-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TGLI/8bkkoMMRyt7SH+S1BluzeT4srn5xQi1qdXUrHQFYZCqTtiG2VdvJfH07BH/ noBxNERQE5SBJgN55G7gjQ== 0000950109-01-502422.txt : 20021127 0000950109-01-502422.hdr.sgml : 20021127 20010730172543 ACCESSION NUMBER: 0000950109-01-502422 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 20010730 EFFECTIVENESS DATE: 20010730 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEUTSCHE BANC ALEX BROWN CASH RESERVE FUND INC CENTRAL INDEX KEY: 0000353447 IRS NUMBER: 621223991 STATE OF INCORPORATION: MD FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03196 FILM NUMBER: 01693168 BUSINESS ADDRESS: STREET 1: ONE SOUTH STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4108953761 MAIL ADDRESS: STREET 1: ONE SOUTH ST CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: BROWN ALEX CASH RESERVE FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: BT ALEX BROWN CASH RESERVE FUND INC DATE OF NAME CHANGE: 19970827 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEUTSCHE BANC ALEX BROWN CASH RESERVE FUND INC CENTRAL INDEX KEY: 0000353447 IRS NUMBER: 621223991 STATE OF INCORPORATION: MD FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-72658 FILM NUMBER: 01693167 BUSINESS ADDRESS: STREET 1: ONE SOUTH STREET CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4108953761 MAIL ADDRESS: STREET 1: ONE SOUTH ST CITY: BALTIMORE STATE: MD ZIP: 21202 FORMER COMPANY: FORMER CONFORMED NAME: BROWN ALEX CASH RESERVE FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: BT ALEX BROWN CASH RESERVE FUND INC DATE OF NAME CHANGE: 19970827 485BPOS 1 d485bpos.txt DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. As filed with the Securities and Exchange Commission on July 30, 2001 Registration No. 2-72658 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_] Post-Effective Amendment No. 36 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_] Amendment No. 37 [X] (Check appropriate box or boxes.) DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. (Exact Name of Registrant as Specified in Charter) One South Street, Baltimore, Maryland 21202 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code (410) 727-1700 Copies to: Richard T. Hale Richard W. Grant, Esquire Deutsche Banc Alex. Brown Inc. Morgan, Lewis & Bockius LLP One South Street, 1701 Market Street Baltimore, Maryland 21202 Philadelphia, PA 19103-2921 (Name and Address of Agent for Service) - -------------------------------------------------------------------------------- It is proposed that this filing will become effective (check appropriate box) [X] immediately upon filing pursuant to paragraph (b) [_] on [date] pursuant to paragraph (b) [_] 60 days after filing pursuant to paragraph (a)(1) [_] 75 days after filing pursuant to paragraph (a)(2) [_] on [date] pursuant to paragraph (a) of rule 485 Deutsche Banc Alex. Brown Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. Prime Series Treasury Series Tax-Free Series Prospectus August 1, 2001 [Like shares of all mutual funds, these securities have not been approved or disapproved by the Securities and Exchange Commission nor has the Securities and Exchange Commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.] Deutsche Bank [LOGO] Overview - -------------------------------------------------------------------------------- of the Cash Reserve Fund Goal: Each Series of the Fund seeks as high a level of current income (tax- exempt current income in the case of the Tax-Free Series) as is consistent with preservation of capital and liquidity. Core Strategy: ..The Prime Series invests in high quality, short-term money market instruments. ..The Treasury Series invests in securities issued by the US Treasury. ..The Tax-Free Series invests in high quality, short-term municipal securities. The Fund offers Deutsche Banc Alex. Brown Cash Reserve Shares of each series through securities dealers and financial institutions that act as shareholder servicing agents. INVESTMENT POLICIES AND STRATEGIES The Prime Series seeks to achieve its objective by investing in high quality money market instruments, maintaining an average maturity of 90 days or less. The Prime Series attempts to maintain a stable price of $1.00 per share by investing in securities that are valued in US dollars and have remaining maturities of 397 days or less. The Treasury Series seeks to achieve its objective by investing in US Treasury Securities, maintaining an average maturity of 90 days or less. The Treasury Series attempts to maintain a stable price of $1.00 per share by investing in securities that have remaining maturities of 397 days or less. The Tax-Free Series seeks to achieve its objective by investing in high quality municipal securities, maintaining an average maturity of 90 days or less. The Tax-Free Series attempts to maintain a stable price of $1.00 per share by investing in securities that are valued in US dollars and have remaining maturities of 397 days or less. - -------------------------------------------------------------------------------- Deutsche Banc Alex. Brown Cash Reserve Fund, Inc.--Prime Series, Treasury Series, Tax-Free Series Overview of Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. Prime Series................................................................ 3 Treasury Series............................................................. 6 Tax-Free Series............................................................. 9
A Detailed Look at Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. Prime Series................................................................ 12 Treasury Series............................................................. 14 Tax-Free Series............................................................. 15
Information Concerning All Series Management of the Fund...................................................... 17 Calculating the Fund's Share Price.......................................... 17 Dividends and Distributions................................................. 17 Tax Considerations.......................................................... 18 Buying and Selling Fund Shares.............................................. 18 Financial Highlights........................................................ 21
- -------------------------------------------------------------------------------- 2 Overview of the Prime Series PRINCIPAL RISKS OF INVESTING IN THE PRIME SERIES Although the Prime Series seeks to preserve the value of your investment at $1.00 per share, there are risks associated with investing in the Prime Series. For example: .. A sharp rise in interest rates could cause the bond market and individual securities in the Prime Series' portfolio to decline in value. The Prime Series' yield can be expected to decline during periods of falling interest rates. .. An issuer's creditworthiness could decline, which in turn may cause the value of that issuer's securities in the Prime Series' portfolio to decline. .. Securities held by the Prime Series could perform poorly. WHO SHOULD CONSIDER INVESTING IN THE PRIME SERIES You should consider investing in the Prime Series if you are seeking income from your investment while minimizing the risk of loss of principal and maintaining liquidity. You should not consider investing in the Prime Series if you seek long-term capital growth. Although it provides a convenient means of diversifying short- term investments, the Prime Series by itself does not constitute a balanced investment program. An investment in the Prime Series is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Prime Series seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Prime Series. - -------------------------------------------------------------------------------- 3 Overview of the Prime Series TOTAL RETURNS, AFTER FEES AND EXPENSES The bar chart and table on this page can help you evaluate the potential risk and rewards of investing in the Deutsche Banc Alex. Brown Cash Reserve Prime Shares (the `Prime Shares') by showing changes in the Prime Shares' performance from year to year. The bar chart shows the Prime Shares' actual total return for each full calendar year for the past ten years. The table shows the Prime Shares' average annual total return over the last calendar year, last five years, last ten years and since inception. As of December 31, 2000, the Prime Shares' 7-day yield was 6.03%. To learn the current 7-day yield, call 1-800-730-1313. - -------------------------------------------------------------------------------- The 7-day yield, which is often referred to as the `current yield,' is the income generated by the Prime Shares over a seven-day period. This amount is then annualized, which means that you assume the Prime Shares generate the same income every week for a year. The `total return' of the Prime Shares is the change in the value of an investment in the Prime Shares over a given period. Average annual total returns are calculated by averaging the year-by-year returns of the Prime Shares over a given period. Year-by-Year Returns Prime Shares (each full calendar year for the past ten years) [GRAPH] 1991 5.69% 1992 3.26% 1993 2.64% 1994 3.81% 1995 5.53% 1996 4.92% 1997 4.99% 1998 4.99% 1999 4.65% 2000 5.95% For the period from December 31, 2000 through June 30, 2001, the total return for the Prime Shares was 2.35%. For the ten-year period shown in the bar chart, the Prime Shares' highest return in any calendar quarter was 1.62% (first quarter 1991) and its lowest quarterly return was 0.64% (second quarter 1993). Past performance offers no indication of how the Prime Shares will perform in the future. Performance for Periods Ended December 31, 2000/1/
Average Annual Total Returns Since Inception 1 Year 5 Years 10 Years (August 11, 1981) Prime Shares 5.95% 5.10% 4.64% 6.58% --------------------------------------------------------
/1/ These figures assume the reinvestment of dividends and capital gains distributions. - -------------------------------------------------------------------------------- 4 Overview of the Prime Series ANNUAL FUND OPERATING EXPENSES (expenses paid from Prime Shares' assets) The Annual Fees and Expenses table to the right describes the fees and expenses that you may pay if you buy and hold Prime Shares. Expense Example: The example below illustrates the expenses you would have incurred on a $10,000 investment in the Prime Shares. The numbers assume that the Prime Shares earned an annual return of 5% over the periods shown, that the Prime Shares' operating expenses remained the same and that you redeem your shares at the end of the period. You may use this hypothetical example to compare the Prime Shares' expense history with other funds. The example does not represent an estimate of future returns or expenses. Your actual costs may be higher or lower. Annual Fees and Expenses
Percentage of Average Daily Assets Management Fee 0.25% ----------------------------------------------- Distribution and Service (12b-1) Fees 0.25% ----------------------------------------------- Other Expenses (including a 0.07% shareholder servicing fee)/1/ 0.18% ----------------------------------------------- Total Fund Operating Expenses 0.68% -----------------------------------------------
/1/ Other Expenses have been restated to reflect current fees. Expense Example
1 Year 3 Years 5 Years 10 Years $69 $218 $379 $847 ---------------------------------------------------------------
- -------------------------------------------------------------------------------- 5 Overview of the Treasury Series PRINCIPAL RISKS OF INVESTING IN THE TREASURY SERIES Although the Treasury Series seeks to preserve the value of your investment at $1.00 per share, there are risks associated with investing in the Treasury Series. For example: .. A sharp rise in interest rates could cause the bond market and individual securities in the Treasury Series' portfolio to decline in value. The yield on US Treasury securities is generally less than yields on other taxable investments. The Treasury Series' Yield can be expected to decline during periods of falling interest rates. .. Securities held by the Treasury Series could perform poorly. WHO SHOULD CONSIDER INVESTING IN THE TREASURY SERIES You should consider investing in the Treasury Series if you are seeking income from your investment while minimizing the risk of loss of principal and maintaining liquidity. You should not consider investing in the Treasury Series if you seek long-term capital growth. Although it provides a convenient means of diversifying short- term investments, the Treasury Series by itself does not constitute a balanced investment program. An investment in the Treasury Series is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Treasury Series seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Treasury Series. - -------------------------------------------------------------------------------- 6 Overview of the Treasury Series TOTAL RETURNS, AFTER FEES AND EXPENSES The bar chart and table on this page can help you evaluate the potential risk and rewards of investing in the Deutsche Banc Alex. Brown Cash Reserve Treasury Shares (the `Treasury Shares') by showing changes in the Treasury Shares' performance from year to year. The bar chart shows the Treasury Shares' actual total return for each full calendar year for the past ten years. The table shows the Treasury Shares' average annual total return over the last calendar year, last five years, last ten years and since inception. As of December 31, 2000, the Treasury Shares' 7-day yield was 5.67%. To learn the current 7-day yield, call 1-800-730-1313. - -------------------------------------------------------------------------------- The 7-day yield, which is often referred to as the `current yield,' is the income generated by the Treasury Shares over a seven-day period. This amount is then annualized, which means that you assume the Treasury Shares generate the same income every week for a year. The `total return' of the Treasury Shares is the change in the value of an investment in the Treasury Shares over a given period. Average annual total returns are calculated by averaging the year-by- year returns of the Treasury Shares over a given period. Year-by-Year Returns Treasury Shares (each full calendar year for the past ten years) [GRAPH] 1991 5.51% 1992 3.21% 1993 2.56% 1994 3.57% 1995 5.17% 1996 4.65% 1997 4.68% 1998 4.54% 1999 4.15% 2000 5.48% For the period from December 31, 2000 through June 30, 2001, the total return for the Treasury Shares was 2.20%. For the ten-year period shown in the bar chart, the Treasury Shares' highest return in any calendar quarter was 1.55% (first quarter 1991) and its lowest quarterly return was 0.61% (second quarter 1993). Past performance offers no indication of how the Treasury Shares will perform in the future. Performance for Periods Ended December 31, 2000/1/
Average Annual Total Returns Since Inception 1 Year 5 Years 10 Years (April 1, 1987) Treasury Shares 5.48% 4.70% 4.35% 6.01% ---------------------------------------------------------
/1/ These figures assume the reinvestment of dividends and capital gains distributions. - -------------------------------------------------------------------------------- 7 Overview of the Treasury Series ANNUAL FUND OPERATING EXPENSES (expenses paid from Treasury Shares' assets) The Annual Fees and Expenses table to the right describes the fees and expenses that you may pay if you buy and hold Treasury Shares. Expense Example: The example below illustrates the expenses you would have incurred on a $10,000 investment in the Treasury Shares. The numbers assume that the Treasury Shares earned an annual return of 5% over the periods shown, that the Treasury Shares' operating expenses remained the same and that you redeem your shares at the end of the period. You may use this hypothetical example to compare the Treasury Shares' expense history with other funds. The example does not represent an estimate of future returns or expenses. Your actual costs may be higher or lower. Annual Fees and Expenses
Percentage of Average Daily Assets Management Fee 0.23% --------------------------------------------------- Distribution and Service (12b-1) Fees 0.25% --------------------------------------------------- Other Expenses (including a 0.07% shareholder servicing fee)/1/ 0.15% --------------------------------------------------- Total Fund Operating Expenses 0.63% --------------------------------------------------- Less Fee Waivers (0.05%)/2/ --------------------------------------------------- Net Expenses 0.58% ---------------------------------------------------
/1/ Other Expenses have been restated to reflect current fees. /2/ The Advisor has contractually agreed to waive its fee for the Treasury Series by 0.05%. This agreement will continue until July 31, 2002 and may be extended. Expense Example/3/
1 Year 3 Years 5 Years 10 Years $59 $197 $346 $782 ---------------------------------------------------------------
/3/ For the first year, the expense example takes the fee waiver into account. - -------------------------------------------------------------------------------- 8 Overview of the Tax-Free Series PRINCIPAL RISKS OF INVESTING IN THE TAX-FREE SERIES Although the Tax-Free Series seeks to preserve the value of your investment at $1.00 per share, there are risks associated with investing in the Tax-Free Series. For example: .. A sharp rise in interest rates could cause the bond market and individual securities in the Tax-Free Series' portfolio to decline in value. The Tax- Free Series' yield can be expected to decline during periods of falling interest rates. .. An issuer's creditworthiness could decline, which in turn may cause the value of that issuer's securities in the Tax-Free Series' portfolio to decline. .. Securities held by the Tax-Free Series could perform poorly. .. To the extent that the Tax-Free Series invests in taxable securities, a portion of its income would be taxable. WHO SHOULD CONSIDER INVESTING IN THE TAX-FREE SERIES You should consider investing in the Tax-Free Series if you are seeking tax- free income from your investment while minimizing the risk of loss of principal and maintaining liquidity. You should not consider investing in the Tax-Free Series if you seek long-term capital growth. Although it provides a convenient means of diversifying short- term investments, the Tax-Free Series by itself does not constitute a balanced investment program. An investment in the Tax-Free Series is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Tax-Free Series seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Tax-Free Series. - -------------------------------------------------------------------------------- 9 Overview of the Tax-Free Series TOTAL RETURNS, AFTER FEES AND EXPENSES The bar chart and table on this page can help you evaluate the potential risk and rewards of investing in the Deutsche Banc Alex. Brown Cash Reserve Tax-Free Shares (the `Tax-Free Shares') by showing changes in the Tax-Free Shares' performance from year to year. The bar chart shows the Tax-Free Shares' actual total return for each full calendar year for the past ten years. The table shows the Tax-Free Shares' average annual total return over the last calendar year, last five years, last ten years and since inception. As of December 31, 2000, the Tax-Free Shares' 7-day yield was 3.86% and the Tax-Free Shares' 7-day taxable equivalent yield was 6.49%. To learn the current 7-day yield, call 1-800-730-1313. - -------------------------------------------------------------------------------- The 7-day yield, which is often referred to as the `current yield,' is the income generated by the Tax-Free Shares over a seven-day period. This amount is then annualized, which means that you assume the Tax-Free Shares generate the same income every week for a year. The 7-day taxable equivalent yield is the before-tax yield that would need to be earned from a taxable investment to equal the 7-day yield. The taxable equivalent yield is computed by dividing the portion of the yield that is tax-exempt by one minus the highest applicable federal income tax rate and adding the product to the portion of the yield that is not tax-exempt, if any. The `total return' of the Tax-Free Shares is the change in the value of an investment in the Tax-Free Shares over a given period. Average annual total returns are calculated by averaging the year-by- year returns of the Tax-Free Shares over a given period. Year-by-Year Returns Tax Free Shares (each full calendar year for the past ten years) [GRAPH] 1991 3.90% 1992 2.39% 1993 1.85% 1994 2.38% 1995 3.35% 1996 2.89% 1997 3.08% 1998 2.93% 1999 2.63% 2000 3.46% For the period from December 31, 2000 through June 30, 2001, the total return for the Tax-Free Shares was 1.33%. For the ten-year period shown in the bar chart, the Tax-Free Shares' highest return in any calendar quarter was 0.97% (first quarter 1991) and its lowest quarterly return was 0.44% (first quarter 1993). Past performance offers no indication of how the Tax-Free Shares will perform in the future. Performance for Periods Ended December 31, 2000/1/
Average Annual Total Returns Since Inception 1 Year 5 Years 10 Years (Dec. 17, 1990) Tax-Free Shares 3.46% 3.00% 2.88% 2.87% ---------------------------------------------------------
/1/ These figures assume the reinvestment of dividends and capital gains distributions. - -------------------------------------------------------------------------------- 10 Overview of the Tax-Free Series ANNUAL FUND OPERATING EXPENSES (expenses paid from Tax-Free Shares' assets) The Annual Fees and Expenses table to the right describes the fees and expenses that you may pay if you buy and hold Tax-Free Shares. Expense Example: The example below illustrates the expenses you would have incurred on a $10,000 investment in the Tax-Free Shares. The numbers assume that the Tax-Free Shares earned an annual return of 5% over the periods shown, that the Tax-Free Shares' operating expenses remained the same and that you redeem your shares at the end of the period. You may use this hypothetical example to compare the Tax-Free Shares' expense history with other funds. The example does not represent an estimate of future returns or expenses. Your actual costs may be higher or lower. Annual Fees and Expenses
Percentage of Average Daily Assets Management Fee 0.26% ----------------------------------------------- Distribution and Service (12b-1) Fees 0.25% ----------------------------------------------- Other Expenses (including a 0.07% shareholder servicing fee)/1/ 0.15% ----------------------------------------------- Total Fund Operating Expenses 0.66% -----------------------------------------------
/1/ Other Expenses have been restated to reflect current fees. Expense Example
1 Year 3 Years 5 Years 10 Years $67 $211 $368 $822 ---------------------------------------------------------------
- -------------------------------------------------------------------------------- 11 A detailed look - ------------------------------------------------------------------------------- at the Prime Series OBJECTIVE The Prime Series seeks as high a level of current income as is consistent with preservation of capital and liquidity by investing in high quality short-term money market instruments. While Investment Company Capital Corp. (`ICCC' or the `Advisor') gives priority to earning income and maintaining the value of the Prime Series' principal at $1.00 per share, all money market instruments, including US Treasury obligations, can change in value when interest rates change or an issuer's creditworthiness changes. STRATEGY The Prime Series seeks current income by investing in high quality money market securities and maintains an average maturity of 90 days or less. The Advisor actively adjusts the average maturity of the Prime Series in response to its outlook for interest rates and the economy. The Prime Series follows two policies designed to maintain a stable share price: .. Securities are valued in US dollars and have remaining maturities of 397 days (about 13 months) or less at the time of purchase or have features that reduce their maturities to 397 days or less at the time of purchase. .. The Prime Series buys US Treasury obligations, money market instruments and other debt obligations that at the time of purchase: .. have received one of the two highest ratings from Moody's Investors Service, Inc., Standard & Poor's Ratings Group or Fitch, Inc.; or .. are unrated, but are determined to be of similar quality by the Advisor. PRINCIPAL INVESTMENTS The Prime Series may invest in high quality, short-term, dollar-denominated money market instruments paying a fixed, variable or floating interest rate. The Prime Series' investments may include: .. Debt obligations issued by US and foreign banks, financial institutions, corporations or other entities, including certificates of deposit, bankers' acceptances, commercial paper, variable rate demand notes, funding agreements and US Treasury obligations. Securities that do not satisfy the maturity restrictions for a money market fund may be specifically structured so that they are eligible investments for money market funds. For example, some securities have features which have the effect of shortening the security's maturity. .. US government securities that are issued or guaranteed by the US Treasury, or by agencies or instrumentalities of the US Government. .. Repurchase agreements, which are agreements to buy securities at one price, with a simultaneous agreement to sell back the securities at a future date at an agreed-upon price. .. Asset-backed securities, which are generally participations in a pool of assets whose payment is derived from the payments generated by the underlying assets. Payments on the asset-backed security generally consist of interest and/or principal. .. The Prime Series may invest up to 10% of its total assets in non-affiliated money market mutual funds with investment objectives and policies that are comparable to those of the Prime Series. The Prime Series may invest only in non-affiliated money market mutual funds that maintain an `AAA' rating by a nationally recognized statistical ratings organization. The Advisor limits exposure to any one issuer. RISKS Set forth below are some of the prominent risks associated with money market mutual funds, and the Advisor's approaches to limit them. Although the Advisor attempts to assess the likelihood that these risks may actually occur and to limit them, there is no guarantee that it will succeed. Primary Risks Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the Prime Series adheres to the following practices: .. The Advisor limits the average maturity of the securities held by the Prime Series to 90 days or less. Generally, rates of short-term investments fluctuate less than longer-term bonds. - ------------------------------------------------------------------------------- 12 A Detailed Look at the Prime Series .. The Advisor buys securities with remaining maturities of 13 months or less. This reduces the risk to the Prime Series that the issuer's creditworthiness will change. Credit Risk. A money market instrument's credit quality depends on the issuer's ability to pay interest on the security and repay the debt: the lower the credit rating, the greater the risk that the security's issuer will default, or fail to meet its payment obligations. The credit risk of a security may also depend on the credit quality of any bank or financial institution that provides credit enhancement for it. The Prime Series only buys securities determined by the Advisor to be of high quality with minimal credit risk. Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions. Security Selection Risk. While the Prime Series invests in short-term securities, which by nature are relatively stable investments, the risk remains that the securities the Advisor has selected will not perform as expected. This could cause the Prime Series' returns to lag behind those of similar money market funds. Repurchase Agreement Risk. A repurchase agreement exposes the Prime Series to the risk that the party that sells the securities defaults on its obligation to repurchase them. In this circumstance, the Prime Series can lose money because: .. it cannot sell the securities at the agreed-upon time and price; or .. the securities lose value before they can be sold. The Prime Series seeks to reduce this risk by monitoring the creditworthiness of the sellers with whom it enters into repurchase agreements. The Prime Series also monitors the value of the securities to ensure that they are at least equal to the total amount of the repurchase obligations, including interest and accrued interest. Prepayment Risk. When a bond issuer, such as an issuer of asset-backed securities, retains the right to pay off a high yielding bond before it comes due, the Prime Series may have no choice but to reinvest the proceeds at lower interest rates. Thus, prepayment may reduce the Prime Series' income. It may also create a capital gains tax liability, because bond issuers usually pay a premium for the right to pay off bonds early. - ------------------------------------------------------------------------------- 13 A detailed look - -------------------------------------------------------------------------------- at the Treasury Series OBJECTIVE The Treasury Series seeks as high a level of current income as is consistent with preservation of capital and liquidity by investing in securities issued by the US Treasury. While Investment Company Capital Corp. (`ICCC' or the `Advisor') gives priority to earning income and maintaining the value of the Treasury Series' principal at $1.00 per share, all money market instruments, including US Treasury obligations, can change in value when interest rates change or an issuer's creditworthiness changes. STRATEGY The Treasury Series seeks current income by investing in US Treasury securities and maintains an average maturity of 90 days or less. The Advisor actively adjusts the average maturity of the Treasury Series in response to its outlook for interest rates and the economy. The Treasury Series follows this policy designed to maintain a stable share price: .. Securities are valued in US dollars and have remaining maturities of 397 days (about 13 months) or less at the time of purchase or have features that reduce their maturities to 397 days or less at the time of purchase. PRINCIPAL INVESTMENTS While the Treasury Series may invest, to a limited extent, in repurchase agreements, the Advisor expects that 100% of the Treasury Series will be invested in US Treasury securities. The Treasury Series' investments may include: .. US Treasury obligations. .. US government securities that are issued or guaranteed by the US Treasury. The Advisor limits exposure to any one issuer. RISKS Set forth below are some of the prominent risks associated with money market mutual funds, and the Advisor's approaches to limit them. Although the Advisor attempts to assess the likelihood that these risks may actually occur and to limit them, there is no guarantee that it will succeed. Primary Risks Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the Treasury Series adheres to the following practices: .. The Advisor limits the average maturity of the securities held by the Treasury Series to 90 days or less. Generally, rates of short-term investments fluctuate less than longer-term bonds. .. The Advisor buys securities with remaining maturities of 13 months or less. This reduces the risk to the Treasury Series that the issuer's creditworthiness will change. Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions. Security Selection Risk. While the Treasury Series invests in short-term securities, which by nature are relatively stable investments, the risk remains that the securities the Advisor has selected will not perform as expected. This could cause the Treasury Series' returns to lag behind those of similar money market funds. - -------------------------------------------------------------------------------- 14 A detailed look - -------------------------------------------------------------------------------- at the Tax-Free Series OBJECTIVE The Tax-Free Series seeks as high a level of current income exempt from federal income tax as is consistent with preservation of capital and liquidity by investing in high quality short-term municipal securities. While Investment Company Capital Corp. (`ICCC' or the `Advisor') gives priority to earning tax-free income and maintaining the value of the Tax-Free Series' principal at $1.00 per share, all money market instruments, including US Treasury obligations, can change in value when interest rates change or an issuer's creditworthiness changes. STRATEGY The Tax-Free Series seeks tax exempt current income by investing in high quality municipal securities and maintains an average maturity of 90 days or less. The Advisor actively adjusts the average maturity of the Tax-Free Series in response to its outlook for interest rates and the economy. The Tax-Free Series follows two policies designed to maintain a stable share price: .. Securities are valued in US dollars and have remaining maturities of 397 days (about 13 months) or less at the time of purchase or have features that reduce their maturities to 397 days or less at the time of purchase. .. The Tax-Free Series buys municipal securities and other debt obligations that at the time of purchase: .. have received one of the two highest ratings from Moody's Investors Service, Inc., Standard & Poor's Ratings Group or Fitch, Inc.; or .. are unrated, but are determined to be of similar quality by the Advisor. PRINCIPAL INVESTMENTS While it is the policy of the Tax-Free Series to invest at least 80% of its assets in securities exempt from federal income tax, the Advisor expects that 100% of the Tax-Free Series will be so invested. The Tax-Free Series invests in high quality, short-term, dollar-denominated municipal securities. The Tax-Free Series' investments may include: .. Municipal notes and short-term municipal bonds. .. Variable rate demand notes. .. Tax-exempt commercial paper. .. The Tax-Free Series may invest up to 10% of its total assets in non- affiliated money market mutual funds with investment objectives and policies that are comparable to those of the Tax-Free Series. The Tax-Free Series may invest only in non-affiliated money market mutual funds that maintain an `AAA' rating by a nationally recognized statistical ratings organization. The Advisor limits exposure to any one issuer. RISKS Set forth below are some of the prominent risks associated with money market mutual funds, and the Advisor's approaches to limit them. Although the Advisor attempts to assess the likelihood that these risks may actually occur and to limit them, there is no guarantee that it will succeed. Primary Risks Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the Tax-Free Series adheres to the following practices: .. The Advisor limits the average maturity of the securities held by the Tax- Free Series to 90 days or less. Generally, rates of short-term investments fluctuate less than longer-term bonds. .. The Advisor buys securities with remaining maturities of 13 months or less. This reduces the risk to the Tax-Free Series that the issuer's creditworthiness will change. Credit Risk. A money market instrument's credit quality depends on the issuer's ability to pay interest on the security and repay the debt: the lower the credit rating, the greater the risk that the security's issuer will default, or fail to meet its payment obligations. The credit risk of a security may also depend on the credit quality of any bank or financial institution that provides credit enhancement for it. The Tax-Free Series only buys securities determined by the Advisor to be of high quality with minimal credit risk. - -------------------------------------------------------------------------------- 15 A Detailed Look at the Tax-Free Series Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions. Security Selection Risk. While the Tax-Free Series invests in short-term securities, which by nature are relatively stable investments, the risk remains that the securities the Advisor has selected will not perform as expected. This could cause the Tax-Free Series' returns to lag behind those of similar money market funds. Special Tax Features. To the extent that the Tax-Free Series invests in taxable securities, a portion of its income would be taxable. - -------------------------------------------------------------------------------- 16 Information - -------------------------------------------------------------------------------- concerning all Series MANAGEMENT OF THE FUND Board of Directors. A Board of Directors supervises all of the Fund's activities on behalf of the Fund's shareholders. Investment Advisor. Under the supervision of the Board of Directors, Investment Company Capital Corp., with headquarters at One South Street, Baltimore, MD 21202, acts as the investment advisor to each Series of the Fund. As investment advisor, ICCC makes each Series' investment decisions. It buys and sells securities for each Series and conducts the research that leads to the purchase and sale decisions. ICCC is also responsible for selecting brokers and for negotiating brokerage commissions and dealer charges. ICCC may delegate its duties under the Advisory Agreements, and has delegated certain of such duties to its affiliate. ICCC received from the Fund a fee equal to 0.25% of the Prime Series' average daily net assets, 0.18% of the Treasury Series' average daily net assets (net of fee waivers) and 0.26% of the Tax-Free Series' average daily net assets for its services in the last fiscal year. ICCC may, from time to time, voluntarily waive a portion of its advisory fee with respect to any Series to preserve or enhance the performance of the Series. ICCC has contractually agreed to waive its fee for the Treasury Series by 0.05%. This agreement will continue until July 31, 2002 and may be extended. ICCC may provide compensation to securities dealers and service agents for distribution, administrative and promotional services. ICCC provides a full range of investment advisory and administrative services, and as of June 30, 2001, managed approximately $12 billion in assets. ICCC is an indirect wholly owned 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, private and commercial banking, investment banking and insurance. CALCULATING THE FUND'S SHARE PRICE We calculate the price of the Fund's shares (also known as the `net asset value' or `NAV') on each day the Fund is open as of 11:00 am Eastern Time for the Treasury and Tax-Free Series and as of 12:00 pm Eastern Time for the Prime Series. You can find the Fund's daily share price in the mutual fund listings of most major newspapers. On the day before certain holidays are observed, the bond markets or other primary trading markets for the Fund may close early. They may also close early on the day after Thanksgiving and the day before Christmas Eve. If the bond markets close early, the Fund may also close early. You may call 1-800-730-1313 for additional information about whether the Fund will close early before a particular holiday. On days the Fund closes early: .. All orders received prior to the Fund's close will be processed at the net asset value next calculated. .. Orders received after the Fund's close will be processed at the net asset value next calculated on the next day the Fund is open. The Fund uses the amortized cost method to account for any premiums or discounts above or below the face value of any securities it buys and rounds the per share net asset value to the nearest whole cent. This method writes down the premium--or marks up the discount--at a constant rate until maturity. It does not reflect daily fluctuations in market value. The Fund's net asset value will normally be $1.00 per share. There can be no assurance, however, that this will always be the case. DIVIDENDS AND DISTRIBUTIONS Normally, the Fund's policy is to declare dividends from its net income daily and pay the dividends to shareholders monthly. The Fund reserves the right to include in the distribution any short-term capital gains on securities that it sells. You will not receive the dividends declared on the day you sell your shares. The Fund may also pay dividends at other times if necessary for the Fund to avoid federal income or excise tax. All dividends are automatically invested in shares of the Series you own, unless you elect to receive them in cash. To make this - -------------------------------------------------------------------------------- The Fund is open every week, Monday through Friday, except when the following holidays are celebrated: New Year's Day, Martin Luther King, Jr. Day (the third Monday in January), Presidents' Day (the third Monday in February), Good Friday, Memorial Day (the last Monday in May), Independence Day, Labor Day (the first Monday in September), Columbus Day (the second Monday in October), Veterans' Day (November 11), Thanksgiving Day (the fourth Thursday in November) and Christmas Day. - -------------------------------------------------------------------------------- 17 Information Concerning all Series election, notify your securities dealer or your service agent at least five days before the date on which the next dividend or distribution will be paid. TAX CONSIDERATIONS The following summary is based on current tax laws that may change. The tax considerations for tax-deferred accounts, non-taxable entities and non-US investors may be different. Because tax circumstances for each investor are unique and tax laws are subject to change, you should consult with your tax advisor before investing. If you are a taxable shareholder, you and other shareholders pay federal, state and local taxes at ordinary income rates on the income dividends distributed by each series. Your taxes will vary from year to year, based on the amount of dividends paid out by each series. Every year the Fund will send you information on the tax status of dividends paid by each series the previous year. You may owe the taxes whether you receive cash or choose to have dividends reinvested. The Prime and Treasury Series each expect that their distributions of income will be taxed at ordinary income rates. The Tax-Free Series intends to generate and pay to shareholders income that is exempt from federal income tax. The Tax-Free Series may, however, invest a portion of its assets in securities that generate income that is not exempt from federal income tax or alternative minimum tax. Distributions of such income are taxable to you as ordinary income. Distributions from each series may also be subject to state and local income tax. Many states, however, grant tax-free status to dividends paid from interest earned on direct obligations of the US government, subject to certain restrictions. Because each series expects to maintain a $1.00 net asset value per share, you should not expect to have any gain or loss on the sale of the shares of the Fund. By law, each series must withhold a portion of your taxable distributions, dividends and sales proceeds equal to the current backup withholding tax rate, if you do not provide your correct social security or taxpayer identification number along with the certification required by the IRS, or if the IRS instructs the series to do so. Distribution and Shareholder Servicing Plans The Fund has adopted plans under Rule 12b-1 that allow it to pay your securities dealer or service agent distribution and other fees for the sale of its shares and for shareholder service. The Prime, Treasury and Tax-Free Shares each pay a distribution fee equal to 0.25% annually of average daily net assets. Because these fees are paid out of the shares' net assets on an on- going basis, they will, over time, increase the cost of your investment and may cost you more than paying other types of sales charges. The Fund has adopted a shareholder service plan for the shares. Under the terms of each shareholder service plan, the Fund will pay the Distributor an annual service fee of 0.07% of the shares' average daily net assets. The Distributor will use the service fee to pay third parties for services for which they are not otherwise being compensated under the applicable 12b-1 Plan. BUYING AND SELLING FUND SHARES To Purchase Shares You may buy Fund shares through your securities dealer or through any financial institution authorized to act as a service agent. Contact them for details on how to enter and pay for your order. Minimum Account Investments Initial investment $1,500 Subsequent investments in the same series $ 100
The Fund and its service providers reserve the right, from time to time in their sole discretion, to waive or reduce the investment minimums. Automatic Investment and Redemption Program. Your securities dealer or service agent may have established a special procedure to automatically invest proceeds from the sale of securities and other credit balances in your account in shares of the series you have selected and to redeem shares of the series you own to pay for securities purchases. Contact your securities dealer or service agent for details. To Redeem Shares You may redeem the Fund's shares through your securities dealer or service agent. Contact them for details on how to enter your order and for information as to how you will be paid. Your securities dealer or service agent may require the following documents before redeeming your shares: .. A letter of instruction, if you are redeeming shares worth more than $100,000. The letter must specify your account number and the number of shares or dollar amount you wish to redeem. The letter must be signed by all account owners of the shares exactly as their names appear on the account. - -------------------------------------------------------------------------------- 18 Information Concerning all Series .. A signature guarantee, if you are redeeming shares and you request that the check be mailed to an address other than the one on record. You can obtain one from most banks or service agents. .. Any additional documents that may be required if your account is in the name of a corporation, partnership, trust or fiduciary. Redemption Price The price you receive when you redeem shares will be the net asset value per share of the series you are redeeming. Other Redemption Information Redemption by Check. You may establish special check redemption privileges that will allow you to redeem shares of the series you own by writing checks in amounts of $500 or more. These checks may be cashed or deposited in the same way as ordinary bank checks. You may use the same check regardless of which series of the Fund you own. If you own shares of more than one series of the Fund, your check will be honored first through redemption of shares of the Tax- Free Series, then through redemption of shares of the Prime Series and, finally, through redemption of shares of the Treasury Series. You will continue to earn dividends on your shares until the check is presented for payment and the corresponding shares are redeemed. Check redemption information will appear in your account with your securities dealer or service agent. Canceled checks will not be returned to you. If the amount of your check exceeds the value of the shares of all series you own, the check will be returned to the payee marked `non-sufficient funds.' Checks written for amounts less than $500 may also be returned. The Fund, in its discretion, will honor such checks but will charge you a servicing fee of $15. The Fund reserves the right to terminate or alter check redemption privileges at any time, to impose a service charge, or to charge you for checks. The Fund may also charge you for returned checks and for effecting stop payment orders. If you are interested in establishing check redemption privileges, contact your securities dealer or service agent. Other Information. Any dividends payable on shares you redeem will be paid on the next dividend payment date. If you redeem sufficient shares to reduce your investment in a series to $500 or less, the Fund has the power to redeem the remaining shares after giving you 60 days' notice. The Fund reserves the right to redeem shares in kind under certain circumstances. If you paid for your purchase of shares by check, receipt of redemption proceeds will be restricted until your check clears or for a period of up to fifteen calendar days unless you are using the proceeds to purchase other securities through your securities dealer or service agent. Important Information about Buying and Selling Shares .. You may buy and sell shares of the Fund through securities dealers and authorized service agents. The price at which you buy and sell shares is based on the next calculation of the NAV after the order is received by your securities dealer or service agent. .. Any dividends payable on shares you redeem will be paid on the next dividend payable date. If you have redeemed all of your shares by that time, the dividend will be paid to you in cash whether or not that is the payment option you have selected. .. The Fund reserves the right to close your account on 60 days' notice if it fails to meet minimum account balance requirements for any reason other than a change in market value. .. The Fund remits proceeds from the sale of shares in US dollars. Under certain circumstances, the Fund reserves the right to redeem shares `in- kind,' which means that the Fund may give you a portion of your redemption in portfolio securities. .. The Fund reserves the right to reject purchases of Fund shares (including purchases that are part of an exchange) for any reason. The Fund reserves the right to suspend or postpone redemptions during periods when: 1) the New York Stock Exchange is closed; 2) trading on the New York Stock Exchange is restricted; or 3) an emergency exists that prohibits the Fund from disposing of its portfolio securities or pricing its shares. .. Your purchase order may not be accepted if the Fund determines that your purchase would be detrimental to the interests of its shareholders. The Fund specifically reserves the right to refuse your order if it is part of multiple purchase requests that the Fund, in its sole discretion, deems to involve excessive trading or to be part of a market timing strategy. In making its determination, the Fund may consider orders you have placed individually, orders placed in combination with a group of shareholders or commonly controlled accounts and orders placed by your service agent. For these purposes, the Fund may consider, among other factors, your trading history in this or any affiliated fund, the funds involved, the amount of your investment, your background and the background of any other investors or service agents involved. - -------------------------------------------------------------------------------- 19 Information Concerning all Series .. Account Statements and Fund Reports: Your securities dealer or service agent will furnish you with a written confirmation of every transaction that affects your account balance. You will also receive periodic statements reflecting the balances in your account. Your securities dealer or service agent will send you semi-annual and annual reports on the Fund's overall performance, its holdings and its investing strategies. - ------------------------------------------------------------------------------- 20 A Detailed Look at the Prime Series The following tables provide a picture of each Series' financial performance for the past five fiscal years. The information selected reflects results for a single share of a Series. The total returns in the tables represent the rates of return that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions. This information has been audited by PricewaterhouseCoopers LLP, independent accountants, whose report, along with the Fund's financial statements, is included in the Fund's annual report. The annual report is available free of charge by calling 1-800-730-1313. Financial Highlights Prime Series (for a share outstanding throughout each period)
