SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement.
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material under Rule 14a-12.
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2)).
THE CENTRAL EUROPE AND RUSSIA 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:
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
345 Park Avenue,
New York, New York 10154
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 22, 2004
----------
To our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of The
Central Europe and Russia Fund, Inc., a Maryland corporation (the "Fund"), will
be held at 3:30 P.M., New York time, on June 22, 2004 at 280 Park Avenue, 40th
Floor West, New York, New York 10017 for the following purposes:
1. To elect four (4) Directors, three to serve for a term of three years
and one to serve for a term of one year and until their successors are
elected and qualify.
2. To ratify the appointment by the Audit Committee and the Board of
Directors of PricewaterhouseCoopers LLP as independent auditors for the
fiscal year ending October 31, 2004.
3. To act upon, if presented, a stockholder proposal.
4. To transact such other business as may properly come before the Meeting
or any postponement or adjournment thereof.
Only holders of record of Common Stock at the close of business on April
30, 2004 are entitled to notice of, and to vote at, this Meeting or any
adjournment thereof.
If you have any questions or need additional information, please contact
Morrow & Co., Inc., the Fund's proxy solicitors, at 445 Park Avenue, New York,
New York 10022, or 1-800-654-2468.
By Order of the Board of Directors
Bruce A. Rosenblum
Secretary
Dated: May 26, 2004
Whether or not you expect to attend the meeting, please sign the enclosed
proxy and promptly return it to the Fund. We ask your cooperation in mailing in
your proxy promptly, so that the Fund does not incur any additional expenses of
solicitation of proxies.
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
345 Park Avenue,
New York, New York 10154
Annual Meeting of Stockholders
June 22, 2004
---------------
PROXY STATEMENT
---------------
This Proxy Statement is furnished by the Board of Directors of The Central
Europe and Russia Fund, Inc. (the "Board of Directors" or "Board"), a Maryland
corporation (the "Fund"), in connection with the solicitation of proxies for use
at the Annual Meeting of Stockholders (the "Meeting") to be held at 3:30 P.M.,
New York time, on June 22, 2004 at 280 Park Avenue, 40th Floor West, New York,
New York 10017. The purpose of the Meeting and the matters to be considered are
set forth in the accompanying Notice of Annual Meeting of Stockholders.
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 four (4) directors of the Fund ("Directors")
(Proposal 1), FOR the ratification of the appointment by the Audit Committee and
the Board of PricewaterhouseCoopers LLP as independent auditors for the Fund
(Proposal 2) and AGAINST the stockholder proposal (Proposal 3). A proxy may be
revoked at any time prior to the time it is voted by written notice to the
Secretary of the Fund, by submitting a subsequently executed proxy or by
attendance at the Meeting and voting in person.
The close of business on April 30, 2004 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 10,197,209 shares of Common Stock
outstanding and entitled to vote. Each share will be entitled to one vote on
each matter that comes before the Meeting. It is expected that the Notice of
Annual Meeting, this Proxy Statement and the form of proxy will first be mailed
to stockholders on or about May 26, 2004.
A quorum is necessary to hold a valid meeting. If stockholders entitled to
cast one-third of all votes entitled to be cast at the Meeting are present in
person or by proxy, a quorum will be established. The Fund intends to treat
properly executed proxies that are marked "abstain" and broker non-votes
(defined below) 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. A "broker non-vote" occurs when a broker holding
shares for a beneficial owner does not vote on a particular matter because the
broker does not have discretionary voting power with respect to that matter and
has not received instructions from the beneficial owner.
1
PROPOSAL 1: ELECTION OF DIRECTORS
The Fund's charter (the "Charter") provides that the Board of Directors be
divided into three classes of Directors serving staggered three-year terms and
until their successors are elected and qualify. The term of office for Directors
in Class I expires at the 2004 Annual Meeting, Class II at the next succeeding
annual meeting and Class III at the following succeeding annual meeting. Three
Class I nominees and one Class II nominee are proposed in this Proxy Statement
for election.
Should any vacancy occur on the Board of Directors, the remaining Directors
would be able to fill such vacancy by the affirmative vote of a majority of the
remaining Directors in office, even if the remaining Directors do not constitute
a quorum. Any Director elected by the Board to fill a vacancy would hold office
until the remainder of the full term of the class of Directors in which the
vacancy occurred and until a successor is elected and qualifies. If the size of
the Board is increased, additional Directors will be apportioned among the three
classes to make all classes as nearly equal as possible.
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 that he will serve as a
Director 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 form of
proxy in accordance with their discretion.
Information Regarding Directors and Officers
The following table shows certain information about the nominees for
election as Directors and about Directors whose terms will continue, including
beneficial ownership of Common Stock of the Fund. Each has served as a Director
of the Fund since the Fund's inception in 1990, except for Ambassador Burt, who
was elected to the Board on June 30, 2000, Mr. Langhammer, who was elected to
the Board on May 9, 2003, Mr. Cannon, who was elected to the Board on April 23,
2004, and Dr. Bock, who was elected to the Board on May 5, 2004.
2
Nominees Proposed for Election:
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Class I Directors
(Term will Expire in 2004; Nominees for Term Expiring in 2007)
----------------------------------------------------------------------------------------------------------------------------------
Number of
Portfolios in Shares
Fund Complex(2) of Common
Overseen by Stock
Term of Office Director or Other Directorships Beneficially
Name, Address(1) Position(s) and Length of Principal Occupation(s) Nominee for Held by Director or Owned at
& Age with Fund Time Served During Past Five Years Director Nominee for Director April 2, 2004(3)
--------------- --------- ----------- ---------------------- -------- -------------------- ----------------
Non-Interested Directors
Ambassador Director Since 2000 Chairman, Diligence LLC, 69 Director of The Germany 1,484
Richard R. Burt, formerly IEP Advisors, Inc. Fund, Inc. (since 2000) and
57 (information collection, The New Germany Fund, Inc.
analysis, consulting and (since 2004), as well as
intelligence) (since 1998). other funds in the Fund
Chairman of the Board, Complex as indicated.(4)
Weirton Steel Corp. (since Board Member, IGT, Inc.
1996). Partner, McKinsey & (gaming technology) (since
Company (1991-1994). U.S. 1995). Board Member,
Ambassador to the Federal Hollinger International
Republic of Germany (printing and publishing)
(1985-1989). Chairman, IEP (since 1995). Board Member,
Advisor, LLP (international HCL Technologies, Inc.
consulting). (information technology and
product engineering) (since
1999). Member, Textron
Corporation International
Advisory Council (aviation,
automotive, industrial
operations and finance)
(since 1996). Director,
UBS-Paine Webber family of
Mutual Funds.
John H. Cannon, Director Since 2004 Consultant (since 2002); 3 Director of The New Germany None
62 Vice President and Fund, Inc. (since 1990) and
Treasurer Venator The Germany Fund, Inc.
Group/Footlocker Inc. (since 2004).(4)
(footwear retailer) (until
2001).
3
----------------------------------------------------------------------------------------------------------------------------------
Class I Directors
(Term will Expire in 2004; Nominees for Term Expiring in 2007)
----------------------------------------------------------------------------------------------------------------------------------
Number of
Portfolios in Shares
Fund Complex(2) of Common
Overseen by Stock
Term of Office Director or Other Directorships Beneficially
Name, Address(1) Position(s) and Length of Principal Occupation(s) Nominee for Held by Director or Owned at
& Age with Fund Time Served During Past Five Years Director Nominee for Director April 2, 2004(3)
--------------- --------- ----------- ---------------------- -------- -------------------- ----------------
Interested Directors(5)
Detlef Bierbaum, Director Since 1990 Partner of Sal. Oppenheim 2 Director of The Germany None
61 Jr. & Cie KGaA (investment Fund, Inc. (since 1986).(4)
management). Member of Supervisory
Board, Tertia
Handelsbeteiligungsgesell-schaft
mbH (electronic retailer).
Member of Supervisory
Board, Douglas AG
(retailer). Member of
Supervisory Board, LVM
Landwirtschaftlicher
Versicherungsverein
(insurance). Member of
Supervisory Board, Monega
KAG (investment company).
Member of Supervisory
Board, AXA Investment
Managers GmbH (investment
company). Chairman of
Supervisory Board,
Oppenheim
Kapitalanlagegesellschaft
mbH (investment company).
Chairman of Supervisory
Board, Oppenheim
Immobilien-Kapitalanlagegesellschaft
mbH (investment company).
Member of Supervisory
Board, Oppenheim
Beteiligungs-AG (holding
company). Chairman of
Administrative Board,
Oppenheim Prumerica Asset
Management S.a.r.l.
(investment company).
Member of Supervisory
Board, Atradius N.V.
(insurance). Chairman of
the Advisory Board of DWS
Investment GmbH. Member of
the Board of Quindee REIT,
Toronto.
4
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Class II Directors
(Nominees for Term Expiring in 2005)
----------------------------------------------------------------------------------------------------------------------------------
Number of
Portfolios in Shares
Fund Complex(2) of Common
Overseen by Stock
Term of Office Director or Other Directorships Beneficially
Name, Address(1) Position(s) and Length of Principal Occupation(s) Nominee for Held by Director or Owned at
& Age with Fund Time Served During Past Five Years Director Nominee for Director April 2, 2004(3)
--------------- --------- ----------- ---------------------- -------- -------------------- ----------------
Non-Interested Directors
Dr. Kurt W. Bock, Director Since 2004 Member of the Board of 2 Director of The Germany None
45(9) Executive Directors and Fund, Inc. (since 2004).(4)
CFO, BASF Member of the Supervisory
Aktiengesellschaft (since Boards of Wintershall AG
2003); President, Logistics (since 2003) and Basell
and Information Services, N.V. (since 2003). Member
BASF Aktiengesellschaft of the Advisory Boards of
(2000 to 2003); Chief WINGAS GmbH (since 2003),
Financial Officer, BASF WIEH GmbH (since 2003),
Corporation (1998 to 2000); Landesbank
Managing Director, Robert Baden-Wurttemberg (since
Bosch Ltda. (1996 to 1998); 2003), Initiative D21
Senior Vice President, (since 2003), DBW ("Die
Finance and Accounting, Betriebswirtschaft") (since
Robert Bosch GmbH (1994 to 2003), and Gesellschaft fur
1996); Senior Vice Unternehmensplanung (IUP)
President, Finance, Robert (since 2004). Member of the
Bosch GmbH (1992 to 1994); Boards of BASFIN
Head of Technology, Corporation (since 2002),
Planning and Controlling, Deutsches Rechnungslegungs
Engineering Plastics Standards Committee
division, BASF ("DRSC") (since 2003),
Aktiengesellschaft (1991 to Schmalenbachgesellschaft
1992); Executive Assistant (since 2004), and Jacob
to BASF's Chief Financial Gould Schurman Stiftung
Officer (1987 to 1991). (since 2004). Member of the
Trustees of Arbeitskreis
Evangelischer Unternehmer
("AEU") (since 2003).
5
Directors whose term will continue:
----------------------------------------------------------------------------------------------------------------------------------
Class II Directors
(Term will Expire in 2005)
----------------------------------------------------------------------------------------------------------------------------------
Number of
Portfolios in Shares
Fund Complex(2) of Common
Overseen by Stock
Term of Office Director or Other Directorships Beneficially
Name, Address(1) Position(s) and Length of Principal Occupation(s) Nominee for Held by Director or Owned at
& Age with Fund Time Served During Past Five Years Director Nominee for Director April 2, 2004(3)
--------------- --------- ----------- ---------------------- -------- -------------------- ----------------
Non-Interested Directors
Robert H. Director Since 1990 President, Robert H. 69 Director of The New Germany 3,140
Wadsworth, 64 Wadsworth Associates, Inc. Fund, Inc. (since 1992) and
(consulting firm) (May 1983 The Germany Fund, Inc.
to present). Formerly, (since 1986) as well as
President and Trustee, other funds in the Fund
Trust for Investment Complex as indicated.(4)
Managers (registered
investment companies)
(April 1999-June 2002).
President, Investment
Company Administration,
L.L.C. (January
1992(6)-July 2001).
President, Treasurer and
Director, First Fund
Distributors, Inc. (mutual
fund distribution) (June
1990-January 2002). Vice
President, Professionally
Managed Portfolios (May
1991-January 2002) and
Advisors Series Trust
(registered investment
companies) (October
1996-January 2002).
Interested Directors(5)
John Bult, 68 Director Since 1990 Chairman, PaineWebber 3 Director of The Germany 4,510
International (since 1985). Fund, Inc. (since 1986) and
The New Germany Fund, Inc.
(since 1990).(4) Director
of The France Growth Fund,
Inc. (closed-end fund).
Director of The Greater
China Fund, Inc.
(closed-end fund).
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Class III Directors
(Term will Expire in 2006)
----------------------------------------------------------------------------------------------------------------------------------
Number of
Portfolios in Shares
Fund Complex(2) of Common
Overseen by Stock
Term of Office Director or Other Directorships Beneficially
Name, Address(1) Position(s) and Length of Principal Occupation(s) Nominee for Held by Director or Owned at
& Age with Fund Time Served During Past Five Years Director Nominee for Director April 2, 2004(3)
--------------- --------- ----------- ---------------------- -------- -------------------- ----------------
Non-Interested Directors
Fred H. Director Since 2003 Chief Executive Officer, 2 Director of The Germany None
Langhammer, The Estee Lauder Companies Fund, Inc. (since 2003).(4)
60(7) Inc. (manufacturer and Director, Gillette Company.
marketer of cosmetics) Director, Inditex, S.A
(since 2000), President (fashion manufacturer and
(since 1995), Chief retailer). Director,
Operating Officer German-American Chamber of
(1985-1999), Managing Commerce, Inc. Co-Chairman,
Director, operations in American Institute for
Germany (1982-1985), Contemporary German Studies
President, operations in at Johns Hopkins
Japan (1975-1982). University. Senior Fellow,
Foreign Policy Association.
