<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THE EMERGING GERMANY FUND INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
THE EMERGING GERMANY FUND INC.
4 EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
March 17, 1997
Dear Stockholder:
We are pleased to provide you with this Proxy Statement and proxy card for
the Fund's Annual Meeting of Stockholders to be held on April 28, 1997. At this
year's meeting, the Stockholders will be asked to vote for the election of three
members of the Board of Directors, to approve the selection of Coopers & Lybrand
L.L.P. as the Fund's independent accountants and to consider a proposal from a
Stockholder. The Stockholder's proposal, if adopted, would recommend that the
Board expedite the process to ensure the Fund's shares can be purchased and/or
sold at their net asset value by, for example, converting the Fund from a
closed-end to an open-end fund. After considering the steps the Fund is already
taking to increase the price of the Fund's shares and to reduce the discount to
net asset value, the Board unanimously concluded that the adoption of the
Stockholder proposal would not be in the best interests of the Fund and its
Stockholders.
The Board of Directors closely monitors the price of the Fund's shares and
their discount to net asset value. Last year, the Board asked for and received
permission from the Stockholders to modify the Fund's investment guidelines and
to change the Fund's investment manager to RCM Capital Management, L.L.C. As
explained more fully in the Proxy Statement, the Board believes that the steps
currently being taken by RCM to increase the price of the Fund's shares and to
reduce the discount to net asset value are the best way to maximize the overall
investment performance of the Fund. Consequently, the Board recommends that you
vote against the Stockholder proposal.
Whether or not you plan on attending the Annual Meeting, please sign the
enclosed proxy card and promptly return it to the Fund. This will save the Fund
the additional expense of further solicitation.
If you have any questions about this matter, please call the Fund's
toll-free telephone number 1-800-356-6122.
We thank you for your cooperation.
Very Truly Yours,
Rolf Passow
CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
THE EMERGING GERMANY FUND INC.
4 EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1997
------------------------
To Our Stockholders:
Notice is hereby given that an Annual Meeting of Stockholders of The
Emerging Germany Fund Inc. (the "Fund") will be held at 11:00 a.m. on April 28,
1997 at 75 Wall Street, New York, New York 10005, for the following purposes:
(1) To elect three directors of the Fund, each to hold office for a term of
three years and until his successor is duly elected and qualified.
(2) To ratify the selection by the Board of Directors of Coopers & Lybrand
L.L.P. as independent accountants of the Fund for the Fund's fiscal year
ending December 31, 1997.
(3) To consider, if presented, a stockholder proposal.
(4) To consider and act upon any other business that may properly come
before the meeting or any adjournment thereof.
Only holders of common stock of record at the close of business on March 7,
1997 are entitled to notice of, and to vote at, this meeting or any adjournment
thereof.
By Order of the Board of Directors
Alexandra Simou
SECRETARY
Dated: March 17, 1997
San Francisco, California
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE ENCLOSED PROXY
AND RETURN IT TO THE FUND. TO SAVE THE FUND THE ADDITIONAL EXPENSE OF FURTHER
SOLICITATION, PLEASE MAIL IN YOUR PROXY PROMPTLY.
<PAGE>
THE EMERGING GERMANY FUND INC.
4 EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1997
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished by the Board of Directors of The Emerging
Germany Fund Inc. (the "Fund") in connection with the solicitation of proxies
for use at the Annual Meeting of Stockholders (the "Meeting") to be held at
11:00 a.m. on April 28, 1997 at 75 Wall Street, New York, New York 10005. The
purpose of the Meeting and the matters to be acted upon are set forth in the
accompanying Notice of Annual Meeting.
If the accompanying form of proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. However, if no instructions are specified, shares
will be voted FOR the election of Directors, FOR ratification of selection of
the Fund's independent accountants and AGAINST the stockholder proposal. A proxy
may be revoked at any time prior to the time it is voted by written notice to
the Secretary of the Fund or by attendance at the Meeting.
The close of business on March 7, 1997 has been fixed as the record date for
the determination of stockholders entitled to notice of, and to vote at, the
Meeting. On that date, the Fund had 14,008,334 shares of Common Stock
outstanding and entitled to vote. Each share of Common Stock is entitled to one
vote at the Meeting, and fractional shares are entitled to proportionate shares
of one vote. It is expected that the Notice of Annual Meeting, Proxy Statement
and form of proxy will first be mailed to stockholders on or about March 17,
1997.
The election of Directors (Proposal 1) requires approval by a plurality of
the votes cast at the meeting. The ratification of Coopers & Lybrand L.L.P. as
independent accountants of the Fund (Proposal 2) and the stockholder proposal,
if presented, (Proposal 3) require the affirmative vote of a majority of the
shares cast at the Meeting on such matters. The Fund intends to treat properly
executed proxies that are marked "abstain" and broker "non-votes" as present for
the purposes of determining whether a quorum has been achieved at the Meeting.
