<PAGE> 1
MANAGEMENT
INVESTMENT ADVISER. Since November 15, 1971, Reserve Management Company, Inc.
("RMCI") 1250 Broadway, New York, NY 10001 and its affiliates have provided
investment advice to The Reserve Funds. RMCI serves as the investment adviser to
The Reserve Fund (the "Trust"). As a result of recent shareholder votes, each of
the Funds has entered into a new Investment Management Agreement ("Agreement")
with RMCI effective June 26, 1999, which is substantially similar to the
Investment Management Agreement previously in effect with regard to each Fund,
except for a new comprehensive management fee. The U.S. Treasury Fund, since
inception, has been subject to a comprehensive management fee. The Agreement
provides that RMCI provides continuous investment advisory and management
services to the Funds
RMCI manages the investment portfolios of the Funds, subject to policies
adopted by the Trustees. For its services, RMCI receives a fee of 0.80% per year
of the average daily net assets of each Fund. RMCI pays all employee and
customary operating expenses of the Fund. Excluded from the definition of
customary operating expenses are interest, taxes, brokerage fees, extraordinary
legal and accounting fees and expenses, and the fees of the disinterested
Trustees, for which each Fund pays its direct or allocated share.
ANNUAL FUND OPERATING EXPENSES FOR ALL FUNDS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
U.S. U.S.
PRIMARY GOVERNMENT TREASURY
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
Comprehensive Management Fee (a)..................... .80% .80% .80%
12b-1 Fees (b)....................................... .20% .20% .20%
---- ---- ----
Total Operating Expenses............................. 1.00% 1.00% 1.00%
==== ==== ====
</TABLE>
(a) The comprehensive management fee includes advisory and customary
operating expenses. However, the Funds may be charged for certain
non-recurring extraordinary expenses and its allocated or direct
share of certain other expenses.
(b) The Funds have adopted a Rule 12b-1 plan which allows the Funds to
pay distribution fees for the sale and distribution of its shares.
The maximum level of distribution expenses is 0.20% per year of
each Fund's average net assets. As these fees are paid out of each
Fund's assets on an on-going basis, over time these fees will
increase the cost of your investment and may cost you more than
paying other types of sales charges.
----------------------
THE RESERVE FUND SUPPLEMENT DATED JULY 1, 1999.
SUPPLEMENT TO THE RESERVE FUND PROSPECTUS DATED JULY 31, 1998.
Investors are advised to update their records and retain this information for
future reference.
