<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION NO. 811-7734
33-63300
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 7 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 9
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(Check appropriate box or boxes.)
RESERVE PRIVATE EQUITY SERIES
(Exact Name of Registrant as Specified in Charter)
810 Seventh Avenue, New York, NY 10019
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 977-9982
------------------------------
Marc C. Cozzolino, Esq., 810 Seventh Avenue, 17th Floor, New York, NY 10019
- --------------------------------------------------------------------------------
(Name and Address of Agent for service)
It is proposed that filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485
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on (date) pursuant to paragraph (b) of Rule 485
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X 75 days after filing pursuant to paragraph (a) of Rule 485
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on (date) pursuant to paragraph (a) of Rule 485
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The Commission is requested to send copies of all communications to:
Paul F. Roye, Esq.
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
The Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 electing to register an indefinite number of
shares of beneficial interest. Registrant intends to file the notice required
by Rule 24f-2 with respect to its fiscal year ending May 31, 1996 on or before
July 31, 1996.
Total Pages: 33
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<PAGE> 2
CROSS-REFERENCE SHEET PURSUANT TO RULE 495(a)
<TABLE>
<CAPTION>
FORM PROSPECTUS AND STATEMENT
N-1A OF ADDITIONAL INFORMATION
ITEM FORM CAPTION CAPTION
- ---- ----------------------------------- -------------------------------------------------------
Part A
<S> <C> <C>
1 Cover Page Cover Page
2 Synopsis Fund Expenses
3 Condensed Financial Information (omitted)
4 General Description of Registrant The Trust; Investment Objective and Policies;
Investment Techniques and Investments
5 Management of the Fund Management, Trustees and Officers of the Trust
6 Capital Stock and Other Securities Shares of Beneficial Interest; Taxes; Dividends
and Distributions
7 Purchase of Securities Being Offered How to Buy shares
8 Redemption or Repurchase Redemptions
9 Legal Proceedings (omitted)
Part B
10 Cover Page Statement of Additional Information
11 Table of Contents Table of Contents
12 General Information and History (omitted)
13 Investment Objective and Policies Investment Policies; Other Policies
14 Management of the Registrant Trustees and Officers of the Trust
15 Control Person and Principal Trustees and Officers of the Trust
Holders of Securities
16 Investment Advisory and Other Investment Management and Other Agreement
Services
17 Brokerage Allocation Portfolio Turnover, Transaction Charges and
Allocation
18 Capital Stock and Other Securities Shares of Beneficial Interest
19 Purchase, Redemption, and Pricing Purchase, Redemption and Pricing of Shares;
of Securities Being Offered Dividends and Taxes
20 Tax Status Distributions and Taxes
21 Underwriters Investment Management and Other Agreements
22 Calculation of Performance Date Performance Informance
23 Financial Statements (omitted)
</TABLE>
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<PAGE> 3
THE GENERAL INFORMATION, PURCHASES AND REDEMPTIONS
RESERVE NATIONWIDE 800-637-1700
FUNDS
RESERVE LARGE-CAP VALUE EQUITY FUND
The RESERVE LARGE-CAP VALUE EQUITY FUND (the "Fund" or "Large-Cap
Fund") is a newly offered series of shares issued by the Reserve Private Equity
Series ("Trust") an open-end management investment company.
The Fund's investment objective is to seek long term capital
appreciation through investment in a portfolio of large, high quality U.S.
companies. Any production of income is secondary to this objective. The Fund
seeks to achieve its objective by primarily investing in attractively valued
and undervalued equity securities believed to offer favorable possibilities of
capital appreciation. Generally, the Fund will seek to invest in equity
securities issued by companies with investment characteristics such as high
return on shareholder's equity, strong company management that enhances
shareholder value, good cash flow generation and favorable profit trends.
Fundamentally, investment candidates are understandable businesses that can
generate consistent earnings growth where the company is believed to be
undervalued as a whole. The Fund emphasizes investment in larger U.S.
companies whose outstanding shares have an aggregate market value of $5 billion
or more and is designed for investors seeking the opportunity for
above-average, long-term growth with below-average overall risk (defined as
loss capital) and nominal current income. The Fund will invest at least 65% of
its net assets in equity securities and at least 65% of net assets in the
securities of companies, whose aggregate market value is $5 billion or more,
i.e., "large-cap".
This Prospectus sets forth concisely the information about the Fund
which a prospective investor should know before investing. A Statement of
Additional Information dated , providing further details about
the Fund, has been filed with the Securities and Exchange Commission. The
Statement of Additional Information may be obtained upon request and without
charge by writing or calling the Fund at the telephone number shown above.
The Statement of Additional Information is hereby incorporated by reference
into this Prospectus.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------------------------
Prospectus dated 1995.
Investors are advised to read and retain this Prospectus for future reference.
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<PAGE> 4
FUND EXPENSES
The following table illustrates all expenses and fees that a shareholder of the
Fund will incur.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.50%
Maximum Sales Load Imposed on Reinvested Dividends . . . . . . . . . . . . . . . . . . . . . . . . None
Deferred Sales Load . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Redemption Fees* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>
*The Fund charges a $10 fee for wire redemptions of less than $10,000.
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
LARGE-CAP FUND
--------------
<S> <C>
Comprehensive Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.50%
12b-1 Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25%
-----
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.75%
=====
</TABLE>
The purpose of this table is to assist the investor in understanding
the costs and expenses that a shareholder in the Fund will bear directly or
indirectly. Because the 12b-1 fee is an annual charge, long-term shareholders
in the Fund may pay more than the economic equivalent of the maximum front-end
sales charges permitted by rules of the National Association of Securities
Dealers, Inc.
The Fund is charged a comprehensive fee (see "Management of the Fund"
on page ) which includes all management fees and ordinary operating
expenses.
The following example illustrates the expenses a shareholder would pay
on a $1,000 investment over various time periods assuming: (1) a 5% annual rate
of return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Large-Cap Fund $62 $98 $136 $242
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN.
THE TRUST
The Trust was formed on April 22, 1993 under Delaware law and is
commonly known as a Delaware business trust. It is an open-end management
investment company consisting, as of the date of this Prospectus, of six
separate series. Additional series may be added in the future by the Board of
Trustees. The Large-Cap Fund, which is offered by this Prospectus, is
classified as a non-diversified mutual fund.
The Large-Cap Fund is advised and managed by Reserve Management Company, Inc.
(the "Adviser"), which supervises the day-to-day investment operations of the
Fund. The Adviser and the Trust, on behalf of the Fund, have entered into
sub-advisory agreement with Siphron Capital Management a registered investment
adviser (the "Sub-Adviser"or "Siphron").
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<PAGE> 5
INVESTMENT OBJECTIVE AND POLICIES
The Large-Cap Fund's investment objective is to seek capital
appreciation through investment in a portfolio of large, high quality U.S.
companies. Any production of income is secondary to this objective. There can
be no assurance that the Fund will achieve its investment objective.
The Fund's investment objective is to seek long term capital
appreciation through investment in a portfolio of large, high quality U.S.
companies. Any production of income is secondary to this objective. The Fund
seeks to achieve its objective by primarily investing in attractively valued
and undervalued equity securities believed to offer favorable possibilities of
capital appreciation. Generally, the Fund will seek to invest in equity
securities issued by companies with investment characteristics such as high
return on shareholder's equity, strong company management that enhances
shareholder value, good cash flow generation and favorable profit trends.
Fundamentally, investment candidates are understandable businesses that can
generate consistent earnings growth where the company is believed to be
undervalued as a whole. The Fund emphasizes investment in larger U.S.
companies whose outstanding shares have an aggregate market value of $5 billion
or more and is designed for investors seeking the opportunity for
above-average, long-term growth with below-average overall risk (defined as
loss capital) and nominal current income. The Fund will invest at least 65% of
its net assets in equity securities and at least 65% of net assets in the
securities of companies, whose aggregate market value is $5 billion or more,
i.e., "large cap".
It is the Sub-Adviser's view that high quality, large companies can
generate consistent growth over time that is above the growth rate of the
overall economy. The Fund may also invest in companies presenting special
situations when it is believed that the shares offer a strong potential for
capital appreciation due to the market underestimating earnings potential,
changes in management or other similar opportunities. The Fund will not invest
more than 25% of the value of its total assets in securities of issuers in any
particular industry.
INVESTMENT TECHNIQUES AND INVESTMENTS
CASH EQUIVALENTS. The Fund may invest in cash equivalents, which are
short-term obligations issued or guaranteed as to interest and principal by the
U.S. Government or any instrumentality thereof (including repurchase agreements
collateralized by such securities); and obligations of domestic and foreign
banks. Instruments which are not rated may also be purchased by the Fund
provided such instruments are determined to be of comparable quality by the
Sub-Adviser under the supervision of the Adviser and the Board of Trustees of
the Trust to those instruments in which the Fund may invest.
U.S. TREASURY SECURITIES. The Fund may invest in U.S. Treasury securities,
including Bills, Notes, Bonds and other debt securities issued by the U.S.
Treasury. These instruments are direct obligations of the U.S. Government and,
as such, are backed by the full faith and credit of the United States.
SECURITIES OF U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES. The Fund may
invest in both adjustable rate and fixed rate securities issued or guaranteed
by agencies or instrumentalities of the U.S. Government, including, but not
limited to, Government National Mortgage Association (GNMA), Federal National
Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC)
securities. Obligations of GNMA, the Farmers Home Administration and the
Export-Import Bank are backed by the full faith and credit of the United
States. In the case of securities not backed by the full faith and credit of
the United States, the Fund must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment. Such securities include
obligations issued by the Student Loan Marketing Association (SLMA), FNMA and
FHLMC, each of which may borrow from the U.S. Treasury to meet its obligations
although the U.S. Treasury IS under no obligation to lend to such entities.
GNMA, FNMA and FHLMC may also issue collateralized mortgage obligations.
The Fund may invest in component parts of U.S. Government securities,
namely either the corpus (principal) of such obligations (principal only or
"PO" class) or one of the interest payments
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<PAGE> 6
scheduled to be paid on such obligations (interest only or "IO" class). These
obligations may take the form of (i) obligations from which the interest
coupons have been stripped; (ii) the interest coupons that are stripped: (iii)
book-entries at a Federal Reserve member bank representing ownership of
obligation components; or (iv) receipts evidencing the component parts (corpus
or coupons) of U.S. Government obligations that have not actually been
stripped. Such receipts evidence ownership of component parts of U.S.
