<PAGE>
FLAG INVESTORS VALUE BUILDER FUND, INC.
ONE SOUTH STREET
BALTIMORE, MARYLAND 21202
------------------------
October [30], 2000
Dear Shareholder:
The Board of Directors of Flag Investors Value Builder Fund, Inc. (the
"Fund") is pleased to invite you to a Special Meeting of Shareholders to be held
at 2:15 p.m. (Eastern time) on December 7, 2000, at the offices of the Fund's
advisor, Investment Company Capital Corp., One South Street, Baltimore,
Maryland. At this meeting you will be asked to approve two important proposals
affecting your Fund.
First, shareholders are being asked to approve a change in the Fund's
investment policies to provide an additional opportunity to increase the Fund's
investment income. Specifically, the Board of Directors is recommending that the
Fund be allowed to engage in "securities lending," a process where the Fund, in
an effort to increase its income, lends its portfolio securities to others. The
Fund always retains beneficial ownership of the securities it lends, and, at any
time, can demand the return of any security lent. The Board believes that
adequate safeguards are in place to protect the Fund's interests when
participating in securities lending programs, and that this process provides a
good opportunity to help increase the Fund's income.
Second, shareholders are being asked to provide advance approval for a
proposed sub-advisory agreement that will reflect a change in control of the
sub-advisor scheduled for March 2001. This change of control is not expected to
have any impact on the quality and nature of the services that the sub-advisor
provides to the Fund. The key terms of the proposed sub-advisory agreement are
identical to the terms of the Fund's current sub-advisory agreement.
Enclosed is further information relating to both of these proposals,
including a Question and Answer section, proxy statement and proxy card. The
proxy statement discusses each proposal in detail.
THE BOARD BELIEVES THAT EACH PROPOSAL IS IMPORTANT AND RECOMMENDS THAT
YOU READ THE ENCLOSED MATERIALS CAREFULLY AND THEN VOTE FOR BOTH
PROPOSALS.
<PAGE>
What you need to do:
- Please read all enclosed materials, including the Question & Answer
section.
- Vote in one of the following ways:
1. By Internet: Logon to www.proxyvote.com and follow the on-screen
instructions.
2. By Telephone: Call Toll-Free 1-800-690-6903.
3. By Mail: Complete the enclosed proxy card and return it in the pre-
paid envelope provided.
4. Attend the shareholder meeting (details enclosed).
Thank you for voting on these important matters.
Sincerely,
/s/ Truman T. Semans
----------------------------------------------
Truman T. Semans
Chairman
Flag Investors Value Builder Fund, Inc.
2
<PAGE>
October [30], 2000
QUESTIONS AND ANSWERS
FOR SHAREHOLDERS OF
FLAG INVESTORS VALUE BUILDER FUND, INC.
Here is a brief overview of the primary matters affecting the Fund that
require a shareholder vote. We encourage you to also read the full text of the
enclosed proxy statement.
Q. What are shareholders being asked to vote on?
A. At the Meeting, shareholders are voting to approve the following matters:
- Changes to the Fund's investment policies to permit the Fund to
participate in securities lending programs, where the Fund can earn
additional income by lending its portfolio securities to others.
- A proposed sub-advisory agreement to reflect an expected change of control
of the Fund's sub-advisor, effective March 2001.
Q. What is a securities lending program?
A. A securities lending program is an organized, structured process that
provides an opportunity for a mutual fund or other entity to earn additional
income by lending its portfolio securities on a fully collateralized basis
to qualified financial institutions. The Fund always retains beneficial
ownership of the loaned security, and at all times has a contractual right
to demand that the borrower return the loaned security to the Fund.
Q. Why is the Board recommending that the Fund participate in a securities
lending program?
A. The Board of Directors believes that participation in a securities lending
program will provide an opportunity for the Fund to earn additional
investment income. Further, although it is not possible to eliminate risk
entirely, the Board believes that adequate safeguards are in place to
protect the Fund's interests when the Fund participates in a securities
lending program.
Q. What safeguards are in place to protect the Fund when participating in a
securities lending program?
