<PAGE>
LOGO
ALEX. BROWN
CASH RESERVE FUND, INC.
PRIME SERIES
TREASURY SERIES
TAX-FREE SERIES
1996
ANNUAL REPORT
<PAGE>
KEY FEATURES OF ALEX. BROWN CASH RESERVE FUND, INC.
DAILY DIVIDENDS
Alex. Brown Cash Reserve Fund, Inc. (the "Fund") declares dividends
daily and distributes them monthly in the form of additional shares
or, at your option, credits the dividends in cash to your account at
Alex. Brown & Sons Incorporated ("Alex. Brown").
CHECK REDEMPTION PRIVILEGE
After completing an authorization form, you may redeem your shares by writing
a check (in a minimum amount of $500) on your account. You will continue to
earn dividends until your check reaches the bank for clearance.
PURCHASES BY MAIL
You may purchase shares by mailing a check and a completed order form to the
Fund at P.O. Box 1346, Baltimore, MD 21203. Order forms and preaddressed
envelopes may be obtained from your Alex. Brown investment representative.
NO SALES CHARGE AND IMMEDIATE LIQUIDITY
You may buy or redeem shares in your account at any time. There is no sales
charge or penalty imposed by the Fund for the purchase or redemption of
shares.
AUTOMATIC PURCHASE AND SALE
You may participate in a program that results in the automatic purchase and
sale of Fund shares in conjunction with security transactions as well as cash
balances accumulated in your Alex. Brown accounts.
CONSTANT NET ASSET VALUE PER SHARE
The Fund uses the amortized cost method of valuing its portfolio securities
and accordingly, will attempt to maintain a constant net asset value of $1.00
per share. Since the Fund's inception on August 11, 1981, a constant net
asset value of $1.00 per share has been maintained for each Series.
MINIMUM INVESTMENT
The minimum initial investment is $1,500. Subsequent investments may be made
in an amount of $100 or more. The minimum amounts do not apply if you
participate in the automatic purchase and sale program.
CURRENT YIELD INFORMATION AVAILABLE
Call (410) 234-3737.
This report is prepared for the general information of shareholders of Alex.
Brown Cash Reserve Fund, Inc. It may be distributed only to current
shareholders or to persons who have received a current prospectus.
<PAGE>
LETTER TO SHAREHOLDERS
MAY 6, 1996
We are pleased to report on the progress of your Fund for the fiscal year
ended March 31, 1996. As of the fiscal year-end, the Fund's net assets
totaled $3.9 billion, an increase of approximately 50% since last year. The
breakdown among each of the Fund's Series is illustrated in the pie chart
below.
Asset Breakdown by Series
PIE CHART
Prime Series $2.6 billion
Treasury Series $719 million
Tax-Free Series $572 million
YEAR IN REVIEW
During the last quarter, interest rates rose, reversing the downward trend
experienced during the first nine months of the year. The year commenced with
long-term rates at approximately 8%, decreasing to a low approaching 6%.
Currently, inflation fears triggered by strong employment results in February
and March have surfaced. as a result, long-term rates have reversed their
downward trend and are presently nearing the 7% level. Intermediate-term rates
have also followed this course.
Throughout the year, a flattening yield curve prompted investors not to
extend their time horizons to receive a small incremental gain in yield. As a
result, investors funneled record amounts of cash reserves into money market
funds. As of March 31, 1996, assets in all taxable and nontaxable money market
funds, according to money market research service IBC/Donoghue, Inc., totaled
$825.3 billion, a 27.5% increase over the same date last year. With assets
currently near $4 billion as of this writing, the Fund enjoyed an even greater
percentage increase in assets. This increase can be attributed to several
factors: 1) an increase in the number of shareholders, 2) the new reduced
settlement timeframe for securities transactions, and 3) investor reluctance to
commit cash to longer maturities.
1
<PAGE>
Historical Yield Chart
(For the twelve months ended 3/31/96)
YIELD CHART
6% --------------------------------------------------------------------
*# *
# * *
5% --------------------------------------------------------------------
# # * 4.72%
# 4.46%
4% --------------------------------------------------------------------
@ @ @ @
3% --------------------------------------------------------------------
@ 2.67%
2% --------------------------------------------------------------------
1% --------------------------------------------------------------------
0% --------------------------------------------------------------------
3/31/95 6/30/95 9/30/95 12/31/95 3/31/96
* Prime Series
# Treasury Series
@ Tax-Free Series
3/31/95 6/30/95 9/30/95 12/31/95 3/31/96
------- ------- ------- -------- -------
Prime Series 5.62% 5.54% 5.19% 5.13% 4.72%
Treasury Series 5.31% 5.21% 4.93% 4.82% 4.46%
Tax-Free Series 3.39% 3.27% 3.16% 3.45% 2.67%
PORTFOLIO QUALITY
The steady flow of assets into the Fund did not impact its portfolio
characteristics. A relatively short weighted average maturity was maintained in
each of the Fund's Portfolios, as noted in the chart below.
---------------------------------------------
WEIGHTED AVERAGE MATURITY
(AS OF MARCH 31, 1996)
---------------------------------------------
Prime Series 54 days
---------------------------------------------
Treasury Series 48 days
---------------------------------------------
Tax-Free Series 42 days
---------------------------------------------
In addition to conservative maturity management, Fund policy requires
that the Fund invest only in the highest quality issues. Evidence of our
insistence on high quality can be found in the Standard & Poor's (S&P)
ratings of each Series of the Fund. Both the Prime and Tax-Free Series
maintain a "AAAm" rating and the Treasury Series maintains a "AAAm-G" rating.
These ratings are the highest that S&P awards to money market funds.
You will note that in the Prime Series, 100% of the holdings continue to
be A-1/P-1 or higher quality. In the Treasury Series, 100% of the holdings
are rated AAA, and the repurchase agreements are fully backed by U.S.
Treasuries. In the Tax-Free Series, the majority of the holdings have the
highest rating for municipal holdings.
INVESTMENT RESULTS
Each series produced returns for the past fiscal year that were competitive
with the average of its peer group. We are pleased that we were able to
generate these returns given our stringent, quality-driven parameters and our
conservative approach to managing the Fund.
2
<PAGE>
--------------------------------------------------------------------
PERFORMANCE COMPARISONS
(FOR THE YEAR ENDED MARCH 31, 1996)
--------------------------------------------------------------------
Yield
------
ALEX. BROWN CASH RESERVE PRIME SERIES 5.36%
First Tier Money Fund Average 5.32%
--------------------------------------------------------------------
ALEX. BROWN CASH RESERVE TREASURY SERIES 5.05%
100% U.S. Treasury Money Fund Average 5.08%
--------------------------------------------------------------------
ALEX. BROWN CASH RESERVE TAX-FREE SERIES 3.23%
Tax-Free Money Fund Average 3.26%
--------------------------------------------------------------------
Source: IBC/Donoghue, Inc. "Money Market Insight," April, 1996
The yields shown represent past performance, which is no guarantee
of future results. An investment in a money market fund is neither
insured nor guaranteed by the U.S. Government. There can be no
assurance that the Fund will be able to maintain a stable net asset
value of $1.00 per share.
MARKET OUTLOOK
Against the backdrop of a surging stock market, apparent benign inflation
and low GPD growth, the bond market was surprised for two consecutive months by
strong employment results. Since then, rates have risen sharply, two-year notes
have climbed to 6.06% from 4.38%, the Dow Jones Industrial Average has fallen
approximately 4% and inflation concerns seem to have resurfaced. the widespread
notion of further near-term rate cuts by the Federal Reserve have all but
disappeared.
Going forward, inflation should remain around 3%. Given the one- to
two-year lead time for Fed tightening in 1995 to take effect, 1996/1997
should produce a sluggish economy. Consumer debt has risen dramatically, and
the rise in mortgage rates from 7% to 8% is slowing home buying and
refinancing activities. In the business sector, capital spending is slowing.
Pressure to increase wages is limited. These factors, among others, suggest
slow GDP growth and in time, the possible reversal of the recent increase in
interest rates.
3
<PAGE>
SUMMARY
Many investors are using money market funds as protection against turbulent
markets. We assure you that our commitment remains the same - to provide our
shareholders with a very high quality money fund and a competitive yield.
As always, we appreciate your continued support.
Sincerely,
/s/ W. James Price /s/ Richard T. Hale
- - ----------------------- ----------------------------
W. James Price Richard T. Hale
Chairman President
4
<PAGE>
CHAIRMAN'S LETTER
May 6, 1996
The year 1995 saw the retirement of two of our longtime Directors. We would
like to thank them for their valuable and tireless service over the years.
Alonzo G. Decker, former Chairman and CEO of Black & Decker, was one of
our original Directors, joining the Alex. Brown Cash Reserve Fund Board in
1981. He served with distinction, and his wise counsel will be much missed,
but we know he will enjoy having more time to spend on his farm on the
Eastern Shore of Maryland.
Bruce Hannay, former Vice President for Patents and Research at Bell
Labs, joined our Board in 1984. His willingness to cross the country four
times each year to attend our Board meetings tells us a great deal about his
energy and loyalty. We wish him well in his retirement in the beautiful State
of Washington.
Al and Bruce, we thank you and will miss you.
Sincerely,
/s/ W. James Price
- - --------------------------------
W. James Price
Chairman
5
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
PRIME SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets
March 31, 1996
<TABLE>
<CAPTION>
Rating (a)
----------------- Par
S&P Moody's (000) Value
------ --------- --------- --------------
COMMERCIAL PAPER -- 87.5%(b)
<S> <C> <C> <C> <C>
Automobiles & Trucks -- 4.9%
Ford Motor Credit Corp.
5.50% 4/1/96 ...................... A-1 P-1 $15,000 $ 15,000,000
PACCAR Financial Corp.
5.32% 4/18/96 ..................... A-1+ P-1 11,000 10,972,366
5.30% 4/24/96 ..................... A-1+ P-1 10,000 9,966,139
5.03% 5/16/96 ..................... A-1+ P-1 5,000 4,968,562
5.03% 5/23/96 ..................... A-1+ P-1 11,000 10,920,079
Toyota Motor Credit Corp.
5.31% 4/22/96 ..................... A-1+ P-1 30,000 29,907,075
5.30% 5/2/96 ...................... A-1+ P-1 15,450 15,379,488
5.00% 5/20/96 ..................... A-1+ P-1 15,000 14,897,917
5.00% 5/22/96 ..................... A-1+ P-1 15,000 14,893,750
------------
126,905,376
------------
Beverages -- 1.9%
Anheuser-Busch Companies, Inc.
