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Flag Investors
Mutual Funds
Growth
Flag Investors Emerging Growth Fund
Flag Investors Equity Partners Fund
Flag Investors International Fund
Equity Income
Flag Investors Real Estate Securities Fund
Flag Investors Telephone Income Fund
Balanced
Flag Investors Value Builder Fund
Income
Flag Investors Intermediate-Term Income Fund
Flag Investors Total Return U.S. Treasury Fund Shares
Tax-Free Income
Flag Investors Managed Municipal Fund Shares
Flag Investors Maryland Intermediate
Tax-Free Income Fund
Current Income
Flag Investors Cash Reserve Prime Shares
P.O. Box 515
Baltimore, Maryland 21203
800-767-FLAG
Distributed by:
ALEX. BROWN &SONS
INCORPORATED
[Flag Logo]
Flag
Investors
Intermediate-
Term
Income
Fund
Semi-Annual Report
June 30, 1996
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FLAG INVESTORS
INTERMEDIATE-TERM INCOME FUND
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Dear Shareholders:
The six-month period ended June 30, 1996 was a challenging time for the
bond market. After the euphoria of 1995, when rates drifted steadily lower
throughout the year in anticipation of slowing economic growth and continued
Federal Reserve monetary easing, the first half of 1996 witnessed a change in
economic expectations and an abrupt reversal in the direction of interest rates
(see charts, right). Renewed fears of inflation--apparent byproducts of surging
job growth and rising commodity prices--rumbled through the debt markets,
causing most longer-term bond prices to tumble.
In sharp contrast to 1995's unprecedented and unsustainable double-digit
returns, performance results were meager in this difficult environment. Absent
exposure to more rate-sensitive long-term bonds, your Fund, with its inherently
defensive intermediate-term maturity bias, again delivered competitive results
for the six- and twelve-month periods ended June 30, 1996. Specific total return
performance comparisons are listed on the following page.
Portfolio Considerations
Recognizing the advanced stage of the interest rate cycle and the
unlikelihood that rates would decline further below year-end levels, we took
steps earlier this year to insulate the Fund from severe price erosion. By
shortening the Fund's weighted average maturity to 4.9 years and moving funds
into fuller coupon premium issues, we greatly reduced the Fund's susceptibility
to a damaging rise in rates. Concerned by the meager yield differential between
medium-quality corporate bonds and U.S. Treasury issues, we also reduced the
Fund's overall corporate
Historical Yield Curves
[Graph appears below]
6/30/95 12/31/95 6/30/96
------- -------- -------
3 Month 5.563 5.072 5.152
6 Month 5.576 5.147 5.358
1 Year 5.623 5.132 5.674
2 Year 5.793 5.150 6.107
3 Year 5.852 5.208 6.269
5 Year 5.970 5.374 6.462
10 Year 6.203 5.570 6.714
30 Year 6.617 5.949 6.894
5-Year U.S. Treasury Yields
(6/30/93 - 6/30/96)
[Graph appears below]
6/93 5.046
4.771
12/93 5.208
6.225
6/94 6.949
7.280
12/94 7.827
7.071
6/95 5.967
6.015
12/95 5.381
6.086
6/96 6.462
1
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FLAG INVESTORS
INTERMEDIATE-TERM INCOME FUND
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exposure in favor of Treasuries and, in several situations, mortgage-
backed securities (see charts, bottom right). Together, these changes raised
the Fund's defensive asset mix as a troublesome period for the bond market
evolved during the Spring.
Outlook
Recent statements by Federal Reserve Chairman Alan Greenspan reflect
concerns that wage and price pressures are beginning to emerge. As he obliquely
warned, there are early indications that the period of favorable inflation may
be drawing to a close. Sharing many of these same concerns, we are comfortable
maintaining the Fund's defensive stance until we see more signs that lower rates
are on the horizon. We would expect the current environment of higher rates to
ultimately retard economic growth, leading to a renewed drop in yields. As this
occurs, we will extend the Fund's weighted average duration to its chartered
maximum of four years to lock in higher rates.
Dividend Policy
The Fund continues to pay a monthly dividend of $0.05. Recognizing the
importance of improving shareholder wealth, we continue to emphasize strategies
that maximize total return (current income plus share appreciation).
We thank you for your continued interest in the Fund.
