<PAGE>
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[GRAPHIC OMITTED]
SHORT-INTERMEDIATE INCOME FUND, INC.
(Class A Shares)
Prospectus & Application -- May 1, 1998, as supplemented
through March 31, 1999
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This mutual fund (the "Fund") seeks a high level of current income consistent
with preservation of principal within an intermediate-term maturity structure.
Class A Shares of the Fund ("Class A Shares") are available through your
securities dealer or the Fund's transfer agent. (See "How to Buy Shares.")
This Prospectus sets forth basic information that you should know about the Fund
prior to investing. You should retain it for future reference. A Statement of
Additional Information dated May 1, 1998 has been filed with the Securities and
Exchange Commission (the "SEC") and is hereby incorporated by reference. It is
available upon request and without charge by calling the Fund at (800) 767-FLAG.
TABLE OF CONTENTS
Fund Expenses .............................. 1
Financial Highlights ....................... 2
Investment Program ......................... 3
Investment Restrictions .................... 5
The Fund's Net Asset Value ................. 5
How to Buy Shares .......................... 6
How to Redeem Shares ....................... 7
Telephone Transactions ..................... 8
Dealer Compensation ........................ 9
Dividends and Taxes ........................ 9
Management of the Fund ..................... 10
Investment Advisor and Sub-Advisor ......... 10
Distributor ................................ 11
Custodian, Transfer Agent and
Accounting Services ..................... 11
Performance Information .................... 11
General Information ........................ 12
Application ................................ A-1
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
Flag Investors Funds
P.O. Box 515
Baltimore, Maryland 21203
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<PAGE>
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FUND EXPENSES
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Shareholder Transaction Expenses:
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) ............ 1.50%*
Maximum Sales Charge Imposed on Reinvested Dividends ..................................... None
Maximum Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, whichever is lower) ........................................................... 0.50%*
Annual Fund Operating Expenses (as a percentage of average daily net assets):
Management Fees (net of fee waivers) ..................................................... 0.09%**
12b-1 Fees ............................................................................... 0.25%
Other Expenses ........................................................................... 0.36%
-----
Total Fund Operating Expenses (net of fee waivers) ....................................... 0.70%**
=====
</TABLE>
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* If you purchase $1 million or more of Class A Shares, you will not have to
pay a sales charge. You may, however, be required to pay a contingent
deferred sales charge when you redeem your shares. (See "How to Buy Shares"
and "How to Redeem Shares.")
** The Fund's investment advisor currently intends to waive its fee or to
reimburse the Fund on a voluntary basis to the extent required so that Total
Fund Operating Expenses do not exceed 0.70% of the Class A Shares' average
daily net assets. Absent fee waivers, Management Fees would be 0.35% and
Total Fund Operating Expenses would be 0.96% of the Class A Shares' average
daily net assets.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Example: 1 year 3 years 5 years 10 years
- -------- -------- --------- --------- ---------
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period:* .......... $22 $37 $53 $101
</TABLE>
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* Absent fee waivers, expenses would be higher.
The Expenses and Example should not be considered a representation of future
expenses. Actual expenses may be greater or less than those shown.
The purpose of the above table is to describe the various costs and
expenses that you will bear, directly and indirectly. If you purchase Class A
Shares through a financial institution, you may be charged separate fees by that
institution.
The rules of the SEC require that the maximum sales charge (in the Class A
Shares' case, 1.50% of the offering price) be reflected in the above table.
However, you may qualify for reduced sales charges or no sales charge at all.
(see "How to Buy Shares") Due to the continuous nature of Rule 12b-1 fees, you
may pay more than the equivalent of the maximum sales charges permitted by the
Conduct Rules of the National Association of Securities Dealers, Inc. if you
hold your shares for a long time. The above table has not been audited by
Deloitte & Touche LLP, the Fund's independent auditors.
1
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<PAGE>
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FINANCIAL HIGHLIGHTS
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The financial highlights included in this table have been derived from the
Fund's financial statements for the periods indicated and have been audited by
Deloitte & Touche LLP, independent auditors. The financial statements and
related notes for the fiscal year ended December 31, 1997 and the independent
auditors' report thereon of Deloitte & Touche LLP are included in the Statement
of Additional Information. Additional performance information is contained in
the Fund's Annual Report for the fiscal year ended December 31, 1997 which can
be obtained at no charge by calling the Fund at (800) 767-FLAG.
(For a Class A Share outstanding throughout each period)
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<TABLE>
<CAPTION>
For the Year Ended December 31,
----------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value at beginning of
period ........................ $ 10.28 $ 10.48 $ 9.62 $ 10.57 $ 10.37 $ 10.54
-------- -------- -------- --------- -------- --------
Income from Investment
Operations:
Net investment income ........... 0.61 0.63 0.62 0.57 0.57 0.63
Net realized and unrealized
gain/(loss) on investments 0.10 (0.23) 0.84 (0.92) 0.34 (0.05)
-------- --------- -------- --------- -------- ---------
Total from Investment Opera-
tions ......................... 0.71 0.40 1.46 (0.35) 0.91 0.58
-------- --------- -------- --------- -------- ---------
Less Distributions:
Dividends from net investment
income and short-term
gains ......................... (0.60) (0.60) (0.60) (0.57) (0.69) (0.75)
Return of capital ............... -- -- -- (0.03) -- --
Distributions from net realized
long-term gains ............... -- -- -- -- (0.02) --
--------- --------- --------- --------- -------- ---------
Total distributions ............. (0.60) (0.60) (0.60) (0.60) (0.71) (0.75)
--------- --------- --------- --------- -------- ---------
Net asset value at end of
period ........................ $ 10.39 $ 10.28 $ 10.48 $ 9.62 $ 10.57 $ 10.37
========= ========= ========= ========= ======== =========
Total Return(2).................. 7.13% 4.04% 15.43% (3.32)% 8.98% 5.68%
Ratios to Average Daily Net
Assets:
Expenses(3)...................... 0.70% 0.70% 0.70% 0.70% 0.70% 0.70%
Net investment income(5)......... 5.92% 6.11% 6.00% 5.57% 5.43% 6.01%
Supplemental Data:
Net assets at end of period
(000) ......................... $ 45,569 $ 58,584 $ 67,116 $ 78,789 $112,520 $ 78,706
Portfolio turnover rate ......... 65% 42% 46% 50% 86% 107%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Period
May 13, 1991(1)
through
December 31, 1991
------------------
<S> <C>
Per Share Operating
Performance:
Net asset value at beginning of
period ........................ $ 10.00
--------
Income from Investment
Operations:
Net investment income ........... 0.32
Net realized and unrealized
gain/(loss) on investments 0.64
--------
Total from Investment Opera-
tions ......................... 0.96
--------
Less Distributions:
Dividends from net investment
income and short-term
gains ......................... (0.42)
Return of capital ............... --
Distributions from net realized
long-term gains ............... --
--------
Total distributions ............. (0.42)
--------
Net asset value at end of
period ........................ $ 10.54
========
Total Return(2)................... 9.79%
Ratios to Average Daily Net
Assets:
Expenses(3)...................... 0.70%(4)
Net investment income(5)......... 5.97%(4)
Supplemental Data:
Net assets at end of period
(000) ......................... $ 64,327
Portfolio turnover rate ......... 46%
</TABLE>
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(1) Commencement of operations.
(2) Total return excludes the effect of sales loads.
(3) Without the waiver of advisory fees, the ratio of expenses to average daily
net assets would have been 0.96%, 0.99%, 0.93%, 0.84%, 0.85%, 0.87% and
1.73% (annualized) for the years ended December 31, 1997, 1996, 1995, 1994,
1993 and 1992 and for the period ended December 31, 1991, respectively.
(4) Annualized.
(5) Without the waiver of advisory fees, the ratio of net investment income to
average daily net assets would have been 5.66%, 5.83%, 5.77%, 5.43%, 5.28%,
5.83% and 4.94% (annualized) for the years ended December 31, 1997, 1996,
1995, 1994, 1993 and 1992 and for the period ended December 31, 1991,
respectively.
2
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INVESTMENT PROGRAM
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Investment Objective, Policies and Risk
Considerations
The Fund's investment objective is to provide a high level of current
income consistent with preservation of principal within an intermediate-term
maturity structure.
