<PAGE>
As Filed with the Securities and Exchange Commission on August 25, 1995
Registration No. 33-28479
811-4827
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 15 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 16 [X]
FLAG INVESTORS INTERNATIONAL FUND, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
135 East Baltimore Street
Baltimore, MD 21202
--------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (410) 727-1700
---------------
Edward J. Veilleux
135 East Baltimore Street
Baltimore, MD 21202
--------------------------------------
(Name and address of agent for service)
Copy to:
Richard W. Grant, Esquire
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103
===============================================================================
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
----
on [date] pursuant to paragraph (b)
----
X 60 days after filing pursuant to paragraph (a)
----
75 days after filing pursuant to paragraph (a)
----
on [date] pursuant to paragraph (a) of Rule 485.
----
===============================================================================
Registrant has elected to maintain registration of an indefinite number of
shares of Common Stock pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Registrant's Rule 24f-2 Notice for its fiscal year ended
October 31, 1994 was filed with the Commission on December 8, 1994.
===============================================================================
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
(Class A Shares)
Cross Reference Sheet
August 25, 1995
<TABLE>
<CAPTION>
Registration
Items Required by Form N-1A Statement Heading
--------------------------- -----------------
<S> <C>
Part A - Information Required in a Prospectus
Item 1. Cover Page ............................................. Cover Page
Item 2. Synopsis ............................................... Fee Table
Item 3. Condensed Financial Information. ....................... Financial Highlights;
Performance Information
Item 4. General Description of Registrant ...................... Investment Program; Investment
Restrictions; General
Information
Item 5. Management of the Fund ................................. Management of the Fund;
Investment Advisor and Sub-
Advisor; Distributor; Custodian,
Transfer Agent, Accounting
Services
Item 5A. Management's Discussion of Fund
Performance ............................................ *
Item 6. Capital Stock and Other Securities ..................... Cover Page; Dividends and Taxes;
General Information
Item 7. Purchase of Securities Being Offered ................... How to Invest in the Fund;
Distributor
Item 8. Redemption or Repurchase ............................... How to Redeem Shares
Item 9. Pending Legal Proceedings .............................. **
</TABLE>
-----------------
* Information required by Item 5A is contained in Registrant's 1994
Annual Report to Shareholders.
** Omitted since the answer is negative or the item is not applicable.
<PAGE>
<TABLE>
<CAPTION>
Registration
Items Required by Form N-1A Statement Heading
--------------------------- -----------------
<S> <C>
Part B - Information Required in a Statement
of Additional Information
Item 10. Cover Page ............................................. Cover Page
Item 11. Table of Contents ...................................... Table of Contents
Item 12. General Information and History ........................ General Information and History
Item 13. Investment Objectives and Policies ..................... Investment Objective and
Policies
Item 14. Management of the Fund ................................. Management of the Fund
Item 15. Control Persons and Principal
Holders of Securities .................................. Control Persons and Principal
Holders of Securities
Item 16. Investment Advisory and Other Services ................. Investment Advisory and Other
Services; Custodian, Accounting
Services and Transfer Agent;
Independent Auditors
Item 17. Brokorage Allocation ................................... Brokerage
Item 18. Capital Stock and Other Securities ..................... Capital Shares; Quarterly
Reports
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered ............................ Valuation of Shares and
Redemption
Item 20. Tax Status ............................................. Federal Tax Treatment of
Dividends and Distributions
Item 21. Underwriters ........................................... Distribution of Fund Shares and
Administration
Item 22. Calculation of Performance Data ........................ Performance Information
Item 23. Financial Statements ................................... Financial Statements
</TABLE>
Part C - Other Information
Part C contains the information required by the items contained
therein under the items set forth in the form.
<PAGE>
The prospectus dated February 28, 1995 relating to the Flag Investors Class A
Shares of Flag Investors International Fund, Inc. (the "Fund"), filed with
the Securities and Exchange Commission on February 24, 1995 as part of Post-
Effective Amendment No. 14 to the Fund's Registration Statement on Form N-1A
(File No. 33-28479) under Rule 485(b) under the Securities Act of 1933, as
amended (the "1933 Act"), and in final form under Rule 497(c) under the 1933
Act on March 3, 1995 is incorporated herein by reference as if set forth in
its entirety.
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
(Institutional Shares)
Cross Reference Sheet
August 25, 1995
<TABLE>
<CAPTION>
Registration
Items Required by Form N-1A Statement Heading
--------------------------- -----------------
<S> <C>
Part A - Information Required in a Prospectus
Item 1. Cover Page ............................................. Cover Page
Item 2. Synopsis ............................................... Fee Table
Item 3. Condensed Financial Information. ....................... Financial Highlights;
Performance Information
Item 4. General Description of Registrant ...................... Investment Program; Investment
Restrictions; General
Information
Item 5. Management of the Fund ................................. Management of the Fund;
Investment Advisor and Sub-
Advisor; Distributor; Custodian,
Transfer Agent, Accounting
Services
Item 5A. Management's Discussion of Fund
Performance ............................................ ***
Item 6. Capital Stock and Other Securities ..................... Cover Page; Dividends and Taxes;
General Information
Item 7. Purchase of Securities Being Offered ................... How to Invest in the Fund;
Distributor
Item 8. Redemption or Repurchase ............................... How to Redeem Shares
Item 9. Pending Legal Proceedings .............................. ****
</TABLE>
-------------
*** Information required by Item 5A is contained in Registrant's 1994
Annual Report to Shareholders.
**** Omitted since the answer is negative or the item is not applicable.
<PAGE>
<TABLE>
<CAPTION>
Registration
Items Required by Form N-1A Statement Heading
--------------------------- -----------------
<S> <C>
Part B - Information Required in a Statement of Additional
Information
Item 10. Cover Page ............................................. Cover Page
Item 11. Table of Contents ...................................... Table of Contents
Item 12. General Information and History ........................ General Information and History
Item 13. Investment Objectives and Policies ..................... Investment Objective and
Policies
Item 14. Management of the Fund ................................. Management of the Fund
Item 15. Control Persons and Principal
Holders of Securities .................................. Control Persons and Principal
Holders of Securities
Item 16. Investment Advisory and Other Services ................. Investment Advisory and Other
Services; Custodian, Accounting
Services and Transfer Agent;
Independent Auditors
Item 17. Brokorage Allocation ................................... Brokerage
Item 18. Capital Stock and Other Securities ..................... Capital Shares; Quarterly
Reports
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered ............................ Valuation of Shares and
Redemption
Item 20. Tax Status ............................................. Federal Tax Treatment of
Dividends and Distributions
Item 21. Underwriters ........................................... Distribution of Fund Shares and
Administration
Item 22. Calculation of Performance Data ........................ Performance Information
Item 23. Financial Statements ................................... Financial Statements
</TABLE>
Part C - Other Information
Part C contains the information required by the items contained
therein under the items set forth in the form.
<PAGE>
(Flag Logo)
FLAG INVESTORS
INTERNATIONAL FUND, INC.
(Institutional Shares)
This mutual fund (the "Fund") is an open-end diversified management
investment company seeking long-term growth of capital primarily through
investment in a diversified portfolio of marketable equity securities of
issuers located outside of the United States.
Flag Investors Institutional Shares of the Fund ("Institutional Shares")
are available through Alex. Brown & Sons Incorporated ("Alex. Brown") and may
be purchased only by eligible institutions and by clients of investment
advisory affiliates of Alex. Brown. (See "How to Invest in Institutional
Shares.")
This Prospectus sets forth basic information that investors should know
about the Fund prior to investing, and should be retained for future
reference. A Statement of Additional Information dated February 28, 1995, as
amended through , 1995, has been filed with the Securities and Exchange
Commission (the "SEC") and is hereby incorporated by reference. It is
available upon request and without charge by calling the Fund at (800)
767-FLAG.
_______________________________________________________________________________
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
PROSPECTUS
The date of this Prospectus is , 1995.
<PAGE>
FLAG INVESTORS
INTERNATIONAL FUND, INC.
(INSTITUTIONAL SHARES)
135 EAST BALTIMORE STREET
BALTIMORE, MARYLAND 21202
TABLE OF CONTENTS
-----------------
Page
1. Fee Table .................................................. 2
2. Financial Highlights ....................................... 3
3. Investment Program ......................................... 6
4. Investment Restrictions .................................... 9
5. How to Invest in Institutional Shares ...................... 9
6. How to Redeem Institutional Shares ......................... 12
7. Dividends and Taxes ........................................ 13
8. Management of the Fund ..................................... 15
9. Investment Advisor and Sub-Advisor ......................... 15
10. Distributor ................................................ 17
11. Custodian, Transfer Agent, Accounting Services ............. 18
12. Performance Information .................................... 18
13. General Information ........................................ 19
-------------------------------------------------------------------------------
No person has been authorized to give any information or to make
representations not contained in this Prospectus in connection with any
offering made by this Prospectus and, if given or made, such information
must not be relied upon as having been authorized by the Fund or its
distributor. This Prospectus does not constitute an offering by the Fund or
by its distributor in any jurisdiction in which such offering may not
lawfully be made.
-------------------------------------------------------------------------------
2
<PAGE>
================================================================================
1. FEE TABLE
................................................................................
SHAREHOLDER TRANSACTION EXPENSES:
________________________________________________________________________________
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) .................... None
Maximum Sales Charge Imposed on Reinvested Dividends .... None
Deferred Sales Charge ................................... None*
________________________________________________________________________________
ANNUAL FUND OPERATING EXPENSES (NET OF FEE WAIVERS):
(as a percentage of average daily net assets)
________________________________________________________________________________
Management Fees (net of fee waivers) .................. .28%
12b-1 Fees ............................................ None
Other Expenses ........................................ .97%
-----
Total Fund Operating Expenses (net of fee waivers) .... 1.25%
=====
________________________________________________________________________________
* The Fund's investment advisor currently intends to waive its fees or
reimburse the Fund, on a voluntary basis, to the extent required so that
Total Fund Operating Expenses do not exceed 1.25% of the Institutional
Shares' average net assets. Absent fee waivers, Management Fees would be
.75% and Total Fund Operating Expenses would be 1.72% of the Institutional
Shares' average net assets.
EXAMPLE:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
You would pay the following expenses
on a $1,000 investment, assuming (1)
5% annual return and (2) redemption
at the end of each time period:* 1 year 3 years 5 Years 10 Years
--------------------------------------------------------------------------------------------------
$13 $40 $71 $161
--------------------------------------------------------------------------------------------------
</TABLE>
* The example is based on Total Fund Operating Expenses, net of fee waivers.
Absent fee waivers, expenses would be higher.
The Example should not be considered a representation of future expenses.
Actual expenses may be greater or less than those shown.
The purpose of the foregoing table is to describe the various costs and
expenses that an investor in the Fund will bear directly and indirectly. A
person who purchases Institutional Shares through a financial institution may
be charged separate fees by the financial institution. (For more complete
descriptions of the various costs and expenses, see "How to Invest in
Institutional Shares -- Offering Price", "Investment Advisor and Sub-
Advisor" and "Distributor.") The Expenses and Example appearing in the table
above are based on the Fund's expenses (net of fee waivers) for the Class A
Shares, another class of shares offered by the Fund, for the fiscal year
ended October 31, 1994, less 12b-1 fees of .25%.
The foregoing table has not been audited by Deloitte & Touche LLP, the
Fund's independent auditors.
2
<PAGE>
================================================================================
2. Financial Highlights
The Fund has not offered the Institutional Shares prior to the date of
this Prospectus. However, the fund has offered another class of shares since
1992. Historical financial information about the Fund is not fully applicable
to the Institutional Shares because the expenses paid by the Fund in the past
differ from those the Institutional Shares will incur. (See "Fee Table.")
Nevertheless, historical information about the Fund may be useful to
investors if they take into account the differences in expenses. Accordingly,
the financial highlights included in this table have been derived from the
Fund's financial statements for the Class A Shares for the periods indicated
and (except for the unaudited financial statements for the six-month period
ended April 30, 1995) have been audited by Deloitte & Touche LLP, independent
auditors. The financial statements and related notes for the Class A Shares
for the fiscal year ended October 31, 1994 and the report thereon of Deloitte
& Touche LLP and the unaudited financial statements for such shares for the
six-month period ended April 30, 1995 are included in the Statement of
Additional Information. Additional performance information for the Class A
Shares is contained in the Fund's Annual Report for the fiscal year ended
October 31, 1994, which can be obtained at no charge by calling the Fund at
(800)767-FLAG.
3
<PAGE>
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
CLASS A
----------------------------------------
FOR THE
SIX MONTHS FOR THE YEAR
ENDED APRIL 30, ----------------------
1995 1994 1993
--------------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of
period $ 14.01 $ 13.05 $ 9.11
--------- --------- ---------
Income from Investment Operations:
Net investment income 0.12 0.18 0.49
Net realized and unrealized
gain/(loss) on investments(1) (1.85) 1.58 3.45
--------- --------- ---------
Total from Investment Operations (1.73) 1.76 3.94
Less Distributions:
Dividends from net investment
income and short-term gains -- (0.84) --
Distributions from net realized
long-term gains -- -- --
--------- --------- ---------
Total Distributions -- (0.84) --
--------- --------- ---------
Net asset value at end of period $ 12.28 $ 13.97 $ 13.05
========= ========= =========
Total Return*** (12.22)% 13.98% 43.25%
Ratios to Average Net Assets:
Expenses(2) 1.49%* 1.50% 1.50%
Net investment income(3) 2.01%* 0.75% 1.91%
Supplemental Data:
Net assets at end of period (000) $12,910 $15,487 $15,008
Portfolio turnover rate 13% 43% 48%
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------
NOVEMBER 18, 1986
(COMMENCEMENT OF
OPERATIONS)
ENDED OCTOBER 31, THROUGH
----------------------------------------------------------- OCTOBER 31,
1992 1991 1990 1989 1988 1987
---------- --------- --------- --------- --------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of
period $ 10.63 $ 11.80 $ 13.71 $ 11.78 $ 10.81 $ 10.00
---------- --------- --------- --------- --------- ------------------
Income from Investment Operations:
Net investment income 0.16 0.15 0.60 0.10 0.11 0.03
Net realized and unrealized
gain/(loss) on investments(1) (1.62) (0.55) (1.33) 1.92 1.57 0.78
---------- --------- --------- --------- --------- ------------------
Total from Investment Operations (1.46) (0.40) (0.73) 2.02 1.68 0.81
Less Distributions:
Dividends from net investment
income and short-term gains (0.06) -- (0.57) (0.09) (0.16) --
Distributions from net realized
long- term gains -- (0.77) (0.61) -- (0.55) --
---------- --------- --------- --------- --------- ------------------
Total Distributions (0.06) (0.77) (1.18) (0.09) (0.71) --
---------- --------- --------- --------- --------- ------------------
Net asset value at end of period $ 9.11 $ 10.63 $ 11.80 $13.71 $11.78 $ 10.81
========== ========= ========= ========= ========= ==================
Total Return*** (13.80%) (3.15%) (6.63%) 17.25% 16.21% 8.1%
Ratios to Average Net Assets:
Expenses(2) 1.50% 1.50% 1.50% 1.49% 1.46% 1.48%*
Net investment income(3) 0.73% 1.17% 1.48% 0.62% 0.87% 1.41%*
Supplemental Data:
Net assets at end of period (000) $19,780 $38,830 $44,406 $32,325 $35,259 $38,227
Portfolio turnover rate 63% 73% 62% 95% 96% 72%
</TABLE>
------
* Annualized.
** Investment Company Capital Corp. and The Glenmede Trust Company became the
Fund's investment advisor and sub-advisor, respectively, on August 23,
1993.
*** Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charges.
(1) Current year includes net realized currency loss. Prior year's net
realized currency gain/(loss) is included in net investment income.
(2) Without the waiver of advisory fees, the ratio of expenses to average net
assets would have been 2.10% (annualized), 1.97%, 2.13%, 1.92%, 1.90%,
1.75%, 1.82%, 1.79% and 1.85% for the six months ended April 30, 1995,
for the fiscal years ended October 31, 1994, 1993, 1992, 1991, 1990, 1989
and 1988 and for the period November 18, 1986 through October 31, 1987,
respectively.
(3) Without the waiver of advisory fees, the ratio of net investment income
to average net assets would have been 1.40% (annualized), 0.28%, 1.28%,
0.31%, 0.77%, 1.21%, 0.29%, 0.54%, and 0.78% for the six months ended
April 30, 1995, for the fiscal years ended October 31, 1994, 1993, 1992,
1991, 1990, 1989 and 1988 and for the period November 18, 1986 through
October 31, 1987, respectively.
5
<PAGE>
================================================================================
3. INVESTMENT PROGRAM
................................................................................
INVESTMENT OBJECTIVES, POLICIES
AND RISK CONSIDERATIONS
The investment objective of the Fund is long-term growth of capital. The
foregoing investment objective is a fundamental policy of the Fund and cannot
be changed without shareholder approval. The Fund seeks to achieve this
objective by investing primarily in common stocks and other equity securities
of companies located outside the United States. The Fund's assets will
usually consist of issues listed on recognized foreign securities exchanges.
The Fund is, however, free to hold securities that are not so listed, and may
invest up to 15% of its net assets in such securities. There can be no
assurance the Fund will achieve its objective.
Investment Company Capital Corp., the Fund's investment advisor ("ICC"),
and The Glenmede Trust Company, the Fund's sub-advisor ("Glenmede")
(collectively, the "Advisors"), are responsible for managing the Fund's
investments. (See "Investment Advisor and Sub-Advisor.") Glenmede manages the
Fund's investments on a day-to-day basis and utilizes a disciplined,
value-based investment management style to construct the Fund's international
equity portfolio. Markets, and individual securities within each market, are
compared on the basis of fundamental value, quality, and prospective earnings
potential.
The Fund's assets will normally be invested primarily in equity securities
of companies located outside the United States. For these purposes, equity
securities consist of not only common stock but securities convertible into
common stock and American Depository Receipts, which are securities issued in
the United States that represent ownership rights in foreign countries. The
Fund diversifies investments by issuer and does not concentrate in any one
industry. In addition, the Fund allocates its investments among geographic
regions and individual countries and, normally, expects to have 65% of its
total assets invested in at least three different foreign countries. (See
"Investment Restrictions.")
If the Fund is not fully invested in equity securities, any assets not so
invested may be invested in securities issued or guaranteed by the United
States government or any of its agencies or instrumentalities; shares of
open- or closed-end investment companies that invest exclusively in such
securities; fixed income securities issued by U.S. or foreign corporations,
or by foreign governments, that are determined by the Advisors to be of high
quality; U.S. and foreign short-term money market instruments (consisting
6
<PAGE>
of government obligations; time deposits, bankers acceptances, and
certificates of deposit of creditworthy banks; commercial paper and
short-term corporate debt securities, which are rated in the top two
categories published by Moody's Investors Service, Inc. or by Standard &
Poor's Corporation or, if unrated, are of comparable quality as determined by
the Advisors under guidelines established by the Fund's Board of Directors;
and repurchase agreements with respect thereto). Under normal circumstances,
no more than 35% of the Fund's assets may be invested in fixed income
securities and money market instruments. For defensive purposes, however, up
to 100% of such assets may be invested in money market instruments.
The Fund may also enter into forward currency exchange contracts in order
to hedge against uncertainty in the level of future foreign exchange rates in
the purchase and sale of investment securities, but it may not enter into
such contracts for speculative purposes. The Fund will use these instruments
primarily for transaction hedging (i.e., to protect against adverse currency
movements between a security's trade and settlement dates) but reserves the
right occasionally to use forward contracts to hedge the value of securities
denominated in a particular currency against a decline in the value of that
currency. A forward foreign currency exchange contract involves an obligation
to purchase or sell a specific currency at a future date, which may be any
fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts may be
bought or sold to protect the Fund, to some degree, against a possible loss
resulting from an adverse change in the relationship between foreign
currencies and the U.S. dollar. It should be realized that this method of
protecting the value of the Fund's investment securities against a decline in
the value of a currency does not eliminate fluctuations in the underlying
prices of the securities. It simply establishes a rate of exchange at some
future point in time. Additionally, although such contracts tend to minimize
the risk of loss due to a decline in the value of the hedged currency, at the
same time they tend to limit any potential gain which might result should the
value of the currency increase.
................................................................................
SPECIAL RISK CONSIDERATIONS
Foreign investments involve substantial and different risks which should
be carefully considered by any potential investor. In general, less
information is publicly available about foreign companies than is available
about companies in the United States. Most foreign companies are not subject
to uniform audit and financial reporting standards, practices and
requirements comparable to those in the United States.
7
<PAGE>
Foreign stock markets are generally not as developed or efficient as those
in the United States. In most foreign markets volume and liquidity are less
than in the United States and, at times, volatility of price can be greater
than in the United States. Fixed commissions on foreign stock exchanges are
generally higher than the negotiated commissions on U.S. exchanges. There is
generally less government supervision and regulation of foreign stock
exchanges, brokers and companies than in the United States. The settlement
periods for foreign securities, which are often longer than those for
securities of U.S. issuers, may affect portfolio liquidity.
Although the Fund intends to invest in securities of companies and
governments of developed, stable nations, there is also the possibility of
adverse changes in investment or exchange control regulations, expropriation
or confiscatory taxation, limitations on the removal of funds or other
assets, political or social instability, or diplomatic developments which
could adversely affect investments, assets or securities transactions of the
Fund in some foreign countries.
The dividends and interest payable on certain of the Fund's foreign
portfolio securities may be subject to foreign withholding taxes, thus
reducing the net amount available for distribution to the Fund's
shareholders. The expense ratio of the Fund can be expected to be higher than
those of investment companies investing in domestic securities due to the
additional cost of custody of foreign securities. A more detailed description
of the costs of operation of the Fund is contained under "Investment Advisor
and Sub-Advisor" and "Distributor" and in the Statement of Additional
Information. Portfolio securities held by the Fund which are listed on
foreign exchanges may be traded on days that the Fund does not value its
securities, such as Saturdays and the customary U.S. business holidays on
which the New York Stock Exchange is closed. As a result, the net asset value
of Class A Shares may be significantly affected on days when shareholders do
not have access to the Fund.
8
<PAGE>
================================================================================
4. Investment Restrictions
The Fund's investment program is subject to a number of restrictions which
reflect both self-imposed standards and federal and state regulatory
limitations. The investment restrictions recited below are matters of
fundamental policy and may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. Accordingly, the Fund will
not:
1) Concentrate 25% or more of its total assets in securities of issuers in
any one industry (for these purposes, banks and insurance companies are
considered to be separate industries);
2) Invest more than 5% of its total assets in the securities of any single
issuer;
3) Invest in the securities of any single issuer if, as a result, the Fund
would hold more than 10% of the outstanding voting securities of such
issuer;
4) Borrow money except as a temporary measure to facilitate settlements and
for extraordinary or emergency purposes and then only from banks and in an
amount not exceeding 10% of the value of the total assets of the Fund at
the time of such borrowing, provided that, while borrowings by the Fund
equalling 5% or more of the Fund's total assets are outstanding, the Fund
will not purchase securities; and
5) Invest more than 10% of the value of its net assets in illiquid
securities, including time deposits of over seven days' duration.
The Fund is subject to further investment restrictions that are set forth
in the Statement of Additional Information.
================================================================================
5. How to Invest in the Fund
Institutions (e.g. banks and trust companies, savings institutions,
corporations, insurance companies, investment counsellors, pension funds
employee benefit plans, trusts, estates and educational, religious and
charitable institutions) and clients of investment advisory affiliates of
Alex. Brown (collectively, "Eligible Investors") may purchase Institutional
Shares through Alex. Brown, 135 East Baltimore Street, Baltimore, Maryland
21202 or directly from the Fund by wiring payment of the purchase price in
the manner described below. Eligible Investors interested in establishing an
account with the Fund should complete and return the Application Form
attached to this Prospectus prior to wiring funds.
9
<PAGE>
The minimum initial investment in Institutional Shares is $500,000. There
is no minimum for clients of investment advisory affiliates of Alex. Brown or
for subsequent investments.
Orders for purchases of Institutional Shares are accepted on any day on
which the New York Stock Exchange is open for business ("Business Day"). The
Fund reserves the right to suspend the sale of Institutional Shares at any
time at the discretion of Alex. Brown and the Fund's investment advisor.
Purchase orders for Institutional Shares will be executed at the per share
purchase price equal to the net asset value per share next determined after
receipt of the purchase order. Alex. Brown may, in its sole discretion,
refuse to accept any purchase order.
The net asset value per share is determined once daily as of the close of
the New York Stock Exchange, which is ordinarily 4:00 p.m. (Eastern Time), on
each Business Day. Net asset value per share of a class is calculated by
valuing all assets held by the Fund, deducting all liabilities, including
liabilities attributable to that specific class, and dividing the resulting
amount by the number of then outstanding shares of the class. For this
purpose portfolio securities will be given their market value where feasible.
If a portfolio security is traded on a national exchange, whether U.S. or
foreign, or on an automated dealer quotation system, on the valuation date,
the last quoted sale price will generally be used. In the case of securities
listed on more than one exchange, the Fund will use the latest sale price on
the exchange where the stock is primarily traded as determined by the
Advisors under procedures established and monitored by the Fund's Board of
Directors. Securities or other assets for which market quotations are not
readily available are valued at their fair value as determined in good faith
by the Advisors under procedures established from time to time and monitored
by the Fund's Board of Directors. Investments with maturities of less than 60
days will be valued at amortized cost, which constitutes fair value as
determined by the Fund's Board of Directors. Any assets and liabilities
initially expressed in foreign currency values will be translated into U.S.
dollar values at the prevailing market rates of such currencies against U.S.
dollars at the time of valuation.
An Eligible Investor which has established an account with the Fund may
place orders to purchase Institutional Shares either by calling the Fund's
order desk at (800) 882-9550 and then wiring funds, or by wiring funds with
the necessary instructions as described below. The Fund reserves the right to
reject any order for the purchase of Institutional Shares.
10
<PAGE>
A shareholder who places an order by telephone will be asked to furnish:
o The shareholder's account number
o The amount to be invested
Funds should be wired to the Fund's transfer agent (the "Transfer Agent"),
c/o Investors Fiduciary Trust Company ("IFTC"), as follows:
IFTC
a/c Flag Investors Funds -- Institutional Shares
Acct. #
---------
ABA #1010-0362-1
Kansas City, Missouri 64105
referring in the wire to:
o Flag Investors International Fund, Inc. (Institutional Shares) "For
further credit to (insert shareholder's account number)"
o The Fund account number
o The amount to be invested
................................................................................
PURCHASES BY EXCHANGE
Shareholders of other Flag Investors Funds may exchange their
institutional shares of those funds for an equal dollar amount of
Institutional Shares.
The net asset value of shares purchased and redeemed in an exchange
request received on a Business Day will be determined on the same day,
provided that the exchange request is received prior to 4:00 p.m. (Eastern
Time), or the close of the New York Stock Exchange, whichever is earlier.
Exchange requests received after 4:00 p.m. (Eastern Time) will be effected on
the next Business Day.
The exchange privilege may be exercised by notifying the Fund's [Transfer
Agent] by telephone at [(800) 553-8080] on any Business Day between the hours
of 8:30 a.m. and 5:30 p.m. (Eastern Time) or by regular or express mail at
its address listed under "Custodian, Transfer Agent, Accounting Services."
Telephone exchange privileges are automatic. Shareholders may specifically
request that no telephone exchanges be accepted for their accounts. This
election may be made on the Application Form or at any time thereafter by
completing and returning appropriate documentation supplied by the Transfer
Agent.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. These
procedures include requiring the investor to provide certain personal
11
<PAGE>
identification information at the time an account is opened and prior to
effecting each transaction requested by telephone. In addition, all telephone
transaction requests will be recorded and investors may be required to
provide additional telecopied instructions of such transaction requests. The
Fund or the Transfer Agent may be liable for any losses due to unauthorized
or fraudulent telephone instructions if either of them does not employ these
procedures. Neither the Fund nor the Transfer Agent will be responsible for
any loss, liability, cost or expense for following instructions received by
telephone that either of them reasonably believes to be genuine. During
periods of extreme economic or market changes, shareholders may experience
difficulty in effecting telephone transactions. In such event, requests
should be made by regular or express mail.
The exchange privilege may be exercised only in those states where the
institutional shares of such other funds may legally be sold. Investors
should receive and read the applicable prospectus prior to tendering shares
for exchange. The Fund may modify or terminate this offer of exchange at any
time on 60 days' prior written notice to shareholders.
................................................................................
OTHER INFORMATION
Periodic statements of account from [the Fund] will reflect all dividends,
purchases and redemptions of Institutional Shares.
In the interest of economy and convenience and because of the operating
procedures for the Institutional Shares, certificates representing such
shares will not be issued. All Institutional Shares purchased are confirmed
and credited to the shareholder's account on the Fund's books maintained by
ICC or its agents. Shareholders will have the same rights and ownership with
respect to such shares as if certificates had been issued.
================================================================================
6. How to Redeem Shares
Shareholders may redeem all or part of their Institutional Shares on any
Business Day by notifying the Transfer Agent by telephone at (800) 553-8080
and transmitting a duly authorized redemption order in proper form to Alex.
Brown or to the Transfer Agent. Redemption orders may also be transmitted by
regular or express mail to the Transfer Agent at its address listed under
"Custodian, Transfer Agent, Accounting Services."
A redemption request is effected at the net asset value per share next
determined after receipt of the order. Redemption orders received after 4:00
p.m. (Eastern Time) will be effected at the net asset value next determined
12
<PAGE>
on the following Business Day. Payment for redeemed Institutional Shares will
be made by wire transfer of funds to the shareholder's bank promptly upon
receipt of a duly authorized redemption request and, in any event, within
[two] Business Days.
Dividends payable up to the date of redemption of Institutional Shares
will be paid on the next dividend payable date. If all of the Institutional
Shares in an account have been redeemed on a dividend payable date, the
dividend will be remitted by check to the shareholder.
The Fund has the power, under its Articles of Incorporation, to redeem
shareholder accounts amounting to less than $500 (as a result of redemptions)
upon 60 days' written notice.
================================================================================
7. Dividends and Taxes
................................................................................
DIVIDENDS AND DISTRIBUTIONS
The Fund's policy is to distribute to shareholders substantially all of
its taxable net investment income in the form of annual dividends. The Fund
may distribute to shareholders any taxable net capital gains on an annual
basis or, alternatively, may elect to retain net capital gains and pay taxes
thereon.
Unless the shareholder elects otherwise, all dividends and net capital
gains distributions, if any, will be reinvested in additional Institutional
Shares at net asset value per share on the payment date. Shareholders may
elect to have income dividends and capital gains distributions paid in cash.
Shareholders wishing to change their election must give written notice to the
Transfer Agent (see "Custodian, Transfer Agent, Accounting Services"), either
directly or through Alex. Brown, at least five days before the next date on
which dividends or distributions will be paid.
................................................................................
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS
The following is only a general summary of certain federal tax
considerations affecting the Fund and the shareholders. No attempt is made to
present a detailed explanation of the tax treatment of the Fund or the
shareholders, and the discussion here is not intended as a substitute for
careful tax planning. This general discussion of federal income tax
considerations is based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action. The Statement of
Additional Information sets forth further information concerning taxes.
13
<PAGE>
The Fund has been and expects to continue to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended. As long as the Fund qualifies for this tax treatment, it will be
relieved of U.S. federal income tax on amounts distributed to shareholders,
but U.S. shareholders, unless otherwise exempt, will pay federal income or
capital gains taxes on the amounts so distributed regardless of whether such
distributions are paid in cash or reinvested in additional Institutional
Shares.
Distributions from the Fund out of net capital gains (the excess of net
long-term capital gains over net short-term capital losses), if any, are
taxed to U.S. shareholders as long-term capital gains regardless of how long
the shareholder has held the Institutional Shares. All other income
distributions are taxed to the shareholders as ordinary income. Shareholders
will be advised annually as to the tax status of all distributions.
Ordinarily, shareholders will include all dividends declared by the Fund as
income in the year of payment. However, dividends declared payable to
shareholders of record in December of one year, but paid in January of the
following year, will be deemed for tax purposes to have been received by the
shareholders and paid by the Fund in the year in which the dividends were
declared.
Investors should be careful to consider the tax implications of buying
shares just prior to a distribution. The price of shares purchased at that
time may reflect the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will nevertheless be taxable on the entire
amount of the distribution received.
Investment income received by the Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. To
the extent that the Fund is liable for foreign income taxes so withheld, it
intends to operate so as to meet the requirements of the Code to pass through
to its shareholders credit for foreign income taxes paid. Although the Fund
intends to meet the requirements of the Code to pass through such taxes,
there can be no assurance that it will be able to do so.
Distributions by the Fund to shareholders who are non-resident alien
individuals, foreign trusts or estates, foreign corporations or foreign
partnerships may be subject to U.S. federal income tax treatment that differs
from the treatment described above. (See the Statement of Additional
Information.)
A sale, exchange, or redemption of Institutional Shares is a taxable event
for the shareholder.
14
<PAGE>
The Fund intends to make sufficient distributions or deemed distributions
of its ordinary income and capital gain net income prior to the end of each
calendar year to avoid liability for federal excise tax.
Shareholders are urged to consult with their tax advisors concerning the
application of U.S. federal, state and local income taxes to investments in
the Fund.
================================================================================
8. Management of the Fund
The overall business affairs of the Fund are managed by its Board of
Directors. The Board approves all significant agreements between the Fund and
persons or companies furnishing services to the Fund, including the Fund's
agreements with its investment advisor, sub-advisor, distributor, custodian,
accounting services agent and transfer agent. The day-to-day operations of
the Fund are delegated to the Fund's officers, to Alex. Brown, the Fund's
distributor, to ICC, the Fund's investment advisor, and to Glenmede, the
Fund's sub-advisor. Two Directors and all of the officers of the Fund are
officers or employees of Alex. Brown, ICC or Glenmede. The other Directors of
the Fund have no affiliation with Alex. Brown, ICC or Glenmede.
The Fund's Directors and officers are as follows:
<TABLE>
<S> <C> <C> <C>
*Truman T. Semans Chairman and Director John W. Church, Jr. President
*Richard T. Hale Director Andrew B. Williams Executive Vice President
James J. Cunnane Director Gary V. Fearnow Vice President
N. Bruce Hannay Director Edward J. Veilleux Vice President
John F. Kroeger Director Brian C. Nelson Vice President and Secretary
Louis E. Levy Director Diana M. Ellis Treasurer
Eugene J. McDonald Director Laurie D. DePrine Assistant Secretary
Harry Woolf Director
</TABLE>
------
* Messrs. Semans and Hale are "interested persons" of the Fund within the
meaning of Section 2(a)(19) under the Investment Company Act of 1940, as
amended (the "1940 Act").
================================================================================
9. Investment Advisor and Sub-Advisor
ICC is the Fund's investment advisor and Glenmede is the Fund's
sub-advisor. ICC is also the investment advisor to, and Alex. Brown acts as
distributor for, other mutual funds in the Flag Investors family of funds and
Alex. Brown Cash Reserve Fund, Inc., which funds had approximately $3.8
billion of net assets as of December 31, 1994. Glenmede provides fiduciary
and investment services to endowment funds, foundations, employee benefit
plans and other institutions and individuals. At , 1995, Glenmede had
over $ billion in assets in the accounts for which it serves in various
capacities including as executor, trustee, or investment advisor.
15
<PAGE>
Pursuant to the terms of the Investment Advisory Agreement, ICC supervises
and manages all of the Fund's operations. Under the Investment Advisory and
Sub-Advisory Agreements, ICC delegates to Glenmede certain of its duties,
provided that ICC continues to supervise the performance of Glenmede and to
report thereon to the Fund's Board of Directors. Pursuant to the terms of the
Sub-Advisory Agreement, Glenmede is responsible for the decisions to buy and
sell securities for the Fund, for broker-dealer selection, and for
negotiation of commission rates under standards established and periodically
reviewed by the Board of Directors. The Board has established procedures
under which Glenmede may allocate transactions to Alex. Brown, provided that
compensation to Alex. Brown on each transaction is reasonable and fair
compared to the commission, fee or other remuneration received or to be
received by other broker-dealers in connection with comparable transactions
involving similar securities during a comparable period of time. In addition,
consistent with NASD Rules, and subject to seeking the most favorable price
and execution available and such other policies as the Board may determine,
Glenmede may consider services in connection with the sale of Shares as a
factor in the selection of broker-dealers to execute portfolio transactions
for the Fund.
As compensation for its services, ICC receives from the Fund a fee,
calculated daily and paid monthly, equal to .75% of the Fund's average daily
net assets. This fee is higher than that paid by most mutual funds, however,
in ICC's opinion, is comparable to fees paid by other investment companies
with similar investment objectives and policies. ICC has voluntarily agreed
to waive a portion of its advisory fees so that the Fund's total operating
expenses do not exceed 1.25% of the Fund's average daily net assets. (See
"Fee Table.") As compensation for its services, Glenmede receives a fee from
ICC, calculated daily and paid monthly, equal to .55% of the Fund's average
daily net assets. Glenmede has also agreed to waive, on a voluntary basis, a
portion of its fee in an amount proportionate to the amount by which ICC's
fees may be reduced, as described above. For the fiscal year ended October
31, 1994, ICC received a fee (net of fee waivers) equal to .28% of the Fund's
average daily net assets and from such fee paid Glenmede a fee (net of fee
waivers) equal to .21% of the Fund's average daily net assets.
ICC is a wholly-owned subsidiary of Alex. Brown, the Fund's distributor.
ICC also serves as the Fund's transfer and dividend disbursing agent. (See
"Custodian, Transfer Agent, Accounting Services.") Glenmede, a limited
purpose trust company, is a wholly-owned subsidiary of The Glenmede
16
<PAGE>
Corporation. The address of ICC is 135 East Baltimore Street, Baltimore,
Maryland 21202. The address of Glenmede is One Liberty Place, 1650 Market
Street, Philadelphia, Pennsylvania 19103.
................................................................................
PORTFOLIO MANAGERS
Messrs. John W. Church, Jr., the Fund's President, and Andrew B. Williams,
CFA, the Fund's Executive Vice President, have shared primary responsibility
for managing the Fund's assets since August, 1993.
Mr. Church is senior vice president and chief investment officer of
Glenmede. Prior to joining Glenmede, he was vice president in charge of
investment strategy at Girard (Mellon) Bank, where he was employed for
sixteen years. Before Girard Bank, Mr. Church spent two years at the
investment counseling firm of Franklin, Cole & Co., New York, and four years
at Chemical Bank, New York. Mr. Church received an A.B. in Economics from
Bowdoin College in 1954. He is a member and past president of the Financial
Analysts of Philadelphia, and a member of the Philadelphia Securities
Association.
Mr. Williams is vice president, equity analyst and international equity
manager of Glenmede. Before joining Glenmede, he served as vice president in
investment research at Shearson Lehman Brothers in New York. Before that, he
worked at Provident National Bank as a research analyst. Mr. Williams
received an M.B.A. in Finance from Temple University in 1981 and an A.B. in
History from Trinity College in 1976. He is a member of the Financial
Analysts of Philadelphia and is a Chartered Financial Analyst.
================================================================================
10. Distributor
Alex. Brown acts as distributor of the Institutional Shares. Alex. Brown
is an investment banking firm which offers a broad range of investment
services to individual, institutional, corporate and municipal clients. It is
a wholly-owned subsidiary of Alex. Brown Incorporated which has engaged
directly and through subsidiaries and affiliates in the investment business
since 1800. Alex. Brown is a member of the New York Stock Exchange and other
leading securities exchanges. Headquartered in Baltimore, Maryland, Alex.
Brown has offices throughout the United States and, through subsidiaries,
maintains offices in London, England, Geneva, Switzerland and Tokyo, Japan.
Alex. Brown receives no compensation for its services with respect to the
Institutional Shares.
17
<PAGE>
Alex. Brown bears all expenses associated with advertisements, promotional
materials, sales literature and printing and mailing prospectuses to other
than Fund shareholders.
================================================================================
11. Custodian, Transfer Agent, Accounting Services
Boston Safe Deposit and Trust Company, located at One Boston Place,
Boston, Massachusetts 02108, acts as custodian of the Fund's assets.
Investment Company Capital Corp., 135 East Baltimore Street, Baltimore,
Maryland 21202 (telephone: (800) 553-8080) is the Fund's transfer and
dividend disbursing agent. ICC also serves as the Fund's investment advisor.
The Shareholder Services Group, Inc., located at One Exchange Place, Boston,
Massachusetts 02109, provides accounting services to the Fund.
================================================================================
12. Performance Information
From time to time the Fund may advertise its performance including
comparisons to other mutual funds with similar investment objectives and to
stock or other relevant indices. All such advertisements will show the
average annual total return over one, five and ten year periods or, if such
periods have not yet elapsed, shorter periods corresponding to the life of
the Fund. Such total return quotations will be computed by finding average
annual compounded rates of return over such periods that would equate an
assumed initial investment of $1,000 to the ending redeemable value and other
fees, according to the required standardized calculation. The standardized
calculation is required by the SEC to provide consistency and comparability
in investment company advertising and is not equivalent to a yield
calculation. If the Fund compares its performance to other funds or to
relevant indices, the Fund's performance will be stated in the same terms in
which such comparative data and indices are stated, which is normally total
return rather than yield.
The performance of the Fund may be compared to data prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc. and Morningstar
Inc., independent services which monitor the performance of mutual funds. The
performance of the Fund may also be compared to the Europe, Australia and Far
East Index, an unmanaged foreign securities index monitored by Morgan Stanley
Capital International, S.A. and to the Standard & Poor's 500 Stock Index and
the Dow Jones Industrial Average, both of which are recognized indices of
domestic stocks' performance. The Fund may also use total return performance
data as reported in the following national financial and industry publications
18
<PAGE>
that monitor the performance of mutual funds: Money Magazine, Forbes, Business
Week, Barron's, IBC/Donoghue's Money Fund Report, Investor's Daily and The Wall
Street Journal.
Performance will fluctuate and any statement of performance should not be
considered as representative of the future performance of the Fund.
Shareholders should remember that performance is generally a function of the
type and quality of instruments held by the Fund, operating expenses and
market conditions. Any fees charged by banks with respect to customer
accounts through which Class A Shares may be purchased, although not included
in calculations of performance, will reduce performance results.
================================================================================
13. General Information
................................................................................
CAPITAL SHARES
The Fund is a Maryland corporation, authorized to issue fifteen million
shares of capital stock, with a par value of $.001 per share. Shares of the
Fund have equal rights with respect to voting. Voting rights are not
cumulative, so the holders of more than 50% of the outstanding shares voting
together for election of Directors may elect all the members of the Board of
Directors of the Fund. In the event of liquidation or dissolution of the
Fund, each share is entitled to its portion of the Fund's assets after all
debts and expenses have been paid.
The Board of Directors is authorized to establish additional "series" of
shares of capital stock, each of which would evidence interests in a separate
portfolio of securities, and separate classes of each series of the Fund. The
Shares offered by this Prospectus have been designated: Flag Investors
International Fund Institutional Shares. The Board has no present intention
of establishing any additional series of the Fund but the Fund does have one
other class of shares in addition to the shares offered hereby: Flag
Investors International Fund Class A Shares, are subject to a maximum
front-end sales charge of % and a .25% 12b-1 fee. Different classes of the
Fund may be offered to certain investors and holders of such shares may be
entitled to certain exchange privileges not offered to Institutional Shares.
All classes of the Fund share a common investment objective, portfolio of
investments and advisory fee, but the classes may have different
distribution/service fees or sales load structures.
19
<PAGE>
................................................................................
ANNUAL MEETINGS
Unless required under applicable Maryland law, the Fund does not expect to
hold annual meetings of shareholders. However, shareholders of the Fund
retain the right, under certain circumstances, to request that a meeting of
shareholders be held for the purpose of considering the removal of a Director
from office, and if such a request is made, the Fund will assist with
shareholder communications in connection with the meeting.
................................................................................
REPORTS
The Fund furnishes shareholders with semi-annual reports containing
information about the Fund and its operations, including a list of
investments held in the Fund's portfolio and financial statements. The annual
financial statements are audited by the Fund's independent auditors, Deloitte
& Touche LLP.
................................................................................
FUND COUNSEL
Morgan, Lewis & Bockius serves as counsel of the Fund.
................................................................................
SHAREHOLDER INQUIRIES
Shareholders with inquiries concerning their shares should contact the
Fund at (800)553-8080.
20
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
(INSTITUTIONAL SHARES)
NEW ACCOUNT APPLICATION
------------------------------------------------------------------------------
Send completed Application by overnight carrier to:
Flag Investors Funds
1004 Baltimore Avenue, 4th Floor
Kansas City, MO 64105
Attn: Flag Investors International Fund, Inc.
For assistance in completing this application please call: 1-800-553-8080
8:30 a.m. to 5:30 p.m., Eastern Time, Monday-Friday.
To open an IRA account, call 1-800-767-3524 to request an IRA application.
------------------------------------------------------------------------------
YOUR ACCOUNT REGISTRATION (PLEASE PRINT)
Name on Account
-----------------------------------------
Name of Corporation, Trust or Partnership
-----------------------------------------
Tax ID Number
[ ] Corporation [ ] Partnership [ ] Trust
[ ] Non-Profit or Charitable Organization [ ] Other -----------------------
If a Trust, please provide the following:
-----------------------------------------------------------------------------
Date of Trust For the Benefit of
-----------------------------------------------------------------------------
Name of Trustees (If to be included in the Registration)
Mailing Address
-----------------------------------------------------------------------------
Name of Individual to Receive Correspondence
-----------------------------------------------------------------------------
Street
-----------------------------------------------------------------------------
City State Zip
( )
-----------------------------------------------------------------------------
Daytime Phone
-----------------------------------------------------------------------------
INITIAL INVESTMENT
The initial minimum purchase for the Institutional Shares of the Fund is
$500,000. There is no minimum for clients of investment advisory affiliates
of Alex. Brown or for subsequent investments.
Indicate the amount of investment: $---------------------.
Follow the instructions below to arrange for a wire transfer for initial
investment:
o Send completed Application by overnight courier to Flag Investors Funds
at the address listed above.
<PAGE>
o Call 1-800-553-8080 to obtain investor's new account number.
o Wire payment of the purchase price to the Fund's transfer agent, c/o
Investors Fiduciary Investment Company ("IFTC"), as follows:
IFTC Bank
a/c Flag Investors Funds -- Institutional Shares
Acct. #---------------
ABA # 1010-0362-1
Kansas City, Missouri 64105
Please refer in the wire to "For further credit
to -----------------------------------------."
(Investor's Fund Account Number)
-----------------------------------------------------------------------------
DISTRIBUTION OPTIONS
Please check appropriate boxes. If none of the options are elected, all
distributions will be reinvested in additional Institutional Shares of the
Fund at no sales charge.
Income Dividends Capital Gains
[ ] Reinvested in additional shares [ ] Reinvested in additional shares
[ ] Paid in Cash [ ] Paid in Cash
-----------------------------------------------------------------------------
TELEPHONE TRANSACTIONS
I understand that the investor will automatically have telephone exchange
privileges (with respect to Institutional Shares of other Flag Investors
Funds) unless I mark the box below:
[ ] No, the investor does not want telephone exchange privileges
------------------------------------------------------------------------------
BANK ACCOUNT DESIGNATION
(THIS SECTION MUST BE COMPLETED)
Please attach a blank, voided check to provide account and bank routing
information.
------------------------------------------------------------------------------
Name of Bank Branch
------------------------------------------------------------------------------
Bank Address City/State/Zip
------------------------------------------------------------------------------
Name(s) on Account Type of Account (Checking/Now)
------------------------------------------------------------------------------
Account Number A.B.A. Number
<PAGE>
ACKNOWLEDGEMENT, CERTIFICATE AND SIGNATURE
I have received a copy of the Fund's prospectus dated _______, 1995. Unless
the box below is checked, I certify under penalties of perjury, (1) that the
number shown on this form is the investor's correct taxpayer identification
number and (2) that the investor is not subject to backup withholding as a
result of a failure to report all interest or dividends, or the Internal
Revenue Service has notified the investor that it is no longer subject to
backup withholding. [ ] Check here if the investor is subject to backup
withholding.
