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<SEC-DOCUMENT>0000950123-04-001495.txt : 20040210
<SEC-HEADER>0000950123-04-001495.hdr.sgml : 20040210
<ACCEPTANCE-DATETIME>20040210173034
ACCESSION NUMBER:		0000950123-04-001495
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		18
FILED AS OF DATE:		20040210

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CENTRAL EUROPE & RUSSIA FUND INC
		CENTRAL INDEX KEY:			0000860489
		IRS NUMBER:				133556099
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-06041
		FILM NUMBER:		04583086

	BUSINESS ADDRESS:	
		STREET 1:		280 PARK AVENUE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10017
		BUSINESS PHONE:		2124741694

	MAIL ADDRESS:	
		STREET 1:		280 PARK AVENUE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10017

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CENTRAL EUROPEAN EQUITY FUND INC /MD/
		DATE OF NAME CHANGE:	19970429

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FUTURE GERMANY FUND INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	UNITED GERMANY FUND INC
		DATE OF NAME CHANGE:	19900219

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CENTRAL EUROPE & RUSSIA FUND INC
		CENTRAL INDEX KEY:			0000860489
		IRS NUMBER:				133556099
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-111828
		FILM NUMBER:		04583087

	BUSINESS ADDRESS:	
		STREET 1:		280 PARK AVENUE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10017
		BUSINESS PHONE:		2124741694

	MAIL ADDRESS:	
		STREET 1:		280 PARK AVENUE
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10017

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CENTRAL EUROPEAN EQUITY FUND INC /MD/
		DATE OF NAME CHANGE:	19970429

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FUTURE GERMANY FUND INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	UNITED GERMANY FUND INC
		DATE OF NAME CHANGE:	19900219
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>y93068a1nv2za.txt
<DESCRIPTION>AMENDMENT NO.1 TO FORM N-2
<TEXT>
<PAGE>


  (AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 10, 2004)



                                              SECURITIES ACT FILE NO. 333-111828


                                       INVESTMENT COMPANY ACT FILE NO. 811-06041
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
                                    FORM N-2


<Table>
<S>                                                          <C>
  REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933      [X]
               PRE-EFFECTIVE AMENDMENT NO. 1                   [X]
                POST-EFFECTIVE AMENDMENT NO.                   [ ]
                           AND/OR
 REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF    [ ]
                            1940                               [X]
                      AMENDMENT NO. 11
</Table>


                             ---------------------
                    THE CENTRAL EUROPE AND RUSSIA FUND, INC.
             (Exact Name of Registrant as Specified in its Charter)

                   345 PARK AVENUE, NEW YORK, NEW YORK 10154
                    (Address of Principal Executive Offices)

       Registrant's Telephone Number, including Area Code: (800) 437-6269

                            BRUCE A. ROSENBLUM, ESQ.
                    THE CENTRAL EUROPE AND RUSSIA FUND, INC.
                         C/O DEUTSCHE ASSET MANAGEMENT
                                 1 SOUTH STREET
                                   BAL01-1806
                              BALTIMORE, MD 21202
                    (Name and Address of Agent for Service)

                                   COPIES TO:

<Table>
<S>                                              <C>
             JOHN T. BOSTELMAN, ESQ                            THOMAS A. HALE, ESQ.
            SULLIVAN & CROMWELL LLP                  SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
                125 BROAD STREET                        333 WEST WACKER DRIVE, SUITE 2100
            NEW YORK, NEW YORK 10004                         CHICAGO, ILLINOIS 60606
</Table>

                             ---------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:  As soon as practicable after the
effective date of this Registration Statement. If any securities being
registered on this form will be offered on a delayed or continuous basis in
reliance on Rule 415 under the Securities Act of 1933, other than securities
offered in connection with a dividend reinvestment plan, check the following
box. [X]

It is proposed that this filing will become effective when declared effective
pursuant to Section 8(c).
                             ---------------------
        CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933


<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
                                                            PROPOSED MAXIMUM     PROPOSED MAXIMUM
                                            AMOUNT           OFFERING PRICE         AGGREGATE            AMOUNT OF
TITLE OF SECURITIES BEING REGISTERED   BEING REGISTERED       PER UNIT(1)       OFFERING PRICE(1)   REGISTRATION FEE(2)
- ------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                  <C>                  <C>                  <C>
Common Stock, $.001 par value......         42,373               $23.60             1,000,000             $126.70
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</Table>



(1) Estimated solely for purposes of calculating the registration fee as
    required by Rule 457(c) under the Securities Act of 1933 based upon the
    average of the high and low sales prices reported on the New York Stock
    Exchange consolidated reporting system of $23.60 on February 3, 2004.



(2) $80.90 was previously paid on January 9, 2004 upon the filing under the
    Securities Act of 1933 of this Registration Statement for 39,293 shares of
    Common Stock.


THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

- --------------------------------------------------------------------------------

CROSS REFERENCE SHEET
THE CENTRAL EUROPE AND RUSSIA FUND, INC.

PARTS A AND B OF REGISTRATION STATEMENT

<Table>
<Caption>
ITEM                                                    LOCATION IN PROSPECTUS OR STATEMENT OF
NO.    CAPTION                                          ADDITIONAL INFORMATION ("SAI")
- ----   -------                                          -----------------------------------------------
<S>    <C>                                              <C>
1.     Outside Front Cover Page.......................  Front Cover Page
2      Cover Pages; Other Offering Information........  Front Cover Page
3.     Fee Table and Synopsis.........................  Fee Table and Prospectus Summary
4.     Financial Highlights...........................  Financial Highlights
5.     Plan of Distribution...........................  Front Cover Page; Prospectus Summary; Our
                                                        Rights Offering
6.     Selling Shareholders...........................  Not Applicable
7.     Use of Proceeds................................  Use of Proceeds
8.     General Description of the Registrant..........  Front Cover Page; Prospectus Summary; Market
                                                        and Net Asset Value Information; Investment
                                                        Objective and Policies; Risk Factors
9.     Management.....................................  Our Management; Custodian, Dividend-Paying
                                                        Agent, Transfer Agent and Registrar
10.    Capital Stock, Long-Term Debt, and Other         Front Cover Page; Market and Net Asset Value
       Securities.....................................  Information; Common Stock; Dividends and
                                                        Distributions; Voluntary Cash Purchase Program
                                                        and Dividend Reinvestment Plan; Taxation
11.    Defaults and Arrears on Senior Securities......  Not Applicable
12.    Legal Proceedings..............................  Not Applicable
13.    Table of Contents of the Statement of            Table of Contents of Statement of Additional
       Additional Information.........................  Information
14.    Cover Page of SAI..............................  Cover Page of SAI
15.    Table of Contents of SAI.......................  Cover Page of SAI
16.    General Information and History................  General Information in SAI
17.    Investment Objective and Policies..............  Investment Objective and Policies in SAI;
                                                        Investment Restrictions in SAI
18.    Management.....................................  Management in SAI; Investment Advisory and
                                                        Other Services in SAI; Brokerage Allocation and
                                                        Other Services in SAI
19.    Control Persons and Principal Holders of         Control Persons and Principal Holders of
       Securities.....................................  Securities in SAI
20.    Investment Advisory and Other Services.........  Investment Advisory and Other Services in SAI
21.    Brokerage Allocation and Other Practices.......  Brokerage Allocation and Other Practices in SAI
22.    Tax Status.....................................  Taxation in Prospectus
23.    Financial Statements...........................  Financial Statement in SAI
</Table>

PART C OF REGISTRATION STATEMENT

Information required to be included in Part C is set forth under the appropriate
item, so numbered in Part C to this Registration Statement.

- --------------------------------------------------------------------------------
                                                                               I
<PAGE>

The information in this prospectus is not complete and may be changed. A
registration statement relating to the securities has been filed with the
Securities and Exchange Commission. We may not sell these securities until the
registration statement is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer, solicitation or sale is not permitted.


PRELIMINARY PROSPECTUS       Subject to completion       dated February 10, 2004

- --------------------------------------------------------------------------------

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
[              ] Shares of Common Stock
Issuable Upon Exercise of Rights to Subscribe for Those Shares
- --------------------------------------------------------------------------------


We are issuing to our stockholders of record as of the close of business on
          , 2004 transferable rights entitling the holders of those rights to
subscribe for up to an aggregate of          shares of our common stock.
Stockholders of record will receive one right for each share of common stock
held on the record date. These rights entitle the holders to purchase one new
share of common stock for every three rights held, and holders who fully
exercise their rights will be entitled to subscribe, subject to certain
limitations and subject to allotment, for any shares not acquired by the
exercise of rights. Our outstanding common stock is listed on the New York Stock
Exchange ("NYSE") and trades under the symbol "CEE," as will be the shares
offered for subscription in this rights offering. The rights are transferable
and application will be made to list the rights for trading on the NYSE under
the symbol "CEE.RT" during the course of this rights offering. See "Our Rights
Offering" on page 14 in this prospectus for a complete discussion of the terms
of this rights offering. The subscription price per share will be      % of the
lower of (i) the average of the last reported sale prices of a share of our
common stock on the NYSE on the expiration date of the rights offering and the
four preceding business days and (ii) the net asset value per share on the
expiration date. THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
          , 2004, UNLESS EXTENDED AS DESCRIBED IN THIS PROSPECTUS.



We announced the preliminary filing with the Securities and Exchange Commission
in connection with this rights offering on January 9, 2004. The net asset values
per share of our common stock at the close of business on January 9, 2004 and
          , 2004 were $26.47 and $          , respectively, and the last
reported sale prices of a share of common stock on the NYSE were $25.41 and
$          , respectively, 96.0% and      % of net asset value, respectively.



As a result of the terms of this rights offering, stockholders who do not fully
exercise their rights, upon completion of this rights offering, will own a
smaller proportional interest in us than they owned prior to this rights
offering. In addition, because the subscription price per share may be less than
the then current net asset value per share, the completion of this rights
offering may result in an immediate dilution of the net asset value per share
for all existing stockholders. Such dilution is not currently determinable
because it is not known how many shares will be subscribed for, what the net
asset value or market price of our common stock will be on the expiration date
for the shares or what the subscription price will be. Such dilution could be
substantial. Stockholders will experience a decrease in the net asset value per
share held by them, irrespective of whether they exercise all or any portion of
their rights. See "Our Rights Offering--Investment Considerations" on page 24 of
this prospectus and "Risk Factors and Special Considerations-- Dilution of Net
Asset Value" on page 33 of this prospectus.



If you have questions or need further information about this rights offering,
please write or call Georgenson Shareholder Communications, Inc., our
information agent for this rights offering, at           or 1-800-          .

                                                           (Continued on page 3)

- --------------------------------------------------------------------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.


<Table>
<Caption>
                                                                  A          B
                                                              PER SHARE   TOTAL(1)
- ----------------------------------------------------------------------------------
<S>                                                           <C>         <C>
Estimated Subscription Price(2)
- ----------------------------------------------------------------------------------
Estimated Sales Load(2)(3)
- ----------------------------------------------------------------------------------
Proceeds, before expenses, to the Fund(2)(4)
- ----------------------------------------------------------------------------------
</Table>


                                                 (Footnotes continued on page 3)

                              UBS INVESTMENT BANK
- --------------------------------------------------------------------------------
                 The date of this prospectus is           , 2004
<PAGE>

                       [INSERT MAP OF ALL THE COUNTRIES]
<PAGE>

- --------------------------------------------------------------------------------

Available information

We are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the Investment Company Act of
1940, as amended (the "Investment Company Act"), and in accordance with these
requirements, we file reports and other information with the United States
Securities and Exchange Commission (the "SEC"). Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the SEC in Washington, D.C. Information about the operation of the
SEC's public reference facilities may be obtained by calling the SEC at
1-202-942-8090. Such reports and other information are also available on the
SEC's website at http://www.sec.gov.
                          ---------------------------

(Continued from front cover page)

We were incorporated in Maryland on February 6, 1990. We are a non-diversified
closed-end management investment company that seeks capital appreciation by
investing primarily in equity or equity-linked securities of Central European
and Russian companies. No assurance can be given that our investment objective
will be achieved. DUE TO OUR INVESTMENT OBJECTIVE AND POLICIES, INVESTMENT IN US
INVOLVES CERTAIN RISK CONSIDERATIONS, INCLUDING THE RISK OF EXCHANGE-RATE
FLUCTUATIONS, WHICH ARE NOT NORMALLY ASSOCIATED WITH INVESTMENTS IN THE UNITED
STATES. SEE "RISK FACTORS AND SPECIAL CONSIDERATIONS" ON PAGE 29 OF THIS
PROSPECTUS. Our investment manager is Deutsche Bank Securities Inc. and our
investment adviser is Deutsche Asset Management International GmbH.

This prospectus sets forth concisely the information that a prospective investor
ought to know before investing. Investors are advised to read this prospectus
carefully and retain it for future reference. A Statement of Additional
Information dated           , 2004 (the "SAI") containing additional information
about us has been filed with the Securities and Exchange Commission and is
incorporated by reference in its entirety into this prospectus. A copy of the
SAI, the table of contents of which appears on page 51 of this prospectus, may
be obtained without charge upon written or oral request from our information
agent at           or 1-800-          .
                          ---------------------------

(Footnotes continued from front cover page)

(1) Assumes that all rights offered in this rights offering were exercised at
    the estimated subscription price.

(2) Estimated on the basis of      % of the lower of (i) the average of the last
    reported sales price of a share of our common stock on the NYSE on
              , 2004 and the four preceding business days and (ii) the net asset
    value per share of our common stock on           , 2004.


(3) UBS Securities LLC will act as dealer manager for this rights offering. We
    have agreed to pay the dealer manager a fee for its financial services equal
    to 3.75% of the subscription price per share. We have agreed to reimburse
    the dealer manager up to $100,000 for its reasonable expenses incurred in
    connection with this rights offering. These fees will be borne by us and
    indirectly by all of our stockholders, including those who do not exercise
    their rights. We and our investment manager have each agreed to indemnify
    the dealer manager or contribute to losses arising out of certain
    liabilities, including liabilities under the Securities Act of 1933, as
    amended (the "Securities Act"). See "Our Rights Offering--Distribution
    Arrangements" on page 21 of this prospectus.



(4) Before deducting offering expenses payable by us estimated at $          ,
    including an aggregate of up to $100,000 as partial reimbursement of the
    dealer manager for their out-of-pocket expenses. See "Our Rights
    Offering--Distribution Arrangements" on page 21 of this prospectus.

                          ---------------------------

Unless otherwise specified, all references in this prospectus to "dollars," "US
$", "U.S. dollars" or "$" are to United States dollars.

- --------------------------------------------------------------------------------
                                                                               3
<PAGE>

Prospectus summary

This is only a summary. This summary may not contain all of the information that
you should consider before investing in us. You should review the more detailed
information contained in this prospectus and our SAI.

PURPOSE OF OUR RIGHTS OFFERING


Our board of directors has determined that it would be in our best interest and
in our stockholders' best interest to increase our assets available for
investment, thereby permitting us to take advantage more fully of investment
opportunities in Central Europe, Russia and Turkey. Our investment manager and
investment adviser believe that the outlook for a number of industries and
companies in Central Europe, Russia and Turkey is promising. In addition, our
board of directors believes that increasing our assets available for investment
should result in a modest lowering of our expenses as a percentage of average
net assets because our fixed cost can be spread over a larger asset base.


There is no assurance that this rights offering will be successful or that by
increasing our size, our aggregate expenses and, correspondingly, our expense
ratio, will be lowered. See "Our Rights Offering--Purpose of Our Rights
Offering" on page 14 of this prospectus.

Our outstanding common stock is listed on the NYSE and trades under the symbol
"CEE," as will be the shares offered for subscription in this rights offering.

IMPORTANT TERMS OF OUR RIGHTS OFFERING

The following are a few of the important terms of our rights offering. For a
detailed discussion of the terms of this rights offering, see "Our Rights
Offering" on page 14 of this prospectus.

Aggregate number of shares of our
common stock offered................

Number of transferable rights issued
to each stockholder.................     One right for every share of our common
                                         stock held

Subscription ratio..................     One share of common stock for every
                                         three rights held (1-for-3)


Subscription price..................     The subscription price per share will
                                         be      % of the lower of (i) the
                                         average of the last reported sale
                                         prices of a share of our common stock
                                         on the NYSE on the expiration date of
                                         the rights offering and the four
                                         preceding business days and (ii) the
                                         net asset value per share on the
                                         expiration date


TRANSFERABILITY OF RIGHTS


We are issuing to stockholders on the record date transferable rights to
subscribe for additional shares of our common stock. The rights are transferable
until the close of business on the last business day prior to the expiration
date. Application will be made to list the rights on the NYSE under the symbol
"CEE.RT," subject to notice of issuance. Trading in the rights on the NYSE is
expected to be conducted on a when-issued basis from           , 2004 until the
record date; thereafter, they will trade regular-way until the expiration date
(including extensions). We will use our best efforts to ensure that an adequate
trading market for the rights will exist, although there is no assurance that a
market for the rights will develop. Assuming a market exists for the rights, the
rights may be purchased and sold through usual brokerage channels or sold
through the subscription agent.


 4
<PAGE>

Stockholders on the record date who do not wish to exercise any of the rights
issued to them pursuant to this rights offering may instruct the subscription
agent to sell any unexercised rights through or to the dealer manager.
Subscription certificates representing the rights to be sold through or to the
dealer manager must be received by the subscription agent on or before
          , 2004, (or, if the subscription period is extended, on or before two
business days prior to the extended expiration date). Alternatively, the rights
evidenced by a subscription certificate may be transferred in whole by endorsing
the subscription certificate for transfer in accordance with the accompanying
instructions.

See "Our Rights Offering--Transferability and Sale of Rights" on page 16 of this
prospectus.

IMPORTANT DATES TO REMEMBER


<Table>
<S>                                                           <C>
Record Date.................................................
Subscription Period.........................................        *
Expiration Date.............................................        *
Notices for Guarantees of Delivery Due......................        *
Payment for Guarantees of Delivery Due......................        *
Confirmation Mailed to Participants.........................        *
Final Payment of Shares.....................................        *
</Table>


- ------------
* Unless this rights offering is extended.

OVER-SUBSCRIPTION PRIVILEGE

Shares not subscribed for during the subscription period will be offered, by
means of the over-subscription privilege, only to stockholders on the record
date who have exercised all rights issued to them (other than those rights that
cannot be exercised because they represent in the aggregate the right to acquire
less than one share of our common stock). Investors who are not stockholders on
the record date, but who otherwise acquire rights to purchase shares of our
common stock pursuant to this rights offering, are not entitled to subscribe for
any shares of our common stock pursuant to the over-subscription privilege. If
these requests for our common shares exceed the common shares available, the
available common shares will be allocated pro rata among stockholders who
over-subscribed based on the number of rights originally issued to them pursuant
to this rights offering. See "Our Rights Offering--Over-Subscription Privilege"
on page 15 of this prospectus.

METHOD FOR EXERCISING RIGHTS

Rights are evidenced by subscription certificates that will be mailed to
stockholders of record or, if stockholder's shares are held by Cede & Co. or any
other depository or nominee, to Cede & Co. or the other depository or nominee.
Rights may be exercised by filling in and signing the subscription certificate
and mailing it in the envelope provided, or otherwise delivering the completed
and signed subscription certificate to the subscription agent, together with
payment at the estimated subscription price for the shares. Rights may also be
exercised by contacting your broker, banker or trust company, which can arrange,
on your behalf, to guarantee delivery of payment and of a properly completed and
executed subscription certificate. A fee may be charged for this service.
Completed subscription certificates and payments must be received by the
subscription agent prior to 5:00 p.m., New York City time, on the expiration
date at the offices of the subscription agent. See "Our Rights
Offering--Exercise of Rights" on page 18 of this prospectus and "Our Rights
Offering--Payment for Shares" on page 19 of this prospectus.

DISTRIBUTION ARRANGEMENTS

UBS Securities LLC will act as dealer manager for this rights offering. Under
the terms and subject to the conditions contained in the dealer manager
agreement, the dealer manager will provide financial

                                                                               5
<PAGE>


advisory services and marketing services in connection with this rights offering
and will solicit the exercise of rights and participation in the
over-subscription privilege. We have agreed to pay the dealer manager a fee for
its financial advisory, marketing and soliciting services equal to 3.75% of the
aggregate subscription price for shares issued pursuant to this rights offering.
The dealer manager will reallow a part of their fees to other broker-dealers
which have assisted in soliciting the exercise of rights.



Other offering expenses incurred by us in connection with this rights offering
are estimated to be $          , which includes up to $100,000 that may be paid
to the dealer manager as reimbursement for its reasonable expenses incurred in
connection with this rights offering. For additional information about the
distribution arrangements, see "Our Rights Offering--Distribution Arrangements"
on page 21 of this prospectus.


INFORMATION AGENT


The Information agent for this rights offering is: Georgenson Shareholder
Communications, Inc.


OUR INVESTMENT OBJECTIVE AND POLICIES

We are a non-diversified closed-end management investment company registered
under the Investment Company Act. Our investment objective is to seek long-term
capital appreciation through investment primarily in equity and equity-linked
securities of issuers domiciled in Central Europe and Russia. Under normal
circumstances, at least 80% of our net assets will be invested in the securities
of issuers domiciled in Central Europe or Russia. We may also invest in
additional types of securities, such as warrants, if consistent with our
investment objective, and participation certificates of issuers in any European
country or Russia. For hedging purposes, we may also invest in put and call
options on European or Russian securities and indices. We may invest up to 20%
of our total assets in fixed income securities of European or Russian issuers.
For temporary defensive purposes, we also may invest in money market instruments
and lend our portfolio securities to banks, securities dealers and other
institutions. Although we do not currently engage in foreign exchange
transactions, we may, when our investment manager and our investment adviser
deem it advisable, attempt to hedge our foreign currency exposure by entering
into forward currency contracts. See "Investment Objective and Policies" on page
25 of this prospectus and page B-2 of the SAI and "Investment Restrictions" on
page B-5 of the SAI.

MANAGEMENT

Under our investment advisory agreement, our investment adviser is Deutsche
Asset Management International GmbH ("DeAMI"), and under our management
agreement, our investment manager is Deutsche Bank Securities Inc. ("DBSI").
Both DeAMI and DBSI are wholly owned direct or indirect subsidiaries of Deutsche
Bank AG, a major German banking institution. See "Our Management" on page 37 of
this prospectus and "Investment Advisory and Other Services" on page B-17 of the
SAI.

MANAGEMENT FEES

We pay our investment manager a management fee, computed weekly and payable
monthly, at the annual rate of 0.65% of our average weekly net assets up to $100
million, and 0.55% of our assets in excess of $100 million. We pay our
investment adviser an advisory fee, computed weekly and payable monthly, at an
annual rate of 0.35% of our average weekly net assets up to $100 million and
0.25% of our assets in excess of $100 million. See "Our Management" on page 37
of this prospectus and "Investment Advisory and Other Services" on page B-17 of
the SAI.

 6
<PAGE>

CUSTODIANS


Investors Bank & Trust Company acts as our custodian. Our custodian has
agreements with a global network of sub-custodians. See "Custodians,
Dividend-Paying Agent, Transfer Agent and Registrar" on page 76 of this
prospectus.


DIVIDEND-PAYING AGENT, TRANSFER AGENT AND REGISTRAR

Investors Bank & Trust Company acts as our dividend-paying agent, transfer agent
and registrar.

RISK FACTORS AND SPECIAL CONSIDERATIONS

Risk Factors Relating to Foreign Investment Generally.  Foreign investments may
involve certain considerations and risks not typically associated with those of
domestic origin as a result of, among others, the possibility of political and
economic developments and the level of governmental supervision and regulation
of foreign securities markets. In addition, certain foreign markets may be
substantially smaller, less developed, less liquid and more volatile than the
major markets of the United States.

Some foreign markets in which we invest are considered to be emerging market
countries. Investment in these countries subjects us to a greater risk of loss
than investments in a developed country. This is due to, among other things,
greater market volatility, lower trading volume, political and economic
instability, greater risk of market shut down and more governmental limitations
on foreign investment policy than those typically found in a developed market.

The economies of individual emerging market countries may differ favorably or
unfavorably from the U.S. economy in many respects. The economies of developing
countries generally are heavily dependent upon international trade, and have
been and may be adversely affected by trade restrictions, currency values and
economic conditions in the countries with which they trade. In addition, foreign
investment in certain emerging markets is restricted or controlled to varying
degrees, which will increase our cost and expenses.

Some emerging market countries may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market country's balance of payments, the country could impose
temporary restrictions on foreign capital remittances. Investing in local
markets in emerging market countries may require us to adopt special procedures,
seek local government approvals or take other actions, each of which may involve
additional costs to us.

No established secondary markets may exist for many of the emerging market
issuer securities in which we invest. This reduced secondary market liquidity
may have an adverse effect on market price and our ability to dispose of
particular instruments when necessary and may make it more difficult for us to
obtain accurate market quotations for purposes of valuing our portfolio and
calculating our net asset value.

For a detailed discussion of risk factors and special considerations, see "Risk
Factors and Special Considerations" on page 29 of this prospectus.

Risk Factors Relating to Investment in Central Europe.  Central European
countries are in varying stages of transition towards market-oriented economies
based on private and entrepreneurial initiatives, multi-party democracies,
pluralism and market economies. These countries experienced the extremely
volatile market performance in the past decade, and investing in securities of
Central European issuers entails all of the risks of investing in securities of
foreign issuers to a heightened degree. In addition, a substantial portion of
the economic growth, if any, of Central European countries is attributable to
their exporting industries rather than domestic consumption; therefore, the
Central European countries are also highly susceptible to economic downturns in
Western European countries and the United States, which are substantial
consumers of their exported products.

                                                                               7
<PAGE>

Central European markets continue to be relatively volatile, and our investments
will remain subject to currency fluctuation and local political, economic and
social uncertainties. Investing in any developing market means tolerating a
certain amount of volatility and, in some cases, severe market corrections. In
addition, investments in a single region, even though representing a number of
different countries, may be affected by common economic forces and other
factors.

Less developed markets involve higher levels of risks, and are subject to more
substantial volatility and price fluctuations than securities that are traded in
more developed markets.

Risks Factors Relating to Investment in Russia.  Investing in Russia subjects us
to many of the same risks associated with investing in Central European
countries. There are significant risks inherent in Russian securities that are
not typically associated with securities of companies in more developed
countries. The value of Russian securities may be affected by various
uncertainties, such as economic, political and social instability, investment
and regulatory risk, including crime and corruption in government and business,
and inconsistency and underdevelopment of Russia's tax and legal systems. As is
the case with issuers in most emerging markets, Russian securities are subject
to a higher degree of volatility than the securities of Western companies.

Russia continues to make the transition from a centrally controlled command
system to a market-oriented, democratic model of government, but its continued
development, and the pace with which it continues to make the transition,
remains uncertain. The Russian economy suffers from the lack of an effective
banking system and is plagued by a deteriorating infrastructure. Russia's role
and its reintegration into the global political economy are also unsettled, and
internal regional conflicts continue to exist.

The Russian economy relies heavily on the production and export of oil. Russia
also has substantial trading links with Iraq. Because Russia is highly sensitive
to changes in the world oil price and because of recent United States legal and
military action against Iraq, it is even more difficult to predict future oil
price movements with any certainty and fluctuations in pricing may increase
substantially.

There is still no centralized public market for trading Russian securities,
despite the number of stock exchanges in Russia, and trading occurs mostly
over-the-counter. Corporate governance standards for Russian companies have also
proven to be poor, and minority stockholders in Russian companies have suffered
losses due to abusive share dilutions, asset transfers and transfer-pricing
practices. Stockholders of Russian companies also lack many of the protections
available to stockholders of Western issuers. Accounting, financial and auditing
reporting by Russian companies is also generally of less quality and less
reliable compared with Western companies.

Laws and regulations involving foreign investment in Russian enterprises, title
to securities and transfer of title are also relatively new and can change
quickly and unpredictably. Moreover, Russia's taxation system is frequently
subject to change and enforcement is inconsistent at federal, regional and local
levels.


Dilution of Net Asset Value.  We will experience a dilution of the aggregate net
asset value per share of our common stock upon the completion of this rights
offering because the subscription price may be less than our then current net
asset value per share. This dilution, which may be substantial, will be
experienced by all stockholders, irrespective of whether they exercise all or
any portion of their rights. Also, Stockholders who do not fully exercise their
rights should expect that they will own a smaller proportional interest in us
after the completion of the rights offering. The distribution to stockholders of
transferable rights which themselves may have intrinsic value will afford
non-participating stockholders the potential of receiving a cash payment upon
sale of their rights, receipt of which may be viewed as partial compensation for
the dilution of their interest in us. No assurance can be given that a market
for the rights will develop or as to the value, if any, that rights will have.


Net Asset Value Discount.  Shares of closed-end investment companies frequently
trade at a discount from net asset value. This is a risk separate and distinct
from the risk that our net asset value will

 8
<PAGE>

decrease. We cannot predict whether our common stock will trade at, above or
below net asset value. Our shares of common stock currently trade at a discount.
See "Market and Net Asset Value Information" on page 13 of this prospectus.
Stockholders wishing to sell their shares of common stock during this rights
offering should be aware that there is greater risk that the discount to net
asset value, which may increase during this rights offering, will adversely
affect them. This increased risk is because, among other things, the market
price per share may reflect anticipated dilution that will result from this
rights offering. There can be no assurance that, after the completion of this
rights offering, our shares will trade at the same level as our current discount
to net asset value.

Exchange Rate Fluctuations and Foreign Currency Considerations.  Substantially
all of our assets are invested in Central Europe and Russia, and substantially
all of the income we receive from these investments will be in euros or other
foreign currencies. Since we will compute and distribute income in U.S. dollars,
and the computation of income will be made on the day we earn the income, any
fluctuation in the value of foreign currency relative to the U.S. dollar between
the earning of the income and the time at which we convert the foreign
currencies to U.S. dollars may have an adverse impact on us. In addition, since
we will invest in securities denominated or quoted in currencies other than the
U.S. dollar, changes in foreign currency exchange rates will affect the value of
our securities in our portfolio and the unrealized appreciation or depreciation
of our investments.


We generally expect that the foreign currencies received by us with respect to
most of our investments will be freely convertible into U.S. dollars on foreign
exchange markets and that in most cases the U.S. dollars received will be fully
repatriable out of the various foreign countries in which we invest. However,
our investments in Russia will be in securities denominated in Russian Rubles,
which are not externally convertible into other currencies outside of Russia.



We do not currently, nor do we expect to, engage in foreign exchange
transactions as an investment strategy. However, we may enter into forward
currency transactions in the future in order to seek to hedge the value of our
portfolio, if our investment manager and investment adviser deem it necessary.


Interest Expense.  We may, subject to limitations, borrow money for temporary or
emergency purposes for the clearance of transactions. Borrowing money will
subject us to interest expenses and we may incur other transaction costs.

Certain Provisions of Our Articles of Incorporation and Bylaws.  We have
provisions in our articles of incorporation and bylaws that could have the
effect of delaying, deferring, preventing or otherwise limiting the ability of
other entities or persons to acquire control of us, to cause us to engage in
certain transactions or to modify our structure.

Foreign Custody.  Our foreign securities and cash are generally held in foreign
banks and securities depositories by a global network of custodians. There may
be limited or no regulatory oversight over their operations. Also, the laws of
certain countries may put limits on our ability to recover our assets if a
foreign bank, depository or issuer of a security, or any of their agents, goes
bankrupt.

Market Disruption.  As a result of terrorist attacks on the World Trade Center
and the Pentagon on September 11, 2001, some of the U.S. securities markets were
closed for a four-day period. These terrorist attacks and related events have
led to increased short-term market volatility. U.S. military and related action
in Iraq and Afghanistan and events in the Middle East could have significant
adverse effects on U.S. and world economics and markets. A similar disruption of
the U.S. or world financial markets could impact interest rates, auctions,
secondary trading, ratings, credit risk, inflation and other factors relating to
our common stock.

                                                                               9
<PAGE>

Fee table


<Table>
<S>                                                            <C>
SHAREHOLDER TRANSACTION EXPENSES
  Sales Load (as a percentage of offering price)(1).........   3.75%
  Dividend Reinvestment and Cash Purchase Plan Fees(2)......   None
ANNUAL EXPENSES (as a percentage of net assets attributable
  to common shares)
  Advisory and Management Fees(3)(4)........................      %
  Other Expenses(5).........................................      %
  Total Annual Expenses(4)..................................      %
</Table>


- ------------


(1)  The dealer manager will receive a fee for its financial advisory, marketing
     and soliciting services equal to 3.75% of the aggregate subscription price
     for shares issued pursuant to this rights offering. We have also agreed to
     reimburse the dealer manager for out-of-pocket expenses up to an aggregate
     of $100,000. These fees will be borne by us and indirectly by all of our
     stockholders, including those who do not exercise their rights. See "Our
     Rights Offering--Distribution Arrangements" on page 21 of this prospectus.


(2)  See "Voluntary Cash Purchase Program and Dividend Reinvestment Plan" on
     page 43 of this prospectus.

(3)  See "Our Management" on page 37 of this prospectus and "Investment Advisory
     and Other Services" on page B-17 of the SAI for additional information.

(4)  The indicated advisory and management fees and the expense ratio assume
     that this rights offering is fully subscribed, yielding estimated net
     proceeds of approximately $        million. It also assumes that net assets
     attributable to our common stock will not increase or decrease due to price
     or currency fluctuation.

(5)  "Other Expenses" have been estimated for the current fiscal year. See
     "Brokerage Allocation and Other Practices" on page B-18 of the SAI for
     additional information.

This fee table is intended to assist investors in understanding the costs and
expenses that an investor will bear directly or indirectly by investing in our
shares.

EXAMPLE

An investor would directly or indirectly pay the following expenses on a $1,000
investment, assuming a 5% annual return throughout the periods:

<Table>
<Caption>
1 YEAR     3 YEARS    5 YEARS    10 YEARS
- -------    -------    -------    --------
<S>        <C>        <C>        <C>
$          $          $          $
</Table>


This example assumes that all dividends and all other distributions are
reinvested at net asset value and that the percentage amounts listed under
Annual Expenses remain the same in the years shown. The example also reflects
payment of the 3.75% sales load and other expenses incurred in connection with
this rights offering. The above tables and the assumption in this example of a
5% annual return are required by SEC regulations applicable to all investment
companies; the assumed 5% annual return is not a prediction of, and does not
represent, the projected or actual performance of our shares. For a more
complete description of our costs and expenses, see "Our Management" on page 42
of this prospectus, "Investment Advisory and Other Services" on page B-17 of the
SAI and "Brokerage Allocation and Other Practices" on page B-18 of the SAI.


THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES OR
RATE OF RETURN AND OUR ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

 10
<PAGE>

- --------------------------------------------------------------------------------

Financial highlights

Set forth below and on the next page is selected data for a share of common
stock outstanding throughout each of the years indicated. The information below
has been audited by PricewaterhouseCoopers LLP ("PwC"), our independent
auditors, whose report thereon was unqualified. The information should be read
in conjunction with the financial statements and notes contained therein. The
unqualified report of PwC for the year ended October 31, 2003 is included in the
SAI under "Financial Statements."

<Table>
<Caption>
                                                                                    FOR THE YEAR ENDED OCTOBER 31
                                                                 2003       2002       2001       2000       1999
- -----------------------------------------------------------------------------------------------------------------
<S>                                                          <C>        <C>        <C>        <C>        <C>
Per share operating performance
Net asset value:
Beginning of year..........................................  $  15.93   $  13.83   $  16.14   $  15.99   $  15.74
                                                             --------   --------   --------   --------   --------
Net investment income (loss)...............................       .21       (.07)       .10       (.09)      (.08)
Net realized and unrealized gain (loss) on investments and
  foreign currency transactions............................      6.86       2.37      (2.70)      (.38)       .09
                                                             --------   --------   --------   --------   --------
Increase (decrease) from investment operations.............      7.07       2.30      (2.60)      (.47)      0.01
                                                             --------   --------   --------   --------   --------
Increase resulting from share repurchases..................       .08        .06        .29        .62        .40
                                                             --------   --------   --------   --------   --------
Distributions from net investment income...................        --       (.10)        --         --       (.13)
Distributions from net realized foreign currency gains.....        --       (.13)        --         --       (.01)
Distributions from net realized short-term capital gains...        --         --         --         --         --
Distributions from net realized long-term capital gains....        --         --         --         --         --
                                                             --------   --------   --------   --------   --------
Total distributions(1).....................................        --       (.23)        --         --       (.14)
                                                             --------   --------   --------   --------   --------
Dilution in NAV from dividend reinvestment.................        --       (.03)        --         --       (.02)
                                                             --------   --------   --------   --------   --------
Net asset value:
  End of year..............................................  $  23.08   $  15.93   $  13.83   $  16.14   $  15.99
                                                             ========   ========   ========   ========   ========
Market value:
  End of year..............................................  $  21.25   $  13.25   $  10.95   $ 11.875   $  12.50
Total investment return for the year:(2)
  Based upon market value..................................     60.38%     23.43%     (7.79)%    (5.00)%    (3.29)%
  Based upon net asset value...............................     44.88%     17.05%    (14.31)%      .94%      2.48%
Ratio to average net assets:
  Total expenses before custody credits(3).................      1.51%      1.55%      1.66%      1.37%      1.44%
  Net investment income (loss).............................      1.00%      (.44)%      .63%      (.44)%     (.44)%
Portfolio turnover.........................................     43.88%     57.77%     57.83%     59.17%     60.35%
Net assets at end of year (000's omitted)..................  $177,766   $126,467   $111,213   $140,923   $157,265
(1) For U.S. tax purposes, total distributions consisted
    of:
  Ordinary income..........................................        --   $   0.23         --         --   $   0.14
  Long term capital gains..................................        --         --         --         --         --
                                                             --------   --------   --------   --------   --------
                                                                   --   $   0.23         --         --   $   0.14
                                                             --------   --------   --------   --------   --------
(2) Total investment return based on market value is calculated assuming that shares of our common stock were
    purchased at the closing market price as of the beginning of the year, dividends, capital gains and other
    distributions were reinvested as provided for in our dividend reinvestment plan and then sold at the closing
    market price per share on the last day of the year. The computation does not reflect any sales commission
    investors may incur in purchasing or selling shares of the Fund. The total investment return based on the net
    asset value is similarly computed except that the Fund's net asset value is substituted for the closing
    market value.
(3) The custody credits are attributable to interest earned on the U.S. cash balances. The ratios of total
    expenses after custody credits to average net assets are 1.50%, 1.54%, 1.62%, 1.35% and 1.43% for 2003, 2002,
    2001, 2000 and 1999 respectively.
</Table>

- --------------------------------------------------------------------------------
                                                                              11
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

<Table>
<Caption>
                                                                       FOR THE YEAR ENDED OCTOBER 31
                                                    1998       1997       1996       1995       1994
- ----------------------------------------------------------------------------------------------------
<S>                                             <C>        <C>        <C>        <C>        <C>
Per share operating performance
Net asset value:
Beginning of year.............................  $  28.00   $  24.56   $  20.70   $  18.65   $  16.76
                                                --------   --------   --------   --------   --------
Net investment income (loss)..................       .13        .09        .17        .13        .19
Net realized and unrealized gain (loss) on
  investments and foreign currency
  transactions................................     (6.18)      5.26       3.93       2.03       1.76
                                                --------   --------   --------   --------   --------
Increase (decrease) from investment
  operations..................................     (6.05)      5.35       4.10       2.16       1.95
                                                --------   --------   --------   --------   --------
Increase resulting from share repurchases.....       .82        .28        .14        .09        .02
                                                --------   --------   --------   --------   --------
Distributions from net investment income......      (.01)      (.11)      (.13)      (.19)      (.08)
Distributions from net realized foreign
  currency gains..............................        --         --       (.03)      (.01)        --
Distributions from net realized short-term
  capital gains...............................     (1.54)        --         --         --         --
Distributions from net realized long-term
  capital gains...............................     (5.02)     (1.81)      (.22)        --         --
                                                --------   --------   --------   --------   --------
Total distributions...........................     (6.57)     (1.92)      (.38)      (.20)      (.08)
                                                --------   --------   --------   --------   --------
Dilution in NAV from dividend reinvestment....      (.46)      (.27)        --         --
                                                --------   --------   --------   --------   --------
Net asset value:
  End of year.................................  $  15.74   $  28.00   $  24.56   $  20.70   $  18.65
                                                ========   ========   ========   ========   ========
Market value:
  End of year.................................  $13.0625   $ 23.125   $ 19.625   $  16.00   $  15.25
  Total investment return for the year:(1)
  Based upon market value.....................    (22.89)%    28.93%     25.28%      6.37%     (3.42)%
  Based upon net asset value..................    (26.09)%    22.41%     20.74%     12.22%     12.90%
Ratio to average net assets:
  Total expenses..............................      1.17%      1.10%      1.08%      1.24%      1.14%
  Net investment income (loss)................       .56%       .32%       .73%       .68%      1.07%
Portfolio turnover............................     97.48%     68.20%     52.30%     38.89%     32.38%
Net assets at end of year (000's omitted).....  $173,825   $325,972   $289,133   $247,529   $226,554
</Table>

- ------------

(1) Total investment return based on market value is calculated assuming that
    shares of our common stock were purchased at the closing market price as of
    the beginning of the year, dividends, capital gains and other distributions
    were reinvested as provided for in our dividend reinvestment plan and then
    sold at the closing market price per share on the last day of the year. The
    computation does not reflect any sales commission investors may incur in
    purchasing or selling shares of the Fund. The total investment return based
    on the net asset value is similarly computed except that the Fund's net
    asset value is substituted for the closing market value.

- --------------------------------------------------------------------------------
 12
<PAGE>

- --------------------------------------------------------------------------------

Market and net asset value information


Our outstanding common stock is, and the shares offered for subscription
pursuant to this rights offering, will be listed on the NYSE. Our common stock
is also listed on the Regulated Market Segment (Geregelter Markt) of the
Frankfurt Stock Exchange. Since our commencement of operations in March 1990,
our common stock traded in the market at both a premium and a discount to net
asset value. Since 1990, our common stock has generally traded at a discount to
net asset value. Our officers have not determined the reasons why our common
stock has traded at a discount to net asset value, nor can they predict whether
our common stock will continue to trade at a discount to net asset value, and if
so, the level of such discount. Shares of closed-end investment companies
frequently trade at a discount to net asset value.



We announced the preliminary filing with the United States Securities and
Exchange Commission in connection with this rights offering on January 9, 2004.
The net asset values per share of our common stock at the close of business on
January 9, 2004 and           , 2004, the last business day prior to the date of
this prospectus, were $26.47 and $          , respectively, and the last
reported sale prices of a share of common stock on the NYSE were $25.41 and
$          , respectively, 96.0% and      % of net asset value, respectively.


The following table sets forth for our common stock for the periods indicated:
(i) the per share net asset value corresponding to the high/low market price for
each quarter, (ii) the per share high and low market price on the NYSE, (iii)
the discount to net asset value of each high/low market price and (iv) the total
volume of trading on the NYSE during the period.


<Table>
<Caption>
                                                                              DISCOUNT TO NET
                                   NET ASSET VALUE(1)     MARKET PRICE(2)     ASSET VALUE (%)     VOLUME OF
COMMON STOCK                          HIGH        LOW      HIGH       LOW      HIGH       LOW    TRADING(3)
- -----------------------------------------------------------------------------------------------------------
<S>                                <C>        <C>        <C>       <C>       <C>       <C>       <C>
Fiscal Year 2002
  January 31, 2002...............  $16.00     $13.83     $13.25    $11.00    17.19%    20.46%      729,200
  April 30, 2002.................  $17.25     $15.12     $14.89    $12.55    13.68%    17.00%      652,100
  July 31, 2002..................  $17.79     $14.33     $15.34    $11.60    13.77%    19.05%      804,100
  October 31, 2002...............  $15.93     $14.21     $13.25    $11.67    16.82%    17.87%      438,800
Fiscal Year 2003
  January 31, 2003...............  $17.37     $16.03     $15.05    $13.25    13.36%    17.34%      481,300
  April 30, 2003.................  $17.72     $15.81     $14.99    $13.25    15.41%    16.19%      623,800
  July 31, 2003..................  $20.29     $18.13     $17.61    $14.99    13.21%    17.32%    1,379,600
  October 31, 2003...............  $24.73     $20.26     $23.65    $17.40     4.37%    14.12%    1,965,500
Fiscal Year 2004
  January 31, 2004...............  $26.30     $22.36     $25.82    $20.02     1.83%    10.47%    1,444,035
</Table>


- ------------
(1) Based on our computations.

(2) As reported by the NYSE.

(3) As reported by the NYSE.

- --------------------------------------------------------------------------------
                                                                              13
<PAGE>

- --------------------------------------------------------------------------------

Our rights offering

PURPOSE OF OUR RIGHTS OFFERING


Our board of directors has determined that it would be in our best interest and
in our stockholders best interest to increase our assets available for
investment, thereby permitting us to take advantage more fully of investment
opportunities in Central Europe, Russia and Turkey. In connection with our
directors' consideration of this rights offering, our investment manager and
investment adviser believe that the outlook for a number of industries and
companies in Central Europe, Russia and Turkey is promising.


This rights offering provides existing stockholders the opportunity to purchase
additional shares of our common stock at a price below market price and net
asset value (subject to the sales load described in this prospectus). The
distribution to stockholders of transferable rights, which may themselves have
intrinsic value, also will afford non-participating stockholders the potential
of receiving cash payment upon the sale of the rights, receipt of which may be
viewed as partial compensation for the dilution of their interests. In addition,
our board of directors believes that increasing our assets available for
investment should result in a modest lowering of our expenses as a percentage of
average net assets because our fixed cost can be spread over a larger asset
base. Moreover, our board of directors considered the impact of this rights
offering on our net asset value per share. For a discussion of the potential
impact of this rights offering on current stockholders, such as dilution, see
"Risk Factors and Special Considerations" on page 29 of this prospectus and
"--Investment Considerations" below on page 24.


In determining that this rights offering was in our best interest and in the
best interest of our stockholders, our board of directors retained UBS
Securities LLC, the dealer manager in this rights offering, to provide us with
financial advisory, marketing and soliciting services relating to this rights
offering, including the structure, timing and terms of the rights offering. In
addition, our board of directors considered, among other things, using a fixed
pricing versus variable pricing mechanism, the benefits and drawbacks of
conducting a non-transferable versus a transferable rights offering, the effect
on us if this rights offering is not fully subscribed and the experience of the
dealer manager in conducting rights offerings.


There is no assurance that this rights offering will be successful or that, by
increasing our size, our aggregate expenses and, correspondingly, our expense
ratio will be lowered.

We may, in the future and at our discretion, choose to make additional rights
offerings from time to time for a number of shares and on terms which may or may
not be similar to this rights offering. Any such future rights offering will be
made in accordance with the Investment Company Act.

For a discussion of certain benefits of this rights offering to our affiliates,
see "--Certain Effects of This Rights Offering" below on page 23.

TERMS OF THE OFFER

We are issuing to stockholders on the record date transferable rights to
subscribe for an aggregate of           shares of our common stock. Stockholders
of record will receive one right for each share of our common stock held on the
record date. Each stockholder on the record date, or each rights holder, will be
entitled to acquire at the subscription price one share of our common stock for
every three rights held. Fractional shares of our common stock will not be
issued upon the exercise of rights; accordingly, rights may be exercised only in
integral multiples of three, except that any stockholder on the record date who
is issued fewer than three rights may subscribe, at the subscription price, for
one full share of our common stock. Rights may be exercised at any time during
the subscription period, which commences on           , 2004 and ends on the
expiration date, which is 5:00 p.m., New York City time, on           , 2004. We
may extend the expiration date until 5:00 p.m., New York City time, to a date
not later than           ,

- --------------------------------------------------------------------------------
 14
<PAGE>
OUR RIGHTS OFFERING
- --------------------------------------------------------------------------------

2004. See "--Expiration of This Rights Offering" below on page 18. Shares of our
common stock not subscribed for during the subscription period will be offered,
by means of the over-subscription privilege, to our stockholders on the record
date who fully exercise the rights issued to them pursuant to this rights
offering (other than those rights that cannot be exercised because they
represent in the aggregate the right to acquire less than one share of our
common stock) and who wish to acquire more than the number of shares they are
entitled to purchase pursuant to the exercise of their rights, subject to
certain limitations and subject to allotment. Investors who are not stockholders
on the record date, but who otherwise acquire rights to purchase shares of our
common stock pursuant to this rights offering, are not entitled to subscribe for
any shares of our common stock pursuant to the over-subscription privilege. See
"--Over-Subscription Privilege" below on page 15.

For purposes of determining the maximum number of shares of our common stock a
stockholder may acquire pursuant to this rights offering, broker-dealers whose
shares are held of record by Cede & Co., the nominee for the Depository Trust
Company ("DTC"), or by any other depository or nominee will be deemed to be the
holders of the rights that are held by Cede & Co. or such other depository or
nominee on their behalf.


The rights are transferable and application will be made to list them for
trading on the NYSE under the symbol "CEE.RT." See "--Transferability and Sale
of Rights" below on page 16.


Rights may be exercised by completing a subscription certificate and delivering
it, together with payment at the estimated subscription price, to the
subscription agent. A rights holder will have no right to rescind a purchase
after the subscription agent has received a completed subscription certificate
together with payment for the shares offered pursuant to this rights offering.
Rights holders who exercise the rights will not know at the time of exercise the
subscription price of the shares being acquired and will be required initially
to pay for both the shares subscribed for during the subscription period and, if
eligible, any additional shares subscribed for pursuant to the over-subscription
privilege at the estimated subscription price of $     per share. For a
discussion of the method by which rights may be exercised and shares paid for,
see "--Exercise of Rights" below on page 18 and "--Payment for Shares" below on
page 19.

There is no minimum number of rights which must be exercised in order for this
rights offering to close.

OVER-SUBSCRIPTION PRIVILEGE

Shares not subscribed for during the subscription period will be offered, by
means of the over-subscription privilege, only to stockholders on the record
date who have exercised all rights issued to them (other than those rights that
cannot be exercised because they represent in the aggregate the right to acquire
less than one share of our common stock) and who wish to acquire more than the
number of our shares of our common stock for which the rights issued to them are
exercisable. Investors who are not stockholders on the record date, but who
otherwise acquire rights to purchase shares of our common stock pursuant to this
rights offering, are not entitled to subscribe for any shares of our common
stock pursuant to the over-subscription privilege.

Stockholders on the record date who are fully exercising their rights during the
subscription period should indicate, on the subscription certificate which they
submit with respect to the exercise of the rights issued to them, how many
shares they are willing to acquire pursuant to the over-subscription privilege.

All over-subscriptions will be honored in full to the extent that our shares of
common stock not subscribed for during the subscription period are available. If
there are insufficient shares of our common stock to honor all
over-subscriptions, the available shares of our common stock will be allocated
pro rata among those who over-subscribe based solely on the number of rights
initially issued to them pursuant to this rights offering, so that the number of
shares of our common stock issued to stockholders who subscribe pursuant to the
over-subscription privilege will generally be in proportion

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                                                                              15
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OUR RIGHTS OFFERING
- --------------------------------------------------------------------------------

to the number of shares of our common stock owned by them on the record date.
The allocation process may involve a series of allocations in order to assure
that the total number of shares of common stock available for over-subscriptions
is distributed on a pro rata basis.

We will not offer or sell any shares of our common stock which are not
subscribed for during the subscription period or pursuant to the
over-subscription privilege.

TRANSFERABILITY AND SALE OF RIGHTS


The rights are transferable until the close of business on the last business day
prior to the expiration date, which is           , 2004, unless we extend the
expiration date, until 5:00 p.m., New York City time, to a date not later than
          , 2004. Application will be made to list the rights on the NYSE under
the symbol "CEE.RT," subject to notice of issuance. Trading in the rights on the
NYSE is expected to be conducted on a when-issued basis from           , 2004
until the record date; thereafter, they will trade regular way until the
expiration date (including extensions). Stockholders are encouraged to contact
their broker, bank or financial adviser for more information about trading the
rights. We will use our best efforts to ensure that an adequate trading market
for the rights will exist, although there is no assurance that a market for the
rights will develop. Assuming a market exist for the rights, the rights may be
purchased and sold through usual brokerage channels or sold through the
subscription agent.


Sales through Subscription Agent and Dealer Manager.  Stockholders on the record
date who do not wish to exercise any of the rights issued to them pursuant to
this rights offering may instruct the subscription agent to sell any unexercised
rights through or to the dealer manager. Subscription certificates representing
the rights to be sold through or to the dealer manager must be received by the
subscription agent on or before           , 2004, (or, if the subscription
period is extended, on or before two business days prior to the extended
expiration date). Upon the timely receipt by the subscription agent of
appropriate instructions to sell rights, the subscription agent will ask the
dealer manager either to purchase or to use its best efforts to complete the
sale, and the subscription agent will remit the proceeds of the sale to the
selling stockholder. If the rights are sold, sales of those rights will be
deemed to have been effected at the weighted average price received by the
dealer manager on the day those rights are sold. The sale price of any rights
sold to the dealer manager will be based upon the then current market price for
the rights. The dealer manager will also attempt to sell all rights which remain
unclaimed as a result of subscription certificates being returned by the postal
authorities to the subscription agent as undeliverable as of the fourth business
day prior to the expiration date (or, if the subscription period is extended, as
of the fourth business day prior to the extended expiration date). The
subscription agent will hold the proceeds from those sales for the benefit of
those nonclaiming stockholders until the proceeds are either claimed or escheat.
There can be no assurance that the dealer manager will purchase or be able to
complete the sale of any of those rights and neither we nor the dealer manager
have guaranteed any minimum sales price for the rights. If a stockholder does
not utilize the services of the subscription agent and chooses to use another
broker-dealer or other financial institution to sell rights issued to them
pursuant to this rights offering, then the other broker-dealer or financial
institution may charge a fee to sell the rights.

Other Transfers.  The rights evidenced by a subscription certificate may be
transferred in whole by endorsing the subscription certificate for transfer in
accordance with the accompanying instructions. A portion of the rights evidenced
by a single subscription certificate (but not fractional rights) may be
transferred by delivering to the subscription agent a subscription certificate
properly endorsed for transfer, with instructions to register such portion of
the rights evidenced thereby in the name of the transferee and to issue a new
subscription certificate to the transferee evidencing the transferred rights. If
this occurs, a new subscription certificate evidencing the balance of the
rights, if any, will be issued to the stockholder or, if the stockholder so
instructs, to an additional transferee. The signature on the subscription
certificate must correspond with the name as written upon the face of the
subscription

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<PAGE>
OUR RIGHTS OFFERING
- --------------------------------------------------------------------------------

certificate in every particular, without alteration or enlargement, or any
change. A signature guarantee must be provided by an eligible financial
institution as defined in Rule 17Ad-15 of the Exchange Act, subject to the
standards and procedures we adopt.

Stockholders wishing to transfer all or a portion of their rights should allow
at least five business days prior to the expiration date for: (i) the transfer
instructions to be received and processed by the subscription agent; (ii) a new
subscription certificate to be issued and transmitted to the transferee or
transferees with respect to transferred rights, and to the transferor with
respect to retained rights, if any; and (iii) the rights evidenced by the new
subscription certificate to be exercised or sold by the recipients of the
subscription certificate. Neither we nor the subscription agent nor the dealer
manager shall have any liability to a transferee or transferor of rights if
subscription certificates are not received in time for exercise or sale prior to
the expiration date.

Except for the fees charged by the subscription agent and dealer manager (which
we will pay), all commissions, fees and other expenses (including brokerage
commissions and transfer taxes) incurred or charged in connection with the
purchase, sale or exercise of rights will be for the account of the transferor
of the rights, and none of these commissions, fees or expenses will be paid by
us, the subscription agent or the dealer manager.


We anticipate that the rights will be eligible for transfer through, and that
the exercise of the primary subscription (and the over-subscription) may be
effected through, the facilities of DTC using the PSOP System at or prior to
5:00 p.m., New York City time, on the expiration date.


THE SUBSCRIPTION PRICE


The subscription price per share of our common stock will be      % of the lower
of (i) the average of the last reported sale prices of a share of our common
stock on the NYSE on the expiration date and the preceding four business days
and (ii) the net asset value per share as of the close of business on the
expiration date. For example, if the average of the last reported sale prices on
the NYSE on the expiration date and the preceding four business days of a share
of our common stock is $          and the net asset value per share of our
common stock on the expiration date is $          , the subscription price would
be $          (     % of $          ). If, however, the five-day average of the
last reported sale prices on the NYSE on the expiration date is $          , and
the net asset value per share of our common stock on such date is $          ,
the subscription price would be $          (     % of $          ). Since the
expiration date of the subscription period will be           , 2004 (unless we
extend the subscription period), rights holders will not know the subscription
price at the time of exercise and will be required initially to pay for both the
shares subscribed for on primary subscription and, if eligible, any additional
shares subscribed for pursuant to the over-subscription privilege at the
estimated subscription price of $     per share. See "Payment for Shares" below.
Rights holders who exercise their rights will have no right to rescind a
purchase after receipt of their completed subscription certificates together
with payment for shares by the subscription agent. We do not have the right to
withdraw the rights or cancel this rights offering after the rights have been
distributed.



We announced the preliminary filing with the United States Securities and
Exchange Commission in connection with this rights offering on January 9, 2004.
The net asset values per share of our common stock at the close of business on
January 9, 2004 and on           , 2004, the last business day prior to the date
of this prospectus, were $26.47 and $          , respectively, and the last
reported sale prices of a share of our common stock on the NYSE on such dates
were $25.41 and $          , respectively, equivalent to 96.0% and      % of net
asset value, respectively. See "Market and Net Asset Value Information" on page
13 of this prospectus.


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                                                                              17
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OUR RIGHTS OFFERING
- --------------------------------------------------------------------------------

EXPIRATION OF THIS RIGHTS OFFERING

The offer will expire at 5:00 p.m., New York City time, on           , 2004
unless we extend the expiration date until 5:00 p.m., New York City time, to a
date not later than           , 2004. Rights will expire on the expiration date
and may not be exercised after this date.

SUBSCRIPTION AGENT


The subscription agent for this rights offering is Colbent Corporation, which
will receive for its administrative, processing, invoicing and other services as
subscription agent a fee estimated to be approximately $35,000, including
reimbursement for all out-of-pocket expenses related to this rights offering.
Questions regarding the subscription certificates should be directed to
Georgenson Shareholder Communication, Inc., our information agent at
1-800-          ; stockholders may also consult their brokers or nominees.
SIGNED SUBSCRIPTION CERTIFICATES SHOULD BE SENT, TOGETHER WITH PAYMENT OF THE
ESTIMATED SUBSCRIPTION PRICE, TO COLBENT CORPORATION, ATTENTION: CORPORATE
ACTIONS, by one of the methods described below:



<Table>
<S>                                             <C>
                (1) BY MAIL:                               (2) BY EXPRESS MAIL OR
                                                             OVERNIGHT COURIER:
               P.O. Box 859208
          Braintree, MA 02185-9208                           161 Bay State Road
                                                             Braintree, MA 02184
                (3) BY HAND:
 Securities Transfer and Reporting Services
           c/o Colbent Corporation
         100 Williams Street Galeria
             New York, NY 10038
</Table>


WE WILL HONOR ONLY SUBSCRIPTION CERTIFICATES RECEIVED BY THE SUBSCRIPTION AGENT
ON OR PRIOR TO THE EXPIRATION DATE AT ONE OF THE ADDRESSES LISTED ABOVE.
DELIVERY TO AN ADDRESS OTHER THAN THOSE LISTED ABOVE WILL NOT CONSTITUTE GOOD
DELIVERY.

EXERCISE OF RIGHTS

Rights are evidenced by subscription certificates that will be mailed to
stockholders of record or, if stockholder's shares are held by Cede & Co. or any
other depository or nominee, to Cede & Co. or the other depository or nominee.
Rights may be exercised by filling in and signing the subscription certificate
and mailing it in the envelope provided, or otherwise delivering the completed
and signed subscription certificate to the subscription agent, together with
payment at the estimated subscription price for the shares as described below
under "--Payment for Shares" on page 19 of this prospectus. Rights may also be
exercised by contacting your broker, banker or trust company, which can arrange,
on your behalf, to guarantee delivery of payment and of a properly completed and
executed subscription certificate. A fee may be charged for this service.
Completed subscription certificates and payments must be received by the
subscription agent prior to 5:00 p.m., New York City time, on the expiration
date at the offices of the subscription agent at the addresses set forth above
under "Subscription Agent."

