------------- ------------
<S> <C> <C>
ARIZONA -- 5.8%
$ 900,000 Apache County IDA for Tucson Electric Power Company Series 83A, 3.25%, 12/15/18 (a).............. $ 900,000
500,000 Apache County IDA for Tucson Electric Power Company Series 83B, 3.40%, 12/15/18 (a).............. 500,000
1,100,000 Arizona HFA for Pooled Loan Program, 3.40%, 10/1/15 (a).......................................... 1,100,000
550,000 Avondale IDA for National Health INVS, 3.30%, 12/1/14 (a)........................................ 550,000
1,985,000 Maricopa IDA for Orangewood CCRC Project, 3.35%, 2/1/29 (a)...................................... 1,985,000
2,300,000 Maricopa Pollution Control for Arizona Public Serv. Co., Series A, 3.30%, 5/1/29 (a)............. 2,300,000
3,500,000 Pima County IDA PCR for Tucson Electric Project, 3.25%, 12/1/22 (a).............................. 3,500,000
4,100,000 Pima County IDA PCR for Tucson Electric Project, 3.40%, 10/1/22 (a).............................. 4,100,000
2,225,000 Yavapai IDA for Regional Medical Center, Series B, 3.25%, 12/1/26 (a)............................ 2,225,000
------------
17,160,000
------------
CALIFORNIA -- .8%
2,000,000 California School District Cash Reserves Program GOB, 4.50%, 7/2/99.............................. 2,001,243
500,000 Irvine Ranch IMPT BD ACT 1915 Assessment DIST 85-7-I, 3.00%, 9/2/11 (a).......................... 500,000
------------
2,501,243
------------
COLORADO -- 1.4%
4,000,000 Colorado HFA for North Colorado Medical Center, 3.20%, 5/15/20 (a)............................... 4,000,000
------------
CONNECTICUT -- .9%
500,000 Connecticut HEF for Yale University Series T-1, 3.25%, 7/1/29 (a)................................ 500,000
2,000,000 Connecticut Special Tax Transportation Infrastructure Second Lien Revenue Bonds, 3.20%,
12/1/10 (a)..................................................................................... 2,000,000
------------
2,500,000
------------
DISTRICT OF COLUMBIA -- 3.7%
7,500,000 Washington, D.C. George Washington University, 3.35%, 3/1/06 (a)................................. 7,500,000
2,200,000 Washington, D.C. Housing Finance Agency RAW, 3.85%, 7/1/27 (a)................................... 2,200,000
1,220,000 Washington, D.C. National Children's Center Inc., 3.25%, 2/1/20 (a).............................. 1,220,000
------------
10,920,000
------------
FLORIDA -- 4.6%
100,000 Dade County HFA for Miami Children's Hospital, 3.85%, 9/1/25 (a)................................. 100,000
400,000 Dade County IDA for Dolphin Stadium Project Series B, 3.20%, 1/1/16 (a).......................... 400,000
1,000,000 Dade County IDA for Dolphin Stadium Project Series D, 3.20%, 1/1/16 (a).......................... 1,000,000
1,500,000 Florida Local Gov't Financial Auth. for Lake Wales Medical Centers Series A, 3.25%, 3/1/15 (a)... 1,500,000
10,000 Gulf Breeze Series 85 A Revenue Bonds, 3.25%, 12/1/15 (a)........................................ 10,000
4,500,000 Manatee PCR for Florida Power and Light, 3.30%, 9/1/24 (a)....................................... 4,500,000
2,000,000 Orange IDA for Lake Highland Prep School, 3.30%, 10/1/18 (a)..................................... 2,000,000
700,000 Pinellas Industrial Council--Chi Chi Rodriguez Youth Foundation, 3.30%, 8/1/16 (a)............... 700,000
2,200,000 Port St. Lucie PCR for Florida Power and Light, 3.30%, 1/1/26 (a)................................ 2,200,000
1,000,000 Sarasota HFA for Bay Village Project, 3.30%, 12/1/23 (a)......................................... 1,000,000
100,000 University of North Florida HEF for Capital Improvement Project, 3.30%, 11/1/24 (a).............. 100,000
------------
13,510,000
------------
GEORGIA -- 1.0%
1,000,000 Clayton Housing Auth. Multi Family for Rainwood Development, 3.47%, 5/1/06 (a)................... 1,000,000
1,800,000 Elbert County IDA for Seaboard Farms of Elberton, 3.25%, 7/1/05 (a).............................. 1,800,000
100,000 Hapeville IDA for Hapeville Hotel Partnership Project, 3.30%, 11/1/15 (a)........................ 100,000
------------
2,900,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
- ------------ ------------
<C> <S> <C> <C>
ILLINOIS -- 1.8%
$1,500,000 Chicago Emergency Telephone System GOB, 4.50%, 1/1/00............................................ $ 1,510,224
880,000 Illinois HFA for Community Hospital Center--B, 3.30%, 10/1/15 (a)................................ 880,000
1,400,000 Illinois HFA for Community Hospital Center--C, 3.30%, 10/1/15 (a)................................ 1,400,000
1,580,000 Streamwood IDA for Olde Church Centre Project, 3.40%, 12/1/14 (a)................................ 1,580,000
------------
5,370,224
------------
IOWA -- .6%
415,000 Buffalo IDA for Linwood Mining & Minerals, 3.65%, 1/1/00 (a)..................................... 415,000
1,000,000 Des Moines HFR for Iowa Methodist Med. Center Project, 3.25%, 8/1/15 (a)......................... 1,000,000
200,000 Polk County IDA for Convalescence Center, 4.00%, 1/1/11 (a)...................................... 200,000
------------
1,615,000
------------
KANSAS -- 3.4%
6,000,000 Olathe GOB Temp Notes Series A, 4.13%, 6/1/99.................................................... 6,000,000
3,800,000 Overland Parks Temp Notes, 3.50%, 4/29/00........................................................ 3,810,718
------------
9,810,718
------------
KENTUCKY -- .4%
1,210,000 Lexington Fayette RAW for Richmond Place Assoc. Project, 3.30%, 4/1/15 (a)....................... 1,210,000
------------
LOUISIANA -- 1.7%
700,000 Calcasieu Parish Sales Tax District 4A, 3.25%, 9/1/99............................................ 700,000
2,100,000 Louisiana Offshore Terminal Authority for Loop Inc., 1st Stage, 3.30%, 9/1/06 (a)................ 2,100,000
1,300,000 Louisiana Offshore Terminal Authority for Loop Inc., 1st Stage, 3.30%, 9/1/08 (a)................ 1,300,000
1,000,000 Louisiana Public Facilities Authority W. Kingston Med. Center, 3.40%, 9/1/25 (a)................. 1,000,000
------------
5,100,000
------------
MARYLAND -- 2.5%
1,200,000 Baltimore IDA for Baltimore Cap Acquisition, 3.20%, 8/1/16 (a)................................... 1,200,000
1,940,000 Baltimore Sheppard & Enoch Pratt Hospital, 3.30%, 7/1/21 (a)..................................... 1,940,000
1,900,000 Maryland IDA for Liberty Medical Center, 3.30%, 7/1/18 (a)....................................... 1,900,000
400,000 Montgomery County IDA for Info Systems and Network Corp., 3.95%, 4/1/14 (a)...................... 400,000
2,000,000 Prince George's County IDA for Frank Parsons Paper Co., 4.10%, 1/1/13 (a)........................ 2,000,000
------------
7,440,000
------------
MASSACHUSETTS -- 7.4%
200,000 Boston Water & Sewer Commission Rev. Bonds Series A, 3.25%, 11/1/24 (a).......................... 200,000
900,000 Massachusetts GOB Series 97, 3.25%, 8/1/15 (a)................................................... 900,000
1,400,000 Massachusetts HEF Brigham & Women's Hospital, 3.15%, 7/1/17 (a).................................. 1,400,000
1,000,000 Massachusetts HEF Capital Asset Program, 3.25%, 1/1/01 (a)....................................... 1,000,000
587,000 Massachusetts HEF for Harvard University, 3.15%, 2/1/16 (a)...................................... 587,000
1,000,000 Massachusetts HEF for Partners Health Care Systems, 3.25%, 7/1/27 (a)............................ 1,000,000
400,000 Massachusetts HEF for Partners Health Care Systems, 3.15%, 7/1/27 (a)............................ 400,000
500,000 Massachusetts HEFA for Hallmark Health System Series B, 3.15%, 7/1/27 (a)........................ 500,000
1,200,000 Massachusetts HEFA for Harvard University, 3.15%, 9/1/40 (a)..................................... 1,200,000
200,000 Massachusetts IFA for Goddard House, 3.15%, 11/1/25 (a).......................................... 200,000
700,000 Massachusetts IFA for Gordon College Series 97, 3.15%, 12/1/27 (a)............................... 700,000
800,000 Massachusetts IFA for Governor Dummer Academy, 3.15%, 7/1/26 (a)................................. 800,000
500,000 Massachusetts IFA for Milton Academy, 3.10%, 3/1/27 (a).......................................... 500,000
200,000 Massachusetts IFA for QUAMCO Inc., Series B, 3.25%, 9/1/01 (a)................................... 200,000
200,000 Massachusetts IFA for Whitehead Bio-Medical, 3.15%, 7/1/26 (a)................................... 200,000
1,500,000 Massachusetts Muni Wholesale Electric Co. Series C, 3.15%, 7/1/19 (a)............................ 1,500,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
- ------------ ---------------------------------- ------------
<S> <C> <C>
MASSACHUSETTS -- 7.4% (CONTINUED)
$1,300,000 Massachusetts Water Resource Authority, 3.15%, 4/1/28 (a)........................................ $ 1,300,000
9,063,000 Triton Regional School District BAN, 3.50%, 4/12/00.............................................. 9,089,503
------------
21,676,503
------------
MICHIGAN -- 4.6%
700,000 Bruce HFA for St. Joseph, Series A, 3.10%, 5/1/18 (a)............................................ 700,000
300,000 Delta EDC for Mead-Escanaba Paper, Series E, 3.35%, 12/1/23 (a).................................. 300,000
1,795,000 Garden City HFA for Garden City Hospital, 3.30%, 9/1/26 (a)...................................... 1,795,000
1,600,000 Grand Rapids Water Supply System, 3.20%, 1/1/20 (a).............................................. 1,600,000
3,100,000 Jackson EDC for Thrifty Leoni Inc. Project, 3.47%, 12/1/14 (a)................................... 3,100,000
300,000 Michigan HFA for St. Mary Hosp. of Livonia, 3.20%, 7/1/17 (a).................................... 300,000
1,900,000 Michigan HDA for Fairlane Meadows Harbortown Ltd., 3.47%, 6/1/04 (a)............................. 1,900,000
400,000 Michigan HDA for Fairlane Meadows, 3.25%, 12/1/07 (a)............................................ 400,000
1,900,000 Michigan Job Development Auth. for Gordon Food Service Project, 3.25%, 8/1/15 (a)................ 1,900,000
1,500,000 Royal Oak HFA for William Beaumont Hospital Series L, 3.35%, 1/1/27 (a).......................... 1,500,000
------------
13,495,000
------------
MINNESOTA -- .3%
64,091 New Brighton IDA for Taylor Corp. Series 1988, 4.96%, 11/1/99.................................... 64,091
705,000 New Hope Comm. Dev. Bonds for Nat'l. Beauty Proj. Ser. 1994, 3.55%, 5/1/10 (a)................... 705,000
------------
769,091
------------
MISSOURI -- 1.1%
625,000 Kansas City IDA Hospital Revenue for Baptist Health, Series A, 3.30%, 8/1/18 (a)................. 625,000
2,500,000 Missouri Development Finance Board for Union Station Project, 3.50%, 12/1/03 (a)................. 2,500,000
------------
3,125,000
------------
MONTANA -- .2%
515,000 Great Falls Comm. Dev. Bonds for Liberty Development Partners, 3.65%, 12/1/07 (a)................ 515,000
------------
NEBRASKA -- .3%
390,000 Buffalo County IDR for AgRex Inc. Project, 4.10%, 2/1/15 (a)..................................... 390,000
500,000 Nebraska EFA for Creighton University Project, 3.40%, 12/15/12 (a)............................... 500,000
------------
890,000
------------
NEW HAMPSHIRE -- 1.5%
4,300,000 Strafford TAN, 3.18%, 12/31/99................................................................... 4,300,721
------------
NEW JERSEY -- 8.2%
3,100,000 Burlington BAN, 3.62%, 10/18/99.................................................................. 3,103,705
12,500,000 East Orange BAN, 4.38%, 7/1/99................................................................... 12,503,699
1,460,000 Englewood Temp Notes, 3.70%, 7/16/99............................................................. 1,460,173
1,500,000 Essex Improvement Authority for the Childrens Institute Project, 3.15%, 2/1/20 (a)............... 1,500,000
200,000..... New Jersey EDA for Public Service Electric and Gas Co., Series A, 3.00%, 9/1/12 (a).............. 200,000
900,000 New Jersey EDA for Volvo of America Corp., 3.79%, 12/1/04 (a).................................... 900,000
500,000 New Jersey EFA for College of New Jersey, Series A, 3.17%, 7/1/29 (a)............................ 500,000
1,000,000 New Jersey Sports Exposition Authority, Series C, 3.00%, 9/1/24 (a).............................. 1,000,000
2,800,000 Vernon School District Temp Notes, Series B, 3.20%, 12/3/99...................................... 2,801,651
------------
23,969,228
------------
NEW MEXICO -- 1.2%
3,500,000 Farmington PCR for Arizona Public Service Co. Series B, 3.30%, 9/1/24 (a)........................ 3,500,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
- ------------ ---------------------------------- ------------
<S> <C> <C>
NEW YORK -- 16.5%
$4,300,000 Babylon UFSD TAN, 3.75%, 6/28/99................................................................. $ 4,300,368
5,000,000 Harrison CSD TAN, 3.75%, 6/30/99................................................................. 5,000,457
1,300,000 Long Island Power Authority Series 5, 3.30%, 5/1/33 (a).......................................... 1,300,000
2,700,000 New York City GOB Series A4, 3.30%, 8/1/23 (a)................................................... 2,700,000
4,625,000 New York City GOB Series A7, 3.40%, 8/1/20 (a)................................................... 4,625,000
1,200,000 New York City GOB Series A7, 3.40%, 8/1/21 (a)................................................... 1,200,000
1,000,000 New York City GOB Series B, 3.30%, 10/1/20 (a)................................................... 1,000,000
2,600,000 New York City GOB Series E3, 3.40%, 8/1/23 (a)................................................... 2,600,000
1,700,000 New York City GOB Series E4, 3.40%, 8/1/21 (a)................................................... 1,700,000
3,200,000 New York City GOB Series E4, 3.40%, 8/1/22 (a)................................................... 3,200,000
1,300,000 New York City GOB Series E5, 3.40%, 8/1/10 (a)................................................... 1,300,000
1,800,000 New York City GOB Series E5, 3.40%, 8/1/15 (a)................................................... 1,800,000
2,600,000 New York City GOB Series E5, 3.40%, 8/1/18 (a)................................................... 2,600,000
1,400,000 New York City GOB Series E5, 3.40%, 8/1/19 (a)................................................... 1,400,000
1,000,000 New York City GOB Series E6, 3.40%, 8/1/19 (a)................................................... 1,000,000
3,234,405 North Hempstead BAN, 3.50%, 10/28/99............................................................. 3,238,421
6,000,000 Riverhead CSD TAN, 3.75%, 6/25/99................................................................ 6,000,415
3,300,000 Williamson CSD RAN, 3.70%, 6/25/99............................................................... 3,300,124
------------
48,264,785
------------
NORTH DAKOTA -- .4%
1,100,000 Minot IDR for Nash Finch Co. Project, 4.20%, 12/1/02 (a)......................................... 1,100,000
------------
OHIO -- 6.2%
425,000 Brunswick IDR for Kinder-Care Learning Centers Project Series A, 3.60%, 6/1/02 (a)............... 425,000
900,000 Claremont HFR for Mercy Health Systems Series A, 3.20%, 12/1/21 (a).............................. 900,000
800,000 Columbus ERD for Electric Systems Revenue Bonds, 3.65%, 9/1/09 (a)............................... 800,000
900,000 Cuyahoga IDA for Allen Group Inc. Project, 3.20%, 12/1/15 (a).................................... 900,000
1,310,000 Cuyahoga IDA for Cleveland Clinic Series A, 3.30%, 1/1/16 (a).................................... 1,310,000
980,000 Franklin County Bonds for Kinder-Care Project Series A, 3.60%, 6/1/02 (a)........................ 980,000
3,465,000 Franklin County HRB for US Health Corp Series A, 3.25%, 12/1/21 (a).............................. 3,465,000
900,000 Lucas County HFR for Lutheran Homes Society Project, 3.25%, 11/1/19 (a) 900,000