Director, Japan Society.
6
----------------------------------------------------------------------------------------------------------------------------------
Class III Directors
(Term will Expire in 2006)
----------------------------------------------------------------------------------------------------------------------------------
Number of
Portfolios in Shares
Fund Complex(2) of Common
Overseen by Stock
Term of Office Director or Other Directorships Beneficially
Name, Address(1) Position(s) and Length of Principal Occupation(s) Nominee for Held by Director or Owned at
& Age with Fund Time Served During Past Five Years Director Nominee for Director April 2, 2004(3)
--------------- --------- ----------- ---------------------- -------- -------------------- ----------------
Non-Interested Directors
Werner Walbrol, Director Since 1990 President and Chief 3 Director of The Germany 1,918
66 Executive Officer, The Fund, Inc. (since 1986) and
European American Chamber The New Germany Fund, Inc.
of Commerce, Inc. Senior (since 2004).(4) Director,
Adviser, Coudert Brothers TUV Rheinland of North
LLP. Formerly, President America, Inc. (independent
and Chief Executive testing and assessment
Officer, The German services). President and
American Chamber of Director, German-American
Commerce, Inc. Partnership Program
(student exchange
programs). Director, AXA
Art Insurance Corporation
(fine art and collectible
insurer).
Interested Directors(5)
Christian H. Director Since 1990 Director (since 1999) and 3 Director of The Germany 1,110
Strenger, 60 Managing Director Fund, Inc. (since 1986) and
(1991-1999) of DWS The New Germany Fund, Inc.
Investment GmbH (investment (since 1990).(4) Member,
management). Supervisory Board, Fraport
AG (international airport
business). Board member,
Incepta PLC (media and
advertising).
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Executive Officers(8):
----------------------------------------------------------------------------------------------------------------------------------
Shares
of Common
Stock
Term of Office Beneficially
Position(s) and Length of Principal Occupation(s) Owned at
Name, Address(1) & Age with Fund Time Served During Past Five Years April 2, 2004(3)
---------------------- --------- ----------- ---------------------- ----------------
Richard T. Hale, 58(10) President and Year to year Managing Director, Deutsche 1,261
Chief since 2001 Investment Management
Executive Americas Inc.
Officer (2003-present); Managing
Director, Deutsche Bank
Securities Inc. (formerly
Deutsche Banc Alex. Brown
Inc.) and Deutsche Asset
Management (1999 to
present); Director and
President, Investment
Company Capital Corp.
(registered investment
advisor) (1996 to present);
Director, Deutsche Global
Funds, Ltd. (2000 to
present); Director, Scudder
Global Opportunities Fund
(since 2003);
Director/Officer,
Deutsche/Scudder Mutual
Funds (various dates);
President, Montgomery
Street Income Securities,
Inc. (2002 to present)
(registered investment
companies); Vice President,
Deutsche Asset Management,
Inc. (2000 to present).
Formerly, Director, ISI
Family of Funds (registered
investment companies; 4
funds overseen)
(1992-1999); CABEI Fund
(2000 to 2004), North
American Income Fund (2000
to 2004) (registered
investment companies).
Vincent J. Esposito, Vice President Year to year Managing Director, Deutsche None
47(11) since 2003 Asset Management (2003 to
present). Formerly,
Managing Director and Head
of Relationship Management,
Putnam Investments (March
1999-2003) and Managing
Director and National Sales
Manager, Putnam Investments
(March 1997-March 1999).
7
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Executive Officers(8):
----------------------------------------------------------------------------------------------------------------------------------
Shares
of Common
Stock
Term of Office Beneficially
Position(s) and Length of Principal Occupation(s) Owned at
Name, Address(1) & Age with Fund Time Served During Past Five Years April 2, 2004(3)
---------------------- --------- ----------- ---------------------- ----------------
Bruce A. Rosenblum, 43 Secretary Year to year Director, Deutsche Asset None
since 2003 Management (2002 to
present); prior thereto,
Vice President of Deutsche
Asset Management
(2000-2002); and partner
with the law firm of
Freedman, Levy, Kroll &
Simonds (1997-2000).
Charles A. Rizzo, Chief Year to year Director, Deutsche Asset None
46(11) Financial since 2003 Management (April 2000 to
Officer and present). Formerly, Vice
Treasurer President and Department
Head, BT Alex. Brown
Incorporated (now Deutsche
Bank Securities Inc.)
(1998-1999); Senior
Manager, Coopers & Lybrand
L.L.P. (now
PricewaterhouseCoopers LLP)
(1993-1998).
Kathleen Sullivan Assistant Year to year Director, Deutsche Asset None
D'Eramo, 47(11) Treasurer since 2003 Management (2002 to
present). Formerly Senior
Vice President, Zurich
Scudder Investments
(2000-2002); Vice
President, Zurich Scudder
Investments and its
predecessor companies
(1995-2000).
----------
(1) The mailing address of all directors and officers with respect to Fund
operations is c/o Deutsche Bank Securities, Inc., 345 Park Avenue, New
York, New York 10154.
(2) Includes The Germany Fund, Inc. and The New Germany Fund, Inc., which are
the other closed-end registered investment companies for which Deutsche
Bank Securities Inc. acts as manager. It also includes 201 other open- and
closed-end funds advised by wholly-owned entities of the Deutsche Bank
Group in the United States.
(3) All Directors and Executive Officers as a group (14 persons) owned 13,423
shares which constitutes less than 1% of the outstanding Common Stock of
the Fund. Share numbers in this Proxy Statement have been rounded to the
nearest whole share.
(4) The New Germany Fund, Inc. and The Germany Fund, Inc. are the other
closed-end registered investment companies for which Deutsche Bank
Securities, Inc. acts as manager. Messrs. Burt and Wadsworth also serve as
Directors/Trustees of the following open-end investment companies: Scudder
Advisor Funds, Scudder Advisor Funds II, Scudder Advisor Funds III, Scudder
Institutional Funds, Scudder Investment Portfolios, Scudder Cash Management
Portfolio, Scudder Treasury Money Portfolio, Scudder International Equity
Portfolio, Scudder Equity 500 Index Portfolio, Scudder Asset Management
Portfolio, Scudder Investments VIT Funds, Scudder MG Investments Trust,
Scudder Investors Portfolios Trust, Scudder Investors Funds, Inc., Scudder
Flag Investors Value Builder Fund, Inc., Scudder Flag Investors Equity
Partners Fund, Inc., Scudder Flag Investors Communications Fund, Inc., Cash
Reserve Fund, Inc. and Scudder RREEF Securities Trust. They also serve as
Directors of Scudder RREEF Real Estate Fund, Inc. and Scudder RREEF Real
Estate Fund II, Inc., closed-end investment companies. These Funds are
advised by either Deutsche Asset Management, Inc., Deutsche Asset
Management Investment Services Limited, or Investment Company Capital
Corp., each an indirect, wholly-owned subsidiary of Deutsche Bank AG.
(5) Indicates "Interested Person", as defined in the Investment Company Act of
1940, as amended (the "1940 Act"). Mr. Bierbaum is an "interested" Director
because of his affiliation with Sal. Oppenheim Jr. & Cie. KGaA, which
engages in brokerage with the Fund and other accounts managed by the
investment adviser and manager; and Mr. Bult is an "interested" Director
because of his affiliation with PaineWebber International, an affiliate of
UBS Securities LLC, a registered broker-dealer; and Mr. Strenger is an
"interested" Director because of his affiliation with DWS-Deutsche
Gesellschaft fur Wertpapiersparen mbH ("DWS"), a majority-owned subsidiary
of Deutsche Bank AG and because of his ownership of Deutsche Bank AG
shares.
(6) Inception date of corporation which was predecessor to the LLC.
(7) In December 2001, Mr. Langhammer's two adult children borrowed $1 million
from a Deutsche Bank Group company. As of April 1, 2004 the loan was fully
paid off.
(8) Each also serving as an officer of The Germany Fund, Inc. and The New
Germany Fund, Inc. The officers of the Fund are elected annually by the
Board of Directors at its meeting following the Annual Meeting of
Stockholders.
(9) Dr. Tessen von Heydebreck, a managing director of Deutsche Bank, is a
member of the supervisory board of BASF AG, Dr. Bock's employer.
(10) Mr. Hale announced his intent to retire effective June 18, 2004. In
connection with his retirement, we anticipate that Mr. Hale will resign as
President and CEO of the Fund as of that date. The Board of Directors will
consider a replacement for Mr. Hale at its Board Meeting on July 12, 2004.
(11) Indicates ownership of securities of Deutsche Bank either directly or
through Deutsche Bank's deferred compensation plan.
8
The following table contains additional information with respect to the
beneficial ownership of equity securities by each Director or Nominee in the
Fund and, on an aggregated basis, in any registered investment companies
overseen by the Director or Nominee within the same Family of Investment
Companies as the Fund:
Aggregate Dollar Range of Equity
Securities in All Funds Overseen by
Dollar Range of Equity Director or Nominee in Family of
Name of Director or Nominee Securities in the Fund(1) Investment Companies(1), (2)
-------------------------- -------------------- -------------------------------
Detlef Bierbaum None None
Dr. Kurt W. Bock None None
John Bult over $100,000 over $100,000
Ambassador Richard R. Burt $10,001 - $50,000 $50,001 - $100,000
John H. Cannon None $10,001 - $50,000
Fred H. Langhammer None None
Christian H. Strenger $10,001 - $50,000 $10,001 - $50,000
Robert H. Wadsworth $50,001 - $100,000 over $100,000
Werner Walbrol $50,001 - $100,000 $50,001 - $100,000
----------
(1) Valuation date is April 2, 2004.
(2) The Family of Investment Companies consists of the Fund, The Germany Fund,
Inc. and The New Germany Fund, Inc., which are closed-end funds and share
the same investment adviser and manager and hold themselves out as related
companies.
The Board of Directors presently has four standing committees including an
audit committee (the "Audit Committee"), an advisory committee (the "Advisory
Committee"), an executive committee (the "Executive Committee") and a nominating
committee (the "Nominating Committee").
The Audit Committee, comprising Messrs. Burt, Cannon, Wadsworth and
Walbrol, operates pursuant to a written charter which is attached hereto as
Exhibit A. The Audit Committee's organization and responsibilities are contained
in the Audit Committee Report, which is included in this Proxy Statement, and in
its written charter. The members of the Audit Committee are "independent" as
required by the independence standards of Rule 10A-3 under the Securities
Exchange Act of 1934. The Board of Directors has determined that each member of
the Audit Committee is financially literate and has determined that each of
Messrs. Cannon and Wadsworth meets the requirements for an audit committee
financial expert under the rules of the Securities and Exchange Commission
("SEC"). Although the Board has determined that these individuals meet the
requirements for an audit committee financial expert, their responsibilities are
the same as those of the other audit committee members. They are not auditors or
accountants, do not perform "field work" and are not full-time employees. The
SEC has determined that an audit committee member who is designated as an audit
committee financial expert will not be deemed to be an "expert" for any purpose
as a result of being identified as an audit committee financial expert. The
Audit Committee met four times during the fiscal year ended October 31, 2003.
The Advisory Committee, comprising Messrs. Bierbaum, Burt, Wadsworth and
Walbrol, makes recommendations to the full Board with respect to the Management
Agreement between the Fund and Deutsche Bank Securities Inc. ("DBSI") and the
Investment Advisory Agreement between the Fund and Deutsche Asset Management
International GmbH ("DeAM"). The Advisory Committee met once during the past
fiscal year.
The Executive Committee, comprising Messrs. Burt, Strenger, Wadsworth and
Walbrol, has the authority to act for the Board on all matters between meetings
of the Board subject to any limitations under applicable state law. During the
past fiscal year the Executive Committee did not meet.
9
The Nominating Committee, comprising Messrs. Burt, Wadsworth and Walbrol,
operates pursuant to a written charter which is attached hereto as Exhibit B.
The Board has determined that each of the members is not an "interested person"
as the term is defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended. The Nominating Committee's organization and responsibilities
are set forth in the Nominating Committee Charter. Generally, the Nominating
Committee identifies, evaluates and selects and nominates, or recommends to the
Board of Directors, candidates for the Board or any committee of the Board. To
be eligible for nomination as a Director a person must, at the time of such
person's nomination, have Relevant Experience and Country Knowledge and must not
have any Conflict of Interest, as those terms are defined in the Fund's By-laws.
The relevant portions of the Fund's By-laws describing these requirements are
included as Exhibit C. The Nominating Committee may also take into account
additional factors listed in the Nominating Committee Charter, which generally
relate to the nominee's industry knowledge, business experience, education,
ethical reputation, special skills, ability to work well in group settings and
the ability to qualify as an "independent director."
The Nominating Committee will consider nominee candidates properly
submitted by stockholders in accordance with applicable law, the Fund's Articles
of Incorporation or By-laws, resolutions of the Board and the qualifications and
procedures set forth in the Nominating Committee Charter and this proxy
statement. A stockholder or group of stockholders seeking to submit a nominee
candidate (i) must have beneficially owned at least 5% of the Fund's common
stock for at least two years, (ii) may submit only one nominee candidate for any
particular meeting of stockholders, and (iii) may submit a nominee candidate for
only an annual meeting or other meeting of stockholders at which directors will
be elected. The stockholder or group of stockholders must provide notice of the
proposed nominee pursuant to the requirements found in the Fund's By-laws.
