<PAGE>
As Filed With the Securities and Exchange Commission on August 18, 1995
Registration No. 33-21119
811-5320
------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 10 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 14 [x]
FLAG INVESTORS EMERGING GROWTH FUND, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
135 East Baltimore Street
Baltimore, Maryland 21202
----------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (410) 727-1700
Edward J. Veilleux
135 East Baltimore Street
Baltimore, Maryland 21202
--------------------------------------
(Name and Address of Agent for Service)
Copy to:
Richard W. Grant, Esquire
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, Pennsylvania 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)
------------------------------------------------------------------------------
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 EMERGING GROWTH FUND, INC.
(Class A and Class B Shares)
Cross Reference Sheet
August 18, 1995
<TABLE>
<CAPTION>
Registration
Statement
Items Required by Form N-1A Heading
--------------------------- ------------
Part A - Information Required in a Prospectus
------
<S> <C> <C>
Item 1. Cover Page.............................. Cover Page
Item 2. Synopsis ............................... Fund Expenses
Item 3. Condensed Financial Information ........ Financial Highlights
Item 4. General Description of Registrant ...... Investment Program;
Investment Restrictions;
General Information
Item 5. Management of the Fund ................. Management of the
Fund; Investment
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>
<S> <C> <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 Objectives
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, Transfer Agent,
Accounting Services;
Independent Accountants
Item 17. Brokerage 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
Item 22. Calculation of Performance Data ........ Performance Information
Item 23. Financial Statements ................... Financial Statements
Part C - Other Information
Part C contains the information required by the items
contained therein under the items set forth in the form.
</TABLE>
<PAGE>
The prospectus dated February 28, 1995 relating to the Flag Investors Class A
Shares of Flag Investors Emerging Growth Fund, Inc. (the "Fund"), filed with the
Securities and Exchange Commission on February 24, 1995 as part of
Post-Effective Amendment No. 9 to the Fund's Registration Statement on Form N-1A
(File No. 33-21119) 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
of March 3, 1995 is incorporated herein by reference as if set forth in its
entirety.
<PAGE>
FLAG INVESTORS EMERGING GROWTH FUND, INC.
(Institutional Shares)
Cross Reference Sheet
August 18, 1995
<TABLE>
<CAPTION>
Registration
Statement
Items Required by Form N-1A Heading
--------------------------- ------------
Part A - Information Required in a Prospectus
<S> <C> <C>
Item 1. Cover Page ............................. Cover Page
Item 2. Synopsis ............................... Fund Expenses
Item 3. Condensed Financial Information ........ Financial Highlights
Item 4. General Description of Registrant ...... Investment Program;
Investment Restrictions;
General Information
Item 5. Management of the Fund ................. Management of the
Fund; Investment
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 Institutional Shares;
Distributor
Item 8. Redemption or Repurchase ............... How to Redeem Institutional
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>
<S> <C> <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 Objectives
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, Transfer Agent,
Accounting Services;
Independent Accountants
Item 17. Brokerage 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
Item 22. Calculation of Performance Data ........ Performance Information
Item 23. Financial Statements ................... Financial Statements
Part C - Other Information
Part C contains the information required by the items
contained therein under the items set forth in the form.
</TABLE>
<PAGE>
(LOGO)
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
(Institutional SHARES)
This mutual fund (the "Fund") is an open-end diversified mutual fund
seeking long-term capital appreciation. The Fund will invest primarily in a
diversified portfolio of small and mid-sized emerging growth companies.
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
EMERGING GROWTH FUND, INC.
(INSTITUTIONAL SHARES)
135 EAST BALTIMORE STREET
BALTIMORE, MARYLAND 21202
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Fund Expenses ................................... 2
2. Financial Highlights ............................ 2
3. Investment Program .............................. 6
4. Investment Restrictions ......................... 10
5. How to Invest in Institutional Shares ........... 10
6. How to Redeem Institutional Shares .............. 13
7. Dividends and Taxes ............................. 14
8. Management of the Fund .......................... 15
9. Investment Advisor .............................. 16
10. Distributor ..................................... 17
11. Custodian, Transfer Agent, Accounting Services .. 17
12. Performance Information ......................... 18
13. General Information ............................. 19
</TABLE>
-----------------------------------------------------------------------------
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.
-----------------------------------------------------------------------------
1
<PAGE>
=============================================================================
1. FUND EXPENSES
.............................................................................
SHAREHOLDER TRANSACTION EXPENSES: (AS A PERCENTAGE OF OFFERING PRICE)
<TABLE>
<CAPTION>
<S> <C>
----------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases .............. None
Maximum Sales Charge Imposed on Reinvested Dividends ... None
Deferred Sales Charge .................................. None
----------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES:
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
----------------------------------------------------------------
Management Fees ........................................ .47%
12b-1 Fees ............................................. None
Other Expenses ......................................... .78%
Total Fund Operating Expenses .......................... 1.25%
</TABLE>
------
EXAMPLE:
<TABLE>
<CAPTION>
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
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$13 $40 $71 $161
----------------------------------------------------------------------------------------------------
</TABLE>
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 or 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", "Investment Advisor" and "Distributor.") The Expenses
and Example appearing in the table above are based on the Fund's expenses 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%.
=============================================================================
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
1987. 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 "Fund Expenses.")
Nevertheless, historical information about the Fund may be useful to investors
2
<PAGE>
if they take into account the differences in expenses. Accordingly, the
financial highlights included in this table are a part of 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 Coopers & Lybrand L.L.P., independent accountants. The
financial statements for the Class A Shares for the fiscal year ended October
31, 1994 and the report thereon of Coopers & Lybrand L.L.P. 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 October 31,
ended April 30, ---------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of
period $ 12.90 $ 14.02 $ 13.53 $ 15.23 $ 8.93 $ 14.90 $ 10.87
------------- --------- --------- ---------- --------- ---------- ---------
Income from Investment Operations:
Net investment income/(loss) (0.03) (0.08) (0.08) (0.16) (0.10) (0.11) (0.05)
Net realized and unrealized
gain/(loss) on investments 0.82 0.47 1.20 (1.54) 6.40 (4.00) 4.13
Effect of other capital share
activity -- -- -- -- -- -- --
------------- --------- --------- ---------- --------- ---------- ---------
Total from Investment Operations 0.79 0.39 1.12 (1.70) 6.30 (4.11) 4.08
Less Distributions:
Dividends from net investment income
and short-term gains -- -- -- -- -- (1.86) (0.05)
Distributions from net realized
long-term gains (0.04) (1.51) (0.63) -- -- -- --
------------- --------- --------- ---------- --------- ---------- ---------
Total Distributions (0.04) (1.51) (0.63) -- -- (1.86) (0.05)
------------- --------- --------- ---------- --------- ---------- ---------
Net asset value at end of period $ 13.65 $ 12.90 $ 14.02 $ 13.53 $ 15.23 $ 8.93 $ 14.90
============= ========= ========= ========== ========= ========== =========
Total Return* 6.16 3.75% 8.33% (11.16)% 70.55% (31.63)% 37.64%
Ratios to Average Net Assets:
Expenses(2) 1.50%(1) 1.50% 1.50% 1.46% 1.50% 1.50% 1.49%
Net investment income (loss)(3) (0.51)%(1) (0.73)% (0.52)% (0.92)% (0.76)% (0.92)% (0.42)%
Supplemental Data:
Net assets at end of period (000) $28,136 $23,302 $28,867 $38,924 $48,656 $31,678 $44,396
Portfolio turnover rate 25% 86% 133% 69% 79% 82% 108%
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
--------------------
For the period
December 30, 1987
(commencement of
operations) through
October 31, 1988
--------------------
<S> <C>
Per Share Operating Performance:
Net asset value at beginning of
period $ 10.00
------------------
Income from Investment Operations:
Net investment income/(loss) 0.10
Net realized and unrealized
gain/(loss) on investments (0.88)
Effect of other capital share
activity 1.65
------------------
Total from Investment Operations 0.87
Less Distributions:
Dividends from net investment income
and short-term gains --
Distributions from net realized
long-term gains --
------------------
Total Distributions --
------------------
Net asset value at end of period $ 10.87
==================
Total Return* 8.80%
Ratios to Average Net Assets:
Expenses(2) 1.47%(1)
Net investment income (loss)(3) 1.02%(1)
Supplemental Data:
Net assets at end of period (000) $26,159
Portfolio turnover rate 110%
</TABLE>
------
* Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charges.
(1) Annualized.
(2) Without the waiver of advisory fees, the ratio of expenses to average net
assets would have been 1.79% (annualized), 1.88%, 1.64%, 1.91%, 1.64%,
1.63% and 2.12% for the six months ended April 30, 1995, years ended
October 31, 1994, 1993, 1991, 1990 and 1989 and for the period December
30, 1987 through October 31, 1988, respectively.
(3) Without the waiver of advisory fees, the ratio of net investment
income/loss to average net assets would have been (.79)% (annualized),
(1.10)%, (0.66)%, (1.17)%, (1.07)%, (0.56)% and 1.68% for the six months
ended April 30, 1995, for the fiscal years ended October 31, 1994, 1993,
1991, 1990 and 1989 and for the period December 30, 1987 through October
31, 1988, respectively.
5
<PAGE>
=============================================================================
3. INVESTMENT PROGRAM
.............................................................................
INVESTMENT OBJECTIVES, POLICIES
AND RISK CONSIDERATIONS
The Fund's investment objective is long-term capital appreciation. The
Fund will seek to accomplish its objective through investments in small and
mid-sized emerging growth companies. The Fund's investment objective is a
fundamental policy of the Fund and may not be changed without shareholder
approval. There can be no assurance, however, that the Fund will achieve its
investment objective.
At the same time, the Fund will attempt to reduce the volatility inherent
in the price of individual investments in this sector of the market by
investing in a diversified portfolio of securities of companies that the
Fund's advisor believes are well managed and have experienced or have the
potential to experience rapid growth in revenues, earnings, assets and cash
flow. In general, an emerging growth company with approximately $250 million
or less in annual sales would be considered a small company; a mid-sized
emerging growth company would generally have annual sales in an approximate
range of between $250 million and $1 billion. Investments in such emerging
growth companies involve certain risks. (See "Special Risk Considerations.")
The Fund will also attempt to reduce the volatility of price changes by
investing in a broad cross-section of industries. The Fund's investments in
particular industries will change from time to time as investment
opportunities change, but the Fund invests primarily, but not exclusively, in
companies in the businesses of technology, health care, business services,
energy, transportation, financial services, consumer products and services
and capital goods.
Investment Company Capital Corp., the Fund's investment advisor ("ICC" or
the "Advisor"), will seek to identify companies which, in its opinion, have
the ability to sustain a relatively high level of growth and profitability.
In selecting such companies, the Advisor will focus on a number of key
criteria including: industry position, management quality and experience,
accounting and financial policies, marketing and service capabilities and the
productivity of the product development effort.
Up to 25% of the Fund's assets may from time to time be invested in "other
investments" which do not otherwise meet the criteria set forth above, but
which the Advisor believes offer improved opportunities for growth not yet
fully appreciated by investors. Such investments may arise, for example, because
6
<PAGE>
of a new product developed by a mature company or a new opportunity in an
established business line of a mature company that shows growth potential
similar to that of emerging growth companies.
Under normal circumstances Fund assets will be invested as fully as
possible in the common stocks and securities convertible into common stocks
of small and mid-sized emerging growth companies (and at least 65% of the
Fund's assets will be so invested). The Fund will not invest more than 20% of
its assets in convertible securities. A convertible security is a
fixed-income security which may be converted at a stated price within a
specified period of time into a specified number of shares of common stock of
the same or a different issuer. While providing a fixed income stream
(generally higher in yield than the income derivable from a common stock but
lower than that afforded by a non-convertible debt security), a convertible
security also affords an investor the opportunity, through its conversion
feature, to participate in the capital appreciation of the common stock into
which it is convertible.
However, even under normal circumstances, up to 35% of the Fund's assets
may be invested in U.S. Government securities, corporate bonds and
debentures, preferred stocks or money market instruments when the Advisor
believes doing so is appropriate in light of the Fund's investment objective
and market conditions. Such investments might be appropriate if, for example,
the Advisor believed there were not sufficient quantities of common stocks
available at appropriate prices or if the Advisor believed debt securities
were consistent with the Fund's investment objective because such securities
could enjoy capital appreciation due to an increase in their value caused by
changes in interest rates. In addition, for temporary defensive purposes, the
Fund may, without limitation as to the amount of the Fund's assets which may
be so invested, hold money market instruments. For purposes of the foregoing,
money market instruments will be limited to short- term obligations,
including government obligations, time deposits, bankers acceptances,
certificates of deposit, commercial paper and short-term debt securities,
which are rated in the top two categories published by Moody's Investors
Service, Inc. ("Moody's") or by Standard & Poor's Ratings Group ("Standard &
Poor's") or, if unrated, are of comparable quality as determined by the
Advisor under guidelines established by the Fund's Board of Directors.
Corporate bonds and debentures will be limited to those rated in the top
three categories published by Moody's or by Standard & Poor's (Aaa, Aa or A
by Moody's or AAA, AA or A by Standard & Poor's) or, if unrated, are of
comparable quality as determined by the Advisor under guidelines established
by the Fund's Board of Directors. Should the Fund maintain a temporary
defensive position, investment income would increase and might constitute a
greater percentage of the return of the Fund.
7
<PAGE>
Although it is the policy of the Fund to purchase and hold securities for
capital appreciation, each security in the portfolio will be evaluated on a
regular basis, and changes in the portfolio will be made whenever the Advisor
believes changes are advisable. Since investment changes usually will be made
without reference to the length of time a security has been held, a
significant number of short-term transactions may result. If the number of
changes in portfolio securities increases, the Fund will necessarily
experience higher transaction costs.
The Fund may engage to a limited extent in the following investment
practices, each of which may involve certain special risks. The Statement of
Additional Information contains more detailed information about these
practices, including limitations designed to reduce these risks.
1) Repurchase Agreements. The Fund may agree to purchase U.S. Government
securities from financial institutions, such as banks and broker- dealers,
subject to the seller's agreement to repurchase the securities at an
established time and price. The Fund will enter into repurchase agreements
only with banks and broker-dealers that have been determined to be
creditworthy by the Fund's Board of Directors under criteria established
with the assistance of the Advisor. The seller under a repurchase
agreement would be required to maintain the value of the securities
subject to the repurchase agreement at not less than the repurchase price.
Default by the seller would, however, expose the Fund to possible loss
because of adverse market action or delay in connection with the
disposition of the underlying obligations. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, the
Fund may be delayed or limited in its ability to sell the collateral.
2) Loans of Portfolio Securities. The Fund may also lend portfolio securities
to financial institutions in accordance with the investment restrictions
described in this Prospectus and the Statement of Additional Information.
The Fund lends portfolio securities only to those financial institutions
that are approved as creditworthy by the Fund's Board of Directors and
only against collateral consisting of cash or U.S. Government securities
with an aggregate value at all times equal to or greater than the value of
the securities loaned. The borrowers pay the Fund an amount equal to any
dividends or interest received on the securities they borrow. The Fund
retains all or a portion of the interest received on investment of the
cash collateral or receives a fee from the borrower.
8
<PAGE>
.............................................................................
SPECIAL RISK CONSIDERATIONS
Although the Advisor will seek to invest in quality emerging growth
companies, there are risks to investors inherent in the characteristics of
emerging growth companies. Securities of small companies often will be
closely held with only a small proportion of their outstanding securities
held by the general public. Securities held by the Fund may have limited
trading markets that may be subject to wide price fluctuations. In view of
such factors, the net asset value of a share may vary significantly.
Accordingly, the Fund should not be considered suitable for investors who are
unable or unwilling to assume the risk of loss inherent in such a program,
nor should investment in the Fund be considered a balanced or complete
investment program.
The companies in which the Fund may invest may have relatively small
revenues and lack depth of management. Investments in such companies tend to
be volatile and are therefore speculative. They may have a small share of the
market for their products or services and they may provide goods or services
to a regional or limited market. Small companies may be unable to internally
generate funds necessary for growth or potential development or to generate
such funds through external financing on favorable terms. In addition, they
may be developing or marketing new products or services for which markets are
not yet established and may never become established. Such companies may have
or may develop only a regional market for products or services and thus be
affected by local or regional market conditions. Moreover, small companies
may have insignificant market share in their industries and may have
difficulty maintaining or increasing their market share in competition with
larger companies. Due to these and other factors, small companies may suffer
significant losses.
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. For the fiscal years ended October 31, 1994 and October
31, 1993, the Fund's portfolio turnover rate was 83% and 133%, respectively.
A high level of portfolio turnover may generate relatively high transaction
costs and may increase the amount of taxes payable by the Fund's
shareholders. (See "Dividends and Taxes.")
9
<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 numbered 1 through 4 below are
matters of fundamental policy and may not be changed without the affirmative
vote of a majority of the outstanding shares. The investment restriction
numbered 5 may be changed by a vote of the majority of the Board of
Directors. The Fund will not:
1) Concentrate 25% or more of its total assets in securities of issuers in
any one industry (for these purposes the U.S. Government and its agencies
and instrumentalities are not considered an issuer);
2) With respect to 75% of its total assets, invest more than 5% of its total
assets in the securities of any single issuer (for these purposes the U.S.
Government and its agencies and instrumentalities are not considered an
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 Fund's net assets in illiquid securities,
including time deposits and repurchase agreements with maturities of
greater than seven days.
The Fund is subject to further investment restrictions that are set forth
in the Statement of Additional Information.
=============================================================================
5. HOW TO INVEST IN INSTITUTIONAL SHARES
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
10
<PAGE>
Shares through Alex. Brown, 135 East Baltimore Street, Baltimore, Maryland
21202 or directly from the Fund by wiring 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.
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").
Purchase orders for Institutional Shares will be executed at the net asset
value per share next determined after receipt of the 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 or on an automated
dealer quotation system, such as NASDAQ, on the valuation date, the last
quoted sale price will generally be used. Securities or other assets for
which market quotations are not readily available are valued at their fair
value as determined in good faith under procedures established from time to
time and monitored by the Fund's Board of Directors. Debt obligations with
maturities of 60 days or less will be valued at amortized cost, which
constitutes fair value as determined by the Fund's Board of Directors. The
Fund reserves the right to suspend the sale of Institutional Shares at any
time at the discretion of Alex. Brown and the Advisor.
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.
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
11
<PAGE>
Funds should be wired to the Fund's transfer agent (the "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
referring in the wire to:
o Flag Investors Emerging Growth 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 [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
identification information at the time an account is opened and prior
toeffecting 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.
12
<PAGE>
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 INSTITUTIONAL 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 Fund's 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
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.
13
<PAGE>
Dividends payable up to the date of the redemption of Institutional Shares
will be paid on the next dividend payment date. If all of the Institutional
Shares in an account have been redeemed on the dividend payment date, the
dividend will be remitted by wire to the shareholder's bank.
=============================================================================
7. DIVIDENDS AND TAXES
.............................................................................
DIVIDENDS AND DISTRIBUTIONS
The Fund's policy is to distribute to shareholders substantially all of
its taxable net investment income (consisting of dividend and interest income
and the excess, if any, of net short-term capital gains over net long-term
capital losses) in the form of annual dividends. The Fund anticipates that it
will distribute substantially all of its "net capital gain" income (the
excess of net long-term capital gains over net short-term capital losses) for
each taxable year as a capital gains distribution.
Unless the shareholder elects otherwise, all income 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 terminate automatic reinvestment by giving 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 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.
The following summary 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.
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 federal income tax on amounts distributed to shareholders, but
14
<PAGE>
shareholders, unless otherwise exempt, will be taxed 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, will be
taxed to shareholders as long-term capital gains regardless of the length of
time a shareholder has held the Institutional Shares. All other income
distributions are taxed to the shareholders as ordinary income. Corporate
shareholders may be entitled to the dividends received deduction on a portion
of dividends received from the Fund. 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.
A sale, exchange, or redemption of Institutional Shares is a taxable event
for the Shareholder.
The Fund intends to make sufficient distributions of its ordinary income
and capital gain net income (the excess of short and long-term capital gains
over short and long-term capital losses) prior to the end of each calendar
year to avoid liability for federal excise tax. Shareholders are advised to
consult their tax advisors concerning the application of 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 the Advisor and with its custodian and transfer agent. The
day to day operations of the Fund are delegated to the Fund's executive
officers and to the Advisor. Three Directors and all of the officers of the
Fund are officers or employees of Alex. Brown or the Advisor. The other
Directors of the Fund have no affiliation with Alex. Brown or the Advisor.
15
<PAGE>
The Fund's Directors and officers are as follows:
<TABLE>
<S> <C> <C> <C>
*Truman T. Semans Chairman Frederick L. Meserve, Jr. President
*W. James Price Director Edward J. Veilleux Vice President
*Richard T. Hale Director Gary V. Fearnow Vice President
James J. Cunnane Director Charles A. Reid Vice President
N. Bruce Hannay Director Brian C. Nelson Vice President and Secretary
John F. Kroeger Director Sandra J. Doeller Vice President
Louis E. Levy Director Diana M. Ellis Treasurer
Eugene J. McDonald Director Laurie D. DePrine Assistant Secretary
Harry Woolf Director
</TABLE>
------
*Messrs. Semans, Price 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.
=============================================================================
9. INVESTMENT ADVISOR
Investment Company Capital Corp., the Fund's investment advisor, is a
wholly-owned subsidiary of Alex. Brown, the Fund's distributor. Since the mid
1970's, Alex. Brown has provided services to and in respect of emerging
growth and later stage private companies in the United States, including
research and analysis, venture capital participation, investment banking and
investment advisory services. Subject to review by the Board of Directors and
to any limitations imposed by applicable law, the Fund may purchase
securities of such emerging growth companies. The Advisor 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 $ billion of assets as of
, 1995. The address of the Advisor is 135 East Baltimore Street,
Baltimore, Maryland 21202.
The Advisor is responsible for the general management of the Fund, as well
as for 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 Advisory Agreement provides for maximum annual fee equal to .85% of
Fund's average daily net assets. However, the actual amount of the fee is
contractually limited to an amount that would result in total expenses on
Class A Shares of no more than 1.5%. As compensation for its services for the
fiscal year ended Ocotber 31, 1994, the Advisor received from the Fund a fee
equal to .47% of the Fund's average daily net assets.
ICC also serves as the Fund's transfer and dividend disbursing agent and
provides accounting services to the Fund. (See "Custodian, Transfer Agent,
Accounting Services.")
16
<PAGE>
.............................................................................
PORTFOLIO MANAGER
Frederick L. Meserve, Jr., President of the Fund and a principal of Alex.
Brown, has had primary responsibility for managing the Fund's assets since
October of 1993. Mr. Meserve joined Alex. Brown in 1977. He has been a member
of Alex. Brown's Investment Committee since 1979. In addition, Mr. Meserve
has published a number of investment strategy reports on growth stocks. Mr.
Meserve received a B.S.&E. from Princeton University in 1960 and an M.B.A.
from Columbia School of Business in 1962.
=============================================================================
10. DISTRIBUTOR
Alex. Brown, 135 East Baltimore Street, Baltimore, Maryland 21202, 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.
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
PNC Bank, National Association ("PNC Bank"), with offices at Airport
Business Park, 200 Stevens Drive, Lester, Pennsylvania 19113, 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 and provides accounting
services to the Fund. As compensation for providing accounting services for
the period from January 1, 1994 through October 31, 1994, ICC received from
the Fund an annualized fee equal to .09% of the Fund's average daily net
assets. (See the Statement of Additional Information.) Prior to January 1,
1994, Alex. Brown provided accounting services to the Fund and for the period
17
<PAGE>
from November 1, 1993 through December 31, 1993, received an annualized fee
equal to .09% of the Fund's average daily net assets. ICC also serves as the
Fund's investment advisor.
=============================================================================
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 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 Standard & Poor's 500
Stock Index, the Russell 2000 Index, the Dow Jones Industrial Average, and
the NASDAQ OTC Composite and OTC Industrial Indices. The Fund may also use
total return performance data as reported in national financial and industry
publications that monitor the performance of mutual funds such as Money
Magazine, Forbes, Business Week, Barron's, Investor's Daily, IBC/Donoghue's
Money Fund Report 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 Institutional Shares may be purchased, although not
included in calculations of performance, will reduce performance results.
18
<PAGE>
=============================================================================
13. GENERAL INFORMATION
.............................................................................
DESCRIPTION OF SHARES
The Fund was incorporated under the laws of the State of Maryland on July
2, 1987 and is authorized to issue fifteen million shares of capital stock,
with a par value of $.001 per share. Shares 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 the 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 pro
rata 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
Emerging Growth Fund Institutional Shares." The Board has no present
intention of establishing any additional series of the Fund but the Fund does
have another class of shares in addition to the shares offered hereby: Flag
Investors Emerging Growth Fund Class A Shares. Shares of that class are
subject to a maximum front-end sales charge of 4.5% 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 fees or sales load structures.
.............................................................................
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 the
shareholder communications in connection with the meeting.
19
<PAGE>
.............................................................................
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 accountants,
Coopers & Lybrand L.L.P.
.............................................................................
FUND COUNSEL
Morgan, Lewis & Bockius serves as counsel to the Fund.
.............................................................................
SHAREHOLDER INQUIRIES
Shareholders with inquiries concerning their shares should contact the
Fund at (800) 553-8080.
20
<PAGE>
FLAG INVESTORS EMERGING GROWTH 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 Emerging Growth 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.
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)
<PAGE>
==============================================================================
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
[ ] Reinvested in additional shares
[ ] Paid in Cash
Capital Gains
[ ] Reinvested in additional shares
[ ] 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
=============================================================================
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
<PAGE>
==============================================================================
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.
* 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 ASSOCIATION (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 EMERGING GROWTH 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 BY WRITING OR CALLING ALEX.
BROWN & SONS INCORPORATED, 135 EAST BALTIMORE ST.,
BALTIMORE, MARYLAND 21202, (800) 767-FLAG.
Statement of Additional Information Dated:
February 28, 1995, as amended through _____________ , 1995
Relating to the Prospectuses Dated:
February 28, 1995, relating to the Class A Shares
and
________________ , 1995, relating to the Institutional Shares
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. General Information and History.............................................................. 1
2. Investment Objectives and Policies........................................................... 1
3. Valuation of Shares and Redemption........................................................... 4
4. Federal Tax Treatment of Dividends and
Distributions.............................................................................. 5
5. Management of the Fund....................................................................... 8
6. Investment Advisory and Other Services....................................................... 12
7. Distribution of Fund Shares.................................................................. 13
8. Brokerage.................................................................................... 16
9. Capital Shares............................................................................... 18
10. Semi-Annual Reports........................................................................ 18
11. Custodian, Transfer Agent, Accounting Services .............................................. 19
12. Independent Accountants...................................................................... 19
13. Performance Information...................................................................... 20
14. Control Persons and Principal Holders of
Securities................................................................................. 21
15. Financial Statements ........................................................................ 22
</TABLE>
<PAGE>
1. GENERAL INFORMATION AND HISTORY
Flag Investors Emerging Growth 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 Emerging Growth Fund Class A Shares (the "Class A Shares") and
Flag Investors Emerging Growth Fund Institutional Shares (the "Institutional
Shares") (collectively, the "Shares"). As used herein, the "Fund" refers to Flag
Investors Emerging Growth 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 such Shares 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 respecting 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 incorporated under the laws of the State of Maryland on
July 2, 1987. 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, amended. The Fund's registration
statement was declared effective by the SEC on June 15, 1988 and the Fund
commenced operations as a diversified open-end management investment company.
