FLAG INVESTORS EMERGING GROWTH FUND INC, 497, 1999-04-12

FLAG INVESTORS EMERGING GROWTH FUND INC
497, 1999-04-12

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Emerging Growth Fund, Inc.
(Class A and Class B Shares)

Prospectus & Application -- March 1, 1999, as
supplemented through March 31, 1999
- --------------------------------------------------------------------------------

This mutual fund (the "Fund") seeks to achieve long-term capital appreciation
primarily through investment in a diversified portfolio of small and mid-sized
emerging growth companies.

The Fund offers shares through securities dealers and financial institutions
that act as shareholder servicing agents. You may also buy shares through the
Fund's Transfer Agent. This Prospectus describes Flag Investors Class A Shares
(the "Class A Shares") and Flag Investors Class B Shares (the "Class B Shares")
of the Fund. These separate classes give you a choice as to sales charge and
fund expenses. (Refer to the section on sales charges and the attached
Application.)

TABLE OF CONTENTS

Investment Summary ......................... 1
Fees and Expenses of the Fund .............. 2
Investment Program ......................... 3
The Fund's Net Asset Value ................. 4
How to Buy Shares .......................... 4
How to Redeem Shares ....................... 5
Telephone Transactions ..................... 5
Sales Charges .............................. 6
How to Choose the Class
That Is Right for You ................... 8
Dividends and Taxes ........................ 8
Investment Advisor and Sub-Advisor ......... 9
Financial Highlights ....................... 10
Application ................................ A-1

Flag Investors Funds
P.O. Box 515
Baltimore, MD 21203

- --------------------------------------------------------------------------------

The Securities and Exchange Commission has neither approved nor disapproved
these securities nor has it passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
<PAGE>
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------

Objectives and Strategies

The Fund seeks to achieve long-term capital appreciation primarily
through investment in a diversified portfolio of common stocks of small and
mid-sized emerging growth companies. These companies have relatively small
market capitalizations. The Fund's investment advisor and sub-advisor
(collectively, the "Advisors") will attempt to identify emerging growth
companies, that is, companies that they believe have the ability or potential
to sustain a high level of growth in their revenue, earnings, assets and cash
flow. The Advisors will focus on a number of key selection criteria including a
company's industry position, management quality and experience, accounting and
financial policies, marketing and service capabilities, and product development
efforts.

Risk Profile

The Fund is suited for you if you are willing to accept the risks and
uncertainties of investing in emerging growth companies in the hope of
achieving above average long-term capital appreciation.

General Stock Risk. The value of an investment in the Fund will vary from
day to day, based on changes in the prices of securities the Fund holds. Those
prices, in turn, reflect investor perceptions of the economy, the markets and
the companies represented in the Fund's portfolio.

Emerging Growth and Small Cap Stock Risks. The stocks of small and
mid-sized companies may experience greater price volatility than those of
larger companies. The market for such stocks may be more limited and the
companies themselves may be more vulnerable to economic or company specific
problems. In particular, these small companies may have limited product lines,
markets and financial resources, and may depend on a relatively small
management group.

An investment in the Fund could lose money. An investment in the Fund is
not a bank deposit and is not guaranteed by the FDIC or any other government
agency.

Fund Performance

The following bar chart and table show the performance of the Fund both
year-by-year and as an average over different periods of time. The variability
of performance over time provides an indication of the risks of investing in
the Fund. This is an historical record and does not necessarily indicate how
the Fund will perform in the future.

[CHART OMITTED]

1989 32.20%
1990 -21.07%
1991 49.62%
1992 -9.18%
1993 -0.77%
1994 5.03%
1995 37.34%
1996 18.20%
1997 20.74%
1998 6.61%

- -----------
* The bar chart does not reflect sales charges. If it did, returns would be
less than those shown.

During the 10-year period shown in the bar chart, the highest return for a
quarter was 33.33% (quarter ended 12/31/98) and the lowest return for a quarter
was -29.50% (quarter ended 4/30/90).

1
<PAGE>

Average Annual Total Return (for periods ended December 31, 1998)

<TABLE>
<CAPTION>
Class A Shares(1) S&P 500(2) Russell 2000(5)
---------------------- ---------------- ------------------
<S> <C> <C> <C>
Past One Year ............ 1.81% 28.58% -2.55%
Past Five Years .......... 15.95% 24.06% 11.47%
Past Ten Years ........... 11.42% 19.21% 12.92%
Since Inception .......... 11.00%(12/30/87) 18.97%(3) 13.97%

Class B Shares(1) S&P 500(2) Russell 2000(5)
---------------------- -------------- ------------------
Past One Year ............ 1.86% 28.58% -2.55%
Since Inception .......... 9.39%(6/20/96) 29.68%(4) 9.64%
</TABLE>

- ---------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions and include the impact of the maximum sales charges.
(2) The Standard & Poor's 500 Composite Index is an unmanaged index that is a
widely recognized benchmark of general market performance. The index is a
passive measure of equity market returns. It does not factor in the costs of
buying, selling and holding securities -- costs which are reflected in the
Fund's results.
(3) For the period from 12/31/87 through 12/31/98.
(4) For the period from 6/30/96 through 12/31/98.
(5) The Russell 2000 Index is an unmanaged index that is a widely recognized
benchmark of small company stock performance. The Russell 2000's performance
may be a better comparison for the Fund than the S&P 500 which tracks
larger, more developed stocks.

FEES AND EXPENSES OF THE FUND
- --------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.

<TABLE>
<CAPTION>
Class A Class B
Shares Shares
Initial Sales Deferred
Charge Sales Charge
Shareholder Transaction Expenses: Alternative Alternative
(fees paid directly from your investment) --------------- -------------
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) .................................. 4.50%* None
Maximum Deferred Sales Charge (Load) (as a percentage
of original purchase price or redemption proceeds, whichever is lower)
For purchases made before May 1, 1999 .............................. 0.50%* 4.00%**
For purchases made on or after May 1, 1999 ......................... 1.00%* 4.00%**
Maximum Sales Charge (Load) Imposed on Reinvested Dividends ........... None None
Redemption Fee ........................................................ None None
Exchange Fee .......................................................... None None

Annual Fund Operating Expenses:
(expenses that are deducted from Fund assets)

Management Fees ....................................................... 0.85% 0.85%
Distribution and/or Service (12b-1) Fees .............................. 0.25% 0.75%
Other Expenses (including a 0.25% shareholder servicing fee
for Class B Shares) .................................................. 0.31% 0.56%
---- ----
Total Annual Fund Operating Expenses .................................. 1.41% 2.16%
==== ====
</TABLE>

- -----------
* You will pay no sales charge on purchases of $1 million or more of Class A
Shares but, unless you are otherwise eligible for a sales charge waiver or
reduction, you may pay a contingent deferred sales charge when you redeem
your shares. (See "Sales Charges -- Redemption Price.")
** Contingent deferred sales charges decline over time and reach zero after six
years. At that time, Class B Shares convert automatically to Class A
Shares. (See "Sales Charges" and "How to Choose the Class That Is Right for
You.")

2
<PAGE>

Example:

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs
would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Class A Shares ....................................................... $587 $876 $1,186 $2,065
Class B Shares ....................................................... $619 $976 $1,359 $2,128

You would pay the following expenses if you did not redeem your shares

Class A Shares ....................................................... $587 $876 $1,186 $2,065
Class B Shares ....................................................... $219 $676 $1,159 $2,128
</TABLE>

Federal regulations require that the table above reflect the maximum sales
charge. However, you may qualify for reduced sales charges or no sales charge
at all. (Refer to the section on sales charges.) If you hold your shares for a
long time, the combination of the initial sales charge you paid and the
recurring 12b-1 fees may exceed the maximum sales charges permitted by the
Conduct Rules of the National Association of Securities Dealers, Inc.

INVESTMENT PROGRAM
- --------------------------------------------------------------------------------

Investment Objective, Policies and
Risk Considerations

The Fund seeks to achieve long-term capital appreciation primarily
through investment in a diversified portfolio of small and mid-sized emerging
growth companies.

The Advisors are responsible for managing the Fund's investments. (Refer
to the section on the Investment Advisor and Sub-Advisor.) The Advisors will
seek to identify companies that, in their opinion, are well managed and have
experienced or have the potential to experience rapid growth in their revenue,
earnings, assets and cash flow. The selection criteria will include a company's
industry position, management qualifications and experience, accounting and
financial policies, marketing and service capabilities, and product development
efforts. The Advisors will invest in a broad cross-section of industries in an
effort to limit the Fund's volatility. The Fund will invest primarily, but not
exclusively, in the businesses of technology, health care, business services,
energy, transportation, financial services, consumer products and services and
capital goods.

An investment in the Fund involves risk. Over time, common stocks have
shown greater potential for growth than other types of securities, but in the
short run stocks can be more volatile than other types of securities. In
general, stock prices are sensitive to developments affecting particular
companies and to general economic conditions that affect particular industry
sectors or the securities markets as a whole. In addition to the general risks
of the stock markets, investing in small to mid-size companies entails special
risks. The stock prices of emerging growth companies tend to be more volatile
than investments in larger, more established companies making such investments
more speculative. In particular, the companies that the Fund invests in may
have limited product lines, markets, and financial resources, and may depend on
a relatively small management group. There can be no guarantee that the Fund
will achieve its goals.

<PAGE>

To protect the Fund under adverse market conditions, the Advisors may
make temporary, defensive investments in money market instruments, investments
that would not ordinarily be consistent with the Fund's objectives. While
engaged in a temporary defensive strategy, the Fund may not achieve its
investment objective. The Advisors would follow such a strategy only if they
believed the risk of loss outweighed the opportunity for gain.