Generally, this notice must be received not less than 90 days nor more than 120
days prior to the first anniversary of the date of mailing of the notice for the
preceding year's annual meeting. Such notice shall include the specific
information required by the Fund's By-laws. The relevant portions describing
these requirements are included as Exhibit C. The Nominating Committee will
evaluate nominee candidates properly submitted by stockholders on the same basis
as it considers and evaluates candidates recommended by other sources. The
Nominating Committee met twice during the past fiscal year.
All members on each of the four committees of the Board are non-interested
persons (except that Mr. Strenger, an interested person, is a member of the
Executive Committee, and Mr. Bierbaum, an interested person, is a member of the
Advisory Committee).
During the past fiscal year, the Board of Directors had four regular
meetings, and each incumbent Director that served as a Director during the past
fiscal year attended at least 75% of the aggregate number of meetings of the
Board and meetings of Board Committees on which that Director served. The Board
has a policy that encourages Directors to attend the Annual Meeting of
Stockholders, to the extent travel to the Annual Meeting of Stockholders is
reasonable for that Director. Two Directors attended the 2003 Annual Meeting of
Stockholders.
To communicate with the Board of Directors or an individual Director of the
Fund, a stockholder must send a written communication to the Fund's principal
office at the address listed in the Notice of Annual Meeting of Stockholders
accompanying this Proxy Statement, addressed to the Board of Directors of the
Fund or an individual Director and the Secretary of the Fund. The Secretary of
the Fund will direct the correspondence to the appropriate parties.
The Fund pays each of its Directors who is not an interested person of the
Fund, the investment adviser or the manager an annual fee of $7,500 plus $750
for each Board and Committee meeting attended. Each such Director who is also a
Director of The Germany Fund, Inc. or The New Germany Fund, Inc. also receives
the same annual and per-meeting fees for services as a Director of each such
fund. Effective as of April 24, 2002, no Director of all
10
three funds is paid for attending more than two funds' board and committee
meetings when meetings of the three funds are held concurrently, and, effective
as of January 1, 2002, no such Director receives more than the annual fee of two
funds. Each of the Fund, The Germany Fund, Inc. and The New Germany Fund, Inc.
reimburses the Directors (except for those employed by the Deutsche Bank Group)
for travel expenses in connection with Board meetings. These three funds,
together with 201 other open- and closed-end funds advised by wholly-owned
entities of the Deutsche Bank Group in the United States, represent the entire
Fund Complex within the meaning of the applicable rules and regulations of the
SEC. The following table sets forth (a) the aggregate compensation from the Fund
for the fiscal year ended October 31, 2003, and (b) the total compensation from
the Fund Complex that includes the Fund for its fiscal year ended October 31,
2003, and such other funds for the year ended December 31, 2003, for each
Director who is not an interested person of the Fund, and for all such Directors
as a group:
Aggregate Compensation Total Compensation
Name of Director From Fund From Fund Complex
--------------- ---------------------- -------------------
Ambassador Richard R. Burt $15,750 $168,640
John H. Cannon None $ 16,500
Fred H. Langhammer $ 6,500 $ 13,000
Eggert Voscherau(1) $ 5,000 $ 10,000
Robert H. Wadsworth $11,750 $170,000
Werner Walbrol $16,500 $ 34,500
------- --------
Total $55,500 $412,640
======= ========
----------
(1) Mr. Voscherau resigned as a Director of the Fund, effective May 5, 2004.
No compensation is paid by the Fund to Directors or officers who are
interested persons of the Fund or of any entity of the Deutsche Bank Group.
The Board unanimously recommends a vote FOR Proposal 1.
Required Vote. Provided a quorum has been established, the affirmative vote
of a plurality of the votes cast at the Meeting is required for the election of
each Director. For purposes of the election of Directors, abstentions will have
no effect on the result of the vote.
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has approved PricewaterhouseCoopers LLP (the "Firm" or
"PwC") as independent auditors for the Fund for the fiscal year ending October
31, 2004. A majority of members of the Board of Directors, including a majority
of the members of the Board of Directors who are not "interested" Directors (as
defined in the 1940 Act) of the Fund, have ratified the appointment of PwC as
the Fund's independent auditors for that fiscal year. Based principally on
representations from the Firm, the Fund knows of no direct financial or material
indirect financial interest of such Firm in the Fund. That Firm, or a
predecessor firm, has served as the independent auditors for the Fund since
inception.
Neither our charter nor By-laws requires that the stockholders ratify the
appointment of PwC as our independent auditors. We are doing so because we
believe it is a matter of good corporate practice. If the stockholders do not
ratify the appointment, the Audit Committee and the Board of Directors will
reconsider whether or not to retain PwC, but may retain such independent
auditors. Even if the appointment is ratified, the Audit Committee and the Board
of Directors in their discretion may change the appointment at any time during
the year if they determine that such change would be in the best interests of
the Fund and its stockholders. It is
11
intended that the persons named in the accompanying form of proxy will vote for
PwC. A representative of PwC will be present at the Meeting and will have the
opportunity to make a statement and is expected to be available to answer
appropriate questions concerning the Fund's financial statements.
The Board unanimously recommends a vote FOR Proposal 2.
Required Vote. Provided a quorum has been established, the affirmative vote
of a majority of the votes cast at the Meeting is required for the ratification
of the appointment by the Audit Committee and the Board of Directors of PwC as
independent auditors for the Fund for the fiscal year ending October 31, 2004.
For purposes of Proposal 2, abstentions will have no effect on the result of the
vote.
INFORMATION WITH RESPECT TO THE FUND'S INDEPENDENT AUDITORS
The following table shows fees paid to PwC by the Fund during the Fund's
two most recent fiscal years: (i) for audit and non-audit services provided to
the Fund, and (ii) for engagements for non-audit services pre-approved by the
Audit Committee for the Fund's manager and investment adviser and certain
entities controlling, controlled by, or under common control with the manager
and investment adviser that provide ongoing services to the Fund (collectively,
the "Adviser Entities"), which engagements relate directly to the operations and
financial reporting of the Fund. The Audit Committee of each Board will review,
at least annually, whether PwC's receipt of non-audit fees from the Fund, the
Fund's manager, the Fund's investment adviser and all Adviser Entities is
compatible with maintaining PwC's independence.
Audit Fees(1) Audit Related Fees(2) Tax Fees(3) All Other Fees(4)
------------- --------------------- ------------------ --------------------
Adviser Adviser Adviser
Fund Fund Entities Fund Entities Fund Entities
---- ---- -------- ---- -------- ---- --------
2003.................... $63,500 -- -- $ 9,267 -- -- --
2002.................... $55,923 -- -- $12,034 -- -- --
----------
(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of the Fund's annual financial statements and services provided
in connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees."
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
other than "Audit Fees," "Audit Related Fees" and "Tax Fees."
Audit Committee Pre Approval Policies and Procedures. Generally, the Audit
Committee must pre-approve (i) all services to be performed for the Fund by the
Fund's independent auditors and (ii) all non-audit services to be performed by
the Fund's independent auditors for the Fund's investment adviser or any Adviser
Entities with respect to operations and financial reporting of the Fund. The
Chair of the Audit Committee may approve or deny the request to engage the
auditors to provide any fund services or fund-related services that are not
listed on the pre-approved list if the cost associated with the request is
$50,000 or less, or at the Chair's discretion, determine to call a special
meeting of the Audit Committee for the purpose of considering the proposal.
Should the Chair of the Audit Committee be unavailable, any other member of the
Audit Committee may serve as an alternate for the purpose of approving or
denying the request. The auditors shall report to the Audit Committee at each of
its regular meetings all audit or non-audit services to the Fund and all
non-audit services to the Adviser Entities that relate directly to the Fund's
operations and financial reporting initiated since the last such report was
rendered, including a general description of the services and projected fees and
the means by which such services were approved by the Audit Committee. The
engagement of the auditors to provide certain services customarily required by a
Fund
12
in the ordinary course of its operation or by an Adviser Entity in the ordinary
course of its operation is approved by the Audit Committee subject to
pre-determined dollar limits. In all cases where an Adviser Entity engages the
auditors to provide audit or non-audit services not previously described here
and the projected fees for such engagement exceed $25,000, the auditors will
notify the Audit Committee not later than their next meeting.
All Non-Audit Fees. The table below shows the aggregate non-audit fees
billed by PwC for services rendered to the Fund and to the Advisor Entities that
provide ongoing services to the Fund, whether or not such engagements relate
directly to the operations and financial reporting of the Fund, for the two most
recent fiscal years for the Fund.
Fiscal Year Aggregate Non-Audit Fees
----------- ------------------------
2003 $1,255,167
2002 $ 378,792
AUDIT COMMITTEE REPORT
The purposes of the Audit Committee are to 1) assist the Board of Directors
in its oversight of (i) the integrity of the Fund's financial statements; (ii)
the Fund's compliance with legal and regulatory requirements; (iii) the
independent auditors' qualifications and independence; and (iv) the performance
of the independent auditors; and 2) to prepare this report. Each member of the
Audit Committee is "independent," as required by the independence standards of
Rule 10A-3 under the Securities Exchange Act of 1934. The Audit Committee
operates pursuant to a written charter, a copy of which is attached as Exhibit A
to this Proxy Statement. As set forth in the Audit Committee Charter, management
of the Fund and applicable service providers are responsible for the
preparation, presentation and integrity of the Fund's financial statements and
for the effectiveness of internal control over financial reporting. Management
and applicable service providers are responsible for maintaining appropriate
accounting and financial reporting principles and policies and internal control
over financial reporting and other procedures that provide for compliance with
accounting standards and applicable laws and regulations. The independent
auditors are responsible for planning and carrying out a proper audit of the
Fund's annual financial statements and expressing an opinion as to their
conformity with generally accepted accounting principles.
In the performance of its oversight function, the Audit Committee has
considered and discussed the audited financial statements with Management and
the independent auditors of the Fund. The Audit Committee has also discussed
with the independent auditors the matters required to be discussed by Statement
on Auditing Standards No. 61, Communication with Audit Committees, as currently
in effect. The Audit Committee has also considered whether the provision of any
non-audit services not pre-approved by the Audit Committee provided by the
Fund's independent auditors to the Fund's investment adviser, manager or to any
entity controlling, controlled by or under common control with the Fund's
investment adviser or manager that provides ongoing services to the Fund is
compatible with maintaining the auditors' independence. Finally, the Audit
Committee has received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as currently in effect, and has
discussed with the auditors their independence.
The members of the Audit Committee are not full-time employees of the Fund
and are not performing the functions of auditors or accountants. As such, it is
not the duty or responsibility of the Audit Committee or its members to conduct
"field work" or other types of auditing or accounting reviews or procedures or
to set auditor independence standards. The Audit Committee's considerations and
discussions referred to above do not assure
13
that the audit of the Fund's financial statements has been carried out in
accordance with generally accepted auditing standards, that the financial
statements are presented in accordance with generally accepted accounting
principles or that the Fund's auditors are in fact "independent."
Based upon the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of the Audit
Committee referred to above and in the Charter, the Audit Committee recommended
to the Board of Directors of the Fund that the audited financial statements of
the Fund be included in the Fund's annual report to stockholders for the fiscal
year ended October 31, 2003.
Submitted by the Audit Committee
of the Fund's Board of Directors
Ambassador Richard R. Burt
John Cannon
Robert H. Wadsworth
Werner Walbrol
INFORMATION ABOUT THE INVESTMENT ADVISER AND MANAGER
Adviser
The Fund entered into an investment advisory agreement with Deutsche Asset
Management International GmbH ("DeAM"), with principal offices located at
Mainzer Landstrasse 178-190, 60327 Frankfurt am Main, Germany (at the time of
execution of the agreement, DB Capital Management International GmbH) on March
6, 1990. This agreement continues in effect for successive twelve-month periods
from its initial term, but only if the agreement is approved for continuance
annually by the Fund's board of directors in accordance with the requirements of
the Investment Company Act. Pursuant to the Investment Advisory Agreement, DeAM,
in accordance with the Fund's stated investment objectives, policies and
restrictions, makes recommendations to the Fund's manager, Deutsche Bank
Securities Inc. ("DBSI"), with respect to the Fund's investments and, upon
instructions given by DBSI as to suitable securities for investment by the Fund,
transmits purchase and sale orders and selects brokers and dealers to execute
portfolio transactions on behalf of the Fund. The Investment Advisory Agreement
was last submitted to a vote of the Fund's stockholders for approval on June 21,
1991. The Board of Directors, at its meeting on April 23, 2004, resolved to
continue the Investment Advisory Agreement. Since neither DeAM nor DBSI is
willing to provide services separately, each agreement provides that it shall
automatically terminate upon assignment or upon termination of the other
agreement.
DeAM, a corporation organized under the laws of the Federal Republic of
Germany ("Germany"), is a wholly-owned subsidiary of DB Financial Services
Holding GmbH ("DBFSH"). DBFSH is a wholly-owned subsidiary of DB Capital Markets
(Deutschland) GmbH ("DBCM"), which is a wholly-owned subsidiary of Deutsche Bank
A.G. The principal corporate offices of DBFSH and DBCM are Mainzer Landstrasse
12 D 60325, Frankfurt am Main Germany. DeAM provides international portfolio
management services to institutional investors worldwide. As of December 31,
2003, funds worth $8.7 billion were managed by DeAM for institutional accounts
in more than ten countries, including the United States. DeAM also serves as
investment adviser for The Germany Fund, Inc. and The New Germany Fund, Inc.,
which are closed-end registered investment companies, whose shares are traded on
the New York Stock Exchange ("NYSE").