5.34% 4/18/96 ..................... A-1+ P-1 15,000 14,962,175
4.90% 10/21/96 .................... A-1+ P-1 20,000 19,447,389
4.75% 10/28/96 .................... A-1+ P-1 15,000 14,584,375
------------
48,993,939
------------
Chemicals, General -- 2.1%
E.I. duPont de Nemours
5.31% 4/29/96 ..................... A-1+ P-1 25,000 24,896,750
5.02% 6/17/96 ..................... A-1+ P-1 15,000 14,833,167
5.03% 7/19/96 ..................... A-1+ P-1 5,000 4,923,851
5.50% 8/1/96 ...................... A-1+ P-1 10,000 9,813,611
------------
54,467,379
------------
Chemicals, Specialty -- 1.3%
Air Products & Chemicals
5.48% 4/16/96 ..................... A-1 P-1 9,000 8,979,450
5.35% 6/17/96 ..................... A-1 P-1 15,000 14,828,354
5.125% 7/11/96 .................... A-1 P-1 9,000 8,870,594
------------
32,678,398
------------
Computer & Office Equipment -- 7.9%
Hewlett-Packard
5.35% 4/18/96 ..................... A-1+ P-1 10,000 9,974,736
5.24% 4/19/96 ..................... A-1+ P-1 10,000 9,973,800
5.22% 4/26/96 ..................... A-1+ P-1 20,500 20,425,687
4.97% 6/19/96 ..................... A-1+ P-1 10,000 9,890,936
4.95% 6/25/96 ..................... A-1+ P-1 15,000 14,824,688
5.04% 7/19/96 ..................... A-1+ P-1 9,750 9,601,215
</TABLE>
6
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating (a)
----------------- Par
S&P Moody's (000) Value
------ --------- --------- --------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER -- continued
Computer & Office Equipment -- continued
Pitney Bowes Credit Corp.
5.24% 4/18/96 ..................... A-1+ P-1 $10,000 $ 9,975,256
5.11% 4/30/96 ..................... A-1+ P-1 15,000 14,938,254
5.14% 5/2/96 ...................... A-1+ P-1 10,000 9,955,739
5.02% 10/3/96 ..................... A-1+ P-1 15,000 14,613,042
5.03% 10/3/96 ..................... A-1+ P-1 15,000 14,612,271
5.02% 10/4/96 ..................... A-1+ P-1 20,000 19,481,267
5.04% 10/4/96 ..................... A-1+ P-1 17,000 16,557,320
Xerox Credit Corp.
5.10% 5/8/96 ...................... A-1 P-1 20,000 19,895,167
5.05% 8/29/96 ..................... A-1 P-1 10,000 9,789,583
--------------
204,508,961
--------------
Credit Unions -- 2.5%
Central Corp. Credit
5.39% 4/15/96 ..................... A-1+ P-1 24,225 24,174,222
Mid-States Corporate Federal Credit
Union
5.33% 4/12/96 ..................... A-1+ P-1 18,000 17,970,685
5.33% 4/23/96 ..................... A-1+ P-1 8,000 7,973,942
U.S. Central Credit Union
5.30% 4/17/96 ..................... A-1+ P-1 15,000 14,964,667
--------------
65,083,516
--------------
Defense & Aircraft -- 2.1%
Rockwell International Corp.
5.31% 4/30/96 ..................... A-1+ P-1 55,000 54,764,939
--------------
Electrical & Electronics -- 2.9%
General Electric Company
5.43% 4/4/96 ...................... A-1+ P-1 25,000 24,988,687
5.42% 5/2/96 ...................... A-1+ P-1 25,000 24,883,319
5.07% 5/3/96 ...................... A-1+ P-1 10,000 9,954,933
Motorola Inc.
5.06% 4/25/96 ..................... A-1+ P-1 15,000 14,949,400
--------------
74,776,339
--------------
Electric Utility -- 1.4%
Indianapolis Power & Light
5.17% 4/2/96 ...................... A-1+ P-1 10,700 10,698,463
Northern States Power
5.35% 4/17/96 ..................... A-1+ P-1 25,000 24,940,556
--------------
35,639,019
--------------
</TABLE>
7
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating (a)
----------------- Par
S&P Moody's (000) Value
------ --------- --------- --------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER -- continued
Entertainment -- 2.6%
Walt Disney Co. .......................
5.18% 7/15/96 ..................... A-1 P-1 $10,000 $ 9,848,917
5.18% 8/14/96 ..................... A-1 P-1 15,000 14,708,625
5.20% 9/10/96 ..................... A-1 P-1 20,000 19,532,000
5.18% 12/6/96 ..................... A-1 P-1 10,000 9,641,717
5.18% 12/9/96 ..................... A-1 P-1 15,000 14,456,100
--------------
68,187,359
--------------
Finance/Commercial -- 0.4%
CIT Group Holdings Inc.
5.32% 4/8/96 ...................... A-1 P-1 10,000 9,989,656
--------------
Finance/Consumer -- 2.2%
USAA Capital Corp.
5.32% 4/3/96 ...................... A-1+ P-1 7,000 6,997,931
5.12% 4/10/96 ..................... A-1+ P-1 15,000 14,980,800
5.02% 5/20/96 ..................... A-1+ P-1 10,000 9,931,672
5.05% 6/6/96 ...................... A-1+ P-1 8,500 8,421,304
5.05% 6/14/96 ..................... A-1+ P-1 18,006 17,819,088
--------------
58,150,795
--------------
Finance/Diversified -- 0.5%
General Electric Capital Corp.
5.15% 4/4/96 ...................... A-1+ P-1 12,000 11,994,850
--------------
Food -- 6.0%
Campbell Soup Co.
5.34% 6/6/96 ...................... A-1+ P-1 25,000 24,755,250
4.98% 10/4/96 ..................... A-1+ P-1 10,000 9,742,700
Cargill, Inc.
5.35% 4/2/96 ...................... A-1+ P-1 10,000 9,998,514
5.08% 4/30/96 ..................... A-1+ P-1 8,000 7,967,262
5.02% 5/8/96 ...................... A-1+ P-1 10,000 9,948,406
5.02% 5/20/96 ..................... A-1+ P-1 10,000 9,931,672
5.23% 6/17/96 ..................... A-1+ P-1 10,000 9,888,136
5.23% 6/18/96 ..................... A-1+ P-1 20,000 19,773,367
H.J.Heinz
5.37% 4/1/96 ...................... A-1 P-1 10,000 10,000,000
Hershey Foods
5.10% 4/26/96 ..................... A-1+ P-1 20,000 19,929,167
Kellogg Company
5.09% 4/16/96 ..................... A-1+ P-1 4,122 4,113,258
5.25% 6/3/96 ...................... A-1+ P-1 21,000 20,807,062
--------------
156,854,794
--------------
</TABLE>
8
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating (a)
----------------- Par
S&P Moody's (000) Value
------ --------- --------- --------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER -- continued
Household Products -- 5.8%
Clorox Company ........................
5.33% 4/8/96 ...................... A-1+ P-1 $20,000 $ 19,979,272
5.30% 4/22/96 ..................... A-1+ P-1 15,000 14,953,625
5.03% 5/28/96 ..................... A-1+ P-1 5,000 4,960,179
Colgate-Palmolive Co.
5.35% 4/4/96 ...................... A-1 P-1 15,000 14,993,313
5.09% 7/12/96 ..................... A-1 P-1 10,000 9,855,783
Procter & Gamble Co.
5.23% 4/12/96 ..................... A-1+ P-1 18,200 18,170,915
5.23% 4/17/96 ..................... A-1+ P-1 15,000 14,965,133
5.07% 5/13/96 ..................... A-1+ P-1 14,000 13,917,190
5.07% 6/11/96 ..................... A-1+ P-1 20,000 19,800,017
5.00% 6/12/96 ..................... A-1+ P-1 9,000 8,910,000
5.07% 6/14/96 ..................... A-1+ P-1 12,000 11,874,940
--------------
152,380,367
--------------
Insurance, Property & Casualty -- 4.3%
A.I. Credit Corp.
5.00% 5/7/96 ...................... A-1+ P-1 15,000 14,925,000
5.00% 5/13/96 ..................... A-1+ P-1 20,000 19,883,333
AIG Funding Inc.
5.30% 4/19/96 ..................... A-1+ P-1 15,000 14,960,250
5.30% 5/20/96 ..................... A-1+ P-1 10,000 9,927,861
5.20% 7/31/96 ..................... A-1+ P-1 15,000 14,737,833
Chubb Capital Corp.
5.55% 4/12/96 ..................... A-1+ P-1 24,200 24,160,473
Marsh & McLennan Companies Inc.
5.15% 9/27/96 ..................... A-1+ P-1 15,000 14,615,896
--------------
113,210,646
--------------
Integrated Oil -- 3.7%
Amoco Co.
5.18% 4/18/96 ..................... A-1+ P-1 17,106 17,064,157
Exxon Imperial U.S. Inc.
5.28% 4/17/96 ..................... A-1+ P-1 25,000 24,941,422
5.30% 4/26/96 ..................... A-1+ P-1 30,000 29,889,583
Shell Oil Co.
5.37% 4/4/96 ...................... A-1+ P-1 25,000 24,988,812
--------------
96,883,974
--------------
Oil Transportation -- 0.6%
Colonial Pipeline
5.25% 4/11/96 ..................... A-1+ P-1 6,600 6,590,375
5.12% 4/12/96 ..................... A-1+ P-1 10,000 9,984,356
--------------
16,574,731
--------------
</TABLE>
9
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating (a)
----------------- Par
S&P Moody's (000) Value
------ --------- --------- --------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER -- continued
Paper -- 1.3%
Kimberly-Clark Corp. ..................
5.13% 4/19/96 ..................... A-1+ P-1 $ 5,850 $ 5,834,995
5.30% 5/1/96 ...................... A-1+ P-1 20,000 19,911,667
5.27% 5/7/96 ...................... A-1+ P-1 8,000 7,957,840
--------------
33,704,502
--------------
Pharmaceuticals -- 8.9%
Abbott Laboratories
5.33% 4/25/96 ..................... A-1+ P-1 20,000 19,928,933
Eli Lilly & Co.
5.11% 4/23/96 ..................... A-1+ P-1 15,000 14,953,158
5.30% 5/23/96 ..................... A-1+ P-1 10,000 9,923,444
4.92% 6/17/96 ..................... A-1+ P-1 10,000 9,894,767
5.21% 6/20/96 ..................... A-1+ P-1 15,000 14,826,333
4.95% 8/20/96 ..................... A-1+ P-1 15,000 14,709,187
4.78% 8/22/96 ..................... A-1+ P-1 10,000 9,810,128
Pfizer Inc.
5.15% 4/4/96 ...................... A-1+ P-1 3,000 2,998,713
5.13% 4/17/96 ..................... A-1+ P-1 20,000 19,954,400
Schering-Plough Corp.
5.25% 5/24/96 ..................... A-1+ P-1 20,000 19,845,417
Warner-Lambert Co.
