[LOGO OMITTED]
Short-Intermediate
Income
Semi-Annual Report
June 30, 1999
<PAGE>
REPORT HIGHLIGHTS
- --------------------------------------------------------------------------------
o Substantially outperforming the long-term bond markets, while maintaining its
focus on quality, your Fund's Class A Shares delivered total returns of (.3%)
and 3.3% for the six month and one year period ending June 30, 1999,
respectively.
o Continued strength in the U.S. economy prompted the Federal Reserve to raise
interest rates one quarter of a percent at the June 30th meeting. We
anticipate the Fed may raise rates once more before year-end but do not see
this move jeopardizing the expansion.
o With five year Treasury yields one percent higher year to date and comparable
maturity corporate yields approaching 7%, we believe the opportunity exists
for a cautious extension of the average maturity of your Fund.
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Shareholders:
We are pleased to report on the Fund's progress for the six-month period
ended June 30, 1999.
First Half 1999
With scant evidence of the U.S. economy moderating much less losing
strength, the Federal Reserve raised interest rates yet moved to a neutral
stance on further increases. Inflation remained subdued throughout the second
quarter as evidenced by soft producer and consumer price index reports and
consumer confidence strengthened throughout the first half of 1999 to its second
highest level since late 1968. Encouraged by low unemployment and the vigorous
equity market boosting their retirement accounts, optimistic consumers seem to
have no intention of slowing their spending spree. Data substantiating the lower
level of new home sales, precipitated by higher mortgage rates, may be the
important signal the Fed is searching for that economic activity is moderating.
We feel the Fed may well raise interest rates once more this year; however, this
move should not jeopardize the record setting expansion.
The price deterioration of fixed income securities, which began in the
final quarter of last year, continued throughout the first half of this year as
the market anticipated a tightening of monetary conditions by the Federal
Reserve. Performance of fixed income securities for the first half of 1999
initially appeared to repeat the dismal showing of 1994. Recall that in 1993,
the Federal Reserve allowed the overnight rate to trade at 3%. By the close of
1994, that
[Graphic Omitted]
(Plot points for graph)
U.S. Treasury Yields
(6/98-6/99)
Date 5-YEAR Date 10-YEAR
---- ------ ---- -------
7/03/98 5.413 7/03/98 5.409
7/10/98 5.398 7/10/98 5.411
7/17/98 5.4855 7/17/98 5.507
7/24/98 5.4745 7/24/98 5.4575
7/31/98 5.5005 7/31/98 5.494
8/07/98 5.3755 8/07/98 5.399
8/14/98 5.3345 8/14/98 5.3885
8/21/98 5.19 8/21/98 5.2875
8/28/98 4.903 8/28/98 5.062
9/04/98 4.891 9/04/98 5.013
9/11/98 4.6475 9/11/98 4.83
9/18/98 4.5145 9/18/98 4.695
9/25/98 4.3675 9/25/98 4.56
10/02/98 4.0845 10/02/98 4.28
10/09/98 4.4635 10/09/98 4.784
10/16/98 4.0415 10/16/98 4.444
10/23/98 4.3015 10/23/98 4.7025
10/30/98 4.231 10/30/98 4.605
11/06/98 4.591 11/06/98 4.94
11/13/98 4.502 11/13/98 4.81
11/20/98 4.5955 11/20/98 4.814
11/27/98 4.593 11/27/98 4.808
12/04/98 4.386 12/04/98 4.627
12/11/98 4.39 12/11/98 4.615
12/18/98 4.362 12/18/98 4.5615
12/25/98 4.711 12/25/98 4.848
1/01/99 4.54 1/01/99 4.654
1/08/99 4.732 1/08/99 4.87
1/15/99 4.553 1/15/99 4.685
1/22/99 4.517 1/22/99 4.623
1/29/99 4.548 1/29/99 4.651
2/05/99 4.863 2/05/99 4.9405
2/12/99 4.9625 2/12/99 5.0525
2/19/99 4.9915 2/19/99 5.074
2/26/99 5.221 2/26/99 5.287
3/05/99 5.223 3/05/99 5.314
3/12/99 5.0555 3/12/99 5.147
3/19/99 5.082 3/19/99 5.1835
3/26/99 5.0755 3/26/99 5.199
4/02/99 5.0545 4/02/99 5.187
4/09/99 4.956 4/09/99 5.0525
4/16/99 5.112 4/16/99 5.221
4/23/99 5.136 4/23/99 5.252
4/30/99 5.213 4/30/99 5.348
5/07/99 5.374 5/07/99 5.542
5/14/99 5.498 5/14/99 5.628
5/21/99 5.4255 5/21/99 5.504
5/28/99 5.58 5/28/99 5.62
6/04/99 5.733 6/04/99 5.807
6/11/99 5.914 6/11/99 6.0325
6/18/99 5.728 6/18/99 5.827
6/25/99 5.892 6/25/99 6.014
1
<PAGE>
LETTER TO SHAREHOLDERS (CONTINUED)
- --------------------------------------------------------------------------------
rate had doubled to 6%, leaving in its wake bond losses across the yield and
quality spectrum. However, by starting this year with a significantly flatter
yield curve (short rates approximately 4.50%, long rates 5.00%) the return
profile for the short and intermediate markets is more promising than in 1994.
