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 GERMANY FUND, INC.
(Name of Registrant as Specified in Its Charter)
---------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
THE GERMANY FUND, INC.
August 29, 2005
Dear Stockholders:
You are cordially invited to attend a Special Meeting of Stockholders (the
"Meeting") of The Germany Fund, Inc. to be held at 3:00 P.M., New York time, on
October 27, 2005 at the offices of Deutsche Asset Management, 345 Park Avenue,
New York, New York. Your Board of Directors and management look forward to
greeting personally those stockholders able to attend.
Stockholders are being asked to approve a proposal to change the
investment objective of the fund to "seeking long-term capital appreciation
through investment primarily in equity or equity-linked securities of issuers
domiciled in countries in Europe that utilize the Euro currency." These
currently consist of companies domiciled in the following 12 countries: Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal and Spain. As part of the investment change, your Fund
would change its name to "The European Equity Fund, Inc." Under the proposed
change, the Fund would also be able to invest up to 20% of the volume of its net
assets in securities of issuers domiciled in European countries that do not use
the Euro currency. Further information is provided in the attached Questions and
Answers and in the proxy materials.
If the investment change is approved by stockholders at the Meeting, your
Fund will also conduct a tender offer for 20% of its outstanding shares at 95%
of net asset value per share, which represents a premium over today's market
price. The tender offer would commence within two months after stockholder
approval of the investment change.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. We urge
you to complete, sign, date and mail the enclosed proxy, or vote using the
telephone number on the enclosed proxy card, as soon as possible, even if you
currently plan to attend the Meeting. If you hold your shares in a brokerage or
bank account, your broker or bank may allow you to vote your shares by telephone
or internet. Please consult the materials you receive from your broker or bank
prior to voting by telephone or internet.
Sincerely,
Julian Sluyters
President and Chief Executive Officer
THE GERMANY FUND, INC.
QUESTIONS AND ANSWERS ABOUT THE PROPOSAL AND SPECIAL MEETING
Q: What is the proposal?
A: You are being asked to approve an expansion of your Fund's investment
objective so that it may invest at least 80% of its assets in companies of
all countries that use the Euro currency, in addition to Germany. The Fund
would also invest up to 20% of its assets in securities of issuers
domiciled in European countries that do not use the Euro currency. If
stockholders approve this change to the Fund's investment objective, it
will also conduct a tender offer.
Q: Why has the Board recommended the change to the Fund's investment
objective?
A: The Board of Directors, with advice from the Fund's manager and investment
adviser, has determined that, particularly after the introduction of the
Euro as a single currency and further steps toward European integration,
investment opportunities available to the Fund should be expanded to
include equities not only of German companies, but also a geographically
broader range of companies.
Q: Why has the Board of Directors approved a tender offer, and why will there
be a tender offer only if the investment objective is changed?
A: Although the Board of Directors believes that stockholders will benefit
from the change to the Fund's investment objective, the Board also
recognizes that some stockholders of the Fund may not wish to remain
invested in a fund that does not invest primarily in German companies. For
this reason, the Board has recommended a tender offer to provide
additional liquidity for stockholders who wish to sell their shares, but
only if the change to the investment objective is approved by
stockholders. If the proposal is approved by stockholders, the Fund will
buy back up to 20% of the Fund's shares at a price equal to 95% of net
asset value per share as of the end of the tender period. If more than 20%
of the Fund's shares are tendered, tendering stockholders will participate
pro rata in the tender offer. Stockholder participation in the tender
offer will be voluntary on the part of stockholders.
Q: How can I vote or authorize my vote to be cast?
A: You can vote in any one of four ways:
o By sending the enclosed proxy card, signed and dated, to us in the
enclosed envelope;
o Through the internet, if your broker or bank allows you to do so
(you should consult the materials you receive from your broker or
bank);
o By telephone, using the number listed on the enclosed proxy card; or
o In person, by attending the Special Meeting discussed in the proxy
materials.
Q: What should I do now?
A: We recommend that you vote your shares FOR the proposal. We urge you to
vote as soon as possible using one of the first three methods listed
above, even if you currently plan to attend the Meeting, so that the Fund
does not incur additional costs to solicit proxies. Stockholders who may
wish to tender their shares if the change to the investment objective is
approved do not need to do anything at this time; further information on
the tender offer, if it is to take place, will be provided after the
Special Meeting.
THE GERMANY FUND, INC.
345 Park Avenue
New York, New York 10154
----------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
October 27, 2005
----------
To our Stockholders:
Notice is hereby given that a Special Meeting of Stockholders (the
"Meeting") of The Germany Fund, Inc., a Maryland corporation (the "Fund"), will
be held at 3:00 P.M., New York time, on October 27, 2005 at the offices of
Deutsche Asset Management, 345 Park Avenue, New York, New York, for the
following purposes:
1. To approve a change in the Fund's investment objective from "seeking
long-term capital appreciation through investment primarily in
equity or equity-linked securities of German companies" to "seeking
long-term capital appreciation through investment primarily in
equity or equity-linked securities of companies domiciled in
countries in Europe that utilize the Euro currency."
