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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 Short-Intermediate 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 21203
800-767-FLAG
Distributed by:
ICC Distributors, Inc.
<PAGE>
[Flag Investors Logo]
Flag
Investors
Cash Reserve
Prime
Shares
Semi-Annual Report
September 30, 1997
<PAGE>
Fund Features
________________________________________________________________________________
(bullet) Daily Dividends
The Fund declares dividends daily and distributes them monthly in the
form of additional 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 January 5, 1989.
However, there can be no assurance that the fund will be able to
maintain a net asset value of $1.00 per share.
(bullet) Minimum Investment
The minimum initial investment is $2,000. Subsequent investments may be
made in an amount of $100 or more.
<PAGE>
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 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. In addition, the Fund has provided a
competitive return, as shown in the chart below.
Performance Comparisons
30-Day Yield as of 9/30/97
- --------------------------------------------------------------------------------
Flag Investors Cash Reserve Prime Shares--Class A 4.93%
- --------------------------------------------------------------------------------
First Tier Rated Money Fund Average 4.97%
- --------------------------------------------------------------------------------
- ----------
Source: IBC/Donoghue, Inc. "Rated Money Fund Report," October 1997.
The yields shown represent past performance, which is no guarantee of future
results. An investment in a money market fund is neither insured nor guaranteed
by the U.S. government. The Rated Money Fund Average is the average yield of all
funds rated AAA by Standard & Poor's in the category.
1
<PAGE>
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
<PAGE>
Flag Investors Cash Reserve Prime Shares
_______________________________________________________________________________
Statement of Net Assets September 30, 1997
(Unaudited) Rating
------------- Par
Prime Series 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.
5.47% 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
<PAGE>
Flag Investors Cash Reserve Prime Shares
_______________________________________________________________________________
Statement of Net Assets (continued) September 30, 1997
(Unaudited) Rating
------------- Par
Prime Series 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
<PAGE>
Flag Investors Cash Reserve Prime Shares
_______________________________________________________________________________
Rating
------------- Par
Prime Series 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
5
<PAGE>
Flag Investors Cash Reserve Prime Shares
_______________________________________________________________________________
Statement of Net Assets (continued) September 30, 1997
(Unaudited) Rating
------------- Par
Prime Series S&P Moody's (000) Value
- -------------------------------------------------------------------------------
Commercial Paper -- continued
Food - concluded
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
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
--------------
6
<PAGE>
Flag Investors Cash Reserve Prime Shares
_______________________________________________________________________________
Rating
------------- Par
Prime Series S&P Moody's (000) Value
- -------------------------------------------------------------------------------
Commercial Paper -- continued
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
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
7
<PAGE>
Flag Investors Cash Reserve Prime Shares
_______________________________________________________________________________
Statement of Net Assets (continued) September 30, 1997
(Unaudited) Rating
------------- Par
Prime Series S&P Moody's (000) Value
- -------------------------------------------------------------------------------
Commercial Paper -- continued
Pharmaceuticals - concluded
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
--------------
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
8
<PAGE>
Flag Investors Cash Reserve Prime Shares
_______________________________________________________________________________
Rating
------------- Par
Prime Series S&P Moody's (000) Value
- -------------------------------------------------------------------------------
Commercial Paper -- concluded
Structured Finance - concluded
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
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
--------------
9
<PAGE>
Flag Investors Cash Reserve Prime Shares
_______________________________________________________________________________
Statement of Net Assets (concluded) September 30, 1997
(Unaudited) Rating
------------- Par
Prime Series S&P Moody's (000) Value
- -------------------------------------------------------------------------------
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
--------------
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
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
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 ratings can be found in the
Fund's Statement of Additional Information.
See Notes to Financial Statements.
11
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
Statement of Operations
For the Six
Months Ended
Prime Series September 30,
- --------------------------------------------------------------------------------
1997(1)
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
-----------
- ----------
(1) Unaudited.
See Notes to Financial Statements.
12
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
Statement of Changes in Net Assets
For the Six For the
Months Ended Year Ended
Prime Series 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
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
Financial Highlights--Prime Shares
(For a share outstanding throughout each period)
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
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
<TABLE>
<CAPTION>
For the Year Ended March 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
<S> <C>
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
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
Financial Highlights--Flag Investors Class A Shares
(For a share outstanding throughout each period)
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
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
<TABLE>
<CAPTION>
For the Year Ended March 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
<S> <C>
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
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
Financial Highlights--Flag Investors Class B Shares
(For a share outstanding throughout each period)
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
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
<TABLE>
<CAPTION>
For the Period
For the Year April 3, 1995(2)
Ended through
March 31, March 31,
- -----------------------------------------------------------------------------------------
1997 1996
<S> <C>
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
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
Financial Highlights--Prime Institutional Shares
(For a share outstanding throughout each period)
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
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
<TABLE>
<CAPTION>
For the Year Ended March 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
<S> <C>
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
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
Financial Highlights--Quality Cash Reserve Prime Shares
(For a share outstanding throughout each period)
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
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
<TABLE>
<CAPTION>
For the Year Ended March 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
<S> <C>
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
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
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
24
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
NOTE 1--concluded
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
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.
25
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
Notes to Financial Statements (continued)
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.
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.
26
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
NOTE 2--concluded
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.
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.
27
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
Notes to Financial Statements (concluded)
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.
28
<PAGE>
Flag Investors Cash Reserve Prime Shares
________________________________________________________________________________
Directors and Officers
Richard T. Hale
Chairman
James J. Cunnane Carl W. Vogt, Esq.
Director Director
John F. Kroeger Harry Woolf
Director President
Louis E. Levy Amy M. Olmert
Director Secretary
Eugene J. McDonald Joseph A. Finelli
Director Treasurer
Rebecca W. Rimel Laurie D. Collidge
Director Assistant Secretary
Truman T. Semans
Director
Investment Objective
A money market fund designed to seek as high a level of current income as is
consistent with preservation of capital and liquidity.
This report is prepared for the general
information of shareholders. It is authorized for
distribution to prospective investors only when
preceded or accompanied by an effective
prospectus.
For more complete information regarding
any of the Flag Investors Funds, including
charges and expenses, obtain a prospectus from
your investment representative or directly from
the Fund at 1-800-767-FLAG. Read it carefully
before you invest.