If a non-resident alien, please indicate country of residence:
---------------
I acknowledge that the telephone exchange privileges are automatic and will
be effected as described in the Fund's current prospectus (see "How to Invest
in Institutional Shares -- Purchases by Exchange"). I also acknowledge that
the investor may bear the risk of loss in the event of fraudulent use of such
privileges. If the investor does not want telephone exchange privileges, I
have so indicated on this Application.
------------------------------------------------------------------------------
Signature of Corporate Officer, General Partner, Trustee, etc. Date
------------------------------------------------------------------------------
Signature of Corporate Officer, General Partner, Trustee, etc. Date
------------------------------------------------------------------------------
PERSON(S) AUTHORIZED TO CONDUCT TRANSACTIONS
The following person(s) ("Authorized Person(s)") are currently officers,
trustees, general partners or other authorized agents of the investor. Any
------* of the Authorized Person(s) is, by lawful and appropriate action of
the investor, a person entitled to give instructions regarding purchases and
redemptions or make inquiries regarding the Account.
------------------------------------ -----------------------------------------
Name/Title Signature Date
------------------------------------ -----------------------------------------
Name/Title Signature Date
------------------------------------ -----------------------------------------
Name/Title Signature Date
------------------------------------ -----------------------------------------
Name/Title Signature Date
The signature appearing to the right of each Authorized Person is that
person's signature. Investment Company Capital Corp. ("ICC") may, without
inquiry, act upon the instructions (whether verbal, written, or provided by
wire, telecommunication, or any other process) of any person claiming to be
an Authorized Person. Neither ICC nor any entity on behalf of which ICC is
acting shall be liable for any claims or expenses (including legal fees) or
for any losses resulting from actions taken upon any instructions believed to
be genuine. ICC may continue to rely on the instructions made by any person
claiming to be an Authorized Person until it is informed through an amended
Application that the person is no longer an Authorized Person and it has a
reasonable period (not to exceed one week) to process the amended
Application. Provisions of this Application shall be equally Applicable to
any successor of ICC.
<PAGE>
* If this space is left blank, any one Authorized Person is authorized to
give instructions and make inquiries. Verbal instructions will be accepted
from any one Authorized Person. Written instructions will require
signatures of the number of Authorized Persons indicated in this space.
--------------------------------------------------------------------------------
CERTIFICATE OF AUTHORITY
Investors must complete one of the following two Certificates of Authority.
FOR CORPORATIONS AND UNINCORPORATED ASSOCIATIONS (With a Board of Directors
or Board of Trustees.
I _______, Secretary of the above-named investor, do hereby certify that a
meeting on _______, at which a quorum was present throughout, the Board of
Directors (Board of Trustees) of the investor duly adopted a resolution which
is in full force and effect and in accordance with the investor's charter and
by-laws, which resolution did the following: (1) empowered the
officers/trustees executing this Application (or amendment) to do so on
behalf of the investor; (2) empowered the above-named Authorized Person(s) to
effect securities transactions for the investor on the terms described above;
(3) authorized the Secretary to certify, from time to time, the names and
titles of the officers of the investor and to notify ICC when changes in
officers occur; and (4) authorized the Secretary to certify that such a
resolution has been duly adopted and will remain in full force and effect
until ICC receives a duly-executed amendment to the Certification form.
Witness my hand and seal on behalf of the investor.
this ______day of _________, 199_ Secretary
The undersigned officer (other than the Secretary) hereby certifies that the
foregoing instrument has been signed by the Secretary of the investor.
--------------------------------------------------------------------------------
PARTNERSHIPS AND TRUSTS (Even if you are the sole trustee)
The undersigned certify that they are all general partners/trustees of the
investor and that they have done the following under the authority of the
investor's partnership agreement/trust instrument: (1) empowered the general
partner/trustee executing this Application (or amendment) to do so on behalf
of the investor; (2) empowered the above-named Authorized Person(s) to effect
securities transactions for the investor on the terms described above; (3)
authorized the Secretary to certify, from time to time, the names of the
general partners/trustees of the investor and to notify ICC when changes in
general partners/trustees occur. This authorization will remain in full force
and effect until ICC receives a further duly-executed certification. (If
there are not enough spaces here for all necessary signatures, complete a
separate certificate containing the language of Certificate B and attach it
to the Application).
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------
FLAG INVESTORS INTERNATIONAL FUND, INC.
135 East Baltimore Street
Baltimore, Maryland 21202
-----------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS. IT SHOULD BE READ IN CONJUNCTION WITH A
PROSPECTUS WHICH MAY BE OBTAINED FROM YOUR
PARTICIPATING DEALER OR SHAREHOLDER SERVICING AGENT
OR BY WRITING OR CALLING ALEX. BROWN & SONS
INCORPORATED, 135 EAST BALTIMORE STREET, BALTIMORE,
MARYLAND 21202, (800) 767-FLAG.
Statement of Additional Information Dated:
February 28, 1995, as amended through __________, 1995
Relating to the Prospectus Dated:
February 28, 1995, relating to the Class A Shares
and
__________, 1995, relating to the Institutional Shares
<PAGE>
TABLE OF CONTENTS
Page
1. GENERAL INFORMATION AND HISTORY.................................... 1
2. INVESTMENT OBJECTIVE AND POLICIES.................................. 1
3. VALUATION OF SHARES AND REDEMPTION................................. 3
4. FEDERAL TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS............... 4
5. MANAGEMENT OF THE FUND............................................. 8
6. INVESTMENT ADVISORY AND OTHER SERVICES............................. 12
7. DISTRIBUTION OF FUND SHARES........................................ 14
8. BROKERAGE.......................................................... 17
9. CAPITAL SHARES..................................................... 19
10. SEMI-ANNUAL REPORTS................................................ 19
11. CUSTODIAN, ACCOUNTING SERVICES AND TRANSFER AGENT.................. 19
12. INDEPENDENT AUDITORS............................................... 20
13. PERFORMANCE INFORMATION............................................ 20
14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES................ 21
15. FINANCIAL STATEMENTS............................................... 21
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1. GENERAL INFORMATION AND HISTORY
Flag Investors International Fund, Inc. (the "Fund") is an open-end
management investment company. Under the rules and regulations of the Securities
and Exchange Commission (the "SEC"), all mutual funds are required to furnish
prospective investors with certain information concerning the activities of the
company being considered for investment. The Fund currently offers two classes
of shares: Flag Investors International Fund Class A Shares (the "Class A
Shares") and Flag Investors International Fund Institutional Shares (the
"Institutional Shares") (collectively, the "Shares"). As used herein, the "Fund"
refers to Flag Investors International Fund, Inc., and specific references to
either class of the Fund's Shares will be made using the name of such class.
Important information concerning the Fund is included in the Fund's
Prospectuses which may be obtained without charge from Alex. Brown & Sons
Incorporated ("Alex. Brown"), 135 East Baltimore Street, Baltimore, Maryland
21202, (telephone: (800) 767-FLAG) or, in the case of the Class A Shares, from
Participating Dealers that offer Shares of the Fund to prospective investors.
Prospectuses for the Class A Shares may also be obtained from Shareholder
Servicing Agents. Some of the information required to be in this Statement of
Additional Information is also included in the Fund's current Prospectuses. To
avoid unnecessary repetition, references are made to related sections of the
Prospectuses. In addition, the Prospectuses and this Statement of Additional
Information omit certain information about the Fund and its business that is
contained in the Registration Statement relating to the Fund and its Shares
filed with the SEC. Copies of the Registration Statement as filed, including
such omitted items, may be obtained from the SEC by paying the charges
prescribed under its rules and regulations.
The Fund was organized as a Massachusetts business trust on September 3,
1986. The Fund filed a registration statement with the SEC registering itself as
an open-end, diversified management investment company under the Investment
Company Act of 1940, as amended (the "Investment Company Act") and its Shares
under the Securities Act of 1933, as amended, and commenced operations on
November 18, 1986. On August 16, 1993, the Fund reorganized as a Maryland
corporation pursuant to an Agreement and Plan of Reorganization and Liquidation
approved by shareholders on June 16, 1993. The Institutional Shares have not
been offered prior to the date of this Statement of Additional Information.
Under a license agreement dated August 16, 1993, between the Fund and Alex.
Brown Incorporated, Alex. Brown Incorporated licenses to the Fund the "Flag
Investors" name and logo but retains the rights to that name and logo, including
the right to permit other investment companies to use them.
2. INVESTMENT OBJECTIVE AND POLICIES
Investment Objective
The Fund's investment objective is long-term growth of capital. As more
fully described in the Fund's Prospectus, the Fund seeks to achieve this
objective primarily through investment in a diversified portfolio of marketable
equity securities of issuers domiciled outside of the United States.
Investment Restrictions
The Fund's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. The investment restrictions recited below are in
addition to those described in the Fund's Prospectus, and are matters of
fundamental policy and may not be changed without the affirmative vote of a
majority of the Fund's outstanding Shares. The percentage limitations
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contained in these restrictions apply at the time of purchase of securities.
Accordingly, the Fund will not:
1. Invest in real estate or mortgages on real estate;
2. Purchase or sell commodities or commodities contracts, except that
the Fund may enter into forward currency exchange contracts;
3. Purchase a security if, as a result, more than 5% of the value of
the Fund's total assets would be invested in securities with legal or
contractual restrictions on resale ("restricted securities");
4. Act as an underwriter of securities within the meaning of the
federal securities laws except insofar as it might be deemed to be an
underwriter upon disposition of certain portfolio securities acquired
within the limitation on purchases of restricted securities;
5. Issue senior securities;
6. Make loans of money or portfolio securities, except that the Fund
may purchase or hold debt instruments, including time deposits, in
accordance with its investment objectives and policies;
7. Effect short sales of securities;
8. Purchase securities on margin (but the Fund may obtain such
short-term credits as may be necessary for the clearance of transactions);
or
9. Purchase participations or other direct interests in oil, gas or
other mineral exploration or development programs.
The following are investment restrictions that may be changed by a vote of
the majority of the Board of Directors. The Fund will not:
1. Purchase any securities of unseasoned issuers which have been in
operation directly or through predecessors for less than three years (for
this purpose, the Fund's management considers certain privatized government
companies to be seasoned issuers);
2. Invest in shares of any other open-end investment company
registered under the Investment Company Act, unless otherwise permitted by
law. (If the Board of Directors votes to approve investments in shares of
any other investment company, the Fund might incur sales charges,
management fees and other expenses in connection with any such investment,
which charges would be a Fund expense and accordingly might have some
impact on the Fund's net asset value);
3. Purchase or retain the securities of any issuer if to the knowledge
of the Fund any officer or Director of the Fund or its investment advisor
or sub-advisor owns beneficially more than .5% of the outstanding
securities of such issuer and together they own beneficially more than 5%
of the securities of such issuer;
4. Invest in companies for the purpose of exercising management or
control;
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5. Invest in puts or calls or any combination thereof, except that the
Fund may enter into forward foreign currency contracts; or
6. Purchase warrants, if by reason of such purchase more than 5% of
the Fund's net assets (taken at market value) will be invested in warrants,
valued at the lower of cost or market. Included within this amount, but not
to exceed 2% of the value of the Fund's net assets, may be warrants that
are not listed on the New York or American Stock Exchange. For the purpose
of the foregoing calculations, warrants acquired by the Fund in units or
attached to securities will be deemed to be without value and therefore not
included within the limitations of the preceding sentence;
7. Invest in real estate limited partnerships or oil, gas or mineral
leases.
Other Considerations
The Fund's investments in convertible securities rated below investment
grade will not exceed 5% of the value of its total assets.
3. VALUATION OF SHARES AND REDEMPTION
Valuation
The net asset value per Share is determined once daily as of 4:00 p.m.
(Eastern Time), each day on which the New York Stock Exchange is open for
business (a "Business Day"). The New York Stock Exchange is open for business on
all weekdays except for the following holidays: New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
For the purpose of determining the price at which Shares are redeemed, the
net asset value per share of a class is calculated by valuing all securities
held by the Fund, deducting actual and accrued liabilities (including liability
for dividends declared) attributable to all Shares and any liabilities
attributable to the specific class, and dividing the resulting amount by the
number of outstanding Shares of the class. For this purpose, securities which
are listed on a securities exchange are valued on the basis of their last quoted
sale price (or, in the absence of recorded sales, at the last available bid
price). If a security is listed on more than one exchange, the last quoted sale
on the exchange where the security is primarily traded is used. 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 Advisor under procedures
established and monitored by the Board of Directors. Short-term obligations with
maturities of 60 days or less will be valued at amortized cost, which
constitutes fair value as determined by the Directors.
Redemption
The Fund may suspend the right of redemption or postpone the date of
payment during any period when (a) trading on the New York Stock Exchange is
restricted by applicable rules and regulations of the SEC; (b) the New York
Stock Exchange is closed for other than customary weekend and holiday closings;
(c) the SEC has by order permitted such suspension; or (d) an emergency exists
as determined by the SEC so that valuation of the net assets of the Fund is not
reasonably practicable.
Under normal circumstances, the Fund will redeem Class A Shares by check,
and Institutional Shares by wire transfer of funds, as described in the
Prospectuses relating to such Shares. However, if the Board of Directors
determines that it would be in the best interests of the remaining
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shareholders to make payment of the redemption price in whole or in part by a
distribution in kind of readily marketable securities from the portfolio of the
Fund in lieu of cash, in conformity with applicable rules of the SEC, the Fund
will make such distributions in kind. In the unlikely event that Shares are
redeemed in kind, the redeeming shareholder, will incur brokerage costs in later
converting the assets into cash. The method of valuing portfolio securities is
described under "Valuation of Shares," and such valuation will be made as of the
same time the redemption price is determined. The Fund, however, has elected to
be governed by Rule 18f-1 under the Investment Company Act pursuant to which the
Fund is obligated to redeem Shares solely in cash up to the lesser of $250,000
or 1% of the net asset value of the Fund during any 90-day period for any one
shareholder. A corporate shareholder requesting a redemption must have on file
with the Fund's Transfer Agent, Alex. Brown, a Participating Dealer or
Shareholder Servicing Agent all required resolutions and certificates, such as
resolutions authorizing the redemption and secretary's certificates.
4. FEDERAL TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS
The following discussion of federal income tax consequences is based on the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
issued thereunder as in effect on the date of this Statement of Additional
Information. New legislation, as well as administrative changes or court
decisions, may significantly change the conclusions expressed herein, and may
have a retroactive effect with respect to the transactions contemplated herein.
The following is only a summary of certain additional federal tax
considerations generally affecting the Fund and its shareholders that are not
described in the Fund's Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
discussion here and in the Fund's Prospectus is not intended as a substitute for
careful tax planning.
Qualification as Regulated Investment Company
The Fund has been and expects to be taxed as a regulated investment company
("RIC") under Subchapter M of the Code. As a RIC, the Fund is exempt from
federal income tax on its net investment income and capital gains which it
distributes to shareholders, provided that it distributes at least 90% of its
investment company taxable income (net investment income and the excess of net
short-term capital gains over net long-term capital losses) for the taxable year
(the "Distribution Requirement"), and satisfies certain other requirements of
the Code that are described below. Distributions of investment company taxable
income made during the taxable year or, under certain specified circumstances,
within 12 months after the close of the taxable year, will satisfy the
Distribution Requirement. The Distribution Requirement for any year may be
waived if the Fund establishes to the satisfaction of the Internal Revenue
Service that it is unable to satisfy the Distribution Requirement by reason of
distributions previously made for the purpose of avoiding liability for federal
excise tax (as discussed below).
In addition to satisfaction of the Distribution Requirement, in order to
qualify as a RIC the Fund must (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies,
and other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stocks, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains from designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from gains on the sale or other disposition of any of the following
investments if such investments are held for less than three months (the
"Short-Short Gain Test"): (a) stock or securities (as defined in Section
2(a)(36) of the Investment Company Act); (b) options, futures, or forward
contracts (other than options, futures, or forward contracts on foreign
currencies); and (c) foreign currencies (or options, futures, or forward
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<PAGE>
contracts on foreign currencies) but only if such currencies (or options,
futures, or forward contracts) are not directly related to the Fund's principal
business of investing in stock or securities (or options and futures with
respect to stock or securities).
Income derived by the Fund from a partnership or trust satisfies the Income
Requirement only to the extent such income is attributable to items of income of
the partnership or trust that would satisfy the Income Requirement if they were
realized by the Fund in the same manner as realized by the partnership or trust.
Future Treasury regulations may provide that foreign currency gains that are not
"directly related" to the Fund's principal business of investing in stock or
securities (or in options and futures with respect to stock or securities) will
not satisfy the Income Requirement. It is unclear to what extent gross income
from certain currency related transactions will be treated as not satisfying the
Income Requirement under these Treasury regulations or whether the Treasury
regulations, when issued, will have only prospective effect. Consequently, the
Fund will attempt to operate so that its gross income from certain currency
related transactions will be less than 10% of the gross income of the Fund in
any taxable year that could be subject to these Treasury regulations until such
time as the applicable Treasury regulations are issued or the Fund receives a
satisfactory opinion of counsel or private letter ruling from the Service that
income from such currency transactions may be considered "qualifying income" for
purposes of the Income Requirement.
Because of the Short-Short Gain Test, the Fund may have to limit the sale
of appreciated securities or currencies that it has held for less than three
months. In addition, until such time as Treasury regulations are issued
indicating in which circumstances the writing and purchasing of options on
foreign currency and the investment in forward foreign currency exchange
contracts and currencies is directly related to a regulated investment company's
principal business of investing in stock or securities (or options and futures
with respect to stock or securities), the Fund may have to limit (1) the sale or
offsetting of forward foreign currency exchange contracts that it has held for
less than three months; (2) the exercise or closing of appreciated options on
foreign currency that it has held for less than three months; and (3) certain
other transactions involving foreign currencies.
Many of the forward foreign currency exchange contracts that the Fund
enters into will be subject to special tax treatment as "Section 1256
contracts." Section 1256 contracts are treated as if they are sold for their
fair market value on the last business day of the taxable year, regardless of
whether a taxpayer's obligations (or rights) thereunder have terminated (by
delivery, exercise, entering into a closing transaction or otherwise) as of such
date. Any gain or loss recognized as a consequence of the year-end deemed
disposition of Section 1256 contracts is combined with any other gain or loss
that was previously recognized upon the termination of other Section 1256
contracts during that taxable year and is generally treated as 60% long-term
capital gain or loss and 40% short-term capital gain or loss. The Fund may elect
not to have the year-end deemed sale rule apply to Section 1256 contracts that
are part of a "mixed straddle" with other investments of the Fund that are not
Section 1256 contracts (the "Mixed Straddle Election"). Gains and losses with
respect to certain foreign currency contracts are treated as ordinary income or
loss pursuant to Section 988 of the Code.
In order to qualify as a RIC, at the close of each quarter of its taxable
year, at least 50% of the value of the Fund's assets must consist of cash and
cash items, U.S. Government securities, securities of other RICs, and securities
of other issuers (as to which the Fund has not invested more than 5% of the
value of its total assets in securities of such issuer and as to which the Fund
does not hold more than 10% of the outstanding voting securities of such
issuer), and no more than 25% of the value of its total assets may be invested
in the securities of any one issuer (other than U.S. Government securities and
securities of other RICs), or in two or more issuers which the Fund controls and
which are engaged in the same, similar or related trades or businesses (the
"Asset Diversification Test"). The above limitations are imposed on the Fund as
investment restrictions as set forth in the Prospectus under the heading
"Investment Restrictions." Generally, the Fund will not lose its status as a RIC
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if it fails to meet the Asset Diversification Test solely as a result of a
fluctuation in value of portfolio assets not attributable to a purchase.
For purposes of the Asset Diversification Test, it is unclear under present
law who should be treated as the issuers of options on foreign currencies and of
forward foreign currency exchange contracts, although it has been suggested that
the issuer in each case would be the foreign central bank or foreign government
backing the particular currency.
Fund Distributions
The Fund anticipates that it will distribute substantially all of its
investment company taxable income for each taxable year. Such distributions will
generally be taxable to shareholders as ordinary income, regardless of whether
such distributions are paid in cash or are reinvested in Shares. Shareholders
receiving any distribution from the Fund in the form of additional Shares will
generally be treated as receiving a taxable distribution in an amount equal to
the fair market value of the Shares received, determined as of the reinvestment
date.
Corporate shareholders will be entitled to the 70% dividends received
deduction on Fund distributions to the extent of qualifying dividends received
by the Fund each year. Generally, a dividend will be treated as a qualifying
dividend if it has been received from a domestic corporation. Because most of
the Fund's income will be from foreign securities, only a small portion, if any,
of the Fund's distributions will qualify for the dividends received deduction.
Moreover, for the purposes of the alternative minimum tax and the environmental
tax, corporate shareholders will generally be required to take the full amount
of any dividend received from the Fund into account in determining "adjusted
current earnings."
The Fund may either retain or distribute to shareholders as a capital gains
distribution the excess of its net long-term capital gains over its net
short-term capital losses ("net capital gains") for each taxable year. If such
gains are distributed as a capital gains distribution, they are taxable to
shareholders as long-term capital gains, regardless of the length of time the
shareholder has held Shares, whether such gains were recognized by the Fund
prior to the date on which a shareholder acquired Shares and whether the
distribution was paid in cash or reinvested in Shares. The aggregate amount of
distributions designated by the Fund as capital gains distributions may not
exceed the net capital gains of the Fund for any taxable year, determined by
excluding any net capital losses or net long-term capital losses attributable to
transactions occurring after October 31 of such year and by treating any such
losses as if they arose on the first day of the following taxable year.
Shareholders will be advised annually as to the U.S. federal income tax status
of distributions made during the year.
Conversely, if the Fund elects to retain its net capital gains for any
taxable year it will be taxed thereon (except to the extent of any available
capital loss carryovers) at the corporate tax rate. In such event, it is
expected that the Fund also will elect to have shareholders treated as having
received a distribution of such gains, with the result that they will be
required to report their respective Shares of such gains on their returns as
long-term capital gains, will receive a refundable tax credit for their
allocable share of tax paid by the Fund on the gains, and will increase the tax
basis for their Shares by an amount equal to 65 percent of the deemed
distribution.
Investors should be careful to consider the tax implications of purchasing
Shares just prior to the next dividend date of any ordinary income dividend or
capital gains distribution. Those purchasing just prior to an ordinary income
dividend or capital gains distribution will be taxable on the entire amount of
the distribution received, even though the net asset value per share on the date
of such purchase reflected the amount of such distribution.
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If for any taxable year the Fund does not qualify as a RIC, all of its
taxable income will be subject to tax at regular corporate rates without any
deduction for distributions to shareholders, and such distributions will be
taxable to shareholders as ordinary dividends to the extent of the Fund's
current and accumulated earnings and profits. Such distributions will generally
be eligible for the dividends received deduction in the case of corporate
shareholders.
The Fund will be required in certain cases to withhold and remit to the
United States Treasury 31% of distributions paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the Internal Revenue Service for failure
to report the receipt of interest or dividend income properly, or (3) who has
failed to certify to the Fund that such shareholder is not subject to backup
withholding.
Miscellaneous Considerations
A 4% non-deductible federal excise tax is imposed on RICs that fail to
distribute in each calendar year an amount equal to 98% of ordinary income for
the calendar year and 98% of "capital gain net income" (excess of long and
short-term capital gains over long and short-term capital losses) for the
one-year period ending on October 31 of such calendar year. The balance of such
income must be distributed during the next calendar year. For the foregoing
purposes, a RIC is treated as having distributed any amount on which it is
subject to income tax for any taxable year ending in such calendar year.
The Fund intends to make sufficient distributions of its ordinary taxable
income and capital gain net income prior to the end of each calendar year to
avoid liability for the federal excise tax. However, investors should note that
the Fund may in certain circumstances be required to liquidate portfolio
investments in order to make sufficient distributions to avoid excise tax
liability and, in addition, that the liquidation of investments in such
circumstances may affect the ability of the Fund to satisfy the Short-Short Gain
test.
Generally, gain or loss on the sale of Shares will be capital gain or loss,
which will be long-term if the Shares have been held for more than one year and
otherwise will be short-term. However, investors should be aware that any loss
realized upon the sale, exchange or redemption of Shares held for six months or
less will be treated as a long-term capital loss to the extent any capital gains
distributions have been paid with respect to such Shares (or any undistributed
net capital gains of the Fund with respect to such Shares have been included in
determining the investor's long-term capital gains). In addition, any loss
realized on a sale or other disposition of Shares will be disallowed to the
extent an investor repurchases (or enters into a contract or option to
repurchase) Shares within a period of 61 days (beginning 30 days before and
ending 30 days after the disposition of the Shares). Investors should
particularly note that this loss disallowance rule will apply to Shares received
through the reinvestment of dividends during the 61-day period.
Foreign Income Taxes
As described in the Prospectus, investment income received by the Fund from
sources within foreign countries may be subject to foreign income taxes withheld
at the source. The United States has entered into tax treaties with many foreign
countries which entitle the Fund to a reduced rate of, or exemption from, taxes
on such income. It is impossible to determine the effective rate of foreign tax
in advance since the amount of the Fund's assets to be invested in various
countries is not known.
If more than 50% of the value of the Fund's total assets at the close of
its taxable year consists of the stock or securities of foreign corporations,
the Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant
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to the Foreign Tax Election, shareholders would be required (i) to include in
gross income, even though not actually received, their respective pro-rata
shares of the foreign income taxes paid by the Fund; (ii) either to deduct
their pro-rata share of foreign taxes in computing their taxable income, or to
use such share (subject to various Code limitations) as a foreign tax credit
against federal income tax (but not both). In determining the source and
character of distributions received from the Fund for purposes of the foreign
tax credit limitation rules of the Code, shareholders would, if the Fund makes
the Foreign Tax Election, be required to treat their pro-rata shares of such
foreign taxes and allocable portions of Fund distributions as foreign source
income.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, a foreign trust or estate, foreign corporation, or foreign
partnership ("Foreign Shareholder"), depends on whether the income from the Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from the Fund is not effectively connected with a U.S. trade
or business carried on by a Foreign Shareholder, distributions of net investment
income will be subject to U.S. withholding tax at the rate of 30% (or such lower
treaty rate as may be applicable) upon the gross amount of the distribution.
Furthermore, Foreign Shareholders will generally be exempt from U.S. federal
income tax on gains realized on the sale of Shares, distributions of net
long-term capital gains, and amounts retained by the Fund which are designated
as undistributed capital gains.
If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a Foreign Shareholder, then distributions of net
investment income and net long-term capital gains, and any gains realized upon
the sale of Shares, will be subject to U.S. federal income tax at the rates
applicable to U.S. citizens or domestic corporations.
The Fund may be required to withhold U.S. federal income tax on
distributions that are otherwise exempt from withholding tax (or taxable at a
reduced treaty rate) if the Foreign Shareholder does not comply with Internal
Revenue Service certification requirements.
The tax consequences to a Foreign Shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Furthermore, Foreign Shareholders are strongly urged to consult their
own tax advisors with respect to the particular tax consequences to them of an
investment in the Fund. For various reasons dependent upon the application of
specific U.S. tax rules, Foreign Shareholders may determine that an investment
in the Fund results in adverse tax consequences.
Local Tax Considerations
Rules of U.S. state and local taxation of dividend and capital gains
distributions from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. Shareholders are urged to
consult their tax advisers as to the consequences of these and other U.S. state
and local tax rules regarding an investment in the Fund.
5. MANAGEMENT OF THE FUND
The overall business affairs of the Fund are the responsibility of the
Board of Directors. The Board approves all significant agreements between the
Fund and persons or companies furnishing services to the Fund, including the
Fund's agreements with its investment advisor, sub-advisor, custodian,
accounting services agent and transfer agent. The day-to-day operations of the
Fund are delegated to the Fund's executive officers and to its investment
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advisor, Investment Company Capital Corp. ("ICC"), and sub-advisor, The Glenmede
Trust Company ("Glenmede") (collectively, the "Advisors"). Two Directors and all
of the officers of the Fund are officers or employees of Alex. Brown, ICC or
Glenmede. The other Directors of the Fund have no affiliation with Alex. Brown,
ICC or Glenmede.
Directors and Officers
The Directors and executive officers of the Fund and their principal
occupations during the last five years are set forth below. Unless otherwise
indicated, the address of each Director and executive officer is 135 East
Baltimore Street, Baltimore, Maryland 21202.
*TRUMAN T. SEMANS, Chairman and Director
Managing Director, Alex. Brown & Sons Incorporated; Formerly, Vice
Chairman, Alex. Brown & Sons Incorporated.
*RICHARD T. HALE, Director
Managing Director, Alex. Brown & Sons Incorporated; Chartered Financial
Analyst.
JAMES J. CUNNANE, Director
CBC Capital, 264 Carlyle Lake Drive, St. Louis, Missouri 63141. Managing
Director, CBC Capital (merchant banking), 1993-Present; Formerly, Senior
Vice-President and Chief Financial Officer, General Dynamics Corporation
(defense)(1989-1993) and Director, The Arch Fund (mutual fund).
N. BRUCE HANNAY, Director
201 Condon Lane, Port Ludlow, Washington 98365. Director, Plenum Publishing
Corp.; Formerly Director, Rohm & Haas Company (diversified chemicals) and
General Signal Corp. (control equipment and systems) and Consultant, SRI
International (nonprofit consulting organization).
JOHN F. KROEGER, Director
P.O. Box 464, 24875 Swan Road - Martingham, St. Michaels, Maryland 21663.
Director/Trustee, AIM Funds; Formerly Consultant, Wendell & Stockel
Associates, Inc. (consulting firm) and General Manager, Shell Oil Company.
LOUIS E. LEVY, Director
26 Farmstead Road, Short Hills, New Jersey 07078. Director, Kimberly-Clark
Corporation (personal consumer products) and Household International
(finance and banking); Chairman of the Quality Control Inquiry Committee,
American Institute of Certified Public Accountants; Formerly, Trustee,
Merrill Lynch Funds for Institutions, 1991-1993; Adjunct Professor,
Columbia University-Graduate School of Business, 1991-1992; Partner, KPMG
Peat Marwick, retired 1990.
EUGENE J. MCDONALD, Director
Duke Management Company, Erwin Square, Suite 1000, 2200 West Main Street,
Durham, North Carolina 27705. President, Duke Management Company
(investments); Executive Vice President, Duke University (education,
research and healthcare).
HARRY WOOLF, Director
Institute for Advanced Study, South Olden Lane, Princeton, New Jersey
08540. Professor-at- Large Emeritus, Institute for Advanced Study;
Director, Merrill Lynch Cluster C Funds (registered investment companies),
ATL and Spacelabs Medical Corp. (medical equipment) and Family Health
International (nonprofit research and education); Trustee, Reed College
(education); Formerly, Trustee, Rockefeller Foundation.
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JOHN W. CHURCH, JR., President
The Glenmede Trust Company, One Liberty Place, 1650 Market Street,
Philadelphia, Pennsylvania 19103. Senior Vice President and Chief
Investment Officer, The Glenmede Trust Company.
ANDREW B. WILLIAMS, Executive Vice President
The Glenmede Trust Company, One Liberty Place, 1650 Market Street,
Philadelphia, Pennsylvania 19103. Vice President, The Glenmede Trust
Company, Chartered Financial Analyst.
GARY V. FEARNOW, Vice President
Managing Director, Alex. Brown & Sons Incorporated and Manager, Special
Products Department, Alex. Brown & Sons Incorporated.
EDWARD J. VEILLEUX, Vice President
Principal, Alex. Brown & Sons Incorporated; President, Investment Company
Capital Corp. (registered investment advisor); Vice President, Armata
Financial Corp. (registered broker-dealer).
BRIAN C. NELSON, Vice President and Secretary
Vice President, Alex. Brown & Sons Incorporated, Investment Company Capital
Corp. (registered investment advisor) and Armata Financial Corp.
(registered broker-dealer).
DIANA M. ELLIS, Treasurer
Manager, Portfolio Accounting Department, Investment Company Capital Corp.
(registered investment advisor); Mutual Fund Accounting Department, Alex.
Brown & Sons Incorporated, 1991-Present; Formerly, Accounting Manager,
Downtown Press Inc. (printer), 1987-1991.
LAURIE D. DePRINE, Assistant Secretary
Asset Management Department, Alex. Brown & Sons Incorporated, 1991-Present;
Prior thereto, Student, 1989-1991.
----------------------------
* A Director who is an "interested person" of the Fund as that term is
defined in Section 2(a)(19) of the Investment Company Act.
Directors and officers of the Fund are also directors and officers of some
or all of the other investment companies managed, administered, advised or
distributed by Alex. Brown or its affiliates. There are currently 12 funds in
the Flag Investors/ISI Funds and Alex. Brown Cash Reserve Fund, Inc. fund
complex (the "Fund Complex"). Mr. Semans serves as a Director of seven funds in
the Fund Complex. Mr. Hale serves as President and Director of one fund, Vice
President of one fund and as a Director of 10 other funds in the Fund Complex.
Messrs. Cunnane, Hannay, Kroeger, Levy, McDonald and Woolf serve as Directors of
each fund in the Fund Complex. Mr. Church and Mr. Williams serve as President
and Vice President, respectively, of the Fund. Mr. Fearnow serves as Vice
President of 10 funds in the Fund Complex. Mr. Veilleux serves as Executive Vice
President of one fund and as Vice President of each of the other funds in the
Fund Complex. Mr. Nelson, Ms. Ellis, and Ms. DePrine serve as Vice President and
Secretary, Treasurer and Assistant Secretary for each of the funds in the Fund
Complex.
Some of the Directors of the Fund are customers of, and have had normal
brokerage transactions with, Alex. Brown in the ordinary course of business. All
such transactions were made on substantially the same terms as those prevailing
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<PAGE>
at the time for comparable transactions with unrelated persons. Additional
transactions may be expected to take place in the future.
Officers of the Fund receive no direct remuneration in such capacity from
the Fund. Officers and Directors of the Fund who are officers or directors of
Alex. Brown or Glenmede may be considered to have received remuneration
indirectly. As compensation for his services as director, each Director who is
not an "interested person" of the Fund (as defined in the Investment Company
Act) (a "Non-Interested Director") receives an aggregate annual fee (plus
reimbursement for reasonable out-of-pocket expenses incurred in connection with
his attendance at board and committee meetings) from all Flag Investors/ISI
Funds and Alex. Brown Cash Reserve Fund, Inc. for which he serves. Payment of
such fees and expenses is allocated among all such funds described above in
direct proportion to their relative net assets. For the fiscal year ended
October 31, 1994, Non-Interested Directors' fees attributable to the assets of
the Fund totalled approximately $2,099. The following table shows aggregate
compensation paid to each of the Fund's Directors by the Fund and the Fund
Complex, respectively, in the fiscal year ended October 31, 1994.
COMPENSATION TABLE
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Total Compensation From the
Aggregate Compensation From Fund and Fund Complex Paid to
Name of Person, the Fund for the Fiscal Year Directors for the Fiscal Year
Position Ended October 31, 1994 Ended October 31, 1994
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*Truman T. Semans $0 $0
Chairman
*Richard T. Hale $0 $0
Director
James J. Cunnane $0** $0**
Director
N. Bruce Hannay $119.92 $39,000 for
Director service on 11 Boards(1)
John F. Kroeger $131.92 $42,900
Director service on 11 Boards(1)
Louis E. Levy $ 41.92 $9,750 for
Director service on 11 Boards***(1)
Eugene J. McDonald $119.92 $39,000 for
Director service on 11 Boards(1)
Harry Woolf $119.92 $39,000 for
Director service on 11 Boards(1)
</TABLE>
--------------
* A Director who is an "interested person" as defined in the Investment
Company Act.
** Elected to the Board on December 14, 1994.
*** Elected to the Board on June 17, 1994.
(1) Two other funds in the Fund Complex commenced operations after October 31,
1994. In addition, one fund ceased operations on May 17, 1995
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<PAGE>
The Fund Complex has adopted a Retirement Plan (the "Retirement Plan") for
Directors who are not employees of the Fund, the Fund's Advisor or their
respective affiliates (the "Participants"). After completion of five years of
service, each Participant will be entitled to receive an annual retirement
benefit equal to a percentage of the fee earned by him in his last year of
service. Upon retirement, each Participant will receive annually 10% of such fee
for each year that he served after completion of the first five years, up to a
maximum annual benefit of 50% of the fee earned by him in his last year of
service. The fee will be paid quarterly, for life, by each Fund for which he
serves. The Retirement Plan is unfunded and unvested. Messrs. Hannay, Kroeger
and Woolf have qualified but have not received benefits, and no such benefits
are being accrued for them since they have not yet retired. The Fund has one
Participant, a Director who retired effective December 31, 1994, who has
qualified for the Retirement Plan and who will be paid a quarterly fee of $4,875
by the Fund Complex for the rest of his life. Such fee is allocated to each fund
in the Fund Complex based upon the relative net assets of such fund to the Fund
Complex.
Beginning in December, 1994, any Director who receives fees from the Fund
is permitted to defer a minimum of 50%, or up to all, of his annual compensation
pursuant to a Deferred Compensation Plan.
Code of Ethics
The Board of Directors of the Fund has adopted a Code of Ethics pursuant to
Rule 17j-1 under the Investment Company Act. The Code of Ethics significantly
restricts the personal investing activities of all employees of the Advisors and
the directors and officers of Alex. Brown. As described below, the Code of
Ethics imposes additional, more onerous, restrictions on the Fund's investment
personnel, including the portfolio managers and employees who execute or help
execute a portfolio manager's decisions or who obtain contemporaneous
information regarding the purchase or sale of a security by the Fund.
The Code of Ethics requires that all employees of the Advisors, any
director or officer of Alex. Brown, and all Non-Interested Directors, preclear
any personal securities investments (with limited exceptions, such as
non-volitional purchases or purchases which are part of an automatic dividend
reinvestment plan). The preclearance requirement and associated procedures are
designed to identify any substantive prohibition or limitation applicable to the
proposed investment. The substantive restrictions applicable to investment
personnel include a ban on acquiring any securities in an initial public
offering, a prohibition from profiting on short-term trading in securities and
preclearance of the acquisition of securities in private placements.
Furthermore, the Code of Ethics provides for trading "blackout periods" that
prohibit trading by investment personnel and certain other employees within
periods of trading by the Fund in the same security.
6. INVESTMENT ADVISORY AND OTHER SERVICES
On March 24, 1993, the Board of Directors of the Fund and Bessemer Trust
Company, N.A. ("Bessemer") mutually agreed that Bessemer would resign as advisor
to the Fund at such time as a new advisory agreement with ICC became effective.
Bessemer had acted as the Fund's advisor since November 6, 1986, the date of
commencement of operations of the Fund. The Board approved an Investment
Advisory Agreement between the Fund and ICC and a Sub-Advisory Agreement between
the Fund and Glenmede on March 24, 1993 and on June 16, 1993, the shareholders
of the Fund approved these agreements, effective August 16, 1993.
-12-
<PAGE>
The Advisor
ICC is a wholly owned subsidiary of Alex. Brown, the Fund's distributor.
ICC is also the investment advisor to Alex. Brown Cash Reserve Fund, Inc., Flag
Investors Telephone Income Fund, Inc., Flag Investors Emerging Growth Fund,
Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Intermediate-Term
Income Fund, Inc., Flag Investors Maryland Intermediate Tax Free Income Fund,
Inc., Flag Investors Real Estate Securities Fund, Inc. and Flag Investors Equity
Partners Fund, Inc., which are also distributed by Alex. Brown. Glenmede, a
limited purpose trust company, provides fiduciary and investment services to
individuals, endowment funds, foundations, employee benefit plans and other
institutions. At December 31, 1994, Glenmede had over $7 billion in assets in
the accounts for which it serves in various capacities, including as executor,
trustee or investment advisor. Glenmede is a wholly-owned subsidiary of The
Glenmede Corporation.
Under the Investment Advisory Agreement, ICC supervises and manages all
aspects of the Fund's operations, except for distribution services; formulates
and implements continuing programs for the purchase and sale of securities,
consistent with the investment objective and policies of the Fund; provides the
Fund with such executive, administrative and clerical services as are deemed
advisable by the Fund's Board of Directors; provides the Fund with, or obtains
for it, adequate office space and all necessary office equipment and services,
including telephone service, utilities, stationery, supplies and similar items
for the Fund's principal office; obtains and evaluates pertinent information
about significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally or the
Fund, and whether concerning the individual issuers whose securities are
included in the Fund's portfolio or the activities in which they engage, or with
respect to securities which the Advisor considers desirable for inclusion in the
Fund's portfolio; determines which issuers and securities shall be represented
in the Fund's portfolio and regularly report thereon to the Fund's Board of
Directors; takes all actions necessary to carry into effect the Fund's purchase
and sale programs; supervises the operations of the Fund's custodian, transfer
and dividend disbursing agent, and accounting services agent; provides the Fund
with such administrative and clerical services for the maintenance of certain
shareholder records, as are deemed advisable by the Fund's Board of Directors;
and arranges, but does not pay for, the periodic updating of Prospectuses and
supplements thereto, proxy material, tax returns, reports to the Fund's
shareholders and reports to and filing with the SEC and state Blue Sky
authorities. ICC has delegated certain of these responsibilities to Glenmede.
Any investment program undertaken by ICC or Glenmede will at all times be
subject to the policies and control of the Fund's Board of Directors. Neither
ICC nor Glenmede shall be liable to the Fund or its shareholders for any act or
omission by ICC or Glenmede or any losses sustained by the Fund or its
shareholders except in the case of willful misfeasance, bad faith, gross
negligence, or reckless disregard of duty.
As compensation for its services, ICC is entitled to receive a fee from the
Fund, calculated daily and paid monthly, at the annual rate of .75% of the
Fund's average daily net assets. This fee is higher than that paid by most
mutual funds, however, in ICC's opinion, is comparable to fees paid by other
investment companies with similar investment objectives and policies. As
compensation for its services, Glenmede is entitled to receive a fee from ICC,
payable from its advisory fee, calculated daily and paid monthly, at the annual
rate of .55% of the Fund's average daily net assets. The services of the
Advisors to the Fund are not exclusive and the Advisors are free to, and do,
render similar services to others.
Each of the Investment Advisory Agreement and Sub-Advisory Agreement will
continue in effect for an initial term of two years and from year to year
thereafter as specifically approved (a) at least annually by the Fund's Board of
Directors or by a vote of a majority of the outstanding Shares (as defined under
"Capital Shares") and (b) by the affirmative vote of a majority of the
Non-Interested Directors who have no direct or indirect financial interest in
each of such agreements by votes cast in person at a meeting called for such
-13-
<PAGE>
purpose. The Fund or ICC may terminate the Investment Advisory Agreement upon
sixty days' written notice, without penalty, by the vote of a majority of the
Directors who are not parties to the Investment Advisory Agreement or interested
persons of any such party or by the vote of a majority of the outstanding Shares
(as defined under "Capital Shares"). The Investment Advisory Agreement will
terminate automatically in the event of its assignment. The Sub-Advisory
Agreement has similar termination provisions. As compensation for investment
advisory services for the fiscal year ended October 31, 1994, ICC was entitled
to receive fees of $114,033 and from such amounts waived fees of $19,363 and
paid Glenmede fees of $31,274. During the same period, Glenmede waived fees of
$52,350. For the period from August 23, 1993 through October 31, 1993, ICC
waived all advisory fees ($63,646). For the same period, Glenmede waived all
sub-advisory fees ($3,995). For the fiscal period from November 1, 1992 through
August 22, 1993 and for the fiscal year ended October 31, 1992, Bessemer (the
Fund's advisor during this period) received fees from the Fund in the aggregate
amount of $125,061 and $303,730, respectively, and waived fees of $34,411 and
$64,144, respectively.
ICC has agreed, if necessary, to waive a portion of its fees in order to
limit the overall expense ratio of the Fund to comply with state expense
limitations. Currently, the most restrictive of such limitations would require
ICC to reduce its fees or reimburse the Fund, to the extent required, so that
the ordinary expenses of the Fund (excluding brokerage commissions, interest,
taxes and extraordinary expenses such as legal claims, liabilities, litigation
costs and indemnification related thereto) do not exceed 2.5% of the first $30
million of the Fund's average daily net assets, 2.0% of the next $70 million of
the Fund's average daily net assets and 1.5% of the Fund's average daily net
assets in excess of $100 million. In addition, if required to do so by any
applicable state securities laws or regulations, ICC will reimburse the Fund to
the extent required to prevent the expense limitations of any state law or
regulation from being exceeded. ICC has also agreed to reduce its annual
advisory fees, if necessary, so that the Fund's annual operating expenses do not
exceed 1.50% of the Fund's average daily net assets. Glenmede has agreed to
reduce its aggregate fees for any fiscal year in an amount proportionate to the
amount by which ICC's fees may be reduced as described above.
ICC also serves as the Fund's transfer and dividend disbursing agent. (See
"Custodian, Accounting Services, Transfer Agent.")
7. DISTRIBUTION OF FUND SHARES
Alex. Brown serves as the distributor of the Fund's Shares pursuant to two
separate Distribution Agreements, one for the Class A Shares (the "Class A
Distribution Agreement") and one for the Institutional Shares (the
"Institutional Distribution Agreement") (collectively, "The Distribution
Agreements").
The Class A Shares
The Class A Distribution Agreement provides that Alex. Brown has the
exclusive right to distribute Class A Shares either directly or through other
broker-dealers and further provides that Alex. Brown will: solicit and receive
orders for the purchase of Class A Shares, accept or reject such orders on
behalf of the Fund in accordance with the Fund's currently effective Prospectus
and transmit such orders as are accepted to the Fund's transfer agent as
promptly as possible, receive requests for redemption and transmit such
redemption requests to the Fund's transfer agent as promptly as possible,
respond to inquiries from the Fund's shareholders concerning the status of their
accounts with the Fund, provide the Fund's Board of Directors with quarterly
reports required by Rule 12b-1, and take all actions deemed necessary to carry
into effect the distribution of the Class A Shares. Alex. Brown has not
undertaken to sell any specific number of Class A Shares. The Class A
Distribution Agreement further provides that, in connection with the
distribution of Class A Shares, Alex. Brown will be responsible for all of the
promotional expenses. The services by Alex. Brown to the Fund are not exclusive,
and Alex. Brown shall not be liable to the Fund or its shareholders for any act
-14-
<PAGE>
or omission by Alex. Brown or any losses sustained by the Fund or its
shareholders except in the case of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
Alex. Brown and certain broker-dealers ("Participating Dealers") have
entered into Sub-Distribution Agreements with respect to the Fund's Class A
Shares ("Sub-Distribution Agreements") pursuant to which Participating Dealers
have agreed to process investor purchase and redemption orders and to respond to
inquiries from shareholders concerning the status of their accounts and the
operations of the Fund.
As compensation for providing distribution services for the Class A Shares
as described above, Alex. Brown receives an annual fee, paid monthly, equal to
.25% of the average daily net assets of the Class A Shares. Alex. Brown expects
to allocate a substantial portion of the annual distribution fee to its
investment representatives and up to all of its fee to Participating Dealers.
For the fiscal years ended October 31, 1994, October 31, 1993 and October 31,
1992, Alex. Brown received fees in the amount of $38,112, $39,514 and $75,934,
respectively, and paid from such fees approximately $32,794, $20,178 and
$37,197, respectively, to its investment representatives as compensation and
$1,872, $0 and $1,084, respectively, to Participating Dealers and financial
institutions as compensation.