For the Years Ended March 31, 2001 2000 1999 1998 1997 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 0.0578 0.0480 0.0473 0.0494 0.0478 - -------------------------------------------------------------------------------- - ----- Distributions to shareholders Net investment income (0.0578) (0.0480) (0.0473) (0.0494) (0.0478) - -------------------------------------------------------------------------------- - ----- Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 - -------------------------------------------------------------------------------- - ----- Total investment return 5.94% 4.90% 4.84% 5.05% 4.88% - -------------------------------------------------------------------------------- - ----- Supplemental data and ratios: Net assets, end of year (000s omitted) $5,735,781 $5,772,616 $3,727,990 $3,164,538 $2,545,532 - -------------------------------------------------------------------------------- - ----- Ratios to average net assets: - -------------------------------------------------------------------------------- - ----- Net investment income 5.77% 4.86% 4.71% 4.94% 4.78% - -------------------------------------------------------------------------------- - ----- Expenses 0.66% 0.66% 0.63% 0.67% 0.63% - -------------------------------------------------------------------------------- - -----
- ------------------------------------------------------------------------------- 21 A Detailed Look at the Treasury Series Financial Highlights Treasury Series (for a share outstanding throughout each period)
For the Years Ended March 31, 2001 2000 1999 1998 1997 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 0.0539 0.0431 0.0427 0.0464 0.0453 ------------------------------------------------------------------------------ Distributions to shareholders Net investment income (0.0539) (0.0431) (0.0427) (0.0464) (0.0453) ------------------------------------------------------------------------------ Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 ------------------------------------------------------------------------------ Total investment return 5.53% 4.40% 4.35% 4.74% 4.63% ------------------------------------------------------------------------------ Supplemental data and ratios: Net assets, end of year (000s omitted) $866,508 $790,443 $816,700 $798,427 $678,445 ------------------------------------------------------------------------------ Ratios to average net assets: ------------------------------------------------------------------------------ Net investment income 5.36% 4.31% 4.26% 4.65% 4.54% ------------------------------------------------------------------------------ Expenses after waivers 0.56% 0.61% 0.58% 0.59% 0.61% ------------------------------------------------------------------------------ Expenses before waivers 0.61% 0.66% 0.58% 0.59% 0.61% ------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 22 A Detailed Look at the Tax-Free Series Financial Highlights Tax-Free Series (for a share outstanding throughout each period)
For the Years Ended March 31, 2001 2000 1999 1998 1997 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 0.0333 0.0276 0.0277 0.0306 0.0286 - -------------------------------------------------------------------------------- - - Distributions to shareholders Net investment income (0.0333) (0.0276) (0.0277) (0.0306) (0.0286) - -------------------------------------------------------------------------------- - - Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 - -------------------------------------------------------------------------------- - - Total investment return 3.38% 2.80% 2.81% 3.10% 2.90% - -------------------------------------------------------------------------------- - - Supplemental data and ratios: Net assets, end of year (000s omitted) $1,701,940 $1,664,370 $1,047,391 $841,185 $647,212 - -------------------------------------------------------------------------------- - - Ratios to average net assets: - -------------------------------------------------------------------------------- - - Net investment income 3.31% 2.78% 2.74% 3.05% 2.86% - -------------------------------------------------------------------------------- - - Expenses 0.64% 0.65% 0.58% 0.60% 0.62% - -------------------------------------------------------------------------------- - -
- ------------------------------------------------------------------------------- 23 Additional information about the Fund's investments and performance is available in the Fund's annual and semi-annual reports to shareholders. In the Fund's annual report you will find a discussion of the market conditions and investment stratagies that significantly affected the Fund's performance during its last fiscal year. You can find more detailed information about the Fund in the current Statement of Additional Information, dated August 1, 2001, which has been filed electronically with the Securities and Exchange Commission (SEC) and which is incorporated by reference into this Prospectus. To receive your free copy of the Statement of Additional Information and the annual or semi-annual report, or if you have questions about investing in the Fund, contact your securities dealer or service agent, or write to: Service Center PO Box 219210 Kansas City, MO 64121-9210 or call toll-free 1-800-730-1313 You can find reports and other information about the Fund on the EDGAR database on the SEC website (http://www.sec.gov), or you can get copies of this information, after payment of a duplicating fee, by writing an electronic request to publicinfo@sec.gov or by writing to the Public Reference Section of the SEC, Washington, DC 20549-0102. Information about the Fund, includung its Statement of Additional Information, can be reviewed and copied at the SEC's Public Reference Room in Washington, DC. For more information on the Public Reference Room, call SEC at 202-942-8090. Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. Deutsche Banc Alex. Brown Cash Reserve Prime Shares CUSIP #014.471.106 Deutsche Banc Alex. Brown Cash Reserve Treasury Shares 014.471.205 Deutsche Banc Alex. Brown Cash Reserve Tax-Free Shares 014.470.801 Distributed by: ICC Distributors, Inc. Two Portland Square Portland, ME 04101 Investment Company Act File No. 811-3196 DBCASHPRO(08/01) - -------------------------------------------------------------------------------- ------------------- Deutsche Banc Alex. Brown BULK RATE Cash Reserve Fund, Inc. US POSTAGE PO Box 17250 PAID Baltimore, Maryland 21203 Farmingdale, NY Permit No. 225 ------------------- Deutsche Asset Management Mutual Fund Prospectus August 1,2001 Class A, B and C Shares Cash Reserve Prime Shares [Like shares of all mutual funds, these securities have not been approved or disapproved by the Securities and Exchange Commission nor has the Securities and Exchange Commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.] A Member of the Deutsche Bank Group [LOGO] Overview - -------------------------------------------------------------------------------- of Deutsche Asset Management Cash Reserve Prime Shares-- Class A, B and C Goal: The Prime Series (the `Fund') seeks as high a level of current income as is consistent with preservation of capital and liquidity. Core Strategy: The Fund invests in high quality, short-term money market instruments. INVESTMENT POLICIES AND STRATEGIES The Fund seeks to achieve its objective by investing in high quality money market instruments, maintaining an average maturity of 90 days or less. The Fund attempts to maintain a stable price of $1.00 per share by investing in securities that are valued in US dollars and have remaining maturities of 397 days or less. - -------------------------------------------------------------------------------- Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C Overview of Deutsche Asset Management Cash Reserve Prime Shares Goal........................................................................ 2 Core Strategy............................................................... 2 Investment Policies and Strategies.......................................... 2 Principal Risks of Investing in the Fund.................................... 3 Who Should Consider Investing in the Fund................................... 3 Total Returns, After Fees and Expenses...................................... 4 Annual Fund Operating Expenses.............................................. 5
A Detailed Look at Deutsche Asset Management Cash Reserve Prime Shares Objective................................................................... 6 Strategy.................................................................... 6 Principal Investments....................................................... 6 Risks....................................................................... 6 Management of the Fund...................................................... 7 Calculating the Fund's Share Price.......................................... 7 Dividends and Distributions................................................. 8 Tax Considerations.......................................................... 8 Buying and Selling Fund Shares.............................................. 8 Financial Highlights........................................................ 13
- -------------------------------------------------------------------------------- 2 Overview of Deutsche Asset Management Cash Reserve Prime Shares-- Class A, B and C PRINCIPAL RISKS OF INVESTING IN THE FUND Although the Fund seeks to preserve the value of your investment at $1.00 per share, there are risks associated with investing in the Fund. For example: .. A sharp rise in interest rates could cause the bond market and individual securities in the Fund's portfolio to decline in value. The Fund's yield can be expected to decline during periods of falling interest rates. .. An issuer's creditworthiness could decline, which in turn may cause the value of that issuer's securities in the Fund's portfolio to decline. .. Securities held by the Fund could perform poorly. WHO SHOULD CONSIDER INVESTING IN THE FUND You should consider investing in the Fund if you are seeking income from your investment while minimizing the risk of loss of principal and maintaining liquidity. You should not consider investing in the Fund if you seek long-term capital growth. Although it provides a convenient means of diversifying short-term investments, the Fund by itself does not constitute a balanced investment program. Deutsche Asset Management Cash Reserve Prime Class A Shares are available through your securities dealer or the Deutsche Asset Management Service Center. Deutsche Asset Management Cash Reserve Prime Class B Shares are available only through the exchange of Class B shares of other funds in the Deutsche Asset Management family of funds. Deutsche Asset Management Cash Reserve Prime Class C Shares are available only through the exchange of Class C shares of other funds in the Deutsche Asset Management family of funds. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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. - -------------------------------------------------------------------------------- 3 Overview of Deutsche Asset Management Cash Reserve Prime Shares--Class A, B, and C TOTAL RETURNS, AFTER FEES AND EXPENSES The bar chart and table on this page can help you evaluate the potential risk and rewards of investing in the Fund by showing changes in its performance from year to year. The bar chart shows the Class A shares' actual total return for each full calendar year for the past ten years. The table shows Class A shares' average annual total return over the last calendar year, last five years, last ten years and since inception and Class B shares' average annual total return over the last calendar year, last five years and since inception. As of December 31, 2000, the Class A and Class B shares' 7-day yield was 6.06% and 5.38%, respectively. To learn the current 7-day yield, call the Deutsche Asset Management Service Center at 1-800-730-1313. No performance information is provided for the Class C shares because they have not been offered for a full calendar year. However, performance of the Class C shares is expected to be similar to that of the Fund's other classes and will differ only to the extent that Class C shares have different expenses. - -------------------------------------------------------------------------------- The 7-day yield, which is often referred to as the `current yield,' is the income generated by the Fund over a seven-day period. This amount is then annualized, which means that you assume the Fund generates the same income every week for a year. The `total return' of the Fund is the change in the value of an investment in the Fund over a given period. Average annual total returns are calculated by averaging the year-by-year returns of the Fund over a given period. Year-by-Year Returns Class A Shares (each full calendar year for the past ten years) [GRAPH] 1991 5.68% 1992 3.25% 1993 2.64% 1994 3.81% 1995 5.52% 1996 4.92% 1997 4.99% 1998 4.99% 1999 4.70% 2000 5.94% For the period from December 31, 2000 through June 30, 2001, the total return for the Class A Shares was 2.37%. For the ten-year period shown in the bar chart, the Class A Shares' highest return in any calendar quarter was 1.63% (first quarter 1991) and its lowest quarterly return was 0.64% (second quarter 1993). Past performance offers no indication of how the Fund will perform in the future. Performance for Periods Ended December 31, 2000
Average Annual Total Returns 1 Year 5 Years 10 Years Since Inception Class A shares (January 5, 1989)/1/ 5.94% 5.11% 4.64% 5.28% ---------------------------------------------------------- Class B shares (April 3, 1995)/1/ 0.15% 3.98% N/A 4.08% ----------------------------------------------------------
/1/ Inception Date. These figures assume the reinvestment of dividends and capital gains distributions and include the impact of the maximum sales charges. Since Class B shares are only available through exchange of Class B shares from other Deutsche Asset Management funds, the 5% maximum deferred sales charge reflected in the total return for Class B shares would apply only if you purchased Class B shares of another Deutsche Asset Management fund, exchanged them into Class B shares and then redeemed the Class B shares, all within the time period indicated. - -------------------------------------------------------------------------------- 4 Overview of Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C ANNUAL FUND OPERATING EXPENSES (expenses paid from Fund assets) The Annual Fees and Expenses table to the right describes the fees and expenses that you may pay if you buy and hold Fund shares. Expense Example: The example below illustrates the expenses you would have incurred on a $10,000 investment in the Fund. The numbers assume that the Fund earned an annual return of 5% over the periods shown, that the Fund's operating expenses remained the same and that you redeem your shares at the end of the period. You may use this hypothetical example to compare the Fund's expense history with other funds. The example does not represent an estimate of future returns or expenses. Your actual costs may be higher or lower. - -------------------------------------------------------------------------------- /1/ Class A shares are not subject to a sales charge. However, if you exchange Class A shares of another Deutsche Asset Management fund for Class A shares, you will retain liability for any contingent deferred sales charge due on such shares upon redemption. (See the section entitled `Buying and Selling Fund Shares.') /2/ Contingent deferred sales charges decline over time and reach zero after six years. After seven years, Class B shares convert automatically to Class A shares. (See the section entitled `Buying and Selling Fund Shares.') The period of time you held the shares exchanged into Class B shares will be combined with the period of time you held the shares being redeemed to determine the years since purchase. /3/ You will be required to pay a contingent deferred sales charge if you redeem your Class C shares within one year of purchase. (See the section entitled `Buying and Selling Fund Shares.') The period of time you held the shares exchanged into Class C shares will be combined with the period of time you held the shares being redeemed to determine the years since purchase. /4/ A portion of the shareholder servicing fee is allocated to member firms of the National Association of Securities Dealers, Inc. and qualified banks for services provided and expenses incurred in maintaining your account, responding to your inquiries and providing you with information on your investments. Shareholder Fees (fees paid directly from your investment)
Class A Class B Class C Shares Shares Shares Initial Deferred Deferred Sales Sales Sales Charge Charge Charge Maximum Sales Charge (Load) Imposed on Purchases None/1/ None None --------------------------------------------------------------- Maximum Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, whichever is lower) None 5.00%/2/ 1.00%/3/ ---------------------------------------------------------------
Annual Fees and Expenses (expenses paid from Fund assets)
Percentage of Average Daily Net Assets Class A Class B Class C Management Fees 0.25% 0.25% 0.25% ------------------------------------------------- Distribution and/or Service (12b-1) Fees 0.25% 0.75% 0.75% ------------------------------------------------- Other Expenses (including a 0.25% shareholder servicing fee for Class B and Class C shares) 0.11% 0.39%/4/ 0.34%/4/ ------------------------------------------------- Total Fund Operating Expenses 0.61% 1.39% 1.34% -------------------------------------------------
Expense Example You would pay the following expenses if you redeemed your shares:
1 Year 3 Years 5 Years 10 Years Class A shares $ 62 $195 $340 $ 762 ------------------------------------------------ Class B shares $642 $740 $961 $1,355 ------------------------------------------------ Class C shares $236 $425 $734 $1,613 ------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years Class A shares $ 62 $195 $340 $ 762 ------------------------------------------------ Class B shares $142 $440 $761 $1,355 ------------------------------------------------ Class C shares $136 $425 $734 $1,613 ------------------------------------------------
- -------------------------------------------------------------------------------- 5 A detailed look - ------------------------------------------------------------------------------- at Deutsche Asset Management Cash Reserve Prime Shares-- Class A, B and C OBJECTIVE The Fund seeks as high a level of current income as is consistent with preservation of capital and liquidity by investing in high quality short-term money market instruments. While Investment Company Capital Corp. (`ICCC' or the `Advisor') gives priority to earning income and maintaining the value of the Fund's principal at $1.00 per share, all money market instruments, including US Treasury obligations, can change in value when interest rates change or an issuer's creditworthiness changes. STRATEGY The Fund seeks current income by investing in high quality money market securities and maintains an average maturity of 90 days or less. The Advisor actively adjusts the average maturity of the Fund in response to its outlook for interest rates and the economy. The Fund follows two policies designed to maintain a stable share price: .. Securities are valued in US dollars and have remaining maturities of 397 days (about 13 months) or less at the time of purchase or have features that reduce their maturities to 397 days or less at the time of purchase. .. The Fund buys US Treasury obligations, money market instruments and other debt obligations that at the time of purchase: .. have received one of the two highest ratings from Moody's Investors Service, Inc., Standard & Poor's Ratings Group or Fitch, Inc.; or .. are unrated, but are determined to be of similar quality by the Advisor. PRINCIPAL INVESTMENTS The Fund may invest in high quality, short-term, dollar-denominated money market instruments paying a fixed, variable or floating interest rate. These may include: .. Debt obligations issued by US and foreign banks, financial institutions, corporations or other entities, including certificates of deposit, bankers' acceptances, commercial paper, variable rate demand notes, funding agreements and US Treasury obligations. Securities that do not satisfy the maturity restrictions for a money market fund may be specifically structured so that they are eligible investments for money market funds. For example, some securities have features which have the effect of shortening the security's maturity. .. US government securities that are issued or guaranteed by the US Treasury, or by agencies or instrumentalities of the US Government. .. Repurchase agreements, which are agreements to buy securities at one price, with a simultaneous agreement to sell back the securities at a future date at an agreed-upon price. .. Asset-backed securities, which are generally participations in a pool of assets whose payment is derived from the payments generated by the underlying assets. Payments on the asset-backed security generally consist of interest and/or principal. .. The Fund may invest up to 10% of its total assets in non-affiliated money market mutual funds with investment objectives and policies that are comparable to those of the Fund. The Fund may invest only in non-affiliated money market mutual funds that maintain an `AAA' rating by a nationally recognized statistical ratings organization. The Advisor limits exposure to any one issuer. RISKS Set forth below are some of the prominent risks associated with money market mutual funds, and the Advisor's approaches to limit them. Although the Advisor attempts to assess the likelihood that these risks may actually occur and to limit them, there is no guarantee that it will succeed. Primary Risks Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the Fund adheres to the following practices: .. The Advisor limits the average maturity of the securities held by the Fund to 90 days or less. Generally, rates of short-term investments fluctuate less than longer-term bonds. - ------------------------------------------------------------------------------- 6 A Detailed Look at Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C .. The Advisor buys securities with remaining maturities of 13 months or less. This reduces the risk to the Fund that the issuer's creditworthiness will change. Credit Risk. A money market instrument's credit quality depends on the issuer's ability to pay interest on the security and repay the debt: the lower the credit rating, the greater the risk that the security's issuer will default, or fail to meet its payment obligations. The credit risk of a security may also depend on the credit quality of any bank or financial institution that provides credit enhancement for it. The Fund only buys securities determined by the Advisor to be of high quality with minimal credit risk. Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions. Security Selection Risk. While the Fund invests in short-term securities, which by nature are relatively stable investments, the risk remains that the securities the Advisor has selected will not perform as expected. This could cause the Fund's returns to lag behind those of similar money market funds. Repurchase Agreement Risk. A repurchase agreement exposes the Fund to the risk that the party that sells the securities defaults on its obligation to repurchase them. In this circumstance, the Fund can lose money because: .. it cannot sell the securities at the agreed-upon time and price; or .. the securities lose value before they can be sold. The Fund seeks to reduce this risk by monitoring the creditworthiness of the sellers with whom it enters into repurchase agreements. The Fund also monitors the value of the securities to ensure that they are at least equal to the total amount of the repurchase obligations, including interest and accrued interest. Prepayment Risk. When a bond issuer, such as an issuer of asset-backed securities, retains the right to pay off a high yielding bond before it comes due, the Fund may have no choice but to reinvest the proceeds at lower interest rates. Thus, prepayment may reduce the Fund's income. It may also create a capital gains tax liability, because bond issuers usually pay a premium for the right to pay off bonds early. MANAGEMENT OF THE FUND Deutsche Asset Management is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Fund Management, Inc., Bankers Trust Company, Deutsche Banc Alex. Brown Inc., Deutsche Asset Management, Inc. and Deutsche Asset Management Investment Services Limited. Board of Directors. A Board of Directors supervises all of the Fund's activities on behalf of the Fund's shareholders. Investment Advisor. Under the supervision of the Board of Directors, Investment Company Capital Corp., with headquarters at One South Street, Baltimore, MD 21202, acts as the investment advisor to the Fund. As investment advisor, ICCC makes the Fund's investment decisions. It buys and sells securities for the Fund and conducts the research that leads to the purchase and sale decisions. ICCC is also responsible for selecting brokers and for negotiating brokerage commissions and dealer charges. ICCC may delegate its duties under the Advisory Agreement, and has delegated certain of such duties to its affiliate. ICCC received from the Fund a fee equal to 0.25% of the Fund's average daily net assets for its services in the last fiscal year. ICCC may, from time to time, voluntarily waive a portion of its advisory fee with respect to the Fund to preserve or enhance its performance. ICCC may provide compensation to securities dealers and service agents for distribution, administrative and promotional services. ICCC provides a full range of investment advisory and administrative services, and as of June 30, 2001, managed approximately $12 billion in assets. ICCC is an indirect wholly owned 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, private and commercial banking, investment banking and insurance. CALCULATING THE FUNDS SHARE PRICE We calculate the price of the Fund's shares (also known as the 'net asset value' or 'NAV') on each day the Fund is open as of 12:00 pm Eastern Time. You can find the Fund's daily share price in the mutual fund listings of most major newspapers and on Deutsche Asset Management's web site: www.deam-us.com. On the day before certain holidays are observed, the bond markets or other primary trading markets for the Fund may - -------------------------------------------------------------------------------- The Fund is open every week, Monday through Friday, except when the following holidays are celebrated: New Year's Day, Martin Luther King, Jr. Day (the third Monday in January), Presidents' Day (the third Monday in February), Good Friday, Memorial Day (the last Monday in May), Independence Day, Labor Day (the first Monday in September), Columbus Day (the second Monday in October), Veterans' Day (November 11), Thanksgiving Day (the fourth Thursday in November) and Christmas Day. - -------------------------------------------------------------------------------- 7 A Detailed Look at Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C close early. They may also close early on the day after Thanksgiving and the day before Christmas Eve. If the bond markets close early, the Fund may also close early. You may call the Deutsche Asset Management Service Center at 1-800-730-1313 for additional information about whether the Fund will close early before a particular holiday. On days the Fund closes early: .. All orders received prior to the Fund's close will be processed at the net asset value next calculated. .. Orders received after the Fund's close will be processed at the net asset value next calculated on the next day the Fund is open. The Fund uses the amortized cost method to account for any premiums or discounts above or below the face value of any securities it buys and rounds the per share net asset value to the nearest whole cent. This method writes down the premium--or marks up the discount--at a constant rate until maturity. It does not reflect daily fluctuations in market value. The Fund's net asset value will normally be $1.00 per share. There can be no assurance, however, that this will always be the case. DIVIDENDS AND DISTRIBUTIONS Normally, the Fund's policy is to declare dividends from its net income daily and pay the dividends to shareholders monthly. The Fund reserves the right to include in the distribution any short-term capital gains on securities that it sells. You will not receive the dividends declared on the day you sell your shares. The Fund may also pay dividends at other times if necessary for the Fund to avoid federal income or excise tax. All dividends are automatically invested in shares of the Fund, unless you elect to have your dividends and distributions reinvested in shares of another Deutsche Asset Management fund or elect to receive them in cash. To make either election, complete the appropriate section of the application or notify the Deutsche Asset Management Service Center or your service agent at least five days before the date on which the next dividend or distribution will be paid. TAX CONSIDERATIONS The following summary is based on current tax laws that may change. The tax considerations for tax-deferred accounts, non-taxable entities and non-US investors may be different. Because tax circumstances for each investor are unique and tax laws are subject to change, you should consult with your tax advisor before investing. If you are a taxable shareholder, you and other shareholders pay federal, state and local taxes at ordinary income rates on the income dividends distributed by the Fund. Your taxes will vary from year to year, based on the amount of dividends paid out by the Fund. Every year the Fund will send you information on the tax status of dividends paid the previous year. You may owe the taxes whether you receive cash or choose to have dividends reinvested. Because the Fund expects to maintain a $1.00 net asset value per share, you should not expect to have any gain or loss on the sale or exchange of the shares of the Fund. By law, the Fund must withhold a portion of your taxable distributions, dividends and sales proceeds equal to the current backup withholding tax rate, if you do not provide your correct social security or taxpayer identification number along with the certification required by the IRS, or if the IRS instructs the Fund to do so. Distribution and Shareholder Servicing Plans The Fund has adopted plans under Rule 12b-1 that allow it to pay your service agent distribution and other fees for the sale of its shares and for shareholder service. In addition, the Fund may pay shareholder servicing fees on Class B and C shares. Class A shares pay a distribution fee equal to 0.25% annually of average daily net assets. Class B and C shares pay a distribution fee equal to 0.75% annually of average daily net assets and a shareholder servicing fee equal to 0.25% annually of average daily net assets. Because these fees are paid out of the Fund's net assets on an on-going basis, they will, over time, increase the cost of your investment and may cost you more than paying other types of sales charges. BUYING AND SELLING FUND SHARES To Purchase Shares You may buy Class A shares of the Fund through your service agent. Contact your service agent for details on how to enter and pay for your order. You may also buy Class A shares by contacting the Deutsche Asset Management Service Center directly. Contact the Service Center at 1-800-730-1313 for details. - -------------------------------------------------------------------------------- 8 A Detailed Look at Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C Minimum Account Investments Initial investment in Class A shares $2,000 Initial investment in Class B and C shares (available only through exchange from other Deutsche Asset Management funds' Class B and C shares) $ 500 Subsequent investments $ 100 IRA account, initial investment (there is no minimum for subsequent investments) $1,000 Initial investment for shareholders of other Deutsche Asset Management funds' Class A, B and C shares $ 500 Automatic Investment Plan, initial investment $ 250 Weekly, semi-monthly or monthly plan subsequent investments $ 100 Quarterly plan subsequent investments $ 250 Semi-annual or annual plan subsequent investments $ 500 Minimum investment for qualified retirement plans (such as 401(k), pension or profit sharing plans) $ 0 Minimum account balance: Non-retirement account $ 500 IRA account $ 0
Accounts opened through a service agent may have different minimum investment amounts. The Fund and its service providers reserve the right, from time to time in their sole discretion, to waive or reduce the investment minimums. Automatic Investment Plan. You may elect to make a regular weekly, semi- monthly, monthly, quarterly, semi-annual or annual investment in Class A shares. The amount you decide upon will be withdrawn from your checking account using a pre-authorized check. When the money is received by the Service Center, it will be invested at that day's offering price in Class A shares. Either you or the Fund may discontinue your participation upon 30 days' notice. You may discontinue your plan, change the plan's dollar amount, frequency or investment date by contacting the Service Center. If you wish to enroll in any of these programs or if you need any additional information, complete the appropriate section of the application or contact your service agent or the Service Center. To Redeem Shares You may redeem any class of the Fund's shares through your service agent. Contact your service agent for details on how to enter your order and for information as to how you will be paid. If you have an account with the Fund that is in your name, you may also redeem shares by contacting the Service Center by mail or by telephone. Refer to the section entitled "Telephone Transactions" for more information on this method of redemption. Your service agent or the Service Center may require the following documents before redeeming your shares: .. A letter of instruction, if you are redeeming shares worth more than --------------------- $100,000. The letter must specify your account number and the number of shares or dollar amount you wish to redeem. The letter must be signed by all account owners of the shares exactly as their names appear on the account. .. A signature guarantee, if you are redeeming shares and you request that the ------------------- check be mailed to an address other than the one on record. You can obtain one from most banks or service agents. .. Any additional documents that may be required if your account is in the name -------------------- of a corporation, partnership, trust or fiduciary. Other Redemption Information Systematic Withdrawal Plan. If you own Fund shares having a value of at least $10,000, you may arrange to have some of your shares redeemed monthly, quarterly, semi-annually or annually under the Fund's Systematic Withdrawal Plan. The minimum withdrawal amount is $100. Each redemption under this plan involves all the tax and sales charge implications normally associated with Fund redemptions, except as noted below under "Waiver of Sales Charge." Contact your service agent or the Service Center for more information on this plan. Telephone Transactions. You are automatically entitled to telephone transaction privileges, but you may specifically request that no telephone redemptions or exchanges be accepted for your account. You may make this election when you complete the application or at any time thereafter by completing and returning documentation supplied by the Service Center. You may contact the Service Center during its regular hours, which are normally 8:30 am to 7:00 pm (Eastern time), every business day. The Service Center will employ reasonable procedures to confirm that telephoned instructions are genuine. These procedures include requiring you to provide certain personal identification information when you open your account and before you execute each telephone transaction. You may be required to provide additional written instructions. If these procedures are employed, neither the Fund nor the Service Center will bear any liability for following telephone instructions that the Service Center reasonably believes to be genuine. Your telephone transaction request will be recorded. - -------------------------------------------------------------------------------- 9 A Detailed Look at Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C Purchases by Exchange You may exchange Class A, B or C shares of certain Deutsche Asset Management funds for an equal dollar amount of Class A, B or C shares, respectively, without payment of a sales charge or any other charge, up to four times per calendar year. You may enter both your redemption and purchase orders on the same business day or, if you have already redeemed the shares of the other fund, you may enter your purchase order within 90 days of the redemption. The Fund may modify or terminate these offers of exchange upon 60 days' notice. Your purchase order might not be accepted if the Fund determines that your purchase would be detrimental to the interests of shareholders. (See the section entitled 'Important Information about Buying and Selling Shares.') You may request an exchange through your service agent. Contact your service agent for details on how to enter your order. Before exchanging shares, you should obtain a copy of that fund's prospectus and read it carefully. If you have an account with the Fund that is in your name, you may also request an exchange directly through the Service Center. Please note the following: .. The accounts between which the exchange is taking place must have the same name, address and taxpayer ID number. .. You may make the exchange by phone, if your account has the exchange by phone feature, or by letter. .. Any deferred sales charge will continue to be measured from the time of your original purchase. If the fund you exchange into has a higher deferred sales charge, you will be subject to that charge. If you exchange at any time into a fund with a lower deferred sales charge, your sales charge will not be reduced. .. If your shares are in a taxable account, you may have to pay taxes on the exchange. .. Your exchange must meet the minimum investment amount for the class of shares of the fund being purchased. Redemption Price The amount of any applicable deferred sales charge will be deducted from your redemption price according to the following schedule:
Sales Charge as a Percentage of the Dollar Amount Subject to Charge (as a % of the Lesser of Cost or Value) Years Since Purchase Class A Shares Class B Shares Class C Shares First None 5.00% 1.00% ----------------------------------------------------------- Second None 4.00% None ----------------------------------------------------------- Third None 3.00% None ----------------------------------------------------------- Fourth None 3.00% None ----------------------------------------------------------- Fifth None 2.00% None ----------------------------------------------------------- Sixth None 1.00% None ----------------------------------------------------------- Thereafter None None None -----------------------------------------------------------
Determination of Deferred Sales Charge. The sales charge applicable to your redemption is calculated in a manner that results in the lowest possible rate: .. No sales charge will be applied to Class A shares unless they were purchased as part of an exchange from Class A shares of another Deutsche Asset Management fund. .. No sales charge will be applied to shares you own as a result of reinvesting dividends or distributions. .. If you have purchased shares at various times, the sales charge will be applied first to shares you have owned for the longest period of time. .. If you acquired your shares through an exchange of shares of another Deutsche Asset Management fund, the period of time you held the original shares will be combined with the period of time you held the shares being redeemed to determine the years since purchase. If you bought your shares prior to May 7, 2001, you will pay the sales charge in effect at the time of your original purchase. .. The sales charge is applied to the lesser of the cost of the shares or their value at the time of your redemption. Therefore, you do not pay a sales charge on amounts representing appreciation. Waiver of Sales Charge. You may redeem shares without paying a deferred sales charge under any of the following circumstances: 1) If you are exchanging your Class B or C shares for Class B or C shares of another Deutsche Asset Management fund of the same class. 2) If your redemption represents the minimum required distribution from an individual retirement account or other retirement plan. - -------------------------------------------------------------------------------- 10 A Detailed Look at Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C 3) If your redemption represents a distribution from a Systematic Withdrawal Plan. This waiver applies only if the annual withdrawals under your Plan are 12% or less of your share balance. 4) If shares are being redeemed in your account following your death or a determination that you are disabled. This waiver applies only under the following conditions: (i) The account is registered in your name either individually, as a joint tenant with rights of survivorship, as a participant in community property, or as a minor child under the Uniform Gifts or Uniform Transfers to Minors Acts. (ii) Either you or your representative notifies your service agent or the Service Center that these circumstances exist. Automatic Conversion of Class B Shares. Your Class B shares, along with any reinvested dividends or distributions associated with those shares, will be automatically converted to Class A shares seven years after your purchase. If you purchased your shares prior to January 18, 2000, your Class B shares will be converted to Class A shares six years after your purchase. This automatic conversion will be made on the basis of the relative net asset values of the classes and, under current US tax laws, will not be a taxable event to you. Important Information about Buying and Selling Shares .. You may buy and sell shares of the Fund through authorized service agents. The price at which you buy and sell shares is based on the next calculation of the NAV after the order is received by the Service Center or your service agent, provided that your service agent forwards your order to the Service Center in a timely manner. You should contact your service agent if you have a dispute as to when your order was actually received by the Service Center. .. The Fund accepts payment for shares only in US dollars by check, by bank or Federal Funds wire transfer, or by electronic bank transfer. Please note that the Fund cannot accept cash, starter checks, third-party checks or checks issued by credit card companies or internet-based companies. .. The payment of redemption proceeds and the processing of exchanges for shares of the Fund recently purchased by check may be delayed for up to 15 calendar days while the Fund waits for your check to clear. .. Unless otherwise instructed, the Service Center normally mails a check for the proceeds from the sale of your shares to your account address the next business day but may take up to seven days after the Service Center receives your order in proper form. .. Any dividends payable on shares you redeem will be paid on the next dividend payable date. If you have redeemed all of your shares by that time, the dividend will be paid to you in cash whether or not that is the payment option you have selected. .. The Fund reserves the right to close your account on 60 days' notice if it fails to meet minimum account balance requirements for any reason other than a change in market value. .. The Fund remits proceeds from the sale of shares in US dollars. Under certain circumstances, the Fund reserves the right to redeem shares 'in- kind,' which means that the Fund may give you a portion of your redemption in portfolio securities. .. You may have difficulty contacting the Service Center by telephone during times of market volatility or disruption in telephone service. The Service Center will not accept purchase and sale orders on New York Stock Exchange holidays. The Service Center will close at the same time as the New York Stock Exchange on days when the New York Stock Exchange closes early. If you are unable to reach the Service Center by telephone, you should make your request by mail. .. The Fund reserves the right to reject purchases of Fund shares (including purchases that are part of an exchange) for any reason. The Fund reserves the right to suspend or postpone redemptions during periods when: 1) the New York Stock Exchange is closed; 2) trading on the New York Stock Exchange is restricted; or 3) an emergency exists that prohibits the Fund from disposing of its portfolio securities or pricing its shares. .. Your purchase order may not be accepted if the Fund determines that your purchase would be detrimental to the interests of its shareholders. The Fund specifically reserves the right to refuse your order if it is part of multiple purchase or exchange requests that the Fund, in its sole discretion, deems to involve excessive trading or to be part of a market timing strategy. In making its determination, the Fund may consider orders you have placed individually, orders placed in combination with a group of shareholders or commonly controlled accounts and orders placed by your service agent. For these purposes, the Fund may consider, among other factors, your trading history in this or any affiliated fund, the funds involved, the amount of your investment, your background and the background of any other investors or service agents involved. - -------------------------------------------------------------------------------- 11 A Detailed Look at Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C .. Account Statements and Fund Reports: The Service Center or your service agent will furnish you with a written confirmation of every transaction that affects your account balance. You will also receive periodic statements reflecting the balances in your account. The Service Center will send you semi-annual and annual reports on the Fund's overall performance, its holdings and its investing strategies. - -------------------------------------------------------------------------------- 12 A Detailed Look at Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C The following tables provide a picture of the Fund's financial performance for the past five fiscal years for Class A and Class B shares and since commencement of operations for Class C shares. The information selected reflects results for a single Fund share. The total returns in the tables represent the rates of return that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions. This information has been audited by PricewaterhouseCoopers LLP, independent accountants, whose report, along with the Fund's financial statements, is included in the Fund's annual report. The annual report is available free of charge by calling 1-800-730-1313. Financial Highlights Class A Shares (for a share outstanding throughout each period)
For the Years Ended March 31, 2001 2000 1999 1998 1997 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 0.0579 0.0483 0.0474 0.0494 0.0478 - -------------------------------------------------------------------------------- - -------- Distributions to shareholders Net investment income (0.0579) (0.0483) (0.0474) (0.0494) (0.0478) - -------------------------------------------------------------------------------- - -------- Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 - -------------------------------------------------------------------------------- - -------- Total investment return 5.95% 4.94% 4.85% 5.05% 4.88% - -------------------------------------------------------------------------------- - -------- Supplemental data and ratios: Net assets, end of year $11,881,559 $16,214,395 $13,028,272 $7,736,785 $6,521,574 - -------------------------------------------------------------------------------- - -------- Ratios to average net assets: Net investment income 5.73% 4.89% 4.67% 4.94% 4.78% - -------------------------------------------------------------------------------- - -------- Expenses 0.61% 0.63% 0.63% 0.67% 0.63% - -------------------------------------------------------------------------------- - --------
- -------------------------------------------------------------------------------- 13 A Detailed Look at Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C Financial Highlights Class B Shares (for a share outstanding throughout each period)
For the Years Ended March 31, 2001 2000 1999 1998 1997 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 0.0505 0.0406 0.0400 0.0418 0.0414 - -------------------------------------------------------------------------------- - -- Distributions to shareholders Net investment income (0.0505) (0.0406) (0.0400) (0.0418) (0.0414) - -------------------------------------------------------------------------------- - -- Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 - -------------------------------------------------------------------------------- - -- Total investment return 5.17% 4.14% 4.07% 4.27% 4.22% - -------------------------------------------------------------------------------- - -- Supplemental data and ratios: Net assets, end of year $11,975,189 $2,979,619 $2,355,863 $184,382 $227,098 - -------------------------------------------------------------------------------- - -- Ratios to average net assets: Net investment income 5.00% 4.14% 3.92% 4.18% 4.14% - -------------------------------------------------------------------------------- - -- Expenses 1.39% 1.38% 1.37% 1.42% 1.38% - -------------------------------------------------------------------------------- - --
- -------------------------------------------------------------------------------- 14 A Detailed Look at Deutsche Asset Management Cash Reserve Prime Shares--Class A, B and C Financial Highlights Class C Shares (for a share outstanding throughout each period)
For the Period January 18, 2000/1/ For the Year Ended through March 31, 2001 March 31, 2000 Per share operating performance: Net asset value, beginning of period $1.00 $1.00 ------------------------------------------------------------------------------ Income from investment operations Net investment income 0.0515 0.0115 ------------------------------------------------------------------------------ Distributions to shareholders Net investment income (0.0515) (0.0115) ------------------------------------------------------------------------------ Net asset value, end of period $1.00 $1.00 ------------------------------------------------------------------------------ Total investment return 5.28% 1.15% ------------------------------------------------------------------------------ Supplemental data and ratios: Net assets, end of period $1,592,020 $778,515 ------------------------------------------------------------------------------ Ratios to average net assets: Net investment income 5.07% 6.00%/2/ ------------------------------------------------------------------------------ Expenses 1.34% 0.31%/2/ ------------------------------------------------------------------------------
