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[FLAG INVESTORS LOGO]
Value Builder Fund, Inc.
(Class A, Class B, and Class C Shares)
Prospectus & Application
August 1, 1999, as supplemented through
January 18, 2000
The Securities and Exchange Commission has neither approved nor disapproved
these securities nor has it passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.
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[FLAG INVESTORS LOGO]
This mutual fund (the "Fund") is designed to maximize total return through a
combination of long-term growth of capital and current income.
The Fund offers shares through securities dealers and through financial
institutions that act as shareholder servicing agents. You may also buy shares
through the Fund's Transfer Agent. This Prospectus describes Flag Investors
Class A Shares ("Class A Shares"), Flag Investors Class B Shares ("Class B
Shares") and Flag Investors Class C Shares ("Class C Shares") of the Fund. These
separate classes give you a choice of sales charges and fund expenses. (Refer to
the section on sales charges and the attached Application.)
TABLE OF CONTENTS
Investment Summary ..............................................1
Fees and Expenses of the Fund ...................................3
Investment Program ..............................................4
The Fund's Net Asset Value ......................................5
How to Buy Shares ...............................................5
How to Redeem Shares ............................................6
Telephone Transactions ..........................................6
Sales Charges ...................................................7
How to Choose the Class
That Is Right for You ........................................9
Dividends and Taxes .............................................9
Investment Advisor and Sub-Advisor ..............................9
Financial Highlights ...........................................11
Application ...................................................A-1
Flag Investors Funds
P.O. Box 515
Baltimore, MD 21203
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INVESTMENT SUMMARY
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Objectives and Strategies
The Fund seeks to maximize total return through a combination of
long-term growth of capital and current income by investing primarily in a
portfolio of common stocks and corporate bonds.
The Fund's investment advisor and sub-advisor (the "Advisors")may alter
the percentages of assets invested in common stocks and bonds depending on
their judgment as to general market and economic conditions, trends in yields
and interest rates, and changes in fiscal and monetary policy. Under normal
market conditions, between 40% and 75% of the Fund's assets will be invested in
common stocks and at least 25% of the Fund's assets will be invested in bonds.
In selecting common stocks for the Fund's portfolio, the Advisors use a
"flexible value" approach. With this approach, they try to find common stocks
that are undervalued in the marketplace based on such characteristics as
earnings, cash flow, or asset values. In evaluating a stock's potential, they
also consider other factors such as earnings growth, industry position, and the
strength of management. The Advisors' strategy gives them the flexibility to
purchase traditional value stocks as well as the stocks of high growth rate
companies. While the Fund does not limit its investment to issuers in a
particular capitalization range, the Advisors currently focus on securities of
larger companies.
In selecting bonds for the Fund, the Advisors purchase securities with a
range of maturities based on their assessment of the relative yields available
on securities of different maturities. The Advisors currently anticipate that
the average maturity of the bonds in the Fund's portfolio will be between two
and ten years. The bonds purchased by the Fund will generally be investment
grade, but may also be non-investment grade.
Risk Profile
The Fund is best suited for you if you are seeking both long-term growth
of capital and current income through an approach that combines investments in
common stocks and bonds. The value of an investment in the Fund will vary from
day to day based on changes in the prices of the common stocks and the bonds in
the Fund's portfolio. The Fund's investments in common stocks can be expected
to be more volatile than the Fund's investments in bonds.
General Stock Risk. The prices of common stocks purchased by the Fund
will fluctuate based upon investor perceptions of the economy, the markets, and
the companies represented in the Fund's portfolio.
General Fixed Income Risk. The value of the bonds in the Fund's portfolio
can be expected to increase during periods of falling interest rates and
decrease during periods of rising interest rates. The magnitude of these
increases and decreases will generally be larger if the Fund holds securities
with longer maturities. It is also possible that the issuer of a bond may be
unable to make principal and interest payments when due.
Style Risk. As with any investment strategy, the "flexible value"
strategy used in managing the Fund's equity portfolio will, at times, perform
better than or worse than other investment styles and the overall market. If
the Advisors overestimate the value or return potential of one or more common
stocks, the Fund may underperform the general equity market.
Asset Allocation Risk. The Advisors' assessment of market and economic
conditions may cause them to invest too much or too little in either stocks or
bonds. This could adversely affect the Fund's performance.
You may lose money by investing in the Fund. An investment in the Fund is
not a bank deposit and is not guaranteed by the FDIC or any other government
agency.
1
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Fund Performance
The following bar chart and table show the performance of the Fund both
year-by-year and as an average over different periods of time. The variability
of performance over time provides an indication of the risks of investing in
the Fund. This is an historical record and does not necessarily indicate how
the Fund will perform in the future.
Class A Shares*
For years ended December 31,
1993 1994 1995 1996 1997 1998
11.76% -0.37% 32.74% 24.64% 22.67% 18.53%
- -----------
* The bar chart does not reflect sales charges. If it did, returns would be
less than those shown. For the period from December 31, 1998 through June 30,
1999, the year-to-date total return for Class A Shares was 11.19%.
During the 6-year period shown in the bar chart, the highest return for a
quarter was 17.91% (quarter ended 12/31/98) and the lowest return for a quarter
was (9.66)% (quarter ended 9/30/98).
Average Annual Total Return (for periods ended December 31, 1998)
<TABLE>
<CAPTION>
91-Day U.S. Lipper Balanced
Class A Shares(1) S&P 500(2) Treasury Bill(3) Fund Index(4)
---------------------------- ------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Past One Year ........... 13.19% 28.58% 4.88% 15.09%
Past Five Years ......... 18.01% 24.06% 5.02% 13.87%
Since Inception ......... 16.75%(6/15/92) 21.28%(5) 4.57%(5) 13.63%(5)
91-Day U.S. Lipper Balanced
Class B Shares(1) S&P 500(2) Treasury Bill(3) Fund Index(4)
--------------------------- ------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Past One Year ........... 13.60% 28.58% 4.88% 15.09%
Since Inception ......... 23.22%(1/3/95) 30.51%(6) 5.20%(6) 18.24%(6)
</TABLE>
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(1) These figures assume the reinvestment of dividends and capital gains
distributions and include the impact of the maximum sales charges which
increased on January 18, 2000.