Stockholders Who Are Record Owners.  Stockholders who are record owners can
choose between either option set forth below on page 19 under "--Payment for
Shares." If time is of the essence, option (2) will permit delivery of the
subscription certificate and payment after the expiration date.

Investors Whose Shares Are Held By A Nominee.  Stockholders whose shares are
held by a nominee, such as a broker or trustee, must contact that nominee to
exercise their rights. In that case, the

- --------------------------------------------------------------------------------
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<PAGE>
OUR RIGHTS OFFERING
- --------------------------------------------------------------------------------

nominee will complete the subscription certificate on behalf of the investor and
arrange for proper payment by one of the methods set forth below under
"--Payment for Shares."

Nominees.  Nominees, such as brokers, trustees or depositories for securities,
who hold shares of our common stock for the account of others should notify the
respective beneficial owners of such shares as soon as possible to ascertain
those beneficial owners' intentions and to obtain instructions with respect to
the rights. If the beneficial owner so instructs, the nominee should complete
the subscription certificate and submit it to the subscription agent with the
proper payment as described below on page 19 of this prospectus under "--Payment
for Shares."

Banks, brokers, trustees and other nominee holders of rights will be required to
certify to the subscription agent, before any over-subscription privilege may be
exercised with respect to any particular beneficial owner on the record date, as
to the aggregate number of rights exercised during the subscription period and
the number of shares subscribed for pursuant to the over-subscription privilege
by the beneficial owner and that the beneficial owner exercised all the rights
issued to them pursuant to this rights offering. Nominee-Holder
Over-Subscription Exercise Forms and Beneficial Owner Certification Forms will
be distributed to banks, brokers, trustees and other nominees with the
subscription certificates.

INFORMATION AGENT

Any questions or requests for assistance may be directed to the information
agent at its telephone number and address listed below:


The information agent for this rights offering is: Georgenson Shareholder
Communication, Inc.


Stockholders may also contact their brokers or nominees for information with
respect to this rights offering.

The information agent will receive a fee estimated to be approximately
$          , plus reimbursement for all out-of-pocket expenses related to this
rights offering.

PAYMENT FOR SHARES

Rights holders who wish to acquire shares of our common stock pursuant to this
rights offering or, if eligible, pursuant to the over-subscription privilege may
choose between the following methods of payment:


(1) A rights holder can send the subscription certificate together with payment
    for the shares of our common stock subscribed for during the subscription
    period and, if eligible, for any additional shares subscribed for pursuant
    to the over-subscription privilege to the subscription agent based upon an
    estimated subscription price of $          per share. Subscription will be
    accepted when payment, together with the executed subscription certificate,
    is received by the subscription agent at one of the addresses set forth
    above; the payment and subscription certificate must be received by the
    subscription agent no later than 5:00 p.m., New York City time, on the
    expiration date. The subscription agent will deposit all checks received by
    it for the purchase of shares into a segregated interest-bearing account of
    ours (the interest from which will belong to us) pending proration and
    distribution of shares of our common stock. A payment pursuant to this
    method must be in U.S. dollars by money order or check drawn on a bank
    located in the United States, must be payable to THE CENTRAL EUROPE AND
    RUSSIA FUND, INC. and must accompany an executed Subscription Certificate
    for such Subscription Certificate to be accepted.


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                                                                              19
<PAGE>
OUR RIGHTS OFFERING
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(2) Alternatively, a subscription will be accepted by the subscription agent if,
    prior to 5:00 p.m., New York City time, on the expiration date, the
    subscription agent has received a notice of guaranteed delivery by facsimile
    (telecopy) or otherwise from a bank, a trust company or NYSE member
    guaranteeing delivery of (i) payment of the full subscription price for the
    shares of our common stock subscribed for during the subscription period
    and, if eligible, any additional shares subscribed for pursuant to the
    over-subscription privilege, and (ii) a properly completed and executed
    subscription certificate. The subscription agent will not honor a notice of
    guaranteed delivery unless a properly completed and executed subscription
    certificate and full payment for the shares of our common stock are received
    by the subscription agent by the close of business on the fifth business day
    after the expiration date.


On the confirmation date, which will be seven business days following the
expiration date, a confirmation will be sent by the subscription agent to each
rights holder exercising their rights (or, if shares of our common stock are
held by Cede & Co. or any other depository or nominee, to Cede & Co. and that
other depository or nominee), showing (i) the number of shares of our common
stock acquired during the subscription period, (ii) the number of shares, if
any, acquired pursuant to the over-subscription privilege, (iii) the per share
and total purchase price for the shares and (iv) any additional amount payable
to us by the rights holder or any excess to be refunded by us to the rights
holder, in each case based on the subscription price as determined on the
expiration date. If any rights holder, if eligible, exercises his right to
acquire shares of our common stock pursuant to the over-subscription privilege,
any excess payment which would otherwise be refunded to him will be applied by
us toward payment for shares acquired pursuant to exercise of the
over-subscription privilege. Any additional payment required from a rights
holder must be received by the subscription agent within ten business days after
the confirmation date. Any excess payment to be refunded by us to a rights
holder will be mailed by the subscription agent to him as promptly as
practicable. All payments by a rights holder must be in U.S. dollars by money
order or check drawn on a bank located in the United States and payable to THE
CENTRAL EUROPE AND RUSSIA FUND, INC.


Whichever of the two methods described above is used, issuance and delivery of
certificates for the shares of our common stock purchased are subject to
collection of checks and actual payment.

A RIGHTS HOLDER WHO HAS EXERCISED THEIR RIGHTS WILL HAVE NO RIGHT TO RESCIND
THEIR SUBSCRIPTION AFTER RECEIPT OF THE COMPLETED SUBSCRIPTION CERTIFICATE
TOGETHER WITH PAYMENT FOR SHARES BY THE SUBSCRIPTION AGENT.

If a rights holder who acquires shares of our common stock during the
subscription period or pursuant to the over-subscription privilege does not make
payment of any additional amounts due, we reserve the right to take any or all
of the following actions: (i) find other stockholders for the subscribed and
unpaid for shares; (ii) apply any payment actually received by us toward the
purchase of the greatest whole number of shares which could be acquired by the
rights holder upon exercise of his rights acquired during the subscription
period or pursuant to the over-subscription privilege; or (iii) exercise any and
all other rights or remedies to which we may be entitled, including, without
limitation, the right to set-off against payments actually received by us with
respect to the subscribed shares.

The method of delivery of subscription certificates and payment of the
subscription price to the subscription agent will be at the election and risk of
the stockholders, but if sent by mail it is recommended that such forms and
payments be sent by registered mail, properly insured, with return receipt
requested, and that a sufficient number of days be allowed to ensure delivery to
the subscription agent and clearance of payment prior to 5:00 p.m., New York
City time, on the expiration date. Because uncertified personal checks may take
at least five business days to clear, you are strongly urged to pay, or arrange
for payment, by means of certified or cashier's check or money order.

- --------------------------------------------------------------------------------
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<PAGE>
OUR RIGHTS OFFERING
- --------------------------------------------------------------------------------

All questions concerning the timeliness, validity, form and eligibility of any
exercise of rights will be determined by us, which determinations will be final
and binding. We, in our sole discretion, may waive any defect or irregularity,
or permit a defect or irregularity to be corrected within such time as we may
determine, or reject the purported exercise of any right. Subscriptions will not
be deemed to have been received or accepted until substantially all
irregularities have been waived or cured within such time as we determine in our
sole discretion. We will not be under any duty to give notification of any
defect or irregularity in connection with the submission of subscription
certificates or incur any liability for failure to give such notification.

NOTICE OF NET ASSET VALUE DECLINE

We have, pursuant to the SEC's regulatory requirements, undertaken to suspend
this rights offering until we amend this prospectus if subsequent to           ,
2004, the effective date of our registration statement, our net asset value
declines more than 10% from our net asset value as of that date. In that event,
we will notify stockholders on the record date of any such decline and permit
them to cancel their exercise of rights.

DELIVERY OF STOCK CERTIFICATES

Participants in our dividend reinvestment plan will have any shares of our
common stock acquired pursuant to this rights offering credited to their
stockholder dividend reinvestment accounts in the plan. Stockholders whose
shares are held of record by Cede & Co. or by any other depository or nominee on
their behalf or their broker-dealers' behalf will have any shares acquired
during the subscription period credited to the account of Cede & Co. or other
depository or nominee. Shares acquired pursuant to the over-subscription
privilege will be certificated and stock certificates representing these shares
will be sent directly to Cede & Co. or other depository or nominee. Stock
certificates will not be issued for shares credited to plan accounts for
participants in our dividend reinvestment plan. With respect to all other
stockholders, stock certificates for all shares acquired pursuant to this rights
offering will be mailed promptly after payment for the shares subscribed for has
cleared.

DISTRIBUTION ARRANGEMENTS


UBS Securities LLC, 299 Park Avenue, New York, New York 10171, who is a
broker-dealer and member of the National Association of Securities Dealers, Inc.
will act as dealer manager for this rights offering. Under the terms and subject
to the conditions contained in the dealer manager agreement dated the same date
as this prospectus, the dealer manager will provide financial advisory services
and marketing services in connection with this rights offering and will solicit
the exercise of rights and participation in the over-subscription privilege.
This rights offering is not contingent upon any number of rights being
exercised. We have agreed to pay the dealer manager a fee for its financial
advisory, marketing and soliciting services equal to 3.75% of the aggregate
subscription price for shares issued pursuant to this rights offering.



The dealer manager will reallow to broker-dealers included in the selling group
to be formed and managed by the dealer manager selling fees equal to 2.50% of
the subscription price per share for each share issued pursuant to this rights
offering as a result of their selling efforts. In addition, the dealer manager
will reallow to other broker-dealers that have executed and delivered a
soliciting dealer agreement and have solicited the exercise of rights,
solicitation fees equal to 0.50% of the subscription price per share for each
share issued pursuant to the exercise of rights as a result of their soliciting
efforts, subject to a maximum fee based on the number of shares held by each
broker-dealer through DTC on the record date. Fees will be paid to the
broker-dealer designated on the applicable portion of the subscription
certificates or, in the absence of such designation, to the dealer manager.


- --------------------------------------------------------------------------------
                                                                              21
<PAGE>
OUR RIGHTS OFFERING
- --------------------------------------------------------------------------------


In addition, we have agreed to reimburse the dealer manager up to $100,000 for
its reasonable expenses incurred in connection with this rights offering. We and
our investment manager have each agreed to indemnify UBS Securities LLC or
contribute to losses arising out of certain liabilities, including liabilities
under the Securities Act. The dealer manager agreement also provides that the
dealer manager will not be subject to any liability to us in rendering the
services contemplated by the dealer manager agreement except for any act of bad
faith, willful misconduct, or gross negligence of the dealer manager or reckless
disregard by the dealer manager of its obligations and duties under the dealer
manager agreement.


Prior to the expiration of this rights offering, the dealer manager may
independently offer for sale shares of our common stock, including shares
acquired through purchasing and exercising the rights, at prices it sets. The
dealer manager may realize profits or losses independent of any fees described
in this prospectus.

We have agreed not to offer or sell, or enter into any agreement to sell, any
equity or equity related securities of ours or securities convertible into
equity or equity related securities for a period of 180 days after the date of
the dealer manager agreement without the prior consent of the dealer manager,
except for the shares of our common stock issued in reinvestment of dividends or
distributions.

FOREIGN RESTRICTIONS

Subscription certificates will not be mailed to stockholders whose record
addresses are outside the United States, which includes the District of
Columbia, and the territories and possessions of the United States. These
stockholders will receive written notice of this rights offering. The rights to
which these subscription certificates relate will be held by the subscription
agent for these stockholders' accounts until instructions are received to
exercise the rights. If no instructions have been received by 5:00 p.m., New
York City time on           , 2004, three business days prior to the expiration
date (or, if the subscription period is extended, on or before three business
days prior to the extended expiration date), the rights of these stockholders
will be transferred by the subscription agent to the dealer manager who will
either purchase the rights or use its best efforts to sell the rights. The net
proceeds, if any, from sale of those rights by or to the dealer manager will be
remitted to these stockholders.

FEDERAL INCOME TAX CONSEQUENCES

The following summary of the material United States federal income tax
consequences of the issuance and exercise transfer or lapse of the rights does
not discuss all aspects of federal income taxation that may be relevant to a
particular stockholder, and stockholders should consult their own tax advisors
regarding the tax consequences, including state, local and foreign tax
consequences, relevant to their particular circumstances.

(1) The value of a right will not be includible in the income of a stockholder
    at the time the right is issued.

(2) The basis of a right issued to a stockholder will be zero, and the basis of
    the share with respect to which the right was issued (the old share) will
    remain unchanged, unless either (a) the fair market value of the right on
    the date of distribution is at least 15% of the fair market value of the old
    share, or (b) the stockholder affirmatively elects (in the manner set out in
    Treasury Regulations under the Internal Revenue Code of 1986, as amended
    (the "Code")) to allocate to the right a portion of the basis of the old
    share. If either (a) or (b) applies, the stockholder must allocate basis
    between the old share and the right in proportion to their fair market
    values on the date of distribution.

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OUR RIGHTS OFFERING
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(3) The basis of a right purchased in the market will generally be its purchase
    price.

(4) The holding period of a right issued to a stockholder will include the
    holding period of the old share.

(5) No loss will be recognized by a stockholder if a right distributed to the
    stockholder expires unexercised because the basis of the old share may be
    allocated to a right only if the right is exercised. If a right that has
    been purchased in the market expires unexercised, there will be a recognized
    loss equal to the basis of the right.

(6) Any gain or loss on the sale of a right will be a capital gain or loss if
    the right is held as a capital asset (which in the case of rights issued to
    stockholders will depend on whether the old share is held as a capital
    asset), and will be a long-term capital gain or loss if the holding period
    exceeds one year.

(7) No gain or loss will be recognized by a stockholder upon the exercise of a
    right, and the basis of any share acquired upon exercise (the new share)
    will equal the sum of the basis, if any, of the right and the subscription
    price for the new share. The holding period for the new share will begin
    with the date on which the right is exercised.

EMPLOYEE PLAN CONSIDERATIONS

Stockholders who are employee benefit plans subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (including corporate savings
and 401(k) plans), Keogh or H.R. 10 plans of self-employed individuals and
individual retirement accounts should be aware that additional contributions of
cash to the employee retirement plan (other than rollover contributions or
trustee-to-trustee transfers from other employee retirement plans) in order to
exercise rights would be treated as contributions to the employee retirement
plan and, when taken together with contributions previously made, may result in,
among other things, excise taxes for excess or nondeductible contributions. In
the case of employee retirement plan qualified under Section 401(a) of the Code
and certain other employee retirement plans, additional cash contributions could
cause the maximum contribution limitations of Section 415 of the Code or other
qualification rules to be violated. In addition, there may be other adverse tax
and ERISA consequences if rights are sold or transferred by an employee
retirement plan.

Employee retirement plans and other tax exempt entities, including governmental
plans, should also be aware that if they borrow in order to finance their
exercise of rights, they may become subject to the tax on unrelated business
taxable income ("UBTI") under Section 511 of the Code. If any portion of an
individual retirement account ("IRA") is used as security for a loan, the
portion so used is also treated as distributed to the IRA depositor.

ERISA contains fiduciary responsibility requirements, and ERISA and the Code
contain prohibited transaction rules that may affect the exercise of rights. Due
to the complexity of these rules and the penalties for noncompliance, employee
retirement plans should consult with their counsel and other advisers regarding
the consequences of their exercise of rights under ERISA and the Code.

CERTAIN EFFECTS OF THIS RIGHTS OFFERING

Our investment manager and investment adviser will benefit from this rights
offering because the investment management fee and the investment advisory fee
are based on our average weekly net assets. See "Our Management" on page 37 of
this prospectus and "Investment Advisory and Other Services" on page B-17 of the
SAI. It is not possible to state precisely the amount of additional compensation
our investment manager and investment adviser will receive as a result of this
rights offering because it is not known how many shares of our common stock will
be subscribed for and

- --------------------------------------------------------------------------------
                                                                              23
<PAGE>
OUR RIGHTS OFFERING
- --------------------------------------------------------------------------------

because the proceeds of this rights offering will be invested in additional
portfolio securities, which will fluctuate in value. However, assuming (i) all
rights are exercised, (ii) our average weekly net asset value during 2004 is
$     per share (the net asset value per share on           , 2004) and (iii)
the subscription price is $          per share (     % of the average of the
last reported sale prices of a share of our common stock on           , 2004 and
the four preceding business days) and after giving effect to dealer manager and
soliciting fees, our investment manager and investment adviser would receive
additional annual advisory and administrative fees of approximately
$          and $          , respectively. Some of our directors who voted to
authorize this rights offering may benefit indirectly from their affiliations.
One of our directors who voted to authorize this rights offering is an
interested person of our investment manager and our investment adviser. Another
one of our directors is affiliated with UBS Securities LLC, the dealer manager
in this rights offering. The other directors who voted to authorize this rights
offering are not affiliated with our investment manager, investment adviser or
with the dealer manager. See "Our Management" on page 37 of this prospectus and
"Management" on page B-8 of the SAI.

INVESTMENT CONSIDERATIONS


Upon completion of this rights offering, stockholders who do not exercise their
rights fully will own a smaller proportional interest in us than would be the
case if this rights offering had not been made. In addition, because the
subscription price per share may be less than the then net asset value per share
of our common stock, this rights offering may result in a dilution of net asset
value per share of our common stock for all stockholders, irrespective of
whether they exercise all or any portion of their rights. This dilution will
disproportionately affect stockholders who do not exercise their rights.
Although it is not possible to state precisely the amount of such a decrease in
value, because it is not known at this time what the subscription price will be,
what the net asset value per share will be at the expiration date or what
proportion of our shares will be subscribed for, the dilution could be
substantial. For example, assuming that all rights are exercised, that our net
asset value on the expiration date is $     per share (the net asset value per
share on           , 2004), and that the subscription price is      % of an
average market price of $     per share (the average of the last reported sale
prices of a share of our common stock on           , 2004 and the four preceding
business days), our net asset value per share on this date would be reduced by
approximately $
per share, after giving affect to the dealer manager and broker solicitation
fees payable by us, estimated at $          , and other expenses of this rights
offering, estimated at $          , payable by us. Stockholders on the record
date may experience a decrease in the net asset value per share held by them,
irrespective of whether they exercise all or any portion of their rights.


IMPORTANT DATES TO REMEMBER


<Table>
<Caption>

<S>                                                            <C>
Record Date.................................................
Subscription Period.........................................     *
Expiration Date.............................................     *
Notices for Guarantees of Delivery Due......................     *
Payment for Guarantees of Delivery Due......................     *
Confirmation Mailed to Participants.........................     *
Final Payment of Shares.....................................     *
</Table>


- ------------

* Unless this rights offering is extended.

- --------------------------------------------------------------------------------
 24
<PAGE>

- --------------------------------------------------------------------------------

Use of proceeds

Assuming all shares in this rights offering are sold at an estimated
subscription price of $     per share, the net proceeds of this rights offering
are estimated to be approximately US $          after payment of the dealer
manager and soliciting fees and estimated offering expenses. However, we do not
know whether all rights will be exercised in full, and the subscription price
will not be determined until the close of business on the expiration date of
this rights offering. We expect that the net proceeds will be invested in
accordance with the policies set forth below under "Investment Objective and
Policies" and on page B-2 of the SAI under "Investment Objective and Policies"
within three months from the expiration date, and in no event will the time
period for investment exceed six months.

Investment objective and policies

Our investment objective is to seek long-term capital appreciation through
investment primarily in equity and equity-linked securities of issuers domiciled
in Central Europe and Russia. The term "Central Europe" includes, for this
purpose:

<Table>
<S>                                 <C>   <C>                                     <C>   <C>
Republic of Albania                       Federal Republic of Germany                   Romania
Republic of Austria                       Republic of Hungary                           Slovak Republic
Republic of Bosnia and Herzegovina        Republic of Latvia                            Republic of Slovenia
Republic of Belarus                       Grand Duchy of Liechtenstein                  Swiss Confederation
                                                                                        ("Switzerland")
Republic of Bulgaria                      Republic of Lithuania                         Ukraine
Republic of Croatia                       Former Yugoslav Republic of Macedonia         Federal Republic of Yugoslavia
Czech Republic                            Republic of Moldova
Republic of Estonia                       Republic of Poland
</Table>

A map showing these countries is set forth on the inside cover page of this
prospectus.

Under normal circumstances, at least 80% of our net assets will be invested in
the securities of issuers domiciled in Central Europe or Russia. If we borrow
money (referred to as "leverage"), which we are permitted to do only for
emergency or exceptional circumstances, the 80% minimum will apply to the total
of our net assets plus the amount of those borrowings. We may also invest in
equity or equity-linked securities of issuers domiciled elsewhere in Europe. An
issuer is deemed to be "domiciled" in a country or region if:

+  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,

+  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 our investment manager, or

+  its equity securities are traded principally in that country or region.

- --------------------------------------------------------------------------------
                                                                              25
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The term "Europe" includes the countries of Central Europe, as well as:

<Table>
<S>                           <C>   <C>                         <C>   <C>
Kingdom of Belgium                  Republic of Ireland               Kingdom of Spain
Kingdom of Denmark                  Italian Republic                  Kingdom of Sweden
Republic of Finland                 Grand Duchy of Luxembourg         Republic of Turkey
Republic of France                  Kingdom of the                    United Kingdom of Great Britain and Northern Ireland
                                    Netherlands
Hellenic Republic ("Greece")        Kingdom of Norway
Republic of Iceland                 Republic of Portugal
</Table>

Any future country or countries (or other political entity) formed by
combination or division of the countries comprising Central Europe, Europe or
Russia shall also be deemed to be included within the term "Central Europe",
"Europe" or "Russia", respectively.

Our investment objective and the investment policies described above are
fundamental and may be changed only by the approval of a majority of our
outstanding voting securities. Under the Investment Company Act, a "majority"
means 67% of our shares present at a meeting of our stockholders if the owners
of more than 50% of our shares then outstanding are present in person or by
proxy or, if lower, more than 50% of our outstanding shares. We refer to this
approval voting level as a "majority vote." We will not trade in securities for
short-term gain. Current interest and dividend income are not an objective of
ours. No assurance can be given that we will be able to achieve our objective.

For purposes of the above policies and for the policies and practices described
below in "--Portfolio Structure" and "--Other Investment Practices," 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 our portfolio.

PORTFOLIO STRUCTURE

We will seek to achieve our 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 underlying equity securities receivable upon exercise
or settlement of the linked security. For a discussion of the types of futures
and options that we may or may not invest in, see "--Other Investment Practices"
described below and "Investment Objective and Policies--Futures and Options" on
page B-3 of the SAI.

We will not concentrate investments in any one industry. Non-concentration means
that we will not invest more than 25% of our total assets in the securities of
issuers in any one industry. For purposes of this non-concentration policy, our
investment manager generally classifies the issuers of our portfolio securities
according to the broad industry classification used by Standard & Poor's
Corporation.

In selecting industries and companies for our investments, our investment
adviser and the investment 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.


We have no current intention of focusing our investments in any particular
countries other than Poland, Russia, Hungary, the Czech Republic and Turkey. Our
investments in Poland, Russia, Hungary and the Czech Republic are and may in the
future be significant. In addition, our investments in Turkey may in the future
be significant. On December 31, 2003, the percentages of our total assets
invested in these countries were: Poland--32.9%, Russia--30.9%, Hungary--21.3%,
the Czech Republic--11.2% and Turkey--0.0%.


- --------------------------------------------------------------------------------
 26
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------


Nonetheless, except as described below, there are no prescribed limits on
geographic asset distribution and, from time to time, a significant portion of
our assets may be invested in companies domiciled in as few as three countries.
Our board of directors has also adopted a non-fundamental policy, which may be
changed without stockholder approval, that for the time being permits us to
invest up to the following percentages of the value of our total assets in
equity and equity-linked securities of issuers domiciled in the following
countries. Our board reserves the right to change this policy.



<Table>
<Caption>
COUNTRY                                                        PERCENTAGE OF TOTAL ASSET LIMIT
- -------                                                        -------------------------------
<S>                                                            <C>
Poland......................................................                 65%
Hungary.....................................................                 50%
Russia......................................................                 50%*
Czech Republic..............................................                 30%
Turkey......................................................                 20%**
Any single other country....................................                 15%
</Table>


- ---------------


 * Our Board of Directors has increased the percentage limit for investment in
   Russia from 35% to 50%, effective upon the completion of this rights
   offering.



** Our Board of Directors has increased the percentage limit for investment in
   Turkey from 15% to 20%, effective upon the completion of this rights
   offering.


We may not purchase more than 10% of the outstanding voting securities of any
single issuer.

Although we intend to focus our investments in equities or equity-linked
securities that are listed on a recognized securities exchange or otherwise
publicly traded, we may also invest in securities that are not readily
marketable.

We may also invest in other investment companies, subject to applicable
limitations under the Investment Company Act. These limitations include a
prohibition on our acquiring more than 3% of the voting securities of any other
investment company, more than 5% of our total assets in securities of any one
investment company, or more than 10% of our total assets in securities of all
investment companies combined. Any investment companies in which we may invest
will have a policy of investing all or substantially all of their assets in one
or more European countries or Russia. Investments in other investment companies
may involve an additional layer of expenses because of the fees and expenses
payable by such other investment companies. In determining whether to invest our
assets in other investment companies, our investment manager and investment
adviser will take into consideration, among other factors, the advisory fee and
other expenses payable by those other investment companies.

OTHER INVESTMENT PRACTICES

In addition to the investment practices discussed above in "Investment Objective
and Policies--Portfolio Structure," we may also invest in additional types of
securities, such as warrants, if consistent with our investment objective, and
participation certificates of issuers in any European country or Russia.
Participation certificates generally entitle the holder to participate in
dividend distributions, but not to vote or claim assets in liquidation.

For hedging purposes, we may also purchase put and call options on stock of
European or Russian issuers and, if and when permitted by applicable U.S. law,
invest in the index and bond futures of any other derivative securities listed
on any organized exchange. We may also purchase put and call options on bonds
and other securities, as well as securities indices and, to the extent permitted
by applicable U.S. law, may invest in other options, futures and options on
futures with respect to any

- --------------------------------------------------------------------------------
                                                                              27
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

securities or securities indices compatible with our investment objective that
may from time to time become available on any organized exchange.

We may also write (also referred to as "selling") covered call options on our
portfolio securities and appropriate securities indices for purposes of
generating income. We may write covered call options on portfolio securities and
appropriate securities indices up to the amount of its entire portfolio.

We may invest up to 20% of our total assets in fixed income securities of
European or Russian issuers. For temporary defensive purposes, we also may
invest in money market instruments denominated in U.S. dollars or in a European
or Russian currency or composite currency, including bank time deposits and
certificates of deposit.

We may also lend our portfolio securities to banks, securities dealers and other
institutions meeting the creditworthiness standards established by our board of
directors. We may lend our portfolio securities so long as the terms and the
structure of the loans are consistent with the Investment Company Act.

Although we do not currently engage in foreign exchange transactions as an
investment strategy, we may, when our investment adviser and our investment
manager deem it advisable, attempt to hedge our foreign currency exposure by
entering into forward currency contracts.

For a more detailed discussion of our investment practices with respect to
warrants, participation certificates, futures and options, fixed income
securities, securities lending and currency transactions and the special
considerations relevant to those practices, see "Investment Objective and
Policies" on page B-2 of the SAI. For information regarding other investment
restrictions, see "Investment Restrictions" on page B-5 of the SAI.

- --------------------------------------------------------------------------------
 28
<PAGE>

- --------------------------------------------------------------------------------

Risk factors and special considerations

RISK FACTORS RELATING TO FOREIGN INVESTMENT GENERALLY

Foreign investments may involve certain considerations and risks not typically
associated with those of domestic origin as a result of, among others:

+  generally less liquid and less efficient securities markets;

+  generally greater price volatility;

+  exchange rate fluctuations and exchange controls and the costs associated
   therewith;

+  currency fluctuation;

+  imposition of restrictions on the expatriation of funds or other assets;

+  less publicly available information about issuers;

+  the imposition of taxes;

+  higher transaction and custody costs;

+  settlement delays and risk of loss;

+  difficulties in enforcing contracts;

+  difficulties in obtaining or enforcing a court judgment;

+  less liquidity and smaller market capitalizations;

+  lesser governmental regulation of the securities markets;

+  different accounting, auditing, financial and disclosure standards;

+  governmental interference;

+  higher inflation;

+  social, economic and political uncertainties;

+  the risk of expropriation of assets; and

+  the risk of war.

Some foreign markets in which we invest are considered to be emerging market
countries. Investment in these countries subjects us to a greater risk of loss
than investments in a developed country. This is due to, among other things,
greater market volatility, lower trading volume, political and economic
instability, greater risk of market shut down and more governmental limitations
on foreign investment policy than those typically found in a developed market.

The economies of individual emerging market countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product, rate of inflation, currency depreciation, capital reinvestment,
resource self-sufficiency and balance of payments position. Further, the
economies of developing countries generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be adversely
affected by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue
to be adversely affected by economic conditions in the countries with which they
trade.

- --------------------------------------------------------------------------------
                                                                              29
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------

Foreign investment in certain emerging market issuers is restricted or
controlled to varying degrees. These restrictions or controls may at times limit
or preclude foreign investment in certain emerging market issuers and increase
our costs and expenses. Certain emerging market countries require governmental
approval prior to investments by foreign persons in a particular issuer, limit
the amount of investment by foreign persons in a particular issuer, limit the
investment by foreign persons only to a specific class of securities of an
issuer that may have less advantageous rights than the classes available for
purchase by domiciliaries of the countries and/or impose additional taxes on
foreign investors. Certain emerging market countries may also restrict
investment opportunities in issuers in industries deemed important to national
interests.

Emerging market countries may require governmental approval for the repatriation
of investment income, capital or the proceeds of sales of securities by foreign
investors. In addition, if a deterioration occurs in an emerging market
country's balance of payments, the country could impose temporary restrictions
on foreign capital remittances. We could be adversely affected by delays in, or
a refusal to grant, any restrictions on investments. Investing in local markets
in emerging market countries may require us to adopt special procedures, seek
local government approvals or take other actions, each of which may involve
additional costs to us.

No established secondary markets may exist for many of the emerging market
issuer securities in which we invest. Reduced secondary market liquidity may
have an adverse effect on market price and our ability to dispose of particular
instruments when necessary. Reduced secondary market liquidity for certain
emerging market issuer securities may also make it more difficult for us to
obtain accurate market quotations for purposes of valuing our portfolio and
calculating our net asset value. Market quotations are generally available on
many emerging market issuer securities only from a limited number of dealers and
may not necessarily represent firm bids of those dealers or prices for actual
sales.

RISK FACTORS RELATING TO INVESTMENT IN CENTRAL EUROPE

Central European countries are in varying stages of transition towards
market-oriented economies based on private and entrepreneurial initiatives,
multi-party democracies, pluralism and market economies. These countries
experienced extremely volatile market performance in the past decade, and
investing in securities of Central European issuers entails all of the risks of
investing in securities of foreign issuers to a heightened degree. In addition,
a substantial portion of the economic growth, if any, of Central European
countries is attributable to their exporting industries rather than domestic
consumption; therefore, the Central European countries are also highly
susceptible to economic downturns in Western European countries and the United
States, which are substantial consumers of their exported products.

Central European markets continue to be relatively volatile, and our investments
will remain subject to currency fluctuation and local political, economic and
social uncertainties. Investments in a single region, even though representing a
number of different countries, may be affected by common economic forces and
other factors. We are subject to greater risks of adverse events which occur in
the region and may experience greater volatility than a fund that is more
broadly diversified geographically. There are also individual exceptions within
Central Europe from a risk perspective. For example, while the Republic of
Belarus and the Republic of Moldova are geographically in the same region, their
economies are significantly less developed than those of other Central European
countries. Less developed markets involve higher levels of risk. In addition,
many companies in Central Europe generally do not have operating histories of
significant duration. Consequently, these markets may be subject to more
substantial volatility and price fluctuations than securities that are traded in
more developed markets.

- --------------------------------------------------------------------------------
 30
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------

Investing in any developing market means tolerating a certain amount of
volatility and, in some cases, severe market corrections. Such highly
speculative investing involves special risk considerations not typically
associated with investing in U.S. securities markets. The specific nature of
such risks may vary according to the Central European country in which
investments are made. These risks include, among others:

+  the risk of nationalization or expropriation of assets or confiscatory
   taxation, which may involve the risk of total loss;

+  controls on foreign investment and local practices disfavoring foreign
   investors and limitations on repatriation of invested capital, profits and
   dividends, and on our ability to exchange local currencies for U.S. dollars;

+  greater social, economic and political uncertainty (including regional
   conflict and the risk of war);

+  transitional forms of government;

+  delays in settling portfolio transactions and risk of loss arising out of the
   system of share registration and custody used in certain Central European
   countries;

+  risks in connection with the maintenance of our portfolio securities and cash
   with foreign sub-custodians and securities depositories, including the risk
   that appropriate sub-custody arrangements will not be available to us;

+  the risk that it may be impossible or more difficult than in other countries
   to obtain and/or enforce a judgment;

+  pervasiveness of public corruption and crime in the economic systems of
   certain Central European countries;

+  greater price volatility, substantially less liquidity and significantly
   smaller market capitalization of securities markets in which we may invest;

+  currency exchange rate volatility and the lack of available currency hedging
   instruments;

+  the use of derivative instruments, which may include: forward foreign
   currency exchange contracts, currency futures contracts and options thereon,
   put and call options on securities, indices and foreign currencies, stock
   index futures contracts and options thereon and interest rate futures
   contracts and options thereon;

+  higher rates of inflation (including the risk of social unrest associated
   with periods of hyperinflation);

+  the risk that, by possibly investing significantly in certain multi-industry
   sectors, we may be affected more by any single economic, political or
   regulatory development relating to a specific sector;

+  the financial condition of Central European issuers, including any debt
   amounts and the fact that such issuers may be smaller, less seasoned and
   newly organized;

+  the risk that dividends may be withheld at the source;

+  dependency on exports and the corresponding importance of international
   trade;

+  the difference in, or lack of, disclosure, auditing and financial reporting
   standards, which may result in unavailability of material information about
   issuers in many Central European countries;

+  the risk that the tax systems of Central European countries may not be
   reformed to prevent inconsistent, retroactive and/or exorbitant taxation;

- --------------------------------------------------------------------------------
                                                                              31
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------

+  the fact that statistical information regarding the economy of Central
   European countries may be inaccurate or not comparable to statistical
   information regarding the United States or other economies;

+  less extensive regulation of the securities markets than in more developed
   countries;

+  markets that may be substantially influenced by insider trading and other
   market practices not accepted in developed markets;

+  the risks associated with the difficulties that may occur in pricing our
   portfolio securities;

+  possible difficulty in identifying a purchaser of securities held by us due
   to the underdeveloped nature of the securities markets in Central Europe; and

+  the risk of lawsuits arising from restrictive regulations and practices with
   respect to foreign investment in particular industries.

RISKS FACTORS RELATING TO INVESTMENT IN RUSSIA

Investing in Russia subjects us to many of the same risks associated with
investing in Central European countries that are described above. However, there
are significant risks inherent in Russian securities that are not typically
associated with securities of companies in more developed countries. The value
of Russian securities may be affected by various uncertainties, such as
economic, political and social instability, investment and regulatory risk,
including crime and corruption in government and business, and inconsistency and
underdevelopment of Russia's tax and legal systems. As is the case with issuers
in most emerging markets, Russian securities are subject to a higher degree of
volatility than the securities of Western companies. Although investment in
Central European countries shares some of these risks, as described above,
investments in Russia should be considered to have greater risks.

Since the break-up of the USSR at the end of 1991, Russia has undergone
substantial and, at times, turbulent economic disruption and political and
social upheaval. Russia continues to make the transition from a centrally
controlled command system to a market-oriented, democratic model of government,
but its continued development, and the pace with which it continues to make the
transition, remains uncertain. Since 1991, Russia has been affected by declines
in gross domestic product (GDP), hyperinflation, an unstable currency and high
government indebtedness relative to GDP. The Russian economy also suffers from
the lack of an effective banking system and a significant proportion of
commercial transactions are settled in kind or by the use of promissory notes.
The Russian economy is also plagued by a deteriorating infrastructure due to
poor funding and maintenance, and potential inflationary pressures and currency
devaluation as a result of insufficient funding on its debts. Russia's role and
its reintegration into the global political economy are also unsettled.
Moreover, internal regional conflicts continue to exist, which highlight the
political tension between the central government in Moscow and certain regions
within the Russian Federation. At times, the Russian government also engages in
expropriation, nationalism and confiscation of assets.

Russia's lower house of parliament, the Duma, held elections on December 9th,
2003. The elections have resulted in a firmer shift of power towards parties
professing loyalty to President Vladimir Putin, who with their support now has a
simple majority that would allow him to pass legislation without having to
compromise with other parties. There is also the possibility that an alliance of
the parties loyal to President Putin could effect changes in Russia's
constitution, including extending the term for which the President is allowed to
serve. The election also led to the defeat of liberal and free-market political
parties, which failed to attain the necessary 5% of the votes to gain seats in
the Duma. At the same time one ultra-nationalistic party was able to double its
representation in parliament. The election was criticized almost unanimously by
independent observers, and allegations of election tampering remain unresolved.
President Putin himself has been criticized for using state-run media

- --------------------------------------------------------------------------------
 32
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------

outlets, which control major segments of Russia's media landscape, for election
purposes, as well as for failing to enforce a Russian law that would have
mandated similar coverage for other political parties. Russia's transition
towards a well-functioning democracy remains uncertain and much will depend on
President Putin in the future, particularly on his relationship to the parties
now loyal to him. President Putin will run for reelection in March of 2004.

The Russian economy relies heavily on the production and export of oil. Oil and
gas companies can be significantly affected by the supply of and demand for
energy fuels generally as well as the supply of and demand for oil and gas in
particular, the general condition of industries that serve oil and gas
companies, price fluctuations in energy and oil and gas prices, exploration and
production spending, energy conservation, the success of exploration projects,
government regulation, including taxation, world events, events involving
nature, other events involving international politics, increased competition,
social views, environmental concerns and economic conditions. Natural gas
companies, moreover, are subject to changes in price and supply of both
conventional and alternative energy sources. Russia also has substantial trading
links with Iraq. Because Russia is highly sensitive to changes in the world oil
price and because of recent United States military action against Iraq, it is
even more difficult to predict future oil price movements with any certainty and
fluctuations in pricing may increase substantially.

In addition, Russia's largest oil company, Yukos, is undergoing significant
difficulties. An investigation over several billion U.S. dollars worth of
allegedly back taxes has been launched, and the company's former chief executive
has been arrested and charged with tax evasion and fraud. In early 2003 Yukos
and Sibneft, another major Russian oil company, began merger talks which would
have resulted in the world's fourth largest oil company. Sibneft has since
announced it is terminating the merger, and the company is currently in the
process of repurchasing the majority of its shares from Yukos. Yukos'
difficulties have led to uncertainty in the Russian markets in general, and
allegations of political motivations behind the company's investigation have
added further uncertainty.

There is still no centralized public market for trading Russian securities,
despite the number of stock exchanges in Russia, and trading occurs mostly
over-the-counter. The Russian securities market is still developing and is
regulated by several different authorities that are often in competition with
each other, resulting in contradictory regulations, at times. Corporate
governance standards for Russian companies have also proven to be poor, and
minority stockholders in Russian companies have suffered losses due to abusive
share dilutions, asset transfers and transfer-pricing practices. Stockholders of
Russian securities also lack many of the protections available to stockholders
of Western issuers. In addition, businesses and parts of the Russian economic
system also continue to suffer from very high crime levels, including extortion
and fraud. Moreover, accounting, financial and auditing reporting by Russian
companies is also generally of less quality and less reliable compared with
Western companies.

Laws and regulations involving foreign investment in Russian enterprises, title
to securities and transfer of title are also relatively new and can change
quickly and unpredictably in a manner far more volatile than in developed market
economies. We may also experience difficulty transferring income received in
investments in Russian issuers, such as profits, dividends and interest
payments, abroad. See "--Exchange Rate Fluctuations and Foreign Currency
Considerations" below on page 34.

Russia's taxation system is frequently subject to change, and enforcement is
inconsistent at federal, regional and local levels. Decision-making and
enforcement under Russia's legal system also lack any consistency as a result of
the volume of new legislation and political instability.

DILUTION OF NET ASSET VALUE

A dilution of the aggregate net asset value on a share of our common stock may
be experienced as a result of this rights offering because the subscription
price may be less than our then current net asset

- --------------------------------------------------------------------------------
                                                                              33
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------


value per share. This dilution will be experienced by all stockholders,
irrespective of whether they exercise all or a portion of their rights. In
addition, as a result of the terms of this rights offering, stockholders who do
not fully exercise their rights should expect that they will, at the completion
of this rights offering, own a smaller proportional interest in us than would
otherwise be the case. Although it is not possible to state precisely the amount
of such a decrease in value, because it is not known at this time what
proportion of the shares will be subscribed for as a result of this rights
offering, what the subscription price will be or what the net asset value per
share will be on the expiration date, the dilution could be substantial. For
example, assuming that all rights are exercised and that the subscription price
of $          is approximately      % below our net asset value of
$          per share on           , 2004, our net asset value per share (after
payment of the financial advisory and soliciting fees and estimated offering
expenses) would be reduced by approximately $
per share. The distribution to stockholders of transferable rights which
themselves may have intrinsic value will also afford non-participating
stockholders the potential of receiving a cash payment upon sale of their
rights, receipt of which may be viewed as partial compensation for the dilution
of their interest in us. No assurance can be given that a market for the rights
will develop or as to the value, if any, that rights will have.


NET ASSET VALUE DISCOUNT


As with any stock, the price of our shares of common stock will fluctuate with
market conditions and other factors. Shares of closed-end investment companies
frequently trade at a discount from net asset value. This is a risk separate and
distinct from the risk that our net asset value will decrease. We cannot predict
whether our common stock will trade at, above or below net asset value. The risk
of purchasing shares of a closed-end fund which might trade at a discount is
more pronounced for investors who wish to sell their shares in a relatively
short period of time after the purchase because, for those investors,
realization of gain or loss on their investment is likely to be more dependent
upon the existence of a premium or discount than upon portfolio performance. Our
shares of common stock are not entitled to redemption. Investors desiring
liquidity may, subject to applicable securities laws, trade their shares on the
NYSE. Stockholders wishing to sell their shares of common stock during this
rights offering should be aware that there is greater risk that the discount to
net asset value, which may increase during this rights offering, will adversely
affect them. This increased risk is because, among other things, the market
price per share may reflect anticipated dilution that will result from this
rights offering. There can be no assurance that, after the completion of this
rights offering, our shares will trade at the same level as our current discount
to net asset value. For information about our common stock and its current and
historical performance, see "Market and Net Asset Value Information" on page 13
of this prospectus and "Description of Common Stock" on page 66 of this
prospectus.


EXCHANGE RATE FLUCTUATIONS AND FOREIGN CURRENCY CONSIDERATIONS

Substantially all of our assets are invested in Central Europe and Russia, and
substantially all of the income we receive from these investments will be in
euros or other foreign currencies. We anticipate that in general the foreign
currencies received by us with respect to most of our investments will be freely
convertible into U.S. dollars on foreign exchange markets and that in most cases
the U.S. dollars received will be fully repatriable out of the various foreign
countries in which we invest. However, our investments in Russia will be in
securities denominated in Russian Roubles, which are not externally convertible
into other currencies outside of Russia. There can be no assurance that the
foreign countries in which we invest will not impose restrictions in the future
movement of U.S. dollars or foreign currencies across local borders or on the
convertibility of the foreign currencies into U.S. dollars.

The value of our assets and income will be measured in U.S. dollars. Assets and
liabilities denominated in euros or other foreign currency amounts are
translated into U.S. dollars at 10:00 a.m. mid-point of

- --------------------------------------------------------------------------------
 34
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------

the buying and selling spot rates quoted by the Federal Reserve Bank of New
York. We will compute and distribute income in U.S. dollars, and the computation
of income will be made on the day we earn the income. Therefore, if the value of
foreign securities in which we receive income falls relative to the U.S. dollar
between the earning of the income and the time at which we convert the foreign
currencies to U.S. dollars, we may be required to liquidate securities in order
to make distributions if we have insufficient cash in U.S. dollars to meet
distribution requirements. The liquidation of investments, if required, may have
an adverse impact on our performance.

Since we will invest in securities denominated or quoted in currencies other
than the U.S. dollar, changes in foreign currency exchange rates will affect the
value of our securities in our portfolio and the unrealized appreciation or
depreciation of our investments. Further, we may incur costs in connection with
conversions between various currencies.

We do not currently engage in foreign exchange transactions as an investment
strategy. However, at such future time as our investment manager and investment
advisor believe that one or more currencies in which our securities are
denominated might suffer a substantial decline against the U.S. dollar, we may,
in order to hedge the value of our portfolio, enter into forward currency
contracts. For more information on our investment policies with respect to
currency transactions, see "Investment Objective and Policies--Currency
Transactions" on page B-5 of the SAI.

INTEREST EXPENSE

We may, subject to limitations described under "Investment Restrictions" in the
SAI, borrow money for temporary or emergency purposes for the clearance of
transactions. Borrowing money will subject us to interest expenses, and we may
incur other transactions costs.

CERTAIN PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS


We have provisions in our articles of incorporation and bylaws that could have
the effect of delaying, deferring, preventing or otherwise limiting the ability
of other entities or persons to acquire control of us, to cause us to engage in
certain transactions or to modify our structure. For a discussion of these
provisions, see "Description of Common Stock--Provisions of Our Articles of
Incorporation and Bylaws Affecting Change of Control and Extraordinary
Transactions" on page 66 of this prospectus.


FOREIGN CUSTODY

Investors Bank and Trust Company ("IBT") acts as our custodian. IBT has
agreements with a global network of sub-custodians, which, together with IBT,
maintain custody of our portfolio securities and cash. Thus, our foreign
securities and cash are generally held in foreign banks and securities
depositories. There may be limited or no regulatory oversight over their
operations. Also, the laws of certain countries may put limits on our ability to
recover our assets if a foreign bank, depository or issuer of a security, or any
of their agents, goes bankrupt. In addition, it is often more expensive for us
to buy, sell and hold securities in certain foreign markets than in the United
States. The increased expense of investing in foreign markets reduces the amount
we can earn on our investments and typically results in a higher operating
expense ratio for us than for investment companies invested only in the United
States.

MARKET DISRUPTION

As a result of terrorist attacks on the World Trade Center and the Pentagon on
September 11, 2001, some of the U.S. securities markets were closed for a
four-day period. These terrorist attacks and related events have led to
increased short-term market volatility. U.S. military and related action in Iraq
and Afghanistan and events in the Middle East could have significant adverse
effects on U.S. and

- --------------------------------------------------------------------------------
                                                                              35
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
- --------------------------------------------------------------------------------

world economies and markets. We do not know how long the securities markets will
continue to be affected by these events and cannot predict the effects of the
military action or similar events in the future on the U.S. economy and
securities markets. A similar disruption of the U.S. or world financial markets
could impact interest rates, auctions, secondary trading, ratings, credit risk,
inflation and other factors relating to our common stock.

- --------------------------------------------------------------------------------
 36
<PAGE>

- --------------------------------------------------------------------------------

Our management

INFORMATION REGARDING DIRECTORS AND OFFICERS

Our business and affairs are managed under the direction of our board of
directors. The directors approve all significant agreements between us and
persons or companies furnishing services to us, including our agreement with our
investment manager, investment adviser, custodian and transfer agent. The
management of our day-to-day operations is delegated to our officers and to our
investment manager and investment adviser, subject always to our investment
objective and policies and to the general supervision of our board of directors.
We have nine directors, three of whom are "interested persons" (as defined in
the Investment Company Act) and six of whom are not "interested persons." An
"interested person" is a director who is not independent under the specific
requirements of the Investment Company Act. The names and business addresses of
our directors and officers and their principal occupations and other
affiliations during the past five years are set forth on page B-8 under
"Management" in the SAI.

INVESTMENT MANAGER

Deutsche Bank Securities Inc. ("DBSI"), with principal offices located at 60
Wall Street, New York, New York, is our investment manager and administrator.
Subject to the supervision of our board of directors and pursuant to
recommendations made by our investment adviser, DBSI also determines which
securities are suitable for our investment. We pay DBSI an annual management fee
equal to 0.65% of our average weekly net assets up to $100 million, and 0.55%
for those assets in excess of $100 million.

DBSI is an indirect wholly-owned subsidiary of Deutsche Bank AG. DBSI is engaged
in the securities underwriting, investment advisory and securities brokerage
business, and it is a member of the NYSE and other principal United States stock
exchanges. DBSI also serves as investment manager for The Germany Fund, Inc. and
The New Germany Fund, Inc., which are closed-end registered investment
companies.

With total assets of approximately $1,826.7 billion, 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 September 30, 2003. Its principal corporate offices are
located at Taunusanlage 12, 60325 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 $
billion as of           , 2003.

For additional information about our investment manager, see "Investment
Advisory and Other Services" on page B-17 of the SAI.

INVESTMENT ADVISER

Deutsche Asset Management International GmbH ("DeAMI"), with principal offices
located at Mainzer Landstrasse 178-190, 60327 Frankfurt am Main, Germany, is our
investment adviser. In accordance with our investment objective, policies and
restrictions, DeAMI makes recommendations to our investment manager with respect
to our investments and, upon instructions given by our investment manager as to
which securities are suitable for investment, transmits purchase and sale orders
and selects brokers and dealers to execute portfolio transactions on our behalf.
We pay DeAMI an annual investment advisory fee equal to 0.35% of our average
weekly net assets up to $100 million, and 0.25% for those assets in excess of
$100 million.

- --------------------------------------------------------------------------------
                                                                              37
<PAGE>
OUR MANAGEMENT
- --------------------------------------------------------------------------------

DeAMI is a subsidiary of Deutsche Bank AG. DeAMI provides international
portfolio management services to institutional investors worldwide. As of
December 31, 2003, funds worth $8.7 billion were managed by DeAMI for
institutional accounts in more than ten countries, including the United States.
DeAMI also serves as investment adviser for The Germany Fund, Inc. and The New
Germany Fund, Inc., which are closed-end registered investment companies.

For additional information about our investment adviser, see "Investment
Advisory and Other Services" on page B-17 of the SAI.

PORTFOLIO MANAGEMENT

The names of the persons primarily responsible for the day-to-day management of
our investment portfolio and their business experience during at least the past
five years are set forth in the table below.

<Table>
<Caption>
NAME                           TITLE              LENGTH OF TIME SERVED     BUSINESS EXPERIENCE DURING PAST FIVE YEARS
- ----                  ------------------------   ------------------------   -------------------------------------------
<S>                   <C>                        <C>                        <C>
Hanspeter Ackermann   Chief Investment Officer   Year to year since 1996.   President of Deutsche Bank Investment
                                                                            Management Inc. Managing Director, Deutsche
                                                                            Bank Securities Inc. Managing Director and
                                                                            Senior International Equity Portfolio
                                                                            Manager, Bankers Trust Co. CIO, The Germany
                                                                            Fund, Inc. and The New Germany Fund, Inc.
                                                                            President and Managing Partner, Eiger Asset
                                                                            Management (1993-1996), Managing Director
                                                                            and CIO, SBC Brinson, formerly SBC
                                                                            Portfolio Management International Inc.
                                                                            (institutional investment management)
                                                                            (1983-1993).
Steffen Gruschka      Head of Emerging           Year to year since 2001.   Funds manager for Emerging European
                      European Equities,                                    Equities at DWS/DeAM since 1998.
                      Director
Robert Kalin          Senior Fund Manager        Year to year since 2002.   Senior Portfolio Manager Equities, Emerging
                      Equities                                              Markets at DWS/DeAM since 2002. Before:
                                                                            Senior Portfolio Manager at Zurich Invest
                                                                            (2001-2002), responsible for Emerging
                                                                            Europe; Advisor to Zurich Invest
                                                                            Mittelosteuropa Fund (1998-2001).
Sylwia Szczepek       Senior Fund Manager        Year to year since 2001.   Funds manager for Emerging European
                      Equities                                              Equities at DWS/DeAM since 2001. Before:
                                                                            Deutsche Bank, Corporate Development (Afk).
</Table>

AFFILIATED BROKERAGE

We pay brokerage commissions to Deutsche Bank AG, and its affiliates. Deutsche
Bank AG is the German parent of our investment manager and investment adviser.
For our fiscal year ended October 31, 2003, Deutsche Bank AG and its affiliates
received $5,665 in brokerage commissions as a result of executing agency
transactions in portfolio securities on our behalf. For information about
brokerage practices and commissions, see "Brokerage Allocation and Other
Practices" on page B-18 of the SAI.

OUR EXPENSES

In addition to the management fee and advisory fee of our investment manager and
investment adviser, respectively, we are responsible for the following expenses
if incurred:

+  the fees and expenses of directors who are not affiliated with our investment
   manager or investment adviser;

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<PAGE>
OUR MANAGEMENT
- --------------------------------------------------------------------------------

+  interest expenses;

+  all taxes and corporate fees payable by us to governmental agencies;

+  broker's commissions and other expenses in connection with our securities
   transactions;

+  the cost of stock certificates representing our shares;

+  expenses of registering our shares with federal, state and foreign securities
   authorities;

+  the charges and expenses of our legal counsel and independent accountants;

+  the fees and certain expenses of our custodian and transfer and dividend
   disbursing agents, including those in respect of the accounting and
   record-keeping services;

+  expenses related to stock exchange listings of our shares;

+  expenses of our stockholders meetings and of preparing and distributing
   proxies and reports to our stockholders; and

+  litigation and indemnification expenses and other extraordinary expenses not
   incurred in the ordinary course of our business.

NON-RESIDENT DIRECTORS AND INVESTMENT ADVISER

Five of our directors reside outside of the United States and all or a
significant portion of the assets of these directors are located outside of the
United States. In addition, our investments adviser's principal offices are
based outside the United States and all or a significant portion of our
investment adviser's assets are located outside of the United States. Our
non-resident directors have no authorized agents in the United States to receive
service of process. As a result, it may not be possible for investors to effect
service of process within the United States upon these directors or to enforce
against them in United States courts judgments predicated upon the civil
liability provisions of United States securities laws.

- --------------------------------------------------------------------------------
                                                                              39
<PAGE>


Central European, Russian and Turkish Economies and Markets



Following 50 years of communist command and control economies, the Central
European countries, Russia and Turkey now have economies that essentially are
market-based but starved for investment capital. Progress in transitioning to
capitalist economies within the region is occurring at different rates of speed,
as these countries are in varying stages of political and economic development.
While each country's markets are gradually becoming more consumer-driven, they
depend almost entirely on exports to Western European countries and the United
States to generate growth.



The Central European countries, Russia and Turkey have demonstrated positive
rates of economic growth over the past several years.



Key Economic Indicators, 1998-2002



<Table>
<Caption>
                                                                                 PER CAPITA INCOME
                                                      ANNUAL GDP     ANNUAL           IN 2002
COUNTRY                                               GROWTH RATE   INFLATION   (USD $, MARKET RATE)
- -
<S>                                                   <C>           <C>         <C>
Czech Republic......................................          1.5%        1.8%                 6,810
Hungary.............................................          4.3         9.7                  6,530
Poland..............................................          3.0         7.2                  4,944
Russia..............................................          4.0        32.2                  2,384
Turkey..............................................          1.0        60.2                  2,605
</Table>


- ------------

Source: The Economist Intelligence Unit



Foreign investment levels have increased rapidly over the past decade, with more
than $100 billion of direct investment capital flowing into the region. Interest
rates in Central European countries have been gradually converging to the levels
of Western Europe. Historically, lower interest rates have made investment
projects more viable and have stimulated economic activity.



By the fall of 2003, all Central European countries had held referenda to
approve their admission to the European Union (the "EU"). Results of referenda
were overwhelmingly positive. For example, in Hungary, 83.8% voted in favor of
joining the EU; in Poland, 77.5% voted in favor; and in the Czech Republic,
77.3% assented. Negotiations to complete the admissions process are progressing.
In the past, emerging economies joining the EU have benefited from higher income
levels and consumption patterns resulting from the affiliation with their more
developed Western European neighbors. This effect occurred with the admission to
the European Community (now EU) of Greece in 1981, and with Spain and Portugal
in 1986. While Spain and Portugal adopted the euro as its currency when it
launched in 1999, Greece became a member of the European Monetary Union ("EMU")
in 2001.



In anticipation of the admission of the Central European countries into the EU,
foreign investors have increased investments in the region, as evidenced by fund
flows (representing direct investment and portfolio investments) reaching record
levels in Hungary, Poland and the Czech Republic in 2003. The equity market
indices of Spain, Portugal and Greece and moved closely in line with each other
as the timing of their membership in the EMU approached in 1999 and 2001. It is
possible that this pattern may be repeated as the Central European nations join
the EU.



In Russia, President Vladimir Putin has made the country's reformation into a
free market economy a key priority. It generally believed by many political
analysts, though far from a certainty, that Putin's policies, as well as the
designation by the United States of Russia as a market economy, may help smooth
the country's path to eventual membership in the World Trade Organization.



In Turkey, the government has undertaken important structural reforms in its
economy in the expectation that it will begin membership discussions in earnest
with the EU in December 2004.


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CENTRAL EUROPEAN, RUSSIAN AND TURKISH ECONOMIES AND MARKETS

- --------------------------------------------------------------------------------


POLAND'S ECONOMY AND SECURITIES MARKETS



After two years of weak economic growth and high levels of unemployment, Poland
has recently shown signs of an economic recovery driven by rising levels of
consumption and exports. With a market size greater than those of the Czech
Republic, Slovakia and Hungary combined, Poland's 38.6 million consumers
comprise the largest economy in Central Europe. For the past decade, Poland's
Gross Domestic Product ("GDP") has grown at an annualized rate of 4.5%, nearly
twice that of the Central European average of 2.8%.



Poland began its transition to a market economy in 1990 under difficult
macroeconomic conditions, which included high inflation and high levels of
external debt. In an effort to introduce structural economic reforms, Polish
policymakers liberalized prices, made its currency (the zloty, or PLN)
convertible, fixed the exchange rate and lowered import barriers. Over the past
five years, Poland has moved rapidly from a country that was heavily dependent
on agricultural production to a more diversified economy. 37.6% of Poland's
exports in 2002 were related to machinery and transport equipment, while food
and live animals accounted for just 7.2% of exports. In 1999, by contrast,
agricultural production accounted for 25% of Poland's GDP.



In 2003, Poland held a referendum on question of the country's admission to the
EU, and 77.5% voted in favor. The country will join the EU on May 1, 2004.



Still, according to a report published by The Economist in June 2003, the
country faces several economic challenges. Poverty, as defined by the World
Bank, affects some seven million or more of Poland's population (about 18%) and
is more widespread than in other advanced transition economies of Central Europe
such as Hungary and the Czech Republic. Low productivity rates in the
agricultural sector concentrates poverty largely in rural areas. Moreover, the
rise in unemployment as a result of the global economic slowdown has increased
poverty levels and slowed the country's rate of poverty reduction. Nevertheless,
in 2003 recovery appears to have resumed and, according to preliminary estimates
published by the National Bank of Poland (the central bank of the Republic of
Poland) on January 21, 2004, GDP growth in 2003 was expected to exceed 3.5%.
Inflation has been brought under control, though real interest rates remain
relatively high (around 5.0%).



In addition to high unemployment, the main impediment to growth is the public
sector, especially the weak public finance system and continuing high fiscal
deficits. However, on May 28, 2003, Poland's central bank reduced its main
interest rate for the fifth time in that year after a steep decline in
inflation. Poland's intervention rate now stands at a record low of 5.5%, while
in 2001 the intervention rate stood at 19%.