Year 2000 Issues

The Fund depends on the smooth functioning of computer systems in almost
every aspect of its business. The Fund could be adversely affected if the
computer systems used by its service providers do not properly process dates on
and after January 1, 2000 and distinguish between the year 2000 and the year
1900. The Fund has asked its service providers whether they expect to have
their computer systems adjusted for the year 2000 transition, and has received
assurances from each that its system is expected to accommodate the year 2000
without material adverse consequences to the Fund. The Fund and its
shareholders may experience losses if these assurances prove to be incorrect or
if issuers of portfolio securities or third parties, such as custodians, banks,
broker-dealers or others, with which the Fund does business experience
difficulties as a result of year 2000 issues.

3
<PAGE>

THE FUND'S NET ASSET VALUE
- --------------------------------------------------------------------------------

The price you pay when you buy shares or receive when you redeem shares
is based on the Fund's net asset value per share. When you buy Class A Shares,
the price you pay may be increased by a sales charge. When you redeem either
class of shares, the amount you receive may be reduced by a sales charge. Read
the section on sales charges for details on how and when these charges may or
may not be imposed.

The net asset value per share of the Fund is determined at the close of
regular trading on the New York Stock Exchange (ordinarily 4:00 p.m. Eastern
Time) on each day the Exchange is open for business. It is calculated by
subtracting the liabilities attributable to a class from its proportionate
share of the Fund's assets and dividing the result by the outstanding shares of
the class. Because the different classes have different distribution or service
fees, their net asset values may differ from time to time.

In valuing the Fund's assets, its investments are priced at their market
value. When price quotes for a particular security are not readily available,
investments are priced at their "fair value" using procedures approved by the
Fund's Board of Directors.

You may buy or redeem shares on any day the New York Stock Exchange is
open for business (a "Business Day"). If your order is entered before the net
asset value per share is determined for that day, the price you pay or receive
will be based on that day's net asset value per share. If your order is entered
after the net asset value per share is determined for that day, the price you
pay or receive will be based on the next Business Day's net asset value per
share.

The following sections describe how to buy and redeem shares.

HOW TO BUY SHARES
- --------------------------------------------------------------------------------

You may buy either class of the Fund's shares through your securities
dealer or through any financial institution that is authorized to act as a
shareholder servicing agent. Contact them for details on how to enter and pay
for your order. You may also buy shares by sending your check (along with a
completed Application Form) directly to the Fund. The Application Form, which
includes instructions, is attached to this Prospectus.

You may invest in Class A Shares unless you are a defined contribution
plan with assets of $75 million or more.

Your purchase order may not be accepted if the sale of Fund shares has
been suspended or if it is determined that your purchase would be detrimental
to the interests of the Fund's shareholders.

Investment Minimums

Your initial investment must be at least $2,000. Subsequent investments
must be at least $100. The following are exceptions to these minimums:

o If you are investing in an IRA account, your initial investment may be
as low as $1,000.

o If you are a shareholder of any other Flag Investors fund, your initial
investment in this Fund may be as low as $500.

o If you are a participant in the Fund's Automatic Investing Plan, your
initial investment may be as low as $250. If you participate in the
monthly plan, your subsequent investments may be as low as $100. If you
participate in the quarterly plan, your subsequent investments may be
as low as $250. Refer to the section on the Fund's Automatic Investing
Plan for details.

o There is no minimum investment requirement for qualified retirement
plans such as 401(k), pension or profit sharing plans.

<PAGE>

Investing Regularly

You may make regular investments in the Fund through any of the following
methods. If you wish to enroll in any of these programs or if you need any
additional information, complete the appropriate section of the attached
Application Form or contact your securities dealer, your servicing agent, or
the Transfer Agent.

Automatic Investing Plan. You may elect to make a regular monthly or
quarterly investment in either class of shares. The amount you decide upon will
be withdrawn from your checking account using a pre-authorized check. When the
money is received by the Transfer Agent, it will be invested in the class of
shares selected at that day's offering price. Either you or the Fund may
discontinue your participation upon 30 days' notice.

Dividend Reinvestment Plan. Unless you elect otherwise, all income and
capital gains distributions will be reinvested in additional Fund shares at net
asset value. You may elect to receive your distributions in cash or to have
your distributions invested in shares of other Flag Investors funds. To make
either of these elections or to terminate automatic reinvestment, com-

4
<PAGE>

plete the appropriate section of the attached Application Form or notify the
Transfer Agent, your securities dealer or your servicing agent at least five
days before the date on which the next dividend or distribution will be paid.

Systematic Purchase Plan. You may also purchase either class of shares
through a Systematic Purchase Plan. Contact your securities dealer or servicing
agent for details.

HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------

You may redeem either class of the Fund's shares through your securities
dealer or servicing agent. Contact them for details on how to enter your order
and for information as to how you will be paid. If you have an account with the
Fund that is in your name, you may also redeem shares by contacting the
Transfer Agent by mail or (if you are redeeming less than $50,000) by
telephone. The Transfer Agent will mail your redemption check within seven days
after it receives your order in proper form. Refer to the section on telephone
transactions for more information on this method of redemption.

Your securities dealer, your servicing agent or the Transfer Agent may
require the following documents before they redeem your shares:

1) A letter of instructions specifying your account number and the number of
shares or dollar amount you wish to redeem. The letter must be signed by
all owners of the shares exactly as their names appear on the account.

2) If you are redeeming more than $50,000, a guarantee of your signature by a
member of the Federal Deposit Insurance Corporation, a trust company,
broker, dealer, securities exchange or association, clearing agency,
savings association or (if authorized by state law) credit union.

3) Any stock certificates representing the shares you are redeeming. The
certificates must be either properly endorsed or accompanied by a duly
executed stock power.

4) Any additional documents that may be required if your account is in the
name of a corporation, partnership, trust or fiduciary.

Other Redemption Information

Any dividends payable on shares you redeem will be paid on the next
dividend payable date. If you have redeemed all of your shares by that time,
the dividend will be paid to you by check whether or not that is the payment
option you have selected.

If you redeem sufficient shares to reduce your investment to $500 or
less, the Fund has the power to redeem the remaining shares after giving you 60
days' notice. The Fund reserves the right to redeem shares in kind under
certain circumstances.

If you own Fund shares having a value of at least $10,000, you may
arrange to have some of your shares redeemed monthly or quarterly under the
Fund's Systematic Withdrawal Plan. Each redemption under this plan involves all
the tax and sales charge implications normally associated with Fund
redemptions. Contact your securities dealer, your servicing agent or the
Transfer Agent for information on this plan.

TELEPHONE TRANSACTIONS
- --------------------------------------------------------------------------------

If your shares are in an account with the Transfer Agent, you may redeem
them in any amount up to $50,000 or exchange them for shares in another Flag
Investors fund by calling the Transfer Agent on any Business Day between the
hours of 8:30 a.m. and 5:30 p.m. (Eastern Time). You are automatically entitled
to telephone transaction privileges but you may specifically request that no
telephone redemptions or exchanges be accepted for your account. You may make
this election when you complete the Application Form or at any time thereafter
by completing and returning documentation supplied by the Transfer Agent.

The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephoned instructions are genuine. These procedures include
requiring you to provide certain personal identification information when you
open your account and before you effect each telephone transaction. You may be
required to provide additional telecopied instructions. If these procedures are
employed, neither the Fund nor the Transfer Agent will bear any liability for
following telephone instructions that it reasonably believes to be genuine.
Your telephone transaction request will be recorded.

During periods of extreme economic or market changes, you may experience
difficulty in contacting the Transfer Agent by telephone. In such event, you
should make your request by mail. If you hold your shares in certificate form,
you may not exchange or redeem them by telephone.

5
<PAGE>

SALES CHARGES
- --------------------------------------------------------------------------------

Purchase Price

The price you pay to buy shares will be the Fund's offering price which
is calculated by adding any applicable sales charges to the net asset value per
share of the class you are buying. The amount of any sales charge included in
your purchase price will be according to the following schedule:

Class A
Sales Charge
as % of
-------------------------
Offering Net Amount Class B
Amount of Purchase Price Invested Sales Charge
- ------------------------------- ---------- ------------ -------------
Less than $ 50,000 ......... 4.50% 4.71% None
$ 50,000 - $ 99,999 ......... 3.50% 3.63% None
$ 100,000 - $249,999 ......... 2.50% 2.56% None
$ 250,000 - $499,999 ......... 2.00% 2.04% None
$ 500,000 - $999,999 ......... 1.50% 1.52% None
$1,000,000 and over ........... None None None

Although you do not pay an initial sales charge when you invest
$1,000,000 or more in Class A Shares or when you buy any amount of Class B
Shares, you may pay a sales charge when you redeem your shares. Refer to the
section on redemption price for details. Your securities dealer may be paid a
commission at the time of your purchase.

The sales charge you pay on your current purchase of Class A Shares may
be reduced under the circumstances listed below.

Rights of Accumulation. If you are purchasing additional Class A Shares
of this Fund or Class A shares of any other Flag Investors fund or if you
already have investments in Class A shares, you may combine the value of your
purchases with the value of your existing investments to determine whether you
qualify for a reduced sales charge. (For this purpose your existing investments
will be valued at the higher of cost or current value.) You may also combine
your purchases and investments with those of your spouse and your children
under the age of 21 for this purpose. You must be able to provide sufficient
information to verify that you qualify for this right of accumulation.

