BT ALEX BROWN CASH RESERVE FUND INC, 497, 1999-04-07

BT ALEX BROWN CASH RESERVE FUND INC
497, 1999-04-07

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<PAGE>

BT ALEX. BROWN CASH RESERVE FUND, INC.
INSTITUTIONAL SHARES
P. O. Box 17250
Baltimore, Maryland 21203

BT Alex. Brown Cash Reserve Fund, Inc. (the "Fund") is a money market fund
designed to seek as high a level of current income as is consistent with
preservation of capital and liquidity. The class of shares of the Fund offered
by this Prospectus may be purchased only by eligible institutions.

The Fund offers:
o Prime Series -- a portfolio invested in U.S. Treasury obligations,
repurchase agreements backed by such instruments, obligations issued
or guaranteed by agencies or instrumentalities of the U.S. Government,
domestic bank instruments and commercial paper of the highest quality;

o Treasury Series -- a portfolio invested in U.S. Treasury bills, notes, bonds
and other obligations issued by the U.S. Treasury; and
o Tax-Free Series -- a portfolio invested in high quality, short-term
municipal obligations.

Other principal features of the Fund are:
o No direct or indirect purchase or redemption charges; and
o Dividends are declared daily and paid monthly in additional shares or cash.
For current yield information and for purchase and redemption information, call
(410) 895-5995.

This Prospectus sets forth basic information that you should know about the
Fund prior to investing. You should retain it for future reference. A Statement
of Additional Information dated August 1, 1998, has been filed with the
Securities and Exchange Commission and is hereby incorporated by reference. It
is available upon request and without charge by calling the Fund at (800)
553-8080.

TABLE OF CONTENTS

Page
Table of Fees and Expenses 2
Financial Highlights 3
Investment Program 6
The Fund's Net Asset Value 9
How to Buy Shares 10
How to Redeem Shares 10
Dividends and Taxes 11
Management of the Fund 12
Current Yield 14
General Information 14

The Fund's shares are not deposits or obligations of, or guaranteed or endorsed
by, any bank. The shares are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other government
agency. Investment in the shares involves risk, including possible loss of
principal.

An investment in the Fund is neither insured nor guaranteed by the United
States Government. There can be no assurance that any Series will be able to
maintain a stable net asset value of $1.00 per share.

These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this Prospectus. Any representation to the contrary
is a criminal offense.

Prospectus Dated: August 1, 1998,
as supplemented through
March 31, 1999
<PAGE>

Table of Fees and
Expenses

<TABLE>
<CAPTION>
Prime Treasury Tax-Free
Institutional Institutional Institutional
Shareholder Transaction Expenses Shares Shares Shares
- --------------------------------------------------------------- --------------- --------------- --------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases .................... None None None
Maximum Sales Charge Imposed on Reinvested Dividends ......... None None None
Maximum Deferred Sales Charge ................................ None None None
Redemption Fees .............................................. None None None

As a % of Average
Annual Fund Operating Expenses Daily Net Assets
- ---------------------------------------------------------------- --------------------------------------------------
Management Fees (See "Management of the Fund --
Investment Advisor") ....................................... 0.26% 0.19%* 0.27%
12b-1 Fees (See "Management of the Fund -- Distributor") ..... None None None
Other Expenses ............................................... 0.11% 0.08 % 0.04%
---------- ---------- ----------
Total Fund Operating Expenses ................................ 0.37% 0.27%* 0.31%
========== ========== ==========
</TABLE>

- ------------
* The Advisor is waiving its fee on the Treasury Series by 0.05%. Absent such
fee waivers, Management Fees would be 0.24% and Total Fund Operating
Expenses would be 0.32% of the Treasury Institutional shares class' average
daily net assets. The waiver is voluntary and may be terminated at any time.

Example

You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return, and (2) redemption at the end of each time period:

Prime Treasury Tax-Free
Institutional Institutional Institutional
Shares Shares Shares
--------------- --------------- --------------
1 year .......... $ 4 $ 3 $ 3
3 years ......... $12 $ 9 $10
5 years ......... $21 $15 $17
10 years ......... $47 $34 $39

The Expenses and Example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than those shown.

2
<PAGE>

Financial Highlights
The financial highlights included in these tables are a part of the Fund's
financial statements for the periods indicated and have been audited by the
Fund's independent accountants. The financial statements and financial
highlights for the fiscal year ended March 31, 1998 and the report of the
Fund's independent accountants thereon are included in the Statement of
Additional Information, which can be obtained at no charge by calling the Fund
at (800) 553-8080.

Financial Highlights

(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Prime Institutional Shares
------------------------------------------------------
For the Year Ended March 31,
------------------------------------------------------
1998 1997 1996
----------------- ----------------- ----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of period..... $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------
Income from Investment
Operations:
Net investment income ..................... 0.0519 0.0503 0.0548
Less Distributions:
Dividends from net investment income
and/or short-term gains .................. (0.0519) (0.0503) (0.0548)
------------ ------------ -----------
Net asset value at end of period .......... $ 1.00 $ 1.00 $ 1.00
============ ============ ===========
Total Return:
Based on net asset value per share ........ 5.31% 5.15% 5.62%
Ratios to Average Daily Net Assets:
Expenses .................................. 0.42% 0.38% 0.35%
Net investment income ..................... 5.22% 5.04% 5.32%
Supplemental Data:
Net assets at end of period ............... $317,971,693 $117,812,047 $53,699,315
Number of shares outstanding at end
of period ................................ 317,971,413 117,811,768 53,699,535

</TABLE>

<PAGE>

<CAPTION>
Prime Institutional Shares
------------------------------------------------------------------------
For the Year Ended March 31,
----------------------------------------------------------------------
1995 1994 1993 1992
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
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 ..................... 0.0472 0.0294 0.0327 0.0515
Less Distributions:
Dividends from net investment income
and/or short-term gains .................. (0.0472) (0.0294) (0.0327) (0.0515)
----------- ----------- ----------- -----------
Net asset value at end of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== ===========
Total Return:
Based on net asset value per share ........ 4.82% 2.98% 3.32% 5.27%
Ratios to Average Daily Net Assets:
Expenses .................................. 0.36% 0.30% 0.31% 0.32%
Net investment income ..................... 4.57% 2.94% 3.24% 5.34%
Supplemental Data:
Net assets at end of period ............... $11,904,716 $23,437,449 $28,884,078 $21,867,108
Number of shares outstanding at end
of period ................................ 11,904,663 23,437,512 28,884,132 21,867,108

<CAPTION>
Prime
Institutional
Shares
-----------------
For the Period
June 4, 1990(1)
through
March 31,
1991
-----------------
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period..... $ 1.00
----------
Income from Investment
Operations:
Net investment income ..................... 0.0617
Less Distributions:
Dividends from net investment income
and/or short-term gains .................. (0.0617)
------------
Net asset value at end of period .......... $ 1.00
============
Total Return:
Based on net asset value per share ........ 7.70%(2)
Ratios to Average Daily Net Assets:
Expenses .................................. 0.35%(2)
Net investment income ..................... 7.53%(2)
Supplemental Data:
Net assets at end of period ............... $117,633,558
Number of shares outstanding at end
of period ................................ 117,633,558

</TABLE>

- ------------
1 The Prime Institutional Shares commenced operations on June 4, 1990.
2 Annualized.

