<PAGE>
[LOGO] THE RESERVE FUNDS
Founders of "America's First Money Fund" Est. 1970
1250 Broadway, New York, NY 10001-3701
(212) 401-5500
GENERAL INFORMATION AND 24-HOUR YIELD AND BALANCE INFORMATION
800-637-1700
This literature is not authorized for distribution to prospective investors
unless preceded or accompanied by an appropriate current prospectus.
Distributor--Resrv Partners, Inc.
RF/ANNUAL 07/99
[LOGO] THE
RESERVE
FUNDS
Founders of
"America's First Money Fund"
Est. 1970
ANNUAL REPORT
RESERVE PRIVATE EQUITY SERIES
BLUE CHIP GROWTH FUND
INFORMED INVESTORS GROWTH FUND
INTERNATIONAL EQUITY FUND
LARGE-CAP GROWTH FUND
MID-CAP EQUITY FUND
SMALL-CAP GROWTH FUND
MAY 31, 1999
<PAGE>
RESERVE BLUE CHIP GROWTH FUND
Blue Chip
Growth S&P 500
--------- -------
10/28/94 $10,000 $10,000
05/31/99 27,572 27,468
Total return represents the increase in value of an investment
over the period from October 28, 1994 (inception) to May 31,
1999. 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 Reserve Blue Chip Growth Fund returned 46.62% for the twelve-month period
ended May 31, 1999, while the Standard & Poor's 500 Index ("S&P 500"), the
Fund's primary benchmark, returned 19.35%.
Since we reported to you last year, strong economic growth, robust corporate
profits, low interest rates, and subdued inflation contributed once again to an
environment for double digit gains. A strong rebound in the general market,
which took hold in the fourth quarter, continued into 1999 with the Dow Jones
Industrial Average breaking the 10,000 mark in late March while most other
market indices were also setting record highs.
During this period your Fund has remained focused on high quality companies with
consistent earnings growth, approximately 75% of the Portfolio's holdings
invested in the top 100 companies of the S&P 500. These companies are
well-managed, financially sound industry leaders with proven track records.
As we enter a new fiscal year, we believe that the long-term outlook for
investing remains favorable. We will continue to pay close attention to sector
weightings within the portfolio, and follow our strict sell discipline. We will
also continue our focus on large-cap, high-quality, industry-dominant companies.
Because we believe that these are the companies best equipped financially,
operationally and market-wise to participate in a growing global economy.
ROBERT J. VILE, MANAGING DIRECTOR, TRAINER, WORTHAM & COMPANY, INC., SUB-ADVISOR
2
<PAGE>
RESERVE INFORMED INVESTORS GROWTH FUND
Informed
Investors S&P 500
--------- -------
12/28/94 $10,000 $10,000
05/31/99 22,065 28,239
Total return represents the increase in value of an investment
over the period from December 28, 1994 (inception) to May 31,
1999. 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 Shareholder of the Informed Investors Growth Fund
The six-month return (through June 30) for the fund was 25.6% compared to 12.4%
for the S&P index.
Today, market indicators are sending decidedly mixed signals, triggered by the
conflicting trends of the long-term versus the short-term outlook. Short-term,
for example, the stockmarket anticipates continued low inflation, a rebound in
foreign economies (notably in Asia), higher corporate profits, a strong dollar
and reasonably stable interest rates. These anticipations are seemingly
incompatible with long-term economic realities and this is reflected in the
continued uncertainty and high price volatility that plagues most markets,
worldwide.
Interest rates are unlikely to surge because of the absence of inflation
concerns, but strong credit demands are likely to block a measurable decline in
rates. The bond market faces the largest aggregate corporate bond demand in
recent history, and not withstanding the purported government surplus, U.S.
government spending is rising at the fastest rate in eight years, and is still
accelerating.
Long-term, there are a number of imbalances facing the market: the tight labor
market, the soaring trade deficit (and the accompanying trend of capital
outflow), a negative private savings rate for the first time in 65 years, a
record level of corporate and private leverage and debt, and the most extreme
stock market valuation in history.
Nevertheless, the doomsayers to the contrary, the current market expansion is
now 100 months old: six more months and it will become the longest in U.S.
history. The U.S. is truly in an historical era of economic growth.
Looking to the future, it is important to keep in mind that the current
revolution in information and commerce is the most transforming event in human
history. It is truly the megatrend of all time. The Internet industry, alone
among all others, is the only industry where one can be most certain that in ten
years it will at least be ten times larger than it is today.
Without question, the U.S. is, and will remain, the dominant and controlling
force in this revolution. The expectation from here is for higher prices; that
the recent rally in so called "value" stocks constitutes only a much-needed
broadening phase in the market and, most important of all, that the ultimate
performance advantage will continue to come from selected technology and
internet stocks, the primary sector concentration of the Fund at this time.
THOMAS H. FITZGERALD, JR., PRESIDENT, T. H. FITZGERALD & CO. SUB-ADVISOR
3
<PAGE>
RESERVE INTERNATIONAL EQUITY FUND
International
Equity EAFE
------------- --------
07/13/95 $10,000 $10,000
05/31/99 11,988 12,394
Total return represents the increase in value of the investment
over the period from July 13, 1995 (inception) to May 31, 1999.
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 International Fund
At the start of the year the euro was declining and, with the major portion of
our stocks denominated in this currency, the performance of the Fund was
disappointing. Adding to our difficulty was the worldwide rotation from growth
stocks (our exclusive area of interest) to heavy cyclicals, natural resources
and commodity producers. More recently, the euro has found strength and,
together with a shift back to growth stocks, our performance has picked up
significantly. Specifically, for the year ended May 31, 1999, we were down 4%,
yet we were up 8.47% July 21, 1999, year-to-date. The German and French
economies are now showing encouraging signs that business optimism is improving,
which combined with our concentration in growth companies, bodes well from now
through 2000. More promise comes from the much lower price/earning multiples for
our holdings compared to U.S. issues.
Market conditions are also more favorable in Asia, consequently, our allocation
to the region, particularly Japan, has increased. This reversal is being further
propelled by foreign buying, improved business confidence and export/import data
that provides convincing evidence that the Asian recovery is truly broad-based.
As to Latin America, difficulties in Argentina and Brazil have caused us to
concentrate on Mexico, which continues to benefit from the strength of the U.S.
economy, but the entire region still represents only 4.4% of assets.
NICHOLAS REITENBACH, SENIOR VICE PRESIDENT, PINNACLE ASSOCIATES, LTD.,
SUB-ADVISOR
4
<PAGE>
RESERVE LARGE-CAP GROWTH FUND
Large-Cap
Value S&P 500
--------- -------
01/02/96 $10,000 $10,000
05/31/99 21,417 19,314
Total return represents the increase in value of an investment
over the period from January 2, 1996 (inception) to May 31,
1999. 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 Large-Cap Growth Fund:
Your portfolio produced solid, double-digit gains, for the year ended May 31,
1999, of 21.1% against our benchmark S&P 500 Index return of 19.4%. The Fund
owns interest in 28 enterprises focusing on large, multi-national firms with
strong brands and substantial market share. The Fund's sector emphasis remains
in Health Care, Technology, Finance and Consumer Non-durables. Our positive
outlook for these stocks is based on several factors. First, is a growing world
population that enjoys improved longevity thanks to continued advances in drugs
and preventive care. It is worth noting that Medicare reform and government
intervention, in terms of regulated drug pricing, could potentially hurt the
medical products industry. Nevertheless, well-managed drug companies with
compelling products should continue to generate superior long-term earnings.
Other businesses with popular brand names and exceptional service also stand to
benefit from this expanding consumer base. As always, the best investment
opportunities will be those firms that can produce desirable products and
deliver them to the customer in a cost-effective manner.
Corporate productivity gains continue as businesses use technology to enhance
the utilization of both human and physical capital, while global excess capacity
and trading competition are putting downward pressure on commodity prices.
Indeed, the price of gold has hit 20-year lows. These factors have helped to
produce a very stable and tame inflation environment, which in turn helps to
keep interest rates low. Equally important, the growing acceptance of electronic
commerce has created a secular disinflationary force. A blossoming virtual
marketplace has empowered the consumer with an unprecedented amount of
information and access to merchandise. It will become critical for successful
businesses to leverage their management expertise and brand power to avoid
competing strictly on price. Paradoxically, as this information flow increases,
customers will find comfort and convenience in quality, brand name products and
services.
Thank you for your continued investment in the Reserve Large-Cap Growth Fund.
PETER D. SIPHRON, VICE-PRESIDENT, SIPHRON CAPITAL MANAGEMENT, SUB ADVISER
5
<PAGE>
RESERVE MID-CAP EQUITY FUND
Mid-Cap Russell
Growth 2000
--------- -------
03/13/96 $10,000 $10,000
05/31/99 11,671 13,585
Total return represents the increase in value of an investment
over the period from March 13, 1996 (inception) to May 31, 1999.
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:
The Board of Trustees has decided to liquidate the fund as of July 31, 1999.
RESERVE MANAGEMENT COMPANY, INC.
6
<PAGE>
RESERVE SMALL-CAP GROWTH FUND
Small Cap Russell-2000
Growth Growth Index
--------- ------------
11/14/94 $10,000 $10,000
05/31/99 23,308 16,879
Total return represents the increase in value of an investment
over the period from November 14, 1994 (inception) to May 31,
1999. 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:
For the year ending May 31, 1999 your Fund returned 41.72% while our small cap
growth benchmark, the Russell 2000(Registered) Growth Index, returned 2.30%.
Since inception, your Fund has more than doubled the performance of its
benchmark 144% against 72.2% and this excellent performance was achieved at a
time when small company investing was out of favor. Now the good news, sentiment
for investing in small company stocks has shifted to being quite positive among
professional investors for the remainder of 1999 and into the millennium.
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. Last year our bottom-up, rigorous,
fundamental research identified companies in a number of different areas that
contributed to your Fund's strong performance. Select investments in technology,
telecommunications, healthcare, and consumer services companies all made
positive contributions. We believe that the current technology cycle will not be
a short one. The rest of the world is beginning to understand the significant
competitive advantage that the United States possesses as a result of its
commitment to spending in this area. As a percent of GDP, the United States
spends roughly twice that of Germany and Japan. These countries and others are
beginning to ratchet up spending levels in an attempt to close the gap. The
amounts of money involved are enormous and the implications extremely positive.
For the remainder of the year we expect a slower growth environment in which
Roanoke's practice of individual stock selection rather than index investing
will be key. Taken together, the small cap growth companies in your Fund are
growing their earnings at better than four times the rate of the large-company
S&P 500(Registered) which Goldman, Sachs & Co. expects to be only 7% for 1999.
