<PAGE>
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC.
P.O. Box 17250
Baltimore, Maryland 21203
This mutual fund (the "Fund") is a money market fund designed for individuals,
businesses, institutions and fiduciaries which seek as high a level of current
income (tax-exempt current income in the case of the Tax-Free Series) as is
consistent with preservation of capital and liquidity.
The Fund offers three Series of shares:
o PRIME SERIES
o TREASURY SERIES
o TAX-FREE SERIES
The Fund offers shares through securities dealers and financial institutions
that act as shareholder servicing agents. This Prospectus describes the Deutsche
Banc Alex. Brown Cash Reserve Shares (the "Shares") of each of the above Series.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Investment Summary.................................................................................................................2
Additional Information.............................................................................................................8
The Fund's Net Asset Value.........................................................................................................8
How to Buy Shares..................................................................................................................8
How to Redeem Shares...............................................................................................................9
Distribution and Service Plans....................................................................................................10
Dividends and Taxes...............................................................................................................11
Investment Advisor................................................................................................................11
Financial Highlights..............................................................................................................13
</TABLE>
THE SECURITIES AND EXCHANGE COMMISSION HAS NEITHER APPROVED NOR DISAPPROVED
THESE SECURITIES NOR HAS IT PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED: August 1, 1999
-1-
<PAGE>
INVESTMENT SUMMARY: PRIME SERIES
OBJECTIVE AND STRATEGIES
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.
To achieve this objective, the Prime Series invests in high quality, short-term
money market instruments. These instruments include certificates of deposit,
bankers' acceptances, commercial paper, variable rate demand notes, U.S.
Treasury obligations and repurchase agreements. An instrument is considered to
be high quality if it is rated in one of the two highest rating categories by
either Moody's Investors Service, Inc. or Standard and Poor's Ratings Group or,
if unrated, is of comparable quality as determined by the Advisor.
The Advisor also attempts to achieve the Prime Series' objective by
limiting investments to securities with maturities of 397 days or less and by
maintaining an average maturity of 90 days or less. The Advisor actively adjusts
the average maturity of the Prime Series in response to its outlook for interest
rates and the economy.
The Advisor strictly limits exposure to any one issue.
In managing the Prime Series' assets, the Advisor attempts to maintain
a stable net asset value of $1.00 per share.
RISK PROFILE
The Prime Series is suitable for you if you want to receive income from
your investment while minimizing the risk of loss of principal and maintaining
liquidity. An investment in the Prime Series is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the Advisor attempts to maintain a $1.00 per share price, it is possible that
you may lose money by investing in the Prime Series. Risks of the Prime Series
include:
Interest Rate Risk. The primary risk of the Prime Series is interest
rate risk. The Series' yield can be expected to decline during periods of
falling interest rates.
Credit Risk. It is possible that the credit rating of securities in the
Prime Series' investment portfolio could be downgraded or that a security could
go into default.
Style Risk. There can be no guarantee that the Advisor's judgment about
the attractiveness, relative value or potential return of a security will be
correct.
- --------------------------------------------------------------------------------
PRIME SHARES*
FOR YEARS ENDED DECEMBER 31,
10.00%
9.05%
8.00% 7.94%
6.00% 5.69%
5.53%
4.00% 3.26% 3.81% 4.92% 4.99% 4.99%
2.64%
2.00%
0.00%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------
* For the period from December 31, 1998 through June 30, 1999, the year-to-date
return for the Prime Shares was 2.16%.
During the 10-year period shown in the bar chart, the highest return
for a quarter was 2.34% (quarter ended 6/30/89) and the lowest return for a
quarter was 0.64% (quarter ended 6/30/93).
-2-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED DECEMBER 31, 1998)
- --------------------------------------------------------------------------------
Prime Shares(1)
- --------------------------------------------------------------------------------
Past One Year........................................ 4.99%
- --------------------------------------------------------------------------------
Past Five Years...................................... 4.85%
- --------------------------------------------------------------------------------
Past Ten Years....................................... 5.27%
- --------------------------------------------------------------------------------
Since Inception...................................... 6.83% (8/11/81)
- --------------------------------------------------------------------------------
- ---------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions.
The Prime Shares' current yield for the 7-day period ended December 31, 1998 was
4.53%. You may obtain the current 7-day yield of the Prime Shares by calling
1-800-553-8080.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
and hold Prime Shares.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment): PRIME SHARES
------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases....................................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends............................ None
Maximum Deferred Sales Charge (Load)................................................... None
Redemption Fee ........................................................................ None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
Management Fees ....................................................................... 0.26%
Distribution and/or Service (12b-1) Fees............................................... 0.25%
Other Expenses (including a 0.05% Shareholder Service Fee)............................. 0.16%
-----
Total Annual Fund Operating Expenses................................................... 0.67%
=====
</TABLE>
EXAMPLE:
This Example is intended to help you compare the cost of investing in
the Prime Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Prime Shares for the
time periods indicated and then redeem all of your Prime Shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Prime Shares' operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Prime Shares........................ $68 $214 $373 $835
</TABLE>
-3-
<PAGE>
INVESTMENT SUMMARY: TREASURY SERIES
OBJECTIVE AND STRATEGIES
The investment objective of the Treasury Series is to seek as high a
level of current income as is consistent with preservation of capital and
liquidity. To achieve this objective, the Treasury Series invests in securities
issued by the U.S. Treasury. While the Series may, to a limited extent, invest
in repurchase agreements, the Advisor expects that 100% of the Series will be
invested in U.S. Treasury securities.
The Advisor also attempts to achieve the Treasury Series' objective by
limiting investments to securities with maturities of 397 days or less and by
maintaining an average maturity of 90 days or less. The Advisor actively adjusts
the average maturity of the Treasury Series in response to its outlook for
interest rates and the economy.
The Advisor strictly limits exposure to any one issue.
In managing the Treasury Series' assets, the Advisor attempts to
maintain a stable net asset value of $1.00 per share.
RISK PROFILE
The Treasury Series is suitable for you if you want to receive income
from your investment while minimizing the risk of loss of principal and
maintaining liquidity. An investment in the Treasury Series is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Advisor attempts to maintain a $1.00 per share
price, it is possible that you may lose money by investing in the Treasury
Series. Risks of the Treasury Series include:
Interest Rate Risk. The primary risk of the Treasury Series is interest
rate risk. The Series' yield can be expected to decline during periods of
falling interest rates. The yield on U.S. Treasury securities is generally less
than yields on other taxable investments.
Style Risk. There can be no guarantee that the Advisor's judgment about
the attractiveness, relative value or potential return of a security will be
correct.
- --------------------------------------------------------------------------------
TREASURY SHARES*
FOR YEARS ENDED DECEMBER 31,
10.00%
8.89%
8.00% 7.57%
6.00% 5.51%
5.17%
4.00% 3.21% 3.57% 4.65% 4.68% 4.54%
2.56%
2.00%
0.00%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------
*For the period from December 31, 1998 through June 30, 1999, the
year-to-date return for the Treasury Shares was 2.12%.
During the 10-year period shown in the bar chart, the highest return
for a quarter was 2.25% (quarter ended 6/30/89) and the lowest return for a
quarter was 0.61% (quarter ended 6/30/93).
-4-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED DECEMBER 31, 1998)
- --------------------------------------------------------------------------------
Treasury Series(1)
- --------------------------------------------------------------------------------
Past One Year........................................... 4.54%
- --------------------------------------------------------------------------------
Past Five Years......................................... 4.52%
- --------------------------------------------------------------------------------
Past Ten Years.......................................... 5.02%
- --------------------------------------------------------------------------------
Since Inception......................................... 6.22% (4/3/82)
- --------------------------------------------------------------------------------
- -------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions.
The Treasury Shares' current yield for the 7-day period ended December 31, 1998
was 3.90%. You may obtain the current 7-day yield of the Treasury Shares by
calling 1-800-553-8080.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
and hold Treasury Shares.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment): TREASURY
SHARES
------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases........................................ None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends............................. None
Maximum Deferred Sales Charge (Load).................................................... None
Redemption Fee ......................................................................... None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
Management Fees ........................................................................ 0.24%
Distribution and/or Service (12b-1) Fees................................................ 0.25%
Other Expenses (including a 0.05% Shareholder Service Fee).............................. 0.12%
-------
Total Annual Fund Operating Expenses.................................................... 0.61%
Less Fee Waivers........................................................................ (0.05)%*
-------
Net Expenses............................................................................ 0.56%
=======
</TABLE>
- -----------
* The Advisor has contractually agreed to waive its fee for the Treasury Shares
by 0.05%. This agreement will continue until July 31, 2000 and may be
extended.
EXAMPLE:
This Example is intended to help you compare the cost of investing in
the Treasury Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Treasury Shares for
the time periods indicated and then redeem all of your Treasury Shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Treasury Shares' operating expenses remain the
same. Although your actual costs may be higher or lower, based on these
assumptions, your costs would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Treasury Shares..................... $57* $185* $330* $752*
</TABLE>
*Based on Total Annual Fund Operating Expenses after fee waivers for year 1
only.
-5-
<PAGE>
INVESTMENT SUMMARY: TAX-FREE SERIES
OBJECTIVE AND STRATEGIES
The investment objective of the Tax-Free Series is to seek as high a
level of current income exempt from federal income tax as is consistent with
preservation of capital and liquidity. To achieve this objective, the Tax-Free
Series invests in high quality, short-term municipal securities. These
securities include municipal notes and short-term municipal bonds. A security is
considered to be high quality if it is rated in one of the two highest rating
categories by either Moody's Investors Service, Inc. or Standard and Poor's
Ratings Group or, if unrated, is of comparable quality as determined by the
Advisor. While it is the policy of the Tax-Free Series to invest at least 80% of
its assets in securities exempt from federal income tax, the Advisor expects
that 100% of the Tax-Free Series will be so invested.
The Advisor also attempts to achieve the Tax-Free Series' objective by
limiting investments to securities with maturities of 397 days or less and by
maintaining an average maturity of 90 days or less. The Advisor actively adjusts
the average maturity of the Tax-Free Series in response to its outlook for
interest rates and the economy.
The Advisor strictly limits exposure to any one issue.
In managing the Tax-Free Series' assets, the Advisor attempts to
maintain a stable net asset value of $1.00 per share.
RISK PROFILE
The Tax-Free Series is suitable for you if you want to receive tax-free
income from your investment while minimizing the risk of loss of principal and
maintaining liquidity. An investment in the Tax-Free Series is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Advisor attempts to maintain a $1.00 per share price, it is
possible that you may lose money by investing in the Tax-Free Series. Risks of
the Tax-Free Series include:
Interest Rate Risk. The primary risk of the Tax-Free Series is interest
rate risk. The Series' yield can be expected to decline during periods of
falling interest rates.
Credit Risk. It is possible that the credit rating of securities in the
Tax-Free Series' investment portfolio could be downgraded or that a security
could go into default.
Style Risk. There can be no guarantee that the Advisor's judgment about
the attractiveness, relative value or potential return of a security will be
correct.
Special Tax Features. To the extent that the Tax-Free Series invests in
taxable securities, a portion of its income would be taxable.
- --------------------------------------------------------------------------------
TAX-FREE SHARES*
FOR YEARS ENDED DECEMBER 31,
4.00% 3.90%
3.50% 3.35% 3.08%
3.00% 2.89% 2.93%
2.50% 2.39% 2.38%
2.00% 1.85%
1.00%
0.50%
0.00%
1991 1992 1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------
*For the period from December 31, 1998 through June 30, 1999, the
year-to-date return for the Tax-Free Shares was 1.38%.
During the 8-year period shown in the bar chart, the highest return for
a quarter was 0.97% (quarter ended 9/30/91) and the lowest return for a quarter
was 0.44% (quarter ended 3/31/93).
-6-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED DECEMBER 31, 1998)
- --------------------------------------------------------------------------------
Tax-Free Shares(1)
- --------------------------------------------------------------------------------
Past One Year............................................ 2.93%
- --------------------------------------------------------------------------------
Past Five Years.......................................... 2.93%
- --------------------------------------------------------------------------------
Since Inception.......................................... 2.90% (12/17/90)
- --------------------------------------------------------------------------------
- --------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions.
The Tax-Free Shares' current yield for the 7-day period ended December 31, 1998
was 3.08%. The Tax-Free Shares' taxable-equivalent yield for the 7-day period
ended December 31, 1998 was 4.46%. You may obtain the current 7-day yield of the
Tax-Free Shares by calling 1-800-553-8080.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
and hold Tax-Free Shares.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment): TAX-FREE SHARES
---------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases........................................ None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends............................. None
Maximum Deferred Sales Charge (Load).................................................... None
Redemption Fee ......................................................................... None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
Management Fees ........................................................................ 0.27%
Distribution and/or Service (12b-1) Fees................................................ 0.25%
Other Expenses (including a 0.05% Shareholder Service Fee).............................. 0.14%
-----
Total Annual Fund Operating Expenses.................................................... 0.66%
=====
</TABLE>
EXAMPLE:
This Example is intended to help you compare the cost of investing in
the Tax-Free Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Tax-Free Shares for
the time periods indicated and then redeem all of your Tax-Free Shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that the Tax-Free Shares' operating expenses remain the
same. Although your actual costs may be higher or lower, based on these
assumptions, your costs would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Tax-Free Shares..................... $67 $211 $368 $822
</TABLE>
-7-
<PAGE>
ADDITIONAL INFORMATION
YEAR 2000 ISSUES
The Fund depends on the smooth functioning of computer systems in
almost every aspect of its business. The Fund could be adversely affected if the
computer systems used by its service providers do not properly process dates on
and after January 1, 2000 and distinguish between the year 2000 and the year
1900. The Fund has asked its service providers whether they expect to have their
computer systems adjusted for the year 2000 transition, and has received
assurances from each that its system is expected to accommodate the year 2000
without material adverse consequences to the Fund. The Fund and its shareholders
may experience losses if these assurances prove to be incorrect or if issuers of
portfolio securities or third parties, such as custodians, banks, broker-dealers
or others, with which the Fund does business experience difficulties as a result
of year 2000 issues.
THE FUND'S NET ASSET VALUE
The price you pay when you buy Shares or receive when you redeem Shares
is based on 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 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 of each Series 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 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.
The following sections describe how to buy and redeem Shares.
HOW TO BUY SHARES
You may buy Shares through your securities dealer or through any
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.
-8-
<PAGE>
INVESTMENT MINIMUMS
Your initial investment in any Series must be at least $1,500.
Subsequent investments in the same Series 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
You may make regular investments in the Fund through either of the
following methods. Contact your securities dealer or your 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 your 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. The letter must be signed by
all owners of the Shares exactly as their names appear on the account.
2) A guarantee of your signature. You can obtain one from most banks or
securities dealers.
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 net asset
value of the Series you are redeeming.
-9-
<PAGE>
OTHER REDEMPTION INFORMATION
Redemption by Check. You may establish special check redemption
privileges that will allow you to redeem Shares of the Series you own by writing
checks in amounts of $500 or more. These checks may be cashed or deposited in
the same way as ordinary bank checks. You may use the same check regardless of
which Series of the Fund you own. If you own shares of more than one Series of
the Fund, your check will be honored first through redemption of shares of the
Tax-Free Series, then through redemption of shares of the Prime Series and,
finally, through redemption of shares of the Treasury Series. 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. Canceled checks
will not be returned to you.
If the amount of your check exceeds the value of the Shares of all
Series you own, the check will be returned to the payee marked "non-sufficient
funds." Checks written for amounts less than $500 may also be returned. The
Fund, in its discretion, will honor such checks but will charge you a servicing
fee of $15.
The Fund reserves the right to terminate or alter check redemption
privileges at any time, to 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 a Series
to $500 or less, the Fund has the power to redeem the remaining Shares after
giving you 60 days' notice. The Fund reserves the right to redeem shares in kind
under certain circumstances.
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.
DISTRIBUTION AND SERVICE PLANS
The Fund has adopted plans under Rule 12b-1 that allow the Fund to pay
your securities dealer or shareholder servicing agent distribution and other
fees for the sale of its Shares and for shareholder service. Each Series pays an
annual distribution fee equal to 0.25% of average daily net assets. Because
these fees are paid out of net assets on an on-going basis, they will, over
time, increase the cost of your investment and may cost you more than paying
other types of sales charges.
Each Series has adopted a shareholder service plan for the Shares.
Under the terms of each shareholder service plan, the Fund will pay the
Distributor an annual service fee of 0.05% of the Shares' average daily net
assets. The Distributor will use the service fee to pay third parties for
services for which they are not otherwise being compensated under the applicable
12b-1 Plan.
-10-
<PAGE>
DIVIDENDS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
All of the net income earned on each Series is normally declared as
dividends daily to the respective shareholders of record of such shares.
Dividends on each Series are normally payable on the first day that a purchase
or exchange 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 is based on current tax laws, which may change.
The Fund will distribute substantially all of its income and capital
gains. The dividends and distributions you receive are subject to federal, state
and local taxation, depending upon your tax situation. Distributions you receive
from the Fund may be taxable whether or not you reinvest them. Each sale or
exchange of the Fund's shares is a taxable event.
The Tax-Free Series intends to distribute income exempt from
federal income tax. This income may, however, be subject to state and local tax.
The Tax-Free Series may invest a portion of its assets in securities that
generate taxable income for federal or state income tax purposes. Any capital
gains distributed by the Series may be taxable.
More information about taxes is in the Statement of Additional
Information. Please contact your tax advisor regarding your specific questions
about federal, state and local income taxes.
INVESTMENT ADVISOR
Investment Company Capital Corp. ("ICC" or the "Advisor") is the
investment advisor to each Series of the Fund. ICC supervises and manages the
Fund's operations and generally provides management and administrative services
for the Fund. ICC is also the investment advisor to other mutual funds in the
Flag Investors family of funds. These funds, together with the Fund, had
approximately $10 billion of net assets as of June 30, 1999.
As compensation for its services for the fiscal year ended March 31,
1999, ICC received from the Fund a fee equal to 0.26% of the Prime Series'
average daily net assets, 0.19% of the Treasury Series' average daily net assets
(net of fee waivers) 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
has contractually agreed to waive its fee for the Treasury Series by 0.05%. This
agreement will continue until July 31, 2000 and may be extended.
Prior to June 4, 1999, the Advisor was an indirect subsidiary of
Bankers Trust Corporation. On June 4, 1999, Bankers Trust Corporation merged
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. Because Deutsche Bank AG, as ICC's
new parent company, controls its operations as investment advisor, the Fund's
shareholders will be asked to approve a new investment advisory agreement
between ICC and the Fund with respect to each Series. A Special Meeting of
Shareholders will be held for this purpose. ICC believes that, under this new
arrangement, the services provided to the Fund will be maintained at their
current level.
-11-
<PAGE>
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 Corporation 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.
-12-
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Series' financial performance for the past five fiscal years. Certain
information reflects financial results for a single share of a Series. The total
returns in the table represent the rate that an investor would have earned on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with the Fund's financial statements, is included in the
Statement of Additional Information, which is available upon request.
<TABLE>
<CAPTION>
PRIME SERIES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED MARCH 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of year.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.0473 0.0494 0.0478 0.0524 0.0442
LESS DISTRIBUTIONS:
Dividends from net investment income.... (0.0473) (0.0494) (0.0478) (0.0524) (0.0442)
------- ------- ------- -------- --------
Net asset value at end of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======== ========
TOTAL RETURN:
Based on net asset value per share...... 4.84% 5.05% 4.88% 5.36% 4.51%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 0.63% 0.67% 0.63% 0.60% 0.61%
Net investment income................... 4.71% 4.94% 4.78% 5.21% 4.46%
SUPPLEMENTAL DATA:
Net assets at end of year .............. $3,727,990,170 $3,164,537,551 $2,545,532,365 $2,386,681,216 $1,472,079,739
Number of shares outstanding at
end of year......................... 3,727,906,079 3,164,529,071 2,545,523,885 2,386,684,392 1,472,077,488
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
TREASURY SERIES
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED MARCH 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of year .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- --------- ----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................... 0.0427 0.0464 0.0453 0.0494 0.0411
LESS DISTRIBUTIONS:
Dividends from net investment income .... (0.0427) (0.0464) (0.0453) (0.0494) (0.0411)
Net asset value at end of year .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ========= =========== ==========
TOTAL RETURN:
Based on net asset value per share ...... 4.35% 4.74% 4.63% 5.05% 4.19%
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 0.58% 0.59% 0.61% 0.58% 0.55%(1)
Net investment income ................... 4.26% 4.65% 4.54% 4.94% 4.09%(2)
SUPPLEMENTAL DATA:
Net assets at end of year ............... $816,700,318 $798,426,658 $678,444,803 $666,814,158 $512,167,212
Number of shares outstanding at end of
year .................................... 816,622,190 798,354,129 678,391,386 666,762,028 512,162,864
</TABLE>
- ---------------
(1) Ratio of expenses to average daily net assets prior to partial fee waiver
was 0.56% for the fiscal year ended March 31, 1995.
(2) Ratio of net investment income to average daily net assets prior to partial
fee waiver was 4.08% for the year ended March 31, 1995.
-14-
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE SERIES
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED MARCH 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of
year............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ----------- ----------- ----------- ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............. 0.0277 0.0306 0.0286 0.0318 0.0271
LESS DISTRIBUTIONS:
Dividends from net investment
income............................. (0.0277) (0.0306) (0.0286) (0.0318) (0.0271)
Net asset value at end of year..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============ =========== =========== ===========
TOTAL RETURN:
Based on net asset value per
share.............................. 2.81% 3.10% 2.90% 3.23% 2.75%
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 0.58% 0.60% 0.62% 0.60% 0.57%
Net investment income.............. 2.74% 3.05% 2.86% 3.16% 2.74%
SUPPLEMENTAL DATA:
Net assets at end of year.......... $1,047,391,315 $841,184,924 $647,212,025 $571,507,000 $475,384,229
Number of shares outstanding at end of
year............................... 1,047,493,739 841,258,030 647,283,274 571,593,265 475,474,913
</TABLE>
-15-
<PAGE>
Investment Advisor
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202
Independent Auditors Distributor
PRICEWATERHOUSECOOPERS LLP ICC DISTRIBUTORS, INC.
250 West Pratt Street Two Portland Square
Baltimore, Maryland 21201 Portland, Maine 04101
Transfer Agent Fund Counsel
INVESTMENT COMPANY CAPITAL CORP. MORGAN, LEWIS & BOCKIUS LLP
One South Street 1701 Market Street
Baltimore, Maryland 21202 Philadelphia, Pennsylvania 19103
1-800-553-8080
Custodian
BANKERS TRUST COMPANY
130 Liberty Street
New York, New York 10006
<PAGE>
DEUTSCHE BANC ALEX. BROWN
CASH RESERVE
FUND, INC.
- --------------------------------------------------------------------------------
You may obtain the following additional information about the Fund, free of
charge, from your securities dealer or servicing agent or by calling (800)
553-8080:
o A statement of additional information (SAI) about the Fund that is
incorporated by reference into the prospectus.
o The Fund's most recent annual report containing detailed financial
information and a discussion of market conditions and investment
strategies that significantly affected the Fund's performance during
its last fiscal year.
In addition you may review information about the Fund (including the SAI) at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
(Call 1-800-SEC-0330 to find out about the operation of the Public Reference
Room.) The Commission's Internet site at http://www.sec.gov has reports and
other information about the Fund. You may get copies of this information by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-5009. You will be charged for duplicating fees.
For other shareholder inquiries, contact the Transfer Agent at (800) 553-8080.
For Fund information, call (800) 553-8080 or your securities dealer or servicing
agent.
Investment Company Act File No. 811-3196
BTCASHPRO(8/99)
- --------------------------------------------------------------------------------
<PAGE>
DEUTSCHE BANC ALEX. BROWN
CASH RESERVE
FUND, INC.
PRIME SERIES
TREASURY SERIES
TAX-FREE SERIES
PROSPECTUS
AUGUST 1, 1999
<PAGE>
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC.
INSTITUTIONAL SHARES
P.O. Box 17250
Baltimore, Maryland 21203
This mutual fund (the "Fund") is a money market fund designed for businesses,
institutions and fiduciaries which seek as high a level of current income
(tax-exempt current income in the case of the Tax-Free Series) as is consistent
with preservation of capital and liquidity.
The Fund offers three Series of shares:
O PRIME SERIES
O TREASURY SERIES
O TAX-FREE SERIES
This class of shares may be purchased by eligible institutions. This Prospectus
describes the Deutsche Banc Alex. Brown Cash Reserve Institutional Shares of
each of the above Series.
TABLE OF CONTENTS
Page
----
Investment Summary.............................................................2
Additional Information.........................................................7
The Fund's Net Asset Value.....................................................8
How to Buy Shares..............................................................8
How to Redeem Shares...........................................................9
Dividends and Taxes............................................................9
Investment Advisor............................................................10
Financial Highlights..........................................................11
THE SECURITIES AND EXCHANGE COMMISSION HAS NEITHER APPROVED NOR DISAPPROVED
THESE SECURITIES NOR HAS IT PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED: August 1, 1999
-1-
<PAGE>
INVESTMENT SUMMARY: PRIME SERIES
OBJECTIVE AND STRATEGIES
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.
To achieve this objective, the Prime Series invests in high quality, short-term
money market instruments. These instruments include certificates of deposit,
bankers' acceptances, commercial paper, variable rate demand notes, U.S.
Treasury obligations and repurchase agreements. An instrument is considered to
be high quality if it is rated in one of the two highest rating categories by
either Moody's Investors Service, Inc. or Standard and Poor's Ratings Group or,
if unrated, is of comparable quality as determined by the Advisor.
The Advisor also attempts to achieve the Prime Series' objective by
limiting investments to securities with maturities of 397 days or less and by
maintaining an average maturity of 90 days or less. The Advisor actively adjusts
the average maturity of the Prime Series in response to its outlook for interest
rates and the economy.
The Advisor strictly limits exposure to any one issue.
In managing the Prime Series' assets, the Advisor attempts to maintain
a stable net asset value of $1.00 per share.
RISK PROFILE
The Prime Series is suitable for you if you want to receive income from
your investment while minimizing the risk of loss of principal and maintaining
liquidity. An investment in the Prime Series is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Advisor attempts to maintain a $1.00 per share price, it is
possible that you may lose money by investing in the Prime Series. Risks of the
Prime Series include:
Interest Rate Risk. The primary risk of the Prime Series is interest
rate risk. The Series' yield can be expected to decline during periods of
falling interest rates.
Credit Risk. It is possible that the credit rating of securities in the
Prime Series' investment portfolio could be downgraded or that a security could
go into default.
Style Risk. There can be no guarantee that the Advisor's judgment about
the attractiveness, relative value or potential return of a security will be
correct.
- --------------------------------------------------------------------------------
PRIME INSTITUTIONAL SHARES*
FOR YEARS ENDED DECEMBER 31,
6.00% 5.98% 5.78%
5.00% 5.19% 5.26% 5.25%
4.00% 3.60% 4.13%
3.00% 2.97%
2.00%
1.00%
0.00%
1991 1992 1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------
*For the period from December 31, 1998 through June 30, 1999, the
year-to-date return for the Prime Institutional Shares was 2.32%.
During the 8-year period shown in the bar chart, the highest return for a
quarter was 1.68% (quarter ended 3/31/91) and the lowest return for a quarter
was 0.72% (quarter ended 6/30/93).
-2-
<PAGE>
Average Annual Total Return (for periods ended December 31, 1998)
- --------------------------------------------------------------------------------
Prime Institutional Shares (1)
- --------------------------------------------------------------------------------
Past One Year................................. 5.25%
- --------------------------------------------------------------------------------
Past Five Years............................... 5.12%
- --------------------------------------------------------------------------------
Since Inception............................... 5.05% (6/4/90)
- --------------------------------------------------------------------------------
- ------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions.
The Prime Institutional Shares' current yield for the 7-day period ended
December 31, 1998 was 4.79%. You may obtain the current 7-day yield of the Prime
Institutional Shares by calling 1-800-553-8080.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
and hold Prime Institutional Shares.
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment): PRIME INSTITUTIONAL SHARES
--------------------------
Maximum Sales Charge (Load) Imposed on Purchases....................................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends............................ None
Maximum Deferred Sales Charge (Load)................................................... None
Redemption Fee ........................................................................ None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Prime
Institutional Shares' assets):
Management Fees ....................................................................... 0.26%
Distribution and/or Service (12b-1) Fees............................................... None
Other Expenses ........................................................................ 0.11%
-----
Total Annual Fund Operating Expenses................................................... 0.37%
=====
</TABLE>
EXAMPLE:
This Example is intended to help you compare the cost of investing in
the Prime Institutional Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Prime Institutional
Shares for the time periods indicated and then redeem all of your Prime
Institutional Shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Prime Institutional
Shares' operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
1 year 3 years 5 years 10 years
------ ------- ------- --------
Prime Institutional Shares ..... $38 $119 $208 $468
-3-
<PAGE>
INVESTMENT SUMMARY: TREASURY SERIES
OBJECTIVE AND STRATEGIES
The investment objective of the Treasury Series is to seek as high a
level of current income as is consistent with preservation of capital and
liquidity. To achieve this objective, the Treasury Series invests in securities
issued by the U.S. Treasury. While the Series may, to a limited extent, invest
in repurchase agreements, the Advisor expects that 100% of the Series will be
invested in U.S. Treasury securities.
