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FLAG
INVESTORS
CASH RESERVE
PRIME
SHARES
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1998
<PAGE>
FUND FEATURES
- --------------------------------------------------------------------------------
o Daily Dividends
The Fund declares dividends daily and distributes them monthly in the form of
additional shares.
o 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. Although the
Fund seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund. An investment in a money
market fund is neither insured nor guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
o 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
- --------------------------------------------------------------------------------
We are pleased to report on the progress of your Fund for the six months
ended September 30, 1998.
Market Activity
Two major forces dominated the money markets during the semi-annual
period--foreign activity and Federal Reserve Board policy. As for the former,
the hangover effects of the Asian financial crises, which began in Korea,
Indonesia, and Thailand, spread to China and Japan. Russia devalued its ruble
and defaulted on its debt payments, despite an International Monetary Fund (IMF)
bailout attempt in August. And focus is now on Brazil, where IMF and World Bank
funding is pending to ward off a potential devaluation. All of this supported a
flight to quality and, in particular, a U.S. Treasury rally.
As for Federal Reserve Board activity, anticipation of an official move
impacted the markets just as much as the actual policy change that came at the
very end of the six-month period. To be specific, in May, the markets were
watching continued weakness in the Asian markets and Fed intervention on behalf
of the Japanese yen. The consensus was that the robust U.S. economy might
outweigh Asian concerns and force a tightening of monetary policy. This was not
the case. The Fed did not make any adjustments to interest rates at either its
May or July meetings. Still, Chairman Alan Greenspan noted in July that
inflation seemed to have stopped falling and that history would support
significant declines in the stock market. Then, based on initial signs of U.S.
economic weakness for the month of August, namely the first slowdown in
employment in a long while, anticipation began to run high that the Fed would
have to ease its official monetary policy at its next meeting. In fact, the
Federal Reserve Board did lower the fed funds rate by 0.25% on September 29th,
bringing it to 5.25%.
Money markets also benefited over the semi-annual period from volatility in
the equity markets. This volatility led to a rally in the U.S. fixed income
market in general and to strong cash inflows into the money markets in
particular. Investors moved assets from equity funds, both domestic and foreign,
seeking both the greater liquidity and the perceived safety of the money
markets.
Even with all of these turbulent forces, the money market yield curve
remained flat through mid-September, when an inversion at the short portion of
the curve began. Usually, it takes four to six weeks for a cut in interest rates
by the Federal Reserve Board to fully impact money market yields. However, this
time, yields began to drop even before the September meeting, as the ease in
policy became more evident. As of September 30, the yield spread between
1
<PAGE>
LETTER TO SHAREHOLDERS (CONCLUDED)
- --------------------------------------------------------------------------------
30 day and 90-day commercial paper had inverted to -0.20%. The only exception to
this trend was in the tax-exempt market, where September 15th is the corporate
tax deadline, and thus short-term yields increased dramatically, as dealers
cheapened inventory to offset usual seasonal corporate selling.
Investment Review
We continue to manage the Fund conservatively, maintaining high portfolio
quality, adjusting weighted average maturities in response to market conditions,
and strictly limiting exposure to any particular issue. Evidence of our
insistence on these unusually high investment standards can be found in Standard
& Poor's (S&P) ratings 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. We have always believed that a money fund
is not a place to take chances or to speculate for additional yield.
Performance Comparisons
7-Day Yield as of 9/30/98
- ----------------------------------------------------------------------
Flag Investors Cash Reserve Prime Shares--Class A 5.00%
......................................................................
First Tier Rated Money Fund Average 4.99%
......................................................................
- ------------
Source: IBC/Donoghue, Inc. Money Fund Report, October 1998.
The yields shown represent past performance, which is no guarantee of future
results. The Rated Money Fund Average is the average yield of all funds rated
AAA by Standard &Poor's in the category.
Our strategy has continued to be concentrated on finding high quality
issues in which to invest. For most of the semi-annual period, at least 90% of
the Fund was invested in A1+ rated securities and between 5% and 10% in A1 rated
commercial paper. It is well worth noting that A1 issues had a slight yield
advantage over A1+ issues over the six months. We maintained a weighted average
maturity of 45 to 50 days for most of the period. However, we did extend a bit
in early to-mid August with longer-term Agency Discount Notes, in response to
the lack of high quality short-term commercial paper supply in the market during
that time.
Looking Ahead
Going forward, the U.S. money markets will likely continue to be dominated
by the rate of U.S. economic growth and by the impact on the U.S of global
economic and political events, including those of Russia, Japan, and
2
<PAGE>
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Brazil. President Clinton's woes will also likely play a role. But the real
focus of the money markets will be on the Federal Reserve Board's response to
all of these factors. We believe the markets have already discounted at least
1.00% of easing in monetary policy through a series of incremental 0.25% rate
cuts over the next six to nine months. The concern, as we look ahead, is one of
a credit crunch, precipitated by poor bank earnings and a substantial retraction
of available credit.