Another source of encouragement is that by all sorts of measures, small cap
stocks are cheaper than big cap stocks. Over the past few quarters the valuation
gap had become extreme. We are now at the beginning of a very exciting period
for small company investors because, as the valuation gap normalizes our asset
class should perform particularly well -- and for a long period.
EDWIN G. VROOM AND ADELE S. WEISMAN, CO-PORTFOLIO MANAGERS, ROANOKE ASSET
MANAGEMENT CORP., SUB-ADVISER
7
<PAGE>
RESERVE PRIVATE EQUITY SERIES--BLUE CHIP GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS -- 99.7% (NOTE 1)
- ------- ---------------------- -----------
<S> <C> <C>
BANKS -- 3.1%
5,125 Bank of America Corp............................................................................. $ 331,523
-----------
BIO-TECHNOLOGY -- 3.2%
5,350 AMGEN Inc.*...................................................................................... 338,388
-----------
CABLE-TV -- 4.8%
6,840 Mediaone Group *................................................................................. 504,017
-----------
COMMUNICATION RADIO -- 2.4%
9,775 Infinity Broadcasting Co.*....................................................................... 249,873
-----------
COMPUTER MEMORY DEVICES -- 3.6%
3,850 EMC Corp.*....................................................................................... 383,556
-----------
COMPUTER MICROSYSTEMS -- 7.3%
8,475 Dell Computer Corp.*............................................................................. 291,858
4,100 IBM Corp......................................................................................... 476,881
-----------
768,739
-----------
COMPUTER NETWORKING -- 4.0%
3,862 Cisco Systems, Inc. *............................................................................ 420,475
-----------
COMPUTER SOFTWARE -- 9.7%
2,625 America Online, Inc.*............................................................................ 313,359
3,200 Inktomi Corp*.................................................................................... 329,600
4,750 Microsoft Corp.*................................................................................. 383,266
-----------
1,026,225
-----------
DRUGS -- 2.8%
4,700 Warner Lambert Company........................................................................... 291,400
-----------
ELECTRONICS -- 3.4%
3,550 General Electric Company......................................................................... 360,991
-----------
FINANCIAL/BUSINESS SERVICES -- 11.9%
3,225 Charles Schwab Corp.............................................................................. 341,245
6,000 Citigroup, Inc................................................................................... 397,500
2,525 Fannie Mae Corp.................................................................................. 171,700
3,625 Morgan Stanley-Dean Witter....................................................................... 349,813
-----------
1,260,258
-----------
INSURANCE -- 2.5%
2,325 American International Group, Inc................................................................ 265,777
-----------
MANUFACTURING DIVERSIFIED -- 3.3%
6,375 Soletron Corp.*.................................................................................. 349,031
-----------
MEDICAL SUPPLIES -- 4.4%
4,325 Pfizer Inc. *.................................................................................... 462,775
-----------
OFFICE AND BUSINESS EQUIPMENT -- 2.1%
7,612 Staples, Inc.*................................................................................... 218,845
-----------
PHARMACEUTICALS -- 3.0%
4,775 Merck & Company.................................................................................. 322,313
-----------
</TABLE>
8
<PAGE>
RESERVE PRIVATE EQUITY SERIES--BLUE CHIP GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS--99.7% (CONTINUED) (NOTE 1)
- ------- -----------
<S> <C> <C>
RADIO, TV & BROADCAST COMMUNICATION EQUIPMENT -- 3.1%
4,975 Clear Channel Comm.*............................................................................. $ 328,661
-----------
RETAIL-SPECIALTY -- 2.5%
2,600 CMGI Inc. *...................................................................................... 269,425
-----------
SEMICONDUCTORS -- 3.6%
6,975 Intel Corp....................................................................................... 377,086
-----------
TELECOMMUNICATION -- 14.8%
5,925 AT&T Corp........................................................................................ 328,838
4,975 AT&T Liberty Media*.............................................................................. 323,375
10,650 QWEST Communications Int'l*...................................................................... 451,959
5,350 WorldCom, Inc.*.................................................................................. 462,106
-----------
1,566,278
-----------
TELECOMMUNICATIONS EQUIPMENT -- 4.2%
7,750 Lucent Technologies, Inc. 440,781
-----------
Total Common Stocks (Cost $8,212,865)............................................................ 10,536,417
SHORT-TERM INVESTMENTS--2.3%
250,000 Reserve Institutional Trust: U.S. Government Class A (Cost $250,000)............................. 250,000
-----------
TOTAL INVESTMENTS (COST $8,462,865)................................................. 102.0% 10,786,417
LIABILITIES, LESS OTHER ASSETS...................................................... (2.0) (214,751)
------ -----------
NET ASSETS.......................................................................... 100.0% $10,571,666
------ -----------
------ -----------
</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,
1999, was $8,462,865; the aggregate gross unrealized appreciation was
$2,632,641 and the aggregate gross unrealized depreciation was $309,089.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
RESERVE PRIVATE EQUITY SERIES--BLUE CHIP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES--MAY 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $8,462,865)................................................... $10,786,417
Cash.................................................................................................... 22,168
Receivable for securities sold.......................................................................... 901,753
Receivable for Fund shares sold......................................................................... 15,000
Dividend and interest receivable........................................................................ 3,712
-----------
Total Assets.......................................................................................... 11,729,050
-----------
LIABILITIES:
Payable for securities purchased........................................................................ 1,157,192
Payable for Fund shares repurchased..................................................................... 192
-----------
Total Liabilities..................................................................................... 1,157,384
-----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 507,126 Class R shares and 122 Class I shares outstanding ($.001 par value).... $10,571,666
-----------
-----------
NET ASSET VALUE PER SHARE (offering and redemption price per share):
Class R ($10,570,042/507,126)........................................................................... $ 20.84
-----------
-----------
Class I ($1,624/122).................................................................................... $ 13.29
-----------
-----------
COMPOSITION OF NET ASSETS:
Capital Stock........................................................................................... 507
Paid in surplus......................................................................................... 5,896,645
Accumulated net realized gain on investments............................................................ 2,350,962
Net unrealized appreciation on investments.............................................................. 2,323,552
-----------
NET ASSETS................................................................................................ $10,571,666
-----------
-----------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1999
INVESTMENT INCOME:
Dividends............................................................................................... $ 54,132
Interest................................................................................................ 3,364
-----------
Total Investment Income............................................................................... 57,496
-----------
EXPENSES:
Comprehensive fee (Note 3).............................................................................. 128,465
Distribution fee (Note 3)............................................................................... 24,979
-----------
Total Expenses........................................................................................ 153,444
-----------
Net Investment Loss....................................................................................... (95,948)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 2):
Net realized gain on investments........................................................................ 2,917,573
Net change in unrealized appreciation on investments.................................................... 1,150,092
-----------
Net realized and unrealized gain on investments......................................................... 4,067,665
-----------
Net Increase in Net Assets Resulting from Operations.................................................... $ 3,971,717
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
RESERVE PRIVATE EQUITY SERIES--BLUE CHIP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1999 AND MAY 31, 1998
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss......................................................................... $ (95,948) $ (60,696)
Net realized gain from investment transactions.............................................. 2,917,573 551,668
Net change in unrealized appreciation on investments........................................ 1,150,092 671,426
----------- ----------
Net increase in net assets resulting from operations........................................ 3,971,717 1,162,398
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments............................................................ (631,531) (1,176,380)
----------- ----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net proceeds from sale of shares............................................................ 2,209,195 2,637,887
Reinvestment of distributions............................................................... 608,358 1,120,379
Cost of shares redeemed..................................................................... (4,118,126) (686,091)
----------- ----------
Net increase (decrease) in net assets resulting from capital share transactions............. (1,300,573) 3,072,175
----------- ----------
Net increase in net assets.................................................................. 2,039,613 3,058,193
NET ASSETS:
Beginning of year........................................................................... 8,532,053 5,473,860
----------- ----------
End of year................................................................................. $10,571,666 $8,532,053
----------- ----------
----------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
RESERVE PRIVATE EQUITY SERIES--INFORMED INVESTORS GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS--90.0% (NOTE 1)
- ------- -------------------- ----------
<S> <C> <C>
APPLICATIONS SOFTWARE -- 2.4%
2,000 Citrix Systems, Inc............................................................................... $ 98,875
----------
BUSINESS FINANCIAL SERVICES -- 8.5%
11,800 American Diversified Holdings .................................................................... 70,800
900 Charles Schwab Corp............................................................................... 95,232
1,200 Donaldson, Lufkin & Jenrette...................................................................... 80,400
1,100 Morgan Stanley-Dean Witter........................................................................ 106,150
----------
352,582
----------
COMMUNICATIONS EQUIPMENT -- 6.6%
2,800 Qualcomm, Inc.*................................................................................... 272,300
----------
COMPUTERS -- 3.1%
1,000 At Home Corporation*.............................................................................. 126,750
----------
COMPUTER DATA SERVICES -- 2.5%
900 Verisign, Inc.*................................................................................... 106,650
----------
COMPUTER MEMORY DEVICES -- 2.7%
1,100 EMC, Corp.*....................................................................................... 109,588
----------
COMPUTER MICROSYSTEMS -- 10.1%
900 Doubleclick, Inc.*................................................................................ 87,694
3,300 Net Bank*......................................................................................... 140,663
2,200 PSI Net*.......................................................................................... 97,900
2,400 Security First Technologies*...................................................................... 92,100
----------
418,357
----------
COMPUTER NETWORKING -- 4.0%
1,500 Cisco Systems, Inc.*.............................................................................. 163,313
----------
COMPUTER SOFTWARE -- 10.3%
1,800 America Online, Inc. *............................................................................ 214,875
1,600 E Trade Group*.................................................................................... 71,200
800 Microsoft Corp. *................................................................................. 64,550
500 Yahoo!, Inc.*..................................................................................... 74,000
----------
424,625
----------
ELECTRONIC COMPONENTS -- 4.9%
2,100 Broadcom Corp.--Class A*.......................................................................... 201,075
----------
INTERNET SOFTWARE -- 3.6%
900 Lycos, Inc.*...................................................................................... 90,450
800 Realnetworks, Inc.*............................................................................... 56,700
----------
147,150
----------
PACKAGE SOFTWARE -- 2.4%
2,200 Siebel Systems, Inc............................................................................... 100,165
----------
PHARMACEUTICALS -- 2.8%
2,200 VISX, Inc.*....................................................................................... 114,263
----------
RETAIL INTERNET -- 6.8%
2,900 Beyond.Com Corp.*................................................................................. 61,625
800 Ebay, Inc.*....................................................................................... 141,750
700 Priceline.com*.................................................................................... 78,422
----------
281,797
----------
</TABLE>
12
<PAGE>
RESERVE PRIVATE EQUITY SERIES--INFORMED INVESTORS GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS--90.0% (CONTINUED) (NOTE 1)
- ------- -------------------------------- ----------
<S> <C> <C>
RETAIL--SPECIALTY -- 6.1%
900 Amazon.com, Inc.*................................................................................. $ 106,875
1,400 CMGI, Inc.*....................................................................................... 145,075
----------
251,950
----------
SEMICONDUCTOR, RELATED DEVICES -- 4.0%
1,500 Texas Instruments, Inc............................................................................ 164,063
----------
TELECOMMUNICATIONS -- 6.4%
3,200 Global Crossings Ltd.*............................................................................ 151,800
1,600 Nokia Corp., Class A.............................................................................. 113,600
----------
265,400
----------
TELECOMMUNICATIONS EQUIPMENT -- 2.8%
2,000 Lucent Technologies, Inc.......................................................................... 113,750
----------
Total Common Stocks (Cost $3,610,437)............................................................. 3,712, 653
----------
SHORT-TERM INVESTMENTS -- 8.8%
120,000 Reserve Funds U.S. Treasury....................................................................... 120,000
244,000 Reserve Institutional Trust:
U.S. Government Class A........................................................................... 244,000
----------
Total Short-Term Investments (Cost $364,000)...................................................... 364,000
