N-30D 1 flagcr.txt FLAG CASH RESERVE ANNUAL [LOGO OMITTED] DEUTSCHE ASSET MANAGEMENT [GRAPHIC OMITTED] Mutual Fund Annual Report March 31, 2002 Class A, B and C Shares Cash Reserve Prime Shares [LOGO OMITTED] A MEMBER OF THE DEUTSCHE BANK GROUP Cash Reserve Prime Shares -------------------------------------------------------------------------------- TABLE OF CONTENTS LETTER TO SHAREHOLDERS ................................ 3 CASH RESERVE PRIME SHARES Schedule of Investments ............................ 5 Statement of Assets and Liabilities ................ 12 Statement of Operations ............................ 13 Statements of Changes in Net Assets ................ 14 Financial Highlights ............................... 15 Notes to Financial Statements ...................... 18 Report of IndependentAccountants ................... 21 Tax Information .................................... 21 FUND DIRECTORS ........................................ 22 --------------------------- The Fund is not insured by the FDIC and is not a deposit, obligation of or guaranteed by Deutsche Bank AG. The Fund is subject to investment risks, including possible loss of principal amount invested. --------------------------- -------------------------------------------------------------------------------- 2 Cash Reserve Prime Shares -------------------------------------------------------------------------------- LETTER TO SHAREHOLDERS We are pleased to report on the progress of your Fund for the twelve months ended March 31, 2002. MARKET ACTIVITY THE FEDERAL RESERVE BOARD EASED INTEREST RATES EIGHT TIMES OVER THE COURSE OF THE FISCAL YEAR, CAUSING MONEY MARKET YIELDS TO DECLINE DRAMATICALLY. o These interest rate cuts, in combination with three more during the first calendar quarter of 2001, totaled 4.75%, causing the yield curve to steepen sharply. o This campaign of easing monetary policy, particularly in the second half of 2001, was the most concentrated effort to rejuvenate the economy in the central bank's history. o In explaining the rationale for its interest rate cuts, the Federal Reserve Board consistently cited falling corporate profits, declining business capital investment, weak consumer confidence in the US and slower economic growth abroad. THE MONEY MARKETS WERE PARTICULARLY FOCUSED ON THE FEDERAL RESERVE BOARD'S RESPONSE TO THE UNITED STATES ECONOMY'S PROTRACTED SLOWDOWN. o Employment, production and business spending remained weak. Consumer confidence dipped to new lows, as layoffs and related fears over job security began to surge. o The tragic events of September 11 only heightened the degree of economic uncertainty. o The Federal Reserve Board's already aggressive pace of interest rate cuts was stepped up in the aftermath of the attacks, as it began flooding the financial markets with liquidity. Its objective was to stabilize consumer and business confidence. o Economic data released during the first quarter of 2002 turned a little more positive and pointed to signs of a bottoming in the economy. It became clear by February 2002 that no more interest rate cuts would likely be forthcoming from the Federal Reserve Board during this cycle. In fact, in March, the Federal Reserve Board shifted from an easing to a neutral bias, citing a slow economic recovery in progress. The money markets began pricing in potential interest rate increases by mid-year 2002. TWO NOTABLE EVENTS CAPTURED THE MONEY MARKETS' ATTENTION DURING THE FISCAL YEAR. o The failure of Enron represented the largest corporate bankruptcy ever recorded. The full ramifications of this event on the money markets remain unclear, as the company was a major player in the credit markets. A great number of banks and insurance companies had exposure to Enron at the time of its failure, further extending the impact of its bankruptcy. o Also, turmoil in Argentina led to a default on its debt, devaluation of its currency and a succession of five presidents in a two-week period at the end of December 2001. The fallout from this debacle was felt throughout the emerging markets, supporting a flight-to-quality toward the US money markets. INVESTMENT REVIEW We continued 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 issuer. Evidence of our insistence on these high investment standards can be found in Standard & Poor's (S&P) rating of the portfolio of which Cash Reserve Prime Shares is a class. The portfolio has received a 'AAAm' rating.3 This rating is the highest that S&P awards to money market funds. 7-DAY CURRENT YIELD (as of 3/31/02) -------------------------------------------------------------------------------- Cash Reserve Prime Class A Shares 1 1.44% iMoneyNet First Tier Retail Money Funds Average 2 1.20% -------------------------------------------------------------------------------- 1 PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Yields will fluctuate. 'Current Yield' is computed pursuant to a SEC standardized formula and represents the income generated by an investment in the Fund over a seven day period. This income is then annualized. 2 Money Fund Report Averages, a service of iMoneyNet, Inc., are averages for categories of similar money market funds. 3 Ratings are subject to change and do not remove market risk. -------------------------------------------------------------------------------- 3 Cash Reserve Prime Shares -------------------------------------------------------------------------------- LETTER TO SHAREHOLDERS Our strategy in this Fund continued to be concentrated on investing in high quality issues. As of March 31, 2002, 62% of the Series was invested in securities rated A1+/P1 and 15% in securities rated A1/P1, by S&P and Moody's. The remaining 23% of the Series was primarily invested in AAA-rated money market funds and federal agency securities with long-term AAA-ratings, as rated by S&P and Moody's. We maintained an aggressive weighted average maturity, generally of at least 50 days, for most of the annual period, as we anticipated lower interest rates throughout the fiscal year. At the same time, we concentrated our investments in high-quality issuers and Federal agency securities. As the US economic slowdown accelerated and equity markets continued to slide, the credit quality of many corporations deteriorated. Finding and purchasing high-quality issues with little downgrade risk became both a challenge and an increasingly more important consideration for money market fund managers. As of March 31, 2002, 36.59% of the Series was invested in commercial paper, 18.04% in corporate floating rate securities, 7.99% in euro certificates of deposit, 4.78% in euro time deposits, 8.48% in Yankee certificates of deposit and 24.12% in US agency securities, money market funds and cash or cash equivalents. LOOKING AHEAD We are cautiously optimistic about the outlook for the US economy. A great deal of monetary and fiscal stimulus is already in the pipeline, and there are emerging signs of recovery in consumer confidence, initial jobless claims, housing starts and durable goods (example: transportation). The Federal Reserve Board has signaled an end to its very aggressive monetary stimulus, and we believe we are likely at the start of the recovery stage in the US economy. While we anticipate higher short-term interest rates as the year progresses, we also believe that Federal Reserve Board Chairman Greenspan will likely be forced to keep interest rates low for a relatively long period of time to prevent any chance of a double-dip recession. In light of this, we intend to maintain a neutral stance in the Fund. We intend to add high-quality floating-rate securities while we monitor the future direction of interest rates. We also plan to continue to seek high-quality issuers in an effort to avoid potential downgrades as the economy remains sluggish. We will also continue to maintain our conservative investment strategies and standards for the foreseeable future. We believe in the conservative approach that we apply to investing on behalf of the Fund and will continue to seek competitive yields for our shareholders. As always, we appreciate your continued support. Sincerely, /S/ Darlene M. Rasel Darlene M. Rasel Portfolio Manager March 31, 2002 -------------------------------------------------------------------------------- 4 Cash Reserve Prime Shares Fund -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS March 31, 2002
