FLAG INVESTORS VALUE BUILDER FUND INC, PRES14A, 1999-08-05

FLAG INVESTORS VALUE BUILDER FUND INC
PRES14A, 1999-08-05

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<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 Amendment No. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:

/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 14a-11(c) or 14a-12

FLAG INVESTORS VALUE BUILDER FUND, INC.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:

----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:

----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:

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

5) Total fee paid:

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

/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:

___________________________________________________________________________
3) Filing Party:

___________________________________________________________________________
4) Date Filed:

___________________________________________________________________________

<PAGE>

FLAG INVESTORS VALUE BUILDER FUND, INC.
One South Street
Baltimore, Maryland 21202

[August 23], 1999

Dear Shareholder:

On June 4, 1999, Bankers Trust merged with Deutsche Bank AG. Bankers Trust is
the indirect parent of Investment Company Capital Corp., the investment advisor
to the Flag Investors Value Builder Fund, Inc. (the "Fund"). Bankers Trust also
indirectly owns a 1% general partnership interest and a 49% limited partnership
interest in Alex. Brown Investment Management ("ABIM"), the Fund's sub-advisor.
As a result of the merger, we are asking shareholders of the Fund to approve new
advisory and sub-advisory agreements. Enclosed is further information relating
to these changes, including a Questions & Answers section, proxy statement and
proxy card(s).

Important information about the changes:

o The merger has no effect on the number of shares you own or
the value of those shares.

o The advisory and sub-advisory fees payable under the new
advisory and sub-advisory agreements have not increased.

o The investment objective of your mutual fund investment has
not changed.

In addition to the change in advisory agreements, shareholders are also being
asked to approve other changes outlined in the enclosed Proxy Statement. The
Board of Directors of the Fund believes that the proposals are important and
recommends that you read the enclosed materials carefully and then vote for all
proposals. ---

What you need to do:

o Read all enclosed materials including the Questions & Answers
section.

o Choose one of the following options to vote:

1. By Mail: Complete the enclosed proxy card and return
it in the postage-paid envelope provided by (dd/mm/yy).

2. By Telephone: Call the Toll-Free # on your proxy card
by (dd/mm/yy).

3. By Internet: Logon to www.proxyvote.com by (dd/mm/yy).
-----------------

4. Attend the Shareholder Meeting (details enclosed).

Sincerely,

[INSERT MR. SEMANS' SIGNATURE]

Truman T. Semans
Chairman
Flag Investors Value Builder Fund, Inc.

<PAGE>

[August 23], 1999

IMPORTANT NEWS
FOR SHAREHOLDERS OF
FLAG INVESTORS VALUE BUILDER FUND, INC.

While we encourage you to read the full text of the enclosed Proxy
Statement, here is a brief overview of some matters affecting the Fund which
require a shareholder vote.

Q & A: QUESTIONS AND ANSWERS

Q. What has happened to require a shareholder vote?

A. On June 4, 1999, Bankers Trust became a subsidiary of Deutsche Bank AG.
Bankers Trust is the indirect parent of Investment Company Capital Corp.,
("ICC") investment advisor to the Flag Investors Value Builder Fund, Inc. (the
"Fund"). In addition, Deutsche Bank now indirectly owns a 1% general partnership
interest and a 49% limited partnership interest in Alex. Brown Investment
Management ("ABIM"), the Fund's sub-advisor. Deutsche Bank, a banking company
organized under the laws of the Federal Republic of Germany, provides a
comprehensive range of global banking and financial services.

Deutsche Bank now ranks as the fourth largest investment manager in the
world with $670 billion in assets in a full range of active and index
strategies. Deutsche Asset Management handles the investment management
activities of Deutsche Bank in the Americas, United Kingdom and Asia and will
manage $454 billion in assets globally.

To ensure that ICC may continue to serve as investment advisor and ABIM
as sub-advisor to the Fund, we are seeking shareholder approval of new advisory
and sub-advisory agreements. In addition, you are being asked to elect a Board
of Directors of the Fund and to modify or eliminate certain of the Fund's
fundamental investment policies in response to changes in the law.

THE BOARD MEMBERS OF YOUR FUND, INCLUDING THOSE WHO ARE NOT AFFILIATED WITH THE
FUND, RECOMMEND THAT YOU VOTE FOR THESE PROPOSALS.

Q. Why am I being asked to vote on the new advisory and sub-advisory agreements?

A. The Investment Company Act of 1940, which regulates investment companies in
the United States such as the Fund, requires a shareholder vote to approve new
investment advisory agreements following certain types of business combinations.
The new advisory and sub-advisory agreements became effective immediately upon
consummation of the merger and will continue in effect only upon shareholder
approval.

<PAGE>

Q. How does the merger affect the Fund?

A. The Fund and its respective investment objectives have not changed as a
result of the merger. You still own the same shares in the same Fund as you did
prior to the merger. The new advisory and sub-advisory agreements contain
substantially the same terms and conditions as the investment advisory and
sub-advisory agreements in effect prior to the merger, except for the dates of
execution, effectiveness and initial term. If shareholders do not approve the
new advisory and sub-advisory agreements, these agreements will no longer
continue and the Board of Directors will take such action as it deems to be in
the best interests of the Fund, and its shareholders.

Q. Have the investment advisory and sub-advisory fees remained the same?

A. Yes.

Q. What are the benefits of the merger?

A. There are several potential positive aspects of the merger you may be
interested in. Most notably, the combined institution will be one of the largest
financial institutions in the world, as well as a leader in a number of
important categories, including asset management. The financial strength of the
combined institution coupled with the increased breadth and depth of its
resources and capabilities are advantages the acquisition brings. Further, as a
truly global institution, the combined entity will be in a unique position to
provide coverage, services and products.

Q. How does the Board of Directors of the Fund recommend that I vote?

A. After careful consideration, the Board of Directors of the Fund recommends
that you vote in favor of all the proposals on the enclosed proxy card.

Q. Whom do I call for more information?

A. If you need more information, please call Shareholder Communications
Corporation, the Fund's information agent, at 1-800-732-6168.

<PAGE>

Q. How can I vote my shares?

A. You may choose from one of the following options to vote your shares:

o By mail, with the enclosed proxy card(s) and return envelope.

o By telephone, with a toll-free call to the telephone number that
appears on your proxy card.

o Through the Internet, by using the Internet address located on
your proxy card and following the instructions on the site.

o In person at the shareholder meeting (see details enclosed in
proxy statement).

Q. Will the Fund pay for the proxy solicitation and legal costs associated with
this transaction?

A. No, ICC will bear these costs. However, the Fund will bear the incremental
costs associated with changing the Fund's fundamental policies.

Please vote all issues on each proxy card that you receive. Thank you for
mailing your proxy card promptly.

[August 23], 1999

<PAGE>

PRELIMINARY COPY

FLAG INVESTORS VALUE BUILDER FUND, INC.
One South Street
Baltimore, Maryland 21202
-------------------------

Notice of Special Meeting of Shareholders
October 7, 1999

TO THE SHAREHOLDERS OF FLAG INVESTORS VALUE BUILDER FUND, INC.:

You are cordially invited to a special meeting (the "Special Meeting")
of the shareholders of Flag Investors Value Builder Fund, Inc. (the "Fund"). The
Special Meeting will be held on Thursday, October 7, 1999, at 1:30 p.m. Eastern
Time at the offices of Investment Company Capital Corp., in the conference room
on the 30th Floor of The Alex. Brown Building, One South Street, Baltimore,
Maryland 21202. The purpose of the Special Meeting is to consider the proposals
set forth below and to transact such other business as may be properly brought
before the Special Meeting:

PROPOSAL 1: To consider and act upon a proposal to elect a Board of
Directors of the Fund.

PROPOSAL 2: To approve a new Investment Advisory Agreement between the
Fund and Investment Company Capital Corp.

PROPOSAL 3: To approve a new Sub-Advisory Agreement among the Fund,
Investment Company Capital Corp. and Alex. Brown Investment
Management.

PROPOSAL 4: To eliminate the Fund's fundamental investment policy
concerning short sales.

PROPOSAL 5: To eliminate the Fund's fundamental investment policy
concerning the purchase of securities on margin.

PROPOSAL 6: To eliminate the Fund's fundamental investment policy
concerning purchases of oil, gas or mineral interests.

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<PAGE>

PROPOSAL 7: To modify the Fund's fundamental investment policy concerning
the purchase or sale of commodities or commodity contracts.

PROPOSAL 8: To modify the Fund's fundamental investment policy concerning
borrowing.

PROPOSAL 9: To modify the Fund's fundamental investment policy concerning
loans.

PROPOSAL 10: To modify the Fund's fundamental investment policy on illiquid
and restricted securities and reclassify the policy as
non-fundamental.

Only shareholders of the Fund at the close of business on August 6,
1999 are entitled to notice of, and to vote at, this meeting or any adjournment
thereof.

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING, PLEASE
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD. A POSTAGE PAID ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE SO THAT YOU MAY RETURN YOUR PROXY CARD AS SOON AS
POSSIBLE. YOU MAY ALSO VOTE EASILY AND QUICKLY BY TELEPHONE OR THROUGH THE
INTERNET. TO DO SO, PLEASE FOLLOW THE INSTRUCTIONS INCLUDED ON YOUR ENCLOSED
PROXY CARD. IT IS MOST IMPORTANT AND IN YOUR INTEREST FOR YOU TO VOTE SO THAT A
QUORUM WILL BE PRESENT AND A MAXIMUM NUMBER OF SHARES MAY BE VOTED. THE PROXY IS
REVOCABLE AT ANY TIME PRIOR TO ITS USE.

Amy M. Olmert
Secretary

Dated: [August 23], 1999

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<PAGE>

PRELIMINARY COPY

FLAG INVESTORS VALUE BUILDER FUND, INC.
One South Street
Baltimore, Maryland 21202

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

PROXY STATEMENT

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

SPECIAL MEETING OF SHAREHOLDERS TO BE HELD

October 7, 1999

This Proxy Statement is furnished by the Board of Directors of Flag
Investors Value Builder Fund, Inc. (the "Fund") in connection with the
solicitation of proxies for use at the special meeting of shareholders of the
Fund to be held on Thursday, October 7, 1999, at 1:30 p.m. Eastern Time, or at
any adjournment thereof (the "Special Meeting"), at the offices of Investment
Company Capital Corp., in the conference room on the 30th Floor of The Alex.
Brown Building, One South Street, Baltimore, Maryland 21202. It is expected that
the Notice of Special Meeting, the Proxy Statement and a Proxy Card will be
mailed to shareholders on or about August 23, 1999.

Summary
-------

At the Special Meeting, shareholders will be asked to elect a slate of
Directors, to approve a new Investment Advisory Agreement, to approve a new
Sub-Advisory Agreement and to consider a number of issues relating to the
fundamental investment policies of the Fund.

Proposal 1 asks shareholders of the Fund to elect a Board of Directors.

Proposals 2 and 3 ask shareholders to consider a new Investment
Advisory Agreement between the Fund and Investment Company Capital Corp. ("ICC"
or the "Advisor") and a new Sub-Advisory Agreement among the Fund, ICC and Alex.
Brown Investment Management ("ABIM" or the "Sub-Advisor"). This action is
necessary because the merger on June 4, 1999 (the "Merger") between Bankers
Trust Corporation ("Bankers Trust"), the indirect parent of ICC, and a U.S.
subsidiary of Deutsche Bank AG ("Deutsche Bank") may have arguably resulted in
an assignment and, therefore, termination of the Fund's prior Investment
Advisory and Sub-Advisory Agreements under the Investment Company Act of 1940,
as amended (the "1940 Act"). The proposed new Investment Advisory and
Sub-Advisory Agreements are identical to

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<PAGE>

the Fund's prior Investment Advisory and Sub-Advisory Agreements, except for the
dates of execution, effectiveness and initial term.

Proposals 4 through 10 ask shareholders to approve changes in the
fundamental investment policies of the Fund. Shareholders are being asked to
modify, eliminate, or reclassify as non-fundamental certain of the Fund's
investment policies primarily to update these policies to reflect changes in the
law. The changes to the Fund's fundamental investment policies would become
effective upon shareholder approval or at such later date as the proper officers
of the Fund determine.

If you do not expect to be present at the Special Meeting and wish your
shares to be voted, please vote your proxy ("the Proxy") allowing sufficient
time for the Proxy to be received on or before 1:30 p.m. Eastern Time on
Thursday, October 7, 1999. If your Proxy is properly returned, shares
represented by it will be voted at the Special Meeting in accordance with your
instructions. However, if no instructions are specified, with respect to a
specific Proposal, the Proxy will be voted FOR the approval of such Proposal and
in accordance with the judgment of the persons appointed as proxies upon any
other matter that may properly come before the Special Meeting. Shareholders may
revoke their Proxies at any time prior to the time they are voted by giving
written notice to the Secretary of the Fund, by delivering a subsequently dated
Proxy or by attending and voting at the Special Meeting.

The close of business on August 6, 1999, has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of, and to vote at, the Special Meeting and at any adjournment thereof.
On that date, the Fund had ________________ shares outstanding. Each full share
will be entitled to one vote at the Special Meeting and each fraction of a share
will be entitled to the fraction of a vote equal to the proportion of a full
share represented by the fractional share.

The expenses of the Special Meeting will be borne by ICC, except that
the incremental costs associated with Proposals 4 through 10 will be borne by
the Fund, and will include reimbursement to brokerage firms and others for
expenses in forwarding Proxy solicitation materials to beneficial owners. The
solicitation of Proxies will be largely by mail, but may include telephonic,
telegraphic, Internet or oral communication by employees and officers of ICC and
ABIM (collectively, the AAdvisors"). Additional solicitation may be made by
Shareholder Communications Corporation, ("Shareholder Communications"), a
solicitation firm located in New York, New York that has been engaged by the
Fund to assist in proxy solicitation. [Payments to Shareholder Communications by
ICC and the Fund are estimated to be
$__________.]

Upon request the Fund will furnish to shareholders, without charge, a
copy of the Annual Report for its fiscal year ended March 31, 1999. The Annual
Report of the Fund may be obtained by written request to the Fund, One South
Street, Baltimore, Maryland 21202, or by calling (800) 553-8080.

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<PAGE>

The Fund is registered as an open-end, diversified management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended. The Fund offers four classes of shares:
Class A, Class B, Class C and Institutional.

PROPOSAL 1: To consider and act upon a proposal to elect a Board of
Directors of the Fund.