In seeking this objective the Fund will, under normal circumstances,
invest at least 65% of its total assets in U.S. Government Securities (including
certain mortgage-backed securities) and in collateralized mortgage obligations
("CMOs") and corporate debt securities. The Fund may also invest in other
asset-backed securities and (subject to an overall 20% limit) non-U.S.
dollar-denominated securities. Quality criteria applicable to certain of the
Fund's investments are as follows:
Type of Permitted Minimum Rating(1)
Investment S&P(2) Moody's(3)
---------- ------ ----------
U.S. Government and Agency
Securities ..................... N/A N/A
CMO's ............................ AAA(4) Aaa(4)
Corporate Debt ................... A or better(4) A or better(4)
Other Asset-Backed Securities. AAA(4) Aaa(4)
Securities of Non-U.S. Govern-
mental Issuers ................. AAA(4) Aaa(4)
Securities of Designated Inter-
national Organizations ......... AAA(4) Aaa(4)
Non-Dollar U.S. Government
Securities ..................... AAA(4) Aaa(4)
Securities of Foreign
Corporations ................... AAA(4) Aaa(4)
- ------------------------
(1) In the event any security owned by the Fund is downgraded, the Fund's
investment advisor will review the situation and take appropriate action,
but will not be automatically required to sell any such security. For a
discussion of the above ratings, see the Appendix to the Statement of
Additional Information.
(2) Standard & Poor's Ratings Group.
(3) Moody's Investors Service, Inc.
(4) Or, if unrated, determined to be of comparable quality by the Fund's
investment advisor.
Under normal circumstances the Fund's portfolio will have a dollar
weighted expected average maturity of approximately three to five years and a
maximum dollar weighted average duration of four years. For purposes of
determining the dollar weighted expected average maturity of the Fund's
portfolio, the maturity of a mortgage-backed security will be deemed to be equal
to its assumed life, in recognition of the fact that such securities are subject
to prepayment.
To meet its short-term liquidity needs, the Fund may invest in repurchase
agreements with respect to U.S. Treasury securities, in variable amount master
demand notes and in commercial paper rated A-1 by S&P or Prime-1 by Moody's, or
if not rated, determined to be of comparable quality by the Fund's investment
advisor (the "Advisor"). For temporary, defensive purposes, the Fund may invest
up to 100% of its assets in such instruments.
U.S. Government Securities. U.S. Government securities include
obligations issued and backed by the full faith and credit of the United States
Treasury, as well as obligations issued by agencies or instrumentalities of the
U.S. Government (including securities of the Government National Mortgage
Association ("GNMA")). These obligations may or may not be backed by the full
faith and credit of the U.S. Government. Certain agencies or instrumentalities
of the U.S. Government (such as the United States Postal Service) have the
right to borrow from the United States Treasury to meet their obligations, but
in other instances the obligations of the issuing agency or instrumentality
(such as the Federal Farm Credit System and the Federal National Mortgage
Association ("FNMA")) are supported only by the credit of the agency or
instrumentality.
<PAGE>
Mortgage-Backed Securities. Mortgage-backed securities are obligations
backed by mortgage loans made by lenders, such as commercial banks and savings
and loan institutions, and then assembled into pools for sale to investors. One
type of mortgage-backed security in which the Fund may invest is a pass-through
certificate that provides monthly payments to the certificate holders,
consisting of both interest and principal payments, which in effect
"pass-through" the monthly interest and principal payments made on the
underlying mortgage loans. These certificates are backed as to the timely
payment of principal and interest by GNMA, FNMA and the Federal Home Loan
Mortgage Corporation. (See "U.S. Government Securities" above.)
Mortgage-backed securities may also take the form of a CMO, a bond or
similar obligation backed by pools of mortgages. A CMO is not insured or
guaranteed by the agency or instrumentality of the U.S. Government which issues
the mortgage-backed securities that collateralize the CMO. Payment of principal
and interest on the underlying mortgages, and any reinvestment income thereon,
provide the funds to pay debt service on the CMOs. If there is a default in the
payment of principal and interest, there can be no assurance that the underlying
collateral will be sufficient to effect full repayment. CMOs may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans.
Asset-Backed Securities. The Fund may also invest in securities backed by
assets other than mortgages, including company receivables, truck and auto
3
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loans, leases, and credit card receivables, subject to certain quality
requirements. Through the use of trusts and special purpose corporations, these
types of assets are being securitized in pass-through structures similar to the
mortgage pass-through structure or in pay-through structures similar to the CMO
structure, both as described above. In general, the collateral supporting
asset-backed securities is of shorter maturity than mortgage loans and is less
likely to experience substantial prepayments. However, asset-backed securities
do not generally have the benefit of the same security interest in the related
collateral as either mortgage-backed securities or CMOs, and may therefore
present certain risks not associated with other such securities.
Variable Amount Master Demand Notes. Variable amount master demand notes
are unsecured demand notes that permit investment of fluctuating amounts of
money at variable rates of interest pursuant to arrangements with issuers who
meet the quality criteria discussed above. All variable amount master demand
notes acquired by the Fund will be payable within a prescribed notice period not
to exceed seven days.
Non-U.S. Dollar-Denominated Securities. Non-U.S. dollar-denominated
securities include debt obligations denominated in foreign or composite
currencies (such as the European Currency Unit) issued by (i) foreign national,
provincial, state or municipal governments or their political subdivisions; (ii)
international organizations designated or supported by governmental entities
(e.g., the World Bank and the European Steel and Coal Community); (iii) the U.S.
Government (non-dollar securities only); and (iv) foreign corporations.
Forward Foreign Currency Exchange Transactions. The Fund is authorized to
use forward foreign currency exchange contracts to protect against uncertainty
in the level of future foreign exchange rates. A forward foreign currency
exchange contract is an obligation to purchase or sell a specific currency at a
future date at a price set at the time the contract is entered into. The Fund
may use such forward contracts only under two circumstances. First, if the
Advisor believes the Fund should fix the U.S. dollar price of the foreign
security when the Fund enters into a contract for the purchase or sale, at a
future date, of a security denominated in a foreign currency. Second, if the
Advisor believes the Fund should hedge against risk of loss in the value of
those portfolio securities denominated in foreign currencies.
Rule 144A Securities. Subject to the Fund's overall investment limitations
on investing in illiquid securities and restricted securities, the Fund may
purchase Rule 144A Securities. Rule 144A Securities are restricted securities in
that they have not been registered under the Securities Act of 1933, but they
may be traded between certain qualified institutional investors, including
investment companies. The presence or absence of a secondary market in these
securities may affect their value. The Fund's Board of Directors has established
guidelines and procedures to be utilized to determine the liquidity of such
securities.
Repurchase Agreements. The Fund may agree to purchase U.S. Treasury
securities from creditworthy financial institutions, such as banks and
broker-dealers, subject to the seller's agreement to repurchase the securities
at an established time and price. Default by or bankruptcy proceedings with
respect to the seller may expose the Fund to possible loss because of adverse
market action or delay in connection with the disposition of the underlying
obligations.
Purchase of When-Issued Securities. The Fund may purchase securities, at
their current market value, on a forward commitment or "when-issued" basis. A
segregated account of the Fund, consisting of cash or other liquid securities
equal at all times to the amount of the when-issued commitments will be
established and maintained by the Fund at the Fund's custodian. While the Fund
will purchase securities on a forward commitment or "when-issued" basis only
with the intention of acquiring the securities, the Fund may choose to sell the
securities before the settlement date. The value of securities so purchased or
sold is subject to market fluctuation and no interest accrues to the purchaser
during this period.
<PAGE>
Risk Considerations. The market value of the Fund's debt securities will
change in response to interest rate changes and other factors. During periods of
falling interest rates, the value of outstanding debt securities generally
rises. Conversely, during periods of rising interest rates, the value of such
securities generally declines. Prices of longer term securities generally
increase or decrease more sharply in response to interest rate changes than
those of shorter term securities.
Mortgage-backed securities are subject to special risks due to the
possibility that prepayments on home mortgages will alter their cash flow.
During periods of declining interest rates, prepayments are passed through to
holders of mortgage-backed securities who may then have to reinvest at lower
interest rates. In periods of rising interest rates, prepayments tend to slow,
with the result that the average life of mortgage-backed securities may be
lengthened. Consequently, the possibility of prepayment makes it difficult to
assess the actual maturity and duration of mortgage-backed securities, which, in
turn, makes it difficult to predict both the direction and magnitude of changes
in the value of mortgage-backed securities in response to changes in interest
rates.
4
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<PAGE>
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Purchasing foreign securities may subject the Fund to additional risks
associated with the holding of property abroad. Such risks include future
political and economic developments, currency fluctuations, the possible
withholding of tax payments, the possible seizure or nationalization of foreign
assets, the possible establishment of exchange controls or the adoption of other
foreign government restrictions that might adversely affect the payment of
principal or interest on foreign securities held by the Fund.
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.
INVESTMENT RESTRICTIONS
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The following investment restrictions numbered 1 and 2 are matters of
fundamental policy and may not be changed without shareholder approval.