RATING 1 -------------------------- PAR PRIME SERIES S&P MOODY'S (000) MARKET VALUE COMMERCIAL PAPER 2--36.59% ASSET-BACKED--17.02% Asset Securitization Cooperative Corp. 1.84%, 5/10/02 ................................. A-1+ P-1 $50,000 $ 49,900,333 Bavaria TRR Corp. 1.95%, 4/12/02 ................................. A-1 P-1 30,000 29,982,125 Compass Securitization LLC 1.83%, 4/10/02 ................................. A-1+ P-1 35,690 35,673,724 Mont Blanc Capital Corp. 1.80%, 4/15/02 ................................. A-1+ P-1 30,000 29,979,000 1.87%, 5/13/02 ................................. A-1+ P-1 35,000 34,923,642 1.87%, 5/15/02 ................................. A-1+ P-1 70,000 69,840,011 Pennine Funding LLC 1.82%, 4/15/02 ................................. A-1+ P-1 39,185 39,157,266 1.75%, 4/23/02 ................................. A-1+ P-1 15,000 14,983,958 1.82%, 4/25/02 ................................. A-1+ P-1 45,000 44,945,400 1.83%, 5/21/02 ................................. A-1+ P-1 25,000 24,936,458 Perry Global Funding LLC, Series A 1.84%, 5/22/02 ................................. A-1+ P-1 31,996 31,912,597 Quincy Capital Corp. 1.82%, 4/17/02 ................................. A-1+ P-1 32,127 32,101,013 Receivables Capital Corp. 1.87%, 5/9/02 .................................. A-1+ P-1 40,327 40,234,345 Scaldis Capital LLC 1.82%, 4/15/02 ................................. A-1+ P-1 79,104 79,049,373 1.83%, 5/10/02 ................................. A-1+ P-1 44,659 44,570,463 1.89%, 5/24/02 ................................. A-1+ P-1 25,000 24,930,437 1.68%, 7/12/02 ................................. A-1+ P-1 35,000 34,833,400 2.30%, 9/20/02 ................................. A-1+ P-1 20,233 20,010,662 Sheffield Receivables Corp. 1.83%, 4/12/02 ................................. A-1+ P-1 50,000 49,972,042 1.84%, 4/22/02 ................................. A-1+ P-1 73,040 72,961,817 1.86%, 5/6/02 .................................. A-1+ P-1 30,270 30,215,262 1.92%, 6/17/02 ................................. A-1+ P-1 25,000 24,897,333 1.90%, 7/1/02 .................................. A-1+ P-1 13,000 12,937,564 ------------- 872,948,225 ------------- AUTOMOBILES & TRUCKS--2.24% Toyota Motor Credit Corp. 1.85%, 5/7/02 .................................. A-1+ P-1 45,000 44,916,750 1.85%, 5/10/02 ................................. A-1+ P-1 40,000 39,919,833 Volkswagen of America, Inc. 1.81%, 4/25/02 ................................. A-1 P-1 30,000 29,963,800 ------------- 114,800,383 -------------
See Notes to Financial Statements. -------------------------------------------------------------------------------- 5 Cash Reserve Prime Shares Fund -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS March 31, 2002
RATING 1 -------------------------- PAR PRIME SERIES S&P MOODY'S (000) MARKET VALUE BANKS--4.18% Depfa Bank Europe PLC 1.84%, 5/6/02 .................................. A-1 P-1 $25,000 $ 24,955,278 Fortis Funding LLC 2.13%, 4/22/02 ................................. A-1+ P-1 20,000 19,975,150 HSBC USA, Inc. 1.80%, 4/15/02 ................................. A-1 P-1 45,000 44,968,500 JP MorganChase Bank 1.79%, 4/29/02 ................................. A-1+ P-1 50,000 49,930,389 1.93%, 7/30/02 ................................. A-1+ P-1 25,000 24,839,167 Swedish National Housing Finance Corp. 1.90%, 6/3/02 .................................. A-1+ P-1 25,000 24,916,875 1.95%, 6/4/02 .................................. A-1+ P-1 25,000 24,913,333 ------------- 214,498,692 ------------- BEVERAGES-SOFT DRINKS--0.58% Coca Cola Enterprises, Inc. 1.80%, 4/4/02 .................................. A-1 P-1 30,000 29,995,500 ------------- FINANCE-DIVERSIFIED--4.29% American General Finance Corp. 1.80%, 4/10/02 ................................. A-1 P-1 25,000 24,988,750 GE Capital International Funding, Inc. 1.80%, 4/8/02 .................................. A-1+ P-1 20,000 19,993,000 1.92%, 8/22/02 ................................. A-1+ P-1 10,000 9,923,733 1.93%, 8/28/02 ................................. A-1+ P-1 38,000 37,696,454 General Electric Capital Corp. 1.84%, 5/10/02 ................................. A-1+ P-1 25,000 24,950,167 2.08%, 5/20/02 ................................. A-1+ P-1 25,000 24,929,222 1.94%, 9/4/02 .................................. A-1+ P-1 18,000 17,848,680 International Lease Finance Corp. 1.81%, 4/15/02 ................................. A-1+ P-1 60,000 59,957,767 ------------- 220,287,773 ------------- FINANCIAL SERVICES--1.95% Morgan Stanley Dean Witter & Co. 1.82%, 4/12/02 ................................. A-1+ P-1 25,000 24,986,097 Salomon Smith Barney Holdings, Inc. 1.82%, 4/24/02 ................................. A-1 P-1 75,000 74,912,792 ------------- 99,898,889 ------------- FOODS--1.95% Nestle Capital Corp. 1.75%, 4/9/02 .................................. A-1+ P-1 50,000 49,980,555 1.83%, 6/3/02 .................................. A-1+ P-1 50,000 49,839,875 ------------- 99,820,430 ------------- INSURANCE--1.95% Irish Life & Permanent PLC 1.88%, 5/20/02 ................................. A-1 P-1 40,000 39,897,645 Prudential Funding LLC 1.80%, 4/5/02 .................................. A-1 P-1 35,000 34,993,000 1.81%, 4/22/02 ................................. A-1 P-1 25,000 24,973,604 ------------- 99,864,249 -------------
See Notes to Financial Statements. ------------------------------------------------------------------------------- 6 Cash Reserve Prime Shares Fund -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS March 31, 2002
RATING 1 -------------------------- PAR PRIME SERIES S&P MOODY'S (000) MARKET VALUE TELEPHONE--2.43% SBC Communications, Inc. 2.08%, 4/9/02 .................................. A-1+ P-1 $40,000 $ 39,981,511 Verizon Global Funding Corp. 2.16%, 10/17/02 ................................ A-1 P-1 20,000 19,756,778 Verizon Network Funding Corp. 2.28%, 4/15/02 ................................. A-1+ P-1 30,000 29,973,400 2.21%, 4/25/02 ................................. A-1+ P-1 15,000 14,977,900 1.85%, 5/30/02 ................................. A-1+ P-1 20,000 19,939,361 ------------- 124,628,950 ------------- TOTAL COMMERCIAL PAPER (Amortized Cost $1,876,743,091) ................................................................1,876,743,091 ------------- FLOATING RATE NOTES--18.04% Abbey National PLC 1.819%, 3/31/03 ................................ A-1+ P-1 25,000 24,984,997 American Express Centurian Bank 1.87%, 5/14/02 ................................. A-1 P-1 50,000 50,000,000 American Honda Finance Corp. 1.92%, 6/25/02 ................................. A-1 P-1 10,000 10,000,000 1.901%, 8/27/02 ................................ A-1 P-1 15,000 15,000,000 Asset Securitization Cooperative Corp. 1.87%, 4/23/02 ................................. A-1+ P-1 30,000 30,000,000 1.879%, 5/28/02 ................................ A-1+ P-1 25,000 25,000,000 Associates Corp. of North America 2.03%, 5/17/02 ................................. A-1+ P-1 25,000 25,005,496 Bayerische Landesbank Girozentrale 1.80%, 3/25/03 ................................. A-1+ P-1 25,000 24,985,288 1.80%, 3/26/03 ................................. A-1+ P-1 25,000 24,985,247 Canadian Imperial Bank of Commerce 1.799%, 10/2/02 ................................ A-1+ P-1 50,000 49,986,137 Citigroup Inc. 1.87%, 7/12/02 ................................. A-1+ P-1 60,000 60,000,000 Credit Agricole Indosuez S.A. 1.815%, 3/25/03 ................................ A-1+ P-1 25,000 24,990,192 Credit Suisse First Boston 1.855%, 5/7/02 ................................. A-1+ P-1 20,000 20,000,000 General Electric Capital Corp. 1.92%, 11/21/02 ................................ A-1+ P-1 20,000 20,006,206 J.P. Morgan Chase & Co. 2.00%, 7/8/02 .................................. A-1+ P-1 20,000 20,008,237 Merck & Co., Inc. 1.86%, 10/25/02 ................................ A-1+ P-1 10,000 10,000,000 Merrill Lynch & Co., Inc. 1.84%, 4/3/02 .................................. A-1+ P-1 175,000 175,000,000 Paccar Financial Corp. 1.91%, 4/26/02 ................................. A-1+ P-1 40,000 40,004,191 Salomon Smith Barney Holdings, Inc. 2.027%, 4/15/02 ................................ A-1 P-1 5,675 5,675,671
See Notes to Financial Statements. -------------------------------------------------------------------------------- 7 Cash Reserve Prime Shares Fund -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS March 31, 2002
RATING 1 -------------------------- PAR PRIME SERIES S&P MOODY'S (000) MARKET VALUE Toyota Motor Credit Corp. 1.84%, 4/2/02 .................................. A-1+ P-1 $55,000 $ 55,000,000 1.85%, 5/15/02 ................................. A-1+ P-1 50,000 50,000,000 1.959%, 12/23/02 ............................... A-1+ P-1 50,000 50,000,000 Unilever N.V. 1.92%, 10/24/02 ................................ A-1 P-1 10,000 10,010,451 US Bank N.A. 2.025%, 6/14/02 ................................ A-1 P-1 20,000 20,006,194 Verizon Global Funding 1.93%, 11/4/02 ................................. A-1 P-1 15,000 15,008,870 1.88%, 2/19/03 ................................. A-1 P-1 45,000 44,988,016 Westdeutsche Landesbank Girozentrale 1.82%, 3/24/03 ................................. A-1+ P-1 25,000 24,987,699 ------------ TOTAL FLOATING RATE-NOTES (Amortized Cost $925,632,892) ................................................................... 925,632,892 ------------ AGENCY DISCOUNT NOTES--0.57% Federal Farm Credit Bank 5.25%, 5/1/02 .................................. -- -- 20,000 20,016,075 2.81%, 4/4/03 .................................. -- -- 9,438 9,435,051 ------------ TOTAL AGENCY DISCOUNT NOTES (Amortized Cost $29,451,126) .................................................................... 29,451,126 ------------ CERTIFICATES OF DEPOSIT-YANKEE--8.48% Abbey National PLC 1.95%, 8/5/02 .................................. A-1+ P-1 25,000 25,000,000 2.40%, 11/19/02 ................................ A-1+ P-1 25,000 25,000,000 2.59%, 3/31/03 ................................. A-1+ P-1 10,000 10,003,936 Canadian Imperial Bank of Commerce 1.69%, 7/16/02 ................................. A-1+ P-1 35,000 35,000,000 1.85%, 7/31/02 ................................. A-1+ P-1 75,000 75,000,000 Credit Argricole Indosuez S.A. 1.95%, 8/30/02 ................................. A-1+ P-1 30,000 30,000,000 Dexia Bank Belgium 4.26%, 5/22/02 ................................. A-1+ P-1 20,000 20,000,136 Natexis Banque Populaires 1.86%, 5/7/02 .................................. A-1 P-1 25,000 25,000,000 Norddeutsche Landesbank Girozentrale 2.17%, 11/18/02 ................................ A-1+ P-1 15,000 14,977,454 Rabobank Nederland N.V. 2.76%, 3/24/03 ................................. A-1+ P-1 20,000 19,953,812 Royal Bank of Scotland PLC 4.28%, 4/23/02 ................................. A-1 P-1 25,000 24,999,854 UBS AG 4.10%, 5/20/02 ................................. A-1+ P-1 50,000 50,029,544 1.94%, 8/5/02 .................................. A-1 P-1 35,000 35,000,000 Westdeutsche Landesbank Girozentrale 2.28%, 1/23/03 ................................. A-1+ P-1 25,000 25,000,000 2.27%, 1/27/03 ................................. A-1+ P-1 20,000 19,983,672 ------------ TOTAL CERTIFICATES OF DEPOSIT-YANKEE (Amortized Cost $434,948,408) ................................................................... 434,948,408 ------------
See Notes to Financial Statements. -------------------------------------------------------------------------------- 8 Cash Reserve Prime Shares Fund -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS March 31, 2002
RATING 1 -------------------------- PAR PRIME SERIES S&P MOODY'S (000) MARKET VALUE CERTIFICATES OF DEPOSIT-EURODOLLAR--7.99% Bank of Scotland 3.63%, 5/10/02 ................................. A-1+ P-1 $40,000 $ 40,000,000 BNP Paribas 1.89%, 7/8/02 .................................. A-1+ P-1 75,000 75,000,000 Credit Agricole Indosuez S.A. 4.03%, 6/13/02 ................................. A-1+ P-1 25,000 25,000,465 2.17%, 9/30/02 ................................. A-1+ P-1 35,000 34,998,252 Halifax PLC 2.27%, 4/18/02 ................................. A-1+ P-1 45,000 45,002,493 1.82%, 4/22/02 ................................. A-1+ P-1 25,000 25,000,000 ING Bank N.V. 3.615%, 8/13/02 ................................ A-1+ P-1 30,000 30,000,000 Landesbank Hessen-Thuringen Girozentrale 4.76%, 4/22/02 ................................. A-1+ P-1 30,000 30,008,166 Nordea Bank Finland PLC 1.91%, 8/1/02 .................................. A-1 P-1 20,000 20,000,496 Nordea North America, Inc. 1.76%, 7/22/02 ................................. A-1 P-1 35,000 35,001,079 Unicredito Italiano SPA 1.88%, 5/7/02 .................................. A-1 P-1 50,000 50,000,494 ------------ TOTAL CERTIFICATES OF DEPOSIT-EURODOLLAR (Amortized Cost $410,011,445) ................................................................... 410,011,445 ------------ EURO TIME DEPOSITS-CAYMAN--4.78% Allied Irish Banks PLC 2.188%, 5/28/02 ................................ A-1 P-1 25,000 25,000,000 Landesbank Baden Wurttemberg 2.31%, 4/17/02 ................................. A-1+ P-1 50,000 50,000,000 1.94%, 6/17/02 ................................. A-1+ P-1 70,000 70,000,000 Norddeutsche Landesbank Girozentrale 1.83%, 5/2/02 .................................. A-1+ P-1 50,000 50,000,000 2.33%, 9/30/02 ................................. A-1+ P-1 50,000 50,000,000 ------------ TOTAL EURO TIME DEPOSITS-CAYMAN (Amortized Cost $245,000,000) ................................................................... 245,000,000 ------------ MEDIUM-TERM NOTES--0.19% International Lease Finance Corp. 7.20%, 4/17/02 ................................. A-1+ P-1 10,000 10,011,158 ------------ TOTAL MEDIUM-TERM NOTES (Amortized Cost $10,011,157) .................................................................... 10,011,158 ------------ FEDERAL HOME LOAN MORTGAGE COMPANY--0.52% Federal Home Loan Mortgage Company 6.625%, 8/15/02 ................................ -- -- 15,000 15,260,286 2.45%, 1/16/03 ................................. -- -- 11,270 11,270,000 ------------ TOTAL FEDERAL HOME LOAN MORTGAGE COMPANY (Amortized Cost $26,530,286) .................................................................... 26,530,286 ------------
See Notes to Financial Statements. -------------------------------------------------------------------------------- 9 Cash Reserve Prime Shares Fund -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS March 31, 2002