At the Special Meeting, it is proposed that eight Directors be elected
to hold office until their successors are duly elected and qualified. The
persons named in the accompanying Proxy intend, in the absence of contrary
instructions, to vote all Proxies on behalf of the shareholders for the election
of Richard R. Burt, Richard T. Hale, Joseph R. Hardiman, Louis E. Levy, Eugene
J. McDonald, Rebecca W. Rimel, Truman T. Semans and Robert H. Wadsworth (each a
"Nominee" and collectively the "Nominees"). All of the Nominees are currently
members of the Board of Directors except for Messrs. Burt and Wadsworth. Ms.
Rimel and Messrs. Hale, Levy, McDonald and Semans were last elected by a vote of
shareholders on August 14, 1997. Mr. Hardiman was appointed by the Board of
Directors to fill a vacancy on the Board and has not previously been elected by
the shareholders. Messrs. James J. Cunnane and Carl W. Vogt, who are current
members of the Board, are not seeking reelection and will resign from the Board
effective upon the election of their successors. It is the intention of the
Board that at least 75% of its members will be disinterested persons within the
contemplation of Section 15(f) of the 1940 Act and will remain disinterested
persons for at least three years after the Merger.

At a meeting held on July 28, 1999, the nominating committees (with
each committee comprised of four independent directors) of the Boards of
Directors of the Deutsche Funds, Inc. ("Deutsche Funds") and the Deutsche
Portfolios recommended to the full Boards the nomination of Ms. Rimel and
Messrs. Hale, Hardiman, Levy, McDonald and Semans to each Board. If approved by
the full Boards of the Deutsche Funds and the Deutsche Portfolios, and if
subsequently approved by shareholders, they will serve as directors of the
Deutsche Funds and Deutsche Portfolios. The Deutsche Funds and the Deutsche
Portfolios are advised or administered by a subsidiary of Deutsche Bank.

The proposal to elect the Board of Directors is being presented for
shareholder approval pursuant to requirements under the 1940 Act. Under the 1940
Act, Directors may not fill vacancies unless at least two-thirds of the
Directors holding office after such vacancies are filled have been elected by
the shareholders. The Special Meeting will provide the Board with operating
flexibility by making it possible for the Board of Directors to fill vacancies
that may occur in the future.

Each of the Nominees has consented to being named in this Proxy
Statement and to serving as a Director if elected. The Fund knows of no reason
why any Nominee would be unable or unwilling to serve if elected. Because the
Fund does not hold regular annual

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<PAGE>

shareholder meetings, each Nominee, if elected, will hold office until his or
her successor is elected and qualified.

Information Regarding Nominees

The following information is provided for each Nominee. As of May 31,
1999, the Directors and officers of the Fund as a group and the Nominees as a
group beneficially owned an aggregate of less than 1% of the Fund.

<TABLE>
<CAPTION>
Shares
Beneficially
Name and Position Business Experience During the Past Owned as of
with the Fund Age Five Years (including all directorships) May 31, 1999** Percentage
- ---------------------- --- ----------------------------------------------- -------------- ----------
<S> <C> <C> <C> <C>
Truman T. Semans* 72 Vice Chairman, Brown Investment Advisory ______ ***
Chairman and & Trust Company (formerly, Alex. Brown
Director since 1992 Capital Advisory & Trust Company);
Director, Investment Company Capital Corp.
(registered investment advisor); and Director
and Chairman, Executive Committee of
Virginia Hot Springs, Inc. (property
management). Formerly, Managing
Director, BT Alex. Brown Incorporated;
Vice Chairman, Alex. Brown & Sons
Incorporated (now BT Alex. Brown
Incorporated). Director of 10 funds in the
Fund Complex.****

Richard R. Burt 52 Chairman, IEP Advisors, Inc.; Chairman of ______ ***
Nominee the Board, Weirton Steel Corporation;
Member of the Board, Archer Daniels
Midland Company (agribusiness
operations), Hollinger International Inc.
(publishing), Homestake Mining Company
(mining and exploration), HCL
Technologies (information technology) and
Anchor Technologies (gaming software and
equipment); Director, Mitchell Hutchins
family of funds (registered investment
companies); Member, Textron Corporation
International Advisory Council; and
Partner, McKinsey & Company (consulting),
1991-1994. Formerly, U.S. Chief
Negotiator in Strategic Arms Reduction
Talks (START) with former Soviet Union
and U.S. Ambassador to the Federal
Republic of Germany, 1985-1991. Nominee
for Director of 8 funds in the Fund
Complex.
</TABLE>
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<PAGE>

Joseph R. Hardiman 62 Private Equity Investor and Capital Markets _____ ***
Director since 1998 Consultant; Director, Wit Capital Group
(registered broker dealer) and The Nevis
Fund (registered investment company).
Formerly, President and Chief Executive
Officer, The National Association of
Securities Dealers, Inc. and The NASDAQ
Stock Market, Inc., 1987-1997; Chief
Operating Officer of Alex. Brown & Sons
Incorporated (now BT Alex. Brown
Incorporated), 1985-1987; and General
Partner, Alex. Brown & Sons Incorporated
(now BT Alex. Brown Incorporated), 1976-
1985. Director of each fund in the Fund
Complex.

Louis E. Levy 66 Director, Kimberly-Clark Corporation ______ ***
Director since 1994 (personal consumer products) and
Household International (finance and
banking). Formerly, Chairman of the
Quality Control Inquiry Committee and
American Institute of Certified Public
Accountants, ____ - ____ ; Trustee,
Merrill Lynch Funds for Institutions,
1991-1993; Adjunct Professor, Columbia
University-Graduate School of Business,
1991-1992; and Partner, KPMG Peat
Marwick, retired 1990. Director of each
fund in the Fund Complex.

</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
Shares
Beneficially
Name and Position Business Experience During the Past Owned as of
with the Fund Age Five Years (including all directorships) May 31, 1999** Percentage
- ---------------------- --- ----------------------------------------------- -------------- ----------
<S> <C> <C> <C> <C>
Eugene J. McDonald 67 President, Duke Management Company ______ ***
Director since 1992 (investments); Executive Vice President,
Duke University (education, research and
health care); Executive Vice Chairman and
Director, Central Carolina Bank & Trust
(banking); and Director, Victory Funds
(registered investment companies).
Formerly, Director, AMBAC Treasurers
Trust (registered investment company) and
DP Mann Holdings (insurance). Director of
each fund in the Fund Complex.

Rebecca W. Rimel 48 President and Chief Executive Officer, The ______ ***
Director since 1997 Pew Charitable Trusts (charitable funds);
Director and Executive Vice President, The
Glenmede Trust Company (investment trust
and wealth management). Formerly,
Executive Director, The Pew Charitable
Trusts. Director of 11 funds in the Fund
Complex.

Robert H. Wadsworth 59 President, The Wadsworth Group (registered ______ ***
Nominee investment advisor), First Fund Distributors,
Inc. (registered broker dealer) and
Guinness Flight Investment Funds, Inc.;
Director, The Germany Fund, Inc., The New
Germany Fund, Inc., The Central European
Equity Fund, Inc., DB New World
Portfolio, Ltd., and Deutsche Funds,
Inc.; Trustee, Deutsche Portfolios; and
Vice President, Professionally Managed
Portfolios and Advisors Series Trust
(registered investment companies).
Nominee for Director of 8 funds in the
Fund Complex.
</TABLE>

* Denotes an individual who is an "interested person" as defined in the 1940
Act.
** This information has been provided by each Nominee for Director of the
Fund.
*** As of May 31, 1999, the Nominees of the Fund as a group beneficially
owned an aggregate of less than 1% of the Fund.
**** The AFund Complex" consists of 12 registered investment companies which
hold themselves out to investors as related companies for purposes of
investment and investor services for which ICC provides investment
advisory or administrative services.

Compensation of Directors

Each Director who is not an "interested person" within the meaning of
the 1940 Act, as well as the Fund's President, receives an aggregate annual fee
(plus reimbursement for

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<PAGE>

reasonable out-of-pocket expenses incurred in connection with his or her
attendance at Board and committee meetings) from the Fund and all of the funds
in the Fund Complex for which he or she serves. Payment of such fees and
expenses is allocated among all such funds described above in proportion to
their relative net assets. For the fiscal year ended March 31, 1999, Independent
Directors' fees (including fees paid to the Fund's President) attributable to
the assets of the Fund totaled $36,141. Officers of the Fund, except the Fund's
President, receive no direct remuneration from the Fund. Officers of the Fund
who are employees of BT Alex. Brown Incorporated ("BT Alex. Brown") or its
affiliates may be considered to have received remuneration indirectly.

Any Director who receives fees from the Fund is permitted to defer
between 50% and 100% of his or her annual compensation pursuant to a Deferred
Compensation Plan. Ms. Rimel and Messrs. Cunnane, Levy, McDonald and Vogt have
each executed a Deferred Compensation Agreement and may defer a portion of their
compensation from the Fund and the Fund Complex. Currently, the deferring
Directors may select from among various funds in the Fund Complex and BT
International Equity Fund in which all or part of their deferral account shall
be deemed to be invested. Distributions from the deferring Directors' deferral
accounts will be paid in cash, in quarterly installments over a period of ten
years.

The aggregate compensation payable by the Fund to each of the Fund's
Directors serving during the fiscal year ended March 31, 1999 is set forth in
the compensation table below. The aggregate compensation payable to such
Directors during the fiscal year ended March 31, 1999 by the Fund Complex is
also set forth in the compensation table below.

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<PAGE>

<TABLE>
<CAPTION>
COMPENSATION TABLE

Aggregate Pension or Retirement Total Compensation Number of Funds
Compensation Benefits Accrued as From the Fund in Fund Complex
Payable Part of Fund and Fund Complex for Which Director
Name and Position from the Fund Expenses Payable to Directors Serves
----------------- ------------- --------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Truman T. Semans, Chairman(1) $ 0 $ 0 $ 0 10
Richard T. Hale, Director (1) $ 0 $ 0 $ 0 10
James J. Cunnane, Director $3,448(2) (3) $ 39,000 13(4)
Joseph R. Hardiman, Director(5) $2,717 (3) $ 29,500 11(6)
John F. Kroeger, Director(7) $3,232 (3) $ 36,750 13(4)
Louis E. Levy, Director $4,111 (3) $ 46,500 13(4)
Eugene J. McDonald, Director $3,885(2) (3) $ 44,000 13(4)
Rebecca W. Rimel, Director $3,501(2) (3) $ 39,000 12(4,6)
Carl W. Vogt, Director $3,523(2) (3) $ 39,000 13(4,6)
</TABLE>
- -----------------
(1) A Director who is an "interested person" as defined in the 1940 Act.
(2) Of the amounts payable to Ms. Rimel and Messrs. Cunnane, McDonald and Vogt,
$3,501, $3,448, $3,885, and $3,523, respectively, were deferred pursuant to
the Fund Complex's Deferred Compensation Plan.
(3) The Fund Complex has adopted a Retirement Plan for eligible Directors, and
the Fund's President as described below. The actuarially computed pension
expense for the Fund for the fiscal year ended March 31, 1999 was $14,319.
(4) One of these Funds ceased operations on July 29, 1998.
(5) Appointed to the Board on September 27, 1998.
(6) Ms. Rimel receives and Messrs. Vogt and Hardiman received (prior to their
appointment or election as Director to all of the Funds in the Fund
Complex) proportionately higher compensation from each fund for which they
serve as a Director.
(7) Retired, effective September 27, 1998; Deceased, November 26, 1998.

The Fund Complex has adopted a retirement plan (the "Retirement Plan")
for the Fund's President and Directors who are not employees of the Fund, the
Fund's investment advisor or their respective affiliates (the "Participants").
After completion of six years of service, each Participant will be entitled to
receive an annual retirement benefit equal to a percentage of the fees earned in
his or her last year of service. Upon retirement, each Participant will receive
annually 10% of such fee for each year that he or she served after completion of
the first five years, up to a maximum annual benefit of 50% of the fee earned in
his or her last year of service. The fee will be paid quarterly, for life, by
each fund for which he or she serves. The Retirement Plan is unfunded and
unvested. The Fund has two Participants, a Director who retired effective
December 31, 1994, and Harry Woolf, the Fund's President, who retired as a
Director effective December 31, 1996. These participants qualified for the
Retirement Plan by serving thirteen years and fourteen years, respectively, as
Directors in the Fund Complex and each will be paid a quarterly fee of $4,875 by
the Fund Complex for the rest of his life. Such fees are allocated to each fund
in the Fund Complex based upon the relative net assets of such fund to the Fund
Complex.

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<PAGE>

Set forth in the table below are the estimated annual benefits payable
to a Participant upon retirement assuming various years of service and payment
of a percentage of the fee earned by such Participant in his or her last year of
service, as described below. The approximate credited years of service, shown in
parentheses, for each Participant at December 31, 1998, are as follows: Messrs.
Cunnane (4), Hardiman (0), Levy (4), McDonald (6), Vogt (3), and Ms. Rimel (3).

Estimated Annual Benefits Payable by Fund Complex upon Retirement

Years of Service Chairmen of Audit and Executive Committees Other Participants
- ---------------- ------------------------------------------ ------------------
<S> <C> <C>
6 years $ 4,900 $ 3,900
7 years $ 9,800 $ 7,800
8 years $14,700 $11,700
9 years $19,600 $15,600
10 years or more $24,500 $19,500
</TABLE>

Meetings and Committees of the Board of Directors

There were four regular meetings of the Board of Directors held during
the fiscal year ended March 31, 1999. All incumbent Directors attended all of
the meetings held during their respective terms.

The Board of Directors has an Audit and Compliance Committee. The Audit
and Compliance Committee makes recommendations to the full Board of Directors
with respect to the engagement of independent accountants. The Committee
reviews, with the independent accountants, the results of the audit engagement
and matters having a material effect on the Fund's financial operations. The
members of the Audit and Compliance Committee during the fiscal year ended March
31, 1999, were Ms. Rimel and Messrs. Levy (Chairman), Cunnane, Hardiman,
McDonald and Vogt, each of whom is not an "interested person" within the meaning
of the 1940 Act. Mr. Kroeger was Chairman of the Audit and Compliance Committee
until his retirement. If elected, Messrs. Burt and Wadsworth will become members
of the Audit and Compliance Committee. The Audit and Compliance Committee met
four times during the fiscal year ended March 31, 1999. All incumbent members
attended all of the meetings held during their respective terms. The Chairman
receives an aggregate annual fee of $10,000 from the Fund Complex. Payment of
the fee is allocated among all funds in the Fund Complex in proportion to their
relative net assets.