5.25% 6/10/96 ..................... A-1+ P-1 15,000 14,846,875
5.33% 6/12/96 ..................... A-1+ P-1 12,200 12,069,948
5.35% 6/18/96 ..................... A-1+ P-1 25,000 24,710,208
5.03% 7/30/96 ..................... A-1+ P-1 14,500 14,256,883
5.05% 7/30/96 ..................... A-1+ P-1 10,000 9,831,667
4.80% 8/8/96 ...................... A-1+ P-1 10,000 9,828,000
4.87% 9/3/96 ...................... A-1+ P-1 10,000 9,790,319
--------------
232,178,380
--------------
Publishing -- 6.8%
Dun & Bradstreet Corp.
5.30% 5/21/96 ..................... A-1+ P-1 20,000 19,852,778
Gannett Co.
5.22% 4/9/96 ...................... A-1 P-1 30,000 29,965,200
5.30% 4/11/96 ..................... A-1 P-1 26,200 26,161,428
5.27% 4/17/96 ..................... A-1 P-1 25,000 24,941,444
Knight-Ridder Inc.
5.60% 4/2/96 ...................... A-1+ P-1 25,000 24,996,111
5.25% 4/26/96 ..................... A-1+ P-1 10,000 9,963,542
5.07% 5/28/96 ..................... A-1+ P-1 25,000 24,799,312
McGraw-Hill, Inc.
5.50% 4/4/96 ...................... A-1 P-1 7,500 7,496,563
RR Donnelley & Sons
5.25% 4/26/96 ..................... A-1+ P-1 10,000 9,963,542
--------------
178,139,920
--------------
</TABLE>
10
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating (a)
------------------ Par
S&P Moody's (000) Value
------ --------- --------- --------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER -- continued
Railroad -- 1.5%
Norfolk Southern Corporation
5.03% 6/7/96 ...................... A-1+ P-1 $12,500 $ 12,382,983
5.23% 6/21/96 ..................... A-1+ P-1 26,364 26,053,762
--------------
38,436,745
--------------
Retail, Specialty -- 2.0%
Toys "R" Us
5.30% 4/26/96 ..................... A-1 P-1 27,000 26,900,625
5.37% 5/6/96 ...................... A-1 P-1 25,000 24,869,479
--------------
51,770,104
--------------
Structured Finance -- 6.5%
CIESCO, L.P.
5.32% 4/11/96 ..................... A-1+ P-1 25,000 24,963,014
5.15% 5/8/96 ...................... A-1+ P-1 40,000 39,788,278
5.07% 5/23/96 ..................... A-1+ P-1 15,000 14,890,150
Corporate Asset Funding Company, Inc.
5.15% 4/4/96 ...................... A-1+ P-1 30,000 29,987,125
5.38% 4/22/96 ..................... A-1+ P-1 20,000 19,937,233
5.15% 5/2/96 ...................... A-1+ P-1 20,000 19,911,306
5.27% 5/23/96 ..................... A-1+ P-1 20,000 19,847,756
--------------
169,324,862
--------------
Telephone -- 7.0%
AT&T
5.50% 4/10/96 ..................... A-1+ P-1 10,000 9,986,250
5.30% 4/30/96 ..................... A-1+ P-1 15,000 14,935,958
5.18% 7/9/96 ...................... A-1+ P-1 15,000 14,786,325
Ameritech Capital Funding Corp.
5.07% 6/6/96 ...................... A-1+ P-1 30,000 29,721,150
5.02% 6/7/96 ...................... A-1+ P-1 20,000 19,813,144
5.20% 12/10/96 .................... A-1+ P-1 15,000 14,451,833
Ameritech Corp.
5.14% 4/12/96 ..................... A-1+ P-1 10,000 9,984,294
BellSouth Capital Fund
5.00% 5/7/96 ...................... A-1+ P-1 15,000 14,925,000
BellSouth Telecommunications
5.16% 4/23/96 ..................... A-1+ P-1 18,300 18,242,294
GTE North Inc.
5.48% 4/9/96 ...................... A-1+ P-1 20,000 19,975,644
Southwestern Bell Telephone Co.
5.32% 6/7/96 ...................... A-1+ P-1 15,000 14,851,483
--------------
181,673,375
--------------
</TABLE>
11
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating (a)
------------------ Par
S&P Moody's (000) Value
------ --------- --------- --------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER -- continued
Waste Management -- 0.4%
WMX Technologies
4.78% 11/1/96 ..................... A-1 P-1 $ 10,000 $ 9,715,856
---------------
TOTAL COMMERCIAL PAPER ........... 2,276,988,782
---------------
VARIABLE RATE NOTE -- 1.9%
Coca-Cola Master Note
5.382%(c) 7/22/96 .................. A-1+ P-1 50,000 50,000,000
---------------
FEDERAL HOME LOAN BANK -- 0.6%
FHLB
5.18% 4/24/96 ..................... AAA -- 15,000 14,950,358
---------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 3.1%
FNMA
Discount Note
5.30% 4/16/96 ..................... -- P-1 25,000 24,944,792
5.18% 5/2/96 ...................... -- P-1 15,000 14,933,092
4.95% 9/5/96 ...................... -- P-1 10,000 9,784,125
Note
5.68% 10/7/96 ..................... AAA Aaa 20,000 20,017,657
5.39% 12/4/96 ..................... AAA Aaa 10,000 10,016,832
--------- ---------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION ................... 80,000 79,696,498
--------- ---------------
REPURCHASE AGREEMENTS -- 7.0%(d)
Goldman Sachs & Co.
5.37%(e) 4/1/96 ................... -- -- 83,000 83,000,000
Morgan Stanley & Co.
5.33%(f) 4/1/96 ................... -- -- 100,000 100,000,000
---------------
TOTAL REPURCHASE AGREEMENTS ........................... 183,000,000
---------------
TOTAL INVESTMENTS -- 100.1% ................................... $2,604,635,638(g)
LIABILITIES IN EXCESS OF OTHER ASSETS, NET -- (0.1%) .......... (1,855,863)
---------------
NET ASSETS -- 100.0% .......................................... $2,602,779,775
===============
</TABLE>
12
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
Value
-----
Net Asset Value, Offering and Redemption Price Per:
Prime Share
($2,386,681,216 / 2,386,684,392 shares outstanding)............... $1.00
=====
Flag Investors Class A Share
($5,976,831 / 5,976,824 shares outstanding)....................... $1.00
=====
Flag Investors Class B Share
($10,200 / 10,200 shares outstanding)............................. $1.00
=====
Institutional Prime Share
($53,699,315 / 53,699,535 shares outstanding)..................... $1.00
=====
Quality Cash Reserve Prime Share
($156,412,213 / 156,412,393 shares outstanding)................... $1.00
=====
- - ------
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P") are not covered by the Independent
Accountant's Report.
(b) Most commercial paper is traded on a discount basis. In such cases, the
interest rate shown represents the rate of discount paid or received at
time of purchase by the Fund.
(c) Master note is payable upon demand by the Fund with no more than five days'
notice. Interest rates on master notes are redetermined weekly. Rates shown
are the rates in effect on March 31, 1996.
(d) Collateral on repurchase agreements is taken into possession by the Fund
upon entering into the repurchase agreement. The collateral is marked to
market daily to insure market value as being at least 102 percent of the
resale price of the repurchase agreement.
(e) Dated 3/29/96 to be repurchased on 4/1/96, collateralized by U.S. Treasury
Notes with a market value of $84,660,143.
(f) Dated 3/29/96 to be repurchased on 4/1/96, collateralized by U.S. Treasury
Notes with a market value of $102,042,479.
(g) Aggregate cost for financial reporting and federal tax purposes.
MOODY'S RATINGS:
Aaa Bonds that are judged to be of the best quality.
P-1 Commercial paper bearing this designation is of the best quality.
S&P RATINGS:
AAA These are obligations of the highest quality.
A-1 Commercial paper that has a strong degree of safety regarding timely
payment. Those issues determined to possess very strong safety
characteristics are denoted with a plus (+) sign.
A detailed description of the above ratings can be found in the
Fund's Statement of Additional Information.
See Notes to Financial Statements.
13
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
TREASURY SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets
March 31, 1996
<TABLE>
<CAPTION>
Maturity Par
Date (000) Value
-------- ----- -----
<S> <C> <C> <C>
U.S. TREASURY SECURITIES -- 99.5%
U.S. Treasury Bills(a) -- 70.0%
4.900% .................................. 4/4/96 $20,000 $ 19,991,833
5.000% .................................. 4/4/96 20,000 19,991,667
5.035% .................................. 4/11/96 36,000 35,949,650
4.900% .................................. 4/18/96 8,300 8,280,795
4.990% .................................. 4/18/96 12,300 12,271,017
5.000% .................................. 4/18/96 44,700 44,594,458
5.230% .................................. 4/25/96 14,200 14,150,489
4.790% .................................. 5/2/96 15,800 15,734,829
4.940% .................................. 5/2/96 8,600 8,563,417
4.975% .................................. 5/2/96 8,000 7,965,728
4.985% .................................. 5/2/96 10,500 10,454,927
5.045% .................................. 5/2/96 9,000 8,960,901
5.200% .................................. 5/2/96 9,500 9,457,461
5.245% .................................. 5/2/96 8,600 8,561,158
4.840% .................................. 5/9/96 5,000 4,974,456
4.955% .................................. 5/9/96 20,500 20,392,779
4.980% .................................. 5/9/96 10,000 9,947,433
4.985% .................................. 5/9/96 3,000 2,984,214
4.745% .................................. 5/16/96 16,200 16,103,914
4.950% .................................. 5/16/96 20,000 19,876,250
5.000% .................................. 5/16/96 4,000 3,975,000
4.930% .................................. 5/23/96 45,600 45,275,277
4.750% .................................. 5/30/96 7,600 7,540,836
4.755% .................................. 5/30/96 15,000 14,883,106
4.730% .................................. 6/6/96 7,600 7,534,095
4.850% .................................. 6/6/96 21,500 21,308,829
4.880% .................................. 6/6/96 1,500 1,486,580
4.910% .................................. 6/6/96 29,400 29,135,351
4.955% .................................. 6/20/96 6,500 6,428,428
4.950% .................................. 7/5/96 8,500 8,388,969
4.965% .................................. 7/11/96 2,500 2,465,176
4.990% .................................. 7/11/96 3,400 3,352,401
4.980% .................................. 7/25/96 9,500 9,348,871
5.000% .................................. 7/25/96 5,000 4,920,139
5.055% .................................. 7/25/96 38,200 37,583,150
------------
Total U.S. Treasury Bills .................... 502,833,584
------------
</TABLE>
14
<PAGE>
TREASURY SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Maturity Par
Date (000) Value
-------- ----- -----
<S> <C> <C> <C>
U.S. TREASURY SECURITIES -- continued
U.S. Treasury Notes -- 29.5%
5.500% .................................. 4/30/96 $110,000 $ 110,039,830
4.250% .................................. 5/15/96 20,000 19,972,141
7.375% .................................. 5/15/96 31,700 31,784,833
5.875% .................................. 5/31/96 15,000 15,019,026
7.625% .................................. 5/31/96 15,000 15,056,100
7.875% .................................. 7/15/96 20,000 20,147,390
-------------
Total U.S. Treasury Notes .................... 212,019,320
-------------
TOTAL U.S. TREASURY SECURITIES .......... 714,852,904
-------------
TOTAL INVESTMENTS -- 99.5% ........................ 714,852,904(b)
OTHER ASSETS LESS LIABILITIES, NET -- 0.5% ........ 3,784,011
-------------
NET ASSETS -- 100.0% .............................. $ 718,636,915
=============
Net Asset Value, Offering and Redemption Price Per:
Treasury Share
($666,814,158 / 666,762,028 shares outstanding) . $1.00
=====
Institutional Treasury Share
($51,822,757 / 51,813,226 shares outstanding) ... $1.00
======
</TABLE>
- - ------
(a) U.S. Treasury bills are traded on a discount basis. In such cases, the
interest rate shown represents the yield at the date of purchase.
