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FLAG INVESTORS
Investing With A Difference
Cash Reserve Prime
Shares
Annual Report
March 31, 1999
<PAGE>
FUND FEATURES
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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 and has done so since its inception on January 5, 1989. Although the
Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund. An investment in a
money market fund is neither insured nor guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
o Minimum Investment
The minimum initial investment is $2,000. Subsequent investments may be
$100 or more.
<PAGE>
LETTER TO SHAREHOLDERS
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We are pleased to report on the progress of your Fund for the twelve months
ended March 31, 1999.
Market Activity
The major force that dominated the money markets through the Fund's fiscal
year was the global financial crisis that began in Southeast Asia and spread to
countries around the world. The widening crisis, in turn, caused the Federal
Reserve Board to change monetary policy.
Domestically, the combination of a strong economy and low inflation allowed
the Federal Reserve Board to keep interest rates unchanged at 5.5% through the
second calendar quarter of 1998. But during the third quarter, investors began
to focus more heavily on the Asian crisis and on the political problems in the
Clinton administration. This uncertainty was followed by high volatility in the
money markets, as Russia devalued its currency and defaulted on its debt, weak
commodity prices dampened economic outlooks in Latin America, and concerns
regarding other foreign nations' potential problems surfaced. Investors began
scrambling for the greater liquidity and perceived safety of U.S. Treasury
securities and a major flight to quality was underway.
Still in the third calendar quarter, the announcement of a Federal
Reserve-orchestrated bailout package for a large hedge fund forced market
participants to understand that exposure to the Russian debacle was more
widespread than previously anticipated. In turn, corporate credit spreads
widened significantly. This led to a further rally in U.S. Treasuries plus
significant buying of high quality domestic securities.
The Federal Reserve effectively battled escalating illiquidity and
investors' growing risk aversion with three rapid moves, lowering interest rates
a total of three-quarters of a percent from September through November 1998. The
market responded favorably to the official easing of monetary policy. Rate
spreads between U.S. Treasuries and corporate securities began to narrow, and
the flight to quality premium was taken out of the Treasury market. Also fueling
positive bond market sentiment was a plunge in oil prices and other commodities
to their lowest levels in decades.
Even with all of these turbulent forces, the money market yield curve
remained relatively flat through mid-September, when an inversion at the short
end of the curve began. This inverted yield spread attracted investors to the
short end of the curve. By the end of the year, the yield curve steepened to a
slightly positive position, and the money markets continued to return to normal
in the first quarter of 1999.
1
<PAGE>
LETTER TO SHAREHOLDERS (CONTINUED)
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The tax-exempt money market yield curve did not experience the temporary
inversion, as dealers cheapened inventory to offset usual seasonal corporate
selling, thus increasing short-term yields dramatically. The short-term
tax-exempt market also experienced a sharp fall in new issue volume, reflecting
states' improved liquidity positions as a result of strong increases in personal
income and sales tax receipts. Municipal note volume overall declined 25% in
1998 over 1997, and state note issuance declined 49% year over year. This trend
continued into the first quarter of 1999. The decline in supply of both notes
and variable rate paper coupled with record growth in money market assets
resulted in a sharp reduction in short-term tax-exempt yields.
Investment Review
We continue to manage the Fund conservatively, maintaining high portfolio
quality, adjusting weighted average maturities in response to market conditions,
and strictly limiting exposure to any particular issue. Evidence of our
insistence on these unusually high investment standards can be found in 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. This rating is
the highest that S&P awards to money market funds. We have always believed that
a money fund is not a place to take chances or to speculate for additional
yield. At the same time, we are pleased to have generated competitive returns as
seen in the table below.
Our strategy continues to concentrate on investing in high quality issues
in which to invest. As of March 31, 1999, the Fund was invested 88.2% in U.S.
commercial paper, 7.1% in U.S. certificates of deposit, 2% in repurchase
agreements, 1.7% in corporate floating rate securities, and 1% in government
agency securities. With certain exceptions for specific supply/demand
situations, we maintained a weighted average maturity of 40 to 50 days for most
of the annual period. At March 31, 1999, the Fund's weighted average maturity
stood at 44 days.
Performance Comparisons
7-Day Current Yield as of 3/31/99
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Flag Investors Cash Reserve Prime Shares--Class A 4.27%
................................................................................
First Tier Rated Money Fund Average 4.22%
................................................................................
Source: IBC/Donoghue, Inc. "Money Fund Report," April 2, 1999.
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. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Fund. The Money Fund Averages are average yields of all funds in their
respective categories.
2
<PAGE>
LETTER TO SHAREHOLDERS (CONCLUDED)
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Looking Ahead
We anticipate that despite softness in some key employment statistics
toward the end of the Fund's annual period, the U.S. labor market and the U.S.
economy remain strong. Consumer fundamentals remain favorable, consumer spending
shows no signs of slowing, and housing activity is still high. Indeed, even the
industrial sector, which has been the weak link in the U.S. economic juggernaut,
has begun to show signs of life. Further, recent data suggest that underlying
inflation pressures remain tame, despite some uptick in energy prices. Given
this scenario, we believe the Federal Reserve Board is likely to stay on hold at
least into the summer. In turn, the U.S. money markets should remain fairly
positive throughout most of 1999. We intend to extend the portfolio's weighted
average maturity should attractive yield opportunities present themselves.
In addition, we will continue to concentrate the Fund in very high quality
credits and to maintain our conservative investment strategies and standards for
the foreseeable future.