2. To transact such other business as may properly come before the
Meeting or any postponement or adjournment thereof, including any
adjournment for the purpose of soliciting further votes in favor of
the proposal.
Only holders of record of Common Stock at the close of business on August
19, 2005 are entitled to notice of, and to vote at, this Meeting or any
postponement or adjournment thereof.
If you have any questions or need additional information, please contact
Georgeson Shareholder Communications Inc., the Fund's proxy solicitors, at 17
State Street, New York, New York 10004, or by telephone at 1-800-221-4215.
By Order of the Board of Directors
Carole Coleman
Secretary
Dated: August 29, 2005
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 GERMANY FUND, INC.
345 PARK AVENUE
NEW YORK, NEW YORK 10154
SPECIAL MEETING OF STOCKHOLDERS
OCTOBER 27, 2005
---------------
PROXY STATEMENT
---------------
This Proxy Statement is furnished by the Board of Directors of The Germany
Fund, Inc. (the "Board of Directors" or "Board"), a Maryland corporation (the
"Fund"), in connection with the solicitation of proxies for use at the Special
Meeting of Stockholders (the "Meeting") to be held at 3:00 P.M., New York time,
on October 27, 2005 at the offices of Deutsche Asset Management, 345 Park
Avenue, New York, New York. The purpose of the Meeting and the matters to be
considered are set forth in the accompanying Notice of Special Meeting of
Stockholders.
If the accompanying form of Proxy is executed properly and returned,
shares represented by it will be voted at the Meeting, and any postponement or
adjournment thereof (including any adjournment for the purpose of soliciting
further votes in favor of the proposal), in accordance with the instructions on
the Proxy, but if no instructions are specified, shares will be voted FOR the
change in the Fund's investment objective (the "Proposal"). A proxy may be
revoked at any time prior to the time it is voted by written notice to the
Secretary of the Fund, by submitting a subsequently executed and dated proxy or
by attending the Meeting and voting in person.
If a stockholder owns shares of the Fund in violation of applicable law,
including the Investment Company Act of 1940 (the "1940 Act"), the Fund may
determine that any vote attributable to such shares will not be counted, or that
such shares will not be counted for quorum purposes, or both. Under Section
12(d)(1) of the 1940 Act, the acquisition of more than 3% of the Fund's common
stock by another fund (whether registered, private or offshore) is unlawful. The
votes cast on behalf of any such fund or by any other stockholder whose holdings
are unlawful may be invalid. There is legal uncertainty about the operation of
Section 12(d)(1) and about the Fund's right under federal and state law to
invalidate votes cast by any person whose Fund shares are held in violation of
law. The Fund is prepared, if necessary, to seek judicial resolution of these
matters in any particular case.
The close of business on August 19, 2005 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Meeting. On that date, the Fund had 14,789,992 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
Special Meeting, this Proxy Statement and the form of Proxy will first be mailed
to stockholders on or about August 29, 2005. If you hold your shares in a
brokerage or bank account, your broker or bank may allow you to vote your shares
by telephone or internet. Please consult the materials you receive from your
broker or bank prior to voting by telephone or internet.
Approval of the change in the Fund's investment objective requires
approval of a majority of the Fund's outstanding voting securities, which is
defined in the 1940 Act as the lesser of (1) 67% of the Fund's shares present at
a meeting of its stockholders if the holders of more than 50% of the shares of
the Fund then outstanding are present in person or by proxy or (2) more than 50%
of the Fund's outstanding shares (a "Majority Vote"). The Fund intends to treat
properly executed proxies that are marked "abstain" and broker non-votes as
present for the purpose
of establishing a quorum. A "broker non-vote" is deemed to have occurred when a
proxy received from a broker indicates that the broker does not have
discretionary authority to vote the shares on the matter. Because a Majority
Vote requires a proportion of shares present at the meeting or a proportion of
shares outstanding, abstentions and broker non-votes will have the effect of
votes "against" the Proposal.
INTRODUCTION
The Board of Directors of the Fund has considered and voted to approve
certain matters that, subject to stockholder approval, would change the
investment objective of the Fund to seeking long-term capital appreciation
primarily through investment in equity or equity-linked securities of companies
domiciled in countries in Europe (as defined herein) that utilize the Euro
currency.
