ALEX. BROWN
CASH RESERVE
FUND, INC.
Prime Series
Treasury Series
Tax-Free Series
Annual Report
March 31, 1997
[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) 895-5995.
<PAGE>
Letter to Shareholders
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May 5, 1997
We are pleased to report on the progress of your Fund for the fiscal year
ended March 31, 1997. As of fiscal year-end, the Fund had $4.3 billion in
assets, representing a 10% increase in total assets from last year. The growth
in assets is evident in each of the Fund's series: the Prime Series increased by
11%; the Treasury Series by 3%; and the Tax-Free Series by 13%. The pie chart
below shows the asset breakdown among each of the Fund's series.
Asset Breakdown by Series
[Graph appears here]
Prime Series Treasury Series Tax-Free Series
$2.9 billion $740 million $647 million
YEAR IN REVIEW
The Dow Jones Industrial Average climbed to 7000, and unemployment claims
remained relatively low during the fiscal year. However, in the latter part of
1996 and the beginning of 1997, there was increasing concern that inflation and
wage pressures would soon surface, forcing higher interest rates and eventually
a downturn in the U.S. economy. After having taken "no action" for several
meetings, the Federal Reserve Board decided at its March 25 meeting to increase
the Fed Funds Rate 25 basis points (0.25%) to 5.50%. The increase initially
precipitated a decline in the Dow Jones Industrial Average from its high of
7085.16 on March 11, 1997 to a low of 6391.69 on April 11, 1997. However, the
market has begun to move back up since then as several companies have released
better-than-expected earnings reports, indicating wage pressures have not yet
affected the bottom line, and other economic indicators continue to show very
little increase in inflationary pressures.
The rate increase did help spur the yield on the 30-year bond to a high of
almost 7.20% after it had been as low as 6.35% at the end of November 1996. The
3-month Treasury bill yield continued to trade in the 5.00% to 5.40% range for
most of the Fund's fiscal year.
<PAGE>
Letter to Shareholders (continued)
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Historical Yield Chart
(For the year ended March 31, 1997)
[Graph appears below]
Prime Treasury Tax-Free
Series Series Series
MAR 31, 96 4.72 4.46 2.68
APR 30, 96 4.71 4.47 2.83
MAY 31, 96 4.73 4.46 3.04
JUN 30, 96 4.75 4.49 2.74
JUL 31, 96 4.79 4.56 2.64
AUG 31, 96 4.82 4.6 2.91
SEP 30, 96 4.81 4.6 2.94
OCT 31, 96 4.83 4.56 2.91
NOV 30, 96 4.82 4.56 2.91
DEC 31, 96 4.8 4.51 3
JAN 31, 97 4.77 4.49 2.84
FEB 28, 97 4.74 4.49 2.81
MAR 31, 97 4.73 4.56 2.72
PORTFOLIO QUALITY
In keeping with our conservative investment policies, the Fund has
maintained a relatively short weighted average maturity for each series of the
Fund as noted in the chart below.
Weighted Average Maturity
(As of March 31, 1997)
Alex. Brown Cash Reserve Fund Prime Series 45 days
First Tier Money Fund Average 57 days
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Alex. Brown Cash Reserve Fund Treasury Series 49 days
100% U.S. Treasury Money Fund Average 56 days
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Alex. Brown Cash Reserve Fund Tax-Free Series 39 days
Tax-Free Money Fund Average 43 days
Source: IBC/Donoghue, Inc. "Money Fund Report," April 4, 1997.
The Money Fund Averages are average maturities of all funds in their respective
categories.
2
<PAGE>
In addition to conservative maturity management, Fund policy requires that
the Fund invest only in the highest quality issues. Evidence of our insistence
on high quality can be found in the Standard & Poor's (S&P) ratings of each Fund
series. Both the Prime and Tax-Free Series continue to maintain a "AAAm" rating
and the Treasury Series maintains a "AAAm-G" rating. These ratings are the
highest that S&P awards to money market funds.
Our conservative approach can be seen in every aspect of portfolio
construction. This includes unusually strict limits on exposure to any issue and
a predominance of the very highest rated paper. We have always believed that a
money fund is not a place to take chances or to speculate for additional yield.
INVESTMENT RESULTS
While maintaining unusually strict investment standards, we are pleased to
have generated competitive returns for each of the Fund's series as assets grew
to new highs. Below are yield comparisons for each series against its peer
group.
Performance Comparisons
(For the year ended March 31, 1997)
Alex. Brown Cash Reserve Fund Prime Series 4.88%
First Tier Money Fund Average 4.84%
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Alex. Brown Cash Reserve Fund Treasury Series 4.63%
100% U.S. Treasury Money Fund Average 4.68%
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Alex. Brown Cash Reserve Fund Tax-Free Series 2.90%
Tax-Free Money Fund Average 2.92%
Source: IBC/Donoghue, Inc. "Money Market Insight," April 1997.
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 the Fund will be able to
maintain a stable net asset value of $1.00 per share. The Money Fund Averages
are average yields of all funds in their respective categories.
3
<PAGE>
Letter to Shareholders (concluded)
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MARKET OUTLOOK
The last quarter of 1996 and the first quarter of 1997 saw an unusually
strong economy. Going forward the primary questions will be: Will the economy
subside to its optimum operating level, with strong company earnings, mild
inflation and low unemployment? Or will the Federal Reserve Board have to raise
interest rates to slow the economy, keep inflation in check and prevent the
stock market from becoming too overvalued? If there is another hike, how high
will it be and what will be the resulting outcome?
Going forward the Federal Reserve Board will probably increase rates in the
second or third quarter. While we consider additional rate increases likely, we
believe that global competition, stable commodity prices, a rising dollar and
relatively high real interest rates will preclude a "boom and bust" cycle.
In negotiating these uncertain times, we believe that the conservative
approach we apply to investing on behalf of the Fund's three series will provide
comfort to our shareholders as well as competitive yields.
As always, we appreciate your continued support.
Sincerely,
/s/ Charles W. Cole, Jr. /s/ Richard T. Hale
__________________________ ___________________________
Charles W. Cole, Jr. Richard T. Hale
Chairman President
4
<PAGE>
Chairman's Letter
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May 5, 1997
The Alex. Brown Cash Reserve Fund is one of the oldest money market funds
in the country. Two individuals who were present at the Fund's inception, had
the vision to see its appeal and utility and helped preside over its growth
retired at the end of 1996.
W. James Price, Chairman of the Fund and Managing Director Emeritus of
Alex. Brown & Sons, Inc., was the individual most responsible for the Fund's
establishment and the formation of the conservative policies that have guided it
ever since. His view (and ours) is that investors who regularly take risks in
their debt and equity investments should have one safe haven: namely, their
money fund. As a result, our investment policies are among the most conservative
for money funds, yet we have been able to generate returns to investors that are
in line with industry averages.
Harry Woolf, an independent Director, also retired from the board at
year-end. He is Professor Emeritus at the Institute for Advanced Studies,
Princeton, New Jersey. His wide-ranging background and knowledge have served
the Fund well.
We thank you, and we will miss you both.
Sincerely,
/s/ Charles W. Cole, Jr.
__________________________
Charles W. Cole, Jr.
Chairman
5
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
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Statement of Net Assets March 31, 1997
<TABLE>
<CAPTION>
Rating(a) Par
PRIME SERIES S&P Moody's (000) Value
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<S> <C>
Commercial Paper - 81.6%(b)
Automobiles & Trucks - 0.9%
Toyota Motor Credit Corp.
5.23% 5/23/97 A-1+ P-1 $11,000 $ 10,916,901
5.40% 6/17/97 A-1+ P-1 14,000 13,838,300
---------------
24,755,201
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Bank - 2.6%
Republic New York Corp.
5.27% 4/16/97 A-1+ P-1 20,000 19,956,083
5.30% 4/18/97 A-1+ P-1 30,000 29,924,917
5.34% 7/18/97 A-1+ P-1 25,000 24,599,500
---------------
74,480,500
---------------
Chemicals, General - 2.3%
E.I. duPont de Nemours and Company
5.28% 5/20/97 A-1+ P-1 25,000 24,820,333
5.26% 5/22/97 A-1+ P-1 25,000 24,813,708
5.24% 8/6/97 A-1+ P-1 18,710 18,364,136
---------------
67,998,177
---------------
Computer & Office Equipment - 4.2%
Pitney Bowes Credit Corp.
5.30% 4/14/97 A-1+ P-1 15,000 14,971,292
5.23% 4/23/97 A-1+ P-1 15,505 15,455,444
5.28% 5/12/97 A-1+ P-1 10,000 9,939,867
5.36% 7/1/97 A-1+ P-1 30,000 29,593,533
Xerox Corp.
5.28% 5/14/97 A-1 P-1 10,000 9,936,933
Xerox Credit Corp.
5.28% 4/7/97 A-1 P-1 10,000 9,991,200
5.31% 5/14/97 A-1 P-1 30,000 29,809,725
---------------
119,697,994
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Credit Unions - 2.4%
Mid-States Corporate Federal Credit Union
5.36% 4/16/97 A-1+ P-1 12,900 12,871,190
U.S. Central Credit Union
5.30% 5/9/97 A-1+ P-1 40,000 39,775,958
5.31% 5/12/97 A-1+ P-1 15,000 14,909,288
---------------
67,556,436
---------------
</TABLE>
6
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
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<TABLE>
<CAPTION>
Rating(a) Par
PRIME SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
<S> <C>
Commercial Paper (continued)
Electrical & Electronics - 5.0%
Emerson Electric Co.
5.23% 4/9/97 A-1+ P-1 $30,000 $ 29,965,133
5.24% 4/16/97 A-1+ P-1 40,000 39,912,667
5.23% 4/18/97 A-1+ P-1 39,650 39,552,076
Motorola Inc.
5.23% 4/16/97 A-1+ P-1 20,000 19,956,417
5.21% 5/14/97 A-1+ P-1 15,000 14,906,653
---------------
144,292,946
---------------
Electric Utility - 3.5%
Duke Power Co.
5.27% 4/11/97 A-1+ P-1 45,000 44,934,125
Northern States Power Co.
5.28% 4/2/97 A-1+ P-1 30,000 29,995,600
5.25% 5/23/97 A-1+ P-1 26,000 25,802,833
---------------
100,732,558
---------------
Entertainment - 1.2%
Walt Disney Co.
5.21% 11/19/97 A-1 P-1 20,000 19,328,489
5.20% 11/25/97 A-1 P-1 15,000 14,484,333
---------------
33,812,822
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Finance, Commercial - 0.5%
CIT Group Holdings Inc.
5.23% 5/21/97 A-1 P-1 15,000 14,891,042
---------------
Finance, Consumer - 3.4%
USAA Capital Corp.
5.30% 4/4/97 A-1+ P-1 15,000 14,993,375
5.27% 4/16/97 A-1+ P-1 10,000 9,978,042
5.30% 4/17/97 A-1+ P-1 15,000 14,964,667
5.24% 5/2/97 A-1+ P-1 20,000 19,909,756
5.25% 5/15/97 A-1+ P-1 13,500 13,413,375
5.30% 5/23/97 A-1+ P-1 25,000 24,808,610
---------------
98,067,825
---------------
Finance, Diversified - 3.5%
General Electric Capital Corp.
5.62% 4/25/97 A-1+ P-1 10,100 10,062,159
5.33% 5/23/97 A-1+ P-1 15,000 14,884,083
5.35% 5/23/97 A-1+ P-1 25,665 25,466,975
5.35% 5/30/97 A-1+ P-1 15,000 14,868,479
5.34% 7/2/97 A-1+ P-1 10,000 9,863,533
</TABLE>
7
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
<TABLE>
<CAPTION>
Rating(a) Par
PRIME SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
<S><C>
Commercial Paper (continued)
Finance, Diversified (concluded)
General Electric Capital Corp. (concluded)
5.31% 7/28/97 A-1+ P-1 $15,000 $ 14,738,925
5.33% 7/31/97 A-1+ P-1 10,000 9,820,853
---------------
99,705,007
---------------
Food - 11.4%
Campbell Soup Co.
5.30% 4/7/97 A-1+ P-1 15,000 14,986,750
5.29% 4/9/97 A-1+ P-1 15,000 14,982,367
5.25% 4/10/97 A-1+ P-1 25,000 24,967,188
5.35% 6/25/97 A-1+ P-1 15,000 14,810,521
5.37% 7/9/97 A-1+ P-1 25,000 24,630,813
5.25% 8/22/97 A-1+ P-1 15,000 14,687,188
5.42% 10/8/97 A-1+ P-1 10,000 9,713,944
Cargill, Inc.
5.32% 4/7/97 A-1+ P-1 15,000 14,986,700
5.28% 4/8/97 A-1+ P-1 20,000 19,979,467
5.32% 4/18/97 A-1+ P-1 10,000 9,974,878
5.34% 5/16/97 A-1+ P-1 19,200 19,071,840
5.40% 10/7/97 A-1+ P-1 15,000 14,574,750
Heinz (H.J.) Company
5.27% 4/1/97 A-1 P-1 5,000 5,000,000
Hershey Foods
5.27% 4/8/97 A-1+ P-1 18,500 18,481,043
5.25% 4/11/97 A-1+ P-1 20,000 19,970,833
5.25% 4/25/97 A-1+ P-1 50,000 49,825,000
Kellogg Company
5.28% 4/2/97 A-1+ P-1 9,540 9,538,601
5.24% 4/11/97 A-1+ P-1 18,000 17,973,800
5.28% 4/18/97 A-1+ P-1 8,000 7,980,052
---------------
326,135,735
---------------
Household Products - 2.9%
Clorox Company
5.50% 4/4/97 A-1+ P-1 20,000 19,990,833
5.30% 4/16/97 A-1+ P-1 25,000 24,944,792
5.57% 4/29/97 A-1+ P-1 20,000 19,913,356
Procter & Gamble Co.
5.45% 4/11/97 A-1 P-1 18,000 17,972,750
---------------
82,821,731
---------------
</TABLE>
8
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating(a) Par
PRIME SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
<S><C>
Commercial Paper (continued)
Insurance, Property & Casualty - 5.8%
A.I. Credit Corporation
5.28% 6/10/97 A-1+ P-1 $15,000 $ 14,846,000
5.23% 6/20/97 A-1+ P-1 20,000 19,767,556
AIG Funding Inc.
5.27% 4/7/97 A-1+ P-1 23,165 23,144,653
Chubb Capital Corp.
5.24% 4/7/97 A-1+ P-1 30,000 29,973,700
Marsh & McClennan Companies Inc.
5.35% 5/6/97 A-1+ P-1 15,000 14,921,979
5.26% 6/3/97 A-1+ P-1 20,000 19,815,900
5.35% 7/3/97 A-1+ P-1 15,000 14,792,688
5.37% 10/3/97 A-1+ P-1 30,000 29,171,352
---------------
166,433,828
---------------
Integrated Oil - 1.6%
Amoco Co.
5.20% 4/10/97 A-1+ P-1 20,000 19,974,000
5.32% 6/5/97 A-1+ P-1 25,000 24,759,861
---------------
44,733,861
---------------
Machinery & Tools - 2.9%
Dover Corporation
5.30% 4/4/97 A-1+ -- 18,500 18,491,829
5.25% 4/7/97 A-1+ -- 28,000 27,975,325
Illinois Tool Works
5.36% 4/29/97 A-1+ P-1 13,000 12,945,804
Snap-On Incorporated
5.55% 5/5/97 A-1+ P-1 25,000 24,868,959
---------------
84,281,917
---------------
Oil Transportation - 1.9%
Colonial Pipeline
5.25% 5/19/97 A-1+ P-1 12,100 12,015,300
5.35% 6/17/97 A-1+ P-1 7,200 7,117,610
5.32% 8/6/97 A-1+ P-1 17,300 16,975,317
5.32% 8/14/97 A-1+ P-1 10,000 9,800,500
5.28% 8/18/97 A-1+ P-1 10,000 9,796,134
---------------
55,704,861
---------------
</TABLE>
9
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
<TABLE>
<CAPTION>
Rating(a) Par
PRIME SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
<S><C>
Commercial Paper (continued)
Paper - 1.2%
Minnesota Mining & Manufacturing Co.
5.26% 4/7/97 A-1+ P-1 $15,000 $ 14,986,850
5.27% 5/7/97 A-1+ P-1 9,000 8,952,570
Weyerhaeuser Co.
5.29% 5/7/97 A-1 P-1 10,000 9,947,101
---------------
33,886,521
---------------
Pharmaceuticals - 9.1%
Eli Lilly & Co.
5.28% 7/14/97 A-1+ P-1 15,000 14,771,200
5.33% 7/15/97 A-1+ P-1 10,000 9,844,542
Pfizer Inc.
5.27% 4/4/97 A-1+ P-1 37,400 37,383,575
Schering-Plough Corp.
5.26% 4/22/97 A-1+ P-1 7,850 7,825,914
5.27% 4/29/97 A-1+ P-1 26,100 25,992,831
5.27% 5/13/97 A-1+ P-1 26,050 25,889,719
5.22% 5/20/97 A-1+ P-1 15,000 14,893,425
5.30% 6/24/97 A-1+ P-1 14,950 14,765,118
5.31% 7/22/97 A-1+ P-1 15,000 14,752,200
Warner-Lambert Co.
5.31% 4/15/97 A-1+ P-1 13,500 13,472,123
5.30% 4/30/97 A-1+ P-1 16,100 16,031,262
5.34% 5/20/97 A-1+ P-1 20,000 19,854,633
5.29% 5/29/97 A-1+ P-1 15,000 14,872,158
5.20% 6/20/97 A-1+ P-1 15,000 14,826,667
5.22% 8/14/97 A-1+ P-1 15,400 15,098,544
---------------
260,273,911
---------------
Publishing - 1.2%
Dow Jones & Co., Inc.
5.30% 4/22/97 A-1+ P-1 8,300 8,274,339
Gannett Co., Inc.
5.28% 4/24/97 A-1 P-1 27,000 26,908,920
---------------
35,183,259
---------------
Structured Finance - 6.8%
CIESCO, L.P.
5.28% 4/11/97 A-1+ P-1 15,000 14,978,000
5.30% 4/21/97 A-1+ P-1 10,000 9,970,556
5.32% 4/22/97 A-1+ P-1 19,850 19,788,399
5.33% 4/25/97 A-1+ P-1 25,000 24,911,167
5.26% 5/8/97 A-1+ P-1 15,000 14,918,908
5.27% 5/14/97 A-1+ P-1 20,000 19,874,106
</TABLE>
10
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating(a) Par
PRIME SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper (concluded)
<S><C>
Structured Finance (concluded)
Corporate Asset Funding Company, Inc.
5.32% 4/10/97 A-1+ P-1 $15,000 $ 14,980,050
5.25% 4/16/97 A-1+ P-1 30,000 29,934,375
5.30% 4/22/97 A-1+ P-1 30,000 29,907,250
5.55% 5/13/97 A-1+ P-1 15,000 14,902,874
---------------
194,165,685
---------------
Telephone - 7.3%
Ameritech Capital Funding Corp.
5.33% 4/7/97 A-1+ P-1 15,000 14,986,675
5.28% 4/14/97 A-1+ P-1 25,000 24,952,333
5.31% 4/28/97 A-1+ P-1 15,000 14,940,263
5.30% 5/13/97 A-1+ P-1 20,000 19,876,333
5.54% 6/27/97 A-1+ P-1 20,000 19,732,233
AT&T Corp.
5.37% 8/14/97 A-1+ P-1 20,000 19,597,250
Bell Atlantic Network Funding Corp.
5.65% 4/22/97 A-1+ P-1 9,000 8,970,338
BellSouth Capital Funding Corp.
5.28% 5/6/97 A-1+ P-1 15,000 14,923,000
5.27% 5/12/97 A-1+ P-1 25,000 24,849,951
Southwestern Bell Telephone Co.