(b) Aggregate cost for financial reporting and federal tax purposes.
See Notes to Financial Statements.
15
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
TAX-FREE SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets
March 31, 1996
<TABLE>
<CAPTION>
Rating(a) Par
S&P Moody's (000) Value
-------- --------- -------- ------------
<S> <C> <C> <C> <C>
ALABAMA -- 2.7%
Health Care Facility Authority of The City of Huntsville,
Health Care Facilities Revenue Series 1994-B (MBIA
Insurance)
3.30% 4/7/96 (b) ................................... A-1+ -- $ 5,100 $ 5,100,000
Homewood Educational Building Authority (Sanford
University), Series 1988 A (First Alabama Bank LOC)
3.50% 4/7/96 (b) ................................... -- VMIG-1 4,720 4,720,000
Homewood Educational Building Authority (Sanford
University), Series 1988 B (First Alabama Bank LOC)
3.50% 4/7/96 (b) ................................... -- VMIG-1 5,665 5,665,000
------------
15,485,000
------------
ALASKA -- 1.8%
City of Valdez, Marine Terminal Revenue Refunding Bonds
(Arco Transportation Alaska, Inc. Project)
3.30% 6/10/96 (c) .................................. A-1 VMIG-1 10,500 10,500,000
------------
ARIZONA -- 2.4%
Salt River Project, Agricultural Improvement and Power
District
3.35% 8/14/96 (c) .................................. A-1+ P-1 13,698 13,698,000
------------
ARKANSAS -- 1.4%
Arkansas State Development Health Care Authority
Facilities (Sisters of Mercy) (Abm-AMRO Bank N.V. LOC)
3.40% 4/7/96 (b) ................................... A-1+ VMIG-1 8,100 8,100,000
------------
COLORADO -- 7.3%
Colorado Health Facilities Authority, Hospital Revenue,
Adjustable Rate (Sisters of Charity)
3.35% 4/7/96 (b) ................................... A-1+ VMIG-1 6,000 6,000,000
Colorado State Housing Finance Authority, Multi-Family
Housing Bonds -- Winridge Project (SunTrust Bank LOC)
3.40% 4/7/96 (b) ................................... A-1+ -- 7,000 7,000,000
Colorado TRAN
4.50% 6/27/96 (c) .................................. SP-1+ -- 15,000 15,026,465
4.50% 6/27/96 (c) .................................. SP-1+ -- 4,400 4,411,890
</TABLE>
16
<PAGE>
TAX-FREE SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating(a) Par
S&P Moody's (000) Value
-------- --------- -------- ------------
<S> <C> <C> <C> <C>
COLORADO -- continued
Moffat County Pollution Control Revenue Bonds, Series
1984 (Tri-State)
3.40% 4/7/96 (b) ................................... A-1+ P-1 $ 9,100 $ 9,100,000
------------
41,538,355
------------
FLORIDA -- 3.1%
Sunshine State Government Financing Authority,
Commercial Paper Notes
3.35% 4/30/96 ...................................... A-1+ -- 3,000 3,000,000
3.45% 8/13/96 (c) .................................. -- -- 8,975 8,975,000
3.40% 8/14/96 (c) .................................. A-1+ -- 5,700 5,700,000
------------
17,675,000
------------
GEORGIA -- 6.0%
Cobb County Housing Authority RB (Post Mill Project)
Series 1995 DN (FNMA LOC)
3.35% 4/7/96 (b) ................................... A-1+ -- 7,000 7,000,000
Dekalb County Housing Authority, Multifamily Clairmont
Crest Project (FNMA LOC)
3.30% 4/7/96 (b) ................................... A-1+ -- 4,000 4,000,000
Georgia Municipal Association, Pooled Bonds
(MBIA Insurance)
3.20% 4/7/96 (b) ................................... A-1+ VMIG-1 12,100 12,100,000
Smyrna Housing Authority RB (Post Valley Project)
Series 1995 DN (FNMA LOC)
3.35% 4/7/96 (b) ................................... A-1+ -- 11,000 11,000,000
------------
34,100,000
------------
IDAHO -- 1.2%
Idaho Health Facility Authority (Holy Cross Health
System)
3.35% 4/7/96 (b) ................................... A-1+ VMIG-1 7,000 7,000,000
------------
ILLINOIS -- 11.5%
Illinois Development Finance Authority PCRB Commonwealth
Edison CO Project, Series 94C (Abm-AMRO Bank N.V. LOC)
3.30% 4/7/96 (b) ................................... A-1+ P-1 15,500 15,500,000
Illinois Education Facility Authority, Museum of Science
and Industry (Northern Trust LOC)
3.40% 4/5/96 (b) ................................... -- VMIG-1 1,300 1,300,000
</TABLE>
17
<PAGE>
TAX-FREE SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating(a) Par
S&P Moody's (000) Value
-------- --------- -------- ------------
<S> <C> <C> <C> <C>
ILLINOIS -- continued
Illinois Health Facilities Authority, Gottlieb Health
Resources (Harris Trust LOC)
3.40% 4/7/96 (b) ................................... -- VMIG-1 $ 9,900 $ 9,900,000
Illinois Health Facilities Authority, Revenue Bonds
(Rush-Presbyterian-St. Luke's Medical Center)
3.35% 4/30/96 (c) .................................. A-1+ VMIG-1 3,000 3,000,000
Illinois Health Facilities Authority, Variable Rate
Demand Revenue Bonds, Revolving Fund Pooled Financing
Program (The University of Chicago Project)
3.25% 8/6/96 (c) ................................... A-1+ VMIG-1 11,400 11,400,000
Illinois Health Facility Authority, Carle Foundation
Project (FGIC Insurance)
3.40% 4/7/96 (b) ................................... -- VMIG-1 5,950 5,950,000
Illinois State Revenue Anticipation Certificates
4.50% 5/10/96 (c) .................................. SP-1 MIG-1 11,600 11,608,315
Illinois State Revenue Anticipation Certificates
4.50% 6/10/96 (c) .................................. SP-1+ MIG-1 6,600 6,006,665
Illinois State Toll Highway Authority, Toll Highway
Priority Series B (MBIA Insurance)
3.30% 4/7/96 (b) ................................... A-1+ VMIG-1 1,400 1,400,000
------------
66,064,980
------------
INDIANA -- 5.6%
Indiana Health Facilities Financing Authority, Hospital
Revenue Bonds
3.40% 4/7/96 (b) ................................... A-1+ VMIG-1 5,000 5,000,000
Indiana Health Facility Authority, Hospital Revenue
(Methodist Hospital)
3.40% 4/7/96 (b) ................................... A-1+ VMIG-1 6,900 6,900,000
Indianapolis, Indiana Gas Utility System, Citizens Gas
and Coke Utility
3.45% 8/14/96 (c) .................................. A-1+ P-1 10,000 10,000,000
Petersburg Pollution Control Revenue (Indianapolis
Power and Light) (AMBAC Insurance)
3.30% 4/7/96 (b) ................................... -- VMIG-1 10,000 10,000,000
------------
31,900,000
------------
IOWA -- 2.2%
Council Bluffs, Iowa Pollution Control Revenue (Illinois
Gas and Electric Company)
3.45% 4/7/96 (b) ................................... A-1+ VMIG-1 7,700 7,700,000
Louisa County Pollution Control Revenue, Refunding Bonds
(Rabo Bank Nederland LOC)
3.30% 4/7/96 (c) ................................... A-1+ VMIG-1 5,000 5,000,000
-----------
12,700,000
-----------
</TABLE>
18
<PAGE>
TAX-FREE SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating(a) Par
S&P Moody's (000) Value
-------- --------- -------- ------------
<S> <C> <C> <C> <C>
KANSAS -- 0.5%
Burlington Pollution Control Refunding Revenue Bonds
(Kansas City Power & Light Company) (Toronto Dominion
LOC)
3.20% 6/13/96 (c) .................................. A-1+ P-1 $ 3,150 $ 3,150,000
------------
LOUISIANA -- 6.4%
East Baton Rouge Parish (Georgia Pacific Corp.)
