-----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, CrPXaMvuE4U9wtO2JW+g9/2tF5P/7DtSWLbQqmf51J6HBs5RbM3dGcoqX3vAtLx+ D2q0/ySCGtUDh6xZ+m7lzA== 0000950169-97-001065.txt : 19971127 0000950169-97-001065.hdr.sgml : 19971127 ACCESSION NUMBER: 0000950169-97-001065 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971126 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BT ALEX BROWN 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: SEC FILE NUMBER: 811-03196 FILM NUMBER: 97728669 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 FORMER COMPANY: FORMER CONFORMED NAME: BROWN ALEX CASH RESERVE FUND INC DATE OF NAME CHANGE: 19920703 N-30D 1 ALEX BROWN QUALITY CASH RESERVE Quality Cash Reserve Prime Shares Semi-Annual Report September 30, 1997 Fund Features ________________________________________________________________________________ (bullet) Daily Dividends The Fund declares dividends daily and distributes them monthly in the form of additional shares. (bullet) Check Redemption Privilege After completing an authorization form, you may redeem your shares by writing a check (in a minimum amount of $250) on your account. You will continue to earn dividends until your check reaches the bank for clearance. (bullet) No Sales Charge and Immediate Liquidity You may buy or redeem shares in your account at any time. There is no sales charge or penalty imposed by the Fund for the purchase or redemption of shares. (bullet) Constant Net Asset Value The Fund will attempt to maintain a constant net asset value of $1.00 per share and has done so since its inception on May 6, 1991. However, there can be no assurance that the Fund will be able to maintain a net asset value of $1.00 per share. An investment in a money market fund is neither insured nor guaranteed by the U.S. government. (bullet) Minimum Investment The minimum initial investment is $1,500. Subsequent investments may be made in an amount of $100 or more. (bullet) Current Yield Information Available For current yield information, call (410) 895-5995. This report is prepared for the general information of shareholders of Quality Cash Reserve Prime Shares. It may be distributed only to current shareholders or to persons who have received a current prospectus. Letter to Shareholders ________________________________________________________________________________ October 29, 1997 We are pleased to report on the progress of your Fund for the six months ended September 30, 1997. Period in Review The Federal Reserve Board's increase of the closely watched Federal Funds rate from 5.25% to 5.50% in March was unusual because it was not followed by further rate increases. Since the increase six months ago, there has been solid economic growth -- the Dow Jones Industrial Average has returned 15%, the yield on 10-year Treasury notes has decreased from just under 7% to nearly 6%, and inflation has declined to approximately 2%. Money market rates also declined during the six-month period, albeit modestly, with the yield on 3-month Treasury bills decreasing from 5.3% in March to 5% in September. International economies are beginning to struggle. European economies are dealing with the pressures associated with joining the European Monetary Union (EMU). Southeast Asia, once the fastest growing region in the world, has started to slow, precipitating stock market and currency declines. Domestically, the Federal Reserve has been enjoying a seemingly perfect economy, with both low unemployment and low inflation. However, Federal Reserve Chairman Alan Greenspan has caused some concern in the markets by questioning whether this environment can continue. The markets, which apparently had speculated that the Fed would continue to take no action on interest rates, were somewhat surprised by Chairman Greenspan's comments and have become more volatile in recent weeks. We continue to manage the Fund conservatively, as evidenced by the Standard & Poor's rating of the portfolio of which Quality Cash Reserve Prime Shares is a class. The portfolio maintains a "AAAm" rating, the highest that S&P awards to money market funds. 1 Letter to Shareholders (concluded) ________________________________________________________________________________ Market Outlook We expect the economy will continue to grow at a steady pace. The earnings growth of U.S. corporations remains in the 10% to 12% range, due in large part to productivity gains. Pricing power remains limited with skilled labor being the scarcest resource. Going forward, the Federal Reserve will be carefully weighing the tradeoff between continued growth and potential inflation. Inflation is not yet evident in the producer or consumer price indexes, but inflation remains the Fed's primary concern. However, with real yields (the difference between nominal yields and the inflation component) being historically high, it is difficult to imagine any near- term return to rampant inflation. We continue to believe that the conservative approach we apply to investing on behalf of the Fund will provide comfort to our shareholders as well as competitive yields. As always, we appreciate your support. Sincerely, /s/ Richard T. Hale ___________________ Richard T. Hale Chairman 2 Prime Series ________________________________________________________________________________ Statement of Net Assets September 30, 1997 (Unaudited) Rating --------------- Par S&P Moody's (000) Value - -------------------------------------------------------------------------------- Commercial Paper -- 87.4%(a) Automobiles & Trucks - 2.0% Ford Motor Credit Corp. 5.48% 10/2/97 A-1 P-1 $20,000 $ 19,996,956 5.55% 2/9/98 A-1 P-1 20,000 19,596,083 PACCAR