ALEX. BROWN
CASH RESERVE FUND, INC.
Prime Series
Treasury Series
Tax-Free Series
Semi-Annual Report
September 30, 1996
[Alex. Brown logo] ALEX. BROWN
<PAGE>
Fund Features
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(bullet) Daily Dividends
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.
(bullet) 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.
(bullet) 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 may be
obtained from your Alex. Brown investment representative.
(bullet) 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.
(bullet) 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.
(bullet) Constant Net Asset Value
The Fund 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.
(bullet) 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.
(bullet) Current Yield Information Available
For current yield information, call (410) 234-3737.
<PAGE>
Letter to Shareholders
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October 18, 1996
We are pleased to report on the progress of your Fund for the six months
ended September 30, 1996. The Fund's net assets at the end of the period totaled
$3.9 billion, remaining relatively stable since the Fund's fiscal year-end of
March 31, 1996. The pie chart below illustrates the breakdown of assets among
each of the Fund's series as of September 30, 1996.
Asset Breakdown by Series
[Pie Chart appears here--see values below]
Prime Series $2.7 billion
Treasury Series $685 million
Tax-Free Series $558 million
PERIOD IN REVIEW
The Federal Reserve Bank, under increasing scrutiny with each of its
meetings, determined the economy was stable enough to leave the Fed Funds rate
unchanged at its September 1996 meeting. This decision has left interest rates
fairly stable over this time period, albeit with some occasional swings. The
30-year bond yield has fluctuated in a trading range between 6.55% and 7.20% for
most of the past six months. The 3-month Treasury bill rate has reflected the
Fed's "wait and see" attitude, with its yield ranging between 5.00% and 5.35%.
These yields indicate a rather narrow spread between short-term and long-term
rates.
We continue to manage the Fund conservatively, as evidenced by our "AAA"
rating from Standard &Poor's. Even with our cautious style, each of the Fund's
three series has provided a competitive return for the past twelve months, as
the chart on page 2 illustrates.
1
<PAGE>
Letter to Shareholders (continued)
Performance Comparisons
30-Day Yield
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As of 10/1/96:
- --------------------------------------------------------------------------------
Prime Series 4.82%
First Tier Rated Money Fund Average 4.71%
- --------------------------------------------------------------------------------
Treasury Series 4.60%
100% U.S. Treasury Rated Money Fund Average 4.63%
- --------------------------------------------------------------------------------
As of 9/30/96:
- --------------------------------------------------------------------------------
Tax-Free Series 2.94%
Tax-Free Rated Money Fund Average 2.92%
- --------------------------------------------------------------------------------
Source: IBC/Donoghue, Inc. "Rated Money Fund Report," October 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. The Rated Money Fund
Averages are average yields of all funds rated AAA by Standard & Poor's in their
respective categories.
MARKET OUTLOOK
The final quarter of 1996 raises several questions, and the answers will
dictate which way the markets will move for the remainder of the year, as well
as the beginning of 1997.
(bullet) First, with regard to politics and the upcoming
Presidential and Congressional elections, will lowering the budget deficit
continue to be a top priority?
(bullet) Second, with regard to the Federal Reserve Bank, is the Fed
waiting until after the election to raise or lower interest rates? Are the
members concerned with the relatively low economic growth rate (1.5% to 3%),
or are they watching building inflationary pressures, particularly in labor
markets and energy prices?
(bullet) Finally, in general, just how high will the stock market
go? Will corporate profits continue to rise, or will wage pressures begin to
affect the bottom line? How will the traditional Christmas rush turn out for
retailers?
2
<PAGE>
Regardless of the answers to these questions, it is our belief that the
conservative approach we apply to investing on behalf of the Fund's three series
will provide comfort to our shareholders, and in turn will continue to offer
competitive yields, without sacrificing quality.
As always, we appreciate your continued support.
Sincerely,
/s/ W. James Price /s/ Richard T. Hale
W. James Price Richard T. Hale
Chairman President
3
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Rating Par
PRIME SERIES S&P Moody's (000) Value
- ----------------------------------------------------------------------------------------
<S> <C>
Commercial Paper - 84.9%(a)
Automobiles & Trucks - 2.6%
PACCAR Financial Corp.
5.33% 10/21/96 A-1+ P-1 $10,000 $ 9,970,389
5.40% 10/28/96 A-1+ P-1 9,000 8,963,550
5.29% 11/18/96 A-1+ P-1 5,000 4,964,733
Toyota Motor Credit Corp.
5.32% 10/31/96 A-1+ P-1 15,000 14,933,500
5.25% 11/8/96 A-1+ P-1 15,000 14,916,875
5.36% 12/13/96 A-1+ P-1 14,000 13,847,836
- ----------------------------------------------------------------------------------------
67,596,883
- ----------------------------------------------------------------------------------------
Beverages - 3.1%
Anheuser-Busch Companies Inc.
5.28% 10/7/96 A-1+ P-1 15,000 14,986,800
5.34% 10/7/96 A-1+ P-1 17,300 17,284,603
4.90% 10/21/96 A-1+ P-1 20,000 19,945,556
4.75% 10/28/96 A-1+ P-1 15,000 14,946,563
5.25% 1/1/97 A-1+ P-1 15,000 14,781,250
- ----------------------------------------------------------------------------------------
81,944,772
- ----------------------------------------------------------------------------------------
Chemicals, General - 3.8%
E.I. duPont de Nemours
5.35% 10/18/96 A-1+ P-1 10,000 9,974,736
5.40% 11/22/96 A-1+ P-1 15,000 14,883,000
5.30% 11/27/96 A-1+ P-1 15,000 14,874,125
5.29% 12/18/96 A-1+ P-1 10,000 9,885,383
5.30% 12/20/96 A-1+ P-1 25,000 24,705,556
5.38% 1/30/97 A-1+ P-1 10,000 9,819,172
5.46% 3/26/97 A-1+ P-1 16,000 15,572,907
- ----------------------------------------------------------------------------------------
99,714,879
- ----------------------------------------------------------------------------------------
Chemicals, Specialty - 1.2%
Air Products & Chemicals, Inc.
5.35% 10/25/96 A-1 P-1 11,000 10,960,767
5.33% 11/5/96 A-1 P-1 20,000 19,896,361
- ----------------------------------------------------------------------------------------
30,857,128
- ----------------------------------------------------------------------------------------
Computer & Office Equipment - 7.4%
Hewlett-Packard
5 42% 10/9/96 A-1+ P-1 15,000 14,981,933
5.35% 10/30/96 A-1+ P-1 20,000 19,913,806
5.40% 12/3/96 A-1+ P-1 10,000 9,905,500
========================================================================================
</TABLE>
4
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating Par
PRIME SERIES (continued) S&P Moody's (000) Value
- ----------------------------------------------------------------------------------------
<S> <C>
Commercial Paper (continued)
Computer & Office Equipment (concluded)
Pitney Bowes Credit Corp.
5.02% 10/3/96 A-1+ P-1 $15,000 $ 14,995,817
5.03% 10/3/96 A-1+ P-1 15,000 14,995,808
5.02% 10/4/96 A-1+ P-1 20,000 19,991,633
5.04% 10/4/96 A-1+ P-1 17,000 16,992,860
5.35% 2/19/97 A-1+ P-1 19,000 18,601,871
5.52% 2/19/97 A-1+ P-1 14,775 14,455,565
5.50% 3/21/97 A-1+ P-1 10,000 9,738,750
Xerox Credit Corp.
5.32% 11/8/96 A-1 P-1 20,480 20,364,993
5.32% 12/5/96 A-1 P-1 19,700 19,510,771
- ----------------------------------------------------------------------------------------
194,449,307
- ----------------------------------------------------------------------------------------
Credit Unions - 2.5%
Mid-States Corporate Federal Credit Union
5.37% 10/1/96 A-1+ P-1 20,500 20,469,420
U.S. Central Credit Union
5.30% 10/10/96 A-1+ P-1 15,000 14,980,125
5.40% 10/23/96 A-1+ P-1 15,000 14,950,500
5.31% 12/3/96 A-1+ P-1 15,000 14,860,613
- ----------------------------------------------------------------------------------------
65,260,658
- ----------------------------------------------------------------------------------------
Defense & Aircraft - 0.9%
Rockwell International Corp.
5.28% 10/29/96 A-1+ P-1 25,000 24,897,333
- ----------------------------------------------------------------------------------------
Electrical & Electronics - 3.5%
Emerson Electric Co.
5.32% 10/25/96 A-1+ P-1 25,000 24,911,332
Motorola Inc.
5.32% 10/7/96 A-1+ P-1 20,000 19,982,267
5.28% 10/24/96 A-1+ P-1 15,000 14,949,400
5.35% 10/25/96 A-1+ P-1 17,000 16,939,367
5.32% 11/8/96 A-1+ P-1 15,000 14,915,767
- ----------------------------------------------------------------------------------------
91,698,133
- ----------------------------------------------------------------------------------------
Electric Utility - 1.0%
Northern States Power Co.
5.30% 11/4/96 A-1+ P-1 7,000 6,964,961
5.27% 11/22/96 A-1+ P-1 19,000 18,855,368
- ----------------------------------------------------------------------------------------
25,820,329
- ----------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Rating Par
PRIME SERIES (continued) S&P Moody's (000) Value
- ----------------------------------------------------------------------------------------
<S> <C>
Commercial Paper (continued)
Entertainment - 2.8%
Walt Disney Co.
5.24% 10/9/96 A-1 P-1 $15,000 $14,982,533
5.28% 10/11/96 A-1 P-1 15,000 14,978,000
5.40% 10/15/96 A-1 P-1 10,000 9,979,000
5.18% 12/6/96 A-1 P-1 10,000 9,905,033
5.18% 12/9/96 A-1 P-1 15,000 14,851,075
5.38% 1/29/97 A-1 P-1 10,000 9,820,667
- ----------------------------------------------------------------------------------------
74,516,308
- ----------------------------------------------------------------------------------------
Finance, Commercial - 2.2%
CIT Group Holdings Inc.
5.29% 12/10/96 A-1 P-1 40,000 39,588,555
PHH Corp.
5.42% 10/30/96 A-1 P-1 20,000 19,912,678
- ----------------------------------------------------------------------------------------
59,501,233
- ----------------------------------------------------------------------------------------
Finance, Consumer - 3.6%
USAA Capital Corp.
5.27% 10/30/96 A-1+ P-1 10,000 9,957,547
5.44% 11/4/96 A-1+ P-1 18,000 17,907,520
5.40% 11/14/96 A-1+ P-1 22,000 21,854,800
5.30% 11/27/96 A-1+ P-1 10,000 9,916,083
5.40% 12/17/96 A-1+ P-1 20,000 19,769,000
5.27% 12/20/96 A-1+ P-1 10,000 9,882,889
5.47% 1/2/97 A-1+ P-1 7,423 7,318,107
- ----------------------------------------------------------------------------------------
96,605,946
- ----------------------------------------------------------------------------------------
Finance, Diversified - 3.3%
General Electric Capital Corp.
5.28% 10/7/96 A-1+ P-1 15,000 14,986,800
5.30% 11/27/96 A-1+ P-1 15,000 14,874,125
5.36% 1/3/97 A-1+ P-1 15,000 14,790,067
5.35% 1/17/97 A-1+ P-1 15,000 14,759,250
5.31% 1/23/97 A-1+ P-1 15,000 14,747,775
5.49% 2/5/97 A-1+ P-1 13,875 13,606,276
- ----------------------------------------------------------------------------------------
87,764,293
- ----------------------------------------------------------------------------------------
Food - 8.4%
Campbell Soup Co.
4.98% 10/4/96 A-1+ P-1 10,000 9,995,850
5.46% 12/5/96 A-1+ P-1 15,000 14,852,125
5.47% 12/16/96 A-1+ P-1 17,000 16,803,688
</TABLE>
6
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating Par
PRIME SERIES (continued) S&P Moody's (000) Value
- ----------------------------------------------------------------------------------------
<S> <C>
Commercial Paper (continued)
Food (concluded)
Cargill, Inc.
5.45% 10/8/96 A-1+ P-1 $15,000 $ 14,984,104
5.32% 11/4/96 A-1+ P-1 20,000 19,899,511
5.36% 12/12/96 A-1+ P-1 15,000 14,839,200
5.39% 12/18/96 A-1+ P-1 20,000 19,766,433
H.J. Heinz
5.25% 10/3/96 A-1+ P-1 9,000 8,997,375
5.33% 10/18/96 A-1+ P-1 15,900 15,859,981
Hershey Foods
5.26% 10/15/96 A-1+ P-1 10,500 10,478,522
5.26% 10/18/96 A-1+ P-1 27,500 27,431,693
Kellogg Company
5.33% 11/14/96 A-1+ P-1 25,000 24,837,138
5.33% 11/15/96 A-1+ P-1 10,000 9,933,375
5.33% 11/27/96 A-1+ P-1 15,000 14,873,413
- ----------------------------------------------------------------------------------------
223,552,408
- ----------------------------------------------------------------------------------------
Household Products - 2.8%
Clorox Company
5.30% 11/26/96 A-1+ P-1 23,540 23,345,926
Colgate-Palmolive Co.
5.35% 10/8/96 A-1 P-1 22,000 21,977,114
Procter & Gamble Co.
5.30% 11/18/96 A-1 P-1 10,200 10,127,920
5.38% 12/20/96 A-1 P-1 17,730 17,518,028
- ----------------------------------------------------------------------------------------
72,968,988
- ----------------------------------------------------------------------------------------
Insurance, Property & Casualty - 3.8%
Chubb Capital Corp.
5.27% 10/11/96 A-1+ P-1 18,000 17,973,650
5.33% 10/17/96 A-1+ P-1 18,069 18,026,197
Marsh & McClennan Companies Inc.
5.48% 12/13/96 A-1+ P-1 20,000 19,777,756
5.65% 2/10/97 A-1+ P-1 10,000 9,792,833
5.60% 2/27/97 A-1+ P-1 15,000 14,652,333
5.63% 3/20/97 A-1+ P-1 20,000 19,468,278
- ----------------------------------------------------------------------------------------
99,691,047
- ----------------------------------------------------------------------------------------
Integrated Oil - 0.9%
Shell Oil Co.
5.25% 11/22/96 A-1+ P-1 25,000 24,810,417
- ----------------------------------------------------------------------------------------
Machinery & Tools - 1.7%
Dover Corp.
5.35% 10/24/96 A-1+ -- 20,000 19,931,639
5.40% 10/25/96 A-1+ -- 20,000 19,928,000
========================================================================================
</TABLE>
7
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Rating Par
PRIME SERIES (continued) S&P Moody's (000) Value
- ----------------------------------------------------------------------------------------
<S> <C>
Commercial Paper (continued)
Machinery & Tools (concluded)
Illinois Tool Works
5.35% 10/1/96 A-1+ P-1 $ 5,000 $ 5,000,000
- ----------------------------------------------------------------------------------------
44,859,639
- ----------------------------------------------------------------------------------------
Oil Transportation - 3.2%
Colonial Pipeline
5.43% 10/15/96 A-1+ P-1 17,000 16,964,102
5.45% 10/16/96 A-1+ P-1 20,200 20,154,129
5.39% 11/12/96 A-1+ P-1 15,000 14,905,675
5.43% 12/16/96 A-1+ P-1 6,500 6,425,488
5.44% 1/15/97 A-1+ P-1 12,000 11,807,787
5.47% 2/6/97 A-1+ P-1 14,500 14,217,991
- ----------------------------------------------------------------------------------------
84,475,172
- ----------------------------------------------------------------------------------------
Paper - 0.4%
Weyerhaeuser Co.
5.31% 12/3/96 A-1 P-1 11,600 11,492,207
- ----------------------------------------------------------------------------------------
Pharmaceuticals - 8.8%
Abbott Laboratories
5.33% 10/22/96 A-1+ P-1 10,059 10,027,725
5.32% 10/23/96 A-1+ P-1 25,000 24,918,722
5.33% 10/23/96 A-1+ P-1 13,429 13,385,259
Eli Lilly & Co.
5.28% 11/15/96 A-1+ P-1 10,000 9,934,000
5.33% 2/6/97 A-1+ P-1 12,000 11,772,587
5.57% 2/24/97 A-1+ P-1 7,500 7,330,579
Pfizer, Inc.
5.30% 10/10/96 A-1+ P-1 15,000 14,980,125
Schering-Plough Corp.
5.32% 9/18/96 A-1+ P-1 19,700 19,589,374
5.41% 11/14/96 A-1+ P-1 4,400 4,370,906
5.40% 11/19/96 A-1+ P-1 10,000 9,926,500
5.42% 11/26/96 A-1+ P-1 7,000 6,940,982
5.27% 11/26/96 A-1+ P-1 15,000 14,877,033
Warner-Lambert Co.
