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FLAG INVESTORS
[PHOTO APPEARS HERE]
FLAG
INVESTORS
CASH RESERVE
PRIME
SHARES
ANNUAL REPORT
MARCH 31, 1998
<PAGE>
FUND FEATURES
- -------------------------------------------------------------------------------
bullet Daily Dividends
The Fund declares dividends daily and distributes them monthly in the
form of additional shares.
bullet Constant Net Asset Value
The Fund will attempt to maintain a constant net asset value of $1.00 per
share. Since the Fund's inception on January 5, 1989, a constant net
asset value of $1.00 per share has been maintained.
bullet Minimum Investment
The minimum initial investment is $2,000. Subsequent investments may be
made in an amount of $100 or more.
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
May 4, 1998
We are pleased to report on the progress of your Fund for the fiscal year
ended March 31, 1998.
Year in Review
The current U.S. economic environment is near perfect. Steady growth and
low inflation are fueling the expansion into a seventh year. The economic impact
of an unseasonably warm winter has been a surge in single family home sales and
residential construction. The latest National Purchasing Managers report
indicates continued strength in private domestic demand while the latest
unemployment statistics show continued tightness of labor markets. Over the six
months ended March 31, the Dow Jones Industrial Average has returned 12%, the
yield on the ten year Treasury Note has decreased from 6.10% to 5.65% and
consumer inflation has fallen to 2%.
In the money market arena, the yield curve remains flat with Federal Funds
at 5.50%, and top tier commercial paper in one, three and six month maturities
yielding 5.55%, 5.60% and 5.62% respectively. The Federal Reserve Board's Open
Market Committee met on March 31st and decided to keep interest rates steady,
continuing a policy which favors neither tightening nor easing.
Historical Yield Chart
(For the year ended March 31, 1998)
[GRAPH APPEARS HERE--SEE PLOT POINTS BELOW]
FLAG INVESTORS CASH RESERVE PRIME SHARES
3/31/97 4.74%
4/30/97 4.82
5/31/97 4.9
6/30/97 4.93
7/30/97 4.94
8/31/97 4.94
9/30/97 4.92
10/31/97 4.94
11/30/97 4.97
12/31/97 5.06
1/31/98 5
2/28/98 4.94
3/31/98 4.94
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, 1998
-------------------------------------------------------------------------------
Flag Investors Cash Reserve Prime Shares 47 days
-------------------------------------------------------------------------------
First Tier Money Fund Average 62 days
-------------------------------------------------------------------------------
Source: IBC/Donoghue, Inc. "Money Fund Report," April 3, 1998.
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, 1998
-------------------------------------------------------------------------------
Flag Investors Cash Reserve Prime Shares 4.96%
-------------------------------------------------------------------------------
First Tier Money Fund Average 4.93%
-------------------------------------------------------------------------------
Source: IBC/Donoghue, Inc. "Money Market Insight," April 1998.
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
Despite all this good news, there are economic storm clouds that bear
watching. Stock market performance has made a significant contribution to the
support of economic growth. If there is a change in consumer confidence or
foreign investor attitudes toward U.S. financial assets, any resulting weakness
in the equity market could have a negative influence on the economy. On the
interest rate front there seems to be an absence of factors acting as a
restraint on the economy. The Asian crisis, which was initially perceived as
providing this influence, has seemingly retreated to the sidelines as a threat.
The slope of the yield curve and the level of real interest rates are proving
equally ineffective as moderating influences. The Federal Reserve Board may feel
compelled to act by adopting a tightening bias in the near future.
As always, we appreciate your continued support.
Sincerely,
/s/ Richard T. Hale
____________________
Richard T. Hale
Chairman
3
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1998
Rating(g)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER - 84.7%(a)
Automotive Finance - 3.8%
PACCAR Financial Corp.
5.35% 7/27/98 A-1+ P-1 $ 5,000 $ 4,913,062
Toyota Motor Credit Corp.
5.46% 5/1/98 A-1+ P-1 20,000 19,909,000
5.50% 5/4/98 A-1+ P-1 54,750 54,474,787
5.51% 5/6/98 A-1+ P-1 30,000 29,839,292
5.46% 5/8/98 A-1+ P-1 15,000 14,915,825
5.50% 5/14/98 A-1+ P-1 15,500 15,398,174
------------
139,450,140
------------
Banks - 0.8%
Republic New York Corp.
5.41% 5/1/98 A-1+ P-1 30,000 29,864,750
------------
29,864,750
------------
Beverages - Soft Drinks - 1.7%
Coca-Cola Co.
5.39% 4/3/98 A-1+ P-1 25,000 24,992,514
5.38% 4/21/98 A-1+ P-1 20,000 19,940,222
5.40% 4/23/98 A-1+ P-1 20,000 19,934,000
-----------
64,866,736
-----------
Chemicals, General - 2.9%
E.I. duPont de Nemours and Co.