3
<PAGE>

Financial Highlights (continued)
(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Treasury Institutional Shares
----------------------------------------------------
For the Year Ended March 31,
----------------------------------------------------
1998 1997 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
Per Share Operating Perfor-
mance:
Net asset value at beginning of
period ............................. $ 1.00 $ 1.00 $ 1.00
--------- --------- ---------
Income from Investment
Operations:
Net investment income ............... 0.0489 0.0481 0.0523
Less Distributions:
Dividends from net investment
income and/or short-term
gains .............................. (0.0489) (0.0481) (0.0523)
----------- ----------- -----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
=========== =========== ===========
Total Return:
Based on net asset value per
share .............................. 5.00% 4.92% 5.36%
Ratios to Average Daily Net
Assets:
Expenses ............................ 0.34% 0.36% 0.33%
Net investment income ............... 4.91% 4.81% 5.12%
Supplemental Data:
Net assets at end of period ......... $98,780,023 $61,208,770 $51,822,757
Number of shares outstanding
at end of period ................... 98,768,925 61,199,345 51,813,226

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Treasury Institutional Shares
---------------------------------------------------------------------------------------
For the Period
June 4, 1990(1)
through
For the Year Ended March 31,
----------------------------------------------------------------------
1995 1994 1993 1992 1991
---------------- ---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Perfor-
mance:
Net asset value at beginning of
period ............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ----------
Income from Investment
Operations:
Net investment income ............... 0.0438 0.0282 0.0314 0.0504 0.0590
Less Distributions:
Dividends from net investment
income and/or short-term
gains .............................. (0.0438) (0.0282) ( 0.0314) (0.0504) (0.0590)
----------- ----------- ----------- ----------- -----------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== ===========
Total Return:
Based on net asset value per
share .............................. 4.47% 2.86% 3.19% 5.17% 7.36%(2)
Ratios to Average Daily Net
Assets:
Expenses ............................ 0.30%(3) 0.27%(3) 0.26%(3) 0.27% 0.29%(2)
Net investment income ............... 4.15%(4) 2.82%(4) 3.16%(4) 4.90% 7.02%(2)
Supplemental Data:
Net assets at end of period ......... $14,051,995 $39,692,848 $60,146,987 $63,834,323 $58,017,844
Number of shares outstanding
at end of period ................... 14,046,467 39,688,259 60,140,874 63,834,323 58,017,844

</TABLE>

- ------------
1 The Treasury Institutional Shares commenced operations on June 4, 1990.
2 Annualized.
3 Ratio of expenses to average daily net assets prior to partial fee waivers
was 0.31%, 0.29% and 0.27% for the years ended March 31, 1995, 1994 and
1993, respectively.
4 Ratio of net investment income to average daily net assets prior to partial
fee waivers was 4.14%, 2.80% and 3.15% for the years ended March 31, 1995,
1994 and 1993, respectively.

4
<PAGE>

Financial Highlights (concluded)
(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Tax-Free Institutional Shares
------------------------------
For the Period
June 1, 1997(1)
through
March 31,
1998
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period ................................. $ 1.00
---------
Income from Investment
Operations:
Net investment income .................................................. 0.0273
Less Distributions:
Dividends from net investment income and/or short-term gains . ......... (0.0273)
-----------
Net asset value at end of period ....................................... $ 1.00
===========
Total Return:
Based on net asset value per share ..................................... 2.76%(2)
Ratios to Average Daily Net Assets:
Expenses ............................................................... 0.35%(2)
Net investment income .................................................. 3.29%(2)
Supplemental Data:
Net assets at end of period ............................................ $76,682,752
Number of shares outstanding at end of period .......................... 76,682,889

</TABLE>

- ------------
1 The Tax-Free Institutional Shares commenced operations on June 1, 1997.
2 Annualized.

5
<PAGE>

Investment Program
Investment Objectives

The investment objective of each Series of the Fund is to seek as high a level
of current income as is consistent with preservation of capital and liquidity.
The Tax-Free Series seeks income exempt from federal income taxes. Each Series
seeks to achieve its objective by investing in a diversified portfolio of
domestic money market instruments that satisfy strict credit quality standards
and that mature within 397 days or less from the date of purchase. (See
"Portfolio Investments -- Treasury Series -- Prime Series -- Tax-Free Series.")

Portfolio Investments

-- Treasury Series

The Treasury Series may invest in U.S. Treasury obligations consisting of
marketable securities and instruments issued by the U.S. Treasury, including
bills, notes, bonds and other obligations. It is management's intention to have
100% of the Treasury Series' assets invested in such instruments at all times.
In unusual circumstances, up to 10% of the Treasury Series' assets may be
invested in repurchase agreements collateralized by U.S. Treasury obligations.
Such investments will be made only when it is necessary to ensure that the
Treasury Series is fully invested while satisfying its liquidity requirements.

-- Prime Series

In addition to the U.S. Treasury obligations described above and repurchase
agreements collateralized by U.S. Treasury securities, the Prime Series may
invest in obligations issued or guaranteed as to principal and interest by
agencies or instrumentalities of the U.S. Government. Some of these obligations
are backed by the full faith and credit of the U.S. Government (e.g., the
Government National Mortgage Association), others are supported by the issuing
agency's right to borrow from the U.S. Treasury (e.g., securities of Federal
Home Loan Banks) and still others are backed only by the credit of the
instrumentality (e.g., the Federal National Mortgage Association).

The Prime Series may also invest in a broad range of commercial and bank
obligations that the investment advisor, under guidelines established by the
Board of Directors, believes present minimal credit risk and that satisfy the
criteria for such obligations described below:

The Prime Series may invest in instruments consisting of commercial paper and
variable amount master demand notes. Eligible commercial paper is limited to
short-term, unsecured promissory notes issued by corporations that (i) are
rated Prime-1 by Moody's Investors Service, Inc. ("Moody's") or A-1+ or A-1 by
Standard & Poor's Ratings Group ("S&P"); or (ii) if not rated by Moody's or
S&P, are of comparable quality to Prime-1 or A-1+ or A-1 instruments as
determined by the Fund's investment advisor; and (iii) are otherwise "Eligible
Securities" as defined in Rule 2a-7 under the Investment Company Act of 1940,
as amended. Variable amount master demand notes are unsecured demand notes that
permit investment of fluctuating amounts of money at variable rates of interest
pursuant to arrangements with issuers who meet the foregoing quality criteria.
The interest rate on a variable amount master demand note is periodically
redetermined according to a prescribed formula. Although there is no secondary
market in master demand notes, the payee may demand payment of the principal
amount of the note on relatively short notice. All master demand notes acquired

6
<PAGE>

by the Prime Series will be payable within a prescribed notice period not to
exceed seven days. (See the Statement of Additional Information for information
with respect to commercial paper and bond ratings.)

The Prime Series may also invest in bank instruments consisting mainly of
certificates of deposit and bankers' acceptances that (i) are issued by U.S.
banks that satisfy applicable quality standards; or (ii) are fully insured as
to principal and interest by the Federal Deposit Insurance Corporation.

-- Tax-Free Series

The Tax-Free Series may invest in municipal securities consisting of (i) debt
obligations issued by or on behalf of public authorities to obtain funds to be
used for various public purposes (including the construction of a wide range of
public facilities), for refunding outstanding obligations, for general
operating expenses and for lending such funds to other public institutions and
facilities, and (ii) certain types of industrial development bonds issued by or
on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated facilities
("private activity bonds"); provided that the interest paid on such debt
obligations and private activity bonds, in the opinion of bond counsel, is
exempt from federal income taxes.

