<PAGE> 1
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
<CAPTION>
PAGE
---
<S> <C>
Management's Discussion of Fund Performance..... 2
Financial Statements............................ 9
Report of Independent Accountants............... 38
</TABLE>
Founders of
"America's First
Money Fund"
810 Seventh Avenue, New York, NY 10019-5868
GENERAL INFORMATION AND 24-HOUR YIELD AND BALANCE INFORMATION
800-637-1700 [ ] www.reservefunds.com
This literature is not authorized for distribution to prospective investors
unless
preceded or accompanied by an appropriate current prospectus.
Distributor -- Resrv Partners, Inc.
RPES/ANNUAL 7/98 [The Reserve Funds Logo]
Founders of
"America's First
Money Fund"
-------------------------------------------------------------------------
ANNUAL REPORT
-------------------------------------------------------------------------
RESERVE PRIVATE EQUITY SERIES
FOR THE YEAR ENDED
MAY 31, 1998
<PAGE> 2
RESERVE BLUE CHIP GROWTH FUND
<TABLE>
<CAPTION>
<S> <C>
Blue Chip Growth $18,800 Dow Jones $22,640
10000 10000
18800 22640
</TABLE>
Total return represents the increase in value of an investment
over the period from October 28, 1995 (inception) to May 31,
1998. The Fund's return reflects the maximum sales charge
imposed at the time. On October 31, 1997, the Fund eliminated
the sales charge, so future returns may be higher than those
reflected above. Past performance is not indicative of future
results.
To the Shareholders of Reserve Blue Chip Growth Fund:
The major factors contributing to last year's market gains were strong
economic growth, robust corporate profits, low interest rates and subdued
inflation. As we enter the new fiscal year, we believe the long term outlook for
the stock market remains favorable for many of the same factors. The one area of
concern which could lead to intermediate term market weakness is that corporate
profit growth is moderating. The continuing turmoil in the Asian economies along
with the growing squeeze on profit margins reflecting rising costs, competitive
pricing, and slowing volume gains will result in reduced earnings for a number
of companies for at least the next several quarters.
In this difficult earnings environment, we are concentrating on companies
with highly visible growth in sales and earnings and limited Asian exposure. As
negative announcements increase, we believe investors will focus on companies
having relatively consistent earnings growth. Attractive areas in which the Blue
Chip Growth Fund is invested include U.S. drug companies, select technology
issues and a number of financial, as well as consumer non-durable stocks.
There has been considerable discussion for some time about the historic high
valuations at which the market is selling. While high valuations could limit
returns investors achieve over the next few years, high valuation levels should
not, by themselves, bring about a bear market. The most common reason behind a
market decline is a tightening of monetary policy by the Federal Reserve and
this does not appear likely for some time.
CHARLES V. MOORE, PRESIDENT, TRAINER, WORTHAM & COMPANY, INC., SUB-ADVISER
2
<PAGE> 3
RESERVE CONVERTIBLE SECURITIES FUND
<TABLE>
<CAPTION>
Convertible Securities $11,540 Lipper Convertible $13,280
<S> <C>
10000 10000
11540 13280
</TABLE>
Total return represents the increase in value of an investment
over the period from July 13, 1995 (inception) to May 31, 1998.
The Fund's return reflects the maximum sales charge imposed at
the time. On October 31, 1997, the Fund eliminated the sales
charge, so future returns may be higher than those reflected
above. Past performance is not indicative of future results.
To the Shareholders of Reserve Convertible Securities Fund:
Current conditions have made the convertible securities market a more
challenging asset class in which to find attractively priced issues.
This "best of all worlds" environment for convertibles, declining interest
rates and rising equity prices, along with unprecedented demand, has driven many
convertible issues to historic highs. Mutual fund liquidity and hedge fund
arbitrage trading have been largely responsible for this price action, making it
increasingly difficult to find issues providing the attractive current income
and reasonable conversion premiums necessary to achieve the superior
risk-adjusted rates of return that we have enjoyed in the past.
Energy and energy services, assisted living and managed health care have
considerable convertible issues outstanding that have come under pricing
pressures due to either perceived or real over-supply. These perceptions have
caused severe short-term price corrections in the underlying equities causing
price earnings ratio contraction. We believe these corrections have been
overdone and maintain over-weighted positions based upon the attractive
long-term fundamental prospects for these industries. In addition, our
investment discipline has convinced us to remain over-weighted in issues that
provide attractive current income to offset much of the decline in the
underlying common stock.
Your fund will continue to emphasize a defensive posture and downside
protection by investing in convertibles with superior risk-reward
characteristics, current income (competitive with money-market rates) and
potential for capital appreciation when the underlying common stock performs as
expected.
As of May 29, 1998, 59% of the portfolio was in convertible bonds with an
average life of 5.7 years and an average purchase price of $99.20 or slightly
below par. Combine these figures with a current yield of 5.42% and we are
confident in our market positioning.
We continue our discipline of maintaining downside protection for the
portfolio. We begin to liquidate positions when the underlying common stock
trades at a price/earning ratio of 150% of our long term estimated growth rate.
This has historically protected us from price decline when the company has
disappointed the market with its earnings. We look forward to the coming year.
J. PETER SIMON, SENIOR VICE PRESIDENT, NEW VERNON ADVISORS, INC., SUB-ADVISER
3
<PAGE> 4
RESERVE INFORMED INVESTORS GROWTH FUND
<TABLE>
<CAPTION>
Informed Investors $15,525 S&P 500 $23,670
<S> <C>
10000 10000
15525 23760
</TABLE>
Total return represents the increase in value of an investment
over the period from December 28, 1995 (inception) to May 31,
1998. The Fund's return reflects the maximum sales charge
imposed at the time. On October 31, 1997, the Fund eliminated
the sales charge, so future returns may be higher than those
reflected above. Past performance is not indicative of future
results.
To the Shareholders of Reserve Informed Investors Growth Fund:
The Fund returned 16.5% for the fiscal year ended May 31, 1998--considered a
respectable showing when measured against an investment backdrop that included a
festering Asian crisis, equity valuations in the U.S. markets at the highest
level in modern history, and a domestic stock market that strongly favored a
very narrow list of the largest-capitalization securities virtually to the
exclusion of everything else.
What of the balance of 1998? There is no change in our opinion that the
stock market is going to go higher despite the continuing fall-out from Asia,
the political distractions in Washington and even the potential of a conflict
with Iraq. Very likely, investors can look forward to another rewarding year.
The combination of strong leading indicators, a growing economy and falling
bond prices is actually characteristic of the early part of an economic
recovery, as in 1971, 1976, 1983 and 1991. Stocks have never seriously faltered
under these circumstances, and this time should be no exception.
Leading economic indicators, such as money growth, consumer sentiment and
interest rates are so strong that a business recession is less likely than, as
one financial commentator quipped, President Clinton joining a monastery.
The underlying rate of inflation fell to a 32 year low in 1997. The core
consumer price index--the CPI minus volatile food and energy prices--rose just
2.2% in 1997. That's down from a 2.6% rise in 1996 and the smallest gain since
1965 when it rose 1.5%
The portfolio has been re-balanced in order to take full advantage of its
reawakening of investor interest in stocks that qualify under the "Informed
Investor" discipline. We are confident of outdistancing the S&P 500 index this
year, and for the foreseeable future, as was the case for the most part prior to
1995 when "Informed Investor" stocks enjoyed a level of investor interest and
support closely paralleling that which exists today.
THOMAS H. FITZGERALD, JR., PRESIDENT, T.H. FITZGERALD & CO. SUB-ADVISER
4
<PAGE> 5
RESERVE INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
EAFE $11,663 International Equity $12,665
<S> <C>
10000 10000
11663 12665
</TABLE>
Total return represents the increase in value of an investment
over the period from July 13, 1995 (inception) to May 31, 1998.
The Fund's return reflects the maximum sales charge imposed at
the time. On October 31, 1997, the Fund eliminated the sales
charge, so future returns may be higher than those reflected
above. Past performance is not indicative of future results.
To the Shareholders of Reserve International Equity Fund:
Despite the turmoil in Asia, The Reserve International Fund has performed
very well this year up over 21% and the international stock markets have turned
around. Having made this broad generalization, I will proceed to deny the
existence of an "international" market.
Since we anticipate low inflation, low interest rates and a real growth rate
of 3%, nearly 86% of our assets are in European-based companies. Now that the
wonders of socialism (USSR style) have been totally debunked and socialism
(European style) is on the ropes many companies and governments have pared costs
resulting in less costly government lower interest rates and better returns on
capital for industry.
The Asian markets remain depressed because the economic forecasts are not
optimistic, driven by potential problems throughout the area, such as Malaysia
which has proven a bigger problem than anticipated, and Japan which is a drag
rather than a spur to the entire region. As the yen continues to lose ground to
the dollar and the Japanese government warns that the economy could continue to
contract Japan remains a small fraction in our portfolio, 1.2% to be specific.
Strong action by the government in dealing with banks and basic economic
structural ills would encourage the investment community, but we estimate that
we have at least a year before Asia in general and Japan, specifically will
warrant a greater commitment on the part of your fund.
South American markets, in our opinion, have been punished for the deeds of
Asia. Consequently, strong growth (Mexico 5%, Argentina 6%) is being ignored,
nevertheless, we will delay an increase in our Latin involvement until we feel
the equity environment has improved.
As we said, the "international" market has improved depending on which one
you are considering.
NICHOLAS REITENBACH, SENIOR VICE PRESIDENT, PINNACLE ASSOCIATES LTD.,
SUB-ADVISER
5
<PAGE> 6
RESERVE LARGE-CAP GROWTH FUND--ANNUAL SUMMARY*
<TABLE>
<CAPTION>
Dow Jones $16,415 Large-Cap Value $17,680
<S> <C>
10000 10000
16415 17680
</TABLE>
Total return represents the increase in value of an investment
over the period from July 13, 1995 (inception) to May 31, 1998.
The Fund's return reflects the maximum sales charge imposed at
the time. On October 31, 1997, the Fund eliminated the sales
charge, so future returns may be higher than those reflected
above. Past performance is not indicative of future results.
To the Shareholders of Reserve Large-Cap Growth Fund:
Your Fund continues to perform well in a very strong stock market. Gains in
your stock holdings over the past year were fairly broad-based, with particular
strength in the Medical, Publishing and Food Processing industries. The
portfolio continues to be highly concentrated and, as of May 31, 1998, owned
positions in twenty-seven companies. This concentration reflects our fundamental
philosophy of focusing your investments in great businesses with strong brands
or franchises, consistent shareholder earnings growth, and a talented management
team; an uncommon combination.
As we look ahead, three factors are worth noting: first, political
instability in Russia, India and the Asian Pacific; second, an increasingly
competitive pricing environment driven in part by a broader and better-informed
consumer base via the Internet; and, finally, the pressure on domestic wages
caused by a combination of minimum wage hikes, high demand for skilled labor,
and a shift towards the service sector. These three issues will impact the
global economy and pressure a company's ability to generate profits.
Therefore inflation will remain in check, which in turn helps to moderate
interest rates which allow for higher valuations of future corporate earnings.
Also, the U.S. economy is strong and has provided an attractive haven for
"flight to quality" international investors. You will note that all of the
companies in your fund are domiciled in the United States. And it is these
companies--and other potentially attractive stocks--which define our ongoing
focus. Thank you for your continued investment in the Reserve Large Cap Growth
Fund.*
PETER D. SIPHRON, VICE-PRESIDENT, SIPHRON CAPITAL MANAGEMENT, SUB-ADVISER
* Formerly known as Large-Cap Value. The filing date for the name change with
the Securities and Exchange Commission will become effective on or by
September 22, 1998.
6
<PAGE> 7
RESERVE MID-CAP EQUITY FUND*
<TABLE>
<CAPTION>
Mid-Cap Growth $12,710 Russell 20000 $14,110
<S> <C>
10000 10000
12710 14110
</TABLE>
Total return represents the increase in value of an investment
over the period from June 1, 1995 (inception) to May 31, 1998.
The Fund's return reflects the maximum sales charge imposed at
the time. On October 31, 1997, the Fund eliminated the sales
charge, so future returns may be higher than those reflected
above. Past performance is not indicative of future results.
To the Shareholders of the Reserve Mid-Cap Equity Fund:
We are pleased that the Board of Trustees of the Reserve Mid-Cap Equity Fund
has chosen Pekin Singer & Shapiro Asset Management as the new sub-adviser for
the fund. As the new managers of the fund, our primary goal is to produce
consistent returns relative to the general markets with less overall volatility.
The fund will adopt a growth-at-a-reasonable price philosophy, more in keeping
with the style which we have been using for decades as private money managers.
There will be less emphasis on earning momentum and aggressive growth rates,
which we believe fail to generate superior returns over the long term. A more
detailed explanation of our investment criteria can be found in the new fund
prospectus.
We look forward to investing with you as shareholders and to working for you
as portfolio managers.
