[LOGO OMITTED]
FLAG INVESTORS
INVESTING WITH A DIFFERENCE(R)
SHORT-INTERMEDIATE
INCOME FUND
Semi-Annual Report
June 30, 2000
<PAGE>
REPORT HIGHLIGHTS
--------------------------------------------------------------------------------
o Signs of a moderating economy.
o Federal Reserve tightened monetary policy through first half of 2000.
o Investors taking a closer look at fixed income allocations.
<PAGE>
LETTER TO SHAREHOLDERS
--------------------------------------------------------------------------------
Dear Shareholders:
We are pleased to report on the Fund's progress for the six-month period
ended June 30, 2000.
FIRST HALF 2000
With 175 basis points of tightening of monetary policy since mid 1999,
there are indications that the subtle economic slowdown the Federal Reserve had
hoped to achieve is under way; however, it may be too early to determine if the
current policy of monetary restraint is over. Following the June FOMC meeting,
the Fed acknowledged that the overall tone of the economy has changed to one of
moderating demand "close to the rate of growth of the economy's potential to
produce" and that price pressures remain under control as a result of "rapid
advances in technology." More importantly, Chairman Greenspan has acknowledged
that productivity gains afforded by technology are structural, unlike comments
in earlier speeches warning of cyclical "limits to productivity growth". Given
evidence that consumer confidence is slipping from historical highs, retail
sales and new home sales are slowing and producer and consumer prices are
seemingly subdued, the Fed may keep interest rates steady throughout the fall.
Portfolio Composition (as a percentage of net assets)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
June 30, 2000
Mortgage-Backed 25%
Treasury and Agency 14%
Cash & Other Assets 3%
Asset-Backed 24%
Corporate 34%
December 31, 1999
Mortgage-Backed 24%
Treasury and Agency 10%
Cash & Other Assets 11%
Asset-Backed 17%
Corporate 38%
1
<PAGE>
LETTER TO SHAREHOLDERS (CONCLUDED)
--------------------------------------------------------------------------------
OUTLOOK AND PORTFOLIO CONSIDERATIONS
Over the past several years, fixed income investors have had little if any
chance to enjoy returns that were better than stocks; however, the first half of
2000 has presented that opportunity. While the S&P 500 Index, Nasdaq and Dow
Jones Industrial Average declined .4%, 2.5% and 8.4% respectively; your Fund has
produced a respectable 3% return. During volatile times such as we've
experienced in 2000, the role of fixed income in a portfolio becomes
increasingly important. Currently, bonds provide greater income than stocks or
cash and bond prices often move independently of stock prices; thus, leveling
out expected returns over time. The short-intermediate nature of your Fund is
designed to provide a steady stream of income while preserving principal.
Average Annual Total Returns 1
For Periods Ended Six One Three Five Average
June 30, 2000 Months 2 Year Years Years Duration
--------------------------------------------------------------------------------
Flag Investors
Short-Intermediate
Income Fund --
Class A Shares 3.06% 4.09% 5.00% 5.49% 3.1 yrs.
--------------------------------------------------------------------------------
Institutional Shares 3.23% 4.38% 5.29% N/A 3.1 yrs.
--------------------------------------------------------------------------------
Lehman Brothers
Intermediate-Term Gov't./
Corp. Bond Index 2.95% 4.86% 5.59% 5.79% 3.5 yrs.
--------------------------------------------------------------------------------
Lipper Short-Intermediate-
Term U.S. Gov't.
Bond Fund Average 2.81% 3.90% 4.83% 5.21% 3.0 yrs.
--------------------------------------------------------------------------------
----------
1 PAST PERFORMANCE IS NOT AN INDICATOR OF FUTURE RESULTS. These figures assume
the reinvestment of dividend and capital gains distributions and exclude the
impact of the Fund's 1.50% maximum sales charge in Class A Shares. If the
sales charge were reflected, the quoted performance would be lower. Investment
return and principal value will fluctuate so that an investor's shares may be
worth more or less than their original cost when redeemed. During the period
the Fund waived certain fees and expenses. Had these fees and expenses not
been waived, the Fund's return would have been lower.