2,900,000 Mahoning HFR for Forum Health Group Series B, 3.25%, 12/1/28 (a)................................. 2,900,000
900,000 Ohio Air Quality Dev. Auth. Cincinnati Gas & Electric, 3.30%, 9/1/30 (a)......................... 900,000
2,100,000 Ohio Air Quality Dev. Auth. COP, 3.05%, 6/17/99 2,100,000
1,655,000 Ottawa Hospital Facilities Luther Home of Mercy Project, 3.35%, 10/1/17 (a)...................... 1,655,000
1,010,000 Sharonville IDA for Edgecomb Metals Inc., 3.25%, 11/1/09 (a)..................................... 1,010,000
------------
18,245,000
------------
OKLAHOMA -- 1.2%
3,500,000 Oklahoma IDA for Christian College, 4.62%, 7/1/15 (a)............................................ 3,500,000
------------
PENNSYLVANIA -- 8.0%
1,000,000 Allegheny HDA for Allegheny General Hospital Series B, 4.30%, 9/1/20 (a)......................... 1,000,000
2,200,000 Allegheny HDA for Allegheny General Hospital Series B, 4.30%, 9/1/10 (a)......................... 2,200,000
400,000 Allegheny HDA for Children's Hospital Pittsburgh, Series B, 3.30%, 12/1/15 (a)................... 400,000
700,000 Allegheny University of Pittsburgh Project, Series 85, 3.15%, 7/1/15 (a)......................... 700,000
500,000 Bucks IDA for Edgecomb Metals Co., 3.25%, 10/1/09 (a)............................................ 500,000
1,000,000 Chartier Valley IDR Bonds for 1133 Penn Ave. Assoc., Series A, 3.30%, 8/1/07 (a)................. 1,000,000
1,140,000 Clarion County IDA Bonds for Meritcare Project, Series A, 3.30%, 12/1/12 (a)..................... 1,140,000
2,000,000 Dallastown Area School District GOB, 3.35%, 2/1/18 (a)........................................... 2,000,000
500,000 Dauphin General Authority Revenue Bonds, 3.35%, 11/1/17 (a)...................................... 500,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
- ------------ ---------------------------------- ------------
<S> <C> <C>
PENNSYLVANIA -- 8.0% (CONTINUED)
$1,200,000 Delaware Valley Finance Authority Rev. Bonds, Series B, 3.20%, 12/1/20 (a)....................... $ 1,200,000
2,000,000 Emmaus GOB Local Government Revenue Bonds, 3.25%, 12/1/28 (a).................................... 2,000,000
700,000 Lehigh IDA for Allentown Airport, 3.30%, 12/1/05 (a)............................................. 700,000
500,000 Mercersburg General Purpose Authority, 3.35%,11/1/27 (a)......................................... 500,000
900,000 Northeastern HEF for Wyoming Valley HCF, 3.20%, 1/1/24 (a)....................................... 900,000
2,640,000 Philadelphia MHR for Harbor View Tower Project, 3.30%, 11/1/27 (a)............................... 2,640,000
2,500,000 Philadelphia TRAN, 4.25%, 6/30/99................................................................ 2,501,177
1,500,000 Sayre HCF for Cap Financing Project, Series L, 3.30%, 12/1/20 (a)................................ 1,500,000
500,000 University of Pittsburgh Higher Education Capital Project Bonds, 3.15%, 1/1/19 (a)............... 500,000
1,500,000 York General Authority Pooled Financing, 3.25%, 9/1/26 (a)....................................... 1,500,000
------------
23,381,177
------------
PUERTO RICO -- .1%
300,000 Puerto Rico Commonwealth Highway & Transportation, Series A, 3.00%, 7/1/28 (a)................... 300,000
------------
SOUTH CAROLINA -- .9%
2,550,000 Piedmont Municipal Power Agency for S.C. Electric, Series B, 3.30%, 1/1/19 (a)................... 2,550,000
------------
TENNESSEE -- 1.3%
335,000 Chattanooga IDA for Baylor School Project, 3.30%, 11/1/16 (a).................................... 335,000
1,000,000 Clarksville Public Building Authority Pooled Financing, 3.25% 10/1/25 (a)........................ 1,000,000
1,665,000 Clarksville Public Building Authority Pooled Financing, 3.25%, 6/1/24 (a)........................ 1,665,000
765,000 Franklin HEF for Franklin Health Care Center Inc., 5.25%, 6/1/05 (a)............................. 765,000
------------
3,765,000
------------
TEXAS -- 1.0%
330,000 Bexar HFA for Army Retirement Community, Series B, 3.25%, 7/1/11 (a)............................. 330,000
1,700,000 Harris County HCF for Greater Houston Project, 3.40%, 11/1/25 (a)................................ 1,700,000
900,000 Midlothian IDC for Box-Crow Cement Co. Project, 3.30%, 12/1/09 (a)............................... 900,000
------------
2,930,000
------------
UTAH -- 2.0%
5,975,000 Salt Lake City IDR for Parkview Plaza Project, 3.40%, 12/1/14 (a)................................ 5,975,000
------------
VIRGINIA -- 4.6%
800,000 Alexandria Redevelopment & Housing Authority Residential Care, 3.40%, 10/1/06 (a)................ 800,000
2,145,000 Alexandria IDA for Pooled Loan Project Series A, 3.25%, 7/1/26 (a)............................... 2,145,000
375,000 Bristol IDA for Healthcare Center Inc., 4.90%, 3/1/10 (a)........................................ 375,000
1,000,000 Capital Region Airport Comm. for Richmond International Airport, 3.20%, 7/1/25 (a)............... 1,000,000
2,960,000 Hampton MHR for Avalon at Hampton I-A Project, 3.15%, 6/15/26 (a)................................ 2,960,000
1,600,000 Louisa IDA for Pooled Financing Municipal Bond Fund, 3.25%, 1/1/20 (a)........................... 1,600,000
1,000,000 Lynchburg IDA HRB for VHA Mid Atlantic States Inc., 3.35%, 12/1/25 (a)........................... 1,000,000
1,500,000 Newport News MHR for Newport--Oxford Project, 3.25%, 11/1/06 (a)................................. 1,500,000
100,000 Port Authority of Cincinnati and Hamilton for Kenwood Office Assn., 3.30%, 9/1/25 (a)............ 100,000
1,000,000 Roanoke IDA for Roanoke Memorial Hospital Series B, 3.40%, 7/1/19 (a)............................ 1,000,000
900,000 Roanoke IDA for Southern States Project, 3.75%, 8/1/04 (a)....................................... 900,000
------------
13,380,000
------------
WASHINGTON -- 2.9%
1,700,000 Port of Seattle IDC for Douglas Management Corp., 3.45%, 12/1/05 (a)............................. 1,700,000
6,800,000 Washington HCF for Sunnyside Community Hospital, 3.40%, 10/1/17 (a).............................. 6,800,000
------------
8,500,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
- ------------ ---------------------------------- ------------
<S> <C> <C>
WISCONSIN -- 1.2%
$3,500,000 Green Bay IDA for St. Mary's Holdings, Inc., 3.60%, 11/1/00 (a).................................. $ 3,500,000
------------
TOTAL INVESTMENTS (COST $291,668,690)................................................... 99.7% 291,668,690
OTHER ASSETS, LESS LIABILITIES.......................................................... .5 960,228
----- ------------
NET ASSETS.............................................................................. 100.0% $292,628,918
----- ------------
----- ------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON 292,628,918 SHARES OF
BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING................................................ $1.00
-----
-----
</TABLE>
- ------------------
(a) The interest rates, as reported on May 31, 1999, are subject to change
periodically. Securities payable on demand are collateralized by bank
letters of credit or other credit agreements.
SECURITY TYPE ABBREVIATIONS:
BAN -- Bond Anticipation Notes
COP -- Certificate of Participation
CSD -- Central School District
EDA -- Economic Development Authority Revenue Bonds
EDC -- Economic Development Corporation
EFA -- Economic Finance Authority
ERD -- Energy Research and Development Authority
GOB -- General Obligation Bonds
HCF -- Health Care Facility
HDA -- Hospital Development Authority
HEF -- Health and Educational Facilities Revenue Bonds
HEFA -- Health & Education Facilities Authority
HFA -- Health Facilities Authority Revenue Bonds
HFR -- Health Facilities Revenue Bonds
HRB -- Hospital Revenue Bonds
IDA -- Industrial Development Authority Revenue Bonds
IDC -- Industrial Development Corporation Revenue Bonds
IDR -- Industrial Development Agency Revenue Bonds
IFA -- Industrial Finance Agency Revenue Bonds
MHR -- Multi-family Housing Revenue Bonds
PCR -- Pollution Control Revenue Bonds
RAN -- Revenue Anticipation Notes
RAW -- Revenue Anticipation Warrants
TAN -- Tax Anticipation Notes
TRAN -- Tax & Revenue Anticipation Notes
UFSD -- Union Free School District
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
RESERVE NEW YORK TAX-EXEMPT TRUST--NEW YORK TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS -- 99.1% (NOTE 1)
- ------------ ------------------------------- ------------
<S> <C> <C>
$2,000,000 Babylon UFSD TAN, 3.75%, 6/28/99.................................................................. $2,000,171
2,420,000 Bleecker HDC Terrace Apt Project S85, 3.25%, 7/1/15 (a)........................................... 2,420,000
3,500,000 Deer Park UFSD TAN, 4.00%, 6/25/99................................................................ 3,500,890
2,740,000 Greece CSD RAN, 4.00%, 6/25/99.................................................................... 2,740,538
3,200,000 Guilderland IDA for North Eastern Industrial Park Ser. 1993 A, 3.20%, 12/1/08 (a)................. 3,200,000
3,165,000 Hempstead Town GOB, 4.00%, 8/15/99................................................................ 3,170,903
4,400,000 Ithaca CSD RAN, 3.875%, 6/29/99................................................................... 4,400,618
3,500,000 Jefferson IDA for Watertown Carthage Project, 3.75%, 12/1/12 (a).................................. 3,500,000
2,000,000 Kendall CSD TAN, 4.00%, 6/30/99................................................................... 2,000,382
3,000,000 Long Island Power Authority, NY Electric System SER 1, 3.25%, 5/1/33 (a).......................... 3,000,000
1,060,000 Nassau County GOB, 4.50%, 9/1/99.................................................................. 1,063,917
4,000,000 New York City GOB Custodial Receipts Series A31, 3.40%, 7/2/00 (a)................................ 4,000,000
700,000 New York City GOB Series A4, 3.30%, 8/1/22 (a).................................................... 700,000
6,000,000 New York City GOB Series A4, 3.30%, 8/1/23 (a).................................................... 6,000,000
5,000,000 New York City GOB Series A7, 3.40%, 8/1/20 (a).................................................... 5,000,000
1,000,000 New York City GOB Series A7, 3.40%, 8/1/21 (a).................................................... 1,000,000
1,600,000 New York City GOB Series A8, 3.30%, 8/1/17 (a).................................................... 1,600,000
500,000 New York City GOB Series B1, 3.30%, 8/15/22 (a)................................................... 500,000
1,050,000 New York City GOB Series B4, 3.30%, 8/15/23 (a)................................................... 1,050,000
7,600,000 New York City GOB Series B8, 3.05%, 8/15/24 (a)................................................... 7,600,000
300,000 New York City GOB Series D, 3.05%, 2/1/20 (a)..................................................... 300,000
3,500,000 New York City GOB Series D, 3.15%, 2/1/22 (a)..................................................... 3,500,000
2,800,000 New York City GOB Series D, 3.20%, 2/1/21 (a)..................................................... 2,800,000
3,000,000 New York City GOB Series E3, 3.40%, 8/1/23 (a).................................................... 3,000,000
2,700,000 New York City GOB Series E4, 3.40%, 8/1/21 (a).................................................... 2,700,000
4,000,000 New York City GOB Series E4, 3.40%, 8/1/22 (a).................................................... 4,000,000
1,800,000 New York City GOB Series E5, 3.40%, 8/1/10 (a).................................................... 1,800,000
1,200,000 New York City GOB Series E5, 3.40%, 8/1/16 (a).................................................... 1,200,000
800,000 New York City GOB Series E5, 3.40%, 8/1/18 (a).................................................... 800,000
1,100,000 New York City GOB Series E6, 3.40%, 8/1/19 (a).................................................... 1,100,000
1,750,000 New York City GOB Series F2, 3.25%, 2/15/12 (a)................................................... 1,750,000
5,000,000 New York City GOB Series F5, 3.05%, 2/15/16 (a)................................................... 5,000,000
3,500,000 New York City GOB Series J3, 3.15%, 2/15/16 (a)................................................... 3,500,000
5,900,000 New York City HDC Multifamily Mtg. for James Tower Proj., 3.05%, 7/1/05 (a)....................... 5,900,000
5,000,000 New York City IDA for Childrens Oncology Society, 3.15%, 5/1/21(a)................................ 5,000,000
920,000 New York City IDA for Goodwill Project, 3.05%, 3/1/00............................................. 920,000
1,500,000 New York City IDA for Stroheim & Romann, 3.10%, 12/1/15 (a)....................................... 1,500,000
966,000 New York City IDA American Civil Liberties, 3.05%, 6/1/12 (a)..................................... 966,000
1,570,000 New York City Municipal Water Finance Authority Series C, 3.30%, 6/15/22 (a)...................... 1,570,000
600,000 New York City Municipal Water Finance Authority Series C, 3.30%, 6/15/23 (a)...................... 600,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
RESERVE NEW YORK TAX-EXEMPT TRUST--NEW YORK TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
- ------------ ---------------------------------- ------------
<S> <C> <C>
$ 1,000,000 New York State Dormitory Authority for Public Library Revenue Bonds Series 1992B, 3.05%,
7/1/22 (a)................................................................................. $ 1,000,000
1,200,000 New York State Energy R & D Central Hudson Gas & Electric Corp., 3.10%, 6/1/27 (a)......... 1,200,000
1,200,000 New York State Energy R & D for Brooklyn Union Gas, 3.00%, 12/1/20 (a)..................... 2,000,000
1,700,000 New York State HFA for Mt. Sinai School, 3.25%, 11/1/14 (a)................................ 1,700,000
7,300,000 New York State HFA for Hormandie Court Series 91, 3.00%, 5/15/15 (a)....................... 7,300,000
11,200,000 New York State HFA Service Contract Rev. Bonds Series A, 3.05%, 3/15/27 (a)................ 11,200,000
1,200,000 New York State Dormitory Auth. for Oxford University Press, 3.10%, 7/1/25 (a).............. 1,200,000
9,220,000 New York State Local Government Assistance Corp., 1993A, 3.00%, 4/1/22 (a)................. 9,220,000
3,900,000 New York State Local Government Assistance Corp., Series B, 3.00%, 4/1/25 (a).............. 3,900,000
2,400,000 New York State Local Government Assistance Corp., Series C, 3.00%, 4/1/25 (a).............. 2,400,000
10,000,000 New York State Medical Care Facilities Finance Agency for St. Lukes Hospital, 7.45%,
2/15/29 (a)................................................................................ 10,492,195
4,000,000 North Hempstead BAN, 3.50%, 10/28/99....................................................... 4,006,811
1,100,000 Onondaga County IDR for Edgecomb Metals Project, 3.25%, 11/1/09 (a)........................ 1,100,000
2,800,000 Onondaga County IDR for McLane Co. Project, 3.75%, 11/1/04 (a)............................. 2,800,000
4,000,000 Riverhead CSD TAN, 3.75%, 6/25/99.......................................................... 4,000,277
4,000,000 Suffolk County IDR for Target Rock Corporation Rev. Bonds, 3.15%, 2/1/07 (a)............... 4,000,000
4,550,000 Syracuse IDA for General Accident Insurance Co. Project, 3.10%, 12/1/03 (a)................ 4,550,000
1,300,000 Yonkers IDR for Civic Revenue Bonds for Consumers Union, 3.15%, 7/1/19 (a)................. 1,300,000
4,500,000 Yonkers IDR for Consumers Union Facility, 3.15%, 7/1/21 (a)................................ 4,500,000
------------
TOTAL INVESTMENTS (COST $184,222,702)........................................... 99.1% 184,222,702
OTHER ASSETS, LESS LIABILITIES.................................................. .9 1,758,656