Financial Corp. 5.50% 10/2/97 A-1+ P-1 15,000 14,997,708 Toyota Motor Credit Corp. .47% 10/14/97 A-1+ P-1 15,000 14,970,371 -------------- 69,561,118 -------------- Chemicals, General - 3.9% E.I. duPont de Nemours and Co. 5.61% 10/2/97 A-1+ P-1 10,000 9,998,441 5.49% 11/25/97 A-1+ P-1 10,000 9,916,125 5.55% 12/3/97 A-1+ P-1 20,000 19,805,750 5.62% 12/4/97 A-1+ P-1 20,000 19,800,178 5.54% 12/5/97 A-1+ P-1 25,000 24,749,931 5.46% 1/12/98 A-1+ P-1 25,000 24,609,458 5.47% 1/29/98 A-1+ P-1 25,000 24,544,167 -------------- 133,424,050 -------------- Computer & Office Equipment - 2.8% Pitney Bowes Credit Corp. 5.63% 10/1/97 A-1+ P-1 10,000 10,000,000 5.64% 11/26/97 A-1+ P-1 13,200 13,084,192 5.57% 12/11/97 A-1+ P-1 8,000 7,912,118 5.53% 1/9/98 A-1+ P-1 10,000 9,846,389 5.52% 1/13/98 A-1+ P-1 29,500 29,029,573 5.52% 1/15/98 A-1+ P-1 8,000 7,869,973 Xerox Corp. 5.47% 11/21/97 A-1 P-1 19,500 19,348,891 -------------- 97,091,136 -------------- Consumer Products - 2.4% Eastman Kodak Co. 5.47% 10/10/97 A-1+ P-1 22,500 22,469,231 5.48% 10/15/97 A-1+ P-1 20,000 19,957,378 5.49% 10/24/97 A-1+ P-1 20,000 19,929,850 5.55% 10/29/97 A-1+ P-1 20,000 19,913,667 -------------- 82,270,126 -------------- 3 Prime Series ________________________________________________________________________________ Statement of Net Assets (continued) September 30, 1997 (Unaudited) Rating --------------- Par S&P Moody's (000) Value - -------------------------------------------------------------------------------- Commercial Paper (continued) Credit Unions - 2.6% Central Corporate Credit Union 5.55% 10/15/97 A-1+ P-1 $18,000 $ 17,961,150 Mid-States Corporate Federal Credit Union 5.58% 10/24/97 A-1+ P-1 22,100 22,021,213 U.S. Central Credit Union 5.49% 11/17/97 A-1+ P-1 20,000 19,856,650 5.48% 12/5/97 A-1+ P-1 30,000 29,703,167 -------------- 89,542,180 -------------- Electrical & Electronics - 4.6% Emerson Electric Co. 5.50% 1/8/98 A-1+ P-1 28,500 28,068,937 General Electric Co. 5.50% 12/22/97 A-1+ P-1 25,000 24,686,806 5.50% 12/31/97 A-1+ P-1 15,000 14,791,458 Motorola Inc. 5.47% 10/24/97 A-1+ P-1 60,000 59,790,317 5.46% 11/3/97 A-1+ P-1 30,000 29,849,850 -------------- 157,187,368 -------------- Electric Utility - 2.1% Duke Energy Co. 5.49% 10/14/97 A-1+ P-1 20,000 19,960,350 Northern States Power Co. 5.51% 10/10/97 A-1+ P-1 25,000 24,965,562 5.48% 10/31/97 A-1+ P-1 27,855 27,727,796 -------------- 72,653,708 -------------- Entertainment - 1.0% Walt Disney Co. 5.21% 11/19/97 A-1 P-1 20,000 19,858,172 5.20% 11/25/97 A-1 P-1 15,000 14,880,833 -------------- 34,739,005 -------------- Finance, Commercial - 0.6% CIT Group Holdings Inc. 5.45% 11/10/97 A-1 P-1 20,000 19,878,889 -------------- 4 Prime Series ________________________________________________________________________________ Rating --------------- Par S&P Moody's (000) Value - -------------------------------------------------------------------------------- Commercial Paper (continued) Finance, Consumer - 4.2% USAA Capital Corp. 5.54% 10/7/97 A-1+ P-1 $15,000 $ 14,986,150 5.47% 10/27/97 A-1+ P-1 15,000 14,940,742 5.50% 11/6/97 A-1+ P-1 10,000 9,945,000 5.50% 11/10/97 A-1+ P-1 10,155 10,092,942 5.49% 11/12/97 A-1+ P-1 30,000 29,807,850 5.51% 11/14/97 A-1+ P-1 15,000 14,898,983 5.49% 12/2/97 A-1+ P-1 20,000 19,810,900 5.55% 1/9/98 A-1+ P-1 15,000 14,768,750 5.52% 2/10/98 A-1+ P-1 15,000 14,696,400 -------------- 143,947,717 -------------- Finance, Diversified - 3.1% General Electric Capital Corp. 5.57% 10/1/97 A-1+ P-1 15,000 15,000,000 5.60% 10/9/97 A-1+ P-1 15,000 14,981,333 5.48% 10/14/97 A-1+ P-1 13,339 13,312,604 5.50% 11/3/97 A-1+ P-1 15,000 14,924,375 5.57% 12/4/97 A-1+ P-1 10,000 9,900,978 5.57% 12/9/97 A-1+ P-1 24,700 24,436,307 5.48% 1/13/98 A-1+ P-1 15,000 14,762,533 -------------- 107,318,130 -------------- Food - 10.8% Campbell Soup Co. 5.42% 10/8/97 A-1+ P-1 10,000 9,989,461 5.53% 11/20/97 A-1+ P-1 10,000 9,923,194 5.48% 12/1/97 A-1+ P-1 25,000 24,767,861 5.53% 12/3/97 A-1+ P-1 20,000 19,806,450 5.54% 4/17/98 A-1+ P-1 4,000 3,878,120 Cargill, Inc. 5.48% 10/3/97 A-1+ P-1 20,000 19,993,911 5.40% 10/7/97 A-1+ P-1 15,000 14,986,500 5.52% 10/10/97 A-1+ P-1 20,000 19,972,400 5.48% 10/14/97 A-1+ P-1 20,000 19,960,422 5.53% 10/16/97 A-1+ P-1 9,000 8,979,263 5.47% 11/3/97 A-1+ P-1 20,000 19,899,717 5.47% 1/26/98 A-1+ P-1 20,000 19,644,450 General Mills Inc. 5.55% 11/6/97 A-1 P-1 15,000 14,917,500 Hershey Foods 5.46% 10/20/97 A-1+ P-1 25,000 24,927,958 5.48% 11/14/97 A-1+ P-1 15,000 14,899,533 5.48% 11/25/97 A-1+ P-1 33,000 32,723,717 5.48% 12/12/97 A-1+ P-1 25,700 25,418,328 5 Prime Series ________________________________________________________________________________ Statement of Net Assets (continued) September 30, 1997 (Unaudited) Rating --------------- Par S&P Moody's (000) Value - -------------------------------------------------------------------------------- Commercial Paper (continued) Food (concluded) Kellogg Co. 5.48% 10/10/97 A-1+ P-1 $17,000 $ 16,976,710 5.48% 10/23/97 A-1+ P-1 23,833 23,753,186 5.49% 12/10/97 A-1+ P-1 25,000 24,733,125 -------------- 370,151,806 -------------- Household Products - 4.2% Procter & Gamble Co. 5.47% 10/2/97 A-1+ P-1 25,000 24,996,201 5.48% 10/8/97 A-1+ P-1 16,680 16,662,227 5.46% 11/19/97 A-1+ P-1 40,000 39,702,733 5.46% 11/21/97 A-1+ P-1 29,200 28,974,138 5.48% 12/10/97 A-1+ P-1 20,000 19,786,889 5.48% 12/22/97 A-1+ P-1 15,000 14,812,767 -------------- 144,934,955 -------------- Insurance, Brokerage - 1.4% Marsh & McLennan Companies Inc. 5.38% 10/3/97 A-1+ P-1 30,000 29,991,041 5.60% 3/5/98 A-1+ P-1 20,000 19,517,778 -------------- 49,508,819 -------------- Insurance, Property & Casualty - 3.3% A.I. Credit Corp. 5.54% 10/20/97 A-1+ P-1 15,000 14,956,142 5.50% 1/9/98 A-1+ P-1 25,000 24,618,056 5.48% 1/14/98 A-1+ P-1 20,000 19,680,333 Chubb Capital Corp. 5.51% 10/1/97 A-1+ P-1 54,795 54,795,000 -------------- 114,049,531 -------------- Integrated Oil - 2.6% Amoco Co. 5.53% 10/17/97 A-1+ P-1 40,000 39,901,689 5.47% 1/21/98 A-1+ P-1 25,000 24,574,556 5.47% 1/22/98 A-1+ P-1 25,000 24,570,757 -------------- 89,047,002 -------------- Machinery & Tools - 1.9% Dover Corp. 5.70% 10/22/97 A-1 -- 19,650 19,584,664 5.52% 10/24/97 A-1 -- 20,000 19,929,467 5.60% 10/30/97 A-1 -- 15,000 14,932,333 6 Prime Series ________________________________________________________________________________ Rating --------------- Par S&P Moody's (000) Value - -------------------------------------------------------------------------------- Commercial Paper (continued) Machinery & Tools (concluded) Snap-On Incorporated 5.51% 10/28/97 A-1+ P-1 $10,000 $ 9,958,675 -------------- 64,405,139 -------------- Oil Transportation - 2.5% Colonial Pipeline Co. 5.47% 10/6/97 A-1+ P-1 17,500 17,486,705 5.48% 10/17/97 A-1+ P-1 23,100 23,043,739 5.64% 11/4/97 A-1+ P-1 10,000 9,946,733 5.60% 12/12/97 A-1+ P-1 10,000 9,888,000 5.60% 12/16/97 A-1+ P-1 9,200 9,091,236 5.53% 3/17/98 A-1+ P-1 15,000 14,615,204 -------------- 84,071,617 -------------- Paper - 1.6% Kimberly-Clark Corp. 5.50% 10/21/97 A-1+ P-1 25,000 24,923,611 5.50% 10/23/97 A-1+ P-1 19,500 19,434,458 5.48% 10/24/97 A-1+ P-1 11,500 11,459,737 -------------- 55,817,806 -------------- Pharmaceuticals - 13.3% Abbott Laboratories 5.47% 10/1/97 A-1+ P-1 35,000 35,000,000 5.47% 10/16/97 A-1+ P-1 60,000 59,863,250 5.50% 10/30/97 A-1+ P-1 25,000 24,889,236 Merck & Co., Inc. 5.46% 12/1/97 A-1+ P-1 70,000 69,351,621 Schering-Plough Corp. 5.65% 10/7/97 A-1+ P-1 18,000 17,983,050 5.58% 10/28/97 A-1+ P-1 18,000 17,924,670 5.50% 11/4/97 A-1+ P-1 9,385 9,336,250 5.64% 11/19/97 A-1+ P-1 28,650 28,430,064 5.47% 12/3/97 A-1+ P-1 11,775 11,662,284 5.50% 12/16/97 A-1+ P-1 11,500 11,366,472 5.48% 1/14/98 A-1+ P-1 8,700 8,560,945 5.49% 1/15/98 A-1+ P-1 30,000 29,515,050 Warner-Lambert Co. 5.48% 11/19/97 A-1+ P-1 53,150 52,753,560 5.46% 11/26/97 A-1+ P-1 20,000 19,830,133 5.46% 12/16/97 A-1+ P-1 25,000 24,711,833 5.46% 12/22/97 A-1+ P-1 35,000 34,564,717 -------------- 455,743,135 -------------- 7 Prime Series ________________________________________________________________________________ Statement of Net Assets (continued) September 30, 1997 (Unaudited) Rating --------------- Par S&P Moody's (000) Value - -------------------------------------------------------------------------------- Commercial Paper (continued) Publishing - 0.4% McGraw-Hill, Inc. 5.48% 12/18/97 A-1 P-1 $14,500 $ 14,327,837 -------------- Retail - 1.2% May Department Stores 5.48% 10/27/97 A-1 P-1 20,000 19,920,844 Wal-Mart Stores 5.50% 10/3/97 A-1+ P-1 20,000 19,993,889 -------------- 39,914,733 -------------- Structured Finance - 6.2% CIESCO, L.P. 5.52% 10/3/97 A-1+ P-1 15,000 14,995,400 5.49% 10/10/97 A-1+ P-1 25,000 24,965,688 5.50% 11/10/97 A-1+ P-1 20,000 19,877,778 5.50% 11/25/97 A-1+ P-1 25,000 24,789,931 5.53% 1/6/98 A-1+ P-1 20,000 19,701,994 Corporate Asset Funding Co., Inc. 5.50% 11/6/97 A-1+ P-1 30,000 29,835,000 5.52% 11/14/97 A-1+ P-1 25,000 24,831,333 5.52% 11/17/97 A-1+ P-1 25,000 24,819,833 Corporate Receivables Corp. 5.50% 10/17/97 A-1 P-1 30,000 29,926,667 -------------- 213,743,624 -------------- Telephone - 6.8% Ameritech Capital Funding Corp. 5.46% 11/10/97 A-1+ P-1 14,000 13,915,067 Ameritech Corp. 5.47% 10/29/97 A-1+ P-1 15,000 14,936,183 5.47% 11/6/97 A-1+ P-1 10,000 9,945,300 5.475% 11/7/97 A-1+ P-1 25,000 24,859,323 5.48% 12/4/97 A-1+ P-1 25,000 24,756,444 5.65% 12/5/97 A-1+ P-1 15,000 14,846,979 5.50% 12/29/97 A-1+ P-1 15,000 14,796,042 AT&T Corp. 5.44% 10/15/97 A-1+ P-1 50,000 49,894,222 8 Prime Series ________________________________________________________________________________ Rating --------------- Par S&P Moody's (000) Value - -------------------------------------------------------------------------------- Commercial Paper (concluded) Telephone (concluded) Bell Atlantic Network Funding Corp. 5.54% 10/16/97 A-1+ P-1 $15,000 $ 14,965,375 SBC Communications Inc. 5.49% 12/3/97 A-1+ P-1 35,000 34,663,738 5.50% 12/11/97 A-1+ P-1 15,000 14,837,292 -------------- 232,415,965 -------------- Transportation - 1.9% United Parcel Service of America 5.49% 11/3/97 A-1+ P-1 65,000 64,672,704 -------------- Total Commercial Paper 3,000,418,100 -------------- Medium-Term Note - 0.6% E.I. duPont de Nemours and Co. 5.59% 10/8/97 A-1+ P-1 9,500 9,499,925 Eli Lilly & Co. 6.20% 11/6/97 A-1+ P-1 10,000 10,003,834 -------------- Total Medium-Term Note 19,503,759 -------------- Variable Rate Note - 3.6% Associates Corp. Master Note 5.497%(b) 12/1/97 A-1+ P-1 75,000 75,000,000 Coca-Cola Co. Master Note 5.377%(b) 3/13/98 A-1+ P-1 50,000 50,000,000 -------------- Total Variable Rate Note 125,000,000 -------------- Federal Home Loan Bank - 1.6% FHLB 5.46% 12/12/97 AAA -- 15,000 14,998,863 5.81% 1/23/98 AAA -- 10,000 10,000,000 5.80% 8/13/98 AAA -- 15,000 15,000,000 5.86% 9/2/98 AAA -- 15,000 15,000,000 -------------- Total Federal Home Loan Bank 54,998,863 -------------- 9 Prime Series ________________________________________________________________________________ Statement of Net Assets (concluded) September 30, 1997 (Unaudited) Rating --------------- Par S&P Moody's (000) Value - -------------------------------------------------------------------------------- Federal National Mortgage Association - 3.2% FNMA Note 5.79% 10/16/97 -- P-1 $20,000 $ 20,000,000 5.688% 11/13/97 -- P-1 15,000 15,000,000 5.59% 12/18/97 -- P-1 35,000 35,000,000 5.52% 1/15/98 -- P-1 20,000 20,000,000 5.54% 3/12/98 -- P-1 20,000 20,000,000 -------------- Total Federal National Mortgage Association 110,000,000 -------------- Repurchase Agreements - 3.7%(c) Goldman, Sachs & Co. 6.11%(d) 10/1/97 -- -- 75,800 75,000,000 Morgan Stanley & Co. 5.95%(e) 10/1/97 -- -- 50,000 50,000,000 -------------- Total Repurchase Agreements 125,000,000 -------------- TOTAL INVESTMENTS - 100.1% 3,434,920,722(f) LIABILITIES IN EXCESS OF OTHER ASSETS, NET - (0.1%) (1,892,982) -------------- NET ASSETS - 100.0% $3,433,027,740 ============== 10 Prime Series ________________________________________________________________________________ - -------------------------------------------------------------------------------- Net Asset Value, Offering and Redemption Price Per: Prime Share ($2,938,450,337 / 2,938,441,857 shares outstanding) $1.00 ===== Flag Investors Class A Share ($6,920,887 / 6,920,623 shares outstanding) $1.00 ===== Flag Investors Class B Share ($380,804 / 380,804 shares outstanding) $1.00 ===== Prime Institutional Share ($273,187,869 / 273,187,590 shares outstanding) $1.00 ===== Quality Cash Reserve Prime Share ($214,087,843 / 214,087,161 shares outstanding) $1.00 ===== (a) 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. (b) Master note is payable upon demand by the Fund upon no more than five days' notice. Interest rates on master notes are redetermined weekly. Rates shown are the rates in effect on September 30, 1997. (c) Collateral on repurchase agreements is taken into possession by the broker's custodial bank upon entering into the repurchase agreement. The collateral is marked to market daily to insure market value as being as least 102% of the resale price of the repurchase agreement. (d) Dated 9/30/97, to be repurchased on 10/1/97, collateralized by U.S. Treasury Notes with a market value of $76,500,648. (e) Dated 9/30/97, to be repurchased on 10/1/97, collateralized by U.S. Treasury Notes with a market value of $51,007,747. (f) 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 Obligations that are of the highest quality. A-1 Commercial paper that has a strong degree of safety regarding timely payment. Those issues determined to possess very strong safety characteristics are denoted with a plus (+) sign. A detailed description of the above ratingscan be found in the Fund's Statement of Additional Information. See Notes to Financial Statements. 11 Prime Series ________________________________________________________________________________ Statement of Operations (Unaudited) For the six months ended September 30, 1997 - -------------------------------------------------------------------------------- Investment Income (Note 1): Interest income $87,054,105 ----------- Expenses: Investment advisory fee (Note 2) 4,090,678 Distribution fee (Note 2) 3,970,178 Transfer agent fee 1,568,681 Registration fees 518,500 Custodian fee 186,739 Directors' fees 152,800 Accounting fee (Note 2) 80,721 Printing & postage fees 80,290 Legal fees 31,265 Other expenses 124,940 ----------- Total expenses 10,804,792 Less: Fees waived (Note 2) (65,144) ----------- Net expenses 10,739,648 ----------- Net investment income 76,314,457 ----------- Net realized gain/(loss) from security transactions -- ----------- Net increase in net assets resulting from operations $76,314,457 =========== See Notes to Financial Statements. 12 Prime Series ________________________________________________________________________________ Statement of Changes in Net Assets September 30, 1997 - -------------------------------------------------------------------------------- For the Six For the Months Ended Year Ended September 30, March 31, ------------- ----------- 1997(1) 1997 Increase/(Decrease) in Net Assets Operations: Net investment income $ 76,314,457 $ 132,679,566 Net realized gain/(loss) on sales of investments -- 13,047 -------------- -------------- Net increase in net assets resulting from operations 76,314,457 132,692,613 Distributions to shareholders from: Net investment income: Prime Shares (65,730,315) (119,826,842) Prime Institutional Shares (5,694,643) (4,256,297) Flag Investors Class A Shares (168,552) (295,562) Flag Investors Class B Shares (6,546) (1,260) Quality Cash Reserve Prime Shares (4,714,401) (8,299,605) -------------- -------------- Total distributions (76,314,457) (132,679,566) Capital share transactions, net - (Note 3) 565,564,126 264,670,792 -------------- -------------- Total increase in net assets 565,564,126 264,683,839 Net Assets: Beginning of period 2,867,463,614 2,602,779,775 -------------- -------------- End of period $3,433,027,740 $2,867,463,614 ============== ============== - ---------- (1) Unaudited. See Notes to Financial Statements. 13 Prime Series ________________________________________________________________________________ Financial Highlights (For a share outstanding throughout each period) Prime Shares - -------------------------------------------------------------------------------- For the Six Months Ended September 30, ------------- 1997(1) Per Share Operating Performance: Net asset value at beginning of period $ 1.00 ---------- Income from Investment Operations: Net investment income 0.0246 Less Distributions: Dividends from net investment income (0.0246) ---------- Net asset value at end of period $ 1.00 ========== Total Return: Based on net asset value per share 4.95%(2) Ratios to Average Daily Net Assets: Expenses 0.67%(2) Net investment income 4.91%(2) Supplemental Data: Net assets at end of period $2,938,450,337 Number of shares outstanding at end of period 2,938,441,857 - --------- (1) Unaudited. (2) Annualized. 14 Prime Series ________________________________________________________________________________ Prime Shares (continued) - --------------------------------------------------------------------------------
