<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number:
Exact name of registrant as specified in charter:
Reserve Municipal Money Market Trust
Address of principal executive offices:
1250 Broadway New York, NY 10001-3701
Name and address of agent for service:
Edmund P. Bergan, Jr.
1250 Broadway
New York, NY 10001-3701
Registrant's telephone number, including area code: 212-401-5500
Date of fiscal year end: May 31
Date of reporting period: May 31, 2006
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ITEM 1. ANNUAL REPORTS TO SHAREHOLDERS
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[THE RESERVE LOGO]
A TRADITION OF FINANCIAL INNOVATION(SM)
ANNUAL REPORT
MAY 31, 2006
INTERSTATE TAX-EXEMPT FUND
CALIFORNIA TAX-EXEMPT FUND
CONNECTICUT TAX-EXEMPT FUND
FLORIDA TAX-EXEMPT FUND
MASSACHUSETTS TAX-EXEMPT FUND
MICHIGAN TAX-EXEMPT FUND
NEW JERSEY TAX-EXEMPT FUND
OHIO TAX-EXEMPT FUND
PENNSYLVANIA TAX-EXEMPT FUND
VIRGINIA TAX-EXEMPT FUND
OF THE RESERVE TAX-EXEMPT TRUST
NEW YORK TAX-EXEMPT FUND
OF THE RESERVE NEW YORK TAX-EXEMPT TRUST
ARIZONA MUNICIPAL MONEY-MARKET FUND
LOUISIANA MUNICIPAL MONEY-MARKET FUND
MINNESOTA MUNICIPAL MONEY-MARKET FUND
OF THE RESERVE MUNICIPAL MONEY-MARKET TRUST
ELIMINATE MAIL CLUTTER AND SAVE NATURAL RESOURCES!
SIGN UP FOR RESERVE eDELIVERY AT
www.TheR.com/edelivery
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[PHOTO OF BRUCE BENT]
Bruce Bent
CHAIRMAN
The Reserve
May 31, 2006
Dear Investor,
The Federal Reserve continued its tightening posture with short-term
interest rates throughout the year, sending short-term tax-exempt rates to their
highest levels in 5 years. The seven-day gross yields on all of The Reserve's
tax-exempt and municipal money market funds ran between 3.29% and 3.48% as of
May 31, 2006. For the net return of your fund, please refer to the Financial
Highlights portion of the Notes To Financial Statements section of this report.
Throughout the better part of the first half of 2006, the trusts were well
positioned to respond to the expected rate increases, with the portfolios spread
out among mostly one-day and seven-day variable rate demand notes. These
investments allowed the portfolios to capture higher yields quickly as interest
rates moved up. We intend to maintain this selective strategy until the Federal
Reserve shows clearer indications of moving towards a stable interest rate
environment.
Thank you for choosing The Reserve and helping us become the fastest
organically growing money fund company ranked among the top 25 largest money
fund complexes in 2005.* Please let us know your comments and suggestions on how
we can serve you better.
Bruce R. Bent
Chairman
*Source: iMoneyNet, January 2006
1
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RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--100.1% (NOTE 1)
--------- ------------------------------ --------
ARIZONA--6.0%
$ 35,775,000 Apache County IDA for Tucson Electric Power Co., 3.20%, 12/15/18(a) $ 35,775,000
1,993,500 Apache County IDA for Tucson Electric Power Co., 3.30%, 12/15/18(a) 1,993,500
1,993,500 Apache County IDA for Tucson Electric Power Co., 3.20%, 12/1/20(a) 1,993,500
3,493,500 Arizona HCF for Royal Oaks, 3.47%, 3/1/27(a) 3,493,500
6,500 Arizona HFA, 3.47%, 10/1/15(a) 6,500
3,987,000 Arizona HFA, 3.81%, 10/1/15(a) 3,987,000
7,743,500 McAllister Village Arizona State Univesity Project, 3.25%, 7/1/45 (a) 7,743,500
4,893,500 Coconino County Pollution Control for Arizona Public Service Co. Project, 3.57%, 11/1/33(a) 4,893,500
5,438,500 Pinal County AZ Electrical Systems Rev Series A, 3.47%, 11/1/35(a) 5,438,500
93,500 Maricopa County IDA for Las Gardenias Apartments, 3.50%, 4/15/33(a) 93,500
2,768,500 Scottsdale AZ IDA for Notre Dame School of Phoenix, 3.54%, 5/1/21(a) 2,768,500
993,500 Phoenix AZ IDR for Del Mar Terrace, 3.2%, 10/1/29(a) 993,500
3,400,000 Pima County IDA for Tucson Electric Power Co., Series A, 3.30%, 12/1/22(a) 3,400,000
---------------
72,580,000
---------------
CALIFORNIA--8.2%
395,000 Alameda Contra Costa Cops, Series F, 3.54%, 8/1/23(a) 395,000
1,200,000 California HFA Series P, 3.25%, 2/1/27(a) 1,200,000
11,145,000 California Pollution Control Wadham Energy LP, 3.22%, 11/1/17(a) 11,145,000
43,500,000 California State Economy Recovery Series C-6, 3.50%, 7/1/23(a) 43,500,000
10,475,000 California State Economy Recovery Series C-8, 3.48%, 7/1/23(a) 10,475,000
400,000 California Statewide for Covenant Retirement Community, 3.43%, 12/1/25(a) 400,000
5,250,000 California Water Department Reserve Power Supply, 3.39%, 5/1/22(a) 5,250,000
3,000,000 California Water Department Reserve Power Supply, 3.40%, 5/1/22(a) 3,000,000
3,400,000 California Water Department Reserve Power Supply, 3.50%, 5/1/22(a) 3,400,000
6,000,000 California Water Department Reserve Power Supply, Series G-7, 3.36%, 5/1/17(a) 6,000,000
4,800,000 California Water Department Reserve Power Supply, Series G-10, 3.43%, 5/1/18(a) 4,800,000
4,000,000 Dublin County Multi Hsg for Park Sierra, Series A, 3.23%, 6/1/28(a) 4,000,000
3,030,000 Irvine Assessment, District 89-10, 3.52%, 9/2/15(a) 3,030,000
1,000,000 Los Angeles MFH for Grand Promenade Project, 3.42%, 4/1/32(a) 1,000,000
950,000 Orange County CA Sanitation, 3.36%, 8/1/13(a) 950,000
900,000 Santa Clara County El Cammo Hospital District, 3.48%, 8/1/15(a) 900,000
---------------
99,445,000
---------------
COLORADO--0.8%
400,000 Broomfield CO IDA for Buckeye Investments, 3.49%, 12/1/09(a) 400,000
6,600,000 Colorado Ed & CultBear Creek School Project, 3.48%, 10/1/32(a) 6,600,000
2,800,000 University of Colorado Hosp Auth Rev, Series B, 3.23%, 11/15/35(a) 2,800,000
---------------
9,800,000
---------------
CONNECTICUT--0.6%
1,160,000 Connecticut DAR for Independent Living Project, 3.21%, 7/1/15(a) 1,160,000
640,000 Connecticut DAR for Pierce Memorial Baptist, 3.18%, 10/1/28(a) 640,000
500,000 Connecticut HEFA for Hotchkiss School, Series A, 3.51%, 7/1/30(a) 500,000
585,000 Connecticut Special Tax for Transportation Infrastructure, Series 1, 3.28%, 9/1/20(a) 585,000
2,800,000 Connecticut State Development Authority Rev for Solid Waste, 3.26%, 8/1/23(a) 2,800,000
590,000 Connecticut State HFA, Series D-3, 3.45%, 5/15/33(a) 590,000
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
2
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<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
--------- ---------------------------------- --------
CONNECTICUT (CONTINUED)
$ 1,200,000 Hartford Redev. Agency MHR for Underwood Towers Project, 3.43%, 6/1/20(a) $ 1,200,000
---------------
7,475,000
---------------
FLORIDA--4.2%
14,590,000 Alachua County Oak Hammock University Florida Project, 3.58%, 10/1/32(a) 14,590,000
635,000 Bonia Community Health-Series A, 3.49%, 12/1/29(a) 635,000
150,000 Broward County Education FACS Authority-City College Project, 3.47%,11/1/31(a) 150,000
1,245,000 Capital Finance Authority for Glenridge Palmer Ranch, 3.58%, 6/1/12(a) 1,245,000
4,175,000 Collier County for Clevland Health Clinic, 3.56%, 1/1/35(a) 4,175,000
2,100,000 Dade County Water Revenue, 3.21%, 10/5/22(a) 2,100,000
300,000 Duval County HFA for Lighthouse Bay Apartments, 3.47%, 12/1/32(a) 300,000
5,945,000 Florida HFA for Collins Cove Senior Apartments, 3.27%, 2/1/36(a) 5,945,000
3,000,000 Florida HFC Multifamily, 2.96%-3.24%, 8/1/35(a) 3,000,000
5,405,000 Florida HFC Multifamily for Bridgewater Club, 3.27%, 6/1/34(a) 5,405,000
100,000 Miami-Dade County for Airis Miami LLC, 3.50%, 10/15/25(a) 100,000
1,100,000 Orange County for YMCA, Series A, 3.52%, 5/1/27(a) 1,100,000
5,400,000 Palm Beach County for Morse Obligation Group, 3.49%, 5/1/33(a) 5,400,000
6,700,000 Palm Beach County for Raymond F Kravis Center, 3.40%, 7/1/32(a) 6,700,000
---------------
50,845,000
---------------
GEORGIA--0.9%
1,196,294 Georgia Muni Assoc. Pool Bd. COP, 3.48%, 12/15/20(a) 1,196,294
9,675,000 Marietta HFA for Woold Glen, 3.46%, 7/1/24(a) 9,675,000
---------------
10,871,294
---------------
IOWA--0.1%
1,000,000 Des Moines HRB for Iowa Methodist Medical Center, 3.23%, 8/1/15(a) 1,000,000
---------------
LOUISIANA--8.6%
1,000,000 Lake Charles District Revenue for Conoco, Series A, 3.24%, 9/1/29(a) 1,000,000
965,000 Lake Charles HRB & Term. District Revenue for CITGO Corp., 3.25%, 8/1/07(a) 965,000
54,000 Louisiana Environmental Facilities Community DAR, 3.49%, 11/01/34(a) 54,000
11,000 Louisiana Environmental Facilities Community DAR, 3.58%, 11/01/34(a) 11,000
900,000 Louisiana Environmental Facilities Community DAR, Series A, 3.49%, 11/01/34(a) 900,000
29,965,000 Louisiana Local Government Shreveport Utility Systems Project, 3.50%, 10/1/26(a) 29,965,000
77,000 Louisiana Offshore Term. Auth. Deepwater Port Rev. for Loop LLC, Series A, 3.55%, 9/1/17(a) 77,000
100,000 Louisiana Offshore Term. Auth. Deepwater Port Rev. for Loop LLC, Series A, 3.59%, 9/1/14(a) 100,000
4,975,000 Louisiana Offshore Terminal Loop Inc, 3.47%, 9/1/08(a) 4,975,000
21,385,000 Louisiana PFA for Kenner Hotel Ltd., 3.57%,12/1/15(a) 21,385,000
1,325,000 Louisiana PFA, 3.25%, 7/1/30(a) 1,325,000
26,500,000 Louisiana PFA, 3.50%, 3/15/25(a) 26,500,000
65,000 Louisiana PFA, Multi-family, 3.47%, 6/15/31(a) 65,000
465,000 Port of New Orleans N.O. Cold Storage Project, 3.32%, 11/1/22(a) 465,000
9,365,000 South Louisiana Port Holman Inc. Project, 3.33%, 1/1/27(a) 9,365,000
4,965,000 South Louisiana Port Marine Term. for Occidental Petroleum Corp., 3.20%, 7/1/18(a) 4,965,000
1,390,000 South Louisiana Port Marine Term. for Occidental Petroleum Corp., 3.30%, 7/1/21(a) 1,390,000
---------------
103,507,000
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
3
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<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
--------- ---------------------------------- --------
MARYLAND--3.5%
$ 5,800,000 Howard County for Vantage House Facility, Series A, 3.47% 6/1/32(a) $ 5,800,000
1,075,000 Maryland Health & Higher Pooled Loan, Series D, 3.46%, 1/1/29(a) 1,075,000
1,000,000 Maryland State Health & Higher Education for Carnegie Institute, 3.25%, 10/1/37(a) 1,000,000
1,975,000 Maryland State Health & Higher Education for Trinity College, 3.48%, 11/1/26(a) 1,975,000
22,315,000 Maryland State HEFA for Adventist Health Care, Series A, 3.48%, 1/1/35(a) 22,315,000
10,000,000 Maryland State HEFA for Adventist Health Care, Series B, 3.49%, 1/1/21(a) 10,000,000
---------------
42,165,000
---------------
MASSACHUSETTS--9.0%
180,000 Massachusetts DFA for Gann Academy Project, 2.905%, 6/1/32(a) 180,000
4,015,000 Massachusetts DFA for Bedford Notre Dame Health Care, 3.57% - 3.71%, 10/1/29(a) 4,015,000
600,000 Massachusetts DFA for Briarwood Retirement, 3.17% - 3.23%, 1/1/35(a) 600,000
12,350,000 Massachusetts DFA for Brooksby Village Project, 3.46%, 7/1/32(a) 12,350,000
9,295,000 Massachusetts DFA for Jewish Geriatric Services, 3.23%, 5/15/34(a) 9,295,000
300,000 Massachusetts DFA for Jewish Geriatric Services, 3.23%, 5/15/34(a) 300,000
9,225,000 Massachusetts DFA for Salem Community Corp, 3.48%, 1/1/35(a) 9,225,000
662,000 Massachusetts DFA for Smith College, 3.35%, 7/1/24(a)(c) 662,000
900,000 Massachusetts DFA IDR for You Incorporated, 3.18%, 9/1/32(a) 900,000
300,000 Massachusetts GO, Series 97-B, 3.42%, 9/1/16(a) 300,000
17,170,000 Massachusetts HEFA Capital Assets, Series A, 3.53%, 1/1/35(a) 17,170,000
3,965,000 Massachusetts HEFA Capital Assets, Series D, 3.57%, 1/1/35(a) 3,965,000
135,000 Massachusetts HEFA for Berklee College, Series A-2, 3.57%, 7/1/09(a) 135,000
100,000 Massachusetts HEFA for Berklee College of Music, Series D, 3.24%, 10/1/27(a) 100,000
34,230,000 Massachusetts HEFA for Harvard University, Series R, 3.47%, 11/1/49(a)(c) 34,230,000
525,000 Massachusetts HEFA for Harvard University, Series Y, 3.20%, 7/1/35(a)(c) 525,000
300,000 Massachusetts HEFA for Massachusetts Institute of Technology, Series J-2, 3.05%, 7/1/31(a)(c) 300,000
8,425,000 Massachusetts HEFA for University of Massachusetts, Series A, 3.18%, 11/1/30(a) 8,425,000
100,000 Massachusetts HEFA for Wellesley College, Series E, 3.20%,7/1/22(a)(c) 100,000
200,000 Massachusetts HEFA for Williams College, Series E, 3.43%, 8/1/14(a)(c) 200,000
3,140,000 Massachusetts HFA for Single Family Housing, 3.17% - 3.20%, 12/1/30(a) 3,140,000
520,000 Massachusetts Losell Mills Assoc LP, Series 95, 3.57%, 12/1/20(a) 520,000
400,000 Massachusetts Series B, 2.95%, 9/1/16(a) 400,000
520,000 Massachusetts WRA, Series 99-B, 3.12%, 8/1/28(a) 520,000
1,075,000 Massachusetts WRA, Series C, 3.60%, 8/1/20(a) 1,075,000
100,000 Massachusetts WSR, Series A, 3.41% 11/1/24(a) 100,000
---------------
108,732,000
---------------
MICHIGAN--6.0%
100,000 Ann Arbor Economic For Glacier Hills Inc Project, 3.17%, 11/01/25(a) 100,000
4,980,000 Ann Arbor Economic For Glacier Hills Inc Project, 3.53%, 11/01/25(a) 4,980,000
450,000 Ann Arbor Economic For Glacier Hills Inc Project,2.98%,11/01/25(a) 450,000
75,000 Ann Arbor Economic For Glacier Hills Inc Project,3.03%,11/01/25(a) 75,000
700,000 Ann Arbor Economic For Glacier Hills Inc Project,3.47%,11/01/25(a) 700,000
1,950,000 Detroit Sewer Disposal, 3.13%, 7/1/33(a) 1,950,000
100,000 Garden City For Hospital Group Series 96-A, 3.48%, 9/1/26(a) 100,000
7,245,000 Green Lake Twp MI For EDA Interlocken Ctr, 3.42%, 6/1/34(a) 7,245,000
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
4
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<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
--------- ---------------------------------- --------
MICHIGAN (CONTINUED)
$ 1,500,000 Jackson County EDC for Thrifty Leoni Inc., 3.46%, 12/1/14(a) $ 1,500,000
100,000 Jackson County EDC for Vista Grande Villa, 3.54%, 11/1/31(a) 100,000
4,845,000 Michigan HDA for Berrien Woods, Series A, 3.56%, 7/1/32(a) 4,845,000
1,260,000 Michigan HDA for River Places Apartments, 3.30%, 06/1/18(a) 1,260,000
535,000 Michigan State Hospital For Hospital Equip Loan Program, 3.25%. 12/1/23(a) 535,000
7,760,000 Michigan State University Revenue, Series A, 3.52%, 8/15/32(a) 7,760,000
400,000 Michigan Strategic Fund for Clark Retirement Community, 3.46%, 6/1/31(a) 400,000
2,370,000 Michigan Strategic Fund for Haven Christian Services, 3.50%, 11/15/34(a) 2,370,000
15,525,000 Michigan Strategic Fund for Henry Ford Museum Village, 3.55%, 12/1/33(a) 15,525,000
140,000 Michigan Strategic Fund for M&P Cap LLC, Series A, 3.56%, 6/1/34(a) 140,000
1,450,000 Michigan Strategic Fund for Mot LLC Project, 3.16% - 3.47%, 12/1/34(a) 1,450,000
150,000 Milan Michigan Area Schools, 3.18%, 5/1/30(a) 150,000
1,150,000 Oakland University, 3.28%, 3/1/31(a) 1,150,000
19,260,000 Wayne Charter County Detroit County A, 3.25%, 12/1/16(a) 19,260,000
---------------
72,045,000
---------------
MINNESOTA--1.3%
50,000 Andover Senior Housing for Presbyterian Homes,3.47%, 11/15/33(a) 50,000
40,000 Brooklyn Center for Brookdale Corp II, 3.63%, 12/1/14 (a) 40,000
47,000 Cohasset for Minnesota Power & Light, 3.47%, 6/1/13(a) 47,000
100,000 Mankato Multifamily Highland Apartments, 3.63%, 5/1/27(a) 100,000
2,427,000 Minneapolis Fairview Health Services, 3.21%, 11/15/32(a) 2,427,000
2,078,000 Minnesota HEFA for Carleton College Series 6D, 3.35%, 4/1/35(a) 2,078,000
2,070,000 Minnesota HEFA for St. Olaf College, Series 5-H, 3.58%, 10/1/30(a) 2,070,000
585,000 Minnesota HEFA for St. Olaf College, Series 5-H, 3.58%, 10/1/32(a) 585,000
1,830,000 Minnesota State HFA for Residential Housing, 3.50% - 3.75%, 1/1/35(a) 1,830,000
150,000 Regents University, Series A, 3.25%, 7/1/08(a)(c) 150,000
55,000 Roseville Commercial Dev. Revenue for Berger Transfer & Storage, 3.43%, 12/1/15(a) 55,000
35,000 St. Louis Park Catholic Fin Corp., 3.50%, 10/1/25(a) 35,000
750,000 St. Paul Housing & Redev. Authority MHR for Highland Ridge, 3.47%, 10/1/33(a) 750,000
5,185,000 State of Minnesota GO Bond, 5.00%, 8/1/06 5,200,357
---------------
15,417,357
---------------
MISSOURI--0.0%^
190,000 Platte County IDR for Platte Care Facility, 3.24%, 10/1/10 (a) 190,000
---------------
NEVADA--0.4%
5,450,000 Carson City Tahoe Regional Medical Center, 3.47%, 9/1/35(a) 5,450,000
---------------
NEW JERSEY--5.5%
600,000 Hudson County, 3.52%, 7/15/26(a) 600,000
23,700,000 New Jersey EDA for Airis Newark Project, 3.39%, 1/1/19(a) 23,700,000
2,200,000 New Jersey EDA for Geriatrics Housing Services Series P-J, 3.20%, 11/1/31(a) 2,200,000
8,200,000 New Jersey EDA for Newark Container LLC, 3.26%, 7/1/30(a) 8,200,000
4,735,000 New Jersey EDA Thermal Energy Marian Energy LLC, 3.39%, 9/1/31(a) 4,735,000
1,400,000 New Jersey for Hospital Capital Asset, Series A, 3.36%, 7/1/35(a) 1,400,000
500,000 New Jersey HCF for Communtity Hospital Group, Series A-1, 3.44%, 7/1/20(a) 500,000
700,000 New Jersey Sports Authority Expo, Series C, 3.37%, 9/1/24(a) 700,000
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
5
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<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