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<PAGE>

CENTRAL EUROPEAN, RUSSIAN AND TURKISH ECONOMIES AND MARKETS

- --------------------------------------------------------------------------------


Economic Trends in Poland



<Table>
<Caption>
                                                            1999    2000     2001     2002
                                                            -------------------------------
<S>                                                         <C>     <C>     <C>      <C>
GDP per capita (USD $)....................................  9,280   9,860   10,210   10,450
GDP (% real change, per annum)............................    4.1       4        1      1.4
Government consumption (% of GDP).........................  15.54   17.79    17.74    17.64
Budget balance (% of GDP).................................  (2.03)  (2.15)   (4.32)    (5.1)
Consumer prices (% change per annum; average).............   7.29   10.14     5.49     1.87
Public debt (% of GDP)....................................  43.37   37.99    38.83     43.8
Labor costs per hour (USD $)..............................   2.39    2.46      2.8     2.91
Recorded unemployment (%).................................  11.99   14.51    16.23    17.76
Current-account balance/GDP...............................  (7.46)  (6.06)   (3.91)   (3.54)
</Table>


- ------------

Source: The Economist Intelligence Unit



Furthermore, to stimulate economic growth, the Polish Government has proposed
reducing the corporate income tax (the "CIT") to 19%, down eight percentage
points from the current 27%. The tax cut would be dependent on the removal of
all tax breaks, allowances and deductions that reduce the nominal income tax.
Although its passage is still uncertain, this reduction, if approved by the
government and the Parliament, could have a positive effect on corporate
earnings and job growth. The government has estimated the 2003 effective tax
rate to be 23.7%, reducing the possible tax reduction to a still-meaningful
4.7%. A lower CIT, if it occurs, could be regarded favorably by the Polish
equity market. A lower tax rate could also attract foreign investors and
increase the number of international firms looking to do business in Poland.



The Polish Securities Markets


The existence of an organized investment exchange in Poland dates from 1817,
although it was suspended after World War II. Following the collapse of the
Soviet Union, the Warsaw Stock Exchange (the "WSE") was established in 1991 with
the introduction of an electronic trade settlement system. Although this event
ushered in the development of the country's modern capital market, the market
for traded shares on the WSE took several years to develop. Supervised by the
Polish Securities and Exchange Commission (the "PSEC"), the WSE is the main
platform in Poland for the trading of equity shares, bonds, some stock futures
and a future on the WIG 20, a blue-chip index.


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CENTRAL EUROPEAN, RUSSIAN AND TURKISH ECONOMIES AND MARKETS

- --------------------------------------------------------------------------------


As of December 31, 2003, the total market capitalization of companies listed on
the WSE was 140 billion zlotys (USD $37.5 billion). The following table depicts
the total number of listed companies and the average daily trading volume on the
WSE:



<Table>
<Caption>
                                                                           AVERAGE DAILY TRADING VOLUME
                                              NUMBER OF       IN THOUSANDS   IN MILLIONS   IN THOUSANDS
YEAR                                       LISTED COMPANIES    OF SHARES*        PLN       OF USD $(1)
- -------------------------------------------------------------------------------------------------------
<S>                                        <C>                <C>            <C>           <C>
1995.....................................             65               --             --            --
1996.....................................             83               31            251        67,310
1997.....................................            143              518          3,583       960,692
1998.....................................            198            1,626          8,766     2,350,270
1999.....................................            221            4,085         28,667     7,685,680
2000.....................................            225            6,157         58,329    15,638,647
2001.....................................            230           12,097         60,032    15,155,679
2002.....................................            216           11,190         47,599    12,495,547
2003.....................................            203           12,085         66,281    17,743,291
</Table>


- ------------

Source: Warsaw Stock Exchange



 * Continuous trading. Does not include single-price auction trading or block
   trading.



(1) U.S. dollar equivalents calculated at year-end exchange rate.



The WSE employs an order-driven trading system, which means that prices are
determined by buy and sell orders. Equities may be listed on three markets based
on the company's size, level of public disclosure, and value:



+  Main--This part of the exchange market encompasses securities with the
   highest liquidity. Companies on the main market generally have more capital
   and longer operating histories.



+  Parallel--This part of the exchange encompasses securities with lower
   liquidity. Companies on the parallel market generally have less capital and
   shorter histories than companies on the main market.



+  Free--This part of the exchange encompasses securities that are admitted for
   public trading but that do not meet requirements for listing on the WSE's
   main or parallel markets.



In addition to these three main market segments, investors may select the SiTech
segment, which lists companies across the major market segments principally
engaged in the information technology and telecommunications industries.



Quotations are made in a continuous, single-price with two auctions, and trading
for large numbers of shares are available through block trades. Clearing of
trades is handled by the National Depository for Securities, with settlement
periods for stocks of T+3; bonds, T+2; and futures T+1. The Depository uses the
National Bank of Poland, the country's central bank, as its clearing bank.


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CENTRAL EUROPEAN, RUSSIAN AND TURKISH ECONOMIES AND MARKETS

- --------------------------------------------------------------------------------


Poland's stock market is concentrated in the banking sector, with concentration
also in the telecom and chemicals sectors, as illustrated in the table below.



Industry Composition of the Warsaw Stock Exchange, as of December 31, 2003



<Table>
<Caption>
                                                               INDUSTRY DIVISION BY
ECONOMIC INDUSTRY SECTOR                                      MARKET CAPITALIZATION
- -----------------------------------------------------------------------------------
<S>                                                           <C>
Banking.....................................................              39.6%
Telecom.....................................................              16.5
Chemicals...................................................              11.9
Metals......................................................               5.6
Food........................................................               5.6
Information Technology......................................               3.6
Wood & Paper................................................               3.6
Media.......................................................               2.2
Wholesale & Retail..........................................               2.0
Construction................................................               1.9
Insurance...................................................               1.4
Other.......................................................               6.0
                                                                   -----------
Total.......................................................             100.0%
                                                                   ===========
</Table>


- ------------

Source: Warsaw Stock Exchange, Monthly Bulletin, December 2003



As of December 31, 2003, the following 20 largest companies traded on the WSE
accounted for 79.8% of the total market capitalization of all companies traded
on the exchange:



20 Largest Companies Traded on the Warsaw Stock Exchange by Market
Capitalization, December 2003



<Table>
<Caption>
                                                           MIL. SHARES             MARKET CAPITALIZATION
COMPANY                               INDUSTRY     TICKER  OUTSTANDING  IN MIL. ZLOTYS  IN MIL. USD $(1)
- --------------------------------------------------------------------------------------------------------
<S>                                <C>             <C>     <C>          <C>             <C>
Telekomunikacja Polska SA........         Telecom    TPSA      1,400.0          21,210             5,678
Bank Polska Kasa Opieki SA.......         Finance     PEO        166.1          17,941             4,803
Polski Koncern Natowy Orlen SA...       Chemicals     PKN        427.7          10,693             2,862
Bank Przemyslowo-Hanlowy PBK
  SA.............................         Finance     PBH         28.7          10,194             2,729
Bank Handlowy W Warszawie SA.....         Finance     BHW        130.7           7,539             2,018
Bank Zachodni WBK SA.............         Finance     BZW         73.0           5,523             1,478
KGHM Polska Miedz SA.............          Metals     KGH        200.0           5,240             1,403
Grupa Zywiec SA..................         Brewery     ZWC         11.3           4,920             1,317
ING Bank Slaski SA...............         Finance     BSK         13.0           4,488             1,201
Frantschach Swiecie SA...........  Wood and Paper     SFC         50.0           3,860             1,033
Agora SA.........................           Media     ABO         56.8           2,900               776
Prokom Software SA...............     Information
                                       Technology     PKM         13.8           2,400               642
Europejski Fundusz Leasingowy
  SA.............................         Finance     EFL         43.0           2,364               633
</Table>


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<PAGE>

CENTRAL EUROPEAN, RUSSIAN AND TURKISH ECONOMIES AND MARKETS

- --------------------------------------------------------------------------------


<Table>
<Caption>
                                                           MIL. SHARES             MARKET CAPITALIZATION
COMPANY                               INDUSTRY     TICKER  OUTSTANDING  IN MIL. ZLOTYS  IN MIL. USD $(1)
- --------------------------------------------------------------------------------------------------------
<S>                                <C>             <C>     <C>          <C>             <C>
Bank Millennium SA...............         Finance     MIL        849.2           2,165               580
BRE Bank SA......................         Finance     BRE         23.0           2,125               569
Towarzystwo Ubezpieczen i
  Reasekuracji Warta SA..........       Insurance     WAR          8.1           1,837               492
Firma Oponiarska Debica SA.......       Chemicals     DBC         13.8           1,767               473
Kredyt Bank SA...................         Finance     KRB        211.3           1,690               452
Grupa Kety SA....................          Metals     KTY         10.5           1,418               380
Netia SA.........................         Telecom     NET        344.5           1,378               369
Total 20 Companies...............                              4,074.4         111,651            29,889
Total Shares Market..............                              6,508.9         140,001            37,478
</Table>


- ------------

Source: Warsaw Stock Exchange, Monthly Bulletin, December 2003



(1) U.S. dollar equivalents calculated at year-end exchange rate.



As is the case with the majority of exchange-listed bonds in the Central
European countries, the bulk of Poland's bond issues are Treasury bonds.
Corporate bonds, including those issued by foreign corporations, are also
traded. In Poland, a regulated off-Exchange market is organized by a company
called CeTO, which handles wholesale transactions in bonds and T-bills on a
dedicated platform called the Electronic Treasury Securities Market (ERSPW).
CeTO also manages a market for corporate and municipal public utilities bonds.



The Polish Traded Index (the "PTX"), one of the currently five indexes owned by
the Vienna Stock Exchange (the so-called "CECE Index family", covering the
emerging stock markets of the four Visegrad countries of the Czech Republic,
Hungary, Poland and the Slovak Republic), is a commonly used measure of the
performance of the Polish stock markets. The PTX is a capitalization-weighted
price index reflecting in real time the movement of the most liquid blue chip
stocks traded on the WSE. It is calculated in U.S. dollars as well as in euros
and on a local currency basis. Published criteria for selecting stocks for the
PTX include market capitalization, liquidity, price availability, sector
representation and market interest, with the primary criteria being market
capitalization and liquidity. The PTX is not adjusted for dividend payments.
Although there is no prescribed number of stocks to be included in the PTX, the
Index included 11 stocks as of February 5, 2004, which represented approximately
30.9% of the total market capitalization of stocks listed on the WSE as of the
same date.



The following table presents the annual performance in U.S. dollar terms of the
PTX, along with the U.S. dollar-denominated returns of the Polish currency, the
zloty (the "PLN"), between 1999 and 2003:



Annual Returns of Polish Stock Markets(1) and Currency (in USD $)



<Table>
<Caption>
                                                1999       2000       2001       2002       2003
- -------------------------------------------------------------------------------------------------
<S>                                            <C>        <C>        <C>        <C>        <C>
Polish Traded Exchange ("PTX")...............   39.07%     (3.59)%   (29.89)%     3.28%     30.69%
Zloty ("PLN")................................  (15.42)      0.42       4.24       3.54       2.57
</Table>


- ------------

Source: Bloomberg



(1) Simple price appreciation only.


- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------


THE CZECH REPUBLIC'S ECONOMY AND SECURITIES MARKETS



The Czech Republic is an upper middle-income country situated in the heart of
Central Europe. Over the past twelve years, the Czech economy has undergone a
process of rapid transformation, bringing it closer to its goal of admission to
the EU. Negotiations for EU membership were completed in December 2002 and, in a
June 2003 referendum, 77% of the Czech population voted in favor of admission.
The country is scheduled to join the EU in May 2004.



Economic Trends in The Czech Republic



<Table>
<Caption>
                                                           1999     2000     2001     2002
- -------------------------------------------------------------------------------------------
<S>                                                       <C>      <C>      <C>      <C>
GDP per capita (USD $)..................................  10,610   11,214   11,894   12,220
GDP (% real change, per annum)..........................    0.47     3.25     3.09     1.96
Government consumption (% of GDP).......................   19.68    19.63    19.34    21.41
Budget balance (% of GDP)...............................   (2.34)   (2.32)   (3.11)   (2.02)
Consumer prices (% change per annum; average)...........    2.11     3.90     4.68     1.80
Public debt (% of GDP)..................................   15.04     18.8    22.92    28.00
Labor costs per hour (USD $)............................    2.08     2.00     2.16     2.69
Recorded unemployment (%)...............................    8.63     8.96     8.55     9.19
Current-account balance/GDP (%).........................   (2.66)   (5.29)   (4.59)   (5.33)
</Table>


- ------------

Source: The Economist Intelligence Unit



Privatization has attracted considerable foreign direct investment. The EU is by
far the country's largest trading partner, accounting for 68.3% of exports and
60.1% of imports in 2002. Machinery and transport equipment and intermediate
manufactured goods are the Czech Republic's major exports as well as imports.
The Czech Republic, Hungary, Poland and Slovakia together produce about one
million vehicles per year.



The Czech economy continued to perform relatively well in 2003. Both monetary
and fiscal policies generally were stimulative in 2002 and 2003. The Czech
National Bank, the country's central bank, began easing interest rates
relatively early which, together with an expansionary fiscal policy, provided
needed stimulus to the economy. Inflation has been subdued, falling to 1.8% in
2002 from an average of 4.6% between 1998 and 2002. Unemployment has remained in
the 8% to 10% range over the past several years.



Notwithstanding those positive factors, the current-account deficit has been
growing steadily since 1997, both in absolute terms and as a percentage of GDP.
Although financing government debt levels has been facilitated by privatization,
the few assets that remain, including the telecom, power and steel sectors, and
the uncertain timing of their privatization, makes fiscal consolidation a high
priority.



The Czech Securities Markets


Following World War II, the Czech exchange business, which traces its roots as a
major commodities exchange to the middle of the 19th century, closed its doors.
In May 1991, following the collapse of the Soviet Union, an association of eight
banking houses was formed that later was reorganized into the Prague Stock
Exchange (the "PSE"). The PSE opened for business in April 1993.



The PSE is the largest market organizer in the Czech Republic. Initially, the
PSE was set up to handle transactions between two classes of securities, listed
and unlisted. For companies to be considered for listing on the PSE, they
generally are required to adhere to certain standards such as disclosing
financial strength, operating history and significant changes in their
businesses that might affect the


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- --------------------------------------------------------------------------------


prices of their securities. Unlisted securities were those whose issuers used
the PSE as a mechanism by which to transfer share or interest ownership, with no
requirement for disclosure. In 1995, the PSE sought to impose more stringent
disclosure standards by dividing the markets further into three segments:



+  Main--Securities that were previously listed were automatically transferred
   to the Main Market. This part of the exchange market encompasses securities
   with the highest liquidity. Companies on the main market generally have more
   capital and longer operating histories.



+  Secondary--The Secondary Market was established to provide a market for
   listed companies whose market capitalizations fell under a certain limit.
   This part of the exchange encompasses securities with lower liquidity.
   Companies on the Secondary Market generally have less capital and shorter
   histories than companies on the Main market.



+  Free--Formerly unlisted securities were relegated to the Free Market. This
   part of the exchange encompasses securities that are admitted for public
   trading but that do not meet requirements for listing on the PSE's Main or
   Secondary Markets.



Unified disclosure requirements for companies in both the Main and Secondary
Markets became effective in 1997. In 1999, a new market (the "New Market"),
oriented mainly towards young and developing companies that were seeking capital
for further development, was spun off from the Secondary Market. The New Market
generally has not been active, and currently there are no companies listed on
it.



Trades on the PSE are settled by its wholly owned subsidiary, Univyc, which was
licensed in July 2000 by the Czech Securities Commission to handle settlement of
exchange trades and over-the-counter transactions of the stock exchange. Univyc,
a member of the Central and Eastern European Central Securities Depositories and
Clearing Houses ("CEECSDA"), works through The Czech National Bank's (the
central bank) Clearing Centre (the "CNB-CC") and The Prague Securities Centre
("SCP"), a self-funding government agency established by the Czech Ministry of
Finance in 1993 to promote the development of the capital market. The former
book-entry system for clearing trades was upgraded in 2001 to an on-line
information link with CNB-CC. This system enhancement made it possible for
Univyc to introduce in September 2002 T+3 settlement dates for the trading of
equities and bonds.


- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------


The following table illustrates a multi-year history of the number and type of
listed companies on the PSE.



The Czech Equity Market



<Table>
<Caption>
                                                                                  NUMBER OF ISSUES, BY
                        TOTAL MARKET CAP    TOTAL MARKET CAP      NUMBER                MARKET TYPE(2)
YEAR                          (BIL. CZK)     (MIL. USD $)(1)   OF ISSUES   MAIN    SECONDARY      FREE
- ------------------------------------------------------------------------------------------------------
<S>                    <C>                 <C>                 <C>         <C>     <C>           <C>
1996.................              539.2              21,017       1,670     44           52     1,574
1997.................              495.7              19,322         320     45           58       217
1998.................              416.2              16,223         304     10           96       198
1999.................              479.7              18,688         195      8           81       106
2000.................              442.9              17,263         151      5           60        86
2001.................              340.3              13,264         102      5           48        49
2002.................              478.0              18,632          79      5           41        33
2003.................              644.5              25,122          65      5           34        26
</Table>


- ------------

Source: Prague Stock Exchange



(1) U.S. dollar equivalents calculated at year-end exchange rate.


(2) Includes shares and units.



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- --------------------------------------------------------------------------------


As illustrated in the table below, the Czech Republic's stock market offers
representation across most economic sectors, with fairly high concentration in
the finance, power generation and transportation/communications sectors.



Industry Composition of the Prague Stock Exchange, as of December 31, 2003



<Table>
<Caption>
                                                               INDUSTRY DIVISION BY
ECONOMIC INDUSTRY SECTOR                                      MARKET CAPITALIZATION
- -----------------------------------------------------------------------------------
<S>                                                           <C>
Finance and Banking.........................................          47.24%
Power Generation............................................          23.28
Transport, Communications...................................          16.29
Beverages and Tobacco.......................................           4.78
Extraction of Minerals/Ores.................................           2.78
Chemicals, Pharmaceuticals, Rubber..........................           2.37
Metallurgy, Metal Products..................................           0.93
Building, Building Materials................................           0.83
All Others..................................................           1.51
                                                                     ------
Total.......................................................         100.00%
                                                                     ======
</Table>


- ------------

Source: Prague Stock Exchange, Fact Book 2003



The following table lists the 30 largest stocks listed on the Prague Stock
Exchange based on market capitalization as of December 31, 2003. These 30 stocks
represented 88.9% of the total market capitalization of all listed stocks on the
PSE:



<Table>
<Caption>
                                                                      MARKET CAPITALIZATION(1)
                                                                       IN MIL.     IN THOUSANDS
COMPANY                             INDUSTRY              TICKER         CZK          USD $
- -----------------------------------------------------------------------------------------------
<S>                         <C>                        <C>            <C>          <C>
Erste Bank der
  oesterreichischen
  Sparkas.................  Finance and Banking            BAAERBAG   190,961.8    7,443,366.3
Cesky Telecom, a.s. ......  Transport,
                            Communications                 BAATELEC    93,824.8    3,657,131.2
Komercni banka, a.s. .....  Finance and Banking             BAAKOMB    91,907.8    3,582,409.8
CEZ, a.s. ................  Power Generation                 BAACEZ    86,285.1    3,363,246.5
Philip Morris CR, a.s. ...  Beverages and Tobacco
                            Production                     BAATABAK    30,098.6    1,173,192.3
Ceska pojistovna, a.s. ...  Finance and Banking            BAACSPOJ    17,841.0      695,411.9
Unipetrol, a.s. ..........  Production of Chemicals,
                            Pharmaceuticals, Rubber        BAAUNIPE    12,047.9      469,606.7
Ceske Radiokomunikace,
  a.s. ...................  Transport,
                            Communications                 BAACRADI    10,660.5      415,528.2
Severomoravska energetika,
  a.s.....................  Power Generation               BAASMENG     7,066.3      275,432.4
Severoceske doly, a.s. ...  Extraction and
                            Processing of Minerals
                            and Ores                       BAASEVDO     7,027.9      273,935.6
Prazska energetika,
  a.s. ...................  Power Generation               BAAPRENG     6,601.7      257,323.0
</Table>


- --------------------------------------------------------------------------------
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CENTRAL EUROPEAN, RUSSIAN AND TURKISH ECONOMIES AND MARKETS

- --------------------------------------------------------------------------------


<Table>
<Caption>
                                                                      MARKET CAPITALIZATION(1)
                                                                       IN MIL.     IN THOUSANDS
COMPANY                             INDUSTRY              TICKER         CZK          USD $
- -----------------------------------------------------------------------------------------------
<S>                         <C>                        <C>            <C>          <C>
Jihomoravska energetika,
  a.s. ...................  Power Generation               BAAJMENG     6,572.3      256,177.1
OKD, a.s., clen koncernu
  Karbon Invest...........  Extraction and
                            Processing of Minerals
                            and Ores                         BAAOKD     6,376.3      248,537.3
Ispat Nova Hut a.s. ......  Metallurgy, Metal
                            Products                       BAANOVHU     6,025.4      234,859.8
Severoceska energetika,
  a.s. ...................  Power Generation               BAASEVEN     4,950.9      192,977.7
Zapadoceska energetika,
  a.s. ...................  Power Generation              BAAZCENNG     4,678.6      182,363.9
Stredoceska energeticka,
  a.s. ...................  Power Generation               BAASTREN     4,538.1      176,887.4
Severonmoravska
  plynarenska, a.s. ......  Power Generation               BAASMPLY     4,196.0      163,552.9
Vychodoceska energetika,
  s.a. ...................  Power Generation               BAAVCENG     4,006.2      156,154.9
Jihomoravska plynarenska,
  s.a. ...................  Power Generation               BAAJMPLY     3,931.8      153,254.9
Finop Holding(2)..........  N/A(2)                         BAAFINOP(2)   3,721.5     145,057.7
Sokolovska uhelna,
  a.s. ...................  Extraction and
                            Processing of Minerals
                            and Ores                       BAASOKUH     3,510.1      136,817.7
Jihoceska energetika,
  a.s. ...................  Power Generation               BAAJIHEN     2,910.4      113,442.4
Lafarge cement, a.s. .....  Building, Building
                            Materials                      BAACIZKO     2,171.6       84,645.3
Prazska Plynarenska,
  a.s. ...................  Power Generation                BAAPRLY     2,129.7       83,012.1
Vychodoceska plynarenska,
  a.s. ...................  Power Generation               BAAVCPLY     2,079.5       81,055.4
Stavby silnic a zeleznic,
  a.s. (SSZ)..............  Building, Building
                            Materials                      BAASTSSZ     1,878.3       73,212.9
Metalimex, a.s. ..........  Trade                          BAAMETLX     1,834.1       71,490.1
Zapadoceska plynarenska,
  a.s. ...................  Power Generation               BAAZCPLY     1,781.6       69,443.7
Seversceska plynarenska,
  a.s. ...................  Power Generation               BAASEVPL     1,701.4       66,317.7
</Table>


- ------------

Source: Prague Stock Exchange



(1)U.S. dollar equivalents calculated at year-end exchange rate.



(2)This security was withdrawn from the PSE's Free Market effective on January
   20, 2004, as a result of the cancellation of the company without liquidation.



The Czech Traded Index (the "CTX," one of the CECE Index families) is a commonly
used measure of the Czech stock markets. The CTX is a capitalization-weighted
price index reflecting in real time the movement of the most liquid blue chip
stocks traded on the PSE. It is calculated in U.S. dollars as well


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- --------------------------------------------------------------------------------


as in euros and on a local currency basis. Published criteria for selecting
stocks for the CTX include market capitalization, liquidity, price availability,
sector representation and market interest, with the primary criteria being
market capitalization and liquidity. The CTX is not adjusted for dividend
payments. Although there is no prescribed number of stocks to be included in the
CTX, the Index included seven stocks as of February 5, 2004, which represented
approximately 24.4% of the total market capitalization of stocks (including
shares and units) listed on the PSE as of the same date.



The following table presents the annual performance in U.S.-dollar terms of the
CTX, along with the U.S. dollar-denominated returns of the Czech currency, the
koruna ("CZK"), between 1999 and 2003.



Annual Returns of the Czech Stock Markets(1) and Currency (in USD $)



<Table>
<Caption>
                                                      1999    2000     2001     2002    2003
- ---------------------------------------------------------------------------------------------
<S>                                                  <C>      <C>     <C>       <C>     <C>
Czech Traded Exchange ("CTX")......................   12.06%   1.91%  (21.06)%  36.88%  63.25%
Koruna ("CZK").....................................  (15.76)  (3.86)    4.70    18.41   16.95
</Table>


- ------------

Source: Bloomberg



(1)Simple appreciation only. Does not include dividends reinvested.



HUNGARY'S ECONOMY AND SECURITIES MARKETS



Relative to other Central European countries, Hungary is an upper middle-income
country and one of the region's most successful transition economies. Hungary is
scheduled to join the EU in May 2004. The country has attracted significant
inflows of foreign direct investment, built up a robust private export sector,
and achieved solid economic growth with low unemployment.



After communism fell with the collapse of Janos Kadar's government in May 1988
following nearly four decades of socialist rule, the country has been directing
most of its trade policies to the West, with special emphasis on the EU. Hungary
became politically liberalized in 1990, when free elections were first held.
Since then, reform-minded, right-centrist and left-centrist parties alternately
have assumed power.



Hungary ran large current-account deficits in the mid-1990s, but this situation
improved with increased export activity, which to a large extent was aided by
significantly lower production and labor costs than Western European countries.
More recently, there has been some retrenchment in these trade ratios, as
increased wage pressures outpaced productivity growth and demand stagnated in
the EU. Roughly three-quarters of Hungary's exports, dominated by machinery and
equipment products and other manufactured goods, go to the EU, especially
Germany, based on 2002 figures.


- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------


Economic Trends in Hungary



<Table>
<Caption>
                                                              1999    2000    2001    2002
- -------------------------------------------------------------------------------------------
<S>                                                           <C>     <C>     <C>     <C>
GDP per capita (USD $)......................................  8,230   8,890   9,470   9,930
GDP (% real change per annum)...............................   4.17    5.15    3.80    3.30
Government consumption (% of GDP)...........................  10.15    9.84   11.00   11.05
Budget balance (% of GDP)...................................  (3.20)  (3.48)  (5.15)  (9.65)
Consumer prices (% change per annum, avg.)..................   9.99    9.82    9.16    5.29
Public debt (% of GDP)......................................  61.21   55.53   54.04   60.45
Labor costs per hour (USD $)................................   1.81    1.73    1.95    2.48
Recorded unemployment (%)...................................   6.95    6.38    5.71    5.82
Current-account balance/GDP (%).............................  (5.11)  (6.25)  (3.39)  (4.27)
</Table>


- ------------

Source: The Economist Intelligence Unit



Hungary's current government is pursuing the economic reforms required by EU
membership. The structural reforms, which remain pending, are notably in the
financing of the health care sector, in sub-national finance and in capacity
building. Although the deficit has grown over the past several years, the
government has stated it will seek some spending cuts in 2004. It is not
possible to know whether these cuts will occur. In June 2003, the National Bank
of Hungary, the country's central bank, increased the interest rates used for
its loans to banks from 7.50% to 9.50% in an effort to restrain high rates of
inflation. Core inflation has decreased from 9.5% in December 2001 to 5.6% in
December 2002 to 4.9% in December 2003.



The Hungarian Securities Markets


The Hungarian securities market began to develop in the mid-80s after a 40-year
hiatus. The institutional framework was established when the first Securities
Act was passed in February 1990, which led to the opening of the Budapest Stock
Exchange (the "BSE") in June 1990.



The 1996 Offering of Securities, Investment Services and the Securities Exchange
Act and the 1990 Securities and Stock Exchange Act govern the public issuance
and trading of bonds, shares and other securities in Hungary. In April 2000, the
responsibilities of the Bank Supervisory Board were merged with the state
insurance and pension supervisory agencies to form the Hungarian Financial
Supervisory Authority ("PSZAF"). This entity is a consolidated financial
supervisory body that regulates all financial and securities markets. Although
the PSZAF is independent and self-financing, it has no authority to issue new
regulations that carry legal force.



At the end of 2003, the BSE had 33 members, including 17 licensed-broker or
broker-dealer companies (including several U.S.-based firms) and 16 banks.
Foreign investors can buy local-currency denominated Hungarian government bonds
of any maturity, and foreign investment funds can establish offices in Hungary
in order to attract additional Hungarian investors. In addition, the BSE,
working in concert with the nation's larger banks, has improved its payment and
securities settlement systems, significantly reducing broker risk, which was a
significant factor in the securities markets for investors in the 1990s. For
example, prior to September 3, 1999, banks made the majority of their interbank
payments using a paper-based account management service of the Hungarian Central
Bank (the "NBH"). In July 2000, a real delivery versus payment ("DVP") interbank
settlement system was introduced.



At the end of 2003, the total market capitalization of the Budapest Stock
Exchange was USD $50.0 billion, an increase of nearly 25.5% over year-end 2002.
The average daily trading volume in 2003 was USD $40.9 million. Trading on the
BSE is carried out in three ways: securities,


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- --------------------------------------------------------------------------------


government securities, and futures. Equity and fixed income securities account
for more than 90% of the total trades on the BSE. Between 1995 and 2003, the
number of securities listed and traded on the Budapest Stock Exchange totaled
approximately 1,238. Of these, approximately 475 were equity shares, 265 were
government bonds, 68 were corporate bonds, 249 were T-bills, and 118 were
investment fund shares.



The country has a well-developed banking system with diverse ownership. At the
end of 2002, two-thirds of the Hungarian banking sector was foreign-owned. It is
a very competitive sector that is likely to see increased consolidation as the
government privatizes several remaining holdings. In addition, the country has
been amending its financial regulations to meet EU standards as it prepares for
admission in May 2004. For example, the 2003 Act on Credit Institutions makes it
more difficult to conceal losses. It also modified liquidation rules in
accordance with EU regulations on cross-border services.



Market Capitalization(1) and Trading Volume(2) of Equity Securities on the
Budapest Stock Exchange



<Table>
<Caption>
                                               MARKET CAPITALIZATION AS OF       TRADING VOLUME FOR YEAR
                                                            DECEMBER 31(3)          ENDED DECEMBER 31(3)
YEAR                                           IN MIL. USD $   IN BIL. HUF   IN MIL. USD $   IN BIL. HUF
- --------------------------------------------------------------------------------------------------------
<S>                                            <C>             <C>           <C>             <C>
1995.........................................          2,340         327.8             348          43.6
1996.........................................          5,583         852.5           1,606         245.3
1997.........................................         15,029       3,058.5           7,685       1,436.4
1998.........................................         14,021       3,020.1          16,104       3,460.4
1999.........................................         16,414       4,144.9          14,848       3,431.3
2000.........................................         11,920       3,393.9          12,248       3,417.0
2001.........................................         10,210       2,848.8           4,834       1,385.7
2002.........................................         13,089       2,947.2           5,894       1,513.7
2003.........................................         16,689       3,469.9           8,595       1,849.4
</Table>


- ------------

Source: Budapest Stock Exchange, Annual Report 2003



(1)Excluding stocks of foreign-domiciled companies and investment companies.



(2)Cash turnover at market value of common stock only, excluding
   foreign-domiciled companies and investment companies.



(3)U.S. dollar equivalents calculated at year-end exchange rates.


- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------


Hungary's stock market is concentrated in four sectors--pharmaceuticals,
telecom, banks and oil processing--as illustrated in the table below.



Industry Composition of the Budapest Stock Exchange, as of December 31, 2003



<Table>
<Caption>
                                                               INDUSTRY DIVISION BY
ECONOMIC INDUSTRY SECTOR                                      MARKET CAPITALIZATION
- -----------------------------------------------------------------------------------
<S>                                                           <C>
Pharmaceuticals.............................................                     25%
Telecom.....................................................                     22
Banks.......................................................                     19
Oil Processing..............................................                     16
Chemicals...................................................                      7
Power Supply................................................                      7
Others......................................................                      4
                                                              ---------------------
  Total.....................................................                    100%
                                                              =====================
</Table>


- ------------

Source: Budapest Stock Exchange, Annual Report 2003



Financings via issuance of corporate bonds is very limited in Hungary, as the
corporate bond market is in its infancy. Generally only blue-chip companies and
local subsidiaries of multinational corporations have issued corporate debt in
the country.



The Hungarian Traded Index (the "HTX" Index, one of the CECE Index families) is
a commonly used measure of the Hungarian stock markets. The HTX is a
capitalization-weighted price index reflecting in real time the movement of the
most liquid blue chip stocks traded on the BSE. It is calculated in U.S. dollars
as well as in euros and on a local currency basis. Published criteria for
selecting stocks for the HTX include market capitalization, liquidity, price
availability, sector representation and market interest, with the primary
criteria being market capitalization and liquidity. The HTX is not adjusted for
dividend payments. Although there is no prescribed number of stocks to be
included in the HTX, the Index included ten stocks as of February 5, 2004. This
group represented approximately 16.4% of the total market capitalization of
stocks listed on the BSE as of December 31, 2003.



The following table presents the annual performance in U.S. dollar terms of the
HTX, along with the U.S. dollar-denominated returns of the Hungarian currency,
the florint ("HUF"), between 1999 and 2003.



Annual Returns of the Hungarian Stock Markets (1) and Currency (in USD $)



<Table>
<Caption>
                                                     1999     2000     2001     2002     2003
- ---------------------------------------------------------------------------------------------
<S>                                                <C>      <C>      <C>      <C>      <C>
Hungarian Traded Exchange ("HTX")................   11.55%  (22.49)%  (7.40)%  33.32%   27.83%
Florint ("HUF")..................................  (14.32)  (10.57)    2.74    22.42     7.56
</Table>


- ------------

Source: Bloomberg



(1)Simple appreciation only. Does not include dividends reinvested.



RUSSIA'S ECONOMY AND SECURITIES MARKETS



Investing in Russia subjects investors to many of the same risks associated with
investing in Central European countries, as described in the "Risk Factors and
Special Considerations" section, above. As previously noted, there are
significant risks inherent in Russian securities that are not typically
associated with securities of companies in more developed countries. The value
of Russian securities


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- --------------------------------------------------------------------------------


may be affected by various uncertainties, such as economic, political and social
instability; investment and regulatory risk, including crime and corruption in
government and business; and inconsistency and underdevelopment of Russia's tax
and legal systems. As is the case with issuers in most emerging markets, Russian
securities are subject to a higher degree of volatility than the securities of
Western companies.



Since the breakup of the Soviet Union in August 1991, Russia, the largest of the
former Soviet republics with a population of 145 million, has undergone
substantial economic change and upheaval. The country is structured as a
federation and run as a presidential republic with considerable input from
governors and security services.



Russia continues to be in transition from a centrally controlled command system
to a market-oriented, democratic model of government. The transition has not
been painless, and risks for investing in Russia are not insignificant.
Financial resources are still concentrated in a few hands. Political and
economic reforms are clearly needed in order for the economy to maintain its
growth trajectory.



Since 1991, Russia has been affected at various times by declines in GDP,
hyperinflation, an unstable currency and high government indebtedness relative
to GDP. Under former president Boris Yeltsin, the Russian economy collapsed in
1998 when the government defaulted on its domestic debt. A USD $22.5 billion
bailout by the International Monetary Fund largely proved to be ineffective in
stabilizing the economy.



Still, the country has achieved remarkable progress in transitioning to a
market-based economy, as the following statistics demonstrate.



Economic Trends in Russia



<Table>
<Caption>
                                                              1999    2000    2001    2002
- -------------------------------------------------------------------------------------------
<S>                                                           <C>     <C>     <C>     <C>
GDP per capita (USD $)......................................  4,514   5,085   5,496   5,830
GDP (% real change per annum)...............................   6.35   10.05    5.00    4.30
Government consumption (% of GDP)...........................  14.58   15.09   16.33   16.91
Budget balance (% of GDP)...................................  (1.17)   2.37    3.05    1.65
Consumer prices (% change per annum, average)...............  85.70   20.75   21.60   15.80
Public debt (% of GDP)......................................  88.09   59.12    48.3    43.4
Labor costs per hour (USD)..................................   0.34    0.44    0.62    0.78
Recorded unemployment (%)...................................  12.27    9.69    8.73    8.48
Current-account balance/GDP (%).............................  12.56   18.04   11.29    9.47
</Table>


- ------------

Source: The Economist Intelligence Unit



Vladimir Putin became Russia's president in 2000. Chief among Putin's agenda
items during his administration have been tax reform and deregulation. In March
2002, for example, President Putin replaced the head of Russia's central bank,
Viktor Gerashchenko, a Soviet-era bureaucrat whose tenure was marked by intense
inflation and generally ineffective regulation.



Russia has long been and is today a collection of diverse territories in various
stages of development. Progress on the structural reform front has been somewhat
slowed by intense internal political struggles, and Moscow has been under
considerable pressure to contain certain rebellious regions within the Russian
Federation. Mr. Putin is determined to bring these areas under Moscow's control,
but he needs the cooperation of the Federation members. Significantly, on
December 9, 2003, the Duma parliamentary election confirmed a power shift toward
parties loyal to Mr. Putin. Presidential elections are scheduled for March 2004,
and President Putin is believed to be the front-runner.


- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------


President Putin has made the country's reformation into a free market economy a
key priority. It generally believed by many political analysts, though far from
a certainty, that Putin's policies may help smooth the country's path to
eventual membership in the World Trade Organization ("WTO"). Supporting this
thesis was the June 2002 designation by the United States of Russia as a market
economy, which followed closely on the heels of a similar step taken by the EU.
Russia has taken measures to pass laws that fit WTO standards, and has
participated in bilateral discussions on such sensitive issues as access for
manufactured imports and protection of intellectual property. However,
negotiations that would lead to serious consideration of Russia's admission to
the WTO are far from complete, and to some extent have been hampered by the
country's large bureaucracy, which is charged with enforcing the new legal
standards.



Although the structure of Russia's economy has changed dramatically over the
last decade, it continues to be highly concentrated in several respects, and
retains a number of features that differ from Central European economies in
transition. First, the percentage of new enterprises (i.e., enterprises founded
after the beginning of systemic reforms) and of small- and medium-sized
enterprises is relatively low by international comparison. Second, the economy
still features large production units, many of which are suffering losses.
Third, a significant portion of the population (10%) still lives in economic and
social isolation in the Far North and Far East.



Nevertheless, Russia's economic performance has been both relatively strong and
stable since Putin became president, at a time when most global economies
experienced a considerable slowdown in economic performance. The Russian economy
has benefited from rising oil prices and significant foreign capital inflows. In
2003, Moody's upgraded Russia's credit rating to investment grade status. In
addition, several global companies have increased or are planning to increase
their exposure to the Russian market.



According to a September 2003 report issued by the U.S. Energy Information
Administration, a statistical agency of the U.S. Department of Energy, Russia is
important to world energy markets because it holds the world's largest natural
gas reserves, the second largest coal reserves, and the eighth largest oil
reserves. Russia is presently the world's second largest oil exporter and third
largest energy consumer. Over time, it could become a more significant oil
exporter. In this respect, three developments are noteworthy. First, in 2003 the
Russian authorities approved British Petroleum's nearly USD $8 billion
investment in Tyumen Oil, a joint venture between the two companies, which is
now called TNK-BP. This major transaction would represent the biggest single
direct investment in Russia. Second, a political decision to build a private
pipeline and expand port facilities in Murmansk are aimed at increasing oil
exports to the United States. Third, to reduce Russia's dependence on oil, the
minister of finance has submitted a proposal to create a stabilization fund that
would be used to cushion the economy from the negative impact of potentially
lower oil revenues.



Led by gains in the construction and agriculture sectors, growth was strong in
Russia in 2003, with GDP advancing 7.0% over 2002, according to the Russian
Ministry for Economic Growth. However, many economists expect smaller net
exports to result in lower GDP growth in 2004. The key factor in the overall
performance of Russian GDP growth has been oil and natural gas exports. Oil
revenues have not only fueled domestic demand and consumption but also helped
the Russian financial situation. Russia is one of the few countries in the world
with surpluses in both the federal budget and its current account. As a result,
Russia was able to repay some of its foreign debts before maturity and raise its
foreign exchange reserves to $44 billion in 2003.



The Russian Securities Markets


As noted in the "Risk Factors and Special Considerations" section above,
Russia's securities market is evolving from an exotic frontier market into a
more cohesive emerging market. However, there still is no centralized public
market for trading Russian securities despite the number of stock exchanges in


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- --------------------------------------------------------------------------------


the country. Trading occurs mostly over-the-counter. Corporate governance
standards for Russian companies have also proven to be poor, and minority
stockholders in Russian companies have suffered losses due to abusive share
dilutions, asset transfers and transfer-pricing practices. Stockholders of
Russian companies also lack many of the protection available to stockholders of
Western issuers. Accounting, financial and auditing reporting by Russian
companies is also generally of less quality and less reliability compared with
Western companies.



Laws and regulations involving foreign investment in Russian enterprises, title
to securities and transfer of title are also relatively new and can change
quickly and unpredictably. Moreover, Russia's taxation system is frequently
subject to change and enforcement is inconsistent at federal, regional and local
levels.



The activity at the two major Russian stock exchanges (Moscow Interbank Currency
Exchange, (the "MICEX") and Russian Trading System (the "RTS") accounts for
substantially all of the domestic volume of trading. Both exchanges are
nationwide electronic markets based on a continuous auction model. The MICEX
employs an Internet trading facility, and the RTS uses a dealer market approach
and quote-driven system structurally modeled after the NASDAQ system. These two
exchanges support a developing securities market infrastructure, including
several hundred broker/dealers, and depositary, registration, clearing and
settlement facilities. Regulatory oversight is handled by the Federal Securities
Market Commission ("FSMC"). Russian markets encompass the entire range of
financial instruments used in the global capital markets, including derivatives.



The RTS was established in 1995 to consolidate separate regional securities
trading floors into a unified Russian securities market. The RTS lists Russian
equity and fixed income securities, as well as futures and options (with ruble
and foreign currency settlement) for both domestic and foreign portfolio
managers. RTS also provides real-time trading data to global information
services companies. At year-end 2003, more than 300 securities traded on the
RTS, including 50 bonds.



Trading Volume for Russian Stocks, Year Ended December 31(1)



<Table>
<Caption>
YEAR                                                          IN MIL. USD $(2)   IN SHARES (000S)
- -------------------------------------------------------------------------------------------------
<S>                                                           <C>                <C>
1995........................................................             187.3            924,218
1996........................................................           2,926.3         10,919,144
1997........................................................          14,424.3         20,415,205
1998........................................................           8,662.5         30,629,708
1999........................................................           2,338.4         22,716,229
2000........................................................           5,553.5         29,011,847
2001........................................................           4,239.1         22,648,366
2002........................................................           4,236.0         18,077,301
2003........................................................           5,514.6         17,728,537
</Table>


- ------------

Source: Russian Trading System



(1)Aggregate transactions in the RTS Classic Stock Market, the primary equity
   trading market of the Russian Trading System.



(2)U.S. dollar equivalents calculated using daily exchange rates, aggregated for
   the year.


- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------


The following table shows the percentages of RTS-traded companies in each
industry, by market capitalization at the end of 2002 (the latest date for which
aggregate data is available):



Industry Composition of the Russian Trading System, as of December 31, 2002



<Table>
<Caption>
                                                              INDUSTRY DIVISION BY
ECONOMIC INDUSTRY SECTOR                                      MARKET CAPITALIZATION
- -----------------------------------------------------------------------------------
<S>                                                           <C>
Electric Energy Production..................................                     28%
Machine Building and Metal Processing.......................                     14
Fuel Industry, including Oil................................                     13
Metallurgy..................................................                      9
Telecommunications..........................................                      7
Banking.....................................................                      5
Food Processing Industry....................................                      3
Transport...................................................                      3
Chemical and Petrochemical Industries.......................                      3
Retail......................................................                      1
Other.......................................................                     14
                                                              ---------------------
  Total.....................................................                    100%
                                                              =====================
</Table>


- ------------

Source: RTS Stock Exchange Annual Report 2002



The MICEX, the other leading exchange in Russia, has served as a base for the
nationwide system of trades in the currency, stock and derivatives sectors of
the financial market, operating both in Moscow and in Russia's largest financial
and industrial centers. Jointly with its partners (the MICEX Settlement House,
the National Depository Center, regional exchanges and others), the MICEX
provides settlement and clearing as well as depository services.



The following table sets forth the 30 largest Russian companies based on market
capitalization. These stocks represent roughly 12.3% of the total market
capitalization of the stocks traded on the RTS and MICEX.



<Table>
<Caption>
                                                                                     MARKET
                                                                                 CAPITALIZATION
COMPANY                                   TICKER     INDUSTRY SUB GROUPING      (THOUS. USD $)(1)
- -------------------------------------------------------------------------------------------------
<S>                                       <C>      <C>                          <C>
Gazprom.................................   GAZP     Oil Companies--Integrated           4,150,335
YUKOS Corp..............................   YUKO     Oil Companies--Integrated           3,114,563
LUKoil Oil Company......................   LKOH     Oil Companies--Integrated           2,133,213
Surgutneftegaz..........................   SNGS     Oil Companies--Integrated           2,000,156
Norilisk NIC--MMC.......................   GMKN            Metal--Diversified           1,493,063
Siberian Oil Company (Sibneft)..........   SIBN     Oil Companies--Integrated           1,491,139
Unified Energy System of Russia.........   EESR          Electric--Integrated           1,225,917
Savings Bank of the Russian
  Federation............................   SBER              Commercial Banks             570,000
Severstal...............................   CHMF              Steel--Producers             400,647
Surgutneftegaz-Pfd......................  SNGSP     Oil Companies--Integrated             290,750
Tatneft.................................   TATN     Oil Companies--Integrated             274,515
Mosenergo...............................   MSNG          Electric--Integrated             228,601
</Table>


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- --------------------------------------------------------------------------------


<Table>
<Caption>
                                                                                     MARKET
                                                                                 CAPITALIZATION
COMPANY                                   TICKER     INDUSTRY SUB GROUPING      (THOUS. USD $)(1)
- -------------------------------------------------------------------------------------------------
<S>                                       <C>      <C>                          <C>
Slavneft-Megionneftegaz.................   MFGS      Oil Companies--Explor. &
                                                                         Prod             159,160
Rostelecom..............................   RTKM         Telephone--Integrated             158,856
Baltika Brewery.........................   PKBA                       Brewery             156,410
Orenburgneft............................   ORNB     Oil Companies--Integrated             155,243
UralSvyazInform.........................   URSI              Telecom Services             125,965
Moscow City Telephone Network...........   MGTS              Telecom Services             105,375
Transneft...............................  TRNFP                     Pipelines             105,265
Nizhny Tagil Iron & Steel Plant.........   NTMK                    Metal-Iron              95,958
Aeroflot--Russian International
  Airlines..............................   AFLT                      Airlines              94,402
AvtoVAZ Incorporated....................   AVAZ        Auto-Cars/Light Trucks              78,864
Volga Telecom...........................   NNSI              Telecom Services              73,791
Bashneft................................   BANE      Oil Companies--Explor. &
                                                                        Prod.              66,366
Open Joint Stock Company of Energetics &
  Electrification.......................   IRGZ               Electric Energy              64,352
CenterTelecom...........................   ESMO         Telephone--Integrated              59,570
Unified Energy System of Russia-Pfd.....  EESRP          Electric--Integrated              57,689
SibirTelekom............................   ENCO              Telecom Services              55,853
Lenenergo...............................   LSNG               Electric Energy              55,346
Verkhnaya Salda Metallurgical Production
  Assn. ................................   VSMO                    Metallurgy              54,191
Central Teleco-P........................  CTELP         Telephone--Integrated              52,599
</Table>


- ------------

Source: Bloomberg, Russian Trading System, Moscow Interbank Currency Exchange



(1) Market Capitalization based on last closing prices and currency exchange
    rate as of February 6, 2004.



As of February 6, 2004, approximately 71.9% of the market capitalization of the
above-listed 30 largest companies represented companies in the oil and gas
industry.



As a general rule, shareholders with controlling stakes in a company dominate
Russian equity investing. Typical of most emerging markets countries, including
those of Central Europe, ownership structures in Russia are rarely diversified.
In addition, companies rely much more on debt than equity financing; a small
number of large stakeholders control most shareholder capital; and the
government, not the market, largely controls how financial resources are
allocated. This situation is markedly different from the more accessible and
popular retail American-style of stock ownership.



The Russian securities market continues to benefit from legislative reforms. In
January 2003, several amendments to the Law on the Securities Market (the "Law")
became effective (while others were scheduled to take effect in subsequent
stages in 2004). The changes contained in the amended Law introduced a
legislative basis for the concept of share options and clarifies the government
approvals needed for the issuance or trading of Russian securities in foreign
market through the mechanism of American Depositary Receipts (ADRs), Global
Depositary Receipts (GDRs), or similar instruments. Essentially, under Article
16 of the Law, the FSMC must approve the "placement by a Russian issuer of
securities abroad." In addition, the amended Law has abolished the former
requirement for Russian


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legal entities and individuals to notify the FSMC upon their acquisition of
foreign-issued securities. Further, Article 29 of the Law has also changed the
former requirement for foreign purchasers to notify the FSMC upon their
acquisition of any Russian-issued securities; notice is now required only for
the acquisition of shares in circumstances when Russian law has imposed limits
on foreign ownership. (Such limits remain in effect for certain major Russian
companies, including the national electric utility RAO UES and OAO Gazprom.)
Although the timing of their effects is uncertain, and while enforcement of the
Law remains very much an open question, these changes could be favorable for
foreign investment capital in the Russian securities markets as the system
evolves from one favoring domestic shares and investors to a more global market
model.



However, structural distortions in the Russian securities market have
constrained its development. The cost of regulation is high and tax incentives
are insufficient for most investors. The domestic market is concentrated in
Moscow, where more than 60% of the country's financial capital base is located.
A company's success in the stock market often depends on how closely aligned its
sponsoring broker or bank is with the government and whether there is a personal
relationship between the owners of the company's sponsoring broker or bank and
civil servants. While securities regulation exists on the books, enforcement of
rules is often poor; real sanctions for dishonest practices in client/broker
relationships are rarely enforced.



Russia's domestic bond market, which barely existed five years ago, has grown,
but from relatively low levels and not nearly to the same extent as its Central
and Eastern European neighbors. International bond issues by Russian companies
grew to $5.4 billion by November 2003, from $649 million in 1997. In 2002, the
RTS opened a new market--RTS Bonds--to facilitate trading in corporate,
government and municipal bonds and Eurobonds.



The Russian Traded Index (the "RTX" Index), calculated and maintained by the
Vienna Stock Exchange, is a commonly used measure of the Russian stock markets.
The RTX is a capitalization-weighted price index reflecting in real time the
movement of the most liquid blue chip stocks traded on the RTS. It is calculated
in U.S. dollars as well as in euros and on a local currency basis. Published
criteria for selecting stocks for the RTX include market capitalization,
liquidity, price availability, sector representation and market interest, with
the primary criteria being market capitalization and liquidity. The PTX is not
adjusted for dividend payments. Although there is no prescribed number of stocks
to be included in the RTX, the Index included eight stocks as of February 5,
2004, which represented approximately 32.3% of the total market capitalization
of stocks listed on the RTS as of the same date.



The following table presents the annual performance in U.S. dollar terms of the
RTX, along with the U.S. dollar-denominated returns of the Russian currency, the
ruble ("RUB"), between 1999 and 2003.



Annual Returns of the Russian Stock Markets(1) and Currency (in USD $)



<Table>
<Caption>
                                                       1999     2000    2001    2002    2003
- --------------------------------------------------------------------------------------------
<S>                                                  <C>      <C>      <C>     <C>     <C>
Russian Traded Exchange ("RTX")....................  260.68%  (32.76)% 56.05%  26.21%  73.29%
Ruble ("RUB")......................................  (25.15)   (2.17)  (7.69)  (4.54)   9.28
</Table>


- ------------

Source: Bloomberg



(1) Simple appreciation only. Does not include dividends reinvested.



As the table above illustrates, the Russian securities markets are characterized
by high volatility, including extremely large swings in returns (either up or
down) from year to year.


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TURKEY'S ECONOMY AND SECURITIES MARKETS



Located between Europe and Asia, Turkey is a dynamic emerging market economy. At
the end of 2002, more than 73% of its 70.3 million people lived in urban areas.
At the end of 2002, according to The Economist Intelligence Unit, agriculture
accounted for 16% of its GDP, industry for 24%, and services for 60%.



Economic Trends in Turkey



<Table>
<Caption>
                                                              1999     2000     2001     2002
- ---------------------------------------------------------------------------------------------
<S>                                                         <C>      <C>      <C>      <C>
GDP per capita (USD $)....................................   6,154    6,668    6,219    6,686
GDP (% real change per annum).............................   (4.71)    7.36     (7.5)    7.78
Government consumption (% of GDP).........................   15.18    14.08    14.24    14.03
Budget balance (% of GDP).................................  (13.02)  (10.65)  (16.34)  (14.16)
Consumer prices (% change per annum, average).............   64.87    54.92     54.4    44.96
Public debt (% of GDP)....................................   53.55    60.46    101.6     88.9
Labor costs per hour (USD $)..............................    1.51     1.55     1.22     1.44
Recorded unemployment (%).................................    7.65      6.6     8.53    10.68
Current-account balance/GDP...............................   (0.74)   (4.93)    2.33    (0.98)
</Table>


- ------------

Source: The Economist Intelligence Unit



Turkey established an industrial base through state control and protectionist
policies following World War II. Policies have since shifted towards
liberalization, a trend that was reinforced when Turkey signed a customs union
with the EU in 1995 and became a pre-accession candidate for EU membership at
the Helsinki Summit in December 1999. In addition, legislation to reform
pensions and social security was passed in August 1999. In that same year, the
Turkish government launched an economic reform program to quell high inflation
and restore sustained growth, although these efforts were interrupted by the
impact of several earthquakes and the financial crisis of 2000-2001. As a
result, the economy registered GDP contraction of 7.5% in 2001.



Turkey has been a net importer over the past several years. In 2002, exports
totaled USD $39.8 billion, while imports were USD $48.1 billion, leaving a trade
deficit of USD $8.3 billion, compared with USD $4.5 billion in 2001. Significant
steps have been taken to promote foreign investments in Turkey. Constitutional
change to allow international arbitration has been approved. Foreign direct
investment legislation was revised and a new law was passed in June 2003 to
improve conditions for foreign investments. A Patent Institute has been
established and a new Patent Law submitted to Parliament to protect intellectual
property. In addition, an Investment Promotion Agency is being established, and
state monopolies in electricity and the telecommunication sector have been
opened to competition.



The tax reform law in July 1998 reduced the basic rate of corporation tax from
30% to 25%. Personal income tax rates were lowered to a range of 20% to 45%,
down from 25% to 50%. They were reduced again on January 1, 1999, to between 15%
and 40%. New taxes imposed in the aftermath of the August 1999 earthquake were
maintained as part of an IMF-backed stabilization program. The economy started
to recover in 2002, with GDP growth reaching almost 8%, and the positive
improvement continued into 2003. During the third quarter of 2003, the Turkish
Ministry for Foreign Trade reported annualized GDP growth in the industrial
sector of 7.6%; in the services sector, 3.9%.


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Nevertheless, the recent political and economic climate in Turkey has been
challenging. In November 2003, Turkey was shaken by four suicide bombings by
Islamic fundamentalists in Istanbul. Two targeted Jewish synagogues and the
others demolished the British consulate and the UK-based HSBC bank. In addition,
in the same month, the head of the Banking Regulation and Supervisory Authority
("BRSA") resigned under pressure from the government.



The Turkish Securities Markets


Turkey's securities market has its roots in the second half of the 19th century,
when the first organized securities market was established in 1866 following the
Crimean War. This exchange, entitled the Dersaaset Securities Exchange, created
a medium for European investors who were seeking higher returns in the
far-reaching Ottoman markets. Following the demise of the Ottoman Empire and
formation of the Turkish Republic, a new law was enacted in 1929 to reorganize
the capital markets under the new name, the Istanbul Securities and Foreign
Exchange Bourse. The rise of the modern stock market in Turkey can be traced to
this marketplace, which operated without interruption through the 1929
depression and World War II.



The laws governing the establishment, activities, operations and supervision of
securities exchanges were codified by the Council of Ministers in 1983. The
establishment of the securities exchanges is subject to the approval of the
Finance Ministry upon the recommendation of the Capital Markets Board based in
Ankara. The regulations concerning operational procedures were approved in the
subsequent extraordinary meetings of the General Assembly. The Istanbul Stock
Exchange (the "ISE") was formally established at the end of 1985. The ISE is the
only securities exchange in Turkey authorized to provide trading in equities,
bonds and bills, revenue-sharing certificates, private sector bonds, foreign
securities, real estate certificates and international securities. In June 1991,
the ISE's market for bills and bonds was established.



Listing requirements, which are published by the ISE, require any individual
company applying for listing to provide detailed, independently audited
financial statements and consolidated financial statements for group companies.
Companies must demonstrate three-year operating histories, must have had pre-tax
profits in the two years prior to the application year, and must meet other
detailed requirements, including, among other items, company size, debt levels
and amount of equity float.



There are three principal stock market segments in the ISE:



+  National--All companies listed in the National Market must meet certain
   listing requirements described above. Generally, stocks listed on this market
   are the ISE's largest and most liquid securities. Currently, 100 companies
   listed on the National Market are included in the ISE National 100 Index,
   which is the main index of the ISE stock market.



+  Regional--The Regional Markets segment of the ISE was established to promote
   trading in stocks of small- and medium-sized companies incorporated in all
   parts of Turkey. The Regional Markets include companies delisted temporarily
   or permanently from the National Market, as well as companies that fail to
   fulfill the National Market's listing requirements.



+  New Companies--The New Companies Market was established in 1996 to provide an
   organized market for trading in stocks of companies that may be under
   regulatory scrutiny. Companies listed in this market may be under
   investigation for improper, inconsistent, untimely disclosure information to
   the public; failure to comply with existing rules and regulations; and other
   situations leading to delisting and/or dismissal from the relevant market
   temporarily or permanently in order to protect investors' rights.


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The following table presents an overview of the historical growth of the ISE in
terms of value and number of issues traded in its three principal market
segments.