Performance Comparisons(1)
For Periods Ended June 30, 1999 Six Months One Year Avg. Duration
- --------------------------------------------------------------------------------
Flag Investors Short-Intermediate
Income Fund - Class A Shares (.29)% 3.28% 3.1 yrs.
- --------------------------------------------------------------------------------
Institutional Shares (.10)% 3.57% 3.1 yrs.
- --------------------------------------------------------------------------------
Lehman Brothers Intermediate-Term Gov't.
Corp. Bond Index (.58)% 4.19% 3.4 yrs.
- --------------------------------------------------------------------------------
Lipper Short Intermediate-Term U.S. Gov't.
Bond Fund Average (.39)% 3.33% N/A
- --------------------------------------------------------------------------------
- ----------
(1) These figures assume the reinvestment of dividends and capital gains
distributions and exclude the impact of the Fund's 1.50% maximum sales
charge. If the sales charge were reflected, the quoted performance would be
lower. 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 Lehman Brothers Intermediate Government/Corporate Bond Index
is an unmanaged index that is widely recognized as an indicator of
performance in the intermediate-term government and corporate bond sector.
The Lipper Short-Intermediate Investment Grade Debt Funds Average is an
index of approximately 85 managed funds that have at least 65% of their
assets in investment grade debt securities that are rated in the top four
grades and have dollar-weighted average maturities of one to five years.
Individuals cannot invest directly in any index. Past performance is not an
indicator of future results. Please review the Additional Performance
Information on page 4.
Portfolio Composition (as a percentage of net assets)
June 30, 1999 December 31, 1998
------------- -----------------
Mortgage-Backed 25% Mortgage-Backed 28%
Corporate 35% Corporate 39%
Treasury and Agency 12% Treasury and Agency 11%
Cash 8% Cash 1%
Asset-Backed 20% Asset-Backed 21%
2
<PAGE>
Outlook and Portfolio Considerations
With a surplus of debt issuance pushing high quality corporate spreads to
levels not experienced since the crisis of 1998, these securities lagged the
government sector. However, as the Federal Reserve attempts to fine-tune the
economy without bursting the prosperity bubble, we feel credit quality will
remain strong and the significant corporate debt positions in your Fund will
perform well. During the second quarter, the asset-backed securities in your
portfolio were the best performing assets due to the short duration of these
holdings. With five year Treasury yields one hundred basis points higher since
the beginning of this year and high quality, comparable maturity corporate
yields approaching 7%, we believe the opportunity to participate in this higher
yield environment outweighs the risk of principal declines. We feel a cautious
extension of the average maturity of your Fund is now in order.
Dividend Policy
The Fund continues to distribute approximately $0.05 per share monthly.
With the recent rise in rates, we would anticipate no problems in maintaining
this dividend for the foreseeable future. We appreciate your continued support.
Sincerely,
/s/ M. Elliott Randolph, Jr. /s/ Paul D. Corbin
- ---------------------------- ----------------------
M. Elliott Randolph, Jr. Paul D. Corbin
Portfolio Manager Portfolio Manager
July 23, 1999
3
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Additional Performance Information
The shareholder letter included in this report contains statistics designed
to help you evaluate the performance of your Fund's management. To further
assist in this evaluation, the Securities and Exchange Commission (SEC) requires
that we include the total return of each of the Fund's classes, according to a
standardized formula, for various time periods through the end of the most
recent calendar quarter.
The SEC standardized total return figures include the impact of the maximum
initial sales charge for the Class A Shares. Returns would be higher for Class A
Shares investors who qualified for a lower initial sales charge.