/1/ Commencement of operations. /2/ Annualized. - -------------------------------------------------------------------------------- 15 Additional information about the Fund's investments and performance will be available in the Fund's annual and semi-annual reports to shareholders. In the Fund's annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. You can find more detailed information about the Fund in the current Statement of Additional Information, dated August 1, 2001, which has been filed electronically with the Securities and Exchange Commission (SEC) and which is incorporated by reference into this Prospectus. To receive your free copy of the Statement of Additional Information, the annual or semi- annual report, or if you have questions about investing in the Fund, write to: Deutsche Asset Management Service Center P.O. Box 219210 Kansas City, MO 64121-9210 or call toll-free: 1-800-730-1313 You can find reports and other information about the Fund on the EDGAR Database on the SEC website (http://www.sec.gov), or you can get copies of this information, after payment of a duplicating fee, by writing an electronic request at publicinfo@sec.gov or by writing to the Public Reference Section of the SEC, Washington, DC 20549-0102. Information about the Fund, including its Statement of Additional Information, can be reviewed and copied at the SEC's Public Reference Room in Washington, DC. For information on the Public Reference Room, call the SEC at 202-942-8090. Deutsche Asset Management Cash Reserve Prime Shares Class A Shares CUSIP #251.521.209 Class B Shares 251.521.308 Class C Shares 251.521.100 BDCASHPRO (08/01) Distributed by: ICC Distributors, Inc. 811-3196 Two Portland Square Portland, ME 04101 Quality Cash Reserve Prime Shares Prospectus August 1, 2001 [Like shares of all mutual funds, these securities have not been approved or disapproved by the Securities and Exchange Commission nor has the Securities and Exchange Commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.] Overview - -------------------------------------------------------------------------------- of Quality Cash Reserve Prime Shares (A Class of the Prime Series of Deutsche Banc Alex. Brown Cash Reserve Fund, Inc.) Goal: The Prime Series (the `Fund') seeks as high a level of current income as is consistent with preservation of capital and liquidity. Core Strategy: The Fund invests in high quality, short-term money market instruments. INVESTMENT POLICIES AND STRATEGIES The Fund seeks to achieve its objective by investing in high quality money market instruments, maintaining an average maturity of 90 days or less. The Fund attempts to maintain a stable price of $1.00 per share by investing in securities that are valued in US dollars and have remaining maturities of 397 days or less. - -------------------------------------------------------------------------------- Quality Cash Reserve Prime Shares Overview of Quality Cash Reserve Prime Shares Goal........................................................................ 2 Core Strategy............................................................... 2 Investment Policies and Strategies.......................................... 2 Principal Risks of Investing in the Fund.................................... 3 Who Should Consider Investing in the Fund................................... 3 Total Returns, After Fees and Expenses...................................... 4 Annual Fund Operating Expenses.............................................. 5
A Detailed Look at Quality Cash Reserve Prime Shares Objective................................................................... 6 Strategy.................................................................... 6 Principal Investments....................................................... 6 Risks....................................................................... 6 Management of the Fund...................................................... 7 Calculating the Fund's Share Price.......................................... 7 Dividends and Distributions................................................. 8 Tax Considerations.......................................................... 8 Buying and Selling Fund Shares.............................................. 8
Financial Highlights........................................................ 11
- -------------------------------------------------------------------------------- 2 Overview of Quality Cash Reserve Prime Shares PRINCIPAL RISKS OF INVESTING IN THE FUND Although the Fund seeks to preserve the value of your investment at $1.00 per share, there are risks associated with investing in the Fund. For example: .. A sharp rise in interest rates could cause the bond market and individual securities in the Fund's portfolio to decline in value. The Fund's yield can be expected to decline during periods of falling interest rates. .. An issuer's creditworthiness could decline, which in turn may cause the value of that issuer's securities in the Fund's portfolio to decline. .. Securities held by the Fund could perform poorly. WHO SHOULD CONSIDER INVESTING IN THE FUND You should consider investing in the Fund if you are seeking income from your investment while minimizing the risk of loss of principal and maintaining liquidity. You should not consider investing in the Fund if you seek long-term capital growth. Although it provides a convenient means of diversifying short-term investments, the Fund by itself does not constitute a balanced investment program. Quality Cash Reserve Prime Shares may be purchased exclusively through securities dealers that provide certain shareholder services. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 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. - -------------------------------------------------------------------------------- 3 Overview of Quality Cash Reserve Prime Shares TOTAL RETURNS, AFTER FEES AND EXPENSES The bar chart and table on this page can help you evaluate the potential risk and rewards of investing in the Quality Cash Reserve Prime Shares by showing changes in the Quality Cash Reserve Prime Shares' performance from year to year. The bar chart shows the Quality Cash Reserve Prime Shares' actual total return for each full calendar year since the Fund began selling Quality Cash Reserve Prime Shares. The table shows the Quality Cash Reserve Prime Shares' average annual total return over the last calendar year, last five years and since inception. As of December 31, 2000, the Quality Cash Reserve Prime Shares' 7-day yield was 5.73%. To learn the current 7-day yield, call 1-800-730-1313. - -------------------------------------------------------------------------------- The 7-day yield, which is often referred to as the `current yield,' is the income generated by the Fund over a seven-day period. This amount is then annualized, which means that you assume the Fund generates the same income every week for a year. The `total return' of the Fund is the change in the value of an investment in the Fund over a given period. Average annual total returns are calculated by averaging the year-by-year returns of the Fund over a given period. Year-by-Year Returns (each full calendar year since inception) [GRAPH] 1992 2.86% 1993 2.19% 1994 3.36% 1995 5.16% 1996 4.64% 1997 4.70% 1998 4.69% 1999 4.34% 2000 5.61% For the period from December 31, 2000 through June 30, 2001, the total return for the Quality Cash Reserve Prime Shares was 2.19%. For the nine-year period shown in the bar chart, the Quality Cash Reserve Prime Shares' highest return in any calendar quarter was 1.45% (fourth quarter 2000) and its lowest quarterly return was 0.53% (second quarter 1993). Past performance offers no indication of how the Fund will perform in the future. Performance for Periods Ended December 31, 2000/1/
Average Annual Total Returns Since Inception 1 Year 5 Years (May 6, 1991) Quality Cash Reserve Prime Shares 5.61% 4.79% 4.22% -------------------------------------------------
/1/ These figures assume the reinvestment of dividends and capital gains distributions. - -------------------------------------------------------------------------------- 4 Overview of Quality Cash Reserve Prime Shares ANNUAL FUND OPERATING EXPENSES (expenses paid from Quality Cash Reserve Prime Shares' assets) The Annual Fees and Expenses table to the right describes the fees and expenses that you may pay if you buy and hold Quality Cash Reserve Prime Shares. Expense Example: The example below illustrates the expenses you would have incurred on a $10,000 investment in the Quality Cash Reserve Prime Shares. The numbers assume that the Quality Cash Reserve Prime Shares earned an annual return of 5% over the periods shown, that the Quality Cash Reserve Prime Shares' operating expenses remained the same and that you redeem your shares at the end of the period. You may use this hypothetical example to compare the Quality Cash Reserve Prime Shares' expense history with other funds. The example does not represent an estimate of future returns or expenses. Your actual costs may be higher or lower. Annual Fees and Expenses
Percentage of Average Daily Assets Management Fee 0.25% ----------------------------------------------- Distribution and Service (12b-1) Fees 0.60% ----------------------------------------------- Other Expenses 0.12% ----------------------------------------------- Total Fund Operating Expenses 0.97% -----------------------------------------------
Expense Example
1 Year 3 Years 5 Years 10 Years $99 $309 $536 $1190 ---------------------------------------------------------------
- -------------------------------------------------------------------------------- 5 A detailed look - ------------------------------------------------------------------------------- at Quality Cash Reserve Prime Shares OBJECTIVE The Fund seeks as high a level of current income as is consistent with preservation of capital and liquidity by investing in high quality short-term money market instruments. While Investment Company Capital Corp. (`ICCC' or the `Advisor') gives priority to earning income and maintaining the value of the Fund's principal at $1.00 per share, all money market instruments, including US Treasury obligations, can change in value when interest rates change or an issuer's creditworthiness changes. STRATEGY The Fund seeks current income by investing in high quality money market securities and maintains an average maturity of 90 days or less. The Advisor actively adjusts the Fund's average maturity in response to its outlook for interest rates and the economy. The Fund follows two policies designed to maintain a stable share price: .. Securities are valued in US dollars and have remaining maturities of 397 days (about 13 months) or less at the time of purchase or have features that reduce their maturities to 397 days or less at the time of purchase. .. The Fund buys US Treasury obligations, money market instruments and other debt obligations that at the time of purchase: .. have received one of the two highest ratings from Moody's Investors Service, Inc., Standard & Poor's Ratings Group or Fitch, Inc.; or .. are unrated, but are determined to be of similar quality by the Advisor. PRINCIPAL INVESTMENTS The Fund may invest in high quality, short-term, dollar-denominated money market instruments paying a fixed, variable or floating interest rate. These may include: .. Debt obligations issued by US and foreign banks, financial institutions, corporations or other entities, including certificates of deposit, bankers' acceptances, commercial paper, variable rate demand notes, funding agreements and US Treasury obligations. Securities that do not satisfy the maturity restrictions for a money market fund may be specifically structured so that they are eligible investments for money market funds. For example, some securities have features which have the effect of shortening the security's maturity. .. US government securities that are issued or guaranteed by the US Treasury, or by agencies or instrumentalities of the US Government. .. Repurchase agreements, which are agreements to buy securities at one price, with a simultaneous agreement to sell back the securities at a future date at an agreed-upon price. .. Asset-backed securities, which are generally participations in a pool of assets whose payment is derived from the payments generated by the underlying assets. Payments on the asset-backed security generally consist of interest and/or principal. .. The Fund may invest up to 10% of its total assets in non-affiliated money market mutual funds with investment objectives and policies that are comparable to those of the Fund. The Fund may invest only in non-affiliated money market mutual funds that maintain an `AAA' rating by a nationally recognized statistical ratings organization. The Advisor limits exposure to any one issuer. RISKS Set forth below are some of the prominent risks associated with money market mutual funds, and the Advisor's approaches to limit them. Although the Advisor attempts to assess the likelihood that these risks may actually occur and to limit them, there is no guarantee that it will succeed. Primary Risks Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the Fund adheres to the following practices: .. The Advisor limits the average maturity of the securities held by the Fund to 90 days or less. Generally, rates of short-term investments fluctuate less than longer-term bonds. - ------------------------------------------------------------------------------- 6 A Detailed Look at Quality Cash Reserve Prime Shares .. The Advisor buys securities with remaining maturities of 13 months or less. This reduces the risk to the Fund that the issuer's creditworthiness will change. Credit Risk. A money market instrument's credit quality depends on the issuer's ability to pay interest on the security and repay the debt: the lower the credit rating, the greater the risk that the security's issuer will default, or fail to meet its payment obligations. The credit risk of a security may also depend on the credit quality of any bank or financial institution that provides credit enhancement for it. The Fund only buys securities determined by the Advisor to be of high quality with minimal credit risk. Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions. Security Selection Risk. While the Fund invests in short-term securities, which by nature are relatively stable investments, the risk remains that the securities the Advisor has selected will not perform as expected. This could cause the Fund's returns to lag behind those of similar money market funds. Repurchase Agreement Risk. A repurchase agreement exposes the Fund to the risk that the party that sells the securities defaults on its obligation to repurchase them. In this circumstance, the Fund can lose money because: .. it cannot sell the securities at the agreed-upon time and price; or .. the securities lose value before they can be sold. The Fund seeks to reduce this risk by monitoring the creditworthiness of the sellers with whom it enters into repurchase agreements. The Fund also monitors the value of the securities to ensure that they are at least equal to the total amount of the repurchase obligations, including interest and accrued interest. Prepayment Risk. When a bond issuer, such as an issuer of asset-backed securities, retains the right to pay off a high yielding bond before it comes due, the Fund may have no choice but to reinvest the proceeds at lower interest rates. Thus, prepayment may reduce the Fund's income. It may also create a capital gains tax liability, because bond issuers usually pay a premium for the right to pay off bonds early. MANAGEMENT OF THE FUND Board of Directors. A Board of Directors supervises all of the Fund's activities on behalf of the Fund's shareholders. Investment Advisor. Under the supervision of the Board of Directors, Investment Company Capital Corp., with headquarters at One South Street, Baltimore, MD 21202, acts as the investment advisor to the Fund. As investment advisor, ICCC makes the Fund's investment decisions. It buys and sells securities for the Fund and conducts the research that leads to the purchase and sale decisions. ICCC is also responsible for selecting brokers and for negotiating brokerage commissions and dealer charges. ICCC may delegate its duties under the Advisory Agreement, and has delegated certain of such duties to its affiliate. ICCC received from the Fund a fee equal to 0.25% of the Fund's average daily net assets for its services in the last fiscal year. ICCC may, from time to time, voluntarily waive a portion of its advisory fee with respect to the Fund to preserve or enhance its performance. ICCC may provide compensation to securities dealers and service agents for distribution, administrative and promotional services. ICCC provides a full range of investment advisory and administrative services, and as of June 30, 2001, managed approximately $12 billion in assets. ICCC is an indirect wholly owned 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, private and commercial banking, investment banking and insurance. CALCULATING THE FUND'S SHARE PRICE We calculate the price of the Fund's shares (also known as the `net asset value' or `NAV') on each day the Fund is open as of 12:00 pm Eastern Time. - -------------------------------------------------------------------------------- The Fund is open every week, Monday through Friday, except when the following holidays are celebrated: New Year's Day, Martin Luther King, Jr. Day (the third Monday in January), Presidents' Day (the third Monday in February), Good Friday, Memorial Day (the last Monday in May), Independence Day, Labor Day (the first Monday in September), Columbus Day (the second Monday in October), Veterans' Day (November 11), Thanksgiving Day (the fourth Thursday in November) and Christmas Day. - -------------------------------------------------------------------------------- 7 A Detailed Look at Quality Cash Reserve Prime Shares You can find the Fund's daily share price in the mutual fund listings of most major newspapers. On the day before certain holidays are observed, the bond markets or other primary trading markets for the Fund may close early. They may also close early on the day after Thanksgiving and the day before Christmas Eve. If the bond markets close early, the Fund may also close early. You may call 1-800-730-1313 for additional information about whether the Fund will close early before a particular holiday. On days the Fund closes early: .. All orders received prior to the Fund's close will be processed at the net asset value next calculated. .. Orders received after the Fund's close will be processed at the net asset value next calculated on the next day the Fund is open. The Fund uses the amortized cost method to account for any premiums or discounts above or below the face value of any securities it buys and rounds the per share net asset value to the nearest whole cent. This method writes down the premium--or marks up the discount--at a constant rate until maturity. It does not reflect daily fluctuations in market value. The Fund's net asset value will normally be $1.00 per share. There can be no assurance, however, that this will always be the case. DIVIDENDS AND DISTRIBUTIONS Normally, the Fund's policy is to declare dividends from its net income daily and pay the dividends to shareholders monthly. The Fund reserves the right to include in the distribution any short-term capital gains on securities that it sells. You will not receive the dividends declared on the day you sell your shares. The Fund may also pay dividends at other times if necessary for the Fund to avoid federal income or excise tax. All dividends are automatically invested in shares unless you elect to receive them in cash. To make this election, notify your securities dealer or your service agent at least five days before the date on which the next dividend or distribution will be paid. TAX CONSIDERATIONS The following summary is based on current tax laws that may change. The tax considerations for tax-deferred accounts, non-taxable entities and non-US investors may be different. Because tax circumstances for each investor are unique and tax laws are subject to change, you should consult with your tax advisor before investing. If you are a taxable shareholder, you and other shareholders pay federal, state and local taxes at ordinary income rates on the income dividends distributed by the Fund. Your taxes will vary from year to year, based on the amount of dividends paid out by the Fund. Every year the Fund will send you information on the tax status of dividends paid the previous year. You may owe the taxes whether you receive cash or choose to have dividends reinvested. Because the Fund expects to maintain a $1.00 net asset value per share, you should not expect to have any gain or loss on the sale or exchange of the shares of the Fund. By law, the Fund must withhold a portion of your taxable distributions, dividends and sales proceeds equal to the current backup withholding tax rate, if you do not provide your correct social security or taxpayer identification number along with the certification required by the IRS, or if the IRS instructs the Fund to do so. Distribution Plan The Fund has adopted a plan under Rule 12b-1 that allows it to pay your securities dealer or service agent distribution and other fees for the sale of its shares and for shareholder service. The shares pay a distribution fee equal to 0.60% annually of average daily net assets. Because these fees are paid out of net assets on an on-going basis, they will, over time, increase the cost of your investment and may cost you more than paying other types of sales charges. BUYING AND SELLING FUND SHARES To Purchase Shares You may buy shares through your securities dealer or through any financial institution authorized to act as a service agent. Contact them for details on how to enter and pay for your order. Minimum Account Investments Initial investment $1,500 Subsequent investments $ 100
The Fund and its service providers reserve the right, from time to time in their sole discretion, to waive or reduce the investment minimums. Automatic Investment and Redemption Program. Your securities dealer or service agent may have established a special procedure to automatically invest proceeds from the sale of securities and other credit balances in your account in shares and to redeem shares you own to pay for securities purchases. Contact your securities dealer or service agent for details. - -------------------------------------------------------------------------------- 8 A Detailed Look at Quality Cash Reserve Prime Shares To Redeem Shares You may redeem the Fund's shares through your securities dealer or service agent. Contact them for details on how to enter your order and for information as to how you will be paid. Your securities dealer or service agent may require the following documents before redeeming your shares: .. A letter of instruction, if you are redeeming shares worth more than $100,000. The letter must specify your account number and the number of shares or dollar amount you wish to redeem. The letter must be signed by all account owners of the shares exactly as their names appear on the account. .. A signature guarantee, if you are redeeming shares and you request that the check be mailed to an address other than the one on record. You can obtain one from most banks or service agents. .. Any additional documents that may be required if your account is in the name of a corporation, partnership, trust or fiduciary. Redemption Price The price you receive when you redeem Fund shares will be the shares' net asset value. Other Redemption Information Redemption by Check. You may establish special check redemption privileges that will allow you to redeem shares you own by writing checks in amounts of $250 or more. These checks may be cashed or deposited in the same way as ordinary bank checks. You will continue to earn dividends on your shares until the check is presented for payment and the corresponding shares are redeemed. Check redemption information will appear in your account with your securities dealer or service agent. Canceled checks will not be returned to you. If the amount of your check exceeds the value of the shares you own, the check will be returned to the payee marked `non-sufficient funds.' Checks written for amounts less than $250 may also be returned. The Fund, in its discretion, will honor such checks but will charge you a servicing fee of $15. The Fund reserves the right to terminate or alter check redemption privileges at any time, to impose a service charge, or to charge you for checks. The Fund may also charge you for returned checks and for effecting stop payment orders. If you are interested in establishing check redemption privileges, contact your securities dealer or service agent. Other Information. Any dividends payable on shares you redeem will be paid on the next dividend payment date. If you redeem sufficient shares to reduce your investment to $500 or less, the Fund has the power to redeem the remaining shares after giving you 60 days' notice. The Fund reserves the right to redeem shares in kind under certain circumstances. If you paid for your purchase of shares by check, receipt of redemption proceeds will be restricted until your check clears or for a period of up to fifteen calendar days unless you are using the proceeds to purchase other securities through your securities dealer or service agent. Important Information about Buying and Selling Shares .. You may buy and sell shares of the Fund through securities dealers and authorized service agents. The price at which you buy and sell shares is based on the next calculation of the NAV after the order is received by your securities dealer or service agent. .. Any dividends payable on shares you redeem will be paid on the next dividend payable date. If you have redeemed all of your shares by that time, the dividend will be paid to you in cash whether or not that is the payment option you have selected. .. The Fund reserves the right to close your account on 60 days' notice if it fails to meet minimum account balance requirements for any reason other than a change in market value. .. The Fund remits proceeds from the sale of shares in US dollars. Under certain circumstances, the Fund reserves the right to redeem shares `in- kind,' which means that the Fund may give you a portion of your redemption in portfolio securities. .. The Fund reserves the right to reject purchases of Fund shares (including purchases that are part of an exchange) for any reason. The Fund reserves the right to suspend or postpone redemptions during periods when: 1) the New York Stock Exchange is closed; 2) trading on the New York Stock Exchange is restricted; or 3) an emergency exists that prohibits the Fund from disposing of its portfolio securities or pricing its shares. .. Your purchase order may not be accepted if the Fund determines that your purchase would be detrimental to the interests of its shareholders. The Fund specifically reserves the right to refuse your order if it is part of multiple purchase requests that the Fund, in its sole discretion, deems to involve excessive trading or to be part of a market - -------------------------------------------------------------------------------- 9 A Detailed Look at Quality Cash Reserve Prime Shares timing strategy. In making its determination, the Fund may consider orders you have placed individually, orders placed in combination with a group of shareholders or commonly controlled accounts and orders placed by your service agent. For these purposes, the Fund may consider, among other factors, your trading history in this or any affiliated fund, the funds involved, the amount of your investment, your background and the background of any other investors or service agents involved. .. Account Statements and Fund Reports: Your securities dealer or service agent will furnish you with a written confirmation of every transaction that affects your account balance. You will also receive periodic statements reflecting the balances in your account. Your securities dealer or service agent will send you semi-annual and annual reports on the Fund's overall performance, its holdings and its investing strategies. - -------------------------------------------------------------------------------- 10 A Detailed Look at Quality Cash Reserve Prime Shares The following table provides a picture of the Quality Cash Reserve Prime Shares' financial performance for the past five fiscal years. The information selected reflects results for a single Fund share. The total returns in the table represent the rates of return that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions. This information has been audited by PricewaterhouseCoopers LLP, independent accountants whose report, along with the Fund's financial statements, is included in the Fund's annual report. The annual report is available free of charge by calling 1-800-730-1313. Financial Highlights (for a share outstanding throughout each period)
For the Years Ended March 31, 2001 2000 1999 1998 1997 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 0.0547 0.0447 0.0444 0.0465 0.0449 - -------------------------------------------------------------------------------- - ------------ Distributions to shareholders Net investment income (0.0547) (0.0447) (0.0444) (0.0465) (0.0449) - -------------------------------------------------------------------------------- - ------------ Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 - -------------------------------------------------------------------------------- - ------------ Total investment return 5.61% 4.57% 4.53% 4.75% 4.59% - -------------------------------------------------------------------------------- - ------------ Ratios to average net assets: Expenses after waivers 0.97% 0.96% 0.92% 0.96% 0.91% - -------------------------------------------------------------------------------- - ------------ Expenses before waivers 0.97% 0.96% 0.97% 1.02% 0.98% - -------------------------------------------------------------------------------- - ------------ Net investment income 5.47% 4.56% 4.44% 4.66% 4.50% - -------------------------------------------------------------------------------- - ------------ Supplemental data: Net assets at end of year $49,816,271 $74,505,413 $81,944,555 $226,978,689 $197,370,530 - -------------------------------------------------------------------------------- - ------------
- -------------------------------------------------------------------------------- 11 Additional information about the Fund's investments and performance is available in the Fund's annual and semi-annual reports to shareholders. In the Fund's annual report you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. You can find more detailed information about the Fund in the current Statement of Additional Information, dated August 1, 2001, which has been filed electronically with the Securities and Exchange Commission (SEC) and which is incorporated by reference into this Prospectus. To receive your free copy of the Statement of Additional Information and the annual or semi-annual report, or if you have questions about investing in the Fund, contact your securities dealer or service agent, or write to: Service Center PO Box 219210 Kansas City, MO 64121-9210 or call toll-free: 1-800-730-1313 You can find reports and other information about the Fund on the EDGAR database on the SEC website (http://www.sec.gov), or you can get copies of this information, after payment of a duplicating fee, by writing an electronic request to publicinfo@sec.gov or by writing to the Public Reference Section of the SEC, Washington, DC 20549-0102. Information about the Fund, including its Statement of Additional Information, can be reviewed and copied at the SEC's Public Reference Room in Washington, DC. For more information on the Public Reference Room, call the SEC at 202-942-8090. Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. Quality Cash Reserve Prime Shares CUSIP #014.470.884 Distributed by: ICC Distributors, Inc. Two Portland Square Portland, ME 04101 Investment Company Act File No. 811-3196 430PRO(08/01) - -------------------------------------------------------------------------------- --------------------- Quality Cash Reserve BULK RATE Prime Shares US POSTAGE Deutsche Banc Alex. Brown PAID Cash Reserve Fund, Inc. Farmingdale, NY PO Box 17250 Permit No. 225 Baltimore, Maryland 21203 --------------------- Deutsche Banc Alex. Brown Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. Institutional Shares Prime Series Treasury Series Tax-Free Series Prospectus August 1, 2001 [Like shares of all mutual funds, these securities have not been approved or disapproved by the Securities and Exchange Commission nor has the Securities and Exchange Commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.] DEUTSCHE BANK [LOGO] Overview - ------------------------------------------------------------------------------- of the Cash Reserve Fund--Institutional Shares Goal: Each Series of the Fund seeks as high a level of current income (tax- exempt current income in the case of the Tax-Free Series) as is consistent with preservation of capital and liquidity. Core Strategy: .. The Prime Series invests in high quality, short-term money market instruments. .. The Treasury Series invests in securities issued by the US Treasury. .. The Tax-Free Series invests in high quality, short-term municipal securities. Deutsche Banc Alex. Brown Cash Reserve Institutional Shares of each series may only be purchased by eligible institutions. INVESTMENT POLICIES AND STRATEGIES The Prime Series seeks to achieve its objective by investing in high quality money market instruments, maintaining an average maturity of 90 days or less. The Prime Series attempts to maintain a stable price of $1.00 per share by investing in securities that are valued in US dollars and have remaining maturities of 397 days or less. The Treasury Series seeks to achieve its objective by investing in US Treasury Securities, maintaining an average maturity of 90 days or less. The Treasury Series attempts to maintain a stable price of $1.00 per share by investing in securities that have remaining maturities of 397 days or less. The Tax-Free Series seeks to achieve its objective by investing in high quality municipal securities, maintaining an average maturity of 90 days or less. The Tax-Free Series attempts to maintain a stable price of $1.00 per share by investing in securities that are valued in US dollars and have remaining maturities of 397 days or less. - ------------------------------------------------------------------------------- Deutsche Banc Alex. Brown Cash Reserve Fund, Inc.--Institutional Shares--Prime Series, Treasury Series, Tax-Free Series Overview of Deutsche Banc Alex. Brown Cash Reserve Fund, Inc.--Institutional Shares Prime Series................................................................ 3 Treasury Series............................................................. 6 Tax-Free Series............................................................. 9
A Detailed Look at Deutsche Banc Alex. Brown Cash Reserve Fund, Inc.-- Institutional Shares Prime Series................................................................ 12 Treasury Series............................................................. 14 Tax-Free Series............................................................. 15
Information Concerning All Series Management of the Fund...................................................... 17 Calculating the Fund's Share Price.......................................... 17 Dividends and Distributions................................................. 18 Tax Considerations.......................................................... 18 Buying and Selling Fund Shares.............................................. 18 Financial Highlights........................................................ 20
- ------------------------------------------------------------------------------- 2 Overview of the Prime Series--Institutional Shares PRINCIPAL RISKS OF INVESTING IN THE PRIME SERIES Although the Prime Series seeks to preserve the value of your investment at $1.00 per share, there are risks associated with investing in the Prime Series. For example: .. A sharp rise in interest rates could cause the bond market and individual securities in the Prime Series' portfolio to decline in value. The Prime Series' yield can be expected to decline during periods of falling interest rates. .. An issuer's creditworthiness could decline, which in turn may cause the value of that issuer's securities in the Prime Series' portfolio to decline. .. Securities held by the Prime Series could perform poorly. WHO SHOULD CONSIDER INVESTING IN THE PRIME SERIES You should consider investing in the Prime Series if you are seeking income from your investment while minimizing the risk of loss of principal and maintaining liquidity. You should not consider investing in the Prime Series if you seek long-term capital growth. Although it provides a convenient means of diversifying short- term investments, the Prime Series by itself does not constitute a balanced investment program. An investment in the Prime Series is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Prime Series seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Prime Series. - -------------------------------------------------------------------------------- 3 Overview of the Prime Series--Institutional Shares TOTAL RETURNS, AFTER FEES AND EXPENSES The bar chart and table on this page can help you evaluate the potential risk and rewards of investing in the Deutsche Banc Alex. Brown Cash Reserve Prime Institutional Shares (the `Prime Institutional Shares') by showing changes in the Prime Institutional Shares' performance from year to year. The bar chart shows the Prime Institutional Shares' actual total return for each full calendar year for the past ten years. The table shows the Prime Institutional Shares' average annual total return over the last calendar year, last five years, last ten years and since inception. As of December 31, 2000, the Prime Institutional Shares' 7-day yield was 6.33%. To learn the current 7-day yield, call 1-800-730-1313. - -------------------------------------------------------------------------------- The 7-day yield, which is often referred to as the `current yield,' is the income generated by the Prime Institutional Shares over a seven-day period. This amount is then annualized, which means that you assume the Prime Institutional Shares generate the same income every week for a year. The `total return' of the Prime Institutional Shares is the change in the value of an investment in the Prime Institutional Shares over a given period. Average annual total returns are calculated by averaging the year-by-year returns of the Prime Institutional Shares over a given period. Year-by-Year Returns Prime Institutional Shares (each full calendar year for the past ten years) [GRAPH] 1991 5.98% 1992 3.60% 1993 2.97% 1994 4.13% 1995 5.78% 1996 5.19% 1997 5.26% 1998 5.25% 1999 4.97% 2000 6.31% For the period from December 31, 2000, through June 30, 2001, the total return for the Prime Institutional Shares was 2.50%. For the ten-year period shown in the bar chart, the Prime Institutional Shares' highest return in any calendar quarter was 1.68% (first quarter 1991) and its lowest quarterly return was 0.72% (second quarter 1993). Past performance offers no indication of how the Prime Institutional Shares will perform in the future. Performance for Periods Ended December 31, 2000/1/
Average Annual Total Returns Since Inception 1 Year 5 Years 10 Years (June 4, 1990) Prime Institutional Shares 6.31% 5.39% 4.94% 5.05% ----------------------------------------------------------
/1/These figures assume the reinvestment of dividends and capital gains distributions. - -------------------------------------------------------------------------------- 4 Overview of the Prime Series--Institutional Shares ANNUAL FUND OPERATING EXPENSES (expenses paid from Prime Institutional Shares' assets) The Annual Fees and Expenses table to the right describes the fees and expenses that you may pay if you buy and hold Prime Institutional Shares. Expense Example: The example below illustrates the expenses you would have incurred on a $10,000 investment in the Prime Institutional Shares. The numbers assume that the Prime Institutional Shares earned an annual return of 5% over the periods shown, that the Prime Institutional Shares' operating expenses remained the same and that you redeem your shares at the end of the period. You may use this hypothetical example to compare the Prime Institutional Shares' expense history with other funds. The example does not represent an estimate of future returns or expenses. Your actual costs may be higher or lower. Annual Fees and Expenses
Percentage of Average Daily Assets Management Fee 0.25% ----------------------------------------------- Distribution and Service (12b-1) Fees None ----------------------------------------------- Other Expenses 0.09% ----------------------------------------------- Total Fund Operating Expenses 0.34% -----------------------------------------------
Expense Example
1 Year 3 Years 5 Years 10 Years $35 $109 $191 $431 ---------------------------------------------------------------
- -------------------------------------------------------------------------------- 5 Overview of the Treasury Series--Institutional Shares PRINCIPAL RISKS OF INVESTING IN THE TREASURY SERIES Although the Treasury Series seeks to preserve the value of your investment at $1.00 per share, there are risks associated with investing in the Treasury Series. For example: .. A sharp rise in interest rates could cause the bond market and individual securities in the Treasury Series' portfolio to decline in value. The yield on US Treasury securities is generally less than the yields on other taxable investments. The Treasury Series' yield can be expected to decline during periods of falling interest rates. .. Securities held by the Treasury Series could perform poorly. WHO SHOULD CONSIDER INVESTING IN THE TREASURY SERIES You should consider investing in the Treasury Series if you are seeking income from your investment while minimizing the risk of loss of principal and maintaining liquidity. You should not consider investing in the Treasury Series if you seek long-term capital growth. Although it provides a convenient means of diversifying short- term investments, the Treasury Series by itself does not constitute a balanced investment program. An investment in the Treasury Series is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Treasury Series seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Treasury Series. - -------------------------------------------------------------------------------- 6 Overview of the Treasury Series--Institutional Shares TOTAL RETURNS, AFTER FEES AND EXPENSES The bar chart and table on this page can help you evaluate the potential risk and rewards of investing in the Deutsche Banc Alex. Brown Cash Reserve Treasury Institutional Shares (the `Treasury Institutional Shares') by showing changes in the Treasury Institutional Shares' performance from year to year. The bar chart shows the Treasury Institutional Shares' actual total return for each full calendar year for the past ten years. The table shows the Treasury Institutional Shares' average annual total return over the last calendar year, last five years, last ten years and since inception. As of December 31, 2000, the Treasury Institutional Shares' 7-day yield was 5.97%. To learn the current 7-day yield, call 1-800-730-1313. - -------------------------------------------------------------------------------- The 7-day yield, which is often referred to as the `current yield,' is the income generated by the Treasury Institutional Shares over a seven-day period. This amount is then annualized, which means that you assume the Treasury Institutional Shares generate the same income every week for a year. The `total return' of the Treasury Institutional Shares is the change in the value of an investment in the Treasury Institutional Shares over a given period. Average annual total returns are calculated by averaging the year-by-year returns of the Treasury Institutional Shares over a given period. Year-by-Year Returns Treasury Institutional Shares (each full calendar year for the past ten years) [GRAPH] 1991 5.80% 1992 3.50% 1993 2.85% 1994 3.85% 1995 5.48% 1996 4.97% 1997 4.97% 1998 4.84% 1999 4.46% 2000 5.83% For the period from December 31, 2000, through June 30, 2001, the total return for the Treasury Institutional Shares was 2.35%. For the ten-year period shown in the bar chart, the Treasury Institutional Shares' highest return in any calendar quarter was 1.62% (first quarter 1991) and its lowest quarterly return was 0.68% (second quarter 1993). Past performance offers no indication of how the Treasury Institutional Shares will perform in the future. Performance for Periods Ended December 31, 2000/1/
Average Annual Total Returns Since Inception 1 Year 5 Years 10 Years (June 4, 1990) Treasury Institutional Shares 5.83% 5.01% 4.65% 4.76% ----------------------------------------------------------
/1/These figures assume the reinvestment of dividends and capital gains distributions. - -------------------------------------------------------------------------------- 7 Overview of the Treasury Series--Institutional Shares ANNUAL FUND OPERATING EXPENSES (expenses paid from Treasury Institutional Shares' assets) The Annual Fees and Expenses table to the right describes the fees and expenses that you may pay if you buy and hold Treasury Institutional Shares. Expense Example: The example below illustrates the expenses you would have incurred on a $10,000 investment in the Treasury Institutional Shares. The numbers assume that the Treasury Institutional Shares earned an annual return of 5% over the periods shown, that the Treasury Institutional Shares' operating expenses remained the same and that you redeem your shares at the end of the period. You may use this hypothetical example to compare the Treasury Institutional Shares' expense history with other funds. The example does not represent an estimate of future returns or expenses. Your actual costs may be higher or lower. Annual Fees and Expenses
Percentage of Average Daily Assets Management Fee 0.23% --------------------------------------------------- Distribution and Service (12b-1) Fees None --------------------------------------------------- Other Expenses 0.08% --------------------------------------------------- Total Fund Operating Expenses 0.31% --------------------------------------------------- Less Fee Waivers (0.05%)/1/ --------------------------------------------------- Net Expenses 0.26% ---------------------------------------------------
/1/The Advisor has contractually agreed to waive its fee for the Treasury Series by 0.05%. This agreement will continue until July 31, 2002 and may be extended. Expense Example/2/
1 Year 3 Years 5 Years 10 Years $27 $95 $169 $388 ---------------------------------------------------------------
/2/For the first year, the expense example takes the fee waiver into account. - -------------------------------------------------------------------------------- 8 Overview of the Tax-Free Series--Institutional Shares PRINCIPAL RISKS OF INVESTING IN THE TAX-FREE SERIES Although the Tax-Free Series seeks to preserve the value of your investment at $1.00 per share, there are risks associated with investing in the Tax-Free Series. For example: .. A sharp rise in interest rates could cause the bond market and individual securities in the Tax-Free Series' portfolio to decline in value. The Tax- Free Series' yield can be expected to decline during periods of falling interest rates. .. An issuer's creditworthiness could decline, which in turn may cause the value of that issuer's securities in the Tax-Free Series' portfolio to decline. .. Securities held by the Tax-Free Series could perform poorly. .. To the extent that the Tax-Free Series invests in taxable securities, a portion of its income would be taxable. WHO SHOULD CONSIDER INVESTING IN THE TAX-FREE SERIES You should consider investing in the Tax-Free Series if you are seeking tax- free income from your investment while minimizing the risk of loss of principal and maintaining liquidity. You should not consider investing in the Tax-Free Series if you seek long-term capital growth. Although it provides a convenient means of diversifying short- term investments, the Tax-Free Series by itself does not constitute a balanced investment program. An investment in the Tax-Free Series is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Tax-Free Series seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Tax-Free Series. - -------------------------------------------------------------------------------- 9 Overview of the Tax-Free Series--Institutional Shares TOTAL RETURNS, AFTER FEES AND EXPENSES The bar chart and table on this page can help you evaluate the potential risk and rewards of investing in the Deutsche Banc Alex. Brown Tax-Free Institutional Shares (the `Tax-Free Institutional Shares') by showing changes in the Tax-Free Institutional Shares' performance from year to year. The bar chart shows the Tax-Free Institutional Shares' actual total return for each full calendar year since it began selling shares. The table shows the Tax-Free Institutional Shares' average annual total return over the last calendar year and since inception. As of December 31, 2000, the Tax-Free Institutional Shares' 7-day yield was 4.16% and the Tax-Free Institutional Shares' 7-day taxable equivalent yield was 7.00%. To learn the current 7-day yield, call 1-800-730-1313. - -------------------------------------------------------------------------------- The 7-day yield, which is often referred to as the `current yield,' is the income generated by the Tax-Free Institutional Shares over a seven-day period. This amount is then annualized, which means that you assume the Tax-Free Institutional Shares generate the same income every week for a year. The 7-day taxable equivalent yield is the before-tax yield that would need to be earned from a taxable investment to equal the 7-day yield. The taxable equivalent yield is computed by dividing the portion of the yield that is tax-exempt by one minus the highest applicable federal income tax rate and adding the product to the portion of the yield that is not tax-exempt, if any. The `total return' of the Tax-Free Institutional Shares is the change in the value of an investment in the Tax-Free Institutional Shares over a given period. Average annual total returns are calculated by averaging the year-by-year returns of the Tax-Free Institutional Shares over a given period. Year-by-Year Returns Tax-Free Institutional Shares (each full calendar year since inception) [GRAPH] 1998 3.18% 1999 2.93% 2000 3.78% For the period from December 31, 2000, through June 30, 2001, the total return for the Tax-Free Institutional Shares was 1.48%. For the three-year period shown in the bar chart, the Tax-Free Institutional Shares' highest return in any calendar quarter was 0.98% (fourth quarter 2000) and its lowest quarterly return was 0.65% (first quarter 1999). Past performance offers no indication of how the Tax-Free Institutional Shares will perform in the future. Performance for Periods Ended December 31, 2000/1/
Average Annual Total Returns Since Inception 1 Year (June 2, 1997) Tax-Free Institutional Shares 3.78% (3.32%) --------------------------------------------------------
/1/These figures assume the reinvestment of dividends and capital gains distributions. - -------------------------------------------------------------------------------- 10 Overview of the Tax-Free Series--Institutional Shares ANNUAL FUND OPERATING EXPENSES (expenses paid from Tax-Free Institutional Shares' assets) The Annual Fees and Expenses table to the right describes the fees and expenses that you may pay if you buy and hold Tax-Free Institutional Shares. Expense Example: The example below illustrates the expenses you would have incurred on a $10,000 investment in the Tax-Free Institutional Shares. The numbers assume that the Tax-Free Institutional Shares earned an annual return of 5% over the periods shown, that the Tax-Free Institutional Shares' operating expenses remained the same and that you redeem your shares at the end of the period. You may use this hypothetical example to compare the Tax-Free Institutional Shares' expense history with other funds. The example does not represent an estimate of future returns or expenses. Your actual costs may be higher or lower. Annual Fees and Expenses
Percentage of Average Daily Assets Management Fee 0.26% ----------------------------------------------- Distribution and Service (12b-1) Fees None ----------------------------------------------- Other Expenses 0.08% ----------------------------------------------- Total Fund Operating Expenses 0.34% -----------------------------------------------
Expense Example
1 Year 3 Years 5 Years 10 Years $35 $109 $191 $431 ---------------------------------------------------------------
