-----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, SSSc6/gAIdi5pOoP8hU4nB9g5hEVStGyaNCgZnY3qjVulijUXhJ0qXR+oDBZen1U i5Zsh+BADeI0VdXpnh6N+g== 0000950116-96-000477.txt : 19960701 0000950116-96-000477.hdr.sgml : 19960701 ACCESSION NUMBER: 0000950116-96-000477 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960531 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWN ALEX CASH RESERVE FUND INC CENTRAL INDEX KEY: 0000353447 STANDARD INDUSTRIAL CLASSIFICATION: IRS NUMBER: 621223991 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03196 FILM NUMBER: 96575447 BUSINESS ADDRESS: STREET 1: 135 E BALTIMORE ST CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4107271700 MAIL ADDRESS: STREET 1: 135 E BALTIMORE STREET CITY: BALTIMORE STATE: MD ZIP: 21202 N-30D 1 LOGO Flag Investors Cash Reserve Prime Shares Annual Report March 31, 1996 KEY FEATURES OF FLAG INVESTORS CASH RESERVE PRIME SHARES DAILY DIVIDENDS Flag Investors Cash Reserve Prime Shares (the "Fund") declares dividends daily and distributes them monthly in the form of additional shares. CONSTANT NET ASSET VALUE PER SHARE The Fund uses the amortized cost method of valuing its portfolio securities and accordingly, will attempt to maintain a constant net asset value of $1.00 per share. Since the Fund's inception on January 5, 1989, a constant net asset value of $1.00 per share has been maintained. An investment in a money market fund is neither insured nor guaranteed by the U.S. Government. There can be no assurance that the Fund will be able to maintain a stable net asset value of $1.00 per share. MINIMUM INVESTMENT The minimum initial investment is $2,000. Subsequent investments may be made in an amount of $100 or more. This report is submitted for the general information of the shareholders of Flag Investors Cash Reserve Prime Shares. The report may only be distributed to current shareholders or to persons who have received a current prospectus. LETTER TO SHAREHOLDERS May 6, 1996 We are pleased to report on the progress of your Fund for the fiscal year ended March 31, 1996. YEAR IN REVIEW During the last quarter, interest rates rose, reversing the downward trend experienced during the first nine months of the year. The year commenced with long-term rates at approximately 8%, decreasing to a low approaching 6%. Currently, inflation fears triggered by strong employment results in February and March have surfaced. As a result, long-term rates have reversed their downward trend and are presently nearing the 7% level. Intermediate-term rates have also followed this course. Throughout the year, a flattening yield curve prompted investors not to extend their time horizons to receive a small incremental gain in yield. As a result, investors funneled record amounts of cash reserves into money market funds. As of March 31, 1996, assets in all taxable and nontaxable money market funds, according to money market research service IBC/Donoghue, Inc., totaled $825.3 billion, a 27.5% increase over the same date last year. Historical Yield Chart (For the twelve months ended 3/31/96) 6% --------------------------------------------------- * * * 5% --------------------------*------------------------ -----------------------------------------------*--- 4.72% 4% --------------------------------------------------- 3% --------------------------------------------------- 2% --------------------------------------------------- 1% --------------------------------------------------- 0% --------------------------------------------------- 3/31/95 6/30/95 9/30/95 12/31/95 3/31/96 *Flag Investors Cash Reserve Prime Shares 3/31/95 6/30/95 9/30/95 12/31/95 3/31/96 ------- ------- ------- -------- ------- 5.63 5.54 5.2 5.14 4.72 1 PORTFOLIO QUALITY The steady flow of assets into the Fund did not impact its portfolio characteristics and a relatively short weighted average maturity was maintained in the Fund's portfolio. In addition to conservative maturity management, Fund policy requires that the Fund invest only in the highest quality issues. Evidence of our insistence on high quality can be found in the Standard & Poor's (S&P) rating of the portfolio, of which Flag Investors Cash Reserve Prime Shares is a class. The portfolio maintains a "AAAm" rating, the highest that S&P awards to money market funds. MARKET OUTLOOK Against the backdrop of a surging stock market, apparent benign inflation and low GDP growth, the bond market was surprised for two consecutive months by strong employment results. Since then, rates have risen sharply, two-year notes have climbed to 6.06% from 4.38%, the Dow Jones Industrial Average has fallen approximately 4% and inflation concerns seem to have resurfaced. The widespread notion of further near-term rate cuts by the Federal Reserve have all but disappeared. Going forward, inflation should remain around 3%. Given the one- to two-year lead time for Fed tightening in 1995 to take effect, 1996/1997 should produce a sluggish economy. Consumer debt has risen dramatically, and the rise in mortgage rates from 7% to 8% is slowing home buying and refinancing activities. In the business sector, capital spending is slowing. Pressure to increase wages is limited. These factors, among others, suggest slow GDP growth and in time, the possible reversal of the recent increase in interest rates. SUMMARY Many investors are using money market funds as protection against turbulent markets. We assure you that our commitment remains the same - to provide our shareholders with a very high quality money fund and a competitive yield. As always, we appreciate your continued support. Sincerely, /s/ W. James Price /s/ Richard T. Hale - - -------------------------- -------------------------- W. James Price Richard T. Hale Chairman President 2 CHAIRMAN'S LETTER May 6, 1996 The year 1995 saw