Average Annual Total Return(1)
For periods ended June 30, 1999 1 year 5 years Since Inception
- --------------------------------------------------------------------------------
5/13/91
Class A Shares 1.73% 6.19% 6.36%
- --------------------------------------------------------------------------------
11/2/95
Institutional Shares 3.57% N/A 5.62%
- --------------------------------------------------------------------------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions. Past performance is not an indicator of future results.
While the total return figures are required by SEC rules, such comparisons
are of limited utility since the total return of the Fund's classes are adjusted
for sales charges and expenses while the total return of the indices are not. In
fact, if you wished to replicate the total return of these indices, you would
have to purchase the securities they represent, an effort that would require a
considerable amount of money and would incur expenses that are not reflected in
the index results.
The SEC total return figures may differ from total return figures in the
shareholder letter because the time periods may be different and because the SEC
figures include the impact of sales charges while the total return figures in
the shareholder letter do not. 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.
4
<PAGE>
This page intentionally left blank.
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Statement of Net Assets June 30, 1999
(Unaudited)
S&P Par
Security Rating* (000) Market Value
- --------------------------------------------------------------------------------
CORPORATE NOTES -- 35.3%
Arrow Electronics
7.00%, 1/15/07 ......................... A- $2,000 $ 1,980,000
AT&T Corp
5.625%, 3/15/04 ........................ AA- 2,000 1,940,000
Atlantic City Electric
6.00%, 1/15/03 ......................... A- 2,000 1,972,500
Baltimore Gas & Electric
6.75%, 6/5/12 .......................... A 1,000 997,500
Bear Stearns Companies, Inc.
6.50%, 8/1/02 .......................... A 2,000 1,995,000
Computer Associates International
6.375%, 4/15/05 ........................ A- 2,805 2,671,763
Countrywide Home Loan
7.26%, 5/10/04 ......................... A 2,900 2,950,750
Dana Corp.
6.50%, 3/15/08 ......................... A- 2,500 2,396,875
First Maryland Bancorp
7.20%, 7/1/07 .......................... A- 2,600 2,645,500
Ford Motor Credit
6.00%, 1/14/03 ......................... A 2,000 1,967,500
General Motors Acceptance Corp.
5.625%, 2/15/01 ........................ A- 1,000 992,500
International Lease Finance
6.43%, 9/15/00 ......................... A+ 2,000 2,009,980
New York Telephone
7.375%, 12/15/11 ....................... A+ 1,700 1,714,875
Pacific Gas & Electric
6.25%, 3/1/04 .......................... A 2,000 1,985,000
Sony Corp.
6.125%, 3/4/03 ......................... A 2,000 1,982,500
Tyco International Corp.
5.875%, 11/1/04 ........................ A- 2,000 1,900,000
------------
Total Corporate Notes
(Cost $32,858,277) ........................................ 32,102,243
------------
6
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
S&P Par
Security Rating* (000) Market Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES -- 32.7%
Federal Home Loan Mortgage Corp. -- 5.1%
Debentures
FHLMC
5.00%, 1/15/04 ......................... AAA $3,000 $ 2,868,480
5.125%, 10/15/08 ....................... AAA 2,000 1,820,680
------------
4,689,160
Federal National Mortgage Assn. -- 2.2%
Debentures
Fnma-Govt. Agency
6.375%, 6/15/09 ........................ AAA 2,000 1,993,360
------------
Mortgage Backed Securities -- 24.6%
FHLMC Pool #G50334
6.50%, 2/1/01 .......................... AAA 836 830,185
FHLMC Pool #E20099
6.50%, 5/1/09 .......................... AAA 3,252 3,212,783
FHLMC POOL #C00210
8.00%, 1/1/23 .......................... AAA 430 442,008
FHLMC Pool #G10049
8.00%, 10/1/07 ......................... AAA 451 464,892
FHLMC Pool #G10543
6.00%, 6/1/11 .......................... AAA 2,059 1,988,579
FHLMC T-5 A3
7.15%, 1/25/12 ......................... AAA 2,500 2,448,325
FHLMC T-9 A2
6.43%, 2/25/13 ......................... AAA 2,825 2,772,975
FNGL Pool #409589
9.50%, 11/1/15 ......................... AAA 1,099 1,172,673
FNMA Pool #362537
6.50%, 10/1/03 ......................... AAA 1,850 1,832,688
FNMA Pool #326570
7.00%, 2/1/08 .......................... AAA 2,061 2,069,318
FNMA Pool #433646
6.00%, 10/1/13 ......................... AAA 5,301 5,120,330
------------
22,354,756
7
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Statement of Net Assets (concluded) June 30, 1999
(Unaudited)
S&P Par
Security Rating* (000) Market Value
- --------------------------------------------------------------------------------
Guaranteed Export Trust -- 0.8%
Guaranteed Export Trust, 94-F-A