TOTAL INVESTMENTS (COST $3,974,437).................................................. 98.8% 4,076,653
OTHER ASSETS, LESS LIABILITIES....................................................... 1.2 47,465
------ ----------
NET ASSETS........................................................................... 100.0% $4,124,118
------ ----------
------ ----------
</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,
1999, was $3,974,437; the aggregate gross unrealized appreciation was $494,824
and the aggregate gross unrealized depreciation was $392,608.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
RESERVE PRIVATE EQUITY SERIES--INFORMED INVESTORS GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES--MAY 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $3,974,437).................................................... $4,076,653
Cash..................................................................................................... 68,476
Receivable for securities sold........................................................................... 27,694
Receivable for Fund shares sold.......................................................................... 10,159
Dividend and interest receivable......................................................................... 353
----------
Total Assets........................................................................................... 4,183,335
----------
LIABILITIES:
Payable for securities purchased......................................................................... 58,444
Other payables and accrued expenses...................................................................... 773
----------
Total Liabilities...................................................................................... 59,217
----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 333,030 Class R shares and 138 Class I shares outstanding ($.001 par value)..... $4,124,118
----------
----------
NET ASSET VALUE PER SHARE (offering and redemption price per share):
Class R ($4,122,616/333,030)............................................................................. $ 12.38
----------
----------
Class I ($1,502/138)..................................................................................... $ 10.85
----------
----------
COMPOSITION OF NET ASSETS:
Capital Stock............................................................................................ 334
Paid in surplus.......................................................................................... 2,671,849
Accumulated net realized gain on investments............................................................. 1,349,719
Net unrealized appreciation on investments............................................................... 102,216
----------
NET ASSETS................................................................................................. $4,124,118
----------
----------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1999
INVESTMENT INCOME:
Dividends................................................................................................ $ 8,469
Interest................................................................................................. 12,173
----------
Total Investment Income................................................................................ 20,642
----------
EXPENSES:
Comprehensive fee (Note 3)............................................................................... 48,779
Distribution fee Class R (Note 3)........................................................................ 8,946
----------
Total Expenses......................................................................................... 57,725
----------
Net Investment Loss........................................................................................ (37,083)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 2):
Net realized gain on investments......................................................................... 1,068,145
Net change in unrealized appreciation on investments..................................................... 97,395
----------
Net realized and unrealized gain on investments.......................................................... 1,165,540
----------
Net Increase in Net Assets Resulting from Operations..................................................... $1,128,457
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
RESERVE PRIVATE EQUITY SERIES--INFORMED INVESTORS GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1999 AND MAY 31, 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss........................................................................ $ (37,083) $ (53,234)
Net realized gain from investment transactions............................................. 1,068,145 1,534,443
Net change in unrealized appreciation (depreciation) on investments........................ 97,395 (460,178)
----------- -----------
Net increase in net assets resulting from operations....................................... 1,128,457 1,021,031
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments........................................................... (510,792) (1,379,149)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net proceeds from sale of shares........................................................... 2,948,622 928,647
Reinvestment of distributions.............................................................. 508,666 1,007,930
Cost of shares redeemed.................................................................... (4,285,126) (2,734,101)
----------- -----------
Net decrease in net assets resulting from capital share transactions....................... (827,838) (797,524)
----------- -----------
Net decrease in net assets................................................................. (210,173) (1,155,642)
NET ASSETS:
Beginning of year.......................................................................... 4,334,291 5,489,933
----------- -----------
End of year................................................................................ $ 4,124,118 $ 4,334,291
----------- -----------
----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
THE RESERVE PRIVATE EQUITY SERIES--INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS -- 93.2% (NOTE 1)
- ------- ---------------------- -----------
<S> <C> <C>
AUSTRALIA -- .9%
30,600 Colonial Limited................................................................................. $ 109,133
-----------
DENMARK -- .7%
1,300 Vesta Wind Systems............................................................................... 89,288
-----------
FINLAND -- 7.5%
3,800 Jot Automation Group Oyj......................................................................... 149,903
9,000 Nokia Oyj Series A............................................................................... 639,211
4,000 TT Tieto Oy...................................................................................... 139,547
-----------
928,661
-----------
FRANCE -- 6.3%
380 Altran Technologies SA........................................................................... 85,915
1,100 AXA.............................................................................................. 126,582
1,225 Cap Gemini....................................................................................... 176,176
720 Carrefour........................................................................................ 94,325
1,800 Infogrames Entertainment......................................................................... 127,092
910 Societe Generale-A............................................................................... 165,085
-----------
775,175
-----------
GERMANY -- 2.1%
1,900 Mannesmann AG.................................................................................... 259,204
-----------
HONG KONG -- 6.3%
26,000 Bank of East Asia................................................................................ 57,002
25,000 Cheung Kong Holdings Ltd......................................................................... 203,120
16,400 Hang Seng Bank Ltd............................................................................... 175,550
5,600 HSBC Holdings plc................................................................................ 183,440
18,891 Sun Hung Kai Properties.......................................................................... 151,050
-----------
770,162
-----------
ITALY -- 4.7%
6,200 Autogrill SD SpA................................................................................. 63,733
3,900 Banca Popolare................................................................................... 158,082
9,400 Telecom Italia SpA............................................................................... 55,240
29,100 Telecom Italia SpA............................................................................... 299,472
-----------
576,527
-----------
JAPAN -- 15.8%
16,000 Bank of Tokyo.................................................................................... 213,230
800 Fuji Soft ABC, Inc............................................................................... 40,276
4,000 Fujitsu Support Service.......................................................................... 460,677
900 Hikari Tsuhin, Inc............................................................................... 147,334
4,000 Honda Motor Co................................................................................... 163,211
3,500 Ito En, Ltd...................................................................................... 200,106
3,800 Meiwa Estate Co., Ltd............................................................................ 124,056
8,000 Olympus Optical Co., Ltd......................................................................... 98,716
400 Shohkoh Fund & Co., Ltd.......................................................................... 222,441
2,000 Sumisho Chemical Computer Systems................................................................ 66,800
1,000 Tokeda Chemical Industries....................................................................... 44,175
2,500 Union Tool Co.................................................................................... 158,360
-----------
1,939,382
-----------
</TABLE>
16
<PAGE>
THE RESERVE PRIVATE EQUITY SERIES--INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS--93.2% (CONTINUED) (NOTE 1)
- ------- -------------------- -----------
MEXICO -- 4.4%
<S> <C> <C>
26,400 Apasco SA........................................................................................ $ 158,917
23,000 Corporacion Interamericana *..................................................................... 72,906
75,000 GPO Financiera Baname............................................................................ 154,104
1,900 Telefonos De Mexico SA........................................................................... 151,881
-----------
537,808
-----------
NETHERLANDS -- 4.3%
1,466 Aegon NV......................................................................................... 118,318
3,408 Fortis NV........................................................................................ 110,554
7,488 Wolters Kluwer................................................................................... 300,613
-----------
529,485
-----------
NORWAY -- 3.5%
6,300 Tandberg SA...................................................................................... 84,398
9,200 Tomra Systems.................................................................................... 345,327
-----------
429,725
-----------
SINGAPORE -- 5.4%
28,800 City Development................................................................................. 171,667
18,700 Dev. Bank of Singapore........................................................................... 192,627
17,000 Overseas Chinese Bank............................................................................ 132,812
38,000 Parkway Holdings................................................................................. 81,365
14,000 United Overseas Bank............................................................................. 92,362
-----------
670,833
-----------
SOUTH KOREA -- 4.2%
14,300 Housing & Commercial Bank........................................................................ 391,995
8,100 Kookmin Bank..................................................................................... 122,634
-----------
514,629
-----------
SPAIN -- 1.6%
5,100 Banco Bilbao Vizcaya, SA......................................................................... 73,453
6,196 Banco Santander, SA.............................................................................. 129,050
-----------
202,503
-----------
SWEDEN -- 3.1%
2,300 Ericsson Lm Te................................................................................... 61,350
16,850 Europolitan Housing Holding AB................................................................... 145,900
7,700 Modern Times Group............................................................................... 169,300
-----------
376,550
-----------
SWITZERLAND -- 5.7%
10 Kudelski SA PA................................................................................... 37,620
18 Roche Holdings................................................................................... 190,304
450 Selecta Group--Reg............................................................................... 178,115
820 UBS Ag-Reg....................................................................................... 237,121
92 Zurich Allied AB................................................................................. 55,555
-----------
698,715
-----------
</TABLE>
17
<PAGE>
THE RESERVE PRIVATE EQUITY SERIES--INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS--93.2% (CONTINUED) (NOTE 1)
- ------ -------------------- -----------
<S> <C> <C>
UNITED KINGDOM -- 14.9%
8,300 Bank of Ireland.................................................................................. $ 156,150
4,890 CMG plc.......................................................................................... 128,010
26,700 Compass Group plc................................................................................ 269,855
14,400 Dixons Group plc................................................................................. 254,121
82 HSBC Holdings plc................................................................................ 2,671
14,600 Logica plc....................................................................................... 135,340
18,065 Misys plc........................................................................................ 150,830
8,900 Royal Bank of Scotland........................................................................... 189,367
5,100 Serco Group plc.................................................................................. 103,696
11,332 Smithkline Beecham plc........................................................................... 144,777
11,081 Standard Charter plc............................................................................. 167,560
7,150 Vodafone Group plc............................................................................... 137,825
-----------
1,840,202
-----------
UNITED STATES -- 1.8%
1,800 Eidos PLC ADR.................................................................................... 59,993
1,900 Elan Corp ADR.................................................................................... 102,600
2,500 Telesp Celular Participar ADR.................................................................... 58,282
-----------
220,875
-----------
Total Common Stocks (Cost $9,555,783)............................................................ 11,468,857
-----------
PREFERRED STOCKS--1.1%
----------------------
GERMANY -- 1.1%
60 Porsche AG Pfd. (Cost $114,037).................................................................. 136,526
-----------
WARRANTS--.0%
-------------
500 Havas Advertising *, expires 5/14/2001 (Cost $0)................................................. 1,077
-----------
SHORT-TERM INVESTMENTS--2.0%
----------------------------
250,000 Reserve Institutional Trust: U.S. Government Class A (Cost $250,000)............................. 250,000
-----------
TOTAL INVESTMENTS (COST $9,919,820)................................................. 96.3% 11,856,460
OTHER ASSETS, LESS LIABILITIES...................................................... 3.7 459,558
------ -----------
NET ASSETS.......................................................................... 100.0% $12,316,018
------ -----------
------ -----------
</TABLE>
- ---------------
Value of investments are shown as a percentage of net assets.