the retirement of two of our longtime Directors. We would like to thank them for their valuable and tireless service over the years. Alonzo G. Decker, former Chairman and CEO of Black & Decker, was one of our original Directors, joining the Fund's Board in 1981. He served with distinction, and his wise counsel will be much missed, but we know he will enjoy having more time to spend on his farm on the Eastern Shore of Maryland. Bruce Hannay, former Vice President for Patents and Research at Bell Labs, joined our Board in 1984. His willingness to cross the country four times each year to attend our Board meetings tells us a great deal about his energy and loyalty. We wish him well in his retirement in the beautiful State of Washington. Al and Bruce, we thank you and will miss you. Sincerely, /s/ W. James Price - - ------------------------- W. James Price Chairman 3 PRIME SERIES - - ------------------------------------------------------------------------------- Statement of Net Assets March 31, 1996
Rating (a) ------------------- Par S&P Moody's (000) Value ------ --------- --------- ----------------- COMMERCIAL PAPER -- 87.5%(b) Automobiles & Trucks -- 4.9% Ford Motor Credit Corp. 5.50% 4/1/96 ...................... A-1 P-1 $15,000 $ 15,000,000 PACCAR Financial Corp. 5.32% 4/18/96 ..................... A-1+ P-1 11,000 10,972,366 5.30% 4/24/96 ..................... A-1+ P-1 10,000 9,966,139 5.03% 5/16/96 ..................... A-1+ P-1 5,000 4,968,562 5.03% 5/23/96 ..................... A-1+ P-1 11,000 10,920,079 Toyota Motor Credit Corp. 5.31% 4/22/96 ..................... A-1+ P-1 30,000 29,907,075 5.30% 5/2/96 ...................... A-1+ P-1 15,450 15,379,488 5.00% 5/20/96 ..................... A-1+ P-1 15,000 14,897,917 5.00% 5/22/96 ..................... A-1+ P-1 15,000 14,893,750 ----------------- 126,905,376 ----------------- Beverages -- 1.9% Anheuser-Busch Companies, Inc. 5.34% 4/18/96 ..................... A-1+ P-1 15,000 14,962,175 4.90% 10/21/96 .................... A-1+ P-1 20,000 19,447,389 4.75% 10/28/96 .................... A-1+ P-1 15,000 14,584,375 ----------------- 48,993,939 ----------------- Chemicals, General -- 2.1% E.I. duPont de Nemours 5.31% 4/29/96 ..................... A-1+ P-1 25,000 24,896,750 5.02% 6/17/96 ..................... A-1+ P-1 15,000 14,833,167 5.03% 7/19/96 ..................... A-1+ P-1 5,000 4,923,851 5.50% 8/1/96 ...................... A-1+ P-1 10,000 9,813,611 ----------------- 54,467,379 ----------------- Chemicals, Specialty -- 1.3% Air Products & Chemicals 5.48% 4/16/96 ..................... A-1 P-1 9,000 8,979,450 5.35% 6/17/96 ..................... A-1 P-1 15,000 14,828,354 5.125% 7/11/96 .................... A-1 P-1 9,000 8,870,594 ----------------- 32,678,398 ----------------- Computer & Office Equipment -- 7.9% Hewlett-Packard 5.35% 4/18/96 ..................... A-1+ P-1 10,000 9,974,736 5.24% 4/19/96 ..................... A-1+ P-1 10,000 9,973,800 5.22% 4/26/96 ..................... A-1+ P-1 20,500 20,425,687 4.97% 6/19/96 ..................... A-1+ P-1 10,000 9,890,936 4.95% 6/25/96 ..................... A-1+ P-1 15,000 14,824,688 5.04% 7/19/96 ..................... A-1+ P-1 9,750 9,601,215
4 PRIME SERIES - - ------------------------------------------------------------------------------- Statement of Net Assets -- (continued) March 31, 1996
Rating (a) ------------------- Par S&P Moody's (000) Value ------ --------- --------- ----------------- COMMERCIAL PAPER -- continued Computer & Office Equipment -- continued Pitney Bowes Credit Corp. 5.24% 4/18/96 ..................... A-1+ P-1 $10,000 $ 9,975,256 5.11% 4/30/96 ..................... A-1+ P-1 15,000 14,938,254 5.14% 5/2/96 ...................... A-1+ P-1 10,000 9,955,739 5.02% 10/3/96 ..................... A-1+ P-1 15,000 14,613,042 5.03% 10/3/96 ..................... A-1+ P-1 15,000 14,612,271 5.02% 10/4/96 ..................... A-1+ P-1 20,000 19,481,267 5.04% 10/4/96 ..................... A-1+ P-1 17,000 16,557,320 Xerox Credit Corp. 5.10% 5/8/96 ...................... A-1 P-1 20,000 19,895,167 5.05% 8/29/96 ..................... A-1 P-1 10,000 9,789,583 ----------------- 204,508,961 ----------------- Credit Unions -- 2.5% Central Corp. Credit 5.39% 4/15/96 ..................... A-1+ P-1 24,225 24,174,222 Mid-States Corporate Federal Credit Union 5.33% 4/12/96 ..................... A-1+ P-1 18,000 17,970,685 5.33% 4/23/96 ..................... A-1+ P-1 8,000 7,973,942 U.S. Central Credit Union 5.30% 4/17/96 ..................... A-1+ P-1 15,000 14,964,667 ----------------- 65,083,516 ----------------- Defense & Aircraft -- 2.1% Rockwell International Corp. 5.31% 4/30/96 ..................... A-1+ P-1 55,000 54,764,939 ----------------- Electrical & Electronics -- 2.9% General Electric Company 5.43% 4/4/96 ...................... A-1+ P-1 25,000 24,988,687 5.42% 5/2/96 ...................... A-1+ P-1 25,000 24,883,319 5.07% 5/3/96 ...................... A-1+ P-1 10,000 9,954,933 Motorola Inc. 5.06% 4/25/96 ..................... A-1+ P-1 15,000 14,949,400 ----------------- 74,776,339 ----------------- Electric Utility -- 1.4% Indianapolis Power & Light 5.17% 4/2/96 ...................... A-1+ P-1 10,700 10,698,463 Northern States Power 5.35% 4/17/96 ..................... A-1+ P-1 25,000 24,940,556 ----------------- 35,639,019 -----------------
5 PRIME SERIES - - ------------------------------------------------------------------------------- Statement of Net Assets -- (continued) March 31, 1996