With total assets of approximately $1.0 trillion, Deutsche Bank AG is the
largest commercial and investment bank in Germany and a leading European
financial institution, and is ranked among the world's largest banks in terms of
total assets as of December 31, 2003. Its principal corporate offices are
located at Taunusanlage 12, 60325
14
Frankfurt am Main, Germany. Deutsche Bank AG and certain of its affiliates are
engaged in the management of client funds as well as investment advisory
activities. The total amount of funds under management by Deutsche Bank AG and
its affiliates was approximately $714 billion as of December 31, 2003. Its
shares trade on exchanges including the Frankfurt Stock Exchange, NYSE and Xetra
(German Stock Exchange).
Certain information regarding the principal executive officers of DeAM is
set forth below. DeAM does not have a supervisory board of directors.
Name and Address Principal Occupation
---------------- --------------------
Hans-Joerg Baumann Managing Director,
Mainzer Landstrasse 178-190 DeAM
60327 Frankfurt am Main
Germany
Herbert Michel Managing Director,
Mainzer Landstrasse 178-190 DeAM
60327 Frankfurt am Main
Germany
Dr. Klaus Moessle Managing Director,
Mainzer Landstrasse 178-190 DeAM
60327 Frankfurt am Main Germany
Christophe Bernard Managing Director, Chief
Mainzer Landstrasse 178-190 Investment Officer
60327 Frankfurt am Main DeAM
Germany
Ralf Ring Head of Compliance
Mainzer Landstrasse 178-190 DeAM
60327 Frankfurt am Main
Germany
Marcus Goering Managing Director, Chief
Mainzer Landstrasse 178-190 Operating Officer, Head of Legal
60327 Frankfurt am Main DeAM
Germany
Frank Scheidig Managing Director
Mainzer Landstrasse 178-190 DeAM
60327 Frankfurt am Main
Germany
Markus Oliver Behrens Managing Director
Mainzer Landstrasse 178-190 DeAM
60327 Frankfurt am Main
Germany
15
Manager
The Fund entered into a management agreement with DBSI, with principal
offices located at 60 Wall Street, New York, New York (at the time of execution
of the agreement, Deutsche Bank Capital Corporation) on March 6, 1990. This
agreement continues in effect for successive twelve-month periods from its
initial term, but only if the agreement is approved for continuance annually by
the Fund's Board of Directors in accordance with the requirements of the
Investment Company Act. Pursuant to the Management Agreement, DBSI is the
corporate manager and administrator of the Fund and, subject to the supervision
of the Board of Directors and pursuant to recommendations made by DeAM,
determines suitable securities for investment by the Fund. It (i) handles the
Fund's relationships with its stockholders, including stockholder inquiries
relating to the Fund, (ii) is responsible for, arranges and monitors compliance
with regulatory requirements and NYSE listing requirements and (iii) negotiates
contractual arrangements with third-party service providers, including, but not
limited to, custodians, transfer agents, auditors and printers. DBSI provides
office facilities and personnel to carry out these services, together with
clerical and bookkeeping services which are not being furnished by the Fund's
custodian or transfer and dividend-paying agent. In addition, DBSI (i)
determines and publishes the Fund's net asset value in accordance with its
policy as adopted from time to time by the Board of Directors, (ii) establishes
the Fund's operating expense budgets and authorizes the payment of actual
operating expenses incurred, (iii) calculates the amounts of dividends and
distributions to be declared and paid to the Fund's stockholders, (iv) provides
the board of directors with financial analyses and reports necessary for the
board to fulfill its fiduciary responsibilities, (v) maintains the books and
records of the Fund required by the Investment Company Act (other than those
being maintained by the Fund's custodian and transfer and dividend-paying agent
and registrar, as to which DBSI oversees such maintenance), (vi) prepares the
Fund's United States federal, state and local income tax returns, (vii) prepares
financial information for the Fund's proxy statements and quarterly and annual
reports to stockholders and (viii) prepares the Fund's reports to the SEC. The
Management Agreement was last submitted to a vote of the Fund's stockholders for
approval on June 21, 1991. The Board of Directors, at its meeting on April 23,
2004, resolved to continue the Management Agreement.
DBSI is a wholly-owned subsidiary of DB U.S. Financial Markets Holding
Corporation ("DBUSH"). DBUSH is a wholly-owned subsidiary of Taunus Corporation
("Taunus"), which is a wholly-owned subsidiary of Deutsche Bank AG. DBUSH and
Taunus each have principal corporate offices at 60 Wall Street, New York, New
York 10005. DBSI is engaged in the securities underwriting, investment advisory
and securities brokerage business, and is a member of the NYSE and other
principal United States stock exchanges. DBSI also serves as manager for The
Germany Fund, Inc. and The New Germany Fund, Inc., which are closed-end
registered investment companies.
16
Certain information regarding the directors and principal executive
officers of DBSI is set forth below.
Name and Address Principal Occupation
---------------- --------------------
Seth H. Waugh Chairman, Board of Directors
60 Wall Street
New York, New York 10005
Michael Ray Colon Member, Board of Directors
60 Wall Street
New York, New York 10005
Marc Pfeffer Member, Board of Directors
60 Wall Street
New York, New York 10005
Charles von Arentschildt Member, Board of Directors;
60 Wall Street President and Chief Executive
New York, New York 10005 Officer
Richard W. Ferguson Managing Director and Treasurer
60 Wall Street
New York, New York 10005
Michael Kiernan Managing Director and Chief
60 Wall Street Operations Officer
New York, New York 10005
Eric Gallinek Managing Director and Chief
60 Wall Street Compliance Officer
New York, New York 10005
Christopher J. Mahon Managing Director and Co-Chief
60 Wall Street Compliance Officer
New York, New York 10005
John J. Rioux Managing Director and Co-Chief
60 Wall Street Compliance Officer
New York, New York 10005
Robert Michael Broughton Director and Chief Financial Officer
60 Wall Street
New York, New York 10005
Greg Eickbush Director and Chief Operating Officer
60 Wall Street
New York, New York 10005
James T. Byrne, Jr. Secretary
60 Wall Street
New York, New York 10005
Sonja K. Olsen Assistant Secretary
60 Wall Street
New York, New York 10005
17
Investment Advisory Agreement, Management Agreement and Fees
Each year, the Board of Directors calls and holds a meeting to decide
whether to renew the Investment Advisory Agreement and the Management Agreement
(copies of which are attached hereto as Exhibits D and E, respectively). In
preparation for the meeting, the Advisory Committee of the Board (consisting
exclusively of non-interested directors) requests and reviews a wide variety of
materials provided by DeAM and DBSI, as well as extensive data provided by third
parties, and the Advisory Committee receives advice from counsel to the
non-interested directors. Upon completion of its review, the Advisory Committee
makes a recommendation to the Board of Directors regarding continuation of the
Investment Advisory Agreement and the Management Agreement. At its meeting on
April 22, 2004, the Advisory Committee recommended continuation of these
Agreements. At its meeting on April 23, 2004, the Board of Directors, including
all non-interested members, approved the continuation of the Investment Advisory
Agreement and the Management Agreement. The Advisory Committee's recommendation
and the Board's approval were made after careful consideration of many different
factors including: (i) the performance of the Fund versus the performance of
other funds in the Fund's peer group and in comparison to relevant market
indices, (ii) the investment objective and policies of the Fund, (iii) the
nature, extent and quality of the service provided by DeAM and DBSI, (iv) the
qualifications and experience of investment personnel of DeAM and DBSI, (v) the
excellent reputation and overall financial condition of DeAM and DBSI, (vi) the
access to the extensive research and other resources of Deutsche Bank Group,
(vii) the investment advisory fee and management fee and the fees paid to other
advisors and managers, (viii) other expenses of the Fund and the comparative
expense ratios of other similar closed-end funds, (ix) the profitability of DeAM
and DBSI with respect to the Fund, (x) indirect benefits to affiliates of DeAM
and DBSI, such as brokerage, (xi) the extent to which DeAM and DBSI have
realized or will realize economies of scale as the Fund grows, and (xii) the
benefits of continuity in services to be provided by DeAM and DBSI. After
evaluating the investment advisory relationship and management relationship
under such factors, the Advisory Committee recommended, and the Board, including
the non-interested members, determined that it was satisfied with the nature and
quality of services provided by DBSI and DeAM, and that the fees charged for
these services were reasonable. Accordingly, the Advisory Committee voted
unanimously to recommend continuation of, and the Board voted unanimously to
continue, the Investment Advisory Agreement and the Management Agreement.
18
Summarized below is information about the advisory fees of DeAM and the
management fees of DBSI with respect to the Fund, The Germany Fund, Inc. and The
New Germany Fund, Inc.:
The Fund The Germany Fund, Inc. The New Germany Fund, Inc.
-------- ---------------------- --------------------------
Net assets at April 2, 2004 $286,418,813.29 $124,314,263.13 $238,790,051.38
Rate of advisory fees Annual rate of 0.35% of the Fund's average weekly net assets up to $100 million
of DeAM(1) and 0.25% of such assets in excess of $100 million, computed on the basis of net asset
value at the end of each week and payable at the end of each calendar month.
Rate of management Annual rate of 0.65% of Annual rate of 0.65% of Annual rate of 0.65% of
fees of DBSI(1) the Fund's average the Fund's average the Fund's average
weekly net assets up to weekly net assets up to weekly net assets up to
$100 million and 0.55% $50 million and 0.55% $100 million, 0.55%
of such assets in excess of such assets in excess of such assets in excess
of $100 million, computed of $50 million, computed of $100 million and
in each case on the basis in each case on the basis up to $500 million and
of net asset value at the of net asset value at the 0.50% of such assets in
end of each week and end of each week and excess of $500 million,
payable at the end of each payable at the end of each computed in each case
calendar month. calendar month. on the basis of net asset
value at the end of each
week and payable at the
end of each calendar
month.
----------
(1) Neither DeAM nor DBSI waived, reduced, or otherwise agreed to reduce its
compensation under any applicable contract.
During the fiscal year ended October 31, 2003, the Fund paid aggregate
amounts of $469,148 and $911,794 to DeAM and DBSI, respectively, in respect of
fees. In addition, during such period, the Fund paid an aggregate amount of
$5,665 in brokerage commissions to Deutsche Bank AG or its affiliates, which
constituted approximately 3.49% of the Fund's aggregate brokerage commissions of
$162,271.
Subject to best price together with efficient execution, orders are placed
with brokers and dealers who supply research, market and statistical information
("research" as defined in Section 28(e) of the Exchange Act) to the Fund, its
manager and investment adviser. The Fund's commissions to such brokers may not
represent the lowest obtainable commission rates, although they must be
reasonable in relation to the benefits received. The research may be used by the
Fund's manager and investment adviser in advising other clients. Conversely, the
information provided to our manager and investment adviser by brokers and
dealers through whom their other clients effect securities transactions may be
useful to them in providing investment advice to the Fund. Although research
from brokers and dealers may be useful to the Fund's manager and investment
adviser, it is only supplementary to their own efforts. For the fiscal year
ended October 31, 2003, transactions in the Fund's portfolio securities with
associated brokerage commissions of approximately $162,271 were allocated to
persons or firms supplying research to the Fund, its manager or its investment
adviser.
Neither DeAM nor DBSI is liable for any error of judgment or for any loss
suffered by the Fund in connection with the matters to which the Investment
Advisory Agreement or the Management Agreement, respectively, relates, except
for any loss resulting from willful misfeasance, bad faith or gross negligence
in the performance of, or from
19
reckless disregard of, its obligations and duties under the Investment Advisory
Agreement or the Management Agreement, respectively, or a loss resulting from a
breach of fiduciary duty with respect to receipt of compensation for services
(in which case any award of damages shall be limited to the period and the
amount set forth in Section 36(b)(3) of the 1940 Act).
The Investment Advisory Agreement and the Management Agreement provide that
DeAM and DBSI, respectively, each bears all expenses of all employees and
overhead incurred by it in connection with its duties thereunder. DBSI pays all
salaries and fees of the Fund's directors and officers who are "interested
persons" (as such term is defined in the 1940 Act) of DBSI. The Fund bears all
of its own expenses, including, but not limited to, the following: expenses of
organizing the Fund, fees and out-of-pocket travel expenses of the Fund's
directors who are not "interested persons" (as such term is defined in the 1940
Act) of any other party and other expenses incurred by the Fund in connection
with directors' meetings, interest expense, taxes and governmental fees,
brokerage commissions incurred in acquiring or disposing of the Fund's portfolio
securities, membership dues to professional organizations, premiums allocable to
fidelity bond insurance coverage, expenses of preparing stock certificates,
expenses of registering and qualifying the Fund's shares for sale with the SEC
and in various states and foreign jurisdictions, charges and expenses of the
Fund's legal counsel and independent auditors, Custodian and Transfer and
Dividend-Paying Agent, expenses of obtaining and maintaining stock exchange
listings of the Fund's shares, and the expenses of shareholders' meetings and
preparing and distributing proxies and reports to shareholders.
The services of DeAM and DBSI under the Investment Advisory Agreement and
Management Agreement, respectively, are not deemed to be exclusive, and nothing
in the Investment Advisory Agreement or the Management Agreement prevents any
party, or any affiliate thereof, from providing similar services to other
investment companies and other clients (whether or not their investment
objectives and policies are similar to those of the Fund) or from engaging in
other activities. When other clients of DeAM or DBSI desire to purchase or sell
a security at the same time the security is purchased for or sold by the Fund,
such purchases and sales will, to the extent feasible, be allocated among such
clients and the Fund in a manner believed by DeAM or DBSI, respectively, to be
equitable to such clients. The allocation of securities may adversely affect the
price and quantity of purchases and sales of securities by the Fund.
PROPOSAL 3: STOCKHOLDER PROPOSAL
A beneficial owner (the "proponent") of Common Stock of the Fund 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.