The Board of Directors has a Nominating Committee. The Nominating
Committee makes recommendations to the full Board of Directors with respect to
candidates for the Board of Directors. The members of the Nominating Committee
during the fiscal year ended March 31, 1998, were Ms. Rimel and Messrs. McDonald
(Chairman), Cunnane, Hardiman, Levy and Vogt,

-12-

<PAGE>

each of whom is not an "interested person" within the meaning of the 1940
Act. If elected, Messrs. Burt and Wadsworth will become members of the
Nominating Committee. The Nominating Committee met once during the fiscal year
ended March 31, 1999. All incumbent members attended the meeting held during its
respective term.

The Board of Directors has a Compensation Committee. The Compensation
Committee makes recommendations to the full Board of Directors with respect to
the compensation of Directors. The members of the Compensation Committee during
the fiscal year ended March 31, 1999, were Ms. Rimel and Messrs. Cunnane
(Chairman), Hardiman, Levy, McDonald and Vogt, each of whom is not an
"interested person" within the meaning of the 1940 Act. If elected, Messrs. Burt
and Wadsworth will become members of the Compensation Committee. The
Compensation Committee did not meet during the fiscal year ended March 31, 1999.

The Board of Directors has an Executive Committee. The Executive
Committee makes recommendations to the full Board of Directors with respect to
the renewal of the Fund's agreements with its service providers. The members of
the Executive Committee during the fiscal year ended March 31, 1998 were, Ms.
Rimel and Messrs. McDonald (Chairman), Cunnane, Levy, Hardiman and Vogt, each of
whom is not an "interested person" within the meaning of the 1940 Act. If
elected, Messrs. Burt and Wadsworth will become members of the Executive
Committee. The Chairman of the Executive Committee receives an aggregate annual
fee of $10,000 from the Fund Complex. Payment of such fee is allocated among all
funds in the Fund Complex in proportion to their relative net assets. The
Executive Committee was formed on September 28, 1999 and met twice during the
fiscal year ended March 31, 1999. All incumbent members attended the meetings
held during their respective terms.

Board Approval of the Election of Directors

At meetings of the Board of Directors held on March 30, 1999 and July
28, 1999, the Board of Directors recommended that shareholders vote FOR each of
the Nominees for Director named herein. In recommending that shareholders elect
the Nominees as Directors of the Fund, the Board considered the Nominees'
experience and qualifications.

Shareholder Approval of the Election of Directors

The Election of the Directors requires the affirmative vote of a
plurality of all votes cast at the Special Meeting, provided that a majority of
the shares entitled to vote are present in person or by Proxy at the Special
Meeting. If you give no voting instructions, your shares will be voted FOR all
Nominees named herein. If the Directors are not approved by shareholders of the
Fund, the Board of Directors will consider alternative nominations.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR THE
ELECTION OF THE DIRECTORS. ---

-13-

<PAGE>

PROPOSAL 2: To approve a new Investment Advisory Agreement between the Fund
and Investment Company Capital Corp.

General Information

ICC is the Fund's investment advisor and ABIM is the Fund's sub-
advisor. ICC is an indirect wholly owned subsidiary of Bankers Trust. BT Alex.
Brown owns a 1% general partnership interest in ABIM and BT Alex. Brown
Holdings, Inc. owns a 49% limited partnership interest in ABIM.

On November 30, 1998, Bankers Trust, Deutsche Bank and Circle
Acquisition Corporation entered into an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the terms of the Merger Agreement, Circle
Acquisition Corporation, a wholly owned, New York subsidiary of Deutsche Bank,
merged with and into Bankers Trust on June 4, 1999, with Bankers Trust
continuing as the surviving entity. Under the terms of the Merger, each
outstanding share of Bankers Trust common stock was converted into the right to
receive $93 in cash, without interest.

As a result of the Merger, Bankers Trust became a wholly owned
subsidiary of Deutsche Bank. Deutsche Bank is a banking company with limited
liability organized under the laws of the Federal Republic of Germany. Deutsche
Bank is the parent company of a group consisting of banks, capital markets
companies, mutual fund management companies, mortgage banks, property finance
company, installment financing and leasing companies, insurance companies,
research and consultancy companies and other domestic and foreign companies. At
March 31, 1999, the Deutsche Bank Group had total assets of U.S. $727 billion.
The Deutsche Bank Group's capital and reserves at March 31, 1999 were U.S. $19.6
billion. Since the Merger, Bankers Trust, ICC and ABIM, along with their
affiliates, have continued to offer the same range of financial products and
services, including investment advisory services, that they offered prior to the
Merger.

The Merger on June 4, 1999 may have resulted in an assignment and,
therefore a termination, of the Fund's prior Investment Advisory Agreement under
the 1940 Act. In anticipation of the Merger, the Directors of the Fund,
including the Directors who are not (i) parties to the new Investment Advisory
Agreement between the Fund and ICC (the "New Advisory Agreement") or (ii)
interested persons of any such party (the "Independent Directors"), unanimously
approved the New Advisory Agreement (attached as Exhibit A) on March 30, 1999.
The New Advisory Agreement is identical to the Fund's prior Investment Advisory
Agreement, except for the dates of execution, effectiveness and initial term.

On May 25, 1999, ICC was granted an exemptive order (the "Exemptive
Order") by the Securities and Exchange Commission ("SEC") permitting
implementation, without obtaining prior shareholder approval, of the New
Advisory Agreement during an interim period commencing on the date of the
closing of the Merger and continuing, for a period of up to 150

-14-

<PAGE>

days, through the date on which the New Advisory Agreement is approved by the
shareholders of the Fund (the "Interim Period"). Under the terms of the
Exemptive Order, ICC is allowed to receive advisory fees during the Interim
Period pursuant to the New Advisory Agreement. In accordance with the Exemptive
Order, the advisory fees charged to the Fund and paid to ICC under the New
Advisory Agreement have been held in an interest-bearing escrow account and the
Fund expects to continue to deposit these fees in such account until approval of
the New Advisory Agreement by shareholders of the Fund has been obtained. If the
New Advisory Agreement is not approved by the shareholders of the Fund by the
expiration of the Interim Period, the fees held in escrow will be remitted to
the Fund. As of [____], 1999, the amount escrowed totaled $[____].

ICC does not anticipate that the Merger will result in any reduction in
the quality of services now provided to the Fund. Nor does ICC anticipate that
the Merger will have any adverse effect on its ability to fulfill its
obligations under the New Advisory Agreement or to operate its business in a
manner consistent with past business practice.

The Prior Advisory Agreement

Prior to June 4, 1999, ICC served as investment advisor to the Fund
pursuant to an Investment Advisory Agreement between ICC and the Fund, dated as
of September 1, 1997 (the "Prior Advisory Agreement"). The Prior Advisory
Agreement was initially approved by the shareholders of the Fund on August 14,
1997 and most recently approved by the Fund's Board of Directors, including a
majority of the Independent Directors, on September 29, 1998.

The New Advisory Agreement

Other than the dates of execution, effectiveness and initial term, the
New Advisory Agreement is identical to the Prior Advisory Agreement. The terms
of the New Advisory Agreement are summarized below and are qualified by
reference to Exhibit A.

Advisory Fees. The investment advisory fee as a percentage of net
assets payable by the Fund will be the same under the New Advisory Agreement as
under the Prior Advisory Agreement. If the investment advisory fee under the New
Advisory Agreement had been in effect for the Fund's most recently completed
fiscal year, ICC would have received the same compensation as it received under
the Prior Advisory Agreement.

The New Advisory Agreement. The New Advisory Agreement provides that
the Advisor, in return for its fee, will (a) supervise and manage all aspects of
the Fund's operations, except for distribution services; (b) formulate and
implement continuing programs for the purchases and sales of securities,
consistent with the investment objective and policies of the Fund; (c) provide
the Fund with such executive, administrative and clerical services as are deemed
advisable by the Fund's Board of Directors; (d) provide the Fund with, or obtain
for it, adequate office space and all necessary office equipment and services,
including telephone

-15-

<PAGE>

service, utilities, stationery, supplies and similar items for the Fund's
principal office; (e) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the Fund, and
whether concerning the individual issuers whose securities are included in the
Fund's portfolio or the activities in which they engage, or with respect to
securities which the Advisor considers desirable for inclusion in the Fund's
portfolio; (f) determine which issuers and securities shall be represented in
the Fund's portfolio and regularly report thereon to the Fund's Board of
Directors; (g) take all actions necessary to carry into effect the Fund's
purchase and sale programs; (h) supervise the operations of the Fund's transfer
and dividend disbursing agent; (i) provide the Fund with such administrative and
clerical services for the maintenance of certain shareholder records, as are
deemed advisable by the Fund's Board of Directors; and (j) arrange, but not pay
for, the periodic updating of prospectuses and supplements thereto, proxy
material, tax returns, reports to the Fund's shareholders and reports to and
filings with the SEC and state Blue Sky authorities which may be required of the
Fund. Subject to the approval of the Board and the Fund's shareholders, the
Advisor may delegate certain of its duties enumerated above to a sub-advisor.

Under the New Advisory Agreement, the Fund pays ICC an annual fee based
on the Fund's average daily net assets. This fee is calculated and accrued daily
and the amounts of the daily accruals shall be paid monthly, at the annual rate
of 1.00% of the first $50 million, 0.85% of the next $50 million, 0.80% of the
next $100 million and 0.70% of the amount over $200 million. The Advisor may,
from time to time, voluntarily waive a portion of its advisory fee to preserve
or enhance the performance of the Fund.

The New Advisory Agreement provides that the Advisor will furnish
subject to compliance with applicable banking regulations, at its expense and
without cost to the Fund, the services of one or more officers of the Fund to
the extent that such officers may be required by the Fund for the proper conduct
of its affairs. The Fund assumes and pays all other expenses of the Fund,
including, without limitation: payments to the Fund's Advisor, any Sub-Advisor
and distributor under the Fund's plan of distribution; the charges and expenses
of any registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities and other property, and any
transfer, dividend or accounting agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio securities
transactions to which the Fund is a party; all taxes, including securities
issuance and transfer taxes, and fees payable by the Fund to Federal, State or
other governmental agencies; the costs and expenses of engraving or printing of
certificates representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the Fund and
its shares with the SEC and various states and other jurisdictions (including
filing fees, legal fees and disbursements of counsel); the costs and expenses of
printing, including typesetting, and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing of proxy statements and reports to shareholders;
fees and travel expenses of Directors or Director members of any advisory board
or committee; all expenses

-16-

<PAGE>

incident to the payment of any dividend, distribution, withdrawal or redemption,
whether in shares or in cash; charges and expenses of any outside service used
for pricing of the Fund's shares; charges and expenses of legal counsel,
including counsel to the Directors of the Fund who are not interested persons
(as defined in the 1940 Act) of the Fund and of independent accountants, in
connection with any matter relating to the Fund; membership dues of industry
associations; interest payable on Fund borrowings; postage; insurance premiums
on property or personnel (including officers and Directors) of the Fund which
inure to its benefit; extraordinary expenses (including but not limited to,
legal claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs of the Fund's operation unless
otherwise explicitly provided herein.

The services of the Advisor are not to be deemed exclusive, and the
Advisor is free to render investment advisory and corporate administrative or
other services to others (including other investment companies), and to engage
in other activities, so long as its services under the agreement are not
impaired thereby. The Advisor's officers or directors may serve as officers or
directors of the Fund, and the Fund's officers or directors may serve as
officers or directors of the Advisor, to the extent permitted by law.

Following the expiration of its initial two-year term, the New Advisory
Agreement continues in full force and effect from year to year, provided that
such continuance is approved at least annually by the Fund's Board or by the
vote of a majority of the Fund's outstanding voting securities, and by the
affirmative vote of a majority of the Directors who are not parties to the
agreement or "interested persons" of a party to the agreement (other than as
Directors of the Fund) by votes cast in person at a meeting specifically called
for such purpose.

The New Advisory Agreement may be terminated at any time, on waivable
written notice within 60 days and without any penalty, by vote of the Fund's
Board of Directors, by vote of a majority of the Fund's outstanding voting
securities or by the Advisor. The agreement automatically terminates in the
event of its assignment.

The New Advisory Agreement obligates the Advisor to exercise care and
diligence and to act in good faith and to use its best efforts within reasonable
limits to ensure the accuracy of all services performed under the agreement, but
the Advisor is not liable for any act or omission which does not constitute
willful misfeasance, bad faith or gross negligence on the part of the Advisor or
its officers, directors or employees, or reckless disregard by the Advisor of
its duties under the agreement.

Board Considerations. The Board held a meeting on March 30, 1999, at
which the Board, including the Independent Directors, unanimously approved the
New Advisory Agreement and recommended the New Advisory Agreement for approval
by the shareholders of the Fund. In evaluating the New Advisory Agreement, the
Board based its determination primarily on its conclusion that there would be a
high degree of continuity of services to the Fund and took into account that the
Prior Advisory Agreement and the New Advisory

-17-

<PAGE>

Agreement, including their terms relating to the services to be provided
thereunder by ICC and the fees and expenses payable by the Fund, are
substantially identical.

The Board was assured on behalf of Bankers Trust and Deutsche Bank that
they intend to comply with the requirements of Section 15(f) of the 1940 Act.
Section 15(f) provides a non-exclusive safe harbor for an investment advisor to
an investment company or any of its affiliated persons to receive any amount or
benefit in connection with a change in control of the investment advisor that
results in an assignment so long as two conditions are met:

1. For a period of three years after the change of control, at least
75% of the board members of the investment company must not be interested
persons of the acquired advisor or the acquiror (Bankers Trust and Deutsche
Bank, respectively, in this case). The Fund would be in compliance with this
provision of Section 15(f).

2. An "unfair burden" must not be imposed upon the investment company
as a result of such transaction or any express or implied terms, conditions or
understandings applicable thereto. The term "unfair burden" is defined in
Section 15(f) to include any arrangement during the two-year period after the
Merger whereby the investment advisor, or any interested person of any such
advisor, receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its shareholders (other than fees for
bona fide investment advisory or other services) or from any person in
connection with the purchase or sale of securities or other property to, from or
on behalf of the investment company (other than bona fide ordinary compensation
as principal underwriter for such investment company). Bankers Trust and
Deutsche Bank are not aware of any express or implied term, condition,
arrangement or understanding that would impose an "unfair burden" on the Fund as
a result of the Merger. Bankers Trust and Deutsche Bank have agreed that they,
and their affiliates, will take no action that would have the effect of imposing
an "unfair burden" on the Fund as a result of the Merger.