Pollution Control Revenue Bonds (Toronto Dominion LOC)
3.30% 4/7/96 (b) ................................... -- P-1 2,700 2,700,000
Louisiana Offshore Terminal Authority, Deepwater Port
Refunding Revenue Bonds (Union Bank of Switzerland LOC)
3.35% 4/7/96 (b) ................................... A-1+ -- 3,300 3,300,000
Louisiana Public Facilities Authority, College and
Equipment Series A (Societe Generale LOC)
3.35% 4/7/96 (b) ................................... A-1+ VMIG-1 10,750 10,750,000
Plaquemines Port, Harbor and Terminal District, Marine
Terminal Facilities Revenue Refunding Bonds
(Electro-Coal Transfer Corporation)
3.45% 5/14/96 (b) .................................. -- P-1 5,000 5,000,000
Plaquemines Port, Harbor and Terminal District, Marine
Terminal Facilities Revenue Refunding Bonds
3.50% 4/1/96 (c) ................................... P-1 -- 15,000 15,000,000
------------
36,750,000
------------
MARYLAND -- 4.5%
Maryland State Community Development Administration,
Department of Housing and Community Development,
Single Family Program First Series RB
3.45% 10/1/96 (c) .................................. VMIG-1 -- 7,500 7,500,000
Maryland State Health & Higher Education Authority
(Daughters of Charity)
3.40% 4/7/96 (b) ................................... VMIG-1 -- 11,000 11,000,000
Montgomery County General Obligations
3.30% 4/1/96 (c) ................................... A-1+ P-1 7,000 7,000,000
------------
25,500,000
------------
MASSACHUSETTS -- 2.0%
Massachusetts State Housing Finance, Multi-Family
Series A
3.25% 4/7/96 (b) ................................... A-1+ -- 11,400 11,400,000
-----------
</TABLE>
19
<PAGE>
TAX-FREE SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating(a) Par
S&P Moody's (000) Value
-------- --------- -------- ------------
<S> <C> <C> <C> <C>
MINNESOTA -- 1.5%
City of Rochester, Minnesota, Health Care Facility
(Mayo Medical Center)
3.20% 6/13/96 (c) .................................. A-1+ -- $3,000 $ 3,000,000
Regents of The University of Minnesota, Bonds
3.25% 6/14/96 (c) .................................. A-1+ VMIG-1 3,300 3,300,000
Regents of The University of Minnesota, Commercial Paper
Certificates
3.25% 6/14/96 (c) .................................. A-1+ P-1 2,000 2,000,000
------------
8,300,000
------------
MISSOURI -- 3.8%
Missouri Environmental Improvement, Pollution Control
Revenue, National Rural Utilities Series M
3.40% 4/7/96 (b) ................................... A-1+ VMIG-1 5,800 5,800,000
Missouri Health and Educational Facilities Authority,
Health Facilities Refunding Revenue Bonds (Sisters of
Mercy)
3.40% 4/7/96 (b) ................................... A-1+ VMIG-1 8,000 8,000,000
Missouri Health and Educational Facilities Authority,
Health Facility Revenue (Sisters of Mercy)
3.40% 4/7/96 (b) ................................... A-1+ VMIG-1 8,000 8,000,000
------------
21,800,000
------------
NEW JERSEY -- 0.3% ....................................
Mercer County Improvement Revenue Bonds (Credit
Suisse LOC)
3.00% 4/7/96 (b) ................................... A-1+ MIG-1 1,800 1,800,000
------------
NEW MEXICO -- 0.5%
Albuquerque Health Facility Authority (Sisters of
Charity) (Toronto Dominion LOC)
3.35% 4/7/96 (b) ................................... A-1+ VMIG-1 3,000 3,000,000
------------
NEW YORK -- 0.1%
New York Local Government Assistance Corporation,
Variable Rate Bonds (Societe Generale LOC)
3.15% 4/7/96 (b) ................................... A-1+ VMIG-1 100 100,000
Triborough Bridge and Tunnel Authority (FGIC Insurance)
3.10% 4/7/96 (b) ................................... A-1+ VMIG-1 600 600,000
------------
700,000
------------
</TABLE>
20
<PAGE>
TAX-FREE SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating(a) Par
S&P Moody's (000) Value
-------- --------- -------- ------------
<S> <C> <C> <C> <C>
NORTH CAROLINA -- 2.0%
City of Winston-Salem, G.O. Water and Sewer Revenue
3.30% 4/7/96 (b) ................................... A-1+ VMIG-1 $ 2,600 $ 2,600,000
North Carolina Education Facility Agency (Duke
University)
3.25% 4/7/96 (b) ................................... A-1+ VMIG-1 500 500,000
North Carolina Educational Facilities Finance Agency
(Duke University Project) Series 1987 A
3.25% 4/7/96 (b) ................................... A-1+ VMIG-1 3,000 3,000,000
North Carolina Medical Care (Duke University Hospital
Project) Series A
3.25% 4/7/96 (b) ................................... A-1+ VMIG-1 1,000 1,000,000
North Carolina Medical Care Community Hospital
(Moses Cone Memorial Hospital)
3.35% 4/7/96 (b) ................................... A-1+ -- 4,000 4,000,000
------------
11,100,000
------------
OKLAHOMA -- 1.4%
Oklahoma Industries Authority, Hospital Revenue, Medical
Practice Facility (St. Anthony) (Morgan Guaranty LOC)
3.65% 6/3/96 (c) ................................... -- VMIG-1 5,665 5,665,000
Oklahoma Industries Authority, Hospital Revenue, (St.
Anthony Parking Garage) (Morgan Guaranty LOC)
3.65% 6/3/96 (c) ................................... -- VMIG-1 2,425 2,425,000
------------
8,090,000
------------
OREGON -- 0.5%
City of Klamath Falls, Electric Revenue Bonds (Escrowed
in U.S. Treasuries)
4.40% 5/1/96 (c) ................................... SP-1+ -- 3,000 3,000,000
------------
SOUTH CAROLINA -- 1.2%
South Carolina Jobs Economic Development Authority,
Hospital Facilities Revenue Bonds (Wachovia LOC)
3.35% 4/7/96 (b) ................................... A-1+ VMIG-1 6,600 6,600,000
------------
TENNESSEE -- 5.0%
Metropolitan Nashville Airport Authority, Airport
Improvement Revenue Refunding Bonds (FGIC Insurance)
3.35% 4/7/96 (b) ................................... A-1+ VMIG-1 8,900 8,900,000
State of Tennessee GO, BANS Series A
3.50% 4/7/96 (b) ................................... SP-1+ VMIG-1 19,600 19,600,000
------------
28,500,000
------------
</TABLE>
21
<PAGE>
TAX-FREE SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating(a) Par
S&P Moody's (000) Value
-------- --------- -------- ------------
<S> <C> <C> <C> <C>
TEXAS -- 17.7%
Austin Utility System, Travis and Williamson Counties
(Swiss Bank LOC)
3.25% 5/10/96 ...................................... A-1+ P-1 $ 6,900 $ 6,900,000
3.25% 6/14/96 (c) .................................. -- -- 3,900 3,900,000
Board of Regents, Texas A & M University
System
3.25% 8/13/96 (c) .................................. A-1+ P-1 7,000 7,000,000
Dallas Area Rapid Trans Sales Tax Revenue Series A
(Credit Suisse LOC)
3.25% 6/14/96 (c) .................................. A-1+ P-1 5,000 5,000,000
Harris County Health Facilities Hospital Readily
Adjustable Revenue Bonds (San Jacinto Methodist
Hospital Project) (Morgan Guaranty LOC)
3.35% 6/1/96 (c) ................................... -- VMIG-1 11,250 11,250,000
Harris County Health Facility Development Corporation
(Texas Children's Hospital)
3.30% 4/7/96 (b) ................................... -- VMIG-1 700 700,000
Harris County Toll Road Series G
3.30% 4/7/96 (b) ................................... A-1+ VMIG-1 8,700 8,700,000
Harris County Toll Road Series H
3.30% 4/7/96 (b) ................................... A-1+ VMIG-1 10,300 10,300,000
Lower Colorado River Authority TECP
3.25% 5/9/96 (c) ................................... A-1+ P-1 9,000 9,000,000
Red River Authority (Southwestern Public Service)
(Union Bank of Switzerland LOC)
3.25% 4/7/96 (b) ................................... A-1+ MIG-1 5,600 5,600,000
State of Texas, Tax and Revenue Anticipation Notes
4.75% 8/30/96 (c) .................................. SP-1+ MIG-1 27,205 27,315,284
Texas Higher Education Authority, Facilities Revenue
Series 85B (FGIC Insurance)
3.35% 4/7/96 (b) ................................... A-1+ VMIG-1 5,250 5,250,000
-------------
100,915,284
-------------
UTAH -- 2.3%
Intermountain Power Agency, Power Supply Revenue and
Refunding Bonds (Swiss Bank LOC)
3.25% 8/12/96 (c) .................................. A-1+ VMIG-1 13,000 13,000,000
-------------
VERMONT -- 0.6%
State of Vermont General Obligation Revenue
Anticipation Notes Series F
3.35% 4/30/96 (c) .................................. A-1+ P-1 3,600 3,600,000
-------------
</TABLE>
22
<PAGE>
TAX-FREE SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
<TABLE>
<CAPTION>
Rating(a) Par
S&P Moody's (000) Value
-------- --------- -------- ------------
<S> <C> <C> <C> <C>
WASHINGTON -- 1.0%
Chelan County Public Utility District No. 1 (Chelan
Hydro Consolidated System) Series 1995A DN (MBIA
Insurance)
3.25% 4/7/96 (b) ................................... A-1+ VMIG-1 $ 3,590 $ 3,590,000
Port of Seattle, Washington, Industrial Development
Bonds (Sysco)
3.45% 4/7/96 (b) ................................... A-1 P-1 2,000 2,000,000
-------------
5,590,000
-------------
WISCONSIN -- 3.0%
Pleasant Prairie Village Pollution Control Refunding
Revenue Bonds (Wisconsin Electric Power Company
Project)
3.40% 4/7/96 (b) ................................... A-1+ P-1 10,000 10,000,000
Wisconsin Health and Education Facilities Authority
(Daughters of Charity Health Center)
3.40% 4/7/96 (b) ................................... -- VMIG-1 7,000 7,000,000
-------------
17,000,000
-------------
TOTAL INVESTMENTS --99.5% ................................................... 568,556,619(d)
-------------
OTHER ASSETS IN EXCESS OF LIABILITIES, NET -- 0.5% ........................... 2,950,381
-------------
NET ASSETS -- 100.0% ........................................................ $571,507,000
=============
Net Asset Value, Offering and Redemption Price per
Share ($571,507,000 / 571,593,265 shares outstanding) ...................... $1.00
============= =========== =====
</TABLE>
- - ------
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P") are not covered by the Independent
Accountant's Report.
(b) Demand Security; payable upon demand by the Fund, usually with no more than
seven calendar days' notice. Interest rates are redeterminded periodically.
Rates shown are the rates in effect on March 31, 1996.
(c) Security has an outstanding call, mandatory put or optional put by the
issuer. Par value and maturity date reflect such call or put.
(d) Aggregate cost for financial reporting and federal tax purposes.
See Notes to Financial Statements.
23
<PAGE>
TAX-FREE SERIES
- - -------------------------------------------------------------------------------
Statement of Net Assets -- (continued)
March 31, 1996
INVESTMENT ABBREVIATIONS:
BAN Bond Anticipation Notes
GO General Obligation Bonds
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
LOC Letter of Credit
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
RB Revenue Bonds
TAN Tax Anticipation Notes
TECP Tax-Exempt Commercial Paper
TRAN Tax Revenue Anticipation Notes
INSURANCE ABBREVIATIONS:
AMBAC AMBAC Indemnity Corp.
MBIA Municipal Bond Investors Assurance
FGIC Federal Guaranty Insurance Corporation
MOODY'S MUNICIPAL BOND RATINGS:
Aaa Bonds which are judged to be of the best quality.
Aa Bonds which are judged to be of high quality by all standards.
Issues are sometimes rated with a 1, 2 or 3 which denotes a high,
medium or low ranking within the rating.
MIG-1 Notes bearing this designation are of the best quality.
VMIG-1 Variable rate demand obligations bearing this designation are of
the best quality.