Investment restriction number 3 may be changed by a vote of the majority of the
Board of Directors. The Fund will not:
1) Concentrate 25% or more of its total assets in securities of issuers in any
one industry (for these purposes the U.S. Government and its agencies and
instrumentalities are not considered an issuer);
2) Invest more than 5% of its total assets in the securities of any single
issuer or acquire more than 10% of the voting securities of any issuer (for
these purposes the U.S. Government and its agencies and instrumentalities
are not considered an issuer); and
3) Invest more than 10% of the Fund's net assets in illiquid securities,
including repurchase agreements with maturities of greater than seven days.
The Fund is subject to further investment restrictions that are set forth
in the Statement of Additional Information.
<PAGE>
THE FUND'S NET ASSET VALUE
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The following sections describe how to buy and redeem shares of the Fund.
The price you pay or receive 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 Class A Shares, the price you receive may be
reduced by a sales charge. Read the sections on how to buy shares and how to
redeem shares for details on how and when these charges may or may not be
imposed.
The net asset value per share of a class is determined on each business
day as of the close of trading on the New York Stock Exchange (ordinarily 4:00
p.m. Eastern Time). 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.
In valuing the Fund's assets, its investments are priced at their market
value which is normally based on current prices but which may be determined
according to "fair value" procedures approved by the Fund's Board of Directors.
You may buy or redeem shares on any day on which 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.
5
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<PAGE>
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HOW TO BUY SHARES
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You may buy Class A 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 Class A 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 $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.
Purchase Price
The price you pay to buy Class A Shares will be the Fund's offering price
which is calculated by adding any applicable sales charges to the net asset
value per share. 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
Amount of Purchase Price Invested
- ---------------------------------------------------------
Less than $100,000............... 1.50% 1.52%
$ 100,000 - $499,999............ 1.25% 1.27%
$ 500,000 - $999,999............ 1.00% 1.01%
$1,000,000 and over ............. None None
- ---------------------------------------------------------
Although you do not pay an initial sales charge when you invest $1,000,000
or more in Class A Shares, you may have to pay a sales charge when you redeem
your shares. Refer to the section on how to redeem shares for details.
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 also purchasing Class A shares of this
or any other Flag Investors fund or if you already have investments in Class A
or Class D 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.
<PAGE>
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.
Purchases at Net Asset Value. You may buy Class A Shares without paying a
sales charge under the following circumstances:
1) If you are buying shares in any of the following types of accounts:
(i) 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
6
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<PAGE>
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charged an additional fee by your securities dealer or servicing
agent if you buy shares in this manner;
(ii) A qualified retirement plan;
(iii) A Flag Investors fund payroll savings plan program.
2) If you are reinvesting some or all of the proceeds of a redemption of Class
A Shares made within the last 90 days.
3) 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).
4) If you are a current or retired Director of the Fund, a director, an
employee or a member of the immediate family of an employee of any of the
following (or their respective affiliates): the Distributor, the Advisor
and any broker-dealer authorized to sell shares of the Fund.
Purchases by Exchange
You may exchange shares of any other Flag Investors fund with the same or
higher sales charge structure for an equal dollar amount of Class A Shares,
without payment of the sales charges described above or any other charge. If you
own Flag Investors Cash Reserve Prime Class A Shares, you may exchange into
Class A Shares upon payment of the difference in sales charges. 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 at any time on 60 days' prior written 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.
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 Class A 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 Class A Shares
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, complete 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 Class A Shares through a
Systematic Purchase Plan. Contact your securities dealer or servicing agent for
details.
<PAGE>
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
You may redeem Class A 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 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.
7
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<PAGE>
- --------------------------------------------------------------------------------
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.
Redemption Price
The price you receive when you redeem shares will be the net asset value
of the shares you are redeeming less any applicable sales charge. The amount of
any sales charge deducted from your redemption price will be determined
according to the following schedule.
Years Since Sales Charge as a Percentage of the Dollar Amount Subject
Purchase to Charge
- --------------------------------------------------------------------------------
First .............................................................. 0.50%*
Second ............................................................. 0.50%*
Thereafter ......................................................... 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 $1,000,000 or
more.
Determination of Sales Charge. The sales charge applicable to your
redemption is calculated in a manner that results in the lowest possible rate:
1) The sales charge is applied to the lesser of the cost of the shares or
their current market value.
2) No sales charge will be applied to shares you own as a result of
reinvesting dividends or distributions.
3) 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.
4) If you acquired the 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.
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 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.
4) If your original investment was at least $3,000,000 and your securities
dealer has agreed to return to the Distributor any payments received when
you bought your shares.
<PAGE>
Other Redemption Information
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.
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.
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 unless you 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 informa--
8
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<PAGE>
- --------------------------------------------------------------------------------
tion at the time your account is opened and prior to effecting 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 instructions received by telephone that they
reasonably believe 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.
DEALER COMPENSATION
- --------------------------------------------------------------------------------
Your securities dealer is paid a commission when you buy shares and is
paid a servicing fee for as long as you hold your shares.
Dealer Compensation as
Amount of Purchase a % of Offering Price
- ----------------------------------------------------------
Less than $100,000.......... 1.25%
$ 100,000 - $499,999......... 1.00%
$ 500,000 - $999,999......... 0.75%
$1,000,000 and over .......... *
- ----------------------------------------------------------
* Your securities dealer may be paid up to 0.50% of the Offering Price
In addition to the commissions shown above, your securities dealer may be
paid an annual fee equal to 0.25% of the value of your Class A Shares for as
long as you hold them. The annual fee will begin when you buy your shares.
DIVIDENDS AND TAXES
- --------------------------------------------------------------------------------
Dividends and Distributions
The Fund's policy is to distribute to shareholders substantially all of
its taxable net investment income (including net short-term capital gains) in
the form of monthly dividends. The Fund may distribute to shareholders any net
capital gains (net long-term capital gains less net short-term capital losses)
on an annual basis, or alternatively, may elect to retain net capital gains and
pay tax thereon.
Tax Treatment of Dividends and Distributions
The following summary of certain federal income tax consequences affecting
the Fund and its shareholders is based on current tax laws and regulations,
which may be changed by legislative, judicial, or administrative action. No
attempt has been made to present a detailed explanation of the federal, state or
local tax treatment of the Fund or the shareholders, and the discussion here is
not intended as a substitute for careful tax planning. Accordingly, you are
advised to consult with your tax advisor regarding specific questions.
The Statement of Additional Information sets forth further information
regarding taxes.
The Fund has been and expects to continue to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended. Generally, as long as the Fund qualifies for this tax treatment, it
will not pay U.S. federal income tax on amounts distributed to shareholders.
Unless you are otherwise exempt, you will pay income or capital gains tax on the
amounts distributed to you, regardless of whether such distributions are paid in
cash or reinvested in additional Class A Shares.
Capital gains distributions from the Fund are classified as either
short-term or long-term depending upon how long the Fund held the securities it
sold to generate the gains. You will be taxed on the distributions according to
the category stipulated by the Fund regardless of how long you have held your
Fund shares. You will be taxed on all other income distributions as ordinary
income. Distributions from the Fund generally will not qualify for the corporate
dividends received deduction.
<PAGE>
Ordinarily, you should include all dividends declared by the Fund as
income in the year of payment. However, dividends declared payable to
shareholders of record in December of one year but paid in January of the
following year, will be deemed for tax purposes to have been received by you and
paid by the Fund in the year in which the dividends were declared.
The Fund intends to make sufficient distributions of its ordinary income
and capital gain net income prior to the end of each calendar year to avoid
liability for federal excise tax.
You will be advised annually as to the federal income tax consequences of
distributions made during the year.
The sale, exchange or redemption of Class A Shares is a taxable event for
you.
9
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<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
The overall business and affairs of the Fund are managed by its Board of
Directors. The Board approves all significant agreements between the Fund and
persons or companies furnishing services to the Fund, including the Fund's
agreements with its investment advisor, distributor, custodian and transfer
agent. The day-to-day operations of the Fund are delegated to the Fund's
executive officers, to the Advisor and to the Distributor. A majority of the
Directors are not affiliated with the Advisor or the Distributor.
INVESTMENT ADVISOR AND SUB-ADVISOR
- --------------------------------------------------------------------------------
Investment Company Capital Corp. ("ICC" or the "Advisor"), an indirect
subsidiary of Bankers Trust Corporation, 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 the investment advisor to mutual funds with approximately
$6.5 billion of net assets as of December 31, 1997. In addition to this Fund,
these include other funds in the Flag Investors family and BT Alex. Brown Cash
Reserve Fund, Inc.
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 the negotiation of commission rates.
As compensation for its services for the fiscal year ended December 31,
1997, ICC received from the Fund a fee (net of fee waivers) equal to 0.09% of
the Fund's average daily net assets. ICC compensates Brown Trust out of its
advisory fee. ICC currently intends to waive, on a voluntary basis, its annual
fee to the extent necessary so that the Fund's annual expenses do not exceed
0.70% of the Class A Shares' average daily net assets.