The Board also considered the terms of the Merger and the possible
effects of the Merger upon ICC's organization and upon the ability of ICC to
provide advisory services to the Fund. The Board considered the skills and
capabilities of ICC in this regard and the representations of Bankers Trust and
Deutsche Bank that no material change was planned in the current management or
facilities of ICC.

The Board was also informed of the resources of Deutsche Bank that
could be made available to the Advisor and the Fund. Although the Board focused
primarily on the continuity of services to the Fund, the Directors did consider
Deutsche Bank's experience as advisor and service provider to two families of
U.S. mutual funds as well as numerous non-U.S. mutual funds.

The Board also considered other effects on the Fund of ICC becoming an
affiliated person of Deutsche Bank. Following the Merger, the 1940 Act will
prohibit or impose certain conditions on the ability of the Fund to engage in
certain transactions with Deutsche Bank. For

-18-

<PAGE>

example, absent exemptive relief, the Fund will be prohibited from entering into
securities transactions in which Deutsche Bank acts as a principal. Currently
the Fund is prohibited from entering into only those transactions in which
Bankers Trust acts as principal. The Fund will also have to satisfy certain
conditions in order to engage in securities transactions in which Deutsche Bank
is acting as an underwriter. The Fund is already required to satisfy such
conditions when engaging in transactions in which Bankers Trust is acting as an
underwriter. In this connection, management of the Advisor represented to the
Board that it does not believe these prohibitions or conditions will have a
material effect on the management or performance of the Fund.

The Board also considered that the costs of the Special Meeting,
insofar as they apply to approval of the New Advisory Agreement, would be borne
by the Advisor.

After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Board, including the Independent
Directors, unanimously approved the New Advisory Agreement and voted to
recommend its approval to the shareholders of the Fund.

Additional Information. On March 11, 1999, Bankers Trust Company, a
separate subsidiary of Bankers Trust, 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 after these events took place. Pursuant
to its agreement with the U.S. Attorney's office, Bankers Trust Company 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 Company
agreed to pay a $3.5 million fine to the State of New York. The events leading
up to the guilty plea did not arise out of the investment advisory and
management activities provided by ICC to the Fund.

As a result of the plea, absent an order from the SEC, ICC would not be
able to continue as Advisor. The SEC granted Bankers Trust Company a temporary
order under Section 9(c) of the Act to permit Bankers Trust Company and its
affiliates to continue to provide investment advisory services to registered
investment companies, and Bankers Trust Company, pursuant to Section 9(c) of the
Act, has filed an application for a permanent order. On May 7, 1999, the SEC
extended the temporary order under Section 9(c) of the Act until the SEC takes
final action on the application for a permanent order or, if earlier, November
8, 1999. However, there is no assurance that the SEC will grant a permanent
order. If the SEC refuses to grant a permanent order, shareholders will receive
supplemental proxy materials requesting approval to release any amounts held in
escrow up to the time of the refusal and such other action as deemed appropriate
by the Board.

-19-

<PAGE>

Investment Company Capital Corp.

ICC is a registered investment advisor that had under management as of
June 30, 1999 approximately $10 billion, including assets of the Fund and the
assets of ICC's other clients. ICC is a wholly owned subsidiary of BT Alex.
Brown and an indirect subsidiary of Bankers Trust. The principal address of ICC
and BT Alex. Brown is One South Street, Baltimore, Maryland, 21202 and the
principal address of Bankers Trust is 130 Liberty Street, New York, New York,
10006. Bankers Trust is a wholly owned subsidiary of Deutsche Bank. The
principal address of Deutsche Bank is Deutsche Bank Aktiengesellschaft,
Taunusalage, 12, D-60262 Frankfurt am Main, Federal Republic of Germany.

Deutsche Asset Management (Americas) ("Deutsche Asset Management") is
an operating unit of Deutsche Bank consisting of ICC and other asset management
affiliates of Deutsche Bank.

The following information is provided for each Director and the
principal executive officer of ICC.

<TABLE>
<CAPTION>
Directors and Principal Executive Officer of ICC

Name and Position
with the Advisor Address Principal Occupation
- ---------------- ------- --------------------
<S> <C> <C>
Richard T. Hale One South Street Managing Director,
Director and President Baltimore, Maryland 21202 Deutsche Asset Management
Margaret-Mary V. Preston One South Street Managing Director,
Director Baltimore, Maryland 21202 BT Alex. Brown Incorporated
Mayo A. Shattuck III One South Street President, Chief Operating Officer and
Director Baltimore, Maryland 21202 Director,
BT Alex. Brown Incorporated
Truman T. Semans Furness House Vice Chairman,
Director 19 South Street Brown Investment Advisory & Trust
Baltimore, Maryland 21202 Company
</TABLE>

For the fiscal year ended March 31, 1999, the Fund paid ICC an
aggregate fee of $5,619,259 for advisory services. For such fiscal year, the
Fund also paid ICC aggregate fees of $335,996 for transfer agency services
provided to the Fund and $127,817 for accounting services provided to the Fund.
For the same period, the Fund paid $92,747 to Bankers Trust Company for custody
services provided to the Fund.

As of June 4, 1999, to the Fund management's knowledge as provided by
the Directors and officers of the Fund, the following Directors and officers of
the Fund beneficially owned shares of Bankers Trust that were converted into the
right to receive $93 per share in cash, without interest pursuant to the terms
of the Merger. [Mr. Hale, Chairman and a Director of the Fund and President and
a Director of ICC, beneficially owned [74,195] shares of Bankers Trust. Mr.
Semans, a Director of the Fund and a Director of ICC, beneficially owned ______
shares of Bankers Trust. Charles A. Rizzo, Treasurer of the Fund and a Vice
President of ICC,

-20-

<PAGE>

beneficially owned ___ shares of Bankers Trust.] [Disclose any substantial
interest of officers/Directors/Nominees in Deutsche Bank.]

Other Funds Advised by ICC with Similar Investment Objectives

A number of funds in the Fund Complex invest primarily in equity
securities and accordingly seek capital appreciation, either in and of itself,
or along with income. However, each of these funds employs widely differing
investment policies and styles in seeking these objectives. The following table
provides comparative information on fees paid to ICC pursuant to the advisory
agreements in effect for such funds.

<TABLE>
<CAPTION>
Management Fee
Assets (as a percentage of
Fund (000's) average daily net assets)
- ---- ------- -------------------------

<S> <C> <C>
Flag Investors Equity Partners Fund, Inc. ..................... $ 465,382(1) 0.83%(1)
Flag Investors Emerging Growth Fund, Inc. ..................... $ 123,273(2) .85%(2)
Flag Investors International Fund, Inc. ....................... $ 12,187(3) 0.00% (net of fee waivers)(3)
Flag Investors Real Estate Securities Fund, Inc. .............. $ 41,462(4) 0.35% (net of fee waivers)(4)
Flag Investors Communications Fund, Inc. ...................... $1,445,143(5) 0.68%(5)
</TABLE>

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

(1) Information given for the fiscal year ended May 31, 1999.
(2) Information given for the fiscal year ended October 31, 1998.
(3) Information given for the fiscal year ended October 31, 1998. Absent fee
waivers, Management fees would be 0.75% of the fund's average daily net
assets.
(4) Information given for the fiscal year ended December 31, 1998. Absent fee
waivers, Management fees would be 0.65% of the fund's average daily net
assets.
(5) Information given for the fiscal year ended December 31, 1998.

Shareholder Approval of the New Advisory Agreement

Approval of the New Advisory Agreement requires the affirmative vote of
a majority of the outstanding voting securities of the Fund. In the event that
shareholders of the Fund do not approve the New Advisory Agreement, the Board
will take such action as it deems in the best interest of the Fund and its
shareholders which may include proposing that shareholders approve an agreement
in lieu of the New Advisory Agreement.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
APPROVAL OF THE NEW ADVISORY AGREEMENT. ---

PROPOSAL 3: To approve a new Sub-Advisory Agreement among the Fund,
Investment Company Capital Corp. and Alex. Brown Investment
Management.

-21-

<PAGE>

General Information

ABIM is the Fund's sub-advisor. Shareholders are being asked to approve
a new Sub-Advisory Agreement among ICC, ABIM and the Fund which has been in
effect since the closing of the Merger on June 4, 1999. For a description of the
Merger, together with the factors considered by the Board in its review and
analysis of such Merger, please see Proposal 2 beginning on page ______.

The Merger may have resulted in an assignment and, therefore a
termination, of the Fund's prior Sub-Advisory Agreement under the 1940 Act. In
anticipation of the Merger, the Directors of the Fund, including the Directors
who are not (i) parties to the new Sub-Advisory Agreement among the Fund, ICC
and ABIM (the "New Sub-Advisory Agreement") or (ii) interested persons of any
such party (the "Independent Directors"), unanimously approved the New
Sub-Advisory Agreement (attached as Exhibit B) on March 30, 1999. The New Sub-
Advisory Agreement is identical to the Fund's prior Sub-Advisory Agreement,
except for the dates of execution, effectiveness and initial term.

On May 25, 1999, ICC was granted an Exemptive Order by the SEC
permitting implementation, without obtaining prior shareholder approval, of the
New Sub-Advisory Agreement during an interim period commencing on the date of
the closing of the Merger and continuing, for a period of up to 150 days,
through the date on which the New Sub-Advisory Agreement is approved by the
shareholders of the Fund (the "Interim Period"). Under the terms of the
Exemptive Order, ABIM is allowed to receive advisory fees during the Interim
Period pursuant to the New Sub-Advisory Agreement. In accordance with the
Exemptive Order, the sub-advisory fees paid to ABIM by ICC under the New
Sub-Advisory Agreement have been held and will continue to be held in an
interest-bearing escrow account until approval of the New Sub-Advisory
Agreement by shareholders of the Fund has been obtained. If the New Sub-Advisory
Agreement is not approved by the shareholders of the Fund by the expiration of
the Interim Period, ABIM will not be entitled to accrued fees and interest paid
to ICC.

ABIM does not anticipate that the Merger will result in any reduction
in the quality of services now provided to the Fund. Nor does ABIM anticipate
that the Merger will have any adverse effect on its ability to fulfill its
obligations under the New Sub-Advisory Agreement or to operate its business in a
manner consistent with past business practice.

The Prior Sub-Advisory Agreement

Prior to June 4, 1999, ABIM served as sub-advisor to the Fund pursuant
to a Sub-Advisory Agreement among the Fund, ICC and ABIM, dated as of September
1, 1997 (the "Prior Sub-Advisory Agreement"). The Prior Sub-Advisory Agreement
was initially approved by the shareholders of the Fund on August 14, 1997. The
Prior Sub-Advisory Agreement was last approved by the Fund's Board of Directors,
including a majority of the Independent Directors, on September 29, 1998.

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<PAGE>

The New Sub-Advisory Agreement

Other than the dates of execution, effectiveness and initial term, the
New Sub-Advisory Agreement which has been in effect since June 4, 1999 is
identical to the Prior Sub-Advisory Agreement. The terms of the New Sub-Advisory
Agreement are summarized below and are qualified by reference to Exhibit B.

Advisory Fees. The sub-advisory fee as a percentage of net assets
payable by the sub-advisor will be the same under the New Sub-Advisory
Agreement as under the Prior Sub-Advisory Agreement. If the sub-advisory fee
under the New Sub-Advisory Agreement had been in effect for the Fund's most
recently completed fiscal year, ABIM would have received the same compensation
as it received under the Prior Sub-Advisory Agreement.

The New Sub-Advisory Agreement. The New Sub-Advisory Agreement provides
that ABIM, in return for its fee, will (a) provide the Fund with such executive,
administrative and clerical services as are deemed advisable by the Fund's Board
of Directors; (b) determine which issuers and securities shall be represented in
the Fund's portfolio and regularly report thereon to the Fund's Board of
Directors; (c) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers and regularly report thereon to the
Fund's Board of Directors; (d) take, on behalf of the Fund, all actions which
appear to the Fund necessary to carry into effect such purchase and sale
programs as aforesaid, including the placing of orders for the purchase and sale
of securities of the Fund; and (e) obtain and evaluate pertinent information
about significant developments and economic, statistical and financial data,
domestic, foreign and otherwise, whether affecting the economy generally or the
Fund, and whether concerning the individual issuers whose securities are
included in the Fund's portfolio or the activities in which they engage, or with
respect to securities which ICC considers desirable for inclusion in the Fund's
portfolio.

Under the New Sub-Advisory Agreement, ICC pays ABIM an annual fee based
on the Fund's average daily net assets. This fee is calculated and accrued daily
and paid monthly at the annual rate of 0.75% of the first $50 million, 0.60% of
the next $150 million and 0.50% of the Fund's average daily net assets in excess
of $200 million.

The New Sub-Advisory Agreement provides that ABIM will furnish, subject
to compliance with applicable banking regulations, at its expense and without
cost to the Fund, the services of the President and certain Vice Presidents of
the Fund, to the extent that such officers may be required by the Fund for the
proper conduct of its affairs. ABIM will maintain, at its expense and without
cost to the Fund, a trading function in order to place orders for the purchase
and sale of portfolio securities of the Fund. The Fund assumes and pays or
causes to be paid all other expenses of the Fund, including, without limitation:
payments to ICC under the New Advisory Agreement; payments to the Fund's
distributor under the Fund's plan of distribution; the charges and expenses of
any registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities and other property, and any
transfer, dividend or

-23-

<PAGE>

accounting agent or agents appointed by the Fund; broker's commissions
chargeable to the Fund in connection with portfolio securities transactions to
which the Fund is a party; all taxes, including securities issuance and transfer
taxes, and fees payable by the Fund to Federal, State or other governmental
agencies; the costs and expenses of engraving or printing of certificates
representing shares of the Fund; all costs and expenses in connection with the
registration and the maintenance of registration of the Fund and its shares with
the SEC and various states and other jurisdictions (including filing fees, legal
fees and disbursements of counsel); the costs and expenses of printing,
including typesetting, and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing of proxy statements and reports to shareholders;
fees and travel expenses of Directors or Director members of any advisory board
or committee; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or in cash; charges
and expenses of any outside service used for pricing of the Fund's shares;
charges and expenses of legal counsel, including counsel to the Directors of the
Fund who are not interested persons (as defined in the 1940 Act) of the Fund and
of independent certified public accountants, in connection with any matter
relating to the Fund; membership dues of industry associations; interest payable
on Fund borrowings; postage; insurance premiums on property or personnel
(including officers and Directors) of the Fund which inure to its benefit;
extraordinary expenses (including but not limited to, legal claims and
liabilities and litigation costs and any indemnification related thereto); and
all other charges and costs of the Fund's operation unless otherwise explicitly
provided herein.