5.34% 4/7/98 A-1+ P-1 15,000 14,986,650
5.34% 4/8/98 A-1+ P-1 25,000 24,974,042
5.46% 5/11/98 A-1+ P-1 25,000 24,848,333
5.44% 6/25/98 A-1+ P-1 25,000 24,678,889
5.345% 8/14/98 A-1+ P-1 20,000 19,599,125
-----------
109,087,039
-----------
Chemicals, Specialty - 0.8%
Lubrizol
5.50% 4/1/98 A-1+ P-1 30,000 30,000,000
-----------
30,000,000
-----------
4
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Rating(g)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- continued
COMPUTER & OFFICE EQUIPMENT - 1.4%
Pitney Bowes Credit Corp.
5.43% 4/10/98 A-1+ P-1 $30,000 $ 29,959,275
5.48% 5/14/98 A-1+ P-1 23,500 23,346,179
------------
53,305,454
Consumer Products - 3.6% ------------
Eastman Kodak Co.
5.52% 4/10/98 A-1+ P-1 15,000 14,979,300
5.52% 4/14/98 A-1+ P-1 15,000 14,970,100
5.52% 4/21/98 A-1+ P-1 15,000 14,954,000
5.52% 4/22/98 A-1+ P-1 15,000 14,951,700
5.52% 4/23/98 A-1+ P-1 23,600 23,520,389
5.48% 5/5/98 A-1+ P-1 20,000 19,896,489
5.51% 5/12/98 A-1+ P-1 15,000 14,905,871
5.50% 5/21/98 A-1+ P-1 15,000 14,885,417
-----------
133,063,266
-----------
Electrical & Electronics - 5.7%
Emerson Electric Co.
5.50% 4/13/98 A-1+ P-1 40,000 39,926,667
5.49% 4/17/98 A-1+ P-1 25,000 24,939,000
5.48% 4/20/98 A-1+ P-1 22,000 21,936,372
Motorola Inc.
5.42% 4/6/98 A-1+ P-1 20,000 19,984,944
5.48% 5/12/98 A-1+ P-1 25,000 24,843,972
5.48% 5/21/98 A-1+ P-1 40,000 39,695,555
5.47% 6/25/98 A-1+ P-1 40,000 39,483,389
-----------
210,809,899
Electric Utility - 1.8% -----------
Citizens Utilities Co.
5.48% 6/19/98 A-1+ P-1 20,000 19,759,489
Duke Energy Co.
5.43% 4/7/98 A-1+ P-1 25,000 24,977,375
5.47% 5/28/98 A-1+ P-1 20,600 20,421,587
-----------
65,158,451
-----------
5
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1998
Rating(g)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- continued
Entertainment - 1.5%
Walt Disney Co.
5.63% 4/23/98 A-1 P-1 $25,000 $ 24,913,986
5.44% 7/16/98 A-1 P-1 30,000 29,519,467
------------
54,433,453
------------
Finance, Consumer - 4.1%
USAA Capital Corp.
5.41% 4/7/98 A-1+ P-1 15,000 14,986,475
5.46% 4/24/98 A-1+ P-1 25,000 24,912,792
5.44% 5/4/98 A-1+ P-1 25,000 24,875,333
5.42% 5/12/98 A-1+ P-1 30,000 29,814,817
5.47% 5/12/98 A-1+ P-1 20,000 19,781,200
5.47% 6/19/98 A-1+ P-1 15,000 14,819,946
5.47% 7/17/98 A-1+ P-1 25,000 24,593,549
------------
153,784,112
Finance, Diversified - 3.9% ------------
General Electric Capital Corp.
5.44% 4/14/98 A-1+ P-1 20,000 19,960,711
5.44% 4/21/98 A-1+ P-1 30,000 29,909,333
5.56% 4/23/98 A-1+ P-1 15,000 14,949,033
5.35% 5/12/98 A-1+ P-1 15,212 15,119,312
5.35% 6/19/98 A-1+ P-1 24,400 24,113,537
5.40% 7/6/98 A-1+ P-1 25,000 24,640,000
5.46% 7/9/98 A-1+ P-1 16,883 16,629,502
-----------
145,321,428
-----------
Food - 5.0%
Campbell Soup Co.
5.54% 4/17/98 A-1+ P-1 4,000 3,990,151
5.35% 10/5/98 A-1+ P-1 35,000 34,027,340
Cargill, Inc.
5.37% 4/23/98 A-1+ P-1 10,000 9,967,183
5.52% 5/5/98 A-1+ P-1 20,000 19,895,733
5.46% 5/12/98 A-1+ P-1 25,000 24,844,542
5.44% 5/26/98 A-1+ P-1 40,000 39,667,785
5.46% 6/2/98 A-1+ P-1 15,000 14,858,950
5.45% 6/10/98 A-1+ P-1 25,000 24,735,069
6
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Rating(g)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- continued
Food - concluded
Kellogg Co.