Pursuant to Rule 12b-1 under the Investment Company Act, which provides
that investment companies may pay distribution expenses, directly or indirectly,
only pursuant to a plan adopted by the investment company's Board of Directors
and approved by its shareholders, the Fund has adopted a Plan of Distribution
for the Class A Shares (the "Class A Plan"). The maximum amount payable under
the Class A Plan to Alex. Brown for distribution and other shareholder servicing
assistance is an amount calculated on an average net asset basis and paid
monthly, equal to .25% of the Class A Shares' average daily net assets, unless
and until a change in payment is authorized and approved by the Board of
Directors. Alex. Brown is authorized to make payments out of its fee to its
investment representatives, Participating Dealers and Shareholder Servicing
Agents. Payments to Participating Dealers and Shareholder Servicing Agents may
not exceed fees payable to Alex. Brown under the Class A Plan.
The Class A Distribution Agreement, including the form of Sub-Distribution
Agreement, and the Class A Plan was most recently approved by the Fund's Board
of Directors, including a majority of the Non-Interested Directors, on September
22, 1994. The Class A Distribution Agreement and the Class A Plan will remain in
effect from year to year as specifically approved (a) at least annually by the
Fund's Board of Directors or by a vote of a majority of the outstanding Class A
Shares and (b) by the affirmative vote of a majority of the Non-Interested
Directors, by votes cast in person at a meeting called for such purpose.
In approving the Class A Plan, the Directors concluded, in the exercise of
reasonable business judgment, that there was a reasonable likelihood that the
Class A Plan would benefit the Fund and its shareholders. The Class A Plan will
be renewed only if the Directors make a similar determination in each subsequent
year. The Class A Plan may not be amended to increase materially the fee to be
paid pursuant to the Class A Distribution Agreement without the approval of the
shareholders of the Fund. The Class A Plan may be terminated at any time and the
Class A Distribution Agreement may be terminated at any time upon 60 days'
notice, in either case without penalty, by a vote of a majority of the Fund's
Non-Interested Directors or by a vote of a majority of the Fund's outstanding
Class A Shares (as defined under "Capital Shares"). Any Shareholder Servicing
Agreement may be terminated at any time, without penalty, upon ten days' notice.
Any Sub-Distribution Agreement may be terminated at any time, without penalty,
upon 10 days' notice or by the vote of a majority of the Fund's Non-Interested
Directors. The Class A Distribution Agreement, the Class A Plan, any
Sub-Distribution Agreement and any Shareholder Servicing Agreement shall
automatically terminate in the event of assignment.
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<PAGE>
During the continuance of the Class A Plan, the Fund's Board of Directors
will be provided for their review, at least quarterly, a written report
concerning the payments made under the Class A Plan to Alex. Brown pursuant to
the Class A Distribution Agreement, to any Participating Dealers pursuant to
Sub-Distribution Agreements and to any Shareholder Servicing Agents pursuant to
Shareholder Servicing Agreements. Such reports shall be made by the persons
authorized to make such payments. In addition, during the continuance of the
Class A Plan, the selection and nomination of the Fund's Non-Interested
Directors shall be committed to the discretion of the Non-Interested Directors
then in office.
In addition, with respect to the Class A Shares, the Fund may enter into
Shareholder Servicing Agreements with certain financial institutions, such as
banks, to act as Shareholder Servicing Agents, pursuant to which Alex. Brown
will allocate a portion of its distribution fee as compensation for such
financial institutions' ongoing shareholder services. Although banking laws and
regulations prohibit banks from distributing shares of open-end investment
companies such as the Fund, according to interpretations by various bank
regulatory authorities, financial institutions are not prohibited from acting in
other capacities for investment companies, such as the shareholder servicing
capacities described above. Should future legislative, judicial or
administrative action prohibit or restrict the activities of the Shareholder
Servicing Agents in connection with the Shareholder Servicing Agreements, the
Fund may be required to alter materially or discontinue its arrangements with
the Shareholder Servicing Agents. Such financial institutions may impose
separate fees in connection with these services and investors should review the
Prospectus and this Statement of Additional Information in conjunction with any
such institution's fee schedule. In addition, state securities laws on this
issue may differ from the interpretations of federal law expressed herein, and
banks and financial institutions may be required to register as dealers pursuant
to state law.
The Institutional Shares
The Institutional Distribution Agreement provides that Alex. Brown has the
exclusive right to distribute the Institutional Shares and further provides that
Alex. Brown will solicit and receive orders for the purchase of Institutional
Shares, accept or reject such orders on behalf of the Fund in accordance with
the Fund's currently effective Prospectus for the Institutional Shares and
transmit such orders as are accepted to the Fund's transfer agent as promptly as
possible, receive requests for redemption and transmit such redemption requests
to the Fund's transfer agent as promptly as possible, respond to inquiries from
the Fund's shareholders concerning the status of their accounts with the Fund,
maintain such accounts, books and records as may be required by law or be deemed
appropriate by the Fund's Board of Directors, and take all actions deemed
necessary to carry into effect the distribution of the Institutional Shares.
Alex Brown has not undertaken to sell any specific number of Institutional
Shares. The Institutional Distribution Agreement further provides that, in
connection with the distribution of Institutional Shares, Alex. Brown will be
responsible for all of the promotional expenses. The services provided by Alex.
Brown to the Fund are not exclusive, and Alex. Brown is free to provide similar
services to others. Alex. Brown shall not be liable to the Fund or its
shareholders for any act or omission by Alex. Brown or any losses sustained by
the Fund or its shareholders, except in the case of willful misfeasance, bad
faith, gross negligence or reckless disregard of duty.
Alex. Brown receives no compensation for distributing the Institutional
Shares.
Except as described elsewhere, the Fund pays or causes to be paid all
continuing expenses of the Fund, including, without limitation: investment
advisory and distribution fees; the charges and expenses of any registrar, any
custodian or depository appointed by the Fund for the safekeeping of its cash,
portfolio securities and other property, and any transfer, dividend or
accounting agent or agents appointed by the Fund; brokers' commissions
chargeable to the Fund in connection with portfolio securities transactions to
which the Fund is a party; all taxes, including securities issuance and
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<PAGE>
transfer taxes, and corporate fees payable by the Fund to Federal, state or
other governmental agencies; the costs and expenses of engraving or printing
certificates representing Shares; all costs and expenses in connection with the
registration and maintenance of registration of the Fund and its Shares with the
SEC and various states and other jurisdictions (including filing fees, legal
fees and disbursements of counsel); the costs and expenses of printing,
including typesetting, and distributing Prospectuses and statements of
additional information of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing proxy statements and reports to shareholders;
fees and travel expenses of Non-Interested Directors and Non-Interested members
of any advisory board or committee; all expenses incident to the payment of any
dividend, distribution, withdrawal or redemption, whether in Shares or in cash;
charges and expenses of any outside service used for pricing of the Shares; fees
and expenses of legal counsel, including counsel to the Non-Interested
Directors, and independent accountants, in connection with any matter relating
to the Fund; membership dues of industry associations; interest payable on Fund
borrowings; postage; insurance premiums on property or personnel (including
officers and Directors) of the Fund which inure to its benefit; extraordinary
expenses (including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification related thereto); and all other charges
and costs of the Fund's operations unless otherwise explicitly assumed by ICC or
Alex. Brown.
8. BROKERAGE
Glenmede is responsible for decisions to buy and sell securities for the
Fund, for the broker-dealer selection, and for negotiation of commission rates,
subject to the supervision of ICC. Purchases and sales of securities on a
securities exchange are effected through brokers who charge a commission for
their services. If the transaction is completed on a United States securities
exchange, the brokerage commissions are subject to negotiation between Glenmede
and the broker. Commission rates for brokerage commissions on foreign stock
exchanges are, however, generally fixed. Glenmede may direct purchase and sale
orders to any broker, including, to the extent and in the manner permitted by
applicable law, Alex. Brown.
In over-the-counter transactions orders are placed directly with a
principal market maker and such purchases normally include a mark-up over the
bid to the broker-dealer based on the spread between the bid and asked price for
the security. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter. On occasion,
certain money market investments may be purchased directly from an issuer
without payment of a commission or concession. The Fund will not deal with Alex.
Brown in any transaction in which Alex. Brown acts as a principal, that is, an
order will not be placed with Alex. Brown if execution of the trade involves
Alex. Brown serving as a principal with respect to any part of the Fund's order,
nor will the Fund buy or sell over-the-counter securities with Alex. Brown
acting as market maker.
If Alex. Brown is participating in an underwriting or selling group, the
Fund may not buy portfolio securities from the group except in accordance with
rules of the SEC. The Fund believes that the limitation will not affect its
ability to carry out its present investment objective.
Glenmede's primary consideration in effecting securities transactions is to
obtain the best price and execution of orders on an overall basis. As described
below, however, to the extent that the prices and execution offered by more than
one broker-dealer are comparable, Glenmede may, in its discretion, effect
transactions with dealers that furnish statistical research or other information
or services which are deemed by Glenmede to be beneficial to the Fund's
investment program. Certain research services furnished by broker-dealers may be
useful to Glenmede with clients other than the Fund. Similarly, any research
services received by Glenmede through placement of portfolio transactions of
other clients may be of value to Glenmede in fulfilling its obligations to the
Fund. No specific value can be determined for research and statistical services
furnished without cost to Glenmede by a broker-dealer. Glenmede is of the
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<PAGE>
opinion that, because the material must be analyzed and reviewed by its staff,
its receipt does not tend to reduce expenses, but may be beneficial in
supplementing the Advisors' research and analysis. Therefore, such services may
tend to benefit the Fund by improving Glenmede's investment advice. Glenmede's
policy is to pay a broker-dealer higher commissions for particular transactions
than might be charged if a different broker had been chosen when, in the
Advisor's opinion, this policy furthers the overall objective of obtaining best
price and execution. Subject to periodic review by the Fund's Board of
Directors, Glenmede is also authorized to pay broker-dealers other than Alex.
Brown higher commissions on brokerage transactions for the Fund in order to
secure research and investment services described above. The allocation of
orders among broker-dealers and the commission rates paid by the Fund will be
reviewed periodically by the Board. For the fiscal year ended October 31, 1994
and for the period from August 23, 1993 through October 31, 1993, Glenmede
directed $11,609,273 and $4,451,522, respectively, in principal value of
brokerage transactions to broker dealers and paid $47,549 and $16,123,
respectively, of related commissions because of research services provided to
the Fund. For the period from November 1, 1992 through August 22, 1993, and for
the fiscal year ended October 31, 1992, Bessemer (the Fund's investment advisor
during these periods) directed $21,873,836 and $50,708,054, respectively, in
principal value of brokerage transactions to broker-dealers and paid $79,225 and
$192,332, respectively, of related commissions because of research services
provided to the Fund.
Subject to the above considerations, the Board of Directors has authorized
the Fund to effect portfolio transactions, on an agency basis, through Alex.
Brown pursuant to certain policies and procedures incorporating the standards of
Rule 17e-1 of the SEC under the Investment Company Act which requires that the
commissions paid Alex. Brown must be "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
during a comparable period of time." Rule 17e-1 also contains requirements for
the review of such transactions by the Board of Directors and requires ICC and
Glenmede to furnish reports and to maintain records in connection with such
reviews. The Class A Distribution Agreement between Alex. Brown and the Fund
does not provide for any reduction in the fees to be received by Alex. Brown
from the Fund as a result of profits resulting from brokerage commissions on
transactions of the Fund effected through Alex. Brown. For the fiscal years
ended October 31, 1994, October 31, 1993 and October 31, 1992, the Fund paid no
brokerage commissions to Alex. Brown. The Fund is required to identify any
securities of its "regular brokers or dealers" (as such term is defined in the
Investment Company Act) which the Fund has acquired during its most recent
fiscal year. As of October 31, 1994, the Fund held a 4.15% repurchase agreement
issued by Goldman Sachs & Co. valued at $57,000. Goldman Sachs & Co. is a
"regular broker or dealer" of the Fund.
The Advisors manage other investment accounts. It is possible that, at
times, identical securities will be acceptable for the Fund and one or more of
such other accounts; however, the position of each account in the securities of
the same issuer may vary and the length of time that each account may choose to
hold its investment in such securities may likewise vary. The timing and amount
of purchase by each account will also be determined by its cash position. If the
purchase or sale of securities consistent with the investment policies of the
Fund or one or more of these accounts is considered at or about the same time,
transactions in such securities will be allocated among the accounts in a manner
deemed equitable by the Advisors. The Advisors may combine such transactions, in
accordance with applicable laws and regulations, in order to obtain the best net
price and most favorable execution. Such simultaneous transactions, however,
could adversely affect the ability of the Fund to obtain or dispose of the full
amount of a security which it seeks to purchase or sell and may favorably or
unfavorably affect the price received on the purchase or sale of portfolio
securities.
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<PAGE>
9. CAPITAL SHARES
Under the Fund's Articles of Incorporation, the Fund has 15 million
authorized Shares of common stock, par value of $.001 per share. The Board of
Directors may increase or decrease the number of authorized Shares without
shareholder approval.
The Fund's Articles of Incorporation provide for the establishment of
separate series or separate classes of Shares by the Directors at any time
without shareholder approval. The Fund currently has one Series and the Board
has designated three classes of shares: Flag Investors International Fund Class
A Shares, Flag Investors International Fund Class B Shares, and Flag Investors
International Fund Institutional Shares. The Institutional Shares are offered
only to certain eligible institutions. The Class B Shares are not currently
being offered. Shares of the Fund, regardless of series or class, would have
equal rights with respect to voting, except that with respect to any matter
affecting the rights of the holders of a particular series or class, the holders
of each series or class, would vote separately. In general, each such series
would be managed separately and shareholders of each series would have an
undivided interest in the net assets of that series. For tax purposes, the
series would be treated as separate entities. Generally, each class of Shares
would be identical to every other class in a particular series and expenses of
the Fund (other than 12b-1 and any applicable service fees) are prorated between
all classes of a series based upon the relative net assets of each class. Any
matters affecting any class exclusively would be voted on by the holders of such
class.
Shareholders of the Fund do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding Shares voting together
for election of Directors may elect all the members of the Board of Directors of
the Fund. In such event, the remaining holders cannot elect any members of the
Board of Directors of the Fund.
There are no preemptive, conversion or exchange rights applicable to any of
the Shares. The Fund's issued and outstanding Shares are fully paid and
non-assessable. In the event of liquidation or dissolution of the Fund, each
Share is entitled to its portion of the Fund's assets (or the assets allocated
to a separate series of shares if there is more than one series) after all debts
and expenses have been paid.
As used in this Statement of Additional Information the term "majority of
the outstanding Shares" means the vote of the lesser of (i) 67% or more of the
Shares present at the meeting if the holders of more than 50% of the outstanding
Shares are present or represented by proxy, or (ii) more than 50% of the
outstanding Shares.
10. SEMI-ANNUAL REPORTS
The Fund furnishes shareholders with semi-annual reports containing
information about the Fund and its operations, including a list of investments
held in the Fund's portfolio and financial statements. The annual financial
statements are audited by the Fund's independent auditors.
11. CUSTODIAN, ACCOUNTING SERVICES AND TRANSFER AGENT
Boston Safe Deposit and Trust Company ("Boston Safe Deposit"), located at
One Boston Place, Boston, Massachusetts 02108, acts as custodian of the Fund's
assets. Boston Safe Deposit has presented information to the Fund's Board of
Directors regarding any non-branch correspondent institutions with which it may
enter into agreements to hold the Fund's assets abroad and, based upon its
review of such information, the Board has found such arrangements to comply with
the requirements of Rule 17f-5 under the Investment Company Act and to be
consistent with the best interests of the Fund and its shareholders. The
Shareholder Services Group, Inc. ("TSSG"), One Exchange Place, Boston,
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<PAGE>
Massachusetts 02109, provides accounting services to the Fund. Boston Safe
Deposit and TSSG receive such compensation from the Fund for their respective
services as may be agreed to from time to time by each of them and the Fund.
Investment Company Capital Corp., 135 East Baltimore Street, Baltimore,
Maryland 21202 (telephone: (800) 553-8080) has been retained to act as the
Fund's transfer and dividend disbursing agent, effective March 1, 1994. As
compensation for providing these services, the Fund pays ICC up to $10.50 per
account, plus reimbursement for out-of-pocket expenses incurred in connection
therewith. For the period from March 1, 1994 through October 31, 1994, such fees
totalled $8,372. ICC also serves as the Fund's investment advisor.
12. INDEPENDENT AUDITORS
The annual financial statements of the Fund are audited by Deloitte &
Touche LLP. Deloitte & Touche LLP has offices at 117 Campus Drive, Princeton,
New Jersey 08540.
13. PERFORMANCE INFORMATION
For purposes of quoting and comparing the performance of the Fund to that
of other mutual funds and to stock or other relevant indices in advertisements
or in reports to shareholders, performance will be stated in terms of total
return, rather than in terms of yield. The total return quotations, under the
rules of the SEC must be calculated according to the following formula:
n
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value at the end of the 1, 5,
or 10 year periods (or fractional portion thereof)
of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year periods.
Under the foregoing formula the time periods used in advertising will be
based on rolling calendar quarters, updated to the last day of the most recent
quarter prior to submission of the advertising for publication, and will cover
one, five, and ten year periods or a shorter period dating from the
effectiveness of the Fund's registration statement. In calculating the ending
redeemable value, the maximum sales load is deducted from the initial $1,000
payment and all dividends and distributions by the Fund are assumed to have been
reinvested at net asset value as described in the Prospectus on the reinvestment
dates during the period. Total return, or T in the formula above, is computed by
finding the average annual compounded rates of return over the 1, 5 and 10 year
periods (or fractional portion thereof) that would equate the initial amount
invested to the ending redeemable value. Any sales loads that might in the
future be made applicable at the time to reinvestments would be included as
would any recurring account charges that might be imposed by the Fund.
The Fund may also from time to time include in such advertising a total
return figure that is not calculated according to the formula set forth above in
order to compare more accurately the Fund's performance with other measures of
investment return. For example, in comparing the Fund's total return with data
published by Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.
or Morningstar, Inc., or with the performance of the Europe, Australia and Far
East Index, the Standard & Poor's 500 Stock Index or the Dow Jones Industrial
Average, the Fund calculates its annual total return for the specified periods
of time by assuming the investment of $10,000 in Shares and assuming the
reinvestment of each dividend or other distribution at net asset value on the
reinvestment date. For this alternative computation, the Fund assumes that the
$10,000 invested in Shares is net of all sales charges (as distinguished from
the computation required by the SEC where the $1,000 payment is reduced by
-20-
<PAGE>
sales charges before being invested in Shares). The Fund will, however, disclose
the maximum sales charge and will also disclose that the performance data do not
reflect sales charges and that inclusion of sales charges would reduce the
performance quoted. Such alternative total return information will be given no
greater prominence in such advertising than the information prescribed under SEC
rules and all advertisements containing performance data will include a legend
disclosing that such performance data represent past performance and that the
investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
Calculated according to the SEC rules, for the one year period ended
September 30, 1994, the ending redeemable value of a hypothetical $1,000 payment
for Class A Shares was $1,153 resulting in a total return for such Shares equal
to 15.30%. For the five year period ended September 30, 1994, the ending
redeemable value of a hypothetical $1,000 payment for Class A Shares was $1,143,
resulting in an average annual total return for such Shares equal to 2.72%. For
the period from the effectiveness of the Fund's registration statement on
November 18, 1986 through the end of the Fund's most recent calendar quarter on
September 30, 1994, the ending redeemable value of a hypothetical $1,000 payment
for Class A Shares was $1,779, resulting in an average annual total return for
such Shares equal to 7.59%.
Calculated according to the alternative computation, which assumes no sales
charges and reinvestment of all distributions, for the one year period ended
October 31, 1994, the ending redeemable value of a hypothetical $10,000
investment in Class A Shares was $11,430, resulting in a total return equal to
14.3%. For the five year period ended October 31, 1994, the ending redeemable
value of a hypothetical $10,000 investment in Class A Shares was $12,763,
resulting in an average annual total return equal to 5.0%. For the period from
the effectiveness of the Fund's registration statement on November 18, 1986
through the end of the Fund's most recent fiscal year on October 31, 1994, the
ending redeemable value of a hypothetical $10,000 investment in Class A Shares
was $18,799 resulting in an average annual total return equal to 8.3%.
The Fund's annual portfolio turnover rate (the lesser of the value of the
purchases or sales for the year divided by the average monthly market value of
the portfolio during the year, excluding securities with maturities of one year
or less) may vary from year to year, as well as within a year, depending on
market conditions. The Fund's portfolio turnover rate for the fiscal years ended
October 31, 1994 and October 31, 1993 was 43% and 48%, respectively. The Fund
expects its portfolio turnover rate not to exceed 100% in the fiscal year ending
October 31, 1995.
14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of August 9, 1995, to Fund management's knowledge, no persons owned of
record or beneficially 5% or more of the Fund's Class A outstanding Shares.
As of August 9, 1995, the Directors and executive officers as a group
owned less than 1% of the Fund's total Class A outstanding Shares.
The Institutional Shares were not offered prior to this Statement of
Additional Information.
15. FINANCIAL STATEMENTS
See next page.
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FLAG INVESTORS
INTERNATIONAL FUND, INC.
-------------------------------------------------------------------------------
Statement of Net Assets October 31, 1994
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK--97.4%
Argentina--2.5%
6,300 Telefonica de
Argentina SA $ 392,963 2.5%
------------ ----
Australia--2.6%
40,000 Burns Philip & Co. 102,182 0.6
24,669 Lend Lease Corp. 304,099 2.0
------------ ----
406,281 2.6
Belgium--1.2%
778 Generale de Banque 188,965 1.2
------------ ----
Canada--3.0%
7,100 Bank of Nova Scotia* 144,357 0.9
5,000 Magna International 177,500 1.1
10,000 Methanex Corp. ADR 150,000 1.0
------------ ----
471,857 3.0
China--1.6%
380,000 Guangdong
Investment Ltd. 240,958 1.6
------------ ----
Finland--0.7%
5,000 Outokumpu Oy 'A' 105,782 0.7
------------ ----
France--8.5%
2,500 Alcatel Alsthom 229,148 1.5
4,127 Elf Aquitaine 304,947 2.0
3,864 Lafarge Coppee SA 306,374 2.0
Lagardere Groupe:
9,680 Common Shares 228,395 1.4
9,680 Warrants Expiring
6/30/97* 11,749 0.1
4,375 Valeo 237,462 1.5
------------ ----
1,318,075 8.5
Germany--6.4%
2,000 Deutsche Bank AG 985,471 6.4
------------ ----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hong Kong--2.3%
50,000 Dao Heng Bank Group $ 165,966 1.1%
44,000 Hong Kong Aircraft
Engineering Ltd. 190,747 1.2
------------ ----
356,713 2.3
Ireland--2.8%
44,300 Allied Irish Bank 180,402 1.2
Jefferson Smurfit Group:
40,300 Common Shares 243,251 1.6
4,030 Rights Expiring
11/3/94* 2,595 --
------------ ----
426,248 2.8
Italy--4.1%
8,756 Assicurazioni Generali 219,208 1.4
21,300 Benetton Group SpA 278,398 1.8
25,000 La Rinascente 134,036 0.9
------------ ----
631,642 4.1
Japan--10.6%
5,000 Amway 162,081 1.0
2,000 Aoyama ADR 61,529 0.4
10,000 Canon, Inc. 185,826 1.2
7,600 Chukyo Coca-Cola 89,444 0.6
50 East Japan Railway Co. 249,316 1.6
20,000 Kao Corp. 237,444 1.5
20,000 Nishimatsu
Construction Co. 212,667 1.4
10,000 Sankyo Co. 260,156 1.7
20,000 Toda Construction 185,825 1.2
------------ ----
1,644,288 10.6
Malaysia--3.3%
75,000 Development and
Commercial Bank 206,947 1.4
94,666 Malaysian International
Shipping Corp.
Berhad 'F' 296,410 1.9
------------ ----
503,357 3.3
</TABLE>
22
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FLAG INVESTORS
INTERNATIONAL FUND, INC.
-------------------------------------------------------------------------------
Statement of Net Assets October 31, 1994
(continued)
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK - (continued)
Mexico--9.0%
33,750 Cementos Astsk 'B' SA $ 313,245 2.0%
8,000 Empresas ICA Sociedad
Controladora SA de
CV ADS* 237,000 1.6
3,600 Grupo Financiero
Bancomer SA de CV* 81,000 0.5
Grupo Mexicano de
Desarrollo ADR:
5,000 Units 191,875 1.2
741 Series "B" 13,431 0.1
741 Series "L" 15,005 0.1
179,420 Grupo Situr SA 'B' 542,906 3.5
--------- ----
1,394,462 9.0
Netherlands--6.6%
12,750 Algemene Bank Nederland
Amsterdam-Rotterdam 453,169 2.9
10,000 Bols Wessanew 196,404 1.3
15,000 IHC Caland NV Holdings 380,941 2.4
--------- ----
1,030,514 6.6
Singapore--2.4%
34,066 Oversea Chinese Banking
Corp. Ltd. 'F' 366,525 2.4
--------- ----
Spain--2.4%
6,000 Repsol SA 192,063 1.2
10,000 Vallehermoso SA 179,035 1.2
--------- ----
371,098 2.4
Switzerland--6.5%
1,260 Schweizerischer Bankverein
(Swiss Bank Corp.),
Registered Shares* 174,198 1.1
1,374 Swiss Corporation for
Microelectronics and
Watchmaking Industries
Ltd. (SMH), Registered
Shares 180,653 1.2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Switzerland - (continued)
Schweizerishe
Rckversicherungs--
Gesellschaft (Swiss
Reinsurance):
545 Registered Shares $ 323,539 2.1%
545 Warrants 'B' Expiring
6/30/95* 4,343 --
340 Schweizerische Bank--
gesellschaft (Union
Bank of Switzerland)
Bearer Series 318,881 2.1
------------ ----
1,001,614 6.5
Thailand--7.6%
6,600 Siam Cement Co. Ltd. 'F' 380,805 2.5
344,571 Siam City Bank 487,346 3.1
30,000 Siam Commercial Bank
Ltd. 'F' 310,557 2.0
------------ ----
1,178,708 7.6
United Kingdom--13.3%
62,967 Argyll Group PLC 268,743 1.7
16,149 The Boots Co. plc 139,961 0.9
12,000 Carlton Communications PLC 173,075 1.1
40,000 Compass Group 210,620 1.4
20,000 Grand Metropolitan PLC 135,726 0.9
174,000 Mirror Group
Newspapers plc* 401,192 2.6
50,000 Scottish Power PLC 294,345 1.9
21,000 Siebe plc 184,064 1.2
24,000 Welsh Water PLC 253,333 1.6
------------ ----
2,061,059 13.3
------------ ----
Total Common Stock
(Cost $11,576,356) 15,076,580 97.4
------------ ----
</TABLE>
23
<PAGE>
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FLAG INVESTORS
INTERNATIONAL FUND, INC.
-------------------------------------------------------------------------------
Statement of Net Assets October 31, 1994
(concluded)
<TABLE>
<CAPTION>
No. of
Shares Percent
Par Value of Net
(000) Security (Note A) Assets
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred Stock--0.1%
16 Dairy Farm International
Holdings Ltd., Cvt.
(Hong Kong) $ 15,880 0.1%
------------ -----
Total Preferred Stock
(Cost $16,000) 15,880 0.1
Corporate Bonds--1.5%
$165 Daewoo Electronics, Cvt.
3.50%, 12/31/07 (Korea) 239,250 1.5
Total Corporate Bonds
(Cost $262,149) 239,250 1.5
Repurchase Agreement--0.4%
57 Goldman Sachs & Co. 4.15%
Dated 10/31/94, to be
repurchased on 11/1/94,
collateralized by U.S.
Treasury Strips with a
market value of $58,727
(Cost $57,000) 57,000 0.4
------------ -----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
No. of
Shares Percent
Par Value of Net
(000) Security (Note A) Assets
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total Investment In
Securities $15,388,710 99.4%
(Cost $11,911,505)**
Other Assets in Excess
of Liabilities, Net 98,554 0.6
----------- -----
Net Assets $15,487,264 100.0%
=========== =====
Net Asset Value and
Redemption Value
Per Share
($15,487,264 / 1,108,246
shares outstanding) $13.97
======
Maximum Offering
Price Per Share
($13.97 / .955) $14.63
======
</TABLE>
-------------------------------------------------------------------------------
*Non-income producing security.
**Also aggregate cost for federal tax purposes.
See accompanying Notes to Financial Statements.
24
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FLAG INVESTORS
INTERNATIONAL FUND, INC.
-------------------------------------------------------------------------------
Statement of Operations For the Year Ended October 31, 1994
-------------------------------------------------------------------------------
Investment Income (Note A):
Dividends ...................................................... $ 355,755
Interest ....................................................... 28,179
Less: Foreign taxes withheld ................................. (41,352)
----------
Total income ................................................ 342,582
----------
Expenses:
Investment advisory fee (Note B) ............................... 114,033
Distribution fee (Note B) ...................................... 38,112
Audit .......................................................... 28,499
Legal .......................................................... 25,055
Printing and postage ........................................... 22,033
Accounting fee ................................................. 20,466
Custodian fees ................................................. 20,206
Transfer agent fees (Note B) ................................... 17,002
Registration fees .............................................. 6,107
Miscellaneous .................................................. 6,001
Directors fees ................................................. 2,099
Insurance ...................................................... 772
----------
Total expenses ............................................... 300,385
Less: Fees waived (Note B) ...................................... (71,713)
----------
Total expenses ............................................... 228,672
----------
Net investment income ........................................... 113,910
----------
Net Realized and Unrealized gain/(loss) on investments:
Net realized gain from security transactions ................... 2,141,503
Net realized foreign exchange loss ............................. (65,117)
Net unrealized depreciation of investments ..................... (260,712)
Net unrealized depreciation on translation of assets
and liabilities denominated in foreign currencies ............ (35,059)
----------
Net gain on investments ....................................... 1,780,615
----------
Net increase in net assets resulting from operations ............ $1,894,525
==========
-------------------------------------------------------------------------------
See accompanying Notes to Financial Statements.
25
<PAGE>
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FLAG INVESTORS
INTERNATIONAL FUND, INC.
-------------------------------------------------------------------------------
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended October 31,
---------------------------------
1994 1993
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase/(Decrease) in Net Assets:
Operations:
Net investment income ...................................................... $ 113,910 $ 308,305
Net realized gain/(loss) from security transactions and
foreign exchange transactions .......................................... 2,076,386 (588,918)
Net unrealized appreciation/(depreciation) of investments .................. (260,712) 5,359,710
Net unrealized appreciation/(depreciation) on translation of
assets and liabilities denominated in foreign currencies ............... (35,059) 492,569
------------ ------------
Net increase in net assets resulting from operations ....................... 1,894,525 5,571,666
------------ ------------
Dividends to Shareholders from:
Net investment income ...................................................... (876,034) --
------------ ------------
Capital Share Transactions (NOTE C):
Proceeds from sale of 258,474 and 383,006 shares,
respectively ........................................................... 3,528,455 3,922,969
Value of 58,430 shares issued in reinvestment of dividends ................. 758,523 --
Cost of 358,707 and 1,403,060 shares repurchased,
respectively ........................................................... (4,826,680) (14,265,735)
------------ ------------
Total decrease in net assets derived from capital shares
transactions ........................................................... (539,702) (10,342,766)
------------ ------------
Total increase/(decrease) in net assets .................................... 478,789 (4,771,100)
Net Assets:
Beginning of year .......................................................... 15,008,475 19,779,575
------------ ------------
End of year ................................................................ $ 15,487,264 $ 15,008,475
============ ============
</TABLE>
--------------------------------------------------------------------------------
See accompanying Notes to Financial Statements.
26
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INTERNATIONAL FUND, INC.
-------------------------------------------------------------------------------
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------
1994 1993 1992 1991 1990
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of year ....................... $13.05 $ 9.11 $10.63 $11.80 $13.71
------ ------- ------ ------ ------
Income from Investment Operations:
Net investment income ...................................... 0.18 0.49 0.16 0.15 0.60
Net realized and unrealized gain/(loss)
on investments(1) ...................................... 1.58 3.45 (1.62) (0.55) (1.33)
------ ------- ------ ------ ------
Total from Investment Operations ........................... 1.76 3.94 (1.46) (0.40) (0.73)
Less Distributions:
Dividends from net investment income
and short-term gains ................................... (0.84) -- (0.06) -- (0.57)
Distributions from net realized
long-term gains ........................................ -- -- -- (0.77) (0.61)
------ ------- ------ ------ ------
Total distributions ........................................ (0.84) -- (0.06) (0.77) (1.18)
------ ------- ------ ------ ------
Net asset value at end of year ............................. $13.97 $13.05 $ 9.11 $10.63 $11.80
====== ======= ====== ====== ======
Total Return ................................................... 13.98% 43.25% (13.80)% (3.15)% (6.63)%
Ratios to Average Net Assets:
Expenses(2) ................................................ 1.50% 1.50% 1.50% 1.50% 1.50%
Net investment income(3) ................................... 0.75% 1.91% 0.73% 1.17% 1.48%
Supplemental Data:
Net assets at end of year (000) ............................ $15,487 $15,008 $19,780 $38,830 $44,406
Portfolio turnover rate .................................... 43% 48% 63% 73% 62%
</TABLE>
-------------------------------------------------------------------------------
(1) Current year includes net realized currency loss. Prior year's net realized
currency gain/(loss) is included in net investment income.
(2) Without the waiver of advisory fees (Note B), the ratio of expenses to
average net assets would have been 1.97%, 2.13%, 1.92%, 1.90 and 1.75% for
the years ended October 31, 1994, 1993, 1992, 1991 and 1990, respectively.
(3) Without the waiver of advisory fees (Note B), the ratio of net investment
income to average net assets would have been 0.28%, 1.28%, 0.31%, 0.77% and
1.21% for the years ended October 31, 1994, 1993, 1992, 1991 and 1990,
respectively.
See accompanying Notes to Financial Statements.
27
<PAGE>
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FLAG INVESTORS
INTERNATIONAL FUND, INC.
-------------------------------------------------------------------------------
Notes to Financial Statements
A. Significant Accounting Policies - Flag Investors International Fund, Inc.
("the Fund") was organized as a Massachusetts business trust on September 3,
1986 and commenced operations on November 18, 1986. The Fund was reorganized
as a Maryland corporation on August 16, 1993. The Fund is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company seeking long-term growth of capital primarily through
investment in a diversified portfolio of marketable equity securities of
issuers domiciled outside of the United States. Significant accounting
policies are as follows:
Security Valuation - Securities which are listed on a securities exchange are
valued on the basis of their last quoted sale price (or, in the absence of
recorded sales, at the last available bid price). If a security is listed on
more than one exchange, the last quoted sale price on the exchange where the
security is primarily traded is used. 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.
Foreign Currency Transactions - The books and records of the Fund are
maintained in U.S. dollars. Transactions denominated in foreign currencies
are recorded in the Fund's records at the rate prevailing when earned or
incurred. Asset and liability accounts that are denominated in foreign
currencies are adjusted to reflect the current exchange rate. Transaction
gains or losses resulting from changes in the exchange rate during the
reporting period or upon settlement of the foreign currency transactions are
reported in realized and unrealized gain/(loss) on investments for the
current period. Prior period financial statements have not been reclassified.
The Fund is authorized to enter into forward foreign exchange contracts as a
hedge against either specific transactions or portfolio positions. Such
contracts are not reflected in the Fund's financial statements. However, the
net income or loss from such contracts is recorded from the date the contract
is entered into. Premiums or discounts are amortized over the life of the
contracts.
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
and to make requisite distributions to the shareholders which will be
sufficient to relieve it from all or substantially all federal income and
excise taxes. The Fund's policy is to annually distribute to shareholders
substantially all of its taxable net investment income and net realized
capital gains.
Effective November 1, 1993, the Fund adopted Statement of Position 93-2;
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies.
Adoption of this standard results in the reclassification to paid-in-capital
of permanent differences between tax and financial reporting of net
investment income and realized gains/(losses). As of November 1, 1993, the
cumulative effect of such differences was not material.
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.
28
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FLAG INVESTORS
INTERNATIONAL FUND, INC.
-------------------------------------------------------------------------------
Notes to Financial Statements (concluded)
Interest income is recorded on an accrual basis and includes, when
applicable, the pro rata amortization of premiums and accretion of discounts.
Dividend income is recorded on the ex-dividend date.
B. Investment Advisory Fees, Transactions with Affiliates and Other Fees -
Investment Company Capital Corp. ("ICC"), formerly Flag Investors Management
Corp., a subsidiary of Alex. Brown & Sons Incorporated ("Alex. Brown"),
serves as the Fund's investment advisor and The Glenmede Trust Company
("Glenmede") is the Fund's subadvisor. As compensation for its services, ICC
receives from the Fund a fee, calculated daily and paid monthly equal to .75%
of the Fund's average daily net assets.
As compensation for its subadvisory services, Glenmede receives a fee from
ICC, calculated daily and paid monthly, equal to .55% of the Fund's average
daily net assets.
ICC and Glenmede have voluntarily agreed to waive a portion of their fees so
that the total operating expenses of the Fund do not exceed 1.50% of the
Fund's average daily net assets. For the year ended October 31, 1994, ICC and
Glenmede waived $19,363 and $52,350, respectively.
Effective March 1, 1994, ICC provides transfer agent services to the Fund. As
compensation for its transfer agent services, ICC receives from the Fund a
per account fee, calculated and paid monthly. ICC received $8,372 for
transfer agent services for the period ended October 31, 1994. Prior to March
1, 1994, PFPC, Inc. provided these services.
As compensation for providing distribution services, Alex. Brown receives
from the Fund an annual fee, payable monthly, at the annual rate of .25% of
the Fund's average daily net assets. For the year ended October 31, 1994,
distribution fees were $38,112.
C. Capital Share Transactions - The Fund is authorized to issue up to 10
million shares of capital stock, par value $.001 per share, all of which
shares are designated as common stock.
D. Investment Transactions - Purchases and sales of investment securities,
other than short-term obligations, aggregated $6,186,983 and $7,220,144,
respectively, for the year ended October 31, 1994.
At October 31, 1994, aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost was $3,884,563
and aggregated gross unrealized depreciation for all securities in which
there is an excess of tax cost over value was $407,358.
E. Net Assets - At October 31, 1994, net assets consisted of:
Paid-in-capital ................... $18,124,337
Undistributed net
investment income ................ 12,964
Accumulated net realized loss
from security and foreign
exchange transactions ............ (6,090,551)
Unrealized appreciation of
investments ...................... 3,477,205
Unrealized translation loss ....... (36,691)
-----------
$15,487,264
===========
29
<PAGE>
LOGO
FLAG INVESTORS
INTERNATIONAL FUND, INC.
-------------------------------------------------------------------------------
Independent Auditors' Report
The Board of Directors and Shareholders,
Flag Investors International Fund, Inc.
We have audited the accompanying statement of net assets of Flag Investors
International Fund, Inc. as of October 31, 1994, the related statements of
operations for the year then ended and changes in net assets for each year in
the two-year period then ended, and the financial highlights for each year in
the five-year period then ended. These financial statements and the financial
highlights are the responsibility of the Funds management. Our responsibility is
to express an opinion on these financial statements and the financial highlights
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1994 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Flag Investors
International Fund, Inc. at October 31, 1994, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
December 16, 1994
30
<PAGE>
THE FOLLOWING SEMI-ANNUAL FINANCIAL STATEMENTS FOR THE FUND FOR THE PERIOD ENDED
APRIL 30, 1995 ARE UNAUDITED. THESE UNAUDITED INTERIM FINANCIAL STATEMENTS
REFLECT ALL ADJUSTMENTS WHICH ARE, IN THE OPINION OF MANAGEMENT, NECESSARY TO A
FAIR STATEMENT OF THE RESULTS FOR THE INTERIM PERIOD PRESENTED. ALL SUCH
ADJUSTMENTS ARE OF A NORMAL RECURRING NATURE.
FLAG INVESTORS
INTERNATIONAL FUND, INC.
STATEMENT OF NET ASSETS APRIL 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK 91.0%
AUSTRALIA 3.3%
40,000 Burns Philip & Co. $101,212 0.8%
25,257 Lend Lease Corp. 322,478 2.5
---------- -----
423,690 3.3
BELGIUM 1.9%
778 Generale de Banque 243,745 1.9
---------- -----
CANADA 3.3%
7,100 Bank of Nova Scotia 144,591 1.1
5,000 Magna International 173,125 1.4
10,000 Methanex Corp. ADR 106,250 0.8
---------- -----
423,966 3.3
CHINA 1.4%
380,000 Guangdong Investment Ltd. 175,494 1.4
---------- -----
FINLAND 0.7%
5,000 Outokumpu Oy "A' 88,936 0.7
---------- -----
FRANCE 9.5%
4,127 Elf Aquitaine 328,204 2.5
2,500 Generale des Eaux 262,252 2.0
3,864 Lafarge Coppee SA 299,699 2.3
Lagardere Group:
9,680 Common Shares 216,222 1.7
9,680 Warrants Expiring 6/30/97* 6,959 0.1
4,000 Technip ADR 119,077 0.9
---------- -----
1,232,413 9.5
GERMANY 3.8%
1,000 Deutsche Bank AG 488,011 3.8
---------- -----
HONG KONG 1.9%
50,000 Dao Heng Bank Group $127,890 1.0%
44,000 Hong Kong Aircraft Engineering Ltd. 112,544 0.9
---------- -----
240,434 1.9
IRELAND 3.4%
44,300 Allied Irish Bank 205,922 1.6
40,300 Jefferson Smurfit Group 237,940 1.8
---------- -----
443,862 3.4
ITALY 3.2%
8,756 Assicurazioni Generali 209,754 1.6
21,300 Benetton Group SpA 211,040 1.6
---------- -----
420,794 3.2
JAPAN 18.3%
6,600 Acom Co., Ltd. 188,863 1.5
5,000 Amway Japan 185,823 1.4
2,000 Aoyama ADR 38,708 0.3
10,000 Canon, Inc. 165,044 1.3
7,600 Chukyo Coca-Cola 90,239 0.7
50 East Japan Railway Co. 259,440 2.0
25,000 Hitachi Ltd. 253,800 2.0
20,000 Kao Corp. 242,223 1.9
20,000 Nishimatsu Construction Co. 239,848 1.9
11,000 Sankyo Co. 263,833 2.0
20,000 Toda Construction 213,726 1.6
10,000 Yamanouchi Pharmaceutical 224,412 1.7
---------- -----
2,365,959 18.3
MALAYSIA 1.9%
94,666 Malaysian International Shipping Corp. Berhad "F' 245,338 1.9
---------- -----
</TABLE>
31
<PAGE>
STATEMENT OF NET ASSETS (continued) April 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Percent
No. of Value of Net
Shares Security (Note A) Assets
----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (continued)
MEXICO 1.5%
33,750 Cementos Astsk "B' SA $108,977 0.9%
181,924 Grupo Mexicano de Desarrollo ADR Series "B" 79,630 0.6
---------- -----
188,607 1.5
NETHERLANDS 8.6%
12,750 Algemene Bank Nederland Amsterdam-Rotterdam 487,933 3.8
10,100 Bols Wessanew 213,006 1.6
15,000 IHC Caland NV Holdings 407,692 3.2
---------- -----
1,108,631 8.6
SPAIN 6.1%
10,000 Banco Central Hispano 227,751 1.8
12,900 Dragados & Construcciones SA 194,648 1.5
6,000 Repsol SA 190,291 1.5
10,000 Vallehermoso SA 171,521 1.3
---------- -----
784,211 6.1
SWITZERLAND 5.7%
1,260 Schweizerischer Bank-verein (Swiss Bank Corp.), Registered 207,998 1.6
Shares
1,374 Swiss Corporation for Microelectronices and
Watchmaking Industries Ltd. (SMH), Registered Shares $159,546 1.2%
Schweizerishe Ruckversicherungs-Gesellschaft (Swiss
Reinsurance),
545 Registered Shares 377,344 2.9
545 Warrants "B' Expiring 6/30/95* 5,667 --
---------- -----
750,555 5.7
THAILAND 2.0%
30,000 Siam Commercial Bank Ltd. "F' 253,813 2.0
---------- -----
UNITED KINGDOM 14.5%
62,967 Argyll Group PLC 289,758 2.3
16,149 The Boots Co. plc 132,517 1.0
12,000 Carlton Communications PLC 182,268 1.4
20,000 Grand Metropolitan PLC 128,559 1.0
174,000 Mirror Group Newspapers plc 375,154 2.9
50,000 Scottish Power PLC 271,921 2.1
21,000 Siebe plc 190,232 1.5
80,000 Tomkins plc ADS 301,205 2.3
---------- -----
1,871,614 14.5
---------- -----
Total Common Stock 11,750,073 91.0
(Cost $10,418,955) ---------- -----
</TABLE>
32
<PAGE>
STATEMENT OF NET ASSETS (continued) April 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
No. of
Shares Percent
Par Value of Net
(000) Security (Note A) Assets
----------------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCK 0.1%
16 Dairy Farm International Holdings Ltd., Cvt. (Hong Kong) $13,440 0.1%
---------- -----
Total Preferred Stock 13,440 0.1
(Cost $16,000) ---------- -----
CORPORATE BONDS 1.5%
$165 Daewoo Electronics, Cvt, 193,875 1.5
3.50%, 12/31/07 (Korea) ---------- -----
Total Corporate Bonds
(Cost $257,077) 193,875 1.5
---------- -----
REPURCHASE AGREEMENT 6.3%
808 Goldman Sachs & Co., 5.80%
Dated 4/28/95, to be repurchased on 5/3/95,
collateralized by U.S. Treasury Strips with a market value
of $824,484
(Cost $808,000) 808,000 6.3
---------- -----
Total Investment in Securities $12,765,388 98.9%
(Cost $11,500,032)**
Other Assets in 144,121 1.1
Excess of Liabilities, Net ---------- -----
Net Assets $12,909,509 100.0%
=========== =====
Net Asset Value and
Redemption Value
Per Share
($12,909,509 / 1,051,138 $12.28
shares outstanding) ======
Offering Price
Per Share
($12.28 / .955) $12.86
======
</TABLE>
* Non-income producing security.
** Also aggregate cost for federal tax purposes.
See accompanying Notes to Financial Statements.
33
<PAGE>
FLAG INVESTORS
INTERNATIONAL FUND, INC.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME (NOTE A):
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $133,500
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,392
Less: Foreign taxes withheld . . . . . . . . . . . . . . . . . . . . . (12,278)
-----------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,614
-----------
EXPENSES:
Investment advisory fee (Note B) . . . . . . . . . . . . . . . . . . . . 49,107
Distribution fee (Note B) . . . . . . . . . . . . . . . . . . . . . . . . 16,369
Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,132
Legal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,397
Accounting fee (Note B) . . . . . . . . . . . . . . . . . . . . . . . . . 10,657
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,413
Printing and postage . . . . . . . . . . . . . . . . . . . . . . . . . . 9,671
Transfer agent fees (Note B) . . . . . . . . . . . . . . . . . . . . . . 8,431
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,968
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,976
Directors' fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 744
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467
-----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,332
Less: Fees waived (Note B) . . . . . . . . . . . . . . . . . . . . . . . (40,625)
-----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,707
-----------
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . 34,907
-----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain from security transactions . . . . . . . . . . . . . . 324,148
Net realized foreign exchange loss . . . . . . . . . . . . . . . . . . . (79,455)
Change in unrealized depreciation of investments . . . . . . . . . . . . (2,211,849)
Change in unrealized depreciation on translation of assets and
liabilities denominated in foreign currencies . . . . . . . . . . . . . 53,676
-----------
Net loss on investments . . . . . . . . . . . . . . . . . . . . . . . . (1,913,480)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . $(1,878,573)
===========
</TABLE>
See accompanying Notes to Financial Statements.