The Advisor also attempts to achieve the Treasury Series' objective by
limiting investments to securities with maturities of 397 days or less and by
maintaining an average maturity of 90 days or less. The Advisor actively adjusts
the average maturity of the Treasury Series in response to its outlook for
interest rates and the economy.
The Advisor strictly limits exposure to any one issue.
In managing the Treasury Series' assets, the Advisor attempts to
maintain a stable net asset value of $1.00 per share.
RISK PROFILE
The Treasury Series is suitable for you if you want to receive income
from your investment while minimizing the risk of loss of principal and
maintaining liquidity. An investment in the Treasury Series is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Advisor attempts to maintain a $1.00 per share price, it is
possible that you may lose money by investing in the Treasury Series. Risks of
the Treasury Series include:
Interest Rate Risk. The primary risk of the Treasury Series is interest
rate risk. The Series' yield can be expected to decline during periods of
falling interest rates. The yield on U.S. Treasury securities is generally less
than the yields on other taxable investments.
Style Risk. There can be no guarantee that the Advisor's judgment about
the attractiveness, relative value or potential return of a security will be
correct.
- --------------------------------------------------------------------------------
TREASURY INSTITUTIONAL SHARES*
FOR YEARS ENDED DECEMBER 31,
6.00% 5.80% 5.48%
5.00% 4.97% 4.97% 4.84%
4.00% 3.50% 3.85%
3.00% 2.85%
2.00%
1.00%
0.00%
1991 1992 1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------
*For the period from December 31, 1998 through June 30, 1999, the
year-to-date return for the Treasury Institutional Shares was 1.97%.
During the 8-year period shown in the bar chart, the highest return for
a quarter was 1.62% (quarter ended 3/31/91) and the lowest return for a quarter
was 0.69% (quarter ended 6/30/93).
-4-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED DECEMBER 31, 1998)
- --------------------------------------------------------------------------------
Treasury Institutional Shares (1)
- --------------------------------------------------------------------------------
Past One Year............................. 4.84%
- --------------------------------------------------------------------------------
Past Five Years........................... 4.82%
- --------------------------------------------------------------------------------
Since Inception........................... 4.80% (6/4/90)
- --------------------------------------------------------------------------------
- ------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions.
The Treasury Institutional Shares' current yield for the 7-day period ended
December 31, 1998 was 4.16%. You may obtain the current 7-day yield of the
Treasury Institutional Shares by calling 1-800-553-8080.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
and hold Treasury Institutional Shares.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment): TREASURY
INSTITUTIONAL SHARES
---------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases................................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends........................ None
Maximum Deferred Sales Charge (Load)............................................... None
Redemption Fee .................................................................... None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from
Treasury Institutional Shares' assets):
Management Fees ................................................................... 0.24%
Distribution and/or Service (12b-1) Fees........................................... None
Other Expenses .................................................................... 0.07%
-------
Total Annual Fund Operating Expenses............................................... 0.31%
Less Fee Waivers................................................................... (0.05)%*
-------
Net Expenses....................................................................... 0.26%
</TABLE>
- -----------
* The Advisor has contractually agreed to waive its fee for the Treasury Series
by 0.05%. This agreement will continue until July 31, 2000 and may be
extended.
EXAMPLE:
This Example is intended to help you compare the cost of investing in
the Treasury Institutional Shares with the cost of investing in other mutual
funds.
The Example assumes that you invest $10,000 in the Treasury
Institutional Shares for the time periods indicated and then redeem all of your
Treasury Institutional Shares at the end of those periods. The Example also
assumes that your investment has a 5% return each year and that the Treasury
Institutional Shares' operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions, your costs would be:
1 year 3 years 5 years 10 years
------ ------- ------- --------
Treasury Institutional Shares ...... $27* $95* $169* $388*
- -----------
*Based on Total Annual Fund Operating Expenses after fee waivers for year 1
only.
-5-
<PAGE>
INVESTMENT SUMMARY: TAX-FREE SERIES
OBJECTIVE AND STRATEGIES
The investment objective of the Tax-Free Series is to seek as high a
level of current income exempt from federal income tax as is consistent with
preservation of capital and liquidity. To achieve this objective, the Tax-Free
Series invests in high quality, short-term municipal securities. These
securities include municipal notes and short-term municipal bonds. A security is
considered to be high quality if it is rated in one of the two highest rating
categories by either Moody's Investors Service, Inc. or Standard and Poor's
Ratings Group or, if unrated, is of comparable quality as determined by the
Advisor. While it is the policy of the Tax-Free Series to invest at least 80% of
its assets in securities exempt from federal income tax, the Advisor expects
that 100% of the Tax-Free Series will be so invested.
The Advisor also attempts to achieve the Tax-Free Series' objective by
limiting investments to securities with maturities of 397 days or less and by
maintaining an average maturity of 90 days or less. The Advisor actively adjusts
the average maturity of the Tax-Free Series in response to its outlook for
interest rates and the economy.
The Advisor strictly limits exposure to any one issue.
In managing the Tax-Free Series' assets, the Advisor attempts to
maintain a stable net asset value of $1.00 per share.
RISK PROFILE
The Tax-Free Series is suitable for you if you want to receive tax-free
income from your investment while minimizing the risk of loss of principal and
maintaining liquidity. An investment in the Tax-Free Series is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Advisor attempts to maintain a $1.00 per share price, it is
possible that you may lose money by investing in the Tax-Free Series. Risks of
the Tax-Free Series include:
Interest Rate Risk. The primary risk of the Tax-Free Series is interest
rate risk. The Series' yield can be expected to decline during periods of
falling interest rates.
Credit Risk. It is possible that the credit rating of securities in the
Tax-Free Series' investment portfolio could be downgraded or that a security
could go into default.
Style Risk. There can be no guarantee that the Advisor's judgment about
the attractiveness, relative value or potential return of a security will be
correct.
Special Tax Features. To the extent that the Tax-Free Series invests in
taxable securities, a portion of its income would be taxable.
- --------------------------------------------------------------------------------
TAX-FREE INSTITUTIONAL SHARES*
FOR THE YEAR ENDED DECEMBER 31,1998
3.50% 3.18%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
- --------------------------------------------------------------------------------
*For the period from December 31, 1998 through June 30, 1999,
the year-to-date return for the Tax-Free Institutional Shares was 1.23%.
During the 1-year period shown in the bar chart, the highest return for
a quarter was 0.84% (quarter ended 6/30/98) and the lowest return for a quarter
was 0.76% (quarters ended 3/31/98 and 12/31/98).
-6-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED DECEMBER 31, 1998)
- --------------------------------------------------------------------------------
Tax-Free Institutional Shares(1)
- --------------------------------------------------------------------------------
Past One Year.............................. 3.18%
- --------------------------------------------------------------------------------
Since Inception............................ 3.71% (6/1/97)
- --------------------------------------------------------------------------------
- ------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions.
The Tax-Free Institutional Shares' current yield for the 7-day period ended
December 31, 1998 was 3.34%. The Tax-Free Institutional Shares'
taxable-equivalent yield for the 7-day period ended December 31, 1998 was 4.84%.
You may obtain the current 7-day yield of the Tax-Free Institutional Shares by
calling 1-800-553-8080.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy
and hold Tax-Free Institutional Shares.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment): TAX-FREE INSTITUTIONAL SHARES
-----------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases........................................ None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends............................. None
Maximum Deferred Sales Charge (Load).................................................... None
Redemption Fee ......................................................................... None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from
Tax-Free Institutional Shares' assets):
Management Fees ........................................................................ 0.27%
Distribution and/or Service (12b-1) Fees................................................ None
Other Expenses ......................................................................... 0.09%
-----
Total Annual Fund Operating Expenses.................................................... 0.36%
=====
</TABLE>
EXAMPLE:
This Example is intended to help you compare the cost of investing in
the Tax-Free Institutional Shares with the cost of investing in other mutual
funds.
The Example assumes that you invest $10,000 in the Tax-Free
Institutional Shares for the time periods indicated and then redeem all of your
Shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Tax-Free Institutional Shares'
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions, your costs would be:
1 year 3 years 5 years 10 years
------ ------- ------- --------
Tax-Free Institutional Shares..... $37 $116 $202 $456
ADDITIONAL INFORMATION
YEAR 2000 ISSUES
The Fund depends on the smooth functioning of computer systems in
almost every aspect of its business. The Fund could be adversely affected if the
computer systems used by its service providers do not properly process dates on
and after January 1, 2000 and distinguish between the year 2000 and the year
1900. The Fund has asked its service providers whether they expect to have their
computer systems adjusted for the year 2000 transition, and has received
assurances from each that its system is expected to accommodate the year 2000
without material adverse consequences to the Fund. The Fund and its shareholders
may experience
-7-
<PAGE>
losses if these assurances prove to be incorrect or if issuers of portfolio
securities or third parties, such as custodians, banks, broker-dealers or
others, with which the Fund does business experience difficulties as a result of
year 2000 issues.
THE FUND'S NET ASSET VALUE
The price you pay when you buy shares or receive when you redeem shares
is based on 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 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 of each Series 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 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.
The following sections describe how to buy and redeem shares.
HOW TO BUY SHARES
You may buy shares of any Series of the Fund through your securities
dealer or through any 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. The
following are exceptions to this minimum:
o There is no minimum initial investment for investment advisory
affiliates of Deutsche Bank AG.
o 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 your 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 your
shares of a Series, your dividend will be paid in cash.
-8-
<PAGE>
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 your 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. The letter must be signed by
all owners of the shares exactly as their names appear on the account.
2) A guarantee of your signature. You can obtain one from most banks or
securities dealers.
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 net asset
value of the Series you are redeeming.
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 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.
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. The Fund reserves the right to redeem shares in kind
under certain circumstances.
DIVIDENDS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
All of the net income earned on each Series is normally declared as
dividends daily to the respective shareholders of record of such shares.
Dividends on each Series are normally payable on the first day that a purchase
or exchange 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 per
share, unless you have elected to have dividends paid in cash.
TAXES
The following summary is based on current tax laws, which may change.
The Fund will distribute substantially all of its income and capital
gains. The dividends and distributions you receive are subject to federal, state
and local taxation, depending upon your tax situation. Distributions you receive
from the Fund may be taxable whether or not you reinvest them. Each sale or
exchange of the Fund's shares is a taxable event.
The Tax-Free Series intends to distribute income exempt from
federal income tax. This income may, however, be subject to state and local tax.
The Tax-Free Series may invest a portion of its assets in securities that
generate taxable income for federal or state income tax purposes. Any capital
gains distributed by the Series may be taxable.
More information about taxes is in the Statement of Additional
Information. Please contact your tax advisor regarding your specific questions
about federal, state and local income taxes.
-9-
<PAGE>
INVESTMENT ADVISOR
Investment Company Capital Corp. ("ICC" or the "Advisor") is the
investment advisor to each Series of the Fund. ICC supervises and manages the
Fund's operations and generally provides management and administrative services
for the Fund. ICC is also the investment advisor to other mutual funds in the
Flag Investors family of funds. These funds, together with the Fund, had
approximately $10 billion of net assets as of June 30, 1999.
As compensation for its services for the fiscal year ended March 31,
1999, ICC received from the Fund a fee equal to 0.26% of the Prime Series'
average daily net assets, 0.19% of the Treasury Series' average daily net assets
(net of fee waivers) 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
has contractually agreed to waive its fee for the Treasury Series by 0.05%. This
agreement will continue until July 31, 2000 and may be extended.
Prior to June 4, 1999, the Advisor was an indirect subsidiary of
Bankers Trust Corporation. On June 4, 1999, Bankers Trust Corporation merged
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. Because Deutsche Bank AG, as ICC's
new parent company, controls its operations as investment advisor, the Fund's
shareholders will be asked to approve a new investment advisory agreement
between ICC and the Fund with respect to each Series. A Special Meeting of
Shareholders will be held for this purpose. 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 Corporation 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.
-10-
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
Series' financial performance for the past five fiscal years. Certain
information reflects financial results for a single share of a Series. The total
returns in the table represent the rate that an investor would have earned on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with the Fund's financial statements, is included in the
Statement of Additional Information, which is available upon request.
PRIME INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of year.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- -------- ------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.0499 0.0519 0.0503 0.0548 0.0472
LESS DISTRIBUTIONS:
Dividends from net investment income.... (0.0499) (0.0519) (0.0503) (0.0548) (0.0472)
------- -------- ------- -------- -------
Net asset value at end of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ======= ======= ========
TOTAL RETURN:
Based on net asset value per share...... 5.11% 5.31% 5.15% 5.62% 4.82%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 0.36% 0.42% 0.38% 0.35% 0.36%
Net investment income................... 4.98% 5.22% 5.04% 5.32% 4.57%
SUPPLEMENTAL DATA:
Net assets at end of year .............. $388,447,492 $317,971,693 $117,812,047 $53,699,315 $11,904,716
Number of shares outstanding at end of year 388,440,636 317,971,413 117,811,768 53,699,535 11,904,663
</TABLE>
-11-
<PAGE>
TREASURY INSTITUTIONAL SHARES
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- ------------ ------------ ------------ -------------
Income from Investment Operations:
Net investment income.............. 0.0453 0.0489 0.0481 0.0523 0.0438
LESS DISTRIBUTIONS:
Dividends from net investment income (0.0453) (0.0489) (0.0481) (0.0523) (0.0438)
--------- ------------ ------------ ------------ -------------
Net asset value at end of year..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ============ =========== ============ =============
TOTAL RETURN:
Based on net asset value per share. 4.63% 5.00% 4.92% 5.36% 4.47%
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 0.33% 0.34% 0.33% 0.33% 0.30%(1)
Net investment income.............. 4.54% 4.91% 4.81% 5.12% 4.15%(2)
SUPPLEMENTAL DATA:
Net assets at end of year.......... $122,562,501 $98,780,023 $61,208,770 $51,822,757 $14,051,995
Number of shares outstanding at end of
year.............................. 122,561,713 98,768,925 61,199,345 51,823,226 14,046,467
</TABLE>
- ------------
(1) Ratio of expenses to average daily net assets prior to partial fee waiver
was 0.31% for the year ended March 31, 1995.
(2) Ratio of net investment income to average daily net assets prior to partial
fee waiver was 4.14% for the year ended March 31, 1995.
-12-
<PAGE>
TAX-FREE INSTITUTIONAL SHARES
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE PERIOD JUNE
FOR THE YEAR ENDED 2, 1997(1) THROUGH
MARCH 31, MARCH 31,
1999 1998
---- ----
---------------------- --------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period.............................. $ 1.00 $ 1.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................................... 0.0303 0.0273
LESS DISTRIBUTIONS:
Dividends from net investment income and short-term gains........... (0.0303) (0.0273)
Net asset value at end of year...................................... $ 1.00 $ 1.00
======= =======
TOTAL RETURN:
Based on net asset value per share.................................. 3.07% 2.76%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................................ 0.33% 0.35%(2)
Net investment income............................................... 3.03% 3.29%(2)
SUPPLEMENTAL DATA:
Net assets at end of period......................................... $84,599,738 $76,682,752
Number of shares outstanding at end of period....................... 84,607,371 76,682,889
</TABLE>
- ------------
(1) Commencement of operations.
(2) Annualized.
-13-
<PAGE>
Investment Advisor
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202
Independent Auditors Distributor
PRICEWATERHOUSECOOPERS LLP ICC DISTRIBUTORS, INC.
250 West Pratt Street Two Portland Square
Baltimore, Maryland 21201 Portland, Maine 04101
Transfer Agent Fund Counsel
INVESTMENT COMPANY CAPITAL CORP. MORGAN, LEWIS & BOCKIUS LLP
One South Street 1701 Market Street
Baltimore, Maryland 21202 Philadelphia, Pennsylvania 19103
1-800-553-8080
Custodian
BANKERS TRUST COMPANY
130 Liberty Street
New York, New York 10006
-14-
<PAGE>
DEUTSCHE BANC ALEX. BROWN
CASH RESERVE
FUND, INC.
- --------------------------------------------------------------------------------
You may obtain the following additional information about the Fund, free of
charge, from your securities dealer or servicing agent or by calling (800)
553-8080:
o A statement of additional information (SAI) about the Fund that
is incorporated by reference into the prospectus.
o The Fund's most recent annual report containing detailed
financial information and a discussion of market conditions and
investment strategies that significantly affected the Fund's
performance during its last fiscal year.
In addition you may review information about the Fund (including the SAI) at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
(Call 1-800-SEC-0330 to find out about the operation of the Public Reference
Room.) The Commission's Internet site at http://www.sec.gov has reports and
other information about the Fund. You may get copies of this information by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-5009. You will be charged for duplicating fees.
For other shareholder inquiries, contact the Transfer Agent at (800) 553-8080.
For Fund information, call (800)553-8080 or your securities dealer or servicing
agent.
Investment Company Act File No. 811-3196
BTCASH/PRO (8/99)
- --------------------------------------------------------------------------------
-15-
<PAGE>
DEUTSCHE BANC ALEX. BROWN
CASH RESERVE
FUND, INC.
INSTITUTIONAL SHARES
PRIME SERIES
TREASURY SERIES
TAX-FREE SERIES
PROSPECTUS
AUGUST 1, 1999
-16-
<PAGE>
QUALITY CASH RESERVE PRIME SHARES
(A Class of the Prime Series of Deutsche Banc Alex. Brown Cash Reserve Fund,
Inc.)
P.O. Box 17250
Baltimore, Maryland 21203
The Prime Series (the "Fund") of Deutsche Banc Alex. Brown Cash Reserve Fund,
Inc. 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 Fund offers shares exclusively through securities dealers that provide
certain shareholder services. This Prospectus describes the Quality Cash Reserve
Prime Shares (the "Shares") of the Fund.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Investment Summary................................................................................................2
Additional Information............................................................................................3
The Fund's Net Asset Value........................................................................................4
How to Buy Shares.................................................................................................4
How to Redeem Shares..............................................................................................5
Distribution Plan.................................................................................................5
Dividends and Taxes...............................................................................................6
Investment Advisor................................................................................................6
Financial Highlights..............................................................................................7
</TABLE>
THE SECURITIES AND EXCHANGE COMMISSION HAS NEITHER APPROVED NOR
DISAPPROVED THESE SECURITIES NOR HAS IT PASSED UPON THE ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED: August 1, 1999
-1-
<PAGE>
INVESTMENT SUMMARY
OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to seek as high a level of
current income as is consistent with preservation of capital and liquidity. To
achieve this objective, the Fund invests in high quality, short-term money
market instruments. These instruments include certificates of deposit, bankers'
acceptances, commercial paper, variable rate demand notes, U.S. Treasury
obligations and repurchase agreements. An instrument is considered to be high
quality if it is rated in one of the two highest rating categories by either
Moody's Investors Service, Inc. or Standard and Poor's Ratings Group or, if
unrated, is of comparable quality as determined by the Advisor.
The Advisor also attempts to achieve the Fund's objective by limiting
investments to securities with maturities of 397 days or less and by maintaining
an average maturity of 90 days or less. The Advisor actively adjusts the average
maturity of the Fund in response to its outlook for interest rates and the
economy.
The Advisor strictly limits exposure to any one issue.
In managing the Fund's assets, the Advisor attempts to maintain a
stable net asset value of $1.00 per share.
RISK PROFILE
The Fund is suitable for you if you want to receive income from your
investment while minimizing the risk of loss of principal and maintaining
liquidity. An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Advisor attempts to maintain a $1.00 per share price, it is possible that you
may lose money by investing in the Fund. Risks of the Fund include:
Interest Rate Risk. The primary risk of the Fund is interest rate risk.
The Fund's yield can be expected to decline during periods of falling interest
rates.
Credit Risk. It is possible that the credit rating of securities in the
Fund's investment portfolio could be downgraded or that a security could go into
default.
Style Risk. There can be no guarantee that the Advisor's judgment about
the attractiveness, relative value or potential return of a security will be
correct.
QUALITY CASH RESERVE PRIME SHARES
FOR THE YEARS ENDED DECEMBER 31,
1992 2.86%
1993 2.19%
1994 3.36%
1995 5.16%
1996 4.64%
1997 4.70%
1998 4.69%
[GRAPHIC OMITTED]
* For the period from December 31, 1998 through June 30, 1999, the year-to-date
return for the Quality Cash Reserve Prime Shares was 2.01%.
During the 7-year period shown in the bar chart, the highest return for
a quarter was 1.31% (quarter ended 6/30/95) and the lowest return for a
quarter was 0.53% (quarter ended 6/30/93).
-2-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED DECEMBER 31, 1998)
- --------------------------------------------------------------------------------
Quality Cash Reserve Prime Shares(1)
- --------------------------------------------------------------------------------
Past One Year............................ 4.69%
- --------------------------------------------------------------------------------
Past Five Years.......................... 4.51%
- --------------------------------------------------------------------------------
Since Inception.......................... 4.01% (5/6/91)
- --------------------------------------------------------------------------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions.
The Quality Cash Reserve Prime Shares' current yield for the 7-day
period ended December 31, 1998 was 4.24%. You may obtain the current 7-day yield
of the Quality Cash Reserve Prime Shares by calling 1-800-553-8080.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy
and hold Quality Cash Reserve Prime Shares.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment): QUALITY CASH RESERVE
PRIME SHARES
------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases...................................... None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends........................... None
Maximum Deferred Sales Charge (Load).................................................. None
Redemption Fee ....................................................................... None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from
Quality Cash Reserve Prime Shares' assets):
Management Fees ...................................................................... 0.26%
Distribution and/or Service (12b-1) Fees.............................................. 0.60%
Other Expenses........................................................................ 0.11%
-----
Total Annual Fund Operating Expenses ................................................. 0.97%
=====
</TABLE>
EXAMPLE:
This Example is intended to help you compare the cost of investing in
Quality Cash Reserve Prime Shares with the cost of investing in other mutual
funds.
The Example assumes that you invest $10,000 in Quality Cash Reserve
Prime Shares for the time periods indicated and then redeem all of your Quality
Cash Reserve Prime Shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Quality Cash Reserve
Prime Shares' operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions, your costs would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Quality Cash Reserve Prime Shares.............. $99 $309 $536 $1,190
</TABLE>
ADDITIONAL INFORMATION
YEAR 2000 ISSUES
The Fund depends on the smooth functioning of computer systems in
almost every aspect of its business. The Fund could be adversely affected if the
computer systems used by its service providers do not properly process dates on
and after
-3-
<PAGE>
January 1, 2000 and distinguish between the year 2000 and the year 1900. The
Fund has asked its service providers whether they expect to have their computer
systems adjusted for the year 2000 transition, and has received assurances from
each that its system is expected to accommodate the year 2000 without material
adverse consequences to the Fund. The Fund and its shareholders may experience
losses if these assurances prove to be incorrect or if issuers of portfolio
securities or third parties, such as custodians, banks, broker-dealers or
others, with which the Fund does business experience difficulties as a result of
year 2000 issues.
THE FUND'S NET ASSET VALUE
The price you pay when you buy Shares or receive when you redeem Shares
is based on the Fund's net asset value per share.
The net asset value per share of the Fund 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 its per share net asset value
to the nearest whole cent. As a result, it is anticipated that its 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 Fund's 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 Fund's 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.
The following sections describe how to buy and redeem Shares.
HOW TO BUY SHARES
You may buy Shares through your securities dealer or through any
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
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 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
-4-
<PAGE>
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 your 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. The letter must be
signed by all owners of the Shares exactly as their names appear on the
account.
2) A guarantee of your signature. You can obtain one from most banks or
securities dealers.
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.
OTHER REDEMPTION INFORMATION
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. Canceled 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 Fund reserves the right to terminate or alter check redemption
privileges at any time, to 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 Fund
to $500 or less, the Fund has the power to redeem the remaining Shares after
giving you 60 days' notice. The Fund reserves the right to redeem shares in kind
under certain circumstances.
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.
DISTRIBUTION PLAN
The Fund has adopted a plan under Rule 12b-1 that allows the Fund to
pay your securities dealer or shareholder servicing agent distribution and other
fees for the sale of its Shares and for shareholder service. The Shares pay an
annual
-5-
<PAGE>
distribution fee equal to 0.60% of average daily net assets. Because these fees
are paid out of net assets on an on-going basis, they will, over time, increase
the cost of your investment and may cost you more than paying other types of
sales charges.
DIVIDENDS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
All of the net income earned on the Fund is normally declared as
dividends daily to the respective shareholders of record of the Fund. Dividends
on the Fund 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 Fund at net asset value, unless you have elected to
have dividends paid in cash.
TAXES
The following summary is based on current tax laws, which may change.
The Fund will distribute substantially all of its income and capital
gains. The dividends and distributions you receive are subject to federal, state
and local taxation, depending upon your tax situation. Distributions you receive
from the Fund may be taxable whether or not you reinvest them. Each sale or
exchange of the Fund's shares is a taxable event.
More information about taxes is in the Statement of Additional
Information. Please contact your tax advisor regarding your specific questions
about federal, state and local income taxes.
INVESTMENT ADVISOR
Investment Company Capital Corp. ("ICC" or the "Advisor") is 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
also the investment advisor to other mutual funds in the Flag Investors family
of funds. These funds, together with the Fund, had approximately $10 billion of
net assets as of June 30, 1999.
As compensation for its services for the fiscal year ended March 31,
1999, ICC received from the Fund 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.
Prior to June 4, 1999, the Advisor was an indirect subsidiary of
Bankers Trust Corporation. On June 4, 1999, Bankers Trust Corporation merged
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. Because Deutsche Bank AG, as ICC's
new parent company, controls its operations as investment advisor, the Fund's
shareholders will be asked to approve a new investment advisory agreement
between ICC and Deutsche Banc Cash Reserve Fund, Inc. with respect to the Fund.
A Special Meeting of Shareholders will be held for this purpose. 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 Corporation 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.
-6-
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the past five fiscal years. Certain information
reflects financial results for a single Share. The total returns in the table
represent the rate that an investor would have earned on an investment in the
Shares (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, is included in the Statement of Additional
Information, which is available upon request.
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUALITY CASH RESERVE PRIME SHARES
FOR THE YEARS ENDED MARCH 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of year.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ------------ ------------ ------------ -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.0444 0.0465 0.0449 0.0493 0.0402
LESS DISTRIBUTIONS:
Dividends from net investment income.... (0.0444) (0.0465) (0.0449) (0.0493) (0.0402)
Net asset value at end of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ============ ============ ============ ===========
TOTAL RETURN:
Based on net asset value per share...... 4.53% 4.75% 4.59% 5.04% 4.09%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 0.92%(1) 0.96%(1) 0.91%(1) 0.90%(1) 0.96%
Net investment income................... 4.44%(2) 4.66%(2) 4.50%(2) 4.91%(2) 4.04%
SUPPLEMENTAL DATA:
Net assets at end of year .............. $81,944,555 $226,978,689 $197,370,530 $156,412,213 $94,592,158
Number of shares outstanding at
end of year.......................... 81,938,027 226,978,007 197,369,848 156,412,393 94,591,979
</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.
-7-
<PAGE>
Investment Advisor
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202
Independent Auditors Distributor
PRICEWATERHOUSECOOPERS LLP ICC DISTRIBUTORS, INC.
250 West Pratt Street Two Portland Square
Baltimore, Maryland 21201 Portland, Maine 04101
Transfer Agent Fund Counsel
INVESTMENT COMPANY CAPITAL CORP. MORGAN, LEWIS & BOCKIUS LLP
One South Street 1701 Market Street
Baltimore, Maryland 21202 Philadelphia, Pennsylvania 19103
1-800-553-8080
Custodian
BANKERS TRUST COMPANY
130 Liberty Street
New York, New York 10006
<PAGE>
DEUTSCHE BANC ALEX. BROWN
CASH RESERVE
FUND, INC.
- --------------------------------------------------------------------------------
You may obtain the following additional information about the Fund, free of
charge, from your securities dealer or servicing agent or by calling (800)
553-8080:
o A statement of additional information (SAI) about the Fund that is
incorporated by reference into the prospectus.
o The Fund's most recent annual report containing detailed financial
information and a discussion of market conditions and investment
strategies that significantly affected the Fund's performance during
its last fiscal year.
In addition you may review information about the Fund (including the SAI) at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
(Call 1-800-SEC-0330 to find out about the operation of the Public Reference
Room.) The Commission's Internet site at http://www.sec.gov has reports and
other information about the Fund. You may get copies of this information by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-5009. You will be charged for duplicating fees.
For other shareholder inquiries, contact the Transfer Agent at (800) 553-8080.
For Fund information, call (800) 553-8080 or your securities dealer or servicing
agent.
Investment Company Act File No. 811-3196
430PRO(8/99)
- --------------------------------------------------------------------------------
<PAGE>
QUALITY
CASH RESERVE
PRIME SHARES
PROSPECTUS
AUGUST 1, 1999
<PAGE>
[FLAG INVESTORS LOGO]
CASH RESERVE PRIME SHARES
(Class A and Class B Shares)
Prospectus & Application -- August 1, 1999
- --------------------------------------------------------------------------------
The Prime Series (the "Fund") of Deutsche Banc Alex. Brown Cash Reserve Fund,
Inc. 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 describes Flag Investors Class A Shares (the "Class A Shares")
and Flag Investors Class B Shares (the "Class B Shares"). Class A Shares are
available through your securities dealer or the Fund's transfer agent. Class B
Shares are available only through the exchange of Class B shares of other funds
in the Flag Investors family of funds. (See "How to Buy Shares.")