8.187%, 12/15/04 ....................... AAA $ 689 $ 720,913
------------
Total U.S. Government Agency Securities
(Cost $28,561,209) .......................................... 29,758,189
------------
U.S. TREASURY SECURITIES -- 2.2%
U.S.Treasury Note
5.75% 8/15/03 .......................... AAA 2,000 1,996,220
------------
Total U.S. Treasury Securities
(Cost $1,992,970) ........................................... 1,996,220
------------
ASSET BACKED SECURITIES -- 20.4%
Aesop Funding II Limited Liability Co.,
1997-1-A1
6.22%, 10/20/01 ........................ AAA 3,000 2,992,080
Chemical Master Credit Card Trust
6.23%, 4/15/05 ......................... AAA 3,500 3,472,630
CPS Auto Trust, 1998-2-A
6.09%, 11/15/03 ........................ AAA 2,242 2,241,393
Green Tree Financial Corp., 1994-6-A5
8.25%, 1/15/20 ......................... NR** 3,000 3,098,130
Metris Master Trust, 97-1-A
6.87%, 10/20/05 ........................ AAA 3,000 3,024,330
PG&E Rate Reduction Bonds, California
Infrastructure, 97-1-A4
6.16%, 6/25/03 ......................... AAA 3,700 3,706,660
------------
Total Asset Backed Securities
(Cost $18,568,696) ..................... 18,535,223
------------
COLLATERALIZED MORTGAGE OBLIGATION -- 0.1%
Federal National Mortgage Association
FNMA Series 1988-18B
9.40%, 7/25/03
(Cost $65,374) ......................... AAA 64 66,523
------------
8
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Par
Security (000) Market Value
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 8.2%
Goldman Sachs & Co., dated 6/30/99, 4.70%,
principal and interest in the amount of
$7,453,973, due 7/1/99, collateralized by
U.S. Treasury Bond, par value of $7,593,000,
coupon rate of 5.75%, due 6/30/01, market
value of $7,602,791
(Cost $7,453,000) .................................. $7,453 $ 7,453,000
------------
Total Investments--98.9%
(Cost $91,355,499)*** ....................................... 89,911,398
------------
OTHER ASSETS IN EXCESS OF LIABILITIES--1.1% .................... 1,056, 467
------------
Total Net Assets--100.0% ....................................... $ 90,967,865
============
NET ASSET VALUE AND REDEMPTION PRICE PER:
Class A Share
($46,054,861 / 4,516,434 shares outstanding) .............. $10.20
=======
Institutional Share
($44,913,004 / 4,349,327 shares outstanding) .............. $10.33
=======
MAXIMUM OFFERING PRICE PER:
Class A Share ($10.20 / 0.985) .............................. $10.36
=======
Institutional Share ......................................... $10.33
=======
- ----------
* The Standard & Poor's rating indicated is believed to be the most recent
rating available as of June 30, 1999. The U. S. Government Agency Securities
and U. S. Treasury Securities are assumed to have AAA ratings because they
are backed by the full faith and credit of the U. S. government. These
ratings have not been audited by Deloitte & Touche L.L.P.
** Although this holding is not rated by S&P, it is rated Aaa By Moody's and
AAA by Fitch.
*** Also aggregate cost for federal tax purposes.
See Notes to Financial Statements.
9
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Statement of Operations
For the Six
Months Ended
June 30,
- --------------------------------------------------------------------------------
1999(1)
Investment Income:
Interest .................................................... $ 2,848,984
-----------
Expenses:
Investment advisory fee ..................................... 159,909
Distribution fee ............................................ 56,812
Professional fees ........................................... 53,340
Accounting fee .............................................. 31,683
Registration fees ........................................... 14,522
Transfer agent fee .......................................... 13,613
Custodian fee ............................................... 13,595
Printing and postage ........................................ 10,627
Miscellaneous ............................................... 9,393
-----------
Total expenses ..................................... 363,494
Less: Fees waived .............................................. (101,083)
-----------
Net expenses ....................................... 262,411
-----------
Net investment income .......................................... 2,586,573
-----------
Realized and unrealized gain (loss) on investments:
Net realized gain from security transactions ................ 15,142
Change in unrealized appreciation/depreciation
of investments .......................................... (2,785,366)
-----------
Net loss on investments ............................ (2,770,224)
-----------
Net decrease in net assets resulting from operations ........... $ (183,651)
===========
- ----------
(1) Unaudited.