--------- ---------------------------------- --------
NEW JERSEY (CONTINUED)
$ 16,150,000 New Jersey State Tax & Revenue Antic Notes, Series A, 4.00%, 6/23/06 $ 16,156,570
7,775,000 Port Authority NY, NJ Bayerische Landesbank, 3.50%, 8/1/24(a) 7,775,000
250,000 Port Authority of New York & New Jersey Versatile Structure 3, 3.50%, 6/1/20(a) 250,000
---------------
66,216,570
---------------
NEW YORK--21.1%
9,600,000 Allegheny EFA for Carnegie Mellon University, 3.54%, 12/1/33(a) 9,600,000
2,600,000 Long Island Power Authority Electric System Revenue, Series 2-B, 3.47%, 5/1/33(a) 2,600,000
9,900,000 Long Island Power, Sub-series 3-B, 3.32%, 5/1/33(a) 9,900,000
24,800,000 Metropolitan Transit Authority, 3.41%, 11/01/35(a) 24,800,000
8,000,000 Metropolitan Transit Authority, Sub Series E-1, 3.49%, 11/01/35(a) 8,000,000
4,395,000 Metropolitan Transportation Authority, 3.12%, 11/1/32(a) 4,395,000
3,000,000 New York City GO, Series A-4, 3.50%, 8/1/22(a) 3,000,000
24,265,000 New York City GO, Series -H1, 3.50%, 3/1/34(a) 24,265,000
20,000,000 New York City GO, Sub Series F-3, 3.40% - 3.47%, 9/1/35(a) 20,000,000
2,100,000 New York City Housing Development Corp, 3.19%, 1/1/36(a) 2,100,000
19,050,000 New York City Water, 3.50%, 6/15/25(a) 19,050,000
11,550,000 New York City Water, 3.58%, 6/15/18(a) 11,550,000
5,440,000 New York City Water, 3.58%, 6/15/33(a) 5,440,000
10,330,000 New York City WFA, Series A-6, 3.50%, 11/1/26(a) 10,330,000
6,700,000 New York City, 3.56%, 8/15/23(a) 6,700,000
1,225,000 New York City, TFA, Series H3, 3.50%, 11/1/22(a) 1,225,000
1,300,000 New York State HFA for Bleecker Terrace Apartments, 3.50%, 7/1/15(a) 1,300,000
5,500,000 New York State HFA for Victory, 3.16%, 11/1/33(a) 5,500,000
4,425,000 New York State HFA for W 43rd St., 3.23%, 11/1/34(a) 4,425,000
6,000,000 New York State HFA, Series B, 3.18%, 3/15/26(a) 6,000,000
34,500,000 New York State LGAC., 3.10%, 4/1/25(a) 34,500,000
31,500,000 Triborough Bridge & Tunnel Authority, 3.14% - 3.42%, 1/1/32(a) 31,500,000
8,700,000 Westchester IDA for Catherine Field Home, 3.44%, 1/1/31(a) 8,700,000
---------------
254,880,000
---------------
NORTH CAROLINA--4.3%
51,100,000 North Carolina EFA for Cardinal Gibbons, 3.21% - 3.44%, 12/1/28(a) 51,100,000
600,000 North Carolina EFA for Cardinal Gibbons, 3.47%, 8/1/14(a) 600,000
900,000 North Carolina Medical Care Community for Stanley Total Living Center, 3.53%, 4/1/18(a) 900,000
---------------
52,600,000
---------------
OHIO--4.3%
4,500,000 Akron Bath Copley HDR for Summa Health System, Series B, 3.48%, 11/1/34(a) 4,500,000
200,000 Butler County HCF for Lifesphere, 3.46%, 5/1/27(a) 200,000
300,000 Clinton County for Wilmington Airport, 3.48%, 6/1/11(a) 300,000
3,800,000 Cuyahoga County EDA for Cleveland Botanical Gardens, 3.48%, 7/1/31(a) 3,800,000
2,170,000 Cuyahoga County for Cleveland Health Education Museum, 3.49%, 3/1/32(a) 2,170,000
1,000,000 Cuyahoga County HCF for Devon Oaks, 3.48%, 2/1/34(a) 1,000,000
7,400,000 Evandale County IDR for SHV Realty, Inc., 3.40%, 9/1/15(a) 7,400,000
290,000 Franklin County Hospital Revenue for U.S. Health Corp., 3.45%, 12/1/20(a) 290,000
460,000 Franklin County Hospital Revenue for U.S. Health Corp., Series 96, 3.45%, 12/1/21(a) 460,000
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
6
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<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
--------- ---------------------------------- --------
OHIO (CONTINUED)
$ 145,000 Geauga County for Heather Hill Inc,,3.46%, 7/1/23(a) $ 145,000
150,000 Hamilton County for Alliance Health, 3.19%, 1/1/18(a) 150,000
2,500,000 Hamilton County HCF, 3.45%, 6/1/35(a) 2,500,000
190,000 Kent State University Receipts, 3.28%, 5/1/31(a) 190,000
4,025,000 Licking County HCF, 3.46%, 11/1/33(a) 4,025,000
10,000 Marion County Hospital Improvement, Pooled Lease Program, 3.48%, 11/1/21(a) 10,000
1,625,000 Middleburgh Heights for Southwest General Hospital, 3.47%, 8/15/22(a) 1,625,000
100,000 Ohio Air Quality DAR for Ohio Edison, Series A, 3.20%, 2/1/14(a) 100,000
50,000 Ohio Air Quality, 3.38%, 6/1/23(a) 50,000
1,260,000 Ohio Higher EFA for Ashland University, 3.52%, 9/1/24(a) 1,260,000
100,000 Ohio Higher EFA for Case Western University, 3.20%, 10/1/31(a) 100,000
400,000 Ohio State University General Receipts, 3.35%, 12/1/17(a)(c) 400,000
700,000 Ohio State University General Receipts, 3.35%, 12/1/27(a)(c) 700,000
4,350,000 Ohio WDA, 3.58%, 5/15/19(a) 4,350,000
7,850,000 Paulding County for Waste Disposable, 3.59%, 8/1/26(a) 7,850,000
200,000 Toledo City Services Special Assessment, 3.47%, 12/1/06(a) 200,000
8,000,000 Toledo Lucas County, 3.46%, 5/15/38(a) 8,000,000
---------------
51,775,000
---------------
OKLAHOMA--0.0%^
500,000 Oklahoma City for Christian College, 3.71%, 7/1/15(a) 500,000
---------------
OREGON--0.0%^
500,000 Portland MFH for South Park, 3.27%, 12/1/11(a) 500,000
---------------
PENNSYLVANIA--5.6%
6,300,000 Beaver County IDA for FirstEnergy Nuclear, 3.23%,1/1/35(a) 6,300,000
1,575,000 Bucks County IDA, 3.40%, 7/1/15(a) 1,575,000
250,000 Chartier Valley Pa for Comm'l Dev 1133, 3.49%, 8/1/07(a) 250,000
3,100,000 Chester County IDA for Archdiocese Philadelphia, 3.54%, 7/1/31(a) 3,100,000
2,450,000 Delaware County IDR for Sun, Inc., 3.24%, 11/1/33(a) 2,450,000
10,600,000 Emmaus General Authority Revenue, Series G-18, 3.23%, 3/1/24(a) 10,600,000
1,215,000 Lebanon County HCF for ECC Retirement Village, 3.52%, 10/15/25(a) 1,215,000
2,000,000 Manheim Township School District, 3.47%, 5/1/23(a) 2,000,000
1,900,000 Montgomery County for Higher Ed. William Penn Charter, 3.49%, 9/15/31(a) 1,900,000
2,000,000 Pennsylvania State HEFA, 3.46%, 11/1/14(a) 2,000,000
1,300,000 Pennsylvania Turnpike, Series A-3, 3.23%, 12/1/30(a) 1,300,000
500,000 Philadelphia IDR for Fox Chase Cancer Ctr, 3.52%, 7/1/25(a) 500,000
6,125,000 Philadelphia, 3.37% - 3.78%, 3/1/27(a) 6,125,000
10,370,000 Quakertown Pennsylvania General Authority Revenue, 3.20%, 7/1/26(a) 10,370,000
14,000,000 Westmoreland County Redstone Highland Apts, 3.48%, 1/1/36(a) 14,000,000
3,900,000 Wilkens Area IDA for Fairview Extended Care, Series B, 3.43 1/1/21(a) 3,900,000
---------------
67,585,000
---------------
PUERTO RICO--0.6%
70,000 Puerto Rico GO Commonwealth, 5.25%, 7/1/15(b) 71,148
573,000 Puerto Rico Government Development Bank, 3.16%, 12/1/15(a) 573,000
6,278,000 Puerto Rico Highway & Transportation Authority, Series A, 3.13%, 7/1/28(a) 6,278,000
---------------
6,922,148
---------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<Page>
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
--------- ---------------------------------- --------
TENNESSEE--0.0%^
$ 495,000 Chattanooga IDA for Baylor School, 3.47%, 11/1/16(a) $ 495,000
---------------
TEXAS--5.1%
3,700,000 Harris County IDA for Baytank Houston, Inc., 3.23%, 2/1/20(a) 3,700,000
39,755,000 Texas State Tax and Revenue General Obligations, 4.50%, 8/31/06 39,870,376
18,000,000 Travis County Health Querencia Barton Creek-C, 3.48%, 11/15/35(a) 18,000,000
---------------
61,570,376
---------------
VIRGINIA--2.4%
11,525,000 Alexandria County IDA for Goodwin House, 3.54%, 10/1/35(a) 11,525,000
680,000 Arlington County Virginia Rev for Ballston Public Parking, 3.27%, 8/1/17(a) 680,000
511,000 Chesapeake County IDA for Cheaspeake General Hospital, Series B, 3.22%, 7/1/31(a) 511,000
1,056,000 Clarke County IDR Winchester Medical Center, 3.28%, 1/1/30(a) 1,056,000
401,000 Fairfax County EDA Smithsonian Institute, 3.46%, 12/1/33(a) 401,000
255,000 Hampton County MFH for Shoreline Apartments, 3.25%, 12/1/19(a) 255,000
1,180,000 Henrico County EDA for White Oaks Ltd Project, 3.25%, 10/1/27(a) 1,180,000
1,650,000 King George County Garnet of VA Inc Project, 3.52%, 9/1/21(a) 1,650,000
126,000 Peninsula Port Authority for Dominion Terminal, 3.50%, 7/1/16(a) 126,000
1,270,000 Portsmouth Redevelopment & HSG - Multifamily, 3.27%, 6/1/30(a) 1,270,000
9,885,000 University of Virginia, Series A, 3.25%, 6/1/34(a)(c) 9,885,000
---------------
28,539,000
---------------
WASHINGTON--1.6%
19,350,000 Emerald Heights Project, 3.58%, 7/1/33(a) 19,350,000
---------------
TOTAL INVESTMENTS (COST* $1,210,455,745) 100.1% 1,210,455,745
COMPREHENSIVE MANAGEMENT FEES PAYABLE 0.0^ (9,643)
DISTRIBUTION (12b-1) FEES PAYABLE 0.0^ (1,614)
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1) (1,167,238)
----- ---------------
NET ASSETS 100.0% $ 1,209,277,250
===== ===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE OF EACH CLASS BASED ON
SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING AND EQUIVALENT TO THE
NET ASSETS OF EACH CLASS:
285,535,863 SHARES CLASS R $ 1.00
===============
40,656,390 SHARES CLASS TREASURER'S TRUST $ 1.00
===============
6,356,745 SHARES CLASS 75 $ 1.00
===============
2,648,082 SHARES CLASS 70 $ 1.00
===============
261,711 SHARES CLASS 45 $ 1.00
===============
62,963,368 SHARES CLASS 25 $ 1.00
===============
105,609 SHARES CLASS 15 $ 1.00
===============
10,347 SHARES CLASS 12 $ 1.00
===============
810,739,135 SHARES CLASS 8 $ 1.00
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<Page>
RESERVE TAX-EXEMPT TRUST--CALIFORNIA TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--96.8% (NOTE 1)
--------- ----------------------------- --------
CALIFORNIA--96.8%
$ 1,800,000 California Housing Finance Agency Revenue, Series P, 3.25%, 2/1/27(a) $ 1,800,000
3,720,000 California Infrastructure & Economic Development, Series A, 3.50%, 9/1/28(a) 3,720,000
2,400,000 California Infrastructure & Economic Development, Series B, 3.40%-3.50%, 4/1/42(a) 2,400,000
2,545,000 California Pollution Control Colmac Energy, Series A, 3.21%, 12/1/16(a) 2,545,000
5,945,000 California Pollution Control Pacific Gas & Electric Finance, 3.54%, 11/1/26(a) 5,945,000
2,300,000 California Pollution Control Wadham Energy LP, 3.22%, 11/1/17(a) 2,300,000
775,000 California School Facilities for Capital Improvements, Series C, 3.12%, 7/1/22(a) 775,000
8,475,000 California State Economic Recovery, Series C-6, 3.48%, 7/1/23(a) 8,475,000
3,740,000 California State Economic Recovery, Series C-8, 3.50%, 7/1/23(a) 3,740,000
4,000,000 California State General Obligation, Sub Series A-1, 3.10%, 5/1/40(a) 4,000,000
2,140,000 California State Water Reserve Power Supply Revenue, Series C-15, 3.39%, 5/1/22(a) 2,140,000
2,700,000 California State Water Reserve Power Supply Revenue, Series C-9, 3.40%, 5/1/22(a) 2,700,000
1,290,000 California State Water Reserve Power Supply Revenue, Series B-4, 3.50%, 5/1/22(a) 1,290,000
2,950,000 California State Water Reserve Power Supply Revenue, Series C13, 3.37%, 5/1/22(a) 2,950,000
5,100,000 California State Water Reserve Power Supply Revenue, Series B-3, 3.48%, 5/1/22(a) 5,100,000
545,000 California State Water Reserve Power Supply Revenue, Series B-6, 3.46%, 5/1/22(a) 545,000
6,200,000 California Statewide CDA for Covenant Retirement Community, 3.43%, 12/1/25(a) 6,200,000
2,200,000 California Statewide CDA for Early Education Community Center COP, 3.44%, 9/1/31(a) 2,200,000
2,175,000 Chula Vista Charter City for Home Depot Project, Inc., 3.37%, 12/1/10(a) 2,175,000
2,900,000 Dublin California Multi Housing for Park Sierra, Series A, 3.23%, 6/1/28(a) 2,900,000
1,000,000 Fremont California COP Family Reserve Center, Series 88, 3.46%, 8/1/30(a) 1,000,000
1,400,000 Fremont California Public Finance Family Reserve Center, Series 98, 3.46%, 8/1/28(a) 1,400,000
5,699,000 Irvine Assessment California Ltd Obligation Improvement Bonds District 87-8, 3.50%,
9/2/24(a) 5,699,000
2,346,000 Irvine California Improvement Bond District #00-18, Series A, 3.46%, 9/2/26(a) 2,346,000
4,460,000 Irvine California District Assessment District 89-10, 3.52%, 9/2/15(a) 4,460,000
2,100,000 Irvine California Improvement Bond Act of 1915 Assessment District 97-17, 3.46%,
9/2/23(a) 2,100,000
2,700,000 Irvine Ranch California, Series '85, 3.46%, 10/1/10(a) 2,700,000
4,385,000 Long Beach California Harbor Revenue, Series A, 3.22%, 5/15/27(a) 4,385,000
3,400,000 Los Angeles California Cmnty Redev Multifamily 2nd & Central Apartments-A, 3.18%,
12/1/38(a) 3,400,000
4,000,000 Los Angeles California MFH Grand Promenade Project, 3.42%, 4/1/32(a) 4,000,000
1,300,000 Metro Water District So California Waterworks Revenue, Series B-2, 3.46%, 7/1/28(a) 1,300,000
715,000 Orange County California Sanitation Authority, 3.36%, 8/1/13(a) 715,000
3,000,000 Orange County California Sanitation COPS, 3.49%, 8/1/29(a) 3,000,000
2,900,000 Riverside County California Facilities District # 88-4 Community, 3.16%, 9/1/14(a) 2,900,000
4,000,000 San Francisco Community Facilities District # 4, 3.44%, 8/1/31(a) 4,000,000
1,400,000 Santa Ana California United School District, 3.16%, 7/1/15(a) 1,400,000
4,500,000 Santa Clara County California El Cammo Hospital District, 3.48%, 8/1/15(a) 4,500,000
3,700,000 Stockton HCF for Dameron Hospital Association, Series A, 3.54%, 12/1/32(a) 3,700,000
1,465,000 Turlock Irrigation District for Transportation Project, Series A, 3.50%, 1/1/31(a) 1,465,000
1,800,000 Tustin California Improvement 1915 Reassessment District # 95-2, 3.46%, 9/2/13(a) 1,800,000
---------------
120,170,000
---------------
TOTAL INVESTMENTS (COST* $120,170,000) 96.8% 120,170,000
COMPREHENSIVE MANAGEMENT FEES PAYABLE 0.0^ (2,721)
DISTRIBUTION (12b-1) FEES PAYABLE 0.0^ (680)
OTHER ASSETS, LESS LIABILIES 3.2 3,967,112
----- ---------------
NET ASSETS 100.0% $ 124,133,711
===== ===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
124,133,711 SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING $ 1.00
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<Page>
RESERVE TAX-EXEMPT TRUST--CONNECTICUT TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--80.8% (NOTE 1)
--------- ----------------------------- --------
CONNECTICUT--76.4%
$ 1,300,000 Connecticut DAR for Independent Living, 3.21%, 7/1/15(a) $ 1,300,000
2,150,000 Connecticut DAR for Pierce Memorial Baptist, 3.18%, 10/1/28(a) 2,150,000
1,300,000 Connecticut HEFA for Hotchkiss School, Series A, 3.51%, 7/1/30(a) 1,300,000
1,000,000 Connecticut HEFA for Kingswood-Oxford School, 3.46%, 7/1/30(a) 1,000,000
1,200,000 Connecticut HEFA for Klingberg Family Center, 3.43%, 7/1/32(a) 1,200,000
100,000 Connecticut HEFA for Yale University, Series T-1, 3.50%, 7/1/29(a)(c) 100,000
100,000 Connecticut HEFA for Yale University, Series V-2, 3.45%, 7/1/36(a)(c) 100,000
1,100,000 Connecticut HEFA for Yale University, Series X-3, 3.50%, 7/1/37(a)(c) 1,100,000
2,210,000 Connecticut HFA, Sub Series D-3, 3.45%, 5/15/33(a) 2,210,000
1,615,000 Connecticut Special Tax Obligation for Transportation Infrastructure, 3.28%, 9/1/20(a) 1,615,000
1,300,000 Connecticut State Development Authority for Solid Waste, 3.26%, 8/1/23(a) 1,300,000
1,205,000 Connecticut State GO, Series 1-A, 3.54%, 2/15/21(a) 1,205,000
860,000 Connecticut State GO, Series 97-B, 3.42%, 5/15/14(a) 860,000
1,300,000 Hartford Redev. Agency MHR for Underwood Towers Project, 3.43%, 6/1/20(a) 1,300,000
2,020,000 New Canaan Housing Authority for Village at Waveny Care Center, 3.20%, 1/1/22(a) 2,020,000
500,000 North Canaan Housing Authority for Geer Woods Project, 3.46%, 8/1/31 (a) 500,000
1,625,000 Shelton County HFA for Crosby Commons Project, 3.51%, 1/1/31(a) 1,625,000
---------------
20,885,000
---------------
PUERTO RICO--4.4%
1,210,000 Puerto Rico Government Development Bank, 3.16%, 12/1/15(a) 1,210,000
---------------
TOTAL INVESTMENTS (COST* $22,095,000) 80.8% 22,095,000
OTHER ASSETS, LESS LIABILITIES 19.2 5,249,562
----- ---------------
NET ASSETS 100.0% $ 27,344,562
===== ===============
</Table>
RESERVE TAX-EXEMPT TRUST--CONNECTICUT TAX EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2006
<Table>
ASSETS
Investments in securities, at value (Cost $22,095,000) $ 22,095,000
Cash 5,191,523
Interest receivable 61,965
------------
Total Assets 27,348,488
------------
LIABILITIES
Comprehensive management fees payable 2,808
Distribution (12b-1) fees payable 891
Other Liabilities 227
------------
Total Liabilities 3,926
------------
NET ASSETS $ 27,344,562
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
27,344,562 SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING $ 1.00
============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<Page>
RESERVE TAX-EXEMPT TRUST--FLORIDA TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--99.3% (NOTE 1)
--------- ----------------------------- --------
FLORIDA--94.6%
$ 5,265,000 Alachua County HFA for Oak Hammock University, 3.58%, 10/1/32(a) $ 5,265,000
1,850,000 Broward County Florida Educational Facs Auth, City College Project, 3.47%, 11/1/31(a) 1,850,000
1,930,000 Broward County HFA for Jacaranda Village Apartments, 3.22%, 9/1/22(a) 1,930,000
2,000,000 Capital Finance Authority for Glenride Palmer Ranch, 3.58%, 6/1/12(a) 2,000,000
320,000 Collier County for Cleveland Health Clinic, 3.56%, 1/1/35(a) 320,000