Rating (a) ------------------- Par S&P Moody's (000) Value ------ --------- --------- ----------------- COMMERCIAL PAPER -- continued Entertainment -- 2.6% Walt Disney Co. 5.18% 7/15/96 ..................... A-1 P-1 $10,000 $ 9,848,917 5.18% 8/14/96 ..................... A-1 P-1 15,000 14,708,625 5.20% 9/10/96 ..................... A-1 P-1 20,000 19,532,000 5.18% 12/6/96 ..................... A-1 P-1 10,000 9,641,717 5.18% 12/9/96 ..................... A-1 P-1 15,000 14,456,100 ----------------- 68,187,359 ----------------- Finance/Commercial -- 0.4% CIT Group Holdings Inc. 5.32% 4/8/96 ...................... A-1 P-1 10,000 9,989,656 ----------------- Finance/Consumer -- 2.2% USAA Capital Corp. 5.32% 4/3/96 ...................... A-1+ P-1 7,000 6,997,931 5.12% 4/10/96 ..................... A-1+ P-1 15,000 14,980,800 5.02% 5/20/96 ..................... A-1+ P-1 10,000 9,931,672 5.05% 6/6/96 ...................... A-1+ P-1 8,500 8,421,304 5.05% 6/14/96 ..................... A-1+ P-1 18,006 17,819,088 ----------------- 58,150,795 ----------------- Finance/Diversified -- 0.5% General Electric Capital Corp. 5.15% 4/4/96 ...................... A-1+ P-1 12,000 11,994,850 ----------------- Food -- 6.0% Campbell Soup Co. 5.34% 6/6/96 ...................... A-1+ P-1 25,000 24,755,250 4.98% 10/4/96 ..................... A-1+ P-1 10,000 9,742,700 Cargill, Inc. 5.35% 4/2/96 ...................... A-1+ P-1 10,000 9,998,514 5.08% 4/30/96 ..................... A-1+ P-1 8,000 7,967,262 5.02% 5/8/96 ...................... A-1+ P-1 10,000 9,948,406 5.02% 5/20/96 ..................... A-1+ P-1 10,000 9,931,672 5.23% 6/17/96 ..................... A-1+ P-1 10,000 9,888,136 5.23% 6/18/96 ..................... A-1+ P-1 20,000 19,773,367 H.J.Heinz 5.37% 4/1/96 ...................... A-1 P-1 10,000 10,000,000 Hershey Foods 5.10% 4/26/96 ..................... A-1+ P-1 20,000 19,929,167 Kellogg Company 5.09% 4/16/96 ..................... A-1+ P-1 4,122 4,113,258 5.25% 6/3/96 ...................... A-1+ P-1 21,000 20,807,062 ----------------- 156,854,794 -----------------
6 PRIME SERIES - - ------------------------------------------------------------------------------- Statement of Net Assets -- (continued) March 31, 1996
Rating (a) ------------------- Par S&P Moody's (000) Value ------ --------- --------- ----------------- COMMERCIAL PAPER -- continued Household Products -- 5.8% Clorox Company 5.33% 4/8/96 ...................... A-1+ P-1 $20,000 $ 19,979,272 5.30% 4/22/96 ..................... A-1+ P-1 15,000 14,953,625 5.03% 5/28/96 ..................... A-1+ P-1 5,000 4,960,179 Colgate-Palmolive Co. 5.35% 4/4/96 ...................... A-1 P-1 15,000 14,993,313 5.09% 7/12/96 ..................... A-1 P-1 10,000 9,855,783 Procter & Gamble Co. 5.23% 4/12/96 ..................... A-1+ P-1 18,200 18,170,915 5.23% 4/17/96 ..................... A-1+ P-1 15,000 14,965,133 5.07% 5/13/96 ..................... A-1+ P-1 14,000 13,917,190 5.07% 6/11/96 ..................... A-1+ P-1 20,000 19,800,017 5.00% 6/12/96 ..................... A-1+ P-1 9,000 8,910,000 5.07% 6/14/96 ..................... A-1+ P-1 12,000 11,874,940 ----------------- 152,380,367 ----------------- Insurance, Property & Casualty -- 4.3% A.I. Credit Corp. 5.00% 5/7/96 ...................... A-1+ P-1 15,000 14,925,000 5.00% 5/13/96 ..................... A-1+ P-1 20,000 19,883,333 AIG Funding Inc. 5.30% 4/19/96 ..................... A-1+ P-1 15,000 14,960,250 5.30% 5/20/96 ..................... A-1+ P-1 10,000 9,927,861 5.20% 7/31/96 ..................... A-1+ P-1 15,000 14,737,833 Chubb Capital Corp. 5.55% 4/12/96 ..................... A-1+ P-1 24,200 24,160,473 Marsh & McLennan Companies Inc. 5.15% 9/27/96 ..................... A-1+ P-1 15,000 14,615,896 ----------------- 113,210,646 ----------------- Integrated Oil -- 3.7% Amoco Co. 5.18% 4/18/96 ..................... A-1+ P-1 17,106 17,064,157 Exxon Imperial U.S. Inc. 5.28% 4/17/96 ..................... A-1+ P-1 25,000 24,941,422 5.30% 4/26/96 ..................... A-1+ P-1 30,000 29,889,583 Shell Oil Co. 5.37% 4/4/96 ...................... A-1+ P-1 25,000 24,988,812 ----------------- 96,883,974 ----------------- Oil Transportation -- 0.6% Colonial Pipeline 5.25% 4/11/96 ..................... A-1+ P-1 6,600 6,590,375 5.12% 4/12/96 ..................... A-1+ P-1 10,000 9,984,356 ----------------- 16,574,731 -----------------
7 PRIME SERIES - - ------------------------------------------------------------------------------- Statement of Net Assets -- (continued) March 31, 1996
Rating (a) ------------------- Par S&P Moody's (000) Value ------ --------- --------- ----------------- COMMERCIAL PAPER -- continued Paper -- 1.3% Kimberly-Clark Corp. 5.13% 4/19/96 ..................... A-1+ P-1 $ 5,850 $ 5,834,995 5.30% 5/1/96 ...................... A-1+ P-1 20,000 19,911,667 5.27% 5/7/96 ...................... A-1+ P-1 8,000 7,957,840 ----------------- 33,704,502 ----------------- Pharmaceuticals -- 8.9% Abbott Laboratories 5.33% 4/25/96 ..................... A-1+ P-1 20,000 19,928,933 Eli Lilly & Co. 5.11% 4/23/96 ..................... A-1+ P-1 15,000 14,953,158 5.30% 5/23/96 ..................... A-1+ P-1 10,000 9,923,444 4.92% 6/17/96 ..................... A-1+ P-1 10,000 9,894,767 5.21% 6/20/96 ..................... A-1+ P-1 15,000 14,826,333 4.95% 8/20/96 ..................... A-1+ P-1 15,000 14,709,187 4.78% 8/22/96 ..................... A-1+ P-1 10,000 9,810,128 Pfizer Inc. 5.15% 4/4/96 ...................... A-1+ P-1 3,000 2,998,713 5.13% 4/17/96 ..................... A-1+ P-1 20,000 19,954,400 Schering-Plough Corp. 5.25% 5/24/96 ..................... A-1+ P-1 20,000 19,845,417 Warner-Lambert Co. 5.25% 6/10/96 ..................... A-1+ P-1 15,000 14,846,875 5.33% 6/12/96 ..................... A-1+ P-1 12,200 12,069,948 5.35% 6/18/96 ..................... A-1+ P-1 25,000 24,710,208 5.03% 7/30/96 ..................... A-1+ P-1 14,500 14,256,883 5.05% 7/30/96 ..................... A-1+ P-1 10,000 9,831,667 4.80% 8/8/96 ...................... A-1+ P-1 10,000 9,828,000 4.87% 9/3/96 ...................... A-1+ P-1 10,000 9,790,319 ----------------- 232,178,380 ----------------- Publishing -- 6.8% Dun & Bradstreet Corp. 5.30% 5/21/96 ..................... A-1+ P-1 20,000 19,852,778 Gannett Co. 5.22% 4/9/96 ...................... A-1 P-1 30,000 29,965,200 5.30% 4/11/96 ..................... A-1 P-1 26,200 26,161,428 5.27% 4/17/96 ..................... A-1 P-1 25,000 24,941,444 Knight-Ridder Inc. 5.60% 4/2/96 ...................... A-1+ P-1 25,000 24,996,111 5.25% 4/26/96 ..................... A-1+ P-1 10,000 9,963,542 5.07% 5/28/96 ..................... A-1+ P-1 25,000 24,799,312 McGraw-Hill, Inc. 5.50% 4/4/96 ...................... A-1 P-1 7,500 7,496,563 RR Donnelley & Sons 5.25% 4/26/96 ..................... A-1+ P-1 10,000 9,963,542 ----------------- 178,139,920 -----------------