The proposed changes, together with related modifications to the
investment policies of the Fund, which are set forth in Appendix A to this Proxy
Statement under "Investment Objective and Policies," are referred to as the
"Proposed Investment Strategy". The Board of Directors has also approved a
change in the name of the Fund to "The European Equity Fund, Inc.", to become
effective only if the change of investment objective is approved by
stockholders. The Fund's New York Stock Exchange trading symbol would be changed
to "EEA".
The proposed changes to the Fund's investment objective are based upon the
determination by the Board of Directors, with advice of Deutsche Investment
Management Americas Inc., the Fund's manager (the "Manager"), and Deutsche Asset
Management International GmbH, the Fund's investment adviser (the "Investment
Adviser"), that particularly after the introduction of the Euro as a single
currency and further steps toward European integration, investment opportunities
in large capitalization German equities should be expanded to a geographically
broader range of large capitalization companies. The Board believes that the
economies and securities markets of the countries utilizing the Euro currency
now have sufficient similarities and linkages to justify this expanded
investment focus. Utilizing the Euro currency countries exposes the Fund to no
other currency risks different from those which it currently experiences through
investment in issuers domiciled in Germany, which is one of the countries
utilizing the Euro.
If stockholders approve the Proposal, the Fund intends to conduct a tender
offer for 20% of its outstanding shares at a price of 95% of net asset value per
share as at the end of the tender period, subject to applicable rules of the
Securities and Exchange Commission ("SEC"). This price represents a premium over
today's market price. The tender offer would be commenced within two months
after stockholder approval of the Proposal. If stockholders do not approve the
Proposal, the Fund will not be committed to conduct the tender offer.
Set forth below is a summary of the Proposal:
CHANGE OF THE FUND'S INVESTMENT OBJECTIVE. The current investment
objective of the Fund is "to seek long-term capital appreciation through
investment primarily in equity or equity-linked securities of German companies."
The proposed new investment objective would be "to seek long-term capital
appreciation through investment primarily in equity or equity-linked securities
of issuers domiciled in countries in Europe that utilize the Euro currency."
TENDER OFFER FOR 20% OF SHARES. If the Proposal is approved by
stockholders, the Fund intends to conduct a tender offer for 20% of its
outstanding shares at 95% of net asset value per share as at the end of the
tender period, representing a premium over today's market price.
All references in this Proxy Statement to "(euro)" or "Euro" are to the
Euro currency and to "$" are to U.S. Dollars.
2
PROPOSAL: TO APPROVE A CHANGE IN THE FUND'S INVESTMENT OBJECTIVE
CURRENT INVESTMENT OBJECTIVE AND POLICIES. The Fund's current investment
objective is to seek long-term capital appreciation through investment primarily
in equity or equity-linked securities of German companies. This objective is a
fundamental policy that may not be changed without a Majority Vote of the
stockholders of the Fund. As a matter of fundamental policy, under normal
circumstances, at least 65% of the Fund's total assets must be invested in
equity securities of issuers domiciled in Germany. The Fund also has a
non-fundamental policy that under normal circumstances at least 80% of the value
of its net assets (plus 80% of any borrowing made for investment purposes) must
be invested in securities of issuers domiciled in Germany. The Fund may also
invest up to 20% of the value of its total assets in Euro-denominated fixed
income securities of German issuers.
PROPOSED INVESTMENT OBJECTIVE AND POLICIES. The Manager and the Investment
Adviser have recommended, and the Board has approved and authorized for
submission to stockholders, that the Fund's current investment objective be
changed to the following objective:
"To seek long-term capital appreciation through investment primarily in
equity or equity-linked securities of issuers domiciled in countries in Europe
that utilize the Euro currency."
No assurance can be given that the Fund will be able to achieve its
objective. If this proposed investment objective is adopted, the Fund will, as a
matter of fundamental policy, invest under normal market conditions at least 80%
of the value of its net assets in the equity and equity-linked securities of
issuers domiciled in countries in Europe that utilize the Euro currency (plus
80% of any assets funded with leverage, although the Fund does not borrow
money).
The following 12 European countries currently utilize the Euro currency:
Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal and Spain. Any issuer domiciled in a European country
that adopts the Euro currency in the future will be eligible for investment by
the Fund as part of its 80% fundamental policy. Any issuers domiciled in a
European country that ceases utilizing the Euro will become ineligible under
this fundamental policy.
In connection with the Proposed Investment Strategy, the Board of
Directors expects to use a European equity index against which to benchmark the
Fund's investment performance. The Board's current expectation is to use the
MSCI-EMU index, which is an unmanaged capitalization-weighted index that as of
June 30, 2005 comprised 319 stocks of companies domiciled in the 12 countries
utilizing the Euro currency. Of these stocks, as of July 31, 2005, 117 were
considered to be large capitalization (i.e., have a market capitalization
greater than (euro) 5 billion), representing 84.27% of the market capitalization
of the index. Although not a fundamental policy, the Fund has in the past
generally emphasized large capitalization stocks. If the Proposed Investment
Strategy is adopted, the Fund will be able to invest in an expanded universe of
equities, including in mid-cap and small-cap stocks.