Letter of Intent. If you anticipate making additional purchases of Class
A Shares over the next 13 months, you may combine the value of your current
purchase with the value of your anticipated purchases to determine whether you
qualify for a reduced sales charge. You will be required to sign a letter of
intent specifying the total value of your anticipated purchases and to
initially purchase at least 5% of the total. When you make each purchase during
the period, you will pay the sales charge applicable to their combined value.
If, at the end of the 13-month period, the total value of your purchases is
less than the amount you indicated, you will be required to pay the difference
between the sales charges you paid and the sales charges applicable to the
amount you actually did purchase. Some of the shares you own will be redeemed
to pay this difference.

<PAGE>

Purchases at Net Asset Value. You may buy Class A Shares without paying a
sales charge under the following circumstances:

1) If you are reinvesting some or all of the proceeds of a redemption of Class
A Shares made within the last 90 days.

2) If you are exchanging an investment in another Flag Investors fund for an
investment in this Fund (see "Purchases by Exchange" for a description of
the conditions).

3) If you are a current or retired Fund Director, a director, an employee or a
member of the immediate family of an employee of any of the following (or
their respective affiliates): the Fund's distributor, the Advisors or a
broker-dealer authorized to sell shares of the Fund.

4) If you are buying shares in any of the following types of accounts:

(i) A qualified retirement plan;

(ii) A Flag Investors fund payroll savings plan
program;

(iii) A fiduciary or advisory account with a bank, bank trust department,
registered investment advisory company, financial planner or
securities dealer purchasing shares on your behalf. To qualify for
this provision you must be paying an account management fee for the
fiduciary or advisory services. You may be charged an additional
fee by your securities dealer or servicing agent if you buy shares
in this manner.

Purchases by Exchange

You may exchange shares of any other Flag Investors fund with the same
sales charge structure for an equal dollar amount of Class A or B Shares, as
applicable, without payment of the sales charges described above or any other
charge. If you exchange Class A shares of any Flag Investors fund with a lower
sales charge structure into Class A Shares, you will be charged the difference
in sales charges unless (with the exception of Flag Investors Cash Reserve

6
<PAGE>

Prime Class A Shares) you have owned the shares for at least 24 months. You may
enter both your redemption and purchase orders on the same Business Day or, if
you have already redeemed the shares of the other fund, you may enter your
purchase order within 90 days of the redemption. The Fund may modify or
terminate these offers of exchange upon 60 days' notice.

You may request an exchange through your securities dealer or servicing
agent. Contact them for details on how to enter your order. If your shares are
in an account with the Fund's Transfer Agent, you may also request an exchange
directly through the Transfer Agent by mail or by telephone.

Redemption Price

The amount of any sales charge deducted from your redemption price will
be determined according to the following schedule.

Sales Charge as a Percentage
of the Dollar Amount
Subject to Charge
----------------------------------------------
Class A Sales Charge Class B Sales Charge
(as % of (as % of
Years Since Purchase Cost or Value) Cost or Value)
- ---------------------- ---------------------- ---------------------
First ................ 1.00%* 4.00%
Second ............... 0.50%* 4.00%
Third ................ None 3.00%
Fourth ............... None 3.00%
Fifth ................ None 2.00%
Sixth ................ None 1.00%
Thereafter ........... None None

* You will pay a sales charge when you redeem Class A Shares only if you bought
those shares at net asset value as part of an investment of $1 million or
more. For purchases of $1 million or more of Class A Shares made before May
1, 1999, you will pay a sales charge of 0.50% if you redeem them within the
first year of purchase instead of the 1.00% reflected in the above table.

Determination of Sales Charge. The sales charge applicable to your
redemption is calculated in a manner that results in the lowest possible rate:

1) No sales charge will be applied to shares you own as a result of
reinvesting dividends or distributions.

2) If you have purchased shares at various times, the sales charge will be
applied first to shares you have owned for the longest period of time.

3) If you acquired your shares through an exchange of shares of another Flag
Investors fund, the period of time you held the original shares will be
combined with the period of time you held the shares being redeemed to
determine the years since purchase.

4) The sales charge is applied to the lesser of the cost of the shares or
their value at the time of your redemption.

<PAGE>

Waiver of Sales Charge. You may redeem shares without paying a sales
charge under any of the following circumstances:

1) If you are exchanging your shares for shares of another Flag Investors fund
with the same sales charge structure.

2) If your redemption represents the minimum required distribution from an
individual retirement account or other retirement plan.

3) If your redemption represents a distribution from a Systematic Withdrawal
Plan. This waiver applies only if the annual withdrawals under your Plan
are 12% or less of your share balance.

4) If shares are being redeemed in your account following your death or a
determination that you are disabled. This waiver applies only under the
following conditions:

(i) The account is registered in your name either individually, as a
joint tenant with rights of survivorship, as a participant in
community property, or as a minor child under the Uniform Gifts or
Uniform Transfers to Minors Acts.

(ii) Either you or your representative notifies your securities dealer,
servicing agent or the Transfer Agent that such circumstances exist.

5) If you are redeeming Class A Shares, your original investment was at least
$3,000,000 and your securities dealer has agreed to return to the Fund's
distributor any payments received when you bought your shares.

Automatic Conversion of Class B Shares. Your Class B Shares, along with
any reinvested dividends or distributions associated with those shares, will be
automatically converted to Class A Shares six years after your purchase. This
conversion will be made on the basis of the relative net asset values of the
classes and will not be a taxable event to you.

7
<PAGE>

HOW TO CHOOSE THE CLASS THAT IS RIGHT FOR YOU
- --------------------------------------------------------------------------------

Your decision as to which class of the Fund's shares is best for you
should be based upon a number of factors including the amount of money you
intend to invest and the length of time you intend to hold your shares.

If you choose Class A Shares, you will pay a sales charge when you buy
your shares but the amount of the charge declines as the amount of your
investment increases. You will pay lower expenses while you hold the shares
and, except in the case of investments of $1,000,000 or more, no sales charge
if you redeem them.

If you choose Class B Shares, you will pay no sales charge when you buy
your shares but your annual expenses will be higher than Class A Shares. You
will pay a sales charge if you redeem your shares within six years of purchase,
but the amount of the charge declines the longer you hold your shares and, at
the end of six years, your shares convert to Class A Shares thus eliminating
the higher expenses.

In general, if you intend to invest more than $100,000 your combined
sales charges and expenses are lower with Class A Shares. If you intend to
invest less than $100,000 and expect to hold your shares for more than six
years, your combined sales charges and expenses are lower with Class B Shares.

Your securities dealer is paid a commission when you buy your shares and
is paid a servicing fee for as long as you hold your shares. Your securities
dealer or servicing agent may receive different levels of compensation
depending upon which class of shares you buy.

Distribution Plans

The Fund has adopted plans under Rule 12b-1 that allow the Fund to pay
your securities dealer or shareholder servicing agent distribution and other
fees for the sale of its shares and for shareholder service. Class A Shares pay
an annual distribution fee equal to 0.25% of average daily net assets. Class B
Shares pay an annual distribution fee equal to 0.75% of average daily net
assets and an annual shareholder servicing fee equal to 0.25% of average daily
net assets. Because these fees are paid out of net assets on an on-going basis,
they will, over time, increase the cost of your investment and may cost you
more than paying other types of sales charges.

DIVIDENDS AND TAXES
- --------------------------------------------------------------------------------

Dividends and Distributions

The Fund's policy is to distribute to shareholders substantially all of
its taxable net investment income in the form of annual dividends and to
distribute taxable net capital gains on an annual basis.

Certain Federal Income Tax Consequences

The dividends and distributions you receive from the Fund may be subject
to federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you
reinvest them. Dividends are taxed as ordinary income and capital gains
distributions are taxed at various rates based on how long the Fund held the
assets. The Fund will tell you annually how to treat dividends and
distributions.

If you redeem shares of the Fund, you will be subject to tax on any gain.
The character of such gain will generally be based on your holding period for
the shares. An exchange of shares of the Fund for shares of another fund is a
sale of Fund shares for tax purposes. More information about taxes is in the
Statement of Additional Information.

Because each investor's tax circumstances are unique and because the tax
laws are subject to change, you should consult your tax advisor about your
investment.

8
<PAGE>

INVESTMENT ADVISOR AND SUB-ADVISOR
- --------------------------------------------------------------------------------

Investment Company Capital Corp. ("ICC" or the "Advisor") is the Fund's
investment advisor and Brown Investment Advisory & Trust Company (formerly,
Alex. Brown Capital Advisory & Trust Company) ("Brown Trust" or the
"Sub-Advisor") is the Fund's sub-advisor. ICC is also the investment advisor to
other mutual funds in the Flag Investors family of funds and BT Alex. Brown
Cash Reserve Fund, Inc. These funds, together with the Fund, had approximately
$8.8 billion of net assets as of December 31, 1998. Brown Trust is a Maryland
trust company with approximately $3.2 billion under management as of December
31, 1998.

ICC is responsible for supervising and managing all of the Fund's
operations, including overseeing the performance of Brown Trust. Brown Trust is
responsible for decisions to buy and sell securities for the Fund, for
broker-dealer selection, and for negotiation of commission rates.

As compensation for its advisory services for the fiscal year ended
October 31, 1998, ICC received from the Fund a fee equal to 0.85% of the Fund's
average daily net assets. ICC compensates Brown Trust out of its advisory fee.

The Advisor is an indirect subsidiary of Bankers Trust Corporation.
Bankers Trust Corporation has entered into an Agreement and Plan of Merger with
Deutsche Bank AG ("Deutsche Bank"), dated as of November 30, 1998, under which
Bankers Trust Corporation would merge with and into a subsidiary of Deutsche
Bank. Deutsche Bank is a major global banking institution that is engaged in a
wide range of financial services, including investment management, mutual
funds, retail and commercial banking, investment banking and insurance. The
transaction is contingent upon various regulatory approvals, and continuation
of the Fund's advisory relationship with ICC and sub-advisory relationship with
Brown Trust thereafter is subject to the approval of Fund shareholders. On
March 30, 1999, the Board of Directors approved, subject to shareholder
approval, a new advisory agreement between ICC and the Fund and a new
sub-advisory agreement among the Fund, ICC and Brown Trust in the event the
merger is approved and completed. If the transaction is approved and completed,
Deutsche Bank, as the Advisor's new parent company, will control the operations
of the Advisor. ICC believes that, under this new arrangement, the services
provided to the Fund will be maintained at their current level.