5.27% 10/4/96 A-1+ P-1 40,000 39,982,433
5.30% 10/30/96 A-1+ P-1 15,000 14,935,958
5.27% 12/6/96 A-1+ P-1 20,000 19,806,767
5.25% 1/15/97 A-1+ P-1 10,000 9,845,417
- ----------------------------------------------------------------------------------------
232,624,367
- ----------------------------------------------------------------------------------------
Publishing - 0.7%
Knight-Ridder Inc.
5.35% 10/18/96 A-1+ P-1 7,500 7,481,052
</TABLE>
8
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating Par
PRIME SERIES (continued) S&P Moody's (000) Value
- ----------------------------------------------------------------------------------------
<S> <C>
Commercial Paper (continued)
Publishing (concluded)
RR Donnelley & Sons, Inc.
5.27% 10/7/96 A-1+ P-1 $12,000 $ 11,989,460
- ----------------------------------------------------------------------------------------
19,470,512
- ----------------------------------------------------------------------------------------
Railroad - 1.1%
Norfolk Southern Corp.
5.42% 10/29/96 A-1+ P-1 30,000 29,873,533
- ----------------------------------------------------------------------------------------
Retail, General - 1.9%
J.C. Penney Fund Co.
5.28% 10/29/96 A-1+ P-1 20,000 19,920,800
5.39% 11/13/96 A-1+ P-1 15,000 14,903,429
Wal-Mart Stores
5.27% 10/29/96 A-1+ P-1 15,000 14,938,517
- ----------------------------------------------------------------------------------------
49,762,746
- ----------------------------------------------------------------------------------------
Structured Finance - 4.5%
CIESCO, L.P.
5.28% 10/30/96 A-1+ P-1 10,000 9,957,466
5.32% 11/26/96 A-1+ P-1 25,000 24,793,111
Corporate Asset Funding Company, Inc.
5.27% 10/10/96 A-1+ P-1 11,000 10,985,508
5.43% 10/16/96 A-1+ P-1 20,000 19,954,750
5.30% 10/25/96 A-1+ P-1 20,000 19,929,333
5.37% 11/21/96 A-1+ P-1 20,000 19,847,850
5.35% 12/20/96 A-1+ P-1 15,000 14,821,667
- ----------------------------------------------------------------------------------------
120,289,685
- ----------------------------------------------------------------------------------------
Telephone - 5.7%
Ameritech Capital Funding Corp.
5.34% 10/30/96 A-1+ P-1 20,000 19,913,966
5.29% 12/6/96 A-1+ P-1 25,000 24,757,542
5.20% 12/10/96 A-1+ P-1 15,000 14,848,333
5.40% 1/27/97 A-1+ P-1 15,000 14,734,500
Ameritech Corp.
5.27% 10/18/96 A-1+ P-1 10,000 9,975,114
5.40% 12/2/96 A-1+ P-1 15,000 14,860,500
BellSouth Telecommunications
5.27% 10/11/96 A-1+ P-1 8,000 7,988,289
5.28% 10/24/96 A-1+ P-1 8,000 7,973,013
Southwestern Bell Telephone Co.
5.39% 10/25/96 A-1+ P-1 25,000 24,910,167
5.31% 10/31/96 A-1+ P-1 11,580 11,528,759
- ----------------------------------------------------------------------------------------
151,490,183
- ----------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Rating Par
PRIME SERIES (continued) S&P Moody's (000) Value
- ----------------------------------------------------------------------------------------
<S> <C>
Commercial Paper (concluded)
Waste Management - 3.1%
WMX Technologies
4.78% 11/1/96 A-1 P-1 $10,000 $ 9,958,838
5.32% 11/5/96 A-1 P-1 15,000 14,922,417
5.50% 12/11/96 A-1 P-1 15,000 14,837,292
5.35% 1/24/97 A-1 P-1 15,000 14,743,646
5.67% 4/11/97 A-1 P-1 15,000 14,546,400
5.54% 5/13/97 A-1 P-1 15,000 14,482,933
- ----------------------------------------------------------------------------------------
83,491,526
- ----------------------------------------------------------------------------------------
Total Commercial Paper 2,249,479,632
- ----------------------------------------------------------------------------------------
Variable Rate Note - 4.7%
Associates Corp. Master Note
5.20%(b) 12/1/96 A-1+ P-1 75,000 75,000,000
Coca-Cola Master Note
5.46%(b) 1/17/97 A-1+ P-1 50,000 50,000,000
- ----------------------------------------------------------------------------------------
Total Variable Rate Note 125,000,000
- ----------------------------------------------------------------------------------------
Federal Home Loan Bank - 1.3%
FHLB
6.00% 11/1/96 AAA -- 25,000 24,885,042
5.28% 1/6/97 AAA -- 10,000 9,857,733
- ----------------------------------------------------------------------------------------
Total Federal Home Loan Bank 34,742,775
- ----------------------------------------------------------------------------------------
Federal National Mortgage Association - 3.9%
FNMA
Discount Note
5.32% 10/3/96 -- P-1 10,000 9,997,044
5.46% 11/15/96 -- P-1 9,000 8,998,663
Note
5.68% 10/7/96 -- P-1 20,000 20,000,561
5.31% 10/18/96 -- P-1 20,000 20,000,000
5.39% 12/4/96 -- P-1 10,000 10,004,361
5.63% 12/19/96 -- P-1 20,000 20,000,000
5.45% 2/13/97 -- P-1 15,000 15,000,000
- ----------------------------------------------------------------------------------------
Total Federal National Mortgage Association 104,000,629
- ----------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating Par
PRIME SERIES (concluded) S&P Moody's (000) Value
- ----------------------------------------------------------------------------------------
<S> <C>
Repurchase Agreements - 5.2%(c)
Goldman Sachs
5.65%(d) 10/1/96 -- -- $ 38,600 $ 38,600,000
Morgan Stanley & Co.
5.65%(e) 10/1/96 -- -- 100,000 100,000,000
- ----------------------------------------------------------------------------------------
Total Repurchase Agreements 138,600,000
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0% 2,651,823,036(f)
LIABILITIES IN EXCESS OF OTHER ASSETS, NET - 0.0% (307,662)
- ----------------------------------------------------------------------------------------
NET ASSETS - 100.0% $2,651,515,374
========================================================================================
Net Asset Value, Offering and Redemption Price Per:
Prime Share
($2,396,184,930 / 2,396,188,105 shares outstanding) $1.00
========================================================================================
Flag Investors Class A Share
($6,071,072 / 6,070,838 shares outstanding) $1.00
========================================================================================
Flag Investors Class B Share
($599 / 599 shares outstanding) $1.00
========================================================================================
Prime Institutional Share
($55,411,841 / 55,412,061 shares outstanding) $1.00
========================================================================================
Quality Cash Reserve Prime Share
($193,846,932 / 193,847,114 shares outstanding) $1.00
========================================================================================
</TABLE>
(a) 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.
(b) Master note is payable upon demand by the Fund upon no more than five days'
notice. Interest rates on master notes are redetermined weekly. Rates
shown are those in effect on September 30, 1996.
(c) 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.
(d) Dated 9/30/96 to be repurchased on 10/1/96, collateralized by U.S. Treasury
Notes with a market value of $39,372,757.
(e) Dated 9/30/96 to be repurchased on 10/1/96, collateralized by U.S. Treasury
Notes with a market value of $101,280,062.
(f) 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 Obligations that are 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.
11
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Maturity Par
TREASURY SERIES Date (000) Value
========================================================================================
<S> <C>
U.S. Treasury Securities - 99.5%
U.S. Treasury Bills(a) - 71.0%
5.150% 10/3/96 $ 8,700 $ 8,697,511
5.175% 10/3/96 38,000 37,989,075
5.110% 10/10/96 26,100 26,066,657
5.110% 10/10/96 9,900 9,887,353
5.130% 10/10/96 1,100 1,098,589
4.900% 10/17/96 32,000 31,930,311
5.145% 10/24/96 12,000 11,960,555
5.180% 10/24/96 3,000 2,990,072
5.000% 11/7/96 10,000 9,948,611
5.000% 11/7/96 24,800 24,672,556
5.020% 11/7/96 1,000 994,841
5.060% 11/7/96 1,600 1,591,679
5.095% 11/7/96 1,900 1,890,051
5.030% 11/14/96 12,000 11,926,227
5.170% 11/14/96 20,000 19,873,500
5.190% 11/14/96 30,200 30,008,431
4.970% 11/21/96 50,000 49,647,958
4.990% 11/21/96 18,000 17,872,755
5.000% 11/21/96 4,800 4,766,000
5.035% 11/21/96 4,000 3,971,468
4.970% 11/29/96 18,000 17,853,385
5.030% 11/29/96 4,000 3,967,026
5.100% 11/29/96 27,700 27,468,474
5.040% 12/5/96 30,000 29,727,000
5.045% 12/5/96 1,300 1,288,158
5.090% 12/5/96 22,500 22,293,219
5.110% 12/5/96 25,000 24,769,340
5.160% 12/5/96 14,800 14,662,113
5.050% 12/12/96 10,800 10,690,920
5.060% 12/12/96 13,100 12,967,428
5.220% 1/9/97 12,500 12,318,750
- ----------------------------------------------------------------------------------------
Total U.S. Treasury Bills 485,790,013
- ----------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maturity Par
TREASURY SERIES (concluded) Date (000) Value
========================================================================================
<S> <C>
U.S. Treasury Securities (concluded)
U.S. Treasury Notes - 28.5%
6.875% 10/31/96 $55,300 $ 55,367,766
4.375% 11/15/96 40,000 39,955,377
7.250% 11/15/96 65,000 65,142,877
7.500% 12/31/96 34,800 34,940,750
- ----------------------------------------------------------------------------------------
Total U.S. Treasury Notes 195,406,770
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN U.S. TREASURY SECURITIES - 99.5% 681,196,783(b)
OTHER ASSETS LESS LIABILITIES, NET - 0.5% 3,508,360
- ----------------------------------------------------------------------------------------
NET ASSETS - 100.0% $684,705,143
========================================================================================
Net Asset Value, Offering and Redemption Price Per:
Treasury Share
($638,170,387 / 638,110,342 shares outstanding) $1.00
========================================================================================
Treasury Institutional Share
($46,534,756 / 46,524,573 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.
13
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Rating Par
TAX-FREE SERIES S&P Moody's (000) Value
========================================================================================
<S> <C>
Alabama - 3.6%
Alabama Housing Finance Authority Multi-
Family Housing Revenue (Heatherbrooke
Project), Series C (FNMA LOC)
3.85% 10/7/96(a) A-1+ -- $ 9,900 $ 9,900,000
Homewood Educational Building Authority
(Sanford University), Series 1988 A
(First Alabama Bank LOC)
3.95% 10/7/96(a) -- VMIG-1 4,720 4,720,000
Homewood Educational Building Authority
(Sanford University), Series 1988 B
(First Alabama Bank LOC)
3.95% 10/7/96(a) -- VMIG-1 5,665 5,665,000
- ----------------------------------------------------------------------------------------
20,285,000
- ----------------------------------------------------------------------------------------
Arizona - 2.9%
Salt River Project, Agricultural Improvement
and Power District
3.65% 10/11/96(b) A-1+ P-1 16,198 16,198,000
- ----------------------------------------------------------------------------------------
Arkansas - 1.5%
Arkansas State Development Authority Health
Care Facility (Sisters of Mercy)
(ABN-Amro Bank N.V. LOC)
3.80% 10/7/96(a) A-1+ VMIG-1 8,100 8,100,000
- ----------------------------------------------------------------------------------------
Colorado - 4.6%
Colorado Health Facility Authority (Boulder
Community Hospital),Series 1989 B (MBIA
Insurance)
3.80% 10/7/96(a) A-1+ VMIG-1 4,685 4,685,000
Colorado State General Fund TRAN
4.50% 6/27/97(b) SP-1+ MIG-1 15,000 15,071,995
Moffat County PCR Bonds, Series 1984
(Tri-State)
3.95% 10/7/96(a) A-1+ P-1 6,100 6,100,000
- ----------------------------------------------------------------------------------------
25,856,995
- ----------------------------------------------------------------------------------------
Florida - 1.6%
Sunshine State Government Financing Authority
3.60% 10/15/96(b) A-1+ -- 8,975 8,975,000
- ----------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
========================================================================================
<S> <C>
Georgia - 7.1%
Burke County Development Authority
PCR (Georgia Power Co. Vogtle Project)
4.00% 10/1/96(a) A-1 VMIG-1 $ 6,900 $ 6,900,000
Clayton County Housing Authority,
Multi-Family Housing Revenue Refunding
(Chateau Forest Apartments Project)
(FGICInsurance)
3.90% 10/7/96(a) A-1+ VMIG-1 10,300 10,300,000
Cobb County Housing Authority RB(Post Mill
Project), Series 1995 DN (FNMALOC)
3.85% 10/7/96(a) A-1+ -- 6,100 6,100,000
Dekalb County Multi-Family Housing Bonds
(Camden Brooke Project) (FNMALOC)
3.85% 10/7/96(a) -- VMIG-1 4,500 4,500,000
Smyrna Housing Authority RB(Post Valley
Project), Series 1995 DN (FNMALOC)
3.85% 10/7/96(a) A-1+ -- 12,000 12,000,000
- ----------------------------------------------------------------------------------------
39,800,000
- ----------------------------------------------------------------------------------------
Idaho - 4.1%
Custer County PCR (Amoco Project)
3.40% 10/1/96(b) A-1+ VMIG-1 6,000 6,000,000
Idaho State TAN
4.50% 6/30/97(b) SP-1+ MIG-1 17,000 17,073,118
- ----------------------------------------------------------------------------------------
23,073,118
- ----------------------------------------------------------------------------------------
Illinois - 14.3%
Chicago Tender Notes, Series A (Morgan
Guaranty LOC)
3.65% 10/31/96(b) A-1+ VMIG-1 12,600 12,600,000
Cook County Tender Notes Capital Equipment,
Series A (Northern Trust LOC)
3.90% 10/7/96(a) SP-1+ VMIG-1 4,800 4,800,000
Illinois Development Finance Authority PCR
(Commonwealth Edison Co. Project),
Series 94C (ABN-Amro Bank N.V. LOC)
3.85% 10/7/96(a) A-1+ P-1 7,700 7,700,000
Illinois Development Finance Authority RB
(Chicago Symphony Orchestra Project)
(Northern Trust LOC)
3.90% 10/7/96(a) A-1 VMIG-1 11,300 11,300,000
</TABLE>
15
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Rating Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
========================================================================================
<S> <C>
Illinois (continued)
Illinois Educational Facilities Authority
Adjustable Demand RB (John F. Kennedy
Health Care Foundation) (Harris
Trust & Savings Bank LOC)
3.75% 2/13/97(b) A-1+ -- $12,800 $12,800,000
Illinois Health Facilities Authority
(Evanston Hospital Corp.), Series 96
3.95% 8/15/97(b) A-1+ VMIG-1 5,000 5,000,000
Illinois Health Facilities Authority RB
(Lutheran Institute), Series 1985 DN
(Credit Suisse LOC)
3.50% 10/7/96(a) A-1+ VMIG-1 13,000 13,000,000
Illinois Health Facilities Authority
Variable Rate Demand RB, Revolving
Fund Pooled Financing Program
(The University of Chicago Project)
3.75% 1/30/97(b) A-1+ VMIG-1 11,400 11,400,000
Illinois State Toll Highway Authority,
Toll Highway Priority, Series B
(Societe Generale LOC)
3.80% 10/7/96(a) A-1+ VMIG-1 1,400 1,400,000
- ----------------------------------------------------------------------------------------
80,000,000
- ----------------------------------------------------------------------------------------
Indiana - 8.4%
Evansville Hospital Authority
Hospital Revenue (Daughters of Charity,
St. Mary's Medical Center)
3.85% 10/7/96(a) A-1+ VMIG-1 7,000 7,000,000
Hamilton County Hospital Authority RB
(Daughters of Charity), Series 1983 D
3.85% 10/7/96(a) A-1+ VMIG-1 4,660 4,660,000
Indiana Health Facilities Financing
Authority Hospital RB (Methodist Hospital)
(Credit Suisse LOC)
3.90% 10/7/96(a) A-1+ VMIG-1 5,000 5,000,000
Indianapolis Gas Utility System, Citizens'
Gas and Coke Utility
3.70% 10/11/96(b) A-1+ P-1 5,000 5,000,000
</TABLE>
16
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
========================================================================================
<S> <C>
Petersburg PCR (Indianapolis Power & Light
Company) (AMBAC Insurance)
3.80% 10/7/96(a) -- VMIG-1 $14,100 $14,100,000
Petersburg Refunding PCR (Indianapolis
Power & Light Company)
3.70% 12/13/96(b) A-1+ VMIG-1 7,500 7,500,000
Purdue University, Trustees of Student
Fee Bonds
3.80% 10/7/96(a) A-1+ VMIG-1 3,600 3,600,000
- ----------------------------------------------------------------------------------------
46,860,000
- ----------------------------------------------------------------------------------------
Iowa - 4.9%
Council Bluffs PCR (Illinois Gas
and Electric Company)
3.90% 10/7/96(a) A-1+ VMIG-1 7,600 7,600,000
Louisa County Refunding PCR