- -------------------------------------------------------------------------------- 11 A detailed look - ------------------------------------------------------------------------------- at the Prime Series--Institutional Shares OBJECTIVE The Prime Series seeks as high a level of current income as is consistent with preservation of capital and liquidity by investing in high quality short-term money market instruments. While Investment Company Capital Corp. (`ICCC' or the `Advisor') gives priority to earning income and maintaining the value of the Prime Series' principal at $1.00 per share, all money market instruments, including US Treasury obligations, can change in value when interest rates change or an issuer's creditworthiness changes. STRATEGY The Prime Series seeks current income by investing in high quality money market securities and maintains an average maturity of 90 days or less. The Advisor actively adjusts the average maturity of the Prime Series in response to its outlook for interest rates and the economy. The Prime Series follows two policies designed to maintain a stable share price: .. Securities are valued in US dollars and have remaining maturities of 397 days (about 13 months) or less at the time of purchase or have features that reduce their maturities to 397 days or less at the time of purchase. .. The Prime Series buys US Treasury obligations, money market instruments and other debt obligations that at the time of purchase: .. have received one of the two highest ratings from Moody's Investors Service, Inc., Standard & Poor's Ratings Group or Fitch, Inc.; or .. are unrated, but are determined to be of similar quality by the Advisor. PRINCIPAL INVESTMENTS The Prime Series may invest in high quality, short-term, dollar-denominated money market instruments paying a fixed, variable or floating interest rate. The Prime Series' investments may include: .. Debt obligations issued by US and foreign banks, financial institutions, corporations or other entities, including certificates of deposit, bankers' acceptances, commercial paper, variable rate demand notes, funding agreements and US Treasury obligations. Securities that do not satisfy the maturity restrictions for a money market fund may be specifically structured so that they are eligible investments for money market funds. For example, some securities have features which have the effect of shortening the security's maturity. .. US government securities that are issued or guaranteed by the US Treasury, or by agencies or instrumentalities of the US Government. .. Repurchase agreements, which are agreements to buy securities at one price, with a simultaneous agreement to sell back the securities at a future date at an agreed-upon price. .. Asset-backed securities, which are generally participations in a pool of assets whose payment is derived from the payments generated by the underlying assets. Payments on the asset-backed security generally consist of interest and/or principal. .. The Prime Series may invest up to 10% of its total assets in non-affiliated money market mutual funds with investment objectives and policies that are comparable to those of the Prime Series. The Prime Series may invest only in non-affiliated money market mutual funds that maintain an `AAA' rating by a nationally recognized statistical ratings organization. The Advisor limits exposure to any one issuer. RISKS Set forth below are some of the prominent risks associated with money market mutual funds, and the Advisor's approaches to limit them. Although the Advisor attempts to assess the likelihood that these risks may actually occur and to limit them, there is no guarantee that it will succeed. Primary Risks Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the Prime Series adheres to the following practices: .. The Advisor limits the average maturity of the securities held by the Prime Series to 90 days or less. Generally, rates of short-term investments fluctuate less than longer-term bonds. - ------------------------------------------------------------------------------- 12 A Detailed Look at the Prime Series--Institutional Shares .. The Advisor buys securities with remaining maturities of 13 months or less. This reduces the risk to the Prime Series that the issuer's creditworthiness will change. Credit Risk. A money market instrument's credit quality depends on the issuer's ability to pay interest on the security and repay the debt: the lower the credit rating, the greater the risk that the security's issuer will default, or fail to meet its payment obligations. The credit risk of a security may also depend on the credit quality of any bank or financial institution that provides credit enhancement for it. The Prime Series only buys securities determined by the Advisor to be of high quality with minimal credit risk. Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions. Security Selection Risk. While the Prime Series invests in short-term securities, which by nature are relatively stable investments, the risk remains that the securities the Advisor has selected will not perform as expected. This could cause the Prime Series' returns to lag behind those of similar money market funds. Repurchase Agreement Risk. A repurchase agreement exposes the Prime Series to the risk that the party that sells the securities defaults on its obligation to repurchase them. In this circumstance, the Prime Series can lose money because: .. it cannot sell the securities at the agreed-upon time and price; or .. the securities lose value before they can be sold. The Prime Series seeks to reduce this risk by monitoring the creditworthiness of the sellers with whom it enters into repurchase agreements. The Prime Series also monitors the value of the securities to ensure that they are at least equal to the total amount of the repurchase obligations, including interest and accrued interest. Prepayment Risk. When a bond issuer, such as an issuer of asset-backed securities, retains the right to pay off a high yielding bond before it comes due, the Prime Series may have no choice but to reinvest the proceeds at lower interest rates. Thus, prepayment may reduce the Prime Series' income. It may also create a capital gains tax liability, because bond issuers usually pay a premium for the right to pay off bonds early. - -------------------------------------------------------------------------------- 13 A detailed look - -------------------------------------------------------------------------------- at the Treasury Series--Institutional Shares OBJECTIVE The Treasury Series seeks as high a level of current income as is consistent with preservation of capital and liquidity by investing in securities issued by the US Treasury. While Investment Company Capital Corp. (`ICCC' or the `Advisor') gives priority to earning income and maintaining the value of the Treasury Series' principal at $1.00 per share, all money market instruments, including US Treasury obligations, can change in value when interest rates change or an issuer's creditworthiness changes. STRATEGY The Treasury Series seeks current income by investing in US Treasury securities and maintains an average maturity of 90 days or less. The Advisor actively adjusts the average maturity of the Treasury Series in response to its outlook for interest rates and the economy. The Treasury Series follows this policy designed to maintain a stable share price: .. Securities are valued in US dollars and have remaining maturities of 397 days (about 13 months) or less at the time of purchase or have features that reduce their maturities to 397 days or less at the time of purchase. PRINCIPAL INVESTMENTS While the Treasury Series may invest, to a limited extent, in repurchase agreements, the Advisor expects that 100% of the Treasury Series will be invested in US Treasury securities. The Treasury Series' investments may include: .. US Treasury obligations. .. US government securities that are issued or guaranteed by the US Treasury. The Advisor limits exposure to any one issuer. RISKS Below are set forth some of the prominent risks associated with money market mutual funds, and the Advisor's approaches to limit them. Although the Advisor attempts to assess the likelihood that these risks may actually occur and to limit them, there is no guarantee that it will succeed. Primary Risks Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the Treasury Series adheres to the following practices: .. The Advisor limits the average maturity of the securities held by the Treasury Series to 90 days or less. Generally, rates of short-term investments fluctuate less than longer-term bonds. .. The Advisor buys securities with remaining maturities of 13 months or less. This reduces the risk to the Treasury Series that the issuer's creditworthiness will change. Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions. Security Selection Risk. While the Treasury Series invests in short-term securities, which by nature are relatively stable investments, the risk remains that the securities the Advisor has selected will not perform as expected. This could cause the Treasury Series' returns to lag behind those of similar money market funds. - -------------------------------------------------------------------------------- 14 A detailed look - -------------------------------------------------------------------------------- at the Tax-Free Series--Institutional Shares OBJECTIVE The Tax-Free Series seeks as high a level of current income exempt from federal income tax as is consistent with preservation of capital and liquidity by investing in high quality short-term municipal securities. While Investment Company Capital Corp. (`ICCC' or the `Advisor') gives priority to earning tax-free income and maintaining the value of the Tax-Free Series' principal at $1.00 per share, all money market instruments, including US Treasury obligations, can change in value when interest rates change or an issuer's creditworthiness changes. STRATEGY The Tax-Free Series seeks tax exempt current income by investing in high quality municipal securities and maintains an average maturity of 90 days or less. The Advisor actively adjusts the average maturity of the Tax-Free Series in response to its outlook for interest rates and the economy. The Tax-Free Series follows two policies designed to maintain a stable share price: .. Securities are valued in US dollars and have remaining maturities of 397 days (about 13 months) or less at the time of purchase or have features that reduce their maturities to 397 days or less at the time of purchase. .. The Tax-Free Series buys municipal securities and other debt obligations that at the time of purchase: .. have received one of the two highest ratings from Moody's Investors Service, Inc., Standard & Poor's Ratings Group or Fitch, Inc.; or .. are unrated, but are determined to be of similar quality by the Advisor. PRINCIPAL INVESTMENTS While it is the policy of the Tax-Free Series to invest at least 80% of its assets in securities exempt from federal income tax, the Advisor expects that 100% of the Tax-Free Series will be so invested. The Tax-Free Series invests in high quality, short-term, dollar-denominated municipal securities. The Tax-Free Series' investments may include: .. Municipal notes and short-term municipal bonds. .. Variable rate demand notes. .. Tax-exempt commercial paper. .. The Tax-Free Series may invest up to 10% of its total assets in non- affiliated money market mutual funds with investment objectives and policies that are comparable to those of the Tax-Free Series. The Tax-Free Series may invest only in non-affiliated money market mutual funds that maintain an `AAA' rating by a nationally recognized statistical ratings organization. The Advisor limits exposure to any one issuer. RISKS Below are set forth some of the prominent risks associated with money market mutual funds, and the Advisor's approaches to limit them. Although the Advisor attempts to assess the likelihood that these risks may actually occur and to limit them, there is no guarantee that it will succeed. Primary Risks Interest Rate Risk. Money market instruments, like all debt securities, face the risk that the securities will decline in value because of changes in interest rates. Generally, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. To minimize such price fluctuations, the Tax-Free Series adheres to the following practices: .. The Advisor limits the average maturity of the securities held by the Tax- Free Series to 90 days or less. Generally, rates of short-term investments fluctuate less than longer-term bonds. .. The Advisor primarily buys securities with remaining maturities of 13 months or less. This reduces the risk to the Tax-Free Series that the issuer's creditworthiness will change. Credit Risk. A money market instrument's credit quality depends on the issuer's ability to pay interest on the security and repay the debt: the lower the credit rating, the greater the risk that the security's issuer will default, or fail to meet its payment obligations. The credit risk of a security may also depend on the credit quality of any bank or financial institution that provides credit enhancement for it. The Tax-Free Series only buys securities determined by the Advisor to be of high quality with minimal credit risk. - -------------------------------------------------------------------------------- 15 A Detailed Look at the Tax-Free Series--Institutional Shares Market Risk. Although individual securities may outperform their market, the entire market may decline as a result of rising interest rates, regulatory developments or deteriorating economic conditions. Security Selection Risk. While the Tax-Free Series invests in short-term securities, which by nature are relatively stable investments, the risk remains that the securities the Advisor has selected will not perform as expected. This could cause the Tax-Free Series' returns to lag behind those of similar money market funds. Special Tax Features. To the extent that the Tax-Free Series invests in taxable securities, a portion of its income would be taxable. - -------------------------------------------------------------------------------- 16 Information - -------------------------------------------------------------------------------- concerning all Series MANAGEMENT OF THE FUND Board of Directors. A Board of Directors supervises all of the Fund's activities on behalf of the Fund's shareholders. Investment Advisor. Under the supervision of the Board of Directors, Investment Company Capital Corp., with headquarters at One South Street, Baltimore, MD 21202, acts as the investment advisor to each series of the Fund. As investment advisor, ICCC makes each series' investment decisions. It buys and sells securities for each series and conducts the research that leads to the purchase and sale decisions. ICCC is also responsible for selecting brokers and for negotiating brokerage commissions and dealer charges. ICCC may delegate its duties under the Advisory Agreements, and has delegated certain of such duties to its affiliate. ICCC received from the Fund a fee equal to 0.25% of the Prime Series' average daily net assets, 0.18% of the Treasury Series' average daily net assets (net of fee waivers) and 0.26% of the Tax-Free Series' average daily net assets for its services in the last fiscal year. ICCC may, from time to time, voluntarily waive a portion of its advisory fee with respect to any series to preserve or enhance the performance of the series. ICCC has contractually agreed to waive its fee for the Treasury Series by 0.05%. This agreement will continue until July 31, 2002 and may be extended. ICCC may provide compensation to securities dealers and service agents for distribution, administrative and promotional services. ICCC provides a full range of investment advisory and administrative services, and as of June 30, 2001, managed approximately $12 billion in assets. ICCC is an indirect wholly owned 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, private and commercial banking, investment banking and insurance. CALCULATING THE FUND'S SHARE PRICE We calculate the price of the Fund's shares (also known as the `net asset value' or `NAV') on each day the Fund is open as of 11:00 am Eastern Time for the Treasury and Tax-Free Series and as of 12:00 pm Eastern Time for the Prime Series. You can find the Fund's daily share price in the mutual fund listings of most major newspapers. On the day before certain holidays are observed, the bond markets or other primary trading markets for the Fund may close early. They may also close early on the day after Thanksgiving and the day before Christmas Eve. If the bond markets close early, the Fund may also close early. You may call 1-800-730-1313 for additional information about whether the Fund will close early before a particular holiday. On days the Fund closes early: .. All orders received prior to the Fund's close will be processed at the net asset value next calculated. .. Orders received after the Fund's close will be processed at the net asset value next calculated on the next day the Fund is open. The Fund uses the amortized cost method to account for any premiums or discounts above or below the face value of any securities it buys and rounds the per share net asset value to the nearest whole cent. This method writes down the premium--or marks up the discount--at a constant rate until maturity. It does not reflect daily fluctuations in market value. The Fund's net asset value will normally be $1.00 per share. There can be no assurance, however, that this will always be the case. - -------------------------------------------------------------------------------- The Fund is open every week, Monday through Friday, except when the following holidays are celebrated: New Year's Day, Martin Luther King, Jr. Day (the third Monday in January), Presidents' Day (the third Monday in February), Good Friday, Memorial Day (the last Monday in May), Independence Day, Labor Day (the first Monday in September), Columbus Day (the second Monday in October), Veterans' Day (November 11), Thanksgiving Day (the fourth Thursday in November) and Christmas Day. - -------------------------------------------------------------------------------- 17 Information Concerning all Series DIVIDENDS AND DISTRIBUTIONS Normally, the Fund's policy is to declare dividends from its net income daily and pay the dividends to shareholders monthly. The Fund reserves the right to include in the distribution any short-term capital gains on securities that it sells. You will not receive the dividends declared on the day you sell your shares. The Fund may also pay dividends at other times if necessary for the Fund to avoid federal income or excise tax. All dividends are automatically invested in shares of the Series you own, unless you elect to receive them in cash. To make this election, notify your securities dealer or your service agent at least five days before the date on which the next dividend or distribution will be paid. TAX CONSIDERATIONS The following summary is based on current tax laws that may change. The tax considerations for tax-deferred accounts, non-taxable entities and non-US investors may be different. Because tax circumstances for each investor are unique and tax laws are subject to change, you should consult with your tax advisor before investing. If you are a taxable shareholder, you and other shareholders pay federal, state and local taxes at ordinary income rates on the income dividends distributed by each series. Your taxes will vary from year to year, based on the amount of dividends paid out by each series. Every year the Fund will send you information on the tax status of dividends paid by each series the previous year. You may owe the taxes whether you receive cash or choose to have dividends reinvested. The Prime and Treasury Series each expect that their distributions of income will be taxed at ordinary income rates. The Tax-Free Series intends to generate and pay to shareholders income that is exempt from federal income tax. The Tax-Free Series may, however, invest a portion of its assets in securities that generate income that is not exempt from federal income tax or alternative minimum tax. Distributions of such income are taxable to you as ordinary income. Distributions from each series may also be subject to state and local income tax. Many states, however, grant tax-free status to dividends paid from interest earned on direct obligations of the US government, subject to certain restrictions. Because each series expects to maintain a $1.00 net asset value per share, you should not expect to have any gain or loss on the sale of the shares of the Fund. By law, each series must withhold a portion of your taxable distributions, dividends and sales proceeds equal to the current backup withholding tax rate, if you do not provide your correct social security or taxpayer identification number along with the certification required by the IRS, or if the IRS instructs the series to do so. BUYING AND SELLING FUND SHARES To Purchase Shares You may buy Fund shares through your securities dealer or through any financial institution authorized to act as a service agent. Contact them for details on how to enter and pay for your order. Minimum Account Investments Initial investment $1,000,000 Subsequent investments in the same series $ 0
There is no minimum initial investment for investment advisory affiliates of Deutsche Bank AG and the Deutsche Asset Management family of funds. The Fund and its service providers reserve the right, from time to time in their sole discretion, to waive or reduce the investment minimums. Automatic Investment and Redemption Program. Your securities dealer or service agent may have established a special procedure to automatically invest proceeds from the sale of securities and other credit balances in your account in shares of the series you have selected and to redeem shares of the series you own to pay for securities purchases. Contact your securities dealer or service agent for details. To Redeem Shares You may redeem the Fund's shares through your securities dealer or service agent. Contact them for details on how to enter your order and for information as to how you will be paid. Your securities dealer or service agent may require the following documents before redeeming your shares: .. A letter of instruction, if you are redeeming shares worth more than $100,000. The letter must specify your account number and the number of shares or dollar amount you wish to redeem. The letter must be signed by all account owners of the shares exactly as their names appear on the account. .. A signature guarantee, if you are redeeming shares and you request that the check be mailed to an address other than the one on record. You can obtain one from most banks or service agents. - -------------------------------------------------------------------------------- 18 Information Concerning all Series .. Any additional documents that may be required if your account is in the name of a corporation, partnership, trust or fiduciary. Redemption Price The price you receive when you redeem shares will be the net asset value per share of the series you are redeeming. Other Redemption Information Any dividends payable on shares you redeem will be paid on the next dividend payment date. If you redeem sufficient shares to reduce your investment in a series to $500 or less, the Fund has the power to redeem the remaining shares after giving you 60 days' notice. The Fund reserves the right to redeem shares in kind under certain circumstances. Important Information about Buying and Selling Shares .. You may buy and sell shares of the Fund through securities dealers and authorized service agents. The price at which you buy and sell shares is based on the next calculation of the NAV after the order is received by your securities dealer or service agent. .. Any dividends payable on shares you redeem will be paid on the next dividend payable date. If you have redeemed all of your shares by that time, the dividend will be paid to you in cash whether or not that is the payment option you have selected. .. The Fund reserves the right to close your account on 60 days' notice if it fails to meet minimum account balance requirements for any reason other than a change in market value. .. The Fund remits proceeds from the sale of shares in US dollars. Under certain circumstances, the Fund reserves the right to redeem shares `in- kind,' which means that the Fund may give you a portion of your redemption in portfolio securities. .. The Fund reserves the right to reject purchases of Fund shares for any reason. The Fund reserves the right to suspend or postpone redemptions during periods when: 1) the New York Stock Exchange is closed; 2) trading on the New York Stock Exchange is restricted; or 3) an emergency exists that prohibits the Fund from disposing of its portfolio securities or pricing its shares. .. Your purchase order may not be accepted if the Fund determines that your purchase would be detrimental to the interests of its shareholders. The Fund specifically reserves the right to refuse your order if it is part of multiple purchase requests that the Fund, in its sole discretion, deems to involve excessive trading or to be part of a market timing strategy. In making its determination, the Fund may consider orders you have placed individually, orders placed in combination with a group of shareholders or commonly controlled accounts and orders placed by your service agent. For these purposes, the Fund may consider, among other factors, your trading history in this or any affiliated fund, the funds involved, the amount of your investment, your background and the background of any other investors or service agents involved. .. Account Statements and Fund Reports: Your securities dealer or service agent will furnish you with a written confirmation of every transaction that affects your account balance. You will also receive periodic statements reflecting the balances in your account. Your securities dealer or service agent will send you semi-annual and annual reports on the Fund's overall performance, its holdings and its investing strategies. - ------------------------------------------------------------------------------- 19 A Detailed Look at the Prime Series--Institutional Shares The following tables provide a picture of the Prime and Treasury Series' financial performance for the Institutional Shares for the past five fiscal years and the Tax-Free Series' financial performance for the Institutional Shares since inception. The information selected reflects results for a single share of a Series. The total returns in the tables represent the rates of return that an investor would have earned on an investment in the Fund, assuming reinvestment of all dividends and distributions. This information has been audited by PricewaterhouseCoopers LLP, independent accountants, whose report, along with the Fund's financial statements, is included in the Fund's annual report. The annual report is available free of charge by calling 1-800- 730-1313. Financial Highlights Prime Institutional Shares (for a share outstanding throughout each period)
For the Years Ended March 31, 2001 2000 1999 1998 1997 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 0.0610 0.0511 0.0499 0.0519 0.0503 ------------------------------------------------------------------------------ Distributions to shareholders Net investment income (0.0610) (0.0511) (0.0499) (0.0519) (0.0503) ------------------------------------------------------------------------------ Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 ------------------------------------------------------------------------------ Total investment return 6.28% 5.24% 5.11% 5.31% 5.15% ------------------------------------------------------------------------------ Supplemental data and ratios: Net assets, end of year (000s omitted) $671,539 $637,767 $388,447 $317,972 $117,812 ------------------------------------------------------------------------------ Ratios to average net assets: Net investment income 6.01% 5.18% 4.98% 5.22% 5.04% ------------------------------------------------------------------------------ Expenses 0.34% 0.34% 0.36% 0.42% 0.38% ------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 20 A Detailed Look at the Treasury Series--Institutional Shares Financial Highlights Treasury Institutional Shares (for a share outstanding throughout each period)
For the Years Ended March 31, 2001 2000 1999 1998 1997 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 0.0571 0.0462 0.0453 0.0489 0.0481 ------------------------------------------------------------------------------ Distributions to shareholders Net investment income (0.0571) (0.0462) (0.0453) (0.0489) (0.0481) ------------------------------------------------------------------------------ Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00 ------------------------------------------------------------------------------ Total investment return 5.86% 4.72% 4.63% 5.00% 4.92% ------------------------------------------------------------------------------ Supplemental data and ratios: Net assets, end of year (000s omitted) $137,520 $98,668 $122,563 $98,780 $61,209 ------------------------------------------------------------------------------ Ratios to average net assets: Net investment income 5.66% 4.62% 4.54% 4.91% 4.81% ------------------------------------------------------------------------------ Expenses after waivers 0.26% 0.29% 0.33% 0.34% 0.33% ------------------------------------------------------------------------------ Expenses before waivers 0.31% 0.34% 0.33% 0.34% 0.33% ------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 21 A Detailed Look at the Tax-Free Series--Institutional Shares Financial Highlights Tax-Free Institutional Shares (for a share outstanding throughout each period)
For the Period For the Years Ended March June 2, 1997/1/ 31, through 2001 2000 1999 March 31, 1998 Per share operating performance: Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 ----------------------------------------------------------------------------- Income from investment operations Net investment income 0.0363 0.0306 0.0303 0.0273 ----------------------------------------------------------------------------- Distributions to shareholders Net investment income (0.0363) (0.0306) (0.0303) (0.0273) ----------------------------------------------------------------------------- Net asset value, end of year $1.00 $1.00 $1.00 $1.00 ----------------------------------------------------------------------------- Total investment return 3.69% 3.10% 3.07% 2.76% ----------------------------------------------------------------------------- Supplemental data and ratios: Net assets, end of year (000s omitted) $173,956 $117,446 $84,600 $76,683 ----------------------------------------------------------------------------- Ratios to average net assets: Net investment income 3.62% 3.09% 3.03% 3.29%/2/ ----------------------------------------------------------------------------- Expenses 0.34% 0.35% 0.33% 0.35%/2/ -----------------------------------------------------------------------------
/1/ Commencement of operations. /2/ Annualized. - -------------------------------------------------------------------------------- 22 Additional information about the Fund's investments and performance is available in the Fund's annual and semi-annual reports to shareholders. In the Fund's annual report you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year. You can find more detailed information about the Fund in the current Statement of Additional Information, dated August 1, 2001, which has been filed electronically with the Securities and Exchange Commission (SEC) and which is incorporated by reference into this Prospectus. To receive your free copy of the Statement of Additional Information and the annual or semi-annual report, or if you have questions about investing in the Fund, contact your securities dealer or service agent, or write to: Service Center PO Box 219210 Kansas City, MO 64121-9210 or call toll-free: 1-800-730-1313 You can find reports and other information about the Fund on the EDGAR database on the SEC website (http://www.sec.gov), or you can get copies of this information, after payment of a duplicating fee, by writing an electronic request to publicinfo@sec.gov or by writing to the Public Reference Section of the SEC, Washington, DC 20549-0102. Information about the Fund, including its Statement of Additional Information, can be reviewed and copied at the SEC's Public Reference Room in Washington, DC. For more information on the Public Reference Room, call the SEC at 202-942-8090. Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. Deutsche Banc Alex. Brown Cash Reserve Prime Institutional Shares CUSIP #014.470.405 Deutsche Banc Alex. Brown Cash Reserve Treasury Institutional Shares 014.470.504 Deutsche Banc Alex. Brown Cash Reserve Tax-Free Institutional Shares 014.470.868 Distributed by: ICC Distributors, Inc. Two Portland Square Portland, ME 04101 Investment Company Act File No. 811-3196 DBCASHIPRO(08/01) - -------------------------------------------------------------------------------- ----------------- Deutsche Banc Alex. Brown BULK RATE Cash Reserve Fund, Inc. US POSTAGE PO Box 17250 PAID Baltimore, Maryland 21203 Farmingdale, NY Permit No. 225 ----------------- STATEMENT OF ADDITIONAL INFORMATION DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS FOR THE APPROPRIATE CLASS OF SHARES. THE AUDITED FINANCIAL STATEMENTS FOR THE FUND ARE INCLUDED IN THE FUND'S ANNUAL REPORT, WHICH HAS BEEN FILED ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS INCORPORATED BY REFERENCE INTO THIS STATEMENT OF ADDITIONAL INFORMATION. A COPY OF EACH PROSPECTUS AND EACH ANNUAL REPORT MAY BE OBTAINED WITHOUT CHARGE FROM YOUR SECURITIES DEALER, OR SHAREHOLDER SERVICING AGENT, OR BY WRITING OR CALLING THE FUND AT PO BOX 17250, BALTIMORE, MARYLAND 21203, (800) 730-1313. Statement of Additional Information dated August 1, 2001 Relating to Prospectuses dated, August 1, 2001 for: Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. Cash Reserve Shares (Prime Series, Treasury Series and Tax-Free Series) Institutional Shares (Prime Series, Treasury Series and Tax-Free Series) Quality Cash Reserve Shares (Prime Series) and Deutsche Asset Management Cash Reserve Prime Shares (Formerly Flag Investors Cash Reserve Prime Shares) (Class A, B and C Shares) TABLE OF CONTENTS
Page Introduction............................................................... 1 The Fund and Its Shares.................................................... 1 Investment Program......................................................... 2 Investment Restrictions.................................................... 7 Share Purchases and Redemptions............................................ 8 Dividends and Taxes........................................................ 9 Management of the Fund..................................................... 14 The Investment Advisor..................................................... 18 Distributor................................................................ 19 Portfolio Transactions..................................................... 23 Semi-Annual and Annual Reports............................................. 24 Independent Accountants.................................................... 24 Legal Matters.............................................................. 24 Transfer Agent, Custodian and Accounting Services.......................... 24 Principal Holders of Securities............................................ 25 Current Yield.............................................................. 27 Financial Statements....................................................... 28 Appendix A................................................................. A-1
INTRODUCTION Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (formerly, BT Alex. Brown Cash Reserve Fund, Inc.) (the `Fund') is a mutual fund. The rules and regulations of the Securities and Exchange Commission (the `SEC') require all mutual funds to furnish prospective investors certain information concerning the activities of the company being considered for investment. There are four separate Prospectuses for the Fund's shares. These Prospectuses may be obtained without charge from your Participating Dealer or Shareholder Servicing Agent or by writing the Fund, PO Box 17250, Baltimore, Maryland 21203. Investors may also call (800) 730-1313. Some of the information required to be in this Statement of Additional Information is also included in the Fund's current Prospectuses; and, in order to avoid repetition, reference will be made to sections of the Prospectuses. Unless otherwise noted, the term `Prospectus' as used herein refers to the Prospectus for each class of the Fund's shares. Additionally, the Prospectus and this Statement of Additional Information omit certain information contained in the registration statement filed with the SEC. Copies of the registration statement, including items omitted from the Prospectus and this Statement of Additional Information, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. THE FUND AND ITS SHARES The Fund is registered as an open-end diversified management investment company under the Investment Company Act of 1940, as amended, (the `1940 Act') and its shares are registered under the Securities Act of 1933 (the `1933 Act'). The Fund was organized as a corporation under the laws of the State of Maryland on November 19, 1980, reorganized as a business trust under the laws of the Commonwealth of Massachusetts on August 30, 1985 and, following certain changes in Maryland law, reorganized as a Maryland corporation effective April 5, 1990. The Fund offers three series of shares (each such series is referred to herein as a `Series' and collectively as the `Series'): . Prime Series . Treasury Series . Tax-Free Series There are currently six classes of the Prime Series, designated as the Deutsche Banc Alex. Brown Cash Reserve Prime Shares, the Deutsche Asset Management Cash Reserve Prime Class A Shares (formerly, Flag Investors Cash Reserve Prime Class A Shares), the Deutsche Asset Management Cash Reserve Prime Class B Shares (formerly, Flag Investors Cash Reserve Prime Class B Shares), the Deutsche Asset Management Cash Reserve Prime Class C Shares (formerly, Flag Investors Cash Reserve Prime Class C Shares), the Deutsche Banc Alex. Brown Cash Reserve Prime Institutional Shares and the Quality Cash Reserve Prime Shares. Prior to April 9, 2001 the Deutsche Asset Management Cash Reserve Prime Class A, B and C Shares were known as the Flag Investors Cash Reserve Prime Class A, B and C Shares. There are currently two classes of the Treasury Series, designated as the Deutsche Banc Alex. Brown Cash Reserve Treasury Shares and the Deutsche Banc Alex. Brown Cash Reserve Treasury Institutional Shares. There are currently two classes of the Tax-Free Series, designated as the Deutsche Banc Alex. Brown Cash Reserve Tax-Free Shares and the Deutsche Banc Alex. Brown Cash Reserve Tax-Free Institutional Shares. Effective May 7, 2001, Deutsche Asset Management changed the name of its `Flag Investors' family of mutual funds to `Deutsche Asset Management'. As a result, certain classes of the Fund have changed their names. This change resulted in modifications to the presentation of prospectuses, periodic reports and other publications on behalf of certain classes of the Fund. The term `majority of the outstanding shares' of either the Fund or a particular Series or class means, respectively, the vote of the lesser of (i) 67% or more of the shares of the Fund or such Series or class present or represented by proxy at a meeting, if the holders of more than 50% of the outstanding shares of the Fund or such Series or class are present or represented by proxy, or (ii) more than 50% of the outstanding shares of the Fund or such Series or class. 1 Shareholders do not have cumulative voting rights, and therefore the holders of more than 50% of the outstanding shares of all classes voting together for the election of directors may elect all of the members of the Board of Directors of the Fund. In such event, the remaining holders cannot elect any members of the Board of Directors of the Fund. The Board of Directors may classify or reclassify any unissued shares of any class or classes in addition to those already authorized by setting or changing in any one or more respects, from time to time, prior to the issuance of such shares, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption, of such shares. Any such classification or reclassification will comply with the provisions of the 1940 Act. The Fund's Articles of Incorporation authorize the issuance of shares, each with a par value of $.001. The Board of Directors may increase or (within limits) decrease the number of authorized shares without shareholder approval. A share of a Series represents an equal proportionate interest in such Series with each other share of that Series and is entitled to a proportionate interest in the dividends and distributions from that Series except to the extent such dividends and distributions may be affected by differences in the expenses allocated to a particular class. The assets received by the Fund for the issue or sale of shares of each Series and all income, earnings, profits, losses and proceeds therefrom, subject only to the rights of creditors, are allocated to that Series, and constitute the underlying assets of that Series. The underlying assets of each Series are segregated and are charged with the expenses attributable to that Series and with a share of the general expenses of the Fund as described below under `Expenses.' While the expenses of the Fund are allocated to the separate books of account of each Series, certain expenses may be legally chargeable against the assets of all Series. In addition, expenses of a Series that are attributable to a particular class of shares offered by that Series are allocated to that class. See `Expenses.' The Fund's charter provides that the directors and officers of the Fund will not be liable to the Fund or its shareholders for any action taken by such director or officer while acting in his or her capacity as such, except for any liability to which the director or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. The Fund's charter provides for indemnification by the Fund of the directors and officers of the Fund except with respect to any matter as to which any such person did not act in good faith in the reasonable belief that his or her action was in or not opposed to the best interests of the Fund. Such person may not be indemnified against any liability to the Fund or the Fund's shareholders to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. The Fund's charter also authorizes the purchase of liability insurance on behalf of the directors and officers. The Fund will not normally hold annual shareholders' meetings. Directors may be removed from office by a vote of the holders of two-thirds of the outstanding shares at a meeting duly called for that purpose, which meeting shall be held upon written request of the holders of not less than 10% of the outstanding shares of the Fund. Upon written request by ten or more shareholders, who have been such for at least six months and who hold shares constituting 1% of the outstanding shares, stating that such shareholders wish to communicate with the other shareholders for the purpose of obtaining the signatures necessary to demand a meeting to consider removal of a director, the Fund will undertake to provide a list of shareholders or to disseminate appropriate materials. Except as otherwise disclosed in the Prospectus and in this Statement of Additional Information, the directors shall continue to hold office and may appoint their successors. INVESTMENT PROGRAM Treasury Series 2 The Treasury Series may invest in securities issued or guaranteed by the U.S. Government, including U.S. Treasury securities such as bills, notes, bonds and other obligations. The Treasury Series may also invest, to a limited extent, in repurchase agreements collateralized by U.S. Government securities and in adjustable rate obligations. Such investments will be made only when it is necessary to ensure that the Series is fully invested while satisfying its liquidity requirements. The Treasury Series may commit up to 15% of its net assets to the purchase of when-issued U.S. Government securities. Prime Series The Prime Series may invest in U.S. Treasury obligations consisting of marketable securities and instruments issued by the U.S. Treasury, including bills, notes, bonds and other obligations and repurchase agreements collateralized by U.S. Treasury securities. The Prime Series may also invest in obligations issued or guaranteed as to principal and interest by agencies or instrumentalities of the U.S. Government. Some of these obligations are backed by the full faith and credit of the U.S. Government (e.g., the Government National Mortgage Association), others are supported by the issuing agency's right to borrow from the U.S. Treasury (e.g., securities of Federal Home Loan Banks) and still others are backed only by the credit of the instrumentality (e.g., Fannie Mae). The Prime Series may invest up to 10% of its total assets in non-affiliated money market funds with investment objectives and policies that are comparable to those of the Prime Series. The Prime Series will invest only in non- affiliated money market mutual funds that maintain a `AAA' rating by a nationally recognized statistical ratings organization (`NRSRO'). The Prime Series may invest in highly rated insurance company funding agreements. Funding agreements are contracts issued by insurance companies that provide investors the right to receive a variable rate of interest and the full return of principal at maturity. Funding agreements also include a put option that allows the Fund to return it to the insurance company prior to maturity. The Fund will purchase funding agreements with unconditional puts of 30 or 90 days or less. Funding agreements generally offer a higher yield than other variable securities with similar credit ratings. The primary risk of a funding agreement is the credit quality of the insurance company that issues it. The Fund will only purchase funding agreements with counterparty ratings of A1+ by S&P or P1 by Moody's. Funding agreements are considered `illiquid' securities and will count towards the 10% maximum limit that may be held by the Prime Series. The Fund anticipates investing only 3-4% of the Prime Series' assets in these instruments. The Prime Series may also invest in a broad range of commercial and bank obligations that the Fund's investment advisor (the `Advisor'), under guidelines established by the Board of Directors, believes present minimal credit risk and that satisfy the criteria for an `Eligible Security' as defined in Rule 2a-7 under the 1940 Act as described below. The Prime Series may invest in instruments consisting of commercial paper and variable amount master demand notes. Commercial paper obligations are short- term, unsecured negotiable promissory notes of U.S. or foreign corporations that at the time of purchase meet the rating criteria as an 'Eligible Security' (as defined in Rule 2a-7 under the 1940 Act as described below). Investments in foreign commercial paper generally involve risks similar to those described below relating to obligations of foreign banks or foreign branches of U.S. banks. Variable amount master demand notes are unsecured demand notes that permit investment of fluctuating amounts of money at variable rates of interest pursuant to arrangements with issuers who meet the quality criteria described below. The interest rate on a variable amount master demand note is periodically redetermined according to a prescribed formula. Although there is no secondary market in master demand notes, the payee may demand payment of the principal amount of the note on relatively short notice. In the event an issuer of a variable rate master demand note defaulted on its payment 3 obligation, the Prime Series might be unable to dispose of the note because of the absence of a secondary market and could, for this or other reasons, suffer a loss to the extent of the default. The face maturities of variable rate notes subject to a demand feature may exceed 397 days in certain circumstances. The Prime Series may also invest in bank instruments consisting mainly of certificates of deposit and bankers' acceptances that (i) are issued by U.S. and foreign banks that satisfy applicable quality standards; or (ii) are fully insured as to principal and interest by the Federal Deposit Insurance Corporation. For purposes of the Fund's investment policies with respect to bank obligations, the assets of a bank will be deemed to include the assets of its domestic and foreign branches. Obligations of foreign branches of U.S. banks and foreign banks may be general obligations of the parent bank in addition to the issuing branch or may be limited by the terms of a specific obligation and by government regulation. If the Advisor, acting under the supervision of the Board of Directors, deems the instruments to present minimal credit risk, the Prime Series may invest in obligations of foreign banks or foreign branches of U.S. banks which may include banks located in the United Kingdom, Grand Cayman Island, Nassau, Japan and Canada. Investments in these obligations may entail risks that are different from those of investments in obligations of domestic banks because of differences in political, regulatory and economic systems and conditions. These risks include future political and economic developments, currency blockage, the possible imposition of withholding taxes on interest payments, differing reserve requirements, reporting and recordkeeping requirements and accounting standards, possible seizure or nationalization of foreign deposits, difficulty or inability of pursuing legal remedies and obtaining judgments in foreign courts, possible establishment of exchange controls or the adoption of other foreign governmental restrictions that might adversely affect the payment of principal and interest on bank obligations. Foreign branches of U.S. banks and foreign banks may also be subject to less stringent reserve requirements and to different accounting, auditing, reporting and recordkeeping standards than those applicable to domestic branches of U.S. banks. The Prime Series may invest in deposits, bonds, notes and debentures and other debt obligations that at the time of purchase have, or are comparable in priority and security to other securities of such issuer which have, outstanding short-term obligations meeting the above short-term rating requirements, or if there are no such short-term ratings, are determined by the Advisor, acting under the supervision of the Board of Directors, to be of comparable quality and are rated in the top three highest long-term rating categories by a NRSRO rating such security. Tax-Free Series The Tax-Free Series may invest in municipal securities consisting of (i) debt obligations issued by or on behalf of public authorities to obtain funds to be used for various public purposes (including the construction of a wide range of public facilities), for refunding outstanding obligations, for general operating expenses and for lending such funds to other public institutions and facilities, and (ii) certain types of industrial development bonds issued by or on behalf of public authorities to obtain funds to provide for the construction, equipment, repair or improvement of privately operated facilities (`private activity bonds'); provided that the interest paid on such debt obligations and private activity bonds, in the opinion of bond counsel, is exempt from federal income taxes. The Tax-Free Series may also invest in instruments consisting of commercial paper and variable amount master demand notes. Commercial paper obligations are short-term, unsecured negotiable promissory notes of U.S. or foreign corporations that at the time of purchase meet the rating criteria as an `Eligible Security' (as defined in Rule 2a-7 under the 1940 Act as described below). Investments in foreign commercial paper generally involve risks similar to those described below relating to obligations of foreign banks or foreign branches of U.S. banks. Variable amount master demand notes are unsecured demand notes that permit investment of fluctuating amounts of money at variable rates of interest pursuant to arrangements with issuers who meet the quality criteria described below. The interest rate on a variable amount master demand note is periodically redetermined according to a prescribed formula. Although there is no secondary market in master demand notes, the payee may demand payment of the principal amount of the note on relatively short notice. In the event an issuer of a variable rate master demand note defaulted on its payment 4 obligation, the Tax-Free Series might be unable to dispose of the note because of the absence of a secondary market and could, for this or other reasons, suffer a loss to the extent of the default. The face maturities of variable rate notes subject to a demand feature may exceed 397 days in certain circumstances. The Tax-Free Series invests in high quality municipal securities