The Tax-Free Series invests in high quality municipal securities that the
investment advisor believes, under guidelines established by the Board of
Directors, present minimal credit risk and that at the time of purchase are
rated within the two highest credit categories assigned by the recognized
rating agencies (provided that such purchases would be further limited unless
the instrument meets the definition of "Eligible Security" as defined in Rule
2a-7 under the Investment Company Act of 1940, as amended), including: (1)
bonds rated Aaa or Aa by Moody's or AAA or AA by S&P; (2) municipal commercial
paper rated Prime-1 or Prime-2 by Moody's or A-1+, A-1 or A-2 by S&P; (3)
municipal notes and floating and variable rate demand obligations rated SP-1 or
higher by S&P or MIG2 or VMIG or higher by Moody's; and (4) obligations secured
by letters of credit providers rated within the two highest categories by any
nationally recognized bank rating agency approved by the Fund's Board of
Directors. The Tax-Free Series may purchase unrated securities if they are
determined by the investment advisor, under guidelines established by the Board
of Directors, to be of comparable value to those obligations rated in the
categories described above.

The Tax-Free Series may hold cash reserves pending investment in municipal
securities.

It is a fundamental policy of the Tax-Free Series to have its assets invested
so that at least 80% of the Series' income will be exempt from federal income
taxes, and it is the Tax-Free Series' present intention (but it is not a
fundamental policy) to invest its assets so that 100% of its annual interest
income will be tax-exempt. From time to time, for temporary defensive purposes,
however, the Fund may invest up to all of its assets in taxable short-term
investments that meet the criteria for investment for the Treasury or Prime
Series as described above.

The Tax-Free Series will seek to avoid the purchase of private activity bonds
the interest on which will be considered to be an item of preference for
purposes of alternative minimum tax liability for individuals under the
Internal Revenue Code of 1986, as amended (the "Code").

7
<PAGE>

Other Investment Practices

The Fund may enter into the following arrangements with respect to any Series:

When-Issued Securities involving commitments by a Series to purchase portfolio
securities on a "when-issued" basis. When-issued securities are securities
purchased for delivery beyond the normal settlement date at a stated price and
yield. A Series will generally not pay for such securities or start earning
interest on them until they are received. When-issued commitments will not be
used for speculative purposes and will be entered into only with the intention
of actually acquiring the securities.

The Prime Series and the Treasury Series may also enter into the following
arrangements: Repurchase Agreements under which the purchaser (for example, a
Series of the Fund) acquires ownership of an obligation and the seller agrees,
at the time of the sale, to repurchase the obligation at a mutually agreed upon
time and price, thereby determining the yield during the purchaser's holding
period. Although the underlying collateral for repurchase agreements may have
maturities exceeding 397 days, repurchase agreements entered into by a Series
will not have a stated maturity in excess of seven days from the date of
purchase. A Series may enter into repurchase agreements with institutions that
the Fund's Board of Directors believes present minimal credit risk. Default by,
or bankruptcy proceedings with respect to the seller may, however, expose the
series to possible loss because of adverse market action or delay in connection
with the disposition of the underlying obligations.

The Prime Series may also enter into the following arrangements:

Reverse Repurchase Agreements involving the sale of money market instruments
held by the Prime Series, with an agreement to repurchase the instruments at an
agreed upon price and date. The Prime Series will employ reverse repurchase
agreements only when necessary to meet unanticipated net redemptions so as to
avoid liquidating other money market instruments during unfavorable market
conditions. The Prime Series will utilize reverse repurchase agreements when
the interest income to be earned from portfolio investments that would
otherwise have to be liquidated to meet redemptions is greater than the
interest expense incurred as a result of the reverse repurchase transactions.
Reverse repurchase agreements involve the risk that the market value of
securities retained by the Prime Series in lieu of liquidation may decline
below the repurchase price of the securities sold by the Prime Series that it
is obligated to repurchase.

Investment Restrictions

The Fund's investment program is subject to a number of investment restrictions
that reflect self-imposed standards as well as federal regulatory limitations,
the most significant of which are as follows:

(1) No Series may purchase securities of any issuer (other than obligations of
the U.S. Government, its agencies or instrumentalities and any municipal
securities guaranteed by the U.S. Government) if immediately after such
purchase more than 5% of the value of such Series' assets would be invested in
such issuer;

(2) No Series may borrow money or issue senior securities, except that (i) any
Series may borrow money from banks for temporary purposes in amounts up to 10%
of the value of such Series' total assets at the time of borrowing, provided

8
<PAGE>

that any such borrowings are repaid prior to the purchase of additional
portfolio securities, (ii) the Prime Series may enter into reverse repurchase
agreements in accordance with its investment program and (iii) any Series of
the Fund may enter into commitments to purchase securities in accordance with
its investment program;

(3) No Series may lend money or securities except to the extent that a Series'
investments may be considered loans;

(4) The Prime Series may not purchase any commercial paper or variable rate
demand notes that would cause more than 25% of the value of the Series' total
assets at the time of such purchase to be invested in the securities of one or
more issuers conducting their principal business activities in the same
industry; and

(5) The Tax-Free Series may not purchase any securities (other than obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities,
certificates of deposit and guarantees of banks) that would cause more than 25%
of the value of the Series' total net assets at the time of such purchase to be
invested in: (i) securities of one or more issuers conducting their principal
activities in the same state; (ii) securities, the interest on which is paid
from revenues of projects with similar characteristics; or (iii) industrial
development bonds the obligors of which are in the same industry.

(6) The Tax-Free Series will be invested so that at least 80% of the Series'
income will be exempt from federal income taxes.

The investment objectives of each Series of the Fund as described under
"Investment Objectives" and the foregoing restrictions are matters of
fundamental policy except where noted and may not be changed without the
affirmative vote of a majority of the outstanding shares of the Series
affected. The Treasury Series has a policy, which may be changed by the Fund's
Board of Directors and without shareholder approval, of limiting investments in
U.S. Government obligations to U.S. Treasury obligations.

Further investment restrictions are listed in the Statement of Additional
Information.

The Fund's Net Asset Value

The following sections describe how to buy and redeem shares of the Fund.

The price you pay or receive is the Fund's net asset value per share.

The net asset values per share of the Treasury Series and the Tax Free Series
are determined on each business day as of 11:00 a.m. (Eastern Time). The net
asset value per share of the Prime Series is determined on each business day as
of 12:00 noon (Eastern Time).

The Fund uses the amortized cost method of valuing portfolio securities and
rounds the per share net asset value to the nearest whole cent. As a result, it
is anticipated that the net asset value of each Series will remain constant at
$1.00 per share. There can be no assurance, however, that this will always be
the case.

You may buy or redeem shares on any day on which both the New York Stock
Exchange and the Fund's custodian are open for business (a "Business Day"). If
your order is entered before the Series' net asset value per share is
determined for that day, the price you pay or receive will be based on that
day's net asset value per share. If your order is entered after the Series' net
asset

9
<PAGE>

value per share is determined for that day, the price you pay or receive will
be based on the next Business Day's net asset value per share.

How to Buy Shares

You may buy any Series of the Fund's shares through your securities dealer or
through a financial institution that is authorized to act as a shareholder
servicing agent. Contact them for details on how to enter and pay for your
order.

Your purchase order may not be accepted if the sale of Fund shares has been
suspended or if it is determined that your purchase would be detrimental to the
interests of the Fund's shareholders.

Investment Minimums

Your initial investment in any Series must be at least $1,000,000. There is no
minimum initial investment for investment advisory affiliates of BT Alex.
Brown. There is no minimum investment for subsequent purchases in the same
Series.

Purchase Price

The price you pay to buy shares will be the Fund's net asset value per share.

Investing Regularly

You may make regular investments in the Fund through either of the following
methods. Contact your securities dealer or servicing agent if you wish to
enroll in either of these programs or if you need any additional information.