Sincerely,
/s/ M. Elliott Randolph, Jr. /s/ Paul D. Corbin
M. Elliott Randolph, Jr. Paul D. Corbin
President Executive Vice President
July 23, 1996
Performance Comparisons*
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For the periods ended June 30, 1996
Six One Average
Months Year Maturity
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Flag Investors Intermediate-Term
Income Fund -0.4% 5.3% 4.9 years
Lehman Brothers
Intermediate
Gov't./Corp. Bond Index -0.2% 5.0% 4.2 years
Lehman Brothers 1-3 Year
Gov't. Bond Index 1.4% 5.5% 1.9 years
Lehman Brothers Aggregate
Index -1.2% 5.0% 8.8 years
*These figures assume the reinvestment of dividends and capital gains
distributions and exclude the impact of any sales charge. Since investment
return and principal value will fluctuate, an investor's shares may be worth
more or less than their original cost when redeemed. The unmanaged indices
listed above are widely recognized as indicators of performance in their
respective sectors. Past performance is not an indicator of future results.
Please review the Additional Performance Information on page 3.
Portfolio Composition
June 30, 1996
[Pie Chart appears here -- see values below]
Corporate 35%
Agency & Mortgage-Backed 34%
Treasury 14%
Asset-Backed 11%
Cash 6%
June 30, 1996
Agency & Mortgage-Backed 46%
Corporate 22%
Treasury 18%
Asset-Backed 10%
Cash 4%
2
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FLAG INVESTORS
INTERMEDIATE-TERM INCOME FUND
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Additional Performance Information
The shareholder letter included in this report contains statistics designed
to help you evaluate the performance of your Fund's management. The Securities
and Exchange Commission (SEC) requires that when we report such figures, we also
include the Fund's total return, according to a standardized formula, for
various time periods through the end of the most recent calendar quarter. The
SECtotal return figures differ from those we reported because the time periods
may be different and because the SECcalculation includes the impact of the
currently effective 1.50% maximum sales charge for the Fund's Class A Shares.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
Class A Institutional
Periods ended 6/30/96: Shares Shares
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One Year 3.69% --
- --------------------------------------------------------------------------------
Five Years 6.77% --
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Since Inception* 6.55% 1.74%**
* Inception dates: Class A Shares: 5/13/91; Institutional Shares: 11/2/95.
** Aggregate total return.
These total returns correspond to those experienced by individual
shareholders only if their shares were purchased on the first day of each time
period and the maximum sales charge was paid.
Any performance figures shown are for the full period indicated. Since
investment return and principal value will fluctuate, an investor's shares may
be worth more or less than their original cost when redeemed. Past performance
is not an indicator of future results.
Portfolio Data
Net Asset Value Per:
Class A Share $10.19
Institutional Share $10.29
Total Net Assets $65.9 million
Average Maturity 4.9 years
Average Duration 3.5 years
Maturity Breakdown:*
0-1 year 9%
1-3 years 22%
3-5 years 17%
5-10 years 52%
- --------------------------------------------------------------------------------
*Calculated as a percentage of net assets.
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 invest- ment
representative or directly from the Fund at 1-800-767-FLAG. Read it carefully
before you invest.
3
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FLAG INVESTORS
INTERMEDIATE-TERM INCOME FUND
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Statement of Net Assets June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
S&P Par Value
Security Rating** (000) (Note A)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
CORPORATE BONDS -- 21.8%
Banc One Columbus
7.375%, 12/1/02 AA- $1,000 $ 1,032,501
Countrywide Funding
8.25%, 7/15/02 A- 3,250 3,408,419
Elf Aquitaine
7.75%, 5/1/99 AA- 2,000 2,060,001
Fund America Enterprise
7.75%, 2/1/03 BBB+ 2,000 1,974,978
General Motors Acceptance Corp.
5.625%, 2/15/01 A- 1,000 953,751
Guaranteed Export Trust
8.187%, 12/15/04 AAA 995 1,037,899
Pacific Gas & Electric
6.25%, 3/1/04 A 2,000 1,884,999
Philip Morris Cos., Inc.