RESOLVED: The investment advisory agreement between Deutsche Asset
Management International GmbH and the Fund shall be terminated.
SUPPORTING STATEMENT
My goal is to enable all stockholders of the Fund to realize net asset
value ("NAV") for their shares. The surest way to achieve this is to convert the
Fund to an open-end fund (or to merge it into an existing open-end fund). If the
Fund is open-ended, every shareholder will be able to redeem his shares at NAV.
I believe that the current investment advisor, Deutsche Asset Management
International GmbH, is the main impediment to open-ending because of its fear
that its management fees may decline if we are able to redeem our shares at NAV.
We need to remove this impediment to increase the value of our shares. Passage
of this proposal would not result in the immediate open-ending of the Fund but
would give the Board of Directors the chance to
20
quickly hire a new investment advisor who is amendable to open-ending the fund
or to do whatever is necessary to enhance shareholder value even if that means
diminished fees. In the UK, Austria, Germany or even the United States there are
a lot of investment advisers available with a better track record that would be
glad to advise this fund.
The meager measures like buy-backs meant to narrow the Fund's persistent
discount have not accomplished much. The Fund is still trading at a discount
above the average of World Equity Funds. The planned capital increase will
increase the discount if it is not connected with provisions that the funds
market price will not be allowed to be less than a certain percentage of the
funds NAV. We deserve an investment advisor who is more concerned with
increasing shareholder value than its own fees.
OPPOSING STATEMENT OF YOUR BOARD OF DIRECTORS
For the reasons discussed below, your Board of Directors unanimously
recommends that you vote AGAINST this stockholder proposal.
Your Board of Directors believes that this proposal is misleading. The
"main impediment" to open-ending the Fund is not its investment adviser. That
decision rests entirely with your independent Directors, subject to approval by
stockholders owning a majority of the outstanding shares. By law, your
independent Directors must apply their business judgment to look solely after
your interests as stockholders. Your Directors believe the Fund is most
effectively continued in its original, closed-end format. It is improper to
suggest the investment adviser controls the decision. We urge you to keep this
important fact in mind in considering our reasons for voting against the
proposal below.
Wrong Means to the Wrong End. This proposal wrongly states that terminating
the investment adviser will lead to open-ending the Fund. It will not do that,
but it could harm your investment. Here are the facts.
If approved by stockholders, this proposal would directly terminate the
investment advisory agreement with your Fund's investment adviser. Your Fund's
investment process would therefore be disrupted since a new adviser would have
to be hired and may have a different investment approach. The Fund would incur
expenses because under the Investment Company Act, a new agreement would require
another stockholder approval.
Furthermore, open-ending the Fund could frustrate its basic investment
objective. Open-end funds often must make involuntary portfolio sales to meet
redemption requests. In Central Europe and Russia, where the Fund primarily
invests, the markets are not as liquid as the more mature markets of Western
Europe. The Fund's current closed-end format gives stockholders their liquidity
through the ability to sell their shares on the NYSE rather than through
redemptions, and is better suited to investing in less liquid markets. The Fund
can invest for the long term and not worry about raising short-term cash to meet
redemptions. For the fiscal year ended October 31, 2003, the Fund's total return
based on net asset value rose 44.9% and its total return based on its share
price rose by 60.4%. Over the same period, the Fund's benchmark rose by only
40.7%.
The person behind this proposal is seeking to make use of a stockholder
right under the Investment Company Act of 1940 -- the right to terminate an
investment advisory agreement -- to achieve the completely unrelated goal of
open-ending your Fund for short-term gain at the expense of remaining
stockholders.
The proposal is the wrong means to the wrong end. It will not cause
open-ending, but it could disrupt your Fund's investment program.
Your Board unanimously recommends a vote AGAINST Proposal 3.
21
Required Vote. Adoption of this proposal requires the affirmative vote of
the holders of a majority of the outstanding shares of the Fund which, as
defined by the 1940 Act, means the vote of (1) 67% or more of the shares present
at the Meeting, if the holders of more than 50% of the outstanding shares are
present and represented by proxy, or (2) more than 50% of the outstanding shares
of the Fund, whichever is less. Abstentions and broker non- votes will have the
same effect as votes against the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of May 24, 2004 no person, to the knowledge of management, owned of
record or beneficially more than 5% of the outstanding Common Stock of the Fund.
ADDRESS OF INVESTMENT ADVISER AND MANAGER
The principal office of Deutsche Asset Management International GmbH, the
Fund's investment adviser, is located at Mainzer Landstrasse 178-190, D-60327
Frankfurt am Main, Federal Republic of Germany. The corporate office of Deutsche
Bank Securities Inc., the Fund's manager, is located at 60 Wall Street, New
York, New York 10005.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 30(h) of the Investment Company Act of 1940, as amended, and the
rules under Section 16 of the Securities Exchange Act of 1934, as amended,
require that Directors and Officers of the Fund timely file certain reports
regarding ownership of, and transactions in, the Fund's securities with the SEC.
During the fiscal year 2003, initial reports of beneficial ownership of
securities on Form 3 were inadvertently filed late on behalf of Fred Langhammer,
a Director of the Fund, and Eggert Voscherau, a former Director of 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 properly
come before the meeting, including any question as to an adjournment of the
Meeting, the persons named in the enclosed Proxy will vote thereon according to
their discretion. Abstentions and broker non-votes shall have no effect on the
outcome of a vote to adjourn the meeting.
STOCKHOLDER PROPOSALS
In order for stockholder proposals otherwise satisfying the eligibility
requirements of SEC Rule 14a-8 to be considered for inclusion in the Fund's
proxy statement for the 2004 Annual Meeting, the proposals must be received at
The Central Europe and Russia Fund, Inc., c/o Deutsche Asset Management, 345
Park Avenue, New York, New York 10154, Attention: Secretary, on or before
January 26, 2005.
In addition, the Fund's By-laws currently provide that if a stockholder
desires to bring business (including director nominations) before the 2005
Annual Meeting that is or is not the subject of a proposal timely submitted for
inclusion in the Fund's proxy statement, written notice of such business as
prescribed in the By-laws must be delivered to the Fund's Secretary, at the
principal executive offices of the Fund, between January 26, 2005 and February
25, 2005. For additional requirements, the stockholder may refer to the By-laws,
a current copy of which may be obtained without charge upon request from the
Fund's Secretary. If the Fund does not receive timely notice pursuant to the
By-laws, the proposal may be excluded from consideration at the meeting,
regardless of any earlier notice provided in accordance with SEC Rule 14a-8.
22
EXPENSES OF PROXY SOLICITATION
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 or the
manager or by telephone or telegraph. Brokerage houses, banks and other
fiduciaries may be requested to forward proxy solicitation materials 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 has also made arrangements with Morrow & Co., Inc. to
assist in the solicitation of proxies, if called upon by the Fund, at an
estimated fee of $7,500 plus reimbursement of normal expenses.
ANNUAL REPORT DELIVERY
The Fund will furnish, without charge, a copy of its annual report for the
fiscal year ended October 31, 2003 and the most recent semi-annual report, if
any, to any stockholder upon request. Such requests should be directed by mail
to The Central Europe and Russia Fund, Inc., c/o Deutsche Asset Management, 345
Park Avenue, New York, New York 10154 or by telephone to 1-800-437-6269. Annual
reports are also available on the Fund's web site: www.ceefund.com.
Bruce A. Rosenblum
Secretary
Dated: May 26, 2004
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.
23
EXHIBIT A
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
(the "Company")
AUDIT COMMITTEE CHARTER
(Amended and Restated as of October 31, 2003; and
further amended on April 23, 2004)
I. Composition of the Audit Committee: The Audit Committee shall be comprised
of at least three directors, each of whom shall satisfy the independence
requirements of Rule 10A-3 under the Securities Exchange Act of 1934.(1)
The Board of Directors (the "Board") shall determine that each member is
"financially literate," and that at least one member of the Audit Committee
has "accounting or related financial management expertise," as such
qualifications are interpreted by the Board in its business judgment, and
whether any member of the Audit Committee is an "audit committee financial
expert," as defined by the Securities and Exchange Commission (the "SEC").
If the Board has determined that a member of the Audit Committee is an
audit committee financial expert, it may presume that such member has
accounting or related financial management expertise.
No director may serve as a member of the Audit Committee if such director
serves on the audit committees of more than two other public companies
unless the Board determines that such simultaneous service would not impair
the ability of such director to effectively serve on the Audit Committee.
The Board has determined that simultaneous service on the audit committees
of The New Germany Fund, Inc. and The Germany Fund, Inc. (the "Related
Funds") would not impair a director's ability to effectively serve on the
Audit Committee because, among other reasons, the boards of directors and
audit committees of all three closed-end funds generally meet concurrently,
have substantial director overlaps, have common service providers, and have
many operating, financial reporting and accounting issues in common. The
Board has further determined that service on the Audit Committee of the
Company and the audit committees of the Related Funds should be considered
service on a single public company audit committee for purposes of the
three-audit committee limitation.
Members shall be appointed by the Board, and shall serve at the pleasure of
the Board and for such term or terms as the Board may determine.
The Board shall designate one member of the Audit Committee as its
chairperson.
II. Purposes of the Audit Committee: The purposes of the Audit Committee are to:
1. assist Board oversight of (i) the integrity of the Company's financial
statements, (ii) the Company's compliance with legal and regulatory
requirements, (iii) the independent auditors' qualifications and
independence, and (iv) the performance of the independent auditors; and
2. prepare the report required to be prepared by the Audit Committee
pursuant to the rules of the SEC for inclusion in the Company's annual
proxy statement.
----------
(1) In order to satisfy Rule 10A-3 of the 1934 Act, a member of the Audit
Committee may not (1) accept directly or indirectly any consulting,
advisory or other compensatory fee from the Company other than (a)
director's fees and (b) any other regular benefits that other directors
receive, or (2) be an "interested person" of the Company as such term is
defined in Section 2(a)(19) of the Investment Company Act of 1940.
A-1
The function of the Audit Committee is oversight. The management of the
Company, including the service providers so contractually obligated, is
responsible for the preparation, presentation and integrity of the
Company's financial statements and for the effectiveness of internal
control over financial reporting. Management and applicable service
providers are responsible for maintaining appropriate accounting and
financial reporting principles and policies and internal control over
financial reporting and other procedures that provide for compliance with
accounting standards and applicable laws and regulations. The independent
auditors are responsible for planning and carrying out a proper audit of
the Company's annual financial statements and other procedures. In
fulfilling their responsibilities hereunder, it is recognized that members
of the Audit Committee are not full-time employees of the Company and are
not, and do not represent themselves to be, performing the functions of
auditors or accountants. As such, it is not the duty or responsibility of
the Audit Committee or its members to conduct "field work" or other types
of auditing or accounting reviews or procedures or to set auditor
independence standards, and each member of the Audit Committee shall be
entitled to rely on (i) the integrity of those persons and organizations
within and outside the Company from which it receives information, (ii) the
accuracy of the financial and other information provided to the Audit
Committee by such persons or organizations absent actual knowledge to the
contrary (which shall be promptly reported to the Board of Directors), and
(iii) representations made by management as to any non-audit services
provided by the auditors to the Company, to the Company's investment
manager or investment adviser or any entity in a control relationship with
the investment manager or investment adviser, or to the Company's custodian
(including sub-custodians).
The independent auditors shall submit to the Audit Committee annually a
formal written statement (the "Auditors' Statement") describing: the
auditors' internal quality-control procedures; any material issues raised
by the most recent internal quality-control review or peer review of the
auditors, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting one
or more independent audits carried out by the auditors, and any steps taken
to deal with any such issues; and (to assess the auditors' independence)
all relationships between the independent auditors and the (a) Company, (b)
the Company's investment manager or investment adviser, and (c) any entity
in a control relationship with the investment manager or investment
adviser, whether or not it provides services to the Company, and including
at least the matters set forth in Independence Standards Board No. 1. The
description of relationships should include a description of the non-audit
services, including the fees associated therewith, that were not
pre-approved by the Company's Audit Committee.
The independent auditors shall submit to the Audit Committee annually a
formal written statement of the fees billed in each of the last two fiscal
years for each of the following categories of services rendered by the
independent auditors: (i) the audit of the Company's annual financial
statements or services that are normally provided by the independent
auditors in connection with statutory and regulatory filings or
engagements; (ii) assurance and related services not included in clause (i)
that are reasonably related to the performance of the audit or review of
the Company's financial statements, in the aggregate and by each service;
(iii) tax compliance, tax advice and tax planning services, in the
aggregate and by each service; and (iv) all other products and services
rendered by the independent auditors, in the aggregate and by each service.
The statement as to (ii), (iii) and (iv) should include (and separately
disclose) fees billed in each of the last two fiscal years for the
indicated services to (a) the Company, (b) the Company's investment manager
and investment adviser, and (c) any entity in a control relationship with
the investment manager or investment adviser that provides ongoing services
to the Company.
A-2
III. Meetings of the Audit Committee: The Audit Committee shall meet
semi-annually or more frequently if circumstances dictate, to discuss with
management and the independent auditor the annual audited financial
statements and to address the matters set forth in Article IV. The Audit
Committee should meet separately at least annually with each of management
and the independent auditors to discuss any matters that the Audit
Committee or any of these persons or firms believe should be discussed
privately. The Audit Committee may request any officer or employee of the
Company or any service provider, outside counsel to the Company or the
independent directors or the Company's independent auditors to attend a
meeting of the Audit Committee or to meet with any members of, or
consultants to, the Audit Committee. Members of the Audit Committee may
participate in a meeting of the Audit Committee by means of conference call
or similar communications equipment by means of which all persons
participating in the meeting can hear each other.