Automatic Investment and Redemption Program. Your securities dealer or
servicing agent may have established a special procedure to automatically
invest proceeds from the sale of securities and other credit balances in your
account in shares of the Series you have selected and to redeem shares of the
Series you own to pay for securities purchases. Contact your securities dealer
or servicing agent for details.

Dividend Reinvestment Plan. Unless you elect otherwise, all distributions will
be reinvested in additional shares of the Series you own at net asset value. If
you prefer to receive your distributions in cash, notify your securities dealer
or your servicing agent at least five days before the date on which the next
distribution will be paid. If you have redeemed all of the shares of a Series,
your dividend will be paid in cash.

How to Redeem Shares
You may redeem any class of the Fund's shares through your securities dealer or
servicing agent. Contact them for details on how to enter your order and for
information as to how you will be paid.

Your securities dealer or servicing agent may require the following documents
before they redeem your shares.

1) A letter of instructions specifying your account number and the number of
shares or dollar amount you wish to redeem. All owners of the shares must
sign the letter exactly as their names appear on the account.

2) A guarantee of your signature by a member of the Federal Deposit Insurance
Corporation, a trust company, broker, dealer, securities exchange or
association, clearing agency, savings association or (if authorized by
state law) credit union.

3) Any additional documents that may be required if your account is in the name
of a corporation, partnership, trust or fiduciary.

10
<PAGE>

Redemption Price

The price you receive when you redeem shares will be the net asset value of the
Series you are redeeming.

Other Redemption Information

Other Information. Any dividends payable on shares you redeem will be paid on
the next dividend payment date.

If you redeem sufficient shares to reduce your investment in a Series to $500
or less, the Fund has the power to redeem the remaining shares after giving you
60 days' notice.

Dividends and Taxes

Dividends

All of the net income earned on each Series is normally declared as dividends
daily to the respective shareholders of record of each Series. Dividends on
each Series are normally payable on the first day that a share purchase order
is effective but not on the date that a redemption order is effective.
Dividends are declared daily and reinvested monthly in the form of additional
full and fractional shares of the same Series at net asset value, unless you
have elected to have dividends paid in cash.

Taxes

The following summary of certain federal income tax consequences is based on
current tax laws and regulations, which may be changed by legislative, judicial
or administrative action. No attempt has been made to present a detailed
explanation of the federal, state or local tax treatment of the Fund or its
shareholders, and the discussion here is not intended as a substitute for
careful tax planning. Accordingly, you are advised to consult with your tax
advisor regarding specific questions.

There is further information concerning taxes in the Statement of Additional
Information.

Each Series of the Fund has elected to be taxed as a regulated investment
company under Subchapter M of the Code. As long as a Series qualifies for this
tax treatment, it will not pay federal income taxes on amounts distributed to
its shareholders; but shareholders, unless otherwise exempt, will pay taxes on
taxable amounts so distributed.

The Tax-Free Series intends to qualify to pay "exempt-interest dividends" to
its shareholders, by satisfying certain Code requirements described in the
Statement of Additional Information. So long as these and certain other
requirements are met, dividends of the Tax-Free Series derived from net
tax-exempt interest income will be exempt-interest dividends that are excluded
from the gross income of such Series' shareholders for federal income tax
purposes. Exempt-interest dividends may, however, have collateral federal
income tax consequences, including alternative minimum tax consequences. (See
the Statement of Additional Information.)

11
<PAGE>

Current federal tax law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest, which may have an effect on the
ability of the Fund to purchase sufficient amounts of tax-exempt securities to
satisfy the Code's requirements for the payment of exempt-interest dividends.
All or a portion of the interest on indebtedness incurred or continued by a
shareholder to purchase or carry shares is not deductible for federal income
tax purposes. Furthermore, entities or persons who are "substantial users" (or
persons related to "substantial users") of facilities financed by "private
activity bonds" or "industrial development bonds" should consult their tax
advisors before purchasing shares. (See the Statement of Additional
Information.)

You will be taxed on distributions from a Series' net investment company
taxable income as ordinary income. Distributions will not be eligible for the
dividends received deduction otherwise available to corporate shareholders.
Although no Series expects to realize any capital gains, any distributions of
net capital gains (the excess of net long-term capital gains over net
short-term capital losses) will be taxable to you as either short-term or
long-term depending upon how long the Fund held the securities it sold to
generate the gains. You will be taxed on the distributions according to the
category stipulated by the Fund regardless of how long you have held your Fund
shares.

Dividends declared payable to shareholders of record in December of one year,
but paid in January of the following year, will be deemed for tax purposes to
have been paid by a Series and received by you in the year in which the
dividends were declared.

The Fund intends to make sufficient distributions of its ordinary income and
capital gain net income prior to the end of each calendar year to avoid
liability for federal excise tax.

The sale, exchange or redemption of Institutional Shares is a taxable event for
you.

If you own shares of the Treasury Series, you may not be required to pay state
income tax on dividends to the extent such dividends are derived from interest
on U.S. Treasury obligations. Since state laws vary, you are encouraged to
consult with your tax advisor on this issue.

Management of the Fund
Board of Directors

The overall business and affairs of the Fund are managed by its Board of
Directors. The Board of Directors approves all significant agreements between
the Fund and persons or companies furnishing services to the Fund, including
the Fund's agreements with its investment advisor, distributor, custodian and
transfer agent. The day-to-day operations of the Fund are delegated to the
Fund's executive officers, to the Fund's advisor and to the Fund's distributor.
A majority of the Board of Directors of the Fund have no affiliation with the
Fund's advisor or the Fund's distributor.

Investment Advisor

Investment Company Capital Corp. ("ICC"), an indirect subsidiary of Bankers
Trust Corporation, was organized in 1987 and acts as the Fund's investment
advisor. ICC supervises and manages the Fund's operations and generally
provides management and administrative services for the Fund. ICC is investment
advisor to mutual funds

12
<PAGE>

having net assets of approximately $7.4 billion at May 31, 1998. In addition to
the Fund, these include the funds in the Flag Investors family of funds.

As compensation for providing investment advisory services to the Fund for the
fiscal year ended March 31, 1998, ICC received a fee equal to 0.26% of the
Prime Series' average daily net assets, 0.24% of the Treasury Series' average
daily net assets and 0.27% of the Tax-Free Series' average daily net assets.
ICC may, from time to time, voluntarily waive a portion of its advisory fee
with respect to any Series to preserve or enhance the performance of the
Series. ICC also serves as the Fund's transfer and dividend disbursing agent
and provides accounting services to each Series. An affiliate of ICC provides
custody services to the Fund. (See "Custodian, Transfer Agent and Accounting
Services.")

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, subject to
shareholder approval, a new advisory agreement between ICC and the Fund in the
event the merger is approved and completed. 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.

On March 11, 1999, Bankers Trust Company ("Bankers Trust"), a separate
subsidiary of Bankers Trust Corporation, announced that it had reached an
agreement with the United States Attorney's Office in the Southern District of
New York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record-keeping problems that occurred between 1994
and early 1996. ICC became a subsidiary of Bankers Trust in a merger that
occurred after these events took place. Pursuant to its agreement with the U.S.
Attorney's Office, Bankers Trust pleaded guilty to misstating entries in the
bank's books and records and agreed to pay a $60 million fine to federal
authorities. Separately, Bankers Trust agreed to pay a $3.5 million fine to the
State of New York. The events leading up to the guilty pleas did not arise out
of the investment advisory or mutual fund management activities of Bankers
Trust or its affiliates.