5.28% 4/7/97 A-1+ P-1 12,000 11,989,440
5.27% 4/10/97 A-1+ P-1 20,900 20,872,464
5.25% 5/29/97 A-1+ P-1 15,000 14,873,127
---------------
210,563,407
---------------
Total Commercial Paper 2,340,175,224
---------------
Medium-Term Note - 0.7%
E.I. duPont de Nemours and Company
5.59% 10/8/97 A-1+ P-1 9,500 9,497,964
Eli Lilly & Co.
6.20% 11/6/97 A-1+ P-1 10,000 10,023,322
---------------
Total Medium-Term Note 19,521,286
---------------
Variable Rate Note - 4.4%
Associates Corporation Master Note
5.23%(c) 6/1/97 A-1+ P-1 75,000 75,000,000
Coca-Cola Company Master Note
5.25%(c) 6/26/97 A-1+ P-1 50,000 50,000,000
---------------
Total Variable Rate Note 125,000,000
---------------
</TABLE>
11
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
<TABLE>
<CAPTION>
Rating(a) Par
PRIME SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
<S><C>
Federal Home Loan Bank - 1.7%
FHLB
5.23% 7/7/97 AAA -- $ 9,500 $ 9,366,127
5.10% 8/13/97 AAA -- 15,000 14,715,250
5.46% 12/12/97 AAA -- 15,000 14,995,972
5.81% 1/23/98 AAA -- 10,000 10,000,000
---------------
Total Federal Home Loan Bank 49,077,349
---------------
Federal National Mortgage Association - 2.7%
FNMA
Discount Note
5.28% 4/8/97 -- P-1 15,000 14,984,600
5.33% 9/5/97 -- P-1 11,710 11,437,804
Note
5.43% 6/19/97 -- P-1 20,000 20,000,000
5.39% 7/17/97 -- P-1 15,000 15,000,000
5.50% 9/11/97 -- P-1 15,000 15,000,000
---------------
Total Federal National Mortgage Association 76,422,404
---------------
Repurchase Agreements - 9.0%(d)
Goldman Sachs
6.47%(e) 4/1/97 -- -- 109,100 109,100,000
Morgan Stanley & Co.
6.25%(f) 4/1/97 -- -- 150,000 150,000,000
---------------
Total Repurchase Agreements 259,100,000
---------------
TOTAL INVESTMENTS - 100.1% 2,869,296,263(g)
LIABILITIES IN EXCESS OF OTHER ASSETS, NET - (0.1%) (1,832,649)
---------------
NET ASSETS - 100.0% $2,867,463,614
===============
</TABLE>
12
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Prime Series (concluded) Value
- --------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption Price Per:
Prime Share
($2,545,532,365 / 2,545,523,885 shares outstanding) $1.00
=====
Flag Investors Class A Share
($6,521,574 / 6,521,538 shares outstanding) $1.00
=====
Flag Investors Class B Share
($227,098 / 227,098 shares outstanding) $1.00
=====
Prime Institutional Share
($117,812,047 / 117,811,768 shares outstanding) $1.00
=====
Quality Cash Reserve Prime Share
($197,370,530 / 197,369,848 shares outstanding) $1.00
=====
- ---------------
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P") are not covered by the Independent Accountant's
Report.
(b) Most commercial paper is traded on a discount basis. In such cases, the
interest rate shown represents the rate of discount paid or received at
time of purchase by the Fund.
(c) Master note is payable upon demand by the Fund upon no more than five days'
notice. Interest rates on master notes are redetermined weekly. Rates shown
are the rates in effect on March 31, 1997.
(d) Collateral on repurchase agreements is taken into possession by the broker's
custodial bank upon entering into the repurchase agreement. The collateral
is marked to market daily to insure market value as being as least 102
percent of the resale price of the repurchase agreement.
(e) Dated 3/31/97, to be repurchased on 4/1/97, collateralized by U.S. Treasury
Notes with a market value of $111,282,862.
(f) Dated 3/31/97, to be repurchased on 4/1/97, collateralized by U.S. Treasury
Notes with a market value of $153,006,303.
(g) Aggregate cost for financial reporting and federal tax purposes.
MOODY'S RATINGS:
Aaa Bonds that are judged to be of the best quality.
P-1 Commercial paper bearing this designation is of the best quality.
S&P RATINGS:
AAA 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
13
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
<TABLE>
<CAPTION>
Maturity Par
TREASURY SERIES Date (000) Value
- -----------------------------------------------------------------------------------
<S> <C>
U.S. Treasury Securities - 99.5%
U.S. Treasury Bills(a) - 77.7%
5.010% 4/3/97 $ 14,600 $ 14,595,936
5.030% 4/3/97 9,300 9,297,401
5.060% 4/3/97 6,100 6,098,283
5.010% 4/10/97 16,000 15,979,960
5.000% 4/17/97 22,300 22,250,395
5.110% 4/17/97 35,000 34,920,511
5.140% 4/17/97 25,000 24,942,889
5.140% 4/17/97 2,000 1,995,431
5.180% 4/17/97 2,700 2,693,784
5.280% 4/17/97 4,600 4,589,205
4.990% 4/24/97 3,400 3,389,161
5.010% 4/24/97 27,400 27,312,297
5.140% 4/24/97 1,500 1,495,074
5.000% 5/1/97 37,300 37,144,428
5.030% 5/1/97 9,800 9,758,881
4.940% 5/15/97 40,000 39,758,489
5.010% 5/15/97 9,500 9,441,828
5.030% 5/15/97 7,200 7,155,692
4.940% 5/22/97 22,500 22,342,538
5.015% 5/22/97 7,000 6,950,268
5.020% 5/22/97 23,500 23,332,876
4.940% 5/29/97 18,400 18,253,408
5.040% 5/29/97 21,000 20,829,480
5.050% 5/29/97 18,000 17,853,550
5.200% 5/29/97 50,000 49,581,111
5.040% 6/5/97 2,800 2,774,495
5.050% 6/5/97 54,500 54,002,574
4.930% 6/12/97 15,000 14,852,100
5.030% 6/12/97 3,700 3,662,778
5.090% 6/12/97 23,000 22,765,860
5.150% 6/26/97 25,000 24,692,431
5.170% 6/26/97 14,100 13,925,857
5.200% 6/26/97 2,200 2,172,671
5.110% 7/24/97 3,000 2,951,455
5.160% 7/24/97 1,200 1,180,392
------------
Total U.S. Treasury Bills 574,943,489
------------
</TABLE>
14
<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 - 21.8%
8.500% 4/15/97 $ 35,000 $ 35,042,568
6.500% 4/30/97 25,000 25,020,768
6.875% 4/30/97 20,000 20,025,202
6.500% 5/15/97 20,000 20,025,208
6.500% 5/15/97 15,000 15,023,683
5.625% 6/30/97 21,400 21,414,159
5.500% 7/31/97 9,700 9,700,000
5.750% 9/30/97 15,000 15,016,966
------------
Total U.S. Treasury Notes 161,268,554
------------
TOTAL INVESTMENTS IN U.S. TREASURY SECURITIES - 99.5% 736,212,043(b)
OTHER ASSETS LESS LIABILITIES, NET - 0.5% 3,441,530
------------
NET ASSETS - 100.0% $739,653,573
============
Net Asset Value, Offering and Redemption Price Per:
Treasury Share
($678,444,803 / 678,391,386 shares outstanding) $1.00
=====
Treasury Institutional Share
($61,208,770 / 61,199,346 shares outstanding) $1.00
=====
</TABLE>
(a) U.S. Treasury bills are traded on a discount basis. In such cases, the
interest rate shown represents the yield at the date of purchase.
(b) Aggregate cost for financial reporting and federal tax purposes.
See Notes to Financial Statements.
15
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
<TABLE>
<CAPTION>
Rating(a)
--------------- Par
TAX-FREE SERIES S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S> <C>
Alabama -- 0.8%
The Port City Medical Clinic Board of
Mobile (Mobile Infirmary Association)
(Rabo Bank Nederland LOC)
3.55% 5/12/97(b) A-1+ VMIG-1 $ 5,100 $ 5,100,000
------------
Arkansas -- 1.3%
Arkansas State Development Authority
Health Care Facility (Sisters of Mercy)
(ABN-Amro Bank N.V. LOC)
3.45% 4/7/97(c) A-1+ VMIG-1 8,100 8,100,000
------------
Colorado -- 3.0%
Colorado Health Facilities Authority RB
(Sisters of Charity Health Care System)
(Toronto Dominion LOC)
3.45% 4/7/97(c) A-1+ VMIG-1 4,300 4,300,000
Colorado State General Fund TAN
4.50% 6/27/97(b) SP-1+ MIG-1 15,000 15,023,285
------------
19,323,285
------------
Georgia -- 11.2%
Burke County PCR (Oglethorpe Power
Company) (AMBAC Insurance)
3.60% 12/1/97(b) -- -- 6,000 6,000,000
Clayton County Housing Authority,
Multi-Family Housing Refunding RB
(Chateau Forest Apartments Project)
(FGIC Insurance)
3.40% 4/7/97(c) A-1+ VMIG-1 10,300 10,300,000
Cobb County Housing Authority,
Multi-Family Housing RB
(Mill Bridge Project) (FNMA LOC)
3.45% 4/7/97(c) A-1+ -- 12,450 12,450,000
Cobb County Housing Authority RB
(Post Bridge Project), Series 1995
(FNMA LOC)
3.45% 4/7/97(c) A-1+ -- 12,380 12,380,000
Dekalb County Housing Authority,
Multi-Family Housing (Post Ashford
Project) (FNMA LOC)
3.45% 4/7/97(c) A-1+ -- 7,895 7,895,000
Georgia Municipal Association Pooled
Bonds (MBIA Insurance)
3.40% 4/7/97(c) A-1+ VMIG-1 5,600 5,600,000
</TABLE>
16
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating(a)
--------------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Georgia (continued)
Roswell Housing Authority, Multi-Family
Housing RB (Post Canyon Project)
(FNMA LOC)
3.45% 4/7/97(c) A-1+ -- $ 5,500 $ 5,500,000
Smyrna Housing Authority RB
(Post Valley Project), Series 1995
(FNMA LOC)
3.45% 4/7/97(c) A-1+ -- 12,600 12,600,000
------------
72,725,000
------------
Idaho -- 2.6%
Idaho State TAN
4.50% 6/30/97(b) SP-1+ MIG-1 17,000 17,024,193
------------
Illinois -- 13.2%
Illinois Development Finance Authority
PCR (Commonwealth Edison Co.
Project), Series 94C (ABN-Amro Bank
N.V. LOC)
3.45% 4/7/97(c) A-1+ P-1 7,700 7,700,000
Illinois Development Finance Authority
RB (Chicago Symphony Orchestra
Project) (Northern Trust LOC)
3.50% 4/7/97(c) A-1 VMIG-1 11,300 11,300,000
Illinois Education Facilities Authority
Adjustable Demand RB (John F.
Kennedy Health Care Foundation)
(Harris Trust & Savings Bank LOC)
3.50% 5/14/97(b) A-1+ -- 12,800 12,800,000
Illinois Education Facilities Authority,
Commercial Paper Notes Pooled
Finance (Northern Trust LOC)
3.55% 8/14/97(b) A-1+ VMIG-1 7,000 7,000,000
Illinois Health Facilities Authority
(Evanston Hospital Corp.),
Series 1996
3.95% 8/15/97(b) A-1+ VMIG-1 5,000 5,000,000
Illinois Health Facilities Authority
(Gottlieb Health Resource, Inc.)
(Harris Trust & Savings Bank LOC)
3.50% 4/7/97(c) -- VMIG-1 10,600 10,600,000
</TABLE>
17
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
<TABLE>
<CAPTION>
Rating(a)
--------------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Illinois (continued)
Illinois Health Facilities Authority,
Variable Rate Adjustable Demand RB
(Evanston Hospital Corp.)
3.85% 10/15/97(b) A-1+ VMIG-1 $10,000 $10,000,000
Illinois Health Facilities Authority,
Variable Rate Adjustable Demand RB
(Evanston Hospital Corp.)
3.85% 10/15/97(b) A-1+ VMIG-1 3,000 3,000,000
Illinois Health Facilities Authority,
Variable Rate Demand RB, Revolving
Fund Pooled Financing Program
(The University of Chicago Project)
3.55% 7/2/97(b) A-1+ VMIG-1 16,400 16,400,000
Illinois State Toll Highway Authority,
Toll Highway Priority, Series B
(Societe Generale LOC)
3.35% 4/7/97(c) A-1+ VMIG-1 1,400 1,400,000
------------
85,200,000
------------
Indiana -- 3.6%
Evansville Hospital Authority, Hospital
Revenue (Daughters of Charity,
St. Mary's Medical Center)
3.45% 4/7/97(c) A-1+ VMIG-1 7,800 7,800,000
Petersburg PCR (Indianapolis Power &
Light Co.) (AMBAC Insurance)
3.45% 4/7/97(c) -- VMIG-1 4,100 4,100,000
Petersburg PCR Refunding RB
(Indianapolis Power & Light Co.)
3.50% 5/8/97(b) A-1+ VMIG-1 7,500 7,500,000
Purdue University, Trustees of
Student Fee Bonds
3.45% 4/7/97(c) A-1+ VMIG-1 3,600 3,600,000
------------
23,000,000
------------
</TABLE>
18
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating(a)
--------------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Iowa -- 1.0%
Iowa Finance Authority Health Care
Facility RB (Catholic Health Corp.-A)
(Toronto Dominion LOC)
3.35% 4/7/97(c) A-1+ -- $ 4,100 $ 4,100,000
Iowa Finance Authority Small Business
Development RB, Multi-Family
Housing Associates (Rabo Bank
Nederland LOC)
3.15% 4/7/97(c) -- VMIG-1 2,300 2,300,000
------------
6,400,000
------------
Louisiana -- 5.0%
East Baton Rouge Parish (Georgia-Pacific
Corp.) PCR (Toronto Dominion LOC)
3.45% 4/7/97(c) P-1 -- 2,700 2,700,000
Louisiana Public Facilities Authority
College and Equipment, Series A
(Societe Generale LOC)
3.40% 4/7/97(c) A-1+ VMIG-1 10,400 10,400,000
Plaquemines Port, Harbor and Terminal
District, Marine Terminal Facilities
Refunding RB (Junior) (Electro-Coal
Transfer Corporation Project)
3.45% 6/18/97(b) P-1 -- 7,000 7,000,000
Plaquemines Port, Harbor and Terminal
District, Marine Terminal Facilities
Refunding RB (Electro-Coal Transfer
Corporation Project)
3.45% 6/18/97(b) P-1 -- 6,325 6,325,000
St. Charles Parish PCR (Shell Oil
Company Project)
3.35% 4/7/97(c) A-1+ P-1 6,050 6,050,000
------------
32,475,000
------------
Maryland -- 7.5%
Howard County Consolidated
Public Improvement TECP BAN
3.40% 4/24/97(b) A-1+ P-1 28,200 28,200,000
Maryland Health & Higher Education
Facility Authority (Daughters of
Charity, National Health System)
3.45% 4/7/97(c) A-1+ VMIG-1 5,200 5,200,000
</TABLE>
19
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
<TABLE>
<CAPTION>
Rating(a)
--------------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Maryland (continued)
Maryland Health & Higher Education
Facility Authority (Daughters of
Charity, National Health System)
3.45% 4/7/97(c) -- VMIG-1 $10,800 $10,800,000
Washington Suburban Sanitary District,
Montgomery, Prince George's
Counties GO BAN
3.40% 4/7/97(c) A-1+ VMIG-1 4,300 4,300,000
------------
48,500,000
------------
Michigan -- 1.7%
Grand Rapids Water Supply
(Societe Generale LOC)
3.30% 4/7/97(c) -- VMIG-1 3,000 3,000,000
Michigan State Job Development
Authority Revenue (Gordon Food
Service Project) (Rabo Bank
Nederland LOC)
3.40% 4/7/97(c) -- VMIG-1 7,790 7,790,000
------------
10,790,000
------------
Minnesota -- 2.4%
Becker PCR RB (Junior) (Northern
States Power-Sherbourne Generating
Station Unit 3 Project)
3.55% 5/1/97(b) A-1+ P-1 3,000 3,000,000
Duluth Tax Increment RB
(Lake Superior Paper Industries
Project) (National Australia LOC)
3.45% 4/7/97(c) A-1+ VMIG-1 8,700 8,700,000
Minnesota State RAN
(AMBAC Insurance)
5.00% 6/30/97(b) AAA Aaa 4,000 4,014,245
------------
15,714,245
------------
Missouri -- 5.3%
Missouri Health and Educational Facilities
Authority, Christian Health Services,
Series A (Morgan Guaranty LOC)
3.30% 4/7/97(c) A-1+ -- 4,000 4,000,000
Missouri Health and Educational Facilities
Authority, Health Facility RB
(Sisters of Mercy)
3.45% 4/7/97(c) A-1+ VMIG-1 8,000 8,000,000
</TABLE>
20
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating(a)
--------------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Missouri (continued)
Missouri Health and Educational Facilities
Authority RB (SSM Health Care
Obligated Group) (Morgan
Guaranty LOC)
3.55% 5/1/97(b) -- VMIG-1 $ 1,700 $ 1,700,000
Missouri Health and Educational Facilities
Authority (Sisters of Mercy)
3.45% 4/7/97(c) A-1+ VMIG-1 7,000 7,000,000
Missouri Health and Educational Facilities
Authority (Washington University),
Series 1984
3.45% 4/7/97(c) A-1+ VMIG-1 13,300 13,300,000
------------
34,000,000
------------
New Jersey -- 1.9%
Economic Development Authority
PCR Refunding RB (Public
Service Electric & Gas Co. Project)
(Swiss Bank LOC)
3.10% 4/7/97(c) A-1+ VMIG-1 3,300 3,300,000
Gloucester County PCR Refunding RB
(Mobil Oil Refining Corporation
Project)
3.10% 4/7/97(c) A-1+ VMIG-1 600 600,000
Mercer County Improvement Pooled
Government Loan Program (Credit
Suisse LOC)
3.15% 4/7/97(c) A-1+ VMIG-1 1,600 1,600,000
Salem County Industrial PCR Floating
Rate Bond (E.I. duPont de Nemours
and Company Project)
3.55% 4/7/97(c) A-1+ VMIG-1 6,500 6,500,000
------------
12,000,000
------------
New York -- 2.4%
New York Local Government Assistance
Variable Rate Bonds (Toronto
Dominion LOC)
3.35% 4/7/97(c) A-1+ VMIG-1 15,100 15,100,000
Triborough Bridge and Tunnel Authority
(FGIC Insurance)
3.45% 4/7/97(c) A-1+ VMIG-1 600 600,000
------------
15,700,000
------------
</TABLE>
21
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
<TABLE>
<CAPTION>
Rating(a)
--------------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
North Carolina -- 0.5%
North Carolina Education Facility
Agency (Duke University)
3.35% 4/7/97(c) A-1+ VMIG-1 $ 3,200 $ 3,200,000
------------
Ohio -- 0.3%
Clermont County Health Facilities
Authority RB (Mercy Health System
Project) (Credit Suisse LOC)
3.45% 4/7/97(c) -- VMIG-1 2,000 2,000,000
------------
Oklahoma -- 2.0%
Oklahoma Industries Authority Hospital
RB (St. Anthony Parking Garage B)
(Morgan Guaranty LOC)
3.60% 6/2/97(b) -- VMIG-1 2,365 2,365,000
Oklahoma Industries Authority Medical
Practice Facility RB (SSM Health Care
Obligated Group) (St. Anthony
Physicians Building Project)
(Morgan Guaranty LOC)
3.60% 6/2/97(b) -- VMIG-1 5,560 5,560,000
Oklahoma Water Resources Board State
Loan Program RB (Swiss Bank LOC)
3.50% 9/2/97(b) A-1+ -- 5,000 5,000,000
------------
12,925,000
------------
Pennsylvania -- 3.7%
Beaver County IDA PCR Refunding RB
(Atlantic Richfield Company Project)
3.45% 4/7/97(c) A-1 P-1 12,000 12,000,000
Delaware County IDA Variable Rate
Demand Solid Waste Revenue
(Scott Paper Company)
3.45% 4/7/97(c) A-1+ P-1 7,000 7,000,000
Pennsylvania State TAN
4.50% 6/30/97(b) SP-1+ MIG-1 5,000 5,008,965
------------
24,008,965
------------
Puerto Rico -- 0.2%
Puerto Rico Government Development
Bank Adjustable Refunding Bonds
(Credit Suisse LOC)
3.10% 4/7/97(c) A-1+ VMIG-1 1,600 1,600,000
------------
</TABLE>
22
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating(a)
--------------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Tennessee -- 2.6%
Metropolitan Nashville Airport Authority,
Airport Improvement Refunding RB
(Societe Generale LOC)
3.45% 4/7/97(c) A-1+ VMIG-1 $11,900 $11,900,000
Tennessee GO BAN
3.45% 4/7/97(c) A-1+ P-1 5,000 5,000,000
------------
16,900,000
------------
Texas -- 17.8%
Austin Combined Utility Systems TECP
(Morgan Guaranty LOC)
3.55% 8/14/97(b) A-1+ P-1 8,551 8,551,000
Board of Regents, Texas A & M
University System
3.50% 5/1/97(b) A-1+ P-1 7,000 7,000,000
Dallas Area Rapid Transit Sales Tax
Revenue, Commercial Paper Notes
(Swiss Bank LOC)
3.55% 5/12/97(b) A-1+ P-1 10,000 10,000,000
Dallas Area Rapid Transit Sales Tax
RB (Credit Suisse LOC)
3.50% 5/9/97(b) A-1+ P-1 12,500 12,500,000
Gulf Coast Waste Disposal Authority
PCR (Exxon)
3.80% 4/1/97(c) A-1+ VMIG-1 200 200,000
Harris County Health Facilities
Development Hospital RB (San Jacinto
Methodist Hospital Project) (Morgan
Guaranty LOC)
3.55% 6/2/97(b) -- VMIG-1 10,750 10,750,000
Harris County Toll Road Unlimited Tax
and Subordinate Lien Revenue,
Adjustable Fixed-Rate Bonds, Series B
3.30% 4/7/97(c) A-1+ VMIG-1 12,000 12,000,000
Harris County Toll Road Unlimited Tax
and Subordinate Lien Revenue,
Adjustable Fixed-Rate Bonds, Series F
3.30% 4/7/97(c) A-1+ VMIG-1 4,400 4,400,000
Harris County Toll Road Unlimited Tax
and Subordinate Lien Revenue,
Adjustable Fixed-Rate Bonds, Series G
3.40% 4/7/97(c) A-1+ VMIG-1 900 900,000
</TABLE>
23
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
<TABLE>
<CAPTION>
Rating(a)
--------------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Texas (continued)
Harris County Toll Road Unlimited Tax
and Subordinate Lien Revenue,
Adjustable Fixed-Rate Bonds, Series H
3.40% 4/7/97(c) A-1+ VMIG-1 $ 3,800 $ 3,800,000
Hockley County Industrial Development
Corp. (Amoco Company Project)
3.60% 5/1/97(b) A-1+ P-1 8,000 8,000,000
Houston GO, Series B TECP
3.45% 6/17/97(b) A-1+ P-1 5,000 5,000,000
Lower Colorado River Authority TECP
3.25% 4/8/97(b) A-1+ P-1 13,400 13,400,000
Lower Neches Valley Authority
(Chevron Inc.)