Under Maryland law, abstentions do not constitute a vote "for" or "against" a
matter and will be disregarded in determining the "votes cast" on an issue. If a
proxy is properly executed and returned accompanied by instructions to withhold
authority to vote, it represents a broker "non-vote" (that is, a proxy from a
broker or nominee indicating that such person has not received instructions from
the beneficial owner or other person entitled to vote shares on a particular
matter with respect to which the broker or nominee does not have discretionary
power).
In the event that a quorum is present at the Meeting but sufficient votes to
approve one or more proposals are not cast, the persons named as proxies may
propose one or more adjournments of such Meeting to permit further solicitation
of proxies with respect to such proposal or proposals. Any such adjournment will
require the affirmative vote of a majority of the shares present at the Meeting
or represented by proxy. In such case, the persons named as proxies will vote
those proxies which they are
1
<PAGE>
entitled to vote for any such proposal in favor of such an adjournment, and will
vote those proxies required to be voted against any such proposal against any
such adjournment. A stockholder vote may be taken on one of the proposals in
this Proxy Statement prior to any such adjournment if sufficient votes have been
received and it is otherwise appropriate.
All references in this Proxy Statement to "$" are to U.S. dollars.
The date of this Proxy Statement is March 17, 1997.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Fund's Articles of Incorporation and By-laws provide that the Board of
Directors is to be divided into three classes of Directors. The Directors in
each class serve three-year terms, with one class being elected each year. The
term of one class will expire each year. The term of office for Directors in
Class III expires at the Meeting, for Directors in Class I at the Annual Meeting
of Stockholders in 1998 and for Directors in Class II at the Annual Meeting of
Stockholders in 1999.
Three Class III nominees are named in this Proxy Statement. If elected, the
Class III Directors will serve a three-year term to expire at the Annual Meeting
of Stockholders in 2000 and until their successors are duly elected and
qualified. With the exception of Alfred W. Fiore, each of the nominees was last
elected to the Board of Directors at the Annual Meeting of Stockholders in 1994.
Mr. Fiore was elected as a Director by the Board of Directors in October 1996.
Unless authority is withheld, it is the intention of the persons named in
the accompanying form of proxy to vote each proxy for the election of the
nominees listed below. Each nominee has indicated he will serve if elected, but
if any nominee should be unable to serve, proxies will be voted for any other
person determined by the persons named in the accompanying form of proxy in
accordance with their judgment. Election of each nominee requires the
affirmative vote of a plurality of the votes cast at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE FUND'S STOCKHOLDERS
VOTE FOR THE ELECTION OF THE NOMINEES TO SERVE AS DIRECTORS OF THE FUND.
2
<PAGE>
The following table provides information concerning the Class III nominees
for election as Directors.
CLASS III (TERM EXPIRES AT THE MEETING)
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY
POSITION WITH DURING PAST 5 YEARS AT MARCH 1,
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS 1997(1)
- ------------------------ -------------- ------------------------------------ ---------------
<S> <C> <C> <C>
Gottfried W. Perbix Director President, Perbix International, 1,000
293 Saugatuck Avenue Inc. (management consulting)
Westport, CT 06880 (1980-1994); Director, American
Age 67 Profol Inc. (plastic film
manufacturers) (since 1993); Sole
Proprietor, Perbix Associates
(executive search) (since 1978)
Jacob Saliba Director Director (since 1994), Chairman 6,000
770 Boylston Street, (1988-1994) and Chief Executive
Apt. 11I Officer (1988-1993), Katy
Boston, MA 02199 Industries, Inc. (diversified
Age 83 manufacturing and oil and related
services); President and Chief
Operating Officer, Katy Industries,
Inc. (1968-1987); Director, CEGF
Compagnie des Entrepots et Gares
Frigorifiques (cold storage
warehouses) (since 1989); Director,
Schon & Cie AG (manufacturer of
machinery) (since 1990); Director,
Syratech Corp. (manufacturer of
household furnishings) (since 1992)
Alfred W. Fiore Director General Manager, Hirschfeld, Stern, --
27 Copper Beech Road Moyer & Ross, Inc. (employee benefit
Greenwich, CT 06830 consulting firm) (since 1988);
Age 59 Consultant, Lois/U.S.A. (creative
advertising agency) (1987-1988);
Executive Vice President and Chief
Financial Officer, Parlux
Fragrances, Inc. (1987); Executive
Vice President and Chief Financial
Officer, Concord Assets Group, Inc.
(real estate manager) (1986);
President and Chief Operating
Officer, Amerigroup Financial
Services, Inc. (financial services)
(1984-1986); Partner, KPMG Peat
Marwick, LLP (1973-1984)
</TABLE>
3
<PAGE>
CONTINUING DIRECTORS. The remaining Directors currently serving on the
Board of Directors consist of four Class I Directors and three Class II
Directors. None of such Directors is a nominee for election at the Meeting. All
such Directors will continue in office after the Meeting for the terms shown
below.
The following table provides information concerning the Class I Directors.