that the Advisor believes, under guidelines established by the Board of Directors, present minimal credit risk and that at the time of purchase are rated within the two highest credit categories assigned by a NRSRO (provided that such purchases would be further limited unless the instrument meets the definition of an 'Eligible Security' as defined in Rule 2a-7 under the 1940 Act), including: (1) bonds rated Aaa or Aa by Moody's or AAA or AA by S&P; (2) municipal commercial paper rated Prime-1 or Prime-2 by Moody's or A-1+, A-1 or A-2 by S&P; (3) municipal notes and floating and variable rate demand obligations rated SP-1 or higher by S&P or MIG2 or VMIG or higher by Moody's; and (4) obligations secured by letters of credit providers rated within the two highest categories by any nationally recognized bank rating agency approved by the Fund's Board of Directors. The Tax-Free Series may purchase unrated securities if they are determined by the Advisor, under guidelines established by the Board of Directors, to be of comparable value to those obligations rated in the categories described above. The Tax-Free Series may invest up to 10% of its total assets in non- affiliated money market funds with investment objectives and policies that are comparable to those of the Tax-Free Series. The Tax-Free Series will invest only in non-affiliated money market mutual funds that maintain a 'AAA' rating by a NRSRO. The Tax-Free Series may hold cash reserves pending investment in municipal securities. It is a fundamental policy of the Tax-Free Series to have its assets invested so that at least 80% of the Series' income will be exempt from federal income taxes, and it is the Tax-Free Series' present intention (but it is not a fundamental policy) to invest its assets so that 100% of its annual interest income will be tax-exempt. The Tax-Free Series may invest without limitation in tax-exempt municipal securities subject to alternative minimum tax. The Tax-Free Series will seek to avoid the purchase of private activity bonds, the interest on which would be considered to be an item of preference for purposes of alternative minimum tax liability for individuals under the Internal Revenue Code of 1986, as amended. Other Investment Practices From time to time, on a temporary basis or for defensive purposes, however, the Fund may invest up to all of its assets in taxable short-term investments that meet the criteria for investment for the Treasury or Prime Series as described above. The Fund may enter into the following arrangement with respect to any Series: When-issued Securities involving commitments by a Series to purchase portfolio securities on a 'when-issued' basis. When-issued securities are securities purchased for delivery beyond the normal settlement date at a stated price and yield. A Series will generally not pay for such securities or start earning interest on them until they are received. When-issued commitments will not be used for speculative purposes and will be entered into only with the intention of actually acquiring the securities. The Prime Series and the Treasury Series may also enter into the following arrangement: Repurchase Agreements under which the Series acquires ownership of an obligation and the seller agrees, at the time of the sale, to repurchase the obligation at a mutually agreed upon time and price, thereby determining the yield during the Series' holding period. Although the underlying collateral for repurchase agreements may have maturities exceeding 397 days, repurchase agreements entered into by a Series will not have a stated maturity in excess of seven days from the date of purchase. A Series may enter into repurchase agreements with institutions that the Advisor believes present minimal credit risk. Default 5 by, or bankruptcy proceedings with respect to the seller may, however, expose the Series to possible loss because of adverse market action or delay in connection with the disposition of the underlying obligations. The Prime Series may also enter into the following arrangements. Reverse Repurchase Agreements involving the sale of money market instruments held by the Prime Series, with an agreement to repurchase the instruments at an agreed upon price and date. The Prime Series will employ reverse repurchase agreements only when necessary to meet unanticipated net redemptions so as to avoid liquidating other money market instruments during unfavorable market conditions. The Prime Series will utilize reverse repurchase agreements when the interest income to be earned from portfolio investments that would otherwise have to be liquidated to meet redemptions is greater than the interest expense incurred as a result of the reverse repurchase transactions. Reverse repurchase agreements involve the risk that the market value of securities retained by the Prime Series in lieu of liquidation may decline below the repurchase price of the securities the Prime Series is obligated to repurchase. The Prime Series may also invest in securities generally referred to as asset-backed securities, which directly or indirectly represent a participation interest in, or are secured by and payable from, a stream of payments generated by particular assets such as motor vehicle or credit card receivables. Asset- backed securities may provide periodic payments that consist of interest and/or principal payments. Consequently, the life of an asset-backed security varies with the prepayment and loss experience of the underlying assets. To secure prices deemed advantageous at a particular time, the Prime Series may purchase securities on a delayed-delivery basis, in which case delivery of the securities occurs beyond the normal settlement period; payment for or delivery of the securities would be made prior to the reciprocal delivery or payment by the other party to the transaction. The Prime Series will enter into delayed-delivery transactions for the purpose of acquiring securities and not for the purpose of leverage. Securities purchased on a delayed-delivery basis may expose the Prime Series to risk because the securities may experience fluctuations in value prior to their actual delivery. The Prime Series does not accrue income with respect to a delayed-delivery security prior to its stated delivery date. Purchasing securities on a delayed-delivery basis can involve the additional risk that the yield available in the market when the delivery takes place may be higher than that obtained in the transaction itself. Upon purchasing a security on a delayed-delivery basis, the Prime Series will segregate cash or liquid securities in an amount at least equal to the delayed- delivery commitment. Each Series may invest in instruments that have certain minimum ratings of either Moody's or S&P as permitted by the investment objective, policies and restrictions of each such Series. Investments of commercial paper may be precluded unless a particular instrument is an `Eligible Security' as defined in Rule 2a-7 under the 1940 Act. Rule 2a-7 defines `Eligible Security' as follows: (i) security with a remaining maturity of 397 days or less that is rated (or that has been issued by an issuer that is rated with respect to a class of Short-term debt obligations, or any security within that class, that is comparable in priority and security with the security) by the Requisite NRSROs/1/ in one of the two highest rating categories for Short-term debt obligations (within which there may be sub-categories or gradations indicating relative standing); or ________________________________ /1/ `Requisite NRSRO' shall mean (a) any two nationally recognized statistical ratings organizations that have issued a rating with respect to a security or class of debt obligations of an issuer, or (b) if only one NRSRO has issued a rating with respect to such security or issuer at the time the Fund purchases or rolls over the security, that NRSRO. At present the NRSROs are: Standard & Poor's Ratings Group, Moody's Investors Service, Inc., and Fitch, Inc. Subcategories or gradations in ratings (such as a `+' or `-') do not count as rating categories. 6 (ii) security: (A) that at the time of issuance was a Long-term security but that has a remaining maturity of 397 calendar days or less, and (B) whose issuer has received from the Requisite NRSROs a rating, with respect to a class of Short-term debt obligations (or any security within that class) that is now comparable in priority and security with the security, in one of the three highest rating categories for Short-term debt obligations (within which there may be sub-categories or gradations indicating relative standing); or (iii) an Unrated Security that is of comparable quality to a security meeting the requirements of paragraphs (i) or (ii) of this section, as determined by the money market fund's board of directors; provided, however, that: (A) the board of directors may base its determination that a Standby Commitment is an Eligible Security upon a finding that the issuer of the commitment presents a minimal risk of default; and (B) a security that at the time of issuance was a Long-term security but that has a remaining maturity of 397 calendar days or less and that is an Unrated Security/2/ is not an Eligible Security if the security has a Long-term rating from any NRSRO that is not within the NRSRO's three highest categories (within which there may be sub-categories or gradations indicating relative standing). See Appendix A following this Statement of Additional Information for a description of the minimum ratings of certain NRSROs for instruments in which each Series may invest. INVESTMENT RESTRICTIONS The investment restrictions applicable to the Fund's investment program are set forth below. As a matter of fundamental policy, which may not be changed without a majority vote of shareholders (as that term is defined in this Statement of Additional Information under the heading `The Fund and Its Shares'), no Series will: (1) purchase securities of any issuer (other than obligations of the U.S. Government, its agencies or instrumentalities and any municipal securities guaranteed by the U.S. Government) if immediately after such purchase more than 5% of the value of the Series' assets would be invested in such issuer; (2) borrow money or issue senior securities, except that (i) any Series may borrow money for temporary purposes in amounts up to 10% of the value of such Series' total assets at the time of borrowing; (ii) the Prime Series may enter into reverse repurchase agreements in accordance with its investment program and (iii) any Series may enter into commitments to purchase securities in accordance with its investment program; (3) make loans, except that each Series may purchase or hold debt instruments in accordance with its respective investment objectives and policies, and may loan portfolio securities and enter into repurchase agreements; ________________________ /2/ An `unrated security' is a security (i) issued by an issuer that does not have a current short-term rating from any NRSRO, either as to the particular security or as to any other short-term obligations of comparable priority and security; (ii) that was a long-term security at the time of issuance and whose issuer has not received from any NRSRO a rating with respect to a class of short-term debt obligations now comparable in priority and security; or (iii) a security that is rated but which is the subject of an external credit support agreement not in effect when the security was assigned its rating, provided that a security is not an unrated security if any short-term debt obligation issued by the issuer and comparable in priority and security is rated by any NRSRO. 7 (4) underwrite securities issued by any other person, except to the extent that the purchase of securities and the later disposition of such securities in accordance with a Series' investment program may be deemed an underwriting; (5) invest in real estate (a Series may, however, purchase and sell securities secured by real estate or interests therein or issued by issuers which invest in real estate or interests therein); (6) purchase or sell commodities or commodities contracts, provided that each Series may invest in financial futures and options on such futures. The Prime Series may not purchase any commercial paper or variable rate demand notes that would cause more than 25% of the value of the Series' total assets at the time of such purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry. The following investment restrictions apply to the Tax-Free Series: (1) The Tax-Free Series may not purchase any securities (other than obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, certificates of deposit and guarantees of banks) that would cause more than 25% of the value of the Series' total net assets at the time of such purchase to be invested in (i) securities of one or more issuers conducting their principal activities in the same state; (ii) securities, the interest on which is paid from revenues of projects with similar characteristics; or (iii) industrial development bonds the obligors of which are in the same industry; (2) The Tax-Free Series will be invested so that at least 80% of the Series' income will be exempt from federal income taxes. The following investment restriction may be changed by a vote of the majority of the Board of Directors of the Fund. No Series will invest more than 10% of the value of its net assets in illiquid securities, including repurchase agreements with remaining maturities in excess of seven days. SHARE PURCHASES AND REDEMPTIONS Purchases and Redemptions A complete description of the manner by which the Fund's shares may be purchased or redeemed appears in the Prospectus for that class under the heading 'Buying and Selling Fund Shares.' The Fund reserves the right to suspend the sale of shares at any time. The right of redemption may be suspended or the date of payment postponed when (a) trading on the New York Stock Exchange is restricted, as determined by applicable rules and regulations of the SEC, (b) the New York Stock Exchange is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency exists as determined by the SEC making disposal of portfolio securities or the valuation of the net assets of the Fund not reasonably practicable. Net Asset Value Determination The net asset value of the Treasury Series and the Tax-Free Series is determined daily as of 11:00 a.m. (Eastern time) and the net asset value of the Prime Series is determined daily as of 12:00 noon (Eastern time) each day that the Fund's custodian and the New York Stock Exchange are open for business. For the purpose of determining the price at which shares of each class of each Series are issued and redeemed, the net asset value per share is calculated immediately after the daily dividend declaration 8 by: (a) valuing all securities and instruments of such Series as set forth below; (b) deducting such Series' and class' liabilities; (c) dividing the resulting amount by the number of outstanding shares of such class; and (d) rounding the per share net asset value to the nearest whole cent. As discussed below, it is the intention of the Fund to seek to maintain a net asset value per share of $1.00 for each class of each Series. The instruments held in each Series' portfolio are valued on the basis of amortized cost. This involves valuing an instrument at its cost and thereafter assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Fund would receive if it sold all the securities in its portfolios. During periods of declining interest rates, the daily yield for any Series computed as described under 'Dividends and Taxes' below, may be higher than a like computation made by a fund with identical investments utilizing a method of valuation based upon market prices and estimates of market prices for all of its portfolio instruments. Thus, if the use of amortized cost by the Fund results in a lower aggregate portfolio value for a Series on a particular day, a prospective investor in such Series would be able to obtain a somewhat higher yield than would result from an investment in a fund utilizing solely market values, and existing investors in such Series would receive less investment income. The converse would apply in a period of rising interest rates. The valuation of portfolio instruments based upon their amortized cost, the calculation of the per share net asset value to the nearest whole cent and the concomitant maintenance of the net asset value per share of $1.00 for each class of each Series is permitted in accordance with rules and regulations of the SEC applicable to money market funds, as amended, effective June 1, 1991, which require the Fund to adhere to certain quality, maturity and diversification conditions. The Fund maintains a dollar-weighted average portfolio maturity of 90 days or less for each Series, purchases only instruments having remaining maturities of 397 days or less and invests only in securities determined by the Advisor to be of high quality with minimal credit risk. The Board of Directors is required to establish procedures designed to stabilize, to the extent reasonably practicable, the Fund's price per share at $1.00 for each class of each Series as computed for the purpose of sales and redemptions. Such procedures include review of each Series' portfolio holdings by the Board of Directors, at such intervals as it may deem appropriate, to determine whether the net asset value calculated by using available market quotations or other reputable sources for any class of any Series deviates from $1.00 per share and, if so, whether such deviation may result in material dilution or is otherwise unfair to existing shareholders of the relevant class or Series. In the event the Board of Directors determines that such a deviation exists for any class of any Series, it will take such corrective action as it deems necessary and appropriate, including sales of portfolio instruments prior to maturity to realize capital gains; withholding of dividends; redemption of shares in kind; or establishment of a net asset value per share by using available market quotations. DIVIDENDS AND TAXES Dividends All of the net income earned on the Prime Series, Treasury Series and the Tax-Free Series is declared daily as dividends to the respective holders of record of shares of each class of each Series. The net income of each Series for dividend purposes (from the time of the immediately preceding determination thereof) consists of (a) interest accrued and discount earned (including both original issue and market discount), if any, on the assets of such Series and any general income of the Fund prorated to the Series based on its relative net assets, less (b) amortization of premium and accrued expenses for the applicable dividend period attributable directly to such Series and general expenses of the Fund prorated to each such Series based on its relative net assets. Expenses attributable to a class of a Series are allocated to that class. Although realized gains and losses on the assets of each Series are reflected in the net asset value of such Series, they are not expected to be of an amount which would affect the net asset value of any Series of $1.00 per share for the purposes of purchases and redemptions. Realized gains and losses may be declared and paid yearly or more frequently. The amount of discount or premium on instruments in each Series is fixed at the time of their purchase. See 'Net Asset Value Determination' above. 9 Should the Fund incur or anticipate any unusual expense, loss or depreciation which would adversely affect the net asset value per share or net income per share of any class of a Series for a particular period, the Board of Directors would at that time consider whether to adhere to the present dividend policy described above or to revise it in light of then prevailing circumstances. For example, if the net asset value per share of any class of a Series was reduced, or was anticipated to be reduced, below $1.00, the Board of Directors might suspend further dividend payments with respect to such class or Series until the net asset value returns to $1.00. Thus, the expense, loss or depreciation might result in a shareholder (i) receiving no dividends for the period during which the shareholder held shares of such class or Series or (ii) receiving upon redemption a price per share lower than that which he paid. Dividends on all classes of a Series are normally payable on the first day that a share purchase or exchange order is effective but not on the day that a redemption order is effective. Share purchases for the Treasury Series and the Tax-Free Series effected before 11:00 a.m. (Eastern Time) and Share purchases for the Prime Series effected before 12:00 noon (Eastern Time) begin to earn dividends on the same business day. Dividends are declared daily and reinvested monthly in the form of additional full and fractional shares of the same Series at net asset value unless the shareholder has elected to have dividends paid in cash. Taxes The following is only a summary of certain additional federal income tax considerations generally affecting the Series and their shareholders that are not described in the Series' prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Series or their shareholders, and the discussion here and in the Series' prospectus is not intended as a substitute for careful tax planning. Shareholders are urged to consult with their tax advisors with specific reference to their own tax situation, including their state and local tax liabilities. The following general discussion of certain federal income tax consequences is based on the Internal Revenue Code of 1986, as amended (the 'Code') and the regulations issued thereunder as in effect on the date of this Statement of Additional Information. New legislation, as well as administrative changes or court decisions, may significantly change the conclusions expressed herein, and may have a retroactive effect with respect to the transactions contemplated herein. Qualification as a Regulated Investment Company Each Series intends to qualify and elect to be treated as a 'regulated investment company' ('RIC') as defined under Subchapter M of the Code. Accordingly, a Series must, among other things, (a) derive at least 90% of its gross income each taxable year from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, and certain other related income, including, generally, certain gains from options, futures and forward contracts; and (b) diversify its holdings so that, at the end of each fiscal quarter of a Series' taxable year, (i) at least 50% of the market value of a Series' total assets is represented by cash and cash items, United States Government securities, securities of other RICs, and other securities, with such other securities limited, in respect to any one issuer, to an amount not greater than 5% of the value of a Series' total assets or 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its total assets is invested in the securities (other than United States Government securities or securities of other RICs) of any one issuer or two or more issuers that a Series controls and which are engaged in the same, similar, or related trades or businesses. In addition to the requirements described previously, in order to qualify as a RIC, a Series must distribute at least 90% of its investment company taxable income (that generally includes dividends, taxable interest, and the excess of net short-term capital gains over net long-term capital losses less operating expenses, but determined without regard to the deduction for dividends paid) and at least 90% of its net tax-exempt interest income, for each tax year, if any, to its shareholders. If a Series meets all of the RIC requirements, it will not be subject to federal income tax on any of its net investment income or net realized capital gains that it distributes to shareholders. 10 The Treasury Series may make investments in securities (such as STRIPS) that bear an `original issue discount' or `acquisition discount' (collectively, `OID Securities'). The holder of such securities is deemed to have received interest income even though no cash payments have been received. Accordingly, OID Securities may not produce sufficient current cash receipts to match the amount of distributable net investment income the Series must distribute to satisfy the Distribution Requirement. In some cases, the Series may have to borrow money or dispose of other investments in order to make sufficient cash distributions to satisfy the Distribution Requirement. Although each Series intends to distribute substantially all of its net investment income and may distribute its capital gains for any taxable year, each Series will be subject to federal income taxation to the extent any such income or gains are not distributed. If a Series fails to qualify for any taxable year as a RIC, all of its taxable income will be subject to tax at regular corporate income tax rates without any deduction for distributions to shareholders and such distributions generally will be taxable to shareholders as ordinary dividends to the extent of a Series' current and accumulated earnings and profits. In this event, distributions generally will be eligible for the dividends-received deduction for corporate shareholders. The Board of Directors reserves the right not to maintain the qualification of a Series as a regulated investment company if it determines such course of action to be beneficial to shareholders. Series Distributions Distributions of investment company taxable income will be taxable to shareholders as ordinary income, regardless of whether such distributions are paid in cash or are reinvested in additional Shares, to the extent of a Series' earnings and profits. Each Series anticipates that it will distribute substantially all of its investment company taxable income for each taxable year. Each Series may either retain or distribute to shareholders its excess of net long-term capital gains over net short-term capital losses (`net capital gains'), if any. If such gains are distributed as a capital gains distribution, they are taxable to shareholders that are individuals at a maximum rate of 20%, regardless of the length of time the shareholder has held shares. If any such gains are retained, a Series will pay federal income tax thereon, and, if a Series makes an election, the shareholders will include such undistributed gains in their income, will increase their basis in Series shares by the difference between the amount of such includable gains and the tax deemed paid by such shareholder and will be able to claim their share of the tax paid by a Series as a refundable credit. If a Series' distributions exceed its taxable income and capital gains realized during a taxable year, all or a portion of the distributions made in the same taxable year may be recharacterized as a return of capital to shareholders. A return of capital distribution will generally not be taxable, but will reduce each shareholder's cost basis in the Series and result in a higher reported capital gain or lower reported capital loss when those shares on which the distribution was received are sold. Gains and losses on the sale of portfolio securities and unrealized appreciation or depreciation in the value of these securities may require a Series to adjust distributions in order to maintain a $1.00 net asset value. These procedures may result in under-or over-distributions of net investment income. Because each of the Series' income is derived primarily from interest rather than dividends, no portion of a Series'quit distributions generally will be eligible for the corporate dividends-received deduction. Ordinarily, investors should include all dividends as income in the year of payment. However, dividends declared payable to shareholders of record in October, November, or December of one year, but paid in January of the following year, will be deemed for tax purposes to have been received by the shareholder and paid by the Series in the year in which the dividends were declared. 11 Each Series will provide a statement annually to shareholders as to the federal tax status of distributions paid (or deemed to be paid) by the Series during the year. In certain cases, a Series will be required to withhold and remit to the Internal Revenue Service distributions payable to you equal to the current backup withholding tax rate if you (1) have failed to provide a correct tax identification number, (2) are subject to backup withholding by the Internal Revenue Service for failure to properly report receipt of interest or dividends, or (3) have failed to certify to the Fund that you are not subject to backup withholding. Sale or Exchange of Series Shares Redemptions and exchanges of Series' shares are taxable transactions for federal and state income tax purposes. However, because each Series seeks to maintain a constant $1.00 per share net asset value, you should not expect to realize a capital gain or loss upon redemption or exchange of your shares in a Series. If gain or loss does arise on the sale or exchange of a share, such gain or loss will be long-term if you held the share for more than twelve months and otherwise will be short-term. For individuals, long-term capital gains are currently taxed at a maximum rate of 20% and short-term capital gains are currently taxed at ordinary income tax rates. However, if a shareholder realizes a loss on the sale, exchange or redemption of a share held for six months or less and has previously received a capital gains distribution with respect to the share (or any undistributed net capital gains of a Series with respect to such share are included in determining the shareholder's long-term capital gains), the shareholder must treat the loss as a long-term capital loss to the extent of the amount of the prior capital gains distribution (or any undistributed net capital gains of a Series that have been included in determining such shareholder's long-term capital gains). In addition, any loss realized on a sale or other disposition of shares will be disallowed to the extent an investor repurchases (or enters into a contract or option to repurchase) shares within a period of 61 days (beginning 30 days before and ending 30 days after the disposition of the shares). This loss disallowance rule will apply to shares received through the reinvestment of dividends during the 61-day period. Federal Excise Tax; Miscellaneous Considerations; If a Series fails to distribute in a calendar year at least 98% of its ordinary income for the year and 98% of its capital gain net income (the excess of short and long-term capital gains over short and long-term capital losses) for the one-year period ending October 31 of that year (and any retained amount from the prior calendar year), the Series will be subject to a nondeductible 4% Federal excise tax on undistributed amounts not meeting the 98% threshold. Each Series intends to make sufficient distributions to avoid imposition of this tax, or to retain, at most its net capital gains and pay tax thereon. However, the Fund can give no assurances that its distributions will be sufficient to eliminate all taxes. A Series may invest in complex securities. These investments may be subject to numerous special and complex tax rules. These rules could affect whether gains and losses recognized by a Series are treated as ordinary income or capital gain, accelerate the recognition of income to a Series and/or defer a Series' ability to recognize losses. In turn, those rules may affect the amount, timing or character of the income distributed to you by a Series. If you are a non-U.S. investor in a Series, you may be subject to U.S. withholding and estate tax and are encouraged to consult your tax advisor prior to investing in a Series. State and Local Taxes Rules of state and local taxation of dividend and capital gains distributions from regulated investment companies often differ from the rules for federal income taxation described above. You are urged to consult your tax advisor as to the consequences of these and other state and local tax rules affecting an investment in the Fund. Many states grant tax-free status to dividends paid to you from interest earned on direct obligations of the U.S. government, subject in some states to minimum investment requirements that must be met by a Series. Investments in Government National Mortgage Association or Fannie Mae securities, banker's acceptances, commercial paper and repurchase agreements collateralized by U.S. government securities do not generally qualify for such tax-free treatment. The rules on exclusion of this income are different for corporate shareholders. 12 Additional Tax Information For The Tax-Free Series The Tax-Free Series intends to qualify to pay `exempt-interest dividends' to its shareholders by satisfying the Code's requirement that at the close of each quarter of its taxable year at least 50% of the value of its total assets consist of obligations the interest on which is exempt from federal income tax. As long as this and certain other requirements are met,dividends derived from the Tax-Free Series' net tax-exempt interest income will be `exempt-interest dividends' that are excluded from your gross income for federal income tax purposes. Exempt-interest dividends may, however, have collateral federal income tax consequences, including alternative minimum tax consequences, as discussed below. The percentage of income that constitutes `exempt-interest dividends' will be determined for each year for the Tax-Free Series and will be applied uniformly to all dividends declared with respect to the Tax-Free Series during that year. This percentage may differ from the actual percentage for any particular day. Exempt-interest dividends may be subject to the alternative minimum tax imposed by Section 55 of the Code (the `Alternative Minimum Tax'). The Alternative Minimum Tax is imposed at a maximum rate of up to 28% in the case of non-corporate taxpayers and at a maximum rate of 20% in the case of corporate taxpayers, to the extent it exceeds the taxpayer's regular tax liability. The Alternative Minimum Tax may be affected by the receipt of exempt-interest dividends in two circumstances. First, exempt-interest dividends derived from certain `private activity bonds' issued after August 7, 1986, generally will be an item of tax preference and therefore potentially subject to the Alternative Minimum Tax. Second, in the case of exempt-interest dividends received by corporate shareholders, all exempt-interest dividends, regardless of when the bonds from which they are derived were issued or whether they are derived from private activity bonds, will be included in the corporation's `adjusted current earnings,' as defined in Section 56(g) of the Code, in calculating the corporation's alternative minimum taxable income for purposes of determining the Alternative Minimum Tax. Any interest on indebtedness you incur or continue to purchase or carry shares of the Tax-Free Series will not be deductible for federal income tax purposes. The deduction otherwise allowable to property and casualty insurance companies for `losses incurred' will be reduced by an amount equal to a portion of exempt-interest dividends received or accrued during any taxable year. Foreign corporations engaged in a trade or business in the United States will be subject to a `branch profits tax' on their `dividend equivalent amount' for the taxable year, which will include exempt-interest dividends. Certain Subchapter S corporations may also be subject to taxes on their `passive investment income,' which could include exempt-interest dividends. Up to 85% of the Social Security benefits or railroad retirement benefits received by you during any taxable year will be included in your gross income if your `modified adjusted gross income' (which includes exempt-interest dividends) plus one-half of the Social Security benefits or railroad retirement benefits received by you during that taxable year exceeds the base amount described in Section 86 of the Code. Entities or persons who are `substantial users' (or persons related to `substantial users') of facilities financed by industrial development bonds or private activity bonds should consult their tax advisors before purchasing shares. `Substantial user' is defined generally as including a `non-exempt person' who regularly uses in trade or business a part of such a facility. Current federal law limits the types and volume of bonds qualifying for the federal income tax exemption of interest, which may have an effect on the ability of the Tax-Free Series to purchase sufficient amounts of tax-exempt securities to satisfy the Code's requirements for the payment of exempt-interest dividends. Issuers of bonds purchased by the Tax-Free Series (or the beneficiary of such bonds) may have made certain representations or covenants in connection with the issuance of such bonds to satisfy certain requirements of the Code that must be satisfied subsequent to the issuance of such bonds. Exempt-interest dividends derived from such bonds may become subject to federal income taxation retroactively to the date thereof if such representations are determined to have been inaccurate or if the issuer of such bonds (or the beneficiary of such bonds) fails to comply with such covenants. 13 The Series may not be a suitable investment for you if you are a tax-exempt shareholder or plan because you would not gain any additional benefit from the receipt of exempt-interest dividends. Exempt-interest dividends from interest earned on municipal securities of a state or its political subdivisions, generally are exempt from that state's personal income tax. Most states, however, do not grant tax-free treatment to interest from municipal securities of other states. MANAGEMENT OF THE FUND Directors and Officers The Fund's Board of Directors manages the Fund's overall business and affairs. The Board approves all significant agreements between the Fund and persons or companies furnishing services to the Fund, including the Fund's agreements with its advisor, distributor, custodian and transfer agent. The Directors and executive officers of the Fund, their respective dates of birth and their principal occupations during the last five years are set forth below. Unless otherwise indicated, the address of each Director and executive officer is One South Street, Baltimore, Maryland 21202. *RICHARD T. HALE, Chairman and President (7/17/45) Managing Director, Deutsche Banc Alex. Brown Inc. (formerly, DB Alex. Brown LLC); Deutsche Asset Management Americas; Director and President, Investment Company Capital Corp. (registered investment advisor); Director and/or President, Deutsche Asset Management mutual funds (registered investment companies); Chartered Financial Analyst. Formerly, Director, ISI Family of Funds (registered investment companies). RICHARD R. BURT, Director (2/3/47) IEP Advisors, LLP, 1275 Pennsylvania Avenue, NW, 10th Floor, Washington, DC 20004. Chairman, IEP Advisors, Inc.; Chairman of the Board, Weirton Steel Corporation; Member of the Board, Archer Daniels Midland Company (agribusiness operations), Hollinger International, Inc. (publishing), Homestake Mining (mining and exploration), HCL Technologies (information technology) and Anchor Technologies (gaming software and equipment); Director, Mitchell Hutchins family of funds (registered investment companies); and Member, Textron Corporation International Advisory Council. Formerly, Partner, McKinsey & Company (consulting), 1991-1994; U.S. Chief Negotiator in Strategic Arms Reduction Talks (START) with former Soviet Union and U.S. Ambassador to the Federal Republic of Germany, 1985-1989. JOSEPH R. HARDIMAN, Director (5/27/37) 8 Bowen Mill Road, Baltimore, Maryland 21212. Private Equity Investor and Capital Markets Consultant; Director, Wit Capital Group (registered broker- dealer), Corvis Corporation (optical networks), Brown Investment Advisory & Trust Company (investment advisor), The Nevis Fund, Inc. (registered investment company), and ISI Family of Funds (registered investment companies). 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; Chief Operating Officer of Alex. Brown & Sons Incorporated (now Deutsche Banc Alex. Brown Inc.), 1985-1987; General Partner, Alex. Brown & Sons Incorporated (now Deutsche Banc Alex. Brown Inc.), 1976-1985; 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.), resigned 2000. LOUIS E. LEVY, Director (11/16/32) 26 Farmstead Road, Short Hills, New Jersey 07078. Director, Household International (banking and finance) and ISI Family of Funds (registered investment companies). 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. 14 EUGENE J. MCDONALD, Director (7/14/32) Duke University Investment Counsel, 2200 West Main Street, Suite 240, Durham, North Carolina 27705. Executive Vice President, Investment Counsel, Duke University; Director, Victory Funds (registered investment companies); Lead Director, National Commerce Bank Corporation (NCBC) (banking); and Chairman, Winston Hedged Equity Group. Formerly, Executive Vice Chairman and Director, Central Carolina Bank & Trust (banking); Director, AMBAC Treasurers Trust (registered investment company), DP Mann Holdings (insurance) and ISI Family of Funds (registered investment companies); President, Duke Management Company (investments), retired 2000; and Executive Vice President, Duke University (education, research and health care). REBECCA W. RIMEL, Director (4/10/51) The Pew Charitable Trusts, One Commerce Square, 2005 Market Street, Suite 1700, Philadelphia, Pennsylvania 19103-7017. President and Chief Executive Officer, The Pew Charitable Trusts (charitable foundation); Director and Executive Vice President, The Glenmede Trust Company (investment trust and wealth management). Formerly, Executive Director, The Pew Charitable Trusts and Director, ISI Family of Funds (registered investment companies). *TRUMAN T. SEMANS, Director (10/27/26) Brown Investment Advisory & Trust Company, 19 South Street, Baltimore, Maryland 21202. Vice Chairman, Brown Investment Advisory & Trust Company (investment advisor); Director and Chairman, Virginia Hot Springs Inc. (property management); and Director, Argonex (biotechnology company). Formerly, Managing Director and Vice Chairman, Alex. Brown & Sons Incorporated (now Deutsche Banc Alex. Brown Inc.); Director Investment Company Capital Corp. (registered investment advisor) and Director, ISI Family of Funds (registered investment companies). CARL W. VOGT, Esq., Director (4/20/36) Fulbright & Jaworski L.L.P., 801 Pennsylvania Avenue, N.W., Washington, DC 20004-2604. Senior Partner, Fulbright & Jaworski L.L.P. (law); Director, Yellow Corporation (trucking), American Science & Engineering (x-ray detection equipment), and ISI Family of Funds (registered investment companies). Formerly, Chairman and Member, National Transportation Safety Board; Director, National Railroad Passenger Corporation (Amtrak); Member, Aviation System Capacity Advisory Committee (Federal Aviation Administration); Interim President of Williams College and President, certain funds in the Flag Investors Family of Funds (now part of the Deutsche Asset Management Family of Funds) (registered investment companies). ROBERT H. WADSWORTH, Director (1/29/40) 4455 E. Camelback Road, Suite 261 E., Phoenix, Arizona 85018. President, Investment Company Administration LLC; President and Trustee, Trust for Investment Managers (registered investment company); President and Director, First Fund Distributors, Inc. (registered broker-dealer); Director, The Germany Fund, Inc., The New Germany Fund Inc., The Central European Equity Fund, Inc., and Vice President, Professionally Managed Portfolios and Advisors Series Trust (registered investment companies). Formerly, President, Guinness Flight Investment Funds, Inc. (registered investment companies). CHARLES A. RIZZO, Treasurer (8/5/57) Director, Deutsche Asset Management; Certified Public Accountant and Certified Management Accountant. Formerly, Vice President and Department Head, BT Alex. Brown Incorporated (now Deutsche Banc Alex. Brown Inc.), 1998-1999; Senior Manager, Coopers & Lybrand L.L.P. (now PricewaterhouseCoopers LLP), 1993-1998. AMY M. OLMERT, Secretary (5/14/63) Director, Deutsche Asset Management; Certified Public Accountant. Formerly, Vice President and Department Head, BT Alex. Brown Incorporated (now Deutsche Banc Alex. Brown Inc.), 1997-1999 and Senior Manager, Coopers & Lybrand, L.L.P. (now PricewaterhouseCoopers LLP), 1992-1997. DANIEL O. HIRSCH, Assistant Secretary (3/27/54) 15 Director, Deutsche Asset Management; Formerly, Principal, BT Alex. Brown Incorporated, (now Deutsche Banc Alex. Brown Inc.), 1998-1999; Assistant General Counsel, United States Securities and Exchange Commission, 1993-1998. _____________ * Messrs. Semans and Hale are directors who are `interested persons,' as defined in the 1940 Act. Directors and officers of the Fund are also directors and officers of some or all of the other investment companies managed, administered or advised by Investment Company Capital Corp. (`ICCC') or its affiliates. These funds are part of the Deutsche Asset Management Fund Complex (the `Fund Complex'), which includes all the funds that formerly were part of the Flag Investors Funds Complex, as well as other funds. Mr. Semans serves as Chairman of six funds and as a Director of 18 other funds in the Fund Complex. Mr. Hale serves as Chairman of three funds, and President and Director or Trustee of each of the funds in the Fund Complex. Ms. Rimel and Messrs. Burt, Vogt, Levy, McDonald and Wadsworth serve as Directors of 24 funds in the Fund Complex. Mr. Hardiman serves as Director of 22 funds in the Fund Complex. Mr. Rizzo serves as Treasurer of each of the funds in the Fund Complex. Ms. Olmert serves as Secretary and Mr. Hirsch serves as Assistant Secretary of 24 funds in the Fund Complex. Some of the Directors of the Fund are customers of, and have had normal brokerage transactions with Deutsche Banc Alex. Brown Inc. or its affiliates in the ordinary course of business. All such transactions were made on substantially the same terms as those prevailing at the time for comparable transactions with unrelated persons. Additional transactions may be expected to take place in the future. Officers of the Fund receive no direct remuneration in such capacity from the Fund. Officers and directors of the Fund who are officers or directors of Deutsche Asset Management or ICCC may be considered to have received remuneration indirectly. As compensation for his or her services, each director who is not an `interested person' of the Fund (as defined in the 1940 Act) (an `Independent Director') receives an aggregate annual fee, plus a fee for each meeting attended (plus reimbursement for reasonable out-of-pocket expenses incurred in connection with his or her attendance at Board and committee meetings) from each Fund in the Fund Complex for which he or she serves. In addition, the Chairmen of the Fund Complex's Audit and Executive Committees receive an annual fee for their services. Payment of such fees and expenses are allocated among all such funds described above in direct proportion to their relative net assets. For the fiscal year ended March 31, 2001, Independent Directors' fees attributable to the assets of the Fund totaled $238,759. The following table shows aggregate compensation payable to each of the Fund's directors by the Fund and the Fund Complex, respectively, and pension or retirement benefits accrued as part of Fund expenses in the fiscal year ended March 31, 2001.
COMPENSATION TABLE - -------------------------------------------------------------------------------- - ------------------------------------- Name of Person, Aggregate Compensation from Pension or Retirement Total Compensation from the Position the Fund Payable to Benefits Accrued as Part of Fund and the Fund Complex Directors for the Fiscal Fund Expenses Payable to Directors for Year Ended March 31, 2001 the Fiscal Year Ended March 31, 2001 - -------------------------------------------------------------------------------- - ------------------------------------- Richard T. Hale/1,5/ $0 $0 $0 Chairman - -------------------------------------------------------------------------------- - ------------------------------------- Truman T. Semans $0 $0 $0 Director/1/ - -------------------------------------------------------------------------------- - ------------------------------------- Richard R. Burt $30,401/2/ /3/ $44,250 for service on 9 Director Boards - -------------------------------------------------------------------------------- - ------------------------------------- Joseph R. Hardiman $30,591/2/ /3/ $44,250 for service on 7 Director Boards - -------------------------------------------------------------------------------- - ------------------------------------- Louis E. Levy $37,225/2/ /3/ $54,250 for service on 9 Director Boards - -------------------------------------------------------------------------------- - -------------------------------------
16 - -------------------------------------------------------------------------------- - -------------------------------- Eugene J. McDonald $37,225/2/ /3/ $54,250 for service on 9 Director Boards - -------------------------------------------------------------------------------- - -------------------------------- Rebecca W. Rimel $30,401/2/ /3/ $44,250 for service on 9 Director Boards - -------------------------------------------------------------------------------- - -------------------------------- Carl W. Vogt, Esq. /4/ $30,720/2/ /3/ $44,250 for service on 9 Director Boards - -------------------------------------------------------------------------------- - -------------------------------- Robert H. Wadsworth $30,401/2/ /3/ $44,250 for service on 9 Director Boards - -------------------------------------------------------------------------------- - --------------------------------
_______ /1/ A director who is, or may be, an 'interested person' as defined in the 1940 Act. /2/ Of amounts payable to Ms. Rimel and Messrs. Burt, Hardiman, Levy, McDonald, Vogt, and Wadsworth $30,401, $30,401, $9,175, $18,612, $37,225, $30,720 and $30,401 was deferred pursuant to a Deferred Compensation Plan. /3/ Certain funds in the Fund Complex have adopted a retirement plan, as described below. The actuarially computed pension expense for the year ended March 31, 2001 was approximately $45,026. /4/ Retired as Fund President effective December 19, 2000. Currently, a Director of the Fund. /5/ Effective December 19, 2000, Mr. Hale also serves as President of the Fund. Certain funds in the Fund Complex have adopted a Retirement Plan for Directors who are not employees of the Fund, the Fund's Administrator or its respective affiliates (the 'Retirement Plan'). After completion of six years of service, each participant in the Retirement Plan will be entitled to receive an annual retirement benefit equal to a percentage of the fee earned by the participant in his or her last year of service. Upon retirement, each participant will receive annually 10% of such fee for each year that he or she served after completion of the first five years, up to a maximum annual benefit of 50% of the fee earned by the participant in his or her last year of service. The fee will be paid quarterly, for life, by each fund for which he or she serves. The Retirement Plan is unfunded and unvested. The Fund currently has two participants in the Retirement Plan, a Director who retired effective December 31, 1994 and another Director who retired effective December 31, 1996, each of whom qualified for the Retirement Plan by serving thirteen years and fourteen years, respectively, as Directors in the Fund Complex and who will be paid a quarterly fee of $4,875 by the Fund Complex for the rest of his life. Such fees are allocated to each of the 24 funds that have adopted the Retirement Plan based upon the relative net assets of such fund. As of December 31, 2000, Messrs. McDonald and Levy have qualified for, but have not received, benefits. Set forth in the table below are the estimated annual benefits payable to a Participant upon retirement assuming various years of service and payment of a percentage of the fee earned by such Participant in his or her last year of service, as described above. The approximate credited years of service at December 31, 2000 are as follows: for Mr. Levy, 6 years; for Mr. McDonald, 8 years; for Mr. Vogt and Ms. Rimel, 5 years; for Mr. Hardiman, 2 years; and for Messrs. Burt and Wadsworth, 1 year.