<Table>
<Caption>
                                                                  NUMBER OF ISSUES BY MARKET TYPE
                       TOTAL VALUE   TOTAL VALUE    NUMBER OF                                 NEW
YEAR                   (MIL. LIRA)   (USD $MIL.)       ISSUES     NATIONAL   REGIONAL   COMPANIES
- -------------------------------------------------------------------------------------------------
<S>                    <C>           <C>           <C>          <C>          <C>        <C>
1986.................            9            13            3            3        --           --
1987.................          105           118           15           15        --           --
1988.................          149           115           32           32        --           --
1989.................        1,736           773          238          238        --           --
1990.................       15,313         5,854        1,537        1,537        --           --
1991.................       35,487         8,502        4,531        4,531        --           --
1992.................       56,339         8,567       10,285       10,285        --           --
1993.................      255,222        21,770       35,249       35,249        --           --
1994.................      650,864        23,203      100,062      100,062        --           --
1995.................    2,374,055        52,357      306,254      306,254        --           --
1996.................    3,031,185        37,737      390,924      377,026    12,765          963
1997.................    9,048,721        58,104      919,784      897,383    11,889        6,670
1998.................   18,029,966        70,396    2,242,531    2,205,345    17,665       18,165
1999.................   36,877,335        84,034    5,823,858    5,747,700    52,554        9,136
2000.................  111,165,396       181,934   11,075,685   10,988,802    64,626        4,364
2001.................   93,118,834        80,400   23,938,149   23,706,279   140,757           --
2002.................  106,302,343        70,756   33,933,251   33,411,837   322,127           --
2003.................  146,644,967       100,165   59,099,780   58,297,164   682,824           --
</Table>


- ------------

Source: Istanbul Stock Exchange



The following table shows the percentages of ISE-traded companies in each
industry, by market capitalization at the end of 2002 (the latest date for which
aggregate information is available):



Industry Composition of the Istanbul Stock Exchange, as of December 31, 2002



<Table>
<Caption>
                                                               INDUSTRY DIVISION BY
ECONOMIC INDUSTRY SECTOR                                      MARKET CAPITALIZATION
- -----------------------------------------------------------------------------------
<S>                                                           <C>
Chemical, Petroleum, Plastic................................                  31.38%
Non-Metal Mineral Products..................................                  15.07
Metal Products, Machinery...................................                  21.47
Food, Beverage..............................................                  11.16
Basic Metal.................................................                   8.99
Wood, Paper, Printing.......................................                   6.79
Textiles, Leather...........................................                   4.18
Other.......................................................                   0.96
                                                              ---------------------
  Total.....................................................                 100.00%
                                                              =====================
</Table>


- ------------

Source: Istanbul Stock Exchange, Annual Factbook 2002


- --------------------------------------------------------------------------------
                                                                              63
<PAGE>

CENTRAL EUROPEAN, RUSSIAN AND TURKISH ECONOMIES AND MARKETS

- --------------------------------------------------------------------------------


The following table presents the 30 largest securities traded on the ISE in 2003
by market capitalization. These companies represent 77.2% of the total market
capitalization of all companies traded on the ISE, as of December 31, 2003:



<Table>
<Caption>
                                                                           MARKET CAPITALIZATION
COMPANY                     TICKER                     INDUSTRY SUBGROUP         (MIL. USD $)(1)
- ------------------------------------------------------------------------------------------------
<S>                         <C>      <C>                                   <C>
Akbank T.A. ..............  AKBNK                       Commercial Banks                   8,440
Is Bankasi................  ISBTR                       Commercial Banks                   7,728
Turkcell Iletisi..........  TCELL                       Cellular Telecom                   6,950
KOC Holding...............  KCHOL                 Diversified Operations                   6,239
Sabanci Holding...........  SAHOL                 Diversified Operations                   6,100
Turkiye Garanti...........  GARAN                       Commercial Banks                   3,720
Enka Insaat...............  ENKAI    Divers. Operations/Comm Servs......                   3,600
Tofas-Turk Otomo..........  TOASO                 Auto-Cars/Light Trucks                   3,535
Tupras....................  TUPRS               Oil Refining & Marketing                   3,005
Ford Otomotiv.............  FROTO                 Auto-Cars/Light Trucks                   2,983
Arcelik...................  ARCLK                             Appliances                   2,860
Anadolu Efes Bir..........  AEFES                                Brewery                   2,111
Yapi Credi Bank...........  YKBNK                       Commercial Banks                   2,107
Eregli Demir Celik........  EREGL                        Steel Producers                   1,841
Dogan Yayin Holding.......  DOHOL                 Diversified Operations                   1,603
Petrol Ofisi..............  PTOFS            Retail Petroleum Production                   1,560
Dogan Yayin...............   DYOL                             Multimedia                   1,455
Turk Hava Yollar..........  THYAO                               Airlines                   1,391
Petkim....................  PETKM                 Chemicals--Diversified                   1,198
Hurriyet Gzt..............  HURGZ                 Publishing--Newspapers                   1,097
Migros....................  MIGRS                           Food--Retail                   1,067
Vestel Elek San...........  VESTL                   Audio/Video Products                     986
Turk Sise Cam.............   SISE                             Housewares                     933
Trakya Cam Sanay..........  TRKCM            Miscellaneous Manufacturing                     795
Aygaz AS..................  AYGAZ                 Distribution/Wholesale                     792
BSH Profilo...............  BSPRO                             Appliances                     752
Aksigorta.................  AKGRT            Property/Casualty Insurance                     669
Alarko Holding............  ALARK                 Diversified Operations                     627
Akcansa Cimento...........  AKCNS                               Building
                                             Products--Cement/Aggregates                     612
Finansbank................  FINBN                       Commercial Banks                     608
</Table>


- ------------

Source: Bloomberg, Istanbul Stock Exchange



(1)As of January 26, 2004.



The ISE National 100 Index (the "TRA"), a commonly used measure of the Turkish
stock markets, has been calculated since the inception of the ISE. The TRA, a
capitalization-weighted price index, is comprised of National Market companies
except investment trusts. The constituents of the Index are selected on the
basis of pre-determined criteria established for companies to be included in the
Index. The ISE Executive Council determines which securities will be included in
the Index, and evaluate each company based on their market capitalization,
operating history and liquidity, among other factors.


- --------------------------------------------------------------------------------
 64
<PAGE>

CENTRAL EUROPEAN, RUSSIAN AND TURKISH ECONOMIES AND MARKETS

- --------------------------------------------------------------------------------


The constituents of the Index are subject to quarterly review and adjustment.
The ISE National 100 Index contains the ISE National 50 and ISE National 30
companies. All Turkish lira-based ISE indices are also expressed and published
in U.S. dollar terms.



The following table presents the annual performance in U.S. dollar terms of the
TRA, along with the U.S. dollar-denominated returns of the Turkish currency, the
lira ("TRL"), between 1999 and 2003.



Annual Returns of the Turkish Stock Markets(1) and Currency (in USD $)



<Table>
<Caption>
                                                1999      2000      2001      2002      2003
- --------------------------------------------------------------------------------------------
<S>                                           <C>       <C>       <C>       <C>       <C>
ISE National 100 Index ("TRA")..............  240.83%   (50.12)%  (32.17)%  (34.47)%  112.84%
Lira ("TRL")................................  (42.04)   (18.58)   (53.90)   (12.39)    17.68
</Table>


- ------------

Source: Bloomberg



(2)Simple appreciation only. Does not include dividends reinvested.


- --------------------------------------------------------------------------------
                                                                              65
<PAGE>

- --------------------------------------------------------------------------------

Description of common stock

GENERAL


All shares of common stock are equal as to earnings, assets, dividends,
liquidation and voting privileges and, when issued, will be fully paid and
nonassessable. There are no conversion, pre-emptive or other subscription
rights. In the event of liquidation, each share of common stock is entitled to
its proportion of our assets after debts and expenses. Stockholders are entitled
to one vote per share and do not have cumulative voting rights. Our outstanding
common stock is listed on the NYSE under the symbol "CEE," as will be the shares
offered for subscription in this rights offering. Our common stock is also
listed on the Regulated Market Segment (Geregelter Markt) of the Frankfurt Stock
Exchange. The rights are transferable and application will be made to list them
on the NYSE under the symbol "CEE.RT."



Set forth below is information with respect to our common stock as of February
6, 2004:



<Table>
<Caption>
                                                                                    AMOUNT OUTSTANDING
                                                               AMOUNT HELD BY US    (EXCLUSIVE OF OUR
             TITLE OF CLASS                AMOUNT AUTHORIZED   OR FOR OUR ACCOUNT       HOLDINGS)
             --------------                -----------------   ------------------   ------------------
<S>                                        <C>                 <C>                  <C>
Common Stock $.001 par value.............     80,000,000           5,864,442            7,641,533
</Table>


We have no present intention of offering additional shares, other than pursuant
to this rights offering, except that additional shares may be issued under our
dividend reinvestment plan. For information about our dividend reinvestment
plan, see "Voluntary Cash Purchase Program and Dividend Reinvestment Plan" in
this prospectus. Additional offerings of our common stock, if made, will require
approval of our board of directors and will be subject to the requirements of
the Investment Company Act that common stock may not be sold at a price below
the then current net asset value (exclusive of underwriting discounts and
commissions) except in connection with an offering to existing stockholders or
with the consent of a majority of our outstanding stockholders.

PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS
AFFECTING CHANGE OF CONTROL AND EXTRAORDINARY TRANSACTIONS

We have provisions in our articles of incorporation and bylaws that could have
the effect of delaying, deferring, preventing or otherwise limiting the ability
of other entities or persons to acquire control of us, to cause us to engage in
certain transactions or to modify our structure. Our board of directors is
divided into three classes each having a term of three years. Each year, the
term of one class expires and the successor or successors elected to that class
will serve for a three-year term. This provision could delay for up to two years
the replacement of a majority of our board of directors by our stockholders. A
director may be removed from office only by the affirmative vote of at least
two-thirds of all the votes entitled to be cast by our stockholders generally in
the election of directors. Except as otherwise required by law, any vacancy
created on our board of directors can be filled only by the affirmative vote of
the remaining directors in office. Our bylaws generally require that advance
notice be given to us in the event a stockholder desires to nominate a person
for election to the board of directors or to transact any other business at a
meeting of stockholders.

In addition, the affirmative vote of the holders of two-thirds of our
outstanding shares is required to authorize our dissolution or any of the
following transactions:

+  the merger or consolidation of us with or into any open-end investment
   company;

+  the sale of all or substantially all of our assets; or

- --------------------------------------------------------------------------------
 66
<PAGE>
DESCRIPTION OF COMMON STOCK
- --------------------------------------------------------------------------------

+  any amendment to our articles of incorporation which makes the common stock a
   redeemable security or reduces the two-thirds vote required to authorize the
   actions listed in clauses (1) through (3).

The full text of these provisions can be found in our articles of incorporation
and bylaws, on file with the SEC, as described under "Available Information" in
this prospectus. These provisions could have the effect of depriving
stockholders of an opportunity to sell their shares at a premium over prevailing
market prices by discouraging a third party from seeking to obtain control of us
in a tender offer or similar transaction. Our board of directors believes that
the provisions of our articles of incorporation and bylaws described above
provide the advantage of greater assurance of continuity of board and management
composition and policies. The supermajority voting requirements are generally
greater than the minimum voting requirements imposed on us by the Investment
Company Act and Maryland law. Our board of directors has determined that the
foregoing provisions are in the best interests of stockholders generally.

- --------------------------------------------------------------------------------
                                                                              67
<PAGE>

- --------------------------------------------------------------------------------

Dividends and distributions

We distribute to stockholders, at least annually, substantially all of our net
investment income and net realized capital gains. Distributions are made in cash
or in common stock with the option to receive cash. Stockholders entitled to a
distribution to be made in common stock with the option to receive cash may
elect to receive cash by timely returning a completed option card to Investors
Bank & Trust Company, our dividend-paying agent.

The following table shows the history of dividends and distributions we
distributed to stockholders:

<Table>
<Caption>
                                                              ORDINARY       LONG-TERM
RECORD DATE                                                     INCOME   CAPITAL GAINS    TOTAL
- -----------------------------------------------------------------------------------------------
<S>                                                           <C>        <C>             <C>
12/22/ 2003.................................................     $0.22                    $0.22
11/19/2001..................................................     $0.23                    $0.23
11/16/1998..................................................     $0.14                    $0.14
9/01/1998...................................................     $0.01           $0.01    $0.02
11/17/1997..................................................     $1.54           $5.01    $6.55
9/03/1997...................................................                     $0.02    $0.02
12/19/1996..................................................     $0.11           $1.79    $1.90
12/27/1995..................................................     $0.16           $0.22    $0.38
12/29/1994..................................................     $0.20                    $0.20
12/28/1993..................................................     $0.08                    $0.08
12/28/1992..................................................     $0.17           $0.13    $0.30
9/05/1991...................................................                     $0.02    $0.02
12/04/1990..................................................     $0.22           $0.04    $0.26
</Table>

- --------------------------------------------------------------------------------
 68
<PAGE>

- --------------------------------------------------------------------------------

Voluntary cash purchase program and dividend reinvestment plan

GENERAL

We offer stockholders a Voluntary Cash Purchase Program and Dividend
Reinvestment Plan which provides for optional cash purchases and for the
automatic reinvestment of dividends and distributions payable by us in
additional shares of our common stock. A more complete description of the plan
is provided in the plan brochure available from Investors Bank & Trust Company,
the plan agent, Shareholder Services, P.O. Box 642, OPS 22, Boston,
Massachusetts 02117-0642 (telephone 1-800-437-6269).

Under the Plan, participating stockholders appoint the plan agent to receive or
invest our distributions. In addition, participating stockholders may make
optional cash purchases of our shares through the plan agent as often as once a
month. There is no charge to participating stockholders for participating in the
plan, although when shares are purchased under the plan by the plan agent on the
NYSE or otherwise on the open market, each participating stockholder will pay a
pro rata share of brokerage commissions incurred in connection with these
purchases.

REINVESTMENT OF FUND SHARES

Whenever we declare a capital gains distribution, an income dividend or a return
of capital distribution payable, at the election of stockholders, either in cash
or in our shares of common stock, the plan agent will automatically elect to
receive our shares for the account of each participating stockholder.

Whenever we declare a capital gains distribution, an income dividend or a return
of capital distribution payable only in cash and the net asset value per share
of our common stock equals or is less than the market price per share on the
valuation date (the market parity or premium), the plan agent will apply the
amount of that dividend or distribution payable to a participating stockholder
to the purchase from us of our shares for a participating stockholder's account,
except that if we do not offer shares for this purpose because we conclude
Securities Act registration would be required and such registration cannot be
timely effected or is not otherwise a cost-effective alternative for us, then
the plan agent will follow the procedure described in the next paragraph. The
number of additional shares to be credited to a participating stockholder's
account will be determined by dividing the dollar amount of the distribution
payable to a participating stockholder by the net asset value per share of our
common stock on the valuation date, or if the net asset value per share is less
than 95% of the market price per share on such date, then by 95% of the market
price per share. The valuation date will be the payable date for the dividend or
distribution.

Whenever we declare a capital gains distribution, an income dividend or a return
of capital distribution payable only in cash and the net asset value per share
of our common stock exceeds the market price per share on the valuation date
(the market discount), the plan agent will apply the amount of that dividend or
distribution payable to a participating stockholder (less a participating
stockholder's pro rata share of brokerage commissions incurred with respect to
open-market purchases in connection with the reinvestment of that dividend or
distribution) to the purchase on the open market of our shares for a
participating stockholder's account. The valuation date will be the payable date
for the dividend or distribution.

- --------------------------------------------------------------------------------
                                                                              69
<PAGE>
VOLUNTARY CASH PURCHASE PROGRAM AND DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------

VOLUNTARY CASH PURCHASES

Participating stockholders have the option of making investments in our shares
through the plan agent as often as once a month. Participating stockholders may
invest as little as $100 in any month and may invest up to $36,000 annually
through the voluntary cash purchase feature of the plan. The plan agent will
apply these funds (less a participating stockholder's pro rata share of
brokerage commissions or other costs, if any) to the purchase on the NYSE (or,
if different, on the principal exchange for our shares) or otherwise on the open
market for the participating stockholder's account, regardless of whether there
is a market parity or premium or a market discount.

ENROLLMENT AND WITHDRAWAL

Both current stockholders and first-time investors are eligible to participate
in the plan. Current stockholders may join the plan by either enrolling their
shares with the plan agent or by making an initial cash deposit of at least $250
with the plan agent. First-time investors may join the plan by making an initial
cash deposit of at least $250 with the plan agent. Stockholders who hold our
shares in the name of a brokerage firm, bank or other nominee should contact
their nominee to arrange for it to participate in the plan on the stockholder's
behalf.

Participating stockholders may withdraw from the plan without charge by written
notice to the plan agent. Participating stockholders who choose to withdraw may
elect to receive stock certificates representing all of the full shares held by
the plan agent on their behalf, or to instruct the plan agent to sell these full
shares and distribute the proceeds, net of brokerage commissions, to the
withdrawing participating stockholders. Withdrawn participating stockholders
will receive a cash adjustment for the market value of any fractional shares
held on their behalf at the time of termination.

AMENDMENT AND TERMINATION OF PLAN

The plan may be amended or supplemented by us or by the plan agent only by
giving each participating stockholder written notice at least 90 days prior to
the effective date of the amendment or supplement, except that the notice period
may be shortened when necessary or appropriate in order to comply with
applicable law or the rules or policies of the SEC or any other regulatory body.
The plan may be terminated by us or by the plan agent by written notice mailed
to each participating stockholder. Termination will be effective with respect to
all distributions with a record date at least 90 days after the mailing of
written notice to the participating stockholders.

FEDERAL TAX IMPLICATIONS OF REINVESTMENT OF FUND SHARES

Reinvestment in our shares does not relieve participating stockholders from any
income tax which may be payable on dividends or distributions. For U.S. federal
income tax purposes, when we issue shares representing an income dividend or a
capital gains dividend, a participating stockholder will include in income fair
market value of the shares received as of the payment date, which will be taxed
in the same manner as if cash had been received. The shares will have a tax
basis equal to the fair market value, and the holding period for the shares will
begin on the day after the date of distribution. If shares are purchased on the
open market by the plan agent, a participating stockholder will include in
income the amount of the cash payment made. The basis of the shares will be the
purchase price of the shares, and the holding period for the shares will begin
on the day following the date of purchase. State, local and foreign taxes may
also be applicable. For more information about taxation, see "Taxation" below.

- --------------------------------------------------------------------------------
 70
<PAGE>

- --------------------------------------------------------------------------------

Taxation

DISTRIBUTIONS AND TAX MATTERS

The following is a summary of certain tax considerations generally affecting us
and our stockholders. This section is based on the Internal Revenue Code of
1986, as amended (the "Code"), published rulings and court decisions, all as
currently in effect. These laws are subject to change, possibly on a retroactive
basis. Please consult your own tax advisor concerning the consequences of
investing in us in your particular circumstances under the Code and the laws of
any other taxing jurisdiction.

QUALIFICATION AS A REGULATED INVESTMENT COMPANY

We have elected to be taxed as a regulated investment company under Subchapter M
of the Code and intend to meet all other requirements that are necessary for us
to be relieved of federal taxes on income and gains we distribute to
stockholders. As a regulated investment company, we are not subject to federal
income tax on the portion of our net investment income (i.e., our investment
company taxable income, as that term is defined in the Code, without regard to
the deduction for dividends paid) and net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) that we distribute to
stockholders, provided that we distribute at least 90% of the sum of our net
investment income for the year (the "Distribution Requirement") and satisfy
certain other requirements of the Code that are described below.

In addition to satisfying the Distribution Requirement, we must derive at least
90% of our gross income from dividends, interest, certain payments with respect
to loans of stock and securities, gains from the sale or disposition of stock,
securities or foreign currencies and other income (including but not limited to
gains from options, futures or forward contracts) derived with respect to our
business of investing in those stocks, securities or currencies.


We must also satisfy an asset diversification test in order to qualify as a
regulated investment company. Under this test, at the close of each quarter of
our taxable year, (1) 50% or more of the value of our assets must be represented
by cash, United States government securities, securities of other regulated
investment companies, and other securities, with these other securities limited,
in respect of any one issuer, to an amount not greater than 5% of the value of
our total assets and not greater than 10% of the outstanding voting securities
of that issuer, and (2) not more than 25% of the value of our total assets may
be invested in securities of any one issuer (other than U.S. government
securities or securities of other regulated investment companies), or of two or
more issuers which we control and which are engaged in the same, similar or
related trades or businesses.



If for any year we do not qualify as a regulated investment company, all of our
taxable income (including our net capital gain) will be subject to tax at
regular corporate rates without any deduction for distributions to stockholders.
These distributions will generally be taxable to individual stockholders as
qualified dividend income, as discussed below, and generally will be eligible
for the dividends received deduction in the case of corporate stockholders. In
addition, we could be required to recognize unrealized gains, pay taxes and make
distributions (which could be subject to interest charges) before requalifying
for taxation as a regulated investment company.


EXCISE TAX ON REGULATED INVESTMENT COMPANIES


A 4% non-deductible federal excise tax is imposed on a regulated investment
company to the extent that it distributes income in such a way that it is
taxable to stockholders in a calendar year other than the calendar year in which
the regulated investment company earned the income. Specifically, the excise tax
will be imposed if the regulated investment company fails to distribute in each
calendar year


- --------------------------------------------------------------------------------
                                                                              71
<PAGE>
TAXATION
- --------------------------------------------------------------------------------


at least an amount equal to the sum of (1) 98% of qualified dividend income and
ordinary taxable income for the calendar year and (2) 98% of capital gain net
income (adjusted for certain ordinary losses) for the one-year period ending on
October 31 of this calendar year (or, at the election of a regulated investment
company having a taxable year ending November 30 or December 31, for its taxable
year) and (3) any ordinary income and capital gains for previous years that were
not distributed during those years. The balance of this income must be
distributed during the next calendar year. For the foregoing purposes, a
regulated investment company is treated as having distributed otherwise retained
amounts if it is subject to income tax on those amounts for any taxable year
ending in such calendar year.


We intend to make sufficient distributions or deemed distributions of our
qualified dividend income, ordinary income and capital gain net income prior to
the end of each calendar year to avoid liability for this excise tax. However,
investors should note that we may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.

FUND INVESTMENTS

We may make investments or engage in transactions that affect the character,
amount and timing of gains or losses that we realized. We may make investments
that produce income that is not matched by a corresponding cash receipt by us.
Any of this income would be treated as income earned by us and therefore would
be subject to the distribution requirements of the Code. These investments may
require us to borrow money or dispose of other securities in order to comply
with those requirements. We may also make investments that prevent or defer the
recognition of losses or the deduction of expenses. These investments may
likewise require us to borrow money or dispose of other securities in order to
comply with the distribution requirements of the Code. Additionally, we may make
investments that result in the recognition of ordinary income rather than
capital gain or that prevent us from accruing a long-term holding period. These
investments may prevent us from making capital gain distributions as described
below. We intend to monitor our transactions, will make the appropriate tax
elections and will make the appropriate entries in our books and records when we
make any of these investments in order to mitigate the effect of these rules.

We invest in equity securities of foreign issuers. If we purchase shares in
certain foreign corporations (referred to as passive foreign investment
companies ("PFICs") under the Code), we may be subject to federal income tax on
a portion of any "excess distribution" from this foreign corporation, including
any gain from the disposition of these shares, even if the income is distributed
by us to our stockholders. In addition, certain interest charges may be imposed
on us as a result of these distributions. If we were to invest in an eligible
PFIC and elected to treat the PFIC as a qualified electing fund (a "QEF"), in
lieu of the foregoing requirements, we would be required to include each year in
our income and distribute to stockholders in accordance with the distribution
requirements of the Code a pro rata portion of the QEF's ordinary earnings and
net capital gain, whether or not distributed to us by the QEF. Alternatively, we
generally will be permitted to "mark to market" any shares we hold in a PFIC. If
we make such an election, we would be required to include in income each year
and distribute to stockholders in accordance with the distribution requirements
of the Code, an amount equal to the excess, if any, of the fair market value of
the PFIC stock as of the close of the taxable year over the adjusted basis of
this stock at that time. We would be allowed a deduction for the excess, if any,
of the adjusted basis of the PFIC stock over its fair market value as of the
close of the taxable year, but only to the extent of any net mark-to-market
gains with respect to the stock included by us for prior taxable years. We will
make appropriate basis adjustments in the PFIC stock to take into account the
mark-to-market amounts.

Notwithstanding any election that we make, dividends attributable to
distributions from a foreign corporation will not be eligible for the special
tax rates applicable to qualified dividend income if the

- --------------------------------------------------------------------------------
 72
<PAGE>
TAXATION
- --------------------------------------------------------------------------------

foreign corporation is a PFIC either in the taxable year of the distribution or
the preceding taxable year, but instead will be taxable at rates applicable to
ordinary income.

FUND DISTRIBUTIONS


We anticipate distributing substantially all of our net investment income for
each taxable year. Dividends of net investment income paid to a noncorporate
U.S. stockholder before January 1, 2009 that are designated as qualified
dividend income will generally be taxable to this stockholder at a maximum rate
of 15%. However, the amount of income that we may so designate will generally be
limited to the aggregate amount of qualified dividend income we receive. Higher
tax rates will be reimposed after 2008 unless further legislative action by
Congress is taken. We cannot assure you as to what percentage of the dividends
paid on the shares, if any, will consist of qualified dividend income or
long-term capital gains, both of which are taxed at lower rates for individuals
than are ordinary income and short-term capital gains. In addition, we must meet
certain holding period and other requirements with respect to the shares on
which we receive the eligible dividends, and the noncorporate U.S. stockholder
must meet certain holding period and other requirements with respect to our
shares. Dividends of net investment income that are not designated as qualified
dividend income and dividends of net short-term capital gains will be taxable to
stockholders at ordinary income rates. Dividends paid by us with respect to a
taxable year will qualify for the 70% dividends received deduction generally
available to corporations to the extent of the amount of dividends we receive
from certain domestic corporations for the taxable year. Stockholders will be
advised annually as to the U.S. federal income tax consequences of distributions
made (or deemed made) during the year, including the portion of dividends paid
that qualify for the reduced tax rate.


Ordinarily, stockholders are required to take taxable distributions by us into
account in the year in which the distributions are made. However, for federal
income tax purposes, dividends that are declared by us in October, November or
December as of a record date in such month and actually paid in January of the
following year will be treated as if they were paid on December 31 of the year
declared. Therefore, these dividends will generally be taxable to a stockholder
in the year declared rather than the year paid.

We may either retain or distribute to stockholders our net capital gain for each
taxable year. We currently intend to distribute any of these amounts. If net
capital gain is distributed and designated as a "capital gain dividend", it will
be taxable to stockholders as long-term capital gain, regardless of the length
of time the stockholder has held his shares or whether this gain was recognized
by us prior to the date on which the stockholder acquired its shares. Capital
gain of a noncorporate U.S. stockholder that is recognized before January 1,
2009 is generally taxed at a maximum rate of 15% where the property is held by
us for more than one year. Capital gain of a corporate stockholder is taxed at
the same rate as ordinary income.

Conversely, if we elect to retain our net capital gain, we will be taxed thereon
(except to the extent of any available capital loss carryovers) at the 35%
corporate tax rate. In such a case, it is expected that we also will elect to
have stockholders of record on the last day of our taxable year treated as if
each received a distribution of its pro rata share of this gain, with the result
that each stockholder will be required to report its pro rata share of this gain
on its tax return as long-term capital gain, will receive a refundable tax
credit for its pro rata share of tax paid by us on the gain and will increase
the tax basis for its shares by an amount equal to the deemed distribution less
the tax credit.

Distributions by us that do not constitute qualified dividend income, ordinary
income dividends or capital gain dividends will be treated as a return of
capital to the extent of (and in reduction of) the stockholder's tax basis in
its shares; any excess will be treated as gain from the sale of its shares, as
discussed below.

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TAXATION
- --------------------------------------------------------------------------------

Distributions by us will be treated in the manner described above regardless of
whether these distributions are paid in cash or reinvested in additional shares
of our common stock (or of shares of another fund). Stockholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, prospective investors
should be aware that distributions from us will, all other things being equal,
have the effect of reducing the net asset value of our shares by the amount of
the distribution. If the net asset value is reduced below a stockholder's cost,
the distribution will nonetheless be taxable as described above, even if the
distribution effectively represents a return of invested capital. Investors
should consider the tax implications of buying shares just prior to a
distribution, when the price of shares may reflect the amount of the forthcoming
distribution.

SALE OR REDEMPTION OF SHARES


A stockholder will recognize gain or loss on the sale or redemption of our
shares in an amount equal to the difference between the proceeds of the sale or
redemption and the stockholder's adjusted tax basis in the shares. All or a
portion of any loss so recognized may be disallowed if the stockholder acquires
other shares of us within a period of 61 days beginning 30 days before and
ending 30 days after that disposition, such as pursuant to reinvestment of a
dividend in our shares. Additionally, if a stockholder disposes of our shares
within 90 days following their acquisition, and the stockholder subsequently
re-acquires our shares pursuant to a reinvestment right received upon the
purchase of the original shares, any load charge (i.e., sales or additional
charge) incurred upon the acquisition of the original shares will not be taken
into account as part of the stockholder's basis for computing profit or loss
upon the sale of the shares.


In general, any gain or loss arising from (or treated as arising from) the sale
or redemption of our shares will be considered capital gain or loss and will be
long-term capital gain or loss if the shares were held for more than one year.
However, any capital loss arising from the sale or redemption of shares held for
six months or less will be treated as a long-term capital loss to the extent of
the amount of capital gain dividends received on (or undistributed capital gains
credited with respect to) those shares. Capital gain of a noncorporate U.S.
stockholder that is recognized before January 1, 2009 is generally taxed at a
maximum rate of 15% where the property is held by the stockholder for more than
one year. Capital gain of a corporate stockholder is taxed at the same rate as
ordinary income.

BACKUP WITHHOLDING

We will be required in certain cases to backup withhold and remit to the U.S.
Treasury a portion of qualified dividend income, ordinary income dividends and
capital gain dividends, and the proceeds of redemption of shares, paid to any
stockholder (1) who has provided either an incorrect tax identification number
or no number at all, (2) who is subject to backup withholding by the IRS for
failure to report the receipt of interest or dividend income properly or (3) who
has failed to certify to us that it is not subject to backup withholding or that
it is a corporation or other "exempt recipient". Backup withholding is not an
additional tax and any amounts withheld may be refunded or credited against a
stockholder's federal income tax liability, provided the appropriate information
is furnished to the IRS.

FOREIGN STOCKHOLDERS

Taxation of a stockholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign stockholder") depends on whether the income from us is "effectively
connected" with a U.S. trade or business carried on by this stockholder. If the
income from us is not effectively connected with a U.S. trade or business
carried on by a foreign

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 74
<PAGE>
TAXATION
- --------------------------------------------------------------------------------


stockholder, dividends paid to this foreign stockholder from net investment
income will be subject to U.S. withholding tax at the rate of 30% (or lower
treaty rate) on the gross amount of the dividend. This foreign stockholder would
generally be exempt from U.S. federal income tax, including withholding tax, on
gains realized on the sale of our shares, capital gain dividends and amounts
retained by us that are designated as undistributed capital gains. However, a
foreign stockholder who is a nonresident alien individual and is physically
present in the United States for more than 182 days during the taxable year and
meets certain other requirements will nevertheless be subject to a U.S. tax of
30% on such gains realized on the sale of our shares, capital gain dividends and
amounts retained by us that are designated as undistributed capital gains. If
the income from us is effectively connected with a U.S. trade or business
carried on by a foreign stockholder, then ordinary income dividends, capital
gain dividends, undistributed capital gains credited to this stockholder and any
gains realized upon the sale of our shares will be subject to U.S. federal
income tax at the graduated rates applicable to U.S. citizens or domestic
corporations. Foreign corporate stockholders may also be subject to the branch
profits tax imposed by the Code.


In the case of foreign noncorporate stockholders, we may be required to backup
withhold U.S. federal income tax on distributions that are otherwise exempt from
withholding tax (or taxable at a reduced treaty rate) unless those stockholders
furnish us with proper notification of their foreign status.

The tax consequences to a foreign stockholder entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
stockholders are urged to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in us, the procedure for
claiming the benefit of a lower treaty rate and the applicability of foreign
taxes. Transfers by gift of our shares by an individual foreign stockholder will
not be subject to U.S. federal gift tax, but the value of our shares held by
this stockholder at his death will generally be includible in his gross estate
for U.S. federal estate tax purposes, subject to any applicable estate tax
treaty.

FOREIGN TAXES

We may be subject to foreign withholding taxes or other foreign taxes with
respect to income (possibly including, in some cases, capital gain) received
from sources within foreign countries. So long as more than 50% of the value of
our total assets at the close of the taxable year consists of stock or
securities of foreign issuers, we may elect to treat any foreign income taxes
paid by us as paid directly by our stockholders.

If we make the election, each stockholder will be required to (i) include in
gross income, even though not actually received, its pro rata share of our
foreign income taxes, and (ii) either deduct (in calculating U.S. taxable
income) or credit (in calculating U.S. federal income tax) its pro rata share of
our income taxes. A foreign tax credit may not exceed the U.S. federal income
tax otherwise payable with respect to the foreign source income. For this
purpose, each stockholder must treat as foreign source gross income (i) its
proportionate share of foreign taxes paid by us and (ii) the portion of any
actual dividend paid by us which represents income derived from foreign sources;
the gain from the sale of securities will generally be treated as U.S. source
income and certain foreign currency gains and losses likewise will be treated as
derived from U.S. sources. This foreign tax credit limitation is, with certain
exceptions, applied separately to separate categories of income; dividends from
us will be treated as "passive" or "financial services" income for this purpose.
The effect of this limitation may be to prevent stockholders from claiming as a
credit the full amount of their pro rata share of our foreign income taxes. In
addition, the foreign tax credit is allowed to offset only 90% of the
alternative minimum tax imposed on corporations and individuals, and
stockholders will not be eligible to claim a foreign tax credit with respect to
foreign income taxes paid by us unless certain holding period requirements are
met.

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                                                                              75
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TAXATION
- --------------------------------------------------------------------------------

We will make such an election only if we deem it to be in the best interest of
our stockholders. A stockholder not subject to U.S. tax may prefer that this
election not be made. We will notify stockholders in writing each year if we
make the election and of the amount of foreign income taxes, if any, to be
passed through to the stockholders and the amount of foreign taxes, if any, for
which our stockholders will not be eligible to claim a foreign tax credit
because the holding period requirements (described above) have not been
satisfied.

STATE AND LOCAL TAX MATTERS

Depending on the residence of the stockholders for tax purposes, distributions
may also be subject to state and local taxes. Rules of state and local taxation
regarding qualified dividend income, ordinary income dividends and capital gain
dividends from regulated investment companies may differ from the U.S. federal
income tax rules in other respects. Stockholders are urged to consult their tax
advisers as to the consequences of these and other state and local tax rules
affecting investment in us.

Custodians, dividend-paying agent, transfer agent and registrar

Investors Bank and Trust Company ("IBT"), with principal offices at 200
Clarendon Street, Boston, Massachusetts 02116, acts as our custodian,
dividend-paying agent, transfer agent and registrar. IBT has agreements with a
global network of sub-custodians, which, together with IBT, maintain custody of
our portfolio securities and cash.

Experts

The financial statements, at October 31, 2003, incorporated by reference in this
prospectus and in the SAI have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent auditors, given on their authority as
experts in auditing and accounting. The principal business address of PwC is
1177 Avenue of the Americas, New York, New York, 10036.

Validity of shares

The validity of the shares offered in this rights offering will be passed on for
us by Sullivan & Cromwell LLP, New York, New York and for the dealer manager by
Skadden, Arps, Slate, Meagher & Flom LLP, Chicago, Illinois.

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 76
<PAGE>

- --------------------------------------------------------------------------------

Table of contents of statement of additional information

<Table>
<Caption>
                               PAGE
- ------------------------------------------------------------------
<S>                                                           <C>
General information.........................................   B-2
Investment objective and policies...........................   B-2
Investment restrictions.....................................   B-5
Net asset value.............................................   B-6
Management..................................................   B-8
Control persons and principal holders of securities.........  B-16
Investment advisory and other services......................  B-17
Brokerage allocation and other practices....................  B-18
Financial statements........................................   F-1
</Table>

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                                                                              77
<PAGE>

             ------------------------------------------------------
             ------------------------------------------------------

     NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF US SINCE THE
DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE. IN THE EVENT THAT A MATERIAL CHANGE IN OUR AFFAIRS
OCCURS SUBSEQUENT TO THE DATE HEREOF, A SUPPLEMENTAL PROSPECTUS WILL BE
DISTRIBUTED IN ACCORDANCE WITH APPLICABLE LAW. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.

                             ---------------------

                               TABLE OF CONTENTS


<Table>
<Caption>
                                        PAGE
                                        ----
<S>                                     <C>
Available Information.................    3
Prospectus Summary....................    4
Fee Table.............................   10
Financial Highlights..................   11
Market and Net Asset Value
  Information.........................   13
Our Rights Offering...................   14
Use of Proceeds.......................   25
Investment Objective and Policies.....   25
Risk Factors and Special
  Considerations......................   29
Our Management........................   37
Central European, Russian and Turkish
  Economies and Markets...............   40
Description of Common Stock...........   66
Dividends and Distributions...........   68
Voluntary Cash Purchase Program and
  Dividend Reinvestment Plan..........   69
Taxation..............................   71
Custodians, Dividend-Paying Agent,
  Transfer Agent and Registrar........   76
Experts...............................   76
Validity of Shares....................   76
Table of Contents of Statement of
  Additional Information..............   77
</Table>


             ------------------------------------------------------
             ------------------------------------------------------
             ------------------------------------------------------
             ------------------------------------------------------

                                     [LOGO]

                    THE CENTRAL EUROPE AND RUSSIA FUND, INC.


                           [              ] SHARES OF
                             COMMON STOCK ISSUABLE
                           UPON EXERCISE OF RIGHTS TO
                           SUBSCRIBE FOR SUCH SHARES

                            ------------------------

                                   PROSPECTUS
                            ------------------------

                              UBS INVESTMENT BANK

                                          , 2004



             ------------------------------------------------------

             ------------------------------------------------------
<PAGE>

- --------------------------------------------------------------------------------


Subject to Completion, dated February 10, 2004


THE CENTRAL EUROPE AND RUSSIA FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information (the "SAI") is not a prospectus, but
should be read in conjunction with our prospectus dated           , 2004. This
SAI does not include all information that a prospective investor should consider
before purchasing our shares, and investors should obtain and read the
prospectus prior to purchasing shares. A copy of the prospectus may be obtained
without charge, by calling our information agent at. This SAI incorporates by
reference the entire prospectus. Defined terms used in this SAI have the same
meaning as provided in the prospectus. The date of this SAI is           , 2004.

TABLE OF CONTENTS

<Table>
                               PAGE
- ------------------------------------------------------------------
<S>                                                           <C>
General information.........................................   B-2
Investment objective and policies...........................   B-2
Investment restrictions.....................................   B-5
Net asset value.............................................   B-6
Management..................................................   B-8
Control persons and principal holders of securities.........  B-16
Investment advisory and other services......................  B-17
Brokerage allocation and other practices....................  B-18
Financial statements........................................   F-1
</Table>

THE INFORMATION CONTAINED IN THIS SAI IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.

- --------------------------------------------------------------------------------
                                                                            B- 1
<PAGE>

- --------------------------------------------------------------------------------

General information

We were incorporated in Maryland on February 6, 1990 as The United Germany Fund,
Inc. On February 15, 1990, we changed our name to The Future Germany Fund, Inc.,
and thereafter commenced investment operations under that name. On June 29,
1995, we changed our name to The Central European Equity Fund, Inc. On June 25,
2003, we changed our name to the current one, The Central Europe and Russia
Fund, Inc.

Investment objective and policies

Our investment objective is to seek long-term capital appreciation through
investment primarily in equity and equity-linked securities of issuers domiciled
in Central Europe and Russia. We may not be able to achieve our objective. For a
more detailed discussion of our investment objective and policies, see
"Investment Objective and Policies" on page 25 of the prospectus.

The following is a discussion of other investment policies and practices with
respect to warrants, participation certificates, futures and options, fixed
income securities, securities lending and currency transactions and the special
considerations relevant to these practices that supplements the material
contained in the prospectus. For purposes of policies and practices discussed
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 our portfolio.

WARRANTS

We may also invest in warrants if consistent with our investment objective. The
warrants in which we 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 that issuer at a specified price for a
fixed period of time (which may be in perpetuity). Warrants are commonly issued
attached to other securities of the issuer as a method of making these
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.

These securities may have higher yields; however, they may be less liquid than
common stock. We may invest in Participation Certificates of issuers in any
European country or Russia.

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B- 2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

FUTURES AND OPTIONS

For hedging purposes, we may also purchase put and call options on stock of
European or Russian issuers and, to the extent permitted by applicable United
States law, invest in the index and bond futures and any other derivative
securities listed on any organized exchange. Options are contracts which give
the buyer the right, but not the obligation, to buy or sell a fixed amount of
securities at a fixed price for a fixed period of time. A futures contract is a
binding obligation to purchase or deliver the specific type of financial
instrument, or the cash equivalent of this instrument in certain circumstances,
called for in the contract at a specific price at a future date. We will only
invest in options or futures in an attempt to hedge against changes or
anticipated changes in the value of particular securities in our portfolio or
all or a portion of our portfolio. We will not invest in options or futures if,
immediately thereafter, more than the amount of our total assets would be
hedged. For hedging purposes, we may also purchase put and call options on bonds
and other securities, as well as securities indices, if and when such
investments become available. We may invest in other options, futures and
options on futures with respect to any securities or securities indices
compatible with our investment objective that may from time to time become
available on any organized exchange, if permitted by applicable law.

We may also write (also referred to as "selling") covered call options on our
portfolio securities and appropriate securities indices for purposes of
generating income. We may write covered call options on portfolio securities and
appropriate securities indices up to the amount of our entire portfolio. A call
option gives the holder the right to purchase the underlying securities from us
at a special price (the "exercise price") for a stated period of time (usually
three, six or nine months). Prior to the expiration of the option, the writer
(also referred to as the "seller") of the option has an obligation to sell the
underlying security to the holder of the option at the exercise price regardless
of the market price of the security at the time the option is exercised. The
initial purchaser of an option pays the writer a premium, which is paid at time
of purchase and is retained by the writer whether or not the option is
exercised. A "covered" call option means that so long as we are obligated as the
writer of the option, we will own:

+  the underlying securities subject to the option;

+  securities convertible or exchangeable without the payment of any
   consideration into the securities subject to the option; or

+  warrants on the securities subject to the option exercisable at a price not
   greater than the option exercise price and, at the time the option is
   exercisable, the securities subject to the option.

In the case of covered call options on securities indices, references to
securities in the bullet points above will include such securities as the
investment adviser believes approximate the index (but not necessarily all those
comprising the index), as well as, in the case of the second two bullets,
securities convertible, exchangeable or exercisable into the value of the index.
The writing of a call option may involve the pledge of the underlying security
which the call option covers, or other portfolio securities. In order to make
use of our authority to write covered call options, we may pledge our assets.

In the event the option is exercised, the writer may either deliver the
underlying securities at the exercise price or if it does not wish to deliver
its own securities, purchase new securities at a cost to the writer, which may
be more than the exercise price premium received, and deliver the new securities
for the exercise option. In the event the option is exercised, our potential for
gain is limited to the difference between the exercise price plus the premium
less the cost of the security. Alternatively, the option's position could be
extinguished or closed out by purchasing a like option. It is possible, although
considered unlikely, that we might be unable to execute such a closing purchase
transaction. If the price of a security declines below the amount to be received
from the exercise price less the

- --------------------------------------------------------------------------------
                                                                            B- 3
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

amount of the call premium received and if the option could not be closed out,
we would hold a security which might otherwise have been sold to protect against
depreciation. In addition, our portfolio turnover may increase to the extent
that the market price of underlying securities covered by call options written
by us increases and we have not entered into closing purchase transactions.
Brokerage commissions associated with writing options transactions are normally
higher than those associated with other securities transactions.

FIXED INCOME SECURITIES

We may also invest up to 20% of our total assets in fixed income securities of
European or Russian 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 or
Russian currency or composite currency, which have been determined by our
investment manager and investment adviser 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, our investment manager and investment
adviser will consider the potential for capital appreciation, taking into
account maturity and yield considerations. For temporary defensive purposes, we
also may invest in money market instruments denominated in U.S. dollars or in a
European or the Russian currency or composite currency, including bank time
deposits and certificates of deposit.

LOANED SECURITIES

We may also lend our portfolio securities to banks, securities dealers and other
institutions meeting the creditworthiness standards established by our board of
directors. We may lend our portfolio securities so long as the terms and the
structure of such loans are not inconsistent with the Investment Company Act,
which currently requires that:

+  the borrower pledge and maintain with us collateral consisting of cash, a
   letter of credit issued by a domestic United States bank or securities issued
   or guaranteed by the United States Government having a value at all times of
   not less than 100% of the value of the securities loaned;

+  the borrower add to such collateral whenever the price of the loaned
   securities rises (e.g., the value of the loan is "marked to market" on a
   daily basis);

+  the loan be made subject to termination by us at any time; and

+  we receive reasonable interest on the loan (which may include a portion of
   the interest from our investing any cash collateral in interest bearing
   short-term investments).

Any such collateral may be invested by us in repurchase agreements
collateralized by securities issued or guaranteed by the United States
Government. Any distributions on the loaned securities and any increase in their
market value accrue to us. Loan arrangements made by us will comply with all
other applicable regulatory requirements. All relevant facts and circumstances,
including the creditworthiness of the borrowing institution, will be monitored
by our investment manager and adviser, and will be considered in making
decisions with respect to lending of securities, subject to review by our board
of directors. We may pay reasonable negotiated fees in connection with loaned
securities, so long as such fees are set forth in a written contract and
approved by our board of directors. In addition, any voting rights may pass with
the loaned securities, but if a material event were to occur affecting an
investment on loan, the loan may be called and the securities voted. Any gain or
loss in the market price of the loaned securities that may occur during the term
of the loan will be for our account.

- --------------------------------------------------------------------------------
B- 4
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

CURRENCY TRANSACTIONS

We may attempt to hedge our foreign currency exposure by entering into forward
currency contracts. We do not currently engage in foreign exchange transactions
as an investment strategy. However, at such future time as our investment
manager and investment adviser believe that one or more currencies in which our
securities are denominated might suffer a substantial decline against the United
States dollar, we may, in order to hedge the value of our portfolio, enter into
forward contracts, e.g., to sell fixed amounts of such currencies for fixed
amounts of United States dollars in the interbank market. A forward currency
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract.

Our dealings in forward exchange transactions will be limited to hedging
involving either specific transactions or portfolio positions. Transaction
hedging is the purchase or sale of forward currency with respect to our specific
receivables or payables, which will generally arise in connection with the
purchase or sale of our portfolio securities. Position hedging is the sale of
forward currency with respect to portfolio security positions denominated or
generally quoted in that currency.

We may engage in "conventional hedging," which involves entering into forward
currency contracts to sell fixed amounts of a foreign currency (such as Polish
zlotys) for fixed amounts of United States dollars in order to hedge the United
States dollar value of our portfolio. We may also engage in "cross-hedging",
which involves entering into forward currency contracts to sell fixed amounts of
such foreign currency (such as Polish zlotys) for fixed amounts of another
foreign currency to which we may seek exposure (such as euros).

We may not position a hedge with respect to any currency to an extent greater
than the aggregate market value (at the time of making such sale) of the
securities held in our portfolio denominated or generally quoted in or currently
convertible into such currency. If we enter into a hedging transaction, our
custodian or subcustodian will place cash or United States Government or other
liquid securities in a segregated account of ours in an amount equal to the
value of our total assets committed to the consummation of the forward contract,
which value will be adjusted on a daily basis. If the value of the securities
placed in the segregated account declines, additional cash or securities will be
placed in the account so that the value of the account will equal the amount of
our commitment with respect to the contract.

Investment restrictions

In addition to its investment objective and the other investment policies
described under "Investment Objective and Policies" above and in the prospectus,
we have adopted certain investment restrictions, which are fundamental policies
and may be changed only by the approval of a majority of our outstanding voting
securities. Under the Investment Company Act, a "majority" means 67% of our
shares present at a meeting of our stockholders if the owners of more than 50%
of our shares then outstanding are present in person or by proxy or, if lower,
more than 50% of our outstanding shares. We refer to this approval voting level
as a "majority vote." For purposes of 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 our portfolio.

We may not:

 1. purchase more than 10% of the voting securities of any single issuer;

 2. invest 25% or more of our total assets in the securities of issuers in any
    one industry;

- --------------------------------------------------------------------------------
                                                                            B- 5
<PAGE>
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------

 3. issue senior securities, borrow money or pledge its assets, except that we
    may borrow for temporary or emergency purposes or for the clearance of
    transactions in amounts not exceeding 10% of the value of our total assets
    (not including the amount borrowed) and will not purchase securities while
    any of these borrowings are outstanding, and except that we may pledge our
    assets in connection with writing covered call options;

 4. make real estate mortgage loans or other loans, except through the purchase
    of debt obligations consistent with our investment policies;

 5. buy or sell commodities, commodity contracts, futures contracts, real estate
    or interests in real estate (other than as described under "Investment
    Objective and Policies--Portfolio Structure" in the prospectus and under
    "Investment Objective and Policies--Currency Transactions" in this SAI);

 6. make short sales of securities or maintain a short position in any security;

 7. buy, sell or write put or call options (other than as described under
    "Investment Objective and Policies--Portfolio Structure" on page 26 of the
    prospectus and under "Investment Objective and Policies--Futures and
    Options" on page B-3 in this SAI);

 8. purchase securities on margin, except such short-term credits as may be
    necessary or routine for the clearance or settlement of transactions;

 9. act as an underwriter, except to the extent we may be deemed to be an
    underwriter in connection with the sale of securities in our portfolio; or

10. purchase securities, the sale of which by us could not be effected without
    prior registration under the Securities Act, except that this restriction
    shall not preclude us from acquiring non-U.S. securities.

We are classified as a "non-diversified" investment company under the Investment
Company Act, which means we are not limited by the Investment Company Act in the
proportion of our assets that may be invested in the securities of a single
issuer. However, we conduct our operations so as to qualify as a "regulated
investment company" for purposes of the Internal Revenue Code, which relieves us
of any liability for Federal income tax to the extent that our earnings are
distributed to stockholders. To so qualify, among other requirements, we must
limit our investments so that, at the close of each quarter of the taxable year,
(i) not more than 25% of the market value of our 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 our total assets must be represented by cash,
United States 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 our total assets and not more than 10% of the issuer's
outstanding voting securities.

For purposes of our policy not to invest 25% or more of the total value of our
assets in a particular industry, our investment manager generally classifies the
issuers of our portfolio securities according to the broad industry
classification used by Standard & Poor's Corporation.

Net asset value


Net asset value per share is determined on each business day that the NYSE is
open for trading as of 5:00 p.m. New York City time and made available to
stockholders. Effective February 17, 2004, we will change the time of
calculating our net asset value per share to 11:30 a.m. New York City time and
make it available to stockholders as soon as reasonably possible after the 11:30
a.m. calculation time, currently expected to be in the range of 1:00 p.m. to
2:00 p.m. New York City time. Net asset value per share is calculated by
dividing the value of our net assets (the value of our assets less our


- --------------------------------------------------------------------------------
B- 6
<PAGE>
NET ASSET VALUE
- --------------------------------------------------------------------------------

liabilities) by the total number of shares of our common stock outstanding. Any
assets or liabilities initially expressed in terms of non-US dollar currencies
are translated into U.S. dollars at the 10:00 a.m. mid-point of the buying and
selling spot rates quoted by the Federal Reserve Bank of New York.

All securities for which market quotations are readily available are valued at
the last quoted sale price on the primary exchange on which they are traded
prior to the time of determination. If no sale occurs on that business day or
there is otherwise no last quoted sale price available at that time, and both
bid and asked prices are available, the securities are valued at the mean
between the last current bid and asked prices (but if no quoted asked prices are
available, they are valued at the last quoted bid price). Unlisted securities
and listed securities whose primary market is over-the-counter will be valued,
if both bid and asked prices are available, at the mean between the last current
bid and asked prices prior to the time of determination (but if no quoted asked
prices are available, they are valued at the last quoted bid price). If bid and
asked quotations are not available, then these securities are valued at their
fair value as determined in good faith by or under the direction of our board of
directors.

Warrants issued separately from any other security will be valued upon their
issuance and prior to commencement of trading at the stated value ascribed by
the issuing entity. Warrants attached to other securities (also known as a unit)
are given no separate value. Warrants that become detached from a unit are
initially valued at the difference between the value of the unit prior to
detachment and the value of the other security after detachment. Warrants are
then valued at the quoted last sales price. Rights that are trading will be
valued as any other equity security. If the rights are not trading and the
shares resulting from exercising the rights are trading, then the rights will be
valued at the market value of the new shares minus the cost to subscribe to the
new shares multiplied by the subscription ratio. If the rights are not trading
and the shares resulting from exercising the rights are not trading, then the
rights are valued at their fair value as determined in good faith by or under
the direction of our board of directors. Upon commencement of trading, both
warrants and rights are valued as any other security.

New shares initially issued resulting from the exercise of rights will be valued
as any other security if the new shares are trading. If the new shares are not
trading and the rights are still trading, then the shares will be valued at the
market value of the number of rights needed to exercise to receive the new
shares less the cost to subscribe to the new shares. If the rights are not
trading and the new shares are not trading, then the shares are valued at their
fair value as determined in good faith by or under the direction of our board of
directors.

Initial public offering securities will be initially valued at the offer price,
and, upon commencement of trading, will be valued as any other security. Any
securities tendered by us will continue to be valued at the closing market price
until the tender is completed. Debt securities with a remaining maturity of 60
days or less at the time of purchase will be valued at amortized cost unless the
circumstances indicate that amortized cost does not approximate fair value.
Overnight repurchase agreements and other repurchase agreements maturing in
seven days or less will be valued at par. Longer-term repurchase agreements will
be valued at the bid quotations. All other securities and assets are valued at
their fair value as determined in good faith by or under the direction of our
board of directors.

- --------------------------------------------------------------------------------
                                                                            B- 7
<PAGE>

- --------------------------------------------------------------------------------

Management

DIRECTORS AND OFFICERS

The names and addresses of our directors and officers are set forth below,
together with their positions and their principal occupations during the past
five years and, in the case of directors, their positions with certain other
organizations and companies.
<Table>
<Caption>
                                                                                             NUMBER OF
                                                                                            PORTFOLIOS
                                                                                              IN FUND
                                         TERM OF OFFICE AND                                 COMPLEX(2)
                           POSITION(S)     LENGTH OF TIME       PRINCIPAL OCCUPATION(S)      OVERSEEN
NAME, ADDRESS(1) & AGE      WITH FUND          SERVED           DURING PAST FIVE YEARS      BY DIRECTOR
- -------------------------------------------------------------------------------------------------------
<S>                        <C>           <C>                  <C>                           <C>
INTERESTED DIRECTORS(3)
Detlef Bierbaum, 61(3)      Director        Since 1990.       Partner of Sal. Oppenheim          2
                                                              Jr. & Cie KGaA (investment
                                                              management).
John Bult, 67(3)            Director        Since 1990.       Chairman, PaineWebber              3
                                                              International (since 1985).
Christian H. Strenger,      Director        Since 1990.       Director (since 1999) and          3
 60(3)                                                        Managing Director (1991-
                                                              1999) of DWS Investment
                                                              GmbH (investment
                                                              management).

<Caption>

                           OTHER DIRECTORSHIPS HELD BY
NAME, ADDRESS(1) & AGE              DIRECTOR
- -------------------------  ---------------------------
<S>                        <C>
INTERESTED DIRECTORS(3)
Detlef Bierbaum, 61(3)     Director, The Germany Fund,
                           Inc. (since 1986).(4)
                           Member of the Supervisory
                           Board, Tertia
                           Handelsbeteiligungsgesel
                           lschaft mbH (electronic
                           retailer). Member of
                           Supervisory Board, Douglas
                           AG (retailer). Member of
                           Supervisory Board, LVM
                           Landwirtschaftlicher
                           Versicherungsverein
                           (insurance). Member of
                           Supervisory Board, Monega
                           KAG. Member of Supervisory
                           Board, AXA Investment
                           Managers.
John Bult, 67(3)           Director, The Germany Fund,
                           Inc. (since 1986) and The
                           New Germany Fund, Inc.
                           (since 1990).(4) Director,
                           The France Growth Fund,
                           Inc. (closed-end fund).
                           Director, The Greater China
                           Fund, Inc. (closed end
                           fund).
Christian H. Strenger,     Director, The Germany Fund,
 60(3)                     Inc. (since 1986) and The
                           New Germany Fund, Inc.
                           (since 1990).(4) Member,
                           Supervisory Board, Fraport
                           AG (international airport
                           business). Board member,
                           Incepta PLC (media and
                           advertising).
</Table>

- --------------------------------------------------------------------------------
B- 8
<PAGE>
MANAGEMENT
- --------------------------------------------------------------------------------

<Table>
<Caption>
                                                                                             NUMBER OF
                                                                                            PORTFOLIOS
                                                                                              IN FUND
                                         TERM OF OFFICE AND                                 COMPLEX(2)
                           POSITION(S)     LENGTH OF TIME       PRINCIPAL OCCUPATION(S)      OVERSEEN
NAME, ADDRESS(1) & AGE      WITH FUND          SERVED           DURING PAST FIVE YEARS      BY DIRECTOR
- -------------------------------------------------------------------------------------------------------
<S>                        <C>           <C>                  <C>                           <C>
NON-INTERESTED DIRECTORS
Ambassador                  Director        Since 2000.       Chairman, Diligence LLC,          68
Richard R. Burt, 56                                           formerly IEP Advisors, Inc.
                                                              (information collection,
                                                              analysis, consulting and
                                                              intelligence) (since 1998).
                                                              Chairman of the Board,
                                                              Weirton Steel Corp. (since
                                                              1996). Partner, McKinsey &
                                                              Company (1991-1994). U.S.
                                                              Ambassador to the Federal
                                                              Republic of Germany
                                                              (1985-1989). Chairman, IEP
                                                              Advisor, LLP (international
                                                              consulting).
Fred H. Langhammer, 59(8)   Director        Since 2003.       Chief Executive Officer,           2
                                                              The Estee Lauder Companies
                                                              Inc. (manufacturer and
                                                              marketer of cosmetics)
                                                              (since 2000), President
                                                              (since 1995), Chief
                                                              Operating Officer (1985-
                                                              1999), Managing Director,
                                                              operations in Germany
                                                              (1982-1985), President,
                                                              operations in Japan (1975-
                                                              1982).
Eggert Voscherau, 60(5)     Director        Since 2003.       Vice Chairman, BASF                2
                                                              Aktiengesellschaft
                                                              (chemicals) (since 2002).
                                                              Deputy Chairman, Ressort II
                                                              (Europe Region)
                                                              (Industrials) (1998-2002).
                                                              Chairman and Chief
                                                              Executive Officer and
                                                              Executive Director, BASF
                                                              Corporation (chemicals)
                                                              (United States)
                                                              (1997-1998). Executive
                                                              Director, BASF
                                                              Aktiengesellschaft (1996-
                                                              1997), Executive Vice
                                                              President, BASF Corporation
                                                              (United States) and
                                                              President, North American
                                                              Consumer Products division
                                                              (1991-1994). President,
                                                              BASF Aktiengesellschaft
                                                              (Germany) (1986-1991).

<Caption>

                           OTHER DIRECTORSHIPS HELD BY
NAME, ADDRESS(1) & AGE              DIRECTOR
- -------------------------  ---------------------------
<S>                        <C>
NON-INTERESTED DIRECTORS
Ambassador                 Director, The Germany Fund,
Richard R. Burt, 56        Inc., as well as other
                           funds in the Fund Complex
                           as indicated.(4) Board
                           Member, IGT, Inc. (gaming
                           technology) (since 1995).
                           Board Member, Hollinger
                           International (printing and
                           publishing) (since 1995).
                           Board Member, HCL
                           Technologies, Inc.
                           (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.
Fred H. Langhammer, 59(8)  Director, The Germany Fund,
                           Inc. (since 2003).(4)
                           Director, Gillette Company.
                           Director, Inditex, S.A
                           (fashion manufacturer and
                           retailer). Director,
                           Cosmetics, Toiletries and
                           Fragrance Association.
                           Director, German-American
                           Chamber of Commerce, Inc.
                           Co-Chairman, American
                           Institute for Contemporary
                           German Studies at Johns
                           Hopkins University. Senior
                           Fellow, Foreign Policy
                           Association. Director,
                           Japan Society.
Eggert Voscherau, 60(5)    Director The Germany Fund
                           Inc. (since 2003).(4)
                           Member, Supervisory Boards
                           of: Dresdner Bank
                           Lateinamerika AG,
                           Haftpflichtverband der
                           Deutschen Industrie V.a.G.,
                           Basell N.V., BASF Espanola
                           S.A., BASF Schwarzheide
                           GmbH. President, Cefic
                           (European Chemical Industry
                           Council). President,
                           International Council of
                           Chemical Associations.
                           Board Member, BASF
                           Aktiengesellschaft.
</Table>


- --------------------------------------------------------------------------------
                                                                            B- 9
<PAGE>
MANAGEMENT
- --------------------------------------------------------------------------------

<Table>
<Caption>
                                                                                             NUMBER OF
                                                                                            PORTFOLIOS
                                                                                              IN FUND
                                         TERM OF OFFICE AND                                 COMPLEX(2)
                           POSITION(S)     LENGTH OF TIME       PRINCIPAL OCCUPATION(S)      OVERSEEN
NAME, ADDRESS(1) & AGE      WITH FUND          SERVED           DURING PAST FIVE YEARS      BY DIRECTOR
- -------------------------------------------------------------------------------------------------------
<S>                        <C>           <C>                  <C>                           <C>
Robert H. Wadsworth, 64     Director        Since 1990.       President, Robert H.              69
                                                              Wadsworth Associates, Inc.
                                                              (consulting firm) (May
                                                              1983-present). President
                                                              and Trustee, Trust for
                                                              Investment Managers
                                                              (registered investment
                                                              companies) (April 1999-June
                                                              2002). President,
                                                              Investment Company
                                                              Administration, L.L.C.
                                                              (January 1992-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 2003).
Werner Walbrol, 66          Director        Since 1990.       President and Chief                2
                                                              Executive Officer, The
                                                              European American Chamber
                                                              of Commerce, Inc. Formerly,
                                                              President and Chief
                                                              Executive Officer, The
                                                              German American Chamber of
                                                              Commerce, Inc.