On March 11, 1999, Bankers Trust Company ("Bankers Trust"), a separate
subsidiary of Bankers Trust Corporation, announced that it had reached an
agreement with the United States Attorney's Office in the Southern District of
New York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record-keeping problems that occurred between 1994
and early 1996. ICC became a subsidiary of Bankers Trust Corporation in a
merger that occurred after these events took place. Pursuant to its agreement
with the U.S. Attorney's Office, Bankers Trust pleaded guilty to misstating
entries in the bank's books and records and agreed to pay a $60 million fine to
federal authorities. Separately, Bankers Trust agreed to pay a $3.5 million
fine to the State of New York. The events leading up to the guilty pleas did
not arise out of the investment advisory or mutual fund management activities
of Bankers Trust or its affiliates.

As a result of the plea, absent an order from the SEC, ICC may not be
able to continue to provide investment advisory services to the Fund. The SEC
has granted a temporary order to permit Bankers Trust and its affiliates to
continue to provide investment advisory services to registered investment
companies. There is no assurance that the SEC will grant a permanent order.

Portfolio Manager

Frederick L. Meserve, Jr. has been responsible for managing the Fund's
assets since November, 1993. Mr. Meserve is a Managing Director at Brown Trust
where he has served as the Fund's portfolio manager since October, 1998. Prior
thereto, Mr. Meserve served as the Fund's portfolio manager while employed at
BT Alex. Brown Incorporated. 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.

9
<PAGE>

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The financial highlights table is intended to help you understand the
Fund's financial performance for the past five fiscal years. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information is part of the Fund's financial statements,
which have been audited by PricewaterhouseCoopers LLP. These financial
statements are included in the Statement of Additional Information, which is
available upon request.

(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Class A Shares
-----------------------------------------------------------------
For the Year Ended October 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value at
beginning of period ........... $ 23.17 $ 19.14 $ 17.09 $ 12.90 $ 14.02
--------- ------- ------- ------- -------
Income from Investment
Operations:
Expenses in excess of
income ........................ (0.22) (0.18) (0.15) (0.09) (0.08)
Net realized and
unrealized gain/(loss)
on investments ................ (2.82) 4.95 3.10 4.32 0.47
--------- ------- ------- ------- -------
Total from Investment
Operations .................... (3.04) 4.77 2.95 4.23 0.39
--------- ------- ------- ------- -------
Less Distributions:
Distributions from net
realized short-term
gains ......................... (0.21) (0.21) (0.30) -- --
Distributions from net
realized mid-term and
long-term gains ............... (0.84) (0.53) (0.60) (0.04) (1.51)
--------- ------- ------- ------- -------
Total distributions ............. (1.05) (0.74) (0.90) (0.04) (1.51)
--------- ------- ------- ------- -------
Net asset value at end of
period ........................ $ 19.08 $ 23.17 $ 19.14 $ 17.09 $ 12.90
========= ======= ======= ======= =======
Total Return(3) .................. (13.48)% 25.93% 18.19% 32.92% 3.75%
Ratios to Average Daily
Net Assets:
Expenses ........................ 1.41% 1.44% 1.50% 1.50% 1.50%
Expenses in excess of
income ........................ (1.03)% (0.97)% (0.83)% (0.64)% (0.73)%
Supplemental Data:
Net assets at end of
period (000): ................. $ 65,247 $71,123 $45,325 $38,127 $23,302
Portfolio turnover rate ......... 23% 42% 24% 39% 86%

<PAGE>

<CAPTION>
Class B Shares
-------------------------------------------
For the Year June 20, 1996(1)
Ended through
October 31, October 31,
-------------------------- ---------------
1998 1997 1996
------------- ----------- ---------------
<S> <C> <C> <C>
Per Share Operating
Performance:
Net asset value at
beginning of period ........... $ 22.88 $ 19.10 $ 19.22
------- -------- -------
Income from Investment
Operations:
Expenses in excess of
income ........................ (0.37)(2) (0.18) (0.12)
Net realized and
unrealized gain/(loss)
on investments ................ (2.77) 4.70 --
------- -------- -------
Total from Investment
Operations .................... (3.14) 4.52 (0.12)
------- -------- -------
Less Distributions:
Distributions from net
realized short-term
gains ......................... (0.21) (0.21) --
Distributions from net
realized mid-term and
long-term gains ............... (0.84) (0.53) --
Total distributions ............. (1.05) (0.74) --
------- -------- -------
Net asset value at end of
period ........................ $ 18.69 $ 22.88 $ 19.10
======= ======== =======
Total Return(3) .................. 14.11% 24.69% (0.62)%
Ratios to Average Daily
Net Assets:
Expenses ........................ 2.16% 2.19% 2.25%(4)
Expenses in excess of
income ........................ (1.77)% (1.73)% (1.67)%(4)
Supplemental Data:
Net assets at end of
period (000): ................. $5,155 $ 5,719 $ 772
Portfolio turnover rate ......... 23% 42% 24%
</TABLE>

- -----------
1 Commencement of operations.
2 Calculation based on average shares.
3 Total return excludes the effect of sales charge.
4 Annualized.

10
<PAGE>

FLAG INVESTORS EMERGING GROWTH FUND, INC.
NEW ACCOUNT APPLICATION
- --------------------------------------------------------------------------------
Make check payable to "Flag Investors Emerging For assistance in completing
Growth Fund, Inc." and mail with this this Application please call:
Application to: 1-800-553-8080, Monday through
Flag Investors Funds (Eastern Time). Friday, 8:30 a.m. to 5:30 p.m.
P.O. Box 419663
Kansas City, MO 64141-6663 To open an IRA account, please
Attn: Flag Investors Emerging Growth Fund, Inc. call 1-800-767-3524 for an IRA
information kit.

I wish to purchase the following class of shares of the Fund, in the amount
indicated below. (Please check the applicable box and indicate the amount of
purchase.)

[ ] Class A Shares (4.5% maximum initial sales charge) in the amount of
$_______

[ ] Class B Shares (4.0% maximum contingent deferred sales charge) in the
amount of $__________

Your Account Registration (Please Print)
<TABLE>
<CAPTION>
<S> <C>

Existing Account No., if any: _______________

Individual or Joint Tenant Gifts to Minors

- ------------------------------------------------------- ----------------------------------------------------------------------
First Name Initial Last Name Custodian's Name (only one allowed by law)

- ------------------------------------------------------- ----------------------------------------------------------------------
Social Security Number Minor's Name (only one)

- ------------------------------------------------------- ------------------------------- -----------------------------------
Joint Tenant Initial Last Name Social Security Number of Minor Minor's Date of Birth (Mo./Day/Yr.)

under the _____________________ Uniform Gifts to Minors Act
State of Residence

Corporations, Trusts, Partnerships, etc. Mailing Address

- ------------------------------------------------------- ----------------------------------------------------------------------
Name of Corporation, Trust or Partnership Street

- ---------------------- -------------------------- ----------------------------------------------------------------------
Tax ID Number Date of Trust City State Zip

( )
- ------------------------------------------------------- ----------------------------------------------------------------------
Name of Trustees (if to be included in Daytime Phone
the Registration)

- -------------------------------------------------------
For the Benefit of
</TABLE>

<PAGE>

Letter of Intent (Optional)

[ ] I intend to invest at least the amount indicated below in Class A Shares
of Flag Investors Emerging Growth Fund, Inc. I understand that if I satisfy
the conditions described in the attached prospectus, this Letter of Intent
entitles me to the applicable level of reduced sales charges on my
purchases.
[ ] $50,000 [ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1 000,000

Right of Accumulation (Optional)

List the Account numbers of other Flag Investors Funds that you or your
immediate family already own that qualify you for reduced sales charges.

Fund Name Account No. Owner's Name Relationship
--------- ----------- ------------ ------------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Distribution Options

Please check the appropriate boxes. If none of the options are selected, all
distributions will be reinvested in additional shares of the same class of the
Fund at no sales charge.

Income Dividends Capital Gains
[ ] Reinvested in additional shares [ ] Reinvested in additional shares
[ ] Paid in cash [ ] Paid in cash

Call (800) 553-8080 for information about reinvesting your dividends in other
funds in the Flag Investors Family of Funds.

A-1
<PAGE>

Automatic Investing Plan (Optional)

[ ] I authorize you as Agent for the Automatic Investing Plan to automatically
invest $_______ in Class A Shares or $_______ in Class B Shares for me, on a
monthly or quarterly basis, on or about the 20th of each month or if quarterly,
the 20th of January, April, July and October, and to draw a bank draft in
payment of the investment against my checking account. (Bank drafts may be
drawn on commer-cial banks only.)

Minimum Initial Investment: $250 per class

Subsequent Investments (check one): [ ] Monthly ($100 minimum per class)
[ ] Quarterly ($250 minimum per class)

Please attach a voided check.

- ---------------------------------- ------------------------------------------
Bank Name Depositor's Signature Date

- ---------------------------------- ------------------------------------------
Existing Flag Investors Fund Account Depositor's Signature (if Date
No., if any joint acct., both must sign)

Systematic Withdrawal Plan (Optional)

[ ] Beginning the month of ___________ , 19__ please send me checks on a
monthly or quarterly basis, as indicated below, in the amount of (complete as
applicable) $___________ , from Class A Shares and/or $___________ from Class
B Shares that I own, payable to the account registration address as shown
above. (Participation requires minimum account value of $10,000 per class.)