For the Year Ended March 31, --------------------------------------------------------------------------- 1997 1996 1995 1994 1993 Per Share Operating Performance: Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ---------- --------- --------- --------- --------- Income from Investment Operations: Net investment income 0.0478 0.0524 0.0442 0.0262 0.0295 Less Distributions: Dividends from net investment income (0.0478) (0.0524) (0.0442) (0.0262) (0.0295) ---------- --------- --------- --------- --------- Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========== ========= ========= ========= ========= Total Return: Based on net asset value per share 4.88% 5.36% 4.51% 2.65% 2.99% Ratios to Average Daily Net Assets: Expenses 0.62% 0.60% 0.61% 0.62% 0.63% Net investment income 4.77% 5.21% 4.46% 2.62% 2.95% Supplemental Data: Net assets at end of period $2,545,532,365 $2,386,681,216 $1,472,079,739 $1,350,334,979 $1,470,711,552 Number of shares outstanding at end of period 2,545,523,885 2,386,684,392 1,472,077,488 1,350,332,916 1,470,709,489
- ---------- (1) Unaudited. (2) Annualized. See Notes to Financial Statements. 15 Prime Series ________________________________________________________________________________ Financial Highlights (For a share outstanding throughout each period) Flag Investors Cash Reserve Prime Shares--Class A - -------------------------------------------------------------------------------- For the Six Months Ended September 30, ------------- 1997(1) Per Share Operating Performance: Net asset value at beginning of period $ 1.00 ---------- Income from Investment Operations: Net investment income 0.0246 Less Distributions: Dividends from net investment income (0.0246) ---------- Net asset value at end of period $ 1.00 ========== Total Return: Based on net asset value per share 4.95%(2) Ratios to Average Daily Net Assets: Expenses 0.67%(2) Net investment income 4.90%(2) Supplemental Data: Net assets at end of period $6,920,887 Number of shares outstanding at end of period 6,920,623 - --------- (1) Unaudited. (2) Annualized. 16 Prime Series ________________________________________________________________________________ Flag Investors Cash Reserve Prime Shares -- Class A (continued) - --------------------------------------------------------------------------------
For the Year Ended March 31, --------------------------------------------------------------------------- 1997 1996 1995 1994 1993 Per Share Operating Performance: Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ---------- ---------- ---------- ----------- ---------- Income from Investment Operations: Net investment income 0.0478 0.0524 0.0442 0.0262 0.0295 Less Distributions: Dividends from net investment income (0.0478) (0.0524) (0.0442) (0.0262) (0.0295) ---------- ---------- ---------- ----------- ---------- Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========== ========== ========== =========== ========== Total Return: Based on net asset value per share 4.88% 5.36% 4.51% 2.65% 2.99% Ratios to Average Daily Net Assets: Expenses 0.63% 0.60% 0.61% 0.62% 0.63% Net investment income 4.78% 5.25% 4.26% 2.62% 2.95% Supplemental Data: Net assets at end of period $6,521,574 $5,976,831 $7,726,696 $18,116,648 $10,392,282 Number of shares outstanding at end of period 6,521,310 5,976,824 7,726,698 18,116,633 10,392,267
See Notes to Financial Statements. 17 Prime Series ________________________________________________________________________________ Financial Highlights (For a share outstanding throughout each period) Flag Investors Cash Reserve Prime Shares--Class B - -------------------------------------------------------------------------------- For the Six Months Ended September 30, ------------- 1997(1) Per Share Operating Performance: Net asset value at beginning of period $ 1.00 --------- Income from Investment Operations: Net investment income 0.0208 Less Distributions: Dividends from net investment income (0.0208) --------- Net asset value at end of period $ 1.00 ========= Total Return: Based on net asset value per share 4.19%(3) Ratios to Average Daily Net Assets: Expenses 1.42%(3) Net investment income 4.17%(3) Supplemental Data: Net assets at end of period $380,804 Number of shares outstanding at end of period 380,804 - --------- (1) Unaudited. (2) Commencement of operations. (3) Annualized. 18 Prime Series ________________________________________________________________________________ Flag Investors Cash Reserve Prime Shares--Class B (continued) - --------------------------------------------------------------------------------
For the Period For the Year April 3, 1995(2) Ended through March 31, March 31, ------------- ----------------- 1997 1996 Per Share Operating Performance: Net asset value at beginning of period $ 1.00 $ 1.00 -------- -------- Income from Investment Operations: Net investment income 0.0414 0.0361 Less Distributions: Dividends from net investment income (0.0414) (0.0361) -------- -------- Net asset value at end of period $ 1.00 $ 1.00 ======== ======== Total Return: Based on net asset value per share 4.22% 3.69%(3) Ratios to Average Daily Net Assets: Expenses 1.42% 1.38%(3) Net investment income 4.10% 4.30%(3) Supplemental Data: Net assets at end of period $227,098 $ 10,200 Number of shares outstanding at end of period 227,098 10,200