ADR -- American Depository Receipt.
* Non-income producing.
For Federal income tax purposes the tax basis for investments owned on May
31,1999 was $9,919,820; aggregate gross unrealized appreciation was $2,363,113
and the aggregate unrealized gross depreciation was $426,473.
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
THE RESERVE PRIVATE EQUITY SERIES--INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999 (CONTINUED)
INDUSTRY COMPOSITION
- --------------------
INDUSTRY PERCENT
- -------- -------
Auto/Truck Manufacturers........................................... 2.6%
Building & Housing................................................. 1.3
Cellular Telephone................................................. 3.7
Chemicals.......................................................... .4
Commercial Banks................................................... 18.5
Computers Software................................................. 3.8
Consumer Products.................................................. 3.0
Drugs & Health Care................................................ 4.5
Electronics........................................................ 1.1
Entertainment & Leisure............................................ .6
Financial Services................................................. 6.2
Food & Drink....................................................... 1.7
Insurance Companies................................................ 2.4
IT Service......................................................... 8.1
Lodging & Restaurants.............................................. 2.9
Machinery.......................................................... 4.8
Media.............................................................. 1.4
Photo Equipment & Film............................................. .8
Publishing......................................................... 2.6
Real Estate Development............................................ 5.5
Retailing.......................................................... 4.6
Service Companies.................................................. 2.4
Telecommunications................................................. 10.2
Telephone Utilities................................................ 1.2
Short-Term Investments............................................. 2.0
Other Assets, Less Liabilities..................................... 3.7
-----
PERCENT OF NET ASSETS.............................................. 100.0%
-----
-----
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
RESERVE PRIVATE EQUITY SERIES--INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES--MAY 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value (cost $9,919,820).............................................. $11,856,460
Cash............................................................................................... 426,240
Receivable for securities sold..................................................................... 120,155
Receivable for Fund shares sold.................................................................... 480,000
Dividend and interest receivable................................................................... 16,163
Foreign dividend reclaim receivable................................................................ 12,894
Miscellaneous receivable........................................................................... 5,581
-----------
Total Assets..................................................................................... 12,917,493
-----------
LIABILITIES:
Payable for securities purchased................................................................... 268,135
Payable for Fund shares repurchased................................................................ 333,340
-----------
Total Liabilities................................................................................ 601,475
-----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 967,588 of Class R shares and 115 of Class I shares outstanding ($.001 par
value)........................................................................................... $12,316,018
-----------
-----------
NET ASSET VALUE PER SHARE (offering and redemption price per share):
Class R ($12,314,729/967,588)...................................................................... $ 12.73
-----------
-----------
Class I ($1,289/115)............................................................................... $ 11.21
-----------
-----------
COMPOSITION OF NET ASSETS:
Capital Stock...................................................................................... $ 968
Paid in
surplus.............................................................................................. 11,101,473
Undistributed net investment loss.................................................................. (75,445)
Accumulated net realized loss on investments and foreign currency transactions..................... (646,805)
Net unrealized gain on investments and foreign currency transactions............................... 1,935,827
-----------
NET ASSETS........................................................................................... $12,316,018
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
RESERVE PRIVATE EQUITY SERIES--INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends *........................................................................................ $ 134,938
Interest........................................................................................... 31,980
-----------
Total Investment Income.......................................................................... 166,918
-----------
EXPENSES:
Comprehensive fee (Note 3)......................................................................... 197,020
Distribution fee Class R (Note 3).................................................................. 30,514
-----------
Total Expenses................................................................................... 227,534
-----------
Net Investment Loss.................................................................................. (60,616)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Net realized gain on investments transactions...................................................... 674,062
Net realized loss from foreign currency transactions............................................... (2,623)
Net change in unrealized depreciation on investments............................................... (1,053,819)
Net change in unrealized loss from foreign currency transactions................................... (813)
-----------
Net realized and unrealized loss on investments.................................................... (383,193)
-----------
Net Decrease in Net Assets Resulting from Operations............................................... $ (443,809)
-----------
-----------
*Dividends are net of foreign tax witholdings of $23,615.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1999 AND MAY 31, 1998
1999 1998
----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss.................................................................. $ (60,616) $ (43,943)
Net realized gain (loss) from investment transactions................................ 674,062 (975,769)
Net realized loss from foreign currency transactions................................. (2,623) (1,308)
Net change in unrealized appreciation (depreciation) on investments.................. (1,053,819) 1,271,564
Net change in unrealized depreciation from foreign currency transactions............. (813) (63)
----------- -----------
Net increase (decrease) in net assets resulting from operations...................... (443,809) 250,481
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net proceeds from sale of shares..................................................... 9,092,144 3,581,943
Cost of shares redeemed.............................................................. (9,189,122) (3,110,454)
----------- -----------
Net increase (decrease) in net assets resulting from capital share transactions...... (96,978) 471,489
----------- -----------
Contribution from management......................................................... 5,581 --
----------- -----------
Net increase (decrease) in net assets................................................ (535,206) 721,970
NET ASSETS:
Beginning of year.................................................................... 12,851,224 12,129,254
----------- -----------
End of year.......................................................................... $12,316,018 $12,851,224
----------- -----------
----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
RESERVE PRIVATE EQUITY SERIES--LARGE-CAP GROWTH FUND+
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS--94.7% (NOTE 1)
- ------ -------------------- -----------
<S> <C> <C>
BANKS -- 5.8%
7,500 Chase Manhattan Bank............................................................................. $ 543,750
15,400 Wells Fargo & Company............................................................................ 616,000
-----------
1,159,750
-----------
BEVERAGES -- 5.1%
15,100 Coca-Cola Company................................................................................ 1,031,519
-----------
COMPUTER SOFTWARE -- 4.5%
11,200 Microsoft Corp. *................................................................................ 903,700
-----------
COMPUTERS -- 3.3%
7,100 Hewlett-Packard Company.......................................................................... 669,618
-----------
CONSUMER PRODUCTS -- 7.6%
7,100 Clorox Company................................................................................... 716,656
16,100 Gillette Company................................................................................. 821,100
-----------
1,537,756
-----------
DRUGS -- 7.3%
15,500 Abbott Laboratories.............................................................................. 700,406
11,300 Merck & Company, Inc............................................................................. 762,750
-----------
1,463,156
-----------
FINANCIAL/BUSINESS SERVICES -- 9.6%
8,400 American Express Company......................................................................... 1,017,975
8,700 Charles Schwab Corp.............................................................................. 920,569
-----------
1,938,544
-----------
FOOD -- 11.1%
6,100 Campbell Soup Company............................................................................ 269,163
12,600 Hershey Foods Corp............................................................................... 683,550
10,000 Quaker Oats Company.............................................................................. 660,625
7,100 Wrigley (Wm.) Jr. Company........................................................................ 618,144
-----------
2,231,482
-----------
INSURANCE -- 3.2%
5,600 American International Group, Inc................................................................ 640,150
-----------
MEDICAL PRODUCTS -- 13.1%
7,700 Bristol-Myers Squibb Company..................................................................... 528,413
10,900 Johnson & Johnson................................................................................ 1,009,613
7,100 Lilly (Eli) & Company............................................................................ 507,206
5,500 Pfizer, Inc...................................................................................... 588,500
-----------
2,633,732
-----------
MISCELLANEOUS MANUFACTURING -- 3.7%
8,600 Minnesota Mining & Manufacturing................................................................. 737,450
-----------
PHOTOGRAPHY -- 1.5%
4,600 Eastman Kodak Company............................................................................ 311,074
-----------
PUBLISHING -- 3.7%
6,700 Gannett Company, Inc............................................................................. 484,075
7,900 New York Times Company........................................................................... 269,588
-----------
753,663
-----------
</TABLE>
22
<PAGE>
RESERVE PRIVATE EQUITY SERIES--LARGE-CAP GROWTH FUND+
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS--94.7% (CONTINUED) (NOTE 1)
- ------- -------------------- -----------
<S> <C> <C>
RESTAURANTS -- 4.7%
24,600 McDonald's Corp.................................................................................. $ 947,100
-----------
RETAIL -- 3.4%
11,400 Nike, Inc........................................................................................ 694,687
-----------
SEMICONDUCTOR -- 7.1%
13,500 Electronic Data Systems.......................................................................... 759,375
12,600 Intel Corp. *.................................................................................... 681,188
-----------
1,440,563
-----------
Total Common Stocks (Cost $17,424,885)........................................................... 19,093,944
-----------
SHORT-TERM INVESTMENTS--5.3%
100,000 Reserve Funds U.S. Government.................................................................... 100,000
50,000 Reserve Funds U.S. Treasury...................................................................... 50,000
910,000 Reserve Institutional Trust: U.S. Government Class A............................................. 910,000
-----------
Total Short-Term Investments (Cost $1,060,000)................................................... 1,060,000
-----------
TOTAL INVESTMENTS (COST $18,484,885)................................................ 100.0% 20,153,944
OTHER ASSETS, LESS LIABILITIES...................................................... .0 5,688
------ -----------
NET ASSETS.......................................................................... 100.0% $20,159,632
------ -----------
------ -----------
</TABLE>
- ---------------
Value of investments are shown as a percentage of net assets.
