<PAGE>
Exhibit d(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
LETTER AGREEMENT
Deutsche Fund Management, Inc.
31 W. 52nd Street
New York, NY 10019
May 12, 2000
Flag Investors Funds, Inc.
Flag Investors Portfolios
1 South Street
Baltimore, MD 21202
RE: Expense Ratio Caps
Dear Sirs:
By this letter, Deutsche Fund Management, Inc. (the "Adviser") undertakes
to continue to waive its management fee and limit expenses of the series of Flag
Investors Funds, Inc. and their underlying corresponding portfolios of Flag
Investors Portfolios Trust (collectively, the "Funds") so that total annual
operating expenses do not exceed the amounts indicated on the respective classes
of shares from June 1, 2000 through June 1, 2001, or such longer period as may
be required by the Securities and Exchange Commission but not to continue beyond
December 31, 2001 without further written documentation.
<TABLE>
<CAPTION>
FLAG INVESTORS FUNDS, INC. CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Flag Investors Top 50 US 1.15% 1.90% 1.90%
Flag Investors Top 50 Europe 1.60% 2.35% 2.35%
Flag Investors Top 50 World 1.60% 2.35% 2.35%
Flag Investors Top 50 Asia 1.60% 2.35% 2.35%
Flag Investors European
Mid-Cap Fund 1.60% 2.35% 2.35%
Flag Investors Japanese
Equity Fund 1.60% 2.35% 2.35%
</TABLE>
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Expense Ratio Caps
Page 2
To document this undertaking by the Adviser to the Funds, please confirm
your acceptance by signing and returning to the Adviser the enclosed copy
hereof.
Very truly yours,
DEUTSCHE FUND MANAGEMENT, INC.
By: /s/ Daniel O. Hirsch
--------------------------------
Title: Secretary
ACCEPTED AND CONFIRMED:
FLAG INVESTORS PORTFOLIOS TRUST FLAG INVESTORS FUNDS, INC.,
on behalf of the above listed portfolios on behalf of the above listed funds
By: /s/ Amy M. Olmert By: /s/ Amy M. Olmert
------------------------------ --------------------------------
Title: Assistant Secretary Title: Assistant Secretary