ICC also serves as the Fund's transfer and dividend disbursing agent and
provides accounting services to the Fund. An affiliate of ICC provides custody
services to the Fund. (See "Custodian, Transfer Agent and Accounting
Services.")
On November 30, 1998, Bankers Trust Corporation entered into an Agreement
and Plan of Merger with Deutsche Bank AG under which Bankers Trust Corporation
would merge with and into a subsidiary of Deutsche Bank AG. Deutsche Bank AG 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 AG, as ICC's new parent
company, will control its operations as investment 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.
10
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<PAGE>
- --------------------------------------------------------------------------------
Portfolio Managers
Messrs. M. Elliott Randolph, Jr., and Paul D. Corbin have shared primary
responsibility for managing the Fund's assets since inception.
Mr. Randolph has nearly 24 years of investment experience. He is a
Principal at Brown Trust where he has served as the Fund's portfolio manager
since October, 1998. Prior to that he served as the Fund's portfolio manager
while employed at BT Alex. Brown Incorporated. From 1988-1991 he was a
Principal with Monument Capital Management, Inc.
Mr. Corbin has 20 years of investment experience. He is a Principal at
Brown Trust where he has served as the Fund's portfolio manager since October,
1998. Prior to that he served as the Fund's portfolio manager while employed at
BT Alex. Brown Incorporated. From 1984-1991 he served as the Senior Vice
President in charge of Fixed Income Portfolio Management at First National Bank
of Maryland.
DISTRIBUTOR
- --------------------------------------------------------------------------------
ICC Distributors, Inc. ("ICC Distributors" or the "Distributor") has
served as distributor of each class of the Fund's shares since August 31, 1997.
ICC Distributors is a registered broker-dealer that offers distribution services
to a variety of registered investment companies including other funds in the
Flag Investors family of funds and BT Alex. Brown Cash Reserve Fund, Inc. ICC
Distributors is not affiliated with the Advisor.
The Fund has adopted a Distribution Agreement and related Plan of
Distribution (the "Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended. In addition, the Fund may enter into agreements with
certain financial institutions, including certain banks and BT Alex. Brown
Incorporated, to provide share-holder services, pursuant to which the
Distributor may allocate on a proportional basis up to all of its distribution
fee as compensation for such financial institutions' ongoing shareholder
services. Such financial institutions may charge you separately for these
services.
As compensation for providing distribution services for the Class A Shares
for the period from August 31, 1997 through December 31, 1997, the Distributor
received a fee equal to 0.25% (annualized) of the average daily net assets of
the Class A Shares.
Payments under the Plan are made as described above regardless of the
Distributor's actual cost of providing distribution services and may be used to
pay the Distributor's overhead expenses. If the cost of providing distribution
services to the Fund is less than the payments received, the Distributor may
retain the unexpended portion of the distribution fee. ICC Distributors or the
Advisor and their respective affiliates may make payments from their own
resources to securities dealers and servicing agents. Payments by the
Distributor may include additional discounts or promotional incentives in the
form of cash or other compensation (including merchandise or travel).
CUSTODIAN, TRANSFER AGENT AND ACCOUNTING SERVICES
- --------------------------------------------------------------------------------
Investment Company Capital Corp. is the Fund's transfer and dividend
disbursing agent and provides accounting services to the Fund. As compensation
for providing accounting services to the Fund for the fiscal year ended December
31, 1997, ICC received a fee equal to 0.08% of the Fund's average daily net
assets. Bankers Trust acts as custodian of the Fund's assets. (See the Statement
of Additional Information.)
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund may advertise its performance including
comparisons to other mutual funds with similar investment objectives and to
relevant indices. Any quotations of yield of the Fund will be determined by
dividing the net investment income earned by the Fund during a 30-day period by
the maximum offering price per share on the last day of the period and
annualizing the result on a semi-annual basis. All advertisements of performance
will show the average annual total return, net of the Fund's maximum sales
charge, over one-, five- and ten-year periods or, if such periods have not yet
elapsed, shorter periods corresponding to the life of the Fund. Such total
return quotations will be computed by finding average annual
11
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<PAGE>
- --------------------------------------------------------------------------------
compounded rates of return over such periods that would equate an assumed
initial investment of $1,000 to the ending redeemable value, net of the maximum
sales charge and other fees according to the required standardized calculation.
The standardized calculation is required by the SEC to provide consistency and
comparability in investment company advertising and is not equivalent to a yield
calculation.
If the Fund compares its performance to other funds or to relevant
indices, the Fund's performance will be stated in the same terms in which such
comparative data and indices are stated, which is normally total return rather
than yield. For these purposes, the performance of the Fund, as well as the
performance of such investment companies or indices, may not reflect sales
charges, which, if reflected, would reduce performance results.
The performance of the Fund may be compared to data prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc. and Morningstar
Inc., independent services that monitor the performance of mutual funds. The
performance of the Fund may also be compared to the Lehman Brothers Intermediate
Aggregate Bond Index, the Merrill Lynch 1-3 Year Treasury Index and the Lehman
Brothers Government Corporate Intermediate-Term Bond Index. The Fund may also
use total return performance data as reported in national financial and industry
publications that monitor the performance of mutual funds such as Money
Magazine, Forbes, Business Week, Barron's, Investor's Daily, IBC/Donoghue's
Money Fund Report and The Wall Street Journal.
Performance will fluctuate and any statement of performance should not be
considered as representative of the future performance of the Fund. Performance
is generally a function of the type and quality of instruments held by the Fund,
operating expenses and market conditions. Any fees charged by your bank with
respect to the account through which your Class A Shares may be purchased,
although not included in calculations of performance, will reduce your
performance results.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
Description of Shares
The Fund is an open-end diversified management investment company
organized under the laws of the State of Maryland on April 16, 1990 and is
authorized to issue 85 million shares of capital stock, par value of $.001 per
share, all of which shares are designated common stock. Each share has one vote
and is entitled to dividends and distributions when and if declared by the Fund.
In the event of liquidation or dissolution of the Fund, each share is entitled
to its pro rata portion of the Fund's assets after all debts and expenses have
been paid. The fiscal year-end of the Fund is December 31. Prior to February 14,
1997, the Fund was known as Flag Investors Intermediate-Term Income Fund, Inc.
The Board of Directors is authorized to establish additional series of
shares of capital stock, each of which would evidence interests in a separate
portfolio of securities, and separate classes of each series of the Fund. The
shares offered by this Prospectus have been designated "Flag Investors
Short-Intermediate Income Fund Class A Shares." The Board has no present
intention of establishing any additional series of the Fund but the Fund does
have another class of shares, "Flag Investors Short-Intermediate Income Fund
Institutional Shares." Additional information concerning this class may be
obtained by calling the Fund at (800) 767-FLAG. Different classes of the Fund
may be offered to certain investors and holders of such shares may be entitled
to certain exchange privileges not offered to Class A Shares. All classes of the
Fund share a common investment objective, portfolio of investments and advisory
fee, but the classes may have different sales load structures, distribution fees
or other expenses, and accordingly, the net asset value per share of the classes
may differ at times.
Annual Meetings
The Fund does not expect to hold annual meetings of shareholders, unless
required by Maryland law. Shareholders of the Fund retain the right, under
certain circumstances to request that a meeting of shareholders be held for the
purpose of considering the removal of a Director from office, and if such a
request is made, the Fund will assist with the shareholder communications in
connection with the meeting.
Reports
You will be furnished with semi-annual reports containing information
about the Fund and its operations, including a list of investments held in the
Fund's portfolio and financial statements. The annual financial statements are
audited by the Fund's independent auditors, Deloitte & Touche LLP.
Shareholder Inquiries
If you have questions concerning your Class A Shares, contact the Transfer
Agent at (800) 553-8080, the Fund at (800) 767-FLAG, or your securities dealer
or servicing agent.
12
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<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND, INC.
NEW ACCOUNT APPLICATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Make check payable to "Flag Investors Short-Intermediate For assistance in completing this Application please call: 1-800-553-8080,
Income Fund, Inc." and mail with this Application to: Monday through Friday, 8:30 a.m. to 5:30 p.m. (Eastern Time).
Flag Investors Funds
P.O. Box 419663 To open an IRA account, please call 1-800-767-3524 for an IRA information
Kansas City, MO 64141-6663 kit.
Attn: Flag Investors Short-Intermediate Income Fund, Inc.
I enclose a check for $___________ payable to "Flag Investors Short-Intermediate Income Fund, Inc." for the purchase of Class A
Shares of the Fund.
Your Account Registration (Please Print)
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.