A. First, the Fund's advisor decides which of the Fund's securities will be
made available for lending, so the Fund will never be obligated to lend a
security if that loan doesn't make sense for the Fund. Second, every
borrower must provide and maintain collateral equal to at least 100% of the
value of the security loaned. Third, the Fund has a contractual right at any
time to demand the return of any loaned security. Finally, in the event that
the
<PAGE>
collateral becomes inadequate or the borrower encounters financial
difficulties, the organizer of the securities lending program provides
indemnification to protect the Fund's rights to the loaned security.
Q. Approval is also sought for a proposed sub-advisory agreement reflecting an
expected change of control of the Fund's sub-advisor in March 2001. How will
this expected change in control affect the Fund?
A. The expected change in control of the Fund's sub-advisor is not expected to
have any effect on the management of the Fund. The sub-advisor is currently
owned by two partners, one of which is currently affiliated with the Fund's
advisor. The unaffiliated partner is buying out the other. THE FUND'S
CURRENT PORTFOLIO MANAGER WILL STILL MANAGE THE FUND'S ASSETS, AND THE FUND
WILL HAVE THE SAME INVESTMENT OBJECTIVE, STRATEGIES, AND RISKS.
Q. How is the proposed sub-advisory agreement different from the Fund's current
sub-advisory agreement?
A. There are no significant differences. The key terms of the proposed sub-
advisory agreement and the Fund's current sub-advisory agreement are
identical.
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 BOTH PROPOSALS ON THE ENCLOSED PROXY CARD.
Q. Where can I get more information?
A. If you need more information, please call Shareholder Communications
Corporation, the Fund's information agent, at 1-877-504-7018.
Q. How can I vote my shares?
A. You may choose from one of the following options:
- Through the Internet, by using www.proxyvote.com and following the on-
screen instructions.
- By telephone, by calling toll-free 1-800-690-6903.
- By mail, with the enclosed proxy card and return envelope.
- In person at the shareholder meeting (see details enclosed in the proxy
statement).
Please vote on both issues on each proxy card that you receive. Thank you
for mailing your proxy card promptly.
2
<PAGE>
PRELIMINARY COPY
FLAG INVESTORS VALUE BUILDER FUND, INC.
ONE SOUTH STREET
BALTIMORE, MARYLAND 21202
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
DECEMBER 7, 2000
TO THE SHAREHOLDERS OF FLAG INVESTORS VALUE BUILDER FUND, INC.:
You are cordially invited to a special meeting ("the Meeting") of the
shareholders of Flag Investors Value Builder Fund, Inc. (the "Fund"). The
Meeting will be held on December 7, 2000, at 2:15 p.m. (Eastern time) at the
offices of the Fund's advisor, Investment Company Capital Corp., in the
conference room on the 30th Floor of One South Street, Baltimore, Maryland
21202. The purpose of the Meeting is to consider the proposals set forth below
and to transact such other business as may be properly brought before the
Meeting:
PROPOSAL 1: To approve modifying the Fund's fundamental investment policy
concerning loans; and
PROPOSAL 2: To approve a proposed sub-advisory agreement among the Fund,
its investment advisor, Investment Company Capital Corp.
("ICCC") and its sub-advisor, Alex. Brown Investment
Management ("ABIM"), effective March 2001, reflecting an
expected change in control of ABIM.
Only shareholders of the Fund at the close of business on October 16, 2000 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 MEETING, PLEASE VOTE NOW.
YOU MAY COMPLETE AND RETURN THE ENCLOSED PROXY CARD. A POSTAGE PAID ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
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.
YOUR PROXY IS REVOCABLE AT ANY TIME PRIOR TO THE MEETING.
NO MATTER HOW MANY SHARES YOU OWN, YOUR VOTE IS IMPORTANT AND WILL ENSURE THAT A
QUORUM WILL BE PRESENT AT THE MEETING.
Thank You.
/s/ Amy M. Olmert
----------------------------------
Amy M. Olmert
Secretary
Dated: [October 30], 2000
<PAGE>
PRELIMINARY COPY
FLAG INVESTORS VALUE BUILDER FUND, INC.
ONE SOUTH STREET
BALTIMORE, MARYLAND 21202
---------------------
PROXY STATEMENT
---------------------
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
DECEMBER 7, 2000
2:15 P.M.