We continue to believe that the conservative approach we apply to investing
on behalf of the Fund's Series will provide comfort, as well as competitive
yields, to our shareholders.
As always, we appreciate your continued support.
Sincerely,
/s/ Darlene M. Rasel
- --------------------
Darlene Rasel
Portfolio Manager
3
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
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Statement of Net Assets March 31, 1999
Rating(d)
----------- Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper - 88.4%
Automotive Finance - 8.4%
Ford Motor Credit Corp.
4.80% 4/9/99 A-1 P-1 $10,000 $ 9,989,333
4.84% 4/15/99 A-1 P-1 40,000 39,924,711
4.85% 4/23/99 A-1 P-1 20,000 19,940,722
4.79% 5/14/99 A-1 P-1 35,000 34,799,751
4.83% 7/15/99 A-1 P-1 6,500 6,408,431
PACCAR Financial Corp.
4.84% 4/1/99 A-1+ P-1 6,000 6,000,000
4.90% 4/16/99 A-1+ P-1 7,700 7,684,279
4.85% 4/26/99 A-1+ P-1 8,000 7,973,056
4.79% 5/11/99 A-1+ P-1 5,000 4,973,389
4.79% 5/12/99 A-1+ P-1 12,000 11,934,537
4.83% 6/1/99 A-1+ P-1 3,100 3,074,629
4.83% 6/2/99 A-1+ P-1 3,400 3,371,718
4.81% 6/22/99 A-1+ P-1 8,000 7,912,351
4.81% 6/24/99 A-1+ P-1 49,000 48,450,057
Toyota Motor Credit Corp.
5.00% 4/8/99 A-1+ P-1 10,000 9,990,278
4.78% 4/9/99 A-1+ P-1 20,000 19,978,756
4.80% 5/25/99 A-1+ P-1 45,000 44,676,000
4.84% 5/25/99 A-1+ P-1 23,218 23,049,437
4.81% 6/25/99 A-1+ P-1 25,000 24,716,076
4.81% 6/28/99 A-1+ P-1 20,000 19,764,844
------------
354,612,355
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Banks - 4.5%
Bank One Corp
4.83% 9/17/99 A-1 P-1 30,000 29,319,775
Suntrust Bank
4.84% 5/26/99 A-1 P-1 15,000 14,889,083
Wells Fargo Bank
4.83% 4/9/99 A-1 P-1 25,000 24,973,167
4.81% 4/30/99 A-1 P-1 25,000 24,903,132
4.81% 5/28/99 A-1 P-1 25,000 24,809,604
4.82% 6/30/99 A-1 P-1 25,000 24,698,750
4.83% 7/19/99 A-1 P-1 20,000 19,707,517
4.83% 7/21/99 A-1 P-1 25,000 24,627,688
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187,928,716
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Beverages - Soft Drinks - 3.6%
Coca-Cola Co.
4.75% 4/27/99 A-1+ P-1 4,500 4,484,563
4.75% 4/28/99 A-1+ P-1 40,000 39,857,500
4.82% 5/17/99 A-1+ P-1 14,875 14,783,387
4
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FLAG INVESTORS CASH RESERVE PRIME SHARES
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Rating(d)
----------- Par
Prime Series S&P Moody's (000) Value
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Commercial Paper (continued)
Beverages - Soft Drinks (continued)
4.78% 5/21/99 A-1+ P-1 $20,000 $ 19,867,222
4.81% 5/28/99 A-1+ P-1 50,000 49,619,604
4.80% 6/23/99 A-1+ P-1 19,791 19,571,980
PepsiCo, Inc.
4.81% 8/19/99 A-1 P-1 5,000 4,996,830
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153,181,086
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Chemicals, General - 3.6%
E.I. duPont de Nemours and Co.
4.79% 4/12/99 A-1+ P-1 8,200 8,187,998
4.77% 4/29/99 A-1+ P-1 50,000 49,814,373
4.79% 4/29/99 A-1+ P-1 40,000 39,850,978
4.80% 5/13/99 A-1+ P-1 15,000 14,916,000
4.79% 5/14/99 A-1+ P-1 40,000 39,771,144
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152,540,493
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Chemicals, Specialty - 2.2%
Minnesota Mining & Manufacturing Co.
4.80% 4/19/99 A-1+ P-1 15,000 14,964,000
4.80% 5/21/99 A-1+ P-1 25,000 24,833,333
4.80% 7/19/99 A-1+ P-1 55,000 54,200,667
------------
93,998,000
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Computer & Office Equipment - 1.2%
Pitney Bowes Credit Corp.
4.84% 4/5/99 A-1+ P-1 25,000 24,986,556
4.90% 4/12/99 A-1+ P-1 24,300 24,263,618
------------
49,250,174
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Electrical and Electronics - 3.7%
Motorola Credit Corp.
4.81% 6/10/99 A-1+ P-1 30,000 29,719,417
4.81% 6/11/99 A-1+ P-1 26,000 25,753,354
Motorola Inc.
4.80% 4/16/99 A-1+ P-1 10,000 9,980,000
4.82% 5/27/99 A-1+ P-1 35,000 34,737,578
4.83% 5/27/99 A-1+ P-1 22,130 21,963,730
4.82% 6/4/99 A-1+ P-1 35,000 34,700,089
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156,854,168
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Entertainment - 1.5%
Walt Disney Co.