Frequency (check one): [ ] Monthly [ ] Quarterly (January, April,
July, and October)

Telephone Transactions

I understand that I will automatically have telephone redemption privileges
(for amounts up to $50,000) and telephone exchange privileges (with respect to
other Flag Investors Funds) unless I mark one or both of the boxes below:

No, I/we do not want: [ ] Telephone redemption privileges
[ ] Telephone exchange privileges

Redemptions effected by telephone will be mailed to the address of record. If
you would prefer redemptions mailed to a predesignated bank account, please
provide the following information:

Bank: ____________________________ Bank Account No.: ________________________

Address: ___________________________ Bank Account Name: _______________________

___________________________

<PAGE>

Signature and Taxpayer Certification

The Fund may be required to withhold and remit to the U.S. Treasury 31% of any
taxable dividends, capital gains distributions and redemption proceeds paid to
any individual or certain other non-corporate shareholders who fail to provide
the information and/or certifications required below. This backup withholding
is not an additional tax, and any amounts withheld may be credited against
your ultimate U.S. tax liability.

By signing this Application, I hereby certify under penalties of perjury that
the information on this Application is complete and correct and that as
required by federal law: (Please check applicable boxes)

[ ] U.S. Citizen/Taxpayer:

[ ] I certify that (1) the number shown above on this form is the correct
Social Security Number or Tax ID Number and (2) I am not subject to any
backup withholding either because (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding.

[ ] If no Tax ID Number or Social Security Number has been provided above,
I have applied, or intend to apply, to the IRS or the Social Security
Administration for a Tax ID Number or a Social Security Number, and I
understand that if I do not provide either number to the Transfer Agent
within 60 days of the date of this Application or if I fail to furnish
either number, I may be subject to a penalty and a 31% backup
withholding on distributions and redemption proceeds. (Please provide
either number on IRS Form W-9. You may request such form by calling the
Transfer Agent at 800-553-8080.)

[ ] Non-U.S. Citizen/Taxpayer:

Indicated country of residence for tax purposes: _________________________

Under penalties of perjury, I certify that I am not a U.S. citizen or
resident and I am an exempt foreign person as defined by the Internal
Revenue Service.

I acknowledge that I am of legal age in the state of my residence. I have
received a copy of the Fund's prospectus.

The Internal Revenue Service does not require your consent to any provision of
this document other than the certifications required to avoid backup
withholding.

- ---------------------------------- -----------------------------------------
Signature Date Signature (if joint acct., both must sign)
Date
- --------------------------------------------------------------------------------

For Dealer Use Only

Dealer's Name: ______________________________ Dealer Code: ____________________

Dealer's Address: ___________________________ Branch Code: ____________________

___________________________

Representative: _____________________________ Rep. No.: _______________________

A-2
<PAGE>

Investment Advisor
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202

Sub-Advisor Distributor
BROWN INVESTMENT ADVISORY & TRUST COMPANY ICC DISTRIBUTORS, INC.
Furness House Two Portland Square
19 South Street Portland, Maine 04101
Baltimore, Maryland 21202

Transfer Agent Independent Accountants
INVESTMENT COMPANY CAPITAL CORP. PRICEWATERHOUSECOOPERS LLP
One South Street 250 West Pratt Street
Baltimore, Maryland 21202 Baltimore, Maryland 21201
1-800-553-8080

Custodian Fund Counsel
BANKERS TRUST COMPANY MORGAN, LEWIS & BOCKIUS LLP
130 Liberty Street 1701 Market Street
New York, New York 10006 Philadelphia, Pennsylvania 19103

<PAGE>

[GRAPHIC OMITTED]

Flag Investors
P.O. Box 515
Baltimore, Maryland 21203
(800) 767-FLAG

- --------------------------------------------------------------------------------

You may obtain the following additional information about the Fund, free of
charge, from your securities dealer or servicing agent or by calling (800)
767-FLAG:

o A statement of additional information (SAI) about the Fund that is
incorporated by reference into the prospectus.

o The Fund's most recent annual and semi-annual reports containing detailed
financial information and, in the case of the annual report, a discussion
of market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year.

In addition you may review information about the Fund (including the SAI) at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
(Call 1-800-SEC-0330 to find out about the operation of the Public Reference
Room.) The Commission's Internet site at http://www.sec.gov has reports and
other information about the Fund. You may get copies of this information by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-5009. You will be charged for duplicating fees.

For other shareholder inquiries, contact the Transfer Agent at (800) 553-8080.
For Fund information, call (800) 767-FLAG or your securities dealer or servicing
agent.

Investment Company Act File No. 811-5320
- --------------------------------------------------------------------------------
EGPRS
4/99
<PAGE>

[GRAPHIC OMITTED]
FLAG INVESTORS
Investing With A Difference

Emerging Growth Fund, Inc.
(Institutional Shares)

Prospectus & Application -- March 1, 1999, as
supplemented through March 31, 1999
================================================================================

This mutual fund (the "Fund") seeks to achieve long-term capital appreciation
primarily through investment in a diversified portfolio of small and mid-sized
emerging growth companies.

The Fund offers shares through securities dealers and financial institutions
that act as shareholder servicing agents. You may also buy shares through the
Fund's Transfer Agent. This Prospectus describes Flag Investors Institutional
Shares (the "Institutional Shares") of the Fund. Institutional Shares may be
purchased only by eligible institutions, certain qualified retirement plans or
by investment advisory affiliates of BT Alex. Brown Incorporated on behalf of
their clients. (See "How to Buy Institutional Shares.")

TABLE OF CONTENTS

Investment Summary ................................ 1
Fees and Expenses of the Institutional Shares ..... 2
Investment Program ................................ 2
The Fund's Net Asset Value ........................ 3
How to Buy Institutional Shares ................... 3
How to Redeem Institutional Shares ................ 4
Telephone Transactions ............................ 4
Dividends and Taxes ............................... 4
Investment Advisor and Sub-Advisor ................ 5
Financial Highlights .............................. 6
Application ....................................... A-1

Flag Investors Funds
P.O. Box 515
Baltimore, MD 21203

================================================================================

INVESTMENT SUMMARY
- --------------------------------------------------------------------------------

Objectives and Strategies

Risk Profile

The Fund is suited for you if you are willing to accept the risks and
uncertainties of investing in emerging growth companies in the hope of
achieving above average long-term capital appreciation.

An investment in the Fund could lose money. An investment in the Fund is
not a bank deposit and is not guaranteed by the FDIC or any other government
agency.

Fund Performance

The following bar chart and table show the performance of the
Institutional Shares both year-by-year and as an average over different periods
of time. The variability of performance over time provides an indication of the
risks of investing in the Fund. This is an historical record and does not
necessarily indicate how the Fund will perform in the future.

Institutional Shares
For years ended December 31,

1997 1998

21.08% 6.72%

- ------------------------
During the 2-year period shown in the bar chart, the highest return for a
quarter was 33.41% (quarter ended 12/31/98) and the lowest return for a quarter
was -23.02% (quarter ended 9/30/98).

Average Annual Total Return (for periods ended December 31, 1998)
<TABLE>
<CAPTION>
Institutional Russell
Shares(1) S&P 500(2) 2000(4)
---------------------------- ------------ -----------
<S> <C> <C> <C>
Past One Year ........... 6.72% 28.58% -2.55%
Since Inception ......... 14.70%(11/2/95) 29.07%(3) 13.32%(3)
</TABLE>

- ------------------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions.
(2) The Standard & Poor's 500 Composite Index is an unmanaged index that is a
widely recognized benchmark of general market performance. The index is a
passive measure of equity market returns. It does not factor in the costs
of buying, selling and holding securities -- costs which are reflected in
the Fund's results.
(3) For the period from 10/31/95 through 12/31/98.
(4) The Russell 2000 Index is an unmanaged index that is a widely recognized
benchmark of small company stock performance. The Russell 2000's
performance may be a better comparison for the perfomance of the Fund than
the S&P 500 which tracks larger, more developed stocks.

1
<PAGE>

FEES AND EXPENSES OF THE INSTITUTIONAL SHARES

- --------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and
hold Institutional Shares.

<TABLE>
<S> <C>
Shareholder Transaction Expenses (fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases ............................ None
Maximum Deferred Sales Charge (Load) ........................................ None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends ................. None
Redemption Fee .............................................................. None
Exchange Fee ................................................................ None
Annual Fund Operating Expenses (expenses that are deducted from Fund assets):
Management Fees ............................................................. 0.85%
Distribution and/or Service (12b-1) Fees .................................... None
Other Expenses .............................................................. 0.31%
-----
Total Annual Fund Operating Expenses ........................................ 1.16%
=====
</TABLE>

Example:

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Institutional Shares
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Institutional Shares .............. $118 $369 $638 $1,409
</TABLE>

INVESTMENT PROGRAM
- --------------------------------------------------------------------------------

Investment Objective, Policies
and Risk Considerations

The Fund seeks to achieve long-term capital appreciation primarily
through investment in a diversified portfolio of small and mid-sized emerging
growth companies.

2
<PAGE>

Year 2000 Issues

THE FUND'S NET ASSET VALUE
- --------------------------------------------------------------------------------

The price you pay when you buy shares or receive when you redeem shares
is based on the Fund's net asset value per share. The net asset value per share
of the Fund is determined at the close of regular trading on the New York Stock
Exchange (ordinarily 4:00 p.m. Eastern Time) on each day the Exchange is open
for business. It is calculated by subtracting the liabilities attributable to
the Institutional Shares from their proportionate share of the Fund's assets
and dividing the result by the outstanding Institutional Shares.