5.51% 4/28/98 A-1+ P-1 $12,364 $ 12,312,906
------------
184,299,659
------------
Household Products - 3.3%
Colgate-Palmolive Co.
5.49% 4/30/98 A-1 P-1 35,000 34,845,212
Procter & Gamble Co.
5.48% 5/4/98 A-1+ P-1 40,000 39,799,067
5.35% 6/2/98 A-1+ P-1 25,000 24,769,653
5.35% 6/26/98 A-1+ P-1 25,000 24,680,486
-----------
124,094,418
-----------
Insurance, Brokerage - 2.6%
Marsh & McLennan Companies Inc.
5.44% 6/11/98 A-1+ P-1 20,000 19,785,422
5.47% 7/23/98 A-1+ P-1 15,000 14,742,454
5.39% 9/8/98 A-1+ P-1 20,000 19,520,889
5.43% 9/16/98 A-1+ P-1 15,000 14,619,900
5.28% 10/20/98 A-1+ P-1 30,000 29,110,078
-----------
97,778,743
-----------
Insurance, Property & Casualty - 3.9%
A.I. Credit Corp.
5.44% 4/9/98 A-1+ P-1 15,000 14,981,867
5.43% 5/6/98 A-1+ P-1 50,000 49,736,042
5.35% 5/11/98 A-1+ P-1 30,000 29,821,667
5.33% 6/12/98 A-1+ P-1 20,000 19,786,800
5.36% 7/7/98 A-1+ P-1 30,000 29,566,733
-----------
143,893,109
-----------
Integrated Oil - 6.3%
Amoco Co.
5.41% 4/7/98 A-1+ P-1 25,000 24,977,458
5.40% 4/16/98 A-1+ P-1 30,000 29,932,500
5.37% 4/27/98 A-1+ P-1 30,000 29,883,650
5.40% 5/12/98 A-1+ P-1 30,000 29,815,500
5.42% 6/16/98 A-1+ P-1 25,000 24,713,944
5.43% 7/21/98 A-1+ P-1 20,000 19,665,150
7
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- -------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1998
Rating(g)
------------ Par
Prime Series S&P Moody's (000) Value
- -------------------------------------------------------------------------------
COMMERCIAL PAPER -- continued
Integrated Oil - concluded
Shell Oil Co.
5.41% 4/9/98 A-1+ P-1 $50,000 $ 49,939,889
5.45% 6/12/98 A-1+ P-1 25,000 24,727,500
------------
233,655,591
------------
Machinery & Tools - 1.5%
Dover Corp.
5.48% 4/17/98 A-1 NR 17,500 17,457,378
5.53% 4/21/98 A-1 NR 20,000 19,938,556
Snap-On Incorporated
5.48% 4/9/98 A-1+ P-1 20,000 19,975,644
------------
57,371,578
------------
Natural Gas - 0.7%
Consolidated Natural Gas
5.50% 4/17/98 A-1+ P-1 25,000 24,938,889
------------
24,938,889
------------
Oil Transportation - 2.8%
Colonial Pipeline Co.
5.50% 4/6/98 A-1+ P-1 15,000 14,988,542
5.62% 4/22/98 A-1+ P-1 15,000 14,950,825
5.48% 4/28/98 A-1+ P-1 13,000 12,946,570
5.52% 5/27/98 A-1+ P-1 15,000 14,871,200
5.63% 6/10/98 A-1+ P-1 13,000 12,857,686
5.47% 6/23/98 A-1+ P-1 19,000 18,760,384
5.62% 6/29/98 A-1+ P-1 15,000 14,791,592
------------
104,166,799
------------
Paper - 4.5%
Kimberly-Clark Corp.
5.51% 4/29/98 A-1+ P-1 50,500 50,283,579
5.50% 4/30/98 A-1+ P-1 27,300 27,179,046
Minnesota Mining & Manufacturing Co.
5.38% 4/20/98 A-1+ P-1 38,910 38,799,412
5.35% 5/19/98 A-1+ P-1 20,000 19,857,333
5.35% 5/20/98 A-1+ P-1 30,000 29,781,542
------------
165,900,912
------------
8
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- -------------------------------------------------------------------------------
Rating(g)
------------ Par
Prime Series S&P Moody's (000) Value
- -------------------------------------------------------------------------------
COMMERCIAL PAPER -- continued
PHARMACEUTICALS - 6.9%
Abbott Laboratories
5.48% 4/7/98 A-1+ P-1 $ 30,000 $ 29,972,600
5.47% 4/8/98 A-1+ P-1 36,000 35,961,710
Merck & Co., Inc.
5.38% 4/24/98 A-1+ P-1 75,000 74,742,208
Pfizer Inc.
5.46% 5/4/98 A-1+ P-1 48,000 47,759,760
Schering-Plough Corp.