IV. Duties and Powers of the Audit Committee: To carry out its purposes, the
Audit Committee shall have the following duties and powers:
1. with respect to the independent auditors,
(i) to be directly responsible for the appointment, retention,
compensation, and oversight of the work of the independent
auditors (including the resolution of disagreements between
management and the independent auditors regarding financial
reporting), who shall report directly to the Audit Committee;
provided that the auditor appointment shall be subject to
ratification by the Board;
(ii) to be directly responsible for the appointment, retention,
compensation and oversight of the work of any registered
public accounting firm, other than the independent auditors,
engaged for the purpose of preparing or issuing an audit
report or to perform audit, review or attestation services,
which firm shall report directly to the Audit Committee;
(iii) to pre-approve, or to adopt appropriate procedures to
pre-approve, all audit and non-audit services to be provided
by the independent auditors, including applicable non-audit
services provided to the Company's investment manager and
investment adviser and any entity in a control relationship
with the investment manager or investment adviser that
provides ongoing services to the Company;
(iv) to ensure that the independent auditors prepare and deliver
annually an Auditors' Statement (it being understood that the
independent auditors are responsible for the accuracy and
completeness of this Statement), and to discuss with the
independent auditors any relationships or services disclosed
in this Statement that may impact the quality of audit
services or the objectivity and independence of the Company's
independent auditors;
(v) to obtain from the independent auditors in connection with
any audit a timely report relating to the Company's annual
audited financial statements describing all critical
accounting policies and practices used, all alternative
treatments of financial information within generally accepted
accounting principles that have been discussed with
management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by
the independent auditors, and any material written
communications between the independent auditors and
management, such as any "management" letter or schedule of
unadjusted differences;
(vi) to review and evaluate the qualifications, performance and
independence of the independent auditors, as well as the lead
partner of the independent auditors;
A-3
(vii) to discuss with management the timing and process for
implementing the rotation of the lead audit partner, the
concurring partner and any other active audit engagement team
partner and consider whether there should be a regular
rotation of the audit firm itself; and
(viii) to take into account the opinions of management in assessing
the independent auditors' qualifications, performance and
independence;
2. with respect to financial reporting principles and policies and
internal audit controls and procedures,
(i) to advise management, relevant service providers and the
independent auditors that they are expected to provide or
cause to be provided to the Audit Committee a timely analysis
of significant financial reporting issues and practices;
(ii) to consider any reports or communications (and management's
and/or applicable service providers' responses thereto)
submitted to the Audit Committee by the independent auditors
required by or referred to in SAS 61 (as codified by AU
Section 380), as may be modified or supplemented, including
reports and communications related to:
o deficiencies noted in the audit in the design or
operation of internal controls;
o consideration of fraud in a financial statement audit;
o detection of illegal acts;
o the independent auditors' responsibility under generally
accepted auditing standards;
o any restriction on audit scope;
o significant accounting policies;
o significant issues discussed with the national office
respecting auditing or accounting issues presented by
the engagement;
o management judgments and accounting estimates;
o any accounting adjustments arising from the audit that
were noted or proposed by the auditors but were passed
(as immaterial or otherwise);
o the responsibility of the independent auditor for other
information in documents containing audited financial
statements;
o disagreements with management;
o consultation by management with other accountants;
o major issues discussed with management prior to
retention of the independent auditors;
o difficulties encountered with management in performing
the audit;
o the independent auditors' judgments about the
preferability, not just acceptability, of the Company's
accounting principles; and
o reviews, if any, of interim financial information
conducted in accordance with generally accepted auditing
standards by the independent auditors;
A-4
(iii) to meet with management, the independent auditors and, if
appropriate, the relevant service providers:
o to discuss the scope of the annual audit;
o to discuss the annual audited financial statements and
any interim financial statements;
o to discuss any significant matters arising from any
audit, including any audit problems or difficulties,
whether raised by management, relevant service providers
or the independent auditors, relating to the Company's
financial statements;
o to discuss any difficulties the independent auditors
encountered in the course of the audit, including any
restrictions on their activities or access to requested
information and any significant disagreements with
management;
o to discuss any "management" or "internal control" letter
issued, or proposed to be issued, by the independent
auditors to the Company;
o to review the form of opinion the independent auditors
propose to render to the Board and stockholders;
o to discuss, as appropriate: (a) any major issues
regarding accounting principles and financial statement
presentations, including any significant changes in the
Company's selection or application of accounting
principles, and major issues as to the adequacy of the
Company's internal controls and any special audit steps
adopted in light of material control deficiencies; (b)
analyses prepared by management and/or the independent
auditors setting forth significant financial reporting
issues and judgments made in connection with the
preparation of the financial statements, including
analyses of the effects of alternative GAAP methods on
the financial statements; and (c) the effect of
regulatory and accounting initiatives on the financial
statements of the Company;
o to discuss allocations of expenses between the Company
and other entities;
o to discuss the Company's compliance with Subchapter M of
the Internal Revenue Code of 1986, as amended;
o to discuss with management and the independent auditors
their respective procedures to assess the
representativeness of securities prices provided by
external pricing services; and
o to discuss with independent auditors their conclusions
as to the reasonableness of procedures employed to
determine the fair value of securities for which readily
available market quotations are not available,
management's adherence to such procedures and the
adequacy of supporting documentation;
(iv) to inquire of the Company's chief executive officer and chief
financial officer as to the existence of any significant
deficiencies or material weaknesses in the design or
operation of internal control over financial reporting which
are reasonably likely to adversely affect the Company's
ability to record, process, summarize and report financial
information and any fraud, whether or not material, that
involves management or service providers that have a
significant role in the Company's internal control over
financial reporting;
A-5
(v) to discuss with management and any relevant service providers
the semi-annual financial statements at the next Audit
Committee meeting following their issuance;
(vi) to discuss guidelines and policies governing the process by
which management of the Company and the relevant service
providers of the Company assess and manage the Company's
exposure to risk, and to discuss the Company's most
significant financial risk exposures and the steps management
has taken to monitor and control such exposures;
(vii) to obtain from the independent auditors assurance that the
audit was conducted in a manner consistent with Section 10A
of the Securities Exchange Act of 1934, as amended, which
sets forth certain procedures to be followed in any audit of
financial statements required under the Securities Exchange
Act of 1934;
(viii) to discuss with the respective counsel for the Company and
the investment manager any significant legal, compliance or
regulatory matters that may have a material effect on the
financial statements or the Company's business, financial
statements or compliance policies, including material notices
to or inquiries received from governmental agencies;
(ix) to establish procedures for the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters,
and for the confidential, anonymous submission by employees
of the Company, the investment manager or investment adviser,
or employees of any other service provider that provides
accounting related services to the Company, of concerns
regarding questionable accounting or auditing matters;
(x) to consider any reports concerning material violations
submitted to the Audit Committee by the Company's Chief Legal
Officer, counsel for service providers or outside counsel
pursuant to the SEC attorney professional responsibility
rules, any service provider's attorney reporting policy
(which may be broader than the SEC rules) or otherwise and
determine what action or response is necessary or
appropriate; and
(xi) to review policies of the investment manager and investment
adviser, and any entity within the Company's Investment
Company Complex, as such term is defined in Rule 2-01(f)(14)
of Regulation S-X, for hiring employees or former employees of
the independent auditors whose responsibilities are to include
an accounting role or financial reporting oversight role with
respect to the Company;
3. with respect to reporting, recommendations and other matters,
(i) to provide advice to the Board in selecting the principal
accounting officer of the Company;
(ii) to prepare any report or other disclosures, including any
recommendation of the Audit Committee, required by the rules
of the SEC to be included in the Company's annual proxy
statement;
(iii) to review this charter at least annually and recommend any
changes to the full Board;
(iv) to report its activities to the full Board on a regular basis
and to make such recommendations with respect to the above
and other matters as the Audit Committee may deem necessary
or appropriate; and
(v) to prepare and review with the Board an annual performance
evaluation of the Audit Committee, which evaluation must
compare the performance of the Audit Committee with the
requirements of this charter. The performance evaluation by
the Audit Committee shall be conducted in such manner as the
Audit Committee deems appropriate. The report to the Board
may take the form of an oral report by the chairperson of the
Audit Committee or any other member of the Audit Committee
designated by the Audit Committee to make this report.
A-6
V. Delegation to Subcommittee: The Audit Committee may, in its discretion,
delegate all or a portion of its duties and responsibilities to a
subcommittee of the Audit Committee. The Board and the Audit Committee have
authorized any member of the Audit Committee to pre-approve any audit or
non-audit services to be performed by the independent auditors, provided
that any such approvals are presented to the Audit Committee at its next
scheduled meeting.
VI. Resources and Authority of the Audit Committee: The Audit Committee shall
have the resources and authority appropriate to discharge its duties and
responsibilities, including the authority to select, retain, terminate, and
approve the fees and other retention terms of special or independent
counsel, accountants or other experts and advisers, as it deems necessary
or appropriate, without seeking approval of the Board or management. The
Company shall provide for appropriate funding, as determined by the Audit
Committee, in its capacity as a committee of the Board, for payment of
compensation to the independent auditors and any other public accounting
firm engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Company.
A-7
EXHIBIT B
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
(the "Fund")
NOMINATING COMMITTEE CHARTER
(Adopted as of April 23, 2004)
The Board of Directors (the "Board") of the Fund has adopted this Charter
to govern the activities of the Nominating Committee (the "Committee") of the
Board.
Statement of Purposes and Responsibilities
The primary purposes and responsibilities of the Committee are:
(i) to identify individuals qualified to become members of the Board in
the event that a position is vacated or created;
(ii) to consider all candidates proposed to become members of the Board,
subject to applicable law, the Fund's Articles of Incorporation or
By-laws, resolutions of the Board and the procedures and policies
set forth in this Charter and the Fund's annual proxy statement;
(iii) to select and nominate, or recommend for nomination by the Board,
candidates for election as Directors;
(iv) in the case of a director nominee to fill a Board vacancy created
by an increase in the size of the Board, to make a recommendation
to the Board as to the class of directors in which the individual
should serve;
(v) to make recommendations to the Board from time to time as to any
changes that the Committee believes to be desirable to the
provisions of the Fund's By-laws regarding minimum standards and
qualifications for service as a Director on the Board or to any
charter of committees of the Board regarding minimum standards and
qualifications for service as a committee member, and to recommend
to the Board, or to set, any additional standards or qualifications
considered necessary or desirable for service as a Director on the
Board or as a member of a committee of the Board;
(vi) to identify Board members qualified to fill vacancies on any
committee of the Board, taking into account any qualifications or
other criteria set forth in the charter of that committee, and to
recommend that the Board appoint the identified member or members
to that committee;
(vii) to make recommendations to the Board from time to time as to
changes that the Committee believes to be desirable to the size of
the Board or any committee thereof;
(viii) to review with counsel, at least annually, each Director's
affiliations and relationships for purposes of determining whether
such Director is a person who is not an "interested person" of the
Fund, as defined in Section 2(a)(19) of the Investment Company Act
of 1940, as amended.
(ix) to assist management in the preparation of the disclosure in the
Fund's annual proxy statement regarding the operations of the
Committee; and
(x) to perform any other duties or responsibilities expressly delegated
to the Committee by the Board from time to time relating to the
nomination of Board or committee members.
B-1
Organization and Governance
The Committee shall consist solely of three or more members of the Board.
The Committee must consist entirely of Board members who are not "interested
persons" of the Fund, as defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended ("Independent Directors"). Members shall serve at the
pleasure of the Board and for such term or terms as the Board may determine.
One or more members of the Committee may be designated by the Board as the
Committee's chairperson or co-chairperson, as the case may be.
The Committee shall meet at least once a year at a time and place
determined by the Committee chairperson, with further meetings to occur, or
actions to be taken by unanimous written consent, when deemed necessary or
desirable by the Committee or its chairperson. Members of the Committee may
participate in a meeting of the Committee by means of conference call or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Committee meetings shall be held in accordance with
the Fund's By-laws.
Criteria for Director Nominees
To be eligible for nomination as a Director a person must, at the time of
such person's nomination, have Relevant Experience and Country Knowledge, as
defined in the Fund's By-laws, and must not have any Conflict of Interest, as
defined in the Fund's By-laws. Whether a proposed nominee satisfies the
foregoing qualifications shall be determined by the Committee in its sole
discretion. The Committee may also take into account a wide variety of factors
in considering Director candidates, including (but not limited to): (i) the
candidate's knowledge in matters relating to the investment company industry;
(ii) any experience possessed by the candidate as a director or senior officer
of other public or private companies; (iii) the candidate's educational
background; (iv) the candidate's reputation for high ethical standards and
personal and professional integrity; (v) any specific financial, technical or
other expertise possessed by the candidate, and the extent to which such
expertise would complement the Board's existing mix of skills and
qualifications; (vi) the candidate's perceived ability to contribute to the
ongoing functions of the Board, including the candidate's ability and commitment
to attend meetings regularly, work collaboratively with other members of the
Board and carry out his or her duties in the best interests of the Fund; (vii)
the candidate's ability to qualify as an Independent Director; and (viii) such
other criteria as the Nominating Committee determines to be relevant in light of
the existing composition of the Board and any anticipated vacancies or other
factors.
Identification of Nominees
In identifying potential nominees for the Board, the Committee may
consider candidates recommended by one or more of the following sources: (i) the
Fund's Directors, (ii) the Fund's officers, (ii) the Fund's investment manager,
investment adviser or their affiliates, (iv) the Fund's stockholders (see below)
and (v) any other source the Committee deems to be appropriate. The Committee
will not consider self-nominated candidates or candidates nominated by members
of a candidate's family, including such candidate's spouse, children, parents,
siblings, uncles, aunts, grandparents, nieces and nephews. The Committee may,
but is not required to, retain a third party search firm at the Fund's expense
to identify potential candidates.