The services of ABIM are not to be deemed exclusive, and ABIM is free
to render investment advisory or other services to others (including other
investment companies), and to engage in other activities, so long as its
services under the agreement are not impaired thereby. Partners of ABIM may
serve as officers or Directors of the Fund, the Fund's officers or Directors may
serve as officers or partners of ABIM, to the extent permitted by law, and
partners of ABIM are not prohibited from engaging in any other business activity
or from rendering services to any other person, or from serving as partners,
officers, trustees or directors of any other firm, trust or corporation,
including other investment companies.

Following the expiration of its initial two-year term, the New
Sub-Advisory Agreement continues in full force and effect from year to year,
provided that such continuance is approved at least annually by the Fund's Board
or by the vote of a majority of the Fund's outstanding voting securities, and by
the affirmative vote of a majority of the Directors who are not parties to the
agreement or Ainterested parties" of a party to the agreement (other than as
Directors of the Fund) by votes cast in person at a meeting specifically called
for such purpose.

The New Sub-Advisory Agreement may be terminated, without the payment
of any penalty, by the Fund upon a vote of the Fund's Board of Directors, by a
vote of a majority of the Fund's outstanding voting securities or by ABIM, upon
60 days' written notice to the other parties. The agreement automatically
terminates in the event of its assignment.

-24-

<PAGE>

The New Sub-Advisory Agreement obligates ABIM to exercise care and
diligence and to act in good faith and to use its best efforts within reasonable
limits to ensure the accuracy of all services performed under the agreement, but
ABIM is not liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of ABIM or its officers,
directors or employees or reckless disregard by ABIM of its duties under the
agreement.

Board Considerations. The Board held a meeting on March 30, 1999, at
which the Board, including the Independent Directors, approved the New
Sub-Advisory Agreement for the Fund and recommended the New Sub-Advisory
Agreement for approval by the shareholders of the Fund. In evaluating the New
Sub-Advisory Agreement, the Board considered substantially the same factors that
led it to approve the New Advisory Agreement, particularly the continuity of
services. In this regard, the Board took into account that the Prior
Sub-Advisory Agreement and the New Sub-Advisory Agreement, including their terms
relating to the services to be provided thereunder by ABIM and the fees and
expenses, are substantially identical.

Alex. Brown Investment Management

ABIM is a registered investment advisor that had under management as of
June 30, 1999 approximately $11.7 billion, including assets of the Fund and the
assets of ABIM's other clients. ABIM is a limited partnership affiliated with
the Advisor. Buppert, Behrens & Owen, Inc., a company organized and owned by
three employees of ABIM, owns a 49% limited partnership interest and a 1%
general partnership interest in ABIM. BT Alex. Brown owns a 1% general
partnership interest in ABIM and BT Alex. Brown Holdings, Inc. owns the
remaining 49% limited partnership interest. The address of each of the foregoing
entities is One South Street, Baltimore, Maryland 21202.

The following information is provided for each general partner and the
principal executive officer of ABIM.

Name and Position with ABIM Address Principal Occupation
--------------------------- ------- --------------------
<S> <C> <C>
Buppert, Behrens & Owen, Inc. One South Street N/A
General Partner Baltimore, MD 21202
BT Alex. Brown Incorporated One South Street N/A
General Partner Baltimore, MD 21202
J. Dorsey Brown, III One South Street Managing Director, BT Alex.
Chief Executive Officer Baltimore, MD 21202 Brown Incorporated
</TABLE>

For the fiscal year ended March 31, 1999, ICC paid ABIM an aggregate
fee of $4,056,393 for sub-advisory services. For such fiscal year, the Fund paid
ICC aggregate fees of $5,619,259 for advisory services, $335,996 for transfer
agency services and $127,817 for accounting services provided to the Fund.

-25-

<PAGE>

Other Funds with Similar Investment Objectives Sub-Advised by ABIM

ABIM acts as sub-advisor to two other funds which invest primarily in
equity securities and accordingly seek capital appreciation, either in and of
itself, or along with income. However, each of these funds employs widely
differing investment policies and styles in seeking these objectives. The
following table provides comparative information on fees paid by ICC to ABIM
pursuant to sub-advisory agreements in effect for such funds.
<TABLE>
<CAPTION>
Sub-Advisory Fee
Assets of Fund (as a percentage of average
Fund (000s) daily net assets)
------ -----------------

<S> <C> <C>
Flag Investors Equity Partners Fund, Inc. $ 465,382(1) ______%(1)
Flag Investors Communications Fund, Inc. $1,445,143(2) ______%(2)
</TABLE>
- ------------
(1) Information given for the fiscal year ended May 31, 1999.
(2) Information given for the fiscal year ended December 31, 1998.

Shareholder Approval of the New Sub-Advisory Agreement

Approval of the New Sub-Advisory Agreement requires the affirmative
vote of a majority of the outstanding voting securities of the Fund. In the
event that shareholders of the Fund do not approve the New Sub-Advisory
Agreement, the Board will take such action as it deems in the best interest of
the Fund and its shareholders, which may include proposing that shareholders
approve an agreement in lieu of the New Sub-Advisory Agreement.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT. ---

PROPOSAL 4: To eliminate the Fund's fundamental investment policy concerning
short sales.

At the Special Meeting, the shareholders of the Fund will vote
regarding the elimination of the Fund's fundamental investment policy with
respect to short sales. Currently, the Fund has a fundamental investment policy
stating that:

The Fund will not effect short sales of securities.

If shareholders approve, this policy will be eliminated.

The primary purpose of this Proposal is to eliminate the Fund's
fundamental investment policy on short sales. This policy was initially adopted
primarily to comply with state regulatory requirements, which have been
eliminated as a result of federal legislation. If the proposal is

-26-

<PAGE>

approved, the Fund, subject to the approval of the Board of Directors and upon
proper disclosure in the Fund's registration statement, would be able to make
short sales in conformity with Section 18 of the 1940 Act. In a short sale, an
investor sells a borrowed security and has a corresponding obligation to the
lender to return the identical security. Approval of the Proposal is not
expected to significantly affect the way the Fund is managed because the Fund
has no present intention to engage in short sales. However, Directors are
requesting approval of the Proposal in order to eliminate an unnecessary policy
and are doing so at this time in order to take advantage of the fact that the
Fund is holding a shareholder meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
THE ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT POLICY CONCERNING ---
SHORT SALES.

PROPOSAL 5: To eliminate the Fund's fundamental investment policy concerning
the purchase of securities on margin.

At the Special Meeting, the shareholders of the Fund will vote
regarding the elimination of the Fund's fundamental investment policy with
respect to purchasing securities on margin.
Currently, the Fund has a policy stating that:

The Fund will not purchase securities on margin (but the Fund may
obtain such short-term credits as may be necessary for the clearance of
transactions).

If shareholders approve, this policy will be eliminated.

The primary purpose of this Proposal is to eliminate the Fund's
fundamental investment policy on purchasing securities on margin. This policy
was initially adopted primarily to comply with state regulatory requirements,
which have been eliminated as a result of federal legislation. If the proposal
is approved, the Fund would be able to purchase securities on margin. Margin
purchases involve the purchase of securities with money borrowed from a broker.
"Margin" is the cash or eligible securities that the borrower places with a
broker as collateral against the loan. Approval of the Proposal is not expected
to significantly affect the way the Fund is managed because the Fund has no
present intention to purchase securities on margin. However, Directors are
requesting approval of the Proposal in order to eliminate an unnecessary policy
and are doing so at this time to take advantage of the fact that the Fund is
holding a shareholder meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
THE ELIMINATION THE FUND'S FUNDAMENTAL INVESTMENT POLICY CONCERNING THE ---
PURCHASE OF SECURITIES ON MARGIN.

-27-

<PAGE>

PROPOSAL 6: To eliminate the Fund's fundamental investment policy concerning
purchases of oil, gas, or mineral interests.

At the Special Meeting, the shareholders of the Fund will vote
regarding the elimination of the Fund's fundamental investment policy with
respect to purchasing oil, gas or mineral interests. Currently, the Fund has a
fundamental investment policy stating that:

The Fund will not purchase participations or other direct interests in
oil, gas or other mineral leases or exploration or development
programs.

If shareholders approve, this policy will be eliminated.

The primary purpose of this Proposal is to remove the Fund's
fundamental investment policy regarding purchases of oil, gas or mineral
interests. This policy was initially adopted to comply with state regulatory
requirements, which have been eliminated as a result of federal legislation. If
the Proposal is approved, the Fund would be permitted to invest directly in oil,
gas or mineral interests. These investments are subject to certain risks
including substantial price fluctuations, unpredictable economic and political
circumstances, the existence of cartels in certain industries, and the
development of new technologies for finding and producing such materials.
Approval of the Proposal is not expected to significantly affect the way the
Fund is managed because the Fund has no present intention to invest directly in
oil, gas or mineral interests. However, Directors are requesting approval of the
Proposal in order to eliminate an unnecessary policy and are doing so at this
time to take advantage of the fact that the Fund is holding a shareholder
meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
THE ELIMINATION OF THE FUND'S FUNDAMENTAL INVESTMENT POLICY CONCERNING ---
PURCHASES OF OIL, GAS, OR MINERAL INTERESTS.

PROPOSAL 7: To modify the Fund's fundamental investment policy concerning the
purchase or sale of commodities or commodity contracts.

At the Special Meeting, the shareholders of the Fund will vote
regarding the modification of the Fund's fundamental investment policy
concerning the purchase or sale of commodities or commodity contracts.
Currently, the Fund has a fundamental investment policy stating that:

The Fund will not purchase or sell commodities or commodities
contracts, including financial futures contracts.

If shareholders approve, the Fund's fundamental investment policy would
state that:

The Fund will not purchase or sell commodities or commodity contracts
provided that the Fund may invest in financial futures and options on
such futures.

-28-

<PAGE>

The primary purpose of this Proposal is to modify the Fund's policy on
commodities to permit the Fund to invest in financial futures and to clarify
that the Fund may invest in options on financial futures. Revising the policy
will provide the Fund with increased flexibility in making investment decisions
and allow the Fund to respond to rapidly changing market conditions. Further,
revision of this fundamental investment policy may provide increased investment
opportunities which may enable the Fund to enhance its performance.

Financial futures contracts provide for a future sale by one party and
purchase by another party of a specified amount of a specified security at a
specified price. An option on a future contract gives the purchaser the right,
in exchange for a premium, to assume a position in a futures contract at a
specified exercise price during the term of the option. If the Proposal is
approved, to the extent approved by the Board of Directors and subject to proper
disclosure in the Fund's registration statement, the Fund will be able to use
futures and options for bona fide hedging purposes, to offset changes in the
value of securities held or expected to be acquired of be disposed of, to
minimize fluctuations in foreign currencies, or to gain exposure to a particular
market or instrument. Similarly, the Fund will be able to buy and sell futures
contracts and options to manage its exposure to changing interest rates and
securities prices.

Approval of the Proposal is not expected to significantly affect the
way the Fund is managed because the Fund has no present intention to invest in
financial futures or options to an extent greater than currently disclosed in
its registration statement. However, Directors are requesting approval of the
Proposal in order to provide the Fund with increased investment flexibility and
are doing so at this time to take advantage of the fact that the Fund is holding
a shareholder meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
THE MODIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT POLICY CONCERNING ---
THE PURCHASE OR SALE OF COMMODITIES OR COMMODITY CONTRACTS.

PROPOSAL 8. To modify the Fund's fundamental investment policy concerning
borrowing.

At the Special Meeting, the shareholders of the Fund will vote
regarding the modification of the Fund's fundamental investment policy on
borrowing. Currently, the Fund has a fundamental investment policy stating that:

The Fund will not borrow money, except as a temporary measure to
facilitate settlements and for extraordinary or emergency purposes and
then only from banks in an amount not exceeding 10% of the total assets
of the Fund at the time of such borrowing, provided that, while
borrowings by the Fund equal to 5% or more of the Fund's total assets
are outstanding, the Fund will not purchase securities for investment.

If shareholders approve, the Fund's fundamental investment policy would
state that:

-29-

<PAGE>

The Fund will not borrow money except as a temporary measure for
extraordinary or emergency purposes in an amount not exceeding 10% of
the value of the total assets of the Fund at the time of such
borrowing.

The primary purpose of this proposal is to modify the Fund's
fundamental investment policy on borrowing to provide the Fund with increased
investment flexibility. The 1940 Act requires all funds to adopt a fundamental
investment policy regarding borrowing. The Proposal will permit the Fund to meet
its regulatory requirements under the 1940 Act, while allowing the Fund
increased flexibility in making investment decisions. Under its current policy,
the Fund may borrow only from banks. If the Proposal is approved, the Fund could
borrow from institutions other than banks, to the extent permitted by law.
Approval of the Proposal is not expected to significantly affect the way the
Fund is managed because the Fund has no present intention to borrow from
institutions other than banks. However, the Directors are requesting approval of
this policy to provide the Fund with increased investment flexibility and they
are doing so at this time to take advantage of the fact that the Fund is holding
a shareholder meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
THE MODIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT POLICY CONCERNING ---
BORROWING.

PROPOSAL 9. To approve modifying the Fund's fundamental investment Policy
concerning loans.

At the Special Meeting, the shareholders of the Fund will vote
regarding the modification of the Fund's fundamental investment policy on loans.
Currently, the Fund has a fundamental investment policy stating that:

The Fund will not make loans, except that the Fund may purchase or hold
debt instruments and enter into repurchase agreements in accordance
with its investment objectives and policies.

If the Proposal is approved, the Fund's fundamental investment policy
would state that:

The Fund will not make loans, except that the Fund may purchase or hold
debt instruments in accordance with its investment objectives and
policies, and may loan portfolio securities and enter into repurchase
agreements.