Government obligations (corpus or coupons) purchased by a third party
(typically an investment banking firm)and held on behalf of the third party in
physical or book-entry form by a major commercial bank or trust company
pursuant to a custody agreement with the third party. A "stripped security"
issued by an investment banking firm or other private organization is not
considered to be a U.S. Government security.
CONVERTIBLE SECURITIES. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which provide
a stable stream of income with generally higher yields than those of equity
securities of the same or similar issuers. The price of a convertible security
will normally vary with changes in the price of the underlying stock, although
the higher yield tends to decline as interest rates increase and increase as
interest rates decline. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality, they enable investors to benefit from increases in the market price of
the underlying common stock.
RIGHTS AND WARRANTS. The Fund will invest in rights or warrants only if the
underlying equity securities themselves are deemed appropriate by Reserve for
inclusion in the Fund's portfolio. Rights and warrants may be considered more
speculative than certain other types of investments in that they do not entitle
a holder of dividends or voting rights with respect to the underlying
securities nor do they represent any right or warrant does not necessarily
change with the value of underlying security, although the value of a right or
warrant may decline because of a decrease in the value of the underlying
security, the passage of time or a change in perception as to the potential of
the underlying security, or any security, or any combination thereof. If the
market price of the underlying security is below the exercise price set forth
in the warrant on the expiration date, the warrant will expire worthless.
Moreover, a right or warrant ceases to have if it is not exercised prior to the
expiration date.
DEFENSIVE POSITION. For temporary defensive purposes, each Fund may invest in
certain types of short-term, liquid, high-grade or high quality (depending of
the Fund) debt securities. These securities may include U.S. Government
securities, qualifying bank deposits, money market instruments, and other types
of short-term debt securities including notes and bonds. For Funds that may
invest in foreign countries, such securities may also include short-term,
foreign-currency denominated securities of the type mentioned above issued by
foreign governmental entities, companies and supranational organizations. For
a complete description of the types of securities each Fund may invest in while
in a temporary defensive position, please see such Fund's Statement of
Additional Information.
As a non-diversified investment company, each Fund is permitted to
have all its assets invested in a limited number of issuers. As a result, an
investment in a Fund could entail greater risk than a mutual fund with a policy
of diversification.
MANAGEMENT OF THE FUND
THE ADVISER. The Fund's investment adviser is Reserve Management Company,
Inc., 14 Locust Place, Manhasset, New York 11030, which manages The Reserve
Funds with over $3 billion in assets. The Adviser supervises a continuous
investment program for the Fund, evaluates and monitors the Sub-Adviser's
performance, investment program and compliance with applicable laws and
regulations and recommends to the Board of Trustees whether the Sub-Adviser's
contract should be continued or modified. The Adviser is also responsible for
the day-to-day administration of the Fund's activities. Under the Investment
Management Agreement, the Adviser pays all employee costs, costs of the
Sub-Adviser and other ordinary operating expenses of the Fund. Excluded from
ordinary operating expenses are interest, taxes, brokerage fees, extraordinary
legal and accounting fees and expenses, payments made pursuant to the Trust's
Distribution Plan and the fees of the disinterested Trustees.
-7-
<PAGE> 7
For its services under the Investment Management Agreement and for
paying the Fund's ordinary operating expenses, the Adviser is paid a
comprehensive fee of 1.50% per annum of the average daily net assets of the
Fund.
THE SUB-ADVISER. The Adviser and Trust have retained Siphron Capital
Management, 280 S. Beverly Drive, Beverly Hills, California 90212
("Sub-Adviser" or "Siphron") as Sub-Adviser. Under the Sub-Advisory Agreement,
Siphron manages the assets of the Fund in accordance with its investment
objectives, investment programs, policies, and restrictions under the
supervision of the Adviser and Board of Trustees. The Adviser (not the Fund)
pays the Sub-Adviser for its services from the Investment Management Agreement.
Siphron Capital Management was formed in 1991 and currently manages
over $200 million for tax-exempt, institutional clients. Siphron Capital has
not previously served as an adviser or sub-adviser to a registered investment
company. However, the senior management of Siphron Capital has over thirty
(30) years experience in using the investment policies discussed herein.
For its services, Siphron Capital receives a sub-advisory fee up to
.75% per annum of the Fund's average daily net assets.
The Investment Management Agreement and Sub-Advisory Agreement provide
that the Adviser and Sub-Adviser, respectively, shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which the agreements relate, except a loss
resulting from the willful misfeasance, bad faith or gross negligence on the
part of the Adviser or Sub-Adviser in the performance of their duties or from
reckless disregard by them of their duties under each respective agreement.
PORTFOLIO MANAGERS. Mr. David C. Siphron and Mr. Peter D. Siphron, both
partners of Siphron Capital Management, serve as the Fund's portfolio managers.
The Fund's portfolio management is a team effort with each manager providing
investment recommendations based on a proprietary combination of fundamental
and technical analysis. Portfolio actions are based on mutual consent, with
David Siphron having final approval. David Siphron has over thirty consecutive
years of investment experience; Peter Siphron, over ten years. Both portfolio
managers possess a Masters in Business Administration and are Chartered
Financial Analysts.
PERFORMANCE INFORMATION. Set forth below are certain performance data provided
by the Sub-Adviser.
The following performance calculation was used to prepare the
Investment Performance. The annual market value of the Sub-Adviser's portfolio
was determined as the sum of the market value of all of its assets (including
cash, cash equivalents, interest, dividends and securities). The annual rate
of return for the Sub-Adviser's portfolio was determined on a time weighted
basis as the percentage change of the portfolio's assets after allowing for the
effect of any cash additions or withdrawals which occurred during the year.
The investment performance reflects the cost of brokerage commissions and all
other expenses.
<TABLE>
<CAPTION>
Year Ended Sub-Adviser's S&P
December 31 Total Return 500
- ----------- -------------------- ----------
<S> <C> <C>
1991 25.6% 30.5%
1992 10.2 7.7
1993 19.0 10.0
1994 7.4 1.3
Annualized
return since January 1, 1991
to December 31, 1994 15.3% 11.85%
</TABLE>
There are no fees included in the gross return calculations. These
performance calculations assume the reinvestment of dividends and
distributions.
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<PAGE> 8
Investors should not rely on the above performance data of the
Sub-Adviser as an indication of the future performance of the Fund. It should
be noted that management of the Fund will be affected by the Fund's obligation
to redeem its shares upon request, regulatory requirements of the Investment
Company Act of 1940 and requirements of the Internal Revenue Code of 1986, as
amended, to qualify as a regulated investment company.
The Sub-Adviser's performance figures are compared with one stock
market index. The Standards & Poor's ("S&P") 500 Stock Price Index is widely
regarded by investors as representative of the securities markets in general.
PORTFOLIO TRANSACTIONS. Decisions as to the purchase and sale of securities for
the Fund and the execution of these transactions, including the negotiation of
brokerage commissions on such transactions, are the responsibility of the
Sub-Adviser. In general, the Sub-Adviser seeks to obtain prompt and reliable
execution of purchase and sale orders at the most favorable net prices or
yields. In determining the best net price and execution, the Sub-Adviser may
take into account a broker's or dealer's operational and financial capabilities
and the type of transaction involved.
The Sub-Adviser may consider statistical, research, or other services
provided by the broker or dealers, some of which may be useful to the
Sub-Adviser in its other business functions. To the extent such non-price
factors are taken into account, the execution price paid may be increased, but
only in reasonable relation to the benefit of such non-price factors as
determined in good faith by the Sub-Adviser. The Sub-Adviser is authorized to
place portfolio transactions with brokers or dealers participating in the
distribution of shares of the Fund, but only if the Sub-Adviser reasonably
believes that the execution and commission are comparable to those available
from other qualified firms. Further, subject to procedures adopted by, and
under the supervision of, the Board of Trustees, the Sub-Adviser is authorized
to place portfolio transactions with brokers or dealers affiliated with it,
provided the commission or fee paid on the transaction is reasonable and fair
when compared to the commission or fee charged by other brokers or dealers on
comparable transactions involving similar securities being purchased or sold
during a comparable period of time.
The annual portfolio turnover rate of the Fund is expected to
approximate 100% under normal market conditions. See "Portfolio Turnover,
Transaction Charges and Allocation" in the Statement of Additional Information.
TRUSTEES. Under the Declaration of Trust, which is governed by the laws of the
State of Delaware, the Trustees of the Trust are ultimately responsible for the
conduct of the Trust's affairs. The Trustees serve indefinite terms (subject
to certain removal procedures) and they appoint their own successors, provided
that at least a majority of the Trustees have been elected by shareholders.
The Declaration of Trust provides that a Trustee may be removed at any special
meeting of shareholders by a vote of a majority of the Trust's outstanding
shares.
TRANSFER AGENT AND DIVIDEND PAYING AGENT. The Trust acts as its own transfer
agent and dividend paying agent.
HOW TO BUY SHARES
METHOD OF PAYMENT. The minimum initial investment is $1,000 and the minimum
subsequent investment is $100, except for IRAs. The Fund reserves the right,
with respect to any person or class of persons, under certain circumstances to
waive or lower investment minimums. An initial purchase must be accompanied by
an Investment Application. If no dealer or broker is named in the Investment
Application, the Distributor will act as dealer for you. You can buy shares of
the Fund each business day at the public offering price next determined after
receipt by the Fund or an investment dealer which has a sales agreement with
the Fund's Distributor of a request in proper form. The public offering price
is equal to net asset value of the Fund plus a sales charge as set forth in the
table below. Payments (denominated in U.S. dollars) must be made (if
purchasing directly from the Fund):
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<PAGE> 9
- By check (drawn on a U.S. bank) payable to or endorsed to Reserve
Private Equity Series. You must include your account number on each
check unless it is an initial purchase. Checks should be mailed to
Reserve Private Equity Series, 810 Seventh Avenue, New York, N.Y.
10019-5868. A charge in the amount of $15 will be imposed if any
check used for investment in your account does not clear.
- By wire - Prior to calling your bank, call the Fund for specific
instructions at 800-637-1700.
Investments in the Fund may also be made through investment dealers
which have sales agreements with Resrv Partners, Inc., the distributor of the
Fund's shares ("Authorized Dealer"). Such dealers should send the investor's
Investment Application and payment to the Fund. Payment should be made by
check or wire. Purchase orders will be confirmed at the public offering price
calculated next after receipt by the Fund or an Authorized Dealer, which order
must be promptly transmitted to the Fund, of the properly completed Investment
Application and payment. Orders received by the Fund or an Authorized Dealer
after 4:00 P.M. (New York time) will be priced at the public offering price in
effect at 4:00 P.M. (New York time) on the next business day.
