QUALITY
CASH RESERVE
PRIME SHARES
Annual Report
March 31, 1999
<PAGE>
Fund Features
- --------------------------------------------------------------------------------
o Daily Dividends
The Fund declares dividends daily and distributes them monthly in the form
of additional shares.
o Check Redemption Privilege
After completing an authorization form, you may redeem your shares by
writing a check (in a minimum amount of $250) on your account. You will
continue to earn dividends until your check reaches the bank for clearance.
o No Sales Charge and Immediate Liquidity
You may buy or redeem shares in your account at any time. There is no sales
charge or penalty imposed by the Fund for the purchase or redemption of
shares (other fees and expenses do apply to a continued investment in the
Fund and are described in the prospectus).
o Constant Net Asset Value
The Fund will attempt to maintain a constant net asset value of $1.00 per
share and has done so since its inception on May 6, 1991. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund. An investment in a money
market fund is neither insured nor guaranteed by the FDIC or any other
government agency.
o Minimum Investment
The minimum initial investment is $1,500. Subsequent investments may be
$100 or more.
o Current Yield Information Available
For current yield information, call (410) 895-5995.
This report is prepared for the general information of shareholders of
Quality Cash Reserve Prime Shares. It may be distributed only to current
shareholders or to persons who have received a current prospectus.
<PAGE>
Letter to Shareholders
- --------------------------------------------------------------------------------
We are pleased to report on the progress of your Fund for the twelve months
ended March 31, 1999.
MARKET ACTIVITY
The major force that dominated the money markets through the Fund's fiscal
year was the global financial crisis that began in Southeast Asia and spread to
countries around the world. The widening crisis, in turn, caused the Federal
Reserve Board to change monetary policy.
Domestically, the combination of a strong economy and low inflation allowed
the Federal Reserve Board to keep interest rates unchanged at 5.5% through the
second calendar quarter of 1998. But during the third quarter, investors began
to focus more heavily on the Asian crisis and on the political problems in the
Clinton administration. This uncertainty was followed by high volatility in the
money markets, as Russia devalued its currency and defaulted on its debt, weak
commodity prices dampened economic outlooks in Latin America, and concerns
regarding other foreign nations' potential problems surfaced. Investors began
scrambling for the greater liquidity and perceived safety of U.S. Treasury
securities and a major flight to quality was underway.
Still in the third calendar quarter, the announcement of a Federal
Reserve-orchestrated bailout package for a large hedge fund forced market
participants to understand that exposure to the Russian debacle was more
widespread than previously anticipated. In turn, corporate credit spreads
widened significantly. This led to a further rally in U.S. Treasuries plus
significant buying of high quality domestic securities.
The Federal Reserve effectively battled escalating illiquidity and
investors' growing risk aversion with three rapid moves, lowering interest rates
a total of three-quarters of a percent from September through November 1998. The
market responded favorably to the official easing of monetary policy. Rate
spreads between U.S. Treasuries and corporate securities began to narrow, and
the flight to quality premium was taken out of the Treasury market. Also fueling
positive bond market sentiment was a plunge in oil prices and other commodities
to their lowest levels in decades.
Even with all of these turbulent forces, the money market yield curve
remained relatively flat through mid-September, when an inversion at the short
end of the curve began. This inverted yield spread attracted investors to the
short end of the curve. By the end of the year, the yield curve steepened to a
slightly positive position, and the money markets continued to return to normal
in the first quarter of 1999.
1
<PAGE>
Letter to Shareholders (continued)
- --------------------------------------------------------------------------------
The tax-exempt money market yield curve did not experience the temporary
inversion, as dealers cheapened inventory to offset usual seasonal corporate
selling, thus increasing short-term yields dramatically. The short-term
tax-exempt market also experienced a sharp fall in new issue volume, reflecting
states' improved liquidity positions as a result of strong increases in personal
income and sales tax receipts. Municipal note volume overall declined 25% in
1998 over 1997, and state note issuance declined 49% year over year. This trend
continued into the first quarter of 1999. The decline in supply of both notes
and variable rate paper coupled with record growth in money market assets
resulted in a sharp reduction in short-term tax-exempt yields.