1,925,000 Dade County IDA for Dolphins Stadium, Series C, 3.20%, 1/1/16(a) 1,925,000
145,000 Dade County IDA for Florida Power & Light, 3.55%, 6/1/21(a) 145,000
2,600,000 Duval County HFA for Lighthouse Bay Apartments, 3.47%, 12/1/32(a) 2,600,000
1,200,000 Florida HEFA Saint Thomas University Project, 3.59%, 1/1/19(a) 1,200,000
3,470,000 Florida HFC Multifamily for Bridgewater Club, 3.27%, 6/1/34(a) 3,470,000
900,000 Florida HFC Multifamily for Wellesley Apartments, 2.96%, 8/1/35(a) 900,000
2,080,000 Jacksonville Florida Dist Energy System Series A, 3.42%, 10/1/34(a) 2,080,000
2,755,000 Jacksonville Florida HFA for Southern Baptist Hospital, Series A, 3.59%, 8/15/33(a) 2,755,000
2,295,000 Lee County IDA for Bonita Community Health Services, Series A, 3.49%, 12/1/29(a) 2,295,000
1,000,000 Manatee County PCR for Florida Power & Light, 3.55%, 9/1/24(a) 1,000,000
4,200,000 Miami Dade County IDA for Airis Miami LLC, Series A, 3.50%, 10/15/25(a) 4,200,000
1,185,000 Orange County YMCA, Series A, 3.52%, 5/1/27(a) 1,185,000
4,400,000 Palm Beach County for Morse Obligation Group, 3.49%, 5/1/33(a) 4,400,000
2,700,000 Palm Beach County for Raymond F Kravis Center Project, 3.40%, 7/1/32(a) 2,700,000
1,800,000 Palm Beach County for School Board, Series B, 3.45%, 8/1/27 (a) 1,800,000
1,000,000 Pinellas County HFA, 3.48%, 11/1/15(a) 1,000,000
500,000 Pinellas County Florida HFA for Pooled Hospital Loan Program, Series 85, 3.60%,
12/1/15(a) 500,000
2,000,000 Port Orange for Palmer College, 3.47%, 10/1/32(a) 2,000,000
2,800,000 Putnam County Dev. Authority PCR for Florida Power & Light, 3.55%, 9/1/24(a) 2,800,000
500,000 Sarasota County HCF for Bay Village, 3.52%, 12/1/23(a) 500,000
200,000 Seminole County IDA HCF for Florida Living Nursing, 3.67%, 2/1/11(a) 200,000
400,000 University of North Florida Capital Improvements Project, 3.57%, 11/1/24(a) 400,000
700,000 Volusia County IDR for Easter Seal Society of Volusia, 3.58%, 9/1/21(a) 700,000
---------------
52,120,000
---------------
NEW YORK--1.7%
925,000 New York City Transitional, Series 3, 3.35%, 11/1/22(a) 925,000
---------------
PUERTO RICO--3.0%
1,647,000 Puerto Rico Government Development Bank, 3.16%, 12/1/15(a) 1,647,000
---------------
TOTAL INVESTMENTS (COST* $54,692,000) 99.3% 54,692,000
COMPREHENSIVE MANAGEMENT FEES PAYABLE 0.0^ (7,328)
DISTRIBUTION (12b-1) FEES PAYABLE 0.0^ (1,832)
OTHER ASSETS, LESS LIABILITIES 0.7 375,604
----- ---------------
NET ASSETS 100.0% $ 55,058,444
===== ===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
55,058,444 SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING. $ 1.00
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<Page>
RESERVE TAX-EXEMPT TRUST--MASSACHUSETTS TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--95.3% (NOTE 1)
--------- ----------------------------- --------
MASSACHUSETTS--95.3%
$ 890,000 Massachusetts DFA for Bedford Notre Dame Health Care, 3.57%, 10/1/29(a) $ 890,000
800,000 Massachusetts DFA for Briarwood Retirement, 3.02%, 1/1/35(a) 800,000
2,250,000 Massachusetts DFA for Brooksby Village Project, 3.46%, 7/1/32(a) 2,250,000
720,000 Massachusetts DFA for Gann Academy Project, 3.51%, 6/1/32(a) 720,000
1,250,000 Massachusetts DFA for Jewish Geriatric Services, 3.23%, 5/15/34(a) 1,250,000
655,000 Massachusetts DFA for Mystic Valley School, 3.47%, 6/15/08(a) 655,000
1,000,000 Massachusetts DFA for Salem Community Corporation, 3.48%, 1/1/35(a) 1,000,000
600,000 Massachusetts DFA for Smith College, 3.35%, 7/1/24(a)(c) 600,000
200,000 Massachusetts DFA for Smith College, 3.35%, 7/1/29(a)(c) 200,000
50,000 Massachusetts DFA for, 3.43%, 5/15/34(a) 50,000
800,000 Massachusetts DFA IDR for Ocean Spray Cranberries, 3.47%, 10/15/11(a) 800,000
1,900,000 Massachusetts DFA IDR for You Incorporated, 3.18%, 9/1/32(a) 1,900,000
1,200,000 Massachusetts GO, Series 97-B, 3.42%, 9/1/16(a) 1,200,000
700,000 Massachusetts HEFA for Berklee College of Music, Series B, 3.24%, 10/1/27(a) 700,000
1,380,000 Massachusetts HEFA for Cap Asset Program, Series A, 3.53%, 1/1/35(a) 1,380,000
1,800,000 Massachusetts HEFA for Cap Asset Program, Series D, 3.57%, 1/1/35(a) 1,800,000
2,000,000 Massachusetts HEFA for Harvard University, Series R, 3.47%, 11/1/49(a)(c) 2,000,000
175,000 Massachusetts HEFA for Harvard University, Series Y, 3.20%, 7/1/35(a)(c) 175,000
1,000,000 Massachusetts HEFA for MIT, Series J-2, 3.25%, 7/1/31(a)(c) 1,000,000
825,000 Massachusetts HEFA for University of Massachusetts, Series A, 3.18%, 11/1/30(a) 825,000
800,000 Massachusetts HEFA for Wellesley College, Series E, 3.20%, 7/1/22(a)(c) 800,000
700,000 Massachusetts HEFA for Williams College, Series E, 3.43%, 8/1/14(a)(c) 700,000
600,000 Massachusetts IFA for Tech Mold & Tool, 3.29%, 6/1/18(a) 600,000
180,000 Massachusetts WRA, Series 99-B, 3.12%, 8/1/28(a) 180,000
630,000 Massachusetts WRA, Series B, 3.21%, 4/1/28(a) 630,000
1,250,000 Massachusetts WRA, Series C, 3.21%, 8/1/37(a) 1,250,000
2,080,000 Massachusetts WRA, Series C, 3.60%, 8/1/20(a) 2,080,000
700,000 Massachusetts WSR, Series A, 3.41% 11/1/24(a) 700,000
---------------
27,135,000
---------------
TOTAL INVESTMENTS (COST* $27,135,000) 95.3% 27,135,000
COMPREHENSIVE MANAGEMENT FEE PAYABLE 0.0 (3,666)
DISTRIBUTION (12b-1) FEES PAYABLE 0.0 (917)
OTHER ASSETS, LESS LIABILITIES 4.7 1,332,241
----- ---------------
NET ASSETS 100.0% $ 28,462,658
===== ===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
28,462,658 SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING $ 1.00
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<Page>
RESERVE TAX-EXEMPT TRUST--MICHIGAN TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--85.1% (NOTE 1)
--------- ----------------------------- --------
MICHIGAN--82.9%
$ 175,000 Ann Arbor Economic Development Corp for Glacier Hills Inc, Series A, 3.05%-3.53%,
11/1/25(a) $ 175,000
1,500,000 Detroit Mich Sew Disp Rev Var, Series B, 2.88%-3.55%, 7/1/33(a) 1,500,000
400,000 Garden City Hospital Finance Authority, Series 96-A, 3.48%, 9/1/26(a) 400,000
500,000 Grand Rapids Economical Development Corp for Baker Knapp & Tubbs, 3.48%, 6/1/12(a) 500,000
500,000 Green Lake Township Michigan Economic Development, 3.78%, 6/1/34(a) 500,000
600,000 Jackson County Economic Development Corp for Vista Grande Villa Sr Lien-, Series A,
3.54%, 11/01/31(a) 600,000
300,000 Jackson County for Vista Grande Villa -Sr Lien-, Series A, 3.54%, 11/1/31(a) 300,000
1,105,000 Michigan State HSG Development Authority Multi-Family for Berrien Woods III, Series A,
3.56%, 7/1/32(a) 1,105,000
480,000 Michigan State HSG Development Authority Multi-Family for River Place Apts, 3.30%,
6/1/18(a) 480,000
775,000 Michigan State University Revenue, Series A, 3.52%, 8/15/32(a) 775,000
758,000 Michigan Strategic Fund for Grayling General Solid Waste, 3.25%, 1/1/14(a) 758,000
775,000 Michigan Strategic Fund for Haven Christian Services, 3.50%, 11/15/34(a) 775,000
775,000 Michigan Strategic Fund for Henry Ford Museum Village, 3.55%, 12/1/33(a) 775,000
160,000 Michigan Strategic Fund for M&P CAP, Series A, 3.56%, 6/1/34(a) 160,000
100,000 Michigan Strategic Fund for Mot LLC, 3.47%, 12/1/34(a) 100,000
345,000 Michigan Strategic Fund for Peachwood Center Association, 3.24%, 6/1/16(a) 345,000
1,045,000 Milan Michigan Area School, 3.42%-3.58%,5/1/30(a) 1,045,000
500,000 Oakland County Michigan EDC for Graphic-Technology INC, 3.53%, 4/1/28(a) 500,000
625,000 Oakland University, 3.28%, 3/1/31(a) 625,000
660,000 Wayne Charter County Michigan Airport, Series A, 3.25%,12/1/16(a) 660,000
400,000 Wayne Charter County Michigan Airport, Series A, 3.27%, 12/1/32(a) 400,000
1,000,000 WoodHaven Brownstown Michigan School, Series B, 3.47%, 5/1/34(a) 1,000,000
---------------
13,478,000
---------------
PUERTO RICO--2.2%
350,000 Puerto Rico Government Development Bank, 3.16%, 12/1/15(a) 350,000
---------------
TOTAL INVESTMENTS (COST* $13,828,000) 85.1% 13,828,000
OTHER ASSETS, LESS LIABILITIES 14.9 2,425,156
----- ---------------
NET ASSETS 100.0% $ 16,253,156
===== ===============
</Table>
RESERVE TAX-EXEMPT TRUST--MICHIGAN TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2006
<Table>
ASSETS
Investments in securities, at value (Cost $13,828,000) $ 13,828,000
Cash 2,366,349
Interest receivable 59,278
Due from Custodian 2,415
------------
Total Assets 16,256,042
------------
LIABILITIES
Comprehensive Management fees payable 2,207
Distribution (12b-1) fees payable 552
Chief Compliance Officer expenses payable 1
Trustee Fees payable 126
------------
Total Liabilities 2,886
------------
NET ASSETS $ 16,253,156
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
16,253,156 SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING $ 1.00
============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<Page>
RESERVE TAX-EXEMPT TRUST--NEW JERSEY TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--85.7% (NOTE 1)
--------- ----------------------------- --------
NEW JERSEY--85.7%
$ 1,160,000 Atlantic County Pooled Government Loan Program, 3.22%, 7/1/26(a) $ 1,160,000
2,050,000 Hudson County NJ Impt Auth Auth, 3.10%-3.72%, 7/15/26(a) 2,050,000
2,400,000 New Jersey EDA for Bayonne Dock, 3.54%, 12/1/27(a) 2,400,000
2,600,000 New Jersey EDA for Foreign Trade, Series 98, 3.55%, 12/1/07(a) 2,600,000
2,500,000 New Jersey EDA for Geriatrics Housing Services Series P-J, 3.20%, 11/1/31(a) 2,500,000
2,300,000 New Jersey EDA for US Golf Association Project, 3.44%, 5/1/23(a) 2,300,000
1,340,000 New Jersey EDA for Newark Project, 3.39%, 1/1/19(a) 1,340,000
4,200,000 New Jersey EDA for Newark Container LLC, 3.26%, 7/1/30(a) 4,200,000
1,900,000 New Jersey EDA for RJB Associates, ERN, 3.44%, 8/1/08(a) 1,900,000
2,000,000 New Jersey EDA for SCH Princeton Project, 3.44%, 11/1/34(a) 2,000,000
200,000 New Jersey EDA for Solthaven Project, Seires A, 3.52%, 1/15/18(a) 200,000
3,465,000 New Jersey EDA for Thermal Marina Energy LLC, Series A, 3.39%, 9/1/31(a) 3,465,000
800,000 New Jersey Health Care Facs Financing Auth, Series A1, 3.44%, 7/1/20 (a) 800,000
1,495,000 New Jersey Health Care St Barnabas, Series 2001A, 3.20%, 7/1/31(a) 1,495,000
2,500,000 New Jersey Sports Authority Expo, Series C, 3.37%, 9/1/24(a) 2,500,000
1,900,000 New Jersey State Single Family Housing, Series D, 3.36%, 10/1/26 (a) 1,900,000
2,000,000 New Jersey State Tax & Revenue, Series C, 4.00%, 6/23/06 2,000,908
1,000,000 New Jersey Turnpike Authority, Series 91-D, 3.19%, 1/1/18(a) 1,000,000
1,200,000 New Jersey Turnpike Authority, Series C-1, 3.18%, 1/1/24(a) 1,200,000
2,185,000 Port Authority of New York & New Jersey Special Obligation Revenue, 3.50%, 8/1/24(a) 2,185,000
3,200,000 Port Authority of New York & New Jersey Versatile Structure 3, 3.50%, 6/1/20(a) 3,200,000
3,900,000 Salem County NJ Friends Home Woodstown Inc., 3.43%, 4/1/34 (a) 3,900,000
---------------
TOTAL INVESTMENTS (COST* $46,295,908) 85.7% 46,295,908
OTHER ASSETS, LESS LIABILITIES 14.3 7,750,767
----- ---------------
NET ASSETS 100.0% $ 54,046,675
===== ===============
</Table>
NEW JERSEY TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2006
<Table>
ASSETS
Investments in securities, at value (Cost $46,295,908) $ 46,295,908
Cash 7,535,790
Interest receivable 226,761
------------
Total Assets 54,058,459
------------
LIABILITIES
Comprehensive management fees payable 7,138
Distribution (12b-1) fees payable 1,785
Interest expense 2,399
Trustee Fees payable 458
Chief Compliance Officer expenses payable 4
------------
Total Liabilities 11,784
------------
NET ASSETS $ 54,046,675
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
54,046,675 SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING $ 1.00
============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<Page>
RESERVE TAX-EXEMPT TRUST--OHIO TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--97.4% (NOTE 1)
--------- ----------------------------- --------
OHIO--97.4%
$ 500,000 Akron Bath Copley HDR for Summa Health System, Series B, 3.48%, 11/1/34(a) $ 500,000
375,000 Allen County HCF for Mennonite Home, 3.48%, 2/1/18(a) 375,000
800,000 Butler County HCF for Lifesphere, 3.46%, 5/1/27(a) 800,000
300,000 Centerville HCR for Bethany Lutheran, 3.26%, 5/1/08(a) 300,000
395,000 Cleveland Airport Systems Revenue, Series D, 3.27%, 1/1/27(a) 395,000
600,000 Cleveland Ohio Income Tax Revenue, 3.24%, 5/15/24(a) 600,000
830,000 Cuyahoga County Cleveland Health, 3.49%, 3/1/32(a) 830,000
435,000 Cuyahogo County for S&R Playhouse, 3.70%, 12/1/09(a) 435,000
700,000 Cuyahoga County HRB EDA for Cleveland Botanical Gardens, 3.48%, 7/1/31(a) 700,000
800,000 Evandale County IDR for SHV Realty Inc., 3.40%, 9/1/15(a) 800,000
1,345,000 Franklin County Hospital Revenue for U.S. Health Corp., Series A, 3.45%, 12/1/21(a) 1,345,000
855,000 Geauga County for Heather Hill Inc, 3.46%, 7/1/23(a) 855,000
630,000 Greene County IDA for Fairview, Series B, 3.43%, 1/1/11(a) 630,000
555,000 Hamilton County HRB for Alliance Health, Series A, 3.19%, 1/1/18(a) 555,000
795,000 Kent State University Receipts, 3.28%, 5/1/31(a) 795,000
1,475,000 Licking County HCF, 3.46%, 11/1/33(a) 1,475,000
100,000 Ohio Air Quality DAR PCR for Ohio Edison, Series C, 3.45%, 6/1/23(a) 100,000
200,000 Ohio Air Quality DAR PCR for Ohio Edison, Series C, 3.55%, 6/1/23(a) 200,000
50,000 Ohio Air Quality DAR PCR for Ohio Edison, Series C, 3.63%, 6/1/23(a) 50,000
540,000 Ohio State Higher Educational Facility Revenue for Ashland Univ. 3.52%, 9/1/24(a) 540,000
700,000 Ohio State Higher Educational Facility Revenue for Western Univ. 3.53%, 10/1/31(a) 700,000
1,600,000 Ohio State University General Receipts, 3.35%, 12/1/27(a)(c) 1,600,000
1,000,000 Ohio WDA PCR for Edison Project B, 3.58%, 9/1/18(a) 1,000,000
750,000 Ohio WDA PCR for Firstenergy Gen Corp, 3.58%, 5/15/19(a) 750,000
550,000 Paulding County Waste Disposal for Lafarge Corporation, 3.59%, 8/1/26(a) 550,000
500,000 Toledo-Lucas County Ohio Port Series C, 3.47%, 5/15/38(a) 500,000
800,000 Toledo Ohio City Services Special Assessment, 3.47%, 12/1/06(a) 800,000
---------------
TOTAL INVESTMENTS (COST* $18,180,000) 97.4% 18,180,000
COMPREHENSIVE MANAGEMENT FEE PAYABLE 0.0 (2,465)
DISTRIBUTION (12b-1) FEES PAYABLE 0.0 (616)
OTHER ASSETS, LESS LIABILITIES 2.6 487,543
----- ---------------
NET ASSETS 100.0% $ 18,664,462
===== ===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
18,664,462 SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING $ 1.00
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<Page>
RESERVE TAX-EXEMPT TRUST--PENNSYLVANIA TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--97.5% (NOTE 1)
--------- ----------------------------- --------
PENNSYLVANIA--97.5%
$ 1,050,000 Allegheny Higher Education for Carnegie Mellon University, 3.54%, 12/1/33(a) $ 1,050,000
1,700,000 Allegheny IDA for UPMC Health Systems, Series C, 3.49%, 3/1/15(a) 1,700,000
2,365,000 Allentown IDA for Diocese of Allentown 3.54%, 12/1/29(a) 2,365,000
2,300,000 Beaver County IDA for Firstenergy Nuclear, 3.23%, 1/1/35(a) 2,300,000
595,000 Berks County IDR for Visiting Nurse Services, Series A, 3.73%, 12/1/15(a) 595,000
125,000 Berks County IDR for Visiting Nurse Services, Series B, 3.58%, 12/1/15(a) 125,000
2,225,000 Bucks County IDA for Shv Real Estate Inc, 3.40%, 7/1/15(a) 2,225,000
64,000 Chartiers Valley IDR, 3.49%, 8/1/07(a) 64,000
200,000 Chester County IDA for Archdiocese, 3.54%, 7/1/31(a) 200,000
1,100,000 City of Philadelphia Water and Sewer Revenue Refund, 3.22%, 6/15/23(a) 1,100,000
1,585,000 Cumberland County PA, 3.46%, 12/1/32(a) 1,585,000
1,000,000 Delaware County IDR for Sun, Inc., 3.24%, 11/1/33(a) 1,000,000
2,300,000 Emmaus General Authority Revenue, Series G, 3.23%, 3/1/24(a) 2,300,000
2,955,000 Energy Development Authority for Ebensburg Project 3.27%, 12/1/11(a) 2,955,000
700,000 Indiana County IDA for Conemaugh 3.30%, 6/1/27(a) 700,000
2,185,000 Lawrence County IDA for Var Villa Maria PJ., 3.49%, 7/1/33(a) 2,185,000
1,965,000 Lebanon County HCF for ECC Retirement Village, 3.52%, 10/15/25(a) 1,965,000
1,995,000 Manheim School District, 3.47%, 5/1/23(a) 1,995,000
370,000 Montgomery County IDR for Girl Scouts of Southeastern PA, 3.58%, 2/1/25(a) 370,000
800,000 North Hampton County First Mortgage of Kirkland Village, 3.46%, 11/1/30(a) 800,000
1,600,000 Pennsylvania Higher Education Agency for Ebensburg Project, 3.23%, 1/1/18(a) 1,600,000
900,000 Pennsylvania State Turnpike, Series A3, 3.23%, 12/1/30(a) 900,000
2,325,000 Philadelphia Hospital and Higher Education Authority, 3.35%, 7/1/31(a) 2,325,000
1,000,000 Philadelphia Housing and Higher Education Authority for Childrens Hospital, 3.34%,
3/1/27(a) 1,000,000
500,000 Philadelphia Housing and Higher Education Authority for Childrens Hospital, 3.39%,
3/1/27(a) 500,000
3,440,000 Philadelphia IDR for Fox Chase Cancer Center Project, 3.52%, 7/1/25(a) 3,440,000
1,655,000 Quakertown Pennsylvania General Authority Revenue, 3.20%, 7/1/26(a) 1,655,000