See Notes to Financial Statements. 19 Prime Series ________________________________________________________________________________ Financial Highlights (For a share outstanding throughout each period) Prime Institutional Shares - -------------------------------------------------------------------------------- For the Six Months Ended September 30, ------------- 1997(1) Per Share Operating Performance: Net asset value at beginning of period $ 1.00 -------- Income from Investment Operations: Net investment income 0.0258 Less Distributions: Dividends from net investment income (0.0258) -------- Net asset value at end of period $ 1.00 ======== Total Return: Based on net asset value per share 5.21%(2) Ratios to Average Daily Net Assets: Expenses 0.42%(2) Net investment income 5.20%(2) Supplemental Data: Net assets at end of period $273,187,869 Number of shares outstanding at end of period 273,187,590 - --------- (1) Unaudited. (2) Annualized. 20 Prime Series ________________________________________________________________________________ Prime Institutional Shares (continued) - --------------------------------------------------------------------------------
For the Year Ended March 31, --------------------------------------------------------------------------- 1997 1996 1995 1994 1993 Per Share Operating Performance: Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ---------- --------- --------- --------- --------- Income from Investment Operations: Net investment income 0.0503 0.0548 0.0472 0.0294 0.0327 Less Distributions: Dividends from net investment income (0.0503) (0.0548) (0.0472) (0.0294) (0.0327) ---------- --------- --------- --------- --------- Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ========== ========= ========= ========= ========= Total Return: Based on net asset value per share 5.15% 5.62% 4.82% 2.98% 3.32% Ratios to Average Daily Net Assets: Expenses 0.38% 0.35% 0.36% 0.30% 0.31% Net investment income 5.04% 5.32% 4.57% 2.94% 3.24% Supplemental Data: Net assets at end of period $117,812,047 $53,699,315 $11,904,716 $23,437,449 $28,884,078 Number of shares outstanding at end of period 117,811,768 53,699,535 11,904,663 23,437,512 28,884,132
See Notes to Financial Statements. 21 Prime Series ________________________________________________________________________________ Financial Highlights (For a share outstanding throughout each period) Quality Cash Reserve Prime Shares - -------------------------------------------------------------------------------- For the Six Months Ended September 30, ------------- 1997(1) Per Share Operating Performance: Net asset value at beginning of period $ 1.00 -------- Income from Investment Operations: Net investment income 0.0231 Less Distributions: Dividends from net investment income (0.0231) -------- Net asset value at end of period $ 1.00 ======== Total Return: Based on net asset value per share 4.66%(2) Ratios to Average Daily Net Assets: Expenses 0.96%(2,3) Net investment income 4.62%(2,4) Supplemental Data: Net assets at end of period $214,087,843 Number of shares outstanding at end of period 214,087,161 - ---------- (1) Unaudited. (2) Annualized. (3) Ratio of expenses to average daily net assets prior to partial fee waivers was 1.02%, 0.98% and 0.95% for the six months ended September 30, 1997 and the years ended March 31, 1997 and 1996, respectively. (4) Ratio of net investment income to average daily net assets prior to partial fee waivers was 4.56%, 4.43% and 4.86% for the six months ended September 30, 1997 and the years ended March 31, 1997 and 1996, respectively. 22 Prime Series ________________________________________________________________________________ Quality Cash Reserve Prime Shares (continued) - --------------------------------------------------------------------------------
For the Year Ended March 31, --------------------------------------------------------------------------- 1997 1996 1995 1994 1993 Per Share Operating Performance: Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- ------- ------- -------- Income from Investment Operations: Net investment income 0.0449 0.0493 0.0402 0.0218 0.0253 Less Distributions: Dividends from net investment income (0.0449) (0.0493) (0.0402) (0.0218) (0.0253) -------- -------- ------- ------- -------- Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======= ======= ======== Total Return: Based on net asset value per share 4.59% 5.04% 4.09% 2.20% 2.53% Ratios to Average Daily Net Assets: Expenses 0.91%(3) 0.90%(3) 0.96% 1.06% 1.04% Net investment income 4.50%(4) 4.91%(4) 4.04% 2.18% 2.53% Supplemental Data: Net assets at end of period $197,370,530 $156,412,213 $94,592,158 $92,678,440 $101,321,868 Number of shares outstanding at end of period 197,369,848 156,412,393 94,591,979 92,678,268 101,321,668
See Notes to Financial Statements. 23 Prime Series ________________________________________________________________________________ Notes to Financial Statements NOTE 1--Significant Accounting Policies BT Alex. Brown Cash Reserve Fund, Inc. (the "Fund"), formerly Alex. Brown Cash Reserve Fund, Inc., commenced operations August 11, 1981. The Fund is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end Investment Management Company. Its objective is to seek as high a level of current income as is consistent with preservation of capital and liquidity. The Fund consists of three portfolios: the Prime Series, the Treasury Series and the Tax-Free Series. The Prime Series consists of five classes: BT Alex. Brown Cash Reserve Prime Shares ("Prime Shares"), Flag Investors Cash Reserve Prime Shares Class A ("Flag Investors Class A Shares"), Flag Investors Cash Reserve Prime Shares Class B ("Flag Investors Class B Shares"), Quality Cash Reserve Prime Shares ("Quality Cash Shares") and BT Alex. Brown Cash Reserve Prime Institutional Shares ("Prime