JOANNE PEKIN AND MARTHA DORAN, PRINCIPALS, PEKIN SINGER & SHAPIRO ASSET
MANAGEMENT SUB-ADVISERS
* Formerly known as Mid-Cap Growth Fund. The filing date for the name change
with the Securities and Exchange Commission will become effective on or by
September 22, 1998.
7
<PAGE> 8
RESERVE SMALL-CAP GROWTH FUND
<TABLE>
<CAPTION>
Emerging Growth $16,440 Russell 2000-Growth Index $18,230
<S> <C>
10000 10000
16440 18230
</TABLE>
Total return represents the increase in value of an investment
over the period from November 14, 1995 (inception) to May 31,
1998. The Fund's return reflects the maximum sales charge
imposed at the time. On October 31, 1997, the Fund eliminated
the sales charge, so future returns may be higher than those
reflected above. Past performance is not indicative of future
results.
To the Shareholders of the Reserve Small-Cap Growth Fund:
The Fund's inception to date performance has continued to outpace the small
capitalization growth benchmark of the Russell 2000(R) Growth Index. However,
over the arbitrary fiscal one year ending May 31, 1998 the Fund's return was
lower than its benchmark. We are encouraged that since May the Fund has markedly
outperformed the Index and has begun to produce the impressive returns last
experienced in 1995.
Our core investment belief is that earnings growth is the primary
determinant of equity returns and that fundamental research can identify those
dynamic companies with outstanding growth potential. In today's investment
environment the risks of investing in companies which disappoint on earnings
have increased so dramatically that only securities with predictable earnings
are priced at levels appropriate to their growth rates. The Fund has an
advantage in this environment because we perform rigorous fundamental research
on each investment idea from the bottom-up rather than selecting stocks based on
top-down/macro themes or computer screening. However, even superior individual
stock selection is often not enough if the market is being shocked by exogenous
forces. In May, 1998 for example, concern about repercussions from Southeast
Asia depressed the stock price of almost all small cap technology and
telecommunications companies whether or not their earnings were at risk.
Obviously, the excellent June 1998 returns were partially the result of more
rational pricing of these same issues. Good performance was also attributable to
our weighting in small company consumer stocks.
As we enter the second half of 1998, we are excited by our portfolio because
the average earnings growth rate is expected to be significantly over two times
that of the S&P 500(R) Index while the expected earnings comparisons for 1999
are even more compelling. Looking forward, it is our belief that large
multinational corporations are more vulnerable to the external Asian slowdown
than smaller domestic companies. As the market rediscovers high growth companies
that have little or no Asian exposure, the Fund's portfolio should deliver the
outsized returns you should expect from investing in small company stocks.
EDWIN G. VROOM, PRESIDENT, ROANOKE ASSET MANAGEMENT, SUB-ADVISER
8
<PAGE> 9
THE RESERVE PRIVATE EQUITY SERIES--RESERVE BLUE CHIP GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS -- 99.6% SHARES (NOTE 1)
---------------------- ------ --------
<S> <C> <C>
AEROSPACE AND DEFENSE -- 3.6%
Armor Holdings, Inc.*........
25,000 $ 306,250
AUTO/TRUCKS & PARTS -- 3.5% ----------
Federal Mogul Corp. .........
5,000 295,937
BANKS -- 8.3% ----------
Banc One Corp. ..............
BankBoston Corporation....... 6,270 345,634
3,400 358,275
----------
703,909
BEVERAGES -- 4.5% ----------
Pepsico, Inc. ...............
9,500 387,719
CABLE--TV -- 5.0% ----------
U.S. West, Inc.--Media Group*
11,500 426,219
COMMERCIAL SERVICES -- 3.5% ----------
Cendant Corporation*.........
13,736 297,900
COMMUNICATIONS -- 5.4% ----------
Chancellor Media Corp.*......
Qualcomm, Inc.*.............. 6,000 250,875
4,000 208,500
----------
459,375
COMPUTER NETWORKING -- 4.4% ----------
Cisco Systems, Inc.*.........
5,000 378,125
DATA PROCESSING -- 4.4% ----------
National Data Corp. .........
9,900 371,250
ELECTRONICS -- 4.0% ----------
General Electric Co. ........
4,100 341,837
ENTERTAINMENT -- 3.3% ----------
Disney (Walt) Co. ...........
2,500 282,812
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS (CONTINUED) SHARES (NOTE 1)
------------------------- ------ --------
<S> <C> <C>
INSURANCE -- 11.4%
American International Group,
Inc. ...................... 2,500 $ 309,531
Hartford Financial Services
Group, Inc. ............... 3,000 330,188
Travelers Group, Inc. ....... 5,500 335,500
----------
975,219
----------
MACHINERY -- 2.2%
Novellus Systems, Inc.*...... 5,000 189,063
----------
OFFICE AND BUSINESS EQUIPMENT -- 4.7%
International Business
Machines................... 3,400 399,075
----------
OIL/GAS EQUIPMENT & SERVICES -- 6.7%
Global Marine, Inc.*......... 14,000 312,375
Petroleum Geo-Services, ADR*. 4,000 262,000
----------
574,375
----------
PACKAGED SOFTWARE -- 4.3%
Computer Associates
International.............. 7,000 367,500
----------
PHARMACEUTICALS -- 9.3%
Johnson & Johnson............ 4,500 310,781
Lilly (Eli) & Co. ........... 3,300 202,744
Merck & Co. ................. 2,400 280,950
----------
794,475
----------
RETAIL--SPECIALTY -- 3.9%
Blyth Industries, Inc.*...... 11,000 337,563
----------
SEMICONDUCTORS -- 4.5%
Altera Corp.*................ 5,000 168,125
Intel Corp. ................. 3,000 214,312
----------
382,437
----------
TELECOMMUNICATION -- 2.7%
Worldcom, Inc.*.............. 5,000 227,500
----------
TOTAL COMMON STOCKS
(Cost $7,325,080)............ 99.6% 8,498,540
OTHER ASSETS, LESS
LIABILITIES.................. .4% 33,513
------ ----------
NET ASSETS..................... 100.0% $8,532,053
======= ==========
</TABLE>
- ------------
Value of investments are shown as a percentage of Net Assets.
* Non-income producing.
ADR--American Depository Receipt.
For Federal income tax purposes the tax basis for investments owned at May 31,
1998, was $7,325,080; the aggregate gross unrealized appreciation was $1,363,344
and the aggregate gross unrealized depreciation was $189,884.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
THE RESERVE PRIVATE EQUITY SERIES--RESERVE BLUE CHIP GROWTH FUND
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
ASSETS:
Investments in securities, at value
(cost $7,325,080)..................... $8,498,540
Cash.................................... 42,839
Dividend and interest receivable........ 3,895
----------
Total Assets.......................... 8,545,274
----------
LIABILITIES:
Other payables and accrued expenses..... 13,221
----------
Total Liabilities..................... 13,221
----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 565,337 shares
outstanding ($.001 par value,
unlimited number of Shares of
Beneficial Interest Authorized.)...... $8,532,053
==========
Net asset value per share (offering and
redemption price per share)........... $ 15.09
==========
COMPOSITION OF NET ASSETS:
Capital Stock--(par value).............. 565
Paid in surplus......................... 7,197,157
Accumulated net realized gain on
investments........................... 160,871
Net unrealized appreciation on
investments........................... 1,173,460
----------
NET ASSETS................................ $8,532,053
==========
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1998
INVESTMENT INCOME:
Dividends............................... $ 43,764
Interest................................ 17,583
----------
Total Investment Income............... 61,347
----------
EXPENSES:
Comprehensive fee (Note 3).............. 104,500
Distribution fee (Note 3)............... 17,543
----------
Total Expenses........................ 122,043
----------
Net Investment Loss..................... (60,696)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments........ 551,668
Net change in unrealized appreciation on
investments........................... 671,426
----------
Net realized and unrealized gain on
investments........................... 1,223,094
----------
Net Increase in Net Assets Resulting
from Operations....................... $1,162,398
==========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1998 AND MAY 31, 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss..................................... $ (60,696) $ (60,000)
Net realized gain from investment transactions.......... 551,668 976,672
Net change in unrealized appreciation (depreciation) on
investments............................................ 671,426 (642,561)
----------- -----------
Net increase in net assets resulting from operations.... 1,162,398 274,111
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments........................ (1,176,380) (68,349)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares........................ 2,637,887 1,176,349
Reinvestment of distributions........................... 1,120,379 68,323
Cost of shares redeemed................................. (686,091) (1,148,732)
----------- -----------
Net increase in net assets resulting from capital share
transactions........................................... 3,072,175 95,940
----------- -----------
Net increase in net assets.............................. 3,058,193 301,702
NET ASSETS:
Beginning of year....................................... 5,473,860 5,172,158
----------- -----------
End of year............................................. $ 8,532,053 $ 5,473,860
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
THE RESERVE PRIVATE EQUITY SERIES--RESERVE CONVERTIBLE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998
<TABLE>
<CAPTION>
FACE VALUE
CONVERTIBLE BONDS -- 59.2% MATURITY AMOUNT (NOTE 1)
- -------------------------- -------- ------ --------
<S> <C> <C> <C>
BASIC INDUSTRIAL COMMODITY -- 2.0%
First South Africa Corp., Ltd., 9.00%..................... 06/15/04 $ 450,000 $ 495,000
-----------
COMMERCIAL SERVICES -- 4.3%
Data Processing Industrial, 144A, 5.25%................... 04/01/05 500,000 522,500
Metamor Worldwide, Inc., 2.94%............................ 08/15/04 600,000 538,500
-----------
1,061,000
-----------
COMPUTER STORAGE DEVICES -- 1.6%
Cirrus Logic, Inc. 144A, 6.00%............................ 12/15/03 500,000 388,125
-----------
DRUGS AND HEALTH CARE -- 2.6%
Dura Pharmaceutical, 3.50%................................ 07/15/02 750,000 643,635
-----------
GOLD MINING -- 1.8%
Coeur D'Alene Mines Corp., 7.25%.......................... 10/31/05 550,000 441,375
-----------
LEISURE & ENTERTAINMENT -- 4.0%
Family Golf Centers, Inc., 5.75%.......................... 10/15/04 400,000 494,750
Unapix Entertainment, Inc., 144A, 10.0%................... 06/30/04 500,000 500,000
-----------
994,750
-----------
HOTEL/MOTEL -- 4.3%
Hilton Hotels Corp., 5.00%................................ 05/15/06 500,000 549,688
Signature Resorts, Inc., 5.75%............................ 01/15/07 600,000 500,250
-----------
1,049,938
-----------
MANAGED CARE -- 10.7%
Alternative Living Services, 5.25%........................ 12/15/02 450,000 508,500
American Retirement Corp., 5.75%.......................... 10/01/02 400,000 400,375
Assisted Living Concepts, Inc., 6.00%..................... 11/01/02 450,000 440,578
Carematrix, Inc., 6.25%................................... 08/15/04 500,000 505,000
PhyCor, Inc., 4.50%....................................... 02/15/03 500,000 420,000
Sunrise Assisted Living, 5.50%............................ 06/15/02 350,000 359,479
-----------
2,633,932
-----------
OFFSHORE DRILLING -- 2.1%
Diamond Offshore Drilling, Inc., 3.75%.................... 02/15/07 400,000 520,583
-----------
OIL DOMESTIC -- 3.6%
Lomak Petroleum, Inc., 144A, 6.00%........................ 02/01/07 500,000 468,750
Parker Drilling, 5.50%.................................... 08/01/04 450,000 425,250
-----------
894,000
-----------
OIL AND GAS EQUIPMENT SERVICES -- 9.1%
Halter Marine, 144A, 4.50%................................ 09/15/04 1,000,000 881,250
Key Energy Group, Inc., 5.00%............................. 09/15/04 750,000 606,875
Seacor Holdings, Inc., 5.375%............................. 11/15/06 700,000 763,875
-----------
2,252,000
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
THE RESERVE PRIVATE EQUITY SERIES--RESERVE CONVERTIBLE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998--(CONTINUED)
<TABLE>
<CAPTION>
FACE VALUE
CONVERTIBLE BONDS (CONTINUED) MATURITY AMOUNT (NOTE 1)
- ----------------------------- -------- ------ --------
<S> <C> <C> <C>
POLLUTION CONTROL -- 5.5%
USA Waste Services, Inc., 4.00%........................... 02/01/02 $ 600,000 $ 729,750