8 PRIME SERIES - - ------------------------------------------------------------------------------- Statement of Net Assets -- (continued) March 31, 1996
Rating (a) ------------------- Par S&P Moody's (000) Value ------ --------- --------- ----------------- COMMERCIAL PAPER -- continued Railroad -- 1.5% Norfolk Southern Corporation 5.03% 6/7/96 ...................... A-1+ P-1 $12,500 $ 12,382,983 5.23% 6/21/96 ..................... A-1+ P-1 26,364 26,053,762 ----------------- 38,436,745 ----------------- Retail, Specialty -- 2.0% Toys "R" Us 5.30% 4/26/96 ..................... A-1 P-1 27,000 26,900,625 5.37% 5/6/96 ...................... A-1 P-1 25,000 24,869,479 ----------------- 51,770,104 ----------------- Structured Finance -- 6.5% CIESCO, L.P. 5.32% 4/11/96 ..................... A-1+ P-1 25,000 24,963,014 5.15% 5/8/96 ...................... A-1+ P-1 40,000 39,788,278 5.07% 5/23/96 ..................... A-1+ P-1 15,000 14,890,150 Corporate Asset Funding Company, Inc. 5.15% 4/4/96 ...................... A-1+ P-1 30,000 29,987,125 5.38% 4/22/96 ..................... A-1+ P-1 20,000 19,937,233 5.15% 5/2/96 ...................... A-1+ P-1 20,000 19,911,306 5.27% 5/23/96 ..................... A-1+ P-1 20,000 19,847,756 ----------------- 169,324,862 ----------------- Telephone -- 7.0% AT&T 5.50% 4/10/96 ..................... A-1+ P-1 10,000 9,986,250 5.30% 4/30/96 ..................... A-1+ P-1 15,000 14,935,958 5.18% 7/9/96 ...................... A-1+ P-1 15,000 14,786,325 Ameritech Capital Funding Corp. 5.07% 6/6/96 ...................... A-1+ P-1 30,000 29,721,150 5.02% 6/7/96 ...................... A-1+ P-1 20,000 19,813,144 5.20% 12/10/96 .................... A-1+ P-1 15,000 14,451,833 Ameritech Corp. 5.14% 4/12/96 ..................... A-1+ P-1 10,000 9,984,294 BellSouth Capital Fund 5.00% 5/7/96 ...................... A-1+ P-1 15,000 14,925,000 BellSouth Telecommunications 5.16% 4/23/96 ..................... A-1+ P-1 18,300 18,242,294 GTE North Inc. 5.48% 4/9/96 ...................... A-1+ P-1 20,000 19,975,644 Southwestern Bell Telephone Co. 5.32% 6/7/96 ...................... A-1+ P-1 15,000 14,851,483 ----------------- 181,673,375 -----------------
9 PRIME SERIES - - ------------------------------------------------------------------------------- Statement of Net Assets -- (continued) March 31, 1996
Rating (a) ------------------- Par S&P Moody's (000) Value ------ --------- --------- ----------------- COMMERCIAL PAPER -- continued Waste Management -- 0.4% WMX Technologies 4.78% 11/1/96 ..................... A-1 P-1 $ 10,000 $ 9,715,856 ----------------- TOTAL COMMERCIAL PAPER ........... -- 2,276,988,782 ----------------- VARIABLE RATE NOTE -- 1.9% Coca-Cola Master Note 5.382%(c) 7/22/96 .................. A-1+ P-1 50,000 50,000,000 ----------------- FEDERAL HOME LOAN BANK -- 0.6% FHLB 5.18% 4/24/96 ..................... AAA -- 15,000 14,950,358 ----------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 3.1% FNMA Discount Note 5.30% 4/16/96 ..................... -- P-1 25,000 24,944,792 5.18% 5/2/96 ...................... -- P-1 15,000 14,933,092 4.95% 9/5/96 ...................... -- P-1 10,000 9,784,125 Note 5.68% 10/7/96 ..................... AAA Aaa 20,000 20,017,657 5.39% 12/4/96 ..................... AAA Aaa 10,000 10,016,832 --------- ----------------- TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION ................... 80,000 79,696,498 --------- ----------------- REPURCHASE AGREEMENTS -- 7.0%(d) Goldman Sachs & Co. 5.37%(e) 4/1/96 ................... -- -- 83,000 83,000,000 Morgan Stanley & Co. 5.33%(f) 4/1/96 ................... -- -- 100,000 100,000,000 ----------------- TOTAL REPURCHASE AGREEMENTS .......................... 183,000,000 ----------------- TOTAL INVESTMENTS -- 100.1% ................................... $2,604,635,638(g) LIABILITIES IN EXCESS OF OTHER ASSETS, NET -- (0.1%) .......... (1,855,863) ----------------- NET ASSETS -- 100.0% .......................................... $ 2,602,779,775 =================
10 PRIME SERIES - - ------------------------------------------------------------------------------- Statement of Net Assets -- (continued) March 31, 1996
Value ------- Net Asset Value, Offering and Redemption Price Per: Prime Share ($2,386,681,216 / 2,386,684,392 shares outstanding) ........... $1.00 ======= Flag Investors Class A Share ($5,976,831 / 5,976,824 shares outstanding) .................. $1.00 ======= Flag Investors Class B Share ($10,200 / 10,200 shares outstanding) ........................ $1.00 ======= Institutional Prime Share ($53,699,315 / 53,699,535 shares outstanding) ................ $1.00 ======= Quality Cash Reserve Prime Share ($156,412,213 / 156,412,393 shares outstanding) .............. $1.00 =======