See Notes to Financial Statements.
10
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
June 30, Dec. 31,
- --------------------------------------------------------------------------------
1999(1) 1998
Increase/(Decrease) in Net Assets:
Operations:
Net investment income .......................... $ 2,586,573 $ 5,239,442
Net realized gain from security transactions ... 15,142 626,662
Change in unrealized appreciation/
depreciation of investments .................. (2,785,366) 281,972
------------ ------------
Net increase/(decrease) in net assets resulting
from operations .............................. (183,651) 6,148,076
------------ ------------
Dividends to Shareholders from:
Net investment income:
Class A Shares ............................... (1,103,081) (2,783,314)
Institutional Shares ......................... (1,150,720) (2,456,128)
Distributions in excess of net investment income:
Class A Shares ............................... -- (84,080)
Institutional Shares ......................... -- (74,196)
------------ ------------
Total distributions ............................ (2,253,801) (5,397,718)
------------ ------------
Capital Share Transactions:
Proceeds from sale of shares ................... 17,294,873 46,758,290
Value of shares issued in reinvestment of
dividends .................................... 936,755 2,730,265
Cost of shares redeemed ........................ (17,044,790) (35,645,932)
------------ ------------
Increase in net assets derived from
capital share transactions ................... 1,186,838 13,842,623
------------ ------------
Total increase/(decrease) in net assets ........ (1,250,614) 14,592,981
Net Assets:
Beginning of period ............................ 92,218,479 77,625,498
------------ ------------
End of period .................................. $ 90,967,865 $ 92,218,479
============ ============
- ----------
(1) Unaudited.
See Notes to Financial Statements.
11
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Financial Highlights -- Class A Shares
(For a share outstanding throughout each period)
For the Six
Months Ended
June 30,
- ------------------------------------------------------------------------------
1999(1)
Per Share Operating Performance:
Net asset value at beginning of period ..................... $ 10.48
-------
Income from Investment Operations:
Net investment income ...................................... 0.28
Net realized and unrealized gain/(loss) on investments ........ (0.31)
-------
Total from Investment Operations ........................... (0.03)
Less Distributions:
Distributions from net investment income ................... (0.25)
Distributions in excess of net investment income ........... --
Return of capital .......................................... --
-------
Total Distributions ........................................ (0.25)
-------
Net asset value at end of period ........................... $ 10.20
=======
Total Return(2) ............................................... (0.03)%
Ratios to Average Daily Net Assets:
Expenses(3) ................................................ 0.70%(5)
Net investment income(4) ................................... 5.53%(5)
Supplemental Data:
Net assets at end of period (000) .......................... $46,055
Portfolio turnover rate .................................... 19%
- ----------
(1) Unaudited.
(2) Total return excludes the effect of sales charge.
(3) Without the waiver of advisory fees (Note 2), the ratio of expenses to
average daily net assets would have been 0.92% (annualized), 0.93%, 0.96%,
0.99%, 0.93%, and 0.84%, for the period ended June 30, 1999 and for the
years ended December 31, 1998, 1997, 1996, 1995 and 1994, respectively.
(4) Without the waiver of advisory fees (Note 2), the ratio of net investment
income to average daily net assets would have been 5.31% (annualized),
5.34%, 5.66%, 5.83%, 5.77%, and 5.43%, for the period ended June 30, 1999
and for the years ended December 31, 1998, 1997, 1996, 1995 and 1994,
respectively.
(5) Annualized.