United States Filter Corp., 4.50%......................... 12/15/01 600,000 632,875
-----------
1,362,625
-----------
RETAIL AND APPAREL -- 2.0%
Charming Shoppes, 7.50%................................... 07/15/06 500,000 482,500
-----------
SEMICONDUCTOR AND RELATED -- 2.0%
Xilinx, Inc., 5.25%....................................... 11/01/02 500,000 498,729
-----------
TELECOMMUNICATION -- 2.1%
Bell Atlantic Financial, 5.75%............................ 04/01/03 500,000 516,875
-----------
TRANSPORT--AIR FREIGHT -- 1.5%
Consolidated Logistics, 144A, 8.00%....................... 08/21/00 400,000 360,000
-----------
TOTAL CONVERTIBLE BONDS (Cost $14,715,151).................. 14,595,067
-----------
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCKS -- 35.4% SHARES
- ------------------------------------------------------------ -------
<S> <C> <C>
BANKS -- 1.6%
St. George Bank Ltd., $4.50............................... 8,000 396,000
-----------
COMMERCIAL SERVICES -- 1.5%
Cendant Corp., 7.50%...................................... 10,000 377,500
-----------
COMPUTER NETWORKING -- 2.1%
Vanstar Financial Trust, 6.75%............................ 12,500 509,375
-----------
CONTAINERS AND GLASS PRODUCTS -- 4.2%
Corning Delaware L. P., 6.00%............................. 8,500 527,000
Crown Cork & Seal Co., 4.50%.............................. 10,500 510,563
-----------
1,037,563
-----------
ELECTRONICS COMPONENTS -- 1.9%
Peak Trends Trust, 9.00%.................................. 30,000 471,863
-----------
FINANCIAL SERVICES -- 2.3%
SunAmerica, Inc., $3.1875, Series E....................... 4,000 577,000
-----------
GOLD MINING -- 1.7%
Freeport McMoran Corp., 7.00%, Series A................... 20,000 427,500
-----------
HOME BUILDING -- 1.6%
Fleetwood Capital Trust, 6%, Series 144A.................. 7,500 397,031
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
THE RESERVE PRIVATE EQUITY SERIES--RESERVE CONVERTIBLE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998--(CONTINUED)
<TABLE>
<CAPTION>
VALUE
CONVERTIBLE PREFERRED STOCKS (CONTINUED) SHARES (NOTE 1)
- ---------------------------------------- ------ --------
<S> <C> <C>
HOTEL/MOTEL -- 1.9%
Host Marriott Corp., 6.75%, Series 144A................... 8,500 $ 472,016
-----------
INSURANCE -- 2.1%
Aetna Inc., 6.25%......................................... 7,000 528,063
-----------
MANAGED CARE -- 2.1%
MedPartners, Inc., 6.50%, TAPS............................ 43,200 510,300
-----------
NATURAL GAS -- 1.9%
MCN Energy Corp., 8.75%................................... 15,000 464,063
-----------
OIL AND GAS EQUIPMENT SERVICES -- 2.0%
EVI, Inc., 5.00%, Series 144A............................. 10,000 467,292
-----------
PUBLISHING -- 2.2%
Readers Digest, $1.93..................................... 20,000 553,750
-----------
RESTAURANTS -- 4.4%
Apple South, Inc., $3.50, Series 144A..................... 8,500 474,938
US Restaurants, 7.72%, Series A........................... 21,500 619,469
-----------
1,094,407
-----------
TELECOMMUNICATIONS -- 1.9%
Omnipoint Corp., 7.00%, 144A.............................. 10,000 456,875
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $8,258,145)........ 8,740,598
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 14
THE RESERVE PRIVATE EQUITY SERIES--RESERVE CONVERTIBLE SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998--(CONTINUED)
<TABLE>
<CAPTION>
COMMON STOCKS -- 2.5%
- ---------------------
<S> <C> <C> <C>
ENTERTAINMENT -- 0.7%
Malibu Entertainment Worldwide, Inc.*............................... 62,900 165,112
-----------
MANAGED CARE -- 1.7%
Phycor, Inc.,....................................................... 25,000 421,875
-----------
MISCELLANEOUS MANUFACTURING -- 0.1%
Disc Graphics, Inc., Wts., Cl. A, 11/1/99*.......................... 75,000 28,125
-----------
TOTAL COMMON STOCKS (Cost $1,127,079)................................. 615,112
-----------
SHORT-TERM INVESTMENTS -- 2.7%
- ------------------------------------------------------------
Vista U. S. Government Money Market Fund (Cost $660,000)............ 660,000 660,000
-----------
TOTAL INVESTMENTS (Cost $24,760,375)........................ 99.8% 24,610,777
OTHER ASSETS, LESS LIABILITIES.............................. .2% 47,805
------ -----------
NET ASSETS.................................................. 100.0% $24,658,582
======== ===========
</TABLE>
- ------------
Value of investments are shown as a percentage of net assets.
* Non-income producing security.
For Federal income tax purposes the tax basis for investments owned at May 31,
1998, was $24,760,375; the aggregate gross unrealized appreciation was $920,495
and the aggregate unrealized gross unrealized depreciation was $1,070,093.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
THE RESERVE PRIVATE EQUITY SERIES--RESERVE CONVERTIBLE SECURITIES FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
<S> <C>
ASSETS:
Investments in securities, at value
(cost $24,760,375)................... $24,610,777
Cash................................... 28,716
Receivable for securities sold......... 1,295,793
Dividend and interest receivable....... 223,132
-----------
Total Assets......................... 26,158,418
-----------
LIABILITIES:
Payable for securities purchased....... 1,477,869
Payable for Fund shares redeemed....... 25
Other payables and accrued expenses.... 21,942
-----------
Total Liabilities.................... 1,499,836
-----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 2,341,706
shares outstanding ($.001 par value,
unlimited number of Shares of
Beneficial Interest Authorized.)..... $24,658,582
===========
Net asset value per share (offering and
redemption price per share).......... $ 10.53
===========
COMPOSITION OF NET ASSETS:
Capital Stock -- (par value)........... 2,342
Paid in surplus........................ 24,071,647
Accumulated net realized gain on
investments.......................... 595,578
Undistributed net investment income.... 138,613
Net unrealized depreciation on
investments.......................... (149,598)
-----------
NET ASSETS............................... $24,658,582
===========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1998
<S> <C>
INVESTMENT INCOME:
Dividends.............................. $ 508,102
Interest............................... 740,035
-----------
Total Investment Income.............. 1,248,137
-----------
EXPENSES:
Comprehensive fee (Note 3)............. 339,097
Distribution fee (Note 3).............. 56,545
-----------
Total Expenses....................... 395,642
-----------
Less expenses waived (Note 3).......... (208,939)
-----------
Net expenses......................... 186,703
Net Investment Income.................. 1,061,434
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments....... 1,725,903
Net change in unrealized appreciation
on investments....................... (1,520,425)
-----------
Net realized and unrealized gain on
investments.......................... 205,478
-----------
Net Increase in Net Assets Resulting
from Operations...................... $ 1,266,912
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1998 AND MAY 31, 1997
<TABLE>
<CAPTION>
1998 1997*
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment income................................... $ 1,061,434 $ 560,728
Net realized gain from investment transactions.......... 1,725,903 225,074
Net change in unrealized appreciation (depreciation) on
investments............................................ (1,520,425) 1,370,827
----------- -----------
Net increase in net assets resulting from operations.... 1,266,912 2,156,629
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments........................ (1,348,604) (390,051)
Net investment income................................... (1,093,502) (6,791)
----------- -----------
Total distributions to shareholders..................... (2,442,106) (396,842)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares........................ 3,876,464 20,601,861
Reinvestment of distributions........................... 1,979,389 201,224
Cost of shares redeemed................................. (593,337) (1,991,612)
----------- -----------
Net increase in net assets resulting from capital share
transactions........................................... 5,262,516 18,811,473
----------- -----------
Net increase in net assets.............................. 4,087,322 20,571,260
NET ASSETS:
Beginning of year....................................... 20,571,260 --
----------- -----------
End of year (including undistributed net investment
income of $138,613 and $170,681, respectively)......... $24,658,582 $20,571,260
=========== ===========
</TABLE>
* From September 3, 1996 (Commencement of Operations) to May 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE> 16
THE RESERVE PRIVATE EQUITY SERIES--RESERVE INFORMED INVESTORS GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS -- 89.1% SHARES (NOTE 1)
- ---------------------- ------ --------
<S> <C> <C>
AEROSPACE AND DEFENSE -- 2.0%
Gulfstream Aerospace Corp.*....... 2,000 $ 85,000
----------
AIRLINES AND AIR TRANSPORT -- 12.1%
Airbourne Freight Corp............ 3,500 130,375
America West Holdings, Inc., Cl.
B*.............................. 4,400 124,575
Southwest Airlines Company........ 5,500 146,781
US Airways Group, Inc.*........... 1,800 126,000
----------
527,731
----------
AUTOMOTIVE -- 2.9%
Ford Motor Company................ 2,400 124,500
----------
COMPUTER GRAPHICS -- 0.7%
Cadence Design Systems, Inc.*..... 900 31,725
----------
COMPUTER SOFTWARE -- 20.2%
America Online, Inc.*............. 2,600 216,613
Citrix Systems, Inc.*............. 2,200 114,812
Compuware Corp.,*................. 3,700 169,969
HBO & Company..................... 2,200 126,981
Siebel Systems, Inc.*............. 4,100 93,275
Yahoo!, Inc.*..................... 1,400 153,300
----------
874,950
----------
COMPUTER PERIPHERAL EQUIPMENT -- 2.8%
Lexmark International Group, Cl.
A*.............................. 2,200 122,100
----------
ELECTRONICS -- 1.8%
Sanmina Corp.*.................... 1,000 77,875
----------
FINANCIAL/BUSINESS SERVICES -- 12.8%
Bear Stearns Companies, Inc. ..... 2,200 119,350
Capital One Financial Corp. ...... 1,400 139,738
Lehman Brothers Holdings, Inc. ... 2,400 170,250
Paine Webber Group, Inc. ......... 2,900 124,519
----------
553,857
----------
HOSPITAL -- 0.5%
Health Management Assoc., Cl. A* 700 20,869
----------
HOUSEHOLD FURNISHINGS & APPLIANCES -- 0.8%
Ethan Allen Interiors, Inc. ...... 700 35,219
----------
INSURANCE -- .1%
Travelers Group, Inc.............. 100 6,100
VALUE
COMMON STOCKS (CONTINUED) SHARES (NOTE 1)
- ------------------------- ------ --------
<S> <C> <C>
OIL AND GAS EQUIPMENT -- 3.9%
BJ Services Co.*.................. 1,800 $ 58,838
Coastal Corp. .................... 700 49,350
Global Marine, Inc.*.............. 2,800 62,475
----------
170,663
----------
PHARMACEUTICAL AND HOSPITAL SUPPLIES -- 3.1%
Arterial Vascular Engineering*.... 3,600 111,262
Lincare Holdings, Inc.*........... 300 22,500
----------
133,762
----------
RETAIL SPECIALTY AND APPAREL -- 12.0%
Amazon.Com, Inc.*................. 1,400 123,375
Best Buy Company, Inc.*........... 3,800 123,975
Office Depot, Inc.*............... 1,900 56,050
TJX Companies, Inc. .............. 4,600 215,050
----------
518,450
----------
TELECOMMUNICATIONS -- 1.5%
Worldcom, Inc.*................... 1,400 63,700
----------
TELECOMMUNICATION EQUIPMENT -- 6.0%
Lucent Technologies, Inc. ........ 2,800 198,625
Superior Telecom, Inc. ........... 1,600 63,400
----------
262,025
----------
TELEPHONE AND TELEGRAPH -- 5.9%
AT&T Corp. ....................... 800 48,700
Tellabs, Inc.*.................... 3,000 206,156
----------
254,856
----------
TOTAL COMMON STOCKS
(Cost $3,858,561)................. 3,863,382
----------
SHORT-TERM INVESTMENTS -- 10.1%
- ------------------------------------
Vista Treasury Plus Money Market
Fund............................ 217,000 217,000
Vista U.S. Government Money Market
Fund............................ 220,000 220,000
----------
TOTAL SHORT-TERM INVESTMENTS (Cost
$437,000)......................... 437,000
----------
TOTAL INVESTMENTS (Cost
$4,295,561)....................... 99.2% 4,300,382
OTHER ASSETS, LESS LIABILITIES...... .8% 33,909
------ ----------
NET ASSETS.......................... 100.0% $4,334,291
======= ==========
</TABLE>
- ------------
Value of investments are shown as a percentage of net assets.
* Non-income producing security.
For Federal income tax purposes the tax basis for investments owned at May 31,
1998, was $4,295,561; the aggregate gross unrealized appreciation was $202,391
and the aggregate gross unrealized depreciation was $197,570.