SALES CHARGE TABLE. Share purchases of the Fund are made at the public
offering price. The public offering price is the net asset value per share
plus a sales charge as shown below:
<TABLE>
<CAPTION>
Dealers
As a % As a % Reallowance
of Offering of Net Asset as a % of
Amount of Transaction Price per Share Value per Share Offering Price
- --------------------- --------------- --------------- --------------
<S> <C> <C> <C>
Less than $50,000 4.50 4.71 4.00
$50,000 to less than $100,000 3.50 3.63 3.00
$100,000 to less than $250,000 3.00 3.09 2.50
$250,000 to less than $500,000 2.50 2.56 2.00
$500,000 to less than $1,000,000 1.50 1.52 1.00
Over $1,000,000 0 0 0
</TABLE>
It is the position of the staff of the Securities and Exchange
Commission that if the dealer reallowance exceeds 90% a dealer maybe considered
an underwriter under the Securities Act of 1933.
Shares of the Fund may be purchased at net asset value, without sales
charge, by full time employees, their spouses and minor children of the
Adviser, Sub-Adviser, Resrv Partners, Inc., and other affiliated companies; any
Trustee of the Fund and their spouses; any trust, pension, profit sharing, or
other benefit plan in which any such foregoing person is a participant;
Sub-Adviser advisory clients and related persons of such; and through
reinvestment of dividends and capital gains distributions.
RIGHT OF ACCUMULATION. Reduced sales charges apply to any purchase of shares
of the Fund where the aggregate investment, including such purchase, is $50,000
or more. If, for example, you previously purchased and still hold shares of
the Fund with a current market value of $50,000 and subsequently purchase
shares of the Fund having a current value of $10,000, the sales charge
applicable to the subsequent purchase would be reduced to 3.50% of the offering
price.
To qualify for reduced sales charges, at the time of purchase you or
your dealer must notify the Fund or Resrv Partners, Inc., that such purchase
should be combined.
LETTER OF INTENT. Investors who anticipate that they will invest $50,000 (other
than through exchanges) or more in shares of the Fund within thirteen months
may execute a Letter of Intent. The execution of a Letter of Intent will
result in an investor paying a lower sales charge, at the appropriate quantity
purchase level shown above on all purchases during a thirteen month period.
Purchases of other Trust separate investment portfolios that may be offered may
be included to fulfill the Letter of Intent.
Out of an investor's initial purchase (or subsequent purchases) 5% of
the specified dollar amount of this Letter of Intent will be held in escrow by
the transfer agent in his/her account until
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<PAGE> 10
his/her total purchases of the Fund plus his/her accumulation credit (if any)
equal the amount specified. A purchase not originally made pursuant to a
Letter of Intent may be included under a backdated letter executed within 90
days of such purchase (accumulation credit).
If total purchases plus an investor's accumulation credit are less
than specified amount, the investor agrees to remit to the distributor an
amount equal to the difference in dollar amount of sales charge the investor
has actually paid and the amount of sales charges which he/she would have paid
on his/her aggregate purchases if the total of such purchases had been made at
a single time. If the investor does not pay such difference in sales charges
within 20 business days after written request by the dealer, bank or
distributor, the transfer agent, upon instructions from the distributor is
authorized to effect the repurchase of an appropriate number of escrowed shares
in order to realize such difference.
NET ASSET VALUE. Fund shares are issued at net asset value plus a sales charge
(if applicable) and redeemed at the net asset value next determined after
receipt by the Fund of a request in proper form. The net asset value of the
shares of the Fund is calculated at the close of business of the New York Stock
Exchange on each day the New York Stock Exchange is open which is currently
4:00 P.M. (New York time). The net asset value of the Fund will not be
determined on those days that the New York Stock Exchange is closed for trading
or on days on which no orders to purchase, sell or redeem shares have been
received by the Fund. The New York Stock Exchange is closed on the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas. The net asset
value per share of the Fund is determined by adding the value of all the Fund's
securities, cash and other assets, subtracting its liabilities, and dividing
the result by the number of its shares outstanding. Business days are days
when the New York Stock Exchange is open for regular trading.
INDIVIDUAL RETIREMENT ACCOUNTS. Investors may use the Fund as an investment
for Individual Retirement Accounts ("IRAs"). A master IRA plan, with
information regarding administration fees and other details are available from
Resrv Partners, Inc. The initial minimum investment is $250. Subsequent
investments are accepted in any amount.
DISTRIBUTOR. The Fund's distributor is Resrv Partners, Inc., 810 Seventh
Avenue, New York, N.Y. 10019, 212-977-9880. The distributor is a wholly-owned
subsidiary of the Adviser.
All orders for the purchase of shares of the Fund are subject to
acceptance or rejection by Resrv Partners, Inc. in its sole discretion. The
sale of shares will be suspended during any period when the determination of
net asset value is suspended, and may be suspended by the Board of Trustees
whenever in its judgment it is in the best interests of the Fund to do so.
EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares in the
Reserve money market funds at net asset value and other separate investment
portfolios that may be offered by the Trust. No sales charge applies to
exchanges, except between identical classes of shares or from Reserve money
market funds to no-load classes of shares. Exchanges of shares from the
Reserve money market funds to classes other than no-load classes are subject to
applicable sales charges on the Fund unless a waiver of the sales charge is
applicable. Exchanges between variable rate funds are possible between similar
classes only and may also be subject to applicable sales charges. A waiver of
the sales charge may apply if the shares being exchanged from the Reserve money
market funds were acquired: (a) by a previous exchange from shares of the
portfolio purchased with a sales charge, or (b) through investments of
dividends or capital gains distributions with respect to the foregoing category
of shares. Shares of any of the money market funds or the Fund must be
registered for sale in the investor's state.
The exchange privilege is not available for shares which have been
held for less than 15 days except for no-load classes which are available
immediately. Exchanges by telephone are an automatic privilege unless the
shareholder notifies the Fund on the Investment Application that his
authorization has been withheld. Unless authorization is withheld, the Fund
will honor requests by any person by telephone at (212) 977-9980 or (800)
637-1700. The Fund and its affiliates may be liable for any losses caused by
their failure to employ reasonable procedures to avoid unauthorized or
fraudulent instructions. To reduce such risk, the registration of the account
into which shares are to be
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<PAGE> 11
exchanged must be identical to the registration of the originating account and
all telephone exchange requests will be recorded. The Fund may also require
the use of a password or other form of personal identification. In addition,
the Fund will provide written confirmation of exchange transactions. During
periods of volatile economic and market conditions, a shareholder may have
difficulty making a exchange request by telephone, in which case an exchange
request would have to be made in writing.
The Trust may modify or discontinue the exchange privilege at any time, and will
do so on 60 days' notice, if such notice is required by regulations adopted
under the Investment Company Act of 1940. The notice period may be shorter if
applicable law permits. The Trust reserves the right to reject telephone or
written requests submitted in bulk on behalf of 10 or more accounts. Purchases
and exchanges should be made for investment purposes only. A pattern of
frequent exchanges may be deemed by the Adviser to be abusive and contrary to
the best interests of the Fund's other shareholders. At the Adviser's
discretion, the Fund may refuse to accept additional purchases and/or exchanges
from the investor. The Fund does not have any specific definition of what
constitutes a pattern of frequent exchanges, and will consider all relevant
factors in determining whether a particular situation is abusive. The Fund may
take such action, which includes, but is not limited to the imposition of fees.
Investors should be aware that the Fund may, in its discretion, limit or
otherwise restrict the number of times this Exchange Privilege may be exercised
by any investor. Any such restriction will be made on a prospective basis, upon
notice to the shareholder not later than 10 days following such shareholder's
most recent exchange. Telephone and written exchange requests must be received
by the Fund by 2:00 P.M. (New York time) on a regular business day to take
effect that day. Telephone exchanges may be effected on regular business days
from 9:00 A.M. to 4:30 P.M. (New York time). Exchange requests received after
2:00 P.M. (New York time) will be effected at the next calculated net asset
value plus a sales charge (if applicable).
Exchanges of shares are taxable events and may result in a gain or
loss for federal income tax purposes. A prospectus for any of the Reserve
money market funds or other series of the Trust may be obtained from the
Distributor or any Authorized Dealer. An investor considering an exchange
should refer to the appropriate fund prospectus for additional information
since each Reserve money market fund and series of the Trust has different
investment objectives and policies.
DISTRIBUTION PLAN. Under the Plan of Distribution ("Plan"), adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, the Fund pays Resrv
Partners, Inc. for advertising, marketing and distributing the Fund's shares
and for servicing Fund shareholders at an annual rate of .25% of the value of
the Fund's average daily net assets. The Fund is not obligated to pay any
distribution expense in excess of such distribution services fee. If the Plan
were terminated or not continued, no amounts (other than amounts accrued but
not yet paid) would be owed by the Fund.
Under the Plan, Resrv Partners, Inc. may make payments to brokers,
financial institutions and financial intermediaries for administration, for
servicing Portfolio shareholders who are also their clients and/or for
distribution. Resrv Partners, Inc. determines the amounts to be paid to
brokers, financial institutions and financial intermediaries ("Firms"). Firms
receive such fees in respect of the average daily net asset value of the Fund's
shares owned by shareholders for whom the Firm performs servicing or for whom
the Firm is the dealer of record. Financial institutions providing
distribution assistance or administrative services for the Fund may be required
to register as securities dealers in certain states. The fees payable to Resrv
Partners, Inc. under the Plan for advertising, marketing and distributing the
Fund's shares and for payments to Firms are payable without regard to actual
expenses incurred. Resrv Partners, Inc. may use such fees to promote the sale
of shares such as by paying for the preparation, printing and distribution of
prospectuses to other than current shareholders or other promotional
activities.
The Glass-Steagall Act and other applicable laws prohibit federally
chartered or supervised banks from engaging in the business of issuing,
underwriting, selling or distributing securities although national and state
chartered banks are permitted to purchase and sell securities upon the order
and for the account of their customers. Those persons who wish to provide
assistance in the form of activities not primarily intended to result in the
sale of Trust shares (such as administrative and account
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<PAGE> 12
maintenance services) may include banks, upon advice of counsel that they are
permitted to do so under applicable laws and regulations, including the
Glass-Steagall Act. In such event, no preference will be given to securities
issued by such banks as investments and the assistance payments received by
such banks under the Plan may or may not compensate the banks for their
administrative and account maintenance services for which the bank may also
receive compensation from the bank accounts they service. It is management's
position that payments to banks pursuant to the Plan for activities not
primarily intended to result in the sale of Trust shares, such as
administrative and account maintenance services, do not violate the
Glass-Steagall Act. However, this is an unsettled area of the law and if a
determination contrary to management's position is made by a bank regulatory
agency or court concerning payments to banks contemplated by the Plan, any such
payments will be terminated and any shares registered in the bank's name, for
its underlying customer, will be registered in the name of that customer.