At July 31, 2005, issuers domiciled in the 12 Euro currency countries
represented the following percentages of the MSCI-EMU index by market
capitalization:
PERCENTAGE PERCENTAGE PERCENTAGE
COUNTRY OF INDEX COUNTRY OF INDEX COUNTRY OF INDEX
- ------- ---------- ------- ---------- ------- ----------
Austria 1.33% Germany 21.06% Luxembourg --
Belgium 4.04% Greece 1.87% The Netherlands 10.37%
Finland 4.45% Ireland 2.44% Portugal 0.85%
France 29.49% Italy 12.17% Spain 11.93%
3
Under the Proposed Investment Strategy, the Fund may invest up to 20% of
the value of its net assets in securities of issuers domiciled in countries of
Europe that do not use the Euro currency. The countries comprising "Europe" are
listed in Appendix A. Any future country or countries (or other political
entity) formed by combination or division of the countries comprising Europe
shall also be deemed to be included within the term "Europe". Other
non-fundamental investment policies of the Fund that have been approved by the
Board, effective upon implementation of the Proposed Investment Strategy, are
described in Appendix A under "Investment Objective and Policies".
There will be no prescribed limit on geographic asset distribution within
Europe and, from time to time, a significant portion of the Fund's assets may be
invested in companies domiciled in as few as three countries.
The Board of Directors has adopted a non-fundamental policy that for the
time being the Fund will not invest more than 15% of its total assets in any one
issuer.
See "Investment Objective and Policies" in Appendix A for a description of
the investment policies of the Fund as amended to take account of the Proposed
Investment Strategy and related changes to its investment policies.
EFFECT OF ADOPTION OF THE PROPOSAL. The Fund has not previously been
permitted under normal market conditions to invest less than 80% of the value of
its net assets in equity and equity-linked securities of German companies. Upon
the adoption of the Proposal by the stockholders, the Fund will be permitted to
invest all of its assets outside Germany, subject to the requirement that under
normal circumstances at least 80% of the value of its net assets must be
invested in European countries that utilize the Euro currency.
TENDER OFFER. If the Proposal is approved, the Fund intends to conduct a
tender offer to repurchase up to 20% of its outstanding shares. The tender offer
price will be 95% of net asset value per share as at the end of the tender
period, subject to applicable SEC rules. At August 22, 2005, 95% of net asset
value per share represented a premium to the closing market price that day
(which was equivalent to 90.38% of net asset value). The purpose of the tender
offer is to create some additional market liquidity for stockholders who do not
wish to own shares in a European-oriented fund and instead wish to sell their
shares. The tender offer will increase somewhat the Fund's net asset value per
share, but will also increase somewhat its expense ratio. A repurchase of 20% of
the Fund's shares at 95% of net asset value per share would increase the net
asset value per share by 1.25%. Conversely, if the Fund's average net assets
were 20% lower in 2004, its expense ratio would have been 1.63% instead of
1.58%.
Participation in the tender offer by stockholders will be voluntary on
their part. If 20% or less of the Fund's shares are tendered, the Fund will
purchase all tendered shares. If more than 20% of the Fund's shares are
tendered, tendering stockholders will be allowed to participate pro rata in
proportion to the amounts they have tendered, subject to the limited exceptions
permitted by the SEC rules.
The Fund expects to conduct the tender offer within two months after
approval of the Proposal. If the Proposal is not approved, the Fund will not be
committed to conduct the tender offer.
TRANSITION. If stockholders approve the Proposal, the Fund anticipates
that its transition to European-oriented investing will be completed within
three months.
RECOMMENDATION. The Board unanimously recommends a vote FOR the Proposal.
REQUIRED VOTE. A Majority Vote of the Fund's stockholders entitled to vote
is required to approve the amendment to the Fund's investment objective.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of July 31, 2005 no person, to the knowledge of management, owned of
record or beneficially more than 5% of the outstanding Common Stock of the Fund,
other than as set forth below:
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OUTSTANDING COMMON STOCK
------------------- ----------------------- ------------------------
Wachovia Corp.(1) 1,039,700 7.03%
One Wachovia Center
Charlotte, NC 28288-0137
- ----------
(1) This information is based exclusively on information provided by such
entity on Schedule 13F filed with respect to the Fund as of June 30, 2005.