The Lehman Brothers Intermediate-Term Government/Corporate Bond Fund ndex is
an unmanaged index that is widely recognized as an indicator of performance in
the intermediate-term government and corporate bond sector. Index returns do
not reflect expenses which have been deducted from the Fund's returns. The
Lipper Short-Intermediate-Term U.S. Government Bond Fund Average is an average
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. Please review
the Additional Performance Information on page 4.
2 Returns less than one year are cumulative.
2
<PAGE>
--------------------------------------------------------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
A-RATED INDUSTRIAL CORPORATE BOND YIELDS
Jun-94 7.37
7.18
7.18
7.67
7.87
8.21
8.25
7.96
7.47
7.53
7.27
6.47
Jun-95 6.48
6.63
6.57
6.51
6.23
5.94
5.84
5.7
6.19
6.54
6.82
7.01
Jun-96 6.86
6.97
7.17
6.88
6.48
6.2
6.58
6.59
6.7
7.09
6.92
6.81
Jun-97 6.72
6.26
6.57
6.32
6.18
6.3
6.18
5.88
6.01
6.01
6.05
5.98
Jun-98 5.97
5.98
5.49
5.14
5.29
5.42
5.46
5.31
6.01
5.88
5.98
6.36
Jun-99 6.49
6.65
6.93
6.84
6.91
6.95
7.17
7.49
7.45
7.27
7.48
7.61
Jun-00 7.3
-----------
Source -- Bloomberg Financial Markets
Though it may be too early to indicate a trend, investor interest in bond
funds seems to be on the upswing. Whether locking in sizable gains in their
equity portfolios or reacting to volatility in the equity markets, investors'
enthusiasm for stocks has cooled leading those who believe the Fed may be close
to the end of a tightening cycle gradually back to the bond market.
Our strategy of upgrading quality while maintaining an over-weighted
position in corporate bonds has allowed the fund to participate in some of the
highest yields in the last six years (see chart above). In addition, as holdings
of short asset-backed and mortgage-backed securities have repaid principal, we
have reinvested the proceeds at more attractive rates. We will continue to
pursue higher quality, more liquid securities for your Fund as market conditions
allow.
Sincerely,
/S/ SIGNATURE M. ELLIOTT RANDOLPH, JR. /S/ SIGNATURE PAUL D. CORBIN
M. Elliott Randolph, Jr. Paul D. Corbin
Portfolio Manager Portfolio Manager
July 30, 2000
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 1.50%
maximum initial sales charge for the Fund's 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 Since
June 30, 2000 1 year 5 years Inception
--------------------------------------------------------------------------------
Class A Shares
(inception 5/13/91) 2.53% 5.17% 6.11%
--------------------------------------------------------------------------------
Institutional Shares
(inception 11/2/95) 4.38% N/A 5.35%
--------------------------------------------------------------------------------
--------------
1 PAST PERFORMANCE IS NOT AN INDICATOR OF FUTURE RESULTS. These figures assume
the reinvestment of dividend and capital gain distributions. Investment return
and principle value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost. During the
period the Fund waived fees and expenses.
The SEC total return figures may differ from total return figures in the
shareholder letter 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.
4
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS JUNE 30, 2000
(UNAUDITED)
S&P PAR
SECURITY RATING* (000) MARKET VALUE
--------------------------------------------------------------------------------
CORPORATE NOTES -- 33.5%
Atlantic City Electric
6.00%, 1/15/03 ..................... A- $2,000 $ 1,940,000
Baltimore Gas & Electric
6.75%, 6/5/12 ...................... A 1,000 986,384
Block Financial Corp. .................
6.75%, 11/1/04 ..................... A 1,750 1,677,813
Computer Associates International
6.375%, 4/15/05 .................... BBB+ 2,000 1,875,000
Countrywide Home Loan
7.26%, 5/10/04 ..................... A 3,000 2,936,250
First Maryland Bancorp
7.20%, 7/1/07 ...................... A- 1,575 1,504,125
Ford Motor Credit
7.375%, 10/28/09 ................... A 2,000 1,940,000
General Electric Capital Corp.