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE> 17
THE RESERVE PRIVATE EQUITY SERIES--RESERVE INFORMED INVESTORS GROWTH FUND
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
<S> <C>
ASSETS:
Investments in securities, at value
(cost $4,295,561)..................... $4,300,382
Cash.................................... 30,977
Receivable for securities sold.......... 78,732
Receivable for Fund shares sold......... 147
Dividend and interest receivable........ 1,023
----------
Total Assets.......................... 4,411,261
----------
LIABILITIES:
Payable for securities purchased........ 58,037
Payable for Fund shares redeemed........ 11,717
Other payables and accrued expenses..... 7,216
----------
Total Liabilities..................... 76,970
----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 414,343 shares
outstanding ($.001 par value,
unlimited number of Shares of
Beneficial Interest Authorized.)...... $4,334,291
==========
Net asset value per share (offering and
redemption price per share)........... $ 10.46
==========
COMPOSITION OF NET ASSETS:
Capital Stock -- (par value)............ 414
Paid in surplus......................... 3,813,231
Accumulated net realized gain on
investments........................... 515,825
Net unrealized appreciation on
investments........................... 4,821
----------
NET ASSETS................................ $4,334,291
==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1998
<S> <C>
INVESTMENT INCOME:
Dividends............................... $ 32,194
Interest................................ 17,247
----------
Total Investment Income............... 49,441
----------
EXPENSES:
Comprehensive fee (Note 3).............. 87,976
Distribution fee (Note 3)............... 14,699
----------
Total Expenses........................ 102,675
----------
NET INVESTMENT INCOME (LOSS).............. (53,234)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments........ 1,534,443
Net change in unrealized appreciation on
investments........................... (460,178)
----------
Net realized and unrealized gain on
investments........................... 1,074,265
----------
Net Increase in Net Assets Resulting
from Operations....................... $1,021,031
==========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1998 AND MAY 31, 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss..................................... $ (53,234) $ (31,610)
Net realized gain from investment transactions.......... 1,534,443 1,253,328
Net change in unrealized appreciation (depreciation) on
investments............................................ (460,178) (1,975,139)
----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................. 1,021,031 (753,421)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments........................ (1,379,149) (525,939)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares........................ 928,647 1,400,871
Reinvestment of distributions........................... 1,007,930 395,531
Cost of shares redeemed................................. (2,734,101) (1,435,172)
----------- -----------
Net (decrease) increase in net assets resulting from
capital share transactions............................. (797,524) 361,230
----------- -----------
Net decrease in net assets.............................. (1,155,642) (918,130)
NET ASSETS:
Beginning of year....................................... 5,489,933 6,408,063
----------- -----------
End of year............................................. $ 4,334,291 $ 5,489,933
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE> 18
THE RESERVE PRIVATE EQUITY SERIES--RESERVE INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS -- 85.6% SHARES (NOTE 1)
---------------------- ------ --------
<S> <C> <C>
AUSTRALIA -- .5%
Brambles Industries,
Ltd. .................... 2,900 $ 58,500
-----------
DENMARK -- 1.8%
Novo Nordisk AS - Series
B*....................... 1,500 235,898
-----------
FINLAND -- 4.2%
Nokia Oyj Series A......... 2,900 190,737
TT Tieto Oy;............... 1,700 353,912
-----------
544,649
-----------
FRANCE -- 15.0%
Altran Technologie*........ 420 85,919
AXA-UAP.................... 4,300 489,011
Banque Nationale De
Paris.................... 700 59,734
Cap Gemini................. 1,000 149,126
Cerg Finance, FA........... 660 83,765
Havas Advertising.......... 800 168,999
Le Carbone-Lorraine........ 400 182,359
Pinault-Printemps-Redoute... 425 349,542
Societe Industrielle....... 300 69,286
Societe Generale........... 830 164,248
Sodexho Alliance........... 700 128,586
-----------
1,930,575
-----------
GERMANY -- 3.7%
Adidas Salomon AG.......... 1,100 193,988
Deutsche Pfandbrief Bank... 1,700 135,909
Metro AG................... 2,400 152,771
-----------
482,668
-----------
HONG KONG -- .3%
Hang Seng Bank Ltd. ....... 5,000 37,268
Hong Kong & China Gas
Co. ..................... 3,049 3,995
Sun Hai Kai Properties..... 169 654
-----------
41,917
-----------
ITALY -- 7.2%
Bulgari SpA................ 10,200 60,175
Credito Italiano SpA....... 59,000 329,465
Telecom Italia Mobile
SpA...................... 52,000 306,774
Telecom Italia SpA......... 30,500 228,401
-----------
924,815
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS (CONTINUED) SHARES (NOTE 1)
------------------------- ------ --------
<S> <C> <C>
JAPAN -- 1.2%
Itoen, Ltd. ............... 1,700 $ 52,402
Sumitomo Marine & Fire..... 7,000 38,819
Terumo Corporation......... 4,000 60,354
-----------
151,575
-----------
MEXICO -- .8%
Corp. Interamericana DE,
Series B*................ 32,300 108,705
-----------
NETHERLANDS -- 7.4%
Aegon NV................... 3,700 295,853
Heineken NV................ 5,156 174,129
ING Group NV............... 2,250 154,321
Koninklijke Ahold NV....... 2,102 66,291
Koninklijke Numico NV ..... 1,830 64,257
Ordina Beheer NV........... 2,100 68,448
VNU-Verenigde NV........... 1,950 66,824
Wolters Kluwer NV.......... 472 66,223
-----------
956,346
-----------
NORWAY -- 5.2%
Merkantidata............... 42,500 591,451
Tomra Systems ASA.......... 2,300 71,179
-----------
662,630
-----------
PORTUGAL -- .5%
Banco Commercial
Portugues................ 1,916 63,346
-----------
SPAIN -- 10.8%
Banco Bilbao Vizcaya, SA... 8,000 401,345
Banco Santander, SA........ 6,500 326,950
Campofrio Alimentacion..... 2,800 235,348
Telefonica, SA............. 2,800 124,965
Tele Pizza, SA*............ 28,000 281,495
-----------
1,370,103
-----------
SWEDEN -- 3.3%
Netcom Systems AB - Series
B*....................... 5,100 194,830
Ericsson
Telefonaktiebolaget,
Series B................. 8,000 227,684
-----------
422,514
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE> 19
THE RESERVE PRIVATE EQUITY SERIES--RESERVE INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998--(CONTINUED)
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS (CONTINUED) SHARES (NOTE 1)
------------------------- ------ --------
<S> <C> <C>
SWITZERLAND -- 9.5%
Nestle SA.................. 100 $ 213,886
Novartis AG................ 190 321,213
Union Bank Of
Switzerland.............. 80 134,277
Schweizerische Rueck Ges... 50 115,032
Zurich Versicherung........ 700 436,468
-----------
1,220,876
-----------
THAILAND -- .0%
Central Pattana Public Co.,
Ltd.*.................... 10,000 2,740
-----------
UNITED KINGDOM -- 12.3%
Barclays plc............... 2,441 65,047
Capita Group plc........... 8,100 71,758
Compass Group plc.......... 7,300 148,915
HSBC Holdings plc.......... 82 1,990
Lloyds TSB Group plc....... 4,500 65,305
Logica plc................. 4,100 120,906
Misys plc.................. 6,984 417,968
Rentokil Initial plc....... 18,300 126,415
St. James Place Capital.... 26,500 148,295
Serco Group plc............ 13,800 294,042
Smithkline Beecham plc..... 5,800 63,684
Standard Chartered plc..... 4,781 59,944
-----------
1,584,269
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS (CONTINUED) SHARES (NOTE 1)
------------------------- ------ --------
<S> <C> <C>
UNITED STATES -- 1.9%
Portugal Telecomm SA,
ADR...................... 3,000 $ 159,000
Telecom de Argentina SA,
ADR...................... 2,800 86,800
-----------
245,800
-----------
TOTAL COMMON STOCKS (Cost
$8,186,942)................ 11,007,926
-----------
PREFERRED STOCKS -- 5.4%
- -----------------------------
GERMANY -- 5.4%
Porsche AG Pfd............. 70 192,028
Systeme, Anwendungen,
Produkte AG Pfd.......... 900 498,824
-----------
TOTAL PREFERRED STOCKS
(Cost $522,820)............ 690,852
-----------
WARRANTS -- .0%
- -----------------------------
FRANCE -- .0%
Havas Advertising*,
5/14/2001................ 500 1,336
HONG KONG -- .0%
Hong Kong & China Gas Co.,*
9/30/1999................ 1,524 107
-----------
TOTAL WARRANTS
(Cost $0).................. 1,443
-----------
SHORT-TERM INVESTMENT -- 5.6%
- -----------------------------
Vista U.S. Government Money
Market Fund (Cost
$710,000)................ 710,000 710,000
-----------
TOTAL INVESTMENTS (Cost
$9,419,762)................ 96.6% 12,410,221
OTHER ASSETS, LESS
LIABILITIES................ 3.4% 441,003
------ -----------
NET ASSETS................... 100.0% $12,851,224
======= ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE> 20
THE RESERVE PRIVATE EQUITY SERIES--RESERVE INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998--(CONTINUED)
INDUSTRY COMPOSITION
<TABLE>
<CAPTION>
INDUSTRY PERCENT
-------- -------
<S> <C>
Advertising................................ 1.3%
Auto/Truck Manufacturers................... 1.5
Beverages.................................. 1.9
Bio-Tech & Medical Devices................. .5
Cellular Telephone......................... 4.2
Commercial Banks........................... 9.1
Computer Peripheral........................ 5.3
Computer Software.......................... 12.0
Consumer Products.......................... .5
Consumer Service........................... 3.8
Diversified Operations..................... .5
Drugs & Health Care........................ 4.8
Electrical Equipment....................... 1.4
Entertainment & Leisure.................... .8
Financial Services......................... 8.4
</TABLE>
<TABLE>
<CAPTION>
INDUSTRY PERCENT
-------- -------
<S> <C>
Food Processing............................ 4.5%
Insurance Companies........................ 4.6
Lodging & Restaurants...................... 1.2
Money Center Banks......................... 5.1
Pollution Control.......................... 1.5
Publishing................................. 1.0
Real Estate Investment..................... .6
Retailing.................................. 6.1
Service Companies.......................... 1.2
Telecommunications......................... 6.9
Telephone Utilities........................ .7
Textiles & Footwear........................ 1.6
-----
91.0
Short-Term Investments..................... 5.6
Other Assets, Less Liabilities............. 3.4
-----
PERCENT OF NET ASSETS...................... 100.0%
=====
</TABLE>
- ------------
Value of investments are shown as a percentage of net assets.
For Federal income tax purposes the tax basis for investments owned at May 31,
1998, was $9,419,762, the aggregate gross unrealized appreciation was $3,356,354
and the aggregate gross unrealized depreciation was $365,895.