CLASS I (TERM EXPIRES 1998)
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY
POSITION WITH DURING PAST 5 YEARS AT MARCH 1,
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS 1997(1)
- ------------------------ -------------- ------------------------------------ ---------------
<S> <C> <C> <C>
Theodore J. Coburn Director President, Brown, Coburn & Co. --
17 Cotswold Road (Consulting) (since 1991); Student,
Brookline, MA 02146 Harvard University Graduate School
Age 43 of Education (since 1992) and
Harvard University Divinity School
(since 1991); Senior Vice President,
Prudential Securities Inc.
(1986-1991); Managing Director,
Equity Transactions Group,
Prudential-Bache Capital Funding
(1986-1991); Director, Prudential
Securities Inc. (1986-1991);
Director, Nicholas-Applegate Fund,
Inc. (since 1987); Trustee,
Nicholas-Applegate Investment Trust
(since 1993); Director, Measurement
Specialities, Inc. (since 1995);
Director, Moovies, Inc. (since 1995)
Robert J. Birnbaum Director Director, NASD Regulation, Inc. 1,000
313 Bedford Road (since 1996); Director, Chicago
Ridgewood, NJ 07450 Mercantile Exchange (since 1990);
Age 69 Trustee, Liberty All-Star Growth
Fund, Inc. (since 1995); Trustee,
Colonial Funds (since 1995);
Trustee, Liberty All-Star Equity
Fund, Inc. (since 1994); Special
Counsel, Dechert Price & Rhoads (law
firm) (1988-1993); President and
Chief Operating Officer, New York
Stock Exchange, Inc. (1985-1988);
President and Chief Operating
Officer, American Stock Exchange,
Inc. (1977-1985)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY
POSITION WITH DURING PAST 5 YEARS AT MARCH 1,
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS 1997(1)
- ------------------------ -------------- ------------------------------------ ---------------
<S> <C> <C> <C>
Carroll Brown Director President, The American Council on 1,000
The American Council Germany (since 1988); Foreign
on Germany Service Officer, United States
14 East 60th Street Department of State (1957-1988)
Suite 606
New York, NY 10022
Age 68
George N. Fugelsang(*) Director Senior General Manager and Chief --
Dresdner Bank AG Executive North America, Dresdner
75 Wall Street Bank AG (since 1994); President and
New York, NY 10005 Chairman, Board of Managers,
Age 56 Dresdner Kleinwort Benson North
America LLC (since 1996); President,
Director and Chief Executive
Officer, Dresdner Securities (USA)
Inc. (1994-1996); Director,
Dresdner-NY Inc. (since 1994);
Managing Director, Morgan Stanley &
Company, Inc. (1986-1994)
</TABLE>
The following table provides information concerning the Class II Directors.
CLASS II (TERM EXPIRES 1999)
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY
POSITION WITH DURING PAST 5 YEARS AT MARCH 1,
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS 1997(1)
- ------------------------ -------------- ------------------------------------ ---------------
<S> <C> <C> <C>
James E. Dowd Director Attorney/Consultant (since 1982); 1,077
571 Hayward Mill Road Director, Trustee or Managing
Concord, MA 01742 General Partner of various
Age 74 registered investment companies
managed by Federated Investors
(since 1982); President, Boston
Stock Exchange (1969-1982); Member
of Panel of Arbitrators, New York
Stock Exchange, Inc. (since 1986);
Member of Panel of Arbitrators,
National Association of Securities
Dealers, Inc. (since 1984)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
PRINCIPAL OCCUPATION OR INDIRECTLY
POSITION WITH DURING PAST 5 YEARS AT MARCH 1,
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS 1997(1)
- ------------------------ -------------- ------------------------------------ ---------------
<S> <C> <C> <C>
Siegfried A. Kessler Director Retired; Chairman, Carl Zeiss Inc. 1,000
52 Heritage Road (New York) (1981-1982) and President
Hilton Head Island, (1965-1981) (sale, distribution and
SC 29925 service of scientific instruments);
Age 79 President, Carl Zeiss Canada Ltd.
(sale, distribution and service of
scientific instruments and optical
products) (1965-1985)
Rolf Passow(*) Chairman and Chief Executive (since 1992) and --
Deutscher Investment- Director Managing Director (1987-1992),
Trust Gesellschaft fur Deutscher Investment-Trust,
Wertpapieranlagen mbH Gesellschaft fur Wertpapieranlagen
Mainzer Landstrasse mbH; Chief Executive, dresdnerbank
11-13 investment management
60329 Frankfurt Kapitalanlagegesellschaft mbH (since
Germany 1992); Member, Board of Managing
Age 57 Directors, Frankfurter
Wertpapierborse (Frankfurt Stock
Exchange) (1992-1993); Chairman,
Advisory Management Council,
Dresdner Kleinwort Benson
International Management Services
Ltd. (since 1995)
</TABLE>
- ------------------------
(1) All Directors and officers as a group beneficially owned less than 1% of the
outstanding Common Stock of the Fund at March 1, 1997.