----- ------------
NET ASSETS...................................................................... 100.0% $185,981,358
----- ------------
----- ------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE BASED ON 185,981,358 SHARES OF
BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING......................................... $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
RESERVE TAX-EXEMPT TRUST--CONNECTICUT TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS -- 92.9% (NOTE 1)
- ----------- ------------------------------- -----------
<S> <C> <C>
$1,400,000 Connecticut DAI for Allen Group Inc., 3.80%, 2/1/13 (a)............................................ $ 1,400,000
700,000 Connecticut DAI for Conco Medical Co. Project Series 85, 3.00%, 11/1/05 (a)........................ 700,000
1,700,000 Connecticut DAI for General Accident Insurance Co., 3.10%, 12/1/13 (a)............................. 1,700,000
462,000 Connecticut DAI for Regional YMCA Project, 3.30%, 6/1/08 (a)....................................... 462,000
4,165,000 Connecticut Development Authority Health Care Revenue Bonds for Independent Living Project, 3.10%,
7/1/15 (a)......................................................................................... 4,165,000
1,400,000 Connecticut Development Authority PCR for Central Vermont Public Service, 3.55%, 12/1/15 (a)....... 1,400,000
1,400,000 Connecticut HEF for Housing Mortgage Finance Program Series G, 3.10%, 5/15/18 (a).................. 1,400,000
1,000,000 Connecticut HEF for Bradley Health Care Series B, 2.90%, 7/1/29 (a)................................ 1,000,000
1,500,000 Connecticut HEF for Charlotte Hospital Series C, 2.90%, 7/1/13 (a)................................. 1,500,000
350,000 Connecticut HEF for Kingswood Oxford School Issue Ser. A, 3.30%, 2/1/09 (a)........................ 350,000
365,000 Connecticut HEF for New Haven Hosp RAW Ser E, 3.70%, 6/1/12 (a).................................... 365,000
1,200,000 Connecticut HEF for Pomfret School Issue Series A, 3.20%, 7/1/24 (a)............................... 1,200,000
1,000,000 Connecticut HEF for Sharon Hospital Series A, 3.10%, 7/1/27 (a).................................... 1,000,000
4,500,000 Connecticut HEF for Yale University Series T, 3.25%, 7/1/29 (a).................................... 4,500,000
1,500,000 Connecticut Special Asmt Unemployment Comp RAW Series C, 3.60%, 11/15/01 (a)....................... 1,500,000
2,010,000 Connecticut Special Tax Obligation RAW Series C, 6.80%, 12/1/09 (a)................................ 2,088,240
1,900,000 Connecticut State GOB Economic Recovery Notes, 4.75%, 6/15/99...................................... 1,900,744
4,980,000 Connecticut State GOB Series B, 3.25%, 5/15/14 (a)................................................. 4,980,000
1,000,000 Connecticut State GOB Series C, 3.50%, 10/15/99.................................................... 1,001,817
500,000 Connecticut State HEFA for Quinnipiac College Series B, 3.25%, 7/1/19 (a).......................... 511,366
500,000 Connecticut State HEFA for Yale Univ. Series T-1, 3.25%, 7/1/29 (a)................................ 500,000
2,470,000 Connecticut State Special Tax Transportation Infrastructure Second Lien Revenue Bonds, 3.20%,
12/1/10 (a)....................................................................................... 2,470,000
3,500,000 Hartford Redev. Agency MHR for Underwood Towers Project, 3.15%, 6/1/20 (a)......................... 3,500,000
3,000,000 New Britain BAN, 3.15%, 4/12/00.................................................................... 3,003,247
1,700,000 Puerto Rico Electric Power Authority, 3.10%, 7/1/22 (a)............................................ 1,700,000
2,000,000 Puerto Rico Government Development Bank COP, 3.00%, 6/7/99......................................... 2,000,000
500,000 Puerto Rico Highway & Transportation Series A, 3.00%, 7/1/28 (a)................................... 500,000
1,200,000 Puerto Rico Ind. Med. & Envir. RAW for Reynolds Metals, 3.60%, 9/1/13 (a).......................... 1,200,000
500,000 Shelton, Connecticut HFA for Crosby Commons Project, 3.10%, 1/1/31 (a)............................. 500,000
3,000,000 South Windsor, BAN. 2.89%, 3/22/00................................................................. 3,000,339
-----------
TOTAL INVESTMENTS (COST $51,497,753)...................................................... 92.9% 51,497,753
OTHER ASSETS, LESS LIABILITIES............................................................ 7.1 3,940,925
----- -----------
NET ASSETS................................................................................ 100.0% $55,438,678
----- -----------
----- -----------
STATEMENT OF ASSETS AND LIABILITIES--MAY 31, 1999
ASSETS
Investments in securities, at value (cost $51,497,753)............................................. $51,497,753
Cash............................................................................................... 3,606,370
Accrued Interest receivable........................................................................ 340,629
-----------
Total Assets....................................................................................... 55,444,752
LIABILITIES
Other payables and accrued expenses................................................................ 6,074
-----------
NET ASSETS......................................................................................... $55,438,678
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON 55,438,678 SHARES OF BENEFICIAL
INTEREST, $.001 PAR VALUE OUTSTANDING............................................................. $1.00
-----
-----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
RESERVE TAX-EXEMPT TRUST--FLORIDA TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS -- 97.7% (NOTE 1)
- ------------ ------------------------------- -----------
<S> <C> <C>
FLORIDA -- 74.8%
$1,425,000 Brevard County MHR for Malabar Lakes Proj., 3.40%, 12/1/10 (a).................................... $ 1,425,000
800,000 Broward MHR for Welleby Apt. Project, Series 1984, 3.20%, 12/1/06 (a)............................. 800,000
300,000 Collier IDA HFA for Retirement Rental Housing Revenue Bonds, 3.25%, 12/1/15 (a)................... 300,000
200,000 Dade County for HFA--Miami Children's Hospital, 3.85%, 8/1/25 (a)................................. 200,000
200,000 Dade HFA Rev. Bonds for Miami Children's Hospital, 3.15%, 9/1/25 (a).............................. 200,000
100,000 Dade IDA for Aviation Authority Facilities, Series 84A, 3.35%, 10/1/09 (a)........................ 100,000
1,000,000 Dade IDA for Dolphin Stadium Project, Series D, 3.20%, 1/1/16 (a)................................. 1,000,000
600,000 Dade IDA for Dolphin Stadium Project, Series B, 3.20%, 1/1/16 (a)................................. 600,000
900,000 Duval HFA for Lakes of Mayport Apartment Project, 3.35%, 12/1/09 (a).............................. 900,000
100,000 Florida Gulf Coast GOB, Series 97, 3.25%, 8/1/27 (a).............................................. 100,000
200,000 Florida Local Gov. Auth. for Lake Wales Medical Center, Series A, 3.25%, 3/1/15 (a)............... 200,000
1,015,000 Florida State Turnpike Auth--Turnpike Revenue Bonds, 7.50%, 7/1/19 (a)............................ 1,038,951
305,000 Gulf Breeze IDA Revenue Bonds Series 85, 3.25%, 12/1/15 (a)....................................... 305,000
300,000 Hillsborough County IDA PCR for Gannon Coal, 3.30%, 5/15/18 (a)................................... 300,000
400,000 Hillsborough IDA PCR for Tampa Electric, 3.25%, 9/1/25 (a)........................................ 400,000
1,000,000 Hillsborough School Board Sales Tax Revenue Bonds, 5.00%, 10/1/99................................. 1,006,469
130,000 Jacksonville IDR for Coastal Islands Project, 3.45%, 8/1/08 (a)................................... 130,000
1,000,000 Jacksonville IDR for University Medical Center, 4.75%, 2/1/19 (a)................................. 1,000,000
400,000 Manatee PCR for Florida Power and Light, 3.30%, 9/1/24 (a)........................................ 400,000
605,000 Miami-Dade County GOB, 6.00%, 11/1/99............................................................. 612,051
1,500,000 Orange HFA for Mayflower Retirement, 3.25%, 3/1/18 (a)............................................ 1,500,000
1,000,000 Orange IDA for Trinity Prep School, 3.30%, 10/12/23 (a)........................................... 1,000,000
200,000 Palm Beach County--Florida Airport System, 5.50%, 10/1/99......................................... 201,570
500,000 Palm Beach PCR for Water and Sewer Project, 4.30%, 10/1/11 (a).................................... 500,000
400,000 Pinnellas County--Chi Chi Rodriguez Foundation, 3.30%, 8/1/16 (a)................................. 400,000
200,000 Port St. Lucie PCR for Florida Power and Light, 4.00%, 1/1/11 (a)................................. 200,000
500,000 Port St. Lucie PCR for Florida Power and Light, 3.30%, 1/1/26 (a)................................. 500,000
100,000 Putnam PCR for Florida Power and Light, 3.30%, 9/1/24 (a)......................................... 100,000
1,000,000 Sarasota Bay Village Project, 3.30%, 12/1/23 (a).................................................. 1,000,000
200,000 Tampa Occupational License Tax Bonds, 3.35%, 5/1/27 (a)........................................... 200,000
300,000 University of North Florida Capital Improvement Project, 3.30%, 11/1/24 (a)....................... 300,000
-----------
16,919,041
-----------
ARIZONA -- 1.3%
300,000 Apache IDA for Tucson Electric Power Company Series, 83A, 3.25%, 12/15/18 (a)..................... 300,000
-----------
DISTRICT OF COLUMBIA -- 7.1%
1,600,000 Washington, DC, George Washington University, 3.35%, 3/1/06 (a)................................... 1,600,000
-----------
LOUISIANA -- 3.5%
800,000 Calcasieu Parish Sales Tax District 4A, 3.25%, 9/1/99............................................. 800,000
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
RESERVE TAX-EXEMPT TRUST--FLORIDA TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--97.7% (CONTINUED) (NOTE 1)
- ------------ ----------------------------------------- ------------
<S> <C> <C>
CONNECTICUT -- 3.5%
$800,000 Connecticut Development Auth HCR for Independent Living Project, 3.10%, 7/1/15 (a)................ $ 800,000
-----------
MASSACHUSETTS -- .9%
200,000 Massachusetts GOB Series B, 3.25%, 8/1/15......................................................... 200,000
-----------
PENNSYLVANIA -- 2.2%
500,000 Delaware Valley Fin. Authority Rev. Bonds Series 85D, 3.20%, 12/1/20 (a).......................... 500,000
-----------
TEXAS -- 4.4%
1,000,000 Harris County HCF for Greater Houston Project, 3.40%, 11/1/25 (a)................................. 1,000,000
-----------
TOTAL INVESTMENTS (COST $22,119,041)..................................................... 97.7% 22,119,041
OTHER ASSETS, LESS LIABILITIES........................................................... 2.3 511,049
----- -----------
NET ASSETS............................................................................... 100.0% $22,630,090
----- -----------
----- -----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE BASED ON 22,630,090 SHARES OF
BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING................................................. $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
RESERVE TAX-EXEMPT TRUST--MASSACHUSETTS TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS -- 87.8% (NOTE 1)
- ----------- ------------------------------- -----------
<S> <C> <C>
$ 300,000 Boston Water and Sewer Commission Rev. Bonds, 3.25%, 11/1/24 (a)................................... $ 300,000
300,000 Framingham IDA for Perina Corp., 3.60%, 9/30/05 (a)................................................ 300,000
327,000 Greenfield GOB, 5.00%, 11/15/99.................................................................... 329,739
325,000 Long Meadow GOB, 4.00%, 11/15/99................................................................... 326,225
500,000 Massachusetts GOB Series 97, 3.25%, 8/1/15 (a)..................................................... 500,000
1,500,000 Massachusetts HEF for Capital Asset Program, 3.25%, 1/1/01 (a)..................................... 1,500,000
500,000 Massachusetts HEF for Harvard University, Series Q, 3.15%, 9/1/40 (a).............................. 500,000
600,000 Massachusetts HEF for Partnership Healthcare System, 3.15%, 7/1/27 (a)............................. 600,000
100,000 Massachusetts HEFA Capital Asset Series D, 3.30%,1/1/35 (a)........................................ 100,000
300,000 Massachusetts HEFA Capital Assist. Program Series, G-1, 3.05%, 1/1/19 (a).......................... 300,000
1,000,000 Massachusetts HEFA COP, 3.00%, 8/25/99............................................................. 1,000,000
500,000 Massachusetts HEFA for Endicott College Series B, 3.15%, 10/1/18(a)................................ 500,000
500,000 Massachusetts HEFA for Hallmark Health Systems Series B, 3.15%, 7/1/27 (a)......................... 500,000
1,000,000 Massachusetts HEFA for Harvard University, 3.15%, 2/1/16 (a)....................................... 1,000,000
100,000 Massachusetts HEFA for Harvard University, 3.15%, 8/1/17 (a)....................................... 100,000
400,000 Massachusetts HEFA for Wellesley College Series B, 3.15%, 7/1/22 (a)............................... 400,000
400,000 Massachusetts HEFA for Williams College Series E, 3.15%, 8/1/14 (a)................................ 400,000
300,000 Massachusetts IDA for KRH Rolls Project Series 1988, 3.75%, 5/1/06 (a)............................. 300,000
130,000 Massachusetts IFA for Composite Easy Day, 3.15%, 7/1/06 (a)........................................ 130,000
300,000 Massachusetts IFA for Emerson College, 3.15%, 11/1/25 (a).......................................... 300,000
800,000 Massachusetts IFA for Gordon College Series 97, 3.15%, 12/1/27 (a)................................. 800,000
200,000 Massachusetts IFA for Governor Dummer Academy, 3.15%, 7/1/26 (a)................................... 200,000
300,000 Massachusetts IFA for Holyoke Water Power Project, 3.20%, 5/1/22 (a)............................... 300,000
400,000 Massachusetts IFA for Milton Academy, 3.10%, 3/1/27 (a)............................................ 400,000
800,000 Massachusetts IFA for Quemco Series B, 3.35%, 9/1/01 (a)........................................... 800,000
800,000 Massachusetts IFA for Whitehead Institute Bio-Medical, 3.15%, 7/1/26 (a)........................... 800,000
100,000 Massachusetts Showa Women's Institute of Boston, 3.20%, 3/15/04 (a)................................ 100,000
1,490,000 Massachusetts Turnpike Authority BAN, 5.00%, 6/1/99................................................ 1,490,000
500,000 Massachusetts Water Resource Authority, 3.05%, 4/1/28 (a).......................................... 500,000
200,000 Massachusetts Water Resource Authority, 3.15%, 4/1/28 (a).......................................... 200,000
230,000 Southborough GOB, 6.50%, 11/15/99.................................................................. 233,360
1,500,000 Triton Regional School District BAN, 3.50%, 4/12/00................................................ 1,504,386
781,000 Westwood GOB, 4.00%, 12/15/99...................................................................... 784,747
-----------
TOTAL INVESTMENTS (COST $17,498,457)...................................................... 87.8% 17,498,457
OTHER ASSETS, LESS LIABILITIES............................................................ 12.2 2,429,834
----- -----------
NET ASSETS................................................................................ 100.0% $19,928,291
----- -----------
----- -----------
STATEMENT OF ASSETS AND LIABILITIES--MAY 31, 1999
ASSETS