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 December 7, 2000, at 2:15 p.m. (Eastern time) or at any
adjournment thereof (the "Meeting"), at the offices of the Fund's advisor,
Investment Company Capital Corp., in the conference room on the 30th Floor of
One South Street, Baltimore, Maryland 21202. It is expected that the Notice of
the Meeting, the Proxy Statement and a Proxy Card will be mailed to shareholders
on or about November 3, 2000.
SUMMARY
At the Meeting, shareholders will be asked to approve two proposals.
Proposal 1 asks shareholders of the Fund to approve modifying the Fund's
fundamental investment policy concerning loans.
Proposal 2 asks shareholders of the Fund to approve a proposed sub-advisory
agreement among the Fund, Investment Company Capital Corp.("ICCC") and Alex.
Brown Investment Management ("ABIM"), effective March 2001, reflecting an
expected change in control of ABIM.
If you do not expect to be present at the Meeting and wish your shares to be
voted, please vote your proxy (the "Proxy") by mail, telephone or the Internet,
allowing sufficient time for the Proxy to be received and processed on or before
2:15 p.m. Eastern time on December 7, 2000. If your Proxy is properly returned,
shares represented by it will be voted at the Meeting in accordance with your
instructions. However, if no instructions are specified on your signed Proxy
with
1
<PAGE>
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 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 Meeting.
The close of business on October 16, 2000, has been fixed as the record date
(the "Record Date") for the determination of shareholders entitled to notice of,
and to vote at, the 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 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. All classes of the Fund's shares will vote together on each
proposal.
The expenses of the Meeting will be shared by ICCC and ABIM (collectively,
the "Advisors") and 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, Internet or face-to-face meetings by employees and officers of the
Fund and the Advisors. Additional solicitation will be made by Shareholder
Communications Corporation ("Shareholder Communications"), a solicitation firm
located in New York, New York, that has been engaged by the Advisors to assist
in proxy solicitation. The cost of the proxy solicitation is estimated to be
[$ ].
Upon request, the Fund will furnish to shareholders, without charge, a copy
of the Fund's Annual Report for its fiscal year ended March 31, 2000 and the
Semi-annual Report for the period ended September 30, 2000, when available.
These reports of the Fund may be obtained by written request to the Fund, One
South Street, Mail Stop BAL01-1208, Attention: Kelli Hurdle, Baltimore, Maryland
21202, or by calling (800)767-3524.
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 its shares are registered under the Securities Act of 1933, as amended.
2
<PAGE>
PROPOSAL 1: TO APPROVE MODIFYING THE FUND'S FUNDAMENTAL INVESTMENT POLICY
CONCERNING LOANS.
The Board has unanimously approved, and is recommending that shareholders
approve, a proposed change to the Fund's investment policies to permit the Fund
to participate in securities lending programs. The change is designed to give
the Fund an opportunity to earn additional income in an effort to increase the
Fund's returns. There is no guarantee that these efforts will be successful.
If the Proposal is 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 equal to at
least 100% of the market value of the securities loaned plus accrued interest or
income. The Fund always retains beneficial ownership of the loaned security, and
at all times has a contractual right to demand that the borrower return the
loaned security to the Fund.
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. The Fund, however, will engage in securities lending through a
securities lending program. As part of this program, the program's organizer
provides indemnification should the collateral held be insufficient to protect
the Fund's rights to the loaned security.
Approving the Fund's participation in securities lending programs requires a
modification to the Fund's current investment policy regarding 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 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 BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
APPROVAL OF THE PROPOSAL TO MODIFY THE FUND'S INVESTMENT POLICIES CONCERNING
LOANS.
3
<PAGE>
PROPOSAL 2: TO APPROVE A PROPOSED SUB-ADVISORY AGREEMENT AMONG THE FUND,
INVESTMENT COMPANY CAPITAL CORP. ("ICCC") AND ALEX. BROWN
INVESTMENT MANAGEMENT ("ABIM"), REFLECTING AN EXPECTED CHANGE OF
CONTROL OF ABIM.