34
<PAGE>
FLAG INVESTORS
INTERNATIONAL FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
April 30, 1995 Ended
(Unaudited) October 31, 1994
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income . . . . . . . . . . . . . . . . . $34,907 $113,910
Net realized gain from security transactions and
foreign exchange transactions . . . . . . . . . . . . 244,693 2,076,388
Change in unrealized depreciation of investments . . . (2,211,849) (260,712)
Change in unrealized appreciation/(depreciation) on
translation of assets and liabilities denominated in
foreign currencies . . . . . . . . . . . . . . . . . 53,676 (35,059)
----------- -----------
Net increase/(decrease) in net assets resulting from
operations . . . . . . . . . . . . . . . . . . . . . (1,878,573) 1,894,525
----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . . . . . . . . -- (876,034)
----------- -----------
CAPITAL SHARE TRANSACTIONS (NOTE C):
Proceeds from sale of 55,669 and 258,474 shares,
respectively . . . . . . . . . . . . . . . . . . . . 688,411 3,528,455
Value of 58,430 shares issued in reinvestment of
dividends . . . . . . . . . . . . . . . . . . . . . . -- 758,523
Cost of 112,778 and 357,707 shares repurchased,
respectively . . . . . . . . . . . . . . . . . . . . (1,387,593) (4,826,680)
----------- -----------
Total decrease in net assets derived from capital share
transactions . . . . . . . . . . . . . . . . . . . . (699,182) (539,702)
----------- -----------
Total increase/(decrease) in net assets . . . . . . . . (2,577,755) 478,789
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . 15,487,264 15,008,475
----------- -----------
End of period . . . . . . . . . . . . . . . . . . . . . $12,909,509 $15,487,264
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
35
<PAGE>
FLAG INVESTORS
INTERNATIONAL FUND, INC.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
For the Six
Months Ended
April 30, 1995 Year Ended October 31,
(Unaudited) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value at
beginning of period . . $14.01 $13.05 $9.11 $10.63 $11.80 $13.71
-------- -------- ------- ------- ------- -------
Income from Investment
Operations:
Net investment income . . 0.12 0.19 0.49 0.16 0.15 0.60
Net realized and
unrealized gain/(loss)
on investments . . . . (1.85) 1.61 3.45 (1.62) (0.55) (1.33)
-------- -------- ------- ------- ------- -------
Total from Investment
Operations . . . . . . (1.73) 1.80 3.94 (1.46) (0.40) (0.73)
Less Distributions:
Dividends from net
investment income
and short-term gains . . . -- (0.84) -- (0.06) -- (0.57)
Distributions from net
realized long-term gains -- -- -- -- (0.77) (0.61)
-------- -------- ------- ------- ------- -------
Total Distributions . . . -- (0.84) -- (0.06) (0.77) (1.18)
-------- -------- ------- ------- ------- -------
Net asset value at end of
period . . . . . . . . $12.28 $14.01 $13.05 $9.11 $10.63 $11.80
======== ======== ======= ======= ======= =======
Total Return . . . . . . . (12.22)% 14.30% 43.25% (13.80)% (3.15)% (6.63)%
Ratios to Average Net
Assets:
Expenses (2) . . . . . . 1.49%(1) 1.50% 1.50% 1.50% 1.50% 1.50%
Net Investment Income(3) . 2.01%(1) 0.85% 1.91% 0.73% 1.17% 1.48%
Supplemental Data:
Net assets at end of
period (000) . . . . . $12,910 $15,530 $15,006 $19,780 $38,830 $44,406
Portfolio turnover rate . 13% 43% 48% 63% 73% 62%
</TABLE>
(1) Annualized
(2) Without the waiver of advisory fees (Note B), the ratio of expenses to
average net assets would have been 2.10% (annualized), 1.97%, 2.13%,
1.92%, 1.90%, and 1.75% for the six months ended April 30, 1995 and for
the years ended October 31, 1994, 1993, 1992, 1991, and 1990,
respectively.
(3) Without the waiver of advisory fees (Note B), the ratio of net
investment income to average net assets would have been 1.40%
(annualized), .29%, 1.28%, 0.31%, 0.77%, and 1.21%, for the six months
ended April 30, 1995 and for the years ended October 31, 1994, 1993,
1992, 1991, and 1990, respectively.
See accompanying Notes to Financial Statements.
36
<PAGE>
(LOGO)
FLAG INVESTORS
INTERNATIONAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
A. Significant Accounting Policies-Flag Investors International Fund, Inc. ("the
Fund") was organized as a Massachusetts business trust on September 3, 1986 and
commenced operations on November 18, 1986. The Fund was reorganized as a
Maryland corporation on August 16, 1993. The Fund is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company seeking long-term growth of capital primarily through investment in a
diversified portfolio of marketable equity securities of issuers domiciled
outside of the United States. Significant accounting policies are as follows:
Security Valuation-Securities which are listed on a securities exchange are
valued on the basis of their last quoted sale price (or, in the absence of
recorded sales, at the last available bid price). If a security is listed on
more than one exchange, the last quoted sale price on the exchange where the
security is primarily traded is used. Securities or other assets for which
market quotations are not readily available are valued at their face 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.
Foreign Currency Transactions-The books and records of the Fund are maintained
in U.S. dollars. Transactions denominated in foreign currencies are recorded in
the Fund's records at the rate prevailing when earned or incurred. Asset and
liability accounts that are denominated in foreign currencies are adjusted to
reflect the current exchange rate. Transaction gains or losses resulting from
changes in the exchange rate during the reporting period or upon settlement of
the foreign currency transactions are reported in realized and unrealized
gain/(loss) on investments for the current period. Prior period financial
statements have not been reclassified.
The Fund is authorized to enter into forward foreign exchange contracts as a
hedge against either specific transactions or portfolio positions. Such
contracts are not reflected in the Fund's financial statements. However, the net
income or loss from such contracts is recorded from the date the contract is
entered into. Premiums or discounts are amortized over the life of the
contracts.
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 and to
make requisite distributions to the shareholders which will be sufficient to
relieve it from all or substantially all federal income and excise taxes. The
The Fund's policy is to annually distribute to shareholders substantially all of
its taxable net investment income and net realized capital gains.
Effective November 1, 1993, the Fund adopted Statement of Position 93-2;
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies.
Adoption of this standard results in the reclassification to paid-in-capital of
permanent differences between tax and financial reporting of net investment
income and realized gains/(losses). As of November 1, 1993, the cumulative
effect of such differences was not material.
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
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
method for both financial reporting and income tax purposes. Interest income is
recorded on an accrual basis and includes, when applicable, the pro rata
amortization of premiums and accretion of discounts. Dividend income is
recorded on the ex-dividend date.
B. Investment Advisory Fees, Transactions with Affiliates and Other Fees-
Investment Company Capital Corp. ("ICC"), a subsidiary of Alex. Brown & Sons
Incorporated ("Alex. Brown"), serves as the Fund's investment advisor and the
Glenmede Trust Company ("Glenmede") is the Fund's subadvisor. As compensation
for its services, ICC receives from the Fund a fee, calculated daily and paid
monthly equal to .75% of the Fund's average daily net assets.
As compensation for its subadvisory services, Glenmede receives a fee from ICC,
calculated daily and paid monthly, equal to .55% of the Fund's average daily net
assets.
ICC and Glenmede have voluntarily agreed to waive a portion of their fees so
that the total operating expenses of the Fund do not exceed 1.50% of the Fund's
average daily net assets. For the six months ended April 30, 1995, ICC and
Glenmede waived $13,148 and $27,477, respectively.
As compensation for its transfer agent services, ICC receives from the Fund a
per account fee, calculated and paid monthly. ICC received $8,431 for transfer
agent services for the six months ended April 30, 1995.
As compensation for providing distribution services, Alex. Brown receives from
the Fund an annual fee, payable monthly, at the annual rate of .25% of the
Fund's average daily net assets. For the six months ended April 30, 1995,
distribution fees were $16,369.
As compensation for providing 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 $1,496 for accounting services for the period April 10,
1995 through April 30, 1995. Prior to April 10, 1995 TSSG provided these
services.
C. CAPITAL SHARE TRANSACTIONS-The Fund is authorized to issue up to 10 million
shares of capital stock, par value $.001 per share, all of which shares are
designated as common stock.
D. INVESTMENT TRANSACTIONS-Purchases and sales of investment securities, other
than short-term obligations, aggregated $1,678,933 and $3,242,939, respectively,
for the six months ended April 30, 1995.
At April 30, 1995, aggregate gross unrealized appreciation for all securities in
which there is an excess of value over tax cost was $1,752,334 and aggregated
gross unrealized depreciation for all securities in which there is an excess of
tax cost over value was $486,978.
E. NET ASSETS-At April 30, 1995, net assets consisted of:
<TABLE>
<S> <C>
Paid-in-capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17,425,155
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . 47,871
Accumulated net realized loss from security and foreign exchange
transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,845,858)
Unrealized appreciation of investments . . . . . . . . . . . . . . . . . . 1,265,356
Unrealized translation gain . . . . . . . . . . . . . . . . . . . . . . . . 16,985
-----------
$12,909,509
===========
</TABLE>
38
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
List all financial statements and exhibits filed as part of the
Registration Statement.
(a) Financial statements:
(1) Included in Part A of the Registration Statement:
- Financial Highlights for the six months ended October 31,
1995 and the fiscal years ended October 31, 1994, October
31, 1993, October 31, 1992, October 31, 1991, October 31,
1990, October 31, 1989 and October 31, 1988 and for the
period November 18, 1986 (commencement of operations)
through October 31, 1987
(2) Included in Part B of the Registration Statement:
- Statement of Net Assets as of October 31, 1994
- Statement of Operations for the fiscal year ended
October 31, 1994
- Statements of Changes in Net Assets for the fiscal years
ended October 31, 1994 and October 31, 1993
- Financial Highlights for the fiscal years ended October 31,
1994, October 31, 1993, October 31, 1992, October 31, 1991
and October 31, 1990
- Notes to Financial Statements
- Independent Auditors' Report
- Statement of Net Assets as of April 30, 1995 (unaudited)
- Statement of Operations for the six months ended April 30,
1995 (unaudited)
- Statement of Changes in Net Assets for the six months ended
April 30, 1995 and the fiscal year ended October 31, 1994
(unaudited)
- Financial Highlights for the six months ended April 30, 1995
(unaudited) and the fiscal years ended October 31, 1994,
October 31, 1993, October 31, 1992, October 31, 1991, and
October 31, 1990
- Notes to the Financial Statements (unaudited)
(3) All required financial statements are included in Parts A and
B hereof. All other financial statements and schedules are
inapplicable.
C-1
<PAGE>
(b) Exhibits:
Exhibit
Number Description
------- -----------
(1) (a) Articles of Incorporation of Registrant, filed herewith.
(b) Registrant's Articles Supplementary, filed herewith.
(c) Registrant's Articles Supplementary, filed herewith.
(d) Form of Registrant's Articles Supplementary, filed
herewith.
(2) Registrant's By-laws, filed herewith.
(3) None
(4) Specimen Security with respect to Flag Investors Shares.
(5) (a)(1) Investment Advisory Agreement between Registrant and
Investment Company Capital Corp., filed herewith.
(b) Sub-Advisory Agreement among Registrant, Investment
Company Capital Corp. and The Glenmede Trust Company,
filed herewith.
(6) (a) Distribution Agreement with respect to Flag Investors
International Fund Class A Shares between Registrant and
Alex. Brown & Sons Incorporated, filed herewith.
(b) Form of Sub-Distribution Agreement between Alex. Brown &
Sons Incorporated and Participating Dealers, filed
herewith.
(c) Shareholder Servicing Agreement between Registrant and
Shareholder Servicing Agents, filed herewith.
(d) Form of Accounting Services Agreement between Registrant
and The Boston Company Advisors, Inc. (as assigned to The
Shareholders Services Group, Inc.), filed herewith.
(7) None.
(8) (a) Custody Agreement between Registrant and Boston Safe
Deposit and Trust Company, filed herewith.
(b) Form of Sub-Custody Agreement between Boston Safe Deposit
and Trust Company and Sub-Custodians, filed herewith.
(9) Master Services Agreement between Registrant and Investment
Company Capital Corp., filed herewith.
C-2
<PAGE>
(10) Opinion of Counsel with respect to issuance of shares of Flag
Investors International Fund, Inc., filed herewith.
(11) Consent of Deloitte & Touche LLP, filed herewith.
(12) None.
(13) Form of Subscription Agreement between Flag Investors
International Fund and Investors, filed herewith.
(14) None.
(15) Registrant's Distribution Plan with respect to Flag Investors
International Fund Class A Shares, filed herewith.
(16) Schedule of Computation of Performance Quotations (unaudited),
filed herewith.
(24) Powers of Attorney, filed herewith.
---------
1 Incorporated by reference to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A (Registration No. 33-
28479), filed with the Securities and Exchange Commission on February
24, 1994.
Item 25. Persons Controlled by or under Common Control with Registrant.
Furnish a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant and as to each such
person indicate (1) if a company, the state or other sovereign power under
the laws of which it is organized, and (2) the percentage of voting
securities owned or other basis of control by the person, if any, immediately
controlling it.
None.
Item 26. Number of Holders of Securities.
State in substantially the tabular form indicated, as of a specified
date within 90 days prior to the date of filing, the number of record holders
of each class of securities of the Registrant.
The following information is given as of August 9, 1995:
Number of
Title of Class Record Holders
-------------- --------------
Common Stock Class A 794
Common Stock Institutional 0
C-3
<PAGE>
Item 27. Indemnification.
State the general effect of any contract, arrangements or statute under
which any director, officer, underwriter or affiliated person of the
Registrant is insured or indemnified in any manner against any liability
which may be incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own protection.
Sections 1, 2, 3 and 4 of Article VIII of Registrant's Articles of
Incorporation, included as Exhibit 1(b) to this Registration Statement and
incorporated herein by reference, provide as follows:
Section 1. To the fullest extent that limitations on the liability
of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Corporation shall
have any liability to the Corporation or its stockholders for
damages. This limitation on liability applies to events occurring
at the time a person serves as a director or officer of the
Corporation whether or not such person is a director or officer at
the time of any proceeding in which liability is asserted.
Section 2. The Corporation shall indemnify and advance expenses to
its currently acting and its former directors to the fullest extent
that indemnification of directors is permitted by the Maryland
General Corporation Law. The Corporation shall indemnify and
advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law.
The Board of Directors of the Corporation may make further
provision for indemnification of directors, officers, employees and
agents in the By-Laws of the Corporation or by resolution or
agreement to the fullest extent permitted by the Maryland General
Corporation law.
Section 3. No provision of this Article VIII shall be effective to
protect or purport to protect any director or officer of the
Corporation against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Section 4. References to the Maryland General Corporation Law in
this Article VIII are to such law as from time to time amended. No
further amendment to the Charter of the Corporation shall decrease,
but may expand, any right of any person under this Article VIII
based on any event, omission or proceeding prior to such amendment.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event of a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person in connection with the securities being registered) the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue. In the absence of a determination by a court of
competent jurisdiction, the determinations that indemnification against such
liabilities is proper, and advances can be made, are made by a majority of a
quorum of the disinterested, non-party directors of the Fund, or an
independent legal counsel in a written opinion, based on review of readily
available facts.
C-4
<PAGE>
Item 28. Business and Other Connections of Investment Advisor.
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment advisor of the Registrant, and
each director, officer or partner of any such investment advisor, is or has
been, at any time during the past two fiscal years, engaged for his own
account or in the capacity of director, officer, employee, partner or
trustee.
(a) Investment Advisor
During the last two fiscal years, no director or officer of Investment
Company Capital Corp., the Fund's Investment Advisor, has engaged in any
other business, profession, vocation or employment of a substantial nature
other than that of the business of investment management and, through
affiliates, investment banking.
(b) Sub-Advisor
Set forth below are the names and business connections of the directors
and principal executive officers of The Glenmede Trust Company who are
engaged in any other business, profession, vocation, or employment of a
substantial nature.
Name and Position with Glenmede Business Connections
------------------------------- --------------------
Susan W. Catherwood - Director Director, The Glenmede
Corporation; Board Member,
Philadelphia Electric Company.
Robert G. Dunlop - Director Director, The Glenmede
Corporation.
Thomas W. Langfitt, M.D. - President and Chief Executive
Director, President, Officer, The Glenmede
Chief Executive Officer Corporation; Board Member, New
York Life Insurance Company,
SmithKline Beecham Corporation
and Sun Company, Inc.
Robert E. McDonald - Director Director, The Glenmede
Corporation.
G. Thompson Pew, Jr. - Direct or Principal, Philadelphia
Investment Banking Company.
J. Howard Pew II - Director Director, The Glenmede
Corporation.
J.N. Pew III - Director Director, The Glenmede
Corporation.
J.N. Pew IV, M.D. - Director Internal Medicine, Private
Practice; Director, The Glenmede
Corporation.
R. Anderson Pew - Director President, Helios Capital
Corporation; Director, The
Glenmede Corporation.
Richard F. Pew - Director Businessman/Rancher
William C. Richardson, Ph.D. President, Johns Hopkins
- Director University.
Ethel Benson Wister - Director Director, The Glenmede
Corporation
A.E. Piscopo - Executive Vice Executive Vice President, The
President, Chief Glenmede Corporation.
Operating Officer
C-5
<PAGE>
Rebecca W. Rimel - President Executive Vice President, The
and CEO, The Pew Charitable Glenmede Corporation.
Trusts (Division of Glenmede)
Kathleen Crenny - Controller Controller, The Glenmede
Corporation.
Mary V. Burke - Secretary Secretary, The Glenmede
Corporation.
Katherine E. Koch - Treasurer Treasurer, The Glenmede
Corporation.
Item 29. Principal Underwriters.
(a) Alex. Brown & Sons Incorporated acts as distributor for the Alex.
Brown Cash Reserve Fund, Inc., Flag Investors Telephone Income Fund, Inc.,
Flag Investors Emerging Growth Fund, Inc., the Flag Investors Shares class of
Total Return U.S. Treasury Fund, Inc., Flag Investors Quality Growth Fund,
Inc., the Flag Investors Shares class of Managed Municipal Fund, Inc., Flag
Investors Intermediate-Term Income Fund, Inc., Flag Investors Value Builder
Fund, Inc., Flag Investors Maryland Intermediate Tax Free Income Fund, Inc.,
Flag Investors Real Estate Securities Fund, Inc. and Flag Investors Equity
Partners Fund, Inc., all registered open-end management investment companies.
(b)
<TABLE>
<CAPTION>
Name and Principal Position and Officers with Position and Offices
Business Address* Principal Underwriters with Registrant
------------------ -------------------------- --------------------
<S> <C> <C>
Alvin B. Krongard Chief Executive Officer, Director None
Benjamin Howell Chairman, Director None
Griswold, IV
Mayo A. Shattuck III President, Director None
Robert E. Price Secretary and General Counsel None
Beverly L. Wright Chief Financial Officer and None
Treasurer
</TABLE>
------------
* 135 East Baltimore Street, Baltimore, Maryland 21202
(c) Not Applicable.
Item 30. Location of Accounts and Records.
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act [15 U.S.C. 80a-30(a)] and the
Rules [17 CFR 270.31a-1 to 31a-3] promulgated thereunder, furnish the name
and address of each person maintaining physical possession of each such
account, book or other document.
C-6
<PAGE>
Investment Company Capital Corp., the Registrant's investment advisor
and transfer and dividend disbursing agent, 135 East Baltimore Street,
Baltimore, Maryland 21202, will maintain physical possession of each such
account, book or other document of Registrant except for the records
maintained by The Glenmede Trust Company, One Liberty Place, 1650 Market
Street, Philadelphia, Pennsylvania, 19103 relating to its functions as the
Registrant's sub-advisor, the records maintained by Alex. Brown & Sons
Incorporated, 135 East Baltimore Street, Baltimore, Maryland 21202 relating
to its functions as the Registrant's distributor, the records maintained by
Boston Safe Deposit and Trust Company, One Boston Place, Boston,
Massachusetts 02108 relating to its functions as the Registrant's custodian
and the records maintained by The Shareholder Services Group, Inc., One
Exchange Place, Boston, Massachusetts 02109, relating to its functions as the
Registrant's accounting services provider.
Item 31. Management Services.
Furnish a summary of the substantive provisions of any management-
related service contract not discussed in Part A or Part B of this Form
(because the contract was not believed to be of interest to a purchaser of
securities of the Registrant) under which services are provided to the
Registrant, indicating the parties to the contract, the total dollars paid
and by whom, for the last three fiscal years.
None.
Item 32. Undertakings.
Furnish the following undertakings in substantially the following form
in all initial Registration Statements filed under the 1933 Act:
(a) Not Applicable.
(b) Not Applicable.
(c) A copy of the Registrant's latest Annual Report to Shareholders is
available upon request, without charge by contacting Registrant at
(800) 767-3524.
C-7
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Post-
Effective Amendment No. 15 to the Registration Statement to be signed on its
behalf by the undersigned thereto duly authorized in the City of Baltimore,
in the State of Maryland, on the 25th day of August, 1995.
FLAG INVESTORS INTERNATIONAL FUND, INC.
By: /s/ John W. Church, Jr.
----------------------------------
John W. Church, Jr.,
President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by the
following persons in the capacities on the date(s) indicated:
* Director August 25, 1995
------------------------- ---------------
Truman T. Semans Date
* Director August 25, 1995
------------------------- ---------------
Richard T. Hale Date
* Director August 25, 1995
------------------------- ---------------
James J. Cunnane Date
* Director August 25, 1995
------------------------- ---------------
N. Bruce Hannay Date
* Director August 25, 1995
------------------------- ---------------
John F. Kroeger Date
* Director August 25, 1995
------------------------- ---------------
Louis E. Levy Date
* Director August 25, 1995
------------------------- ---------------
Eugene J. McDonald Date
/s/ Rebecca W. Rimel Director August 25, 1995
------------------------- ---------------
Rebecca W. Rimel Date
* Director August 25, 1995
------------------------- ---------------
Harry Woolf Date
/s/ John W. Church, Jr. President August 25, 1995
------------------------- ---------------
John W. Church, Jr. Date
* Chief Financial August 25, 1995
------------------------- and Accounting ---------------
Diana M. Ellis Officer Date
*By: /s/ Brian C. Nelson
--------------------
Brian C. Nelson
Attorney-In-Fact
<PAGE>
EXHIBIT INDEX
EDGAR
Exhibit
Number Description
------- -----------
EX-99.B (1) (a) Registrant's Articles of Incorporation, filed herewith.
EX-99.B (1) (b) Registrant's Articles Supplementary, filed herewith.
EX-99.B (1) (c) Registrant's Articles Supplementary, filed herewith.
EX-99.B (1) (d) Form of Registrant's Articles Supplementary, filed herewith.
EX-99.B (2) Registrant's By-Laws, filed herewith.
(3) None.
(4) Specimen Security with respect to Flag Investors Shares is hereby
incorporated by reference to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A (Registration No.
33-28479), filed with the Securities and Exchange Commission on
February 24, 1994.
EX-99.B (5) (a) Investment Advisory Agreement between Registrant and
Investment Company Capital Corp., filed herewith.
EX-99.B (5) (b) Sub-Advisory Agreement among Registrant, Investment
Company Capital Corp. and The Glenmede Trust Company,
filed herewith.
EX-99.B (6) (a) Distribution Agreement with respect to Flag
Investors International Fund Class A Shares between
Registrant and Alex. Brown & Sons Incorporated, filed
herewith.
EX-99.B (6) (b) Form of Sub-Distribution Agreement between Alex. Brown &
Sons Incorporated and Participating Dealers, filed herewith.
EX-99.B (6) (c) Shareholder Servicing Agreement between
Registrant and Shareholder Servicing Agents, filed
herewith.
EX-99.B (6) (d) Form of Accounting Services Agreement between Registrant
and The Boston Company Advisors, Inc. (as assigned to The
Shareholder Services Group, Inc.), filed herewith.
EX-99.B (6) (e) Form of Distribution Agreement with respect to Flag
Investors International Fund Institutional Shares between
Registrant and Alex Brown & Sons Incorporated, filed
herewith.
(7) None.
<PAGE>
EDGAR
Exhibit
Number Description
------- -----------
EX-99.B (8) (a) Custody Agreement between Registrant and
Boston Safe Deposit and Trust Company, filed
herewith.
EX-99.B (8) (b) Form of Sub-Custody Agreement between Boston Safe
Deposit and Trust Company and Sub-Custodians, filed
herewith.
EX-99.B (9) Master Services Agreement between Registrant and
Investment Company Capital Corp., filed herewith.
EX-99.B (10) Opinion of Counsel, filed herewith.
EX-99.B (11) Consent of Deloitte & Touche LLP, filed herewith.
(12) None.
EX-99.B (13) Subscription Agreements between Registrant Fund and
Investors, filed herewith.
(14) None.
EX-99.B (15) Registrant's Distribution Plan with respect to Flag
Investors International Fund Class A Shares, filed herewith.
EX-99.B (16) Schedule of Computation of Performance Quotations
(unaudited), filed herewith.
EX-99.B (24) Powers of Attorney, filed herewith.
EX-99.B (27) Financial Data Schedule, filed herewith.
<PAGE>
EX-99.B(1)(a)
ARTICLES OF INCORPORATION
OF
FLAG INVESTORS INTERNATIONAL FUND, INC.
ARTICLE I
THE UNDERSIGNED, Edward J. Veilleux, whose post office address
is 135 East Baltimore Street, Baltimore, Maryland 21202, being at least eighteen
years of age, does hereby act as an incorporator, under and by virtue of the
General Laws of the State of Maryland authorizing the formation of corporations
and with the intention of forming a corporation.
ARTICLE II
The name of the Corporation is Flag Investors International
Fund, Inc.
ARTICLE III
The purpose for which the Corporation is formed is to act as
an open-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act").
ARTICLE IV
The Corporation is expressly empowered as follows:
(1) To hold, invest and reinvest its assets in securities and
other investments including assets in cash.
(2) To issue and sell shares of its capital stock in such
amounts and on such terms and conditions and for such purposes and for such
amount or kind of consideration as may now or hereafter be permitted by law.
(3) To redeem, purchase or otherwise acquire, hold, dispose
of, resell, transfer, reissue or cancel (all without the vote or consent of the
shareholders of the Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by law and by the Charter of the
Corporation.
(4) To enter into a written contract or contracts with any
person or persons providing for a delegation of the management of all or part of
this Corporation's securities portfolio(s) and also for the delegation of the
performance of various administrative or corporate functions, subject to the
direction of the Board of Directors of the Corporation. Any such contract or
contracts may be made with any person even though such person may be an officer,
<PAGE>
other employee, director or shareholder of this Corporation or a corporation,
partnership, trust or association in which any such officer, other employee,
director or shareholder may be interested.
(5) To enter into a written contract or contracts appointing
one or more underwriters, distributors or agents for the sale of the shares of
the Corporation on such terms and conditions as the Board of Directors of the
Corporation may deem reasonable and proper, and to allow such person or persons
a commission on the sale of such shares. Any such contract or contracts may be
made with any person even though such person may be an officer, other employee,
director or shareholder of this Corporation or a corporation, partnership, trust
or association in which any such officer, other employee, director or
shareholder may be interested.
(6) To enter into a written contract or contracts employing
such custodian or custodians for the safekeeping of the property of the
Corporation and of its shares, such dividend disbursing agent or agents, and
such transfer agent or agents and registrar or registrars for its shares, and
such agent or agents for accounting and other administrative services on such
terms and conditions as the Board of Directors of the Corporation may deem
reasonable and proper for the conduct of the affairs of the Corporation, and to
pay the fees and disbursements of such custodians, dividend disbursing agents,
transfer agents, registrars and accounting and administrative services agents
out of the income and/or any other property of the Corporation. Notwithstanding
any other provisions of the Charter or the By-Laws of the Corporation, the Board
of Directors of the Corporation may cause any or all of the property of the
Corporation to be transferred to, or to be acquired and held in the name of, a
custodian so appointed or any nominee or nominees of this Corporation or nominee
or nominees of such custodian satisfactory to the Board of Directors of the
Corporation.
(7) To employ the same person, partnership (general or
limited), association, trust or corporation in any multiple capacity under
Sections (4), (5) and (6) of this Article, who may receive compensation from the
Corporation in as many capacities in which such person, partnership (general or
limited), association, trust or corporation shall serve the Corporation.
(8) To do any and all such further acts or things and to
exercise any and all such further powers or rights as may be necessary,
incidental, relative, conducive, appropriate or desirable for the
accomplishment, carrying out or attainment of the purposes stated in Article III
hereof.
The Corporation shall be authorized to exercise and enjoy all
of the powers, rights and privileges granted to, or conferred upon, corporations
by the General Laws of the State of Maryland now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE V
The post office address of the principal office of the
Corporation in the State of Maryland is c/o Alex. Brown & Sons Incorporated, 135
East Baltimore Street, Baltimore, Maryland 21202. The name of the resident agent
of the Corporation in this State is Edward J. Veilleux, a citizen of this State,
who resides there, and the post office address of the resident agent is 135 East
Baltimore Street, Baltimore, Maryland 21202.
-2-
<PAGE>
ARTICLE VI
Section 1. The total number of shares of capital stock which
the Corporation shall have the authority to issue is ten million shares, of the
par value of 1 mil ($.001) per share and of the aggregate par value of ten
thousand dollars ($10,000), all of which shares are designated Common Stock.
Unless otherwise prohibited by law, so long as the Corporation is registered as
an open-end investment company under the 1940 Act, the Board of Directors of the
Corporation shall have the power and authority, without the approval of the
holders of any outstanding shares, to increase or decrease the number of shares
of capital stock, or the number of shares of capital stock of any class or
series, that the Corporation has authority to issue.
Section 2. Any fractional share shall carry proportionately
all the rights of a whole share, excepting any right to receive a certificate
evidencing such fractional share, but including, without limitation, the right
to vote and the right to receive dividends.
Section 3. All persons who shall acquire stock in the
Corporation shall acquire the same subject to the provisions of the Charter and
the By-Laws of the Corporation. All shares issued pursuant to the Charter of the
Corporation for which the price or consideration fixed thereon shall have been
paid shall be deemed to be fully paid and non-assessable.
Section 4. The Board of Directors of the Corporation shall
have authority to classify and reclassify any authorized but unissued shares of
capital stock from time to time by setting or changing in any one or more
respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms or conditions
of redemption of the capital stock; provided that the Board of Directors of the
Corporation shall not classify or reclassify any of such shares into any class
or series of stock which is prior to any class or series of capital stock then
outstanding with respect to rights upon the liquidation, dissolution or winding
up of the affairs of, or upon any distribution of the general assets of, the
Corporation, except that there may be variations so fixed and determined among
different series and classes as to investment objectives, purchase price, right
of redemption, special rights as to dividends, and in liquidation, with respect
to assets belonging to a particular series or class, voting powers and
conversion rights. Subject to the provisions of Section 7 of this Article VI and
applicable law, the power of the Board of Directors of the Corporation to
classify or reclassify any of the shares of capital stock shall include, without
limitation, authority to classify or reclassify any such stock into a class or
classes of capital stock and to divide and classify shares of any class into one
or more series of such class, by determining, fixing or altering one or more of
the following:
(A) The distinctive designation of such class or
series and the number of shares to constitute such class or series;
provided that, unless otherwise prohibited by the terms of such class
or series, the number of shares of any class or series may be decreased
by the Board of Directors of the Corporation in connection with any
classification or reclassification of unissued shares and the number of
shares of such class or series may be increased by the Board of
Directors of the Corporation in connection with any such classification
or reclassification, and any shares of any class or series which have
been redeemed, purchased or otherwise acquired by the Corporation shall
remain part of the authorized capital stock and be subject to
classification and reclassification as provided herein.
(B) Whether or not and, if so, the rates, amounts and
times at which, and the conditions under which, dividends shall be
payable on shares of such class or series.
(C) Whether or not shares of such class or series
shall have voting rights in addition to any general voting rights
provided by law and the Charter of the Corporation and, if so, the
terms of such additional voting rights.
-3-
<PAGE>
(D) The rights of the holders of shares of such class
or series upon the liquidation, dissolution or winding up of the
affairs, or upon any distribution of the assets, of the Corporation.
(E) Any other rights, restrictions, including
restrictions on transferability, and qualifications of shares of such
class or series, not inconsistent with law and the Charter of the
Corporation.
Section 5. The Board of Directors of the Corporation shall
have authority to issue from time to time shares of capital stock, whether now
or hereafter authorized, for such consideration as the Board of Directors of the
Corporation may deem advisable, subject to such limitations as may be set forth
in the Charter or the By-Laws of the Corporation or in the Maryland General
Corporation Law.
Section 6. No holder of stock of the Corporation shall, as
such holder, have any preemptive right to purchase or subscribe for any shares
of the capital stock of the Corporation or any other security of the Corporation
which it may issue or sell (whether out of the number of shares authorized by
the Charter of the Corporation, or out of any shares of the capital stock of the
Corporation acquired by it after the issue thereof, or otherwise) other than
such right, if any, as the Board of Directors of the Corporation, in its
discretion, may determine.
Section 7. Shares of Common Stock of the Corporation shall
have the following preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption:
(A) Assets Belonging to a Class. All consideration
received by the Corporation for the issue or sale of stock of any class
of Common Stock, together with all assets in which such consideration
is invested and reinvested, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to the class of shares of Common Stock with respect
to which such assets, payments or funds were received by the
Corporation for all purposes, subject only to the rights of creditors,
and shall be so handled upon the books of account of the Corporation.
Such consideration, assets, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any assets derived from any reinvestment of
such proceeds in whatever form, are herein referred to as "assets
belonging to" such class. Any assets, income, earnings, profits, and
proceeds thereof, funds or payments which are not readily attributable
to any particular class shall be allocable among any one or more of the
classes in such manner and on such basis as the Board of Directors of
the Corporation, in its sole discretion, shall deem fair and equitable.
(B) Liabilities Belonging to a Class. The assets
belonging to any class of Common Stock shall be charged with the
liabilities in respect of such class, and shall also be charged with
such class's share of the general liabilities of the Corporation
determined as hereinafter provided. The determination of the Board of
Directors of the Corporation shall be conclusive as to the amount of
such liabilities, including the amount of accrued expenses and
reserves; as to any allocation of the same to a given class; and as to
whether the same are allocable to one or more classes. The liabilities
so allocated to a class are herein referred to as "liabilities
belonging to" such class. Any liabilities which are not readily
attributable to any particular class shall be allocable among any one
or more of the classes in such manner and on such basis as the Board
-4-
<PAGE>
of Directors of the Corporation, in its sole discretion, shall deem
fair and equitable.
(C) Dividends and Distributions. Shares of each class
of Common Stock shall be entitled to such dividends and distributions,
in stock or in cash or both, as may be declared from time to time by
the Board of Directors of the Corporation, acting in its sole
discretion, with respect to such class, provided, however, that
dividends and distributions on shares of a class of Common Stock shall
be paid only out of the lawfully available "assets belonging to such
class" as such phrase is defined in Section 7(A) of this Article VI.
(D) Liquidating Dividends and Distributions. In the
event of the liquidation or dissolution of the Corporation,
shareholders of each class of Common Stock shall be entitled to
receive, as a class, out of the assets of the Corporation available for
distribution to shareholders, but other than general assets not
belonging to any particular class of stock, the assets belonging to
such class; and the assets so distributable to the shareholders of any
class of Common Stock shall be distributed among such shareholders in
proportion to the number of shares of such class held by them and
recorded on the books of the Corporation. In the event that there are
any general assets not belonging to any particular class of stock and
available for distribution, such distribution shall be made to the
holders of stock of all classes of Common Stock in proportion to the
asset value of the respective classes of Common Stock determined as
hereinafter provided.
(E) Voting. Each shareholder of each class of Common
Stock shall be entitled to one vote for each share of Common Stock,
irrespective of the class, then standing in his name on the books of
the Corporation, and on any matter submitted to a vote of shareholders,
all shares of Common Stock then issued and outstanding and entitled to
vote shall be voted in the aggregate and not by class except that: (i)
when expressly required by law, shares of Common Stock shall be voted
by individual class and (ii) only shares of Common Stock of the
respective class or classes affected by a matter shall be entitled to
vote on such matter. At all meetings of the shareholders, the holders
of one-third of the shares of stock of the Corporation entitled to vote
at the meeting, present in person or by proxy, shall constitute a
quorum for the transaction of any business, except as otherwise
provided by statute or by the Charter of the Corporation. In the
absence of a quorum, no business may be transacted, except that the
holders of a majority of the shares of stock present in person or by
proxy and entitled to vote may adjourn the meeting from time to time,
without notice other than announcement at the meeting, except as
otherwise required by the By-Laws of the Corporation, until the holders
of the requisite amount of shares of stock shall be so present. At any
such adjourned meeting at which a quorum may be present, any business
may be transacted which might have been transacted at the meeting as
originally called. The absence from any meeting, in person or by proxy,
of holders of the number of shares of stock of the Corporation in
excess of a majority thereof which may be required by the laws of the
State of Maryland, the 1940 Act, or any other applicable statute, the
Charter or the By-Laws of the Corporation, for action upon any given
matter shall not prevent action at such meeting upon any other matter
or matters which may properly come before the meeting, if there shall
be present at the meeting, in person or by proxy, holders of the number
of shares of stock of the Corporation required for action in respect of
such other matter or matters.
(F) Redemption. To the extent the Corporation has
funds or other property legally available therefor, each holder of
shares of Common Stock of the Corporation shall be entitled to require
the Corporation to redeem all or any part of the shares of Common Stock
of the Corporation standing in the name of such holder on the books of
the Corporation, and all shares of Common Stock issued by the
Corporation shall be subject to redemption by the Corporation, at the
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<PAGE>
redemption price of such shares as in effect from time to time as may
be determined by the Board of Directors of the Corporation in
accordance with the provisions hereof, subject to the right of the
Board of Directors of the Corporation to suspend the right of
redemption of shares of Common Stock of the Corporation or postpone the
date of payment of such redemption price in accordance with provisions
of applicable law. Without limiting the generality of the foregoing,
the Corporation shall, to the extent permitted by applicable law, have
the right at any time to redeem the shares owned by any holder of
Common Stock of the Corporation (i) if such redemption is, in the
opinion of the Board of Directors of the Corporation, desirable in
order to prevent the Corporation from being deemed a "personal holding
company" within the meaning of the Internal Revenue Code, as now or
hereafter in force, (ii) if the value of such shares in the account
maintained by the Corporation or its transfer agent for any class of
Common Stock is less than Five Hundred Dollars ($500.00) provided,
however, that each shareholder shall be notified that the value of his
account is less than Five Hundred Dollars ($500.00) and allowed sixty
(60) days to make additional purchases of shares before such redemption
is processed by the Corporation or (iii) if the net income with respect
to any particular class of Common Stock should be negative or it should
otherwise be appropriate to carry out the Corporation's
responsibilities under the 1940 Act, in each case subject to such
further terms and conditions as the Board of Directors of the
Corporation may from time to time adopt. The redemption price of shares
of Common Stock of the Corporation shall, except as otherwise provided
in this Section 7(F), be the net asset value thereof as determined by
the Board of Directors of the Corporation from time to time in
accordance with the provisions of applicable law, less such redemption
fee or other charge, if any, as may be fixed by resolution of the Board
of Directors of the Corporation. Payment of the redemption price shall
be made in cash by the Corporation at such time and in such manner as
may be determined from time to time by the Board of Directors of the
Corporation unless, in the opinion of the Board of Directors of the
Corporation, which shall be conclusive, conditions exist which make
payment wholly in cash unwise or undesirable; in such event the
Corporation may make payment wholly or partly by securities or other
property included in the assets belonging or allocable to the class of
the shares redemption of which is being sought, the value of which
shall be determined as provided herein.
(G) Conversion or Exchange. Each holder of any class
of Common Stock of the Corporation, who either surrenders his share
certificate in good delivery form to the Corporation or, if the shares
in question are not represented by certificates, delivers to the
Corporation a written request in good order signed by the shareholder,
shall, subject to such procedures as may be established by the Board of
Directors of the Corporation, be entitled to convert or exchange the
shares in question on the basis hereinafter set forth, into shares of
stock of any other class of the Corporation. The Corporation shall
determine the net asset value, as provided herein, of the shares to be
converted and may deduct therefrom a conversion or exchange cost, in an
amount determined within the discretion of the Board of Directors of
the Corporation. Within five (5) business days after such surrender and
payment of any conversion or exchange cost, the Corporation shall issue
to the shareholder such number of shares of stock of the class desired
as, taken at the net asset value thereof determined as provided herein
in the same manner and at the same time as that of the shares
surrendered, shall equal the net asset value of the shares surrendered,
less any conversion or exchange cost as aforesaid. Any amount
representing a fraction of a share may be paid in cash at the option of
the Corporation. Any conversion or exchange cost may be paid and/or
assigned by the Corporation to the underwriter and/or to any other
entity, as it may elect.
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<PAGE>
(H) Restrictions on Transferability. If, in the
opinion of the Board of Directors of the Corporation, concentration in
the ownership of shares of Common Stock might cause the Corporation to
be deemed a personal holding company within the meaning of the Internal
Revenue Code, as now or hereafter in force, the Corporation may at any
time and from time to time refuse to give effect on the books of the
Corporation to any transfer or transfers of any share or shares of
Common Stock in an effort to prevent such personal holding company
status.
ARTICLE VII
The number of directors of the Corporation shall be eight (8),
which number may be increased or decreased pursuant to the By-Laws of the
Corporation but shall never be less than three (3) except for any period during
which shares of the Corporation are held by less than three shareholders. The
name of the director who shall act until the directors are elected by the
Corporation's shareholders or until his successor is duly elected and qualify
is:
Edward J. Veilleux
ARTICLE VIII
Section 1. To the fullest extent that limitations on the
liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the Corporation shall have any
liability to the Corporation or its shareholders for damages. This limitation on
liability applies to events occurring at the time a person serves as a director
or officer of the Corporation whether or not such person is a director or
officer at the time of any proceeding in which liability is asserted.
Section 2. The Corporation shall indemnify and advance
expenses to its currently acting and its former directors to the fullest extent
that indemnification of directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify and advance expenses to its
officers to the same extent as to its directors and to such further extent as is
consistent with law. The Board of Directors of the Corporation may make further
provision for indemnification of directors, officers, employees and agents in
the By-Laws of the Corporation or by resolution or agreement to the fullest
extent permitted by the Maryland General Corporation Law.
Section 3. No provision of this Article VIII shall be
effective to protect or purport to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.
Section 4. References to the Maryland General Corporation Law
in this Article VIII are to such law as from time to time amended. No further
amendment to the Charter of the Corporation shall decrease, but may expand, any
right of any person under this Article VIII based on any event, omission or
proceeding prior to such amendment.
ARTICLE IX
Any determination made in good faith, so far as accounting
matters are involved, in accordance with accepted accounting practices by or
pursuant to the direction of the Board of Directors of the Corporation, as to
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<PAGE>
the amount of assets, obligations or liabilities of the Corporation, as to the
amount of net income of the Corporation from dividends and interest for any
period or amounts at any time legally available for the payment of dividends, as
to the amount of any reserves or charges set up and the propriety thereof, as to
the time of or purpose for creating reserves or as to the use, alteration or
cancellation of any reserves or charges (whether or not any obligation or
liability for which such reserves or charges shall have been created shall have
been paid or discharged or shall be then or thereafter required to be paid or
discharged), as to the value of any security owned by the Corporation or as to
any other matters relating to the issuance, sale, redemption or other
acquisition or disposition of securities or shares of capital stock of the
Corporation, and any reasonable determination made in good faith by the Board of
Directors of the Corporation as to whether any transaction constitutes a
purchase of securities on "margin", a sale of securities "short", or an
underwriting of the sale of, or a participation in any underwriting or selling
group in connection with the public distribution of, any securities, shall be
final and conclusive, and shall be binding upon the Corporation and all holders
of its capital stock, past, present and future, and shares of the capital stock
of the Corporation are issued and sold on the condition and understanding,
evidenced by the purchase of shares of capital stock or acceptance of share
certificates, that any and all such determinations shall be binding as
aforesaid. No provision of the Charter of the Corporation shall be effective (i)
to require a waiver of compliance with any provision of the Securities Act of
1933, as amended, or the 1940 Act, or of any valid rule, regulation or order of
the Securities and Exchange Commission thereunder or (ii) to protect or purport
to protect any director or officer of the Corporation against any liability to
the Corporation or its security holders to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
ARTICLE X
The duration of this Corporation shall be perpetual.
ARTICLE XI
Section 1. The Corporation reserves the right from time to
time to make any amendments to its Charter which may now or hereafter be
authorized by law, including any amendments changing the terms or contract
rights, as expressly set forth in its Charter, of any of its outstanding stock
by classification, reclassification or otherwise, but no such amendment which
changes such terms or contract rights of any of its outstanding stock shall be
valid unless such amendment shall have been authorized by not less than a
majority of the aggregate number of the votes entitled to be cast thereon by a
vote at a meeting or by the unanimous written consent of the Directors of the
Corporation as provided in the Corporation's By-Laws.
Section 2. Notwithstanding any provision of the General Laws
of the State of Maryland requiring any action to be taken or authorized by the
affirmative vote of a greater proportion than the majority of the total number
of shares of any class of stock of the Corporation, such action shall be
effective and valid if taken or authorized by the affirmative vote of the
holders of a majority of the total number of shares outstanding of that class of
stock entitled to vote thereon, except as otherwise provided in the Charter of
the Corporation.
Section 3. So long as permitted by Maryland law, the books of
the Corporation may be kept outside of the State of Maryland at such place or
places as may be designated from time to time by the Board of Directors of the
Corporation or in the By-Laws of the Corporation.
Section 4. In furtherance, and not in limitation, of the
powers conferred by the laws of the State of Maryland, the Board of Directors of
the Corporation is expressly authorized:
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<PAGE>
(A) To make, alter or repeal the By-Laws of the
Corporation, except where such power is reserved by the By-Laws of the
Corporation to the shareholders, and except as otherwise required by
the 1940 Act.
(B) From time to time to determine whether and to
what extent and at what times and places and under what conditions and
regulations the books and accounts of the Corporation, or any of them
other than the stock ledger, shall be open to the inspection of the
shareholders, and no shareholder shall have any right to inspect any
account or book or document of the Corporation, except as conferred by
law or authorized by resolution of the Board of Directors or of the
shareholders of the Corporation.
(C) Without the assent or vote of the shareholders,
to authorize the issuance from time to time of shares of the stock of
any class of the Corporation, whether now or hereafter authorized, for
such consideration as the Board of Directors of the Corporation may
deem advisable.
(D) Without the assent or vote of the shareholders,
to authorize and issue obligations of the Corporation, secured and
unsecured, as the Board of Directors may determine, and to authorize
and cause to be executed mortgages and liens upon the property of the
Corporation, real and personal.
(E) Notwithstanding anything in the Charter of the
Corporation to the contrary, to establish in its absolute discretion
the basis or method for determining the value of the assets belonging
to any class, and the net asset value of each share of any class of the
Corporation for purposes of sales, redemptions, repurchases of shares
or otherwise.
(F) To determine in accordance with generally
accepted accounting principles and practices what constitutes net
profits, earnings, surplus or net assets in excess of capital, and to
determine what accounting periods shall be used by the Corporation for
any purpose, whether annual or any other period, including daily; (i)
to set apart out of any funds of the Corporation such reserves for such
purposes as it shall determine and to abolish the same; (ii) to declare
and pay any dividends and distributions in cash, securities or other
property from surplus or any funds legally available therefor, at such
intervals (which may be as frequently as daily) or on such other
periodic basis, as it shall determine; (iii) to declare such dividends
or distributions by means of a formula or other method of
determination, at meetings held less frequently than the frequency of
the effectiveness of such declarations; (iv) to establish payment dates
for dividends or any other distributions on any basis, including dates
occurring less frequently than the effectiveness of declarations
thereof; and (v) to provide for the payment of declared dividends on a
date earlier or later than the specified payment date in the case of
shareholders of the Corporation redeeming their entire ownership of
shares of any class of the Corporation.