6.95%, 6/1/06 A 2,000 2,002,500
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Total Corporate Bonds (Cost $13,424,381) 14,355,048
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U.S. GOVERNMENT AGENCY SECURITIES -- 46.3%
Federal Home Loan Bank -- 4.5%
Consolidated System-wide Bonds
7.151%, Due 9/13/05 AAA 3,000 2,928,867
Federal Home Loan Mortgage Corp. -- 12.1%
Multi-Class Mortgage Certificates
Series 21-H, 5.85%, Due 1/25/19 AAA 4,000 3,796,122
Series 106-F, 8.50%, Due 12/15/20 AAA 2,893 2,968,349
Participation Certificate
Pool #G10049, 8.00%, Due 10/1/07 AAA 1,209 1,233,864
Federal National Mortgage Assoc. -- 19.6%
Debenture
6.250%, Due 8/12/03 AAA 3,500 3,333,859
Mortgage-Backed Securities
Pool #326570, 7.00%, Due 2/1/08 AAA 3,846 3,797,479
Multi-Class Mortgage Certificates
Series 88-18-B, 9.40%, 7/25/03 AAA 203 213,150
Series 149-D, 12.00%, 4/25/19 AAA 1,298 1,330,813
Series 91-11-G, 7.00%, 11/25/19 AAA 2,187 2,182,636
Series W-1, 8.20%, 4/25/25 AAA 2,000 2,049,200
Government National Mortgage Assoc. -- 10.1%
"Pass Throughs"
Pool #194615, 8.00%, Due 3/15/17 AAA 164 165,329
Pool #204405, 8.00%, Due 4/15/17 AAA 171 172,358
Pool #371200, 8.00%, Due 12/15/23 AAA 1,604 1,619,111
</TABLE>
4
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INTERMEDIATE-TERM INCOME FUND
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Statement of Net Assets (concluded) June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
S&P Par Value
Security Rating** (000) (Note A)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Government National Mortgage Assoc. (continued)
Pool #371206, 8.00%, Due 12/15/23 AAA $1,832 $ 1,848,725
Pool #780195, 8.00%, Due 7/15/25 AAA 2,828 2,865,269
- ---------------------------------------------------------------------------------------------------------------------------
Total U.S. Government Agency Securities (Cost $31,835,588) 30,505,131
- ---------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES -- 17.5%
U.S. Treasury Notes
4.750%, 9/30/98 AAA 4,000 3,885,320
5.250%, 1/31/01 AAA 2,000 1,911,283
5.750%, 8/15/03 AAA 2,000 1,905,516
5.875%, 2/15/04 AAA 4,000 3,823,473
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Total U.S. Treasury Securities (Cost $11,833,220) 11,525,592
- ---------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES -- 10.0%
Banc One Credit Card Master Trust
6.300%,10/15/02 AAA 3,000 2,943,900
Discover Credit Card, 93-A-A
6.25%, 8/15/00 AAA 3,000 2,988,893
Premier Auto Trust, 94-1-A3
4.75%, 2/2/00 AAA 655 648,703
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Total Asset-Backed Securities (Cost $6,691,492) 6,581,496
- ---------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.9%
Goldman Sachs & Co., 5.25%
Dated 6/28/96, to be repurchased on 7/1/96, collateralized
by U.S. Treasury Bonds with a market value of $1,979,189.
(Cost $1,940,000) NR* 1,940 1,940,000
- ---------------------------------------------------------------------------------------------------------------------------
Total Investment in Securities -- 98.5%
(Cost $65,724,681)*** 64,907,267
Other Assets in Excess of Liabilities, Net-- 1.5% 1,019,975
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets-- 100.0% $65,927,242
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price Per:
Class A Share ($58,008,812 / 5,694,472 shares outstanding) $10.19
Institutional Share ($7,918,430 / 769,405 shares outstanding) $10.29
Maximum Offering Price Per:
Class A Share ($10.19 / .985) $10.35
Institutional Share $10.29
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Not rated.
** The Standard & Poor's rating indicated is believed to be the most recent
rating available as of June 30, 1996.
*** Also aggregate cost for federal tax purposes.
See accompanying Notes to Financial Statements.
5
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FLAG INVESTORS
INTERMEDIATE-TERM INCOME FUND
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Statement of Operations For the Six Months Ended June 30, 1996
(Unaudited)
INVESTMENT INCOME (NOTE A):
Interest $ 2,305,962
EXPENSES:
Investment advisory fee (Note B) 115,889
Distribution fee (Note B) 76,984
Accounting fee (Note B) 27,007
Printing and postage 17,165
Transfer agent fee (Note B) 14,794
Custodian fee 12,821
Legal 12,328
Audit 11,835
Registration fees 9,862
Miscellaneous 6,604
Organizational expense (Note A) 4,484
Directors' fees 2,466
Insurance 1,247
Total expenses 313,486
Less: Fees waived (Note B) (83,277)
Net expenses 230,209
Net investment income 2,075,753
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (NOTE A):
Net realized gain from security transactions 124,699
Change in unrealized depreciation of investments (2,463,411)
Net loss on investments (2,338,712)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (262,959)
- --------------------------------------------------------------------------------
See accompanying Notes to Financial Statements.