Institutional Shares"). The Treasury Series consists of two classes: BT Alex. Brown Cash Reserve Treasury Shares ("Treasury Shares") and BT Alex. Brown Cash Reserve Treasury Institutional Shares ("Treasury Institutional Shares"). The Tax-Free Series consists of two classes: BT Alex. Brown Cash Reserve Tax-Free Shares ("Tax-Free Shares") and BT Alex. Brown Tax-Free Institutional Shares ("Tax-Free Institutional Shares"). Shareholders can vote only on issues that affect the share classes they own. When preparing the Fund's financial statements, management makes estimates and assumptions to comply with generally accepted accounting principles. These estimates affect 1) the assets and liabilities that we report at the date of the financial statements; 2) the contingent assets and liabilities that we disclose at the date of the financial statements; and 3) the revenues and expenses that we report for the period. Our estimates could be different from the actual results. The Fund's significant accounting policies are: A. Security Valuation--Each portfolio has a weighted average maturity of 90 days or less. The Fund values portfolio securities on the basis of amortized cost, which approximates market value. Using this method, the Fund values a security at its cost when it is purchased. The Fund then assumes a constant amortization to maturity of any discount or premium. B. Repurchase Agreements--The Prime Series may enter into tri-party repurchase agreements with broker-dealers and domestic banks. A repurchase agreement is a short-term investment in which the Fund buys a debt security that the broker agrees to repurchase at a set time and price. The third party, which is the broker's custodial bank, holds the collateral in a separate account until the repurchase agreement matures. The agreement ensures that the collateral's market value, including any accrued interest, is sufficient if the broker defaults. The Fund's access to the collateral may be delayed or limited if the broker defaults and the value of the collateral declines or if the broker enters into an insolvency proceeding. C. Federal Income Taxes--The Fund determines its distributions according to income tax regulations, which may be different from generally accepted 24 Prime Series ________________________________________________________________________________ Notes to Financial Statements (continued) NOTE 1--concluded accounting principles. As a result, the Fund occasionally makes reclassifications within its capital accounts to reflect income and gains that are available for distribution under income tax regulations. The Fund is organized as a regulated investment company. As long as it maintains this status and distributes to its shareholders substantially all of its taxable net investment income and net realized capital gains, it will be exempt from most, if not all, federal income and excise taxes. As a result, the Fund has made no provisions for federal income taxes. Each portfolio is treated as a separate entity for federal income tax purposes. The Prime Series has a capital loss carryforward of $1,520 that may be carried forward to offset any capital gains. This capital loss carryforward begins to expire in the year 2005 if not used. D. Security Transactions, Investment Income and Distributions--The Fund uses the trade date to account for security transactions and the specific identification method for financial reporting and income tax purposes to determine the cost of investments sold or redeemed. Interest income is recorded on an accrual basis and includes the pro rata scientific method for amortization of premiums and accretion of discounts when appropriate. Dividends to shareholders are declared daily. Dividend distributions or reinvestments are made monthly. E. Expenses--Operating expenses for each share class are charged to that class' operations. If a Fund expense cannot be directly attributed to a share class, the expense is prorated among the classes that the expense affects and is based on the classes' relative net assets. NOTE 2--Investment Advisory Fees, Transactions with Affiliates and Other Fees Investment Company Capital Corp. ("ICC"), an indirect subsidiary of Bankers Trust New York Corporation, is the investment advisor for the Prime Series. Under the terms of the investment advisory agreement, the Fund pays ICC an annual fee based on the Fund's aggregate average daily net assets. This fee is calculated daily and paid monthly at the following annual rates: 0.30% of the first $500 million, 0.26% of the next $500 million, 0.25% of the next $500 million, 0.24% of the next $1 billion, 0.23% of the next $1 billion and 0.22% of the amount over $3.5 billion. The Prime Series pays an additional fee that is calculated daily and paid monthly at the annual rate of 0.02% of its average daily net assets. Prior to August 23, 1995, the Fund paid ICC a different annual fee based on the Fund's aggregate average daily net assets. This fee was calculated daily and paid monthly at the following annual rates: 0.25% of the first $500 million, 0.21% of the next $500 million, 0.20% of the next $500 million and 0.19% of the amount over $1.5 billion. 