INVESTMENT REVIEW
We continue to manage the Fund conservatively, maintaining high portfolio
quality, adjusting weighted average maturities in response to market conditions,
and strictly limiting exposure to any particular issue. Evidence of our
insistence on these unusually high investment standards can be found in Standard
& Poor's (S&P) ratings of the portfolio of which Quality Cash Reserve Prime
Shares is a class. The portfolio maintains a "AAAm" rating. This rating is the
highest that S&P awards to money market funds. We have always believed that a
money fund is not a place to take chances or to speculate for additional yield.
Our strategy in this Series continues to concentrate on investing in high
quality issues. As of March 31, 1999, the Series was invested 88.2% in U.S.
commercial paper, 7.1% in U.S. certificates of deposit, 2% in repurchase
agreements, 1.7% in corporate floating rate securities, and 1% in government
agency securities. With certain exceptions for specific supply/demand
situations, we maintained a weighted average maturity of 40 to 50 days for most
of the annual period. At March 31, 1999, the Series weighted average maturity
stood at 44 days.
LOOKING AHEAD
We anticipate that despite softness in some key employment statistics
toward the end of the Fund's annual period, the U.S. labor market and the U.S.
economy remain strong. Consumer fundamentals remain favorable, consumer spending
shows no signs of slowing, and housing activity is still high. Indeed, even the
industrial sector, which has been the weak link in the U.S. economic juggernaut,
has begun to show signs of life. Further, recent data suggest that underlying
inflation pressures remain tame, despite some uptick in energy prices. Given
this scenario, we believe the Federal Reserve Board is likely to stay on hold at
least into the summer. In turn, the U.S. money markets should remain fairly
positive throughout most of 1999.
2
<PAGE>
Letter to Shareholders (concluded)
- --------------------------------------------------------------------------------
We intend to extend the portfolio's weighted average maturity should
attractive yield opportunities present themselves. In addition, we will continue
to concentrate in very high quality credits and to maintain our conservative
investment strategies and standards for the foreseeable future.
We continue to believe that the conservative approach we apply to investing
on behalf of the Fund's Series will provide comfort, as well as competitive
yields, to our shareholders.
As always, we appreciate your continued support.
Sincerely,
/s/ Darlene M. Rasel
- ----------------------------------
Darlene Rasel
Portfolio Manager
3
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Statement of Net Assets March 31, 1999
Rating(d)
------------ Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Commercial Paper - 88.4%(a)
- ------------------------------------------------------------------------------
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
4
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Rating(d)
------------ Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Commercial Paper (continued)
- ------------------------------------------------------------------------------
Beverages - Soft Drinks (continued)
4.78% 5/21/99 A-1+ P-1 $20,000 $ 19,867,222
4.81% 5/28/99 A-1+ P-1 50,000 49,619,604
4.80% 6/23/99 A-1+ P-1 19,791 19,571,980
PepsiCo, Inc.
4.81% 8/19/99 A-1 P-1 5,000 4,996,830
-----------------
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
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
-----------------
5
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1999
Rating(d)
------------ Par
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, 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
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
-----------------
Finance, Diversified - 6.6%
Associates Corp.of North America
4.83% 4/12/99 A-1+ P-1 8,000 7,988,193
4.85% 4/30/99 A-1+ P-1 15,000 14,941,396
4.78% 5/14/99 A-1+ P-1 25,000 24,857,324
4.82% 5/17/99 A-1+ P-1 50,000 49,692,056
Associates First Capital Corp.
4.83% 5/24/99 A-1+ P-1 22,000 21,843,562
General Electric Capital Corp.
5.02% 4/23/99 A-1+ P-1 15,000 14,953,983
4.82% 5/5/99 A-1+ P-1 12,000 11,945,373
4.82% 6/3/99 A-1+ P-1 35,000 34,704,775
4.83% 6/4/99 A-1+ P-1 20,000 19,828,267
4.77% 6/18/99 A-1+ P-1 20,000 19,793,300
4.88% 7/6/99 A-1+ P-1 13,000 12,830,827
6
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Rating(d)
------------ Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Commercial Paper (continued)
- ------------------------------------------------------------------------------
Finance, Diversified (continued)
4.83% 7/28/99 A-1+ P-1 $20,000 $ 19,683,367
4.83% 8/16/99 A-1+ P-1 15,000 14,724,288
General Electric Co.
4.85% 6/3/99 A-1+ P-1 10,000 9,915,125
-----------------
277,701,836
-----------------
Food - 0.6%
Campbell Soup Co.