3.50% 8/15/97(b) A-1+ -- 4,500 4,500,000
State of Texas TRAN
4.75% 8/29/97(b) SP-1+ MIG-1 5,000 5,015,490
Texas Higher Education Authority
Facilities Revenue, Series 85B
(FGIC Insurance)
3.40% 4/7/97(c) A-1+ VMIG-1 4,100 4,100,000
Yoakum County Industrial Development
Adjustable Rate PCR RB (Amoco
Company Project)
3.60% 5/1/97(b) A-1+ VMIG-1 5,265 5,265,000
------------
115,381,490
------------
Utah -- 4.4%
Intermountain Power Agency, Power
Supply RB (Morgan Guaranty LOC)
3.93% 6/16/97(b) -- -- 7,500 7,500,000
Intermountain Power Agency Variable
Rate, Power Supply Refunding RB
(Swiss Bank LOC)
3.50% 5/1/97(b) A-1+ VMIG-1 13,000 13,000,000
Salt Lake City Flexible Rate RB (Pooled
Hospital Financing Program)
3.45% 4/7/97(c) A-1+ VMIG-1 8,000 8,000,000
------------
28,500,000
------------
</TABLE>
24
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating(a)
--------------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Washington -- 3.6%
Chelan County Public Utility, District
No.1 (Chelan Hydro Consolidated
System) Series 1995A DN (Credit
Suisse LOC)
3.30% 4/7/97(c) A-1+ VMIG-1 $ 3,475 $ 3,475,000
King County Sewer Revenue Notes,
Series A
3.50% 8/20/97(b) A-1 P-1 10,000 10,000,000
King County Sewer Revenue Notes,
Series A
3.25% 4/29/97(b) A-1 P-1 10,000 10,000,000
------------
23,475,000
------------
Wisconsin -- 1.5%
Pleasant Prairie Village PCR Refunding
RB (Wisconsin Electric Power
Company Project)
3.50% 4/7/97(c) A-1+ P-1 10,000 10,000,000
------------
TOTAL INVESTMENTS - 99.5% $644,042,178(d)
OTHER ASSETS IN EXCESS OF LIABILITIES, NET - 0.5% 3,169,847
------------
NET ASSETS - 100.0% $647,212,025
============
Net Asset Value, Offering and
Redemption Price Per Share
($647,212,025/647,283,274 shares outstanding) $1.00
=====
</TABLE>
- ---------
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P") are not covered by the Independent Accountant's
Report.
(b) Security has an outstanding call, mandatory put or optional put by the
issuer. Par value and maturity date reflect such call or put.
(c) Demand security; payable upon demand by the Fund with usually no more than
seven (7) calendar days' notice. Interest rates are redetermined
periodically. Rates shown are those in effect on March 31, 1997.
(d) Aggregate cost for financial reporting and federal tax purposes.
See Notes to Financial Statements.
25
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
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.
FGIC Financial Guaranty Insurance Corporation
MBIA Municipal Bond Investors Assurance
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.
26
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Operations
For the year ended March 31, 1997
<TABLE>
<CAPTION>
Prime Treasury Tax-Free
Series Series Series
- ------------------------------------------------------------------------------------
<S><C>
Investment Income: (Note 1)
Interest income $150,388,078 $37,344,014 $20,589,946
------------ ----------- -----------
Expenses:
Distribution fee (Note 2) 7,395,916 1,681,441 1,479,581
Investment advisory fee (Note 2) 7,394,936 1,780,708 1,630,384
Transfer agent fee 1,686,323 242,470 163,383
Custodian fee 301,072 144,081 72,228
Accounting fee (Note 2) 157,854 126,264 63,954
Directors' fees 166,782 26,750 48,000
Registration fees 312,763 52,125 85,000
Legal fees 48,809 23,887 20,000
Audit fee 34,485 11,251 13,415
Printing & postage fees 214,446 134,757 78,250
Other expenses 115,181 50,494 29,744
------------ ----------- -----------
Total expenses 17,828,567 4,274,228 3,683,939
Less: Fees waived (Note 2) (120,055) -- --
------------ ----------- -----------
Net expenses 17,708,512 4,274,228 3,683,939
------------ ----------- -----------
Net investment income 132,679,566 33,069,786 16,906,007
------------ ----------- -----------
Net realized gain from security
transactions 13,047 1,180 15,016
------------ ----------- -----------
Net increase in net assets resulting
from operations $132,692,613 $33,070,966 $16,921,023
============ =========== ===========
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets March 31, 1997
<TABLE>
<CAPTION>
PRIME SERIES
- -----------------------------------------------------------------------------------
Year Ended Year Ended
March 31, March 31,
1997 1996
----------- -----------
<S><C>
Increase/(Decrease) in Net Assets
Operations:
Net investment income $ 132,679,566 $ 107,454,378
Net realized gain/(loss) on sales of
investments 13,047 (6,050)
-------------- --------------
Net increase in net assets resulting
from operations 132,692,613 107,448,328
Distributions to Shareholders From:
Net investment income:
Alex. Brown Cash Reserve Prime, Treasury
and Tax-Free Shares, respectively (119,826,842) (99,181,255)
Alex. Brown Cash Reserve
Institutional Shares (4,256,297) (1,334,079)
Flag Investors Class A Shares (295,562) (402,702)
Flag Investors Class B Shares (1,260) (300)
Quality Cash Reserve Prime Shares (8,299,605) (6,536,042)
-------------- --------------
Total distributions (132,679,566) (107,454,378)
Capital Share Transactions, net - (Note 3) 264,670,792 1,016,482,516
-------------- --------------
Total increase in net assets 264,683,839 1,016,476,466
Net Assets:
Beginning of year 2,602,779,775 1,586,303,309
-------------- --------------
End of year $2,867,463,614 $2,602,779,775
============== ==============
</TABLE>
28
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
TREASURY SERIES TAX-FREE SERIES
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
March 31, March 31, March 31, March 31,
1997 1996 1997 1996
----------- ----------- ----------- ------------
<S><C>
Increase/(Decrease) in Net Assets
Operations:
Net investment income $ 33,069,786 $ 32,463,791 $ 16,906,007 $ 17,012,671
Net realized gain/(loss) on sales of
investments 1,180 51,785 15,016 4,419
------------ ------------ ------------ ------------
Net increase in net assets resulting 33,070,966 32,515,576 16,921,023 17,017,090
from operations
Distributions to Shareholders From:
Net investment income:
Alex. Brown Cash Reserve Prime, Treasury (30,533,284) (30,565,630) (16,906,007) (17,012,671)
and Tax-Free Shares, respectively
Alex. Brown Cash Reserve (2,536,502) (1,898,161) -- --
Institutional Shares -- -- -- --
Flag Investors Class A Shares -- -- -- --
Flag Investors Class B Shares -- -- -- --
Quality Cash Reserve Prime Shares ------------ ------------ ------------ ------------
(33,069,786) (32,463,791) (16,906,007) (17,012,671)
Total distributions
21,015,478 192,365,923 75,690,009 96,118,352
Capital Share Transactions, net - (Note 3) ------------ ------------ ------------ ------------
21,016,658 192,417,708 75,705,025 96,122,771
Total increase in net assets
Net Assets: 718,636,915 526,219,207 571,507,000 475,384,229
Beginning of year ------------ ------------ ------------ ------------
$739,653,573 $718,636,915 $647,212,025 $571,507,000
End of year ============ ============ ============ ============
</TABLE>
====== See Notes to Financial Statements.
29
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
ALEX. BROWN CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Year ended
March 31,
----------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
--------------
Income from Investment Operations:
Net investment income 0.0478
Less Distributions:
Dividends from net investment income (0.0478)
--------------
Net asset value at end of year $ 1.00
==============
Total Return:
Based on net asset value per share 4.88%
Ratios to Average Daily Net Assets:
Expenses 0.63%
Net investment income 4.78%
Supplemental Data:
Net assets at end of year $2,545,532,365
Number of shares outstanding at end of year 2,545,523,885
30
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
ALEX. BROWN CASH RESERVE PRIME SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
- -------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------- -------------- -------------- --------------
Income from Investment Operations: 0.0524 0.0442 0.0262 0.0295
Net investment income
Less Distributions: (0.0524) (0.0442) (0.0262) (0.0295)
Dividends from net investment income -------------- -------------- -------------- --------------
$ 1.00 $ 1.00 $ 1.00 $ 1.00
Net asset value at end of year ============== ============== ============== ==============
Total Return:
Based on net asset value per share 5.36% 4.51% 2.65% 2.99%
Ratios to Average Daily Net Assets:
Expenses 0.60% 0.61% 0.62% 0.63%
Net investment income 5.21% 4.46% 2.62% 2.95%
Supplemental Data:
Net assets at end of year $2,386,681,216 $1,472,079,739 $1,350,334,979 $1,470,711,552
Number of shares outstanding at end of year 2,386,684,392 1,472,077,488 1,350,332,916 1,470,709,489
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS A
- --------------------------------------------------------------------------------
Year ended
March 31,
----------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
----------
Income from Investment Operations:
Net investment income 0.0478
Less Distributions:
Dividends from net investment income (0.0478)
----------
Net asset value at end of year $ 1.00
==========
Total Return:
Based on net asset value per share 4.88%
Ratios to Average Daily Net Assets:
Expenses 0.63%
Net investment income 4.78%
Supplemental Data:
Net assets at end of year $6,521,574
Number of shares outstanding at end of year 6,521,310
32
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS A (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
- -----------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ----------- -----------
Income from Investment Operations: 0.0524 0.0442 0.0262 0.0295
Net investment income
Less Distributions: (0.0524) (0.0442) (0.0262) (0.0295)
Dividends from net investment income ---------- ---------- ----------- -----------
$ 1.00 $ 1.00 $ 1.00 $ 1.00
Net asset value at end of year ========== ========== =========== ===========
Total Return: 5.36% 4.51% 2.65% 2.99%
Based on net asset value per share
Ratios to Average Daily Net Assets: 0.60% 0.61% 0.62% 0.63%
Expenses 5.25% 4.26% 2.62% 2.95%
Net investment income
Supplemental Data: $5,976,831 $7,726,696 $18,116,648 $10,392,282
Net assets at end of year 5,976,824 7,726,698 18,116,633 10,392,267
Number of shares outstanding at end of year
</TABLE>
See Notes to Financial Statements.
33
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS B
- --------------------------------------------------------------------------------
Year ended
March 31,
----------
1997
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
--------
Income from Investment Operations:
Net investment income 0.0414
Less Distributions:
Dividends from net investment income (0.0414)
--------
Net asset value at end of period $ 1.00
========
Total Return:
Based on net asset value per share 4.22%
Ratios to Average Daily Net Assets:
Expenses 1.38%
Net investment income 4.14%
Supplemental Data:
Net assets at end of period $227,098
Number of shares outstanding at end of period 227,098
- ---------
(1) Commencement of operations.
(2) Annualized.
34
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS B (continued)
- --------------------------------------------------------------------------------
April 3, 1995(1)
through
March 31,
----------------
1996
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
-------
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 =======
3.69%(2)
Total Return:
Based on net asset value per share 1.38%(2)
Ratios to Average Daily Net Assets: 4.30%(2)
Expenses
Net investment income $10,200
Supplemental Data: 10,200
Net assets at end of period
Number of shares outstanding at end of period
See Notes to Financial Statements.
35
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
ALEX. BROWN CASH RESERVE PRIME INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
Year ended
March 31,
----------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
--------
Income from Investment Operations:
Net investment income 0.0503
Less Distributions:
Dividends from net investment income (0.0503)
--------
Net asset value at end of year $ 1.00
========
Total Return:
Based on net asset value per share 5.15%
Ratios to Average Daily Net Assets:
Expenses 0.38%
Net investment income 5.04%
Supplemental Data:
Net assets at end of year $117,812,047
Number of shares outstanding at end of year 117,811,768
36
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
ALEX. BROWN CASH RESERVE PRIME INSTITUTIONAL SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
- ------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations: ----------- ----------- ----------- -----------
Net investment income 0.0548 0.0472 0.0294 0.0327
Less Distributions:
Dividends from net investment income (0.0548) (0.0472) (0.0294) (0.0327)
Net asset value at end of year ----------- ----------- ----------- -----------
$ 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%
Ratios to Average Daily Net Assets:
Expenses 0.35% 0.36% 0.30% 0.31%
Net investment income 5.32% 4.57% 2.94% 3.24%
Supplemental Data:
Net assets at end of year $53,699,315 $11,904,716 $23,437,449 $28,884,078
Number of shares outstanding at end of year 53,699,535 11,904,663 23,437,512 28,884,132
</TABLE>
See Notes to Financial Statements.
37
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
QUALITY CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Year ended
March 31,
---------
1997
Per Share Operating Performance:
Net asset value at beginning of year .............. $ 1.00
------------
Income from Investment Operations:
Net investment income ............................. 0.0449
Less Distributions:
Dividends from net investment income .............. (0.0449)
------------
Net asset value at end of year .................... $ 1.00
============
Total Return:
Based on net asset value per share ................ 4.59%
Ratios to Average Daily Net Assets:
Expenses .......................................... 0.91%(1)
Net investment income ............................. 4.50%(2)
Supplemental Data:
Net assets at end of year ......................... $197,370,530
Number of shares outstanding at end of year ....... 197,369,848
- ------------
(1) Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.98% and 0.95% for the years ended March 31, 1997 and 1996,
respectively.
(2) Ratio of net investment income to average daily net assets prior to partial
fee waivers was 4.43% and 4.86% for the years ended March 31, 1997 and
1996, respectively.
38
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
QUALITY CASH RESERVE PRIME SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
--------------------------------------------------------------------
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ----------- ----------- ------------
Income from Investment Operations:
Net investment income ........................ 0.0493 0.0402 0.0218 0.0253
Less Distributions:
Dividends from net investment income ......... (0.0493) (0.0402) (0.0218) (0.0253)
------------ ----------- ----------- ------------
Net asset value at end of year ............... $ 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%
Ratios to Average Daily Net Assets:
Expenses ..................................... 0.90%(1) 0.96% 1.06% 1.04%
Net investment income ........................ 4.91%(2) 4.04% 2.18% 2.53%
Supplemental Data:
Net assets at end of year .................... $156,412,213 $94,592,158 $92,678,440 $101,321,868
Number of shares outstanding at end of year... $156,412,393 $94,591,979 $92,678,268 $101,321,668
</TABLE>
See Notes to Financial Statements
39
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
ALEX. BROWN CASH RESERVE TREASURY SHARES
- --------------------------------------------------------------------------------
Year ended
March 31,
------------
1997
Per Share Operating Performance:
Net asset value at beginning of year ......... $ 1.00
------------
Income from Investment Operations:
Net investment income ........................ 0.0453
Less Distributions:
Dividends from net investment income ......... (0.0453)
------------
Net asset value at end of year ............... $ 1.00
============
Total Return:
Based on net asset value per share ........... 4.63%
Ratios to Average Daily Net Assets:
Expenses ..................................... 0.61%
Net investment income ........................ 4.54%
Supplemental Data:
Net assets at end of year .................... $678,444,803
Number of shares outstanding at end of year... 678,391,386
- ------------
(1) Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.56% for each of the years ended March 31, 1995, 1994 and 1993,
respectively.
(2) Ratio of net investment income to average daily net assets prior to partial
fee waivers was 4.08%, 2.53% and 2.86% for the years ended March 31, 1995,
1994 and 1993, respectively.
40
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
ALEX. BROWN CASH RESERVE TREASURY SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
- ------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of year ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------ ------------
Income from Investment Operations:
Net investment income ...................... 0.0494 0.0411 0.0255 0.0285
Less Distributions:
Dividends from net investment income ...... (0.0494) (0.0411) (0.0255) (0.0285)
------------ ------------ ------------ ------------
Net asset value at end of year ............ $ 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%
Ratios to Average Daily Net Assets:
Expenses .................................. 0.58% 0.55%(1) 0.54%(1) 0.55%(1)
Net investment income ..................... 4.94% 4.09%(2) 2.55%(2) 2.87%(2)
Supplemental Data:
Net assets at end of year ................. $666,814,158 $512,167,212 $581,724,214 $618,175,839
Number of shares outstanding at end of year 666,762,028 512,162,864 581,723,448 618,152,465
</TABLE>
See Notes to Financial Statements.