Under a license agreement dated December 29, 1987 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.
Size of the Fund
The allocation of the Fund's assets in emerging growth companies
requires substantial research and analysis in respect of such companies and the
Fund's management believes that the size of the Fund should be limited so that
the investment advisor can perform the appropriate research and analysis of
investment opportunities. Accordingly, at such time as the assets of the Fund
are in excess of $400 million, the Fund will accept Share purchases only from
existing shareholders (including reinvestment of dividends and capital gains
distributions). Further, at such time as the assets of the Fund are in excess of
$500 million, the Fund will discontinue sales of Shares with the exception of
purchases made by pre-existing IRA accounts.
2. INVESTMENT OBJECTIVES AND POLICIES
Investment Objective and Policies of the Fund
The Fund's investment objective and its general investment policies are
described in the Prospectus. As stated in the Prospectus, the Fund's investment
objective is long-term capital appreciation. Realization of income is not a
significant investment consideration and any income realized on the Fund's
-1-
<PAGE>
investments therefore will be incidental to the Fund's objective. There can be
no assurance that the Fund will, in fact, achieve its objective. The Fund's
investment objective may not be changed by the Board of Directors without
shareholder approval.
The Prospectus discusses the types of securities in which the Fund will
invest, the portfolio policies and techniques and the size of the Fund. This
Statement of Additional Information describes other investment practices in
which the Fund may engage, including making loans of the Fund's portfolio
securities, purchasing securities for future delivery, and entering into
repurchase agreements.
Other Investment Practices
Except as described in the section of the Prospectus entitled
"Investment Restrictions" and below under "Investment Restrictions", the
investment policies described in the Prospectus and in this Statement of
Additional Information are not fundamental, and the Board of Directors may
change such policies without the affirmative vote of a majority of the Fund's
outstanding Shares. The Fund's investment objective may not be changed by the
Board of Directors without such a vote.
As described in the Prospectus, the Fund may invest up to 20% of its net
assets in securities convertible into the common stock of high quality growth
companies. In general, the market value of a convertible security is at least
the higher of its "investment value" (i.e., its value as a fixed-income
security) or its "conversion value" (i.e., the value of the underlying shares of
common stock if the security is converted). As a fixed-income security, a
convertible security tends to increase in market value when interest rates
decline and tends to decrease in value when interest rates rise. However, the
price of a convertible security also is influenced by the market value of the
security's underlying common stock. Thus, the price of a convertible security
tends to increase as the market value of the underlying stock increases, whereas
it tends to decrease as the market value of the underlying stock declines.
Investments in convertible securities generally entail less risk than
investments in the common stock of the same issuer.
Repurchase Agreements
The Fund may agree to purchase U.S. Government securities from financial
institutions, such as banks and broker-dealers, subject to the seller's
agreement to repurchase the securities at an established time and price. The
collateral for these repurchase agreements will be held by the Fund's custodian
or by a duly appointed sub-custodian. The Fund will enter into repurchase
agreements only with banks and broker-dealers that have been determined to be
creditworthy by the Fund's Board of Directors under criteria established with
the assistance of Investment Company Capital Corp., the Fund's investment
advisor ("ICC"). The list of approved banks and broker-dealers will be monitored
regularly by ICC and reviewed at least quarterly by the Fund's Board of
Directors. The seller under a repurchase agreement would be required to maintain
the value of the securities subject to the repurchase agreement at not less than
the repurchase price. Default by the seller would, however, expose the Fund to
possible loss because of adverse market action or delay in connection with the
disposition of the underlying obligations. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, the Fund
may be delayed or limited in its ability to sell the collateral.
Loans of Portfolio Securities
The Fund may also lend portfolio securities to financial institutions in
accordance with the investment restrictions described in the Prospectus and this
Statement of Additional Information. The Fund will lend portfolio securities
only to those financial institutions that are approved as creditworthy by the
Fund's Board of Directors and only against collateral consisting of cash or U.S.
Government securities with an aggregate value at all times equal to or greater
than the value of the securities loaned. The borrower would pay to the Fund an
amount equal to any dividends or interest received on the securities lent.
-2-
<PAGE>
The Fund would retain all or a portion of the interest received on investment of
the cash collateral or receive a fee from the borrower. Payments received on
such loans, including amounts received during the loan on account of interest on
the securities loaned, may not (together with all non-qualifying income) exceed
10% of the Fund's gross income (without offset for realized capital gains)
unless, in the opinion of counsel to the Fund, such amounts are qualifying
income under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code").
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 which may not be changed without the affirmative vote of a
majority of the Fund's outstanding Shares. Accordingly, the Fund will not:
1) Invest in real estate or mortgages on real estate except that
the Fund may invest in the securities of companies that invest in real
estate or mortgages;
2) Purchase or sell commodities or commodities contracts;
3) 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;
4) Issue senior securities;
5) Make loans, except that the Fund may purchase or hold debt
instruments in accordance with its investment objective and policies,
and may lend portfolio securities and enter into repurchase agreements
as described in the Registration Statement;
6) Effect short sales of securities;
7) Purchase securities on margin (but the Fund may obtain such
short-term credits as may be necessary for the clearance of
transactions); or
8) 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 percentage limitations contained
in these restrictions apply at the time of purchase of securities. The Fund will
not:
1) Purchase any securities of unseasoned issuers which have been
in operation directly or through predecessors for fewer than three
years;
2) Invest in shares of any other investment company registered
under the Investment Company Act, except (a) as a temporary investment
in an investment company that invests only in securities the Fund could
purchase directly for temporary investment or (b) as a means of
purchasing securities of foreign issuers whose securities may be
purchased only through such an investment; provided that, in either
event, the Fund will pay any sales charges in connection with such
purchases without reduction to the sales charges on purchases of Shares,
and provided further, that the Fund shall acquire not more than 3% of
the total outstanding voting stock of such company, or invest more than
5% of the Fund's assets in any one such company or 10% of the Fund's
assets in all such investment companies, and only as otherwise permitted
by law. (If the Board of Directors voted to approve investments in
-3-
<PAGE>
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
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;
5) Invest in puts or calls or any combination thereof;
6) Invest more than 10% of the Fund's net assets in illiquid
securities (as defined under federal and state securities laws),
including time deposits and repurchase agreements with maturities of
greater than seven days;
7) 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 preceding
limitations;
8) Invest in real estate limited partnerships;
9) Invest in oil, gas or mineral leases.
3. VALUATION OF SHARES AND REDEMPTION
Valuation of Shares
The net asset value per Share is determined once daily as of the time
the New York Stock Exchange closes, which is ordinarily 4:00 p.m. (Eastern Time)
on each Business Day of the Fund. 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.
The net asset value per share of a class is calculated by valuing all
assets held by the Fund, deducting liabilities attributable to all shares and
any liabilities attributable to the 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 or an automatic dealer
quotation system, such as NASDAQ, on the valuation date, the last quoted sale
price will generally be used. Securities or other assets for which market
quotations are not readily available are valued at their fair value as
determined in good faith by ICC under procedures established and monitored by
the Board of Directors. Debt obligations with maturities of 60 days or less will
be valued at amortized cost, which constitutes fair value as determined by the
Fund's Board of 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
-4-
<PAGE>
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
Prospectus relating to each class of Shares. However, if the Board of Directors
determines that it would be in the best interests of the remaining shareholders
of the Fund 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 redeem Shares by distributions in kind. If Shares are redeemed in kind, a
redeeming shareholder will incur brokerage costs when the assets are later
converted into cash. The valuation of portfolio securities, by the method
described under "Valuation of Shares," will be made as of the same time the
redemption price is determined. The Fund's ability to make payment of the
redemption price by distribution in kind is further limited because the Fund 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.
4. FEDERAL TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS
The following discussion of federal income tax consequences is based on
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 a Regulated Investment Company
The Fund expects to be taxed as a regulated investment company ("RIC")
under Subchapter M of the Code. However, in order to qualify as a RIC for any
taxable year, the Fund must (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from 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
stock, securities or currencies (the "Income Requirement"), and (2) derive less
than 30% of its gross income (exclusive of certain gains from the 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
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 stocks or securities).
The Fund must also diversify its holdings so that, at the close of each
quarter of its taxable year, (i) at least 50% of the value of its total assets
consists of cash, cash items, U.S. government securities, securities of other
RICs, and other securities (so long as such other securities with respect to any
issuer do not constitute more than 5% of the total assets of the Fund or more
than 10% of the outstanding voting securities of such issuer), and (ii) not more
than 25% of the value of its total assets is invested in the securities (other
-5-
<PAGE>
than U.S. government securities or the securities of other RICs) of any one
issuer or of two or more issuers which the Fund controls and which are engaged
in the same or similar trades or businesses or related trades or businesses (the
"Asset Diversification Test"). The Fund will not lose its status as a RIC 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. The Fund may
curtail its investments in and trading of other securities where the application
thereto of the Asset Diversification Test is uncertain.
Under Subchapter M, 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 year (the "Distribution Requirement")
and complies with the other requirements of the Code described above.
Distributions of investment company taxable income made during the taxable year
or, under certain specified circumstances, within twelve months after the close
of the taxable year, will satisfy the Distribution Requirement. The Distribution
Requirement for any year may be waived if a RIC 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 (discussed below).
Although the Fund intends to distribute substantially all of its net
investment income and capital gains for any taxable (i.e., fiscal) year, the
Fund will be subject to federal income taxation to the extent any such income or
gains are not distributed.
The foregoing requirements of the Code may inhibit the Fund in its
efforts to achieve its investment objectives.
Fund Distributions
The Fund anticipates that it will distribute substantially all of its
investment company taxable income for each taxable year. Distributions of
investment company taxable income will be taxable to shareholders as ordinary
income, regardless of whether such distributions are paid in cash or are
invested in additional Shares.
The Fund also anticipates that it will distribute substantially all of
its "net capital gains" income (the excess of net long-term capital gains over
net short-term capital losses) for each taxable year as a capital gains
distribution. Such a distribution, whether paid in cash or reinvested in Shares,
is taxable to shareholders as long-term capital gains, regardless of the length
of time a shareholder has held Fund Shares or whether such gains were reflected
in the price paid for the 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 who invest either distributions of investment company
taxable income or capital gains in additional Shares will generally be treated
as receiving a distribution in an amount equal to the fair market value,
determined as of the payment date, of the Shares received. Such shareholders
will have a cost basis in each Share received equal to the fair market value of
a Share of the Fund on the payment date.
Ordinary income dividends paid by the Fund to corporate shareholders
will be eligible for the 70% dividends received deduction to the extent of the
gross amount of qualified dividends received by the Fund for the year.
Generally, and subject to certain limitations, a dividend is a qualified
dividend if it is received from a domestic corporation. The Fund will provide a
statement annually to shareholders of the amount of dividends eligible for the
deduction. The dividends received deduction is not available for capital gains
distributions.
-6-
<PAGE>
For 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 their "alternate
minimum taxable income."
Investors should be careful to consider the tax implications of buying
shares just prior to the next record date for 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 dividend or distribution received even though the net asset value per share
on the date of purchase reflected the amount of such distribution.
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 generally will
be eligible for the dividends received deduction in the case of corporate
shareholders.
The Fund generally will be required in certain cases to withhold tax at
the rate of 31% with respect to distributions payable 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 the shareholder is not subject to
backup withholding or that he is an "exempt recipient."
Federal Excise Tax; Miscellaneous Considerations; Effect of Future Legislation
The Code imposes a nondeductible 4% federal excise tax on RICs that do
not distribute in each calendar year an amount equal to 98% of their ordinary
income for the calendar year plus 98% of their capital gain net income for the
one-year period ending on October 31 of such calendar year. The excise tax is
imposed on the undistributed part of this required distribution. In addition,
the balance of such income must be distributed during the next calendar year to
avoid liability for the excise tax in that year. For the foregoing purposes, a
company is treated as having distributed any amount on which it is subject to
income tax for any taxable year ending in such calendar year. For this purpose,
in determining its capital gain net income for the one-year period ending on
October 31 of such calendar year the Fund must reduce its capital gain net
income by the amount of any net ordinary loss for the calendar year (but not
below the net capital gains for the one-year period ending on October 31).
Because the Fund intends to distribute all of its income currently (or to
retain, at most, its "net capital gains" and pay tax thereon), the Fund does not
anticipate incurring any liability for this 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 such 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, exchange or redemption of a Share
will be capital gain or loss, which will be long-term capital gain or loss if
the Share is held for more than one year and otherwise will be short-term
capital gain or loss. However, if a shareholder realizes a loss on the sale,
exchange or redemption of a Share held for six months or less, such loss will be
treated as a long-term capital loss to the extent that any capital gains
distributions have been paid with respect to such Share (or any undistributed
net capital gains of the Fund with respect to such Share have been included in
determining the shareholder'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 or distributions during the 61-day
period.
-7-
<PAGE>
Rules of state and local taxation of dividend and capital gains
distributions from RICs often differ from the rules for federal income taxation
described above. Shareholders are urged to consult their tax advisers as to the
consequences of federal, state and local tax rules affecting 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, distributor, custodian and
transfer agent. The day-to-day operations of the Fund are delegated to the
Fund's executive officers and the Fund's Advisor. Three Directors and all of the
officers of the Fund, are officers or employees of Alex. Brown or ICC. The other
Directors of the Fund have no affiliation with Alex. Brown or ICC.
Directors and Officers
The Directors and executive officers of the Fund and their principal
occupations for 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.
*W. JAMES PRICE, Director
6885 North Ocean Boulevard, Apartment #306, Ocean Ridge, Florida
33435-3343. Director, Boca Research, Inc. (computer peripherals);
Formerly, Managing Director, Alex. Brown & Sons Incorporated; Director,
CSX Corporation (transportation and natural resources company), and
PHH Corporation (business services).
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.
--------
* A Director who is an "interested person" as defined in the Investment
Company Act of 1940.
-8-
<PAGE>
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.
FREDERICK L. MESERVE, JR., President
Principal, Alex. Brown & Sons Incorporated 1977-Present.
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).
GARY V. FEARNOW, Vice President
Managing Director, Alex. Brown & Sons Incorporated; Manager, Special
Products Department, Alex. Brown & Sons Incorporated.
CHARLES A. REID, Vice President
Principal, Alex. Brown & Sons Incorporated, 1980-Present; General
Partner, Baltimore Street Capital III (growth companies investor).
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).
SANDRA J. DOELLER, Vice President
Vice President, Alex. Brown & Sons Incorporated; Equity Trader, Asset
Management Department, Alex. Brown & Sons Incorporated, 1983-Present.
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.
-9-
<PAGE>
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. Messrs. Meserve and Reid 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, respectively, for each of the
funds in the Fund Complex. Ms. Doeller serves as a Vice President of the Fund.
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
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 ICC 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 $1,997. 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.
-10-
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Aggregate Compensation From the Fund Total Compensation from the Fund and
Name of Person, for the Fiscal Year Ended October 31, 1994 Fund Complex Paid to Directors for
Position the Fiscal Year Ended October 31, 1994
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*Truman T. Semans, Chairman $0 $0
*W. James Price, Director $0 $0
Richard T. Hale, Director $0 $0
James J. Cunnane, Director $0 ** $0 **
N. Bruce Hannay, Director $180.37 $39,000 for
service on 11 Boards(1)
John F. Kroeger, Director $158.43 $42,900 for
service on 11 Boards(1)
Louis E. Levy, Director $57.52 $9,750 for
service on 11 Boards ***(1)
Eugene J. McDonald, Director $180.37 $39,000 for
service on 11 Boards(1)
Harry Woolf, Director $180.37 $39,000 for
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.
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.
-11-
<PAGE>
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
ICC 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 ICC, 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 December 29, 1987, the sole shareholder of the Fund approved and on
June 20, 1989 a majority of the outstanding Shares of the Fund approved, an
Investment Advisory Agreement (the "Advisory Agreement") between the Fund and
ICC, which contract is described in greater detail below.
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 International 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.
ICC (a) formulates and implements continuing programs for the purchases
and sales of securities, (b) determines what issuers and securities (and in what
proportion) shall be represented in the Fund's portfolio, (c) provides the
Fund's Board of Directors regular financial reports and analyses respecting the
Fund's portfolio investments and operations, and the operations of comparable
investment companies, (d) obtains and evaluates pertinent information about
economic, statistical and financial information pertinent to the Fund, (e)
takes, on behalf of the Fund, all actions which appear necessary to the Fund to
carry into effect its purchase and sale programs, (f) supervises all aspects of
the Fund's management, (g) arranges, but does not pay for, the printing and
mailing of prospectuses, proxy materials and shareholder reports, (h) prepares
and files federal and state tax returns, (i) prepares and files registration
statements and reports regarding the sale of shares and (j) maintains books and
records respecting its activities. Any investment program undertaken by ICC will
at all times be subject to policies and control of the Fund's Board of
Directors. ICC shall not be liable to the Fund or its shareholders for any act
or omission by ICC 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. These services of ICC to the Fund are not exclusive
and ICC is free to render similar services to others.
-12-
<PAGE>
The Investment Advisory Agreement provides for a maximum annual fee,
payable monthly, representing .85% of the Class A Shares' average daily net
assets. However, the actual amount of the fee is contractually limited to an
amount that would result in total epenses on Class A Shares of no more than 1.5%
of the Class A Shares' average daily net assets.
In addition, ICC has agreed to reduce its aggregate fees attributable to
the Fund or make payments to the Fund, if necessary, to the extent required to
satisfy any expense limitations imposed by any securities laws or regulations
thereunder of any state in which the Shares of the Fund are qualified for sale.
Currently, the most restrictive of such expense limitations requires the
Investment Advisor to reduce its fees, or to make payments to the Fund, to the
extent required so that 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.
The 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 of the Fund and (b) by the affirmative vote of a majority of
the Non-Interested Directors who have no direct or indirect financial interest
in the Advisory Agreement by votes cast in person at a meeting called for such
purpose. The Advisory Agreement was most recently approved by the Fund's Board
of Directors, including a majority of the Non-Interested Directors, on September
22, 1994. The Fund or ICC may terminate the Advisory Agreement on 60 days'
written notice without penalty. The Advisory Agreement will terminate
automatically in the event of assignment. For the fiscal years ended October 31,
1994, October 31, 1993 and October 31, 1992, ICC received fees from the Fund of
$206,444, $255,608 and $398,690, respectively.
ICC also serves as the Fund's transfer and dividend disbursing agent and
provides accounting services to the Fund. See "Custodian, Transfer Agent and
Accounting Services."
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 for their review
with quarterly reports required by Rule 12b-1, 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 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
provided by Alex. Brown to the Fund are not exclusive, and Alex. Brown shall
-13-
<PAGE>
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 and Participating Dealers may enter into sub-distribution
agreements ("Sub-Distribution Agreements") with broker-dealers, pursuant to
which such broker-dealers have agreed to process investor purchase and
redemption orders and respond to inquiries from Fund shareholders concerning the
status of their accounts and the operations of the Fund ("Shareholder Servicing
Agents").
As compensation for providing distribution and related administrative
services for the Class A Shares as described above, Alex. Brown receives an
annual fee, calculated and paid monthly, equal to .25% the average daily net
assets of the Class A Shares. Alex. Brown expects to allocate a substantial
portion of its annual fee to its investment representatives and to
broker-dealers who enter into Sub- Distribution Agreements with Alex. Brown
under which such broker-dealers have agreed to process investor purchase and
redemption orders and respond to inquiries from Fund shareholders concerning the
status of their accounts and the operations of the Fund. For the fiscal years
ended October 31, 1994, October 31, 1993 and October 31, 1992, Alex. Brown
received from the Fund $60,719, $89,403 and $118,683, respectively, in fees for
distribution and related administrative services. For the same periods, Alex.
Brown paid approximately $54,254, $45,834 and $64,159, respectively, as
compensation to its investment representatives and $939, $183 and $716,
respectively, as compensation to Participating Dealers and financial
institutions. Alex. Brown received no brokerage commissions from the Fund during
these periods.
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 Fund's Class A Shares (the "Class A Plan"). Under the Class A Plan, the
Fund pays a fee to Alex. Brown for distribution and other shareholder servicing
assistance as set forth in the Class A Distribution Agreement, and Alex. Brown
is authorized to make payments out of its fee to its investment representatives,
to Participating Dealers and to 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 Class A Plan and a
form of Sub-Distribution Agreement was approved by the Fund's Board of
Directors, including a majority of the Non-Interested Directors (and those
Directors who have no direct or indirect financial interest in the Class A Plan
or the Class A Distribution Agreement) initially on July 2, 1987 and most
recently on September, 1995. The Plan was approved by a majority of the
outstanding Class A Shares on June 20, 1989. The Class A Distribution Agreement
and the Plan encompassed therein will remain in effect from year to year as
specifically approved at least annually by the Fund's Board of Directors and 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 Distribution Agreement without the approval of the
shareholders of the Fund. The Plan may be terminated at any time and the
Distribution Agreement may be terminated at any time upon sixty days' notice, in
either case without penalty, by the vote of a majority of the Fund's
Non-Interested Directors or by a vote of a majority of the outstanding Class A
Shares (as defined under "Capital Shares"). Any Sub-Distribution Agreement
-14-
<PAGE>
may be terminated in the same manner at any time. Any Shareholder Servicing
Agreement may be terminated at any time, without penalty, upon 10 days' notice.
The Distribution Agreement, any Sub-Distribution Agreement and any Shareholder
Servicing Agreement shall automatically terminate in the event of assignment.
During the continuance of the Class A Plan, the Fund's Board of
Directors will be provided for their review, at least quarterly, with a written
report concerning the payments made under the Plan to Alex. Brown pursuant to
the Class A Distribution Agreement, to broker-dealers pursuant to Sub-
Distribution Agreements and to Shareholder Servicing Agents pursuant to
Shareholder Servicing Agreements described below. 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.
-15-
<PAGE>
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 depositary appointed by the Fund for the safekeeping of 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 corporate fees payable by the Fund to federal, state or other
governmental agencies; the costs and expenses of engraving or printing of
certificates representing Shares; all costs and expenses in connection with the
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 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 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 indemnification related thereto); and all other charges and cost of
the Fund's operation unless otherwise explicitly assumed by Alex. Brown or ICC.
8. BROKERAGE
Purchases and sales of securities on a securities exchange are effected
through brokers who charge a commission for their services. These brokerage
commissions are subject to negotiation between ICC and the broker-dealer. ICC
may direct purchase and sale orders to any broker-dealer, 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 instruments 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 serves 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. While the Fund believes that the limitation will not
significantly affect its ability to carry out its present investment objective,
the Fund may be at a disadvantage in the future in comparison to other funds
which have similar investment objectives, but which are not subject to such
limitations.
ICC's primary consideration in effecting securities transactions is to
obtain, on an overall basis, the best price and execution of orders. As
described below, however, to the extent that the price and execution offered by
more than one broker-dealer are comparable, ICC may, in its discretion, effect
transactions with broker-dealers that furnish statistical, research or other
information or services which are deemed by ICC to be beneficial to the Fund's
investment program. ICC is also authorized to pay higher commissions on
-16-
<PAGE>
brokerage transactions for the Fund to non-affiliated brokers in order to secure
research and investment services described below, subject to periodic review by
the Fund's Board of Directors. Research services may include the following:
statistical and background information on the U.S. economy, industry groups and
individual small and mid-sized companies; forecasts and interpretations with
respect to specific industry groups and individual small and mid-sized
companies; information on federal, state, local and foreign political
developments; portfolio management strategies; performance information on
securities, indices and investment accounts; information concerning prices of
securities; provision of equipment used to communicate research information;
arrangement of meetings with management of companies; and provision of access to
consultants who supply research information. Certain research services furnished
by broker-dealers may be useful to ICC with clients other than the Fund.
Similarly, any research services received by ICC through placement of portfolio
transactions of other clients may be of value to ICC in fulfilling its
obligations to the Fund. No specific value can be determined for research and
statistical services furnished without cost to ICC by a broker-dealer. ICC is of
the 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 ICC's research and analysis. Therefore, it may tend to benefit the
Fund by improving ICC's investment advice. ICC's policy is to pay a
broker-dealer higher commissions for particular transactions than might be
charged if a different broker-dealer had been chosen when, in ICC's opinion,
this policy furthers the overall objective of obtaining the best price and
execution. The allocation of orders among broker-dealers and the commission
rates paid by the Fund will be reviewed periodically by the Board.
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 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 to
furnish reports and to maintain records in connection with such reviews. The
Distribution Agreements between Alex. Brown and the Fund do not provide for any
reduction in the distribution fee to be received by Alex. Brown from the Fund as
a result of profits 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, ICC directed $11,425,223, $31,080,534 and $71,010,027,
respectively of transactions to broker-dealers and paid $35,863, $125,743 and
$128,337, respectively to broker-dealers in related commissions because of
research services provided to the Fund. During such periods, the Fund did not
pay 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 4.72% repurchase agreement
issued by Goldman Sachs & Co. valued at $588,000. Goldman Sachs & Co. is a
"regular broker or dealer" of the Fund.
ICC manages other investment accounts and 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 ICC. ICC 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.
-17-
<PAGE>
9. CAPITAL SHARES
The Fund is authorized to issue 15 million Shares of capital stock,
par value of $.001 per share, all of which Shares are designated common stock.
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 and 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 Emerging Growth Fund
Class A Shares, Flag Investors Emerging Growth Fund Class B Shares, and Flag
Investors Emerging Growth 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 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) would be prorated between all classes of
a series based upon the relative net assets of each class. Any matters affecting
any class exclusively will 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 shareholders cannot elect
any members of the Board of Directors of the Fund.
The Fund's issued and outstanding Shares are fully paid and
non-assessable. Each Share has one vote and shall be entitled to dividends and
distributions when and if declared by the Fund. There are no preemptive,
conversion or exchange rights applicable to any of the Shares. In the event of
liquidation or dissolution of the Fund, each Share is entitled to its pro rata
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 a 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 accountants.
-18-
<PAGE>
11. CUSTODIAN, TRANSFER AGENT AND ACCOUNTING SERVICES
PNC Bank, National Association ("PNC Bank"), Airport Business Park, 200
Stevens Drive, Lester, Pennsylvania 19113, a subsidiary of PNC Bank Corp., has
been retained to act as custodian of the Fund's investments. PNC Bank receives
such compensation from the Fund for its services as custodian as may be agreed
to from time to time by PNC Bank 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 $15.00 per account, plus reimbursement for
out-of-pocket expenses. For the period from March 1, 1994 through October 31,
1994, such fees totaled $11,060.
ICC also provides certain accounting services to the Fund under a Master
Services Agreement effective January 1, 1994 between the Fund and ICC. These
services were previously provided by Alex. Brown. As compensation for these
services, ICC is entitled to receive an annual fee, calculated daily and paid
monthly as shown below. These fees are the same as those paid to Alex. Brown
under the prior accounting services agreement.
Average Net Assets Incremental Annual Accounting Fee
------------------ ---------------------------------
$ 0 - $ 10,000,000 $13,000(fixed fee)
$ 10,000,000 - $ 20,000,000 .100%
$ 20,000,000 - $ 30,000,000 .080%
$ 30,000,000 - $ 40,000,000 .060%
$ 40,000,000 - $ 50,000,000 .050%
$ 50,000,000 - $ 60,000,000 .040%
$ 60,000,000 - $ 70,000,000 .030%
$ 70,000,000 - $ 100,000,000 .020%
$100,000,000 - $ 500,000,000 .015%
$500,000,000 - $1,000,000,000 .005%
over $1,000,000,000 .001%
In addition, the Fund will reimburse ICC for the following
out-of-pocket expenses incurred in connection with ICC's provision of accounting
services under the Master Services Agreement: express delivery service,
independent pricing and storage. ICC also serves as the Fund's investment
advisor.