4.85% 4/15/99 A-1 P-1 25,000 24,952,847
4.82% 9/24/99 A-1 P-1 40,000 39,057,422
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64,010,269
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5
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FLAG INVESTORS CASH RESERVE PRIME SHARES
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Statement of Net Assets (continued) March 31, 1999
Rating(d)
----------- Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper (continued)
Finance, Consumer - 5.8%
American General Finance Corp.
4.83% 6/10/99 A-1 P-1 $25,000 $ 24,765,208
4.84% 6/11/99 A-1 P-1 25,000 24,761,361
4.83% 7/26/99 A-1 P-1 35,000 34,455,283
USAA Capital Corp.
4.78% 4/7/99 A-1+ P-1 18,810 18,795,015
4.80% 4/14/99 A-1+ P-1 25,000 24,956,667
4.85% 4/15/99 A-1+ P-1 10,000 9,981,139
4.82% 4/16/99 A-1+ P-1 27,000 26,945,775
4.80% 4/30/99 A-1+ P-1 10,000 9,961,333
4.80% 5/13/99 A-1+ P-1 15,000 14,916,000
4.82% 5/13/99 A-1+ P-1 15,000 14,915,650
4.76% 5/28/99 A-1+ P-1 6,700 6,649,504
4.83% 6/4/99 A-1+ P-1 12,242 12,136,882
4.80% 6/25/99 A-1+ P-1 20,000 19,773,333
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243,013,150
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Finance, Leasing - 2.6%
International Lease Financial Corp.
4.81% 4/9/99 A-1+ P-1 25,000 24,973,278
4.83% 4/9/99 A-1+ P-1 20,000 19,978,533
4.83% 4/13/99 A-1+ P-1 22,000 21,964,580
4.81% 5/5/99 A-1+ P-1 25,000 24,886,431
4.83% 6/3/99 A-1+ P-1 8,100 8,031,535
4.73% 7/20/99 A-1+ P-1 6,000 5,913,283
4.84% 9/16/99 A-1+ P-1 4,450 4,349,489
------------
110,097,129
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Finance, Diversified - 6.6%
Associates Corp. of North America
4.83% 4/12/99 A-1+ P-1 8,000 7,988,193
4.85% 4/30/99 A-1+ P-1 15,000 14,941,396
4.78% 5/14/99 A-1+ P-1 25,000 24,857,324
4.82% 5/17/99 A-1+ P-1 50,000 49,692,056
Associates First Capital Corp.
4.83% 5/24/99 A-1+ P-1 22,000 21,843,562
General Electric Capital Corp.
5.02% 4/23/99 A-1+ P-1 15,000 14,953,983
4.82% 5/5/99 A-1+ P-1 12,000 11,945,373
4.82% 6/3/99 A-1+ P-1 35,000 34,704,775
4.83% 6/4/99 A-1+ P-1 20,000 19,828,267
4.77% 6/18/99 A-1+ P-1 20,000 19,793,300
4.88% 7/6/99 A-1+ P-1 13,000 12,830,827
6
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
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Rating(d)
----------- Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper (continued)
Finance, Diversified (continued)
4.83% 7/28/99 A-1+ P-1 $20,000 $ 19,683,367
4.83% 8/16/99 A-1+ P-1 15,000 14,724,288
General Electric Co.
4.85% 6/3/99 A-1+ P-1 10,000 9,915,125
------------
277,701,836
------------
Food - 0.6%
Campbell Soup Co.
4.80% 6/14/99 A-1+ P-1 23,790 23,555,272
------------
Household Products - 6.8%
Johnson & Johnson
4.85% 4/9/99 A-1+ P-1 30,000 29,967,667
4.75% 5/10/99 A-1+ P-1 50,000 49,742,708
4.75% 6/2/99 A-1+ P-1 28,200 27,969,308
4.78% 7/20/99 A-1+ P-1 6,900 6,799,222
4.78% 7/21/99 A-1+ P-1 22,500 22,168,388
Procter & Gamble Co.
4.75% 5/13/99 A-1+ P-1 34,000 33,811,583
4.78% 5/13/99 A-1+ P-1 50,000 49,721,167
4.80% 5/27/99 A-1+ P-1 40,000 39,701,333
4.82% 5/27/99 A-1+ P-1 5,000 4,962,511
4.82% 6/18/99 A-1+ P-1 20,000 19,791,133
------------
284,635,020
------------
Insurance, Property and Casualty - 1.2%
A.I. Credit Corp.
4.80% 4/8/99 A-1+ P-1 50,000 49,953,333
------------
Integrated Oil - 3.5%
Shell Oil Co.
4.78% 5/13/99 A-1+ P-1 50,000 49,721,167
4.79% 5/14/99 A-1+ P-1 50,000 49,713,931
4.82% 5/14/99 A-1+ P-1 50,000 49,712,139
------------
149,147,237
------------
Oil Transportation - 0.9%
Colonial Pipeline Co.
4.85% 4/23/99 A-1+ P-1 2,000 1,994,072
4.84% 5/10/99 A-1+ P-1 15,200 15,120,301
4.83% 6/21/99 A-1+ P-1 5,000 4,945,663
4.80% 7/9/99 A-1+ P-1 3,500 3,453,800
4.83% 7/28/99 A-1+ P-1 12,000 11,810,020
------------
37,323,856
------------
7
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
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Statement of Net Assets (continued) March 31, 1999
Rating(d)
----------- Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper (continued)
Pharmaceuticals - 7.9%
Abbott Laboratories
4.82% 4/16/99 A-1+ P-1 $25,550 $ 25,498,687
4.88% 4/26/99 A-1+ P-1 28,500 28,403,417
Pfizer Inc.