5.42% 4/14/98 A-1+ P-1 11,835 11,811,836
5.36% 5/20/98 A-1+ P-1 8,000 7,941,636
Warner-Lambert Co.
5.36% 7/24/98 A-1+ P-1 50,000 49,151,333
------------
257,341,083
------------
Publishing - 1.5%
Gannett Co., Inc.
5.45% 4/9/98 A-1+ P-1 20,000 19,975,778
5.50% 4/14/98 A-1+ P-1 20,000 19,960,278
Times Mirror Co.
5.52% 6/5/98 A-1 P-1 16,000 15,840,533
------------
55,776,589
------------
Structured Finance - 9.0%
CIESCO, L.P.
5.43% 4/8/98 A-1+ P-1 20,000 19,978,883
5.50% 4/17/98 A-1+ P-1 25,000 24,938,889
5.43% 4/29/98 A-1+ P-1 30,000 29,873,300
5.50% 5/15/98 A-1+ P-1 15,000 14,899,167
5.47% 5/15/98 A-1+ P-1 20,000 19,866,289
5.47% 5/22/98 A-1+ P-1 15,000 14,883,762
5.50% 5/28/98 A-1+ P-1 25,000 24,782,292
Corporate Receivables Corp.
5.45% 4/9/98 A-1 P-1 25,000 24,969,722
5.48% 5/13/98 A-1 P-1 20,000 19,872,133
9
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1998
Rating(g)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER -- continued
Structured Finance - concluded
Corporate Asset Funding Co., Inc.
5.43% 4/08/98 A-1+ P-1 $ 35,000 $ 34,963,104
5.40% 4/13/98 A-1+ P-1 15,000 14,973,000
5.44% 4/23/98 A-1+ P-1 25,000 24,916,889
5.43% 4/24/98 A-1+ P-1 22,250 22,172,811
5.45% 4/28/98 A-1+ P-1 20,000 19,918,250
5.50% 6/11/98 A-1+ P-1 25,000 24,728,819
------------
335,737,310
------------
TELEPHONE - 4.7%
Ameritech Capital Funding Corp.
5.50% 4/9/98 A-1+ P-1 15,000 14,981,667
5.40% 4/24/98 A-1+ P-1 15,000 14,948,250
5.45% 4/27/98 A-1+ P-1 20,000 19,921,278
Ameritech Corp.
5.395% 6/9/98 A-1+ P-1 25,000 24,741,490
AT&T Corp.
5.50% 4/8/98 A-1+ P-1 20,000 19,978,611
Bell Atlantic Network Funding Corp.
5.52% 4/22/98 A-1+ P-1 20,000 19,935,600
Bell Atlantic Financial Services Corp.
5.51% 5/7/98 A-1 P-1 15,000 14,917,350
SBC Communications Inc.
5.33% 4/17/98 A-1+ P-1 20,000 19,952,622
5.44% 5/27/98 A-1+ P-1 25,000 24,788,444
-----------
174,165,312
-------------
Total Commercial Paper 3,148,264,720
-------------
VARIABLE RATE NOTES -- 3.3%
Associates Corp. Master Note
5.497% 6/1/98(b) A-1+ P-1 75,000 75,000,000
Coca-Cola Co. Master Note
5.417% 9/9/98(b) A-1+ P-1 50,000 50,000,000
------- -----------
Total Variable Rate Notes 125,000 125,000,000
------- -----------
10
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Rating(g)
------------ Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK -- 3.1%
FHLB
5.43% 5/6/98 AAA -- $ 20,000 $ 19,894,417
5.72% 6/30/98 AAA -- 20,000 20,000,000
5.24% 7/17/98 AAA -- 34,580 34,041,436
5.70% 3/17/99 AAA -- 20,000 20,000,000
5.65% 3/30/99 AAA -- 20,000 20,000,000
-------- --------------
Total Federal Home Loan Bank 114,580 113,935,853
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 3.6% -------- --------------
FNMA
Note
5.61% 5/14/98 -- P-1 20,000 20,000,000
5.74% 6/9/98 -- P-1 15,000 15,000,000
5.28% 7/13/98 -- P-1 25,000 24,622,333
5.35% 7/16/98 -- P-1 30,000 30,000,000
5.37% 8/12/98 -- P-1 20,000 20,000,000
5.47% 9/14/98 -- P-1 25,000 25,000,000
-------- --------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION 135,000 134,622,333
-------- --------------
REPURCHASE AGREEMENTS -- 5.4%(c)
Goldman, Sachs & Co.
5.86% 4/1/98(d) -- -- 100,900 100,900,000
Morgan Stanley & Co.
5.80% 4/1/98(e) -- -- 100,000 100,000,000
-------- --------------
Total Repurchase Agreements 200,900 200,900,000
-------- --------------
Total Investments - 100.1% 3,722,722,906(f)
Liabilities in Excess of Other Assets, Net - (0.1%) (5,313,806)
--------------
NET ASSETS - 100.0% $3,717,409,100
==============
See Notes to Financial Statements.