4.80% 6/14/99 A-1+ P-1 23,790 23,555,272
-----------------
Household Products - 6.8%
Johnson & Johnson
4.85% 4/9/99 A-1+ P-1 30,000 29,967,667
4.75% 5/10/99 A-1+ P-1 50,000 49,742,708
4.75% 6/2/99 A-1+ P-1 28,200 27,969,308
4.78% 7/20/99 A-1+ P-1 6,900 6,799,222
4.78% 7/21/99 A-1+ P-1 22,500 22,168,388
Procter & Gamble Co.
4.75% 5/13/99 A-1+ P-1 34,000 33,811,583
4.78% 5/13/99 A-1+ P-1 50,000 49,721,167
4.80% 5/27/99 A-1+ P-1 40,000 39,701,333
4.82% 5/27/99 A-1+ P-1 5,000 4,962,511
4.82% 6/18/99 A-1+ P-1 20,000 19,791,133
-----------------
284,635,020
-----------------
Insurance, Property and Casualty - 1.2%
A.I. Credit Corp.
4.80% 4/8/99 A-1+ P-1 50,000 49,953,333
-----------------
Integrated Oil - 3.5%
Shell Oil Co.
4.78% 5/13/99 A-1+ P-1 50,000 49,721,167
4.79% 5/14/99 A-1+ P-1 50,000 49,713,931
4.82% 5/14/99 A-1+ P-1 50,000 49,712,139
-----------------
149,147,237
-----------------
Oil Transportation - 0.9%
Colonial Pipeline Co.
4.85% 4/23/99 A-1+ P-1 2,000 1,994,072
4.84% 5/10/99 A-1+ P-1 15,200 15,120,301
4.83% 6/21/99 A-1+ P-1 5,000 4,945,663
4.80% 7/9/99 A-1+ P-1 3,500 3,453,800
4.83% 7/28/99 A-1+ P-1 12,000 11,810,020
-----------------
37,323,856
-----------------
7
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1999
Rating(d)
------------ Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Commercial Paper (continued)
- ------------------------------------------------------------------------------
Pharmaceuticals - 7.9%
Abbott Laboratories
4.82% 4/16/99 A-1+ P-1 $25,550 $ 25,498,687
4.88% 4/26/99 A-1+ P-1 28,500 28,403,417
Pfizer Inc.
4.82% 4/13/99 A-1+ P-1 60,000 59,903,600
4.85% 4/16/99 A-1+ P-1 50,000 49,898,958
4.82% 4/30/99 A-1+ P-1 40,000 39,844,689
Schering - Plough Corp.
4.75% 4/16/99 A-1+ P-1 22,399 22,354,669
4.85% 4/20/99 A-1+ P-1 4,800 4,787,713
4.82% 5/14/99 A-1+ P-1 22,000 21,873,341
4.83% 5/14/99 A-1+ P-1 23,000 22,867,309
4.82% 5/28/99 A-1+ P-1 18,000 17,862,630
Warner - Lambert Co.
4.79% 5/17/99 A-1+ P-1 30,000 29,816,383
4.82% 5/18/99 A-1+ P-1 11,150 11,079,836
-----------------
334,191,232
-----------------
Publishing - 0.4%
Gannett Co.
4.90% 4/23/99 A-1+ P-1 14,600 14,556,281
-----------------
Retail - Food Chains - 1.2%
McDonald's Corp.
4.95% 4/1/99 A-1+ P-1 50,000 50,000,000
-----------------
Structured Finance - 11.2%
CIESCO, L.P.
4.85% 4/7/99 A-1+ P-1 15,000 14,987,875
4.80% 4/9/99 A-1+ P-1 45,000 44,952,000
4.86% 4/13/99 A-1+ P-1 30,500 30,450,590
4.85% 5/7/99 A-1+ P-1 15,000 14,927,250
4.78% 5/11/99 A-1+ P-1 20,000 19,893,778
4.85% 5/14/99 A-1+ P-1 17,945 17,841,044
4.83% 6/8/99 A-1+ P-1 15,000 14,863,150
Corporate Receivables Corp.