P-1 Commercial paper bearing this designation is of the best quality.
S&P MUNICIPAL BOND RATINGS:
AAA These are obligations of the highest quality.
AA These obligations have the second strongest capacity for payment
of debt service. Those issues determined to possess very strong
safety characteristics are denoted with a plus (+) sign.
SP-1 Notes which have a strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety
characteristics are assigned a plus (+) designation.
A-1 Commercial paper which has a strong degree of safety regarding
timely payment. Those issues determined to possess very strong
safety characteristics are denoted with a plus (+) sign.
A detailed description of the above ratings can be found in the
Fund's Statement of Additional Information.
See Notes to Financial Statements.
24
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- - -------------------------------------------------------------------------------
Statement of Operations
For the year ended March 31, 1996
<TABLE>
<CAPTION>
Prime Treasury Tax-Free
Series Series Series
-------------- ------------- -----------
<S> <C> <C> <C>
Investment Income (Note 1):
Interest income ................. $120,275,367 $36,310,501 $20,235,536
-------------- ------------- -----------
Expenses:
Distribution fee (Note 2) ....... 5,575,592 1,549,949 1,345,261
Investment advisory fees (Note 2) . 5,134,900 1,542,437 1,356,239
Transfer agent fees ............. 1,105,948 234,288 154,031
Custodian fees .................. 272,140 153,691 84,589
Accounting fees (Note 2) ........ 150,692 122,841 63,181
Directors' fees ................. 99,134 26,796 35,201
Registration fees ............... 169,236 54,148 81,232
Legal fees ...................... 65,876 25,067 21,107
Printing & postage fees ......... 181,021 77,172 32,758
Other expenses .................. 125,781 60,321 49,266
-------------- ------------- -----------
Total expenses................ 12,880,320 3,846,710 3,222,865
Less: Fees waived (Note 2).... (59,331) -- --
-------------- ------------- -----------
Net expenses .............. 12,820,989 3,846,710 3,222,865
-------------- ------------- -----------
Net investment income ................ 107,454,378 32,463,791 17,012,671
Net realized gain/(loss) from security
transactions ....................... (6,050) 51,785 4,419
-------------- ------------- -----------
Net increase in net assets resulting
from operations .................... $107,448,328 $32,515,576 $17,017,090
============== ============= ===========
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- - -------------------------------------------------------------------------------
Statement of Vhanges in Net Assets
<TABLE>
<CAPTION>
Prime Series
-------------------------------
March 31, March 31,
1996 1995
--------------- --------------
<S> <C> <C>
Increase/(Decrease) in net assets
Operations:
Net investment income ............................. $ 107,454,378 $ 64,805,363
Net realized gain/(loss) on sales of investments .. (6,050) 355
-------------- ---------------
Net increase in net assets resulting from operations 107,448,328 64,805,718
Distributions to shareholders from:
Net investment income:
Prime, Treasury and Tax-Free Shares, respectively. (99,181,255) (59,535,578)
Institutional Shares ........................... (1,334,079) (635,062)
Flag Investors Class A Shares .................. (402,702) (699,891)
Flag Investors Class B Shares .................. (300) --
Quality Cash Reserve Prime Shares .............. (6,536,042) (3,934,832)
-------------- ---------------
Total distributions ............................ (107,454,378) (64,805,363)
Capital share transactions, net - (Note 3) .......... 1,016,482,516 101,735,438
-------------- ---------------
Total increase/(decrease) in net assets ........... 1,016,476,466 101,735,793
Net assets:
Beginning of year .............................. 1,586,303,309 1,484,567,516
-------------- ---------------
End of year .................................... $2,602,779,775 $1,586,303,309
============== ===============
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
<TABLE>
<CAPTION>
Treasury Series Tax-Free Series
- - ----------------------------------- ----------------------------------
March 31, March 31, March 31, March 31,
1996 1995 1996 1995
- - ------------- ------------- ------------ --------------
<S> <C> <C> <C>
$ 32,463,791 $ 24,429,870 $ 17,012,671 $ 10,545,966
51,785 4,522 4,419 (10,654)
- - ------------ ------------ -------------- -------------
32,515,576 24,434,392 17,017,090 10,535,312
(30,565,630) (22,548,414) (17,012,671) (10,545,966)
(1,898,161) (1,881,456) -- --
-- -- -- --
-- -- -- --
-- -- -- --
- - ------------ -------------- -------------- --------------
(32,463,791) (24,429,870) (17,012,671) (10,545,966)
92,365,923 (95,202,377) 96,118,352 96,535,651
- - ------------ -------------- -------------- --------------
192,417,708 (95,197,855) 96,122,771 96,524,997
526,219,207 621,417,062 475,384,229 378,859,232
- - ------------ -------------- -------------- --------------
$718,636,915 $526,219,207 $571,507,000 $475,384,229
============ ============== ============== ==============
</TABLE>
27
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
Alex. Brown Cash Reserve Prime Shares
<TABLE>
<CAPTION>
Year ended March 31,
-----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value at beginning
of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------- -------------- -------------- -------------- --------------
Income from Investment
Operations:
Net investment income .... 0.0524 0.0442 0.0262 0.0295 0.0485
Less Distributions:
Dividends from net investment
income and/or short-term
gains ................. (0.0524) (0.0442) (0.0262) (0.0295) (0.0485)
-------------- -------------- -------------- -------------- --------------
Net asset value at end of
year ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============== ============== ==============
Total Return:
Based on net asset value per
share ................. 5.36% 4.51% 2.65% 2.99% 4.96%
Ratios to Average Daily Net
Assets:
Expenses ................. 0.60% 0.61% 0.62% 0.63% 0.61%
Net investment income .... 5.21% 4.46% 2.62% 2.95% 4.84%
Supplemental Data:
Net assets at end of year. $2,386,681,216 $1,472,079,739 $1,350,334,979 $1,470,711,552 $1,505,012,086
Number of shares outstanding
at end of year ........ 2,386,684,392 1,472,077,488 1,350,332,916 1,470,709,489 1,505,010,023
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
Flag Investors Cash Reserve Prime Shares -- Class A
<TABLE>
<CAPTION>
Year ended March 31,
---------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value at beginning
of year .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------- ------------- ------------
Income from Investment
Operations:
Net investment income ....... 0.0524 0.0442 0.0262 0.0295 0.0485
Less Distributions:
Dividends from net investment
income and/or short-term
gains .................... (0.0524) (0.0442) (0.0262) (0.0295) (0.0485)
------------ ------------ ------------- ------------- ------------
Net asset value at end of
year....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ============ ============= ============= ============
Total Return:
Based on net asset value per
share .................... 5.36% 4.51% 2.65% 2.99% 4.96%
Ratios to Average Daily Net
Assets:
Expenses .................... 0.60% 0.61% 0.62% 0.63% 0.61%
Net investment income ....... 5.25% 4.26% 2.62% 2.95% 4.84%
Supplemental Data:
Net assets at end of year.... $5,976,831 $7,726,696 $18,116,648 $10,392,282 $7,350,424
Number of shares outstanding
at end of year ........... 5,976,824 7,726,698 18,116,633 10,392,267 7,350,409
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Financial Highlights
(for a share outstanding throughout the period)
Flag Investors Cash Reserve Prime Shares -- Class B
April 3, 1995*
through
March 31, 1996
--------------
Per Share Operating
Performance:
Net asset value at beginning
of year ............... $ 1.00
--------
Income from Investment
Operations:
Net investment income .... 0.0361
Less Distributions:
Dividends from net invest-
ment income ........... (0.0361)
--------
Net asset value at end of
year .................. $ 1.00
========
Total Return:
Based on net asset value
per share ............. 3.69%**
Ratios to Average Daily Net
Assets:
Expenses ................. 1.38%**
Net investment income .... 4.30%**
Supplemental Data:
Net assets at end of year . $ 10,200
Number of shares outstand-
ing at end of year .... 10,200
- - ------
* Commencement of operations.
** Annualized.
See Notes to Financial Statements.
30
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Financial Highlights
(for a share outstanding throughout the period)
Alex. Brown Cash Reserve Prime Institutional Shares
<TABLE>
<CAPTION>
Year ended March 31,
-----------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of
year............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- ------------- ------------- ------------- ------------
Income from Investment Operations:
Net investment income .......... 0.0548 0.0472 0.0294 0.0327 0.0515
Less Distributions:
Dividends from net investment
income and/or short-term
gains ....................... (0.0548) (0.0472) (0.0294) (0.0327) (0.0515)
------------- ------------- ------------- ------------- ------------
Net asset value at end of year . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============= ============= ============= ============
Total Return:
Based on net asset value per share 5.62% 4.82% 2.98% 3.32% 5.27%
Ratios to Average Daily Net Assets:
Expenses ....................... 0.35% 0.36% 0.30% 0.31% 0.32%
Net investment income .......... 5.32% 4.57% 2.94% 3.24% 5.34%
Supplemental Data:
Net assets at end of year ...... $53,699,315 $11,904,716 $23,437,449 $28,884,078 $21,867,108
Number of shares outstanding at
end of year.................. 53,699,535 11,904,663 23,437,512 28,884,132 21,867,108
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
PRIME SERIES
- - -------------------------------------------------------------------------------
Financial Highlights
(for a share outstanding throughout the period)
Alex. Brown Cash Reserve Prime Institutional Shares
<TABLE>
<CAPTION>
Year ended March 31, May 6, 1991*
---------------------------------------------------------------- through
1996 1995 1994 1993 March 31, 1992
-------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value at beginning
of year .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------- ------------- ------------- -------------- -------
Income from Investment
Operations:
Net investment income .... 0.0493 0.0402 0.0218 0.0253 0.0399
Less Distributions:
Dividends from net
investment income and/or
short-term gains ..... (0.0493) (0.0402) (0.0218) (0.0253) (0.0399)
-------------- ------------- ------------- -------------- --------
Net asset value at end of
year ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============= ============= ============== ========
Total Return:
Based on net asset value
per share ........... 5.04% 4.09% 2.20% 2.53% 4.30%**
Ratios to Average Daily Net
Assets:
Expenses ................ 0.90%(1) 0.96% 1.06% 1.04% 0.96%**
Net investment income ... 4.91%(2) 4.04% 2.18% 2.53% 4.30%**
Supplemental Data:
Net assets at end of year . $156,412,213 $94,592,158 $92,678,440 $101,321,868 $94,887,669
Number of shares
outstanding at end of
year................... 156,412,393 94,591,979 92,678,268 101,321,668 94,887,669
</TABLE>
- - ----------
* Commencement of operations.
** Annualized.
1 Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.95% for the year ended March 31, 1996,
2 Ratio of net investment income to average daily net assets prior to partial
fee waivers was 4.86% for the year ended March 31, 1996.
See Notes to Financial Statements.