(Rabo Bank Nederland LOC)
3.80% 10/7/96(a) A-1+ VMIG-1 19,500 19,500,000
- ----------------------------------------------------------------------------------------
27,100,000
- ----------------------------------------------------------------------------------------
Louisiana - 5.5%
East Baton Rouge Parish (Georgia Pacific
Corp.) PCR (Toronto Dominion LOC)
3.80% 10/7/96(a) -- P-1 2,700 2,700,000
Louisiana Offshore Terminal Authority
Deepwater Port Refunding RB
(Union Bank of Switzerland LOC)
3.90% 10/7/96(a) A-1+ -- 3,300 3,300,000
Louisiana Public Facilities Authority
College and Equipment, Series A (Societe
Generale LOC)
3.90% 10/7/96(a) A-1+ VMIG-1 10,600 10,600,000
Plaquemines Port, Harbor and Terminal
Facilities Refunding RB
(Electro-Coal Transfer Corporation Project)
3.55% 11/20/96(b) -- P-1 2,600 2,600,000
3.65% 12/2/96(b) -- P-1 11,325 11,325,000
- ----------------------------------------------------------------------------------------
30,525,000
- ----------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Rating Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
========================================================================================
<S> <C>
Maryland - 3.4%
Maryland Health & Higher Education
Facility Authority (Daughters of Charity,
National Health System, St. Agnes Hospital)
3.85% 10/7/96(a) A-1+ VMIG-1 $ 5,200 $ 5,200,000
Maryland State Community Development
Administration, Department of Housing and
Community Development, Single Family
Program, First Series RB
3.45% 10/1/96(b) -- VMIG-1 7,500 7,500,000
Maryland State Health & Higher Education
Authority (Daughters of Charity)
3.85% 10/7/96(a) -- VMIG-1 3,300 3,300,000
University of Maryland University
Revenue, Revolving Equipment Loan Series
(Student Loan Marketing Assoc. LOC)
3.70% 10/7/96(a) A-1+ VMIG-1 3,200 3,200,000
- ----------------------------------------------------------------------------------------
19,200,000
- ----------------------------------------------------------------------------------------
Massachusetts - 2.5%
Massachusetts Health and Education
Facility Authority (Capital Assets),
Series D (MBIA Insurance)
3.85% 10/7/96(a) A-1+ VMIG-1 14,000 14,000,000
- ----------------------------------------------------------------------------------------
Minnesota - 2.2%
Becker PCR (Northern States Power
Company - Sherbourne Generating
Station Project)
3.65% 11/1/96(b) A-1+ VMIG-1 6,700 6,700,000
Regents of The University of Minnesota TECP
3.65% 10/25/96(b) A-1+ P-1 3,300 3,300,000
3.65% 10/25/96(b) A-1+ P-1 2,000 2,000,000
- ----------------------------------------------------------------------------------------
12,000,000
- ----------------------------------------------------------------------------------------
Missouri - 1.1%
Missouri Environmental Improvement
PCR (National Rural Utilities),
Series M
3.95% 10/7/96(a) A-1+ VMIG-1 5,800 5,800,000
- ----------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
========================================================================================
<S> <C>
New Jersey - 1.5%
Gloucester County Pollution Control
Authority Refunding RB
(Mobil Oil Refining Corporation Project)
3.50% 10/7/96(a) A-1+ VMIG-1 $3,000 $ 3,000,000
Mercer County Improvement RB
(Credit Suisse LOC)
3.60% 10/7/96(a) A-1+ VMIG-1 1,800 1,800,000
New Jersey Economic Development Authority
PCR Refunding Bonds
(Public Service Electric & Gas Co. Project)
(Swiss Bank LOC)
3.50% 10/7/96(a) A-1+ VMIG-1 3,300 3,300,000
- ----------------------------------------------------------------------------------------
8,100,000
- ----------------------------------------------------------------------------------------
New York - 0.1%
Triborough Bridge and Tunnel Authority
(FGIC Insurance)
3.80% 10/7/96(a) A-1+ VMIG-1 600 600,000
- ----------------------------------------------------------------------------------------
North Carolina - 0.2%
North Carolina Educational Facilities
Finance Agency (Duke University)
3.75% 10/7/96(a) A-1+ VMIG-1 500 500,000
North Carolina Educational Facilities
Finance Agency (Duke University),
Series 1987 A
3.75% 10/7/96(a) A-1+ VMIG-1 800 800,000
- ----------------------------------------------------------------------------------------
1,300,000
- ----------------------------------------------------------------------------------------
Ohio - 2.2%
Clermont County Adjustable Rate Hospital
Facilities RB (Mercy Health System)
3.95% 10/7/96(a) A-1+ VMIG-1 6,436 6,436,000
Ohio Air Pollution Control Variable Rate
Demand Refunding RB (PPG Industries)
4.05% 10/7/96(a) A-1 VMIG-1 6,000 6,000,000
- ----------------------------------------------------------------------------------------
12,436,000
- ----------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Rating Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
========================================================================================
<S> <C>
Oklahoma - 2.0%
Oklahoma Industries Authority Hospital
Revenue, St. Anthony Parking Garage B
(Morgan Guaranty LOC)
3.65% 12/3/96(b) -- VMIG-1 $ 2,365 $ 2,365,000
Oklahoma Industries Authority, Medical
Practice Facility RB (SSM Health Care)
(Morgan Guaranty LOC)
3.65% 12/3/96(b) -- VMIG-1 5,560 5,560,000
Oklahoma Water Resources Board, State
Loan Program RB (Swiss Bank LOC)
3.70% 3/3/97(b) A-1+ -- 3,000 3,000,000
- ----------------------------------------------------------------------------------------
10,925,000
- ----------------------------------------------------------------------------------------
Pennsylvania - 0.3%
Philadelphia Higher Education & Hospital
Authority (Children's Hospital of
Philadelphia Project)
4.00% 10/1/96(a) A-1+ -- 1,500 1,500,000
- ----------------------------------------------------------------------------------------
Tennessee - 1.6%
Metropolitan Nashville Airport Authority,
Airport Improvement Refunding RB
(Societe Generale LOC)
3.85% 10/7/96(a) A-1+ VMIG-1 8,900 8,900,000
- ----------------------------------------------------------------------------------------
Texas - 13.4%
Austin Utility System (Travis and
Williamson Counties) (Swiss Bank LOC)
3.65% 10/25/96(b) A-1+ P-1 3,900 3,900,000
Dallas Area Rapid Transportation Sales
Tax Revenue, Series A (Credit Suisse LOC)
3.65% 10/25/96(b) A-1+ P-1 5,000 5,000,000
Gulf Coast Waste Disposal Authority
PCR (Exxon)
3.90% 10/1/96(a) A-1+ VMIG-1 2,100 2,100,000
Harris County Health Facilities Development
Hospital RB (San Jacinto Methodist
Hospital Project) (Morgan Guaranty LOC)
3.60% 12/2/96(b) -- VMIG-1 20,250 20,247,971
</TABLE>
20
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
========================================================================================
<S> <C>
Harris County Toll Road, Series H
3.80% 10/7/96(a) A-1+ VMIG-1 $ 3,800 $ 3,800,000
Hockley County Industrial Development
Corp. (Amoco Project)
3.60% 11/1/96(b) A-1+ P-1 8,000 8,000,000
Lower Neches Valley Authority
(Chevron Inc.)
3.65% 2/18/97(b) A-1+ -- 6,500 6,500,000
State of Texas Public Finance Authority GO
3.70% 12/12/96(b) A-1+ P-1 9,600 9,600,000
State of Texas TRAN
4.75% 8/29/97(b) SP-1+ MIG-1 5,000 5,034,285
Texas Higher Education Authority
Facilities Revenue, Series 85B
(FGIC Insurance)
3.90% 10/7/96(a) A-1+ VMIG-1 5,150 5,150,000
Yoakum County Industrial Development
Adjustable Rate PCR
(Amoco Company Project)
3.60% 11/1/96(b) A-1+ VMIG-1 5,265 5,265,000
- ----------------------------------------------------------------------------------------
74,597,256
- ----------------------------------------------------------------------------------------
Utah - 3.7%
Intermountain Power Agency, Power Supply
RB (Morgan Guaranty LOC)
3.93% 6/16/97(b) A-1+ VMIG-1 7,500 7,500,000
Intermountain Power Agency, Power Supply
RB (Swiss Bank LOC)
3.50% 10/15/96(b) A-1+ VMIG-1 13,000 13,000,000
- ----------------------------------------------------------------------------------------
20,500,000
- ----------------------------------------------------------------------------------------
Virginia - 0.1%
Hampton Roads Regional Jail Authority,
Variable Rate Demand RB (Regional Jail
Facility) (Wachovia LOC)
3.90% 10/7/96(a) A-1+ VMIG-1 800 800,000
- ----------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Rating Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
========================================================================================
<S> <C>
Washington - 3.0%
Chelan County Public Utility District
No.1 (Chelan Hydro Consolidated
System), Series 1995 A DN
(Credit Suisse LOC)
3.80% 10/7/96(a) A-1+ VMIG-1 $ 3,475 $ 3,475,000
King County Sewer Revenue Notes
3.70% 10/1/96(b) A-1 P-1 8,500 8,500,000
King County Sewer Revenue Notes,
Series A
3.70% 12/12/96(b) A-1 P-1 5,000 5,000,000
- ----------------------------------------------------------------------------------------
16,975,000
- ----------------------------------------------------------------------------------------
Wisconsin - 2.5%
Pleasant Prairie Village Refunding PCR
(Wisconsin Electric Power Company Project)
3.85% 10/7/96(a) A-1+ P-1 10,000 10,000,000
Wisconsin Health Facilities
Authority RB
(Daughters of Charity, St. Mary's Hospital)
3.85% 10/7/96(a) -- VMIG-1 3,800 3,800,000
- ----------------------------------------------------------------------------------------
13,800,000
- ----------------------------------------------------------------------------------------
Wyoming - 1.3%
Sweetwater County PCR
(Idaho Power Co.), Series B
4.08% 10/7/96(a) A-1 VMIG-1 7,100 7,100,000
- ----------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX-FREE SERIES (continued) Value
========================================================================================
<S> <C>
TOTAL INVESTMENTS - 99.6% $555,306,369(c)
OTHER ASSETS IN EXCESS OF LIABILITIES, NET - 0.4% 2,217,479
- ----------------------------------------------------------------------------------------
NET ASSETS - 100.0% $557,523,848
- ----------------------------------------------------------------------------------------
Net Asset Value, Offering and
Redemption Price Per Share
($557,523,848 / 557,597,126 shares outstanding) $1.00
========================================================================================
(a) Demand security; payable upon demand by the Fund with usually no more than
seven (7) calendar days'notice. Interest rates are redetermine periodically.
Rates shown are those in effect on September 30, 1996.
(b) Security has an outstanding call, mandatory put or optional put by the
issuer. Par value and maturity date reflect such call or put.
(c) Aggregate cost for financial reporting and federal tax purposes.
See Notes to Financial Statements.
23
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
Rating Par
TAX-FREE SERIES (concluded)
================================================================================
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 Financial Guaranty Insurance Corporation
MOODY'S MUNICIPAL BOND RATINGS:
Aaa Bonds that are judged to be of the best quality.
Aa Bonds that are judged to be of high quality by all standards. Issues
are sometimes rated with a 1, 2 or 3, which denote 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 Obligations that are of the highest quality.
AA Obligations that 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 that 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 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.
24
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Operations (Unaudited)
For the six months ended September 30, 1996
</TABLE>
<TABLE>
<CAPTION>
Prime Treasury Tax-Free
Series Series Series
- ----------------------------------------------------------------------------------------
<S> <C>
Investment Income (Note 1):
Interest income $73,729,458 $18,174,027 $10,020,531
Expenses:
Distribution fee (Note 2) 3,661,677 820,459 720,001
Investment advisory fee (Note 2) 3,651,417 869,155 794,633
Transfer agent fee 540,474 120,000 78,087
Custodian fee 156,070 75,001 45,661
Accounting fee (Note 2) 78,911 62,795 31,922
Directors' fees 48,158 12,534 24,066
Registration fees 84,868 25,073 48,877
Legal fees 28,894 12,534 10,027
Printing and postage fees 191,225 47,300 37,777
Other expenses 65,107 53,946 26,958
Total expenses 8,506,801 2,098,797 1,818,009
Less: Fees waived (Note 2) (57,988) -- --
Net expenses 8,448,813 2,098,797 1,818,009
Net investment income 65,280,645 16,075,230 8,202,522
Net realized gain from security
transactions -- 8,567 12,136
Net increase in net assets resulting
from operations $65,280,645 $16,083,797 $ 8,214,658
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
ALEX. BROWN CASH RESERVE FUND. INC.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets September 30, 1996
<TABLE>
<CAPTION>
PRIME SERIES
- ---------------------------------------------------------------------------------------------
Six Months Ended Year Ended
September 30, March 31,
1996(1) 1996
---------------- ----------
<S> <C>
Increase/(Decrease) in Net Assets
Operations:
Net investment income $ 65,280,645 $ 107,454,378
Net realized gain/(loss) on sales of investments -- (6,050)
-------------- --------------
Net increase in net assets resulting
from operations 65,280,645 107,448,328
Distributions to Shareholders From:
Net investment income:
Alex. Brown Cash Reserve Prime, Treasury and
Tax-Free Shares, respectively (59,516,901) (99,181,255)
Alex. Brown Cash Reserve Institutional Shares (1,619,636) (1,334,079)
Flag Investors Class A Shares (140,207) (402,702)
Flag Investors Class B Shares (132) (300)
Quality Cash Reserve Prime Shares (4,003,769) (6,536,042)
-------------- --------------
Total distributions (65,280,645) (107,454,378)
Capital Share Transactions, net -- (Note 3) 48,735,599 1,016,482,516
-------------- --------------
Total increase/(decrease) in net assets 48,735,599 1,016,476,466
Net Assets:
Beginning of period 2,602,779,775 1,586,303,309
-------------- --------------
End of period $2,651,515,374 $2,602,779,775
============== ==============
</TABLE>
- -----------
(1) Unaudited.
26
<PAGE>
ALEX. BROWN CASH RESERVE FUND. INC.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
TREASURY SERIES TAX-FREE SERIES
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
September 30, March 31, September 30, March 31,
1996(1) 1996 1996(1) 1996
---------------- ---------- ---------------- ----------
<S> <C>
Increase/(Decrease) in Net Assets
Operations:
Net investment income $ 16,075,230 $ 32,463,791 $ 8,202,522 $ 17,012,671
Net realized gain/(loss) on sales of investments 8,567 51,785 12,136 4,419
------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations 16,083,797 32,515,576 8,214,658 17,017,090
Distributions to Shareholders From:
Net investment income:
Alex. Brown Cash Reserve Prime, Treasury and
Tax-Free Shares, respectively (14,857,570) (30,565,630) (8,201,671) (17,012,671)
Alex. Brown Cash Reserve Institutional Shares (1,217,660) (1,898,161) -- --
Flag Investors Class A Shares -- -- -- --
Flag Investors Class B Shares -- -- -- --
Quality Cash Reserve Prime Shares -- -- -- --
------------ ------------ ------------ ------------
Total distributions (16,075,230) (32,463,791) (8,201,671) (17,012,671)
Capital Share Transactions, net -- (Note 3) (33,940,339) 192,365,923 (13,996,139) 96,118,352
------------ ------------ ------------ ------------
Total increase/(decrease) in net assets (33,931,772) 192,417,708 (13,983,152) 96,122,771
Net Assets:
Beginning of period 718,636,915 526,219,207 571,507,000 475,384,229
------------ ------------ ------------ ------------
End of period $684,705,143 $718,636,915 $557,523,848 $571,507,000
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
ALEX. BROWN CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
================================================================================
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0239
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0239)
-------
Net asset value at end of period $ 1.00
=======
Total Return:
Based on net asset value per share 4.82%(2)
Ratios to Average Daily Net Assets:
Expenses 0.60%(2)
Net investment income 4.77%(2)
Supplemental Data:
Net assets at end of period $2,396,184,930
Number of shares outstanding at
end of period 2,396,188,105
- -----------
(1) Unaudited.