TABLE OF CONTENTS
Investment Summary.............................................................2
Additional Information.........................................................4
The Fund's Net Asset Value.....................................................4
How to Buy Shares..............................................................5
How to Redeem Shares...........................................................6
Telephone Transactions.........................................................9
Distribution Plans.............................................................9
Dividends and Taxes............................................................9
Investment Advisor............................................................10
Financial Highlights..........................................................12
Application..................................................................A-1
Flag Investors Funds
P.O. Box 515
Baltimore, MD 21203
- --------------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NEITHER APPROVED NOR
DISAPPROVED THESE SECURITIES NOR HAS IT PASSED UPON THE ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
INVESTMENT SUMMARY
OBJECTIVE AND STRATEGIES
The investment objective of the Fund is to seek as high a level of
current income as is consistent with preservation of capital and liquidity. To
achieve this objective, the Fund invests in high quality, short-term
money market instruments. These instruments include certificates of deposit,
bankers' acceptances, commercial paper, variable rate demand notes, U.S.
Treasury obligations and repurchase agreements. An instrument is considered to
be high quality if it is rated in one of the two highest rating categories by
either Moody's Investors Service, Inc. or Standard and Poor's Ratings Group or,
if unrated, it is of comparable quality as determined by the Advisor.
The Advisor also attempts to achieve the Fund's objective by limiting
investments to securities with maturities of 397 days or less and by maintaining
an average maturity of 90 days or less. The Advisor actively adjusts the average
maturity of the Fund in response to its outlook for interest rates and the
economy.
The Advisor strictly limits exposure to any one issue.
In managing the Fund's assets, the Advisor attempts to maintain a
stable net asset value of $1.00 per share.
RISK PROFILE
The Fund is suitable for you if you want to receive income from your
investment while minimizing the risk of loss of principal and maintaining
liquidity. An investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Advisor attempts to maintain a $1.00 per share price, it is possible that you
may lose money by investing in the Fund. Risks of the Fund include:
Interest Rate Risk. The primary risk of the Fund is interest rate risk.
The Fund's yield can be expected to decline during periods of falling interest
rates.
Credit Risk. It is possible that the credit rating of securities in the
Fund's investment portfolio could be downgraded or that a security could go into
default.
Style Risk. There can be no guarantee that the Advisor's judgment about
the attractiveness, relative value or potential return of a security will be
correct.
CLASS A SHARES*
FOR YEARS ENDED DECEMBER 31,
- --------------------------------------------------------------------------------
8.00% 7.92%
7.00%
6.00%
5.68% 5.52%
4.92% 4.99% 4.99%
5.00%
4.00% 3.81%
3.25%
3.00%
2.64%
2.00%
1.00%
0.00%
- --------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998
For the period from December 31, 1998 through June 30, 1999, the year-to-date
return for the Class A Shares was 2.19%.
During the 9-year period shown in the bar chart, the highest return for
a quarter was 1.95% (quarter ended 6/30/90) and the lowest return for a quarter
was 0.64% (quarter ended 6/30/93).
2
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (FOR PERIODS ENDED DECEMBER 31, 1998)
<TABLE>
<CAPTION>
Class A Shares(1) Class B Shares(1)
-------------- --------------
<S> <C> <C>
Past One Year...................................... 4.99% 0.21%
Past Five Years.................................... 4.84% N/A
Since Inception.................................... 5.23% (1/5/89) 3.27% (4/3/95)
</TABLE>
- --------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions.
The Class A Shares' and Class B Shares' current yield for the 7-day
period ended December 31, 1998 was 4.54% and 3.78%, respectively. You may obtain
the current 7-day yield for the Class A Shares and Class B Shares by calling
1-800-553-8080.
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy
and hold shares of the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES:
(fees paid directly from your investment) CLASS A SHARES CLASS B SHARES
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases ....................................... None* None
Maximum Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, whichever is lower)................... None 4.00%**
Maximum Sales Charge (Load) Imposed on Reinvested Dividends...................... None None
Redemption Fee .................................................................. None None
Exchange Fee..................................................................... None None
ANNUAL FUND OPERATING EXPENSES:
(expenses that are deducted from Class A or Class B Shares' assets)
Management Fees.................................................................. 0.26% 0.26%
Distribution and/or Service (12b-1) Fees......................................... 0.25% 0.75%
Other Expenses (including a 0.25% shareholder servicing fee
for Class B Shares) .......................................................... 0.11% 0.36%***
---- -----
Total Annual Fund Operating Expenses............................................. 0.62% 1.37%
==== =====
</TABLE>
----------
* Class A Shares are not subject to a sales charge. However, if you
exchange Class A shares of another Flag Investors fund for Class A
Shares, you will retain liability for any contingent deferred sales
charge due on such shares upon redemption. (See "How to Buy Shares"
and "How to Redeem Shares.")
** Contingent deferred sales charges decline over time and reach zero
after six years. At that time, Class B Shares convert automatically
to Class A Shares. (See "Sales Charges")
*** A portion of the shareholder servicing fee is allocated to member
firms of the National Association of Securities Dealers, Inc. and
qualified banks for services provided and expenses incurred in
maintaining your account, responding to your inquiries and
providing you with information on your investments.
EXAMPLE:
This Example is intended to help you compare the cost of
investing in Class A or Class B Shares with the cost of investing in
other mutual funds.
The Example assumes that you invest $10,000 in the Class A or
Class B Shares for the time periods indicated and then redeem all of
your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Class A or Class
B Shares' operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
CLASS A SHARES................................... $ 63 $199 $346 $ 774
CLASS B SHARES................................... $539 $734 $950 $1,252
You would pay the following expenses if you did not redeem your shares:
CLASS A SHARES................................... $ 63 $199 $346 $ 774
CLASS B SHARES................................... $139 $434 $750 $1,252
</TABLE>
3
<PAGE>
ADDITIONAL INFORMATION
YEAR 2000 ISSUES
The Fund depends on the smooth functioning of computer systems in
almost every aspect of its business. The Fund could be adversely affected if the
computer systems used by its service providers do not properly process dates on
and after January 1, 2000 and distinguish between the year 2000 and the year
1900. The Fund has asked its service providers whether they expect to have their
computer systems adjusted for the year 2000 transition, and has received
assurances from each that its system is expected to accommodate the year 2000
without material adverse consequences to the Fund. The Fund and its shareholders
may experience losses if these assurances prove to be incorrect or if issuers of
portfolio securities or third parties, such as custodians, banks, broker-dealers
or others, with which the Fund does business experience difficulties as a result
of year 2000 issues.
THE FUND'S NET ASSET VALUE
The price you pay when you buy shares or receive when you redeem shares
is based on the Fund's net asset value per share. When you redeem Class B
Shares, the amount you receive may be reduced by a sales charge. Read the
section on how to redeem shares for details on how and when these charges may or
may not be imposed.
The net asset value per share of the Fund 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 the Fund 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 Fund's 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 Fund's 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.
The following sections describe how to buy and redeem shares.
4
<PAGE>
HOW TO BUY SHARES
You may buy Class A Shares through your securities dealer or through
any 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. You may
also buy Class A Shares by sending your check (along with a completed
Application Form) directly to the Fund. The Application Form, which includes
instructions, is attached to this Prospectus. You may buy Class B Shares only
through the exchange of Class B shares of other funds in the Flag Investors
family of funds. (See "Purchases By Exchange" for a description of the
conditions.)
Your order to purchase Class A Shares is effective only when your
securities dealer or servicing agent receives your order in proper form and
federal funds are available to the Fund for investment. If you pay for shares by
check, your check is normally converted into federal funds within two business
days. 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. If you purchase shares by check,
redemption of those shares may be restricted. See the section on redemptions
below.
INVESTMENT MINIMUMS
Your initial investment in Class A Shares must be at least $2,000. Your
initial investment in Class B Shares, which are available only through exchange,
must be at least $500. Subsequent investments must be at least $100. The
following are exceptions to these minimums:
o If you are investing in an IRA account, your initial investment in
Class A Shares may be as low as $1,000.
o If you are a shareholder of any other Flag Investors fund, your
initial investment in either class of this Fund may be as low as
$500.
o If you are a participant in the Class A Shares' Automatic Investing
Plan, your initial investment may be as low as $250. If you
participate in the monthly plan, your subsequent investments may be
as low as $100. If you participate in the quarterly plan, your
subsequent investments may be as low as $250. Refer to the section
on the Fund's Automatic Investing Plan for details.
o There is no minimum investment requirement for qualified retirement
plans such as 401(k), pension or profit sharing plans.
PURCHASES BY EXCHANGE
You may exchange shares of any other Flag Investors fund for an equal
dollar amount of Class A or Class B Shares, as applicable, without paying a
sales charge. The Fund may modify or terminate this offer of exchange upon 60
days' prior written notice.
5
<PAGE>
You may request an exchange through your securities dealer or servicing
agent. Contact them for details on how to enter your order. If your shares are
in an account with the Fund's Transfer Agent, you may also request an exchange
directly through the Transfer Agent by mail or telephone.
INVESTING REGULARLY
You may make regular investments in the Fund through any of the
following methods. If you wish to enroll in any of these programs or if you need
any additional information, complete the appropriate section of the attached
Application Form or contact your securities dealer, your servicing agent, or the
Transfer Agent.
Automatic Investing Plan. You may elect to make a regular monthly or
quarterly investment in Class A Shares. The amount you decide upon will be
withdrawn from your checking account using a pre-authorized check. When the
money is received by the Transfer Agent, it will be invested in Class A Shares
selected at that day's net asset value. Either you or the Fund may discontinue
your participation upon 30 days' notice.
Dividend Reinvestment Plan. Unless you elect otherwise, all income and
capital gains distributions will be reinvested in additional shares of the
applicable class at net asset value. You may elect to receive your distributions
in cash or to have your distributions invested in shares of other Flag Investors
funds. To make either of these elections or to terminate automatic reinvestment,
complete the appropriate section of the attached Application Form or notify the
Transfer Agent, your securities dealer or your servicing agent at least five
days before the date on which the next dividend or distribution will be paid.
Systematic Purchase Plan. You may also purchase Class A Shares through
a Systematic Purchase Plan. Contact your securities dealer or servicing agent
for details.
HOW TO REDEEM SHARES
You may redeem either 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. If you have an
account with the Fund that is in your name, you may also redeem shares by
contacting the Transfer Agent by mail or (if you are redeeming less than
$50,000) by telephone. The Transfer Agent will mail your redemption check within
seven days after it receives your order in proper form. Refer to the section on
telephone transactions for more information on this method of redemption.
Your securities dealer, your servicing agent or the Transfer 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. The letter must be
signed by all owners of the shares exactly as their names appear on the
account.
6
<PAGE>
2) If you are redeeming more than $50,000, a guarantee of your signature.
You can obtain one from most banks or securities dealers.
3) Any additional documents that may be required if your account is in the
name of a corporation, partnership, trust or fiduciary.
OTHER REDEMPTION INFORMATION
Any dividends payable on shares you redeem will be paid on the next
dividend payable date. If you have redeemed all of your shares by that time, the
dividend will be paid to you in cash whether or not that is the payment option
you have selected.
If you redeem sufficient shares to reduce your investment to $500 or
less, the Fund has the power to redeem the remaining shares after giving you 60
days' notice. The Fund reserves the right to redeem shares in kind under certain
circumstances.
If you own Fund shares having a value of at least $10,000, you may
arrange to have some of your shares redeemed monthly or quarterly under the
Fund's Systematic Withdrawal Plan. Each redemption under this plan involves all
the tax and sales charge implications normally associated with Fund redemptions.
Contact your securities dealer, your servicing agent or the Transfer Agent for
information on this plan.
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
redeeming shares through your securities dealer or servicing agent and are using
the proceeds to purchase other securities in that account.
Redemption Price
The price you receive when you redeem your Class A Shares will be the
net asset value. The price you receive when you redeem your Class B Shares will
be the net asset value less any applicable sales charge.
The amount of any sales charge deducted from your Class B Shares'
redemption price will be determined according to the following schedule.
Years Since Purchase Sales Charge as a
Percentage of the Dollar
Amount Subject to Charge
-----------------------------------------------------------------------
First ..................................... 4.00%
Second .................................... 4.00%
Third ..................................... 3.00%
Fourth .................................... 3.00%
Fifth ..................................... 2.00%
Sixth ..................................... 1.00%
Thereafter ................................ None
-----------------------------------------------------------------------
7
<PAGE>
Determination of Sales Charge. The sales charge applicable to your
redemption of Class B Shares is calculated in a manner that results in the
lowest possible rate:
1) No sales charge will be applied to shares you own as a result of
reinvesting dividends or distributions.
2) If you have purchased shares at various times, the sales charge will be
applied first to shares you have owned for the longest period of time.
3) If you acquired your shares through an exchange of shares of another
Flag Investors fund, the period of time you held the original shares
will be combined with the period of time you held the shares being
redeemed to determine the years since purchase.
4) The sales charge is applied to the lesser of the cost of the shares or
their value at the time of your redemption.
Waiver of Sales Charge. You may redeem Class B Shares without paying a
sales charge under any of the following circumstances:
1) If you are exchanging your shares for Class B shares of another Flag
Investors fund.
2) If your redemption represents the minimum required distribution from an
individual retirement account or other retirement plan.
3) If your redemption represents a distribution from a Systematic
Withdrawal Plan. This waiver applies only if the annual withdrawals
under your Plan are 12% or less of your share balance.
4) If shares are being redeemed in your account following your death or a
determination that you are disabled. This waiver applies only under the
following conditions:
(i) The account is registered in your name either individually, as
a joint tenant with rights of survivorship, as a participant
in community property, or as a minor child under the Uniform
Gifts or Uniform Transfers to Minors Acts.
(ii) Either you or your representative notifies your securities
dealer, servicing agent or the Transfer Agent that such
circumstances exist.
Automatic Conversion of Class B Shares. Your Class B Shares, along with
any reinvested dividends or distributions associated with those shares, will be
automatically converted to Class A Shares six years after your purchase. This
conversion will be made on the basis of the relative net asset values of the
classes and will not be a taxable event to you.
8
<PAGE>
TELEPHONE TRANSACTIONS
If your shares are in an account with the Transfer Agent, you may
redeem them in any amount up to $50,000 or exchange them for shares in another
Flag Investors fund by calling the Transfer Agent on any Business Day between
the hours of 8:30 a.m. and 5:30 p.m. (Eastern Time). You are automatically
entitled to telephone transaction privileges but you may specifically request
that no telephone redemptions or exchanges be accepted for your account. You may
make this election when you complete the Application Form or at any time
thereafter by completing and returning documentation supplied by the Transfer
Agent.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephoned instructions are genuine. These procedures include
requiring you to provide certain personal identification information when you
open your account and before you effect each telephone transaction. You may be
required to provide additional telecopied instructions. If these procedures are
employed, neither the Fund nor the Transfer Agent will bear any liability for
following telephone instructions that it reasonably believes to be genuine. Your
telephone transaction request will be recorded.
During periods of extreme economic or market changes, you may
experience difficulty in contacting the Transfer Agent by telephone. In such
event, you should make your request by mail.
DISTRIBUTION PLANS
The Fund has adopted plans under Rule 12b-1 that allow the Fund to pay
your securities dealer or shareholder servicing agent distribution and other
fees for the sale of its shares and for shareholder service. Class A Shares pay
an annual distribution fee equal to 0.25% of average daily net assets. Class B
Shares pay an annual distribution fee equal to 0.75% of average daily net assets
and an annual shareholder servicing fee equal to 0.25% of average daily net
assets. Because these fees are paid out of net assets on an on-going basis, they
will, over time, increase the cost of your investment and may cost you more than
paying other types of sales charges.
DIVIDENDS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
All of the net income earned on shares is normally declared as
dividends daily to the respective shareholders of record of such shares.
Dividends on shares are normally payable on the first day that a purchase or
exchange order is effective but not on the date that a redemption order is
effective.
TAXES
The following summary is based on current tax laws, which may change.
9
<PAGE>
The Fund will distribute substantially all of its income and capital
gains. The dividends and distributions you receive are subject to federal, state
and local taxation, depending upon your tax situation. Distributions you receive
from the Fund may be taxable whether or not you reinvest them. Each sale or
exchange of the Fund's shares is a taxable event.
More information about taxes is in the Statement of Additional
Information. Please contact your tax advisor regarding your specific questions
about federal, state and local income taxes.
INVESTMENT ADVISOR
Investment Company Capital Corp. ("ICC" or the "Advisor") is the Fund's
investment advisor. ICC supervises and manages the Fund's operations and
generally provides management and administrative services for the Fund. In
addition, ICC is responsible for managing the Fund's investments. ICC is also
the investment advisor to other mutual funds in the Flag Investors family of
funds. These funds, together with the Fund, had approximately $10 billion of net
assets as of June 30, 1999.
As compensation for its advisory services for the fiscal year ended
March 31, 1999, ICC received from the Fund a fee equal to 0.26% of the Fund's
average daily net assets. ICC may, from time to time, voluntarily waive a
portion of its advisory fee with respect to the Fund to preserve or enhance the
performance of the Series.
Prior to June 4, 1999, the Advisor was an indirect subsidiary of
Bankers Trust Corporation. On June 4, 1999, Bankers Trust Corporation merged
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. Because Deutsche Bank AG, as ICC's
new parent company, controls its operations as investment advisor, the Fund's
shareholders will be asked to approve a new investment advisory agreement
between ICC and Deutsche Banc Cash Reserve Fund, Inc. with respect to the Fund.
A Special Meeting of Shareholders will be held for this purpose. 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 Corporation 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.
10
<PAGE>
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.
11
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the past five fiscal years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned on an investment in
the Fund (assuming reinvestment of all dividends and distributions). This
information is part of the Fund's financial statements, which have been audited
by PricewaterhouseCoopers LLP. These financial statements are included in the
Statement of Additional Information, which is available upon request.
<TABLE>
<CAPTION>
FLAG INVESTORS CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
- -----------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED MARCH 31,
--------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of year.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................... 0.0474 0.0494 0.0478 0.0524 0.0442
LESS DISTRIBUTIONS:
Dividends from net investment income..... (0.0474) (0.0494) (0.0478) (0.0524) (0.0442)
---------- ---------- ---------- ---------- --------------
Net asset value at end of year .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ========== ========== ========== ==========
TOTAL RETURN:
Based on net asset value per share....... 4.85% 5.05% 4.88% 5.36% 4.51%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................. 0.63% 0.67% 0.63% 0.60% 0.61%
Net investment income.................... 4.67% 4.94% 4.78% 5.25% 4.26%
SUPPLEMENTAL DATA:
Net assets at end of year................ $13,028,272 $7,736,785 $6,521,574 $5,976,831 $7,726,696
Number of shares outstanding at end of year 13,027,769 7,736,522 6,521,310 5,976,824 7,726,698
</TABLE>
12
<PAGE>
FLAG INVESTORS CLASS B SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
April 3, 1995(1)
through March
For the Years Ended March 31, 31,
-------------------------------------------------------------
1999 1998 1997 1996
---- ---- ---- ----
<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.................. 0.0400 0.0418 0.0414 0.0361
LESS DISTRIBUTIONS:
Dividends from net investment income... (0.0400) (0.0418) (0.0414) (0.0361)
----------- -------- -------- --------
Net asset value at end of period ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ======== ======== ========
TOTAL RETURN:
Based on net asset value per share..... 4.07% 4.27% 4.22% 3.69%
RATIOS TO AVERAGE NET ASSETS:
Expenses............................... 1.37% 1.42% 1.38% 1.38%(2)
Net investment income.................. 3.92% 4.18% 4.14% 4.30%(2)
SUPPLEMENTAL DATA:
Net assets at end of period............ $2,355,863 $184,382 $227,098 $ 10,200
Number of shares outstanding at end of
period................................. 2,355,780 184,382 227,098 10,200
</TABLE>
- ----------
(1) Commencement of Operations.
(2) Annualized.
13
<PAGE>
<TABLE>
<CAPTION>
FLAG INVESTORS CASH RESERVE PRIME CLASS A SHARES
NEW ACCOUNT APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Make check payable to "Flag Investors Cash Reserve Prime FOR ASSISTANCE IN COMPLETING THIS APPLICATION PLEASE CALL:
CLASS A SHARES" AND MAIL WITH THIS APPLICATION TO: 1-800-553-8080, MONDAY THROUGH FRIDAY, 8:30 A.M. TO 5:30 P.M.
(EASTERN TIME).
Flag Investors Funds TO OPEN AN IRA ACCOUNT, PLEASE CALL 1-800-767-3524 FOR AN IRA
P.O. BOX 219663 INFORMATION KIT.RA
Kansas City, MO 64121-9663
Attn: Flag Investors Cash Reserve Prime Class A Shares
I wish to purchase Flag Investors Cash Reserve Prime Class A Shares in the amount of $________________.
Your Account Registration (Please Print)
Existing Account No., if any: __________________________
INDIVIDUAL OR JOINT TENANT GIFTS TO MINORS
- ---------------------------------------------------------- ----------------------------------------------------------------------
First Name Initial Last Name Custodian's Name (only one allowed by law)
- ---------------------------------------------------------- ----------------------------------------------------------------------
Social Security Number Minor's Name (only one)
- ---------------------------------------------------------- ------------------------------- ------------------------------------
Joint Tenant Initial Last Name Social Security Number of Minor Minor's Date of Birth (Mo./Day/Yr.)
under the ____________________ Uniform Gifts to Minors Act
(State of Residence)
CORPORATIONS, TRUSTS, PARTNERSHIPS, ETC. MAILING ADDRESS
- ---------------------------------------------------------- ----------------------------------------------------------------------
Name of Corporation, Trust or Partnership Street
- -------------------- --------------------------------- ----------------------------------------------------------------------
Tax ID Number Date of Trust City State Zip
( )
- ---------------------------------------------------------- ----------------------------------------------------------------------
Name of Trustees (if to be included in the Registration) Daytime Phone
- ----------------------------------------------------------
For the Benefit of
Distribution Options
Please check appropriate boxes. If none of the options are selected, all distributions will be reinvested in additional Flag
Investors Class A Shares at no sales charge.
INCOME DIVIDENDS CAPITAL GAINS
|_| Reinvested in additional shares |_| Reinvested in additional shares
|_| Paid in cash |_| Paid in cash
Call (800) 553-8080 for information about reinvesting your dividends in other funds in the Flag Investors Family of Funds.
Automatic Investing Plan (Optional)
|_| I authorize you as Agent for the Automatic Investing Plan to automatically invest $___________ in Flag Investors Class A Shares
for me, on a monthly or quarterly basis, on or about the 20th of each month or if quarterly, the 20th of January, April, July and
October, and to draw a bank draft in payment of the investment against my checking account. (Bank drafts may be drawn on commercial
banks only.)
Minimum Initial Investment: $250
Subsequent Investments (check one): |_| Monthly ($100 MINIMUM) |_| Quarterly ($250 MINIMUM)
Please attach a voided check.
- ------------------------------------- -----------------------------------------------------------------------------
Bank Name Depositor's Signature Date
- ------------------------------------- -----------------------------------------------------------------------------
Existing Flag Investors Fund Account No., if any Depositor's Signature (if joint acct., both must sign) Date
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Systematic Withdrawal Plan (Optional)
|_| Beginning the month of ____________________________, ____ (year) please send me checks on a monthly or quarterly basis, as
indicated below, in the amount of (complete as applicable) $__________________________________, from Class A Shares that I own,
payable to the account registration address as shown above. (Participation requires minimum account value of $10,000.)
FREQUENCY (CHECK ONE): |_| Monthly |_| Quarterly (January, April, July and October)
Telephone Transactions
I UNDERSTAND THAT I WILL AUTOMATICALLY HAVE TELEPHONE REDEMPTION PRIVILEGES (FOR AMOUNTS UP TO $50,000) AND TELEPHONE EXCHANGE
PRIVILEGES (WITH RESPECT TO OTHER FLAG INVESTORS FUNDS) UNLESS I MARK ONE OR BOTH OF THE BOXES BELOW:
No, I/We do not want: |_|Telephone redemption privileges |_|Telephone exchange privileges
Redemptions effected by telephone will be mailed to the address of record. If you would prefer redemptions mailed to a predesignated
bank account, please provide the following information:
Bank:_______________________________________________ Bank Account No.: ___________________________________________________
Address: ___________________________________________ Bank Account Name: ___________________________________________________
___________________________________________
Signature and Taxpayer Certification
- ------------------------------------------------------------------------------------------------------------------------------------
THE FUND MAY BE REQUIRED TO WITHHOLD AND REMIT TO THE U.S. TREASURY 31% OF ANY TAXABLE DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND
REDEMPTION PROCEEDS PAID TO ANY INDIVIDUAL OR CERTAIN OTHER NON-CORPORATE SHAREHOLDERS WHO FAIL TO PROVIDE THE INFORMATION AND/OR
CERTIFICATIONS REQUIRED BELOW. THIS BACKUP WITHHOLDING IS NOT AN ADDITIONAL TAX, AND ANY AMOUNTS WITHHELD MAY BE CREDITED AGAINST
YOUR ULTIMATE U.S. TAX LIABILITY.
BY SIGNING THIS APPLICATION, I HEREBY CERTIFY UNDER PENALTIES OF PERJURY THAT THE INFORMATION ON THIS APPLICATION IS COMPLETE AND
CORRECT AND THAT AS REQUIRED BY FEDERAL LAW: (PLEASE CHECK APPLICABLE BOXES)
|_| U.S. CITIZEN/TAXPAYER:
|_| I CERTIFY THAT (1) THE NUMBER SHOWN ABOVE ON THIS FORM IS THE CORRECT SOCIAL SECURITY NUMBER OR TAX ID NUMBER AND (2) I AM
NOT SUBJECT TO ANY BACKUP WITHHOLDING BECAUSE (A) I AM EXEMPT FROM BACKUP WITHHOLDING, OR (B) I HAVE NOT BEEN NOTIFIED BY
THE INTERNAL REVENUE SERVICE ("IRS") THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL
INTEREST OR DIVIDENDS, OR (C) THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING.
|_| IF NO TAX ID NUMBER OR SOCIAL SECURITY NUMBER HAS BEEN PROVIDED ABOVE, I HAVE APPLIED, OR INTEND TO APPLY, TO THE IRS OR THE
SOCIAL SECURITY ADMINISTRATION FOR A TAX ID NUMBER OR SOCIAL SECURITY NUMBER, AND I UNDERSTAND THAT IF I DO NOT PROVIDE
EITHER NUMBER TO THE TRANSFER AGENT WITHIN 60 DAYS OF THE DATE OF THIS APPLICATION OR IF I FAIL TO FURNISH MY CORRECT SOCIAL
SECURITY NUMBER OR TAX ID NUMBER, I MAY BE SUBJECT TO A PENALTY AND A 31% BACKUP WITHHOLDING ON DISTRIBUTIONS AND REDEMPTION
PROCEEDS. (PLEASE PROVIDE EITHER NUMBER ON IRS FORM W- 9. YOU MAY REQUEST SUCH FORM BY CALLING THE TRANSFER AGENT AT
800-553-8080.)
|_| NON-U.S. CITIZEN/TAXPAYER:
INDICATED COUNTRY OF RESIDENCE FOR TAX PURPOSES: _________________________________________
UNDER PENALTIES OF PERJURY, I CERTIFY THAT I AM NOT A U.S. CITIZEN OR RESIDENT I AM AN EXEMPT FOREIGN PERSON AS DEFINED BY THE
INTERNAL REVENUE SERVICE.
- ------------------------------------------------------------------------------------------------------------------------------------
I acknowledge that I am of legal age in the state of my residence. I have received a copy of the Fund's prospectus.
- ------------------------------------------------------------------------------------------------------------------------------------
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED
TO AVOID BACKUP WITHHOLDING.
- ------------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------- ----------------------------------------------------------------------
Signature Date Signature (if joint acct., both must sign) Date
- ------------------------------------------------------------------------------------------------------------------------------------
FOR DEALER USE ONLY
Dealer's Name: ______________________________________ Dealer Code: _________________________________________________________
Dealer's Address: ______________________________________ Branch Code: _________________________________________________________
______________________________________ Rep. No.: ____________________________________________________________
Representative: ______________________________________
</TABLE>
A-2
<PAGE>
Investment Advisor Distributor
INVESTMENT COMPANY CAPITAL CORP. ICC DISTRIBUTORS, INC.
One South Street Two Portland Square
Baltimore, Maryland 21202 Portland, Maine 04101
Transfer Agent Independent Accountants
INVESTMENT COMPANY CAPITAL CORP. PRICEWATERHOUSECOOPERS LLP
One South Street 250 West Pratt Street
Baltimore, Maryland 21202 Baltimore, Maryland 21201
1-800-553-8080
Custodian Fund Counsel
BANKERS TRUST COMPANY MORGAN, LEWIS & BOCKIUS LLP
130 Liberty Street 1701 Market Street
New York, New York 10006 Philadelphia, Pennsylvania 19103
<PAGE>
[FLAG INVESTORS LOGO]
Flag Investors
P.O. Box 515
Baltimore, Maryland 21203
(800) 767-FLAG
- --------------------------------------------------------------------------------
You may obtain the following additional information about the Fund, free of
charge, from your securities dealer or servicing agent or by calling (800)
767-FLAG:
o A statement of additional information (SAI) about the Fund that is
incorporated by reference into the prospectus.
o The Fund's most recent annual and semi-annual reports containing
detailed financial information and, in the case of the annual
report, a discussion of market conditions and investment
strategies that significantly affected the Fund's performance
during its last fiscal year.
In addition you may review information about the Fund (including the SAI) at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
(Call 1-800-SEC-0330 to find out about the operation of the Public Reference
Room.) The Commission's Internet site at http://www.sec.gov has reports and
other information about the Fund. You may get copies of this information by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-5009. You will be charged for duplicating fees.