(*) Interested person of the Fund (as defined in the Investment Company Act of
1940, as amended). Mr. Fugelsang is an interested person of the Fund because
of his affiliation with Dresdner Bank AG, the parent of the Fund's manager;
Mr. Passow is an interested person of the Fund because of his affiliation
with Deutscher Investment-Trust Gesellschaft fur Wertpapieranlagen mbH and
dresdnerbank investment management Kapitalanlagegesellschaft mbH, which are
wholly owned subsidiaries of Dresdner Bank AG.
OTHER INFORMATION REGARDING DIRECTORS
The Fund pays each of its Directors who is not an interested person of the
Fund as defined in the Investment Company Act of 1940, as amended (the "1940
Act"), an annual fee of $7,500, plus $750 for each Board of Directors meeting
attended. During the fiscal year ended December 31, 1996, all such Directors as
a group received from the Fund aggregate fees amounting to $76,125. In addition,
the Fund reimburses Directors not affiliated with RCM Capital Management,
L.L.C., the Fund's investment manager ("RCM" or "Manager"), for travel and
out-of-pocket expenses incurred in connection with
6
<PAGE>
meetings of the Board. Other than the fees described above, the Fund does not
pay its Directors any amounts as compensation for their service on the Board of
Directors. The following table sets forth for each Director receiving
compensation from the Fund the amount of such compensation paid by the Fund
during the fiscal year ended December 31, 1996.
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS FROM FUND AND
AGGREGATE ACCRUED ESTIMATED FUND COMPLEX
COMPENSATION AS PART OF ANNUAL BENEFITS PAID TO
NAME OF PERSON, POSITION FROM FUND FUND EXPENSES UPON RETIREMENT DIRECTORS
- ------------------------------------------------ ------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
Directors:
Robert J. Birnbaum............................ $ 10,500 -- -- $ 10,500
Carroll Brown................................. 10,500 -- -- 10,500
Theodore J. Coburn............................ 10,500 -- -- 10,500
James E. Dowd................................. 10,500 -- -- 10,500
Alfred W. Fiore............................... 2,625 -- -- 2,625
Siegfried A. Kessler.......................... 10,500 -- -- 10,500
Gottfried W. Perbix........................... 10,500 -- -- 10,500
Jacob Saliba.................................. 10,500 -- -- 10,500
------------- -------
TOTAL..................................... $ 76,125 $ 76,125
------------- -------
------------- -------
</TABLE>
During the fiscal year ended December 31, 1996, the Board of Directors met
five times. Each Director attended at least 75% of the total number of meetings
of the Board and each Committee of the Board of which he was a member held
during the period in which he served, except for Mr. Fugelsang who attended
three of the five meetings of the Board.
The Board of Directors has an Audit Committee presently composed of Messrs.
Perbix, Dowd and Kessler, none of whom is an interested person of the Fund (as
defined in the 1940 Act). The Audit Committee makes recommendations to the full
Board with respect to the engagement of independent accountants and reviews with
the independent accountants the plan and results of the audit engagement and
matters having a material effect upon the Fund's financial operations. The Audit
Committee held two meetings during the fiscal year ended December 31, 1996.
The Board of Directors has no compensation or nominating committees, or
other committees performing similar functions.
EXECUTIVE OFFICERS OF THE FUND
The executive officers of the Fund are typically chosen each year at the
meeting of the Board of Directors held in connection with the Annual Meeting of
Stockholders, to hold office until the meeting of the Board of Directors held in
connection with the next Annual Meeting of Stockholders and until their
successors are chosen and qualified. As a result of the assumption in November
1996 by RCM of the function of investment manager of the Fund, the current
executive officers of the Fund were appointed by the Board of Directors in
December 1996. No executive officers of the Fund receive any compensation from
the Fund for their services as executive officers.
7
<PAGE>
The following table presents information about the executive officers of the
Fund, other than as shown above.
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL OCCUPATION DURING PAST 5 YEARS
NAME, ADDRESS AND AGE FUND AND OTHER AFFILIATIONS
- ------------------------------------ ----------------- --------------------------------------------------------
<S> <C> <C>
William S. Stack President Member, Board of Managers, RCM Capital Management,
The Emerging Germany Fund L.L.C. (since 1996); Senior Vice President, RCM Capital
4 Embarcadero Center Management, a California Limited Partnership
San Francisco, CA 94111 (1994-1996); Managing Director, Lexington Management
Age 50 Corporation (1985-1994)
Barbel Lenz Vice President Assistant Vice President, Dresdner Kleinwort Benson
The Emerging Germany Fund North America LLC (since 1996); Assistant Vice
4 Embarcadero Center President, Dresdner Securities (USA) Inc. (1995-1996);
San Francisco, CA 94111 Assistant Vice President, Deutscher Investment-Trust,
Age 33 Gesellschaft fur Wertpapieranlagen mbH (1991-1995)
Caroline M. Hirst Treasurer and Senior Vice President and Director of Investment
The Emerging Germany Fund Assistant Operations, RCM Capital Management, L.L.C. (since 1996);
4 Embarcadero Center Secretary Director of Investment Operations, RCM Capital
San Francisco, CA 94111 Management, a California Limited Partnership
Age 36 (1994-1996); Head of International Administration,
Morgan Grenfell Asset Management, Ltd. (1991-1994)
Alexandra Simou Secretary Assistant Director, Mutual Funds Administration, RCM
The Emerging Germany Fund Capital Management, L.L.C. (since 1996); Vice President,
4 Embarcadero Center Dresdner Kleinwort Benson North America LLC (1996); Vice
San Francisco, CA 94111 President (1995-1996) and Assistant Vice President
Age 44 (1989-1995), Dresdner Securities (USA) Inc.