- ---------------------------------------------
Name of Corporation, Trust or Partnership Mailing Address
- -------------------- --------------------- ---------------------------------------------------------------------
Tax ID Number Date of Trust Street
- --------------------------------------------- ---------------------------------------------------------------------
Name of Trustees (If to be included in the City State Zip
Registration)
( )
---------------------------------------------------------------------
- --------------------------------------------- Daytime Phone
For the Benefit of
Letter of Intent (Optional)
[ ] I agree to the Letter of Intent and Escrow Agreement set forth in the accompanying prospectus. Although I am not obligated to
do so, I intend to invest over a 13-month period in Class A Shares of Flag Investors Short-Intermediate Income Fund, Inc. in an
aggregate amount at least equal to:
[ ] $100,000 [ ] $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 for this purchase.
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 Class A
Shares 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Automatic Investing Plan (Optional)
[ ] I authorize you as Agent for the Automatic Investing Plan to automatically invest $__________ 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 commercial banks only.)
Minimum Initial Investment: $250
Subsequent Investments (check one): [ ] Monthly ($100 minimum) [ ] Quarterly ($250 minimum) Please attach a voided check.
- -------------------------------------------------- ----------------------------------------------------------------
Bank Name Depositor's Signature Date
- -------------------------------------------------- ----------------------------------------------------------------
Existing Flag Investors Fund Account No., if any Depositor's Signature Date
(if 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 $____________, from Class A Shares that I own, payable to the account registration address as shown above.
(Participation requires minimum account value of $10,000.)
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 exchange privileges [ ] Telephone redemption privileges
Redemptions effected by telephone will be mailed to the address of record. If you would prefer redemptions mailed to a
pre-designated bank account, please provide the following information:
Bank:________________________________________ Bank Account No.: ___________________________________________
Address: _______________________________________ Bank Account Name:___________________________________________
_______________________________________
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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
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 of 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 my
correct Social Security Number or Tax ID 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. I acknowledge
that the telephone redemption and exchange privileges are automatic and will be effective as described in the Fund's current
prospectus (see "Telephone Transactions"). I also acknowledge that I may bear the risk of loss in the event of fraudulent use of
such privileges. If I do not want telephone redemption or exchange privileges, I have so indicated on this Application.
- ------------------------------------------------------------------------------------------------------------------------------------
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
</TABLE>
<PAGE>
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FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND, INC.
(Class A Shares)
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
Custodian Independent Auditors
BANKERS TRUST COMPANY DELOITTE & TOUCHE LLP
130 Liberty Street 117 Campus Drive
New York, New York 10006 Princeton, New Jersey 08540
Transfer Agent Fund Counsel
INVESTMENT COMPANY CAPITAL CORP. MORGAN, LEWIS & BOCKIUS
One South Street LLP
Baltimore, Maryland 21202 1701 Market Street
1-800-553-8080 Philadelphia, Pennsylvania 19103
- --------------------------------------------------------------------------------
<PAGE>
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SHORTPRS
4/99
- --------------------------------------------------------------------------------
<PAGE>
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[GRAPHIC OMITTED]
SHORT-INTERMEDIATE INCOME FUND, INC.
(Institutional Shares)
Prospectus & Application -- May 1, 1998, as
supplemented through March 31, 1999
- --------------------------------------------------------------------------------
This mutual fund (the "Fund") seeks a high level of current income consistent
with preservation of principal within an intermediate-term maturity structure.
Institutional Shares of the Fund ("Institutional Shares") are available through
your securities dealer or the Fund's transfer agent and may be purchased only
by eligible institutions, certain qualified retirement plans, or investment
advisory affiliates of BT Alex. Brown Incorporated ("BT Alex. Brown"). (See
"How to Buy Institutional Shares.")
This Prospectus sets forth basic information that you should know about the Fund
prior to investing. You should retain it for future reference. A Statement of
Additional Information dated May 1, 1998 has been filed with the Securities and
Exchange Commission (the "SEC") and is hereby incorporated by reference. It is
available upon request and without charge by calling the Fund at (800) 767-FLAG.
TABLE OF CONTENTS
Fund Expenses .............................. 1
Financial Highlights ....................... 2
Investment Program ......................... 3
Investment Restrictions .................... 5
The Fund's Net Asset Value ................. 5
How to Buy Institutional Shares ............ 5
How to Redeem Institutional Shares ......... 6
Telephone Transactions ..................... 6
Dividends and Taxes ........................ 7
Management of the Fund ..................... 7
Investment Advisor and Sub-Advisor ......... 7
Distributor ................................ 8
Custodian, Transfer Agent and
Accounting Services ..................... 9
Performance Information .................... 9
General Information ........................ 9
Application ................................ A-1
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
Flag Investors Funds
P.O. Box 515
Baltimore, Maryland 21203
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE>
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FUND EXPENSES
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Shareholder Transaction Expenses:
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases ................................... None
Maximum Sales Charge Imposed on Reinvested Dividends ........................ None
Maximum Deferred Sales Charge ............................................... None
Annual Fund Operating Expenses (as a percentage of average daily net assets):
Management Fees (net of fee waivers) ........................................ 0.09%*
12b-1 Fees .................................................................. None
Other Expenses .............................................................. 0.36%
--------
Total Fund Operating Expenses (net of fee waivers) .......................... 0.45%*
========
</TABLE>
- -----------
* The Fund's investment advisor currently intends to waive its fee or
reimburse the Fund on a voluntary basis, to the extent required so that
Total Fund Operating Expenses do not exceed 0.45% of the Institutional
Shares' average daily net assets. Absent fee waivers, Management Fees would
be 0.35% and Total Fund Operating Expenses would be 0.72% of the
Institutional Shares' average daily net assets.
<TABLE>
<S> <C> <C> <C> <C>
Example: 1 year 3 years 5 years 10 years
- --------------------------------------------------------- -------- --------- --------- ---------
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period:* ....... $5 $14 $25 $57
</TABLE>
- -----------
* Absent fee waivers, expenses would be higher.
The Expenses and Example should not be considered a representation of future
expenses. Actual expenses may be greater or less than those shown.
The purpose of the above table is to describe the various costs and
expenses that you will bear indirectly when you invest in Institutional Shares.
If you purchase Institutional Shares through a financial institution, you may be
charged separate fees by the financial institution.
1
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<PAGE>
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FINANCIAL HIGHLIGHTS
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The financial highlights included in this table have been derived from the
Fund's financial statements for the periods indicated and have been audited by
Deloitte & Touche LLP, independent auditors. The financial statements and
related notes for the fiscal year ended December 31, 1997 and the report thereon
of Deloitte & Touche LLP are included in the Statement of Additional
Information. Additional performance information is contained in the Fund's
Annual Report for the fiscal year ended December 31, 1997 which can be obtained
at no charge by calling the Fund at (800) 767-FLAG.
(For a share outstanding throughout each period)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year
Ended For the Period
December 31, November 2, 1995(1)
------------------------- through
1997 1996 December 31, 1995
----------- ----------- --------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of period ............................ $ 10.38 $ 10.58 $ 10.42
------- ------- --------
Income from Investment Operations:
Net investment income ............................................. 0.61 0.59 0.09
Net realized and unrealized gain/(loss) on investments ............ 0.13 (0.17) 0.12
------- ------- --------
Total from Investment Operations .................................. 0.74 0.42 0.21
Less Distributions:
Dividends from net investment income and short-term gains ......... (0.62) (0.62) (0.05)
------- ------- --------
Net asset value at end of period .................................. $ 10.50 $ 10.38 $ 10.58
======= ======= ========
Total Return ...................................................... 7.40% 4.20% 12.47%(2)
Ratios to Average Daily Net Assets:
Expenses(3) ....................................................... 0.45% 0.45% 0.45%(2)
Net investment income(4) .......................................... 6.17% 6.35% 6.52%(2)
Supplemental Data:
Net assets at end of period (000) ................................. $32,056 $17,507 $ 2,186
Portfolio turnover rate ........................................... 65% 42% 46%
</TABLE>
- -----------
(1) Commencement of operations.
(2) Annualized.
(3) Without the waiver of advisory fees, the ratio of expenses to average daily
net assets would have been 0.72%, 0.76% and 0.72% (annualized) for the
years ended December 31, 1997 and 1996 and the period ended December 31,
1995, respectively.
(4) Without the waiver of advisory fees, the ratio of net investment income to
average daily net assets would have been 5.90%, 6.04% and 6.27%
(annualized) for the years ended December 31, 1997 and 1996 and the period
ended December 31, 1995, respectively.
2
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<PAGE>
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INVESTMENT PROGRAM
- --------------------------------------------------------------------------------
Investment Objective, Policies and Risk
Considerations
The Fund's investment objective is to provide a high level of current
income consistent with preservation of principal within an intermediate-term
maturity structure.