For the near term, though, the economic backdrop remains positive. We have
only begun to see slower, non-recessionary growth. The labor market remains
tight with unemployment at a low 4.6%. Interest rates remain favorable at
historically low levels. There are still no real signs of inflation, and
fiscally, the government is running a surplus for the first time in almost
thirty years, so there is room for Congress to either cut taxes and/or increase
spending.
Given this backdrop and until both domestic and global events run their
course, we intend to remain reasonably neutral to the benchmarks in terms of
average weighted maturity in the Fund. We will also continue to concentrate the
Fund in very high quality credits and to maintain our conservative investment
strategies and standards for the foreseeable future.
We continue to believe that the conservative approach we apply to investing
on behalf of the Fund will provide comfort, as well as competitive yields, to
our shareholders.
As always, we appreciate your continued support.
Sincerely,
/s/ Richard T. Hale
___________________
Richard T.Hale
Chairman
3
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
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<TABLE>
<CAPTION>
Statement of Net Assets September 30, 1998
(Unaudited)
Rating
------------- Par
Prime Series S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Commercial Paper - 82.1%(a)
Automotive Finance -- 5.7%
PACCAR Financial Corp.
5.48% 10/16/98 A-1+ P-1 $40,000 $ 39,908,667
5.49% 10/22/98 A-1+ P-1 15,000 14,951,962
5.48% 11/20/98 A-1+ P-1 14,000 13,893,444
Toyota Motor Credit Corp.
5.50% 10/02/98 A-1+ P-1 25,000 24,996,181
5.48% 10/13/98 A-1+ P-1 15,000 14,972,600
5.45% 10/19/98 A-1+ P-1 40,000 39,891,000
5.25% 10/26/98 A-1+ P-1 30,000 29,890,625
5.45% 11/12/98 A-1+ P-1 20,000 19,872,833
------------
198,377,312
------------
Beverages -- 5.8%
Anheuser Busch Companies, Inc.
5.45% 10/09/98 A-1 P-1 25,000 24,895,278
Coca-Cola Co.
5.45% 10/09/98 A-1+ P-1 25,000 24,969,722
5.47% 11/03/98 A-1+ P-1 20,000 19,899,717
5.35% 11/10/98 A-1+ P-1 25,000 24,851,389
5.27% 12/09/98 A-1+ P-1 25,000 24,747,479
PepsiCo, Inc.
5.47% 11/30/98 A-1 P-1 30,000 29,726,500
5.40% 12/14/98 A-1 P-1 35,000 34,611,500
5.46% 12/14/98 A-1 P-1 20,000 19,775,533
------------
203,477,118
------------
Chemicals, General -- 3.7%
E.I. duPont de Nemours and Co.
5.48% 10/09/98 A-1+ P-1 50,000 49,939,111
5.50% 10/27/98 A-1+ P-1 25,000 24,900,694
5.46% 10/29/98 A-1+ P-1 15,000 14,936,300
5.47% 11/19/98 A-1+ P-1 40,000 39,702,189
------------
129,478,294
------------
</TABLE>
4
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating
------------- Par
Prime Series S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Commercial Paper -- continued
Chemicals, Specialty -- 0.8%
Minnesota Mining & Manufacturing
5.45% 10/21/98 A-1+ P-1 $30,000 $ 29,909,167
5.33% 12/21/98 A-1+ P-1 27,000 26,676,203
------------
56,585,370
------------
Electrical & Electronics -- 4.3%
Emerson Electric Co.
5.40% 11/06/98 A-1+ P-1 8,165 8,120,909
General Electric Co.
5.47% 11/20/98 A-1+ P-1 14,906 14,792,756
Motorola Inc.
5.32% 10/06/98 A-1+ P-1 15,000 14,988,917
5.46% 10/13/98 A-1+ P-1 20,000 19,963,600
5.48% 10/13/98 A-1+ P-1 15,000 14,972,600
5.13% 12/17/98 A-1+ P-1 30,000 29,670,825
5.45% 12/17/98 A-1+ P-1 25,000 24,708,576
5.10% 12/28/98 A-1+ P-1 25,000 24,688,333
------------
151,906,516
------------
Electric Utility -- 2.6%
Duke Energy Co.
5.45% 10/20/98 A-1 P-1 25,000 24,928,091
5.48% 10/20/98 A-1 P-1 35,000 34,898,772
5.48% 11/06/98 A-1 P-1 30,000 29,835,600
------------
89,662,463
------------
Finance, Commercial -- .4%
CIT Group Holdings
5.48% 10/07/98 A-1 P-1 15,000 14,986,300
------------
14,986,300
------------
Finance, Consumer -- 3.2%
USAA Capital Corp.