As described below, ABIM and one of its current 50% owners have entered into
an agreement to purchase the interest of the remaining 50% owner, effective
March 2001. This expected change of control of ABIM may be considered an
assignment and termination of any sub-advisory agreement that ABIM has with ICCC
and the Fund at that time. In anticipation of this transaction, the Board has
unanimously approved, and is recommending that shareholders approve, a proposed
sub-advisory agreement among the Fund, ICCC and ABIM, which reflects the change
of control of ABIM (the "Proposed Sub-Advisory Agreement"). The key terms of the
Proposed Sub-Advisory Agreement will be identical to the sub-advisory agreement
currently in place.
THE CHANGE OF CONTROL OF ABIM IS NOT EXPECTED TO IMPACT THE NATURE OR
QUALITY OF THE SERVICES TO BE PROVIDED BY ABIM TO ICCC OR THE FUND.
CHANGE OF CONTROL OF ABIM
ABIM currently is a limited partnership affiliated with ICCC. Buppert,
Behrens & Owen, Inc. ("BB&O"), a company organized and owned by three employees
of ABIM, owns a 49% limited partnership interest and a 1% general partnership
interest in ABIM. DB Alex. Brown, LLC ("DBAB"), an affiliate of ICCC, owns the
remaining 50% general partnership interest in ABIM.
On May 17, 2000, ABIM and BB&O entered into an Agreement of Sale of
Partnership Interests ("Sale Agreement") with DBAB that will result in BB&O
holding all partnership interests in ABIM, effective as of a March 2001 closing
date. In connection with this sale, ABIM also entered into a Trademark License
Agreement (the "License Agreement") with BT Alex. Brown Holdings, Inc. ("BTAB
Holdings") that will permit ABIM to continue to use the "Alex. Brown" name from
the March 2001 closing date until December 31, 2005. Under the terms of these
agreements, ABIM has agreed to pay DBAB and BTAB Holdings an amount equal to 60%
and 18%, respectively, of the sub-advisory fees earned during calendar years
2000, 2001 and 2002 by ABIM for providing advisory services to ICCC on behalf of
the Fund, and two other funds in the Fund Complex: Flag Investors Equity
Partners Fund, Inc. ("Equity Partners") and Flag Investors Communications
Fund, Inc. ("Communications"). If one or more of these funds converts to a
feeder fund in a master-feeder format, this calculation would include
sub-advisory fees earned in connection with providing sub-advisory services to
any master portfolio in which a fund invests. All amounts due will be paid in
eight installments on a quarterly basis beginning April 30, 2001, with the
4
<PAGE>
last installment due January 31, 2003. Amounts due DBAB will be offset by ABIM
partnership distributions payable to DBAB in April 2001.
The March 2001 closing date for the Sale Agreement is contingent upon, among
other events, the approval of the Proposed Sub-Advisory Agreement by Fund
shareholders, and the approval of a similar-type proposed sub-advisory agreement
by the shareholders of Equity Partners. The shareholders of Communications
approved such a proposed sub-advisory agreement on August 31, 2000. The Sale
Agreement also includes a provision prohibiting ABIM, BB&O and its employees,
partners, officers, or directors from providing investment advisory services to
any other registered investment company pursuing the same investment strategies
as the Fund, Equity Partners or Communications. Consistent with the fiduciary
duties that ICCC owes the Fund as its advisor, the Sale Agreement and License
Agreement do not prevent ICCC from suggesting that the Fund terminate its
relationship with ABIM if ICCC believes such a suggestion is appropriate, but
any such termination must ultimately be recommended by a majority of the
Directors of the Fund who are not "interested persons" (as defined in the 1940
Act) ("Independent Directors") and approved by the Fund's Board.
BOARD CONSIDERATIONS
At meetings on March 21 and 22, 2000, the Board, including the Independent
Directors, approved the Proposed Sub-Advisory Agreement and recommended it for
approval by the shareholders of the Fund.