SHARES OF BENEFICIAL INTEREST
The Trust is an open-end management investment company commonly known
as a mutual fund. The Trust was organized as an unincorporated Delaware
business trust on April 22, 1993 and is authorized to issue an unlimited number
of shares of beneficial interest, which may be issued in any number of series.
Shareholders are entitled to a full vote for each full share held (and
fractional votes for fractional shares) and have equal rights with respect to
earnings, dividends, redemption and in the net assets of their respective
series on liquidation. All shares issued will be fully paid and non-assessable
and will have no preemptive or conversion rights; however, the Trust will not
issue share certificates. The Trustees do not intend to hold annual meetings
of shareholders. The Trustees will call such special meetings of Shareholders
as may be required under the Investment Company Act of 1940 (e.g., to approve a
new investment advisory agreement or to change the fundamental investment
policies) or by the Declaration of Trust.
TAXES
The Fund intends to maintain its regulated investment company status
for federal income tax purposes, so that it will not be liable for federal
income taxes to the extent its net income and net capital gains are
distributed. The requirement for maintaining its status as a regulated
investment company under the Internal Revenue Code ("Code") may cause the Fund
to restrict the degree to which it engages in short term trading, short sales
and transactions in options and futures contracts. Dividends paid by the Fund
from net investment income, including net short term capital gains, whether in
cash or in additional shares of the Fund, will be taxable as ordinary income.
The Code imposes a non-deductible, 4% excise tax on regulated
investment companies that do not distribute to their shareholders in each
calendar year an amount equal to (i) 98% of their calendar year ordinary
income, plus 98% of their capital gain net income (the excess of short and long
term capital gains over short and long term capital losses) for the one year
period ending October 31. Dividends declared in December of any year to
shareholders of record on any date in December will be deemed to have been
received by the shareholders and paid by the Fund on the record date, provided
such dividends are paid January during the following year.
Distributions from long term capital gains, designated by the Fund as
capital gain dividends whether paid in cash or additional shares of the Fund,
are taxable for Federal income tax purposes as long term capital gains,
regardless of the length of time Trust shares have been held and are not
eligible for the dividends received deduction available to corporations.
Dividends and other distributions may also be subject to state and local taxes.
A purchase of Fund shares shortly before the ex-dividend date or capital gains
distribution could result in the receipt of an amount which, although in effect
a return of principal, is subject to income taxes.
Under the Code exchanges and redemptions of shares, including
transfers of shares of the Fund for shares of another fund with which the Fund
has exchange privileges, are taxable events and, accordingly, may result in
capital gain or loss for shareholders participating in such transactions.
Deductions for losses recognized on the disposition of shares may in some
circumstances be disallowed
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<PAGE> 13
or deferred. However, if the shares exchanged have been held less than 91
days, the sales charge paid on such shares is not included in the tax basis of
the exchanged shares, but is carried over and included in the tax basis of the
shares acquired. Furthermore, shareholders electing to reinvest dividends or
other distributions in new shares will nevertheless be treated as having
received such distributions for tax purposes.
For tax purposes, the Fund will send shareholders an annual notice of
dividends and distributions paid during the prior year. Shareholders are
advised to retain all statements received from the Fund to maintain accurate
records of their investments. The tax treatment of non-resident alien
individuals, foreign corporations, and other non-U.S. shareholders may differ
from that described above. Shareholders should consult their own tax advisers
regarding specific questions as to federal, state and local taxes with specific
reference to their own tax situation.
DIVIDENDS AND DISTRIBUTIONS
Shareholders may receive two kinds of distributions from the Fund:
dividends and capital gains distributions. All dividends and capital gains
distributions are paid in the form of additional shares credited to an
investor's account at net asset value unless the shareholder has requested on
the Investment Application or in writing to the Fund one of the following three
options:
(1) Dividend Option - to receive income dividends in cash and capital
gains distributions in additional shares.
(2) Distribution Option - to receive capital gains distributions in
cash and income dividends in additional shares.
(3) Dividend and Distribution Option - to receive both income dividends
and capital gains distributions in cash.
These three options are not available, however, for retirement plans
or an account with a net asset value of less than $1,000.
Any net investment income will be distributed quarterly as dividends
to shareholders. Any net realized short and long term capital gains, if any,
will be paid to shareholders at least annually.
REDEMPTIONS
TIME AND METHOD OF REDEMPTION. Fund shares are redeemed at net asset value
determined as of the next close of the New York Stock Exchange on a regular
business day after the written request by any person in proper form is received
by the Fund, at 810 Seventh Avenue, 17th Floor, New York, New York 10019-5868.
Redemptions may be effected during regular business days from 9:00 A.M. to 4:00
P.M. (New York time). Redemption requests received after 4:00 P.M. (New York
time) will be effected at the next calculated net asset value. If the Fund has
previously been advised in writing of your brokerage or bank account, telephone
requests by any person are accepted for payment to such account by calling
800-637-1700. The procedures and potential liability of the Fund and its
affiliates in connection with telephone exchanges as discussed in "Exchange
Privilege" above also apply to telephone redemptions. To reduce risk, proceeds
of telephone redemptions may be sent only to a bank or brokerage account
designated by the shareholder, in writing, on the Investment Application or in
a letter with the signature(s) guaranteed and telephone redemption requests
will be recorded. All other redemption requests must be signed by the
registered owner(s) with signature(s) guaranteed by a member firm of a national
securities exchange, a domestic commercial bank, credit union, savings bank,
savings and loan association or domestic trust company. If an account has
multiple owners, the Fund may rely on the instructions of any one owner unless
otherwise instructed in writing. Guarantees from notaries public are
unacceptable. Additional documentary evidence of authority is required in the
event redemption is requested by a corporation, partnership, trust, fiduciary,
executor, or administrator. Changes in redemption instructions, registration
or authorized signatures must be in writing with the
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<PAGE> 14
signature(s) guaranteed. Payments of $10,000 or more will be wired upon
request without charge. A shareholder will be charged for wires of less than
$10,000 (currently $10). The Fund assumes no responsibility for delays in the
receipt of wired or mailed funds. The use of a predesignated financial
institution, such as a savings bank, savings and loan association or credit
union, which is not a member of the Federal Reserve wire system to receive your
wire could cause such a delay.
The Fund ordinarily will make payment for all shares redeemed within
seven days after receipt of a redemption request in proper form except as
provided by rules of the Securities and Exchange Commission or until your
purchase check has cleared (see "Restrictions", below). The Fund will provide
written confirmation of redemption transactions.
The Fund reserves the right to refuse a telephone redemption if its
believes it is advisable to do so. Procedures for telephone redemptions may be
modified or terminated by the Fund at any time upon proper notice to
shareholder. During times of drastic economic or market conditions,
shareholders may experience difficulty in contacting the Trust by telephone to
request a redemption of shares. In such cases shareholders should consider
using another method of redemption, such as a written request.
REDEMPTIONS THROUGH BROKERS AND FINANCIAL INSTITUTIONS. Redemptions through
brokers and financial institutions may involve such other parties' own
redemption minimums, service fees, and other redemption requirements.
SMALL ACCOUNTS. The Fund reserves the right to redeem shares in any account
with a balance of less than $1,000 in share value. Prior to any such
redemption, the Fund will give the shareholder thirty (30) days' written notice
during which time the shareholder may increase his investment to avoid having
has shares redeemed. The $1,000 minimum balance will be waived if the account
balance drops below $1,000 due to market activity. IRA accounts would not be
subject to this requirement. Shareholders whose account has a balance of
$1,000 must achieve a balance of $2,500 within 12 months or the Funds may
choose to impose a fee, upon proper notice to shareholders.
RESTRICTIONS. The right of redemption may be suspended or the date of payment
postponed for more than seven days only (a) when the New York Stock Exchange is
closed (other than for customary closings); (b) when, as determined by the
Securities and Exchange Commission ("SEC"), trading on the Exchange is
restricted or an emergency exists making it not reasonably practicable to
dispose of securities owned by the Fund or for it to determine the fair value
of its net assets; or (c) for such periods as the SEC may by order permit.
Purchases by personal, corporate or government checks may not be redeemed until
after the purchase check has cleared. The redemption proceeds will be sent
upon bank clearance of your purchase check which may take up to fifteen (15)
days. When a purchase is made by wire and subsequently redeemed, the proceeds
from such redemption normally will not be transmitted until two business days
after the purchase by wire.
GENERAL INFORMATION
BACKUP WITHHOLDING. The Fund is required by Federal law, subject to certain
exemptions, to withhold 31% of dividends, capital gains distributions and
payments for shares redeemed. In order to avoid this withholding requirement
investors are required to certify, on the account application or separate W-9
Form, that their taxpayer identification number is correct, that they are not
currently subject to backup withholding, or that they are exempt from backup
withholding and the Fund must not have been directed by the IRS to backup
withhold. Shareholders should be aware that, under regulations promulgated by
the Internal Revenue Service, the Fund may be fined $50 annually for each
account for which a certified taxpayer identification number is not provided.
In the event that such a fine is imposed with respect to an uncertified account
in any year, a corresponding charge will be made against the account.
REPORTS AND STATEMENTS. Shareholders receive an annual report containing
audited financial statements and an unaudited semi-annual report. A statement
is mailed to each shareholder at least quarterly.
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<PAGE> 15
SPECIAL SERVICES. The Fund reserves the right, upon notice, to charge
shareholder accounts for specific costs incurred in processing unusual
transactions for shareholders. Such transactions include, but are not limited
to, stop payment requests on official Trust checks, returned checks and special
research services.
PERFORMANCE. From time to time, in advertisements and sales literature, the
Fund may present information regarding the total return on a hypothetical
investment in the Fund for various periods of performance and may make
comparisons of such total return to various stock indices (group of unmanaged
common stocks), including the New York Stock Exchange Composite Index, Standard
& Poor's 500 Stock Index, and the Dow Jones Industrial Average, the NASDAQ
Composite Index or to groups of comparable mutual funds.