For other shareholder inquiries, contact the Transfer Agent at (800) 553-8080.
For Fund information, call (800) 767-FLAG or your securities dealer or servicing
agent.
Investment Company Act File No. 811-3196
- --------------------------------------------------------------------------------
CASHPRS
(8/99)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
----------------------------------------
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC.
-------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS FOR THE
APPROPRIATE CLASS OF SHARES, WHICH MAY BE OBTAINED FROM YOUR
SECURITIES DEALER, OR SHAREHOLDER SERVICING AGENT, OR BY
WRITING OR CALLING THE FUND AT P.O. BOX 17250, BALTIMORE,
MARYLAND 21203, (800) 553-8080.
Statement of Additional Information dated August 1,
1999 Relating to Prospectuses dated, August 1, 1999, for:
Deutsche Banc Alex. Brown Cash Reserve Fund, Inc.
(Prime Series, Treasury Series and Tax-Free Series)
Quality Cash Reserve Prime Shares
Flag Investors Cash Reserve Prime Shares
(Class A and Class B) and
Institutional Shares
(Prime Series, Treasury Series and Tax-Free Series)
<PAGE>
TABLE OF CONTENTS
Introduction............................................................ 1
The Fund and Its Shares................................................. 1
Investment Program and Restrictions..................................... 3
Investment Restrictions................................................. 6
Share Purchases and Redemptions......................................... 8
Dividends and Taxes..................................................... 9
Directors and Officers.................................................. 14
The Investment Advisor.................................................. 18
Distributor............................................................. 19
Portfolio Transactions.................................................. 24
Semi-Annual Reports..................................................... 26
Independent Accountants................................................. 26
Sub-Accounting.......................................................... 26
Legal Matters .......................................................... 26
Transfer Agent, Custodian and Accounting Services....................... 26
Principal Holders of Securities......................................... 27
Current Yield........................................................... 29
Financial Statements.................................................... 30
Appendix A.............................................................. A-1
<PAGE>
INTRODUCTION
Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (formerly,
BT Alex. Brown Cash Reserve Fund, Inc.) (the "Fund") is a mutual fund. The rules
and regulations of the Securities and Exchange Commission (the "SEC") require
all mutual funds to furnish prospective investors with certain information
concerning the activities of the company being considered for investment. There
are four separate Prospectuses for the Fund's shares dated August 1, 1999: one
for the Deutsche Banc Alex. Brown Cash Reserve Classes of each Series, one for
the Institutional Classes of each Series, one for the Flag Investors Cash
Reserve Prime Class A and B Shares of the Prime Series and one for the Quality
Cash Reserve Prime Shares Class of the Prime Series. These prospectuses may be
obtained without charge from your Participating Dealer or Shareholder Serving
Agent or by writing the Fund, P.O. Box 17250, Baltimore, Maryland 21203.
Investors may also call (800) 553-8080. Some of the information required to be
in this Statement of Additional Information is also included in the Fund's
current Prospectuses; and, in order to avoid repetition, reference will be made
to sections of the Prospectuses. Unless otherwise noted, the term "Prospectus"
as used herein refers to the Prospectus for each class of the Fund's shares.
Additionally, the Prospectus and this Statement of Additional Information omit
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from the
Prospectus and this Statement of Additional Information, may be obtained from
the SEC by paying the charges prescribed under its rules and regulations.
THE FUND AND ITS SHARES
The Fund is registered as an open-end diversified management
investment company under the Investment Company Act of 1940, as amended, (the
"1940 Act") and its shares are registered under the Securities Act of 1933. The
Fund was organized as a corporation under the laws of the State of Maryland on
November 19, 1980, reorganized as a business trust under the laws of the
Commonwealth of Massachusetts on August 30, 1985 and, following certain changes
in Maryland law, reorganized as a Maryland corporation effective April 5, 1990.
The Fund offers three series of shares (each such series is
referred to herein as a "Series" and collectively as the "Series"):
o Prime Series
o Treasury Series
o Tax-Free Series
There are currently five classes of the Prime Series,
designated as the Deutsche Banc Alex. Brown Cash Reserve Prime Shares, the Flag
Investors Cash Reserve Prime Class A Shares, the Flag Investors Cash Reserve
Prime Class B Shares, the Deutsche Banc Alex. Brown Cash Reserve Prime
Institutional Shares and the Quality Cash Reserve Prime Shares. There are
currently two classes of the Treasury Series, designated as the Deutsche Banc
Alex. Brown Cash Reserve Treasury Shares and the Deutsche Banc Alex. Brown Cash
Reserve Treasury Institutional Shares. There are currently two classes of the
Tax-Free Series, designated as the Deutsche Banc Alex. Brown Cash Reserve
Tax-Free Shares and the Deutsche Banc Alex. Brown Cash Reserve Tax-Free
Institutional Shares.
-1-
<PAGE>
The term "majority of the outstanding shares" of either the
Fund or a particular Series or class means, respectively, the vote of the lesser
of (i) 67% or more of the shares of the Fund or such Series or class present or
represented by proxy at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund or such Series or class are present or
represented by proxy, or (ii) more than 50% of the outstanding shares of the
Fund or such Series or class.
Shareholders do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding shares of all classes
voting together for the election of directors may elect all of the members of
the Board of Directors of the Fund. In such event, the remaining holders cannot
elect any members of the Board of Directors of the Fund.
The Board of Directors may classify or reclassify any unissued
shares of any class or classes in addition to those already authorized by
setting or changing in any one or more respects, from time to time, prior to the
issuance of such shares, the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption, of such shares. Any such classification or
reclassification will comply with the provisions of the 1940 Act.
The Fund's Articles of Incorporation authorize the issuance of
10 billion 550 million shares, each with a par value of $.001. The Board of
Directors may increase or (within limits) decrease the number of authorized
shares without shareholder approval. A share of a Series represents an equal
proportionate interest in such Series with each other share of that Series and
is entitled to a proportionate interest in the dividends and distributions from
that Series except to the extent such dividends and distributions may be
affected by differences in the expenses allocated to a particular class.
The assets received by the Fund for the issue or sale of
shares of each Series and all income, earnings, profits, losses and proceeds
therefrom, subject only to the rights of creditors, are allocated to that
Series, and constitute the underlying assets of that Series. The underlying
assets of each Series are segregated and are charged with the expenses
attributable to that Series and with a share of the general expenses of the Fund
as described below under "Expenses." While the expenses of the Fund are
allocated to the separate books of account of each Series, certain expenses may
be legally chargeable against the assets of all Series. In addition, expenses of
a Series that are attributable to a particular class of shares offered by that
Series are allocated to that class. See "Expenses."
The Fund's Charter provides that the directors and officers of
the Fund will not be liable to the Fund or its shareholders for any action taken
by such director or officer while acting in his or her capacity as such, except
for any liability to which the director or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office. The Fund's Charter
provides for indemnification by the Fund of the directors and officers of the
Fund except with respect to any matter as to which any such person did not act
in good faith in the reasonable belief that his or her action was in or not
opposed to the best interests of the Fund. Such person may not be indemnified
against any liability to the Fund or the Fund's shareholders to which he or she
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office. The Fund's Charter also authorizes the purchase of liability
insurance on behalf of the directors and officers.
The Fund will not normally hold annual shareholders' meetings.
Directors may be removed from office by a vote of the holders of two-thirds of
the outstanding shares at a meeting duly called for that purpose, which meeting
shall be held upon written request of the holders of not less than 10% of the
outstanding shares of the Fund. Upon written request by ten or more
shareholders, who have been such for at least six months and who hold shares
constituting 1% of the outstanding shares, stating that such shareholders wish
to communicate with the other shareholders for the purpose of obtaining the
-2-
<PAGE>
signatures necessary to demand a meeting to consider removal of a director, the
Fund will undertake to provide a list of shareholders or to disseminate
appropriate materials.
Except as otherwise disclosed in the Prospectus and in this
Statement of Additional Information, the directors shall continue to hold office
and may appoint their successors.
INVESTMENT PROGRAM AND RESTRICTIONS
- -- 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 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 Fund's investment advisor (the
"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 and Poor's Ratings Group ("S&P") or (ii)
if not rated by Moody's or S&P, are of comparable quality to Prime-I or A-l+ or
A-1 instruments as determined by the Advisor; and (iii) are otherwise "Eligible
Securities" as defined in Rule 2a-7 under the 1940 Act. 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.
-3-
<PAGE>
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 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-11 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 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, on a temporary basis or
for 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 income from any such
investments will not be counted toward the 80% minimum discussed in the
preceding paragraph. (See "Dividends and Taxes.")
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
-4-
<PAGE>
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, which it is
obligated to repurchase.
Each Series may invest in instruments that have certain
minimum ratings of either Moody's or S&P as permitted by the investment
objective, policies and restrictions of each such Series. Investments of
commercial paper may be precluded unless a particular instrument is an "Eligible
Security" as defined in Rule 2a-7 under the 1940 Act. Rule 2a-7 defines
"Eligible Security" as follows:
(i) a security with a remaining maturity of 397 days or less
that is rated (or that has been issued by an issuer that is rated with
respect to a class of Short-term debt obligations, or any security
within that class, that is comparable in priority and security with the
security) by the Requisite NRSROs(1) in one of the two highest rating
categories for Short-term debt obligations (within which there may be
sub-categories or gradations indicating relative standing); or
(ii) a security:
- --------
(1) "Requisite NRSRO" shall mean (a) any two nationally recognized
statistical rating organizations that have - issued a rating with
respect to a security or class of debt obligations of an issuer, or (b)
if only one NRSRO has issued a rating with respect to such security or
issuer at the time the Fund purchases or rolls over the security, that
NRSRO. At present the NRSROs are: Standard & Poor's Ratings Group,
Moody's Investors Service, Inc., Duff and Phelps, Inc., Fitch Investors
Services, Inc. and, with respect to certain types of securities, IBCA
Limited and its affiliates, IBCA Inc. Subcategories or gradations in
ratings (such as a "+" or "-") do not count as rating categories.
-5-
<PAGE>
(A) that at the time of issuance was a Long-term
security but that has a remaining maturity of 397 calendar
days or less, and
(B) whose issuer has received from the Requisite
NRSROs a rating, with respect to a class of Short-term debt
obligations (or any security within that class) that is now
comparable in priority and security with the security, in one
of the two highest rating categories for Short-term debt
obligations (within which there may be sub-categories or
gradations indicating relative standing); or
(iii) an Unrated Security that is of comparable quality to a
security meeting the requirements of paragraphs (i) or (ii) of this
section, as determined by the money market fund's board of directors;
provided, however, that:
(A) the board of directors may base its determination
that a Standby Commitment is an Eligible Security upon a
finding that the issuer of the commitment presents a minimal
risk of default; and
(B) a security that at the time of issuance was a
Long-term security but that has a remaining maturity of 397
calendar days or less and that is an Unrated Security(2) is
not an Eligible Security if the security has a Long-term
rating from any NRSRO that is not within the NRSRO's two
highest categories (within which there may be sub-categories
or gradations indicating relative standing).
See Appendix A following this Statement of Additional
Information for a description of the minimum ratings of Moody's and S&P for
instruments in which each Series may invest.
INVESTMENT RESTRICTIONS
The investment restrictions applicable to the Fund's
investment program are set forth below. As a matter of fundamental policy which
may not be changed without a majority vote of shareholders (as that term is
defined in this Statement of Additional Information under the heading "General
Information About the Fund"), no Series will:
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(2) An "unrated security" is a security (i) issued by an issuer that does
not have a current short-term rating from any NRSRO, either as to the
particular security or as to any other short-term obligations of
comparable priority and security; (ii) that was a long-term security at
the time of issuance and whose issuer has not received from any NRSRO a
rating with respect to a class of short-term debt obligations now
comparable in priority and security; or (iii) a security that is rated
but which is the subject of an external credit support agreement not in
effect when the security was assigned its rating, provided that a
security is not an unrated security if any short-term debt obligation
issued by the issuer and comparable in priority and security is rated
by any NRSRO.
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(1) 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 the
Series' assets would be invested in such issuer;
(2) 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 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 may enter
into commitments to purchase securities in accordance
with its investment program;
(3) lend money or securities except to the extent that a
Series' investments may be considered loans;
(4) buy common stocks or voting securities or invest in
companies for the purpose of exercising control or
management;
(5) mortgage, pledge or hypothecate any assets except to
secure permitted borrowings and reverse repurchase
agreements and then only in an amount up to 15% of
the value of a Series' total assets at the time of
borrowing or entering into a reverse repurchase
agreement;
(6) underwrite securities issued by any other person,
except to the extent that the purchase of securities
and the later disposition of such securities in
accordance with a Series' investment program may be
deemed an underwriting;
(7) invest in real estate (a Series may, however,
purchase and sell securities secured by real estate
or interests therein or issued by issuers which
invest in real estate or interests therein);
(8) purchase oil, gas or mineral interests (a Series may,
however, purchase and sell the securities of
companies engaged in the exploration, development,
production, refining, transporting and marketing of
oil, gas or minerals);
(9) purchase or sell commodities or commodity futures
contracts, purchase securities on margin, make short
sales or invest in puts or calls;
(10) acquire for value the securities of any other
investment company, except in connection with a
merger, consolidation, reorganization or acquisition
of assets.
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.
The following investment restrictions apply to the Tax-Free
Series:
(1) 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%
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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 obliger of
which are in the same industry;
(2) The Tax-Free Series will be invested so that at least
80% of the Series' income will be exempt from federal
income taxes.
The following investment restriction may be changed by a vote
of the majority of the Board of Directors of the Fund. No Series will invest
more than 10% of the value of its net assets in illiquid securities, including
repurchase agreements with remaining maturities in excess of seven days.
The following investment restriction, that may be changed by a
vote of the majority of the Board of Directors of the Fund, applies to the
Treasury Series. The Treasury Series will limit investments in U.S. Government
obligations to U.S. Treasury obligations.
SHARE PURCHASES AND REDEMPTIONS
PURCHASES AND REDEMPTIONS
A complete description of the manner by which the Fund's
Shares may be purchased or redeemed appears in the Prospectus for that class
under the headings "How to Buy Shares" and "How to Redeem Shares." The Fund
reserves the right to suspend the sale of Shares at any time.
The right of redemption may be suspended or the date of
payment postponed when (a) trading on the New York Stock Exchange is restricted,
as determined by applicable rules and regulations of the SEC, (b) the New York
Stock Exchange is closed for other than customary weekend and holiday closings,
(c) the SEC has by order permitted such suspension, or (d) an emergency as
determined by the SEC exists making disposal of portfolio securities or the
valuation of the net assets of the Fund not reasonably practicable.
NET ASSET VALUE DETERMINATION
The net asset value of the Treasury Series and the Tax-Free
Series is determined daily as of 11:00 a.m. (Eastern time) and the net asset
value of the Prime Series is determined daily as of 12:00 noon Eastern time each
day that Bankers Trust Company and the New York Stock Exchange are open for
business.
For the purpose of determining the price at which shares of
each class of each Series are issued and redeemed, the net asset value per share
is calculated immediately after the daily dividend declaration by: (a) valuing
all securities and instruments of such Series as set forth below; (b) deducting
such Series' and class' liabilities; (c) dividing the resulting amount by the
number of shares outstanding of such class; and (d) rounding the per share net
asset value to the nearest whole cent. As discussed below, it is the intention
of the Fund to maintain a net asset value per share of $1.00 for each class of
each Series.
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<PAGE>
The instruments held in each Series' portfolio are valued on
the basis of amortized cost. This involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Fund would receive if it sold all the
securities in its portfolios. During periods of declining interest rates, the
daily yield for any Series computed as described under "Dividends and Taxes"
below, may be higher than a like computation made by a fund with identical
investments utilizing a method of valuation based upon market prices and
estimates of market prices for all of its portfolio instruments. Thus, if the
use of amortized cost by the Fund results in a lower aggregate portfolio value
for a Series on a particular day, a prospective investor in such Series would be
able to obtain a somewhat higher yield than would result from an investment in a
fund utilizing solely market values, and existing investors in such Series would
receive less investment income. The converse would apply in a period of rising
interest rates.
The valuation of the portfolio instruments based upon their
amortized cost, the calculation of the per share net asset value to the nearest
whole cent and the concomitant maintenance of the net asset value per share of
$1.00 for each class of each Series is permitted in accordance with rules and
regulations of the SEC applicable to money market funds, as amended, effective
June 1, 1991, which require the Fund to adhere to certain quality, maturity and
diversification conditions. The Fund maintains a dollar-weighted average
portfolio maturity of 90 days or less for each Series, purchases only
instruments having remaining maturities of 397 days or less and invests only in
securities determined by the Board of Directors to be of high quality with
minimal credit risk. The Board of Directors is required to establish procedures
designed to stabilize, to the extent reasonably possible, the Fund's price per
share at $1.00 for each class of each Series as computed for the purpose of
sales and redemptions. Such procedures include review of each Series' portfolio
holdings by the Board of Directors, at such intervals as it may deem
appropriate, to determine whether the net asset value calculated by using
available market quotations or other reputable sources for any class of any
Series deviates from $1.00 per share and, if so, whether such deviation may
result in material dilution or is otherwise unfair to existing shareholders of
the relevant class or Series. In the event the Board of Directors determines
that such a deviation exists for any class of any Series, it will take such
corrective action as it deems necessary and appropriate, including sales of
portfolio instruments prior to maturity to realize capital maturity; withholding
of dividends; redemption of shares in kind; or establishment of a net asset
value per share by using available market quotations.
DIVIDENDS AND TAXES
DIVIDENDS
All of the net income earned on the Prime Series, Treasury
Series and the Tax-Free Series is declared daily as dividends to the respective
holders of record of shares of each class of each Series. The net income of each
Series for dividend purposes (from the time of the immediately preceding
determination thereof) consists of (a) interest accrued and discount earned
(including both original issue and market discount), if any, on the assets of
such Series and any general income of the Fund prorated to the Series based on
its relative net assets, less (b) amortization of premium and accrued expenses
for the applicable dividend period attributable directly to such Series and
general expenses of the Fund prorated to each such Series based on its relative
net assets. Expenses attributable to a class of a Series are allocated to that
class. Although realized gains and losses on the assets of each Series are
reflected in the net asset value of such Series, they are not expected to be of
an amount which would affect the net asset value of any Series of $1.00 per
share for the purposes of purchases and redemptions. Realized gains and losses
may be declared and paid yearly or more frequently. The amount of discount or
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premium on instruments in each portfolio is fixed at time of their purchase. See
"Net Asset Value Determination" above.
Should the Fund incur or anticipate any unusual expense,
loss or depreciation which would adversely affect the net asset value per share
or net income per share of any class of a Series for a particular period, the
Board of Directors would at that time consider whether to adhere to the present
dividend policy described above or to revise it in light of then prevailing
circumstances. For example, if the net asset value per share of any class of a
Series was reduced, or was anticipated to be reduced, below $1.00, the Board of
Directors might suspend further dividend payments with respect to such class or
Series until the net asset value returns to $1.00. Thus, the expense, loss or
depreciation might result in a shareholder (i) receiving no dividends for the
period during which the shareholder held shares of such class or Series or (ii)
receiving upon redemption a price per share lower than that which he paid.
Dividends on all classes of a Series are normally payable on
the first day that a share purchase or exchange order is effective but not on
the day that a redemption order is effective. Share purchases for the Treasury
Series and the Tax-Free Series effected before 11:00 a.m. (Eastern Time) and
Share purchases for the Prime Series effected before 12:00 noon (Eastern Time)
begin to earn dividends on the same business day. Dividends are declared and
reinvested monthly in the form of additional full and fractional shares of the
same Series at net asset value unless the shareholder has elected to have
dividends paid in cash.
TAXES
The following is only a summary of certain additional federal
income tax considerations generally affecting the Series and its shareholders
that are not described in the Series' prospectus. No attempt is made to present
a detailed explanation of the tax treatment of the Series or its shareholders,
and the discussion here and in the Series' prospectus is not intended as a
substitute for careful tax planning. Shareholders are urged to consult with
their tax advisors with specific reference to their own tax situation, including
their state and local tax liabilities.
The following general discussion of certain federal income tax
consequences is based on the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations issued thereunder as in effect on the date of this
Statement of Additional Information. New legislation, as well as administrative
changes or court decisions, may significantly change the conclusions expressed
herein, and may have a retroactive effect with respect to the transactions
contemplated herein.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each Series intends to qualify and elect to be treated as a
"regulated investment company" ("RIC") as defined under Subchapter M of the
Code. By following such a policy, each Series expects to eliminate or reduce to
a nominal amount the federal taxes to which they may be subject.
In order to qualify as a RIC, a Series must distribute at
least 90% of its net investment income (that generally includes dividends,
taxable interest, and the excess of net short-term capital gains over net
long-term capital losses less operating expenses) and at least 90% of its net
tax exempt interest income, for each tax year, if any, to its shareholders and
also must meet several additional requirements. Included among these
requirements are the following: (i) at least 90% of the Series' gross income
each taxable year must be derived from dividends, interest, payments with
respect to securities loans, and gains from the sale or other disposition of
stock or securities, or certain other income; (ii) at the close of each quarter
of the Series' taxable year, at least 50% of the value of its total assets must
be represented by cash and cash items, U.S. Government securities, securities of
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<PAGE>
other RICs and other securities, with such other securities limited, in respect
to any one issuer, to an amount that does not exceed 5% of the value of the
Series' assets and that does not represent more than 10% of the outstanding
voting securities of such issuer; and (iii) at the close of each quarter of the
Series' taxable year, not more than 25% of the value of its assets may be
invested in securities (other than U.S. Government securities or the securities
of other RICs) of any one issuer or of two or more issuers which the Series
controls and which are engaged in the same, similar or related trades or
businesses.
The Treasury Series may make investments in securities (such
as STRIPS) that bear "original issue discount" or "acquisition discount"
(collectively, "OID Securities"). The holder of such securities is deemed to
have received interest income even though no cash payments have been received.
Accordingly, OID Securities may not produce sufficient current cash receipts to
match the amount of distributable net investment income the Series must
distribute to satisfy the Distribution Requirement. In some cases, the Series
may have to borrow money or dispose of other investments in order to make
sufficient cash distributions to satisfy the Distribution Requirement.
Although each Series intends to distribute substantially all
of its net investment income and may distribute its capital gains for any
taxable year, each Series will be subject to federal income taxation to the
extent any such income or gains are not distributed.
If the Series fail to qualify for any taxable year as a RIC,
all of their taxable income will be subject to tax at regular corporate income
tax rates without any deduction for distributions to shareholders and such
distributions generally will be taxable to shareholders as ordinary dividends to
the extent of a Series' current and accumulated earnings and profits. In this
event, distributions generally will be eligible for the dividends-received
deduction for corporate shareholders.
SERIES DISTRIBUTIONS
Distributions of investment company taxable income will be
taxable to shareholders as ordinary income, regardless of whether such
distributions are paid in cash or are reinvested in additional Shares, to the
extent of a Series' earnings and profits. Each Series anticipates that it will
distribute substantially all of its investment company taxable income for each
taxable year.
Each Series intends to distribute to shareholders its excess
of net long-term capital gains over net short-term capital losses ("net capital
gains"). Such distributions are taxable to shareholders who are individuals at a
maximum rate of 20%, regardless of the length of time the shareholder has held
their Series Shares. If any such gains are retained, however, a Series will pay
federal income tax thereon.
In the case of corporate shareholders, distributions (other
than capital gains distributions) from a RIC generally qualify for the
dividends-received deduction to the extent of the gross amount of qualifying
dividends received by a Series for the year. Generally, and subject to certain
limitations, a dividend will be treated as a qualifying dividend if it has been
received from a domestic corporation. Accordingly, it is not expected that any
Series distribution will qualify for the corporate dividends-received deduction.
Ordinarily, investors should include all dividends as income
in the year of payment. However, dividends declared payable to shareholders of
record in October, November, or December of one year, but paid in January of the
following year, will be deemed for tax purposes to have been received by the
shareholder and paid by the Series in the year in which the dividends were
declared.
In certain cases, a Series will be required to withhold, and
remit to the United States Treasury, 31% of any distributions paid to a
shareholder who (1) has failed to provide a correct taxpayer
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<PAGE>
identification number, (2) is subject to backup withholding by the Internal
Revenue Service, or (3) has failed to certify to the Series that such
shareholder is not subject to backup withholding.
Each Series will provide a statement annually to shareholders
as to the federal tax status of distributions paid (or deemed to be paid) by the
Series during the year, including the amount of dividends eligible for the
corporate dividends-received deduction.
SALE OR EXCHANGE OF SERIES SHARES
Generally, gain or loss on the sale or exchange of a Series
Share will be capital gain or loss that will be long-term if the Share has been
held for more than twelve months and otherwise will be short-term. For
individuals, long-term capital gains are currently taxed at a maximum rate of
20% and short-term capital gains are currently taxed at ordinary income tax
rates. However, if a shareholder realizes a loss on the sale, exchange or
redemption of a Share held for six months or less and has previously received a
capital gains distribution with respect to the Share (or any undistributed net
capital gains of a Series with respect to such Share are included in determining
the shareholder's long-term capital gains), the shareholder must treat the loss
as a long-term capital loss to the extent of the amount of the prior capital
gains distribution (or any undistributed net capital gains of a Series that have
been included in determining such shareholder's long-term capital gains). In
addition, any loss realized on a sale or other disposition of Shares will be
disallowed to the extent an investor repurchases (or enters into a contract or
option to repurchase) Shares within a period of 61 days (beginning 30 days
before and ending 30 days after the disposition of the Shares). This loss
disallowance rule will apply to Shares received through the reinvestment of
dividends during the 61-day period.
FEDERAL EXCISE TAX
If a Series fails to distribute in a calendar year at least
98% of its ordinary income for the year and 98% of its capital gain net income
(the excess of short and long term capital gains over short and long term
capital losses) for the one-year period ending October 31 of that year (and any
retained amount from the prior calendar year), the Series will be subject to a
nondeductible 4% Federal excise tax on the undistributed amounts. Each Series
intends to make sufficient distributions to avoid imposition of this tax, or to
retain, at most its net capital gains and pay tax thereon.
STATE AND LOCAL TAXES
Depending upon state and local law, distributions by the
Series to shareholders and the ownership of Shares may be subject to state and
local taxes. Shareholders are urged to consult their tax advisors as to the
consequences of these and other state and local tax rules affecting an
investment in the Series.
ADDITIONAL TAX INFORMATION FOR THE TAX-FREE SERIES
The Series intends to qualify to pay "exempt interest
dividends" to its shareholders by satisfying the Code's requirement that at the
close of each quarter of its taxable year at least 50% of the value of its total
assets consist of obligations the interest on which is exempt from federal
income tax. As long as this and certain other requirements are met, dividends
derived from the Series' net tax-exempt interest income will be "exempt interest
dividends" that are excluded from your gross income for federal income tax
purposes. Exempt interest dividends may, however, have collateral federal income
tax consequences, including alternative minimum tax consequences, as discussed
below.
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<PAGE>
The percentage of income that constitutes "exempt-interest
dividends" will be determined for each year for the Series and will be applied
uniformly to all dividends declared with respect to the Series during that year.
This percentage may differ from the actual percentage for any particular day.
Exempt-interest dividends may be subject to the alternative
minimum tax imposed by Section 55 of the Code (the "Alternative Minimum Tax").
The Alternative Minimum Tax is imposed at a rate of up to 28% in the case of
non-corporate taxpayers and at the rate of 20% in the case of corporate
taxpayers, to the extent it exceeds the taxpayer's regular tax liability. The
Alternative Minimum Tax may be affected by the receipt of exempt-interest
dividends in two circumstances. First, exempt-interest dividends derived from
certain "private activity bonds" issued after August 7, 1986, will generally be
an item of tax preference and therefore potentially subject to the Alternative
Minimum Tax. The Series intends, when possible, to avoid investing in private
activity bonds. Second, in the case of exempt-interest dividends received by
corporate shareholders, all exempt-interest dividends, regardless of when the
bonds from which they are derived were issued or whether they are derived from
private activity bonds, will be included in the corporation's "adjusted current
earnings," as defined in Section 56(g) of the Code, in calculating the
corporation's alternative minimum taxable income for purposes of determining the
Alternative Minimum Tax.
Interest on indebtedness incurred or continued by shareholders
to purchase or carry Shares of the Series will not be deductible for federal
income tax purposes. The deduction otherwise allowable to property and casualty
insurance companies for "losses incurred" will be reduced by an amount equal to
a portion of exempt-interest dividends received or accrued during any taxable
year. Foreign corporations engaged in a trade or business in the United States
will be subject to a "branch profits tax" on their "dividend equivalent amount"
for the taxable year, which will include exempt-interest dividends. Certain
Subchapter S corporations may also be subject to taxes on their "passive
investment income," which could include exempt-interest dividends. Up to 85% of
the Social Security benefits or railroad retirement benefits received by an
individual during any taxable year will be included in the gross income of such
individual if the individual's "modified adjusted gross income" (which includes
exempt-interest dividends) plus one-half of the Social Security benefits or
railroad retirement benefits received by such individual during that taxable
year exceeds the base amount described in Section 86 of the Code.
Entities or persons who are "substantial users" (or persons
related to "substantial users") of facilities financed by industrial development
bonds or private activity bonds should consult their tax advisors before
purchasing Shares. "Substantial user" is defined generally as including a
"non-exempt person" who regularly uses in trade or business a part of such a
facility.