In seeking this objective the Fund will, under normal circumstances, invest
at least 65% of its total assets in U.S. Government Securities (including
certain mortgage-backed securities) and in collateralized mortgage obligations
("CMOs") and corporate debt securities. The Fund may also invest in other
asset-backed securities and (subject to an overall 20% limit) non-U.S.
dollar-denominated securities. Quality criteria applicable to certain of the
Fund's investments are as follows:
<TABLE>
<CAPTION>
Type of Permitted Minimum Rating(1)
Investment S&P(2) Moody's(3)
- -------------------------------------------- -------------- -------------
<S> <C> <C>
U.S. Government and Agency
Securities ............................... N/A N/A
CMO's ...................................... AAA(4) Aaa(4)
Corporate Debt ............................. A or better(4) A or better(4)
Other Asset-Backed Securities .............. AAA(4) Aaa(4)
Securities of Non-U.S. Governmental
Issuers .................................. AAA(4) Aaa(4)
Securities of Designated Interna-
tional Organizations ..................... AAA(4) Aaa(4)
Non-Dollar U.S. Government
Securities ............................... AAA(4) Aaa(4)
Securities of Foreign Corporations ......... AAA(4) Aaa(4)
</TABLE>
- ----------
(1) In the event any security owned by the Fund is downgraded, the Fund's
investment advisor will review the situation and take appropriate action,
but will not be automatically required to sell any such security. For a
discussion of the above ratings, see the Appendix to the Statement of
Additional Information.
(2) Standard & Poor's Ratings Group.
(3) Moody's Investors Service, Inc.
(4) Or, if unrated, determined to be of comparable quality by the Fund's
investment advisor.
Under normal circumstances the Fund's portfolio will have a dollar weighted
expected average maturity of approximately three to five years and a maximum
dollar weighted average duration of four years. For purposes of determining the
dollar weighted expected average maturity of the Fund's portfolio, the maturity
of a mortgage-backed security will be deemed to be equal to its assumed life, in
recognition of the fact that such securities are subject to prepayment.
To meet its short-term liquidity needs, the Fund may invest in repurchase
agreements with respect to U.S. Treasury securities, in variable amount master
demand notes and in commercial paper rated A-1 by S&P or Prime-1 by Moody's, or
if not rated, determined to be of comparable quality by the Fund's investment
advisor (the "Advisor"). For temporary, defensive purposes, the Fund may invest
up to 100% of its assets in such instruments.
<PAGE>
U.S. Government Securities. U.S. Government securities include obligations
issued and backed by the full faith and credit of the United States Treasury, as
well as obligations issued by agencies or instrumentalities of the U.S.
Government (including securities of the Government National Mortgage Association
("GNMA")). These obligations may or may not be backed by the full faith and
credit of the U.S. Government. Certain agencies or instrumentalities of the U.S.
Government (such as the United States Postal Service) have the right to borrow
from the United States Treasury to meet their obligations, but in other
instances the obligations of the issuing agency or instrumentality (such as the
Federal Farm Credit System and the Federal National Mortgage Association
("FNMA")) are supported only by the credit of the agency or instrumentality.
Mortgage-Backed Securities.
Mortgage-backed securities are obligations backed by mortgage loans made by
lenders, such as commercial banks and savings and loan institutions, and then
assembled into pools for sale to investors. One type of mortgage-backed security
in which the Fund may invest is a pass-through certificate that provides monthly
payments to the certificate holders, consisting of both interest and principal
payments, which in effect "pass-through" the monthly interest and principal
payments made on the underlying mortgage loans. These certificates are backed as
to the timely payment of principal and interest by GNMA, FNMA and the Federal
Home Loan Mortgage Corporation. See "U.S. Government Securities" above.
Mortgage-backed securities may also take the form of a CMO, a bond or
similar obligation backed by pools of mortgages. A CMO is not insured or
guaranteed by the agency or instrumentality of the U.S. Government which issues
the mortgage-backed securities that collateralize the CMO. Payment of principal
and interest on the underlying mortgages, and any reinvestment income thereon,
provide the funds to pay debt service on the CMOs. If there is a default in the
payment of principal and interest, there can be no assurance that the underlying
collateral will be sufficient to effect full repayment. CMOs may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans.
Asset-Backed Securities. The Fund may also invest in securities backed by
assets other than mortgages, including company receivables, truck and auto
loans, leases, and credit card receivables, subject to certain quality
requirements. Through the use of trusts and special purpose corporations, these
types of assets are being securitized in pass-through structures similar to the
mortgage pass-through structure or in pay-through structures similar to the CMO
structure, both
3
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<PAGE>
- --------------------------------------------------------------------------------
as described above. In general, the collateral supporting asset-backed
securities is of shorter maturity than mortgage loans and is less likely to
experience substantial prepayments. However, asset-backed securities do not
generally have the benefit of the same security interest in the related
collateral as either mortgage-backed securities or CMOs, and may therefore
present certain risks not associated with other such securities.
Variable Amount Master Demand Notes. Variable amount master demand notes
are unsecured demand notes that permit investment of fluctuating amounts of
money at variable rates of interest pursuant to arrangements with issuers who
meet the quality criteria discussed above. All variable amount master demand
notes acquired by the Fund will be payable within a prescribed notice period not
to exceed seven days.
Non-U.S. Dollar-Denominated Securities. Non- U.S. dollar-denominated
securities include debt obligations denominated in foreign or composite
currencies (such as the European Currency Unit) issued by (i) foreign national,
provincial, state or municipal governments or their political subdivisions; (ii)
international organizations designated or supported by governmental entities
(e.g., the World Bank and the European Steel and Coal Community); (iii) the U.S.
Government (non-dollar securities only); and (iv) foreign corporations.
Forward Foreign Currency Exchange Transactions. The Fund is authorized to
use forward foreign currency exchange contracts to protect against uncertainty
in the level of future foreign exchange rates. A forward foreign currency
exchange contract is an obligation to purchase or sell a specific currency at a
future date at a price set at the time the contract is entered into. The Fund
may use such forward contracts only under two circumstances. First, if the
Advisor believes the Fund should fix the U.S. dollar price of the foreign
security when the Fund enters into a contract for the purchase or sale, at a
future date, of a security denominated in a foreign currency. Second, if the
Advisor believes the Fund should hedge against risk of loss in the value of
those portfolio securities denominated in foreign currencies.
Rule 144A Securities. Subject to the Fund's overall investment limitations
on investing in illiquid securities and restricted securities, the Fund may
purchase Rule 144A Securities. Rule 144A Securities are restricted securities in
that they have not been registered under the Securities Act of 1933, but they
may be traded between certain qualified institutional investors, including
investment companies. The presence or absence of a secondary market in these
securities may affect their value. The Fund's Board of Directors has established
guidelines and procedures to be utilized to determine the liquidity of such
securities.
<PAGE>
Repurchase Agreements. The Fund may agree to purchase U.S. Treasury
securities from creditworthy financial institutions, such as banks and
broker-dealers, subject to the seller's agreement to repurchase the securities
at an established time and price. Default by or bankruptcy proceedings with
respect to the seller may expose the Fund to possible loss because of adverse
market action or delay in connection with the disposition of the underlying
obligations.
Purchase of When-Issued Securities. The Fund may purchase securities at
their current market value on a forward commitment or "when-issued" basis. A
segregated account of the Fund, consisting of cash or other liquid securities
equal at all times to the amount of the when-issued commitments will be
established and maintained by the Fund at the Fund's custodian. While the Fund
will purchase securities on a forward commitment or "when-issued" basis only
with the intention of acquiring the securities, the Fund may choose to sell the
securities before the settlement date. The value of securities so purchased or
sold is subject to market fluctuation and no interest accrues to the purchaser
during this period.
Risk Considerations. The market value of the Fund's debt securities will
change in response to interest rate changes and other factors. During periods of
falling interest rates, the value of outstanding debt securities generally
rises. Conversely, during periods of rising interest rates, the value of such
securities generally declines. Prices of longer term securities generally
increase or decrease more sharply in response to interest rate changes than
those of shorter term securities.
Mortgage-backed securities are subject to special risks due to the
possibility that prepayments on home mortgages will alter their cash flow.
During periods of declining interest rates, prepayments are passed through to
holders of mortgage-backed securities who may then have to reinvest at lower
interest rates. In periods of rising interest rates, prepayments tend to slow,
with the result that the average life of mortgage-backed securities may be
lengthened. Consequently, the possibility of prepayment makes it difficult to
assess the actual maturity and duration of mortgage-backed securities, which, in
turn, makes it difficult to predict both the direction and magnitude of changes
in the value of mortgage-backed securities in response to changes in interest
rates.
Purchasing foreign securities may subject the Fund to additional risks
associated with the holding of property abroad. Such risks include future
political and
4
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<PAGE>
- --------------------------------------------------------------------------------
economic developments, currency fluctuations, the possible withholding of tax
payments, the possible seizure or nationalization of foreign assets, the
possible establishment of exchange controls or the adoption of other foreign
government restrictions which might adversely affect the payment of principal or
interest on foreign securities held by the Fund.