41
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
ALEX. BROWN CASH RESERVE TREASURY INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
Year ended
March 31,
------------
1997
Per Share Operating Performance:
Net asset value at beginning of year ...... $ 1.00
-----------
Income from Investment Operations:
Net investment income ..................... 0.0481
Less Distributions:
Dividends from net investment income ...... (0.0481)
-----------
Net asset value at end of year ............ $ 1.00
===========
Total Return:
Based on net asset value per share ........ 4.92%
Ratios to Average Daily Net Assets:
Expenses .................................. 0.36%
Net investment income ..................... 4.81%
Supplemental Data:
Net assets at end of year ................. $61,208,770
Number of shares outstanding at end of year 61,199,345
- ------------
(1) 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.
(2) 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.
42
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
ALEX. BROWN CASH RESERVE TREASURY INSTITUTIONAL SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
--------------------------------------------------------------------
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of year ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income ..................... 0.0523 0.0438 0.0282 0.0314
Less Distributions:
Dividends from net investment income ...... (0.0523) (0.0438) (0.0282) (0.0314)
----------- ----------- ----------- -----------
Net asset value at end of year ............ $ 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%
Ratios to Average Daily Net Assets:
Expenses .................................. 0.33% 0.30%(1) 0.27%(1) 0.26%(1)
Net investment income ..................... 5.12% 4.15%(2) 2.82%(2) 3.16%(2)
Supplemental Data:
Net assets at end of year ................. $51,822,757 $14,051,995 $39,692,848 $60,146,987
Number of shares outstanding at end of year 51,813,226 14,046,467 39,688,259 60,140,874
</TABLE>
See Notes to Financial Statements.
43
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
ALEX. BROWN CASH RESERVE TAX-FREE SERIES
- --------------------------------------------------------------------------------
Year ended
March 31,
-------------
1997
Per Share Operating Performance:
Net asset value at beginning of year ...... $ 1.00
------------
Income from Investment Operations:
Net investment income ..................... 0.0286
Less Distributions:
Dividends from net investment income ...... (0.0286)
------------
Net asset value at end of year ............ $ 1.00
============
Total Return:
Based on net asset value per share ........ 2.90%
Ratios to Average Daily Net Assets:
Expenses .................................. 0.62%
Net investment income ..................... 2.86%
Supplemental Data:
Net assets at end of year ................. $647,212,025
Number of shares outstanding at end of year 647,283,274
44
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
ALEX. BROWN CASH RESERVE TAX-FREE SERIES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
----------------------------------------------------------------
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of year ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------ ------------
Income from Investment Operations:
Net investment income ..................... 0.0318 0.0271 0.0184 0.0213
Less Distributions:
Dividends from net investment income ...... (0.0318) (0.0271) (0.0184) (0.0213)
------------ ------------ ------------ ------------
Net asset value at end of year ............ $ 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%
Ratios to Average Daily Net Assets:
Expenses .................................. 0.60% 0.57% 0.58% 0.60%
Net investment income ..................... 3.16% 2.74% 1.84% 2.13%
Supplemental Data:
Net assets at end of year ................. $571,507,000 $475,384,229 $378,859,232 $315,661,447
Number of shares outstanding at end of year 571,593,265 475,474,913 378,939,262 315,700,742
</TABLE>
See Notes to Financial Statements.
45
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements
NOTE 1--Significant Accounting Policies
Alex. Brown Cash Reserve Fund, Inc. ("the Fund") commenced operations
August 11, 1981. The Fund is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end Investment Management Company. Its
objective is to seek as high a level of current income as is consistent with
preservation of capital and liquidity.
The Fund consists of three portfolios: the Prime Series, the Treasury
Series and the Tax-Free Series. The Prime Series consists of five classes: 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
consists of two classes: Alex. Brown Cash Reserve Treasury Shares ("Treasury
Shares") and Alex. Brown Cash Reserve Treasury Institutional Shares ("Treasury
Institutional Shares"). The Tax-Free Series consists of one class: Alex. Brown
Cash Reserve Tax-Free Series ("Tax-Free Series"). Shareholders can vote only on
issues that affect the share classes they own.
When preparing the Fund's financial statements, management makes estimates
and assumptions to comply with generally accepted accounting principles. These
estimates affect 1) the assets and liabilities that we report at the date of the
financial statements; 2) the contingent assets and liabilities that we disclose
at the date of the financial statements; and 3) the revenues and expenses that
we report for the period. Our estimates could be different from the actual
results. The Fund's significant accounting policies are:
A. Security Valuation--Each portfolio has a weighted average maturity of
90 days or less. The Fund values portfolio securities on the basis of
amortized cost, which approximates market value. Using this method,
the Fund values a security at its cost when it is purchased. The Fund
then assumes a constant amortization to maturity of any discount or
premium.
B. Repurchase Agreements--The Prime Series may enter into tri-party
repurchase agreements with broker-dealers and domestic banks. A
repurchase agreement is a short-term investment in which the Fund buys
a debt security that the broker agrees to repurchase at a set time and
price. The third party, which is the broker's custodial bank, holds
the collateral in a separate account until the repurchase agreement
matures. The agreement ensures that the collateral's market value,
including any accrued interest, is sufficient if the broker defaults.
The Fund's access to the collateral may be delayed or limited if the
broker defaults and the value of the collateral declines or if the
broker enters into an insolvency proceeding.
C. Federal Income Taxes--The Fund determines its distributions according
to income tax regulations, which may be different from generally
accepted ac-
46
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 1--concluded
counting principles. As a result, the Fund occasionally makes
reclassifications within its capital accounts to reflect income and
gains that are available for distribution under income tax
regulations.
The Fund is organized as a regulated investment company. As long
as it maintains this status and distributes to its shareholders
substantially all of its taxable net investment income and net
realized capital gains, it will be exempt from most, if not all,
federal income and excise taxes. As a result, the Fund has made no
provisions for federal income taxes. Each portfolio is treated as a
separate entity for federal income tax purposes.
The Tax-Free Series and Prime Series each have a capital loss
carryforward of $72,632 and $1,520, respectively, that may be carried
forward to offset any capital gains if necessary. These capital loss
carryforwards begin to expire in the years 2000 and 2005,
respectively, if not used.
D. Security Transactions, Investment Income and Distributions--The Fund
uses the trade date to account for security transactions and the
specific identification method for financial reporting and income tax
purposes to determine the cost of investments sold or redeemed.
Interest income is recorded on an accrual basis and includes the pro
rata amortization of premiums and accretion of discounts when
appropriate. Dividends to shareholders are declared daily. Dividend
distributions or reinvestments are made monthly.
E. Expenses--Operating expenses for each share class are charged to that
class' operations. If a Fund expense cannot be directly attributed to
a share class, the expense is prorated among the classes that the
expense affects and is based on the classes' relative net assets.
NOTE 2--Investment Advisory Fees, Transactions with Affiliates and Other Fees
Investment Company Capital Corp. ("ICC"), a subsidiary of Alex. Brown
Financial Corp., is the investment advisor for all series. Under the terms of
the investment advisory agreement, the Fund pays ICC a fee. This fee is
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 the amount over $3.5 billion.
The Prime Series pays an additional fee that is calculated daily and paid
monthly at the annual rate of .02% of its average daily net assets. The Tax-Free
Series also pays an additional fee that is calculated daily and paid monthly at
the annual rate of .03% of its average daily net assets. Prior to August 23,
1995, the Fund paid ICC a different fee. This fee was 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 the amount over $1.5 billion.
47
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2--continued
PNC Institutional Management Corporation ("PIMC") is the sub-advisor for
the Tax-Free Series. As compensation for its subadvisory services, ICC pays PIMC
a fee. This fee is 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
the amount over $4 billion. For the year ended March 31, 1997, ICC paid PIMC
$665,664 for sub-advisory services for the Tax-Free Series.
As compensation for its accounting services, the Prime Series and Treasury
Series pay ICC an annual fee that is calculated daily and paid monthly from the
two series' average daily net assets. The Prime Series paid $157,854 and the
Treasury Series paid $126,264 to ICC for accounting services for the year ended
March 31, 1997.
As compensation for its accounting services, the Tax-Free Series pays PFPC
Inc. ("PFPC"), an affiliate of PIMC, an annual fee that is calculated daily and
paid monthly from its average daily net assets. The Tax-Free Series paid $63,954
to PFPC for accounting services for the year ended March 31, 1997.
As compensation for its transfer agent services, the three series pay ICC a
per account fee that is calculated and paid monthly. The Prime Series paid
$1,686,323, the Treasury Series paid $242,470 and the Tax-Free Series paid
$163,383 to ICC for transfer agent services for the year ended March 31, 1997.
As compensation for providing distribution services, the Prime Shares, Flag
Investors Class A Shares, Treasury Shares and the Tax-Free Series pay Alex.
Brown & Sons Incorporated ("Alex. Brown") an annual fee equal to 0.25% of these
classes' average daily net assets. Alex. Brown was paid $6,275,671, $15,461,
$1,681,411 and $1,479,581 for distribution services for the Prime Shares, Flag
Investors Class AShares, Treasury Shares and Tax-Free Series, respectively. The
Quality Cash Shares and Flag Investors Class B Shares also pay Alex. Brown an
annual fee for distribution services. This fee is equal to .60% of the Quality
Cash Shares' aggregate average daily net assets or $1,106,876 and 1.00% of the
Flag Investors Class B Shares' aggregate average daily net assets or $307.
ICC and Alex. Brown may voluntarily waive or reimburse a portion of their
advisory or distribution fees for the Prime, Treasury and Tax-Free Series to
preserve or enhance each series' performance. If ICC decides to waive part of
its fee, PIMC will waive the same proportion of its fee for the same time
periods. These voluntary waivers and reimbursements are not contractual and
could change. Any reimbursements by ICC, Alex. Brown or PIMC are limited to the
fees they actually received for the fiscal year. ICC and PIMC did not waive any
advisory fees for the year ended March 31, 1997. Alex. Brown voluntarily waived
distribution fees of $120,055 for the Quality Cash Shares for the year ended
March 31, 1997.
The Fund's complex offers a retirement plan for eligible Directors. The
actuarially computed pension expense allocated to the Fund for the year ended
March 31,
48
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2--concluded
1997 was $21,193 for the Prime Series, $5,903 for the Treasury Series and
$20,585 for the Tax-Free Series. The accrued liability at March 31, 1997 was
$178,614 for the Prime Series, $67,119 for the Treasury Series and $68,031 for
the Tax-Free Series.
NOTE 3--Capital Stock and Share Information
The Fund is authorized to issue up to 6.4 billion shares of $.001 par value
capital stock (3.55 billion Prime Series, 1.5 billion Treasury Series, 1 billion
Tax-Free Series and 350 million undesignated). Transactions in shares of the
Fund were as follows:
March 31, 1997 March 31, 1996
-------------- --------------
Prime Series:
Sold:
Prime Shares ..................... 22,263,288,298 19,439,463,533
Flag Investors Class A Shares .... 9,331,912 12,118,053
Flag Investors Class B Shares .... 328,144 24,535
Prime Institutional Shares ....... 912,825,877 213,159,539
Quality Cash Shares .............. 1,001,597,821 1,285,040,597
Issued as reinvestment of dividends:
Prime Shares ..................... 113,931,978 93,103,137
Flag Investors Class A Shares .... 281,420 374,561
Flag Investors Class B Shares .... 1,264 --
Prime Institutional Shares ....... 3,084,567 753,855
Quality Cash Shares .............. 8,045,624 6,300,386
Redeemed:
Prime Shares ..................... (22,218,380,783) (18,617,959,766)
Flag Investors Class A Shares .... (9,068,618) (14,242,488)
Flag Investors Class B Shares .... (112,510) (14,335)
Prime Institutional Shares ....... (851,798,212) (172,118,522)
Quality Cash Shares .............. (968,685,990) (1,229,520,569)
--------------- ---------------
Net increase ................... 264,670,792 1,016,482,516
=============== ===============
Treasury Series:
Sold:
Treasury Shares .................. 4,075,840,415 4,043,423,430
Treasury Institutional Shares .... 458,391,680 396,793,576
Issued as reinvestment of dividends:
Treasury Shares .................. 29,377,891 28,890,267
Treasury Institutional Shares .... 1,597,049 417,316
Redeemed:
Treasury Shares .................. (4,093,588,948) (3,917,714,533)
Treasury Institutional Shares .... (450,602,609) (359,444,133)
-------------- --------------
Net increase ................... 21,015,478 192,365,923
============== ==============
Tax-Free Series:
Sold ............................... 5,222,168,283 4,817,984,787
Issued as reinvestment of dividends 16,162,636 16,116,851
Redeemed ........................... (5,162,640,910) (4,737,983,286)
-------------- --------------
Net increase ................... 75,690,009 96,118,352
============== ==============
49
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
NOTE 4--Net Assets
On March 31, 1997, net assets consisted of:
Prime Treasury Tax-Free
Series Series Series
-------------- ------------ ------------
Paid-in capital $2,867,456,646 $739,586,543 $647,284,657
Undistributed net realized
gain/(loss) on sales of
investments 6,968 67,030 (72,632)
-------------- ------------ ------------
$2,867,463,614 $739,653,573 $647,212,025
============== ============ ============
NOTE 5--Merger Agreement
On April 6, 1997, Bankers Trust New York Corporation and Alex. Brown
Incorporated announced that they had signed a definitive agreement to merge. The
merger, which is expected to be completed by the fourth quarter of 1997, is
subject to customary closing conditions, including certain regulatory and
shareholder approvals.
- --------------------------------------------------------------------------------
IMPORTANT INCOME TAX INFORMATION
Tax-Free Series
---------------
One hundred percent of the dividends paid by the Tax-Free Series of Alex. Brown
Cash Reserve Fund, Inc. for the fiscal year ended March 31, 1997 qualified as
exempt-interest dividends for federal income tax purposes.
Treasury Series
---------------
One hundred percent of the dividends paid by the Treasury Series of Alex. Brown
Cash Reserve Fund, Inc. for the fiscal year ended March 31, 1997 were derived
from interest on investments in direct obligations of the U.S. Treasury.
Currently, most states allow the percentage of dividend income attributable to
federal obligations to be exempt from state income tax. We recommend that you
consult your tax advisor to determine if any portion of the dividends you
received are exempt from state income tax.
- --------------------------------------------------------------------------------
50
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
Alex. Brown Cash Reserve Fund, Inc.
We have audited the accompanying statements of net assets of Alex. Brown
Cash Reserve Fund, Inc. (consisting of the Prime, Treasury and Tax-Free Series)
as of March 31, 1997, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the four years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the year ended March 31, 1993 were audited
by other auditors whose report dated May 7, 1993, expressed an unqualified
opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
March 31, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective Series comprising the Alex. Brown Cash Reserve Fund, Inc.
as of March 31, 1997, and the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended and their financial highlights for each of the four years in the
period then ended, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Philadelphia, Pennsylvania
May 2, 1997
51
<PAGE>
Board of Directors
- --------------------------------------------------------------------------------
CHARLES W. COLE, JR.
Chairman
JAMES J. CUNNANE EUGENE J. McDONALD
Director Director
RICHARD T. HALE REBECCA W. RIMEL
Director Director
JOHN F. KROEGER TRUMAN T. SEMANS
Director Director
LOUIS E. LEVY CARL W. VOGT, Esq.
Director Director
Officers
- --------------------------------------------------------------------------------
RICHARD T. HALE PAUL D. CORBIN JOSEPH A. FINELLI
President Vice President Treasurer
EDWARD J. VEILLEUX MONICA M. HAUSNER LAURIE D. COLLIDGE
Executive Vice President Vice President Assistant Secretary
M. ELLIOTT RANDOLPH, JR. SCOTT J. LIOTTA
Vice President Vice President and Secretary
- --------------------------------------------------------------------------------
Distributor Custodian
ALEX. BROWN & SONS PNC BANK, N.A.
INCORPORATED 17th and Chestnut Streets
One South Street Philadelphia, PA 19101
Baltimore, MD 21202
(410) 727-1700 Transfer Agent
INVESTMENT COMPANY CAPITAL CORP.
Investment Advisor One South Street
INVESTMENT COMPANY CAPITAL CORP. Baltimore, MD 21202
One South Street (800) 553-8080
Baltimore, MD 21202
Auditors
Sub-Advisor COOPERS & LYBRAND L.L.P.
(Tax-Free Series) 2400 Eleven Penn Center
PNC INSTITUTIONAL Philadelphia, PA 19103
MANAGEMENT CORPORATION
103 Bellevue Parkway
Wilmington, DE 19809
- --------------------------------------------------------------------------------
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.
52
<PAGE>
[ALEX. BROWN LOGO]
ALEX. BROWN
AMERICA'S OLDEST INVESTMENT BANKING FIRM
ESTABLISHED 1800
BALTIMORE, MD 21202
One South Street
(410) 727-1700
================================================================================
ANNAPOLIS, MD 21403 NEW YORK, NY 10104
410 Severn Avenue, Suite 202-204 1290 Avenue of the Americas,
(410) 268-4040 10th Floor
(212) 237-2000
ATLANTA, GA 30305
One Piedmont Center, Suite 400 PHILADELPHIA, PA 19103
3565 Piedmont Road, N.E. 1635 Market Street, 17th Floor
(404) 261-1000 (215) 563-2300
BOSTON, MA 02110 RICHMOND, VA 23219
101 Federal Street, 15th Floor 100 Shockoe Slip
(617) 737-8181 (804) 644-8000
CHICAGO, IL 60606 SAN FRANCISCO, CA 94111
The USGBuilding, Suite 1900 101 California Street, 46th Floor
222 West Adams Street (415) 544-2800
(312) 424-6000
TOKYO 105, JAPAN
DALLAS, TX 75201 Shiroyama Jt. Mori Building
200 Crescent Court, Suite 500 12F, 4-3-1 Toranomon,
(214) 740-7700 Minato-Ku, Tokyo 105
011-813-5401-2270
FISHKILL, NY 12524
300 Westage Bus. Ctr., Suite 310 TOWSON, MD 21204
(914) 897-4900 210 W. Pennsylvania Ave., Ste. 260
(410) 825-8600
GENEVA, SWITZERLAND (1204)
7, Rue du Rhone, 1st Floor WASHINGTON, DC 20005
011-41-22-312-4000 500 The Washington Building
1440 New York Ave., N.W.
GREENWICH, CT 06830 (202) 626-7000
One Pickwick Plaza
(203) 869-5555 WEST PALM BEACH, FL 33401
The Esperante Building
JACKSONVILLE, FL 32202 222 Lakeview Avenue, Suite 1200
200 West Forsyth Street, Suite 1520 (561) 832-4488
(904) 355-0643
WILMINGTON, DE 19801
LONDON, ENGLAND EC2N 2HE 1201 Market Street, Suite 1001
Austin Friars House (302) 656-8111
2-6 Austin Friars, 2nd Floor
011-44-171-786-7410 WINSTON-SALEM, NC 27101
200 West Second Street, Suite 500
LOS ANGELES, CA 90017 (910) 724-6921
601 South Figueroa St., Suite 3650
(213) 892-0500
- ------------
Information may be obtained and shares may be purchased through any of the
offices listed above.
<PAGE>
ALEX. BROWN CASH RESERVE FUND, INC. ----------------
P.O. Box 1346 BULK RATE
Baltimore, MD 21203 U.S. Postage
PAID
Richmond, VA
Permit No. 930
----------------
<PAGE>
Quality
Cash Reserve
Prime Shares
Annual Report
March 31, 1997
<PAGE>
Fund Features
- --------------------------------------------------------------------------------
o Daily Dividends
The Fund declares dividends daily and distributes them monthly in the form of
additional shares.
o 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.
o 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.
o 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 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.
o Minimum Investment
The minimum initial investment is $1,500. Subsequent investments may be made
in an amount of $100 or more.
o Current Yield Information Available
For current yield information, call (410) 895-5995.
This report is prepared for the general information of shareholders of
Quality Cash Reserve Prime Shares. It may be distributed only to current
shareholders or to persons who have received a current prospectus.
<PAGE>
Letter to Shareholders
- --------------------------------------------------------------------------------
May 5, 1997
We are pleased to report on the progress of your Fund for the fiscal year
ended March 31, 1997.