7.50%, 6/5/03 ...................... AAA 1,000 1,007,500
General Motors Acceptance Corp.
6.625%, 10/1/02 .................... A 2,000 1,975,000
Goldman Sachs Group****
6.25%, 2/1/03 ...................... A+ 2,000 1,935,000
New York Telephone
7.375%, 12/15/11 ................... AA 1,700 1,659,625
Pacific Gas & Electric
6.25%, 3/1/04 ...................... AA- 2,000 1,927,500
Tyco International Corp.
5.875%, 11/1/04 .................... A- 2,000 1,870,000
Wilmington Trust Corp.
6.625%, 5/1/08 ..................... A- 2,200 1,988,250
Worldcom Inc.
8.00%, 5/15/06 ..................... A- 2,000 2,025,000
-----------
TOTAL CORPORATE NOTES
(Cost $28,141,746) .......................................... 27,247,447
-----------
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000
(UNAUDITED)
S&P PAR
SECURITY RATING* (000) MARKET VALUE
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCYSECURITIES -- 39.8%
FEDERAL HOME LOAN MORTGAGE CORP. -- 2.1%
Debentures
FHLMC
5.125%, 10/15/08 .......................... AAA** $2,000 $1,744,320
----------
FEDERAL NATIONAL MORTGAGE ASSN. -- 9.0%
Debentures
FNMA-Government Agency
6.25%, 7/15/04 ............................ AAA** 3,000 2,921,250
6.375%, 6/15/09 ........................... AAA** 3,000 2,847,720
FNMA
7.25%, 1/15/10 ............................ AAA** 1,500 1,514,820
----------
7,283,790
----------
FEDERAL HOME LOAN BANK NOTES -- 2.5%
Federal Home Loan Bank
7.25%, 5/15/03 ............................ AAA** 2,000 2,015,000
----------
GUARANTEED EXPORT TRUST -- 0.7%
Guaranteed Export Trust, 94-F-A
8.187%, 12/15/04 .......................... AAA 539 546,712
----------
MORTGAGE BACKED SECURITIES -- 25.5%
FHLMC Pool #C00210
8.00%, 1/1/23 ............................. AAA+ 346 348,579
FHLMC Pool #E20099
6.50%, 5/1/09 ............................. AAA+ 2,672 2,581,139
FHLMC Pool #G10049
8.00%, 10/1/07 ............................ AAA+ 317 320,998
FHLMC Pool #G10543
6.00%, 6/1/11 ............................. AAA+ 1,760 1,669,424
FHLMC Pool #G10682
7.50%, 6/1/12 ............................. AAA+ 2,141 2,137,308
FHLMC Pool #G10690
7.00%, 7/1/12 ............................. AAA+ 2,162 2,124,448
FHLMC Pool #G50334
6.50%, 2/1/01 ............................. AAA+ 594 580,510
FHLMC T-5 A3
7.15%, 1/25/12 ............................ AAA+ 2,271 2,257,700
FNGL Pool #409589
9.50%, 11/1/15 ............................ AAA+ 929 964,846
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000
(UNAUDITED)
S&P PAR
SECURITY RATING* (000) MARKET VALUE
--------------------------------------------------------------------------------
MORTGAGE BACKED SECURITIES (CONTINUED)
FNMA Pool #326570
7.00%, 2/1/08 ............................ AAA+ $1,757 $ 1,724,581
FNMA Pool #362537
6.50%, 10/1/03 ........................... AAA+ 1,557 1,509,250
FNMA Pool #433646
6.00%, 10/1/13 ........................... AAA+ 4,790 4,534,422
-----------
20,753,205
-----------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES
(Cost $33,437,981) ....................... 32,343,027
-----------
ASSET BACKED SECURITIES -- 23.8%
California Infrastructure SCE-1
6.38%, 9/25/08 ........................... AAA 2,945 2,854,647
Chemical Master Credit Card Trust 1
6.23%, 4/15/05 ........................... AAA 3,500 3,440,710
Chevy Chase Auto Receivables Trust,
Series 97-3, Class A
6.20%, 3/20/04 ........................... AAA 1,485 1,472,451
CPS Auto Trust, 1998-2-A
6.09%, 11/15/03 .......................... AAA 2,765 2,726,668
Green Tree Financial Corp., 1994-6-A5
8.25%, 1/15/20 ........................... NR** 3,000 3,015,480
IMC Home Equity Loan Trust
6.69%, 2/25/21 ........................... AAA 2,850 2,806,538
Metris Master Trust, 97-1- A
6.87%, 10/20/05 .......................... AAA 3,000 2,986,500
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $19,481,698) ............................................ 19,302,994