(2) The Standard & Poor's 500 Index is an unmanaged index that is a widely
recognized benchmark of general equity market performance. The index does
not factor in the costs of buying, selling, and holding securities -- costs
which are reflected in the Fund's results.
(3) The 91-Day U.S. Treasury Bill is a measure of short-term bond market
performance.
(4) The Lipper Balanced Fund Index is a non-weighted index of the 30 largest
funds within the Lipper balanced fund investment category. Typically, the
stock/bond ratio of the funds in the index ranges around 60%/40%.
(5) For the period from 6/30/92 through 12/31/98.
(6) For the period from 12/31/94 through 12/31/98.
No performance information is provided for the Class C Shares because they
had not been offered for a full year at December 31, 1998. However, performance
of the Class C Shares is expected to be similar to that of the Fund's other
classes and will differ only to the extent that Class C Shares do not have the
same expenses.
2
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FEES AND EXPENSES OF THE FUND
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This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
Initial Sales Deferred Deferred
Charge Sales Charge Sales Charge
Alternative Alternative Alternative
--------------- ----------------- ----------------
<S> <C> <C> <C>
Shareholder Fees:
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) ....................................... 5.50%* None None
Maximum Deferred Sales Charge (Load)(as a percentage of original purchase
price or redemption proceeds, whichever is lower) ......................... 1.00%* 5.00%** 1.00%***
Maximum Sales Charge (Load) Imposed on Reinvested Dividends ................ None None None
Redemption Fee ............................................................. None None None
Exchange Fee ............................................................... None None None
Annual Fund Operating Expenses:
(expenses that are deducted from Fund assets)
Management Fees ............................................................ 0.75% 0.75% 0.75%
Distribution and/or Service (12b-1) Fees ................................... 0.25% 0.75% 0.75%
Other Expenses (including a 0.25% shareholder servicing fee for Class B
and Class C Shares) ....................................................... 0.12% 0.37%**** 0.37%****
------ ---=---- -------
Total Annual Fund Operating Expenses ....................................... 1.12% 1.87% 1.87%
====== ========= =======
</TABLE>
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* You will pay no sales charge on purchases of $1 million or more of Class A
Shares, but unless you are otherwise eligible for a sales charge waiver or
reduction, you may pay a contingent deferred sales charge when you redeem
your shares. (See "Sales Charges -- Redemption Price.")
** Contingent deferred sales charges decline over time and reach zero after
six years. After seven years, Class B Shares convert automatically to Class
A Shares. (See "Sales Charges" and "How to Choose the Class That Is Right
for You.")
*** You will be required to pay a contingent deferred sales charge if you
redeem your Class C Shares within one year after purchase. (See "Sales
Charges -- Redemption Price.")
**** A portion of the shareholder servicing fee is allocated to your securities
dealer and qualified banks for services provided and expenses incurred in
maintaining your account, responding to your inquiries, and providing you
with information about your investment.
Example:
This Example is intended to help you compare the cost of investing in each
class of the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Class A Shares ........................................................ $559 $790 $1,039 $1,752
Class B Shares ........................................................ $590 $888 $1,211 $1,815
Class C Shares ........................................................ $290 $588 N/A N/A
You would pay the following expenses if you did not redeem your shares:
Class A Shares ........................................................ $559 $790 $1,039 $1,752
Class B Shares ........................................................ $190 $588 $1,011 $1,815
Class C Shares ........................................................ $190 $588 N/A N/A
</TABLE>
Federal regulations require that the table above reflect the maximum sales
charge. However, you may qualify for reduced sales charges or no sales charge
at all. (Refer to the section on sales charges.) If you hold your
3
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shares for a long time, the combination of the initial sales charge you paid
and the recurring 12b-1 fees may exceed the maximum sales charges permitted by
the Conduct Rules of the National Association of Securities Dealers, Inc.
INVESTMENT PROGRAM
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Investment Objective, Policies, and
Risk Considerations
The Fund seeks to maximize total return through a combination of
long-term growth of capital and current income by investing primarily in a
portfolio of common stocks and corporate bonds.
The Advisors are responsible for managing the Fund's investments. (Refer
to the section on Investment Advisor and Sub-Advisor.) In selecting investments
for the Fund, the Advisors determine the relative percentages of assets to be
invested in common stocks and bonds based on their judgment as to general
market and economic conditions, trends in yields and interest rates, and
changes in fiscal and monetary policy. Under normal market conditions, between
40% and 75% of the Fund's assets will be invested in common stocks and at least
25% of the Fund's assets will be invested in bonds.
In selecting common stocks for the Fund's portfolio, the Advisors use a
"flexible value" approach. With this approach, they try to find common stocks
that are undervalued in the marketplace based on such characteristics as
earnings, cash flow, or asset values. In evaluating a stock's potential, they
also consider other factors such as earnings growth, industry position, and the
strength of management. The Advisors' strategy gives them the flexibility to
purchase traditional value stocks as well as the stocks of high growth rate
companies. While the Fund does not limit its investment to issuers in a
particular capitalization range, the Advisors currently focus on securities of
larger companies.
In managing the Fund's bond portfolio, the Advisors invest primarily in
corporate bonds. The Advisors select bonds with a range of maturities based on
their assessment of the relative yields available on securities of different
maturities. The Advisors currently anticipate that the average maturity of the
bonds in the Fund's portfolio will be between two and ten years. In general,
the corporate bonds held by the Fund will be investment grade bonds. However,
the Fund also invests, to a limited extent, in non-investment grade bonds.
An investment in the Fund involves risk. Over time, common stocks have
shown greater potential for growth than other types of securities, but in the
short run, stocks can be more volatile than other types of securities. Stock
prices are sensitive to developments affecting particular companies and to
general economic conditions that affect particular industry sectors or the
securities markets as a whole. Bonds are subject to interest rate and credit
risk. The value of the Fund's bond portfolio can be expected to increase during
periods of falling interest rates and decrease during periods of rising
interest rates. The magnitude of these increases and decreases will generally
be larger if the Fund holds securities with longer maturities. It is also
possible that the issuer of a bond may be unable to make principal and interest
payments when due. Whether or not the Fund benefits from the allocation of
assets between common stocks and bonds will depend on the Advisors' success in
assessing economic trends and their impact on financial assets.