+ Formerly Large-Cap Value Fund.
* Non-income producing securities.
For Federal income tax purposes the tax basis for investments owned May 31,
1999, was $18,484,885: the aggregate gross unrealized appreciation was
$2,437,217 and the aggregate unrealized gross unrealized depreciation was
$768,158.
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
RESERVE PRIVATE EQUITY SERIES--LARGE-CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES--MAY 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $18,484,885).................................................. $20,153,944
Receivable for Fund shares sold......................................................................... 48,175
Dividend and interest receivable........................................................................ 26,694
-----------
Total Assets.......................................................................................... 20,228,813
-----------
LIABILITIES:
Payable for Fund shares redeemed........................................................................ 58,088
Cash overdraft.......................................................................................... 11,093
-----------
Total Liabilities..................................................................................... 69,181
-----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 379,625 Class R shares and 998,502 Class I shares outstanding ($.001 par
value)................................................................................................ $20,159,632
-----------
-----------
NET ASSET VALUE PER SHARE (offering and Redemption price per share):
Class R ($8,118,072/379,625)............................................................................ $ 21.38
-----------
-----------
Class I ($12,041,945/998,502)........................................................................... $ 12.06
-----------
-----------
COMPOSITION OF NET ASSETS:
Capital Stock........................................................................................... 1,378
Paid in surplus......................................................................................... 15,807,691
Accumulated net realized gain on investments............................................................ 2,681,504
Net unrealized appreciation on investments.............................................................. 1,669,059
-----------
NET ASSETS................................................................................................ $20,159,632
-----------
-----------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1999
INVESTMENT INCOME:
Dividends............................................................................................... $ 147,376
Interest................................................................................................ 34,461
-----------
Total Investment Income............................................................................... 181,837
-----------
EXPENSES:
Comprehensive fee (Note 3).............................................................................. 167,536
Distribution fee Class R (Note 3)....................................................................... 28,550
-----------
Total Expenses........................................................................................ 196,086
-----------
Net Investment Loss....................................................................................... (14,249)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 2):
Net realized gain on investments........................................................................ 3,008,607
Net change in unrealized appreciation on investments.................................................... 106,911
-----------
Net realized and unrealized gain on investments......................................................... 3,115,518
-----------
Net Increase in Net Assets Resulting from Operations.................................................... $ 3,101,269
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
RESERVE PRIVATE EQUITY SERIES--LARGE-CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1999 AND MAY 31, 1998
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss......................................................................... $ (14,249) $ (18,080)
Net realized gain from investment transactions.............................................. 3,008,607 333,591
Net change in unrealized appreciation on investments........................................ 106,911 805,172
----------- ----------
Net increase in net assets resulting from operations........................................ 3,101,269 1,120,683
----------- ----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net realized gain on investments............................................................ (541,732) (111,520)
----------- ----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net proceeds from sale of shares............................................................ 29,243,558 3,717,183
Reinvestment of distributions............................................................... 522,649 110,918
Cost of shares redeemed..................................................................... (18,952,127) (1,161,229)
----------- ----------
Net increase in net assets resulting from capital share transactions........................ 10,814,080 2,666,872
----------- ----------
Net increase in net assets.................................................................. 13,373,617 3,676,035
NET ASSETS:
Beginning of year........................................................................... 6,786,015 3,109,980
----------- ----------
End of year................................................................................. $20,159,632 $6,786,015
----------- ----------
----------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
RESERVE PRIVATE EQUITY SERIES--MID-CAP EQUITY FUND+
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS -- 89.0% (NOTE 1)
- -------- ---------------------- ----------
<S> <C> <C>
ADVERTISING -- 4.7%
7,650 Ha-Lo Industries, Inc.*.......................................................................... $ 92,278
----------
BANKS -- 6.3%
1,320 First Tennessee National Corp.................................................................... 54,368
5,000 Hibernia Corp., Class A.......................................................................... 71,250
----------
125,618
----------
BUILDING PRODUCTS -- 1.7%
1,750 Watsco, Inc...................................................................................... 33,797
----------
CAPITAL GOODS INDUSTRIAL -- 5.2%
5,000 Vishay Intertechnology, Inc.*.................................................................... 104,063
----------
COMMUNICATIONS -- 6.2%
3,500 Scientific-Atlanta, Inc.*........................................................................ 123,594
----------
COMPUTER--PERIPHERAL EQUIPMENT -- 3.9%
2,000 American Power Conversion Corp.*................................................................. 77,875
----------
DRUGS -- 1.4%
5,000 North American Vaccine*.......................................................................... 26,875
----------
ELECTRONICS -- .6%
600 Kopin Corp.*..................................................................................... 11,850
----------
HOSPITAL SUPPLIES -- 2.5%
2,500 Pall Corp........................................................................................ 50,156
----------
MANUFACTURING -- 3.1%
2,000 Molex Inc........................................................................................ 61,250
----------
OFFSHORE DRILLING -- 1.8%
3,500 Pride International, Inc.*....................................................................... 36,531
----------
OPTICAL INSTRUMENTS AND LENSES -- 3.0%
3,600 Sola International, Inc.*........................................................................ 60,075
----------
POLLUTION CONTROL -- 3.3%
7,280 Newpark Resources, Inc.*......................................................................... 65,520
----------
PROPERTY--LIABILITY INSURANCE -- 4.6%
3,000 Ace Ltd.......................................................................................... 91,500
----------
RETAIL -- 10.4%
4,000 Autozone, Inc.*.................................................................................. 115,750
8,250 Pier 1 Imports, Inc.............................................................................. 91,266
----------
207,016
----------
SPECIAL INDUSTRIAL MACHINERY -- 10.7%
3,000 Pentair Industries Inc........................................................................... 132,375
3,000 Quanex........................................................................................... 78,375
----------
210,750
----------
</TABLE>
26
<PAGE>
RESERVE PRIVATE EQUITY SERIES--MID-CAP EQUITY FUND+
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999 (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS -- 89.0% (CONTINUED) (NOTE 1)
- -------- ---------------------------------- ----------
<S> <C> <C>
TELECOMMUNICATIONS -- 8.5%
2,500 Antec Corp.*..................................................................................... $ 73,281
1,100 WorldCom, Inc.................................................................................... 95,013
----------
168,294
----------
TIRES -- 5.6%
1,300 Gatx Corp........................................................................................ 50,454
1,500 B.F. Goodrich.................................................................................... 60,750
----------
111,204
----------
TRANSPORTATION -- 5.5%
6,000 Swift Transportation Co., Inc.*.................................................................. 109,688
----------
Total Common Stocks (Cost $1,630,466)............................................................ 1,767,934
----------
SHORT-TERM INVESTMENTS--10.6%
100,000 Reserve Funds U.S. Government.................................................................... 100,000
25,000 Reserve Funds U.S. Treasury...................................................................... 25,000
85,000 Reserve Institutional Trust:
U.S. Government Class A......................................................................... 85,000
----------
Total Short-term Investments (Cost $210,000)..................................................... 210,000
----------
TOTAL INVESTMENTS (COST $1,840,466)................................................. 99.6% 1,977,934
OTHER ASSETS, LESS LIABILITIES...................................................... .4 7,583
------ ----------
NET ASSETS.......................................................................... 100.0% $1,985,517
------ ----------
------ ----------
</TABLE>
- ---------------
Value of investments are shown as a percentage of net assets.
+ Formerly Mid-Cap Growth Fund.
* Non-income producing securities.
For Federal income tax purposes the tax basis for investments owned at May 31,
1999, was $1,840,466; the aggregate gross unrealized appreciation was $375,326
and the aggregate gross unrealized depreciation was $237,858.