</TABLE>
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 2)
At a meeting held on December 16, 1996, a majority of the members of the
Board of Directors who are not interested persons (as defined in the 1940 Act)
of the Fund approved the selection of Coopers & Lybrand L.L.P. ("Coopers &
Lybrand") as independent accountants of the Fund for the fiscal year ending
December 31, 1997. Audit services performed for the Fund by Coopers & Lybrand
during the fiscal year ended December 31, 1996 included examination of the
Fund's financial statements. Coopers & Lybrand has informed the Fund that it has
no material direct or indirect interest in the Fund.
A representative of Coopers & Lybrand is expected to be present at the
Meeting to answer appropriate questions concerning the Fund's financial
statements and will have an opportunity to make a statement if such
representative chooses to do so.
8
<PAGE>
It is intended that the persons named in the accompanying form of proxy will
vote for ratification of the selection of Coopers & Lybrand.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE FUND'S STOCKHOLDERS
VOTE FOR RATIFICATION OF THE SELECTION OF COOPERS & LYBRAND AS THE FUND'S
INDEPENDENT ACCOUNTANTS.
STOCKHOLDER PROPOSAL
(PROPOSAL 3)
A beneficial owner of Common Stock of the Fund (the "proponent") has
informed the Fund that he intends to present a proposal for action at the
Meeting. The proponent's name and address and the number of shares owned by him
will be furnished by the Secretary of the Fund upon request. The proponent
proposes that the following resolution be presented to the stockholders of the
Fund:
"RESOLVED: That the shareholders of The Emerging Germany Fund recommend that
the Board of Directors expedite the process to ensure the fund's shares can be
purchased and/or sold at Net Asset Value. Suggested alternatives include: (1)
conversion to an open-end investment company; or (2) a merger of the Fund with
an existing open-end investment company."
The proponent has requested that the following statement be included in the
proxy statement in support of the proposal:
"SUPPORTING STATEMENT: Shares of The Emerging Germany Fund have consistently
been trading (on the New York Stock Exchange) at over a 20% discount to Net
Asset Value (NAV). This is unacceptable and has caused vast under performance of
shareholder returns in relation to NAV, as the discount has widened over the
years. In addition, the underlying Portfolio Performance has been mediocre at
best, when compared to the relevant indexes.
As a long-term owner of the shares, I believe that shareholder loyalty and
patience have not been rewarded. The closed-end structure has exacted huge
costs, far exceeding any benefits shareholders may have hoped to receive. I
strongly believe that the shareholders would benefit by changing the corporation
from a closed-end investment company to an open-end investment company. The
one-time conversion costs would be inconsequential in relation to the greater
than 20% price appreciation that could benefit shareholders if the fund
open-ends.
Management has not made a serious effort to address the discount problem to
date. There have been no significant buybacks of shares. The Board of Directors
has a fiduciary duty to us, the shareholders. I believe they must be urged to
consider the value-enhancing options in the proposal. It is both timely and
proper. Most importantly, it will be substantially beneficial to shareholders'
net worth.
I urge your support. Vote for this proposal."
OPPOSING STATEMENT OF THE FUND'S BOARD OF DIRECTORS
FOR THE REASONS DISCUSSED BELOW, THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE AGAINST THIS STOCKHOLDER PROPOSAL.
The Board of Directors of the Fund has monitored the development of the
price of the Fund's shares (the "Shares") and the discount to Net Asset Value
("NAV") at which they historically have been, and
9
<PAGE>
currently are, trading. On several occasions over the past few years, and most
recently at its meeting on February 14, 1997, the Board reviewed the Fund's
performance as a closed-end fund and the historical relationship between market
price and NAV of the Shares. The Board has also considered several anti-discount
strategies, including strategies employed by other closed-end funds in order to
attempt to reduce their discounts to NAV, as well as the recent changes to the
Fund's management and investment mandate. After careful deliberation, it was
unanimously determined by the Board at its meeting on February 14, 1997 that the
adoption by the Fund of strategies that have not been demonstrated reliably to
decrease the discount to NAV might have a long-term detrimental effect on the
Fund and its future prospects.
