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SIGNATURE EDWARD J. VEILLEUX
TITLE VICE PRESIDENT
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REPORT OF INDEPENDENT ACCOUNTANTS
-------
To the Board of Directors of
Flag Investors Emerging Growth Fund, Inc.
In planning and performing our audit of the financial
statements and financial highlights of Flag Investors Emerging Growth Fund, Inc.
for the year ended October 31, 1997, we considered its internal control
structure, including procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and financial highlights and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal control
structure.
The management of Flag Investors Emerging Growth Fund, Inc. is
responsible for establishing and maintaining an internal control structure. In
fulfilling this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of internal control
structure policies and procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not absolute, assurance
that assets are safeguarded against loss from unauthorized use or disposition
and that transactions are executed in accordance with management's authorization
and recorded properly to permit preparation of financial statements in
conformity with generally accepted accounting principles.
Because of inherent limitations in any internal control
structure, errors or irregularities may occur and not be detected. Also,
projection of any evaluation of the structure to future periods is subject to
the risk that it may become inadequate because of changes in conditions or that
the effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure that might be
material weaknesses under standards established by the American Institute of
Certified Public Accountants. A material weakness is a condition in which the
design or operation of the specific internal control structure elements does not
reduce to a relatively low level the risk that errors or irregularities in
amounts that would be material in relation to the financial statements and
financial highlights being audited may occur and not be detected within a timely
period by employees in the normal course of performing their assigned functions.
However, we noted no matters involving the internal control structure, including
procedures for safeguarding securities, that we consider to be material
weaknesses, as defined above, as of October 31, 1997.
This report is intended solely for the information and use of
management and the Board of Directors of Flag Investors Emerging Growth Fund,
Inc. and for the Securities and Exchange Commission.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
November 26, 1997
<PAGE>
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, 1997, and the related
statement 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 respective periods presented herein. 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 the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
October 31, 1997, by correspondence with the custodian and brokers. 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, 1997,
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 respective periods presented herein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
November 26, 1997