4.82% 4/13/99 A-1+ P-1 60,000 59,903,600
4.85% 4/16/99 A-1+ P-1 50,000 49,898,958
4.82% 4/30/99 A-1+ P-1 40,000 39,844,689
Schering - Plough Corp.
4.75% 4/16/99 A-1+ P-1 22,399 22,354,669
4.85% 4/20/99 A-1+ P-1 4,800 4,787,713
4.82% 5/14/99 A-1+ P-1 22,000 21,873,341
4.83% 5/14/99 A-1+ P-1 23,000 22,867,309
4.82% 5/28/99 A-1+ P-1 18,000 17,862,630
Warner - Lambert Co.
4.79% 5/17/99 A-1+ P-1 30,000 29,816,383
4.82% 5/18/99 A-1+ P-1 11,150 11,079,836
------------
334,191,232
------------
Publishing - 0.4%
Gannett Co.
4.90% 4/23/99 A-1+ P-1 14,600 14,556,281
------------
Retail - Food Chains - 1.2%
McDonald's Corp.
4.95% 4/1/99 A-1+ P-1 50,000 50,000,000
------------
Structured Finance - 11.2%
CIESCO, L.P.
4.85% 4/7/99 A-1+ P-1 15,000 14,987,875
4.80% 4/9/99 A-1+ P-1 45,000 44,952,000
4.86% 4/13/99 A-1+ P-1 30,500 30,450,590
4.85% 5/7/99 A-1+ P-1 15,000 14,927,250
4.78% 5/11/99 A-1+ P-1 20,000 19,893,778
4.85% 5/14/99 A-1+ P-1 17,945 17,841,044
4.83% 6/8/99 A-1+ P-1 15,000 14,863,150
Corporate Receivables Corp.
4.83% 4/7/99 A-1+ P-1 40,000 39,967,800
4.83% 4/14/99 A-1+ P-1 10,000 9,982,558
4.82% 4/23/99 A-1+ P-1 15,000 14,955,817
4.83% 5/21/99 A-1+ P-1 30,000 29,798,750
4.84% 5/21/99 A-1+ P-1 35,000 34,764,722
4.87% 6/4/99 A-1+ P-1 28,000 27,757,582
8
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Rating(d)
----------- Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Commercial Paper (concluded)
Structured Finance (continued)
Corporate Asset Funding Co., Inc.
4.81% 4/22/99 A-1+ P-1 $20,000 $ 19,943,883
4.88% 5/6/99 A-1+ P-1 40,000 39,810,222
4.87% 5/11/99 A-1+ P-1 12,000 11,935,067
4.84% 5/12/99 A-1+ P-1 45,000 44,751,950
4.86% 5/25/99 A-1+ P-1 25,000 24,817,750
4.84% 6/3/99 A-1+ P-1 15,000 14,872,950
--------------
471,274,738
--------------
Telephone - 11.0%
Ameritech Capital Funding Corp.
4.85% 4/22/99 A-1+ P-1 52,755 52,605,747
AT&T Corp.
4.84% 4/14/99 A-1+ P-1 20,000 19,965,044
4.83% 5/20/99 A-1+ P-1 30,000 29,802,775
4.81% 6/8/99 A-1+ P-1 40,000 39,636,578
Bell Atlantic Network Funding Corp.
4.76% 4/5/99 A-1+ P-1 20,000 19,989,422
4.80% 4/6/99 A-1+ P-1 17,000 16,988,667
Bell South Capital Funding Corp.
4.78% 4/13/99 A-1+ P-1 8,000 7,987,253
4.80% 4/14/99 A-1+ P-1 50,000 49,913,333
4.80% 4/23/99 A-1+ P-1 29,000 28,914,933
4.84% 4/23/99 A-1+ P-1 30,000 29,911,267
Bell South Telecommunications, Inc.
4.80% 4/9/99 A-1+ P-1 10,000 9,989,333
4.85% 4/14/99 A-1+ P-1 20,000 19,964,972
SBC Communications Inc.
5.00% 4/1/99 A-1+ P-1 75,000 75,000,000
4.81% 5/6/99 A-1+ P-1 40,000 39,812,944
4.81% 5/7/99 A-1+ P-1 25,000 24,879,750
--------------
465,362,018
--------------
Total Commercial Paper
(Cost $3,723,186,363) 3,723,186,363
--------------
Floating Rate - Notes - 1.5%
Associates Corp. of North America
4.89% 3/20/00 A-1+ P-1 40,000 39,973,208
Federal Home Loan Mortgage Corp.
4.77% 11/9/99 A-1+ P-1 25,000 24,989,569
--------------
Total Floating Rate - Note
(Cost $64,962,777) 64,962,777
--------------
9
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Net Assets (concluded) March 31, 1999
Rating(d)
----------- Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Medium-Term Note - 0.1%
Pitney Bowes, Inc.
