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Case Status:    SETTLED
On or around 03/11/2016 (Date of order of final judgment)

Filing Date: November 25, 2008

The Reserve Short-Term Investment Trust ("RSTIT") is an open-end, diversified management investment company.

According to a press release dated November 25, 2008, the class action was on behalf of purchasers or entities who purchased or held the shares of certain mutual funds offered by RSTIT including the Reserve Yield Plus Fund (“Reserve Yield Plus Fund” or the “Fund”) (NASDAQ:RYPYX); (NASDAQ:RYPTX); (NASDAQ:RYPJX); (NASDAQ:RYPQX) during the period from July 27, 2007 to September 16, 2008 (the “Class Period”), including purchasers and holders of the Reserve Yield Plus Fund in connection with the July 27, 2007 offering.

Specifically, the complaint charges RSTIT, its parent and affiliates, certain of its officers and trustees and TD Ameritrade Holding Corp. with violations of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940.

On July 27, 2007, RSTIT filed with the SEC a Registration Statement on Form N-1A, a Prospectus and Statement of Additional Information (collectively the “Prospectus”). The Prospectus emphasized the Fund’s focus was to “seek as high a level of current income as is consistent with the preservation of capital and liquidity” and a “stable $1.00 share price.” The Fund later issued reports characterizing the Fund as being an “enhanced cash fund” and emphasizing the Fund’s focus on “safety of principal, liquidity and soundness of sleep.”

The Complaint alleges that many of the Fund’s purchasers were sold their interests in the Fund by TD Ameritrade and its employees who consistently represented to investors that the Fund was just like a money market fund. Due to Defendants’ positive, but false, statements, investors purchased and/or continued to hold shares in the Fund.

On September 16, 2008, The Reserve Fund, an entity related to RSTIT, issued a release concerning the Primary Fund, one of its money market funds, stating that the value of the debt securities issued by Lehman Brothers Holdings, Inc. (face value $785 million) and held by the Primary Fund had been valued at zero and, as a result, the net asset value (“NAV”) of the Primary Fund was $0.97 per share. This was major news, as this was only the second time in history that a money market fund had “broken the buck” – that is, reported a share’s value was less than a dollar. In addition, on September 16, 2008, the NAV of the Reserve Yield Plus Fund also collapsed from $1.00 per share to close at $0.97 due to its investment in debt securities issued by Lehman. Thereafter, RSTIT suspended providing a daily NAV on the Reserve Yield Plus Fund.

According to the Complaint, the true facts, which were omitted from the Prospectus and other statements made by Defendants during the Class Period, were as follows: (a) the Fund was no longer adhering to the stated objectives of preserving capital, but in an effort to achieve greater yields was pursuing riskier instruments; (b) despite the fact that many observers believed Lehman would be the next Wall Street failure after Bear Stearns collapsed in March 2008, the Fund purchased a large amount of Lehman commercial paper in April 2008; (c) the Fund was not designed to protect the $1.00 NAV, as were traditional money market funds, and was thus significantly riskier than money market funds; (d) the Fund’s internal controls were inadequate to prevent Defendants from taking on excessive risk; and (e) the Fund failed to disclose the extent of its relationship with TD Ameritrade.

On September 28, 2009, Judge Paul G. Gardephe granted the motion to appoint the Reserve Yield Plus Fund Investor Group's motion for appointment as lead Plaintiff. The Investor Group's motion for appointment of Hagens Berman Sobol Shapiro LLP as lead Counsel was also granted. On November 20, 2009, the lead Plaintiff filed a First Amended Class Action Complaint. The Defendants filed two motions to dismiss on March 26, 2010.

According to the Order entered on July 29, 2010, the Reserve Defendants and the TDA Defendants requested that this Court reconsider its decision to grant the Reserve Yield Plus Fund Investor Group's request on the grounds that this action is governed by the Private Securities Litigation Reform Act of 1995 ("PSLRA"). The PSLRA imposes a mandatory stay of discovery while, as here, a motion to dismiss was pending.

On June 4, 2015, the parties entered into a Stipulation of Settlement. The Settlement was preliminarily approved on November 23. On March 11, 2016, the Court granted final approval of the Settlement and dismissed this case with prejudice.

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