Total return for a period is the percentage change in value during the
period of an investment in the Fund's shares, including the value of shares
acquired through reinvestment of all dividends and capital gains distributions.
The average annual total return for a given period may be calculated by finding
the average annual compounded rate of return that would equate to a
hypothetical $1,000 investment to the value of that investment that could be
redeemed at the end of the period, assuming reinvestment of all distributions.
All of the calculations described above will assume the reinvestment of
dividends and distributions in additional shares of the Fund and the deduction
of the maximum sales load from the initial investment.
In addition to the figures described above, the Fund might use
rankings or ratings determined by Lipper Analytical Services, Inc., an
independent service that monitors the performance of over 1,000 mutual funds,
Morningstar, Inc., or another service to compare the performance of the Fund
with the performance of (i) other funds of similar size and investment
objective or (ii) broader groups of funds. Such comparative performance
information will also be stated in the same terms in which the comparative data
or indices are stated. For these purposes, the performance of the Fund, as
well as the performance of the mutual funds, do not reflect sales loads, the
inclusion of which would reduce Fund performance.
Performance of the Fund will vary from time to time, and past results
are not necessarily indicative of future results. Performance information
supplied by the Fund may not provide a basis of comparison with other
investments using different reinvestment assumptions or time periods.
---------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
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<PAGE> 16
RESERVE PRIVATE EQUITY SERIES
RESERVE LARGE-CAP VALUE EQUITY FUND
810 SEVENTH AVENUE, NEW YORK, N.Y. 10019
(800) 637-1700
-----------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information describes Reserve Private
Equity Series ("Trust") and the Reserve Large-Cap Value Equity Fund ("Large-Cap
Fund" or "Fund"). This Statement is not a Prospectus, but provides detailed
information to supplement the Prospectus and should be read in conjunction with
the Prospectus. A copy of the Prospectus may be obtained (without charge) from
Reserve Private Equity Series. This Statement is dated
1995.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Policies
Other Policies
Trustees and Officers of the Trust
Investment Management and Other Agreements
Portfolio Turnover, Transaction Charges and
Allocation
Shares of Beneficial Interest
Purchase, Redemption and Pricing of Shares
Distributions and Taxes
Performance Information
</TABLE>
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<PAGE> 17
INVESTMENT POLICIES
The Fund has adopted as fundamental policies the following limitations
on its investment activities. These fundamental policies may not be changed
without a majority vote of the Fund shareholders, as defined in the Investment
Company Act of 1940. The Large-Cap Value Equtiy Fund may not:
(1) borrow money except as a temporary measure for extraordinary or emergency
proposes and then only in an amount not to exceed 33 1/3% of the market value
of its assets; (2) issue senior securities as defined in the Investment
Company Act of 1940 except that the Fund may borrow money in accordance with
limitation (1); (3) act as an underwriter with respect to the securities of
others except to the extent that, in connection with the disposition of
portfolio securities, it may be deemed to be an underwriter under certain
federal securities laws; (4) invest 25% or more of the value of its total
assets in the securities of issues in any particular industry; (5) purchase,
sell or otherwise invest in real estate or commodities or commodity contracts
except the Fund may purchase readily marketable securities of companies holding
real estate or interests therein and interest rate futures contracts, stock
index futures contracts, and put and call options on interest rate futures
contracts; (6) invest in voting securities or in companies for the purpose of
exercising control; and (7) purchase securities on margin, except to obtain
such short-term credits as may be necessary for the clearance of transactions;
however, the Fund may make margin deposits in connection with options and
financial futures transactions.
In addition to the fundamental investment policies listed above, the
Fund has voluntarily adopted certain policies that may be changed or amended by
action of the Trustees without requiring prior notice to or approval of
shareholders. In accordance with such policies and restrictions the Fund
cannot:
(1) purchase from or sell investment securities to any of the officers
or Trustees of the Trust, its investment adviser, its investment sub-adviser,
its principal underwriter or the officers, principals or directors of its
investment adviser, investment sub-adviser or principal underwriter; and (2)
purchase or retain securities of an issuer any of whose officers, directors,
trustees or securityholders is an officer or Trustee of the Trust or a member,
officer, director or trustee of the investment adviser or sub-adviser of the
Fund if one or more of such individuals owns beneficially more than one-half of
one percent (1/2 of 1%) of the securities (taken at market value) of such
issuer and such individuals owning more than one-half of one percent (1/2 of
1%) of such securities together beneficially own more than 5% of such
securities or both.
As a non-diversified company, the Fund is permitted to invest all of
its assets in a limited number of issuers. However, it intends to comply with
Subchapter M of the Internal Revenue Code in order to qualify as a regulated
investment company for federal income tax purposes. To so qualify, the Fund
must diversify its holdings so that, at the close of each quarter of its
taxable year, (a) at least 50% of the value of its total assets is represented
by cash, cash items, securities issued by the U.S. Government or its agencies
or instrumentalities, securities of other regulated investment companies, and
other securities limited generally with respect to any one issuer to an amount
not more than 5% of the total assets of the Fund and not more than 10% of the
outstanding voting securities of such issuer, and (b) not more than 25% of the
value of its total assets is invested in the securities of any one issuer
(other than the U.S. Government or its agencies or instrumentalities or
regulated investment companies), or in two or more issuers that the Fund
controls and that are engaged in the same or similar trades or businesses. In
the event of a decline in the market value of the securities of one or more
such issuers exceeding 5%, an investment in the Fund could entail greater risk
than in a fund which has a policy of diversification.
OTHER POLICIES
WARRANTS. The Fund also may invest up to 5% of its net assets in warrants.
Included within this amount, may be warrants which are not listed on the New
York or American Stock Exchanges. A reason for investing in warrants is to
permit the Fund to participate in an anticipated increase in the market value
of a security without having to purchase the security to which the warrants
relate.
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<PAGE> 18
Warrants convey no rights to dividends or voting rights, but only an option to
purchase equity securities of the issuer at a fixed price. If such securities
appreciate, the warrants may be exercised and sold at a gain, but a loss will
be incurred if such securities decrease in value or the term of the warrant
expires before it is exercised. The 5% limitation does not include warrants
acquired by the Fund in units or attached to other securities.
TRUSTEES AND OFFICERS OF THE TRUST
*BRUCE R. BENT, President, Treasurer and Trustee, 810 Seventh Avenue,
New York, New York 10019.
Mr. Bent is President, Treasurer, and Trustee of The Reserve Fund
("RF"), Reserve Institutional Trust ("RIT"), Reserve Tax-Exempt Trust ("RTET")
and Reserve New York Tax-Exempt Trust ("RNYTET"), Director, Vice President and
Secretary of Reserve Management Company, Inc. ("RMCI") and Reserve Management
Corporation, and Chairman and Director of Resrv Partners, Inc. Before 1968, he
was associated with Stone & Webster Securities Corp., and previously, Teachers
Insurance and Annuity Association.
EDWIN EHLERT, JR., Trustee, 125 Elm Street, Westfield, New Jersey
07091.
Mr. Ehlert is President and Director of Ehlert Travel Associates, Inc.
(travel agency formerly called Travelong of Westfield, Inc.) and Ehlert Travel
Associates of Florida, Inc. (travel agency), and Trustee of RF, RIT, RNYTET and
RTET.
HENRI W. EMMET, Trustee, 176 East 71st Street, New York, New York
10021.
Mr. Emmet is the Managing Director of Servus Associates, Inc, and
U.S.A. Representative of the First National Bank of Southern Africa and Trustee
of RF, RET, RNYTET and RTET. Until 1989, he was Senior Vice President of the
New York branch of Banque Nationale de Paris.
BURTT R. EHRLICH, Trustee, 667 Madison Avenue, New York, New York
10021.
Mr. Ehrlich is a Director of Benson Eye Care Corp and a private
investor. Until 1992, he was President and Chairman of Ehrlich Bober Financial
Corp., a municipal securities investment firm.
*DONALD J. HARRINGTON, C.M, Trustee, St. John's University, Jamaica,
New York 11439.
The Reverend Harrington is President of St. John's University (NY) and
a Trustee of RF, RIT, RNYTET and RTET. The Reverend Harrington served as
President of Niagara University from 1984 to 1989 and was Executive Vice
President of Niagara University from 1981 to 1984.
NIELS W. JOHNSEN, Trustee, 1 Whitehall Street, New York, New York
10004.
Mr. Johnsen is Chairman of the Board of International Shipholding
Corp. and Central Gulf Lines, Inc. (ship cargo carrier), Director of Centennial
Insurance Co. and Trustee of The Atlantic companies (insurance), RF, RIT,
RNYTET and RTET.
THOMAS L. RHODES, Trustee, 150 East 35th Street, New York, New York
10016
Mr. Rhodes is President and a member of the Board of Directors of the
National Review. From 1976 to 1992 Mr. Rhodes was a partner with Goldman,
Sachs & Co., an investment banking firm.
MARC C. COZZOLINO, Counsel and Secretary, 810 Seventh Avenue, New
York, NY 10019.
Mr. Cozzolino is Counsel and Secretary of RF, RIT, RTET, and RNYTET.
Before joining The Reserve Funds in 1994, Mr. Cozzolino was a staff attorney
at the New Jersey Bureau of Securities.
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<PAGE> 19
PAT A. COLLETTI, Controller, 810 Seventh Avenue, New York, New York
10019.
Mr. Colletti is Controller of RF, RIT, RTET and RNYTET. Prior to
joining The Reserve Funds in 1985, Mr. Colletti was Supervisor of Accounting of
Money Market Funds for the Dreyfus Corporation.
- ------------------------------------------
* Interested Trustee within the meaning of the Investment Company Act of 1940.
Under the Declaration of Trust, the Trustees and officers are entitled
to be indemnified by the Trust to the fullest extent permitted by law against
all liabilities and expenses reasonably incurred by them in connection with any
claim, suit or judgment or other liability or obligation of any kind in which
they become involved by virtue of their service as a Trustee or officer of the
Trust, except liabilities incurred by reason of their willful misfeasance, bad
faith, gross negligence or reckless regard of the duties involved in the
conduct of their office.