<Caption>

                           OTHER DIRECTORSHIPS HELD BY
NAME, ADDRESS(1) & AGE              DIRECTOR
- -------------------------  ---------------------------
<S>                        <C>
Robert H. Wadsworth, 64    Director, The Germany Fund,
                           Inc. (since 1986) and The
                           New Germany Fund, Inc.
                           (since 1992) as well as
                           other funds in the Fund
                           Complex as indicated.(4)
Werner Walbrol, 66         Director, The Germany Fund,
                           Inc. (since 1986).(4)
                           Director, TUV Rheinland of
                           North America, Inc.
                           (independent testing and
                           assessment services).
                           President and Director,
                           German-American Partnership
                           Program (student exchange
                           programs). Director, AXA
                           Nordstern Art Insurance
                           Corporation (fine art and
                           collectible insurer).
                           Member, Advisory Board,
                           Abels & Grey.
</Table>


- --------------------------------------------------------------------------------
B- 10
<PAGE>
MANAGEMENT
- --------------------------------------------------------------------------------

<Table>
<Caption>
                                                                           TERM OF OFFICE AND
NAME, ADDRESS(1) & AGE                POSITION(S) WITH FUND(6)           LENGTH OF TIME SERVED
- ----------------------          -------------------------------------   ------------------------
<S>                             <C>                                     <C>
OFFICERS
Richard T. Hale, 58             President and Chief Executive Officer   Year to year since 2001.
Vincent J. Esposito,            Vice President                          Year to year since 2004.
Hanspeter Ackermann, 46(7)      Chief Investment Officer                Year to year since 1996.
Bruce A Rosenblum, 43           Secretary                               Year to year since 2003.
Charles A. Rizzo, 46            Treasurer and Chief Financial Officer   Year to year since 2003.
Kathleen Sullivan D'Eramo, 46   Assistant Treasurer                     Year to year since 2003.

<Caption>
                                         PRINCIPAL OCCUPATION(S)
NAME, ADDRESS(1) & AGE                   DURING PAST FIVE YEARS
- ----------------------          -----------------------------------------
<S>                             <C>
OFFICERS
Richard T. Hale, 58             Managing Director, Deutsche Investment
                                Management Americas Inc. (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).
                                CABEI Fund (2000 to present), North
                                American Income Fund (2000 to present)
                                (registered investment companies);
                                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).
Vincent J. Esposito,            Managing Director, Deutsche 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)
Hanspeter Ackermann, 46(7)      President of Deutsche Bank Investment
                                Management Inc. Managing Director,
                                Deutsche Bank Securities Inc. Managing
                                Director and Senior International Equity
                                Portfolio Manager, Bankers Trust Co.
                                President and Managing Partner, Eiger
                                Asset Management (1993-1996), Managing
                                Director and CIO, SBC Brinson, formerly
                                SBC Portfolio Management International
                                Inc. (institutional investment
                                management) (1983--1993).
Bruce A Rosenblum, 43           Director of Deutsche Asset Management
                                (2000 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, 46            Director, Deutsche Asset Management
                                (April 2000 to present). Formerly, Vice
                                President and Department Head, BT Alex,
                                Brown Incorporated (now Deutsche Bank
                                Securities Inc.) (1998-1999); Senior
                                Manager, Coopers and Lybrand L.L.P. (now
                                PricewaterhouseCoopers LLP) (1993-1998).
Kathleen Sullivan D'Eramo, 46   Director, Deutsche Asset Management (2003
                                to present).
</Table>


- ------------

(1) Unless otherwise indicated, the address of all directors and officers is c/o
    Deutsche Asset Management., 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 204 other open-and
    closed-end funds advised by wholly-owned entities of the Deutsche Bank Group
    in the United States.

(3) Indicates "Interested Person", as defined in the Investment Company Act. Mr.
    Bierbaum is an "interested" Director because of his affiliation with Sal.
    Oppenheim Jr. & Cie KGaA, which is the parent company of a registered
    broker-dealer; and Mr. Bult is an "interested" Director because of his
    affiliation with UBS Securities LLC, a registered broker-dealer, and the
    dealer manager in this rights offering; and Mr. Strenger is an "interested"
    Director because of his affiliation with DWS-

- --------------------------------------------------------------------------------
                                                                           B- 11
<PAGE>
MANAGEMENT
- --------------------------------------------------------------------------------

    Deutsche Gesellschaft fur Wertpapiersparen mbH ("DWS"), a majority-owned
    subsidiary of Deutsche Bank and because of his ownership of Deutsche Bank
    shares.

(4) The Germany Fund, Inc. and the New 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
    Reserves 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) Dr. Tessen von Heydebreck, a managing director of Deutsche Bank, is a member
    of the supervisory board of BASF AG, Mr. Voscherau's employer.

(6) Each also serving as an officer of The Germany Fund, Inc. and The New
    Germany Fund, Inc. Our officers are elected annually by our board of
    directors at their meeting following the Annual Meeting of Stockholders.

(7) Indicates ownership of securities of Deutsche Bank AG either directly or
    through Deutsche Bank's deferred compensation plan.

(8) In December 2001, Mr. Langhammer's two adult children borrowed $1 million
    from a Deutsche Bank Group company. The loan, which is secured by collateral
    furnished by Mr. Langhammer, bears interest at 3-month LIBOR and is of
    indefinite duration. As of May 9, 2003, the full principal remained
    outstanding.

The following table contains additional information with respect to the
beneficial ownership of equity securities by each of our directors and, on an
aggregated basis, in any registered investment companies overseen by the
director within our same Family of Investment Companies:


<Table>
<Caption>
                                              DOLLAR RANGE OF   AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN
                                     EQUITY SECURITIES IN THE      ALL FUNDS OVERSEEN BY DIRECTOR IN FAMILY OF
NAME OF DIRECTOR                                      FUND(1)                       INVESTMENT COMPANIES(1)(2)
- --------------------------------------------------------------------------------------------------------------
<S>                                  <C>                        <C>
Detlef Bierbaum....................                  None                                                 None
John Bult..........................       $10,001-$50,000                                     $50,001-$100,000
Ambassador Richard R Burt..........       $10,001-$50,000                                      $10,001-$50,000
Fred H. Langhammer.................                  None                                                 None
Christian H. Strenger..............       $10,001-$50,000                                      $10,001-$50,000
Eggert Voscherau...................                  None                                                 None
Robert H. Wadsworth................      $50,001-$100,000                                        Over $100,000
Werner Walbrol.....................       $10,001-$50,000                                     $50,001-$100,000
</Table>


- ------------

(1) Valuation date is February 3, 2004.


(2) The Family of Investment Companies consists of us, 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.


Our board of directors presently has an audit committee (composed of Messrs.
Burt, Wadsworth and Walbrol). The audit committee makes recommendations to the
full board with respect to the engagement of independent accountants and reviews
with the independent accountants the plan and results of the audit engagement
and matters having a material effect upon our financial operations. The audit
committee met three times during the fiscal year ended October 31, 2003. In
addition, our board of directors has an advisory committee composed of Messrs.
Burt, Wadsworth and Walbrol. The advisory committee makes recommendations to the
full board with respect to our management agreement with Deutsche Bank
Securities Inc. ("DBSI") and our investment advisory agreement with Deutsche
Asset Management International GmbH ("DeAMI"). The advisory committee met once
during the past fiscal year. The board of directors also has an executive
committee and a nominating committee. During the past fiscal year, the
nominating committee met twice and the executive committee did not meet. The
members of the executive committee are Messrs. Burt, Strenger, Wadsworth and
Walbrol. The executive committee has the authority to act for the board on all
matters between meetings of the board, subject to any limitations under
applicable state law. The members of


- --------------------------------------------------------------------------------
B- 12
<PAGE>
MANAGEMENT
- --------------------------------------------------------------------------------

the nominating committee are Messrs. Burt, Wadsworth and Walbrol. The nominating
committee makes recommendations to the full board with respect to the selection
of candidates to fill vacancies on the board of directors intended to be filled
by persons not affiliated with DBSI or DeAMI, and the nominating committee
evaluates the qualifications of all nominees for directorship pursuant to the
director qualification provisions in our bylaws. The nominating committee will
consider suggestions from stockholders submitted in writing to our secretary
that comply with the requirements for such proposals contained in our bylaws.
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).

During the past fiscal year, our board of directors had four regular meetings,
and each director (except Messrs. Voscherau and Langhammer) attended at least
75% of the aggregate number of meetings of the board and meetings of board
committees on which that director served.

We pay each of our directors who are not interested persons of us, our
investment adviser or our investment manager an annual fee of $7,500 plus $750
for each meeting attended. Each 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 fund. Effective as of April
24, 2002, no director of all 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 director receives more
than the annual fee of two funds. We reimburse directors (except for those
employed by the Deutsche Bank group) for travel expenses in connection with
board meetings. The following table sets forth (a) the aggregate compensation
from us for the fiscal year ended October 31, 2003, and (b) the total
compensation from the fund complex that includes us for our fiscal year ended
October 31, 2003, and such other funds in the fund complex for the fiscal year
ended December 31, 2003, for each director, and for all directors as a group:


<Table>
<Caption>
                                                    AGGREGATE COMPENSATION     TOTAL COMPENSATION
NAME OF DIRECTOR                                                 FROM FUND   FROM FUND COMPLEX(1)
- -------------------------------------------------------------------------------------------------
<S>                                                 <C>                      <C>
Detlef Bierbaum(2)................................                     N/A                    N/A
John Bult(2)......................................                     N/A                    N/A
Richard R. Burt...................................                 $16,500               $168,640
Fred H. Langhammer................................                  $6,500                $13,000
Edward C. Schmults(3).............................                 $15,750                $30,750
Christian Strenger(2).............................                     N/A                    N/A
Eggert Voscherau..................................                  $5,000                $10,000
Robert H. Wadsworth...............................                 $12,000               $170,000
Werner Walbrol....................................                 $18,000                $34,500
                                                                 ---------             ----------
Total                                                              $73,750               $426,890
                                                                 ---------             ----------
                                                                 ---------             ----------
</Table>


- ------------

(1) Includes us, 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 204 other open- and
    closed-end funds advised by wholly-owned entities of the Deutsche Bank AG in
    the United States.

(2) Indicates "Interested Person", as defined in the Investment Company Act. Mr.
    Bierbaum is an "interested" Director because of his affiliation with Sal.
    Oppenheim Jr. & Cie KGaA, which is the parent company of a registered
    broker-dealer; and Mr. Bult is an "interested" Director because of his
    affiliation with UBS Securities LLC, a registered broker-dealer, and the
    dealer manager in this rights offering; 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
    and because of his ownership of Deutsche Bank shares.


(3) Mr. Schmults resigned as director on January 16, 2004.


No compensation is paid us to directors or officers who are interested persons
of us or of any entity affiliated with Deutsche Bank AG.

- --------------------------------------------------------------------------------
                                                                           B- 13
<PAGE>
MANAGEMENT
- --------------------------------------------------------------------------------

CODE OF ETHICS

Our board of directors has adopted a code of ethics pursuant to Rule 17j-1 under
the Investment Company Act. This code of ethics permits access persons to trade
in securities that may be purchased or held by us for their own accounts,
subject to compliance with the code of ethic's preclearance requirements. In
addition, the code of ethics provides for trading "blackout periods" that
prohibit trading by personnel within periods of trading by us in the same
security. The code of ethics prohibits short-term trading profits and personal
investment in initial public offerings and requires prior approval with respect
to purchases of securities in private placements.

Our investment manager (in its capacity as our investment manager) has adopted a
code of ethics pursuant to Rule 17j-1 under Investment Company Act. This code of
ethics permits access persons to trade in securities that may be purchased or
held by us for their own accounts, subject to compliance with the code of ethics
preclearance requirements. In addition, the code of ethics provides for trading
"blackout periods" that prohibit trading by personnel within periods of trading
by us in the same security. The code of ethics prohibits short-term trading
profits and personal investment in initial public offerings and requires prior
approval with respect to purchases of securities in private placements.

Our investment adviser has adopted a code of ethics pursuant to Rule 17j-1 under
the Investment Company Act. This code of ethics permits access persons to trade
in securities that may be purchased or held by us for their own accounts,
subject to compliance with the code of ethic's requirements. The code of ethics
requires prior approval for personal investment in initial public offerings and
prohibits short-term trading profits, "front running" trades placed by us, naked
short sales, and personal investment in private placements.

These code of ethics are on file with and available from the SEC at
http://www.sec.gov or by calling 1-202-942-8090. Copies may also be obtained,
after paying a duplication fee, by electronic request at the following email
address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section,
Washington, D.C. 20549-0102.

PROXY VOTING POLICIES AND PROCEDURES

We have delegated proxy voting responsibilities to our investment manager,
subject to our board of directors' general oversight. We have delegated proxy
voting to our investment manager with the direction that proxies should be voted
consistent with our best economic interests. Our investment manager has adopted
its own Proxy Voting Policies and Procedures ("Policies"), a Proxy Voting
Desktop Manual ("Manual") and Proxy Voting Guidelines ("Guidelines") for this
purpose. The Policies address, among other things, conflicts of interest that
may arise between our interests, and the interests of our investment manager and
its affiliates. The Manual sets forth the procedures that the investment manager
has implemented to vote proxies, including monitoring for corporate events,
communicating with our custodian regarding proxies, considering the merits of
each proposal, and executing and recording the proxy vote. The Guidelines set
forth our investment manager's general position on various proposals, such as:

+  Stockholder Rights--Our investment manager generally votes against proposals
   that restrict stockholder rights.

+  Corporate Governance--Our investment manager generally votes for confidential
   and cumulative voting and against supermajority voting requirements for
   charter and bylaw amendments.

+  Anti-Takeover Matters--Our investment manager generally votes for proposals
   that require stockholder ratification of poison pills or that request boards
   to redeem poison pills, and votes

- --------------------------------------------------------------------------------
B- 14
<PAGE>
MANAGEMENT
- --------------------------------------------------------------------------------

   "against" the adoption of poison pills if they are submitted for stockholder
   ratification. Our investment manager generally votes for fair price
   proposals.

+  Routine Matters--Our investment manager generally votes for the ratification
   of auditors, procedural matters related to the annual meeting, and changes in
   company name, and against bundled proposals and adjournment.

The general provisions described above do not apply to investment companies. Our
investment manager generally votes proxies solicited by investment companies in
accordance with the recommendations of an independent third-party, except for
proxies solicited by or with respect to investment companies for which our
investment manager or any of its affiliates serve as investment adviser or
principal underwriter ("affiliated investment companies"). Our investment
manager votes affiliated investment company proxies in the same proportion as
the vote of the investment company's other stockholder (sometimes called
"mirror" or "echo" voting). Master fund proxies solicited from feeder funds are
voted in accordance with applicable requirements of the Investment Company Act.

Although the Guidelines set forth our investment manager's general voting
positions on various proposals, our investment manager may, consistent with our
best interest, determine under some circumstances to vote contrary to those
positions.

The Guidelines on a particular issue may or may not reflect the view of
individual members of our board of directors, or of a majority of our board of
directors. In addition, the Guidelines may reflect a voting position that
differs from the actual practices of the public companies within the Deutsche
Bank organization or of the investment companies for which our investment
manager or any of its affiliates serve as investment adviser or sponsor.

Our investment manager may consider the views of a portfolio company's
management in deciding how to vote a proxy or in establishing general voting
positions for the Guidelines, but management's views are not determinative.

As mentioned above, the Policies describe the way in which our investment
manager resolves conflicts of interest. To resolve conflicts, our investment
manager, under normal circumstances, votes proxies in accordance with its
Guidelines. If our investment manager departs from the Guidelines with respect
to a particular proxy or if the Guidelines do not specifically address a certain
proxy proposal, a proxy voting committee established by our investment manager
will vote the proxy. Before voting any such proxy, however, the committee will
exclude from the voting discussions and determinations any member who is
involved in or aware of a material conflict of interest. If, after excluding any
and all such members, there are fewer than three voting members remaining, the
investment manager will engage an independent third party to vote the proxy or
follow the proxy voting recommendations of an independent third party.

Under certain circumstances, our investment manager may not be able to vote
proxies, or may find that the expected costs associated with voting outweigh the
economic benefits. For example, our investment manager may not vote proxies on
certain foreign securities due to local restrictions or customs. Our investment
manager generally does not vote proxies on securities subject to share blocking
restrictions.

- --------------------------------------------------------------------------------
                                                                           B- 15
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------


Control persons and principal holders of securities



As of February 3, 2004 no person, to the knowledge of management, owned of
record or beneficially more than 5% of our outstanding common stock, other than
as set forth below:


<Table>
<Caption>
                                                       AMOUNT AND NATURE                 PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER             OF BENEFICIAL OWNERSHIP   OUTSTANDING COMMON STOCK
- ---------------------------------------------------------------------------------------------------
<S>                                              <C>                       <C>
MeAG Munich Ergo Kapitalanlage-
gesellschaft mbH(1) (Munich, Germany)..........                  507,076                       6.42%
</Table>

- ------------

(1) This information is based exclusively on information provided by such person
    on Schedules 13G filed with respect to us on February 14, 2003. To the
    knowledge of management, no other Schedules 13D or 13G had been filed with
    respect to us as of December 10, 2003.


As of February 3, 2004, all directors and executive officers as a group (14
persons) owned approximately 12,470 shares of our common stock, which
constitutes less than 1% of our outstanding common stock.


- --------------------------------------------------------------------------------
B- 16
<PAGE>

- --------------------------------------------------------------------------------

Investment advisory and other services

INVESTMENT ADVISER AND INVESTMENT MANAGER

We entered into a management agreement with DBSI (at the time of execution of
the agreement, Deutsche Bank Capital Corporation) and an investment advisory
agreement with DeAMI (at the time of execution of the agreement, DB Capital
Management International GmbH) on March 6, 1990. Both agreements continue in
effect for successive twelve-month periods from their initial term, but only if
the agreements are approved for continuance annually by our board of directors
in accordance with the requirements of the Investment Company Act. Our board of
directors last voted to continue both the management agreement and the
investment advisory agreement on May 9, 2003. Both agreements are terminable
without penalty by vote of a majority of our board of directors or by a vote of
the holders of a majority of our outstanding common stock, or by DBSI or DeAMI,
as the case may be, at any time upon not less than sixty days' written notice to
the other party. Since neither DBSI nor DeAMI is willing to provide services
separately, each agreement provides that it shall automatically terminate upon
assignment or upon termination of the other agreement. Both DBSI and DeAMI are
wholly owned direct or indirect subsidiaries of Deutsche Bank AG, a major German
banking institution.

Pursuant to the management agreement, DBSI is our corporate manager and
administrator and, subject to the supervision of our board of directors and
pursuant to recommendations made by the investment adviser, determines which
securities are suitable securities for our investment. DBSI (i) handles our
relationships with our stockholders, including stockholder inquiries, (ii) is
responsible for, arranges and monitors compliance with regulatory requirements
and New York Stock Exchange listing requirements and (iii) negotiates
contractual arrangements with third-party service providers, including, but not
limited to, custodians, transfer agents, auditors and printers. DBSI also
provides office facilities and personnel to carry out these services, together
with clerical and bookkeeping services which are not being furnished by our
custodian or transfer and dividend-paying agent. In addition, DBSI (i)
determines and publishes our net asset value in accordance with our policy as
adopted from time to time by our board of directors, (ii) establishes our
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 by us to our stockholders, (iv) provides our board of
directors with financial analyses and reports necessary for our board to fulfill
its fiduciary responsibilities, (v) maintains our books and records required
under the Investment Company Act (other than those being maintained by our
custodian and transfer and dividend-paying agent and registrar, as to which DBSI
oversees such maintenance), (vi) prepares our United States federal, state and
local income tax returns, (vii) prepares financial information for our proxy
statements and quarterly and annual reports to stockholders and (viii) prepares
the our reports to the SEC.

We pay DBSI a management fee, computed weekly and payable monthly, at an annual
rate of 0.65% of our average weekly net assets up to $100,000,000 and 0.55% of
such assets in excess of $100,000,000. During the fiscal years ended October 31,
2003, October 31, 2002 and October 31, 2001, we paid DBSI a management fee of
$911,794, $786,424 and $775,596, respectively. Besides its role as our
investment manager, DBSI also acts as the investment manager for The Germany
Fund, Inc. and The New Germany Fund, Inc. The Germany Fund, Inc. pays DBSI an
annual management fee of 0.65% of its average weekly net assets up to
$50,000,000 and 0.55% of such assets over $50,000,000. The New Germany Fund,
Inc. pays DBSI an annual management fee of 0.65% of its average weekly net
assets up to $100,000,000 and 0.55% of such assets over $100,000,000 and up to
$500,000,000 and 0.50% of such amounts in excess of $500,000,000. We, together
with The

- --------------------------------------------------------------------------------
                                                                           B- 17
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
- --------------------------------------------------------------------------------

Germany Fund, Inc. and The New Germany Fund, Inc., represent the entire fund
complex managed by DBSI.

Pursuant to our investment advisory agreement, DeAMI, in accordance with our
investment objective, policies and restrictions, makes recommendations to our
investment manager with respect to our investments and, upon instructions given
by our investment manager as to which securities are suitable for investment,
transmits purchase and sale orders and selects brokers and dealers to execute
portfolio transactions on our behalf.

We pay DeAMI an investment advisory fee, computed weekly and payable monthly, at
an annual rate of 0.35% of our average weekly net assets up to $100 million and
0.25% of such assets in excess of $100 million. During the fiscal years ended
October 31, 2003, October 31, 2002 and October 31, 2001, we paid DeAMI an
investment advisory fee of $469,148, $412,158 and $407,237, respectively.
Besides its role as our investment manager, DBSI also acts as the investment
manager of The Germany Fund, Inc. and The New Germany Fund, Inc. The Germany
Fund, Inc. and The New Germany Fund, Inc. each pay DeAMI an investment advisory
fee, computed weekly and payable monthly, at an annual rate of 0.35% of their
average weekly net assets up to $100 million and 0.25% of such assets in excess
of $100 million. We, together with The Germany Fund, Inc. and The New Germany
Fund, Inc., represent the entire fund complex advised by DeAMI.

Both the management agreement and the investment advisory agreement provide that
DBSI and DeAMI, respectively, are responsible for all expenses of all employees
and overhead incurred by them in connection with their duties under their
respective agreements. DBSI pays all salaries and fees of our directors and
officers who are "interested persons" under the Investment Company Act. An
"interested person" is a director who is not independent under the specific
requirements of the Investment Company Act. We bear all of our own expenses,
including those expenses described in "Our Management" on page 37 of the
prospectus.

In reaching their decision on May 9, 2003 to continue the management agreement
and the investment advisory agreement for another twelve-month period, our board
of directors reviewed information derived from a number of sources covering a
range of issues. Our board of directors considered, among other things, the
experience, expertise and availability of the executive and professional
personnel of DBSI and DeAMI, as well as the management and investment advisory
services that DBSI and DeAMI, respectively, provided to us. With respect to
DBSI, this entailed a review of the portfolio services performed by DBSI, a
review of the general nature of the corporate services performed by DBSI in
addition to those provided by others (such as the registrar and transfer agent),
and a review of any current changes to DBSI's asset management operations that
could be relevant to the services DBSI provides to us. With respect to DeAMI,
this entailed a review of the investment advisory services performed by DeAMI.
Our board of directors also reviewed the performance of DBSI's and DeAMI's other
advisory clients as well as comparative information with respect to the
performance of certain securities indices for the equity markets relevant to us.
In addition, our board of directors also compared the management and investment
advisory fees charged by DBSI and DeAMI, respectively, with information on fees
charged by other investment managers and investment advisers for comparative
services. Taking into account this review, our board of directors determined
that it was satisfied with the nature and quality of services provided by DBSI
and DeAMI, and that fees charged for these services were reasonable.

Brokerage allocation and other practices

The primary objective in placing orders for the purchase and sale of securities
for the our portfolio is to obtain best price together with efficient execution,
taking into account such factors as commission,

- --------------------------------------------------------------------------------
B- 18
<PAGE>
BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------

size of order, difficulty of execution and skill required of the broker.
Brokerage commission rates in Central Europe and Russia for transactions
executed on the exchanges may be discounted for certain large domestic and
foreign investors such as us. Off-board transactions outside of the exchanges'
regular business hours are executed on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. Subject to best price
together with efficient execution, orders for brokerage transactions may be
placed with Deutsche Bank AG or any of its affiliates. Our policy requires that
commissions paid to Deutsche Bank AG or any of its affiliates be reasonable and
fair compared with commissions received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
a securities exchange during a comparable period of time.

During our fiscal years ended October 31, 2003, October 31, 2002, and October
31, 2001, we incurred brokerage commissions amounting in the aggregate to
$162,271, $288,097 and $282,266, respectively. During such periods, we paid
brokerage commissions to Deutsche Bank AG or its affiliates amounting to $5,665,
which constituted 3.49% of our aggregate brokerage commissions, $20,790, which
constituted 7.22% of our aggregate brokerage commissions, and $25,202, which
constituted 8.93% of our aggregate brokerage commissions, respectively.

At each board meeting, our board of directors reviews the commissions paid by us
to determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits we receive. They have determined that the
aforementioned commissions were at the best rate available for institutions such
as ours.

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 us, our
investment manager and investment adviser. Our 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 our
investment manager and investment adviser in advising other clients. Conversely,
the information provided to our investment manager and investment adviser by
brokers and dealers through whom their other clients effect securities
transactions may be useful to them in providing services to us. Although
research from brokers and dealers may be useful to our investment manager and
investment adviser, it is only supplementary to their own efforts. For our
fiscal years ended October 31, 2003, October 31, 2002, and October 31, 2001,
transactions in our portfolio securities with associated brokerage commissions
of approximately $162,271, $288,097 and $282,266, respectively, were allocated
to persons or firms supplying research to us, our investment manager or our
investment adviser.

- --------------------------------------------------------------------------------
                                                                           B- 19
<PAGE>

- --------------------------------------------------------------------------------

Financial statements


The required financials statements are included in our 2003 Annual Report, and
are incorporated by reference into this SAI. These statements include: Schedule
of Investments as of October 31, 2003; the Statement of Assets and Liabilities
as of October 31, 2003; Statement of Operations for the fiscal year ended
October 31, 2003; Statements of Changes in Net Assets for the fiscal years ended
October 31, 2003 and October 31, 2002; Notes to Financial Statements; and
Financial Highlights for a share of common stock outstanding during each of the
fiscal years ended October 31, 2003, 2002, 2001, 2000 and 1999. A copy of our
2003 Annual Report is available on the SEC's website at http://www.sec.gov. A
copy may also be obtained without charge upon written or oral request from our
information agent at or 1-800-          .


- --------------------------------------------------------------------------------
                                                                            F- 1
<PAGE>

- --------------------------------------------------------------------------------

Part C

OTHER INFORMATION

ITEM 24.  FINANCIAL STATEMENTS AND EXHIBITS.

(1) Financial Statements

Part B--The Central Europe and Russia Fund, Inc. Financial Statements are
included in the Fund's 2003 Annual Report and are incorporated by reference into
the Statement of Incorporation. These statements include: Schedule of
Investments as of October 31, 2003; the Statement of Assets and Liabilities as
of October 31, 2003; Statement of Operations for the fiscal year ended October
31, 2003; Statements of Changes in Net Assets for the fiscal years ended October
31, 2003 and October 31, 2002; Notes to Financial Statements; and Financial
Highlights for a share of common stock outstanding during each of the fiscal
years ended October 31, 2003, 2002, 2001, 2000 and 1999.

(2)  Exhibits


<Table>
<S>       <C>  <C>
    (a)(1)  -- Articles of Incorporation of the Fund, dated February 6,
               1990
    (a)(2)  -- Articles of Amendment to Articles of Incorporation, dated
               February 14, 1990
    (a)(3)  -- Articles of Amendment of Articles of Incorporation, dated
               June 29, 1995
    (a)(4)  -- Articles Supplementary, dated December 14, 1999
    (a)(5)  -- Articles of Amendment of Articles of Incorporation, dated
               June 24, 2003
    (b)    --  By-Laws of the Fund
    (c)    --  Not applicable
  *(d)(1)  --  Form of Subscription Certificate
  *(d)(2)  --  Form of Notice of Guaranteed Delivery
  *(d)(3)  --  Form of Nominee Holder Over-Subscription Exercise Form
  *(d)(4)  --  Form of Beneficial Owner Certification Form
  *(d)(5)  --  Form of Subscription Agent Agreement
  *(d)(6)  --  Form of Information Agent Agreement
 **(e)     --  Voluntary Cash Purchase Program and Dividend Reinvestment
               Plan
    (f)    --  Not applicable
    (g)(1)  -- Management Agreement, dated as of March 6, 1990, between the
               Fund and Deutsche Bank Securities Inc. (formerly Deutsche
               Bank Capital Corporation)
    (g)(2)  -- Investment Advisory Agreement, dated as of March 6, 1990,
               between the Fund and Deutsche Asset Management International
               GmbH (formerly DB Capital Management International GmbH)
    (h)(1)  -- Form of Dealer Manager Agreement (including the exhibits
               containing the form of Selling Group Agreement and the form
               of Soliciting Dealer Agreement)
    (h)(2)  -- Form of Letter Agreement
    (i)    --  Not applicable
    (j)(1)  -- Amended and Restated Custody Agreement between the the Fund
               and Investors Bank & Trust Company
    (j)(2)  -- Delegation Agreement between the Fund and Investors Bank &
               Trust Company
</Table>


- --------------------------------------------------------------------------------
                                                                            C- 1
<PAGE>
PART C
- --------------------------------------------------------------------------------


<Table>
<S>       <C>  <C>
    (k)    --  Transfer Agency and Service Agreement between the Fund and
               Investors Bank & Trust Company
  *(l)(1)  --  Opinion and Consent of Sullivan & Cromwell LLP
***(m)     --  Consent of Deutsche Asset Management International GmbH to
               service of process in the United States
    (n)    --  Consent of PricewaterhouseCoopers LLP
    (o)    --  Not applicable
    (p)    --  Not applicable
    (q)    --  Not applicable
    (r)(1)  -- Code of Ethics of the Fund adopted pursuant to Rule 17j-1 of
               the Investment Company Act
    (r)(2)  -- Code of Ethics of Deutsche Bank Securities Inc. adopted
               pursuant to Rule 17j-1 of the Investment Company Act
    (r)(3)  -- Code of Ethics of Deutsche Asset Management International
               GmbH adopted pursuant to Rule 17j-1 of the Investment
               Company Act
 **Other   --  Power of Attorney
 Exhibits
</Table>


- ------------
  * To be filed by amendment


 ** Previously filed.



*** Incorporated by reference to Form ADV filed on January 30, 2004 (Commission
    File No. 801-20289)


ITEM 25.  MARKETING ARRANGEMENTS.


(1)  See Section 4(a) of the Dealer Manager Agreement, to be filed as Exhibit
(2)(h)(1).



(2)  See Section 4(b) of Exhibit (2)(h)(1).



(3)  Not Applicable


ITEM 26.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses to be incurred in
connection with this rights offering described in this Registration Statement:


<Table>
<S>                                                            <C>
Registration Fee............................................
New York Stock Exchange listing fee.........................
Printing (other than stock certificates)....................
Legal fees and expenses.....................................
Accounting fees and expenses................................
Dealer Manager expense allowance............................
NASD filing fee.............................................
Miscellaneous expenses......................................
                                                               -------
TOTAL.......................................................
                                                               =======
</Table>


- --------------------------------------------------------------------------------
C- 2
<PAGE>
PART C
- --------------------------------------------------------------------------------

ITEM 27.  PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.

None.

ITEM 28.  NUMBER OF HOLDERS OF SECURITIES.


As of February 3, 2004, the Fund had approximately 8,500 holders of record of
its common stock, par value $0.001 per shares.


ITEM 29.  INDEMNIFICATION.

Under Article Eleventh of our Amended and Restated Articles of Incorporation and
Article XII of our Amended and Restated By-Laws, our directors and officers will
be indemnified to the fullest extent allowed and in the manner provided by
Maryland law and provisions of the 1940 Act, including advancing of expenses
incurred in connection therewith. Indemnification shall not be provided however
to any officer or director against any liability to us or our security-holders
to which he or she would otherwise be subject by reasons of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.

We maintain insurance on behalf of any person who is or was a director of
officer of the Fund, against certain liability asserted against him or her and
incurred by him or her or arising out of his or her position. In no event,
however, will we pay that portion of the premium, if any, for insurance to
indemnify any such person or any act for which we ourselves are not permitted to
indemnify.

Insofar as indemnification for liabilities under the Securities Act of 1933 may
be permitted to the directors and officers, we have been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
such Act and is therefore unenforceable. If a claim for indemnification against
such liabilities under the Securities Act of 1933 (other than for expenses
incurred in a successful defense) is asserted against us by the directors or
officers in connection with this rights offering, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by us is against public policy as expressed in such Act and will be governed by
the final adjudication of such issue.

Our Management Agreement and Investment Advisory Agreement, filed as exhibits
(g)(1) and (g)(2), respectively, limit the liability of our investment advisor
and our investment manager.

ITEM 30.  BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.


We are fulfilling the requirement of this Item 30 to provide a list of the
officers and directors of our investment adviser and investment manager,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by those entities or those of its
officers and directors during the past two years, by incorporating herein by
reference the information contained in the current Form ADV filed on January 30,
2004 and July 24, 2003, respectively, with the Securities and Exchange
Commission by each of Deutsche Asset management International GmbH (Commission
File No. 801-20289) and Deutsche Bank Securities Inc. (Commission File No.
801-9638) pursuant to the Investment Advisers Act of 1940, as amended.


ITEM 31.  LOCATION OF ACCOUNTS AND RECORDS.

All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act and the rules thereunder will be maintained
at the offices of Investors Bank & Trust Company, 200 Clarendon Street, Boston
Massachusetts 02116, and at our offices, 345 Park Avenue, New York, New York
10154.

- --------------------------------------------------------------------------------
                                                                            C- 3
<PAGE>
PART C
- --------------------------------------------------------------------------------

ITEM 32.  MANAGEMENT SERVICES.

Not Applicable.

ITEM 33.  UNDERTAKINGS.

(a)  Registrant undertakes to suspend offering of the shares covered under this
registration statement until it amends its prospectus contained herein if (1)
subsequent to the effective date of this Registration Statement, its net asset
value per share declines more than ten percent from its net asset value as of
the effective date of this Registration Statement, or (2) its net asset value
increases to an amount greater than its net proceeds as stated in the prospectus
contained herein.

(b)  Registrant undertakes:

(1)  To file, during any period in which offers or sales are being made, a
     post-effective amendment to this registration statement: (i) to include any
     prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
     to reflect in the prospectus any facts or events arising after the
     effective date of the registration statement (or the most recent
     post-effective amendment thereof) in the registration statement; and (iii)
     to include any material information with respect to the plan of
     distribution not previously disclosed in the registration statement or any
     material change to such information in the registration statement.

(2)  That, for the purpose of determining any liability under the Securities Act
     of 1933, each such post-effective amendment shall be deemed to be a new
     registration statement relating to the securities offered therein, and the
     offering of such securities at that time shall be deemed to be the initial
     bona fide offering thereof.

(3)  To remove from registration by means of a post-effective amendment any of
     the securities being registered which remain unsold at the termination of
     the offering.

(4)  For the purposes of determining any liability under the Securities Act of
     1933, the information omitted from the form of prospectus filed as part of
     this registration statement in reliance upon Rule 430A and contained in a
     form of prospectus filed by the registrant under Rule 497(h) under the
     Securities Act of 1933 shall be deemed to be part of this registration
     statement as of the time it was declared effective.

(c)  Registrant undertakes to send by first class mail or other means designed
to ensure equally prompt delivery, within two business days of receipt of a
written or oral request, the Statement of Additional Information.

- --------------------------------------------------------------------------------
C- 4
<PAGE>
PART C
- --------------------------------------------------------------------------------

Signatures


Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
city of New York, and the state of New York, on the 10th day of February, 2004.


                                       THE CENTRAL EUROPE AND RUSSIA FUND, INC.
                                      ------------------------------------------
                                                     (Registrant)

                                      By:          /s/ RICHARD T. HALE
                                         ---------------------------------------
                                                     Richard T. Hale
                                          President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons and on the date
indicated.


<Table>
<Caption>
                       NAME                                        TITLE
- ---------------------------------------------------------------------------------------
<C>                                                  <S>                                 <C>
                         *                           Chairman of the Board and Director
- ---------------------------------------------------
               Christian H. Strenger

                                                     Director
- ---------------------------------------------------
                  Detlef Bierbaum

                         *                           Director
- ---------------------------------------------------
                     John Bult

                                                     Director
- ---------------------------------------------------
                  Richard R. Burt

                         *                           Director
- ---------------------------------------------------
                Fred H. Langhammer

                         *                           Director
- ---------------------------------------------------
                Robert H. Wadsworth

                         *                           Director
- ---------------------------------------------------
                  Werner Walbrol

                                                     Director
- ---------------------------------------------------
                 Eggert Voscherau

                /s/ RICHARD T. HALE                  President and Chief Executive
- ---------------------------------------------------  Officer
                  Richard T. Hale
</Table>


- --------------------------------------------------------------------------------
                                                                            C- 5
<PAGE>
PART C
- --------------------------------------------------------------------------------

<Table>
<Caption>
                       NAME                                        TITLE
- ---------------------------------------------------------------------------------------
<C>                                                  <S>                                 <C>
                         *                           Treasurer and Chief Financial
- ---------------------------------------------------  Officer (Principal Financial
                 Charles A. Rizzo                    Accounting Officer)
</Table>

- ------------
* Richard T. Hale, by signing his name hereto, does sign this document in behalf
  of the persons indicated above pursuant to a power of attorney duly executed
  by such person and filed as an exhibit to this Registration Statement.


<Table>
<S>                                                     <C>
          /s/ RICHARD T. HALE                                      February 10, 2004
- ----------------------------------------                ----------------------------------------
            Richard T. Hale                                               Date
            Attorney-in Fact
</Table>


- --------------------------------------------------------------------------------
C- 6
<PAGE>
PART C
- --------------------------------------------------------------------------------

INDEX TO EXHIBITS


<Table>
<Caption>
 EXHIBIT
 NUMBER         EXHIBIT
- ----------------------------------------------------------------------------
<S>        <C>  <C>
    (a)(1)  --  Articles of Incorporation of the Fund, dated February 6,
                1990
    (a)(2)  --  Articles of Amendment to Articles of Incorporation, dated
                February 14, 1990
    (a)(3)  --  Articles of Amendment of Articles of Incorporation, dated
                June 29, 1995
    (a)(4)  --  Articles Supplementary, dated December 14, 1999
    (a)(5)  --  Articles of Amendment of Articles of Incorporation, dated
                June 24, 2003
    (b)     --  By-Laws of the Fund
    (c)     --  Not applicable
  *(d)(1)   --  Form of Subscription Certificate
  *(d)(2)   --  Form of Notice of Guaranteed Delivery
  *(d)(3)   --  Form of Nominee Holder Over-Subscription Exercise Form
  *(d)(4)   --  Form of Beneficial Owner Certification Form
  *(d)(5)   --  Form of Subscription Agent Agreement
  *(d)(6)   --  Form of Information Agent Agreement
 **(e)      --  Voluntary Cash Purchase Program and Dividend Reinvestment
                Plan
    (f)     --  Not applicable
    (g)(1)  --  Management Agreement, dated as of March 6, 1990, between the
                Fund and Deutsche Bank Securities Inc. (formerly Deutsche
                Bank Capital Corporation)
    (g)(2)  --  Investment Advisory Agreement, dated as of March 6, 1990,
                between the Fund and Deutsche Asset Management International
                GmbH (formerly DB Capital Management International GmbH)
    (h)(1)  --  Form of Dealer Manager Agreement (including the exhibits
                containing the form of Selling Group Agreement and the form
                of Soliciting Dealer Agreement)
    (h)(2)  --  Form of Letter Agreement
    (i)     --  Not applicable
    (j)(1)  --  Amended and Restated Custody Agreement between the Fund and
                Investors Bank & Trust Company
    (j)(2)  --  Delegation Agreement between the Fund and Investors Bank &
                Trust Company
    (k)     --  Transfer Agency and Service Agreement between the Fund and
                Investors Bank & Trust Company
  *(l)(1)   --  Opinion and Consent of Sullivan & Cromwell LLP
***(m)      --  Consent of Deutsche Asset Management International GmbH to
                service of process in the United States
    (n)     --  Consent of PricewaterhouseCoopers LLP
    (o)     --  Not applicable
    (p)     --  Not applicable
    (q)     --  Not applicable
    (r)(1)  --  Code of Ethics of the Fund adopted pursuant to Rule 17j-1 of
                the Investment Company Act
    (r)(2)  --  Code of Ethics of Deutsche Bank Securities Inc. adopted
                pursuant to Rule 17j-1 of the Investment Company Act
    (r)(3)  --  Code of Ethics of Deutsche Asset Management International
                GmbH adopted pursuant to Rule 17j-1 of the Investment
                Company Act
</Table>


- --------------------------------------------------------------------------------
                                                                            C- 7
<PAGE>
PART C
- --------------------------------------------------------------------------------


<Table>
<Caption>
 EXHIBIT
 NUMBER         EXHIBIT
- ----------------------------------------------------------------------------
<S>        <C>  <C>
**Other     --  Power of Attorney
  Exhibits
</Table>


- ------------
  * To be filed by amendment


 ** Previously filed.



*** Incorporated by reference to Form ADV filed on January 30, 2004 (Commission
    File No. 801-20289)


- --------------------------------------------------------------------------------
C- 8

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.1
<SEQUENCE>3
<FILENAME>y93068a1exv99waw1.txt
<DESCRIPTION>ARTICLES OF INCORPORATION OF THE FUND
<TEXT>
<PAGE>
                                                               Exhibit (2)(a)(1)

                            ARTICLES OF INCORPORATION
                                       OF
                          THE UNITED GERMANY FUND, INC.

                  ARTICLE FIRST: I, the incorporator, John T. Bostelman, whose
post office address is 250 Park Avenue, New York, New York 10177, being at least
eighteen years of age, hereby, under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations, form a corporation.

                  ARTICLE SECOND: The name of the corporation is "The United
Germany Fund, Inc." (the "Corporation").

                  ARTICLE THIRD: The address of the Corporation's registered
office in the State of Maryland is c/o The Corporation Trust Incorporated, 32
South Street, Baltimore, Maryland 21201. The name of its registered agent at
such address is The Corporation Trust Incorporated.

                  ARTICLE FOURTH: The purpose of the Corporation is to engage in
any lawful act or activity for which corporations may be formed under the
General Corporation Law of Maryland. The duration of the Corporation is
perpetual.

                  ARTICLE FIFTH: Section 1. The total authorized capital stock
of the Corporation shall be 80,000,000 shares of Common Stock of the par value
of $.001 per share.

                  The Corporation, acting by its Board of Directors, without
action by the stockholders, may from time to time create and issue, whether or
not in connection with the issue and sale of any shares of stock or other
securities of the Corporation, rights or options entitling the bearer or
registered owner or holder of each thereof to purchase from the Corporation, any
shares of its capital stock, such rights or options to be evidenced by or in
such warrant or warrants, or purchase certificate or purchase certificates, or
other instrument or instruments as shall be approved by its Board of Directors.
The terms upon which, the time or times, which may be limited or unlimited in
duration, at or within which and the price or prices at which, or the other
consideration or considerations for which, such shares may be purchased from the
Corporation upon exercise of any such right or option shall be as fixed or
stated or provided in a resolution or resolutions adopted by the Board of
Directors of the Corporation providing for the creation and issue of such rights
or options, and in every case, set forth or incorporated by reference in the
warrant or warrants, or purchase certificate or purchase certificates, or other
instrument or instruments evidencing such rights or options; provided, however,
that, in case the shares of stock of the Corporation to be purchased upon the
exercise of such rights or options shall be originally issued upon such
exercise, the price or prices to be received therefor shall not be less than the
par value thereof. Any shares so issued for which the price or consideration
fixed as aforesaid shall have been paid, shall be deemed full-paid stock and
shall not be liable to any further call or assessment thereon. Without
limitation of the

<PAGE>

foregoing, the Corporation may, during any period fixed by it, limit the right
to exercise any such rights or options to the owners of specified certificates
for shares of stock or other securities of the Corporation.

                  Section 2. The presence in person or by proxy of the holders
of record of one-third of the shares of common stock issued and outstanding and
entitled to vote thereat shall constitute a quorum for the transaction of any
business at all meetings of the stockholders except as otherwise provided by law
or in these Articles of Incorporation.

                  Section 3. Notwithstanding any provision of the General Laws
of the State of Maryland requiring action to be taken or authorized by the
affirmative vote of the holders of a designated proportion greater than a
majority of the shares of common stock, such action shall be valid and effective
if taken or authorized by the affirmative vote of the holders of a majority of
the total number of shares of common stock outstanding and entitled to vote
thereupon pursuant to the provisions of these Articles of Incorporation.

                  Section 4. No holder of shares of common stock of the
Corporation shall, as such holder, have any preemptive right to purchase or
subscribe for any part of any new or additional issue of stock of any class, or
of rights or options to purchase any stock, or of securities convertible into,
or carrying rights or options to purchase, stock of any class, whether now or
hereafter authorized or whether issued for money, for a consideration other than
money or by way of a dividend or otherwise, and all such rights are hereby
waived by each holder of common stock and of any other class of stock or
securities which may hereafter be created.

                  Section 5. All persons who shall acquire common stock in the
Corporation shall acquire the same subject to the provisions of these Articles
of Incorporation.

                  ARTICLE SIXTH: If so determined by the Board of Directors, and
to the extent and in the manner permitted by law, the Corporation may from time
to time receive money and/or other property and credit the amount or value
thereof to reserve or surplus, and such money or other property may be an
undivided part of money, and/or other property for another part of which stock,
bonds, debentures and/or other obligations of the Corporation are issued.
Against any reserve or surplus so established there may be charged losses at any
time incurred by the Corporation, and also dividends or other distributions upon
stock. Such reserve or surplus may be reduced from time to time by the Board of
Directors for the purposes above specified or by transfer from such reserve or
surplus to capital account.

                  ARTICLE SEVENTH: The initial number of directors of the
Corporation shall be one, and the name of the person who shall act as such until
his successor is duly elected and qualifies is as follows: Christian M.
Strenger. However, the By-Laws of the Corporation may fix the number of
directors at a number other than one. The Board of Directors is hereby
authorized, by the vote of a majority of the entire Board of Directors, to
increase or decrease the number of directors within a limit specified in the
By-Laws

                                       2
<PAGE>

and to fill the vacancies created by any such increase in the number of
directors. The directors of the Corporation need not be stockholders.

                  At such time as the number of Directors first equals or
exceeds three, the Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of Directors constituting the
entire Board permits with the term of office of one class expiring each year. At
the annual meeting of stockholders next following such division into three
classes, Directors of the first class shall be elected to hold office for a term
expiring at the next succeeding annual meeting, Directors of the second class
shall be elected to hold office for a term expiring at the second succeeding
annual meeting and Directors of the third class shall be elected to hold office
for a term expiring at the third succeeding annual meeting. At each annual
meeting of stockholders succeeding the annual meeting of stockholders next
following such division into three classes, the successors to the class of
Directors whose term shall then expire shall be elected to hold office for a
term expiring at the third succeeding annual meeting.

                  ARTICLE EIGHTH: In furtherance and not in limitation of the
powers conferred by law, the Board of Directors is expressly authorized:

                  (a)      To make, adopt, alter, amend and repeal the By-Laws
         of the Corporation, subject to the power of the holders of the capital
         stock to alter, amend or repeal the By-Laws made by the Board of
         Directors;

                  (b)      To designate by resolution passed by a majority of
         the whole Board two or more of their number to constitute an Executive
         Committee, who, to the extent provided in said resolution or in the
         By-Laws of the Corporation, shall have and exercise the powers of the
         Board of Directors in the management of the business and affairs of the
         Corporation, with power to authorize the seal of the Corporation to be
         affixed to all papers which may require it;

                  (c)      To appoint from the Directors or otherwise such other
         committees as they may deem judicious, and to such content as may be
         provided in their resolutions or in the By-Laws to delegate to such
         committee all or any of the powers of the Board of Directors which may
         be lawfully delegated;

                  (d)      To determine conclusively at the time of such
         acquisition, what initial valuation shall be placed upon the property,
         rights and interests acquired by the Corporation in exchange for or in
         payment of its shares of stock;

                  (e)      To fix from time to time, and to vary, the amount of
         the profits to be reserved as working capital or for any other lawful
         purposes and to increase, decrease or make any disposition of any fund
         so reserved;

                  (f)      Subject to the provisions of these Articles of
         Incorporation, to determine whether any, and if any, what part, of the
         surplus of the Corporation or of the net profits arising from its
         business shall be declared in dividends and paid

                                       3
<PAGE>

         to the stockholders and to direct and determine the use and disposition
         of any such surplus or net profits;

                  (g)      To determine from time to time whether and to what
         extent and at what times and places and under what conditions and
         regulations the accounts and books of the Corporation, or any of them,
         shall be open to the inspection of the stockholders; and no stockholder
         shall have any right to inspect any account or book or document of the
         Corporation, except as conferred by the laws of the State of Maryland,
         unless and until authorized so to do by resolution of the Board of
         Directors or of the stockholders;

                  (h)      To remove at any time any officer elected or
         appointed by the Board of Directors, but only by the affirmative vote
         of a majority of the members of the Board then in office, and to remove
         or to confer on any committee or officer the power to remove any other
         officer or employee of the Corporation. Any such removal may be for
         cause or without cause.

                  ARTICLE NINTH: Any contract, transaction or act of the
Corporation or of the Directors, which shall be ratified by a majority of a
quorum of the stockholders having voting power at any annual meeting, or at any
special meeting called for such purpose, shall, except as otherwise specifically
provided by law, or by those Articles of Incorporation, be as valid and as
binding as though ratified by every stockholder of the Corporation, provided,
however, that any failure of the stockholders to approve or ratify such
contract, transaction or act, when and if submitted, shall not of itself be
deemed in any way to render the same invalid, nor deprive their Directors of
their right to proceed with such contract, transaction or act.

                  ARTICLE TENTH: The Corporation reserves the right to amend,
alter, change or repeal any provisions contained in these Articles of
Incorporation, in the manner now or hereafter prescribed by statute in the case
of articles of incorporation, and all rights conferred upon the stockholders
herein are granted subject to this reservation. The vote of two-thirds of the
outstanding shares of capital stock of the Corporation shall be necessary to
authorise any of the following actions; (i) a merger or consolidation of the
Corporation with an open-end investment company, (ii) the dissolution of the
Corporation, (iii) the sale of all or substantially all of the assets of the
Corporation, (iv) any amendment to those Articles of Incorporation which makes
the Common Stock a redeemable security (as such term is defined in the
Investment Company Act of 1940) or reduces the two-thirds vote required to
authorize the actions listed in this paragraph.

                  ARTICLE ELEVENTH: A Director or officer of the Corporation
shall not be liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a Director or officer, except to the extent such
exemption from liability or limitation thereof is not permitted under Maryland
General Corporation Law or the Investment Company Act of 1940 as currently in
effect or as the same may hereafter be amended. No amendment, modification or
repeal of this Article ELEVENTH shall

                                       4
<PAGE>

adversely affect any right or protection of a Director or officer that exists at
the time of such amendment, modification or repeal.

                  ARTICLE TWELFTH: The Corporation shall indemnify to the
fullest extent permitted by law (including the Investment Company Act of 1940)
as currently in effect or as the same hereafter be amended, any person made or
threatened to be made a party to any action, suit or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that
such person or such person's testator or intestate is or was a director or
officer of the Corporation or serves or served at the request of the Corporation
any other enterprise as a director or officer. To the fullest extent permitted
by law (including the Investment Company Act of 1940) as currently in effect or
as the same may hereafter be amended, expenses incurred by any such person in
defending any such action, suit or proceeding shall be paid or reimbursed by the
Corporation promptly upon receipt by it of an undertaking of such person to
repay such expenses if it shall ultimately be determined that such person is not
entitled to be indemnified by the Corporation. The rights provided to any person
by this Article TWELFTH shall be enforceable against the Corporation by such
person who shall be presumed to have relied upon it in serving or continuing to
serve as a director or officer as provided above. No amendment of this Article
TWELFTH shall impair the rights of any person arising at any time with respect
to events occurring prior to such amendment. For purposes of this Article
TWELFTH, the term "Corporation" shall include any predecessor of the Corporation
and any constituent corporation (including any constituent of a constituent)
absorbed by the Corporation in a consolidation or merger; the term "other
enterprise" shall include any corporation, partnership, joint venture, trust or
employee benefit plan; service "at the request of the Corporation" shall include
service as a director or officer of the Corporation which imposes duties on, or
involves services by, such director or officer with respect to an employee
benefit plan, its participants or beneficiaries; any excise taxes assessed on a
person with respect to an employee benefit plan shall be deemed to be
indemnifiable expenses; and action by a person with respect to any employee
benefit plan which such person reasonably believes to be in the interest of the
participants and beneficiaries of such plan shall be deemed to be action not
opposed to the best interests of the Corporation.

                  IN WITNESS WHEREOF, I have signed these Articles of
Incorporation this 6th day of February, 1990.

                                                     /s/ John T. Bostelman
                                                     ---------------------
                                                     John T. Bostelman

                                       5
<PAGE>

                  THE UNDERSIGNED incorporator of The United Germany Fund, Inc.,
who executed the foregoing Articles of Incorporation of which this Certificate
is made a part, herby acknowledges the same to be his Act and further
acknowledges the same to be his Act and further acknowledges that, to the best
of his knowledge, the matters and facts set forth therein are true in all
material respects under the penalties of perjury.

February 6, 1990

                                                     /s/ John T. Bostelman
                                                     ---------------------
                                                     John T. Bostelman

                                       6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.2
<SEQUENCE>4
<FILENAME>y93068a1exv99waw2.txt
<DESCRIPTION>ARTICLES OF AMENDMENT
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(a)(2)

                              ARTICLES OF AMENDMENT
                          TO ARTICLES OF INCORPORATION
                        OF THE UNITED GERMANY FUND, INC.
          PURSUANT TO SECTION 2-603 OF MARYLAND GENERAL CORPORATION LAW

         1.       This amendment to the Articles of Incorporation of The United
Germany Fund, Inc. (the "Corporation") was revised and approved by the sole
director of the Corporation on February 14, 1990 and no stock entitled to be
voted on the matter of this amendment was outstanding or subscribed for at the
time of such approval;

         2.       ARTICLE SECOND of the Corporation's Articles of Incorporation
is hereby amended to read in its entirety:

                  "ARTICLE SECOND: The name of the corporation is "The Future
      Germany Fund, Inc." (the "Corporation")."

WHEREFORE, the individual below has signed on behalf of the Corporation this
14th day of February 1990.

                                                     /s/ Christian H. Strenger
                                                     -------------------------
                                                     Christian H. Strenger
                                                      President, Chief Executive
                                                      Officer and Sole Director

WITNESS:

/s/ Robert R. Gambee
- ----------------------------
Robert R. Gambee
 Vice President, Secretary
 and Treasurer

<PAGE>

                                                               EXHIBIT (2)(a)(2)

                  The undersigned, an authorized officer of the Corporation, who
executed on behalf of said corporation the foregoing Articles of Amendment, of
which this Certificate is made a part, hereby acknowledges in the name and on
behalf of said corporation, the foregoing Articles of Amendment to be the
corporate act of said corporation and further certifies, under penalties of
perjury, that the matters and facts set forth therein with respect to the
approval thereof are true.

                                                     /s/ Christian H. Strenger
                                                     -------------------------
                                                     Christian H. Strenger

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.3
<SEQUENCE>5
<FILENAME>y93068a1exv99waw3.txt
<DESCRIPTION>ARTICLES OF AMENDMENT
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(a)(3)

                              ARTICLES OF AMENDMENT
                                       OF
                            ARTICLES OF INCORPORATION
                                       OF
                          THE FUTURE GERMANY FUND, INC.

Pursuant to Section 2-604 of the General Corporation Law of the State of
Maryland, I, Robert R. Gambee, being a vice- president of The Future Germany
Fund, Inc., a Maryland corporation (the "Corporation"), hereby certify that:

         FIRST, the following amendment to the Corporation's Articles of
Incorporation was advised by the Corporation's Board of Directors and approved
by the Corporation's stockholders; and

         SECOND, ARTICLE SECOND of the Corporation's Articles of Incorporation
is hereby amended to read in full as follows:

         "ARTICLE SECOND: The name of the Corporation is "The Central European
         Equity Fund, Inc." (the "Corporation")."

<PAGE>

IN WITNESS THEREOF, I have signed these Articles of Amendment this 29th day of
June, 1995.

                                                     /s/Robert Gambee
                                                     ----------------
                                                     Robert R. Gambee
                                                     Vice President

Attest:

/s/Joesph Cheung
- -------------------
Joseph Cheung
Assistant Secretary



                  I acknowledge this to be my act and state under penalty of
perjury that with respect to all matters and facts therein, to the best of my
knowledge, information, and belief, such matters and facts are true in all
material respects.

Date: June 29, 1995             By:/s/Robert Gambee
                                   ------------------------------
                                      Robert R. Gambee

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.4
<SEQUENCE>6
<FILENAME>y93068a1exv99waw4.txt
<DESCRIPTION>ARTICLES SUPPLEMENTARY
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(a)(4)

                     THE CENTRAL EUROPEAN EQUITY FUND, INC.

                             ARTICLES SUPPLEMENTARY

                  THE CENTRAL EUROPEAN EQUITY FUND, INC., a Maryland corporation
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland, that:

                  FIRST: Under a power contained in Title 3, Subtitle 8 of the
Maryland General Corporation Law (the "MGCL"), the Corporation, by resolutions
of its Board of Directors (the "Board of Directors") duly adopted at a meeting
duly called and held on December 9, 1999, has elected to become subject to
Sections 3-804 and 3-805 of the MGCL.

                  SECOND: The resolutions described above provide that,
notwithstanding any other provision in the charter or By-Laws of the Corporation
to the contrary, the Corporation elects to be subject to Sections 3-804 and
3-805 of the MGCL, the repeal of which may be effected only by the means
authorized by Section 3-802(b)(3) of the MGCL.

                  THIRD: These Articles Supplementary have been approved by the
Board of Directors of the Corporation in the manner and by the vote required by
law.

                  FOURTH: The undersigned President of the Corporation
acknowledges these Articles Supplementary to be the corporate act of the
Corporation and, as to all matters or facts required to be verified under oath,
the undersigned President acknowledges that, to the best of his knowledge,
information and belief, these matters and facts are true in all material
respects and that this statement is made under the penalties for perjury.

<PAGE>

                                                               EXHIBIT (2)(a)(4)

                  IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed under seal in its name and on its behalf by its
President and attested to by its Secretary on this forteenth day of December,
1999.

                                    THE CENTRAL EUROPEAN EQUITY FUND, INC.

                                    By:/s/ Paul Higgings                  (SEAL)
                                       -----------------------------------
                                     Name: Paul Higgins
                                     Title: President

Witness:

/s/ Robert Gambee
- -------------------
Name: Robert Gambee
Title: Secretary


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.A.5
<SEQUENCE>7
<FILENAME>y93068a1exv99waw5.txt
<DESCRIPTION>ARTICLES OF AMENDMENT
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(a)(5)

                              ARTICLES OF AMENDMENT
                                       OF
                            ARTICLES OF INCORPORATION
                                       OF
                     THE CENTRAL EUROPEAN EQUITY FUND, INC.