YEAR IN REVIEW
The Dow Jones Industrial Average climbed to 7000, and unemployment claims
remained relatively low during the fiscal year. However, in the latter part of
1996 and the beginning of 1997, there was increasing concern that inflation and
wage pressures would soon surface, forcing higher interest rates and eventually
a downturn in the U.S. economy. After having taken "no action" for several
meetings, the Federal Reserve Board decided at its March 25 meeting to increase
the Fed Funds Rate 25 basis points (0.25%) to 5.50%. The increase initially
precipitated a decline in the Dow Jones Industrial Average from its high of
7085.16 on March 11, 1997 to a low of 6391.69 on April 11, 1997. However, the
market has begun to move back up since then as several companies have released
better-than-expected earnings reports, indicating wage pressures have not yet
affected the bottom line, and other economic indicators continue to show very
little increase in inflationary pressures.
The rate increase did help spur the yield on the 30-year bond to a high of
almost 7.20% after it had been as low as 6.35% at the end of November 1996. The
3-month Treasury bill yield continued to trade in the 5.00% to 5.40% range for
most of the Fund's fiscal year.
Historical Yield Chart
(For the year ended March 31, 1997)
[Graph appears here--see plot points below]
Quality Cash Reserve
Prime Shares
3/31/96 4.5
4/30/96 4.43
5/31/96 4.45
6/30/96 4.47
7/31/96 4.51
8/31/96 4.53
9/30/96 4.53
10/31/96 4.55
11/30/96 4.54
12/31/96 4.52
1/31/97 4.49
2/28/97 4.45
3/31/97 4.45
1
<PAGE>
Letter to Shareholders (concluded)
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
In keeping with our conservative investment policies, the Fund has
maintained a relatively short weighted average maturity as noted in the chart
below.
- --------------------------------------------------------------------------------
Weighted Average Maturity
(As of March 31, 1997)
- --------------------------------------------------------------------------------
Quality Cash Reserve Prime Shares 45 days
First Tier Money Fund Average 57 days
- --------------------------------------------------------------------------------
Source: IBC/Donoghue, Inc. "Money Fund Report," April 4, 1997.
The Money Fund Average is the average maturity of all funds in the category.
In addition to conservative maturity management, Fund policy requires that
the Fund invest only in the highest quality issues. Evidence of our insistence
on high quality can be found in the Standard & Poor's (S&P) ratings of 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.
Our conservative approach can be seen in every aspect of portfolio
construction. This includes unusually strict limits on exposure to any issue and
a predominance of the very highest rated paper. We have always believed that a
money fund is not a place to take chances or to speculate for additional yield.
MARKET OUTLOOK
The last quarter of 1996 and the first quarter of 1997 saw an unusually
strong economy. Going forward the primary questions will be: Will the economy
subside to its optimum operating level, with strong company earnings, mild
inflation and low unemployment? Or will the Federal Reserve Board have to raise
interest rates to slow the economy, keep inflation in check and prevent the
stock market from becoming too overvalued? If there is another hike, how high
will it be and what will be the resulting outcome?
Going forward the Federal Reserve Board will probably increase rates in the
second or third quarter. While we consider additional rate increases likely, we
believe that global competition, stable commodity prices, a rising dollar and
relatively high real interest rates will preclude a "boom and bust" cycle.
In negotiating these uncertain times, we believe that the conservative
approach we apply to investing on behalf of the Fund will provide comfort to our
shareholders as well as competitive yields.
As always, we appreciate your continued support.
Sincerely,
/s/ Charles W. Cole, Jr. /s/ Richard T. Hale
- ------------------------ -------------------
Charles W. Cole, Jr. Richard T. Hale
Chairman President
2
<PAGE>
Chairman's Letter
- --------------------------------------------------------------------------------
May 5, 1997
The Fund is one of the oldest money market funds in the country. Two
individuals who were present at the Fund's inception, had the vision to see
its appeal and utility and helped preside over its growth retired at the end of
1996.
W. James Price, Chairman of the Fund and Managing Director Emeritus of
Alex. Brown & Sons, Inc., was the individual most responsible for the Fund's
establishment and the formation of the conservative policies that have guided it
ever since. His view (and ours) is that investors who regularly take risks in
their debt and equity investments should have one safe haven: namely, their
money fund. As a result, our investment policies are among the most conservative
for money funds, yet we have been able to generate returns to investors that are
in line with industry averages.
Harry Woolf, an independent Director, also retired from the board at
year-end. He is Professor Emeritus at the Institute for Advanced Studies,
Princeton, New Jersey. His wide-ranging background and knowledge have served
the Fund well.
We thank you, and we will miss you both.
Sincerely,
/s/ Charles W. Cole, Jr.
- ------------------------
Charles W. Cole, Jr.
Chairman
3
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
Rating(a)
-------------- Par
S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper - 81.6%(b)
Automobiles & Trucks - 0.9%
Toyota Motor Credit Corp.
5.23% 5/23/97 A-1+ P-1 $11,000 $ 10,916,901
5.40% 6/17/97 A-1+ P-1 14,000 13,838,300
------------
24,755,201
------------
Bank - 2.6%
Republic New York Corp.
5.27% 4/16/97 A-1+ P-1 20,000 19,956,083
5.30% 4/18/97 A-1+ P-1 30,000 29,924,917
5.34% 7/18/97 A-1+ P-1 25,000 24,599,500
------------
74,480,500
------------
Chemicals, General - 2.3%
E.I. duPont de Nemours and Company
5.28% 5/20/97 A-1+ P-1 25,000 24,820,333
5.26% 5/22/97 A-1+ P-1 25,000 24,813,708
5.24% 8/6/97 A-1+ P-1 18,710 18,364,136
------------
67,998,177
------------
Computer & Office Equipment - 4.2%
Pitney Bowes Credit Corp.
5.30% 4/14/97 A-1+ P-1 15,000 14,971,292
5.23% 4/23/97 A-1+ P-1 15,505 15,455,444
5.28% 5/12/97 A-1+ P-1 10,000 9,939,867
5.36% 7/1/97 A-1+ P-1 30,000 29,593,533
Xerox Corp.
5.28% 5/14/97 A-1 P-1 10,000 9,936,933
Xerox Credit Corp.
5.28% 4/7/97 A-1 P-1 10,000 9,991,200
5.31% 5/14/97 A-1 P-1 30,000 29,809,725
------------
119,697,994
------------
Credit Unions - 2.4%
Mid-States Corporate Federal Credit Union
5.36% 4/16/97 A-1+ P-1 12,900 12,871,190
U.S. Central Credit Union
5.30% 5/9/97 A-1+ P-1 40,000 39,775,958
5.31% 5/12/97 A-1+ P-1 15,000 14,909,288
------------
67,556,436
------------
4
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Rating(a)
-------------- Par
S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper (continued)
Electrical & Electronics - 5.0%
Emerson Electric Co.
5.23% 4/9/97 A-1+ P-1 $30,000 $ 29,965,133
5.24% 4/16/97 A-1+ P-1 40,000 39,912,667
5.23% 4/18/97 A-1+ P-1 39,650 39,552,076
Motorola Inc.
5.23% 4/16/97 A-1+ P-1 20,000 19,956,417
5.21% 5/14/97 A-1+ P-1 15,000 14,906,653
------------
144,292,946
------------
Electric Utility - 3.5%
Duke Power Co.
5.27% 4/11/97 A-1+ P-1 45,000 44,934,125
Northern States Power Co.
5.28% 4/2/97 A-1+ P-1 30,000 29,995,600
5.25% 5/23/97 A-1+ P-1 26,000 25,802,833
------------
100,732,558
------------
Entertainment - 1.2%
Walt Disney Co.
5.21% 11/19/97 A-1 P-1 20,000 19,328,489
5.20% 11/25/97 A-1 P-1 15,000 14,484,333
------------
33,812,822
------------
Finance, Commercial - 0.5%
CIT Group Holdings Inc.
5.23% 5/21/97 A-1 P-1 15,000 14,891,042
------------
Finance, Consumer - 3.4%
USAA Capital Corp.
5.30% 4/4/97 A-1+ P-1 15,000 14,993,375
5.27% 4/16/97 A-1+ P-1 10,000 9,978,042
5.30% 4/17/97 A-1+ P-1 15,000 14,964,667
5.24% 5/2/97 A-1+ P-1 20,000 19,909,756
5.25% 5/15/97 A-1+ P-1 13,500 13,413,375
5.30% 5/23/97 A-1+ P-1 25,000 24,808,610
------------
98,067,825
------------
Finance, Diversified - 3.5%
General Electric Capital Corp.
5.62% 4/25/97 A-1+ P-1 10,100 10,062,159
5.33% 5/23/97 A-1+ P-1 15,000 14,884,083
5.35% 5/23/97 A-1+ P-1 25,665 25,466,975
5.35% 5/30/97 A-1+ P-1 15,000 14,868,479
5.34% 7/2/97 A-1+ P-1 10,000 9,863,533
5
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1997
Rating(a)
-------------- Par
S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper (continued)
Finance, Diversified (concluded)
General Electric Capital Corp. (concluded)
5.31% 7/28/97 A-1+ P-1 $15,000 $ 14,738,925
5.33% 7/31/97 A-1+ P-1 10,000 9,820,853
------------
99,705,007
------------
Food - 11.4%
Campbell Soup Co.
5.30% 4/7/97 A-1+ P-1 15,000 14,986,750
5.29% 4/9/97 A-1+ P-1 15,000 14,982,367
5.25% 4/10/97 A-1+ P-1 25,000 24,967,188
5.35% 6/25/97 A-1+ P-1 15,000 14,810,521
5.37% 7/9/97 A-1+ P-1 25,000 24,630,813
5.25% 8/22/97 A-1+ P-1 15,000 14,687,188
5.42% 10/8/97 A-1+ P-1 10,000 9,713,944
Cargill, Inc.
5.32% 4/7/97 A-1+ P-1 15,000 14,986,700
5.28% 4/8/97 A-1+ P-1 20,000 19,979,467
5.32% 4/18/97 A-1+ P-1 10,000 9,974,878
5.34% 5/16/97 A-1+ P-1 19,200 19,071,840
5.40% 10/7/97 A-1+ P-1 15,000 14,574,750
Heinz (H.J.) Company
5.27% 4/1/97 A-1 P-1 5,000 5,000,000
Hershey Foods
5.27% 4/8/97 A-1+ P-1 18,500 18,481,043
5.25% 4/11/97 A-1+ P-1 20,000 19,970,833
5.25% 4/25/97 A-1+ P-1 50,000 49,825,000
Kellogg Company
5.28% 4/2/97 A-1+ P-1 9,540 9,538,601
5.24% 4/11/97 A-1+ P-1 18,000 17,973,800
5.28% 4/18/97 A-1+ P-1 8,000 7,980,052
------------
326,135,735
------------
Household Products - 2.9%
Clorox Company
5.50% 4/4/97 A-1+ P-1 20,000 19,990,833
5.30% 4/16/97 A-1+ P-1 25,000 24,944,792
5.57% 4/29/97 A-1+ P-1 20,000 19,913,356
Procter & Gamble Co.
5.45% 4/11/97 A-1 P-1 18,000 17,972,750
------------
82,821,731
------------
6
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Rating(a)
-------------- Par
S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper (continued)
Insurance, Property & Casualty - 5.8%
A.I. Credit Corporation
5.28% 6/10/97 A-1+ P-1 $15,000 $ 14,846,000
5.23% 6/20/97 A-1+ P-1 20,000 19,767,556
AIG Funding Inc.
5.27% 4/7/97 A-1+ P-1 23,165 23,144,653
Chubb Capital Corp.
5.24% 4/7/97 A-1+ P-1 30,000 29,973,700
Marsh & McClennan Companies Inc.
5.35% 5/6/97 A-1+ P-1 15,000 14,921,979
5.26% 6/3/97 A-1+ P-1 20,000 19,815,900
5.35% 7/3/97 A-1+ P-1 15,000 14,792,688
5.37% 10/3/97 A-1+ P-1 30,000 29,171,352
------------
166,433,828
------------
Integrated Oil - 1.6%
Amoco Co.
5.20% 4/10/97 A-1+ P-1 20,000 19,974,000
5.32% 6/5/97 A-1+ P-1 25,000 24,759,861
------------
44,733,861
------------
Machinery & Tools - 2.9%
Dover Corporation
5.30% 4/4/97 A-1+ -- 18,500 18,491,829
5.25% 4/7/97 A-1+ -- 28,000 27,975,325
Illinois Tool Works
5.36% 4/29/97 A-1+ P-1 13,000 12,945,804
Snap-On Incorporated
5.55% 5/5/97 A-1+ P-1 25,000 24,868,959
------------
84,281,917
------------
Oil Transportation - 1.9%
Colonial Pipeline
5.25% 5/19/97 A-1+ P-1 12,100 12,015,300
5.35% 6/17/97 A-1+ P-1 7,200 7,117,610
5.32% 8/6/97 A-1+ P-1 17,300 16,975,317
5.32% 8/14/97 A-1+ P-1 10,000 9,800,500
5.28% 8/18/97 A-1+ P-1 10,000 9,796,134
------------
55,704,861
------------
7
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1997
Rating(a)
-------------- Par
S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper (continued)
Paper - 1.2%
Minnesota Mining & Manufacturing Co.
5.26% 4/7/97 A-1+ P-1 $15,000 $ 14,986,850
5.27% 5/7/97 A-1+ P-1 9,000 8,952,570
Weyerhaeuser Co.
5.29% 5/7/97 A-1 P-1 10,000 9,947,101
------------
33,886,521
------------
Pharmaceuticals - 9.1%
Eli Lilly & Co.
5.28% 7/14/97 A-1+ P-1 15,000 14,771,200
5.33% 7/15/97 A-1+ P-1 10,000 9,844,542
Pfizer Inc.
5.27% 4/4/97 A-1+ P-1 37,400 37,383,575
Schering-Plough Corp.
5.26% 4/22/97 A-1+ P-1 7,850 7,825,914
5.27% 4/29/97 A-1+ P-1 26,100 25,992,831
5.27% 5/13/97 A-1+ P-1 26,050 25,889,719
5.22% 5/20/97 A-1+ P-1 15,000 14,893,425
5.30% 6/24/97 A-1+ P-1 14,950 14,765,118
5.31% 7/22/97 A-1+ P-1 15,000 14,752,200
Warner-Lambert Co.
5.31% 4/15/97 A-1+ P-1 13,500 13,472,123
5.30% 4/30/97 A-1+ P-1 16,100 16,031,262
5.34% 5/20/97 A-1+ P-1 20,000 19,854,633
5.29% 5/29/97 A-1+ P-1 15,000 14,872,158
5.20% 6/20/97 A-1+ P-1 15,000 14,826,667
5.22% 8/14/97 A-1+ P-1 15,400 15,098,544
------------
260,273,911
------------
Publishing - 1.2%
Dow Jones & Co., Inc.
5.30% 4/22/97 A-1+ P-1 8,300 8,274,339
Gannett Co., Inc.
5.28% 4/24/97 A-1 P-1 27,000 26,908,920
------------
35,183,259
------------
Structured Finance - 6.8%
CIESCO, L.P.
5.28% 4/11/97 A-1+ P-1 15,000 14,978,000
5.30% 4/21/97 A-1+ P-1 10,000 9,970,556
5.32% 4/22/97 A-1+ P-1 19,850 19,788,399
5.33% 4/25/97 A-1+ P-1 25,000 24,911,167
5.26% 5/8/97 A-1+ P-1 15,000 14,918,908
5.27% 5/14/97 A-1+ P-1 20,000 19,874,106
8
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Rating(a)
-------------- Par
S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper (concluded)
Structured Finance (concluded)
Corporate Asset Funding Company, Inc.
5.32% 4/10/97 A-1+ P-1 $15,000 $ 14,980,050
5.25% 4/16/97 A-1+ P-1 30,000 29,934,375
5.30% 4/22/97 A-1+ P-1 30,000 29,907,250
5.55% 5/13/97 A-1+ P-1 15,000 14,902,874
--------------
194,165,685
--------------
Telephone - 7.3%
Ameritech Capital Funding Corp.
5.33% 4/7/97 A-1+ P-1 15,000 14,986,675
5.28% 4/14/97 A-1+ P-1 25,000 24,952,333
5.31% 4/28/97 A-1+ P-1 15,000 14,940,263
5.30% 5/13/97 A-1+ P-1 20,000 19,876,333
5.54% 6/27/97 A-1+ P-1 20,000 19,732,233
AT&T Corp.
5.37% 8/14/97 A-1+ P-1 20,000 19,597,250
Bell Atlantic Network Funding Corp.
5.65% 4/22/97 A-1+ P-1 9,000 8,970,338
BellSouth Capital Funding Corp.
5.28% 5/6/97 A-1+ P-1 15,000 14,923,000
5.27% 5/12/97 A-1+ P-1 25,000 24,849,951
Southwestern Bell Telephone Co.
5.28% 4/7/97 A-1+ P-1 12,000 11,989,440
5.27% 4/10/97 A-1+ P-1 20,900 20,872,464
5.25% 5/29/97 A-1+ P-1 15,000 14,873,127
--------------
210,563,407
--------------
Total Commercial Paper 2,340,175,224
--------------
Medium-Term Note - 0.7%
E.I. duPont de Nemours and Company
5.59% 10/8/97 A-1+ P-1 9,500 9,497,964
Eli Lilly & Co.
6.20% 11/6/97 A-1+ P-1 10,000 10,023,322
--------------
Total Medium-Term Note 19,521,286
--------------
Variable Rate Note - 4.4%
Associates Corporation Master Note
5.23%c 6/1/97 A-1+ P-1 75,000 75,000,000
Coca-Cola Company Master Note
5.25%c 6/26/97 A-1+ P-1 50,000 50,000,000
--------------
Total Variable Rate Note 125,000,000
--------------
9
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Net Assets (concluded) March 31, 1997
Rating(a)
------------- Par
S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Federal Home Loan Bank - 1.7%
FHLB
5.23% 7/7/97 AAA -- $ 9,500 $ 9,366,127
5.10% 8/13/97 AAA -- 15,000 14,715,250
5.46% 12/12/97 AAA -- 15,000 14,995,972
5.81% 1/23/98 AAA -- 10,000 10,000,000
--------------
Total Federal Home Loan Bank 49,077,349
--------------
Federal National Mortgage Association - 2.7%
FNMA
Discount Note
5.28% 4/8/97 -- P-1 15,000 14,984,600
5.33% 9/5/97 -- P-1 11,710 11,437,804
Note
5.43% 6/19/97 -- P-1 20,000 20,000,000
5.39% 7/17/97 -- P-1 15,000 15,000,000
5.50% 9/11/97 -- P-1 15,000 15,000,000
--------------
Total Federal National Mortgage Association 76,422,404
--------------
Repurchase Agreements - 9.0%(d)
Goldman Sachs
6.47%(e) 4/1/97 -- -- 109,100 109,100,000
Morgan Stanley & Co.
6.25%(f) 4/1/97 -- -- 150,000 150,000,000
--------------
Total Repurchase Agreements 259,100,000
--------------
TOTAL INVESTMENTS - 100.1% 2,869,296,263(g)
LIABILITIES IN EXCESS OF OTHER ASSETS, NET - (0.1%) (1,832,649)
--------------
NET ASSETS - 100.0% $2,867,463,614
==============
10
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption Price Per:
Prime Share
($2,545,532,365 / 2,545,523,885 shares outstanding) $1.00
=====
Flag Investors Class A Share
($6,521,574 / 6,521,538 shares outstanding) $1.00
=====
Flag Investors Class B Share
($227,098 / 227,098 shares outstanding) $1.00
=====
Prime Institutional Share
($117,812,047 / 117,811,768 shares outstanding) $1.00
=====
Quality Cash Reserve Prime Share
($197,370,530 / 197,369,848 shares outstanding) $1.00
=====
- -----------
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P") are not covered by the Independent Accountant's
Report.