11
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Net Assets (concluded) March 31, 1998
Prime Series
- --------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption Price Per:
Prime Share
($3,164,537,551 / 3,164,529,071 shares outstanding) $1.00
=====
Flag Investors Class A Share
($7,736,785 / 7,736,522 shares outstanding) $1.00
=====
Flag Investors Class B Share
($184,382 / 184,382 shares outstanding) $1.00
=====
Institutional Prime Share
($317,971,693 / 317,971,413 shares outstanding) $1.00
=====
Quality Cash Reserve Prime Share
($226,978,689 / 226,978,007 shares outstanding) $1.00
=====
- ----------
(a) Most commercial paper is traded on a discount basis. In such cases, the
interest rate shown represents the yield at time of purchase by the Fund.
(b) Master note is payable upon demand by the Fund upon no more than five days'
notice. Interest rates on master notes are redetermined weekly. Rates shown
are the rates in effect on March 31, 1998.
(c) Collateral on Tri-party repurchase agreements is taken into possession by
the Funds upon entering into the Tri-party 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.
(d) Dated 3/31/98 to be repurchased on 4/1/98, collateralized by U.S. Treasury
Notes with a market value of $102,918,187.
(e) Dated 3/31/98 to be repurchased on 4/1/98, collateralized by U.S. Treasury
Notes with a market value of $102,178,538.
(f) Aggregate cost for financial reporting and federal tax purposes.
(g) The credit ratings are not covered by the report of independent auditors.
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.
12
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Operations
For the year ended March 31, 1998
For the Year Ended
Prime Series March 31,
- --------------------------------------------------------------------------------
1998
Investment Income:
Interest income $184,011,736
------------
Expenses:
Investment advisory fee 8,582,839
Distribution fee 8,299,915
Transfer agent fees 2,661,928
Custodian fees 349,351
Directors' fees 232,075
Registration fees 1,001,689
Miscellaneous 933,217
------------
Total expenses 22,061,014
Less: Fees waived (136,191)
------------
Net expenses 21,924,823
------------
Net investment income 162,086,913
------------
Net realized gain (loss) from security transactions --
------------
Net increase in net assets resulting from operations $162,086,913
============
See Notes to Financial Statements.
13
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the For the
Year Ended Year Ended
Prime Series March 31, March 31,
- --------------------------------------------------------------------------------
1998 1997
Increase/(Decrease) in Net Assets:
Operations:
Net investment income $ 162,086,913 $ 132,679,566
Net realized gain/(loss) on sales of
investments -- 13,047
-------------- --------------
Net increase in net assets resulting
from operations 162,086,913 132,692,613
Distributions to shareholders from:
Net investment income:
BT Alex. Brown Cash Reserve
Prime Shares (138,011,807) (119,826,842)
BT Alex. Brown Cash Reserve Prime
Institutional Shares (13,656,968) (4,256,297)
Flag Investors Class A Shares (341,197) (295,562)
Flag Investors Class B Shares (12,545) (1,260)
Quality Cash Reserve Prime Shares (10,064,396) (8,299,605)
-------------- --------------
Total distributions (162,086,913) (132,679,566)
Capital share transactions, net 849,945,486 264,670,792
-------------- --------------
Total increase in net assets 849,945,486 264,683,839
Net Assets:
Beginning of period 2,867,463,614 2,602,779,775
-------------- --------------
End of period $3,717,409,100 $2,867,463,614
============== ==============
14
<PAGE>
This page intentionally left blank.