25 Prime Series ________________________________________________________________________________ Notes to Financial Statements (continued) NOTE 2--concluded As compensation for its accounting services, the Prime Series pays ICC an annual fee that is calculated daily and paid monthly from its average daily net assets. The Prime Series paid $80,721 to ICC for accounting services for the six months ended September 30, 1997. As compensation for its transfer agent services, the Prime Series pays ICC a per account fee that is calculated and paid monthly. The Prime Series paid $1,568,681 to ICC for transfer agent services for the six months ended September 30, 1997. As compensation for providing distribution services, the Prime Shares and Flag Investors Class A Shares pay ICC Distributors, Inc. ("ICC Distributors") an annual fee equal to 0.25% of these classes' average daily net assets. The Prime Shares and Flag Investors Class A Shares paid $3,348,079 and $8,593 for distribution services, respectively, for the six months ended September 30, 1997. The Quality Cash Shares and Flag Investors Class B Shares also pay ICC Distributors an annual fee for distribution services. This fee is equal to 0.60% of the Quality Cash Shares' aggregate average daily net assets or $611,936 and 1.00% of the Flag Investors Class B Shares' aggregate average daily net assets or $1,570 for the six months ended September 30, 1997. Prior to September 1, 1997, Alex. Brown & Sons Incorporated ("Alex. Brown") served as these classes' distributor for the same compensation and on substantially the same terms and conditions as ICC Distributors. ICC and ICC Distributors may voluntarily waive or reimburse a portion of their advisory or distribution fees for the Prime Series to preserve or enhance the series' performance. These voluntary waivers and reimbursements are not contractual and could change. Any reimbursements by ICC and ICC Distributors are limited to the fees they actually received for the fiscal year. ICC did not waive any advisory fees for the six months ended September 30, 1997. Alex. Brown and ICC Distributors voluntarily waived distribution fees of $65,144 for the Quality Cash Shares for the six months ended September 30, 1997. The Fund's complex offers a retirement plan for eligible Directors. The actuarially computed pension expense allocated to the Fund for the period April 1, 1997 to September 30, 1997 was $52,521 for the Prime Series, and the accrued liability on September 30, 1997 was $200,329 for the Prime Series. 26 Prime Series ________________________________________________________________________________ Notes to Financial Statements (concluded) NOTE 3--Capital Stock and Share Information The Fund is authorized to issue up to 8 billion shares of $.001 par value capital stock (4.9 billion Prime Series). Transactions in shares of the Prime Series were as follows: For the Six For the Months Ended Year Ended September 30, 1997(1) March 31, 1997 --------------------- -------------- Prime Series: Sold: Prime Shares 11,369,880,500 22,263,288,298 Flag Investors Class A Shares 3,206,149 9,331,912 Flag Investors Class B Shares 201,502 328,144 Prime Institutional Shares 2,406,523,910 912,825,877 Quality Cash Shares 568,353,311 1,001,597,821 Issued as reinvestment of dividends: Prime Shares 61,059,227 113,931,978 Flag Investors Class A Shares 161,160 281,420 Flag Investors Class B Shares 5,497 1,264 Prime Institutional Shares 4,043,078 3,084,567 Quality Cash Shares 4,546,262 8,045,624 Redeemed: Prime Shares (11,038,021,755) (22,218,380,783) Flag Investors Class A Shares (2,967,996) (9,068,618) Flag Investors Class B Shares (53,293) (112,510) Prime Institutional Shares (2,255,191,166) (851,798,212) Quality Cash Shares (556,182,260) (968,685,990) --------------- --------------- Net increase 565,564,126 264,670,792 =============== =============== - --------- (1) Unaudited. Note 4--Net Assets On September 30, 1997, net assets consisted of: Prime Series -------------- Paid-in capital $3,433,020,772 Undistributed net realized gain on sales of investments 6,968 -------------- $3,433,027,740 ============== Note 5--Shareholder Meeting Alex. Brown Incorporated, which was the parent corporation of the Fund's investment advisor, merged into a subsidiary of Bankers Trust New York Corporation on September 1, 1997. Due to the change in control of Alex. Brown Incorporated, the Fund held a special meeting for its shareholders on August 14, 1997. During the meeting, shareholders of the Prime Series approved a new Investment Advisory Agreement between the Fund and ICC. The new agreement is substantially the same as the former agreement. In addition, the Fund's shareholders elected the following Directors: James J. Cunnane, Richard T. Hale, John F. Kroeger, Louis E. Levy, Eugene J. McDonald, Rebecca W. Rimel, Truman T. Semans and Carl W. Vogt. 27 Board of Directors ________________________________________________________________________________ RICHARD T. HALE EUGENE J. McDONALD Chairman Director JAMES J. CUNNANE REBECCA W. RIMEL Director Director JOHN F. KROEGER TRUMAN T. SEMANS Director Director LOUIS E. LEVY CARL W. VOGT, Esq. Director Director Officers ________________________________________________________________________________ Harry Woolf Amy M. Olmert President Secretary Joseph A. Finelli Laurie D. Collidge Treasurer Assistant Secretary ________________________________________________________________________________ Distributor Custodian ICC Distributors, Inc. Bankers Trust Company P.O. Box 7558 130 Liberty Street Portland, ME 04101 New York, NY 10006 (207) 879-6200 Transfer Agent Investment Advisor Investment Company Capital Corp. Investment Company Capital Corp. One South Street One South Street Baltimore, MD 21202 Baltimore, MD 21202 (800) 553-8080 Auditors Coopers & Lybrand L.L.P. 2400 Eleven Penn Center Philadelphia, PA 19103 ________________________________________________________________________________ 28 This page intentionally left blank. QUALITY CASH RESERVE PRIME SHARES P.O. Box 1346 BULK RATE Baltimore, MD 21203 U.S. Postage PAID Baltimore, MD Permit No. 8614 -----END PRIVACY-ENHANCED MESSAGE-----