B-2
Consideration of Candidates Recommended by Stockholders
The Committee will consider nominee candidates properly submitted by
stockholders in accordance with applicable law, the Fund's Articles of
Incorporation or By-laws, resolutions of the Board and the qualifications and
procedures set forth in this Charter and the Fund's annual proxy statement,
including the requirements that a stockholder or group of stockholders seeking
to submit a nominee candidate (i) must have beneficially owned at least 5% of
the Fund's common stock for at least two years, (ii) may submit only one nominee
candidate for any particular meeting of stockholders, and (iii) may submit a
nominee candidate for only an annual meeting or other meeting of stockholders at
which directors will be elected. The Committee will evaluate nominee candidates
properly submitted by stockholders on the same basis as it considers and
evaluates candidates recommended by other sources.
Delegation to Subcommittee
The Committee may, in its discretion, delegate all or a portion of its
duties and responsibilities to a subcommittee of the Committee.
Resources and Authority of the Committee
The Committee shall have the resources and authority appropriate to
discharge its duties and responsibilities, including the authority to select,
retain, terminate and approve the fees and other retention terms of special
counsel or other experts or consultants, as it deems appropriate, without
seeking approval of the Board or management. With respect to consultants or
search firms used to identify director candidates, this authority shall be
vested solely in the Committee.
B-3
EXHIBIT C
THE CENTRAL EUROPE AND RUSSIA FUND, INC.
EXCERPTS OF BY-LAWS
(as Amended and Restated as of January 31, 2000 and
further amended on July 16, 2001)
Article II
Section 13. Advance Notice of Stockholder Nominees for Director and Other
Stockholder Proposals. (a) Annual Meetings of Stockholders. (1) Nominations of
persons for election to the Board of Directors and the proposal of business to
be considered by the stockholders may be made at an annual meeting of
stockholders (i) pursuant to the Corporation's notice of meeting, (ii) by or at
the direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record both at the time of giving of notice
provided for in this Section 13(a) and at the time of the annual meeting, who is
entitled to vote at the meeting and who complied with the notice procedures set
forth in this Section 13(a).
(2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (iii) of paragraph
(a)(1) of this Section 13, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation and such other
business must otherwise be a proper matter for action by the stockholders.
To be timely, a stockholder's notice shall be delivered to the Secretary
at the principal executive offices of the Corporation not less than 90
days nor more than 120 days prior to the first anniversary of the date of
mailing of the notice for the preceding year's annual meeting; provided,
however, that in the event that the date of mailing of the notice for the
annual meeting is advanced or delayed by more than 30 days from the first
anniversary of the date of mailing of the notice for the preceding year's
annual meeting, notice by the stockholder to be timely must be so
delivered not earlier than the 120th day prior to the date of mailing of
the notice for such annual meeting and not later than the close of
business on the later of the 90th day prior to the date of mailing of the
notice for such annual meeting or the tenth day following the day on which
disclosure of the date of mailing of the notice for such meeting is first
made. In no event shall the public announcement of a postponement or
adjournment of an annual meeting commence a new time period for the giving
of a stockholder's notice as described above. Such stockholder's notice
shall set forth (i) as to each person whom the stockholder proposes to
nominate for election or reelection as a director, (A) the name, age,
business address and residence address of such person, (B) the class and
number of shares of stock of the Corporation that are beneficially owned
by such person, (C) all other information relating to such person that is
required to be disclosed in solicitations of proxies for election of
directors in an election contest (even if an election contest is not
involved), or is otherwise required, in each case pursuant to Regulation
14A (or any successor provision) under the Exchange Act or pursuant to the
Investment Company Act and the rules thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected), and (D) a statement specifying which of
clauses (1)-(7) of the definition of "Relevant Experience and Country
Knowledge" in Article III, Section 3 of the Bylaws the person being
nominated satisfies, information relating to such person sufficient to
support a determination that the person satisfies the specified clause or
clauses of the definition and a representation that the person does not
have a "Conflict of Interest" as defined in Article III, Section 3 of the
Bylaws; (ii) as to any other business that the stockholder proposes to
bring before the meeting, a description of the business desired to be
brought before the meeting, the reasons for conducting such business at
the meeting and any material interest in such business of such stockholder
(including any anticipated benefit to the stockholder therefrom) and of
each beneficial owner, if any, on whose behalf the proposal is made; and
C-1
(iii) as to the stockholder giving the notice and each beneficial owner,
if any, on whose behalf the nomination or proposal is made, (x) the name
and address of such stockholder, as they appear on the Corporation's stock
ledgers and a current name and address, if different, and of such
beneficial owner, and (y) the class and number of shares of each class of
stock of the Corporation which are owned beneficially and of record by
such stockholder and owned beneficially by such beneficial owner.
(3) Notwithstanding anything in this subsection (a) of this Section
13 to the contrary, in the event the Board of Directors increases or
decreases the maximum or minimum number of directors in accordance with
Article III, Section 2 of these Bylaws, and there is no public
announcement of such action at least 100 days prior to the first
anniversary of the date of mailing of the preceding year's annual meeting,
a stockholder's notice required by this Section 13(a) shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public
announcement is first made by the Corporation.
(b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) provided that the Board of Directors has determined that
directors shall be elected at such special meeting, by any stockholder of the
Corporation who is a stockholder of record both at the time of giving of notice
provided for in this Section 13 and at the time of the special meeting, who is
entitled to vote at the meeting and who complied with the notice procedures set
forth in this Section 13. In the event the Corporation calls a special meeting
of stockholders for the purpose of electing one or more directors to the Board
of Directors, any such stockholder may nominate a person or persons (as the case
may be) for election as a director as specified in the Corporation's notice of
meeting, if the stockholder's notice required by paragraph (a)(2) of this
Section 13 shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the 120th day prior to such special
meeting and not later than the close of business on the later of the 90th day
prior to such special meeting or the tenth day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In no
event shall the public announcement of a postponement or adjournment of a
special meeting commence a new time period for the giving of a stockholder's
notice as described above.
(c) General. (1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 13 and Article III, Section 3 of these
Bylaws shall be eligible to serve as directors and only such business shall be
conducted at a meeting of stockholders as shall have been brought before the
meeting in accordance with the procedures set forth in this Section 13. The
chairman of the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth in
this Section 13 and, if any proposed nomination or business is not in compliance
with this Section 13, to declare that such defective nomination or proposal be
disregarded.
C-2
(2) For purposes of this Section 13, (a) the "date of mailing of the
notice" shall mean the date of the proxy statement for the solicitation of
proxies for election of directors and (b) "public announcement" shall mean
disclosure (i) in a press release reported by the Dow Jones News Service,
Associated Press or comparable news service or (ii) in a document publicly
filed by the Corporation with the Securities and Exchange Commission
pursuant to the Exchange Act or the Investment Company Act.
(3) Notwithstanding the foregoing provisions of this Section 13, a
stockholder shall also comply with all applicable requirements of state
law and of the Exchange Act and the Investment Company Act and the rules
and regulations thereunder with respect to the matters set forth in this
Section 13. Nothing in this Section 13 shall be deemed to affect any right
of stockholders to request inclusion of proposals in, nor the right of the
Corporation to omit a proposal from, the Corporation's proxy statement
pursuant to Rule 14a-8 (or any successor provision) under the Exchange
Act.
Article III
Section 3. Qualifications. Directors need not be stockholders. Each
Director shall hold office until the earlier of: (a) the expiration of his term
and his or her successor shall have been elected and qualifies, (b) his or her
death, (c) his or her resignation, (d) December 31 of the year in which he or
she shall have reached 70 years of age, or (e) his or her removal; provided that
clause (d) shall not apply to any person who was a Director on October 15, 1999
or to any person who the Nominating Committee (or in the absence of such a
Committee, the Board of Directors) determines to except from that clause on the
basis that the person's prior public or government service or other broad-based
activities in the business community make it essential that the Corporation
continue to receive the benefit of the person's services as a Director. The
determination described in the previous sentence shall be made on or before July
31 of the year in which the Director in question reaches the age specified in
clause (d). To be eligible for nomination as a director a person must, at the
time of such person's nomination, have Relevant Experience and Country Knowledge
(as defined below) and must not have any Conflict of Interest (as defined
below). Whether a proposed nominee satisfies the foregoing qualifications shall
be determined by the Nominating Committee or, in the absence of such a
Committee, by the Board of Directors, each in its sole discretion.
"Relevant Experience and Country Knowledge" means experience in business,
investment, economic or political matters of Germany or the United States
through service for 10 of the past 20 years (except where a shorter period is
noted) in one or more of the following principal occupations:
(1) senior executive officer or partner of a financial or industrial
business headquartered in Germany that has annual revenues of at
least the equivalent of US $500 million,
(2) senior executive officer or partner of a financial or industrial
business headquartered in the United States that has annual revenues
of at least the equivalent of US $500 million and whose management
responsibilities include supervision of European business
operations,
(3) director (or the equivalent) for 5 of the past 10 years of one or
more investment businesses or vehicles (including this Corporation)
a principal focus of which is investment in Germany and that have at
least the equivalent of US $250 million in combined total assets of
their own,
(4) senior executive officer or partner of an investment management
business having at least the equivalent of US $500 million in
securities of German companies or securities principally traded in
Germany under discretionary management for others,
C-3
(5) senior executive officer or partner of a business consulting,
accounting or law firm having at least 100 professionals and (b)
whose principal responsibility involves or involved providing
services involving European matters for financial or industrial
businesses, investment businesses or vehicles or investment
management businesses as described in (1)-(4) above,
(6) senior official (including ambassador or minister) in the national
government, a government agency or the central bank of Germany or
the United States, in a major supranational agency or organization
of which Germany or the United States is a member, or in a leading
international trade organization relating to Germany or the United
States, in each case in the area of finance, economics, trade or
foreign relations, or
(7) current director or senior officer (without regard to years of
service) of an investment manager or adviser of the Corporation, or
of any entity controlling or under common control with an investment
manager or adviser of the Corporation.
For purposes of clauses (1)-(5) of the preceding sentence and clauses (1)-(2) of
the next paragraph, the term "financial or industrial business" includes a
financial or industrial business unit within a larger enterprise; the term
"investment businesses or vehicles" includes an investment business unit or
investment vehicle within a larger enterprise; the term "investment management
business" includes an investment management business unit within a larger
enterprise; and the term "investment vehicle" includes an investment vehicle
within a larger enterprise; but in each case only to the extent the unit
satisfies the revenue, asset and other requirements specified for the business
or vehicle in clauses (1)-(5) of the preceding sentence or clauses (1)-(2) of
the next paragraph.
"Conflict of Interest" means the presence of a conflict with the interests
of the Corporation or its operations through any of the following:
(1) current position as a director, officer, partner or employee of
another investment vehicle a significant (i.e., 25% or more of total
assets) focus of which is securities of German companies or
securities principally traded in German markets and that does not
have the same investment adviser as the Corporation or an investment
adviser affiliated with an investment adviser of the Corporation,
(2) current position as a director, officer, partner or employee of the
sponsor or equivalent of an investment vehicle described in the
previous point, or
(3) current position as an official of a governmental agency or
self-regulatory body having responsibility for regulating the
Corporation or the markets in which it proposes to invest.
C-4
EXHIBIT D
INVESTMENT ADVISORY AGREEMENT
AGREEMENT dated as of March 6, 1990, between The Future Germany Fund,
Inc., a Maryland corporation ("Fund"), and DB Capital Management International
GmbH, a West German corporation ("CMI").
WHEREAS, the Fund is a non diversified closed end management company
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act");
WHEREAS, the Fund desires to retain CMI to render certain specified
investment advisory services to the Fund; and
WHEREAS, CMI is willing to render such services if and so long as a
certain Management Agreement, dated as of March 6, 1990, between the Fund and
Deutsche Bank Capital Corporation ("DBCC") is entered into and not terminated;
NOW, THEREFORE, the parties agree as follows:
1. Investment Adviser. CMI, in accordance with the Fund's stated
investment objectives, policies and limitations, will make recommendations with
respect to the Fund's investments and, upon instructions given by DBCC as to
suitable securities for investment by the Fund, will transmit purchase and sale
orders and select brokers and dealers to execute portfolio transactions on
behalf of the Fund.
2. Fees and Expenses.
2.1 The Fund will pay CMI an annual advisory fee hereunder of 0.35%
of the Fund's average weekly net assets up to U.S. $100 million and 0.25%
of such assets in excess of U.S. $100 million, computed by DBCC on the
basis of net asset value at the end of each week and payable at the end of
each calendar month.
2.2 CMI shall bear all expenses of its employees and overhead
incurred by it in connection with its duties under this Agreement. The
Fund will indemnify CMI for all taxes (other than income taxes), duties,
charges, fees and expenses (including, without limitation, broker fees,
dealer fees, clearing bank fees and legal fees) CMI incurs in connection
with the services provided under this Agreement. The obligations contained
in this clause shall survive the termination of this Agreement.
2.3 Payments to CMI shall be made in U.S. Dollars to its account
with Deutsche Bank AG, New York branch.
3. Liability.
3.1 Neither CMI nor any of its officers, directors or employees
shall be liable for any error of judgment or for any loss suffered by the
Fund in connection with the matters to which this Agreement relates,
except (i) that CMI shall be under a fiduciary duty with respect to
receipt of compensation for services pursuant to Section 36 of the 1940
Act, and shall therefore be liable for a loss resulting from a breach of
such fiduciary duty (in which case any award of damages shall be limited
to the period and the amount set forth in Section 36(b)(3) of the
Investment Company Act), or (ii) a loss resulting from willful
misfeasance, bad faith or gross negligence on its or their part in the
performance of, or from reckless disregard by it or them of its or their
obligations and duties under, this Agreement.