As a result of the plea, absent an order from the SEC, ICC may not be able to
continue to provide investment advisory services to the Fund. The SEC has
granted a temporary order to permit Bankers Trust and its affiliates to
continue to provide investment advisory services to registered investment
companies. There is no assurance that the SEC will grant a permanent order.

Distributor

ICC Distributors, Inc. ("ICC Distributors" or the "Distributor") acts as
distributor for the Fund's three Series. ICC Distributors is a registered

13
<PAGE>

broker-dealer that offers distribution services to a variety of registered
investment companies including the funds in the Flag Investors family of funds.
ICC Distributors is not affiliated with the Fund's advisor.

ICC Distributors receives no compensation for its services with respect to the
Institutional Shares. ICC Distributors bears all expenses associated with
advertisements, promotional materials, sales literature and printing and
mailing prospectuses to other than Fund shareholders.

Current Yield

From time to time the Fund advertises the "yield" and "effective yield" of the
Institutional Shares of a particular Series. Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Series refers to the income generated by an investment in the
Series over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized," that is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated similarly, but when annualized, the income
earned by an investment in the Series is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The Tax-Free Series may also
advertise a taxable-equivalent yield or effective yield, which are calculated
by applying a stated income tax rate to the Series' tax-exempt income for the
same periods and annualized as described above.

General Information

Description of Shares

The Fund is an open-end, diversified management investment company. The Fund
was reorganized under the laws of the State of Maryland on April 5, 1990. The
Fund is authorized to issue 9 billion shares of common stock, with a par value
of $.001 per share. Shares of the Fund are divided into three series -- the
Prime Series, the Treasury Series and the Tax-Free Series. Each of the Series
currently offers one or more classes, which differ from each other principally
in distribution fees, in some instances shareholder servicing fees, and the
method of distribution, which may affect performance. For information regarding
the other classes of shares, please call (800) 553-8080. Shares of the Fund
have equal rights with respect to voting, except that the holders of shares of
a particular Series or class will have the exclusive right to vote on matters
affecting only the rights of the holders of such Series or class. For example,
holders of a particular Series will have the exclusive right to vote on any
investment advisory agreement or investment restriction that relates only to
such Series. In the event of dissolution or liquidation, holders of each Series
will receive pro rata, subject to the rights of creditors, (a) the proceeds of
the sale of the assets held in the respective Series less (b) the liabilities
of the Fund attributable to the respective Series or allocated among all Series
based on the respective liquidation value of each Series.

There are no preemptive or conversion rights applicable to any of the Fund's
shares. The Fund's shares, when issued, will be fully paid and non-assessable.
The Board of Directors may create additional series or classes of Fund shares
without shareholder approval.

14
<PAGE>

Custodian, Transfer Agent and Accounting Services

Investment Company Capital Corp., the Fund's investment advisor, also serves as
the Fund's transfer and dividend disbursing agent and provides accounting
services to each Series. As compensation for providing accounting services to
the Prime Series and the Treasury Series for the fiscal year ended March 31,
1998, ICC received from the Fund an annual fee equal to 0.01% of the Prime
Series' average daily net assets and 0.02% of the Treasury Series' average
daily net assets.

As compensation for providing accounting services to the Tax-Free Series, ICC
receives from the Fund an annual fee equal to $13,000, plus a percentage of the
Tax-Free Series' average daily net assets in excess of $10 million at a maximum
rate of 0.10% of net assets, and declining at various asset levels to a minimum
rate of 0.001% on assets of $1 billion or more. Bankers Trust Company, a
subsidiary of Bankers Trust Corporation, acts as custodian of the Fund's
assets. (See the Statement of Additional Information.)

Annual Meetings

The Fund does not expect to hold annual meetings of shareholders unless
required by Maryland law. Shareholders may remove directors from office by
votes cast at a meeting of shareholders or by written consent. A meeting of
shareholders may be called at the request of the holders of 10% or more of the
Fund's outstanding shares.

Reports

You will be furnished with semi-annual reports containing information about the
Fund and its operations, including a list of investments held in the Fund's
portfolio and financial statements.
The annual financial statements are audited
by the Fund's independent accountants,
PricewaterhouseCoopers LLP.

Shareholder Inquiries

If you have questions concerning your Institutional Shares, contact the Fund at
(800) 553-8080.

15
<PAGE>

BT ALEX. BROWN CASH RESERVE FUND, INC.

Institutional Shares

Investment Advisor
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202

Distributor Fund Counsel
ICC DISTRIBUTORS, INC. MORGAN, LEWIS & BOCKIUS LLP
P.O. Box 7558 1701 Market Street
Portland, Maine 04101 Philadelphia, Pennsylvania 19103

Custodian Independent Accountants
BANKERS TRUST COMPANY PRICEWATERHOUSECOOPERS LLP
130 Liberty Street 250 West Pratt Street
New York, New York 10006 Baltimore, Maryland 21201

Transfer Agent
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202
(800) 553-8080

- --------------------------------------------------------------------------------

BT ALEX. BROWN
CASH RESERVE
FUND, INC.
INSTITUTIONAL
SHARES

Prime Series
Treasury Series
Tax-Free Series

Prospectus

August 1, 1998, as
supplemented through
March 31, 1999

<PAGE>

QUALITY CASH RESERVE PRIME SHARES
(A Class of BT Alex. Brown Cash Reserve Fund, Inc.)
P.O. Box 17250
Baltimore, Maryland 21203

BT Alex. Brown Cash Reserve Fund, Inc. (the "Fund") is a money market fund
designed to seek as high a level of current income as is consistent with
preservation of capital and liquidity. This Prospectus relates to the Quality
Cash Reserve Prime Shares (the "Shares"). Shares are available exclusively
through securities dealers that provide certain shareholder services.

Other principal features of the Shares are:

o Shares are sold without purchase or redemption charges;
o Dividends are declared daily and paid monthly in additional Shares or cash;
o Free check redemption.

For current yield information and for purchase and redemption information, call
your securities dealer.

You may obtain the Fund's Statement of Additional Information without charge
from the Fund or any securities dealer that has entered into a dealer agreement
with the Fund's distributor (the "Distributor").

TABLE OF CONTENTS

Page
Table of Fees and Expenses 2
Financial Highlights 3
Investment Program 4
The Fund's Net Asset Value 6
How to Buy Shares 6
How to Redeem Shares 7
Dividends and Taxes 8
Management of the Fund 9
Current Yield 10
General Information 11

The Shares are not deposits or obligations of, or guaranteed or endorsed by any
bank. The Shares are not federally insured by the Federal Reserve Board or any
other government agency. Investment in the Shares involves risk, including
possible loss of principal.

An investment in the Fund is neither insured nor guaranteed by the United
States Government. There can be no assurance that the Prime Series will be able
to maintain a stable net asset value of $1.00 per share.

Prospectus Dated: August 1, 1998,
as supplemented through
March 31, 1999

1
<PAGE>

Table of Fees and
Expenses

The following table of fees and expenses is provided to assist you in
understanding the various costs and expenses that you may bear indirectly. Your
actual expenses may be greater or less than those shown. Due to the continuous
nature of Rule 12b-1 fees, you may pay more than the equivalent of the maximum
front-end sales charges otherwise permitted by the Conduct Rules of the
National Association of Securities Dealers, Inc. if you hold Shares for a long
time.