(2) Annualized.
28
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALEX. BROWN CASH RESERVE PRIME SHARES (continued)
- ----------------------------------------------------------------------------------------------------------------------------------
Year ended March 31,
==================================================================================================================================
1996 1995 1994 1993 1992
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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 period $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 period 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.
29
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS A
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
---------------------
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0239
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0239)
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 4.82%(2)
Ratios to Average Daily Net Assets:
Expenses 0.60%(2)
Net investment income 4.77%(2)
Supplemental Data:
Net assets at end of period $6,071,072
Number of shares outstanding at end of period 6,070,838
- --------------------------------------------------------------------------------
</TABLE>
- --------------
(1) Unaudited.
(2) Annualized.
30
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS A (continued)
- -----------------------------------------------------------------------------------------------------------------------
Year ended March 31,
- -----------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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 period $5,976,831 $7,726,696 $18,116,648 $10,392,282 $7,350,424
Number of shares outstanding at end of period 5,976,824 7,726,698 18,116,633 10,392,267 7,350,409
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
<TABLE>
ALEX. BROWN CASH RESERVE FUND, INC. ALEX. BROWN CASH RESERVE FUND, INC.
- ------------------------------------------------------------------- -------------------------------------------------------------
(For a share outstanding throughout each period)
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS B FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS B (continued)
- ------------------------------------------------------------------- -------------------------------------------------------------
<S><C>
April 3, 1995(2)
Six months ended through
September 30, 1996(1) March 31, 1996
- ------------------------------------------------------------------- -------------------------------------------------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00 $ 1.00
------- -------
Income from Investment Operations:
Net investment income 0.0200 0.0361
Less Distributions:
Dividends from net investment income (0.0200) (0.0361)
------- -------
Net asset value at end of period $ 1.00 $ 1.00
======= =======
Total Return:
Based on net asset value per share 4.07%(3) 3.69%(3)
Ratios to Average Daily Net
Assets:
Expenses 1.35%(3) 1.38%(3)
Net investment income 4.02%(3) 4.30%(3)
Supplemental Data:
Net assets at end of period $ 599 $10,200
Number of shares outstanding at end
of period 599 10,200
- ------------------------------------------------------------------- -------------------------------------------------------------
</TABLE>
- ------------
(1) Unaudited.
(2) Commencement of operations.
(3) Annualized.
See Notes to Financial Statements.
32
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
ALEX. BROWN CASH RESERVE PRIME INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
-----------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0252
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0252)
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 5.07%(2)
Ratios to Average Daily Net Assets:
Expenses 0.35%(2)
Net investment income 5.02%(2)
Supplemental Data:
Net assets at end of period $55,411,841
Number of shares outstanding at end of period 55,412,061
- --------------------------------------------------------------------------------
- ------------
(1) Unaudited.
(2) Annualized.
34
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALEX. BROWN CASH RESERVE PRIME INSTITUTIONAL SHARES (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended March 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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 period $53,699,315 $11,904,716 $23,437,449 $28,884,078 $21,867,108
Number of shares outstanding at end of period 53,699,535 11,904,663 23,437,512 28,884,132 21,867,108
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
QUALITY CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0225
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0225)
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 4.47%(3)
Ratios to Average Daily Net Assets:
Expenses 0.89%(3,4)
Net investment income 4.48%(3,5)
Supplemental Data:
Net assets at end of period $193,846,933
Number of shares outstanding at end of period 193,847,114
- --------------------------------------------------------------------------------
(1) Unaudited.
(2) Commencement of operations.
(3) Annualized.
(4) Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.95% and 0.95% for the six months ended September 30, 1996 and the
year ended March 31, 1996, respectively.
(5) Ratio of net investment income to average daily net assets prior to
partial fee waivers was 4.42% and 4.86% for the six months ended
September 30, 1996 and the year ended March 31, 1996, respectively.
36
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUALITY CASH RESERVE PRIME SHARES (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
May 6, 1991(2)
through
Year ended March 31, March 31, 1992
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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%(3)
Ratios to Average Daily Net Assets:
Expenses 0.90%(4) 0.96% 1.06% 1.04% 0.96%(3)
Net investment income 4.91%(5) 4.04% 2.18% 2.53% 4.30%(3)
Supplemental Data:
Net assets at end of period $156,412,213 $94,592,158 $92,678,440 $101,321,868 $94,887,669
Number of shares outstanding at
end of period 156,412,393 94,591,979 92,678,268 101,321,668 94,887,669
</TABLE>
See Notes to Financial Statements.
37
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- -----------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
ALEX. BROWN CASH RESERVE TREASURY SHARES
- -----------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
- -----------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
------
Income from Investment Operations:
Net investment income 0.0143
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0143)
-------
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 4.62%(2)
Ratios to Average Daily Net Assets:
Expenses 0.58%(2)
Net investment income 4.59%(2)
Supplemental Data:
Net assets at end of period $638,170,387
Number of shares outstanding at end of period 638,110,342
- --------------------------------------------------------------------------------
(1) Unaudited.
(2) Annualized.
(3) 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, respectively.
(4) Ratio of net investment income to average daily net assets prior to
partial fee waivers was 4.08%, 2.53% and 2.86% for the years ended March
31, 1995, 1994 and 1993, respectively.
38
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALEX. BROWN CASH RESERVE TREASURY SHARES (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended March 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
<S><C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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%(3) 0.54%(3) 0.55%(3) 0.55%
Net investment income 4.94% 4.09%(4) 2.55%(4) 2.87%(4) 4.76%
Supplemental Data:
Net assets at end of period $666,814,158 $512,167,212 $581,724,214 $618,175,839 $725,010,207
Number of shares outstanding at end of period 666,762,028 512,162,864 581,723,448 618,152,465 725,010,207
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
39
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
ALEX. BROWN CASH RESERVE TREASURY INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
------
Income from Investment Operations:
Net investment income 0.0227
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0227)
-------
Net asset value at end of period $ 1.00
=======
Total Return:
Based on net asset value per share 4.87%(2)
Ratios to Average Daily Net Assets:
Expenses 0.33%(2)
Net investment income 4.84%(2)
Supplemental Data:
Net assets at end of period $46,534,756
Number of shares outstanding at end of period 46,524,573
- --------------------------------------------------------------------------------
(1) Unaudited.
(2) Annualized.
(3) Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.31%, 0.29% and 0.27% for the years ended March 31, 1995, 1994
and 1993, respectively.
(4) Ratio of net investment income to average daily net assets prior to partial
fee waivers was 4.14%, 2.80% and 3.15% for the years ended March 31, 1995,
1994 and 1993, respectively.
40
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALEX. BROWN CASH RESERVE TREASURY INSTITUTIONAL SHARES (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended March 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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%(3) 0.27%(3) 0.26%(3) 0.27%
Net investment income 5.12% 4.15%(4) 2.82%(4) 3.16%(4) 4.90%
Supplemental Data:
Net assets at end of period $51,822,757 $14,051,995 $39,692,848 $60,146,987 $63,834,323
Number of shares outstanding at end of period 51,813,226 14,046,467 39,688,259 60,140,874 63,834,323
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
41
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
ALEX. BROWN CASH RESERVE TAX-FREE SHARES
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0241
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0241)
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 2.87%(2)
Ratios to Average Daily Net Assets:
Expenses 0.63%(2)
Net investment income 2.85%(2)
Supplemental Data:
Net assets at end of period $557,523,848
Number of shares outstanding at end of period 557,597,126
- --------------------------------------------------------------------------------
(1) Unaudited.
(2) Annualized.
(3) Ratio of expenses to average daily net assets prior to partial fees was
0.57% for the year ended March 31, 1992.
(4) Ratio of net investment income to average daily net assets prior to
partial fees was 3.48% for the year ended March 31, 1992.
42
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ALEX. BROWN CASH RESERVE TAX-FREE SHARES (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended March 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
<S><C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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%(3)
Net investment income 3.16% 2.74% 1.84% 2.13% 3.49%(4)
Supplemental Data:
Net assets at end of period $571,507,000 $475,384,229 $378,859,232 $315,661,447 $304,987,823
Number of shares outstanding at end of period 571,593,265 475,474,913 378,939,262 315,700,742 305,008,959
</TABLE>
See Notes to Financial Statements.
43
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements
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 Alex. Brown Cash
Reserve Prime Institutional Shares ("Prime Institutional Shares"). The Treasury
Series offers two classes of shares: Alex. Brown Cash Reserve Treasury Shares
("Treasury Shares") and Alex. Brown Cash Reserve Treasury Institutional Shares
("Treasury Institutional Shares"). The Alex. Brown Cash Reserve Tax-Free Series
("Tax-Free Series") offers only one class of shares. Matters affecting each
class are voted on exclusively by the shareholders of that class.
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.
D. Federal Income Taxes--The Fund intends to comply with the requirements
of the Internal Revenue Code necessary to continue to qualify as a
regulated invest-
44
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 1--concluded
ment company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains)
that 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 the year 2000.
E. Expenses--Operating expenses directly attributable to a class of shares
are charged to that class' operations. Expenses of the Fund that
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
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. For the six months ended September 30, 1996, the Fund paid
PIMC$399,190 for sub-advisory services for the Tax-Free Series.
The Fund has agreed to reimburse PFPC Inc., an affiliate of PIMC, for
certain costs incurred in providing accounting services to the Tax-Free Series.
For the six months ended September 30, 1996, the Fund paid PFPC $31,922 for
accounting services for the Tax-Free Series.
45
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2--concluded
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 six months ended
September 30, 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 of 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 two Series' average daily net assets. lCC received $78,911 and $62,795 for
accounting services for the six months ended September 30, 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
$540,474, $120,000 and $78,087 for transfer agent services for the six months
ended September 30, 1996 for the 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 each class. Alex. Brown voluntarily waived distribution fees in
the amount of $57,988 for the Quality Cash Shares for the six months ended
September 30, 1996.
The Fund complex of which the Fund is a part has adopted a retirement plan
for eligible Directors. The actuarially computed pension expense allocated to
the Fund for the period January 1, 1996 through September 30, 1996 was
approximately $40,500, $14,500 and $10,000 for the Prime, Treasury and Tax-Free
Series, respectively, and the accrued liability was approximately $211,000,
$75,000 and $52,000 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 periods ended September 30, 1996 and March 31, 1996 are
listed on the following page.
46
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
NOTE 3--concluded September 30, 1996
(Unaudited) March 31, 1996
Prime Series:
Sold:
Prime Shares 10,938,844,772 19,439,463,533
Flag Investors Class A Shares 3,613,116 12,118,053
Flag Investors Class B Shares 4,670 24,535
Prime Institutional Shares 203,535,745 213,159,539
Quality Cash Shares 503,778,591 1,285,040,597
Issued as reinvestment of dividends:
Prime Shares 56,307,220 93,103,137
Flag Investors Class A Shares 133,453 374,561
Flag Investors Class B Shares 399 --
Prime Institutional Shares 1,211,277 753,855
Quality Cash Shares 3,842,527 6,300,386
Redeemed:
Prime Shares (10,985,648,278) (18,617,959,766)
Flag Investors Class A Shares (3,652,327) (14,242,488)
Flag Investors Class B Shares (14,671) (14,335)
Prime Institutional Shares (203,034,496) (172,118,522)
Quality Cash Shares (470,186,399) (1,229,520,569)
--------------- ---------------
Net increase 48,735,599 1,016,482,516
=============== ===============
Treasury Series:
Sold:
Treasury Shares 2,164,014,641 4,043,423,430
Treasury Institutional Shares 211,355,409 396,793,576
Issued as reinvestment of dividends:
Treasury Shares 14,255,334 28,890,267
Treasury Institutional Shares 782,613 417,316
Redeemed:
Treasury Shares (2,206,921,661) (3,917,714,533)
Treasury Institutional Shares (217,426,675) (359,444,133)
-------------- --------------
Net increase/(decrease) (33,940,339) 192,365,923
============== ==============
Tax-Free Series:
Sold 2,518,447,605 4,817,984,787
Issued as reinvestment of dividends 7,795,188 16,116,851
Redeemed (2,540,238,932) (4,737,983,286)
-------------- --------------
Net increase/(decrease) (13,996,139) 96,118,352
============== ==============
NOTE 4--Net Assets
At September 30, 1996, net assets consisted of:
<TABLE>
<CAPTION>
Prime Treasury Tax-Free
Series Series Series
------ -------- --------
<S> <C>
Paid-in capital $2,651,518,882 $684,634,915 $557,597,126
Undistributed net investment income 2,187 427 --
Undistributed net realized gain/(loss) on
sales of investments (5,695) 69,801 (73,278)
-------------- ------------ ------------
$2,651,515,374 $684,705,143 $557,523,848
============== ============ ============
</TABLE>
47
<PAGE>
Board of Directors
- --------------------------------------------------------------------------------
W. JAMES PRICE
Chairman
CHARLES W. COLE JR. EUGENE J. McDONALD
Director Director
JAMES J. CUNNANE REBECCA W. RIMEL
Director Director
RICHARD T. HALE TRUMAN T. SEMANS
Director Director
JOHN F. KROEGER CARL W. VOGT, Esq.
Director Director
LOUIS E. LEVY HARRY WOOLF
Director Director
Officers
- --------------------------------------------------------------------------------
W. JAMES PRICE M. ELLIOTT RANDOLPH, JR. JOSEPH A. FINELLI
Chairman Vice President Treasurer
RICHARD T. HALE PAUL D. CORBIN EDWARD J. STOKEN
President Vice President Secretary
EDWARD J. VEILLEUX MONICA M. HAUSNER LAURIE D. DEPRINE
Executive Vice President Vice President Assistant Secretary
SCOTT J. LIOTTA
Vice President
- --------------------------------------------------------------------------------
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 Transfer Agent
INVESTMENT COMPANY CAPITAL CORP.
Investment Advisor 135 East Baltimore Street
INVESTMENT COMPANY CAPITAL CORP. Baltimore, MD 21202
135 East Baltimore Street (800) 553-8080
Baltimore, MD 21202
Auditors
Sub-Advisor COOPERS & LYBRAND L.L.P.
(Tax-Free Series) 217 E. Redwood Street
PNC INSTITUTIONAL Baltimore, MD 21202
MANAGEMENT CORPORATION
103 Bellevue Parkway
Wilmington, DE 19809
- --------------------------------------------------------------------------------
48
<PAGE>
(C) BY ALEX. BROWN & SONS INCORPORATED
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>
ALEX. BROWN CASH RESERVE FUND, INC. BULK RATE
P.O. Box 1346 U.S. Postage
Baltimore, MD 21203 PAID
Richmond, VA
Permit No. 930
<PAGE>
QUALITY
CASH RESERVE
PRIME SHARES
Semi-Annual Report
September 30, 1996
<PAGE>
Fund Features
(bullet) Daily Dividends
The Fund declares dividends daily and distributes them monthly in the
form of additional shares.
(bullet) Check Redemption Privilege
After completing an authorization form, you may redeem your shares by
writing a check (in a minimum amount of $250) on your account. You will
continue to earn dividends until your check reaches the bank for
clearance.
(bullet) 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.
(bullet) Constant Net Asset Value
The Fund will attempt to maintain a constant net asset value of $1.00
per share and has done so since its inception on May 6, 1991. However,
there can be no assurance that the Fund will be able to maintain a
constant net asset value of $1.00 per share. An investment in a money
market fund is neither insured nor guaranteed by the U.S. Government.
(bullet) Minimum Investment
The minimum initial investment is $1,500. Subsequent investments may be
made in an amount of $100 or more.
This report is submitted for the general information of the
shareholders of Quality Cash Reserve Prime Shares. The report may only
be distributed to current shareholders or to persons who have received
a current prospectus.
<PAGE>
Letter to Shareholders
November 6, 1996
We are pleased to report on the progress of your Fund for the six months
ended September 30, 1996.
PERIOD IN REVIEW
The Federal Reserve Bank, under increasing scrutiny with each of its
meetings, determined the economy was stable enough to leave the Fed Funds rate
unchanged at its September 1996 meeting. This decision has left interest rates
fairly stable over this time period, albeit with some occasional swings. The
30-year bond yield has fluctuated in a trading range between 6.55% and 7.20% for
most of the past six months. The 3-month Treasury bill rate has reflected the
Fed's "wait and see" attitude, with its yield ranging between 5.00% and 5.35%.