In valuing the Fund's assets, its investments are priced at their market
value. When price quotes for a particular security are not readily available,
invest-ments are priced at their "fair value" using procedures approved by the
Fund's Board of Directors.

You may buy or redeem Institutional Shares on any day the New York Stock
Exchange is open for business (a "Business Day"). If your order is entered
before the net asset value per share is determined for that day, the price you
pay or receive will be based on that day's net asset value per share. If your
order is entered after the net asset value per share is determined for that
day, the price you pay or receive will be based on the next Business Day's net
asset value per share.

The following sections describe how to buy and redeem Institutional
Shares.

HOW TO BUY INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------

You may buy Institutional Shares if you are any of the following:
o An eligible institution (e.g., a financial institution, corporation,
investment counselor, trust, estate or educational, religious or
charitable institution or a qualified retirement plan other than a
defined contribution plan).
o A defined contribution plan with assets of at least $75 million.
o An investment advisory affiliate of BT Alex. Brown purchasing shares
for the accounts of your investment advisory clients.

You may buy Institutional Shares through your securities dealer or
through any financial institution that is authorized to act as a shareholder
servicing agent. Contact them for details on how to enter and pay for your
order. You may also buy Institutional Shares by sending your check (along with
a completed Application Form) directly to the Fund. The Application Form, which
includes instructions, is attached to this Prospectus.

Your purchase order may not be accepted if the sale of Fund shares has
been suspended or if it is determined that your purchase would be detrimental
to the interests of the Fund's shareholders.

Investment Minimums

Your initial investment must be at least $500,000.

The following are exceptions to this minimum:

o There is no minimum initial investment for investment advisory
affiliates of BT Alex. Brown purchasing shares for the accounts of
their investment advisory clients.

3
<PAGE>

o There is no minimum initial investment for defined contribution plans
with assets of at least $75 million.

o The minimum initial investment for all other qualified retirement plans
is $1 million.

There are no minimums for subsequent investments.

Purchases by Exchange

You may exchange Institutional shares of any other Flag Investors fund
for an equal dollar amount of Institutional Shares of the Fund. The Fund may
modify or terminate this offer of exchange upon 60 days' notice.

HOW TO REDEEM INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------

You may redeem Institutional Shares through your securities dealer or
servicing agent. Contact them for details on how to enter your order and for
information as to how you will be paid. If your shares are in an account with
the Fund, you may also redeem them by contacting the Transfer Agent by mail or
(if you are redeeming less than $500,000) by telephone. You will be paid for
redeemed shares by wire transfer of funds to your securities dealer, servicing
agent or bank upon receipt of a duly authorized redemption request as promptly
as feasible and, under most circumstances, within three Business Days.

Any dividends payable on shares you redeem will be paid on the next
dividend payable date. If you have redeemed all of your shares by that time,
the dividend will be remitted by wire to your securities dealer, servicing
agent or bank.

TELEPHONE TRANSACTIONS
- --------------------------------------------------------------------------------

If your shares are in an account with the Transfer Agent, you may redeem
them in any amount up to $500,000 or exchange them for Institutional shares of
another Flag Investors fund by calling the Transfer Agent on any Business Day
between the hours of 8:30 a.m. and 5:30 p.m. (Eastern Time). You are
automatically entitled to telephone transaction privileges but you may
specifically request that no telephone redemptions or exchanges be accepted for
your account. You may make this election when you complete the Application Form
or at any time thereafter by completing and returning documentation supplied by
the Transfer Agent.

During periods of extreme economic or market changes, you may experience
difficulty in contacting the Transfer Agent by telephone. In such event,
you should make your request by express mail or facsimile.

DIVIDENDS AND TAXES
- --------------------------------------------------------------------------------

Dividends and Distributions

Certain Federal Income Tax Consequences

4
<PAGE>

whether or not you reinvest them. Dividends are taxed as ordinary income and
capital gains distributions are taxed at various rates based on how long
theFund held the assets. The Fund will tell you annually how to treat dividends
and distributions.

If you redeem shares of the Fund, you will be subject to tax on any gain.
The character of such gain will generally be based on your holding period for
the shares. An exchange of shares of the Fund for shares of another fund is a
sale of Fund shares for tax purposes. More information on taxes is in the
Statement of Additional Information.

Because each investor's tax circumstances are unique and because the tax
laws are subject to change, you should consult your tax advisor about your
investment.

INVESTMENT ADVISOR AND SUB-ADVISOR
- --------------------------------------------------------------------------------

As compensation for its services for the fiscal year ended October 31,
1998, ICC received from the Fund a fee equal to 0.85% of the Fund's average
daily net assets. ICC compensates Brown Trust out of its advisory fee.

The Advisor is an indirect subsidiary of Bankers Trust Corporation.
Bankers Trust Corporation has entered into an Agreement and Plan of Merger with
Deutsche Bank AG ("Deutsche Bank"), dated as of November 30, 1998, under which
Bankers Trust Corporation would merge with and into a subsidiary of Deutsche
Bank. Deutsche Bank is a major global banking institution that is engaged in a
wide range of financial services, including investment management, mutual
funds, retail and commercial banking, investment banking and insurance. The
transaction is contingent upon various regulatory approvals, and continuation
of the Fund's advisory with ICC and sub-advisory relationship with Brown Trust
thereafter is subject to the approval of Fund shareholders. On March 30, 1999,
the Board of Directors approved, subject to shareholder approval, a new
advisory agreement between ICC and the Fund and a new sub-advisory agreement
among the Fund, ICC and Brown Trust in the event the merger is approved and
completed. If the transaction is approved and completed, Deutsche Bank, as the
Advisor's new parent company, will control the operations of the Advisor. ICC
believes that, under this new arrangement, the services provided to the Fund
will be maintained at their current level.

Portfolio Manager

5
<PAGE>

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The financial highlights table is intended to help you understand the
Institutional Shares' financial performance since the class began operations.
Certain information reflects financial results for a single Institutional
Share. The total returns in the table represent the rate that an investor would
have earned on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information is part of the Fund's financial
statements, which have been audited by PricewaterhouseCoopers LLP. These
financial statements are included in the Statement of Additional Information,
which is available upon request.

(For a share outstanding throughout each period)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Institutional Shares
--------------------------------------------------
For the Year For the Period
Ended November 2, 1995(1)
October 31, through October 31,
--------------------------- --------------------
1998 1997 1996
------------- ----------- --------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of period ................... $ 23.25 $ 19.15 $ 17.45
-------- ------- -------
Income from Investment Operations:
Expenses in excess of investment income .................. (0.17)(2) ( 0.26) (0.12)
Net realized and unrealized gain/(loss)
on investments. ........................................ (2.86) 5.10 2.72
---------- ------- -------
Total from Investment Operations ......................... (3.03) 4.84 2.60
---------- ------- -------
Less Distributions: .......................................
Distributions from net realized short-term gains ......... (0.21) ( 0.21) (0.30)
Distributions from net realized mid-term and
long-term gains ........................................ (0.84) ( 0.53) (0.60)
---------- ------- -------
Total distributions ...................................... (1.05) ( 0.74) (0.90)
---------- ------- -------
Net asset value at end of period ......................... $ 19.17 $ 23.25 $ 19.15
========== ======= =======
Total Return .............................................. (13.39)% 26.36% 16.48%
Ratios to Average Daily Net Assets:
Expenses ................................................. 1.16% 1.19% 1.25%(3)
Expenses in excess of income ............................. ( 0.76)% (0.74)% (0.61)%(3)
Supplemental Data:
Net assets at end of period (000) ........................ $ 6,243 $13,068 $19,751
Portfolio turnover rate .................................. 23% 42% 24%(3)
</TABLE>
- -----------
1 Commencement of operations.
2 Calculations based on average shares.
3 Annualized.

6
<PAGE>

FLAG INVESTORS EMERGING GROWTH FUND, INC.
(INSTITUTIONAL SHARES)
NEW ACCOUNT APPLICATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Send completed Application by overnight carrier to: For assistance in completing this Application please call:
Flag Investors Funds 1-800-553-8080, Monday through Friday,
8:30 a.m. to 5:30 p.m. (Eastern Time).
330 West Ninth Street, First Floor
Kansas City, MO 64105
Attn: Flag Investors Emerging Growth Fund, Inc.

If you are paying by check, make check payable to "Flag Investors Emerging Growth Fund, Inc." and mail with this Application. If you
are paying by wire, see instructions below.

- ------------------------------------------------------------------------------------------------------------------------------------
Your Account Registration (Please Print)

Name on Account Mailing Address

- ---------------------------------------------------------- -----------------------------------------------------------------
Name of Corporation, Trust or Partnership Name of Individual to Receive Correspondence

- -------------------------- -----------------------------------------------------------------
Tax ID Number Street

/ / Corporation / / Partnership / / Trust -----------------------------------------------------------------
/ / Non-Profit or Charitable Organization / / Other______ City State Zip

If a Trust, please provide the following: ( )
-----------------------------------------------------------------
Daytime Phone

- ------------------------------------------------------------------------------------------------------------------------------------
Date of Trust For the Benefit of

- ------------------------------------------------------------------------------------------------------------------------------------
Name of Trustees (If to be included in the Registration)

Initial Investment
Indicate the amount to be invested and the method of payment:
/ / A. By Mail: Enclosed is a check in the amount of $____________ payable to Flag Investors Emerging Growth Fund, Inc.