5.48% 10/01/98 A-1+ P-1 30,000 30,000,000
5.49% 10/16/98 A-1+ P-1 35,000 34,919,938
5.50% 10/23/98 A-1+ P-1 22,000 21,926,056
5.49% 10/30/98 A-1+ P-1 25,000 24,889,437
------------
111,735,431
------------
</TABLE>
5
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
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<TABLE>
<CAPTION>
Statement of Net Assets (continued) September 30, 1998
(Unaudited)
Rating
------------- Par
Prime Series S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Commercial Paper -- continued
Finance, Diversified -- 4.2%
General Electric Capital Corp.
5.47% 10/05/98 A-1+ P-1 $25,000 $ 24,984,806
5.46% 10/26/98 A-1+ P-1 25,000 24,904,687
5.50% 10/26/98 A-1+ P-1 10,000 9,961,806
5.49% 11/17/98 A-1+ P-1 25,000 24,820,813
5.47% 11/20/98 A-1+ P-1 20,000 19,848,055
5.37% 12/18/98 A-1+ P-1 20,000 19,767,300
5.25% 01/22/99 A-1+ P-1 25,000 24,588,021
------------
148,875,488
------------
Food -- 9.1%
Campbell Soup Co.
5.35% 10/05/98 A-1+ P-1 35,000 34,979,194
5.48% 10/13/98 A-1+ P-1 23,500 23,457,073
5.48% 11/06/98 A-1+ P-1 30,000 29,835,600
H.J. Heinz
5.48% 10/01/98 A-1 P-1 12,000 12,000,000
5.49% 10/06/98 A-1 P-1 34,200 34,173,923
5.48% 10/19/98 A-1 P-1 20,000 19,945,200
5.40% 11/12/98 A-1 P-1 30,000 29,811,000
Hershey Foods Corp.
5.51% 10/22/98 A-1 P-1 25,000 24,919,646
5.48% 11/02/98 A-1 P-1 15,000 14,926,933
Kellogg Company
5.30% 12/03/98 A-1+ P-1 20,975 20,780,457
5.33% 12/10/98 A-1+ P-1 25,000 24,740,903
Sara Lee Corp.
5.20% 10/28/98 A-1+ P-1 50,000 49,805,000
------------
319,374,929
------------
Household Products -- 3.7%
Proctor & Gamble Co.
5.48% 10/19/98 A-1+ P-1 25,000 24,931,500
5.49% 10/28/98 A-1+ P-1 20,000 19,917,650
5.45% 12/01/98 A-1+ P-1 47,000 46,565,968
5.45% 01/04/99 A-1+ P-1 40,000 39,424,722
------------
130,839,840
------------
</TABLE>
6
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating
------------- Par
Prime Series S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Commercial Paper -- continued
Insurance, Brokerage -- 1.4%
Marsh & McLennan Companies Inc.
5.28% 10/20/98 A-1+ P-1 $20,000 $ 19,944,267
5.30% 10/20/98 A-1+ P-1 10,000 9,972,027
5.41% 11/05/98 A-1+ P-1 20,000 19,894,806
------------
49,811,100
------------
Insurance, Property & Casualty -- 2.0%
A.I. Credit Corp.
5.46% 10/07/98 A-1+ P-1 30,000 29,972,700
5.45% 11/04/98 A-1+ P-1 40,000 39,794,111
------------
69,766,811
------------
Natural Gas -- 2.9%
Consolidated Natural Gas
5.49% 10/02/98 A-1+ P-1 40,000 39,993,900
5.49% 10/13/98 A-1+ P-1 19,320 19,284,644
5.49% 10/20/98 A-1+ P-1 23,000 22,933,358
5.20% 11/06/98 A-1+ P-1 20,000 19,896,000
------------
102,107,902
------------
Integrated Oil -- 4.3%
Amoco Co.
5.47% 10/27/98 A-1+ P-1 50,000 49,802,472
5.45% 10/28/98 A-1+ P-1 25,000 24,897,813
5.47% 11/17/98 A-1+ P-1 25,000 24,821,465
Shell Oil Co.
5.46% 10/29/98 A-1+ P-1 50,000 49,787,667
------------
149,309,417
------------
Oil Transportation -- 2.6%
Colonial Pipeline Co.
5.40% 10/13/98 A-1+ P-1 15,000 14,973,000
5.52% 10/27/98 A-1+ P-1 15,000 14,940,200
5.47% 11/06/98 A-1+ P-1 12,500 12,431,625
5.45% 12/04/98 A-1+ P-1 10,000 9,903,111
5.35% 12/09/98 A-1+ P-1 17,500 17,320,552
5.45% 01/22/98 A-1+ P-1 10,200 10,025,509
5.28% 03/08/98 A-1+ P-1 12,500 12,210,333
------------
91,804,330
------------
</TABLE>
7
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Net Assets (continued) September 30, 1998
(Unaudited)
Rating
------------- Par
Prime Series S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Commercial Paper -- continued
Paper Products -- 2.6%
Kimberly-Clark Corp.