- - ------ (a) Ratings assigned by Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P") are not covered by the Independent Accountant's Report. (b) Most commercial paper is traded on a discount basis. In such cases, the interest rate shown represents the rate of discount paid or received at time of purchase by the Fund. (c) Master note is payable upon demand by the Fund with no more than five days' notice. Interest rates on master notes are redetermined weekly. Rates shown are the rates in effect on March 31, 1996. (d) Collateral on repurchase agreements is taken into possession by the Fund upon entering into the repurchase agreement. The collateral is marked to market daily to insure market value as being at least 102 percent of the resale price of the repurchase agreement. (e) Dated 3/29/96 to be repurchased on 4/1/96, collateralized by U.S. Treasury Notes with a market value of $84,660,143. (f) Dated 3/29/96 to be repurchased on 4/1/96, collateralized by U.S. Treasury Notes with a market value of $102,042,479. (g) Aggregate cost for financial reporting and federal tax purposes. MOODY'S RATINGS: Aaa Bonds that are judged to be of the best quality. P-1 Commercial paper bearing this designation is of the best quality. S&P RATINGS: AAA These are obligations of the highest quality. A-1 Commercial paper that has a strong degree of safety regarding timely payment. Those issues determined to possess very strong safety characteristics are denoted with a plus (+) sign. A detailed description of the above ratings can be found in the Fund's Statement of Additional Information. See Notes to Financial Statements. 11 PRIME SERIES - - ------------------------------------------------------------------------------- STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1996
Investment Income (Note 1): Interest income ................................ $120,275,367 -------------- Expenses: Distribution fee (Note 2) ...................... 5,575,592 Investment advisory fees (Note 2) ............... 5,134,900 Transfer agent fees ............................ 1,105,948 Custodian fees ................................. 272,140 Printing & postage fees ........................ 181,021 Registration fees .............................. 169,236 Accounting fees (Note 2) ....................... 150,692 Other expenses ................................. 125,781 Directors' fees ................................ 99,134 Legal fees ..................................... 65,876 -------------- Total expenses ............................... 12,880,320 Less: Fees waived (Note 2) ................. (59,331) -------------- Net expenses ............................. 12,820,989 -------------- Net investment income ............................... 107,454,378 Net realized loss from security transactions ...................................... (6,050) -------------- Net increase in net assets resulting from operations ................................... $107,448,328 ==============
See Notes to Financial Statements. 12 PRIME SERIES - - ------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS
March 31, March 31, 1996 1995 --------- --------- Increase/(Decrease) in net assets Operations: Net investment income ................................. $ 107,454,378 $ 64,805,363 Net realized gain/(loss) on sales of investments ...... (6,050) 355 -------------- --------------- Net increase in net assets resulting from operations... 107,448,328 64,805,718 Distributions to shareholders from: Net investment income: Prime Shares ....................................... (99,181,255) (59,535,578) Institutional Shares ............................... (1,334,079) (635,062) Flag Investors Class A Shares ...................... (402,702) (699,891) Flag Investors Class B Shares ...................... (300) -- Quality Cash Reserve Prime Shares .................. (6,536,042) (3,934,832) -------------- --------------- Total distributions ................................ (107,454,378) (64,805,363) Capital share transactions, net - (Note 3) .............. 1,016,482,516 101,735,438 -------------- --------------- Total increase in net assets .......................... 1,016,476,466 101,735,793 Net assets: Beginning of year .................................. 1,586,303,309 1,484,567,516 -------------- --------------- End of year ........................................ $2,602,779,775 $1,586,303,309 ============== ===============
See Notes to Financial Statements. 13 PRIME SERIES - - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR) PRIME SHARES
Year ended March 31, ----------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 -------------- -------------- -------------- -------------- -------------- Per Share Operating Performance: Net asset value at beginning of year ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------------- -------------- -------------- -------------- -------------- Income from Investment Operations: Net investment income ........ 0.0524 0.0442 0.0262 0.0295 0.0485 Less Distributions: Dividends from net investment income and/or short-term gains ..................... (0.0524) (0.0442) (0.0262) (0.0295) (0.0485) -------------- -------------- -------------- -------------- -------------- Net asset value at end of year ...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ============== ============== ============== ============== ============== Total Return: Based on net asset value per share ..................... 5.36% 4.51% 2.65% 2.99% 4.96% Ratios to Average Daily Net Assets: Expenses ..................... 0.60% 0.61% 0.62% 0.63% 0.61% Net investment income ........ 5.21% 4.46% 2.62% 2.95% 4.84% Supplemental Data: Net assets at end of year .... $2,386,681,216 $1,472,079,739 $1,350,334,979 $1,470,711,552 $1,505,012,086 Number of shares outstanding at end of year ............ 2,386,684,392 1,472,077,488 1,350,332,916 1,470,709,489 1,505,010,023
See Notes to Financial Statements. 14 PRIME SERIES - - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR) FLAG INVESTORS CASH RESERVE PRIME SHARES -- CLASS A