-----------
COLLATERALIZED MORTGAGE OBLIGATION -- 0.0%
FNMA Series 1988-18B
9.40%, 7/25/03 ........................... AAA+ 38 38,953
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATION
(Cost $38,933) ................................................ 38,953
-----------
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000
(UNAUDITED)
S&P PAR
SECURITY RATING* (000) MARKET VALUE
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.2%
Goldman Sachs & Co., dated 6/30/00, 6.40%,
principal and interest in the amount of
$2,601,387, due 7/3/2000, collateralized by
U.S. Treasury Bond, par value of $2,634,000,
coupon rate 6.25%, due 10/31/01, market
value of 2,652,649 .............................. $2,600 $ 2,600,000
-----------
TOTAL INVESTMENTS -- 100.3%
(Cost $83,700,358)*** .......................................... 81,532,421
-----------
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.3)% .................... (241,913)
-----------
TOTAL NET ASSETS-- 100.0% ......................................... $81,290,508
===========
NET ASSET VALUE AND REDEMPTION PRICE PER:
Class A Share
($39,166,736 (DIVIDE) 3,918,533 shares outstanding) .......... $10.00
======
Institutional Share
($42,123,772 (DIVIDE) 4,157,295 shares outstanding) .......... $10.13
======
MAXIMUM OFFERING PRICE PER:
Class A Share ($10.00 (DIVIDE) 0.985) .......................... $10.15
======
Institutional Share ............................................ $10.13
======
---------------
* The Standard & Poor's rating indicated is believed to be the most recent
available as of 6/30/00. These ratings have not been audited by
PricewaterhouseCoopers LLP.
** Although this holding is not rated by S&P, it is rated Aaa by Moody's.
*** Also, aggregate cost for federal tax purposes.
**** Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may only be resold to qualified institutional buyers -- total of
such securities at period-end amounts to 2.38% of net assets.
+ Although not specifically rated by either S&P or Moody's, the Portfolio
managers deem the credit quality equivalent to AAA.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE SIX
MONTHS ENDED
JUNE 30,
--------------------------------------------------------------------------------
2000
Investment Income:
Interest ..................................................... $ 2,815,279
-----------
Expenses:
Investment advisory fee ...................................... 145,570
Distribution fee ............................................. 50,986
Professional fees ............................................ 50,465
Accounting fee ............................................... 30,553
Printing and postage fees .................................... 21,409
Transfer agent fee ........................................... 17,688
Registration fee ............................................. 14,602
Director's fee ............................................... 2,990
Servicing fee ................................................ 685
Custodian fee ................................................ 670
Miscellaneous ................................................ 1,881
-----------
Total expenses ..................................... 337,499
Less:Fees waived ............................................. (108,284)
-----------
Net expenses ....................................... 229,215
-----------
Net investment income ........................................... 2,586,064
-----------
Realized and unrealized gain/(loss) on investments:
Net realized loss from securities transactions ............... (402,004)
Change in unrealized appreciation/depreciation of investments 321,211
-----------
Net loss on investments ............................ (80,793)
-----------
Net increase in net assets resulting from operations ............ $ 2,505,271
===========
SEE NOTES TO FINANCIAL STATEMENTS.