In evaluating the Proposed Sub-Advisory Agreement, the Board took into
account (1) the nature and quality of the sub-advisory services rendered and the
results achieved by ABIM in the management of the Fund; (2) the relationship of
the sub-advisory fee schedule to the fee schedules of comparable mutual funds;
(3) the costs borne by ABIM in providing investment sub-advisory services to the
Fund; (4) the profits of ABIM in providing services to the Fund; (5) the extent
to which the economies of scale that ABIM might experience as a result of growth
in the Fund's assets would be shared with ICCC and the Fund; and (6) research
services received in return for allocation of brokerage. With respect to the
nature and quality of services and the results achieved, the Directors were
presented with information about the performance of the Fund since inception
(1992). The Board also took into account (1) the nature and quality of services
expected to be provided by ABIM after the change of control; and (2) the
potential impact of the terms and conditions of the Sale Agreement and License
Agreement on ABIM's financial standing and profitability, particularly as these
factors affect ABIM's ability to provide the services required under the
Proposed Sub-Advisory Agreement. In these regards, the Board concluded that the
change of control of
5
<PAGE>
ABIM was not expected to have any adverse material impact on the nature and
quality of services to be provided by ABIM.
The Board also was advised that ICCC, ABIM and BB&O intended to comply with
the requirements of Section 15(f) of the 1940 Act. Section 15(f) allows an
investment advisor to an investment company or any of the advisor's affiliates
to benefit from a transaction such as the one proposed 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 acquirer (ABIM and BB&O, respectively, in this
case). The Board of the Fund currently is in compliance with this provision
of Section 15(f) and expects to remain so in the future.
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 change of control of ABIM whereby the investment advisor, or any
interested person of any such advisor (among others, ICCC) 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). ICCC, ABIM, and BB&O 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 change of control of ABIM. ICCC, ABIM, and BB&O 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 change of
control of ABIM.
THE CURRENT SUB-ADVISORY AGREEMENT
ABIM serves as sub-advisor to the Fund pursuant to a sub-advisory agreement
among the Fund, ICCC and ABIM, dated as of September 1, 2000 (the "Current
Sub-Advisory Agreement"). The Current Sub-Advisory Agreement was initially
approved by the shareholders of the Fund on October 7, 1999. The Current
Sub-Advisory Agreement was most recently approved by the Fund's Board of
Directors, including a majority of the Independent Directors, for an initial
two-year term on September 25, 2000.
6
<PAGE>
THE PROPOSED SUB-ADVISORY AGREEMENT
Other than the dates of execution, effectiveness and initial term, the
Proposed Sub-Advisory Agreement is identical to the Current Sub-Advisory
Agreement. The terms of the Proposed Sub-Advisory Agreement are summarized below
and are qualified by reference to Exhibit A.
SERVICES PROVIDED. The Proposed Sub-Advisory Agreement provides that ABIM,
in return for its fee, will (a) provide the Fund with executive, administrative
and clerical services; (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 and regularly report thereon to the Fund's
Board of Directors; (d) take, on behalf of the Fund, all actions necessary to
effect the purchase and sale programs, including placing orders; and (e) obtain
and evaluate pertinent information about significant developments and economic,
statistical and financial data, with respect to securities included, or
considered desirable for inclusion in the Fund's portfolio.
The Proposed Sub-Advisory Agreement provides that ABIM will furnish at its
expense, 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.
ABIM will maintain at its expense, a trading function in order to place orders
for the purchase and sale of portfolio securities of the Fund. The Fund assumes
and pays all of its other expenses.
The services of ABIM are not to be deemed totally exclusive. ABIM is free to
render investment advisory or other services to others, 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, 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.
FEES. ABIM receives a fee from ICCC, calculated daily and paid at the end
of each calendar month. The annual rate of the sub-advisory fee under the
Current and Proposed Sub-Advisory Agreements is as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY INCREMENTAL
NET ASSETS SUB-ADVISORY FEE
---------------------------------------- ----------------
<S> <C>
0 - $50 Million 0.65%
Greater than $50 Million up to $200
Million 0.50%
Excess over $200 Million 0.40%
</TABLE>
7
<PAGE>
For the year ended March 31, 2000, ICCC paid ABIM $5,116,599 in sub-
advisory fees for services provided to the Fund.
TERM OF THE AGREEMENT. Following the expiration of its initial two-year
term, the Proposed 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 "interested 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 Proposed 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' waivable written notice to the other parties. The agreement
automatically terminates in the event of its assignment.
STANDARD OF CARE. The Proposed 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, partners or employees or reckless disregard by ABIM of its
duties under the agreement.