         Pursuant to Section 2-605 of the General Corporation Law of the State
of Maryland, I, Richard T. Hale, being the President and Chief Executive Officer
of The Central European Equity Fund, Inc., a Maryland corporation (the
"Corporation"), hereby certify that:

         FIRST, the following amendment to the Corporation's Articles of
Incorporation was approved by a majority of the Corporation's Board of
Directors; and

         SECOND, ARTICLE SECOND of the Corporation's Articles of Incorporation
is hereby amended to read in full as follows:

         "ARTICLE SECOND: The name of the Corporation is "The Central Europe and
         Russia Fund, Inc." (the "Corporation")."

<PAGE>

         IN WITNESS THEREOF, I have signed these Articles of Amendment this 24th
day of June, 2003.

                                                   /s/Richard T. Hale
                                                   -----------------------
                                                   Richard T. Hale
                                                   President and Chief Executive
                                                   Officer

Attest:

/s/ Robert R. Gambee
- --------------------
Robert R. Gambee
Chief Operating Officer and
Secretary

         I acknowledge this to be my act and state under penalty of perjury that
with respect to all matters and facts therein, to the best of my knowledge,
information, and belief, such matters and facts are true in all material
respects.

Date: June 24, 2003                                     By: /s/Richard T. Hale
                                                            ------------------
                                                            Richard T. Hale

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.B
<SEQUENCE>8
<FILENAME>y93068a1exv99wb.txt
<DESCRIPTION>BY-LAWS OF THE FUND
<TEXT>
<PAGE>

                                                                  EXHIBIT (2)(b)

                     The Central European Equity Fund, Inc.

                            (a Maryland corporation)

                                     Bylaws

                  (Amended and Restated as of January 31, 2000

                      and further amended on July 16, 2001)

                                    ARTICLE I

                                     Offices

         Section 1. Principal Office. The principal office of The Central
European Equity Fund, Inc. (the "Corporation") shall be located
at such place or places as the Board of Directors may designate.

         Section 2. Additional Offices. The Corporation may have additional
offices at such places as the Board of Directors may from time to time determine
or the business of the Corporation may require.

                                   ARTICLE II

                                  Stockholders

         Section 1. Place of Meetings. All meetings of the stockholders of the
Corporation shall be held at the principal

<PAGE>

                                                                  EXHIBIT (2)(b)

office of the Corporation or at such other place as may from time to time be set
by the Board of Directors and stated in the notice of meeting.

         Section 2. Annual Meetings. An annual meeting of the stockholders for
the election of directors and the transaction of any business within the powers
of the Corporation shall be held in the month of June each year on a date and at
the time set by the Board of Directors and stated in the notice of meeting.

         Section 3. Special Meetings. (a) General. The President, Chief
Executive Officer or Board of Directors may call a special meeting of the
stockholders. Subject to subsection (b) of this Section 3, a special meeting of
stockholders shall also be called by the Secretary of the Corporation upon the
written request of the stockholders entitled to cast not less than a majority of
all the votes entitled to be cast at such meeting.

                  (b) Stockholder Requested Special Meetings. (1) Any
stockholder of record seeking to have stockholders request a special meeting
shall, by sending written notice to the Secretary (the "Record Date Request
Notice") by registered mail, return receipt requested, request the Board of
Directors to fix a record date to determine the stockholders entitled to request
a special meeting (the "Request Record Date"). The Record Date Request Notice
shall set forth the purpose of the meeting and the matters

<PAGE>

                                                                  EXHIBIT (2)(b)

proposed to be acted on at it, shall be signed by one or more stockholders of
record as of the date of signature (or their duly authorized agents), shall bear
the date of signature of each such stockholder (or other agent) and shall set
forth all information relating to each such stockholder that must 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 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 14a-11 thereunder or pursuant to the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
the rules thereunder. Upon receiving the Record Date Request Notice, the Board
of Directors may fix a Request Record Date. The Request Record Date shall not
precede and shall not be more than ten days after the close of business on the
date on which the resolution fixing the Request Record Date is adopted by the
Board of Directors. If the Board of Directors, within ten days after the date on
which a valid Record Date Request Notice is received, fails to adopt a
resolution fixing the Request Record Date and make a public announcement of such
Request Record Date, the Request Record Date shall be the close of business on
the tenth day after the first date on which the Record Date Request Notice is
received by the Secretary.

<PAGE>

                                                                  EXHIBIT (2)(b)

                           (2) In order for any stockholder to request a special
meeting, one or more written requests for a special meeting signed by
stockholders of record (or their duly authorized agents) as of the Request
Record Date entitled to cast not less than a majority (the "Special Meeting
Percentage") of all of the votes entitled to be cast at such meeting (the
"Special Meeting Request") shall be delivered to the Secretary. In addition, the
Special Meeting Request shall set forth the purpose of the meeting and the
matters proposed to be acted on at it (which shall be limited to the matters set
forth in the Record Date Request Notice received by the Secretary), shall bear
the date of signature of each such stockholder (or other agent) signing the
Special Meeting Request, shall set forth the name and address, as they appear in
the Corporation's books, of each stockholder signing such request (or on whose
behalf the Special Meeting Request is signed) and the class and number of shares
of stock of the Corporation which are owned of record and beneficially by each
such stockholder, shall be sent to the Secretary by registered mail, return
receipt requested, and shall be received by the Secretary within 60 days after
the Request Record Date. Any requesting stockholder may revoke his, her or its
request for a special meeting at any time by written revocation delivered to the
Secretary.

<PAGE>

                                                                  EXHIBIT (2)(b)

                           (3) The Secretary shall inform the requesting
stockholders of the reasonably estimated cost of preparing and mailing the
notice of meeting (including the Corporation's proxy materials). The Secretary
shall not be required to call a special meeting upon stockholder request and
such meeting shall not be held unless, in addition to the documents required by
paragraph (2) of this Section 3(b), the Secretary receives payment of such
reasonably estimated cost prior to the mailing of any notice of the meeting.

                           (4) Except as provided in the next sentence, any
special meeting shall be held at such place, date and time as may be designated
by the President, Chief Executive Officer or Board of Directors, whoever has
called the meeting. In the case of any special meeting called by the Secretary
upon the request of stockholders (a "Stockholder Requested Meeting"), such
meeting shall be held at such place, date and time as may be designated by the
Board of Directors; provided, however, that the date of any Stockholder
Requested Meeting shall be not more than 90 days after the record date for such
meeting (the "Meeting Record Date"); and provided further that if the Board of
Directors fails to designate, within ten days after the date that a valid
Special Meeting Request is actually received by the Secretary (the "Delivery
Date"), a date and time for a Stockholder Requested

<PAGE>

                                                                  EXHIBIT (2)(b)

Meeting, then such meeting shall be held at 2:00 p.m. local time on the 90th day
after the Meeting Record Date or, if such 90th day is not a Business Day (as
defined below), on the first preceding Business Day; and provided further that
in the event that the Board of Directors fails to designate a place for a
Stockholder Requested Meeting within ten days after the Delivery Date, then such
meeting shall be held at the principal executive offices of the Corporation. In
fixing a date for any special meeting, the President, Chief Executive Officer or
Board of Directors may consider such factors as he, she or it deems relevant
within the good faith exercise of business judgment, including, without
limitation, the nature of the matters to be considered, the facts and
circumstances surrounding any request for meeting and any plan of the Board of
Directors to call an annual meeting or a special meeting. In the case of any
Stockholder Requested Meeting, if the Board of Directors fails to fix a Meeting
Record Date that is a date within 30 days after the Delivery Date, then the
close of business on the 30th day after the Delivery Date shall be the Meeting
Record Date.

                           (5) If at any time as a result of written revocations
of requests for the special meeting, stockholders of record (or their duly
authorized agents) as of the Request Record Date entitled to cast less than the
Special Meeting Percentage

<PAGE>

                                                                  EXHIBIT (2)(b)

shall have delivered and not revoked requests for a special meeting, the
Secretary may refrain from mailing the notice of the meeting or, if the notice
of the meeting has been mailed, the Secretary may revoke the notice of the
meeting at any time before ten days before the meeting if the Secretary has
first sent to all other requesting stockholders written notice of such
revocation and of intention to revoke the notice of the meeting. Any request for
a special meeting received after a revocation by the Secretary of a notice of a
meeting shall be considered a request for a new special meeting.

                           (6) The Chairman of the Board of Directors, the
President or the Board of Directors may appoint regionally or nationally
recognized independent inspectors of elections to act as the agent of the
Corporation for the purpose of promptly performing a ministerial review of the
validity of any purported Special Meeting Request received by the Secretary. For
the purpose of permitting the inspectors to perform such review, no such
purported request shall be deemed to have been delivered to the Secretary until
the earlier of (i) five Business Days after receipt by the Secretary of such
purported request and (ii) such date as the independent inspectors certify to
the Corporation that the valid requests received by the Secretary represent at
least a majority of the issued and outstanding shares of stock

<PAGE>

                                                                  EXHIBIT (2)(b)

that would be entitled to vote at such meeting. Nothing contained in this
paragraph (6) shall in any way be construed to suggest or imply that the
Corporation or any stockholder shall not be entitled to contest the validity of
any request, whether during or after such five Business Day period, or to take
any other action (including, without limitation, the commencement, prosecution
or defense of any litigation with respect thereto, and the seeking of injunctive
relief in such litigation).

                           (7) For purposes of these Bylaws, "Business Day"
shall mean any day other than a Saturday, a Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.

                  Section 4. Notice of Meetings of Stockholders. Not less than
ten nor more than 90 days before each meeting of stockholders, the Secretary
shall give to each stockholder entitled to vote at such meeting and to each
stockholder not entitled to vote who is entitled to notice of the meeting
written or printed notice stating the time and place of the meeting and, in the
case of a special meeting or as otherwise may be required by any statute, the
purpose for which the meeting is called, either by mail, presenting it to the
stockholder personally, leaving it at the stockholder's residence or usual place
of business or transmitting the notice to the stockholder in any

<PAGE>

                                                                  EXHIBIT (2)(b)

other manner authorized by law. If mailed, notice shall be deemed to be given
when deposited in the United States mail addressed to the stockholder at the
stockholder's post office address as it appears upon the books of the
Corporation. A meeting of stockholders convened on the date for which it was
called may be adjourned from time to time and place to place without further
notice to a date not more than 120 days after the original record date.

         Section 5. Scope of Notice. Any business of the Corporation may be
transacted at an annual meeting of stockholders without being specifically
designated in the notice, except such business as is required by any statute to
be stated in such notice. No business shall be transacted at a special meeting
of stockholders except as specifically designated in the notice.

         Section 6. Quorum. At any meeting of stockholders, the presence in
person or by proxy of stockholders entitled to cast one-third of all the votes
entitled to be cast at such meeting shall constitute a quorum; but this section
shall not affect any requirement under any statute or the charter of the
Corporation for the vote necessary for the adoption of any measure. If, however,
such quorum shall not be present at any meeting of the stockholders, the
chairman of the meeting, in

<PAGE>

                                                                  EXHIBIT (2)(b)

accordance with Section 12 of this Article II of these Bylaws, shall have the
power to adjourn the meeting from time to time to a date not more than 120 days
after the original record date without notice other than announcement at the
meeting. At such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally notified.

         Section 7. Voting. A plurality of all the votes cast at a meeting of
stockholders duly called and at which a quorum is present shall be sufficient to
elect a director. Each share may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted. A majority of the votes cast at a meeting of stockholders duly called and
at which a quorum is present shall be sufficient to approve any other matter
which may properly come before the meeting, unless more than a majority of the
votes cast is required by statute or by the charter of the Corporation. Unless
otherwise provided in the charter, each outstanding share, regardless of class,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders.

         Section 8. Proxies. A stockholder may cast the votes entitled to be
cast by the shares of the stock owned of record by him, her or it either in
person or by proxy executed by the

<PAGE>

                                                                  EXHIBIT (2)(b)

stockholder or the stockholder's duly authorized agent in any manner authorized
by law. Such proxy shall be filed with the Secretary of the Corporation before
or at the time of the meeting. No proxy shall be valid after eleven months from
the date of its execution, unless otherwise provided in the proxy.

         Section 9. Voting of Stock by Certain Holders. Stock of the Corporation
registered in the name of a corporation, partnership, trust or other entity, if
entitled to be voted, may be voted by the President or a Vice President, a
general partner or trustee thereof, as the case may be, or a proxy appointed by
any of the foregoing individuals, unless some other person who has been
appointed to vote such stock pursuant to a bylaw or a resolution of the
governing body of such corporation or other entity or agreement of the partners
of a partnership presents a certified copy of such bylaw, resolution or
agreement, in which case such person may vote such stock. Any Director or other
fiduciary may vote stock registered in his or her name as such fiduciary, either
in person or by proxy.

         Shares of stock of the Corporation directly or indirectly owned by it
shall not be voted at any meeting and shall not be counted in determining the
total number of outstanding shares entitled to be voted at any given time,
unless they are held by it in a fiduciary capacity, in which case they

<PAGE>

                                                                  EXHIBIT (2)(b)

may be voted and shall be counted in determining the total number of outstanding
shares at any given time.

         The Board of Directors may adopt by resolution a procedure by which a
stockholder may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified stock in place of the stockholder who makes the certification.

         Section 10. Inspectors. At any meeting of stockholders, the chairman of
the meeting may appoint one or more persons as inspectors for such meeting. Such
inspectors shall

<PAGE>

                                                                  EXHIBIT (2)(b)

ascertain and report the number of shares represented at the meeting based upon
their determination of the validity and effect of proxies, count all votes,
report the results and perform such other acts as are proper to conduct the
election and voting with impartiality and fairness to all the stockholders.

         Each report of an inspector shall be in writing and signed by the
inspector or by a majority of them if there is more than one inspector acting at
such meeting. If there is more than one inspector, the report of a majority
shall be the report of the inspectors. The report of the inspector or inspectors
on the number of shares represented at the meeting and the results of the voting
shall be prima facie evidence thereof.

         Section 11. Presiding Officer - Stockholders Meetings. At every meeting
of stockholders, the Chairman of the Board, if there be one, shall conduct the
meeting or, in the case of vacancy in office or absence of the Chairman of the
Board, one of the following directors or officers present shall conduct the
meeting in the order stated: the Vice Chairman of the Board, if there be one,
the Chief Executive Officer, the President, the Vice Presidents in their order
of rank and seniority, or a chairman chosen by the stockholders entitled to cast
a majority of the votes which all stockholders present in person or by proxy are
entitled to cast, shall act as chairman, and the Secretary,

<PAGE>

                                                                  EXHIBIT (2)(b)

or, in his or her absence, an Assistant Secretary, or in the absence of both the
Secretary and Assistant Secretaries, a person appointed by the chairman shall
act as secretary.

         Section 12. Conduct of Stockholders Meetings. The order of business and
all other matters of procedure at any meeting of stockholders shall be
determined by the chairman of the meeting. The chairman of the meeting may
prescribe such rules, regulations and procedures and take such action as, in the
discretion of such chairman, are appropriate for the proper conduct of the
meeting, including, without limitation, (a) restricting admission to the time
set for the commencement of the meeting; (b) limiting attendance at the meeting
to stockholders of record of the Corporation, their duly authorized proxies or
other such persons as the chairman of the meeting may determine; (c) limiting
participation at the meeting on any matter to stockholders of record of the
Corporation entitled to vote on such matter, their duly authorized proxies or
other such persons as the chairman of the meeting may determine; (d) limiting
the time allotted to questions or comments by participants; (e) maintaining
order and security at the meeting; and (f) recessing or adjourning the meeting
to a later date and time and a place announced at the meeting. Unless otherwise
determined by the chairman of the meeting, meetings of stockholders shall not be

<PAGE>

                                                                  EXHIBIT (2)(b)

required to be held in accordance with the rules of parliamentary procedure.

                  THE FOLLOWING SECTION 13 IS EFFECTIVE UNTIL DECEMBER 31, 2000
AND SHALL HAVE NO FORCE OR EFFECT AS OF JANUARY 1, 2001. 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

<PAGE>

                                                                  EXHIBIT (2)(b)

be timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 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 90th 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 60th 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

<PAGE>

                                                                  EXHIBIT (2)(b)

person and (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); (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 (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.

<PAGE>

                                                                  EXHIBIT (2)(b)

                           (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 II, Section 1 of these Bylaws, and there is no public announcement
of such action at least 70 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

<PAGE>

                                                                  EXHIBIT (2)(b)

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 90th day prior to such special meeting and not later than the close of
business on the later of the 60th 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.

<PAGE>

                                                                  EXHIBIT (2)(b)

                  (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.

                           (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.
<PAGE>

                                                                  EXHIBIT (2)(b)

                           (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.

         THE FOLLOWING SECTION 13 IS EFFECTIVE AS OF JANUARY 1, 2001. 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).

<PAGE>

                                                                  EXHIBIT (2)(b)

                           (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

<PAGE>

                                                                  EXHIBIT (2)(b)

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;

<PAGE>

                                                                  EXHIBIT (2)(b)

(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 (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

<PAGE>

                                                                  EXHIBIT (2)(b)

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

<PAGE>

                                                                  EXHIBIT (2)(b)

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

<PAGE>

                                                                  EXHIBIT (2)(b)

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.

                           (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.

<PAGE>

                                                                  EXHIBIT (2)(b)

         Section 14. Voting by Ballot. Voting on any question or in any election
may be viva voce unless the chairman of the meeting shall order or any
stockholder shall demand that voting be by ballot.

                                   ARTICLE III

                               Board of Directors

         Section 1. General Powers. The business and affairs of the Corporation
shall be managed under the direction of its Board of Directors.

         Section 2. Number and Tenure. The number of Directors shall be not less
than the minimum number required from time to time by the Maryland General
Corporation Law. Subject to the minimum number of directors described in the
immediately preceding sentence, the number of directors of the Corporation shall
be fixed only by a vote of the Board of Directors.

         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

<PAGE>

                                                                  EXHIBIT (2)(b)

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:

<PAGE>

                                                                  EXHIBIT (2)(b)

                           (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,

                           (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

<PAGE>

                                                                  EXHIBIT (2)(b)

                                    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
enterpirse; and the term "investment vehicle" includes an investment vehicle
within a larger enterprise; but in each case only to the extent the unit
satisifes the revenue, asset and other requirements speicifed 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:

<PAGE>

                                                                  EXHIBIT (2)(b)

                           (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.

         Section 4. Vacancies. Subject to the provisions of the Investment
Company Act, each vacancy on the Board of Directors of the Corporation may be
filled only 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 to fill a vacancy shall hold office for the remainder of the full term
of the class of directors in which the vacancy occurred and until a successor is
elected and qualifies.

         Section 5. Place of Meeting. The Directors may hold their meetings,
have one or more offices, and keep the books of the Corporation at any office or
offices of the Corporation or at

<PAGE>

                                                                  EXHIBIT (2)(b)

any other place as they may from time to time by resolution determine, or in the
case of meetings, as they may from time to time by resolution determine or as
shall be specified or fixed in the respective notices or waivers of notice
thereof.

         Section 6. Annual and Regular Meetings. The annual meeting of the Board
of Directors shall be held as soon as practicable after the annual meeting of
the stockholders. The Board of Directors may provide, by resolution, the time
and place, either within or without the State of Maryland, for the holding of
regular meetings of the Board of Directors without other notice than such
resolution.

         Section 7. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the Chief Executive Officer, the
President, the Secretary or two or more Directors who are then appointed to the
Executive Committee.

         Section 8. Notice. Notice of any special meeting of the Board of
Directors shall be delivered personally or by telephone, facsimile transmission,
United States mail or courier to each Director at his business or residence
address. Notice by personal delivery, by telephone or a facsimile transmission
shall be given at least two days prior to the meeting. Notice by mail shall be
given at least five days prior to the meeting and shall

<PAGE>

                                                                  EXHIBIT (2)(b)

be deemed to be given when deposited in the United States mail properly
addressed, with postage thereon prepaid. Telephone notice shall be deemed to be
given when the Director is personally given such notice in a telephone call to
which he or she is a party. Facsimile transmission notice shall be deemed to be
given upon completion of the transmission of the message to the number given to
the Corporation by the Director and receipt of a completed answer-back
indicating receipt. Neither the business to be transacted at, nor the purpose
of, any annual, regular or special meeting of the Board of Directors need be
stated in the notice, unless specifically required by statute or these Bylaws.

         Section 9. Quorum and Voting. A majority of the Board of Directors then
in office shall constitute a quorum for the transaction of business, provided
that, if less than a majority of such Directors are present at said meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice, and provided further that if, pursuant to the charter of
the Corporation or these Bylaws, the vote of a majority of a particular group of
Directors is required for action, a quorum must also include a majority of such
group. The action of the majority of the Directors present at any meeting at
which a quorum is present shall be the action of the Board of

<PAGE>

                                                                  EXHIBIT (2)(b)

Directors, unless the concurrence of a greater proportion is required for such
action by applicable statute.

         Section 10. Telephone Meetings. Directors may participate in a meeting
by means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time;
provided that no such meeting by conference telephone or similar communications
equipment may be held for the purpose of voting to approve or continue any
investment advisory contract pursuant to Section 15 of the Investment Company
Act. Participation in a meeting by these means constitutes presence in person at
the meeting.

         Section 11. Informal Action by the Board of Directors. Any action
required or permitted to be taken at any meeting of the Board of Directors may
be taken without a meeting, if a written consent to such action is signed by
each Director and such written consent is filed with the minutes of the
proceedings of the Board or such committee; provided that no such action by
written consent may be taken to approve or continue an investment advisory
contract pursuant to Section 15 of the Investment Company Act.

         Section 12. Compensation of Directors. Directors shall be entitled to
receive such compensation from the

<PAGE>

                                                                  EXHIBIT (2)(b)

Corporation for their services as may from time to time be voted by the Board of
Directors.

                                   ARTICLE IV

                                   Committees

         Section 1. Number, Tenure and Qualifications. The Board of Directors
may appoint from among its members an Audit Committee and other committees,
composed of one or more Directors, to serve at the pleasure of the Board of
Directors. The Board of Directors may appoint from among its members an
Executive Committee composed of two or more Directors, to serve at the pleasure
of the Board of Directors.

         Section 2. Powers. The Board of Directors may delegate to committees
appointed under Section 1 of this Article any of the powers of the Board of
Directors, except as prohibited by law.

         Section 3. Meetings. Notice of committee meetings shall be given in the
same manner as notice for special meetings of the Board of Directors. Except for
the Executive Committee, a majority of the members of the committee shall
constitute a quorum for the transaction of business at any meeting of the
committee. Three, but in no event less than one-third, of the Directors then
appointed to the Executive Committee shall

<PAGE>

                                                                  EXHIBIT (2)(b)

constitute a quorum for the transaction of business at any meeting of the
Executive Committee. The act of a majority of the committee members present at a
meeting shall be the act of such committee. The Board of Directors may designate
a chairman of any committee, and such chairman or any two members of any
committee (if there are at least two members of the committee) may fix the time
and place of its meeting unless the Board shall otherwise provide. In the
absence of any member of any such committee, the members thereof present at any
meeting, whether or not they constitute a quorum, may appoint another Director
to act in the place of such absent member. Each committee shall keep minutes of
its proceedings.

         Section 4. Telephone Meetings. Members of a committee of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time; provided that no such meeting by conference
telephone or similar communications equipment may be held for the purpose of
voting to approve or continue any investment advisory contract pursuant to
Section 15 of the Investment Company Act. Participation in a meeting by these
means constitutes presence in person at the meeting.

<PAGE>

                                                                  EXHIBIT (2)(b)

         Section 5. Informal Action by Committees. Any action required or
permitted to be taken at any meeting of a committee of the Board of Directors
may be taken without a meeting, if a consent in writing to such action is signed
by each member of the committee and such written consent is filed with the
minutes of proceedings of such committee; provided that no such action by
written consent may be taken to approve or continue an investment advisory
contract pursuant to Section 15 of the Investment Company Act.

         Section 6. Vacancies. Subject to the provisions hereof, the Board of
Directors shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace any
absent or disqualified member or to dissolve any such committee.

                                    ARTICLE V

                                    Officers

         Section 1. General Provisions. The officers of the Corporation shall
include a Chief Executive Officer, a President, a Secretary and a Treasurer and
may include a Chairman of the Board, a Vice Chairman of the Board, one or more
Vice Presidents, a Chief Operating Officer, a Chief Financial Officer, one or
more Assistant Secretaries and one or more Assistant Treasurers. In

<PAGE>

                                                                  EXHIBIT (2)(b)

addition, the Board of Directors may from time to time appoint such other
officers with such powers and duties as they shall deem necessary or desirable.
The officers of the Corporation shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of stockholders, except that the Chief Executive Officer may appoint one
or more Vice Presidents, Assistant Secretaries and Assistant Treasurers. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as may be convenient. Each officer shall hold office
until his or her successor is elected and qualifies or until his or her death,
resignation or removal in the manner hereinafter provided. Any two or more
offices except President and Vice President may be held by the same person. In
its discretion, the Board of Directors may leave unfilled any office except that
of President, Treasurer and Secretary. Election of an officer or agent shall not
of itself create contract rights between the Corporation and such officer or
agent.

         Section 2. Removal and Resignation. Any officer or agent of the
Corporation may be removed by the Board of Directors if in its judgment the best
interests of the Corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed. Any

<PAGE>

                                                                  EXHIBIT (2)(b)

officer of the Corporation may resign at any time by giving written notice of
his or her resignation to the Board of Directors, the Chairman of the Board, the
President or the Secretary. Any resignation shall take effect at any time
subsequent to the time specified therein or, if the time when it shall become
effective is not specified therein, immediately upon its receipt. The acceptance
of a resignation shall not be necessary to make it effective unless otherwise
stated in the resignation. Such resignation shall be without prejudice to the
contract rights, if any, of the Corporation.

         Section 3. Vacancies. A vacancy in any office may be filled by the
Board of Directors for the balance of the term.

         Section 4. Chairman of the Board. The Board of Directors shall
designate a Chairman of the Board. The Chairman of the Board shall preside over
the meetings of the Board of Directors and of the stockholders at which he or
she shall be present. The Chairman of the Board shall perform such other duties
as may be assigned to him or her by the Board of Directors.

         Section 5. Chief Executive Officer. The Board of Directors may
designate a Chief Executive Officer. In the absence of such designation, the
Chairman of the Board shall be the Chief Executive Officer of the Corporation.
The Chief

<PAGE>

                                                                  EXHIBIT (2)(b)

Executive Officer shall have general responsibility for implementation
of the policies of the Corporation, as determined by the Board of Directors, and
for the management of the business and affairs of the Corporation. He or she may
execute any deed, mortgage, bond, contract or other instrument, except in cases
where the execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation
or shall be required by law to be otherwise executed.

         Section 6. President. The President shall have the responsibilities and
duties as set forth by the Board of Directors or, in the event that the offices
of Chief Executive Officer and President are not held by the same person, the
Chief Executive Officer.

         Section 7. Chief Operating Officer. The Board of Directors may
designate a Chief Operating Officer. The Chief Operating Officer shall have the
responsibilities and duties as set forth by the Board of Directors or the Chief
Executive Officer.

         Section 8. Chief Financial Officer. The Board of Directors may
designate a Chief Financial Officer. The Chief Financial Officer shall have the
responsibilities and duties as

<PAGE>

                                                                  EXHIBIT (2)(b)

set forth by the Board of Directors or the Chief Executive Officer.

         Section 9. Vice Presidents. In the absence of the Chief Executive
Officer and the President or in the event of a vacancy in such office, the Vice
President (or in the event there be more than one Vice President, the Vice
Presidents in the order designated at the time of their election or, in the
absence of any designation, then in the order of their election) shall perform
the duties of the Chief Executive Officer and the President and when so acting
shall have all the powers of and be subject to all the restrictions upon the
Chief Executive Officer and the President; and shall perform such other duties
as from time to time may be assigned to him by the President or by the Board of
Directors. The Board of Directors or the Chief Executive Officer may designate
one or more Vice Presidents as executive Vice President or as Vice President for
particular areas of responsibility.

         Section 10. Secretary. The Secretary shall (a) keep the minutes of the
proceedings of the stockholders, the Board of Directors and committees of the
Board of Directors in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these Bylaws or

<PAGE>

                                                                  EXHIBIT (2)(b)

as required by law; (c) be custodian of the corporate records and of the seal of
the Corporation; (d) keep a register of the post office address of each
stockholder which shall be furnished to the Secretary by such stockholder; (e)
have general charge of the share transfer books of the Corporation; and (f) in
general perform such other duties as from time to time may be assigned to him by
the Chief Executive Officer, the President or by the Board of Directors.

         Section 11. Treasurer. The Treasurer shall have the custody of the
funds and securities of the Corporation and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors.

         The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and Board of Directors, at the
regular meetings of the Board of Directors or whenever it may so require, an
account of all his or her transactions as Treasurer and of the financial
condition of the Corporation.

<PAGE>

                                                                  EXHIBIT (2)(b)

         If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his or her office and for the restoration to the Corporation, in case
of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, moneys and other property of whatever kind in his or
her possession or under his or her control belonging to the Corporation.

         Section 12. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or Treasurer, respectively,
or by the Chief Executive Officer or the Board of Directors. The Assistant
Treasurers shall, if required by the Board of Directors, give bonds for the
faithful performance of their duties in such sums and with such surety or
sureties as shall be satisfactory to the Board of Directors.

                  Section 13. Salaries. The salaries and other compensation of
the officers shall be fixed from time to time by the Board of Directors and no
officer shall be prevented from receiving such salary or other compensation by
reason of the fact that he or she is also a director.

<PAGE>

                                                                  EXHIBIT (2)(b)

                                   ARTICLE VI

                      Contracts, Loans, Checks and Deposits

         Section 1. Contracts. The Board of Directors may authorize any
officer or agent to enter into any contract or to execute and deliver any
instrument in the name of and on behalf of the Corporation and such authority
may be general or confined to specific instances. Any agreement, deed, mortgage,
lease or other document executed by one or more of the directors or by an
authorized person shall be valid and binding upon the Board of Directors and
upon the Corporation when authorized or ratified by action of the Board of
Directors.

         Section 2. Checks and Drafts. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or agent of the
Corporation in such manner as shall from time to time be determined by the Board
of Directors.

         Section 3. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may designate.

                                   ARTICLE VII

<PAGE>

                                                                  EXHIBIT (2)(b)

                                      Stock

         Section 1. Certificates for Shares. Each stockholder shall be entitled
to a certificate or certificates which shall represent and certify the number of
shares of each class of stock held by him in the Corporation. Each certificate
shall be signed by the Chief Executive Officer, the President or a Vice
President and countersigned by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer and may be sealed with the seal, if any, of
the Corporation. The signatures may be either manual or facsimile. Certificates
shall be consecutively numbered; and if the Corporation shall, from time to
time, issue several classes of stock, each class may have its own number series.
A certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. Each certificate representing shares
which are restricted as to their transferability or voting powers, which are
preferred or limited as to their dividends or as to their allocable portion of
the assets upon liquidation or which are redeemable at the option of the
Corporation, shall have a statement of such restriction, limitation, preference
or redemption provision, or a summary thereof, plainly stated on the
certificate. If the Corporation has authority to issue stock of more than one
class, the certificate shall contain on the face or back a full statement or

<PAGE>

                                                                  EXHIBIT (2)(b)

summary of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption of each
class of stock and, if the Corporation is authorized to issue any preferred or
special class in series, the differences in the relative rights and preferences
between the shares of each series to the extent they have been set and the
authority of the Board of Directors to set the relative rights and preferences
of subsequent series. In lieu of such statement or summary, the certificate may
state that the Corporation will furnish a full statement of such information to
any stockholder upon request and without charge. If any class of stock is
restricted by the Corporation as to transferability, the certificate shall
contain a full statement of the restriction or state that the Corporation will
furnish information about the restrictions to the stockholder on request and
without charge.

                  Section 2. Transfers of Shares. Shares of the Corporation
shall be transferable on the books of the Corporation by the holder thereof in
person or by the person's duly authorized attorney or legal representative, upon
surrender and cancellation of certificates, if any, for the same number of
shares, duly endorsed or accompanied by proper instruments of assignment and
transfer, with such proof of the authenticity of

<PAGE>

                                                                  EXHIBIT (2)(b)

the signature as the Corporation or its agents may reasonably require; in the
case of shares not represented by certificates, the same or similar requirements
may be imposed by the Board of Directors. The Corporation shall be entitled to
treat the holder of record of any share of stock as the holder in fact thereof
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such share or on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Maryland.

         Notwithstanding the foregoing, transfers of shares of any class of
stock will be subject in all respects to the charter of the Corporation and all
of the terms and conditions contained therein.

         Section 3. Stock Ledgers. An original or duplicate stock ledger of the
Corporation, containing the names and addresses of the stockholders and the
number of shares held by them respectively, shall be maintained at the principal
offices of the Corporation or, if the Corporation employs a Transfer Agent, at
the offices of the Transfer Agent of the Corporation.

         Section 4. Lost, Stolen or Destroyed Certificates. Any officer
designated by the Board of Directors may direct a new certificate to be issued
in place of any certificate previously

<PAGE>

                                                                  EXHIBIT (2)(b)

issued by the Corporation alleged to have been lost, stolen or destroyed upon
the making of an affidavit of that fact by the person claiming the certificate
to be lost, stolen or destroyed. When authorizing the issuance of a new
certificate, an officer designated by the Board of Directors may, in his or her
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or the owner's legal
representative to advertise the same in such manner as he or she shall require
and/or to give bond, with sufficient surety, to the Corporation to indemnify it
against any loss or claim which may arise as a result of the issuance of a new
certificate.

         Section 5. Closing of Transfer Books or Fixing of Record Date. The
Board of Directors may set, in advance, a record date for the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or determining stockholders entitled to receive payment of any
dividend or the allotment of any other rights, or in order to make a
determination of stockholders for any other proper purpose. Such date, in any
case, shall not be prior to the close of business on the day the record date is
fixed and shall be not more than 90 days and, in the case of a meeting of
stockholders, not less than ten days, before the date on which the meeting or

<PAGE>

                                                                  EXHIBIT (2)(b)

particular action requiring such determination of stockholders of record is to
be held or taken.

         In lieu of fixing a record date, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not longer
than 20 days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days before the date
of such meeting.

         If no record date is fixed and the stock transfer books are not closed
for the determination of stockholders, (a) the record date for the determination
of stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day on which the notice of meeting is
mailed or the 30th day before the meeting, whichever is the closer date to the
meeting, and (b) the record date for the determination of stockholders entitled
to receive payment of a dividend or an allotment of any other rights shall be
the close of business on the day on which the resolution of the directors,
declaring the dividend or allotment of rights, is adopted.

         When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination shall
apply to any adjournment

<PAGE>

                                                                  EXHIBIT (2)(b)

thereof, except when (i) the determination has been made through the closing of
the transfer books and the stated period of closing has expired or (ii) the
meeting is adjourned to a date more than 120 days after the record date fixed
for the original meeting, in either of which case a new record date shall be
determined as set forth herein.

         Section 6. Fractional Stock; Issuance of Units. The Board of Directors
may issue fractional stock or provide for the issuance of scrip, all on such
terms and under such conditions as they may determine. Notwithstanding any other
provision of the charter or these Bylaws, the Board of Directors may issue units
consisting of different securities of the Corporation. Any security issued in a
unit shall have the same characteristics as any identical securities issued by
the Corporation, except that the Board of Directors may provide that for a
specified period securities of the Corporation issued in such unit may be
transferred on the books of the Corporation only in such unit.

                                  ARTICLE VIII

                                 Corporate Seal

         Section 1. In General. The Board of Directors may provide for a
suitable corporate seal, in such form and bearing such inscriptions as it may
determine.

<PAGE>

                                                                  EXHIBIT (2)(b)

         Section 2. Affixing Seal. Whenever the Corporation is permitted or
required to affix its seal to a document, it shall be sufficient to meet the
requirements of any law, rule or regulation relating to a seal to place the word
"(SEAL)" adjacent to the signature of the person authorized to execute the
document on behalf of the Corporation.

                                   ARTICLE IX

                                   Fiscal Year

                  The Board of Directors shall have the power, from time to
time, to fix the fiscal year of the Corporation by a duly adopted resolution.

                                    ARTICLE X

                                  Distributions

         Section 1. Authorization. Dividends and other distributions upon the
stock of the Corporation may be authorized by the Board of Directors, subject to
the provisions of law and the charter of the Corporation. Dividends and other
distributions may be paid in cash, property or stock of the Corporation, subject
to the provisions of law and the charter.

         Section 2. Contingencies. Before payment of any dividends or other
distributions, there may be set aside out of any assets of the Corporation
available for dividends or other

<PAGE>

                                                                  EXHIBIT (2)(b)

distributions such sum or sums as the Board of Directors may from time to time,
in its absolute discretion, think proper as a reserve fund for contingencies,
for equalizing dividends or other distributions, for repairing or maintaining
any property of the Corporation or for such other purpose as the Board of
Directors shall determine to be in the best interest of the Corporation, and the
Board of Directors may modify or abolish any such reserve in the manner in which
it was created.

                                   ARTICLE XI

                                Waiver of Notice

         Whenever any notice is required to be given pursuant to the charter of
the Corporation or these Bylaws or pursuant to applicable law, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at nor the purpose
of any meeting need be set forth in the waiver of notice, unless specifically
required by statute. The attendance of any person at any meeting shall
constitute a waiver of notice of such meeting, except where such person attends
a meeting for the express purpose of objecting to the transaction of any
business

<PAGE>

                                                                  EXHIBIT (2)(b)

on the ground that the meeting is not lawfully called or convened.

                                   ARTICLE XII

                                 Indemnification

         The Corporation shall indemnify to the fullest extent permitted by law
(including the Investment Company Act) as currently in effect or as the same may
hereafter be amended, any person made or threatened to be made a party to any
action, suit or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that such person or such person's testator
or intestate is or was a director or officer of the Corporation or serves or
served at the request of the Corporation any other enterprise as a director or
officer. To the fullest extent permitted by law (including the Investment
Company Act) as currently in effect or as the same may hereafter be amended,
expenses incurred by any such person in defending any such action, suit or
proceeding shall be paid or reimbursed by the Corporation promptly upon receipt
by it of an undertaking of such person to repay such expenses if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Corporation. The rights provided to any person by this

<PAGE>

                                                                  EXHIBIT (2)(b)

Article XII shall be enforceable against the Corporation by such person who
shall be presumed to have relied upon it in serving or continuing to serve as a
director or officer as provided above. No amendment of this Article XII shall
impair the rights of any person arising at any time with respect to events
occurring prior to such amendment. For purposes of this Article XII, the term
"Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger; the term "other enterprise" shall
include any corporation, partnership, joint venture, trust or employee benefit
plan; service "at the request of the Corporation" shall include service as a
director or officer of the Corporation which imposes duties on, or involves
services by, such director or officer with respect to an employee benefit plan,
its participants or beneficiaries; any excise taxes assessed on a person with
respect to an employee benefit plan shall be deemed to be indemnifiable
expenses; and action by a person with respect to any employee benefit plan which
such person reasonably believes to be in the interest of the participants and
beneficiaries of such plan shall be deemed to be action not opposed to the best
interests of the Corporation.

<PAGE>

                                                                  EXHIBIT (2)(b)

                                  ARTICLE XIII

                                    Custodian

                  Section 1. In General. The Corporation shall have as custodian
or custodians (including any sub-custodian) one or more trust companies or banks
of good standing which shall conform to the requirements of Section 17(f) of the
Investment Company Act and the rules promulgated thereunder. To the extent
required by the Investment Company Act and the rules promulgated thereunder, the
funds and securities held by the Corporation shall be kept in the custody of one
or more such custodians (and any sub-custodian), provided such custodian or
custodians (and any sub-custodian) can be found ready and willing to act.

         Section 2. Resignation, Change or Inability to Serve. The Corporation
shall upon the resignation, change or inability to serve of its custodian (and
any sub-custodian):

               (i) in case of such resignation or inability to serve, use its
      best efforts to obtain a successor custodian;

               (ii) require that the cash and securities owned by the
      Corporation be delivered directly to the successor custodian; and

               (iii) in the event that no successor custodian can be found,
      submit to the stockholders

<PAGE>

                                                                  EXHIBIT (2)(b)

      before permitting delivery of the cash and securities owned by the
      Corporation otherwise than to a successor custodian, the question whether
      or not this Corporation shall be liquidated or shall function without a
      custodian.

                                   ARTICLE XIV

                               Amendment of Bylaws

         The Bylaws of the Corporation may be altered, amended, added to or
repealed by a majority vote of the entire Board of Directors; the power to
alter, amend, add to or repeal the Bylaws is vested exclusively in the Board of
Directors.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.G.1
<SEQUENCE>9
<FILENAME>y93068a1exv99wgw1.txt
<DESCRIPTION>MANAGEMENT AGREEMENT
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(g)(1)

                              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

<PAGE>


                                                               EXHIBIT (2)(g)(1)

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

<PAGE>

                                                               EXHIBIT (2)(g)(1)

..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-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.

<PAGE>

                                                               EXHIBIT (2)(g)(1)

         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

<PAGE>

                                                               EXHIBIT (2)(g)(1)

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 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

<PAGE>

                                                               EXHIBIT (2)(g)(1)

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.

<PAGE>

                                                               EXHIBIT (2)(g)(1)

         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.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.G.2
<SEQUENCE>10
<FILENAME>y93068a1exv99wgw2.txt
<DESCRIPTION>INVESTMENT ADVISORY AGREEMENT
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(g)(2)

                         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

<PAGE>

                                                               EXHIBIT (2)(g)(2)

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.

<PAGE>

                                                               EXHIBIT (2)(g)(2)

         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

<PAGE>

                                                               EXHIBIT (2)(g)(2)

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.

<PAGE>

                                                               EXHIBIT (2)(g)(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

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.H.1
<SEQUENCE>11
<FILENAME>y93068a1exv99whw1.txt
<DESCRIPTION>FORM OF DEALER MANAGEMENT AGREEMENT
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(h)(1)

                         [    ] Shares of Common Stock
                        Issuable Upon Exercise of Rights
                          to Subscribe for such Shares

                            DEALER MANAGER AGREEMENT

                                                              New York, New York
                                                                     , 2004

UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026

Ladies and Gentlemen:

                  Each of The Central Europe and Russia Fund, Inc., a Maryland
corporation (the "Fund"), and Deutsche Bank Securities, Inc., a Delaware
corporation (the "Investment Manager"), hereby confirms the agreement with and
appointment of UBS Securities LLC to act as dealer manager (the "Dealer
Manager") in connection with the issuance by the Fund to the holders of record
(the "Holders") at the close of business on the record date set forth in the
Prospectus (as defined herein) (the "Record Date") transferable rights entitling
such Holders to subscribe for up to [__________] shares (each a "Share" and,
collectively, the "Shares") of the Fund's common stock, par value $0.01 per
share (the "Common Shares"), of the Fund (the "Offer"). Pursuant to the terms of
the Offer, the Fund is issuing each Holder one transferable right (each a
"Right" and, collectively, the "Rights") for each Common Share held by such
Holder on the Record Date. Such Rights entitle holders to acquire during the
subscription period set forth in the Prospectus (the "Subscription Period"), at
the price set forth in such Prospectus (the "Subscription Price"), one Share for
each three Rights exercised (except that any Holder who is issued fewer than
three Rights will be able to subscribe for one full Share pursuant to the
primary subscription), on the terms and conditions set forth in such Prospectus.
No fractional

<PAGE>

shares will be issued. Any Holder who fully exercises all Rights initially
issued to such Holder (other than those Rights that cannot be exercised because
they represent the right to acquire less than one Share) will be entitled to
subscribe for, subject to allocation, additional Shares (the "Over-Subscription
Privilege") on the terms and conditions set forth in the Prospectus. The Rights
are transferable and are expected to be listed on the New York Stock Exchange,
Inc. under the symbol "CEE.RT".

                  The Fund has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form N-2 (Nos. 333-111828 and
811-06041) and a related preliminary prospectus and preliminary statement of
additional information under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations of the Commission under the
Investment Company Act and the Securities Act (the "Rules and Regulations"), and
has filed such amendments to such registration statement on Form N-2, if any,
and such amended preliminary prospectuses and preliminary statements of
additional information as may have been required to the date hereof. If the
registration statement has not become effective, a further amendment to such
registration statement, including forms of a final prospectus and final
statement of additional information necessary to permit such registration
statement to become effective will promptly be filed by the Fund with the
Commission. If the registration statement has become effective and any
prospectus or statement of additional information contained therein omits
certain information at the time of effectiveness pursuant to Rule 430A of the
Rules and Regulations, a final prospectus and final statement of additional
information containing such omitted information will promptly be filed by the
Fund with the Commission in accordance with Rule 497(h) of the Rules and
Regulations. The term "Registration Statement" means the registration statement,
as amended, at the time it becomes or became effective, including financial
statements and all exhibits and all documents, if any, incorporated therein by
reference, and any information deemed to be included by Rule 430A. The term
"Prospectus" means the final prospectus and final statement of additional
information in the forms filed with the Commission pursuant to Rule 497(c), (e),
(h) or (j) of the Rules and Regulations, as the case may be, as from time to
time amended or supplemented pursuant to the Securities Act.

                  The Prospectus and letters to owners of Common Shares of the
Fund, subscription certificates and other forms used to exercise rights,
brochures, wrappers, any letters from the Fund to securities dealers, commercial
banks and other nominees and any newspaper announcements, press releases and
other offering materials and information that the Fund may use, approve, prepare
or authorize for use in

                                        2

<PAGE>

connection with the Offer, are collectively referred to hereinafter as the
"Offering Materials".

1.       Representations and Warranties.

         a.       Each of the Fund and the Investment Manager represents and
                  warrants to, and agrees with, the Dealer Manager as of the
                  date hereof, as of the date of the commencement of the Offer
                  (such later date being hereinafter referred to as the
                  "Representation Date") and as of the Expiration Date (as
                  defined below) that:

                  i.       The Fund meets the requirements for use of Form N-2
                           under the Securities Act and the Investment Company
                           Act and the Rules and Regulations. At the time the
                           Registration Statement became or becomes effective,
                           the Registration Statement did or will contain all
                           statements required to be stated therein in
                           accordance with and did or will comply in all
                           material respects with the requirements of the
                           Securities Act, the Investment Company Act and the
                           Rules and Regulations and did not or will not contain
                           an untrue statement of a material fact or omit to
                           state any material fact required to be stated therein
                           or necessary to make the statements therein not
                           misleading. From the time the Registration Statement
                           became or becomes effective through the expiration
                           date of the Offer set forth in the Prospectus, as it
                           may be extended as provided in the Prospectus (the
                           "Expiration Date"), the Prospectus and the other
                           Offering Materials will not contain an untrue
                           statement of a material fact or omit to state any
                           material fact required to be stated therein or
                           necessary in order to make the statements therein, in
                           the light of the circumstances under which they were
                           made, not misleading; provided, however, that the
                           representations and warranties in this subsection
                           shall not apply to statements in or omissions from
                           the Registration Statement, Prospectus or Offering
                           Materials made in reliance upon and in conformity
                           with information relating to the Dealer Manager
                           furnished to the Fund in writing by the Dealer
                           Manager expressly for use in the Registration
                           Statement, Prospectus or Offering Materials.

                  ii.      The Fund has been duly incorporated and is validly
                           existing as

                                       3

<PAGE>

                           a corporation in good standing under the laws of the
                           State of Maryland, has full corporate power and
                           authority to conduct its business as described in the
                           Registration Statement and the Prospectus, and is
                           duly qualified to do business in each jurisdiction
                           wherein it owns or leases real property or in which
                           the conduct of its business requires such
                           qualification, except where the failure to be so
                           qualified does not involve a material adverse effect
                           upon the Fund's business, properties, financial
                           position or results of operations. The Fund has no
                           subsidiaries.

                  iii.     The Fund is duly registered with the Commission under
                           the Investment Company Act as a closed-end,
                           non-diversified management investment company, no
                           order of suspension or revocation of such
                           registration has been issued or proceedings therefor
                           initiated or, to the best of its knowledge,
                           threatened by the Commission, and the provisions of
                           the Fund's articles of incorporation and by-laws
                           comply as to form in all material respects with the
                           requirements of the Investment Company Act and the
                           Rules and Regulations.

                  iv.      PricewaterhouseCoopers LLP, the accountants who
                           certified the financial statements of the Fund set
                           forth or incorporated by reference in the
                           Registration Statement and the Prospectus, are
                           independent public accountants as required by the
                           Investment Company Act and the Rules and Regulations.

                  v.       The financial statements of the Fund set forth or
                           incorporated by reference in the Registration
                           Statement and the Prospectus present fairly in all
                           material respects the financial condition of the Fund
                           as of the dates or for the periods indicated in
                           conformity with generally accepted accounting
                           principles applied on a consistent basis; and the
                           information set forth in the Prospectus under the
                           headings "Fee Table" and "Financial Highlights"
                           presents fairly in all material respects the
                           information stated therein.

                  vi.      The Fund has an authorized capitalization as set
                           forth in the Prospectus; the outstanding Common
                           Shares have been duly authorized and are validly
                           issued, fully paid and non-assessable

                                       4

<PAGE>

                           and conform in all material respects to the
                           description thereof in the Prospectus under the
                           heading "Description of Common Stock"; the Rights
                           have been duly authorized by all requisite action on
                           the part of the Fund for issuance pursuant to the
                           Offer; the Shares have been duly authorized by all
                           requisite action on the part of the Fund for issuance
                           and sale pursuant to the terms of the Offer and, when
                           issued and delivered by the Fund upon exercise of the
                           Rights pursuant to the terms of the Offer against
                           payment of the consideration set forth in the
                           Prospectus, will be validly issued, fully paid and
                           non-assessable; the Shares and the Rights conform in
                           all material respects to the descriptions thereof
                           contained in the Registration Statement, the
                           Prospectus and the other Offering Materials; and the
                           issuance of each of the Rights and the Shares is not
                           subject to any preemptive rights.

                  vii.     Except as set forth in the Prospectus, subsequent to
                           the respective dates as of which information is given
                           in the Registration Statement and the Prospectus, (A)
                           the Fund has not incurred any liabilities or
                           obligations, direct or contingent, other than in the
                           ordinary course of investment operations, that are
                           material to the Fund, (B) there has not been any
                           material change in the Common Shares or long-term
                           debt of the Fund, or any material adverse change, or
                           any development involving a prospective material
                           adverse change, in the condition (financial or
                           other), business, prospects, net worth or results of
                           operations of the Fund (excluding fluctuations in the
                           Fund's net asset value due to investment activities
                           in the ordinary course of operations, and changes in
                           the market price per share of the Common Shares and
                           discount or premium of such market price per share to
                           net asset value per share) and (C) except for the
                           dividend on the outstanding Common Shares declared on
                           December 22, 2003 and payable to holders of record on
                           December [ ], 2003, there have been no dividends or
                           distributions paid or declared in respect of the
                           Fund's Common Shares.

                  viii.    This agreement (the "Agreement") has been duly
                           authorized, executed and delivered by the Fund. Each
                           of the Subscription Agency Agreement (the
                           "Subscription Agency Agreement")

                                       5

<PAGE>
                           dated as of [    ], 2004 between the Fund and [     ]
                           (the "Subscription Agent"), the Information Agent
                           Agreement (the "Information Agent Agreement") dated
                           as of [     ], 2004 between the Fund and [     ] (the
                           "Information Agent"), the Management Agreement dated
                           as of January 31, 1990 between the Fund and the
                           Investment Manager (the "Investment Management
                           Agreement"), the Investment Advisory Agreement dated
                           as of January 31, 1990 between the Fund and Deutsche
                           Asset Management International GmbH, the investment
                           adviser (the "Investment Adviser") for the Fund ("the
                           Investment Advisory Agreement"), the Amended and
                           Restated Custodian Agreement dated as of July 23,1993
                           between the Fund and Investors Bank & Trust Company
                           (the "Custodian Agreement"), and the Transfer Agency
                           and Service Agreement dated as of July 23, 1993
                           between the Fund and Investors Bank & Trust Company
                           (the "Transfer Agency Agreement") (collectively, all
                           the foregoing agreements set forth in this sentence
                           are the "Fund Agreements"), has been duly authorized,
                           executed and delivered by the Fund; each of the Fund
                           Agreements complies with all applicable provisions of
                           the Investment Company Act, the Investment Advisers
                           Act of 1940, as amended (the "Advisers Act") and the
                           rules and regulations under such Acts; and, assuming
                           due authorization, execution and delivery by the
                           other parties thereto, each of the Fund Agreements
                           constitutes a legal, valid, binding and enforceable
                           obligation of the Fund, subject to the qualification
                           that the enforceability of the Fund's obligations
                           thereunder may be limited by bankruptcy, insolvency,
                           reorganization, moratorium and similar laws of
                           general applicability relating to or affecting
                           creditors' rights, to general principles of equity
                           (regardless of whether enforceability is considered
                           in a proceeding in equity or at law) and, in the case
                           of the Investment Management Agreement and the
                           Investment Advisory Agreement, to termination under
                           the Investment Company Act.

                  ix.      Neither the issuance of the Rights, nor the issuance
                           and sale of the Shares pursuant to exercise of the
                           Rights, nor the execution, delivery, performance and
                           consummation by the Fund of any other of the
                           transactions contemplated in the Fund Agreements, nor
                           the consummation of the transactions contemplated in
                           this Agreement or in the Registration Statement

                                       6

<PAGE>

                           nor the fulfillment of the terms hereof or thereof
                           will conflict with or violate the articles of
                           incorporation or by-laws of the Fund, or conflict
                           with, result in a breach or violation of, or
                           constitute a default or an event of default under, or
                           result in the creation or imposition of any lien,
                           charge or encumbrance upon any properties or assets
                           of the Fund under the articles of incorporation or
                           by-laws of the Fund, or under the terms and
                           provisions of any material agreement, indenture,
                           mortgage, loan agreement, note, insurance or surety
                           agreement, lease or other instrument to which the
                           Fund is a party or by which it may be bound or to
                           which any of the property or assets of the Fund is
                           subject, nor will such action result in any violation
                           of any order, law, rule or regulation of any court or
                           governmental agency or body having jurisdiction over
                           the Fund or any of its properties.

                  x.       Except as set forth in the Registration Statement,
                           there is no pending or, to the knowledge of the Fund
                           or the Investment Manager, threatened action, suit or
                           proceeding affecting the Fund or to which the Fund is
                           a party before or by any court or governmental
                           agency, authority or body or any arbitrator which
                           might result in any material adverse change in the
                           condition (financial or other), business prospects,
                           net worth or operations of the Fund, or which might
                           materially and adversely affect the properties or
                           assets thereof of a character required to be
                           disclosed in the Registration Statement or the
                           Prospectus.

                  xi.      There are no franchises, contracts or other documents
                           of the Fund that are material or otherwise required
                           to be described in the Registration Statement or the
                           Prospectus, or to be filed or incorporated by
                           reference as exhibits which are not described or
                           filed or incorporated by reference therein as
                           permitted by the Securities Act, the Investment
                           Company Act or the Rules and Regulations.

                  xii.     No consent, approval, authorization, notification or
                           order of, or filing with, or the issuance of any
                           license or permit by, any court or governmental
                           agency or body is required for the consummation by
                           the Fund of the transactions contemplated

                                       7

<PAGE>

                           by this Agreement, the Subscription Agency Agreement,
                           the Rights and the Offer or the Registration
                           Statement, except such as have been obtained, or if
                           the registration statement filed with respect to the
                           Shares is not effective under the Securities Act as
                           of the time of execution hereof, such as may be
                           required (and shall be obtained as provided in this
                           Agreement) under the Investment Company Act, the
                           Securities Act and the Securities Exchange Act of
                           1934, as amended (the "Exchange Act"), or by the
                           National Association of Securities Dealers, Inc., the
                           New York Stock Exchange or the Frankfurt Stock
                           Exchange.

                  xiii.    The Common Shares have been duly listed on the New
                           York Stock Exchange and prior to their issuance the
                           Shares and the Rights will have been duly approved
                           for listing, subject to official notice of issuance,
                           on the New York Stock Exchange.

                  xiv.     The Fund (A) has not taken, directly or indirectly,
                           any action designed to cause or to result in, or that
                           has constituted or which might reasonably be expected
                           to constitute, the stabilization or manipulation of
                           the price of any security of the Fund to facilitate
                           the issuance of the Rights or the sale or resale of
                           the Rights and the Shares, (B) has not since the
                           filing of the Registration Statement sold, bid for or
                           purchased, or paid anyone any compensation for
                           soliciting purchases of, Common Shares of the Fund
                           (except for the solicitation of exercises of the
                           Rights pursuant to this Agreement) and (C) will not,
                           until the later of the expiration of the Rights or
                           the completion of the distribution (within the
                           meaning of the anti-manipulation rules under the
                           Exchange Act) of the Shares, sell, bid for or
                           purchase, pay or agree to pay to any person any
                           compensation for soliciting another to purchase any
                           other securities of the Fund (except for the
                           solicitation of exercises of the Rights pursuant to
                           this Agreement); provided that any action in
                           connection with the Fund's dividend reinvestment and
                           cash purchase plan will not be deemed to be within
                           the terms of this Section 1.a.xiv.

                  xv.      The Fund has complied in all previous tax years,
                           except for tax years for which the applicable statute
                           of limitations has

                                       8

<PAGE>

                           expired, and intends to direct the investment of the
                           proceeds of the offering described in the
                           Registration Statement and the Prospectus in such a
                           manner as to continue to comply, with the
                           requirements of Subchapter M of the Internal Revenue
                           Code of 1986, as amended ("Subchapter M of the
                           Code"), and has qualified and intends to continue to
                           qualify as a regulated investment company under
                           Subchapter M of the Code.

                  xvi.     The Fund has complied in the last five years, and
                           intends to direct the investment of the proceeds of
                           the offering described in the Registration Statement
                           and the Prospectus in such a manner as to continue to
                           comply, with the asset coverage and other applicable
                           requirements of the Investment Company Act.

                                       9

<PAGE>

         b.       The Investment Manager represents and warrants to, and agrees
                  with, the Dealer Manager as of the date hereof, as of the
                  Representation Date and as of the Expiration Date that:

                  i.       The Investment Manager has been duly incorporated and
                           is validly existing as a corporation in good standing
                           under the laws of the State of Delaware, has full
                           power and authority (corporate and other) to own its
                           properties and conduct its business as described in
                           the Registration Statement and the Prospectus, and is
                           duly qualified to do business as a foreign
                           corporation in each jurisdiction wherein it owns or
                           leases real property or in which the conduct of its
                           business requires such qualification, except where
                           the failure to be so qualified does not involve a
                           material adverse effect upon the Investment Manager's
                           business, properties, financial position or
                           operations.

                  ii.      The Investment Manager is duly registered as an
                           investment adviser under the Advisers Act, and is not
                           prohibited by the Advisers Act or the Investment
                           Company Act, or the rules and regulations under such
                           Acts, from acting as investment adviser for the Fund
                           as contemplated in the Prospectus and the Investment
                           Management Agreement.

                  iii.     This Agreement has been duly authorized, executed and
                           delivered by the Investment Manager. The Investment
                           Management Agreement has been duly authorized,
                           executed and delivered by the Investment Manager, and
                           complies with all applicable provisions of the
                           Investment Company Act, the Advisers Act and the
                           rules and regulations under such Acts, and is,
                           assuming due authorization, execution and delivery by
                           the other party thereto, a legal, valid, binding and
                           enforceable obligation of the Investment Manager,
                           subject to the qualification that the enforceability
                           of the Investment Manager's obligations thereunder
                           may be limited by bankruptcy, insolvency,
                           reorganization, moratorium and similar laws of
                           general applicability relating to or affecting
                           creditors' rights, to general principles of equity
                           (regardless of whether enforceability is considered
                           in a proceeding in equity or at law) and to
                           termination under the Investment Company Act.