3.2 CMI does not assume responsibility for the acts or omissions of
any other person.
D-1
3.3 CMI shall not be liable for any losses caused by disturbances of
its operations by virtue of force majeure, riot, or damage caused by
nature or due to other events for which it is not responsible (e.g.,
strike, lock out or acts of domestic or foreign authorities).
4. Services Not Exclusive. It is understood that the services of CMI are
not deemed to be exclusive, and nothing in this Agreement shall prevent CMI or
any of its affiliates from providing similar services to other investment
companies and other clients (whether or not their investment objectives and
policies are similar to those of the Fund) or from engaging in other activities.
When other clients of CMI desire to purchase or sell a security at the same time
such security is purchased or sold for the Fund, such purchases and sales will,
to the extent feasible, be allocated among the Fund and such clients in a manner
believed by CMI to be equitable to such clients.
5. Notice. Any notice or other communication required to be given pursuant
to this Agreement shall be in writing or by telex and shall be effective upon
receipt. Notices and communications shall be given (1) to the Fund at 31 West
52nd Street, New York, New York 10019, Attention: Secretary; and (2) to CMI at
Taunusanlage 12, D 6000 Frankfurt am Main 1, Attention: Managing Director,
Investment Policy Committee.
6. Miscellaneous.
6.1 This Agreement is effective March 6, 1990, and shall continue in
effect until the earlier of March 5, 1992 or the first annual meeting of
the Fund's stockholders after the effective date of the Fund's
Registration Statement on Form N 2 filed with the Securities and Exchange
Commission. If approved at such meeting, and unless sooner terminated,
this Agreement shall continue in effect for successive periods of twelve
months after such date, provided that each such continuance shall be
approved as required by the Investment Company Act. The annual approval of
the continuance of this Agreement shall be confirmed to CMI by the Fund in
writing. Notwithstanding the foregoing, this Agreement may be terminated
by the Fund in the manner prescribed by the Investment Company Act,
without the payment of any penalty, at any time upon not less than sixty
days' prior written notice to CMI, or by CMI upon not less than sixty
days' written notice to the Fund.
This Agreement shall automatically terminate (i) in the event of its
assignment (as defined in the Investment Company Act) by either party, or
(ii) upon termination of the Management Agreement dated as of March 6,
1990, between the Fund and DBCC.
6.2 This Agreement shall be construed in accordance with the laws of
the Federal Republic of Germany.
6.3 The captions in this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
6.4 If any provisions of this Agreement shall be held or made
invalid, in whole or in part, the other provisions of this Agreement shall
remain in force. Invalid provisions shall, in accordance with the intent
and purpose of this Agreement, be replaced by such valid provisions which
in their economic effect come as close as legally possible to such invalid
provisions.
6.5 Nothing herein shall be construed as constituting CMI an agent
of the Fund.
6.6 CMI shall be entitled to rely on any notice or other
communication believed by it to be genuine and correct and to have been
sent to it by or on behalf of the Fund.
D-2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
THE FUTURE GERMANY FUND, INC.
By: /s/ R. GAMBEE
--------------------------
Name: R. Gambee
Title: VP, Secy, Treas.
DB CAPITAL MANAGEMENT
INTERNATIONAL GmbH
By: /s/ M. TINTILNOT
--------------------------
Name:
Title: Managing Director
D-3
EXHIBIT E
MANAGEMENT AGREEMENT
AGREEMENT dated as of March 6, 1990, between The Future Germany Fund,
Inc., a Maryland corporation (the "Fund"), and Deutsche Bank Capital
Corporation, a New York corporation ("Deutsche Bank Capital").
WHEREAS, the Fund is a non diversified closed end management company
registered under the Investment Company Act of Investment Company, as amended
(the "Investment Company Act");
WHEREAS, the Fund desires to retain Deutsche Bank Capital to render
certain specified management services to the Fund; and
WHEREAS, Deutsche Bank Capital is willing to render such services if and
so long as the Investment Advisory Agreement, dated as of March 6, 1990, between
the Fund and DB Capital Management International GmbH ("CMI") is entered into
and not terminated;
NOW, THEREFORE, the parties agree as follows:
1. Manager. Deutsche Bank Capital shall be the corporate manager and
administrator of the Fund and, subject to the supervision of the Board of
Directors of the Fund and pursuant to recommendations made by CMI, will
determine suitable securities for investment by the Fund. It will handle
the Fund's relationships with its shareholders including responding to
shareholder inquiries relating to the Fund, be responsible for, arrange
and monitor compliance with regulatory requirements and compliance with
New York Stock Exchange listing requirements and negotiate contractual
arrangements with third party service providers, including, but not
limited to, custodians, transfer agents, auditors and printers. Deutsche
Bank Capital will also provide office facilities and personnel adequate to
perform these services, together with those ordinary clerical and
bookkeeping services which are not being furnished by the Fund's custodian
or transfer and dividend paying agent. Deutsche Bank Capital will also
determine and publish the Fund's net asset value in accordance with the
Fund's policy as adopted from time to time by the Board of Directors;
establish the Fund's operating expense budgets and authorize the payment
of actual operating expenses incurred; calculate the amount of dividends
and distributions to be declared and paid to the Fund's shareholders;
provide to the Board of Directors those financial analyses and reports
necessary for the Board to fulfill their fiduciary responsibilities;
maintain the books and records of the Fund required under Rule 31a 1 under
the Investment Company Act (other than those being maintained by the
Fund's custodians and transfer and dividend paying agent, as to which
Deutsche Bank Capital will oversee such maintenance); prepare the Fund's
U.S. federal, state and local income tax returns; prepare the financial
information for the Fund's proxy statements and quarterly and annual
reports to shareholders; and prepare the Fund's reports to the Securities
and Exchange Commission.
2. Fees. The Fund will pay Deutsche Bank Capital an annual
management fee hereunder of .65% of the Fund's average weekly net assets
up to U.S. $100 million and .55% of such assets in excess of U.S. $100
million, computed on the basis of net asset value at the end of each week
and payable at the end of each calendar month.
3. Expenses. Deutsche Bank Capital shall bear all expenses of its
employees and overhead incurred in connection with its duties under this
Agreement and shall pay all salaries and fees of the Fund's directors and
officers who are interested persons (as defined in the Investment Company
Act) of Deutsche Bank Capital. The Fund will bear all of its own expenses,
including expenses of organizing the Fund; fees of the Fund's directors
who are not interested persons (as defined in the Investment Company Act)
of any other party; out
E-1
of pocket travel expenses for all directors who are not interested persons
(as defined in the Investment Company Act) of any other party and other
expenses incurred by the Fund in connection with meetings of directors;
interest expense; taxes and governmental fees; brokerage commissions and
other expenses incurred in acquiring or disposing of the Fund's portfolio
securities; expenses of preparing stock certificates; expenses of
registering and qualifying the Fund's shares for sale with the Securities
and Exchange Commission and in various states and foreign jurisdictions;
charges and expenses of the Fund's legal counsel and independent auditors;
custodian, dividend paying and transfer agent expenses; expenses of
obtaining and maintaining stock exchange listings of the Fund's shares;
and the expenses of shareholders' meetings and of the preparation and
distribution of proxies and reports to shareholders.
4. Liability.
4.1 Neither Deutsche Bank Capital nor any of its officers, directors
or employees shall be liable for any error of judgment or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, except (i) that Deutsche Bank Capital shall be under a
fiduciary duty with respect to receipt of compensation for services
pursuant to Section 36 of the Investment Company Act and shall therefore
be liable for a loss resulting from a breach of such fiduciary duty (in
which case any award of damages shall be limited to the period and the
amount set forth in Section 36(b)(3) of the Investment Company Act) or
(ii) a loss resulting from willful misfeasance, bad faith or gross
negligence on its or their part in the performance of, or from reckless
disregard by it or them of its or their obligations and duties under, this
Agreement.
4.2 Deutsche Bank Capital does not assume responsibility for the
acts or omissions of any other person.
5. Services Not Exclusive. It is understood that the services of Deutsche
Bank Capital are not deemed to be exclusive, and nothing in this Agreement shall
prevent Deutsche Bank Capital, or any of its affiliates from providing similar
services to other investment companies and other clients (whether or not their
investment objectives and policies are similar to those of the Fund) or from
engaging in other activities. When other clients of Deutsche Bank Capital desire
to purchase or sell a security at the same time such security is purchased or
sold for the Fund, such purchases and sales will, to the extent feasible, be
allocated among the Fund and such clients in a manner believed by Deutsche Bank
Capital to be equitable to such clients.
6. Notice. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to Deutsche Bank Capital at 31 West 52nd
Street, New York, New York 10019, Attention: Office of Funds Administration; and
(2) to the Fund at 31 West 52nd Street, New York, New York 10019, Attention:
Secretary.
7. Miscellaneous.
7.1 This Agreement is effective March 6, 1990, and shall continue in
effect until the earlier of March 5, 1992 or the first annual meeting of
Fund's stockholders after the effective date of the Fund's Registration
Statement on Form N 2 filed with the Securities and Exchange Commission.
If approved at such meeting, and unless sooner terminated, this Agreement
shall continue in effect for successive periods of twelve months after
such date, provided that each such continuance shall be approved as
required by the Investment Company Act. The annual approval of the
continuance of this Agreement shall be confirmed to Deutsche Bank Capital
by the Fund in writing. Notwithstanding the foregoing, this Agreement may
be terminated by the Fund in the manner prescribed by the Investment
Company Act, without the payment of any penalty, at any time upon not less
than sixty days' prior written notice to
E-2
Deutsche Bank Capital, or by Deutsche Bank Capital upon not less than
sixty days' written notice to the Fund. This Agreement shall automatically
terminate (i) in the event of its assignment (as defined in the Investment
Company Act) by either party, or (ii) upon termination of the Investment
Advisory Agreement, dated as of March 6, 1990, between the Fund and CMI.
7.2 This Agreement shall be construed in accordance with the laws of
the State of New York.
7.3 The captions in this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
7.4 If any provisions of this Agreement shall be held or made
invalid in whole or in part, the other provisions of this Agreement shall
remain in force. Invalid provisions shall, in accordance with the intent
and purpose of this Agreement, be replaced by such valid provisions which
in their economic effect come as close as legally possible to such invalid
provisions.
7.5 Nothing herein shall be construed as constituting Deutsche Bank
Capital an agent of the Fund.
7.6 Deutsche Bank Capital shall be entitled to rely on any notice or
communication believed by it to be genuine and correct and to have been
sent to it by or on behalf of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
THE FUTURE GERMANY FUND, INC.
By: /s/ R. GAMBEE
--------------------------
Name: R. Gambee
Title: VP, Secy, Treas.
DEUTSCHE BANK CAPITAL CORPORATION
By: /s/ KELLER
--------------------------
Name: M. Keller
Title: EVP Equities Dept.
E-3
[LOGO]
PROXY THE CENTRAL EUROPE AND RUSSIA FUND, INC.
This proxy is solicited on behalf of the Board of Directors.
The undersigned stockholder of The Central Europe and Russia Fund, Inc., a
Maryland corporation (the "Fund"), hereby appoints Bruce A. Rosenblum and
Patricia Rosch Carrington, or either of them, as proxies for the undersigned,
with full power of substitution in each of them, to attend the Annual Meeting of
the Stockholders of the Fund to be held at 3:30 P.M., New York time, on June 22,
2004 at 280 Park Avenue, 40th Floor West, New York, New York 10017 and any
adjournment or postponement thereof, to cast on behalf of the undersigned all
votes that the undersigned is entitled to cast at such meeting and otherwise to
represent the undersigned at the meeting with all powers possessed by the
undersigned if personally present at the meeting. The undersigned hereby
acknowledges receipt of the Notice of the Annual Meeting of Stockholders and of
the accompanying Proxy Statement and revokes any proxy heretofore given with
respect to such meeting.
The votes entitled to be cast by the undersigned will be cast as instructed
below. If this proxy is executed but no instruction is given, the votes entitled
to be cast by the undersigned will be cast "For" each of the nominees for
director, "For" Proposal 2 and "Against" Proposal 3 as described in the Proxy
Statement and in the discretion of the proxy holder on any other matter that may
properly come before the meeting or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES
1. |_| FOR each of the nominees |_| WITHHOLD AUTHORITY |_| FOR all nominees
for director listed below. as to all listed except as marked
nominees. to the contrary
below.
(Instructions: To withhold authority for any individual nominee,
strike a line through the nominee's name in the list below.)
Detlef Bierbaum
Dr. Kurt W. Bock
Ambassador Richard R. Burt
John H. Cannon
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 2
2. To ratify the appointment by the Audit Committee and the Board of
Directors of PricewaterhouseCoopers LLP as independent auditors for
the fiscal year ending October 31, 2004.
|_| FOR |_| AGAINST |_| ABSTAIN
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" PROPOSAL 3
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3. To approve a Stockholder proposal to terminate the investment
advisory agreement between the Fund and Deutsche Asset Management
International GmbH.
|_| FOR |_| AGAINST |_| ABSTAIN
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4. To vote and otherwise represent the undersigned on any other matter
that may properly come before the meeting or any adjournment or
postponement thereof in the discretion of the proxy holder.
Please sign here exactly as name appears on the records of the Fund and
date. If the shares are held jointly, each holder should sign. When signing as
an attorney, executor, administrator, trustee, guardian, officer of a
corporation or other entity or in another representative capacity, please give
the full title under signature(s).
____________________________________________
Signature
____________________________________________
Signature, if held jointly
Dated: _______________________________, 2004