These yields indicate a rather narrow spread between short-term and long-term
rates.
We continue to manage the Fund conservatively, as evidenced by the rating
that Standard & Poor's (S&P) has awarded to the portfolio of which Quality Cash
Reserve Prime Shares is a class. The portfolio maintains a "AAAm" rating, the
highest that S&P awards to money market funds.
MARKET OUTLOOK
The final quarter of 1996 raises several questions, and the answers will
dictate which way the markets will move for the remainder of the year, as well
as the beginning of 1997.
(bullet) First, with regard to politics and the Presidential and Congressional
elections, will lowering the budget deficit continue to be a top priority?
(bullet) Second, with regard to the Federal Reserve Bank, is the Fed waiting to
raise or lower interest rates? Are the members concerned with the relatively low
economic growth rate (1.5% to 3%), or are they watching building inflationary
pressures, particularly in labor markets and energy prices?
(bullet) Finally, in general, just how high will the stock market go? Will
corporate profits continue to rise, or will wage pressures begin to affect the
bottom line? How will the traditional Christmas rush turn out for retailers?
1
<PAGE>
Letter to Shareholders (continued)
- --------------------------------------------------------------------------------
Regardless of the answers to these questions, it is our belief that the
conservative approach we apply to investing on behalf of the Fund will provide
comfort to our shareholders, and in turn will continue to offer competitive
yields, without sacrificing quality.
As always, we appreciate your continued support.
Sincerely,
/s/ W. James Price /s/ Richard T. Hale
- ----------------------- -------------------------
W. James Price Richard T. Hale
Chairman President
2
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Net Assets September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Rating
------------ Par
S&P Moody's (000) Value
<S> <C>
Commercial Paper - 84.9%(a)
Automobiles & Trucks - 2.6% PACCAR Financial Corp.
5.33% 10/21/96 A-1+ P-1 $10,000 $ 9,970,389
5.40% 10/28/96 A-1+ P-1 9,000 8,963,550
5.29% 11/18/96 A-1+ P-1 5,000 4,964,733
Toyota Motor Credit Corp.
5.32% 10/31/96 A-1+ P-1 15,000 14,933,500
5.25% 11/8/96 A-1+ P-1 15,000 14,916,875
5.36% 12/13/96 A-1+ P-1 14,000 13,847,836
----------
67,596,883
----------
Beverages - 3.1%
Anheuser-Busch Companies Inc.
5.28% 10/7/96 A-1+ P-1 15,000 14,986,800
5.34% 10/7/96 A-1+ P-1 17,300 17,284,603
4.90% 10/21/96 A-1+ P-1 20,000 19,945,556
4.75% 10/28/96 A-1+ P-1 15,000 14,946,563
5.25% 1/1/97 A-1+ P-1 15,000 14,781,250
----------
81,944,772
----------
Chemicals, General - 3.8%
E.I. duPont de Nemours
5.35% 10/18/96 A-1+ P-1 10,000 9,974,736
5.40% 11/22/96 A-1+ P-1 15,000 14,883,000
5.30% 11/27/96 A-1+ P-1 15,000 14,874,125
5.29% 12/18/96 A-1+ P-1 10,000 9,885,383
5.30% 12/20/96 A-1+ P-1 25,000 24,705,556
5.38% 1/30/97 A-1+ P-1 10,000 9,819,172
5.46% 3/26/97 A-1+ P-1 16,000 15,572,907
----------
99,714,879
----------
Chemicals, Specialty - 1.2%
Air Products & Chemicals, Inc.
5.35% 10/25/96 A-1 P-1 11,000 10,960,767
5.33% 11/5/96 A-1 P-1 20,000 19,896,361
----------
30,857,128
----------
Computer & Office Equipment - 7.4%
Hewlett-Packard
5.42% 10/9/96 A-1+ P-1 15,000 14,981,933
5.35% 10/30/96 A-1+ P-1 20,000 19,913,806
5.40% 12/3/96 A-1+ P-1 10,000 9,905,500
</TABLE>
3
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) September 30, 1996
(Unaudited)
Commercial Paper (continued)
Computer & Office Equipment (concluded)
<TABLE>
<CAPTION>
Rating
------------ Par
S&P Moody's (000) Value
<S> <C>
Pitney Bowes Credit Corp.
5.02% 10/3/96 A-1+ P-1 $15,000 $ 14,995,817
5.03% 10/3/96 A-1+ P-1 15,000 14,995,808
5.02% 10/4/96 A-1+ P-1 20,000 19,991,633
5.04% 10/4/96 A-1+ P-1 17,000 16,992,860
5.35% 2/19/97 A-1+ P-1 19,000 18,601,871
5.52% 2/19/97 A-1+ P-1 14,775 14,455,565
5.50% 3/21/97 A-1+ P-1 10,000 9,738,750
Xerox Credit Corp.
5.32% 11/8/96 A-1 P-1 20,480 20,364,993
5.32% 12/5/96 A-1 P-1 19,700 19,510,771
-----------
194,449,307
-----------
Credit Unions - 2.5%
Mid-States Corporate Federal Credit Union
5.37% 10/1/96 A-1+ P-1 20,500 20,469,420
U.S. Central Credit Union
5.30% 10/10/96 A-1+ P-1 15,000 14,980,125
5.40% 10/23/96 A-1+ P-1 15,000 14,950,500
5.31% 12/3/96 A-1+ P-1 15,000 14,860,613
----------
65,260,658
----------
Defense & Aircraft - 0.9%
Rockwell International Corp.
5.28% 10/29/96 A-1+ P-1 25,000 24,897,333
Electrical & Electronics - 3.5%
Emerson Electric Co.
5.32% 10/25/96 A-1+ P-1 25,000 24,911,332
Motorola Inc.
5.32% 10/7/96 A-1+ P-1 20,000 19,982,267
5.28% 10/24/96 A-1+ P-1 15,000 14,949,400
5.35% 10/25/96 A-1+ P-1 17,000 16,939,367
5.32% 11/8/96 A-1+ P-1 15,000 14,915,767
----------
91,698,133
----------
</TABLE>
4
<PAGE>
Prime Series
- -------------------------------------------------------------------------------
Commercial Paper (continued)
<TABLE>
<CAPTION>
Rating
------------ Par
S&P Moody's (000) Value
<S> <C>
Electric Utility - 1.0%
Northern States Power Co.
5.30% 11/4/96 A-1+ P-1 $ 7,000 $ 6,964,961
5.27% 11/22/96 A-1+ P-1 19,000 18,855,368
-----------
25,820,329
-----------
Entertainment - 2.8%
Walt Disney Co.
5.24% 10/9/96 A-1 P-1 15,000 14,982,533
5.28% 10/11/96 A-1 P-1 15,000 14,978,000
5.40% 10/15/96 A-1 P-1 10,000 9,979,000
5.18% 12/6/96 A-1 P-1 10,000 9,905,033
5.18% 12/9/96 A-1 P-1 15,000 14,851,075
5.38% 1/29/97 A-1 P-1 10,000 9,820,667
----------
74,516,308
----------
Finance, Commercial - 2.2%
CIT Group Holdings Inc.
5.29% 12/10/96 A-1 P-1 40,000 39,588,555
PHH Corp.
5.42% 10/30/96 A-1 P-1 20,000 19,912,678
----------
59,501,233
----------
Finance, Consumer - 3.6%
USAA Capital Corp.
5.27% 10/30/96 A-1+ P-1 10,000 9,957,547
5.44% 11/4/96 A-1+ P-1 18,000 17,907,520
5.40% 11/14/96 A-1+ P-1 22,000 21,854,800
5.30% 11/27/96 A-1+ P-1 10,000 9,916,083
5.40% 12/17/96 A-1+ P-1 20,000 19,769,000
5.27% 12/20/96 A-1+ P-1 10,000 9,882,889
5.47% 1/2/97 A-1+ P-1 7,423 7,318,107
----------
96,605,946
----------
Finance, Diversified - 3.3%
General Electric Capital Corp.
5.28% 10/7/96 A-1+ P-1 15,000 14,986,800
5.30% 11/27/96 A-1+ P-1 15,000 14,874,125
5.36% 1/3/97 A-1+ P-1 15,000 14,790,067
5.35% 1/17/97 A-1+ P-1 15,000 14,759,250
5.31% 1/23/97 A-1+ P-1 15,000 14,747,775
5.49% 2/5/97 A-1+ P-1 13,875 13,606,276
----------
87,764,293
----------
</TABLE>
5
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) September 30, 1996
(Unaudited)
Commercial Paper (continued)
<TABLE>
<CAPTION>
Rating
------------ Par
S&P Moody's (000) Value
<S> <C>
Food - 8.4%
Campbell Soup Co.
4.98% 10/4/96 A-1+ P-1 $10,000 $ 9,995,850
5.46% 12/5/96 A-1+ P-1 15,000 14,852,125
5.47% 12/16/96 A-1+ P-1 17,000 16,803,688
Cargill, Inc.
5.45% 10/8/96 A-1+ P-1 15,000 14,984,104
5.32% 11/4/96 A-1+ P-1 20,000 19,899,511
5.36% 12/12/96 A-1+ P-1 15,000 14,839,200
5.39% 12/18/96 A-1+ P-1 20,000 19,766,433
H.J. Heinz
5.25% 10/3/96 A-1+ P-1 9,000 8,997,375
5.33% 10/18/96 A-1+ P-1 15,900 15,859,981
Hershey Foods
5.26% 10/15/96 A-1+ P-1 10,500 10,478,522
5.26% 10/18/96 A-1+ P-1 27,500 27,431,693
Kellogg Company
5.33% 11/14/96 A-1+ P-1 25,000 24,837,138
5.33% 11/15/96 A-1+ P-1 10,000 9,933,375
5.33% 11/27/96 A-1+ P-1 15,000 14,873,413
-----------
223,552,408
-----------
Household Products - 2.8%
Clorox Company
5.30% 11/26/96 A-1+ P-1 23,540 23,345,926
Colgate-Palmolive Co.
5.35% 10/8/96 A-1 P-1 22,000 21,977,114
Procter & Gamble Co.
5.30% 11/18/96 A-1 P-1 10,200 10,127,920
5.38% 12/20/96 A-1 P-1 17,730 17,518,028
-----------
72,968,988
-----------
Insurance, Property & Casualty - 3.8%
Chubb Capital Corp.
5.27% 10/11/96 A-1+ P-1 18,000 17,973,650
5.33% 10/17/96 A-1+ P-1 18,069 18,026,197
Marsh & McClennan Companies Inc.
5.48% 12/13/96 A-1+ P-1 20,000 19,777,756
5.65% 2/10/97 A-1+ P-1 10,000 9,792,833
5.60% 2/27/97 A-1+ P-1 15,000 14,652,333
5.63% 3/20/97 A-1+ P-1 20,000 19,468,278
-----------
99,691,047
-----------
</TABLE>
6
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Commercial Paper (continued)
<TABLE>
<CAPTION>
Rating
------------ Par
S&P Moody's (000) Value
<S> <C>
Integrated Oil - 0.9%
Shell Oil Co.
5.25% 11/22/96 A-1+ P-1 $25,000 $ 24,810,417
Machinery & Tools - 1.7%
Dover Corp.
5.35% 10/24/96 A-1+ -- 20,000 19,931,639
5.40% 10/25/96 A-1+ -- 20,000 19,928,000
Illinois Tool Works
5.35% 10/1/96 A-1+ P-1 5,000 5,000,000
------------
44,859,639
------------
Oil Transportation - 3.2%
Colonial Pipeline
5.43% 10/15/96 A-1+ P-1 17,000 16,964,102
5.45% 10/16/96 A-1+ P-1 20,200 20,154,129
5.39% 11/12/96 A-1+ P-1 15,000 14,905,675
5.43% 12/16/96 A-1+ P-1 6,500 6,425,488
5.44% 1/15/97 A-1+ P-1 12,000 11,807,787
5.47% 2/6/97 A-1+ P-1 14,500 14,217,991
------------
84,475,172
------------
Paper - 0.4%
Weyerhaeuser Co.
5.31% 12/3/96 A-1 P-1 11,600 11,492,207
------------
Pharmaceuticals - 8.8%
Abbott Laboratories
5.33% 10/22/96 A-1+ P-1 10,059 10,027,725
5.32% 10/23/96 A-1+ P-1 25,000 24,918,722
5.33% 10/23/96 A-1+ P-1 13,429 13,385,259
Eli Lilly & Co.
5.28% 11/15/96 A-1+ P-1 10,000 9,934,000
5.33% 2/6/97 A-1+ P-1 12,000 11,772,587
5.57% 2/24/97 A-1+ P-1 7,500 7,330,579
Pfizer, Inc.
5.30% 10/10/96 A-1+ P-1 15,000 14,980,125
Schering-Plough Corp.
5.32% 9/18/96 A-1+ P-1 19,700 19,589,374
5.41% 11/14/96 A-1+ P-1 4,400 4,370,906
5.40% 11/19/96 A-1+ P-1 10,000 9,926,500
5.42% 11/26/96 A-1+ P-1 7,000 6,940,982
5.27% 11/26/96 A-1+ P-1 15,000 14,877,033
</TABLE>
7
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) September 30, 1996
(Unaudited)
Commercial Paper (continued)
Pharmaceuticals (concluded)
<TABLE>
<CAPTION>
Rating
------------ Par
S&P Moody's (000) Value
<S> <C>
Warner-Lambert Co.
5.27% 10/4/96 A-1+ P-1 $40,000 $ 39,982,433
5.30% 10/30/96 A-1+ P-1 15,000 14,935,958
5.27% 12/6/96 A-1+ P-1 20,000 19,806,767
5.25% 1/15/97 A-1+ P-1 10,000 9,845,417
------------
232,624,367
------------
Publishing - 0.7%
Knight-Ridder Inc.
5.35% 10/18/96 A-1+ P-1 7,500 7,481,052
RR Donnelley & Sons, Inc.
5.27% 10/7/96 A-1+ P-1 12,000 11,989,460
------------
19,470,512
------------
Railroad - 1.1%
Norfolk Southern Corp.
5.42% 10/29/96 A-1+ P-1 30,000 29,873,533
------------
Retail, General - 1.9%
J.C. Penney Fund Co.
5.28% 10/29/96 A-1+ P-1 20,000 19,920,800
5.39% 11/13/96 A-1+ P-1 15,000 14,903,429
Wal-Mart Stores
5.27% 10/29/96 A-1+ P-1 15,000 14,938,517
------------
49,762,746
------------
Structured Finance - 4.5%
CIESCO, L.P.
5.28% 10/30/96 A-1+ P-1 10,000 9,957,466
5.32% 11/26/96 A-1+ P-1 25,000 24,793,111
Corporate Asset Funding Company, Inc.
5.27% 10/10/96 A-1+ P-1 11,000 10,985,508
5.43% 10/16/96 A-1+ P-1 20,000 19,954,750
5.30% 10/25/96 A-1+ P-1 20,000 19,929,333
5.37% 11/21/96 A-1+ P-1 20,000 19,847,850
5.35% 12/20/96 A-1+ P-1 15,000 14,821,667
------------
120,289,685
------------
Telephone - 5.7%
Ameritech Capital Funding Corp.
5.34% 10/30/96 A-1+ P-1 20,000 19,913,966
5.29% 12/6/96 A-1+ P-1 25,000 24,757,542
5.20% 12/10/96 A-1+ P-1 15,000 14,848,333
5.40% 1/27/97 A-1+ P-1 15,000 14,734,500
</TABLE>
8
<PAGE>
Prime Series
- -------------------------------------------------------------------------------
Commercial Paper (concluded)
Telephone (concluded)
<TABLE>
<CAPTION>
Rating
------------ Par
S&P Moody's (000) Value
<S> <C>
Ameritech Corp.
5.27% 10/18/96 A-1+ P-1 $10,000 $ 9,975,114
5.40% 12/2/96 A-1+ P-1 15,000 14,860,500
BellSouth Telecommunications
5.27% 10/11/96 A-1+ P-1 8,000 7,988,289
5.28% 10/24/96 A-1+ P-1 8,000 7,973,013
Southwestern Bell Telephone Co.