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
RESERVE PRIVATE EQUITY SERIES--MID-CAP EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES--MAY 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $1,840,466)..................................................... $1,977,934
Cash...................................................................................................... 11,003
Dividend and interest receivable.......................................................................... 1,045
----------
Total Assets............................................................................................ 1,989,982
----------
LIABILITIES
Other payables and accrued expenses....................................................................... 4,465
----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 187,146 Class R shares and 130 Class I shares outstanding ($.001 par value)...... $1,985,517
----------
----------
NET ASSET VALUE PER SHARE (offering and redemption price per share):
Class R ($1,984,119/187,146).............................................................................. $ 10.60
----------
----------
Class I ($1,398/130)...................................................................................... $ 10.75
----------
----------
COMPOSITION OF NET ASSETS:
Capital Stock............................................................................................. 187
Paid in surplus........................................................................................... 1,761,651
Accumulated net realized gain on investments.............................................................. 86,211
Net unrealized appreciation on investments................................................................ 137,468
----------
NET ASSETS.................................................................................................. $1,985,517
----------
----------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1999
INVESTMENT INCOME:
Dividends................................................................................................. $ 9,322
Interest.................................................................................................. 10,985
----------
Total Investment Income................................................................................. 20,307
----------
EXPENSES:
Comprehensive fee (Note 3)................................................................................ 30,515
Distribution fee Class R (Note 3)......................................................................... 5,553
----------
Total Expenses.......................................................................................... 36,068
----------
Net Investment Loss......................................................................................... (15,761)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Net realized gain on investments.......................................................................... 237,620
Net change in unrealized appreciation on investments...................................................... (517,432)
----------
Net realized and unrealized loss on investments........................................................... (279,812)
----------
Net Decrease in Net Assets Resulting from Operations...................................................... $ (295,573)
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
RESERVE PRIVATE EQUITY SERIES--MID-CAP EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1999 AND MAY 31, 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss.......................................................................... $ (15,761) $ (55,592)
Net realized gain from investment transactions............................................... 237,620 550,984
Net change in unrealized appreciation (depreciation) on investments.......................... (517,432) 15,787
---------- ----------
Net increase (decrease) in net assets resulting from operations.............................. (295,573) 511,179
---------- ----------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net realized gain on investments............................................................. (238,857) (485,972)
---------- ----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net proceeds from sale of shares............................................................. 120,681 1,341,995
Reinvestment of distributions................................................................ 238,437 480,743
Cost of shares redeemed...................................................................... (1,219,730) (2,469,521)
---------- ----------
Net decrease in net assets resulting from capital share transactions......................... (860,612) (646,783)
---------- ----------
Net decrease in net assets................................................................... (1,395,042) (621,576)
NET ASSETS:
Beginning of year............................................................................ 3,380,559 4,002,135
---------- ----------
End of year.................................................................................. $1,985,517 $3,380,559
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
RESERVE PRIVATE EQUITY SERIES--SMALL-CAP GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS -- 96.9% (NOTE 1)
- -------- ---------------------- --------------
<S> <C> <C>
APPLICATION SOFTWARE -- 4.2%
4,200 Citrix Systems, Inc.*......................................................................... $ 207,638
3,470 Hyperion Solutions Corp.*..................................................................... 54,002
--------------
261,640
--------------
COMMERCIAL SERVICES -- 5.1%
6,550 International Telecomm Data Systems, Inc.*.................................................... 81,875
5,200 Memberworks, Inc. *........................................................................... 235,300
--------------
317,175
--------------
COMMUNICATION EQUIPMENT -- 2.4%
4,300 ECI Telecommunications Ltd.................................................................... 148,887
--------------
COMPUTER-NETWORKING-8.3%
2,900 CNET, Inc. *.................................................................................. 313,925
3,800 Legato Systems, Inc.*......................................................................... 208,050
--------------
521,975
--------------
COMPUTER SERVICES -- 4.0%
4,500 HNC Software, Inc. *.......................................................................... 121,780
2,000 Sapient Corp.*................................................................................ 127,500
--------------
249,280
--------------
COMPUTER SOFTWARE -- 3.8%
8,200 Business Objects S.A., ADR*................................................................... 235,750
--------------
DRUGS AND HEALTH CARE -- 5.4%
6,000 Centocor, Inc.*............................................................................... 260,625
5,000 National Dentex Corp.*........................................................................ 78,125
--------------
338,750
--------------
ELECTRONICS PRODUCTS -- 2.1%
2,000 Alpha Inds. Inc.*............................................................................. 68,500
5,000 Invivo Corp.*................................................................................. 60,000
--------------
128,500
--------------
ENERGY -- 1.3%
7,500 Cross Timbers Oil Company..................................................................... 81,094
--------------
ENTERTAINMENT SOFTWARE -- 3.5%
16,400 Activision, Inc.*............................................................................. 219,350
--------------
INTERNET SOFTWARE -- 5.8%
1,275 Excite, Inc.*................................................................................. 169,575
2,000 Exodus Communications, Inc.*.................................................................. 150,000
1,200 Worldgate Communications *.................................................................... 44,400
--------------
363,975
--------------
FIBER OPTICS -- 5.7%
7,200 Harmonic Lightwaves, Inc.*.................................................................... 355,500
--------------
MANAGED CARE -- 1.4%
15,000 MedPartners Inc.*............................................................................. 87,188
--------------
</TABLE>
30
<PAGE>
RESERVE PRIVATE EQUITY SERIES--SMALL-CAP GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS--MAY 31, 1999--(CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES COMMON STOCKS--96.9% (CONTINUED) (NOTE 1)
- -------- -------------------- --------------
<S> <C> <C>
MEDICAL INFORMATION SYSTEMS -- 4.7%
9,000 Dendrite International, Inc.*................................................................. $ 297,000
--------------
OFFSHORE DRILLING -- 1.2%
3,000 Newfield Exploration Co.*..................................................................... 76,125
--------------
OPTICAL INSTRUMENTS & LENSES -- 1.4%
2,000 KLA-Tencor Corp.*............................................................................. 91,000
--------------
RETAILS -- 10.3%
3,500 BeBe Stores, Inc.*............................................................................ 101,063
17,400 Corporate Express, Inc.*...................................................................... 114,187
6,500 Staples, Inc.*................................................................................ 186,875
1,200 Tiffany & Co.................................................................................. 99,450
4,800 Williams-Sonoma, Inc.*........................................................................ 143,100
--------------
644,675
--------------
SEMICONDUCTOR & RELATED SERVICES -- 16.8%
4,000 Applied Micro Circuits Corp.*................................................................. 236,500
2,700 ETEC Systems, Inc.*........................................................................... 72,394
10,000 Transwitch Corp.*............................................................................. 462,500
2,100 Uniphase Corp.*............................................................................... 281,400
--------------
1,052,794
--------------
TELECOMMUNICATIONS & EQUIPMENT -- 5.6%
4,000 DSP Communications Inc.*...................................................................... 123,000
8,900 MDSI Mobile Data Solution, Inc.*.............................................................. 160,200
1,800 Proxim, Inc.*................................................................................. 69,300
--------------
352,500
--------------
MISCELLANEOUS -- 3.9%
8,500 Central Garden & Pet Corp.*................................................................... 114,750
5,000 On Assignment, Inc.*.......................................................................... 128,125
--------------
242,875
--------------
Total Common Stocks (Cost $3,749,756)......................................................... 6,066,033
--------------
SHORT-TERM INVESTMENTS-3.7%
---------------------------
230,000 Reserve Institutional Trust: U.S. Government Class A (Cost $230,000).......................... 230,000
--------------
TOTAL INVESTMENTS (COST $3,979,756).................................................. 100.6% 6,296,033
LIABILITIES, LESS OTHER ASSETS....................................................... (.6) (35,958)
------ --------------
NET ASSETS........................................................................... 100.0% $ 6,260,075
------ --------------
------ --------------
</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 on May 31,
1999, was $3,979,756; the aggregate gross unrealized appreciation was $2,723,800
and the aggregate gross unrealized depreciation was $407,523.
SEE NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
RESERVE PRIVATE EQUITY SERIES--SMALL-CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES--MAY 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $3,979,756)................................................... $ 6,296,033
Cash.................................................................................................... 32,289
Dividend and interest receivable........................................................................ 634
-----------
Total Assets............................................................................................ 6,328,956
-----------
LIABILITIES:
Payable for securities purchased........................................................................ 68,500
Payable for Fund shares redeemed........................................................................ 381
-----------
Total Liabilities....................................................................................... 68,881
-----------
NET ASSETS (NOTES 1 & 5):
Net assets consisting of 265,075 Class R shares and 113 Class I shares outstanding (.001 par value)..... $ 6,260,075
-----------
-----------
NET ASSET VALUE PER SHARE (offering and redemption price per share):
Class R ($6,258,376/265,075)............................................................................ $ 23.61
-----------
-----------
Class I ($1,699/113).................................................................................... $ 15.05
-----------
-----------
COMPOSITION OF NET ASSETS:
Capital Stock (par value)............................................................................... 265
Paid in surplus......................................................................................... 3,352,083
Accumulated net realized gain on investments............................................................ 591,450
Net unrealized appreciation on investments.............................................................. 2,316,277
-----------
$ 6,260,075
-----------
-----------
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends............................................................................................... $ 2,275
Interest................................................................................................ 6,474
-----------
Total Investment Income............................................................................... 8,749
-----------
EXPENSES:
Comprehensive fee (Note 3).............................................................................. 72,323
Distribution fee Class R (Note 3)....................................................................... 13,322
-----------
Total Expenses........................................................................................ 85,645
-----------
Net Investment Loss..................................................................................... (76,896)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Net realized gain on investments........................................................................ 736,974
Net change in unrealized appreciation on investments.................................................... 1,196,324
-----------
Net realized and unrealized gain on investments......................................................... 1,933,298
-----------
Net Increase in Net Assets Resulting from Operations.................................................... $ 1,856,402
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
RESERVE PRIVATE EQUITY SERIES--SMALL-CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED MAY 31, 1999 AND MAY 31, 1998
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
INVESTMENT OPERATIONS:
Net investment loss......................................................................... $ (76,896) $ (102,604)
Net realized gain from investment transactions.............................................. 736,974 431,594
Net change in unrealized appreciation on investments........................................ 1,196,324 143,667
----------- ----------
Net increase in net assets resulting from operations........................................ 1,856,402 472,657
----------- ----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net proceeds from sale of shares............................................................ 2,288,700 502,230
Cost of shares redeemed..................................................................... (3,426,129) (1,443,491)
----------- ----------
Net decrease in net assets resulting from capital share transactions........................ (1,137,429) (941,261)
----------- ----------
Net increase (decrease) in net assets....................................................... 718,973 (468,604)
NET ASSETS:
Beginning of year........................................................................... 5,541,102 6,009,706
----------- ----------
End of year................................................................................. $ 6,260,075 $5,541,102
----------- ----------
----------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 six regulated investment companies (commonly called mutual funds):
Reserve Blue Chip Growth Fund, Reserve Informed Investors Growth Fund,
Reserve International Equity Fund, Reserve Large-Cap Growth Fund, Reserve
Mid-Cap Equity Fund and Reserve Small Cap Growth Fund. The Trust has the
right, at its discretion, to add other funds if the situation warranted.
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 June 24, 1998, the Board of Trustees ("Trustees") of the Trust agreed
to add an institutional class ("Class I") to each Fund, and designate the
existing Fund shares as a retail class ("Class R"). The Trustees further
agreed to set the I Class' minimum initial investment at $250,000, and to
also set a low expense ratio to compete with other institutional accounts.
The Trustees also voted to change the names of Reserve Large-Cap Value
Fund and Reserve Mid-Cap Growth Fund to Reserve Large-Cap Growth Fund and
Reserve Mid-Cap Equity Fund, respectively. The change in name has no
bearing on either Fund's current investment objectives and policies.
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 recorded on the identified cost basis for both
financial statement and federal income tax purposes.
Income and net realized capital gain distributions are determined in
accordance with federal income tax regulations that may differ from
generally accepted accounting principles. 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. 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, 1999, the Trust's fiscal year end, as follows:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
-----------------------------------------
UNDISTRIBUTED
NET ACCUMULATED
INVESTMENT REALIZED
RESERVE FUND CAPITAL INCOME GAIN
------------ --------- ------------- -----------
<S> <C> <C> <C>
Blue Chip Growth Fund......................................... $ 3 $95,948 $ (95,951)
Informed Investors Growth Fund................................ (313,624) 37,083 276,541
International Equity Fund..................................... -- (2,623) 2,623
Large-Cap Growth Fund......................................... -- 14,249 (14,249)
Mid-Cap Equity Fund........................................... -- 15,761 (15,761)
Small-Cap Growth Fund......................................... (87,376) 76,896 10,480
</TABLE>
These reclassifications had no effect on net investment income, net
realized gain on investments, or net assets.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS (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, as
amended, by complying with the requirements of the Internal Revenue 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. Therefore, no federal income tax
provision is required.