*Non-income producing
ADR - American Depository Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE> 21
THE RESERVE PRIVATE EQUITY SERIES--RESERVE INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
<S> <C>
ASSETS:
Investments in securities, at value
(cost $9,419,762).................... $12,410,221
Cash................................... 138,923
Receivable for securities sold......... 699,788
Receivable for Fund shares sold........ 1,025
Dividend and interest receivable....... 35,913
-----------
Total Assets......................... 13,285,870
-----------
LIABILITIES:
Payable for securities purchased....... 407,190
Payable for Fund shares redeemed....... 5,885
Other payables and accrued expenses.... 21,571
-----------
Total Liabilities.................... 434,646
-----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 971,753 shares
outstanding ($.001 par value,
unlimited number of Shares of
Beneficial Interest Authorized.)..... $12,851,224
===========
Net asset value per share (offering and
redemption price per share).......... $ 13.22
===========
COMPOSITION OF NET ASSETS:
Capital Stock -- (par value)........... 972
Paid in surplus........................ 11,192,866
Accumulated net realized loss on
investments and foreign currency
transactions......................... (1,320,867)
Accumulated net investment loss........ (12,206)
Net unrealized appreciation on
investments and foreign currency
transactions......................... 2,990,459
-----------
NET ASSETS............................... $12,851,224
===========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1998
<S> <C>
INVESTMENT INCOME:
Dividends.............................. $ 139,263*
Interest............................... 41,847
-----------
Total Investment Income.............. 181,110
-----------
EXPENSES:
Comprehensive fee (Note 3)............. 196,873
Distribution fee (Note 3).............. 28,180
-----------
Total Expenses....................... 225,053
-----------
Net Investment Loss.................... (43,943)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized loss on investments....... (975,769)
Net realized loss from foreign currency
transactions......................... (1,308)
Net change in unrealized appreciation
on investments....................... 1,271,564
Net change in unrealized depreciation
on foreign currency transactions..... (63)
-----------
Net realized and unrealized gain on
investments and foreign currency
transactions......................... 294,424
-----------
Net Increase in Net Assets Resulting
from Operations...................... $ 250,481
===========
</TABLE>
* Dividends are net of foreign tax withholdings of $21,966.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1998 AND MAY 31, 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss..................................... $ (43,943) $ (68,848)
Net realized loss from investment transactions.......... (975,769) (273,130)
Net realized loss from foreign currency transactions.... (1,308) --
Net change in unrealized appreciation on investments.... 1,271,564 1,387,936
Net change in unrealized depreciation from foreign
currency transactions.................................. (63) --
----------- -----------
Net increase in net assets resulting from operations.... 250,481 1,045,958
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares........................ 3,581,943 8,057,063
Cost of shares redeemed................................. (3,110,454) (558,291)
----------- -----------
Net increase in net assets resulting from capital share
transactions........................................... 471,489 7,498,772
----------- -----------
Net increase in net assets.............................. 721,970 8,544,730
NET ASSETS:
Beginning of year....................................... 12,129,254 3,584,524
----------- -----------
End of year............................................. $12,851,224 $12,129,254
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE> 22
THE RESERVE PRIVATE EQUITY SERIES--RESERVE LARGE-CAP VALUE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS -- 98.5% SHARES (NOTE 1)
---------------------- ------ --------
<S> <C> <C>
BANKS -- 3.2%
Wells Fargo & Company....... 600 $ 216,900
----------
BEVERAGES -- 7.9%
Coca-Cola Company........... 4,200 329,175
Pepsico, Inc. .............. 5,000 204,063
----------
533,238
----------
COMPUTER SOFTWARE -- 3.7%
Microsoft Corp.*............ 3,000 254,437
----------
COMPUTERS -- 2.7%
Hewlett-Packard Company..... 3,000 186,375
----------
CONSUMER PRODUCTS -- 8.6%
Clorox Company.............. 3,500 292,250
Gillette Company............ 2,500 292,812
----------
585,062
----------
DRUGS -- 8.3%
Abbott Laboratories......... 3,500 259,656
Merck & Co.................. 2,600 304,362
----------
564,018
----------
FINANCIAL/BUSINESS SERVICES -- 7.5%
American Express Co......... 3,000 307,875
Charles Schwab Corp. ....... 6,000 198,000
----------
505,875
----------
FOOD -- 14.3%
Campbell Soup Company....... 3,500 190,750
Hershey Foods Corp.......... 4,500 311,625
Quaker Oats Company......... 4,000 230,750
Wrigley (Wm.) Jr. Company... 2,500 240,625
----------
973,750
----------
MEDICAL PRODUCTS -- 14.8%
Becton Dickinson & Co. ..... 3,000 212,250
Bristol-Myers Squibb Co..... 2,100 225,750
Johnson & Johnson........... 4,400 303,875
Pfizer, Inc. ............... 2,500 262,031
----------
1,003,906
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS (CONTINUED) SHARES (NOTE 1)
------------------------- ------ --------
<S> <C> <C>
MISCELLANEOUS MANUFACTURING -- 4.5%
Minnesota Mining &
Manufacturing............. 3,300 $ 305,663
----------
PHOTOGRAPHY -- 3.2%
Eastman Kodak Company....... 3,000 214,125
----------
PUBLISHING -- 4.8%
Gannett Company, Inc. ...... 2,800 184,625
New York Times Company...... 2,000 141,000
----------
325,625
----------
RESTAURANTS -- 8.1%
McDonald's Corp. ........... 6,000 393,750
Tricon Global Restaurants,
Inc.*..................... 5,000 155,313
----------
549,063
----------
RETAIL -- 3.7%
Nike, Inc. ................. 5,500 253,000
----------
SEMICONDUCTOR -- 3.2%
Intel Corp. ................ 3,000 214,313
----------
TOTAL COMMON STOCKS
(Cost $5,123,202)........... 6,685,350
----------
SHORT-TERM INVESTMENTS -- 1.0%
- ----------------------------------------------------
Vista U.S. Government Money
Market Fund (Cost
$65,000).................. 65,000 65,000
----------
TOTAL INVESTMENTS (Cost
$5,188,202)................. 99.5% 6,750,350
OTHER ASSETS, LESS
LIABILITIES................. .5% 35,665
------ ----------
NET ASSETS.................... 100.0% $6,786,015
====== ==========
</TABLE>
- ------------
Value of investments are shown as a percentage of net assets.
* Non-income producing security.
For Federal income tax purposes the tax basis for investments owned at May 31,
1998, was $5,188,202; the aggregate gross unrealized appreciation was $1,653,359
and the aggregate gross unrealized depreciation was $91,211.
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE> 23
THE RESERVE PRIVATE EQUITY SERIES--RESERVE LARGE-CAP VALUE FUND
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
ASSETS:
Investments in securities, at value
(cost $5,188,202)..................... $6,750,350
Cash.................................... 39,983
Dividends and interest receivable....... 6,968
----------
Total Assets.......................... 6,797,301
----------
LIABILITIES:
Payable for Fund shares redeemed........ 838
Other payables and accrued expenses..... 10,448
----------
Total Liabilities..................... 11,286
----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 373,675 shares
outstanding ($.001 par value,
unlimited number of Shares of
Beneficial Interest Authorized.)...... $6,786,015
==========
Net asset value per share (offering and
redemption price per share)........... $ 18.16
==========
COMPOSITION OF NET ASSETS:
Capital Stock -- (par value)............ 374
Paid in surplus......................... 4,994,615
Accumulated net realized gain on
investments and foreign currency
transactions.......................... 228,878
Net unrealized appreciation on
investments........................... 1,562,148
----------
NET ASSETS................................ $6,786,015
==========
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1998
INVESTMENT INCOME:
Dividends............................... $ 55,700
Interest................................ 13,485
----------
Total Investment Income............... 69,185
----------
EXPENSES:
Comprehensive fee (Note 3).............. 74,612
Distribution fee (Note 3)............... 12,653
----------
Total Expenses........................ 87,265
----------
Net Investment Loss..................... (18,080)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments........ 333,591
Net change in unrealized appreciation on
investments........................... 805,172
----------
Net realized and unrealized gain on
investments........................... 1,138,763
----------
Net Increase in Net Assets Resulting
from Operations....................... $1,120,683
==========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1998 AND MAY 31, 1997
<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss..................................... $ (18,080) $ (7,402)
Net realized gain from investment transactions.......... 333,591 21,379
Net change in unrealized appreciation on investments.... 805,172 686,853
----------- ----------
Net increase in net assets resulting from operations.... 1,120,683 700,830
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments........................ (111,520) --
----------- ----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares........................ 3,717,183 1,345,107
Reinvestment of distributions........................... 110,918 --
Cost of shares redeemed................................. (1,161,229) (167,017)
----------- ----------
Net increase in net assets resulting from capital share
transactions........................................... 2,666,872 1,178,090
----------- ----------
Net increase in net assets.............................. 3,676,035 1,878,920
NET ASSETS:
Beginning of year....................................... 3,109,980 1,231,060
----------- ----------
End of year............................................. $ 6,786,015 $3,109,980
=========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE> 24
THE RESERVE PRIVATE EQUITY SERIES--RESERVE MID-CAP GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS -- 95.8% SHARES (NOTE 1)
---------------------- ------ --------
<S> <C> <C>
ADVERTISING -- 3.8%
Ha-Lo Industries, Inc.*..... 4,100 $ 126,844
----------
AUTO--TRUCK PARTS -- 4.6%
Gentex Corp.*............... 4,200 153,825
----------
BANKS -- 3.1%
Hibernia Corp., Class A..... 5,000 105,000
----------
BUILDING PRODUCTS -- 3.0%
Watsco, Inc. ............... 3,500 102,813
----------
COMMUNICATIONS -- 3.7%
Scientific-Atlanta, Inc..... 5,700 125,756
----------
COMPUTERS & COMPUTER SOFTWARE -- 14.4%
Computer Management
Sciences, Inc.*........... 5,300 125,875
Harbinger Corp.*............ 4,800 111,750
Hyperion Software Corp.*.... 3,500 113,094
Ingram Micro, Inc.*......... 3,100 136,594
----------
487,313
----------
COMPUTER--PERIPHERAL EQUIPMENT -- 3.5%
American Power Conversion
Corp.* ................... 4,000 120,000
----------
ELECTRONICS -- 7.3%
Coltec Industries, Inc.*.... 4,600 102,637
Pentair Industries, Inc. ... 3,300 144,788
----------
247,425
----------
INSTRUMENTS--SCIENTIFIC -- 4.3%
Waters Corp.*............... 2,500 145,625
----------
INSURANCE -- 4.5%
Protective Life Corp. ...... 4,200 151,200
----------
LEISURE & ENTERTAINMENT -- 3.3%
Action Performance Cos.,
Inc.*..................... 4,000 111,250
----------
OFFSHORE DRILLING -- 2.3%
Pride International,
Inc.* .................... 3,500 78,531
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS (CONTINUED) SHARES (NOTE 1)
------------------------- ------ --------
<S> <C> <C>
POLLUTION CONTROL -- 3.9%
Newpark Resources, Inc.*.... 7,280 $ 132,405
----------
RESTAURANTS -- 4.2%
Cracker Barrel Old Country
Stores, Inc............... 4,400 141,900
----------
RETAIL -- 18.0%
Autozone, Inc.*............. 5,000 166,251
Fingerhut Companies, Inc.... 5,000 146,563
Pier 1 Imports, Inc. ....... 5,850 140,765
Stein Mart, Inc.*........... 9,800 154,350
----------
607,929
----------
SEMICONDUCTORS -- 2.5%
Maxim Integrated Products,
Inc.*..................... 2,500 83,437
----------
TELECOMMUNICATIONS -- 4.8%
Pacific Gateway Exchange,
Inc.*..................... 2,600 110,825
Worldcom, Inc.* ............ 1,100 50,050
----------
160,875
----------
TRANSPORTATION -- 4.6%
Swift Transportation Co.,
Inc.*..................... 7,050 156,862
----------
TOTAL COMMON STOCKS (Cost
$2,584,090)................. 3,238,990
----------
SHORT-TERM INVESTMENTS -- 6.5%
- ------------------------------
Vista U. S. Government Money
Market Fund (Cost
$220,000)................. 220,000 220,000
----------
TOTAL INVESTMENTS (Cost
$2,804,090)................. 102.3% 3,458,990
LIABILITIES, LESS OTHER
ASSETS...................... (2.3%) (78,431)
------ ----------
NET ASSETS.................... 100.0% $3,380,559
======= ==========
</TABLE>
- ------------
Value of investments are shown as a percentage of net assets.
* Non-income producing security.
For Federal income tax purposes the tax basis for investments owned at May 31,
1998, was $2,804,090; the aggregate gross unrealized appreciation was $692,754
and the aggregate gross unrealized depreciation was $37,854.