<TABLE>
<S> <C>
Shareholder Transaction Expenses
- --------------------------------
Maximum Sales Charge Imposed on Purchases ............................... None
Maximum Sales Charge Imposed on Reinvested Dividends .................... None
Maximum Deferred Sales Charge ........................................... None
Redemption Fees ......................................................... None
Annual Fund Operating Expenses (as a percentage of average daily net assets)
- ----------------------------------------------------------------------------
Management Fees ......................................................... 0.26%
12b-1 Fees (after fee waivers) .......................................... 0.54%*
Other Expenses .......................................................... 0.16%
------
Total Fund Operating Expenses (after fee waivers) ....................... 0.96%*
======
</TABLE>
- ------------
* The Distributor currently reduces its annual 12b-1 Fees, on a voluntary
basis, to 0.54% of the Shares' average daily net assets. Absent fee
waivers, 12b-1 Fees would be 0.60% and Total Fund Operating Expenses would
be 1.02% of the Shares' average daily net assets.

Example of Quality Cash Reserve Prime Shares Expenses
- -----------------------------------------------------

You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return on the investment, and (2) redemption at the end of the period:*

<TABLE>
<CAPTION>
<S> <C>
1 year ................................................................... $ 10
3 years .................................................................. $ 31
5 years .................................................................. $ 53
10 years .................................................................. $118
</TABLE>

- ------------
* The Example is based on Total Fund Operating Expenses after fee waivers.
Absent fee waivers, expenses would be higher.

The Expenses and Example should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those shown.

2
<PAGE>

Financial Highlights

The financial highlights included in this table are a part of the Fund's
financial statements for the periods indicated and have been audited by the
Fund's independent accountants. The financial statements and financial
highlights for the fiscal year ended March 31, 1998 and the report of the Fund's
independent accountants thereon are included in the Statement of Additional
Information, which can be obtained at no charge by calling the Fund at (800)
553-8080.

Financial Highlights
(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Quality Cash Reserve Prime Shares
-------------------------------------------------------

For the Year Ended March 31,
-------------------------------------------------------
1998 1997 1996
----------------- ----------------- -----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of period ..... $ 1.00 $ 1.00 $ 1.00
---------- ---------- ----------
Income from Investment Operations:
Net investment income ...................... 0.0465 0.0449 0.0493
Less Distributions:
Dividends from net investment income
and/or short-term gains ................... (0.0465) (0.0449) (0.0493)
---------- ---------- ----------
Net asset value at end of period ........... $ 1.00 $ 1.00 $ 1.00
========== ========== ==========
Total Return:
Based on net asset value per share ......... 4.75% 4.59% 5.04%
Ratios to Average Daily Net Assets:
Expenses ................................... 0.96%(2) 0.91%(2) 0.90%(2)
Net investment income ...................... 4.66%(3) 4.50%(3) 4.91%(3)
Supplemental Data:
Net assets at end of period ................ $226,978,689 $197,370,530 $156,412,213
Number of shares outstanding at end of
period .................................... 226,978,007 197,369,848 156,412,393
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Quality Cash Reserve Prime Shares
----------------------------------------------------------------------
For the Period
For the Year Ended March 31, May 6, 1991(1)
----------------------------------------------------- through
1995 1994 1993 March 31, 1992
---------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C>
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 ...................... 0.0402 0.0218 0.0253 0.0399
Less Distributions:
Dividends from net investment income
and/or short-term gains ................... (0.0402) (0.0218) (0.0253) (0.0399)
----------- ----------- ---------- ---------
Net asset value at end of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ========= ========== =========
Total Return:
Based on net asset value per share ......... 4.09% 2.20% 2.53% 4.30%(4)
Ratios to Average Daily Net Assets:
Expenses ................................... 0.96% 1.06% 1.04% 0.96%(4)
Net investment income ...................... 4.04% 2.18% 2.53% 4.30%(4)
Supplemental Data:
Net assets at end of period ................ $94,592,158 $92,678,440 $101,321,868 $94,887,669
Number of shares outstanding at end of
period .................................... 94,591,979 92,678,268 101,321,668 94,887,669

</TABLE>

<PAGE>

- --------
(1) The Quality Cash Reserve Prime Shares commenced operations on May 6, 1991.
(2) Ratio of expenses to average daily net assets prior to partial fee waivers
was 1.02%, 0.98% and 0.95% for the years ended March 31, 1998, 1997 and
1996, respectively.
(3) Ratio of net investment income to average daily 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.
(4) Annualized.

3
<PAGE>

Investment Program

Investment Objective

The investment objective of the Prime Series is to seek as high a level of
current income as is consistent with preservation of capital and liquidity. The
Prime Series seeks to achieve this objective by investing in a diversified
portfolio of domestic money market instruments that satisfy strict credit
quality standards and that mature within 397 days or less from the date of
purchase.

Portfolio Investments

The Prime Series may invest in U.S. Treasury obligations consisting of
marketable securities and instruments issued by the U.S. Treasury, including
bills, notes, bonds and other obligations. In addition to U.S. Treasury
obligations and repurchase agreements collateralized by U.S. Treasury
securities, the Prime Series may invest in obligations issued or guaranteed as
to principal and interest by agencies or instrumentalities of the U.S.
Government. Some of these obligations are backed by the full faith and credit
of the U.S. Government (e.g., the Government National Mortgage Association),
others are supported by the issuing agency's right to borrow from the U.S.
Treasury (e.g., securities of Federal Home Loan Banks) and still others are
backed only by the credit of the instrumentality (e.g., the Federal National
Mortgage Association).

The Prime Series may invest in instruments consisting of commercial paper and
variable amount master demand notes. Eligible commercial paper is limited to
short-term, unsecured promissory notes issued by corporations that (i) are
rated Prime-1 by Moody's Investor Services, Inc. ("Moody's") or A-1+ or A-1 by
Standard and Poor's Ratings Group ("S&P"), or (ii) if not rated by Moody's or
S&P, are of comparable quality to Prime-1 or A-1+ or A-1 instruments as
determined by the Fund's investment advisor, and (iii) are otherwise "Eligible
Securities" as defined in Rule 2a-7 under the Investment Company Act of 1940,
as amended. Variable amount master demand notes are unsecured demand notes that
permit investment of fluctuating amounts of money at variable rates of interest
pursuant to arrangements with issuers who meet the foregoing quality criteria.
The interest rate on a variable amount master demand note is periodically
redetermined according to a prescribed formula. Although there is no secondary
market in master demand notes, the payee may demand payment of the principal
amount of the note on relatively short notice. All master demand notes acquired
by the Prime Series will be payable within a prescribed notice period not to
exceed seven days. (See the Statement of Additional Information for information
with respect to commercial paper and bond ratings.)

The Prime Series may also invest in bank instruments, consisting mainly of
certificates of deposit and bankers' acceptances, that (i) are issued by U.S.
banks that satisfy applicable quality standards, or (ii) are fully insured as
to principal and interest by the Federal Deposit Insurance Corporation.

Other Investment Practices

The Prime Series may enter into the following arrangements:

4
<PAGE>

Repurchase Agreements under which the purchaser (for example, the Prime Series)
acquires ownership of an obligation and the seller agrees, at the time of the
sale, to repurchase the obligation at a mutually agreed upon time and price,
thereby determining the yield during the purchaser's holding period. Although
the underlying collateral for repurchase agreements may have maturities
exceeding 397 days, repurchase agreements entered into by the Prime Series will
not have a stated maturity in excess of seven days from the date of purchase.
Default by, or bankruptcy proceedings with respect to the seller may, however,
expose the Series to possible loss because of the adverse market action or
delay in connection with the disposition of the underlying obligations.

When-Issued Securities involving commitments by the Prime Series to purchase
portfolio securities on a "when-issued" basis. When-issued securities are
securities purchased for delivery beyond the normal settlement date at a stated
price and yield. The Prime Series will generally not pay for such securities or
start earning interest on them until they are received. When-issued commitments
will not be used for speculative purposes and will be entered into only with
the intention of actually acquiring the securities.