(G) In addition to the powers and authorities granted
herein and by statute expressly conferred upon it, the Board of
Directors of the Corporation is authorized to exercise all such powers
and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of Maryland law,
the Charter and the By-Laws of the Corporation.
-9-
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator of Flag
Investors International Fund, Inc. has signed these Articles of Incorporation on
this 15th day of March, 1993.
/s/ Edward J. Veilleux
----------------------
Edward J. Veilleux
Incorporator
WITNESS:
/s/ Brian C. Nelson
-------------------
Name:
THE UNDERSIGNED incorporator of Flag Investors International
Fund, Inc. who executed the foregoing Articles of Incorporation of which this
Certificate is made a part hereby acknowledges the same to be his act and
further acknowledges that, to the best of his knowledge, the matters and facts
set forth therein are true in all material respects under the penalties of
perjury.
/s/ Edward J. Veilleux
----------------------
Edward J. Veilleux
Incorporator
-10-
<PAGE>
EX-99.B(1)(b)
FLAG INVESTORS INTERNATIONAL FUND, INC.
ARTICLES SUPPLEMENTARY
FLAG INVESTORS INTERNATIONAL FUND, INC. (the "Corporation")
having its principal office in the City of Baltimore, certifies that:
FIRST: The Corporation's Board of Directors in accordance with
Section 2-105(c) of the Maryland General Corporation Law has adopted a
resolution classifying and designating the Corporation's previously
unclassified ten million (10,000,000) shares of Common Stock, par value
$.001 per share, having an aggregate value of $10,000.00, as follows:
eight million (8,000,000) shares are designated "Flag Investors
International Fund Class A Shares" (the "Class A Shares"), and two
million (2,000,000) shares remain undesignated.
SECOND: Immediately before the designation and classification
of the Class A Shares pursuant to these Articles Supplementary, the
Corporation was authorized to issue ten million (10,000,000) shares of
Common Stock, par value $.001 per share, having an aggregate par value
of $10,000.00, of which ten million (10,000,000) shares were designated
Common Stock in the Corporation's Articles of Incorporation, but which,
out of authorized but unissued shares, had been designated Flag
Investors International Fund Shares and renamed Flag Investors
International Fund Class A Shares by the Corporation's Board of
Directors as authorized in the Corporation's Articles of Incorporation.
THIRD: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940, as
amended.
<PAGE>
IN WITNESS WHEREOF, Flag Investors International Fund, Inc.
has caused these Articles Supplementary to be executed by one of its
Vice-Presidents and its corporate seal to be affixed and attested by its
Secretary on this 15th day of December 1993.
[CORPORATE SEAL]
FLAG INVESTORS INTERNATIONAL FUND, INC.
By: _________________________________
Vice-President
Attest: __________________
Secretary
The undersigned, Vice President of FLAG INVESTORS
INTERNATIONAL FUND, INC., who executed on behalf of said corporation the
foregoing Articles Supplementary to the Articles of Incorporation of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said corporation, the foregoing Articles Supplementary to the Articles of
Incorporation to be the corporate act of said corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are true in all
material respects, under the penalties of perjury.
_______________________________________
Edward J. Veilleux
<PAGE>
EX-99.B(1)(c)
FLAG INVESTORS INTERNATIONAL FUND, INC.
ARTICLES SUPPLEMENTARY
FLAG INVESTORS INTERNATIONAL FUND, INC. (the "Corporation")
having its principal office in the City of Baltimore, certifies that:
FIRST: The Corporation's Board of Directors in accordance with
Section 2-105(c) of the Maryland General Corporation Law has adopted a
resolution designating the Corporation's classified ten million (10,000,000)
shares of Common Stock, par value $.001 per share, having an aggregate value of
$10,000.00, as follows: eight million (8,000,000) shares are designated "Flag
Investors International Fund Class A Shares" (the "Class A Shares"), one million
(1,000,000) shares are designated "Flag Investors International Fund Class B
Shares" (the "Class B Shares"), and one million (1,000,000) shares remain
undesignated.
SECOND: Immediately before the designation of the Class B
Shares pursuant to these Articles Supplementary, the Corporation was authorized
to issue ten million (10,000,000) shares of Common Stock, par value $.001 per
share, having an aggregate par value of $10,000.00, of which eight million
(8,000,000) shares were designated "Flag Investors International Fund Class A
Shares" (the "Class A Shares") and two million (2,000,000) shares remained
undesignated.
THIRD: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940, as amended.
<PAGE>
IN WITNESS WHEREOF, Flag Investors International Fund, Inc.
has caused these Articles Supplementary to be executed by one of its Vice
Presidents and its corporate seal to be affixed and attested by its Secretary on
this 31st day of December, 1994.
[CORPORATE SEAL]
FLAG INVESTORS INTERNATIONAL FUND, INC.
By: /s/ Edward J. Veilleux
---------------------------------------
Vice President
Attest: /s/ Brian C. Nelson
-----------------------
Secretary
The undersigned, Vice President of FLAG INVESTORS
INTERNATIONAL FUND, INC., who executed on behalf of said corporation the
foregoing Articles Supplementary to the Articles of Incorporation of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said corporation, the foregoing Articles Supplementary to the Articles of
Incorporation to be the corporate act of said corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are true in all
material respects, under the penalties of perjury.
/s/ Edward J. Veilleux
---------------------------------------
Edward J. Veilleux
<PAGE>
EX-99.B(1)(d)
FLAG INVESTORS INTERNATIONAL FUND, INC.
FORM OF
ARTICLES SUPPLEMENTARY
FLAG INVESTORS INTERNATIONAL FUND, INC. (the "Corporation")
having its principal office in the City of Baltimore, certifies that:
FIRST: The Corporation's Board of Directors in accordance with
Section 2-105(c) of the Maryland General Corporation Law has adopted a
resolution increasing the total number of shares of capital stock which the
Corporation has the authority to issue to fifteen million (15,000,000) shares of
Common Stock, of the par value of 1 mil ($.001) per share and of the aggregate
par value of fifteen thousand dollars ($15,000), all of which shares are
designated as follows: eight million (8,000,000) shares are designated "Flag
Investors International Fund Class A Shares," one million (1,000,000) shares are
designated "Flag Investors International Fund Class B Shares," five million
(5,000,000) shares are designated "Flag Investors International Fund
Institutional Shares" and one million (1,000,000) shares remain undesignated.
SECOND: Immediately before the increase, the Corporation was
authorized to issue ten million (10,000,000) shares of Common Stock, of the par
value of 1 mil ($.001) per share and of the aggregate par value of ten thousand
dollars ($10,000), all of which shares were designated as follows: eight million
(8,000,000) shares were designated "Flag Investors International Fund Class A
Shares," one million (1,000,000) shares were designated "Flag Investors
International Fund Class B Shares" and one million (1,000,000) shares remained
undesignated.
THIRD: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940, as amended.
<PAGE>
IN WITNESS WHEREOF, Flag Investors International Fund,
Inc. has caused these Articles Supplementary to be executed by
one of its Vice Presidents and its corporate seal to be affixed
and attested by its Secretary on this ___ day of_________________, 1995.
[CORPORATE SEAL]
FLAG INVESTORS INTERNATIONAL FUND, INC.
By: __________________________________
Vice President
Attest: _________________________
Secretary
The undersigned, Vice President of FLAG INVESTORS
INTERNATIONAL FUND, INC., who executed on behalf of said corporation the
foregoing Articles Supplementary to the Articles of Incorporation of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said corporation, the foregoing Articles Supplementary to the Articles of
Incorporation to be the corporate act of said corporation and further certifies
that, to the best of his knowledge, information and belief, the matters and
facts set forth therein with respect to the approval thereof are true in all
material respects, under the penalties of perjury.
_____________________________
Vice President
<PAGE>
EX-99.B(2)
BY-LAWS
OF
FLAG INVESTORS INTERNATIONAL FUND, INC.
ARTICLE I
Offices
Section 1. Principal Office. The principal office of
the Corporation shall be in the city of Baltimore, State of Maryland.
Section 2. Principal Executive Office. The principal
executive office of the Corporation shall be in the City of Baltimore,
State of Maryland.
Section 3. Other Offices. The Corporation may have
such other offices in such places as the Board of Directors may
from time to time determine.
ARTICLE II
Meetings of Shareholders
Section 1. Annual Meetings. An annual meeting of the
shareholders of the Corporation shall not be required to be held in any year in
which shareholders are not required to elect directors under the Investment
Company Act of 1940, as amended (the "1940 Act") even if the Corporation is
holding a meeting of the shareholders for a purpose other than the election of
directors. If the Corporation is required by the 1940 Act to hold a meeting to
elect directors, the meeting shall be designated as the Annual Meeting of
shareholders for that year and shall be held within 120 days after the
occurrence of an event requiring the election of directors. The Board of
Directors may, in its discretion, hold a meeting to be designated as the Annual
Meeting of shareholders on a date within the month of March, in any year where
an election of directors by shareholders is not required under the 1940 Act. The
date of an Annual Meeting shall be set by appropriate resolution of the Board of
Directors, and shareholders shall vote on the election of directors and transact
any other business as may properly be brought before the Annual Meeting.
<PAGE>
Section 2. Special Meetings. Special meetings of the
shareholders, unless otherwise provided by law or by the Charter of the
Corporation, may be called for any purpose or purposes by a majority of the
Board of Directors or the President, and shall be called by the President or
Secretary on the written request of the shareholders as provided by the Maryland
General Corporation Law. Such request shall state the purpose or purposes of the
proposed meeting and the matters proposed to be acted on at it; provided,
however, that unless requested by shareholders entitled to cast a majority of
all the votes entitled to be cast at the meeting, a special meeting need not be
called to consider any matter which is substantially the same as a matter voted
on at any special meeting of the shareholders held during the preceding twelve
(12) months.
Section 3. Place of Meetings. The regular meeting, if any, and
any special meeting of the shareholders shall be held at such place within the
United States as the Board of Directors may from time to time determine.
Section 4. Notice of Meetings; Waiver of Notice; Shareholder
List. (a) Notice of the place, date and time of the holding of each regular and
special meeting of the shareholders and the purpose or purposes of the meeting
shall be given personally or by mail, not less then ten nor more than ninety
days before the date of such meeting, to each shareholder entitled to vote at
such meeting and to each other shareholder entitled to notice of the meeting.
Notice by mail shall be deemed to be duly given when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
records of the Corporation, with postage thereon prepaid. The notice of every
meeting of shareholders may be accompanied by a form of proxy approved by the
Board of Directors in favor of such actions or persons as the Board of Directors
may select.
(b) Notice of any meeting of shareholders shall
be deemed waived by any shareholder who shall attend such meeting in person or
by proxy, or who shall, either before or after the meeting, submit a signed
waiver of notice which is filed with the records of the meeting. A meeting of
shareholders convened on the date for which it was called may be adjourned from
time to time without further notice to a date not more than 120 days after the
original record date.
(c) At least five (5) days prior to each meeting
of shareholders, the officer or agent having charge of the share transfer books
of the Corporation shall make a complete list of shareholders entitled to vote
at such meeting, in alphabetical order with the address of and the number of
shares held by each shareholder.
- 2 -
<PAGE>
Section 5. Organization. At each meeting of the shareholders,
the Chairman of the Board (if one has been designated by the Board), or in his
absence or inability to act, the President, or in the absence or inability to
act of the Chairman of the Board and the President, a Vice President, or in the
absence or the inability to act of the Chairman of the Board, the President and
all the Vice Presidents, a chairman chosen by the shareholders shall act as
chairman of the meeting. The Secretary, or in his absence or inability to act,
any person appointed by the chairman of the meeting, shall act as secretary of
the meeting and keep the minutes thereof.
Section 6. Voting. (a) Except as otherwise provided by statute
or the Charter of the Corporation, each holder of record of shares of stock of
the Corporation having voting power shall be entitled at each meeting of the
shareholders to one vote for every share of such stock standing in his name on
the record of shareholders of the Corporation as of the record date determined
pursuant to Section 5 of Article VI hereof or if such record date shall not have
been so fixed, then at the later of (i) the close of business on the day on
which notice of the meeting is mailed or (ii) the thirtieth (30) day before the
meeting. In all elections for directors, each share of stock may be voted for as
many individuals as there are directors to be elected and for whose election the
share is entitled to be voted.
(b) Each shareholder entitled to vote at any
meeting of shareholders may authorize another person or persons to act for him
by a proxy signed by such shareholder or his attorney-in-fact. No proxy shall be
valid after the expiration of eleven months from the date thereof, unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the shareholder executing it, except in those cases where such proxy states
that it is irrevocable and where an irrevocable proxy is permitted by law.
Except as otherwise provided by statute, the Charter or the Corporation or these
By-Laws, any corporate action to be taken by vote of the shareholders shall be
authorized by a majority of the total votes cast at a meeting of shareholders at
which a quorum is present by the holders of shares present in person or
represented by proxy and entitled to vote on such action, except that a
plurality of all the votes cast at a meeting at which a quorum is present is
sufficient to elect a director.
(c) If a vote shall be taken on any question
other than the election of directors, which shall be by written ballot, then
unless required by statute or these By-Laws, or determined by the chairman of
the meeting to be advisable, any such vote need not be by ballot. On a vote by
ballot, each ballot shall be signed by the shareholder voting, or by his proxy,
if there be such proxy, and shall state the number of shares voted.
- 3 -
<PAGE>
Section 7. Inspectors. The Board may, in advance of any
meeting of shareholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If the inspectors shall not be so appointed or if
any of them shall fail to appear or act, the chairman of the meeting may, and on
the request of any shareholder entitled to vote at the meeting shall, appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath to execute faithfully the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the chairman
of the meeting or any shareholder entitled to vote at it, the inspectors shall
make a report in writing of any challenge, request or matter determined by them
and shall execute a certificate of any fact found by them. No director or
candidate for the office of director shall act as inspector of an election of
directors. Inspectors need not be shareholders.
Section 8. Consent of Shareholders in Lieu of Meeting. Except
as otherwise provided by statute any action required to be taken at any regular
or special meeting of shareholders, or any action which may be taken at any
annual or special meeting of shareholders, may be taken without a meeting,
without prior notice and without a vote, if the following are filed with the
records of shareholders' meetings: (i) a unanimous written consent which sets
forth the action and is signed by each shareholder entitled to vote on the
matter and (ii) a written waiver of any right to dissent signed by each
shareholder entitled to notice of the meeting but not entitled to vote at it.
ARTICLE III
Board of Directors
Section 1. General Powers. Except as otherwise provided in the
Charter of the Corporation, the business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. All powers of the
Corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the shareholders by law or by the Charter
of the Corporation or these By-Laws.
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Section 2. Number of Directors. The number of directors shall
be fixed from time to time by resolution of the Board of Directors adopted by a
majority of the Directors then in office; provided, however, that the number of
directors shall in no event be less than three (except for any period during
which shares of the corporation are held by fewer than three shareholders) nor
more than fifteen. Any vacancy created by an increase in directors may be filled
in accordance with Section 6 of this Article III. No reduction in the number of
directors shall have the effect of removing any director from office prior to
the expiration of his term unless such director is specifically removed pursuant
to Section 5 of this Article III at the time of such decrease. Directors need
not be shareholders.
Section 3. Election and Term of Directors. Directors shall be
elected by majority vote of a quorum cast by written ballot at the regular
meeting of shareholders, if any, or at a special meeting held for that purpose.
The term of office of each director shall be from the time of his election and
qualification and until his successor shall have been elected and shall have
qualified, or until his death, or until he shall have resigned, or have been
removed as hereinafter provided in these By-Laws, or as otherwise provided by
statute or the Charter of the Corporation.
Section 4. Resignation. A Director of the Corporation may
resign at any time by giving written notice of his resignation to the Board or
the Chairman of the Board or the President or the Secretary. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon its
receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5. Removal of Directors. Any Director of the
Corporation may be removed by the shareholders by a vote of a majority of the
votes entitled to be cast for the election of directors.
Section 6. Vacancies. The shareholders may elect a successor
to fill a vacancy on the Board of Directors which results from the removal of a
Director. A majority of the remaining Directors, whether or not sufficient to
constitute a quorum, may fill a vacancy on the Board of Directors which results
from any cause except an increase in the number of directors, and a majority of
the entire Board of Directors may fill a vacancy which results from an increase
in the number of Directors; provided, however, that no vacancies shall be filled
by action of the remaining Directors, if after the filling of said vacancy or
vacancies, fewer than two-thirds of the Directors then holding office shall have
been elected by the shareholders of the Corporation. In the event that at any
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time there is a vacancy in any office of a Director which vacancy may not be
filled by the remaining Directors, a special meeting of the shareholders shall
be held as promptly as possible and in any event within sixty days, for the
purpose of filling said vacancy or vacancies. A director elected by the Board of
Directors of the Corporation to fill a vacancy serves until the next annual
meeting of shareholders and until his successor is elected and qualifies. A
Director elected by the shareholders of the Corporation to fill a vacancy which
results from the removal of a director serves for the balance of the term of the
removed director.
Section 7. Regular Meetings. Regular meetings of the
Board may be held with notice at such times and places as may be
determined by the Board of Directors.
Section 8. Special Meetings. Special meetings of the Board may
be called by the Chairman of the Board, the President, or by a majority of the
directors either in writing or by vote at a meeting, and may be held at any
place in or out of the State of Maryland as the Board may from time to time
determine.
Section 9. Notice of Special Meetings. Notice of each special
meeting of the Board shall be given by the Secretary as hereinafter provided, in
which notice shall be stated the time and place of the meeting. Notice of each
such meeting shall be delivered to each director, either personally or by
telephone, telegraph, cable or wireless, at least twenty-four hours before the
time at which such meeting is to be held, or by first-class mail, postage
prepaid, or by commercial delivery services addressed to him at his residence or
usual place of business, at least three days before the day on which such
meeting is to be held.
Section 10. Waiver of Notice of Special Meetings. Notice of
any special meeting need not be given to any Director who shall, either before
or after the meeting, sign a written waiver of notice which is filed with the
records of the meeting or who shall attend such meeting. Except as otherwise
specifically required by these By-Laws, a notice or waiver of notice of any
meeting need not state the purposes of such meeting.
Section 11. Quorum and Voting. One-third, but not fewer than
three members, of the members of the entire Board shall be present in person at
any meeting of the Board in order to constitute a quorum for the transaction of
business at such meeting, and except as otherwise expressly required by statute,
the Charter of the Corporation, these By-Laws, the 1940 Act or other applicable
statute, the act of a majority of the directors present at any meeting at which
a quorum is present shall be the act of the Board; provided, however, that
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the approval of any contract with an investment adviser or principal
underwriter, as such terms are defined in the 1940 Act, which the Corporation
enters into or any renewal or amendment thereof, the approval of the fidelity
bond required by the 1940 Act, and the selection of the Corporation's
independent public accountants shall each require the affirmative vote of a
majority of the Directors who are not interested persons, as defined in the 1940
Act, of the Corporation. In the absence of a quorum at any meeting of the Board,
a majority of the Directors present thereat may adjourn the meeting from time to
time, but not for a period greater than thirty (30) days at any one time, to
another time and place until a quorum shall attend. Notice of the time and place
of any adjourned meeting shall be given to the Directors who were not present at
the time of the adjournment and, unless such time and place were announced at
the meeting at which the adjournment was taken, to the other Directors. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called.
Section 12. Chairman. The Board of Directors may at any time
appoint one of its members as Chairman of the Board, who shall serve at the
pleasure of the Board and who shall perform and execute such duties and powers
as may be conferred upon or assigned to him by the Board or these By-Laws, but
who shall not by reason of performing and executing these duties and powers be
deemed an officer or employee of the Corporation.
Section 13. Organization. At every meeting of the Board of
Directors, the Chairman of the Board, if one has been selected and is present,
shall preside. In the absence or inability of the Chairman of the Board to
preside at a meeting, the President, or, in his absence or inability to act,
another director chosen by a majority of the directors present, shall act as
chairman of the meeting and preside at it. The Secretary (or, in his absence or
inability to act, any person appointed by the Chairman) shall act as secretary
of the meeting and keep the minutes thereof.
Section 14. Written Consent of Directors in Lieu of a Meeting.
Any action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of the
proceedings of the Board or committee; provided, however, that for so long as
the Corporation is registered as an investment company under the 1940 Act, this
Section shall be inapplicable to the approval of any investment advisory
agreement, sub-advisory agreement or any plan (or agreement containing a plan)
pursuant to Rule 12b-1 under the 1940 Act.
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Section 15. Meeting by Conference Telephone. Members of the
Board of Directors may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time; provided, however, that for so
long as the Corporation is registered as an investment company under the 1940
Act, this Section shall be inapplicable to the approval of any investment
advisory agreement, sub-advisory agreement or any plan (or agreement containing
a plan) pursuant to Rule 12b-1 under the 1940 Act.
Section 16. Compensation. Any Director, whether or not he is a
salaried officer, employee or agent of the Corporation, may be compensated for
his services as director or as a member of a committee, or as Chairman of the
Board or chairman of a committee, and in addition may be reimbursed for
transportation and other expenses, all in such manner and amounts as the
directors may from time to time determine.
Section 17. Investment Policies. It shall be the duty of the
Board of Directors to ensure that the purchase, sale, retention and disposal of
portfolio securities and the other investment practices of the Corporation are
at all times consistent with the investment policies and restrictions with
respect to securities investments and otherwise of the Corporation, as recited
in the current Prospectus of the Corporation filed from time to time with the
Securities and Exchange Commission and as required by the 1940 Act. The Board,
however, may delegate the duty of management of the assets and the
administration of its day-to-day operations to an individual or corporate
management company or investment adviser pursuant to a written contract or
contracts which have obtained the requisite approvals, including the requisite
approvals of renewals thereof, of the Board of Directors or the shareholders of
the Corporation in accordance with the provisions of the 1940 Act.
ARTICLE IV
Committees
Section 1. Committees of the Board. The Board may, by
resolution adopted by a majority of the entire Board, designate an Executive
Committee, Compensation Committee, Audit Committee and Nomination Committee,
each of which shall consist of two or more of the directors of the Corporation,
which committee shall have and may exercise all the powers and authority of the
Board with respect to all matters other than as set forth in Section 3 of this
Article IV.
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Section 2. Other Committees of the Board. The Board of
Directors may from time to time, by resolution adopted by a majority of the
whole Board, designate one or more other committees of the Board, each such
committee to consist of two or more directors and to have such powers and duties
as the Board of Directors may, by resolution, prescribe.
Section 3. Limitation of Committee Powers. No committee of the
Board shall have power or authority to:
(a) recommend to shareholders any action requiring
authorization of shareholders pursuant to statute or the Charter;
(b) approve or terminate any contract with an
investment adviser or principal underwriter, as such terms are defined in the
1940 Act, or take any other action required to be taken by the Board of
Directors by the 1940 Act;
(c) amend or repeal these By-Laws or adopt new
By-Laws;
(d) declare dividends or other distributions or
issue capital stock of the Corporation; and
(e) approve any merger or share exchange which
does not require shareholder approval.
Section 4. General. One-third, but not less than two members,
of the members of any committee shall be present in person at any meeting of
such committee in order to constitute a quorum for the transaction of business
at such meeting, and the act of a majority present shall be the act of such
committee. The Board may designate a chairman of any committee and such chairman
or any two members of any committee may fix the time and place of its meetings
unless the Board shall otherwise provide. In the absence or disqualification of
any member or any committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. The Board
shall have the power at any time to change the membership of any committee, to
fill all vacancies, to designate alternate members, to replace any absent or
disqualified member, or to dissolve any such committee.
All committees shall keep written minutes of their proceedings
and shall report such minutes to the Board. All such proceedings shall be
subject to revision or alteration by the Board; provided, however, that third
parties shall not be prejudiced by such revision or alteration.
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ARTICLE V
Officers, Agents and Employees
Section 1. Number and Qualifications. The officers of the
Corporation shall be a President, a Secretary and a Treasurer, each of whom
shall be elected by the Board of Directors. The Board of Directors may elect or
appoint one or more Vice Presidents and may also appoint such other officers,
agents and employees as it may deem necessary or proper. Any two or more offices
may be held by the same person, except the offices of President and Vice
President, but no officer shall execute, acknowledge or verify any instrument in
more than one capacity. The Board may from time to time elect or appoint, or
delegate to the President the power to appoint, such other officers (including
one or more Assistant Vice Presidents, one or more Assistant Treasurers and one
or more Assistant Secretaries) and such agents, as may be necessary or desirable
for the business of the Corporation. Such other officers and agents shall have
such duties and shall hold their offices for such terms as may be prescribed by
the Board or by the appointing authority.
Section 2. Resignations. Any officer of the Corporation may
resign at any time by giving written notice of his resignation to the Board, the
Chairman of the Board, the President or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time when it shall
become effective shall not be specified therein, immediately upon its receipt;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 3. Removal of Officer. Agent or Employee. Any officer,
agent or employee of the Corporation may be removed by the Board of Directors
with or without cause at any time, and the Board may delegate such power of
removal as to agents and employees not elected or appointed by the Board of
Directors. Such removal shall be without prejudice to such person's contract
rights, if any, but the appointment of any person as an officer, agent or
employee of the Corporation shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office, whether arising
from death, resignation, removal or any other cause, may be filled for the
unexpired portion of the term of the office which shall be vacant, in the manner
prescribed in these By-Laws for the regular election or appointment to such
office.
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Section 5. Compensation. The compensation of the officers of
the Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any committee or to any officer in respect of other officers under
his control. No officer shall be precluded from receiving such compensation by
reason of the fact that he is also a director of the Corporation.
Section 6. Bonds or other Security. If required by the Board,
any officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in such amount and with
such surety or sureties as the Board may require.
Section 7. President. The President shall be the chief
executive officer of the Corporation. In the absence of the Chairman of the
Board (or if there be none), he shall preside at all meetings of the
shareholders and of the Board of Directors. He shall have, subject to the
control of the Board of Directors, general charge of the business and affairs of
the Corporation. He may employ and discharge employees and agents of the
Corporation, except such as shall be appointed by the Board, and he may delegate
these powers.
Section 8. The Vice Presidents. In the absence or disability
of the President, or when so directed by the President, any Vice President
designated by the Board of Directors may perform any or all of the duties of the
President, and, when so acting, shall have all the powers of, and be subject to
all the restrictions upon, the President; provided, however, that no Vice
President shall act as a member of or as chairman of any committee of which the
President is a member or chairman by designation of ex-officio, except when
designated by the Board. Each Vice President shall perform such other duties as
from time to time may be conferred upon or assigned to him by the Board or the
President.
Section 9. Treasurer. The Treasurer shall:
(a) have charge and custody of, and be
responsible for, all the funds and securities of the Corporation, except those
which the Corporation has placed in the custody of a bank or trust company or
member of a national securities exchange (as that term is defined in the
Securities Exchange Act of 1934) pursuant to a written agreement designating
such bank or trust company or member of a national securities exchange as
custodian of the property of the Corporation;
(b) keep full and accurate accounts of receipts
and disbursements in books belonging to the corporation;
(c) cause all moneys and other valuables to be
deposited to the credit of the Corporation;
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(d) receive, and give receipts for, moneys due
and payable to the Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and
supervise the investment of its funds as ordered or authorized by
the Board, taking proper vouchers therefor; and
(f) in general, perform all the duties incident
to the office of Treasurer and such other duties as from time to time may be
assigned to him by the Board or the President.
Section 10. Assistant Treasurers. In the absence or disability
of the Treasurer, or when so directed by the Treasurer, any Assistant Treasurer
may perform any or all of the duties of the Treasurer, and, when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
Treasurer. Each Assistant Treasurer shall perform all such other duties as from
time to time may be conferred upon or assigned to him by the Board of Directors,
the President or the Treasurer.
Section 11. Secretary. The Secretary shall:
(a) keep or cause to be kept in one or more books
provided for the purpose, the minutes of all meetings of the Board, the
committees of the Board and the shareholders;
(b) see that all notices are duly given in accordance
with the provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock certificates of the
Corporation (unless the seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest the seal to all ether
documents to be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements,
certificates and other documents and records required by law to be kept and
filed are properly kept and filed; and
(e) in general, perform all the duties incident to
the office of Secretary and such other duties as from time to time may be
assigned to him by the Board or the President.
Section 12. Assistant Secretaries. In the absence or
disability of the Secretary, or when so directed by the Secretary, any Assistant
Secretary may perform any or all of the duties of the Secretary, and, when so
acting, shall have all the powers of, and be subject to all restrictions upon,
the Secretary. Each Assistant Secretary shall perform such other duties as
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from time to time may be conferred upon or assigned to him by the Board of
Directors, the President or the Secretary.
Section 13. Delegation of Duties. In case of the absence of
any officer of the Corporation, or for any other reason that the Board may deem
sufficient, the Board may confer for the time being the powers or duties, or any
of them, of such officer upon any other officer or upon any Director.
ARTICLE VI
Capital Stock
Section 1. Stock Certificates. Each holder of stock of the
Corporation shall be entitled upon request to have a certificate or
certificates, in such form as shall be approved by the Board, representing the
number of shares of stock of the Corporation owned by him, provided, however,
that certificates for fractional shares will not be delivered in any case. The
certificates representing shares of stock shall be signed by the President, a
Vice President, or the Chairman of the Board, and countersigned by the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed
with the seal of the Corporation. Any or all of the signatures or the seal on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate shall be issued, it may be issued by the Corporation
with the same effect as if such officer, transfer agent or registrar were still
in office at the date of issue.
Section 2. Rights of Inspection. There shall be kept at the
principal executive office, which shall be available for inspection during usual
business hours in accordance with the General Laws of the State of Maryland, the
following corporate documents: (a) By-Laws, (b) minutes of proceedings of the
shareholders, (c) annual statements of affairs, and (d) voting trust agreements,
if any. One or more persons who together are and for at least six months have
been shareholders of record of at least five percent of the outstanding stock of
any class may inspect and copy during usual business hours the Corporation's
books of account and stock ledger in accordance with the General Laws of the
State of Maryland.
Section 3. Transfer of Shares. Transfers of shares of stock of
the Corporation shall be made on the stock records of the Corporation at the
direction of the person named on the Corporation's books or named in the
certificate or certificates for such shares (if issued) only by the registered
holder thereof, or by his attorney authorized by power of attorney duly
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executed and filed with the Secretary or with a transfer agent or transfer
clerk, and on surrender of the certificate or certificates, if issued, for such
shares properly endorsed or accompanied by a duly executed stock transfer power
and the payment of all taxes thereon. Except as otherwise provided by law, the
Corporation shall be entitled to recognize the exclusive right of a person in
whose name any share or shares stand on the record of shareholders as the owner
of such share or shares for all purposes, including, without limitation, the
rights to receive dividends or other distributions, and to vote as such owner,
and the Corporation shall not be bound to recognize any equitable or legal claim
to or interest in any such share or shares on the part of any other person.
Section 4. Transfer Agents and Registrars. The Corporation may
have one or more Transfer Agents and one or more Registrars of its stock, whose
respective duties the Board of Directors may, from time to time, define. No
certificate of stock shall be valid until countersigned by a Transfer Agent, if
the Corporation shall have a Transfer Agent or until registered by a Registrar,
if the Corporation shall have a Registrar. The duties of Transfer Agent and
Registrar may be combined.
Section 5. Record Date and Closing of Transfer Books. The
Board of Directors may set a record date for the purpose of making any proper
determination with respect to shareholders, including which shareholders are
entitled to notice of a meeting, vote at a meeting (or any adjournment thereof),
receive a dividend, or be allotted or exercise ether rights. The record date
may not be more than ninety (90) days before the date on which the action
requiring the determination will be taken; and, in the case of a meeting of
shareholders, the record date shall be at least ten (10) days before the date of
the meeting. The Board of Directors shall not close the books of the Corporation
against transfers of shares during the whole or any part of such period.
Section 6. Regulations. The Board may make such additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of stock of the Corporation.
Section 7. Lost, Stolen, Destroyed or Mutilated Certificates.
The holder of any certificate representing shares of stock of the Corporation
shall immediately notify the Corporation of any loss, theft, destruction or
mutilation of such certificate, and the Corporation may issue a new certificate
of stock in the place of any certificate theretofore issued by it which the
owner thereof shall allege to have been lost, stolen or destroyed or which shall
have been mutilated, and the Board may, in its discretion, require such
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owner or his legal representatives to give to the Corporation a bond in such
sum, limited or unlimited, and in such form and with such surety or sureties, as
the Board in its absolute discretion shall determine, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss or destruction of any such certificate, or issuance of a new
certificate. Anything herein to the contrary notwithstanding, the Board, in its
absolute discretion, may refuse to issue any such new certificate, except
pursuant to legal proceedings under the laws of the State of Maryland.
Section 8. Stock Leaders. The Corporation shall not be
required to keep original or duplicate stock ledgers at its principal office in
the City of Baltimore, Maryland, but stock ledgers shall be kept at the
office(s) of the Transfer Agent(s) of the Corporation's capital stock.
ARTICLE VII
Seal
The Board of Directors shall provide a suitable seal, bearing
the name of the Corporation, which shall be in the charge of the secretary. The
Board of Directors may authorize one or more duplicate seals and provide for the
custody thereof. If the corporation is required to place its corporate seal on a
document, it is sufficient to meet any requirement of any law, rule, or
regulation relating to a corporate seal to place the word "Seal" adjacent to the
signature of the person authorized to sign the document on behalf of the
Corporation.
ARTICLE VIII
Fiscal Year
Unless otherwise determined by the Board, the fiscal year of
the Corporation shall end on the last day of October in each year.
ARTICLE IX
Depositories and Custodians
Section 1. Depositories. The funds of the Corporation shall be
deposited with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
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Section 2. Custodians. All securities and other investments
shall be deposited in the safekeeping of such banks or other companies as the
Board of Directors of the Corporation may from time to time determine. Every
arrangement entered into with any bank or other company for the safekeeping of
the securities and investments of the Corporation shall contain provisions
complying with the 1940 Act, and the general rules and regulations thereunder.
ARTICLE X
Execution of Instruments
Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts,
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as the
Board of Directors by resolution shall from time to time designate.
Section 2. Sale or Transfer of Securities. Money market
instruments, bonds or other securities at any time owned by the Corporation may
be held on behalf of the Corporation or sold, transferred or otherwise disposed
of subject to any limits imposed by these By-Laws, and pursuant to authorization
by the Board and, when so authorized to be held on behalf of the Corporation or
sold, transferred or otherwise disposed of, may be transferred from the name of
the Corporation by the signature of the President or a Vice President or the
Treasurer or pursuant to any procedure approved by the Board of Directors,
subject to applicable law.
ARTICLE XI
Independent Public Accountants
The firm of independent public accountants which shall sign or
certify the financial statements of the Corporation which are filed with the
Securities and Exchange Commission shall be selected annually by the Board of
Directors and ratified by the Board of Directors or the shareholders in
accordance with the provisions of the 1940 Act.
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ARTICLE XII
Annual Statements
The books of account of the Corporation shall be examined by
an independent firm of public accountants at the close of each annual period of
the Corporation and at such other times as may be directed by the Board. A
report to the shareholders based upon each such examination shall be mailed to
each shareholder of the Corporation of record on such date with respect to each
report as may be determined by the Board, at his address as the same appears on
the books of the Corporation. Such annual statement shall also be placed on file
at the Corporation's principal office in the State of Maryland. Each such report
shall show the assets and liabilities of the Corporation as of the close of the
annual or semi-annual period covered by the report and the securities in which
the funds of the Corporation were then invested. Such report shall also show the
Corporation's income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual or semi-annual
period covered by the report and any other information required by the 1940 Act,
and shall set forth such other matters as the Board or such firm of independent
public accountants shall determine.
ARTICLE XIII
Indemnification of Directors and Officers
Section 1. Indemnification. The Corporation shall indemnify
its directors to the fullest extent that indemnification of directors is
permitted by the Maryland General Corporation Law. The Corporation shall
indemnify its officers to the same extent as its Directors and to such further
extent as is consistent with law. The Corporation shall indemnify its Directors
and officers who while serving as Directors or officers also serve at the
request of the Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan to the fullest extent consistent with
law. This Article XIII shall not protect any such person against any liability
to the Corporation or any shareholder thereof to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
Section 2. Advances. Any current or former director
or officer of the Corporation claiming indemnification within the scope of
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this Article XIII shall be entitled to advances from the Corporation for payment
of the reasonable expenses incurred by him in connection with proceedings to
which he is a party in the manner and to the full extent permissible under the
Maryland General Corporation Law, the Securities Act of 1933 (the "1933 Act")
and the 1940 Act, as such statutes are now or hereafter in force.
Section 3. Procedure. On the request of any current or former
director or officer requesting indemnification or an advance under this Article
XIII, the Board of Directors shall determine, or cause to be determined, in a
manner consistent with the Maryland General Corporation Law, the 1933 Act and
the 1940 Act, as such statutes are now or hereafter in force, whether the
standards required by this Article XIII have been met.
Section 4. Other Rights. The indemnification provided by this
Article XIII shall not be deemed exclusive of any other right, in respect of
indemnification or otherwise, to which those seeking such indemnification may be
entitled under any insurance or other agreement, vote of shareholders or
disinterested directors or otherwise, both as to action by a Director or officer
of the Corporation in his official capacity and as to action by such person in
another capacity while holding such office or position, and shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 5. Maryland Law. References to the Maryland
General Corporation Law in this Article XIII are to such law as
from time to time amended.
ARTICLE XIV
Amendments
These By-Laws or any of them may be amended, altered or repealed at any
annual meeting of the shareholders or at any special meeting of the shareholders
at which a quorum is present or represented, provided that notice of the
proposed amendment, alteration or repeal be contained in the notice of such
special meeting. These By-Laws may also be amended, altered or repealed by the
affirmative vote of a majority of the Board of Directors at any regular or
special meeting of the Board of Directors.
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<PAGE>
EX-99.B(5)(a)
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 16th day
of August, 1993 by and between FLAG INVESTORS INTERNATIONAL FUND, INC., a
Maryland corporation (the "Fund"), and FLAG INVESTORS MANAGEMENT CORP., a
Maryland corporation (the "Advisor").
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Advisor is registered as an investment advisor
under the Investment Advisors Act of 1940, as amended, and engages in the
business of acting as an investment advisor; and
WHEREAS, the Fund and the Advisor desire to enter into an
agreement under which the Advisor will provide investment advisory and
administrative services for the Fund on the terms and conditions hereinafter set
forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Investment Advisor. The Fund hereby appoints
the Advisor to act as the Fund's investment advisor. The Advisor shall manage
the Fund's affairs and shall supervise all aspects of the Fund's operations
(except as otherwise set forth herein), including the investment and
reinvestment of the cash, securities or other properties comprising the Fund's
assets, subject at all times to the policies and control of the Fund's Board of
Directors. The Advisor shall give the Fund the benefit of its best judgment,
efforts and facilities in rendering its service as Advisor.
2. Delivery of Documents. The Fund has furnished the Advisor
with copies properly certified or authenticated of each of the following:
(a) The Fund's Articles of Incorporation filed with the
Department of Assessments and Taxation of the State of Maryland on
March 16, 1993 and all amendments thereto (such Articles of
Incorporation, as presently in effect and as shall from time to time be
amended, are herein called the "Articles of Incorporation");
(b) The Fund's Bylaws and all amendments thereto (such
Bylaws, as presently in effect and as they shall from time to time be
amended, are herein called the "Bylaws");
(c) Resolutions of the Fund's Board of Directors and
shareholders authorizing the appointment of the Advisor and approving
this Agreement;
(d) The Fund's Notification of Registration filed pursuant
to Section 8(a) of the Investment Company Act of 1940 on Form N-8A
under the 1940 Act as filed with the Securities and Exchange Commission
(the "SEC") on September 3, 1986;
(e) The Fund's Registration Statement on Form N-1A under
the Securities Act of 1933, as amended (the "1933 Act") (File No.
33-8479) and under the 1940 Act as filed with the SEC on September 3,
1986 relating to the shares of the Fund, and all amendments thereto;
and
<PAGE>
(f) The Fund's most recent prospectus (such prospectus, as
presently in effect, and all amendments and supplements thereto are
herein called "Prospectus").
The Fund will furnish the Advisor from time to time with
copies, properly certified or authenticated, of all amendments or supplements to
the foregoing, if any, and all documents, notices and reports filed with the
SEC.
3. Duties of Investment Advisor. In carrying out its
obligations under Section 1 hereof, the Advisor shall:
(a) supervise and manage all aspects of the Fund's
operations, except for distribution services;
(b) formulate and implement continuing programs for the
purchases and sales of securities, consistent with the investment
objective and policies of the Fund;
(c) provide the Fund with such executive, administrative
and clerical services as are deemed advisable by the Fund's Board of
Directors;
(d) provide the Fund with, or obtain for it, adequate
office space and all necessary office equipment and services, including
telephone service, utilities, stationery, supplies and similar items
for the Fund's principal office;
(e) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally
or the Fund, and whether concerning the individual issuers whose
securities are included in the Fund's portfolio or the activities in
which they engage, or with respect to securities which the Advisor
considers desirable for inclusion in the Fund's portfolio;
(f) determine which issuers and securities shall be
represented in the Fund's portfolio and regularly report thereon to the
Fund's Board of Directors;
(g) take all actions necessary to carry into effect the
Fund's purchase and sale programs;
(h) supervise the operations of the Fund's Custodian,
transfer and dividend disbursing agent, and accounting services agent;
(i) provide the Fund with such administrative and clerical
services for the maintenance of certain shareholder records, as are
deemed advisable by the Fund's Board of Directors; and
(j) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax returns,
reports to the Fund's shareholders and reports to and filing with the
SEC and state Blue Sky authorities.
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<PAGE>
4. Broker-Dealer Relationships. In the event that the Advisor
is responsible for decisions to buy and sell securities for the Fund,
broker-dealer selection, and negotiation of its brokerage commission rates, the
Advisor's primary consideration in effecting securities transactions will be to
obtain the best price and execution on an overall basis. In performing this
function the Advisor shall comply with applicable policies established by the
Board of Directors and shall provide the Board of Directors with such reports as
the Board of Directors may require in order to monitor the Fund's portfolio
transaction activities. In certain instances the Advisor may make purchases of
underwritten issues at prices which include underwriting fees. In selecting a
broker-dealer to execute each particular transaction, the Advisor will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Fund on a continuing
basis. Accordingly, the price to the Fund in any transaction may be less
favorable than that available from another broker-dealer if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies as the Board of Directors may determine, the
Advisor shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker-dealer that provides brokerage and research
services to the Advisor an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the Advisor
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities with respect to the Fund. The Advisor is
further authorized to allocate the orders placed by it on behalf of the Fund to
such broker-dealers other than Alex. Brown & Sons Incorporated ("Alex. Brown")
who also provide research or statistical material or other services to the Fund
or the Advisor. Such allocation shall be in such amounts and proportions as the
Advisor shall determine and the Advisor will report on said allocation regularly
to the Board of Directors of the Fund, indicating the broker-dealers to whom
such allocations have been made and the basis therefor.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking the most
favorable price and execution available and such other policies as the Directors
may determine, the Advisor may consider services in connection with the sale of
shares of the Fund as a factor in the selection of broker-dealers to execute
portfolio transactions for the Fund.
Subject to the policies established by the Board of Directors
in compliance with applicable law, the Advisor may direct Alex. Brown to execute
portfolio transactions for the Fund on an agency basis. The commissions paid to
Alex. Brown must be, as required by Rule 17e-1 under the 1940 Act, "reasonable
and fair compared to the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable transactions involving
similar securities during a comparable period of time." If the purchase or sale
of securities consistent with the investment policies of the Fund or one or more
other account of the Advisor is considered at or about the same time,
transactions in such securities will be allocated among the accounts in a manner
deemed equitable by the Advisor. Alex. Brown and the Advisor may combine such
transactions, in accordance with applicable laws and regulations, in order to
obtain the best net price and most favorable execution.
The Fund will not deal with the Advisor or Alex. Brown in any
transaction in which the Advisor or Alex. Brown acts as a principal with respect
to any part of the Fund's order. If Alex. Brown is participating in an
underwriting or selling group, the Fund may not buy portfolio securities
-3-
<PAGE>
from the group except in accordance with policies established by the Board of
Directors in compliance with the rules of the SEC.
5. Control by Board of Directors. Any management or
supervisory activities undertaken by the Advisor pursuant to this Agreement, as
well as any other activities undertaken by the Advisor on behalf of the Fund
pursuant thereto, shall at all times be subject to any applicable directives of
the Board of Directors of the Fund.
6. Compliance with Applicable Requirements. In carrying out
its obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
(b) the provisions of the Registration Statement of the
Fund under the 1933 Act and the 1940 Act;
(c) the provisions of the Articles of Incorporation;
(d) the provisions of the Bylaws; and
(e) any other applicable provisions of Federal and State
law.
7. Expenses. The expenses connected with the Fund shall be
allocable between the Fund and the Advisor as follows:
(a) The Advisor shall furnish, at its expense and without
cost to the Fund, the services of one or more officers of the Fund, to the
extent that such officers may be required by the Fund for the proper conduct of
its affairs.
(b) The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund, including, without limitation: payments to the
Fund's distributor under the Fund's plan of distribution, the charges and
expenses of any registrar, any custodian or depository appointed by the Fund for
the safekeeping of its cash, portfolio securities and other property, and any
transfer, dividend or accounting agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio securities
transactions to which the Fund is a party; all taxes, including securities
issuance and transfer taxes, and fees payable by the Fund to Federal, State or
other governmental agencies; the costs and the expenses of the engraving or
printing of certificates representing shares of the Fund; all costs and expenses
in connection with registration and maintenance of registration of the Fund and
its shares with the SEC and various states and other jurisdictions (including
filing fees, legal fees and disbursements of counsel); the costs and expenses of
printing, including typesetting, and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing of proxy statements and reports to shareholders;
fees and travel expenses of Directors or Director members of any advisory board
or committee; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or in cash; charges
and expenses of any outside service used for pricing of Fund's shares; charges
and expenses of legal counsel, including counsel to the Directors of the Fund
who are not "interested persons" (as defined in the 1940 Act) of the Fund and of
independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
-4-
<PAGE>
Directors) of the Fund which inure to its benefit; extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto); and all other charges and costs
of the Fund's operation unless otherwise explicitly provided herein.
8. Delegation of Responsibilities.
(a) Subject to the approval of the Board of Directors,
including a majority of the Fund's Directors who are not "interested persons"
(as defined in the 1940 Act) of the Fund, and of the shareholders of the Fund,
the Advisor may delegate to a sub-advisor its duties enumerated in Section 3
hereof. The Advisor shall continue to supervise the performance of any such
sub-advisor and shall report regularly thereon to the Fund's Board of Directors,
but shall not be responsible for the sub-advisor's performance under the
sub-advisory agreement.
(b) The Advisor may, but shall not be under any duty to,
perform services on behalf of the Fund which are not required by this Agreement
upon the request of the Fund's Board of Directors. Such services will be
performed on behalf of the Fund, and the Advisor's charge in rendering such
services may be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by the Advisor of any Fund
expense that the Advisor is not required to pay or assume under this Agreement
shall not relieve the Advisor of any of its obligations to the Fund nor obligate
the Advisor to pay or assume any similar Fund expense on any subsequent
occasions.
9. Compensation. For the services to be rendered and the
expenses to be assumed by the Advisor, the Fund shall pay to the Advisor monthly
compensation at an annual rate of .75% of the Fund's average daily net assets.