2,340,000 Schuylkill County IDA for Northeastern Power, 3.55%, 12/1/22(a) 2,340,000
1,000,000 Scranton Pennsylvania Redevelopment, 3.52%, 6/1/33(a) 1,000,000
2,000,000 Washington County, 3.46%, 7/1/34(a)(c) 2,000,000
2,000,000 Westmoreland County Redstone Highlands, 3.48%, 1/1/36(a) 2,000,000
1,300,000 Wilkins Area IDA for Fairview Extended Care, Series B, 3.43%, 1/1/21(a) 1,300,000
---------------
TOTAL INVESTMENTS (COST* $47,639,000) 97.5% 47,639,000
COMPREHENSIVE MANAGEMENT FEES PAYABLE 0.0^ (6,363)
DISTRIBUTION (12b-1) FEES PAYABLE 0.0^ (1,591)
OTHER ASSETS, LESS LIABILITIES 2.5 1,240,227
----- ---------------
NET ASSETS 100.0% $ 48,871,273
===== ===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
48,871,273 SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING $ 1.00
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<Page>
RESERVE TAX-EXEMPT TRUST--VIRGINA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--78.4% (NOTE 1)
--------- ----------------------------- --------
VIRGINIA--63.7%
$ 1,020,000 Alexandria County IDA for Goodwin House, 3.54%, 10/1/35(a) $ 1,020,000
1,320,000 Arlington County for Ballston Public Parking, 3.27%, 8/1/17(a) 1,320,000
500,000 Charlottesville IDA for Seminole, Series B, 3.52%, 12/1/13(a) 500,000
689,000 Chesapeake Virginia Hospital, Series B, 3.22%, 7/1/31(a) 689,000
769,000 Clarke County IDR, 3.28%, 1/1/30(a) 769,000
699,000 Fairfax CNTY EDA Smithsonian Institute, 3.46%, 12/1/33(a) 699,000
1,020,000 Hampton MFH for Shoreline Apartments, 3.25%, 12/1/19(a) 1,020,000
530,000 Hanover County IDA for Covenent Woods, 3.49%, 7/1/29(a) 530,000
720,000 Henrico County EDA (CITI-AMT)for White Oaks LTD Proj., 3.25%, 10/1/27(a) 720,000
1,250,000 King George County VA Inc. Project, 3.52%,9/01/21(a) 1,250,000
2,019,000 Peninsula Port Authority for Dominion Terminal, 3.50%, 7/1/16(a) 2,019,000
300,000 Peninsula Port Authority for Dominion Terminal, 3.56%, 7/1/16(a) 300,000
1,330,000 Portsmouth Redev Marsh Landing PJ, Series A, 3.27%, 6/1/30(a) 1,330,000
1,020,000 University of Virginia Revenue, Series A, 3.25%, 6/1/34(a)(c) 1,020,000
---------------
13,186,000
---------------
PUERTO RICO--14.7%
2,020,000 Puerto Rico Government Bank, 3.16%,12/1/15(a) 2,020,000
1,020,000 Puerto Rico Highway & Transportation Authority, Series A, 3.13%, 7/1/28(a) 1,020,000
---------------
3,040,000
---------------
TOTAL INVESTMENTS (COST* $16,226,000) 78.4% 16,226,000
OTHER ASSETS, LESS LIABILITIES 21.6 4,465,305
----- ---------------
NET ASSETS 100.0% $ 20,691,305
===== ===============
</Table>
RESERVE TAX-EXEMPT TRUST--VIRGINIA TAX EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2006
<Table>
ASSETS
Investments in securities, at value (Cost $16,226,000) $ 16,226,000
Cash 4,400,057
Interest receivable 68,207
------------
Total Assets 20,694,264
------------
LIABILITIES
Comprehensive management fees payable 2,142
Distribution (12b-1) fees payable 684
Trustee Fees payable 132
Chief Compliance Officer expenses payable 1
------------
Total Liabilities 2,959
------------
NET ASSETS $ 20,691,305
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
20,691,305 SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING $ 1.00
============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<Page>
RESERVE NEW YORK TAX-EXEMPT TRUST--NEW YORK TAX-EXEMPT FUND
STATEMENT OF NET ASSETS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--99.7% (NOTE 1)
--------- ----------------------------- --------
NEW JERSEY--4.0%
$ 7,000,000 Port Authority of New York & New Jersey Versatile Structure, 3.50%, 8/1/24(a) $ 7,000,000
500,000 Port Authority of New York & New Jersey Versatile Structure, 3.50%, 6/1/20(a) 500,000
---------------
7,500,000
---------------
NEW YORK--95.4%
4,700,000 Babylon IDR for Ogden Martin, 3.17%, 1/1/19(a) 4,700,000
615,000 Bleecker HDC for Terrace Apartments Project S85, 3.50%, 7/1/15(a) 615,000
3,635,000 Cattaraugus County IDA for YMCA, 3.54%, 9/1/28(a) 3,635,000
1,000,000 Dutchess IDA for Trinity Pawling School, 3.45%, 10/1/32(a) 1,000,000
2,430,000 Franklin County IDA Civic Facility for Trudeau Institute, 3.16%, 12/1/20(a) 2,430,000
3,400,000 Guilderland IDA for Eastern Industrial Park, Series 93-A, 3.16%, 12/1/08(a) 3,400,000
6,700,000 Jay Street Development Corp., Series A-1, 3.19%, 5/1/22(a) 6,700,000
5,200,000 Long Island Power Authority Electric System Revenue, Series 2-A, 3.15%, 5/1/33(a) 5,200,000
900,000 Long Island Power Authority Electric System Revenue, Series 2-B, 3.47%, 5/1/33(a) 900,000
11,500,000 Metropolitan Transportation Authority, 3.18% - 3.49%, 11/1/35(a) 11,500,000
2,200,000 Monroe County for Margaret Woodbury Strong Museum, 3.46%, 4/1/35(a) 2,200,000
1,500,000 Monroe County for St. Ann's Home Project, 3.29%, 7/1/30(a) 1,500,000
4,860,000 Nassau County, 3.12%, 11/15/22(a) 4,860,000
4,000,000 New York City Cultural Resources for Asian Society, 3.44%, 4/1/30(a) 4,000,000
8,000,000 New York City DAR for Greenwich LLC, Series, 3.42% 12/1/39(a) 8,000,000
5,300,000 New York City IDA for American Society for Technion, 3.17%, 10/1/33(a) 5,300,000
3,800,000 New York City IDA for Childrens Oncology Society, 3.20%, 5/1/21(a) 3,800,000
5,000,000 New York City IDA for Liberty, 3.46%, 12/1/39(a) 5,000,000
6,000,000 New York City WFA, 3.50%, 6/15/25(a) 6,000,000
3,000,000 New York City WFA, 3.56%, 6/15/23(a) 3,000,000
200,000 New York City WFA, Series A, 3.50%, 11/1/26(a) 200,000
1,500,000 New York City WFA, Series C, 3.56%, 6/15/22(a) 1,500,000
1,100,000 New York City WFA, Series C, 3.58%, 6/15/18(a) 1,100,000
200,000 New York City WFA, Series F, 3.58%, 6/15/33(a) 200,000
1,000,000 New York City, GO Series A4, 3.50%, 8/1/23(a) 1,000,000
200,000 New York City, GO Series A4, 3.56%, 8/1/15(a) 200,000
9,945,000 New York City, GO Series A4, 3.58%, 8/1/21(a) 9,945,000
200,000 New York City, GO Series A7, 3.49%, 8/1/20(a) 200,000
100,000 New York City, GO Series B, 3.56%, 8/15/18(a) 100,000
730,000 New York City, GO Series B5, 3.50%, 8/15/22(a) 730,000
2,300,000 New York City, GO Series E3, 3.49%, 8/1/23(a) 2,300,000
1,000,000 New York City, HDC, Series A, 3.15%, 11/15/19(a) 1,000,000
8,900,000 New York City, TFA, Series H3, 3.41% - 3.50%, 11/1/22(a) 8,900,000
1,500,000 New York State Energy Resources and Development, 3.25%, 12/1/27(a) 1,500,000
8,200,000 New York State HFA for 10 Liberty Street, 3.15%, 5/1/35(a) 8,200,000
6,500,000 New York State HFA for 270 East Burnside Avenue Apartments, 3.25%, 1/15/39(a) 6,500,000
11,775,000 New York State HFA, 3.23%, 11/1/34(a) 11,775,000
3,875,000 New York State IDA for Rotterdam, 3.16%, 11/1/09(a) 3,875,000
5,800,000 New York State LGAC., Series D, 3.17%, 4/1/25(a) 5,800,000
6,000,000 New York State R&D Con Ed, Series C-2, 3.26%, 11/1/39(a) 6,000,000
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<Page>
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS (CONTINUED) (NOTE 1)
--------- ---------------------------------- --------
NEW YORK (CONTINUED)
$ 3,665,000 Schenectady County IDA for Sunnyview Hospital & Rehab., Series A, 3.49%, 8/1/33(a) $ 3,665,000
4,610,000 Tompkins County IDA for Kendal Ithaca Community Care, Series B, 3.25%, 7/1/24(a) 4,610,000
7,100,000 Triborough Bridge & Tunnel Authority, Series F, 3.49%, 11/1/32(a) 7,100,000
7,280,000 Westchester IDA for Catherine Field Home, 3.40% - 3.44%, 1/1/31(a) 7,280,000
---------------
177,420,000
---------------
PUERTO RICO--0.3%
500,000 Puerto Rico Government Development Bank, 3.16%, 12/1/15(a) 500,000
---------------
TOTAL INVESTMENTS (COST* $185,420,000) 99.7% 185,420,000
COMPREHENSIVE MANAGEMENT FEE PAYABLE 0.0 (4,075)
DISTRIBUTION (12b-1) FEES PAYABLE 0.0 (1,019)
OTHER ASSETS, LESS LIABILITIES 0.3 538,714
----- ---------------
NET ASSETS 100.0% $ 185,953,620
===== ===============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
185,953,620 SHARES OF BENEFICIAL INTEREST, $.001 PAR VALUE OUTSTANDING $ 1.00
===============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<Page>
RESERVE MUNICIPAL MONEY-MARKET TRUST--ARIZONA MUNICIPAL MONEY-MARKET FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--52.7% (NOTE 1)
--------- ----------------------------- --------
ARIZONA--48.9%
$ 6,500 Apache County Arizona IDA, 3.20%, 12/1/20(a) $ 6,500
6,500 Apache County Arizona IDA, 3.30%, 12/15/18(a) 6,500
6,500 Arizona Health Care Facilty Authority, 3.44%-3.81%, 10/1/15(a) 6,500
6,500 Arizona Health Facilty Authority-Royal Oaks Project, 3.47%, 3/1/27(a) 6,500
6,500 Coconino Poll Ctl C-Arizona Public Service Co Pj, 3.57%, 11/1/33(a) 6,500
6,500 Electrical District #3 Pina, 3.18%-3.45%, 11/1/35(a) 6,500
6,500 Maricopa IDA-FNMA Las Gardenias Apartments A, 3.50%, 4/15/33 6,500
6,500 McAllister Vlg Az- Arizona State University Project, 3.25%,7/1/45(a) 6,500
6,500 Phoenix Az IDR- Del Mar Terrace, 3.20%, 10/1/29 6,500
6,500 Scottsdale Az IDA- Notre, 3.54%, 5/1/21(a) 6,500
---------------
Total Float Rate Demand Notes
(Cost $65,000) 65,000
---------------
PUERTO RICO--3.8%
5,000 Puerto Rico Commonwealth, 5.25%, 7/1/15(b) 5,082
(Cost $5,082) ---------------
5,082
---------------
TOTAL INVESTMENTS (COST* $70,082) 52.7% 70,082
OTHER ASSETS, LESS LIABILITIES 47.3 63,020
----- ---------------
NET ASSETS 100.0% $ 133,102
===== ===============
</Table>
RESERVE MUNICIPAL MONEY-MARKET TRUST--ARIZONA MUNICIPAL MONEY-MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2006
<Table>
ASSETS
Investments in securities, at value (Cost $70,082) $ 70,082
Cash 67,776
Interest receivable 456
------------
Total Assets 138,314
------------
LIABILITIES
Comprehensive management fees payable 18
Distribution (12b-1) fees payable 4
Payable for securities purchased 5,190
------------
Total Liabilities 5,212
------------
NET ASSETS $ 133,102
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
133,102 SHARES OF BENEFICIAL INTEREST, $.0001 PAR VALUE OUTSTANDING $ 1.00
============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<Page>
RESERVE MUNICIPAL MONEY-MARKET TRUST--LOUISIANA MUNICIPAL MONEY-MARKET FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--65.4% (NOTE 1)
--------- ----------------------------- --------
LOUISIANA--53.8%
$ 35,000 Lake Charles HRB & Term. District Revenue for CITGO Corp., 3.25%, 8/1/07(a) $ 35,000
12,000 Louisiana Environment Facilities Community DAR, Series A, 3.46%, 11/1/34(a) 12,000
13,000 Louisiana Environment Facilities Community DAR, Series A, 3.49%, 11/1/34(a) 13,000
10,000 Louisiana Environment Facilities Community DAR, Series A, 3.58%, 11/1/34(a) 10,000
35,000 Louisiana Local Govt. for Shreveport Utility System Project, 3.50%, 10/1/26(a) 35,000
35,000 Louisiana PFA for Kenner Hotel Limited, 3.57%,12/1/15(a) 35,000
35,000 Louisiana PFA, Multi-family, 3.47%, 6/15/31(a) 35,000
25,000 Louisiana Offshore Term. Auth. Deepwater Port Rev. for Loop LLC, Series A,
3.47%, 9/1/08(a) 25,000
23,000 Louisiana Offshore Term. Auth. Deepwater Port Rev. for Loop LLC, Series A,
3.55%, 9/1/17(a) 23,000
35,000 Louisiana University Agriculture & Mechanical College, 3.25%, 7/1/30(a) 35,000
35,000 Port of New Orleans Cold Storage Project, 3.32%, 11/1/22 35,000
35,000 South Louisiana Port Marine Term. for Occidental Petroleum Corp., 3.20%, 7/1/18(a) 35,000
35,000 South Louisiana Port Marine Term. for Holnam Project., 3.33%, 1/1/27(a) 35,000
35,000 South Louisiana Port Marine Term. Revenue, 3.30%, 7/1/21(a) 35,000
---------------
398,000
---------------
PUERTO RICO--11.6%
51,000 Puerto Rico Government Development Bank, 3.16%, 12/1/15(a) 51,000
35,000 Puerto Rico Highway & Transportation Authority, Series A, 3.13%, 7/1/28(a) 35,000
---------------
86,000
---------------
TOTAL INVESTMENTS (COST* $484,000) 65.4% 484,000
OTHER ASSETS, LESS LIABILITIES 34.6 255,624
----- ---------------
NET ASSETS 100.0% $ 739,624
===== ===============
</Table>
RESERVE MUNICIPAL MONEY-MARKET TRUST--LOUISIANA MUNICIPAL MONEY-MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2006
<Table>
ASSETS
Investments in securities, at value (Cost $484,000) $ 484,000
Cash 253,891
Interest receivable 1,391
Other assets 388
------------
Total Assets 739,670
------------
LIABILITIES
Comprehensive management fees payable 12
Distribution (12b-1) fees payable 24
Trustee Fees Payable 10
------------
Total Liabilities 46
------------
NET ASSETS $ 739,624
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
739,624 SHARES OF BENEFICIAL INTEREST, $.0001 PAR VALUE OUTSTANDING $ 1.00
============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<Page>
RESERVE MUNICIPAL MONEY-MARKET TRUST--MINNESOTA MUNICIPAL MONEY-MARKET FUND
SCHEDULE OF INVESTMENTS--MAY 31, 2006
<Table>
<Caption>
PRINCIPAL VALUE
AMOUNT TAX-EXEMPT OBLIGATIONS--81.9% (NOTE 1)
--------- ----------------------------- --------
MINNESOTA--74.9%
$ 150,000 Andover Senior Housing for Presbyterian Homes, 3.47%, 11/15/33 (a) $ 150,000
60,000 Brooklyn Center for Brookdale Corp II, 3.63%, 12/1/14 (a) 60,000
253,000 Cohasset for Minnesota Power & Light, Project B, 3.47%, 6/1/13 (a) 253,000
100,000 Minnesota General Obligation Bond, 5.00%, 8/1/06 100,296
208,000 Minnesota Health for Fairview Health Services, 3.21%, 11/15/32(a) 208,000
70,000 Minnesota HEFA for St. Olaf College, Series 5-H, 3.58%, 10/1/30(a) 70,000
80,000 Minnesota HEFA for St. Olaf College, Series 5-M1, 3.58%, 10/1/32(a) 80,000
230,000 Minnesota Revenue for People Serving People Project, 3.63%, 10/1/21(a) 230,000
150,000 Minnesota Housing Finance Agency, Series C, 3.50%, 1/1/35(a) 150,000
172,000 Minnesota HEFA for Carleton College Series 6D, 3.35%, 4/1/35(a) 172,000
100,000 Roseville Commercial Dev. Revenue for Berger Transfer & Storage, 3.43%, 12/1/15 100,000
50,000 St. Louis Park Revenue for Catholic Finance Corp., 3.50%, 10/1/25(a) 50,000
210,000 St. Paul Housing & Redev. Authority District Heating Revenue, 3.25%, 12/1/12(a) 210,000
250,000 St. Paul Housing & Redev. Authority MHR for Highland Ridge, 3.47%, 10/1/33(a) 250,000
100,000 St. Paul Housing & Redev. Authority for Public Radio Project, 3.58%, 10/1/25(a) 100,000
150,000 University of Minnesota, Series A, 3.25%, 7/1/08 (a)(c) 150,000
---------------
2,333,296
---------------
PUERTO RICO--7.0%
150,000 Puerto Rico Government Development Bank, 3.16%, 12/1/15 (a) 150,000
67,000 Puerto Rico Highway & Transportation Authority, Series A, 3.13%, 7/1/28 (a) 67,000
---------------
217,000
---------------
TOTAL INVESTMENTS (COST* $2,550,296) 81.9% 2,550,296
OTHER ASSETS, LESS LIABILITIES 18.1 562,039
----- ---------------
NET ASSETS 100.0% $ 3,112,335
===== ===============
</Table>
RESERVE MUNICIPAL MONEY MARKET TRUST-MINNESOTA MUNICIPAL MONEY-MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2006
<Table>
ASSETS
Investments in securities, at value (Cost $2,550,296) $ 2,550,296
Cash 553,943
Interest receivable 9,911
Other assets 1,164
------------
Total Assets 3,115,314
------------
LIABILITIES
Comprehensive management fees payable 412
Distribution (12b-1) fees payable 103
Interest Expense payable 2,442
Trustee Fees payable 22
------------
Total Liabilities 2,979
------------
NET ASSETS $ 3,112,335
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE, BASED ON
3,112,335 SHARES OF BENEFICIAL INTEREST, $.0001 PAR VALUE OUTSTANDING $ 1.00
============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<Page>
SECURITY TYPE ABBREVIATIONS
CDA -- Community Development Authority
COP -- Certificate of Participation
DAR -- Development Authority Revenue Bonds
DFA -- Development Finance Agency
EDA -- Economic Development Authority Revenue Bonds
EDC -- Economic Development Corporation
EFA -- Education Facilities Authority
GO -- General Obligation Bonds
HCF -- Health Care Facilities Revenue Bonds
HCR -- Health Care Revenue Bonds
HDC -- Housing Development Corporation Bonds
HDR -- Housing Development Revenue
HEFA -- Health & Education Facilities Authority
HFA -- Housing Finance Authority Revenue Bonds
HFC -- Housing Finance Corporation
HRB -- Hospital Revenue Bonds
IDA -- Industrial Development Authority Revenue Bonds
IDR -- Industrial Development Agency Revenue Bonds
IFA -- Industrial Finance Authority
LGAC -- Local Government Assistance Corp.
MFH -- Multifamily Housing Revenue Bonds
MHR -- Multifamily Housing Revenue Bonds
PCR -- Pollution Control Revenue Bonds
PFA -- Public Finance Authority
WDA -- Water Development Authority
WFA -- Water Finance Authority
WRA -- Water Resource Authority
WSR -- Water & Sewer System Revenue Bonds
- ----------
(a) Variable rate securities. The interest rates shown are as reported on May
31, 2006, are subject to change periodically. Securities payable on demand
are collateralized by bank letters of credit or other credit agreements.
(b) Securities are collateralized by bank letters of credit or other credit
agreements.
(c) Obligations of Educational Facilities.
* The cost of the investments for federal income tax purposes is the same as
the cost for financial reporting purposes.
^ Amount is less than 0.05%.
SEE NOTES TO FINANCIAL STATEMENTS.