5.50% 10/16/98 A-1+ P-1 $40,000 $ 39,908,333
5.32% 12/18/98 A-1+ P-1 20,000 19,769,467
------------
59,677,800
------------
Pharmaceuticals -- 4.5%
Abbott Laboratories
5.45% 10/14/98 A-1+ P-1 80,000 79,842,556
Pfizer Inc.
5.43% 10/09/98 A-1+ P-1 20,000 19,975,867
Warner-Lambert Co.
5.13% 03/11/99 A-1+ P-1 30,000 29,311,725
5.15% 03/22/99 A-1+ P-1 30,000 29,261,833
------------
158,391,981
------------
Publishing -- 1.2%
Gannett Co., Inc.
5.45% 10/09/98 A-1+ P-1 27,300 27,266,937
McGraw-Hill, Inc.
5.48% 11/09/98 A-1 P-1 13,965 13,882,094
------------
41,149,031
------------
Structured Finance -- 9.3%
CIESCO, L.P.
5.50% 10/21/98 A-1+ P-1 50,000 49,847,222
5.49% 10/23/98 A-1+ P-1 20,000 19,932,900
5.50% 10/23/98 A-1+ P-1 30,000 29,899,167
5.50% 11/13/98 A-1+ P-1 15,000 14,901,459
Corporate Receivables Corp.
5.50% 10/07/98 A-1 P-1 25,000 24,977,083
5.49% 10/23/98 A-1 P-1 25,000 24,916,125
5.49% 11/06/98 A-1 P-1 15,000 14,917,650
5.26% 11/13/98 A-1 P-1 15,000 14,905,758
5.46% 11/23/98 A-1 P-1 15,000 14,879,425
5.28% 12/03/98 A-1 P-1 20,000 19,815,200
5.36% 12/04/98 A-1 P-1 25,000 24,761,778
</TABLE>
8
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rating
------------- Par
Prime Series S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
Commercial Paper -- continued
Corporate Asset Fund Co., Inc.
5.50% 11/03/98 A-1+ P-1 $ 40,000 $ 39,798,333
5.45% 11/18/98 A-1+ P-1 35,000 34,745,666
--------------
328,297,766
--------------
Telephone -- 7.8%
Ameritech Capital Funding Corp.
5.48% 10/13/98 A-1+ P-1 57,700 57,594,601
5.44% 11/09/98 A-1+ P-1 20,000 19,882,133
5.44% 11/10/98 A-1+ P-1 30,000 29,818,667
Ameritech Corp.
5.25% 10/22/98 A-1+ P-1 15,000 14,954,063
BellSouth Telecommunications, Inc.
5.44% 10/27/98 A-1+ P-1 36,000 35,858,560
5.48% 10/27/98 A-1+ P-1 36,000 35,857,520
SBC Communications Inc.
5.46% 10/15/98 A-1+ P-1 50,000 49,893,833
5.46% 10/22/98 A-1+ P-1 15,000 14,952,225
5.38% 11/17/98 A-1+ P-1 15,000 14,894,642
--------------
273,706,244
--------------
Total Commercial Paper 2,879,321,443
--------------
VARIABLE RATE NOTES -- 3.6%
Associates Corp Master Note
5.497%(b) 12/01/98 A-1+ P-1 75,000 75,000,000
Coca-Cola Co. Master Note
5.122%(b) 03/08/99 A-1+ P-1 50,000 50,000,000
-------- --------------
Total Variable Rate Notes 125,000 125,000,000
-------- --------------
</TABLE>
9
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Net Assets (concluded) September 30, 1998
(Unaudited)
Rating
------------- Par
Prime Series S&P Moody's (000) Value
- ------------------------------------------------------------------------------------
<S><C>
FEDERAL HOME LOAN BANK -- 4.5%
FHLB
5.34% 01/20/99 AAA -- $ 41,656 $ 40,970,134
5.13% 02/05/99 AAA -- 25,000 24,547,563
5.10% 02/25/99 AAA -- 19,120 18,721,826
5.09% 03/05/99 AAA -- 15,000 14,671,271
5.70% 07/07/99 AAA -- 15,000 15,000,000
5.53% 07/27/99 AAA -- 10,425 10,420,681
5.15% 09/30/99 AAA -- 20,000 20,000,000
-------- --------------
Total Federal Home Loan Bank 146,201 144,331,475
-------- --------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 3.5%
FNMA
Note
5.59% 11/18/98 -- P-1 20,000 20,000,000
5.56% 12/15/98 -- P-1 25,000 25,000,000
5.58% 01/15/99 -- P-1 35,000 35,000,000
5.50% 02/12/98 -- P-1 25,000 25,000,000
4.92% 06/18/99 -- P-1 20,000 19,289,333
5.70% 07/22/99 -- P-1 15,000 15,000,000
-------- --------------
140,000 139,289,333
-------- --------------
Repurchase Agreements -- 6.4%(c)
Goldman, Sachs & Co.