Except as hereinafter set forth, compensation under this
Agreement shall be calculated and accrued daily and the amounts of the daily
accruals shall be paid monthly. If this Agreement becomes effective subsequent
to the first day of a month or shall terminate before the last day of a month,
compensation for the part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Subject to the provisions of Section 10 hereof, payment of the Advisor's
compensation for the preceding month shall be made as promptly as possible after
completion of the computations contemplated by Section 10 hereof.
10. Expense Limitation. In the event the operating expenses of
the Fund, including all investment advisory and administrative fees, for any
fiscal year ending on a date on which this Agreement is in effect, exceed the
expense limitations applicable to the Fund imposed by the securities laws or
regulations thereunder of any state in which the Fund's shares are qualified for
sale, as such limitations may be raised or lowered from time to time, the
Advisor shall reduce its investment advisory fee to the extent of its share of
such excess expenses and, if required pursuant to any such laws or regulations,
will reimburse the Fund for its share of annual operating expenses in excess of
any expense limitation that may be applicable; provided, however, there shall be
excluded from such expenses the amounts of any interest, taxes, brokerage
commissions and extraordinary expenses (including, but not limited to, legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Fund. Such reduction, if any, shall be computed
and accrued daily, shall be settled on a monthly basis and shall be based upon
the expense limitation applicable to the Fund.
11. Non-Exclusivity. The services of the Advisor to the Fund
are not to be deemed to be exclusive, and the Advisor shall be free to render
investment advisory or other services to others (including other investment
-5-
<PAGE>
companies) and to engage in other activities, so long as its services under this
Agreement are not impaired thereby. It is understood and agreed that officers or
directors of the Advisor may serve as officers or Directors of the Fund, and
that officers or Directors of the Fund may serve as officers or directors of the
Advisor to the extent permitted by law; and that the officers and directors of
the Advisor are not prohibited from engaging in any other business activity or
from rendering services to any other person, or from serving as partners,
officers, trustees or directors of any other firm, trust or corporation,
including other investment companies.
12. Term and Renewal. This Agreement shall become effective as
of the date hereof and shall continue in force and effect, subject to Section 13
hereof, for two years from the date hereof. Following the expiration of its
initial two-year term, this Agreement shall continue in force and effect from
year to year, provided that such continuance is specifically approved at least
annually:
(a) (i) by the Fund's Board of Directors or (ii) by the
vote of a majority of the outstanding voting securities (as defined in the 1940
Act) of the Fund; and
(b) by the affirmative vote of a majority of the Directors
who are not parties to this Agreement or "interested persons" (as defined in
the 1940 Act) of a party to this Agreement (other than as Directors of the Fund)
by votes cast in person at a meeting specifically called for such purpose.
13. Termination. This Agreement may be terminated, without the
payment of any penalty, by the Fund upon vote of the Fund's Board of Directors
or a vote of a majority of the Fund's outstanding voting securities (as defined
in the 1940 Act) or by the Advisor, upon sixty (60) days' written notice to the
other party. This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
14. Liability of Advisor. In the performance of its duties
hereunder, the Advisor shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to ensure
the accuracy of all services performed under this Agreement, but the Advisor
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of the Advisor or its
officers, directors or employees, or reckless disregard by the Advisor of its
duties under the Agreement.
15. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such notice.
Until further notice to the other party, it is agreed that the address of the
Fund and of the Advisor for this purpose shall be 135 East Baltimore Street,
Baltimore, Maryland 21202.
16. Questions of Interpretation. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. Otherwise the
provisions of this Agreement shall be interpreted in accordance with the laws of
Maryland.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective offices as of the day
and year first above written.
[SEAL] FLAG INVESTORS INTERNATIONAL FUND, INC.
Attest: /s/ Edward J. Veilleux By: /s/ Brian C. Nelson
------------------------ ------------------------
[SEAL] FLAG INVESTORS MANAGEMENT CORP.
Attest: /s/ Laurie DePrine By: /s/ Edward J. Veilleux
------------------------ ------------------------
-7-
<PAGE>
EX-99.B(5)(b)
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of the 16th day of August, 1993 by
and among FLAG INVESTORS INTERNATIONAL FUND, INC., a Maryland corporation (the
"Fund"), FLAG INVESTORS MANAGEMENT CORP., a Maryland corporation (the
"Advisor"), and THE GLENMEDE TRUST COMPANY, a limited purpose trust company
chartered under the laws of the Commonwealth of Pennsylvania (the
"Sub-Advisor").
WHEREAS, the Advisor is the investment advisor to the Fund,
which is an open-end, diversified management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund and the Advisor wish to retain the
Sub-Advisor for purposes of rendering advisory services to the Fund and the
Advisor in connection with the Advisor's responsibilities to the Fund on the
terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Sub-Advisor. The Fund hereby appoints the
Sub-Advisor to act as the Fund's Sub-Advisor under the supervision of the Fund's
Board of Directors and the Advisor, and the Sub-Advisor hereby accepts such
appointment, all subject to the terms and conditions contained herein.
2. Delivery of Documents. The Fund has furnished the
Sub-Advisor with copies properly certified or authenticated of each of the
following:
(a) The Fund's Articles of Incorporation, filed with the
Department of Assessments and Taxation of the State of Maryland on
March 16, 1993 and all amendments thereto (such Articles of
Incorporation, as presently in effect as they shall from time to time
be amended, are herein called the "Articles of Incorporation");
(b) The Fund's Bylaws and all amendments thereto (such Bylaws,
as presently in effect as they shall from time to time be amended, are
herein called the "Bylaws");
(c) Resolutions of the Fund's Board of Directors and
shareholders authorizing the appointment of the Sub-Advisor and
approving this Agreement;
(d) The Fund's Notification of Registration filed pursuant to
Section 8(a) of the Investment Company Act of 1940 on Form N-8A under
the 1940 Act as filed with the Securities and Exchange Commission (the
"SEC") on September 3, 1986;
(e) The Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act") (File No. 33-8479)
and under the 1940 Act as filed with the SEC on September 3, 1986
relating to the shares of the Fund, and all amendments thereto; and
(f) The Fund's most recent prospectus (such prospectus, as
presently in effect, and all amendments and supplements thereto are
herein called "Prospectus").
<PAGE>
The Fund will furnish the Sub-Advisor from time to time with
copies, properly certified or authenticated, of all amendments or supplements to
the foregoing, if any, and all documents, notices and reports filed with the
SEC.
3. Duties of Sub-Advisor. In carrying out its obligations
under Section 1 hereof, the Sub-Advisor shall:
(a) determine which issuers and securities shall be
represented in the Fund's portfolio and regularly report thereon to the
Fund's Board of Directors;
(b) take all actions necessary to carry into effect the Fund's
purchase and sale programs;
(c) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and regularly
report thereon to the Fund's Advisor and Board of Directors; and
(d) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally
or the Fund, and whether concerning the individual issuers whose
securities are included in the Fund's portfolio or the activities in
which they engage, or with respect to securities which the Advisor
considers desirable for inclusion in the Fund's portfolio.
4. Broker-Dealer Relationships. In circumstances when the
Sub-Advisor is responsible for decisions to buy and sell securities for the
Fund, broker-dealer selection, and negotiation of its brokerage commission
rates, the Sub-Advisor's primary consideration in effecting security
transactions will be to obtain the best price and execution on an overall basis.
In performing this function the Sub-Advisor shall comply with applicable
policies established by the Board of Directors and shall provide the Board of
Directors with such reports as the Board of Directors may require in order to
monitor the Fund's portfolio transaction activities. In certain instances the
Sub-Advisor may make purchases of underwritten issues at prices which include
underwriting fees. In selecting a broker-dealer to execute each particular
transaction, the Sub- Advisor will take the following into consideration: the
best net price available; the reliability, integrity and financial condition of
the broker-dealer; the size of and difficulty in executing the order; and the
value of the expected contribution of the broker-dealer to the investment
performance of the Fund on a continuing basis. Accordingly, the price to the
Fund in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Board of
Directors may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker-dealer that
provides brokerage and research services to the Sub-Advisor an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker-dealer would have charged for effecting that
transaction, if the Sub-Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or the Sub-Advisor's overall responsibilities with
respect to the Fund. The Sub-Advisor is further authorized to allocate the
orders placed by it on behalf of the Fund to such broker-dealers other than
Alex. Brown & Sons Incorporated ("Alex. Brown") who also provide research or
statistical material or other services to the Fund or the Sub-Advisor. Such
allocation shall be in such amounts and proportions as the Sub-Advisor shall
determine and the Sub-Advisor will report on said allocation regularly to the
Board of Directors of the Fund, indicating the broker-dealers to whom such
allocations have been made and the basis therefor.
2
<PAGE>
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking the most
favorable price and execution available and such other policies as the Directors
may determine, the Sub-Advisor may consider services in connection with the sale
of shares of the Fund as a factor in the selection of broker-dealers to execute
portfolio transactions for the Fund.
Subject to the policies established by the Board of Directors
in compliance with applicable law, the Advisor may direct Alex. Brown to execute
portfolio transactions for the Fund on an agency basis. The commissions paid to
Alex. Brown must be, as required by Rule 17e-1 under the 1940 Act, "reasonable
and fair compared to the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable transactions involving
similar securities during a comparable period of time." If the purchase or sale
of securities consistent with the investment policies of the Fund or one or more
other accounts of the Sub-Advisor is considered at or about the same time,
transactions in such securities will be allocated among the accounts in a manner
deemed equitable by the Sub-Advisor. Alex. Brown and the Sub- Advisor may
combine such transactions, in accordance with applicable laws and regulations,
in order to obtain the best net price and most favorable execution.
The Fund will not deal with the Sub-Advisor or Alex. Brown in
any transaction in which the Sub-Advisor or Alex. Brown acts as a principal with
respect to any part of the Fund's order. If Alex. Brown is participating in an
underwriting or selling group, the Fund may not buy portfolio securities from
the group except in accordance with policies established by the Board of
Directors in compliance with rules of the SEC.
5. Control by Fund's Board of Directors. Any recommendations
concerning the Fund's investment program for the Fund proposed by the
Sub-Advisor to the Fund and the Advisor pursuant to this Agreement, as well as
any other activities undertaken by the Sub-Advisor on behalf of the Fund
pursuant hereto, shall at all times be subject to any applicable directives of
the Board of Directors of the Fund.
6. Compliance with Applicable Requirements. In carrying out
its obligations under this Agreement, the Sub-Advisor shall at all times
conform to:
(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder, as amended;
(b) the provisions of the Registration Statement of the Fund
under the 1933 Act and the 1940 Act;
(c) the provisions of the Articles of Incorporation;
(d) the provisions of the Bylaws; and
(e) any other applicable provisions of Federal and State law.
7. Expenses. The expenses connected with the Fund shall be
allocable between theFund, the Sub-Advisor and the Advisor as follows:
(a) The Sub-Advisor shall furnish, at its expense and without
cost to the Fund, the services of the President and Executive Vice
President of the Fund, to the extent that such officers may be required
by the Fund for the proper conduct of its affairs.
(b) The Sub-Advisor shall maintain, at its expense and without
cost to the Fund, a trading function in order to carry out its
obligations under Section 3 hereof to place orders for the purchase and
sale of portfolio securities for the Fund.
3
<PAGE>
(c) The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund, including, without limitation: payments to
the Advisor under the Investment Advisory Agreement between the Fund
and the Advisor; payments to the Fund's distributor under the Fund's
plan of distribution; the charges and expenses of any registrar, any
custodian or depository appointed by the Fund for the safekeeping of
its cash, portfolio securities and other property, and any transfer,
dividend or accounting agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio
securities transactions to which the Fund is a party; all taxes,
including securities issuance and transfer taxes, and fees payable by
the Fund to Federal, state or other governmental agencies; the costs
and expenses of the engraving or printing of certificates representing
shares of the Fund; all costs and expenses in connection with the
registration and maintenance of registration of the Fund and its shares
with the SEC and various states and other jurisdictions (including
filing fees, legal fees and disbursements of counsel); the costs and
expenses of printing, including typesetting, and distributing
prospectuses and statements of additional information of the Fund and
supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Directors' meetings and of the preparing, printing
and mailing of proxy statements and reports to shareholders; fees and
travel expenses of Directors or Director members of any advisory board
or committee; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or in cash;
charges and expenses of any outside service used for pricing of the
Fund's shares; charges and expenses of legal counsel, including counsel
to the Directors of the Fund who are not "interested persons" (as
defined in the 1940 Act) of the Fund and of independent certified
public accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund
borrowings; postage; insurance premiums on property or personnel
(including officers and Directors) of the Fund which inure to its
benefit; extraordinary expenses (including, but not limited to, legal
claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs of the Fund's
operation unless otherwise explicitly provided herein.
8. Compensation. For the services to be rendered hereunder by
the Sub-Advisor, the Advisor shall pay to the Sub-Advisor monthly compensation
at the annual rate of .55% of the Fund's average daily net assets. Except as
hereinafter set forth, compensation under this Agreement shall be calculated and
accrued daily and the amounts of the daily accruals paid monthly. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculations of the fees as set forth above. Subject to the provisions of
Section 10 hereof, payment of the Sub-Advisor's compensation for the preceding
month shall be made as promptly as possible after completion of the computations
contemplated in Section 10 hereof.
9. Additional Responsibilities. The Sub-Advisor may, but shall
not be under any duty to, perform services on behalf of the Fund which are not
required by this Agreement upon the request of the Fund's Board of Directors.
Such services will be performed on behalf of the Fund and the Sub-Advisor's
charges in rendering such services will be billed monthly to the Fund, subject
to examination by the Fund's independent certified public accountants. Payment
or assumption by the Sub-Advisor of any Fund expense that the Sub-Advisor is not
required to pay or assume under this Agreement shall not relieve the Sub-
Advisor of any of its obligations to the Fund nor obligate the Sub-Advisor to
pay or assume any similar Fund expenses on any subsequent occasions.
10. Expense Limitation. If, for any fiscal year of the Fund,
the amount of the fee which the Advisor would otherwise receive from the Fund
pursuant to the Investment Advisory Agreement between the Fund and the Advisor
is reduced pursuant to the expense limitation provisions of the Investment
Advisory Agreement or pursuant to the voluntary waiver of the right to receive
such fee, the fee which the Sub-Advisor would otherwise receive from the Advisor
pursuant to Section 8 of this Agreement shall also be reduced proportionately,
and, if such amount should exceed such monthly fee, the Sub-Advisor agrees to
4
<PAGE>
repay the Advisor such amount of its fee previously received with respect to
such fiscal year as may be required to make up the deficiency no later than the
last day of the following month. In no event will the Sub-Advisor be required to
reimburse the Advisor for any amount in excess of the fee it receives pursuant
to this Agreement during the fiscal year of the Fund in which the reimbursement
is required.
11. Term. This Agreement shall become effective at 12:01 a.m.
on the date hereof and shall remain in force and effect, subject to Section 13
hereof, for two years from the date hereof.
12. Renewal. Following the expiration of its initial two-year
term, this Agreement shall continue in force and effect from year to year,
provided that such continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Directors or (ii) by the vote
of a majority of the outstanding voting securities of the Fund (as
defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the Directors who
are not parties to this Agreement or "interested persons" of a party to
this Agreement (other than as Directors of the Fund) by votes cast in
person at a meeting specifically called for such purpose.
13. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by vote of the Fund's Board of Directors or
by vote of a majority of the outstanding voting securities of the Fund (as
defined in Section 2(a)(42) of the 1940 Act), on sixty (60) days' written notice
to the Advisor and the Sub-Advisor. This Agreement may be terminated at any
time, without the payment of any penalty, by the Advisor or Sub-Advisor on sixty
(60) days' written notice to the Fund and the other party. Upon the termination
of the Investment Advisory Agreement, this Agreement shall automatically
terminate on sixty (60) days' written notice. The notice provided for herein may
be waived by any person to whom such notice is required. This Agreement shall
automatically terminate in the event of its assignment (as defined in Section
2(a)(4) of the 1940 Act).
14. Non-Exclusivity. The services of the Sub-Advisor to the
Advisor and the Fund are not to be deemed to be exclusive, and the Sub-Advisor
shall be free to render investment advisory or other services to others
(including other investment companies) and to engage in other activities, so
long as its services under this Agreement are not impaired thereby. It is
understood and agreed that officers or Directors of the Sub-Advisor may serve as
officers or directors of the Fund, and that officers or Directors of the Fund
may serve as officers or directors of the Sub-Advisor, to the extent permitted
by law; and that the officers and Directors of the Sub-Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, trustees or
directors of any other firm, trust or corporation, including other investment
companies.
15. Liability of Sub-Advisor. In the performance of its duties
hereunder, the Sub-Advisor shall be obligated to exercise care and diligence
and to act in good faith and to use its best efforts within reasonable limits to
ensure the accuracy of all services performed under this Agreement, but the Sub-
Advisor shall not be liable for any act or omission which does not constitute
willful misfeasance, bad faith or gross negligence on the part of the
Sub-Advisor or its officers, directors or employees, or reckless disregard by
the Sub-Advisor of its duties under this Agreement.
16. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such notice.
Until further notice to the other party, it is agreed that the address of the
Sub-Advisor for this purpose shall be 229 South 18th Street, Philadelphia,
Pennsylvania 19103 and the address of the Advisor and the Fund shall be 135 East
Baltimore Street, Baltimore, Maryland 21202.
5
<PAGE>
17. Questions and Interpretation. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to said Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. Otherwise the
provisions of this Agreement shall be interpreted in accordance with the laws of
Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers on the day
and year first above written.
Attest: FLAG INVESTORS INTERNATIONAL FUND, INC.
/s/ Laurie D. DePrine By: /s/ Brian C. Nelson
----------------------- ------------------------------
Attest: FLAG INVESTORS MANAGEMENT CORP.
/s/ Laurie D. DePrine By: /s/ Edward J. Veilleux
----------------------- ------------------------------
Attest: THE GLENMEDE TRUST COMPANY
/s/ Laurie D. DePrine By: /s/ Andrew B. Williams
----------------------- ------------------------------
6
<PAGE>
EX-99.B(6)(a)
DISTRIBUTION AGREEMENT
AGREEMENT, made as of the 16th day of August, 1993, by and
between FLAG INVESTORS INTERNATIONAL FUND, INC., a Maryland corporation (the
"Fund"), and ALEX. BROWN & SONS INCORPORATED, a Maryland corporation ("Alex.
Brown").
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund wishes to appoint Alex. Brown as the
exclusive distributor of the shares of Common Stock of the Fund (the "Shares")
and Alex. Brown wishes to become the distributor of the Shares; and
WHEREAS, the compensation to Alex. Brown hereunder and the
payments contemplated by paragraph 5 constitute the financing of activities
intended to result in the sale of Shares, and this Agreement is entered into
pursuant to a "written plan" pursuant to Rule 12b-1 under the Act (the "Plan")
allowing the Fund to make such payments.
NOW, THEREFORE, in consideration of the premises herein and of
other good and valuable consideration the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. Appointment. The Fund appoints Alex. Brown as Distributor
for the Shares for the period and on the terms set forth in this Agreement. The
Fund may from time to time issue separate series or classes of its shares of
common stock, or classify and reclassify shares of such series as classes, and
the appointment effected hereby shall constitute appointment for the
distribution of such additional series and classes unless the parties shall
otherwise agree in writing. Alex. Brown accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. Delivery of Documents. The Fund has furnished Alex. Brown
with copies properly certified or authenticated, of each of the following:
(a) The Fund's Articles of Incorporation, filed with
the Secretary of State of Maryland on March 16, 1993 and all amendments thereto
(the "Articles of Incorporation");
(b) The Fund's By-Laws and all amendments thereto
(such By-Laws, as presently in effect and as they shall from time to time be
amended, are herein called the "By-Laws");
(c) Resolutions of the Fund's Board of Directors and
shareholders authorizing the appointment of Alex. Brown as the Fund's
Distributor of the Shares and approving this Agreement;
<PAGE>
(d) The Fund's Notification of Registration filed
pursuant to Section 8(a) of the 1940 Act on Form N-8A under the 1940 Act, as
filed with the Securities and Exchange Commission (the "SEC") on September 3,
1986;
(e) The Fund's Registration Statement on Form N-1A
under the Securities Act of 1933, as amended (the "1933 Act") (File No. 33-8479)
and under the 1940 Act as filed with the SEC on September 3, 1986 relating to
the Shares of the Fund, and all amendments thereto; and
(f) The Fund's most recent prospectus (such
prospectus and all amendments and supplements thereto are herein called
"Prospectus").
The Fund will furnish Alex. Brown from time to time with
copies, properly certified or authenticated, of all amendments or supplements to
the foregoing, if any, and all documents, notices and reports filed with the
SEC.
3. Duties as Distributor. Alex. Brown shall give the Fund the
benefit of its best judgment, efforts and facilities in rendering its services
as Distributor of the Shares. Alex. Brown shall:
(a) respond to inquiries from the Fund's shareholders
concerning the status of their accounts with the Fund;
(b) take, on behalf of the Fund, all actions deemed
necessary to carry into effect the distribution of the Shares;
(c) provide the Board of Directors of the Fund with
quarterly reports as required by Rule 12b-1 under the 1940
Act.
4. Distribution of Shares. Alex. Brown shall be the exclusive
distributor of the Shares. It is mutually understood and agreed that Alex. Brown
does not undertake to sell all or any specific portion of the Shares. The Fund
shall not sell any of the Shares except through Alex. Brown and securities
dealers who have valid Sub-Distribution Agreements with Alex. Brown.
Notwithstanding the provisions of the foregoing sentence, the Fund may issue its
Shares at their net asset value to any shareholder of the Fund purchasing such
Shares with dividends or other cash distributions received from the Fund
pursuant to an offer made to all shareholders.
5. Control by Board of Directors. Any distribution activities
undertaken by Alex. Brown pursuant to this Agreement, as well as any other
activities undertaken by Alex. Brown on behalf of the Fund pursuant hereto,
shall at all times be subject to any directives of the Board of Directors of the
Fund. The Board of Directors may agree, on behalf of the Fund, to amendments to
this Agreement, provided that the Fund must obtain prior approval of the
shareholders of the Fund to any amendment which would result in a material
increase in the amount expended by the Fund.
6. Compliance with Applicable Requirements. In carrying out
its obligations under this Agreement, Alex. Brown shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any
rules and regulations adopted thereunder as amended;
(b) the provisions of the Registration Statement of
the Fund under the 1933 Act and the 1940 Act and any amendments and supplements
thereto;
-2-
<PAGE>
(c) the provisions of the Articles of Incorporation
of the Fund and any amendments thereto;
(d) the provisions of the By-Laws of the Fund;
(e) the rules and regulations of the National
Association of Securities Dealers, Inc. ("NASD") and all other self-regulatory
organizations applicable to the sale of investment company shares; and
(f) any other applicable provisions of Federal and
State law.
7. Expenses. The expenses connected with the Fund shall be
allocable between the Fund and Alex. Brown as follows:
(a) Alex. Brown shall furnish, at its expense and
without cost to the Fund, the services of personnel to the extent that such
services are required to carry out their obligations under this Agreement;
(b) Alex. Brown shall bear the expenses of any
promotional or sales literature used by Alex. Brown or furnished by Alex. Brown
to purchasers or dealers in connection with the public offering of the Shares,
the expenses of advertising in connection with such public offering and all
legal expenses in connection with the foregoing;
(c) the Fund assumes and shall pay or cause to be
paid all other expenses of the Fund, including, without limitation: the fees of
the Fund's investment advisor; the charges and expenses of any registrar,
custodian or depositary appointed by the Fund for the safekeeping of its cash,
portfolio securities and other property, and any stock transfer, dividend or
accounting agent or agents appointed by the Fund; brokers' commissions
chargeable to the Fund in connection with portfolio securities transactions to
which the Fund is a party; all taxes, including securities issuance and transfer
taxes, and corporate fees payable by the Fund to Federal, State or other
governmental agencies; the cost and expense of engraving or printing of stock
certificates representing Shares; all costs and expenses in connection with
maintenance of registration of the Fund and the Shares with the SEC and various
states and other jurisdictions (including filing fees and legal fees and
disbursements of counsel) except as provided in subparagraph (a) above, the
expenses of printing, including typesetting, and distributing prospectuses of
the Fund and supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Directors' meetings and of preparing, printing and mailing of
proxy statements and reports to shareholders; fees and travel expenses of
Directors who are not "interested persons" of the Fund (as defined in the 1940
Act) or members of any advisory board or committee; all expenses incident to the
payment of any dividend, distribution, withdrawal or redemption, whether in
Shares or in cash; charges and expenses of any outside service used for pricing
of the Shares; charges and expenses of legal counsel, including counsel to the
Directors who are not "interested persons" of the Fund (as defined in the 1940
Act), and of independent accountants, in connection with any matter relating to
the Fund; membership dues of industry associations; interest payable on Fund
borrowings; postage; insurance premiums on property or personnel (including
officers and Directors) of the Fund which inure to its benefit; extraordinary
expenses (including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification related thereto); and all other charges
and costs of the Fund's operation unless otherwise explicitly provided herein.
-3-
<PAGE>
8. Delegation of Responsibilities. Alex. Brown may, but shall
be under no duty to, perform services on behalf of the Fund which are not
required by this Agreement upon the request of the Fund's Board of Directors.
Such services will be performed on behalf of the Fund and Alex. Brown's charge
in rendering such services may be billed monthly to the Fund, subject to
examination by the Fund's independent accountants. Payment or assumption by
Alex. Brown of any Fund expense that Alex. Brown is not required to pay or
assume under this Agreement shall not relieve Alex. Brown of any of its
obligations to the Fund or obligate Alex. Brown to pay or assume any similar
Fund expense on any subsequent occasions.
9. Compensation. For the services to be rendered and the
expenses assumed by Alex. Brown, the Fund shall pay to Alex. Brown, compensation
at the annual rate of .25% of the average daily net assets of the Fund. Except
as hereinafter set forth, continuing compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall be paid
monthly. If this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last day of a month compensation for that
part of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculations of the fees as set forth above. Payment of
Alex. Brown's compensation for the preceding month shall be made as promptly as
possible.
10. Compensation for Servicing Shareholder Accounts. The Fund
acknowledges that Alex. Brown may compensate its investment representatives for
opening accounts, processing investor letters of transmittals and applications
and withdrawal and redemption orders, responding to inquiries from Fund
shareholders concerning the status of their accounts and the operations of the
Fund, and communicating with the Fund and its transfer agent on behalf of the
Fund shareholders.
11. Sub-Distribution Agreements. Alex. Brown may enter into
Sub-Distribution Agreements (the "Sub-Distribution Agreements") with any
securities dealer who is registered under the Securities Exchange Act of 1934
and a member in good standing of the NASD, who may wish to act as a
Participating Dealer in connection with the proposed offering. All
Sub-Distribution Agreements shall be in substantially the form of the agreement
attached hereto as Exhibit "A". For processing Fund shareholders' redemption
orders, responding to the inquiries from Fund shareholders concerning the status
of their accounts and the operations of the Fund and communicating with the
Fund, its transfer agent and Alex. Brown, Alex. Brown may pay each such
Participating Dealer an amount not to exceed that portion of the compensation
paid to Alex. Brown hereunder that is attributable to accounts of Fund
shareholders who are customers of such Participating Dealer.
12. Non-Exclusivity. The services of Alex. Brown to the Fund
are not to be deemed exclusive and Alex. Brown shall be free to render
distribution or other services to others (including other investment companies)
and to engage in other activities. It is understood and agreed that directors,
officers or employees of Alex. Brown may serve as directors or officers of the
Fund, and that directors or officers of the Fund may serve as directors,
officers and employees of Alex. Brown to the extent permitted by law; and that
directors, officers and employees of Alex. Brown are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, directors or officers of any other firm or
corporation, including other investment companies.
13. Term and Approval. This Agreement shall become effective
at the close of business on the date hereof and shall remain in force and effect
for an initial term of two years and from year to year thereafter, provided that
such continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Directors or (ii) by
the vote of a majority of the outstanding voting securities (as defined in the
1940 Act), and
-4-
<PAGE>
(b) by the affirmative vote of a majority of the
Directors who are not "interested persons" of the Fund (as defined in the 1940
Act) and do not have a financial interest in the operation of this Agreement, by
votes cast in person at a meeting specifically called for such purpose.
14. Termination. This Agreement may be terminated at any time,
on sixty (60) days' written notice to the other party without the payment of any
penalty, (i) by vote of the Fund's Board of Directors, (ii) by vote of a
majority of the directors who are not "interested persons" of the Fund (as
defined in the 1940 Act) and do not have a financial interest in the operation
of this Agreement, (iii) by vote of a majority of the Fund's outstanding voting
securities (as defined in the 1940 Act) or (iv) by Alex. Brown. The notice
provided for herein may be waived by each party. This Agreement shall
automatically terminate in the event of its assignment (as the term is defined
in the 1940 Act).
15. Liability. In the performance of its duties hereunder,
Alex. Brown shall be obligated to exercise care and diligence and to act in good
faith and to use its best efforts within reasonable limits in performing all
services provided for under this Agreement, but shall not be liable for any act
or omission which does not constitute willful misfeasance, bad faith or gross
negligence on the part of Alex. Brown or reckless disregard by Alex. Brown of
its duties under this Agreement.
16. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such notice.
Until further notice to the other parties, it is agreed that the address of both
Alex. Brown and the Fund for this purpose shall be 135 East Baltimore Street,
Baltimore, Maryland 21202.
17. Questions of Interpretation. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. Otherwise the
provisions of this Agreement shall be interpreted in accordance with the laws of
Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers as of the day
and year first above written.
[SEAL] FLAG INVESTORS INTERNATIONAL FUND, INC.
Attest: /s/ Brian C. Nelson By /s/ Edward J. Veilleux
------------------- ----------------------
[SEAL] ALEX. BROWN & SONS INCORPORATED
Attest: /s/ Brian C. Nelson By /s/ Richard T. Hale
------------------- -------------------
-5-
<PAGE>
EX-99.B(6)(b)
Exhibit A
FLAG INVESTORS FAMILY OF FUNDS
135 East Baltimore Street
Baltimore, Maryland 21202
SUB-DISTRIBUTION AGREEMENT
_____________________, 19__
Gentlemen:
Alex. Brown & Sons Incorporated ("Alex. Brown"), a Maryland
corporation, serves as distributor (the "Distributor") of the Flag Investors
Funds (collectively, the "Funds", individually a "Fund"). The Funds are open-end
investment companies registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Funds offer their shares ("Shares")
to the public in accordance with the terms and conditions contained in the
Prospectus of each Fund. The term "Prospectus" used herein refers to the
prospectus on file with the Securities and Exchange Commission which is part of
the registration statement of each Fund under the Securities Act of 1933 (the
"Securities Act"). In connection with the foregoing you may serve as a
participating dealer (and, therefore, accept orders for the purchase or
redemption of Shares, respond to shareholder inquiries and perform other related
functions) on the following terms and conditions:
1. Participating Dealer. You are hereby designated a
Participating Dealer and as such are authorized (i) to accept orders for the
purchase of Shares and to transmit to the Funds such orders and the payment made
therefore, (ii) to accept orders for the redemption of Shares and to transmit to
the Funds such orders and all additional material, including any certificates
for Shares, as may be required to complete the redemption and (iii) to assist
shareholders with the foregoing and other matters relating to their investments
in each Fund, in each case subject to the terms and conditions set forth in the
Prospectus of each Fund. You are to review each Share purchase or redemption
order submitted through you or with your assistance for completeness and
accuracy. You further agree to undertake from time to time certain shareholder
servicing activities for customers of yours who have purchased Shares and who
use your facilities to communicate with the Funds or to effect redemptions or
additional purchases of Shares.
2. Limitation of Authority. No person is authorized to make
any representations concerning the Funds or the Shares except those contained in
the Prospectus of each Fund and in such printed information as the Distributor
may subsequently prepare. No person is authorized to distribute any sales
material relating to any Fund without the prior written approval of the
Distributor.
3. Compensation. As compensation for such services, you will
look solely to the Distributor, and you acknowledge that the Funds shall have no
direct responsibility for any compensation. In addition to any sales charge
payable to you by your customer pursuant to a Prospectus, the Distributor will
pay you no less often than annually a shareholder processing and service fee
<PAGE>
(as we may determine from time to time in writing) computed as a percentage of
the average daily net assets maintained with each Fund during the preceding
period by shareholders who purchase their shares through you or with your
assistance, provided that said assets are at least $250,000 for each Fund for
which you are to be compensated, and provided that in all cases your name is
transmitted with each shareholder's purchase order.
4. Prospectus and Reports. You agree to comply with the
provisions contained in the Securities Act governing the distribution of
prospectuses to persons to whom you offer Shares. You further agree to deliver,
upon our request, copies of any amended Prospectus of the relevant Fund to
purchasers whose Shares you are holding as record owner and to deliver to such
persons copies of the annual and interim reports and proxy solicitation
materials of the Funds. We agree to furnish to you as many copies of each
Prospectus, annual and interim reports and proxy solicitation materials as you
may reasonably request.
5. Qualification to Act. You represent that you are a member
in good standing of the National Association of Securities Dealers, Inc. (the
"NASD"). Your expulsion or suspension from the NASD will automatically terminate
this Agreement on the effective date of such expulsion or suspension. You agree
that you will not offer Shares to persons in any jurisdiction in which you may
not lawfully make such offer due to the fact that you have not registered under,
or are not exempt from, the applicable registration or licensing requirements of
such jurisdiction. You agree that in performing the services under this
Agreement, you at all times will comply with the Rules of Fair Practice of the
NASD, including, without limitation, the provisions of Section 26 of such Rules.
You agree that you will not combine customer orders to reach breakpoints in
commissions for any purposes whatsoever unless authorized by the then current
Prospectus in respect of Shares of a particular class or by us in writing. You
also agree that you will place orders immediately upon their receipt and will
not withhold any order so as to profit therefrom. In determining the amount
payable to you hereunder, we reserve the right to exclude any sales which we
reasonably determine are not made in accordance with the terms of the Prospectus
and provisions of the Agreement.
6. Blue Sky. The Funds have registered an indefinite number of
Shares under the Securities Act. The Funds intend to register or qualify in
certain states where registration or qualification is required. We will inform
you as to the states or other jurisdictions in which we believe the Shares have
been qualified for sale under, or are exempt from the requirements of, the
respective securities laws of such states. You agree that you will offer Shares
to your customers only in those states where such Shares have been registered,
qualified, or an exemption is available. We assume no responsibility or
obligation as to your right to sell Shares in any jurisdiction. We will file
with the Department of State in New York a State Notice and a Further State
Notice with respect to the Shares, if necessary.
7. Authority of Fund. Each of the Funds shall have full
authority to take such action as it deems advisable in respect of all matters
pertaining to the offering of its Shares, including the right not to accept any
order for the purchase of Shares.
8. Record Keeping. You will (i) maintain all records required
by law to be kept by you relating to transactions in Shares and, upon request by
any Fund, promptly make such of these records available to the Fund as the Fund
may reasonably request in connection with its operations and (ii) promptly
notify the Fund if you experience any difficulty in maintaining the records
described in the foregoing clauses in an accurate and complete manner.
9. Liability. The Distributor shall be under no liability to
you except for lack of good faith and for obligations expressly assumed by them
hereunder. In carrying out your obligations, you agree to act in good faith and
-2-
<PAGE>
without negligence. Nothing contained in this Agreement is intended to operate
as a waiver by the Distributor or you of compliance with any provision of the
Investment Company Act, the Securities Act, the Securities Exchange Act of 1934,
as amended, or the rules and regulations promulgated by the Securities and
Exchange Commission thereunder.
10. Termination. This Agreement may be terminated by either
party, without penalty, upon ten days' notice to the other party and shall
automatically terminate in the event of its assignment (as defined in the
Investment Company Act). This Agreement may also be terminated at any time for
any particular Fund without penalty by the vote of a majority of the members of
the Board of Directors or Trustees of such Fund who are not "interested persons"
(as defined in the Investment Company Act) and who have no direct or indirect
financial interest in the operation of the Distribution Agreement between such
Fund and the Distributor or by the vote of a majority of the outstanding voting
securities of the Fund.
11. Communications. All communications to us should be sent to
the above address. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us one copy of this agreement.
ALEX. BROWN & SONS INCORPORATED
-----------------------------------
(Authorized Signature)
Confirmed and accepted:
Firm Name: ________________________
By: _______________________________
Address: __________________________
Date:______________________________
-3-
<PAGE>
EX-99.B(6)(c)
FLAG INVESTORS FAMILY OF FUNDS
135 East Baltimore Street
Baltimore, Maryland 21202
SHAREHOLDER SERVICING AGREEMENT
_________________, 19__
Gentlemen:
We wish to enter into this Shareholder Servicing Agreement
with you concerning the provision of support services to your clients and
customers ("Customers") who may from time to time beneficially own shares of our
common stock ("Shares").
The terms and conditions of this Servicing Agreement are as
follows:
Section 1. (a) You agree to provide the following services to
Customers who may from time to time beneficially own Shares: (i) aggregating and
processing purchase and redemption requests for Shares from Customers and
placing net purchase and redemption orders with our distributor; (ii) processing
dividend payments from us on behalf of Customers; (iii) providing information
periodically to Customers showing their positions in Shares; (iv) arranging for
bank wires; (v) responding to Customer inquiries relating to the services
performed by you; (vi) providing subaccounting with respect to Shares
beneficially owned by Customers; (vii) as required by law, forwarding
shareholder communications from us (such as proxies, shareholder reports, annual
and semi-annual financial statements and dividend, distribution and tax notices)
to Customers; and (viii) providing such other similar services as we may
reasonably request to the extent you are permitted to do so under applicable
statutes, rules or regulations. You will provide to Customers a schedule of any
fees that you may charge directly to them for such services. You hereby
represent that such fees are not unreasonable or excessive. Shares purchased by
you on behalf of Customers will be registered with our transfer agent in your
name or in the name of your nominee. The Customer will be the beneficial owner
of Shares purchased and held by you in accordance with the Customer's
instructions ("Customers' Shares") and the Customer may exercise all rights of a
shareholder of the Fund.
(b) You agree that you will (i) maintain all records
required by law relating to transactions in Shares and, upon our request,
promptly make such of these records available to us as we may reasonably request
in connection with our operations, and (ii) promptly notify us if you experience
any difficulty in maintaining the records described in the foregoing clauses in
an accurate and complete manner.
Section 2. You will provide such office space and equipment,
telephone facilities and personnel (which may be a part of the space, equipment
and facilities currently used in your business, or any personnel employed by
you) as may be reasonably necessary or beneficial in order to provide the
aforementioned services to Customers.
Section 3. Neither you nor any of your officers, employees,
agents or assignees are authorized to make any representations concerning us or
Shares except those contained in our then current prospectus for such Shares,
copies of which will be supplied by us to you, or in such supplemental
literature or advertising as may be authorized by us in writing.
<PAGE>
Section 4. For all purposes of this Agreement you will be
deemed to be an independent contractor, and will have no authority to act as
agent for us in any matter or in any respect. You may, upon prior written notice
to us, delegate your responsibilities hereunder to another person or persons;
provided, however, that notwithstanding any such delegation, you will remain
responsible for the performance of all of your responsibilities under this
Agreement. By your written acceptance of this Agreement, you agree to and do
release, indemnify and hold us harmless from and against any and all direct or
indirect liabilities or losses resulting from requests, directions, actions or
inactions of or by you or your officers, employees, agents or assignees
regarding your responsibilities hereunder or the purchase, redemption, transfer
or registration of Shares by or on behalf of Customers. You and your employees
will, upon request, be available during normal business hours to consult with us
or our designees concerning the performance of your responsibilities under this
Agreement.
Section 5. In consideration of the services and facilities
provided by you hereunder, we will cause our distributor pay to you, and you
will accept as full payment therefor, a fee (as we may determine from time to
time in writing) computed as a percentage of the average daily net assets of the
Customers' Shares held of record by you from time to time, which fee will be
computed daily and payable no less often than annually. For purposes of
determining the fees payable under this Section 5, the average daily net assets
of the Customers' Shares will be computed in the manner specified in our
registration statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of Shares for purposes of
purchases and redemptions. The fee rate stated above may be prospectively
increased or decreased by us or by our distributor, at any time upon notice to
you. Further, we may, in our discretion and without notice, suspend or withdraw
the sale of Shares, including the sale of such shares to you for the account of
any Customer or Customers.
Section 6. You will furnish us or our designees with such
information relating to your performance under this Agreement as we or they may
reasonably request (including, without limitation, periodic certifications
confirming the provision to Customers of the services described herein), and
shall otherwise cooperate with us and our designees (including, without
limitation, any auditors designated by us), in connection with the preparation
of reports to our Board of Directors concerning this Agreement and the monies
paid or payable by us pursuant hereto, as well as any other reports or filings
that may be required by law.
Section 7. We may enter into other similar services agreements
with any other person or persons without your consent.
Section 8. This Agreement will become effective on the date a
fully executed copy of this Agreement is received by us or our distributor, and
is terminable, without penalty, at any time by us or by you upon ten days'
notice to the other party hereto and shall automatically terminate in the event
of its assignment, as that term is defined in the Investment Company Act of
1940, as amended.
Section 9. This Agreement will be construed in accordance with
the laws of the State of Maryland.
Section 10. All notices and other communications to either you
or us will be duly given if mailed, telegraphed, telexed or transmitted by
similar telecommunications device, if to us at the address below, and if to you,
at the address specified by you after your signature below:
Flag Investors Family of Funds
135 East Baltimore Street
Baltimore, Maryland 21202
Attention: Edward J. Veilleux
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<PAGE>
If you agree to be legally bound by the provisions of this
Agreement, please sign a copy of this letter where indicated below and promptly
return it to us, at the address set forth in Section 10 above.
Very truly yours,
ALEX. BROWN & SONS INCORPORATED
Date: _______________ By: ________________________
Authorized Officer
Confirmed and Accepted:
Firm Name: _______________________________
By: ________________________________
Address: ________________________________
________________________________
Date: ________________________________
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<PAGE>
EX-99.B(6)(d)
FORM OF
ADMINISTRATION AGREEMENT
[Date]
The Boston Company Advisors, Inc.
One Exchange Place
Boston, massachusetts 01209
Dear Sirs:
[Name of Fund] a [business trust/Maryland Corporation] organized under
the laws of the [Commonwealth of Massachusetts/State of Maryland], confirms its
agreement with The Boston Company Advisors, Inc. ("Boston Advisors") as follows:
1. Investment Description: Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
[Master Trust Agreement/Articles of Incorporation], as amended from time to
time, in its Prospectus and Statement of Additional Information as from time to
time in effect, and in such manner and to the extent as may from time to time be
approved by the Board of Directors/Trustees of the Fund. Copies of the Fund's
Prospectus, Statement of Additional Information and the [Master Trust
Agreement/Articles of Incorporation] have been or will be submitted to Boston
Advisors. The Fund employs [Investment Adviser] (the "Adviser") as its
investment adviser and desires to employ and hereby appoints Boston Advisors as
its administrator. Boston Advisors accepts this appointment and agrees to
furnish services for the compensation set forth below.
2. Services as Administrator
Subject to the supervision and direction of the Board of
Directors/Trustees of the Fund, Boston Advisors will (a) assist in supervising
all aspects of the Fund's operations except those performed by the Fund's
Adviser under its investment advisory agreement; (b) supply the Fund with office
facilities (which may be Boston Advisors' own offices) statistical and research
data, data processing services, clerical, accounting and bookkeeping services,
including but not limited to, the calculation of net asset value of shares of
the Fund, internal auditing and legal services, internal executive and
administrative services, and stationary and office supplies; and (c) prepare
reports to the shareholders of the Fund, tax returns and reports to and filings
with the Securities and Exchange Commission and state Blue Sky authorities.
<PAGE>
3. Compensation
In consideration of services rendered pursuant to this Agreement, the
Fund will pay Boston Advisors on the first business day of each month a fee for
the previous month at an annual rate of [percent %] of the Fund's average daily
net assets. The fee for the period from the date the Fund's initial registration
statement is declared effective by the Securities and Exchange Commission to the
end of the month during which the initial registration statement is declared
effective shall be prorated according to the proportion that such period bears
to the full monthly period. Upon any termination of this Agreement before the
end of any month, the fee for such part of the month shall be prorate according
to the proportion which such period bears to the full monthly period and shall
be payable upon the date of termination of this Agreement. For the purpose of
determining fees payable to Boston Advisors, the value of the Fund's net assets
shall be computed at the times and in the manner specified in the Prospectus and
Statement of Additional Information as from time to time in effect.
4. Expenses
Boston Advisors will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will bear certain
other expenses to be incurred in its operation, including: taxes, interest,
brokerage fees and commissions, if any; fees of Directors/Trustees of the Fund
who are not officers, directors, or employees of _____________; the Adviser or
Boston Advisors; Securities and Exchange Commission fees and state Blue Sky
qualification fees; charges of custodians and transfer and dividend disbursing
agents; certain insurance premiums; outside auditing and legal expenses, costs
of maintenance of corporate existence; costs attributable to investor services,
including without limitation, telephone and personnel expenses; costs of
preparing and printing prospectuses and statement of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings, and meetings of the officers or Board of
Directors/Trustees of the Fund; and any extraordinary expenses.
5. Standard of Care
Boston Advisors shall exercise its best judgment in rendering the
services listed in paragraph 2 above. Boston Advisors shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates provided that
nothing in this Agreement shall be deemed to protect or purport to protect
Boston Advisors against liability to the Fund or to its shareholders to which
Boston Advisors would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of Boston Advisors' reckless disregard of its obligations and duties
under this Agreement.
<PAGE>
6. Term of Agreement
This Agreement shall continue automatically (unless terminated as
provided herein) for successive annual periods provided that such continuance is
specifically approved at least annually by the Board of Directors/Trustees of
the Fund including a majority of the Board of Directors/Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting such approval. This Agreement is terminable, without penalty,
on 60 days' written notice, by the Board of Directors/Trustees of the Fund or by
vote of holders of a majority of the Fund's shares, or upon 90 days' written
notice, by Boston Advisors.
7. Service to Other Companies or Accounts
The Fund understands that Boston Advisors now acts, will continue to
act and may act in the future as administrator to one or more other investment
companies, and the Fund has no objection to Boston Advisors' so acting. In
addition, the fund understands that the persons employed by Boston Advisors to
assist in the performance of Boston Advisors' duties hereunder will not devote
their full time to such service and nothing contained herein shall be deemed to
limit or restrict the right of Boston Advisors or any affiliate of Boston
Advisors to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
[Name of Fund]
By:____________________________
[Title]
Accepted:
THE BOSTON COMPANY ADVISORS, INC.
By:__________________________________
Authorized Officer
President
<PAGE>
EX-99.B(6)(e)
FLAG INVESTORS INTERNATIONAL FUND, INC.
FLAG INVESTORS INSTITUTIONAL SHARES
FORM OF
DISTRIBUTION AGREEMENT
AGREEMENT, made as of the ____ day of ___________, 19___, by and
between FLAG INVESTORS INTERNATIONAL FUND INC., a Maryland corporation (the
"Fund"), and ALEX. BROWN & SONS INCORPORATED, a Maryland corporation ("Alex.
Brown").
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund's Articles of Incorporation, filed with the Secretary
of State of the State of Maryland on March 16, 1993 (the "Articles"), authorize
the Board of Directors of the Fund to increase or decrease the number of shares
of capital stock of the Fund and the number of shares of any class of capital
stock of the Fund; and
WHEREAS, the Fund's Board of Directors has authorized the designation
of two classes of shares of the Fund known as the Flag Investors International
Fund Class A Shares and the Flag Investors International Class B Shares; and
WHEREAS, the Fund's Board of Directors has further authorized the
creation of an institutional class of shares of the Fund known as the Flag
Investors International Fund Institutional Shares (the "Shares"); and
WHEREAS, the Fund wishes to appoint Alex. Brown as the exclusive
distributor of the Shares and Alex. Brown wishes to become the distributor of
the Shares.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and of other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment. The Fund appoints Alex. Brown as Distributor for the
Shares for the period and on the terms set forth in this Agreement. Alex. Brown
accepts such appointment and agrees to render the services set forth herein.