The primary purpose of this Proposal is to modify the Fund's
fundamental investment policy concerning loans to permit the Fund to engage in
securities lending. The 1940 Act requires all funds to adopt a fundamental
investment policy regarding loans. The Proposal will permit the Fund to meet its
regulatory requirements under the 1940 Act, while permitting the Fund increased
investment flexibility to loan its portfolio securities to others. If the
proposal is

-30-

<PAGE>

approved, the Fund would be able to lend its securities to brokers, dealers,
domestic and foreign banks or other financial institutions for the purposes of
increasing its investment income. Any such loan would be secured by cash or
equivalent collateral, or by a letter of credit at least equal to the market
value of the securities loaned plus accrued interest or income. Securities
lending may subject the Fund to the risk of delay in recovering the loaned
securities or a loss of rights in the collateral should the borrower fail
financially.

Approval of the Proposal is not expected to significantly affect the
way the Fund is managed because the Fund has no present intention to engage in
securities lending. However, the Directors are requesting approval of this
policy to provide the Fund with increased investment flexibility and they are
doing so at this time to take advantage of the fact that the Fund is holding a
shareholder meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
THE MODIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT POLICY CONCERNING ---
LOANS.

PROPOSAL 10: To modify the Fund's fundamental investment policy on illiquid and
restricted securities and reclassify the policy as non-
fundamental.

At the Special Meeting, the shareholders of the Fund will vote
regarding the modification of the Fund's fundamental investment policy on
illiquid and restricted securities and reclassify the policy as non-fundamental.
Currently, the Fund has a fundamental investment policy stating that:

The Fund will not invest more than 10% of the value of its net assets
in illiquid securities (as defined under federal or state securities
laws), including repurchase agreements with remaining maturities in
excess of seven days, provided, however, that the Fund shall not invest
more than 5% of its total assets in securities that the Fund is
restricted from selling to the public without registration under the
Securities Act of 1933, as amended (excluding restricted securities
eligible for resale pursuant to Rule 144A under the Securities Act of
1933, as amended, that have been determined to be liquid by the Fund's
Board of Directors based upon the trading markets for such securities).

If shareholders approve, the Fund's fundamental investment policy would
be reclassified as non-fundamental and would state that:

The Fund will not invest more than 10% of the value of its net assets
in illiquid securities (as defined under federal and state securities
laws).

The primary purpose of this proposal is to eliminate the Fund's
fundamental investment policy on restricted securities and reclassify the Fund's
fundamental investment policy on

-31-

<PAGE>

illiquid securities as non-fundamental. The Fund's policy on restricted
securities was initially adopted primarily to comply with state regulatory
requirements, which have been eliminated as a result of federal legislation.
Restricted securities are securities that are restricted from sale to the public
without registration under the Securities Act of 1933 and are deemed to be
illiquid. If the proposal is approved, the Fund would be able to invest in
restricted securities to the extent permitted by the Fund's fundamental
investment policy on illiquid securities. The Fund would continue to be able to
invest an unlimited amount in Rule 144A securities that are deemed to be liquid.
Investing more than 5% of the Fund's total assets in restricted securities may
be considered a speculative activity and may involve greater expense to the
Fund.

The Fund also proposes to reclassify the Fund's fundamental investment
policy on illiquid securities as non-fundamental because it is not legally
required to be fundamental. Reclassifying the policy as non-fundamental would
provide the Board with the flexibility to change the policy in the future as it
deems appropriate in the interest of investors in the Fund. If the Proposal is
approved, the Board would have the flexibility to increase the Fund's limit on
the purchase of illiquid securities to the extent permitted by federal law and
regulations and interpretations, thereof. Investing a larger percentage of the
Fund's assets in illiquid securities may, of course, increase the Fund's
exposure to risks associated with such securities, including, the risk that the
Fund will be unable to sell a security at an opportune time and thus cause the
security to be viewed as speculative.

Approval of the Proposal is not expected to significantly affect the
way the Fund is managed because the Fund has no present intention to request the
Board to increase the Fund's limitation on investment in illiquid securities or
invest more than 5% of the Fund's assets in restricted securities. However, the
Directors are requesting approval of this Proposal to eliminate an unnecessary
policy on restricted securities and provide the Board with increased flexibility
with respect to illiquid securities. The Directors are doing so at this time to
take advantage of the fact that the Fund is holding a shareholder meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
THE MODIFICATION OF THE FUND'S FUNDAMENTAL INVESTMENT POLICY ON ILLIQUID ---
AND RESTRICTED SECURITIES AND THE RECLASSIFICATION OF THE POLICY AS
NON-FUNDAMENTAL.

-32-

<PAGE>

ADDITIONAL INFORMATION

Directors and Executive Officers

Information about the Fund's current Directors and principal executive
officers, is set forth below. Each officer of the Fund will hold such office
until a successor has been elected by the Board of Directors. Directors and
officers of the Fund are also directors and officers of some or all of the other
investment companies managed, administered or advised by BT Alex. Brown or its
affiliates.

<TABLE>
<CAPTION>
Shares
Business Experience Beneficially
Name and During the Past Five Years, Owned as of
Position with the Fund Age including all Directorships May 31, 1999 Percentage
---------------------- --- --------------------------- ------------ ----------
<S> <C> <C> <C>
James J. Cunnane 61 Managing Director, CBC Capital ______ ***
Director since 1994 (merchant banking), 1993-Present;
Director, Net.World
(telecommunications), 1998-Present.
Director of each fund in the Fund
Complex.
Richard T. Hale* 54 See AInformation Regarding Nominees." ______ **
Director since 1992
Joseph R. Hardiman 62 See AInformation Regarding Nominees." ______ **
Director since 1998
Louis E. Levy 66 See AInformation Regarding Nominees." ______ **
Director since 1994
Eugene J. McDonald 67 See AInformation Regarding Nominees." ______ **
Director since 1992
Rebecca W. Rimel 48 See AInformation Regarding Nominees." ______ **
Director since 1997
Truman T. Semans* 72 See AInformation Regarding Nominees." ______ **
Director since 1992
Chairman since 1992
Carl W. Vogt, Esq. 63 Senior Partner, Fulbright & Jaworski ______ ***
Director since 1997 L.L.P. (law); Director, Yellow
Corporation (trucking) and American
Science & Engineering (x-ray detection
equipment). Formerly, Chairman and
Member, National Transportation Safety
Board; Director, National Railroad
Passenger Corporation Amtrak); and
Member, Aviation System Capacity
Advisory Committee (Federal Aviation
Administration). Director of each fund
in the Fund Complex.
</TABLE>

-33-

<PAGE>

Amy M. Olmert 36 Vice President, BT Alex. Brown ______ **
Secretary since 1997 Incorporated, 1997-Present. Formerly,
Senior Manager, Coopers & Lybrand
L.L.P. (now PricewaterhouseCoopers
LLP), 1988 -1997.

Charles A. Rizzo 42 Vice President and Department Head, ______ **
Treasurer since 1999 Deutsche Asset Management. Formerly,
Senior Manager, PricewaterhouseCoopers
LLP, 1993-1998.

Tracie E. Richter 31 Vice President, Morgan Grenfell Inc.; ______ **
Assistant Secretary Treasurer and Chief Financial Officer,
since 1999 Morgan Grenfell Investment Trust,
1996-Present. Formerly, Vice President,
Bankers Trust Company, 1996-1998 and
Tax Associate, Goldman Sachs Asset
Management, 1993-1996

Daniel O. Hirsch 45 Principal, BT Alex. Brown Incorporated. ______ **
Assistant Secretary Formerly, Assistant General Counsel,
since 1999 United States Securities and Exchange
Commission, 1993-1998.
</TABLE>

* Denotes an individual who is an "interested person" as defined in the
1940 Act.
** As of May 31, 1999 the Directors and officers of the Fund as a group
(13 persons) beneficially owned an aggregate of less than 1% the Fund.

Investment Advisor and Sub-Advisor

See AInvestment Company Capital Corp." on page ___ and "Alex. Brown
Investment Management" on page ____ for additional information concerning the
Advisor and the Sub-Advisor.

-34-

<PAGE>

Principal Underwriter

ICC Distributors, Inc., located at Two Portland Square, Portland,
Maine, 04104, acts as the Fund's principal underwriter.

Portfolio Transactions

In the fiscal year ended March 31, 1999, the Fund paid no brokerage
commissions to BT Alex. Brown Incorporated or its affiliates.

Independent Accountants

A majority of the Fund's Board of Directors who are not Ainterested
persons" of the Fund have selected PricewaterhouseCoopers LLP as the independent
accountants of the Fund for the fiscal year ending March 31, 2000. A
representative of PricewaterhouseCoopers LLP will be available by telephone
during the Special Meeting, if needed, to make a statement if desired and to
respond to appropriate questions from shareholders.

Beneficial Owners

To the knowledge of fund management, as of the Record Date, the
following [was] a beneficial owner of 5% or more of the outstanding shares of
the Fund.

Amount of Beneficial Percent of Total Shares
Name and Address Ownership Outstanding
- ---------------- --------- -----------

[To be provided]

Submission of Shareholder Proposals

The Fund is incorporated under the laws of the State of Maryland. Under
Maryland General Corporation Law, a corporation registered under the 1940 Act,
such as the Fund, is not required to hold an annual meeting in any year in which
the election of Directors is not required to be acted upon under the 1940 Act.
The Fund has availed itself of this provision and achieves cost savings by
eliminating printing costs, mailing charges and other expenses involved in
routine annual meetings.

Even with the elimination of routine annual meetings, the Board of
Directors may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act, or as required or permitted by the
Articles of Incorporation and By-Laws of the Fund. As described above,
shareholder meetings will be held, in compliance with the 1940 Act, to elect
Directors under certain circumstances. Shareholder meetings may also be held by
the Fund for other purposes, including to approve investment policy changes, a
new Investment Advisory

-35-

<PAGE>

Agreement, a new Sub-Advisory Agreement or other matters requiring shareholder
action under the 1940 Act.

A meeting may also be called by shareholders holding at least 10% of
the shares entitled to vote at the meeting for the purpose of voting upon the
removal of Directors. Upon written request by ten or more shareholders, who have
been shareholders for at least six months and who hold shares constituting at
least 1% of the outstanding shares, stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Director, the
Fund has undertaken to provide a list of shareholders or to disseminate
appropriate materials. In addition, Maryland General Corporation Law provides
for the calling of a special meeting by the written request of shareholders
holding at least 25% of the shares entitled to vote at the meeting.

Shareholders who wish to present a proposal for action at the next
meeting or suggestions as to nominees for the Board of Directors should submit
the proposal or suggestions to be considered to the Fund 60 days in advance of
any such meeting for inclusion in the Fund's proxy statement and form of proxy
for such meeting as is held. The Nominating Committee of the Board of Directors
will give consideration to shareholder suggestions as to nominees for the Board
of Directors. Shareholders retain the right, under limited circumstances, to
request that a meeting of the shareholders be held for the purpose of
considering the removal of a Director from office and, if such a request is
made, the Fund will assist with shareholder communications in connection with
the meeting.

Required Vote

Approval of Proposal 1 requires the affirmative vote of a plurality of
all votes cast at the Special Meeting, provided that a majority of the shares
entitled to vote are present in person or by Proxy at the Special Meeting.
Approval of Proposals 2 through 10 requires the affirmative vote of a majority
of the outstanding voting securities of the Fund. As defined in the 1940 Act,
the vote of a Amajority of the outstanding voting securities" of the Fund means
the vote of (i) 67% or more of the Fund's outstanding shares present at a
meeting, if the holders of more than 50% of the outstanding shares of the Fund
are present or represented by proxy, or (ii) more than 50% of the Fund's
outstanding shares, whichever is less.

Abstentions and "broker non-votes" will not be counted for or against
the Proposals but will be counted for purposes of determining whether a quorum
is present. Abstentions will be counted as votes present for purposes of
determining a "majority of the outstanding voting securities" present at the
Special Meeting and will therefore have the effect of counting against Proposals
2 through 10. The Fund believes that brokers who hold shares as record owners
for beneficial owners have the authority under the rules of the various stock
exchanges to vote those shares with respect to Proposals 1 through 3 when they
have not received instructions from beneficial owners.

-36-

<PAGE>

Other Matters

No business other than the matters described above is expected to come
before the Special Meeting, but should any matter incident to the conduct of the
Special Meeting or any question as to an adjournment of the Special Meeting
arise, the persons named in the enclosed Proxy will vote thereon according to
their best judgment in the interest of the Fund.

SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING AND
WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO VOTE BY MAIL, TELEPHONE OR
INTERNET AS EXPLAINED IN THE INSTRUCTIONS INCLUDED ON YOUR PROXY CARD.

By Order of the Directors,

Amy M. Olmert

Dated: [August 23], 1999

-37-

<PAGE>
EXHIBIT A

FLAG INVESTORS VALUE BUILDER FUND, INC.

FORM OF INVESTMENT ADVISORY AGREEMENT

THIS INVESTMENT ADVISORY AGREEMENT is made as of the 4th day of
June, 1999 by and between FLAG INVESTORS VALUE BUILDER FUND, INC., a Maryland
corporation (the "Fund"), and INVESTMENT COMPANY CAPITAL CORP., a Maryland
corporation (the "Advisor").

WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and

WHEREAS, the Advisor is registered as an investment advisor under the
Investment Advisors Act of 1940, as amended, and engages in the business of
acting as an investment advisor; and

WHEREAS, the Fund and the Advisor desire to enter into an agreement to
provide investment advisory and administrative services for the Fund on the
terms and conditions hereinafter set forth.

NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:

1. Appointment of Investment Advisor. The Fund hereby appoints the
Advisor to act as the Fund's investment advisor. The Advisor shall
manage the Fund's affairs and shall supervise all aspects of the Fund's
operations (except as otherwise set forth herein), including the
investment and reinvestment of the cash, securities or other properties
comprising the Fund's assets, subject at all times to the policies and
control of the Fund's Board of Directors. The Advisor shall give the
Fund the benefit of its best judgment, efforts and facilities in
rendering its service as Advisor.