(b) Most commercial paper is traded on a discount basis. In such cases, the
interest rate shown represents the rate of discount paid or received at time
of purchase by the Fund.
(c) Master note is payable upon demand by the Fund upon no more than five days'
notice. Interest rates on master notes are redetermined weekly. Rates shown
are the rates in effect on March 31, 1997.
(d) Collateral on repurchase agreements is taken into possession by the broker's
custodial bank upon entering into the repurchase agreement. The collateral
is marked to market daily to insure market value as being as least 102
percent of the resale price of the repurchase agreement.
(e) Dated 3/31/97, to be repurchased on 4/1/97, collateralized by U.S. Treasury
Notes with a market value of $111,282,862.
(f) Dated 3/31/97, to be repurchased on 4/1/97, collateralized by U.S. Treasury
Notes with a market value of $153,006,303.
(g) Aggregate cost for financial reporting and federal tax purposes.
MOODY'S RATINGS:
Aaa Bonds that are judged to be of the best quality.
P-1 Commercial paper bearing this designation is of the best quality.
S&P RATINGS:
AAA 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
For the year ended March 31, 1997
- --------------------------------------------------------------------------------
Investment Income: (Note 1)
Interest income $150,388,078
------------
Expenses:
Distribution fee (Note 2) 7,395,916
Investment advisory fee (Note 2) 7,394,936
Transfer agent fee 1,686,323
Registration fees 312,763
Custodian fee 301,072
Printing & postage fees 214,446
Directors' fees 166,782
Accounting fee (Note 2) 157,854
Legal fees 48,809
Audit fee 34,485
Other expenses 115,181
------------
Total expenses 17,828,567
Less: Fees waived (Note 2) (120,055)
------------
Net expenses 17,708,512
------------
Net investment income 132,679,566
------------
Net realized gain from security transactions 13,047
------------
Net increase in net assets resulting from operations $132,692,613
============
See Notes to Financial Statements.
12
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets March 31, 1997
- --------------------------------------------------------------------------------
Year ended Year ended
March 31, March 31,
1997 1996
---------- ----------
Increase/(Decrease) in Net Assets
Operations:
Net investment income $ 132,679,566 $ 107,454,378
Net realized gain/(loss) on sales of
investments 13,047 (6,050)
------------- --------------
Net increase in net assets resulting
from operations 132,692,613 107,448,328
Distributions to Shareholders From:
Net investment income:
Prime Shares (119,826,842) (99,181,255)
Prime Institutional Shares (4,256,297) (1,334,079)
Flag Investors Class A Shares (295,562) (402,702)
Flag Investors Class B Shares (1,260) (300)
Quality Cash Reserve Prime Shares (8,299,605) (6,536,042)
------------- --------------
Total distributions (132,679,566) (107,454,378)
Capital Share Transactions, net - (Note 3) 264,670,792 1,016,482,516
------------- --------------
Total increase in net assets 264,683,839 1,016,476,466
Net Assets:
Beginning of year 2,602,779,775 1,586,303,309
------------- --------------
End of year $2,867,463,614 $2,602,779,775
============== ==============
See Notes to Financial Statements.
13
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
PRIME SHARES
- --------------------------------------------------------------------------------
Year ended
March 31,
----------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
--------------
Income from Investment Operations:
Net investment income 0.0478
Less Distributions:
Dividends from net investment income (0.0478)
--------------
Net asset value at end of year $ 1.00
==============
Total Return:
Based on net asset value per share 4.88%
Ratios to Average Daily Net Assets:
Expenses 0.63%
Net investment income 4.78%
Supplemental Data:
Net assets at end of year $2,545,532,365
Number of shares outstanding at end of year 2,545,523,885
14
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
PRIME SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
----------------------------------------------------------------------------------
1996 1995 1994 1993
<S><C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------- -------------- -------------- --------------
Income from Investment Operations:
Net investment income 0.0524 0.0442 0.0262 0.0295
Less Distributions:
Dividends from net investment income (0.0524) (0.0442) (0.0262) (0.0295)
-------------- -------------- -------------- --------------
Net asset value at end of year $ 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%
Ratios to Average Daily Net Assets:
Expenses 0.60% 0.61% 0.62% 0.63%
Net investment income 5.21% 4.46% 2.62% 2.95%
Supplemental Data:
Net assets at end of year $2,386,681,216 $1,472,079,739 $1,350,334,979 $1,470,711,552
Number of shares outstanding at end of year 2,386,684,392 1,472,077,488 1,350,332,916 1,470,709,489
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS A
- --------------------------------------------------------------------------------
Year ended
March 31,
----------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
----------
Income from Investment Operations:
Net investment income 0.0478
Less Distributions:
Dividends from net investment income (0.0478)
----------
Net asset value at end of year $ 1.00
==========
Total Return:
Based on net asset value per share 4.88%
Ratios to Average Daily Net Assets:
Expenses 0.63%
Net investment income 4.78%
Supplemental Data:
Net assets at end of year $6,521,574
Number of shares outstanding at end of year 6,521,310
16
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS A (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
----------------------------------------------------------------------------
1996 1995 1994 1993
<S><C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ----------- -----------
Income from Investment Operations:
Net investment income 0.0524 0.0442 0.0262 0.0295
Less Distributions:
Dividends from net investment income (0.0524) (0.0442) (0.0262) (0.0295)
---------- ---------- ----------- -----------
Net asset value at end of year $ 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%
Ratios to Average Daily Net Assets:
Expenses 0.60% 0.61% 0.62% 0.63%
Net investment income 5.25% 4.26% 2.62% 2.95%
Supplemental Data:
Net assets at end of year $5,976,831 $7,726,696 $18,116,648 $10,392,282
Number of shares outstanding at end of year 5,976,824 7,726,698 18,116,633 10,392,267
</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
- --------------------------------------------------------------------------------
Year ended
March 31,
----------
1997
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
--------
Income from Investment Operations:
Net investment income 0.0414
Less Distributions:
Dividends from net investment income (0.0414)
--------
Net asset value at end of period $ 1.00
========
Total Return:
Based on net asset value per share 4.22%
Ratios to Average Daily Net Assets:
Expenses 1.38%
Net investment income 4.14%
Supplemental Data:
Net assets at end of period $227,098
Number of shares outstanding at end of period 227,098
- --------
(1) Commencement of operations.
(2) Annualized.
18
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS B (continued)
- --------------------------------------------------------------------------------
April 3, 1995(1)
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%(2)
Ratios to Average Daily Net Assets:
Expenses 1.38%(2)
Net investment income 4.30%(2)
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 year)
PRIME INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
Year ended
March 31,
----------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
------------
Income from Investment Operations:
Net investment income 0.0503
Less Distributions:
Dividends from net investment income (0.0503)
------------
Net asset value at end of year $ 1.00
============
Total Return:
Based on net asset value per share 5.15%
Ratios to Average Daily Net Assets:
Expenses 0.38%
Net investment income 5.04%
Supplemental Data:
Net assets at end of year $117,812,047
Number of shares outstanding at end of year 117,811,768
20
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
PRIME INSTITUTIONAL SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
-----------------------------------------------------------------------------
1996 1995 1994 1993
<S><C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income 0.0548 0.0472 0.0294 0.0327
Less Distributions:
Dividends from net investment income (0.0548) (0.0472) (0.0294) (0.0327)
----------- ----------- ----------- -----------
Net asset value at end of year $ 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%
Ratios to Average Daily Net Assets:
Expenses 0.35% 0.36% 0.30% 0.31%
Net investment income 5.32% 4.57% 2.94% 3.24%
Supplemental Data:
Net assets at end of year $53,699,315 $11,904,716 $23,437,449 $28,884,078
Number of shares outstanding at end of year 53,699,535 11,904,663 23,437,512 28,884,132
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
QUALITY CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Year ended
March 31,
----------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
------------
Income from Investment Operations:
Net investment income 0.0449
Less Distributions:
Dividends from net investment income (0.0449)
------------
Net asset value at end of year $ 1.00
============
Total Return:
Based on net asset value per share 4.59%
Ratios to Average Daily Net Assets:
Expenses 0.91%(1)
Net investment income 4.50%(2)
Supplemental Data:
Net assets at end of year $197,370,530
Number of shares outstanding at end of year 197,369,848
- -----------
(1) Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.98% and 0.95% for the years ended March 31, 1997 and 1996,
respectively.
(2) Ratio of net investment income to average daily net assets prior to partial
fee waivers was 4.43% and 4.86% for the years ended March 31, 1997 and 1996,
respectively.
22
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
QUALITY CASH RESERVE PRIME SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended March 31,
--------------------------------------------------------------------------------
1996 1995 1994 1993
<S><C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ----------- ----------- ------------
Income from Investment Operations:
Net investment income 0.0493 0.0402 0.0218 0.0253
Less Distributions:
Dividends from net investment income (0.0493) (0.0402) (0.0218) (0.0253)
------------ ----------- ----------- ------------
Net asset value at end of year $ 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%
Ratios to Average Daily Net Assets:
Expenses 0.90%(1) 0.96% 1.06% 1.04%
Net investment income 4.91%(2) 4.04% 2.18% 2.53%
Supplemental Data:
Net assets at end of year $156,412,213 $94,592,158 $92,678,440 $101,321,868
Number of shares outstanding at end of year 156,412,393 94,591,979 92,678,268 101,321,668
</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") commenced operations
August 11, 1981. The Fund is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end Investment Management Company.
Its objective is to seek as high a level of current income as is consistent with
preservation of capital and liquidity.
The Fund consists of three portfolios: the Prime Series, the Treasury
Series and the Tax-Free Series. The Prime Series consists of five classes:
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 consists of two classes: Alex. Brown Cash Reserve Treasury
Shares ("Treasury Shares") and Alex. Brown Cash Reserve Treasury
Institutional Shares ("Treasury Institutional Shares"). The Tax-Free Series
consists of one class: Alex. Brown Cash Reserve Tax-Free Series ("Tax-Free
Series"). Shareholders can vote only on issues that affect the share classes
they own.
When preparing the Fund's financial statements, management makes estimates
and assumptions to comply with generally accepted accounting principles. These
estimates affect 1) the assets and liabilities that we report at the date of the
financial statements; 2) the contingent assets and liabilities that we disclose
at the date of the financial statements; and 3) the revenues and expenses that
we report for the period. Our estimates could be different from the actual
results. The Fund's significant accounting policies are:
A. Security Valuation--Each portfolio has a weighted average maturity of 90
days or less. The Fund values portfolio securities on the basis of
amortized cost, which approximates market value. Using this method,
the Fund values a security at its cost when it is purchased. The Fund
then assumes a constant amortization to maturity of any discount or
premium.
B. Repurchase Agreements--The Prime Series may enter into tri-party
repurchase agreements with broker-dealers and domestic banks. A
repurchase agreement is a short-term investment in which the Fund buys a
debt security that the broker agrees to repurchase at a set time and
price. The third party, which is the broker's custodial bank, holds the
collateral in a separate account until the repurchase agreement
matures. The agreement ensures that the collateral's market value,
including any accrued interest, is sufficient if the broker
defaults. The Fund's access to the collateral may be delayed or
limited if the broker defaults and the value of the collateral declines
or if the broker enters into an insolvency proceeding.
C. Federal Income Taxes--The Fund determines its distributions according to
income tax regulations, which may be different from generally accepted
ac-
24
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 1--concluded
counting principles. As a result, the Fund occasionally makes
reclassifications within its capital accounts to reflect income and
gains that are available for distribution under income tax regulations.
The Fund is organized as a regulated investment company. As long as
it maintains this status and distributes to its shareholders
substantially all of its taxable net investment income and net realized
capital gains, it will be exempt from most, if not all, federal income
and excise taxes. As a result, the Fund has made no provisions for
federal income taxes. Each portfolio is treated as a separate entity for
federal income tax purposes.
The Prime Series has a capital loss carryforward of $1,520 that may
be carried forward to offset any capital gains if necessary. This
capital loss carryforward begins to expire in the year 2005 if not used.
D. Security Transactions, Investment Income and Distributions--The Fund
uses the trade date to account for security transactions and the
specific identification method for financial reporting and income
tax purposes to determine the cost of investments sold or redeemed.
Interest income is recorded on an accrual basis and includes the pro
rata amortization of premiums and accretion of discounts when
appropriate. Dividends to shareholders are declared daily. Dividend
distributions or reinvestments are made monthly.
E. Expenses--Operating expenses for each share class are charged to that
class' operations. If a Fund expense cannot be directly attributed to
a share class, the expense is prorated among the classes that the
expense affects and is based on the classes' relative net assets.
NOTE 2--Investment Advisory Fees, Transactions with Affiliates and Other Fees
Investment Company Capital Corp. ("ICC"), a subsidiary of Alex. Brown
Financial Corp., is the investment advisor for the Prime Series. Under the terms
of the investment advisory agreement, the Fund pays ICC a fee. This fee is
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 the amount over $3.5 billion.
The Prime Series pays an additional fee that is calculated daily and paid
monthly at the annual rate of .02% of its average daily net assets. Prior to
August 23, 1995, the Fund paid ICC a different fee. This fee was 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 the amount over
$1.5 billion.
25
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2--concluded
As compensation for its accounting services, the Prime Series pays ICC an
annual fee that is calculated daily and paid monthly from its average daily net
assets. The Prime Series paid $157,854 to ICC for accounting services for the
year ended March 31, 1997.
As compensation for its transfer agent services, the Prime Series pays ICC
a per account fee that is calculated and paid monthly. The Prime Series paid
$1,686,323 to ICC for transfer agent services for the year ended March 31, 1997.
As compensation for providing distribution services, the Prime Shares and
Flag Investors Class A Shares pay Alex. Brown & Sons Incorporated ("Alex.
Brown") an annual fee equal to 0.25% of these classes' average daily net assets.
Alex. Brown was paid $6,275,671 and $15,461 for distribution services for the
Prime Shares and Flag Investors Class A Shares. The Quality Cash Shares and Flag
Investors Class B Shares also pay Alex. Brown an annual fee for distribution
services. This fee is equal to .60% of the Quality Cash Shares' aggregate
average daily net assets or $1,106,876 and 1.00% of the Flag Investors Class B
Shares' aggregate average daily net assets or $307.
ICC and Alex. Brown may voluntarily waive or reimburse a portion of their
advisory or distribution fees for the Prime Series to preserve or enhance the
series' performance. These voluntary waivers and reimbursements are not
contractual and could change. Any reimbursements by ICC or Alex. Brown are
limited to the fees they actually received for the fiscal year. ICC did not
waive any advisory fees for the year ended March 31, 1997. Alex. Brown
voluntarily waived distribution fees of $120,055 for the Quality Cash Shares for
the year ended March 31, 1997.
The Fund's complex offers a retirement plan for eligible Directors. The
actuarially computed pension expense allocated to the Prime Series for the year
ended March 31, 1997 was $21,193, and the accrued liability on March 31, 1997
was $178,614 for the Prime Series.
26
<PAGE>
Prime Series
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
NOTE 3--Capital Stock and Share Information
The Fund is authorized to issue up to 6.4 billion shares of $.001 par
value capital stock (3.55 billion Prime Series). Transactions in shares of
the Prime Series were as follows:
March 31, 1997 March 31, 1996
-------------- --------------
Prime Series:
Sold:
Prime Shares 22,263,288,298 19,439,463,533
Flag Investors Class A Shares 9,331,912 12,118,053
Flag Investors Class B Shares 328,144 24,535
Prime Institutional Shares 912,825,877 213,159,539
Quality Cash Shares 1,001,597,821 1,285,040,597
Issued as reinvestment of dividends:
Prime Shares 113,931,978 93,103,137
Flag Investors Class A Shares 281,420 374,561
Flag Investors Class B Shares 1,264 --
Prime Institutional Shares 3,084,567 753,855
Quality Cash Shares 8,045,624 6,300,386
Redeemed:
Prime Shares (22,218,380,783) (18,617,959,766)
Flag Investors Class A Shares (9,068,618) (14,242,488)
Flag Investors Class B Shares (112,510) (14,335)
Prime Institutional Shares (851,798,212) (172,118,522)
Quality Cash Shares (968,685,990) (1,229,520,569)
--------------- ---------------
Net increase 264,670,792 1,016,482,516
=============== ===============
NOTE 4--Net Assets
On March 31, 1997, net assets consisted of:
Prime Series
--------------
Paid-in capital $2,867,456,646
Undistributed net realized gain on sales of investments 6,968
--------------
$2,867,463,614
==============
NOTE 5--Merger Agreement
On April 6, 1997, Bankers Trust New York Corporation and Alex. Brown
Incorporated announced that they had signed a definitive agreement to merge.
The merger, which is expected to be completed by the fourth quarter of 1997, is
subject to customary closing conditions, including certain regulatory and
shareholder approvals.
27
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
the Prime Series of Alex. Brown Cash Reserve Fund, Inc.
We have audited the accompanying statements of net assets of the Prime
Series of Alex. Brown Cash Reserve Fund, Inc. as of March 31, 1997, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the four years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights for the year ended March 31, 1993 were audited by other auditors
whose report dated May 7, 1993, expressed an unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
March 31, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Prime Series of Alex. Brown Cash Reserve Fund, Inc. as of March 31, 1997, and
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and its financial
highlights for each of the four years in the period then ended, in conformity
with generally accepted accounting principles.
COOPERS &LYBRAND L.L.P.
Philadelphia, Pennsylvania
May 2, 1997
28
<PAGE>
Board of Directors
- --------------------------------------------------------------------------------
CHARLES W. COLE, JR.
Chairman
JAMES J. CUNNANE EUGENE J. McDONALD
Director Director
RICHARD T. HALE REBECCA W. RIMEL
Director Director
JOHN F. KROEGER TRUMAN T. SEMANS
Director Director
LOUIS E. LEVY CARL W. VOGT, Esq.
Director Director
Officers
- --------------------------------------------------------------------------------
RICHARD T. HALE PAUL D. CORBIN JOSEPH A. FINELLI
President Vice President Treasurer
EDWARD J. VEILLEUX MONICA M. HAUSNER LAURIE D. COLLIDGE
Executive Vice President Vice President Assistant Secretary
M. ELLIOTT RANDOLPH, JR. SCOTT J. LIOTTA
Vice President Vice President and Secretary
- --------------------------------------------------------------------------------
Distributor Custodian
ALEX. BROWN & SONS PNC BANK, N.A.
INCORPORATED 17th and Chestnut Streets
One South Street Philadelphia, PA 19101
Baltimore, MD 21202
(410) 727-1700 Transfer Agent
INVESTMENT COMPANY CAPITAL CORP.
Investment Advisor One South Street
INVESTMENT COMPANY CAPITAL CORP. Baltimore, MD 21202
One South Street (800) 553-8080
Baltimore, MD 21202
Auditors
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
- --------------------------------------------------------------------------------
29
<PAGE>
BULK RATE
Quality Cash Reserve Prime Shares U.S. Postage
P.O. Box 1346 PAID
Baltimore, MD 21203 Baltimore, MD
Permit No. 8614
<PAGE>
[FLAG INVESTORS LOGO]
FLAG INVESTORS
[PHOTOGRAPH APPEARS HERE]
FLAG
INVESTORS
CASH RESERVE
PRIME
SHARES
ANNUAL REPORT
MARCH 31, 1997
<PAGE>
FUND FEATURES
- --------------------------------------------------------------------------------
o Daily Dividends
The Fund declares dividends daily and distributes them monthly in the form of
additional shares.
o 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.
o Minimum Investment
The minimum initial investment is $2,000. Subsequent investments may be made
in an amount of $100 or more.
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
May 5, 1997
We are pleased to report on the progress of your Fund for the fiscal year
ended March 31, 1997.