2. Delivery of Documents. The Fund has furnished Alex. Brown with
copies properly certified or authenticated of each of the following:
(a) The Fund's Articles and all amendments thereto;
(b) The Fund's By-Laws and all amendments thereto (such
By-Laws, as presently in effect and as they shall from time to time be amended,
are herein called the "By-Laws");
<PAGE>
(c) Resolutions of the Fund's Board of Directors and
shareholders authorizing the appointment of Alex. Brown as the Fund's
Distributor of the Shares and approving this Agreement;
(d) The Fund's Notification of Registration filed pursuant to
Section 8(a) of the 1940 Act on Form N-8A under the 1940 Act, as filed with the
Securities and Exchange Commission (the "SEC") on September 3, 1986;
(e) The Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act") (File No. 33-8479) and under
the 1940 Act as filed with the SEC on September 3, 1986 relating to the Shares
of the Fund, and all amendments thereto; and
(f) The Fund's most recent prospectus for the Shares (such
prospectus and all amendments and supplements thereto are herein called
"Prospectus").
The Fund will furnish Alex. Brown from time to time with copies,
properly certified or authenticated, of all amendments or supplements to the
foregoing, if any, and all documents, notices and reports filed with the SEC.
3. Duties as Distributor. Alex. Brown shall give the Fund the benefit
of its best judgment, efforts and facilities in rendering its services as
Distributor of the Shares. Alex. Brown shall:
(a) respond to inquiries from the Fund's shareholders
concerning the status of their accounts with the Fund; and
(b) take, on behalf of the Fund, all actions deemed necessary
to carry into effect the distribution of the Shares.
4. Distribution of Shares. Alex. Brown shall be the exclusive
distributor of the Shares. It is mutually understood and agreed that Alex. Brown
does not undertake to sell all or any specific portion of the Shares. The Fund
shall not sell any of the Shares except through Alex. Brown. Notwithstanding the
provisions of the foregoing sentence,
(a) the Fund may issue its Shares at their net asset value to
any shareholder of the Fund purchasing such Shares with dividends or other cash
distributions received from the Fund pursuant to an offer made to all
shareholders;
(b) Alex. Brown may enter into shareholder processing and
servicing agreements in accordance with Section 8 hereof;
(c) Alex. Brown may, and when requested by the Fund shall,
suspend its efforts to effectuate sales of the Shares at any time when in the
opinion of Alex. Brown or of the Fund no sales should be made because of market
or other economic considerations or abnormal circumstances of any kind; and
(d) the Fund may withdraw the offering of the Shares (i) at
any time with the consent of Alex. Brown, or (ii) without such consent when so
required by the provisions of any statute or of any order, rule or regulation of
any governmental body having jurisdiction.
5. Control by Board of Directors. Any distribution activities
undertaken by Alex. Brown pursuant to this Agreement, as well as any other
activities undertaken by Alex. Brown on behalf of the Fund pursuant hereto,
shall at all times be subject to any directives of the Board of Directors of the
Fund. The Board of Directors may agree, on behalf of the Fund, to amendments to
this Agreement, provided that the Fund must obtain prior approval of the
shareholders of the Fund to any amendment which would result in a material
increase in the amount expended by the Fund.
-2-
<PAGE>
6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, Alex. Brown shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder as amended;
(b) the provisions of the Registration Statement of the Fund
under the 1933 Act and the 1940 Act and any amendments and supplements thereto;
(c) the provisions of the Articles of Incorporation of the
Fund and any amendments thereto;
(d) the provisions of the By-Laws of the Fund;
(e) the rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD") and all other self-regulatory organizations
applicable to the sale of investment company shares; and
(f) any other applicable provisions of Federal and State law.
7. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and Alex. Brown as follows:
(a) Alex. Brown shall furnish, at its expense and without cost
to the Fund, the services of personnel to the extent that such services are
required to carry out their obligations under this Agreement;
(b) Alex. Brown shall bear the expenses of any promotional or
sales literature used by Alex. Brown or furnished by Alex. Brown to purchasers
or dealers in connection with the public offering of the Shares, the expenses of
advertising in connection with such public offering and all legal expenses in
connection with the foregoing;
(c) the Fund assumes and shall pay or cause to be paid all
other expenses of the Fund, including, without limitation: the fees of the
Fund's investment advisor; the charges and expenses of any registrar, custodian
or depositary appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property, and any stock transfer, dividend or accounting
agent or agents appointed by the Fund; brokers' commissions chargeable to the
Fund in connection with portfolio securities transactions to which the Fund is a
party; all taxes, including securities issuance and transfer taxes, and
corporate fees payable by the Fund to Federal, State or other governmental
agencies; all costs and expenses in connection with maintenance of registration
of the Fund and the Shares with the SEC and various states and other
jurisdictions (including filing fees and legal fees and disbursements of
counsel) except as provided in subparagraph (a) above; the expenses of printing,
including typesetting, and distributing prospectuses of the Fund and supplements
thereto to the Fund's shareholders; all expenses of shareholders' and Directors'
meetings and of preparing, printing and mailing of proxy statements and reports
to shareholders; fees and travel expenses of Directors who are not "interested
persons" of the Fund (as defined in the 1940 Act) or members of any advisory
board or committee; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in Shares or in cash; charges
and expenses of any outside service used for pricing of the Shares; charges and
expenses of legal counsel, including counsel to the Directors who are not
"interested persons" of the Fund (as defined in the 1940 Act), and of
independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
-3-
<PAGE>
postage; insurance premiums on property or personnel (including officers and
Directors) of the Fund which inure to its benefit; extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto); and all other charges and costs
of the Fund's operation unless otherwise explicitly provided herein.
8. Delegation of Responsibilities. Alex. Brown may, but shall be under
no duty to, perform services on behalf of the Fund which are not required by
this Agreement upon the request of the Fund's Board of Directors. Such services
will be performed on behalf of the Fund and Alex. Brown's charge in rendering
such services may be billed monthly to the Fund, subject to examination by the
Fund's independent accountants. Payment or assumption by Alex. Brown of any Fund
expense that Alex. Brown is not required to pay or assume under this Agreement
shall not relieve Alex. Brown of any of its obligations to the Fund or obligate
Alex. Brown to pay or assume any similar Fund expense on any subsequent
occasions.
9. Compensation. Alex. Brown shall receive no compensation for the
services to be rendered and the expenses assumed by it pursuant to this
Agreement.
10. Compensation for Servicing Shareholder Accounts. The Fund
acknowledges that Alex. Brown may, from its own resources, compensate its
investment representatives for opening accounts, processing investor letters of
transmittals and applications and withdrawal and redemption orders, responding
to inquiries from Fund shareholders concerning the status of their accounts and
the operations of the Fund, and communicating with the Fund and its transfer
agent on behalf of the Fund shareholders.
11. Sub-Distribution Agreements. Alex. Brown may enter into
Sub-Distribution Agreements (the "Sub-Distribution Agreements") with any
securities dealer who is registered under the Securities Exchange Act of 1934
and a member in good standing of the NASD, who may wish to act as a
Participating Dealer in connection with the proposed offering. All
Sub-Distribution Agreements shall be in substantially the form of the agreement
attached hereto as Exhibit "A". For processing Fund shareholders' redemption
orders, responding to the inquiries from Fund shareholders concerning the status
of their accounts and the operations of the Fund and communicating with the
Fund, its transfer agent and Alex. Brown, Alex. Brown may, from its own
resources, compensate each such Participating Dealer for such services.
12. Non-Exclusivity. The services of Alex. Brown to the Fund are not to
be deemed exclusive and Alex. Brown shall be free to render distribution or
other services to others (including other investment companies) and to engage in
other activities. It is understood and agreed that Directors, officers or
employees of Alex. Brown may serve as Directors or officers of the Fund, and
that Directors or officers of the Fund may serve as Directors, officers and
employees of Alex. Brown to the extent permitted by law; and that Directors,
officers and employees of Alex. Brown are not prohibited from engaging in any
other business activity or from rendering services to any other person, or from
serving as partners, Directors or officers of any other firm or corporation,
including other investment companies.
13. Term and Approval. This Agreement shall become effective at the
close of business on the date hereof and shall remain in force and effect for an
initial term of two years and from year to year thereafter, provided that such
continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Directors or (ii) by the vote
of a majority of the outstanding voting securities of the Shares (as defined in
the 1940 Act), and
(b) by the affirmative vote of a majority of the Directors who
are not "interested persons" of the Fund (as defined in the 1940 Act) and do not
have a financial interest in the operation of this Agreement, by votes cast in
person at a meeting specifically called for such purpose.
-4-
<PAGE>
14. Termination. This Agreement may be terminated at any time, on sixty
(60) days' written notice to the other party without the payment of any penalty,
(i) by vote of the Fund's Board of Directors, (ii) by vote of a majority of the
Directors who are not "interested persons" of the Fund (as defined in the 1940
Act) and do not have a financial interest in the operation of this Agreement,
(iii) by vote of a majority of the Fund's outstanding voting securities (as
defined in the 1940 Act) or (iv) by Alex. Brown. The notice provided for herein
may be waived by each party. This Agreement shall automatically terminate in the
event of its assignment (as the term is defined in the 1940 Act).
15. Liability. In the performance of its duties hereunder, Alex. Brown
shall be obligated to exercise care and diligence and to act in good faith and
to use its best efforts within reasonable limits in performing all services
provided for under this Agreement, but shall not be liable for any act or
omission which does not constitute willful misfeasance, bad faith or gross
negligence on the part of Alex. Brown or reckless disregard by Alex. Brown of
its duties under this Agreement.
16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other parties, it is agreed that the address of both Alex.
Brown and the Fund for this purpose shall be 135 East Baltimore Street,
Baltimore, Maryland 21202.
17. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to such
term or provision of the 1940 Act and to interpretations thereof, if any, by the
United States courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is revised by rule, regulation or order of the
SEC, such provision shall be deemed to incorporate the effect of such rule,
regulation or order. Otherwise the provisions of this Agreement shall be
interpreted in accordance with the laws of Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the day and year first
above written.
[SEAL] FLAG INVESTORS INTERNATIONAL FUND, INC.
Attest:__________________ By _____________________________________
Title:
[SEAL] ALEX. BROWN & SONS INCORPORATED
Attest:__________________ By _____________________________________
Title:
-5-
<PAGE>
EX-99.B(8)(a)
CUSTODY AGREEMENT
AGREEMENT dated as of August 16, 1993 between BOSTON SAFE
DEPOSIT AND TRUST COMPANY ("Bank") and FLAG INVESTORS INTERNATIONAL FUND, INC.
("Company").
WITNESSETH:
WHEREAS, Company is a registered open-end investment company;
and
WHEREAS, the Company wishes to retain the Bank to provide
certain custodian services to the Company and the Bank is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment of Custodian; Custody Account. The Company
hereby constitutes and appoints the Bank as custodian of all the securities and
monies at the time owned by or in the possession of the Company during the
period of this Agreement. The Bank hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth. The Bank
agrees to establish and maintain (a) a separate custody account in the name of
the Company ("Custody Account") for any and all stocks, shares, bonds,
debentures, notes, mortgages or other obligations for the payment of money and
any certificates, receipts, warrants or other instruments representing rights to
receive, purchase or subscribe for the same or evidencing or representing any
-1-
<PAGE>
other rights or interests therein and other similar property (hereinafter called
"Securities") from time to time received by the Bank or any sub-custodian (as
defined in the second paragraph of Section 3 hereof) from or at the direction of
the Company; and (b) a separate deposit account or accounts in the name of each
Fund ("Deposit Account") for any and all cash and cash equivalents in any
currency received by the Bank or any sub-custodian from or at the direction of
the Company, which cash shall not be subject to withdrawal by draft or check.
The term "Property" as used herein shall mean all Securities, cash, cash
equivalents and other assets of the Company.
2. Maintenance of Property. Securities in a Custody Account
shall be held in such country or other jurisdiction as shall be specified from
time to time in Instructions (as defined in Section 9 hereof), provided that
such country or other jurisdiction shall be one in which the principal trading
market for such Securities is located or the country or other jurisdiction in
which such Securities are to be presented for payment or are acquired for the
Custody Account, and cash in a Deposit Account shall be credited to an account
in such amounts and in the country or other jurisdiction as shall be specified
from time to time in Instructions, provided that such country or other
jurisdiction shall be one in which such cash in the legal currency for the
payment of public or private debts.
3. Eligible Foreign Custodians and Securities Depositories.
The Company authorizes the Bank to hold the Securities in the Custody Account(s)
-2-
<PAGE>
and the cash in the Deposit Account(s) in custody and deposit accounts,
respectively, which have been established by the Bank with one of its branches,
a branch of a qualified U.S. bank, an eligible foreign custodian or an eligible
foreign securities depository. If a Bank's branch, a branch of a qualified U.S.
bank or an eligible foreign custodian is selected to act as the Bank's
sub-custodian to hold any property, such entity is authorized to hold such in
its account with any eligible foreign securities depository in which it
participates so long as such foreign securities depository has been approved by
the Company. For purposes of this Agreement (a) "qualified U.S. bank" shall mean
a qualified U.S. bank as defined in Rule 17f-5 under the Investment Company Act
of 1940, as amended ("Rule 17f-5"); (b) "eligible foreign custodian" shall mean
(i) a banking institution or trust company incorporated or organized under the
laws of a country other than the United States that is regulated as such by that
country's government or an agency thereof and that has shareholders' equity in
excess of $200 million in U.S. currency (or a foreign currency equivalent
thereto) or (ii) a majority-owned direct or indirect subsidiary of a qualified
U.S. bank or bank holding company that is incorporated or organized under the
laws of a country other than the United States and that has shareholders' equity
in excess of $100 million in U.S. currency (or a foreign currency equivalent
thereto); (c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws of a
-3-
<PAGE>
country other than the United States, which operates (i) the central system for
handling of securities or equivalent book-entries in that country or (ii) a
transnational system for the central handling of securities or equivalent
book-entries.
Hereinafter the term "sub-custodian" will refer to any Bank
branch, any branch of a qualified U.S. bank, any eligible foreign custodian or
any eligible foreign securities depository with which the Bank, as sub-custodian
for the Company, has entered into an agreement of the type contemplated
hereunder regarding Securities and/or cash held in or to be acquired for a
Custody Account or a Deposit Account.
If, after the initial approval of the sub-custodians by the
Company in connection with this Agreement, the Bank wishes to appoint other
sub-custodians to hold Property, it will so notify the Company and will provide
the Company with information reasonably necessary to determine any such new
sub-custodian's eligibility under Rule 17f-5, including a copy of the proposed
agreement with sub-custodian. The Company shall within 30 days after receipt of
such notice give a written approval or disapproval of the proposed action.
If the bank intends to remove any sub-custodian previously
approved, it shall so notify the Company and shall move the Property deposited
with such sub-custodian to another sub-custodian previously approved or to a new
sub-custodian, provided that the appointment of any new sub-custodian will be
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<PAGE>
subject to the requirements set forth in the preceding paragraph. The Bank shall
take steps as may be required to remove any sub-custodian which has ceased to
meet the requirements of Rule 17f-5.
4. Use of Sub-Custodians. With respect to Property which is
maintained by the Bank in the physical custody of a sub-custodian pursuant to
Section 3:
(a) The Bank will identify on its books as belonging
to the Company any Property held by such sub-custodian.
(b) In the event that a sub-custodian permits any of
the Securities placed in its care to be held in an eligible foreign securities
depository, such sub-custodian will be required by its agreement with the Bank
to identify on its books such Securities as being held for the account of the
Bank as a custodian for its customers.
(c) Any Securities in a Custody Account held by a
sub-custodian of the Bank will be subject only to the instructions of the Bank
or its agents; and any Securities held in an eligible foreign securities
depository for the account of a sub-custodian will be subject only to the
instructions of such sub-custodian.
(d) The Bank will only deposit Property in an account
with a sub-custodian which includes exclusively the assets held by the Bank for
its customers, and the Bank will cause such account to be designated by such
sub-custodian as a special custody account for the exclusive benefit of
customers of the Bank.
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<PAGE>
(e) Any agreement the Bank shall enter into with a
sub-custodian with respect to the holding of Property shall require that (i) the
Property is not subject to any right, charge, security interest, lien or claim
of any kind in factor of such sub-custodian or its creditors except for a claim
of payment for its safe custody or administration and (ii) beneficial ownership
of such Property is freely transferable without the payment of money or value
other than for safe custody or administration.
(f) The Bank shall allow independent public
accountants of the Company such reasonable access to the records of the Bank
relating to Property held in a Custody Account and a Deposit Account as required
by such accountants in connection with their examination of the books and
records pertaining to the affairs of the Company. The Bank shall, subject to
restrictions under applicable law, also obtain from any sub-custodian with which
the Bank maintains the physical possession of any Property an undertaking to
permit independent public accountants of the Company such reasonable access to
the records of such sub-custodian as may be required in connection with their
examination of the books and records pertaining to the affairs of the Company or
to supply a verifiable confirmation of the contents of such records. The Bank
shall furnish the Company such reports (or portions thereof) of the Bank's
external auditors as relate directly to the Bank's system of internal accounting
controls applicable to the Bank's duties under this Agreement.
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<PAGE>
(g) The Bank will supply to the Company at least
monthly a statement in respect to any Property in a Custody and a Deposit
Account held by each sub-custodian, including an identification of the entity
having possession of such Property, and the Bank will send to the Company an
advice or notification of any transfers of Property to or from the Custodian
Account and Deposit Account, indicating, as to Property acquired, the identity
of the entity having physical possession of such Property. In the absence of the
filing in writing with the Bank by the Company of exceptions or objections to
any such statement within ninety (90) days of the Company's receipt of such
statement, or within ninety (90) days after the date that a material defect in
reasonably discoverable, the Company shall be deemed to have approved such
statement; and in such case or upon written approval of the Company of any such
statement the Bank shall, to the extent permitted by law and provided the Bank
has met the standard of case in Section 12 hereof, be released, relieved and
discharged with respect to all matters and things set forth in such statement as
though such statement has been settled by the decree of a court of competent
jurisdiction in an action in which the Company and all persons having any equity
interest in the Company were parties.
(h) The Bank warrants to the Company that in its
opinion, after due inquiry, the established procedures to be followed by each of
its branches, each branch of a qualified U.S. bank, each eligible foreign
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custodian and each eligible foreign securities depository holding Property for
the account of the Company pursuant to this Agreement afford protection for such
Property at least equal to that afforded by the Bank's established procedures
with respect to similar Property held by the Bank (and its securities
depositories) in Boston, MA.
(i) The Bank hereby warrants the Company that as of
the date of this Agreement it is maintaining a Bankers Blanket Bond and hereby
agrees to notify the Company in the event its Bankers Blanket Bond is canceled
or otherwise lapses.
5. Deposit Account Payments. Subject to the provisions of
Section 7, the Bank shall make, or cause its sub- custodian to make, payments of
cash credited to a Deposit Account only:
(a) in connection with the purchase of Securities and
the delivery of such Securities to, or the crediting of such Securities to the
particular Custody Account of, the Bank or its sub-custodian, each such payment
to be made at prices as confirmed by Instructions from Authorized Persons (as
defined in Section 10 hereof);
(b) for the purchase or redemption of shares of the
capital stock of the Company and the delivery to, or crediting to the account
of, the Bank or its sub-custodian of such shares to be so purchased or redeemed;
(c) for the payment of dividends, interest, taxes,
management or supervisory fees, capital distributions or operating expenses;
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<PAGE>
(d) for the payments to be made in connection with
the conversion, exchange or surrender of Securities held in a Custody Account;
(e) for other proper corporate purposes; or
(f) upon the termination of this Custody Agreement as
hereinafter set forth. All payments of cash for a purpose permitted by
subsection (a), (b), (c) or (d) of this Section 5 will be made only upon receipt
by the Bank of Instructions from Authorized Persons which shall specify the
purpose for which the payment is to be made and the applicable subsection of
this Section 5. In the case of any payment to be made for the purpose permitted
by subsection (e) of this Section 5, the Bank must first receive a certified
copy of a resolution of the Board of Directors of the Company adequately
describing such payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment shall be made.
Any payment pursuant to subsection (f) of this Section 5 will be made in
accordance with Section 17 hereof.
In the event that any payment made under this Section 5
exceeds the funds available in that Deposit Account, the Bank's foreign
sub-custodian may, in its discretion, advance funds in an amount equal to such
excess and such advance, shall be deemed an overdraft from the Bank's foreign
sub-custodian to that investment portfolio payable on demand, bearing interest
at the rate of interest customarily charges by the Bank's foreign
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<PAGE>
subcustodian on similar overdrafts. If the Bank causes a Deposit Account to be
credited on the payable date for interest, dividends or redemptions, the Company
will promptly return to the Bank any such amount or property so credited upon
oral or written notification that neither the Bank nor its sub-custodian can
collect such amount or property in the ordinary course of business. The Bank or
its sub-custodian, as the case may be, shall have no duty or obligation to
institute legal proceeding or take any other action with respect to the
collection of such amount or property beyond its ordinary collection procedures.
6. Custody Account Transactions. Subject to the provisions of
Section 7, Securities in a Custody Account will be transferred, exchanged or
delivered by the Bank or its sub-custodian only:
(a) upon sale of such Securities and receipt by the
Bank or its sub-custodian or payment therefor, each such payment to be in the
amount confirmed by Instruction from Authorized Persons;
(b) when such Securities are called, redeemed or
retired, or otherwise become payable. Notwithstanding the foregoing, the Bank or
its sub-custodian shall have no responsibility to the Company for monitoring or
ascertaining any call, redemption or retirement dates with respect to put bonds
which are owned by the Company and held by the Bank, its sub-custodian or their
respective nominees. Nor shall the Bank or its sub-custodian have any
responsibility or liability to the Company for any loss for any missed
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<PAGE>
payments or other defaults resulting therefrom unless the Bank or such
sub-custodian received timely notification from the Company specifying the time,
place and manner for the presentment of any such put bond held by the Bank, its
sub-custodian or their respective nominees. The Bank shall not be responsible
and assumes no liability to the Company for the accuracy or completeness of any
notification the Bank or any sub-custodian may furnish to the Company with
respect to put bonds;
(c) in exchange for or upon conversion into other
Securities alone or other Securities and cash pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment;
(d) upon conversion of such Securities pursuant to
their terms into other Securities;
(e) upon exercise of subscription, purchase or other
similar rights represented by such Securities;
(f) for the purpose of exchanging interim receipts or
temporary Securities for definitive Securities;
(g) for the purpose of redeeming in kind shares of
the capital stock of the Company against delivery to the Bank or its
sub-custodian of such shares to be redeemed;
(h) for other proper corporate purposes; or
(i) upon the termination of this Sub-Custodian
Agreement as hereinafter set forth. All transfers, exchanges or deliveries of
Securities in a Custody Account for a purpose permitted by either
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<PAGE>
subsection (a), (b), (c), (d), (e) or (f) of this Section 6 will be made, except
as provided in Section 8 hereof, only upon receipt by the Bank of Instructions
from Authorized Persons which shall specify the purpose of the transfer,
exchange or delivery to be made and the applicable subsection of this Section 6.
In the case of any transfer or delivery to be made for the purpose permitted by
subsection (g) of this Section 6, the Bank must first receive Instructions from
Authorized Persons specifying the shares held by the Bank or its sub-custodian
to be so transferred or delivery of such shares shall be made. In the case of
any transfer, exchange or delivery to be made for the purpose permitted by
subsection (h) of this Section 6, the Bank must first receive a certified copy
of a resolution of the Board of Directors of the Company adequately describing
such transfer, exchange or delivery, declaring such purpose to be proper
corporate purpose, and naming the person or persons to whom delivery of such
Securities shall be made. Any transfer or delivery pursuant to subsection (i) of
this Section 6 will be made in accordance with Section 17 hereof.
7. Custody Account Procedures. With respect to any
transaction involving Securities held in or to be acquired for a Custody
Account, the Bank in its discretion may cause the Deposit Account to be credited
on the actual settlement date with the proceeds of any sale or exchange of
Securities from the particular Custody Account and to be debited on the actual
settlement date for the cost of Securities purchased or acquired for the
particular Custody Agreement.
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<PAGE>
Settlement and payment for Securities received for, and
delivery of Securities out of, a Custody Account may be effected in accordance
with the customary or established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering Securities to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment for such
Securities from such purchaser or dealer.
8. Actions of the Bank. Until the Bank receives Instructions
from Authorized Persons to the contrary, the Bank will, or will instruct its
sub-custodian, to:
(a) present for payment any Securities in a Custody
Account which are called, redeemed or retired or otherwise become payable and
all coupons and other income items which call for payment upon presentation to
the extent that the Bank or sub-custodian is aware of such opportunities for
payment, and hold cash received upon presentation of such Securities in
accordance with the provisions of Section 2, 3 and 4 hereof;
(b) in respect of Securities in a Custody Account,
execute in the name of the Company such ownership and other certificates as may
be required to obtain payments in respect thereof;
(c) exchange interim receipts or temporary Securities
in a Custody Account for definitive Securities;
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<PAGE>
(d) (if applicable) convert monies received with
respect to Securities or foreign issue into United States dollars or any other
currency necessary to effect any transaction involving the Securities whenever
it is practicable to do so through customary banking channels, using any method
or agency available, including, but not limited to, the facilities of the Bank,
its subsidiaries, affiliates or sub-custodians;
(e) (if applicable) appoint brokers and agents for
any transaction involving the Securities in a Custody Account; and
(f) reclaim taxes withheld by foreign issuers where
reclaim is possible provided that Bank has been provided with all documentation
it may require.
9. Instructions. As used in this Agreement, the term
"Instructions" means instructions of the Company received by the Bank, via
telephone, telex, TWX, facsimile transmission, bank wire or other telephonic or
electronic instruction system acceptable to the Bank which the Bank believes in
good faith to have been given by Authorized Persons or which are transmitted
with proper testing or authentication pursuant to terms and conditions which the
Bank may specify.
Any Instructions delivered to the Bank by telephone shall
promptly thereafter be confirmed in writing by an Authorized Person (which
confirmation may bear the facsimile signature of such Person), but the Company
will hold the Bank harmless for the Company's (i) failure to send such
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<PAGE>
confirmation in writing, or (ii) the failure of such confirmation to conform to
the telephone Instructions received. Unless otherwise expressly provided, all
Instructions shall continue in full force and effect until canceled or
superseded. If the Bank requires test arrangements, authentication methods or
other security devices to be used with respect to Instructions, any Instructions
given by the Company thereafter shall be given and processed in accordance with
such terms and conditions for the use of such arrangements, methods of devices
as the Bank may put into effect and modify from time to time. The Company shall
safeguard any test keys, identification codes or other security devices which
the Bank shall make available to them. The Bank may electronically record any
Instructions given by telephone, and any other telephone discussions, with
respect to a Custody Account.
10. Authorized Persons. As used in this Agreement, the term
"Authorized Persons" means such officers or such agents of the Company as have
been designated by a resolution of the Board of Directors of the Company, a
certified copy of which has been provided to the Bank, to act on behalf of the
Company in the performance of any acts which Authorized Persons may do under
this Agreement. Such persons shall continue to be Authorized Persons until such
time as the Bank receives Instructions from Authorized Persons that any such
officer or agent is no longer an Authorized Person.
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<PAGE>
11. Nominees. Securities in a Custody Account which are
ordinarily held in registered form may be registered in the name of the Bank's
nominee or, as to any Securities in the possession of any entity other than the
Bank, in the name of such entity's nominee. The Company agrees to hold any such
nominee harmless from any liability as a holder of record of such Securities,
but not if such liability is a result of such nominee's negligence. The Bank may
without notice to the Company cause any such Securities to cease to be
registered in the name of any such nominee. In the event that any Securities
registered in the name of the Bank's nominee or held by one of its
sub-custodians and registered in the name of such sub-custodian's nominee are
called for partial redemption by the issuer of such Security, the Bank may
allot, or cause to be allotted, the called portion to the respective beneficial
holders of such class of security in any manner the Bank deems to be fair and
equitable.
12. Standard of Care.
(a) The Bank shall be obligated to perform only such
duties as are set forth in this Agreement or expressly contained in instructions
given to the Bank which are consistent with the provisions of this Agreement.
(i) The Bank will use reasonable care with
respect to its obligations under this
Agreement and the safekeeping of
Property. The Bank shall be liable to
the Company for any loss which shall
occur as the result of the failure of a
sub-custodian or any eligible foreign
securities depository to exercise
reasonable care and without negligence
with respect to the safekeeping of such
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<PAGE>
Property to the same extent that the
Bank would be liable to the Company if
the Bank were holding such Property in
Boston, MA. In the event of any loss to
the Company by reason of the failure or
negligent conduct of the Bank or its
subcustodian or an eligible foreign
securities depository to exercise
reasonable care, the Bank shall be
liable to the Company only to the extent
of the Company's direct damages and
expenses, which damages, for purposes of
Property only shall, be determined based
on the market value of the Property
which is the subject of the loss at the
date of such loss and without reference
to any special conditions or
circumstances.
(ii) The Bank will not be responsible for any
act, omission, default or for the
solvency of any broker or agent (other
than as provided herein) which it or a
sub-custodian appoints and uses unless
such appointment and use were made or
done negligently or in bad faith.
(iii) The Bank shall be indemnified by, and
without liability to the Company for any
action taken or omitted by the Bank
whether pursuant to Instructions or
otherwise within the scope of this
Agreement if such act or omission was in
good faith and without negligence. In
performing its obligations under this
Agreement, the Bank may rely on the
genuineness of any document which it
believes in good faith and without
negligence to have been validly
executed.
(iv) The Company agrees to pay for and hold
the Bank harmless from any liability or
loss resulting from the imposition or
assessment of any taxes or other
governmental charges, and any related
expenses with respect to income from or
Property in such Custody Account and
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<PAGE>
Deposit Account, assuming that the
Company has in good faith determined
that the Bank has properly performed its
duties hereunder.
(v) The Bank shall be entitled to rely, and
may act upon the advice or counsel (who
may be counsel for the Company) on all
matters and shall act reasonably and in
good faith pursuant to such advice.
Notwithstanding the foregoing, the Bank
shall remain liable for the performance
of its duties hereunder and such counsel
shall act reasonably and in good faith.
(vi) The Bank need not maintain any insurance
for the exclusive benefit of the
Company.
(vii) Without limiting the foregoing, the Bank
shall not be liable for any loss which
results from:
1) the general risk of investing, or
2) subject to Section 12(a)(i) hereof
investing or holding Property in a
particular country including, but not
limited to, losses resulting from
nationalization, expropriation or other
governmental actions; regulation of the
banking or securities industry; currency
restrictions, devaluations or
fluctuations; and market conditions
which prevent the orderly execution of
securities transactions or affect the
value of Property.
(viii) No party shall be liable to the other
for any loss due to forces beyond their
control including but not limited to
strikes or work stoppages, acts of war
or terrorism, insurrection, revolution,
nuclear fusion, fission or radiation, or
acts of God.
(b) Consistent with and without limiting the first
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<PAGE>
paragraph of this Section 12, it is specifically acknowledged that the Bank
shall have no duty or responsibility to:
(i) Question Instructions or make any
suggestions to Company or Authorized
Person regarding such Instructions;
(ii) Supervise or make recommendations with
respect to investments or the retention
of Securities;
(iii) Subject to Section 12(a)(ii) hereof,
evaluate or report to the Company or an
Authorized Person regarding the
financial condition of any broker, agent
or other party to which Securities are
delivered or payments are made pursuant
to this Agreement; or
(iv) Review or reconcile trade confirmations
received from brokers.
(c) The Bank shall provide to the Company, on an
annual basis, a report confirming that the arrangements hereunder remain in
compliance with the rules of the Securities and Exchange Commission governing
such arrangements.
13. Corporate Action. Whenever the Bank or its sub-custodian
receives information concerning the Securities which requires discretionary
action by the beneficial owner of the Securities (other than a proxy), such as
subscription rights, bonus, issues, stock repurchase plans and rights offerings,
or legal notices or other material intended to be transmitted to securities
holders ("Corporate Actions"), the Bank will give the Company notice of such
Corporate Actions to the extent that the Bank's central corporate actions
department has actual knowledge of a Corporate Action in time to notify its
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customers. The Bank shall use its best efforts to ensure that it receives all
available Corporate Action information, interprets such information concerning
the Securities and promptly reports such information to the Company.
When a rights entitlement or a fractional interest resulting
from a rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank or its sub-custodians will
endeavor to obtain Instructions from the Company or its Authorized Person, but
if Instructions are not received in time for the Bank to take timely action, or
actual notice of such Corporate Action was received too late to seek
Instructions, the Bank is authorized to sell such rights entitlement or
fractional interest and to credit the applicable Deposit Account with the
proceeds and to take any other action it deems, in good faith, to be appropriate
in which case, provided it has met the standard of care in Section 12 hereof, it
shall be held harmless by the Company for any such action.
The Bank will deliver proxies to the Company or its designated
agent pursuant to special arrangements which may have been agreed to in writing
between the parties hereto. Such proxies shall be executed in the appropriate
nominee name relating to Securities in the Custody Account registered in the
name of such nominee but without indicating the manner in which such proxies are
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to be voted; and where bearer Securities are involved, proxies will be delivered
in accordance with instructions from Authorized Persons.
14. Fees and Expenses.
(a) The Company will compensate the Bank for its
services rendered under this Agreement in accordance with the fees set forth in
the Fee Schedule annexed hereto as Schedule A and incorporated herein. Such Fee
Schedule does not include out-of-pocket disbursements of the Bank for which the
Bank shall be entitled to bill separately. Out-of-pocket disbursements may
include only the items specified in the Schedule of Out-of-Pocket charges
annexed hereto as Schedule B and incorporated herein, which schedule may be
modified by the Bank if the Company consents in writing to the modifications.
(b) The parties hereto will agree upon the
compensation for acting as custodian for any portfolio of the Company hereafter
established and designated, and at the time that the Bank commences serving as
such for said portfolio, such agreement shall be reflected in a Fee Schedule for
that portfolio, dated and signed by an officer of each party hereto, which shall
be attached to Schedule A of this Agreement.
(c) Any compensation agreed to hereunder may be
adjusted from time to time by attaching to Schedule A of this Agreement a
revised Fee Schedule, dated and signed by an Authorized Officer or authorized
representative of each party hereto.
(d) The Bank will bill the Company as soon as
practicable after the end of each calendar month, and said billings will be
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detailed in accordance with the Fee Schedule for the Company. The Company will
promptly pay to the Bank the amount of such billing.
(e) Subject to the Bank's proper performance of its
duties hereunder, the Company hereby agrees to hold the Bank harmless from any
liability or loss resulting from any taxes or other governmental charges, and
any expenses related thereto, which may be imposed, or assessed with respect to
the Custody Account with the Bank and also agrees to hold the Bank, its
sub-custodians, and their respective nominees harmless from any liability as a
record holder of Securities in such Custody Account. The Bank is authorized to
charge the account of the Company for such items and the Bank shall have a lien
on Securities in such Custody Account and on cash in such Deposit Account for
any amount owing to the Bank from time to time under this Agreement.
15. Effectiveness. This Agreement shall be effective on the
date first noted above.
16. Termination. This Agreement may be terminated by the
Company or the Bank by 60 days' written notice to the other, sent by registered
mail, provided that any termination by the Company shall be authorized by a
resolution of the Board of Directors of the Company, a certified copy of which
shall accompany such notice of termination, and provided further, that such
resolution shall specify the names of persons to whom the Bank shall deliver the
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Securities in each Custody Account and to whom the cash in each Deposit Account
shall be paid. If notice of termination is given by the Bank, the Company shall,
within 60 days following the giving of such notice, deliver to the Bank a
certified copy of a resolution of the Board of Directors of the Company
specifying the names of the persons to whom the Bank shall deliver such
Securities and cash, after deducting therefrom any amounts which the Bank
determines to be owed to it under Section 14 hereof. If within 60 days following
the giving of a notice of termination by the Bank, the Bank does not receive
from the Company a certified copy of a resolution of the Board of Directors of
the Company specifying the names of the persons to whom the cash in each Deposit
Account shall be paid and to whom the Securities in each Custody Account shall
be delivered, the Bank, at its election, may deliver such Securities and pay
such cash to a bank or trust company doing business in the continental United
States and qualified as a custodian under the Investment Company Act of 1940, as
amended, to be held and disposed of pursuant to the provisions of this
Agreement, or to Authorized Persons, or may continue to hold such Securities and
cash until a certified copy of one or more resolutions as aforesaid is delivered
to the Bank. The obligations of the parties hereto regarding the use of
reasonable obligations of the parties hereto regarding the use of reasonable
care, indemnities and payment of fees and expenses shall survive the termination
of this Agreement.
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17. Miscellaneous.
(a) Annexed hereto as Appendix A is a certification
signed by two of the present officers of the Company setting forth the names and
the signatures of the present Authorized Persons. The Company agrees to furnish
to the Bank a new certification in similar form in the event that any such
present Authorized Person ceases to be such an Authorized Person or in the event
that other or additional Authorized Persons are elected or appointed. Until such
new certification shall be received, the Bank shall be fully protected in acting
under the provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered certification.
(b) Annexed hereto as Appendix B is a certification
signed by two of the present officers of the Company setting forth the names and
the signatures of the present officers of the Company. The Company agrees to
furnish to the Bank a new certification in similar form in the event any such
present officer ceases to be an officer of the Trust or in the event that other
or additional officers are elected or appointed. Until such new certification
shall be received, the Bank shall be fully protected in acting under the
provisions of this Agreement upon the signature of the officers as set forth in
the last delivered certification.
(c) Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Bank, shall be
sufficiently given if addressed to the Bank and mailed or delivered to it at its
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offices at One Boston Place, Boston, Massachusetts 02108 or at such other place
as the Custodian may from time to time designate in writing.
(d) Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Company, shall be
sufficiently given if addressed to the Company and mailed or delivered to it at
its offices at its address stated on the first page hereof or at such other
place as the Company may from time to time designate in writing, with a copy to:
Alex Brown
135 East Baltimore Street
Baltimore, Maryland 21202
Attention: Edward J. Veilleux
(e) This Agreement may not be amended or modified in
any manner except by a written agreement executed by both parties with the same
formality as this Agreement, (i) authorized and approved by a vote of the Board
of Directors of the Company, including a majority of the members of the Board of
Directors of the Company who are not "interested persons" of the Company (as
defined in the 1940 Act), or (ii) authorized and approved by such other
procedures as may be permitted or required by the 1940 Act.
(f) This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the Company
without the written consent of the Bank, or by the Bank without the written
consent of the Company authorized or approved by a vote of the Board of
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Directors of the Company, and any attempted assignment without such written
consent shall be null and void.
(g) This Agreement shall be construed in accordance
with the laws of The Commonwealth of Massachusetts.
(h) The captions of the Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(i) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective representatives duly authorized as
of the day and year first above written.
FLAG INVESTORS INTERNATIONAL,
FUND, INC.
BY: _____________________________________
Name:
Title:
BOSTON SAFE DEPOSIT AND
TRUST COMPANY
By: _____________________________________
Name:
Title:
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<PAGE>
APPENDIX A
We, ___________________, Treasurer and ___________________,
Secretary, of Flag Investors International Fund, Inc., a corporation organized
under the laws of the State of Maryland (the "Company"), do hereby certify that:
The following individuals have been duly authorized as
Authorized Persons to give Oral Instructions and Written Instructions on behalf
of the Company and the signatures set forth opposite their respective names are
their true and correct signatures:
<PAGE>
APPENDIX B
We, ________________, President and _________________________,
Secretary of Flag Investors International Fund, Inc., a corporation organized
under the laws of the State of Maryland (the "Company"), do hereby certify that:
The following individuals serve in the following positions
with the Company and each individual has been duly elected or appointed to each
such position and qualified therefor in conformity with the Company's Articles
of Incorporation and By-Laws and the signatures set forth opposite their
respective names are their true and correct signatures:
Name Position Signature
---- -------- ---------
President ______________________________________
Treasurer ______________________________________
Secretary ______________________________________
Investment Officer ______________________________________
Investment Officer ______________________________________
Assistant Treasurer ______________________________________
Assistant Treasurer ______________________________________
Assistant Secretary ______________________________________
Assistant Secretary ______________________________________
Assistant Secretary ______________________________________
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<PAGE>
APPENDIX C - INDIVIDUALS WITH ACCESS
I, Lynne E. Larkin, Secretary of Boston Safe Deposit and Trust
Company, a Massachusetts corporation (the "Custodian"), do hereby certify that:
The following twelve named individuals have been duly
authorized by the Executive Committee of the Board of Directors of the Custodian
to have access to the assets of Flag Investors International Fund, Inc., a
corporation organized under the laws of the State of Maryland, held by the
Custodian in its capacity as such:
Diane Contardo
Marie F. Culleton
Karen D. DeVitto
Joan M. Donahue
Claire J. Lurie
Eleanor L. Millan
Cynthia E. Peluso
Geraldine E. Ryan
Mary A. Sannella
Daniel J. Smith
Merton E. Thompson, III
George H. Whitney, III
_____________________________________
Lynne E. Larkin
Boston Safe Deposit and Trust Company
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<PAGE>
Schedule A
FLAG INVESTORS
FEE SCHEDULE
CUSTODY SERVICES
I. Holding Charges
U.S. Assets
First $200 million of net assets 2.0 Basis Points
Next $300 million of net assets 1.0 Basis Points
Over $500 million of net assets 0.8 Basis Points
Plus a per security holding charge of $5.00 per month.
II. Transaction Charges
DTC and Fed Book Entry $10 per trade
PTC $17.50 per trade
U.S. Physical $30 per trade
Third Party FX $20 per FX
Paydowns $5 per paydown
III. Country Groupings
Fees Transactions
---- ------------
Euroclear/Cedel
Under 500 million 4 basis points $25
Over 500 million 3 basis points $25
Group I Markets
Under 500 million 6 basis points $25
Over 500 million 5 basis points $25
Group II Markets 12 basis points $35
Group III Markets 15 basis points $35
Group IV Market 35 basis points $75
Third Party FX Contracts $20
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<PAGE>
Schedule A - continued
FLAG INVESTORS
FEE SCHEDULE
CUSTODY SERVICES
Group I Group II Group III Group IV
Markets Markets Markets Markets
------- ------- ------- -------
Canada Australia Austria Argentina
Germany Belgium Italy Brazil
Japan Denmark Malaysia Chile
United Kingdom Finland Portugal Cyprus
France Singapore Greece
Hong Kong South Korea India
Ireland Spain Indonesia
Mexico Thailand Israel
Netherlands Jordan
New Zealand Luxembourg
Norway Pakistan
Sweden Peru
Switzerland Philippines
Poland
Sri Lanka
Turkey
Venezuela
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<PAGE>
SCHEDULE B
The Company will pay to the Custodian as soon as possible
after the end of each month the out-of-pocket expenses specified on this
Schedule B and reasonably incurred in connection with the assets of the Company:
telephone
wire charges
courier services
stamp duty
registration
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<PAGE>
EX-99.B(8)(b)
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
Subcustodian Agreement
================================================================================
AGREEMENT made this ________ day of ________________, 1992,
between BOSTON SAFE DEPOSIT AND TRUST COMPANY (hereinafter referred to as
"Boston Safe"), a trust company having its principal office at One Boston Place,
Boston, Massachusetts, U.S.A., and (hereinafter referred to as the "Bank"), a
_________ organized under the laws of ____________ and having an office at
_________________.
WHEREAS, Boston Safe has been appointed to act as Trustee,
Custodian or Subcustodian of securities and monies on behalf of certain of its
customers including, without limitation, investment companies subject to the
U.S. Investment Company Act of 1940, as amended, and employee benefit plans
subject to the U.S. Employee Retirement Income Security Act of 1974, as amended;
and
WHEREAS, Boston Safety wishes to establish an account with the
bank to hold and maintain certain property which Boston Safe holds as custodian,
subcustodian or trustee; and
WHEREAS, Bank agrees to establish such Account and to hold and
maintain all property in the Account in accordance with the terms and conditions
herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, Boston Safe and Bank agree as follows:
I. The Account
A. Establishment of the Account
Boston Safe hereby establishes with the Bank an Account
which shall be composed of
(1) a Custody Account (including such sub-accounts as
Boston Safe may request from time to time), for any and all Securities (as
hereinafter defined) from time to time received by Bank therefor, and
(2) a Deposit Account (including such sub-accounts as
Boston Safe may request from time to time) for any and all Cash (as
hereinafter defined) from time to time received by Bank therefor.
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<PAGE>
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
Subcustodian Agreement
================================================================================
Sub-accounts shall be established for each
investment company subject to the U.S. Investment Company Act of
1940 and each other customer of Boston Safe as requested by
Boston Safe.
B. Use of the Account
The Account shall be used exclusively to hold,
acquire, transfer or otherwise care for, on behalf of Boston Safe
as Trustee, Custodian or Subcustodian and the customers of Boston
Safe and not for Boston Safe's own interest, Securities and such
cash or cash equivalents as are transferred to Bank or as are
received in payment of any transfer of, or as payment on, or
interest on, or dividend from, any such Securities (herein
collectively called "Cash").
C. Transfer of Property in the Account
Beneficial ownership of the Securities and Cash in
the Account shall be freely transferable without payment of money
or value other than for custody and administration.
D. Ownership and Segregation of Property in the
Account
The ownership of the property in the Account,
whether Securities, Cash or both, and whether any such property
is held by Bank or in an Eligible Depository, shall be clearly
recorded on Bank's books as belonging to Boston Safe on behalf of
Boston Safe's customers, and not for Boston Safe's own interest
and, to the extent that Securities are physically held in the
Account, such Securities shall also be physically segregated from
the general assets of Bank, the assets of Boston Safe in its
individual capacity and the assets of Bank's other customers. In
addition, Bank shall maintain such other records as may be
necessary to identify the property hereunder as belonging to each
sub-account of the Account.
E. Registration of Securities in the Account
Securities which are eligible for deposit in a
depository as provided for in Paragraph III may be maintained
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<PAGE>
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
Subcustodian Agreement
================================================================================
with the depository in an account for Bank's customers.
Securities which are not held in a depository and that are
ordinarily held in registered form will be registered in the name
of Bank, or in the name of Bank's nominee, unless alternate
Instructions are furnished by Boston Safe.
II. Services to Be Provided By the Bank
The services Bank will provide to Boston Safe and the
manner in which such services will be performed will be as set
forth below in this Agreement.
A. Services Performed Pursuant to Instructions
All transactions involving the Securities and Cash
in the Account shall be executed solely in accordance with Boston
Safe's Instructions as that term is defined in Paragraph VI
hereof, except those described in paragraph B below.
B. Services to Be Performed Without Instructions
Bank will, unless it receives Instructions from
Boston Safe to the contrary:
(1) Collect Cash
Promptly collect and receive all dividends,
income, principal, proceeds from transfer and other payments with
respect to property held in the Account, and present for payment
all Securities held in the Account which are called, redeemed or
retired or otherwise become payable and all coupons and other
income items which call for payment upon presentation, and credit
Cash receipts therefrom to the Deposit Account;
(2) Exchange Securities
Promptly exchange Securities where the
exchange is purely ministerial (including, without limitation,
the exchange of temporary Securities for those in definitive form
and the exchange of warrants, or other documents of entitlement
to Securities, for the Securities themselves);
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<PAGE>
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
Subcustodian Agreement
================================================================================
(3) Sale of Rights and Fractional Interests
Whenever notification of a rights
entitlement or a fractional interest resulting from a rights issue, stock
dividend or stock split is received for the Account and such rights entitlement
or fractional interest bears an expiration date, Bank will promptly endeavor to
obtain Boston Safe's Instructions, but should these not be received in time for
Bank to take timely action, Bank is authorized to sell such rights entitlement
or fractional interest and to credit the Account;
(4) Execute Certificates
Execute in Boston Safe's name for the
Account, whenever Bank deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of income from the
Securities held in the Account;
(5) Pay Taxes and Receive Refunds
To pay or cause to be paid from the Account
any and all taxes and levies in the nature of taxes imposed on the property in
the Account by any governmental authority, and to take all steps necessary to
obtain all tax exemptions, privileges or other benefits, including reclaiming
and recovering any foreign withholding tax, relating to the Account and to
execute any declarations, affidavits, or certificates of ownership which may be
necessary in connection therewith; and
(6) Prevent Losses
Take such steps as may be reasonably
necessary to secure or otherwise prevent the loss of rights
attached to or otherwise relating to property held in the
Account.