4.83% 4/7/99 A-1+ P-1 40,000 39,967,800
4.83% 4/14/99 A-1+ P-1 10,000 9,982,558
4.82% 4/23/99 A-1+ P-1 15,000 14,955,817
4.83% 5/21/99 A-1+ P-1 30,000 29,798,750
4.84% 5/21/99 A-1+ P-1 35,000 34,764,722
4.87% 6/4/99 A-1+ P-1 28,000 27,757,582
8
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Rating(d)
------------ Par
S&P Moody's (000) Value
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Commercial Paper (concluded)
- ------------------------------------------------------------------------------
Structured Finance (continued)
Corporate Asset Funding Co., Inc.
4.81% 4/22/99 A-1+ P-1 $20,000 $ 19,943,883
4.88% 5/6/99 A-1+ P-1 40,000 39,810,222
4.87% 5/11/99 A-1+ P-1 12,000 11,935,067
4.84% 5/12/99 A-1+ P-1 45,000 44,751,950
4.86% 5/25/99 A-1+ P-1 25,000 24,817,750
4.84% 6/3/99 A-1+ P-1 15,000 14,872,950
-----------------
471,274,738
-----------------
Telephone - 11.0%
Ameritech Capital Funding Corp.
4.85% 4/22/99 A-1+ P-1 52,755 52,605,747
AT&T Corp.
4.84% 4/14/99 A-1+ P-1 20,000 19,965,044
4.83% 5/20/99 A-1+ P-1 30,000 29,802,775
4.81% 6/8/99 A-1+ P-1 40,000 39,636,578
Bell Atlantic Network Funding Corp.
4.76% 4/5/99 A-1+ P-1 20,000 19,989,422
4.80% 4/6/99 A-1+ P-1 17,000 16,988,667
Bell South Capital Funding Corp.
4.78% 4/13/99 A-1+ P-1 8,000 7,987,253
4.80% 4/14/99 A-1+ P-1 50,000 49,913,333
4.80% 4/23/99 A-1+ P-1 29,000 28,914,933
4.84% 4/23/99 A-1+ P-1 30,000 29,911,267
Bell South Telecommunications, Inc.
4.80% 4/9/99 A-1+ P-1 10,000 9,989,333
4.85% 4/14/99 A-1+ P-1 20,000 19,964,972
SBC Communications Inc.
5.00% 4/1/99 A-1+ P-1 75,000 75,000,000
4.81% 5/6/99 A-1+ P-1 40,000 39,812,944
4.81% 5/7/99 A-1+ P-1 25,000 24,879,750
-----------------
465,362,018
-----------------
Total Commercial Paper
(Cost $3,723,186,363) 3,723,186,363
-----------------
- -------------------------------------------------------------------------------
Floating Rate - Notes - 1.5%
- -------------------------------------------------------------------------------
Associates Corp. of North America
4.89% 3/20/00 A-1+ P-1 40,000 39,973,208
Federal Home Loan Mortgage Corp.
4.77% 11/9/99 A-1+ P-1 25,000 24,989,569
-----------------
Total Floating Rate - Notes
(Cost $64,962,777) 64,962,777
-----------------
9
<PAGE>
PRIME SERIES
- -------------------------------------------------------------------------------
Statement of Net Assets (continued) March 31, 1999
Rating(d)
------------ Par
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
-----------------
10
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Statement of Net Assets (concluded) March 31, 1999
Rating(d)
------------ Par
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
($3,028,272 / 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 repurchase agreements is taken into possession by the agent
of the Fund upon entering into the repurchase agreement. The collateral is
marked to market daily to insure market value as being at least 102 percent
of the resale price of the repurchase agreement at time of purchase.
(c) Aggregate cost for financial reporting and federal tax purposes.
(d) The credit ratings are not covered by the report of independent
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.
A detailed description of the above ratings can be found in the
Fund's Statement of Additional Information.
See Notes to Financial Statements.
11
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Statement of Operations
For the year ended March 31, 1999
- --------------------------------------------------------------------------------
Investment Income:
Interest income $202,392,068
--------------
Expenses:
Investment advisory fees ............................... 9,800,088
Distribution fees ...................................... 9,527,563
Transfer agent fees .................................... 2,213,530
Registration fees ...................................... 557,046
Custodian fees ......................................... 476,010
Shareholder service fees ............................... 442,438
Professional fees ...................................... 177,169
Accounting fees ........................................ 167,901
Directors' fees ........................................ 86,534
Miscellaneous .......................................... 368,231
--------------
Total expenses ................................ 23,816,510
Less: Fees waived ................................ (114,329)
--------------
Net expenses ................................ 23,702,181
--------------
Net investment income ..................................... 178,689,887
Net realized gain from security transactions .............. 88,481
--------------
Net increase in net assets resulting from operations ...... $178,778,368
==============
See Notes to Financial Statements.