6
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INTERMEDIATE-TERM INCOME FUND
<TABLE>
<CAPTION>
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Statement of Changes in Net Assets
For the Six
Months Ended For the Year
June 30, 1996 Ended
(Unaudited) December 31, 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 2,075,753 $ 4,324,862
Net realized gain/(loss) from security transactions 124,699 (1,018,416)
Change in appreciation/(depreciation) of
investments (2,463,411) 7,179,328
Change in unrealized appreciation of assets
and liabilities denominated in foreign currency -- 1,216
Net increase/(decrease) in net assets
resulting from operations (262,959) 10,486,990
Dividends to Shareholders from:
Net investment income:
Flag Investors Class A Shares (1,518,214) (4,208,250)
Flag Investors Institutional Shares (118,077) (7,962)
Total distributions (1,636,291) (4,216,212)
CAPITAL SHARE TRANSACTIONS (NOTE C):
Proceeds from sale of shares 10,355,231 4,986,795
Value of shares issued in reinvestment of dividends 1,170,669 2,635,861
Cost of shares repurchased (13,001,102) (23,380,739)
Decrease in net assets derived from
capital share transactions (1,475,202) (15,758,083)
Total decrease in net assets (3,374,452) (9,487,305)
NET ASSETS:
Beginning of period 69,301,694 78,788,999
End of period $65,927,242 $69,301,694
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</TABLE>
See accompanying Notes to Financial Statements.
7
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FLAG INVESTORS
INTERMEDIATE-TERM INCOME FUND
<TABLE>
<CAPTION>
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Financial Highlights -- Flag Investors Class A Shares
(For a share outstanding throughout each period)
For the Six For the Period
Months Ended May 13, 1991*
June 30, 1996 For the Year Ended December 31, through
(Unaudited) 1995 1994 1993 1992 Dec. 31, 1991
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of
period $ 10.48 $ 9.62 $ 10.57 $ 10.37 $ 10.54 $ 10.00
Income from Investment
Operations:
Net investment income 0.37 0.62 0.57 0.57 0.63 0.32
Net realized and unrealized
gain/(loss) on investments (0.36) 0.84 (0.92) 0.34 (0.05) 0.64
Total from Investment
Operations 0.01 1.46 (0.35) 0.91 0.58 0.96
Less Distributions:
Dividends from net investment
income and short-term gains (0.30) (0.60) (0.57) (0.69) (0.75) (0.42)
Return of capital -- -- (0.03) -- -- --
Distributions from net realized
long-term gains -- -- -- (0.02) -- --
Total distributions (0.30) (0.60) (0.60) (0.71) (0.75) (0.42)
Net asset value at end of period $ 10.19 $ 10.48 $ 9.62 $ 10.57 $ 10.37 $ 10.54
Total Return(1) (0.43)% 15.43% (3.32)% 8.98% 5.68% 9.79%
Ratios to Average Daily Net Assets:
Expenses(2) 0.70%** 0.70% 0.70% 0.70% 0.70% 0.70%**
Net investment income(3) 6.16%** 6.00% 5.57% 5.43% 6.01% 5.97%**
Supplemental Data:
Net assets at end of period (000) $58,009 $67,116 $78,789 $112,520 $78,706 $64,327
Portfolio turnover rate 23% 46% 50% 86% 107% 46%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
**Annualized.
(1) Total return excludes the effect of sales charge.
(2) Without the waiver of advisory and administration fees (Note B), the ratio
of expenses to average daily net assets would have been 0.96% (annualized),
0.93%, 0.84%, 0.85%, 0.87% and 1.73% (annualized) for the six months
ended June 30, 1996, the years ended December 31, 1995, 1994, 1993, 1992,
and the period ended December 31, 1991, respectively.
(3) Without the waiver of advisory and administration fees (Note B), the ratio
of net investment income to average daily net assets would have
been 5.91% (annualized), 5.77%, 5.43%, 5.28%, 5.83% and 4.94%
(annualized) for the six months ended June 30, 1996, the years ended
December 31, 1995, 1994, 1993, 1992, and the period ended December 31,
1991, respectively.