ADDITIONAL INFORMATION ABOUT ABIM
ABIM is a registered investment advisor with assets under management as of
September 30, 2000, of approximately $10.6 billion, including assets of the Fund
and the assets of ABIM's other clients. As described on page 8, BB&O and DBAB
are the current owners of ABIM. The address of BB&O and ABIM is 217 East Redwood
Street, Baltimore, Maryland 21202. DBAB's address is One South Street,
Baltimore, Maryland 21202.
8
<PAGE>
The following information is provided for each general partner and the
principal executive officer of ABIM.
<TABLE>
<CAPTION>
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
DB Alex. Brown, LLC One South Street N/A
General Partner Baltimore, MD 21202
J. Dorsey Brown, III One South Street Chief Executive
Chief Executive Officer Baltimore, MD 21202 Officer, ABIM
</TABLE>
ABIM is an affiliate of ICCC. For the fiscal year ended March 31, 2000, the
Fund paid to ICCC or ICCC's affiliates fees for advisory, transfer agency,
accounting and custody services provided to the Fund in the amounts of
$7,107,396, $439,923, $138,553 and $84,889, respectively.
OTHER FUNDS WITH SIMILAR INVESTMENT OBJECTIVES SUB-ADVISED BY ABIM
ABIM acts as sub-advisor to two other funds that 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 ICCC to ABIM pursuant to
sub-advisory agreements in effect for such funds.
<TABLE>
<CAPTION>
AVERAGE NET SUB-ADVISORY FEE (AS A
ASSETS OF PERCENTAGE OF AVERAGE
FUND FUND (000S) DAILY NET ASSETS)
---- ----------------- ----------------------
<S> <C> <C>
Flag Investors Equity Partners
Fund, Inc. $ 433,828(1) 0.56%(1)
Flag Investors Communications
Fund, Inc. $ 2,053,613(2) 0.40%(2)
</TABLE>
------------------------
(1) Information given for the fiscal year ended May 31, 2000.
(2) Information given for the fiscal year ended December 31, 1999.
Effective August 31, 2000, ABIM agreed to lower the sub-advisory fees it
charges ICCC for providing sub-advisory services to the Fund and Equity Partners
by ten basis points at each breakpoint. This change is already reflected in the
description of the Current and Proposed Sub-Advisory Agreements provided above.
Also effective August 31, 2000, ICCC agreed to increase the sub-advisory fees it
pays to ABIM for providing sub-advisory services to Communications by five basis
points at each breakpoint.
9
<PAGE>
SHAREHOLDER APPROVAL OF THE PROPOSED SUB-ADVISORY AGREEMENT
Approval of the Proposed Sub-Advisory Agreement requires the affirmative
vote of a majority of the outstanding voting securities of the Fund (as defined
in the 1940 Act). In the event that shareholders of the Fund do not approve the
Proposed 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 Proposed Sub-Advisory
Agreement.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
APPROVAL OF THE PROPOSED SUB-ADVISORY AGREEMENT.
ADDITIONAL INFORMATION
BENEFICIAL OWNERS
[To the knowledge of Fund management, as of the Record Date, there were no
beneficial owners holding 5% or more of the outstanding shares of the Fund.] As
of the Record Date, the Directors and Officers of the Fund as a group
beneficially owned an aggregate of less than 1% of the outstanding shares of the
Fund.
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, such as the approval of investment policy changes, a proposed
investment advisory or sub-advisory agreement or other matters requiring
shareholder action under the 1940 Act. 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.
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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 such 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.
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.
REQUIRED VOTE
Approval of each of the Proposals 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 "majority of the outstanding voting securities" of the
Fund means the vote of (i) 67% or more of the Fund's outstanding voting
securities 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
Meeting and will therefore have the effect of counting against each of the
Proposals.
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 MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO VOTE BY MAIL, TELEPHONE OR INTERNET AS
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EXPLAINED IN THE INSTRUCTIONS INCLUDED ON YOUR PROXY CARD.
By Order of the Directors,
/s/ Amy M. Olmert
----------------------------------------------
Amy M. Olmert
SECRETARY
Dated: October [30], 2000
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EXHIBIT A
FLAG INVESTORS VALUE BUILDER FUND, INC.