23
<Page>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 2006
<Table>
<Caption>
RESERVE TAX-EXEMPT TRUST
--------------------------------------------------------------------
CALIFORNIA CONNECTICUT FLORIDA MASSACHUSETTS
FUND FUND FUND FUND
-------------- -------------- -------------- --------------
INTEREST INCOME (Note 1) $ 3,186,602 $ 716,682 $ 1,442,913 $ 619,343
-------------- -------------- -------------- --------------
EXPENSES (Note 2)
Comprehensive management fees 910,632 206,005 400,830 173,812
Distribution (12b-1) fees 227,490 51,592 99,989 43,548
Trustee Fee expense 903 225 495 176
Chief Compliance Officer expense 739 183 317 136
Interest Expense 1,185 21 1,240 266
-------------- -------------- -------------- --------------
Total expenses before waiver 1,140,949 258,026 502,871 217,938
Less: expenses waived (Note 2) (2,309) (2,554) (849) --
-------------- -------------- -------------- --------------
Net Expenses 1,138,640 255,472 502,022 217,938
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME, representing Net Increase in
Net Assets from Investment Operations $ 2,047,962 $ 461,210 $ 940,891 $ 401,405
============== ============== ============== ==============
</Table>
<Table>
<Caption>
RESERVE TAX-EXEMPT TRUST
----------------------------------------------------------------------------
MICHIGAN NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------
INTEREST INCOME (Note 1) $ 415,354 $ 1,443,348 $ 544,600 $ 1,259,801 $ 453,656
------------ ------------ ------------ ------------ ------------
EXPENSES (Note 2)
Comprehensive management fees 120,029 411,808 153,980 350,550 130,241
Distribution (12b-1) fees 30,013 102,867 38,565 87,774 32,553
Trustee Fee expense 125 458 190 424 132
Chief Compliance Officer expense 111 341 150 315 94
Interest expense 82 1,693 253 1,715 22
------------ ------------ ------------ ------------ ------------
Total expenses before waiver 150,360 517,167 193,138 440,778 163,042
Less: expenses waived (Note 2) (2,397) (3,450) (561) (4,474) (15,641)
------------ ------------ ------------ ------------ ------------
Net Expenses 147,963 513,717 192,577 436,304 147,401
------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME, representing Net Increase in
Net Assets from Investment Operations $ 267,391 $ 929,631 $ 352,023 $ 823,497 $ 306,255
============ ============ ============ ============ ============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<Page>
FOR THE YEAR OR PERIOD ENDED MAY 31, 2006
<Table>
<Caption>
RESERVE MUNICIPAL MONEY MARKET TRUST
--------------------------------------------------
RESERVE NEW YORK
TAX-EXEMPT TRUST ARIZONA LOUISIANA MINNESOTA
---------------- MUNICIPAL MUNICIPAL MUNICIPAL
NEW YORK MONEY-MARKET MONEY-MARKET MONEY-MARKET
FUND FUND* FUND FUND
---------------- -------------- -------------- --------------
INTEREST INCOME (Note 1) $ 4,969,438 $ 586 $ 23,816 $ 65,390
---------------- -------------- -------------- --------------
EXPENSES (Note 2)
Comprehensive management fees 1,436,851 140 6,552 18,544
Distribution (12b-1) fees 359,213 35 1,638 4,639
Trustee Fee expense 1,483 -- 10 21
Chief Compliance Officer expense 1,210 -- 7 12
Interest Expense 930 -- 22 119
---------------- -------------- -------------- --------------
Total expenses 1,799,687 175 8,229 23,335
Less: expenses waived (Note 2) (1,959) (13) (3,866) (1,614)
---------------- -------------- -------------- --------------
Net Expenses 1,797,728 162 4,363 21,721
---------------- -------------- -------------- --------------
NET INVESTMENT INCOME, representing Net Increase in
Net Assets from Investment Operations $ 3,171,710 $ 424 $ 19,453 $ 43,669
================ ============== ============== ==============
</Table>
- ----------
* Commenced operations on April 3, 2006.
SEE NOTES TO FINANCIAL STATEMENTS.
25
<Page>
RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
FOR THE YEAR ENDED MAY 31, 2006
<Table>
INTEREST INCOME (Note 1) $ 32,188,895
------------
EXPENSES (Note 2)
COMPREHENSIVE MANAGEMENT FEES:
Class R 2,244,501
Class Treasurer's Trust 243,633
Class 75 4,827
Class 70 9,732
Class 45 1,164
Class 25 95,466
Class 15 156
Class 12 11
Class 8 623,320
DISTRIBUTION (12b-1) FEES:
Class R 561,124
Class 75 1,756
Class 70 3,893
Interest expense 9,373
Trustee fees 8,016
Chief Compliance Officer expense 7,383
------------
Total expenses before waiver 3,814,355
Less: expenses waived (Note 2) (21,610)
------------
Net Expenses 3,792,745
------------
NET INVESTMENT INCOME, representing Net Increase in Net Assets from Investment Operations $ 28,396,150
============
</Table>
RESERVE TAX-EXEMPT TRUST--INTERSTATE TAX-EXEMPT FUND
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED YEAR ENDED
MAY 31, 2006 MAY 31, 2005
---------------- ----------------
INCREASE IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment income $ 28,396,150 $ 12,477,598
---------------- ----------------
DIVIDENDS PAID TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (NOTE 1):
Class R (5,184,121) (1,904,802)
Class Treasurer's Trust (913,838) (357,612)
Class 75 (23,419) (2)
Class 70 (41,196) (21,974)
Class 45 (6,358) (158)
Class 25 (954,097) (387,135)
Class 15 (2,652) (1,570)
Class 12 (278) (71)
Class 8 (21,270,191) (9,804,274)
---------------- ----------------
Total dividends to shareholders (28,396,150) (12,477,598)
---------------- ----------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 6)
(at net asset value of $1.00 per share):
Proceeds from sale of shares 14,627,363,666 7,530,222,443
Dividends reinvested 24,824,501 12,477,598
Cost of shares redeemed (14,855,232,668) (6,518,644,846)
---------------- ----------------
(203,044,501) 1,024,055,195
---------------- ----------------
Net (decrease) increase in net assets (203,044,501) 1,024,055,195
NET ASSETS:
Beginning of year 1,412,321,751 388,266,556
---------------- ----------------
End of year $ 1,209,277,250 $ 1,412,321,751
================ ================
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
26
<Page>
<Table>
<Caption>
RESERVE TAX-EXEMPT TRUST
--------------------------------------------------------------------
CALIFORNIA FUND CONNECTICUT FUND
-------------------------------- --------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 2006 MAY 31, 2005 MAY 31, 2006 MAY 31, 2005
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
FROM INVESTMENT OPERATIONS:
Net investment income $ 2,047,962 $ 718,269 $ 461,210 $ 141,646
-------------- -------------- -------------- --------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1) (2,047,962) (718,269) (461,210) (141,646)
-------------- -------------- -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00 per share):
Proceeds from sale of shares 516,214,214 450,880,899 85,601,734 64,118,583
Dividends reinvested 2,007,889 718,269 455,318 141,646
Cost of shares redeemed (499,290,565) (447,611,652) (82,099,259) (62,338,249)
-------------- -------------- -------------- --------------
18,931,538 3,987,516 3,957,793 1,921,980
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets 18,931,538 3,987,516 3,957,793 1,921,980
NET ASSETS:
Beginning of year 105,202,173 101,214,657 23,386,769 21,464,789
-------------- -------------- -------------- --------------
End of year $ 124,133,711 $ 105,202,173 $ 27,344,562 $ 23,386,769
============== ============== ============== ==============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
27
<Page>
<Table>
<Caption>
RESERVE TAX-EXEMPT TRUST
--------------------------------------------------------------------
FLORIDA FUND MASSACHUSETTS FUND
-------------------------------- --------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 2006 MAY 31, 2005 MAY 31, 2006 MAY 31, 2005
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
FROM INVESTMENT OPERATIONS:
Net investment income $ 940,891 $ 326,913 $ 401,405 $ 123,894
-------------- -------------- -------------- --------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1) (940,891) (326,913) (401,405) (123,894)
-------------- -------------- -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00 per share):
Proceeds from sale of shares 259,543,792 212,489,726 112,988,911 70,696,703
Dividends reinvested 912,761 326,913 396,697 123,894
Cost of shares redeemed (248,491,628) (209,176,509) (107,075,531) (66,487,254)
-------------- -------------- -------------- --------------
11,964,925 3,640,130 6,310,077 4,333,343
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets 11,964,925 3,640,130 6,310,077 4,333,343
NET ASSETS:
Beginning of year 43,093,519 39,453,389 22,152,581 17,819,238
-------------- -------------- -------------- --------------
End of year $ 55,058,444 $ 43,093,519 $ 28,462,658 $ 22,152,581
============== ============== ============== ==============
<Caption>
RESERVE TAX-EXEMPT TRUST
--------------------------------
MICHIGAN FUND
--------------------------------
YEAR ENDED YEAR ENDED
MAY 31, 2006 MAY 31, 2005
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
FROM INVESTMENT OPERATIONS:
Net investment income $ 267,391 $ 82,915
-------------- --------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1) (267,391) (82,915)
-------------- --------------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00 per share):
Proceeds from sale of shares 62,946,219 40,145,244
Dividends reinvested 264,352 82,915
Cost of shares redeemed (63,589,665) (35,670,278)
-------------- --------------
(379,094) 4,557,881
-------------- --------------
Net increase (decrease) in net assets (379,094) 4,557,881
NET ASSETS:
Beginning of year 16,632,250 12,074,369
-------------- --------------
End of year $ 16,253,156 $ 16,632,250
============== ==============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
28
<Page>
<Table>
<Caption>
RESERVE TAX-EXEMPT TRUST
----------------------------------------------------------------
NEW JERSEY FUND OHIO FUND
------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, MAY 31, MAY 31, MAY 31,
2006 2005 2006 2005
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
FROM INVESTMENT OPERATIONS:
Net investment income $ 929,631 $ 337,190 $ 352,023 $ 111,931
------------- ------------- ------------- -------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1) (929,631) (337,190) (352,023) (111,931)
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00 per share):
Proceeds from sale of shares 255,094,826 282,434,698 67,920,236 80,335,415
Dividends reinvested 908,420 337,190 349,991 111,931
Cost of shares redeemed (246,945,655) (288,028,722) (68,629,751) (72,335,170)
------------- ------------- ------------- -------------
9,057,591 (5,256,834) (359,524) 8,112,176
------------- ------------- ------------- -------------
Net increase (decrease) in net assets 9,057,591 (5,256,834) (359,524) 8,112,176
NET ASSETS:
Beginning of year 44,989,084 50,245,918 19,023,986 10,911,810
------------- ------------- ------------- -------------
End of year $ 54,046,675 $ 44,989,084 $ 18,664,462 $ 19,023,986
============= ============= ============= =============
<Caption>
RESERVE TAX-EXEMPT TRUST
----------------------------------------------------------------
PENNSYLVANIA FUND VIRGINIA FUND
------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, MAY 31, MAY 31, MAY 31,
2006 2005 2006 2005
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
FROM INVESTMENT OPERATIONS:
Net investment income $ 823,497 $ 306,095 $ 306,255 $ 81,075
------------- ------------- ------------- -------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1) (823,497) (306,095) (306,255) (81,075)
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00 per share):
Proceeds from sale of shares 222,021,394 163,192,232 81,454,407 72,769,957
Dividends reinvested 807,411 306,095 302,392 81,075
Cost of shares redeemed (218,650,897) (164,865,058) (74,771,092) (70,194,502)
------------- ------------- ------------- -------------
4,177,908 (1,366,731) 6,985,707 2,656,530
------------- ------------- ------------- -------------
Net increase (decrease) in net assets 4,177,908 (1,366,731) 6,985,707 2,656,530
NET ASSETS:
Beginning of year 44,693,365 46,060,096 13,705,598 11,049,068
------------- ------------- ------------- -------------
End of year $ 48,871,273 $ 44,693,365 $ 20,691,305 $ 13,705,598
============= ============= ============= =============
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
29
<Page>
<Table>
<Caption>
RESERVE NEW YORK
TAX-EXEMPT TRUST
------------------------------
NEW YORK
FUND
------------------------------
YEAR ENDED YEAR ENDED
MAY 31, MAY 31,
2006 2005
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
FROM INVESTMENT OPERATIONS:
Net investment income $ 3,171,710 $ 1,155,796
------------- -------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1) (3,171,710) (1,155,796)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00 per share):
Proceeds from sale of shares 623,924,988 517,833,490
Dividends reinvested 3,096,494 1,155,796
Cost of shares redeemed (605,490,832) (527,148,018)
------------- -------------
21,530,650 (8,158,732)
------------- -------------
Net increase (decrease) in net assets 21,530,650 (8,158,732)
NET ASSETS:
Beginning of year 164,422,970 172,581,702
------------- -------------
End of year $ 185,953,620 $ 164,422,970
============= =============
<Caption>
RESERVE MUNICIPAL
MONEY-MARKET TRUST
---------------------------------------------------------------------------------
ARIZONA
MUNICIPAL
MONEY-
MARKET LOUISIANA MUNICIPAL MINNESOTA MUNICIPAL
FUND MONEY-MARKET FUND MONEY-MARKET FUND
------------- ------------------------------ ------------------------------
PERIOD
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, MAY 31, MAY 31, MAY 31, MAY 31,
2006* 2006 2005 2006 2005
------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
FROM INVESTMENT OPERATIONS:
Net investment income $ 424 $ 19,453 $ 1,888 $ 43,669 $ 7,523
------------- ------------- ------------- ------------- -------------
DIVIDENDS PAID TO SHAREHOLDERS FROM:
Net investment income (Note 1) (424) (19,453) (1,888) (43,669) (7,523)
------------- ------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(at net asset value of $1.00 per share):
Proceeds from sale of shares 144,203 5,086,377 1,146,967 17,251,908 5,904,669
Dividends reinvested 424 18,742 1,888 42,321 7,523
Cost of shares redeemed (11,525) (4,658,680) (1,041,556) (15,586,533) (5,153,400)
------------- ------------- ------------- ------------- -------------
133,102 446,439 107,299 1,707,696 758,792
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in net assets 133,102 446,439 107,299 1,707,696 758,792
NET ASSETS:
Beginning of year -- 293,185 185,886 1,404,639 645,847
------------- ------------- ------------- ------------- -------------
End of year $ 133,102 $ 739,624 $ 293,185 $ 3,112,335 $ 1,404,639
============= ============= ============= ============= =============
</Table>
- ----------
* Commenced operations on April 3, 2006.
SEE NOTES TO FINANCIAL STATEMENTS.
30
<Page>
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES:
Reserve New York Tax-Exempt Trust, Reserve Tax-Exempt Trust and Reserve
Municipal Money-Market Trust (collectively, the "Trusts") are registered
with the Securities Exchange Commission ("SEC") under the Investment
Company Act of 1940, as amended ("the Investment Company Act"), as open-end
management investment companies. The policies summarized below are
consistently followed in the preparation of each Trust's financial
statements in conformity with U.S. generally accepted accounting
principles.
A. The Trusts' authorized shares of beneficial interest are unlimited. As
of May 31, 2006, there were eleven (11) separate series of Reserve
Tax-Exempt Trust authorized (Interstate Tax-Exempt Fund, California
Tax-Exempt Fund, Connecticut Tax-Exempt Fund, Florida Tax-Exempt Fund,
Massachusetts Tax-Exempt Fund, Michigan Tax-Exempt Fund, New Jersey
Tax-Exempt Fund, Ohio Tax-Exempt Fund, Pennsylvania Tax-Exempt Fund,
Virginia Tax-Exempt Fund and Interstate II Tax-Exempt Fund (which has not
commenced operations)); one (1) series of Reserve New York Tax-Exempt Trust
(New York Tax-Exempt Fund) and three (3) separate series of Reserve
Municipal Money-Market Trust (Arizona Money-Market Fund, Louisiana
Money-Market Fund and Minnesota Money-Market Fund) authorized and
outstanding (each a "Fund", and collectively the "Funds"). The Funds each
offer a single class of shares, except for the Interstate Tax-Exempt Fund,
which currently offers twelve classes of shares as follows: Class 8, Class
12, Class 15, Class 20, Class 25, Class 35, Class 45, Treasurer's Trust,
Class 70, Class 75, Class 95 and Class R. As of May 31, 2006, Class 20,
Class 35 and Class 95 had no shares outstanding. These financial statements
and notes apply to all above mentioned series of all of the Funds, except
for the Interstate II Tax-Exempt Fund.
B. Securities are valued at amortized cost, which approximates market value
in accordance with Rule 2a-7 under the Investment Company Act. The
amortized cost method values a security at cost and assumes a constant
amortization to maturity of any discount or premium, irrespective of
intervening changes in interest rates or market values using the effective
interest method. For purposes of compliance with Rule 2a-7 of the
Investment Company Act, and for computing the portfolios' average weighted
life to maturity, the maturity of floating or variable rate instruments in
which the Funds may invest will be deemed to be for floating rate
instruments (1) the notice period required before the Funds are entitled to
receive payment of the principal amount of the instrument; and for variable
rate instruments the longer of (1) above or (2) the period remaining until
the instrument's next rate adjustment.
C. It is each Fund's policy to comply with Subchapter M of the Internal
Revenue Code and to distribute all income to its shareholders. Accordingly,
no Federal income tax provision is required.
D. Security transactions are recorded on a trade date basis. Interest
income is accrued daily, and security premium or discount is amortized or
accreted daily. The Interstate Tax-Exempt Fund allocates investment income
and fund level expenses to each class (expenses other than the
comprehensive management fee and distribution fee) on a daily basis based
upon the relative proportion of net assets of each class.
E. Net investment income is distributed to shareholders daily and
automatically reinvested in additional Fund shares, unless the shareholder
has elected in writing to receive cash.
F. The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities on the date of the financial statements and the reported
amounts of income and expenses during the reporting periods. Actual results
could differ from those estimates.
G. During the fiscal year, the Funds incurred overdraft positions with
their custodian bank. Any related interest charges are shown in each Fund's
statement of operations.
(2) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
Pursuant to an Investment Management Agreement (the "Agreement") between
Reserve Management Company, Inc. ("RMCI") and each Trust on behalf of each
of its series, RMCI serves as each Fund's Investment Adviser, subject to
the policies adopted by the Board of Trustees. Under the Agreement, RMCI is
responsible for the supervision of the day-to-day operations, manages each
Fund's investments, effects purchases and sales and absorbs certain
promotional expenses. The Funds, with the exception of Interstate
Tax-Exempt Fund, pay RMCI a comprehensive management fee, which is accrued
daily at the annual rate of 0.80% of the average daily net assets of each
Fund. The Interstate Tax-Exempt Fund pays RMCI a comprehensive management
fee, accrued daily, at an annual rate based on the average daily net assets
of each class of the Fund's shares according to the following schedule:
Class 8, 0.08%; Class 12, 0.12%; Class 15, 0.15%; Class 20, 0.20%; Class
25, 0.25%; Class 35, 0.35%; Class 45, 0.45%; Treasurer's Trust, 0.60%;
Class 70, 0.50%; Class 75, 0.55%; Class 95, 0.75%; Class R, 0.80%. The
comprehensive management fee includes the investment advisory fee, all
administrative and customary operating expenses of each Fund, as well as
shareholder liaison services (such as responding to customer inquiries and
31
<Page>
providing information on their investments), recordkeeping charges,
accounting expenses, transfer agent costs and the expenses of preparing,
printing and mailing shareholder reports and prospectuses. Excluded from
the definition of customary operating expenses are: compensation of Chief
Compliance Officer, interest charges, taxes, brokerage fees and
commissions, extraordinary legal and accounting fees and other
extraordinary expenses, payments under the Trust's Distribution Plan, as
defined below, and the fees of the Trustees who are not interested persons,
as defined in the Investment Company Act (the "non-interested Trustees"),
for which each Fund pays its direct or allocated share. The Arizona,
Louisiana and Minnesota Municipal Money-Market Funds also pay the state
(blue sky) and SEC registration fees applicable to those Funds. For the
year ended May 31, 2006, RMCI voluntarily waived a portion of its
comprehensive management fee in the amounts listed below:
<Table>
<Caption>
FUND AMOUNT
---- --------
Interstate Tax-Exempt Fund $ 21,610
California Tax-Exempt Fund 2,309
Connecticut Tax-Exempt Fund 2,554
Florida Tax-Exempt Fund 849
Michigan Tax-Exempt Fund 2,397
New Jersey Tax-Exempt Fund 3,450
Ohio Tax-Exempt Fund 561
Pennsylvania Tax-Exempt Fund 4,474
Virginia Tax-Exempt Fund 15,641
New York Tax-Exempt Fund 1,959
Arizona Municipal Money-Market Fund 13
Louisiana Municipal Money-Market Fund 3,866
Minnesota Municipal Money-Market Fund 1,614
</Table>
These waivers are voluntary and may be terminated at any time.
Certain Officers and Trustees of the Trusts are also Officers of RMCI.
As of May 31, 2006, RMCI owned 76% of the Arizona, 15% of the Louisiana and
3% of the Minnesota Municipal-Money Market Funds.