5.41%(d) 10/01/98 -- -- 124,500 124,500,000
Morgan Stanley & Co.
5.35%(e) 10/01/98 -- -- 100,000 100,000,000
-------- --------------
Total Repurchase Agreements 224,500 224,500,000
-------- --------------
Total Investments - 100.1% 3,512,442,251(f)
Liabilities in Excess of Other Assets, Net - (0.1%) (4,574,391)
--------------
Net Assets - 100.0% $3,507,867,860
==============
</TABLE>
10
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Prime Series
- ------------------------------------------------------------------------------------
<S><C>
Net Asset Value, Offering and Redemption Price Per:
Prime Share
($2,969,412,285 / 2,969,404,538 shares outstanding) $1.00
=====
Flag Investors Class A Share
($10,559,517 / 10,559,257 shares outstanding) $1.00
=====
Flag Investors Class B Share
($3,034,323 / 3,034,300 shares outstanding) $1.00
=====
Institutional Prime Share
($271,858,350 / 271,858,147 shares outstanding) $1.00
=====
Quality Cash Reserve Prime Share
($253,003,385 / 253,002,758 shares outstanding) $1.00
=====
</TABLE>
- -----------
(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, 1998.
(c) Collateral on repurchase agreements is taken into possession by the Fund
upon entering into the repurchase agreement. The collateral is marked to
market daily to insure market value as being at least 102 percent of the
resale price of the repurchase agreement.
(d) Dated 9/30/98 to be repurchased on 10/1/98, collateralized by U.S. Treasury
Notes with a market value of $126,990,955.
(e) Dated 9/30/98 to be repurchased on 10/1/98, collateralized by U.S. Treasury
Notes with a market value of $102,015,570.
(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
(Unaudited)
For the Six
Months Ended
Prime Series September 30,
- -----------------------------------------------------------------------------
1998
Investment Income:
Interest income $100,392,874
------------
Expenses:
Investment advisory fee 4,689,772
Distribution fee 4,522,362
Transfer agent fees 967,363
Custodian fees 151,890
Directors' fees 68,625
Registration fees 166,556
Miscellaneous 405,503
------------
Total expenses 10,972,071
Less: Fees waived (73,840)
------------
Net expenses 10,898,231
Net investment income 89,494,643
Net realized loss from security transactions (867)
------------
Net increase in net assets resulting from operations $ 89,493,776
============
See Notes to Financial Statements.
12
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
Prime Series September 30, March 31,
- --------------------------------------------------------------------------------
1998(1) 1998
Increase/(Decrease) in Net Assets:
Operations:
Net investment income $ 89,494,643 $ 162,086,913
Net realized loss on sales of
investments (867) --
-------------- --------------
Net increase in net assets resulting
from operations 89,493,776 162,086,913
Distributions to shareholders from:
Net investment income:
BT Alex. Brown Cash Reserve
Prime Shares (75,031,665) (138,011,807)
BT Alex. Brown Cash Reserve Prime
Institutional Shares (8,687,715) (13,656,968)
Flag Investors Class A Shares (174,241) (341,197)
Flag Investors Class B Shares (19,890) (12,545)
Quality Cash Reserve Prime Shares (5,581,109) (10,064,396)
-------------- --------------
Total distributions (89,494,620) (162,086,913)
Capital share transactions, net (209,540,396) 849,945,486
-------------- --------------
Total increase/(decrease) in net assets (209,541,240) 849,945,486
Net Assets:
Beginning of period 3,717,409,100 2,867,463,614
-------------- --------------
End of period $3,507,867,860 $3,717,409,100
============== ==============
- --------
(1)Unaudited.
See Notes to Financial Statements.
13
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Prime Shares
(For shares outstanding throughout each period)
For the
Six Months Ended
September 30,
- --------------------------------------------------------------------------------
1998*
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
--------------
Income from Investment Operations:
Net investment income 0.0249
Less Distributions:
Dividends from net investment income (0.0249)
--------------
Net asset value at end of period $ 1.00
==============
Total Return:
Based on net asset value per share 2.51%
Ratios to Average Daily Net Assets:
Expenses 0.61%(1)
Net investment income 4.95%(1)
Supplemental Data:
Net assets at end of period $2,969,412,285
Number of shares outstanding
at end of period 2,969,404,538
- --------
*Unaudited.
(1)Annualized.