9
<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,
--------------------------------------------------------------------------------
2000 1 1999
Increase/(Decrease) in Net Assets:
Operations:
Net investment income ....................... $ 2,586,064 $ 5,213,527
Net realized loss from security transactions (402,004) (573,383)
Change in unrealized appreciation/
depreciation of investments ............... 321,211 (3,830,413)
------------ ------------
Net increase in net assets resulting
from operations ........................... 2,505,271 809,731
------------ ------------
Dividends to Shareholders from:
Net investment income:
Class A Shares ............................ (1,023,071) (2,593,071)
Institutional Shares ...................... (1,101,008) (2,649,696)
Return of Capital:
Class A Shares ............................ -- (61,264)
Institutional Shares ...................... -- (62,601)
------------ ------------
Total distributions ......................... (2,124,079) (5,366,632)
------------ ------------
Capital Share Transactions:
Proceeds from sale of shares ................ 8,945,942 27,968,218
Value of shares issued in reinvestment of
dividends ................................. 906,128 2,313,240
Cost of shares repurchased .................. (12,119,129) (34,766,661)
------------ ------------
Decrease in net assets derived from
capital share transactions ................ (2,267,059) (4,485,203)
------------ ------------
Total decrease in net assets ................ (1,885,867) (9,042,104)
Net Assets:
Beginning of period ......................... 83,176,375 92,218,479
------------ ------------
End of period (including distributions in
excess of net investment income of
$250,738 for the year ended
December 31, 1999) ........................ $ 81,290,508 $ 83,176,375
============ ============
----------
1 Unaudited.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- CLASS A SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------------------------------------
2000 2 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of period .................. $ 9.95 $ 10.48 $ 10.39 $ 10.28 $ 10.48 $ 9.62
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income ................................... 0.36 0.57 0.58 0.61 0.63 0.62
Net realized and unrealized gain/(loss) on investments .. (0.01) (0.50) 0.11 0.10 (0.23) 0.84
------- ------- ------- ------- ------- -------
Total from Investment Operations ........................ 0.35 0.07 0.69 0.71 0.40 1.46
Less Distributions:
From net investment income .............................. (0.30) (0.59) (0.58) (0.60) (0.60) (0.60)
In excess of net investment income ...................... -- -- (0.02) -- -- --
Return of capital ....................................... -- (0.01) -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions ..................................... (0.30) (0.60) (0.60) (0.60) (0.60) (0.60)
------- ------- ------- ------- ------- -------
Net asset value at end of period ........................ $ 10.00 $ 9.95 $ 10.48 $ 10.39 $ 10.28 $ 10.48
======= ======= ======= ======= ======= =======
Total Return1 .............................................. 3.06% 0.70% 6.81% 7.13% 4.04% 15.43%
Ratios to Average Daily Net Assets:
Expenses before waivers ................................. 0.94%3 0.93% 0.93% 0.96% 0.99% 0.93%
Expenses after waivers .................................. 0.70%3 0.70% 0.70% 0.70% 0.70% 0.70%
Net investment income ................................... 6.09%3 5.63% 5.57% 5.92% 6.11% 6.00%
Supplemental Data:
Net assets at end of period (000) ....................... $39,167 $42,559 $47,107 $45,569 $58,584 $67,116
Portfolio turnover rate ................................. 17% 47% 40% 65% 42% 46%
<FN>
-----------
1 Total return excludes the effect of sales charge.
2 Unaudited.
3 Annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12 13
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED NOVEMBER 2, 1995 2
JUNE 30, FOR THE YEARS ENDED DECEMBER 31, THROUGH DECEMBER 31,
-----------------------------------------------------------------------------------------------------------------------------------
2000 2 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of period ........ $ 10.08 $ 10.60 $ 10.50 $ 10.38 $ 10.58 $10.42
------- ------- ------- ------- ------- ------
Income from Investment Operations:
Net investment income ......................... 0.37 0.61 0.61 0.61 0.59 0.09
Net realized and unrealized gain/(loss)
on investments .............................. (0.01) (0.51) 0.11 0.13 (0.17) 0.12
------- ------- ------- ------- ------- ------
Total from Investment Operations .............. 0.36 0.10 0.72 0.74 0.42 0.21
Less Distributions:
From net investment income .................... (0.31) (0.60) (0.61) (0.62) (0.62) (0.05)
In excess of net investment income ............ -- -- (0.01) -- -- --
Return of capital ............................. -- (0.02) -- -- -- --
------- ------- ------- ------- ------- ------
Total distributions ........................... (0.31) (0.62) (0.62) (0.62) (0.62) (0.05)
------- ------- ------- ------- ------- ------
Net asset value at end of period .............. $ 10.13 $ 10.08 $ 10.60 $ 10.50 $ 10.38 $10.58
======= ======= ======= ======= ======= ------
Total Return 3 ................................ 3.23% 1.02% 7.07% 7.40% 4.20% 12.47%
Ratios to Average Daily Net Assets:
Expenses before waivers ....................... 0.69%4 0.68% 0.67% 0.72% 0.76% 0.72%
Expenses after waivers ........................ 0.45%4 0.45% 0.45% 0.45% 0.45% 0.45%4
Net investment income ......................... 6.34%4 5.88% 5.81% 6.17% 6.35% 6.52%4
Supplemental Data:
Net assets at end of period (000) ............. $42,124 $40,617 $45,112 $32,056 $17,507 $2,186