Current federal 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 Series to purchase sufficient amounts of tax-exempt
securities to satisfy the Code's requirements for the payment of exempt interest
dividends.
Issuers of bonds purchased by the Series (or the beneficiary
of such bonds) may have made certain representations or covenants in connection
with the issuance of such bonds to satisfy certain requirements of the Code that
must be satisfied subsequent to the issuance of such bonds. Investors should be
aware that exempt-interest dividends derived from such bonds may become subject
to federal income taxation retroactively to the date thereof if such
representations are determined to have been inaccurate or if the issuer of such
bonds (or the beneficiary of such bonds) fails to comply with such covenants.
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The Series may not be a suitable investment for tax-exempt
shareholders and plans because such shareholders and plans would not gain any
additional benefit from the receipt of exempt-interest dividends.
DIRECTORS AND OFFICERS
The overall business and affairs of the Fund are managed by
its Board of Directors. The Board 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 directors and executive officers of the Fund, their dates
of birth and their principal occupations during the last five years are set
forth below. Unless otherwise indicated, the address of each Director and
executive officer is One South Street, Baltimore, Maryland 21202.
*RICHARD T. HALE, CHAIRMAN AND DIRECTOR (7/17/45)
Managing Director, Deutsche Asset Management Americas; Director and President,
Investment Company Capital Corp. (registered investment advisor); and Chartered
Financial Analyst.
*TRUMAN T. SEMANS, DIRECTOR (10/27/26)
Brown Investment Advisory & Trust Company, Furness House, 19 South Street,
Baltimore, Maryland 21202. Vice Chairman, Brown Investment Advisory & Trust
Company (formerly, Alex. Brown Capital Advisory & Trust Company); Director,
Investment Company Capital Corp. (registered investment advisor); and Director
and Chairman of the Executive Committee, Virginia Hot Springs Inc. (property
management). Formerly, Managing Director Emeritus, BT Alex. Brown Incorporated
and Vice Chairman, Alex. Brown & Sons Incorporated (now BT Alex. Brown
Incorporated).
JAMES J. CUNNANE, DIRECTOR (3/11/38)
60 Seagate Drive, Unit P106, Naples, Florida 34103. Managing Director, CBC
Capital (merchant banking), 1993-Present; Director, Net.World
(telecommunications) 1998-Present.
JOSEPH R. HARDIMAN, DIRECTOR (5/27/37)
8 Bowen Mill Road, Baltimore, Maryland 21212. Private Equity Investor and
Capital Markets Consultant; Director, Wit Capital Group (registered broker
dealer) and The Nevis Fund (registered investment company). Formerly, Director,
Circon Corp. (medical instruments); President and Chief Executive Officer, The
National Association of Securities Dealers, Inc. and The NASDAQ Stock Market,
Inc., 1987-1997; Chief Operating Officer of Alex. Brown & Sons Incorporated (now
BT Alex. Brown Incorporated) 1985-1987; and General Partner, Alex. Brown & Sons
Incorporated (now BT Alex. Brown Incorporated) 1976-1985.
LOUIS E. LEVY, DIRECTOR (11/16/32)
26 Farmstead Road, Short Hills, New Jersey 07078. Director, Kimberly-Clark
Corporation (personal consumer products) and Household International (banking
and finance). Formerly, Chairman of the Quality Control Inquiry Committee,
American Institute of Certified Public Accountants; Trustee, Merrill Lynch Funds
for Institutions, 1991-1993; Adjunct Professor, Columbia University-Graduate
School of Business, 1991-1992; and Partner, KPMG Peat Marwick, retired 1990.
EUGENE J. McDONALD, DIRECTOR (7/14/32)
Duke Management Company, Erwin Square, Suite 1000, 2200 West Main Street,
Durham, North Carolina 27705. President, Duke Management Company (investments);
Executive Vice President,
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<PAGE>
Duke University (education, research and health care); Executive Vice Chairman
and Director, Central Carolina Bank & Trust (banking) and Director, Victory
Funds (registered investment companies). Formerly, Director, AMBAC Treasurers
Trust (registered investment company) and DP Mann Holdings (insurance).
REBECCA W. RIMEL, DIRECTOR (4/10/51)
The Pew Charitable Trusts, One Commerce Square, 2005 Market Street, Suite 1700,
Philadelphia, Pennsylvania 19103. President and Chief Executive Officer, The Pew
Charitable Trusts (charitable funds); Director and Executive Vice President, The
Glenmede Trust Company (investment trust and wealth management). Formerly,
Executive Director, The Pew Charitable Trusts.
CARL W. VOGT, ESQ., DIRECTOR (4/20/36)
Fulbright & Jaworski L.L.P., 801 Pennsylvania Avenue, N.W., Washington, D.C.
20004-2604. Senior Partner, Fulbright & Jaworski L.L.P. (law); Director, Yellow
Corporation (trucking); American Science & Engineering (x-ray detection
equipment). Formerly, Chairman and Member, National Transportation Safety Board;
Director, National Railroad Passenger Corporation (Amtrak) and Member, Aviation
System Capacity Advisory Committee (Federal Aviation Administration).
HARRY WOOLF, PRESIDENT (8/12/23)
Institute for Advanced Study, Olden Lane, Princeton, New Jersey 08540.
Professor-at-Large Emeritus, Institute for Advanced Study; Director, Family
Health International (non-profit research and education) and Research America
(non-profit medical research). Formerly, Director, ATL and SpaceLabs Medical
Corp. (medical equipment); Trustee, Reed College (education) and Rockefeller
Foundation; and Director, Merrill Lynch Cluster C Funds and Flag
Investors/ISI/BT Alex. Brown Cash Reserve Fund, Inc. Fund Complex (registered
investment companies).
CHARLES A. RIZZO, TREASURER (8/5/57)
Vice President and Department Head, Deutsche Asset Management Americas,
1998-Present. Formerly, Senior Manager, PricewaterhouseCoopers LLP 1993-1998.
AMY M. OLMERT, SECRETARY (5/14/63)
Vice President, Deutsche Asset Management Americas, 1997-Present. Formerly,
Senior Manager, Coopers & Lybrand L.L.P. (now PricewaterhouseCoopers),
1988-1997.
DANIEL O. HIRSCH, ASSISTANT SECRETARY (3/27/54)
Director, Deutsche Asset Management Americas, 1998-Present. Formerly, Assistant
General Counsel, United States Securities and Exchange Commission, 1993-1998.
TRACIE E. RICHTER, Assistant Secretary (1/12/68)
Vice President, Deutsche Asset Management Americas; Treasurer and Chief
Financial Officer, Morgan Grenfell Investment Trust. Formerly, Tax Associate,
Goldman Sachs Asset Management, 1993-1996 and Vice President, Bankers Trust
Company, 1996-1998.
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* Messrs. Hale and Semans are "interested persons," as defined in the 1940 Act.
Directors and officers of the Fund are also directors and
officers of some or all of the investment companies managed, administered or
advised by BT Alex. Brown Incorporated ("BT Alex.
Brown") or its affiliates.
There are currently 12 funds in the Flag Investors/ISI Funds
and Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. fund complex (the "Fund
Complex"). Mr. Hale serves as Chairman of three funds and as a director of seven
other funds in the Fund Complex. Mr. Semans serves as Chairman of five funds and
as a director of five other funds in the Fund Complex. Messrs. Cunnane,
Hardiman, Levy, McDonald and Vogt serve as directors of each fund in the Fund
Complex. Ms. Rimel serves as a director of eleven funds in the Fund Complex. Mr.
Woolf serves as President of seven funds in the
-15-
<PAGE>
Fund Complex. Ms. Olmert serves as Secretary, Mr. Rizzo serves as Treasurer, Mr.
Hirsch serves as Assistant Secretary and Ms. Richter serves as Assistant
Secretary of each of the funds in the Fund Complex.
With the exception of the Fund's President, officers of the
Fund receive no direct remuneration in such capacity from the Fund. Officers and
directors of the Fund who are officers or directors of Deutsche Asset Management
Americas or ICC may be considered to have received remuneration indirectly. Each
director who is not an "interested person" of the Fund (as defined in the 1940
Act) (an "Independent Director") and Mr. Woolf, the Fund's President, receives
an aggregate annual fee (plus reimbursement for reasonable out-of-pocket
expenses incurred in connection with his or her attendance at Board and
committee meetings) from the Fund and from all Flag Investors/ISI Funds for
which he or she serves. In addition, the Chairmen of the Fund Complex's Audit
and Executive Committees receive an annual fee from the Fund Complex. Payment of
such fees and expenses are allocated among all such funds described above in
proportion to their relative net assets. For the fiscal year ended March 31,
1999, Independent Directors' fees (including fees paid to the Fund's President)
attributable to the assets of the Fund totaled $137,888.
The following table shows aggregate compensation payable to
each of the Fund's directors by the Fund and the Fund Complex, respectively, and
pension or retirement benefits accrued as part of Fund expenses in the fiscal
year ended March 31, 1999.
-16-
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
COMPENSATION TABLE
Total Compensation from the
Aggregate Compensation from Fund and the Fund Complex
the Fund Payable to Directors Pension or Retirement Payable to Directors for the
Name of Person, for the Fiscal Year Ended Benefits Accrued as Part of Fiscal Year Ended
Position March 31, 1999 Fund Expenses March 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard T. Hale (1) $0 $0 $0
Chairman
Truman T. Semans (1) $0 $0 $0
Director
James J. Cunnane $25,427(2) (3) $39,000 for service
Director on 13(4) Boards
Joseph R. Hardiman(5) $20,384 (3) $29,250 for service on 12
Director Boards(6)
John F. Kroeger (7) $24,230 (3) $36,750 for service
Director on 13(4) Boards
Louis E. Levy $30,300(2) (3) $46,500 for service
Director on 13(4) Boards
Eugene J. McDonald $28,656(2) (3) $44,000 for service
Director on 13(4) Boards
Rebecca W. Rimel $26,232(2) (3) $39,000 for service
Director on 12 Boards(4,6)
Carl W. Vogt, Esq. $25,982(2) (3) $39,000 for service
Director on 13 Boards(4,6)
</TABLE>
(1) A director who is, or may be, an "interested person" as defined in the 1940
Act.
(2) Of amounts payable to Ms. Rimel and Messrs. Cunnane, Levy, McDonald and
Vogt, $25,823, $25,427, $23,250, $28,656 and $25,982 was deferred pursuant
to a Deferred Compensation Plan.
(3) The Fund Complex has adopted a retirement plan for eligible directors and
the Fund's President, as described below. The actuarially computed pension
expense for the year ended March 31, 1998 was approximately $287,906.
(4) One of these Funds ceased operations on July 29, 1998.
(5) Elected to the Fund's Board effective September 27, 1998.
(6) Ms. Rimel receives and Messrs. Hardiman and Vogt received (prior to their
appointment or election as Director to all of the funds in the Fund
Complex) proportionately higher compensation from each fund for which they
serve as Director.
(7) Retired effective September 27, 1998; Deceased on November 26, 1998.
The Fund Complex has adopted a retirement plan (the
"Retirement Plan") for the Fund's President and Directors who are not employees
of the Fund, the Fund's advisor or their respective affiliates (the
"Participants"). After completion of six years of service, each Participant will
be entitled to receive an annual retirement benefit equal to a percentage of the
fee earned by him or her in his or her last year of service. Upon retirement,
each Participant will receive annually 10% of such fee for each year that he or
she served after completion of the first five years, up to a maximum annual
benefit of 50% of the fee earned by him or her in his or her last year of
service. The fee will be paid quarterly, for life, by each fund for which he or
she serves. The Retirement Plan is unfunded and unvested. The Fund has two
Participants, a director who retired effective December 31, 1994 and Harry
Woolf, the Fund's President, who retired effective December 31, 1996. These
Participants qualified for the Retirement Plan by serving thirteen years and
fourteen years, respectively, as directors in the Fund Complex and each of whom
will be paid a quarterly fee of $4,875 by the Fund Complex for the rest of his
or her life. Such fees are allocated to each fund in the Fund Complex based upon
the relative net assets of such fund to the Fund Complex.
Set forth in the table below are the estimated annual benefits
payable to a Participant upon retirement assuming various years of service and
payment of a percentage of the fee earned by such Participant in his or her last
year of service, as described above. The approximate credited years of
-17-
<PAGE>
service at December 31, 1998 are as follows: for Ms. Rimel, 3 years; for Mr.
Cunnane, 4 years; for Mr. Levy, 4 years; for Mr. McDonald, 6 years; for Mr.
Vogt, 3 years; and for Mr. Hardiman, 0 years.
<TABLE>
<CAPTION>
Years of Service Estimated Annual Benefits Payable By Fund Complex Upon Retirement
- ---------------- -----------------------------------------------------------------
Chairmen of Audit and Other Participants
Executive Committees ------------------
--------------------
<S> <C> <C>
6 years $4,900 $3,900
7 years $9,800 $7,800
8 years $14,700 $11,700
9 years $19,600 $15,600
10 years or more $24,500 $19,500
</TABLE>
Any director who receives fees from the Fund is permitted to
defer 50% to 100% of his or her annual compensation pursuant to a Deferred
Compensation Plan. Ms. Rimel and Messrs. Cunnane, Levy, McDonald and Vogt have
each executed a Deferred Compensation Agreement. Currently, the deferring
directors may select from among various Flag Investors Funds, Deutsche Banc
Alex. Brown Cash Reserve Fund, Inc. and BT International Equity Fund in which
all or part of their deferral account shall be deemed to be invested.
Distributions from the deferring directors' deferral accounts will be paid in
cash, in generally equal quarterly installments over a period of ten years.
THE INVESTMENT ADVISOR
On March 30, 1999, the Board of Directors of the Fund,
including a majority of the Independent Directors, approved new investment
advisory agreements (the "Advisory Agreements") between the Fund and Investment
Company Capital Corp. ("ICC" or the "Advisor") with respect to each Series in
anticipation of the merger (the "Merger") between Deutsche Bank A.G. ("Deutsche
Bank") and Bankers Trust Corporation ("Bankers Trust"). The Merger arguably
assigned and, therefore, terminated the Fund's prior investment advisory
agreements on June 4, 1999. Under an exemptive order issued by the SEC, ICC has
been serving as investment advisor for each Series pursuant to the new Advisory
Agreements since June 4, 1999. If shareholders approve the new Advisory
Agreements at the Special Meeting of Shareholders to be held on October 7, 1999,
they will continue in effect for an initial two year term. Prior to June 4,
1999, the Advisor was an indirect subsidiary of Bankers Trust. On June 4, 1999,
Bankers Trust merged with and into a subsidiary of Deutsche Bank. Deutsche Bank
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. Deutsche Asset Management
Americas is an operating unit of Deutsche Bank consisting of ICC and other asset
management affiliates of Deutsche Bank. ICC was organized in 1987.
The terms of the Advisory Agreements are the same except to
the extent specified below. Pursuant to the terms of the Advisory Agreements,
ICC (a) supervises and manages the Fund's operations; (b) formulates and
implements continuing programs for the purchases and sales of securities,
consistent with the investment objective and policies of each Series; (c)
provides the Fund with such executive, administrative and clerical services as
are deemed advisable by the Fund's Board of Directors; (d) provides the Fund
with, or obtains for it, adequate office space and all necessary office
equipment and services; (e) obtains and evaluates pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign and otherwise, whether affecting the economy generally or any Series of
the Fund, and whether concerning the individual issuers whose securities are
included in the Fund's Series or the activities in which they engage, or with
respect to securities which ICC considers desirable for inclusion in the
portfolio of any of the Fund's Series; (f) determines which issuers and
securities shall be represented in the Portfolio of any of the Fund's Series;
(g) takes all actions necessary to carry into effect the Fund's purchase and
sale programs; (h) supervises the operations of the Fund's transfer and dividend
disbursing agent; (i) provides the Fund with such administrative and clerical
services for the maintenance of certain shareholder records as are deemed
advisable by the Fund's Board of Directors; and (j) arranges, but does not pay
for, the periodic updating of prospectuses and supplements thereto, proxy
material, tax returns, reports to the Fund's shareholders and reports to and
filings with the
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<PAGE>
SEC and state Blue Sky authorities. ICC may delegate its
duties under the Advisory Agreements, and has delegated certain of such duties
to its affiliates.
As compensation for its services for the Fund, ICC receives a
fee from the Fund, calculated daily and paid monthly, at the following annual
rates based upon the Fund's aggregate average daily net assets: 0.30% of the
first $500 million, 0.26% of the next $500 million, 0.25% of the next $500
million, 0.24% of the next $1 billion, 0.23% of the next $1 billion and 0.22% of
that portion in excess of $3.5 billion. In addition, the Advisor is entitled to
receive an additional fee with respect to the Prime Series and the Tax-Free
Series, calculated daily and paid monthly, at the annual rate of 0.02% of the
Prime Series' average daily net assets and 0.03% 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.
Advisory fees paid by the Fund to ICC for the last three fiscal years were as
follows:
---------------------------------------------------------------------
For the Fiscal Year Ended March 31
---------------------------------------------------------------------
1999 1998 1997
---------------------------------------------------------------------
$14,541,722 $12,511,915 $10,806,028
---------------------------------------------------------------------
The Advisory Agreements continue in effect from year to year
if each such agreement is specifically approved at least annually by the Fund's
Board of Directors and by a majority of the Independent Directors by votes cast
in person at a meeting called for such purpose. The Fund or ICC may terminate
any Advisory Agreement on 60 days' written notice without penalty. The Advisory
Agreements terminate automatically in the event of an "assignment," as defined
in the 1940 Act.
ICC also serves as the Fund's transfer and dividend disbursing
agent and provides accounting services to each Series. An affiliate of ICC
serves as custodian to the Fund. (See "Transfer Agent, Custodian and Accounting
Services.")
DISTRIBUTOR
ICC Distributors, Inc. ("ICC Distributors" or the
"Distributor") serves as the distributor for each class of the Fund's shares
pursuant to a Distribution Agreement dated August 31, 1997 (the "Distribution
Agreement"). ICC Distributors serves as the distributor for other funds in the
Flag Investors family of funds.
The Distribution Agreement provides that ICC Distributors
shall; (i) use reasonable efforts to sell Shares upon the terms and conditions
contained in the Distribution Agreement and the Fund's then current Prospectus;
(ii) use its best efforts to conform with the requirements of all federal and
state laws relating to the sale of the Shares; (iii) adopt and follow procedures
as may be necessary to comply with the requirements of the National Association
of Securities Dealers, Inc. and any other applicable self-regulatory
organization; (iv) perform its duties under the supervision of and in accordance
with the directives of the Fund's Board of Directors and the Fund's Articles of
Incorporation and By-Laws; and (v) provide the Fund's Board of Directors with a
written report of the amounts expended in connection with the Distribution
Agreement. ICC Distributors shall devote reasonable time and effort to effect
sales of Shares but shall not be obligated to sell any specific number of
Shares. The services of ICC Distributors are not exclusive and ICC Distributors
shall not be liable to the Fund or its shareholders for any error of judgment or
mistake of law, for any losses arising out of any investment, or for any action
or inaction of ICC
-19-
<PAGE>
Distributors in the absence of bad faith, willful misfeasance or gross
negligence in the performance of its duties or obligations under the
Distribution Agreement or by reason of its reckless disregard of its duties and
obligations under the Distribution Agreement. The Distribution Agreement further
provides that the Fund and ICC Distributors will mutually indemnify each other
for losses relating to disclosures in the Fund's registration statement.
The Distribution Agreement may be terminated at any time upon 60 days'
written notice by the Fund, without penalty, by the vote of a majority of the
Fund's Independent Directors or by a vote of a majority of the Fund's
outstanding Shares of the related class (as defined under "Capital Stock") or
upon 60 days' written notice by the Distributor and shall automatically
terminate in the event of an assignment. The Distribution Agreement has an
initial term of one year from the date of effectiveness. It shall continue in
effect thereafter with respect to each class of the Fund provided that it is
approved at least annually by (i) a vote of a majority of the outstanding voting
securities of the related class of the Fund or (ii) a vote of a majority of the
Fund's Board of Directors including a majority of the Independent Directors and,
with respect to each class of the Fund for which there is a plan of
distribution, so long as such plan of distribution is approved at least annually
by the Independent Directors in person at a meeting called for the purpose of
voting on such approval. The Distribution Agreement, including the form of
Sub-Distribution Agreement, was initially approved by the Board of Directors,
including a majority of the Independent Directors, on August 4, 1997 and was
most recently approved on September 29, 1998.
As compensation for its services, ICC Distributors receives a
distribution fee from the Fund, calculated daily and paid monthly, at the annual
rate of 0.25% of the aggregate average daily net assets of all classes of the
Fund, excluding net assets attributable to the Institutional Shares, the Quality
Cash Reserve Prime Shares and the Flag Investors Cash Reserve Prime Class B
Shares. ICC Distributors receives no compensation with respect to its services
as distributor for the Institutional Shares and none of ICC Distributors'
compensation as distributor of the Fund's shares is allocated to the
Institutional Shares. ICC Distributors receives a distribution fee from the
Fund, calculated daily and paid monthly, at the annual rates of 0.60% of the
average daily net assets of the Quality Cash Reserve Prime Shares and 0.75% of
the average daily net assets of the Flag Investors Cash Reserve Prime Class B
Shares. In addition, ICC Distributors receives a shareholder servicing fee, paid
monthly, at an annual rate equal to 0.25% of the Flag Investors Cash Reserve
Prime Class B Shares' average daily net assets and 0.05% of the Deutsche Banc
Alex. Brown Cash Reserve Shares' (Prime Series, Treasury Series, Tax-Free
Series) average daily net assets.
As compensation for providing distribution and shareholder
services to the Fund for the last three fiscal years, the fund's distributor
received fees in the following amounts:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
For the Fiscal Year Ended March 31
- ------------------------------------------------------------------------------------------------------------------
Fee 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prime Series 12b-1 Fees $9,527,563(1) $8,299,915(3) $7,398,316(7,8)
- ------------------------------------------------------------------------------------------------------------------
Treasury Series 12b-1 Fee $1,964,145(1) $1,700,377(4) $1,681,441(7)
- ------------------------------------------------------------------------------------------------------------------
Tax-Free Series 12b-1 Fee $2,232,564(1) $1,784,579(5) $1,479,582(7)
- ------------------------------------------------------------------------------------------------------------------
Flag Investors Cash $4,613(1)
Reserve Class B
Shareholder Servicing Fee $750(6) $231(7)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-20-
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prime Series Shareholder
Service Fee $442,438(1,2) N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Treasury Series Shareholder
Service Fee $99,136(1,2) N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Tax-Free Series
Shareholder Service Fee $127,363(1,2) N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Received by ICC Distributors.
(2) For the period from January 12, 1999 through March 31, 1999.
(3) Of this amount, Alex. Brown, the Fund's distributor prior to August 31,
1997, received $3,204,626 (net of waivers of $54,321 for the Quality Cash
Reserve Prime Shares Class) and ICC Distributors, the Fund's distributor
effective August 31, 1997, received $5,095,289 (net of waivers of $81,870
for the Quality Cash Reserve Prime Shares Class).
(4) Of this amount, Alex. Brown, the Fund's distributor prior to August 31,
1997, received $655,375 and ICC Distributors, the Fund's distributor
effective August 31, 1997, received $1,045,002.
(5) Of this amount, Alex. Brown, the Fund's distributor prior to August 31,
1997, received $692,546 and ICC Distributors, the Fund's distributor
effective August 31, 1997, received $1,092,033.
(6) Of this amount, Alex. Brown, the Fund's distributor prior to August 31,
1997, received $315 and ICC Distributors, the Fund's distributor effective
August 31, 1997, received $435.
(7) Received by Alex. Brown.
(8) Net of fee waivers of $120,055 for the Quality Cash Reserve Prime Shares
Class.
Pursuant to the Distribution Agreement, ICC Distributors may
pay certain promotional and advertising expenses and, except in the case of the
Institutional Shares, may compensate certain registered securities dealers and
banks and other financial institutions for services provided in connection with
the processing of orders for purchase or redemption of the Fund's shares and
furnishing other shareholder services. Payments by ICC Distributors to certain
registered securities dealers are paid by ICC Distributors out of fees received
by ICC Distributors from the Fund. In addition, the Fund may enter into
Shareholder Servicing Agreements pursuant to which the Advisor or its affiliates
will provide compensation out of its own resources for ongoing shareholder
services. Specifically, ICC Distributors may compensate certain registered
securities dealers for opening accounts, processing investor purchase and
redemption orders, responding to inquiries from Fund shareholders concerning the
status of their accounts and the operations of the Fund, and communicating with
the Fund and its transfer agent on behalf of Fund shareholders. ICC Distributors
may also enter into shareholder processing and servicing agreements
("Shareholder Servicing Agreements") with any securities dealer who is
registered under the Securities Exchange Act of 1934 and is a member in good
standing of the National Association of Securities Dealers, Inc. and (except for
the Quality Cash Reserve Prime Shares) with banks and other financial
institutions who may wish to establish accounts or sub-accounts on behalf of
their customers (collectively, such securities dealers, banks and financial
institutions are referred to as "Shareholder Servicing Agents").
For 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, its
transfer agent and ICC Distributors, ICC Distributors may make payments to
Shareholder Servicing Agents out of its distribution fee. The fees payable to
Shareholder Servicing Agents under Shareholder Servicing Agreements will be
negotiated by ICC Distributors. ICC Distributors will report quarterly to the
Fund's Board of Directors on the rate to be paid under each such agreement and
the amounts paid or payable under such agreements. The rate will be based upon
ICC Distributors' analysis of: (1) the nature, quality and scope of services
being provided by the Shareholder Servicing Agent; (2) the costs incurred by the
Shareholder Servicing Agent in connection with providing services to
shareholders; (3) the amount of assets being invested in shares of the Fund; and
(4) the contribution being made by the Shareholder Servicing Agent toward
reducing the Fund's expense ratio. The
-21-
<PAGE>
provisions of the Distribution Agreement authorizing payments by ICC
Distributors for advertisements, promotional materials, sales literature and
printing and mailing of prospectuses to other than Fund shareholders and
payments by ICC Distributors and the Fund to Shareholder Servicing Agents may be
deemed to constitute payments by the Fund to support distribution.
The Glass-Steagall Act and other applicable laws, among other
things, generally prohibit federally chartered or supervised banks from engaging
in the business of underwriting, selling or distributing securities.
Accordingly, ICC Distributors will engage banks as Shareholder Servicing Agents
only to perform administrative and shareholder servicing functions. Management
of the Fund believes that such laws should not preclude a bank from acting as a
Shareholder Servicing Agent. However, judicial or administrative decisions or
interpretations of such laws as well as changes in either federal or state
statutes or regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent a bank from continuing to perform all
or a part of its servicing activities. If a bank were prohibited from so acting,
shareholder clients would be permitted to remain as Fund shareholders and
alternate means for continuing the servicing of such shareholders would be
sought. In such event, changes in the operation of the Fund might occur and
shareholders serviced by such bank might no longer be able to avail themselves
of any automatic investment or other services then being provided by such bank.
It is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.
Pursuant to Rule 12b-1 under the 1940 Act, investment
companies may pay distribution expenses directly or indirectly, only pursuant to
a plan adopted by the investment company's board of directors and approved by
its shareholders. The Fund has adopted six separate distribution plans: one for
the Flag Investors Cash Reserve Prime Class A Shares; one for the Flag Investors
Cash Reserve Prime Class B Shares; one for the Deutsche Banc Alex. Brown Cash
Reserve Prime Shares; one for the Deutsche Banc Alex. Brown Cash Reserve
Treasury Shares; one for the Deutsche Banc Alex. Brown Cash Reserve Tax-Free
Shares; and one for the Quality Cash Reserve Prime Shares (the "Plans"). Amounts
allocated to Participating Dealers or Shareholder Servicing Agents may not
exceed amounts payable to ICC Distributors under the Plans with respect to
shares held by or on behalf of customers of such entities.
The Plans will remain in effect from year to year provided
that each agreement and Plan is specifically approved at least annually by the
Fund's Board of Directors and by the affirmative vote of a majority of the
Independent Directors by votes cast in person at a meeting called for such
purpose. The Plans were most recently approved in the foregoing manner on
September 29, 1998. In approving the Plans, the directors determined, in the
exercise of their business judgment and in light of their fiduciary duties as
directors of the Fund, that there was a reasonable likelihood that such Plans
would benefit the Fund and its shareholders. Although it is a primary objective
of each Plan to reduce expenses of the Fund by fostering growth in the Fund's
net assets, there can be no assurance that this objective of each Plan will be
achieved; however, based on the data and information presented to the Board of
Directors by ICC Distributors, the Board of Directors determined that there is a
reasonable likelihood that the benefits of growth in the size of the Fund can be
accomplished under the Plan.
Each Plan will be renewed only if the directors make a similar
determination prior to each renewal term. The Plans may not be amended to
increase the maximum amount of payments by ICC Distributors to Shareholder
Servicing Agents without shareholder approval, and all material amendments to
the provisions of the Distribution Agreement relating to the Plan must be
approved by a vote of the Board of Directors and of the directors who have no
direct or indirect interest in the Plan, cast in person at a meeting called for
the purpose of such vote. When the Board of Directors of the Fund approved the
Plans, the Board of Directors requested and evaluated such information as it
deemed reasonably necessary to make an informed determination that the
agreements and Plans should be approved. The Board considered and gave
appropriate weight to all pertinent factors necessary to reach
-22-
<PAGE>
the good faith judgment that the Plans would benefit the Fund and its
shareholders. During the continuance of the Plans, ICC Distributors will report
in writing to the Fund's Board of Directors annually the amounts and purposes of
such payments for services rendered to shareholders by securities dealers and
financial institutions who have executed Shareholder Servicing Agreements.