Several techniques were considered for reducing the discount to NAV. These
included implementing a Share repurchase program, conducting a shareholder
rights offering and converting the Fund to, or merging it with, an open-end
investment company. However, in view of the fact that the Fund's stockholders
approved the recent modification of the Fund's investment mandate and the
appointment of RCM Capital Management, L.L.C. ("RCM"), an experienced fund
manager with over $26 billion under management, as the Fund's new investment
manager, it was determined by the Board that implementation of such techniques
would be premature. In fact, although past performance does not guarantee future
results, since April 1996, when the Fund's mandate was broadened to eliminate
the requirement to invest at least 60% of total assets in small and medium-sized
German companies and to permit investment of up to 35% of total assets in equity
and equity-linked securities of European countries other than Germany, through
March 7, 1997, Share price has increased from 7.50 to 8.75 and NAV has increased
from 9.30 to 11.05. Furthermore, RCM, which routinely distributes to analysts in
the investment community reports and other material about the other funds that
it manages, plans to adopt the same practice with respect to the Fund with the
intention of creating greater demand for the Fund's Shares and reducing their
discount to NAV. In light of the improvement in the Fund's performance and the
fact that RCM has only been managing the Fund since November 1996, the Board
believes it would be improvident to make significant changes to the Fund's
current structure at this time and that it is in the best interests of the Fund
and its stockholders that the Fund continue to operate in its current closed-end
format.
As stated, the Board did consider a number of techniques intended to reduce
or eliminate the disparity between Share price and NAV. These techniques were
not deemed to be desirable as a way to reduce the discount of the Share price to
NAV or to be in the best interests of the Fund and its stockholders for the
following reasons:
1. SHARE REPURCHASE PROGRAMS ARE GENERALLY NOT EFFECTIVE IN REDUCING THE
DISCOUNT TO NAV IN THE LONG TERM AND WOULD DEPLETE THE ASSETS OF THE
FUND. In a share repurchase program, the Fund would purchase a
predetermined number of Shares on the open market after providing six
months advance notice to the stockholders. After considering the merits
of such a program, the Board was not persuaded that such a strategy would
reduce the discount to NAV for more than a short period of time, if at
all. Historical data on the trading results of other funds which have
instituted share repurchase programs strongly suggest that any reduction
in the discount to NAV would be short-lived. In addition, a share
repurchase program would reduce the Fund's asset base and increase its
expense ratio.
2. A RIGHTS OFFERING BY THE FUND WOULD NOT NECESSARILY REDUCE THE DISCOUNT
TO NAV AND COULD DILUTE THE INTERESTS OF THE STOCKHOLDERS. A rights
offering would entitle the current stockholders to purchase additional
Shares of the Fund at a price below their current trading price. Since
the Shares
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already trade at a discount to NAV, stockholders would purchase the
Shares at a price significantly below NAV. Although the purchase of
additional Shares would increase the Fund's assets available for
investment, there could be no assurance that the discount to NAV would
decrease as a result. Further, the selective exercise of the rights could
dilute the proportionate interest of some stockholders in the Fund's
assets and earnings.
3. CONVERSION TO AN OPEN-END FUND MIGHT FORCE SALES OF PORTFOLIO SECURITIES
AND COULD UNDERMINE THE FUND'S OBJECTIVE OF LONG-TERM CAPITAL
APPRECIATION. If the Fund were to experience substantial redemptions of
shares following its conversion to an open-end investment company, it
would probably not have sufficient cash reserves to fund such redemptions
and therefore could be required to sell portfolio securities and incur
increased transaction costs in order to raise cash to meet such
redemptions. As a result, the Manager would lose the flexibility it now
has to purchase and sell portfolio securities free of pressures that
might otherwise be generated by shareholder purchases and redemptions.
Because the Fund is a closed-end fund, the Manager currently is not
required to invest new moneys or liquidate portfolio holdings at what may
be inopportune times, and can manage the Fund's portfolio with a greater
emphasis on long-term considerations.
4. CONVERSION OF THE FUND COULD LEAD TO AN INCREASE IN ITS EXPENSE RATIO
AND DECREASE IN ITS SIZE. Conversion of the Fund to an open-end
investment company would raise the possibility of the Fund suffering
substantial redemptions of shares, particularly in the period immediately
following the conversion. The possible imposition of such measures as a
temporary redemption fee of up to 0.50 percent might reduce the number of
initial redemptions that would otherwise occur. However, unless the Fund
were able to generate sales of new shares sufficient to offset these
redemptions, the size of the Fund would be expected to decrease. Because
certain of the Fund's operating expenses are fixed, a decrease in the
Fund's asset size would likely increase the ratio of its operating
expenses to its income and net assets and, as a result, decrease the
Fund's net income per share available for dividends to existing
stockholders and potential future investors. Such a decrease in size
could result in a decision by the Board of Directors to terminate and
liquidate the Fund (or by the Manager not to continue to act as such) if
the amount of the Fund's assets were reduced to such an extent that it
was no longer considered economically feasible for the Fund to continue
to carry on business.