15
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Prime Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
For the Year Ended
March 31,
- --------------------------------------------------------------------------------
1998
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
--------------
Income from Investment Operations:
Net investment income 0.0494
Less Distributions:
Dividends from net investment income and/or
short-term gains (0.0494)
--------------
Net asset value at end of period $ 1.00
==============
Total Return:
Based on net asset value per share 5.05%
Ratios to Average Daily Net Assets:
Expenses 0.67%
Net investment income 4.94%
Supplemental Data:
Net assets at end of period $3,164,537,551
Number of shares outstanding at end of period 3,164,529,071
16
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended March 31,
- ----------------------------------------------------------------------------------------------------------------------------------
<S><C> 1997 1996 1995 1994
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------- -------------- -------------- --------------
Income from Investment Operations:
Net investment income 0.0478 0.0524 0.0442 0.0262
Less Distributions:
Dividends from net investment income and/or
short-term gains (0.0478) (0.0524) (0.0442) (0.0262)
-------------- -------------- -------------- --------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============== ==============
Total Return:
Based on net asset value per share 4.88% 5.36% 4.51% 2.65%
Ratios to Average Daily Net Assets:
Expenses 0.63% 0.60% 0.61% 0.62%
Net investment income 4.78% 5.21% 4.46% 2.62%
Supplemental Data:
Net assets at end of period $2,545,532,365 $2,386,681,216 $1,472,079,739 $1,350,334,979
Number of shares outstanding at end of period 2,545,523,885 2,386,684,392 1,472,077,488 1,350,332,916
</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 PERIOD)
For the Year Ended
March 31,
- --------------------------------------------------------------------------------
1998
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
----------
Income from Investment Operations:
Net investment income 0.0494
Less Distributions:
Dividends from net investment income and/or
short-term gains (0.0494)
----------
Net asset value at end of period $ 1.00
==========
Total Return:
Based on net asset value per share 5.05%
Ratios to Average Daily Net Assets:
Expenses 0.67%
Net investment income 4.94%
Supplemental Data:
Net assets at end of period $7,736,785
Number of shares outstanding at end of period 7,736,522
18
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
- ----------------------------------------------------------------------------------------------------------------------------------
<S><C> 1997 1996 1995 1994
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income 0.0478 0.0524 0.0442 0.0262
Less Distributions:
Dividends from net investment income and/or
short-term gains (0.0478) (0.0524) (0.0442) (0.0262)
---------- ----------- ----------- -----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== =========== =========== ===========
Total Return:
Based on net asset value per share 4.88% 5.36% 4.51% 2.65%
Ratios to Average Daily Net Assets:
Expenses 0.63% 0.60% 0.61% 0.62%
Net investment income 4.78% 5.25% 4.26% 2.62%
Supplemental Data:
Net assets at end of period $6,521,574 $5,976,831 $7,726,696 $18,116,648
Number of shares outstanding at end of period 6,521,310 5,976,824 7,726,698 18,116,633
</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,
- -------------------------------------------------------------------------------
1998 1997
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00 $ 1.00
-------- --------
Income from Investment Operations:
Net investment income 0.0418 0.0414
Less Distributions:
Dividends from net investment income
and/or short-term gains (0.0418) (0.0414)
-------- --------
Net asset value at end of period $ 1.00 $ 1.00
======== ========
Total Return:
Based on net asset value per share 4.27% 4.22%
Ratios to Average Net Assets:
Expenses 1.42% 1.38%
Net investment income 4.18% 4.14%
Supplemental Data:
Net assets at end of period $184,382 $227,098
Number of shares outstanding at end of period 184,382 227,098
- ----------
(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
and/or short-term gains (0.0361)
--------
Net asset value at end of period $ 1.00
========
Total Return:
Based on net asset value per share 3.69%
Ratios to Average 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 PERIOD)
For the Year Ended
March 31,
- --------------------------------------------------------------------------------
1998
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
-------------
Income from Investment Operations:
Net investment income 0.0519
Less Distributions:
Dividends from net investment income and/or
short-term gains (0.0519)
-------------
Net asset value at end of period $ 1.00
=============
Total Return:
Based on net asset value per share 5.31%
Ratios to Average Net Assets:
Expenses 0.42%
Net investment income 5.22%
Supplemental Data:
Net assets at end of period $317,971,693
Number of shares outstanding at end of period 317,971,413
22
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
- ----------------------------------------------------------------------------------------------------------------------------------
<S><C> 1997 1996 1995 1994
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ----------- ------------ -----------
Income from Investment Operations:
Net investment income 0.0503 0.0548 0.0472 0.0294
Less Distributions:
Dividends from net investment income and/or
short-term gains (0.0503) (0.0548) (0.0472) (0.0294)
------------ ----------- ------------ -----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ =========== ============ ===========
Total Return:
Based on net asset value per share 5.15% 5.62% 4.82% 2.98%
Ratios to Average Net Assets:
Expenses 0.38% 0.35% 0.36% 0.30%
Net investment income 5.04% 5.32% 4.57% 2.94%
Supplemental Data:
Net assets at end of period $117,812,047 $53,699,315 $11,904,716 $23,437,449
Number of shares outstanding at end of period 117,811,768 53,699,535 11,904,663 23,437,512
</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 PERIOD)
For the Year Ended
March 31,
- --------------------------------------------------------------------------------
1998
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
------------
Income from Investment Operations:
Net investment income 0.0465
Less Distributions:
Dividends from net investment income and/or
short-term gains (0.0465)
------------
Net asset value at end of period $ 1.00
=============
Total Return:
Based on net asset value per share 4.75%
Ratios to Average Daily Net Assets:
Expenses 0.96%(1)
Net investment income 4.66%(2)
Supplemental Data:
Net assets at end of period $226,978,689
Number of shares outstanding at end of period 226,978,007
(1) Ratio of expenses to average net assets prior to partial fee waivers assumed
was 1.02%, 0.98% and 0.95% for the years ended March 31, 1998, 1997 and
1996, respectively.
(2) Ratio of net investment income to average net assets prior to partial fee
waivers was 4.60%, 4.43% and 4.86% for the years ended March 31, 1998, 1997
and 1996, respectively.