At May 31, 1999, the Trust's fiscal year end, the Reserve International
Equity Fund had capital loss carry-forwards, for federal income tax
purposes, that are available to offset future net realized capital gains,
if any:
<TABLE>
<CAPTION>
CAPITAL LOSS EXPIRATION
CARRY-FORWARD YEAR
------------- ----------
<S> <C> <C>
Reserve International Equity Fund............................................ $ 458,731 2006
</TABLE>
(2) INVESTMENT ACTIVITY
For the year ended May 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (excluding short-term investments) were
as follows:
AGGREGATE AGGREGATE
PURCHASES SALES
----------- -----------
Blue Chip Growth Fund.................... $14,410,599 $15,635,384
Informed Investors Growth Fund........... 18,150,632 19,466,901
International Equity Fund................ 20,041,678 19,755,681
Large-Cap Growth Fund.................... 18,516,654 9,223,578
Mid-Cap Equity Fund...................... 856,747 2,047,991
Small-Cap Growth Fund.................... 1,349,511 2,634,866
(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
Management 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, based
on each class' average daily net assets, at the following annual rates:
CLASS R CLASS I
------- -------
Blue Chip Growth Fund.............................. 1.20% .90%
Informed Investors Growth Fund..................... 1.30 1.00
International Equity Fund.......................... 1.55 1.25
Large-Cap Growth Fund.............................. 1.20 .90
Mid-Cap Equity Fund................................ 1.30 1.00
Small-Cap Growth Fund.............................. 1.30 1.00
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The rates above went into effect October 1, 1998, the day the Class I
became active. Prior to October 1, 1998, RMCI received an annual fee at a
rate of 1.50% of each Fund's average daily net assets, except
International Equity Fund that paid an annual rate of 1.75%.
RMCI has entered into an Investment Sub-Advisory Agreement with investment
managers to serve as the Funds' sub-advisers (the "Sub-Advisers"). Under
the general supervision of RMCI, the Sub-Advisers are responsible for the
day-to-day investment decisions. Pursuant to the Sub-Advisory Agreements
RMCI pays each Sub-Adviser a fee equal to one-half of the Fund's net
profit. Net profit is deemed to be the comprehensive fee received by RMCI
less Fund expenses and all applicable sales and marketing costs.
RMCI has entered into a Distribution Plan with Resrv Partners, Inc.
("RESRV") a wholly-owned subsidiary of RMCI. As distributor for the Funds,
RESRV 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
RESRV. The distributor also is responsible for the marketing efforts of
the Funds. For its services as distributor, RESRV receives an annual fee
of .25 of 1% of Class R average daily net assets.
DISTRIBUTION
FEE
------------
Blue Chip Growth Fund............................... $ 24,979
Informed Investors Growth Fund...................... 8,946
International Equity Fund........................... 30,514
Large-Cap Growth Fund............................... 28,550
Mid-Cap Equity Fund................................. 5,553
Small-Cap Growth Fund............................... 13,322
TRANSACTIONS WITH AFFILIATES
As of May 31, 1999, certain key officers of RMCI owned 29.8% of Blue Chip
Growth Fund, 28.4% of Informed Investors Growth Fund, 28.6% of Large-Cap
Growth Fund, 64.5% of Mid-Cap Equity Fund and 33.4% of Small-Cap Growth
Fund.
(4) CAPITAL SHARE TRANSACTIONS
For the year ended May 31, 1999, the capital stock transactions of each
Fund was as follows:
<TABLE>
<CAPTION>
CLASS R CLASS I
------------------------- ------------------------
RESERVE BLUE CHIP GROWTH FUND SHARES AMOUNT SHARES AMOUNT
----------------------------- -------- ------------- --------- -----------
<S> <C> <C> <C> <C>
Sold.......................................................... 120,237 $ 2,208,029 112 $ 1,166
Reinvested.................................................... 36,055 608,254 10 104
Redeemed...................................................... (214,503) (4,118,126) 0 0
-------- ------------- --------- -----------
Net Increase (Decrease)....................................... (58,211) $ (1,301,843) 122 $ 1,270
-------- ------------- --------- -----------
-------- ------------- --------- -----------
<CAPTION>
CLASS R CLASS I
------------------------- ------------------------
RESERVE INFORMED INVESTORS FUND SHARES AMOUNT SHARES AMOUNT
------------------------------- -------- ------------- --------- -----------
<S> <C> <C> <C> <C>
Sold.......................................................... 239,436 $ 2,947,459 115 $ 1,166
Reinvested.................................................... 53,132 508,470 23 193
Redeemed...................................................... (373,881) (4,285,126) 0 0
-------- ------------- --------- -----------
Net Increase (Decrease)....................................... (81,313) $ (829,197) 138 $ 1,359
-------- ------------- --------- -----------
-------- ------------- --------- -----------
<CAPTION>
CLASS R CLASS I
------------------------- ------------------------
RESERVE INTERNATIONAL EQUITY FUND SHARES AMOUNT SHARES AMOUNT
--------------------------------- -------- ------------- --------- -----------
<S> <C> <C> <C> <C>
Sold.......................................................... 699,763 $ 9,090,978 115 $ 1,166
Redeemed...................................................... (703,928) (9,189,122) 0 0
-------- ------------- --------- -----------
Net Increase (Decrease)....................................... (4,165) $ (98,144) 115 $ 1,166
-------- ------------- --------- -----------
-------- ------------- --------- -----------
</TABLE>
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
CLASS R CLASS I
------------------------- ------------------------
RESERVE LARGE-CAP GROWTH FUND SHARES AMOUNT SHARES AMOUNT
----------------------------- -------- ------------- --------- -----------
<S> <C> <C> <C> <C>
Sold.......................................................... 900,731 $ 16,910,071 1,033,943 $12,333,487
Reinvested.................................................... 27,901 522,595 5 54
Redeemed...................................................... (922,682) (18,512,127) (35,446) (440,000)
-------- ------------- --------- -----------
Net Increase (Decrease)....................................... 5,950 $ (1,079,461) 998,502 $11,893,541
-------- ------------- --------- -----------
-------- ------------- --------- -----------
</TABLE>
<TABLE>
<CAPTION>
CLASS R CLASS I
----------------------- ----------------
RESERVE MID-CAP EQUITY FUND SHARES AMOUNT SHARES AMOUNT
--------------------------- -------- ----------- ------ ------
<S> <C> <C> <C> <C>
Sold..................................................................... 11,216 $ 119,515 118 $1,166
Reinvested............................................................... 25,552 238,321 12 116
Redeemed................................................................. (110,095) (1,219,730) -- --
-------- ----------- ---- ------
Net Increase (Decrease).................................................. (73,327) $ (861,894) 130 $1,282
-------- ----------- ---- ------
-------- ----------- ---- ------
RESERVE SMALL-CAP GROWTH FUND
-----------------------------
Sold..................................................................... 107,988 $ 2,287,534 113 $1,166
Redeemed................................................................. (175,495) (3,426,129) -- --
-------- ----------- ---- ------
Net Increase (Decrease).................................................. (67,507) $(1,138,595) 113 $1,166
-------- ----------- ---- ------
-------- ----------- ---- ------
</TABLE>
<TABLE>
<CAPTION>
CLASS R* CLASS D
------------------------ ------------------------
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)
--------- ----------- -------- ------------
--------- ----------- -------- ------------
RESERVE INFORMED INVESTORS GROWTH
---------------------------------
Sold............................................................ 83,790 $ 928,647 -- $ --
Reinvested...................................................... 101,914 1,007,930 -- --
Redeemed........................................................ (249,698) (2,734,101) (1,141) (16,355)
--------- ----------- -------- ------------
Net Increase (Decrease)......................................... (63,994) $ (797,524) (1,141) $ (16,355)
--------- ----------- -------- ------------
--------- ----------- -------- ------------
RESERVE INTERNATIONAL EQUITY FUND
---------------------------------
Sold............................................................ 287,467 $ 3,588,183 752 $ 9,550
Redeemed........................................................ (276,380) (3,085,673) (3,187) (40,571)
--------- ----------- -------- ------------
Net Increase (Decrease)......................................... 11,087 $ 502,510 (2,435) $ (31,021)
--------- ----------- -------- ------------
--------- ----------- -------- ------------
RESERVE LARGE-CAP GROWTH FUND
-----------------------------
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>
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
CLASS R* CLASS D
------------------------ ------------------------
FOR THE PERIOD
YEAR ENDED JUNE 1, 1998 TO
MAY 31, 1998 SEPTEMBER 30, 1998
------------------------ ------------------------
RESERVE MID-CAP EQUITY 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)
--------- ----------- -------- ------------
--------- ----------- -------- ------------
RESERVE SMALL-CAP GROWTH FUND
Sold............................................................ 41,002 $ 727,314 2,838 $ 45,650
Reinvested...................................................... -- -- -- --
Redeemed........................................................ (81,450) (1,410,761) (17,221) (312,464)
--------- ----------- -------- ------------
Net Increase (Decrease)......................................... (40,448) $ (683,447) (14,383) $ (266,814)
--------- ----------- -------- ------------
--------- ----------- -------- ------------
* Formerly known as Class A.
</TABLE>
(5) 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.