Investments in securities, at value (cost $17,498,457)............................................. $17,498,457
Cash............................................................................................... 2,312,098
Accrued interest receivable........................................................................ 119,919
-----------
Total Assets....................................................................................... 19,930,474
LIABILITIES
Other payables and accrued expenses................................................................ 2,183
-----------
NET ASSETS......................................................................................... $19,928,291
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON 19,928,291 SHARES OF BENEFICIAL
INTEREST, $.001 PAR VALUE OUTSTANDING............................................................ $1.00
-----
-----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
RESERVE TAX-EXEMPT TRUST--MICHIGAN TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS -- 98.8% (NOTE 1)
- --------- ------------------------------- ----------
<S> <C> <C>
$100,000 Bruce Catholic Health, 3.10%, 5/1/18 (a)............................................................. $ 100,000
100,000 Delta EDC for Mead-Escanaba Paper E, 3.35%, 12/1/23 (a).............................................. 100,000
100,000 Garden City Hospital Finance Authority, 3.30%, 9/1/26 (a)............................................ 100,000
100,000 Grand Rapids Water Supply System, 3.20%, 1/1/20 (a).................................................. 100,000
100,000 Jackson EDC for Thrifty Leoni Inc. Project, 3.475%, 12/1/14 (a)...................................... 100,000
100,000 Michigan Hospital Finance Authority St. Mary Hospital of Livonia, 3.20%, 7/1/17 (a).................. 100,000
100,000 Michigan Housing Development Authority for Laurel, 3.25%, 12/1/07 (a)................................ 100,000
100,000 Michigan Housing Development Authority Harbortown Ltd., 3.47%, 6/1/04 (a)............................ 100,000
100,000 Michigan Job Development Authority for Gordon Food Service, 3.25%, 8/1/15 (a)........................ 100,000
100,000 Michigan Job Development Authority for Hitachi Metals, 4.15%, 1/1/04 (a)............................. 100,000
100,000 Puerto Rico Highway and Transportation Auth., 3.00%, 7/1/28 (a)...................................... 100,000
100,000 Royal Oak HFA for William Beaumont Hospital, Series L, 3.35%, 1/1/27 (a)............................. 100,000
----------
TOTAL INVESTMENTS (COST $1,200,000)......................................................... 98.8% 1,200,000
OTHER ASSETS, LESS LIABILITIES.............................................................. 1.2 14,305
----- ----------
NET ASSETS.................................................................................. 100.0% $1,214,305
----- ----------
----- ----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE BASED ON 1,214,305 SHARES OF BENEFICIAL
INTEREST, $.001 PAR VALUE OUTSTANDING.............................................................. $1.00
-----
-----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
RESERVE TAX-EXEMPT TRUST--NEW JERSEY TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS -- 99.5% (NOTE 1)
- ----------- ------------------------------- -----------
<S> <C> <C>
$2,000,000 Atlantic City Pooled Loan Program, 2.90%, 7/1/26 (a)............................................... $ 2,000,000
1,560,000 East Orange County BAN, 4.37%, 7/1/99.............................................................. 1,560,462
2,000,000 Englewood School Qualified Temporary Notes, 3.70%, 7/16/99......................................... 2,000,237
2,000,000 Essex County Improvement Authority, 3.15%, 12/01/25 (a)............................................ 2,000,000
1,500,000 Essex Improvement Authority for the Childrens Institute, 3.15%, 2/1/20 (a)......................... 1,500,000
2,000,000 Essex TAN, 3.50%, 11/18/99......................................................................... 2,003,174
2,073,340 Fairfield BAN, 3.25%, 1/26/00...................................................................... 2,074,587
100,000 Monmouth BAN, 3.10%, 8/1/16 (a).................................................................... 100,000
850,000 New Jersey EDA for A.R.C.--Volvo of Am Corp, 3.15%, 12/1/09 (a).................................... 850,000
700,000 New Jersey EDA for Bayonne IMTT Docking Revenue Bonds, 3.25%, 12/1/27 (a).......................... 700,000
710,000 New Jersey EDA for Economic Growth Bond, Series F, 3.10%, 8/1/14 (a)............................... 710,000
700,000 New Jersey EDA for Market Transition Bonds, 5.00%, 7/1/99.......................................... 701,014
900,000 New Jersey EDA, 3.10%, 8/1/08 (a).................................................................. 900,000
900,000 New Jersey EDA for St. James Preparatory School, 3.10%, 12/1/27 (a)................................ 900,000
1,005,000 New Jersey EDA for St. Peters School, Series 1995, 3.15%, 1/1/10 (a)............................... 1,005,000
2,000,000 New Jersey EDA for Stolthaven Proj., Series A, 3.25%, 1/15/18 (a).................................. 2,000,000
400,000 New Jersey EDA for Trailer Marine Corps Project, 3.25%, 2/1/02 (a)................................. 400,000
3,900,000 New Jersey EDA for Volvo of American Corp, 3.79%, 12/1/04 (a)...................................... 3,900,000
800,000 New Jersey EDA PCR for PSE&G Co., 3.00%, 9/1/12 (a)................................................ 800,000
385,000 New Jersey EDL for Princeton University, Series E, 4.00%, 7/1/99................................... 385,090
1,500,000 New Jersey EFA Series A, 3.17%, 7/1/29 (a)......................................................... 1,500,000
400,000 New Jersey HCF Hospital Capital Asset Series C, 3.00%, 7/1/35 (a).................................. 400,000
1,900,000 New Jersey Sports Expo Authority Series 92C, 3.00%, 9/01/24 (a).................................... 1,900,000
3,700,000 New Jersey Turnpike Authority General Series 91D, 3.05%, 1/1/18 (a)................................ 3,700,000
1,400,000 Port Authority NY and NJ, Series 2, 3.25%, 5/1/19 (a).............................................. 1,400,000
700,000 Port Authority NY and NJ, Liq. Facility, Series 5, 3.35%, 8/1/24................................... 700,000
2,000,000 Puerto Rico COP, 3.00%, 6/7/99..................................................................... 2,000,000
1,000,000 Vernon Board of Education Temporary Note, 3.20%, 12/3/99........................................... 1,000,589
2,000,000 Wharton Board of Education Temporary Note, 4.00%, 8/30/99.......................................... 2,001,666
-----------
TOTAL INVESTMENTS (COST $41,091,819)...................................................... 99.5% 41,091,819
OTHER ASSETS, LESS LIABILITIES............................................................ .5 224,677
----- -----------
NET ASSETS................................................................................ 100.0% $41,316,496
----- -----------
----- -----------
NET ASSET VALUE PER SHARE, OFFERING AND REDEMPTION PRICE PER SHARE BASED ON 41,316,496 SHARES OF
BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING................................................. $1.00
-----
-----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
RESERVE TAX-EXEMPT TRUST--OHIO TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS -- 97.3% (NOTE 1)
- --------- ------------------------------- ----------
<S> <C> <C>
$100,000 Claremont HEF for Mercy Health Systems, 3.20%, 12/1/21(a)............................................ $ 100,000
100,000 Columbus ERD Electric Systems Revenue Bonds, 3.65%, 9/1/09 (a)....................................... 100,000
90,000 Cuyahoga HFA for Cleveland Clinic Series A, 3.30%, 1/1/16 (a)........................................ 90,000
100,000 Cuyahoga IDA for Allen Group Project, 3.20%, 12/1/15 (a)............................................. 100,000
100,000 Franklin County Hosp. Revenue for US Health Corp., Series 96A, 3.25%, 12/1/21 (a).................... 100,000
100,000 Franklin County Industrial Development Refunding Revenue Bonds for Kinder-Care Learning Centers
Project, Series A, 3.60%, 6/1/02 (a)................................................................. 100,000
100,000 Lucas County EDA for Lutheran Home Society Project, 3.25%, 11/1/19 (a)............................... 100,000
100,000 County Forum Health Obligation Group, 3.25%, 12/1/28 (a)............................................. 100,000
100,000 Ohio State Air Quality Dev. Auth. for Cincinnati Gas & Elec., 3.30%, 9/1/30 (a)...................... 100,000
100,000 Ottawa County, HFR for Luther Home of Mercy, 3.35%, 10/1/17 (a)...................................... 100,000
100,000 Port Authority of Cincinnati and Hamilton Counties for Kenwood Office Association, 3.30%,9/1/25
(a)................................................................................................. 100,000
100,000 Sharonville IDA for Edgecomb Metals Inc., 3.25%, 11/1/09 (a)......................................... 100,000
----------
TOTAL INVESTMENTS (COST $1,190,000)......................................................... 97.3% 1,190,000
OTHER ASSETS, LESS LIABILITIES.............................................................. 2.7 32,486
----- ----------
NET ASSETS.................................................................................. 100.0% $1,222,486
----- ----------
----- ----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE BASED ON 1,222,486 SHARES OF BENEFICIAL
INTEREST, $.001 PAR VALUE OUTSTANDING.............................................................. $1.00
-----
-----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
RESERVE TAX-EXEMPT TRUST -- PENNSYLVANIA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--92.2% (NOTE 1)
- ----------- ----------------------------- -----------
<S> <C> <C>
$ 200,000 Allegheny Hosp. Dev. Auth. for Allegheny Hosp., Series B, 3.30%, 11/1/27 (a)....................... $ 200,000
1,000,000 Allegheny Hosp. Dev. Auth. for Allegheny Hosp., Series B, 4.30%, 9/1/20 (a)........................ 1,000,000
500,000 Allegheny Hosp. Dev. Auth., Childrens' Hosp. Pitt., Series B, 3.30%, 12/1/15 (a)................... 500,000
400,000 Allegheny IDA for Longwood at Oakmont, 3.30%, 7/1/27 (a)........................................... 400,000
1,000,000 Allegheny IDA for St. Francis Health Systems, 3.30%, 11/1/27 (a)................................... 1,000,000
700,000 Allegheny University of Pittsburgh Project, Series 85, 3.70%, 3/1/13 (a)........................... 700,000
700,000 Allegheny University of Pittsburgh Project, Series 85, 3.15%, 7/1/15 (a)........................... 700,000
1,000,000 Beaver IDA, Ohio Edison Co., Series A, 3.10%, 10/1/32 (a).......................................... 1,000,000
530,000 Bucks IDA for Edgecomb Metals Co., 3.25%, 10/1/09 (a).............................................. 530,000
564,000 Chartier Valley IDA Bonds for 1133 Penn Ave. Associates Project, Series A, 3.30%, 8/1/07 (a)....... 564,000
285,000 Clarion IDA for Meritcare Project, Series A, 3.30%, 12/01/12 (a)................................... 285,000
1,000,000 Delaware County IDA for Peco Energy Corp., 3.20%, 6/24/99.......................................... 1,000,000
1,000,000 Delaware Valley Regional Finance Authority Series 85, 3.20%, 12/1/20 (a)........................... 1,000,000
600,000 Emmaus GOB Local Government Revenue Bonds, 3.25%, 12/1/28 (a)...................................... 600,000
600,000 Lehigh IDA for Allentown Airport, 3.30%, 12/1/05 (a)............................................... 600,000
755,000 Mercersburg General Purpose Authority, 3.35%, 11/1/27 (a).......................................... 755,000
1,000,000 Montgomery County COP, 3.10%, 7/14/99.............................................................. 1,000,000
100,000 Northeastern HEF Wyoming Valley HCS Revenue Bonds, 3.20%, 1/1/24 (a)............................... 100,000
500,000 Pennsylvania Turnpike Authority, 7.50%, 12/1/19 (a)................................................ 520,625
585,000 Philadelphia Higher Ed. Auth. for Temple University, 3.35%, 10/1/09 (a)............................ 585,000
260,000 Philadelphia IDR for Educational Foreign MED Graduates, 3.90%, 6/1/99.............................. 260,000
200,000 Philadelphia MHR for Harbor View Tower Project, 3.30%, 11/1/27 (a)................................. 200,000
500,000 Philadelphia TRAN, 4.25%, 6/30/99.................................................................. 500,235
500,000 Sayre Health Care Facilities, 3.30%, 12/1/20 (a)................................................... 500,000
300,000 York County for Philadelphia Electric Corp., 3.30%, 8/1/16 (a)..................................... 300,000
525,000 York County General Auth. For Pooled Fin. Prog., Ser. A, 3.25%, 9/1/26 (a)......................... 525,000
300,000 York County General Auth. For Pooled Financing Prog., 3.30%, 9/1/26 (a)............................ 300,000
-----------
TOTAL INVESTMENTS (COST $15,624,860)...................................................... 92.2% 15,624,860
OTHER ASSETS, LESS LIABILITIES............................................................ 7.8 1,324,429
----- -----------
NET ASSETS................................................................................ 100.0% $16,949,289
----- -----------
----- -----------
STATEMENT OF ASSETS AND LIABILITIES--MAY 31, 1999
ASSETS
Investments in securities, at value (cost $15,624,860)............................................. $15,624,860
Cash............................................................................................... 1,223,545
Accrued Interest receivable........................................................................ 102,741
-----------
Total Assets....................................................................................... 16,951,146
LIABILITIES
Other payables and accrued expenses................................................................ 1,857
-----------
NET ASSETS......................................................................................... $16,949,289
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON 16,949,289 SHARES OF BENEFICIAL
INTEREST, $.001 PAR VALUE OUTSTANDING............................................................ $1.00
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
SECURITY TYPE ABBREVIATIONS:
BAN -- Bond Anticipation Notes
COP -- Certificate of Participation
CSD -- Central School District
DAI -- Development Authority Industrial Development
Refunding Bonds
EDA -- Economic Development Authority Revenue Bonds
EDC -- Economic Development Corporation
EFA -- Education Facilities Authority
ERD -- Energy Research and Development Authority
GOB -- General Obligation Bonds
HCF -- Health Care Facilities Revenue Bonds
HCR -- Housing Corporation Revenue Bonds
HDC -- Housing Development Corporation Bonds
HEF -- Health and Educational Facilities Revenue Bonds
HEFA -- Health & Education Facilities Authority
HFA -- Health Facilities Authority Revenue Bonds
HFR -- Housing Finance Revenue Bonds
IDA -- Industrial Development Authority Revenue Bonds
IDR -- Industrial Development Agency Revenue Bonds
IFA -- Industrial Finance Agency Revenue Bonds
MHR -- Multifamily Housing Revenue Bonds
PCR -- Pollution Control Revenue Bonds
RAN -- Revenue Anticipation Notes
RAW -- Revenue Anticipation Warrants
TAN -- Tax Anticipation Notes
TRAN -- Tax & Revenue Anticipation Notes
UFSD -- Union Free School District
- ------------------
(a) The interest rates, as reported on May 31, 1999, are subject to change
periodically. Securities payable on demand, are collateralized by bank
letters of credit or other credit agreements.