/ / B. By Wire: A bank wire in the amount of $____________ has been sent from________________________ ______________________________
Name of Bank Wire Control Number
Wire Instructions
Follow the instructions below to arrange for a wire transfer for initial investment:
o Send completed Application by overnight carrier to Flag Investors Funds at the address listed above.
o Call 1-800-553-8080 to obtain new investor's Fund account number.
o Wire payment of the purchase price to Investors Fiduciary Trust Company ("IFTC"), as follows:
IFTC
a/c Flag Investors Funds
Acct. # 7528183
ABA # 1010-0362-1
Kansas City, Missouri 64105
Please include the following information in the wire:
o Flag Investors Emerging Growth Fund, Inc. -- Institutional Shares
o The amount to be invested
o "For further credit to __________________________________."
(Investor's Fund Account Number)
<PAGE>

Distribution Options

Please check appropriate boxes. If none of the options are selected, all distributions will be reinvested in additional
Institutional Shares of the Fund.

Income Dividends Capital Gains
/ / Reinvested in additional shares / / Reinvested in additional shares
/ / Paid in cash / / Paid in cash

Telephone Transactions

I understand that I will automatically have telephone redemption privileges (for amounts up to $500,000) and exchange privileges
(with respect to Institutional Shares of other Flag Investors Funds) unless I mark one or both of the boxes below:

No, I do not want: / / Telephone redemption privileges / / Telephone exchange privileges
Redemptions effected by telephone will be wired to the bank account designated below.

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

- ------------------------------------------------------------------------------------------------------------------------------------
Account Number A.B.A. Number
</TABLE>

A-1
<PAGE>
<TABLE>
<CAPTION>

Signature and Taxpayer Certificate
<S> <C>
The Fund may be required to withhold and remit to the U.S. Treasury 31% of any taxable dividends, capital gains distributions and
redemption proceeds paid to any individual or certain other non-corporate shareholders who fail to provide the information and/or
certifications required below. This backup withholding is not an additional tax, and any amounts withheld may be credited against
the shareholder's ultimate U.S. tax liability.

By signing this Application, I hereby certify under penalties of perjury that the information on this Application is complete and
correct and that as required by federal law: (Please check applicable boxes)

/ / U.S. Citizen/Taxpayer:

/ / I certify that (1) the number shown above on this form is the correct Tax ID Number and (2) I am not subject to any backup
withholding either because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c)
the IRS has notified me that I am no longer subject to backup withholding.

/ / If no Tax ID Number has been provided above, I have applied, or intend to apply, to the IRS for a Tax ID Number, and I
understand that if I do not provide such number to the Transfer Agent within 60 days of the date of this Application or if I
fail to furnish my correct Tax ID Number, I may be subject to a penalty and a 31% backup withholding on distributions and
redemption proceeds. (Please provide your Tax ID Number on IRS Form W-9. You may request such form by calling the Transfer
Agent at 800-553-8080.)

/ / Non-U.S. Citizen/Taxpayer: Indicated country of residence for tax purposes: ____________________________________________________
Under penalties of perjury, I certify that I am not a U.S. citizen or resident and I am an exempt foreign person as defined by
the Internal Revenue Service.

I have received a copy of the Fund's prospectus.

The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required
to avoid backup withholding.

- ------------------------------------------------------------------------------------------------------------------------------------
Signature of Corporate Officer, General Partner, Trustee, etc. Date

Person(s) Authorized to Conduct Transactions

The following person(s) ("Authorized Person(s)") are currently officers, trustees, general partners or other authorized agents of
the investor. Any __________* of the Authorized Person(s) is, by lawful and appropriate action of the investor, a person entitled to
give instructions regarding purchases and redemptions or make inquiries regarding the Account.

- ---------------------------------------------------------- -----------------------------------------------------------------
Name/Title Signature Date

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.
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>

Certificate of Authority

Investors must complete one of the following two Certificates of Authority.

Certificate A: FOR CORPORATIONS AND UNINCORPORATED ASSOCIATIONS (With a Board of Directors or Board of Trustees.)

I __________________________, Secretary of the above-named investor, do hereby certify that at 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.

- ------------------------------------------------------------------------------------------------------------------------------------
Signature and title Date

Certificate B: FOR 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 this Certificate B and
attach it to the Application).

- ------------------------------------------------------------------------------------------------------------------------------------
Signature and title Date

- ------------------------------------------------------------------------------------------------------------------------------------
Signature and title Date
</TABLE>

A-2
<PAGE>

Investment Advisor
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202

Sub-Advisor Distributor
BROWN INVESTMENT ADVISORY ICC DISTRIBUTORS, INC.
& TRUST COMPANY Two Portland Square
Furness House Portland, Maine 04101
19 South Street
Baltimore, Maryland 21202

Custodian Fund Counsel
BANKERS TRUST COMPANY MORGAN, LEWIS & BOCKIUS LLP
130 Liberty Street 1701 Market Street
New York, New York 10006 Philadelphia, Pennsylvania 19103

<PAGE>

[GRAPHIC OMITTED]
FLAG INVESTORS
Investing With A Difference

Flag Investors Funds
P.O. Box 515
Baltimore, Maryland 21203
(800) 767-FLAG

- --------------------------------------------------------------------------------

You may obtain the following additional information about the Fund, free of
charge, from your securities dealer or servicing agent or by calling (800)
767-FLAG:

o A statement of additional information (SAI) about the Fund that is
incorporated by reference into the prospectus.

o The Fund's most recent annual and semi-annual reports containing detailed
financial information and, in the case of the annual report, a discussion
of market conditions and investment strategies that significantly affected
the Fund's performance during its last fiscal year.

In addition you may review information about the Fund (including the SAI)
at the Securities and Exchange Commission's Public Reference Room in
Washington, D.C. (Call 1-800-SEC-0330 to find out about the operation of the
Public Reference Room.) The Commission's Internet site at http://www.sec.gov
has reports and other information about the Fund. You may get copies of this
information by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-5009. You will be charged for duplicating fees.

For other shareholder inquiries, contact the Transfer Agent at (800)
553-8080. For Fund information, call (800) 767-FLAG or your securities dealer
or servicing agent.

Investment Company Act File No. 811-5320
- --------------------------------------------------------------------------------
EGIPRS
4/99
<PAGE>

BROWN INVESTMENT ADVISORY & TRUST
EMERGING GROWTH SHARES
(A Class of Flag Investors Emerging Growth Fund, Inc.)
(formerly, Alex. Brown Capital Advisory & Trust Emerging Growth Shares)

Prospectus -- March 1, 1999, as
supplemented through March 31, 1999

- --------------------------------------------------------------------------------

This mutual fund (the "Fund") seeks to achieve long-term capital appreciation
primarily through investment in a diversified portfolio of small and mid-sized
emerging growth companies.

The Fund offers Brown Investment Advisory & Trust Shares (the "Shares") solely
for the discretionary accounts of Brown Investment Advisory & Trust Company and
its affiliates. (See "How to Buy Shares.")

TABLE OF CONTENTS

Investment Summary ......................... 1
Fees and Expenses of the Shares ............ 2
Investment Program ......................... 2
The Fund's Net Asset Value ................. 3
How to Buy Shares .......................... 3
How to Redeem Shares ....................... 3
Dividends and Taxes ........................ 4
Investment Advisor and Sub-Advisor ......... 4
Financial Highlights ....................... 6

- --------------------------------------------------------------------------------
The Securities and Exchange Commission has neither approved nor disapproved
these securities nor has it passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.

<PAGE>

INVESTMENT SUMMARY
- --------------------------------------------------------------------------------

Objectives and Strategies

Risk Profile

The Fund is suited for you if you are willing to accept the risks and
uncertainties of investing in emerging growth companies in the hope of
achieving above average long-term capital appreciation.

An investment in the Fund could lose money. An investment in the Fund is
not a bank deposit and is not guaranteed by the FDIC or any other government
agency.

Fund Performance

The following bar chart and table show the performance of the Shares for
the calendar year ended December 31, 1998 and as an average over different
periods of time. The variability of performance over time provides an
indication of the risks of investing in the Fund. This is an historical record
and does not necessarily indicate how the Fund will perform in the future.
<PAGE>

Brown Investment Advisory
& Trust Shares
For the year ended December 31, 1998

1998 6.86%

During the 1-year period shown in the bar chart, the highest return for a
quarter was 33.45% (quarter ended 12/31/98) and the lowest return for a quarter
was -23.04% (quarter ended 9/30/98).

Average Annual Total Return (for periods ended December 31, 1998)

<TABLE>
<CAPTION>
Brown
Investment
Advisory & Trust Russell
Shares(1) S&P 500(2) 2000(4)
-------------------------- ------------ ------------
<S> <C> <C> <C>
Past One Year. ........... 6.86% 28.58% --2.55%
Since Inception. ......... 17.74%(5/9/97) 31.38%(3) 14.54%(3)
</TABLE>

- ------------------------
(1) These figures assume the reinvestment of dividends and capital gains
distributions.
(2) The Standard & Poor's 500 Composite Index is an unmanaged index that is a
widely recognized benchmark of general market performance. The index is a
passive measure of equity market returns. It does not factor in the costs of
buying, selling and holding securities -- costs which are reflected in the
Fund's results.
(3) For the period from 4/30/97 through 12/31/98.
(4) The Russell 2000 Index is an unmanaged index that is a widely recognized
benchmark of small company stock performance. The Russell 2000's performance
may be a better comparison for the performance of the Fund than the S&P 500
which tracks larger, more developed stocks.

1
<PAGE>

FEES AND EXPENSES OF THE SHARES
- --------------------------------------------------------------------------------

This table describes the fees and expenses that you may pay if you buy and
hold Shares.