Portfolio turnover rate ....................... 17% 47% 40% 65% 42% 46%
<FN>
---------------
1 Unaudited.
2 Commencement of operations.
3 Total return excludes the effect of sales charge.
4 Annualized.
</FN>
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14 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 management investment company. The Fund seeks a high level
of current income consistent with preservation of principal within an
intermediate-term maturity structure.
The Fund consists of two active 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 accounting principles generally accepted in
theUnited States. 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. VALUATION OF SECURITIES -- 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, 2000 there were no securities
valued using the fair value pricing procedures. 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
16
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
NOTE 1 -- CONCLUDED
the collateral in a separate account until the repurchase agreement
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. SECURITIES TRANSACTIONS, INVESTMENT INCOME, DISTRIBUTIONS AND OTHER --
The Fund uses the trade date to account for securities 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
amortization of premiums and accretion of discounts when appropriate.
Income, gains 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. ("ICCC"), an indirect subsidiary of
Deutsche Bank AG, is the Fund's investment advisor.
As compensation for its advisory services, the Fund pays ICCC an annual
fee, based on the Fund's average daily net assets which is calculated daily and
17
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- CONTINUED
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, 2000, ICCC's advisory fees amounted to $145,570, of which,
$23,840 was payable at the end of the period.
ICCC has contractually 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, 2000, ICCC waived fees of
$108,284.
Brown Investment Advisory & Trust Company ("Brown Trust") is the Fund's
investment sub-advisor. As compensation for providing sub-advisory services,
Brown Trust is entitled to receive a fee from ICCC, calculated daily and payable
monthly, at the annual rate of 0.23% of the first $1 billion of the Fund's
average daily net assets, 0.20% of the next $500 million of the Fund's average
daily net assets and 0.16% of that portion of the Fund's average daily net
assets in excess of $1.5 billion. Brown Trust has contractually agreed to waive
its fees in proportion to any fee waivers by ICCC.
ICCC also provides accounting services to the Fund for which the Fund pays
ICCC 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, 2000, ICCC's fees
were $30,553 of which, $5,023 was payable at the end of the period.
ICCC also provides transfer agent services to the Fund for which the Fund
pays ICCC a per account fee that is calculated and paid monthly. For the six
months ended June 30, 2000, ICCC's fees were $17,688 of which, $1,472 was
payable at the end of the period.
Certain officers and directors of the Fund are also officers or directors
of ICCC.
ICC Distributors, Inc., 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 at an annual rate equal to 0.25% of the
Class A Shares' average daily net assets. For the six months ended June 30,
2000, ICC Distributors' fee was $50,986 of which, $8,270 was payable at the end
of the period.
Bankers Trust Company, an affiliate of the advisor, is the Fund's
custodian. For the six months ended June 30, 2000, Bankers Trust's fees were
$670 of which $12,723 was payable at the end of the period.
18
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
NOTE 2 -- CONCLUDED
The Fund participates along with other Flag Investor Funds in a retirement
plan for eligible Directors. The actuarially computed pension expense allocated
to the Fund for the six months ended June 30, 2000 was approximately $679 and
the accrued liability was approximately $5,360.