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
THE RESERVE FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1999
<TABLE>
<CAPTION>
U.S. U.S.
PRIMARY GOVERNMENT TREASURY
FUND FUND FUND
------------ ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME (Note 1)..................................................... $165,783,965 $36,980,516 $13,142,886
------------ ----------- -----------
EXPENSES (Note 2)
Management fee............................................................. 13,863,140 3,530,115 --
Comprehensive fee.......................................................... -- -- 2,208,713
Shareholder servicing, administration and general office expenses.......... 6,948,679 1,610,476 --
Distribution assistance.................................................... 5,750,544 1,300,163 552,300
Equipment expense.......................................................... 1,262,419 195,013 --
Occupancy costs............................................................ 1,513,097 142,472 --
Professional fees.......................................................... 777,312 167,588 --
Stationery, printing and supplies.......................................... 753,602 168,522 --
Custody fees............................................................... 157,092 35,198 --
Trustee fees............................................................... 65,255 14,626 --
Other...................................................................... 326,856 18,057 --
------------ ----------- -----------
Total Expenses before waiver............................................. 31,417,996 7,182,230 2,761,013
Less: expenses waived.................................................... -- -- (635,127)
------------ ----------- -----------
Net Expenses............................................................. 31,417,996 7,182,230 2,125,886
------------ ----------- -----------
NET INVESTMENT INCOME, representing net increase in
Net Assets from Investment Operations...................................... $134,365,969 $29,798,286 $11,017,000
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1999
<TABLE>
<S> <C>
INTEREST INCOME (Note 1)................................................................................... $12,194,696
-----------
EXPENSES (Note 2)
Management fee........................................................................................... 1,801,995
Shareholder servicing fee................................................................................ 732,644
Distribution assistance.................................................................................. 694,614
Equipment expense........................................................................................ 90,497
Professional fees........................................................................................ 92,722
Occupancy costs.......................................................................................... 69,202
Stationery, printing and supplies........................................................................ 105,528
Trustee fees............................................................................................. 7,355
Other expenses........................................................................................... 9,433
-----------
TOTAL EXPENSES............................................................................................. 3,603,990
-----------
NET INVESTMENT INCOME, representing net increase in Net Assets from Investment Operations.................. $ 8,590,706
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1999
<TABLE>
<CAPTION>
RESERVE NEW YORK
TAX-EXEMPT TRUST RESERVE TAX-EXEMPT TRUST
---------------- ----------------------------------------
NEW YORK CONNECTICUT FLORIDA MASSACHUSETTS
FUND FUND FUND FUND
---------------- ----------- -------- -------------
<S> <C> <C> <C> <C>
INTEREST INCOME (Note 1)................................ $6,004,656 $1,470,406 $731,595 $ 832,273
---------- ----------- -------- ---------
EXPENSES (Note 2)
Management fee........................................ 941,347 231,720 110,877 131,448
Shareholder servicing, administration
and general office expenses......................... 428,814 91,653 42,714 48,286
Distribution assistance............................... 329,640 73,475 44,350 7,054
Equipment expense..................................... 41,542 10,118 4,559 5,840
Professional fees..................................... 48,472 12,368 5,932 7,075
Occupancy costs....................................... 37,940 9,860 4,611 5,081
Stationery, printing and supplies..................... 48,795 13,804 6,853 7,589
Trustees' fee......................................... 3,831 959 480 556
Other expenses........................................ 2,314 19,482 1,378 49,967
---------- ----------- -------- ---------
Total Expenses...................................... 1,882,695 463,439 221,754 262,896
---------- ----------- -------- ---------
NET INVESTMENT INCOME $4,121,961 $1,006,967 $509,841 $ 569,377
---------- ----------- -------- ---------
---------- ----------- -------- ---------
<CAPTION>
RESERVE TAX-EXEMPT TRUST
------------------------------------------------------------
MICHIGAN NEW JERSEY OHIO PENNSYLVANIA
FUND* FUND FUND FUND
---------------- ----------- -------- -------------
<S> <C> <C> <C> <C>
INTEREST INCOME (Note 1)................................ $ 17,087 $1,428,892 $ 56,009 $ 617,300
---------- ----------- -------- ---------
EXPENSES (Note 2)
Management fee........................................ -- 225,279 8,867 94,163
Comprehensive fee..................................... 5,663 -- -- --
Shareholder servicing, administration
and general office expenses......................... -- 104,788 3,064 35,875
Distribution assistance............................... -- 85,492 54 36,193
Equipment expense..................................... -- 9,916 422 3,955
Professional fees..................................... -- 12,033 841 5,206
Occupancy costs....................................... -- 9,132 300 4,112
Stationery, printing and supplies..................... -- 2,987 1,379 6,612
Trustees' fee......................................... -- 932 34 406
Other expenses........................................ -- -- 2,774 1,803
---------- ----------- -------- ---------
Total Expenses before Waivers....................... 5,663 450,559 17,735 188,325
Expenses waived..................................... (2,881) -- (2,931) --
---------- ----------- -------- ---------
Total Expenses after Waivers........................ 2,782 450,559 14,804 188,325
---------- ----------- -------- ---------
NET INVESTMENT INCOME................................... $ 14,305 $ 978,333 $ 41,205 $ 428,975
---------- ----------- -------- ---------
---------- ----------- -------- ---------
</TABLE>
- ------------------
* For the period December 14, 1998 (Commencement of Operations) to May 31, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
THE RESERVE FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PRIMARY FUND U.S. GOVERNMENT FUND
----------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998 MAY 31, 1999 MAY 31, 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM
INVESTMENT OPERATIONS:
Net investment income........ $ 134,365,969 $ 115,231,501 $ 29,798,286 $ 29,697,721
--------------- --------------- --------------- ---------------
DIVIDENDS PAID TO SHAREHOLDERS
FROM:
Net investment income
(Note 1)................... (134,365,969) (115,231,501) (29,798,286) (29,697,721)
--------------- --------------- --------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00
per share):
Net proceeds from sale of
shares..................... 16,224,681,639 11,543,024,341 3,450,382,930 3,252,798,210
Dividends reinvested......... 134,365,969 115,231,501 29,798,286 29,697,721
Cost of shares redeemed...... (15,736,604,580) (11,054,744,831) (3,416,454,910) (3,241,872,625)
--------------- --------------- --------------- ---------------
Net increase derived from
capital share transactions and
from investment operations..... 622,443,028 603,511,011 63,726,306 40,623,306
NET ASSETS:
Beginning of year.............. 2,707,620,063 2,104,109,052 652,467,622 611,844,316
--------------- --------------- --------------- ---------------
End of year.................... $ 3,330,063,091 $ 2,707,620,063 $ 716,193,928 $ 652,467,622
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
<CAPTION>
U.S. TREASURY FUND
------------------------------------
YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998
----------------- ---------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM
INVESTMENT OPERATIONS:
Net investment income........ $ 11,017,000 $ 9,908,933
----------------- ---------------
DIVIDENDS PAID TO SHAREHOLDERS
FROM:
Net investment income
(Note 1)................... (11,017,000) (9,908,933)
----------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00
per share):
Net proceeds from sale of
shares..................... 1,315,560,422 1,135,200,601
Dividends reinvested......... 11,017,000 9,908,933
Cost of shares redeemed...... (1,279,635,650) (1,074,527,046)
----------------- ---------------
Net increase derived from
capital share transactions and
from investment operations..... 46,941,772 70,582,488
NET ASSETS:
Beginning of year.............. 239,760,293 169,177,805
----------------- ---------------
End of year.................... $ 286,702,065 $ 239,760,293
----------------- ---------------
----------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment income.............................................................. $ 8,590,706 $ 9,250,843
-------------- --------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1)..................................................... (8,590,706) (9,250,843)
-------------- --------------
FROM CAPITAL SHARE TRANSACTIONS (at net asset value of $1.00 per share):
Net proceeds from sale of shares................................................... 1,500,543,145 1,583,012,502
Dividends reinvested............................................................... 8,590,706 9,250,843
Cost of shares redeemed............................................................ (1,569,373,790) (1,545,546,354)
-------------- --------------
Net increase (decrease) in net assets derived from capital share transactions and from
investment operations................................................................ (60,239,939) 46,716,991
NET ASSETS:
Beginning of year.................................................................... 352,868,857 306,151,866
-------------- --------------
End of year.......................................................................... $ 292,628,918 $ 352,868,857
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
RESERVE NEW YORK TAX-EXEMPT TRUST
---------------------------------------------
NEW YORK FUND
---------------------------------------------
YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment income................. $ 4,121,961 $ 4,696,211
---------------- ----------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1)........ (4,121,961) (4,696,211)
---------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS (at net
asset value of $1.00 per share):
Net proceeds from sale of shares...... 727,809,717 748,322,717
Dividends reinvested.................. 4,121,961 4,696,211
Cost of shares redeemed............... (717,162,559) (734,986,773)
---------------- ----------------
Net increase in net assets derived from
capital share transactions and from
investment operations................... 14,769,119 18,032,155
NET ASSETS:
Beginning of year....................... 171,212,239 153,180,084
---------------- ----------------
End of year............................. $ 185,981,358 $ 171,212,239
---------------- ----------------
---------------- ----------------
<CAPTION>
RESERVE TAX-EXEMPT TRUST
------------------------------------------
CONNECTICUT FUND
------------------------------------------
YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998
----------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment income................. $ 1,006,967 $ 981,381
----------------- ----------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1)........ (1,006,967) (981,381)
----------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS (at net
asset value of $1.00 per share):
Net proceeds from sale of shares...... 169,702,015 141,307,597
Dividends reinvested.................. 1,006,967 981,381
Cost of shares redeemed............... (152,056,981) (138,998,804)
----------------- ----------------
Net increase in net assets derived from
capital share transactions and from
investment operations................... 18,652,001 3,290,174
NET ASSETS:
Beginning of year....................... 36,786,677 33,496,503
----------------- ----------------
End of year............................. $ 55,438,678 $ 36,786,677
----------------- ----------------
----------------- ----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
RESERVE TAX-EXEMPT TRUST
--------------------------------------------------------------------------
FLORIDA FUND MASSACHUSETTS FUND
------------------------------------ ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998 MAY 31, 1999 MAY 31, 1998
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
INVESTMENT OPERATIONS:
Net investment income...................... $ 509,841 $ 266,695 $ 569,377 $ 507,543
---------------- ---------------- --------------- ---------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1)............. (509,841) (266,695) (569,377) (507,543)
---------------- ---------------- --------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS (at net asset
value of $1.00 per share):
Net proceeds from sale of shares........... 141,741,605 99,350,457 76,638,806 72,967,159
Dividends reinvested....................... 509,841 266,695 569,377 507,543
Cost of shares redeemed.................... (130,438,595) (92,909,297) (82,662,880) (61,126,323)
---------------- ---------------- --------------- ---------------
Net increase (decrease) in net assets derived
from capital share transactions and from
investment operations........................ 11,812,851 6,707,855 (5,454,697) 12,348,379
NET ASSETS:
Beginning of year............................ 10,817,239 4,109,384 25,382,988 13,034,609
---------------- ---------------- --------------- ---------------
End of year.................................. $ 22,630,090 $ 10,817,239 $ 19,928,291 $ 25,382,988
---------------- ---------------- --------------- ---------------
---------------- ---------------- --------------- ---------------
<CAPTION>
MICHIGAN FUND
---------------
PERIOD ENDED
MAY 31, 1999(A)
---------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
INVESTMENT OPERATIONS:
Net investment income...................... $ 14,305
---------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1)............. (14,305)
---------------
FROM CAPITAL SHARE TRANSACTIONS (at net asset
value of $1.00 per share):
Net proceeds from sale of shares........... 2,100,000
Dividends reinvested....................... 14,305
Cost of shares redeemed.................... (900,000)
---------------
Net increase (decrease) in net assets derived
from capital share transactions and from
investment operations........................ 1,214,305
NET ASSETS:
Beginning of year............................ --
---------------
End of year.................................. $ 1,214,305
---------------
---------------
</TABLE>
- ------------------
(a) For the period December 14, 1998 (Commencement of Operations) to May 31,
1999.