To reduce the Fund's risk, the Advisors may make temporary defensive
investments in high quality, short-term money market instruments and in notes
or bonds issued by the U.S. Treasury Department or by other agencies of the
U.S. government. While engaged in a temporary defensive strategy, the Fund may
not achieve its investment objective. The Advisors would follow such a strategy
only if they believed the risk of loss outweighed the opportunity for gain.
Year 2000 Issues
The Fund depends on the smooth functioning of computer systems in almost
every aspect of its business. The Fund could be adversely affected if the
computer systems used by its service providers do not properly process dates
after January 1, 2000 and do not distinguish between the year 2000 and the year
1900. The Fund has asked its service providers whether they expect to have
their computer systems adjusted for the year 2000 transition and has received
assurances from each that its system is expected to accommodate the year 2000
without material adverse consequences to the Fund. The Fund and its
shareholders may experience losses if these assurances prove to be incorrect or
if issuers of portfolio securities or third parties, such as custodians, banks,
broker-dealers, or others, with which the Fund does business experience
difficulties as a result of year 2000 issues.
4
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THE FUND'S NET ASSET VALUE
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The price you pay when you buy shares or receive when you redeem shares
is based on the Fund's net asset value per share. When you buy Class A Shares,
the price you pay may be increased by a sales charge. When you redeem any class
of shares, the amount you receive may be reduced by a sales charge. Read the
section on sales charges for details on how and when these charges may or may
not be imposed.
The net asset value per share of the Fund is determined at the close of
regular trading on the New York Stock Exchange (ordinarily 4:00 p.m. Eastern
Time) on each day the Exchange is open for business. On the day before certain
holidays are observed, the primary trading markets for the Fund may close early
and the Fund also may close early. You may call the Transfer Agent at
1-800-553-8080 for additional information about whether the Fund will close
early before a particular holiday. The net asset value is calculated by
subtracting the liabilities attributable to a class from its proportionate
share of the Fund's assets and dividing the result by the outstanding shares of
the class. Because the different classes have different distribution or service
fees, their net asset values may differ.
In valuing its assets, the Fund's investments are priced at their market
value. When price quotes for a particular security are not readily available,
investments are priced at their "fair value" using procedures approved by the
Fund's Board of Directors.
You may buy or redeem shares on any day the New York Stock Exchange is
open for business (a "Business Day"). If your order is entered before the net
asset value per share is determined for that day, the price you pay or receive
will be based on that day's net asset value per share. If your order is entered
after the net asset value per share is determined for that day or after the
Fund has closed early before a holiday, the price you pay or receive will be
based on the next Business Day's net asset value per share.
The following sections describe how to buy and redeem shares.
HOW TO BUY SHARES
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You may buy any class of the Fund's shares through your securities dealer
or through any financial institution that is authorized to act as a shareholder
servicing agent. Contact them for details on how to enter and pay for your
order. You may also buy shares by sending your check (along with a completed
Application Form) directly to the Fund. The Application Form, which includes
instructions, is attached to this Prospectus.
You may invest in Class A Shares unless you are a defined contribution
plan with assets of $75 million or more.
Your purchase order may not be accepted if the sale of Fund Shares has
been suspended or if it is determined that your purchase would be detrimental
to the interests of the Fund's shareholders.
Investment Minimums
Your initial investment must be at least $2,000. Subsequent investments
must be at least $100. The following are exceptions to these minimums:
o If you are investing in an IRA account, your initial investment may be
as low as $1,000.
o If you are a shareholder of any other Flag Investors fund, your initial
investment in this Fund may be as low as $500.
o If you are a participant in the Fund's Automatic Investing Plan, your
initial investment may be as low as $250. If you participate in the
monthly plan, your subsequent investments may be as low as $100. If you
participate in the quarterly plan, your subsequent investments may be as
low as $250. Refer to the section on the Fund's Automatic Investing Plan
for details.
o There is no minimum investment requirement for qualified retirement
plans such as 401(k), pension, or profit sharing plans.
Investing Regularly
You may make regular investments in the Fund through any of the following
methods. If you wish to enroll in any of these programs or if you need any
additional information, complete the appropriate section of the attached
Application Form or contact your securities dealer, your servicing agent, or
the Transfer Agent.
Automatic Investing Plan. You may elect to make a regular monthly or
quarterly investment in any class of shares. The amount you decide upon will be
withdrawn from your checking account using a pre-authorized check. When the
money is received by the
5
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Transfer Agent, it will be invested in the class of shares selected at that
day's offering price. Either you or the Fund may discontinue your participation
upon 30 days' notice.
Dividend Reinvestment Plan. Unless you elect otherwise, all income and
capital gains distributions will be reinvested in additional Fund Shares at net
asset value. You may elect to receive your distributions in cash or to have
your distributions invested in shares of other Flag Investors funds. To make
either of these elections or to terminate automatic reinvestment, complete the
appropriate section of the attached Application Form or notify the Transfer
Agent, your securities dealer, or your servicing agent at least five days
before the date on which the next dividend or distribution will be paid.
Systematic Purchase Plan. You may also purchase any class of shares
through a Systematic Purchase Plan. Contact your securities dealer or servicing
agent for details.
HOW TO REDEEM SHARES
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You may redeem any class of the Fund's shares through your securities
dealer or servicing agent. Contact them for details on how to enter your order
and for information as to how you will be paid. If you have an account with the
Fund that is in your name, you may also redeem shares by contacting the
Transfer Agent by mail or (if you are redeeming less than $50,000) by
telephone. The Transfer Agent will mail your redemption check within seven days
after it receives your order in proper form. Refer to the section on telephone
transactions for more information on this method of redemption.
Your securities dealer, your servicing agent, or the Transfer Agent may
require the following documents before they redeem your shares:
1) A letter of instructions specifying your account number and the number
of shares or dollar amount you wish to redeem. The letter must be
signed by all owners of the shares exactly as their names appear on the
account.
2) If you are redeeming more than $50,000, a guarantee of your signature.
You can obtain one from most banks or securities dealers.
3) Any stock certificates representing the shares you are redeeming. The
certificates must be either properly endorsed or accompanied by a duly
executed stock power.