INVESTMENT MANAGEMENT AND OTHER AGREEMENTS
THE ADVISER. Reserve Management Company, Inc. ("Adviser"),14 Locust
Place, Manhasset, New York, NY 11030, a registered investment adviser, manages
the Trust and provides it with investment advice pursuant to an Investment
Management Agreement. Under the Investment Management Agreement, the Adviser
manages the Fund, is responsible for the day-to-day oversight of the Trust's
operations and otherwise administers the affairs of the Trust as it deems
advisable subject to the overall control and direction of the Trustees and the
investment policies and limitations of the Trust described in the Prospectus
and Statement of Additional Information. RMCI pays all employee costs and other
ordinary operating costs of the Fund pursuant to the Investment Management
Agreement. Excluded from ordinary operating costs are interest charges, taxes,
brokerage fees, extraordinary legal and accounting fees and expenses, payments
made pursuant to the Trust's Distribution Plan and the fees of the
disinterested Trustees, for which the Fund pays its direct or allocated share.
For its management services, and for paying all of the employee costs,
costs of the Sub-Adviser and other ordinary operating expenses of the Trust,
RMCI is periodically paid a comprehensive fee, at the annual rate of 1.50% per
annum of the average daily net assets of the Fund.
The Investment Management Agreement is subject to annual review by and
must be approved at least annually by a vote of a majority of the Board of
Trustees, including a majority of those who are not "interested persons" as
defined in the Investment Company Act of 1940, cast in person at a meeting
called for the purpose of voting on such renewal. The Agreement terminates
automatically upon its assignment and may be terminated without penalty upon 60
days' written notice by vote of the Trustees, by vote of a majority of
outstanding voting shares of the Fund or by the Adviser.
THE SUB-ADVISER. Siphron Capital Management ("Sub-Adviser"), 280 S.
Beverly Drive, Beverly Hlls, California 90212, a registered investment Adviser,
acts as Sub-Adviser to the Fund. The Adviser and Trust have entered into a
Sub-Advisory Agreement with the Sub-Adviser pursuant to which the Adviser will
pay any fees of the Sub-Adviser. The Sub-Advisory Agreement is subject to
annual review by and must be approved annually by the Trustees, including a
majority of those who are not "interested persons" as defined in the Investment
Company Act of 1940, cast in person at a meeting called for purpose of voting
on such renewal. The agreement automatically terminates upon its assignment
and may be terminated without penalty upon 60 days' written notice by vote of
the Trustees, by vote of a majority of outstanding voting shares of the Fund or
by the Sub-Adviser.
CUSTODIAN. Chemical Bank, 4 New York Plaza, New York, New York 10004
is Custodian for the cash and securities of the Trust. The Custodian maintains
custody of the Trust's cash and securities, handles its securities settlements
and performs transaction processing for receipts and disbursements in
connection with the purchase and sale of the Trust's shares.
-20-
<PAGE> 20
DISTRIBUTION AGREEMENT. Resrv Partners, Inc. ("RESRV"), 810 Seventh
Avenue, New York, New York 10019, is a distributor of the shares of the Trust.
RESRV is a "principal underwriter" for the Trust within the meaning of the
Investment Company Act of 1940, and as such acts as agent in arranging for the
continuous offering of Trust shares. RESRV has the right to enter into dealer
agreements with brokers or other persons of its choice for the sale of Trust
shares. RESRV's principal business is the distribution of shares of mutual
funds and it has retained no underwriting commissions during the last three
fiscal years.
The Distribution Agreement must be approved annually by the Trustees,
including a majority of those who are not "interested persons," as defined in
the Investment Company Act of 1940.
DISTRIBUTION PLAN. The Trust maintains a Distribution Plan ("Plan")
and related agreements, as amended, under Rule 12b-1 of the Investment Company
Act of 1940, which provides that investment companies may pay distribution
expenses, directly or indirectly, pursuant to a plan adopted by the Board and
approved by its shareholders. Pursuant to the Plan, the Distributor or its
affiliates may make payments ("assistance payments") to brokers, financial
institutions and financial intermediaries ("payees") in respect of Trust
shareholder accounts ("qualified accounts") as to which the payee has rendered
distribution assistance or other services. The Distributor may also retain
amounts to pay for advertising and marketing expenses. Assistance payments by
the Distributor are made to payees at an annual rate not to exceed .25% of the
average net asset value of all payees' qualified accounts. The Trustees have
determined that there is a reasonable likelihood that the Plan will benefit the
Trust and its shareholders and that its costs are primarily intended to result
in the sale of the Trust's shares.
Under the Plan, the Trust's officers report quarterly the amounts and
purposes of assistance payments to the Trustees. During the continuance of the
Plan the selection and nomination of the disinterested Trustees of the Trust
are at the discretion of the disinterested Trustees currently in office.
The Plan and related agreements may be terminated at any time by a
vote of a majority of the outstanding voting securities of the Fund. The Plan
and related agreements may be renewed from year to year if approved by a vote
of a majority of the Board of Trustees, including a majority of those who are
not "interested persons", as defined in the Investment Company Act of 1940.
The Plan may not be amended to increase materially the amount to be spent for
distribution without shareholder approval. All material amendments to the Plan
must be approved by a majority vote of the Board of Trustees, including a
majority of the disinterested Trustees, cast in person at a meeting called for
the purpose of such vote.
INDEPENDENT ACCOUNTANTS. Coopers & Lybrand, L.L.P. 1301 Avenue of
Americas, New York, New York 10019 is the Trust's independent accountants.
PORTFOLIO TURNOVER, TRANSACTION CHARGES AND ALLOCATION
Subject to the overall supervision of the officers of the Trust, its
Board of Trustees, and the Adviser, the Sub-Adviser places all orders for the
purchase and sale of the Fund's investment securities. In general, in the
purchase and sale of investment securities the Sub-Adviser will seek to obtain
prompt and reliable execution of orders at the most favorable prices or yields.
In determining best price and execution, the Sub-Adviser may take into account
a dealer's operational and financial capabilities, the type of transaction
involved, the dealer's general relationship with the Fund's Sub-Adviser, and
any statistical, research, or other services provided by the dealer. To the
extent such non-price factors are taken into account the execution price paid
may be increased, but only in reasonable relation to the benefit of such
non-price factors to the Fund as determined in good faith by the Fund's
Sub-Adviser. Brokers or dealers who execute investment securities transactions
for the Fund may also sell its shares; however, any such sales will not be
either a qualifying or disqualifying factor in the selection of brokers or
dealers. Subject to procedures adopted by, and the supervision of, the Board
of Trustees, the Sub-Adviser is authorized to place portfolio transactions
with brokers or dealers affiliated with it provided the commission or fee
charged is comparable to that charged by non-affiliated brokers or dealers on
comparable transactions involving similar securities being purchased or sold
during a comparable period of time on a securities exchange. Any such
transactions will be in accordance with Rule 17e-1 under the Investment Company
Act of 1940.
-21-
<PAGE> 21
When transactions are made in the over-the-counter market, the Fund
deals with the primary market makers unless more favorable prices are otherwise
obtainable.
SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trust to issue an unlimited
number of full and fractional shares of beneficial interest, and to divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the Trust. Each share
represents an interest in the respective series of the Trust proportionately
equal to the interest of each other share. If they deem it advisable in the
best interests of shareholders, the Trustees of the Trust may classify or
reclassify any unissued shares of the Trust by setting or changing the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption of the stock. Any changes would be required to comply with any
applicable state and Federal securities laws. These currently require that
each series be preferred over all other series in respect of assets
specifically allocated to such class. It is anticipated that under most
circumstances, the rights of any additional series would be comparable unless
otherwise required to respond to the particular situation. Upon liquidation of
the Trust, shareholders are entitled to share pro rata in the net assets of
their respective series of the Trust available for distribution to such
shareholders. No changes can be made to the Trust's issued shares without
shareholder approval.
Each Fund share when issued is fully paid, nonassessable and fully
transferable or redeemable at the shareholder's option. Each share has an
equal interest in the net assets of its series, equal rights to all dividends
and other distributions from its series, and one vote for all purposes. Shares
of separate series vote together for the election of Trustees and have
noncumulative voting rights, meaning that the holders of more than 50% of the
shares voting for the election of Trustees could elect all Trustees if they so
choose, and in such event the holders of the remaining shares could not elect
any person to the Board of Trustees.
The Declaration of Trust further provides that the Trustees will not
be liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
Regulations of the Securities and Exchange Commission provide that if
a series is separately affected by a matter requiring a vote (election of
Trustees, ratification of independent accountant selection, and approval of an
underwriting agreement are not considered to have such separate effect and may
be voted upon by the Trust as a whole), each such series votes separately. Each
series votes separately on such matters as approval of the Investment
Management Agreement and material amendments to the Plan, which require
approval by a majority of the effected shareholders. For this purpose a
"majority" is constituted by either 50 percent of all shares voting as a group
or 67 percent of the shares voted as a group at a meeting of shareholders at
which at least 50 percent of the shares of each group are represented.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Redemption payments are normally made by check or wire transfer, but
the Trust may be authorized to make payment of redemptions partly or wholly in
kind (that is, by delivery of portfolio instruments valued at the same time as
the redemption net asset value is determined). The Trust has made an election
committing it to pay in cash all requests for redemption from the series
involved, by any shareholder or record, limited during any 90-day period to the
lesser of $250,000 or 1% of the net assets of the series at the beginning of
the period. The election is irrevocable pursuant to rules and regulations
under the Investment Company Act or 1940 unless withdrawal is permitted by
order of the Securities and Exchange Commission. In disposing of such
securities an investor might incur transaction costs and on the date of
disposition might receive an amount less than the net asset value of the
redemption.
-22-
<PAGE> 22
DETERMINATION OF NET ASSET VALUE. Shares are offered at net asset
value plus a sales charge. The net asset value of the Fund is calculated at
the end of each business day (currently 4:00 PM New York time) that the New
York Stock Exchange is open for trading and on other days there is a sufficient
degree of trading to materially affect the Fund's net asset value. The net
asset value is not calculated on New Year's Day, Presidents' Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day,
Christmas Day and on other days the New York Stock Exchange is closed for
trading. The net asset value per share of the Fund is determined by adding the
value of all its securities and other assets, subtracting its liabilities and
dividing the result by the total number of outstanding shares that represent an
interest in the Fund.
Investment securities are valued at the last sale price on the
securities exchange or national securities market on which such securities are
primarily traded. Securities not listed on an exchange or national securities
market, or securities in which there were no transactions, are valued at the
average of the last bid and asked prices, except in the case of open short
positions where the asked price is used for valuation purposes. Bid price is
used when no asked price is available. Market quotations for foreign
securities in foreign currencies are translated into United States dollars at
the prevailing rates of exchange. Any securities or other assets for which
recent market quotations are not readily available are valued at fair value as
determined in good faith by the Board of Trustees.