12
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended December 31,
- ---------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of period ..................... $ 10.39 $ 10.28 $ 10.48 $ 9.62 $ 10.57
------- ------- ------- ------- --------
Income from Investment Operations:
Net investment income ...................................... 0.58 0.61 0.63 0.62 0.57
Net realized and unrealized gain/(loss) on investments ........ 0.11 0.10 (0.23) 0.84 (0.92)
------- ------- ------- ------- --------
Total from Investment Operations ........................... 0.69 0.71 0.40 1.46 (0.35)
Less Distributions:
Distributions from net investment income ................... (0.58) (0.60) (0.60) (0.60) (0.57)
Distributions in excess of net investment income ........... (0.02) -- -- -- --
Return of capital .......................................... -- -- -- -- (0.03)
------- ------- ------- ------- -------
Total Distributions ........................................ (0.60) (0.60) (0.60) (0.60) (0.60)
------- ------- ------- ------- -------
Net asset value at end of period ........................... $ 10.48 $ 10.39 $ 10.28 $ 10.48 $ 9.62
======= ======= ======= ======= =======
Total Return(2) ............................................... 6.81% 7.13% 4.04% 15.43% (3.32)%
Ratios to Average Daily Net Assets:
Expenses(3) ................................................ 0.70% 0.70% 0.70% 0.70% 0.70%
Net investment income(4) ................................... 5.57% 5.92% 6.11% 6.00% 5.57%
Supplemental Data:
Net assets at end of period (000) .......................... $47,107 $45,569 $58,584 $67,116 $78,789
Portfolio turnover rate .................................... 40% 65% 42% 46% 50%
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Financial Highlights -- Institutional Shares
(For a share outstanding throughout each period)
For the Six
Months Ended
June 30,
- -------------------------------------------------------------------------------
1999(1)
Per Share Operating Performance:
Net asset value at beginning of period ..................... $ 10.60
-------
Income from Investment Operations:
Net investment income ...................................... 0.30
Net realized and unrealized gain/(loss) on investments ..... (0.31)
-------
Total from Investment Operations ........................... (0.01)
Less Distributions:
Distributions from net investment income ................... (0.26)
Distributions in excess of net investment income ........... --
-------
Total distributions ........................................ (0.26)
-------
Net asset value at end of period ........................... $ 10.33
=======
Total Return(3) ............................................... (0.01)%
Ratios to Average Daily Net Assets:
Expenses(4) ................................................ 0.45%(6)
Net investment income(5) ................................... 5.78%(6)
Supplemental Data:
Net assets at end of period (000) .......................... $44,913
Portfolio turnover rate .................................... 19%
- ----------
(1) Unaudited.
(2) Commencement of operations.
(3) Total return excludes the effect of sales charge.
(4) Without the waiver of advisory fees (Note 2), the ratio of expenses to
average daily net assets would have been 0.67% (annualized), 0.67%, 0.72%,
0.76%, and 0.72% (annualized) for the period ended June 30, 1999, for the
years ended December 31, 1998, 1997 and 1996 and for the period ended
December 31, 1995, respectively.
(5) Without the waiver of advisory fees (Note 2), the ratio of net investment
income to average daily net assets would have been 5.57% (annualized),
5.58%, 5.90%, 6.04%, and 6.27% (annualized) for the period ended June 30,
1999, for the years ended December 31, 1998, 1997 and 1996, and for the
period ended December 31, 1995, respectively.
(6) Annualized.
14
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
For the Years November 2, 1995(2)
Ended December 31, through December 31,
- ---------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of period ..................... $ 10.50 $ 10.38 $ 10.58 $ 10.42
------- ------- ------- -------
Income from Investment Operations:
Net investment income ...................................... 0.61 0.61 0.59 0.09
Net realized and unrealized gain/(loss) on investments ..... 0.11 0.13 (0.17) 0.12
------- ------- ------- -------
Total from Investment Operations ........................... 0.72 0.74 0.42 0.21
Less Distributions:
Distributions from net investment income ................... (0.61) (0.62) (0.62) (0.05)
Distributions in excess of net investment income ........... (0.01) -- -- --
------- ------- ------- -------
Total distributions ........................................ (0.62) (0.62) (0.62) (0.05)
------- ------- ------- -------
Net asset value at end of period ........................... $ 10.60 $ 10.50 $ 10.38 $ 10.58
======= ======= ======= =======
Total Return(3) ............................................... 7.07% 7.40% 4.20% 12.47%
Ratios to Average Daily Net Assets:
Expenses(4) ................................................ 0.45% 0.45% 0.45% 0.45%(6)
Net investment income(5) ................................... 5.81% 6.17% 6.35% 6.52%(6)
Supplemental Data:
Net assets at end of period (000) .......................... $45,112 $32,056 $17,507 $ 2,186
Portfolio turnover rate .................................... 40% 65% 42% 46%
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
NOTE 1--Significant Accounting Policies
Flag Investors Short-Intermediate Income Fund, Inc. (the "Fund"), was
organized as a Maryland Corporation on April 16, 1990 and began operations May
13, 1991. The Fund is registered under the Investment Company Act of 1940 as a
diversified, open-end investment management company. It is designed to provide a
high level of current income consistent with preservation of principal within an
intermediate-term maturity structure.