5.39% 10/25/96 A-1+ P-1 25,000 24,910,167
5.31% 10/31/96 A-1+ P-1 11,580 11,528,759
------------
151,490,183
------------
Waste Management - 3.1%
WMX Technologies
4.78% 11/1/96 A-1 P-1 10,000 9,958,838
5.32% 11/5/96 A-1 P-1 15,000 14,922,417
5.50% 12/11/96 A-1 P-1 15,000 14,837,292
5.35% 1/24/97 A-1 P-1 15,000 14,743,646
5.67% 4/11/97 A-1 P-1 15,000 14,546,400
5.54% 5/13/97 A-1 P-1 15,000 14,482,933
-------------
83,491,526
-------------
Total Commercial Paper 2,249,479,632
-------------
Variable Rate Note - 4.7%
Associates Corp. Master Note
5.20%(b) 12/1/96 A-1+ P-1 75,000 75,000,000
Coca-Cola Master Note
5.46%(b) 1/17/97 A-1+ P-1 50,000 50,000,000
-------------
Total Variable Rate Note 125,000,000
-------------
Federal Home Loan Bank - 1.3%
FHLB
6.00% 11/1/96 AAA -- 25,000 24,885,042
5.28% 1/6/97 AAA -- 10,000 9,857,733
------------
Total Federal Home Loan Bank 34,742,775
------------
Federal National Mortgage Association - 3.9%
FNMA
Discount Note
5.32% 10/3/96 -- P-1 10,000 9,997,044
5.46% 11/15/96 -- P-1 9,000 8,998,663
</TABLE>
9
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Net Assets (concluded) September 30, 1996
(Unaudited)
Federal National Mortgage Association (concluded)
<TABLE>
<CAPTION>
Rating
------------ Par
S&P Moody's (000) Value
<S> <C>
Note
5.68% 10/7/96 -- P-1 $ 20,000 $ 20,000,561
5.31% 10/18/96 -- P-1 20,000 20,000,000
5.39% 12/4/96 -- P-1 10,000 10,004,361
5.63% 12/19/96 -- P-1 20,000 20,000,000
5.45% 2/13/97 -- P-1 15,000 15,000,000
------------
Total Federal National Mortgage Association 104,000,629
------------
Repurchase Agreements - 5.2%(c)
Goldman Sachs
5.65%(d) 10/1/96 -- -- 38,600 38,600,000
Morgan Stanley & Co.
5.65%(e) 10/1/96 -- -- 100,000 100,000,000
-----------
Total Repurchase Agreements 138,600,000
-----------
TOTAL INVESTMENTS - 100.0% 2,651,823,036(f)
LIABILITIES IN EXCESS OF OTHER ASSETS, NET - 0.0% (307,662)
--------------
NET ASSETS - 100.0% $2,651,515,374
==============
Net Asset Value, Offering and Redemption Price Per:
Prime Share
($2,396,184,930 / 2,396,188,105 shares outstanding) $1.00
Flag Investors Class A Share =====
($6,071,072 / 6,070,838 shares outstanding) $1.00
Flag Investors Class B Share =====
($599 / 599 shares outstanding) $1.00
Prime Institutional Share =====
($55,411,841 / 55,412,061 shares outstanding) $1.00
Quality Cash Reserve Prime Share =====
($193,846,932 / 193,847,114 shares outstanding) $1.00
=====
</TABLE>
10
<PAGE>
Prime Series
- -------------------------------------------------------------------------------
(a) 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.
(b) Master note is payable upon demand by the Fund
upon no more than five days' notice. Interest rates on master notes are
redetermined weekly. Rates shown are those in effect on September 30, 1996.
(c) 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.
(d) Dated 9/30/96 to be repurchased on 10/1/96, collateralized by U.S. Treasury
Notes with a market value of $39,372,757.
(e) Dated 9/30/96 to be repurchased on 10/1/96, collateralized by U.S. Treasury
Notes with a market value of $101,280,062.
(f) 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 Obligations that are 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.
11
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Operations (Unaudited)
For the six months ended September 30, 1996
Investment Income (Note 1):
Interest income $73,729,458
-----------
Expenses:
Distribution fee (Note 2) 3,661,677
Investment advisory fee (Note 2) 3,651,417
Transfer agent fee 540,474
Printing and postage fees 191,225
Custodian fee 156,070
Registration fees 84,868
Accounting fee (Note 2) 78,911
Other expenses 65,107
Directors' fees 48,158
Legal fees 28,894
----------
Total expenses 8,506,801
Less: Fees waived (Note 2) (57,988)
----------
Net expenses 8,448,813
----------
Net investment income 65,280,645
Net realized gain from security
transactions --
----------
Net increase in net assets resulting
from operations $65,280,645
----------
See Notes to Financial Statements.
12
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets September 30, 1996
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, March 31,
1996(1) 1996
<S> <C>
Increase in Net Assets
Operations:
Net investment income $ 65,280,645 $ 107,454,378
Net realized loss on sales of investments -- (6,050)
-------------- --------------
Net increase in net assets resulting
from operations 65,280,645 107,448,328
Distributions to Shareholders From:
Net investment income:
Prime Shares (59,516,901) (99,181,255)
Prime Institutional Shares (1,619,636) (1,334,079)
Flag Investors Class A Shares (140,207) (402,702)
Flag Investors Class B Shares (132) (300)
Quality Cash Reserve Prime Shares (4,003,769) (6,536,042)
-------------- --------------
Total distributions (65,280,645) (107,454,378)
Capital Share Transactions, net - (Note 3) 48,735,599 1,016,482,516
-------------- --------------
Total increase in net assets 48,735,599 1,016,476,466
Net Assets:
Beginning of period 2,602,779,775 1,586,303,309
-------------- --------------
End of period $2,651,515,374 $2,602,779,775
============== ==============
</TABLE>
- --------------
(1) Unaudited.
See Notes to Financial Statements.
13
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
PRIME SHARES
Six months ended
September 30, 1996(1)
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
--------
Income from Investment Operations:
Net investment income 0.0239
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0239)
--------
Net asset value at end of period $ 1.00
========
Total Return:
Based on net asset value per share 4.82%(2)
Ratios to Average Daily Net Assets:
Expenses 0.60%(2)
Net investment income 4.77%(2)
Supplemental Data:
Net assets at end of period $2,396,184,930
Number of shares outstanding at end of period 2,396,188,105
(1) Unaudited.
(2) Annualized.
14
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
PRIME SHARES (continued)
<TABLE>
<CAPTION>
Year ended March 31,
1996 1995 1994 1993 1992
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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 period $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 period 2,386,684,392 1,472,077,488 1,350,332,916 1,470,709,489 1,505,010,023
See Notes to Financial Statements.
15
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS A
Six months ended
September 30, 1996(1)
-----------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
--------
Income from Investment Operations:
Net investment income 0.0239
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0239)
--------
Net asset value at end of period $ 1.00
========
Total Return:
Based on net asset value per share 4.82%(2)
Ratios to Average Daily Net Assets:
Expenses 0.60%(2)
Net investment income 4.77%(2)
Supplemental Data:
Net assets at end of period $6,071,072
Number of shares outstanding at end of period 6,070,838
(1) Unaudited.
(2) Annualized.
16
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS A (continued)
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Year ended March 31,
- --------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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 period $5,976,831 $7,726,696 $18,116,648 $10,392,282 $7,350,424
Number of shares outstanding at end of period 5,976,824 7,726,698 18,116,633 10,392,267 7,350,409
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS B
Six months ended
September 30, 1996(1)
Per Share Operating Performance: $ 1.00
Net asset value at beginning of period --------
Income from Investment Operations: 0.0200
Net investment income
Less Distributions: (0.0200)
Dividends from net investment income --------
$ 1.00
Net asset value at end of period ========
Total Return: 4.07%(3)
Based on net asset value per share
Ratios to Average Daily Net
Assets: 1.35%(3)
Expenses 4.02%(3)
Net investment income
Supplemental Data: $ 599
Net assets at end of period
Number of shares outstanding at end 599
of period
(1) Unaudited.
(2) Commencement of operations.
(3) Annualized.
18
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Flag Investors Cash Reserve Prime Shares--Class B (continued)
April 3, 1995(2)
through
March 31, 1996
Per Share Operating Performance: $ 1.00
Net asset value at beginning of period --------
Income from Investment Operations: 0.0361
Net investment income
Less Distributions: (0.0361)
Dividends from net investment income --------
$ 1.00
Net asset value at end of period ========
Total Return: 3.69%(3)
Based on net asset value per share
Ratios to Average Daily Net
Assets: 1.38%(3)
Expenses 4.30%(3)
Net investment income
Supplemental Data: $10,200
Net assets at end of period
Number of shares outstanding at end 10,200
of period
See Notes to Financial Statements.
19
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
PRIME INSTITUTIONAL SHARES
Six months ended
September 30, 1996(1)
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
---------
Income from Investment Operations:
Net investment income 0.0252
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0252)
---------
Net asset value at end of period $ 1.00
=========
Total Return:
Based on net asset value per share 5.07%(2)
Ratios to Average Daily Net Assets:
Expenses 0.35%(2)
Net investment income 5.02%(2)
Supplemental Data:
Net assets at end of period $55,411,841
Number of shares outstanding at end of period 55,412,061
(1) Unaudited.
(2) Annualized.
20
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
PRIME INSTITUTIONAL SHARES (continued)
<TABLE>
<CAPTION>
Year ended March 31,
1996 1995 1994 1993 1992
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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 period $53,699,315 $11,904,716 $23,437,449 $28,884,078 $21,867,108
Number of shares outstanding at end of period 53,699,535 11,904,663 23,437,512 28,884,132 21,867,108
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
QUALITY CASH RESERVE PRIME SHARES
Six months ended
September 30, 1996(1)
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
----------
Income from Investment Operations:
Net investment income 0.0225
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0225)
----------
Net asset value at end of period $ 1.00
==========
Total Return:
Based on net asset value per share 4.47%(3)
Ratios to Average Daily Net Assets:
Expenses 0.89%(3,4)
Net investment income 4.48%(3,5)
Supplemental Data:
Net assets at end of period $193,846,933
Number of shares outstanding at end of period 193,847,114
(1) Unaudited.
(2) Commencement of operations.
(3) Annualized.
(4) Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.95% and 0.95% for the six months ended September 30, 1996 and the year
ended March 31, 1996, respectively.
(5) Ratio of net investment income to average daily net assets prior to partial
fee waivers was 4.42% and 4.86% for the six months ended September 30, 1996
and the year ended March 31, 1996, respectively.
22
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
QUALITY CASH RESERVE PRIME SHARES (continued)
<TABLE>
<CAPTION>
May 6, 1991(2)
through
Year ended March 31, March 31, 1992
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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%(3)
Ratios to Average Daily Net Assets:
Expenses 0.90%(4) 0.96% 1.06% 1.04% 0.96%(3)
Net investment income 4.91%(5) 4.04% 2.18% 2.53% 4.30%(3)
Supplemental Data:
Net assets at end of period $156,412,213 $94,592,158 $92,678,440 $101,321,868 $94,887,669
Number of shares outstanding at end of period 156,412,393 94,591,979 92,678,268 101,321,668 94,887,669
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Notes to Financial Statements
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 Alex. Brown Cash
Reserve Prime Institutional Shares ("Prime Institutional Shares"). Matters
affecting each class are voted on exclusively by the shareholders of that class.
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.
24
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
D. Federal Income Taxes--The Fund intends 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) that is
distributed to shareholders. Each portfolio is treated as a separate entity for
federal income tax purposes.
E. Expenses--Operating expenses directly attributable to a class of shares
are charged to that class' operations. Expenses of the Fund that 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 the Prime 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. 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.
ICC may, from time to time, voluntarily waive a portion of its advisory fee
with respect to the Prime Series to preserve or enhance the performance of the
Series as compared to certain industry benchmarks. No advisory fees were waived
for the six months ended September 30, 1996.
Under the terms of these agreements, ICC and the Fund's distributor will,
from time to time, voluntarily waive or reimburse a portion of their advisory or
distribution fees, respectively, with respect to the Prime Series or any class
to preserve or enhance the Series' or class' performance. Such voluntary waivers
would not be contractual and would be subject to change. Any reimbursement by
ICC or the distributor would be limited to the fees actually received by them
for such fiscal year.
25
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2--concluded
As compensation for its accounting services, ICC receives from the Prime
Series an annual fee, calculated daily and paid monthly, based on the Series'
average daily net assets. lCC received $78,911 for accounting services for the
six months ended September 30, 1996 for the Prime Series.
As compensation for its transfer agent services, ICC receives from the
Prime Series a per account fee, calculated and paid monthly. ICC received
$540,474 for transfer agent services for the six months ended September 30, 1996
for the Prime Series.
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 and Flag Investors Class A
Shares 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 each class. Alex.
Brown voluntarily waived distribution fees in the amount of $57,988 for the
Quality Cash Shares for the six months ended September 30, 1996.
The Fund complex of which the Fund is a part has adopted a retirement plan
for eligible Directors. The actuarially computed pension expense allocated to
the Fund for the period January 1, 1996 through September 30, 1996 was
approximately $40,500 and the accrued liability was approximately $211,000 for
the Prime Series.
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). Changes in shares outstanding
during the periods ended September 30, 1996 and March 31, 1996 are listed on the
following page.
26
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
NOTE 3--concluded
September 30, 1996
(Unaudited) March 31, 1996
Prime Series:
Sold:
Prime Shares 10,938,844,772 19,439,463,533
Flag Investors Class A Shares 3,613,116 12,118,053
Flag Investors Class B Shares 4,670 24,535
Prime Institutional Shares 203,535,745 213,159,539
Quality Cash Shares 503,778,591 1,285,040,597
Issued as reinvestment of dividends:
Prime Shares 56,307,220 93,103,137
Flag Investors Class A Shares 133,453 374,561
Flag Investors Class B Shares 399 --
Prime Institutional Shares 1,211,277 753,855
Quality Cash Shares 3,842,527 6,300,386
Redeemed:
Prime Shares (10,985,648,278) (18,617,959,766)
Flag Investors Class A Shares (3,652,327) (14,242,488)
Flag Investors Class B Shares (14,671) (14,335)
Prime Institutional Shares (203,034,496) (172,118,522)
Quality Cash Shares (470,186,399) (1,229,520,569)
--------------- ---------------
Net increase 48,735,599 1,016,482,516
=============== ===============
NOTE 4--Net Assets
At September 30, 1996, net assets consisted of:
Prime
Series
Paid-in capital $2,651,518,882
Undistributed net investment income 2,187
Undistributed net realized loss on sales of
investments (5,695)
--------------
$2,651,515,374
==============
27
<PAGE>
Board of Directors
W. JAMES PRICE
Chairman
CHARLES W. COLE JR. EUGENE J. McDONALD
Director Director
JAMES J. CUNNANE REBECCA W. RIMEL
Director Director
RICHARD T. HALE TRUMAN T. SEMANS
Director Director
JOHN F. KROEGER CARL W. VOGT, Esq.
Director Director
LOUIS E. LEVY HARRY WOOLF
Director Director
Officers
W. JAMES PRICE M. ELLIOTT RANDOLPH, JR. JOSEPH A. FINELLI
Chairman Vice President Treasurer
RICHARD T. HALE PAUL D. CORBIN EDWARD J. STOKEN
President Vice President Secretary
EDWARD J. VEILLEUX MONICA M. HAUSNER LAURIE D. DEPRINE
Executive Vice President Vice President Assistant Secretary
SCOTT J. LIOTTA
Vice President
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 Transfer Agent
INVESTMENT COMPANY CAPITAL CORP.
Investment Advisor 135 East Baltimore Street
INVESTMENT COMPANY CAPITAL CORP. Baltimore, MD 21202
135 East Baltimore Street (800) 553-8080
Baltimore, MD 21202
Auditors
COOPERS & LYBRAND L.L.P.
217 E. Redwood Street
Baltimore, MD 21202
28
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
Quality Cash Reserve Prime Shares BULK RATE
P.O. Box 1346 U.S. POSTAGE
Baltimore, MD 21203 PAID
BALTIMORE, MD
PERMIT NO. 8614
<PAGE>
Flag Investors
Cash Reserve
Prime Shares
Semi-Annual Report
September 30, 1996
[Flag Investors Logo]
FLAG INVESTORS
<PAGE>
Fund Features
- --------------------------------------------------------------------------------
(bullet) Daily Dividends
The Fund declares dividends daily and distributes them monthly in the
form of additional shares.
(bullet) Constant Net Asset Value
The Fund will attempt to maintain a constant net asset value of
$1.00 per share. Since the Fund's inception on January 5, 1989, a
constant net asset value of $1.00 per share has been maintained.
(bullet) Minimum Investment
The minimum initial investment is $2,000. Subsequent investments may
be made in an amount of $100 or more.
Letter to Shareholders
October 18, 1996
We are pleased to report on the progress of your Fund for the six months
ended September 30, 1996.