4) Any additional documents that may be required if your account is in the
name of a corporation, partnership, trust, or fiduciary.
Other Redemption Information
Any dividends payable on shares you redeem will be paid on the next
dividend payable date. If you have redeemed all of your shares by that time,
the dividend will be paid to you in cash whether or not that is the payment
option you have selected.
If you redeem sufficient shares to reduce your investment to $500 or
less, the Fund has the power to redeem the remaining shares after giving you 60
days' notice. The Fund reserves the right to redeem shares in kind under
certain circumstances.
If you own Fund Shares having a value of at least $10,000, you may
arrange to have some of your shares redeemed monthly or quarterly under the
Fund's Systematic Withdrawal Plan. Each redemption under this plan involves all
the tax and sales charge implications normally associated with Fund
redemptions. Contact your securities dealer, your servicing agent, or the
Transfer Agent for information on this plan.
TELEPHONE TRANSACTIONS
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If your shares are in an account with the Transfer Agent, you may redeem
them in any amount up to $50,000 or exchange them for shares in another Flag
Investors fund by calling the Transfer Agent on any Business Day between the
hours of 8:30 a.m. and 5:30 p.m. (Eastern Time). You are automatically entitled
to telephone transaction privileges, but you may specifically request that no
telephone redemptions or exchanges be accepted for your account. You may make
this election when you complete the Application Form or at any time thereafter
by completing and returning documentation supplied by the Transfer Agent.
The Fund and the Transfer Agent will employ reasonable procedures to
confirm that telephoned instructions are genuine. These procedures include
requiring you to provide certain personal identification information when you
open your account and
6
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before you effect each telephone transaction. You may be required to provide
additional telecopied instructions. If these procedures are employed, neither
the Fund nor the Transfer Agent will bear any liability for following telephone
instructions that either reasonably believes to be genuine. Your telephone
transaction request will be recorded.
During periods of extreme economic or market changes, you may experience
difficulty in contacting the Transfer Agent by telephone. In such event, you
should make your request by mail. If you hold your shares in certificate form,
you may not exchange or redeem them by telephone.
SALES CHARGES
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Purchase Price
The price you pay to buy shares will be the Fund's offering price; this
is calculated by adding any applicable sales charges to the net asset value per
share of the class you are buying. The amount of any sales charge included in
your purchase price will be according to the following schedule:
<TABLE>
<CAPTION>
Class A
Sales Charge
as a % of
-------------------------
Class B Class C
Offering Net Amount Sales Sales
Amount of Purchase Price Invested Charge Charge
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $ 50,000 ......... 5.50% 5.82% None None
$ 50,000 - $ 99,999 ......... 4.50% 4.71% None None
$ 100,000 - $249,999 ......... 3.50% 3.63% None None
$ 250,000 - $499,999 ......... 2.50% 2.56% None None
$ 500,000 - $999,999 ......... 2.00% 2.04% None None
$1,000,000 and over ........... None None None None
- -----------------------------------------------------------------------------------
</TABLE>
Although you do not pay an initial sales charge when you invest
$1,000,000 or more in Class A Shares or when you buy any amount of Class B or
Class C Shares, you may pay a sales charge when you redeem your shares. Refer
to the section on redemption price for details.
The sales charge you pay on your current purchase of Class A Shares may
be reduced under the circumstances listed below.
Rights of Accumulation. If you are purchasing additional Class A Shares
of this Fund or Class A shares of any other Flag Investors fund or if you
already have investments in Class A shares, you may combine the value of your
purchases with the value of your existing investments to determine whether you
qualify for reduced sales charges. (For this purpose your existing investments
will be valued at the higher of cost or current value.) You may also combine
your purchases and investments with those of your spouse and your children
under the age of 21 for this purpose. You must be able to provide sufficient
information to verify that you qualify for this right of accumulation.
Letter of Intent. If you anticipate making additional purchases of Class
A Shares over the next 13 months, you may combine the value of your current
purchase with the value of your anticipated purchases to determine whether you
qualify for a reduced sales charge. You will be required to sign a letter of
intent specifying the total value of your anticipated purchases and to
initially purchase at least 5% of the total. When you make each purchase during
the period, you will pay the sales charge applicable to their combined value.
If, at the end of the 13-month period, the total value of your purchases is
less than the amount you indicated, you will be required to pay the difference
between the sales charges you paid and the sales charges applicable to the
amount you actually did purchase. Some of the shares you own will be redeemed
to pay this difference.
<PAGE>
Purchases at Net Asset Value. You may buy Class A Shares without paying a
sales charge under the following circumstances:
1) If you are reinvesting some or all of the proceeds of a redemption of Class A
Shares made within the prior 90 days.
2) If you are exchanging an investment in another Flag Investors fund for an
investment in this Fund (see "Purchases by Exchange" for a description of the
conditions).
3) If you are a current or retired Fund Director, a director, an employee, or a
member of the immediate family of an employee of any of the following (or
their respective affiliates): the Fund's distributor, the Advisors, or a
broker-dealer authorized to sell shares of the Fund.
4) If you are buying shares in any of the following types of accounts:
(i) A qualified retirement plan;
(ii) A Flag Investors fund payroll savings plan program;
(iii) A fiduciary or advisory account with a bank, bank trust department,
registered investment advisory company, financial planner or
securities dealer purchasing shares on your behalf. To qualify for
this provision you must be paying an account management fee for the
fiduciary or advisory services. You may be charged an additional fee
by your securities dealer or servicing agent if you buy shares in
this manner.
7
<PAGE>
Purchases by Exchange
You may exchange Class A, B, or C Shares of any other Flag Investors fund
for an equal dollar amount of Class A, B or C Shares, respectively, without
payment of the sales charges described above or any other charge. You may not
exchange Class A Shares of a Flag Investors Money Market Fund unless you
acquired those shares through a prior exchange. You may enter both your
redemption and purchase orders on the same Business Day or, if you have already
redeemed the shares of the other fund, you may enter your purchase order within
90 days of the redemption. The Fund may modify or terminate these offers of
exchange upon 60 days' notice.
You may request an exchange through your securities dealer or servicing
agent. Contact them for details on how to enter your order. If your shares are
in an account with the Fund's Transfer Agent, you may also request an exchange
directly through the Transfer Agent by mail or by telephone.