Year ended March 31, --------------------------------------------------------------------------- 1996 1995 1994 1993 1992 ------------ ------------ ------------- ------------- ------------ Per Share Operating Performance: Net asset value at beginning of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------------ ------------ ------------- ------------- ------------ Income from Investment Operations: Net investment income .... 0.0524 0.0442 0.0262 0.0295 0.0485 Less Distributions: Dividends from net investment income and/or short-term gains ................. (0.0524) (0.0442) (0.0262) (0.0295) (0.0485) ------------ ------------ ------------- ------------- ------------ Net asset value at end of year .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ============ ============ ============= ============= ============ Total Return: Based on net asset value per share ................. 5.36% 4.51% 2.65% 2.99% 4.96% Ratios to Average Daily Net Assets: Expenses ................. 0.60% 0.61% 0.62% 0.63% 0.61% Net investment income .... 5.25% 4.26% 2.62% 2.95% 4.84% Supplemental Data: Net assets at end of year . $5,976,831 $7,726,696 $18,116,648 $10,392,282 $7,350,424 Number of shares outstanding at end of year ........ 5,976,824 7,726,698 18,116,633 10,392,267 7,350,409
See Notes to Financial Statements. 15 PRIME SERIES - - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD) FLAG INVESTORS CASH RESERVE PRIME SHARES -- CLASS B
April 3, 1995* through March 31, 1996 -------------- Per Share Operating Performance: Net asset value at beginning of year ..... $ 1.00 -------------- Income from Investment Operations: Net investment income .................... 0.0361 Less Distributions: Dividends from net investment income ..... (0.0361) -------------- Net asset value at end of year .................................. $ 1.00 ============== Total Return: Based on net asset value per share ....... 3.69%** Ratios to Average Daily Net Assets: Expenses ................................. 1.38%** Net investment income .................... 4.30%** Supplemental Data: Net assets at end of year ................ $ 10,200 Number of shares outstanding at end of year 10,200
- - ------ * Commencement of operations. ** Annualized. See Notes to Financial Statements. 16 PRIME SERIES - - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) INSTITUTIONAL PRIME SHARES
Year ended March 31, ------------------------------------------------------------------------------ 1996 1995 1994 1993 1992 ------------- ------------- ------------- ------------- ------------- Per Share Operating Performance: Net asset value at beginning of year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------------- ------------- ------------- ------------- ------------- Income from Investment Operations: Net investment income .......... 0.0548 0.0472 0.0294 0.0327 0.0515 Less Distributions: Dividends from net investment income and/or short-term gains ....................... (0.0548) (0.0472) (0.0294) (0.0327) (0.0515) ------------- ------------- ------------- ------------- ------------- Net asset value at end of year . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ============= ============= ============= ============= ============= Total Return: Based on net asset value per share ......................... 5.62% 4.82% 2.98% 3.32% 5.27% Ratios to Average Daily Net Assets: Expenses ....................... 0.35% 0.36% 0.30% 0.31% 0.32% Net investment income .......... 5.32% 4.57% 2.94% 3.24% 5.34% Supplemental Data: Net assets at end of year ...... $53,699,315 $11,904,716 $23,437,449 $28,884,078 $21,867,108 Number of shares outstanding at end of year ................. 53,699,535 11,904,663 23,437,512 28,884,132 21,867,108
See Notes to Financial Statements. 17 PRIME SERIES - - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) QUALITY CASH RESERVE PRIME SHARES
Year ended March 31, May 6, 1991* ----------------------------------------------------------------- through 1996 1995 1994 1993 March 31, 1992 ------------- ------------ ----------- ------------- -------------- Per Share Operating Performance: Net asset value at beginning of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------------ ----------- ----------- ------------ ----------- Income from Investment Operations: Net investment income ......... 0.0493 0.0402 0.0218 0.0253 0.0399 Less Distributions: Dividends from net investment income and/or short-term gains .......... (0.0493) (0.0402) (0.0218) (0.0253) (0.0399) ------------ ----------- ----------- ------------ ----------- Net asset value at end of year ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ============ =========== =========== ============ =========== Total Return: Based on net asset value per share ................ 5.04% 4.09% 2.20% 2.53% 4.30%** Ratios to Average Daily Net Assets: Expenses .................... 0.90%(1) 0.96% 1.06% 1.04% 0.96%** Net investment income ....... 4.91%(2) 4.04% 2.18% 2.53% 4.30%** Supplemental Data: Net assets at end of year....... $156,412,213 $94,592,158 $92,678,440 $101,321,868 $94,887,669 Number of shares outstanding at end of year............. 156,412,393 94,591,979 92,678,268 101,321,668 94,887,669