DISTRIBUTION ASSISTANCE:
The Funds have adopted a Rule 12b-1 Distribution Plan and entered into a
Distribution Agreement with Resrv Partners, Inc., an affiliate of RMCI,
which allows the Funds to pay fees for certain shareholder services and for
expenses related to the sale of its shares for the Funds that offer a
single class of shares and of Interstate Tax-Exempt Fund Class R, Class 95,
Class 75 and Class 70 Shares. The rate of distribution expenses may not
exceed 0.20% per year of the Classes' average daily net assets.
(3) CONCENTRATION OF RISK:
Total assets of each Fund in the Trusts include a cash balance that is held
in accounts with JPMorgan Chase, the Funds' Custodian.
STATE-SPECIFIC RISKS. Each State Fund concentrates investments in municipal
obligations of issuers located in the state for which it is named. The
municipal obligation market is volatile. Particularly, investments secured
by letters of credit or guarantees of banks are subject to the same risks
generally associated with investing in the banking industry, such as
interest rate risk, credit risk and regulatory developments. Further, there
are specific risks associated with investing in a single state. For
example, unfavorable political or economic conditions and/or changes in
municipal market-related legislation or litigation within the state can
significantly affect the financial condition and credit quality of issuers
of municipal securities located in that state.
32
<Page>
(4) INVESTMENT CONCENTRATION:
The Funds invest substantially all of their assets in portfolios of
tax-exempt obligations issued by states, territories and possessions of the
United States and their subdivisions. The issuers' ability to meet their
obligations may be affected by economic, regional or political
developments. In order to reduce the credit risks associated with such
factors, the Funds invest substantially all of their portfolio assets in
obligations backed by letters of credit, bond insurance of financial
institutions, financial guaranty assurance agencies and/or other credit
enhancement arrangements as shown below as a percentage of each Fund's net
assets at May 31, 2006:
INTERSTATE TAX-EXEMPT FUND 95.2%
LETTER OF CREDIT
<Table>
ABN-AMRO Bank NV 0.7%
Allied Irish Bank, PLC 0.3%
Bank of America NA 7.5%
Bank of Montreal 0.2%
Bank of New York 3.1%
Bank of Nova Scotia 5.1%
Barclays Bank PLC 0.9%
Bayerische Landesbank Girozentrale 2.5%
BNP Paribas 2.6%
Citibank, NA 5.8%
Citizens Bank of MA 0.2%
Comerica Bank 1.9%
Credit Suisse First Boston 3.1%
DEPFA Bank, PLC 2.5%
Dexia Bank 1.1%
FHLB 0.4%
Fifth Third Bank 0.3%
Fleet National Bank 1.4%
Fortis Bank 2.8%
Harris Trust & Savings Bank 0.3%
Harvard University 2.9%
HBOS PLC 0.4%
JPMorganChase Bank 4.1%
Keybank NA 0.9%
Kredietbank NV 3.3%
La Salle Bank, NA 3.4%
Landesbank Hessen-Thuerinigen Girozentrale 1.2%
Lloyds TSB Bank PLC 2.0%
M&T Bank 1.8%
Manufacturers & Traders TC, NY 0.8%
Natexis Banques Populaires 0.1%
National City Bank 0.1%
Northern Trust Co. 0.7%
Ohio State University 0.1%
PNC Bank, NA 1.8%
Regions Bank 0.1%
Royal Bank of Canada, Montreal 0.5%
Royal Bank of Scotland 1.6%
Smith College 0.1%
State Street Bank & Trust Co. 0.1%
Suntrust Bank of Nashville NA 0.4%
Suntrust Bank of Atlanta 0.7%
University of Virginia 0.8%
US Bank, NA MPLS 1.0%
Wachovia Bank NA 3.7%
Wells Fargo Bank NA 0.2%
</Table>
* BOND INSURANCE
<Table>
AMBAC 9.2%
FGIC 3.0%
FRMC 1.4%
FSA 4.9%
MBIA 1.2%
</Table>
33
<Page>
CALIFORNIA TAX-EXEMPT FUND 96.8%
LETTER OF CREDIT
<Table>
Allied Irish Bank, PLC 1.8%
Bank of America NA 3.2%
Bank of New York 7.4%
Bank of Nova Scotia 3.3%
Bayerische Landesbank Girozentrale 4.6%
BNP Paribas 4.6%
Calyon NY 0.8%
Citibank, NA 4.6%
Comerica Bank 2.3%
Dexia Bank 2.4%
Fortis Babk 2.4%
JPMorganChase Bank 4.8%
Kredietbank NV, Brussels 8.7%
La Salle Bank, NA 5.0%
Landesbank Hessen-Thuerinigen Girozentrale 4.2%
Lloyds 6.1%
Republic N.B. New York 2.7%
Societe Generale 1.2%
State Street Bank & Trust Co. 5.8%
US Bank NA 3.0%
Wachovia Bank NA 1.8%
Wells Fargo Bank NA 3.0%
</Table>
* BOND INSURANCE
<Table>
AMBAC 2.5%
FRMC 3.2%
FSA 2.4%
MBIA 5.0%
</Table>
CONNECTICUT TAX-EXEMPT FUND 80.8%
LETTER OF CREDIT
<Table>
Allied Irish Bank, PLC 8.1%
Bank of America 7.4%
Bank of Montreal 4.7%
Bayerische Landesbank Girozentrale 3.1%
JPMorganChase Bank 4.7%
La Salle Bank, NA 7.9%
Landesbank Hessen-Thueringen Girozentrale 4.4%
Northern Trust Co. 4.8%
Wachovia Bank NA 7.8%
Yale 4.8%
</Table>
* BOND INSURANCE
<Table>
AMBAC 8.1%
FGIC 5.9%
FSA 4.7%
MBIA 4.4%
</Table>
FLORIDA TAX-EXEMPT FUND 99.3%
LETTER OF CREDIT
<Table>
Bank of America NA 8.4%
BNP Paribas 9.5%
Citibank, NA 5.0%
Fifth Third Bank 4.2%
Fleet National Bank 1.7%
Florida Power & Light 7.2%
HBOS PLC 3.6%
JPMorganChase Bank 0.6%
Keybank NA 8.0%
La Salle Bank NA 3.6%
Northern Trust Co. 4.9%
Republic National Bank 3.5%
Societe Generale 3.5%
State Street Bank & Trust Co. 3.8%
Suntrust Bank 8.5%
Wachovia Bank NA 3.8%
</Table>
* BOND INSURANCE
<Table>
AMBAC 8.5%
FRMC 4.7%
FSA 3.3%
MBIA 3.0%
</Table>
34
<Page>
MASSACHUSETTS TAX-EXEMPT FUND 95.3%
LETTER OF CREDIT
<Table>
Allied Irish Bank, PLC 2.5%
Bank of Nova Scotia 2.3%
Comercia Bank, Detroit 6.3%
Depfa Bank, PLC 4.2%
Dexia Bank 2.9%
Fleet National Bank 4.8%
Harvard University 7.7%
Kredietbank NV 3.1%
La Salle Bank, NA 7.9%
Landesbank Hessen-Thueringen Girozentrale 8.0%
Lloyds TSB Bank PLC 4.6%
MIT Mass Inst Tech 3.5%
PNC 6.7%
Smith College 2.8%
State ST. Bank & Trust Co. Boston 2.4%
Sun Trust Bank of Atlanta 2.1%
Wachovia Bank NA 2.8%
Wellesley College 2.8%
Williams College 2.5%
</Table>
* BOND INSURANCE
<Table>
AMBAC 2.2%
FGIC 4.4%
MBIA 8.8%
</Table>
MICHIGAN TAX-EXEMPT FUND 85.1%
LETTER OF CREDIT
<Table>
Bank of New York 3.0%
Bank One N.A 3.1%
Barclays Bank PLC 4.7%
Comerica Bank 4.7%
Depfa Bank PLC 4.8%
FHLB 6.8%
Fifth Third Bank 7.1%
JPMorganChase Bank 1.7%
Kredietbank NV 4.8%
La Salle Bank, NA 5.5%
Landesbank Hessen-Thuerinigen Girozentrale 6.4%
National City Bank 2.5%
Standard Federal Bank, NA 5.2%
Wachovia Bk & TR Co. 3.1%
</Table>
* BOND INSURANCE
<Table>
AMBAC 4.1%
FGIC 6.3%
FSA 9.2%
MBIA 2.1%
</Table>
NEW JERSEY TAX-EXEMPT FUND 81.9%
LETTER OF CREDIT
<Table>
Allied Irish Bank, PLC 3.7%
Bank of America 7.2%
Bank of New York 8.6%
Bayerische Landesbank Girozentrale 4.0%
Citibank, NA 8.1%
Dexia Credit Local 3.5%
JPMorganChase Bank 8.7%
Kredietbank NV. Brussels 2.2%
Lloyds TSB Bank PLC 4.6%
PNC Bank, NA 7.8%
Suntrust Bank 4.4%
Wachovia Bank NA 7.9%
</Table>
* BOND INSURANCE
<Table>
AMBC 2.5%
FGIC 1.9%
FSA 2.2%
MBIA 4.6%
</Table>
35
<Page>
OHIO TAX-EXEMPT FUND 97.4%
LETTER OF CREDIT
<Table>
ABN-AMRO Bank NV 4.3%
Allied Irish Bank, PLC 3.8%
Bank of America, NA 3.4%
Bank of Nova Scotia 2.7%
Barclays Bank PLC 4.0%
Bayerische Landesbank Girozentrale 2.9%
Citibank, NA 7.2%
HBOS PLC 7.9%
JPMorganChase Bank 7.3%
Keybank NA 7.3%
Landesbank Hessen-Thurin 3.8%
National City Bank 1.6%
Ohio State University 8.6%
Republic National Bank 2.3%
State Street Bank & Trust Co. 4.3%
US Bank NA 4.3%
Wachovia Bank NA 7.2%
Wells Fargo Bank NA 2.0%
Westdeutsche Landesbank AG 2.1%
</Table>
* BOND INSURANCE
<Table>
AMBAC 3.2%
MBIA 7.2%
</Table>
PENNSYLVANIA TAX-EXEMPT FUND 97.5%
LETTER OF CREDIT
<Table>
ABN-AMRO Bank NV 4.5%
Allied Irish Bank, PLC 4.5%
Bank of America NA 4.7%
Bank of Nova Scotia 4.1%
Barclays Bank PLC 4.7%
Bayerische Landesbank Girozentrale 1.8%
Comerica Bank 3.5%
Depfa Bank, PLC 4.7%
Dexia Bank 4.8%
JPMorganChase Bank 8.5%
Kredietbank NV. Brussels 4.9%
Landesbank Hessen-Thuerinigen Girozentrale 8.2%
MBIA 4.8%
Northern Trust Co. 4.0%
PNC Bank, NA 8.6%
University of Pennsylvania 4.1%
Wachovia Bank NA 7.5%
</Table>
* BOND INSURANCE
<Table>
AMBAC 3.3%
FSA 6.3%
</Table>
VIRGINIA TAX-EXEMPT FUND 78.4%
LETTER OF CREDIT
<Table>
Bank of America NA 9.8%
BB&T NA 5.0%
Citibank 4.9%
JP Morgan/Chase 6.0%
Suntrust Bank 9.8%
University of Virginia 4.9%
US Bank NA 9.8%
Wachovia Bank NA 4.9%
</Table>
* BOND INSURANCE
<Table>
AMBAC 4.9%
FRMC 4.9%
FSA 3.7%
MBIA 9.8%
</Table>
36
<Page>
NEW YORK TAX-EXEMPT FUND 99.7%
LETTER OF CREDIT
<Table>
ABN/AMRO 3.8%
Allied Irish Bank, PLC 3.4%
Bank of America NA 5.2%
Bank of New York 2.0%
Bayerische Landesbank Girozentrale 4.3%
Citibank, NA 3.2%
Comerica Bank. Detroit 3.9%
Depfa Bank, PLC 4.2%
Dexia Bank 0.1%
Fortis Bank 6.2%
JP Morgan Chase 4.0%
Keybank NA Cleveland OH 6.5%
Kredietbank NV. Brussels 0.1%
Landesbank Baden-Wurternberg 5.3%
Landesbank Hessen-Thueringen Girozentrale 3.8%
Lloyds 2.7%
Republic N.B. New York 4.3%
Royal Bank of Canada, Montreal 4.8%
Royal Bank of Scotland 0.8%
Societe Generale 3.1%
Wachovia BK & TR CO. NA North Carolina 2.5%
Wells Fargo Bank NA 4.3%
Westdeutsche Landesbank Girozentrale 4.6%
</Table>
* BOND INSURANCE
<Table>
AMBAC 0.1%
FGIC 5.7%
FNMA 0.5%
FRMC 4.4%
FSA 5.2%
MBIA 0.7%
</Table>
ARIZONA MUNICIPAL MONEY-MARKET FUND 48.8%
LETTER OF CREDIT
<Table>
Bank of America NA 4.9%
Bank One N.A 4.9%
Bank of New York 4.9%
Credit Suisse First Boston 4.9%
Kredietbank NV 4.9%
La Salle Bank, NA 4.9%
</Table>
* BOND INSURANCE
<Table>
AMBAC 4.8%
FGIC 4.8%
FNMA 4.9%
FRMC 4.9%
</Table>
LOUISIANA MUNICIPAL MONEY-MARKET FUND 65.4%
LETTER OF CREDIT
<Table>
Bank of America NA 4.8%
Bank of New York 9.5%
JPMorganChase Bank 3.1%
Natexis Banques Populaires 4.7%
Regions Bank 4.7%
Suntrust Bank Nashville NA 3.4%
Suntrust Bank of Atlanta 4.7%
Wachovia Bank 4.7%
</Table>
* BOND INSURANCE
<Table>
AMBAC 4.8%
MBIA 6.9%
FNMA 4.7%
FGIC 4.7%
FSA 4.7%
</Table>
37
<Page>
MINNESOTA MUNICIPAL MONEY-MARKET FUND 78.6%
LETTER OF CREDIT
<Table>
Allied Irish Bank, PLC 4.8%
Dexia Bank 6.8%
FNMA 4.8%
Harris Trust & Savings Bank 4.8%
La Salle Bank, NA 8.1%
Lloyds TSB Bank PLC 4.8%
University of Minnesota 4.8%
US Bank NA 9.3%
Wells Fargo Bank NA 8.8%
</Table>
* BOND INSURANCE
<Table>
AMBAC 8.8%
FRMC 8.0%
MBIA 4.8%
</Table>
* Some securities may be backed by both a letter of credit and bond
insurance.
^ Amount is less than 0.05%.
(5) COMPOSITION OF NET ASSETS:
At May 31, 2006, the composition of each Fund's net assets was as follows:
<Table>
<Caption>
INTERSTATE CALIFORNIA CONNECTICUT FLORIDA MASSACHUSETTS
FUND FUND FUND FUND FUND
--------------- --------------- --------------- --------------- ---------------
Par Value $ 1,209,277 $ 124,134 $ 27,345 $ 55,058 $ 28,463
Additional-Paid-in-Capital 1,208,067,973 124,009,577 27,317,217 55,003,386 28,434,195
--------------- --------------- --------------- --------------- ---------------
Net Assets $ 1,209,277,250 $ 124,133,711 $ 27,344,562 $ 55,058,444 $ 28,462,658
=============== =============== =============== =============== ===============
</Table>
<Table>
<Caption>
MICHIGAN NEW JERSEY OHIO PENNSYLVANIA VIRGINIA
FUND FUND FUND FUND FUND
--------------- --------------- --------------- --------------- ---------------
Par Value $ 16,253 $ 54,047 $ 18,664 $ 48,871 $ 20,691
Additional-Paid-in-Capital 16,236,903 53,992,628 18,645,798 48,822,402 20,670,614
--------------- --------------- --------------- --------------- ---------------
Net Assets $ 16,253,156 $ 54,046,675 $ 18,664,462 $ 48,871,273 $ 20,691,305
=============== =============== =============== =============== ===============
</Table>
<Table>
<Caption>
NEW YORK ARIZONA LOUISIANA MINNESOTA
FUND FUND FUND FUND
--------------- --------------- --------------- ---------------
Par Value $ 185,954 $ 13 $ 74 $ 311
Additional-Paid-in-Capital 185,767,666 133,089 739,550 3,112,024
--------------- --------------- --------------- ---------------
Net Assets $ 185,953,620 $ 133,102 $ 739,624 $ 3,112,335
=============== =============== =============== ===============
</Table>
The tax basis of each Fund's assets is the same as the basis for financial
reporting at May 31, 2006. There was no undistributed net investment income
for any of the Funds at May 31, 2006. All dividends paid during the year
ended May 31, 2006 were federally tax-exempt dividends.
The income dividends were classified as tax-exempt income for federal
income tax purposes for the years shown below:
<Table>
<Caption>
2006 2005
---- ----
Interstate Tax-Exempt Fund $ 28,396,150 $ 12,477,598
California Tax-Exempt Fund 2,047,962 718,269
Connecticut Tax-Exempt Fund 461,210 141,646
Florida Tax-Exempt Fund 940,891 326,913
Massachusetts Tax-Exempt Fund 401,405 123,894
Michigan Tax-Exempt Fund 267,391 82,915
New Jersey Tax-Exempt Fund 929,631 337,190
Ohio Tax-Exempt Fund 352,023 111,931
Pennsylvania Tax-Exempt Fund 823,497 306,095
Virginia Tax-Exempt Fund 306,255 81,075
New York Tax-Exempt Fund 3,171,710 1,155,796
Arizona Municipal Money-Market Fund 424 --
Louisiana Municipal Money-Market Fund 19,453 1,888
Minnesota Municipal Money-Market Fund 43,669 7,523
</Table>
38
<Page>
(6) CAPITAL SHARE TRANSACTIONS:
For the years ended May 31, 2006 and May 31, 2005, the capital share
transactions of each class of the Interstate Tax-Exempt Fund, each at a net
asset value of $1 per share, were as follows:
<Table>
<Caption>
YEAR ENDED MAY 31, 2006
---------------------------------------------------------------------------------------------------
TREASURER'S
CLASS R TRUST CLASS 75 CLASS 70 CLASS 45 CLASS 25
-------------- -------------- -------------- -------------- -------------- --------------
Sold 1,193,940,109 450,122,707 10,116,006 175,463,902 1,899,359 153,302,998
Reinvested 5,070,615 885,658 22,962 41,004 6,187 870,076
Redeemed (1,174,903,920) (459,064,686) (3,782,324) (173,801,732) (1,713,687) (168,877,105)
-------------- -------------- -------------- -------------- -------------- --------------
Net Increase (Decrease) 24,106,804 (8,056,321) 6,356,644 1,703,174 191,859 (14,704,031)
============== ============== ============== ============== ============== ==============
<Caption>
CLASS 15 CLASS 12 CLASS 8
-------------- -------------- ---------------
Sold 513 3 12,642,518,069
Reinvested 2,780 275 17,924,944
Redeemed (513) (1) (12,873,088,700)
-------------- -------------- ---------------
Net Increase (Decrease) 2,780 277 (212,645,687)
============== ============== ===============
<Caption>
YEAR ENDED MAY 31, 2005
---------------------------------------------------------------------------------------------------
OCTOBER 1, 2004* OCTOBER 1, 2004*
TREASURER'S TO MAY 31, 2005 TO MAY 31, 2005
CLASS R TRUST CLASS 75 CLASS 70 CLASS 45 CLASS 25
-------------- -------------- ---------------- ---------------- -------------- --------------
Sold 1,218,219,096 257,552,413 1,510 75,609,267 65,703 106,352,469
Reinvested 1,904,802 357,612 2 21,974 158 387,135
Redeemed (1,242,244,626) (231,731,228) (1,411) (74,686,333) (6,055) (44,943,518)
-------------- -------------- -------------- -------------- -------------- --------------
Net Increase (Decrease) (22,120,728) 26,178,797 101 944,908 59,806 61,796,086
============== ============== ============== ============== ============== ==============
<Caption>
FEBRUARY 1, 2005*
TO MAY 31, 2005
------------------------------------------------
CLASS 15 CLASS 12 CLASS 8
-------------- -------------- --------------
Sold 24 9,999 5,872,411,962
Reinvested 1,570 71 9,804,274
Redeemed (15) -- (4,925,031,660)
-------------- -------------- --------------
Net Increase (Decrease) 1,579 10,070 957,184,576
============== ============== ==============
</Table>
- ----------
* Commencement of Class operations.
39
<Page>
(7) FINANCIAL HIGHLIGHTS:
Contained below is per share operating performance data for a share of
beneficial interest outstanding for each of the periods as indicated.