As compensation for providing accounting services for the period from
November 1, 1993 through December 31, 1993, Alex. Brown received fees of $4,687.
As compensation for providing accounting services for the period from January 1,
1994 through October 31, 1994, ICC received fees of $21,743.
12. INDEPENDENT ACCOUNTANTS
The annual financial statements of the Fund are audited by Coopers &
Lybrand L.L.P. whose report thereon appears elsewhere herein, and has been
included herein in reliance upon the report of such firm of accountants given on
their authority as experts in accounting and auditing. Coopers & Lybrand L.L.P.
has offices at 2400 Eleven Penn Center, Philadelphia, PA 19103.
-19-
<PAGE>
13. PERFORMANCE INFORMATION
For purposes of quoting and comparing the performance of the Fund to
that of other open-end diversified management investment companies and to stock
or other relevant indices in advertisements or in certain 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. "T" in the formula above is calculated by
finding the average annual compounded rate of return over the period that would
equate an assumed initial payment of $1,000 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 total
return figures that are not calculated according to the formula set forth above
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., the Fund calculates its aggregate
and average 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 sales charges before
being invested in Shares). The Fund will, however, disclose the maximum sales
charges 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.
-20-
<PAGE>
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 $948, resulting in a total return for such Shares equal
to (5.19%). For the five year period ended September 30, 1994, the ending
redeemable value of a hypothetical $1,000 payment for Class A Shares was $1,018,
resulting in an average annual total return for such Shares equal to 0.35%.
For the period from June 15, 1988 (effectiveness of the Fund's registration
statement) 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 $1,392, resulting in an average annual total return for
such Shares equal to 5.39%.
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 $10,375, resulting in a total return equal to
3.8%. For the five year period ended October 31, 1994, the ending redeemable
value of a hypothetical $10,000 investment in Class A Shares was $11,643,
resulting in an average annual total return equal to 3.1%. For the period from
June 15, 1988 (effectiveness of the Fund's registration statement) 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 the Class A Shares was
$15,201, resulting in an average annual total return equal to 6.8%
The Institutional Shares were not offered prior to this Statement of
Additional Information.
14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of August 10, 1995, to Fund management's knowledge, the following
persons owned of record or beneficially 5% or more of the Fund's outstanding
Class A Shares:
Name & Address % Ownership
-------------- -----------
Alex. Brown Incorporated 65.81*
P.O. Box 1776 =====
Baltimore, MD 21203
* As of such date to the Fund's knowledge, Alex. Brown
Incorporated owned beneficially less than 1% of such Shares.
T. Rowe Price 18.73%
Trustee for Alex. Brown & Sons Incorporated =====
Plan 100460
P.O. Box 17215
Baltimore, MD 21203
Alex. Brown & Sons Incorporated 5.88%
FBO 201-95002-10 =====
P.O. Box 1345
Baltimore, MD 21203
As of August 10, 1995, the Directors and executive officers as a
group owned less than 1% of the total outstanding Class A Shares.
-21-
<PAGE>
The Institutional Shares were not offered prior to the date of this
Statement of Additional Information.
15. FINANCIAL STATEMENTS
See next page.
-22-
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
Statement of Net Assets October 31, 1994
<TABLE>
<CAPTION>
PERCENT
NO. OF VALUE OF NET
SHARES SECURITY (NOTE A) ASSETS
<C> <S> <C> <C>
COMMON STOCKS-87.7%
BUSINESS SERVICES-5.7%
16,500 Brock Control
Systems Inc.* $ 160,875 0.7%
65,000 Manugistics Group,Inc.* 568,750 2.5
36,500 QuickResponse
Services,Inc.* 593,125 2.5
1,322,750 5.7
CONSUMER PRODUCTS-3.7%
25,000 Electronic Arts,Inc. 562,500 2.4
12,500 Sierra On-Line,Inc.* 300,000 1.3
862,500 3.7
CONSUMER SERVICES-6.6%
39,150 Hometown Buffet,Inc.* 450,225 1.9
12,500 Papa John's
International,Inc.* 400,000 1.7
10,500 PETsMART,Inc.* 387,187 1.7
11,500 Starbucks Corp.* 311,938 1.3
1,549,350 6.6
FINANCIAL SERVICES-5.8%
14,000 John Alden
Financial Corp. 420,000 1.8
42,500 Life Partners Group Inc. 924,375 4.0
1,344,375 5.8
HEALTH CARE SERVICES-9.9%
7,500 Access Health
Marketing Inc.* 141,562 0.6
20,500 Genesis Health
Venture Inc. 604,750 2.6
21,000 Phycor Inc.* 719,250 3.1
29,550 Vivra Inc.* 834,788 3.6
2,300,350 9.9
HEALTH CARE-
TECHNOLOGY/SUPPLIES-1.9%
21,700 Haemonetics Corp.* $ 434,000 1.9%
MEDIA/COMMUNICATIONS-8.8%
36,000 Broadcasting Partners Inc. 571,500 2.5
14,566 Clear Channel
Communications Inc. 733,762 3.1
9,500 Lancit Media Productions* 150,812 0.7
42,500 Westcott
Communications Inc.* 589,688 2.5
2,045,762 8.8
TECHNOLOGY-
SOFTWARE/SERVICES-16.3%
75,500 Integrated Systems Inc.* 1,113,625 4.8
64,500 Marcam Corp.* 636,938 2.7
18,500 Parametric
Technology Corp.* 666,000 2.8
16,000 Progress Software Corp.* 502,000 2.2
19,000 Synopsys Inc.* 876,375 3.8
3,794,938 16.3
TECHNOLOGY-
SYSTEMS/SEMICONDUCTOR-18.0%
9,500 Applied Digital
Access Inc.* 235,125 1.0
30,500 Atmel Corp. 1,124,687 4.8
25,500 Level One
Communications Inc. 459,000 2.0
7,500 Maxim Integrated
Products Inc.* 502,500 2.2
34,300 QUALCOMM, Inc.* 1,011,850 4.3
15,000 Xilinx,Inc.* 871,875 3.7
4,205,037 18.0
</TABLE>
<PAGE>
FLAG INVESTORS
EMERGING GROWTH 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>
TRANSPORTATION-11.0%
24,600 Fritz Companies Inc.* $ 959,400 4.1%
70,500 Great Lakes Aviation Ltd.* 334,875 1.4
26,000 Landair Services Inc.* 552,500 2.4
10,000 Landstar System Inc.* 332,500 1.4
11,500 Wabash National Corp. 399,625 1.7
2,578,900 11.0
TOTAL COMMON STOCKS
(Cost $15,624,712) 20,437,962 87.7
COMMERCIAL PAPER-10.7%
$2,500 Ford Motor Corp.
4.724%,11/2/94
(Cost $2,500,000) 2,500,000 10.7
REPURCHASE AGREEMENT-2.5%
588 GOLDMAN SACHS & CO. 4.72%
Dated 10/31/94,to be
repurchased on 11/1/94,
collateralized by U.S.
Treasury Strips with
a market value
of $599,849
(Cost $588,000) 588,000 2.5
</TABLE>
<TABLE>
<CAPTION>
PERCENT
VALUE OF NET
(NOTE A) ASSETS
<S> <C> <C>
TOTAL INVESTMENT IN
SECURITIES
(Cost $18,712,712)** $23,525,962 100.9%
LIABILITIES IN EXCESS OF
OTHER ASSETS, NET (224,207) (0.9)
NET ASSETS $23,301,755 100.0%
NET ASSET VALUE AND
REDEMPTION PRICE
PER SHARE
($23,301,755 / 1,806,223
shares outstanding) $12.90
MAXIMUM OFFERING
PRICE PER SHARE
($12.90 / .955) $13.51
</TABLE>
*NON-INCOME PRODUCING SECURITY.
**AGGREGATE COST FOR FEDERAL TAX PURPOSES WAS $18,822,500.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND,INC.
Statement of Operations For the Year Ended October 31, 1994
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME (NOTE A):
Interest........................................... $ 144,914
Dividends.......................................... 43,222
Total income...................................... 188,136
EXPENSES:
Investment advisory fee (Note B)................... 206,444
Distribution fee (Note B).......................... 60,719
Legal.............................................. 33,871
Printing and postage............................... 26,810
Accounting fee (Note B)............................ 26,430
Transfer agent fees (Note B)....................... 22,978
Custodian fees..................................... 22,049
Audit.............................................. 20,712
Registration fees.................................. 18,532
Miscellaneous...................................... 13,605
Directors'fees..................................... 1,997
Insurance.......................................... 1,734
Total expenses.................................... 455,881
Less: Fees waived (Note B)......................... (91,569)
Net expenses...................................... 364,312
Net investment loss................................ (176,176)
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized loss from security transactions....... (13,816)
Net unrealized appreciation of investments......... 328,533
Net gain on investments............................ 314,717
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... $ 138,541
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH 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 loss.................................... $ (176,176) $ (186,089)
Net realized gain/(loss) from security
transactions......................................... (13,816) 3,037,146
Net unrealized appreciation/(depreciation) of
investments........................................... 328,533 (154,510)
Net increase in net assets resulting from
operations........................................... 138,541 2,696,547
DIVIDENDS TO SHAREHOLDERS FROM:
Net realized long-term gains........................... (2,944,147) (1,772,357)
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of 502,395 and 334,871 shares,
respectively.......................................... 6,358,306 4,602,863
Value of 230,642 and 113,876 shares issued in
reinvestment of dividends,respectively................ 2,746,944 1,540,740
Cost of 985,114 and 1,266,845 shares repurchased,
respectively.......................................... (11,865,168) (17,124,314)
Decrease in net assets derived from capital share
transactions.......................................... (2,759,918) (10,980,711)
Total decrease in net assets........................... (5,565,524) (10,056,521)
NET ASSETS:
Beginning of year...................................... 28,867,279 38,923,800
End of year............................................ $ 23,301,755 $ 28,867,279
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH 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... $ 14.02 $ 13.53 $ 15.23 $ 8.93 $ 14.90
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss.................... (0.08) (0.08) (0.16) (0.10) (0.11)
Net realized and unrealized gain/(loss)
on investments....................... 0.47 1.20 (1.54) 6.40 (4.00)
Total from Investment Operations....... 0.39 1.12 (1.70) 6.30 (4.11)
LESS DISTRIBUTIONS:
Dividends from net investment income
and short-term gains................. - - - - (1.86)
Distributions from net realized
long-term gains...................... (1.51) (0.63) - - -
Total distributions.................... (1.51) (0.63) - - (1.86)
Net asset value at end of year......... $ 12.90 $ 14.02 $ 13.53 $ 15.23 $ 8.93
TOTAL RETURN............................. 3.75% 8.33% (11.16)% 70.55% (31.63)%
RATIOS TO AVERAGE NET ASSETS:
Expenses(1)............................ 1.50% 1.50% 1.46% 1.50% 1.50%
Net investment loss(2)................. (0.73)% (0.52)% (0.92)% (0.76)% (0.92)%
SUPPLEMENTAL DATA:
Net assets at end of year (000)........ $23,302 $28,867 $ 38,924 $48,656 $ 31,678
Portfolio turnover rate................ 86% 133% 69% 79% 82%
</TABLE>
1 WITHOUT THE WAIVER OF ADVISORY FEES (NOTE B), THE RATIO OF EXPENSES TO
AVERAGE NET ASSETS WOULD HAVE BEEN 1.88%, 1.64%, 1.91% AND 1.64% FOR THE YEARS
ENDED OCTOBER 31, 1994, 1993, 1991 AND 1990, RESPECTIVELY.
2 WITHOUT THE WAIVER OF ADVISORY FEES (NOTE B), THE RATIO OF NET INVESTMENT
LOSS TO AVERAGE NET ASSETS WOULD HAVE BEEN (1.10)%, (0.66)%, (1.17)% AND (1.07)%
FOR THE YEARS ENDED OCTOBER 31, 1994, 1993, 1991 AND 1990, RESPECTIVELY.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
Notes to Financial Statements
A. SIGNIFICANT ACCOUNTING POLICIES - Flag Investors Emerging Growth
Fund,Inc.(the "Fund") was organized as a Maryland Corporation on July 2,1987 and
commenced operations on December 30,1987.The Fund is registered under the
Investment Company Act of 1940 as a diversified,open-end management investment
company.Significant accounting policies are as follows:
SECURITY VALUATION - Portfolio securities which are primarily traded on a
recognized U.S.securities exchange are valued on the basis of their last sale
price.In the event that there are no sales or the security is not listed,it is
valued at the average between the last reported bid and asked prices or at the
fair value as determined 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.
REPURCHASE AGREEMENTS - The Fund may agree to purchase money market
instruments subject to the seller's agreement to repurchase them at an agreed
upon date and price.The seller,under a repurchase agreement,will be required on
a daily basis to maintain the value of the securities subject to the agreement
at not less than the repurchase price.The agreement is conditioned upon the
collateral being deposited under the Federal Reserve book-entry system.
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 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 long-term capital gains, if any.
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 gain/(loss). As of November 1,1993,the cumulative effect of
such differences has been accounted for by decreasing accumulated investment
loss,undistributed net realized gain and paid-in-capital by $1,512,683.The
change had no effect on net asset value or distributions to shareholders.
OTHER - Security transactions are accounted for on the trade date and the
cost of investments sold or redeemed in kind is determined by use of the
specific identification method for both financial reporting and income tax
purposes. Interest income is recorded on an accrual basis.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. As compensation for its advisory services, ICC
receives from the Fund an annual fee,calculated daily and paid monthly,at the
annual rate of .85% of the Fund's average daily net assets.ICC has agreed to
reduce its aggregate fees so that ordinary expenses of the Fund for any fiscal
year do not exceed 1.5% of average net assets.For the year ended October 31,
1994,ICC waived $91,569 in fees.
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
Notes to Financial Statements (concluded)
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 $11,060 for transfer
agent services for the period ended October 31,1994.Prior to March 1,1994,PFPC,
Inc.provided these services.
As compensation for its accounting services, ICC receives from the Fund an
annual fee,calculated daily and paid monthly,from the Fund's average daily net
assets.Prior to December 31, 1993, Alex.Brown provided these services.ICC and
Alex.Brown received $26,430 for accounting services for the year ended October
31, 1994.
As compensation for providing distribution services, Alex.Brown receives
from the Fund an annual fee calculated daily and paid monthly,at an annual rate
equal to .25% of the Fund's average daily net assets.For the year ended October
31,1994,distribution fees were $60,719.
CAPITAL SHARE TRANSACTIONS - At October 31, 1994,the Fund was authorized to
issue up to 10 million shares of $.001 par value common stock.
INVESTMENT TRANSACTIONS - Purchases and sales of investment
securities,other than short-term obligations,aggregated $20,087,428 and
$22,529,380,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 $5,506,739 and
aggregate gross unrealized depreciation for all securities in which there is an
excess of tax cost over value was $803,277.
E. NET ASSETS - At October 31,1994,net assets consisted of:
<TABLE>
<CAPTION>
<S> <C>
Paid-in-capital . . . . . . . . . . . . $18,530,480
Accumulated net realized
loss from security
transactions . . . . . . . . . . . . (41,975)
Unrealized appreciation
on investments . . . . . . . . . 4,813,250
$23,301,755
</TABLE>
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
Report of Independent Accountants
To the Shareholders and Directors of
Flag Investors Emerging Growth Fund,Inc.:
We have audited the accompanying statement of net assets of Flag Investors
Emerging Growth Fund,Inc.as of October 31,1994,and the related statements of
operations for the year then ended,the statement of changes in net assets for
each of the two years in the period then ended and the financial highlights for
each of the five years in the period then ended.These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based 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 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 investments owned as of
October 31,1994,by correspondence with the custodian.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,the financial statements and financial highlights referred to
above present fairly,in all material respects,the financial position of Flag
Investors Emerging Growth Fund, Inc.as of October 31,1994,the results of its
operations for the year then ended,the changes in its net assets for each of the
two years in the period then ended and the financial highlights for each of the
five years in the period then ended,in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore,Maryland
December 2,1994
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
--------------------------------------------------------------------------------
Statement of Net Assets April 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
PERCENT
NO. OF VALUE OF NET
SHARES SECURITY (NOTE A) ASSETS
<C> <S> <C> <C>
-----------------------------------------------------------------
COMMON STOCKS--84.7%
BUSINESS SERVICES--6.9%
11,500 Corporate Express, Inc. $ 324,875 1.2%
66,000 Manugistics Group, Inc.* 709,500 2.5
48,000 QuickResponse Services,
Inc.* 894,000 3.2
------------- ----------
1,928,375 6.9
CONSUMER SERVICES--14.0%
52,500 DF&R Restaurants, Inc. 748,125 2.6
92,150 HomeTown Buffet, Inc.* 1,094,281 3.9
46,500 O'Charley's, Inc. 581,250 2.1
63,000 Pacific Sunwear of Calif. 472,500 1.7
12,500 Papa John's International,
Inc.* 432,813 1.5
10,500 PETsMART, Inc.* 350,437 1.2
11,500 Starbucks Corp.* 270,250 1.0
------------- ----------
3,949,656 14.0
FINANCIAL SERVICES--5.3%
47,500 Life Partners Group Inc. 926,250 3.3
23,500 Pxre Corporation 569,875 2.0
------------- ----------
1,496,125 5.3
HEALTH CARE SERVICES--8.8%
13,000 Access Health Marketing
Inc.* 219,375 0.8
20,500 Genesis Health Venture Inc. 558,625 2.0
27,500 Phycor Inc.* 873,125 3.1
25,550 Vivra Inc.* 820,793 2.9
------------- ----------
2,471,918 8.8
<CAPTION>
PERCENT
NO. OF VALUE OF NET
SHARES SECURITY (NOTE A) ASSETS
<C> <S> <C> <C>
-----------------------------------------------------------------
MEDIA/COMMUNICATIONS--6.1%
10,066 Clear Channel
Communications Inc. $ 566,212 2.0%
15,500 Lancit Media Productions* 189,875 0.7
68,500 Westcott Communications
Inc.* 959,000 3.4
------------- ----------
1,715,087 6.1
TECHNOLOGY--
SOFTWARE/SERVICES--18.3%
51,500 Integrated Systems Inc.* 1,081,500 3.9
75,500 Marcam Corp.* 1,123,063 4.0
13,500 Parametric Technology
Corp.* 641,250 2.3
24,500 Progress Software Corp.* 992,250 3.5
6,500 Security Dynamics
Technologies, Inc. 229,125 0.8
16,500 Synopsys Inc.* 895,125 3.2
7,500 XcelleNet, Inc. 177,188 0.6
------------- ----------
5,139,501 18.3
TECHNOLOGY--
SYSTEMS/SEMICONDUCTOR--13.5%
15,000 Applied Digital Access
Inc.* 213,750 0.8
19,500 Atmel Corp. 858,000 3.1
60,500 Level One Communications
Inc. 930,187 3.3
15,000 Maxim Integrated Products
Inc.* 543,750 1.9
22,800 Qualcom Inc.* 598,500 2.1
8,500 Xilinx Inc.* 652,375 2.3
------------- ----------
3,796,562 13.5
</TABLE>
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
--------------------------------------------------------------------------------
Statement of Net Assets (CONCLUDED) April 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
NO. OF
SHARES/ PERCENT
PAR VALUE OF NET
(000) SECURITY (NOTE A) ASSETS
<C> <S> <C> <C>
-----------------------------------------------------------------
COMMON STOCKS (CONCLUDED)
TRANSPORTATION--11.8%
21,100 Fritz Companies Inc.* $ 1,271,275 4.5%
105,500 Great Lakes Aviation Ltd.* 395,625 1.4
33,500 Landair Services Inc.* 510,875 1.8
19,000 Landstar System Inc.* 551,000 2.0
19,000 Wabash National Corp. 591,376 2.1
------------- ----------
3,320,151 11.8
TOTAL COMMON STOCKS
(Cost $18,369,619) 23,817,375 84.7
------------- ----------
COMMERCIAL PAPER--11.0%
$3,100 Ford Motor Credit Corp.
5.96%, 5/3/95 (Cost
$3,100,000) 3,100,000 11.0
------------- ----------
REPURCHASE AGREEMENT--2.1%
604 Goldman Sachs & Co., 5.80%
Dated 4/28/95, to be
repurchased on 5/1/95,
collateralized by U.S.
Treasury Strips with a
market value of $616,422 604,000 2.1
------------- ----------
</TABLE>
<TABLE>
<CAPTION>
PERCENT
VALUE OF NET
(NOTE A) ASSETS
<S> <C> <C>
---------------------------------------------------------------
TOTAL INVESTMENT IN SECURITIES
(Cost $22,073,619)** $ 27,521,375 97.8%
------------- ----------
OTHER ASSETS IN EXCESS OF
LIABILITIES, NET 614,722 2.2
------------- ----------
NET ASSETS $ 28,136,097 100.0%
============= ==========
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE
($28,136,097 DIVIDED BY 2,061,292
shares outstanding) $13.65
======
MAXIMUM OFFERING PRICE PER SHARE
($13.65 DIVIDED BY .955) $14.29
======
</TABLE>
--------------------------------------------------------------------------------
*Non-income producing security.
**Also aggregate cost for federal tax purposes.
See accompanying Notes to Financial Satements
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
--------------------------------------------------------------------------------
Statement of Operations For the Six Months Ended April 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME (NOTE A):
Interest................................................................. $ 116,900
Dividends................................................................ 6,893
---------
Total Income........................................................... 123,793
---------
EXPENSES:
Investment advisory fee (Note B)......................................... 105,686
Distribution fee (Note B)................................................ 31,084
Legal.................................................................... 17,514
Accounting fee (Note B).................................................. 13,419
Transfer agent fees (Note B)............................................. 11,414
Custodian fees........................................................... 10,899
Audit.................................................................... 10,407
Printing and postage..................................................... 10,391
Miscellaneous............................................................ 5,373
Registration fees........................................................ 4,261
Directors' fees.......................................................... 996
Insurance................................................................ 520
---------
Total expenses......................................................... 221,964
Less: Fees waived (Note B)............................................... (35,374)
---------
Net expenses........................................................... 186,590
---------
Net investment loss...................................................... (62,797)
---------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain from security transactions............................. 865,608
Change in unrealized appreciation of investments......................... 634,506
---------
Net gain on investments.................................................. 1,500,114
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......................... $1,437,317
==========
----------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH 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 loss............................................... $ (62,797) $ (176,176)
Net realized gain/(loss) from security transactions............... 865,608 (13,816)
Change in unrealized appreciation of investments.................. 634,506 328,533
--------------- ------------------
Net increase in net assets resulting from operations.............. 1,437,317 138,541
--------------- ------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net realized long-term gains...................................... (73,772) (2,944,147)
--------------- ------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of 405,855 and 502,395 shares, respectively.... 5,467,880 6,358,306
Value of 5,714 and 230,642 shares issued in reinvestment of
dividends, respectively......................................... 68,961 2,746,944
Cost of 156,500 and 985,114 shares repurchased, respectively...... (2,066,044) (11,865,168)
--------------- ------------------
Increase/(decrease) in net assets derived from capital share
transactions.................................................... 3,470,797 (2,759,918)
--------------- ------------------
Total increase/(decrease) in net assets........................... 4,834,342 (5,565,524)
NET ASSETS:
Beginning of period............................................... 23,301,755 28,867,279
--------------- ------------------
End of period..................................................... $ 28,136,097 $ 23,301,755
============== ==================
-----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
--------------------------------------------------------------------------------
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1995 ----------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value at beginning of period............. $ 12.90 $ 14.02 $ 13.53 $ 15.23 $ 8.93 $ 14.90
------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss................................ (0.03) (0.08) (0.08) (0.16) (0.10) (0.11)
Net realized and unrealized gain/(loss)
on investments................................... 0.82 0.47 1.20 (1.54) 6.40 (4.00)
------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations................... 0.79 0.39 1.12 (1.70) 6.30 (4.11)
LESS DISTRIBUTIONS:
Dividends from net investment income
and short-term gains............................. -- -- -- -- -- (1.86)
Distributions from net realized
long-term gains.................................. (0.04) (1.51) (0.63) -- -- --
------- ---------- ---------- ---------- ---------- ----------
Total distributions................................ (0.04) (1.51) (0.63) -- -- (1.86)
------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period................... $ 13.65 $ 12.90 $ 14.02 $ 13.53 $ 15.23 $ 8.93
======= ========== ========== ========== ========== ==========
TOTAL RETURN......................................... 6.16% 3.75% 8.33% (11.16)% 70.55% (31.63)%
RATIOS TO AVERAGE NET ASSETS:
Expenses(2)........................................ 1.50%(1) 1.50% 1.50% 1.46% 1.50% 1.50%
Net investment loss(3)............................. (0.51)%(1) (0.73)% (0.52)% (0.92)% (0.76)% (0.92)%
SUPPLEMENTAL DATA:
Net assets at end of period (000).................. $28,136 $23,302 $28,867 $38,924 $48,656 $31,678
Portfolio turnover rate............................ 25% 68% 133% 69% 79% 82%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Annualized.
2 Without the waiver of advisory fees (Note B), the ratio of expenses to average
net assets would have been 1.79% (annualized), 1.88%, 1.64%, 1.91%, 1.64% and
1.63% 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 loss
to average net assets would have been (.79)% (annualized), (1.10)%, (.66)%,
(1.17)%, (1.07)% and (0.56)% 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.
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements
A. SIGNIFICANT ACCOUNTING POLICIES
Flag Investors Emerging Growth Fund, Inc. (the "Fund") was organized as a
Maryland Corporation on July 2, 1987 and commenced operations on December 30,
1987. The Fund is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. Significant accounting
policies are as follows:
SECURITY VALUATION -- Portfolio securities which are primarily traded on a
recognized U.S. securities exchange are valued on the basis of their last
sale price. In the event that there are not sales or the security is not
listed, it is valued at the average between the last reported bid and asked
prices or at the fair value as determined 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.
REPURCHASE AGREEMENTS -- The Fund may agree to purchase money market
instruments subject to the seller's agreement to repurchase them at an agreed
upon date and price. The seller, under a repurchase agreement, will be
required on a daily basis to maintain the value of the securities subject to
the agreement at not less than the repurchase price. The agreement is
conditioned upon the collateral being deposited under the Federal Reserve
book-entry system.
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 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 long-term capital
gains, if any.
Effective November 1, 1993, the Fund adopted Statement of Position 93-2:
Determination, Disclosure and Financial Statement of 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 gain/loss). As of November 1, 1993, the
cumulative effect of such differences has been accounted for by decreasing
accumulated investment loss, undistributed net realized gain and
paid-in-capital by $1,512,683. The change had no effect on net asset value or
distributions to shareholders.
OTHER -- Security transactions are accounted for on the trade date and the
cost of investments sold or redeemed in kind is determined by use of the
specific identification method for both financial reporting and income tax
purposes. Interest income is recorded on an accrual basis. Dividend income is
recorded on the ex-dividend date.