5. CONVERSION WOULD BE EXPENSIVE. The process of converting the Fund to an
open-end investment company would involve legal and other expenses to the
Fund, including the preparation of a registration statement under the
Securities Act of 1933, and the payment of necessary filing fees with
respect to such a registration statement and any filings under the "blue
sky" laws of the various states. The Board of Directors has been advised
that these conversion expenses, which would be paid by the Fund and would
result in a one-time increase in the Fund's current expense ratio, could
be expected to total at least $250,000. Because the Fund is unable to
determine at this time the actual costs that would be involved, it is
possible that the conversion expenses would be substantially higher.
6. OTHER CONSEQUENCES OF CHANGE IN STATUS. Various other consequences of a
conversion of the Fund to an open-end investment company were considered
by the Board. These consequences were considered relevant for the
following reasons:
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a. DELISTING FROM THE NYSE; STATE SECURITIES LAW REGISTRATIONS. If
the Fund were to convert to an open-end fund, the Shares would
immediately be delisted from the NYSE. Some investment managers believe
that the listing of an investment company on a U.S. stock exchange,
particularly the NYSE, represents a valuable asset, especially in terms
of attracting non-U.S. investors. In addition, certain investors, such as
pension funds, have internal restrictions on the portion of their
portfolio that can be invested in non-listed securities. Delisting would
save the Fund annual NYSE fees, but the absence of a stock exchange
listing, combined with the need to issue new shares when investors wish
to increase their holdings, would have the effect of requiring the Fund
to pay federal and state registration fees on sales of shares, except to
the extent that the underwriter or distributor of such shares paid some
or all of such fees, and make certain filings with most of the states of
the United States under the securities or "blue sky" laws of those
states. It is not anticipated that any net savings or increased cost to
the Fund because of these different expenses and registration
requirements would materially affect the Fund's expense ratio.
b. UNDERWRITING; BROKERAGE COMMISSIONS OR SALES CHARGES ON PURCHASES
AND SALES. Open-end investment companies typically seek to sell new
shares on a continuous basis in order to offset redemptions and avoid
reduction in size. Shares of "load" open-end investment companies are
normally offered and sold through an underwriter or distributor, which
deducts a sales charge from the purchase price at the time of purchase or
from the redemption proceeds at the time of redemption, or receives a
distribution fee from the fund, or both, to compensate it and securities
dealers for sales and marketing services. Shares of "no-load" open-end
investment companies are sold at NAV without a sales charge, with the
fund's investment manager or an affiliate normally bearing the cost of
sales and marketing from its own resources. Shares of closed-end
investment companies, on the other hand, are bought and sold in secondary
market transactions at prevailing market prices subject to brokerage
commissions charged by the broker-dealer firms executing such
transactions.
c. STOCKHOLDER SERVICES. Open-end investment companies typically
provide more services to shareholders and incur correspondingly higher
shareholder servicing expenses. Because of the facility with which a
shareholder of an open-end fund can redeem his or her shares, one service
that is generally offered by open-end funds is the ability of a
shareholder to transfer his or her investment from one fund into another
fund that is part of the same "family" of open-end funds at little or no
cost to the shareholders. The Fund has engaged in no discussions with any
family of funds to become a part of such family, and there can be no
assurance that the Fund would be able to make such an arrangement if the
Fund were to convert to an open-end fund.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
At December 31, 1996, Lazard Freres & Co. LLC and FMR Corp., who are not
affiliated persons of the Fund as defined in the 1940 Act, were known to the
Fund to be beneficial owners of 9.1% and 6.15%, respectively, of the Fund's
outstanding shares of Common Stock. The Fund is currently not aware of any other
person who beneficially owns more than 5% of the Fund's outstanding shares of
Common Stock.
At March 7, 1997, Cede & Co., a nominee of Depository Trust Company ("DTC"),
held of record 13,549,437, or approximately 96.7%, of the Fund's outstanding
shares of Common Stock. DTC is a securities depository for brokers, dealers and
other institutional investors. Securities are so deposited for
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the purpose of permitting book entry transfers of securities among such
investors. The Fund does not know the names of beneficial owners of its shares
that have been deposited at DTC.
Under U.S. federal securities laws, the Fund's directors, its executive
officers and certain other persons, including persons affiliated with the Fund's
investment adviser and manager, are required to file reports with respect to
their initial ownership of the Fund's Common Stock and any subsequent changes in
that ownership to the Securities and Exchange Commission and the New York Stock
Exchange. The Fund is required to disclose in this Proxy Statement any failure
by any such person to file these reports during fiscal year 1996 by the due
dates established in the applicable securities laws. During fiscal year 1996,
all required reports were filed on a timely basis except that Dresdner Kleinwort
Benson North America LLC ("DKBNA"), the Fund's investment adviser and manager
from September 1 to October 31, 1996, and Erich Pohl, Timothy A. Shacklock and
Alan C. D. Yarrow, members of the Board of Managers of DKBNA during such period,
inadvertently failed to file initial reports of ownership for the Fund, which
filings have since been made. In making this disclosure, the Fund has relied
solely on written representations of the persons obligated to file such reports
and on copies of the reports filed by such persons and furnished to the Fund.