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.
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The following investment restrictions numbered 1 and 2 are matters of
fundamental policy and may not be changed without shareholder approval.
Investment restriction number 3 may be changed by a vote of the majority of the
Board of Directors. The Fund will not:
1) Concentrate 25% or more of its total assets in securities of issuers in any
one industry (for these purposes the U.S. Government and its agencies and
instrumentalities are not considered an issuer);
2) Invest more than 5% of its total assets in the securities of any single
issuer or acquire more than 10% of the voting securities of any issuer (for
these purposes the U.S. Government and its agencies and instrumentalities
are not considered an issuer); and
3) Invest more than 10% of the Fund's net assets in illiquid securities,
including repurchase agreements with maturities of greater than seven days.
The Fund is subject to further investment restrictions that are set forth
in the Statement of Additional Information.
<PAGE>
THE FUND'S NET ASSET VALUE
- --------------------------------------------------------------------------------
The following sections describe how to buy and redeem shares of the Fund.
The price you pay or receive is based on the Fund's net asset value per
share. The net asset value per share of a class is determined on each business
day as of the close of trading on the New York Stock Exchange (ordinarily 4:00
p.m. Eastern Time). 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.
In valuing the Fund's assets, its investments are priced at their market
value which is normally based on current prices but which may be determined
according to "fair value" procedures approved by the Fund's Board of Directors.
You may buy or redeem shares on any day on which 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.
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).
o A qualified retirement 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.
5
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<PAGE>
- --------------------------------------------------------------------------------
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
If you are an eligible institution, your initial investment must be at
least $500,000. There are no minimum initial investments for qualified
retirement plans or investment advisory affiliates of BT Alex. Brown. 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 at any time on 60 days' prior written
notice.
You may request an exchange through your securities dealer or your
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 express mail or telephone.
Other Information
In the interest of economy and convenience and because of the operating
procedures for the Institutional Shares, certificates representing such shares
will not be issued.
HOW TO REDEEM INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
You may redeem your shares through your securities dealer or your servicing
agent. Contact them for details on how to enter your order. If your shares are
in an account with the Fund, you may also redeem them by contacting the Transfer
Agent by telephone (if you are redeeming less than $500,000). 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.
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.
<PAGE>
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 unless you
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 at the time
your account is opened and prior to effecting 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 instructions received by telephone that they reasonably
believe 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 express mail or facsimile. (See "How to Buy
Institutional Shares -- Purchases by Exchange" and "How to Redeem Institutional
Shares.")
6
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<PAGE>
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DIVIDENDS AND TAXES
- --------------------------------------------------------------------------------
Dividends and Distributions
The Fund's policy is to distribute to shareholders substantially all of its
taxable net investment income (including net short-term capital gains) in the
form of monthly dividends. The Fund may distribute to shareholders any net
capital gains (net long-term capital gains less net short-term capital losses)
on an annual basis, or alternatively, may elect to retain net capital gains and
pay tax thereon.
Unless you elect otherwise, all income dividends and net capital gains
distributions, if any, will be reinvested in additional Institutional Shares at
net asset value. You may elect to terminate automatic reinvestment by giving
written instructions to the Transfer Agent, either directly or through your
securities dealer or servicing agent, at least five days before the next date on
which dividends or distributions will be paid.
Tax Treatment of Dividends and Distributions
The following summary of certain federal income tax consequences affecting
the Fund and its shareholders is based on current tax laws and regulations,
which may be changed by legislative, judicial, or administrative action. No
attempt has been made to present a detailed explanation of the federal, state or
local tax treatment of the Fund or the shareholders, and the discussion here is
not intended as a substitute for careful tax planning. Accordingly, you are
advised to consult with your tax advisor regarding specific questions.
The Statement of Additional Information sets forth further information
regarding taxes.
The Fund has been and expects to continue to be taxed as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended. Generally, as long as the Fund qualifies for this tax treatment, it
will not pay U.S. federal income tax on amounts distributed to shareholders.
Unless you are otherwise exempt, you will pay income or capital gains tax on the
amounts distributed to you, regardless of whether such distributions are paid in
cash or reinvested in additional Institutional Shares.
Capital gains distributions from the Fund are classified as either
short-term or long-term depending upon how long the Fund held the securities it
sold to generate the gains. You will be taxed on the distributions according to
the category stipulated by the Fund regardless of how long you have held your
Fund shares. You will be taxed on all other income distributions as ordinary
income. Distributions from the Fund generally will not qualify for the corporate
dividends received deduction.
Ordinarily, you should include all dividends declared by the Fund as income
in the year of payment. However, dividends declared payable to shareholders of
record in December of one year but paid in January of the following year, will
be deemed for tax purposes to have been received by you and paid by the Fund in
the year in which the dividends were declared.
The Fund intends to make sufficient distributions of its ordinary income
and capital gain net income prior to the end of each calendar year to avoid
liability for federal excise tax.
You will be advised annually as to the federal income tax consequences of
distributions made during the year.
The sale, exchange or redemption of Institutional Shares is a taxable event
for you.
<PAGE>
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
The overall business and affairs of the Fund are managed by its Board of
Directors. The Board approves all significant agreements between the Fund and
persons or companies furnishing services to the Fund, including the Fund's
agreements with its investment advisor, distributor, custodian and transfer
agent. The day to day operations of the Fund are delegated to the Fund's
executive officers, to the Advisor and to the Distributor. A majority of the
Directors are not affiliated with the Advisor or the Distributor.
INVESTMENT ADVISOR AND SUB-ADVISOR
- --------------------------------------------------------------------------------
Investment Company Capital Corp. ("ICC" or the "Advisor"), an indirect
subsidiary of Bankers Trust Corporation, 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 the investment advisor to mutual funds with approximately
$6.5 billion of net
7
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<PAGE>
- --------------------------------------------------------------------------------
assets as of December 31, 1997. In addition to this Fund, these include other
funds in the Flag Investors family and BT Alex. Brown Cash Reserve Fund, Inc.
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 the negotiation of commission rates.
As compensation for its services for the fiscal year ended December 31,
1997, ICC received a fee (net of fee waivers) equal to 0.09% of the Fund's
average daily net assets. ICC compensates Brown Trust out of its advisory fee.
ICC currently intends to waive, on a voluntary basis, its annual fee to the
extent necessary so that the Fund's annual expenses do not exceed 0.45% of the
Institutional Shares' average daily net assets.
ICC also serves as the Fund's transfer and dividend disbursing agent and
provides accounting services to the Fund. An affiliate of ICC provides custody
services to the Fund. (See "Custodian, Transfer Agent and Accounting Services.")
On November 30, 1998, Bankers Trust Corporation entered into an Agreement
and Plan of Merger with Deutsche Bank AG under which Bankers Trust Corporation
would merge with and into a subsidiary of Deutsche Bank AG. Deutsche Bank AG 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 AG, as ICC's new parent
company, will control its operations as investment 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.
<PAGE>
Portfolio Managers
Messrs. M. Elliott Randolph, Jr. and Paul D. Corbin, have shared primary
responsibility for managing the Fund's assets since inception.
Mr. Randolph has nearly 24 years of investment experience. He is a
principal at Brown Trust where he has served as the Fund's portfolio manager
since October, 1998. Prior to that he served as the Fund's portfolio manager
while employed at BT Alex. Brown Incorporated. From 1988-1991 he was a Principal
with Monument Capital Management, Inc.
Mr. Corbin has 20 years of investment experience. He is a Principal at
Brown Trust where he has served as the Fund's portfolio manager since October,
1998. Prior to that he served as the Fund's portfolio manager while employed at
BT Alex. Brown Incorporated. From 1984-1991 he served as the Senior Vice
President in charge of Fixed Income Portfolio Management at First National Bank
of Maryland.
DISTRIBUTOR
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ICC Distributors, Inc. ("ICC Distributors" or the "Distributor") serves as
distributor of each class of the Fund's shares. ICC Distributors receives no
compensation for distributing the Institutional Shares. ICC Distributors is a
registered broker-dealer that offers distribution services to a variety of
registered investment companies including other funds in the Flag Investors
family of funds and BT Alex. Brown Cash Reserve Fund, Inc. ICC Distributors is
not affiliated with the Advisor.
8
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<PAGE>
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ICC Distributors bears all expenses associated with advertisements,
promotional materials, sales literature and printing and mailing prospectuses to
other than Fund shareholders. The Advisor or its affiliates may make payments
from their own resources to securities dealers and servicing agents.