B. INVESTMENT ADVISORY FEE, 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. As
compensation for its advisory services, ICC receives from the Fund an annual
fee, calculated daily and paid monthly, at the annual rate of .85% of the Fund's
average daily net assets. ICC has agreed to reduce its aggregate fees so that
ordinary expenses of the Fund for any fiscal year do not exceed 1.5% of average
net assets. For the six months ended April 30, 1995, ICC waived $35,374 in fees.
As compensation for its transfer agent services, ICC receives from the Fund a
per account fee, calculated and paid monthly. ICC received $11,414 for
transfer agent services for the six months ended April 30, 1995.
<PAGE>
[LOGO]
FLAG INVESTORS
EMERGING GROWTH FUND, INC.
--------------------------------------------------------------------------------
Notes to Financial Statements (CONCLUDED)
As compensation for its accounting services, ICC receives from the Fund an
annual fee, calculated daily and paid monthly, from the Fund's average daily
net assets. ICC received $13,419 for accounting services for the six months
ended April 30, 1995.
As compensation for providing distribution services, Alex. Brown receives
from the Fund an annual fee calculated daily and paid monthly, at an annual
rate equal to .25% of the Fund's average daily net assets. For the six months
ended April 30, 1995, distribution fees were $31,084.
C. CAPITAL SHARE TRANSACTIONS
At April 30, 1995, the Fund was authorized to issue up to 10 million shares
of $.001 par value common stock.
D. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, other than short-term
obligations, aggregated $7,701,570, and $5,822,270, 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 $6,460,646 and
aggregate gross unrealized depreciation for all securities in which there is
an excess of tax cost over value was $1,012,890.
E. NET ASSETS
At April 30, 1995, net assets consisted of:
<TABLE>
<S> <C>
Paid-in-capital.................... $ 22,001,277
Accumulated net realized gain from
security transactions............ 687,064
Unrealized appreciation of
investments...................... 5,447,756
------------
$ 28,136,097
============
</TABLE>
Directors and Officers
[LOGO]
Investment Objective
An open-end mutual fund seeking long-term growth of capital through investment
in a diversified portfolio of small and mid-sized emerging growth companies.
<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 fiscal years ended October 31,
1994, October 31, 1993, October 31, 1992, October 31, 1991,
October 31, 1990 and October 31, 1989 and for the period
from December 30, 1987 (commencement of operations) through
October 31, 1988
(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
- Statement 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 the Financial Statements
- Report of Independent Accountants
- 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
of the Registration Statement. All other financial statements and
schedules are inapplicable.
(b) Exhibits:
(1) (a)(1) Articles of Incorporation.
(b)(1) Articles of Amendment.
(c)(1) Articles Supplementary.
(d)(1) Form of Articles Supplementary.
C-1
<PAGE>
(2)(1) By-Laws.
(3) Not Applicable.
(4)(2) Specimen Security with respect to Flag Investors Shares.
(5)(1) Investment Advisory Agreement between Registrant and
Investment Company Capital Corp.
(6) (a)(1) Distribution Agreement with respect to Flag Investors
Emerging Growth Fund Class A Shares between Registrant
and Alex. Brown & Sons Incorporated.
(b)(1) Sub-Distribution Agreement between Alex. Brown & Sons
Incorporated and Participating Dealers.
(c)(1) Form of Shareholder Servicing Agreement between Alex.
Brown & Sons Incorporated and Shareholder Servicing
Agents.
(d)(1) Form of Distribution Agreement with respect to Flag
Investors Emerging Growth Fund Institutional Shares
between Registrant and Alex. Brown & Sons Incorporated.
(7) Not Applicable.
(8)(1) Custodian Agreement between Registrant and Provident National
Bank in effect from February 1, 1991.
(9)(1) Master Services Agreement between Registrant and Investment
Company Capital Corp.
(10)(1) Opinion of Counsel.
(11)(1) Consent of Coopers & Lybrand L.L.P.
(12) Not Applicable.
(13)(1) Subscription Agreements between Registrant and Investors.
(14) Not Applicable.
(15)(1) Plan of Distribution with respect to Flag Investors Emerging
Growth Fund Class A Shares.
(16)(1) Schedule of Computation of Performance Data (unaudited).
C-2
<PAGE>
(24)(1) Powers of Attorney.
(27)(1) Financial Data Schedule.
1 Filed herewith.
2 Incorporated by reference to Registrant's Registration Statement on Form
N-1A (Registration No. 33-21119), filed with the Securities and Exchange
Commission on April 7, 1988.
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 10, 1995.
Title of Class Number of Record Holders
-------------- ------------------------
Common Stock Class A 1,399
Institutional 0
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.
Section 17(h) of the Investment Company Act of 1940, as amended (the "1940
Act"), MD Corps. & Ass'ns Code Ann. Section 2-418 (1985 repl. vol.) and Article
VIII of Registrant's Articles of Incorporation, provide that in certain
situations the Registrant may indemnify any person who was or is a director,
officer or employee of the Registrant against all liabilities and expenses,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably incurred by
any such indemnified person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or legislative body except with respect to any matter as to which
such person shall have been finally adjudicated in any such action, suit or
other proceeding (a) not to have acted in good faith in the reasonable belief
that such person's action was in the best interests of the Registrant or (b) to
be liable to the Registrant or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
C-3
<PAGE>
involved in the conduct of such person's office. Expenses, including counsel
fees so incurred by any such person, shall be paid from time to time by the
Registrant in advance of the final disposition of any such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay amounts so paid to the Registrant if it is ultimately determined that
indemnification of such expenses is not authorized under the Articles of
Incorporation, provided, however, that either (a) such person shall have
provided appropriate security for such undertaking, (b) the Registrant shall be
insured against losses arising from any such advance payments or (c) either a
majority of the Directors who are not "interested persons" of the Registrant as
defined in Section 2(a)(19) of the 1940 Act acting on the matter (provided that
a majority of the Directors who are not "interested persons" then in office act
on the matter), or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts that there is reason
to believe that such person will be found entitled to indemnification under the
Articles of Incorporation.
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 1940 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 1940 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.
Item 28. Business and Other Connections of Investment Advisor.
Describe any other business, profession, vocation or employment of a
substantial nature in which the 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.
During the last two fiscal years, no director or officer of Investment
Company Capital Corp., the Registrant's Investment Advisor, has engaged in any
other business, profession, vocation or employment of a substantial nature other
than as an officer or employee of Alex. Brown.
Item 29. Principal Underwriters
(a) Alex. Brown & Sons Incorporated acts as distributor for Alex. Brown
Cash Reserve Fund, Inc., Flag Investors Telephone Income Fund, Inc.,
Flag Investors International Fund, Inc., the Flag Investors Total
Return U.S. Treasury Fund Shares of Total Return U.S. Treasury Fund,
Inc., the Flag Investors Managed Municipal Fund Shares 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.
C-4
<PAGE>
<TABLE>
<CAPTION>
(b)
Names and Principal Position with offices Position and Offices
Business Address* and Principal Underwriter with Registrant
-------------------- --------------------------- --------------------
<S> <C> <C>
Alvin B. Krongard Chief Executive Officer, Director None
Benjamin Howell Griswold, IV Chairman, Director None
Mayo A. Shattuck III President, Director None
Beverly L. Wright Chief Financial Officer and Treasurer None
Robert F. Price Secretary and General Counsel None
</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.
Alex. Brown & Sons Incorporated (Registrant's distributor) and
Investment Company Capital Corp. (Registrant's investment advisor,
transfer agent and dividend disbursing agent), 135 E. Baltimore Street,
Baltimore, Maryland 21202, will maintain physical possession of each such
account, book or other document of the Registrant, except for those
maintained by the Registrant's custodian, PNC Bank, 17th & Chestnut
Streets, Philadelphia, PA 19103.
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.
See Exhibit 8.
C-5
<PAGE>
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-6
<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. 10 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 18th day of August, 1995 .
FLAG INVESTORS EMERGING GROWTH
FUND, INC.
By: /s/ Frederick L. Meserve, Jr.
-----------------------------
Frederick L. Meserve, 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:
<TABLE>
<CAPTION>
<S> <C> <C>
* Director August 18, 1995
---------------------------------------
Truman T. Semans
* Director August 18, 1995
---------------------------------------
W. James Price
* Director August 18, 1995
---------------------------------------
Richard T. Hale
* Director August 18, 1995
---------------------------------------
James J. Cunnane
* Director August 18, 1995
---------------------------------------
N. Bruce Hannay
* Director August 18, 1995
---------------------------------------
John F. Kroeger
* Director August 18, 1995
---------------------------------------
Louis E. Levy
* Director August 18, 1995
---------------------------------------
Eugene J. McDonald
* Director August 18, 1995
---------------------------------------
Harry Woolf
/s/ Frederick L. Meserve, Jr. President August 18, 1995
---------------------------------------
Frederick L. Meserve, Jr.
* Chief Financial August 18, 1995
--------------------------------------- and Accounting
Diana M. Ellis Officer
* By: /s/ Brian C. Nelson
---------------------
Brian C. Nelson
Attorney-In-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EDGAR
Exhibit
Number Description Page No.
------- ----------- --------
<S> <C> <C>
EX-99.B(1) (a) Registrant's Articles of Incorporation, filed herewith.
EX-99.B(1) (b) Registrant's Articles of Amendment, 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) Registrant's Specimen Security with respect to Flag
Investors Shares, is hereby incorporated by reference to
Registrant's Registration Statement on Form N-1A
(Registration No. 33-21119), filed with the Securities and
Exchange Commission on April 7, 1988.
EX-99.B(5) Registrant's Investment Advisory Agreement between Registrant and
Investment Company Capital Corp., filed herewith.
EX-99.B(6) (a) Registrant's Distribution Agreement with respect to
Flag Investors Emerging Growth Fund Class A Shares
between Registrant and Alex. Brown & Sons Incorporated,
filed herewith.
EX-99.B(6) (b) Registrant's Sub-Distribution Agreement between Alex. Brown &
Sons Incorporated and Participating Broker-Dealers, filed
herewith.
EX-99.B(6) (c) Registrant's Shareholder Servicing Agreement between Registrant
and Shareholder Servicing Agents, filed herewith.
EX-99.B(6) (d) Form of Distribution Agreement with respect to Flag
Investors Emerging Growth Fund Institutional Shares
between Registrant and Alex. Brown & Sons Incorporated,
filed herewith.
(7) None.
EX-99.B(8) Custodian Agreement between Registrant and Provident
National Bank, as in effect from February 1, 1991, 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 Coopers & Lybrand L.L.P., filed herewith.
(12) None.
EX-99.B(13) Subscription Agreements between Registrant and Investors,
filed herewith.
(14) None.
<PAGE>
EX-99.B(15) Distribution Plan with respect to Flag Investors Emerging
Growth 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-27 Financial Data Schedule, filed herewith.
</TABLE>
<PAGE>
EX-99.B(1)(a)
ARTICLES OF INCORPORATION
OF
FLAG INVESTORS EMERGING GROWTH 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 EMERGING GROWTH FUND, INC.
ARTICLE III
The purpose for which the Corporation is formed is to act as a
management investment company under the Investment Company Act of 1940, as
amended, (the "1940 Act") initially as a closed-end company and, after Board of
Directors and shareholder approval, as an open-end company.
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
<PAGE>
of the stockholders 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. 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.
(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 this
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 this 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 ByLaws of the Corporation, the Board
of Directors 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.
(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
- 2 -
<PAGE>
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.
ARTICLE VI
(1) The total number of shares of capital stock which the
Corporation shall have the authority to issue is Ten Million (10,000,000)
shares, of the par value of 1 mil ($.001) per share and of the aggregate par
value of ten thousand dollars ($10,000.00), 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 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.
(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.
(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 this Charter for which
- 3 -
<PAGE>
the price or consideration fixed thereon shall have been paid shall be deemed to
be fully paid and non-assessable.
(4) The Board of Directors 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 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 6 of this Article VI and applicable law, the power of the Board of
Directors 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 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 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
- 4 -
<PAGE>
provided by law and the Charter of the Corporation and, if so, the
terms of such additional voting rights.
(D) The rights of the holders of shares of such class
or series upon the liquidation, dissolution or winding up of the
affairs of, 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.
(5) The Board of Directors 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 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.
(6) 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, 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
- 5 -
<PAGE>
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 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 of Directors, 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, 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 6(A) of this Article VI.
(D) Liquidating Dividends and Distributions. In the
event of the liquidation or dissolution of the Corporation,
stockholders 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 stockholders of any
class of Common Stock shall be distributed among such stockholders 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 stockholders,
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
- 6 -
<PAGE>
respective class or classes affected by a matter shall be entitled to
vote on such matter. At all meetings of the stockholders, 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. 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, 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 other
applicable statute, the Charter, or the By-Laws, 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. Upon the qualification of the
Corporation as an open-end investment company or at such other time as
the Board of Directors may determine is appropriate, and 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 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
- 7 -
<PAGE>
order to prevent the Corporation from being deemed a "personal holding
company" within the meaning of the Internal Revenue Code of 1986, as
amended, (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 $500.00 (Five Hundred Dollars) provided, however, that each
shareholder shall be notified that the value of his account is less
than $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 6(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,
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 surrenders his share
certificate in good delivery form to the Corporation or, if the shares
in question are not represented by certificates, who 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, 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 nay deduct
therefrom a conversion or exchange cost, in an amount determined within
the discretion of the Board of Directors. 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
- 8 -
<PAGE>
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 agency, as it may elect.
(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 present such personal holding company
status.
ARTICLE VII
(1) The number of directors of the Corporation shall be five
(5), 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 stockholders. The
name of the director who shall act until the directors are elected by the
Corporation's shareholder or until his successor is duly elected and qualifies
is:
Edward J. Veilleux
(2) 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, 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, in its discretion, may determine.
ARTICLE VIII
Section 1. Directors, Officers, etc. The Corporation shall
indemnify each of its Directors and officers (including persons who serve at the
Corporation's request as directors, officers or trustees of another organization
in which the Corporation has any interest as a shareholder, creditor or
- 9 -
<PAGE>
otherwise) (hereinafter referred to as a "Covered Person") against all
liabilities and expenses, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees reasonably incurred by any Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or otherwise or with which
such Covered Person may be or may have been threatened while in office or
thereafter, by reason of being or having been such a Covered Person except with
respect to any matter as to which such covered Person shall have been finally
adjudicated in any such action, suit or other proceeding (a) not to have acted
in good faith in the reasonable belief that such Covered Person's action was in
the best interests of the Corporation or, in the case of any criminal
proceeding, with reasonable cause to believe that the conduct was lawful, or (b)
to be liable to the Corporation or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's Office. Expenses, including
counsel fees so incurred by any such Covered Person (but excluding amounts paid
in satisfaction of judgments, in compromise or as fines or penalties), shall be
paid from time to time by the Corporation in advance of the final disposition of
any such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Covered Person to repay amounts so paid to the Corporation if it
is ultimately determined that indemnification of such expenses is not authorized
under this Article, provided, however, that such Covered Person shall have
affirmed that he in good faith believes that he has met the standard of conduct
necessary for indemnification and shall have provided a written undertaking to
repay the amount if it is ultimately determined that the standard of conduct has
not been met and either a majority of the Directors acting on the matter who are
not parties to such action (provided that at least two of such Directors then in
office act on the matter), or independent legal counsel in a written opinion,
shall have determined, based upon a review of readily available facts that there
is reason to believe that such Covered Person will be found entitled to
indemnification under this Article.
Section 2. Disposition Without Adjudication. As to any matter
disposed of (whether by a compromise payment, pursuant to a consent decree or
otherwise) without an adjudication by a court, or by any other body before which
the proceeding was brought, that such Covered Person either (a) did not act in
good faith in the reasonable belief that his action was in the best interests of
the Corporation or, in the case of any criminal proceeding, with reasonable
cause to believe that the conduct was lawful (b) is liable to the Corporation or
its Shareholders by reason of willful misfeasance, bad faith, gross negligence
- 10 -
<PAGE>
or reckless disregard of the duties involved in the conduct of his or her
office, indemnification shall be provided if (i) approved as in the best
interest of the Corporation, by at least a majority of the Directors acting on
the matter who are not parties to such action (provided that at least two of
such Directors then in office act on the matter) upon a determination, based
upon a review of readily available facts at a meeting called for the purpose of
reviewing such indemnification that such Covered Person acted in good faith in
the reasonable belief that his action was in the best interests of the
Corporation and is not liable to the Corporation or its Shareholders by reasons
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office, or (ii) there has been
obtained an opinion in writing of independent legal counsel, based upon a review
of readily available facts to the effect that such Covered Person appears to
have acted in good faith in the reasonable belief that his action was in the
best interests of the Corporation and that such indemnification would not
protect such Covered Person against any liability to the Corporation 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. Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Corporation or to have been liable to the Corporation or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office, or in the case of any criminal proceeding, to have acted
without reasonable cause to believe that his conduct was lawful.
Section 3. Indemnification Not Exclusive. The right of
indemnification hereby provided shall not be exclusive of or affect any other
rights to which such Covered Person may be entitled. As used in this Article
VIII, the term "Covered Person" shall include such person's heirs, executors and
administrators and a "disinterested Director" is a Director who is not a
"interested person" of the Corporation as defined in Section 2(a)(19) of the
1940 Act, (or who has been exempted from being an "interested person" by any
rule, regulation or order of the Commission) and against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending. Nothing contained in
this Article shall affect any rights to indemnification to which personnel of
the Corporation, other than Directors or officers, and other persons may be
entitled by contract or otherwise under law, nor the power of the Corporation
- 11 -
<PAGE>
to purchase and maintain liability insurance on behalf of any such person;
provided, however, that the Corporation shall not purchase or maintain any such
liability insurance in contravention of applicable law, including without
limitation the 1940 Act.
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, as to 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 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 to (i) 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)
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.
- 12 -
<PAGE>
ARTICLE X
The duration of this Corporation shall be perpetual.
ARTICLE XI
(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 as provided in the
Corporation's By-Laws.
(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.
(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 or in the
By-Laws of the Corporation.
(4) In furtherance, and not in limitation, of the powers
conferred by the laws of the State of Maryland, the Board of Directors is
expressly authorized:
(A) To make, alter or repeal the By-Laws of the
Corporation, except where such power is reserved by the By- Laws to the
stockholders, 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
stockholders, and no shareholder shall have any right to inspect any
account or book or document of the Corporation, except as conferred by
- 13 -
<PAGE>
law or authorized by resolution of the Board of Directors or
of the stockholders.
(C) Without the assent or vote of the stockholders,
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 may deem advisable.
(D) Without the assent or vote of the stockholders,
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 this Charter 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; to
set apart out of any funds of the Corporation such reserves for such
purposes as it shall determine and to abolish the same; 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; 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; 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 to provide for the payment of declared dividends on a date
earlier or later than the specified payment date in the case of
stockholders 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 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, this Charter
and the By-Laws of the Corporation.
- 14 -
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator of
FLAG INVESTORS EMERGING GROWTH FUND, INC. hereby executes the
foregoing Charter and acknowledges the same to be his act on the
2nd day of July, 1987.
/s/ Edward J. Veilleux
-------------------------------
Edward J. Veilleux
Incorporator
WITNESS:
/s/ Henry D. Kahn
-------------------
- 15 -
<PAGE>
EX-99.B(1)(b)
EXHIBIT 1
FLAG INVESTORS EMERGING GROWTH FUND, INC.
ARTICLES OF AMENDMENT
Flag Investors Emerging Growth Fund, Inc., a Maryland
corporation having its principal business office at 135 East Baltimore Street,
Baltimore Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The charter of the Corporation is hereby
amended as follows:
Article III of the Articles of Incorporation is
amended and restated to read in full as follows:
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.
SECOND: The board of directors of the Corporation, by
unanimous written consent pursuant to Section 2-408 of the Corporations and
Associations Article of the Annotated Code of Maryland, as of December 29, 1987,
duly adopted a resolution in which was set forth the foregoing amendment to the
charter, declaring that the said amendment to the charter as proposed was
advisable and directing that it be submitted for action thereon by the
stockholders of the Corporation.
<PAGE>
THIRD: All of the stockholders of the Corporation, by
unanimous written consent pursuant to Section 2-505 of the Corporations and
Associations Article of the Annotated Code of Maryland, on December 30, 1987,
duly approved the foregoing amendment to the charter of the Corporation.
FOURTH: The amendment to the charter of the Corporation
as hereinabove set forth has been duly advised by the board of
directors and approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its President and attested by its
Secretary on December 30, 1987.
[SEAL] FLAG INVESTORS EMERGING GROWTH
FUND, INC.
Attest: /s/ Brian C. Nelson By: /s/ Richard C. Hackney
--------------------- --------------------------
Brian C. Nelson Richard C. Hackney
Secretary President
The undersigned, President of Flag Investors Emerging Growth
Fund, Inc., who executed on behalf of said corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said corporation, the foregoing Articles of Amendment 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 herein
with respect to the approval thereof are true in all material respects, under
the penalties of perjury.
/s/ Richard C. Hackney
---------------------------------
Richard C. Hackney
- 2 -
<PAGE>
EX-99.B(1)(c)
FLAG INVESTORS EMERGING GROWTH FUND, INC.
ARTICLES SUPPLEMENTARY
FLAG INVESTORS EMERGING GROWTH 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 Emerging Growth Fund Class A Shares" (the "Class A Shares"), one
million (1,000,000) shares are designated "Flag Investors Emerging Growth 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 Emerging Growth 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 Emerging Growth 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 EMERGING GROWTH FUND, INC.
By: /s/ Edward J. Veilleux
------------------------------------
Vice President
Attest: /s/ Brian C. Nelson
------------------------
Secretary
The undersigned, Vice President of FLAG INVESTORS EMERGING
GROWTH 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 EMERGING GROWTH FUND, INC.
FORM OF
ARTICLES SUPPLEMENTARY
FLAG INVESTORS EMERGING GROWTH 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 ($15,000), all of which
shares are designated as follows: eight million (8,000,000) shares are
designated "Flag Investors Emerging Growth Fund Class A Shares," one million
(1,000,000) shares are designated "Flag Investors Emerging Growth Fund Class
B Shares," five million (5,000,000) shares are designated "Flag Investors
Emerging Growth Fund Institutional Shares" and one million (1,000,000) shares
remain undesignated.
SECOND: Immediately before the increase, the Corporation was
authorized to issue ten million (10,000,000) shares of Common Stock, of the
par value of 1 mil ($.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 Emerging
Growth Fund Class A Shares," one million (1,000,000) shares were designated
"Flag Investors Emerging Growth 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 Emerging Growth 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 EMERGING GROWTH FUND, INC.
By: _______________________________________
Vice President
Attest: __________________________
Secretary
The undersigned, Vice President of FLAG INVESTORS EMERGING GROWTH
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.
By: __________________________________________________
Vice President
<PAGE>
EX-99.B(2)
BY-LAWS
OF
FLAG INVESTORS EMERGING GROWTH 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 Stockholders
Section 1. Stockholder Meetings. The Corporation may, but
shall not be required to, hold a regular meeting of stockholders in any year in
which the Corporation is not required, under the Investment Company Act of 1940,
as amended, (the "1940 Act") to submit for stockholder approval (i) the election
of director(s), (ii) any contract with an investment adviser or principal
underwriter (as such terms are defined in the 1940 Act) that the Corporation
enters into or any renewal or amendment thereof, or (iii) the selection of the
Corporation's independent public accountants. If stockholder approval is
required for any of the purposes in (i) through (iii) above, the regular meeting
shall be held, at which stockholders shall vote on the proposal necessitating
such meeting and shall transact any other business as may properly be brought
before the meeting. Regular meetings of stockholders, if any, shall be held on
such day during the month of June and at such time as shall be designated by the
Board of Directors and stated in the notice of the meeting.
<PAGE>
Section 2. Special Meetings. Special meetings of the
stockholders, unless otherwise provided by law or by the Charter 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 stockholders 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 stockholders 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 stockholders held during the preceding twelve (12) months.
Section 3. Place of Meetings. The regular meeting, if any, and
any special meeting of the stockholders 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 stockholders and the purpose or purposes of the meeting
shall be given personally or by mail, not less than ten nor more than ninety
days before the date of such meeting, to each stockholder entitled to vote at
such meeting and to each other stockholder 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 stockholder at his address as it appears on the
records of the Corporation, with postage thereon prepaid. The notice of every
meeting of stockholders 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 stockholders shall be
deemed waived by any stockholder 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
stockholders 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
stockholders, the officer or agent having charge of the share transfer books of
the Corporation shall make a complete list of stockholders entitled to vote at
such meeting, in alphabetical order with the address of and the number of shares
held by each stockholder.
- 2 -
<PAGE>
Section 5. Organization. At each meeting of the stockholders,
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 stockholders 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, each holder of record of shares of stock of the Corporation
having voting power shall be entitled at each meeting of the stockholders to one
vote for every share of such stock standing in his name on the record of
stockholders of the Corporation as of the record date determined pursuant to
Section 8 of Article VII 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 stockholder entitled to vote at any meeting
of stockholders may authorize another person or persons to act for him by a
proxy signed by such stockholder 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 stockholder 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 these By-Laws, any
corporate action to be taken by vote of the stockholders shall be authorized by
a majority of the total votes cast at a meeting of stockholders 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 stockholder 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 stockholders, 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 stockholder 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 stockholders. On request of the chairman
of the meeting or any stockholder 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 stockholders.
Section 8. Consent of Stockholders in Lieu of Meeting. Except
as otherwise provided by statute any action required to be taken at any regular
or special meeting of stockholders, or any action which may be taken at any
annual or special meeting of stockholders, may be taken without a meeting,
without prior notice and without a vote, if the following are filed with the
records of stockholders' meetings: (i) a unanimous written consent which sets
forth the action and is signed by each stockholder entitled to vote on the
matter and (ii) a written waiver of any right to dissent signed by each
stockholder 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, 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 stockholders by law or by the Charter
or these By-Laws.
- 4 -
<PAGE>
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 stockholders.
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 stockholders, 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.
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 stockholders by a vote of a majority of the
votes entitled to be cast for the election of directors.
Section 6. Vacancies. The stockholders 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 stockholders of the Corporation. In the event that at any
time there is a vacancy in any office of a director which vacancy may not be
- 5 -
<PAGE>
filled by the remaining directors, a special meeting of the stockholders 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 to fill a vacancy serves until the next annual meeting of stockholders
and until his successor is elected and qualifies. A director elected by the
stockholders 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, 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 the approval of any
contract with an investment adviser or principal underwriter, as such terms are
- 6 -
<PAGE>
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.
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.
- 7 -
<PAGE>
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 stockholders 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.
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 stockholders any action requiring
authorization of stockholders pursuant to statute or the Charter;
- 8 -
<PAGE>
(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 stockholder 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 of 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.
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
- 9 -
<PAGE>
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.
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.
- 10 -
<PAGE>
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
stockholders 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;
(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.
- 11 -
<PAGE>
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 stockholders;
(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 other 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 from time to time
may be conferred upon or assigned to him by the Board of Directors, the
President or the Secretary.
Section 10. 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.
- 12 -
<PAGE>
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
stockholders, (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 stockholders 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 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 stockholders 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
- 13 -
<PAGE>
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 stockholders, including which stockholders are
entitled to notice of a meeting, vote at a meeting (or any adjournment thereof),
receive a dividend, or be allotted or exercise other 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 stockholders,
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 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.
- 14 -
<PAGE>
Section 8. Stock Ledgers. 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
respective offices of the Transfer Agents 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 December 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.
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.
- 15 -
<PAGE>
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 stockholders in accordance with the
provisions of the 1940 Act.