6.54% 7/15/99 A-1+ P-1 $ 5,000 $ 5,023,414
-------------
Total Medium-Term Note
(Cost $5,023,414) 5,023,414
-------------
Federal Home Loan Bank - 0.2%
FHLB
5.53% 7/27/99 A-1+ P-1 10,425 10,423,310
-------------
Total Federal Home Loan Bank
(Cost $10,423,310) 10,423,310
-------------
Federal Home Loan Mortgage - 0.4%
FHLM
4.7% 4/30/99 AAA -- 15,000 14,943,209
-------------
Total Federal Home Loan
(Cost $14,943,209) 14,943,209
-------------
Federal National Mortgage Association - 0.5%
FNMA
4.92% 6/18/99 -- P-1 20,000 19,786,800
-------------
Total Federal National Mortgage Association
(Cost $19,786,800) 19,786,800
-------------
Certificates of Deposit - 7.0%
First Chicago NBD Corporation
4.83% 4/20/99 A-1+ P-1 10,000 10,000,000
4.85% 5/24/99 A-1+ P-1 50,000 50,000,000
4.90% 6/7/99 A-1+ P-1 40,000 40,000,000
4.88% 6/30/99 A-1+ P-1 25,000 25,000,000
NationsBank Corporation
5.02% 5/3/99 A-1+ P-1 25,000 25,000,000
5.00% 5/10/99 A-1+ P-1 35,000 35,000,000
4.92% 7/6/99 A-1+ P-1 10,000 10,000,000
Wachovia Bank
4.86% 4/22/99 A-1+ P-1 50,000 50,000,289
4.85% 5/20/99 A-1+ P-1 50,000 50,000,000
-------------
Certificates of Deposit
(Cost $295,000,289) 295,000,289
-------------
10
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Rating(d)
----------- Par
Prime Series S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Repurchase Agreement - 2.0%(b)
Goldman Sachs & Co.
4.90% 4/1/99(e) -- -- $85,721 $ 85,721,970
--------------
Total Repurchase Agreements
(Cost $85,721,970) 85,721,970
--------------
Total Investments--100.0%
(Cost $4,219,048,132)(c) $4,219,048,132
Liabilities in Excess of Other Assets, Net--0.0% (5,281,780)
--------------
Net Assets--100.0% $4,213,766,352
--------------
Net Asset Value, Offering and Redemption Price Per:
Prime Share
($3,727,990,170 divided by 3,727,906,079 shares outstanding) $1.00
=====
Flag Investors Class A Share
($13,028,272 divided by 13,027,769 shares outstanding) $1.00
=====
Flag Investors Class B Share
($2,355,863 divided by 2,355,780 shares outstanding) $1.00
=====
Institutional Prime Share
($388,447,492 divided by 388,440,636 shares outstanding) $1.00
=====
Quality Cash Reserve Prime Share
($81,944,555 divided by 81,938,027 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) Collateral on repurchase agreements is taken into possession by the agent
of the Fund upon entering into the repurchase agreement. The collateral is
marked to market daily to insure market value as being at least 102 percent
of the resale price of the repurchase agreement at time of purchase.
(c) Aggregate cost for financial reporting and federal tax purposes.
(d) The credit ratings are not covered by the report of independent auditors.
(e) Dated 3/31/99 principal and interest in the amount of 85,733,638, due
04/01/99 (Collateralized by U.S. Treasury Note, par value of $48,920,000,
coupon rate of 6.375, due 03/31/01, value of $50,185,071; U.S. Treasury
Bond, par value of $1,789,000, coupon rate of 10.75%, due 08/15/05, value
of $2,326,083; U.S. Treasury Bill, par value of $34,930,000, coupon rate of
4.51%, due 04/01/99, value of $34,925,564).
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>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statement of Operations
For the
Year Ended
Prime Series March 31,
- --------------------------------------------------------------------------------
1999
Investment Income:
Interest income $202,392,068
------------
Expenses:
Investment advisory fees 9,800,088
Distribution fees 9,527,563
Transfer agent fees 2,213,530
Registration fees 557,046
Custodian fees 476,010
Shareholder service fees 442,438
Professional fees 177,169
Accounting fees 167,901
Directors' fees 86,534
Miscellaneous 368,231
------------
Total expenses 23,816,510
Less: Fees waived (114,329)
------------
Net expenses 23,702,181
------------
Net investment income 178,689,887
Net realized gain from security transactions 88,481
------------
Net increase in net assets resulting from operations $178,778,368
============
See Notes to Financial Statements
12
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Prime Series For the Years Ended March 31,
- --------------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income $ 178,689,887 $ 162,086,913
Net realized gain from security transactions 88,481 --
-------------- --------------
Net increase in net assets resulting
from operations 178,778,368 162,086,913
-------------- --------------
Distributions to shareholders from:
Net investment income:
BT Alex. Brown Cash Reserve
Prime Shares (151,410,202) (138,011,807)
BT Alex. Brown Cash Reserve Prime
Institutional Shares (16,058,016) (13,656,968)
Flag Investors Cash Reserve Prime Shares -
Class A (435,677) (341,197)
Flag Investors Cash Reserve Prime Shares -
Class B (72,373) (12,545)
Quality Cash Reserve Prime Shares (10,713,744) (10,064,396)
-------------- --------------
Total distributions (178,690,012) (162,086,913)
-------------- --------------
Capital share transactions, net 496,268,896 849,945,486
-------------- --------------
Total increase in net assets 496,357,252 849,945,486
Net Assets:
Beginning of period 3,717,409,100 2,867,463,614
-------------- --------------
End of period $4,213,766,352 $3,717,409,100
============== ==============
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- ----------------------------------------------------------------------
Financial Highlights -- Prime Shares
(For shares outstanding throughout each period)
For the
Year Ended
March 31,
- ---------------------------------------------------------------------
<S> <C>
1999
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
--------------
Income from Investment Operations:
Net investment income 0.0473
Less Distributions:
Dividends from net investment income (0.0473)
--------------
Net asset value at end of period $ 1.00
==============
Total Return:
Based on net asset value per share 4.84%
Ratios to Average Daily Net Assets:
Expenses 0.63%
Net investment income 4.71%
Supplemental Data:
Net assets at end of period $3,727,990,170
Number of shares outstanding at end of period 3,727,906,079
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- ---------------------------------------------------------------------------------------------------------------------------
Financial Highlights -- Prime Shares
(For shares outstanding throughout each period)
For the Years Ended March 31,
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 1997 1996 1995
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 0.0494 0.0478 0.0524 0.0442
Less Distributions:
Dividends from net investment income (0.0494) (0.0478) (0.0524) (0.0442)
-------------- -------------- -------------- ---------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============== ===============
Total Return:
Based on net asset value per share 5.05% 4.88% 5.36% 4.51%
Ratios to Average Daily Net Assets:
Expenses 0.67% 0.63% 0.60% 0.61%
Net investment income 4.94% 4.78% 5.21% 4.46%
Supplemental Data:
Net assets at end of period $3,164,537,551 $2,545,532,365 $2,386,681,216 $1,472,079,739
Number of shares outstanding at end of period 3,164,529,071 2,545,523,885 2,386,684,392 1,472,077,488
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- ----------------------------------------------------------------------
Financial Highlights -- Flag Investors Class A Shares
(For shares outstanding throughout each period)
For the
Year Ended
March 31,
1999
- ---------------------------------------------------------------------
<S> <C>
1999
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
-----------
Income from Investment Operations:
Net investment income 0.0474
Less Distributions:
Dividends from net investment income (0.0474)
-----------
Net asset value at end of period $ 1.00
===========
Total Return:
Based on net asset value per share 4.85%
Ratios to Average Daily Net Assets:
Expenses 0.63%
Net investment income 4.67%
Supplemental Data:
Net assets at end of period $13,028,272
Number of shares outstanding at end of period 13,027,769
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- ----------------------------------------------------------------------------------------------------------------
Financial Highlights -- Flag Investors Class A Shares
(For shares outstanding throughout each period)
For the Years Ended March 31,
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 1997 1996 1995
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 0.0494 0.0478 0.0524 0.0442
Less Distributions:
Dividends from net investment income (0.0494) (0.0478) (0.0524) (0.0442)
---------- ---------- ---------- ----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ==========
Total Return:
Based on net asset value per share 5.05% 4.88% 5.36% 4.51%
Ratios to Average Daily Net Assets:
Expenses 0.67% 0.63% 0.60% 0.61%
Net investment income 4.94% 4.78% 5.25% 4.26%
Supplemental Data:
Net assets at end of period $7,736,785 $6,521,574 $5,976,831 $7,726,696
Number of shares outstanding at end of period 7,736,522 6,521,310 5,976,824 7,726,698
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- ---------------------------------------------------------------------
Financial Highlights -- Flag Investors Class B Shares
(For shares outstanding throughout each period)
For the
Year Ended
March 31,
- ---------------------------------------------------------------------
<S> <C>
1999
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
----------
Income from Investment Operations:
Net investment income 0.0400
Less Distributions:
Dividends from net investment income (0.0400)
----------
Net asset value at end of period $ 1.00
==========
Total Return:
Based on net asset value per share 4.07%
Ratios to Average Net Assets:
Expenses 1.37%
Net investment income 3.92%
Supplemental Data:
Net assets at end of period $2,355,863
Number of shares outstanding at end of period 2,355,780
</TABLE>
- ----------
(1) Commencement of operations
(2) Annualized
18
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------------------------------------
Financial Highlights -- Flag Investors Class B Shares
(For shares outstanding throughout each period)
For the Period
For the Years April 3, 1995(1)
Ended March 31, through March 31,
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998 1997 1996
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from Investment Operations:
Net investment income 0.0418 0.0414 0.0361
Less Distributions:
Dividends from net investment income (0.0418) (0.0414) (0.0361)
-------- -------- --------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return:
Based on net asset value per share 4.27% 4.22% 3.69%
Ratios to Average Net Assets:
Expenses 1.42% 1.38% 1.38%(2)
Net investment income 4.18% 4.14% 4.30%(2)
Supplemental Data:
Net assets at end of period $184,382 $227,098 $ 10,200
Number of shares outstanding at end of period 184,382 227,098 10,200
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- ----------------------------------------------------------------------
Financial Highlights -- Prime Institutional Shares
(For shares outstanding throughout each period)
For the
Year Ended
March 31,
- ----------------------------------------------------------------------
<S> <C>
1999
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
------------
Income from Investment Operations:
Net investment income 0.0499
Less Distributions:
Dividends from net investment income (0.0499)
------------
Net asset value at end of period $ 1.00
============
Total Return:
Based on net asset value per share 5.11%
Ratios to Average Daily Net Assets:
Expenses 0.36%
Net investment income 4.98%
Supplemental Data:
Net assets at end of period $388,447,492
Number of shares outstanding at end of period 388,440,636
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- ----------------------------------------------------------------------------------------------------------------------
Financial Highlights -- Prime Institutional Shares
(For shares outstanding throughout each period)
For the Years Ended March 31,
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 1997 1996 1995
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 0.0519 0.0503 0.0548 0.0472
Less Distributions:
Dividends from net investment income (0.0519) (0.0503) (0.0548) (0.0472)
------------ ------------ ----------- -----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============ =========== ===========
Total Return:
Based on net asset value per share 5.31% 5.15% 5.62% 4.82%
Ratios to Average Daily Net Assets:
Expenses 0.42% 0.38% 0.35% 0.36%
Net investment income 5.22% 5.04% 5.32% 4.57%
Supplemental Data:
Net assets at end of period $317,971,693 $117,812,047 $53,699,315 $11,904,716
Number of shares outstanding at end of period 317,971,413 117,811,768 53,699,535 11,904,663
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------
Financial Highlights -- Quality Cash Reserve Prime Shares
(For shares outstanding throughout each period)
For the
Year Ended
March 31,
- --------------------------------------------------------------------------
<S> <C>
1999
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
-----------
Income from Investment Operations:
Net investment income 0.0444
Less Distributions:
Dividends from net investment income (0.0444)
-----------
Net asset value at end of period $ 1.00
===========
Total Return
Based on net asset value per share 4.53%
Ratios to Average Daily Net Assets:
Expenses 0.92%(1)
Net investment income 4.44%(2)
Supplemental Data:
Net assets at end of period $81,944,555
Number of shares outstanding at end of period 81,938,027
</TABLE>
- ----------
(1) Ratios of expenses to average net assets prior to partial fee waivers was
0.97%, 1.02%, 0.98% and 0.95% for the years ended March 31, 1999, 1998,
1997 and 1996, respectively.