- - ------ * Commencement of operations. ** Annualized. 1 Ratio of expenses to average daily net assets prior to partial fee waviers was 0.95% for the year ended March 31, 1996. 2 Ratio of net investment income to average daily net assets prior to partial fee waivers was 4.86% for the year ended March 31, 1996. See Notes to Financial Statements. 18 Notes to Financial Statements March 31, 1996 NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES Alex. Brown Cash Reserve Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Fund is organized as a Maryland corporation consisting of three different portfolios, the Prime Series, the Treasury Series, and the Tax-Free Series. The Prime Series consists of five different classes of shares: Alex. Brown Cash Reserve Prime Shares ("Prime Shares"), Flag Investors Cash Reserve Prime Shares Class A ("Flag Investors Class A Shares"), Flag Investors Cash Reserve Prime Shares Class B ("Flag Investors Class B Shares"), Quality Cash Reserve Prime Shares ("Quality Cash Shares") and Institutional Prime Shares. Matters affecting each class are voted on exclusively by such shareholders. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuation -- The Fund maintains a dollar-weighted average maturity of 90 days or less for each portfolio. The securities of each portfolio are valued on the basis of amortized cost, which approximates market value. This method values a security at its cost on the date of purchase, and thereafter, assumes a constant amortization to maturity of any original issue or other discount or premium. B. Security Transactions, Investment Income and Distributions -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales, if any, are computed on the basis of specific identification of the securities sold. Interest income is recorded on an accrual basis and includes, when applicable, amortization of premiums and accretion of discounts. Dividends to shareholders are declared daily and distributions or reinvestments of the dividends are made monthly. C. Repurchase Agreement -- The Prime Series may agree to purchase money market instruments subject to the seller's agreement to repurchase them at an agreed upon date and price. The seller, under a repurchase agreement, will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price. The agreement is conditioned upon the collateral being deposited under the Federal Reserve book-entry system. 19 Notes to Financial Statements -- (continued) March 31, 1996 NOTE 1 -- CONCLUDED D. Federal Income Taxes -- The Fund intends to continue to comply with the requirements of the Internal Revenue Code necessary to continue to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. E. Expenses -- Operating expenses directly attributable to a class of shares are charged to that class' operations. Expenses of the Fund which are not directly attributable to a specific class are prorated among the classes to which the expense relates based on the relative net assets of each class. NOTE 2 -- ADVISORY FEES AND TRANSACTIONS WITH OTHER AFFILIATES The Fund has entered into an investment advisory agreement with Investment Company Capital Corp. ("ICC"), a subsidiary of Alex. Brown Financial Corp., with respect to the Prime Series. Under the terms of the investment advisory agreement, ICC receives a fee from the Fund, calculated daily and paid monthly, at the following annual rates based upon the Fund's aggregate average daily net assets: .30% of the first $500 million, .26% of the next $500 million, .25% of the next $500 million, .24% of the next $1 billion, .23% of the next $1 billion and .22% of 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, calculated daily and paid monthly, at the annual rate of .02% of the Prime Series' average daily net assets. Prior to August 23, 1995, ICC received a fee from the Fund, calculated daily and paid monthly, at the following annual rates based upon the Fund's aggregate average daily net assets: .25% of the first $500 million, .21% of the next $500 million, .20% of the next $500 million and .19% of that portion in excess of $1.5 billion. ICC may, from time to time, voluntarily waive a portion of its advisory fee with respect to the Prime Series to preserve or enhance the performance of each Series as compared to certain industry benchmarks. No advisory fees were waived for the year ended March 31, 1996. Under the terms of these agreements, ICC and the Fund's distributor will, if necessary, reimburse the Fund for any fiscal year to the extent that expenses (exclusive of any interest, taxes, brokerage commissions and extraordinary expenses) exceed 1% of aggregate average daily net assets of the Prime Series. The obligation of ICC to reimburse the Fund is limited to the fees actually received by ICC for such fiscal year. As compensation for its accounting services, ICC receives from the Prime Series an annual fee, calculated daily and paid monthly, based on the Fund's average daily net assets. ICC received $150,692 for accounting services for the year ended March 31, 1996 for the Prime Series. 20 Notes to Financial Statements -- (continued) March 31, 1996 As compensation for its transfer agent services, ICC receives from the Prime Series a per account fee, calculated and paid monthly. ICC received $1,105,948 for transfer agent services for the year ended March 31, 1996 for the Prime Series. The Fund has entered into a distribution agreement with Alex. Brown & Sons Incorporated ("Alex. Brown"). Under the terms of the distribution agreement, Alex. Brown receives a fee from the Prime Shares and Flag Investors Class A Shares, at the annual rate of .25% of the aggregate average daily net assets of these classes of shares. Alex. Brown also receives a fee from the Quality Cash Shares and the Flag Investors Class B Shares at the annual rate of .60% and 1.00%, respectively, of the aggregate average daily net assets of the class. Alex. Brown voluntarily waived distribution fees in the amount of $59,331 for the Quality Cash Shares for the year ended March 31, 1996. The fund complex of which the Fund is a part has adopted a retirement plan for eligible Directors. The actuarially computed pension expense for the year ended March 31, 1996 was approximately $72,000 for the Prime Series. NOTE 3 -- CAPITAL STOCK AND SHARE INFORMATION The Fund is authorized to issue up to 6,400,000,000 shares of $.001 par value capital stock (3,550,000,000 Prime Series). Changes in shares outstanding during the years ended March 31, 1996 and March 31, 1995 are listed below.