14
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
-----------------------------------------------------------------------------------
1998 1997 1996 1995 1994
<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 0.0494 0.0478 0.0524 0.0442 0.0262
Less Distributions:
Dividends from net investment income (0.0494) (0.0478) (0.0524) (0.0442) (0.0262)
-------------- -------------- -------------- -------------- --------------
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 5.05% 4.88% 5.36% 4.51% 2.65%
Ratios to Average Daily Net Assets:
Expenses 0.67% 0.63% 0.60% 0.61% 0.62%
Net investment income 4.94% 4.78% 5.21% 4.46% 2.62%
Supplemental Data:
Net assets at end of period $3,164,537,551 $2,545,532,365 $2,386,681,216 $1,472,079,739 $1,350,334,979
Number of shares outstanding
at end of period 3,164,529,071 2,545,523,885 2,386,684,392 1,472,077,488 1,350,332,916
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Flag Investors Class A Shares
(For shares outstanding throughout each period)
For the Six
Months Ended
September 30,
- --------------------------------------------------------------------------------
1998*
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
-----------
Income from Investment Operations:
Net investment income 0.0249
Less Distributions:
Dividends from net investment income (0.0249)
-----------
Net asset value at end of period $ 1.00
===========
Total Return:
Based on net asset value per share 2.51%
Ratios to Average Daily Net Assets:
Expenses 0.61%(1)
Net investment income 4.97%(1)
Supplemental Data:
Net assets at end of period $10,559,517
Number of shares outstanding at end of period 10,559,257
- -----------
*Unaudited.
(1)Annualized.
16
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
-----------------------------------------------------------------------------------
1998 1997 1996 1995 1994
<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 0.0494 0.0478 0.0524 0.0442 0.0262
Less Distributions:
Dividends from net investment income (0.0494) (0.0478) (0.0524) (0.0442) (0.0262)
----------- ---------- ---------- ---------- -----------
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 5.05% 4.88% 5.36% 4.51% 2.65%
Ratios to Average Daily Net Assets:
Expenses 0.67% 0.63% 0.60% 0.61% 0.62%
Net investment income 4.94% 4.78% 5.25% 4.26% 2.62%
Supplemental Data:
Net assets at end of period $7,736,785 $6,521,574 $5,976,831 $7,726,696 $18,116,648
Number of shares outstanding at end of period 7,736,522 6,521,310 5,976,824 7,726,698 18,116,633
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Flag Investors Class B Shares
(For shares outstanding throughout each period)
For the
Six Months Ended
September 30,
- --------------------------------------------------------------------------------
1998*
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
----------
Income from Investment Operations:
Net investment income 0.0212
Less Distributions:
Dividends from net investment income (0.0212)
----------
Net asset value at end of period $ 1.00
==========
Total Return:
Based on net asset value per share 2.14%
Ratios to Average Net Assets:
Expenses 1.36%(2)
Net investment income 4.29%(2)
Supplemental Data:
Net assets at end of period $3,034,323
Number of shares outstanding at end of period 3,034,300
- ---------
* Unaudited
(1) Commencement of operations.
(2) Annualized.
18
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
For the Years Ended April 3, 1995(1)
March 31, through March 31,
- ---------------------------------------------------------------------------------------------
1998 1997 1996
<S><C>
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from Investment Operations:
Net investment income 0.0418 0.0414 0.0361
Less Distributions:
Dividends from net investment income (0.0418) (0.0414) (0.0361)
-------- -------- --------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total Return:
Based on net asset value per share 4.27% 4.22% 3.69%
Ratios to Average Net Assets:
Expenses 1.42% 1.38% 1.38%(2)
Net investment income 4.18% 4.14% 4.30%(2)
Supplemental Data:
Net assets at end of period $184,382 $227,098 $ 10,200
Number of shares outstanding at end of period 184,382 227,098 10,200
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Prime Institutional Shares
(For shares outstanding throughout each period)
For the Six
Months Ended
September 30,
- --------------------------------------------------------------------------------
1998*
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
------------
Income from Investment Operations:
Net investment income 0.0261
Less Distributions:
Dividends from net investment income (0.0261)
------------
Net asset value at end of period $ 1.00
============
Total Return:
Based on net asset value per share 2.64%
Ratios to Average Daily Net Assets:
Expenses 0.36%(1)
Net investment income 5.20%(1)
Supplemental Data:
Net assets at end of period $271,858,350
Number of shares outstanding at end of period 271,858,147
- ----------
* Unaudited.
(1) Annualized.
20
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
<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 0.0519 0.0503 0.0548 0.0472 0.0294
Less Distributions:
Dividends from net investment income (0.0519) (0.0503) (0.0548) (0.0472) (0.0294)
------------ ------------ ----------- ----------- -----------
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 5.31% 5.15% 5.62% 4.82% 2.98%
Ratios to Average Daily Net Assets:
Expenses 0.42% 0.38% 0.35% 0.36% 0.30%
Net investment income 5.22% 5.04% 5.32% 4.57% 2.94%
Supplemental Data:
Net assets at end of period $317,971,693 $117,812,047 $53,699,315 $11,904,716 $23,437,449
Number of shares outstanding at end of period 317,971,413 117,811,768 53,699,535 11,904,663 23,437,512
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Financial Highlights--Quality Cash Reserve Prime Shares
(For shares outstanding throughout each period)
For the
Six Months Ended
September 30,
- --------------------------------------------------------------------------------
1998*
Per Share Operating Performance:
Net asset value at beginning of period $ 1.00
------------
Income from Investment Operations:
Net investment income 0.0234
Less Distributions:
Dividends from net investment income (0.0234)
------------
Net asset value at end of period $ 1.00
============
Total Return:
Based on net asset value per share 2.36%
Ratios to Average Daily Net Assets:
Expenses 0.90%(1,3)
Net investment income 4.67%(2,3)
Supplemental Data:
Net assets at end of period $253,003,385
Number of shares outstanding
at end of period 253,002,758
- ----------
* Unaudited.