<Table>
<Caption>
CLASS R
-------------------------------------------------------------
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
INTERSTATE TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0182 0.0070 0.0010 0.0034 0.0108
Dividends from net investment income (0.0182) (0.0070) (0.0010) (0.0034) (0.0108)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.84% 0.70% 0.10% 0.34% 1.09%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 285.5 $ 261.4 $ 283.5 $ 280.4 $ 295.7
Ratio of expenses to average net assets, before fee waivers 1.00% 1.00% 1.00% 1.00% 1.01%
Ratio of expenses to average net assets net of fee waivers 1.00% 1.00% 0.90% 0.99% 1.01%
Ratio of net investment income to average net assets 1.85% 0.69% 0.10% 0.33% 1.08%
<Caption>
TREASURER'S TRUST
-------------------------------------------------------------
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
INTERSTATE TAX-EXEMPT FUND
Net asset value at beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0222 0.0109 0.0040 0.0074 0.0149
Dividends from net investment income (0.0222) (0.0109) (0.0040) (0.0074) (0.0149)
--------- --------- --------- --------- ---------
Net asset value at end of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 2.25% 1.10% 0.40% 0.74% 1.50%
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (millions) $ 40.7 $ 48.7 $ 22.5 $ 29.2 $ 20.5
Ratio of expenses to average net assets, before fee waivers 0.60% 0.60% 0.60% 0.60% 0.61%
Ratio of expenses to average net assets net of fee waivers 0.60% (b) (b) (b) (b)
Ratio of net investment income to average net assets 2.25% 1.24% 0.37% 0.71% 1.59%
</Table>
40
<Page>
<Table>
<Caption>
CLASS 75 CLASS 70 CLASS 45
---------------------- -------------------- --------------------------------
YEAR SEPTEMBER 23, YEAR AUGUST 16, YEAR YEAR AUGUST 7,
ENDED 2004* TO ENDED 2004* TO ENDED ENDED 2003* TO
MAY 31, MAY 31, MAY 31, MAY 31, MAY 31, MAY 31, MAY 31,
2006 2005 2006 2005 2006 2005 2004
-------- -------- -------- -------- -------- -------- --------
INTERSTATE TAX-EXEMPT FUND
Net asset value at beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- -------- -------- --------
Net investment income 0.0207 0.0083 0.0212 0.0092 0.0237 0.0123 0.0044
Dividends from net investment income (0.0207) (0.0083) (0.0212) (0.0092) (0.0237) (0.0123) (0.0044)
-------- -------- -------- -------- -------- -------- --------
Net asset value at end of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ======== ======== ========
Total Return 2.09% 0.83% 2.15% 0.93% 2.40% 1.25% 0.45%
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (millions) $ 6.4 $ --^ $ 2.6 $ 0.9 $ 0.3 $ 0.10 $ --^
Ratio of expenses to average net assets,
before fee waivers 0.75% 0.75%(a) 0.70% 0.71%(a) 0.45% 0.46% 0.44%(a)
Ratio of expenses to average net assets
net of fee waivers 0.75% (b) 0.70% (b) 0.45% (b) (b)
Ratio of net investment income to
average net assets 2.67% 1.60%(a) 2.12% 1.10%(a) 2.46% 1.37% 0.55%(a)
<Caption>
CLASS 25
-------------------------------------------------------------
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
INTERSTATE TAX-EXEMPT FUND
Net asset value at beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0257 0.0144 0.0075 0.0109 0.0184
Dividends from net investment income (0.0257) (0.0144) (0.0075) (0.0109) (0.0184)
--------- --------- --------- --------- ---------
Net asset value at end of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 2.61% 1.46% 0.75% 1.09% 1.86%
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (millions) $ 63.0 $ 77.7 $ 15.9 $ 17.8 $ 16.3
Ratio of expenses to average net assets, before fee waivers 0.25% 0.25% 0.25% 0.25% 0.26%
Ratio of expenses to average net assets net of fee waivers 0.25% (b) (b) (b) (b)
Ratio of net investment income to average net assets 2.50% 1.76% 0.74% 1.07% 1.96%
<Caption>
CLASS 15
----------------------------------------------------------
YEARS ENDED JANUARY 13,
------------------------------------------- 2003* TO
MAY 31, MAY 31, MAY 31, MAY 31,
INTERSTATE TAX-EXEMPT FUND 2006 2005 2004 2003
----------- ----------- ----------- ----------
Net asset value at beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
----------- ----------- ----------- ----------
Net investment income 0.0267 0.0154 0.0085 0.0039
Dividends from net investment income (0.0267) (0.0154) (0.0085) (0.0039)
----------- ----------- ----------- ----------
Net asset value at end of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
=========== =========== =========== ==========
Total Return 2.71% 1.56% 0.86% 0.39%
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (millions) $ 0.1 $ 0.10 $ 0.1 $ 0.1
Ratio of expenses to average net assets, before fee waivers 0.15% 0.16% 0.15% 0.15%(a)
Ratio of expenses to average net assets net of fee waivers 0.15% (b) (b) (b)
Ratio of net investment income to average net assets 2.55% 1.54% 0.85% 1.03%(a)
</Table>
41
<Page>
<Table>
<Caption>
CLASS 12 CLASS 8
---------------------- ------------------------------------------------
FEBRUARY 1, JANUARY 13,
2005* TO YEARS ENDED MAY 31, 2003* TO
MAY 31, MAY 31, ----------------------------------- MAY 31,
2006 2005 2006 2005 2004 2003
--------- --------- --------- --------- --------- ---------
INTERSTATE TAX-EXEMPT FUND
Net asset value at beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- --------- ---------
Net investment income 0.0271 0.0069 0.0274 0.0161 0.0092 0.0042
Dividends from net investment income (0.0271) (0.0069) (0.0274) (0.0161) (0.0092) (0.0042)
--------- --------- --------- --------- --------- ---------
Net asset value at end of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= ========= =========
Total Return 2.75% 0.70% 2.78% 1.64% 0.93% 0.42%
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (millions) $ 0.0 $ --^ $ 810.7 $ 1,023.4 $ 66.2 $ 0.1
Ratio of expenses to average net assets,
before fee waivers 0.12% 0.12%(a) 0.08% 0.08% 0.08% 0.08%(a)
Ratio of expenses to average net assets
net of fee waivers 0.12% (b) 0.08% (b) (b) (b)
Ratio of net investment income to average
net assets 2.73% 2.12%(a) 2.73% 1.80% 0.92% 1.10%(a)
<Caption>
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
CALIFORNIA TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0177 0.0068 0.0006 0.0033 0.0098
Dividends from net investment income (0.0177) (0.0068) (0.0006) (0.0033) (0.0098)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.79% 0.69% 0.06% 0.33% 0.98%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 124.1 $ 105.2 $ 101.2 $ 109.0 $ 109.3
Ratio of expenses to average net assets, before fee waivers 1.00% 1.00% 1.00% 1.00% 1.01%
Ratio of expenses to average net assets net of fee waivers 1.00% 1.00% 0.89% 0.99% 1.01%
Ratio of net investment income to average net assets 1.80% 0.69% 0.06% 0.32% 1.00%
</Table>
42
<Page>
<Table>
<Caption>
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
CONNECTICUT TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0179 0.0068 0.0006 0.0025 0.0092
Dividends from net investment income (0.0179) (0.0068) (0.0006) (0.0025) (0.0092)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.81% 0.68% 0.06% 0.25% 0.92%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 27.3 $ 23.4 $ 21.5 $ 36.4 $ 41.2
Ratio of expenses to average net assets, before fee waivers 1.00% 1.00% 1.00% 1.00% 1.01%
Ratio of expenses to average net assets net of fee waivers 0.99% 1.00% 0.86% 0.98% 1.01%
Ratio of net investment income to average net assets 1.79% 0.68% 0.06% 0.25% 0.92%
</Table>
<Table>
<Caption>
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
FLORIDA TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0185 0.0072 0.0006 0.0036 0.0105
Dividends from net investment income (0.0185) (0.0072) (0.0006) (0.0036) (0.0105)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.86% 0.73% 0.06% 0.36% 1.05%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 55.1 $ 43.1 $ 39.5 $ 45.9 $ 32.1
Ratio of expenses to average net assets, before fee waivers 1.01% 1.00% 1.00% 1.00% 1.00%
Ratio of expenses to average net assets net of fee waivers 1.00% 1.00% 0.91% 0.99% 1.00%
Ratio of net investment income to average net assets 1.88% 0.74% 0.06% 0.35% 0.99%
</Table>
43
<Page>
<Table>
<Caption>
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
MASSACHUSETTS TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0181 0.0068 0.0006 0.0030 0.0099
Dividends from net investment income (0.0181) (0.0068) (0.0006) (0.0030) (0.0099)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.82% 0.68% 0.06% 0.30% 0.99%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 28.5 $ 22.2 $ 17.8 $ 20.8 $ 21.0
Ratio of expenses to average net assets, before fee waivers 1.00% 1.01% 1.01% 1.00% 1.00%
Ratio of expenses to average net assets net of fee waivers (b) 1.00% 0.88% 0.98% 1.00%
Ratio of net investment income to average net assets 1.84% 0.69% 0.06% 0.30% 0.99%
</Table>
<Table>
<Caption>
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
MICHIGAN TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0182 0.0069 0.0006 0.0029 0.0080
Dividends from net investment income (0.0182) (0.0069) (0.0006) (0.0029) (0.0080)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.84% 0.70% 0.06% 0.29% 0.81%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 16.3 $ 16.6 $ 12.1 $ 7.9 $ 8.5
Ratio of expenses to average net assets, before fee waivers 1.00% 1.01% 1.00% 1.00% 1.01%
Ratio of expenses to average net assets net of fee waivers 0.99% 1.00% 0.91% 0.98% 1.00%
Ratio of net investment income to average net assets 1.78% 0.77% 0.06% 0.29% 0.64%
</Table>
44
<Page>
<Table>
<Caption>
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
NEW JERSEY TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0178 0.0068 0.0006 0.0029 0.0101
Dividends from net investment income (0.0178) (0.0068) (0.0006) (0.0029) (0.0101)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.80% 0.68% 0.06% 0.29% 1.01%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 54.0 $ 45.0 $ 50.2 $ 56.0 $ 57.5
Ratio of expenses to average net assets, before fee waivers 1.00% 1.00% 1.00% 1.00% 1.01%
Ratio of expenses to average net assets net of fee waivers 1.00% 0.99% 0.87% 0.97% 1.01%
Ratio of net investment income to average net assets 1.81% 0.66% 0.06% 0.28% 0.94%
</Table>
<Table>
<Caption>
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
OHIO TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0184 0.0071 0.0006 0.0030 0.0082
Dividends from net investment income (0.0184) (0.0071) (0.0006) (0.0030) (0.0082)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.86% 0.71% 0.06% 0.30% 0.83%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 18.7 $ 19.0 $ 10.9 $ 10.4 $ 5.7
Ratio of expenses to average net assets, before fee waivers 1.00% 1.00% 1.01% 1.00% 1.01%
Ratio of expenses to average net assets net of fee waivers 1.00% 1.00% 0.92% 0.99% 1.01%
Ratio of net investment income to average net assets 1.83% 0.79% 0.06% 0.29% 0.81%
</Table>
45
<Page>
<Table>
<Caption>
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
PENNSYLVANIA TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0186 0.0070 0.0007 0.0036 0.0097
Dividends from net investment income (0.0186) (0.0070) (0.0007) (0.0036) (0.0097)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.88% 0.70% 0.07% 0.36% 0.97%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 48.9 $ 44.7 $ 46.1 $ 40.6 $ 51.5
Ratio of expenses to average net assets, before fee waivers 1.00% 1.00% 1.00% 1.00% 1.01%
Ratio of expenses to average net assets net of fee waivers 0.99% 1.00% 0.93% 1.00% 1.01%
Ratio of net investment income to average net assets 1.87% 0.70% 0.07% 0.34% 0.89%
</Table>
<Table>
<Caption>
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
VIRGINIA TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0181 0.0067 0.0006 0.0025 0.0069
Dividends from net investment income (0.0181) (0.0067) (0.0006) (0.0025) (0.0069)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.82% 0.67% 0.06% 0.25% 0.69%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 20.7 $ 13.7 $ 11.0 $ 11.3 $ 13.0
Ratio of expenses to average net assets, before fee waivers 1.00% 1.00% 1.00% 1.00% 1.01%
Ratio of expenses to average net assets net of fee waivers 0.91% 1.00% 0.90% 0.95% 0.99%
Ratio of net investment income to average net assets 1.88% 0.70% 0.06% 0.24% 0.60%
</Table>
46
<Page>
<Table>
<Caption>
YEARS ENDED MAY 31,
-------------------------------------------------------------
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
NEW YORK TAX-EXEMPT FUND
Net asset value at beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0176 0.0067 0.0006 0.0034 0.0095
Dividends from net investment income (0.0176) (0.0067) (0.0006) (0.0034) (0.0095)
--------- --------- --------- --------- ---------
Net asset value at end of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.77% 0.67% 0.06% 0.34% 0.95%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 185.9 $ 164.4 $ 172.6 $ 228.4 $ 234.4
Ratio of expenses to average net assets, before fee waivers 1.00% 1.02% 1.02% 1.00% 1.01%
Ratio of expenses to average net assets net of fee waivers 1.00% 1.01% 0.89% 0.99% 1.01%
Ratio of net investment income to average net assets 1.77% 0.66% 0.06% 0.34% 0.94%
</Table>
<Table>
<Caption>
PERIOD
ENDED
MAY 31,
2006**
---------
ARIZONA MUNICIPAL MONEY-MARKET FUND
Net asset value at beginning of year $ 1.0000
---------
Net investment income 0.0039
Dividends from net investment income (0.0039)
---------
Net asset value at end of year $ 1.0000
=========
Total Return 0.39%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (millions) $ 0.1
Ratio of expenses to average net assets, before fee waivers 1.00%(a)
Ratio of expenses to average net assets net of fee waivers 0.92%(a)
Ratio of net investment income to average net assets 2.42%(a)
</Table>
47
<Page>
<Table>
<Caption>
APRIL 17
YEARS ENDED MAY 31, 2002* TO
------------------------------------------------ MAY 31,
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
LOUISIANA MUNICIPAL MONEY-MARKET FUND
Net asset value at beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0213 0.0065 0.0007 0.0032 0.0014
Dividends from net investment income (0.0213) (0.0065) (0.0007) (0.0032) (0.0014)
--------- --------- --------- --------- ---------
Net asset value at end of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 2.16% 0.66% 0.07% 0.32% 0.14%
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (millions) $ 0.7 $ 0.3 $ 0.2 $ 0.1 $ 0.1
Ratio of expenses to average net assets, before fee waivers 0.99% 1.01% 1.00% 1.00% 1.04%(a)
Ratio of expenses to average net assets net of fee waivers 0.52% 1.00% 0.64% 0.57% 0.00%(a)
Ratio of net investment income to average net assets 2.33% 0.74% 0.06% 0.32% 1.15%(a)
</Table>
<Table>
<Caption>
APRIL 17
YEARS ENDED MAY 31, 2002* TO
------------------------------------------------ MAY 31,
2006 2005 2004 2003 2002
--------- --------- --------- --------- ---------
MINNESOTA MUNICIPAL MONEY-MARKET FUND
Net asset value at beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- --------- ---------
Net investment income 0.0179 0.0066 0.0006 0.0044 0.0017
Dividends from net investment income (0.0179) (0.0066) (0.0006) (0.0044) (0.0017)
--------- --------- --------- --------- ---------
Net asset value at end of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= ========= =========
Total Return 1.80% 0.66% 0.06% 0.44% 0.17%
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (millions) $ 3.1 $ 1.4 $ 0.6 $ 0.2 $ 0.1
Ratio of expenses to average net assets, before fee waivers 1.01% 1.00% 1.01% 1.00% 1.04%(a)
Ratio of expenses to average net assets net of fee waivers 0.94% 0.99% 0.78% 0.69% 0.00%(a)
Ratio of net investment income to average net assets 1.88% 0.78% 0.06% 0.43% 1.40%(a)
</Table>
- ----------
* Inception of Class Operations.
(a) Annualized.
(b) As there were no fee waivers during the period, this is not applicable.
^ Amount is less than $50,000.
** Commenced operations on April 3, 2006.
(8) OTHER MATTERS
Management has determined that certain of the Funds' service contracts and
distribution plans have lapsed due to an administrative error. RMCI is
taking all necessary steps to remedy this, including having already
obtained Board approval and seeking shareholder approval of the retention
of fees paid and the approval of new service contracts and distribution
plans. Management does not expect this matter to have any adverse financial
impact on the Funds.
48
<Page>
(9) COMMITMENTS AND CONTINGENCIES:
In the normal course of business, the Funds enter into contracts that
contain a variety of representations and warranties and provide general
indemnifications. The Funds' general exposure under these arrangements is
unknown, as this would involve future claims that may be made against the
Funds that have not yet occurred. However, based on experience, the Funds
expect the risk of loss to be remote.
49
<Page>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees and Shareholders of Reserve Tax-Exempt Trust, Reserve New
York Tax-Exempt Trust and Reserve Municipal Money-Market Trust:
We have audited the accompanying statements of net assets of Interstate
Tax-Exempt Fund, California Tax-Exempt Fund, Florida Tax-Exempt Fund,
Massachusetts Tax-Exempt Fund, Ohio Tax-Exempt Fund, Pennsylvania Tax-Exempt
Fund of the Reserve Tax-Exempt Trust, New York Tax-Exempt Fund of the Reserve
New York Tax-Exempt Trust and the statements of assets and liabilities,
including the schedule of investments, of Connecticut Tax-Exempt Fund, Michigan
Tax-Exempt Fund, New Jersey Tax-Exempt Fund, Virginia Tax-Exempt Fund of the
Reserve Tax-Exempt Trust, Arizona Municipal Money-Market Fund, Louisiana
Municipal Money-Market Fund, Minnesota Municipal Money-Market Fund of the
Reserve Municipal Money-Market Trust (collectively the Funds), as of May 31,
2006, and the related statements of operations, changes in net assets and the
financial highlights for the year or period then ended as indicated herein.
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statements
of changes in net assets for the year-ended May 31, 2005 and the financial
highlights for each of the years or periods in the four-year period ended May
31, 2005 were audited by other independent registered public accounting firm
whose report dated September 26, 2005 expressed an unqualified opinion on those
statements and the financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of May 31, 2006, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the net assets of Interstate
Tax-Exempt Fund, California Tax-Exempt Fund, Florida Tax-Exempt Fund,
Massachusetts Tax-Exempt Fund, Ohio Tax-Exempt Fund, Pennsylvania Tax-Exempt
Fund of the Reserve Tax-Exempt Trust, New York Tax-Exempt Fund of the Reserve
New York Tax-Exempt Trust, the assets and liabilities of Connecticut Tax-Exempt
Fund, Michigan Tax-Exempt Fund, New Jersey Tax-Exempt Fund, Virginia Tax-Exempt
Fund of the Reserve Tax-Exempt Trust, Arizona Municipal Money-Market Fund,
Louisiana Municipal Money-Market Fund, Minnesota Municipal Money-Market Fund of
the Reserve Municipal Money-Market Trust as of May 31, 2006, the results of
their operations, changes in their net assets, and the financial highlights for
year or period then ended as indicated herein, in conformity with U.S. generally
accepted accounting principles.
/s/ KPMG LLP
New York, New York
July 27, 2006
50
<Page>
THE JOINT BOARD OF TRUSTEES AND EXECUTIVE OFFICERS OF THE FUNDS (UNAUDITED)
The Board of Trustees is responsible for the management and supervision of the
Funds. The Trustees approve all material agreements between the Funds and the
Funds' service providers. Biographical information relating to the Trustees and
the Executive Officers of the Funds is set forth below, including their ages,
their principal occupations for at least the last five years, their positions
with the Funds and the length of time served. The Trustees and the Executive
Officers of the Funds oversee 31 portfolios in The Reserve fund complex. Except
as otherwise described below, none of the Trustees or Executive Officers hold
public directorships outside of The Reserve fund complex.
INTERESTED TRUSTEE
<Table>
<Caption>
POSITIONS TERM OF OFFICE ** PRINCIPAL OCCUPATIONS DURING
NAME, ADDRESS, AGE WITH THE FUNDS AND LENGTH OF SERVICE THE LAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------------------------------
BRUCE R. BENT* Chairman, Trustee, Trustee since inception President of Reserve Management Company, Inc.
Age: 69 President and Treasurer ("RMCI"), Director and Chairman/Chief
The Reserve Chairman since 2000. Executive Officer of Reserve Management;
1250 Broadway President, Treasurer Corporation ("RMC") and
New York, NY 10001 President and Treasurer Chairman and Director of Resrv Partners, Inc.
since 2005 ("RESRV") since 2000; Chairman and Director of
Reserve International Liquidity Fund Ltd.
since 1990. Co-founder of The Reserve Fund
("RF") in 1970; officer thereof since 1970.
</Table>
INDEPENDENT TRUSTEES
<Table>
<Caption>
POSITIONS TERM OF OFFICE ** PRINCIPAL OCCUPATIONS DURING
NAME, ADDRESS, AGE WITH THE FUNDS AND LENGTH OF SERVICE THE LAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------------------------------
EDWIN EHLERT, JR. Trustee Trustee of all Trusts Retired. President, Premier Resources, Inc.
Age: 75 since inception (meeting management firm) since 1997.
2517 Highway #35, Bldg. J
Manasquan, NJ 08736
WILLIAM J. MONTGORIS Trustee Trustee of all Trusts Retired since 1999. Chief Operating Officer of
Age: 59 since 1999 The Bear Stearns Companies, Inc. from 1979 to
286 Gregory Road 1999. Director of Stage Stores, Inc.
Franklin Lakes, NJ 07417 (retailing) since 2004.