REDUCED SALES CHARGE. Officers, directors, full time employees and
Trustees, and any trust, pension, profit sharing or qualified retirement plan
of the Adviser, Sub-Adviser, the distributor, the Trust and any affiliate
thereof may purchase shares of the Fund at the net asset value per share.
Spouses and minor children of the foregoing may also purchase shares at net
asset value. In addition, Sub-Adviser advisory clients and related persons of
such may purchase shares at net asset value.
DISTRIBUTIONS AND TAXES
The following is a general description of certain tax rules relating
to the Fund. It is not exhaustive and prospective investors may wish to
consult their tax advisers.
The Fund intends to qualify as a regulated investment company under
the Internal Revenue Code of 1986 ("Code") so long as such qualification is in
the best interests of shareholders. If it so qualifies, in any fiscal year in
which it distributes at least 90 percent of its taxable net income, the Fund
generally will not be subjected to federal income tax on such distributed
amounts. Shareholders of the Fund, however, will be subject to federal income
tax on any ordinary net income and net capital gains realized by the Fund and
distributed to shareholders as regular or capital gains dividends, whether
distributed in cash or in the form of additional shares. Net long term capital
gains distributions will be taxable to shareholders as long term capital gains,
regardless of the length of time the corresponding shares have been held.
Upon the taxable disposition (including a sale or redemption) of
shares of the Fund, a shareholder may realize a gain or loss depending upon his
basis in his shares. Such gain or loss generally will be treated as capital
gain or loss (if the shares are capital assets in the shareholder's hands) and
will be long-term or short-term, generally depending upon the shareholder's
holding period for the shares. However, a loss realized by a shareholder on
the disposition of Fund shares with respect to which capital gain dividends
have been paid will, to the extent of such capital gain dividends, be treated
as long-term capital loss if such shares have been held by the shareholder for
six months or less. Further, a loss realized on disposition will be disallowed
to the extent the shares disposed of are replaced (whether by reinvestment of
distributions or otherwise) within a period of 61 days beginning 30 days before
and ending 30 days after the shares are disposed of. In such a case, the basis
of the shares acquired will be adjusted to reflect the disallowed loss.
Shareholders receiving distributions in the form of additional shares will have
a cost basis for Federal income tax purposes in each share received equal to
the net asset value of a share of the Funds on the reinvestment date.
In order to qualify as a "regulated investment company" under the
Code, the Fund must, among other things, in each taxable year distribute at
least 90 percent of its taxable income to shareholders, derive at least 90
percent of its gross income from dividends, interest and gains from the sale or
-23-
<PAGE> 23
disposition of securities and derive less than 30 percent of its gross income
from the sale or disposition of securities held for less than three months.
Accordingly, the Fund will be subject to certain restrictions including
restrictions in the writing of options on securities which have been held for
less than three months, purchasing and selling futures contracts held for less
than three months, in the writing of options which expire in less than three
months, and in effecting closing purchase transactions, with respect to options
which have been written less than three months prior to such transactions.
The Code imposes a non-deductible, 4% excise tax on regulated
investment companies that do not distribute to their shareholders in each
calendar year an amount equal to (i) 98% of their calendar year ordinary
income; plus 98% of their capital gain net income (the excess of short and long
term capital losses) for the one year period ending October 31. Dividends
declared in December of any year to shareholders of record on any date in
December will be deemed to have been received by the shareholders and paid by
the Fund on the record date, provided such dividends are paid by February 1 as
of the following year.
Dividends and distributions declared payable to shareholders of record
after September 30 of any year and paid before February 1 of the following
year, are considered taxable income to shareholders on December 31 in the year
declared even though paid in the next year.
Dividends to shareholders who are non-resident aliens may be subject
to a United States withholding tax at a rate of up to 30% under existing
provisions of the code applicable to foreign individuals and entities unless a
reduced rate of withholding or a withholding exemption is provided under
applicable treaty laws. Non-resident aliens are urged to consult their own tax
adviser concerning the applicability of the United States withholding tax.
The Code includes rules applicable to certain listed options, futures
contracts, and options on futures contracts which the Fund may write, purchase
or sell. Such options and contracts are classified as Section 1256 contracts
under the Code. The character of gain or loss resulting from the sale,
disposition, closing out, expiration or other termination of Section 1256
contracts is generally treated as long-term capital gain or loss to the extent
of 60% thereof and short-term capital gain or loss to the extent of 40% thereof
("60/40 gain or loss"). Such contracts, generally are required to be treated
as sold at market value on the last day of such fiscal year and on certain
other dates for federal income tax purposes ("marked-to-market"). Generally,
over-the-counter options are not classified as Section 1256 contracts and are
not subject to the mark-to market rule or to 60/40 gain or loss treatment. Any
gains or losses recognized by the Fund from transactions in over-the-counter
options generally constitute short-term capital gains or losses. If
over-the-counter call options written, or over-the-counter put options
purchased, by the Fund are exercised, the gain or loss realized on the sale of
the underlying securities may be either short-term or long-term, depending on
the holding period of the securities. In determining the amount of gain or
loss, the sales proceeds are reduced by the premium paid for over-the-counter
puts or increased by the premium received for over-the counter calls.
Generally, the hedging transactions undertaken by the Fund may result
in "straddles" for U.S. federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund. In addition,
losses realized by the Fund on positions that are part of a straddle may be
deferred under the straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which the losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the tax consequences to the Fund of engaging in hedging
transactions are not entirely clear. Hedging transactions may increase the
amount of short-term capital gain realized by the Fund which is taxed as
ordinary income when distributed to Shareholders.
The Fund may make one or more of the elections available under the
Code which are applicable to straddles. If the Fund makes any of the
elections, this amount, character and timing of gains or losses form the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
may operate to accelerate the recognition of gains or losses from the affected
straddle positions.
-24-
<PAGE> 24
Because the straddle rules may affect the character of gains or
losses, defer losses and/or accelerate the recognition of gains or losses from
the affected straddle position, the amount which may be distributed to
Shareholder, and which, will be taxed to them as ordinary income or long-term
capital gain, may be increased or decreased as compared to a fund that did not
engage in such hedging transactions.
The Code and the Treasury Regulations thereunder are subject to change
by legislative or administrative action either prospectively or retroactively.
Dividends paid by the Fund are generally expected to be subject to any
state or local taxes on income. Shareholders should consult their own
attorneys or tax advisers about the tax consequences related to investing in
the Fund.
PERFORMANCE INFORMATION
The Fund may from time to time advertise its total return. Total
return is computed by finding the average annual compounded rates of return
over the 1,5 and 10 year periods or up to the life of the Fund that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P (1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1,5 or 10 year
periods at the end of the 1,5 or 10 year periods
(or fractional portion thereof)
In advertising and sales literature, the Fund may compare its
performance to (i) the Standard & Poor's 500 Stock Index ("S&P 500"), Dow Jones
Industrial Average ("DJIA"), the Russell 2000, or other unmanaged indices so
that investors may compare the Fund's results with those of a group of
unmanaged securities widely regarded by investors as representative of the
securities markets in general; (ii) other groups of mutual funds tracked by
Lipper Analytical Services, Inc. a widely used independent research firm which
ranks mutual funds by overall performance, investment objectives and assets, or
tracked by other services, companies, publications, or persons who rank mutual
funds on overall performance or other criteria; and (iii) the Consumer Price
Index (measure for inflation) to assess the real rate of return from an
investment in the Fund. Unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs and expenses.
The Fund may also compute aggregate total return for specified periods
based on a hypothetical Fund account with an assumed initial investment of
$10,000. The aggregate total return is determined by dividing the net asset
value of the account at the end of the specified period by the value of the
initial investment and is expressed as a percentage. Calculation of aggregate
total return reflects payment of the maximum sales charge and assumes
reinvestment of all income dividends and capital gain distributions during the
period.
The Fund may also quote annual, average annual and annualized total
return and aggregate total performance data both as a percentage and as a
dollar amount based on a hypothetical $10,000 investment for various periods.
Such data will be computed as described above, except that (1) the rates of
return calculated will not be average annual rates, but rather, actual annual,
annualized or aggregate rates of return and (2) the maximum sales charge will
not be included with respect to annual, annualized or aggregate rates of return
calculations.
-25-
<PAGE> 25
Part C
Item 24. Financial Statements and Exhibits
(a) Financial Statements Included in Part A:
None
Financial Statements Included in Part B:
None
(b) Exhibits
(1) Amended Declaration of Trust was filed as an Exhibit to
Registrant's Pre-effective Amendment No. 1 filed September 3,
1993 and is herewith incorporated by reference.
(2) Amended Bylaws of the Registrant were filed as an Exhibit to
Registrant's Pre-effective Amendment No. 1 filed September 3,
1993 and is herewith incorporated by reference.
(3) Not Applicable.
(4) Not Applicable.
(5) (a) Form of Investment Management Agreement between the
Registrant and Reserve Management Company, Inc. was filed as
an Exhibit to the Registrant's Registration Statement filed
May 25, 1993 and is herewith incorporated by reference.
(b) Form of Sub-Investment Management Agreements between the
Registrant, Reserve Management Company, Inc. and Sub-
Adviser, is herewith incorporated by reference.
(6) (a) Form of Distribution Agreement between the Registrant and
Resrv Partners, Inc. was filed as an Exhibit to the
Registrant's Registration Statement filed May 25, 1993 and is
herewith incorporated by reference.
(b) Form of Dealer Agreement. was filed as an Exhibit to the
Registrant's Registration Statement filed May 25, 1993 and is
herewith incorporated by reference.
(7) Pension Plan of Reserve Management corporation was filed as
an exhibit to Post-Effective Amendment No. 32 of The Reserve
Fund, File No. 2-36429; amendments to Pension Plan filed as
an exhibit to Post-Effective No. 45 of The Reserve Fund (File
No. 2-36429) dated July 31, 1989 and is herewith incorporated
by reference.
(8) Form of Custodian Agreement between Registrant and Custodial
Trust Company was filed as an Exhibit to Pre- effective
Amendment No.1 filed September 3, 1993 and is herewith
incorporated by reference.
(9) Not Applicable.
(10) Opinion of counsel.*
(11) Consent of independent accountants - Not Applicable.
(12) Not Applicable.
(13) Form of Subscription Agreement was filed as an Exhibit to the
Registrant's Registration Statement filed May 25, 1993 and is
herewith incorporated by reference.
*Filed herewith
**To be filed by amendment
-26-
<PAGE> 26
(14) Not Applicable.