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 stockholders based upon each such examination shall be mailed to each
stockholder 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
- 16 -
<PAGE>
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
Amendments
These By-Laws or any of them may be amended, altered or repealed at
any annual meeting of the stockholders or at any special meeting of the
stockholders 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.
- 17 -
<PAGE>
EX-99.B(5)
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 30th day
of December, 1987 by and between FLAG INVESTORS EMERGING GROWTH FUND, INC. a
Maryland corporation (the "Fund") and FLAG INVESTORS MANAGEMENT CORP., a
Maryland corporation (the "Advisor"), with respect to the following recital of
fact:
R E C I T A L
WHEREAS, the Fund is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended; and
WHEREAS, the Advisor is a registered investment advisor
and engages in the business of acting as an investment advisor;
and
WHEREAS, the Fund and the Advisor desire to enter an agreement
to 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. The Fund hereby appoints the Advisor to manage
and supervise all aspects of 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
hereby 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 or will
furnish the Advisor 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 the State of Maryland on July 3, 1987 and all
amendments thereto (such Articles of Incorporation, as presently in effect and
as from time to time amended, are herein called the "Articles");
<PAGE>
(b) The Fund's By-Laws and all amendments thereto
(such By-Laws, as presently in effect and as from time to time amended, are
herein called the "By-Laws");
(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, as amended (the
"1940 Act") on Form N-8A under the 1940 Act as filed with the Securities and
Exchange Commission (the "SEC") on September 8, 1987;
(e) The Fund's Registration Statement on Form N-1A
under the 1940 Act and under the Securities Act of 1933, as amended (the "1933
Act") as filed with the SEC 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").
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. The Advisor shall give the
Fund the benefit of its best judgment, efforts and facilities in rendering its
services as Advisor. In carrying out its obligations under paragraph 1 hereof,
the Advisor shall:
(a) formulate and implement continuing programs for
the purchases and sales of securities and regularly report thereon to the Fund's
Board of Directors; and
(b) in accordance with the Fund's investment
objectives, policies and investment restrictions reflected in the Prospectus
determine what issuers and securities shall be represented in the Fund's
portfolio and in what proportion and regularly report them to the Fund's Board
of Directors; and
(c) provide the Board of Directors of the Fund on a
regular basis with financial reports with respect to the Fund's Portfolio
investments and analyses of the Fund's operations and the operations of
comparable investment companies; 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 portfolio
of the Fund, and whether concerning the individual issuers whose securities are
- 2 -
<PAGE>
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; and
(e) take, on behalf of the Fund, all actions which
appear to the Fund necessary to carry into effect such purchase and sale
programs and supervisory functions as aforesaid, including the placing of orders
for the purchase and sale of portfolio securities; and
(f) supervise and manage all aspects of the Fund's
operations; and
(g) provide the Fund with such executive,
administrative and clerical services as are deemed advisable by the Fund's Board
of Directors; and
(h) arrange, but not pay for, the periodic updating
of prospectuses and supplements thereto, proxy materials, tax returns, reports
to the Fund's shareholders and reports to and filings with the SEC and state
Blue Sky authorities; and
(i) provide the Fund with, or obtain, adequate office
space and all necessary equipment and services, including telephone service,
heat, utilities, stationery supplies and similar items for any offices as are
deemed advisable by the Fund's Board of Directors; and
(j) be responsible for the maintenance of such
accounts books and records as may be required by law or may, in the judgment of
the Board of Directors, be appropriate for the orderly transaction of the Fund's
business, provided that, if the Fund enters into a contract with any third party
for the maintenance of any such accounts, books and records, the Advisor shall
be responsible for supervision of and coordination with such third party on
behalf of the Fund but shall not be responsible for the costs related to such
contract or for the performance of such contract by such third party; and
(k) supervise, on behalf of the Fund, the operations
of the Fund's transfer and dividend disbursing agent; and
4. Broker-Dealer Relationships. The Advisor is responsible for
decisions to buy and sell securities for the Fund, broker-dealer selection, and
negotiation of its brokerage commission rates. 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
- 3 -
<PAGE>
Board of Directors may require in order to monitor the Fund's portfolio
transaction activities.
The Advisor's primary consideration in effecting securities
transactions will be to obtain best price and execution of orders on an overall
basis. Accordingly, the Advisor will take into consideration in executing
individual transactions the net price available. However, the Advisor may also
take into consideration other factors as discussed below.
The Advisor will take into consideration the ability of the
broker-dealer to meet the Fund's portfolio transaction execution needs on a
continuing basis. Accordingly, the Advisor will consider the reliability,
integrity and financial condition of the broker-dealer, the size of and
difficulty in executing the particular order and the general ability of the
broker-dealer to execute the Fund's transactions reliably and promptly. To the
extent that the executions and prices offered by more than one broker-dealer are
comparable, the Advisor may, in its discretion, effect transactions with
broker-dealers that furnish statistical, research or other information or
services which are deemed by the Advisor to be beneficial to the Fund's
investment program. Accordingly, 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 or dealer an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or 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 or dealer, viewed in terms of
either that particular transaction or the Advisor's overall responsibilities
with respect to the Fund.
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 & Sons
Incorporated ("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."
- 4 -
<PAGE>
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 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 from
the group except in accordance with policies established by the Board of
Directors in compliance with 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 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 as amended; and
(b) the provisions of the Registration Statement of
the Fund under the 1933 Act and the 1940 Act and any rules and regulations
adopted thereunder as amended; and
(c) the provisions of the Fund's Articles of
Incorporation; and
(d) the provisions of the By-laws of the Fund, as
amended; and
(e) any other applicable provisions of state and
federal law and applicable rules of any registered national securities
organization.
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 (except as provided in paragraph 8 hereof), the
services of such officers and employees as may be required by the Fund for the
proper conduct of its affairs; travel expenses of employees and officers of the
- 5 -
<PAGE>
Advisor; office space, equipment, research services and supplies; expenses of
maintaining accounts, books, and records, except to the extent such services are
provided by a third party pursuant to a contract with the Fund.
(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 Advisor, Sub-Advisor and Alex. Brown; the charges and expenses of any
registrar, any custodian 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 and any accounting services
provider 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
of the Fund; 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); 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 or
members of any advisory board or committee other than such Directors or members
who are "interested persons" within the meaning of Section 2(a)(19) of 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 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 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. The Advisor 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 the Advisor's charge
- 6 -
<PAGE>
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. The Advisor may, with the approval of the majority of
the Fund's Directors who are not "interested persons" of the Fund, appoint a
Sub-Advisor for the Fund. Such Sub-Advisor shall be paid by the Advisor.
9. Compensation. For the services to be rendered and the
expenses assumed by the Advisor, the Fund shall pay to the Advisor compensation
at an annual rate of .85% of the Fund's average daily net assets; provided that,
if necessary, the Advisor's annual compensation will be reduced so that the
Fund's total expense for that year do not exceed 1.5% 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 that 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 paragraph 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 paragraph 10
hereof. The Advisor agrees to waive such portion of its fee as may be required
to comply with expense limitations imposed by the securities laws of various
states.
10. 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 and 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 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 or directors of any other firm or corporation, including other
investment companies.
11. Term and Approval. This Agreement shall become effective
at the close of business on the date hereof and shall continue 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:
- 7 -
<PAGE>
(a) (i) by the Fund's Board of Directors or (ii) by
the vote of the holders of a majority of the outstanding voting securities (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 (as
defined in the 1940 Act) of a party to this Agreement (other than as Fund
Directors), by votes cast in person at a meeting specifically called for such
purpose.
12. 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, by vote of the Fund's Board of Directors or by vote of the holders
of a majority of the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), or by the Advisor. The notice provided for herein may
be waived by either party. This Agreement shall automatically terminate in the
event of its assignment, the term "assignment" having the meaning defined in
Section 2(a)(4) of the 1940 Act.
13. Liability.
(a) 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 in performing all
services provided for 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 this
Agreement.
(b) The Advisor agrees that any claims by it against
the Fund may be satisfied only from the assets of the Fund, and no shareholders,
Directors or officers of the Fund may be held personally liable or responsible
for any obligations arising out of this Agreement.
14. 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.
15. 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
- 8 -
<PAGE>
of the Securities and Exchange Commission 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
Securities and Exchange Commission, 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 EMERGING GROWTH FUND, INC.
Attest: /s/ Brenda L. Bowers By: /s/ Brian C. Nelson
----------------------- ----------------------------------
[SEAL] FLAG INVESTORS MANAGEMENT CORP.
Attest: /s/ Brenda L. Bowers By: /s/ Edward J. Veilleux
----------------------- ----------------------------------
- 9 -
<PAGE>
EX-99.B(6)(a)
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made as of the 30th day of
December, 1987 by and between FLAG INVESTORS EMERGING GROWTH FUND, INC., a
Maryland corporation (the "Fund") and ALEX. BROWN & SONS INCORPORATED, a
Maryland corporation ("Alex. Brown").
R E C I T A L
WHEREAS, the Fund is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, Alex. Brown is registered as a broker-dealer
under the Securities Exchange Act of 1934; and
WHEREAS, the Fund and Alex. Brown desire to enter an
agreement to provide distribution 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. The Fund hereby appoints Alex. Brown as
Distributor for the Fund for the period and on the terms set forth in this
Agreement. 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 the State of Maryland on July 2, 1987 and all
amendments thereto (the Articles of Incorporation, as presently in effect and as
from time to time amended, are herein called the "Articles");
(b) The Fund's By-Laws and all amendments thereto
(the By-Laws, as presently in effect and as from time to time 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 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 8, 1987;
(e) The Fund's Private Placement Memorandum dated
September 8, 1987;
(f) The Fund's Registration Statement on Form N-1A
under the Securities Act of 1933, as amended (the "1933 Act") (File No.
33-21119) and under the 1940 Act as filed with the SEC on April 7, 1988 relating
to the shares of the Fund and all amendments thereto; and
(g) The Fund's most recent prospectus, included as
part of the Fund's Registration Statement (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. In carrying out its obligations hereunder, 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 Fund's shares; and
(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 Fund's shares. It is mutually understood and agreed that
Alex. Brown does not undertake to sell all or any specific portion of the shares
of common stock of the Fund ("Shares"). The Fund shall not sell any of its
-2-
<PAGE>
Shares except through Alex. Brown, securities dealers who have valid
Sub-Distribution Agreements with Alex. Brown or financial institutions that have
entered into Shareholder Service Agreements with the Fund. 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.
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 thereto,
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
the Agreement, provided that any such amendment that would provide for a
material increase in the amount expended by the Fund, must be approved by Fund
Shareholders before becoming effective.
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;
(c) the provisions of the Articles of the Fund;
(d) the provisions of the By-Laws of the Fund;
(e) the rules and regulations of the National
Association of Securities Dealers ("NASD") and all other self-regulatory
organizations applicable to the sale of investment company shares; and
(f) any other applicable provisions of state and
Federal law.
7. Expenses. The expenses connected with the Fund shall be
allocable between the Fund and Alex. Brown as follows:
-3-
<PAGE>
(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 its 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 Fund's
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 organizational expenses of the Fund and all other expenses of the Fund,
including, without limitation: the fees of the Fund's Advisor and Alex. Brown;
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 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); 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 Board of 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" within the meaning of
Section 2(a)(19) of 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 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 directors) of the Fund which inure to its benefit;
-4-
<PAGE>
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 nor obligate Alex. Brown to pay or assume any similar
Fund expense on any subsequent occasions.
9. Compensation.
(a) 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.
(b) In the event the operating expenses of the Fund,
including all investment advisory and administrative and distribution 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, Alex.
Brown shall reduce its fee to the extent of such excess expenses and, if
required pursuant to any such laws or regulations, will reimburse the Fund for
annual operating expenses in excess of any expense limitation that may be
applicable; provided, however, there shall be excluded from such expenses the
amount of any interest, taxes, brokerage commissions, extraordinary expenses
(including but not limited to legal claims and liabilities and litigation costs
-5-
<PAGE>
and any indemnification related thereto) and any other amount not includable in
calculating such expense limitation, 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 as at the end of the last business day of the month. That expense
limitation which results in the largest reduction shall be applicable.
10. Compensation for Servicing Shareholder Accounts. The Fund
acknowledges that Alex. Brown may compensate its investment representatives for
soliciting and 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 National Association of Securities Dealers,
Inc. All SubDistribution 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
sub-distributor 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 sub-distributor.
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 employees or
partners of Alex. Brown may serve as officers or directors of the Fund, and that
officers or directors of the Fund may serve as employees or partners of Alex.
Brown to the extent permitted by law; and that employees and partners 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, officers or
directors of any other firm or corporation, including other investment
companies.
-6-
<PAGE>
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 vote of the Fund's Board of Directors
or (ii) by the vote of a majority of the outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the
Fund's Directors who are not "interested persons" of the Fund (as defined in the
1940 Act) and who do not have a financial interest in the operation of this
Agreement, by votes cast in person at a Board of Directors' 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 who 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 Section 2(a)(42) of the 1940 Act),
or (iv) by Alex. Brown. The notice provided for herein may be waived by either
party. This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of 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 party, it is agreed that the address of both
Alex. Brown and the Fund for this purpose shall be One Thirty-five East
Baltimore Street, Baltimore, Maryland 21202.
-7-
<PAGE>
17. Question 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 EMERGING GROWTH FUND, INC.
Attest: /s/ Brenda L. Bowers By: /s/ Brian C. Nelson
-------------------- -----------------------------------
Vice President and Treasurer
[SEAL] ALEX. BROWN & SONS INCORPORATED
Attest:/s/ Brenda L. Bowers By: /s/ Edward J. Veilleux
-------------------- -----------------------------------
-8-
<PAGE>
EX-99.B(6)(b)
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 (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.
<PAGE>
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 it hereunder. In
carrying out your obligations, you agree to act in good faith and 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.
<PAGE>
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:______________________________
<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
-2-
<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: _______________________________
-3-
<PAGE>
EX-99.B(6)(d)
FLAG INVESTORS EMERGING GROWTH FUND, INC.
Institutional Shares
FORM OF
DISTRIBUTION AGREEMENT
AGREEMENT, made as of the ____ day of ___________, 1995, by and
between FLAG INVESTORS EMERGING GROWTH 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 July 2, 1987 (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
Emerging Growth Fund Class A Shares and the Flag Investors Emerging Growth
Fund 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 Emerging Growth 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 April 7, 1988;
(e) The Fund's Registration Statement on Form N-1A under
the Securities Act of 1933, as amended (the "1933 Act") (File No. 33-21119)
and under the 1940 Act as filed with the SEC on April 7, 1988 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
-2-
<PAGE>
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;
(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
-3-
<PAGE>
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. 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 EMERGING GROWTH
FUND, INC.
Attest:__________________ By _____________________________________
Title:
[SEAL] ALEX. BROWN & SONS INCORPORATED
Attest:__________________ By _____________________________________
Title:
-5-
<PAGE>
EX-99.B(8)
CUSTODIAN SERVICES AGREEMENT TERMS AND CONDITIONS
This Agreement is made as of February 1, 1991 by and between Flag
Investors Emerging Growth Funds, Inc. (the "Fund"), a Maryland corporation, and
Provident National Bank ("Provident"), a national banking association.
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund wishes to
retain Provident to provide custodian services, and Provident wishes to furnish
custodian services, either directly or through an affiliate or affiliates, as
more fully described herein.
In consideration of the promises and mutual covenants herein contained,
the parties agree as follows:
1. Definitions.
(a) "Authorized Person". The term "Authorized Person" shall
mean any officer of the Fund and any other person, who is duly authorized by the
Fund's Governing Board, to give Oral and Written Instructions on behalf of the
Fund. Such persons are listed in the Certificate attached hereto as the
Authorized Persons Appendix as such appendix may be amended in writing by the
Fund's Governing Board from time to time.
(b) "Book-Entry System". The term "Book-Entry System" means
Federal Reserve Treasury book-entry system for United States and federal agency
securities, its successor or successors, and its nominee or nominees and any
book-entry system maintained by an exchange registered with the SEC under the
1934 Act.
<PAGE>
(c) "CFTC". The term "CFTC" shall mean the Commodities Futures
Trading Commission.
(d) "Governing Board". The term "Governing Board" shall mean
the Fund's Board of Directors if the Fund is a corporation or the Fund's Board
of Trustees if the Fund is a trust, or, where duly authorized, a competent
committee thereof.
(e) "Oral Instructions". The term "Oral Instructions" shall
mean oral instructions received by Provident from an Authorized Person or from a
person reasonably believed by Provident to be an Authorized Person.
(f) "Provident". The term "Provident" shall mean Provident
National Bank or a subsidiary or affiliate of Provident National Bank.
(g) "SEC". The term "SEC" shall mean the Securities and
Exchange Commission.
(h) "Securities and Commodities Laws". The term shall mean the
"1933 Act", the Securities Act of 1933, as amended, the "1934 Act", the
Securities Exchange Act of 1934, as amended, and the "CEA", the Commodities
Exchange Act, as amended.
(i) "Shares". The term "Shares" shall mean the shares of stock
of any series or class of the Fund, or, where appropriate, units of beneficial
interest in a trust where the Fund is organized as a Trust.
(j) "Property". The term "Property" shall mean:
-2-
<PAGE>
(i) any and all securities and other
investment items which the Fund may from
time to time deposit, or cause to be
deposited, with Provident or which
Provident may from time to time hold for
the Fund;
(ii) all income in respect of any of such
securities or other investment items;
(iii) all proceeds of the sale of any of such
securities or investment items; and
(iv) all proceeds of the sale of securities
issued by the Fund, which are received
by Provident from time to time, from or
on behalf of the Fund.
(k) "Written Instructions". The term "Written Instructions"
shall mean written instructions signed by two Authorized Persons and received by
Provident. The instructions may be delivered by hand, mail, tested telegram,
cable, telex or facsimile sending device.
2. Appointment. The Fund hereby appoints Provident to provide custodian
services, and Provident accepts such appointment and agrees to furnish such
services.
3. Delivery of Documents. The Fund has provided or, where applicable,
will provide Provident with the following:
(a) certified or authenticated copies of the
resolutions of the Fund's Governing Board,
approving the appointment of Provident or its
affiliates to provide services;
(b) a copy of the Fund's most recent effective
registration statement;
(c) a copy of the Fund's advisory agreement or
agreements;
(d) a copy of the Fund's distribution agreement or
agreements;
-3-
<PAGE>
(e) a copy of the Fund's administration agreements if
Provident is not providing the Fund with such
services;
(f) copies of any shareholder servicing agreements
made in respect of the Fund; and
(g) certified or authenticated copies of any and all
amendments or supplements to the foregoing.
4. Compliance with Government Rules and Regulations. Provident
undertakes to comply with all applicable requirements of the 1933 Act, the 1934
Act, the 1940 Act, and the CEA, and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to all duties to be
performed by Provident hereunder. Except as specifically set forth herein,
Provident assumes no responsibility for such compliance by the Fund.
5. Instructions. Unless otherwise provided in this Agreement, Provident
shall act only upon Oral and Written Instructions. Provident shall be entitled
to rely upon any Oral and Written Instructions it receives from an Authorized
Person (or from a person reasonably believed by Provident to be an Authorized
Person) pursuant to this Agreement. Provident may assume that any Oral or
Written Instructions received hereunder are not in any way inconsistent with the
provisions of organizational documents of the Fund or of any vote, resolution or
proceeding of the Fund's Governing Board or of the Fund's shareholders.
The Fund agrees to forward to Provident Written Instructions confirming
Oral Instructions so that Provident receives the Written Instructions by the
-4-
<PAGE>
close of business on the same day that such Oral Instructions are received. The
fact that such confirming Written Instructions are not received by Provident
shall in no way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions.
The Fund further agrees that Provident 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.
6. Right to Receive Advice.
(a) Advice of the Fund. If Provident is in doubt as to any
action it should or should not take, Provident may request directions or advice,
including Oral or Written Instructions, from the Fund.
(b) Advice of Counsel. If Provident shall be in doubt as to
any questions of law pertaining to any action it should or should not take,
Provident may request advice at its own cost from such counsel of its own
choosing (who may be counsel for the Fund, the Fund's advisor or Provident, at
the option of Provident).
(c) Conflicting Advice. In the event of a conflict between
directions, advice or Oral or Written Instructions Provident receives from the
Fund, and the advice it receives from counsel, Provident shall be entitled to
rely upon and follow the advice of counsel.
-5-
<PAGE>
(d) Protection of Provident. Provident 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
Provident believes, in good faith, to be consistent with those directions,
advice or Oral or Written Instructions.
Nothing in this paragraph shall be construed so as to impose an
obligation upon Provident (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
Agreement, the same is a condition of Provident's properly taking or not taking
such action.
7. Records. The books and records pertaining to the Fund, which are in
the possession of Provident, 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, rules and regulations. The Fund, or the Fund's
authorized representatives, shall have access to such books and records at all
times during Provident's normal business hours. Upon the reasonable request of
the Fund, copies of any such books and records shall be provided by Provident to
the Fund or to an authorized representative of the Fund, at the Fund's expense.
8. Confidentiality. Provident agrees to keep confidential all records
of the Fund and information relative to the Fund and its shareholders (past,
present and potential), unless the release of such records or information is
-6-
<PAGE>
otherwise consented to, in writing, by the Fund. The Fund further agrees that,
should Provident be required to provide such information or records to duly
constituted authorities (who may institute civil or criminal contempt
proceedings for failure to comply), Provident shall not be required to seek the
Fund's consent prior to disclosing such information; provided that Provident
gives the Fund prior written notice of the provision of such information and
records.
9. Cooperation with Accountants. Provident shall cooperate with the
Fund's independent public accountants and shall take all reasonable action 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 their opinion, as required by the Fund.
10. Disaster Recovery. Provident shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provision for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment failures,
Provident shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions but shall have no liability with respect thereto.
11. Compensation. As compensation for custody services rendered by
Provident during the term of this Agreement, the Fund will pay to Provident a
fee or fees as may be agreed to in writing from time to time by the Fund and
Provident.
-7-
<PAGE>
12. Indemnification. The Fund agrees to indemnify and hold harmless
Provident and its nominees from all taxes, charges, expenses, assessment, claims
and liabilities (including, without limitation, liabilities arising under the
1933 Act, the 1934 Act, the 1940 Act, the CEA, and any state and foreign
securities and blue sky laws, and amendments thereto, and expenses, including
(without limitation) attorneys' fees and disbursements, arising directly or
indirectly from any action which Provident takes or does not take (i) at the
request or on the direction of or in reliance on the advice of the Fund or (ii)
upon Oral or Written Instructions. Neither Provident, 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 Provident's or its
nominees' own willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties and obligations under this Agreement or Provident's own
grossly negligent failure to perform its duties under this Agreement.
13. Responsibility of Provident. Provident 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 Provident, in writing. Provident shall be
obligated to exercise care and diligence in the performance of its duties
hereunder, to act in good faith and to use its best efforts, within reasonable
limits, in performing services provided for under this Agreement. Provident
shall be responsible for its own or its nominees' own willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties and obligations
under this Agreement or Provident's own negligent failure to perform its duties
under this Agreement.
-8-
<PAGE>
Without limiting the generality of the foregoing or of any other
provision of this Agreement, Provident, in connection with its duties under this
Agreement, shall not be under any duty or obligation to inquire into and shall
not be liable for (a) the validity or invalidity or authority or lack thereof of
any Oral or Written Instruction, notice or other instrument which conforms to
the applicable requirements of this Agreement, and which Provident reasonably
believes to be genuine; or (b) delays or errors or loss of data occurring by
reason of circumstances beyond Provident's control, including acts of civil or
military authority, national emergencies, fire, flood or catastrophe, acts of
God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
Notwithstanding anything in this Agreement to the contrary, Provident
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
Provident's performance of the services provided hereunder, whether or not the
likelihood of such losses or damages was known by Provident.
14. Description of Services.
(a) Delivery of the Property. The Fund will deliver or arrange
for delivery to Provident, all the property it owns, including cash received as
a result of the distribution of its Shares, during the period that is set forth
in this Agreement. Provident will not be responsible for such property until
actual receipt.
-9-
<PAGE>
(b) Receipt and Disbursement of Money. Provident, acting upon
Written Instructions, shall open and maintain separate account(s) in the Fund's
name using all cash received from or for the account of the Fund, subject to the
terms of this Agreement. In addition, upon Written Instructions, Provident shall
open separate custodial accounts for each separate series, portfolio or class of
the Fund and shall hold in such account(s) all cash received from or for the
accounts of the Fund specifically designated to each separate series, portfolio
or class.
Provident shall make cash payments from or for the account of the Fund
only for:
(i) purchases of securities in the name of
the Fund or Provident or Provident's
nominee as provided in sub-paragraph
(j) and for which Provident has
received a copy of the broker's or
dealer's confirmation or payee's
invoice, as appropriate;
(ii) purchase or redemption of Shares of the
Fund delivered to Provident;
(iii) payment of, subject to Written
Instructions, interest, taxes,
administration, accounting,
distribution, advisory, management fees
or similar expenses which are to be
borne by the Fund;
(iv) payment to, subject to receipt of
Written Instructions, the Fund's
transfer agent, as agent for the
shareholders, an amount equal to the
amount of dividends and
-10-
<PAGE>
distributions stated in the Written
Instructions to be distributed in cash
by the transfer agent to shareholders,
or, in lieu of paying the Fund's
transfer agent, Provident may arrange
for the direct payment of cash
dividends and distributions to
shareholders in accordance with
procedures mutually agreed upon from
time to time by and among the Fund,
Provident and the Fund's transfer
agent.
(v) payments, upon receipt of Written
Instructions, in connection with the
conversion, exchange or surrender of
securities owned or subscribed to by
the Fund and held by or delivered to
Provident;
(vi) payments of the amounts of dividends
received with respect to securities
sold short;
(vii) payments made to a sub-custodian
pursuant to provisions in sub-paragraph
(c) of this Paragraph 14; and
(viii) payments, upon Written Instructions
made for other proper Fund purposes.
Provident is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian for the
account of the Fund.
(c) Receipt of Securities.
(i) Provident shall hold all securities
received by it for the account of the
Fund in a separate account that
physically segregates such securities
from those of any other persons, firms
or corporations. All such securities
shall be held or disposed of only upon
Written Instructions of the Fund
pursuant to the terms of this
Agreement. Provident shall have no
power or authority to assign,
hypothecate, pledge or otherwise
dispose of any such securities or
investment, except upon the express
terms of this Agreement and upon
Written Instructions, accompanied by
-11-
<PAGE>
a certified resolution of the Fund's
Governing Board, authorizing the
transaction. In no case may any member
of the Fund's Board of Directors/
Trustees, or any officer, employee or
agent of the Fund withdraw any
securities.
At Provident's own expense and for its
own convenience and subject to the
approval of the Fund's Board of
Directors, but such approval may not be
unreasonably withheld, Provident may
enter into subcustodian agreements with
other United States banks or trust
companies to perform duties described
in this sub-paragraph (c). Such bank or
trust company shall have an aggregate
capital, surplus and undivided profits,
according to its last published report,
of at least one million dollars
($1,000,000), if it is a subsidiary or
affiliate of Provident, or at least
twenty million dollars ($20,000,000) if
such bank or trust company is not a
subsidiary or affiliate of Provident.
In addition, such bank or trust company
must agree to comply with the relevant
provisions of the 1940 Act and other
applicable rules and regulations.