                                       10

<PAGE>

                  iv.      Neither the execution, delivery, performance and
                           consummation by the Investment Manager of its
                           obligations under this Agreement or the Investment
                           Management Agreement nor the consummation of the
                           transactions contemplated herein or therein or in the
                           Registration Statement nor the fulfillment of the
                           terms thereof will conflict with or violate the
                           certificate of incorporation or by-laws of the
                           Investment Manager, or conflict with, result in a
                           breach or violation of, or constitute a default or an
                           event of default under, or result in the creation or
                           imposition of any lien, charge or encumbrance upon
                           any properties or assets of the Investment Manager
                           under its certificate of incorporation or by-laws,
                           the terms and provisions of any material agreement,
                           indenture, mortgage, loan agreement, note, insurance
                           or surety agreement, lease or other instrument to
                           which the Investment Manager is a party or by which
                           it may be bound or to which any of the property or
                           assets of the Investment Manager is subject, nor will
                           such action result in any violation of any order,
                           law, rule or regulation of any court or governmental
                           agency or body having jurisdiction over the
                           Investment Manager or any of its properties.

                  v.       There is no pending or, to the best of the Investment
                           Manager's knowledge, threatened action, suit or
                           proceeding affecting the Investment Manager or to
                           which the Investment Manager is a party before or by
                           any court or governmental agency, authority or body
                           or any arbitrator which would disqualify the
                           Investment Manager pursuant to Section 9(a) of the
                           Investment Company Act from acting as investment
                           adviser to the Fund or is otherwise reasonably likely
                           to result in any material adverse change in the
                           Investment Manager's ability to perform its services
                           under the Investment Management Agreement.

                  vi.      No consent, approval, authorization, notification or
                           order of, or filing with, or the issuance of any
                           license or permit by, any court or governmental
                           agency or body is required for the consummation by
                           the Investment Manager of the transactions
                           contemplated by this Agreement or the Investment
                           Management Agreement to be consummated by the

                                       11

<PAGE>

                           Investment Manager except such as have been obtained,
                           or if the registration statement filed with respect
                           to the Shares is not effective under the Securities
                           Act as of the time of execution hereof, such as may
                           be required (and shall be obtained as provided in
                           this Agreement) under the Investment Company Act, the
                           Securities Act and the Securities Exchange Act of
                           1934, as amended (the "Exchange Act"), or by the
                           National Association of Securities Dealers, Inc., the
                           New York Stock Exchange or the Frankfurt Stock
                           Exchange.

                  vii.     The Investment Manager (A) has not taken, directly or
                           indirectly, any action designed to cause or to result
                           in, or that has constituted or which might reasonably
                           be expected to constitute, the stabilization or
                           manipulation of the price of any security of the Fund
                           to facilitate the issuance of the Rights or the sale
                           or resale of the Rights and the Shares, (B) has not
                           since the filing of the Registration Statement sold,
                           bid for or purchased, or paid anyone any compensation
                           for soliciting purchases of, Common Shares of the
                           Fund (except for the solicitation of exercises of the
                           Rights pursuant to this Agreement) and (C) will not,
                           until the later of the expiration of the Rights or
                           the completion of the distribution (within the
                           meaning of the anti-manipulation rules under the
                           Exchange Act) of the Shares, sell, bid for or
                           purchase, pay or agree to pay any person any
                           compensation for soliciting another to purchase any
                           other securities of the Fund (except for the
                           solicitation of exercises of the Rights pursuant to
                           this Agreement); provided that any action in
                           connection with the Fund's dividend reinvestment and
                           cash purchase plan will not be deemed to be within
                           the terms of this Section 1.b.vii.

                                       12

<PAGE>

         c.       Any certificate required by this Agreement that is signed by
                  any officer of the Fund on behalf of the Fund or the
                  Investment Manager on behalf of the Investment Manager and
                  delivered to the Dealer Manager or counsel for the Dealer
                  Manager shall be deemed a representation and warranty by the
                  Fund or the Investment Manager, as the case may be, to the
                  Dealer Manager, as to the matters covered thereby.

2.       Agreement to Act as Dealer Manager.

         a.       On the basis of the representations and warranties contained
                  herein, and subject to the terms and conditions of the Offer:

                  i.       The Fund hereby appoints the Dealer Manager to
                           solicit the exercise of Rights and authorizes the
                           Dealer Manager to sell Shares purchased by the Dealer
                           Manager from the Fund though the exercise of Rights
                           as described herein; the Fund hereby authorizes the
                           Dealer Manager to form and manage a group of selling
                           broker-dealers (each a "Selling Group Member" and
                           collectively the "Selling Group") that enter into a
                           Selling Group Agreement with the Dealer Manager in
                           the form attached hereto as Exhibit A to solicit the
                           exercise of Rights and to sell Shares purchased by
                           the Selling Group Member from the Dealer Manager as
                           described herein; and the Fund hereby authorizes
                           other soliciting broker-dealers (each a "Soliciting
                           Dealer" and collectively the "Soliciting Dealers")
                           that enter into a Soliciting Dealer Agreement with
                           the Dealer Manager in the form attached hereto as
                           Exhibit B to solicit the exercise of Rights. The
                           Dealer Manager hereby agrees to solicit the exercise
                           of Rights in accordance with the Securities Act, the
                           Investment Company Act and the Exchange Act, and its
                           customary practice subject to the terms and
                           conditions of this Agreement, the procedures
                           described in the Registration Statement, the
                           Prospectus and, where applicable, the terms and
                           conditions of such Selling Group Agreement or
                           Soliciting Dealer Agreement; and the Dealer Manager
                           hereby agrees to form and manage the Selling Group to
                           solicit the exercise of Rights and to sell Shares to
                           the Selling Group purchased by the Dealer Manager
                           from the Fund through the exercise of Rights as
                           described herein in accordance with the Securities

                                       13

<PAGE>

                           Act, the Investment Company Act and the Exchange Act,
                           and its customary practice subject to the terms and
                           conditions of this Agreement, the procedures
                           described in the Registration Statement, the
                           Prospectus and, where applicable, the terms and
                           conditions of the Selling Group Agreement.

                  ii.      The Fund hereby authorizes the Dealer Manager to buy
                           and exercise Rights, including unexercised Rights
                           delivered to the Subscription Agent for resale and
                           Rights of Foreign Record Date Shareholders (as
                           defined in the Prospectus) held by the Subscription
                           Agent for which no instructions are received, on the
                           terms and conditions set forth in such Prospectus,
                           and to sell Shares to the public or to Selling Group
                           Members at the offering price set by the Dealer
                           Manager from time to time. Sales of Shares by the
                           Dealer Manager or Selling Group Members shall not be
                           at a price higher than the offering price set by the
                           Dealer Manager from time to time.

         b.       To the extent permitted by applicable law, the Fund agrees to
                  furnish, or cause to be furnished, to the Dealer Manager,
                  lists, or copies of those lists, showing the names and
                  addresses of, and number of Common Shares held by, Holders as
                  of the Record Date, and the Dealer Manager agrees to use such
                  information only in connection with the Offer, and not to
                  furnish the information to any other person except for
                  securities brokers and dealers that have been requested by the
                  Dealer Manager to solicit exercises of Rights.

         c.       The Dealer Manager agrees to provide to the Fund, in addition
                  to the services described in paragraph 2.a., financial
                  advisory and marketing services in connection with the Offer.
                  No advisory fee, other than the fees provided for in Section 3
                  of this Agreement and the reimbursement of the Dealer
                  Manager's out-of-pocket expenses as described in Section 5 of
                  this Agreement, will be payable by the Fund, or any other
                  party hereto, to the Dealer Manager in connection with the
                  financial advisory and marketing services provided by the
                  Dealer Manager pursuant to this Section 2.c.

         d.       The Fund and the Dealer Manager agree that the Dealer Manager
                  is an independent contractor with respect to the solicitation
                  of the exercise of Rights and the performance of financial
                  advisory and

                                       14

<PAGE>

                  marketing services for the Fund contemplated by this
                  Agreement.

         e.       In rendering the services contemplated by this Agreement, the
                  Dealer Manager acknowledges that it is not authorized to (i)
                  use any solicitation material other than the Prospectus (as
                  supplemented or amended, if applicable) and the Offering
                  Materials or (ii) to make any representation, oral or written,
                  to any shareholders or prospective shareholders of the Fund
                  that are not contained in the Prospectus (as supplemented or
                  amended, if applicable) or the Offering Materials, in each
                  case unless previously authorized to do so in writing by the
                  Fund.

         f.       In rendering the services contemplated by this Agreement, the
                  Dealer Manager will not be subject to any liability to the
                  Fund or the Investment Manager or the Investment Adviser or
                  any of their affiliates, for any act or omission on the part
                  of any soliciting broker or dealer (except with respect to the
                  Dealer Manager acting in such capacity) or any other person,
                  and the Dealer Manager will not be liable for acts or
                  omissions in performing its obligations under this Agreement,
                  except for any losses, claims, damages, liabilities and
                  expenses that are finally judicially determined to have
                  resulted primarily from the bad faith, willful misconduct or
                  gross negligence of the Dealer Manager or by reason of the
                  reckless disregard of the obligations and duties of the Dealer
                  Manager under this Agreement.

3.       Dealer Manager Fees. In full payment for the financial advisory,
         marketing and soliciting services rendered and to be rendered hereunder
         by the Dealer Manager, the Fund agrees to pay the Dealer Manager a fee
         (the "Dealer Manager Fee") equal to 3.75% of the aggregate Subscription
         Price for the Shares issued pursuant to the exercise of Rights and the
         Over-Subscription Privilege. In full payment for the soliciting efforts
         to be rendered, the Dealer Manager agrees to reallow selling fees (the
         "Selling Fees") to Selling Group Members equal to 2.50% of the
         Subscription

                                       15

<PAGE>

                  Price per Share for each Share issued pursuant to either (a)
                  the exercise of Rights and the Over-Subscription Privilege
                  where such Selling Group Member is so designated on the
                  subscription form or (b) the purchase for resale from the
                  Dealer Manager in accordance with the Selling Group Agreement.
                  In full payment for the soliciting efforts to be rendered, the
                  Dealer Manager agrees to reallow soliciting fees (the
                  "Soliciting Fees") to Soliciting Dealers equal to 0.50% of the
                  Subscription Price per Share for each Share issued pursuant to
                  the exercise of Rights and the Over-Subscription Privilege
                  where such Soliciting Dealer is so designated on the
                  subscription form, subject to a maximum fee based on the
                  number of Common Shares held by such Soliciting Dealer through
                  The Depository Trust Company ("DTC") on the Record Date. The
                  Dealer Manager agrees to pay the Selling Fees or Solicitation
                  Fees, as the case may be, to the broker-dealer designated on
                  the applicable portion of the form used by the holder to
                  exercise Rights and the Over-Subscription Privilege, and if no
                  broker-dealer is so designated or a broker-dealer is otherwise
                  not entitled to receive compensation pursuant to the terms of
                  the Selling Group Agreement or Soliciting Dealer Agreement,
                  then the Dealer Manager shall retain such Selling Fee or
                  Solicitation Fee for Shares issued pursuant to the exercise of
                  Rights and the Over-Subscription Privilege. Payment to the
                  Dealer Manager by the Fund will be in the form of a wire
                  transfer of same day funds to an account or accounts
                  identified by the Dealer Manager. Such payment will be made on
                  each date on which the Fund issues Shares after the Expiration
                  Date. Payment to a Selling Group Member or Soliciting Dealer
                  will be made by the Dealer Manager directly to such Selling
                  Group Member or Soliciting Dealer by check to an address
                  identified by such broker-dealer. Such payments shall be made
                  on or before the tenth business day following the day the Fund
                  issues Shares after the Expiration Date.

4.       Other Agreements.

         a.       The Fund covenants with the Dealer Manager as follows:

                  i.       The Fund will use its best efforts to cause the
                           Registration Statement to become effective and
                           maintain its effectiveness under the Securities Act.

                  ii.      The Fund will notify, and confirm the notice in
                           writing to, the Dealer Manager immediately (A) of the
                           effectiveness of the Registration Statement and any
                           amendment thereto (including any post-effective
                           amendment), (B) of the receipt of any additional
                           comments from the Commission, (C) of any request by
                           the Commission for any further amendment to the
                           Registration Statement or any amendment or supplement
                           to the Prospectus or for additional information and
                           (D) of the issuance by the Commission of any stop
                           order suspending the

                                       16

<PAGE>

                           effectiveness of the Registration Statement or the
                           initiation of any proceedings for that purpose. The
                           Fund will make every reasonable effort to prevent the
                           issuance of any stop order described in subsection
                           (D) hereunder and, if any such stop order is issued,
                           to obtain the lifting thereof at the earliest
                           possible moment.

                  iii.     The Fund will give the Dealer Manager notice of its
                           intention to file any amendment to the Registration
                           Statement (including any post-effective amendment) or
                           any amendment or supplement to the Prospectus
                           (including any revised prospectus which the Fund
                           proposes for use by the Dealer Manager in connection
                           with the Offer, which differs from the prospectus on
                           file at the Commission at the time the Registration
                           Statement becomes effective, whether or not such
                           revised prospectus is required to be filed pursuant
                           to Rule 497(c), (e) or (h) of the Rules and
                           Regulations), whether pursuant to the Investment
                           Company Act, the Securities Act, or otherwise, and
                           will furnish the Dealer Manager with copies of any
                           such amendment or supplement a reasonable amount of
                           time prior to such proposed filing or use, as the
                           case may be, and will give due consideration to not
                           filing or to revising any such proposed amendment or
                           supplement to which the Dealer Manager or counsel for
                           the Dealer Manager shall reasonably object.

                  iv.      The Fund will, without charge, deliver to the Dealer
                           Manager, as soon as practicable, the number of copies
                           (one of which is manually executed) of the
                           Registration Statement as originally filed and of
                           each amendment thereto as it may reasonably request,
                           in each case with the exhibits filed therewith.

                  v.       The Fund will, without charge, furnish to the Dealer
                           Manager, from time to time during the period when the
                           Prospectus is required to be delivered under the
                           Securities Act, such number of copies of the
                           Prospectus (as amended or supplemented) as the Dealer
                           Manager may reasonably request for the purposes
                           contemplated by the Securities Act or the Rules and
                           Regulations.

                  vi.      If any event shall occur as a result of which it is
                           necessary or

                                       17

<PAGE>

                           appropriate to amend or supplement the Registration
                           Statement or the Prospectus in order to make the
                           Prospectus not misleading in the light of the
                           circumstances existing at the time it is delivered to
                           a Holder, the Fund will forthwith amend or supplement
                           the Prospectus by preparing for filing with the
                           Commission (and furnishing to the Dealer Manager a
                           reasonable number of copies of) an amendment or
                           amendments of the Registration Statement or an
                           amendment or amendments of or a supplement or
                           supplements to the Prospectus (in a manner consistent
                           with paragraph 4.a.iii. above), at the Fund's
                           expense, which will amend or supplement the
                           Registration Statement or the Prospectus so that the
                           Prospectus will not contain an untrue statement of a
                           material fact or omit to state a material fact
                           required to be stated therein or necessary in order
                           to make the statements therein, in the light of the
                           circumstances existing at the time the Prospectus is
                           delivered to a Holder, not misleading.

                  vii.     The Fund will endeavor, in cooperation with the
                           Dealer Manager and its counsel, to confirm that the
                           Rights and the Shares are not required to be
                           qualified for offering and sale under the applicable
                           securities laws of such states and other
                           jurisdictions of the United States as the Dealer
                           Manager may designate.

                  viii.    The Fund will make generally available to its
                           security holders as soon as practicable, but no later
                           than 60 days after the end of the Fund's fiscal
                           semi-annual or fiscal year-end period covered
                           thereby, an earnings statement (which need not be
                           audited) (in form complying with the provisions of
                           Rule 158 of the Rules and Regulations of the
                           Securities Act) covering a twelve-month period
                           beginning not later than the first day of the Fund's
                           fiscal semi-annual period next following the
                           "effective" date (as defined in said Rule 158) of the
                           Registration Statement.

                  ix.      For a period of 180 days from the date of this
                           Agreement, the Fund will not, without the prior
                           consent of the Dealer Manager, offer or sell, or
                           enter into any agreement to sell, any equity or
                           equity related securities of the Fund or securities
                           convertible into such securities, other than the
                           Rights and the Shares

                                       18

<PAGE>

                           and the Common Shares issued in reinvestment of
                           dividends or distributions.

                  x.       The Fund will use the net proceeds from the Offer as
                           set forth under "Use of Proceeds" in the Prospectus.

                  xi.      The Fund will use its best efforts to cause the
                           Rights and the Shares to be duly authorized for
                           listing by the New York Stock Exchange, subject to
                           official notice of issuance, prior to the time the
                           Rights are issued.

                  xii.     The Fund will use its best efforts to maintain its
                           qualification as a regulated investment company under
                           Subchapter M of the Code.

                  xiii.    The Fund will apply the net proceeds from the Offer
                           in such a manner as to continue to comply with the
                           requirements of the Prospectus and the Investment
                           Company Act.

                  xiv.     The Fund will advise or cause the Subscription Agent
                           (A) to advise the Dealer Manager and, only where
                           specifically noted, each Selling Group Member who
                           specifically requests, from day to day during the
                           period of, and promptly after the termination of, the
                           Offer, as to the names and addresses (to the extent
                           permitted by applicable law) of all Holders
                           exercising Rights, the total number of Rights
                           exercised by each Holder (to the extent permitted by
                           applicable law) during the immediately preceding day,
                           indicating the total number of Rights verified to be
                           in proper form for exercise,

                                       19

<PAGE>

                           rejected for exercise and being processed and, for
                           the Dealer Manager and each Selling Group Member, the
                           number of Rights exercised on subscription
                           certificates indicating the Dealer Manager or such
                           Selling Group Member, as the case may be, as the
                           broker-dealer with respect to such exercise, and as
                           to such other information as the Dealer Manager may
                           reasonably request; and will notify the Dealer
                           Manager and each Selling Group Member, not later than
                           5:00 P.M., New York City time, on the first business
                           day following the Expiration Date, of the total
                           number of Rights exercised and Shares related
                           thereto, the total number of Rights verified to be in
                           proper form for exercise, rejected for exercise and
                           being processed and, for the Dealer Manager and each
                           Selling Group Member, the number of Rights exercised
                           on subscription certificates indicating the Dealer
                           Manager or such Selling Group Member, as the case may
                           be, as the broker-dealer with respect to such
                           exercise, and as to such other information as the
                           Dealer Manager may reasonably request; (B) to sell
                           any Rights received for resale from Holders
                           exclusively to or through the Dealer Manager, which
                           may, at its election, purchase such Rights as
                           principal or act as agent for the resale thereof; and
                           (C) to issue Shares upon the Dealer Manager's
                           exercise of Rights no later than the close of
                           business on the business day following the day that
                           full payment for such Shares has been received by the
                           Subscription Agent.

         b.       Neither the Fund nor the Investment Manager will take,
                  directly or indirectly, any action designed to cause or to
                  result in, or that has constituted or which might reasonably
                  be expected to constitute, the stabilization or manipulation
                  of the price of any security of the Fund to facilitate the
                  issuance of the Rights or the sale or resale of the Rights or
                  the Shares; provided that any action in connection with the
                  Fund's dividend reinvestment and cash purchase plan will not
                  be deemed to be within the meaning of this Section 4.b.

5.       Payment of Expenses.

         a.       The Fund will pay all expenses incident to the performance of
                  its obligations under this Agreement, including, but not
                  limited to, expenses relating to (i) the printing and filing
                  of the Registration Statement as originally filed and of each
                  amendment thereto, (ii) the preparation, issuance and delivery
                  of the certificates for the Shares and subscription
                  certificates relating to the Rights, (iii) the fees and
                  disbursements of the Fund's counsel (including the fees and
                  disbursements of local counsel) and accountants, (iv) the
                  printing or other production and delivery to the Dealer
                  Manager of copies of the Registration Statement as originally
                  filed and of each amendment thereto and of the Prospectus and
                  any amendments or supplements thereto, (v) the fees and
                  expenses incurred with respect to filing with the National
                  Association of Securities Dealers, Inc., (vi) the fees and

                                       20

<PAGE>

                  expenses incurred in connection with the listing of the Shares
                  on the New York Stock Exchange, Inc., (vii) the printing or
                  other production, mailing and delivery expenses incurred in
                  connection with Offering Materials and (viii) the fees and
                  expenses incurred with respect to the Subscription Agent and
                  the Information Agent. The Fund agrees to pay the foregoing
                  expenses whether or not the transactions contemplated under
                  this Agreement are consummated.

         b.       In addition to any fees that may be payable to the Dealer
                  Manager under this Agreement, the Fund agrees to reimburse the
                  Dealer Manager upon request made from time to time for its
                  reasonable expenses incurred in connection with its activities
                  under this Agreement, including the reasonable fees and
                  disbursements of its legal counsel (excluding Blue Sky filing
                  fees which are paid directly by the Fund), in an amount up to
                  $[________].

         c.       If this Agreement is terminated by the Dealer Manager in
                  accordance with the provisions of Section 6 or Section 9.a.i.,
                  9.a.ii. or 9.a.iii., the Fund agrees to reimburse the Dealer
                  Manager for all of its reasonable out-of-pocket expenses
                  incurred in connection with its performance hereunder,
                  including the reasonable fees and disbursements of counsel for
                  the Dealer Manager. In the event the transactions contemplated
                  hereunder are not consummated for reasons other than as
                  described in the previous sentence, the Fund agrees to pay all
                  of the costs and expenses set forth in paragraph 5.b. which
                  the Fund would have paid if such transactions had been
                  consummated.

6.       Conditions of the Dealer Manager's Obligations. The obligations of the
         Dealer Manager hereunder are subject to the accuracy of the respective
         representations and warranties of the Fund and the Investment Manager
         contained herein, to the performance by the Fund and the Investment
         Manager of their respective obligations hereunder, and to the following
         further conditions:

         a.       The Registration Statement shall have become effective not
                  later than 5:30 P.M., New York City time, on the Record Date,
                  or at such later time and date as may be approved by the
                  Dealer Manager; the Prospectus

                                       21

<PAGE>

                  and any amendment or supplement thereto shall have been filed
                  with the Commission in the manner and within the time period
                  required by Rule 497(c), (e), (h) or (j), as the case may be,
                  under the Securities Act; no stop order suspending the
                  effectiveness of the Registration Statement or any amendment
                  thereto shall have been issued, and no proceedings for that
                  purpose shall have been instituted or threatened or, to the
                  knowledge of the Fund, the Investment Manager or the Dealer
                  Manager, shall be contemplated by the Commission; and the Fund
                  shall have complied with any request of the Commission for
                  additional information (to be included in the Registration
                  Statement, the Prospectus or otherwise).

         b.       On the Representation Date and the Expiration Date, the Dealer
                  Manager shall have received:

                  i.       The opinions, dated the Representation Date and the
                           Expiration Date, of Sullivan & Cromwell LLP, counsel
                           for the Fund, in form and substance reasonably
                           satisfactory to counsel for the Dealer Manager to the
                           effect that:

                           (1)      The Fund has been duly incorporated and is
                                    validly existing as a corporation in good
                                    standing under the laws of the State of
                                    Maryland, has full corporate power and
                                    authority to conduct its business as
                                    described in the Registration Statement and
                                    the Prospectus, and is duly qualified to do
                                    business as a foreign corporation in each
                                    jurisdiction wherein it owns or leases real
                                    property or in which the conduct of its
                                    business requires such qualification, except
                                    where the failure to be so qualified does
                                    not involve a material adverse effect upon
                                    the Fund's business, properties, financial
                                    position or results of operations.

                           (2)      The Fund is registered with the Commission
                                    under the Investment Company Act as a
                                    closed-end, non-diversified management
                                    investment company, to the knowledge of such
                                    counsel after reasonable investigation, no
                                    order of suspension or revocation of such
                                    registration has been issued or proceedings
                                    therefor

                                       22

<PAGE>

                                    initiated or, threatened by the Commission,
                                    all required action has been taken under the
                                    Securities Act and the Investment Company
                                    Act to make the public offering and
                                    consummate the issuance of the Rights and
                                    the issuance and sale of the Shares by the
                                    Fund upon exercise of the Rights, and the
                                    provisions of the Fund's articles of
                                    incorporation and by-laws do not conflict
                                    with the requirements of the Investment
                                    Company Act and the Rules and Regulations.

                           (3)      The Fund's authorized share capital is as
                                    set forth in the Prospectus; the outstanding
                                    Common Shares have been duly authorized and
                                    are validly issued, fully paid and
                                    non-assessable; the outstanding Common
                                    Shares conform, and when issued pursuant to
                                    the terms of the Offer the Shares will
                                    conform, in all material respects to the
                                    description thereof in the Prospectus under
                                    the heading "Description of Common Stock";
                                    the Rights have been duly authorized by all
                                    requisite action on the part of the Fund for
                                    issuance pursuant to the Offer; the Shares
                                    have been duly authorized by all requisite
                                    action on the part of the Fund for issuance
                                    and sale pursuant to the terms of the Offer
                                    and, when issued and delivered by the Fund
                                    pursuant to the terms of the Offer against
                                    payment of the consideration set forth in
                                    the Prospectus, will be validly issued,
                                    fully paid and non-assessable; the Rights
                                    conform in all material respects to the
                                    descriptions thereof contained in the
                                    Prospectus under the sub-headings "Terms of
                                    the Offer," "Transferability and Sale of
                                    Rights," and "The Subscription Price" each
                                    under the heading "Our Rights Offering"
                                    insofar as such descriptions relate to the
                                    Form of Subscription Certificate in the
                                    Registation Statement; and under Maryland
                                    General Corporate Law, to such counsel's
                                    knowledge, the issuance of the Rights and
                                    the Shares is not subject to any preemptive
                                    rights.

                           (4)      This Agreement and each of the Fund
                                    Agreements has been duly authorized,
                                    executed and delivered by the

                                       23

<PAGE>

                                    Fund; each of this Agreement and the Fund
                                    Agreements complies with all applicable
                                    provisions of the Investment Company Act,
                                    the Advisers Act and the rules and
                                    regulations under such Acts; and, assuming
                                    due authorization, execution and delivery by
                                    the other parties thereto, each of the Fund
                                    Agreements [other than the Invsestment
                                    Advisory Agreement] constitutes a valid and
                                    legally binding obligation of the Fund,
                                    enforceable in accordance with its terms,
                                    subject to bankruptcy, insolvency,
                                    fraudulent transfer, reorganization,
                                    moratorium and similar laws of general
                                    applicability relating to or affecting
                                    creditors' rights, to general equity and
                                    (with respect to the Investment Management
                                    Agreement and the Investment Advisory
                                    Agreement) to termination under the
                                    Investment Company Act.

                           (5)      The issuance of the Rights, the issuance and
                                    sale of the Shares upon exercise of the
                                    Rights and the execution, delivery and
                                    performance by the Fund of any other of the
                                    transactions contemplated in this Agreement,
                                    or, to the extent relevant to the Rights or
                                    the Shares, in the Fund Agreements will not
                                    violate the articles of incorporation or
                                    by-laws of the Fund, or result in a breach
                                    of, or constitute a default under, any of
                                    the Fund Agreements or any other agreement,
                                    indenture, mortgage, loan agreement, note,
                                    insurance or surety agreement, lease or
                                    other instrument, specifically identified to
                                    such counsel by an appropriate officer of
                                    the Fund (the "Identified Agreements") as
                                    those agreements and other such instruments
                                    to which the Fund is a party or by which it
                                    may be bound or to which any of the property
                                    or assets of the Fund is subject and that
                                    are, based solely upon the statements of
                                    such officer, material to the Fund, nor will
                                    such action by the Fund result in any
                                    violation of any U.S. federal or New York
                                    State law or published rule or regulation or
                                    the Maryland General Corporation Law;
                                    provided, however, that solely for purposes
                                    of this paragraph (5) and not for purposes
                                    of the opinions expressed in other

                                       24

<PAGE>

                                    paragraphs, such counsel need express no
                                    opinion with respect to Federal or state
                                    securities laws, laws governing fiduciary
                                    relationships, fraudulent transfer laws,
                                    antitrust laws, the Employee Retirement
                                    Income Security Act of 1974 or laws
                                    governing the solicitation of deposits; and
                                    provided, further, that insofar as
                                    performance by the Fund of its obligations
                                    under this Agreement, the Fund Agreements
                                    and any Identified Agreement is concerned,
                                    such counsel need express no opinion as to
                                    bankruptcy, insolvency, reorganization,
                                    moratorium and similar laws of general
                                    applicability relating to or affecting
                                    creditors' rights.

                           (6)      To the best knowledge of such counsel after
                                    reasonable inquiry, no consent, approval,
                                    authorization, notification or order of,
                                    license or permit issued by, or filing with,
                                    any court or governmental agency or body is
                                    required under the Maryland General
                                    Corporation Law, the laws of the State of
                                    New York or U.S. Federal law for the
                                    consummation by the Fund of the transactions
                                    contemplated by this Agreement, the
                                    Subscription Agency Agreement or the Rights,
                                    except (A) such as have been obtained and
                                    (B) such as may be required under the blue
                                    sky laws of any jurisdiction in connection
                                    with the transactions contemplated hereby.

                           (7)      The Registration Statement has become
                                    effective under the Securities Act; to the
                                    knowledge of such counsel after reasonable
                                    inquiry, no stop order suspending the
                                    effectiveness of the Registration Statement
                                    has been issued, and no proceedings for that
                                    purpose have been instituted or threatened
                                    by the Commission; and the Registration
                                    Statement, as it may be amended, and the
                                    Prospectus, as it may be amended or
                                    supplemented, (other than the financial
                                    statements, schedules, the notes thereto and
                                    the schedules and other financial, economic
                                    and statistical data contained or
                                    incorporated by reference therein or omitted
                                    therefrom, as to which such counsel need
                                    express no opinion) as of their respective
                                    effective or issue dates appeared on their

                                       25

<PAGE>

                                    face to be appropriately responsive in all
                                    material respects to the requirements of the
                                    Securities Act and the Investment Company
                                    Act and the Rules and Regulations.

                           (8)      The statements in the Prospectus under the
                                    headings "Our Rights Offering--Federal
                                    Income Tax Consequences" and "Taxation"
                                    fairly summarize the matters described
                                    therein.

                           In rendering such opinion, such counsel may rely, as
                           to matters of Maryland law or the law of any
                           jurisdiction other than the Federal law of the United
                           States and the laws of the State of New York, on the
                           opinion of other counsel of good standing whom they
                           believe to be reliable and who are satisfactory to
                           counsel for the Dealer Manager and, as to matters of
                           fact, to the extent they deem proper, on certificates
                           of responsible officers of the Fund, the Investment
                           Manager, the Investment Adviser and public officials.

                           In a separate letter, such counsel shall also have
                           stated that, while they have not themselves checked
                           the accuracy and completeness of or otherwise
                           verified, and are not passing upon and assume no
                           responsibility for the accuracy, completeness or
                           fairness of, the statements contained in the
                           Registration Statement or the Prospectus, except to
                           the limited extent stated in paragraphs (3) and (11)
                           above, in the course of their review and discussion
                           of the contents of the Registration Statement and
                           Prospectus with certain officers and employees of the
                           Fund, the Investment Manager, the Investment Adviser
                           and the Fund's independent accountants, nothing has
                           come to their attention which caused them to believe
                           that the Registration Statement, as of its effective
                           date, contained any untrue statement of a material
                           fact or

                                       26

<PAGE>

                           omitted to state any material fact required to be
                           stated therein or necessary to make the statements
                           contained therein not misleading or that the
                           Prospectus (as it may have been supplemented), as of
                           its date and on the Representation Date or the
                           Expiration Date, as the case may be, contained any
                           untrue statement of a material fact or omitted to
                           state any material fact necessary to make the
                           statements therein, in the light of the circumstances
                           under which they were made, not misleading (except
                           that such counsel need not express any statement or
                           belief with respect to the financial statements,
                           schedules or other financial or statistical data
                           included or incorporated by reference in the
                           Registration Statement or Prospectus). In addition,
                           such counsel shall also have stated that they do not
                           know of any litigation or any governmental proceeding
                           instituted or threatened against the Fund that would
                           be required to be disclosed in the Prospectus and is
                           not so disclosed. Also, such counsel shall have
                           stated that they do not know of any documents that
                           are required to be filed as exhibits to the
                           Registration Statement and are not so filed or of any
                           documents that are required to be summarized in the
                           Prospectus and are not so summarized.

                  ii.      The opinions, dated the Representation Date and the
                           Expiration Date, of [Bruce A. Rosenblum, Esq.],
                           internal counsel for the Investment Manager, in form
                           and substance satisfactory to counsel for the Dealer
                           Manager to the effect that:

                           (1)      The Investment Manager has been duly
                                    incorporated and is validly existing as a
                                    corporation in good standing under the laws
                                    of the State of Delaware, has full corporate
                                    power and authority to own its properties
                                    and conduct its business as described in the
                                    Registration Statement and the Prospectus,
                                    and is duly qualified to do business as a
                                    foreign corporation in each jurisdiction
                                    wherein it owns or leases real property or
                                    in which the conduct of its business
                                    requires such qualification, except where
                                    the failure to be so qualified does not
                                    involve a material adverse effect upon the
                                    Investment Manager's business, properties,
                                    financial position or operations.

                           (2)      The Investment Manager is registered as an
                                    investment adviser under the Advisers Act,
                                    and is not prohibited by the Advisers Act or
                                    the Investment Company Act, or the rules and
                                    regulations under such Acts, from

                                       27

<PAGE>

                                    acting as investment adviser for the Fund as
                                    contemplated in the Investment Management
                                    Agreement.

                           (3)      Each of this Agreement and the Investment
                                    Management Agreement has been duly
                                    authorized, executed and delivered by the
                                    Investment Manager and complies with all
                                    applicable provisions of the Investment
                                    Company Act, the Advisers Act and the rules
                                    and regulations under such Acts; the
                                    Investment Management Agreement is, assuming
                                    due authorization, execution and delivery by
                                    the other party thereto, a valid and legally
                                    binding obligation of the Investment Manager
                                    enforceable in accordance with its terms,
                                    subject to bankruptcy, insolvency,
                                    fraudulent transfer, reorganization,
                                    moratorium and similar laws of general
                                    applicability relating to or affecting
                                    creditors' rights, to general equity
                                    principles and to termination under the
                                    Investment Company Act.

                           (4)      The execution, delivery and performance by
                                    the Investment Manager of its obligations
                                    under this Agreement and the Investment
                                    Management Agreement will not violate the
                                    certificate of incorporation or by-laws of
                                    the Investment Manager, or result in a
                                    material breach of, or constitute a material
                                    default under, or result in the creation or
                                    imposition of any material lien, charge or
                                    encumbrance upon any properties or assets of
                                    the Investment Manager under the terms and
                                    provisions of any material agreement,
                                    indenture, mortgage, loan agreement, note,
                                    insurance or surety agreement, lease or
                                    other instrument to which the Investment
                                    Manager is a party or by which it may be
                                    bound or to which any of the property or
                                    assets of the Investment Manager is subject,
                                    nor will such action by the Investment
                                    Manager result in any material violation of
                                    any U.S. Federal or New York State law or
                                    published rule or regulation or the Delaware
                                    General Corporation Law; provided, however,
                                    that solely for purposes of this paragraph
                                    (4) and not for purposes of the opinions

                                       28

<PAGE>

                                    expressed in other paragraphs, such counsel
                                    need express no opinion with respect to
                                    Federal or state securities laws, laws
                                    governing fiduciary relationships,
                                    fraudulent transfer laws, antitrust laws,
                                    the Employee Retirement Income Security Act
                                    of 1974 or laws governing the solicitation
                                    of deposits; and provided, further, that
                                    insofar as performance by the Investment
                                    Manager of its obligations under this
                                    Agreement and the Investment Management
                                    Agreement is concerned, such counsel need
                                    express no opinion as to bankruptcy,
                                    insolvency, reorganization, moratorium and
                                    similar laws of general applicability
                                    relating to or affecting creditors' rights.

                           (5)      To the best knowledge of such counsel, there
                                    is no pending or threatened action, suit or
                                    proceeding to which the Investment Manager
                                    is a party before or by any U.S. federal, or
                                    New York or Delaware court or governmental
                                    agency, authority or body (a)(i) that might
                                    result in any material adverse change in the
                                    Investment Manager's condition (financial or
                                    other), business prospects, net worth or
                                    operations or (ii) which might materially
                                    and adversely affect the properties or
                                    assets thereof and (b) that is of a
                                    character required to be disclosed in the
                                    Registration Statement or Prospectus.

                           (6)      To the best knowledge of such counsel after
                                    reasonable inquiry, no consent, approval,
                                    authorization, notification or order of,
                                    license or permit issued by, or filing with
                                    any court or governmental agency or body is
                                    required under the Delaware General
                                    Corporation Law, the laws of the State of
                                    New York or U.S. Federal law for the
                                    consummation by the Investment Manager of
                                    the transactions contemplated by this
                                    Agreement or the Investment Management
                                    Agreement except (A) such as have been
                                    obtained and (B) such as may be required
                                    under the blue sky laws of any jurisdiction
                                    in connection with the transactions
                                    contemplated hereby.

                                       29

<PAGE>

                           In rendering such opinion, such counsel may rely as
                           to matters of fact, to the extent such counsel deems
                           proper, on certificates of responsible officers of
                           the Fund, the Investment Manager, the Investment
                           Adviser, their affiliates and public officials.

         c.       The Dealer Manager shall have received from Skadden, Arps,
                  Slate, Meagher & Flom LLP, counsel for the Dealer Manager,
                  such opinion or opinions, dated the Representation Date and
                  the Expiration Date, with respect to the Offer, the
                  Registration Statement, the Prospectus and other related
                  matters as the Dealer Manager may reasonably require, and the
                  Fund shall have furnished to such counsel such documents as
                  they reasonably request for the purpose of enabling them to
                  pass upon such matters.

         d.       The Fund shall have furnished to the Dealer Manager a
                  certificate of the Fund, signed by the President, the
                  Treasurer, the Assistant Treasurer, the Secretary, the
                  Assistant Secretary or a Vice President of the Fund, dated the
                  Representation Date and the Expiration Date, to the effect
                  that the signer of such certificate carefully examined the
                  Registration Statement, the Prospectus, any supplement to the
                  Prospectus and this Agreement and that, to the best of the
                  signer's knowledge:

                  i.       the representations and warranties of the Fund in
                           this Agreement are true and correct in all material
                           respects on and as of the Representation Date or the
                           Expiration Date, as the case may be (except that
                           references to the Registration Statement or
                           Prospectus shall be to such documents as they may
                           have been amended or supplemented at the date of such
                           certificate), with the same effect as if made on the
                           Representation Date or the Expiration Date, as the
                           case may be, and the Fund has complied with all the
                           agreements and satisfied all the conditions on its
                           part to be performed or satisfied at or prior to the
                           Representation Date or the Expiration Date, as the
                           case may be;

                  ii.      no stop order suspending the effectiveness of the
                           Registration

                                       30

<PAGE>

                           Statement has been issued and no proceedings for that
                           purpose have been instituted or, to the Fund's
                           knowledge, threatened; and

                  iii.     since the date of the most recent balance sheet
                           included or incorporated by reference in the
                           Prospectus, there has been no material adverse change
                           in the condition (financial or other), business,
                           prospects, net worth or results of operations of the
                           Fund (excluding fluctuations in the Fund's net asset
                           value due to investment activities in the ordinary
                           course of operations, and changes in the market price
                           per share of the Common Shares and discount or
                           premium of such market price per share to net asset
                           value per share), except as set forth in or
                           contemplated in the Prospectus (as it may be amended
                           or supplemented at the date of such certificate).

         e.       The Investment Manager shall have furnished to the Dealer
                  Manager certificates of the Investment Manager, signed by the
                  President, Treasurer, Secretary or Vice President or any other
                  senior officer of comparable authority, dated the
                  Representation Date and the Expiration Date, to the effect
                  that the signer of such certificate has read the Registration
                  Statement, the Prospectus, any supplement to the Prospectus
                  and this Agreement and, to the best knowledge of such signer,
                  the representations and warranties of the Investment Manager
                  in this Agreement are true and correct in all material
                  respects on and as of the Representation Date or the
                  Expiration Date, as the case may be, with the same effect as
                  if made on the Representation Date or the Expiration Date, as
                  the case may be (except that references to the Registration
                  Statement or Prospectus shall be to such documents as they may
                  have been amended or supplemented at the date of such
                  certificate).

         f.       PricewaterhouseCoopers LLP shall have furnished to the Dealer
                  Manager letters, dated the Representation Date and the
                  Expiration Date, in form and substance satisfactory to the
                  Dealer Manager stating in effect that:

                                       31

<PAGE>

                  i.       they are independent accountants with respect to the
                           Fund within the meaning of the Securities Act and the
                           applicable Rules and Regulations;

                  ii.      in their opinion, the audited financial statements
                           examined by them and included or incorporated by
                           reference in the Registration Statement comply as to
                           form in all material respects with the applicable
                           accounting requirements of the Securities Act and the
                           Investment Company Act and the respective Rules and
                           Regulations with respect to registration statements
                           on Form N-2;

                  iii.     they have performed specified procedures, not
                           constituting an audit in accordance with generally
                           accepted auditing standards, including a reading of
                           the latest available unaudited financial information
                           of the Fund, a reading of the minute books of the
                           Fund, and inquiries of officials of the Fund
                           responsible for financial and accounting matters and
                           on the basis of such inquiries and procedures nothing
                           came to their attention that caused them to believe
                           that at a specified date not more than five business
                           days prior to the Representation Date or the
                           Expiration Date, as the case may be, there was any
                           change in the common shares, any decrease in net
                           assets or any increase in long-term debt of the Fund
                           as compared with amounts shown in the most recent
                           statement of assets and liabilities included or
                           incorporated by reference in the Registration
                           Statement, except as the Registration Statement
                           discloses has occurred or may occur, or they shall
                           state any specific changes, increases or decreases;
                           and

                                       32

<PAGE>

                  iv.      in addition to the procedures referred to in clause
                           iii. above, they have compared certain dollar amounts
                           (or percentages as derived from such dollar amounts)
                           and other financial information regarding the
                           operations of the Fund appearing in the Registration
                           Statement, which have previously been specified by
                           the Dealer Manager and which shall be specified in
                           such letter, and have found such items to be in
                           agreement with, the accounting and financial records
                           of the Fund.

         g.       Subsequent to the respective dates as of which information is
                  given in the Registration Statement and the Prospectus, there
                  shall not have been (i) any change, increase or decrease
                  specified in the letter or letters referred to in paragraph
                  6.f., or (ii) any change, or any development involving a
                  prospective change, in or affecting the business or properties
                  of the Fund, the effect of which, in any case referred to in
                  clause (i) or (ii) above, is, in the judgment of the Dealer
                  Manager, so material and adverse as to make it impractical or
                  inadvisable to proceed with the Offer as contemplated by the
                  Registration Statement and the Prospectus.

         h.       Prior to the Representation Date, the Fund shall have
                  furnished to the Dealer Manager such further information,
                  certificates and documents as the Dealer Manager may
                  reasonably request.

         i.       If any of the conditions specified in this Section 6 shall not
                  have been fulfilled in all material respects when and as
                  provided in this Agreement or waived by the Dealer Manager, or
                  if any of the opinions and certificates mentioned above or
                  elsewhere in this Agreement shall not be in all material
                  respects reasonably satisfactory in form and substance to the
                  Dealer Manager and its counsel, this Agreement and all
                  obligations of the Dealer Manager hereunder may be canceled
                  at, or at any time prior to, the Expiration Date by the Dealer
                  Manager. Notice of such cancellation shall be given to the
                  Fund in writing or by telephone confirmed in writing.

                                       33

<PAGE>

7.       Indemnity and Contribution.

         a.       Each of the Fund and the Investment Manager, jointly and
                  severally, agrees to indemnify, defend and hold harmless the
                  Dealer Manager, its partners, directors and officers, and any
                  person who controls the Dealer Manager within the meaning of
                  Section 15 of the Securities Act or Section 20 of the Exchange
                  Act, and the successors and assigns of all of the foregoing
                  persons from and against any loss, damage, expense, liability
                  or claim (including the reasonable cost of investigation)
                  which the Dealer Manager or any such person may incur under
                  the Securities Act, the Exchange Act, the Investment Company
                  Act, the Advisers Act, the common law or otherwise, insofar as
                  such loss, damage, expense, liability or claim arises out of
                  or is based upon any untrue statement or alleged untrue
                  statement of a material fact contained in the Registration
                  Statement (or in the Registration Statement as amended by any
                  post-effective amendment thereof by the Fund) or in a
                  Prospectus (the term Prospectus for the purpose of this
                  Section 7 being deemed to include any preliminary prospectus,
                  the Prospectus and the Prospectus as amended or supplemented
                  by the Fund), or arises out of or is based upon any omission
                  or alleged omission to state a material fact required to be
                  stated in either such Registration Statement or Prospectus or
                  necessary to make the statements made therein not misleading,
                  except insofar as any such loss, damage, expense, liability or
                  claim arises out of or is based upon any untrue statement or
                  alleged untrue statement of a material fact contained in and
                  in conformity with information furnished in writing by or on
                  behalf of the Dealer Manager to the Fund or the Investment
                  Manager expressly for use with reference to the Dealer Manager
                  in such Registration Statement or such Prospectus or arises
                  out of or is based upon any omission or alleged omission to
                  state a material fact in connection with such information
                  required to be stated in such Registration Statement or such
                  Prospectus or necessary to make such information not
                  misleading.

                  If any action, suit or proceeding (together, a "Proceeding")
                  is brought against the Dealer Manager or any such person in
                  respect of which indemnity may be sought against the Fund or
                  the Investment Manager pursuant to the foregoing paragraph,
                  the Dealer Manager or such

                                       34

<PAGE>

                  person shall promptly notify the Fund or the Investment
                  Manager, as the case may be, in writing of the institution of
                  such Proceeding and the Fund or the Investment Manager shall
                  assume the defense of such Proceeding, including the
                  employment of counsel reasonably satisfactory to such
                  indemnified party and payment of all fees and expenses;
                  provided, however, that the omission to so notify the Fund or
                  the Investment Manager shall not relieve the Fund or the
                  Investment Manager from any liability which the Fund or the
                  Investment Manager may have to the Dealer Manager or any such
                  person or otherwise. The Dealer Manager or such person shall
                  have the right to employ its or their own counsel in any such
                  case, but the fees and expenses of such counsel shall be at
                  the expense of the Dealer Manager or of such person unless the
                  employment of such counsel shall have been authorized in
                  writing by the Fund or the Investment Manager, as the case may
                  be, in connection with the defense of such Proceeding or the
                  Fund or the Investment Manager shall not have, within a
                  reasonable period of time in light of the circumstances,
                  employed counsel to have charge of the defense of such
                  Proceeding or such indemnified party or parties shall have
                  reasonably concluded that there may be defenses available to
                  it or them which are different from, additional to or in
                  conflict with those available to the Fund or the Investment
                  Manager (in which case the Fund or the Investment Manager
                  shall not have the right to direct the defense of such
                  Proceeding on behalf of the indemnified party or parties), in
                  any of which events such fees and expenses shall be borne by
                  the Fund or the Investment Manager and paid as incurred (it
                  being understood, however, that the Fund or the Investment
                  Manager shall not be liable for the expenses of more than one
                  separate counsel (in addition to any local counsel) in any one
                  Proceeding or series of related Proceedings in the same
                  jurisdiction representing the indemnified parties who are
                  parties to such Proceeding). Neither the Fund nor the
                  Investment Manager shall be liable for any settlement of any
                  Proceeding effected without its written consent but if settled
                  with the written consent of the Fund or the Investment
                  Manager, the Fund or the Investment Manager, as the case may
                  be, agrees to indemnify and hold harmless the Dealer Manager
                  and any such person from and against any loss or liability by
                  reason of such settlement. Notwithstanding the foregoing
                  sentence, if at any time an indemnified party shall have
                  requested an indemnifying party to reimburse the indemnified
                  party for fees and

                                       35

<PAGE>

                  expenses of counsel as contemplated by the second sentence of
                  this paragraph, then the indemnifying party agrees that it
                  shall be liable for any settlement of any Proceeding effected
                  without its written consent if (i) such settlement is entered
                  into more than 60 business days after receipt by such
                  indemnifying party of the aforesaid request, (ii) such
                  indemnifying party shall not have reimbursed the indemnified
                  party in accordance with such request prior to the date of
                  such settlement and (iii) such indemnified party shall have
                  given the indemnifying party at least 30 days' prior notice of
                  its intention to settle. No indemnifying party shall, without
                  the prior written consent of the indemnified party, effect any
                  settlement of any pending or threatened Proceeding in respect
                  of which any indemnified party is or could have been a party
                  and indemnity could have been sought hereunder by such
                  indemnified party, unless such settlement includes an
                  unconditional release of such indemnified party from all
                  liability on claims that are the subject matter of such
                  Proceeding and does not include an admission of fault,
                  culpability or a failure to act, by or on behalf of such
                  indemnified party.

         b.       The Dealer Manager agrees to indemnify, defend and hold
                  harmless the Fund and the Investment Manager, its directors
                  and officers, and any person who controls the Fund or the
                  Investment Manager within the meaning of Section 15 of the
                  Securities Act or Section 20 of the Exchange Act, and the
                  successors and assigns of all of the foregoing persons from
                  and against any loss, damage, expense, liability or claim
                  (including the reasonable cost of investigation) which,
                  jointly or severally, the Fund or the Investment Manager or
                  any such person may incur under the Securities Act, the
                  Exchange Act, the Investment Company Act, the Advisers Act,
                  the common law or otherwise, insofar as such loss, damage,
                  expense, liability or claim arises out of or is based upon any
                  untrue statement or alleged untrue statement of a material
                  fact contained in and in conformity with information furnished
                  in writing by or on behalf of the Dealer Manager to the Fund
                  or the Investment Manager expressly for use with reference to
                  the Dealer Manager in the Registration Statement (or in the
                  Registration Statement as amended by any post-effective
                  amendment thereof by the Fund) or in a Prospectus, or arises
                  out of or is based upon any omission or alleged omission to
                  state a material fact in connection with such information
                  required to be stated in such Registration Statement or such
                  Prospectus or necessary to make such information

                                       36

<PAGE>

                  not misleading.

                  If any Proceeding is brought against the Fund, the Investment
                  Manager or any such person in respect of which indemnity may
                  be sought against the Dealer Manager pursuant to the foregoing
                  paragraph, the Fund, the Investment Manager or such person
                  shall promptly notify the Dealer Manager in writing of the
                  institution of such Proceeding and the Dealer Manager shall
                  assume the defense of such Proceeding, including the
                  employment of counsel reasonably satisfactory to such
                  indemnified party and payment of all fees and expenses;
                  provided, however, that the omission to so notify the Dealer
                  Manager shall not relieve the Dealer Manager from any
                  liability which the Dealer Manager may have to the Fund, the
                  Investment Manager or any such person or otherwise. The Fund,
                  the Investment Manager or such person shall have the right to
                  employ its own counsel in any such case, but the fees and
                  expenses of such counsel shall be at the expense of the Fund,
                  the Investment Manager or such person, as the case may be,
                  unless the employment of such counsel shall have been
                  authorized in writing by the Dealer Manager in connection with
                  the defense of such Proceeding or such Dealer Manager shall
                  not have, within a reasonable period of time in light of the
                  circumstances, employed counsel to have charge of the defense
                  of such Proceeding or such indemnified party or parties shall
                  have reasonably concluded that there may be defenses available
                  to it or them which are different from or additional to or in
                  conflict with those available to the Dealer Manager (in which
                  case the Dealer Manager shall not have the right to direct the
                  defense of such Proceeding on behalf of the indemnified party
                  or parties, but the Dealer Manager may employ counsel and
                  participate in the defense thereof but the fees and expenses
                  of such counsel shall be at the expense of the Dealer
                  Manager), in any of which events such fees and expenses shall
                  be borne by the Dealer Manager and paid as incurred (it being
                  understood, however, that the Dealer Manager shall not be
                  liable for the expenses of more than one separate counsel (in
                  addition to any local counsel) in any one Proceeding or series
                  of related Proceedings in the same jurisdiction representing
                  the indemnified parties who are parties to such Proceeding).
                  The Dealer Manager shall not be liable for any settlement of
                  any such Proceeding effected without the written consent of
                  the Dealer Manager but if settled with the written

                                       37

<PAGE>

                  consent of the Dealer Manager, the Dealer Manager agrees to
                  indemnify and hold harmless the Fund, the Investment Manager
                  and any such person from and against any loss or liability by
                  reason of such settlement. Notwithstanding the foregoing
                  sentence, if at any time an indemnified party shall have
                  requested an indemnifying party to reimburse the indemnified
                  party for fees and expenses of counsel as contemplated by the
                  second sentence of this paragraph, then the indemnifying party
                  agrees that it shall be liable for any settlement of any
                  Proceeding effected without its written consent if (i) such
                  settlement is entered into more than 60 business days after
                  receipt by such indemnifying party of the aforesaid request,
                  (ii) such indemnifying party shall not have reimbursed the
                  indemnified party in accordance with such request prior to the
                  date of such settlement and (iii) such indemnified party shall
                  have given the indemnifying party at least 30 days' prior
                  notice of its intention to settle. No indemnifying party
                  shall, without the prior written consent of the indemnified
                  party, effect any settlement of any pending or threatened
                  Proceeding in respect of which any indemnified party is or
                  could have been a party and indemnity could have been sought
                  hereunder by such indemnified party, unless such settlement
                  includes an unconditional release of such indemnified party
                  from all liability on claims that are the subject matter of
                  such Proceeding.

         c.       If the indemnification provided for in this Section 7 is
                  unavailable to an indemnified party under subsections (a) and
                  (b) of this Section 7 in respect of any losses, damages,
                  expenses, liabilities or claims referred to therein, then each
                  applicable indemnifying party, in lieu of indemnifying such
                  indemnified party, shall contribute to the amount paid or
                  payable by such indemnified party as a result of such losses,
                  damages, expenses, liabilities or claims (i) in such
                  proportion as is appropriate to reflect the relative benefits
                  received by the Fund and the Investment Manager on the one
                  hand and the Dealer Manager on the other hand from the
                  offering of the Shares or (ii) if the allocation provided by
                  clause (i) above is not permitted by applicable law, in such
                  proportion as is appropriate to reflect not only the relative
                  benefits referred to in clause (i) above but also the relative
                  fault of the Fund and the Investment Manager on the one hand
                  and of the Dealer Manager on the other in connection with the
                  statements or omissions which resulted in such losses,
                  damages, expenses, liabilities or claims,

                                       38

<PAGE>

                  as well as any other relevant equitable considerations. The
                  relative benefits received by the Fund or the Investment
                  Manager on the one hand and the Dealer Manager on the other
                  shall be deemed to be in the same respective proportions as
                  the total proceeds from the offering (net of the Dealer
                  Manager Fee but before deducting expenses) received by the
                  Fund and the total underwriting discounts and commissions
                  received by the Dealer Manager, bear to the aggregate public
                  offering price of the Shares. The relative fault of the Fund
                  and the Investment Manager on the one hand and of the Dealer
                  Manager on the other shall be determined by reference to,
                  among other things, whether the untrue statement or alleged
                  untrue statement of a material fact or omission or alleged
                  omission relates to information supplied by the Fund or the
                  Investment Manager or by the Dealer Manager and the parties'
                  relative intent, knowledge, access to information and
                  opportunity to correct or prevent such statement or omission.
                  The amount paid or payable by a party as a result of the
                  losses, damages, expenses, liabilities and claims referred to
                  in this subsection shall be deemed to include any legal or
                  other fees or expenses reasonably incurred by such party in
                  connection with investigating, preparing to defend or
                  defending any Proceeding.

         d.       The Fund and the Investment Manager and the Dealer Manager
                  agree that it would not be just and equitable if contribution
                  pursuant to this Section 7 were determined by pro rata
                  allocation or by any other method of allocation that does not
                  take account of the equitable considerations referred to in
                  subsection (c) above. Notwithstanding the provisions of this
                  Section 7, the Dealer Manager shall not be required to
                  contribute any amount in excess of the fees received by it. No
                  person guilty of fraudulent misrepresentation (within the
                  meaning of Section 11(f) of the Securities Act) shall be
                  entitled to contribution from any person who was not guilty of
                  such fraudulent misrepresentation.

         e.       Notwithstanding any other provisions in this Section 7, no
                  party shall be entitled to indemnification or contribution
                  under this Dealer Manager Agreement against any loss, claim,
                  liability, expense or damage arising by reason of such
                  person's willful misfeasance, or gross negligence

                                       39

<PAGE>

                  in the performance of its duties hereunder.

         f.       The indemnity and contribution agreements contained in this
                  Section 7 and the covenants, warranties and representations of
                  the Fund contained in this Agreement shall remain in full
                  force and effect regardless of any investigation made by or on
                  behalf of the Dealer Manager, its partners, directors or
                  officers or any person (including each partner, officer or
                  director of such person) who controls the Dealer Manager
                  within the meaning of Section 15 of the Securities Act or
                  Section 20 of the Exchange Act, or by or on behalf of the Fund
                  or the Investment Manager, its directors or officers or any
                  person who controls the Fund or the Investment Manager within
                  the meaning of Section 15 of the Securities Act or Section 20
                  of the Exchange Act, and shall survive any termination of this
                  Agreement or the issuance and delivery of the Rights. The Fund
                  or the Investment Manager and the Dealer Manager agree
                  promptly to notify each other of the commencement of any
                  Proceeding against it and, in the case of the Fund or the
                  Investment Manager, against any of the Fund's or the
                  Investment Manager's officers or directors in connection with
                  the issuance of the Rights, or in connection with the
                  Registration Statement or Prospectus.

         g.       The Fund and the Investment Manager acknowledge that the
                  statements under the caption "Our Rights
                  Offering--Distribution Arrangements" in the Prospectus
                  constitute the only information furnished in writing to the
                  Fund by the Dealer Manager expressly for use in such document,
                  and the Dealer Manager confirms that such statements are
                  correct in all material respects.

8.       Representations, Warranties and Agreements to Survive Delivery. The
         respective agreements, representations, warranties, indemnities and
         other statements of the Fund or its officers, of the Investment Manager
         and of the Dealer Manager set forth in or made pursuant to this
         Agreement shall survive the Expiration Date and will remain in full
         force and effect, regardless of any investigation made by or on behalf
         of Dealer Manager or the Fund or any of the officers, directors or
         controlling persons referred to in Section 7 hereof, and will survive
         delivery of and payment for the Shares pursuant to the Offer.

                                       40

<PAGE>

         The provisions of Sections 5 and 7 hereof shall survive the termination
         or cancellation of this Agreement.

9.       Termination of Agreement.

         a.       This Agreement shall be subject to termination in the absolute
                  discretion of the Dealer Manager, by notice given to the Fund
                  prior to the expiration of the Offer, if prior to such time
                  (i) financial, political, economic, currency, banking or
                  social conditions in the United States shall have undergone
                  any material change the effect of which on the financial
                  markets makes it, in the Dealer Manager's judgment,
                  impracticable or inadvisable to proceed with the Offer, (ii)
                  there has occurred any outbreak or material escalation of
                  hostilities or other calamity or crisis the effect of which on
                  the financial markets of the United States is such as to make
                  it, in the Dealer Manager's judgment, impracticable or
                  inadvisable to proceed with the Offer, (iii) trading in the
                  Common Shares or in the Rights shall have been suspended by
                  the Commission or the New York Stock Exchange, Inc., (iv)
                  trading in securities generally on the New York Stock
                  Exchange, Inc. shall have been suspended or limited or (v) a
                  banking moratorium shall have been declared either by Federal
                  or New York State authorities.

         b.       If this Agreement is terminated pursuant to this Section, such
                  termination shall be without liability of any party to any
                  other party except as provided in Section 5.

                                       41

<PAGE>

10.      Notices. All communications hereunder will be in writing and effective
         only on receipt, and, if sent to the Dealer Manager, will be mailed,
         delivered or telegraphed and confirmed to UBS Securities LLC, 299 Park
         Avenue, New York, New York 10171-0026, Attn: Syndicate Department and,
         if to the Fund or the Investment Manager, shall be sufficient in all
         respects if delivered or sent to the Fund or the Investment Manager c/o
         Deutsche Asset Management, One South Street, BAL01-1806, Baltimore,
         Maryland 21202, Attention: Bruce A. Rosenblum, Esq.