The Fund consists of two share classes: Class A Shares, which began
operations on May 13, 1991, and Institutional Shares, which began operations on
November 2, 1995.
The Class A Shares have a 1.50% maximum front-end sales charge and a 0.25%
distribution fee. The Institutional Shares have neither a front-end sales charge
nor a distribution fee.
When preparing the Fund's financial statements, management makes estimates
and assumptions in accordance 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--The Fund values debt securities based on quotations
provided by a pricing service, which uses transactions on bonds,
quotations from bond dealers, market transactions in comparable
securities and various relationships between securities to determine
value. The Fund values portfolio securities that are primarily traded on
a national exchange by using the last sale price reported for the day.
When a market quotation is unavailable, the Investment Advisor
determines a fair value using procedures that the Board of Directors
establishes and monitors. At June 30, 1999 there were no Board valued
securities. The Fund values short-term obligations with maturities of 60
days or less at amortized cost.
B. Repurchase Agreements--The Fund may enter into tri-party repurchase
agreements with broker-dealers and domestic banks. A repurchase
agreement is a short-term investment in which the Fund buys a debt
security that the broker agrees to repurchase at a set time and price.
The third party, which is the broker's custodial bank, holds the
collateral in a separate account until the repurchase agreement
16
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
NOTE 1--concluded
matures. The agreement requires that the collateral's market value,
including any accrued interest, exceeds the broker's repurchase
obligation. 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
income taxes.
D. Security Transactions, Investment Income, Distributions and Other--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. Income and common expenses are allocated to
each class based on its respective average net assets. Class specific
expenses are charged directly to each class. Dividends from net
investment income are declared and paid monthly. Distributions of
capital gains are recorded on the ex-dividend dates. Distributions in
excess of net investment income occur when taxable income exceeds income
under generally accepted accounting principles.
NOTE 2--Investment Advisory Fee, Transactions with Affiliates and
Other Fees
Investment Company Capital Corp. ("ICC"), an indirect subsidiary of Bankers
Trust Corporation, is the Fund's investment advisor. In November 1998 Bankers
Trust Corporation ("BT Corp.") and Deutsche Bank AG ("Deutsche Bank") entered
into an Agreement and Plan of Merger. This merger transaction was consummated on
June 4, 1999. As a result of the transaction, BT Corp. became a wholly-owned
subsidiary of Deutsche Bank.
17
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
NOTE 2--continued
As compensation for its advisory services, the Fund pays ICC an annual fee.
This fee is based on the Fund's average daily net assets and is calculated daily
and paid monthly at the following annual rates: 0.35% of the first $1 billion,
0.30% of the next $500 million and 0.25% of the amount over $1.5 billion. For
the six months ended June 30, 1999, ICC's advisory fees amounted to $159,909, of
which $26,010 was payable at the end of the period.
ICC has agreed to waive its fees and reimburse expenses of the Fund to the
extent necessary to limit Fund expenses to 0.70% of the Class A Shares' average
daily net assets and 0.45% of the Institutional Shares' average daily net
assets. For the six months ended June 30, 1999, ICC waived fees of $101,083.
ICC also provides accounting services to the Fund for which the Fund pays
ICC an annual fee that is calculated daily and paid monthly from the Fund's
average daily net assets. For the six months ended June 30, 1999, ICC's fees
were $31,683, of which $5,209 was payable at the end of the period.
ICC also provides transfer agent services to the Fund for which the Fund
pays ICC a per account fee that is calculated and paid monthly. For the six
months ended June 30, 1999, ICC's fees were $13,613, of which $10,922 was
payable at the end of the period.
Certain officers and directors of the Fund are also officers or directors
of ICC.
ICC Distributors, Inc., a member of the Forum Group of companies, provides
distribution services to the Fund for which the Fund pays ICC Distributors an
annual fee, pursuant to rule 12b-1, that is calculated daily and paid monthly.