Provident shall remain responsible for
the performance of all of its duties as
described in this Agreement and shall
hold the Fund harmless from its own
acts or omissions, under the standards
of care provided for herein, or the
acts and omissions of any sub-custodian
chosen by Provident under the terms of
this sub-paragraph (c).
(d) Transactions Requiring Instructions. Upon receipt of Oral
or Written Instructions and not otherwise, Provident, directly or through the
use of the Book-Entry System, shall:
(i) deliver any securities held for the
Fund against the receipt of payment for
the sale of such securities;
-12-
<PAGE>
(ii) execute and deliver to such persons as
may be designated in such Oral or
Written Instructions, proxies,
consents, authorizations, and any other
instruments whereby the authority of
the Fund as owner of any securities may
be exercised;
(iii) deliver any securities to the issuer
thereof, or its agent, when such
securities are called, redeemed,
retired or otherwise become payable;
provided that, in any such case, the
cash or other consideration is to be
delivered to Provident;
(iv) deliver any securities held for the
Fund against receipt of other
securities or cash issued or paid in
connection with the liquidation,
reorganization, refinancing, tender
offer, merger, consolidation or
recapitalization of any corporation, or
the exercise of any conversion
privilege;
(v) deliver any securities held for the
Fund to any protective committee,
reorganization committee or other
person in connection with the
reorganization, refinancing, merger,
consolidation, recapitalization or sale
of assets of any corporation, and
receive and hold under the terms of
this Agreement such certificates of
deposit, interim receipts or other
instruments or documents as may be
issued to it to evidence such delivery;
(vi) make such transfer or exchanges of the
assets of the Fund and take such other
steps as shall be stated in said Oral
or Written Instructions to be for the
purpose of effectuating a duly
authorized plan of liquidation,
reorganization, merger, consolidation
or recapitalization of the Fund;
(vii) release securities belonging to the
Fund to any bank or trust company for
the purpose of a pledge or
hypothecation to secure any loan
incurred by the Fund; provided,
however, that securities shall be
released only upon payment to
-13-
<PAGE>
Provident of the monies borrowed,
except that in cases where additional
collateral is required to secure a
borrowing already made subject to
proper prior authorization, further
securities may be released for that
purpose; and repay such loan upon
redelivery to it of the securities
pledged or hypothecated therefor and
upon surrender of the note or notes
evidencing the loan;
(viii) release and deliver securities owned by
the Fund in connection with any
repurchase agreement entered into on
behalf of the Fund, but only on receipt
of payment therefor; and pay out moneys
of the Fund in connection with such
repurchase agreements, but only upon
the delivery of the securities;
(ix) release and deliver or exchange
securities owned by the Fund in
connection with any conversion of such
securities, pursuant to their terms,
into other securities;
(x) release and deliver securities owned by
the fund for the purpose of redeeming
in kind shares of the Fund upon
delivery thereof to Provident; and
(xi) release and deliver or exchange
securities owned by the Fund for other
corporate purposes.
Provident must also receive a certified resolution describing
the nature of the corporate purpose and the name and address of the person(s) to
whom delivery shall be made when such action is pursuant to sub-paragraph (d)
(xi) above.
(e) Use of Book-Entry System. The Fund shall deliver to
Provident certified resolutions of the Fund's Governing Board approving,
authorizing and instructing Provident on a continuous and on-going basis, to
deposit in the Book-Entry System all securities belonging to the Fund eligible
for deposit therein and to utilize the Book-Entry System to the extent possible
-14-
<PAGE>
in connection with settlements of purchases and sales of securities by the Fund,
and deliveries and returns of securities loaned, subject to repurchase
agreements or used as collateral in connection with borrowings. Provident shall
continue to perform such duties until it receives Written or Oral Instructions
authorizing contrary actions(s).
To administer the Book-Entry System properly, the following provisions
shall apply:
(i) With respect to securities of the Fund
which are maintained in the Book-Entry
system, established pursuant to this
sub-paragraph (e) hereof, the records
of Provident shall identify by
Book-Entry or otherwise those
securities belonging to the Fund.
Provident shall furnish the Fund a
detailed statement of the Property held
for the Fund under this Agreement at
least monthly and from time to time and
upon written request.
(ii) Securities and any cash of the Fund
deposited in the Book-Entry System will
at all times be segregated from any
assets and cash controlled by Provident
in other than a fiduciary or custodian
capacity but may be commingled with
other assets held in such capacities.
Provident and its sub-custodian, if
any, will pay out money only upon
receipt of securities and will deliver
securities only upon the receipt of
money.
(iii) All books and records maintained by
Provident which relate to the Fund's
participation in the Book-Entry System
will at all times during Provident's
regular business hours be open to the
inspection of the Fund's duly
authorized employees or agents, and the
Fund will be furnished with all
information in respect of the services
rendered to it as it may require.
-15-
<PAGE>
(iv) Provident will provide the Fund with
copies of any report obtained by
Provident on the system of internal
accounting control of the Book-Entry
System promptly after receipt of such a
report by Provident.
Provident will also provide the Fund with such reports on its own
system of internal control as the Fund may reasonably request from time to time.
(f) Registration of Securities. All Securities held for the
Fund which are issued or issuable only in bearer form, except such securities
held in the Book-Entry system, shall be held by Provident in bearer form; all
other securities held for the Fund may be registered in the name of the Fund;
Provident; the Book-Entry System; a sub-custodian; or any duly appointed
nominee(s) of the Fund, Provident, Book-Entry system or sub-custodian. The Fund
reserves the right to instruct Provident as to the method of registration and
safekeeping of the securities of the Fund. The Fund agrees to furnish to
Provident appropriate instruments to enable Provident to hold or deliver in
proper form for transfer, or to register its registered nominee or in the name
of the Book-Entry System, any securities which it may hold for the account of
the Fund and which may from time to time be registered in the name of the Fund.
Provident shall hold all such securities which are not held in the Book-Entry
System in a separate account for the Fund in the name of the Fund physically
segregated at all times from those of any other person or persons.
-16-
<PAGE>
(g) Voting and Other Action. Neither Provident nor its nominee
shall vote any of the securities held pursuant to this Agreement by or for the
account of the Fund, except in accordance with Written Instructions. Provident,
directly or through the use of the Book-Entry System, shall execute in blank and
promptly deliver all notice, proxies, and proxy soliciting materials to the
registered holder of such securities. If the registered holder is not the Fund
then Written or Oral Instructions must designate the person(s) who owns such
securities.
(h) Transactions Not Requiring Instructions. In the absence of
contrary Written Instructions, Provident is authorized to take the following
actions:
(i) Collection of Income and Other Payments.
(A) collect and receive for the account of
the Fund, all income, dividends,
distributions, coupons, option
premiums, other payments and similar
items, included or to be included in
the Property, and, in addition,
promptly advise the Fund of such
receipt and credit such income, as
collected, to the Fund's custodian
account;
(B) endorse and deposit for collection, in
the name of the Fund, checks, drafts,
or other orders for the payment of
money;
(C) receive and hold for the account of the
Fund all securities received as a
distribution on the Fund's portfolio
securities as a result of a stock
dividend, share split-up or
reorganization, recapitalization,
-17-
<PAGE>
readjustment or other rearrangement or
distribution of rights or similar
securities issued with respect to any
portfolio securities belonging to the
Fund held by Provident hereunder;
(D) present for payment and collect the
amount payable upon all securities
which may mature or be called,
redeemed, or retired, or otherwise
become payable on the date such
securities become payable; and
(E) take any action which may be necessary
and proper in connection with the
collection and receipt of such income
and other payments and the endorsement
for collection of checks, drafts, and
other negotiable instruments.
(i) Miscellaneous Transactions.
(A) Provident is authorized to deliver or
cause to be delivered Property against
payment or other consideration or
written receipt therefor in the
following cases:
(1) for examination by a broker or
dealer selling for the account of
the Fund in accordance with street
delivery custom;
(2) for the exchange of interim
receipts or temporary securities
for definitive securities; and
(3) for transfer of securities into
the name of the Fund or Provident
or nominee of either, or for
exchange of securities for a
different number of bonds,
certificates, or other evidence,
representing the same aggregate
face amount or number of units
bearing the same interest rate,
maturity date and call provisions,
if any; provided that, in any such
case, the new securities are to be
delivered to Provident.
-18-
<PAGE>
(B) Unless and until Provident receives
Oral or Written Instructions to the
contrary, Provident shall:
(1) pay all income items held by it
which call for payment upon
presentation and hold the cash
received by it upon such payment
for the account of the Fund;
(2) collect interest and cash
dividends received, with notice to
the Fund, to the account of the
Fund;
(3) hold for the account of the Fund
all stock dividends, rights and
similar securities issued with
respect to any securities held by
us; and
(4) execute as agent on behalf of the
Fund all necessary ownership
certificates required by the
Internal Revenue Code or the
Income Tax Regulations of the
United States Treasury Department
or under the laws of any State now
or hereafter in effect, inserting
the Fund's name on such
certificate as the owner of the
securities covered thereby, to the
extent it may lawfully do so.
(ii) Segregated Accounts.
(i) Provident shall upon receipt of Written
or Oral Instructions establish and
maintain a segregated account(s) on
its records for and on behalf of the
Fund. Such account(s) may be used to
transfer cash and securities, including
securities in the Book-Entry System:
(A) for the purposes of compliance by
the Fund with the procedures
required by a securities or option
exchange, providing such
procedures comply with the 1940
Act and any releases of the SEC
relating to the maintenance of
segregated accounts by registered
investment companies; and
-19-
<PAGE>
(B) upon receipt of Written
Instructions, for other proper
corporate purposes.
(ii) Provident shall arrange for the establishment of
IRA custodian accounts for such shareholders
holding shares through IRA accounts, in
accordance with the Prospectus, the Internal
Revenue Code (including regulations), and with
such other procedures as are mutually agreed upon
from time to time by and among the Fund,
Provident and the Fund's transfer agent.
(j) Purchases of Securities. Provident shall settle purchased
securities upon receipt of Oral or Written Instructions from the fund or its
investment advisor(s) that specify:
(i) the name of the issuer and the title of
the securities, including CUSIP number
if applicable;
(ii) the number of shares or the principal
amount purchased and accrued interest,
if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such
purchase; and
(vi) the name of the person from whom or the
broker through whom the purchase was
made. Provident shall upon receipt of
securities purchased by or for the Fund
pay out of the moneys held for the
account of the Fund the total amount
payable to the person from whom or the
broker through whom the purchase was
made, provided that the same conforms
to the total amount payable as set
forth in such Oral or Written
Instructions.
(k) Sales of Securities. Provident shall sell
securities upon receipt of Oral Instructions from the Fund that specify:
-20-
<PAGE>
(i) the name of the issuer and the title of
the security, including CUSIP number if
applicable;
(ii) the number of shares or principal
amount sold, and accrued interest, if
any;
(iii) the date of trade, settlement and sale;
(iv) the sale price per unit;
(v) the total amount payable to the Fund
upon such sale;
(vi) the name of the broker through whom or
the person to whom the sale was made;
and
(vii) the location to which the security must
be delivered and delivery deadline, if
any.
Provident shall deliver the securities upon receipt of the total amount
payable to the Fund upon such sale, provided that the total amount payable is
the same as was set forth in the Oral or Written Instructions. Subject to the
foregoing, Provident may accept payment in such form as shall be satisfactory to
it, and may deliver securities and arrange for payment in accordance with the
customs prevailing among dealers in securities.
(1) Reports.
(i) Provident shall furnish the Fund the
following reports:
(A) such periodic and special reports
as the Fund may reasonably
request;
(B) a monthly statement summarizing
all transactions and entries for
the account of the Fund, listing
the portfolio securities belonging
to the fund with the adjusted
average cost of each issue and the
market value at the end of such
month, and stating the cash
account of the Fund including
disbursement;
-21-
<PAGE>
(C) the reports to be furnished to the Fund
pursuant to Rule 17f-4; and
(D) such other information as may be agreed
upon from time to time between the Fund
and Provident.
(ii) Provident shall transmit promptly to the Fund any
proxy statement, proxy material, notice of a call or
conversion or similar communication received by it
as custodian of the Property. Provident shall be
under no other obligation to inform the Fund as to
such actions or events.
(m) Collections. All collections of monies or other property
in respect, or which are to become part, of the Property (but not the
safekeeping thereof upon receipt by Provident) shall be at the sole risk of the
Fund. If payment is not received by Provident within a reasonable time after
proper demands have been made, Provident shall notify the Fund in writing,
including copies of all demand letters, any written responses, memoranda of all
oral responses and to telephonic demands thereto, and await instructions from
the Fund. Provident shall not be obliged to take legal action for collection
unless and until reasonably indemnified to its satisfaction. Provident shall
also notify the Fund as soon as reasonably practicable whenever income due on
securities is not collected in due course.
15. Duration and Termination. This Agreement shall continue until
terminated by the Fund or by Provident on sixty (60) days prior written notice
to the other party. In the event this Agreement is terminated (pending
appointment of a successor to Provident or vote of the shareholders of the Fund
to dissolve or to function without a custodian of its cash, securities or
-22-
<PAGE>
other property), Provident shall not deliver cash, securities or other property
of the Fund to the Fund. It may deliver them to a bank or trust company of
Provident's, having an aggregate capital, surplus and undivided profits, as
shown by its last published report, of not less than twenty million dollars
($20,000,000), as a custodian for the Fund to be held under terms similar to
those of this Agreement. Provident shall not be required to make any such
delivery or payment until full payment shall have been made to Provident of all
of its fees, compensation, costs and expenses. Provident shall have a security
interest in and shall have a right of set-off against Property in the Fund's
possession as security for the payment of such fees, compensation, costs and
expenses.
16. Notices. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notice shall be addressed (a) if to Provident at
Provident's address, Airport Business Center, International Court 2, 200 Stevens
Drive, Lester, Pennsylvania 19113, marked for the attention of the Custodian
Services Department (or its successor) (b) if to the Fund, at the address of the
Fund; or (c) if to neither of the foregoing, at such other address as shall have
been notified to the sender of any such Notice or other communication. If notice
is sent by confirming telegram, cable, telex or facsimile sending device, it
shall be deemed to have been given immediately. If notice is sent by first-class
mail, it shall be deemed to have been given five days after it has been mailed.
If notice is sent by messenger, it shall be deemed to have been given on the day
it is delivered.
-23-
<PAGE>
17. Amendments. This Agreement, or any term hereof, may be changed or
waived only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
18. Delegation. Provident may assign its rights and delegate its duties
hereunder to any wholly-owned direct or indirect subsidiary of Provident
National Bank or PNC Financial Corp, provided that (i) Provident gives the Fund
thirty (30) days prior written notice; (ii) the delegate agrees with Provident
to comply with all relevant provisions of the 1940 Act; and (iii) Provident and
such delegate promptly provide such information as the Fund may request, and
respond to such questions as the Fund may ask, relative to the delegation,
including (without limitation) the capabilities of the delegate.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
21. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
-24-
<PAGE>
understandings relating to the subject matter hereof, provided that the parties
may embody in one or more separate documents their agreement, if any, with
respect to delegated and/or Oral Instructions.
The captions in this 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.
This Agreement shall be deemed to be a contract made in Pennsylvania
and governed by Pennsylvania law. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding and shall inure to the benefit of the parties hereto and their
respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
PROVIDENT NATIONAL BANK
[SEAL] By: /s/ A. Plambeck
-----------------------------------
Dated: February 7, 1991
-------------------------------
FLAG INVESTORS EMERGING GROWTH FUNDS, INC.
[SEAL] By:/s/ Edward J. Veilleux
-----------------------------------
Dated: 2/22/91
-------------------------------
-25-
<PAGE>
EX-99.B(9)
FORM OF
MASTER SERVICES AGREEMENT
THIS AGREEMENT is made as of the 1st day of January, 1994 by
and between FLAG INVESTORS EMERGING GROWTH FUND, INC., a Maryland corporation
(the "Fund"), and INVESTMENT COMPANY CAPITAL CORP., a Maryland corporation
("ICC").
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 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.
-2-
<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 I CC
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.
FLAG INVESTORS EMERGING GROWTH FUND, INC.
By: ___________________________________
Title:
INVESTMENT COMPANY CAPITAL CORP.
By: __________________________________
Title:
-4-
<PAGE>
Appendix I
TRANSFER AGENCY SERVICES APPENDIX
to
MASTER SERVICES AGREEMENT
between
FLAG INVESTORS EMERGING GROWTH FUND, INC. 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 Flag Investors Emerging Growth Fund, Inc. 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.
-5-
<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.
(c) 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 the
recordholder unless third party payment authorizations have been signed by the
recordholder and delivered to ICC.
-6-
<PAGE>
(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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 $10,000 and (iii) ICC has complied with the identification and other
security procedures required by the Fund in connection with telephone
transactions.
-7-
<PAGE>
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.
-8-
<PAGE>
Appendix II
ACCOUNTING SERVICES APPENDIX
to
MASTER SERVICES AGREEMENT
between
FLAG INVESTORS EMERGING GROWTH FUND, INC. 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 FLAG INVESTORS EMERGING GROWTH FUND, INC. and
INVESTMENT COMPANY CAPITAL CORP. Defined terms not otherwise defined herein
shall have the meaning set forth in the Master Services Agreement.
1. Accounting Services to be Provided. ICC will perform the following
accounting functions if required:
(a) Journalize investment, capital share and income and
expense;
(b) Verify investment buy/sell trade tickets when received
from the Fund's investment advisor and transmit trades to the Fund's custodian
for proper settlement;
(c) Maintain individual ledgers for investment securities;
(d) Maintain tax lots for each security;
(e) Reconcile cash and investment balances with the custodian,
and provide the Fund's investment advisor with the beginning cash balance
available for investment purposes;
(f) Update the cash availability throughout the day as
required by the Fund's investment advisor;
(g) Post to and prepare the Fund's Statement of Net Assets and
Liabilities and the Statement of Operations;
(h) Calculate various contractual expenses (e.g., advisor and
custody fees);
(i) Monitor the expense accruals and notify Fund management of
any proposed adjustments;
(j) Control all disbursements from the Fund and authorize such
disbursements upon written instructions from the President or any other officer
of the Fund or the investment advisor;
(k) Calculate capital gains and losses;
(l) Determine the Fund's net income;
(m) Obtain security market quotes from independent pricing
services approved by the investment advisor, or if such quotes are unavailable,
then obtain such prices from the investment advisor, and in either case
calculate the market value of portfolio investments;
(n) Transmit or mail a copy of the daily portfolio valuation
to the Fund's investment advisor;
-9-
<PAGE>
(o) Compute the Fund's net asset value;
(p) As appropriate, compute the yields, total return, expense
ratios, portfolio turnover rate;
(q) Prepare a monthly financial statement, which will include
the following items:
o Schedule of Investments;
o Statement of Net Assets and Liabilities;
o Statement of Operations;
o Statement of Changes in Net Assets;
o Cash Statement;
o Schedule of Capital Gains and Losses;
(r) Assist in the preparation of:
o Federal and State Tax Returns;
o Excise Tax Returns;
o Annual, Semi-Annual and Quarterly Shareholder
Reports;
o Rules 24 (e)-2 and 24 (f)-2 Notices;
o Annual and Semi-Annual Reports on Form N-SAR;
o Monthly and Quarterly Statistical Data Information
Reports Sent to Performance Tracking Companies;
(s) Assist in the Blue Sky and Federal registration and
compliance process;
(t) Assist in the review of registration statements; and
(u) Assist in monitoring compliance with Sub-Chapter M of the
Internal Revenue Code.
2. Records. ICC shall keep the following records: (a) all books and records with
respect to the Fund's books of account; and (b) records of the Fund's securities
transactions.
3. Liaison With Accountants. In addition to ICC's obligations relating to the
Fund's independent accountants set forth in the Master Services Agreement, ICC
shall act as liaison with the Fund's independent accountants and shall provide
account analyses, fiscal year summaries, and other audit related schedules.
4. Compensation. For services performed by ICC pursuant to this Appendix, the
Fund will pay to ICC compensation for such services as the parties may agree to
from time to time in writing.
-10-
<PAGE>
EX-99.B(10)
[LETTERHEAD OF BALLARD, SPAHR, ANDREWS & INGERSOLL]
May 27, 1988
Flag Investors Emerging Growth Fund, Inc.
135 East Baltimore Street
Baltimore, MD 21202
Gentlemen:
We have acted as counsel to you in connection with the organization of
Flag Investors Emerging Growth Fund, Inc. (the "Fund") and with the proposed
offering of shares of common stock of the Fund, par value $.001 per share (the
"Shares").
Having prepared the Articles of Incorporation and By-Laws of the Fund,
and having assisted in the preparation of the Registration Statement on Form
N-1A relating to the offering of the Shares and other related documents, we are
of the opinion that:
1. The Fund is a Maryland corporation, validly organized an din good
standing under the laws of that state, authorized to issue up to 10,000,000
shares of its common stock, par value $.001 per share.
2. Upon the effectiveness of your Registration Statement on Form N-1A
under the Securities Act of 1933, as amended and the Investment Company Act of
1940, as amended, covering an indefinite number of Shares (Registration No.
33-21119) you will, in jurisdictions where the Shares are qualified for sale, be
authorized to make a public offering of Shares pursuant to the terms of the
offering, as the offering is described in the effective prospectus relating to
the Shares, and the Shares, when so issued in the offering, will be validly
issued, fully paid and non-assessable.
We have reviewed the securities laws of any state of territory in
connection with the proposed offering of Shares, and we express no opinion as to
the legality of an offer of sale of Shares under any such state or territorial
securities laws.
<PAGE>
Flag Investors Emerging Growth Fund, Inc.
May 27, 1988
Page 2
This opinion is intended only for your use in connection with the
offering of Shares, and may not be relied upon by any other person.
We hereby consent to the inclusion of this opinion as Exhibit 10 to the
Registration Statement on Form N-1A to be filed with the Securities and Exchange
Commission.
Very truly yours,
/s/ Ballard, Spahr, Andrews & Ingersoll
<PAGE>
EX-99.B(11)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion of our report dated December 2, 1994 on our
audit of the financial statements and financial highlights of Flag Investors
Emerging Growth Fund, Inc. in the Statement of Additional Information with
respect to Post-Effective Amendment No. 9 and Amendment No. 13 to the
Registration Statement (File Numbers 33-21119 and 811-5320) on Form N-1A under
the Securities Act of 1933 and the Investment Company Act of 1940, respectively,
of Flag Investors Emerging Growth Funds, Inc. We also consent to the reference
to our Firm under the headings "General Information" and "Financial Highlights"
in the Prospectus and under the heading "Independent Accountants" in the
Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 24, 1995
<PAGE>
EX-99.B(13)
AGREEMENT NO. _______
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the subscription price of $10.00 per share. The undersigned (i) encloses
herewith a check payable to the Fund; or (ii) will wire federal funds
directly to the Fund's agent, Provident National Bank to Federal Reserve
Account No. 0310000-53 for the Fund's Account No. 36163, in an amount equal
to $100,000. The undersigned acknowledges receipt of copy numbered ________
of the Private Placement Memorandum of the Fund, dated September 8, 1987 (the
"Memorandum") and of a letter supplement thereto dated December __, 1987 (the
"Letter Supplement"), and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has had no operating history and an investment in the
Fund involves a degree of risk;
(b) The sole shareholder of the Fund, Alex. Brown & Sons
Incorporated, has previously taken action, as described in the
Letter Supplement, to effect the conversion of the Fund to an
open-end investment company as of the date on which the Fund's
Registration Statement on Form N-1A under the Securities Act
of 1933, as amended (the "Securities Act") and under the
Investment Company Act of 1940, as amended (the "1940 Act") is
first declared effective;
<PAGE>
(c) Shares will be sold without registration under the Securities
Act in reliance on the private offering exemption in Section
4(2) thereof, and the Fund intends to include registration of
the Shares under the Securities Act as part of the Fund's
Registration Statement on Form N-1A under the Securities Act
and under the 1940 Act;
(d) That the Fund has filed a Notification of Registration on Form
N-8A that will register the Fund under the 1940 Act; and
(e) Shares may be transferred only under the circumstances
described in the Memorandum.
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the Letter Supplement thereto, and
the undersigned represents to Alex. Brown & Sons Incorporated that he or it
is purchasing the Shares for his or its own account and not with a view to
their resale or further distribution; that no one other than the undersigned
will have any interest in, or any right to acquire, the Shares or any part
thereof, nor does anyone other than the undersigned have any interest in this
subscription, and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder and thereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described below, he or it
is not entitled to cancel, terminate or revoke this
subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
<PAGE>
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A; and
(e) if (i) this subscription is accepted in whole or in part by
the Fund, (ii) Messrs. Ballard, Spahr, Andrews & Ingersoll and
Maryland counsel deliver opinions of counsel concerning
relevant state corporate law, and (iii) the other conditions
precedent set forth above are met, upon full payment of the
subscription, a certificate for the Shares will be issued to
the undersigned as fully paid and non-assessable.
This Amended and Restated Subscription Agreement supersedes any
previous subscription agreement executed by or on behalf of the undersigned
relative to Shares in the Fund, and any such previous agreement is hereby
rescinded and is of no further force and effect.
PENNSYLVANIA RESIDENT ONLY:
Pennsylvania residents may elect, within two business days after
they first deliver an Amended and Restated Subscription Agreement to Alex.
Brown & Sons Incorporated, to withdraw from the subscription and to receive a
full refund of any monies paid. A withdrawal under this provision shall be
made without any further liability to any person. Pennsylvania residents may
accomplish this withdrawal by letter, telegram or oral communication directed
to Edward J. Veilleux at Alex. Brown & Sons Incorporated, 135 East Baltimore
Street, Baltimore, Maryland 21202, telephone: (301) 727-1700. A telegram
must be sent or the letter postmarked no later than the second business day
after the Amended and Restated Subscription Agreement was delivered to Alex.
Brown & Sons Incorporated. It is recommended that a letter be sent by
certified mail, return receipt requested to ensure that the letter is
received by Alex. Brown & Sons Incorporated. An oral request to withdraw
must be made to Edward J. Veilleux before 5:00 p.m. on the second business
day after the Amended and Restated Subscription Agreement was delivered to
Alex. Brown & Sons Incorporated. Alex. Brown & Sons Incorporated will issue
a written confirmation that the oral request was received.
Each Pennsylvania resident who subscribes for the securities being
offered hereby agrees not to sell these securities for a period of twelve
months after the date of purchase.
- 3 -
<PAGE>
X Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated:
(Signature of Subscriber)
Subscription for 10,000
Shares, at the Subscription
price of $10.00 per Share.
Total purchase price: W. James Price
------------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
$ 100,000
----------
c/o Alex. Brown & Sons
------------------------------------------------
(Street Address)
------------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging ###-##-####
Growth Fund, Inc. ------------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson
-------------------- ------------------------------------------------
(Tax Identification Number)
- 4 -
<PAGE>
AGREEMENT NO. 120
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the subscription price of $10.00 per share. The undersigned (i) encloses
herewith a check payable to the Fund; or (ii) will wire federal funds
directly to the Fund's agent, Provident National Bank to Federal Reserve
Account No. 0310000-53 for the Fund's Account No. 36163, in an amount equal
to $300,000. The undersigned acknowledges receipt of copy numbered 120 of
the Private Placement Memorandum of the Fund, dated September 8, 1987 (the
"Memorandum") and of a letter supplement thereto dated December _, 1987 (the
"Letter Supplement"), and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has had no operating history and an investment in the
Fund involves a degree of risk;
(b) The sole shareholder of the Fund, Alex. Brown & Sons
Incorporated, has previously taken action, as described in the
Letter Supplement, to effect the conversion of the Fund to an
open-end investment company as of the date on which the Fund's
Registration Statement on Form N-1A under the Securities Act
of 1933, as amended (the "Securities Act") and under the
Investment Company Act of 1940, as amended (the "1940 Act") is
first declared effective;
<PAGE>
(c) Shares will be sold without registration under the Securities
Act in reliance on the private offering exemption in Section
4(2) thereof, and the Fund intends to include registration of
the Shares under the Securities Act as part of the Fund's
Registration Statement on Form N-1A under the Securities Act
and under the 1940 Act;
(d) That the Fund has filed a Notification of Registration on Form
N-8A that will register the Fund under the 1940 Act; and
(e) Shares may be transferred only under the circumstances
described in the Memorandum.