See accompanying Notes to Financial Statements.
8
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INTERMEDIATE-TERM INCOME FUND
<TABLE>
<CAPTION>
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Financial Highlights -- Flag Investors Institutional Shares
(For a share outstanding throughout each period)
For the Six For the Period
Months Ended November 2, 1995*
June 30, 1996 through
(Unaudited) December 31, 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of period $10.58 $10.42
Income from Investment Operations:
Net investment income 0.36 0.09
Net realized and unrealized gain/(loss) on investments (0.34) 0.12
Total from Investment Operations 0.02 0.21
Less Distributions:
Dividends from net investment income and short-term gains (0.31) (0.05)
Net asset value at end of period $10.29 $10.58
Total Return(1) (0.43)% 12.47%
Ratios to Average Daily Net Assets:
Expenses(2) 0.45%** 0.45%**
Net investment income(3) 6.51%** 6.52%**
Supplemental Data:
Net assets at end of period (000) $7,918 $2,186
Portfolio turnover rate 23% 46%
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</TABLE>
* Commencement of operations.
** Annualized.
(1) Total return excludes the effect of sales charge.
(2) Without the waiver of advisory and administration fees (Note B), the ratio
of expenses to average daily net assets would have been 0.71%
(annualized) and 0.72% (annualized) for the six months ended June 30,
1996, and the period ended December 31, 1995, respectively.
(3) Without the waiver of advisory and administration fees (Note B), the ratio
of net investment income to average daily net assets would have been 6.26%
(annualized) and 6.25% (annualized) for the six months ended June 30, 1996,
and the period ended December 31, 1995, respectively.
See accompanying Notes to Financial Statements.
9
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FLAG INVESTORS
INTERMEDIATE-TERM INCOME FUND
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Notes to Financial Statements
A. Significant Accounting Policies - Flag Investors Intermediate-Term Income
Fund, Inc. (the "Fund") is registered under the Investment Company Act of
1940 as an open-end, diversified management investment company designed to
provide a high level of current income consistent with preservation of
capital within an intermediate-term maturity structure. The Fund commenced
operations on May 13, 1991, consisting of Class A Shares, which are subject
to a maximum front-end sales charge of 1.50% and a 0.25% distribution fee.
On November 2, 1995, the Fund began offering Institutional Shares, which are
not subject to a front-end sales charge or a distribution fee.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Fund.
Security Valuation - Debt securities are valued on the basis of quotations
provided by a pricing service, which uses information with respect to
transactions on bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining value. Portfolio securities that are listed on a national
securities exchange are valued on the basis of their last sale price or, in
the absence of recorded sales, at the average of readily available closing
bid and asked prices. Securities or other assets for which market quotations
are not readily available are valued at their fair value so determined in
good faith by the investment advisor under procedures established and
monitored by the Board of Directors. Short-term obligations with maturities
of 60 days or less are valued at amortized cost which approximates market.
Federal Income Tax - No provision is made for federal income taxes as it is
the Fund's intention to continue to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code and to make
requisite distributions to the shareholders that will be sufficient to
relieve it from all or substantially all federal income and excise taxes.
The Fund's policy is to distribute to shareholders substantially all of its
taxable net investment income on a monthly basis and net realized long-term
capital gains annually, if any.
Other - Security transactions are accounted for on the trade date and the
cost of investments sold or redeemed is determined by use of the specific
identification method for both financial reporting and income tax purposes.
Interest income is recorded on an accrual basis and includes amortization of
premiums and accretion of discounts.
Costs incurred by the Fund in connection with its organization, registration
and the initial public offering of shares have been deferred and are being
amortized on the straight-line method over a five-year period beginning on
the date on which the Fund commenced its investment activities.
B. Investment Advisory Fees, Transactions with Affiliates and Other Fees -
Investment Company Capital Corp. ("ICC"), a subsidiary of Alex. Brown
Financial Corp., serves as the Fund's investment advisor. As compensation
for its advisory services, ICC receives from the Fund an annual fee,
calculated daily and paid monthly, at the following annual rates based upon
the Fund's average daily net assets:0.35% of the first $1 billion, 0.30% of
the next $500 million and 0.25% of that portion in excess of $1.5 billion.