RATING 1 -------------------------- PAR PRIME SERIES S&P MOODY'S (000) MARKET VALUE FEDERAL HOME LOAN MORTGAGE BANK--2.63% Federal Home Loan Bank 7.25%, 5/15/02 ................................. -- -- $20,000 $ 20,078,462 3.75%, 7/23/02 ................................. -- -- 10,000 9,996,210 6.75%, 8/15/02 ................................. -- -- 15,000 15,268,919 6.25%, 11/15/02 ................................ -- -- 12,000 12,281,286 5.125%, 1/13/03 ................................ -- -- 20,760 21,268,568 2.35%, 2/21/03 ................................. -- -- 20,000 19,988,836 2.50%, 2/21/03 ................................. -- -- 25,000 24,997,767 2.40%, 3/20/03 ................................. -- -- 10,820 10,815,590 ------------ TOTAL FEDERAL HOME LOAN MORTGAGE BANK (Amortized Cost $134,695,638) ................................................................... 134,695,638 ------------ FEDERAL NATIONAL MORTGAGE ASSOCIATION--1.26% Federal National Mortgage Association 1.75%, 5/8/02 .................................. -- -- 50,000 49,910,069 2.25%, 2/7/03 .................................. -- -- 15,000 15,000,000 ------------ TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION (Amortized Cost $64,910,069) .................................................................... 64,910,069 ------------ MONEY MARKET FUNDS--5.88% Dreyfus Cash Management 1.83%, 4/1/02 .................................. -- -- 15,000 15,000,000 Federated Prime Cash Obligation Fund 1.83%, 4/1/02 .................................. -- -- 75,000 75,000,000 AIM Liquid Assets Portfolio 1.87%, 4/1/02 .................................. -- -- 211,718 211,718,000 ------------ TOTAL MONEY MARKET FUNDS (Amortized Cost $301,718,000) ................................................................... 301,718,000 ------------ US TREASURY OBLIGATIONS--0.73% US Treasury Bill 1.715%, 5/9/02 ................................. -- -- 25,000 24,954,743 US Treasury Note 5.75%, 10/31/02 ................................ -- -- 12,000 12,264,391 ------------ TOTAL US TREASURY OBLIGATIONS (Amortized Cost $37,219,134) .................................................................... 37,219,134 ------------ FUNDING AGREEMENTS--0.88% General Electric Capital Assurance Co. 1.991%, 9/3/02 ................................. A-1+ P-1 45,000 45,000,000 ------------ TOTAL FUNDING AGREEMENT (Amortized Cost $45,000,000) .................................................................... 45,000,000 ------------
See Notes to Financial Statements. -------------------------------------------------------------------------------- 10 Cash Reserve Prime Shares Fund -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS March 31, 2002
PAR PRIME SERIES (000) MARKET VALUE REPURCHASE AGREEMENTS--11.46% Tri Party Repurchase Agreement with J.P. Morgan Securities, Inc., dated 3/28/02, 1.92%, principal and interest in the amount of $201,009,032, due 4/1/02, (collateralized by Fannie Maes with a par value of $217,137,121, coupon rates from 6.00% to 7.50%, due from 8/1/16 thru 3/1/32, with a market value of $206,004,133). .........$200,000 $ 200,000,000 Tri Party Repurchase Agreement with UBS Warburg, dated 3/28/02, 1.90%, principal and interest in the amount of $389,960,953, due 4/1/02, (collateralized by Fannie Maes and Resolution Funding Corp. Interest holdings with a par value of $549,713,000, coupon rates from 0.00% to 9.375%, due from 4/15/02 thru 10/15/29, with a market value of $395,500,552). .................................................... 387,744 387,744,141 -------------- TOTAL REPURCHASE AGREEMENTS (Amortized Cost $587,744,141) ................................................................ 587,744,141 -------------- TOTAL INVESTMENTS (Amortized Cost $5,129,615,387)3 ............................................. 100.00% $5,129,615,387 LIABILITIES IN EXCESS OF OTHER ASSETS ........................................... 0.00 (182,012) ------ -------------- NET ASSETS ...................................................................... 100.00% $5,129,433,375 ====== ============== -------------------------------------------------------------------------------- 1 Unaudited. 2 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. 3 Also aggregate cost for federal tax purposes. MOODY'S RATINGS: P-1 Commercial paper bearing this designation is of the best quality. S&P RATINGS: 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 Cash Reserve Prime Shares -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES PRIME SERIES MARCH 31, 2002 ASSETS Investments, at amortized cost ........................... $5,129,615,387 Receivable for capital shares sold ....................... 4,906 Interest receivable ...................................... 15,204,860 Prepaid expenses and other ............................... 1,208,433 -------------- Total assets ............................................... 5,146,033,586 -------------- LIABILITIES Payable for securities purchased ......................... 9,435,051 Payable for capital shares redeemed ...................... 429,373 Income dividend payable .................................. 2,312,688 Advisory fees payable .................................... 1,134,916 Distribution fees payable ................................ 963,706 Transfer agent fees payable .............................. 663,678 Custody fees payable ..................................... 67,346 Accounting fees payable .................................. 15,508 Accrued expenses and other ............................... 1,577,945 -------------- Total liabilities .......................................... 16,600,211 -------------- NET ASSETS ................................................. $5,129,433,375 ============== COMPOSITION OF NET ASSETS Paid-in capital .......................................... $5,129,029,989 Undistributed net investment income ...................... 158,140 Accumulated net realized gain from investment transactions 245,246 -------------- NET ASSETS ................................................. $5,129,433,375 ============== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE Deutsche Bank Alex. Brown Cash Reserve Prime Shares 1 ... $ 1.00 ============== Deutsche Bank Alex. Brown Cash Reserve Prime Institutional Shares 2 ........................ $ 1.00 ============== Cash Reserve Prime Class A Shares 3 ..................... $ 1.00 ============== Cash Reserve Prime Class B Shares 4 ..................... $ 1.00 ============== Cash Reserve Prime Class C Shares 5 ..................... $ 1.00 ============== Quality Cash Reserve Prime Shares 6 ..................... $ 1.00 ============== -------------------------------------------------------------------------------- 1 Net asset value, offering and redemption price per share (based on net assets of $4,320,764,048 and 4,320,415,351 shares outstanding). 2 Net asset value, offering and redemption price per share (based on net assets of $750,110,039 and 750,063,357 shares outstanding). 3 Net asset value, offering and redemption price per share (based on net assets of $11,524,175 and 11,522,981 shares outstanding). 4 Net asset value, offering and redemption price per share (based on net assets of $10,761,040 and 10,760,311 shares outstanding). 5 Net asset value, offering and redemption price per share (based on net assets of $679,304 and 679,343 shares outstanding). 