12
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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 ............................ (151,410,202) (138,011,807)
BT Alex. Brown Cash Reserve
Prime Institutional Shares .............. (16,058,016) (13,656,968)
Flag Investors Cash Reserve
Class A Prime Shares .................... (435,677) (341,197)
Flag Investors Cash Reserve
Class B Prime 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 Transactions, net ................ 496,268,896 849,945,486
---------------- ----------------
Total increase in net assets ................ 496,357,252 849,945,486
Net Assets:
Beginning of period ......................... 3,717,409,100 2,867,463,614
---------------- ----------------
End of period ............................... $4,213,766,352 $3,717,409,100
================ ================
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
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 Daily Net Assets:
Expenses ................................ 0.63%
Net investment income ................... 4.71%
Supplemental Data:
Net assets at end of period ............. $3,727,990,170
Number of shares outstanding at
end of period ......................... 3,727,906,079
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
PRIME SERIES
- -------------------------------------------------------------------------------
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 Daily Net Assets:
Expenses .................................... 0.67% 0.63% 0.60% 0.61%
Net investment income ....................... 4.94% 4.78% 5.21% 4.46%
Supplemental Data:
Net assets at end of period ................. $3,164,537,551 $2,545,532,365 $2,386,681,216 $1,472,079,739
Number of shares outstanding at
end of period ............................. 3,164,529,071 2,545,523,885 2,386,684,392 1,472,077,488
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
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>
16
<PAGE>
PRIME SERIES
- -------------------------------------------------------------------------------
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.
17
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
FLAG INVESTORS CASH RESERVE PRIME SHARES--CLASS B
- --------------------------------------------------------------------------------
For the
Year Ended
March 31,
1999
-------------
Per Share Operating Performance:
Net asset value at beginning of period ............. $ 1.00
-------------
Income from Investment Operations:
Net investment income .............................. 0.0400
Less Distributions:
Dividends from net investment income ............... (0.0400)
-------------
Net asset value at end of period ................... $ 1.00
=============
Total Return:
Based on net asset value per share ................. 4.07%
Ratios to Average Daily 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
- -----------
1 Commencement of operations.
2 Annualized.
18
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
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 income ............... (0.0418) (0.0414) (0.0361)
-------- -------- --------
Net asset value at end of period ................... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return:
Based on net asset value per share ................. 4.27% 4.22% 3.69%
Ratios to Average Daily Net Assets:
Expenses ........................................... 1.42% 1.38% 1.38%(2)
Net investment income .............................. 4.18% 4.14% 4.30%(2)
Supplemental Data:
Net assets at end of period ........................ $184,382 $227,098 $ 10,200
Number of shares outstanding at end of period ...... 184,382 227,098 10,200
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
PRIME INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
For the
Year Ended
March 31,
- -------------------------------------------------------------------------------
1999
------------
Per Share Operating Performance:
Net asset value at beginning of period ............... $ 1.00
------------
Income from Investment Operations:
Net investment income ................................ 0.0499
Less Distributions:
Dividends from net investment income ................. (0.0499)
------------
Net asset value at end of period ..................... $ 1.00
============
Total Return:
Based on net asset value per share ................... 5.11%
Ratios to Average Daily Net Assets:
Expenses ............................................. 0.36%
Net investment income ................................ 4.98%
Supplemental Data:
Net assets at end of period .......................... $388,447,492
Number of shares outstanding at end of period ........ 388,440,636
20
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
PRIME INSTITUTIONAL SHARES (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended March 31,
-------------------------------------------------------------
1998 1997 1996 1995
------------ ------------ ----------- -----------
Per Share Operating Performance:
<S> <C> <C> <C> <C>
Net asset value at beginning of period ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ----------- -----------
Income from Investment Operations:
Net investment income ....................... 0.0519 0.0503 0.0548 0.0472
Less Distributions:
Dividends from net investment income ........ (0.0519) (0.0503) (0.0548) (0.0472)
------------ ------------ ----------- -----------
Net asset value at end of period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============ =========== ===========
Total Return:
Based on net asset value per share .......... 5.31% 5.15% 5.62% 4.82%
Ratios to Average Daily Net Assets:
Expenses .................................... 0.42% 0.38% 0.35% 0.36%