(2) Ratios of net investment income to average net assets prior to partial fee
waivers was 4.39%, 4.60%, 4.43% and 4.86% for the years ended March 31,
1999, 1998, 1997 and 1996, respectively.
22
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
Financial Highlights -- Quality Cash Reserve Prime Shares
(For shares outstanding throughout each period)
For the Years Ended March 31,
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 1997 1996 1995
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 0.0465 0.0449 0.0493 0.0402
Less Distributions:
Dividends from net investment income (0.0465) (0.0449) (0.0493) (0.0402)
------------ ------------ ------------ -----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============ ============ ===========
Total Return
Based on net asset value per share 4.75% 4.59% 5.04% 4.09%
Ratios to Average Daily Net Assets:
Expenses 0.96%(1) 0.91%(1) 0.90%(1) 0.96%
Net investment income 4.66%(2) 4.50%(2) 4.91%(2) 4.04%
Supplemental Data:
Net assets at end of period $226,978,689 $197,370,530 $156,412,213 $94,592,158
Number of shares outstanding at end of period 226,978,007 197,369,848 156,412,393 94,591,979
</TABLE>
See Notes to Financial Statements.
23
<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 is in accordance with Rule 2a-7 of the
Investment Company Act of 1940 and, 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
24
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
NOTE 1 -- concluded
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 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 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
D. Security Transactions, Investment Income, 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 gain or loss on 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 classes' 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.
25
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2 -- Investment Advisory Fee, 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.
As compensation for its accounting services, the Prime Series, Treasury
Series and Tax-Free Series pay ICC an annual fee that is calculated daily and
paid monthly from its three series' average daily net assets. The Prime Series
paid $167,901, the Treasury Series paid $134,044 and the Tax-Free Series paid
$137,933 for accounting services for the year ended March 31, 1999.
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
$2,213,530, the Treasury Series paid $303,231 and the Tax-Free Series paid
$127,823 to ICC for transfer agent services for the year ended March 31, 1999.
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., a member of the Forum Group of Companies, ("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, 1999,
Distribution fees aggregated $8,036,615, $23,274, $1,964,145 and $2,232,564 for
distribution services for the Prime Shares, Flag Investors Class A Shares,
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 $1,449,220 for the year ended March 31,
1999 and 1.00% (includes .25% shareholder servicing fee) of the Flag Investors
Class B Shares' aggregate average daily net assets or $18,454.
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. ICC did not waive any advisory fees for the year
26
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Note 2 -- continued
ended March 31, 1999. ICC Distributors voluntarily waived $114,329 of its
distribution fees for the period April 1, 1998 to December 31, 1998. There was
no waiver from January 1, 1999 thru March 31, 1999.
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, 1999 was $104,755 for the Prime Series, $32,916 for the Treasury
Series and $15,403 for the Tax-Free Series. The accrued liability at March 31,
1999 was $267,276 for the Prime Series, $92,176 for the Treasury Series and
$70,975 for the Tax-Free Series.
On November 30, 1998, Bankers Trust Corporation entered into an Agreement
and Plan of Merger with Deutsche Bank AG under which Bankers Trust Corporation
would merge with and into a subsidiary of Deutsche Bank AG. Deutsche Bank AG is
a major global banking institution that is engaged in a wide range of financial
services, including investment management, mutual funds, retail and commercial
banking, investment banking and insurance. The transaction is contingent upon
various regulatory approvals, and continuation of the Fund's advisory
relationship with ICC thereafter is subject to the approval of Fund
shareholders. On March 30, 1999, the Board of Directors approved a new advisory
agreement between ICC and the Fund in the event the merger is approved and
completed. The new advisory agreement and a new sub-advisory agreement will be
subject to shareholder approval. If the transaction is approved and completed,
Deutsche Bank AG, as ICC's new parent company, will control its operations as
investment advisor. ICC believes that, under this new arrangement, the services
provided to the Fund will be maintained at their current level.