6 Net asset value, offering and redemption price per share (based on net assets of $35,594,769 and 35,585,928 shares outstanding). See Notes to Financial Statements. -------------------------------------------------------------------------------- 12 Cash Reserve Prime Shares -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS PRIME SERIES FOR THE YEAR ENDED MARCH 31, 2002 INVESTMENT INCOME: Interest ............................................ $185,466,404 Dividend ............................................ 16,152,608 ------------ Total income ........................................... 201,619,012 ------------ EXPENSES Investment advisory fees ............................ 14,871,017 Distribution fees: Deutsche Bank Alex. Brown Cash Reserve Prime Shares 12,224,901 Cash Reserve Prime Class A Shares ................. 29,144 Cash Reserve Prime Class B Shares ................. 89,867 Cash Reserve Prime Class C Shares ................. 8,821 Quality Cash Reserve Prime Shares ................. 229,233 Transfer agent fees ................................. 4,209,655 Shareholder service fees: Deutsche Bank Alex. Brown Cash Reserve Prime Shares 3,148,858 Cash Reserve Prime Class B Shares ................. 29,956 Cash Reserve Prime Class C Shares ................. 2,941 Registration fees ................................... 468,967 Printing and shareholder reports .................... 375,043 Custody fees ........................................ 318,718 Directors' fees ..................................... 249,381 Accounting fees ..................................... 188,906 Professional fees ................................... 92,194 Miscellaneous ....................................... 287,790 ------------ Total expenses ......................................... 36,825,392 ------------ NET INVESTMENT INCOME .................................. 164,793,620 NET REALIZED GAIN FROM INVESTMENT TRANSACTIONS ......... 245,752 ------------ NET INCREASE IN NET ASSETS FROM OPERATIONS ............. $165,039,372 ============ See Notes to Financial Statements. -------------------------------------------------------------------------------- 13 Cash Reserve Prime Shares -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS
PRIME SERIES FOR THE YEARS ENDED MARCH 31, 2002 2001 INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment income ........................... $ 164,793,620 $ 364,872,769 Net realized gain from investment transactions .. 245,752 73,226 ---------------- ---------------- Net increase in net assets from operations ...... 165,039,372 364,945,995 ---------------- ---------------- DISTRIBUTIONS TO SHAREHOLDERS Net investment income: Deutsche Bank Alex. Brown Cash Reserve Prime Shares ....................... (135,065,270) (317,575,763) Deutsche Bank Alex. Brown Cash Reserve Prime Institutional Shares ......... (28,192,942) (43,000,080) Cash Reserve Prime Class A Shares ............. (327,361) (844,641) Cash Reserve Prime Class B Shares ............. (241,512) (280,056) Cash Reserve Prime Class C Shares ............. (25,475) (41,081) Quality Cash Reserve Prime Shares ............. (975,379) (3,131,157) ---------------- ---------------- Total distributions ................................ (164,827,939) (364,872,778) ---------------- ---------------- CAPITAL SHARE TRANSACTIONS (at net asset value of $1.00 per share) Net proceeds from sales of shares ............... 32,128,229,715 49,691,006,111 Net dividend reinvestments ...................... 159,795,311 340,652,084 Net cost of shares redeemed ..................... (33,641,388,146) (50,054,007,599) ---------------- ---------------- Net decrease in net assets from capital share transactions ............... (1,353,363,120) (22,349,404) ---------------- ---------------- TOTAL DECREASE IN NET ASSETS ....................... (1,353,151,687) (22,276,187) NET ASSETS Beginning of year ............................... 6,482,585,062 6,504,861,249 ---------------- ---------------- End of year ..................................... $ 5,129,433,375 $ 6,482,585,062 ================ ================
See Notes to Financial Statements. -------------------------------------------------------------------------------- 14 Cash Reserve Prime Shares -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
CLASS A SHARES FOR THE YEARS ENDED MARCH 31, 2002 2001 2000 1999 1998 PER SHARE OPERATING PERFORMANCE: NET ASSET VALUE, BEGINNING OF YEAR ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- INCOME FROM INVESTMENT OPERATIONS Net investment income ............................... 0.0277 0.0579 0.0483 0.0474 0.0494 DISTRIBUTIONS TO SHAREHOLDERS Net investment income ............................... (0.0277) (0.0579) (0.0483) (0.0474) (0.0494) ------- ------- ------- ------- ------- NET ASSET VALUE, END OF YEAR ........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN ................................ 2.80% 5.95% 4.94% 4.85% 5.05% SUPPLEMENTAL DATA AND RATIOS: Net assets, end of year (000s omitted) .............. $11,524 $11,882 $16,214 $13,028 $7,737 Ratios to average net assets: Net investment income ............................. 2.81% 5.73% 4.89% 4.67% 4.94% Expenses .......................................... 0.61% 0.61% 0.63% 0.63% 0.67%
See Notes to Financial Statements. -------------------------------------------------------------------------------- 15 Cash Reserve Prime Shares -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
CLASS B SHARES FOR THE YEARS ENDED MARCH 31, 2002 2001 2000 1999 1998 PER SHARE OPERATING PERFORMANCE: NET ASSET VALUE, BEGINNING OF YEAR ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- ------- ------- INCOME FROM INVESTMENT OPERATIONS Net investment income ............................... 0.0202 0.0505 0.0406 0.0400 0.0418 DISTRIBUTIONS TO SHAREHOLDERS Net investments income .............................. (0.0202) (0.0505) (0.0406) (0.0400) (0.0418) ------- ------- ------- ------- ------- NET ASSET VALUE, END OF YEAR ........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======= ======= TOTAL INVESTMENT RETURN ................................ 2.04% 5.17% 4.14% 4.07% 4.27% SUPPLEMENTAL DATA AND RATIOS: Net assets, end of year (000s omitted) .............. $10,761 $11,975 $2,980 $2,356 $184 Ratios to average net assets: Net investment income ............................. 2.01% 5.00% 4.14% 3.92% 4.18% Expenses .......................................... 1.36% 1.39% 1.38% 1.37% 1.42%
See Notes to Financial Statements. -------------------------------------------------------------------------------- 16 Cash Reserve Prime Shares -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS
CLASS C SHARES FOR THE PERIOD JANUARY 18, 2000 1 FOR THE YEARS ENDED MARCH 31, THROUGH MARCH 31, 2002 2001 2000 PER SHARE OPERATING PERFORMANCE: NET ASSET VALUE, BEGINNING OF PERIOD .................... $ 1.00 $ 1.00 $ 1.00 -------- -------- ------- INCOME FROM INVESTMENT OPERATIONS Net investment income ................................ 0.0202 0.0515 0.0115 DISTRIBUTIONS TO SHAREHOLDERS Net investment income ................................ (0.0202) (0.0515) (0.0115) -------- -------- ------- NET ASSET VALUE, END OF PERIOD .......................... $ 1.00 $ 1.00 $ 1.00 ======== ======== ======= TOTAL INVESTMENT RETURN ................................. 2.04% 5.28% 1.15% SUPPLEMENTAL DATA AND RATIOS: Net assets, end of period (000s omitted) ............. $679 $1,592 $779 Ratios to average net assets: Net investment income .............................. 2.16% 5.07% 6.00%2 Expenses ........................................... 1.36% 1.34% 0.31%2 -------------------------------------------------------------------------------- 1 Commencement of operations. 2 Annualized.