Net investment income ....................... 5.22% 5.04% 5.32% 4.57%
Supplemental Data:
Net assets at end of period ................. $317,971,693 $117,812,047 $53,699,315 $11,904,716
Number of shares outstanding at end of period 317,971,413 117,811,768 53,699,535 11,904,663
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each period)
QUALITY CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
For the
Year Ended
March 31,
- --------------------------------------------------------------------------------
1999
-----------
Per Share Operating Performance:
Net asset value at beginning of period ..................... $ 1.00
-----------
Income from Investment Operations:
Net investment income ...................................... 0.0444
Less Distributions:
Dividends from net investment income ....................... (0.0444)
-----------
Net asset value at end of period ........................... $ 1.00
===========
Total Return:
Based on net asset value per share ........................ 4.53%
Ratios to Average Daily Net Assets:
Expenses ................................................... 0.92%(1)
Net investment income ...................................... 4.44%(2)
Supplemental Data:
Net assets at end of period ................................ $81,944,555
Number of shares outstanding at end of period .............. 81,938,027
- -----------
1 Ratios of expenses to average net assets prior to partial fee waivers was
0.97%, 1.02%, 0.98% and 0.95% for the years ended March 31, 1999, 1998, 1997
and 1996, respectively.
2 Ratios of net investment income to average net assets prior to partial fee
waivers was 4.39%, 4.60%, 4.43% and 4.86% for the years ended March 31, 1999,
1998, 1997 and 1996, respectively.
22
<PAGE>
<TABLE>
<CAPTION>
PRIME SERIES
- --------------------------------------------------------------------------------
QUALITY CASH RESERVE PRIME SHARES (continued)
- --------------------------------------------------------------------------------
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 Daily Net Assets:
Expenses ......................................... 0.96%(1) 0.91%(1) 0.90%(1) 0.96%
Net investment income ............................ 4.66%(2) 4.50%(2) 4.91%(2) 4.04%
Supplemental Data:
Net assets at end of period ...................... $226,978,689 $197,370,530 $156,412,213 $94,592,158
Number of shares outstanding at end of period .... 226,978,007 197,369,848 156,412,393 94,591,979
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
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.
24
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 1--concluded
C. Federal Income Taxes--The Fund is organized as a regulated investment
company. As long as it maintains this status and distributes to its shareholders
substantially all of its taxable net investment income and net realized capital
gains, it will be exempt from most, if not all, federal income and excise taxes.
As a result, the Fund has made no provisions for federal income taxes. Each
portfolio is treated as a separate entity for federal income tax purposes.
The Fund determines its distributions according to income tax
regulations, which may be different from generally accepted accounting
principles. As a result, the Fund occasionally makes reclassifications
within its capital accounts to reflect income and gains that are
available for distribution under income tax regulations.
D. Security Transactions, Investment Income 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 classes' operations. If a Fund expense
cannot be directly attributed to a share class, the expense is prorated among
the classes that the expense affects and is based on the classes' relative net
assets.
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 its accounting services, the Prime Series, Treasury
Series, and Tax-Free Series pay ICC an annual fee that is calculated daily and
paid monthly from 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.
25
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2--concluded
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 from January 1, 1999 thru March 31, 1999.
The Fund's complex offers a retirement plan for eligible Directors. The
actuarially computed pension expense allocated to the Fund for the year ended
March 31, 1999 was $104,755 for the Prime Series, $32,916 for the Treasury
Series and $15,403 for the Tax-Free Series. The accrued liability at March 31,
1999 was $267,276 for the Prime Series, $92,176 for the Treasury Series and
$70,975 for the Tax-Free Series.
On November 30, 1998, Bankers Trust Corporation entered into an Agreement
and Plan of Merger with Deutsche Bank AG under which Bankers Trust Corporation
would merge with and into a subsidiary of Deutsche Bank AG. Deutsche Bank AG is
a major global banking institution that is engaged in a wide range of financial
services, including investment management, mutual funds, retail and commercial
banking, investment banking and insurance. The transaction is contingent upon
various regulatory approvals, and continuation of the Fund's advisory
relationship with ICC thereafter is subject to the approval of Fund
shareholders. On March 30, 1999, the Board of Directors approved a new advisory
agreement between ICC and the Fund in the event the merger is approved and
completed. The new advisory agreement and a new sub-advisory agreement will be
subject to shareholder approval. If the transaction is approved and completed,
Deutsche Bank AG, as ICC's new parent company, will control its operations as
investment advisor. ICC believes that, under this new arrangement, the services
provided to the Fund will be maintained at their current level.