SEE NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
RESERVE TAX-EXEMPT TRUST
-------------------------------------------------------------
NEW JERSEY FUND OHIO FUND
----------------------------- ---------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
YEAR ENDED MAY 31, MAY 31, MAY 31,
MAY 31, 1999 1998 1999 1998(B)
------------ ------------ ---------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment income.................. $ 978,333 $ 991,619 $ 41,205 $ 10,949
------------ ------------ ---------- ----------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1)......... (978,333) (991,619) (41,205) (10,949)
------------ ------------ ---------- ----------
FROM CAPITAL SHARE TRANSACTIONS (at net
asset value of $1.00 per share):
Net proceeds from sale of shares....... 223,758,247 234,261,239 2,750,308 4,357,301
Dividends reinvested................... 978,333 991,619 41,205 10,949
Cost of shares redeemed................ (221,020,524) (237,104,518) (4,075,632) (1,861,645)
------------ ------------ ---------- ----------
Net increase (decrease) in net assets
derived from capital share transactions
and from investment operations........... 3,716,056 (1,851,660) (1,284,119) 2,506,605
NET ASSETS:
Beginning of year........................ 37,600,440 39,452,100 2,506,605 --
------------ ------------ ---------- ----------
End of year.............................. $ 41,316,496 $ 37,600,440 $1,222,486 $2,506,605
------------ ------------ ---------- ----------
------------ ------------ ---------- ----------
<CAPTION>
PENNSYLVANIA FUND
---------------------------------
YEAR ENDED PERIOD ENDED
MAY 31, MAY 31,
1999 1998(C)
----------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment income.................. $ 428,975 $ 239,733
----------------- ------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1)......... (428,975) (239,733)
----------------- ------------
FROM CAPITAL SHARE TRANSACTIONS (at net
asset value of $1.00 per share):
Net proceeds from sale of shares....... 79,111,957 56,580,287
Dividends reinvested................... 428,975 239,733
Cost of shares redeemed................ (75,778,781) (43,632,882)
----------------- ------------
Net increase (decrease) in net assets
derived from capital share transactions
and from investment operations........... 3,762,151 13,187,138
NET ASSETS:
Beginning of year........................ 13,187,138 --
----------------- ------------
End of year.............................. $ 16,949,289 $ 13,187,138
----------------- ------------
----------------- ------------
</TABLE>
- ------------------
(b) For the period April 1, 1998 (Commencement of Operations) to May 31, 1998.
(c) For the period September 12, 1997 (Commencement of Operations) to May 31,
1998.
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
RESERVE NEW YORK TAX-EXEMPT TRUST ("NY TRUST")
RESERVE TAX-EXEMPT TRUST (CONNECTICUT, FLORIDA, INTERSTATE,
MASSACHUSETTS, NEW JERSEY, OHIO AND PENNSYLVANIA FUNDS) ("TRUST")
(THE NY TRUST AND TRUST ARE COLLECTIVELY REFERRED TO AS "TRUSTS")
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES:
The Funds/Trusts are registered under the Investment Company Act of 1940
as nondiversified, open-end management investment companies. The policies
summarized below are consistently followed in the preparation of their
financial statements in conformity with generally accepted accounting
principles.
A. The Fund and Trusts' authorized shares of beneficial interest are
unlimited. The Fund's shares are divided into four series: Primary, U.S.
Government, U.S. Treasury and the Strategist Money-Market. The Trust's
shares are divided into ten series: California, California II,
Connecticut, Florida, Interstate, Massachusetts, Michigan, New Jersey,
Ohio and Pennsylvania Tax-Exempt Funds (collectively the "Funds"). These
financial statements and notes apply to Primary, U.S. Government, U.S.
Treasury Funds of the Reserve Fund; Connecticut, Florida, Interstate,
Massachusetts, Michigan, New Jersey, Ohio, and Pennsylvania of Reserve
Tax-Exempt Trust and to the New York Fund of Reserve New York Tax-Exempt
Trust. These financial statements and notes apply to all funds mentioned
above except Strategist Money-Market Fund, California and California II
Tax-Exempt Funds.
B. Securities are valued at amortized cost which approximates market
value. The amortized cost method values a security at cost plus accrued
interest at the time of purchase and thereafter assumes a constant
amortization to maturity of any discount or premium, irrespective of
intervening changes in interest rates or market values. The maturity of
floating or variable rate instruments in which the Fund may invest will
be deemed to be, for floating rate instruments (1) the notice period
required before the Fund is entitled to receive payment of the principal
amount of the instrument; and for variable rate instruments the longer of
(1) above or (2) the period remaining until the instrument's next rate
adjustment, for purpose of Rule 2a-7 and for computing the portfolio's
average weighted life to maturity.
C. It is The Fund and Trusts' policy to comply with Subchapter M of the
Internal Revenue Code and to distribute all income to its shareholders.
Accordingly, no Federal income tax provision is required.
D. Security transactions are recorded on a trade date basis; interest
income is accrued daily and security premium or discount is amortized or
accreted daily. Net investment income is distributed to shareholders
daily and automatically reinvested in additional Fund shares.
E. All Funds except U.S. Treasury and Michigan are charged only for its
direct and/or allocated share of expenses (in proportion to net assets or
number of shareholder accounts). Please read Note 7, "Subsequent Events",
for more detail.
F. Funds may enter into repurchase agreements with financial institutions
and securities dealers who are deemed creditworthy pursuant to guidelines
established by the Funds' Board of Trustees. The Investment adviser will
follow procedures intended to provide that all repurchase agreements are
at least 100% collateralized as to principal and interest. However, in
the event of default or bankruptcy by the seller, realization and/or
retention of the collateral may be subject to legal proceedings. The
Funds' custodian holds the securities subject to repurchase agreements.
(2) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
Pursuant to an Investment Management Agreement (the "Agreement") between
Reserve Management Company, Inc. ("RMCI") and the Funds, RMCI serves as
the Funds' Investment Adviser subject to the direction of the Board of
Trustees. Under the Agreement, RMCI is responsible for the supervision of
the day-to-day operations of each Fund, manages the Fund's investments,
effects purchases and sales thereof, and absorbs certain promotional
expenses. For its services as Investment Adviser, RMCI receives a
management fee from each Fund, except U.S. Treasury Fund and Michigan,
calculated at an annual rate of .50% of the first $500 million, .475% of
the next $500 million, .45% of the next $500 million, .425% of the next
$500 million and .40% in excess of $2 billion of average daily net
assets. For its services as Investment Adviser of the U.S. Treasury Fund
and the Michigan Fund, RMCI receives a comprehensive fee, calculated at
an annual rate of .80% of the Fund's average daily net assets. RMCI has
voluntarily agreed to reduce the comprehensive fee of U.S. Treasury Fund
to an annual rate of .60% of average net assets. Please read Note 7,
"Subsequent Events", for more details.
31
<PAGE>
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
RESERVE NEW YORK TAX-EXEMPT TRUST ("NY TRUST")
RESERVE TAX-EXEMPT TRUST (CONNECTICUT, FLORIDA, INTERSTATE,
MASSACHUSETTS, NEW JERSEY, OHIO AND PENNSYLVANIA FUNDS) ("TRUST")
(THE NY TRUST AND TRUST ARE COLLECTIVELY REFERRED TO AS "TRUSTS")
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Under the current Service Agreement, RMCI is reimbursed for expenditures
made by RMCI on behalf of the Trust. During the year ended May 31, 1999,
RMCI was reimbursed the following amounts:
<TABLE>
<S> <C> <C> <C>
New York $ 611,708 New Jersey $ 139,788
Connecticut 158,246 Ohio 5,883
Florida 66,527 Pennsylvania 57,969
Massachusetts 124,394
</TABLE>
The Funds also reimburse RMCI for brokerage fees and commissions,
interest charges, taxes and extraordinary expenses, legal fees and
expenses, and the fees of the disinterested Trustees. Please read Note 7
"Subsequent Events" for more details regarding a new Investment Advisory
Agreement.
During the year ended May 31, 1999, RMCI voluntarily waived a portion of
its management fee and other operating expenses from U.S. Treasury Fund,
Michigan and Ohio Funds. The amounts reimbursed pursuant to the
undertaking amounted to $551,812, $2,881 and $2,931 to U.S. Treasury
Fund, Michigan and Ohio Funds, respectively.
DISTRIBUTION ASSISTANCE:
Pursuant to a Distribution Plan, each Fund, Trust and NY Trust will make
payments of up to .20% per annum of the average net asset value of the
Trust qualified shareholder accounts as to which the payee or RMCI has
rendered assistance in distributing its shares. RMCI has voluntarily
agreed to reduce the payments made by U.S. Treasury Fund to an annual
rate of .17%. During the year ended May 31, 1999, RMCI voluntarily
reimbursed the Fund a total of $83,315 pursuant to the undertaking.
(3) MANAGEMENT'S USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities on
the dates of the financial statements and the reported amounts of income
and expenses during the reporting periods. Actual results could differ
from those estimates.
(4) INVESTMENT CONCENTRATION:
The Trusts invest substantially all of their assets in portfolios of
tax-exempt debt obligations primarily consisting of issuers in each of
the respective states. The issuers' ability to meet their obligations may
be affected by economic, regional or political developments. In order to
reduce the credit risk associated with such factors, the Trusts invest
substantially in obligations backed by letters of credit, bond insurance
of financial institutions, or financial guaranty assurance agencies. At
May 31, 1999, the percentage invested in such obligations amounted to:
<TABLE>
<S> <C> <C> <C>
New York 81% Michigan 99%
Connecticut 69% New Jersey 68%
Florida 93% Ohio 89%
Massachusetts 64% Pennsylvania 86%
</TABLE>
32
<PAGE>
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
RESERVE NEW YORK TAX-EXEMPT TRUST ("NY TRUST")
RESERVE TAX-EXEMPT TRUST (CONNECTICUT, FLORIDA, INTERSTATE,
MASSACHUSETTS, NEW JERSEY, OHIO AND PENNSYLVANIA FUNDS) ("TRUST")
(THE NY TRUST AND TRUST ARE COLLECTIVELY REFERRED TO AS "TRUSTS")
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(5) COMPONENTS OF NET ASSETS:
At May 31, 1999, the components of each Fund and Trusts' net assets was
as follows:
<TABLE>
<CAPTION>
PRIMARY U.S. GOVERNMENT U.S. TREASURY INTERSTATE
-------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Par Value.......................................... $ 3,330,063 $ 716,194 $ 286,702 $ 292,629
Paid-in-Capital.................................... 3,326,733,028 715,477,734 286,415,363 292,336,289
-------------- ------------- ------------- -------------
Net Assets......................................... $3,330,063,091 $ 716,193,928 $ 286,702,065 $ 292,628,918
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
<CAPTION>
NEW YORK CONNECTICUT FLORIDA MASSACHUSETTS
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Par Value.......................................... $ 185,981 $ 55,439 $ 22,630 $ 19,928
Paid-in-Capital.................................... 185,795,377 55,383,239 22,607,460 19,908,363
-------------- ------------- ------------- -------------
Net Assets......................................... $ 185,981,358 $ 55,438,678 $ 22,630,090 $ 19,928,291
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
<CAPTION>
MICHIGAN NEW JERSEY OHIO PENNSYLVANIA
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Par Value.......................................... $ 1,214 $ 41,316 $ 1,222 $ 16,949
Paid-in-Capital.................................... 1,213,091 41,275,180 1,221,264 16,932,340
-------------- ------------- ------------- -------------
Net Assets......................................... $ 1,214,305 $ 41,316,496 $ 1,222,486 $ 16,949,289
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
</TABLE>
(6) FINANCIAL HIGHLIGHTS:
Contained below is per share operating performance data for a share of
beneficial interest outstanding for each of the periods as indicated.