Redemption Price
The amount of any sales charge deducted from your redemption price will
be determined according to the following schedule.
Sales Charge as a Percentage
of the Dollar Amount
Subject to Charge
-----------------------------------------------------
Class A Class B Class C
Sales Charge Sales Charge Sales Charge
(as % of (as % of (as % of
Years Since Purchase Cost or Value) Cost or Value) Cost or Value)
- ------------------------------------------------------------------------------
First ................ 1.00%* 5.00% 1.00%
Second ............... 0.50%* 4.00% None
Third ................ None 3.00% None
Fourth ............... None 3.00% None
Fifth ................ None 2.00% None
Sixth ................ None 1.00% None
Thereafter ........... None None None
- ------------------------------------------------------------------------------
* You will pay a sales charge when you redeem Class A Shares only if your
shares were purchased at net asset value because they were part of an
investment of $1 million or more.
Determination of Sales Charge. The sales charge applicable to your
redemption is calculated in a manner that results in the lowest possible rate:
1) No sales charge will be applied to shares you own as a result of reinvesting
dividends or distributions.
2) If you have purchased shares at various times, the sales charge will be
applied first to shares you have owned for the longest period of time.
3) If you acquired your shares through an exchange of shares of another Flag
Investors fund, the period of time you held the original shares will be
combined with the period of time you held the shares being redeemed to
determine the years since purchase. If you bought your shares prior to
January 18, 2000, you will pay the sales charge that was in effect at the
time of your original purchase.
4) The sales charge is applied to the lesser of the cost of the shares or their
value at the time of your redemption.
<PAGE>
Waiver of Sales Charge. You may redeem shares without paying a sales
charge under any of the following circumstances:
1) If you are exchanging your Shares for shares of another Flag Investors fund
of the same class.
2) If your redemption represents the minimum required distribution from an
individual retirement account or other retirement plan.
3) If your redemption represents a distribution from a Systematic Withdrawal
Plan. This waiver applies only if the annual withdrawals under your Plan are
12% or less of your share balance.
4) If shares are being redeemed in your account following your death or a
determination that you are disabled. This waiver applies only under the
following conditions:
(i) The account is registered in your name either individually, as a
joint tenant with rights of survivorship, as a participant in
community property, or as a minor child under the Uniform Gifts or
Uniform Transfers to Minors Acts.
(ii) Either you or your representative notifies your securities dealer,
servicing agent, or the Transfer Agent that such circumstances
exist.
5) If you are redeeming Class A Shares, your original investment was at least
$3,000,000, and your securities dealer has agreed to return to the Fund's
distributor any payments received when you bought your shares.
Automatic Conversion of Class B Shares. Your Class B Shares, along with
any reinvested dividends or distributions associated with those shares, will be
automatically converted to Class A Shares seven years after your purchase. If
you purchased your shares prior to January 18, 2000, your shares will be
converted to Class A Shares six years after your purchase. This conversion will
be made on the basis of the relative net asset values of the classes and will
not be a taxable event to you.
8
<PAGE>
HOW TO CHOOSE THE CLASS THAT IS RIGHT FOR YOU
- --------------------------------------------------------------------------------
Your decision as to which class of the Fund's shares is best for you
should be based upon a number of factors including the amount of money you
intend to invest and the length of time you intend to hold your shares.
If you choose Class A Shares, you will pay a sales charge when you buy
your shares, but the amount of the charge declines as the amount of your
investment increases. You will pay lower expenses while you hold the shares
and, except in the case of investments of $1,000,000 or more, no sales charge
if you redeem them.
If you choose Class B Shares, you will pay no sales charge when you buy
your shares, but your annual expenses will be higher than Class A Shares. You
will pay a sales charge if you redeem your shares within six years of purchase,
but the amount of the charge declines the longer you hold your shares and, at
the end of seven years, your shares convert to Class A Shares, thus eliminating
the higher expenses.
If you choose Class C Shares, you will pay no sales charge when you buy
your shares or if you redeem them after holding them for at least a year. On
the other hand, expenses on Class C Shares are the same as those on Class B
Shares and, since there is no conversion to Class A Shares at the end of seven
years, the higher expenses continue for as long as you own your shares.
In general, if you intend to invest more than $50,000, your combined
sales charges and expenses are lower with Class A Shares. If you intend to
invest less than $50,000 and expect to hold your shares for more than seven
years, your combined sales charges and expenses are lower with Class B Shares.
If you intend to invest less than $50,000 and expect to hold your shares for
less than seven years, your combined sales charges and expenses are lower with
Class C Shares.
Your securities dealer is paid a fee when you buy shares. In addition,
your securities dealer is paid an annual fee as long as you hold your shares.
For Class A and Class B Shares, this fee begins when you purchase your shares.
For Class C Shares, this fee begins one year after you purchase your shares.
Your securities dealer or servicing agent may receive different levels of
compensation depending upon which class of shares you buy.
Distribution Plans
The Fund has adopted plans under Rule 12b-1 that allow the Fund to pay
your securities dealer or shareholder servicing agent distribution and other
fees for the sale of its shares and for shareholder service. Class A Shares pay
an annual distribution fee equal to 0.25% of average daily net assets. Class B
and Class C Shares pay an annual distribution fee equal to 0.75% of average
daily net assets and an annual shareholder servicing fee equal to 0.25% of
average daily net assets. Because these fees are paid out of net assets on an
on-going basis, they will, over time, increase the cost of your investment and
may cost you more than paying other types of sales charges.
DIVIDENDS AND TAXES
- --------------------------------------------------------------------------------
Dividends and Distributions
The Fund's policy is to distribute to shareholders substantially all of
its taxable net investment income in the form of quarterly dividends and to
distribute taxable net capital gains on an annual basis.
Taxes
The following summary is based on current tax laws, which may change.
The Fund will distribute substantially all of its income and capital
gains. The dividends and distributions you receive are subject to federal,
state, and local taxation, depending upon your tax situation. The tax treatment
of dividends and distributions is the same whether or not you reinvest them.
Each sale or exchange of the Fund's shares is a taxable event.
More information about taxes is in the Statement of Additional
Information. Please contact your tax advisor regarding your specific questions
about federal, state, and local income taxes.