The percentage of shares of Common Stock of the Fund beneficially owned by
the Fund's Board of Directors as of July 31, 2005, in the aggregate, did not
exceed 1% of the total number of shares of the Fund outstanding, and none of the
executive officers of the Fund held any Fund shares as of that date. Directors
who are German residents would be subject to adverse German tax consequences if
they owned shares of a fund organized outside of Germany, such as the Fund, that
is not subject to German regulation or tax reporting. Holdings of individual
directors as of July 31, 2005 were as follows.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AT
DIRECTOR JULY 31, 2005
-------- ----------------------
Werner Walbrol 4,418
John H. Cannon 454
Ambassador Richard R. Burt 3,890
Robert H. Wadsworth 4,330
John Bult 3,013
The mailing address of all directors and officers with respect to Fund
operations is c/o Deutsche Investment Management Americas, Inc., 345 Park
Avenue, NYC20-2799, New York, New York 10154.
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
Investment Management Americas Inc., the Fund's manager, is located at 345 Park
Avenue, New York, New York 10154.
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.
5
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 2006 Annual Meeting, the proposals must be received at
The Germany Fund, Inc., c/o Deutsche Asset Management, 345 Park Avenue,
NYC20-2799, New York, New York 10154, Attention: Secretary, on or before January
18, 2006.
In addition, the Fund's Bylaws currently provide that if a stockholder
desires to bring business (including director nominations) before the 2006
Annual Meeting (whether or not such business is the subject of a proposal timely
submitted for inclusion in the Fund's proxy statement), written notice of such
business as prescribed in the Bylaws must be delivered to the Fund's Secretary,
at the principal executive offices of the Fund, between January 18, 2006 and
February 17, 2006. For additional requirements, the stockholder should refer to
the Bylaws, 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 Bylaws, the proposal may be excluded from consideration at the meeting,
regardless of any earlier notice provided in accordance with SEC Rule 14a-8.
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 the Fund
will reimburse them for such out-of-pocket expenses. It is anticipated that the
cost of such supplementary solicitation, if any, will be nominal. The Fund has
also made arrangements with Georgeson Shareholder Communications Inc. to assist
in the solicitation of proxies, if called upon by the Fund, at an estimated fee
not to exceed $90,000, 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 December 31, 2004 and the most recent semi-annual report, if
any, to any stockholder upon request. Such requests should be directed by mail
to The Germany Fund, Inc., c/o Deutsche Asset Management, 345 Park Avenue,
NYC20-2799, 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.germanyfund.com.
Carole Coleman
Secretary
Dated: August 29, 2005
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON AND WHO
WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY TO THE FUND.
6
Appendix A
REVISED INVESTMENT POLICIES
If the Proposal is approved by stockholders, the Fund's investment
objective and policies and investment restrictions would read as follows:
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE. The investment objective of The European Equity
Fund, Inc. (the "Fund") is to seek long-term capital appreciation through
investment primarily in equity or equity-linked securities of issuers domiciled
in countries in Europe that utilize the Euro currency.
Under normal circumstances, at least 80% of the Fund's net assets will be
invested in the securities of issuers domiciled in European countries that
utilize the Euro currency (plus 80% of any assets funded with leverage, although
the Fund does not borrow money, except in an emergency or under exceptional
circumstances as described below in investment policy (2) under "Investment
Restrictions"). The Fund may also invest in equity or equity-linked securities
of issuers domiciled in countries of Europe that do not utilize the Euro
currency. An issuer is deemed to be "domiciled" in a country or region if (a) it
is organized under the laws of that country, or a country within that region, or
maintains its principal place of business in that country or region, (b) it
derives 50% or more of its annual revenues or profits from goods produced or
sold, investments made or services performed in that country or region, or has
50% or more of its assets in that country or region, in each case as determined
in good faith by Deutsche Investment Management Americas Inc., the Fund's
Manager (the "Manager") or (c) its equity securities are traded principally in
that country or region.
The following 12 countries, as of August 29, 2005, utilize the Euro
currency: the Austrian Republic, the Kingdom of Belgium, the Republic of
Finland, the French Republic, the Federal Republic of Germany, the Hellenic
Republic ("Greece"), the Republic of Ireland, the Italian Republic, the Grand
Duchy of Luxembourg, the Kingdom of the Netherlands, the Portuguese Republic and
the Kingdom of Spain. Countries utilizing the Euro currency are referred to as
"Euro Countries." If a European country in the future adopts the Euro currency
as legal tender, it will become a Euro Country for purposes of the Fund's 80%
fundamental investment policy. Similarly, if a country ceases to utilize the
Euro as its currency, it will cease to be a Euro Country.