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the Letter Supplement thereto, and
the undersigned represents to Alex. Brown & Sons Incorporated that he or it
is purchasing the Shares for his or its own account and not with a view to
their resale or further distribution; that no one other than the undersigned
will have any interest in, or any right to acquire, the Shares or any part
thereof, nor does anyone other than the undersigned have any interest in this
subscription, and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder and thereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described below, he or it
is not entitled to cancel, terminate or revoke this
subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
-2-
<PAGE>
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A; and
(e) if (i) this subscription is accepted in whole or in part by
the Fund, (ii) Messrs. Ballard, Spahr, Andrews & Ingersoll and
Maryland counsel deliver opinions of counsel concerning
relevant state corporate law, and (iii) the other conditions
precedent set forth above are met, upon full payment of the
subscription, a certificate for the Shares will be issued to
the undersigned as fully paid and non-assessable.
This Amended and Restated Subscription Agreement supersedes any
previous subscription agreement executed by or on behalf of the undersigned
relative to Shares in the Fund, and any such previous agreement is hereby
rescinded and is of no further force and effect.
PENNSYLVANIA RESIDENT ONLY:
Pennsylvania residents may elect, within two business days after
they first deliver an Amended and Restated Subscription Agreement to Alex.
Brown & Sons Incorporated, to withdraw from the subscription and to receive a
full refund of any monies paid. A withdrawal under this provision shall be
made without any further liability to any person. Pennsylvania residents may
accomplish this withdrawal by letter, telegram or oral communication directed
to Edward J. Veilleux at Alex. Brown & Sons Incorporated, 135 East Baltimore
Street, Baltimore, Maryland 21202, telephone: (301) 727-1700. A telegram
must be sent or the letter postmarked no later than the second business day
after the Amended and Restated Subscription Agreement was delivered to Alex.
Brown & Sons Incorporated. It is recommended that a letter be sent by
certified mail, return receipt requested to ensure that the letter is
received by Alex. Brown & Sons Incorporated. An oral request to withdraw
must be made to Edward J. Veilleux before 5:00 p.m. on the second business
day after the Amended and Restated Subscription Agreement was delivered to
Alex. Brown & Sons Incorporated. Alex. Brown & Sons Incorporated will issue
a written confirmation that the oral request was received.
Each Pennsylvania resident who subscribes for the securities being
offered hereby agrees not to sell these securities for a period of twelve
months after the date of purchase.
-3-
<PAGE>
Dividends. Check this box if you choose to have cash dividends
--------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated: 12/30/87
(Signature of Subscriber)
Subscription for 3,000
Shares, at the Subscription
price of $10.00 per Share. Pocantino Fund
Total purchase price: Richard F. Carlson, General
Partner
Pocantico Fund
-----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
$ 300,000.00
--------------
c/o Rockefeller & Co.
30 Rockefeller Plaza
-----------------------------------------------
(Street Address)
New York, NY 10112
-----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging
Growth Fund, Inc. -----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson 13-6294571
------------------------ -----------------------------------------------
(Tax Identification Number)
- 4 -
<PAGE>
AGREEMENT NO. 125
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the subscription price of $10.00 per share. The undersigned (i) encloses
herewith a check payable to the Fund; or (ii) will wire federal funds
directly to the Fund's agent, Provident National Bank to Federal Reserve
Account No. 0310000-53 for the Fund's Account No. 36163, in amount equal to
$100,000.00. The undersigned acknowledges receipt of copy numbered 125 of
the Private Placement Memorandum of the Fund, dated September8, 1987 (the
"Memorandum") and of a letter supplement thereto dated December 30, 1987 (the
"Letter Supplement"), and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has had no operating history and an investment in the
Fund involves a degree of risk;
(b) The sole shareholder of the Fund, Alex. Brown & Sons
Incorporated, has previously taken action, as described in the
Letter Supplement, to effect the conversion of the Fund to an
open-end investment company as of the date on which the Fund's
Registration Statement on Form N-1A under the Securities Act
of 1933, as amended (the "Securities Act") and under the
Investment Company Act of 1940, as amended (the "1940 Act") is
first declared effective;
<PAGE>
(c) Shares will be sold without registration under the Securities
Act in reliance on the private offering exemption in Section
4(2) thereof, and the Fund intends to include registration of
the Shares under the Securities Act as part of the Fund's
Registration Statement on Form N-1A under the Securities Act
and under the 1940 Act;
(d) That the Fund has filed a Notification of Registration on Form
N-8A that will register the Fund under the 1940 Act; and
(e) Shares may be transferred only under the circumstances
described in the Memorandum.
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the Letter Supplement thereto, and
the undersigned represents to Alex. Brown & Sons Incorporated that he or it
is purchasing the Shares for his or its own account and not with a view to
their resale or further distribution; that no one other than the undersigned
will have any interest in, or any right to acquire, the Shares or any part
thereof, nor does anyone other than the undersigned have any interest in this
subscription, and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder and thereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described below, he or it
is not entitled to cancel, terminate or revoke this
subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
-2-
<PAGE>
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A; and
(e) if (i) this subscription is accepted in whole or in part by
the Fund, (ii) Messrs. Ballard, Spahr, Andrews & Ingersoll and
Maryland counsel deliver opinions of counsel concerning
relevant state corporate law, and (iii) the other conditions
precedent set forth above are met, upon full payment of the
subscription, a certificate for the Shares will be issued to
the undersigned as fully paid and non-assessable.
This Amended and Restated Subscription Agreement supersedes any
previous subscription agreement executed by or on behalf of the undersigned
relative to Shares in the Fund, and any such previous agreement is hereby
rescinded and is of no further force and effect.
PENNSYLVANIA RESIDENT ONLY:
Pennsylvania residents may elect, within two business days after
they first deliver an Amended and Restated Subscription Agreement to Alex.
Brown & Sons Incorporated, to withdraw from the subscription and to receive a
full refund of any monies paid. A withdrawal under this provision shall be
made without any further liability to any person. Pennsylvania residents may
accomplish this withdrawal by letter, telegram or oral communication directed
to Edward J. Veilleux at Alex. Brown & Sons Incorporated, 135 East Baltimore
Street, Baltimore, Maryland 21202, telephone: (301) 727-1700. A telegram
must be sent or the letter postmarked no later than the second business day
after the Amended and Restated Subscription Agreement was delivered to Alex.
Brown & Sons Incorporated. It is recommended that a letter be sent by
certified mail, return receipt requested to ensure that the letter is
received by Alex. Brown & Sons Incorporated. An oral request to withdraw
must be made to Edward J. Veilleux before 5:00 p.m. on the second business
day after the Amended and Restated Subscription Agreement was delivered to
Alex. Brown & Sons Incorporated. Alex. Brown & Sons Incorporated will issue
a written confirmation that the oral request was received.
Each Pennsylvania resident who subscribes for the securities being
offered hereby agrees not to sell these securities for a period of twelve
months after the date of purchase.
-3-
<PAGE>
Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated: The Lawrenceville School
/s/ by: James Dawson, Treasurer
----------------------------------------------
Subscription for 10,000 (Signature of Subscriber)
Shares, at the Subscription
price of $10.00 per Share.
Total purchase price: The Lawrenceville School
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
$ 100,000.00
-------------
Attn. James J. Dawson
----------------------------------------------
Box 6126
Lawrenceville School
----------------------------------------------
(Street Address)
Lawrenceville, New Jersey 08648
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson 21-0634503
---------------------- ----------------------------------------------
(Tax Identification Number)
- 4 -
<PAGE>
AGREEMENT NO. 126
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the subscription price of $10.00 per share. The undersigned (i) encloses
herewith a check payable to the Fund; or (ii) will wire federal funds
directly to the Fund's agent, Provident National Bank to Federal Reserve
Account No. 0310000-53 for the Fund's Account No. 36163, in an amount equal
to $20,000. The undersigned acknowledges receipt of copy numbered 126 of the
Private Placement Memorandum of the Fund, dated September 8, 1987 (the
"Memorandum") and of a letter supplement thereto dated December __, 1987 (the
"Letter Supplement"), and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has had no operating history and an investment in the
Fund involves a degree of risk;
(b) The sole shareholder of the Fund, Alex. Brown & Sons
Incorporated, has previously taken action, as described in the
Letter Supplement, to effect the conversion of the Fund to an
open-end investment company as of the date on which the Fund's
Registration Statement on Form N-1A under the Securities Act
of 1933, as amended (the "Securities Act") and under the
Investment Company Act of 1940, as amended (the "1940 Act") is
first declared effective;
<PAGE>
(c) Shares will be sold without registration under the Securities
Act in reliance on the private offering exemption in Section
4(2) thereof, and the Fund intends to include registration of
the Shares under the Securities Act as part of the Fund's
Registration Statement on Form N-1A under the Securities Act
and under the 1940 Act;
(d) That the Fund has filed a Notification of Registration on Form
N-8A that will register the Fund under the 1940 Act; and
(e) Shares may be transferred only under the circumstances
described in the Memorandum.
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the Letter Supplement thereto, and
the undersigned represents to Alex. Brown & Sons Incorporated that he or it
is purchasing the Shares for his or its own account and not with a view to
their resale or further distribution; that no one other than the undersigned
will have any interest in, or any right to acquire, the Shares or any part
thereof, nor does anyone other than the undersigned have any interest in this
subscription, and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder and thereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described below, he or it
is not entitled to cancel, terminate or revoke this
subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
-2-
<PAGE>
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A; and
(e) if (i) this subscription is accepted in whole or in part by
the Fund, (ii) Messrs. Ballard, Spahr, Andrews & Ingersoll and
Maryland counsel deliver opinions of counsel concerning
relevant state corporate law, and (iii) the other conditions
precedent set forth above are met, upon full payment of the
subscription, a certificate for the Shares will be issued to
the undersigned as fully paid and non-assessable.
This Amended and Restated Subscription Agreement supersedes any
previous subscription agreement executed by or on behalf of the undersigned
relative to Shares in the Fund, and any such previous agreement is hereby
rescinded and is of no further force and effect.
PENNSYLVANIA RESIDENT ONLY:
Pennsylvania residents may elect, within two business days after
they first deliver an Amended and Restated Subscription Agreement to Alex.
Brown & Sons Incorporated, to withdraw from the subscription and to receive a
full refund of any monies paid. A withdrawal under this provision shall be
made without any further liability to any person. Pennsylvania residents may
accomplish this withdrawal by letter, telegram or oral communication directed
to Edward J. Veilleux at Alex. Brown & Sons Incorporated, 135 East Baltimore
Street, Baltimore, Maryland 21202, telephone: (301) 727-1700. A telegram
must be sent or the letter postmarked no later than the second business day
after the Amended and Restated Subscription Agreement was delivered to Alex.
Brown & Sons Incorporated. It is recommended that a letter be sent by
certified mail, return receipt requested to ensure that the letter is
received by Alex. Brown & Sons Incorporated. An oral request to withdraw
must be made to Edward J. Veilleux before 5:00 p.m. on the second business
day after the Amended and Restated Subscription Agreement was delivered to
Alex. Brown & Sons Incorporated. Alex. Brown & Sons Incorporated will issue
a written confirmation that the oral request was received.
Each Pennsylvania resident who subscribes for the securities being
offered hereby agrees not to sell these securities for a period of twelve
months after the date of purchase.
-3-
<PAGE>
Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated:
(Signature of Subscriber)
Subscription for 2,000
Shares, at the Subscription
price of $10.00 per Share. /s/ Charles A. Reid
Total purchase price: ----------------------------------------------
Charles A. Reid
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
$ 20,000
---------
2000 Skyline Road
----------------------------------------------
(Street Address)
Ruxton, MD 21204
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging ###-##-####
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson
---------------------- ----------------------------------------------
(Tax Identification Number)
- 4 -
<PAGE>
AGREEMENT NO. 129
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the subscription price of $10.00 per share. The undersigned (i) encloses
herewith a check payable to the Fund; or (ii) will wire federal funds
directly to the Fund's agent, Provident National Bank to Federal Reserve
Account No. 0310000-53 for the Fund's Account No. 36163, in an amount equal
to $20,000. The undersigned acknowledges receipt of copy numbered 129 of the
Private Placement Memorandum of the Fund, dated September 8, 1987 (the
"Memorandum") and of a letter supplement thereto dated December __, 1987 (the
"Letter Supplement"), and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has had no operating history and an investment in the
Fund involves a degree of risk;
(b) The sole shareholder of the Fund, Alex. Brown & Sons
Incorporated, has previously taken action, as described in the
Letter Supplement, to effect the conversion of the Fund to an
open-end investment company as of the date on which the Fund's
Registration Statement on Form N-1A under the Securities Act
of 1933, as amended (the "Securities Act") and under the
Investment Company Act of 1940, as amended (the "1940 Act") is
first declared effective;
<PAGE>
(c) Shares will be sold without registration under the Securities
Act in reliance on the private offering exemption in Section
4(2) thereof, and the Fund intends to include registration of
the Shares under the Securities Act as part of the Fund's
Registration Statement on Form N-1A under the Securities Act
and under the 1940 Act;
(d) That the Fund has filed a Notification of Registration on Form
N-8A that will register the Fund under the 1940 Act; and
(e) Shares may be transferred only under the circumstances
described in the Memorandum.
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the Letter Supplement thereto, and
the undersigned represents to Alex. Brown & Sons Incorporated that he or it
is purchasing the Shares for his or its own account and not with a view to
their resale or further distribution; that no one other than the undersigned
will have any interest in, or any right to acquire, the Shares or any part
thereof, nor does anyone other than the undersigned have any interest in this
subscription, and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder and thereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described below, he or it
is not entitled to cancel, terminate or revoke this
subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
-2-
<PAGE>
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A; and
(e) if (i) this subscription is accepted in whole or in part by
the Fund, (ii) Messrs. Ballard, Spahr, Andrews & Ingersoll and
Maryland counsel deliver opinions of counsel concerning
relevant state corporate law, and (iii) the other conditions
precedent set forth above are met, upon full payment of the
subscription, a certificate for the Shares will be issued to
the undersigned as fully paid and non-assessable.
This Amended and Restated Subscription Agreement supersedes any
previous subscription agreement executed by or on behalf of the undersigned
relative to Shares in the Fund, and any such previous agreement is hereby
rescinded and is of no further force and effect.
PENNSYLVANIA RESIDENT ONLY:
Pennsylvania residents may elect, within two business days after
they first deliver an Amended and Restated Subscription Agreement to Alex.
Brown & Sons Incorporated, to withdraw from the subscription and to receive a
full refund of any monies paid. A withdrawal under this provision shall be
made without any further liability to any person. Pennsylvania residents may
accomplish this withdrawal by letter, telegram or oral communication directed
to Edward J. Veilleux at Alex. Brown & Sons Incorporated, 135 East Baltimore
Street, Baltimore, Maryland 21202, telephone: (301) 727-1700. A telegram
must be sent or the letter postmarked no later than the second business day
after the Amended and Restated Subscription Agreement was delivered to Alex.
Brown & Sons Incorporated. It is recommended that a letter be sent by
certified mail, return receipt requested to ensure that the letter is
received by Alex. Brown & Sons Incorporated. An oral request to withdraw
must be made to Edward J. Veilleux before 5:00 p.m. on the second business
day after the Amended and Restated Subscription Agreement was delivered to
Alex. Brown & Sons Incorporated. Alex. Brown & Sons Incorporated will issue
a written confirmation that the oral request was received.
Each Pennsylvania resident who subscribes for the securities being
offered hereby agrees not to sell these securities for a period of twelve
months after the date of purchase.
- 3 -
<PAGE>
Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated: 12/29/87
Subscription for 2,000 (Signature of Subscriber)
Shares, at the Subscription
price of $10.00 per Share. /s/ Richard C. Hackney, Jr.
Total purchase price: ----------------------------------------------
Richard C. Hackney, Jr.
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
$ 20,000
---------
604 S. Charles Street
----------------------------------------------
(Street Address)
Baltimore, MD 21230
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging ###-##-####
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson
---------------------- ----------------------------------------------
(Tax Identification Number)
- 4 -
<PAGE>
AGREEMENT NO. 130
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the subscription price of $10.00 per share. The undersigned (i) encloses
herewith a check payable to the Fund; or (ii) will wire federal funds
directly to the Fund's agent, Provident National Bank to Federal Reserve
Account No. 0310000-53 for the Fund's Account No. 36163, in an amount equal
to $500,000. The undersigned acknowledges receipt of copy numbered 130 of
the Private Placement Memorandum of the Fund, dated September 8, 1987 (the
"Memorandum") and of a letter supplement thereto dated December 30, 1987 (the
"Letter Supplement"), and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has had no operating history and an investment in the
Fund involves a degree of risk;
(b) The sole shareholder of the Fund, Alex. Brown & Sons
Incorporated, has previously taken action, as described in the
Letter Supplement, to effect the conversion of the Fund to an
open-end investment company as of the date on which the Fund's
Registration Statement on Form N-1A under the Securities Act
of 1933, as amended (the "Securities Act") and under the
Investment Company Act of 1940, as amended (the "1940 Act") is
first declared effective;
<PAGE>
(c) Shares will be sold without registration under the Securities
Act in reliance on the private offering exemption in Section
4(2) thereof, and the Fund intends to include registration of
the Shares under the Securities Act as part of the Fund's
Registration Statement on Form N-1A under the Securities Act
and under the 1940 Act;
(d) That the Fund has filed a Notification of Registration on Form
N-8A that will register the Fund under the 1940 Act; and
(e) Shares may be transferred only under the circumstances
described in the Memorandum.
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the Letter Supplement thereto, and
the undersigned represents to Alex. Brown & Sons Incorporated that he or it
is purchasing the Shares for his or its own account and not with a view to
their resale or further distribution; that no one other than the undersigned
will have any interest in, or any right to acquire, the Shares or any part
thereof, nor does anyone other than the undersigned have any interest in this
subscription, and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder and thereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described below, he or it
is not entitled to cancel, terminate or revoke this
subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
-2-
<PAGE>
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A; and
(e) if (i) this subscription is accepted in whole or in part by
the Fund, (ii) Messrs. Ballard, Spahr, Andrews & Ingersoll and
Maryland counsel deliver opinions of counsel concerning
relevant state corporate law, and (iii) the other conditions
precedent set forth above are met, upon full payment of the
subscription, a certificate for the Shares will be issued to
the undersigned as fully paid and non-assessable.
This Amended and Restated Subscription Agreement supersedes any
previous subscription agreement executed by or on behalf of the undersigned
relative to Shares in the Fund, and any such previous agreement is hereby
rescinded and is of no further force and effect.
PENNSYLVANIA RESIDENT ONLY:
Pennsylvania residents may elect, within two business days after
they first deliver an Amended and Restated Subscription Agreement to Alex.
Brown & Sons Incorporated, to withdraw from the subscription and to receive a
full refund of any monies paid. A withdrawal under this provision shall be
made without any further liability to any person. Pennsylvania residents may
accomplish this withdrawal by letter, telegram or oral communication directed
to Edward J. Veilleux at Alex. Brown & Sons Incorporated, 135 East Baltimore
Street, Baltimore, Maryland 21202, telephone: (301) 727-1700. A telegram
must be sent or the letter postmarked no later than the second business day
after the Amended and Restated Subscription Agreement was delivered to Alex.
Brown & Sons Incorporated. It is recommended that a letter be sent by
certified mail, return receipt requested to ensure that the letter is
received by Alex. Brown & Sons Incorporated. An oral request to withdraw
must be made to Edward J. Veilleux before 5:00 p.m. on the second business
day after the Amended and Restated Subscription Agreement was delivered to
Alex. Brown & Sons Incorporated. Alex. Brown & Sons Incorporated will issue
a written confirmation that the oral request was received.
Each Pennsylvania resident who subscribes for the securities being
offered hereby agrees not to sell these securities for a period of twelve
months after the date of purchase.
- 3 -
<PAGE>
Dividends. Check this box if you choose to have cash dividends
--------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated: 12/29/87
Subscription for 50,000 (Signature of Subscriber)
Shares, at the Subscription
price of $10.00 per Share. /s/ Barry Brown Casey
Total purchase price: Eugene B. Casey Foundation
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
$ 500,000.00
Suite 401, 1 West Deer Park Drive
----------------------------------------------
(Street Address)
Gaithersburg, Maryland 20877
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson 51-6220316
------------------- ----------------------------------------------
(Tax Identification Number)
- 4 -
<PAGE>
AGREEMENT NO. 131
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the subscription price of $10.00 per share. The undersigned (i) encloses
herewith a check payable to the Fund; or (ii) will wire federal funds
directly to the Fund's agent, Provident National Bank to Federal Reserve
Account No. 0310000-53 for the Fund's Account No. 36163, in an amount equal
to $300,000. The undersigned acknowledges receipt of copy numbered 131 of
the Private Placement Memorandum of the Fund, dated September 8, 1987 (the
"Memorandum") and of a letter supplement thereto dated December __, 1987 (the
"Letter Supplement"), and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has had no operating history and an investment in the
Fund involves a degree of risk;
(b) The sole shareholder of the Fund, Alex. Brown & Sons
Incorporated, has previously taken action, as described in the
Letter Supplement, to effect the conversion of the Fund to an
open-end investment company as of the date on which the Fund's
Registration Statement on Form N-1A under the Securities Act
of 1933, as amended (the "Securities Act") and under the
Investment Company Act of 1940, as amended (the "1940 Act") is
first declared effective;
<PAGE>
(c) Shares will be sold without registration under the Securities
Act in reliance on the private offering exemption in Section
4(2) thereof, and the Fund intends to include registration of
the Shares under the Securities Act as part of the Fund's
Registration Statement on Form N-1A under the Securities Act
and under the 1940 Act;
(d) That the Fund has filed a Notification of Registration on Form
N-8A that will register the Fund under the 1940 Act; and
(e) Shares may be transferred only under the circumstances
described in the Memorandum.
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the Letter Supplement thereto, and
the undersigned represents to Alex. Brown & Sons Incorporated that he or it
is purchasing the Shares for his or its own account and not with a view to
their resale or further distribution; that no one other than the undersigned
will have any interest in, or any right to acquire, the Shares or any part
thereof, nor does anyone other than the undersigned have any interest in this
subscription, and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder and thereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described below, he or it
is not entitled to cancel, terminate or revoke this
subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
-2-
<PAGE>
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A; and
(e) if (i) this subscription is accepted in whole or in part by
the Fund, (ii) Messrs. Ballard, Spahr, Andrews & Ingersoll and
Maryland counsel deliver opinions of counsel concerning
relevant state corporate law, and (iii) the other conditions
precedent set forth above are met, upon full payment of the
subscription, a certificate for the Shares will be issued to
the undersigned as fully paid and non-assessable.
This Amended and Restated Subscription Agreement supersedes any
previous subscription agreement executed by or on behalf of the undersigned
relative to Shares in the Fund, and any such previous agreement is hereby
rescinded and is of no further force and effect.
PENNSYLVANIA RESIDENT ONLY:
Pennsylvania residents may elect, within two business days after
they first deliver an Amended and Restated Subscription Agreement to Alex.
Brown & Sons Incorporated, to withdraw from the subscription and to receive a
full refund of any monies paid. A withdrawal under this provision shall be
made without any further liability to any person. Pennsylvania residents may
accomplish this withdrawal by letter, telegram or oral communication directed
to Edward J. Veilleux at Alex. Brown & Sons Incorporated, 135 East Baltimore
Street, Baltimore, Maryland 21202, telephone: (301) 727-1700. A telegram
must be sent or the letter postmarked no later than the second business day
after the Amended and Restated Subscription Agreement was delivered to Alex.
Brown & Sons Incorporated. It is recommended that a letter be sent by
certified mail, return receipt requested to ensure that the letter is
received by Alex. Brown & Sons Incorporated. An oral request to withdraw
must be made to Edward J. Veilleux before 5:00 p.m. on the second business
day after the Amended and Restated Subscription Agreement was delivered to
Alex. Brown & Sons Incorporated. Alex. Brown & Sons Incorporated will issue
a written confirmation that the oral request was received.
Each Pennsylvania resident who subscribes for the securities being
offered hereby agrees not to sell these securities for a period of twelve
months after the date of purchase.
- 3 -
<PAGE>
Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated:
Subscription for 3,000 (Signature of Subscriber)
Shares, at the Subscription
price of $10.00 per Share. /s/ Richard E. Carlson
Total purchase price: 5500 Fund
Richard E. Carlson, General Partner
5500 Fund
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration
$ 300,000 Statement)
----------
c/o Rockefeller Plaza - Rm. 5425
30 Rockefeller Plaza
----------------------------------------------
(Street Address)
New York, NY 10112
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson 13-3090269
------------------- ----------------------------------------------
(Tax Identification Number)
- 4 -
<PAGE>
AGREEMENT NO. 132
AMENDED AND RESTATED
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the subscription price of $10.00 per share. The undersigned (i) encloses
herewith a check payable to the Fund; or (ii) will wire federal funds
directly to the Fund's agent, Provident National Bank to Federal Reserve
Account No. 0310000-53 for the Fund's Account No. 36163, in an amount equal
to $500,000.00 The undersigned acknowledges receipt of copy numbered 132 of
the Private Placement Memorandum of the Fund, dated September 8, 1987 (the
"Memorandum") and of a letter supplement thereto dated December __, 1987 (the
"Letter Supplement"), and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he or it is aware of the
following:
(a) The Fund has had no operating history and an investment in the
Fund involves a degree of risk;
(b) The sole shareholder of the Fund, Alex. Brown & Sons
Incorporated, has previously taken action, as described in the
Letter Supplement, to effect the conversion of the Fund to an
open-end investment company as of the date on which the Fund's
Registration Statement on Form N-1A under the Securities Act
of 1933, as amended (the "Securities Act") and under the
Investment Company Act of 1940, as amended (the "1940 Act") is
first declared effective;
<PAGE>
(c) Shares will be sold without registration under the Securities
Act in reliance on the private offering exemption in Section
4(2) thereof, and the Fund intends to include registration of
the Shares under the Securities Act as part of the Fund's
Registration Statement on Form N-1A under the Securities Act
and under the 1940 Act;
(d) That the Fund has filed a Notification of Registration on Form
N-8A that will register the Fund under the 1940 Act; and
(e) Shares may be transferred only under the circumstances
described in the Memorandum.