Year in Review
The Dow Jones Industrial Average climbed to 7000, and unemployment claims
remained relatively low during the fiscal year. However, in the latter part of
1996 and the beginning of 1997, there was increasing concern that inflation and
wage pressures would soon surface, forcing higher interest rates and eventually
a downturn in the U.S. economy. After having taken "no action" for several
meetings, the Federal Reserve Board decided at its March 25 meeting to increase
the Fed Funds Rate 25 basis points (0.25%) to 5.50%. The increase initially
precipitated a decline in the Dow Jones Industrial Average from its high of
7085.16 on March 11, 1997 to a low of 6391.69 on April 11, 1997. However, the
market has begun to move back up since then as several companies have released
better-than-expected earnings reports, indicating wage pressures have not yet
affected the bottom line, and other economic indicators continue to show very
little increase in inflationary pressures.
The rate increase did help spur the yield on the 30-year bond to a high of
almost 7.20% after it had been as low as 6.35% at the end of November 1996. The
3-month Treasury bill yield continued to trade in the 5.00% to 5.40% range for
most of the Fund's fiscal year.
Historical Yield Chart
(For the year ended March 31, 1997)
[Graph appears here--see plot points below]
Flag Investors
Cash Reserve
Prime Shares
3/31/96 4.73
4/30/96 4.71
5/31/96 4.73
6/30/96 4.75
7/31/96 4.8
8/31/96 4.82
9/30/96 4.82
10/31/96 4.83
11/30/96 4.83
12/31/96 4.81
1/31/97 4.77
2/28/97 4.74
3/31/97 4.74
1
<PAGE>
LETTER TO SHAREHOLDERS (CONCLUDED)
- --------------------------------------------------------------------------------
Portfolio Quality
In keeping with our conservative investment policies, the Fund has
maintained a relatively short weighted average maturity as noted in the chart
below.
Weighted Average Maturity
As of March 31, 1997
- --------------------------------------------------------------------------------
Flag Investors Cash Reserve Prime Shares--Class A 45 days
- --------------------------------------------------------------------------------
First Tier Money Fund Average 57 days
- --------------------------------------------------------------------------------
- ------------
Source: IBC/Donoghue, Inc. "Money Fund Report," April 4, 1997.
The Money Fund Average is the average maturity of all funds in the category.
In addition to conservative maturity management, Fund policy requires that
the Fund invest only in the highest quality issues. Evidence of our insistence
on high quality can be found in the Standard & Poor's (S&P) ratings of 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.
Our conservative approach can be seen in every aspect of portfolio
construction. This includes unusually strict limits on exposure to any issue and
a predominance of the very highest rated paper. We have always believed that a
money fund is not a place to take chances or to speculate for additional yield.
Investment Results
While maintaining unusually strict investment standards, we are pleased to
have generated a competitive return for the Fund as assets grew to new highs.
Performance Comparisons
For the year ended March 31, 1997
- --------------------------------------------------------------------------------
Flag Investors Cash Reserve Prime Shares--Class A 4.88%
- --------------------------------------------------------------------------------
First Tier Money Fund Average 4.84%
- --------------------------------------------------------------------------------
- ------------
Source: IBC/Donoghue, Inc. "Money Market Insight," April 1997.
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 the Fund will be able to
maintain a stable net asset value of $1.00 per share. The Money Fund Average is
the average yield of all funds in the category.
2
<PAGE>
- --------------------------------------------------------------------------------
Market Outlook
The last quarter of 1996 and the first quarter of 1997 saw an unusually
strong economy. Going forward the primary questions will be: Will the economy
subside to its optimum operating level, with strong company earnings, mild
inflation and low unemployment? Or will the Federal Reserve Board have to raise
interest rates to slow the economy, keep inflation in check and prevent the
stock market from becoming too overvalued? If there is another hike, how high
will it be and what will be the resulting outcome?
Going forward the Federal Reserve Board will probably increase rates in the
second or third quarter. While we consider additional rate increases likely, we
believe that global competition, stable commodity prices, a rising dollar and
relatively high real interest rates will preclude a "boom and bust" cycle.
In negotiating these uncertain times, we believe that the conservative
approach we apply to investing on behalf of the Fund will provide comfort to our
shareholders as well as competitive yields.
As always, we appreciate your continued support.
Sincerely,
/s/ Charles W. Cole, Jr. /s/ Richard T. Hale
- ------------------------ -------------------
Charles W. Cole, Jr. Richard T. Hale
Chairman President
3
<PAGE>
CHAIRMAN'S LETTER
- --------------------------------------------------------------------------------
May 5, 1997
The Fund is one of the oldest money market funds in the country. Two
individuals who were present at the Fund's inception, had the vision to see its
appeal and utility and helped preside over its growth retired at the end of
1996.
W. James Price, Chairman of the Fund and Managing Director Emeritus of
Alex. Brown & Sons, Inc., was the individual most responsible for the Fund's
establishment and the formation of the conservative policies that have guided it
ever since. His view (and ours) is that investors who regularly take risks in
their debt and equity investments should have one safe haven: namely, their
money fund. As a result, our investment policies are among the most conservative
for money funds, yet we have been able to generate returns to investors that are
in line with industry averages.
Harry Woolf, an independent Director, also retired from the board at
year-end. He is Professor Emeritus at the Institute for Advanced Studies,
Princeton, New Jersey. His wide-ranging background and knowledge have served the
Fund well.
We thank you, and we will miss you both.
Sincerely,
/s/ Charles W. Cole, Jr.
- ------------------------
Charles W. Cole, Jr.
Chairman
4
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1997
Rating(a)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- 81.6%(b)
Automobiles & Trucks - 0.9%
Toyota Motor Credit Corp.
5.23% 5/23/97 A-1+ P-1 $11,000 $ 10,916,901
5.40% 6/17/97 A-1+ P-1 14,000 13,838,300
------------
24,755,201
------------
Bank - 2.6%
Republic New York Corp.
5.27% 4/16/97 A-1+ P-1 20,000 19,956,083
5.30% 4/18/97 A-1+ P-1 30,000 29,924,917
5.34% 7/18/97 A-1+ P-1 25,000 24,599,500
------------
74,480,500
------------
Chemicals, General - 2.3%
E.I. duPont de Nemours and Company
5.28% 5/20/97 A-1+ P-1 25,000 24,820,333
5.26% 5/22/97 A-1+ P-1 25,000 24,813,708
5.24% 8/6/97 A-1+ P-1 18,710 18,364,136
------------
67,998,177
------------
Computer & Office Equipment - 4.2%
Pitney Bowes Credit Corp.
5.30% 4/14/97 A-1+ P-1 15,000 14,971,292
5.23% 4/23/97 A-1+ P-1 15,505 15,455,444
5.28% 5/12/97 A-1+ P-1 10,000 9,939,867
5.36% 7/1/97 A-1+ P-1 30,000 29,593,533
Xerox Corp.
5.28% 5/14/97 A-1 P-1 10,000 9,936,933
Xerox Credit Corp.
5.28% 4/7/97 A-1 P-1 10,000 9,991,200
5.31% 5/14/97 A-1 P-1 30,000 29,809,725
------------
119,697,994
------------
Credit Unions - 2.4%
Mid-States Corporate Federal Credit Union
5.36% 4/16/97 A-1+ P-1 12,900 12,871,190
U.S. Central Credit Union
5.30% 5/9/97 A-1+ P-1 40,000 39,775,958
5.31% 5/12/97 A-1+ P-1 15,000 14,909,288
------------
67,556,436
------------
5
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1997
Rating(a)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- continued
Electrical & Electronics - 5.0%
Emerson Electric Co.
5.23% 4/9/97 A-1+ P-1 $30,000 $ 29,965,133
5.24% 4/16/97 A-1+ P-1 40,000 39,912,667
5.23% 4/18/97 A-1+ P-1 39,650 39,552,076
Motorola Inc.
5.23% 4/16/97 A-1+ P-1 20,000 19,956,417
5.21% 5/14/97 A-1+ P-1 15,000 14,906,653
------------
144,292,946
------------
Electric Utility - 3.5%
Duke Power Co.
5.27% 4/11/97 A-1+ P-1 45,000 44,934,125
Northern States Power Co.
5.28% 4/2/97 A-1+ P-1 30,000 29,995,600
5.25% 5/23/97 A-1+ P-1 26,000 25,802,833
------------
100,732,558
------------
Entertainment - 1.2%
Walt Disney Co.
5.21% 11/19/97 A-1 P-1 20,000 19,328,489
5.20% 11/25/97 A-1 P-1 15,000 14,484,333
------------
33,812,822
------------
Finance, Commercial - 0.5%
CIT Group Holdings Inc.
5.23% 5/21/97 A-1 P-1 15,000 14,891,042
------------
Finance, Consumer - 3.4%
USAA Capital Corp.
5.30% 4/4/97 A-1+ P-1 15,000 14,993,375
5.27% 4/16/97 A-1+ P-1 10,000 9,978,042
5.30% 4/17/97 A-1+ P-1 15,000 14,964,667
5.24% 5/2/97 A-1+ P-1 20,000 19,909,756
5.25% 5/15/97 A-1+ P-1 13,500 13,413,375
5.30% 5/23/97 A-1+ P-1 25,000 24,808,610
------------
98,067,825
------------
Finance, Diversified - 3.5%
General Electric Capital Corp.
5.62% 4/25/97 A-1+ P-1 10,100 10,062,159
5.33% 5/23/97 A-1+ P-1 15,000 14,884,083
5.35% 5/23/97 A-1+ P-1 25,665 25,466,975
6
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Rating(a)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- continued
Finance, Diversified - concluded
General Electric Capital Corp. - concluded
5.35% 5/30/97 A-1+ P-1 $15,000 $ 14,868,479
5.34% 7/2/97 A-1+ P-1 10,000 9,863,533
5.31% 7/28/97 A-1+ P-1 15,000 14,738,925
5.33% 7/31/97 A-1+ P-1 10,000 9,820,853
------------
99,705,007
------------
Food - 11.4%
Campbell Soup Co.
5.30% 4/7/97 A-1+ P-1 15,000 14,986,750
5.29% 4/9/97 A-1+ P-1 15,000 14,982,367
5.25% 4/10/97 A-1+ P-1 25,000 24,967,188
5.35% 6/25/97 A-1+ P-1 15,000 14,810,521
5.37% 7/9/97 A-1+ P-1 25,000 24,630,813
5.25% 8/22/97 A-1+ P-1 15,000 14,687,188
5.42% 10/8/97 A-1+ P-1 10,000 9,713,944
Cargill, Inc.
5.32% 4/7/97 A-1+ P-1 15,000 14,986,700
5.28% 4/8/97 A-1+ P-1 20,000 19,979,467
5.32% 4/18/97 A-1+ P-1 10,000 9,974,878
5.34% 5/16/97 A-1+ P-1 19,200 19,071,840
5.40% 10/7/97 A-1+ P-1 15,000 14,574,750
Heinz (H.J.) Company
5.27% 4/1/97 A-1 P-1 5,000 5,000,000
Hershey Foods
5.27% 4/8/97 A-1+ P-1 18,500 18,481,043
5.25% 4/11/97 A-1+ P-1 20,000 19,970,833
5.25% 4/25/97 A-1+ P-1 50,000 49,825,000
Kellogg Company
5.28% 4/2/97 A-1+ P-1 9,540 9,538,601
5.24% 4/11/97 A-1+ P-1 18,000 17,973,800
5.28% 4/18/97 A-1+ P-1 8,000 7,980,052
------------
326,135,735
------------
Household Products - 2.9%
Clorox Company
5.50% 4/4/97 A-1+ P-1 20,000 19,990,833
5.30% 4/16/97 A-1+ P-1 25,000 24,944,792
5.57% 4/29/97 A-1+ P-1 20,000 19,913,356
7
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1997
Rating(a)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- continued
Household Products - concluded
Procter & Gamble Co.
5.45% 4/11/97 A-1 P-1 $18,000 $ 17,972,750
------------
82,821,731
------------
Insurance, Property & Casualty - 5.8%
A.I. Credit Corporation
5.28% 6/10/97 A-1+ P-1 15,000 14,846,000
5.23% 6/20/97 A-1+ P-1 20,000 19,767,556
AIG Funding Inc.
5.27% 4/7/97 A-1+ P-1 23,165 23,144,653
Chubb Capital Corp.
5.24% 4/7/97 A-1+ P-1 30,000 29,973,700
Marsh & McClennan Companies Inc.
5.35% 5/6/97 A-1+ P-1 15,000 14,921,979
5.26% 6/3/97 A-1+ P-1 20,000 19,815,900
5.35% 7/3/97 A-1+ P-1 15,000 14,792,688
5.37% 10/3/97 A-1+ P-1 30,000 29,171,352
------------
166,433,828
------------
Integrated Oil - 1.6%
Amoco Co.
5.20% 4/10/97 A-1+ P-1 20,000 19,974,000
5.32% 6/5/97 A-1+ P-1 25,000 24,759,861
------------
44,733,861
------------
Machinery & Tools - 2.9%
Dover Corporation
5.30% 4/4/97 A-1+ -- 18,500 18,491,829
5.25% 4/7/97 A-1+ -- 28,000 27,975,325
Illinois Tool Works
5.36% 4/29/97 A-1+ P-1 13,000 12,945,804
Snap-On Incorporated
5.55% 5/5/97 A-1+ P-1 25,000 24,868,959
------------
84,281,917
------------
Oil Transportation - 1.9%
Colonial Pipeline
5.25% 5/19/97 A-1+ P-1 12,100 12,015,300
5.35% 6/17/97 A-1+ P-1 7,200 7,117,610
5.32% 8/6/97 A-1+ P-1 17,300 16,975,317
5.32% 8/14/97 A-1+ P-1 10,000 9,800,500
5.28% 8/18/97 A-1+ P-1 10,000 9,796,134
------------
55,704,861
------------
8
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Rating(a)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- continued
Paper - 1.2%
Minnesota Mining & Manufacturing Co.
5.26% 4/7/97 A-1+ P-1 $15,000 $ 14,986,850
5.27% 5/7/97 A-1+ P-1 9,000 8,952,570
Weyerhaeuser Co.
5.29% 5/7/97 A-1 P-1 10,000 9,947,101
------------
33,886,521
------------
Pharmaceuticals - 9.1%
Eli Lilly & Co.
5.28% 7/14/97 A-1+ P-1 15,000 14,771,200
5.33% 7/15/97 A-1+ P-1 10,000 9,844,542
Pfizer Inc.
5.27% 4/4/97 A-1+ P-1 37,400 37,383,575
Schering-Plough Corp.
5.26% 4/22/97 A-1+ P-1 7,850 7,825,914
5.27% 4/29/97 A-1+ P-1 26,100 25,992,831
5.27% 5/13/97 A-1+ P-1 26,050 25,889,719
5.22% 5/20/97 A-1+ P-1 15,000 14,893,425
5.30% 6/24/97 A-1+ P-1 14,950 14,765,118
5.31% 7/22/97 A-1+ P-1 15,000 14,752,200
Warner-Lambert Co.
5.31% 4/15/97 A-1+ P-1 13,500 13,472,123
5.30% 4/30/97 A-1+ P-1 16,100 16,031,262
5.34% 5/20/97 A-1+ P-1 20,000 19,854,633
5.29% 5/29/97 A-1+ P-1 15,000 14,872,158
5.20% 6/20/97 A-1+ P-1 15,000 14,826,667
5.22% 8/14/97 A-1+ P-1 15,400 15,098,544
------------
260,273,911
------------
Publishing - 1.2%
Dow Jones & Co., Inc.
5.30% 4/22/97 A-1+ P-1 8,300 8,274,339
Gannett Co., Inc.
5.28% 4/24/97 A-1 P-1 27,000 26,908,920
------------
35,183,259
------------
Structured Finance - 6.8%
CIESCO, L.P.
5.28% 4/11/97 A-1+ P-1 15,000 14,978,000
5.30% 4/21/97 A-1+ P-1 10,000 9,970,556
9
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1997
Rating(a)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- concluded
Structured Finance - concluded
CIESCO, L.P. - concluded
5.32% 4/22/97 A-1+ P-1 $19,850 $ 19,788,399
5.33% 4/25/97 A-1+ P-1 25,000 24,911,167
5.26% 5/8/97 A-1+ P-1 15,000 14,918,908
5.27% 5/14/97 A-1+ P-1 20,000 19,874,106
Corporate Asset Funding Company, Inc.
5.32% 4/10/97 A-1+ P-1 15,000 14,980,050
5.25% 4/16/97 A-1+ P-1 30,000 29,934,375
5.30% 4/22/97 A-1+ P-1 30,000 29,907,250
5.55% 5/13/97 A-1+ P-1 15,000 14,902,874
-------------
194,165,685
-------------
Telephone - 7.3%
Ameritech Capital Funding Corp.
5.33% 4/7/97 A-1+ P-1 15,000 14,986,675
5.28% 4/14/97 A-1+ P-1 25,000 24,952,333
5.31% 4/28/97 A-1+ P-1 15,000 14,940,263
5.30% 5/13/97 A-1+ P-1 20,000 19,876,333
5.54% 6/27/97 A-1+ P-1 20,000 19,732,233
AT&T Corp.
5.37% 8/14/97 A-1+ P-1 20,000 19,597,250
Bell Atlantic Network Funding Corp.
5.65% 4/22/97 A-1+ P-1 9,000 8,970,338
BellSouth Capital Funding Corp.
5.28% 5/6/97 A-1+ P-1 15,000 14,923,000
5.27% 5/12/97 A-1+ P-1 25,000 24,849,951
Southwestern Bell Telephone Co.
5.28% 4/7/97 A-1+ P-1 12,000 11,989,440
5.27% 4/10/97 A-1+ P-1 20,900 20,872,464
5.25% 5/29/97 A-1+ P-1 15,000 14,873,127
-------------
210,563,407
-------------
Total Commercial Paper 2,340,175,224
-------------
MEDIUM-TERM NOTE -- 0.7%
E.I. duPont de Nemours and Company
5.59% 10/8/97 A-1+ P-1 9,500 9,497,964
Eli Lilly & Co.
6.20% 11/6/97 A-1+ P-1 10,000 10,023,322
-------------
Total Medium-Term Note 19,521,286
-------------
10
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Rating(a)
------------- Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
VARIABLE RATE NOTE -- 4.4%
Associates Corporation Master Note
5.23%(c) 6/1/97 A-1+ P-1 $ 75,000 $ 75,000,000
Coca-Cola Company Master Note
5.25%(c) 6/26/97 A-1+ P-1 50,000 50,000,000
--------------
Total Variable Rate Note 125,000,000
--------------
FEDERAL HOME LOAN BANK -- 1.7%
FHLB
5.23% 7/7/97 AAA -- 9,500 9,366,127
5.10% 8/13/97 AAA -- 15,000 14,715,250
5.46% 12/12/97 AAA -- 15,000 14,995,972
5.81% 1/23/98 AAA -- 10,000 10,000,000
--------------
Total Federal Home Loan Bank 49,077,349
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 2.7%
FNMA
Discount Note
5.28% 4/8/97 -- P-1 15,000 14,984,600
5.33% 9/5/97 -- P-1 11,710 11,437,804
Note
5.43% 6/19/97 -- P-1 20,000 20,000,000
5.39% 7/17/97 -- P-1 15,000 15,000,000
5.50% 9/11/97 -- P-1 15,000 15,000,000
--------------
Total Federal National Mortgage Association 76,422,404
--------------
REPURCHASE AGREEMENTS -- 9.0%(d)
Goldman Sachs
6.47%(e) 4/1/97 -- -- 109,100 109,100,000
Morgan Stanley & Co.
6.25%(f) 4/1/97 -- -- 150,000 150,000,000
--------------
Total Repurchase Agreements 259,100,000
--------------
Total Investments -- 100.1% 2,869,296,263(g)
Liabilities in Excess of Other Assets, Net -- (0.1%) (1,832,649)
--------------
Net Assets -- 100.0% $2,867,463,614
==============
11
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Net Assets (concluded) March 31, 1997
Prime Series Value
- --------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption Price Per:
Prime Share
($2,545,532,365 / 2,545,523,885 shares outstanding) $1.00
=====
Flag Investors Class A Share
($6,521,574 / 6,521,538 shares outstanding) $1.00
=====
Flag Investors Class B Share
($227,098 / 227,098 shares outstanding) $1.00
=====
Prime Institutional Share
($117,812,047 / 117,811,768 shares outstanding) $1.00
=====
Quality Cash Reserve Prime Share
($197,370,530 / 197,369,848 shares outstanding) $1.00
=====
- ------------
(a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and Standard
& Poor's Corporation ("S&P") are not covered by the Independent
Accountant's Report.