In addition, the Deutsche Banc Alex. Brown Cash Reserve Shares
of the Prime, Treasury and Tax-Free Series have each adopted a Shareholder
Service Plan. This plan compensates Shareholder Servicing Agents for services
for which they are not otherwise being compensated under a dealer or shareholder
servicing agreement entered into pursuant to the Plan for the shares. These
plans will continue in effect from year to year only so long as such continuance
is specifically approved at least annually by the vote of the Fund's Board of
Directors.
EXPENSES
ICC and the Distributor furnish, without cost to the Fund,
such personnel as are required, subject to applicable banking laws, for the
proper conduct of the Fund's affairs and to carry out their obligations under
the Distribution Agreement and the Advisory Agreements. The Advisor maintains,
at its own expense and without cost to the Fund, trading functions in order to
carry out its obligation to place orders for the purchase and sale of portfolio
securities for the Tax-Free, Prime or Treasury Series, as appropriate. ICC
Distributors bears the expenses of printing and distributing prospectuses (other
than those prospectuses distributed to existing shareholders of the Fund) and
any other promotional or sales literature used by ICC Distributors or furnished
by ICC Distributors to purchasers or dealers in connection with the public
offering of the Fund's shares, the expenses of advertising in connection with
such public offering and all legal expenses in connection with the foregoing.
The Fund pays or causes to be paid all other expenses of the
Fund, including, without limitation: the fees of ICC Distributors and ICC; the
charges and expenses of any registrar, any custodian or depository appointed by
the Fund for the safekeeping of its cash, portfolio securities and other
property, and any share transfer, dividend or accounting agent or agents
appointed by the Fund; brokers' commissions chargeable to the Fund in connection
with portfolio securities transactions to which the Fund is a party; all taxes,
including securities issuance and transfer taxes, and fees payable by the Fund
to federal, state or other governmental agencies; the costs and expenses of
engraving or printing certificates representing shares of the Fund; all costs
and expenses in connection with the registration and maintenance of registration
of the Fund and its shares with the SEC and various states and other
jurisdictions (including filing fees, legal fees and disbursements of counsel);
the costs and expenses of printing, including typesetting, and distributing
prospectuses of the Fund and supplements thereto to the Fund's shareholders
(prospectuses distributed to prospective shareholders are paid for by ICC
Distributors); all expenses of shareholders' and directors' meetings and of
preparing, printing and mailing of proxy statements and reports to shareholders;
fees and travel expenses of directors or director members of any advisory board
or committee; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or in cash; charges
and expenses of any outside service used for pricing of the Fund's shares; fees
and expenses of legal counsel and of independent accountants, in connection with
any matter relating to the Fund; membership dues of industry associations;
interest payable on Fund borrowings; postage; insurance premiums on property or
personnel (including officers and directors) of the Fund which inure to its
benefit; extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification related thereto); and
all other charges and costs of the Fund's operations unless otherwise explicitly
assumed by ICC Distributors, or ICC.
Expenses which are attributable to any of the Fund's three
Series are charged against the income of such Series in determining net income
for dividend purposes. Expenses of the Fund which are
-23-
<PAGE>
not directly attributable to the operations of a particular Series are allocated
among the Series based upon the relative net assets of each Series. Expenses
attributable to a class of shares of a Series are allocated to that class.
PORTFOLIO TRANSACTIONS
The Advisor is responsible for decisions to buy and sell
securities for the Fund, broker-dealer selection and negotiation of commission
rates. Since purchases and sales of portfolio securities by the Fund are usually
principal transactions, the Fund incurs little or no brokerage commissions.
Portfolio securities are normally purchased directly from the issuer or from a
market maker for the securities. The purchase price paid to dealers serving as
market makers may include a spread between the bid and asked prices. The Fund
may also purchase securities from underwriters at prices which include a
commission paid by the issuer to the underwriter. During the fiscal years ended
March 31, 1999, March 31, 1998, and March 31, 1997, the Fund incurred no
brokerage commissions.
The Fund does not seek to profit from short-term trading, and
will generally (but not always) hold portfolio securities to maturity. The
Fund's fundamental policies require that investments mature within one year or
less, and the amortized cost method of valuing portfolio securities requires
that the Fund maintain an average weighted portfolio maturity of 90 days or
less. Both policies may result in relatively high portfolio turnover, but since
brokerage commissions are not normally paid on money market instruments, the
high rate of portfolio turnover is not expected to have a material effect on the
Fund's net income or expenses.
The Advisor's primary consideration in effecting a security
transaction is to obtain the best net price and the most favorable execution of
the order. To the extent that the executions and prices offered by more than one
dealer are comparable, the Advisor may, at its discretion, effect transactions
with dealers that furnish statistical, research or other information or services
which are deemed by the Advisor to be beneficial to the Fund's investment
program. Certain research services furnished by dealers may be useful to the
Advisor with clients other than the Fund. Similarly, any research services
received by the Advisor through placement of portfolio transactions of other
clients may be of value to the Advisor in fulfilling its obligations to the
Fund. The Advisor is of the opinion that the material received is beneficial in
supplementing its research and analysis, and, therefore, may benefit the Fund by
improving the quality of its investment advice. The advisory fee paid by the
Fund is not reduced because the Advisor receives such services. During the
fiscal years ended March 31, 1999, March 31, 1998, and March 31, 1997, the
Advisor directed no transactions to dealers and paid no related commissions
because of research services provided to the Fund.
-24-
<PAGE>
The Fund is required to identify any securities of its
"regular brokers or dealers" (as such term is defined in the 1940 Act) which the
Fund has acquired during its most recent fiscal year. As of March 31, 1999, the
Fund held a 4.90% repurchase agreement issued by Goldman Sachs & Co. valued at
$85,721,970. Goldman Sachs & Co. is a regular broker-dealer of the Fund.
The Advisor and its affiliates manage several other investment
accounts, some of which may have objectives similar to that of the Fund. It is
possible that at times, identical securities will be acceptable for one or more
of such investment accounts. However, the position of each account in the
securities of the same issue may vary and the length of time that each account
may choose to hold its investment in the securities of the same issue may
likewise vary. The timing and amount of purchase by each account will also be
determined by its cash position. If the purchase or sale of securities
consistent with the investment policies of the Fund and one or more of these
accounts is considered at or about the same time, transactions in such
securities will be allocated in good faith among the Fund and such accounts in a
manner deemed equitable by the Advisor. The Advisor may combine such
transactions, in accordance with applicable laws and regulations, in order to
obtain the best net price and most favorable execution. The allocation and
combination of simultaneous securities purchases on behalf of the Fund's three
series will be made in the same way that such purchases are allocated among or
combined with those of other such investment accounts. Simultaneous transactions
could adversely affect the ability of the Fund to obtain or dispose of the full
amount of a security which it seeks to purchase or sell.
Portfolio securities will not be purchased from or sold to or
through any "affiliated person" of the Advisor, as defined in the 1940 Act. In
making decisions with respect to purchase of portfolio securities for the Fund,
the Advisor will not take into consideration whether a dealer or other financial
institution has executed a Shareholder Servicing Agreement with ICC
Distributors.
Provisions of the 1940 Act and rules and regulations
thereunder have been construed to prohibit the Fund's purchasing securities or
instruments from or through, or selling securities or instruments to or through,
any holder of 5% or more of the voting securities of any investment company
managed or advised by the Advisor. The Fund has obtained an order of exemption
from the SEC which permits the Fund to engage in such transactions with a 5%
holder, if the 5% holder is one of the 50 largest U.S. banks measured by
deposits. Purchases from these 5% holders are subject to quarterly review by the
Fund's Board of Directors, including the Independent Directors. Additionally,
such purchases and sales are subject to the following conditions:
(1) The Fund will maintain and preserve a written copy of the
internal control procedures for the monitoring of such
transactions, together with a written record of any such
transactions setting forth a description of the security
purchased or sold, the identity of the purchaser or seller,
the terms of the purchase or sale transactions and the
information or materials upon which the determinations to
purchase or sell each security were made;
(2) Each security to be purchased or sold by the Fund will be:
(i) consistent with the Fund's investment policies and
objectives; (ii) consistent with the interests of the Fund's
shareholders; and (iii) comparable in terms of quality, yield,
and maturity to similar securities purchased or sold during a
comparable period of time;
(3) The terms of each transaction will be reasonable and fair
to the Fund's shareholders and will not involve overreaching
on the part of any person; and
(4) Each commission, fee, spread or other remuneration
received by a 5% holder will be reasonable and fair compared
to the commission, fee, spread or other remuneration received
by other brokers or dealers in connection with comparable
transactions involving
-25-
<PAGE>
similar securities purchased or sold during a comparable
period of time and will not exceed the limitations set forth
in Section 17(e)(2) of the 1940 Act.
SEMI-ANNUAL REPORTS
The Fund furnishes shareholders with semi-annual reports
containing information about the Fund and its operations, including a schedule
of investments held in the Fund's portfolios and its financial statements.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 250 West Pratt Street, Baltimore,
Maryland, 21201, are the independent accountants to the Fund.
SUB-ACCOUNTING
The Fund and ICC have arranged for PFPC to offer
sub-accounting services to Fund shareholders and maintain information with
respect to underlying owners. Investors, such as financial institutions,
investment counselors and brokers, who purchase shares for the account of
others, can make arrangements through the Fund or ICC for these sub-accounting
services.
LEGAL MATTERS
Morgan, Lewis & Bockius LLP serves as counsel to the Fund.
TRANSFER AGENT, CUSTODIAN AND ACCOUNTING SERVICES
Bankers Trust Company ("Bankers Trust") serves as custodian of
the Fund's investments. Bankers Trust receives such compensation from the Fund
for its services as custodian as may be agreed to from time to time by Bankers
Trust and the Fund. For the fiscal year ended March 31, 1999, Bankers Trust was
paid $604,985 as compensation for providing custody services to the Fund. ICC,
the Fund's investment advisor, provides accounting services for each Series. In
addition, ICC serves as the Fund's transfer and dividend disbursing agent. ICC
receives such compensation from the Fund (or, with respect to accounting fees,
from the Tax-Free, Prime or Treasury Series, as appropriate) for services in
such capacities as are agreed to from time to time by ICC and the Fund.
As compensation for providing accounting services to each
Series of the Fund, ICC receives an annual fee, calculated daily and paid
monthly as shown below.
<TABLE>
<CAPTION>
Average Daily Net Assets Incremental Annual Accounting Fee Per Series
------------------------ --------------------------------------------
<S> <C>
$ 0 - $ 10,000,000 $13,000(fixed fee)
$ 10,000,000 - $ 20,000,000 0.100%
$ 20,000,000 - $ 30,000,000 0.080%
$ 30,000,000 - $ 40,000,000 0.060%
$ 40,000,000 - $ 50,000,000 0.050%
$ 50,000,000 - $ 60,000,000 0.040%
$ 60,000,000 - $ 70,000,000 0.030%
$ 70,000,000 - $ 100,000,000 0.020%
$100,000,000 - $ 500,000,000 0.015%
$500,000,000 - $1,000,000,000 0.005%
over $1,000,000,000 0.001%
</TABLE>
In addition, each Series, as appropriate, will reimburse ICC
for the following out-of-pocket expenses incurred in connection with ICC's
performance of accounting services for such Series: express delivery,
independent pricing and storage.
For the fiscal year ended March 31, 1999, ICC received fees of
$167,901 for providing accounting services to the Prime Series, $134,044 for
providing accounting services to the Treasury Series and $137,933 for providing
accounting services to the Tax-Free Series.
As compensation for providing transfer agency services, the
Fund pays ICC up to $18.13 per account per year plus reimbursement for
out-of-pocket expenses incurred in connection therewith. For the fiscal year
ended March 31, 1999, such fees totaled $2,213,530 for the Prime Series,
$303,231 for the Treasury Series and $127,823 for the Tax-Free Series,
respectively.
-26-
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
To Fund management's knowledge, the following persons owned
beneficially or of record 5% or more of the outstanding shares of a class of the
Fund, as of May 11, 1999.*
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Name and Address Owned of Beneficially Percentage of Ownership
Record Owned
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alex. Brown & Sons Inc X 13.86% of Prime Institutional
A/C 0021031411 Shares
PO Box 1346
Baltimore, MD 21203-1346
- ------------------------------------------------------------------------------------------------------------------
Alex. Brown & Sons Inc X 6.53% of Prime Institutional
A/C 00024769660 Shares
PO Box 1346
Baltimore, MD 21203-1346
- ------------------------------------------------------------------------------------------------------------------
Alex. Brown & Sons Inc X X 23.63% of Prime Institutional
A/C 0025010788 Shares
Brown Advisory House Acct
PO Box 1346
Baltimore, MD 21203-1346
- ------------------------------------------------------------------------------------------------------------------
Alex. Brown & Sons Inc X 5.33% of Tax-Free Institutional
A/C 00020170070 Shares
PO Box 1346
Baltimore, MD 21203-1346
- ------------------------------------------------------------------------------------------------------------------
Alex. Brown & Sons Inc X 5.93% of Tax-Free Institutional
A/C 23171040 Shares
PO Box 1346
Baltimore, MD 21203-1346
- ------------------------------------------------------------------------------------------------------------------
Alex. Brown & Sons Inc X 54.86% of Tax-Free Institutional
A/C 25010788 Shares
Brown Investment Advisory House
Acct.
PO Box 1346
Baltimore, MD 21203-1346
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-27-
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Alex. Brown & Sons Inc X X 31.17% of Tax-Free Institutional
A/C 0025010788 Shares
Brown Investment Advisory House
Acct.
PO Box 1346
Baltimore, MD 21203-1346
- ------------------------------------------------------------------------------------------------------------------
Brown Advisory Trust X 14.92% of Tax-Free Institutional
FBO 01-01-170-7356004 Shares
1 South Street
Baltimore, MD 21202
- ------------------------------------------------------------------------------------------------------------------
Frank Powell Sr Tr X 6.93% of Prime Class B Shares
U/A 01/01/87
FTP Inc Retirement Account
FBO Frank Powell Sr
PO Box 469
Old Bridge, NJ
- ------------------------------------------------------------------------------------------------------------------
Inv Fiduciary Trust Co Cust X 5.86% of Prime Class B Shares
IRA r/o Gary D Lehman
1716 Willow Drive
Easton, PA 18040-8130
- ------------------------------------------------------------------------------------------------------------------
Legg Mason Wood Walker Inc X 8.30% of Prime Class B Shares
301-08123-15
PO Box 1476
Baltimore, MD 21203-1476
- ------------------------------------------------------------------------------------------------------------------
US Clearing Corp X 5.60% of Prime Class B Shares
FBO 136-40509-12
26 Broadway
New York, NY 10004-1703
- ------------------------------------------------------------------------------------------------------------------
BT Alex. Brown Incorporated X 7.47% of Prime Class B Shares
FBO 223-08887-17
PO Box 1346
Baltimore, MD 21203-1346
- ------------------------------------------------------------------------------------------------------------------
Prudential Securities Inc. FBO X 6.70% of Prime Class B Shares
Mr. Robert Renna
IRA dtd 02/22/85
2799 SE Bluem Way
Port St. Lucie, FL 34952-5777
- ------------------------------------------------------------------------------------------------------------------
BT Alex. Brown Incorporated X 11.43% of Prime Class A Shares
FBO 204-81237-11
PO Box 1346
Baltimore, MD 21203-1346
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
As of May 11, 1999, the directors and officers of the Fund
owned an aggregate of less than 1% of the Fund's shares or any class thereof.
- -----------------------------------------
* To Fund management's knowledge, BT Alex. Brown Incorporated owned less than 1%
of any Series of the Fund, as of May 11, 1999.
-28-
<PAGE>
CURRENT YIELD
Set forth below are the current, effective and
taxable-equivalent yields, as applicable, for each class or series of the Fund's
shares for the seven-day period ended March 31, 1999.
<TABLE>
<CAPTION>
Series or class Current Yield Effective Yield Taxable-Equivalent Yield***
- --------------- ------------- --------------- ---------------------------
<S> <C> <C> <C>
Prime Series* 4.27% 4.36% N/A
Institutional Prime Shares 4.57% 4.67% N/A
Quality Cash Reserve Prime Shares 3.97% 4.05% N/A
Flag Investors Cash Reserve Prime B Shares 3.56% 3.63% N/A
Cash Reserve Treasury Shares 3.97% 4.04% N/A
Institutional Treasury Shares 4.26% 4.35% N/A
Cash Reserve Tax-Free Shares 2.39% 2.41% 2.41%
Institutional Tax-Free Shares 2.69% 2.72% 2.72%
</TABLE>
- -----------------------
* Cash Reserve Prime Shares and Flag Investors Cash Reserve Prime Class A
Shares.
** Assumes a tax rate of 31%.
The yield for each Series of the Fund can be obtained by
calling your Participating Dealer or Shareholder Servicing Agent. Quotations of
yield on each Series of the Fund may also appear from time to time in the
financial press and in advertisements.
The current yields quoted will be the net average annualized
yield for an identified period, usually seven consecutive calendar days. Yield
for each Series or class will be computed by assuming that an account was
established with a single share of a Series (the "Single Share Account") on the
first day of the period. To arrive at the quoted yield, the net change in the
value of that Single Share Account for the period (which would include dividends
accrued with respect to the share, and dividends declared on shares purchased
with dividends accrued and paid, if any, but would not include realized gains
and losses or unrealized appreciation or depreciation) will be multiplied by 365
and then divided by the number of days in the period, with the resulting figure
carried to the nearest hundredth of one percent. The Fund may also furnish a
quotation of effective yield for each Series or class that assumes the
reinvestment of dividends for a 365 day year and a return for the entire year
equal to the average annualized yield for the period, which will be computed by
compounding the unannualized current yield for the period by adding 1 to the
unannualized current yield, raising the sum to a power equal to 365 divided by
the number of days in the period, and then subtracting 1 from the result.
In addition, the Fund may furnish a quotation of the Tax-Free
Series' taxable-equivalent yield, which will be computed by dividing the
tax-exempt portion of such Series' effective yield for a stated consecutive
seven day period by one minus the investor's income tax rate and adding the
product to the portion of the yield for the same consecutive seven day period
that is not tax-exempt. The resulting yield is what the investor would need to
earn from a taxable investment in order to realize an after-tax benefit equal to
the tax-free yield provided by the Tax-Free Series.
-29-
<PAGE>
Historical yields are not necessarily indicative of future yields.
Rates of return will vary as interest rates and other conditions affecting money
market instruments change. Yields also depend on the quality, length of maturity
and type of instruments in each of the Fund's Series and each Series' or class'
operating expenses. Quotations of yields will be accompanied by information
concerning the average weighted maturity of the portfolio of a Series.
Comparison of the quoted yields of various investments is valid only if yields
are calculated in the same manner and for identical limited periods. When
comparing the yield for either Series of the Fund with yields quoted with
respect to other investments, shareholders should consider (a) possible
differences in time periods, (b) the effect of the methods used to calculate
quoted yields, and (c) the quality and average-weighted maturity of portfolio
investments, expenses, convenience, liquidity and other important factors.
FINANCIAL STATEMENTS
See next page.
-30-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
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
------------
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
------------
187,928,716
------------
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
-31-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating (d)
---------- Par
PRIME SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Commercial Paper (continued)
- --------------------------------------------------------------------------------
Beverages - Soft Drinks (continued)
4.81% 5/28/99 A-1+ P-1 $50,000 $ 49,619,604
4.78% 5/21/99 A-1+ P-1 20,000 19,867,222
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
------------
153,181,086
------------
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
------------
152,540,493
------------
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
------------
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
------------
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
------------
156,854,168
------------
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
------------
64,010,269
------------
-32-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating (d)
---------- Par
PRIME SERIES (continued) 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
------------
243,013,150
------------
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
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
------------
Finance, Leasing - 2.6%
International Lease Finance 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
-33-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating (d)
---------- Par
PRIME SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Commercial Paper (continued)
- --------------------------------------------------------------------------------
Finance, Leasing (continued)
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
------------
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
------------
-34-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating (d)
---------- Par
PRIME SERIES (continued) 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
-35-
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating (d)
------------- Par
PRIME SERIES (continued) S&P Moody's (000) Value
COMMERCIAL PAPER (continued)
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 - Notes
(Cost $64,962,777) 64,962,777
------------
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating (d)
---------- Par
PRIME SERIES (continued) 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
4.70% 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
------------
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating (d)
----------- Par
PRIME SERIES (concluded) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 2.0%b
Goldman Sachs & Co.
4.90% 4/1/99e $ 85,721 $85,721,970
------------
TOTAL REPURCHASE AGREEMENT
(Cost $85,721,970) 85,721,970
------------
TOTAL INVESTMENTS--100.1%
(Cost $4,219,048,132)c $4,219,048,132
LIABILITIES IN EXCESS OF OTHER ASSETS, NET--(0.1)% (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 / 3,727,906,079 shares outstanding) $1.00
=====
Flag Investors Class A Share
($13,028,272 / 13,027,769 shares outstanding) $1.00
=====
Flag Investors Class B Share
($2,355,863 / 2,355,780 shares outstanding) $1.00
=====
Institutional Prime Share
($388,447,492 / 388,440,636 shares outstanding) $1.00
=====
Quality Cash Reserve Prime Share
($81,944,555 / 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 tri party repurchase agreements held 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
accountants.
(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.
See Notes to Financial Statements
-38-
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Maturity Par
TREASURY SERIES Date (000) Value
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS(a) - 71.5%
4.370% 4/1/99 $ 250 $ 250,000
4.400% 14/1/99 14,180 14,180,000
4.425% 4/1/99 18,815 18,815,000
4.305% 4/15/99 2,360 2,356,049
4.820% 4/15/99 560 558,950
4.850% 4/15/99 32,945 32,882,862
4.260% 4/22/99 22,310 22,254,560
4.470% 4/22/99 5,130 5,116,624
4.485% 4/22/99 75,000 74,803,781
4.730% 4/22/99 39,730 39,620,378
4.745% 4/22/99 45,000 44,875,444
4.800% 4/22/99 11,590 11,557,548
4.405% 5/13/99 20,000 19,897,217
4.410% 5/13/99 79,880 79,469,017
4.415% 5/20/99 30,000 29,819,721
4.400% 5/27/99 7,715 7,662,195
4.420% 5/27/99 16,680 16,565,316
4.430% 5/27/99 16,550 16,435,952
4.450% 5/27/99 32,385 32,160,824
4.470% 5/27/99 2,400 2,383,312
4.485% 5/27/99 38,000 37,734,887
4.490% 5/27/99 3,615 3,589,751
4.530% 5/27/99 25,000 24,823,833
4.390% 6/10/99 50,000 49,573,194
4.470% 6/10/99 41,000 40,643,642
4.505% 6/10/99 42,685 42,311,091
4.380% 6/24/99 1,155 1,143,196
-------------
Total U.S. Treasury Bills $ 671,484,344
-------------
-39-
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Maturity Par
TREASURY SERIES (concluded) Date (000) Value
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES - 31.4%
6.375% 4/30/99 $ 35,000 $ 35,047,578
6.500% 4/30/99 171,414 171,677,367
6.000% 6/30/99 30,000 30,102,434
6.750% 6/30/99 23,000 23,112,381
6.375% 7/15/99 15,000 15,067,252
6.875% 8/31/99 20,210 20,386,466
------------
Total U.S. Treasury Notes 295,393,477
------------
TOTAL U.S. TREASURY SECURITIES 966,877,821
------------
TOTAL INVESTMENTS--102.9%
(Cost $933,994,942) $ 966,877,821b
LIABILITIES IN EXCESS OF ASSETS--(2.9)% (27,615,002)
-------------
TOTAL NET ASSETS--100.0% $ 939,262,819
=============
Net Asset Value, Offering and Redemption Price Per:
Treasury Share
($816,700,318 / 816,622,190 shares outstanding) $1.00
=====
Institutional Treasury Share
($122,561,713 / 122,561,713 shares outstanding) $1.00
=====
- ------------
(a) U.S. Treasury bills are traded on a discount basis. In such cases, the
interest rate shown represents the yield at the date of purchase.
(b) Aggregate cost for financial reporting and federal tax purposes.