CUSTODIAN, TRANSFER AGENT AND ACCOUNTING SERVICES
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Investment Company Capital Corp. is the Fund's transfer and dividend
disbursing agent and provides accounting services to the Fund. As compensation
for providing accounting services to the Fund for the fiscal year ended December
31, 1997, ICC received a fee equal to 0.08% of the Fund's average daily net
assets. Bankers Trust acts as custodian of the Fund's assets. (See the Statement
of Additional Information.)
PERFORMANCE INFORMATION
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From time to time the Fund may advertise its performance including
comparisons to other mutual funds with similar investment objectives and to
relevant indices. Any quotations of yield of the Fund will be determined by
dividing the net investment income earned by the Fund during a 30-day period by
the maximum offering price per share on the last day of the period and
annualizing the result on a semi-annual basis. All advertisements of performance
will show the average annual total return over one-, five- and ten-year periods
or, if such periods have not yet elapsed, shorter periods corresponding to the
life of the Fund. Such total return quotations will be computed by finding
average annual compounded rates of return over such periods that would equate an
assumed initial investment of $1,000 to the ending redeemable value according to
the required standardized calculation. The standardized calculation is required
by the SEC to provide consistency and comparability in investment company
advertising and is not equivalent to a yield calculation.
If the Fund compares its performance to other funds or to relevant indices,
the Fund's performance will be stated in the same terms in which such
comparative data and indices are stated, which is normally total return rather
than yield.
The performance of the Fund may be compared to data prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc. and Morningstar
Inc., independent services which monitor the performance of mutual funds. The
performance of the Fund may also be compared to the Lehman Brothers Intermediate
Aggregate Bond Index, the Merrill Lynch 1-3 Year Treasury Index and the Lehman
Brothers Government Corporate Intermediate-Term Bond Index. The Fund may also
use total return performance data as reported in national financial and industry
publications that monitor the performance of mutual funds such as Money
Magazine, Forbes, Business Week, Barron's, Investor's Daily, IBC/Donoghue's
Money Fund Report and The Wall Street Journal.
<PAGE>
Performance will fluctuate and any statement of performance should not be
considered as representative of the future performance of the Fund. Performance
is generally a function of the type and quality of instruments held by the Fund,
operating expenses and market conditions. Any fees charged by your bank with
respect to the account through which your Institutional Shares may be purchased,
although not included in calculations of performance, will reduce your
performance results.
GENERAL INFORMATION
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Description of Shares
The Fund is an open-end diversified management investment company organized
under the laws of the State of Maryland on April 16, 1990 and is authorized to
issue 85 million shares of capital stock, par value of $.001 per share, all of
which shares are designated common stock. Each share has one vote and is
entitled to dividends and distributions when and if declared by the Fund. In the
event of liquidation or dissolution of the Fund, each share is entitled to its
pro rata portion of the Fund's assets after all debts and expenses have been
paid. The fiscal year-end of the Fund is December 31. Prior to February 14,
1997, the Fund was known as Flag Investors Intermediate-Term Income Fund, Inc.
The Board of Directors is authorized to establish additional series of
shares of capital stock, each of which would evidence interests in a separate
portfolio of securities, and separate classes of each series of the Fund. The
shares offered by this Prospectus have been designated "Flag Investors
Short-Intermediate Income Fund Institutional Shares." The Board has no present
intention of establishing any additional series of the
9
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<PAGE>
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Fund but the Fund does have another class of shares, "Flag Investors
Short-Intermediate Income Fund Class A Shares." Additional information
concerning this class may be obtained by calling the Fund at (800) 767-FLAG.
Different classes of the Fund may be offered to certain investors and holders of
such shares may be entitled to certain exchange privileges not offered to
Institutional Shares. All classes of the Fund share a common investment
objective, portfolio of investments and advisory fee, but the classes may have
different distribution fees or sales load structures, and accordingly, the net
asset value per share of the classes may differ at times.
Annual Meetings
The Fund does not expect to hold annual meetings of shareholders unless
required by Maryland law. Shareholders of the Fund retain the right, under
certain circumstances to request that a meeting of shareholders be held for the
purpose of considering the removal of a Director from office, and if such a
request is made, the Fund will assist with the shareholder communications in
connection with the meeting.
Reports
You will be furnished with semi-annual reports containing information about
the Fund and its operations, including a list of investments held in the Fund's
portfolio and financial statements. The annual financial statements are audited
by the Fund's independent auditors, Deloitte & Touche LLP.
Shareholder Inquiries
If you have questions concerning your Institutional Shares, contact the
Fund at (800) 767-FLAG, the Transfer Agent at (800) 553-8080 or your securities
dealer or servicing agent.
10
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<PAGE>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND, INC.
(INSTITUTIONAL SHARES)
NEW ACCOUNT APPLICATION
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<TABLE>
<CAPTION>
<S> <C>
Send completed Application by overnight carrier to: For assistance in completing this Application please call: 1-800-
Flag Investors Funds 553-8080, Monday through Friday, 8:30 a.m. to 5:30 p.m. (Eastern Time).
330 West 9th Street, First Floor
Kansas City, MO 64105
Attn: Flag Investors Short-Intermediate Income Fund, Inc.
If you are paying by check, make check payable to "Flag Investors Short-Intermediate Income Fund, Inc." and mail with this
Application.
If you are paying by wire, see instructions below.
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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 --------------------------------------------------------------
City State Zip
[_] Non-Profit or Charitable Organization [_] Other __________ ( )
--------------------------------------------------------------
If a Trust, please provide the following: Daytime Phone
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Date of Trust For the Benefit of
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Trustees (If to be included in the Registration)
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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 Short-Intermediate Income 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
Flag Investors Funds
Acct. # 7528175
ABA # 1010-0362-1
Kansas City, Missouri 64105
Please include the following information in the wire:
o Flag Investors Short-Intermediate Income Fund, Inc. -- Institutional Shares
o The amount to be invested
o "For further credit to ________________________________."
(Investor's Fund Account Number)
<PAGE>
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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
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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.
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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
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Name(s) on Account
- ------------------------------------------------------------------------------------------------------------------------------------
Account Number A.B.A. Number
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
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Acknowledgment, Certificate and Signature
<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
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 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. I acknowledge that the telephone redemption and exchange privileges are automatic
and will be effected as described in the Fund's current prospectus (see "Telephone Transactions"). I also acknowledge that I may
bear the risk of loss in the event of fraudulent use of such privileges. If I do not want telephone redemption or exchange
privileges, I have so indicated on this Application.
- ------------------------------------------------------------------------------------------------------------------------------------
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
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Signature of Corporate Officer, General Partner, Trustee, etc. Date
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
Person(s) Authorized to Conduct Transactions
The following person(s) ("Authorized Person(s)") are currently officers, trustees, general partners or other authorized agents of
the investor. Any ________________ * of the Authorized Person(s) is, by lawful and appropriate action of the investor, a person
entitled to give instructions regarding purchases and redemptions or make inquiries regarding the Account.
- ---------------------------------------------------------------- ---------------------------------------------------------------
Name/Title Signature Date
- ---------------------------------------------------------------- ---------------------------------------------------------------
Name/Title Signature Date
- ---------------------------------------------------------------- ---------------------------------------------------------------
Name/Title Signature Date
- ---------------------------------------------------------------- ---------------------------------------------------------------
Name/Title Signature Date
The signature appearing to the right of each Authorized Person is that person's signature. Investment Company Capital Corp. ("ICC")
may, without inquiry, act upon the instructions (whether verbal, written, or provided by wire, telecommunication, or any other
process) of any person claiming to be an Authorized Person. Neither ICC nor any entity on behalf of which ICC is acting shall be
liable for any claims or expenses (including legal fees) or for any losses resulting from actions taken upon any instructions
believed to be genuine. ICC may continue to rely on the instructions made by any person claiming to be an Authorized Person until it
is informed through an amended Application that the person is no longer an Authorized Person and it has a reasonable period (not to
exceed one week) to process the amended Application. Provisions of this Application shall be equally Applicable to any successor of
ICC.
* If this space is left blank, any one Authorized Person is authorized to give instructions and make inquiries. Verbal
instructions will be accepted from any one Authorized Person. Written instructions will require signatures of the number of
Authorized Persons indicated in this space.
- ------------------------------------------------------------------------------------------------------------------------------------
Certificate of Authority
Investors must complete one of the following two Certificates of Authority.
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>
FLAG INVESTORS SHORT-INTERMEDIATE INCOME FUND, INC.
(Institutional 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 Independent Auditors
BANKERS TRUST COMPANY DELOITTE & TOUCHE LLP
130 Liberty Street 117 Campus Drive
New York, New York 10006 Princeton, New Jersey 08540
Transfer Agent Fund Counsel
INVESTMENT COMPANY CAPITAL CORP. MORGAN, LEWIS & BOCKIUS LLP
One South Street 1701 Market Street
Baltimore, Maryland 21202 Philadelphia, Pennsylvania 19103
1-800-553-8080
SHORTIPRS
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