INVESTMENT ADVISOR AND SUB-ADVISOR
- --------------------------------------------------------------------------------
Investment Company Capital Corp. ("ICC" or the "Advisor") is the Fund's
investment advisor and Alex. Brown Investment Management ("ABIM" or the "Sub-
Advisor") is the Fund's sub-advisor. ICC is also the investment advisor to
other mutual funds in the Flag Investors family of funds and Deutsche Banc
Alex. Brown Cash Reserve Fund, Inc. These funds, together with the Fund, had
approximately $10 billion of net assets as of June 30, 1999. ABIM is a
registered investment advisor with approximately $11.7 billion
9
<PAGE>
under management as of June 30, 1999. 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. Deutsche Banc Alex. Brown Incorporated
owns a 1% general partnership interest in ABIM and BT Alex. Brown Holdings,
Inc. owns the remaining 49% limited partnership interest.
ICC is responsible for supervising and managing all of the Fund's
operations, including overseeing the performance of ABIM. ABIM is responsible
for decisions to buy and sell securities for the Fund, for broker-dealer
selection, and for negotiation of commission rates.
As compensation for its services for the fiscal year ended March 31,
1999, ICC received from the Fund a fee equal to 0.75% of the Fund's average
daily net assets. ICC compensates ABIM out of its advisory fee.
The Advisor is an indirect, wholly owned subsidiary of Deutsche Bank, AG.
Deutsche Bank is a major global banking institution that is engaged in a wide
range of financial services, including investment management, mutual funds,
retail and commercial banking, investment banking, and insurance.
The Advisor was formerly an indirect subsidiary of Bankers Trust
Corporation. It became an indirect subsidiary of Deutsche Bank as a result of
Bankers Trust Corporation's merger with Deutsche Bank on June 4, 1999. Because
this merger resulted in a change of control of the Advisor, the shareholders
were asked to approve a new investment advisory agreement between the fund and
ICC and a new sub-advisory agreement among the Fund, ICC, and ABIM. Under these
agreements, the services provided to the Fund by the Advisors are the same as
the services provided under the agreements in effect when the Advisor was a
subsidiary of Bankers Trust. The agreements were approved at a Special Meeting
of shareholders held on October 7, 1999.
On March 11, 1999, Bankers Trust Company ("Bankers Trust"), a separate
subsidiary of Bankers Trust Corporation, announced that it had reached an
agreement with the United States Attorney's Office in the Southern District of
New York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record-keeping problems that occurred between 1994
and early 1996. ICC became a subsidiary of Bankers Trust Corporation in a
merger that occurred after these events took place. Pursuant to its agreement
with the U.S. Attorney's Office, Bankers Trust pleaded guilty to misstating
entries in the bank's books and records and agreed to pay a $60 million fine to
federal authorities. Separately, Bankers Trust agreed to pay a $3.5 million
fine to the State of New York. The events leading up to the guilty pleas did
not arise out of the investment advisory or mutual fund management activities
of Bankers Trust or its affiliates.
As a result of the plea, absent an order from the SEC, ICC and ABIM may
not be able to continue to provide advisory services to the Fund. The SEC has
granted a temporary order to permit Bankers Trust and its affiliates to
continue to provide investment advisory services to registered investment
companies. There is no assurance that the SEC will grant a permanent order.
Portfolio Manager
Mr. Hobart C. Buppert, II has primary responsibility for managing the
Fund's assets. Prior to July 31, 1997, he shared that responsibility with
Messrs. J. Dorsey Brown, III and Lee S. Owen.
Mr. Buppert has 27 years of investment experience. He has been a Vice
President of ABIM since 1980. Prior to joining ABIM, Mr. Buppert worked as a
Portfolio Manager for T. Rowe Price Associates from 1976 to 1980 and as a
Portfolio Manager and Research Analyst for the Equitable Trust Company from
1972 to 1976. Mr. Buppert received his B.A. and M.B.A. degrees from Loyola
College in 1970 and 1974, respectively. He is a member of the Baltimore
Security Analysts Society and the Financial Analysts Federation.
10
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the
Fund's financial performance for the past five fiscal years for Class A Shares
and since commencement of operations for Class B and Class C Shares. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information is part of the Fund's financial statements,
which have been audited by PricewaterhouseCoopers LLP. These financial
statements are included in the Statement of Additional Information, which is
available upon request.
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Class A Shares
------------------------------------------------------------------------
For the Years Ended March 31,
------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of year ............... $ 22.09 $ 17.14 $ 14.68 $ 12.02 $ 11.23
------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income .............................. 0.56 0.47 0.39 0.36 0.35
Net realized and unrealized gain on
investments ...................................... 2.40 5.21 2.49 3.03 0.80
------- -------- -------- -------- --------
Total from Investment Operations ................... 2.96 5.68 2.88 3.39 1.15
------- -------- -------- -------- --------
Less Distributions:
Net investment income and short-term gains ......... (0.57) (0.47) (0.36) (0.41) (0.35)
Net realized long-term capital gains ............... (0.33) (0.26) (0.06) (0.32) (0.01)
------- -------- -------- -------- --------
Total distributions ................................ (0.90) (0.73) (0.42) (0.73) (0.36)
------- -------- -------- -------- --------
Net asset value at end of year ..................... $ 24.15 $ 22.09 $ 17.14 $ 14.68 $ 12.02
======= ======== ======== ======== ========
Total Return ........................................ 13.91% 33.82% 19.90% 28.86% 10.57%
Ratios to Average Net Assets:
Expenses ........................................... 1.12% 1.14% 1.27% 1.31% 1.35%(1)
Net investment income .............................. 2.64% 2.49% 2.51% 2.72% 3.07%(2)
Supplemental Data:
Net assets at end of year (000) .................... $649,664 $491,575 $278,130 $200,020 $ 146,986
Portfolio turnover rate ............................ 10% 7% 13% 15% 18%
</TABLE>
- -----------
(1) Without the waiver of advisory fees, the ratio of expenses to average net
assets would have been 1.40% for the year ended March 31, 1995.
(2) Without the waiver of advisory fees, the ratio of net investment income to
average net assets would have been 3.02% for the year ended March 31, 1995.