2. Delivery of Documents. The Fund has furnished the Advisor with
copies properly certified or authenticated of each of the following:

(a) The Fund's Articles of Incorporation, filed with the State
of Maryland on March 5, 1992 and all amendments thereto (such
Articles of Incorporation, as presently in effect and as they
shall from time to time be amended, are herein called the
"Articles of Incorporation");

(b) The Fund's By-laws and all amendments thereto (such
By-laws, as presently in effect and as they shall from time to
time be amended, are herein called the "By-laws");

(c) Resolutions of the Fund's Board of Directors and
shareholders authorizing the appointment of the Advisor and
approving this Agreement;

(d) The Fund's Notification of Registration filed pursuant to
Section 8(a) of the Investment Company Act of 1940 on Form
N-8A under the 1940 Act as filed with the Securities and
Exchange Commission (the "SEC") on March 16, 1992;

(e) The Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act") (File No.
33-46279) and under the 1940 Act as filed with the SEC on
March 16, 1992 relating to the shares of the Fund, and all
amendments thereto; and

A-1
<PAGE>
(f) The Fund's most recent prospectus (such prospectus, as
presently in effect, and all amendments and supplements
thereto are herein called "Prospectus").

The Fund will furnish the Advisor from time to time with
copies, properly certified or authenticated, of all amendments or
supplements to the foregoing, if any, and all documents, notices and
reports filed with the SEC.

3. Duties of Investment Advisor. In carrying out its obligations under
Section 1 hereof, the Advisor shall:

(a) supervise and manage all aspects of the Fund's operations,
except for distribution services;

(b) formulate and implement continuing programs for the
purchases and sales of securities, consistent with the
investment objective and policies of the Fund;

(c) provide the Fund with such executive, administrative and
clerical services as are deemed advisable by the Fund's Board
of Directors;

(d) provide the Fund with, or obtain for it, adequate office
space and all necessary office equipment and services,
including telephone service, utilities, stationery, supplies
and similar items for the Fund's principal office;

(e) obtain and evaluate pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are
included in the Fund's portfolio or the activities in which
they engage, or with respect to securities which the Advisor
considers desirable for inclusion in the Fund's portfolio;

(f) determine which issuers and securities shall be
represented in the Fund's portfolio and regularly report
thereon to the Fund's Board of Directors;

(g) take all actions necessary to carry into effect the Fund's
purchase and sale programs;

(h) supervise the operations of the Fund's transfer and
dividend disbursing agent;

(i) provide the Fund with such administrative and clerical
services for the maintenance of certain shareholder records,
as are deemed advisable by the Fund's Board of Directors; and

(j) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax
returns, reports to the Fund's shareholders and reports to and
filings with the SEC and state Blue Sky authorities.

4. Broker-Dealer Relationships. In the event that the Advisor is
responsible for decisions to buy and sell securities for the Fund,
broker-dealer selection, and negotiation of its brokerage commission
rates, the Advisor's primary consideration in effecting securities
transactions will be to obtain the best price and execution on an
overall basis. In performing this function the Advisor shall comply
with applicable policies established by the Board of Directors and
shall provide the Board of Directors with such reports as the Board of
Directors may require in order to monitor the Fund's portfolio
transaction activities. In certain instances the Advisor may make
purchases of underwritten issues at prices which include underwriting
fees. In selecting a broker-dealer to execute each particular
transaction, the Advisor will take the following into consideration:
the best net price available; the reliability, integrity and financial
condition of the broker-dealer; the size of and difficulty in executing
the order; and the value of the expected contribution of the
broker-dealer to the

A-2
<PAGE>
investment performance of the Fund on a continuing basis. Accordingly,
the price to the Fund in any transaction may be less favorable than
that available from another broker-dealer if the difference is
reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies as the Board of Directors
may determine, the Advisor shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker-dealer
that provides brokerage and research services to the Advisor an amount
of commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker-dealer would have
charged for effecting that transaction, if the Advisor determines in
good faith that such amount of commission was reasonable in relation to
the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or
the Advisor's overall responsibilities with respect to the Fund. The
Advisor is further authorized to allocate the orders placed by it on
behalf of the Fund to such broker-dealers who also provide research or
statistical material or other services to the Fund or the Advisor. Such
allocation shall be in such amounts and proportions as the Advisor
shall determine and the Advisor will report on said allocation
regularly to the Board of Directors of the Fund, indicating the
broker-dealers to whom such allocations have been made and the basis
therefor.

Consistent with the Conduct Rules of the National Association
of Securities Dealers, Inc., and subject to seeking the most favorable
price and execution available and such other policies as the Directors
may determine, the Advisor may consider services in connection with the
sale of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.

Subject to the policies established by the Board of Directors
in compliance with applicable law, the Advisor may direct BT Alex.
Brown Incorporated ("BT Alex. Brown") to execute portfolio transactions
for the Fund on an agency basis. The commissions paid to BT Alex. Brown
must be, as required by Rule 17e-1 under the 1940 Act, "reasonable and
fair compared to the commission, fee or other remuneration received or
to be received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of
time." If the purchase or sale of securities consistent with the
investment policies of the Fund or one or more other accounts of the
Advisor is considered at or about the same time, transactions in such
securities will be allocated among the accounts in a manner deemed
equitable by the Advisor. BT Alex. Brown and the Advisor may combine
such transactions, in accordance with applicable laws and regulations,
in order to obtain the best net price and most favorable execution.

The Fund will not deal with the Advisor or BT Alex. Brown in
any transaction in which the Advisor or BT Alex. Brown acts as a
principal with respect to any part of the Fund's order. If BT Alex.
Brown is participating in an underwriting or selling group, the Fund
may not buy portfolio securities from the group except in accordance
with policies established by the Board of Directors in compliance with
the rules of the SEC.

5. Control by Board of Directors. Any management or supervisory
activities undertaken by the Advisor pursuant to this Agreement, as
well as any other activities undertaken by the Advisor on behalf of the
Fund pursuant thereto, shall at all times be subject to any applicable
directives of the Board of Directors of the Fund.

6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times
conform to:

(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;

(b) the provisions of the Registration Statement of the Fund
under the 1933 Act and the 1940 Act;

A-3
<PAGE>
(d) the provisions of the By-laws; and

(e) any other applicable provisions of Federal and State law.

7. Expenses. The expenses connected with the Fund shall be allocable
between the Fund and the Advisor as follows:

(a) The Advisor shall, subject to compliance with applicable
banking regulations, furnish, at its expense and without cost
to the Fund, the services of and one or more officers of the
Fund, to the extent that such officers may be required by the
Fund, for the proper conduct of its affairs.

(b) The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund, including, without limitation:
payments to the Fund's distributor under the Fund's plan of
distribution, the charges and expenses of any registrar, any
custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities and other
property, and any transfer, dividend or accounting agent or
agents appointed by the Fund; brokers' commissions, chargeable
to the Fund in connection with portfolio securities
transactions to which the Fund is a party; all taxes,
including securities issuance and transfer taxes, and fees
payable by the Fund to Federal, State or other governmental
agencies; the costs and the expenses of engraving or printing
of certificates representing shares of the Fund; all costs and
expenses in connection with registration and maintenance of
registration of the Fund and its shares with the SEC and
various states and other jurisdictions (including filing fees,
legal fees and disbursements of counsel); the costs and
expenses of printing, including typesetting, and distributing
prospectuses and statements of additional information of the
Fund and supplements thereto to the Fund's shareholders; all
expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing of proxy statements and
reports to shareholders; fees and travel expenses of Directors
or Director members of any advisory board or committee; all
expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or
in cash; charges and expenses of any outside service used for
pricing of the Fund's shares; charges and expenses of legal
counsel, including counsel to the Directors of the Fund who
are not "interested persons" (as defined in the 1940 Act) of
the Fund and of independent accountants, in connection with
any matter relating to the Fund; membership dues of industry
associations; interest payable on Fund borrowings; postage;
insurance premiums on property or personnel (including
officers and Directors) of the Fund which inure to its
benefit; extraordinary expenses (including, but not limited
to, legal claims and liabilities and litigation costs and any
indemnification related thereto); and all other charges and
costs of the Fund's operation unless otherwise explicitly
provided herein.

8. Delegation of Responsibilities.

(a) Subject to the approval of the Board of Directors
including a majority of the Fund's Directors who are not
"interested persons" (as defined in the 1940 Act) of the Fund
and shareholders of the Fund, the Advisor may delegate to a
sub-advisor its duties enumerated in Section 3, hereof. The
Advisor shall continue to supervise the performance of any
such sub-advisor and shall report regularly thereon to the
Fund's Board of Directors, but shall not be responsible for
the sub-advisor's performance under the sub-advisory
agreement.

(b) The Advisor may, but shall not be under any duty to,
perform services on behalf of the Fund which are not required
by this Agreement upon the request of the Fund's Board of
Directors. Such services will be performed on behalf of the
Fund and the Advisor's charge in rendering such services may
be billed monthly to the Fund, subject to examination by the
Fund's independent accountants. Payment or assumption by the
Advisor of any Fund expense that the Advisor is not required
to pay or assume under this Agreement shall not relieve the
Advisor of any of its obligations to the Fund nor obligate the
Advisor to pay or assume any similar Fund expense on any
subsequent occasions.

A-4
<PAGE>

9. Compensation. For the services to be rendered and the expenses
assumed by the Advisor, the Fund shall pay to the Advisor monthly
compensation at an annual rate of 1.00% of the first $50 million of the
Fund's average daily net assets, 0.85% of the next $50 million of the
Fund's average daily net assets, 0.80% of the next $100 million of the
Fund's average daily net assets and 0.70% of the Fund's average daily
net assets exceeding $200 million.

Except as hereinafter set forth, compensation under this
Agreement shall be calculated and accrued daily and the amounts of the
daily accruals shall be paid monthly. If this Agreement becomes
effective subsequent to the first day of a month or shall terminate
before the last day of a month, compensation for the part of the month
this Agreement is in effect shall be prorated in a manner consistent
with the calculation of the fees as set forth above. Payment of the
Advisor's compensation for the preceding month shall be made as
promptly as possible.

10. Non-Exclusivity. The services of the Advisor to the Fund
are not to be deemed to be exclusive, and the Advisor shall be free to
render investment advisory or other services to others (including other
investment companies) and to engage in other activities, so long as its
services under this Agreement are not impaired thereby. It is
understood and agreed that officers or directors of the Advisor may
serve as officers or Directors of the Fund, and that officers or
Directors of the Fund may serve as officers or directors of the Advisor
to the extent permitted by law; and that the officers and directors of
the Advisor are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from
serving as partners, officers, trustees or directors of any other firm,
trust or corporation, including other investment companies.

11. Term and Renewal. This Agreement shall become effective as of the
date hereof and shall continue in force and effect, subject to Section
12 hereof, for two years from the date hereof. Following the expiration
of its initial two-year term, this Agreement shall continue in force
and effect from year to year, provided that such continuance is
specifically approved at least annually:

(a) (i) by the Fund's Board of Directors or (ii) by the vote
of a majority of the outstanding voting securities (as defined
in the 1940 Act); and

(b) by the affirmative vote of a majority of the Directors who
are not parties to this Agreement or "interested persons" (as
defined in the 1940 Act) of a party to this Agreement (other
than as Directors of the Fund) by votes cast in person at a
meeting specifically called for such purpose.

12. Termination. This Agreement may be terminated without the payment
of any penalty, by the Fund upon vote of the Fund's Board of Directors
or a vote of a majority of the Fund's outstanding voting securities (as
defined in the 1940 Act) or by the Advisor, upon sixty (60) days'
written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment (as defined in the 1940 Act).

13. Liability of Advisor. In the performance of its duties hereunder,
the Advisor shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits
to ensure the accuracy of all services performed under this Agreement,
but the Advisor shall not be liable for any act or omission which does
not constitute willful misfeasance, bad faith or gross negligence on
the part of the Advisor or its officers, directors or employees, or
reckless disregard by the Advisor of its duties under the Agreement.

14. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such
notice. Until further notice to the other party, it is agreed that the
address of the Fund and of the Advisor for this purpose shall be One
South Street, Baltimore, Maryland 21202.

A-5
<PAGE>
15. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to the 1940 Act. In
addition, where the effect of a requirement of the 1940 Act reflected
in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the
effect of such rule, regulation or order. Otherwise the provisions of
this Agreement shall be interpreted in accordance with the laws of
Maryland.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective offices as of the day and year first
above written.

[SEAL] FLAG INVESTORS VALUE BUILDER FUND, INC.

Attest:______________________ By: ___________________________________
Name:
Title:

[SEAL] INVESTMENT COMPANY CAPITAL CORP.

Attest:______________________ By: ___________________________________
Name:
Title:

A-6

<PAGE>
EXHIBIT B

FLAG INVESTORS VALUE BUILDER FUND, INC.

FORM OF SUB-ADVISORY AGREEMENT

THIS AGREEMENT is made as of the 4th day of June, 1999 by and
among FLAG INVESTORS VALUE BUILDER FUND, INC., a Maryland corporation (the
"Fund"), INVESTMENT COMPANY CAPITAL CORP., a Maryland corporation (the
"Advisor"), and ALEX. BROWN INVESTMENT MANAGEMENT, a Maryland limited
partnership (the "Sub-Advisor").

WHEREAS, the Advisor is the investment advisor to the Fund, which is an
open-end, diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Fund and the Advisor wish to retain the Sub-Advisor for
purposes of rendering advisory services to the Fund and the Advisor in
connection with the Advisor's responsibilities to the Fund on the terms and
conditions hereinafter set forth.

NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:

1. Appointment of Sub-Advisor. The Fund hereby appoints the Sub-Advisor
to act as the Fund's Sub-Advisor under the supervision of the Fund's
Board of Directors and the Advisor, and the Sub-Advisor hereby accepts
such appointment, all subject to the terms and conditions contained
herein.

2. Delivery of Documents. The Fund has furnished the Sub-Advisor with
copies properly certified or authenticated of each of the following:

(a) The Fund's Articles of Incorporation, filed with the State
of Maryland on March 5, 1992 and all amendments thereto (such
Articles of Incorporation, as presently in effect and as they
shall from time to time be amended are herein called the
AArticles of Incorporation");

(b) The Fund's By-laws and all amendments thereto (such
By-laws, as presently in effect and as they shall from time to
time be amended, are herein called the "By-laws");

(c) Resolutions of the Fund's Board of Directors and
shareholders authorizing the appointment of the Sub-Advisor
and approving this Agreement;

(f) The Fund's most recent prospectus (such prospectus, as
presently in effect, and all amendments are supplements
thereto are herein called AProspectus").

B-1
<PAGE>
The Fund will furnish the Sub-Advisor from time to time with
copies, properly certified or authenticated, of all amendments or
supplements to the foregoing, if any, and all documents, notices and
reports filed with the SEC.