24
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
- ----------------------------------------------------------------------------------------------------------------------------------
<S><C> 1997 1996 1995 1994
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------- ---------- -----------
Income from Investment Operations:
Net investment income 0.0449 0.0493 0.0402 0.0218
Less Distributions:
Dividends from net investment income and/or
short-term gains (0.0449) (0.0493) (0.0402) (0.0218)
------------ ------------- ---------- -----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============= ========== ===========
Total Return:
Based on net asset value per share 4.59% 5.04% 4.09% 2.20%
Ratios to Average Daily Net Assets:
Expenses 0.91%(1) 0.90%(1) 0.96% 1.06%
Net investment income 4.50%(2) 4.91%(2) 4.04% 2.18%
Supplemental Data:
Net assets at end of period $197,370,530 $156,412,213 $94,592,158 $92,678,440
Number of shares outstanding at end of period 197,369,848 156,412,393 94,591,979 92,678,268
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Notes to Financial Statements
NOTE 1--Significant Accounting Policies
BT 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: BT
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 BT Alex. Brown Cash
Reserve Prime Institutional Shares ("Prime Institutional Shares"). The Treasury
Series consists of two classes: BT Alex. Brown Cash Reserve Treasury Shares
("Treasury Shares") and BT Alex. Brown Cash Reserve Treasury Institutional
Shares ("Treasury Institutional Shares"). The Tax-Free Series consists of two
classes: BT Alex. Brown Cash Reserve Tax-Free Shares ("Tax-Free Shares") and
BT Alex Brown Cash Reserve Tax-Free Institutional Shares ("Tax-Free
Institutional Shares"). 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. 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
26
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
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.
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 recorded on an
accrual basis and 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.
27
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2--Investment Advisory Fees, Transactions with Affiliates and Other Fees
Investment Company Capital Corp. ("ICC"), a subsidiary of Bankers Trust
Corporation, 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.
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, 1998, ICC paid PIMC
$1,119,488 for sub-advisory services for the Tax-Free Series. Effective April 1,
1998 sub-advisory services will no longer be provided to the Fund.
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 $162,781 and the
Treasury Series paid $127,485 to ICC for accounting services for the year ended
March 31, 1998.
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 $66,777
to PFPC for accounting services for the year ended March 31, 1998. Effective
April 1, 1998 ICC began to perform accounting services for the Tax-Free Series.
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 $2,661,928, the Treasury Series paid $274,991 and the Tax-Free Series
paid $162,558 to ICC for transfer agent services for the year ended March 31,
1998.
28
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
NOTE 2--continued
As compensation for providing distribution services, the Prime Shares, Flag
Investors Class A Shares, Treasury Shares and the Tax-Free Shares pay ICC
Distributors, Inc. ("ICC Distributors"), which is not related to ICC, an annual
fee equal to 0.25% of these classes' average daily net assets. For the year
ended March 31, 1998, distribution fees aggregated $6,983,764, $17,244,
$1,700,377 and $1,784,579 for distribution services for the Prime Shares, Flag
Investors Class AShares, Treasury Shares and Tax-Free Shares, respectively. The
Quality Cash Shares and Flag Investors Class B Shares also pay ICC Distributors
an annual fee for distribution services. This fee is equal to .60% of the
Quality Cash Shares' aggregate average daily net assets or $1,295,907 for the
year ended March 31, 1998 and 1.00% of the Flag Investors Class B Shares'
aggregate average daily net assets or $3,000 for the year ended March 31, 1998.
Prior to September 1, 1997 Alex. Brown and Sons, Inc. served as the Fund's
distributor for the same rate of compensation and on substantially the same
terms as ICC Distributors and earned $2,742,862 for the Prime Shares, $7,178 for
Flag Investors Class A Shares, $507,956 for Quality Cash Shares, $1,266 for Flag
Investors Class B Shares, $655,375 for Treasury Shares, and $692,546 for
Tax-Free Shares for the year ended March 31, 1998.
ICC and ICC Distributors may voluntarily waive a portion of their advisory
or distribution fees for the Prime, Treasury and Tax-Free Series to preserve or
enhance each series' performance. These voluntary waivers are not contractual
and could change. Any waivers by ICC or ICC Distributors are limited to the fees
they actually receive for the fiscal year. ICC did not waive any advisory fees
for the year ended March 31, 1998. Alex. Brown voluntarily waived distribution
fees of $54,321 for the Quality Cash Shares for the period ended August 31, 1997
and ICC Distributors waived $81,870 for the period September 1, 1997 to March
31, 1998.
Effective September 22, 1997, Bankers Trust Company, a subsidiary of
Bankers Trust Corporation, became the Fund's custodian. Prior to September 22,
1997, PNC Bank served as the Fund's custodian. From September 22, 1997 to March
31, 1998, the Prime Series, Treasury Series, and Tax-Free Series paid $162,613,
$43,249, and $31,538 in custody expenses, respectively.