<TABLE>
<S> <C>
Shareholder Transaction Expenses (fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases ............................ None
Maximum Deferred Sales Charge (Load) ........................................ None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends ................. None
Redemption Fee .............................................................. None
Exchange Fee ................................................................ None
Annual Fund Operating Expenses (expenses that are deducted from Fund assets):
Management Fees ............................................................. 0.85%*
Distribution and/or Service (12b-1) Fees .................................... None
Other Expenses .............................................................. 0.31%
-----
Total Annual Fund Operating Expenses ........................................ 1.16%
=====
</TABLE>

- ------------------------
* Brown Investment Advisory & Trust Company intends to waive its advisory fee
at the account level for client assets invested in Shares.

Example:

This Example is intended to help you compare the cost of investing in the
Shares with the cost of investing in other mutual funds.

1 year 3 years 5 years 10 years
Brown Investment Advisory -------- --------- --------- ---------
& Trust Shares ......... $118 $369 $638 $1,409

INVESTMENT PROGRAM
- --------------------------------------------------------------------------------

Investment Objective, Policies and
Risk Considerations

The Fund seeks to achieve long-term capital appreciation primarily
through investment in a diversified portfolio of small and mid-sized emerging
growth companies.

2
<PAGE>

companies that the Fund invests in may have limited product lines, markets, and
financial resources, and may depend on a relatively small management group.
There can be no guarantee that the Fund will achieve its goals.

Year 2000 Issues

The Fund depends on the smooth functioning of computer systems in almost
every aspect of its business. The Fund could be adversely affected if the
computer systems used by its service providers do not properly process dates on
and after January 1, 2000 and distinguish between the year 2000 and the year
1900. The Fund has asked its service providers whether they expect to have their
computer systems adjusted for the year 2000 transition, and has received
assurances from each that its system is expected to accommodate the year 2000
without material adverse consequences to the Fund. The Fund and its shareholders
may experience losses if these assurances prove to be incorrect or if issuers of
portfolio securities or third parties, such as custodians, banks, broker-dealers
or others, with which the Fund does business experience difficulties as a result
of year 2000 issues.

THE FUND'S NET ASSET VALUE
- --------------------------------------------------------------------------------

The price you pay when you buy Shares or receive when you redeem Shares
is based on the Fund's net asset value per share. The net asset value per share
of the Fund is determined at the close of regular trading on the New York Stock
Exchange (ordinarily 4:00 p.m. Eastern Time) on each day the Exchange is open
for business. It is calculated by subtracting the liabilities attributable to a
class from its proportionate share of the Fund's assets and dividing the result
by the outstanding shares of the class.

You may buy or redeem Shares on any day the New York Stock Exchange is
open for business (a "Business Day"). If your order is entered before the net
asset value per share is determined for that day, the price you pay or receive
will be based on that day's net asset value per share. If your order is entered
after the net asset value per share is determined for that day, the price you
pay or receive will be based on the next Business Day's net asset value per
share.

The following sections describe how to buy and redeem Shares.

HOW TO BUY SHARES
- --------------------------------------------------------------------------------

Only Brown Investment Advisory & Trust Company and its affiliates may
acquire Shares on behalf of their discretionary accounts by placing orders with
the Fund's distributor. There is no minimum for initial or subsequent
investments in Shares.

Your purchase order may not be accepted if the sale of Fund shares has
been suspended or if it is determined that your purchase would be detrimental
to the interests of the Fund's shareholders.

HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------

Shares may be redeemed by, or at the direction of, Brown Investment
Advisory & Trust Company, or an affiliate, by transmitting an order through the
Fund's distributor or the Transfer Agent. Contact them for details. Payment for
redeemed Shares will be made by, or at the direction of, Brown Investment
Advisory & Trust Company, or an affiliate. Payment will be made as promptly as
feasible and, under most circumstances, within three Business Days. Any
dividends payable on Shares you redeem will be paid on the next dividend
payable date.

3
<PAGE>

DIVIDENDS AND TAXES
- --------------------------------------------------------------------------------

Dividends and Distributions

Certain Federal Income Tax Consequences

The dividends and distributions you receive from the Fund may be subject
to federal, state and local taxation, depending on your tax situation. The tax
treatment of dividends and distributions is the same whether or not you reinvest
them. Dividends are taxed as ordinary income and capital gains distributions are
taxed at various rates based on how long the Fund held the assets. The Fund will
tell you annually how to treat dividends and distributions.

If you redeem shares of the Fund, you will be subject to tax on any gain.
The character of such gain will generally be based on your holding period for
the Shares. An exchange of shares of the Fund for shares of another fund is a
sale of Fund shares for tax purposes. More information on taxes is in the
Statement of Additional Information.

Because each investor's tax circumstances are unique and because the tax
laws are subject to change, you should consult your tax advisor about your
investment.

INVESTMENT ADVISOR AND SUB-ADVISOR
- --------------------------------------------------------------------------------

The Advisor is an indirect subsidiary of Bankers Trust Corporation.
Bankers Trust Corporation has entered into an Agreement and Plan of Merger with
Deutsche Bank AG ("Deutsche Bank"), dated as of November 30, 1998, under which
Bankers Trust Corporation would merge with and into a subsidiary of Deutsche
Bank. Deutsche Bank is a major global banking institution that is engaged in a
wide range of financial services, including investment management, mutual funds,
retail and commercial banking, investment banking and insurance. The
transaction is contingent upon various regulatory approvals, and continuation of
the Fund's advisory relationship with ICC and sub-advisory relationship with
Brown Trust thereafter is subject to the approval of Fund shareholders. On March
30, 1999, the Board of Directors approved, subject to shareholder approval, a
new advisory agreement between ICC and the Fund and a new sub-advisory agreement
among the Fund, ICC and Brown Trust in the event the merger is approved and
completed. If the transaction is approved and completed, Deutsche Bank, as the
Advisor's new parent company, will control the operations of the Advisor. ICC
believes that, under this new arrangement, the services provided to the Fund
will be maintained at their current level.

On March 11, 1999, Bankers Trust Company ("Bankers Trust"), a separate
subsidiary of Bankers Trust Corporation, announced that it had reached an
agreement with the United States Attorney's Office in the Southern District of
New York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record-keeping problems that occurred between 1994
and early 1996. ICC became a subsidiary of Bankers Trust Corporation in a merger
that occurred after these events took place. Pursuant to its agreement with the
U.S. Attorney's Office, Bankers Trust pleaded guilty to misstating entries in
the bank's books and records and agreed to pay a $60 million fine to federal
authorities. Separately, Bankers Trust agreed to pay a $3.5 million fine to the
State of New York. The events leading up to the guilty pleas did not arise out
of the investment advisory or mutual fund management activities of Bankers Trust
or its affiliates.

4
<PAGE>

Portfolio Manager

5
<PAGE>

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the
Brown Investment Advisory & Trust Shares' financial performance since the class
began operations. Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information is part of the Fund's financial
statements, which have been audited by PricewaterhouseCoopers LLP. These
financial statements are included in the Statement of Additional Information,
which is available upon request.

(For a share outstanding throughout each period)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Year For the Period
Ended May 9, 1997(1)
October 31, through October 31,
1998 1997
-------------- --------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of period ................... $ 23.24 $ 18.64
-------- -------
Income from Investment Operations:
Expenses in excess of income ............................. (0.17)(2) (0.06)
Net realized and unrealized gain/(loss)
on investments. ........................................ (2.83) 4.66
---------- --------
Total from Investment Operations ......................... (3.00) 4.60
---------- --------
Less Distributions:
Distributions from net realized short-term gains ......... (0.21) --
Distributions from net realized mid-term and
long-term gains ........................................ (0.84) --
---------- --------
Total distributions ...................................... (1.05) --
---------- --------
Net asset value at end of period ......................... $ 19.19 $ 23.24
========== ========
Total Return .............................................. (13.26)% 24.68%
Ratios to Average Daily Net Assets:
Expenses ................................................. 1.16% 1.19%(3)
Expenses in excess of income ............................. (0.80)% (0.69)%(3)
Supplemental Data:
Net assets at end of period (000) ........................ $ 46,628 $35,653
Portfolio turnover rate .................................. 23% 42%
</TABLE>

- -----------
(1) Commencement of operations.
(2) Calculation based on average shares.
(3) Annualized.

6
<PAGE>

FLAG INVESTORS EMERGING GROWTH FUND, INC.

(Brown Investment Advisory & Trust Shares)

Investment Advisor
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202

Sub-Advisor Distributor
BROWN INVESTMENT ADVISORY ICC DISTRIBUTORS, INC.
& TRUST COMPANY Two Portland Square
Furness House Portland, Maine 04101
19 South Street
Baltimore, Maryland 21202

Custodian Fund Counsel
BANKERS TRUST COMPANY MORGAN, LEWIS & BOCKIUS LLP
130 Liberty Street 1701 Market Street
New York, New York 10006 Philadelphia, Pennsylvania 19103
<PAGE>

===============================================================================
You may obtain the following additional information about the Fund, free of
charge, from your securities dealer
or servicing agent or by calling (800) 767-3524:

o A statement of additional information (SAI) about the Fund that is
incorporated by reference into the prospectus.

o The Fund's most recent annual and semi-annual reports containing detailed
financial information and, in the case of the annual report, a
discussion of market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal
year.

In addition you may review information about the Fund (including the SAI) at
the Securities and Exchange Commission's Public Reference Room in Washington,
D.C. (Call 1-800-SEC-0330 to find out about the operation of the Public
Reference Room.) The Commission's Internet site at http://www.sec.gov has
reports and other information about the Fund. You may get copies of this
information by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-5009. You will be charged for duplicating fees.

For other shareholder inquiries, contact the Transfer Agent at (800) 553-8080.
For Fund information, call (800) 767-3524 or your securities dealer or servicing
agent.

Investment Company Act File No. 811-5320
===============================================================================