The terms "Europe" and "European" include the Euro Countries, as well as
the Republic of Albania, Bosnia and Herzegovina, the Republic of Belarus, the
Republic of Bulgaria, the Republic of Croatia, the Czech Republic, the Kingdom
of Denmark, the Republic of Estonia, the Republic of Hungary, the Republic of
Iceland, the Republic of Latvia, the Principality of Liechtenstein, the Republic
of Lithuania, the Former Yugoslav Republic of Macedonia, the Republic of
Moldova, the Kingdom of Norway, the Republic of Poland, Romania, the Slovak
Republic, the Republic of Slovenia, the Kingdom of Sweden, the Swiss
Confederation ("Switzerland"), the Republic of Turkey, Ukraine, the United
Kingdom of Great Britain and Northern Ireland and the Federal Republic of
Yugoslavia. For purposes of this investment policy, any future country or
countries (or other political entity) formed by combination or division of the
countries comprising Europe shall also be deemed to be included within the term
"Europe".
The Fund's investment objective and the foregoing investment policies are
fundamental, and may only be changed by the approval of a majority of the Fund's
outstanding voting securities, which is defined in the Investment Company Act of
1940 (the "1940 Act"), as the lesser of (1) 67% of the Fund's shares present at
a
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meeting of its stockholders if the owners of more than 50% of the shares of the
Fund then outstanding are present in person or by proxy or (2) more than 50% of
the Fund's outstanding shares (a "Majority Vote"). The Fund will not trade in
securities for short-term gain. Current interest and dividend income are not an
objective of the Fund. No assurance can be given that the Fund will be able to
achieve its investment objective. Unless otherwise stated, the other investment
policies described below are non-fundamental and may be changed by the Board of
Directors without a stockholder vote.
PORTFOLIO STRUCTURE. The Fund will seek to achieve its investment
objective of long-term capital appreciation primarily by investing in equity and
equity-linked securities of companies in a spectrum of industries. Equity and
equity-linked securities include common stock, convertible and non-convertible
preferred stock, whether voting or non-voting, convertible bonds, bonds with
warrants and unattached warrants. Equity-linked securities refer to debt
securities convertible into equity and securities such as warrants, options and
futures, the prices of which reflect the value of the equity securities
receivable upon exercise or settlement thereof. For a discussion of the types of
futures and options that the Fund may or may not invest in, see the discussion
under "Derivatives."
The Fund will not concentrate investments in any one industry, which means
that the Fund will not invest 25% or more of its total assets in the securities
of issuers in any one industry. This is a fundamental policy, which may be
changed only by approval of stockholders.
In selecting industries and companies for investment by the Fund, Deutsche
Asset Management International GmbH (the "Investment Adviser") and Deutsche
Investment Management Americas Inc. (the "Manager") generally consider factors
such as overall growth prospects, competitive position in their product markets,
management, technology, research and development, productivity, labor costs, raw
material costs and sources, profit margins, return on investment, capital
resources and government regulation.
The Fund has no current intention of focusing its investments in any
particular countries; however, except as described below, there are no
prescribed limits on geographic asset distribution within the Euro Countries
and, from time to time, a significant portion of the Fund's assets may be
invested in companies domiciled in as few as three countries.
The Fund may not invest more than 15% of its total assets in the
securities of any single issuer.
Although it intends to focus its investments in equities or equity-linked
securities that are listed on a recognized securities exchange or otherwise
publicly traded, the Fund may also invest in securities that are not readily
marketable. The Fund may also invest in other investment companies, subject to
applicable limitations under the 1940 Act. These limitations include a
prohibition on the Fund's acquiring more than 3% of the voting securities of any
other investment company or more than 10% of its total assets in securities of
all investment companies. Any investment companies in which the Fund may invest
will have a policy of investing all or substantially all of their assets in one
or more European countries. Such investments may involve an additional layer of
expenses because of the fees and expenses payable by such other investment
companies. In determining whether to invest assets of the Fund in other
investment companies, the Manager and Investment Adviser will take into
consideration, among other factors, the advisory fee and other expenses payable
by such other investment companies.
WARRANTS. The Fund may also invest in warrants if consistent with the
Fund's investment objective. The warrants in which the Fund may invest are a
type of security, usually issued together with another security of an issuer,
that entitles the holder to buy a fixed amount of common or preferred stock of
such issuer at a specified price for a fixed period of time (which may be in
perpetuity). Warrants are commonly issued attached to other
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securities of the issuer as a method of making such securities more attractive
and are usually detachable and thus may be bought or sold separately from the
issued security. Warrants can be a speculative instrument. The value of a
warrant may decline because of a decrease in the value of the underlying stock,
the passage of time or a change in perception as to the potential of the
underlying stock, or any combination thereof. If the market price of the
underlying stock is below the exercise price set forth in the warrant on the
expiration date, the warrant will expire worthless. Publicly traded warrants
currently exist with respect to the stock of a significant number of European
companies.
PARTICIPATION CERTIFICATES. Certain German, Swiss and Austrian companies
have issued participation certificates ("Participation Certificates" or
"Genuss-Scheine"), which entitle the holder to participate only in dividend
distributions, generally at rates above those declared on the issuers' common
stock, but not to vote, nor usually to any claim for assets in liquidation.