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED MAY 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PRIMARY FUND
Net asset value beginning of year............................ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
Net investment income from investment operations............. .0438 .0483 .0457 .0490 .0450
Less dividends from net investment income.................... (.0438) (.0483) (.0457) (.0490) (.0450)
-------- -------- -------- -------- --------
Net asset value at end of year............................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total Return................................................. 4.38% 4.83% 4.57% 4.90% 4.50%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions)............................ $3,330.1 $2,707.6 $2,104.1 $1,664.1 $1,602.5
Ratio of expenses to average net assets...................... 1.00% .94% .98% .98% .97%
Ratio of net investment income to average net assets......... 4.26% 4.71% 4.47% 4.79% 4.42%
</TABLE>
33
<PAGE>
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
RESERVE NEW YORK TAX-EXEMPT TRUST ("NY TRUST")
RESERVE TAX-EXEMPT TRUST (CONNECTICUT, FLORIDA, INTERSTATE,
MASSACHUSETTS, NEW JERSEY, OHIO AND PENNSYLVANIA FUNDS) ("TRUST")
(THE NY TRUST AND TRUST ARE COLLECTIVELY REFERRED TO AS "TRUSTS")
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED MAY 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT FUND
Net asset value beginning of year............................ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
Net investment income from investment operations............. .0426 .0471 .0449 .0484 .0441
Less dividends from net investment income.................... (.0426) (.0471) (.0449) (.0484) (.0441)
-------- -------- -------- -------- --------
Net asset value at end of year............................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total Return................................................. 4.26% 4.71% 4.49% 4.84% 4.41%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions)............................ $ 716.2 $ 652.5 $ 611.8 $ 568.5 $ 721.8
Ratio of expenses to average net assets...................... 1.00% .99% .99% 1.00% .99%
Ratio of net investment income to average net assets......... 4.16% 4.63% 4.40% 4.75% 4.31%
U.S.TREASURY FUND
Net asset value beginning of year............................ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
Net investment income from investment operations............. .0410 .0456 .0443 .0466 .0456
Less dividends from net investment income.................... (.0410) (.0456) (.0443) (.0466) (.0456)
-------- -------- -------- -------- --------
Net asset value at end of year............................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total Return................................................. 4.10% 4.56% 4.43% 4.66% 4.56%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions)............................ $ 286.7 $ 239.8 $ 169.2 $ 142.8 $ 95.2
Ratio of expenses to average net assets (a).................. 1.00% .97% .97% .99% .93%
Ratio of net investment income to average net assets......... 3.76% 4.26% 4.13% 4.33% 4.44%
INTERSTATE TAX-EXEMPT FUND
Net asset value, beginning of year........................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
Net investment income from investment operations............. .0245 .0279 .0256 .0285 .0265
Less dividends from net investment income.................... (.0245) (.0279) (.0256) (.0285) (.0265)
-------- -------- -------- -------- --------
Net asset value, end of year................................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total Return................................................. 2.45% 2.79% 2.56% 2.85% 2.65%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions)............................ $ 292.6 $ 352.9 $ 306.2 $ 292.1 $ 315.2
Ratio of expenses to average net assets...................... 1.00% .97% 1.04% 1.04% 1.00%
Ratio of net investment income to average net assets......... 2.38% 2.75% 2.52% 2.80% 2.59%
</TABLE>
34
<PAGE>
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
RESERVE NEW YORK TAX-EXEMPT TRUST ("NY TRUST")
RESERVE TAX-EXEMPT TRUST (CONNECTICUT, FLORIDA, INTERSTATE,
MASSACHUSETTS, NEW JERSEY, OHIO AND PENNSYLVANIA FUNDS) ("TRUST")
(THE NY TRUST AND TRUST ARE COLLECTIVELY REFERRED TO AS "TRUSTS")
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
FOR FISCAL YEARS ENDED MAY 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NEW YORK TAX-EXEMPT FUND
Net asset value, beginning of year........................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
Net investment income........................................ .0222 .0268 .0247 .0276 .0253
Less dividends from net investment income.................... (.0222) (.0268) (.0247) (.0276) (.0253)
-------- -------- -------- -------- --------
Net asset value, end of year................................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total Return................................................. 2.22% 2.68% 2.47% 2.76% 2.53%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions)............................ $ 186.0 $ 171.2 $ 153.2 $ 125.5 $ 152.9
Ratio of expenses to average net assets...................... 1.00% .94% 1.04% 1.04% .98%
Ratio of net investment income to average net assets......... 2.19% 2.63% 2.43% 2.72% 2.48%
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CONNECTICUT TAX-EXEMPT FUND
Net asset value, beginning of year........................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
Net investment income........................................ .0221 .0267 .0243 .0266 .0254
Less dividends from net investment income.................... (.0221) (.0267) (.0243) (.0266) (.0254)
-------- -------- -------- -------- --------
Net asset value, end of year................................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total Return................................................. 2.21% 2.67% 2.43% 2.66% 2.54%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions)............................ $ 55.4 $ 36.8 $ 33.5 $ 34.8 $ 26.6
Ratio of expenses to average net assets...................... 1.00% .89% .97% 1.01% .99%(d)
Ratio of net investment income to average net assets......... 2.17% 2.64% 2.39% 2.61% 2.23%(d)
</TABLE>
35
<PAGE>
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
RESERVE NEW YORK TAX-EXEMPT TRUST ("NY TRUST")
RESERVE TAX-EXEMPT TRUST (CONNECTICUT, FLORIDA, INTERSTATE,
MASSACHUSETTS, NEW JERSEY, OHIO AND PENNSYLVANIA FUNDS) ("TRUST")
(THE NY TRUST AND TRUST ARE COLLECTIVELY REFERRED TO AS "TRUSTS")
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31,
--------------------------------------------------------
1999 1998 1997(B)
-------- -------- --------
<S> <C> <C> <C> <C> <C>
FLORIDA TAX-EXEMPT FUND
Net asset value, beginning of year........................... $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- --------
Net investment income........................................ .0237 .0269 .0228
Less dividends from net investment income.................... (.0237) (.0269) (.0228)
-------- -------- --------
Net asset value, end of year................................. $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- --------
-------- -------- --------
Total Return................................................. 2.37% 2.69% 2.42%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions)............................ $ 22.6 $ 10.8 $ 4.1
Ratio of expenses to average net assets...................... 1.00% .94% 1.04%(c)
Ratio of net investment income to average net assets......... 2.30% 2.62% 2.39%(c)
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEARS ENDED MAY 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
MASSACHUSETTS TAX-EXEMPT FUND
Net asset value, beginning of year........................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
Net investment income........................................ .0220 .0284 .0259 .0276 .0265
Less dividends from net investment income.................... (.0220) (.0284) (.0259) (.0276) (.0265)
-------- -------- -------- -------- --------
Net asset value, end of year................................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total Return................................................. 2.20% 2.84% 2.59% 2.76% 2.65%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions)............................ $ 19.9 $ 25.4 $ 13.0 $ 9.0 $ 10.2
Ratio of expenses to average net assets...................... 1.00% .75% .83%(d) .89%(d) .80%(d)
Ratio of net investment income to average net assets......... 2.17% 2.78% 2.54%(d) 2.66%(d) 2.69%(d)
</TABLE>
<TABLE>
<CAPTION>
MICHIGAN TAX-
EXEMPT FUND NEW JERSEY TAX-EXEMPT FUND
PERIOD ENDED --------------------------------------------------------
MAY 31, FISCAL YEARS ENDED MAY 31,
------------- --------------------------------------------------------
1999(E) 1999 1998 1997 1996 1995(F)
------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
------- -------- -------- -------- -------- --------
Net investment income........................ .0118 .0223 .0254 .0236 .0263 .0243
Less dividends from net investment income.... (.0118) (.0223) (.0254) (.0236) (.0263) (.0243)
------- -------- -------- -------- -------- --------
Net asset value, end of period............... $1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
------- -------- -------- -------- -------- --------
------- -------- -------- -------- -------- --------
Total Return................................. 2.55%(c,d) 2.23% 2.54% 2.36% 2.63% 2.43%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (millions).......... $ 1.2 $ 41.3 $ 37.6 $ 39.5 $ 41.0 $ 21.6
Ratio of expenses to average net assets...... 1.00%(c,d) 1.00% .99% 1.06% 1.04% 1.02%(c,d)
Ratio of net investment income to to average
net assets................................. 2.02%(c,d) 2.17% 2.50% 2.33% 2.59% 2.81%(c,d)
</TABLE>
36
<PAGE>
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
RESERVE NEW YORK TAX-EXEMPT TRUST ("NY TRUST")
RESERVE TAX-EXEMPT TRUST (CONNECTICUT, FLORIDA, INTERSTATE,
MASSACHUSETTS, NEW JERSEY, OHIO AND PENNSYLVANIA FUNDS) ("TRUST")
(THE NY TRUST AND TRUST ARE COLLECTIVELY REFERRED TO AS "TRUSTS")
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
MAY 31,
------------------
1999 1998(G)
------- -------
<S> <C> <C>
OHIO TAX-EXEMPT FUND
Net asset value, beginning of period........................................................... $1.0000 $1.0000
------- -------
Net investment income.......................................................................... .0236 .0048
Less dividends from net investment income...................................................... (.0236) (.0048)
------- -------
Net asset value, end of period................................................................. $1.0000 $1.0000
------- -------
------- -------
Total Return................................................................................... 2.36% 2.87%(c)
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (millions)............................................................ $ 1.2 $ 2.5
Ratio of expenses to average net assets........................................................ 1.00%(d) 1.00%(c)
Ratio of net investment income to average net assets........................................... 2.16%(d) 2.86%(c)
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31,
------------------
1999 1998(H)
------- -------
<S> <C> <C>
PENNSYLVANIA TAX-EXEMPT FUND
Net asset value, beginning of period........................................................... $1.0000 $1.0000
------- -------
Net investment income.......................................................................... .0234 .0189
Less dividends from net investment income...................................................... (.0234) (.0189)
------- -------
Net asset value, end of period................................................................. $1.0000 $1.0000
------- -------
------- -------
Total Return................................................................................... 2.34% 2.64%(c)
RATIOS/SUPPLEMENTAL DATA
Net asset, end of period (millions)............................................................ $ 16.9 $ 13.2
Ratio of expenses to average net assets........................................................ 1.00% 1.00%(c)
Ratio of net investment income to average net assets........................................... 2.28% 2.62%(c)
</TABLE>
- ---------------
(a) Net of fees and other expenses. Had RMCI not undertaken to reduce expenses,
the net expense ratios would have amounted to:
<TABLE>
<CAPTION>
NET
EXPENSE INVESTMENT
FISCAL YEAR RATIO INCOME
- ------------------------ ------------------------ ------------------------
<S> <C> <C>
1999 .77% 3.99%
1998 .77% 4.46%
1997 .77% 4.33%
1996 .79% 4.53%
1995 .68% 4.64%
</TABLE>
(b) From June 24, 1996 (Commencement of Operations) to May 31, 1997.
(c) Annualized.
37
<PAGE>
THE RESERVE FUND (THE "FUND")
PRIMARY, U.S. GOVERNMENT AND U.S. TREASURY FUNDS (THE "FUNDS")
RESERVE NEW YORK TAX-EXEMPT TRUST ("NY TRUST")
RESERVE TAX-EXEMPT TRUST (CONNECTICUT, FLORIDA, INTERSTATE,
MASSACHUSETTS, NEW JERSEY, OHIO AND PENNSYLVANIA FUNDS) ("TRUST")
(THE NY TRUST AND TRUST ARE COLLECTIVELY REFERRED TO AS "TRUSTS")
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(d) Due to the voluntary waiver of certain expenses by RMCI for certain funds,
the actual expense ratios and net investment income amounted to:
<TABLE>
<CAPTION>
NET
EXPENSE INVESTMENT
FUND FISCAL YEAR RATIO INCOME
- ---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Connecticut 1995 .89% 2.33%
Massachusetts 1997 .79% 2.58%
1996 .84% 2.71%
1995 .69% 2.80%
Michigan 1999 .49% 2.53%
New Jersey 1995 1.01% 2.82%
Ohio 1999 .83% 2.32%
</TABLE>
(e) From December 14, 1998 (Commencement of Operations) to May 31, 1999.
(f) From October 17, 1994 (Commencement of Operations) to May 31, 1995.
(g) From April 1, 1998 (Commencement of Operations) to May 31, 1998.
(h) From September 12, 1997 (Commencement of Operations) to May 31, 1998.
(7) SUBSEQUENT EVENTS:
On June 22, 1999, a new Investment Management Agreement between the Funds
comprising Reserve Funds, Reserve New York Tax-Exempt Trust and Reserve
Tax-Exempt Trust, and RMCI went into effect. Under the new Agreement, all
Funds subject to a management fee converted to a comprehensive fee
charged at an annual rate of .80% of each Fund's average daily net
assets. The comprehensive fee is an all-inclusive fee, and the Funds no
longer will be charged expenses as described in Note 2, but will not
include such charges as brokerage fees and commissions, interest charges,
taxes and extraordinary expenses, legal fees and expenses, and the fees
of the disinterested Trustees.
38
<PAGE>
9. SUPPLEMENTAL PROXY INFORMATION (UNAUDITED):
A. THE RESERVE FUND
The Special Meeting of Shareholders of The Reserve Fund (consisting of four
Funds: Primary Fund, U.S. Government Fund, U.S. Treasury Fund, and Strategist
Money-Market Fund); was held on January 15, 1999 at the offices of The Reserve
Funds, 810 Seventh Avenue, New York, NY. The meeting was adjourned until
February 17, 1999, at which time it was held. The meeting was held 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 to permit the issuance of multiple classes of
shares Trust Vote
PROPOSAL 4
To approve the following proposed amendments:
A. To amend the Declaration of Trust to eliminate the policy on pricing securities; Trust Vote
B. To amend the Declaration of Trust to permit non-material amendments; Trust Vote
C. To amend the Declaration of Trust concerning the right to vote portfolio securities; Trust Vote
D. To amend the Declaration of Trust concerning termination or reorganization of the Trust; Trust Vote
E. To amend the Trusts' fundamental investment policy on the issuance of senior securities; All Funds
F. To amend the Trusts' fundamental investment policy regarding underwriting; All Funds
G. To change the designation of the Trusts' fundamental investment policy on investing for control of
portfolio companies; All Funds
H. To eliminate the Trusts' fundamental investment policies regarding certain portfolio transactions; All Funds
I. To eliminate the Trusts' fundamental investment policy on investing in the securities of other
investment companies; All Funds
J. To amend the Trusts' By-Laws concerning amendments thereto Trust Vote
PROPOSAL 5
To approve changes to the Trusts' Fundamental Investment Policies to Permit a Master Fund/Feeder Fund
Structure All Funds
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
PROPOSAL 7
To ratify the selection of PricewaterhouseCoopers LLP as independent public accountants for the fiscal
year ending May 31, 1999; and Trust Vote
PROPOSAL 8
To transact such other business as may properly come before the Meeting Such Funds
as Necessary
</TABLE>
39
<PAGE>
9. SUPPLEMENTAL PROXY INFORMATION (UNAUDITED) (CONTINUED)
A Quorum of the shares of the Trust and the Funds was present at the
Meeting.
The results of the proxy solicitation as to the Trust and the Primary, U.S.