10
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INTERMEDIATE-TERM INCOME FUND
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Notes to Financial Statements (continued)
ICC has agreed to reduce its aggregate fees so that ordinary expenses of the
Fund for any fiscal year do not exceed 0.70% of the Fund's average daily net
assets for Class A Shares and 0.45% for Institutional Shares. For the six
months ended June 30, 1996, ICCwaived fees of $83,277.
As compensation for its transfer agent services, ICC receives from the Fund
a per account fee, calculated and paid monthly. ICC received $14,794 for
transfer agent services for the six months ended June 30, 1996.
As compensation for its accounting services, ICC receives from the Fund an
annual fee, calculated daily and paid monthly, from the Fund's average daily
net assets. ICC received $27,007 for accounting services for the six months
ended June 30, 1996.
As compensation for providing distribution services, ICC receives from the
Fund an annual fee, calculated daily and paid monthly, at an annual rate
equal to 0.25% of the Fund's average daily net assets of Class A Shares. For
the six months ended June 30, 1996, distribution fees aggregated $76,984.
The Fund complex of which the Fund is a part has adopted a retirement plan
for eligible Directors. The actuarially computed pension expense allocated
to the Fund for the six months ended June 30, 1996 was $1,098.
C. Capital Share Transactions - The Fund is authorized to issue up to 55 million
shares of capital stock (45 million Class A, 5 million Institutional,
2 million Class B and 3 million undesignated), par value, $.001 per share,
all of which shares are designated as common stock. Transactions in shares
of the Fund were as follows:
Class A Shares
For the Six
Months Ended For the Year
June 30, 1996 Ended
(Unaudited) Dec. 31, 1995
Shares sold 419,564 267,783
Shares issued to
shareholders on
reinvestment of
dividends 106,326 261,580
Shares redeemed (1,237,868) (2,317,104)
Net decrease in
shares outstanding (711,978) (1,787,741)
Proceeds from sale
of shares $ 4,358,719 $ 2,690,780
Value of reinvested
dividends 1,092,017 2,635,861
Cost of shares
redeemed (12,773,834) (23,241,599)
Net decrease from
capital share
transactions $ (7,323,098) $(17,914,958)
Institutional Shares
For the Six For the Period
Months Ended Nov. 2, 1995*
June 30, 1996 through
(Unaudited) Dec. 31, 1995
Shares sold 576,651 219,797
Shares issued to
shareholders on
reinvestment of
dividends 7,645 --
Shares redeemed (21,476) (13,212)
Net increase in shares
outstanding 562,820 206,585
Proceeds from sale
of shares $5,996,512 $2,296,015
Value of reinvested
dividends 78,652 --
Cost of shares
redeemed (227,268) (139,140)
Net increase from
capital share
transactions $5,847,896 $2,156,875
- --------------------------------------------------------------------------------
*Commencement of operations.
11
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FLAG INVESTORS
INTERMEDIATE-TERM INCOME FUND
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Notes to Financial Statements (concluded)
D. Investment Transactions - Purchases and sales of investment securities,
other than short-term obligations, aggregated $14,943,948 and $16,757,354,
respectively, for the six months ended June 30, 1996.
At June 30, 1996, aggregate gross unrealized appreciation for all securities
in which there is an excess of market value over tax cost was $362,855, and
aggregate gross unrealized depreciation for all securities in which there is
an excess of tax cost over market value was $1,180,269.
E. Net Assets - At June 30, 1996, net assets consisted of:
Paid-in capital:
Flag Investors Class A Shares $61,690,202
Flag Investors Institutional
Shares 8,004,771
Accumulated net realized loss from
security transactions (3,389,779)
Undistributed net investment
income 439,462
Unrealized depreciation of
investments (817,414)
$65,927,242
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[Flag Logo]
FLAG INVESTORS
INTERMEDIATE-TERM INCOME FUND
- --------------------------------------------------------------------------------
Directors and Officers
Richard T. Hale Paul D. Corbin
Chairman Executive Vice President
James J. Cunnane Gary V. Fearnow
Director Vice President
John F. Kroeger Edward J. Veilleux
Director Vice President
Louis E. Levy Brian C. Nelson
Director Vice President
Eugene J. McDonald Monica M. Hausner
Director Vice President
W. James Price Joseph A. Finelli
Director Treasurer
Harry Woolf Edward J. Stoken
Director Secretary
M. Elliott Randolph, Jr. Laurie D. DePrine
President Assistant Secretary
Investment Objective
An open-end mutual fund designed to provide a high level of current income
consistent with preservation of principal within an intermediate-term maturity
structure.
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