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE> 25
THE RESERVE PRIVATE EQUITY SERIES--RESERVE MID-CAP GROWTH FUND
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
<S> <C>
ASSETS:
Investments in securities, at value
(cost $2,804,090)..................... $3,458,990
Dividend and interest receivable........ 727
----------
Total Assets.......................... 3,459,717
----------
LIABILITIES:
Payable for securities purchased........ 49,775
Cash overdraft.......................... 6,797
Payable for Fund shares redeemed........ 12,821
Other payables and accrued expenses..... 9,765
----------
Total Liabilities..................... 79,158
----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 260,473 shares
outstanding ($.001 par value,
unlimited number of Shares of
Beneficial Interest Authorized.)...... $3,380,559
==========
Net asset value per share (offering and
redemption price per share)........... $ 12.98
==========
COMPOSITION OF NET ASSETS:
Capital Stock -- (par value)............ 263
Paid in surplus......................... 2,622,187
Accumulated net realized gain on
investments and foreign currency
transactions.......................... 103,209
Net unrealized appreciation on
investments........................... 654,900
----------
NET ASSETS................................ $3,380,559
==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1998
<S> <C>
INVESTMENT INCOME:
Dividends............................... $ 16,884
Interest................................ 12,962
----------
Total Investment Income............... 29,846
----------
EXPENSES:
Comprehensive fee (Note 3).............. 68,619
Distribution fee (Note 3)............... 16,819
----------
Total Expenses........................ 85,438
----------
Net Investment Loss..................... (55,592)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments........ 550,984
Net change in unrealized appreciation on
investments........................... 15,787
----------
Net realized and unrealized gain on
investments........................... 566,771
----------
Net Increase in Net Assets Resulting
from Operations....................... $ 511,179
==========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1998 AND MAY 31, 1997
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss..................................... $ (55,592) $ (57,359)
Net realized gain from investment transactions.......... 550,984 144,746
Net change in unrealized appreciation on investments.... 15,787 185,442
----------- -----------
Net increase in net assets resulting from operations.... 511,179 272,829
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments........................ (485,972) --
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares........................ 1,341,995 3,118,364
Reinvestment of distributions........................... 480,743 --
Cost of shares redeemed................................. (2,469,521) (1,928,613)
----------- -----------
Net increase (decrease) in net assets resulting from
capital share transactions............................. (646,783) 1,189,751
----------- -----------
Net increase (decrease) in net assets................... (621,576) 1,462,580
NET ASSETS:
Beginning of year....................................... 4,002,135 2,539,555
----------- -----------
End of year............................................. $ 3,380,559 $ 4,002,135
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE> 26
THE RESERVE PRIVATE EQUITY SERIES--SMALL-CAP GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1998
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS -- 97.8% SHARES (NOTE 1)
---------------------- ------ --------
<S> <C> <C>
BIO-TECHNOLOGY -- 2.4%
Genzyme Corp.*.................... 4,800 $ 131,400
----------
COMMERCIAL SERVICES -- 7.5%
Concentra Managed Care, Inc.*..... 4,465 104,369
International Telecomm Data
Systems, Inc.*.................. 6,750 166,219
Memberworks, Inc.*................ 5,200 141,700
----------
412,288
----------
COMMUNICATION EQUIPMENT -- 2.8%
ECI Telecommunications Ltd. ...... 4,800 154,200
----------
COMMUNICATION NETWORK -- 4.4%
ICG Communications, Inc.*......... 4,500 136,125
PairGain Technologies, Inc.*...... 6,900 107,813
----------
243,938
----------
COMPUTER--NETWORKING -- 7.9%
Ascend Communications, Inc.*...... 5,100 220,256
CNET, Inc.*....................... 2,200 79,750
Legato Systems, Inc.*............. 4,800 137,400
----------
437,406
----------
COMPUTER PERIPHERAL EQUIPMENT -- 1.9%
Dialogic Corp.*................... 3,200 105,600
----------
COMPUTER SERVICES -- 4.1%
HNC Software, Inc.*............... 4,500 155,531
Remedy Corp.*..................... 4,500 72,703
----------
228,234
----------
COMPUTER SOFTWARE -- 14.1%
Activision, Inc.*................. 14,900 149,931
Business Objects S.A. ADR*........ 9,700 163,991
Citrix Systems, Inc.*............. 1,500 78,281
Dendrite International, Inc.*..... 7,000 215,250
Electronic Arts, Inc.*............ 700 30,450
Excite, Inc.*..................... 1,000 54,375
Sapient Corp.*.................... 2,000 89,500
----------
781,778
----------
DRUGS AND HEALTH CARE -- 4.4%
Centocor, Inc.*................... 3,200 124,800
National Dentex Corp.*............ 5,000 118,750
----------
243,550
----------
ELECTRONIC COMPONENTS -- 1.1%
AVX Corp.......................... 3,300 62,288
----------
ENERGY -- 2.3%
Cross Timbers Oil Company......... 7,500 129,844
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
COMMON STOCKS (CONTINUED) SHARES (NOTE 1)
------------------------- ------ --------
<S> <C> <C>
FIBER OPTICS -- 1.5%
Harmonic Lightwaves, Inc.*........ 4,800 $ 83,400
----------
OFFICE BUSINESS EQUIPMENT -- 3.1%
HBO & Company..................... 3,000 173,156
----------
OFFSHORE DRILLING -- 2.7%
Newfield Exploration Co.*......... 3,000 67,125
Parker Drilling Company*.......... 10,000 84,375
----------
151,500
----------
OIL WELL SERVICES -- 1.4%
Dawson Production Services,
Inc.*........................... 7,000 77,875
----------
OPTICAL INSTRUMENTS & LENSES -- 1.2%
KLA-Tencor Corp.*................. 2,000 67,750
----------
RETAILS -- 12.3%
Borders Group, Inc.*.............. 5,000 155,000
Corporate Express, Inc.*.......... 17,400 201,731
Staples, Inc.*.................... 6,487 162,986
Williams-Sonoma, Inc.*............ 5,800 160,225
----------
679,942
----------
SEMICONDUCTOR & RELATED SERVICES -- 11.0%
Applied Micro Circuits Corp.*..... 5,500 123,750
ETEC Systems, Inc.*............... 2,700 98,719
Level One Communications*......... 6,750 180,141
Transwitch Corp.*................. 15,000 206,250
----------
608,860
----------
TELECOMMUNICATIONS & EQUIPMENT -- 6.2%
MDSI Mobile Data Solutions*....... 6,100 90,737
Newbridge Networks Corp.*......... 3,200 90,800
P-COM, Inc.*...................... 7,400 111,000
Startec Global Communications*.... 3,100 50,763
----------
343,300
----------
MISCELLANEOUS -- 5.5%
Central Garden & Pet Corp.*....... 4,500 133,031
On Assignment, Inc.*.............. 5,000 168,750
----------
301,781
----------
TOTAL COMMON STOCKS (Cost
$4,298,137)....................... 5,418,090
----------
Vista U.S. Government Money Market
Fund (Cost $100,000).............. 100,000 100,000
----------
TOTAL INVESTMENTS (Cost
$4,398,137)....................... 99.6% 5,518,090
OTHER ASSETS, LESS LIABILITIES...... .4% 23,012
------ ----------
NET ASSETS.......................... 100.0% $5,541,102
======= ==========
</TABLE>
- ------------
Value of investments are shown as a percentage of net assets.
* Non-income producing security.
ADR--American Depository Receipt.
For Federal income tax purposes the tax basis for investments owned at May 31,
1998, was $4,398,137; the aggregate gross unrealized appreciation was $1,526,708
and the aggregate gross unrealized depreciation was $406,755.
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE> 27
THE RESERVE PRIVATE EQUITY SERIES--RESERVE SMALL-CAP GROWTH FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
<S> <C>
ASSETS:
Investments in securities, at value
(cost $4,398,137)..................... $5,518,090
Cash.................................... 51,355
Dividend and interest receivable........ 240
----------
Total Assets.......................... 5,569,685
----------
LIABILITIES:
Payable for Fund share repurchased...... 19,779
Other payables and accrued expenses..... 8,804
----------
Total Liabilities..................... 28,583
----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 332,582 shares
outstanding ($.001 par value,
unlimited number of Shares of
Beneficial Interest Authorized.)...... $5,541,102
==========
Net asset value per share (offering and
redemption price per share)........... $ 16.66
==========
COMPOSITION OF NET ASSETS:
Capital Stock -- (par value)............ 333
Paid in surplus......................... 4,576,820
Accumulated net realized loss on
investments........................... (156,004)
Net unrealized appreciation on
investments........................... 1,119,953
----------
NET ASSETS................................ $5,541,102
==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1998
<S> <C>
INVESTMENT INCOME:
Dividends............................... $ 3,291
Interest................................ 3,972
----------
Total Investment Income............... 7,263
----------
EXPENSES:
Comprehensive fee (Note 3).............. 93,651
Distribution fee (Note 3)............... 16,216
----------
Total Expenses........................ 109,867
----------
Net Investment Loss..................... (102,604)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments........ 431,594
Net change in unrealized appreciation on
investments........................... 143,667
----------
Net realized and unrealized gain on
investments........................... 575,261
----------
Net Increase in Net Assets Resulting
from Operations....................... $ 472,657
==========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1998 AND MAY 31, 1997
1998 1997
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss..................................... $ (102,604) $ (112,165)
Net realized gain (loss) from investment transactions... 431,594 (577,118)
Net change in unrealized appreciation (depreciation) on
investments............................................ 143,667 (847,249)
----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................. 472,657 (1,536,532)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares........................ 502,230 2,187,444
Cost of shares redeemed................................. (1,443,491) (1,540,646)
----------- -----------
Net increase (decrease) in net assets resulting from
capital share transactions............................. (941,261) 646,798
----------- -----------
Net decrease in net assets.............................. (468,604) (889,734)
NET ASSETS:
Beginning of year....................................... 6,009,706 6,899,440
----------- -----------
End of year............................................. $ 5,541,102 $ 6,009,706
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE> 28
THE RESERVE PRIVATE EQUITY SERIES
NOTES TO FINANCIAL STATEMENTS--MAY 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Reserve Private Equity Series (the "Trust") was formed as a business
trust under the laws of the state of Delaware. Currently, the Trust is
comprised of seven regulated investment companies (commonly called mutual
funds): Reserve Blue Chip Growth Fund, Reserve Convertible Securities Fund,
Reserve Informed Investors Growth Fund, Reserve International Equity Fund,
Reserve Large-Cap Value Fund, Reserve Mid-Cap Growth Fund, and Reserve
Small-Cap Growth Fund (formerly Reserve Emerging Growth Fund) (collectively
the "Funds"). The Trust has the right, at its discretion, to add other funds.
The Trust is registered under the Investment Company Act of 1940, as a
non-diversified open-end investment company. Each Fund in the Trust has
authorized an unlimited number of shares of beneficial interest of $.001 par
value.
On September 11, 1997, the Board of Trustees (the "Trustees") of the Trust
agreed to eliminate the Funds' front-end sales charge, which at the time was
4.50%, applicable to purchases by Class A shareholders. With the elimination
of the front-end sales charge, the Trustees agreed to merge the Class D
shares into the Class A shares of the Trust. The elimination of the sales
charge and the merger went into effect on October 1, 1997. Additionally, the
Trustees agreed to change the name of Reserve Emerging Growth Fund to
Small-Cap Growth Fund.
The accounting policies summarized below are consistently followed in
preparation of the financial statements in conformity with generally accepted
accounting principles.
SECURITY VALUATION
Portfolio securities are stated at value. Securities listed or traded on an
exchange are valued at the last sales price on the exchange in which the
security is principally traded or, lacking any sales, at the mean between the
closing bid and asked price. Securities traded in the over-the-counter market
are valued at the mean between the quoted bid and asked price. Where market
quotations are not readily available, the securities are valued at their fair
value as determined in good faith by or under direction of the Trustees.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded on a trade date basis. Dividend income
and distributions to shareholders are recorded on the ex-dividend dates.
Interest income is accrued daily. Realized gains and losses from securities
transactions are recorded on the identified cost basis for both financial
statement and federal income tax purposes. Income dividends, if any, are
distributed on a calendar quarter. Distributions from net realized capital
gains are distributed annually in December, based on an October 31, year end.
Income and net realized capital gain distributions are determined in
accordance with federal income tax regulations that may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for net operating losses and the recognition of net
realized gains and losses. Accordingly, the effect of differing financial
reporting and federal income tax treatments have been reclassified among the
components of net assets at May 31, 1998, the Trust's fiscal year end, as
follows:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
----------------------------------------
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT REALIZED
RESERVE FUND CAPITAL INCOME GAIN
------------ --------- -------------- -----------
<S> <C> <C> <C>
Blue Chip Growth Fund....................................... $ -- $ 60,696 $(60,696)
Informed Investors Growth Fund.............................. -- 53,234 (53,234)
International Equity Fund................................... (33,045) 31,737 1,308
Large-Cap Value Fund........................................ (3,508) 18,080 (14,572)
Mid-Cap Growth Fund......................................... (32,568) 55,592 (23,024)
Small-Cap Growth Fund....................................... (102,604) 102,604 --
</TABLE>
These reclassifications had no effect on net investment income, net realized
gain on investments, or net assets.
28
<PAGE> 29
THE RESERVE PRIVATE EQUITY SERIES
NOTES TO FINANCIAL STATEMENTS--MAY 31, 1998--(CONTINUED)
FOREIGN CURRENCY TRANSLATION
With respect to the Reserve International Equity Fund, assets and liabilities
denominated in foreign currencies are translated into U.S. dollars using
exchange rates on the valuation date. Purchases and sales of securities,
expense payments and income receipts are translated into U.S. dollars using
the exchange rate on the transaction date. The Fund does not segregate that
portion of the results of operations resulting from changes in foreign
exchange rates from the portion resulting from changes in market prices of
securities held; both are included in net realized and unrealized gains or
losses on investments and foreign currency transactions.
FEDERAL INCOME TAXES
It is the Trust's policy for each Fund to continue to qualify as a regulated
investment company under the Internal Revenue Code of 1986 (the "Code") as
amended, by complying with the requirements of the Code applicable to
regulated investment companies, and to distribute substantially all of its
taxable income, including net realized capital gains, if any, to its
shareholders. Accordingly, no federal income tax provision is required.
At May 31, 1998, the Trust's fiscal year end, the following Funds had capital
loss carryforwards for federal income tax purposes, which are available to
offset future net realized capital gains, if any:
<TABLE>
<CAPTION>
CAPITAL LOSS EXPIRATION
CARRYFORWARD YEAR
------------ ----------
<S> <C> <C>
Reserve International Equity Fund........................... $ 71,968 2004
Reserve International Equity Fund........................... 273,130 2005
Reserve International Equity Fund........................... 975,769 2006
Reserve Small-Cap Growth Fund............................... 145,524 2005
</TABLE>
2. INVESTMENT ACTIVITY
For the year ended May 31, 1998, the aggregate cost of purchases and proceeds
from sales of investments (excluding short-term investments) were as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE
RESERVE FUND PURCHASES SALES
------------ --------- ---------
<S> <C> <C>
Blue Chip Growth Fund....................................... $ 9,940,665 $ 7,679,556
Convertible Securities Fund................................. 40,787,380 37,225,020
Informed Investors Growth Fund.............................. 21,291,978 23,666,311
International Equity Fund................................... 12,179,817 12,544,810
Large-Cap Fund.............................................. 3,693,658 1,164,240
Mid-Cap Growth Fund......................................... 3,109,332 4,116,612
Small-Cap Growth Fund....................................... 2,840,774 3,684,301
</TABLE>
3. ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Reserve Management Company, Inc. (RMCI), serves as the Trust's Investment
Adviser subject to the direction of the Trustees. Under the Investment
Advisory Agreement, RMCI is responsible for the day-to-day operations,
including monitoring investment programs, portfolio valuation, compliance,
administration, or any other functions as required by the Trust. RMCI pays
substantially all of the operating expenses of the Trust, exclusive of
interest, taxes, brokerage, distribution fees, and any extraordinary fees.