March 31, 1996 March 31, 1995 ---------------- ---------------- Prime Series: Sold: Prime Shares .................. 19,439,463,533 10,195,279,007 Flag Investors Class A Shares . 12,118,053 16,905,684 Flag Investors Class B Shares . 24,535 -- Institutional Prime Shares .... 213,159,539 60,472,629 Quality Cash Shares ........... 1,285,040,597 509,661,769 Issued as reinvestment of dividends: Prime Shares .................. 93,103,137 57,178,155 Flag Investors Class A Shares . 374,561 666,245 Institutional Prime Shares .... 753,855 40,493 Quality Cash Shares ........... 6,300,386 3,847,996 Redeemed: Prime Shares .................. (18,617,959,766) (10,130,712,590) Flag Investors Class A Shares . (14,242,488) (27,961,864) Flag Investors Class B Shares . (14,335) -- Institutional Prime Shares .... (172,118,522) (72,045,971) Quality Cash Shares ........... (1,229,520,569) (511,596,054) ---------------- ---------------- Net increase ............. 1,016,482,516 101,735,499 ================ ================
NOTE 4 -- NET ASSETS At March 31, 1996, net assets consisted of:
Prime Series -------------- Paid-in-capital ............................................. $2,602,785,854 Undistributed net realized gain/(loss) on sales of investments (6,079) -------------- $2,602,779,775 ==============
21 REPORT OF INDEPENDENT ACCOUNTANTS To The Shareholders and Board of Directors of Flag Investors Cash Reserve Prime Shares: We have audited the accompanying statements of net assets of the Prime Series of Alex. Brown Cash Reserve Fund, Inc. as of March 31, 1996, and the related statement of operations for the year then ended and the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the three years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the respective years in the period ended March 31, 1993 were audited by other auditors whose report dated May 7, 1993, expressed an unqualified opinion thereon. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned as of March 31, 1996 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Prime Series of Alex. Brown Cash Reserve Fund, Inc. as of March 31, 1996, and the results of their operations for the year then ended and the changes in their net assets for each of the two years in the period then ended and their financial highlights for each of the three years in the period then ended, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Baltimore, Maryland May 10, 1996 22 BOARD OF DIRECTORS W. JAMES PRICE LOUIS E. LEVY Chairman Director CHARLES W. COLE JR. EUGENE J. McDONALD Director Director JAMES J. CUNNANE REBECCA W. RIMEL Director Director RICHARD T. HALE CARL W. VOGT, Esq. Director Director JOHN F. KROEGER HARRY WOOLF Director Director - - ----------------------------------------------------------------------------- OFFICERS W. JAMES PRICE M. ELLIOTT RANDOLPH, JR. BRIAN C. NELSON Chairman Vice President Vice President & Secretary RICHARD T. HALE PAUL D. CORBIN President Vice President JOSEPH A. FINELLI Treasurer EDWARD J. VEILLEUX Executive Vice President MONICA M. HAUSNER LAURIE D. DEPRINE Vice President Assistant Secretary - - ----------------------------------------------------------------------------- Distributor Custodian ALEX. BROWN & SONS PNC BANK, N.A. INCORPORATED 17th and Chestnut Streets 135 East Baltimore Street Philadelphia, PA 19101 Baltimore, MD 21202 (410) 727-1700 Transfer Agent Investment Advisor INVESTMENT COMPANY CAPITAL CORP. INVESTMENT COMPANY CAPITAL CORP. 135 East Baltimore Street 135 East Baltimore Street Baltimore, MD 21202 Baltimore, MD 21202 (800) 553-8080 Auditors COOPERS & LYBRAND L.L.P. 217 E. Redwood Street Baltimore, MD 21202 - - ----------------------------------------------------------------------------- 23 LOGO FLAG INVESTORS MUTUAL FUNDS Growth Flag Investors Emerging Growth Fund Flag Investors Equity Partners Fund Flag Investors International Fund Equity Income Flag Investors Real Estate Securities Fund Flag Investors Telephone Income Fund Balanced Flag Investors Value Builder Fund Income Flag Investors Intermediate-Term Income Fund Flag Investors Total Return U.S. Treasury Fund Shares Tax-Free Income Flag Investors Managed Municipal Fund Shares Flag Investors Maryland Intermediate Tax-Free Income Fund Current Income Flag Investors Cash Reserve Prime Shares P.O. Box 515 Baltimore, Maryland 800-767-FLAG Distributed by: ALEX. BROWN & SONS INCORPORATED -----END PRIVACY-ENHANCED MESSAGE-----