32
<PAGE>
TREASURY SERIES
- - -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
Alex. Brown Cash Reserve Treasury Shares
<TABLE>
<CAPTION>
Year ended March 31,
----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------- -------------- -------------- -------------- --------------
Per Share Operating Performance:
<S> <C> <C> <C> <C> <C>
Net asset value at beginning
of year.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------- -------------- -------------- -------------- --------------
Income from Investment
Operations:
Net investment income ....... 0.0494 0.0411 0.0255 0.0285 0.0477
Less Distributions:
Dividends from net investment
income and/or short-term
gains .................... (0.0494) (0.0411) (0.0255) (0.0285) (0.0477)
-------------- -------------- -------------- -------------- --------------
Net asset value at end of
year........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============== ============== ==============
Total Return:
Based on net asset value per
share........................ 5.05% 4.19% 2.58% 2.89% 4.88%
Ratios to Average Daily Net
Assets:
Expenses .................... 0.58% 0.55%* 0.54%* 0.55%* 0.55%
Net investment income ....... 4.94% 4.09% 2.55% 2.87% 4.76%
Supplemental Data:
Net assets at end of year ... $666,814,158 $512,167,212 $581,724,214 $618,175,839 $725,010,207
Number of shares outstanding
at end of year.............. 666,762,028 512,162,864 581,723,448 618,152,465 725,010,207
</TABLE>
- - ------
* Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.56% for the years ended March 31, 1995, 1994, and 1993.
See Notes to Financial Statements.
33
<PAGE>
TREASURY SERIES
- - --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
Alex. Brown Cash Reserve Treasury Institutional Shares
<TABLE>
<CAPTION>
Year ended March 31,
------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of
year........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- ------------- ------------- ------------- -------------
Income from Investment Operations:
Net investment income .......... 0.0523 0.0438 0.0282 0.0314 0.0504
Less Distributions:
Dividends from net investment
income and/or short-term
gains........................ (0.0523) (0.0438) (0.0282) (0.0314) (0.0504)
------------- ------------- ------------- ------------- -------------
Net asset value at end of year.. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============= ============= ============= =============
Total Return:
Based on net asset value per
share......................... 5.36% 4.47% 2.86% 3.19% 5.17%
Ratios to Average Daily Net Assets:
Expenses ....................... 0.33% 0.30%(1) 0.27%(1) 0.26%(1) 0.27%
Net investment income .......... 5.12% 4.15%(2) 2.82%(2) 3.16%(2) 4.90%
Supplemental Data:
Net assets at end of year ...... $51,822,757 $14,051,995 $39,692,848 $60,146,987 $63,834,323
Number of shares outstanding at
end of year ................. 51,813,226 14,046,467 39,688,259 60,140,874 63,834,323
</TABLE>
- - ------
(1) Ratio of expenses to average daily net assets prior to
partial fee waivers assumed was 0.31%, 0.29% and 0.27% for
the years ended March 31, 1995, 1994, and 1993, respectively.
(2) Ratio of net investment income to average daily net assets
prior to partial fee waivers assumed was 4.14%, 2.80% and
3.15% for the years ended March 31, 1995, 1994, and 1993,
respectively.
See Notes to Financial Statements.
34
<PAGE>
TAX-FREE SERIES
- - --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
Alex. Brown Cash Reserve Treasury Institutional Shares
<TABLE>
<CAPTION>
Year ended March 31,
------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value at
beginning of year........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------- -------------- -------------- -------------- --------------
Income from Investment
Operations:
Net investment income .... 0.0318 0.0271 0.0184 0.0213 0.0353
Less Distributions:
Dividends from net
investment income
and/or short-term
gains.................. (0.0318) (0.0271) (0.0184) (0.0213) (0.0353)
-------------- -------------- -------------- -------------- --------------
Net asset value at end
of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============== ============== ==============
Total Return:
Based on net asset value
per share.............. 3.23% 2.75% 1.86% 2.15% 3.59%
Ratios to Average Daily Net
Assets:
Expenses ................ 0.60% 0.57% 0.58% 0.60% 0.56%(1)
Net investment income ... 3.16% 2.74% 1.84% 2.13% 3.49%(2)
Supplemental Data:
Net assets at end of year . $571,507,000 $475,384,229 $378,859,232 $315,661,447 $304,987,823
Number of shares
outstanding at end
of year................ 571,593,265 475,474,913 378,939,262 315,700,742 305,008,959
</TABLE>
- - ------
(1) Ratio of expenses to average daily net assets prior to partial fees
assumed was 0.57% for the year ended March 31, 1992.
(2) Ratio of net investment income to average daily net assets prior to
partial fees assumed was 3.48% for the year ended March 31, 1992.
35
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- - --------------------------------------------------------------------------------
Notes to Financial Statements
March 31, 1996
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
Alex. Brown Cash Reserve Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund is organized as a Maryland
corporation consisting of three different portfolios, the Prime Series, the
Treasury Series, and the Tax-Free Series. The Prime Series consists of five
different classes of shares: Alex. Brown Cash Reserve Prime Shares ("Prime
Shares"), Flag Investors Cash Reserve Prime Shares Class A ("Flag Investors
Class A Shares"), Flag Investors Cash Reserve Prime Shares Class B ("Flag
Investors Class B Shares"), Quality Cash Reserve Prime Shares ("Quality Cash
Shares") and Institutional Prime Shares. The Treasury Series offers two
classes of shares: Alex. Brown Cash Reserve Treasury Shares ("Treasury
Shares") and Institutional Treasury Shares. The Tax-Free Series offers only
one class of shares. Matters affecting each class are voted on exclusively by
such shareholders.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. The following is a
summary of the significant accounting policies followed by the Fund in the
preparation of its financial statements.
A. Security Valuation -- The Fund maintains a dollar-weighted average
maturity of 90 days or less for each portfolio. The securities of each
portfolio are valued on the basis of amortized cost, which approximates
market value. This method values a security at its cost on the date of
purchase, and thereafter, assumes a constant amortization to maturity of
any original issue or other discount or premium.
B. Security Transactions, Investment Income and Distributions --
Securities transactions are accounted for on a trade date basis. Realized
gains or losses on sales, if any, are computed on the basis of specific
identification of the securities sold. Interest income is recorded on an
accrual basis and includes, when applicable, amortization of premiums and
accretion of discounts. Dividends to shareholders are declared daily and
distributions or reinvestments of the dividends are made monthly.
C. Repurchase Agreement -- The Prime Series may agree to purchase money
market instruments subject to the seller's agreement to repurchase them at
an agreed upon date and price. The seller, under a repurchase agreement,
will be required on a daily basis to maintain the value of the securities
subject to the agreement at not less than the repurchase price. The
agreement is conditioned upon the collateral being deposited under the
Federal Reserve book-entry system.
36
<PAGE>
Notes to Financial Statements -- (continued)
March 31, 1996
NOTE 1 -- CONCLUDED
D. Federal Income Taxes -- The Fund intends to continue to comply with the
requirements of the Internal Revenue Code necessary to continue to qualify
as a regulated investment company and, as such, will not be subject to
federal income taxes on otherwise taxable income (including net realized
capital gains) which is distributed to shareholders. Each portfolio is
treated as a separate entity for federal income tax purposes. The Tax-Free
Series has a capital loss carryforward of $87,648 (which may be carried
forward to offset future taxable capital gains, if any) which begins to
expire, if not previously utilized, in 2000.
E. Expenses -- Operating expenses directly attributable to a class of
shares are charged to that class' operations. Expenses of the Fund which
are not directly attributable to a specific class are prorated among the
classes to which the expense relates based on the relative net assets of
each class.
NOTE 2 -- ADVISORY FEES AND TRANSACTIONS WITH OTHER AFFILIATES
The Fund has entered into an investment advisory agreement with Investment
Company Capital Corp. ("ICC"), a subsidiary of Alex. Brown Financial Corp.,
with respect to all Series, and a sub-advisory agreement with PNC
Institutional Management Corporation ("PIMC") with respect to the Tax-Free
Series. Under the terms of the investment advisory agreement, ICC receives a
fee from the Fund, calculated daily and paid monthly, at the following annual
rates based upon the Fund's aggregate average daily net assets: .30% of the
first $500 million, .26% of the next $500 million, .25% of the next $500
million, .24% of the next $1 billion, .23% of the next $1 billion and .22% of
that portion in excess of $3.5 billion. In addition, the Advisor is entitled
to receive an additional fee with respect to the Prime Series, calculated
daily and paid monthly, at the annual rate of .02% of the Prime Series'
average daily net assets as well as an additional fee with respect to the
Tax-Free Series, calculated daily and paid monthly, at the annual rate of
.03% of the Tax-Free Series' average daily net assets. Prior to August 23,
1995, ICC received a fee from the Fund, calculated daily and paid monthly, at
the following annual rates based upon the Fund's aggregate average daily net
assets: .25% of the first $500 million, .21% of the next $500 million, .20%
of the next $500 million and .19% of that portion in excess of $1.5 billion.
As compensation for its subadvisory services, PIMC receives a fee from
ICC, calculated daily and paid monthly, at the following annual rates based
upon the Tax-Free Series' aggregate average daily net assets: .15% of the
first $250 million, .13% of the next $250 million, .11% of the next $250
million, .09% of the next $250 million, .075% of the next $3 billion and .06%
of that portion in excess of $4 billion.
37
<PAGE>
Notes to Financial Statements -- (continued)
March 31, 1996
The Fund, pursuant to the sub-advisory agreement with PIMC, has agreed to
reimburse PIMC for certain costs incurred in providing accounting services to
the Tax-Free Series. For the year ended March 31, 1996, the Fund paid PIMC
$723,599 for sub-advisory and accounting services for the Tax-Free Series. No
advisory fees were waived for the year ended March 31, 1996.
ICC may, from time to time, voluntarily waive a portion of its advisory
fee with respect to the Prime, Treasury and Tax-Free Series to preserve or
enhance the performance of each Series as compared to certain industry
benchmarks, and, if ICC elects to so waive a portion of its fee, PIMC has
agreed that it would waive a portion of its fee in the same proportion and
for the same time periods as any ICC waiver. No advisory fees were waived for
the year ended March 31, 1996.
Under the terms of these agreements, ICC and the Fund's distributor will,
if necessary, reimburse the Fund for any fiscal year to the extent that
expenses (exclusive of any interest, taxes, brokerage commissions and
extraordinary expenses) exceed 1% of aggregate average daily net assets each
of the Fund's three Series. The obligation of ICC to reimburse the Fund is
limited to the fees actually received by ICC for such fiscal year.
As compensation for its accounting services, ICC receives from the Prime
and Treasury Series an annual fee, calculated daily and paid monthly, based
on the Fund's average daily net assets. ICC received $150,692 and $122,841
for accounting services for the year ended March 31, 1996 for the Prime and
Treasury Series, respectively.