For its services as Investment Adviser, RMCI receives an annual fee at a rate
of 1.50% of each Fund's average daily net assets, except Reserve
International Equity Fund, which pays an annual fee at a rate of 1.75% of its
average daily net assets. The fees are payable monthly.
RMCI has agreed to continue to voluntarily limit the amount charged to the
Reserve Convertible Securities Fund, to an annual rate of .75% of the Fund's
average daily net assets. For the year ended May 31, 1998, the fees it
charged the Fund were reduced by $170,101.
29
<PAGE> 30
THE RESERVE PRIVATE EQUITY SERIES
NOTES TO FINANCIAL STATEMENTS--MAY 31, 1998--(CONTINUED)
RMCI has entered into an Investment Sub-Advisory Agreement with investment
managers to serve as the Funds' sub-advisors (the "Sub-Advisors"). Under the
general supervision of RMCI, the Sub-Advisors are responsible for the
day-to-day investment decisions. The fees paid to the Sub-Advisors are paid
by RMCI as follows:
<TABLE>
<CAPTION>
RESERVE FUND SUB-ADVISER FEE
------------ ----------- ---
<S> <C> <C>
Blue Chip Growth Fund Trainer, Wortham & Company, Inc. .750%
Convertible Securities Fund New Vernon Advisors, Inc. .750%
Informed Investors Growth Fund T. H. Fitzgerald & Company .750%
International Equity Fund Pinnacle Associates Limited .875%
Large-Cap Fund Siphron Capital Management .750%
Mid-Cap Growth Fund Southern Capital Advisors .750%
Small-Cap Growth Fund Roanoke Asset Management Corp. .750%
</TABLE>
RMCI has entered into a Distribution Plan with Resrv Partners, Inc. ("RPI") a
wholly-owned subsidiary of RMCI. As distributor for the Funds, RPI is
responsible for accepting Fund share purchases and redemptions on behalf of
the Funds, providing at its own expense financial consultants and
compensating broker-dealers who supply distribution assistance to RPI. The
distributor also is responsible for the marketing efforts of the Funds. For
its services as distributor, RPI receives an annual fee of .25 of 1% of each
Fund's average daily net assets. Prior to October 1, 1997, RPI received an
annual fee of .25 of 1% for Class A shares, and an annual fee of 1% for Class
D shares. For the year ended May 31, 1998, the Funds paid the following
distribution fees:
<TABLE>
<CAPTION>
RESERVE FUND DISTRIBUTION FEE
------------ ----------------
<S> <C>
Blue Chip Growth Fund....................................... $17,543
Convertible Securities Fund................................. 17,682
Informed Investors Growth Fund.............................. 14,699
International Equity Fund................................... 28,180
Large-Cap Value Fund........................................ 12,653
Mid-Cap Growth Fund......................................... 16,819
Small-Cap Growth Fund....................................... 16,216
</TABLE>
For the period June 1, 1997 to January 31, 1998, RPI voluntarily waived a
portion of the distribution fees it charged the Reserve Convertible
Securities Fund. The fees waived by RPI amounted to $38,838.
TRANSACTIONS WITH AFFILIATES:
As of May 31, 1998, Trainer, Wortham & Company, Inc. owns 23.4% of Reserve
Blue Chip Growth Fund.
As of May 31, 1998, RMCI and affiliated persons owned 23.4%, 13.4%, 13.9%,
36.6%, 19.9%, and 2.8% of Reserve Blue Chip Growth Fund, Reserve Informed
Investors Growth Fund, Reserve Large-Cap Fund, Reserve Mid-Cap Growth Fund,
Reserve Small-Cap Growth Fund Reserve, and Reserve International Equity Fund,
respectively. Taconic Petroleum Corp. owns 13.6% of Reserve Large-Cap Fund.
Christopher E. Vroom owns 8.0% of the Reserve Small-Cap Growth Fund.
4. MANAGEMENT'S USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
30
<PAGE> 31
THE RESERVE PRIVATE EQUITY SERIES
NOTES TO FINANCIAL STATEMENTS--MAY 31, 1998--(CONTINUED)
5. CAPITAL SHARE TRANSACTIONS
Transactions in capital stock of each Fund for the year ended May 31, 1998,
were as follows:
<TABLE>
<CAPTION>
CLASS D
CLASS A -----------------------
------------------------ FOR THE PERIOD
YEAR ENDED JUNE 1, 1998 TO
MAY 31, 1998 SEPTEMBER 30, 1998
------------------------ -----------------------
RESERVE BLUE CHIP GROWTH FUND SHARES AMOUNT SHARES AMOUNT
----------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold...................................................... 178,836 $ 2,689,325 152 $ 2,500
Reinvested................................................ 79,403 1,120,379 -- --
Redeemed.................................................. (44,001) (685,503) (3,128) (54,526)
--------- ----------- -------- -----------
Net Increase (Decrease)................................... 214,238 $ 3,124,201 (2,976) $ (52,026)
========= =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
CLASS D
CLASS A -----------------------
------------------------ FOR THE PERIOD
YEAR ENDED JUNE 1, 1998 TO
MAY 31, 1998 SEPTEMBER 30, 1998
------------------------ -----------------------
RESERVE CONVERTIBLE SECURITIES FUND SHARES AMOUNT SHARES AMOUNT
----------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold...................................................... 357,328 $ 3,895,085 21 $ 235
Reinvested................................................ 181,967 1,979,389 -- --
Redeemed.................................................. (53,071) (591,997) (1,683) (20,195)
--------- ----------- -------- -----------
Net Increase (Decrease)................................... 486,224 $ 5,282,477 (1,662) $ (19,960)
========= =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
CLASS D
CLASS A -----------------------
------------------------ FOR THE PERIOD
YEAR ENDED JUNE 1, 1998 TO
MAY 31, 1998 SEPTEMBER 30, 1998
------------------------ -----------------------
RESERVE INFORMED INVESTORS GROWTH FUND SHARES AMOUNT SHARES AMOUNT
-------------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold...................................................... 83,790 $ 928,647 -- $ --
Reinvested................................................ 101,914 1,007,930 -- --
Redeemed.................................................. (249,698) (2,734,101) (1,141) (16,355)
--------- ----------- -------- -----------
Net Decrease.............................................. (63,994) $ (797,524) (1,141) $ (16,355)
========= =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
CLASS D
CLASS A -----------------------
------------------------ FOR THE PERIOD
YEAR ENDED JUNE 1, 1998 TO
MAY 31, 1998 SEPTEMBER 30, 1998
------------------------ -----------------------
RESERVE INTERNATIONAL EQUITY FUND SHARES AMOUNT SHARES AMOUNT
--------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold...................................................... 287,467 $ 3,588,183 752 $ 9,550
Reinvested................................................ -- -- -- --
Redeemed.................................................. (276,380) (3,085,673) (3,187) (40,571)
--------- ----------- -------- -----------
Net Increase (Decrease)................................... 11,087 $ 502,510 (2,435) $ (31,021)
========= =========== ======== ===========
</TABLE>
31
<PAGE> 32
THE RESERVE PRIVATE EQUITY SERIES
NOTES TO FINANCIAL STATEMENTS--MAY 31, 1998--(CONTINUED)
<TABLE>
<CAPTION>
CLASS D
CLASS A -----------------------
------------------------ FOR THE PERIOD
YEAR ENDED JUNE 1, 1998 TO
MAY 31, 1998 SEPTEMBER 30, 1998
------------------------ -----------------------
RESERVE LARGE CAP VALUE FUND SHARES AMOUNT SHARES AMOUNT
---------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold...................................................... 225,263 $ 3,764,562 3,604 $ 55,870
Reinvested................................................ 6,906,501 110,918 -- --
Redeemed.................................................. (67,510) (1,147,646) (7,445) (116,831)
--------- ----------- -------- -----------
Net Increase (Decrease)................................... 7,064,254 $ 2,727,834 (3,841) $ (60,961)
========= =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
CLASS D
CLASS A -----------------------
------------------------ FOR THE PERIOD
YEAR ENDED JUNE 1, 1998 TO
MAY 31, 1998 SEPTEMBER 30, 1998
------------------------ -----------------------
RESERVE MID-CAP GROWTH FUND SHARES AMOUNT SHARES AMOUNT
--------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold...................................................... 207,717 $ 3,061,184 50,380 $ 685,878
Reinvested................................................ 40,095 480,743 -- --
Redeemed.................................................. (152,046) (2,069,981) (190,095) (2,805,123)
--------- ----------- -------- -----------
Net Increase (Decrease)................................... 95,766 $ 1,471,946 (139,715) $(2,119,245)
========= =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
CLASS D
CLASS A -----------------------
------------------------ FOR THE PERIOD
YEAR ENDED JUNE 1, 1998 TO
MAY 31, 1998 SEPTEMBER 30, 1998
RESERVE SMALL CAP GROWTH FUND ------------------------ -----------------------
(FORMERLY RESERVE EMERGING GROWTH FUND) SHARES AMOUNT SHARES AMOUNT
--------------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold...................................................... 41,002 $ 727,314 2,838 $ 45,650
Reinvested................................................ -- -- -- --
Redeemed.................................................. (81,450) (1,410,761) (17,221) (312,464)
--------- ----------- -------- -----------
Net Decrease.............................................. (40,448) $ (683,447) (14,383) $ (266,814)
========= =========== ======== ===========
</TABLE>
Transactions in capital stock of each Fund for the period ended May 31, 1997,
were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS D
------------------------ -----------------------
YEAR ENDED YEAR ENDED
MAY 31, 1997 MAY 31, 1997
------------------------ -----------------------
RESERVE BLUE CHIP GROWTH FUND SHARES AMOUNT SHARES AMOUNT
----------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold...................................................... 76,231 $ 1,119,812 3,957 $ 56,537
Reinvested................................................ 4,875 67,171 84 1,152
Redeemed.................................................. (74,089) (1,092,588) (3,930) (56,144)
--------- ----------- -------- -----------
Net Increase.............................................. 7,017 $ 94,395 111 $ 1,545
========= =========== ======== ===========
</TABLE>
32
<PAGE> 33
THE RESERVE PRIVATE EQUITY SERIES
NOTES TO FINANCIAL STATEMENTS--MAY 31, 1998--(CONTINUED)
<TABLE>
<CAPTION>
CLASS A CLASS D
----------------------- ------------------
SEPTEMBER 3, 1996 SEPTEMBER 3, 1996
(COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) TO OF OPERATIONS) TO
MAY 31, 1997 MAY 31, 1997
----------------------- ------------------
RESERVE CONVERTIBLE SECURITIES FUND SHARES AMOUNT SHARES AMOUNT
----------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold........................................................ 2,026,485 $20,572,892 2,814 $ 28,969
Reinvested.................................................. 19,551 201,111 11 113
Redeemed.................................................... (190,554) (1,979,449) (1,163) (12,163)
--------- ----------- ------ ---------
Net Increase................................................ 1,855,482 $18,794,554 1,662 $ 16,919
========= =========== ====== =========
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS D
----------------------- ------------------
YEAR ENDED YEAR ENDED
MAY 31, 1997 MAY 31, 1997
----------------------- ------------------
RESERVE EMERGING GROWTH FUND SHARES AMOUNT SHARES AMOUNT
---------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold........................................................ 117,069 $ 1,999,906 10,982 $ 187,538
Redeemed.................................................... (84,292) (1,389,829) (9,047) (150,817)
--------- ----------- ------ ---------
Net Increase................................................ 32,777 $ 610,077 1,935 $ 36,721
========= =========== ====== =========
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS D
----------------------- ------------------
YEAR ENDED YEAR ENDED
MAY 31, 1997 MAY 31, 1997
----------------------- ------------------
RESERVE INFORMED INVESTORS GROWTH FUND SHARES AMOUNT SHARES AMOUNT
-------------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold........................................................ 116,034 $ 1,389,343 911 $ 11,528
Reinvested.................................................. 37,456 395,531 -- --
Redeemed.................................................... (121,475) (1,425,528) (814) (9,644)
--------- ----------- ------ ---------
Net Increase................................................ 32,015 $ 359,346 97 $ 1,884
========= =========== ====== =========
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS D
----------------------- ------------------
YEAR ENDED YEAR ENDED
MAY 31, 1997 MAY 31, 1997
----------------------- ------------------
RESERVE INTERNATIONAL EQUITY FUND SHARES AMOUNT SHARES AMOUNT
--------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold........................................................ 689,779 $ 8,029,446 2,446 $ 27,617
Redeemed.................................................... (47,041) (551,604) (562) (6,687)
--------- ----------- ------ ---------
Net Increase................................................ 642,738 $ 7,477,842 1,884 $ 20,930
========= =========== ====== =========
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS D
----------------------- ------------------
YEAR ENDED YEAR ENDED
MAY 31, 1997 MAY 31, 1997
----------------------- ------------------
RESERVE LARGE-CAP VALUE FUND SHARES AMOUNT SHARES AMOUNT
---------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold........................................................ 108,518 $ 1,276,605 5,080 $ 68,502
Redeemed.................................................... (11,940) (151,013) (1,239) (16,004)
--------- ----------- ------ ---------
Net Increase................................................ 96,578 $ 1,125,592 3,841 $ 52,498
========= =========== ====== =========
</TABLE>
33
<PAGE> 34
THE RESERVE PRIVATE EQUITY SERIES
NOTES TO FINANCIAL STATEMENTS--MAY 31, 1998--(CONTINUED)
<TABLE>
<CAPTION>
CLASS A CLASS D
---------------------- ----------------------
YEAR ENDED YEAR ENDED
MAY 31, 1997 MAY 31, 1997
---------------------- ----------------------
RESERVE MID-CAP GROWTH FUND SHARES AMOUNT SHARES AMOUNT
--------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Sold....................................................... 198,244 $ 2,390,365 58,332 $ 727,999
Redeemed................................................... (44,223) (530,105) (114,850) (1,398,508)
-------- ----------- -------- -----------
Net Increase............................................... 154,021 $ 1,860,260 (56,518) $ (670,509)
======== =========== ======== ===========
</TABLE>
6. FINANCIAL HIGHLIGHTS (CONTAINED BELOW ARE SELECTED DATA FOR A SHARE
OUTSTANDING, TOTAL INVESTMENT RETURN, RATIOS TO AVERAGE NET ASSETS AND OTHER
SUPPLEMENTAL DATA FOR EACH OF THE YEARS PRESENTED FOR EACH OF THE FUNDS.)