(6) FINANCIAL HIGHLIGHTS:
Contained below is per share operating performance for a share of each
Class for each of the periods indicated. The information should be read in
conjunction with the accompanying financial data and related notes
<TABLE>
<CAPTION>
CLASS R CLASS I
------------------------------------------------ ------------
FISCAL YEARS ENDED MAY 31, PERIOD ENDED
------------------------------------------------ MAY 31,
RESERVE BLUE CHIP GROWTH FUND 1999 1998 1997 1996 1995(A) 1999(B)
----------------------------- ------- ------ ------ ------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 15.09 $15.46 $14.91 $12.03 $ 10.00 $10.00
------- ------ ------ ------ ------- ------
Income from investment operations
Net investment loss................................... (.23) (.00) (.17) (.10) (.03) (.32)
Net realized and unrealized gain...................... 7.02 2.82 .91 3.62 2.06 4.65
------- ------ ------ ------ ------- ------
Total from investment operations........................ 6.79 2.82 0.74 3.52 2.03 4.33
Less distribution from net realized net capital gain.... (1.04) (3.19) (.19) (.64) -- (1.04)
------- ------ ------ ------ ------- ------
Net asset value, end of period.......................... $ 20.84 $15.09 $15.46 $14.91 $ 12.03 $13.29
------- ------ ------ ------ ------- ------
------- ------ ------ ------ ------- ------
Total Return............................................ 46.62% 19.70% 5.12% 30.10% 20.30% 32.90%
RATIOS/SUPPLEMENTAL DATA
------------------------
Net assets, end of period (thousands)................... $10,570 $8,532 $5,428 $5,130 $ 1,993 $ 2
Ratio of expenses to average net assets................. 1.53% 1.75% 1.75% 1.75% 1.73%(c) .88%(c)
Ratio of net investment loss to average net assets...... (.96)% (.87)% (1.13)% (.94)% (.70)%(c) (1.12)%(c)
Portfolio turnover rate................................. 144% 113% 109% 72% 68% 144%
</TABLE>
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS R CLASS I
------------------------------------------------ ------------
FISCAL YEARS ENDED MAY 31, PERIOD ENDED
------------------------------------------------ MAY 31,
RESERVE INFORMED INVESTORS GROWTH FUND 1999 1998 1997 1996 1995(A) 1999(B)
-------------------------------------- ------- ------ ------ ------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 10.46 $11.48 $14.36 $11.99 $ 10.00 $10.00
------- ------ ------ ------ ------- ------
Income from investment operations
Net investment loss................................... (.27) (.20) (.07) (.33) (.07) (.03)
Net realized and unrealized gain (loss)............... 4.12 2.08 (1.66) 3.87 2.06 2.81
------- ------ ------ ------ ------- ------
Total from investment operations........................ 3.85 1.88 (1.73) 3.54 1.99 2.78
Less distribution from net realized net capital gain.... (1.93) (2.90) (1.15) (1.17) -- (1.93)
------- ------ ------ ------ ------- ------
Net asset value, end of period.......................... $ 12.38 $10.46 $11.48 $14.36 $ 11.99 $10.85
------- ------ ------ ------ ------- ------
------- ------ ------ ------ ------- ------
Total Return............................................ 42.22% 17.88% (11.35)% 29.75% 19.90% 8.50%
RATIOS/SUPPLEMENTAL DATA
------------------------
Net assets end of period (thousands).................... $ 4,123 $4,334 $5,477 $6,393 $ 6,837 $ 1
Ratio of expenses to average net assets................. 1.61% 1.75% 1.75% 1.75% 1.75%(c) 1.06%(c)
Ratio of net investment loss to average net assets...... (1.04)% (.91)% (.57)% (1.57)% (1.62)%(c) (.59)%(c)
Portfolio turnover rate................................. 551% 410% 255% 132% 59% 551%
</TABLE>
<TABLE>
<CAPTION>
CLASS R CLASS I
---------------------------------------- ------------
FISCAL YEARS ENDED MAY 31, PERIOD ENDED
---------------------------------------- MAY 31,
RESERVE INTERNATIONAL EQUITY FUND 1999 1998 1997 1996(E) 1999(B)
--------------------------------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 13.22 $ 12.59 $ 11.26 $ 10.00 $ 10.00
------- ------- ------- ------- --------
Income from investment operations
Net investment loss..................................... (.06) (.04) (.07) (.05) (.48)
Net realized and unrealized gain (loss)................. (.43) .67 1.40 1.31 1.69
------- ------- ------- ------- --------
Total from investment operations........................ (.49) .63 1.33 1.26 1.21
------- ------- ------- ------- --------
Net asset value, end of period.......................... $ 12.73 $ 13.22 $ 12.59 $ 11.26 $ 11.21
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Total Return............................................ (3.78%) 5.00% 11.81% 12.60% 12.00%
RATIOS/SUPPLEMENTAL DATA
------------------------
Net assets in thousands, end of period.................. $12,310 $12,699 $12,099 $ 3,578 $ 1
Ratio of expenses to average net assets before waiver... 1.87% 2.00% 2.00% 2.00%(c) 1.29%(c)
Ratio of net investment loss to average net assets...... (.50)% (.39)% (.82)% (.92)%(c) (5.43)%(c)
Portfolio turnover rate................................. 174% 114% 52% 70% 174%
</TABLE>
<TABLE>
<CAPTION>
CLASS R CLASS I
---------------------------------------- ------------
FISCAL YEARS ENDED MAY 31, PERIOD ENDED
---------------------------------------- MAY 31,
RESERVE LARGE-CAP GROWTH FUND 1999 1998 1997 1996(H) 1999(B)
----------------------------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 18.16 $ 14.61 $ 10.95 $ 10.00 $ 10.00
------- ------- ------- ------- --------
Income from investment operations
Net investment loss..................................... -- (.03) (.03) (.01) (.01)
Net realized and unrealized gain ....................... 3.76 3.89 3.69 .96 2.61
------- ------- ------- ------- --------
Total from investment operations........................ 3.76 3.86 3.66 .95 2.60
Less distributions from net realized gain............... (.54) (.31) -- -- (.54)
------- ------- ------- ------- --------
Net asset value, end of period.......................... $ 21.38 $ 18.16 $ 14.61 $ 10.95 $ 12.06
------- ------- ------- ------- --------
------- ------- ------- ------- --------
Total Return............................................ 21.13% 26.71% 33.42% 9.50% 20.60%
</TABLE>
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS R CLASS I
---------------------------------------- ------------
FISCAL YEARS ENDED MAY 31, PERIOD ENDED
---------------------------------------- MAY 31,
1999 1998 1997 1996(H) 1999(B)
------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA
------------------------
Net assets end of period (thousands).......................... $ 8,118 $ 6,786 $ 3,054 $ 1,231 $ 12,042
Ratio of expenses to average net assets....................... 1.51% 1.75% 1.75% 1.75%(c) .87%(c)
Ratio of net investment loss to average net assets............ (.22)% (.36)% (.32)% (.32)% .38%(c)
Portfolio turnover rate....................................... 69% 25% 18% 0% 69%
</TABLE>
<TABLE>
<CAPTION>
CLASS R CLASS I
---------------------------------------- ------------
FISCAL YEARS ENDED MAY 31, PERIOD ENDED
---------------------------------------- MAY 31,
1999 1998 1997 1996(F) 1999(B)
------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C>
RESERVE MID-CAP EQUITY FUND
---------------------------
Net asset value, beginning of period........................... $ 12.98 $ 13.20 $ 12.29 $ 10.94 $10.00
------- ------- ------- ------- ------
Income from investment operations
Net investment loss............................................ (.30) (.26) (.11) (.01) (.38)
Net realized and unrealized gain............................... (.92) 1.50 1.02 1.36 2.29
------- ------- ------- ------- ------
Total from investment operations............................... (1.22) 1.24 .91 1.35 1.91
Less distribution from net realized gains...................... (1.16) (1.46) -- -- (1.16)
------- ------- ------- ------- ------
Net asset value, end of period................................. $ 10.60 $ 12.98 $ 13.20 $ 12.29 $10.75
------- ------- ------- ------- ------
------- ------- ------- ------- ------
Total Return................................................... (8.18)% 10.31% 7.40% 12.34%(c) 7.50%
RATIOS/SUPPLEMENTAL DATA
------------------------
Net assets, end of period (thousands).......................... $ 1,984 $ 3,381 $ 2,174 $ 131 $ 1
Ratio of expenses to average net assets........................ 1.63% 1.75% 1.75% 1.74%(c) 1.33%(c)
Ratio of net investment loss to average net assets............. (.71)% (1.21)% (1.31)% (.97)%(c) (2.27)%(c)
Portfolio turnover rate........................................ 43% 73% 102% 85% 43%
</TABLE>
<TABLE>
<CAPTION>
CLASS R CLASS I
---------------------------------------------- ------------
FISCAL YEARS ENDED MAY 31, PERIOD ENDED
----------------------------------------------- MAY 31,
1999 1998 1997 1996 1995(G) 1999(B)
------ ------ ------ ------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
RESERVE SMALL-CAP GROWTH FUND
-----------------------------
Net asset value, beginning of period..................... $16.66 $15.52 $19.56 $12.21 $ 10.00 $10.00
------ ------ ------ ------ ------- ------
Income from investment operations
Net investment loss...................................... (.51) (.39) (.28) (.17) (.09) (.08)
Net realized and unrealized gain (loss).................. 7.46 1.53 (3.76) 8.05 2.30 5.13
------ ------ ------ ------ ------- ------
Total from investment operations......................... 6.95 1.14 (4.04) 7.88 2.21 5.05
Less distribution from net realized gain................. -- -- -- (.53) -- --
------ ------ ------ ------ ------- ------
Net asset value, end of period........................... $23.61 $16.66 $15.52 $19.56 $ 12.21 $15.05
------ ------ ------ ------ ------- ------
------ ------ ------ ------ ------- ------
Total Return............................................. 41.72% 7.35% (20.65)% 65.55% 22.10% 50.50%
RATIOS/SUPPLEMENTAL DATA
------------------------
Net assets in thousands, end of period................... $6,258 $5,541 $5,789 $6,657 $ 1,241 $ 2
Ratio of expenses to average net assets.................. 1.61% 1.75% 1.75% 1.75% 1.75%(c) 1.00%(c)
Ratio of net investment loss to average net assets....... (1.44)% (1.64)% (1.69)% (1.70)% (1.62)%(c) (.89)%(c)
Portfolio turnover rate.................................. 26% 46% 28% 38% 43% 26%
</TABLE>
(Footnotes on next page)
40
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Footnotes from previous page)
- ---------------
(a) From October 28, 1994 (Commencement of Operations) to May 31, 1995.
(b) From October 1, 1998 (Commencement of Operations) to May 31, 1999.
(c) Annualized.
(d) From December 28, 1994 (Commencement of Operations) to May 31, 1995.
(e) From July 13, 1995 (Commencement of Operations) to May 31, 1996.
(f) From March 13, 1996 (Commencement of Operations) to May 31, 1996.
(g) From November 14, 1994 (Commencement of Operations) to May 31, 1995.
(h) From January 2, 1996 (Commencement of Operations) to May 31, 1996.
(7) SUBSEQUENT EVENTS:
The Trustees agreed to close Reserve Mid Cap Equity Fund effective
July 31, 1999.
41
<PAGE>
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 portfolios of investments, and the related statements of operations, and of
changes in net assets and financial highlights present fairly, in all material
respects, the financial position of The Reserve Private Equity Series
(comprising, respectively, Reserve Blue Chip Fund, Reserve Informed Investors
Fund, Reserve International Equity Fund, Reserve Large Cap Growth Fund (formerly
Reserve Large Cap Value Fund), Reserve Mid-Cap Equity Fund (formerly Reserve Mid
Cap Growth Fund), and Reserve Small Cap Growth Fund (the "Trust") at May 31,
1999, and 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 period presented, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at May 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
July 28, 1999
42
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<PAGE>
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