11
<PAGE>
<TABLE>
<CAPTION>
Class B Shares
------------------------------------------------------
For the Years Ended March 31,
------------------------------------------------------
1999 1998 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value at beginning of period ......... $ 22.08 $ 17.16 $ 14.71 $ 12.01
------- -------- -------- --------
Income from Investment Operations:
Net investment income .......................... 0.41 0.34 0.26 0.21
Net realized and unrealized gain on
investments .................................. 2.38 5.20 2.51 3.05
------- -------- -------- --------
Total from Investment Operations ............... 2.79 5.54 $ 2.77 3.26
------- -------- -------- --------
Less Distributions:
Net investment income and short-term gains ..... (0.43) (0.36) (0.26) (0.24)
Net realized long-term capital gains ........... (0.33) (0.26) (0.06) (0.32)
------- -------- -------- --------
Total distributions ............................ (.76) (0.62) (0.32) (0.56)
------- -------- -------- --------
Net asset value at end of period ............... $ 24.11 $ 22.08 $ 17.16 $ 14.71
======== ======== ======== ========
Total Return .................................... 13.10% 32.84% 19.00% 27.89%
Ratios to Average Net Assets:
Expenses ....................................... 1.87% 1.89% 2.02% 2.06%
Net investment income .......................... 1.90% 1.75% 1.84% 1.97%
Supplemental Data:
Net assets at end of period (000) .............. $110,680 $ 64,498 $ 17,311 $ 4,178
Portfolio turnover rate ........................ 10% 7% 13% 15%
Class C Shares
---------------
For the
Period
January 3, For the Period
1995(1) April 8, 1998(1)
through through
March 31, March 31,
----------------- ---------------
1995 1999
----------------- ---------------
Per Share Operating Performance:
Net asset value at beginning of period ......... $ 11.14 $ 22.31
------- --------
Income from Investment Operations:
Net investment income .......................... 0.08 0.39
Net realized and unrealized gain on
investments .................................. 0.79 2.10
------- --------
Total from Investment Operations ............... 0.87 2.49
------- --------
Less Distributions:
Net investment income and short-term gains ..... -- (0.35)
Net realized long-term capital gains ........... -- (0.33)
------- --------
Total distributions ............................ -- (0.68)
------- --------
Net asset value at end of period ............... $ 12.01 $ 24.12
======= ========
Total Return .................................... 7.81% 11.50%(2)
Ratios to Average Net Assets:
Expenses ....................................... 2.10%(3,4) 1.91%(4)
Net investment income .......................... 2.94%(4,5) 2.05%(4)
Supplemental Data:
Net assets at end of period (000) .............. $ 341 $ 17,450
Portfolio turnover rate ........................ 18% 10%
</TABLE>
- -----------
(1) Commencement of operations.
(2) Total return is since inception.
(3) Without the waiver of advisory fees, the ratio of expenses to average net
assets would have been 2.17% annualized for the period ended March 31, 1995.
(4) Annualized.
(5) Without the waiver of advisory fees, the ratio of net investment income to
average net assets would have been 2.87% annualized for the period ended
March 31, 1995.
12
<PAGE>
FLAG INVESTORS VALUE BUILDER FUND, INC.
NEW ACCOUNT APPLICATION
- --------------------------------------------------------------------------------
Make check payable to "Flag Investors For assistance in completing this
Value Builder Fund, Inc." and mail Application please call:
with this Application to: 1-800-553-8080, Monday through
Flag Investors Funds Friday, 8:30 a.m. to 5:30 p.m.
P.O. Box 219663 (Eastern Time).
Kansas City, MO 64121-9663 To open an IRA account, please call
Attn: Flag Investors Value Builder 1-800-767-3524 for an IRA information
Fund, Inc. kit.
I wish to purchase the following class of shares of the Fund, in the amount
indicated. (Please check the applicable box and indicate the amount of
purchase.)
MINIMUM INITIAL INVESTMENT: $2,000 ($500 FOR SHAREHOLDERS WITH AN EXISTING
FLAG INVESTORS ACCOUNT.)
[ ] Class A Shares (5.5% maximum initial sales charge) in the amount of
$_________
[ ] Class B Shares (5.0% maximum contingent deferred sales charge) in the
amount of $_______
[ ] Class C Shares (1.0% maximum contingent deferred sales charge) in the
amount of $_______
Your Account Registration (Please Print)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Existing Account No., if any: _________
Individual or Joint Tenant Gifts to Minors
- ----------------------------------------------- ----------------------------------------------------------------------
First Name Initial Last Name Custodian's Name (only one allowed by law)
- ----------------------------------------------- ----------------------------------------------------------------------
Social Security Number Minor's Name (only one)
- ----------------------------------------------- ------------------------------- -------------------------------------
Joint Tenant Initial Last Name Social Security Number of Minor Minor's Date of Birth (Mo./Day/Yr.)
under the ____________________ Uniform Gifts to Minors Act
(State of Residence)
Corporations, Trusts, Partnerships, etc. Mailing Address
- ----------------------------------------------- ----------------------------------------------------------------------
Name of Corporation, Trust or Partnership Street
- ---------------------- --------------------- ----------------------------------------------------------------------
Tax ID Number Date of Trust City State Zip
( )
- ----------------------------------------------- ----------------------------------------------------------------------
Name of Trustees (if to be included in Daytime Phone
the Registration)
- -----------------------------------------------
For the Benefit of
</TABLE>
<PAGE>
Letter of Intent (Optional)
[ ] I intend to invest at least the amount indicated below in Class A Shares of
Flag Investors Value Builder Fund, Inc. I understand that if I satisfy the
conditions described in the attached prospectus, this Letter of Intent
entitles me to the applicable level of reduced sales charges on my
purchases.
[ ] $50,000 [ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1 000,000
Right of Accumulation (Optional)
List the Account numbers of Class A Shares of other Flag Investors Funds that
you or your immediate family already own that qualify you for reduced sales
charges.
Fund Name Account No. Owner's Name Relationship
--------- ----------- ------------ ------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Distribution Options
Please check the appropriate boxes. If none of the options are selected, all
distributions will be reinvested in additional shares of the same class of the
Fund at no sales charge.