Effective January 1, 1999 BT Alex. Brown Cash Reserve Fund, Inc. (the
"Fund") has adopted the Shareholder Service Plan (the "Plan") for the BT Alex.
Brown Cash Reserve Shares of the Prime, Treasury and Tax-Free Series of the Fund
("Shares") in order to provide compensation to third parties ("Shareholder
Servicing Agents") who provide shareholder services to clients ("Clients") who
from time to time beneficially own shares. In consideration of these services
provided by any Shareholder Servicing Agent, the Fund will pay the Distributor
an annual fee, calculated daily and paid monthly equal to 0.05% of the shares'
daily average net assets.
Effective January 1, 1999 the Advisor is waiving its fee on the Treasury
Series by 0.05%. Absent such fee waivers, Management Fees would be 0.25% and
Total Fund Operating Expenses should be 0.59% on the retail shares and
Management Fees would be 0.25% and Total Fund Operating Expenses should be 0.34%
27
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
on the institutional shares based on average daily net assets. The waiver is
voluntary and may be terminated at any time.
NOTE 3 -- Capital Stock and Share Information
The Fund is authorized to issue up to 9 billion shares of $.001 par value
capital stock (5.4 billion Prime Series, 1.5 billion Treasury Series, 1.75
billion Tax-Free Series and 350 million undesignated). Transactions in shares of
the Fund were as follows:
For the For the
Year Ended Year Ended
March 31, March 31,
1999(1) 1998
--------------- ---------------
Prime Series:
Sold:
Prime Shares 21,238,313,843 23,206,115,785
Flag Investors Class A Shares 86,081,920 6,559,775
Flag Investors Class B Shares 8,010,702 336,592
Institutional Prime Shares 5,126,320,627 4,625,290,052
Quality Cash Shares 1,143,097,219 1,179,123,143
Issued as reinvestment of dividends:
Prime Shares 143,654,045 129,425,606
Flag Investors Class A Shares 385,752 326,541
Flag Investors Class B Shares 55,849 8,133
Institutional Prime Shares 12,241,514 9,131,786
Quality Cash Shares 10,243,851 9,723,053
Redeemed:
Prime Shares (20,818,590,880) (22,716,536,205)
Flag Investors Class A Shares (81,176,425) (5,671,105)
Flag Investors Class B Shares (5,895,153) (387,440)
Institutional Prime Shares (5,068,292,918) (4,434,262,192)
Quality Cash Shares (1,298,381,050) (1,159,238,038)
--------------- ---------------
Net increase 496,268,896 849,945,486
=============== ===============
Treasury Series:
Sold:
Treasury Shares 4,361,406,499 3,641,511,991
Institutional Treasury Shares 826,662,420 590,751,899
Issued as reinvestment of dividends:
Treasury Shares 32,190,535 30,209,607
Institutional Treasury Shares 2,757,290 2,007,274
Redeemed:
Treasury Shares (4,375,328,973) (3,551,758,854)
Institutional Treasury Shares (805,626,922) (555,189,594)
--------------- ---------------
Net increase 42,060,849 157,532,323
=============== ===============
28
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FLAG INVESTORS CASH RESERVE PRIME SHARES
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NOTE 3 -- concluded
For the For the
Year Ended Year Ended
March 31, March 31,
1999 1998
--------------- ---------------
Tax-Free Series:
Sold:
Tax Free Shares 5,341,857,730 5,853,542,023
Institutional Tax Free Shares 1,008,685,495 730,445,736
Issued as reinvestment of dividends:
Tax Free Shares 23,390,210 20,778,337
Institutional Tax Free Shares 1,157,547 276,010
Redeemed:
Tax Free Shares (5,159,012,230) (5,680,345,603)
Institutional Tax Free Shares (1,001,918,560) (654,038,858)
-------------- --------------
Net increase 214,160,192 270,657,645
============== ==============
Note 4 -- Net Assets
Prime Treasury Tax-Free
Series Series Series
-------------- ------------ --------------
Paid-in capital $4,213,671,028 $939,179,715 $1,132,092,030
Undistributed net
investment income/
(distribution in excess) 8,345 (44,873) (55,228)
Undistributed net realized
gain/(loss) on sales
of investments 86,979 127,977 (56,213)
-------------- ------------ --------------
$4,213,766,352 $939,262,819 $1,131,991,053
============== ============ ==============
29
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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
BT Alex. Brown Cash Reserve Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Prime Series of the BT Alex. Brown Cash Reserve Fund, Inc. (the "Fund") at
March 31, 1999, and the results of its operations, the changes in its net assets
and the financial highlights for each of the fiscal periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at March 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Baltimore, Maryland
April 30, 1999
30
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FLAG INVESTORS CASH RESERVE PRIME SHARES
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Directors and Officers
RICHARD T. HALE TRUMAN T. SEMANS
Chairman Director
JAMES J. CUNNANE CARL W. VOGT, ESQ.
Director Director
JOSEPH R. HARDIMAN 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.
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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>
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[LOGO]
Growth
Flag Investors Emerging Growth Fund
Flag Investors Equity Partners Fund
Flag Investors International Fund
Specialty
Flag Investors Communications Fund
Flag Investors Real Estate Securities Fund
Balanced
Flag Investors Value Builder Fund
Fixed 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
Money Market
Flag Investors Cash Reserve Prime Shares
P.O. Box 515
Baltimore, Maryland 21203
800-767-FLAG
Distributed by:
ICC Distributors, Inc.
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