26
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
Effective January 1, 1999 BT Alex. Brown Cash Reserve Fund, Inc. (the
"Fund") has adopted the Shareholder Service Plan (the "Plan") for the BT Alex.
Brown Cash Reserve Shares of the Prime, Treasury and Tax-Free Series of the Fund
("Shares") in order to provide compensation to third parties ("Shareholder
Servicing Agents") who provide shareholder services to clients ("Clients") who
from time to time beneficially own shares. In consideration of these services
provided by any Shareholder Servicing Agent, the Fund will pay the Distributor
an annual fee, calculated daily and paid monthly equal to 0.05% of the shares'
daily average net assets.
Effective January 1, 1999 the Advisor is waiving its fee on the Treasury
Series by 0.05%. Absent such fee waivers, Management Fees would be 0.25% and
Total Fund Operating Expenses should be 0.59% on the retail shares and
Management Fees would be 0.25% and Total Fund Operating Expenses should be 0.34%
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
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
=============== ===============
27
<PAGE>
PRIME SERIES
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
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 ......... 1,108,685,495 730,445,736
Issued as reinvestment of dividends:
Tax-Free Shares ....................... 23,390,210 20,778,337
Institutional Tax Free Shares ......... 1,157,547 276,010
Redeemed:
Tax-Free Shares ....................... (5,159,012,230) (5,680,345,603)
Institutional Tax Free Shares ......... (1,001,918,560) (654,038,858)
-------------- --------------
Net increase ........................ 214,160,192 270,657,645
============== ==============
Note 4--Net Assets
<TABLE>
<CAPTION>
Prime Treasury Tax-Free
Series Series Series
--------------- -------------- --------------
<S> <C> <C> <C>
Paid-in capital .................... $4,213,671,028 $939,179,174 $1,132,092,030
Undistributed net investment
income/(distribution in excess... 8,345 44,873 (55,228)
Undistributed net realized gain/
(loss) on sales of investments... 86,979 127,977 (56,213)
--------------- -------------- --------------
$4,213,766,352 $939,262,819 $1,132,050,589
=============== ============== ==============
</TABLE>
28
<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
the Prime Series of the BT Alex. Brown Cash Reserve Fund, Inc. (the "Fund") at
March 31, 1999, and the results of its operations, the changes in its net assets
and the financial highlights for each of the fiscal periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at March 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Baltimore, Maryland
April 30, 1999
29
<PAGE>
Board of Directors
- --------------------------------------------------------------------------------
RICHARD T. HALE
Chairman
JAMES J. CUNNANE
Director
JOSEPH R. HARDIMAN
Director
LOUIS E. LEVY
Director
EUGENE J. McDONALD
Director
REBECCA W. RIMEL
Director
TRUMAN T. SEMANS
Director
CARL W. VOGT, Esq.
Director
Officers
- --------------------------------------------------------------------------------
HARRY WOOLF
President
JOSEPH A. FINELLI
Treasurer
AMY M. OLMERT
Secretary
SCOTT J. LIOTTA
Assistant Secretary
- --------------------------------------------------------------------------------
Distributor
ICC DISTRIBUTORS, INC.
Two Portland Square
Portland, ME 04101
(207) 879-6200
Investment Advisor
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, MD 21202
Custodian
BANKERS TRUST COMPANY
130 Liberty Street
New York, NY 10006
Transfer Agent
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, MD 21202
(800) 553-8080
Auditors
PRICEWATERHOUSECOOPERS LLP
250 West Pratt Street
Baltimore, MD 21201
- --------------------------------------------------------------------------------
This report is prepared for the general information of shareholders of BT Alex.
Brown Cash Reserve Fund, Inc. It may be distributed only to current shareholders
or to persons who have received a current prospectus.
30
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<PAGE>
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<PAGE>
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<PAGE>
QUALITY CASH RESERVE PRIME SHARES
P.O. Box 1346
Baltimore, MD 21203
Bulk Rate
U.S. Postage
PAID
Farmingdale, NY
Permit No. 225