(1) Ratios of expenses to average net assets prior to partial fee waivers was
0.96%, 1.02%, 0.98% and 0.95% for the six months ended September 30, 1998
and the years ended March 31, 1998, 1997 and 1996, respectively.
(2) Ratios of net investment income to average net assets prior to partial fee
waivers was 4.61%, 4.60%, 4.43% and 4.86% for the six months ended September
30, 1998 and the years ended March 31, 1998, 1997 and 1996, respectively.
(3) Annualized
22
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended March 31,
- -------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
<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 0.0465 0.0449 0.0493 0.0402 0.0218
Less Distributions:
Dividends from net investment income (0.0465) (0.0449) (0.0493) (0.0402) (0.0218)
------------ ------------ ------------ ----------- -------
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 4.75% 4.59% 5.04% 4.09% 2.20%
Ratios to Average Daily Net Assets:
Expenses 0.96%(1) 0.91%(1) 0.90%(1) 0.96% 1.06%
Net investment income 4.66%(2) 4.50%(2) 4.91%(2) 4.04% 2.18%
Supplemental Data:
Net assets at end of period $226,978,689 $197,370,530 $156,412,213 $94,592,158 $92,678,440
Number of shares outstanding
at end of period 226,978,007 197,369,848 156,412,393 94,591,979 92,678,268
</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") 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 Cash Reserve 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 is in accordance with Rule 2a-7 of the Investment
Company Act of 1940 and, which approximates market value. Using this
method, the Fund values a security at its cost. 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
24
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
NOTE 1--concluded
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 Tax--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 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
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 gain or loss on investments sold or redeemed.
Interest income is recorded on an accrual basis and includes the pro
rata 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 recorded on an
accrual basis, and are charged to that classes' 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"), a subsidiary of Bankers Trust
Corporation, is the investment advisor for all series. Under the terms of the
investment advisory agreement, the Fund pays ICC a fee. This fee is calculated
daily and paid monthly, at the following annual rates based upon the Fund's
aggregate average daily net assets: .30% of the first $500 million, .26% of the
next $500 million, .25% of the next $500 million, .24% of the next $1 billion,
.23% of the next $1 billion and .22% of 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 .02% of its average daily net assets. The Tax-Free Series also
pays an additional fee that is calculated daily and paid monthly at the annual
rate of .03% of its average daily net assets.
As compensation for its accounting services, the Prime Series, Treasury
Series and Tax-Free Series pay ICC an annual fee that is calculated daily and
paid monthly from its three series' average daily net assets. The Prime Series
paid $83,250, the Treasury Series paid $66,565 and the Tax-Free Series paid
$68,300 for accounting services for the six-month period ended September 30,
1998.
As compensation for its transfer agent services, the three series pay ICC a
per account fee that is calculated and paid monthly. The Prime Series paid
$967,364, the Treasury Series paid $137,872 and the Tax-Free Series paid $75,321
to ICC for transfer agent services for the six-month period ended September 30,
1998.
As compensation for providing distribution services, the Prime Shares, Flag
Investors Class A Shares, Treasury Shares and the Tax-Free Shares pay ICC
Distributors, Inc. ("ICC Distributors"), which is not related to ICC, an annual
fee equal to 0.25% of these classes' average daily net assets. For the six-month
period ended September 30, 1998, Distribution fees aggregated $3,791,146,
$8,756, $951,645 and $1,040,771 for distribution services for the Prime Shares,
Flag Investors Class A Shares, Treasury Shares and Tax-Free Shares,
respectively. 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
.60% of the Quality Cash Shares' aggregate average daily net assets or $714,833
for the six-month period ended September 30, 1998 and 1.00% (includes .25%
shareholder servicing fee) of the Flag Investors Class B Shares' aggregate
average daily net assets or $4,623.
26
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
NOTE 2--continued
ICC and ICC Distributors may voluntarily waive a portion of their advisory
or distribution fees for the Prime, Treasury and Tax-Free Series to preserve or
enhance each series' performance. These voluntary waivers are not contractual
and could change. ICC did not waive any advisory fees for the six-month period
ended September 30, 1998. ICC Distributors voluntarily waived $73,840
distribution fees for the period April 1, 1998 to September 30, 1998.