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, 1998 was $104,755 for the Prime Series, $32,916 for the
Treasury Series and $27,859 for the Tax-Free Series. The accrued liability at
March 31, 1998 was $222,192 for the Prime Series, $79,512 for the Treasury
Series and $69,283 for the Tax-Free Series.
29
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
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, 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, 1998 March 31, 1997
Prime Series: -------------- --------------
Sold:
Prime Shares 23,206,115,785 22,263,288,298
Flag Investors Class A Shares 6,559,775 9,331,912
Flag Investors Class B Shares 336,592 328,144
Institutional Prime Shares 4,625,290,052 912,825,877
Quality Cash Shares 1,179,123,143 1,001,597,821
Issued as reinvestment of dividends:
Prime Shares 129,425,606 113,931,978
Flag Investors Class A Shares 326,541 281,420
Flag Investors Class B Shares 8,133 1,264
Institutional Prime Shares 9,131,786 3,084,567
Quality Cash Shares 9,723,053 8,045,624
Redeemed:
Prime Shares (22,716,536,205) (22,218,380,783)
Flag Investors Class A Shares (5,671,105) (9,068,618)
Flag Investors Class B Shares (387,440) (112,510)
Institutional Prime Shares (4,434,262,192) (851,798,212)
Quality Cash Shares (1,159,238,038) (968,685,990)
--------------- --------------
Net increase 849,945,486 264,670,792
=============== ==============
Treasury Series:
Sold:
Treasury Shares 3,641,511,991 4,075,840,415
Institutional Treasury Shares 590,751,899 458,391,680
Issued as reinvestment of dividends:
Treasury Shares 30,209,607 29,377,891
Institutional Treasury Shares 2,007,274 1,597,049
Redeemed:
Treasury Shares (3,551,758,854) (4,093,588,948)
Institutional Treasury Shares (555,189,594) (450,602,609)
--------------- --------------
Net increase 157,532,323 21,015,478
=============== ==============
30
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- -------------------------------------------------------------------------------
NOTE 3--concluded
March 31, 1998 March 31, 1997
Tax-Free Series: -------------- --------------
Sold:
Tax Free Shares 5,853,542,023 5,222,168,283
Institutional Tax Free Shares 730,445,736 --
Issued as reinvestment of dividends:
Tax Free Shares 20,778,337 16,162,636
Institutional Tax Free Shares 276,010 --
Redeemed:
Tax Free Shares (5,680,345,603) (5,162,640,910)
Institutional Tax Free Shares (654,038,858) --
-------------- --------------
Net increase 270,657,645 75,690,009
============== ==============
NOTE 4--Net Assets
Prime Treasury Tax-Free
Series Series Series
-------------- ------------ ------------
Paid-in capital $3,717,402,132 $897,118,866 $917,940,919
Undistributed net
investment income 8,488 -- --
Undistributed net realized
gain/(loss) on sales
of investments (1,520) 87,815 (73,243)
-------------- ------------ ------------
$3,717,409,100 $897,206,681 $917,867,676
============== ============ ============
NOTE 5--Shareholder Meeting
Alex. Brown Incorporated, which was the parent corporation of the Fund's
investment advisor, merged into a subsidiary of Bankers Trust Corporation on
September 1, 1997. Due to the change in control of Alex. Brown Incorporated,
the BT Alex. Brown Cash Reserve Fund held a special meeting of its shareholders
on August 14, 1997. During the meeting, shareholders approved a new Investment
Advisory Agreement between the Fund, and ICC. The new agreement is
substantially the same as the former agreement. In addition, shareholders
elected the following Directors: James J. Cunnane, Richard T. Hale, John F.
Kroeger, Louis E. Levy, Eugene J. McDonald, Rebecca W. Rimel, Truman T. Semans,
and Carl W. Vogt.
31
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
BT Alex. Brown Cash Reserve Fund, Inc.
We have audited the accompanying statements of net assets of the Prime
Series of the BT Alex. Brown Cash Reserve Fund, Inc. as of March 31, 1998, 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 five 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.
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, 1998 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 the BT Alex. Brown Cash Reserve Fund, Inc. as of March 31, 1998,
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 five years in the period then ended, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND, L.L.P.
Philadelphia, Pennsylvania
May 1, 1998
32
<PAGE>
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<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- -------------------------------------------------------------------------------
Directors and Officers
RICHARD T. HALE TRUMAN T. SEMANS
Chairman Director
JAMES J. CUNNANE CARL W. VOGT, ESQ.
Director Director
JOHN F. KROEGER HARRY WOOLF
Director President
LOUIS E. LEVY AMY M. OLMERT
Director Secretary
EUGENE J. MCDONALD JOSEPH A. FINELLI
Director Treasurer
REBECCA W. RIMEL SCOTT J. LIOTTA
Director Assistant Secretary
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.
-------------------------------------------------
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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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 Communications Fund
(formerly 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:
ICC DISTRIBUTORS, INC.