- -------------------------------------------------------------------------------- - ------------------------------------ Years of Service Upon Retirement Estimated Annual Benefits Payable By Fund Complex - -------------------------------------------------------------------------------- - ------------------------------------ Chairmen of Audit and Other Participants Executive Committees - -------------------------------------------------------------------------------- - ------------------------------------ 6 years $ 4,900 $ 3,900 - -------------------------------------------------------------------------------- - ------------------------------------ 7 years $ 9,800 $ 7,800 - -------------------------------------------------------------------------------- - ------------------------------------ 8 years $ 14,700 $ 11,700 - -------------------------------------------------------------------------------- - ------------------------------------ 9 years $ 19,600 $ 15,600 - -------------------------------------------------------------------------------- - ------------------------------------ 10 years or more $ 24,500 $ 19,500 - -------------------------------------------------------------------------------- - ------------------------------------
On February 12, 2001, the Board of Directors of the Fund, as well as each fund participating in the Retirement Plan, voted to amend the Retirement Plan, effective January 1, 2001, as part of an overall review of the compensation paid to Directors. The amendments provide that no further benefits would accrue to any current or future directors and include a one-time payment of benefits accrued under the Retirement Plan to Directors, as calculated based on the following actuarial assumptions: (1) retirement benefits at later of age 65 and 10 years of service based on a 10% per year of service vesting schedule; (2) a 6% interest rate; and (3) rounding all calculations to the next whole year as of January 1, 2001. At each Director's election, this one-time payment could be transferred into the Directors' Deferred Compensation Plan, described below. 17 Any Director of the Fund who receives fees from the Fund is permitted to defer 50% to 100% of his or her annual compensation pursuant to a Deferred Compensation Plan. Messrs. Hardiman, Levy, McDonald, Vogt, Burt, Wadsworth, and Ms. Rimel have each executed a Deferred Compensation Agreement. Currently, the deferring Directors may select from among the funds in the Deutsche Asset Management Fund Complex in which all or part of their deferral account shall be deemed to be invested. Distributions from the deferring Directors' deferral accounts will be paid in cash, in generally equal quarterly installments over a period of ten years. Code of Ethics The Board of Directors of the Fund and ICCC have adopted Codes of Ethics pursuant to Rule 17j-1 under the 1940 Act. The Codes of Ethics permit access persons, as this term is defined in the Codes of Ethics, to invest in securities that may be purchased or held by the Fund for their own accounts, but require compliance with the Codes' preclearance requirements. In addition, the Codes provide for trading 'blackout periods' that prohibit trading by access persons within periods of trading by the Fund in the same security, subject to certain exceptions. The Codes also prohibit short term trading profits and personal investment in initial public offerings. The Codes require prior approval with respect to purchases of securities in private placements. These codes of ethics are on public file with, and are available from, the SEC. The Company's principal underwriter, ICC Distributors, Inc. is not required to adopt a Code of Ethics as it meets the exception provided by Rule 17j-1(c)(3) under the 1940 Act. THE INVESTMENT ADVISOR The Advisor is an indirect subsidiary of Deutsche Bank AG. Deutsche Bank is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual funds, retail, private and commercial banking, investment banking and insurance. Deutsche Asset Management Americas is an operating unit of Deutsche Bank consisting of ICCC and other asset management affiliates of Deutsche Bank. ICCC was organized in 1987. Pursuant to the terms of the Advisory Agreements, ICCC (a) supervises and manages the Fund's operations; (b) formulates and implements continuing programs for the purchases and sales of securities, consistent with the investment objective and policies of each Series; (c) provides the Fund with such executive, administrative and clerical services as are deemed advisable by the Fund's Board of Directors; (d) provides the Fund with, or obtains for it, adequate office space and all necessary office equipment and services; (e) obtains and evaluates pertinent information about significant developments and economic, statistical and financial data, domestic, foreign and otherwise, whether affecting the economy generally or any Series of the Fund, and whether concerning the individual issuers whose securities are included in the Fund's Series or the activities in which they engage, or with respect to securities which ICCC considers desirable for inclusion in the portfolio of any of the Fund's Series; (f) determines which issuers and securities shall be represented in the portfolio of any of the Fund's Series; (g) takes all actions necessary to carry into effect the Fund's purchase and sale programs; (h) supervises the operations of the Fund's transfer and dividend disbursing agent; (i) provides the Fund with such administrative and clerical services for the maintenance of certain shareholder records as are deemed advisable by the Fund's Board of Directors; and (j) arranges, but does not pay for, the periodic updating of prospectuses and supplements thereto, proxy material, tax returns, reports to the Fund's shareholders and reports to and filings with the SEC and state Blue Sky authorities. ICCC may delegate its duties under the Advisory Agreements, and has delegated certain of such duties to its affiliate. As compensation for its services for the Fund, ICCC is entitled to receive a fee from each Series, calculated daily and paid monthly, at the following annual rates based upon each Series' aggregate average daily net assets: 0.30% of the first $500 million, 0.26% of the next $500 million, 0.25% of the next $500 million, 0.24% of the next $1 billion, 0.23% of the next $1 billion and 0.22% of that portion in excess of $3.5 billion. In addition, the Advisor is entitled to receive an additional fee with respect to the Prime Series 18 and the Tax-Free Series, calculated daily and paid monthly, at the annual rate of 0.02% of the Prime Series' average daily net assets and 0.03% of the Tax-Free Series' average daily net assets. ICCC has contractually agreed to waive its fee for the Treasury Series by 0.05%. This agreement will continue until July 31, 2002 and may be extended. ICCC may, from time to time, voluntarily waive a portion of its advisory fee with respect to any Series to preserve or enhance the performance of the Series. Advisory fees paid by the Fund to ICCC for the last three fiscal years were as follows: For the Fiscal Year Ended March 31,
- -------------------------------------------------------------------------------- - ------------------------------------ 2001 2000 1999 - -------------------------------------------------------------------------------- - ------------------------------------ $22,259,121 $17,516,716 $14,541,722 ($21,876,684 net of fee waivers) ($17,139,470 net of fee waivers) - -------------------------------------------------------------------------------- - ------------------------------------
The Advisory Agreements continue in effect from year to year if each such agreement is specifically approved at least annually by the Fund's Board of Directors. including a majority of the Independent Directors who have no direct or indirect financial interest in such agreements, with such Independent Directors casting votes in person at a meeting called for such purpose, or by a vote of a majority of the outstanding shares (as defined under `The Fund and Its Shares'). The Fund or ICCC may terminate any Advisory Agreement on 60 days' written notice without penalty. The Advisory Agreements terminate automatically in the event of an `assignment,' as defined in the 1940 Act. ICCC also serves as the Fund's transfer and dividend disbursing agent and provides accounting services to each Series. An affiliate of ICCC serves as custodian to the Fund. (See `Transfer Agent, Custodian and Accounting Services.') DISTRIBUTOR ICC Distributors, Inc. (`ICC Distributors' or the `Distributor'), serves as the distributor for each class of the Fund's shares pursuant to a Distribution Agreement (the `Distribution Agreement'). ICC Distributors also serves as the distributor for other funds in the Deutsche Asset Management family of funds. The Distribution Agreement provides that ICC Distributors shall; (i) use reasonable efforts to sell shares upon the terms and conditions contained in the Distribution Agreement and the Fund's then current Prospectus; (ii) use its best efforts to conform with the requirements of all federal and state laws relating to the sale of the shares; (iii) adopt and follow procedures as may be necessary to comply with the requirements of the National Association of Securities Dealers, Inc. and any other applicable self-regulatory organization; (iv) perform its duties under the supervision of and in accordance with the directives of the Fund's Board of Directors and the Fund's Articles of Incorporation and By-Laws; and (v) provide the Fund's Board of Directors with a written report of the amounts expended in connection with the Distribution Agreement. ICC Distributors shall devote reasonable time and effort to effect sales of shares but shall not be obligated to sell any specific number of shares. The services of ICC Distributors are not exclusive and ICC Distributors shall not be liable to the Fund or its shareholders for any error of judgment or mistake of law, for any losses arising out of any investment, or for any action or inaction of ICC Distributors in the absence of bad faith, willful misfeasance or gross negligence in the performance of its duties or obligations under the Distribution Agreement or by reason of its reckless disregard of its duties and obligations under the Distribution Agreement. The Distribution Agreement further provides that the Fund and ICC Distributors will mutually indemnify each other for losses relating to disclosures in the Fund's registration statement. The Distribution Agreement may be terminated at any time upon 60 days' written notice by the Fund, without penalty, by the vote of a majority of the Fund's Independent Directors or by a vote of a majority of the Fund's outstanding Shares of the related class (as defined under `The Fund and Its Shares') or upon 60 days' written notice by the Distributor and shall automatically terminate in the event of an assignment. The Distribution Agreement has an initial term of one year from the date of effectiveness. It 19 shall continue in effect thereafter with respect to each class of the Fund provided that it is approved at least annually by (i) a vote of a majority of the outstanding voting securities of the related class of the Fund or (ii) a vote of a majority of the Fund's Board of Directors including a majority of the Independent Directors and, with respect to each class of the Fund for which there is a plan of distribution, so long as such plan of distribution is approved at least annually by the Independent Directors in person at a meeting called for the purpose of voting on such approval. As compensation for its services, ICC Distributors receives a distribution fee from the Fund, calculated daily and paid monthly, at the annual rate of 0.25% of the aggregate average daily net assets of the Deutsche Banc Alex. Brown Cash Reserve Prime, Treasury and Tax-Free Shares and the Deutsche Asset Management Cash Reserve Prime Class A Shares. ICC Distributors receives no compensation with respect to its services as distributor for the Deutsche Banc Alex. Brown Cash Reserve Prime, Treasury and Tax-Free Institutional Shares and none of ICC Distributors' compensation as distributor of the Fund's shares is allocated to the Institutional Shares. ICC Distributors receives a distribution fee from the Fund, calculated daily and paid monthly, at the annual rates of 0.60% of the average daily net assets of the Quality Cash Reserve Prime Shares and 0.75% of the average daily net assets of the Deutsche Asset Management Cash Reserve Prime Class B and Class C Shares. In addition, ICC Distributors receives a shareholder servicing fee, paid monthly, at an annual rate equal to 0.25% of the Deutsche Asset Management Cash Reserve Prime Class B and Class C Shares' average daily net assets and 0.07% of the Deutsche Banc Alex. Brown Cash Reserve Shares' (Prime Series, Treasury Series, Tax-Free Series) average daily net assets. As compensation for providing distribution and shareholder services to the Fund for the last three fiscal years, the Fund's distributor received fees in the following amounts: For the Fiscal Year Ended March 31,
- -------------------------------------------------------------------------------- - ------------------------ Fee 2001 2000 1999 - -------------------------------------------------------------------------------- - ------------------------ Prime Shares 12b-1 Fee $13,758,408 $10,408,188 $9,527,563 - -------------------------------------------------------------------------------- - ------------------------ Treasury Shares 12b-1 Fee $ 1,866,121 $ 1,798,100 $1,964,145 - -------------------------------------------------------------------------------- - ------------------------ Tax-Free Shares 12b-1 Fee $ 3,823,650 $ 2,877,907 $2,232,564 - -------------------------------------------------------------------------------- - ------------------------ Prime Shares Shareholder $ 2,743,690 $ 2,106,168 $ 442,238/2/ Service Fee - -------------------------------------------------------------------------------- - ------------------------ Treasury Shares $ 373,224 $ 359,515 $ 99,136/2/ Shareholder Service Fee - -------------------------------------------------------------------------------- - ------------------------ Tax-Free Shares $ 764,730 $ 575,581 $ 127,363/2/ Shareholder Service Fee - -------------------------------------------------------------------------------- - ------------------------ Quality Cash Reserve Prime $ 343,098 $ 456,848 /3/ Shares 12b-1 Fee - -------------------------------------------------------------------------------- - ------------------------ Deutsche Asset Management $ 37,092 $ 37,421 /3/ Cash Reserve Prime Class A 12b-1 Fee - -------------------------------------------------------------------------------- - ------------------------ Deutsche Asset Management $ 55,918 $ 35,959 $ 4,613 Cash Reserve Prime Class B 12b-1 Shareholder Servicing Fee - -------------------------------------------------------------------------------- - ------------------------ Deutsche Asset Management $ 8,100 N/A N/A Cash Reserve Prime Class C 12b-1 Fee and Shareholder Servicing Fee/1/ - -------------------------------------------------------------------------------- - ------------------------
_______________________ /1/ Deutsche Asset Management Cash Reserve Prime Class C Shares began operations on January 18, 2000. /2/ For the period from January 12, 1999 through March 31, 1999. /3/ For the fiscal year ended March 31, 1999, the Cash Reserve Prime Class A Shares' and the Quality Cash Reserve Prime Shares' 12b-1 fees are included in the amount for the Prime Shares' 12b-1 fees. 20 Pursuant to the Distribution Agreement, ICC Distributors may pay certain promotional and advertising expenses and, except in the case of the Institutional Shares, may compensate certain registered securities dealers and banks and other financial institutions for services provided in connection with the processing of orders for purchase or redemption of the Fund's shares and furnishing other shareholder services. Payments by ICC Distributors to certain registered securities dealers are paid by ICC Distributors out of fees received by ICC Distributors from the Fund. In addition, the Fund may enter into Shareholder Servicing Agreements pursuant to which the Advisor or its affiliates will provide compensation out of its own resources for ongoing shareholder services. Specifically, ICC Distributors may compensate certain registered securities dealers for opening accounts, processing investor purchase and redemption orders, responding to inquiries from Fund shareholders concerning the status of their accounts and the operations of the Fund, and communicating with the Fund and its transfer agent on behalf of Fund shareholders. ICC Distributors may also enter into shareholder processing and servicing agreements (`Shareholder Servicing Agreements') with any securities dealer who is registered under the Securities Exchange Act of 1934 and is a member in good standing of the National Association of Securities Dealers, Inc. and (except for the Quality Cash Reserve Prime Shares) with banks and other financial institutions who may wish to establish accounts or sub-accounts on behalf of their customers (collectively, such securities dealers, banks and financial institutions are referred to as `Shareholder Servicing Agents'). ICC Distributors may make payments to Shareholder Servicing Agents out of its distribution fee, for processing investor purchase and redemption orders, responding to inquiries from Fund shareholders concerning the status of their accounts and operations of the Fund and communicating with the Fund, its transfer agent and ICC Distributors. The fees payable to Shareholder Servicing Agents under Shareholder Servicing Agreements will be negotiated by ICC Distributors. ICC Distributors will report quarterly to the Fund's Board of Directors on the rate to be paid under each such agreement and the amounts paid or payable under such agreements. The rate will be based upon ICC Distributors' analysis of: (1) the nature, quality and scope of services being provided by the Shareholder Servicing Agent; (2) the costs incurred by the Shareholder Servicing Agent in connection with providing services to shareholders; (3) the amount of assets being invested in shares of the Fund; and (4) the contribution being made by the Shareholder Servicing Agent toward reducing the Fund's expense ratio. The provisions of the Distribution Agreement authorizing payments by ICC Distributors for advertisements, promotional materials, sales literature and printing and mailing of prospectuses to other than Fund shareholders and payments by ICC Distributors and the Fund to Shareholder Servicing Agents may be deemed to constitute payments by the Fund to support distribution. Pursuant to Rule 12b-1 under the 1940 Act, investment companies may pay distribution expenses directly or indirectly, only pursuant to a plan adopted by the investment company's board of directors and approved by its shareholders. The Fund has adopted seven separate distribution plans: one for the Deutsche Asset Management Cash Reserve Prime Class A Shares; one for the Deutsche Asset Management Cash Reserve Prime Class B Shares; one for the Deutsche Asset Management Cash Reserve Prime Class C Shares; one for the Deutsche Banc Alex. Brown Cash Reserve Prime Shares; one for the Deutsche Banc Alex. Brown Cash Reserve Treasury Shares; one for the Deutsche Banc Alex. Brown Cash Reserve Tax- Free Shares and one for the Quality Cash Reserve Prime Shares (the `Plans'). Amounts allocated to Participating Dealers or Shareholder Servicing Agents may not exceed amounts payable to ICC Distributors under the Plans with respect to shares held by or on behalf of customers of such entities. The Plans will remain in effect from year to year provided that each agreement and Plan is specifically approved at least annually by the Fund's Board of Directors and by the affirmative vote of a majority of the Independent Directors by votes cast in person at a meeting called for such purpose. In approving the Plans, the directors determined, in the exercise of their business judgment and in light of their fiduciary duties as directors of the Fund, that there was a reasonable likelihood that such Plans would benefit the Fund and its shareholders. Although it is a primary objective of each Plan to reduce expenses of the Fund by fostering growth in the Fund's net assets, there can be no assurance that this objective of each Plan will be achieved; however, based on the data and information presented to the Board of Directors by ICC Distributors, the Board of Directors determined that there is a reasonable likelihood that the benefits of growth in the size of the Fund can be accomplished under the Plan. 21 Each Plan will be renewed only if the directors make a similar determination prior to each renewal term. The Plans may not be amended to increase the maximum amount of payments by ICC Distributors to Shareholder Servicing Agents without shareholder approval, and all material amendments to the provisions of the Distribution Agreement relating to the Plan must be approved by a vote of the Board of Directors and of the directors who have no direct or indirect interest in the Plan, cast in person at a meeting called for the purpose of such vote. When the Board of Directors of the Fund approved the Plans, the Board of Directors requested and evaluated such information as it deemed reasonably necessary to make an informed determination that the agreements and Plans should be approved. The Board considered and gave appropriate weight to all pertinent factors necessary to reach the good faith judgment that the Plans would benefit the Fund and its shareholders. During the continuance of the Plans, ICC Distributors will report in writing to the Fund's Board of Directors annually the amounts and purposes of such payments for services rendered to shareholders by securities dealers and financial institutions who have executed Shareholder Servicing Agreements. In addition, the Deutsche Banc Alex. Brown Cash Reserve Shares of the Prime, Treasury and Tax-Free Series have each adopted a Shareholder Service Plan. Each plan compensates Shareholder Servicing Agents for services for which they are not otherwise being compensated under a dealer or shareholder servicing agreement entered into pursuant to the Plan for the shares. These plans will continue in effect from year to year only so long as such continuance is specifically approved at least annually by the vote of the Fund's Board of Directors. Expenses ICCC and the Distributor furnish, without cost to the Fund, such personnel as are required, for the proper conduct of the Fund's affairs and to carry out their obligations under the Distribution Agreement and the Advisory Agreements. The Advisor maintains, at its own expense and without cost to the Fund, trading functions in order to carry out its obligation to place orders for the purchase and sale of portfolio securities for the Prime, Treasury or Tax-Free Series, as appropriate. ICC Distributors bears the expenses of printing and distributing prospectuses (other than those prospectuses distributed to existing shareholders of the Fund) and any other promotional or sales literature used by ICC Distributors or furnished by ICC Distributors to purchasers or dealers in connection with the public offering of the Fund's shares, the expenses of advertising in connection with such public offering and all legal expenses in connection with the foregoing. The Fund pays or causes to be paid all other expenses of the Fund, including, without limitation: the fees of ICC Distributors and ICCC; the charges and expenses of any registrar, any custodian or depository appointed by the Fund for the safekeeping of its cash, portfolio securities and other property, and any share transfer, dividend or accounting agent or agents appointed by the Fund; brokers' commissions chargeable to the Fund in connection with portfolio securities transactions to which the Fund is a party; all taxes, including securities issuance and transfer taxes, and fees payable by the Fund to federal, state or other governmental agencies; the costs and expenses of engraving or printing certificates representing shares of the Fund; all costs and expenses in connection with the registration and maintenance of registration of the Fund and its shares with the SEC and various states and other jurisdictions (including filing fees, legal fees and disbursements of counsel); the costs and expenses of printing, including typesetting, and distributing prospectuses of the Fund and supplements thereto to the Fund's shareholders (prospectuses distributed to prospective shareholders are paid for by ICC Distributors); all expenses of shareholders' and directors' meetings and of preparing, printing and mailing of proxy statements and reports to shareholders; fees and travel expenses of directors or director members of any advisory board or committee; all expenses incident to the payment of any dividend, distribution, withdrawal or redemption, whether in shares or in cash; charges and expenses of any outside service used for pricing of the Fund's shares; fees and expenses of legal counsel and of independent accountants, in connection with any matter relating to the Fund; membership dues of industry associations; interest payable on Fund borrowings; postage; insurance premiums on property or personnel (including officers and directors) of the Fund which inure to its benefit; extraordinary expenses (including, but not limited to, legal claims and liabilities and litigation costs and any indemnification related thereto); and all other charges and costs of the Fund's operations unless otherwise explicitly assumed by ICC Distributors or ICCC. 22 The address of ICC Distributors is Two Portland Square, Portland, Maine 04101. Expenses which are attributable to any of the Fund's three Series are charged against the income of such Series in determining net income for dividend purposes. Expenses of the Fund which are not directly attributable to the operations of a particular Series are allocated among the Series based upon the relative net assets of each Series. Expenses attributable to a class of shares of a Series are allocated to that class. PORTFOLIO TRANSACTIONS The Advisor is responsible for decisions to buy and sell securities for the Fund, broker-dealer selection and negotiation of commission rates. Since purchases and sales of portfolio securities by the Fund are usually principal transactions, the Fund incurs little or no brokerage commissions. Portfolio securities are normally purchased directly from the issuer or from a market maker for the securities. The purchase price paid to dealers serving as market makers may include a spread between the bid and asked prices. The Fund may also purchase securities from underwriters at prices which include a commission paid by the issuer to the underwriter. During the fiscal years ended March 31, 2001, March 31, 2000 and March 31, 1999, the Fund incurred no brokerage commissions. The Fund does not seek to profit from short-term trading, and will generally (but not always) hold portfolio securities to maturity. The Fund's fundamental policies require that investments mature within one year or less, and the amortized cost method of valuing portfolio securities requires that the Fund maintain an average weighted portfolio maturity of 90 days or less. Both policies may result in relatively high portfolio turnover, but since brokerage commissions are not normally paid on money market instruments, the high rate of portfolio turnover is not expected to have a material effect on the Fund's net income or expenses. The Advisor's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. To the extent that the executions and prices offered by more than one dealer are comparable, the Advisor may, at its discretion, effect transactions with dealers that furnish statistical, research or other information or services which are deemed by the Advisor to be beneficial to the Fund's investment program. Certain research services furnished by dealers may be useful to the Advisor with clients other than the Fund. Similarly, any research services received by the Advisor through placement of portfolio transactions of other clients may be of value to the Advisor in fulfilling its obligations to the Fund. The Advisor is of the opinion that the material received is beneficial in supplementing its research and analysis, and, therefore, may benefit the Fund by improving the quality of its investment advice. The advisory fee paid by the Fund is not reduced because the Advisor receives such services. During the fiscal years ended March 31, 2001, March 31, 2000, and March 31, 1999, the Advisor directed no transactions to dealers and paid no related commissions because of research services provided to the Fund. The Fund is required to identify any securities of its `regular brokers or dealers' (as such term is defined in the 1940 Act) which the Fund has acquired during its most recent fiscal year. As of March 31, 2001, the Fund did not hold any securities of its regular broker-dealers. The Advisor and its affiliates manage several other investment accounts, some of which may have objectives similar to that of the Fund. It is possible that at times, identical securities will be acceptable for one or more of such investment accounts. However, the position of each account in the securities of the same issue may vary and the length of time that each account may choose to hold its investment in the securities of the same issue may likewise vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities consistent with the investment policies of the Fund and one or more of these accounts is considered at or about the same time, transactions in such securities will be allocated in good faith among the Fund and such accounts in a manner deemed equitable by the Advisor. The Advisor may combine such transactions, in accordance with applicable laws and regulations, in order to obtain the best net price and most favorable execution. The allocation and combination of simultaneous securities purchases on behalf of the Fund's three series will be made in the same way that such purchases are allocated among or combined with those of other such investment 23 accounts. Simultaneous transactions could adversely affect the ability of the Fund to obtain or dispose of the full amount of a security which it seeks to purchase or sell. Portfolio securities will not be purchased from or sold to or through any "affiliated person" of the Advisor, as defined in the 1940 Act. In making decisions with respect to purchase of portfolio securities for the Fund, the Advisor will not take into consideration whether a dealer or other financial institution has executed a Shareholder Servicing Agreement with ICC Distributors. Provisions of the 1940 Act and rules and regulations thereunder have been construed to prohibit the Fund's purchasing securities or instruments from or through, or selling securities or instruments to or through, any holder of 5% or more of the voting securities of any investment company managed or advised by the Advisor. The Fund has obtained an order of exemption from the SEC which permits the Fund to engage in such transactions with a 5% holder, if the 5% holder is one of the 50 largest U.S. banks measured by deposits. Purchases from these 5% holders are subject to quarterly review by the Fund's Board of Directors, including the Independent Directors. Additionally, such purchases and sales are subject to the following conditions: (1) The Fund will maintain and preserve a written copy of the internal control procedures for the monitoring of such transactions, together with a written record of any such transactions setting forth a description of the security purchased or sold, the identity of the purchaser or seller, the terms of the purchase or sale transactions and the information or materials upon which the determinations to purchase or sell each security were made; (2) Each security to be purchased or sold by the Fund will be: (i) consistent with the Fund's investment policies and objectives; (ii) consistent with the interests of the Fund's shareholders; and (iii) comparable in terms of quality, yield, and maturity to similar securities purchased or sold during a comparable period of time; (3) The terms of each transaction will be reasonable and fair to the Fund's shareholders and will not involve overreaching on the part of any person; and (4) Each commission, fee, spread or other remuneration received by a 5% holder will be reasonable and fair compared to the commission, fee, spread or other remuneration received by other brokers or dealers in connection with comparable transactions involving similar securities purchased or sold during a comparable period of time and will not exceed the limitations set forth in Section 17(e)(2) of the 1940 Act. SEMI-ANNUAL AND ANNUAL REPORTS The Fund furnishes shareholders with semi-annual and annual reports containing information about the Fund and its operations, including a schedule of investments held in the Fund's portfolios and its financial statements. INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP, 250 West Pratt Street, Baltimore, Maryland, 21201, are the independent accountants to the Fund. LEGAL MATTERS Morgan, Lewis & Bockius LLP serves as counsel to the Fund. TRANSFER AGENT, CUSTODIAN AND ACCOUNTING SERVICES Bankers Trust Company (`Bankers Trust'), an affiliate of ICCC, serves as custodian of the Fund's investments. Bankers Trust receives such compensation from the Fund for its services as custodian as may be agreed to from time to time by Bankers Trust and the Fund. For the fiscal year ended March 31, 2001, 24 Bankers Trust was paid $756,611 as compensation for providing custody services to the Fund. ICCC, the Fund's investment advisor, provides accounting services for each Series. In addition, ICCC serves as the Fund's transfer and dividend disbursing agent. ICCC receives such compensation from the Fund (or, with respect to accounting fees, from the Prime, Treasury or Tax-Free Series, as appropriate) for services in such capacities as are agreed to from time to time by ICCC and the Fund. As compensation for providing accounting services to each Series of the Fund, ICCC receives an annual fee, calculated daily and paid monthly as shown below.
- -------------------------------------------------------------------------------- - ---------------------------------- Average Daily Net Assets Incremental Annual Accounting Fee Per Series - -------------------------------------------------------------------------------- - ---------------------------------- $ 0 - $10,000,000 $13,000 (fixed fee) - -------------------------------------------------------------------------------- - ---------------------------------- $10,000,000-$20,000,000 0.100% - -------------------------------------------------------------------------------- - ---------------------------------- $20,000,000-$30,000,000 0.080% - -------------------------------------------------------------------------------- - ---------------------------------- $30,000,000-$40,000,000 0.060% - -------------------------------------------------------------------------------- - ---------------------------------- $40,000,000-$50,000,000 0.050% - -------------------------------------------------------------------------------- - ---------------------------------- $50,000,000-$60,000,000 0.040% - -------------------------------------------------------------------------------- - ---------------------------------- $60,000,000-$70,000,000 0.030% - -------------------------------------------------------------------------------- - ---------------------------------- $70,000,000-$100,000,000 0.020% - -------------------------------------------------------------------------------- - ---------------------------------- $100,000,000-$500,000,000 0.015% - -------------------------------------------------------------------------------- - ---------------------------------- $500,000,000-$1,000,000,000 0.005% - -------------------------------------------------------------------------------- - ---------------------------------- over $1,000,000,000 0.001% - -------------------------------------------------------------------------------- - ----------------------------------
In addition, each Series, as appropriate, will reimburse ICCC for the following out-of-pocket expenses incurred in connection with ICCC's performance of accounting services for such Series: express delivery, independent pricing and storage. For the fiscal year ended March 31, 2001, ICCC received fees of $192,423 for providing accounting services to the Prime Series, $132,501 for providing accounting services to the Treasury Series and $146,386 for providing accounting services to the Tax-Free Series. As compensation for providing transfer agency services, the Fund pays ICCC up to $31.68 per account per year plus reimbursement for out-of-pocket expenses incurred in connection therewith. For the fiscal year ended March 31, 2001, such fees totaled $4,425,540 for the Prime Series, $297,544 for the Treasury Series and $372,942 for the Tax-Free Series, respectively. PRINCIPAL HOLDERS OF SECURITIES To Fund management's knowledge, the following persons owned beneficially or of record 5% or more of the outstanding shares of a class of the Fund, as of July 10, 2001.*
- -------------------------------------------------------------------------------- - ------------------------------------- Name and Address Owned of Record Beneficially Owned Percentage of Ownership - -------------------------------------------------------------------------------- - ------------------------------------- Dean Witter FBO Y 6.78% of Deutsche Asset Baussner Family Partnership Management Cash Reserve PO Box 250 Prime Class B Shares New York, NY 10008-0250 - -------------------------------------------------------------------------------- - ------------------------------------- Prudential Securities Inc. FBO Y 7.69% of Deutsche Asset Mr. Howard B. Hankins TTEE Management Cash Reserve FBO Hankins Family Trust `C' Prime Class C Shares UA DTD 07/23/87 772 El Mirador Drive Fullerton, CA 92835-1821 - -------------------------------------------------------------------------------- - ------------------------------------- Deutsche Banc Alex. Brown Inc. Y 7.00% of Deutsche Asset FBO 246-00072-10 Management Cash Reserve PO Box 1346 Prime Class C Shares Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - -------------------------------------
25 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 7.16% of Quality Cash A/C 0074855106 Reserve Prime Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 10.21% of Quality Cash A/C 0081930226 Reserve Prime Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 13.02% of Tax-Free Shares A/C 00024737656 PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 5.36% of Treasury Shares A/C 0020702789 PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 40.94% of Tax-Free A/C 00065010788 Institutional Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 6.36% of Tax-Free A/C 0022312479 Institutional Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 6.10% of Tax-Free A/C 0022273016 Institutional Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 5.32% of Tax-Free A/C 00022212349 Institutional Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 5.32% of Tax-Free A/C 00024771033 Institutional Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 5.08% of Tax-Free A/C 00022809439 Institutional Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 20.86% of Prime A/C 00065010788 Institutional Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 5.87% of Prime A/C 00022271050 Institutional Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 44.84% of Treasury A/C 00065010788 Institutional Shares PO Box 1346 Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - ------------------------------------- Alex. Brown & Sons Inc. Y 12.07% of Treasury A/C 00020102538 Institutional Shares PO Box 1346 - -------------------------------------------------------------------------------- - -------------------------------------
26 - -------------------------------------------------------------------------------- - ------------------------------------- Baltimore, MD 21203-1346 - -------------------------------------------------------------------------------- - -------------------------------------
As of July 10, 2001 the directors and officers of the Fund owned an aggregate of less than 1% of the Fund's shares or any class thereof. * To Fund management's knowledge, Deutsche Banc Alex. Brown Inc. owned less than 1% of any Series of the Fund, as of July 10, 2001. CURRENT YIELD Set forth below are the current, effective and taxable-equivalent yields, as applicable, for each class or series of the Fund's shares for the seven-day period ended March 31, 2001.
Series or class Current Yield Effective Yield Taxable-Equivalent Yield* Cash Reserve Prime Shares 6.03% 6.19% 10.25% Institutional Prime Shares 6.33% 6.51% 10.78% Quality Cash Reserve Prime Shares 5.73% 5.88% 9.74% Deutsche Asset Management Cash Reserve 6.06% 6.23% 10.31% Prime Class A Shares Deutsche Asset Management Cash Reserve 5.38% 5.51% 9.12% Prime Class B Shares Deutsche Asset Management Cash Reserve 5.33% 5.46% 9.04% Prime Class C Shares Cash Reserve Treasury Shares 5.67% 5.81% 9.62% Institutional Treasury Shares 5.97% 6.13% 10.15% Cash Reserve Tax-Free Shares 3.86% 3.92% 6.49% Institutional Tax-Free Shares 4.16% 4.23% 7.00%
_____ * Assumes a tax rate of 39.6%. The yield for each Series of the Fund can be obtained by calling your Participating Dealer or Shareholder Servicing Agent. Quotations of yield on each Series of the Fund may also appear from time to time in the financial press and in advertisements. The current yields quoted will be the net average annualized yield for an identified period, usually seven consecutive calendar days. Yield for each Series or class will be computed by assuming that an account was established with a single share of a Series (the `Single Share Account') on the first day of the period. To arrive at the quoted yield, the net change in the value of that Single Share Account for the period (which would include dividends accrued with respect to the share, and dividends declared on shares purchased with dividends accrued and paid, if any, but would not include realized gains and losses or unrealized appreciation or depreciation) will be multiplied by 365 and then divided by the number of days in the period, with the resulting figure carried to the nearest hundredth of one percent. The Fund may also furnish a quotation of effective yield for each Series or class that assumes the reinvestment of dividends for a 365 day year and a return for the entire year equal to the average annualized yield for the period, which will be computed by compounding the unannualized current yield for the period by adding 1 to the unannualized current yield, raising the sum to a power equal to 365 divided by the number of days in the period, and then subtracting 1 from the result. In addition, the Fund may furnish a quotation of the Tax-Free Series' taxable-equivalent yield, which will be computed by dividing the tax-exempt portion of such Series' effective yield for a stated consecutive seven day period by one minus the investor's stated income tax rate and adding the product to the portion of the yield for the same consecutive seven day period that is not tax-exempt. The resulting yield is what the investor would need to earn from a taxable investment in order to realize an after-tax benefit equal to the tax- free yield provided by the Tax-Free Series. 27 Historical yields are not necessarily indicative of future yields. Rates of return will vary as interest rates and other conditions affecting money market instruments change. Yields also depend on the quality, length of maturity and type of instruments in each of the Fund's Series and each Series' or class' operating expenses. Quotations of yields will be accompanied by information concerning the average weighted maturity of the portfolio of a Series. Comparison of the quoted yields of various investments is valid only if yields are calculated in the same manner and for identical limited periods. When comparing the yield for any Series of the Fund with yields quoted with respect to other investments, shareholders should consider (a) possible differences in time periods, (b) the effect of the methods used to calculate quoted yields, and (c) the quality and average-weighted maturity of portfolio investments, expenses, convenience, liquidity and other important factors. FINANCIAL STATEMENTS The financial statements for the Fund for the fiscal year ended March 31, 2001 are incorporated herein by reference to the Fund's Annual Report, which has been filed with the SEC, dated March 31, 2001. 28 APPENDIX A Description of Securities Ratings Corporate Bond Ratings Description of S&P's Corporate Bond Ratings: .. AAA - Bonds rated AAA have the highest rating assigned by S&P to a debt obligation. Capacity to pay interest and repay principal is extremely strong. .. AA - Bonds rated AA have a very strong capacity to pay interest and repay principal and differ from the highest rated issues only in small degree. .. Plus (+) or Minus (-) - S&P's letter ratings may be modified by the addition of a plus or a minus sign, which is used to show relative standing within the major categories, except in the AAA rating category. Description of Moody's Corporate Bond Ratings: .. Aaa - Bonds rated Aaa are judged to be the best quality. They carry the smallest degree of investment risk and are generally referred to as `gilt- edge.' Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. .. Aa - Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present making the long-term risks appear somewhat larger than in Aaa securities. .. Numerical Modifiers (1, 2, 3) - Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category. Description of Fitch's Corporate Bond Ratings: .. AAA - Bonds rated AAA have the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for timely payment of financial commitments. This capacity is unlikely to be adversely affected by foreseeable events. .. AA - Bonds rated AA have a very low expectation of credit risk. They indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. Municipal Bond Ratings Description of S&P's Municipal Bond Ratings: .. AAA - An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. .. AA - An obligation rated 'AA' differs from the highest-rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. .. Plus (+) or Minus (-) - S&P's letter ratings may be modified by the addition of a plus or a minus sign, which is used to show relative standing within the major rating categories, except in the AAA rating category. Description of Moody's Municipal Bond Ratings: A-1 .. Aaa--Bonds rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as `gilt edge.' Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. .. Aa--Bonds rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities, or fluctuation of protective elements may be of greater amplitude, or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities. .. Numerical Modifiers (1, 2, 3) - Moody's may apply the numerical modifier in each generic rating classification from Aa through Caa. The modifier 1 indicates that the security ranks in the higher end of its generic rating classification; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the security ranks in the lower end of its generic rating classification. Municipal Note Ratings Description of S&P's Municipal Note Ratings: Municipal notes with maturities of three years or less are usually given note ratings to distinguish more clearly the credit quality of notes as compared to bonds. .. SP-1 - Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation. .. SP-2 - Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes. Description of Moody's Municipal Note Ratings: .. MIG-1/VMIG-1 - The best quality, enjoying strong protection from established cash flows of funds for their servicing or from established and broad-based access to the market for refinancing, or both. .. MIG-2/VMIG-2 - High quality, with ample margins of protection, although not as large as the preceding group. Short-Term Ratings Description of S&P Short-Term Ratings: .. A-1 - The highest ratings category by Standard & Poor's. The obligors capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong. .. A-2 - Somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory. Description of Moody's Short-Term Ratings: .. Prime-1 - Have a superior ability for repayment of senior short-term debt obligations. .. Prime-2 - Have a strong ability for repayment of senior short-term debt obligations. Description of Fitch's Short-Term Ratings: A-2 .. F1+ - Issues assigned this rating are regarded as having the strongest capacity for timely payment of financial commitments. The Plus (+) denotes exceptionally strong credit quality. .. F1 - Issues assigned this rating are regarded as having the strongest capacity for timely payment of financial commitments. Description of Thomson Bank Watch Short-Term Ratings: .. T-1--The highest category; indicates a very high likelihood that principal and interest will be paid on a timely basis. .. T-2--The second-highest category; while the degree of safety regarding timely repayment of principal and interest is strong, the relative degree of safety is not as high as for issues rated `TBW-1'. .. T-3--The lowest investment-grade category; indicates that while the obligation is more susceptible to adverse developments (both internal and external) than those with higher ratings, the capacity to service principal and interest in a timely fashion is considered adequate. .. T-4--The lowest rating category; this rating is regarded as non-investment grade and therefore speculative. Description of Thomson Bank Watch Long-Term Ratings: .. AAA--The highest category; indicates that the ability to repay principal and interest on a timely basis is extremely high. .. AA--The second-highest category; indicates a very strong ability to repay principal and interest on a timely basis, with limited incremental risk compared to issues rated in the highest category. .. A--The third-highest category; indicates the ability to repay principal and interest is strong. Issues rated `a' could be more vulnerable to adverse developments (both internal and external) than obligations with higher ratings. .. BBB--The lowest investment-grade category; indicates an acceptable capacity to repay principal and interest. Issues rated `BBB' are, however, more vulnerable to adverse developments (both internal and external) than obligations with higher ratings. Non-Investment Grade (Issues regarded as having speculative characteristics in the likelihood of timely repayment of principal and interest.) .. BB--While not investment grade, the `BB' rating suggests that the likelihood of default is considerably less than for lower-rated issues. However, there are significant uncertainties that could affect the ability to adequately service debt obligations. .. B--Issues rated `B' show a higher degree of uncertainty and therefore greater likelihood of default than higher-rated issues. Adverse development could well negatively affect the payment of interest and principal on a timely basis. .. CCC--Issues rated `CCC' clearly have a high likelihood of default, with little capacity to address further adverse changes in financial circumstances. .. CC--'CC' is applied to issues that are subordinate to other obligations rated `CCC' and are afforded less protection in the event of bankruptcy or reorganization. .. D--Default These long-term debt ratings can also be applied to local currency debt. In such cases the ratings defined above will be preceded by the designation `local currency'. Ratings in the Long-Term Debt categories may include a plus (+) or Minus (-) designation, which indicates where within the respective category the issue is placed. A-3 PART C OTHER INFORMATION Item 23: Exhibits (a)(1) Articles of Incorporation incorporated by reference to Exhibit (1)(a) to Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-96-000690) on July 30, 1996. (2) Articles Supplementary to Articles of Incorporation dated June 28, 1990 incorporated by reference to Exhibit (1)(b) to Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form N- 1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-96- 000690) on July 30, 1996. (3) Articles Supplementary to Articles of Incorporation dated July 31, 1990 incorporated by reference to Exhibit (1)(c) to Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-96- 000690) on July 30, 1996. (4) Articles Supplementary to Articles of Incorporation dated May 6, 1992 incorporated by reference to Exhibit (1)(d) to Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-96- 000690) on July 30, 1996. (5) Articles Supplementary to Articles of Incorporation, dated December 31, 1994 incorporated by reference to Exhibit (1)(e) to Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-96- 000690) on July 30, 1996. (6) Articles Supplementary to Articles of Incorporation dated December 29, 1995 incorporated by reference to Exhibit (1)(f) to Post-Effective Amendment No. 28 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-97- 000573) on March 27, 1997. (7) Articles Supplementary to Articles of Incorporation dated October 8, 1996 incorporated by reference to Exhibit (1)(g) to Post-Effective Amendment No. 28 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-97- 000573) on March 27, 1997. (8) Articles Supplementary to Articles of Incorporation dated March 28, 1997 incorporated by reference to Exhibit (1)(h) to Post-Effective Amendment No. 29 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-97- 001360) on July 29, 1997. (9) Articles Supplementary to Articles of Incorporation dated June 17, 1997 incorporated by reference to Exhibit (1)(i) to Post-Effective Amendment No. 29 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-97- 001360) on July 29, 1997. (10) Articles of Amendment to Articles of Incorporation, as filed with the Maryland State Department of Assessments and Taxation on August 29, 1997 incorporated by reference to Exhibit (1)(j) to Post-Effective Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No 950116-98- 001581) on July 29, 1998. (11) Articles Supplementary to Articles of Incorporation, as filed with the Maryland State Department of Assessments and Taxation on April 3, 1998 incorporated by reference to Exhibit (1)(k) to Post-Effective Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-98- 001581) on July 29, 1998. (12) Articles Supplementary to Articles of Incorporation, as filed with the Maryland State Department of Assessments and Taxation on April 14, 1999 incorporated by reference to Post-Effective Amendment No. 31 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on June 1, 1999. (13) Articles of Amendment to Articles of Incorporation, dated July 27, 1999, incorporated by reference to Post-Effective Amendment No. 33 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on December 30, 1999. (14) Articles Supplementary to Articles of Incorporation, as filed with the Maryland State Department of Assessments and Taxation on October 5, 1999 incorporated by reference to Post-Effective Amendment No. 32 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on November 9, 1999. (15) Articles Supplementary to Articles of Incorporation, as filed with the Maryland State Department of Assessments and Taxation on March 23, 2000 incorporated by reference to Post-Effective No. 34 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on July 28, 2000. (16) Articles Supplementary to Articles of Incorporation, as filed with the Maryland State Department of Assessments and Taxation on April 9, 2001, filed herewith. (b) By-Laws as amended through July 28, 1999, incorporated by reference to Post-Effective No. 34 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on July 28, 2000. (c) Instruments Defining Rights of Security Holders with respect to Prime Series Shares and Treasury Shares is incorporated by reference to Exhibit (1)(a) (Articles of Incorporation) and Exhibit 2 (By-Laws) to Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-96-000690) on July 30, 1996. (d)(1)Investment Advisory Agreement dated June 4, 1999, between Registrant and Investment Company Capital Corp. with respect to the Prime Series, incorporated by reference to Post-Effective Amendment No. 32 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on November 9, 1999. (2) Investment Advisory Agreement dated June 4, 1999, between Registrant and Investment Company Capital Corp. with respect to the Treasury Series, incorporated by reference to Post-Effective Amendment No. 32 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on November 9, 1999. (3) Investment Advisory Agreement dated June 4, 1999, between Registrant and Investment Company Capital Corp. with respect to the Tax-Free Series, incorporated by reference to Post-Effective Amendment No. 32 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on November 9, 1999. (4) Expense Limitation Agreement, with respect to the Treasury Series, filed herewith. (e)(1) Distribution Agreement dated August 31, 1997 between ICC Distributors, Inc. and Registrant incorporated by reference to Exhibit (6)(a) to Post- Effective Amendment No. 30 to Registrant's Registration Statement on Form N- 1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-98-001581) on July 29, 1998. (2) Appendix to the Distribution Agreement, dated May 7, 2001, filed herewith. (3) Shareholder Service Plan with respect to the Prime Series, filed herewith. (4) Shareholder Service Plan with respect to the Treasury Series, filed herewith. (5) Shareholder Service Plan with respect to the Tax-Free Series, filed herewith. (f) Not Applicable (g) Custodian Agreement between Registrant and Bankers Trust Company dated June 5, 1998 incorporated by reference to Exhibit (8) to Post-Effective Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-98- 001581) on July 29, 1998. (h) Master Services Agreement (for transfer agency and accounting services for the Fund) between Registrant and Investment Company Capital Corp. incorporated by reference to Exhibit 9 to Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-96-000690) on July 30, 1996. (i) Opinion of Counsel, filed herewith. (j) Consent of Independent Accountants, filed herewith. (k) Not Applicable. (l) Not Applicable. (m)(1) Distribution Plan with respect to BT Alex. Brown Cash Reserve Prime Shares (now known as Deutsche Banc Alex. Brown Cash Reserve Prime Shares) incorporated by reference to Exhibit (15)(a) to Post-Effective Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-98- 001581) on July 29, 1998. (2) Distribution Plan with respect to Flag Investors Cash Reserve Prime Shares--Class A (now known as Deutsche Asset Management Cash Reserve Prime Shares - Class A) incorporated by reference to Exhibit (15)(b) to Post-Effective Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-98-001581) on July 29, 1998. (3) Distribution Plan with respect to Flag Investors Cash Reserve Prime Shares-Class B (now known as Deutsche Banc Alex. Brown Cash Reserve Prime Shares--Class B) incorporated by reference to Exhibit (15)(c) to Post-Effective Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-98-001581) on July 29, 1998. (4) Distribution Plan with respect to Quality Cash Reserve Prime Shares incorporated by reference to Exhibit (15)(d) to Post-Effective Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-98- 001581) on July 29, 1998. (5) Distribution Plan with respect to BT Alex. Brown Cash Reserve Treasury Shares (now known as Deutsche Banc Alex. Brown Cash Reserve Treasury Shares) incorporated by reference to Exhibit (15)(e) to Post-Effective Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-98- 001581) on July 29, 1998. (6) Distribution Plan with respect to BT Alex. Brown Cash Reserve Tax-Free Shares (now known as Deutsche Banc Alex. Brown Cash Reserve Tax-Free Shares) incorporated by reference to Exhibit (15)(f) to Post-Effective Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-98- 001581) on July 29, 1998. (7) Distribution Plan with respect to Flag Investors Cash Reserve Prime Shares Class C (now known as Deutsche Asset Management Cash Reserve Prime Shares - Class C), incorporated by reference to Post-Effective No. 34 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on July 28, 2000. (n)(1) Registrant's 18f-3 Plan incorporated by reference to Exhibit (18)(a) to Post-Effective Amendment No. 27 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-96-000690) on July 29, 1996. (2) Registrant's Amended 18f-3 Plan incorporated by reference to Exhibit (18)(b) to Post-Effective Amendment No. 29 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-97-001360) on July 29, 1997. (3) Registrant's 18f-3 Plan, with exhibits through March 27, 1998 incorporated by reference to Exhibit (18)(c) to Post-Effective Amendment No. 30 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR (Accession No. 950116-98- 001581) on July 29, 1998. (4) Registrant's Amended 18f-3 Plan, incorporated by reference to Post- Effective No. 34 to Registrant's Registration Statement on Form N-1A (File No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on July 28, 2000. (5) Registrant's Amended 18f-3 Plan, filed herewith. (p)(1) Flag Investors Funds Consolidated Code of Ethics, filed herewith. (2) Deutsche Asset Management Code of Ethics, filed herewith. (q)(1) Powers of Attorney for Richard T. Hale and Carl W. Vogt, filed herewith. (2) Powers of Attorney for Richard R. Burt, Joseph R. Hardiman, Louis E. Levy, Eugene J. McDonald, Truman T. Semans, Rebecca W. Rimel, Robert H. Wadsworth and Charles A. Rizzo incorporated by reference to Post-Effective Amendment No. 34 to Registrant's Registration Statement on Form N-1A ( Registration No. 2-72658), filed with the Securities and Exchange Commission via EDGAR on July 28, 2000. Item 24. Persons Controlled by or under Common Control With Registrant Furnish a list or diagram of all persons directly or indirectly controlled by or under common control with the Registrant and as to each such person indicate (1) if a company, the state or other sovereign power under the laws of which it is organized, and (2) the percentage of voting securities owned or other basis of control by the person, if any, immediately controlling it. None. Item 25. Indemnification State the general effect of any contract, arrangements or statute under which any director, officer, underwriter or affiliated person of the Registrant is insured or indemnified in any manner against any liability which may be incurred in their official capacity, other than insurance provided by any director, officer, affiliated person or underwriter for their own protection. Sections a, b, c and d of Article IX of Registrant's Articles of Incorporation included as Exhibit (a) to this Registration Statement and incorporated herein by reference, provide as follows: (a) To the fullest extent that limitations on the liability of directors and officers are permitted by the Maryland General Corporation Law, no director or officer of the Corporation shall have any liability to the Corporation or its stockholders for damages. This limitation on liability applies to events occurring at the time a person serves as a director or officer of the Corporation whether or not such person is a director or officer at the time of any proceeding in which liability is asserted. (b) The Corporation shall indemnify and advance expenses to its currently acting and its former directors to the fullest extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law. The Board of Directors may By-Law, resolution or agreement make further provisions for indemnification of directors, officers, employees and agents to the fullest extent permitted by the Maryland General Corporation Law. (c) No provision of this Article shall be effective to protect any director or officer of the Corporation against any liability to the Corporation or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. (d) References to the Maryland General Corporation Law in this Article are to the law as from time to time amended. No further amendment to the Articles of Incorporation of the Corporation shall affect any right of any person under this Article based on any event, omission or proceeding prior to such amendment. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, Therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Investment Company Act of 1940 and will be governed by the final adjudication of such issue. In the absence of a determination by a court of competent jurisdiction, the determinations that indemnification against such liabilities is proper, and advances can be made, are made by a majority of a quorum of the disinterested, non-party directors of the Fund, or an independent legal counsel in a written opinion, based on review of readily available facts. Item 26. Business and Other Connections of Investment Advisor Describe any other business, profession, vocation or employment of a substantial nature in which the investment advisor of the Registrant, and each director, officer or partner of any such investments advisor, is or has been, at any time during the past two fiscal years, engaged for his own account or in the capacity of director, officer, employee, partner, or trustee. (Disclose the name and principal business address of any company for which a person listed above serves in the capacity of director, officer, employee, partner or trustee, and the nature of the relationship.) During the last two fiscal years, no director or officer of Investment Company Capital Corp., the Registrant's investment advisor, has engaged in any other business, profession, vocation or employment of a substantial nature other than that of the business of investment management and, through affiliates, investment banking. Item 27. Principal Underwriters (a) State the name of each investment company (other than the Registrant) for which each principal underwriter currently distributing securities of the Registrant also acts as a principal underwriter, depositor or investment advisor. ICC Distributors, Inc. acts as distributor for Flag Investors Communications Fund, Inc., Emerging Growth Fund, Inc., Deutsche Asset Management Shares Class of Total Return U.S. Treasury Fund, Inc., Deutsche Asset Management Shares Class of Managed Municipal Fund, Inc., Short-Intermediate Income Fund, Inc., Flag Investors Value Builder Fund, Inc., Real Estate Securities Fund, Inc., Flag Investors Equity Partners Fund, Inc., Deutsche Investors Funds, Inc. (formerly known as Flag Investors Funds, Inc., and prior thereto as Deutsche Funds, Inc.), Deutsche Investors Portfolios Trust (formerly known as Flag Investors Portfolios Trust, and prior thereto as Deutsche Portfolios Trust), BT Investment Funds, BT Advisor Funds, BT Pyramid Mutual Funds, BT Institutional Funds, BT Investment Portfolios, Cash Management Portfolio, Intermediate Tax Free Portfolio, Tax Free Money Portfolio, NY Tax Free Money Portfolio, Treasury Money Portfolio, International Equity Portfolio, Equity 500 Index Portfolio, Capital Appreciation Portfolio, Asset Management Portfolio, Morgan Grenfell Investment Trust, The Glenmede Fund, Inc. and The Glenmede Portfolios, all registered open-end management investment companies. (b)
- -------------------------------------------------------------------------------- - ------------------------------------ Name and Principal Business Position and Offices with Principal Position and Offices with Registrant Address* Underwriter - -------------------------------------------------------------------------------- - ------------------------------------ John Y. Keffer President None - -------------------------------------------------------------------------------- - ------------------------------------ Ronald H. Hirsch Treasurer None - -------------------------------------------------------------------------------- - ------------------------------------ Nanette K. Chern Chief Compliance Officer None - -------------------------------------------------------------------------------- - ------------------------------------ David I. Goldstein Secretary None - -------------------------------------------------------------------------------- - ------------------------------------ Benjamin L. Niles Vice President None - -------------------------------------------------------------------------------- - ------------------------------------ Frederick Skillin Assistant Treasurer None - -------------------------------------------------------------------------------- - ------------------------------------ Marc D. Keffer Assistant Secretary None - -------------------------------------------------------------------------------- - ------------------------------------
*Two Portland Square Portland, Maine 04101 (c) Not Applicable. Item 28. Location of Accounts and Records State the name and address of each person maintaining physical possession of each account, book or other document required to be maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated thereunder. Investment Company Capital Corp., One South Street, Baltimore, Maryland 21202, Registrant's Investment Advisor, Accounting Services Provider and Transfer and Dividend Disbursing Agent, will maintain physical possession of each such account, book or other document of the Registrant except for those maintained by the Registrant's Custodian, Bankers Trust Company, 130 Liberty Street, New York, New York, 10006. Item 29. Management Services Furnish a summary of the substantive provisions of any management related service contract not discussed in Part I of this Form (because the contract was not believed to be material to a purchaser of securities of the Registrant) under which services are provided to the Registrant, indicating the parties to the contract, the total dollars paid and by whom, for the last three fiscal years. None. Item 30. Undertakings None. SIGNATURE PAGE Pursuant to the requirements of the Securities Act and the Investment Company Act, the Fund certifies that it meets all of the requirements for effectiveness of this registration statement under rule 485(b) under the Securities Act and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized in the City of Baltimore, and State of Maryland, on the 30th day of July, 2001 DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. By: /s/ Richard T. Hale* -------------------- Richard T. Hale Chairman and President Pursuant to the requirements of the Securities Act of 1933, this amendment to the Registration Statement has been signed below by the following persons in the capacities on the date(s) indicated: /s/ Richard T. Hale* Chairman and President July 30, 2001 - -------------------------- ------------- Richard T. Hale Date /s/ Richard R. Burt* Director July 30, 2001 - -------------------------- ------------- Richard R. Burt Date /s/ Joseph R. Hardiman* Director July 30, 2001 - -------------------------- ------------- Joseph R. Hardiman Date /s/ Louis E. Levy* Director July 30, 2001 - -------------------------- ------------- Louis E. Levy Date /s/ Eugene J. McDonald* Director July 30, 2001 - -------------------------- ------------- Eugene J. McDonald Date /s/ Rebecca W. Rimel* Director July 30, 2001 - -------------------------- ------------- Rebecca W. Rimel Date /s/ Truman T. Semans* Director July 30, 2001 - -------------------------- ------------- Truman T. Semans Date /s/ Robert H. Wadsworth* Director July 30, 2001 - -------------------------- ------------- Robert H. Wadsworth Date /s/ Carl Vogt, Esq.* Director July 30, 2001 - -------------------------- ------------- Carl Vogt, Esq. Date /s/ Charles A. Rizzo* Chief Financial and July 30, 2001 - -------------------------- ------------- Charles A. Rizzo Accounting Officer Date *By: /s/ Daniel O. Hirsch - -------------------------- Daniel O. Hirsch Attorney-In-Fact RESOLVED, that Edward J. Veilleux, Amy M. Olmert and Daniel O. Hirsch are authorized to sign the Registration Statements on Form N-1A, and any Post- Effective Amendments thereto, of Deutsche Banc Alex. Brown Cash Reserve Fund, Inc., Flag Investors Communications Fund, Inc., Flag Investors Series Funds, Inc., Emerging Growth Fund, Inc., Total Return U.S. Treasury Fund, Inc., Managed Municipal Fund, Inc., Short-Intermediate Income Fund, Inc., Flag Investors Value Builder Fund, Inc., North American Government Bond Fund, Inc., Real Estate Securities Fund, Inc., Flag Investors Equity Partners Fund, Inc. and ISI Strategy Fund, Inc. on behalf of each Fund's President pursuant to a properly executed power of attorney. RESOLVED, that Edward J. Veilleux, Amy M. Olmert and Daniel O. Hirsch are authorized to sign the Registration Statements on Form N-1A, and any Post- Effective Amendments thereto, of Deutsche Banc Alex. Brown Cash Reserve Fund, Inc., Flag Investors Communications Fund, Inc., Flag Investors Series Funds, Inc., Emerging Growth Fund, Inc., Total Return U.S. Treasury Fund, Inc., Managed Municipal Fund, Inc., Short-Intermediate Income Fund, Inc., Flag Investors Value Builder Fund, Inc., North American Government Bond Fund, Inc., Real Estate Securities Fund, Inc., Flag Investors Equity Partners Fund, Inc. and ISI Strategy Fund, Inc. on behalf of each Fund's Chief Financial Officer pursuant to a properly executed power of attorney. EX-99.A.16 3 dex99a16.txt ARTICLES SUPPLEMENTARY TO ARTICLES OF INCORP. Exhibit 99.a.16 ARTICLES SUPPLEMENTARY TO ARTICLES OF INCORPORATION OF DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. Deutsche Banc Alex. Brown Cash Reserve Fund, Inc., a Maryland company having its principal office in Baltimore City, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: The Corporation is registered as an open-end investment company under the Investment Company Act of 1940, as amended. SECOND: The Corporation's Board of Directors, in accordance with Section 2-408(c) of the General Corporation Law of the State of Maryland, by written consent without a meeting, with full force and effect as if adopted by the unanimous affirmative vote of the Board of Directors at a duly constituted meeting, has adopted resolutions to increase the number of shares of capital stock which the Corporation has the authority to issue to twenty billion eight hundred ten million (20,810,000,000) shares of Common Stock, par value $.001 per share, having an aggregate par value of twenty million eight hundred ten thousand dollars ($20,810,000.00) in order to increase, by two billion (2,000,000,000) shares each, the number of authorized shares of the Deutsche Banc Alex. Brown Cash Reserve Prime Shares and Institutional Prime Shares classes of the Fund and to increase, by one billion (1,000,000,000) shares each, the number of authorized shares of the Deutsche Banc. Alex Brown Cash Reserve Treasury Shares, Treasury Institutional Shares, Deutsche Banc. Alex. Brown Cash Reserve Tax-Free Shares and Tax-Free Institutional Shares classes of the Fund; THIRD: Immediately before the increase in the number of authorized shares pursuant to these Articles Supplementary, the Corporation was authorized to issue twelve billion, eight hundred ten million (12,810,000,000) shares of Common Stock, par value $.001 per share, having an aggregate par value of twelve million eight hundred ten thousand dollars ($12,810,000.00), as follows: eight billion six hundred sixty million (8,660,000,000) shares were designated "Prime Series", one billion five hundred fifty million (1,550,000,000) were designated "Treasury Series", two billion two hundred fifty million (2,250,000,000) shares were designated "Tax - Free Series", and the balance of which were unclassified. Of the eight billion six hundred sixty million (8,660,000,000) shares designated for the Prime Series, seven billion (7,000,000,000) shares were classified as Deutsche Banc Alex. Brown Cash Reserve Fund Shares, one billion two hundred million (1,200,000,000) shares were classified as Institutional Shares, fifty million (50,000,000) were classified as Flag Investors Cash Reserve Prime Shares Class A, fifty million (50,000,000) were classified as Flag Investors Cash Reserve Prime Shares Class B, ten million (10,000,000) were classified as Flag Investors Cash Reserve Prime Shares Class C and three hundred fifty million (350,000,000) were classified as Quality Cash Reserve Prime Shares. Of the one billion five hundred fifty million (1,550,000,000) shares designated for the Treasury Series, one billion three hundred million (1,300,000,000) shares were classified as Deutsche Banc Alex. Brown Cash Reserve Fund Shares and two hundred fifty million (250,000,000) were classified as Institutional Shares. Of the two billion two hundred fifty million (2,250,000,000) shares designated for the Tax- Free Series, two billion (2,000,000,000) shares were classifiedf as Deutsche Banc Alex. Brown Cash Reserve Fund Shares and two hundred fifity million (250,000,000) shares were classified as Institutional Shares. FOURTH Pursuant to the authority contained in Section 2-605(a)(2) of the Maryland General Corporation Law and under authority contained in Article ELEVENTH of the Articles of Incorporation for the Corporation, a majority of the entire Board of Directors has adopted resolutions to change the names of various classes of the Corporation. FIFTH: The Articles of Incorporation are amended by redesignating all the issued and unissued shares of the Corporation's Flag Investors Cash Reserve Prime Class A Shares as Cash Reserve Prime Class A, all the issued and unissued shares of the Corporation's Flag Investors Cash Reserve Prime Class B Shares as Cash Reserve Prime Class B and all the issued and unissued shares of the Corporation's Flag Investors Cash Reserve Class Prime C Shares as Cash Reserve Prime Class C Shares. Subsequent to such redesignation, the authorized shares of the Corporation are designated and classified as follows:
Designation Number of Shares - ----------- ---------------- Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. 20,810,000,000 Prime Series 12,660,000,000 Deutsche Banc Alex. Brown Cash Reserve Fund Shares 9,000,000,000 Institutional Shares 3,200,000,000 Cash Reserve Prime Class A Shares 50,000,000 Cash Reserve Prime Class B Shares 50,000,000 Cash Reserve Prime Class C Shares 10,000,000 Quality Cash Reserve Prime Shares 350,000,000 Treasury Series 3,550,000,000 Deutsche Banc Alex. Brown Cash Reserve Fund Shares 1,300,000,000 Institutional Shares 1,250,000,000 Tax - Free Series 4,250,000,000 Deutsche Banc Alex. Brown cash Reserve Fund Shares 3,000,000,000 Institutional Shares 1,250,000,000 Undesignated 350,000,000
SIXTH: The shares of Common Stock of the Corporation redesignated and reclassified here shall be subject to all of the provisions of the Corporation's Charter relating shares of stock of the Corporation generally and shall have the preferences, conversion and other rights, voting powers, restrictions, limitation as to dividends, qualifications, and terms and conditions of redemption set forth in Article FIFTH of the Corporation's Charter. The undersigned President acknowledges that these Articles Supplementary are the acts of the Corporation and states that to the best of his knowledge, information, and belief, the matters and facts set forth in this article with respect to authorization and approval is true in all material respects and that this statement is made under the penalties of perjury. SEVENTH: The foregoing amendments to the Articles of Incorporation are limited to changes expressly permitted by Section 2-605 of Subtitle 6 of Title 2 of the Maryland General Corporation Law to be made without action by stockholders. EIGHTH: These Articles Supplementary shall be effective as of the later of the time the State Department of Assessments and Taxation of Maryland accepts these Articles Supplementary of record or April 9, 2001. IN WITNESS WHEREOF, Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. has caused these presents to be signed in its name and on its behalf by its duly authorized officers who acknowledge that these Articles Supplementary are the act of the Company and that to the best of their knowledge, information and belief, all matters and facts set forth herein relating to the authorization and approval of these Articles are true in all material respects and that this statement is made under the penalties of perjury. Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. By: /s/ Richard T. Hale ----------------------- Richard T. Hale President Date: April 5, 2001 [SEAL] Attest: /s/ Amy M. Olmert - ----------------- Amy M. Olmert Secretary Date: April 5, 2001 EX-99.D.4 4 dex99d4.txt EXPENSE LIMITATION AGREEMENT Exhibit 99.d.4 EXPENSE LIMITATION AGREEMENT THIS EXPENSE LIMITATION AGREEMENT is made as of the 1/st/ day of August, 2001, by and between DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC., a Maryland corporation (the "Fund"), and INVESTMENT COMPANY CAPITAL CORP., a Maryland corporation (the "Advisor"), with respect to the following: WHEREAS, the Advisor serves as the investment advisor to the Fund's Treasury Series pursuant to an Investment Advisory Agreement dated June 4, 1999; and WHEREAS, the Advisor has voluntarily agreed to waive its fees for the Treasury Series by 0.05%; and WHEREAS, the Fund and the Advisor desire to formalize this voluntary fee waiver arrangement for a period beginning on August 1, 2001 and ending on July 31, 2002. NOW THERETOFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt whereof is hereby acknowledged, the parties hereto agree as follows: 1. The Advisor agrees to waive its fees for the Treasury Series by 0.05% for the period from August 1, 2001 to July 31, 2002. 2. Upon the termination of the Investment Advisory Agreement this Agreement shall automatically terminate. 3. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States Courts or in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC issued pursuant to said Act. In addition, where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is revised by rule, regulation or order of the SEC, such provision shall be deemed to incorporate the effect of such rule, regulation or order. Otherwise the provisions of this Agreement shall be interpreted in accordance with the laws of Maryland. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers as of the day and year first above written. [SEAL] DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. Attest:/s/Savonne Ferguson by:/s/Amy M. Olmert ------------------- ---------------- Name: Savonne Ferguson By: Amy M. Olmert Title: Secretary INVESTMENT COMPANY CAPITAL CORP. Attest:/s/Savonne Ferguson by:/s/Edward J. Veilleux ------------------- --------------------- Name: Savonne Ferguson By: Edward J. Veilleux Title: Executive Vice President EX-99.E.2 5 dex99e2.txt APPENDIX TO DISTRIBUTION AGREEMENT Exhibit 99.e.2 Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. DISTRIBUTION AGREEMENT Appendix A as of August 31, 1997 Revised as of May 7, 2001
- ---------------------------------------------------------------------------------------------------------------- Distribution Service Series Class Fee Fee - ---------------------------------------------------------------------------------------------------------------- Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. Prime Series Cash Reserve Prime Shares - Class A 0.25% --- Cash Reserve Prime Shares - Class B(1) 0.75% 0.25% Cash Reserves Prime Shares - Class C(1) 0.75% 0.25% Quality Cash Reserve Prime Shares 0.60% --- Institutional Shares --- --- DBABCR Shares(2) 0.25% --- Tax Free Series Institutional Shares --- --- DBABCR Shares(2) 0.25% --- Treasury Series Institutional Shares --- --- DBABCR Shares(2) 0.25% --- - ----------------------------------------------------------------------------------------------------------------
(1) Only available through exchange. (2) Deutsche Banc Alex. Brown Cash Reserve is defined as DBABCR. EX-99.E.3 6 dex99e3.txt SHAREHOLDER SERVICE PLAN (PRIME SERIES) Exhibit 99.e.3 SHAREHOLDER SERVICE PLAN DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. DEUTSCHE BANC ALEX. BROWN CASH RESERVE PRIME SHARES 1. The Plan. Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (the -------- "Fund") has adopted this Shareholder Service Plan (the "Plan") for the Deutsche Banc Alex. Brown Cash Reserve Shares of the Prime 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. Other capitalized terms used herein have the meaning given to them in the Fund's prospectus. 2. Payments Authorized. (a) The Fund's distributor (the "Distributor") ------------------- is authorized, pursuant to the Plan, to pay any Shareholder Servicing Agent a service fee, as that term is defined in Rule 2830 of the Conduct Rules of the National Association of Securities Dealers, Inc., for services for which such Shareholder Servicing Agent is not otherwise being compensated under a dealer or shareholder servicing agreement entered into pursuant to the Rule 12b-1 Plan for the Shares. (b) In consideration of the services to be provided by any Shareholder Servicing Agent, the Fund will pay the Distributor an annual fee, calculated daily and paid monthly, equal to 0.07% (seven basis points) of the Shares' average daily net assets. The Distributor will pay up to all of such amount to Shareholder Servicing Agents for the Shares. The Fund may, in its discretion and without notice, suspend the sale of Shares, including the sale of Shares to any Shareholder Servicing Agent for the account of any Client or Clients. 3. Representations. No Shareholder Servicing Agent or any of its --------------- officers, employees, or agents may make any representations concerning the Fund or the Shares except those contained in the Fund's current prospectus or statement of additional information or in such supplemental literature or advertising provided by the Fund to the Shareholder Servicing Agent and authorized by the Fund for the Shareholder Servicing Agent's use pursuant to the Plan. A Shareholder Servicing Agent shall have no authority to act as agent for the Fund in any matter or in any respect. The services provided by a Shareholder Servicing Agent under this Plan are not primarily intended to result in the sale of Shares. 4. Non-Exclusivity. The Fund may enter into other similar servicing --------------- agreements with any other person or persons without a Shareholder Servicing Agent's consent. 5. Reports. While this Plan is in effect, the Distributor shall report in ------- writing at least quarterly to the Fund's Board of Directors, and the Board shall review the following: (i) the amounts of all payments under the Plan, the identity of the recipients of each such payment; and (ii) the basis on which the amount of the payment to such recipient was made. 6. Effectiveness, Continuation, Termination and Amendment. (a) This Plan ------------------------------------------------------ has been approved by a vote of a majority of the Board of Directors of the Fund. It shall, unless terminated, continue in effect from year to year only so long as such continuance is specifically approved at least annually by the vote of the Fund's Board of Directors. (b) This Plan may be terminated or amended at any time by a vote of a majority of the Fund's Board of Directors. EX-99.E.4 7 dex99e4.txt SHAREHOLDER SERVICE PLAN (TREASURY SERIES) Exhibit 99.e.4 SHAREHOLDER SERVICE PLAN DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. DEUTSCHE BANC ALEX. BROWN CASH RESERVE TREASURY SHARES 1. The Plan. Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (the -------- "Fund") has adopted this Shareholder Service Plan (the "Plan") for the Deutsche Banc Alex. Brown Cash Reserve Shares of the Treasury 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. Other capitalized terms used herein have the meaning given to them in the Fund's prospectus. 2. Payments Authorized. (a) The Fund's distributor (the "Distributor") is ------------------- authorized, pursuant to the Plan, to pay any Shareholder Servicing Agent a service fee, as that term is defined in Rule 2830 of the Conduct Rules of the National Association of Securities Dealers, Inc., for services for which such Shareholder Servicing Agent is not otherwise being compensated under a dealer or shareholder servicing agreement entered into pursuant to the Rule 12b-1 Plan for the Shares. (b) In consideration of the services to be provided by any Shareholder Servicing Agent, the Fund will pay the Distributor an annual fee, calculated daily and paid monthly, equal to 0.07% (seven basis points) of the Shares' average daily net assets. The Distributor will pay up to all of such amount to Shareholder Servicing Agents for the Shares. The Fund may, in its discretion and without notice, suspend the sale of Shares, including the sale of Shares to any Shareholder Servicing Agent for the account of any Client or Clients. 3. Representations. No Shareholder Servicing Agent or any of its officers, --------------- employees, or agents may make any representations concerning the Fund or the Shares except those contained in the Fund's current prospectus or statement of additional information or in such supplemental literature or advertising provided by the Fund to the Shareholder Servicing Agent and authorized by the Fund for the Shareholder Servicing Agent's use pursuant to the Plan. A Shareholder Servicing Agent shall have no authority to act as agent for the Fund in any matter or in any respect. The services provided by a Shareholder Servicing Agent under this Plan are not primarily intended to result in the sale of Shares. 4. Non-Exclusivity. The Fund may enter into other similar servicing --------------- agreements with any other person or persons without a Shareholder Servicing Agent's consent. 5. Reports. While this Plan is in effect, the Distribution shall report ------- in writing at least quarterly to the Fund's Board of Directors, and the Board shall review the following: (i) the amounts of all payments under the Plan, the identity of the recipients of each such payment; and (ii) the basis on which the amount of the payment to such recipient was made. 6. Effectiveness, Continuation, Termination and Amendment. (a) This Plan ------------------------------------------------------ has been approved by a vote of a majority of the Board of Directors of the Fund. It shall, unless terminated, continue in effect from year to year only so long as such continuance is specifically approved at least annually by the vote of the Fund's Board of Directors. (b) This Plan may be terminated or amended at any time by a vote of a majority of the Fund's Board of Directors. EX-99.E.5 8 dex99e5.txt SHAREHOLDER SERVICE PLAN (TAX-FREE SERIES) Exhibit 99.e.5 SHAREHOLDER SERVICE PLAN DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. DEUTSCHE BANC ALEX. BROWN CASH RESERVE TAX-FREE SHARES 1. The Plan. Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (the -------- "Fund") has adopted this Shareholder Service Plan (the "Plan") for the Deutsche Banc Alex. Brown Cash Reserve Shares of the 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. Other capitalized terms used herein have the meaning given to them in the Fund's prospectus. 2. Payments Authorized. (a) The Fund's distributor (the "Distributor") is ------------------- authorized, pursuant to the Plan, to pay any Shareholder Servicing Agent a service fee, as that term is defined in Rule 2830 of the Conduct Rules of the National Association of Securities Dealers, Inc., for services for which such Shareholder Servicing Agent is not otherwise being compensated under a dealer or shareholder servicing agreement entered into pursuant to the Rule 12b-1 Plan for the Shares. (b) In consideration of the services to be provided by any Shareholder Servicing Agent, the Fund will pay the Distributor an annual fee, calculated daily and paid monthly, equal to 0.07% (seven basis points) of the Shares' average daily net assets. The Distributor will pay up to all of such amount to Shareholder Servicing Agents for the Shares. The Fund may, in its discretion and without notice, suspend the sale of Shares, including the sale of Shares to any Shareholder Servicing Agent for the account of any Client or Clients. 3. Representations. No Shareholder Servicing Agent or any of its officers, --------------- employees, or agents may make any representations concerning the Fund or the Shares except those contained in the Fund's current prospectus or statement of additional information or in such supplemental literature or advertising provided by the Fund to the Shareholder Servicing Agent and authorized by the Fund for the Shareholder Servicing Agent's use pursuant to the Plan. A Shareholder Servicing Agent shall have no authority to act as agent for the Fund in any matter or in any respect. The services provided by a Shareholder Servicing Agent under this Plan are not primarily intended to result in the sale of Shares. 4. Non-Exclusivity. The Fund may enter into other similar servicing --------------- agreements with any other person or persons without a Shareholder Servicing Agent's consent. 5. Reports. While this Plan is in effect, the Distribution shall report in ------- writing at least quarterly to the Fund's Board of Directors, and the Board shall review the following: (i) the amounts of all payments under the Plan, the identity of the recipients of each such payment; and (ii) the basis on which the amount of the payment to such recipient was made. 6. Effectiveness, Continuation, Termination and Amendment. (a) This Plan ------------------------------------------------------ has been approved by a vote of a majority of the Board of Directors of the Fund. It shall, unless terminated, continue in effect from year to year only so long as such continuance is specifically approved at least annually by the vote of the Fund's Board of Directors. (b) This Plan may be terminated or amended at any time by a vote of a majority of the Fund's Board of Directors. EX-99.I 9 dex99i.txt OPINION OF COUNSEL Exhibit 99.i 1701 Market Street MORGAN, LEWIS Philadelphia, PA 19103 & BOCKIUS L L P (215)963-5000 C O U N S E L O R S A T L A W Fax: (215)963-5299 July 25, 2001 Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. One South Street Baltimore, MD 21202 Re: Opinion of Counsel regarding Post-Effective Amendment No. 36 to the ------------------------------------------------------------------- Registration Statement filed on Form N-1A under the Securities Act of 1933 -------------------------------------------------------------------------- (File No. 2-72658) ------------------ Ladies and Gentlemen: We have acted as counsel to Deutsche Banc Alex. Brown Cash Reserve Fund, Inc., (the "Fund") a Maryland corporation, in connection with the above- referenced Registration Statement which relates to the Fund's shares of common stock, par value $.001 per share (the "Shares"). This opinion is being delivered to you in connection with the Fund's filing of Post-Effective Amendment No. 36 to the Registration Statement (the "Amendment") to be filed with the Securities and Exchange Commission pursuant to Rule 485(b) under the Securities Act of 1933. With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or verification on our part, except to the extent otherwise expressly stated, and we express no opinion with respect to the subject matter or accuracy of such assumptions or items relied upon. In connection with this opinion, we have reviewed, among other things, executed copies of the following documents: (a) a certificate of the State of Maryland to the existence and good standing of the Fund dated July 6, 2001; (b) the Articles of Incorporation of the Fund and all amendments and supplements thereto (the "Articles of Incorporation"); (c) a certificate executed by Amy M. Olmert, the Secretary of the Fund, certifying as to the Fund's Articles of Incorporation and By-Laws and certain resolutions adopted by the Board of Directors of the Fund authorizing the issuance of the shares; and (d) a printer's proof of the Amendment. In our capacity as counsel to the Fund, we have examined the originals, or certified, conformed or reproduced copies, of all records, agreements, instruments and documents as we have deemed relevant or necessary as the basis for the opinion hereinafter expressed. In all such examinations, we have assumed the legal capacity of all natural persons executing documents, the genuineness of all signatures, the authenticity of all original or certified copies, and the conformity to original or certified copies of all copies submitted to us as conformed or reproduced copies. As to various questions of fact relevant to such opinion, we have relied upon, and assume the accuracy of, certificates and oral or written statements of public officials and officers or representatives of the Fund. We have assumed that the Amendment, as filed with the Securities and Exchange Commission, will be in substantially the form of the printer's proof referred to in paragraph (d) above. Based upon, and subject to, the limitations set forth herein, we are of the opinion that the Shares, when issued and sold in accordance with the Articles of Incorporation and By-Laws, and for the consideration described in the Registration Statement, will be legally issued, fully paid and nonassessable under the laws of the State of Maryland. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not concede that we are in the category of persons whose consent is required under Section 7 of the 1933 Act. Very truly yours, /s/ Morgan, Lewis and Bockius LLP - --------------------------------- EX-99.J 10 dex99j.txt CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 99.j CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Post-Effective Amendment No. 36 to the registration statement on Form N-1A (the "Registration Statement") of our report dated May 9, 2001, relating to the financial statements and financial highlights which appear in the March 31, 2001 Annual Report to Shareholders of the Prime, Treasury and Tax-Free Series (the three Series comprising the Deutsche Banc Alex. Brown Cash Reserve Fund, Inc.), which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings "Financial Highlights" and "Independent Accountants" in such Registration Statement. PricewaterhouseCoopers LLP Baltimore, Maryland July 25, 2001 EX-99.N.5 11 dex99n5.txt REGISTRANT'S AMENDED 18F-3 PLAN Exhibit 99.n.5 Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. Amended Plan in Accordance with Rule 18f-3 This plan is applicable to each class of Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (the "Fund"). Unless otherwise determined by the Fund's Board of Directors, the Fund may issue multiple classes of shares in accordance with this plan. Except as set forth below, each class of shares of the Fund will have the same relative rights and privileges, including the right to have distributions calculated in the same manner and at the same time as all other classes, and be subject to the same fees and expenses. Expenses relating to different arrangements for shareholder services or the distribution of shares, or both, shall be allocated to and paid by that class. A class may pay a different share of the other expenses, not including advisory or custodial fees or other expenses related to the management of the Fund's assets, if such expenses are actually incurred in a different amount by that class, or if the class receives services of a different kind or to a different degree than other classes. For example, printing, postage and other expenses incurred in connection with any meeting of shareholders of a particular class, and litigation expenses incurred with respect to matters affecting only a particular class shall be allocated to that class. Further, expenses attributable to two or more classes shall be allocated to such classes at the same time. All other expenses of the Fund shall be allocated to each class on the basis of the net asset value of that class in relation to the net asset value of the Fund. Notwithstanding the forgoing, the distributor or adviser of the Fund may waive or reimburse the expenses of a specific class or classes to the extent permitted under Rule 18f-3 of the Investment Company Act of 1940, as amended. The Fund's Board of Directors may determine in the future that other allocations of expenses or other services to be provided to a class of shares are appropriate and amend this Plan accordingly without the approval of shareholders of any class. Unless a class of shares is otherwise designated, it shall have the terms set forth below for Institutional Shares. Except as set forth in a prospectus of the Fund, shares may be exchanged only for shares of the same class of another Fund. Institutional Shares Institutional Shares are sold at net asset value without a sales charge and are sold subject to the minimum purchase requirements set forth in the relevant prospectuses of the Fund. Institutional Shares shall be entitled to the shareholder services set forth from time to time in the Fund's prospectuses with respect to Institutional Shares. Premier Shares Premier Shares are sold at net asset value without a sales charge and are sold subject to the minimum purchase requirements set forth in the relevant prospectuses of the Fund. The minimum purchase requirements for the Premier shares of a fund are typically higher than those for the Institutional shares, if any, of the same fund. Premier Shares shall be entitled to the shareholder services set forth from time to time in the Fund's prospectuses with respect to Premier Shares. Investment Shares Investment Shares are sold at net asset value without a sales charge and are sold subject to the minimum purchase requirements set forth in the relevant Fund's prospectuses. Investment Shares shall be entitled to the shareholder services set forth from time to time in the Fund's prospectuses with respect to Investment Shares. Class A Shares Class A Shares are sold at net asset value with a front-end sales charge and are sold subject to the minimum purchase requirements set forth in the Fund's prospectuses. Investors that purchase Class A Shares that fall within a class described as set forth in the Fund's prospectuses may be permitted to purchase Class A Shares at net asset value with no initial sales charge; but if these shares are redeemed within a specified period after their purchase as set forth in the Fund's prospectuses, a contingent deferred sales charge may be imposed. Class A Shares will be subject to distribution and/or service fees imposed under a Rule 12b-1 plan as set forth in the Fund's prospectuses. Class A Shares shall be entitled to the shareholder services set forth from time to time in the Fund's prospectuses with respect to Class A Shares. Class B Shares Class B Shares are sold at net asset value and are sold subject to the minimum purchase requirements set forth in the Fund's prospectuses. Class B Shares redeemed within a specified period after their purchase as set forth in the Fund's prospectuses will be subject to a contingent deferred sales charge. Class B Shares will be subject to distribution and/or service fees imposed under a Rule 12b-1 plan as set forth in the Fund's prospectuses. Class B Shares will be subject to a shareholder servicing fee under a Service Plan as described in the Fund's prospectuses. Class B Shares held by an investor will convert automatically to Class A Shares after the investor has held such Class B Shares for a period of time, which period shall be specified in the Fund's prospectuses with respect to Class B Shares. Class B Shares shall be entitled to the shareholder services set forth from time to time in the Fund's prospectuses with respect to Class B Shares. Class C Shares Class C Shares are sold at net asset value and are sold subject to the minimum purchase requirements set forth in the Fund's prospectuses. Class C Shares redeemed within a specified period after their purchase as set forth in the Fund's prospectuses will be subject to a contingent deferred sales charge. Class C Shares will be subject to a shareholder servicing fee under a Service Plan as described in the Fund's prospectuses. Class C Shares will be subject to distribution and/or service fees imposed under a Rule 12b-1 plan as set forth in the Fund's prospectuses. Class C Shares shall be entitled to the shareholder services set forth from time to time in the Fund's prospectuses with respect to Class C Shares. Date Most Recently Amended: June 25, 2001 EX-99.P.1 12 dex99p1.txt FLAG INVESTOR FUNDS CONSOLIDATED CODE OF ETHICS Exhibit 99.p.1 Flag Investors Funds Deutsche Banc Alex. Brown Cash Reserve Fund Consolidated Code of Ethics I. General ------- Rule 17j-1 under the Investment Company Act of 1940 (the "1940 Act") makes it unlawful for investment company personnel and other "Access Persons" to engage in "fraudulent, deceptive or manipulative" practices in connection with their personal transactions in securities when those securities are held or to be acquired by an investment company. The Rule also requires every investment company, the investment company's investment advisor and, in certain cases, the investment company's principal underwriter, to adopt a Code of Ethics containing provisions "reasonably necessary to prevent" such prohibited practices. This document constitutes the Code of Ethics required by Rule 17j-1 for the "Funds", as defined in Appendix A. Appendix A also provides certain other ---------- ---------- definitions for entities which are referenced in this Code of Ethics. II. Definitions ----------- For purposes of this Code, the following terms have the meanings set forth as follows: A. "Access Person" means: ------------- 1. Any director, trustee or officer of a Fund, Advisor or Sub-Advisor/1/; 2. Every "Advisory Person" of a Fund, Advisor or Sub-Advisor. An "Advisory Person" is: (a) any employee who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the Purchase or Sale of a Security by a Fund, or whose functions ___________________ 1 If an Advisor or Sub-Advisor is primarily engaged in a business other than advising funds or advisory clients within the meaning of Section (a)(1)(B) of Rule 17j-1 under the 1940 Act, "Access Person" means any director, officer or Advisory Person of an Advisor or Sub-Advisor who, with respect to a Fund for which such entity acts as Advisor or Sub-Advisor, makes any recommendation, participates in the determination of which recommendation shall be made, or whose principal function or duties relate to the determination of which recommendation shall be made or who, in connection with his or her duties, obtains any information concerning securities recommendations being made by such investment advisor or sub-advisor to the Fund. 1 relate to the making of any recommendations with respect to such Purchases or Sales; and (b) any natural person in a Control relationship to a Fund, Advisor or Sub-Advisor who obtains information concerning recommendations made to the Fund with regard to the Purchase or Sale of a Security by the Fund; and 3. Any director, trustee or officer of the Distributor who in the ordinary course of his or her business makes, participates in or obtains information regarding the Purchase or Sale of Securities for the Funds or whose functions or duties as part of the ordinary course of his or her business relate to the making of any recommendation to the Funds regarding any Purchase or Sale of Securities. B. "Beneficial Ownership" of a Security is to be determined in the same manner -------------------- as it is for purposes of Section 16a1-(a)(2) of the Securities Exchange Act of 1934. This means that a person should generally consider himself or herself the beneficial owner of any securities of which he or she shares in the profits, even if he or she has no influence on voting or disposition of the securities. C. "Control" shall have the same meaning as that set forth in Section 2(a)(9) ------- of the 1940 Act. Section 2(a)(9) defines "control" as the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. Ownership of 25% or more of a company's outstanding voting securities is presumed to give the holder thereof control over the company. Such presumption may be countered by the facts and circumstances of a given situation. D. "Covered Persons" means any officer, director, trustee or employee of the --------------- Funds, Advisor, Sub-Advisors or Distributor. E. "Disinterested Director" means a director or trustee of a Fund who is not ---------------------- an "interested person" of the Fund within the meaning of Section 2 (a)(19) of the Investment Company Act of 1940. F. "Purchase or Sale of a Security" means obtaining or disposing of ------------------------------ "Beneficial Ownership" of that Security and includes, among other things, the writing of an option to purchase or sell a Security. G. "Security" shall have the same meaning as that set forth in Section -------- 2(a)(36) of the 1940 Act, except that it shall not include direct obligations of the Government of the United States, bankers' acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments (including repurchase agreements) and shares issued by registered, open-end investment companies. 2 III. General Principles Applicable to Covered Persons ------------------------------------------------ A. Introduction ------------ Although certain provisions of this Code of Ethics apply only to Access Persons, all Covered Persons are subject to the prohibitions of Rule 17j-1 against fraudulent, deceptive and manipulative practices and to the general fiduciary principles as set forth in III.B. and III.C. below. Every Covered Person should appreciate the need to behave in an ethical manner with respect to the Funds. In particular, all Covered Persons who are involved in any way with the activities of a Fund should be wary of any potential conflicts between their duty of loyalty to a Fund and their own financial interests, particularly with respect to their own securities trading activities. Covered Persons should take care to preserve the confidentiality of the Funds' business affairs. Covered Persons who are not "Access Persons" but who become aware of proposed fund securities transactions should not engage in transactions in those same securities without the permission of the Secretary of the Fund. Otherwise, Covered Persons who are not Access Persons are not limited in their personal securities transactions by this Code, but such Covered Persons are encouraged to consult with the Secretary of the Funds if they have any doubts about the applicability of the Code of Ethics to any proposed transaction. B. Statement of General Fiduciary Principles ----------------------------------------- The following principles are the policy of the Funds and are the obligations of all Covered Persons: 1. It is the duty of all Covered Persons at all times to place the interests of Fund shareholders first. 2. All personal securities transactions must be conducted in such manner as to avoid any actual or potential conflict of interest or any abuse of an individual's position of trust and responsibility. 3. Covered Persons must not take inappropriate advantage of their positions or the information they acquire, with or on behalf of a Fund, Advisor, Sub-Advisor and/or Distributor, to the detriment of shareholders of the Funds. C. Fraudulent Practices -------------------- Rule 17j-1 makes it unlawful for any Covered Person, in connection with a Fund with which such Covered Person has a relationship, to: 1. employ any device, scheme or artifice to defraud a Fund; 3 2. make to a Fund any untrue statement of a material fact or omit to state to the Fund a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading; 3. engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon a Fund; or 4. engage in any manipulative practice with respect to a Fund. IV. Requirements Applicable to Disinterested Directors -------------------------------------------------- A. Exceptions to Quarterly Transaction Report Requirement. Not withstanding ------------------------------------------------------ the provisions of IV.B., a Disinterested Director is required to complete a Quarterly Transaction Report only if the Disinterested Director knew or, in ----- the ordinary course of fulfilling his official duties as a Fund director or trustee should have known, that during the 15-day period immediately before or after the director's or trustee's transaction, such Security is or was Purchased or Sold, or considered for Purchase or Sale, by a Fund./2/ B. Quarterly Transaction Reports. Subject to the exception set forth in ----------------------------- IV.A., no later than 10 days following the end of the calendar quarter to which such report relates, each Disinterested Director shall report to the Secretary of the Funds the following information on the form attached as Appendix B to this Code: With respect to transactions in any Security in which such Disinterested Director has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership in the Security: the date of the transaction, title, interest rate (if applicable), number of shares and principal amount of each Security involved; the type of transaction (i.e., purchase, sale or any other type of --- acquisition or disposition); the price of the Security at which the transaction was effected; the name of the broker, dealer or bank with or through whom the transaction was effected; the date the report was submitted. ______________________ /2/ This reporting requirement shall not be applicable to securities traded by passively managed index funds. 4 V. Requirements Applicable to Advisor, Sub-Advisor and Distributors ----------------------------------------------------------------- A. The requirements of this Code of Ethics are not applicable to any Access Person who is subject to a separate Code of Ethics adopted by an Advisor, Sub-Advisor or Distributor of a Fund (as such terms are defined in Appendix -------- A), provided that: - 1. such Code of Ethics complies with the requirements of Rule 17j-1 and has been approved by the Board of Directors or Trustees of the Fund; and 2. such Advisor, Sub-Advisor or Distributor has certified to the Board of Directors or Trustees of the Fund that it has adopted procedures reasonably necessary to prevent Access Persons from violating such Code of Ethics. B. Each Advisor, Sub-Advisor and Distributor shall: 1. submit to the Fund a copy of its Code of Ethics adopted pursuant to Rule 17j-1; 2. promptly report to the Fund in writing any material amendments to such Code; 3. furnish to the Fund upon request (and in any event no less than quarterly) written reports which: a. describe any issues arising under its Code of Ethics or procedures during the period specified including (but not limited to) information about material violations of the Code or procedures and sanctions imposed in response to material violations; and b. certify that it has adopted procedures reasonably necessary to prevent Access Persons from violating its Code. 5 APPENDIX A ---------- ENTITY DEFINITIONS ------------------ "Fund" shall mean each of the following and any series of the following hereafter designated: Flag Investors Communications Fund, Inc. ("Communications") Flag Investors Equity Partners Fund, Inc. ("Equity Partners") Flag Investors Value Builder Fund, Inc. ("Value Builder") Short Intermediate Income Fund, Inc. ("Short-Intermediate") Real Estate Securities Fund, Inc. ("Real Estate") Emerging Growth Fund, Inc. ("Emerging Growth") Deutsche Investors Funds, Inc., on behalf of each of its Series: Top 50 World Fund Top 50 Europe Fund Top 50 Asia Fund Top 50 US Fund European Mid-Cap Fund Japanese Equity Fund Growth Opportunity Fund Global Technology Fund Global Biotechnology Fund Global Financial Services Fund Deutsche Investors Portfolios Trust ("Portfolios Trust"), on behalf of each of its Portfolios: Top 50 World Portfolio Top 50 Europe Portfolio Top 50 Asia Portfolio Top 50 US Portfolio Provesta Portfolio Japanese Equity Portfolio Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. ("Cash Reserve"), on behalf of each of its Series: Prime Series Treasury Series Tax-Free Series Investment Company Capital Corp. (an "Advisor") is the investment advisor to Communications, Emerging Growth, Short-Intermediate, Value Builder, Real Estate, Equity Partners, Cash Reserve, on behalf of the Prime, Treasury and Tax-Free Series, the 6 Deutsche Investors Portfolios Trust and the Deutsche Investors Funds, Inc., on behalf of each of its Series. Alex. Brown Investment Management ("ABIM") is the sub-advisor to Communications, Value Builder and Equity Partners and to Portfolios Trust, on behalf of the Communications and Equity Partners Portfolios; Brown Investment Advisory & Trust Company ("BIA") is the sub-advisor to Emerging Growth and Short-Intermediate; LaSalle Investment Management (Securities) L.P. ("LaSalle") is the sub-advisor to Real Estate; DWS International Portfolio Management GmbH ("DWS") is a sub- advisor to Portfolios Trust, on behalf of the Top 50 World, Top 50 Europe, Top 50 Asia, European-Mid-Cap, Japanese Equity Portfolios and the Global Technology, Global Biotechnology and Global Financial Services Funds. Jennison Associates LLC ("Jennison") is the sub-advisor to Growth Opportunity. Deutsche Asset Management, Inc. ("DAMI") is a sub-advisor to Portfolios Trust, on behalf of the Top 50 US Portfolio. ABIM, BIA, LaSalle, DWS, Jennison and DAMI are referred to herein as the Sub-Advisors. ICC Distributors, Inc. ("the Distributor") is the principal underwriter for each of the Funds. 7 APPENDIX B ---------- QUARTERLY PERSONAL SECURITIES TRANSACTIONS REPORT FOR DISINTERESTED DIRECTORS A Disinterested Director is required to complete this report ONLY IF the ======= Director knew or, in the ordinary course of fulfilling his official duties as a Fund director or trustee should have known, that during the 15-day period immediately before or after the director's or trustee's transaction, such Security is or was Purchased or Sold, or considered for Purchase or Sale, by a Fund. Reports are due within 10 calendar days after the end of the calendar quarter.* Name of Reporting Person:_____________________________________________________ Calendar Quarter Ended:_______________________________________________________ Securities Transactions -----------------------