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of the 1st day of September, 2000 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, non-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 "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 Sub-Advisor and approving this Agreement;
(d) The Fund's Notification of Registration filed pursuant to
Section 8(a) of the 1940 Act on Form N-8A under the 1940 Act as filed with
the Securities and Exchange Commission (the "SEC") on March 16, 1992;
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(e) The Fund's Registration Statement on Form N-1 under the Securities
Act of 1933, as amended (the "1933 Act") (File No. 2-87336) 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
(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 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
(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.
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 and execution available. 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
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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.
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 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 DB Alex. Brown LLC ("DB Alex.
Brown") to execute portfolio transactions for the Fund on an agency basis. The
commissions paid to DB 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
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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. DB
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 DB Alex. Brown in any
transaction in which the Sub-Advisor or DB Alex. Brown acts as a principal with
respect to any part of the Fund's order. If DB 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;
(c) the provisions of the Articles of Incorporation;
(d) the provision of the By-Laws; and
(e) any other applicable provisions of state and federal 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
4
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Section 3 hereof to place orders for the purchase and sale of portfolio
securities for the Fund.
(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' 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 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: 0.65% of the first $50 million of the Fund's
average daily net assets, 0.50% of the Fund's average daily net assets in excess
of
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$50 million but not exceeding $200 million, and 0.40% 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.
SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, THE DUTIES OF THE SUB-ADVISOR,
THE PORTION OF FUND ASSETS THAT SUCH SUB-ADVISOR SHALL MANAGE AND THE FEES TO BE
PAID SUCH SUB-ADVISOR BY THE ADVISOR UNDER AND PURSUANT TO THIS AGREEMENT MAY BE
ADJUSTED FROM TIME TO TIME BY THE ADVISOR WITH AND UPON THE APPROVAL OF SUCH
SUB-ADVISOR AND THE MEMBERS OF THE FUND'S BOARD OF DIRECTORS WHO ARE NOT
"INTERESTED PERSONS" (AS DEFINED IN THE 1940 ACT) OF ANY PARTY TO THIS
AGREEMENT.
9. DELEGATION OF 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.
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.
6
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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-Advisor are not prohibited from engaging in any other business activity or
from rendering services to any other person, or from serving as partners,
officers or directors of any other firm or corporation, including other
investment companies.
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 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
7
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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.
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.
[SEAL] FLAG INVESTORS VALUE BUILDER FUND, INC.
Attest: /s/ Savonne Ferguson By: /s/ Amy M. Olmert
------------------------ ---------------------------------
Name: Savonne Ferguson Name: Amy M. Olmert
Title: Secretary
[SEAL] INVESTMENT COMPANY CAPITAL CORP.
Attest: /s/ Savonne Ferguson By: /s/ Edward J. Veilleux
------------------------ ---------------------------------
Name: Savonne Ferguson Name: Edward J. Veilleux
Title: Executive Vice President
[SEAL] ALEX. BROWN INVESTMENT MANAGEMENT
Attest: /s/ Savonne Ferguson By: /s/ Bruce E. Behrens
------------------------ ---------------------------------
Name: Savonne Ferguson Name: Bruce E. Behrens
Title: Vice President and Principal
8
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[LOGO]
FLAG INVESTORS FUNDS
MUTUAL FUND SERVICES
MS BAL01-1709
ONE SOUTH STREET
BALTIMORE, MD 21202-3220
TO VOTE BY TOUCH-TONE TELEPHONE
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
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.
For more information call 1-877-504-7018
FLAG INVESTORS VALUE BUILDER FUND, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 7, 2000
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 Communications Fund, Inc. (the "Fund"). The undersigned
shareholder(s) of the Fund, revoking previous proxies, hereby appoint(s)
Tammie Lee and Fizza Khan 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 December 7, 2000 (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.
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<S><C>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FLICFI KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL.
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Vote On Proposals For Against Abstain
1. To approve modifying the Fund's fundamental investment policy concerning / / / / / /
loans.
2. To approve a proposed Sub-Advisory Agreement among the Fund, Investment / / / / / /
Company Capital Corp. and Alex. Brown Investment Management, effective
March 2001, reflecting an expected change in control of the Fund's
sub-advisor.
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.
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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