NOTE 3 -- CAPITAL SHARE TRANSACTIONS
The Fund is authorized to issue up to 85 million shares of $.001 par value
capital stock (50 million Class A, 2 million Class B, 15 million Class C, 15
million Institutional Class 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, 2000 1 DEC. 31, 1999
--------------- --------------
Shares sold .............................. 119,033 836,919
Shares issued on reinvestment
of dividends ........................... 75,727 190,496
Shares redeemed .......................... (552,184) (1,247,488)
----------- -------------
Net decrease in shares outstanding ....... (357,424) (220,073)
=========== =============
Proceeds from sale of shares ............. $ 1,178,681 $ 8,585,408
Value of shares issued in reinvestment
of dividends ........................... 750,124 1,936,452
Cost of shares redeemed .................. (5,488,378) (12,765,823)
----------- -------------
Net decrease from capital share
transactions ........................... $(3,559,573) $ (2,243,963)
=========== =============
INSTITUTIONAL SHARES
----------------------------------
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
JUNE 30, 2000 1 DEC. 31, 1999
--------------- --------------
Shares sold .............................. 771,792 1,865,686
Shares issued on reinvestment
of dividends ........................... 15,539 36,539
Shares redeemed .......................... (658,234) (2,128,476)
----------- -----------
Net increase/(decrease) in
shares outstanding ..................... 129,097 (226,251)
----------- -----------
Proceeds from sale of shares ............. $ 7,767,261 $ 19,382,810
Value of reinvested dividends ............ 156,004 376,788
Cost of shares redeemed .................. (6,630,751) (22,000,838)
----------- -----------
Net increase/(decrease) from
capital share transactions ............. $ 1,292,514 $ (2,241,240)
=========== =============
-----------
1 Unaudited.
19
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
NOTE 4 -- INVESTMENT TRANSACTIONS
Excluding short-term and U.S. obligations, purchases of investment
securities aggregated $21,044,212 and sales of investment securities aggregated
$12,988,503 for the six months ended June 30, 2000.
NOTE 5 -- NET ASSETS
At June 30, 2000, net assets consisted of:
Paid-in Capital:
Flag Investors Class A Shares ........................... $43,583,787
Flag Investors Institutional Shares ..................... 43,414,959
Undistributed Net Investment Income ......................... 211,247
Accumulated net realized loss from securities
transactions ............................................. (3,751,548)
Net unrealized depreciation of investments .................. (2,167,937)
-----------
$81,290,508
===========
20
<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND
--------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
RICHARD T. HALE
CHAIRMAN
RICHARD R. BURT
DIRECTOR
JOSEPH R. HARDIMAN
DIRECTOR
LOUIS E. LEVY
DIRECTOR
EUGENE J. MCDONALD
DIRECTOR
REBECCA W. RIMEL
DIRECTOR
TRUMAN T. SEMANS
DIRECTOR
ROBERT H.WADSWORTH
DIRECTOR
CARL W. VOGT, ESQ.
PRESIDENT
CHARLES A. RIZZO
TREASURER
AMY M. OLMERT
SECRETARY
DANIEL O. HIRSCH
ASSISTANT SECRETARY
INVESTMENT OBJECTIVE
An open-end mutual fund that seeks 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 other 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>
[LOGO OMITTED]
FLAG INVESTORS
INVESTING WITH A DIFFERENCE(R)
[GRAPHIC OMITTED]
DOMESTIC EQUITY
Communications Fund
Emerging Growth Fund
Equity Partners Fund
Real Estate Securities Fund
Top 50 US
Value Builder Fund
INTERNATIONAL EQUITY
European Mid-Cap Fund
International Equity Fund
Japanese Equity Fund
Top 50 Asia
Top 50 Europe
Top 50 World
FIXED INCOME
Managed Municipal Fund Shares
Short-Intermediate Income Fund
Total Return U.S. Treasury Fund Shares
MONEY MARKET
Cash Reserve Prime Shares
P.O. Box 515
Baltimore, Maryland 21203
800-767-FLAG
WWW.FLAGINVESTORS.COM
Distributed by:
ICC DISTRIBUTORS, INC.
SHORTSA (8/00)
