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THE EMERGING GERMANY FUND INC.
FOUR EMBARCADERO CENTER, 30TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
January 15, 1999
To Our Fellow Stockholders:
The Board of Directors of The Emerging Germany Fund Inc. (the "Fund") recently
sent you proxy materials for its Annual Meeting of Stockholders (the "Meeting")
to be held on January 26, 1999. These materials describe our proposals to (1)
broaden the Fund's investment objective to capitalize fully on the economic
growth occurring throughout Europe and (2) convert the Fund to an open-end
investment company. If approved at the Meeting, these proposals will provide a
timely and effective means to enhance stockholder returns. The Board of
Directors of the Fund strongly endorses these important changes as being in the
best interest of the Fund and all stockholders. Please refer to the proxy
materials previously mailed to you for a complete explanation of our proposals.
The Board of Directors is sending you this letter now to impress upon you the
importance of your vote. Approval of these proposals is integral to the
continued successful operation of the Fund. Accordingly, it is important that
you take the time to mark your approval FOR our proposals and then sign, date,
and return the enclosed WHITE proxy card to the Fund so that your vote can guide
the Fund into the future. Our Meeting will be held on January 26, 1999, so you
must act soon to have your vote count.
It has come to our attention that two groups of dissident stockholders, Deep
Discount Advisors, Inc./Ron Olin Management Company and Opportunity Partners
L.P., have launched their own proxy solicitations in an attempt to take control
of the Fund. You may have already received one or both of their separate proxy
materials. These dissident stockholders say that they desire control of the Fund
because they believe that they can deliver value to the Fund and its
stockholders more efficiently than is described in our proxy materials. However,
because the plans of these stockholders are so vague and confusing, it is
difficult to determine exactly what they want and how they intend to achieve
whatever goals they have for the Fund. For example, neither dissident indicates
any preferred course of action for the Fund and both fail to offer any
timetable, estimates of cost or explanation of how they will achieve their
goals. Also, although both dissidents suggest that they want the Fund's current
discount to net asset value eliminated, it is puzzling that neither dissident
indicates whether or not they support the Fund's open-ending conversion
plan--the ultimate discount elimination technique available.
In addition to being ambiguous about their plans for the Fund, these dissidents
make promises we believe are misleading and not realistic. For example, in
asserting that they may pursue an open-ending plan that does not have any
redemption fee, something we agree that is possible, neither dissident mentions
that the purpose of a redemption fee is to allocate the costs associated with
redemptions to those stockholders that redeem (like themselves), instead of
passing those costs on to the remaining long-term investors. In other words, the
1% redemption fee is intended to apportion redemption expenses only to those
stockholders electing to redeem their shares in the six-month period following
conversion of the Fund, and not to the stockholders who remain invested in the
Fund. Furthermore, it is highly unlikely that either dissident could effect the
open-ending faster than is contemplated by the Board. Our plan sets the open-end
conversion at approximately ninety days after stockholder approval to allow time
to process a registration statement with the Securities and Exchange Commission,
to delist from the New York Stock Exchange, and to revise Fund operations to run
as an open-end investment management company.
The Fund's proposals, as set forth in our proxy materials and unanimously
supported by the Board of Directors, together with the Fund's record as the
top-performing U.S.-based German fund over the past two years, demonstrate that
we are committed to maximizing stockholder value. We carefully designed our
proposals to give you a straightforward and efficient mechanism for maintaining
your investment in the
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Fund, with the option of realizing net asset value on your shares when you so
choose. In addition, our proposals will ensure that the investment adviser,
which has guided the Fund to excellent returns in recent years, will continue to
manage the Fund. Because our proposals are the only proposals designed to
quickly and efficiently deliver to you added value, we strongly recommend that
you vote in favor of our real proposals and not the confusion and uncertainty
offered by the dissident stockholders.
Once again, we request that you vote in favor of our proposals to broaden the
investment objective of the Fund and to convert the Fund to an open-end
investment management company. The Board is confident that the proposals will
benefit both the Fund and its stockholders. Please sign, date, and return the
enclosed WHITE proxy card in the enclosed postage-paid return envelope. Should
you need another copy of our proxy materials, or if you have any questions or
need other assistance, please call the Fund's proxy solicitor, Georgeson & Co.,
toll-free at (800) 223-2064.
Thank you for your time and consideration.
Sincerely,
[SIGNATURE]
Rolf Passow
Chairman of the Board of Directors,
on behalf of the Board of
The Emerging Germany Fund Inc.
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