See Notes to Financial Statements. -------------------------------------------------------------------------------- 17 Cash Reserve Prime Shares -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES A. ORGANIZATION Deutsche Bank Alex. Brown Cash Reserve Fund, Inc. (the 'Fund') is registered under the Investment Company Act of 1940 (the 'Act'), as amended, as a diversified, open-end management investment company. The Fund is organized as a corporation under the laws of the state of Maryland. The Prime Series is one of the series the Fund offers to investors. The Prime Series offers six classes of shares to investors: Deutsche Bank Alex. Brown Cash Reserve Prime Shares ('Prime Shares'), Cash Reserve Prime Class A Shares ('Class A Shares'), Cash Reserve Prime Class B Shares ('Class B Shares'), Cash Reserve Prime Class C Shares ('Class C Shares'), Quality Cash Reserve Prime Shares ('Quality Cash Shares') and Deutsche Bank Alex. Brown Cash Reserve Prime Institutional Shares ('Prime Institutional Shares'). All shares have equal rights with respect to voting except that shareholders vote separately on matters affecting their rights as holders of a particular series or class. 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. Details concerning the Series' investment objective and policies and the risk factors associated with the Series' investments are described in the Series' Prospectus and Statement of Additional Information. B. VALUATION OF SECURITIES The Fund values its investments at amortized cost. C. SECURITIES TRANSACTIONS AND INVESTMENT INCOME Securities transactions are recorded on trade date. Realized gains and losses are determined by comparing the proceeds of a sale or the cost of a purchase with a specific offsetting transaction. Interest income, including amortization of premiums and accretion of discounts, is accrued daily. Estimated expenses are also accrued daily. Distribution or service fees specifically attributable to a class are allocated to that class. All other expenses, income, gains and losses are allocated among the classes based upon their relative net assets. D. DISTRIBUTIONS The Fund distributes all of its net investment income in the form of dividends, which are declared and recorded daily. Accumulated daily dividends are distributed to shareholders monthly. E. FEDERAL INCOME TAXES It is the Fund's policy to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable income to shareholders. Therefore, no federal income taxes have been accrued. F. REPURCHASE AGREEMENTS The Prime Series (the 'Series') may make short term investments in repurchase agreements that are fully collateralized by US government securities. Under the terms of a repurchase agreement, a financial institution sells fixed income securities to the Series and agrees to buy them back on a specified day in return for the principal amount of the original sale plus accrued interest. The custodial bank holds the collateral in a separate account until the agreement matures. If the value of the securities falls below the principal amount of the repurchase agreement plus accrued interest, the financial institution deposits additional collateral by the following business day. If the financial institution either fails to deposit the required additional collateral or fails to repurchase the securities as agreed, the Series has the right to sell the securities and recover any resulting loss from the financial institution. If the financial institution enters into bankruptcy, the Series' claims on the collateral may be subject to legal proceedings. G. ESTIMATES In preparing its financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions. Actual results may be different. -------------------------------------------------------------------------------- 18 Cash Reserve Prime Shares -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS NOTE 2--FEES AND TRANSACTIONS WITH AFFILIATES Investment Company Capital Corp. ('ICCC'), an indirect, wholly owned subsidiary of Deutsche Bank AG, is the Fund's Advisor. The Fund pays the Advisor an annual fee based on its average daily net assets which is calculated daily and paid monthly at the following annual rates: 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 the amount in excess of $3.5 billion. The Prime Series pays the Advisor an additional advisory fee that is calculated daily and paid monthly at the annual rate of 0.02% of its average daily net assets. ICCC is the Fund's accounting and transfer agent. The Fund pays the accounting agent an annual fee based on its average daily net assets which is calculated daily and paid monthly. The Fund pays the transfer agent a per account fee which is accrued daily and paid monthly. Deutsche Bank Trust Company Americas (formerly, Bankers Trust Company), an affiliate of ICCC, is the Fund's custodian. The Fund pays the custodian an annual fee. Certain officers and directors of the Fund are also officers or directors of ICCC or affiliated with Deutsche Bank AG. These persons are not paid by the Fund for serving in these capacities. NOTE 3--OTHER FEES ICC Distributors, Inc. is the Fund's Distributor. As compensation for these services, the Prime Series pays the Distributor an annual fee, pursuant to Rule 12b-1, based on its average daily net assets, which is calculated daily and paid monthly at the following annual rates: 0.25% of the Prime Shares and Cash Reserve Prime Class A Shares, 0.60% of the Quality Cash Shares and 0.75% of the Cash Reserve Prime Class B Shares and Cash Reserve Prime Class C Shares. The Prime Series also pays the Distributor a shareholder servicing fee based on the average daily net assets of the Cash Reserve Prime Class B Shares and Cash Reserve Prime Class C Shares which is calculated daily and paid monthly at the annual rate of 0.25%. The Fund does not pay fees on the Prime Institutional Shares. The Prime Shares pay the Distributor a shareholder servicing fee, which is calculated daily and paid monthly at an annual rate of 0.07%. Prior to July 5, 2001, the fee was 0.05%. The Distributor uses this fee to compensate third parties that provide shareholder services to their clients who own shares. -------------------------------------------------------------------------------- 19 Cash Reserve Prime Shares -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS NOTE 4--CAPITAL SHARE TRANSACTIONS The Fund is authorized to issue up to 20.81 billion shares of $.001 par value capital stock (12.66 billion Prime Series, 3.55 billion Treasury Series, 4.25 billion Tax-Free Series and 350 million undesignated). Transactions in capital shares were as follows (at net asset value of $1.00 per share): For the For the Year Ended Year Ended March 31, 2002 March 31, 2001 -------------- -------------- Prime Series: Sold: Prime Shares ............... 21,051,181,674 34,781,774,664 Cash Reserve Prime Class A Shares ........... 68,264,960 369,574,242 Cash Reserve Prime Class B Shares ........... 9,355,858 21,570,678 Cash Reserve Prime Class C Shares ........... 2,927,624 3,611,704 Prime Institutional Shares . 10,881,071,233 14,248,970,131 Quality Cash Shares ........ 115,428,366 265,504,692 --------------- ---------------- 32,128,229,715 49,691,006,111 Reinvested: Prime Shares ............... 132,472,386 300,567,137 Cash Reserve Prime Class A Shares ........... 254,852 538,430 Cash Reserve Prime Class B Shares ........... 217,077 238,869 Cash Reserve Prime Class C Shares ........... 20,583 29,796 Prime Institutional Shares . 25,874,526 36,273,237 Quality Cash Shares ........ 955,887 3,004,615 --------------- ---------------- 159,795,311 340,652,084 Redeemed: Prime Shares ............... (22,598,854,964) (35,119,236,863) Cash Reserve Prime Class A Shares ........... (68,877,650) (374,445,652) Cash Reserve Prime Class B Shares ........... (10,787,574) (12,814,093) Cash Reserve Prime Class C Shares ........... (3,860,866) (2,828,014) Prime Institutional Shares . (10,828,399,912) (14,251,483,991) Quality Cash Shares ........ (130,607,180) (293,198,986) --------------- ---------------- (33,641,388,146) (50,054,007,599) --------------- ---------------- Net decrease ............... (1,353,363,120) (22,349,404) =============== ================ NOTE 5--FEDERAL INCOME TAXES At March 31, 2002, capital contributions, accumulated undistributed net investment income, and accumulated net realized gain (loss) from investments have been adjusted for current period permanent book/tax differences which arose principally from distribution reclassifications. These reclassifications resulted in the following increases/(decreases) in the components of net assets: Undistributed Undistributed Net Investment Net Realized Paid-in Income Gain/(Loss) Capital -------------- ------------- ------- Cash Reserve-- Prime Series $73,733 $(73,732) $(1) Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from Generally Accepted Accounting Principles. Distributions during the year ended March 31, 2002 were characterized as follows for tax purposes: Ordinary income $164,827,939 At March 31, 2002, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income $1,137,198 At March 31, 2002, the Fund deferred post-October capital losses of $31,960 to the next fiscal year ending March 31, 2003. NOTE 6--SUBSEQUENT EVENT On April 5, 2002, the Fund changed its name to Deutsche Bank Alex. Brown Cash Reserve Fund, Inc. As a result, certain classes of the Fund have changed their names. This change will result in modifications to the presentation of the Fund's periodic reports on behalf of certain classes of the Fund. -------------------------------------------------------------------------------- 20 Cash Reserve Prime Shares -------------------------------------------------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Deutsche Bank Alex. Brown Cash Reserve Fund, Inc. and Cash Reserve Prime Shares Class A, B and C Shareholders of the Prime Series: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Prime Series (one of the portfolios constituting the Deutsche Bank Alex. Brown Cash Reserve Fund, Inc., hereafter referred to as the 'Fund') at March 31, 2002, 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 accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America, 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, 2002 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland May 3, 2002 -------------------------------------------------------------------------------- TAX INFORMATION (Unaudited) For the Tax Year Ended March 31, 2002 The amounts shown may differ from those elsewhere in this report because of differences between tax and financial reporting requirements. Of ordinary dividends made during the fiscal year ended March 31, 2002, 1.27% has been derived from investments in US Treasury and other direct US Government Obligations. All or a part of the distributions from this income may be exempt from taxation at the state level. Consult your tax advisor for state specific information. -------------------------------------------------------------------------------- 21 Cash Reserve Prime Shares -------------------------------------------------------------------------------- FUND DIRECTORS
NUMBER OF FUNDS IN THE FUND NAME, BIRTH DATE AND BUSINESS EXPERIENCE AND COMPLEX OVERSEEN POSITION WITH THE FUND 1 DIRECTORSHIPS DURING THE PAST 5 YEARS BY DIRECTOR 2 --------------------------------------------------------------------------------------------------------------- INDEPENDENT DIRECTORS --------------------------------------------------------------------------------------------------------------- Richard R. Burt Chairman, IEP Advisors, Inc. (July 1998 to 25 February 3, 1947 present); Chairman of the Board, Weirton Director since 1999. Steel Corporation (April 1996 to present); Member of the Board, Hollinger International, Inc. (publishing) (1995 to present) and HCL Technologies Limited (information technology) (April 1999 to present); Director, UBS Mutual Funds (formerly known as Brinson and Mitchell Hutchins families of funds) (registered investment companies) (1995 to present); and Member, Textron Inc. International Advisory Council (July 1996 to present). Formerly, Partner, McKinsey & Company (consulting) (1991-1994); Member of the Board, Homestake Mining (mining and exploration) (1998-February 2001), Archer Daniels Midland Company (agribusiness operations) (October 1996 to June 2001) and Anchor Gaming (gaming software and equipment) (March 1999 to December 2001); and US Chief Negotiator in Strategic Arms Reduction Talks (START) with former Soviet Union and US Ambassador to the Federal Republic of Germany (1985-1991). --------------------------------------------------------------------------------------------------------------- Joseph R. Hardiman Private Equity Investor (1997 to present); 23 May 27, 1937 Director, Soundview Technology Group Inc. Director since 1998. (investment banking) (July 1998 to present), Corvis Corporation, (optical networks) (July 2000 to present), The Nevis Fund (registered investment company) (July 1999 to present), Brown Investment Advisory & Trust Company (February 2001 to present) and ISI Family of Funds (registered investment companies) (March 1998 to present). Formerly, Director, Circon Corp. (medical instruments) (November 1998-January 1999); President and Chief Executive Officer, The National Association of Securities Dealers, Inc. and The NASDAQ Stock Market, Inc., (1987-1997); Director, Flag Investors Emerging Growth Fund, Inc. (now known as Emerging Growth Fund, Inc.) and Flag Investors Short-Intermediate Income Fund, Inc. (now known as Short-Intermediate Income Fund, Inc.) (registered investment companies) (resigned 2000);Chief Operating Officer of Alex. Brown & Sons Incorporated (now Deutsche Bank Securities Inc.) (1985-1987) and General Partner, Alex. Brown & Sons Incorporated (now Deutsche Bank Securities Inc.), (1976-1985). ---------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 22 Cash Reserve Prime Shares -------------------------------------------------------------------------------- FUND DIRECTORS
NUMBER OF FUNDS IN THE FUND NAME, BIRTH DATE AND BUSINESS EXPERIENCE AND COMPLEX OVERSEEN POSITION WITH THE FUND 1 DIRECTORSHIPS DURING THE PAST 5 YEARS BY DIRECTOR 2 --------------------------------------------------------------------------------------------------------------- INDEPENDENT DIRECTORS --------------------------------------------------------------------------------------------------------------- Louis E. Levy Director, Household International (banking 25 November 16, 1932 and finance) (1992 to present) and ISI Director since 1994. Family of Funds (registered investment companies) (1994 to present). Formerly, Chairman of the Quality Control Inquiry Committee, American Institute of Certified Public Accountants (1992-1998); Trustee, Merrill Lynch Funds for Institutions (1991-1993); Adjunct Professor, Columbia University-Graduate School of Business (1991-1992); Director, Kimberly-Clark Corporation (personal consumer products) (retired 2000) and Partner, KPMG Peat Marwick (retired 1990). --------------------------------------------------------------------------------------------------------------- Eugene J. McDonald Executive Vice President, Investment 25 July 14, 1932 Counsel, Duke University (September 2000 to Director since 1995. present); Advisory Board Member, A.M. Pappas & Associates (life sciences industry) (2000 to present) and Ashford Capital Management (2000 to present); Committee Member, North Carolina Treasurer's Office Investment Advisory Committee (2001 to present); Director, Victory Funds (registered investment companies) (April 1993 to present); Lead Director, National Commerce Bank Corporation (NCBC) (banking) (July 2000 to present); Principal and Chief Investment Officer, Quellos Private Capital Markets, LLC (investments) (September 2001 to present); Director, RedHat, Inc. (software) (July 2000 to present) and Incara Pharmaceuticals (June 2001 to present). Formerly, Chairman, Winston Hedged Equity Group (July 2000-August 2001); Executive Vice Chairman and Director, Central Carolina Bank & Trust (banking) (January 1998-July 2000); Director, AMBAC Treasurers Trust (registered investment company) (July 1996-August 1997), DP Mann Holdings (insurance) (December 1996-December 1998), ISI Family of Funds (registered investment companies) (1992-1999); President, Duke Management Company (investments) (July 1990-September 2000) and Executive Vice President, Duke University (education, research and health care) (July 1984-September 2000). --------------------------------------------------------------------------------------------------------------- Rebecca W. Rimel President and Chief Executive Officer, The 25 April 10, 1951 Pew Charitable Trusts (charitable Director since 1995. foundation) (1994 to present) and Director and Executive Vice President, The Glenmede Trust Company (investment trust and wealth management) (1994 to present). Formerly, Executive Director, The Pew Charitable Trusts (1988-1994) and Director, ISI Family of Funds (registered investment companies) (1997-1999). ---------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 23 Cash Reserve Prime Shares -------------------------------------------------------------------------------- FUND DIRECTORS