(b) Most commercial paper is traded on a discount basis. In such cases, the
interest rate shown represents the rate of discount paid or received at time
of purchase by the Fund.
(c) Master note is payable upon demand by the Fund upon no more than five days'
notice. Interest rates on master notes are redetermined weekly. Rates
shown are the rates in effect on March 31, 1997.
(d) Collateral on repurchase agreements is taken into possession by the
broker's custodial bank upon entering into the repurchase agreement. The
collateral is marked to market daily to insure market value as being as
least 102 percent of the resale price of the repurchase agreement.
(e) Dated 3/31/97, to be repurchased on 4/1/97, collateralized by U.S.
Treasury Notes with a market value of $111,282,862.
(f) Dated 3/31/97, to be repurchased on 4/1/97, collateralized by U.S.
Treasury Notes with a market value of $153,006,303.
(g) Aggregate cost for financial reporting and federal tax purposes.
MOODY'S RATINGS:
Aaa Bonds that are judged to be of the best quality.
P-1 Commercial paper bearing this designation is of the best quality.
S&P RATINGS:
AAA 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.
12
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Operations
For the Year Ended
Prime Series March 31,
- --------------------------------------------------------------------------------
1997
Investment Income: (Note 1)
Interest income $150,388,078
------------
Expenses:
Distribution fee (Note 2) 7,395,916
Investment advisory fee (Note 2) 7,394,936
Transfer agent fee 1,686,323
Registration fees 312,763
Custodian fee 301,072
Printing & postage fees 214,446
Directors' fees 166,782
Accounting fee (Note 2) 157,854
Legal fees 48,809
Audit fee 34,485
Other expenses 115,181
------------
Total expenses 17,828,567
Less: Fees waived (Note 2) (120,055)
------------
Net expenses 17,708,512
------------
Net investment income 132,679,566
------------
Net realized gain from security transactions 13,047
------------
Net increase in net assets resulting from operations $132,692,613
============
See Notes to Financial Statements.
13
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the
Year Ended
Prime Series March 31,
- --------------------------------------------------------------------------------
1997
Increase/(Decrease) in Net Assets:
Operations:
Net investment income $ 132,679,566
Net realized gain/(loss) on sales of investments 13,047
--------------
Net increase in net assets resulting from operations 132,692,613
Distributions to Shareholders From:
Net investment income:
Prime Shares (119,826,842)
Prime Institutional Shares (4,256,297)
Flag Investors Class A Shares (295,562)
Flag Investors Class B Shares (1,260)
Quality Cash Reserve Prime Shares (8,299,605)
--------------
Total distributions (132,679,566)
Capital Share Transactions, net - (Note 3) 264,670,792
--------------
Total increase in net assets 264,683,839
Net Assets:
Beginning of year 2,602,779,775
--------------
End of year $2,867,463,614
==============
14
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
For the
Year Ended
Prime Series March 31,
- --------------------------------------------------------------------------------
1996
Increase/(Decrease) in Net Assets:
Operations:
Net investment income $ 107,454,378
Net realized gain/(loss) on sales of investments (6,050)
--------------
Net increase in net assets resulting from operations 107,448,328
Distributions to Shareholders From:
Net investment income:
Prime Shares (99,181,255)
Prime Institutional Shares (1,334,079)
Flag Investors Class A Shares (402,702)
Flag Investors Class B Shares (300)
Quality Cash Reserve Prime Shares (6,536,042)
--------------
Total distributions (107,454,378)
Capital Share Transactions, net - (Note 3) 1,016,482,516
--------------
Total increase in net assets 1,016,476,466
Net Assets:
Beginning of year 1,586,303,309
--------------
End of year $2,602,779,775
==============
See Notes to Financial Statements.
15
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Prime Shares
(For a share outstanding throughout each year)
For the Year Ended
March 31,
- --------------------------------------------------------------------------------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
--------------
Income from Investment Operations:
Net investment income 0.0478
Less Distributions:
Dividends from net investment income (0.0478)
--------------
Net asset value at end of year $ 1.00
==============
Total Return:
Based on net asset value per share 4.88%
Ratios to Average Daily Net Assets:
Expenses 0.63%
Net investment income 4.78%
Supplemental Data:
Net assets at end of year $2,545,532,365
Number of shares outstanding at end of year 2,545,523,885
16
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
- ---------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------- -------------- -------------- --------------
Income from Investment Operations:
Net investment income 0.0524 0.0442 0.0262 0.0295
Less Distributions:
Dividends from net investment income (0.0524) (0.0442) (0.0262) (0.0295)
-------------- -------------- -------------- --------------
Net asset value at end of year $ 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%
Ratios to Average Daily Net Assets:
Expenses 0.60% 0.61% 0.62% 0.63%
Net investment income 5.21% 4.46% 2.62% 2.95%
Supplemental Data:
Net assets at end of year $2,386,681,216 $1,472,079,739 $1,350,334,979 $1,470,711,552
Number of shares outstanding at end of year 2,386,684,392 1,472,077,488 1,350,332,916 1,470,709,489
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Flag Investors Class A Shares
(For a share outstanding throughout each year)
For the Year Ended
March 31,
- --------------------------------------------------------------------------------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
----------
Income from Investment Operations:
Net investment income 0.0478
Less Distributions:
Dividends from net investment income (0.0478)
----------
Net asset value at end of year $ 1.00
==========
Total Return:
Based on net asset value per share 4.88%
Ratios to Average Daily Net Assets:
Expenses 0.63%
Net investment income 4.78%
Supplemental Data:
Net assets at end of year $6,521,574
Number of shares outstanding at end of year 6,521,310
18
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
- ---------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ----------- -----------
Income from Investment Operations:
Net investment income 0.0524 0.0442 0.0262 0.0295
Less Distributions:
Dividends from net investment income (0.0524) (0.0442) (0.0262) (0.0295)
---------- ---------- ----------- -----------
Net asset value at end of year $ 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%
Ratios to Average Daily Net Assets:
Expenses 0.60% 0.61% 0.62% 0.63%
Net investment income 5.25% 4.26% 2.62% 2.95%
Supplemental Data:
Net assets at end of year $5,976,831 $7,726,696 $18,116,648 $10,392,282
Number of shares outstanding at end of year 5,976,824 7,726,698 18,116,633 10,392,267
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Flag Investors Class B Shares
(For a share outstanding throughout each period)
For the Year Ended
March 31,
- --------------------------------------------------------------------------------
1997
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
--------
Income from Investment Operations:
Net investment income 0.0414
Less Distributions:
Dividends from net investment income (0.0414)
--------
Net asset value at end of period $ 1.00
========
Total Return:
Based on net asset value per share 4.22%
Ratios to Average Daily Net Assets:
Expenses 1.38%
Net investment income 4.14%
Supplemental Data:
Net assets at end of period $227,098
Number of shares outstanding at end of period 227,098
- ------------
(1) Commencement of operations.
(2) Annualized.
20
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
For the Period April 3, 1995(1)
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%(2)
Ratios to Average Daily Net Assets:
Expenses 1.38%(2)
Net investment income 4.30%(2)
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.
21
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Prime Institutional Shares
(For a share outstanding throughout each year)
For the Year Ended
March 31,
- --------------------------------------------------------------------------------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
------------
Income from Investment Operations:
Net investment income 0.0503
Less Distributions:
Dividends from net investment income (0.0503)
------------
Net asset value at end of year $ 1.00
============
Total Return:
Based on net asset value per share 5.15%
Ratios to Average Daily Net Assets:
Expenses 0.38%
Net investment income 5.04%
Supplemental Data:
Net assets at end of year $117,812,047
Number of shares outstanding at end of year 117,811,768
22
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
<S><C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income 0.0548 0.0472 0.0294 0.0327
Less Distributions:
Dividends from net investment income (0.0548) (0.0472) (0.0294) (0.0327)
----------- ----------- ----------- -----------
Net asset value at end of year $ 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%
Ratios to Average Daily Net Assets:
Expenses 0.35% 0.36% 0.30% 0.31%
Net investment income 5.32% 4.57% 2.94% 3.24%
Supplemental Data:
Net assets at end of year $53,699,315 $11,904,716 $23,437,449 $28,884,078
Number of shares outstanding at end of year 53,699,535 11,904,663 23,437,512 28,884,132
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Quality Cash Reserve Prime Shares
(For a share outstanding throughout each year)
For the Year Ended
March 31,
- --------------------------------------------------------------------------------
1997
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00
------------
Income from Investment Operations:
Net investment income 0.0449
Less Distributions:
Dividends from net investment income (0.0449)
------------
Net asset value at end of year $ 1.00
============
Total Return:
Based on net asset value per share 4.59%
Ratios to Average Daily Net Assets:
Expenses 0.91%(1)
Net investment income 4.50%(2)
Supplemental Data:
Net assets at end of year $197,370,530
Number of shares outstanding at end of year 197,369,848
- -----------
(1) Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.98% and 0.95% for the years ended March 31, 1997 and 1996,
respectively.
(2) Ratio of net investment income to average daily net assets prior to partial
fee waivers was 4.43% and 4.86% for the years ended March 31, 1997 and 1996,
respectively.
24
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993
<S><C>
Per Share Operating Performance:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ----------- ----------- ------------
Income from Investment Operations:
Net investment income 0.0493 0.0402 0.0218 0.0253
Less Distributions:
Dividends from net investment income (0.0493) (0.0402) (0.0218) (0.0253)
------------ ----------- ----------- ------------
Net asset value at end of year $ 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%
Ratios to Average Daily Net Assets:
Expenses 0.90%(1) 0.96% 1.06% 1.04%
Net investment income 4.91%(2) 4.04% 2.18% 2.53%
Supplemental Data:
Net assets at end of year $156,412,213 $94,592,158 $92,678,440 $101,321,868
Number of shares outstanding at end of year 156,412,393 94,591,979 92,678,268 101,321,668
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Notes to Financial Statements
NOTE 1--Significant Accounting Policies
Alex. Brown Cash Reserve Fund, Inc. ("the Fund") commenced operations
August 11, 1981. The Fund is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end Investment Management Company.
Its objective is to seek as high a level of current income as is consistent with
preservation of capital and liquidity.
The Fund consists of three portfolios: the Prime Series, the Treasury
Series and the Tax-Free Series. The Prime Series consists of five classes:
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 consists of two classes: Alex. Brown Cash Reserve Treasury
Shares ("Treasury Shares") and Alex. Brown Cash Reserve Treasury
Institutional Shares ("Treasury Institutional Shares"). The Tax-Free Series
consists of one class: Alex. Brown Cash Reserve Tax-Free Series ("Tax-Free
Series"). Shareholders can vote only on issues that affect the share classes
they own.
When preparing the Fund's financial statements, management makes estimates
and assumptions to comply with generally accepted accounting principles. These
estimates affect 1) the assets and liabilities that we report at the date of the
financial statements; 2) the contingent assets and liabilities that we disclose
at the date of the financial statements; and 3) the revenues and expenses that
we report for the period. Our estimates could be different from the actual
results. The Fund's significant accounting policies are:
A. Security Valuation--Each portfolio has a weighted average maturity of 90
days or less. The Fund values portfolio securities on the basis of
amortized cost, which approximates market value. Using this method,
the Fund values a security at its cost when it is purchased. The Fund
then assumes a constant amortization to maturity of any discount or
premium.
B. Repurchase Agreements--The Prime Series may enter into tri-party
repurchase agreements with broker-dealers and domestic banks. A
repurchase agreement is a short-term investment in which the Fund buys a
debt security that the broker agrees to repurchase at a set time
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FLAG INVESTORS CASH RESERVE PRIME SHARES
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NOTE 1--concluded
and price. The third party, which is the broker's custodial bank, holds
the collateral in a separate account until the repurchase agreement
matures. The agreement ensures that the collateral's market value,
including any accrued interest, is sufficient if the broker
defaults. The Fund's access to the collateral may be delayed or
limited if the broker defaults and the value of the collateral declines
or if the broker enters into an insolvency proceeding.
C. Federal Income Tax -- The Fund determines its distributions according
to income tax regulations, which may be different from
generally accepted accounting principles. As a result, the
Fund occasionally makes reclassifications within its capital
accounts to reflect income and gains that are available for
distribution under income tax regulations.
The Fund is organized as a regulated investment company. As long as
it maintains this status and distributes to its shareholders
substantially all of its taxable net investment income and net realized
capital gains, it will be exempt from most, if not all, federal income
and excise taxes. As a result, the Fund has made no provisions for
federal income taxes. Each portfolio is treated as a separate entity
for federal income tax purposes.
The Prime Series has a capital loss carryforward of $1,520 that may
be carried forward to offset any capital gains if necessary. This
capital loss carryforward begins to expire in the year 2005 if not
used.
D. Security Transactions, Investment Income and Distributions--The
Fund uses the trade date to account for security transactions and
the specific identification method for financial reporting and
income tax purposes to determine the cost of investments sold or
redeemed. Interest income is recorded on an accrual basis and
includes the pro rata amortization of premiums and accretion of
discounts when appropriate. Dividends to shareholders are declared
daily. Dividend distributions or reinvestments are made monthly.
E. Expenses--Operating expenses for each share class are charged to that
class' operations. If a Fund expense cannot be directly attributed
to a share class, the expense is prorated among the classes that the
expense affects and is based on the classes' relative net assets.
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FLAG INVESTORS CASH RESERVE PRIME SHARES
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Notes to Financial Statements (continued)
NOTE 2--Investment Advisory Fees, Transactions with Affiliates and Other Fees
Investment Company Capital Corp. ("ICC"), a subsidiary of Alex. Brown
Financial Corp., is the investment advisor for the Prime Series. Under the terms
of the investment advisory agreement, the Fund pays ICC a fee. This fee is
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 the amount over $3.5 billion.
The Prime Series pays an additional fee that is calculated daily and paid
monthly at the annual rate of .02% of its average daily net assets. Prior to
August 23, 1995, the Fund paid ICC a different fee. This fee was 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 the amount over
$1.5 billion.
As compensation for its accounting services, the Prime Series pays ICC an
annual fee that is calculated daily and paid monthly from its average daily net
assets. The Prime Series paid $157,854 to ICC for accounting services for the
year ended March 31, 1997.
As compensation for its transfer agent services, the Prime Series pays ICC
a per account fee that is calculated and paid monthly. The Prime Series paid
$1,686,323 to ICC for transfer agent services for the year ended March 31, 1997.
As compensation for providing distribution services, the Prime Shares and
Flag Investors Class A Shares pay Alex. Brown & Sons Incorporated ("Alex.
Brown") an annual fee equal to 0.25% of these classes' average daily net assets.
Alex. Brown was paid $6,275,671 and $15,461 for distribution services for the
Prime Shares and Flag Investors Class A Shares. The Quality Cash Shares and Flag
Investors Class B Shares also pay Alex. Brown an annual fee for distribution
services. This fee is equal to .60% of the Quality Cash Shares' aggregate
average daily net assets or $1,106,876 and 1.00% of the Flag Investors Class B
Shares' aggregate average daily net assets or $307.
ICC and Alex. Brown may voluntarily waive or reimburse a portion of their
advisory or distribution fees for the Prime Series to preserve or enhance the
series' performance. These voluntary waivers and reimbursements are not
contractual and could change. Any reimbursements by ICC or Alex. Brown are
limited to the fees they actually received for the fiscal year. ICC did not
waive any advisory fees for the year ended March 31, 1997. Alex. Brown
voluntarily
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FLAG INVESTORS CASH RESERVE PRIME SHARES
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waived distribution fees of $120,055 for the Quality Cash Shares for the year
ended March 31, 1997.
The Fund's complex offers a retirement plan for eligible Directors. The
actuarially computed pension expense allocated to the Prime Series for the year
ended March 31, 1997 was $21,193, and the accrued liability on March 31, 1997
was $178,614 for the Prime Series.
NOTE 3--Capital Stock and Share Information
The Fund is authorized to issue up to 6.4 billion shares of $.001 par value
capital stock (3.55 billion Prime Series). Transactions in shares of the Prime
Series were as follows:
March 31, 1997 March 31, 1996
--------------- ---------------
Prime Series:
Sold:
Prime Shares 22,263,288,298 19,439,463,533
Flag Investors Class A Shares 9,331,912 12,118,053
Flag Investors Class B Shares 328,144 24,535
Prime Institutional Shares 912,825,877 213,159,539
Quality Cash Shares 1,001,597,821 1,285,040,597
Issued as reinvestment of dividends:
Prime Shares 113,931,978 93,103,137
Flag Investors Class A Shares 281,420 374,561
Flag Investors Class B Shares 1,264 --
Prime Institutional Shares 3,084,567 753,855
Quality Cash Shares 8,045,624 6,300,386
Redeemed:
Prime Shares (22,218,380,783) (18,617,959,766)
Flag Investors Class A Shares (9,068,618) (14,242,488)
Flag Investors Class B Shares (112,510) (14,335)
Prime Institutional Shares (851,798,212) (172,118,522)
Quality Cash Shares (968,685,990) (1,229,520,569)
--------------- ---------------
Net increase 264,670,792 1,016,482,516
=============== ===============
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FLAG INVESTORS CASH RESERVE PRIME SHARES
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Notes to Financial Statements (concluded)
NOTE 4--Net Assets
On March 31, 1997, net assets consisted of:
Prime Series
------------
Paid-in capital $2,867,456,646
Undistributed net realized gain on sales of investments 6,968
--------------
$2,867,463,614
==============
NOTE 5--Merger Agreement
On April 6, 1997, Bankers Trust New York Corporation and Alex. Brown
Incorporated announced that they had signed a definitive agreement to merge. The
merger, which is expected to be completed by the fourth quarter of 1997, is
subject to customary closing conditions, including certain regulatory and
shareholder approvals.
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FLAG INVESTORS CASH RESERVE PRIME SHARES
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Report of Independent Accountants
To the Shareholders and Board of Directors of
the Prime Series of Alex. Brown Cash Reserve Fund, Inc.
We have audited the accompanying statements of net assets of the Prime
Series of Alex. Brown Cash Reserve Fund, Inc. as of March 31, 1997, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the four years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights for the year ended March 31, 1993 were audited by other auditors
whose report dated May 7, 1993, expressed an unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
March 31, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Prime Series of Alex. Brown Cash Reserve Fund, Inc. as of March 31, 1997, and
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and its financial
highlights for each of the four years in the period then ended, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND, L.L.P.
Philadelphia, Pennsylvania
May 2, 1997
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FLAG INVESTORS CASH RESERVE PRIME SHARES
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Directors and Officers
CHARLES W. COLE, JR.
Chairman
RICHARD T. HALE EDWARD J. VEILLEUX
Director and President Executive Vice President
JAMES J. CUNNANE M. ELLIOTT RANDOLPH, JR.
Director Vice President
JOHN F. KROEGER PAUL D. CORBIN
Director Vice President
LOUIS E. LEVY MONICA M. HAUSNER
Director Vice President
EUGENE J. MCDONALD SCOTT J. LIOTTA
Director Vice President and Secretary
REBECCA W. RIMEL JOSEPH A. FINELLI
Director Treasurer
TRUMAN T. SEMANS LAURIE D. COLLIDGE
Director Assistant Secretary
CARL W. VOGT, ESQ.
Director
Investment Objective
A money market fund designed to seek as high a level of current income as is
consistent with preservation of capital and liquidity.
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This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by an effective 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.
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<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 Short-Intermediate 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 21203
800-767-FLAG
Distributed by:
ALEX. BROWN & SONS
INCORPORATED