C. Additional Services
1. Transmission of Notices of Corporate Action
By such means as will permit Boston Safe to
take timely action with respect thereto, Bank will promptly notify Boston Safe
upon receiving notices or reports, or otherwise becoming aware, of corporate
action affecting Securities held in the Account (including, but not limited to,
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<PAGE>
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
Subcustodian Agreement
================================================================================
calls for redemption, mergers, consolidations, reorganizations,
recapitalizations, tender offers, rights offerings,exchanges, subscriptions and
other offerings) and dividend, interest and other income payments relating to
such Securities.
2. Communications Regarding the Exercise of
Rights
Upon request by Boston Safe, Bank will
promptly deliver, or cause any Eligible Depository authorized and acting
hereunder to deliver, to Boston Safe all notices, provides, proxy soliciting
materials and other communications that call for voting or the exercise of
rights or other specific action (including material relative to legal
proceedings intended to be transmitted to security holders) relating to
Securities held in the Account to the extent received by Bank or said Eligible
Depository, such proxies or any voting instruments to be executed by the
registered holder of the Securities, but without indicating the manner in which
such Securities are to be voted.
3. Monitor Financial Service
In furtherance of its obligations under this
Agreement, Bank will monitor with respect to announcements and other information
respecting property held in the Account, including announcements and other
information with respect to corporate actions and dividend, interest and other
income payments.
III. Use of Securities Depository
Bank may, with the prior written approval of Boston Safe,
maintain all or any part of the Securities in the Account with a securities
depository or clearing agency which is incorporated or organized under the laws
of a country other than the United States of America and is supervised or
regulated by a government agency or regulatory authority in the foreign
jurisdiction having authority over such depositories or agencies, and which
operates (a) the central system for handling of securities or equivalent book
entries in ________, (b) a transnational system for the central handling of
securities or equivalent book entries, or (c) is the subject of an exemptive
order issued by the U.S. Securities and Exchange Commission with respect to the
requirements for a securities depository under Rule 17f-5 of the U.S. Investment
Company Act of 1940 (herein called "Eligible Depository"), provided, however,
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<PAGE>
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
Subcustodian Agreement
================================================================================
that while so maintained such Securities shall be subject only to the directions
of Bank, and that Bank's duties, obligations and responsibilities with regard to
such Securities shall be the same as if such Securities were held by Bank. In
seeking Boston Safe's approval with respect to an Eligible Depository, Bank
shall submit a copy of its agreement with such Eligible Depository to Boston
Safe.
IV. Claims Against Property in the Account
The property in the Account shall not be subject to any right,
charge, security interest, lien or claim of any kind (collectively "Charges") in
favor of Bank or any Eligible Depository or any creditor of Bank or of any
Eligible Depository, except a claim for payment for such property's safe custody
or administration in accordance with the terms of this Agreement. Bank will
immediately notify Boston Safe of any attempt by any party to assert any Charge
against the property held in the Account and shall take all lawful actions to
protect such property from such Charges until Boston Safe has had a reasonable
time to respond to such notice.
V. Qualification of Bank as Subcustodian
Bank represents and warrants that:
(A) it is a branch of a "qualified U.S. bank" or an "eligible
foreign custodian" as those terms are defined in Rule 17f-5 of the U.S.
Investment Company Act of 1940, a copy of which is attached hereto as Attachment
A (the "Rule"), and Bank shall immediately notify Boston Safe, in writing or by
other authorized means, in the event that there appears to be a substantial
likelihood that Bank will cease to qualify under the Rule as currently in effect
or as hereafter amended, or if in fact it does cease to qualify for any reason,
or
(B) it is the subject of an exemptive order issued by the U.S.
Securities and Exchange Commission, which order permits Boston Safe to employ
Bank notwithstanding the fact that Bank fails to qualify under the terms of the
Rule, and Bank shall immediately notify Boston Safe, in writing or by other
authorized means, if for any reason it is no longer covered by such exemptive
order.
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<PAGE>
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
Subcustodian Agreement
================================================================================
Upon receipt of any such notification required under
(A) or (B) of this Paragraph, Boston Safe may terminate this Agreement
immediately without prior notice to Bank.
VI. Definitions
A. Instructions
The term "Instructions" means (1) instructions in
writing signed by authorized individuals designated as such by Boston Safe, (2)
telex or tested telex instructions of Boston Safe, (3) other forms of
instructions in computer readable form as shall customarily be used for the
transmission of like information, and (4) such other forms of communication as
from time to time may be agreed upon by Boston Safe and Bank; which Bank
believes in good faith to have been given by Boston Safe or which are
transmitted with proper testing or authentication pursuant to terms and
conditions which Boston Safe may specify.
Unless otherwise expressly provided, all Instructions
shall continue in full force and effect until cancelled or superseded. Bank
shall act in accordance with Instructions and shall not be liable for any act or
omission in respect of any Instruction except in the case of willful default,
negligence, fraud, bad faith, willful misconduct, or reckless disregard of
duties on the part of Bank. Bank in executing all Instructions will take
relevant action in accordance with accepted industry practice.
B. Account
The term "Account" means collectively the Custody
Account and its sub-accounts, and the Deposit Account and its sub-accounts.
C. Securities
The term "Securities" includes, without limitation,
stocks, shares, bonds, debentures, debt securities (convertible or
non-convertible), bullion, notes, or other obligations or securities and any
certificates, receipts, futures contracts, foreign exchange contracts, options,
warrants, script or other instruments representing rights to receive, purchase,
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
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<PAGE>
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
Subcustodian Agreement
================================================================================
VII. Miscellaneous Provisions
A. Statements Regarding the Account
Bank will supply Boston Safe with such statements
regarding the Account as Boston Safe may request, including the identity and
location of any Eligible Depository authorized and acting hereunder. In
addition, Bank will supply to Boston Safe an advice or notification of any
transfers of Securities to or from the Account indicating, as to Securities
acquired for the Account, if applicable, the Eligible Depository having physical
possession of such Securities.
B. Examination of Books and Records
Bank agrees that its books and records relating to
the Account and Bank's actions under this Agreement shall be open to the
physical, on-premises inspection and audit at reasonable times by officers of,
auditors employed by, or other representatives of Boston Safe (including to the
extent permitted under ________ law the independent public accountants for any
customer of Boston Safe whose property is being held hereunder) and such books
and records shall be retained for such period as shall be agreed upon by Boston
Safe and Bank. As Boston Safe may reasonably request from time to time, Bank
will furnish its auditor's reports on its system of internal controls, and Bank
will use its best efforts to obtain and furnish similar reports of any Eligible
Depository authorized and acting hereunder.
C. Standard of Care
Bank shall exercise reasonable care in holding,
maintaining, servicing and disposing of property under this Agreement, and in
fulfilling any other obligations hereunder, provided that Bank shall exercise at
least the same standard of care as it exercises over its own assets and the
degree of care expected of a prudent professional subcustodian for hire and
shall assume the burden of proving that it has exercised such care in its
maintenance of property held by Bank in the Account and Securities held in an
Eligible Depository shall not affect Bank's standard of care, and Bank will
remain as fully responsible for any loss or damage to such Securities as if it
itself had retained physical possession of them. Bank shall indemnify and hold
harmless Boston Safe, the Account and each of Boston Safe's customers to the
extent of each such customer's interest in the account from and against
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<PAGE>
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
Subcustodian Agreement
================================================================================
any loss, damage, cost, expense, liability or claim (including reasonable
attorneys' fees) arising out of or in connection with the improper or negligent
performance or the nonperformance of the duties of the Bank. Bank shall maintain
adequate policies of insurance with recognized insurance carriers in support of
Bank's indemnification and otherwise covering any loss of the property held
under this Agreement.
Subject to the foregoing, Bank shall be responsible
for complying with all provisions of the law of _______, or any other law,
applicable to Bank in connection with its duties hereunder, including (but not
limited to) the payment of all transfer or similar taxes and compliance with any
currency restrictions and securities laws.
D. Loss of Cash or Securities
Bank agrees that, in the event of any loss of
Securities or Cash in the Account, Bank will use its best efforts to ascertain
the circumstances relating to such loss and will promptly report the same to
Boston Safe.
E. Compensation of Bank
Boston Safe agrees to pay to Bank from time to time
such compensation for its services and such out-of-pocket or incidental expenses
of Bank pursuant to this Agreement as may be mutually agreed upon in writing
from time to time.
F. Termination
Except as otherwise provided herein, this Agreement
may be terminated by Bank or Boston Safe on 60 days' written notice to the other
party, sent by registered mail, provided that any such notice, whether given by
Bank or Boston Safe, shall be followed within 60 days by Instructions specifying
the names of the persons to whom Bank shall deliver the Securities in the
Account and to whom the Cash in the Account shall be paid. If within 60 days
following the giving of such notice of termination, Bank does not receive such
Instructions, Bank shall continue to hold such Securities and Cash subject to
this Agreement until such Instructions are given. The obligations of the parties
under Paragraphs VIIC and VIIE of this Agreement shall survive the termination
of this Agreement.
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<PAGE>
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
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================================================================================
G. Notices
Unless otherwise specified in this Agreement, all
notices and communications with respect to matters contemplated by this
Agreement shall be in writing, and delivered by mail, postage prepaid, or
confirmed telex, to the following addresses (or to such other address as either
party hereto may from time to time designate by notice duly given in accordance
with this Paragraph):
To Bank:
To Boston Safe:
H. Confidentiality
Bank and Boston Safe shall each use its best efforts
to maintain the confidentiality of the property in the Account and the
beneficial owners thereof, subject, however, to the provisions of any laws
requiring disclosure. In addition, Bank shall safeguard any test keys,
identification codes or other security devices which Boston Safe shall make
available to it.
I. Assignment
This Agreement shall not be assignable by either
party but shall bind any successor in interest of Boston Safe and Bank,
respectively.
J. Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of Massachusetts except to the extent that such laws
are preempted by the laws of the United States of America. To the extent
inconsistent with this Agreement, Bank's rules and conditions regarding accounts
generally or custody accounts specifically shall not apply.
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BOSTON SAFE DEPOSIT AND TRUST COMPANY
FORM OF
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================================================================================
IN WITNESS WHEREOF, the parties have hereto caused
this Agreement to be executed by their respective officers thereunto duly
authorized.
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
Title:
[NAME OF BANK]
By:
Title:
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<PAGE>
EX-99.B(9)
MASTER SERVICES AGREEMENT
THIS AGREEMENT is made as of the 1st day of January, 1994 by
and between [FUND], a Maryland corporation (the "Fund"), and INVESTMENT COMPANY
CAPITAL CORP., a Maryland corporation ("ICC").
W I T N E S E T H:
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain ICC to provide certain
services on behalf of the Fund, as set forth in the Appendices to this
Agreement, and ICC is willing so to serve.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints ICC to perform such
services and to serve such functions on behalf of the Fund as set forth in the
Appendices to this Agreement, on the terms set forth in this Agreement and the
Appendices hereto. ICC accepts such appointment and agrees to furnish such
services and serve such functions. The Fund may have currently outstanding one
or more series or classes of its shares of common stock, par value $.001 per
share ("Shares") and may from time to time hereafter issue separate series or
classes of its Shares or classify and reclassify Shares of any series or class,
and the appointment effected hereby shall constitute appointment for the
provision of services with respect to all existing series and classes and any
additional series and classes unless the parties shall otherwise agree in
writing.
2. Delivery of Documents. The Fund has furnished ICC with
copies properly certified or authenticated of the following documents and will
furnish ICC from time to time with copies, properly certified or authenticated,
of all amendments of or supplements thereto, if any:
(a) Resolutions of the Fund's Board of Directors
authorizing the appointment of ICC to act in such capacities on behalf of the
Fund as set forth in the Appendices to this Agreement, and the entering into of
this Agreement by the Fund;
(b) The Fund's Articles of Incorporation and all
amendments thereto (the "Charter") and the Fund's By-Laws and all amendments
thereto (the "By-Laws");
(c) The Fund's most recent Registration Statement on
Form N-1A under the Securities Act of 1933, as amended (the "1933 Act") and
under the 1940 Act as filed with the Securities and Exchange Commission (the
"SEC") relating to the Shares; and
(d) Copies of the Fund's most recent prospectus or
prospectuses, including amendments and supplements thereto (collectively, the
"Prospectus").
3. Services to be Provided; Fees. During the term of this
Agreement, ICC shall perform the services and act in such capacities on behalf
of the Fund as set forth herein and in the Appendices to this Agreement. For the
services performed by ICC for the Fund, the Fund will compensate ICC in such
amounts as may be agreed to from time to time by the parties in writing.
<PAGE>
4. Records. The books and records pertaining to the Fund which
are in the possession of ICC shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws and rules and regulations. The Fund, or the Fund's
authorized representatives, shall have access to such books and records at all
times during ICC's normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by ICC to the Fund
or the Fund's authorized representative at the Fund's expense.
5. Cooperation With Accountants. In addition to any
obligations set forth in an Appendix hereto, ICC shall cooperate with the Fund's
independent accountants and shall take all reasonable actions in the performance
of its obligations under this Agreement to ensure that the necessary information
is made available to such accountants for the expression of such accountants'
opinion of the Fund's financial statements or otherwise, as such may be required
by the Fund from time to time.
6. Compliance with Governmental Rules and Regulations. The
Fund assumes full responsibility for insuring that the Fund complies with all
applicable requirements of the 1933 Act, the Securities Exchange Act of 1934
(the "1934 Act"), the 1940 Act, and any laws, rules and regulations of
governmental authorities having jurisdiction. ICC undertakes to comply with all
applicable requirements of the 1933 Act, the 1934 Act, the 1940 Act, the
Commodities Exchange Act (if applicable), and all laws, rules and regulations of
governmental authorities having jurisdiction with respect to the performance by
ICC of its duties under this Agreement, including the Appendices hereto.
7. Expenses.
(a) ICC shall bear all expenses of its employees and
overhead incurred in connection with its duties under this Agreement and shall
pay all salaries and fees of the Fund's directors and officers who are employees
of ICC.
(b) The Fund assumes and shall pay or cause to be
paid all other expenses of the Fund, including, without limitation: the fees of
the Fund's investment advisor, administrator and distributor; the charges and
expenses of any registrar, any custodian or depositary appointed by the Fund for
the safekeeping of its cash, portfolio securities and other property, and any
stock transfer, dividend or accounting agent or agents appointed by the Fund;
brokers' commissions chargeable to the Fund in connection with portfolio
securities transactions to which the Fund is a party; all taxes, including
securities issuance and transfer taxes, and corporate fees payable by the Fund
to federal, state or other governmental agencies; the cost and expense of
engraving or printing of stock certificates representing Shares; all costs and
expenses in connection with maintenance of registration of the Fund and its
Shares with the SEC and various states and other jurisdictions (including filing
fees and legal fees and disbursements of counsel); the expenses of printing,
including typesetting, and distributing prospectuses of the Fund and supplements
thereto to the Fund's shareholders; all expenses of shareholders' and directors'
meetings and of preparing, printing and mailing of proxy statements and reports
to shareholders; fees and travel expenses of directors or members of any
advisory board or committee other than such directors or members who are
"interested persons" of the Fund (as defined in the 1940 Act); all expenses
incident to the payment of any dividend, distribution, withdrawal or redemption,
whether in Shares or in cash; charges and expenses of any outside service used
for pricing of the Shares; charges and expenses of legal counsel, including
counsel to the directors of the Fund who are not "interested persons" of the
Fund (as defined in the 1940 Act), and of independent accountants, in connection
with any matter relating to the Fund; a portion of membership dues of industry
associations; interest payable on Fund borrowings; postage; insurance premiums
on property or personnel (including officers and directors) of the Fund which
inure to its benefit; extraordinary expenses (including, but not limited to,
legal claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs of the Fund's operation unless
otherwise explicitly provided herein.
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<PAGE>
8. Liability; Indemnification. Neither ICC nor any of its
officers, directors or employees shall be liable for any error of judgment or
for any loss suffered by the Fund in connection with the matters to which this
Agreement, including the Appendices hereto, relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on its or their part in
the performance of, or from reckless disregard by it or them of, its or their
obligations and duties under this Agreement. The Fund agrees to indemnify and
hold harmless ICC and its nominees from all taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation, liabilities
arising under the 1933 Act, the 1934 Act, the 1940 Act, and any state and
foreign securities and blue sky laws, all as currently in existence or as
amended from time to time) and expenses, including (without limitation)
attorneys' fees and disbursements, arising directly or indirectly from any
action or thing which ICC takes or does or omits to take or do at the request or
on the direction of or in reliance on the advice of the Fund; provided, that
neither ICC nor any of its nominees shall be indemnified against any liability
to the Fund or to its shareholders (or any expenses incident to such liability)
arising out of ICC's own willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties and obligations under this Agreement.
Notwithstanding anything else in this Agreement or any Appendix hereto to the
contrary, ICC shall have no liability to the Fund for any consequential, special
or indirect losses or damages which the Fund may incur or suffer as a
consequence of ICC's performance of the services provided in this Agreement or
any Appendix hereto.
9. Responsibility of ICC. ICC shall be under no duty to take
any action on behalf of the Fund except as specifically set forth herein or as
may be specifically agreed to by ICC in writing. In the performance of its
duties hereunder, ICC shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits in
performing services provided for under this Agreement, but ICC shall not be
liable for any act or omission which does not constitute willful misfeasance,
bad faith or gross negligence on the part of ICC or reckless disregard by ICC of
its duties under this Agreement. Notwithstanding anything in this Agreement to
the contrary, ICC shall have no liability to the Fund for any consequential,
special or indirect losses or damages which the Fund may incur or suffer by or
as a consequence of ICC's performance of the services provided hereunder.
10. Non-Exclusivity. The services of ICC to the Fund are not
to be deemed exclusive and ICC shall be free to render accounting or other
services to others (including other investment companies) and to engage in other
activities. It is understood and agreed that directors, officers or employees of
ICC may serve as directors or officers of the Fund, and that directors or
officers of the Fund may serve as directors, officers and employees of ICC to
the extent permitted by law; and that directors, officers and employees of ICC
are not prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as partners, directors
or officers of any other firm or corporation, including other investment
companies.
11. Notice. Any notice or other communication required to be
given pursuant to this Agreement shall be deemed duly given if delivered or
mailed by registered mail, postage prepaid, to the Fund at
_______________________________________, Attention: ____________, or to ICC at
135 E. Baltimore Street, Baltimore, Maryland 21202, Attention: Mr. Edward J.
Veilleux.
12. Miscellaneous.
(a) This Agreement shall become effective as of the
date first above written and shall remain in force until terminated. This
Agreement, or any Appendix hereto, may be terminated at any time without the
payment of any penalty, by either party hereto on sixty (60) days' written
notice to the other party.
(b) This Agreement shall be construed in accordance
with the laws of the State of Maryland.
-3-
<PAGE>
(c) If any provisions of this Agreement shall be held
or made invalid in whole or in part, the other provisions of this Agreement
shall remain in force. Invalid provisions shall, in accordance with the intent
and purpose of this Agreement, be replaced by mutual consent of the parties with
such valid provisions which in their economic effect come as close as legally
possible to such invalid provisions.
(d) Except as otherwise specified in the Appendices
hereto, ICC shall be entitled to rely on any notice or communication believed by
it to be genuine and correct and to have been sent to it by or on behalf of the
Fund.
(e) ICC agrees on behalf of itself and its employees
to treat confidentially all records and other information relative to the Fund
and its prior, present, or potential shareholders, except, after prior
notification to and approval in writing by the Fund, which approval shall not be
unreasonably withheld and may not be withheld where ICC may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Fund.
(f) Any part of this Agreement or any Appendix
attached hereto may be changed or waived only by an instrument in writing signed
by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
[FUND NAME]
By: ____________________________________
Title:
INVESTMENT COMPANY CAPITAL CORP.
By: ____________________________________
Title:
-4-
<PAGE>
Appendix I
TRANSFER AGENCY SERVICES APPENDIX
to
MASTER SERVICES AGREEMENT
between
[NAME OF FUND]
and
INVESTMENT COMPANY CAPITAL CORP.
This Appendix is hereby incorporated into and made a part of the Master
Services Agreement dated as of __________, 19__ (the "Master Services
Agreement") between _________________________________________ and Investment
Company Capital Corp. Defined terms not otherwise defined herein shall have the
meaning set forth in the Master Services Agreement.
1. Definitions.
(a) "Authorized Person". The term "Authorized Person" shall
mean any officer of the Fund and any other person, who is fully authorized by
the Fund's Board of Directors, to give Oral and Written Instructions on behalf
of the Fund. Such persons are listed in the Certificate attached hereto.
(b) "Oral Instructions". The term "Oral Instructions" shall
mean oral instructions received by ICC from an Authorized Person or from a
person reasonably believed by ICC to be an Authorized Person.
(c) "Written Instructions". The term "Written Instructions"
shall mean written instructions signed by two Authorized Persons and received by
ICC. The instructions may be delivered by hand, mail, tested telegram, cable,
telex or facsimile sending device.
2. Instructions. Unless otherwise provided in this Appendix, ICC shall
act only upon Oral and Written Instructions. ICC shall be entitled to rely upon
any Oral and Written Instruction it receives from an Authorized Person (or from
a person reasonably believed by ICC to be an Authorized Person) pursuant to this
Agreement. ICC may assume that any Oral or Written Instruction received
hereunder is not in any way inconsistent with the provisions of the Fund's
Articles of Incorporation, the Master Services Agreement, or any Appendix
attached thereto, or of any vote, resolution or proceeding of the Fund's Board
of Directors or shareholders.
The Fund agrees to forward to ICC Written Instructions
confirming Oral Instructions so that ICC receives the Written Instructions by
the close of business on the same day that such Oral Instructions are received.
The fact that such confirming Written Instructions are not received by ICC shall
in no way invalidate the transactions or enforceability of the transactions
authorized by the Oral Instructions. The Fund further agrees that ICC shall
incur no liability to the Fund in acting upon Oral or Written Instructions
provided such instructions reasonably appear to have been received from an
Authorized Person.
If ICC is in doubt as to any action it should or should not
take, ICC may request directions or advice, including Oral or Written
Instructions, from the Fund. ICC shall be protected in any action it takes or
does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel and which ICC believes,
in good faith, to be consistent with those directions, advice or Oral of Written
Instructions. Notwithstanding the foregoing, ICC shall have no obligation (i) to
seek such directions, advice or Oral or Written Instructions, or (ii) to act in
accordance with such directions, advice or Oral or Written Instructions unless,
under the terms of other provisions of this Appendix, the same is a condition of
ICC's properly taking or not taking such action.
<PAGE>
3. Description of Services.
(a) General Services To be Provided. ICC shall provide to the
Fund the following services on an ongoing basis:
(i) Calculate 12b-1 payments;
(ii) Maintain proper shareholder registrations;
(iii) Review new applications and correspond with
shareholders, if necessary, to complete or
correct information;
(iv) Direct payment processing of checks or wires;
(v) Prepare and certify stockholder lists in
conjunction with proxy solicitations; solicit
and tabulate proxies; receive and tabulate
proxy cards for meetings of the Fund's
shareholders;
(vi) Countersign securities;
(vii) Direct shareholder confirmation of activity;
(viii) Provide toll-free lines for direct shareholder
use, plus customer liaison staff for on-line
inquiry response;
(ix) Mail duplicate confirmation to broker-dealers
of their clients' activity, whether executed
through the broker-dealer or directly with ICC;
(x) Provide periodic shareholder lists and
statistics to the Fund;
(xi) Provide detail for underwriter/broker
confirmations;
(xii) Mail periodic year-end tax and statement
information;
(xiii) Provide timely notification to investment
advisor, accounting agent, and custodian of
Fund activity; and
(xiv) Perform other participating broker-dealer
shareholder services as may be agreed upon from
time to time.
(b) Purchase of Shares. ICC shall issue and credit an account
of an investor, in the manner described in the Prospectus, once it receives: (i)
a purchase order; (ii) proper information to establish a shareholder account;
and (iii) confirmation of receipt by, or crediting of funds for such order to,
the Fund's custodian.
(d) Redemption of Shares. ICC shall redeem the Fund's shares
only in accordance with the provisions of the Prospectus and each shareholder's
individual directions. Shares shall be redeemed at such time as the shareholder
tenders his or her shares and directs the method of redemption in accordance
with the terms set forth in the Prospectus. If securities are received in proper
form, Shares shall be redeemed before the funds are provided to ICC. When the
Fund provides ICC with funds, redemption proceeds will be wired (if requested)
or a redemption check issued. All redemption checks shall be drawn to
<PAGE>
the recordholder unless third party payment authorizations have been signed by
the recordholder and delivered to ICC.
(e) Dividends and Distributions. Upon receipt of certified
resolutions of the Fund's Board of Directors authorizing the declaration and
payment of dividends and distributions, ICC shall issue the dividends and
distributions in shares, or, upon shareholder election, pay such dividends and
distributions in cash. Such issuance or payment shall be made after deduction
and payment of the required amount of funds to be withheld in accordance with
any applicable tax laws or other laws, rules or regulations. The Fund's
shareholders shall receive tax forms and other information, or permissible
substitute notice, relating to dividends and distributions, paid by the Fund as
are required to be filed and mailed by applicable law, rule or regulation. ICC
shall maintain and file with the IRS and other appropriate taxing authorities
reports relating to all dividends and distributions paid by the Fund to its
shareholders as required by tax or other law, rule or regulation.
(f) Shareholder Account Services. If authorized in the
Prospectus, ICC shall arrange for the following services, in accordance with the
applicable terms set forth in the Prospectus: (i) the issuance of Shares
obtained through any pre-authorized check plan and direct purchases through
broker wire orders, checks and applications; (ii) exchanges of shares of any
fund for Shares of the Fund with which the Fund has exchange privileges; (iii)
automatic redemption from an account where that shareholder participates in an
automatic redemption plan; and (iv) redemption of Shares from an account with a
check writing privilege.
(g) Communications to Shareholders. Upon timely Written
Instructions, ICC shall mail all communications by the Fund to its shareholders,
including, reports to shareholders, confirmations of purchases and sales of
Shares, monthly or quarterly statements, dividend and distribution notices, and
proxy material.
(h) Records. ICC shall maintain records of the accounts for
each shareholder showing the following information: (i) name, address and U.S.
Tax Identification or Social Security number; (ii) number and class of Shares
held and number and class of Shares for which certificates, if any, have been
issued, including certificate numbers and denominations; (iii) historical
information regarding the account of each shareholder, including dividends and
distributions paid and the date and price for all transactions on a
shareholder's account; (iv) any stop or restraining order placed against a
shareholder's account; (v) any correspondence relating to the current
maintenance of a shareholder's account; (vi) information with respect to
withholdings; and (vii) any information required in order for ICC to perform any
calculations contemplated or required by this Appendix or the Master Services
Agreement.
(i) Lost or Stolen Certificates. ICC shall place a stop notice
against any certificate reported to be lost or stolen and comply with all
applicable federal regulatory requirements for reporting such loss or alleged
misappropriation. A new certificate shall be registered and issued upon: (i) the
shareholder's pledge of a lost instrument bond or such other appropriate
indemnity bond issued by a surety company approved by ICC; and (ii) completion
of a release and indemnification agreement signed by the shareholder to protect
ICC.
(j) Shareholder Inspection of Stock Records. Upon requests
from Fund shareholders to inspect stock records, ICC will notify the Fund and
the Fund shall deliver Oral or Written Instructions granting or denying each
such request. Unless ICC has acted contrary to the Fund's Instructions, the Fund
agrees to release ICC from any liability for refusal or permission for a
particular shareholder to inspect the Fund's shareholder records.
<PAGE>
(k) Withdrawal of Shares and Cancellation of Certificates.
Upon receipt of Written Instructions, ICC shall cancel outstanding certificates
surrendered by the Fund to reduce the total amount of outstanding shares by the
number of shares surrendered by the Fund.
(l) Telephone Transactions. In accordance with the terms of
the Prospectus, ICC shall act upon shareholder requests made by telephone for
redemption or exchange of ISI shares; provided that (i) the shareholder has
authorized telephone transactions on the Fund's Account Application or otherwise
in writing, (ii) if the request is a redemption, the amount to be redeemed does
not exceed $50,000 and (iii) ICC has complied with the identification and other
security procedures required by the Fund in connection with telephone
transactions.
4. Fees. As compensation for the services performed by ICC for the Fund
pursuant to this Appendix, the Fund will pay to ICC such amounts as may be
agreed to from time to time by the parties in writing.
5. Delegation of Responsibilities. ICC may subcontract to any third
party all or any part of its obligations under this Appendix; provided that any
such subcontracting shall not relieve ICC of any of its obligations under this
Appendix. All subcontractors shall be paid by ICC.
<PAGE>
EX-99.B(10)
[Letterhead of Morgan, Lewis & Bockius]
April 30, 1993
Flag Investors International Fund, Inc.
135 East Baltimore Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
We have acted as counsel for Flag Investors International
Fund, Inc. (the "Fund") in connection with the organization of the Fund. We have
examined and participated in the preparation of the Fund's Articles of
Incorporation, its By- laws, its minutes of meetings and forms of unanimous
consent of its Board of Directors and Shareholders, and Post-Effective Amendment
No. 10 under the Securities Act of 1933 and Amendment No. 11 under the
Investment Company Act of 1940 to the Registration Statement on Form N-1A (No.
33-8479) (the "Registration Statement") filed with the Securities and Exchange
Commission on April 30, 1993 pursuant to which the Fund expressly adopted the
registration statement of Flag Investors International Trust as its own.
Based upon the foregoing and our consideration of such other
matters as we have deemed necessary, we are of the opinion that, assuming that
the Registration Statement is declared effective sixty days after filing, upon
such effectiveness, the shares of common stock of the Fund (the "Shares"), when
issued and paid for pursuant to the terms of the offering as described in the
Fund's Prospectus filed as part of such Registration Statement, will be legally
issued, fully paid and non-assessable.
We hereby consent to the inclusion of this opinion as Exhibit
10(b) to the Registration Statement.
Very truly yours,
<PAGE>
EX-99.B(11)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Flag Investors International Fund, Inc.
We hereby consent to the use in Post-Effective Amendment No. 15 to Registration
No. 33-28479 of our report dated December 16, 1994 appearing in the Statement of
Additional Information, which is a part of such Registration Statement, and to
the references to us under the captions "Financial Highlights" and "General
Information - Reports" appearing in the Prospectus, which also is a part of such
Registration Statement, and under the caption "Independent Auditors" appearing
in the Statement of Additional Information.
Deloitte & Touche LLP
Princeton, New Jersey
August 25, 1995
<PAGE>
EX-99.B(13)
FLAG INVESTORS INTERNATIONAL TRUST
SUBSCRIPTION AGREEMENT
For and in consideration of the mutual agreements herein contained,
Alex. Brown Incorporated ("Alex. Brown") hereby agrees to purchase from Flag
Investors International Trust, a Massachusetts business trust, (the "Fund")
and the Fund agrees to sell 10,000 shares of the Fund's common shares,
without par value at a price of $10.00 per share, (the "Shares") upon the
terms and conditions set forth herein and as part of a public offering
pursuant to the terms and conditions of the Fund's Registration Statement
dated ___________, 1986.
Alex. Brown agrees to purchase such Shares and to pay the full
consideration therefor to the Fund upon demand.
Alex. Brown hereby confirms to the Fund its representations that it
is purchasing such Shares for investment purposes, with no present intention
of redeeming or reselling any portion thereof, and its agreement that in the
event it should dispose of any of such Shares, such transaction will be
effected by redeeming such Shares through the Fund.
ALEX. BROWN INCORPORATED
By: ________________________
Dated: As of _____________, 1986
Subscription Accepted:
FLAG INVESTORS INTERNATIONAL TRUST
By: ____________________________
Chairman
<PAGE>
EX-99.B(15)
FLAG INVESTORS INTERNATIONAL FUND, INC.
FORM OF DISTRIBUTION PLAN
1. The Plan. This Plan (the "Plan") is a written plan as
described in Rule 12b-1 (the "Rule") under the Investment Company Act of 1940,
as amended (the "1940 Act") of Flag Investors Bond Fund, Inc. (the "Fund").
Other capitalized terms herein have the meaning given to them in the Fund's
prospectus.
2. Payments Authorized. (a) Alex. Brown & Sons Incorporated
("Alex. Brown") is authorized, pursuant to the Plan, to make payments to any
Participating Dealer under a Sub-Distribution Agreement, to accept payments
made to it under the Distribution Agreement and to make payments on behalf of
the Fund to Shareholder Servicing Agents under Shareholder Servicing Agreements.
(b) Alex. Brown may make payments in any amount,
provided that the total amount of all payments made during a fiscal year of the
Fund do not exceed, in any fiscal year of the Fund, the amount paid to Alex.
Brown under the Distribution Agreement which is an annual fee, calculated on an
average daily net basis and paid monthly, equal to .25% of the average daily net
assets of the Fund.
3. Expenses Authorized. Alex. Brown is authorized, pursuant to
the Plan, from sums paid to it under the Distribution Agreement, to purchase
advertising for the Shares, to pay for promotional or sales literature and to
make payments to sales personnel affiliated with it for their efforts in
connection with sales of Shares. Any such advertising and sales material may
include references to other open-end investment companies or other investments,
provided that expenses relating to such advertising and sales material will be
allocated among such other investment companies or investments in an equitable
manner, and any sales personnel so paid are not required to devote their time
solely to the sale of Shares.
4. Certain Other Payments Authorized. As set forth in the
Distribution Agreement, the Fund assumes certain expenses, which Alex. Brown and
the Fund's Advisor are authorized to pay or cause to be paid on its behalf and
such payments shall not be included in the limitations contained in this Plan.
These expenses include: the fees of the Fund's Advisor and Alex. Brown; the
charges and expenses of any registrar, any custodian or depository appointed by
the Fund for the safekeeping of its cash, portfolio securities and other
property, and any transfer, dividend or accounting agent or agents appointed by
the Fund; brokers' commissions chargeable to the Fund in connection with
portfolio securities transactions to which the Fund is a party; all taxes,
including securities issuance and transfer taxes, and fees payable by the Fund
to federal, state or other governmental agencies; the costs and expenses of
engraving or printing of certificates representing shares of the Fund; all costs
and expenses in connection with maintenance of registration of the Fund and its
shares with the Securities and Exchange Commission and various states and other
jurisdictions (including filing fees and legal fees and disbursements of
counsel); the costs and expenses of printing, including typesetting, and
distributing prospectuses and statements of additional information of the Fund
supplements thereto to the Fund's shareholders; all expenses of shareholders'
and Directors' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of Directors or
Director members of any advisory board or committee; all expenses incident to
the payment of any dividend, distribution, withdrawal or redemption, whether in
shares or in cash; charges and expenses of any outside service used for pricing
<PAGE>
of the Fund's shares; charges and expenses of legal counsel, including counsel
to the Directors of the Fund who are not interested persons (as defined in the
1940 Act) of the Fund and of independent certified public accountants, in
connection with any matter relating to the Fund; membership dues of industry
associations; interest payable on Fund borrowings; postage; insurance premiums
on property or personnel (including officers and Directors) of the Fund which
inure to its benefit; extraordinary expenses (including, but not limited to,
legal claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs of the Fund's operation unless
otherwise explicitly provided herein.
5. Other Distribution Resources. Alex. Brown and Participating
Dealers may expend their own resources separate and apart from amounts payable
under the Plan to support the Fund's distribution effort. Alex. Brown will
report to the Board of Directors on any such expenditures as part of its regular
reports pursuant to Section 6 of this Plan.
6. Reports. While this Plan is in effect, Alex. Brown shall
report in writing at least quarterly to the Fund's Board of Directors, and the
Board shall review, the following: (i) the amounts of all payments under the
Plan, the identity of the recipients of each such payment; (ii) the basis on
which the amount of the payment to such recipient was made; (iii) the amounts of
expenses authorized under this Plan and the purpose of each such expense; and
(iv) all costs of each item specified in Section 4 of this Plan (making
estimates of such costs where necessary or desirable), in each case during the
preceding calendar or fiscal quarter.
7. Effectiveness, Continuation, Termination and Amendment.
This Plan has been approved (i) by a vote of the Board of Directors of the Fund
and of a majority of the Directors who are not interested persons (as defined in
the 1940 Act), cast in person at a meeting called for the purpose of voting on
this Plan; and (ii) by a vote of holders of at least a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act). This Plan shall,
unless terminated as hereinafter provided, continue in effect from year to year
only so long as such continuance is specifically approved at least annually by
the vote of the Fund's Board of Directors and by the vote of a majority of the
Directors of the Fund who are not interested persons (as defined in the 1940
Act), cast in person at a meeting called for the purpose of voting on such
continuance. This Plan may be terminated at any time by a vote of a majority of
the Directors who are not interested persons (as defined in the 1940 Act) or by
the vote of the holders of a majority of the Fund's outstanding voting
securities (as defined in the 1940 Act). This Plan may not be amended to
increase materially the amount of payments to be made without shareholder
approval, as set forth in (ii) above, and all amendments must be approved in the
manner set forth under (i) above.
<PAGE>
EX-99.B(16)
Schedule of Computation of Performance Quotations
(unaudited)
This Schedule is included to illustrate how total return will be
calculated. The examples presented use actual data for the Fund.
1. Total Return
(a) Average Annual Total Return Pursuant to SEC Rules
(i) One Year ERV
n
P(1+T) = one year ERV
P = initial payment = $1,000
ERV = $830
n = number of years = 1
T = total return = -17.04%
(ii) Five Year ERV
n
P(1+T) = Five Year ERV
P = initial payment = $1,000
ERV = $775
n = number of years = 5
T = average annual total return = -4.97%
(iii) ERV since effectiveness
n
P(1+T) = ERV since 11/18/86
P = initial payment = $1,000
ERV = $1,121
10.5
----
n = number of years = 5 12
T = average annual total return = 1.96%
<PAGE>
(b) Average Annual Total Return Pursuant to Non-
Standardized Computation
(i) One Year ERV
n
P(1+T) = one year ERV
P = initial investment = $10,000
One Year ERV = $8,620
n = number of years = 1
T = total return = -13.8%
(ii) Five Year ERV
n
P(1+T) = Five Year ERV
P = initial investment = $10,000
Five Year ERV = $10,621
n = number of years = 5
T = average annual total return = 1.21%
(iii) ERV since effectiveness
n
P(1+T) = ERV since 11/18/86
P = initial investment = $10,000
ERV = $11,481
11.5
----
n = number of years = 5 12
T = average annual total return = 2.35%
<PAGE>
EX-99.B(24)
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, Truman T. Semans, whose
signature appears below, does hereby constitute and appoint Edward J. Veilleux
and Brian C. Nelson, and each of them singly, his true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments, in his
name, place and stead, which said attorney-in-fact and agent may deem necessary
or advisable or which may be required to enable Flag Investors International
Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the Fund's Registration
Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with
any and all pre-and post-effective amendments thereto, including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as Chairman and a director of
the Fund such Registration Statement and any and all such pre-and post-effective
amendments filed with the Securities and Exchange Commission under the 1933 Act
and the 1940 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorney-in-fact
and agent, or either of them or their substitute or substitutes, shall lawfully
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ Truman T. Semans
---------------------
Truman T. Semans
Date: February 22, 1994
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, Richard T. Hale, whose
signature appears below, does hereby constitute and appoint Edward J. Veilleux
and Brian C. Nelson, and each of them singly, his true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments, in his
name, place and stead, which said attorney-in-fact and agent may deem necessary
or advisable or which may be required to enable Flag Investors International
Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the Fund's Registration
Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with
any and all pre-and post-effective amendments thereto, including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director of the Fund such
Registration Statement and any and all such pre-and post-effective amendments
filed with the Securities and Exchange Commission under the 1933 Act and the
1940 Act, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney-in-fact and
agent, or either of them or their substitute or substitutes, shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ Richard T. Hale
--------------------
Richard T. Hale
Date: February 22, 1994
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, N. Bruce Hannay, whose
signature appears below, does hereby constitute and appoint Edward J. Veilleux
and Brian C. Nelson, and each of them singly, his true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments, in his
name, place and stead, which said attorney-in-fact and agent may deem necessary
or advisable or which may be required to enable Flag Investors International
Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the Fund's Registration
Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with
any and all pre-and post-effective amendments thereto, including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director of the Fund such
Registration Statement and any and all such pre-and post-effective amendments
filed with the Securities and Exchange Commission under the 1933 Act and the
1940 Act, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney-in-fact and
agent, or either of them or their substitute or substitutes, shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ N. Bruce Hannay
--------------------
N. Bruce Hannay
Date: February 22, 1994
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, John F. Kroeger, whose
signature appears below, does hereby constitute and appoint Edward J. Veilleux
and Brian C. Nelson, and each of them singly, his true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments, in his
name, place and stead, which said attorney-in-fact and agent may deem necessary
or advisable or which may be required to enable Flag Investors International
Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the Fund's Registration
Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with
any and all pre-and post-effective amendments thereto, including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director of the Fund such
Registration Statement and any and all such pre-and post-effective amendments
filed with the Securities and Exchange Commission under the 1933 Act and the
1940 Act, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney-in-fact and
agent, or either of them or their substitute or substitutes, shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ John F. Kroeger
--------------------
John F. Kroeger
Date: February 22, 1994
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, Eugene J. McDonald, whose
signature appears below, does hereby constitute and appoint Edward J. Veilleux
and Brian C. Nelson, and each of them singly, his true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments, in his
name, place and stead, which said attorney-in-fact and agent may deem necessary
or advisable or which may be required to enable Flag Investors International
Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the Fund's Registration
Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with
any and all pre-and post-effective amendments thereto, including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director of the Fund such
Registration Statement and any and all such pre-and post-effective amendments
filed with the Securities and Exchange Commission under the 1933 Act and the
1940 Act, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney-in-fact and
agent, or either of them or their substitute or substitutes, shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ Eugene J. McDonald
-----------------------
Eugene J. McDonald
Date: February 22, 1994
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, Harry Woolf, whose signature
appears below, does hereby constitute and appoint Edward J. Veilleux and Brian
C. Nelson, and each of them singly, his true and lawful attorney-in-fact and
agent, with full power of substitution or resubstitution, to do any and all acts
and things and to execute any and all instruments, in his name, place and stead,
which said attorney-in-fact and agent may deem necessary or advisable or which
may be required to enable Flag Investors International Fund, Inc. (the "Fund")
to comply with the Securities Act of 1933, as amended (the "1933 Act") and the
Investment Company Act of 1940, as amended (the "1940 Act"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the Fund's Registration Statement on Form N-1A
pursuant to the 1933 Act and the 1940 Act, together with any and all pre-and
post-effective amendments thereto, including specifically, but without limiting
the generality of the foregoing, the power and authority to sign in the name and
on behalf of the undersigned as a director of the Fund such Registration
Statement and any and all such pre-and post-effective amendments filed with the
Securities and Exchange Commission under the 1933 Act and the 1940 Act, and any
other instruments or documents related thereto, and the undersigned does hereby
ratify and confirm all that said attorney-in-fact and agent, or either of them
or their substitute or substitutes, shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ Harry Woolf
----------------
Harry Woolf
Date: February 22, 1994
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, John W. Church, Jr., whose
signature appears below, does hereby constitute and appoint Edward J. Veilleux
and Brian C. Nelson, and each of them singly, his true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments, in his
name, place and stead, which said attorney-in-fact and agent may deem necessary
or advisable or which may be required to enable Flag Investors International
Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the Fund's Registration
Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with
any and all pre-and post-effective amendments thereto, including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as President of the Fund such
Registration Statement and any and all such pre-and post-effective amendments
filed with the Securities and Exchange Commission under the 1933 Act and the
1940 Act, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney-in-fact and
agent, or either of them or their substitute or substitutes, shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ John W. Church, Jr.
------------------------
John W. Church, Jr.
Date: February 22, 1994
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, Diana M. Ellis, whose
signature appears below, does hereby constitute and appoint Edward J. Veilleux
and Brian C. Nelson, and each of them singly, her true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments, in her
name, place and stead, which said attorney-in-fact and agent may deem necessary
or advisable or which may be required to enable Flag Investors International
Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the Fund's Registration
Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with
any and all pre-and post-effective amendments thereto, including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as Chief Financial and
Accounting Officer of the Fund such Registration Statement and any and all such
pre-and post-effective amendments filed with the Securities and Exchange
Commission under the 1933 Act and the 1940 Act, and any other instruments or
documents related thereto, and the undersigned does hereby ratify and confirm
all that said attorney-in-fact and agent, or either of them or their substitute
or substitutes, shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand and seal
as of the date set forth below.
/s/ Diana M. Ellis
-------------------
Diana M. Ellis
Date: February 22, 1994
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, Louis E. Levy, whose
signature appears below, does hereby constitute and appoint Edward J. Veilleux
and Brian C. Nelson, and each of them singly, his true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments, in his
name, place and stead, which said attorney-in-fact and agent may deem necessary
or advisable or which may be required to enable Flag Investors International
Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the Fund's Registration
Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with
any and all pre-and post-effective amendments thereto, including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director of the Fund such
Registration Statement and any and all such pre-and post-effective amendments
filed with the Securities and Exchange Commission under the 1933 Act and the
1940 Act, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney-in-fact and
agent, or either of them or their substitute or substitutes, shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ Louis E. Levy
------------------
Louis E. Levy
Date: February 24, 1995
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, James J. Cunnane, whose
signature appears below, does hereby constitute and appoint Edward J. Veilleux
and Brian C. Nelson, and each of them singly, his true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments, in his
name, place and stead, which said attorney-in-fact and agent may deem necessary
or advisable or which may be required to enable Flag Investors International
Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the Fund's Registration
Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with
any and all pre-and post-effective amendments thereto, including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director of the Fund such
Registration Statement and any and all such pre-and post-effective amendments
filed with the Securities and Exchange Commission under the 1933 Act and the
1940 Act, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney-in-fact and
agent, or either of them or their substitute or substitutes, shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ James J. Cunnane
---------------------
James J. Cunnane
Date: February 24, 1995
<PAGE>
FLAG INVESTORS INTERNATIONAL FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, Rebecca W. Rimel, whose
signature appears below, does hereby constitute and appoint Edward J. Veilleux
and Brian C. Nelson, and each of them singly, her true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to do any and all acts and things and to execute any and all instruments, in her
name, place and stead, which said attorney-in-fact and agent may deem necessary
or advisable or which may be required to enable Flag Investors International
Fund, Inc. (the "Fund") to comply with the Securities Act of 1933, as amended
(the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940
Act"), and any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the Fund's Registration
Statement on Form N-1A pursuant to the 1933 Act and the 1940 Act, together with
any and all pre-and post-effective amendments thereto, including specifically,
but without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director of the Fund such
Registration Statement and any and all such pre-and post-effective amendments
filed with the Securities and Exchange Commission under the 1933 Act and the
1940 Act, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney-in-fact and
agent, or either of them or their substitute or substitutes, shall lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand and seal
as of the date set forth below.
/s/ Rebecca W. Rimel
---------------------
Rebecca W. Rimel
Date: August 24, 1995
<TABLE> <S> <C>
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