3. Duties of Sub-Advisor. In carrying out its obligations under Section
1 hereof, the Sub-Advisor shall:

(a) provide the Fund with such executive, administrative and
clerical services as are deemed advisable by the Fund's Board
of Directors;

(b) determine which issuers and securities shall be
represented in the Fund's portfolio and regularly report
thereon to the Fund's Board of Directors;

(c) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers and
regularly report thereon to the Fund's Board of Directors;

(d) take, on behalf of the Fund, all actions which appear to
the Fund necessary to carry into effect such purchase and sale
programs as aforesaid, including the placing of orders for the
purchase and sale of securities of the Fund; and

4. Broker-Dealer Relationships. In circumstances when the Sub-Advisor
is responsible for decisions to buy and sell securities for the Fund,
broker-dealer selection, and negotiation of its brokerage commission
rates, the Sub-Advisor's primary consideration in effecting a security
transaction will be execution of orders at the most favorable price on
an overall basis. In performing this function the Sub-Advisor shall
comply with applicable policies established by the Board of Directors
and shall provide the Board of Directors with such reports as the Board
of Directors may require in order to monitor the Fund's portfolio
transaction activities. In selecting a broker-dealer to execute each
particular transaction, the Sub-Advisor will take the following into
consideration: the best net price available; the reliability, integrity
and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the
Fund on a continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other
aspects of the portfolio execution services offered. Subject to such
policies as the Board of Directors may determine, the Sub-Advisor shall
not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker-dealer that provides brokerage and
research services to the Sub-Advisor an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker-dealer would have charged for effecting that
transaction, if the Sub-Advisor determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed
in terms of either that particular transaction or the Sub-Advisor's
overall responsibilities with respect to the Fund. The Sub-Advisor is
further authorized to allocate the orders placed by it on behalf of the
Fund to such broker-dealers who also provide research or statistical
material or other services to the Fund or the Sub-Advisor. Such
allocation shall be in such amounts and proportions as the Sub-Advisor
shall determine and the Sub-Advisor will report on said allocation
regularly to the Board of Directors of the Fund, indicating the brokers
to whom such allocations have been made and the basis therefor.

B-2
<PAGE>
determine, the Sub-Advisor may consider services in connection with the
sale of shares of the Fund as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.

Subject to the policies established by the Board of Directors
in compliance with applicable law, the Advisor may direct BT Alex.
Brown Incorporated ("BT Alex. Brown") to execute portfolio transactions
for the Fund on an agency basis. The commissions paid to BT Alex. Brown
must be, as required by Rule 17e-1 under the 1940 Act, "reasonable and
fair compared to the commission, fee or other remuneration received or
to be received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of
time." If the purchase or sale of securities consistent with the
investment policies of the Fund or one or more other accounts of the
Sub-Advisor is considered at or about the same time, transactions in
such securities will be allocated among the accounts in a manner deemed
equitable by the Sub- Advisor. BT Alex. Brown and the Sub-Advisor may
combine such transactions, in accordance with applicable laws and
regulations, in order to obtain the best net price and most favorable
execution.

The Fund will not deal with the Sub-Advisor or BT Alex. Brown
in any transaction in which the Sub-Advisor or BT Alex. Brown acts as
a principal with respect to any part of the Fund's order. If BT Alex.
Brown is participating in an underwriting or selling group, the Fund
may not buy portfolio securities from the group except in accordance
with policies established by the Board of Directors in compliance with
rules of the SEC.

5. Control by Fund's Board of Directors. Any recommendations concerning
the Fund's investment program for the Fund proposed by the Sub-Advisor
to the Fund and the Advisor pursuant to this Agreement, as well as any
other activities undertaken by the Sub-Advisor on behalf of the Fund
pursuant hereto, shall at all times be subject to any applicable
directives of the Board of Directors of the Fund.

6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Advisor shall at all times
conform to:

(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder, as amended;

(b) the provisions of the Registration Statement of the Fund
under the 1933 Act and the 1940 Act;

(d) the provisions of the By-laws; and

(e) any other applicable provisions of Federal and State law.

7. Expenses. The expenses connected with the Fund shall be allocable
between the Fund, the Sub-Advisor and the Advisor as follows:

(a) The Sub-Advisor shall, subject to compliance with
applicable banking regulations, furnish, at its expense and
without cost to the Fund, the services of the President and
certain Vice Presidents of the Fund, to the extent that such
officers may be required by the Fund for the proper conduct of
its affairs.

(b) The Sub-Advisor shall maintain, at its expense and without
cost to the Fund, a trading function in order to carry out its
obligations under Section 3 hereof to place orders for the
purchase and sale of portfolio securities for the Fund.

B-3
<PAGE>
(c) The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund, including, without limitation:
payments to the Advisor under the Investment Advisory
Agreement between the Fund and the Advisor; payments to the
Fund's distributor under the Fund's plan of distribution; the
charges and expenses of any registrar, any custodian or
depository appointed by the Fund for the safekeeping of its
cash, portfolio securities and other property, and any
transfer, dividend or accounting agent or agents appointed by
the Fund; brokers' commission chargeable to the Fund in
connection with portfolio securities transactions to which the
Fund is a party; all taxes, including securities issuance and
transfer taxes, and fees payable by the Fund to Federal, state
or other governmental agencies; the costs and expenses of
engraving or printing of certificates representing shares of
the Fund; all costs and expenses in connection with the
registration and maintenance of registration of the Fund and
its shares with the SEC and various states and other
jurisdictions (including filing fees, legal fees and
disbursements of counsel); the costs and expenses of printing,
including typesetting, and distributing prospectuses and
statements of additional information of the Fund and
supplements thereto to the Fund's shareholders; all expenses
of shareholders' and Directors' meetings and of preparing,
printing and mailing of proxy statements and reports to
shareholders; fees and travel expenses of Directors or
Director members of any advisory board or committee; all
expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or
in cash; charges and expenses of any outside service used for
pricing of the Fund's shares; charges and expenses of legal
counsel, including counsel to the Directors of the Fund who
are not "interested persons" (as defined in the 1940 Act) of
the Fund and of independent certified public accountants, in
connection with any matter relating to the Fund; membership
dues of industry associations; interest payable on Fund
borrowings; postage; insurance premiums on property or
personnel (including officers and Directors) of the Fund which
inure to its benefit; extraordinary expenses (including but
not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto); and all other
charges and costs of the Fund's operation unless otherwise
explicitly provided herein.

8. Compensation. For the services to be rendered hereunder by the
Sub-Advisor, the Advisor shall pay to the Sub-Advisor monthly
compensation equal to the sum of the amounts determined by applying the
following annual rates to the Fund's average daily net assets: 0.75% of
the first $50 million of the Fund's average daily net assets, 0.60% of
the Fund's average daily net assets in excess of $50 million but not
exceeding $200 million, and 0.50% of the Fund's average daily net
assets in excess of $200 million. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued daily
and the amounts of the daily accruals paid monthly. If this Agreement
becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of
the month this Agreement is in effect shall be prorated in a manner
consistent with the calculations of the fees as set forth above.
Payment of the Sub-Advisor's compensation for the preceding month shall
be made as promptly as possible.

9. Additional Responsibilities. The Sub-Advisor may, but shall not be
under any duty to, perform services on behalf of the Fund which are not
required by this Agreement upon the request of the Fund's Board of
Directors. Such services will be performed on behalf of the Fund and
the Sub-Advisor's charges in rendering such services will be billed
monthly to the Fund, subject to examination by the Fund's independent
certified public accountants. Payment or assumption by the Sub-Advisor
of any Fund expense that the Sub-Advisor is not required to pay or
assume under this Agreement shall not relieve the Sub-Advisor of any of
its obligations to the Fund nor obligate the Sub-Advisor to pay or
assume any similar Fund expenses on any subsequent occasions.

10. Term. This Agreement shall become effective at 12:01 a.m. on the
date hereof and shall remain in force and effect, subject to Section 12
hereof, for two years from the date hereof.

B-4
<PAGE>
11. Renewal. Following the expiration of its initial two-year term,
this Agreement shall continue in force and effect from year to year,
provided that such continuance is specifically approved at least
annually:

(a) (i) by the Fund's Board of Directors or (ii) by the vote
of a majority of the outstanding voting securities of the Fund
(as defined in Section 2(a)(42) of the 1940 Act); and

(b) by the affirmative vote of a majority of the Directors who
are not parties to this Agreement or "interested persons" of a
party to this Agreement (other than as Directors of the Fund)
by votes cast in person at a meeting specifically called for
such purpose.

12. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by vote of the Fund's Board of Directors or
by vote of a majority of the outstanding voting securities of the Fund
(as defined in Section 2(a)(42) of the 1940 Act), on sixty (60) days'
written notice to the Advisor and the Sub-Advisor. This Agreement may
be terminated at any time, without the payment of any penalty, by the
Sub-Advisor on sixty (60) days' written notice to the Fund and the
Advisor. The notice provided for herein may be waived by any person to
whom such notice is required. This Agreement shall automatically
terminate in the event of its assignment (as defined in Section 2(a)(4)
of the 1940 Act).

13. Non-Exclusivity. The services of the Sub-Advisor to the Advisor and
the Fund are not to be deemed to be exclusive, and the Sub-Advisor
shall be free to render investment advisory or other services to others
(including other investment companies) and to engage in other
activities, so long as its services under this Agreement are not
impaired thereby. It is understood and agreed that partners of the
Sub-Advisor may serve as officers or Directors of the Fund, and that
officers or Directors of the Fund may serve as officers or partners of
the Sub-Advisor to the extent permitted by law; and that the partners
of the Sub-Advisory are not prohibited from engaging in any other
business activity or from rendering services to any other person, or
from serving as partners, officers or directors of any other firm or
corporation, including other investment companies.

14. Liability of Sub-Advisor. In the performance of its duties
hereunder, the Sub-Advisor shall be obligated to exercise care and
diligence and to act in good faith and to use its best efforts within
reasonable limits to ensure the accuracy of all services performed
under this Agreement, but the Sub-Advisor shall not be liable for any
act or omission which does not constitute willful misfeasance, bad
faith or gross negligence on the part of the Sub-Advisor or its
officers, directors or employees, or reckless disregard by the
Sub-Advisor of its duties under this Agreement.

15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such
notice. Until further notice to the other party, it is agreed that the
address of the Sub-Advisor, of the Advisor and of the Fund for this
purpose shall be One South Street, Baltimore, Maryland 21202.

16. Questions and Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the
absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to said Act. In
addition, where the effect of a requirement of the 1940 Act reflected
in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the
effect of such rule, regulation or order. Otherwise the provisions of
this Agreement shall be interpreted in accordance with the laws of
Maryland.

B-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.

Attest: FLAG INVESTORS VALUE BUILDER FUND, INC.

__________________________ By:_____________________________________
Name:
Title:

Attest: INVESTMENT COMPANY CAPITAL CORP.

__________________________ By:_____________________________________
Name:
Title:

Attest: ALEX. BROWN INVESTMENT MANAGEMENT

__________________________ By:_____________________________________
Name:
Title:

B-6

<PAGE>

Three Ways To Vote Your Proxy

Proxy Voting Quick & Easy
The enclosed proxy statement provides details on important issues affecting your
Fund(s). The Board of your Fund(s) recommends that you vote FOR all proposals.

We are offering three ways to vote: by automated touch-tone phone, by internet
and by mail. Voting by telephone or internet may be quicker or more cost
effective than the traditional method of mailing back your proxy card; however,
that option is still available to you. If you vote by telephone or internet,
there is no need to return your proxy card.

Your proxy vote is important! Please vote today.

By Automated Touch-Tone Phone*
Using our automated touch-tone phone system, dial the number provided on your
proxy card and follow the directions given.

By Internet*
Visit the website www.proxyvote.com and enter the 12-digit control number
-----------------
located on your proxy card.

By Mail
Simply return your executed proxy in the enclosed postage-paid envelope.

* Do not mail the Proxy Card if voting by internet or telephone.

<PAGE>

[FLAG INVESTORS]
[PROXY SERVICES]
[P.O. BOX 9148]
[FARMINGDALE, NY 11735]

FORM OF

FLAG INVESTORS VALUE BUILDER FUND, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS

October 7, 1999

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
FLAG INVESTORS VALUE BUILDER FUND, INC.

This proxy is for your use in voting on various matters relating to Flag
Investors Value Builder Fund, Inc. (the "Fund"). The undersigned shareholder(s)
of the Fund, revoking previous proxies, hereby appoint(s) Edward J. Veilleux,
Amy M. Olmert and Kathy L. Churko and each of them (with full power of
substitution) the proxies of the undersigned to attend the Special Meeting of
Shareholders of the Fund to be held on October 7, 1999 (the "Special Meeting")
and any adjournments thereof, to vote all of the shares of the Fund that the
signer would be entitled to vote if personally present at the Special Meeting
and on any matter incident to the conduct of the Special Meeting, all as set
forth in the Notice of Special Meeting of Shareholders and Proxy Statement of
the Board of Directors. Said proxies are directed to vote or refrain from voting
pursuant to the Proxy Statement as indicated upon the matters set forth below.

This proxy will be voted as indicated below. If no indication is made, this
proxy will be voted FOR the proposals set forth below. The undersigned
acknowledges receipt with this proxy of a copy of the Notice of Special Meeting
of Shareholders and the Proxy Statement of the Board of Directors.

To Vote by Telephone

1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-000-0003
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.

To Vote by Internet:

1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.

Please print and sign your name in the space provided to authorize the voting of
your shares as indicated and return promptly. When signing on behalf of a
corporation, partnership, estate, trust or in any other representative capacity,
please sign your name and title. For joint accounts, each joint owner must
sign.

UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE COMPLETE, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.

NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS
PORTION ONLY

FLAG INVESTORS VALUE BUILDER FUND, INC.

Vote on Directors

1. To consider and act upon a proposal to elect a Board of Directors.

Truman T. Semans Richard R. Burt
Richard T. Hale Joseph R. Hardiman
Louis E. Levy Eugene J. McDonald
Rebecca W. Rimel Robert H. Wadsworth

[ ] FOR ALL
[ ] WITHHOLD ALL
[ ] FOR ALL EXCEPT:

<PAGE>
To withhold authority to vote mark AFOR ALL EXCEPT" and write the
nominee's name on the line below.

________________________________________

<TABLE>
<CAPTION>
Vote on Proposals
<S> <C>
2. To approve a new Investment Advisory Agreement between the Fund and Investment Company Capital Corp.