NUMBER OF FUNDS IN THE FUND NAME, BIRTH DATE AND BUSINESS EXPERIENCE AND COMPLEX OVERSEEN POSITION WITH THE FUND 1 DIRECTORSHIPS DURING THE PAST 5 YEARS BY DIRECTOR 2 --------------------------------------------------------------------------------------------------------------- INDEPENDENT DIRECTORS --------------------------------------------------------------------------------------------------------------- Carl W. Vogt Of Counsel, Fulbright & Jaworski, L.L.P 25 April 20, 1936 (law) (2002 to present); Director, Yellow Director since 1995. Corporation (trucking) (1996 to present), American Science & Engineering (x-ray detection equipment) (1997 to present) and ISI Family of Funds (registered investment companies) (1999 to present). Formerly, Chairman and Member, National Transportation Safety Board (1992-1994); Director, National Railroad Passenger Corporation (Amtrak) (1991-1992); Member, Aviation System Capacity Advisory Committee (Federal Aviation Administration); President (interim) of Williams College (1999-2000); President, certain funds in the Deutsche Asset Management Family of Funds (formerly, Flag Investors Family of Funds) (registered investment companies) (1999-2000); and Senior Partner, Fulbright &Jaworski L.L.P.(law), retired December 31, 2001. --------------------------------------------------------------------------------------------------------------- Robert H. Wadsworth President, Robert H. Wadsworth Associates, 25 January 29, 1940 Inc. (consulting firm) (1982 to present), Director since 1999. President and Trustee, Trust for Investment Managers (registered investment company) (1999 to present); Director, The Germany Fund Inc. (1986 to present), The New Germany Fund, Inc. (1992 to present) and Central European Equity Fund, Inc. (1986 to present). Formerly President, Investment Company Administration, L.L.C. (1992*-July 2001); President, Treasurer and Director, First Fund Distributors, Inc. (1990-January 2002); Vice President, Professionally Managed Portfolios (1999-2002) and Advisors Series Trust (1997-2002)(registered investment companies); President, Guinness Flight Investment Funds, Inc. (registered investment companies) (1994-1998). * This is the inception date of the corporation, which was the predecessor to the LLC. --------------------------------------------------------------------------------------------------------------- INTERESTED DIRECTORS --------------------------------------------------------------------------------------------------------------- Richard T. Hale 3 Managing Director, Deutsche Bank Securities 52 July 17, 1945 Inc. (formerly Deutsche Bank Alex. Brown Director since 1989. Inc.) (June 1999 to present) and Deutsche Asset Management Americas (June 1999 to present); Director and President, Investment Company Capital Corp. (registered investment advisor) (April 1996 to present) and Deutsche Asset Management Mutual Funds (1989 to present); Director, Deutsche Global Funds, Ltd. (January 2000 to present), CABEI Fund (June 2000 to present) and North American Income Fund (September 2000 to present); Vice President, Deutsche Asset Management, Inc. (September 2000 to present). Chartered Financial Analyst. Formerly, Director, ISI Family of Funds (registered investment companies) (1992-1999). ---------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------- 24 Cash Reserve Prime Shares -------------------------------------------------------------------------------- FUND DIRECTORS
NUMBER OF FUNDS IN THE FUND NAME, BIRTH DATE AND BUSINESS EXPERIENCE AND COMPLEX OVERSEEN POSITION WITH THE FUND 1 DIRECTORSHIPS DURING THE PAST 5 YEARS BY DIRECTOR 2 --------------------------------------------------------------------------------------------------------------- INTERESTED DIRECTORS --------------------------------------------------------------------------------------------------------------- Truman T. Semans 3 Vice Chairman, Brown Investment Advisory & 25 October 27, 1926 Trust Company (1993 to present); Director Director since 1995. and Chairman, Virginia Hot Springs, Inc. (property management) (1991 to present) and Director of Upstate (biotechnology) (1994 to present). Formerly, Managing Director and Vice Chairman, Alex. Brown & Sons Incorporated (Deutsche Bank Securities Inc.) (1974-1998); Director, Investment Company Capital Corp. (registered investment advisor) (1996-2000) and Director, ISI Family of Funds (registered investment companies) (1997-1999). --------------------------------------------------------------------------------------------------------------- NAME, BIRTH DATE AND POSITION WITH THE TRUST AND BUSINESS EXPERIENCE AND THE PORTFOLIO TRUST DIRECTORSHIPS DURING THE PAST 5 YEARS --------------------------------------------------------------------------------------------------------------- OFFICERS --------------------------------------------------------------------------------------------------------------- Richard T. Hale See information provided under Interested Directors. President since 2000. --------------------------------------------------------------------------------------------------------------- Amy Olmert Director, Deutsche Asset Management (1999 Secretary since 1997. to present) and Certified Public May 14, 1963 Accountant. Formerly, Vice President, BT Alex. Brown Incorporated (Deutsche Bank Securities Inc.) (1997-1999) and Senior Manager and other positions, Coopers & Lybrand L.L.P. (PricewaterhouseCoopers LLP) (1988-1997). --------------------------------------------------------------------------------------------------------------- Daniel O. Hirsch Managing Director, Deutsche Asset Assistant Secretary Management (2002 to present) and Director, since 1999. Deutsche Global Funds Ltd. (2002 to March 27, 1954 present). Formerly, Director, Deutsche Asset Management (1999-2002), Principal, BT Alex. Brown Incorporated (Deutsche Bank Securities Inc.) (1998-1999) and Assistant General Counsel, United States Securities and Exchange Commission (1993-1998). --------------------------------------------------------------------------------------------------------------- Charles A. Rizzo Director, Deutsche Asset Management (April Treasurer since 1999. 2000 to present); Certified Public August 5, 1957 Accountant and Certified Management Accountant. Formerly, Vice President and Department Head, BT Alex. Brown Incorporated (Deutsche Bank Securities Inc.) (1998-1999) and Senior Manager, Coopers & Lybrand L.L.P. (PricewaterhouseCoopers LLP) (1993-1998). ---------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 1 Unless otherwise indicated, the address of each Director and Officer is One South Street, Baltimore, MD 21202. 2 As of March 31, 2002 the total number of Deutsche Asset Management funds (the 'Fund Complex') was 71. 3 Messrs. Semans and Hale are directors/trustees who are 'Interested Persons' within the meaning of Section 2(a)(19) of the 1940 Act. Mr. Hale is the President and a Director of the Fund's Advisor and a Managing Director of Deutsche Asset Management, the US asset management unit of Deutsche Bank and its affiliates. Mr. Semans is Vice Chairman of Brown Investment Advisory & Trust Company, an affiliate of Brown Advisory Incorporated, the sub-advisor to two Funds in the fund complex. The Fund's Statement of Additional Information includes additional information about the Fund's Directors. To receive your free copy of the Statement of Additional Information, call toll-free: 1-800-730-1313. -------------------------------------------------------------------------------- 25 [THIS PAGE INTENTIONALLY LEFT BLANK] For information on how to invest, shareholder account information and current price and yield information, please contact your relationship manager or write to: DEUTSCHE ASSET MANAGEMENT SERVICE CENTER PO BOX 219210 KANSAS CITY, MO 64121-9210 or call toll-free: 1-800-730-1313 This report must be preceded or accompanied by a current prospectus for the Fund. Deutsche Asset Management is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Bank Securities Inc., Deutsche Asset Management Inc., Deutsche Asset Management Investment Services Ltd., Deutsche Investment Management Americas Inc. and Scudder Trust Company. Cash Reserve Prime Shares Class A Shares CUSIP #251521209 Class B Shares CUSIP #251521308 Class C Shares CUSIP #251521100 BDCASHANN (3/02) Printed 5/02 Distributed by: ICC Distributors, Inc.