Government and U.S. Treasury Fund on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES WITHHELD/
(1) Board of Trustees VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ------------- ---------------- -----------
<S> <C> <C> <C> <C>
Bruce R. Bent 7,168,944 -- 273,121,130 --
Edwin Ehlert, Jr. 2,157,908,386 -- 272,381,688 --
Henri Emmet 2,156,748,779 -- 273,541,295 --
Donald Harrington 2,158,437,954 -- 271,852,115 --
Bruce R. Bent II .153,825,061 -- 276,465,013 --
William Viklund 2,159,301,036 -- 270,989,038 --
Vincent Mattone 2,158,780,203 -- 271,509,871 --
Diana Herrmann 2,159,085,758 -- 271,204,316 --
Richard Bassuk 2,159,173,949 -- 271,116,125 --
<CAPTION>
(2) Investment Management VOTES WITHHELD/
Agreement VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Primary 1,604,808,472 68,171,930 -- 161,974,078
US Government 360,660,023 16,996,987 -- 40,276,469
US Treasury 136,201,955 7,551,831 -- 13,767,425
<CAPTION>
VOTES WITHHELD/
(3) Multiple Classes VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ------------- ---------------- -----------
<S> <C> <C> <C> <C>
2,087,080,963 124,909,797 -- 218,597,617
<CAPTION>
VOTES WITHHELD/
(4) VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
(A) Pricing Securities 2,075,483,285 122,649,986 -- 232,156,799
(B) Non-material amendments 2,089,106,337 112,300,977 -- 228,882,757
(C) Vote portfolio securities 2,088,403,109 113,567,557 -- 228,319,405
(D) Termination or Reorganization 2,082,163,331 117,347,013 -- 230,779,727
(E) Senior securities
Primary 1,580,014,877 84,086,027 -- 170,853,576
US Government 352,465,782 24,498,809 -- 40,968,889
US Treasury 129,472,288 12,789,456 -- 15,259,467
(F) Underwriting
Primary 1,583,695,564 79,462,169 -- 171,796,746
US Government 355,568,542 21,075,551 -- 41,289,386
US Treasury 130,063,604 12,453,267 -- 15,004,340
(G) Control of portfolio companies
Primary 1,574,878,683 87,875,537 -- 172,200,260
US Government 353,159,744 23,984,303 -- 40,789,433
US Treasury 129,803,466 12,967,953 -- 14,749,793
(H) Portfolio transactions
Primary 1,572,525,764 88,364,189 -- 174,064,526
US Government 352,009,599 22,601,559 -- 43,322,322
US Treasury 129,008,482 14,054,112 -- 14,458,618
(I) Investing in investment
companies
Primary 1,579,829,716 84,339,418 -- 170,785,346
US Government 353,340,847 22,845,789 -- 41,746,843
U.S. Treasury 129,424,162 13,284,020 -- 14,813,030
(J) By-Law amendments 2,079,207,738 119,805,924 -- 231,276,407
<CAPTION>
VOTES WITHHELD/
(5) Master Fund/Feeder VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Primary 1,582,066,524 83,934,117 -- 168,953,838
US Government 353,209,844 24,311,158 -- 40,412,478
US Treasury 131,446,069 11,751,525 -- 14,323,617
<CAPTION>
VOTES WITHHELD/
(6) Trustee Authorization VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Primary 1,596,686,127 77,815,840 -- 160,452,513
US Government 354,645,885 23,402,956 -- 39,884,639
US Treasury 131,306,265 12,418,166 -- 13,796,781
<CAPTION>
VOTES WITHHELD/
(7) PricewaterhouseCoopers LLP VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
2,175,082,027 51,660,848 -- 203,547,195
</TABLE>
40
<PAGE>
9. SUPPLEMENTAL PROXY INFORMATION (UNAUDITED) (CONTINUED)
B. RESERVE TAX-EXEMPT TRUST AND RESERVE NEW YORK TAX-EXEMPT TRUST
The Special Meeting of Shareholders of the Reserve Tax-Exempt Trust (and
seven of its 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) and the
Reserve New York Tax-Exempt Trust (consisting of the New York Tax-Exempt Fund)
was held on January 15, 1999 at the offices of The Reserve Funds, 810 Seventh
Avenue, New York, NY. The meeting was adjourned until February 17, 1999, at
which time it was held. The Meeting was held 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 to permit the issuance of multiple classes of
shares Trust Vote
PROPOSAL 4
To approve the following proposed amendments:
A. To amend the Declaration of Trust to eliminate the policy on pricing securities; Trust Vote
B. To amend the Declaration of Trust to permit non-material amendments; Trust Vote
C. To amend the Declaration of Trust concerning the right to vote portfolio securities; Trust Vote
D. To amend the Declaration of Trust concerning termination or reorganization of the Trust; Trust Vote
E. To amend the Trusts' fundamental investment policy on the issuance of senior securities; All Funds
F. To amend the Trusts' fundamental investment policy regarding underwriting; All Funds
G. To change the designation of the Trusts' fundamental investment policy on investing for control of
portfolio companies; All Funds
H. To eliminate the Trusts' fundamental investment policies regarding certain portfolio transactions; All Funds
I. To eliminate the Trusts' fundamental investment policy on investing in the securities of other
investment companies; All Funds
J. To amend the Trusts' By-Laws concerning amendments thereto Trust Vote
PROPOSAL 5
To approve changes to the Trusts' Fundamental Investment Policies to Permit a Master Fund/Feeder Fund
Structure All Funds
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
PROPOSAL 7
To ratify the selection of PricewaterhouseCoopers LLP as independent public accountants for the fiscal
year ending May 31, 1999; and Trust Vote
PROPOSAL 8
Such Funds
To transact such other business as may properly come before the Meeting as Necessary
</TABLE>
41
<PAGE>
9. SUPPLEMENTAL PROXY INFORMATION (UNAUDITED) (CONTINUED)
A Quorum of the shares of the Trusts and the Funds, with exception of the
Reserve California Tax-Exempt Fund, was present at the Meeting.
The results of the proxy solicitation as to the Trusts and "Single State"
Tax-Exempt Funds, with the exception of The California Tax-Exempt Fund, on the
above matters were as follows:
<TABLE>
<CAPTION>
(1) Board of Trustees
Reserve NY Tax-Exempt VOTES WITHHELD/
Trust VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ------------- ---------------- -----------
<S> <C> <C> <C> <C>
Bruce R. Bent 319,777,868 -- 41,542,335 --
Edwin Ehlert, Jr. 319,681,769 -- 41,638,434 --
Henri Emmet 320,006,295 -- 41,313,908 --
Donald Harrington 319,478,161 -- 41,842,042 --
Bruce R. Bent II 319,816,779 -- 41,503,424 --
William Viklund 320,076,613 -- 41,243,590 --
Vincent Mattone 320,086,191 -- 41,234,012 --
Diana Herrmann 320,086,191 -- 41,234,012 --
Richard Bassuk 320,086,270 -- 41,233,933 --
<CAPTION>
Reserve NY Tax-Exempt VOTES WITHHELD/
Trust VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Bruce R. Bent 90,837,234 -- 11,168,246 --
Edwin Ehlert, Jr. 90,836,085 -- 11,169,395 --
Henri Emmet 90,832,448 -- 11,173,032 --
Donald Harrington 90,892,385 -- 11,113,095 --
Bruce R. Bent II 90,811,258 -- 11,194,222 --
William Viklund 90,837,034 -- 11,168,446 --
Vincent Mattone 90,823,666 -- 11,181,814 --
Diana Herrmann 90,898,328 -- 11,107,152 --
Richard Bassuk 90,837,324 -- 11,168,156 --
<CAPTION>
(2) Investment Management VOTES WITHHELD/
Agreement VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
New York Tax-Exempt 87,546,233 4,677,436 -- 9,781,810
Connecticut Tax-Exempt 21,804,925 1,309,200 -- 5,069,770
Florida Tax-Exempt 7,879,620 434,940 -- 2,715,206
Massachusetts Tax-Exempt 15,373,663 1,291,538 -- 2,014,004
New Jersey Tax-Exempt 22,560,045 1,644,715 -- 2,497,164
Pennsylvania Tax-Exempt 17,252,873 475,311 -- 17,728,184
Interstate Tax-Exempt 182,755,289 8,882,072 -- 21,236,576
<CAPTION>
VOTES WITHHELD/
(3) Multiple Classes VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Reserve Tax-Exempt Trust 313,266,028 17,144,286 -- 36,677,907
Reserve New York
Tax-Exempt Trust 86,831,700 5,596,704 -- 9,577,075
<CAPTION>
VOTES WITHHELD/
(4) VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
(A) Pricing Securities
Reserve Tax-Exempt Trust 305,813,404 18,076,660 -- 37,430,132
Reserve New York
Tax-Exempt Trust 86,317,328 5,612,617 -- 10,075,534
(B) Non-material amendments
Reserve Tax-Exempt Trust 307,125,146 17,340,679 -- 36,854,371
Reserve New York
Tax-Exempt Trust 87,344,332 4,489,482 -- 10,171,664
(C) Vote portfolio securities
Reserve Tax-Exempt Trust 308,392,525 14,724,613 -- 38,203,060
Reserve New York
Tax-Exempt Trust 86,889,797 5,009,752 -- 10,105,930
(D) Termination or
Reorganization
Reserve Tax-Exempt Trust 307,039,997 16,546,710 -- 37,733,490
Reserve New York
Tax-Exempt Trust 87,051,833 4,800,969 -- 10,152,677
</TABLE>
42
<PAGE>
9. SUPPLEMENTAL PROXY INFORMATION (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
VOTES WITHHELD/
VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ------------- ---------------- -----------
<S> <C> <C> <C> <C>
(E) Senior securities
New York Tax-Exempt 86,451,131 5,572,556 -- 9,981,791
Connecticut Tax-Exempt 21,590,697 1,345,865 -- 5,247,333
Florida Tax-Exempt 7,835,909 473,905 -- 2,719,953
Massachusetts Tax-Exempt 15,195,684 1,439,895 -- 2,043,626
New Jersey Tax-Exempt 21,998,273 1,802,806 -- 2,900,845
Pennsylvania Tax-Exempt 17,233,803 19,070 -- 475,311
Interstate Tax-Exempt 178,867,593 11,011,193 -- 22,995,151
(F) Underwriting
New York Tax-Exempt 87,426,909 4,338,152 -- 10,240,418
Connecticut Tax-Exempt 21,589,154 1,335,568 -- 5,259,173
Florida Tax-Exempt 7,824,785 485,028 -- 2,719,953
Massachusetts Tax-Exempt 15,218,981 1,407,566 -- 2,052,658
New Jersey Tax-Exempt 22,082,365 1,688,997 -- 2,930,562
Pennsylvania Tax-Exempt 17,252,639 233 -- 475,311
Interstate Tax-Exempt 177,828,643 11,489,297 -- 23,555,998
(G) Control of portfolio
companies
New York Tax-Exempt 87,735,894 4,784,052 -- 9,485,532
Connecticut Tax-Exempt 21,216,574 1,360,079 -- 5,607,243
Florida Tax-Exempt 7,836,019 462,237 -- 2,731,510
Massachusetts Tax-Exempt 15,168,416 1,418,058 -- 2,092,732
New Jersey Tax-Exempt 22,040,189 1,761,537 -- 2,900,198
Pennsylvania Tax-Exempt 16,297,244 936,792 -- 494,147
Interstate Tax-Exempt 179,402,905 10,635,404 -- 22,835,629
(H) Portfolio transactions
New York Tax-Exempt 87,588,544 4,827,184 -- 9,589,751
Connecticut Tax-Exempt 22,255,157 286,883 -- 5,641,854
Florida Tax-Exempt 7,831,413 478,401 -- 2,719,953
Massachusetts Tax-Exempt 15,402,392 1,256,735 -- 2,020,079
New Jersey Tax-Exempt 22,033,251 1,739,514 -- 2,929,158
Pennsylvania Tax-Exempt 17,252,639 233 -- 475,311
Interstate Tax-Exempt 177,690,181 11,559,788 -- 23,623,967
(I) Investing in investment
companies
New York Tax-Exempt 87,597,534 4,996,429 -- 9,411,516
Connecticut Tax-Exempt 22,303,382 256,770 -- 5,623,744
Florida Tax-Exempt 7,827,059 482,754 -- 2,719,953
Massachusetts Tax-Exempt 15,329,389 1,329,738 -- 2,020,079
New Jersey Tax-Exempt 22,188,840 1,668,995 -- 2,844,089
Pennsylvania Tax-Exempt 16,316,080 936,792 -- 475,311
Interstate Tax-Exempt 178,699,225 10,856,615 -- 23,318,097
(J) By-Law amendments
Reserve Tax-Exempt Trust 308,502,924 15,675,265 -- 37,142,008
Reserve New York
Tax-Exempt Trust 87,470,652 5,269,738 -- 9,265,088
<CAPTION>
VOTES WITHHELD/
(5) Master Fund/Feeder Fund VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
New York Tax-Exempt 87,957,501 4,905,980 -- 9,141,997
Connecticut Tax-Exempt 21,512,476 1,390,113 -- 5,281,306
Florida Tax-Exempt 8,041,624 268,190 -- 2,719,953
Massachusetts Tax-Exempt 15,252,268 1,413,700 -- 2,013,237
New Jersey Tax-Exempt 22,410,130 1,600,820 -- 2,690,974
Pennsylvania Tax-Exempt 17,252,639 233 -- 475,311
Interstate Tax-Exempt 180,200,820 9,988,782 -- 22,684,335
</TABLE>
43
<PAGE>
9. SUPPLEMENTAL PROXY INFORMATION (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
VOTES WITHHELD/
(6) Trustee Authorization VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ------------- ---------------- -----------
<S> <C> <C> <C> <C>
New York Tax-Exempt 87,911,306 5,307,094 -- 8,787,079
Connecticut Tax-Exempt 21,713,811 1,427,913 -- 5,042,171
Florida Tax-Exempt 8,050,917 258,896 -- 2,719,953
Massachusetts Tax-Exempt 15,408,976 1,256,994 -- 2,013,236
New Jersey Tax-Exempt 22,370,856 1,772,037 -- 2,559,031
Pennsylvania Tax-Exempt 16,316,314 936,558 -- 475,311
Interstate Tax-Exempt 182,356,800 8,576,403 -- 21,940,734
<CAPTION>
VOTES WITHHELD/
(7) PricewaterhouseCoopers LLP VOTES FOR VOTES AGAINST BROKER NON-VOTES ABSTENTIONS
------------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Reserve Tax-Exempt Trust 320,959,901 6,815,617 33,544,679
Reserve New York
Tax-Exempt Trust 90,587,061 2,381,548 -- 9,036,870
</TABLE>
Due to an absence of a quorum of the Reserve California Tax-Exempt Fund
("Fund"), the Chairman adjourned the Meeting with respect to this Fund until
March 1, 1999. For the same reason, the Chairman subsequently adjourned the
Meeting to March 5, 1999; March 15, 1999; June 1, 1999 and June 17, 1999. At
June 17, 1999 Meeting, the Chairman announced that the Fund failed to reach
quorum and proposals 2, 4e, 4f, 4g, 4h, 4i, 5 and 6 with respect to California
Tax-Exempt Fund failed. As such, the proxy solicitation was closed as to The
Fund and the Trust was closed.
44