(15) Form of Service Plan was filed as an Exhibit to the
Registrant's Registration Statement filed May 25, 1993 and is
herewith incorporated by reference.
(16) Schedule for computation of each performance quotation
provided in Registration Statement.**
(17) Powers of Attorney*
(18) Rule 18f-3 Plan
*Filed herewith
**To be filed by amendment
-27-
<PAGE> 27
Item 25. Persons Controlled by or Under Common Control with Registrant
As of January 1, 1995, Reserve Management Company, Inc., a New
Jersey corporation, was a shareholder of Registrant.
Item 26. Number of Holders of Securities
As of July 31, 1995 there were 269 recordholders of the Registrant.
Item 27. Indemnification
Each Trustee, officer, employee or agent of the registrant, and any
person who has served at it request as Director, Trustee, officer
or employee of another business entity, shall be entitled to be
indemnified by the Registrant to the fullest extent permitted by
the laws of the State of Delaware, subject to the provisions of the
Investment company Act of 1940 and the rules and regulations
thereunder.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to Trustees, officer and
controlling persons of the Registrant pursuant to the Declaration
to Trust or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange commission such
indemnification against such liabilities (other than the payment by
the Registrant of any expenses incurred or paid by a Trustee,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate public policy as express in the
Act and will governed the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
<TABLE>
<CAPTION>
Position with
Name the Adviser Other Business
- ---------------- -------------------- -----------------------------------------
<S> <C> <C>
Henry B.R. Brown President, Treasurer and President, Treasurer and Director of Reserve
Director Management Corporation of the same address as the Trust;
Director and Treasurer of Transfer Agent Inc., 14 Locust Place,
Manhasset, NY 11030
Bruce R. Bent Vice President, Secretary and Vice President, Secretary and Director of
Director Director Reserve Management Corporation and Director
of Resrv Partners, Inc. both of the same address as the Trust.
Marc C. Cozzolino Counsel Counsel of Reserve Management Corporation and Counsel and
Secretary of Resrv Partners, Inc. both of the same address as the
Trust.
</TABLE>
Item 29. Principal Underwriters
(a) Resrv Partners, Inc., the principal underwriter of the
Registrant, also acts as principal underwriter to The Reserve
Fund, Reserve Institutional Trust, Reserve Tax-Exempt Trust,
and Reserve New York Tax-Exempt Trust.
-28-
<PAGE> 28
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Position and Offices
Business Address With Resrv Partners, Inc. With Registrant
- ------------------ ------------------------- --------------------
<S> <C> <C>
Bruce R. Bent Chairman and Director President, Treasurer & Trustee
Marc C. Cozzolino Counsel & Secretary Counsel & Secretary
</TABLE>
Item 30. Location of Accounts and Records
All records required to maintained by Section 31(a) of the 1940 Act
and the Rules promulgated thereunder are maintained at 810 Seventh
Avenue, New York NY 10019 except those relating to receipts and
deliveries of securities, which are maintained by the Registrant's
Custodians and certain records regarding portfolio transactions
which are maintained at the offices of the Sub-Advisers: T.H.
Fitzgerald & Co., Research Center, 305 Center Rd., Easton, CT 00612;
Trainer, Wortham & Company, Inc., 845 Third Avenue, New York, NY
10022; Roanoke Asset Management, 529 Fifth Avenue, New York, NY
10017. Cambridge Equity Advisors, 5214 Mayland Way, Suite 309,
Brentwood, TN 37027. Southern Capital Advisors, 50 Front Street,
Morgan Keegan Tower, Memphis, TN 38103. Pinnacle Associates Ltd.,
666 Fifth Avenue, 14th Floor, New York, NY 10103. Siphron Capital
Management, 280 S. Beverly Drive, Beverly Hills, California 90212.
Item 31. Management Services
See "Investment Management and Other Agreements" in Part B.
Item 32. Undertakings
Registrant makes the following undertakings:
(a) to file a post effective amendment, using financial statements
which may not be certified, with four to six months from the
effective date of this Registration Statement.
-29-
<PAGE> 29
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that this
Post-Effective Amendment to its Registration Statement meets all of the
requirements for effectiveness pursuant to Rule 485(a) under the Securities Act
of 1933 and Registrant has duly caused this Post-Effective Amendment No. 7 to
its Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of New York and State of New York, on
the 29th day of August, 1995
/s/ Bruce R. Bent
----------------------------------------------
Bruce R. Bent, President
Attest:
/s/ Marc C. Cozzolino
- -------------------------------------------------------------
Marc C. Cozzolino, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 7 to its Registration Statement has been below
signed by the following persons in the capacities and on the dates indicated.
/s/ Bruce R. Bent Date 8/29/95
- ----------------------------------------------- ----------------
Bruce R. Bent, President, Treasurer
and Board Member (principal executive,
operating and financial officer)
* /s/ Date
---------------------------------------------- ----------------
Edwin Ehlert Jr., Board Member
* /s/ Date
---------------------------------------------- ----------------
Henri W. Emmet, Board Member
* /s/ Date
---------------------------------------------- ----------------
Donald J. Harrington, Board Member
* /s/ Date
---------------------------------------------- ----------------
Niels W. Johnsen, Board Member
* /s/ Date
---------------------------------------------- ----------------
Burtt R. Ehrlich, Board Member
* /s/ Date
---------------------------------------------- ----------------
Thomas L. Rhodes, Board Member
/s/ Marc C. Cozzolino Date 8/29/95
- ----------------------------------------------- ----------------
Marc C. Cozzolino, *Attorney-in-Fact
Counsel and Secretary
-33-
<PAGE> 30
INDEX TO EXHIBITS
Sequentially
Exhibit No. Description Numbered
- ----------- ----------- ------------
1. Declaration of Trust of Registrant.**
2. Bylaws of Registrant.**
3. Not Applicable.
4. Not Applicable.
5. (a) Form of Investment Management Agreement between
the Registrant and Reserve Management Company Inc. **
(b) Form of Sub-Investment Management Agreement
between Registrant, Reserve Management Company, Inc.
and Siphon Capital Management**
6. (a) Form of Distribution Agreement between the
Registrant and Resrv Partners, Inc. **
(b) Form of Selected Dealer Agreement. **
7. Pension Plan of Reserve Management Corp. filed
as an exhibit to Post-Effective Amendment No., 32
of The Reserve Fund (File No. 2-36429);
amendments thereto filed as an exhibit to
Post-Effective Amendment No. 45 and all are
incorporated by reference.
8. Form of Custodian Agreements between Registrant and
Custodial Trust Company.**
9. Not Applicable.
10. Opinion of Counsel.
11. Consent of Independent Accountants - Not Applicable
12. Not Applicable
13. Form of Subscription Agreement between the Registrant
and Reserve Management Company, Inc. **
14. Not Applicable
15. Form of Service Plan **
16. Schedule for computation of each performance
quotation provided in Registration Statement*
17. Powers of Attorney
18. N/A
* To be filed by amendment
**Previously filed
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<PAGE> 1
Exhibit 10
August 29, 1995
Board of Trustees
The Reserve Fund
810 Seventh Avenue
New York, New York 10019
Gentlemen:
I have acted as counsel to the Reserve Private Equity Series, a
Delaware business trust (the "Fund"), in connection with the registration of
shares of the Large-Cap Value Equity Fund ("Fund") with the Securities and
Exchange Commission.
As counsel to the Fund, I have made such investigations and have
examined and relied upon the originals or copies, certified or otherwise
identified to my satisfaction, of such records, instruments, certificates,
memoranda and other documents as I have deemed necessary or advisable for the
purposes of this opinion.
1. The Fund has been duly incorporated and is validly existing
under the laws of Delaware.
2. To the best of my knowledge, no further approval, consent or
other order of the Board of Trustees is legally required in
connection with the organization of the Portfolio and the
registration of their shares.
3. To the best of my knowledge, the shares of the Portfolio, when
issued, will be legally issued, non-assessable and, when
subscribed to, fully paid.
I consent to the filing of this opinion as an exhibit to the Fund's
registration statement under the Securities Act of 1933.
Very truly yours,
/s/ Marc C. Cozzolino
Marc C. Cozzolino
Counsel
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<PAGE> 1
Exhibit 17
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a trustee of THE
RESERVE PRIVATE EQUITY SERIES, a Delaware business trust, does hereby
constitute and appoint Marc C. Cozzolino and William Goodwin, and each of them,
his true and lawful attorney and agent to do any and all acts and things and to
execute any and all instruments which said attorney and agent may deem
necessary or advisable; (i) to enable the said Trust to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection
with the registration under said Securities Act of the shares of beneficial
interest of said Trust (the "Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as trustee of said
Trust to a Registration Statement or to any amendment thereto filed with the
Securities and Exchange Commission in respect of said Securities and to any
instrument or document filed as part of, as an exhibit to or in connection with
said Registration Statement or amendment; (ii) to enable said Trust to comply
with the Investment Company act of 1940, as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission in respect thereof,
in connection with the registration under said Investment Company Act of the
Trust, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as trustee of said Trust to a Registration
Statement or to any amendment thereto filed with the Securities and Exchange
Commission in respect of said Trust and to any instrument or document filed as
part of, as an exhibit to or in connection with said Registration Statement or
amendment; and (iii) to register or qualify said Securities for sale and to
register or license said Trust as a broker or dealer in said Securities under
the securities or Blue Sky laws of all such states as may be necessary or
appropriate to permit therein the offering and sale of said Securities as
contemplated by said Registration Statement, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign for and on behalf of the undersigned the name of the undersigned as
trustee of said Trust to any application, statement, petition, prospectus,
notice or other instrument or document, or to any amendment thereto, or to any
exhibit filed as a part thereof or in connection therewith, which is required
to be signed by the undersigned and to be filed with the public authority or
authorities administering said securities or Blue Sky laws for the purpose of
so registering or qualifying said Securities or registering or licensing said
Trust, and the undersigned does hereby ratify and confirm as his own act and
deed all that said attorney and agent shall do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
21st day of June 1995.
/s/ Edwin Ehlert, Jr.
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Edwin Ehlert, Jr., Board Member
/s/ Henri W. Emmet
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Henri W. Emmet, Board Member
/s/ Donald J. Harrington
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Donald J. Harrington, Board Member
/s/ Niels W. Johnsen
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Niels W. Johnsen, Board Member
/s/ Burtt R. Ehrlich
---------------------------------------------------
Burtt R. Ehrlich, Board Member
/s/ Thomas L. Rhodes
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Thomas L. Rhodes, Board Member
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