See Notes to Financial Statements
-40-
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
------------ Par
TAX-FREE SERIES S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Alabama - 1.4%
Alabama Housing Finance Authority,
Multifamily Housing, Refunding RB
(Heatherbrooke Project), (Guaranteed
by FNMA), Variable Rate Weekly
Demand Note, 3.00%, 6/15/26(a) A-1+ -- $9,900 $ 9,900,000
Alabama Housing Finance Authority,
Multifamily Housing, Refunding RB
(Rime Village Hoover Project),
(Guaranteed by FNMA), Variable Rate
Weekly Demand Note, 3.00%, 6/15/26(a) A-1+ -- 5,800 5,800,000
-------------
15,700,000
-------------
Arizona - 0.1%
Phoenix, Arizona, G.O., Series A
3.75%, 7/1/99 AA+ Aa1 1,200 1,202,054
-------------
Arkansas - 0.2%
Arkansas State Development Finance
Authority Health Care Facilities,
(Sisters of Mercy Health), Series B,
Variable Rate Weekly Demand Note,
3.00%, 6/1/12(a) AA+ VMIG-1 1,800 1,800,000
-------------
Colorado - 3.5%
Colorado Health Facilities Authority
Revenue, (Catholic Health
Initiatives), Series B,
Variable Rate Weekly
Demand Note, 3.00%, 12/1/25(a) A-1+ VMIG-1 11,800 11,800,000
Colorado Housing Finance Authority,
Multifamily Housing, (Huntington
Project), (Guaranteed by FNMA),
Variable Rate Weekly Demand Note,
3.00%, 10/15/16(a) A-1+ -- 2,400 2,400,000
Colorado Housing Finance Authority,
Multifamily Housing, (Loretto
Project), (Guaranteed by FNMA),
Variable Rate Weekly Demand Note,
3.00%, 10/15/16(a) A-1+ -- 9,100 9,100,000
-41-
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating* Par
- --------------------------------------------------------------------------------
TAX-FREE SERIES (continued) S&P Moody's (000) Value
Colorado (continued)
Colorado Housing Finance Authority,
Multifamily Housing, (Silver Reef
Project), (Guaranteed by FNMA),
Variable Rate Weekly Demand Note,
3.00%, 10/15/16(a) A-1+ -- $ 9,490 $ 9,490,000
Colorado State, General Fund Revenue,
TRAN, Series A, 4.25%, 6/25/99 SP-1+ -- 4,000 4,006,694
Platte River Power Authority,
Colorado, Series D, (MBIA Insured),
5.00%, 6/1/99 AAA Aaa 2,320 2,328,032
-------------
39,124,726
-------------
Delaware - 0.4%
Delaware State, G.O., Series A
4.60%, 3/1/00 AA+ Aa1 1,000 1,013,400
Delaware State, G.O., Series B
5.00%, 5/1/99 AA+ Aa1 1,500 1,501,592
Delaware State, G.O., Series B
6.85%, 5/1/99 AA+ Aa1 1,750 1,754,289
-------------
4,269,281
-------------
Florida - 1.3%
Florida State, Department of
Environmental Preservation
2000-B, (FSA Insured),
4.50%, 7/1/99 AAA Aaa 1,000 1,002,425
Sunshine State, Local Government,
Financing Commission, Adj Rate
Revenue Bonds, (AMBAC Insured),
Tax Exempt Commercial Paper Mode,
3.05%, 7/28/99 -- VMIG-1 5,000 5,000,000
Sunshine State, Local Government,
Financing Commission, Adj Rate
Revenue Bonds, (AMBAC Insured),
Tax Exempt Commercial Paper Mode,
3.10%, 8/6/99 -- VMIG-1 7,000 7,000,000
Tampa Health Facilities Authority RB,
(Lifelink Foundation Inc. Project),
(LOC: SunTrust Bank), Variable Rate
Weekly Demand Note, 3.10%, 8/1/22(a) -- Aa3 1,500 1,500,000
-------------
14,502,425
-------------
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Georgia - 5.9%
Cobb County, Georgia, Housing
Authority, (Post Mill Project),
(Guaranteed by FNMA), Variable
Rate Weekly Demand Note,
3.00%, 6/1/25(a) A-1+ -- $ 9,380 $ 9,380,000
Columbus County, Georgia, Housing
Authority Revenue, (Columbus State
University Foundation, Inc.),
(LOC: SunTrust Bank), Variable
Rate Weekly Demand Note,
3.10%, 11/7/17(a) -- Aa3 2,300 2,300,000
De Kalb County, Georgia, Housing
Authority, Multifamily Housing,
(Camden Brook Project), (Guaranteed
by FNMA), Variable Rate Weekly
Demand Note, 3.05%, 6/15/25(a) A-1+ -- 5,400 5,400,000
De Kalb County, Georgia, Housing
Authority, Multifamily Housing,
(Clairmont Crest Project),
(Guaranteed by FNMA), Variable
Rate Weekly Demand Note,
3.05%, 6/15/25(a) A-1+ -- 1,400 1,400,000
De Kalb County, Georgia, Housing
Authority, Multifamily Housing,
(Post Ashford Project),
(Guaranteed by FNMA), Variable
Rate Weekly Demand Note,
3.00%, 6/1/25(a) A-1+ -- 7,895 7,895,000
Fulton County, Georgia, Development
Authority Revenue (Georgia Tech
Athletic Association Project),
(LOC: SunTrust Bank), Variable
Rate Weekly Demand Note,
3.10%, 7/1/14(a) -- Aa3 8,050 8,050,000
Georgia State, G.O., Series A,
7.25%, 9/1/99 AAA Aaa 5,660 5,743,969
Macon-Bibb County, Georgia, Hospital
Authority Revenue, (Medical Center
of Central Georgia), (LOC: SunTrust
Bank), Variable Rate Weekly
Demand Note, 3.10%, 8/1/18 -- Aa3 2,900 2,900,000
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating*
----------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Georgia (continued)
Macon-Bibb County, Georgia, Hospital
Authority Revenue, (Medical Center
of Central Georgia), (LOC: SunTrust
Bank), Variable Rate Weekly Demand
Note, 3.10%, 12/1/18(a) A-1+ Aa3 $ 5,000 $ 5,000,000
Municipal Electric Authority of
Georgia, Project One Bonds, Tax
Exempt Commercial Paper Mode,
(LOC: Morgan Guaranty Trust),
3.10%, 7/9/99 A-1+ VMIG-1 3,000 3,000,000
Roswell Housing Authority,
Multifamily Housing, (Post Canyon
Project), (Guaranteed by FNMA),
Variable Rate Weekly Demand Note,
3.00%, 6/1/25(a) A-1+ -- 5,500 5,500,000
Smyrna Housing Authority, Multifamily
Housing, (F&M Villages Project),
(Guaranteed by FNMA), Variable Rate
Weekly Demand Note, 3.00%, 6/6/25(a) A-1+ -- 9,700 9,700,000
-------------
66,268,969
-------------
Idaho - 0.5%
Idaho State, TANS 4.50%, 6/30/99 SP-1+ MIG-1 5,500 5,515,373
-------------
Illinois - 9.6%
Chicago, Illinois, G.O. Adjustable
Tender Notes, (LOC: Morgan
Guaranty Trust), 2.85%, 10/28/99 A-1+ VMIG-1 4,500 4,500,000
Chicago, Illinois, Metro. Water
Reclamation District, G.O.,
4.15%, 12/1/99 AA Aa2 1,000 1,007,329
Chicago, Illinois, Metro. Water
Reclamation District, G.O.,
4.70%, 12/1/99 AA Aa2 1,500 1,515,745
Illinois Development Finance
Authority, P.C.R., (Commonwealth
Edison Company Project), Series C,
(LOC: ABN AMRO Bank N.V.), Variable
Rate Weekly Demand Note,
3.05%, 3/1/09(a) A-1+ P-1 7,700 7,700,000
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
----------- Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Illinois (continued)
Illinois Development Finance
Authority, P.C.R., (Illinois Power
Company Project), Series A,
(LOC: ABN Amro Bank N.V.),
Variable Rate Weekly Demand Note,
3.00%, 11/1/28(a) A-1+ VMIG-1 $ 2,500 $ 2,500,000
Illinois Development Finance
Authority, P.C.R., (Illinois Power
Company Project), Series B,
(LOC: ABN Amro Bank N.V.),
Variable Rate Weekly Demand
Note, 3.05%, 11/1/28(a) A-1+ VMIG-1 2,700 2,700,000
Illinois Development Finance
Authority, (Provena Health),
Series B, (MBIA Insured),
Variable Rate Daily Demand
Note, 3.20%, 5/1/28(a) A-1+ VMIG-1 4,400 4,400,000
Illinois Development Finance
Authority, (Provena Health),
Series C, (MBIA Insured),
Variable Rate Weekly
Demand Note, 3.00%, 5/1/28(a) A-1+ VMIG-1 3,000 3,000,000
Illinois Development Finance
Authority Revenue, (Chicago Symphony
Orchestra), (LOC: Northern Trust),
Variable Rate Weekly Demand Note,
2.95%, 12/1/28(a) A-1+ VMIG-1 11,300 11,300,000
Illinois Development Finance
Authority Revenue, (Fenwick High
School Project), (LOC: Northern
Trust), Variable Rate Weekly
Demand Note, 2.95%, 3/1/32(a) A-1+ -- 8,200 8,200,000
Illinois Educational Facilities
Authority, (Field Museum of Natural
History), (LOC: Northern Trust),
2.90%, 11/1/25, Mandatory
Put - 11/23/99 @ $100 -- VMIG-1 10,000 10,000,000
Illinois Health Facilities Authority,
(Evanston Hospital Corp. Project),
3.70%, 8/15/30 Mandatory
Put - 7/15/99 @ $100 A-1+ VMIG-1 5,000 5,000,000
Illinois Health Facilities Authority,
(Gottlieb Health Resources, Inc.),
(LOC: Harris Trust and Savings Bank),
Variable Rate Weekly Demand Note,
2.95%, 11/15/24 -- VMIG-1 2,500 2,500,000
-45-
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BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Illinois (continued)
Illinois Health Facilities Authority,
(Gottlieb Health Resources, Inc.),
(LOC: Harris Trust and Savings Bank),
Variable Rate Weekly Demand Note,
2.95%, 11/15/25(a) -- VMIG-1 $6,300 $ 6,300,000
Illinois Health Facilities Authority,
(Northwestern Memorial Hospital),
Variable Rate Daily Demand Note,
3.10%, 8/15/25(a) A-1+ VMIG-1 10,900 10,900,000
Illinois Health Facilities Authority,
Revolving Fund, Pooled Financing
Program (University of Chicago
Project), 2.95%, 8/1/15 Mandatory
Put - 5/3/99 @ $100 A-1+ VMIG-1 10,000 10,000,000
Illinois Health Facilities Authority,
Series A, (Evanston Hospital Corp.
Project), 3.15%, 3/15/25 Mandatory
Put - 8/2/99 @ $100 A-1+ VMIG-1 10,000 10,000,000
Illinois State, G.O., (MBIA Insured)
5.38%, 5/1/99 AAA Aaa 2,500 2,503,485
Illinois State, Sales Tax Revenue,
Series U, 4.50%, 6/15/99 AAA Aa2 1,000 1,003,047
Illinois State, Sales Tax Revenue,
Series V, 5.63%, 6/15/99 AAA Aa2 1,000 1,005,294
Schaumburg, Illinois, Series A,
Variable Rate Weekly Demand Note,
3.00%, 12/1/13(a) A-1+ VMIG-1 1,200 1,200,000
-------------
107,234,900
-------------
Indiana - 2.8%
Indiana Health Facilities Authority,
(Charity Obligated Group),
Series F, Variable Rate Weekly
Demand Note, 2.90%, 11/1/26(a) A-1+ VMIG-1 1,700 1,700,000
Purdue University, Student Fee Bonds,
Series K, Variable Rate Weekly
Demand Note, 2.90%, 7/1/20(a) A-1+ VMIG-1 20,625 20,625,000
Purdue University, Student Fee Bonds,
Series L, Variable Rate Weekly
Demand Note, 2.90%, 7/1/20(a) A-1+ VMIG-1 9,000 9,000,000
-------------
31,325,000
-------------
-46-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Iowa - 0.3%
Iowa Finance Authority, Hospital
Facilities Revenue, (Iowa Health
System), Series B, (AMBAC Insured),
Variable Rate Weekly Demand Note,
3.05%, 7/1/20 (a) A-1+ VMIG-1 $ 2,900 $ 2,900,000
-------------
Kansas - 0.1%
Johnson County, Kansas, Union School
District No. 229, G.O., Series A,
6.40%, 10/1/99 AA Aa1 1,195 1,214,906
-------------
Kentucky - 0.2%
Kentucky Asset/Liability Commission,
General Fund, TRAN, Series B,
4.00%, 6/25/99 SP-1+ MIG-1 2,500 2,503,811
-------------
Louisiana - 2.6%
East Baton Rouge Parish, Louisiana,
P.C.R., (Georgia Pacific Corp.),
(LOC: Wachovia Bank), Variable
Rate Weekly Demand Note,
3.00%, 10/1/99(a) -- P-1 3,800 3,800,000
Louisiana Offshore Terminal Authority,
Deepwater Port Revenue, First Stage
1991A (Loop Inc.), (LOC: Morgan
Guaranty Trust), Variable Rate
Weekly Demand Note, 2.95%,
9/1/17(a) A-1+ VMIG-1 17,610 17,610,000
Louisiana Offshore Terminal Authority,
Deepwater Port Revenue, First
Stage 1991A (Loop Inc.), (LOC:
UBS AG), Variable Rate Daily
Demand Note, 3.15%, 9/1/06(a) -- VMIG-1 7,600 7,600,000
-------------
29,010,000
-------------
-47-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Maryland - 4.7%
Baltimore County, Maryland,
Metropolitan District 61st Issue,
G.O., 6.75%, 4/1/99 AAA Aaa $ 1,000 $ 1,000,000
Community Development Administration
Multifamily Development, (Avalon Lea
Apartments Project), (Guaranteed by
FNMA), Variable Rate Weekly Demand
Note, 2.90%, 6/15/26(a) -- VMIG-1 6,800 6,800,000
Community Development Administration
Multifamily Development, (Avalon
Ridge Apartments Project), (Guaranteed
by FNMA), Variable Rate Weekly
Demand Note, 2.90%, 6/15/26(a) -- VMIG-1 12,400 12,400,000
Frederick County, Maryland, BAN,
Variable Rate Weekly Demand Note,
3.05%, 10/1/07(a) A-1+ VMIG-1 2,800 2,800,000
Maryland State, G.O., 6.00%, 7/15/99 AAA Aaa 3,310 3,340,411
Maryland State, G.O., 6.70%, 7/15/99 AAA Aaa 1,000 1,008,670
Maryland State, G.O., 6.75%, 10/15/99
3,000 3,056,739 Maryland
State Health & Higher Educational
Facilities Authority, (Charity
Obligated Group), Series F,
Variable Rate Weekly Demand Note,
2.85%, 11/1/17(a) A-1+ VMIG-1 12,700 12,700,000
Montgomery County, Maryland, G.O.,
Series A, 4.88%, 5/1/99 AAA Aaa 4,060 4,063,815
Washington Suburban Sanitary District,
G.O., Variable Rate Weekly Demand
Note, 3.05%, 8/1/04(a) A-1+ VMIG-1 5,000 5,000,000
Washington Suburban Sanitary District,
Water Supply, G.O., 4.00%, 6/1/99 AA Aa1 1,200 1,200,579
-------------
53,370,214
-------------
-48-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Massachusetts - 2.9%
Massachusetts Bay Transit Authority,
RAN, Series A, 3.50%, 2/25/00 SP-1+ MIG-1 $10,500 $ 10,533,007
Massachusetts State, G.O., Series A,
Variable Rate Weekly Demand Note,
2.85%, 9/1/16(a) A-1+ VMIG-1 18,100 18,100,000
Massachusetts State, G.O., Series B,
Variable Rate Weekly Demand Note,
2.85%, 9/1/16(a) A-1+ VMIG-1 4,000 4,000,000
-------------
32,633,007
-------------
Michigan - 6.1%
Detroit Michigan Water Supply System,
(FGIC Insured), Variable Rate Weekly
Demand Note, 3.00%, 7/1/13(a) A-1+ VMIG-1 2,000 2,000,000
Michigan State Building Authority,
Series 2, (LOC: Canadian Imperial
Bank), Tax Exempt Commercial
Paper, 3.15%, 8/5/99(a) A-1+ P-1 5,600 5,600,000
Michigan State Hospital Finance
Authority, (Charity Obligated Group),
Variable Rate Weekly Demand Note,
2.90%, 11/1/11(a) A-1+ VMIG-1 3,320 3,320,000
Michigan State Hospital Finance
Authority, (Charity Obligated Group),
Variable Rate Weekly Demand Note,
2.90%, 11/1/18 A-1+ VMIG-1 4,450 4,450,000
Michigan State, Strategic Fund,
(Consumer Power Project), P.C.R.,
(LOC: Canadian Imperial Bank),
Variable Rate Daily Demand Note,
3.10%, 6/15/10(a) A-1+ Aa3 3,400 3,400,000
Michigan State, Strategic Fund,
(Consumer Power Project), P.C.R.,
(LOC: Union Bank of Switzerland),
Variable Rate Daily Demand Note,
3.20%, 4/15/18(a) -- P-1 8,900 8,900,000
Michigan State University, General
Revenue, Series A-2, Variable Rate
Weekly Demand Note,
3.00%, 8/15/22(a) A-1+ VMIG-1 20,500 20,500,000
University of Michigan, Series B,
Tax Exempt Commercial Paper,
2.80%, 5/12/99 A-1+ P-1 2,100 2,100,000
-49-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Michigan (continued)
University of Michigan, Series B,
Tax Exempt Commercial Paper,
3.00, 5/12/99 A-1+ P-1 $ 5,000 $ 5,000,000
University of Michigan, Series B,
Tax Exempt Commercial Paper,
3.00, 7/20/99 A-1+ P-1 6,000 6,000,000
University of Michigan, Series B,
Tax Exempt Commercial Paper,
3.00, 7/20/99 A-1+ P-1 2,750 2,750,000
University of Michigan, Series B,
Tax Exempt Commercial Paper,
3.00, 7/21/99 A-1+ P-1 5,000 5,000,000
-------------
69,020,000
-------------
Minnesota - 1.9%
Minnesota State, G.O. 5.00%, 8/1/99 AAA Aaa 1,000 1,006,522
Minnesota State, G.O. 6.60%, 8/1/99 AAA Aaa 1,000 1,011,368
University of Minnesota, Series A,
Variable Rate Weekly Demand Note,
3.00%, 1/1/34(a) A-1+ VMIG-1 19,000 19,000,000
-------------
21,017,890
-------------
Mississippi - 4.1%
Jackson County, Mississippi, Chevron
USA Inc. Project, (Guaranteed by
Chevron), Variable Rate Daily
Demand Note, 3.10%, 12/1/16(a) -- P-1 1,800 1,800,000
Jackson County, Mississippi, Chevron
USA Inc. Project, (Guaranteed by
Chevron), Variable Rate Daily
Demand Note, 3.10%, 6/1/23(a) -- P-1 7,700 7,700,000
Jackson County, Mississippi, Chevron
USA Inc. Project, (Guaranteed by
Chevron), Variable Rate Daily
Demand Note, 3.15%, 6/1/23(a) -- P-1 5,660 5,660,000
Perry County, Mississippi, Leaf
River Forest Project, (LOC: Wachovia
Bank), Variable Rate Daily Demand
Note, 3.15%, 3/1/02(a) -- P-1 30,850 30,850,000
-----------
46,010,000
-----------
-50-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Missouri - 4.0%
Bi-State Development Agency, Missouri,
St. Clair County, (MBIA Insured),
Variable Rate Weekly Demand Note,
3.00%, 7/1/28(a) A-1+ -- $19,500 $ 19,500,000
Missouri State, G.O., Fourth State
Building, Series A, 5.00%, 6/1/99 AAA Aaa 1,150 1,152,406
Missouri State, Health & Educational
Facilities Authority, (Barnes
Hospital Project), (LOC: Morgan
Guaranty Trust), Variable Rate
Weekly Demand Note,
3.00%, 12/1/15(a) A-1+ VMIG-1 2,900 2,900,000
Missouri State, Health & Educational
Facilities Authority, (Sisters of
Mercy Health), Series D, Variable
Rate Weekly Demand Note,
3.00%, 6/1/14(a) A-1+ VMIG-1 400 400,000
Missouri State, Health & Educational
Facilities Authority, (Sisters of
Mercy Health), Series D, Variable
Rate Weekly Demand Note,
3.00%, 6/1/19(a) A-1+ VMIG-1 9,000 9,000,000
Missouri State, Health & Educational
Facilities Authority, (Washington
University Project), Series B,
Variable Rate Daily Demand Note,
3.20%, 9/1/30(a) A-1+ VMIG-1 6,400 6,400,000
Missouri State, Health & Educational
Facilities Authority, (Washington
University Project), Series C,
Variable Rate Daily Demand Note,
3.10%, 9/1/30(a) A-1+ VMIG-1 1,400 1,400,000
Missouri State, Health & Educational
Facilities Authority, (Washington
University Project), Variable Rate
Weekly Demand Note,
3.00%, 9/1/09(a) A-1+ VMIG-1 4,600 4,600,000
-------------
45,352,406
-------------
Montana - 0.7%
Forsyth, Montana, P.C.R., (Pacificorp
Project), (LOC: Rabobank Nederland),
Variable Rate Daily Demand Note,
3.30%, 1/1/18(a) A-1+ P-1 7,750 7,750,000
-------------
-51-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Nevada - 1.4%
Las Vegas Valley Water District,
Nevada, (LOC: Westdeutsche
Landesbank), Tax Exempt Commercial
Paper, 2.80%, 5/11/99 A-1+ P-1 $ 4,000 $ 4,000,000
Las Vegas Valley Water District,
Nevada, (LOC: Westdeutsche
Landesbank), Tax Exempt Commercial
Paper, 2.80%, 5/12/99 A-1+ P-1 10,000 10,000,000
Nevada State, G.O., Series A,
5.25%, 5/15/99 AA Aa2 1,615 1,617,842
-------------
15,617,842
-------------
New Hampshire - 0.2%
New Hampshire State, Capital
Improvement, Series A,
4.00%, 10/1/99 AA+ Aa2 1,900 1,909,325
-------------
New Jersey - 2.5%
New Jersey State, G.O. 5.00%, 7/15/99 AA+ AA1 3,000 3,013,042
New Jersey State, G.O., Series E,
5.00%, 7/15/99 AA+ Aa1 2,965 2,982,772
New Jersey State, Series A, TRAN,
(Tax Exempt Commercial Paper Mode),
3.15%, 4/8/99 A-1+ P-1 3,000 3,000,000
New Jersey State, Series A, TRAN,
(Tax Exempt Commercial Paper Mode),
2.95%, 5/6/99 A-1+ P-1 2,000 2,000,000
New Jersey State, Series A, TRAN,
(Tax Exempt Commercial Paper Mode),
3.15%, 5/6/99 A-1+ P-1 2,000 2,000,000
New Jersey State, Series A, TRAN,
(Tax Exempt Commercial Paper Mode),
3.05%, 5/13/99 A-1+ P-1 5,000 5,000,000
New Jersey State, Series A, TRAN,
(Tax Exempt Commercial Paper Mode),
3.10%, 5/20/99 A-1+ P-1 3,000 3,000,000
New Jersey State, Series A, TRAN,
(Tax Exempt Commercial Paper Mode),
3.20%, 6/4/99 A-1+ P-1 2,000 2,000,000
New Jersey State, Transportation
Trust Fund, Series A, (Escrow in
U.S. Government Securities),
5.90%, 6/15/99 -- AAA 5,000 5,031,718
-------------
28,027,532
-------------
-52-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
New Mexico - 0.4%
New Mexico State, TRAN, 4.25%, 6/30/99 SP-1+ MIG-1 $ 4,000 $ 4,006,188
-------------
New York - 6.9%
Long Island Power Authority,
New York, Electrical System
Revenue, Series 5, (LOC: ABN Amro
Bank N.V. 50%, Morgan Guaranty
50%), Variable Rate Daily Demand
Note, 3.15%, 5/1/33(a) A-1+ VMIG-1 5,700 5,700,000
Long Island Power Authority,
New York, Electric System Revenue,
Variable Rate Demand Bonds,
(Tax Exempt Commercial Paper Mode),
(LOC: Westdeutsche Landesbank 50%,
Bayerische Landesbank 50%),
2.80%, 4/7/99 A-1+ VMIG-1 3,000 3,000,000
Long Island Power Authority, New York,
Electric System Revenue, Variable
Rate Demand Bonds, (Tax Exempt
Commercial Paper Mode), (LOC:
Westdeutsche Landesbank 50%,
Bayerische Landesbank 50%),
2.90%, 4/20/99 A-1+ VMIG-1 2,500 2,500,000
Long Island Power Authority, New York,
Electric System Revenue, Variable
Rate Demand Bonds, (Tax Exempt
Commercial Paper Mode), (LOC:
Westdeutsche Landesbank 50%,
Bayerische Landesbank 50%),
3.05%, 4/26/99 A-1+ VMIG-1 6,000 6,000,000
Long Island Power Authority, New York,
Electric System Revenue, Variable
Rate Demand Bonds, (Tax Exempt
Commercial Paper Mode), (LOC:
Westdeutsche Landesbank 50%,
Bayerische Landesbank 50%),
2.80%, 5/14/99 A-1+ VMIG-1 2,000 2,000,000
Long Island Power Authority,
New York, Series 2, (LOC:
Westdeutsche Landesbank 50%,
Bayerische Landesbank 50%), Variable
Weekly Demand Note, 2.80%, 5/1/33(a) A-1+ VMIG-1 3,500 3,500,000
-53-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
New York (continued)
Metropolitan Transportation
Authority, New York, Transit
Facilities BAN, Tax Exempt
Commercial Paper, 3.10%, 4/13/99 A-1+ P-1 $ 5,000 $ 5,000,000
Municipal Assistance Corp. for New
York City, New York, Sub Series
K-2, (LOC: Westdeutsche Landesbank),
Variable Rate Weekly Demand Note,
3.15%, 7/1/08(a) A-1+ VMIG-1 5,800 5,800,000
New York, New York, G.O., Series
B, (FGIC Insured), Variable Rate
Daily Demand Note, 3.40%, 10/1/20(a) A-1+ VMIG-1 1,400 1,400,000
New York, New York, G.O., Series B,
(FGIC Insured), Variable Rate Daily
DA-1+d Note, 3.40%, 10/1/22(a) A-1+ VMIG-1 1,200 1,200,000
New York City, New York, Municipal
Water Finance Authority, Water and
Sewer System Revenue, Series A,
(FGIC Insured), Variable Rate Daily
Demand Note, 3.35%, 6/15/25(a) A-1+ VMIG-1 2,500 2,500,000
New York City, New York, Municipal
Water Finance Authority, Water and
Sewer System Revenue, Series G,
(FGIC Insured), Variable Rate Daily
Demand Note, 3.10%, 6/15/24(a) A-1+ VMIG-1 19,850 19,850,000
New York City, New York, Transitional
Finance Authority Revenue, SubSeries
B-1, 2.90%, 11/1/27, Mandatory Put -
11/1/99 @ $100 A-1+ VMIG-1 5,000 5,000,000
New York State, Energy Research and
Development Authority, P.C.R.,
Niagara Mohawk Power, (LOC: Toronto
Dominion Bank), Variable Rate Daily
Demand Note, 3.30%, 7/1/15(a) A-1+ -- 5,700 5,700,000
Westchester County, New York, G.O.,
Series B, 4.00%, 11/15/99 AAA Aaa 8,500 8,554,169
-------------
77,704,169
-------------
-54-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
North Carolina - 2.0%
Charlotte-Mecklenberg Hospital
Authority, North Carolina, Health
Care System Revenue, Series C,
Variable Rate Weekly Demand Note,
3.05%, 1/15/26(a) A-1+ VMIG-1 $10,000 $ 10,000,000
Charlotte-Mecklenberg Hospital
Authority, North Carolina, Health
Care System Revenue, Series D,
Variable Rate Weekly Demand Note,
3.05%, 1/15/26(a) A-1+ VMIG-1 3,400 3,400,000
North Carolina Medical Care Commission
Hospital Revenue, (North Carolina
Baptist Hospital Project), Series B,
Variable Rate Weekly Demand Note,
3.05%, 6/1/22(a) A-1+ VMIG-1 9,000 9,000,000
-------------
22,400,000
-------------
Ohio - 1.9%
Clermont County, Ohio, Hospital
Facilities Revenue, Series B,
(Catholic Health Partners),
Variable Rate Weekly
Demand Note, 3.00%, 9/1/21(a) A-1+ VMIG-1 16,720 16,720,000
Ohio State, G.O., Highway Capital
Improvements, Series C,
4.00%, 5/1/99 AAA Aa1 1,100 1,100,321
Ohio State, G.O., Highway Capital
Improvements, Series S,
4.40%, 5/15/99 AAA Aa1 1,835 1,836,331
Ohio State, G.O., Highway Capital
Improvements, Series U,
4.40%, 5/15/99 AAA Aa1 1,000 1,000,761
Ohio State, G.O., Highway Capital
Improvements, Series V,
4.70%, 5/15/99 AAA Aa1 1,350 1,351,706
-------------
22,009,119
-------------
Oregon - 1.4%
Umatilla County, Oregon, Hospital
Facilities Authority, (Catholic
Health Initiatives), Series B,
Variable Rate Weekly Demand Note,
3.00%, 12/1/24(a) A-1+ VMIG-1 15,400 15,400,000
-------------
-55-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Pennsylvania - 0.5%
Pennsylvania State, G.O., Second
Series A, (MBIA Insured),
4.75%, 6/15/99 AAA Aaa $ 1,000 $ 1,002,191
Pennsylvania State, Higher Educational
Facility Authority, Carnegie Mellon
University, Series A, Variable Rate
Daily Demand Note, 3.05%, 11/1/25(a) A-1+ -- 550 550,000
Pennsylvania State, Higher Educational
Facility Authority, Carnegie Mellon
University, Series D, Variable Rate
Daily Demand Note, 3.05%, 11/1/30(a) A-1+ -- 900 900,000
Pottsville, Pennsylvania, Hospital
Authority, Series F, (Charity
Obligated Group), Variable Rate
Weekly Demand Note,
2.90%, 11/1/19(a) A-1+ VMIG-1 1,500 1,500,000
York County, Pennsylvania, Industrial
Development Authority, P.C.R.,
Philadelphia Electric Co., (LOC:
Toronto Dominion Bank), Variable
Rate Daily Demand Note,
3.05%, 8/1/16(a) A-1+ P-1 1,800 1,800,000
-------------
5,752,191
-------------
South Carolina - 1.0%
Rock Hill, South Carolina, Utility
System Revenue, Series B, (AMBAC
Insured), Variable Rate Weekly
Demand Note, 2.90%, 1/1/23(a) A-1+ VMIG-1 5,515 5,515,000
South Carolina State, G.O., Capital
Improvement, Series B,
5.75%, 8/1/99 AAA Aaa 1,500 1,513,752
South Carolina State, G.O., Series A,
4.50%, 8/1/99 AAA Aaa 2,970 2,979,473
South Carolina State, G.O., Series W,
6.00%, 5/1/99 AAA Aaa 1,125 1,127,071
-------------
11,135,296
-------------
-56-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Tennessee - 3.3%
Memphis, Tennessee, G.O.,
5.00%, 10/1/99 AA Aa-1 $ 2,265 $ 2,286,816
Memphis, Tennessee, G.O., Series A,
Variable Rate Weekly Demand Note,
3.15%, 8/1/04(a) A-1+ VMIG-1 2,500 2,500,000
Memphis, Tennessee, G.O., Series A,
Variable Rate Weekly Demand Note,
3.15%, 8/1/07 A-1+ VMIG-1 2,800 2,800,000
Tennessee State, G.O., Variable Rate
Weekly Demand Note,
2.90%, 7/1/01(a) A-1+ VMIG-1 20,600 20,600,000
Tennessee State, G.O., Variable
Rate Weekly Demand Note,
2.90%, 7/2/01(a) A-1+ VMIG-1 9,000 9,000,000
Tennessee State, G.O., Variable
Rate Weekly Demand Note,
2.90%, 7/2/01(a) A-1+ VMIG-1 400 400,000
-------------
37,586,816
-------------
Texas - 15.1%
Austin, Texas, Combined Utility
System, Tax Exempt Commercial
Paper, Series A, (LOC: Morgan
Guaranty Trust), 2.70%, 4/7/99 A-1+ P-1 3,000 3,000,000
Austin, Texas, Combined Utility
System, Tax Exempt Commercial
Paper, Series A, (LOC: Morgan
Guaranty Trust), 2.80%, 5/7/99 A-1+ P-1 3,000 3,000,000
Austin, Texas, Combined Utility
System, Tax Exempt Commercial
Paper, Series A, (LOC: Morgan
Guaranty Trust), 2.85%, 5/7/99 A-1+ P-1 3,000 3,000,000
Austin, Texas, Combined Utility
System, Tax Exempt Commercial
Paper, Series A, (LOC: Morgan
Guaranty Trust), 2.85%, 5/10/99 A-1+ P-1 1,000 1,000,000
Austin, Texas, Combined Utility
System, Tax Exempt Commercial
Paper, Series A, (LOC: Morgan
Guaranty Trust), 2.95%, 5/11/99 A-1+ P-1 6,425 6,425,000
Austin, Texas, Combined Utility
System, Tax Exempt Commercial
Paper, Series A, (LOC: Morgan
Guaranty Trust), 3.10%, 7/26/99 A-1+ P-1 2,340 2,340,000
-57-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Texas (continued)
Austin, Texas, Independent School
District, G.O., (PSF Guaranteed),
6.20%, 8/1/99 AAA Aaa $ 1,000 $ 1,010,934
City of Houston, Texas, G.O., Series B,
Tax Exempt Commercial Paper, 2.95%,
4/6/99 A-1+ P-1 7,700 7,700,000
City of Houston, Texas, G.O., Series B,
Tax Exempt Commercial Paper, 2.80%,
4/9/99 A-1+ P-1 3,000 3,000,000
City of Houston, Texas, G.O., Series B,
Tax Exempt Commercial Paper, 2.85%,
4/12/99 A-1+ P-1 3,000 3,000,000
City of Houston, Texas, G.O., Series B,
Tax Exempt Commercial Paper, 2.90%,
4/19/99 A-1+ P-1 3,000 3,000,000
City of Houston, Texas, G.O., Series B,
Tax Exempt Commercial Paper, 3.10%,
4/23/99 A-1+ P-1 3,000 3,000,000
Dallas, Texas, G.O., 5.50%, 2/15/00 AAA Aaa 1,500 1,530,450
Dallas, Texas, Waterworks and Sewer
System, 8.00%, 10/1/99 AAA Aa2 1,000 1,024,720
Deer Park, Texas, Independent School
District, G.O., (PSF Guaranteed),
6.25%, 2/15/00 AAA Aaa 1,400 1,438,754
Harris County, Texas, G.O., Tax
Exempt Commercial Paper,
3.00%, 4/14/99 A-1+ P-1 1,325 1,325,000
Harris County, Texas, G.O., Tax
Exempt Commercial Paper,
3.15%, 5/10/99 A-1+ P-1 2,000 2,000,000
Harris County, Texas, G.O., Toll Road,
6.30%, 8/1/99 AA Aa2 1,150 1,161,577
Harris County, Texas, G.O., Toll Road,
Series G, Variable Rate Weekly
Demand Note, 3.00%, 8/1/20(a) A-1+ VMIG-1 2,800 2,800,000
Harris County, Texas, G.O., Toll Road,
Series H, Variable Rate Weekly
Demand Note, 3.00%, 8/1/20(a) A-1+ VMIG-1 4,600 4,600,000
Lower Colorado River Authority, Texas,
(MBIA Insured), Variable Rate Weekly
Demand Note, 2.90%, 1/1/13(a) A-1+ VMIG-1 28,600 28,600,000
-58-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Texas (continued)
Sabine River Authority, Texas, P.C.R.,
Utilities Electric Company,
(LOC: UBS AG), Variable Rate Daily
Demand Note, 3.35%, 6/1/30(a) A-1+ VMIG-1 $ 3,700 $ 3,700,000
Texas A & M University, Texas,
5.35%, 5/15/99 AA Aa2 1,000 1,001,815
Texas A & M University, Texas, Tax
Exempt Commercial Paper, 3.05%,
4/23/99 A-1+ P-1 4,000 4,000,000
Texas A & M University, Texas, Tax
Exempt Commercial Paper, 2.80%,
5/11/99 A-1+ P-1 2,000 2,000,000
Texas A & M University, Texas, Tax
Exempt Commercial Paper,
2.85%, 7/22/99 A-1+ P-1 12,000 12,000,000
Texas A & M University, Texas, Tax
Exempt Commercial Paper, 3.00%,
7/23/99 A-1+ P-1 6,300 6,300,000
Texas Higher Education Authority,
Series B, (FGIC Insured), Variable
Rate Weekly Demand Note,
3.00%, 12/1/25(a) A-1+ VMIG-1 3,260 3,260,000
Texas Public Finance Authority,
G.O., Tax Exempt Commercial Paper,
2.90%, 5/13/99 A-1+ P-1 2,500 2,500,000
Texas Public Finance Authority, G.O.,
Tax Exempt Commercial Paper,
3.10%, 7/19/99 A-1+ P-1 2,000 2,000,000
Texas Public Finance Authority, G.O.,
Tax Exempt Commercial Paper,
3.15%, 7/22/99 A-1+ P-1 3,500 3,500,000
Texas State, TRANS, 4.50%, 8/31/99 SP-1+ MIG-1 21,650 21,779,999
Travis County, Texas, Health
Facilities Development Corporation,
(Charity Obligation Group),
Series E, Variable Rate Weekly
Demand Note, 2.90%, 11/1/27(a) A-1+ VMIG-1 7,800 7,800,000
University of Texas, Texas, Tax Exempt
Commercial Paper, 3.15%, 7/14/99 A-1+ P-1 4,000 4,000,000
University of Texas, Texas, Tax Exempt
Commercial Paper, 3.05%, 7/19/99 A-1+ P-1 5,000 5,000,000
-59-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Texas (continued)
University of Texas, Texas, Tax Exempt
Commercial Paper, 3.05%, 7/21/99 A-1+ P-1 $ 5,000 $ 5,000,000
University of Texas, Texas, Tax Exempt
Commercial Paper, 3.15%, 8/9/99 A-1+ P-1 2,000 2,000,000
Waco, Texas, Health Facilities
Development Corporation, (Charity
Obligated Group), Series F,
Variable Rate Weekly
Demand Note, 2.90%, 11/1/26(a) A-1+ VMIG-1 1,000 1,000,000
-------------
170,798,249
-------------
Utah - 1.8%
Utah State, G.O., 4.40%, 7/1/99 AAA Aaa $1,500 $ 1,503,019
Utah State, G.O., Series A, Tax Exempt