Reverse Repurchase Agreements involving the sale of money market instruments
held by the Prime Series, with an agreement to repurchase the instruments at an
agreed upon price and date. The Prime Series will employ reverse repurchase
agreements only when necessary to meet unanticipated net redemptions so as to
avoid liquidating other money market instruments during unfavorable market
conditions. The Prime Series will utilize reverse repurchase agreements when
the interest income to be earned from portfolio investments, which would
otherwise have to be liquidated to meet redemptions, is greater than the
interest expense incurred as a result of the reverse repurchase transactions.
Reverse repurchase agreements involve the risk that the market value of
securities retained by the Prime Series in lieu of liquidation may decline
below the repurchase price of the securities sold by the Prime Series, which it
is obligated to repurchase.

Investment Restrictions

The Prime Series investment program is subject to a number of investment
restrictions that reflect self-imposed standards as well as federal regulatory
limitations. The Prime Series will not:

(1) purchase securities of any issuer (other than obligations of the U.S.
Government, its agencies or instrumentalities), if immediately after such
purchase more than 5% of the value of the Prime Series' assets would be
invested in such issuer;

(2) borrow money or issue senior securities, except that the Prime Series may
(i) borrow money from banks for temporary purposes in amounts up to 10% of the
value of its total assets at the time of borrowing, provided that any such
borrowings will be repaid prior to the purchase of additional portfolio
securities, (ii) enter into reverse repurchase agreements in accordance with
its investment program and (iii) enter into commitments to purchase securities
in accordance with its investment program;

(3) lend money or securities except to the extent that the Prime Series'
investments may be considered loans; or

(4) purchase any commercial paper or variable rate demand notes that would
cause more than 25% of the value of the Prime Series' total assets

5
<PAGE>

at the time of such purchase to be invested in the securities of one or more
issuers conducting their principal business activities in the same industry.

The investment objective of the Prime Series as described under "Investment
Objective" and the foregoing restrictions are matters of fundamental policy
except where noted and may not be changed without the affirmative vote of a
majority of the outstanding shares of the Prime Series.

Further investment restrictions are listed in the Statement of Additional
Information.

The Fund's Net Asset Value

The following sections describe how to buy and redeem Shares.

The price you pay or receive is the Fund's net asset value per share.

The net asset value per share of the Prime Series is determined on each
business day as of 12:00 noon (Eastern Time).

The Fund uses the amortized cost method of valuing portfolio securities and
rounds the per share net asset value to the nearest whole cent. As a result, it
is anticipated that the net asset value will remain constant at $1.00 per
share. There can be no assurance, however, that this will always be the case.

You may buy or redeem Shares on any day on which both the New York Stock
Exchange and the Fund's custodian are open for business (a "Business Day"). If
your order is entered before the net asset value per share is determined for
that day, the price you pay or receive will be based on that day's net asset
value per share. If your order is entered after the net asset value per share
is determined for that day, the price you pay or receive will be based on the
next Business Day's net asset value per share.

How to Buy Shares

You may buy Shares through your securities dealer or through a financial
institution that is authorized to act as a shareholder servicing agent. Contact
them for details on how to enter and pay for your order.

Your purchase order may not be accepted if the sale of Shares has been suspended
or if it is determined that your purchase would be detrimental to the interests
of the Fund's shareholders.

Investment Minimums

Your initial investment must be at least $1,500. Subsequent investments must be
at least $100.

There is no minimum investment requirement if you are buying Shares through
your securities dealer's program for automatic investments and redemptions.

Purchase Price

The price you pay to buy Shares will be the Fund's net asset value per share.

Investing Regularly

6
<PAGE>

Automatic Investment and Redemption Program. Your securities dealer or
servicing agent may have established a special procedure to automatically
invest proceeds from the sale of securities and other credit balances in your
account in Shares and to redeem Shares you own to pay for securities purchases.
Contact your securities dealer or servicing agent for details.

Dividend Reinvestment Plan. Unless you elect otherwise, all distributions will
be reinvested in additional Shares at net asset value. If you prefer to receive
your distributions in cash, notify your securities dealer or your servicing
agent at least five days before the date on which the next distribution will be
paid. If you have redeemed all of your Shares, your dividend will be paid in
cash.

How to Redeem Shares

You may redeem Shares through your securities dealer or servicing agent.
Contact them for details on how to enter your order and for information as to
how you will be paid.

Your securities dealer or servicing agent may require the following documents
before they redeem your Shares.

(1) A letter of instructions specifying your account number and the number of
Shares or dollar amount you wish to redeem. All owners of the Shares must sign
the letter exactly as their names appear on the account.

(2) A guarantee of your signature by a member of the Federal Deposit Insurance
Corporation, a trust company, broker, dealer, securities exchange or
association, clearing agency, savings association or (if authorized by state
law) credit union.

(3) Any additional documents that may be required if your account is in the
name of a corporation, partnership, trust or fiduciary.

Redemption Price

The price you receive when you redeem Shares will be the Fund's net asset value
per share.

Other Redemption Information

Automatic Investment and Redemption Program. Your securities dealer or
servicing agent may have established a special procedure to automatically
invest proceeds from the sale of securities and other credit balances in your
account in Shares and to redeem Shares you own to pay for securities purchases.
Contact your securities dealer or servicing agent for details.

Redemption by Check. You may establish special check redemption privileges that
will allow you to redeem Shares you own by writing checks in amounts of $250 or
more. These checks may be cashed or deposited in the same way as ordinary bank
checks. You will continue to earn dividends on your Shares until the check is
presented for payment and the corresponding shares are redeemed. Check
redemption information will appear in your account with your securities dealer
or servicing agent. Cancelled checks will not be returned to you.

If the amount of your check exceeds the value of the Shares you own, the check
will be returned to the payee marked "non-sufficient funds." Checks written for
amounts less than $250 may also be returned. The Fund, in its discretion, will
honor such checks but will charge you a servicing fee of $15.

The Funds reserves the right to terminate or alter check redemption privileges
at any time, to

7
<PAGE>

impose a service charge, or to charge you for checks. The Fund may also charge
you for returned checks and for effecting stop payment orders.

If you are interested in establishing check redemption privileges, contact your
securities dealer or servicing agent.

Other Information. Any dividends payable on Shares you redeem will be paid on
the next dividend payment date.

If you redeem sufficient Shares to reduce your investment in the Prime Series
to $500 or less, the Fund has the power to redeem the remaining Shares after
giving you 60 days' notice.

If you paid for your purchase of Shares by check, redemption of those Shares
will be restricted for a period of fifteen calendar days unless you are using
the proceeds to purchase other securities through your securities dealer or
servicing agent.

Dividends and Taxes

Dividends

All of the net income earned on the Prime Series is normally declared as
dividends daily to the respective shareholders of record of the Prime Series.
Dividends on the Prime Series are normally payable on the first day that a
share purchase order is effective but not on the date that a redemption order
is effective. Dividends are declared daily and reinvested monthly in the form
of additional full and fractional shares of the Prime Series at net asset
value, unless you have elected to have dividends paid in cash.

Taxes

The following summary of certain federal income tax consequences is based on
current tax laws and regulations, which may be changed by legislation, judicial
or administrative action. No attempt has been made to present a detailed
explanation of the federal, state or local tax treatment of the Fund or its
shareholders, and the discussion here is not intended as a substitute for
careful tax planning. Accordingly, you are advised to consult with your tax
advisor regarding specific questions.

There is further information concerning taxes in the Statement of Additional
Information.