Participation Certificates trade like common stock, either in the
over-the-counter market or through the relevant stock exchanges. Such securities
may have higher yields; however, they may be less liquid than common stock. The
Fund may invest in Participation Certificates of issuers domiciled in any
European country.
DERIVATIVES. Generally, the Fund may purchase, sell and enter into any
type of derivative instrument (including without limitation, financial futures
contracts (including futures contracts on indices of securities, interest rates
and currencies), options on financial futures contracts, warrants, swaps,
forward contracts, foreign currency spot and forward contracts, or other
derivative instruments that are not related to physical commodities). However,
the Fund will only purchase, sell or enter into a particular derivative
instrument if the Fund is authorized to invest in the type of asset (e.g., Euro
Country companies) by which the return on, or value of, the derivative
instrument is primarily measured or if the derivative instrument relates to
currency. Furthermore, the Fund will only invest in futures contracts to the
extent that the Fund, its Directors, its Investment Adviser, its Manager or any
other entity providing services to the Fund would not be required to register
with the Commodity Futures Trading Commission ("CFTC"). In accordance with the
foregoing, the Fund may invest in futures contracts and options with respect
thereto for hedging purposes without limit. However, the Fund may not invest in
such contracts and options for other purposes if the sum of the amount of
initial margin deposits and premiums paid for unexpired options with respect to
such contracts, other than for bona fide hedging purposes, exceeds 5% of the
liquidation value of the Fund's assets, after taking into account unrealized
profits and unrealized losses on such contracts and options; provided, however,
that in the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5% limitation. In
addition, the Fund will not invest in any futures contracts unless such futures
contracts have been approved, if required, by the CFTC for investment by
registered United States investment companies, such as the Fund.
FIXED INCOME SECURITIES. The Fund may also invest up to 20% of its net
assets in fixed income securities of European issuers. Such investments may
include debt instruments issued by private and public entities, including
multinational lending institutions and supranational institutions if denominated
in a European currency or composite currency, which have been determined by the
Fund's Investment Adviser and Manager to be of comparable credit quality to
securities rated in the three highest categories by Moody's Investors Service,
Inc. or Standard & Poor's Corporation. When selecting a debt instrument from
among several investment opportunities, the Investment Adviser and Manager will
consider the potential for capital appreciation, taking into account maturity
and yield considerations. For temporary defensive purposes, the Fund also may
invest in money market instruments denominated in U.S. dollars or in a European
currency or composite currency, including bank time deposits and certificates of
deposit.
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LENDING OF PORTFOLIO SECURITIES. The Fund may lend its investment
securities to approved institutional borrowers who need to borrow securities in
order to complete certain transactions, such as covering short sales, avoiding
failures to deliver securities or completing arbitrage operations. By lending
its investment securities, the Fund attempts to increase its net investment
income through the receipt of interest on the loan. Any gain or loss in the
market price of the securities loaned that might occur during the term of the
loan would belong to the Fund. The Fund may lend its investment securities so
long as the terms, structure and aggregate amount of such loans are not
inconsistent with the 1940 Act or the rules and regulations or interpretations
of the SEC thereunder, which currently require that (a) the borrower pledge and
maintain with the Fund collateral consisting of liquid, unencumbered assets
having a value at all times not less than 100% of the value of the securities
loaned, (b) the borrower add to such collateral whenever the price of the
securities loaned rises (i.e., the borrower "marks to the market" on a daily
basis), (c) the loan be made subject to termination by the Fund at any time, and
(d) the Fund receives reasonable interest on the loan (which may include the
Fund investing any cash collateral in interest bearing short-term investments),
and distributions on the loaned securities and any increase in their market
value. There may be risks of delay in recovery of the securities or even loss of
rights in the collateral should the borrower of the securities fail financially.
However, loans will be made only to borrowers selected by the Fund's delegate
after a commercially reasonable review of relevant facts and circumstances,
including the creditworthiness of the borrower.
At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities, so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Directors. In addition, voting rights may pass
with the loaned securities, but if a material event occurs affecting an
investment on loan, the loan must be called and the securities voted. Pursuant
to an exemptive order granted by the SEC, cash collateral received by the Fund
may be invested in a money market fund managed by the Manager (or one of its
affiliates).
INVESTMENT RESTRICTIONS
In addition to its investment objective and the other investment policies
so indicated under "Investment Objective and Policies," the Fund has adopted
certain investment restrictions, which are fundamental policies and cannot be
changed without a Majority Vote of the Fund's stockholders. For purposes of the
foregoing restrictions and the restrictions listed below, all percentage
limitations apply only immediately after a transaction, and any subsequent
change in any applicable percentage resulting from changing values will not
require elimination of any security from the Fund's portfolio.