This fee is paid at an annual rate equal to 0.25% of the Class A Shares' average
daily net assets. For the six months ended June 30, 1999, ICC's fees were
$58,812, of which $0,000, was payable at the end of the period.
Effective September 22, 1997 Bankers Trust Company became the Fund's
custodian. For the six months ended June 30, 1999 Bankers Trust's fees were
$13,595 of which $2,681 was payable at the end of the period.
The Fund's complex offers a retirement plan for eligible Directors. The
actuarially computed pension expense allocated to the Fund for the six months
ended June 30, 1999 was approximately $1,545, and the accrued liability was
approximately $12,959.
18
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
NOTE 3--Capital Share Transactions
The Fund is authorized to issue up to 60 million shares of $.001 par value
capital stock (45 million Class A, 2 million Class B, 5 million Institutional, 5
million Brown Investment Advisory & Trust and 3 million undesignated).
Transactions in shares of the Fund are listed below.
Class A Shares
---------------------------------
For the Six For the
Months Ended Year Ended
June 30, 1999(1) Dec. 31, 1998
--------------- --------------
Shares sold ................................. 575,427 1,491,889
Shares issued on reinvestment of dividends .. 77,038 203,462
Shares redeemed ............................. (632,062) (1,585,950)
----------- ------------
Net increase in shares outstanding .......... 20,403 109,401
=========== ============
Proceeds from sale of shares ................ $ 5,953,341 $ 15,616,738
Value of shares issued in reinvestment of
dividends ................................ 794,493 2,128,706
Cost of shares redeemed ..................... (6,569,225) (16,609,172)
----------- ------------
Net increase from capital share
transactions ............................. $ 178,609 $ 1,136,272
=========== ============
Institutional Shares
--------------------------------
For the Six For the
Months Ended Year Ended
June 30, 1999(1) Dec. 31, 1998
---------------- ------------
Shares sold ................................. 1,080,249 2,941,098
Shares issued on reinvestment of dividends .. 13,637 56,983
Shares redeemed ............................. (999,008) (1,796,192)
------------ ------------
Net increase in shares outstanding .......... 94,878 1,201,889
============ ============
Proceeds from sale of shares ................ $ 11,341,532 $ 31,141,552
Value of reinvested dividends ............... 142,262 601,559
Cost of shares redeemed ..................... (10,475,565) (19,036,760)
------------ ------------
Net increase from capital share
transactions ............................. $ 1,008,229 $ 12,706,351
============ ============
- ----------
(1) Unaudited.
19
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
NOTE 4--Investment Transactions
Excluding short-term obligations, purchases of investment securities
aggregated $16,815,822 and sales of investment securities aggregated $20,028,964
for the six months ended June 30, 1999.
At June 30, 1999, aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost was $138,303, and
aggregate gross unrealized depreciation for all securities in which there is an
excess of tax cost over value was $1,582,404.
NOTE 5--Net Assets
At June 30, 1999, net assets consisted of:
Paid-in Capital:
Flag Investors Class A Shares ......................... $ 49,628,015
Flag Investors Institutional Shares ................... 45,433,698
Undistributed net investment income ....................... 118,586
Accumulated net realized loss from security transactions .. (2,768,333)
Net unrealized depreciation of investments ................ (1,444,101)
------------
$ 90,967,865
============
NOTE 6--Federal Income Tax Information
At June 30, 1999, there was a tax capital loss carryforward of $2,757,728,
of which $2,722,604 expires in 2003 and $35,124 expires in 2004. This
carryforward will be used to offset future net capital gains, if any.
20
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
- --------------------------------------------------------------------------------
Directors and Officers
RICHARD T. HALE
Chairman
JAMES J. CUNNANE TRUMAN T. SEMANS
Director Director
JOSEPH R. HARDIMAN CARL W. VOGT, ESQ.
Director Director
LOUIS E. LEVY HARRY WOOLF
Director President
EUGENE J. MCDONALD JOSEPH A. FINELLI
Director Treasurer
REBECCA W. RIMEL AMY M. OLMERT
Director 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.
- --------------------------------------------------------------------------------
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 Communications Fund
Flag Investors Real Estate Securities Fund
Balanced
Flag Investors Value Builder Fund
Fixed 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
Money Market
Flag Investors Cash Reserve Prime Shares
P.O. Box 515
Baltimore, Maryland 21203
800-767-FLAG
Distributed by:
ICC Distributors, Inc.
SHORTSA
(8/99)