<TABLE>
<CAPTION>
OCTOBER 28, 1994
(COMMENCEMENT OF
YEAR ENDED YEAR ENDED YEAR ENDED OPERATIONS) TO
RESERVE BLUE CHIP GROWTH FUND MAY 31, 1998 MAY 31, 1997 MAY 31, 1996 MAY 31, 1995
----------------------------- ------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period.................. $15.46 $14.91 $12.03 $10.00
------ ------ ------ ------
Income from investment operations
Net investment income (loss)........................ -- (0.17) (.10) (.03)
Net realized and unrealized gain.................... 2.82 0.91 3.62 2.06
------ ------ ------ ------
Total from investment operations...................... 2.82 0.74 3.52 2.03
Less distribution from net realized income and gain... (3.19) (.19) (.64) --
------ ------ ------ ------
NET ASSET VALUE, end of period........................ $15.09 $15.46 $14.91 $12.03
====== ====== ====== ======
Total Return.......................................... 19.70% 5.12% 30.10% 20.30%(2)
RATIOS/SUPPLEMENTAL DATA
- -----------------------
Net assets in thousands, end of period................ $8,532 $5,428 $5,130 $1,993
Ratio of expenses to average net assets before
waiver.............................................. 1.75% 1.75% 1.75% 1.75%(1)
Ratio of expenses to average net assets, net of
waiver.............................................. 1.75% 1.75% 1.75% 1.73%(1)
Ratio of net investment income (loss) to average net
assets, before waiver............................... (.87)% (1.13)% (.94)% (.72)%(1)
Ratio of net investment income (loss) to average net
assets, net of waiver............................... --% --% --% (.70)%(1)
Portfolio turnover rate............................... 113% 109% 72% 68%
</TABLE>
- ---------------
(1) Annualized
(2) Total return is not annualized and does not reflect impact of sales load.
34
<PAGE> 35
THE RESERVE PRIVATE EQUITY SERIES
NOTES TO FINANCIAL STATEMENTS--MAY 31, 1998--(CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 3, 1996
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
RESERVE CONVERTIBLE SECURITIES FUND MAY 31, 1998 MAY 31, 1997
----------------------------------- ------------ -----------------
<S> <C> <C>
NET ASSET VALUE, beginning of period........................ $ 11.08 $ 10.00
------- -------
Income from investment operations
Net investment income..................................... .03 .34
Net realized and unrealized gain.......................... .69 .99
------- -------
Total from investment operations............................ .72 1.33
Less distribution from net realized income and gain......... (1.27) (.25)
------- -------
NET ASSET VALUE, end of period.............................. $ 10.53 $ 11.08
======= =======
Total Return................................................ 6.44% 13.53%(2)
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets in thousands, end of period...................... $24,659 $20,553
Ratio of expenses to average net assets before waiver....... 1.75% 2.36%(1)
Ratio of expenses to average net assets, net of waiver...... .75% .52%(1)
Ratio of net investment income to average net assets, before
waiver.................................................... 3.77% 3.67%(1)
Ratio of net investment income to average net assets, net of
waiver.................................................... 4.69% 5.52%(1)
Portfolio turnover rate..................................... 168% 113%
</TABLE>
<TABLE>
<CAPTION>
NOVEMBER 14, 1994
(COMMENCEMENT OF
YEAR ENDED YEAR ENDED YEAR ENDED OPERATIONS) TO
RESERVE INFORMED INVESTORS GROWTH FUND MAY 31, 1998 MAY 31, 1997 MAY 31, 1996 MAY 31, 1995
-------------------------------------- ------------ ------------ ------------ -----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period.................. $11.48 $14.36 $11.99 $10.00
------ ------ ------ ------
Income from investment operations
Net investment loss................................. (.20) (.07) (.33) (.07)
Net realized and unrealized gain (loss)............. 2.08 (1.66) 3.87 2.06
------ ------ ------ ------
Total from investment operations...................... 1.88 (1.73) 3.54 1.99
Less distribution from net realized gain.............. (2.90) (1.15) (1.17) --
------ ------ ------ ------
NET ASSET VALUE, end of period........................ $10.46 $11.48 $14.36 $11.99
====== ====== ====== ======
Total Return.......................................... 17.88% (11.35)% 29.75% 19.90%(2)
RATIOS/SUPPLEMENTAL DATA
- -----------------------
Net assets in thousands, end of period................ $4,334 $5,477 $6,393 $6,837
Ratio of expenses to average net assets............... 1.75% 1.75% 1.75% 1.75%(1)
Ratio of net investment loss to average net assets.... (.91)% (.57)% (1.57)% (1.62)%(1)
Portfolio turnover rate............................... 410% 255% 132% 59%
</TABLE>
- ---------------
(1) Annualized
(2) Total return is not annualized and does not reflect impact of sales load.
35
<PAGE> 36
THE RESERVE PRIVATE EQUITY SERIES
NOTES TO FINANCIAL STATEMENTS--MAY 31, 1998--(CONTINUED)
<TABLE>
<CAPTION>
JULY 13, 1995
(COMMENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS) TO
RESERVE INTERNATIONAL EQUITY FUND MAY 31, 1998 MAY 31, 1997 MAY 31, 1996
--------------------------------- ------------ ------------ ----------------
<S> <C> <C> <C>
NET ASSET VALUE, beginning of period........................ $ 12.59 $ 11.26 $10.00
------- ------- ------
Income from investment operations
Net investment loss....................................... (.04) (0.07) (.05)
Net realized and unrealized gain.......................... .67 1.40 1.31
------- ------- ------
Total from investment operations............................ .63 1.33 1.26
------- ------- ------
NET ASSET VALUE, end of period.............................. $ 13.22 $ 12.59 $11.26
======= ======= ======
Total Return................................................ 5.00% 11.81% 12.60%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets in thousands, end of period...................... $12,851 $12,099 $3,578
Ratio of expenses to average net assets before waiver....... 2.00% 2.00% 2.00%(1)
Ratio of expenses to average net assets, net of waiver...... 2.00% 2.00% 1.99%(1)
Ratio of net investment loss to average net assets before
waiver.................................................... (.39)% (.82)% (.92)%(1)
Ratio of net investment loss to average net assets net of
waiver.................................................... (.39)% (.82)% (.91)%(1)
Portfolio turnover rate..................................... 114% 52% 70%
</TABLE>
<TABLE>
<CAPTION>
JANUARY 2, 1996
(COMMENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS) TO
RESERVE LARGE-CAP VALUE FUND MAY 31, 1998 MAY 31, 1997 MAY 31, 1996
- ------------------------------------------------------------ ------- ------- ------
<S> <C> <C> <C>
NET ASSET VALUE, beginning of period........................ $ 14.61 $ 10.95 $10.00
------- ------- ------
Income from investment operations
Net investment loss....................................... (.03) (.03) (.01)
Net realized and unrealized gain.......................... 3.89 3.69 .96
------- ------- ------
Total from investment operations............................ 3.86 3.66 .95
Less distributions from net realized gain................... (.31) -- --
------- ------- ------
NET ASSET VALUE, end of period.............................. $ 18.16 $ 14.61 $10.95
======= ======= ======
Total Return................................................ 26.71% 33.42% 9.50%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets in thousands, end of period...................... $ 6,786 $ 3,054 $1,231
Ratio of expenses to average net assets..................... 1.75% 1.75% 1.75%(1)
Ratio of net investment loss to average net assets.......... (.36) (.32)% (.32)%(1)
Portfolio turnover rate..................................... 25% 18% 0%
</TABLE>
- ---------------
(1) Annualized
(2) Total return is not annualized and does not reflect impact of sales load.
36
<PAGE> 37
THE RESERVE PRIVATE EQUITY SERIES
NOTES TO FINANCIAL STATEMENTS--MAY 31, 1998--(CONTINUED)
<TABLE>
<CAPTION>
MARCH 13, 1996
(COMMENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS) TO
RESERVE MID-CAP GROWTH FUND MAY 31, 1998 MAY 31, 1997 MAY 31, 1996
--------------------------- ------------ ------------ ----------------
<S> <C> <C> <C>
NET ASSET VALUE, beginning of period........................ $13.20 $12.29 $10.94
------ ------ ------
Income from investment operations
Net investment loss....................................... (.26) (.11) (.01)
Net realized and unrealized gain.......................... 1.50 1.02 1.36
------ ------ ------
Total from investment operations............................ 1.24 0.91 1.35
Less distribution from net realized gains................... (1.46)
------ ------ ------
NET ASSET VALUE, end of period.............................. $12.98 $13.20 $12.29
====== ====== ======
Total Return................................................ 10.31% 7.40% 12.34%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets in thousands, end of period...................... $3,381 $2,174 $ 131
Ratio of expenses to average net assets..................... 1.75% 1.75% 1.74%(1)
Ratio of net investment loss to average net assets.......... (1.21)% (1.31)% (.97)%(1)
Portfolio turnover rate..................................... 73% 102% 85%
</TABLE>
<TABLE>
<CAPTION>
NOVEMBER 14, 1994
(COMMENCEMENT OF
YEAR ENDED YEAR ENDED YEAR ENDED OPERATIONS) TO
RESERVE SMALL-CAP GROWTH FUND MAY 31, 1998 MAY 31, 1997 MAY 31, 1996 MAY 31, 1995
----------------------------- ------------ ------------ ------------ -----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period.................. $15.52 $ 19.56 $12.21 $10.00
------ ------- ------ ------
Income from investment operations
Net investment loss................................. (.39) (0.28) (.17) (.09)
Net realized and unrealized gain (loss)............. 1.53 (3.76) 8.05 2.30
------ ------- ------ ------
Total from investment operations...................... 1.14 (4.04) 7.88 2.21
Less distribution from net realized gain.............. -- -- (.53) --
------ ------- ------ ------
NET ASSET VALUE, end of period........................ $16.66 $ 15.52 $19.56 $12.21
====== ======= ====== ======
Total Return.......................................... 7.35% (20.65)% 65.55% 22.10%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets in thousands, end of period................ $5,541 $ 5,789 $6,657 $1,241
Ratio of expenses to average net assets............... 1.75% 1.75% 1.75% 1.75%(1)
Ratio of net investment loss to average net assets.... (1.64)% (1.69)% (1.70)% (1.62)%(1)
Portfolio turnover rate............................... 46% 28% 38% 43%
</TABLE>
- ---------------
(1) Annualized
(2) Total return is not annualized, and does not reflect impact of sales load.
37
<PAGE> 38
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and the Board of Trustees of The Reserve Private Equity
Series:
In our opinion, the accompanying statements of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Reserve Private Equity Series
(comprising, respectively, Reserve Blue Chip Fund, Reserve Convertible
Securities Fund, Reserve Small Cap Fund (formerly Reserve Emerging Growth Fund),
Reserve Informed Investors Fund, Reserve International Equity Fund, Reserve
Large-Cap Fund, and Reserve Mid-Cap Growth Fund (formerly Reserve North America
Growth Fund) (collectively the "Trust"), at May 31, 1998, the results of their
operations for the year then ended, the changes in their net assets for each of
the two years in the period then ended and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at May 31,
1998 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
July 30, 1998
38