Commercial Paper, 3.05%, 4/12/99 A-1+ P-1 4,500 4,500,000
Utah State, G.O., Series A, Tax Exempt
Commercial Paper, 2.95%, 4/14/99 A-1+ P-1 4,000 4,000,000
Utah State, G.O., Series A, Tax Exempt
Commercial Paper,, 3.05%, 4/19/99 A-1+ P-1 2,000 2,000,000
Utah State, G.O., Series A, Tax Exempt
Commercial Paper, 3.00%, 5/6/99 A-1+ P-1 5,000 5,000,000
Utah Transit Authority Sales Tax &
Transportation Revenue, (LOC:
Bayerische Landesbank), Variable
Rate Weekly Demand Note,
3.00%, 5/1/28(a) A-1+ -- 3,400 3,400,000
-------------
20,403,019
-------------
Virginia - 1.5%
Fairfax County, Virginia, G.O.,
Series B, 6.00%, 6/1/99 AAA Aaa 1,550 1,557,924
Hampton Roads, Virginia, Regional
Jail Authority, Series B, (LOC:
Wachovia Bank), Variable Rate
Weekly Demand Note, 3.05%,
7/1/16(a) A-1+ VMIG-1 7,800 7,800,000
Virginia State, G.O., 4.00%, 6/1/99 AAA Aaa 1,400 1,402,307
Virginia State, G.O., 4.50%, 6/1/99 AAA Aaa 2,785 2,789,669
Virginia State, G.O., 5.00%, 6/1/99 AAA Aaa 1,875 1,881,583
Virginia State Public School Authority,
Seriess I, 4.25%, 8/1/99 AA+ Aa1 2,000 2,007,984
-------------
17,439,467
-------------
-60-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Washington - 1.2%
King County, Washington, G.O.,
Series C, 4.00%, 6/1/99 AA+ Aa1 $ 3,000 $ 3,001,300
Thurston County, Washington, G.O.,
(MBIA Insured), 4.75%, 8/1/99 -- AAA 1,875 1,885,675
Washington State, G.O., Series A,
4.25, 7/1/99 AA+ Aa1 2,765 2,770,843
Washington State, G.O., Series C,
5.50, 7/1/99 AA+ Aa1 4,000 4,018,016
Washington State, G.O., 7.20%,
5/1/03, (Escrowed in U.S. Government
Securities), Prerefunded,
5/1/99 @ $100 AA+ AAA 1,000 1,002,715
Washington State, G.O., 7.25%,
5/1/06, (Escrowed in U.S. Government
Securities), Prerefunded,
5/1/99 @ $100 AA+ AAA 1,000 1,002,783
-------------
13,681,332
-------------
Wisconsin - 4.4%
Milwaukee, Wisconsin, G.O., Series A9,
3.85%, 3/1/00 AA+ Aa1 5,180 5,219,365
Milwaukee, Wisconsin, G.O., Series F,
5.00%, 11/15/99 AA+ Aa1 2,185 2,212,366
Milwaukee, Wisconsin, G.O., Series K,
4.25%, 6/15/99 AA+ Aa1 2,705 2,707,917
Oak Creek, Wisconsin, P.C.R.,
(Wisconsin Electric Power Company
Project), Variable Rate Weekly
Demand Note, 3.00%, 8/1/16(a) AA P-1 3,200 3,200,000
Pleasant Prairie, Wisconsin, P.C.R.,
(Wisconsin Electric Power Company
Project), Series B, Variable Rate
Weekly Demand Note, 3.05%, 9/1/30(a) A-1+ P-1 11,150 11,150,000
Wisconsin State, G.O., Series 1,
4.80%, 11/1/99 AA Aa2 1,975 1,994,476
Wisconsin State, Operating Notes,
4.50%, 6/15/99 SP-1+ MIG-1 20,000 20,038,399
-61-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Rating*
------------ Par
TAX-FREE SERIES (continued) S&P Moody's (000) Value
- --------------------------------------------------------------------------------
Wisconsin (continued)
Wisconsin State, Transportation Revenue,
(LOC: Bayerische Landesbank 33.3%,
Westdeutsche Landesbank 66.7%),
Tax Exempt Commercial Paper,
2.65%, 4/1/99 A-1+ P-1 $ 3,000 $ 3,000,000
--------------
49,522,523
--------------
Wyoming - 0.7%
Sweetwater County, Wyoming, P.C.R.,
Pacificorp Project, Series B,
(LOC: Canadian Imperial Bank),
Variable Rate Daily Demand Note,
3.30%, 1/1/14 A-1+ P-1 2,750 2,750,000
Uinta County, Wyoming, P.C.R.,
(Chevron U.S.A.), Variable Rate
Daily Demand Note, 3.10%, 4/1/10 -- P-1 3,800 3,800,000
Uinta County, Wyoming, P.C.R.,
(Chevron U.S.A.), Variable Rate
Daily Demand Note, 3.10%, 4/1/10 -- P-1 600 600,000
Uinta County, Wyoming, P.C.R.,
(Chevron U.S.A.), Variable Rate
Daily Demand Note, 3.10%, 8/15/20(a) -- P-1 1,100 1,100,000
--------------
8,250,000
--------------
TOTAL INVESTMENTS--98.9%
(Cost $1,119,368,030) $1,119,368,030
OTHER ASSETS LESS LIABILITIES, NET--1.1% 12,623,023
--------------
NET ASSETS--100.0% $1,131,991,053
==============
Net Asset Value, Offering and Redemption Price Per:
Tax-Free Retail Share
($1,047,391,315 divided by 1,047,493,793 shares outstanding) $1.00
=====
Tax-Free Institutional Share
($84,599,738 divided by 84,607,371 shares outstanding) $1.00
=====
-62-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
TAX-FREE SERIES (concluded)
- --------------------------------------------------------------------------------
- ---------------
(a) Demand security; payable upon demand by the Fund with usually no more than
seven (7) calendar days' notice. Interest rates are redetermined
periodically.Rates shown are those in effect on March 31, 1999.
* The credit ratings are not covered by the report of independent
accountants.
INVESTMENT ABBREVIATIONS:
AMBAC AMBAC Assurance Corporation
BAN Bond Anticipation Notes
FGIC Financial Guaranty Insurance Corporation
FNMA Federal National Mortgage Association
FSA Financial Security Assurance
GO General Obligation Bond
LOC Letter of Credit
MBIA Municipal Bond Investors Assurance Corporation
PCR Pollution Control Revenue Bonds
PSF Public School Facilities
RAN Revenue Anticipation Note
RB Revenue Bond
TAN Tax Anticipation Note
TRAN Tax Revenue Anticipation Note
INSURANCE ABBREVIATIONS:
AMBAC AMBAC Indemnity Corp.
FGIC Financial Guaranty Insurance Corporation
MBIA Municipal Bond Investors Assurance
MOODY'S MUNICIPAL RATINGS:
Aaa Judged to be of the best quality.
Aa Judged to be of high quality by all standards. Issues are sometimes
rated with a 1, 2 or 3, which denote a high, medium or low ranking
within the rating.
MIG-1 Notes bearing this designation are of the best quality.
VMIG-1 Variable rate demand obligations bearing this designation are of the
best quality.
P-1 Commercial paper bearing this designation is of the best quality.
S&P MUNICIPAL RATINGS:
AAA Obligations that are of the highest quality.
AA Obligations that have the second strongest capacity for payment of
debt service. Those issues determined to possess very strong safety
characteristics are denoted with a plus (+) sign.
SP-1 Notes that have a strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
are assigned a plus (+) designation.
A-1 Commercial paper that has a strong degree of safety regarding timely
payment. Those issues determined to possess very strong safety
characteristics are denoted with a plus (+) sign.
A detailed description of the above ratings can be found in the
Fund's Statement of Additional Information.
See Notes to Financial Statements.
-63-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statements of Operations
For the year ended March 31, 1999
<TABLE>
<CAPTION>
Prime Treasury Tax-Free
Series Series Series
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income:
Interest income $ 202,392,068 $ 42,584,715 $ 32,769,158
------------- ------------- -------------
Expenses:
Investment advisory fees 9,800,088 2,099,289 2,642,345
Distribution fees 9,527,563 1,964,145 2,232,564
Transfer agent fees 2,213,530 303,231 127,823
Registration fees 557,046 132,002 158,282
Custodian fees 476,010 68,093 60,882
Shareholder service fees 442,438 67,048 127,363
Professional fees 177,169 54,510 48,416
Accounting fees 167,901 134,044 137,933
Directors' fees 86,534 32,482 18,872
Miscelleaneous 368,231 161,793 7,555
------------- ------------- -------------
Total expenses 23,816,510 5,016,637 5,562,035
Less: Fees waived (114,329) (113,581) --
------------- ------------- -------------
Net expenses 23,702,181 4,903,056 5,562,035
------------- ------------- -------------
Net investment income 78,689,887 37,681,659 27,207,123
------------- ------------- -------------
Net realized gain from
security transactions 88,481 156,495 18,413
------------- ------------- -------------
Net increase in net assets resulting
from operations $ 178,778,368 $ 37,838,154 $ 27,225,536
============= ============= =============
</TABLE>
See Notes to Financial Statements.
-64-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets March 31, 1999
<TABLE>
<CAPTION>
PRIME SERIES
- --------------------------------------------------------------------------------------------
For the For the
Year Ended Year Ended
March 31, March 31,
---------- ----------
1999 1998
<S> <C> <C>
Increase (Decrease) 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, Treasury Shares and
Tax-Free Shares, respectively (151,410,202) (138,011,807)
BT Alex. Brown Cash Reserve
Prime Institutional Shares,
Treasury Institutional Shares and
Tax-Free Institutional Shares, respectively (16,058,016) (13,656,968)
Flag Investors Class A Shares (435,677) (341,197)
Flag Investors Class B Shares (72,373) (12,545)
Quality Cash Reserve Shares (10,713,744) (10,064,396)
--------------- ---------------
Total distributions (178,690,012) (162,086,913)
--------------- ---------------
Capital Share ransactions, 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>
-65-
<PAGE>
<TABLE>
<CAPTION>
TREASURY SERIES TAX-FREE SERIES
- -----------------------------------------------------------------------------------------------------------------------------------
For the Years Ended March 31,
------------------------------------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net investment income $ 37,681,660 $ 35,037,012 $ 27,207,123 $ 23,916,200
Net realized gain from
security transactions 156,495 20,785 18,413 (1,994)
--------------- --------------- --------------- ---------------
Net increase in net assets resulting
from operations 37,838,155 35,057,797 27,225,536 23,914,206
--------------- --------------- --------------- ---------------
Distributions to Shareholders From:
Net investment income:
BT Alex. Brown Cash Reserve
Prime Shares, Treasury Shares and
Tax-Free Shares, respectively (33,507,990) (31,623,993) (24,515,362) (21,792,392)
BT Alex. Brown Cash Reserve
Prime Institutional Shares,
Treasury Institutional Shares and
Tax-Free Institutional Shares, respectively (4,334,875) (3,413,019) (2,746,989) (2,123,808)
Flag Investors Class A Shares -- -- -- --
Flag Investors Class B Shares -- -- -- --
Quality Cash Reserve Shares -- -- -- --
--------------- --------------- --------------- ---------------
Total distributions (37,842,865) (35,037,012) (27,262,351) (23,916,200)
--------------- --------------- --------------- ---------------
Capital Share ransactions, net 42,060,849 157,532,323 214,160,192 270,657,645
--------------- --------------- --------------- ---------------
Total increase in net assets 42,056,138 157,553,108 214,123,377 270,655,651
Net Assets:
Beginning of period 897,206,681 739,653,573 917,867,676 647,212,025
--------------- --------------- --------------- ---------------
End of period $ 939,262,819 $ 897,206,681 $ 1,131,991,053 $ 917,867,676
=============== =============== =============== ===============
</TABLE>
See Notes to Financial Statements.
-66-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
BT ALEX. BROWN CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Year Ended
March 31,
----------
1999
<S> <C>
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 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>
-67-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
BT ALEX. BROWN CASH RESERVE PRIME SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended March 31,
--------------------------------------------------------------------------------
1998 1997 1996 1995
<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 0.0494 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 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.
-68-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS A
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Year Ended
March 31,
- ------------------------------------------------------------------
1999
<S> <C>
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 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>
See Notes to Financial Statements.
-69-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS A (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended March 31,
- ---------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
<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 0.0494 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 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.
-70-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For shares outstanding throughout each year)
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS B
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Year Ended
March 31,
- ----------------------------------------------------------------------
1999
<S> <C>
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 (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.
-71-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND. INC.
- --------------------------------------------------------------------------------
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS B (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period April 3, 1995(1)
For the Years Ended March 31, through 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 0.0418 0.0414 0.0361
Less Distributions:
Dividends from net investment (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.
-72-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For shares outstanding throughout each year)
BT ALEX. BROWN CASH RESERVE PRIME INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Year Ended
March 31,
- -----------------------------------------------------------------
1999
<S> <C>
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 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>
-73-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
BT ALEX. BROWN CASH RESERVE PRIME INSTITUTIONAL SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended March 31,
- --------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
<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 0.0519 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 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.
-74-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For shares outstanding throughout each year)
QUALITY CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Year Ended
March 31,
- ----------------------------------------------------------------------
1999
<S> <C>
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 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 fee wavers 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.
-75-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
QUALITY CASH RESERVE PRIME SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended March 31,
- ------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
<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 0.0465 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 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.
-76-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For shares outstanding throughout each year)
BT ALEX. BROWN CASH RESERVE TREASURY SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Year Ended
March 31,
- --------------------------------------------------------------------
1999
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
--------------
Income from Investment Operations:
Net investment income 0.042
Less Distributions:
Dividends from net investment income (0.042)
--------------
Net asset value at end of period $ 1.00
==============
Total Return:
Based on net asset value per share 4.35%
Ratios to Average Net Assets:
Expenses 0.58%
Net investment income 4.26%
Supplemental Data:
Net assets at end of period $ 816,700,318
Number of shares outstanding at end of period 816,622,190
</TABLE>
- --------------
(1) Ratio of expenses to average daily net assets prior to partial fee waiver
was 0.56% for the year ended March 31, 1995.
(2) Ratio of net investment income to average daily net assets prior to partial
fee waiver was 4.08% for the year ended March 31, 1995.
-77-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
BT ALEX. BROWN CASH RESERVE TREASURY SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended March 31,
- --------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
<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 0.046 0.045 0.049 0.0411
Less Distributions:
Dividends from net investment income (0.046) (0.045) (0.049) (0.0411)
------------- ------------- ------------- ---------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============= ============= ===============
Total Return:
Based on net asset value per share 4.74% 4.63% 5.05% 4.19%
Ratios to Average Net Assets:
Expenses 0.59% 0.61% 0.58% 0.55%(1)
Net investment income 4.65% 4.54% 4.94% 4.09%(2)
Supplemental Data:
Net assets at end of period $ 798,426,658 $ 678,444,803 $ 666,814,158 $ 512,167,212
Number of shares outstanding at end of period 798,354,129 678,391,386 666,762,028 512,162,864
</TABLE>
See Notes to Financial Statements.
-78-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For shares outstanding throughout each year)
BT ALEX. BROWN CASH RESERVE TREASURY INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Year Ended
March 31,
- -------------------------------------------------------------------
1999
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
-------------
Income from Investment Operations:
Net investment income 0.0453
Less Distributions:
Dividends from net investment income (0.0453)
-------------
Net asset value at end of period $ 1.00
=============
Total Return:
Based on net asset value per share 4.63%
Ratios to Average Net Assets:
Expenses 0.33%
Net investment income 4.54%
Supplemental Data:
Net assets at end of period $ 122,562,501
Number of shares outstanding at end of period 122,561,713
</TABLE>
- -------------------
(1) Ratio of expenses to average daily net assets prior to partial fee waiver
was 0.31% for the year ended March 31, 1995.
(2) Ratio of net investment income to average daily net assets prior to partial
waiver was 4.14% for the year ended March 31, 1995.
-79-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
BT ALEX. BROWN CASH RESERVE TREASURY INSTITUTIONAL SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended March 31,
- -------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
<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 0.0489 0.0481 0.0523 0.0438
Less Distributions:
Dividends from net investment income (0.0489) (0.0481) (0.0523) (0.0438)
------------ ------------ ------------ ------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============ ============ ============
Total Return:
Based on net asset value per share 5.00% 4.92% 5.36% 4.47%
Ratios to Average Net Assets:
Expenses 0.34% 0.33% 0.33% 0.30%(1)
Net investment income 4.91% 4.81% 5.12% 4.15%(2)
Supplemental Data:
Net assets at end of period $ 98,780,023 $ 61,208,770 $ 51,822,757 $ 14,051,995
Number of shares outstanding at end of period 98,768,925 61,199,345 51,823,226 14,046,467
</TABLE>
See Notes to Financial Statements.
-80-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For shares outstanding throughout each year)
BT ALEX. BROWN CASH RESERVE TAX-FREE SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
Year Ended
March 31,
- --------------------------------------------------------------------
1999
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
---------------
Income from Investment Operations:
Net investment income 0.0277
Less Distributions:
Dividends from net investment income (0.0277)
---------------
Net asset value at end of period $ 1.00
===============
Total Return:
Based on net asset value per share 2.81%
Ratios to Average Net Assets:
Expenses 0.58%
Net investment income 2.74%
Supplemental Data:
Net assets at end of period $ 1,047,391,315
Number of shares outstanding at end of period 1,047,493,739
</TABLE>
-81-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
BT ALEX. BROWN CASH RESERVE TAX-FREE SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended March 31,
- -----------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
<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 0.0306 0.0286 0.0318 0.0271
Less Distributions:
Dividends from net investment income (0.0306) (0.0286) (0.0318) (0.0271)
------------- ------------- ------------- -------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
============= ============= ============= =============
Total Return:
Based on net asset value per share 3.10% 2.90% 3.23% 2.75%
Ratios to Average Net Assets:
Expenses 0.60% 0.62% 0.60% 0.57%
Net investment income 3.05% 2.86% 3.16% 2.74%
Supplemental Data:
Net assets at end of period $ 841,184,924 $ 647,212,025 $ 571,507,000 $ 475,384,229
Number of shares outstanding at end of period 841,258,030 647,283,274 571,593,265 475,474,913
</TABLE>
See Notes to Financial Statements.
-82-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Financial Highlights
(For shares outstanding throughout each year)
BT ALEX. BROWN CASH RESERVE TAX-FREE INSTITUTIONAL SERIES
- --------------------------------------------------------------------------------
For the Period
For the June 2, 1997(1)
Year Ended through
March 31, March 31,
------------ --------------
1999 1998
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00 $ 1.00
------------ ------------
Income from Investment Operations:
Net investment income 0.0303 0.0273
Less Distributions:
Dividends from net investment income
and short-term gains (0.0303) (0.0273)
------------ ------------
Net asset value at end of period $ 1.00 $ 1.00
============ ============
Total Return:
Based on net asset value per share 3.07% 2.76%
Ratios to Average Net Assets:
Expenses 0.33% 0.35%(2)
Net investment income 3.03% 3.29%(2)
Supplemental Data:
Net assets at end of period $ 84,599,738 $ 76,682,752
Number of shares outstanding
at end of period 84,607,371 76,682,889
- ---------------
(1) Commencement of operations.
(2) Annualized
-83-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
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
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.
-84-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 1--concluded
C. Federal Income Taxes--The Fund determines its distributions according
to income tax regulations, which may be different from generally
accepted accounting principles. As a result, the Fund occasionally
makes reclassifications within its capital accounts to reflect income
and gains that are available for distribution under income tax
regulations.
The Fund is organized as a regulated investment company. As long
as it maintains this status and distributes to its shareholders
substantially all of its taxable net investment income and net
realized capital gains, it will be exempt from most, if not all,
federal income and excise taxes. As a result, the Fund has made no
provisions for federal income taxes. Each portfolio is treated as a
separate entity for federal income tax purposes.
D. Security Transactions, Investment Income and Distributions--The Fund
uses the trade date to account for security transactions and the
specific identification method for financial reporting and income tax
purposes to determine the 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 class' operations. If a Fund
expense cannot be directly attributed to a share class, the expense is
prorated among the classes that the expense affects and is based on
the classes' relative net assets.
NOTE 2--Investment Advisory Fees, Transactions with Affiliates and Other Fees
Investment Company Capital Corp. ("ICC"), a subsidiary of 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 accounting services, the Prime Series, Treasury Series,
and Tax-Free Series pay ICC an annual fee that is calculated daily and paid
monthly from the 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.
-85-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- ------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2--continued
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% 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 ended March
31, 1999. ICC Distributors voluntarily waived $114,329 of its distribution fees
for the Quality Cash Shares for the period April 1, 1998 to December 31, 1998.
There was no waiver for the period January 1 through 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
$90,975 for the Tax-Free Series.
Bankers Trust Company is a wholly owned subsidiary of Bankers Trust
Corporation. 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 Bankers Trust thereafter is subject to the approval
of Fund shareholders. If the transaction is approved and completed, Deutsche
Bank AG, as Bankers Trust's new parent company, will control its operations as
investment advisor. Bankers Trust believes that, under this new arrangement, the
services provided to the Fund will be maintained at their current level.
-86-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- ------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2--concluded
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'
average daily 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%
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, 1999 March 31, 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 5,126,520,627 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
=============== ===============
-87-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 3--concluded
For the For the
Year Ended Year Ended
March 31, 1999 March 31, 1998
-------------- --------------
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
============== ==============
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 (1,001,918,516) (654,038,858)
-------------- --------------
Net increase 214,160,192 270,657,645
============== ==============
Note 4--Net Assets
<TABLE>
<CAPTION>
Prime Treasury Tax-Free
Series Series Series
-------------- --------------- ---------------
<S> <C> <C> <C>
Paid $4,213,671,028 $ 939,179,715 $ 1,132,102,494
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
============== =============== ===============
</TABLE>
-88-
<PAGE>
BT ALEX. BROWN CASH RESERVE FUND, INC.
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
Note 5--Capital Loss Carryforwards
At March 31, 1999 capital loss carryforwards available as a reduction
against future net realized capital gains aggregate as follow:
<TABLE>
<CAPTION>
Capital Loss Carryforward
Net Realized Expiration Year
Capital Loss --------------------------------------------------------------------
Carryforwards 2000 2001 2002 2003 2004 2005 2006
------------------- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Prime Series -- -- -- -- -- -- -- --
Treasury Series -- -- -- -- -- -- -- --
Tax Free Series $56,213 -- $6,268 $21,858 $26,991 -- -- $1,096
</TABLE>
-89-
<PAGE>
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
BT Alex. Brown Cash Reserve Fund, Inc. (consisting of the Prime, Treasury and
Tax-Free Series) (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
-90-
<PAGE>
Appendix A
COMMERCIAL PAPER RATINGS
MOODY'S - The rating Prime-1 (P-1) is the highest commercial
paper rating assigned by Moody's. Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationship which exists with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations. These
factors are all considered in determining whether the commercial paper is rated
P-1, P-2 or P-3.
S & P - Commercial paper rated A-1+ or A-1 by S&P has the
following characteristics. Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated "A" or better, although in some
cases "BBB" credits may be allowed. The issuer has access to at least two
channels of
A-1
<PAGE>
borrowing. Basic earnings and cash flow have an upward trend with allowance made
for unusual circumstances. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry. The reliability and
quality of management is unquestioned. Relative strength or weakness of the
above factors determines whether the issuer's commercial paper is rated A-1, A-2
or A-3.
SHORT TERM DEBT RATINGS
MOODY'S - State and municipal notes, as well as other
short-term obligations, are assigned a Moody's Investment Grade (MIG) rating.
Factors affecting the liquidity of the borrower and short-term cyclical elements
are critical in short-term ratings, while other factors of major importance in
evaluating bond risk may be less important over the short run.
MIG 1
Notes bearing this designation are of the best quality. Notes
are enjoying strong "protection" by established cash flows, superior
liquidity support or a demonstrated broad-based access to the market
for refinancing.
MIG 2
Notes bearing this designation are of high quality. Margins of
protection are ample although not as large as in the preceding group.
S&P - The note rating reflects the liquidity concerns and
market access risks unique to notes. Notes due in 3 years or less will receive a
note rating. Notes rated "SP-1" have a strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety characteristics
are assigned a plus (+) designation.
TAX-EXEMPT DEMAND RATINGS
MOODY'S - Issues which have demand features (i.e., variable
rate demand obligations) are assigned a VMIG symbol. This symbol reflects such
characteristics as payment upon periodic demand rather than fixed maturity, and
payment relying on external liquidity. The VMIG rating is modified by the
numbers 1, 2 or 3. VMIG1 represents the best quality in the VMIG category, VMIG2
represents high quality, and VMIG3 represents favorable quality.
S&P - "dual" ratings are assigned to all long-term debt issues
that have as part of their provisions a demand feature. The first rating
addresses the likelihood of repayment of principal and interest as due, and the
second rating addresses only the demand feature. The long-term debt rating
symbols are used for bonds to denote the long-term maturity, and the commercial
paper rating symbols are used to denote the put option (e.g., "AAA/A-1+").
A-2