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of stockholders arise,
including any questions as to an adjournment of the Meeting, the shares
represented by proxies will be voted with respect thereto in accordance with the
best judgment of the person or persons voting the proxies.
THE FUND WILL FURNISH, WITHOUT CHARGE, TO ANY STOCKHOLDER UPON REQUEST A
COPY OF THE FUND'S ANNUAL REPORT CONTAINING AUDITED FINANCIAL STATEMENTS OF THE
FUND FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1996. STOCKHOLDERS SHOULD DIRECT
REQUESTS FOR THE ANNUAL REPORT TO ALEXANDRA SIMOU, SECRETARY OF THE FUND, BY
WRITING TO THE FUND IN CARE OF RCM CAPITAL MANAGEMENT, L.L.C., 4 EMBARCADERO
CENTER, SAN FRANCISCO, CALIFORNIA 94111, OR BY CALLING THE FUND'S TOLL-FREE
TELEPHONE NUMBER 1-800-356-6122.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Fund's Annual Meeting
of Stockholders in 1998 must be received by the Fund on or before November 17,
1997 in order to be included in the Fund's proxy statement and form of proxy
relating to that meeting. The submission by a stockholder of a proposal for
inclusion in the proxy statement does not guarantee that it will be included.
Stockholder proposals are subject to certain regulations under U.S. federal
securities laws.
PROXY SOLICITATION MATTERS
The Fund may solicit proxies delivered by beneficial owners of the Fund's
Common Stock in the form of a telephonic proxy or "proxygram." In such event,
beneficial stockholders will receive mailgrams from the Fund requesting each
stockholder who wishes to vote by proxygram to call the toll-free telephone
number provided, furnish the operator with specified information regarding the
stockholder and the shares to be voted, and instruct the operator how the
stockholder wishes to vote on the proposals described in this Proxy Statement.
The operator will then electronically transmit the stockholder's voting
instructions to the designated broker, depository institution or other holder
with actual voting authority, which then will vote
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shares held of record by returning a signed proxy card. The operators who
receive the foregoing voting instructions will be independent of the Fund.
The cost of preparing, assembling and mailing material in connection with
this solicitation will be borne by the Fund. In addition to the use of mails,
proxies may be solicited personally by regular employees of the Fund, RCM or
Dresdner Bank AG or by telephone or telegraph. Brokerage houses, banks and other
fiduciaries may be requested to forward proxy solicitation material to their
principals to obtain authorization for the execution of proxies, and they will
be reimbursed by the Fund for out-of-pocket expenses incurred in this
connection. The Fund also has made arrangements with Georgeson & Company Inc.
and, in Canada, R-M Trust Company to assist in the solicitation of proxies, if
called upon by the Fund, at an aggregate estimated fee of approximately $13,000
plus reimbursement of normal expenses.
By Order of the Board of Directors
Alexandra Simou
SECRETARY
Dated: March 17, 1997
San Francisco, California
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO HAVE
THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT TO THE FUND.
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<PAGE>
THE EMERGING GERMANY FUND INC.
4 EMBARCADERO CENTER
SAN FRANCISCO, CA 94111
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD APRIL 28, 1997
The undersigned hereby appoints Alexandra Simou and Barbel Lenz as proxies, each
with full power of substitution, and hereby authorizes each of them to represent
and to vote, as designated on the reverse side, all the shares of Common Stock
of The Emerging Germany Fund Inc. (the "Fund") held of record by the undersigned
on March 7, 1997 at the Annual Meeting of Stockholders to be held on April 28,
1997 or any adjournment thereof. The undersigned hereby further authorizes such
proxies to vote in their discretion upon such other business as may properly
come before such Annual Meeting or any adjournment thereof. Receipt of Notice of
Annual Meeting and Proxy Statement is hereby acknowledged.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED IN THE MANNER SPECIFIED HEREON. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND
AGAINST PROPOSAL 3.
PLEASE VOTE, DATE, AND SIGN ON REVERSE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------ -----------------------------
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[x] PLEASE MARK VOTES AS IN THIS EXAMPLE
------------------------------
THE EMERGING GERMANY FUND INC.
------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSALS 1 AND 2
(1) Election of Directors.
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
ALFRED W. FIORE GOTTFRIED W. PERBIX JACOB SALIBA
NOTE: If you do not wish your shares voted "FOR" a particular nominee, mark the
"For All Except" box and strike a line through the nominee's(s') name(s). Your
shares will be voted for the remaining nominee(s).
(2) Ratification of the selection by the Board of Directors of Coopers
& Lybrand L.L.P. as independent accountants of the Fund for the
fiscal year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 3
(3) Approval of Stockholder proposal.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting.
Mark box at right if an address change or comment has been noted on the
reverse side of this card. [ ]
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date:
Stockholder sign here Co-owner sign here
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