PERIOD IN REVIEW
The Federal Reserve Bank, under increasing scrutiny with each of its
meetings, determined the economy was stable enough to leave the Fed Funds rate
unchanged at its September 1996 meeting. This decision has left interest rates
fairly stable over this time period, albeit with some occasional swings. The
30-year bond yield has fluctuated in a trading range between 6.55% and 7.20% for
most of the past six months. The 3-month Treasury bill rate has reflected the
Fed's "wait and see" attitude, with its yield ranging between 5.00% and 5.35%.
These yields indicate a rather narrow spread between short-term and long-term
rates.
We continue to manage the Fund conservatively, as evidenced by the rating
that Standard & Poor's (S&P) has awarded to the portfolio of which Flag
Investors Cash Reserve Prime Shares is a class. The portfolio maintains a "AAAm"
rating, the highest that S&P awards to money market funds. Even with our
cautious style, the Fund has provided a competitive return for the past twelve
months, as the chart below illustrates.
Performance Comparison
30-Day Yield as of 10/1/96
Flag Investors Cash Reserve Prime Shares--Class A 4.82%
First Tier Rated Money Fund Average 4.71%
Source: IBC/Donoghue, Inc. "Rated Money Fund Report,"October 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. The Rated Money Fund
Average is an average yield of all funds rated AAA by Standard & Poor's in their
respective categories.
1
<PAGE>
Letter to Shareholders (continued)
MARKET OUTLOOK
The final quarter of 1996 raises several questions, and the answers will
dictate which way the markets will move for the remainder of the year, as well
as the beginning of 1997.
(bullet) First, with regard to politics and the Presidential and
Congressional elections, will lowering the budget deficit continue to be a top
priority?
(bullet) Second, with regard to the Federal Reserve Bank, is the Fed
waiting to raise or lower interest rates? Are the members concerned with the
relatively low economic growth rate (1.5% to 3%), or are they watching
building inflationary pressures, particularly in labor markets and energy
prices?
(bullet) Finally, in general, just how high will the stock market
go? Will corporate profits continue to rise, or will wage pressures begin to
affect the bottom line? How will the traditional Christmas rush turn out for
retailers?
Regardless of the answers to these questions, it is our belief that the
conservative approach we apply to investing on behalf of the Fund will provide
comfort to our shareholders, and in turn will continue to offer competitive
yields, without sacrificing quality.
As always, we appreciate your continued support.
Sincerely,
/s/ W. James Price /s/ Richard T. Hale
- ------------------ -------------------
W. James Price Richard T. Hale
Chairman President
2
<PAGE>
Prime Series
Statement of Net Assets September 30, 1996
(Unaudited)
Rating
---------------- Par
S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper - 84.9%(a)
Automobiles & Trucks - 2.6%
PACCAR Financial Corp.
5.33% 10/21/96 A-1+ P-1 $10,000 $ 9,970,389
5.40% 10/28/96 A-1+ P-1 9,000 8,963,550
5.29% 11/18/96 A-1+ P-1 5,000 4,964,733
Toyota Motor Credit Corp.
5.32% 10/31/96 A-1+ P-1 15,000 14,933,500
5.25% 11/8/96 A-1+ P-1 15,000 14,916,875
5.36% 12/13/96 A-1+ P-1 14,000 13,847,836
-----------
67,596,883
-----------
Beverages - 3.1%
Anheuser-Busch Companies Inc.
5.28% 10/7/96 A-1+ P-1 15,000 14,986,800
5.34% 10/7/96 A-1+ P-1 17,300 17,284,603
4.90% 10/21/96 A-1+ P-1 20,000 19,945,556
4.75% 10/28/96 A-1+ P-1 15,000 14,946,563
5.25% 1/1/97 A-1+ P-1 15,000 14,781,250
-----------
81,944,772
-----------
Chemicals, General - 3.8%
E.I. duPont de Nemours
5.35% 10/18/96 A-1+ P-1 10,000 9,974,736
5.40% 11/22/96 A-1+ P-1 15,000 14,883,000
5.30% 11/27/96 A-1+ P-1 15,000 14,874,125
5.29% 12/18/96 A-1+ P-1 10,000 9,885,383
5.30% 12/20/96 A-1+ P-1 25,000 24,705,556
5.38% 1/30/97 A-1+ P-1 10,000 9,819,172
5.46% 3/26/97 A-1+ P-1 16,000 15,572,907
-----------
99,714,879
-----------
Chemicals, Specialty - 1.2%
Air Products & Chemicals, Inc.
5.35% 10/25/96 A-1 P-1 11,000 10,960,767
5.33% 11/5/96 A-1 P-1 20,000 19,896,361
-----------
30,857,128
-----------
Computer & Office Equipment - 7.4%
Hewlett-Packard
5.42% 10/9/96 A-1+ P-1 15,000 14,981,933
5.35% 10/30/96 A-1+ P-1 20,000 19,913,806
5.40% 12/3/96 A-1+ P-1 10,000 9,905,500
3
<PAGE>
Prime Series
Statement o Net Assets (continued)
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1996
Rating
---------------- Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------------------
Commercial Paper (continued)
<S><C>
Computer & Office Equipment (concluded)
Pitney Bowes Credit Corp.
5.02% 10/3/96 A-1+ P-1 $15,000 $ 14,995,817
5.03% 10/3/96 A-1+ P-1 15,000 14,995,808
5.02% 10/4/96 A-1+ P-1 20,000 19,991,633
5.04% 10/4/96 A-1+ P-1 17,000 16,992,860
5.35% 2/19/97 A-1+ P-1 19,000 18,601,871
5.52% 2/19/97 A-1+ P-1 14,775 14,455,565
5.50% 3/21/97 A-1+ P-1 10,000 9,738,750
Xerox Credit Corp.
5.32% 11/8/96 A-1 P-1 20,480 20,364,993
5.32% 12/5/96 A-1 P-1 19,700 19,510,771
------------
194,449,307
------------
Credit Unions - 2.5%
Mid-States Corporate Federal Credit Union
5.37% 10/1/96 A-1+ P-1 20,500 20,469,420
U.S. Central Credit Union
5.30% 10/10/96 A-1+ P-1 15,000 14,980,125
5.40% 10/23/96 A-1+ P-1 15,000 14,950,500
5.31% 12/3/96 A-1+ P-1 15,000 14,860,613
------------
65,260,658
------------
Defense & Aircraft - 0.9%
Rockwell International Corp.
5.28% 10/29/96 A-1+ P-1 25,000 24,897,333
------------
Electrical & Electronics - 3.5%
Emerson Electric Co.
5.32% 10/25/96 A-1+ P-1 25,000 24,911,332
Motorola Inc.
5.32% 10/7/96 A-1+ P-1 20,000 19,982,267
5.28% 10/24/96 A-1+ P-1 15,000 14,949,400
5.35% 10/25/96 A-1+ P-1 17,000 16,939,367
5.32% 11/8/96 A-1+ P-1 15,000 14,915,767
------------
91,698,133
------------
</TABLE>
4
<PAGE>
Prime Series
<TABLE>
<CAPTION>
Rating
---------------- Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------------------
Commercial Paper (continued)
<S><C>
Electric Utility - 1.0%
Northern States Power Co.
5.30% 11/4/96 A-1+ P-1 $ 7,000 $ 6,964,961
5.27% 11/22/96 A-1+ P-1 19,000 18,855,368
------------
25,820,329
------------
Entertainment - 2.8%
Walt Disney Co.
5.24% 10/9/96 A-1 P-1 15,000 14,982,533
5.28% 10/11/96 A-1 P-1 15,000 14,978,000
5.40% 10/15/96 A-1 P-1 10,000 9,979,000
5.18% 12/6/96 A-1 P-1 10,000 9,905,033
5.18% 12/9/96 A-1 P-1 15,000 14,851,075
5.38% 1/29/97 A-1 P-1 10,000 9,820,667
------------
74,516,308
------------
Finance, Commercial - 2.2%
CIT Group Holdings Inc.
5.29% 12/10/96 A-1 P-1 40,000 39,588,555
PHH Corp.
5.42% 10/30/96 A-1 P-1 20,000 19,912,678
------------
59,501,233
------------
Finance, Consumer - 3.6%
USAA Capital Corp.
5.27% 10/30/96 A-1+ P-1 10,000 9,957,547
5.44% 11/4/96 A-1+ P-1 18,000 17,907,520
5.40% 11/14/96 A-1+ P-1 22,000 21,854,800
5.30% 11/27/96 A-1+ P-1 10,000 9,916,083
5.40% 12/17/96 A-1+ P-1 20,000 19,769,000
5.27% 12/20/96 A-1+ P-1 10,000 9,882,889
5.47% 1/2/97 A-1+ P-1 7,423 7,318,107
------------
96,605,946
------------
Finance, Diversified - 3.3%
General Electric Capital Corp.
5.28% 10/7/96 A-1+ P-1 15,000 14,986,800
5.30% 11/27/96 A-1+ P-1 15,000 14,874,125
5.36% 1/3/97 A-1+ P-1 15,000 14,790,067
5.35% 1/17/97 A-1+ P-1 15,000 14,759,250
5.31% 1/23/97 A-1+ P-1 15,000 14,747,775
5.49% 2/5/97 A-1+ P-1 13,875 13,606,276
------------
87,764,293
------------
</TABLE>
5
<PAGE>
Prime Series
Statement of Net Assets (continued)
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1996
Rating
---------------- Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------------------
Commercial Paper (continued)
<S><C>
Food - 8.4%
Campbell Soup Co.
4.98% 10/4/96 A-1+ P-1 $10,000 $ 9,995,850
5.46% 12/5/96 A-1+ P-1 15,000 14,852,125
5.47% 12/16/96 A-1+ P-1 17,000 16,803,688
Cargill, Inc.
5.45% 10/8/96 A-1+ P-1 15,000 14,984,104
5.32% 11/4/96 A-1+ P-1 20,000 19,899,511
5.36% 12/12/96 A-1+ P-1 15,000 14,839,200
5.39% 12/18/96 A-1+ P-1 20,000 19,766,433
H.J. Heinz
5.25% 10/3/96 A-1+ P-1 9,000 8,997,375
5.33% 10/18/96 A-1+ P-1 15,900 15,859,981
Hershey Foods
5.26% 10/15/96 A-1+ P-1 10,500 10,478,522
5.26% 10/18/96 A-1+ P-1 27,500 27,431,693
Kellogg Company
5.33% 11/14/96 A-1+ P-1 25,000 24,837,138
5.33% 11/15/96 A-1+ P-1 10,000 9,933,375
5.33% 11/27/96 A-1+ P-1 15,000 14,873,413
------------
223,552,408
------------
Household Products - 2.8%
Clorox Company
5.30% 11/26/96 A-1+ P-1 23,540 23,345,926
Colgate-Palmolive Co.
5.35% 10/8/96 A-1 P-1 22,000 21,977,114
Procter & Gamble Co.
5.30% 11/18/96 A-1 P-1 10,200 10,127,920
5.38% 12/20/96 A-1 P-1 17,730 17,518,028
------------
72,968,988
------------
Insurance, Property & Casualty - 3.8%
Chubb Capital Corp.
5.27% 10/11/96 A-1+ P-1 18,000 17,973,650
5.33% 10/17/96 A-1+ P-1 18,069 18,026,197
Marsh & McClennan Companies Inc.
5.48% 12/13/96 A-1+ P-1 20,000 19,777,756
5.65% 2/10/97 A-1+ P-1 10,000 9,792,833
5.60% 2/27/97 A-1+ P-1 15,000 14,652,333
5.63% 3/20/97 A-1+ P-1 20,000 19,468,278
------------
99,691,047
------------
</TABLE>
6
<PAGE>
Prime Series
<TABLE>
<CAPTION>
Rating
---------------- Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------------------
Commercial Paper (continued)
<S><C>
Integrated Oil - 0.9%
Shell Oil Co.
5.25% 11/22/96 A-1+ P-1 $25,000 $ 24,810,417
------------
Machinery & Tools - 1.7%
Dover Corp.
5.35% 10/24/96 A-1+ -- 20,000 19,931,639
5.40% 10/25/96 A-1+ -- 20,000 19,928,000
Illinois Tool Works
5.35% 10/1/96 A-1+ P-1 5,000 5,000,000
------------
44,859,639
------------
Oil Transportation - 3.2%
Colonial Pipeline
5.43% 10/15/96 A-1+ P-1 17,000 16,964,102
5.45% 10/16/96 A-1+ P-1 20,200 20,154,129
5.39% 11/12/96 A-1+ P-1 15,000 14,905,675
5.43% 12/16/96 A-1+ P-1 6,500 6,425,488
5.44% 1/15/97 A-1+ P-1 12,000 11,807,787
5.47% 2/6/97 A-1+ P-1 14,500 14,217,991
------------
84,475,172
------------
Paper - 0.4%
Weyerhaeuser Co.
5.31% 12/3/96 A-1 P-1 11,600 11,492,207
------------
Pharmaceuticals - 8.8%
Abbott Laboratories
5.33% 10/22/96 A-1+ P-1 10,059 10,027,725
5.32% 10/23/96 A-1+ P-1 25,000 24,918,722
5.33% 10/23/96 A-1+ P-1 13,429 13,385,259
Eli Lilly & Co.
5.28% 11/15/96 A-1+ P-1 10,000 9,934,000
5.33% 2/6/97 A-1+ P-1 12,000 11,772,587
5.57% 2/24/97 A-1+ P-1 7,500 7,330,579
Pfizer, Inc.
5.30% 10/10/96 A-1+ P-1 15,000 14,980,125
Schering-Plough Corp.
5.32% 9/18/96 A-1+ P-1 19,700 19,589,374
5.41% 11/14/96 A-1+ P-1 4,400 4,370,906
5.40% 11/19/96 A-1+ P-1 10,000 9,926,500
5.42% 11/26/96 A-1+ P-1 7,000 6,940,982
5.27% 11/26/96 A-1+ P-1 15,000 14,877,033
</TABLE>
7
<PAGE>
Prime Series
Statement of Net Assets (continued)
(Unaudited)
<TABLE>
<CAPTION>
Rating September 30, 1996
---------------- Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------------------
Commercial Paper (continued)
<S><C>
Pharmaceuticals (concluded)
Warner-Lambert Co.
5.27% 10/4/96 A-1+ P-1 $40,000 $ 39,982,433
5.30% 10/30/96 A-1+ P-1 15,000 14,935,958
5.27% 12/6/96 A-1+ P-1 20,000 19,806,767
5.25% 1/15/97 A-1+ P-1 10,000 9,845,417
------------
232,624,367
------------
Publishing - 0.7%
Knight-Ridder Inc.
5.35% 10/18/96 A-1+ P-1 7,500 7,481,052
RR Donnelley & Sons, Inc.
5.27% 10/7/96 A-1+ P-1 12,000 11,989,460
------------
19,470,512
------------
Railroad - 1.1%
Norfolk Southern Corp.
5.42% 10/29/96 A-1+ P-1 30,000 29,873,533
------------
Retail, General - 1.9%
J.C. Penney Fund Co.
5.28% 10/29/96 A-1+ P-1 20,000 19,920,800
5.39% 11/13/96 A-1+ P-1 15,000 14,903,429
Wal-Mart Stores
5.27% 10/29/96 A-1+ P-1 15,000 14,938,517
------------
49,762,746
------------
Structured Finance - 4.5%
CIESCO, L.P.
5.28% 10/30/96 A-1+ P-1 10,000 9,957,466
5.32% 11/26/96 A-1+ P-1 25,000 24,793,111
Corporate Asset Funding Company, Inc.
5.27% 10/10/96 A-1+ P-1 11,000 10,985,508
5.43% 10/16/96 A-1+ P-1 20,000 19,954,750
5.30% 10/25/96 A-1+ P-1 20,000 19,929,333
5.37% 11/21/96 A-1+ P-1 20,000 19,847,850
5.35% 12/20/96 A-1+ P-1 15,000 14,821,667
------------
120,289,685
------------
Telephone - 5.7%
Ameritech Capital Funding Corp.
5.34% 10/30/96 A-1+ P-1 20,000 19,913,966
5.29% 12/6/96 A-1+ P-1 25,000 24,757,542
5.20% 12/10/96 A-1+ P-1 15,000 14,848,333
5.40% 1/27/97 A-1+ P-1 15,000 14,734,500
</TABLE>
8
<PAGE>
Prime Series
<TABLE>
<CAPTION>
Rating
---------------- Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------------------
Commercial Paper (concluded)
<S><C>
Telephone (concluded)
Ameritech Corp.