</Table>
OFFICERS WHO ARE NOT TRUSTEES
<Table>
<Caption>
POSITIONS TERM OF OFFICE ** PRINCIPAL OCCUPATIONS DURING
NAME, ADDRESS, AGE WITH THE FUNDS AND LENGTH OF SERVICE THE LAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------------------------------
BRUCE R. BENT, II+ Co-Chief Executive Co-Chief Executive Senior Vice President, Secretary and Assistant
Age: 40 Officer, Senior Vice Officer and Senior Vice Treasurer of RMCI; Senior Vice President,
The Reserve President and President since 2005. Secretary and Assistant Treasurer of RMC; and
1250 Broadway Assistant Treasurer Secretary, Assistant Treasurer and Director of
New York, NY 10001 Assistant Treasurer RESRV since 2000. Vice President of RMC, RMCI
since 2000. and RESRV from 1992 to 2000. Former Trustee of
Trusts in the Reserve/Hallmark Funds complex.
Former President of the Trusts.
ARTHUR T. BENT III+ Co-Chief Executive Co-Chief Executive Chief Operating Officer, Treasurer, Senior
Age: 38 Officer, Senior Vice Officer since 2005. Vice President and Assistant Secretary of
The Reserve President and Assistant RMCI; President, Treasurer and Assistant
1250 Broadway Secretary Senior Vice President Secretary of RMC; Treasurer, Assistant
New York, NY 10001 and Assistant Secretary Secretary and Directors of RESRV since 2000.
since 2000. Vice President RMC, RMCI and RESRV from 1997
to 2000. Former Treasurer and Chief Financial
Officer of the Trusts.
PATRICK J. FARRELL Chief Financial Officer Since 2006 Chief Financial Officer of the Adviser and its
Age: 46 affiliates since 2005. Chief Financial
The Reserve Officer, Treasurer and Assistant Secretary of
1250 Broadway the MainStay Funds, Eclipse Funds and MainStay
New York, NY 10001 VP Funds; Principal Financial Officer McMorgan
Funds Managing Director New York Life
Investment Management from 2001 to 2005.
</Table>
51
<Page>
<Table>
<Caption>
POSITIONS TERM OF OFFICE ** PRINCIPAL OCCUPATIONS DURING
NAME, ADDRESS, AGE WITH THE FUNDS AND LENGTH OF SERVICE THE LAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------------------------------
EDMUND P. BERGAN, JR. Secretary and General Since 2006 Senior Vice President and General Counsel of
Age: 56 Counsel the Adviser and its affiliates since 2006.
The Reserve From 2004-06, Senior Regulatory Counsel of
1250 Broadway Proskauer Rose LLP. Prior thereto, and since
New York, NY 10001 before 2001, Senior Vice President and General
Counsel of the mutual fund distribution and
servicing affiliates of Alliance Capital
Management L.P.
</Table>
* MR. BRUCE BENT IS AN "INTERESTED PERSON" OF THE FUND AS DEFINED IN SECTION
2(a) (19) OF THE INVESTMENT COMPANY ACT DUE TO HIS POSITIONS WITH RMC, RMCI
AND RESRV.
** EACH TRUSTEE SHALL HOLD OFFICE UNTIL HE RESIGNS, IS REMOVED OR UNTIL HIS
SUCCESSOR IS DULY ELECTED AND QUALIFIED. A TRUSTEE SHALL RETIRE UPON
ATTAINING THE AGE OF SEVENTY-FIVE (75) YEARS, UNLESS EXTENDED BY A VOTE OF
THE TRUSTEES. TRUSTEES NEED NOT BE SHAREHOLDERS.
+ MR. BRUCE R. BENT IS THE FATHER OF MR. BRUCE R. BENT II AND MR. ARTHUR
T. BENT III.
The Trust's Statement of Additional Information includes additional information
about the Trustees and is available without charge, upon request, for
Shareholders by calling toll free: 1-888-823-2867.
FEDERAL TAX INFORMATION (UNAUDITED)
We are required by the Internal Revenue Code to advise you within 60 days of the
Trust's year-end as to the Federal Tax Status of dividends paid during the year.
Accordingly, all dividends were federally tax-exempt dividends.
52
<Page>
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of a Fund, you incur two types of costs: (1)
transaction/redemption fees; and (2) ongoing costs, including management fees;
distribution and/or service (12b-1) fees; and other Fund expenses. This Example
is intended to help you understand your ongoing costs (in dollars) of investing
in a Fund and to compare these costs with the ongoing costs of investing in
other mutual funds.
The Example is based on an investment of $1,000 invested at December 1, 2005 and
held for the entire period ending May 30, 2006.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on each Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the actual return for any of the Funds. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in each Fund with those of other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second line
of the table is useful in comparing ongoing costs only, but will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
<Table>
<Caption>
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE
DECEMBER 1, 2005 MAY 31, 2006 EXPENSES PAID DURING PERIOD*
----------------------- -------------------- ----------------------------
INTERSTATE TAX-EXEMPT CLASS R
Actual $ 1,000.00 $ 1,004.09 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
INTERSTATE TAX-EXEMPT TREASURER'S TRUST
Actual $ 1,000.00 $ 1,006.08 $ 2.99
Hypothetical $ 1,000.00 $ 1,021.79 $ 3.14
* Expenses are equal to the Fund's annualized
expense ratio of 0.60%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
INTERSTATE TAX-EXEMPT CLASS 75
Actual $ 1,000.00 $ 1,009.47 $ 3.74
Hypothetical $ 1,000.00 $ 1,021.00 $ 3.93
* Expenses are equal to the Fund's annualized
expense ratio of 0.75%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
INTERSTATE TAX-EXEMPT CLASS 70
Actual $ 1,000.00 $ 1,008.03 $ 3.49
Hypothetical $ 1,000.00 $ 1,021.27 $ 3.66
* Expenses are equal to the Fund's annualized
expense ratio of 0.70%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
</Table>
53
<Page>
<Table>
<Caption>
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE
DECEMBER 1, 2005 MAY 31, 2006 EXPENSES PAID DURING PERIOD*
----------------------- -------------------- ----------------------------
INTERSTATE TAX-EXEMPT CLASS 45
Actual $ 1,000.00 $ 1,006.83 $ 2.24
Hypothetical $ 1,000.00 $ 1,022.57 $ 2.36
* Expenses are equal to the Fund's annualized
expense ratio of 0.45%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
INTERSTATE TAX-EXEMPT CLASS 25
Actual $ 1,000.00 $ 1,007.83 $ 1.25
Hypothetical $ 1,000.00 $ 1,023.62 $ 1.31
* Expenses are equal to the Fund's annualized
expense ratio of 0.25%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
INTERSTATE TAX-EXEMPT CLASS 15
Actual $ 1,000.00 $ 1,008.33 $ 0.75
Hypothetical $ 1,000.00 $ 1,024.14 $ 0.79
* Expenses are equal to the Fund's annualized
expense ratio of 0.15%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
INTERSTATE TAX-EXEMPT CLASS 12
Actual $ 1,000.00 $ 1,002.24 $ 0.60
Hypothetical $ 1,000.00 $ 1,024.30 $ 0.63
* Expenses are equal to the Fund's annualized
expense ratio of 0.12%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
INTERSTATE TAX-EXEMPT CLASS 8
Actual $ 1,000.00 $ 1,008.68 $ 0.40
Hypothetical $ 1,000.00 $ 1,024.51 $ 0.42
* Expenses are equal to the Fund's annualized
expense ratio of 0.08%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
CALIFORNIA TAX-EXEMPT
Actual $ 1,000.00 $ 1,003.44 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
CONNECTICUT TAX-EXEMPT
Actual $ 1,000.00 $ 1,003.89 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
FLORIDA TAX-EXEMPT
Actual $ 1,000.00 $ 1,003.54 $ 5.04
Hypothetical $ 1,000.00 $ 1,019.64 $ 5.29
* Expenses are equal to the Fund's annualized
expense ratio of 1.01%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
MASSACHUSETTS TAX-EXEMPT
Actual $ 1,000.00 $ 1,003.39 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
</Table>
54
<Page>
<Table>
<Caption>
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE
DECEMBER 1, 2005 MAY 31, 2006 EXPENSES PAID DURING PERIOD*
----------------------- -------------------- ----------------------------
MICHIGAN TAX-EXEMPT
Actual $ 1,000.00 $ 1,003.49 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
NEW JERSEY TAX-EXEMPT
Actual $ 1,000.00 $ 1,003.34 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
OHIO TAX-EXEMPT
Actual $ 1,000.00 $ 1,003.54 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
PENNSYLVANIA TAX-EXEMPT
Actual $ 1,000.00 $ 1,003.49 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
VIRGINIA TAX-EXEMPT
Actual $ 1,000.00 $ 1,003.34 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
NEW YORK TAX-EXEMPT
Actual $ 1,000.00 $ 1,003.39 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
ARIZONA MUNICIPAL MONEY-MARKET FUND
Actual $ 1,000.00 $ 1,001.55 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
LOUISIANA MUNICIPAL MONEY-MARKET FUND
Actual $ 1,000.00 $ 1,003.39 $ 4.89
Hypothetical $ 1,000.00 $ 1,019.80 $ 5.13
* Expenses are equal to the Fund's annualized
expense ratio of 0.98%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
MINNESOTA MUNICIPAL MONEY-MARKET FUND
Actual $ 1,000.00 $ 1,003.29 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.69 $ 5.24
* Expenses are equal to the Fund's annualized
expense ratio of 1.00%, multiplied by the
average account value over the period,
multiplied by 182/365 (to reflect the one-half
year period).
</Table>
55
<Page>
AVAILABILITY OF PROXY VOTING INFORMATION
The day-to-day investment management decisions of each Fund are the
responsibility of that Fund's investment adviser, RMCI. RMCI is primarily
responsible for determining how to vote proxies with respect to companies in
which the respective Fund invests and for the ongoing review and evaluation of
its own proxy voting policies and corresponding compliance with applicable law.
RMCI's proxy voting policies and procedures, as well as information about how a
particular proxy was voted, may be obtained without charge by calling
800-637-1700 to request a copy or by visiting the SEC's website at www.sec.gov.
Information regarding how each Fund voted proxies relating to portfolio
securities during the 12-month period ended June 30, 2005 is available on the
SEC's website or by calling the toll-free number listed above.
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE
The Funds file a complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Forms N-Q are
available on the SEC's website at www.sec.gov and may be reviewed and copied at
the SEC's Public Reference Room in Washington, DC. Information on the operation
of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
APPROVAL OF "COMPREHENSIVE FEE" INVESTMENT MANAGEMENT AGREEMENT
The Board met on June 30, 2005, to consider the approval of the Investment
Management Agreement of the Arizona Fund with RMCI. At that meeting, the Board
had the opportunity to meet with the representatives of RMCI to determine
whether the agreement is in the best interests of the Fund and its shareholder.
The Board, including a majority of the Independent Trustees, so concluded and
voted to recommend the Investment Management Agreement to the Fund's shareholder
for its approval. The Investment Management Agreement is renewed annually if
approved by the Trustees and by a separate vote of a majority of the
non-interested Trustees. The Investment Management Agreement may be terminated
without penalty, upon sixty (60) days' written notice by RMCI or by a vote of
the Trustees or of a majority of the outstanding voting shares of a Fund.
The Independent Trustees met on September 22, 2005 to reconsider their previous
determinations regarding the Investment Management Agreement in light of certain
deficiencies in internal controls identified by RMCI related to reconciling bank
statements, monitoring compliance with certain Internal Revenue Code
requirements and identifying and collecting amounts due certain funds in the
Reserve/Hallmark complex. The Independent Trustees were advised that these
matters had previously been discussed with the Audit Committee and other
Reserve/Hallmark Funds' independent auditors and that RMCI has instituted
additional procedures to enhance its internal controls for the Funds and
committed to continue to strengthen the Funds' overall control environment. The
Independent Trustees were further advised that the identified deficiencies had
no material impact to shareholders, fund net asset value or other
Reserve/Hallmark Funds' performance.
The Independent Trustees expressed concern about the quality of certain
non-advisory services provided by RMCI but were satisfied with steps RMCI had
taken and had committed to take. Based on consideration of all factors they
deemed relevant, including the steps taken by RMCI and RMCI's commitment to
continue to strengthen the overall control environment, the Independent Trustees
reaffirmed their previous determinations to approve the Investment Management
Agreement.
NATURE, EXTENT AND QUALITY OF SERVICE
The Board received and considered information regarding the nature, extent and
quality of the advisory and other services to be provided to the Fund by RMCI.
The Board considered the background and experience of RMCI's management and the
expertise of personnel of RMCI with regard to investing in the type of
securities in which the Fund will invest. The Trustees concluded that the nature
and extent of the services to be provided by RMCI under the Investment
Management Agreement were necessary and appropriate for the conduct and the
business and investment activities of the Fund. The Trustees also concluded that
the quality of the advisory and administrative services would be satisfactory.
COMPARATIVE FEE AND EXPENSES
The comprehensive management fee to be charged under the Investment Management
Agreement encompasses all of the services necessary for the operation of the
Fund. Therefore, in evaluating the fee relative to other funds the Trustees
thought the most appropriate comparison was to the respective expense ratios of
the Fund. The Trustees compared the Fund's expense ratio to (i) the average
expense ratio of all money market funds with similar investment objectives and
policies; and (ii) the expense ratios of money market funds which are believed
to be direct competitors of the Fund ("peer funds"), i.e., money market funds
which are distributed through third-party broker/dealers and other financial
56
<Page>
institutions which do not have their own proprietary money market funds. The
Trustees noted that the expense ratio of the institutional classes of shares of
the Fund was comparable to or lower than the average expense ratio of other
money market funds as well as those of peer funds. They also noted that the
expense ratios of the retail classes of shares were higher than the average of
other money market funds but comparable to the expense ratios of peer funds.
Based upon their review, the Trustees concluded that the fee payable under the
Investment Management Agreement is competitive.
COMPARATIVE PERFORMANCE
The Fund was not yet operational at the time of the approval of the Agreement.
Therefore, it was not possible to compare the performance of the fund to other
funds.
PROFITABILITY
The Trustees received, analyzed and considered an estimated profitability
analysis of RMCI based on the fees payable under the Investment Management
Agreement and the costs to provide required services, as well as other
relationships between the Fund on the one hand and RMCI affiliates on the other.
The Trustees concluded, with respect to the Fund, that RMCI's profitability
would not be excessive in light of the nature, extent and quality of the
services provided and expected to be provided under Investment Management
Agreement.
BREAKPOINTS AND ECONOMIES OF SCALE
As the comprehensive management fee is currently structured, fee levels do not
reflect economies of scale that potentially could be realized as the Fund grows.
The Trustees noted the potential benefits to shareholders of a comprehensive fee
which would tend to limit increases in the Fund's expense ratios even if the
costs of providing services increase and the related entrepreneurial risk
assumed by RMCI through such an approach. Based on the foregoing, the Trustees
concluded that the absence of breakpoints was reasonable.
OTHER BENEFITS
The Trustees concluded that RMCI does not realize any other quantifiable
material benefits from its relationship with the Fund.
No single factor reviewed by the Board was identified by the Board as the
principal factor in determining whether to approve the Investment Management
Agreement with respect to the Fund.
57
<Page>
CHANGES IN ACCOUNTANTS
On September 29, 2005, PricewaterhouseCoopers, LLP informed management that it
was resigning as independent accountants for the Funds. PricewaterhouseCoopers,
LLP was previously engaged as the independent registered public accounting firm
to audit the Funds' financial statements.
PricewaterhouseCoopers, LLP issued reports on the Fund's financial statements as
of May 31, 2004 and May 31, 2005. Such reports did not contain an adverse
opinion or a disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope, or accounting principles.
PricewaterhouseCoopers, LLP's resignation was accepted by the Funds' Audit
Committee and the Board of Trustees.
During the fiscal year ended May 31, 2004, the fiscal year ended May 31, 2005
and through September 29, 2005 there were no disagreements with
PricewaterhouseCoopers, LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers,
LLP, would have caused it to make reference to the subject matter of the
disagreements in connection with its report. During the fiscal year ended May
31, 2004, the fiscal year ended May 31, 2005 and through September 29, 2005 none
of the events enumerated in paragraphs (1)(v)(B) through (D) of Item 304(a) of
Regulation S-K occurred.
As part of its report dated September 26, 2005 filed as an exhibit to the Funds'
Form N-SAR filed on September 28, 2005, PricewaterhouseCoopers, LLP advised
management that certain bank accounts were not reconciled adequately and that
procedures were not adequate to ensure compliance with Internal Revenue Code
requirements necessary to eliminate tax at the Fund level. These conditions have
been corrected.
The Funds provided PricewaterhouseCoopers LLP with a copy of these disclosures
and PricewaterhouseCoopers LLP has furnished the Funds with a letter addressed
to the Commission stating whether it agrees with the statements made by the
Funds herein and, if not, stating the respects in which it does not agree. A
copy of such letter is filed as an exhibit to the Trust's Form N-SAR filed on
November 30, 2005.
The Funds have selected KPMG, LLP as their new auditors as of December 28, 2005.
58
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<Page>
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<Page>
[THE RESERVE LOGO]
A TRADITION OF FINANCIAL INNOVATION(SM)
GENERAL INFORMATION AND 24-HOUR YIELD AND BALANCE INFORMATION
1250 BROADWAY, NEW YORK, NY 10001-3701 - 212-401-5500 - 800-637-1700 -
www.TheR.com
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 5/06
<Page>
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer and principal financial officer. The registrant has
not made any amendments to its code of ethics during the covered period. The
registrant has not granted any waivers from any provisions of the code of ethics
during the covered period. A copy of the registrant's code of ethics is filed
herewith.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of trustees has determined that there is at least one
audit committee financial expert serving on its audit committee. William
Montgoris is the audit committee financial expert and is considered to be
independent.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees. The registrant paid the following amounts to KPMG, LLP, the
registrant's principal accountant, for the audit of the registrant's annual
financial statements and services in connection therewith for the last fiscal
year:
2006
$0
The registrant paid the following amount to Pricewaterhouse Coopers, LLP, the
registrant's former principal accountant, for the audit of the registrant's
annual financial statements and services in connection therewith for the 2005
fiscal year:
2005
$71,375
(b) Not applicable.
(c) Tax Fees. The registrant paid the following amount to KPMG, LLP, the
registrant's principal accountant, for the preparation of tax returns, tax
consultation, research and related items for the last fiscal year:
2006
$0
The registrant paid the following amount to Pricewaterhouse Coopers, LLP, the
registrant's former principal accountant, for the preparation of tax returns,
tax consultation, research and related items for the 2005 fiscal year:
2005
$0
(d) Not applicable.
(e) Before KPMG, LLP, the registrant's principal accountant, is engaged to
render audit or non-audit services by the registrant, the registrant's
investment adviser, or any entity controlling, controlled by, or under common
control with the registrant's investment adviser that provides ongoing services
to the registrant, the engagement is approved by the registrant's Audit
Committee. Due to potential time constraints between meetings, the Audit
Committee has delegated the authority to pre-approve non-audit services to the
Chairman of the Audit Committee, currently William Montgoris, subject to
subsequent ratification by the Audit Committee.
<Page>
(f) Not applicable.
(g) The following table indicates the aggregate non-audit fees billed by the
registrant's former accountant PricewaterhouseCoopers, LLP for services rendered
to the registrant, and rendered to the registrant's investment adviser (not
including any sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the adviser that
provides ongoing services to the registrant for the 2005 fiscal year.
2005
$0
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable, as the schedule of investments in securities of unaffiliated
issuers as of the close of the reporting period is included as part of the
report to shareholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATES.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the disclosure controls and procedures (as defined
in rule 30a-3(c) under the Investment Company Act of 1940, as amended (the
"Act") as of a date within 90 days of the filing of this report, the Chairman
(principal executive officer) and Chief Financial Officer (principal financial
officer) of the Registrant have concluded that such disclosure controls and
procedures are effectively designed to ensure that information required to be
disclosed by the Registrant is recorded, processed, summarized and reported
within the required time periods and is accumulated and communicated to the
Registrant's management to allow timely decisions regarding required disclosure.
<Page>
(b) There has been no change in the Registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the
second fiscal quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the Registrant's
internal control over financial reporting. However, an audit of the financial
statements disclosed that the Funds' procedures for preparing the "Financial
Highlights" were not sufficiently detailed to detect and correct errors in
certain underlying calculations.
These conditions have been corrected, and the Registrant's internal controls
have been revised, subsequent to year-end.
ITEM 12. EXHIBITS.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2 requirements through filing of an exhibit: Filed
herewith.
(a)(2) Certification of chief executive officer and chief financial officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002: Filed herewith
(b) Certification of chief executive officer and chief financial officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002: Furnished herewith
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Reserve Municipal Money Market Trust
By: /s/ Bruce R. Bent II
Name: Bruce R. Bent II
Title: Co-Chief Executive Officer (Principal Executive Officer)
By: /s/ Arthur T. Bent III
Name: Arthur T. Bent III
Title: Co-Chief Executive Officer (Principal Executive Officer)
Date: August 7, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Bruce R. Bent II
Name: Bruce R. Bent II
Title: Co-Chief Executive Officer (Principal Executive Officer)
By: /s/ Arthur T. Bent III
Name: Arthur T. Bent III
Title: Co-Chief Executive Officer (Principal Executive Officer)
By: /s/ Patrick J. Farrell
Name: Patrick J. Farrell
Title: Chief Financial Officer (Principal Financial Officer)
Date: August 7, 2006