The Fund may not:
(1) invest 25% or more of the value of its total assets in a particular
industry;
(2) issue senior securities, borrow money or pledge its assets, except
that the Fund may borrow from banks for temporary or emergency
purposes or for the clearance of transactions in amounts not
exceeding 10% of its total assets (not including the amount
borrowed) and will not purchase securities while any such borrowings
are outstanding, and except that the Fund may pledge its assets in
connection with permitted borrowings or in connection with
purchasing, selling or entering into futures, forwards, options and
other derivative instruments;
(3) make real estate mortgage loans or other loans, except through the
purchase of debt obligations consistent with the Fund's investment
policies;
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(4) buy or sell commodities, commodity contracts, futures contracts,
real estate or interests in real estate, but this shall not prevent
the Fund from purchasing, selling and entering into financial
futures contracts (including futures contracts on indices of
securities, interest rates and currencies), options on financial
futures contracts, warrants, swaps, forward contracts, foreign
currency spot and forward contracts, or other derivative instruments
that are not related to physical commodities;
(5) make short sales of securities or maintain a short position in any
security;
(6) purchase securities on margin, except such short-term credits as may
be necessary or routine for the clearance or settlement of
transactions;
(7) act as an underwriter, except to the extent the Fund may be deemed
to be an underwriter in connection with the sale of securities in
its portfolio; or
(8) purchase securities, the sale of which by the Fund could not be
effected without prior registration under the Securities Act of
1933, except that this restriction shall not preclude the Fund from
acquiring non-U.S. securities.
NON-DIVERSIFIED STATUS. The Fund is classified as a "non-diversified"
investment company under the 1940 Act, which means the Fund is not limited by
the 1940 Act in the proportion of its assets that may be invested in the
securities of a single issuer. However, the Fund conducts its operations so as
to qualify as a "regulated investment company" for purposes of the Internal
Revenue Code, which relieves the Fund of any liability for Federal income tax to
the extent that its earnings are distributed to stockholders. To so qualify,
among other requirements, the Fund must limit its investments so that, at the
close of each quarter of the taxable year, (i) not more than 25% of the market
value of the Fund's total assets may be invested in the securities of a single
issuer or a group of related issuers and (ii) at least 50% of the market value
of its total assets must be represented by cash, U.S. government securities, and
other securities, with such other securities limited, in respect of any one
issuer, to not more than 5% of the market value of the Fund's total assets and
not more than 10% of the issuer's outstanding voting securities.
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[FLAG LOGO]
PROXY
THE GERMANY FUND, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder of The Germany Fund, Inc., a Maryland
corporation (the "Fund"), hereby appoints Julian Sluyters, Carole Coleman and
Patricia Rosch Carrington, or any of them, as proxies for the undersigned, with
full power of substitution in each of them, to attend the Special Meeting of the
Stockholders of the Fund to be held at 3:00 P.M., New York time, on October 27,
2005 at the offices of Deutsche Asset Management, 345 Park Avenue, New York, New
York, and any adjournment or postponement thereof, including any adjournment for
the purpose of soliciting further votes in favor of the proposal, 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 Special Meeting of
Stockholders and of the accompanying Proxy Statement, the terms of each of which
are incorporated by reference herein, 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" THE PROPOSAL
DESCRIBED IN THE PROXY STATEMENT. ADDITIONALLY, THE VOTES ENTITLED TO BE CAST BY
THE UNDERSIGNED WILL BE CAST IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
THERE ARE THREE WAYS TO VOTE YOUR PROXY
TELEPHONE VOTING
This method of voting is available for residents of the U.S. and Canada. On a
touch tone telephone, call TOLL FREE 1-800-732-4052, 24 hours a day, 7 days a
week. Have this proxy card ready, then follow the prerecorded instructions. Your
vote will be confirmed and cast as you have directed. Available until 11.59 p.m.
Eastern Daylight Time on October 26, 2005.
INTERNET VOTING
Visit the Internet voting Web site at http://proxy.georgeson.com. Have this
proxy card ready and follow the instructions on your screen. You will incur only
your usual Internet charges. Available until 11.59 p.m. Eastern Daylight Time on
October 26, 2005.
VOTING BY MAIL
Simply sign and date your proxy card and return it in the postage-paid envelope
to Georgeson Shareholder Communications, Wall Street Station, P.O. Box 1101, New
York, NY 10269-0646. If you are voting by telephone or the Internet, please do
not mail your proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL.
1. TO APPROVE A CHANGE IN THE FUND'S INVESTMENT OBJECTIVE.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. 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, including any adjournment
for the purpose of soliciting further votes in favor of the proposal.
-----------------------------------
Dated: ______, 2005
-----------------------------------
Signature
-----------------------------------
Signature, if held jointly
Please sign here exactly as your 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).