The Prime Series has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended. As long as
the Prime Series qualifies for this tax treatment, it will not pay federal
income taxes on amounts distributed to its shareholders; but shareholders,
unless otherwise exempt, will pay taxes on amounts so distributed.

You will be taxed on distributions of net investment company taxable income as
ordinary income. Distributions will not be eligible for the dividends received
deduction otherwise available to corporate shareholders. Although the Prime
Series does not expect to realize any capital gains, any distributions of net
capital gains (the excess of net long-term capital gains over net short-term
capital losses) will be taxable to you as either short-term or long-term
depending upon how long the Fund held the securities it sold to generate the
gains. You will be taxed on the distributions according to the category
stipulated by the Fund regardless of how long you have held your Shares.

Dividends declared payable to shareholders of record in December of one year,
but paid in January of the following year, will be deemed for

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tax purposes to have been paid by the Prime Series and received by you in the
year in which the dividends were declared.

The Fund intends to make sufficient distributions of its ordinary income and
capital gain net income prior to the end of each calendar year to avoid
liability for federal excise tax.

The sale, exchange or redemption of Shares is a taxable event for you.

Management of the Fund

Board of Directors

The overall business and affairs of the Fund are managed by its Board of
Directors. The Board of Directors approves all significant agreements between
the Fund and persons or companies furnishing services to the Fund, including
the Fund's agreements with its investment advisor, distributor, custodian and
transfer agent. The day-to-day operations of the Fund are delegated to the
Fund's executive officers, to the Fund's advisor and to the Distributor. A
majority of the Board of Directors of the Fund have no affiliation with the
Distributor or the Fund's advisor.

Investment Advisor

Investment Company Capital Corp. ("ICC"), an indirect subsidiary of Bankers
Trust Corporation, was organized in 1987 and acts as the investment advisor to
the Prime Series. ICC supervises and manages the Prime Series' operations and
generally provides management and administrative services for the Prime Series.
ICC is investment advisor to mutual funds having net assets of approximately
$7.4 billion at May 31, 1998. In addition to the Fund, these include the funds
in the Flag Investors family of funds.

As compensation for providing investment advisory services to the Prime Series
for the fiscal year ended March 31, 1998, ICC received a fee equal to 0.26% of
the Prime Series' average daily net assets. ICC may, from time to time,
voluntarily waive a portion of its advisory fee with respect to the Prime
Series to preserve or enhance the performance of such Series.

ICC also serves as the Fund's transfer and dividend disbursing agent and
provides accounting services to the Prime Series. An affiliate of ICC provides
custody services to the Fund. (See "Cus-todian, Transfer Agent and Accounting
Services.")

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<PAGE>

Distributor

ICC Distributors, Inc. ("ICC Distributors" or the "Distributor") has served as
distributor for the Shares since August 31, 1997. ICC Distributors is a
registered broker-dealer that offers distribution services to a variety of
registered investment companies including the funds in the Flag Investors
family of funds. ICC Distributors is not affiliated with the Fund's advisor.

As compensation for its services for the period from August 31, 1997 through
March 31, 1998, ICC Distributors received a fee from the Fund, equal to 0.60%
(annualized) of the average daily net assets invested in Shares. ICC
Distributors currently reduces its distribution fee, on a voluntary basis, to
0.54% of the Shares' average daily net assets. (See "Table of Fees and
Expenses.")

ICC Distributors expects to allocate up to all of its annual fee received from
the Fund to securities dealers as compensation for opening shareholder
accounts, processing investor purchase and redemption orders, responding to
inquiries from Fund shareholders concerning the status of their accounts and
operations of the Fund, and communicating with the Fund and its transfer agent
on behalf of the Fund's shareholders. Additionally, ICC Distributors bears all
expenses associated with advertisements, promotional materials, sales
literature and printing and mailing prospectuses to other than Fund
shareholders. ICC Distributors may from time to time and from its own resources
pay or allow additional discounts or promotional incentives in the form of cash
or other compensation (including merchandise or travel) to securities dealers.

Current Yield

From time to time the Fund advertises the "yield" and "effective yield" of a
particular Series or class. Both figures are based on historical earnings and
are not intended to indicate future performance. The "yield" of a Series or
class refers to the income generated by an investment in that Series or class
over a seven-day period (which period will be stated in the advertisement.)
This income is then "annualized," that is, the amount of income generated by
the investment during that week is assumed to be generated each week of a
52-week period and is shown as a percentage of the investment. The "effective
yield" is calculated

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<PAGE>

similarly, but when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "yield" because of the compounding effect of this assumed reinvestment. You
may obtain the yield for the Quality Cash Reserve Prime Shares by calling your
securities dealer.

General Information

Description of Shares

The Fund is an open-end, diversified management investment company. The Fund
was reorganized under the laws of the State of Maryland on April 5, 1990. The
Fund is authorized to issue 9 billion shares of common stock with a par value
of $.001 per share. Shares of the Fund are divided into three series, each with
a par value of $.001 - the Prime Series, the Treasury Series and the Tax-Free
Series. Each of the Series currently offers one or more classes of shares,
which differ from each other principally in the allocation of certain expenses
and the method of distribution, which may affect performance. For information
regarding the other classes of shares, please call (800) 553-8080 or your
securities dealer. Shares of the Fund have equal rights with respect to voting,
except that the holders of shares of a particular Series or class will have the
exclusive right to vote on matters affecting only the rights of the holders of
such Series or class. For example, holders of a particular Series will have the
exclusive right to vote on any investment advisory agreement or investment
restriction that relates only to such Series. In the event of dissolution or
liquidation, holders of shares of each Series will receive pro rata, subject to
the rights of creditors, (a) the proceeds of the sale of the assets held in the
respective Series less (b) the liabilities of the Fund attributable to the
respective Series or allocated among all Series based on the respective
liquidation value of each Series.

Custodian, Transfer Agent and Accounting
Services

Investment Company Capital Corp. is the Fund's transfer and dividend disbursing
agent and provides accounting services to the Prime Series. As compensation for
providing accounting services to the Prime Series for the fiscal year ended
March 31, 1998, ICC received a fee equal to 0.01% of the Prime Series' average
daily net assets. Bankers Trust Company, a subsidiary of Bankers Trust
Corporation acts as custodian of the Fund's assets. (See the Statement of
Additional Information.)

Annual Meetings

Reports

You will be furnished with semi-annual reports containing information about the
Fund and its operations, including a list of investments held in

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<PAGE>

the Fund's portfolio and financial statements. The annual financial statements
are audited by the Fund's independent accountants, PricewaterhouseCoopers LLP.

Shareholder Inquiries

If you have questions concerning your Shares, contact your securities dealer.

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QUALITY CASH RESERVE PRIME SHARES

(A Class of BT Alex. Brown Cash Reserve Fund, Inc.)

Investment Advisor
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202

Distributor Fund Counsel
ICC DISTRIBUTORS, INC. MORGAN, LEWIS & BOCKIUS LLP
P.O. Box 7558 1701 Market Street
Portland, Maine 04101 Philadelphia, Pennsylvania 19103

Custodian Independent Accountants
BANKERS TRUST COMPANY PRICEWATERHOUSECOOPERS LLP
130 Liberty Street 250 West Pratt Street
New York, New York 10006 Baltimore, Maryland 21201

Transfer Agent
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202
(800) 553-8080

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Quality Cash Reserve Prime Shares
P.O. Box 17250
Baltimore, Maryland 21203

QUALITY
CASH RESERVE
PRIME SHARES

Prospectus

August 1, 1998, as
supplemented through
March 31, 1999

Bulk Rate
U.S. POSTAGE
PAID
Farmingdale, NY
Permit No. 225

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