- ---------------------------------------------------------------------------------------------------- Number of Name of Disclaim Name of Shares, Broker, Beneficial Date of Issuer and Principal Type of Dealer or Ownership? Transaction Title of Amount, Transaction Price Bank (indicate by Security Maturity Date Effecting "X") and Interest Transaction ** Rate (if applicable) - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------
I certify that I have included on this report all securities transactions required to be reported pursuant to the Code of Ethics. __________________________ _________________________ Signature Date Please return this form to Jennifer Vollmer, Deutsche Asset Management Mutual Funds Compliance, One South Street, Baltimore, Maryland 21202. Questions should be directed to Jennifer Vollmer at 410-895-3628. _______________________ * This reporting requirement shall not be applicable to trading activity in passively managed index funds ** If you do not want this report to be construed as an admission that you have Beneficial Ownership of a particular security, please indicate this by marking an "X" in the box. 8 EX-99.P.2 13 dex99p2.txt DEUTSCHE ASSET MANAGEMENT CODE OF ETHICS Exhibit 99.p.2 DEUTSCHE ASSET MANAGEMENT CODE OF ETHICS May, 2000 A Member of the Deutsche Bank Group [LOGO] DEUTSCHE ASSET MANAGEMENT CODE OF ETHICS I. Overview................................................................... 1 II. General Rule............................................................... 1 III. Definitions................................................................ 2 IV. Restrictions............................................................... 3 Blackout Period Restrictions.............................................. 3 New Issues (IPOs)......................................................... 3 Short-Term Trading........................................................ 4 Restricted List........................................................... 4 Private Placements........................................................ 4 V. Compliance Procedures...................................................... 4 Designated Brokerage Accounts............................................. 4 Pre-Clearance............................................................. 4 Reporting Requirements.................................................... 5 Confirmation of Compliance with Policies.................................. 5 VI. Other Procedures/Restrictions.............................................. 5 Service on Boards of Directors............................................ 5 Gifts..................................................................... 5 Rules for Dealing with Governmental Officials and Political Candidates.... 7 Confidentiality........................................................... 8 VII. Sanctions.................................................................. 8 VIII. Interpretations and Exceptions............................................. 8 Appendix: [_] Acknowledgement Form............................................................ 9 [_} Initial (and Annual) Holdings Report............................................ 10 [_} Deutsche Bank Policies and Procedures:.......................................... 11
- Employee/Employee Related Trading - Procedures for Establishing Brokerage Accounts (not yet effective for DeAM) - Procedures for Pre-Clearing Personal Trades (not yet effective for DeAM) DEUTSCHE ASSET MANAGEMENT - U.S. CODE OF ETHICS - ------------------------------------------------------------------------------- I. Overview -------- This Code of Ethics ("Code") sets forth the specialized rules for business conduct and guidelines for the personal investing activities that generally are required of employees involved in the United States investment management areas of the Deutsche Bank Group and its affiliates (collectively "Deutsche Asset Management" or "DeAM")./1/ The provisions of this Code are effective May 26, 2000, and shall apply to all employees deemed to be "Access Persons" (see definition on next page) and such other employees as the Compliance Department ("Compliance") may determine from time to time. This Code supplements the Deutsche Bank Code of Professional Conduct, and Global Master Compliance Manual (available at http://compliance.cc.db.com) on the intranet. Each Access Person must observe those policies, as well as abide by the additional principles and rules set forth in this Code. II. General Rule ------------ DeAM employees will, in varying degrees, participate in or be aware of fiduciary and investment services provided to registered investment companies, institutional investment clients, employee benefit trusts and other types of investment advisory accounts. The fiduciary relationship mandates adherence to the highest standards of conduct and integrity. Accordingly, personnel acting in a fiduciary capacity must carry out their duties for the exclusive benefit of the client accounts. Consistent with this fiduciary duty, the interests of DeAM clients take priority over the investment desires of DeAM and DeAM personnel. All DeAM personnel must conduct themselves in a manner consistent with the requirements and procedures set forth in this Code. DeAM employees may also be required to comply with other policies imposing separate requirements. Specifically, they may be subject to laws or regulations that impose restrictions with respect to personal securities transactions, including, but not limited to, Section 17(j) and Rule 17j-1 under the Investment Company Act of 1940 (the "Act"). The purpose of this Code of Ethics is to ensure that, in connection with his or her personal trading, no Access Person shall conduct any of the following acts upon a client account: . To employ any device, scheme or artifice to defraud; . To make any untrue statement of a material fact, or omit to state a material fact necessary in order to make the statement not misleading; . To engage in any act, practice or course of business that operates or would operate as a fraud or deceit; or . To engage in any manipulative practice. ___________________ /1/ Deutsche Asset Management is the marketing name for the asset management activities of Deutsche Bank AG, Deutsche Funds Management, Bankers Trust Company, DB Alex.Brown LLC, Deutsche Asset Management Inc. (formerly Morgan Grenfell Inc.), and Deutsche Asset Management Investment Services Limited. -1- III. Definitions ----------- A. "Access Person" shall mean: (i) All employees of DeAM, including investment personnel, traders and portfolio managers who, in connection with their regular functions or duties, participate in making decisions or obtain information regarding the purchase or sale of a security by any client accounts, or whose functions relate to the making of any recommendations with respect to such purchases or sales; (ii) All natural persons in a control relationship to DeAM who obtain information concerning investment recommendations made to any client account. The term "control" shall have the same meaning as that set forth in Section 2(a)(9) of the Act; and (iii) Any other personnel with asset management responsibilities or frequent interaction with Access Persons as determined by Compliance (e.g., Legal, Compliance, Risk, Operations, Sales & Marketing, as well as long-term temporary employees and consultants). B. "Accounts" shall mean all securities accounts, whether brokerage or otherwise, and securities held directly outside of accounts, but shall not include open-end mutual fund accounts in which securities transactions cannot be effected. C. "Employee Related Account" of any person subject to this Code shall mean: (i) The employee's own Accounts; (ii) The employee's spouse's Accounts and the Accounts of minor children and other members of the household (whether by marriage or similarly committed status) living in the employee's home; (iii) Accounts in which the employee, his/her spouse/domestic partner, minor children or other persons living in their home have a beneficial interest (i.e., share in the profits even if there is no influence on voting or disposition of the shares); and (iv) Accounts (including corporate Accounts and trust Accounts) over which the employee or his/her spouse/domestic partner exercises investment discretion or control. NOTE: ANY PERSON SUBJECT TO THIS CODE IS RESPONSIBLE FOR COMPLIANCE WITH THESE RULES WITH RESPECT TO ANY EMPLOYEE RELATED ACCOUNT, AS APPLICABLE. D. "Securities" shall include equity or debt securities, derivatives of securities (such as options, warrants, and ADRs), closed-end mutual funds, futures, commodities and similar instruments, but do not include: (i) Shares of open-end mutual funds (unless otherwise directed by Compliance); (ii) Direct obligations of the United States government; or (iii) Bankers' acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements. -2- IV. Restrictions ------------ A. Blackout Period Restrictions (i) Access Persons shall not knowingly effect the purchase or sale of a Security for an Employee Related Account on a day during which any client account has a "buy" or "sell" order for the same Security, until that order is executed or withdrawn; (ii) Access Persons shall not effect the purchase or sale of a Security for an Employee Related Account within seven calendar days before or seven calendar days after the same Security is traded (or contemplated to be traded) by a client account with which the Access Person is associated. (iii) Russell Reconstitution of the Index: Effective every June 30/th/, the Frank Russell Company reconstitutes the various Russell Indices. Several weeks prior to that date, Frank Russell announces the changes to the indices (the "Announcement"). A significant portion of the portfolios which DeAM advise utilize strategies involving securities included in the various Russell indices, and thus DeAM trades heavily in these securities. Therefore, for the period commencing on the day of the Announcement, and continuing until seven business days after June 30/th/, all Access Persons are prohibited from transacting in any Security that is added to or deleted from the Russell 3000 Index. (iv) Deutsche Bank Securities: During certain times of the year, all Deutsche Bank employees are prohibited from conducting transactions in the equity and debt securities of Deutsche Bank, which affect their beneficial interest in the firm. Compliance generally imposes these "blackout" periods around the fiscal reporting of corporate earnings. Blackouts typically begin two days prior to the expected quarterly or annual earnings announcement, and end two days after earnings are released publicly. Additional restricted periods may be required for certain individuals and events, and Compliance will announce when such additional restricted periods are in effect. (v) Exceptions to Blackout Periods (above items i, ii, and iii only) The following are exempt from the specified blackout periods: [_] Securities that are within the S&P 100 Index; [_] Futures and options transactions on indexes; [_] ETF's (Exchange Traded Funds - e.g., SPDRs or "Spiders" (S&P 500 Index), DIAs or "Diamonds" (Dow Jones Industrial Average), etc.); [_] Shares purchased under an issuer sponsored Dividend Reinvestment Plan ("DRIPs"), other than optional purchases; [_] To the extent acquired from the issuer, purchases effected upon the exercise of rights issued pro rata to holders of a class of securities; and [_] Securities purchased under an employer sponsored stock purchase plan or upon the exercise of employee stock options. B. New Issues (IPOs) Access Persons are prohibited from purchasing or subscribing for Securities pursuant to an initial public offering. This prohibition applies even if Deutsche Bank (or any affiliate of Deutsche Bank) has no underwriting role and/or is not involved with the distribution. -3- C. Short -Term Trading Access Persons are prohibited from transacting in the purchase and sale, or sale and purchase, of the same (or equivalent) Securities within 30 calendar days. The following are exempted from this restriction: [_] Futures and options transactions on indexes; [_] ETF's (Exchange Traded Funds - e.g., SPDRs or "Spiders" (S&P 500 Index), DIAs or "Diamonds" (Dow Jones Industrial Average), etc.); [_] Shares purchased under an issuer sponsored Dividend Reinvestment Plan ("DRIPs"), other than optional purchases; [_] To the extent acquired from the issuer, purchases effected upon the exercise of rights issued pro rata to holders of a class of securities; and [_] Securities purchased under an employer sponsored stock purchase plan. D. Restricted List All Deutsche Bank employees, including all Access Persons, are prohibited from buying or selling any securities that are included on the Corporate Restricted List (available on the intranet) and/or other applicable departmental restricted lists. E. Private Placements Prior to effecting a transaction in private securities (i.e., Securities not requiring registration with the Securities and Exchange Commission, and sold directly to the investor), all Access Persons must first obtain the approval of his/her supervisor and then pre-clear the transaction with the Compliance Department, including completing a questionnaire. Any person who has previously purchased privately-placed Securities must disclose such purchases to the Compliance Department before he or she participates in a Fund's or an advisory client's subsequent consideration of an investment in the Securities of the same or a related issuer. Note: Transactions in Securities in derivative instruments, including warrants, convertible Securities, futures and options, etc. shall be restricted in the same manner as the underlying Security. V. Compliance Procedures --------------------- A. Designated Brokerage Accounts All Access Persons are required to open and maintain their Employee Related Accounts in accordance with the Deutsche Bank Employee Trading and Pre-Clearance Policy, as well as additional division-specific requirements, if any. B. Pre-Clearance Proposed Securities transactions must be pre-cleared with the Compliance Department in accordance with the Deutsche Bank Employee Trading and Pre- Clearance Policy. The following are exempted from this restriction: [_] Futures and options transactions on indexes; [_] ETF's (Exchange Traded Funds - e.g., SPDRs or "Spiders" (S&P 500 Index), DIAs or "Diamonds" (Dow Jones Industrial Average), etc.); [_] Shares purchased under an issuer sponsored Dividend Reinvestment Plan ("DRIPs"), other than optional purchases; -4- [_] To the extent acquired from the issuer, purchases effected upon the exercise of rights issued pro rata to holders of a class of securities; and [_] Securities purchased under an employer sponsored stock purchase plan. C. Reporting Requirements (i) Disclosure of Employee Related Accounts/Provision of Statements Upon joining Deutsche Bank, new employees are required to disclose all of their Employee Related Accounts to Compliance, and must carry out the instructions provided to conform such accounts, if necessary, to Deutsche Bank policies. In addition, pursuant to Rule 17j-1 of the Act, no later than ten days after an individual becomes an Access Person, he or she must complete and return an "Initial Holdings Report" (see Appendix). (ii) Quarterly Personal Securities Trading Reports ("PSTs") Pursuant to Rule 17j-1 of the Act, within ten (10) days of the end of each calendar quarter, all Access Persons must sign and return to Compliance a PST report, unless exempted by a division-specific requirement, if any. All PSTs that have reportable personal Securities transactions for the quarter will be reviewed by the appropriate supervisory and/or compliance person. (iii) Annual Holdings Report Once each year, at a date to be specified by Compliance, each Access Person must provide to Compliance an Annual Holdings Report (see Appendix) current as of a date not more than 30 days prior to the date of the report. D. Confirmation of Compliance with Policies Annually, each Access Person is required to sign a statement acknowledging that he or she has received this Code, as amended or updated, and confirm his or her adherence to it. VI. Other Procedures/Restrictions ----------------------------- A. Service on Boards of Directors Employees may not maintain outside business affiliations (e.g., officer or director, governor, trustee, part-time employment, etc.) without the prior written approval of the appropriate senior officer of their respective business units. Service on Boards of publicly traded companies should be limited to a small number of instances. However, such service may be undertaken based upon a determination that these activities are consistent with the interests of DeAM and its clients. Employees serving as directors will not be permitted to participate in the process of making investment decisions on behalf of clients which involve the subject company. B. Gifts (i) Accepting Gifts Employees are prohibited from soliciting or accepting any personal payment or gift to influence, support or reward any service, transaction or business involving Deutsche Bank, or that appears to be made or offered in anticipation of any future service, transaction or business opportunity. A payment or gift includes any fee, compensation, remuneration or thing of value. /2/ However, subject to the prerequisites of honesty, absolute fulfillment of fiduciary duty ___________________ /2/ Under the Bank Bribery Act and other applicable laws and regulations, severe penalties may be imposed on anyone who offers or accepts such improper payments or gifts. If you receive or are offered an improper payment or gift, or if you have any -5- to Deutsche Bank, relevant laws and regulations, and reasonable conduct on the part of the employee, the acceptance of some types of reasonable business gifts received by employees may be permissible, and the rules are as follows: . Cash gifts of any amount are prohibited. This includes cash equivalents such as gift certificates, bonds, securities or other items that may be readily converted to cash. . Acceptance of non-cash gifts, souvenirs, tickets for sporting or entertainment events, and other items with a value less than U.S. $100 or its equivalent is generally permitted, when it is clear that they are unsolicited, unrelated to a transaction and the donor is not attempting to influence the employee. . Acceptance of gifts, other than cash, given in connection with special occasions (e.g., promotions, retirements, weddings, holidays), that are of reasonable value in the circumstances are permissible. . Employees may accept reasonable and conventional business courtesies, such as joining a customer or vendor in attending sporting events, golf outings or concerts, provided that such activities involve no more than the customary amenities. . The cost of working session meals or reasonable related expenses involving the discussion or review of business matters related to Deutsche Bank may be paid by the customer, vendor or others, provided that such costs would have otherwise been reimbursable to the employee by Deutsche Bank in accordance with its travel and entertainment and expense reimbursement policies. (ii) Gift Giving (to Persons other than Government Officials) In appropriate circumstances, it may be acceptable and customary for DeAM to extend gifts to customers or others who do business with Deutsche Bank. Employees should be certain that the gift will not give rise to a conflict of interest, or appearance of conflict, and that there is no reason to believe that the gift will violate applicable codes of conduct of the recipient. Employees with appropriate authority to do so may make business gifts at DeAM's expense, provided that the following requirements are met: . Gifts in the form of cash or cash equivalents may not be given regardless of amount. . The gift must be of reasonable value in the circumstances, and should not exceed a value of U.S. $100 unless the specific prior approval of the appropriate Managing Officer/3/ is obtained. . The gift must be lawful and in accordance with generally accepted business practices of the governing jurisdictions. ________________________________________________________________________________ questions as to the application or interpretation of Deutsche Bank's rules regarding the acceptance of gifts, you must bring the matter to the attention of the Compliance Department. /3/ For purposes of this policy, "Managing Officer" is defined as an officer of at least the Managing Director level to whom the employee directly or indirectly reports, who is in charge of the employee's unit (e.g., a Department Head, Division Head, Function Head, Group Head, General Manager, etc). -6- . The gift must not be given with the intent to influence or reward any person regarding any business or transaction involving DeAM. (iii) Gifts to Government Officials The Compliance Department must be contacted prior to making any gift to a governmental employee or official. Various governmental agencies, legislative bodies and jurisdictions may have rules and regulations regarding the receipt of gifts by their employees or officials. In some cases, government employees or officials may be prohibited from accepting any gifts. (See next section for additional rules regarding political contributions.) C. Rules for Dealing with Governmental Officials and Political Candidates (i) Corporate Payments or Political Contributions No corporate payments or gifts of value may be made to any outside party, including any government official or political candidate or official, for the purpose of securing or retaining business for Deutsche Bank, or influencing any decision on its behalf. . The Federal Election Campaign Act prohibits corporations and labor organizations from using their general treasury funds to make contributions or expenditures in connection with federal elections, and therefore Deutsche Bank departments may not make contributions to U.S. Federal political parties or candidates. . Corporate contributions to political parties or candidates in jurisdictions not involving U.S. Federal elections are permitted only when such contributions are made in accordance with applicable local laws and regulations, and the prior approval of a member of the DeAM Executive Committee has been obtained, and the Deutsche Bank Americas Regional Cost Committee has been notified. Under the Foreign Corrupt Practices Act, Bank Bribery Law, Elections Law and other applicable regulations, severe penalties may be imposed on Deutsche Bank and on individuals who violate these laws and regulations. Similar laws and regulations may also apply in various countries and legal jurisdictions where Deutsche Bank does business. (ii) Personal Political Contributions No personal payments or gifts of value may be made to any outside party, including any government official or political candidate or official, for the purpose of securing business for Deutsche Bank or influencing any decision on its behalf. Employees should always exercise care and good judgment to avoid making any political contribution that may give rise to a conflict of interest, or the appearance of conflict. For example, if a DeAM business unit engages in business with a particular governmental entity or official, DeAM employees should avoid making personal political contributions to officials or candidates who may appear to be in a position to influence the award of business to Deutsche Bank. (iii) Entertainment of Government Officials Entertainment and other acts of hospitality toward government or political officials should never compromise or appear to compromise the integrity or reputation of the official or Deutsche Bank. When hospitality is extended, it should be with the expectation that it will become a matter of public knowledge. -7- D. Confidentiality Access Persons must not divulge contemplated or completed securities transactions or trading strategies of DeAM clients to any person, except as required by the performance of such person's duties, and only on a need-to-know basis. In addition, the Deutsche Bank policies on confidential information, which are contained within the Code of Professional Conduct must be observed. VII. Sanctions --------- Any Access Person who violates this Code may be subject to disciplinary actions, including possible dismissal. In addition, any Securities transactions executed in violation of this Code, such as short-term trading or trading during blackout periods, may subject the employee to a financial penalty, including but not limited to, unwinding the trade and/or disgorging of the profits. Finally, violations and suspected violations of criminal laws will be reported to the appropriate authorities as required by applicable laws and regulations. VIII. Interpretations and Exceptions ------------------------------ Compliance shall have the right to make final and binding interpretations of this Code, and may grant an exception to certain of the above restrictions, as long as no abuse or potential abuse is involved. Each Access Person must obtain approval from the Compliance Department before taking action regarding such an exception. Any questions regarding the applicability, meaning or administration of this Code shall be referred in advance of any contemplated transaction, to Compliance. -8- Deutsche Asset Management ACKNOWLEDGEMENT In connection with my employment with one or more of the legal entities which make up Deutsche Asset Management, I acknowledge that I have received, read and understand the Deutsche Asset Management Code of Ethics issued May, 2000, and agree to adhere to and abide by its provisions. I understand that any violation(s) of this Code of Ethics is grounds for immediate disciplinary action up to, and including, dismissal. Signature _______________________________ Print Name _______________________________ Legal Entity _______________________________ Date _______________________________ Please return this form to DeAM Compliance at 130 Liberty Street, 17/th/ Floor (Mail Stop 2172). A Member of the Deutsche Bank Group [LOGO] -9- Deutsche Asset Management To: "Access Person" From: DeAM Compliance Re: Initial/Annual Holdings Report - Personal Securities Accounts ________________________________________________________________________________ In conformance with Securities and Exchange Commission Rule 17j-1 pursuant to the Investment Company Act of 1940 you are required to provide Compliance with this "Initial Holdings Report" within 10 days of joining Deutsche Asset Management ("DeAM"), and annually thereafter. Accordingly, please fill in the following requested information (or attach a copy of your most recent statement) for all securities/4/ either held directly or held in your Employee-Related Accounts/5/.
Broker/Acct.# Name of Issuer No. of Shares Principal Amount _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________
Signature: _________________________________ Date: _______________________ Print Name: _________________________________ Expense Code: _______________ ________________________ /4/ "Securities" includes equity or debt securities (both privately and publicly offered), derivatives of securities (such as options, warrants, indexes and ADRs), futures, commodities and similar instruments, but does not include: (i) shares of open-end mutual funds (unless otherwise directed by compliance) or (ii) direct obligations of the United States government. /5/ "Employee Related Accounts" include (i) employee's own accounts; (ii) the employee's spouse's accounts and the accounts of minor children and other members of the household (whether by marriage or similarly committed status) living in the employee's home; (iii) accounts in which the employee, his/her spouse/domestic partner, minor children or other persons living in their home have a beneficial interest (i.e., share in the profits even if there is no influence on voting or disposition of shares); and (iv) accounts (including corporate accounts and trust accounts) over which the employee or his/her spouse/domestic partner exercises investment discretion or control. **PLEASE COMPLETE AND RETURN TO COMPLIANCE AT MAIL STOP 2172** -10- NOTICE ------ On the following pages are the Deutsche Bank Compliance Policies and Procedures relating to personal trading by employees. All employees of Deutsche Bank in the Americas (including employees of Deutsche Asset Management and the Mutual Funds Group of DeAM) are required to comply with the policies therein in addition to complying with the DeAM Code of Ethics ("the Code"). Since the Deutsche Bank Compliance Policies and Procedures are a separate set of rules which correspond to the Deutsche Bank Code of Professional Conduct, terms and definitions may differ from those used in the Code. In some cases, the rules in the Code are more restrictive than the rules in the Deutsche Bank Compliance Policies and Procedures. Please note specifically: Outside Accounts. The rule allowing employees to maintain personal securities accounts at Deutsche Bank or another "approved brokerage firm" does not apply to employees of the -- --- Mutual Funds Group of DeAM. Employees of the Mutual Funds Group are required to - ------------------ ------------------ maintain personal accounts (except open-end mutual fund only accounts) only at Deutsche Bank (Alex.Brown), unless they have received an exemption from Mutual Funds Compliance. Pre-Clearance. The rules relating to pre-clearance differ for employees of the Mutual Funds ------------ Group of DeAM. Until the Mutual Funds Group receives the Employee Trade Request - ----- System, the pre-clearance process requires the submission of an Employee Trading Pre-Clearance Form to Sarah Reilly in Mutual Funds Compliance (410-895-3499) and --- calling Corporate Compliance (212-469-8787). Blackout Period. The blackout period(s) in the Code is more broad than the blackout period in the ---------- Deutsche Bank Compliance Policies and Procedures. DeAM employees are subject to an additional blackout period surrounding trades by DeAM client accounts, as described in the Code. Initial Public Offerings. DeAM employees are prohibited from purchasing securities in any initial public ---------- ------------------ offering. This prohibition applies even if Deutsche Bank has no underwriting - -------- role and/or is not involved with the distribution. Questions about these requirements? Please call Jeff Silver (212-250-8053) or Mary Mullin (212-250-8353) in DeAM Compliance or Felicia Emry (410-895-3826) or --------------- Sarah Reilly (410-895-3499) in DeAM Mutual Funds Compliance. ---------------------------- -11- - -------------------------------------------------------------------------------- NOTE: Parts of the procedure (the section dealing with approved brokerages in particular) detailed below was not yet effective for DeAM employees at the time this Code was approved and is provided for future reference. You will be notified in advance of implementation and applicability. Until such time, you must continue to call 212-469-8787 to pre-clear all Securities transactions, and maintain accounts with and transact only through current legacy approved brokers. - -------------------------------------------------------------------------------- COMPLIANCE POLICIES AND PROCEDURES ================================================================================ No.: 101 Subject: Employee/Employee Related Trading - -------------------------------------------------------------------------------- Effective Date: 10/1/97 Approved By: Mary Owen MD/Compliance - -------------------------------------------------------------------------------- Revision Date: 5/20/99 Applicability: All Personnel ================================================================================ Employee Trading Policy -- Employee Accounts Introduction The Employee/Employee-Related Trading Policy is designed to prevent legal, business and ethical conflicts and to guard against the misuse of proprietary or confidential information. In addition, the policy is intended to discourage employees from engaging in personal trading on a scale that would distract them from their daily responsibilities to the Firm. Employees are cautioned not to engage in trading that might result in the appearance of impropriety. Deutsche Bank ("DB") strongly encourages investment by employees that is long-term in nature, and strongly discourages short-term, speculative trading. To whom does this policy apply? This policy applies to the brokerage accounts of employees, long-term temporary employees, full-time consultants, and to those accounts over which such persons expect to exercise influence or control, including (1) accounts of your spouse, minor children or relatives of you or your spouse to whom substantial support is contributed; (2) accounts of any other member of your household, such as a relative (of you or your spouse) living in your home; (3) trust accounts for which you act as trustee, custodian, power-of-attorney or otherwise exercise any type of guidance or influence; and (4) corporate accounts that you directly or indirectly control. All such accounts are referred to as "Employee/Employee-Related Accounts". a. Employee/Employee-Related Accounts (In-house--At an Approved Brokerage Firm) DB requires that its employees maintain their brokerage accounts at an "Approved Brokerage Firm" as determined by DB. If you choose to maintain your accounts "in-house", your accounts will be established and serviced by Alex Brown. If you decide to maintain your accounts outside of DB you are required to make written application identifying yourself as a DB employee. Transactions effected in Employee/Employee-Related Accounts are subject to continuous review by the Control Group on a regular basis. The Control Group will receive duplicate confirmations and monthly statements for every account. Accounts established without the prior approval of your Supervisor and the Control Group may be frozen. -12- b. Trading Pre-Clearance All trades in an Employee/Employee-Related Account must be pre-cleared by your Supervisor and by Compliance. Until your group has received the Employee Trade Request ("ETR") System, the pre-clearance process requires the submission of an "Employee Trading Pre-Clearance Form" to your Supervisor, or respective delegate, and Compliance. Execution of a trade may not take place until you have received both approvals. Failure to obtain the required approvals will result in cancellation of your transaction. Losses incurred by you as the result of the cancellation of unauthorized trading will be charged to the account in question. Profits in trades that were not pre-cleared must be given to a charitable organization. Approvals are good for the day on which they are issued. The one exception is for trade requests placed after 4:00 PM ET; these will be valid for the next trading day. GTC ORDERS (Good Till Canceled): GTC orders will not be approved. The sole -------------------------------- exception is the entering of a STOP-LIMIT order simultaneously with the initial BUY order. c. Black-Out, Holding Periods and Other Prohibitions The following black-out and holding periods apply to each transaction in your account or in an Employee-Related Account, as previously defined. These requirements enable Compliance to more efficiently monitor the trading activities of DB employees and to prevent trading by employees in sensitive departments (i.e., Investment Banking, Research, Capital Markets) that could be perceived as inappropriate. Black-Out Period: The "black-out" period is described as two business days ---------------- immediately preceding the release of quarterly earnings, and two business days after the release of quarterly earnings. No employee of Investment Banking, Research, or Capital Markets areas will receive clearance from their Reviewing Department Head ("RDH") to purchase or sell securities during this period. Exceptions may be granted only on a case-by-case basis, by Compliance. Holding Periods: The firm imposes a holding period for all investments in ---------------- equity, non-investment grade debt, preferred instruments and any security that is convertible into such securities. Exceptions may be granted only on a case-by-case basis, by Compliance. The standard holding periods are: . Investment Banking - 6 months . All Others - 30 days . Alex Brown Retail - None As a general rule, no employee of the Research Division, Investment Banking Division, or Capital Markets Division may trade in the securities of issuers that are covered by you, i.e., the Research Analyst covering XYZ may not trade XYZ securities, the Investment Banker servicing XYZ may not trade XYZ securities. Exceptions to this general rule will be made on a case by case basis, at the sole discretion of Compliance. d. Options, Futures, Options on Futures and Other Derivative Securities You may trade options (except for uncovered options), futures, options on futures, forwards, warrants or options on physical commodities or currencies subject to a 30 day holding period. You may not write covered calls, unless you have held the underlying security for the required 30 day or 6 month holding period. Short sales are permitted only to the extent they are "short vs. the box" or covered. Compliance monitors employee-trading carefully for adherence to these guidelines. Employees found violating these policies may be subject to sanctions, including the suspension of trading privileges and termination. -13- e. Primary and Secondary Public Offerings You may not purchase any security that is part of a primary or secondary offering on which DB is acting as a lead or co-managing underwriter until the offering is priced and the syndicate is terminated. Please keep in mind that the NASD has regulations prohibiting associated persons of member firms from purchasing public offerings that are considered HOT ISSUES. Hot Issues are defined as public offerings that are trading in the secondary market at a price above the offering price. f. Restrictions Arising from DB's Research Recommendations You are restricted from trading in an issuer's securities for a period of two days from the time a DB research analyst initiates coverage, or changes the recommendation on that issuer. If you are aware of any such research recommendation prior to publication, you are prohibited from trading for your own account from the time you learn of the research recommendation until two business days after its publication. The New York Stock Exchange and the National Association of Securities Dealers regularly inquire about trades executed ahead of a research rating change or initiation of coverage. g. Information Regarding Customer or Firm Orders You are prohibited from "frontrunning" customer or Firm orders, i.e., trading for your own account with knowledge and in advance of a customer or Firm order in the same security. In addition, you are strongly discouraged from "piggybacking" on customer or Firm trades, i.e., engaging in identical trades as those that a client or Firm account has completed. While piggybacking is not itself illegal, it can create the appearance of impropriety. h. Trading Securities that are on DB's Restricted List Employees of DB may not effect trades in securities that appear on the Restricted List. For your information and convenience, the Restricted List is posted daily on CCMail under the Compliance Department's Bulletin Board and is also available on the Intranet Homepage. -14- Deutsche Bank PROCEDURES FOR ESTABLISHING BROKERAGE ACCOUNTS The Deutsche Bank ("DB") Compliance Policy requires all DB personnel to take a number of steps with respect to their personal securities accounts and transactions. The Policy requires that all personal securities accounts be maintained at an "Approved Brokerage Firm." Firms currently designated as "Approved Brokerage Firms" The Compliance Department has established procedures that have allowed the designation of the majority of Broker/Dealers as "Approved Brokerage Firms", the main requirement being the Carrying Broker/Dealer's ability to deliver confirmations of transactions electronically to the DB's Employee Trading & Surveillance Group. The following firms are the only Broker/Dealers not approved for use by DB employees. 1. Datek On-Line Securities 2. Ernst & Company If you choose to establish/maintain your accounts at an Approved Brokerage Firm, you are required to make a written application to that Firm, identifying yourself as a DB employee (see attachment). Special arrangements have been established with Alex.Brown, Fidelity Investment, Merrill Lynch, Morgan Stanley Dean Witter, Quick & Reilly, and Salomon Smith Barney for DB employees wishing to establish accounts with these firms. Contacts: Alex.Brown, Employee Brokerage Center 1-800-776-7564 (ext. 3). Fidelity Brokerage Services 212-371-2327 Merrill Lynch Account Manager, Richard Verlin, 212-236-5044 Morgan Stanley Dean Witter Account Manager, Doug Dalmedo, 212-883-7750 Quick & Reilly 212-232-4728 Salomon Smith Barney (Rasweiler Group) 212-643-5769 -15- Deutsche Bank ________________________ Date ________________________ Account Number ________________________ Account Title ________________________ Tax ID Number ________________________________ Name of Carrying Broker Dealer ________________________________ Address ________________________________ RE: Intent to open an account To Whom it may concern; As an employee, or an associated person of a Member Firm, Deutsche Bank Group ("DB"), I am obligated under NYSE Rule 407(a) to express my intention to open a securities or commodities account with your firm in writing both to you as the carrying firm and to my employer. This letter shall serve as notification that I intend to establish such an account with your firm and the signature of the Reviewing Department Head (or his Authorized Delegate) below shall evidence said notification of my employer. You will receive detailed instructions regarding the delivery of duplicate confirmations and statements directly from DB's Compliance Department once the account has been established and an account number has been provided. Should you require further information please contact Milagros Fernandez at (212) 469-8614. Very truly yours, ______________________________ ________________________ Reviewing Dept. Head Employee CC: Reviewing Department Head Compliance Department (with account #) - -------------------------------------------------------------------------------- NOTE: The procedure detailed below was not yet effective for DeAM at the time this Code was approved and is provided for future reference. You will be notified in advance of implementation and availability. Until such time, you must continue to call 212-469-8787 to pre-clear all Securities transactions. - -------------------------------------------------------------------------------- PROCEDURES FOR PRE-CLEARING PERSONAL TRADES - ------------------------------------------- In order to facilitate the above referenced process with as little inconvenience as possible, Compliance has designed a web site on the IntraNet. The site includes a Compliance Home Page with a Restricted List query facility and a menu of "Employee Trading Pre-Clearance Forms". The form that you are required to fill out and submit for approval will depend upon your place of employment. Be sure to select the appropriate form. The site provides for the automatic submission of the form to your supervisor and Compliance. When the form is approved it will be routed back to you for your records, at which point you may proceed with the execution of your transactions. The following are instructions for placing an Employee Trade Request ("ETR"): 1. Launch Netscape 2. Double click on U.S. Compliance (located under Staff Services on the DB Intranet Home Page) 3. Select Employee Trade Request from the Compliance Department Webpage 4. Type in User Name and Password (case sensitive) 5. The system will ask you to verify your user information. Click "Here to Submit". 6. Type the Security Name in the query box. (If the security is on the Restricted List, ETR will prompt you to call Compliance. If the security is not on the Restricted List, ETR will let you proceed to the Forms Webpage.) 7. Select the Request Form that corresponds to your department. Upon submitting your request, ETR will send an e-mail message informing your supervisor that a trade request is open. Once your supervisor approves your request, you will receive another e-mail giving you authorization to execute your trade. If your supervisor is not available, input your request ticket and contact Compliance on extension 8787 for approval. With the exception of discretionary or third party managed account, all employee and/or employee related accounts must be pre-cleared. Failure to adhere to DB's Employee Trading Policy may result in trades being revoked and/or removal of 407 authorization letter. Please Note: All employees are subject to a 30-day holding period with the exception of Investment Banking employees who have a 6-month holding period, and Alex Brown Retail Brokers who have no holding period. EX-99.Q.1 14 dex99q1.txt POWERS OF ATTORNEY Exhibit 99.q.1 DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. POWER OF ATTORNEY ----------------- KNOW ALL PERSONS BY THESE PRESENTS, that, Richard T. Hale, whose signature appears below, does hereby constitute and appoint Edward J. Veilleux, Amy M. Olmert and Daniel O. Hirsch, and each of them singly, his true and lawful attorney-in-fact and agent, with full power of substitution or resubstitution, to do any and all acts and things and to execute any and all instruments, in his name, place and stead, which said attorney-in-fact and agent may deem necessary or advisable or which may be required to enable Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended (the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940 Act"), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof, in connection with the Fund's Registration Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with any and all pre- and post-effective amendments thereto, including specifically, but without limiting the generality of the foregoing, the power and authority to sign in the name and on behalf of the undersigned as Chairman and a director of the Fund such Registration Statement and any and all such pre- and post-effective amendments filed with the Securities and Exchange Commission under the 1933 Act and the 1940 Act, and any other instruments or documents related thereto, and the undersigned does hereby ratify and confirm all that said attorney-in-fact and agent, or either of them or their substitute or substitutes, shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as of the date set forth below. /s/ Richard T. Hale ------------------- Richard T. Hale Date: September 26, 2000 DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. POWER OF ATTORNEY ----------------- KNOW ALL PERSONS BY THESE PRESENTS, that, Richard T. Hale, whose signature appears below, does hereby constitute and appoint Edward J. Veilleux, Amy M. Olmert and Daniel O. Hirsch, and each of them singly, his true and lawful attorney-in-fact and agent, with full power of substitution or resubstitution, to do any and all acts and things and to execute any and all instruments, in his name, place and stead, which said attorney-in-fact and agent may deem necessary or advisable or which may be required to enable Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended (the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940 Act"), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof, in connection with the Fund's Registration Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with any and all pre- and post-effective amendments thereto, including specifically, but without limiting the generality of the foregoing, the power and authority to sign in the name and on behalf of the undersigned as President of the Fund such Registration Statement and any and all such pre- and post- effective amendments filed with the Securities and Exchange Commission under the 1933 Act and the 1940 Act, and any other instruments or documents related thereto, and the undersigned does hereby ratify and confirm all that said attorney-in-fact and agent, or either of them or their substitute or substitutes, shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as of the date set forth below. /s/ Richard T. Hale ------------------- Richard T. Hale Date: December 19, 2000 DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. POWER OF ATTORNEY ----------------- KNOW ALL PERSONS BY THESE PRESENTS, that, Carl W. Vogt, Esq., whose signature appears below, does hereby constitute and appoint Edward J. Veilleux, Amy M. Olmert and Daniel O. Hirsch, and each of them singly, his true and lawful attorney-in-fact and agent, with full power of substitution or resubstitution, to do any and all acts and things and to execute any and all instruments, in his name, place and stead, which said attorney-in-fact and agent may deem necessary or advisable or which may be required to enable Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended (the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940 Act"), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof, in connection with the Fund's Registration Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with any and all pre- and post-effective amendments thereto, including specifically, but without limiting the generality of the foregoing, the power and authority to sign in the name and on behalf of the undersigned as Director of the Fund such Registration Statement and any and all such pre- and post- effective amendments filed with the Securities and Exchange Commission under the 1933 Act and the 1940 Act, and any other instruments or documents related thereto, and the undersigned does hereby ratify and confirm all that said attorney-in-fact and agent, or either of them or their substitute or substitutes, shall lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as of the date set forth below. /s/ Carl W. Vogt, Esq. ---------------------- Carl W. Vogt, Esq. Date: December 19, 2000 -----END PRIVACY-ENHANCED MESSAGE-----