5.27% 10/18/96 A-1+ P-1 $10,000 $ 9,975,114
5.40% 12/2/96 A-1+ P-1 15,000 14,860,500
BellSouth Telecommunications
5.27% 10/11/96 A-1+ P-1 8,000 7,988,289
5.28% 10/24/96 A-1+ P-1 8,000 7,973,013
Southwestern Bell Telephone Co.
5.39% 10/25/96 A-1+ P-1 25,000 24,910,167
5.31% 10/31/96 A-1+ P-1 11,580 11,528,759
--------------
151,490,183
--------------
Waste Management - 3.1%
WMX Technologies
4.78% 11/1/96 A-1 P-1 10,000 9,958,838
5.32% 11/5/96 A-1 P-1 15,000 14,922,417
5.50% 12/11/96 A-1 P-1 15,000 14,837,292
5.35% 1/24/97 A-1 P-1 15,000 14,743,646
5.67% 4/11/97 A-1 P-1 15,000 14,546,400
5.54% 5/13/97 A-1 P-1 15,000 14,482,933
--------------
83,491,526
--------------
Total Commercial Paper 2,249,479,632
--------------
Variable Rate Note - 4.7%
Associates Corp. Master Note
5.20%(b) 12/1/96 A-1+ P-1 75,000 75,000,000
Coca-Cola Master Note
5.46%(b) 1/17/97 A-1+ P-1 50,000 50,000,000
--------------
Total Variable Rate Note 125,000,000
--------------
Federal Home Loan Bank - 1.3%
FHLB
6.00% 11/1/96 AAA -- 25,000 24,885,042
5.28% 1/6/97 AAA -- 10,000 9,857,733
--------------
Total Federal Home Loan Bank 34,742,775
--------------
Federal National Mortgage Association - 3.9%
FNMA
Discount Note
5.32% 10/3/96 -- P-1 10,000 9,997,044
5.46% 11/15/96 -- P-1 9,000 8,998,663
</TABLE>
9
<PAGE>
Prime Series
Statement of Net Assets (concluded)
(Unaudited)
<TABLE>
<CAPTION>
Rating September 30, 1996
---------------- Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------------------
Federal National Mortgage Association (concluded)
<S><C>
Note
5.68% 10/7/96 -- P-1 $ 20,000 $ 20,000,561
5.31% 10/18/96 -- P-1 20,000 20,000,000
5.39% 12/4/96 -- P-1 10,000 10,004,361
5.63% 12/19/96 -- P-1 20,000 20,000,000
5.45% 2/13/97 -- P-1 15,000 15,000,000
--------------
Total Federal National Mortgage Association 104,000,629
--------------
Repurchase Agreements - 5.2%(c)
Goldman Sachs
5.65%(d) 10/1/96 -- -- 38,600 38,600,000
Morgan Stanley & Co.
5.65%(e) 10/1/96 -- -- 100,000 100,000,000
--------------
Total Repurchase Agreements 138,600,000
--------------
TOTAL INVESTMENTS - 100.0% 2,651,823,036(f)
LIABILITIES IN EXCESS OF OTHER ASSETS, NET - 0.0% (307,662)
--------------
NET ASSETS - 100.0% $2,651,515,374
--------------
Net Asset Value, Offering and Redemption Price Per:
Prime Share
($2,396,184,930 / 2,396,188,105 shares outstanding) $1.00
-----
Flag Investors Class A Share
($6,071,072 / 6,070,838 shares outstanding) $1.00
-----
Flag Investors Class B Share
($599 / 599 shares outstanding) $1.00
-----
Prime Institutional Share
($55,411,841 / 55,412,061 shares outstanding) $1.00
-----
Quality Cash Reserve Prime Share
($193,846,932 / 193,847,114 shares outstanding) $1.00
-----
</TABLE>
10
<PAGE>
Prime Series
(a) 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.
(b) Master note is payable upon demand by the Fund upon no more than five days'
notice. Interest rates on master notes are redetermined weekly. Rates
shown are those in effect on September 30, 1996.
(c) 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.
(d) Dated 9/30/96 to be repurchased on 10/1/96, collateralized by U.S. Treasury
Notes with a market value of $39,372,757.
(e) Dated 9/30/96 to be repurchased on 10/1/96, collateralized by U.S.
Treasury Notes with a market value of $101,280,062.
(f) 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 Obligations that are 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.
11
<PAGE>
Prime Series
Statement of Operations (Unaudited)
For the six months ended September 30, 1996
Investment Income (Note 1):
Interest income $73,729,458
-----------
Expenses:
Distribution fee (Note 2) 3,661,677
Investment advisory fee (Note 2) 3,651,417
Transfer agent fee 540,474
Printing and postage fees 191,225
Custodian fee 156,070
Registration fees 84,868
Accounting fee (Note 2) 78,911
Other expenses 65,107
Directors' fees 48,158
Legal fees 28,894
-----------
Total expenses 8,506,801
Less: Fees waived (Note 2) (57,988)
-----------
Net expenses 8,448,813
-----------
Net investment income 65,280,645
Net realized gain from security
transactions --
Net increase in net assets resulting
from operations $65,280,645
-----------
See Notes to Financial Statements.
12
<PAGE>
Prime Series
Statement of Changes in Net Assets September 30, 1996
Six Months Ended Year Ended
September 30, March 31,
1996(1) 1996
Increase in Net Assets
Operations:
Net investment income $ 65,280,645 $ 107,454,378
Net realized loss on sales of investments -- (6,050)
-------------- --------------
Net increase in net assets resulting
from operations 65,280,645 107,448,328
Distributions to Shareholders From:
Net investment income:
Prime Shares (59,516,901) (99,181,255)
Prime Institutional Shares (1,619,636) (1,334,079)
Flag Investors Class A Shares (140,207) (402,702)
Flag Investors Class B Shares (132) (300)
Quality Cash Reserve Prime Shares (4,003,769) (6,536,042)
-------------- --------------
Total distributions (65,280,645) (107,454,378)
Capital Share Transactions, net - (Note 3) 48,735,599 1,016,482,516
-------------- --------------
Total increase in net assets 48,735,599 1,016,476,466
Net Assets:
Beginning of period 2,602,779,775 1,586,303,309
-------------- --------------
End of period $2,651,515,374 $2,602,779,775
(1) Unaudited.
See Notes to Financial Statements.
13
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
Prime Shares
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0239
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0239)
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 4.82%(2)
Ratios to Average Daily Net Assets:
Expenses 0.60%(2)
Net investment income 4.77%(2)
Supplemental Data:
Net assets at end of period $2,396,184,930
Number of shares outstanding at end of period 2,396,188,105
- --------------------
(1) Unaudited.
(2) Annualized.
14
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Prime Shares (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
<S><C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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 period $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 period 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.
15
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
Flag Investors Cash Reserve Prime Shares--Class A
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0239
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0239)
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 4.82%(2)
Ratios to Average Daily Net Assets:
Expenses 0.60%(2)
Net investment income 4.77%(2)
Supplemental Data:
Net assets at end of period $6,071,072
Number of shares outstanding at end of period 6,070,838
- ------------------
(1) Unaudited.
(2) Annualized.
16
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Flag Investors Cash Reserve Prime Shares--Class A (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
- ---------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
<S><C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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 period $5,976,831 $7,726,696 $18,116,648 $10,392,282 $7,350,424
Number of shares outstanding at end of period 5,976,824 7,726,698 18,116,633 10,392,267 7,350,409
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
Flag Investors Cash Reserve Prime Shares--Class B
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0200
Less Distributions:
Dividends from net investment income (0.0200)
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 4.07%(3)
Ratios to Average Daily Net Assets:
Expenses 1.35%(3)
Net investment income 4.02%(3)
Supplemental Data:
Net assets at end of period $ 599
Number of shares outstanding at end
of period 599
- ------------------
(1) Unaudited.
(2) Commencement of operations.
(3) Annualized.
18
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Flag Investors Cash Reserve Prime Shares--Class B (continued)
- --------------------------------------------------------------------------------
April 3, 1995(2)
through
March 31, 1996
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0361
Less Distributions:
Dividends from net investment income (0.0361)
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 3.69%(3)
Ratios to Average Daily Net Assets:
Expenses 1.38%(3)
Net investment income 4.30%(3)
Supplemental Data:
Net assets at end of period $10,200
Number of shares outstanding at end
of period 10,200
See Notes to Financial Statements.
19
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
Prime Institutional Shares
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0252
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0252)
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 5.07%(2)
Ratios to Average Daily Net Assets:
Expenses 0.35%(2)
Net investment income 5.02%(2)
Supplemental Data:
Net assets at end of period $55,411,841
Number of shares outstanding at end of period 55,412,061
- ----------------
(1) Unaudited.
(2) Annualized.
20
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Prime Institutional Shares (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
- -----------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
<S><C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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 period $53,699,315 $11,904,716 $23,437,449 $28,884,078 $21,867,108
Number of shares outstanding at end of period 53,699,535 11,904,663 23,437,512 28,884,132 21,867,108
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
Quality Cash Reserve Prime Shares
- --------------------------------------------------------------------------------
Six months ended
September 30, 1996(1)
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
Income from Investment Operations:
Net investment income 0.0225
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0225)
Net asset value at end of period $ 1.00
Total Return:
Based on net asset value per share 4.47%(3)
Ratios to Average Daily Net Assets:
Expenses 0.89%(3,4)
Net investment income 4.48%(3,5)
Supplemental Data:
Net assets at end of period $193,846,933
Number of shares outstanding at end of period 193,847,114
- ----------------
(1) Unaudited.
(2) Commencement of operations.
(3) Annualized.
(4) Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.95% and 0.95% for the six months ended September 30, 1996 and the year
ended March 31, 1996, respectively.
(5) Ratio of net investment income to average daily net assets prior to partial
fee waivers was 4.42% and 4.86% for the six months ended September 30, 1996
and the year ended March 31, 1996, respectively.
22
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Quality Cash Reserve Prime Shares (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
May 6, 1991(2)
through
Year ended March 31, March 31, 1992
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
<S><C>
Per Share Operating Performance:
Net asset value at beginning of period $ 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 period $ 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%(3)
Ratios to Average Daily Net Assets:
Expenses 0.90%(4) 0.96% 1.06% 1.04% 0.96%(3)
Net investment income 4.91%(5) 4.04% 2.18% 2.53% 4.30%(3)
Supplemental Data:
Net assets at end of period $156,412,213 $94,592,158 $92,678,440 $101,321,868 $94,887,669
Number of shares outstanding at
end of period 156,412,393 94,591,979 92,678,268 101,321,668 94,887,669
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Prime Series
Notes to Financial Statements
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 Alex. Brown Cash
Reserve Prime Institutional Shares ("Prime Institutional Shares"). Matters
affecting each class are voted on exclusively by the shareholders of that class.
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.
24
<PAGE>
Prime Series
Notes to Financial Statements (continued)
NOTE 1--concluded
D. Federal Income Taxes--The Fund intends 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) that is distributed to shareholders. Each portfolio is
treated as a separate entity for federal income tax purposes.
E. Expenses--Operating expenses directly attributable to a class of shares
are charged to that class' operations. Expenses of the Fund that
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 the Prime 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. 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.
ICC may, from time to time, voluntarily waive a portion of its advisory fee
with respect to the Prime Series to preserve or enhance the performance of the
Series as compared to certain industry benchmarks. No advisory fees were waived
for the six months ended September 30, 1996.
Under the terms of these agreements, ICC and the Fund's distributor will,
from time to time, voluntarily waive or reimburse a portion of their advisory or
distribution fees, respectively, with respect to the Prime Series or any class
to preserve or enhance the Series' or class' performance. Such voluntary waivers
would not be contractual and would be subject to change. Any reimbursement by
ICC or the distributor would be limited to the fees actually received by them
for such fiscal year.
25
<PAGE>
Prime Series
Notes to Financial Statements (continued)
NOTE 2--concluded
As compensation for its accounting services, ICC receives from the Prime
Series an annual fee, calculated daily and paid monthly, based on the Series'
average daily net assets. ICC received $78,911 for accounting services for the
six months ended September 30, 1996 for the Prime Series.
As compensation for its transfer agent services, ICC receives from the
Prime Series a per account fee, calculated and paid monthly. ICC received
$540,474 for transfer agent services for the six months ended September 30, 1996
for the Prime Series.
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 and Flag Investors Class A
Shares, 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 each class. Alex.
Brown voluntarily waived distribution fees in the amount of $57,988 for the
Quality Cash Shares for the six months ended September 30, 1996.
The Fund complex of which the Fund is a part has adopted a retirement plan
for eligible Directors. The actuarially computed pension expense allocated to
the Fund for the period January 1, 1996 through September 30, 1996 was
approximately $40,500 and the accrued liability was approximately $211,000 for
the Prime Series.
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). Changes in shares outstanding
during the periods ended September 30, 1996 and March 31, 1996 are listed on the
following page.
26
<PAGE>
Prime Series
Notes to Financial Statements (concluded)
NOTE 3--concluded September 30, 1996
(Unaudited) March 31, 1996
------------------ --------------
Prime Series:
Sold:
Prime Shares 10,938,844,772 19,439,463,533
Flag Investors Class A Shares 3,613,116 12,118,053
Flag Investors Class B Shares 4,670 24,535
Prime Institutional Shares 203,535,745 213,159,539
Quality Cash Shares 503,778,591 1,285,040,597
Issued as reinvestment of dividends:
Prime Shares 56,307,220 93,103,137
Flag Investors Class A Shares 133,453 374,561
Flag Investors Class B Shares 399 --
Prime Institutional Shares 1,211,277 753,855
Quality Cash Shares 3,842,527 6,300,386
Redeemed:
Prime Shares (10,985,648,278) (18,617,959,766)
Flag Investors Class A Shares (3,652,327) (14,242,488)
Flag Investors Class B Shares (14,671) (14,335)
Prime Institutional Shares (203,034,496) (172,118,522)
Quality Cash Shares (470,186,399) (1,229,520,569)
--------------- ---------------
Net increase 48,735,599 1,016,482,516
=============== ===============
NOTE 4--Net Assets
At September 30, 1996, net assets consisted of:
Prime
Series
------
Paid-in capital $2,651,518,882
Undistributed net investment income 2,187
Undistributed net realized loss on sales of
investments (5,695)
--------------
$2,651,515,374
==============
27
<PAGE>
Board of Directors
- --------------------------------------------------------------------------------
W. JAMES PRICE
Chairman
CHARLES W. COLE JR. EUGENE J. McDONALD
Director Director
JAMES J. CUNNANE REBECCA W. RIMEL
Director Director
RICHARD T. HALE TRUMAN T. SEMANS
Director Director
JOHN F. KROEGER CARL W. VOGT, Esq.
Director Director
LOUIS E. LEVY HARRY WOOLF
Director Director
Officers
- --------------------------------------------------------------------------------
W. James Price M. Elliott Randolph, Jr. Joseph A. Finelli
Chairman Vice President Treasurer
Richard T. Hale Paul D. Corbin Edward J. Stoken
President Vice President Secretary
Edward J. Veilleux Monica M. Hausner Laurie D. DePrine
Executive Vice President Vice President Assistant Secretary
Scott J. Liotta
Vice President
- --------------------------------------------------------------------------------
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 Transfer Agent
Investment Company Capital Corp.
Investment Advisor 135 East Baltimore Street
Investment Company Capital Corp. Baltimore, MD 21202
135 East Baltimore Street (800) 553-8080
Baltimore, MD 21202
Auditors
Coopers & Lybrand L.L.P.
217 E. Redwood Street
Baltimore, MD 21202
- --------------------------------------------------------------------------------
28
<PAGE>
This report is submitted for the general information of shareholders of
Flag Investors Cash Reserve Prime Shares. The report may be distributed only
to current shareholders or to persons who have received a current prospectus.
For more complete information regarding any of the Flag Investors Funds,
including charges and expenses, obtain a prospectus from your investment
representative or directly from the Fund at 1-800-767-FLAG. Read it carefully
before you invest.
<PAGE>
[FLAG INVESTORS LOGO]
FLAG INVESTORS
Growth
Flag Investors Emerging Growth Fund
Flag Investors Equity Partners Fund
Flag Investors International Fund
Equity Income
Flag Investors Real Estate Securities Fund
Flag Investors Telephone Income Fund
Balanced
Flag Investors Value Builder Fund
Income
Flag Investors Intermediate-Term Income Fund
Flag Investors Total Return U.S. Treasury Fund Shares
Tax-Free Income
Flag Investors Managed Municipal Fund Shares
Flag Investors Maryland Intermediate Tax-Free Income Fund
Current Income
Flag Investors Cash Reserve Prime Shares
P.O. Box 515
Baltimore, Maryland
800-767-FLAG
Distributed by:
Alex. Brown & Sons
INCORPORATED