Income Dividends Capital Gains
[ ] Reinvested in additional shares [ ] Reinvested in additional shares
[ ] Paid in cash [ ] Paid in cash
Call (800) 553-8080 for information about reinvesting your dividends in other
funds in the Flag Investors Family of Funds.
A-1
<PAGE>
Automatic Investing Plan (Optional)
[ ] I authorize you as Agent for the Automatic Investing Plan to automatically
invest $_______ in Class A Shares or $________ in Class B Shares or $______
in Class C Shares for me, on a monthly or quarterly basis, on or about the 20th
of each month or if quar-terly, the 20th of January, April, July and October,
and to draw a bank draft in payment of the investment against my checking
account. (Bank drafts may be drawn on commercial banks only.)
Minimum Initial Investment: $250 per class
Subsequent Investments (check one): [ ] Monthly ($100 minimum per class)
[ ] Quarterly ($250 minimum per class)
Please attach a voided check.
- ---------------------------------- -----------------------------------------
Bank Name Depositor's Signature Date
- ---------------------------------- -----------------------------------------
Existing Flag Investors Fund Account Depositor's Signature (if Date
No., if any joint acct., both must sign)
Systematic Withdrawal Plan (Optional)
[ ] Beginning the month of ________ , ___ (year) please send me checks on
a monthly or quarterly basis, as indicated below, in the amount of (complete as
applicable) $__________ , from Class A Shares and/or $__________ from Class
B Shares and/or $____________ from Class C Shares that I own, payable to the
account registration address as shown above. (Participation requires minimum
account value of $10,000 per class.)
Frequency (check one): [ ] Monthly [ ] Quarterly (January, April,
July, and October)
Telephone Transactions
I understand that I will automatically have telephone redemption privileges
(for amounts up to $50,000) and telephone exchange privileges (with respect to
other Flag Investors Funds) unless I mark one or both of the boxes below:
No, I/We do not want: [ ] Telephone redemption privileges
[ ] Telephone exchange privileges
Redemptions effected by telephone will be mailed to the address of record. If
you would prefer redemptions mailed to a predesignated bank account, please
provide the following information:
Bank: ______________________________ Bank Account No.:_______________________
Address: ___________________________ Bank Account Name:______________________
___________________________ Bank Phone Number: _____________________
<PAGE>
Signature and Taxpayer Certification
The Fund may be required to withhold and remit to the U.S. Treasury 31% of any
taxable dividends, capital gains distributions and redemption proceeds paid to
any individual or certain other non-corporate shareholders who fail to provide
the information and/or certifications required below. This backup withholding is
not an additional tax, and any amounts withheld may be credited against your
ultimate U.S. tax liability.
By signing this Application, I hereby certify under penalties of perjury that
the information on this Application is complete and correct and that as required
by federal law: (Please check applicable boxes)
[ ] U.S. Citizen/Taxpayer:
[ ] I certify that (1) the number shown above on this form is the correct
Social Security Number or Tax ID Number and (2) I am not subject to any
backup withholding either because (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding.
[ ] If no Tax ID Number or Social Security Number has been provided above, I
have applied, or intend to apply, to the IRS or the Social Security
Administration for a Social Security Number or Tax ID Number, and I
understand that if I do not provide either number to the Transfer Agent
within 60 days of the date of this Application or if I fail to furnish my
correct Social Secur ity Number or Tax ID Number, I may be subject to a
penalty and a 31% backup withholding on distributions and redemption
proceeds. (Please provide either number on IRS Form W-9. You may request
such form by calling the Transfer Agent at 800-553-8080.)
[ ] Non-U.S. Citizen/Taxpayer:
Indicated country of residence for tax purposes:___________________.
Under penalties of perjury, I certify that I am not a U.S. citizen or
resident and I am an exempt foreign person as defined by the Internal
Revenue Service.
I acknowledge that I am of legal age in the state of my residence. I have
received a copy of the Fund's prospectus.
The Internal Revenue Service does not require your consent to any provision of
this document other than the certifications required to avoid backup
withholding.
- ---------------------------------- -----------------------------------------
Signature Date Signature (if joint acct., both must sign)
Date
- --------------------------------------------------------------------------------
For Dealer Use Only
Dealer's Name: _______________________ Dealer Code:__________________________
Branch Address: ______________________ Branch Code:__________________________
______________________ Rep. No.: ____________________________
Representative: ______________________ Rep. Phone No.:_______________________
A-2
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Investment Advisor
INVESTMENT COMPANY CAPITAL CORP.
One South Street
Baltimore, Maryland 21202
Distributor Custodian
ICC DISTRIBUTORS, INC. BANKERS TRUST COMPANY
Two Portland Square 130 Liberty Street
Portland, Maine 04101 New York, New York 10006
Transfer Agent Fund Counsel
INVESTMENT COMPANY CAPITAL CORP. MORGAN, LEWIS & BOCKIUS LLP
One South Street 1701 Market Street
Baltimore, Maryland 21202 Philadelphia, Pennsylvania 19103
1-800-553-8080
Independent Accountants
PRICEWATERHOUSECOOPERS LLP
250 West Pratt Street
Baltimore, Maryland 21201
<PAGE>
[FLAG INVESTORS LOGO]
Flag Investors o P.O. Box 515 o Baltimore, MD 21203 o (800) 767-FLAG
www.flaginvestors.com
- --------------------------------------------------------------------------------
You may obtain the following additional information about the Fund, free of
charge, from your securities dealer or servicing agent or by calling (800)
767-FLAG:
o A statement of additional information (SAI) about the Fund that is
incorporated by reference into the prospectus.
o The Fund's most recent annual and semi-annual reports containing detailed
financial information and, in the case of the annual report, a discussion of
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
In addition you may review information about the Fund (including the SAI) at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
(Call 1-202-942-8090 to find out about the operation of the Public Reference
Room.) The EDGAR Database on the Commission's Internet site at
http://www.sec.gov has reports and other information about the Fund. Copies of
this information may be obtained, upon payment of a duplicating fee, by
electronic request at the following email address: [email protected], or by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-0102. You will be charged for duplicating fees.
For other shareholder inquiries, contact the Transfer Agent at (800) 553-8080.
For Fund information, call (800) 767-FLAG or your securities dealer or servicing
agent.
Investment Company Act File No. 811-6600 VBPRS (1/00)