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the Letter Supplement thereto, and
the undersigned represents to Alex. Brown & Sons Incorporated that he or it
is purchasing the Shares for his or its own account and not with a view to
their resale or further distribution; that no one other than the undersigned
will have any interest in, or any right to acquire, the Shares or any part
thereof, nor does anyone other than the undersigned have any interest in this
subscription, and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder and thereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described below, he or it
is not entitled to cancel, terminate or revoke this
subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
-2-
<PAGE>
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A; and
(e) if (i) this subscription is accepted in whole or in part by
the Fund, (ii) Messrs. Ballard, Spahr, Andrews & Ingersoll and
Maryland counsel deliver opinions of counsel concerning
relevant state corporate law, and (iii) the other conditions
precedent set forth above are met, upon full payment of the
subscription, a certificate for the Shares will be issued to
the undersigned as fully paid and non-assessable.
This Amended and Restated Subscription Agreement supersedes any
previous subscription agreement executed by or on behalf of the undersigned
relative to Shares in the Fund, and any such previous agreement is hereby
rescinded and is of no further force and effect.
PENNSYLVANIA RESIDENT ONLY:
Pennsylvania residents may elect, within two business days after
they first deliver an Amended and Restated Subscription Agreement to Alex.
Brown & Sons Incorporated, to withdraw from the subscription and to receive a
full refund of any monies paid. A withdrawal under this provision shall be
made without any further liability to any person. Pennsylvania residents may
accomplish this withdrawal by letter, telegram or oral communication directed
to Edward J. Veilleux at Alex. Brown & Sons Incorporated, 135 East Baltimore
Street, Baltimore, Maryland 21202, telephone: (301) 727-1700. A telegram
must be sent or the letter postmarked no later than the second business day
after the Amended and Restated Subscription Agreement was delivered to Alex.
Brown & Sons Incorporated. It is recommended that a letter be sent by
certified mail, return receipt requested to ensure that the letter is
received by Alex. Brown & Sons Incorporated. An oral request to withdraw
must be made to Edward J. Veilleux before 5:00 p.m. on the second business
day after the Amended and Restated Subscription Agreement was delivered to
Alex. Brown & Sons Incorporated. Alex. Brown & Sons Incorporated will issue
a written confirmation that the oral request was received.
Each Pennsylvania resident who subscribes for the securities being
offered hereby agrees not to sell these securities for a period of twelve
months after the date of purchase.
- 3 -
<PAGE>
Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated:
Subscription for 50,000 (Signature of Subscriber)
Shares, at the Subscription
price of $10.00 per Share. /s/ Alex. Brown Incorporated by
Total purchase price: Beverly Wright, Chief Financial Officer
Alex. Brown Incorporated
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
$ 500,000.00
-------------
135 E. Baltimore Street
----------------------------------------------
(Street Address)
Baltimore, MD 21202
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson 52-1434118
------------------- ----------------------------------------------
(Tax Identification Number)
- 4 -
<PAGE>
APPENDIX A - SUBSCRIPTION AGREEMENT
AGREEMENT NO. B-5
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the net asset value per Share next determined after receipt by Alex. Brown
& Sons Incorporated of the undersigned's form order. The undersigned (i)
encloses herewith a check payable to the Fund; or (ii) will wire federal
funds directly to the Fund's agent, Provident National Bank to Federal
Reserve Account No. 0310000-53 for the Fund's Account No. __________, in an
amount equal to $__________. The undersigned acknowledges receipt of copy
numbered B5 of the Private Placement Memorandum of the Fund, dated March 23,
1988 (the "Memorandum") and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has a very short operating history and an investment
in the Fund involves a degree of risk;
(b) Shares will be sold without registration under the Securities
Act of 1933, as amended, (the "Securities Act") in reliance on
the private offering exemption in Section 4(2) thereof.
(c) The Fund's Notification of Registration on Form N-8A has
registered the Fund under the Investment Company Act of 1940,
as amended, (the "1940 Act").
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the undersigned represents to Alex.
Brown & Sons Incorporated that he or it is purchasing the Shares for his or
its own account and not with a view to their resale or further distribution;
<PAGE>
that no one person or entity other than the undersigned will have any
interest in, or any right to acquire, the Shares or any part thereof, that
any person or entity other than the undersigned have any interest in this
subscription; and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described in the
Memorandum, he or it is not entitled to cancel, terminate or
revoke this subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A when
and if such Registration Statement is filed and declared
effective;
(e) if (i) this subscription is accepted in whole or in part by
the Fund, upon full payment of the subscription, Shares will
be issued to the undersigned as fully paid and non-assessable.
This Subscription Agreement supersedes any previous subscription
agreement executed by or on behalf of the undersigned relative to Shares in
the Fund, and any such previous agreement is hereby rescinded and is of no
further force and effect.
- 2 -
<PAGE>
Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated: April 4, 1988
/s/ Barry B. Casey
----------------------------------------------
Eugene B. Casey Foundation
----------------------------------------------
Subscription for $554,500 (Signature of Subscriber)
in Shares, at the Net Asset
Value next determined after Eugene B. Casey Foundation
after the receipt hereof ----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
Suite 401
1 West Deer Park Drive
----------------------------------------------
(Street Address)
Gaithersburg, Maryland 20877
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson 52-6220316
------------------- ----------------------------------------------
(Tax Identification Number)
- 3 -
<PAGE>
APPENDIX A - SUBSCRIPTION AGREEMENT
Pocantico
AGREEMENT NO. B-6
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the net asset value per Share next determined after receipt by Alex. Brown
& Sons Incorporated of the undersigned's form order. The undersigned (i)
encloses herewith a check payable to the Fund; or (ii) will wire federal
funds directly to the Fund's agent, Provident National Bank to Federal
Reserve Account No. 0310000-53 for the Fund's Account No. __________, in an
amount equal to $__________. The undersigned acknowledges receipt of copy
numbered 6 of the Private Placement Memorandum of the Fund, dated March 23,
1988 (the "Memorandum") and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has a very short operating history and an investment
in the Fund involves a degree of risk;
(b) Shares will be sold without registration under the Securities
Act of 1933, as amended, (the "Securities Act") in reliance on
the private offering exemption in Section 4(2) thereof.
(c) The Fund's Notification of Registration on Form N-8A has
registered the Fund under the Investment Company Act of 1940,
as amended, (the "1940 Act").
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the undersigned represents to Alex.
Brown & Sons Incorporated that he or it is purchasing the Shares for his or
its own account and not with a view to their resale or further distribution;
that no one person or entity other than the undersigned will have any
<PAGE>
interest in, or any right to acquire, the Shares or any part thereof, that
any person or entity other than the undersigned have any interest in this
subscription; and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described in the
Memorandum, he or it is not entitled to cancel, terminate or
revoke this subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A when
and if such Registration Statement is filed and declared
effective;
(e) if (i) this subscription is accepted in whole or in part by
the Fund, upon full payment of the subscription, Shares will
be issued to the undersigned as fully paid and non-assessable.
This Subscription Agreement supersedes any previous subscription
agreement executed by or on behalf of the undersigned relative to Shares in
the Fund, and any such previous agreement is hereby rescinded and is of no
further force and effect.
- 2 -
<PAGE>
X Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated: April 4, 1988 /s/ Richard E. Carlson
----------------------------------------------
(Signature of Subscriber)
Richard E. Carlson, General Partner
Subscription for $250,000
in Shares, at the Net Asset
Value next determined after
the receipt hereof. Pocantico Fund
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
Room 5425
30 Rockefeller Plaza
----------------------------------------------
(Street Address)
New York, NY 10112
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: ------------------- 13-6294571
----------------------------------------------
(Tax Identification Number)
- 3 -
<PAGE>
APPENDIX A - SUBSCRIPTION AGREEMENT
AGREEMENT NO. B-7
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the net asset value per Share next determined after receipt by Alex. Brown
& Sons Incorporated of the undersigned's form order. The undersigned (i)
encloses herewith a check payable to the Fund; or (ii) will wire federal
funds directly to the Fund's agent, Provident National Bank to Federal
Reserve Account No. 0310000-53 for the Fund's Account No. __________, in an
amount equal to $__________. The undersigned acknowledges receipt of copy
numbered 7 of the Private Placement Memorandum of the Fund, dated March 23,
1988 (the "Memorandum") and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has a very short operating history and an investment
in the Fund involves a degree of risk;
(b) Shares will be sold without registration under the Securities
Act of 1933, as amended, (the "Securities Act") in reliance on
the private offering exemption in Section 4(2) thereof.
(c) The Fund's Notification of Registration on Form N-8A has
registered the Fund under the Investment Company Act of 1940,
as amended, (the "1940 Act").
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the undersigned represents to Alex.
<PAGE>
Brown & Sons Incorporated that he or it is purchasing the Shares for his or
its own account and not with a view to their resale or further distribution;
that no one person or entity other than the undersigned will have any
interest in, or any right to acquire, the Shares or any part thereof, that
any person or entity other than the undersigned have any interest in this
subscription; and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described in the
Memorandum, he or it is not entitled to cancel, terminate or
revoke this subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A when
and if such Registration Statement is filed and declared
effective;
(e) if (i) this subscription is accepted in whole or in part by
the Fund, upon full payment of the subscription, Shares will
be issued to the undersigned as fully paid and non-assessable.
This Subscription Agreement supersedes any previous subscription
agreement executed by or on behalf of the undersigned relative to Shares in
the Fund, and any such previous agreement is hereby rescinded and is of no
further force and effect.
- 2 -
<PAGE>
X Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated: April 4, 1988 /s/ Richard E. Carlson
----------------------------------------------
(Signature of Subscriber)
Richard E. Carlson, General Partner
Subscription for $250,000
in Shares, at the Net Asset
Value next determined after
the receipt hereof. 5500 Fund
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
Room 5425
30 Rockefeller Plaza
----------------------------------------------
(Street Address)
New York, NY 10112
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: 13-3090269
--------------------- ----------------------------------------------
(Tax Identification Number)
- 3 -
<PAGE>
APPENDIX A - SUBSCRIPTION AGREEMENT
AGREEMENT NO. B-8
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the net asset value per Share next determined after receipt by Alex. Brown
& Sons Incorporated of the undersigned's form order. The undersigned (i)
encloses herewith a check payable to the Fund; or (ii) will wire federal
funds directly to the Fund's agent, Provident National Bank to Federal
Reserve Account No. 0310000-53 for the Fund's Account No. __________, in an
amount equal to $__________. The undersigned acknowledges receipt of copy
numbered B8 of the Private Placement Memorandum of the Fund, dated March 23,
1988 (the "Memorandum") and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has a very short operating history and an investment
in the Fund involves a degree of risk;
(b) Shares will be sold without registration under the Securities
Act of 1933, as amended, (the "Securities Act") in reliance on
the private offering exemption in Section 4(2) thereof.
(c) The Fund's Notification of Registration on Form N-8A has
registered the Fund under the Investment Company Act of 1940,
as amended, (the "1940 Act").
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the undersigned represents to Alex.
<PAGE>
Brown & Sons Incorporated that he or it is purchasing the Shares for his or
its own account and not with a view to their resale or further distribution;
that no one person or entity other than the undersigned will have any
interest in, or any right to acquire, the Shares or any part thereof, that
any person or entity other than the undersigned have any interest in this
subscription; and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described in the
Memorandum, he or it is not entitled to cancel, terminate or
revoke this subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A when
and if such Registration Statement is filed and declared
effective;
(e) if (i) this subscription is accepted in whole or in part by
the Fund, upon full payment of the subscription, Shares will
be issued to the undersigned as fully paid and non-assessable.
This Subscription Agreement supersedes any previous subscription
agreement executed by or on behalf of the undersigned relative to Shares in
the Fund, and any such previous agreement is hereby rescinded and is of no
further force and effect.
-2-
<PAGE>
Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated: April 4, 1988 /s/ Henderson Administration Ltd.
----------------------------------------------
(Signature of Subscriber)
Subscription for $500,000
in Shares, at the Net Asset
Value next determined after
the receipt hereof. Henderson Administration Ltd.
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
----------------------------------------------
(Street Address)
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson
------------------- ----------------------------------------------
(Tax Identification Number)
- 3 -
<PAGE>
APPENDIX A - SUBSCRIPTION AGREEMENT
AGREEMENT NO. B-9
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the net asset value per Share next determined after receipt by Alex. Brown
& Sons Incorporated of the undersigned's form order. The undersigned (i)
encloses herewith a check payable to the Fund; or (ii) will wire federal
funds directly to the Fund's agent, Provident National Bank to Federal
Reserve Account No. 0310000-53 for the Fund's Account No. __________, in an
amount equal to $__________. The undersigned acknowledges receipt of copy
numbered 9 of the Private Placement Memorandum of the Fund, dated March 23,
1988 (the "Memorandum") and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has a very short operating history and an investment
in the Fund involves a degree of risk;
(b) Shares will be sold without registration under the Securities
Act of 1933, as amended, (the "Securities Act") in reliance on
the private offering exemption in Section 4(2) thereof.
(c) The Fund's Notification of Registration on Form N-8A has
registered the Fund under the Investment Company Act of 1940,
as amended, (the "1940 Act").
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the undersigned represents to Alex.
<PAGE>
Brown & Sons Incorporated that he or it is purchasing the Shares for his or
its own account and not with a view to their resale or further distribution;
that no one person or entity other than the undersigned will have any
interest in, or any right to acquire, the Shares or any part thereof, that
any person or entity other than the undersigned have any interest in this
subscription; and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described in the
Memorandum, he or it is not entitled to cancel, terminate or
revoke this subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A when
and if such Registration Statement is filed and declared
effective;
(e) if (i) this subscription is accepted in whole or in part by
the Fund, upon full payment of the subscription, Shares will
be issued to the undersigned as fully paid and non-assessable.
This Subscription Agreement supersedes any previous subscription
agreement executed by or on behalf of the undersigned relative to Shares in
the Fund, and any such previous agreement is hereby rescinded and is of no
further force and effect.
- 2 -
<PAGE>
Dividends. Check this box if you choose to have cash dividends
--------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated: 4 April 1988 /s/ Benjamin H. Griswold
----------------------------------------------
(Signature of Subscriber)
Subscription for $100,000
in Shares, at the Net Asset
Value next determined after
the receipt hereof. Benjamin H. Griswold, IV
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration)
135 E. Baltimore Street
----------------------------------------------
(Street Address)
Baltimore, MD 21202
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging ###-##-####
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson
------------------- ----------------------------------------------
(Tax Identification Number)
- 3 -
<PAGE>
APPENDIX A - SUBSCRIPTION AGREEMENT
AGREEMENT NO. B-10
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (which term, as used herein, shall, in the case of
an entity, refer to the entity and not the authorized individual who signs on
behalf of the entity) hereby applies for the purchase of the number of shares
below of the common stock of Flag Investors Emerging Growth Fund, Inc., a
Maryland corporation (the "Fund"), par value $.001 per share (the "Shares"),
at the net asset value per Share next determined after receipt by Alex. Brown
& Sons Incorporated of the undersigned's form order. The undersigned (i)
encloses herewith a check payable to the Fund; or (ii) will wire federal
funds directly to the Fund's agent, Provident National Bank to Federal
Reserve Account No. 0310000-53 for the Fund's Account No. __________, in an
amount equal to $__________. The undersigned acknowledges receipt of copy
numbered B10 of the Private Placement Memorandum of the Fund, dated March 23,
1988 (the "Memorandum") and that the undersigned has been furnished such
additional materials as he or it may have requested and which were reasonably
available and has been afforded the opportunity to ask such questions and to
seek such further information as he or it may have desired concerning the
offering.
The undersigned acknowledges that he is aware of the following:
(a) The Fund has a very short operating history and an investment
in the Fund involves a degree of risk;
(b) Shares will be sold without registration under the Securities
Act of 1933, as amended, (the "Securities Act") in reliance on
the private offering exemption in Section 4(2) thereof.
(c) The Fund's Notification of Registration on Form N-8A has
registered the Fund under the Investment Company Act of 1940,
as amended, (the "1940 Act").
The undersigned and/or his or its offeree representative has read
and is familiar with the Memorandum and the undersigned represents to Alex.
<PAGE>
Brown & Sons Incorporated that he or it is purchasing the Shares for his or
its own account and not with a view to their resale or further distribution;
that no one person or entity other than the undersigned will have any
interest in, or any right to acquire, the Shares or any part thereof, that
any person or entity other than the undersigned have any interest in this
subscription; and that he or it has full right, power and authority to
execute this Subscription Agreement and to perform his or its obligations
hereunder.
The undersigned further represents that he or it, either directly
or together with his or its offeree representative, is sophisticated and
experienced in investment matters and is in a position to evaluate the
offering. The undersigned also represents that he or it has the direct or
indirect financial resources to bear the risk of the investment.
The undersigned agrees that:
(a) except for Pennsylvania residents as described in the
Memorandum, he or it is not entitled to cancel, terminate or
revoke this subscription;
(b) he or it will not transfer or assign this subscription or any
interest therein;
(c) this subscription may be accepted or rejected, in whole or in
part, by Alex. Brown & Sons Incorporated, in Alex. Brown &
Sons Incorporated's discretion;
(d) if, as a consequence of this subscription agreement, he or it
acquires an ownership interest of more than 5% of Fund shares,
his or its name and address will be disclosed in the final
form of the Fund's Registration Statement an Form N-1A when
and if such Registration Statement is filed and declared
effective;
(e) if (i) this subscription is accepted in whole or in part by
the Fund, upon full payment of the subscription, Shares will
be issued to the undersigned as fully paid and non-assessable.
This Subscription Agreement supersedes any previous subscription
agreement executed by or on behalf of the undersigned relative to Shares in
the Fund, and any such previous agreement is hereby rescinded and is of no
further force and effect.
- 2 -
<PAGE>
Dividends. Check this box if you choose to have cash dividends
---------- distributed to you. If this box is not checked,
cash dividends (including net dividend and interest
income, but not net gain) will be automatically
reinvested in the Fund as described in the Section
entitled "Dividends and Taxes - Dividends and
Distributions" of the Private Placement Memorandum.
Dated: April 4, 1988 /s/ Alex. Brown Incorporated
----------------------------------------------
(Signature of Subscriber)
Subscription for $500,000
in Shares, at the Net Asset
Value next determined after
the receipt hereof. Alex. Brown Incorporated
----------------------------------------------
(Type or Print Name as It Should
Appear in the Registration Statement)
135 East Baltimore Street
----------------------------------------------
(Street Address)
Baltimore, MD 21202
----------------------------------------------
(City, State and Zip Code of Subscriber)
ACCEPTED AS OF THE
DATE HEREOF
Flag Investors Emerging
Growth Fund, Inc. ----------------------------------------------
(Social Security Number of Taxpayer or Employer
Identification Number)
By: /s/ Brian C. Nelson 52-1434118
------------------- ----------------------------------------------
(Tax Identification Number)
- 3 -
<PAGE>
EX-99.B(15)
FLAG INVESTORS EMERGING GROWTH FUND, INC.
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 "Act") of Flag Investors Emerging Growth 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 is authorized,
pursuant to the Plan, to make payments to any Participating Dealer under a
Sub-Distribution Agreement ("Participating Dealer"), 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 Services 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 in 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 of the Fund. 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 of the fund.
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, Sub-Advisor and Alex.
Brown; the charges and expenses of any registrar, any custodian or depositary
appointed by the Fund for the safekeeping of its cash, portfolio securities and
<PAGE>
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 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); 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 Board of 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" within the meaning of
Section 2(a)(19) of 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 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 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. The Board acknowledges that
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 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
-2-
<PAGE>
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 of 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 Non- Interested Directors, 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" (as defined in the Act) of the outstanding voting
securities of the Fund. 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 majority vote of Non-Interested Directors of the Fund, 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
Non-Interested Directors or by the vote of the holders of a "majority" (as
defined in the Act) of the outstanding voting securities of the Fund. 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.
-3-
<PAGE>
EX-99.B(16)
Schedule of Computation of Performance Quotations
(a) Average Annual Total Return Pursuant to SEC Rules
(i) Four Month ERV
Using the formula: P (1 + T)n = Four Month ERV
Where: P = $1,000 - initial payment
T = average annual total return
n = 4 = 0.333 = number of years
--
12
Four month ERV = $905.91 = ending redeemable value
at the end of the four month period of a
hypothetical $1,000 payment made at the
beginning of the four month period
Solve for: T
1,000 (1 + T)0.333 = 905.91
(1 + T)0.333 = 905.91 = .90591
------
1,000
1 + T = 0.333 .90591 = .74323
T = .74323 - 1 = -.2567
T = -25.67% = average annual total return
(b) Aggregate Total Return Pursuant to SEC Rules
--------------------------------------------
(i) Four Month ERV
--------------
Using the formula: P (1 + T) = Four Month ERV
Where: P = $1,000 = initial payment
T = aggregate annual total return
Four month ERV = $905.91 = ending redeemable value
at the end of the three month period of a
hypothetical $1,000 payment made at the
beginning of the three month period
<PAGE>
Solve for: T
1,000 (1 + T) = 905.91
1 + T = 905.91 = .90591
------
1,000
T = .90591 - 1 = -.09409
T = -9.41% = aggregate total return
(c) Total Return Pursuant to First Non-Standardized Computation
-----------------------------------------------------------
(i) Four Month ERV
--------------
Using the formula: P (1 + T) = Four Month ERV
Where: P = $10,000 = initial investment
T = aggregate total return
Four month ERV = $9,486 = ending redeemable value
at the end of the four month period of a
hypothetical $10,000 investment made at the
beginning of the four month period
Solve for: T
10,000 (1 + T) = 9,486
1 + T = 9,486 = .9486
------
10,000
T = .9486 - 1 = .0514
T = -5.14% = aggregate total return
Using the formula: P (1 + T)n = Four Month ERV
Where: P = $10,000 = initial investment
T = average annual total return
n = 4 = 0.333 = number of years
--
12
Four month ERV = $9,486 = ending redeemable value
- 2 -
<PAGE>
Solve for: T
10,000 (1 + T)0.333 = 9,486
(1 + T)0.333 = 9,486 = .9486
------
10,000
1 + T = 0.333 .9486 = .8535
T = .8535 - 1 = -.1465
T = -14.65% = average annual total return
(d) Total Return Pursuant to Second Non-Standard Computation:
---------------------------------------------------------
(i) Four Month ERV
---------------
Using the formula:
Four Month ERV = Ending NAV + Dividends + Capital Gains
Where: Four Month ERV = ending redeemable value at the end of the
four month period of a hypothetical $10,000
investment made at the beginning of the four month period
Ending NAV = $9,486 = net asset value at the end of the
four month period
Dividends = $0 = dividends distributed during the
four month period
Capital Gains = $0 = capital gains distributed
during the four month period
Solve for: Four Month ERV
Four Month ERV = $9,486 + $0 + $0 = $9,486
Four Month ERV = $9,486 = ending redeemable value
Using the formula: P (1 + T) = Four Month ERV
Where: P = $10,000 = initial investment
T = aggregate total return
Four Month ERV = $9,486 = ending redeemable value
at the end of the four month period of a
hypothetical $10,000 investment made at the
beginning of the four month period
- 3 -
<PAGE>
Solve for: T
10,000 (1 + T) = 9,486
1 + T = 9,486 = .9486
------
10,000
T = .9486 - 1 = -.0514
T = -5.14% = aggregate total return
Using the formula: P (1 + T)n = Four Month ERV
Where: P = $10,000 = initial investment
T = average annual total return
n = 4 = 0.333 = number of years
--
12
Four month ERV = $9,486 = ending redeemable value
Solve for: T
10,000 (1 + T)0.333 = 9,486
(1 + T)0.333 = 9,486 = .9486
------
10,000
1 + T = 0.333 .9486 = .8535
T = .8535 - 1 = -.1465
T = -14.65% = average annual total return
- 4 -
<PAGE>
EX-99.B(24)(a)
FLAG INVESTORS EMERGING GROWTH 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 Emerging Growth
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 EMERGING GROWTH 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 Emerging Growth
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 EMERGING GROWTH 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 Emerging Growth
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 EMERGING GROWTH 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 Emerging Growth
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 EMERGING GROWTH 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 Emerging Growth
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 EMERGING GROWTH FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, Frederick L. Meserve, 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 Emerging Growth
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/ Frederick L. Meserve, Jr.
--------------------------------
Frederick L. Meserve, Jr.
Date: February 22, 1994
<PAGE>
FLAG INVESTORS EMERGING GROWTH FUND, INC.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that, W. James Price, 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
Emerging Growth 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/ W. James Price
----------------------------
W. James Price
Date: February 22, 1994
<PAGE>
FLAG INVESTORS EMERGING GROWTH 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 Emerging Growth
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 EMERGING GROWTH 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 Emerging Growth 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>
EX-99.B(24)(b)
FLAG INVESTORS EMERGING GROWTH 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 Emerging Growth
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 EMERGING GROWTH 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 Emerging Growth
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
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000831675
<NAME> EMERGING GROWTH FUND
<PERIOD-TYPE> 6-MOS
<CAPTION>
<S> <C>
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 22,073,619
<INVESTMENTS-AT-VALUE> 27,521,375
<RECEIVABLES> 683,384
<ASSETS-OTHER> 24,608
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,229,367
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93,270
<TOTAL-LIABILITIES> 93,270
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,001,277
<SHARES-COMMON-STOCK> 2,061,292
<SHARES-COMMON-PRIOR> 1,806,223
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 687,064
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,447,756
<NET-ASSETS> 28,136,097
<DIVIDEND-INCOME> 6,893
<INTEREST-INCOME> 116,900
<OTHER-INCOME> 0
<EXPENSES-NET> 186,590
<NET-INVESTMENT-INCOME> (62,797)
<REALIZED-GAINS-CURRENT> 865,608
<APPREC-INCREASE-CURRENT> 634,506
<NET-CHANGE-FROM-OPS> 1,437,317
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 73,772
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 405,855
<NUMBER-OF-SHARES-REDEEMED> 156,500
<SHARES-REINVESTED> 5,714
<NET-CHANGE-IN-ASSETS> 4,834,342
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (41,975)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 105,686
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 221,964
<AVERAGE-NET-ASSETS> 25,072,814
<PER-SHARE-NAV-BEGIN> 12.90
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 0.82
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.65
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000831675
<NAME> EMERGING GROWTH FUND
<PERIOD-TYPE> YEAR
<CAPTION>
<S> <C>
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 18,712,712
<INVESTMENTS-AT-VALUE> 23,625,962
<RECEIVABLES> 39,270
<ASSETS-OTHER> 14,755
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 23,579,987
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 278,232
<TOTAL-LIABILITIES> 278,232
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18,530,480
<SHARES-COMMON-STOCK> 1,806,223
<SHARES-COMMON-PRIOR> 2,058,300
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (41,975)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,813,250
<NET-ASSETS> 23,301,755
<DIVIDEND-INCOME> 43,222
<INTEREST-INCOME> 144,914
<OTHER-INCOME> 0
<EXPENSES-NET> 364,312
<NET-INVESTMENT-INCOME> (176,176)
<REALIZED-GAINS-CURRENT> (13,816)
<APPREC-INCREASE-CURRENT> 328,533
<NET-CHANGE-FROM-OPS> 138,541
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2,944,147
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 502,395
<NUMBER-OF-SHARES-REDEEMED> 985,114
<SHARES-REINVESTED> 230,642
<NET-CHANGE-IN-ASSETS> (5,565,524)
<ACCUMULATED-NII-PRIOR> (1,514,381)
<ACCUMULATED-GAINS-PRIOR> 3,093,862
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 206,444
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 455,881
<AVERAGE-NET-ASSETS> 24,287,478
<PER-SHARE-NAV-BEGIN> 14.02
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 0.47
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.51)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.90
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