As compensation for its transfer agent services, ICC receives from the
Fund's three series a per account fee, calculated and paid monthly. ICC
received $1,105,948, $234,288 and $154,031 for transfer agent services for
the year ended March 31, 1996 for Prime, Treasury and Tax-Free Series,
respectively.
The Fund has entered into a distribution agreement with Alex. Brown & Sons
Incorporated ("Alex. Brown"). Under the terms of the distribution agreement,
Alex. Brown receives a fee from the Prime Shares, Flag Investors Class A
Shares, Treasury Shares, and the Tax-Free Series, at the annual rate of .25%
of the aggregate average daily net assets of these classes of shares. Alex.
Brown also receives a fee from the Quality Cash Shares and Flag Investors
Class B Shares at the annual rate of .60% and 1.00%, respectively, of the
aggregate average daily net assets of the class. Alex. Brown voluntarily
waived distribution fees in the amount of $59,331 for the Quality Cash Shares
for the year ended March 31, 1996.
The Fund complex of which the Fund is a part has adopted a retirement plan
for eligible Directors. The actuarially computed pension expense for the year
ended March 31, 1996 was approximately $72,000, $26,000 and $18,000 for the
Prime, Treasury and Tax-Free Series, respectively.
NOTE 3 -- CAPITAL STOCK AND SHARE INFORMATION
The Fund is authorized to issue up to 6,400,000,000 shares of $.001 par
value capital stock (3,550,000,000 Prime Series, 1,500,000,000 Treasury
Series, 1,000,000,000 Tax-Free Series and 350,000,000 not classified).
Changes in shares outstanding during the years ended March 31, 1996 and March
31, 1995 are listed on the following page.
38
<PAGE>
Notes to Financial Statements -- (continued)
March 31, 1996
NOTE 3 -- CONCLUDED
March 31, 1996 March 31, 1995
---------------- ----------------
Prime Series:
Sold:
Prime Shares .................. 19,439,463,533 10,195,279,007
Flag Investors Class A Shares . 12,118,053 16,905,684
Flag Investors Class B Shares . 24,535 --
Institutional Prime Shares .... 213,159,539 60,472,629
Quality Cash Shares ........... 1,285,040,597 509,661,769
Issued as reinvestment of dividends:
Prime Shares .................. 93,103,137 57,178,155
Flag Investors Class A Shares . 374,561 666,245
Institutional Prime Shares .... 753,855 40,493
Quality Cash Shares ........... 6,300,386 3,847,996
Redeemed:
Prime Shares .................. (18,617,959,766) (10,130,712,590)
Flag Investors Class A Shares . (14,242,488) (27,961,864)
Flag Investors Class B Shares . (14,335) --
Institutional Prime Shares .... (172,118,522) (72,045,971)
Quality Cash Shares ........... (1,229,520,569) (511,596,054)
---------------- ----------------
Net increase ............. 1,016,482,516 101,735,499
================ ================
Treasury Series:
Sold:
Treasury Shares ............... 4,043,423,430 2,727,755,716
Institutional Treasury Shares . 396,793,576 854,592,222
Issued as reinvestment of dividends:
Treasury Shares ............... 28,890,267 21,562,879
Institutional Treasury Shares . 417,316 8
Redeemed: ........................
Treasury Shares ............... (3,917,714,533) (2,818,879,180)
Institutional Treasury Shares . (359,444,133) (880,234,022)
---------------- ----------------
Net increase/(decrease) .. 192,365,923 (95,202,377)
================ ================
Tax-Free Series:
Sold ............................. 4,817,984,787 3,571,743,009
Issued as reinvestment of dividends 16,116,851 10,051,311
Redeemed ......................... (4,737,983,286) (3,485,258,669)
---------------- ----------------
Net increase ............. 96,118,352 96,535,651
================ ================
NOTE 4 -- NET ASSETS
At March 31, 1996, net assets consisted of:
<TABLE>
<CAPTION>
Prime Treasury Tax-Free
Series Series Series
-------------- -------------- ------------
<S> <C> <C> <C>
Paid-in-capital ......................... $2,602,785,854 $718,571,065 $571,594,648
Undistributed net realized gain/(loss) on
sales of investments ................... (6,079) 65,850 (87,648)
-------------- -------------- ------------
$2,602,779,775 $718,636,915 $571,507,000
============== ============== ============
</TABLE>
39
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To The Shareholders and Board of Directors of
Alex. Brown Cash Reserve Fund, Inc.:
We have audited the accompanying statements of net assets of Alex. Brown Cash
Reserve Fund, Inc. (consisting of the Prime, Treasury and Tax-Free Series) as
of March 31, 1996, and the related statement of operations for the year then
ended and the statement of changes in net assets for each of the two years in
the period then ended and the financial highlights for each of the three
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for each
of the respective years in the period ended March 31, 1993 were audited by
other auditors whose report dated May 7, 1993, expressed an unqualified
opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. 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
investments owned as of March 31, 1996 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 financial position of
each of the respective series comprising the Alex. Brown Cash Reserve Fund,
Inc. as of March 31, 1996, and the results of their operations for the year
then ended and the changes in their net assets for each of the two years in
the period then ended and their financial highlights for each of the three
years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
May 10, 1996
40
<PAGE>
IMPORTANT INCOME TAX INFORMATION
Tax-Free Series
------
One hundred percent of the dividends paid by the Tax-Free Series of
Alex. Brown Cash Reserve Fund, Inc. for the fiscal year ended March
31, 1996 qualified as exempt-interest dividends for federal income tax
purposes.
Treasury Series
------
One hundred percent of the dividends paid by the Treasury Series of
Alex. Brown Cash Reserve Fund, Inc. for the fiscal year ended March
31, 1996 were derived from interest on investments in direct obligations
of the U.S. Treasury.
Currently, most states allow the percentage of dividend income
attributable to federal obligations to be exempt from state income tax.
We recommend that you consult your tax advisor to determine if any portion
of the dividends you received are exempt from state income tax.
41
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
BOARD OF DIRECTORS
W. JAMES PRICE LOUIS E. LEVY
Chairman Director
CHARLES W. COLE JR. EUGENE J. McDONALD
Director Director
JAMES J. CUNNANE REBECCA W. RIMEL
Director Director
RICHARD T. HALE CARL W. VOGT, Esq.
Director Director
JOHN F. KROEGER HARRY WOOLF
Director Director
- - -------------------------------------------------------------------------------
OFFICERS
W. JAMES PRICE M. ELLIOTT RANDOLPH, JR. BRIAN C. NELSON
Chairman Vice President Vice President
RICHARD T. HALE PAUL D. CORBIN & Secretary
President Vice President JOSEPH A. FINELLI
Treasurer
EDWARD J. VEILLEUX MONICA M. HAUSNER
Executive Vice President Vice President LAURIE D. DEPRINE
Assistant Secretary
- - -----------------------------------------------------------------------------
Distributor Custodian
ALEX. BROWN & SONS PNC BANK, N.A.
INCORPORATED 17th and Chestnut Streets
135 East Baltimore Street Philadelphia, PA 19101
Baltimore, MD 21202
(410) 727-1700
Investment Advisor Transfer Agent
INVESTMENT COMPANY CAPITAL CORP. INVESTMENT COMPANY CAPITAL CORP.
135 East Baltimore Street 135 East Baltimore Street
Baltimore, MD 21202 Baltimore, MD 21202
(800) 553-8080
Sub-Advisor
(Tax-Free Series) Auditors
PNC INSTITUTIONAL COOPERS & LYBRAND L.L.P.
MANAGEMENT CORPORATION 217 E. Redwood Street
103 Bellevue Parkway Baltimore, MD 21202
Wilmington, DE 19809
- - -----------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of
Alex. Brown Cash Reserve Fund, Inc. The report may only be distributed to
current shareholders or to persons who have received a current prospectus.
42
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
ALEX. BROWN & SONS
INCORPORATED
ESTABLISHED 1800
AMERICA'S OLDEST NAME IN INVESTMENT BANKING
BALTIMORE, MD 21202
135 East Baltimore St. (410) 727-1700
ANNAPOLIS, MD 21403 NEW YORK, NY 10104
410 Severn Ave. Ste. 202-204 1290 Avenue of the Americas, 10th Floor
(410) 268-4040 (212) 237-2000
ATLANTA, GA 30305 PHILADELPHIA, PA 19103
3565 Piedmont Rd., N.E. 1635 Market Street 17th Floor
One Piedmont Ctr. (215) 563-2300
Ste. 400 (404) 261-1000
RICHMOND, VA 23219
BOSTON, MA 02110 100 Shockoe Slip (804) 644-8000
101 Federal St., 15th Floor
(617) 737-8181 SAN FRANCISCO, CA 94111
101 California St. 46th Floor (415) 544-2800
CHICAGO, IL 60606
222 West Adams St. Ste. 1900 TOWSON, MD 21204
(312) 424-6000 210 West Pennsylvania Ave. Ste. 260
(410) 825-8600
DALLAS, TX 75201
200 Crescent Ct. Ste. 500 WASHINGTON, DC 20005
(214) 740-7700 500 The Washington Building,
1440 New York Avenue, N.W. (202) 626-7000
FISHKILL, NY 12524
300 Westage Business Ctr. WEST PALM BEACH, FL 33401
Ste. 310 222 Lakeview Ave. Ste. 1200 (407) 832-4488
(914) 897-4900
WILMINGTON, DE 19801
GREENWICH, CT 06830 1201 Market St. Ste. 1001 (302) 656-8111
One Pickwick Plaza (203) 869-5555
WINSTON-SALEM, NC 27101
JACKSONVILLE, FL 32202 200 West Second St., Ste. 500
200 W. Forsyth St., Ste. 1520 (910) 724-6921
(904) 355-0643
LOS ANGELES, CA 90017 ALEX. BROWN
601 S. Figuerora St. Ste. 3650 CAPITAL ADVISORY &
(213) 892-0600 TRUST COMPANY
19-21 South St. (410) 637-1880
ALEX. BROWN & SONS LIMITED Baltimore, MD 21202
London, England EC 2N 2HE
Austin Friars House, ALEX. BROWN & SONS
2-6 Austin Friars (FINANCE) LIMITED
2nd Floor Geneva, Switzerland (1204)
011-44-171-786-7410 7, rue du Rhone, 1st Floor
011-41-22-312-4000
ALEX. BROWN & SONS
INCORPORATED
Tokyo, Japan
Shiroyama JT Mori Building
12F, 4-3-1 Toranoman
Minato-ku, Tokyo 105, Japan
011-813-5401-2270
----------------------
Information may be obtained and shares may be purchased through any of the
offices listed above.
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
P.O. BOX 1346
BALTIMORE, MD 21203
BULK RATE
U.S.POSTAGE
PAID
PERMIT NO. 2139
BALTO., MD