The Fund's complex offers a retirement plan for eligible Directors. The
actuarially computed pension expense allocated to the Fund for the six-month
period ended September 30, 1998 was $52,521 for the Prime Series, $16,503 for
the Treasury Series and $7,723 for the Tax-Free Series. The accrued liability at
September 30, 1998 was $244,732 for the Prime Series, $85,833 for the Treasury
Series and $85,502 for the Tax-Free Series.
NOTE 3--Capital Stock and Share Information
The Fund is authorized to issue up to 9.0 billion shares of $.001 par value
capital stock (5.4 billion Prime Series, 1.5 billion Treasury Series, 1.75
billion Tax-Free Series and 350 million undesignated). Transactions in shares of
the Fund were as follows:
For the six-month For the
period ended Year Ended
September 30, March 31,
1998(+) 1998
----------------- ----------
Prime Series:
Sold:
Prime Shares 9,692,379,684 23,206,115,785
Flag Investors Class A Shares 11,362,186 6,559,775
Flag Investors Class B Shares 4,038,974 336,592
Institutional Prime Shares 2,616,513,753 4,625,290,052
Quality Cash Shares 583,725,208 1,179,123,143
Issued as reinvestment of dividends:
Prime Shares 71,276,743 129,425,606
Flag Investors Class A Shares 129,231 326,541
Flag Investors Class B Shares 7,285 8,133
Institutional Prime Shares 5,801,434 9,131,786
Quality Cash Shares 5,400,010 9,723,053
27
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
NOTE 3--concluded
For the six-month For the
period ended Year Ended
September 30, March 31,
1998(+) 1998
----------------- ----------
Prime Series:
Redeemed:
Prime Shares (9,958,780,959) (22,716,536,205)
Flag Investors Class A Shares (8,668,682) (5,671,105)
Flag Investors Class B Shares (1,196,341) (387,440)
Institutional Prime Shares (2,668,428,453) (4,434,262,192)
Quality Cash Shares (563,100,467) (1,159,238,038)
-------------- ---------------
Net increase/(decrease) (209,540,396) 849,945,486
============== ===============
Treasury Series:
Sold:
Treasury Shares 2,405,994,062 3,641,511,991
Institutional Treasury Shares 527,086,840 590,751,899
Issued as reinvestment of dividends:
Treasury Shares 16,718,399 30,209,607
Institutional Treasury Shares 1,253,846 2,007,274
Redeemed:
Treasury Shares (2,430,775,799) (3,551,758,854)
Institutional Treasury Shares (535,964,474) (555,189,594)
-------------- ---------------
Net increase/(decrease) (15,687,126) 157,532,323
============== ===============
Tax-Free Series:
Sold:
Tax Free Shares 2,515,481,813 5,853,542,023
Institutional Tax Free Shares 545,755,106 730,445,736
Issued as reinvestment of dividends:
Tax Free Shares 11,821,502 20,778,337
Institutional Tax Free Shares 602,124 276,010
Redeemed:
Tax Free Shares (2,580,599,597) (5,680,345,603)
Institutional Tax Free Shares (526,964,577) (654,038,858)
-------------- ---------------
Net increase/(decrease) (33,903,629) 270,657,645
============== ===============
- --------
(+) Unaudited.
28
<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Note 4--Net Assets
Prime Treasury Tax-Free
Series Series Series
-------------- ------------ ------------
Paid-in capital $3,507,861,737 $881,431,740 $883,964,047
Undistributed net
investment income 8,510 -- --
Undistributed net realized
gain/(loss) on sales
of investments (2,387) 151,617 (46,726)
-------------- ------------ ------------
$3,507,867,860 $881,583,357 $883,917,321
============== ============ ============
29
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
FLAG INVESTORS CASH RESERVE PRIME SHARES
- --------------------------------------------------------------------------------
Directors and Officers
RICHARD T. HALE TRUMAN T. SEMANS
Chairman Director
JAMES J. CUNNANE CARL W. VOGT, ESQ.
Director Director
JOE HARDIMAN HARRY WOOLF
Director President
LOUIS E. LEVY AMY M. OLMERT
Director Secretary
EUGENE J. MCDONALD JOSEPH A. FINELLI
Director Treasurer
REBECCA W. RIMEL SCOTT J. LIOTTA
Director Assistant Secretary
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.
- ----------------------------------------------------
<PAGE>
[FLAG INVESTORS LOGO]
Growth
Flag Investors Emerging Growth Fund
Flag Investors Equity Partners Fund
Flag Investors International Fund
Specialty
Flag Investors Real Estate Securities Fund
Flag Investors Communications Fund
(formerly 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
Current Income
Flag Investors Cash Reserve Prime Shares
P.O. Box 515
Baltimore, Maryland 21203
800-767-FLAG
Distributed by:
ICC DISTRIBUTORS, INC.
CASHSA