11.      Successors. This Agreement will inure to the benefit of and be binding
         upon the parties hereto and their respective successors and will inure
         to the benefit of the officers and directors and controlling persons
         referred to in Section 7 hereof, and no other person will have any
         right or obligation hereunder.

12.      Applicable Law. This Agreement will be governed by and construed in
         accordance with the laws of the State of New York.

13.      Submission to Jurisdiction. Except as set forth below, no claim (a
         "Claim") may be commenced, prosecuted or continued in any court other
         than the courts of the State of New York located in the City and County
         of New York or in the United States District Court for the Southern
         District of New York, which courts shall have jurisdiction over the
         adjudication of such matters, and each of the Fund and the Investment
         Manager consents to the jurisdiction of such courts and personal
         service with respect thereto. Each of the Fund and the Investment
         Manager hereby consents to personal jurisdiction, service and venue in
         any court in which any Claim arising out of or in any way relating to
         this Agreement is brought by any third party against UBS Securities or
         any indemnified party. Each of UBS Securities, the Fund (on its behalf
         and, to the extent permitted by applicable law, on behalf of its
         stockholders and affiliates) and the Investment Manager (on its behalf
         and, to the extent permitted by applicable law, on behalf of its
         stockholders and affiliates) waives all right to trial by jury in any
         action, proceeding or counterclaim (whether based upon contract, tort
         or otherwise) in any way arising out of or relating to this Agreement.
         Each of the Fund and the Investment Manager agrees that a final
         judgment in any such action, proceeding or counterclaim brought in any
         such court shall be conclusive and binding upon the Fund or the
         Investment Manager, as the case may be, and

                                       42

<PAGE>

         may be enforced in any other courts in the jurisdiction of which the
         Fund or the Investment Manager is or may be subject, by suit upon such
         judgment.

14.      Counterparts. This Agreement may be executed in one or more
         counterparts, each of which shall be deemed to be an original, but all
         of which together shall constitute one and the same instrument.

                                       43

<PAGE>

                  If the foregoing is in accordance with your understanding of
our agreement, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Fund, the
Investment Manager and the Dealer Manager.

                                        Very truly yours,

                                        The Central Europe and Russia Fund, Inc.

                                        By:_____________________________________
                                           Name:________________________________
                                           Title:_______________________________

                                        Deutsche Bank Securities, Inc.

                                        By:_____________________________________
                                           Name:________________________________
                                           Title:_______________________________

<PAGE>

The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.

UBS Securities LLC

By:______________________________________
   Name:_________________________________
   Title:________________________________

By:______________________________________
   Name:_________________________________
   Title:________________________________

<PAGE>

                                                                       Exhibit A

                    THE CENTRAL EUROPE AND RUSSIA FUND, INC.

                         [     ] Shares of Common Stock
                 Issuable Upon Exercise of Transferable Rights
                          to Subscribe for Such Shares

                            SELLING GROUP AGREEMENT

                                            New York, New York
                                            [     ], 2004

UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026

Ladies and Gentlemen:

                  We understand that The Central Europe and Russia Fund, Inc., a
Maryland corporation (the "Fund"), proposes to issue to holders of record (the
"Holders") at the close of business on the record date set forth in the
Prospectus (as defined herein) (the "Record Date") transferable rights entitling
such Holders to subscribe for up to [     ] shares (each a "Share" and,
collectively, the "Shares") of the Fund's shares of common stock, par value
$0.01 per share (the "Common Shares"), of the Fund (the "Offer"). Pursuant to
the terms of the Offer, the Fund is issuing each Holder one transferable right
(each a "Right" and, collectively, the "Rights") for each Common Share held by
such Holder on the Record Date. Such Rights entitle holders to acquire during
the subscription period set forth in the Prospectus (the "Subscription Period"),
at the price set forth in such Prospectus (the "Subscription Price"), one Share
for each three Rights (except that any Holder who is issued fewer than three
Rights will be able to subscribe for one full Share pursuant to the primary
subscription), on the terms and conditions set forth in such Prospectus. No
fractional shares will be issued. Any Holder who fully exercises all Rights
initially issued to such Holder (other than those Rights that cannot be
exercised because they represent the right to acquire less than one Share) will
be entitled to subscribe for, subject to allocation, additional Shares (the
"Over-Subscription Privilege") on the terms and conditions set forth in such
Prospectus. The Rights are transferable and are expected to be listed on the New
York Stock Exchange, Inc.

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 3
Rights Offer Expiring [      ], 2004, unless extended

                  We further understand that the Fund has appointed UBS
Securities LLC to act as the dealer manager (the "Dealer Manager") in connection
with the Offer and has authorized the Dealer Manager to form and manage a group
of broker-dealers (each a "Selling Group Member" and collectively the "Selling
Group") to solicit the exercise of Rights and to sell Shares purchased by the
Dealer Manager from the Fund through the exercise of Rights.

                  We hereby express our interest in participating in the Offer
as a Selling Group Member.

                  We hereby agree with you as follows:

         1.       We have received and reviewed the Fund's prospectus dated
                  [     ], 2004 (the "Prospectus") relating to the Offer and we
                  understand that additional copies of the Prospectus (or of the
                  Prospectus as it may be subsequently supplemented or amended,
                  if applicable) and any other solicitation materials authorized
                  by the Fund relating to the Offer ("Offering Materials") will
                  be supplied to us in reasonable quantities upon our request
                  therefor to you. We agree that we are not authorized to (i)
                  use any solicitation material other than the Prospectus (as
                  supplemented or amended, if applicable) and the Offering
                  Materials or (ii) to make any representation, oral or written,
                  to any shareholders or prospective shareholders of the Fund
                  that are not contained in the Prospectus (as supplemented or
                  amended, if applicable) or the Offering Materials, in each
                  case unless previously authorized to do so in writing by the
                  Fund.

         2.       From time to time during the period (the "Subscription
                  Period") commencing on [     ], 2004 and ending at 5:00 p.m.,
                  New York City time, on the Expiration Date (the term
                  "Expiration Date" means [     ], 2004, unless and until the
                  Fund shall, in its sole discretion, have extended the period
                  for which the Offer is open, in which event the term
                  "Expiration Date" with respect to the Offer will mean the
                  latest time and date on which the Offer, as so extended by the
                  Fund, will expire), we may solicit the exercise of Rights in
                  connection with the Offer. We will be

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 4
Rights Offer Expiring [      ], 2004, unless extended

                  entitled to receive fees in the amounts and at the times
                  described in Section 4 of this Agreement with respect to
                  Shares purchased pursuant to the exercise of Rights and with
                  respect to which Equiserve (the "Subscription Agent") has
                  received, no later than 5:00 p.m., New York City time, on the
                  Expiration Date, either (i) a properly completed and executed
                  Subscription Certificate identifying us as the broker-dealer
                  having been instrumental in the exercise of such Rights, and
                  full payment for such Shares or (ii) a Notice of Guaranteed
                  Delivery guaranteeing to the Subscription Agent by the close
                  of business of the third business day after the Expiration
                  Date of a properly completed and duly executed Subscription
                  Certificate, similarly identifying us, and full payment for
                  such Shares. We understand that we will not be paid these fees
                  with respect to Shares purchased pursuant to an exercise of
                  Rights for our own account or for the account of any of our
                  affiliates. We also understand and agree that we are not
                  entitled to receive any fees in connection with the
                  solicitation of the exercise of Rights other than pursuant to
                  the terms of this Agreement and, in particular, that we will
                  not be entitled to receive any fees under the Fund's
                  Soliciting Dealer Agreement. We agree to solicit the exercise
                  of Rights in accordance with the Securities Act of 1933, as
                  amended (the "Securities Act"), the Securities Exchange Act of
                  1934, as amended (the "Exchange Act"), and the Investment
                  Company Act of 1940, as amended, and the rules and regulations
                  under each such Act, any applicable securities laws of any
                  state or jurisdiction where such solicitations may be lawfully
                  made, the applicable rules and regulations of any
                  self-regulatory organization or registered national securities
                  exchange and customary practice and subject to the terms of
                  the Subscription Agent Agreement between the Fund and the
                  Subscription Agent and the procedures described in the Fund's
                  registration statement on Form N-2 (File Nos. 333- and
                  811-06041), as amended (the "Registration Statement").

         3.       From time to time during the Subscription Period, we may
                  indicate interest in purchasing Shares from the Dealer
                  Manager. We understand that from time to time the Dealer
                  Manager intends to offer Shares obtained or to be obtained by
                  the Dealer Manager through the exercise

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 5
Rights Offer Expiring [      ], 2004, unless extended

                  of Rights to Selling Group Members who have so indicated
                  interest at prices which shall be determined by the Dealer
                  Manager (the "Offering Price"). We agree that with respect to
                  any such Shares purchased by us from the Dealer Manager the
                  sale of such Shares to us shall be irrevocable and we will
                  offer them to the public at the Offering Price at which we
                  purchase them from the Dealer Manager. Shares not sold by us
                  at such Offering Price may be offered by us after the next
                  succeeding Offering Price is set at the latest Offering Price
                  set by the Dealer Manager. The Dealer Manager agrees that, if
                  requested by any Selling Group Member, and subject to
                  applicable law, the Dealer Manager will set a new Offering
                  Price prior to 4:00 p.m., New York City time, on any business
                  day. We agree to advise the Dealer Manager from time to time
                  upon request, prior to the termination of this Agreement, of
                  the number of Shares remaining unsold which were purchased by
                  us from the Dealer Manager and, on the Dealer Manager's
                  request, we will resell to the Dealer Manager any of such
                  Shares remaining unsold at the purchase price thereof if in
                  the Dealer Manager's opinion such Shares are needed to make
                  delivery against sales made to other Selling Group Members.
                  Any shares purchased hereunder from the Dealer Manager shall
                  be subject to regular way settlement through the facilities of
                  the Depository Trust Company.

         4.       We understand that you will remit to us on or before the tenth
                  business day following the day the Fund issues Shares after
                  the Expiration Date, following receipt by you from the Fund of
                  the Dealer Manager Fee, a selling fee equal to 2.50% of the
                  Subscription Price per Share for (A) each Share issued
                  pursuant to the exercise of Rights or the Over-Subscription
                  Privilege pursuant to each Subscription Certificate upon which
                  we are designated, as certified to you by the Subscription
                  Agent, as a result of our solicitation efforts in accordance
                  with Section 2 and (B) each Share sold by the Dealer Manager
                  to us in accordance with Section 3 less any Shares resold to
                  the Dealer Manager in accordance with Section 3. Your only
                  obligation with respect to payment of the foregoing selling
                  fee to us is to remit to us amounts owing to us and actually
                  received by you from the Fund. Except as aforesaid, you shall

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 6
Rights Offer Expiring [      ], 2004, unless extended

                  be under no liability to make any payments to us pursuant to
                  this Agreement.

         5.       We agree that you, as Dealer Manager, have full authority to
                  take such action as may seem advisable to you in respect of
                  all matters pertaining to the Offer. You are authorized to
                  approve on our behalf any amendments or supplements to the
                  Registration Statement or the Prospectus.

         6.       We represent that we are a member in good standing of the NASD
                  and, in making sales of Shares, agree to comply with all
                  applicable rules of the National Association of Securities
                  Dealers, Inc. (the "NASD") including, without limitation, the
                  NASD's Interpretation with Respect to Free-Riding and
                  Withholding, as set forth in IM 2110-1 of the NASD's Conduct
                  Rules, and Rule 2740 of the NASD's Conduct Rules. We
                  understand that no action has been taken by you or the Fund to
                  permit the solicitation of the exercise of Rights or the sale
                  of Shares in any jurisdiction (other than the United States)
                  where action would be required for such purpose. We agree that
                  we will not, without your approval in advance, buy, sell, deal
                  or trade in, on a when-issued basis or otherwise, the Rights
                  or the Shares or any other option to acquire or sell Shares
                  for our own account or for the accounts of customers, except
                  as provided in Sections 2 and 3 hereof and except that we may
                  buy or sell Rights or Shares in brokerage transactions on
                  unsolicited orders which have not resulted from activities on
                  our part in connection with the solicitation of the exercise
                  of Rights and which are executed by us in the ordinary course
                  of our brokerage business. We will keep an accurate record of
                  the names and addresses of all persons to whom we give copies
                  of the Registration Statement, the Prospectus, any preliminary
                  prospectus (or any amendment or supplement thereto) or any
                  Offering Materials and, when furnished with any subsequent
                  amendment to the Registration Statement and any subsequent
                  prospectus, we will, upon your request, promptly forward
                  copies thereof to such persons.

         7.       Nothing contained in this Agreement will constitute the
                  Selling Group Members partners with the Dealer Manager or with
                  one another or

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 7
Rights Offer Expiring [      ], 2004, unless extended

                  create any association between those parties, or will render
                  the Dealer Manager or the Fund liable for the obligations of
                  any Selling Group Member. The Dealer Manager will be under no
                  liability to make any payment to any Selling Group Member
                  other than as provided in Section 4 of this Agreement, and
                  will be subject to no other liabilities to any Selling Group
                  Member, and no obligations of any sort will be implied. We
                  agree to indemnify and hold harmless you and each other
                  Selling Group Member and each person, if any, who controls you
                  and any such Selling Group Member within the meaning of either
                  Section 15 of the Securities Act or Section 20 of the Exchange
                  Act, against loss or liability caused by any breach by us of
                  the terms of this Agreement.

         8.       We agree to pay any transfer taxes which may be assessed and
                  paid on account of any sales or transfers for our account.

         9.       All communications to you relating to the Offer will be
                  addressed to: UBS Securities LLC, 299 Park Avenue, New York,
                  New York 10171-0026, Attn: Syndicate Department.

         10.      This Agreement will be governed by the internal laws of the
                  State of New York.

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 8
Rights Offer Expiring [      ], 2004, unless extended


         A signed copy of this Selling Group Agreement will be promptly returned
to the Selling Group Member at the address set forth below.

                                                Very truly yours,

                                                UBS Securities LLC

                                                By:_____________________________
                                                     Name:______________________
                                                     Title:_____________________

PLEASE COMPLETE THE INFORMATION BELOW

Printed Firm Name                           Address

Contact at Selling Group Member

Authorized Signature                        Area Code and Telephone
                                            Number

Name and Title                              Facsimile Number

Dated:_________________________________

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Selling Group Agreement - Page 9
Rights Offer Expiring [      ], 2004, unless extended

Payment of the Selling Fee shall be
mailed by check to the following address:

<PAGE>

                                                                       Exhibit B

                    THE CENTRAL EUROPE AND RUSSIA FUND, INC.

                   Rights Offering for Shares of Common Stock

                          SOLICITING DEALER AGREEMENT

            THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
                         [     ], 2004, UNLESS EXTENDED

To Securities Dealers and Brokers:

                  The Central Europe and Russia Fund, Inc., (the "Fund") is
issuing to its shareholders of record ("Record Date Shareholders") as of the
close of business on [     ], 2004 (the "Record Date") transferable rights
("Rights") to subscribe for an aggregate of up to [     ] shares (the "Shares")
of the Fund's shares common stock, par value $0.01 per share (the "Common
Shares"), of the Fund upon the terms and subject to the conditions set forth in
the Fund's Prospectus (the "Prospectus") dated [     ], 2004 (the "Offer"). Each
such Record Date Shareholder is being issued one Right for each full Common
Share owned on the Record Date. Such Rights entitle holders to acquire during
the Subscription Period (as hereinafter defined) at the Subscription Price (as
hereinafter defined), one Share for each three Rights (except that any Record
Date Shareholder who is issued fewer than three Rights will be able to subscribe
for one full Share pursuant to the primary subscription), on the terms and
conditions set forth in such Prospectus. No fractional shares will be issued.
Any Record Date Shareholder who fully exercises all Rights initially issued to
such holder (other than those Rights that cannot be exercised because they
represent the right to acquire less than one Share) will be entitled to
subscribe for, subject to allocation, additional Shares (the "Over-Subscription
Privilege") on the terms and conditions set forth in such

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 2
Transferable Rights Offer Expiring [      ], 2004, unless extended

Prospectus. Shares acquired pursuant to the Over-Subscription Privilege are
subject to allotment, as more fully described in the Prospectus. The Rights are
transferable and are expected to be listed on the New York Stock Exchange, Inc.
The Subscription Price will be [     ]. The Subscription Period will commence on
[      ], 2004 and end at 5:00 p.m., New York City time on the Expiration Date
(the term "Expiration Date" means [     ], 2004, unless and until the Fund
shall, in its sole discretion, have extended the period for which the Offer is
open, in which event the term "Expiration Date" with respect to the Offer will
mean the latest time and date on which the Offer, as so extended by the Fund,
will expire).

                  For the duration of the Offer, the Fund has authorized and the
Dealer Manager has agreed to reallow a Solicitation Fee to any qualified broker
or dealer executing a Soliciting Dealer Agreement who solicits the exercise of
Rights and the Over-Subscription Privilege in connection with the Offer and who
complies with the procedures described below (a "Soliciting Dealer"). Upon
timely delivery to [     ], the Fund's Subscription Agent for the Offer, of
payment for Shares purchased pursuant to the exercise of Rights and the
Over-Subscription Privilege and of properly completed and executed documentation
as set forth in this Soliciting Dealer Agreement, a Soliciting Dealer will be
entitled to receive the Solicitation Fee equal to 0.50% of the Subscription
Price per Share so purchased subject to a maximum fee based on the number of
Common Shares held by such Soliciting Dealer through The Depository Trust
Company ("DTC") on the Record Date; provided, however, that no payment shall be
due with respect to the issuance of any Shares until payment therefor is
actually received. A qualified broker or dealer is a broker or dealer which is a
member of a registered national securities exchange in the United States or the
National Association of Securities Dealers, Inc. ("NASD") or any foreign broker
or dealer not eligible for membership who agrees to conform to the Rules of Fair
Practice of the NASD, including Sections 2730, 2740, 2420 and 2750 thereof, in
making solicitations in the United States to the same extent as if it were a
member thereof.

                  The Fund has authorized and the Dealer Manager has agreed to
pay the Solicitation Fees payable to the undersigned Soliciting Dealer and to
indemnify such Soliciting Dealer on the terms set forth in the Dealer Manager
Agreement, dated [     ], 2004, among UBS Securities LLC as the dealer manager
(the "Dealer Manager"), the Fund and others (the "Dealer Manager Agreement").
Solicitation and other activities by Soliciting Dealers may be undertaken only
in accordance with the applicable rules

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 3
Transferable Rights Offer Expiring [      ], 2004, unless extended

and regulations of the Securities and Exchange Commission and only in those
states and other jurisdictions where such solicitations and other activities may
lawfully be undertaken and in accordance with the laws thereof. Compensation
will not be paid for solicitations in any state or other jurisdiction in which
the opinion of counsel to the Fund or counsel to the Dealer Manager, such
compensation may not lawfully be paid. No Soliciting Dealer shall be paid
Solicitation Fees with respect to Shares purchased pursuant to an exercise of
Rights and the Over-Subscription Privilege for its own account or for the
account of any affiliate of the Soliciting Dealer. No Soliciting Dealer or any
other person is authorized by the Fund or the Dealer Manager to give any
information or make any representations in connection with the Offer other than
those contained in the Prospectus and other authorized solicitation material
furnished by the Fund through the Dealer Manager. No Soliciting Dealer is
authorized to act as agent of the Fund or the Dealer Manager in any connection
or transaction. In addition, nothing herein contained shall constitute the
Soliciting Dealers partners with the Dealer Manager or with one another, or
agents of the Dealer Manager or of the Fund, or create any association between
such parties, or shall render the Dealer Manager or the Fund liable for the
obligations of any Soliciting Dealer. The Dealer Manager shall be under no
liability to make any payment to any Soliciting Dealer, and shall be subject to
no other liabilities to any Soliciting Dealer, and no obligations of any sort
shall be implied.

                  In order for a Soliciting Dealer to receive Solicitation Fees,
the Subscription Agent must have received from such Soliciting Dealer no later
than 5:00 p.m., New York City time, on the Expiration Date, either (i) a
properly completed and duly executed Subscription Certificate with respect to
Shares purchased pursuant to the exercise of Rights and the Over-Subscription
Privilege and full payment for such Shares; or (ii) a Notice of Guaranteed
Delivery guaranteeing delivery to the Subscription Agent by close of business on
the third business day after the Expiration Date, of (a) full payment for such
Shares and (b) a properly completed and duly executed Subscription Certificate
with respect to Shares purchased pursuant to the exercise of Rights.
Solicitation Fees will only be paid after receipt by the Subscription Agent of a
properly completed and duly executed Soliciting Dealer Agreement and a
Subscription Certificate designating the Soliciting Dealer in the applicable
portion hereof. In the case of a Notice of Guaranteed Delivery, Solicitation
Fees will only be paid after delivery in accordance with such Notice of
Guaranteed Delivery has been effected. Solicitation Fees will be paid by the
Fund (through the Subscription Agent) to the Soliciting Dealer by check to an
address designated by the Soliciting Dealer below

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 4
Transferable Rights Offer Expiring [      ], 2004, unless extended

by the tenth business day following the day the Fund issues Shares after the
Expiration Date.

                  All questions as to the form, validity and eligibility
(including time of receipt) of this Soliciting Dealer Agreement will be
determined by the Fund, in its sole discretion, which determination shall be
final and binding. Unless waived, any irregularities in connection with a
Soliciting Dealer Agreement or delivery thereof must be cured within such time
as the Fund shall determine. None of the Fund, the Dealer Manager, the
Subscription Agent, the Information Agent for the Offer or any other person will
be under any duty to give notification of any defects or irregularities in any
Soliciting Dealer Agreement or incur any liability for failure to give such
notification.

                  The acceptance of Solicitation Fees from the Fund by the
undersigned Soliciting Dealer shall constitute a representation by such
Soliciting Dealer to the Fund that: (i) it has received and reviewed the
Prospectus; (ii) in soliciting purchases of Shares pursuant to the exercise of
the Rights and the Over-Subscription Privilege, it has complied with the
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the applicable rules and regulations thereunder, any applicable
securities laws of any state or jurisdiction where such solicitations were made,
and the applicable rules and regulations of any self-regulatory organization or
registered national securities exchange; (iii) in soliciting purchases of Shares
pursuant to the exercise of the Rights and the Over-Subscription Privilege, it
acknowledges that it is not authorized to (a) use any solicitation material
other than the Prospectus (as supplemented or amended, if applicable) and the
Offering Materials or (b) to make any representation, oral or written, to any
shareholders or prospective shareholders of the Fund that are not contained in
the Prospectus (as supplemented or amended, if applicable) or the Offering
Materials, in each case unless previously authorized to do so in writing by the
Fund; (iv) it has not purported to act as agent of the Fund or the Dealer
Manager in any connection or transaction relating to the Offer; (v) the
information contained in this Soliciting Dealer Agreement is, to its best
knowledge, true and complete; (vi) it is not affiliated with the Fund; (vii) it
will not accept Solicitation Fees paid by the Fund pursuant to the terms hereof
with respect to Shares purchased by the Soliciting Dealer pursuant to an
exercise of Rights and the Over-Subscription Privilege for its own account;
(viii) it will not remit, directly or indirectly, any part of Solicitation Fees
paid by the Fund pursuant to the terms hereof to any beneficial owner of Shares
purchased pursuant to the Offer; and (ix) it has agreed to the amount of the
Solicitation

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 5
Transferable Rights Offer Expiring [      ], 2004, unless extended

Fees and the terms and conditions set forth herein with respect to receiving
such Solicitation Fees. By returning a Soliciting Dealer Agreement and accepting
Solicitation Fees, a Soliciting Dealer will be deemed to have agreed to
indemnify the Fund and the Dealer Manager against losses, claims, damages and
liabilities to which the Fund may become subject as a result of the breach of
such Soliciting Dealer's representations made herein and described above. In
making the foregoing representations, Soliciting Dealers are reminded of the
possible applicability of the anti-manipulation rules under the Exchange Act if
they have bought, sold, dealt in or traded in any Shares for their own account
since the commencement of the Offer.

                  Upon expiration of the Offer, no Solicitation Fees will be
payable to Soliciting Dealers with respect to Shares purchased thereafter.

                  Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Dealer Manager Agreement or, if not defined
therein, in the Prospectus.

                  This Soliciting Dealer Agreement will be governed by the laws
of the State of New York.

                  Please execute this Soliciting Dealer Agreement below
accepting the terms and conditions hereof and confirming that you are a member
firm of the NASD or a foreign broker or dealer not eligible for membership who
has conformed to the Rules of Fair Practice of the NASD, including Sections
2730, 2740, 2420 and 2750 thereof, in making solicitations of the type being
undertaken pursuant to the Offer in the United States to the same extent as if
you were a member thereof, and certifying that you have solicited the purchase
of the Shares pursuant to exercise of the Rights, all as described above, in
accordance with the terms and conditions set forth in this Soliciting Dealer
Agreement. Please forward two executed copies of this Soliciting Dealer
Agreement to: UBS Securities LLC, 299 Park Avenue, New York, New York
10171-0026, Attn: Syndicate Department.

<PAGE>

THE CENTRAL EUROPE AND RUSSIA FUND, INC.
Soliciting Dealer Agreement - Page 6
Transferable Rights Offer Expiring [      ], 2004, unless extended

         A signed copy of this Soliciting Dealer Agreement will be promptly
returned to the Soliciting Dealer at the address set forth below.

                                 Very truly yours,

                                 UBS Securities LLC

                                 By:____________________________________________
                                     Name:______________________________________
                                     Title:_____________________________________

PLEASE COMPLETE THE INFORMATION BELOW

Printed Firm Name                           Address

Contact at Soliciting Dealer

Authorized Signature                        Area Code and Telephone
                                            Number

Name and Title                               Facsimile Number

Dated:_________________________________

Payment of the Solicitation Fee shall be
mailed by check to the following address:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.H.2
<SEQUENCE>12
<FILENAME>y93068a1exv99whw2.txt
<DESCRIPTION>FORM OF LETTER AGREEMENT
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(h)(2)

                                LETTER AGREEMENT

                                                              New York, New York
                                                                 [       ], 2004

UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026

Ladies and Gentlemen:

                  We understand that The Central Europe and Russia Fund, Inc., a
Maryland corporation (the "Fund"), has appointed UBS Securities LLC to act as
dealer manager (the "Dealer Manager") in connection with the issuance by the
Fund to the holders of record (the "Holders") at the close of business on the
record date set forth in the Prospectus (as defined herein) (the "Record Date")
of transferable rights entitling such Holders to subscribe for up to
[__________] shares (each a "Share" and, collectively, the "Shares") of the
Fund's common stock, par value $0.01 per share (the "Common Shares"), of the
Fund (the "Offer"). Pursuant to the terms of the Offer, the Fund is issuing each
Holder one transferable right (each a "Right" and, collectively, the "Rights")
for each Common Share held by such Holder on the Record Date. Such Rights
entitle holders to acquire during the subscription period set forth in the
Prospectus (the "Subscription Period"), at the price set forth in such
Prospectus (the "Subscription Price"), one Share for each three Rights exercised
(except that any Holder who is issued fewer than three Rights will be able to
subscribe for one full Share pursuant to the primary subscription), on the terms
and conditions set forth in such Prospectus. No fractional shares will be
issued. Any Holder who fully exercises all Rights initially issued to such
Holder (other than those Rights that cannot be exercised because they represent
the right to acquire less than one Share) will be entitled to subscribe for,
subject to allocation, additional Shares (the "Over-Subscription Privilege") on
the terms and conditions set forth in the Prospectus. The Rights are
transferable and are expected to be listed on the New York Stock Exchange, Inc.

                  The Fund has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form N-2 (Nos. 333-111828 and
811-06041) and a related preliminary prospectus and preliminary statement of
additional information under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations of the Commission under the
Investment Company Act and the Securities Act (the "Rules and Regulations"). The
term "Registration Statement" means the registration statement, as amended, at
the time it becomes or became effective, including financial statements and all
exhibits and all documents, if any, incorporated therein by reference, and any
information deemed to be included by Rule 430A. The term "Prospectus" means the
final prospectus and final statement of additional

<PAGE>

information in the forms filed with the Commission pursuant to Rule 497(c), (e),
(h) or (j) of the Rules and Regulations, as the case may be, as from time to
time amended or supplemented pursuant to the Securities Act.

                  Deutsche Asset Management International GmbH, a German limited
liability company (the "Investment Adviser") acts as investment adviser to the
Fund pursuant to an Investment Advisory Agreement dated as of January 31, 1990
between the Fund and the Investment Adviser. The Investment Adviser is not a
party to the Dealer Manager Agreement (the "Dealer Manager Agreement") pursuant
to which the Fund is appointing or will appoint the Dealer Manager to act in
such capacity in connection with the Offer. As a further inducement to the
Dealer Manager to enter into the Dealer Manager Agreement and to act as Dealer
Manager in connection with the Offer, the Investment Adviser has executed and
delivered to the Dealer Manager this Letter Agreement (""Agreement""). This
Agreement will become effective upon execution of the Dealer Manager Agreement,
as notified to the Investment Adviser by the Dealer Manager.

1.       Representations and Warranties; Agreements.

         a.       The Investment Adviser represents and warrants to, and agrees
                  with, the Dealer Manager as of the date hereof and as of the
                  date of the commencement of the Offer that:

                  i.       The Investment Adviser has been duly organized and is
                           validly existing as a limited liability company under
                           the laws of the Federal Republic of Germany, has full
                           power and authority (corporate and other) to own its
                           properties and conduct its business as described in
                           the Registration Statement and the Prospectus, and is
                           duly qualified to do business as a foreign
                           corporation in each jurisdiction wherein it owns or
                           leases real property or in which the conduct of its
                           business requires such qualification, except where
                           the failure to be so qualified does not involve a
                           material adverse effect upon the Investment Adviser's
                           business, properties, financial position or
                           operations.

                  ii.      The Investment Adviser is duly registered as an
                           investment adviser under the Investment Advisers Act
                           of 1940, as amended (the "Advisers Act'), and is not
                           prohibited by the Advisers Act or the Investment
                           Company Act, or the rules and regulations under such
                           Acts, from acting as investment adviser for the Fund
                           as contemplated in the Prospectus and the Investment
                           Advisory Agreement.

                  iii.     This Agreement has been duly authorized, executed and
                           delivered by the Investment Adviser. The Investment
                           Advisory Agreement has been duly authorized, executed
                           and delivered by the Investment Adviser, and complies
                           with all applicable provisions of

                                       2

<PAGE>

                           the Investment Company Act, the Advisers Act and the
                           rules and regulations under such Acts, and is,
                           assuming due authorization, execution and delivery by
                           the other party thereto, a legal, valid, binding and
                           enforceable obligation of the Investment Adviser,
                           subject to the qualification that the enforceability
                           of the Investment Adviser's obligations thereunder
                           may be limited by bankruptcy, insolvency,
                           reorganization, moratorium and similar laws of
                           general applicability relating to or affecting
                           creditors' rights, to general principles of equity
                           (regardless of whether enforceability is considered
                           in a proceeding in equity or at law) and to
                           termination under the Investment Company Act.

                  iv.      Neither the execution, delivery, performance and
                           consummation by the Investment Adviser of its
                           obligations under this Agreement or the Investment
                           Advisory Agreement nor the consummation of the
                           transactions contemplated herein or therein or in
                           connection with the Offer will conflict with or
                           violate the charter, by-laws or similar
                           organizational documents of the Investment Adviser,
                           or conflict with, result in a breach of, or
                           constitute a default or an event of default under, or
                           result in the creation or imposition of any lien,
                           charge or encumbrance upon any properties or assets
                           of the Investment Adviser under the charter, bylaws
                           or similar organizational document, the terms and
                           provisions of any material agreement, indenture,
                           mortgage, loan agreement, note, insurance or surety
                           agreement, lease or other instrument to which the
                           Investment Adviser is a party or by which it may be
                           bound or to which any of the property or assets of
                           the Investment Adviser is subject, nor will such
                           action result in any violation of any order, law,
                           rule or regulation of any court or governmental
                           agency or body having jurisdiction over the
                           Investment Adviser or any of its properties.

                  v.       There is no pending or, to the best of the Investment
                           Adviser's knowledge, threatened action, suit or
                           proceeding affecting the Investment Adviser or to
                           which the Investment Adviser is a party before or by
                           any court or governmental agency, authority or body
                           or any arbitrator which would disqualify the
                           Investment Adviser pursuant to Section 9(a) of the
                           Investment Company Act from acting as investment
                           adviser to the Fund or is otherwise reasonably likely
                           to result in any material adverse change in the
                           Investment Adviser's ability to perform its services
                           under the Investment Advisory Agreement.

                  vi.      No consent, approval, authorization, notification or
                           order of, or filing with, or the issuance of any
                           license or permit by, any court or governmental
                           agency or body is required for the consummation by
                           the Investment Adviser of the transactions
                           contemplated by

                                       3

<PAGE>

                           Investment Advisory Agreement or in connection with
                           the offer to be consummated by the Investment
                           Adviseor except such as have been obtained, or if the
                           registration statement filed with respect to the
                           Shares is not effective under the Securities Act as
                           of the time of execution hereof, such as may be
                           required (and shall be obtained as provided in this
                           Agreement) under the Investment Company Act, the
                           Securities Act and the Securities Exchange Act of
                           1934, as amended (the "Exchange Act"), or by the
                           National Association of Securities Dealers, Inc., the
                           New York Stock Exchange or the Frankfurt Stock
                           Exchange.

                  vii.     The Investment Adviser (A) has not taken, directly or
                           indirectly, any action designed to cause or to result
                           in, or that has constituted or which might reasonably
                           be expected to constitute, the stabilization or
                           manipulation of the price of any security of the Fund
                           to facilitate the issuance of the Rights or the sale
                           or resale of the Rights and the Shares, (B) has not
                           since the filing of the Registration Statement sold,
                           bid for or purchased, or paid anyone any compensation
                           for soliciting purchases of, Common Shares of the
                           Fund (except for the solicitation of exercises of the
                           Rights pursuant to this Agreement) and (C) will not,
                           until the later of the expiration of the Rights or
                           the completion of the distribution (within the
                           meaning of the anti-manipulation rules under the
                           Exchange Act) of the Shares, sell, bid for or
                           purchase, pay or agree to pay any person any
                           compensation for soliciting another to purchase any
                           other securities of the Fund (except for the
                           solicitation of exercises of the Rights pursuant to
                           this Agreement); provided that any action in
                           connection with the Fund's dividend reinvestment and
                           cash purchase plan will not be deemed to be within
                           the terms of this Section 1.a.vii.

         b.       The Investment Adviser agrees to notify promptly in writing,
                  from the date of this Agreement through the expiration date of
                  the Offer set forth in the Prospectus, as it may be extended
                  as provided for in the Prospectus (the "Expiration Date"), if
                  any representation, warranty or agreement of the Investment
                  Adviser set forth in Section 1.a. of this Agreement shall be
                  untrue or incorrect in any material respect.

2.       Representations, Warranties and Agreements to Survive Delivery. The
         agreements, representations and warranties of the Investment Adviser
         set forth in or made pursuant to this Agreement shall survive the
         Expiration Date and will remain in full force and effect, regardless of
         any investigation made by or on behalf of Dealer Manager or any of the
         officers, directors or controlling persons referred to in Section 7 of
         the Dealer Manager Agreement, and will survive delivery of and payment
         for the Shares pursuant to the Offer.

                                       4

<PAGE>

3.       Notices. All communications hereunder will be in writing and effective
         only on receipt, and, if sent to the Dealer Manager, will be mailed,
         delivered or telegraphed and confirmed to UBS Securities LLC, 299 Park
         Avenue, New York, New York 10171-0026, Attn: Syndicate Department.

4.       Applicable Law. This Agreement will be governed by and construed in
         accordance with the laws of the State of New York.

5.       Submission to Jurisdiction. Except as set forth below, no claim (a
         "Claim") may be commenced, prosecuted or continued in any court other
         than the courts of the State of New York located in the City and County
         of New York or in the United States District Court for the Southern
         District of New York, which courts shall have jurisdiction over the
         adjudication of such matters, and the Investment Adviser consents to
         the jurisdiction of such courts and personal service with respect
         thereto. The Investment Adviser hereby consents to personal
         jurisdiction, service and venue in any court in which any Claim arising
         out of or in any way relating to this Agreement is brought by any third
         party against UBS Securities. Each of UBS Securities and the Investment
         Adviser (on its behalf and, to the extent permitted by applicable law,
         on behalf of its stockholders and affiliates) waives all right to trial
         by jury in any action, proceeding or counterclaim (whether based upon
         contract, tort or otherwise) in any way arising out of or relating to
         this Agreement. The Investment Adviser agrees that a final judgment in
         any such action, proceeding or counterclaim brought in any such court
         shall be conclusive and binding upon the Investment Adviser and may be
         enforced in any other courts in the jurisdiction of which the
         Investment Adviser is or may be subject, by suit upon such judgment.

6.       Counterparts. This Agreement may be executed in one or more
         counterparts, each of which shall be deemed to be an original, but all
         of which together shall constitute one and the same instrument.

                  If the foregoing is in accordance with your understanding of
our agreement, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the
Investment Adviser and the Dealer Manager.

                                                     Very truly yours,

                                    Deutsche Asset Management International GmbH

                                    By:_________________________________________
                                       Name:____________________________________
                                       Title:___________________________________

                                       5

<PAGE>

The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.

UBS Securities LLC

By:_________________________________
   Name:____________________________
   Title:___________________________

By:_________________________________
   Name:____________________________
   Title:___________________________

                                       6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.J.1
<SEQUENCE>13
<FILENAME>y93068a1exv99wjw1.txt
<DESCRIPTION>AMENDED AND RESTATED CUSTODY AGREEMENT
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(j)(1)
                                                                 Effective as of
                                                                   July 23, 1993

                              AMENDED AND RESTATED
                               CUSTODIAN AGREEMENT

                                     Between

                          THE FUTURE GERMANY FUND, INC.

                                       and

                         INVESTORS BANK & TRUST COMPANY

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>      <C>                                                                <C>
1.       Bank Appointed Custodian........................................    1

2.       Definitions.....................................................    1

         2.1      Authorized Person......................................    1
         2.2      Security...............................................    1
         2.3      Portfolio Security.....................................    2
         2.4      Officers' Certificate..................................    2
         2.5      Book-Entry System......................................    2
         2.6      Depository.............................................    2
         2.7      Proper Instructions....................................    2
         2.8      Foreign Securities.....................................    2
         2.9      Eligible Foreign Custodian.............................    3

3.       Separate Accounts...............................................    3

4.       Certification as to Authorized Persons..........................    3

5.       Custody of Cash.................................................    3

         5.1      Purchase of Securities.................................    3
         5.2      [RESERVED].............................................    3
         5.3      Distributions and Expenses of Fund.....................    4
         5.4      Payment in Respect of Securities.......................    4
         5.5      Repayment of Loans.....................................    4
         5.6      Repayment of Cash......................................    4
         5.7      Foreign Exchange Transactions..........................    4
         5.8      Other Authorized Payments..............................    4
         5.9      Termination............................................    4

6.       Securities......................................................    5

         6.1      Segregation and Registration...........................    5
         6.2      Voting and Proxies.....................................    5
         6.3      Book-Entry System......................................    5
         6.4      Use of a Depository....................................    7
         6.5      Use of Book-Entry System for Commercial Paper..........    8
         6.6      [RESERVED].............................................    9
         6.7      Eurodollar CDs.........................................    9
         6.8      Options and Futures Transactions.......................    9
         6.9      Segregated Account.....................................   10
         6.10     Interest Bearing Call or Time Deposits.................   12
</TABLE>

                                      -i-

<PAGE>

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>      <C>                                                                <C>
         6.11     Transfer of Securities.................................   12

7.       [RESERVED]......................................................   14

8.       Merger, Dissolution, etc. of Fund...............................   14

9.       Actions of Bank Without Prior Authorization.....................   14

10.      Collection; Defaults............................................   15

11.      Maintenance of Records; Accounting Services.....................   15

12.      Fund Evaluation.................................................   16

13.      Concerning the Bank.............................................   16

         13.1     Performance of Duties; Standard of Care................   16
         13.2     Agents and Subcustodians...............................   18
         13.3     Insurance..............................................   18
         13.4     Fees and Expenses of Bank..............................   18
         13.5     Advances by Bank.......................................   19

14.      Termination.....................................................   19

15.      Notices.........................................................   20

16.      Amendments......................................................   20

17.      Parties.........................................................   20

18.      Governing Law...................................................   21
</TABLE>

                                      -ii-

<PAGE>

                    AMENDED AND RESTATED CUSTODIAN AGREEMENT

         AGREEMENT made as of this 23rd day of July, 1993 between THE FUTURE
GERMANY FUND, INC., established under the laws of the State of Delaware (the
"Fund") and INVESTORS BANK & TRUST COMPANY (the "Bank") amending and restating
the agreement dated as of March 6, 1990.

         The Fund, a closed-end management investment company, desires to place
and maintain all of its portfolio securities and cash in the custody of the
Bank. The Bank has at least the minimum qualifications required by Section
17(f)(1) of the Investment Company Act of 1940 (the "Act") to act as custodian
of the portfolio securities and cash of the Fund, and has indicated its
willingness to so act, subject to the terms and conditions of this Agreement.

         NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:

         1.       Bank Appointed Custodian. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.

         2.       Definitions. Whenever used herein, the terms listed below will
have the following meaning:

                  2.1      Authorized Person. Authorized Person will mean any of
the persons duly authorized to give Proper Instructions or otherwise act on
behalf of the Fund by appropriate resolution of its Board of Directors (the
"Board"), and set forth in a certificate as required by Section 4 hereof.

                  2.2      Security. The term security as used herein will have
the same meaning as when such term is used in the Securities Act of 1933 as
amended, including, without limitation, any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security, certificate of deposit, or group
or index of securities (including any interest therein or based on the value
thereof) , or any put, call, straddle, option, or privilege entered into on a
national securities exchange relating to a foreign currency, or, in general, any
interest or instrument commonly known as a "security", or any certificate of
interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to, or option contract to
purchase or sell any of the foregoing and futures, forward contracts and options
thereon.

<PAGE>

                  2.3      Portfolio Security. Portfolio Security will mean any
security owned by the Fund.

                  2.4      Officers' Certificate. Officers' Certificate will
mean, unless otherwise indicated, any request, direction, instruction, or
certification in writing signed by any two Authorized Persons of the Fund.

                  2.5      Book-Entry System. Book-Entry System shall mean the
Federal Reserve-Treasury Department Book Entry System for United States
government, instrumentality and agency securities operated by the Federal
Reserve Bank, its successor or successors and its nominee or nominees.

                  2.6      Depository. Depository shall mean any clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934 which acts as a securities depository, and its
nominee or nominees.

                  2.7      Proper Instructions. Proper Instructions shall mean
(i) instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person,
such instructions to be given in such form and manner as the Bank and the Fund
shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed or initialed by such one
or more Authorized Persons. Oral instructions will be considered Proper
Instructions if the Bank reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction involved.
The Fund shall cause all oral instructions to be promptly confirmed in writing,
provided, however, that its failure to do so shall not be deemed to invalidate
or otherwise render ineffective such oral instructions. The Bank shall act upon
and comply with any subsequent Proper Instruction which modifies a prior
instruction and the sole obligation of the Bank with respect to any follow-up or
confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires the Bank
to act the Fund shall give the Bank specific Proper Instructions as to the
action required. Upon receipt of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Fund, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and the Bank are satisfied that such procedures afford adequate safeguards
for the Fund's assets.

                  2.8      Foreign Securities. Foreign Securities shall have the
meaning ascribed to the term in Rule l7f-5 of the Act.

                                      -2-
<PAGE>

                  2.9      Eligible Foreign Custodian. Eligible Foreign
Custodian shall have the meaning ascribed to the term in Rule 17f-5 of the Act.

         3.       Separate Accounts. If the Fund has more than one series or
portfolio, the Bank will segregate the assets of each series or portfolio to
which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all investment
earnings thereon).

         4.       Certification as to Authorized Persons. The Secretary or
Assistant Secretary of the Fund will at all times maintain on file with the Bank
his certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
members of the Board, it being understood that upon the occurrence of any change
in the information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund will sign a new or amended certification setting forth the
change and the new, additional or omitted names or signatures. The Bank will be
entitled to rely and act upon any Officers' Certificate or Proper Instructions
given to it by Authorized Persons named in the most recent certification.

         5.       Custody of Cash. As custodian for the Fund, the Bank will open
and maintain a separate account or accounts in the name of the Fund or in the
name of the Bank, as Custodian of the Fund, and will deposit to the account of
the Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Section 13.2 hereof, including borrowed funds, delivered
to the Bank, subject only to draft or order by the Bank acting pursuant to the
terms of this Agreement. Upon receipt by the Bank of Proper Instructions (which
may be continuing instructions) requesting such payment, designating the payee
or the account or accounts to which the Bank will release funds for deposit, and
stating that it is for a purpose permitted under the terms of this Section 5,
specifying the applicable subsection, or describing such purpose with sufficient
particularity to permit the Bank to ascertain the applicable subsection, the
Bank will make payments of cash held for the accounts of the Fund, insofar as
funds are available for that purpose, only as permitted in subsections 5.1-5.9
below.

                  5.1      Purchase of Securities: upon the purchase of
securities for the Fund, against contemporaneous receipt of such securities by
the Bank registered in the name of the Fund or in the name of, or properly
endorsed and in form for transfer to, the Bank, or a nominee of the Bank, or
receipt for the account of the Bank pursuant to the provisions of Section 6
below, each such payment to be made at the purchase price shown on a broker's
confirmation (or transaction report in the case of Book Entry Paper) of purchase
of the securities received by the Bank before such payment is made, as confirmed
in the Proper Instructions received by the Bank before such payment is made;

                  5.2      [RESERVED]

                                      -3-
<PAGE>

                  5.3      Distributions and Expenses of Fund: for the payment
on the account of the Fund of dividends or other distributions to shareholders
as may from time to time be declared by the Board, interest, taxes, management
or supervisory fees, fees of the Bank for its services hereunder and
reimbursement of the expenses and liabilities of the Bank as provided hereunder,
fees of any transfer agent, fees for legal, accounting, and auditing services,
or other operating expenses of the Fund;

                  5.4      Payment in Respect of Securities: for payments in
connection with the conversion, exchange or surrender of Portfolio Securities or
securities subscribed to by the Fund held by or to be delivered to the Bank;

                  5.5      Repayment of Loans: to repay loans of money made to
the Fund, but, in the case of final payment, only upon redelivery to the Bank of
any Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;

                  5.6      Repayment of Cash: to repay the cash delivered to the
Fund for the purpose of collateralizing the obligation to return to the Fund
certificates borrowed from the Fund representing Portfolio Securities, but only
upon redelivery to the Bank of such borrowed Portfolio Securities;

                  5.7      Foreign Exchange Transactions: for payments in
connection with foreign exchange contracts or options to purchase and sell
foreign currencies for spot and future delivery which may be entered into by the
Bank on behalf of the Fund upon the receipt of Proper Instructions, such Proper
Instructions to specify the currency broker or banking institution (which may be
the Bank, or any other subcustodian or agent hereunder, acting as principal)
with which the contract or option is made, and the Bank shall have no duty with
respect to the selection of such currency brokers or banking institutions with
which the Fund deals or for their failure to comply with the terms of any
contract or option;

                  5.8      Other Authorized Payments: for other authorized
transactions of the Fund, or other obligations of the Fund incurred for proper
Fund purposes; provided that before making any such payment the Bank will also
receive a certified copy of a resolution of the Board signed by an Authorized
Person (other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose; and

                  5.9      Termination: upon the termination of this Agreement
as hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.

                                      -4-
<PAGE>

         6.       Securities.

                  6.1      Segregation and Registration. Except as otherwise
provided herein, and except for securities to be delivered to any subcustodian
appointed pursuant to Section 13.2 hereof, the Bank as custodian, will receive
and hold pursuant to the provisions hereof, in a separate account or accounts
and physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of the Fund. All such Portfolio Securities will be held or disposed of
by the Bank for, and subject at all times to, the instructions of the Fund
pursuant to the terms of this Agreement. Subject to the specific provisions
herein relating to Portfolio Securities that are not physically held by the
Bank, the Bank will register all Portfolio Securities (unless otherwise directed
by Proper Instructions or an Officers' Certificate), in the name of a registered
nominee of the Bank as defined in the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder, and will execute and deliver all
such certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. The Bank will use its best efforts
to the end that the specific Portfolio Securities held by it hereunder will be
at all times identifiable.

         The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
may from time to time be registered in the name of the Fund.

                  6.2      Voting and Proxies. Neither the Bank nor any nominee
of the Bank will vote any of the Portfolio Securities held hereunder, except in
accordance with Proper Instructions or an Officers' Certificate. The Bank will
execute and deliver, or cause to be executed and delivered, to the Fund all
notices, proxies and proxy soliciting materials with respect to such Securities,
such proxies to be executed by the registered holder of such Securities (if
registered otherwise than in the name of the Fund), but without indicating the
manner in which such proxies are to be voted.

                  6.3      Book-Entry System. Provided the Bank has received a
certified copy of a resolution of the Board specifically approving deposits of
Fund assets in the Book-Entry System, and the Bank has not received an Officer's
Certificate indicating that the Board has withdrawn its approval:

                  (a)      The Bank may keep Portfolio Securities in the
         Book-Entry System provided that such Portfolio Securities are
         represented in an account ("Account") of the Bank (or its agent) in
         such System which shall not include any assets of the Bank (or such
         agent) other than assets held as a fiduciary, custodian, or otherwise
         for customers.

                                      -5-
<PAGE>

                  (b)      The records of the Bank (and any such agent) with
         respect to the Fund's participation in the Book-Entry System through
         the Bank (or any such agent) will identify by book entry Portfolio
         Securities which are included with other securities deposited in the
         Account and shall at all times during the regular business hours of the
         Bank (or such agent) be open for inspection by duly authorized
         officers, employees or agents of the Fund. Where securities are
         transferred to the Fund's account, the Bank shall also, by book entry
         or otherwise, identify as belonging to the Fund a quantity of
         securities in fungible bulk of securities (i) registered in the name of
         the Bank or its nominee, or (ii) shown on the Bank's account on the
         books of the Federal Reserve Bank.

                  (c)      The Bank (or its agent) shall pay for Securities
         purchased for the account of the Fund or shall pay cash collateral
         against the return of Portfolio Securities loaned by the Fund upon (i)
         receipt of advice from the Book-Entry System that such Securities have
         been transferred to the Account, and (ii) the making of an entry on the
         records of the Bank (or its agent) to reflect such payment and transfer
         for the account of the Fund. The Bank (or its agent) shall transfer
         Securities sold or loaned for the account of the Fund upon

                           (i)      receipt of advice from the Book-Entry System
                  that payment for Securities sold or payment of the initial
                  cash collateral against the delivery of Securities loaned by
                  the Fund has been transferred to the Account, and

                           (ii)     the making of an entry on the records of the
                  Bank (or its agent) to reflect such transfer and payment for
                  the account of the Fund. Copies of all advices from the
                  Book-Entry System of transfers of securities for the account
                  of the Fund shall identify the Fund, be maintained for the
                  Fund by the Bank and shall be provided to the Fund at its
                  request. The Bank shall send the Fund a confirmation, as
                  defined by Rule 17f-4 of the Act, of any transfers to or from
                  the Account.

                  (d)      The Bank will promptly provide the Fund with any
         report obtained by the Bank or its agent on the Book-Entry System's
         accounting system, internal accounting control and procedures for
         safeguarding securities deposited in the Book-Entry System.

                  (e)      Anything to the contrary in this Agreement
         notwithstanding, the Bank shall be liable to the Fund for any loss or
         damage to the Fund resulting from use of the Book-Entry System by
         reason of any negligence, willful misfeasance or misconduct of the Bank
         or any of its agents or of any of its or their employees or from any
         negligent failure by the Bank or any such agent of its duty to enforce
         effectively such rights as it may have against the Book-Entry System;
         at the election of the Fund, it shall be entitled to be subrogated for
         the Bank in any claim

                                      -6-
<PAGE>

         against the Book-Entry System or any other person which the Bank or its
         agent may have as a consequence of any such loss or damage if and to
         the extent that the Fund has not been made whole for any loss or
         damage.

                  6.4      Use of a Depository. Provided the Bank has received a
certified copy of a resolution of the Board specifically approving deposits in a
Depository and the Bank has not received an Officer's Certificate indicating
that the Board has withdrawn its approval:

                  (a)      The Bank may use a Depository to hold, receive,
         exchange, release, lend, deliver and otherwise deal with Portfolio
         Securities, including stock dividends, rights and other items of like
         nature, and to receive and remit to the Bank on behalf of the Fund all
         income and other payments thereon and to take all steps necessary and
         proper in connection with the collection thereof.

                  (b)      Registration of Portfolio Securities may be made in
         the name of any nominee or nominees used by such Depository.

                  (c)      Payment for Securities purchased and sold may be made
         through the clearing medium employed by such Depository for
         transactions of participants acting through it. Upon any purchase of
         Portfolio Securities, payment will be made only upon delivery of the
         Securities to or for the account of the Fund and the Fund shall pay
         cash collateral against the return of Portfolio Securities loaned by
         the Fund only upon delivery of the Securities to or for the account of
         the Fund; and upon any sale of Portfolio Securities, delivery of the
         Securities will be made only against payment thereof or, in the event
         Portfolio Securities are loaned, delivery of Securities will be made
         only against receipt of the initial cash collateral to or for the
         account of the Fund.

                  (d)      The Bank shall be subject to the same liability and
         duty to the Fund and its shareholders with respect to all securities of
         the Fund, and all cash, stock dividends, rights and items of like
         nature to which the Fund is entitled, held or received by a central
         securities system as agent for the Bank, pursuant to the foregoing
         authorization, as if the same were held or received by the Bank at its
         own offices. In this connection, without limiting the foregoing duty or
         liability, the Bank, without cost to the Fund, shall ensure that:

                           (i)      The Depository obtains replacement of any
                  certificated Portfolio Security deposited with it in the event
                  such Security is lost, destroyed, wrongfully taken or
                  otherwise not available to be returned to the Bank upon its
                  request;

                           (ii)     Any proxy materials received by a Depository
                  with respect to Portfolio Securities deposited with such
                  Depository are forwarded immediately to the Bank for prompt
                  transmittal to the Fund;

                                      -7-
<PAGE>

                           (iii)    Such Depository immediately forwards to the
                  Bank confirmation of any purchase or sale of Portfolio
                  Securities and of the appropriate book entry made by such
                  Depository to the Fund's account;

                           (iv)     Such Depository prepares and delivers to the
                  Bank such records with respect to the performance of the
                  Bank's obligations and duties hereunder as may be necessary
                  for the Fund to comply with the recordkeeping requirements of
                  Section 31(a) of the Act and the Rules thereunder; and

                           (v)      Such Depository delivers to the Bank and the
                  Fund all internal accounting control reports, whether or not
                  audited by an independent public accountant, as well as such
                  other reports as the Fund may reasonably request in order to
                  verify the Portfolio Securities held by such Depository.

                  6.5      Use of Book-Entry System for Commercial Paper.
Provided the Bank has received a certified copy of a resolution of the Board
specifically approving participation in a system maintained by the Bank for the
holding of commercial paper in book-entry form ("Book Entry Paper") and the Bank
has not received an Officer's Certificate indicating that the Board has
withdrawn such approval, upon receipt of Proper Instructions and upon receipt of
confirmation from an Issuer (as defined below) that the Fund has purchased such
Issuer's Book Entry Paper, the Bank shall issue and hold in book-entry form, on
behalf of the Fund, commercial paper issued by issuers with whom the Bank has
entered into a book-entry agreement (the "Issuers"). In maintaining its Book
Entry Paper System, the Bank agrees that:

                  (a)      the Bank will maintain all Book Entry Paper held by
         the Fund in an account of the Bank that includes only assets held by it
         for customers;

                  (b)      the records of the Bank with respect to the Fund's
         purchase of Book Entry Paper through the Bank will identify, by book
         entry, Commercial Paper belonging to the Fund which is included in the
         Book Entry Paper System and shall at all times during the regular
         business hours of the Bank be open for inspection by duly authorized
         officers, employees or agents of the Fund.

                  (c)      The Bank shall pay for Book Entry Paper purchased for
         the account of the Fund upon contemporaneous (i) receipt of advice from
         the Issuer that such sale of Book Entry Paper has been effected, and
         (ii) the making of an entry on the records of the Bank to reflect such
         payment and transfer for the account of the Fund.

                  (d)      The Bank shall cancel such Book Entry Paper
         obligation upon the maturity thereof upon contemporaneous (i) receipt
         of advice that payment for such Book Entry Paper has been transferred
         to the Fund, and (ii) the making of an

                                      -8-
<PAGE>

         entry on the records of the Bank to reflect such payment for the
         account of the Fund.

                  (e)      the Bank shall transmit to the Fund a transaction
         journal confirming each transaction in Book Entry Paper for the account
         of the Fund on the next business day following the transaction; and

                  (f)      the Bank will send to the Fund such reports on its
         system of internal accounting control with respect to the Book Entry
         Paper System as the Fund may reasonably request from time to time.

                  6.6      [RESERVED]

                  6.7      Eurodollar CDs. Any Portfolio Securities which are
Eurodollar CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Securities are identified on the books of the Bank as
belonging to the Fund and that the books of the Bank identify the European
Branch holding such Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subsection 6.7, the Bank shall be under no other duty with respect to such
Eurodollar CDS belonging to the Fund, and shall have no liability to the Fund or
its shareholders with respect to the actions, inactions, whether negligent or
otherwise of such European Branch in connection with such Eurodollar CDs, except
for any loss or damage to the Fund resulting from the Bank's own negligence,
wilful misfeasance or misconduct in the performance of its duties or negligent
disregard of its obligations and duties hereunder.

                  6.8      Options and Futures Transactions.

                  (a)      Puts and Calls Traded on Securities Exchanges, NASDAQ
         or Over-the-Counter.

                           1.       The Bank shall take action as to put options
                  ("puts") and call options ("calls") purchased or sold
                  (written) by the Fund regarding escrow or other arrangements
                  (i) in accordance with the provisions of any agreement entered
                  into upon receipt of Proper Instructions between the Bank, any
                  broker-dealer registered under the Securities Exchange Act of
                  1934 and a member of the National Association of Securities
                  Dealers, Inc. (the "NASD"), and, if necessary, the Fund
                  relating to the compliance with the rules of the Options
                  Clearing Corporation and of any registered national securities
                  exchange, or of any similar organization or organizations.

                           2.       Unless another agreement requires it to do
                  so, the Bank shall be under no duty or obligation to see that
                  the Fund has deposited or is maintaining adequate margin, if
                  required, with any broker in connection

                                      -9-
<PAGE>

                  with any option, nor shall the Bank be under duty or
                  obligation to present such option to the broker for exercise
                  unless it receives Proper Instructions from the Fund. The Bank
                  shall have no responsibility for the legality of any put or
                  call purchased or sold on behalf of the Fund, the propriety of
                  any such purchase or sale, or the adequacy of any collateral
                  delivered to a broker in connection with an option or
                  deposited to or withdrawn from a Segregated Account (as
                  defined in subsection 6.9 below). The Bank specifically, but
                  not by way of limitation, shall not be under any duty or
                  obligation to: (i) periodically check or notify the Fund that
                  the amount of such collateral held by a broker or held in a
                  Segregated Account is sufficient to protect such broker of the
                  Fund against any loss; (ii) effect the return of any
                  collateral delivered to a broker; or (iii) advise the Fund
                  that any option it holds, has or is about to expire. Such
                  duties or obligations shall be the sole responsibility of the
                  Fund.

                  (b)      Puts, Calls and Futures Traded on Commodities
                  Exchanges.

                           1.       The Bank shall take action as to puts, calls
                  and futures contracts ("Futures") purchased or sold by the
                  Fund in accordance with the provisions of any agreement among
                  the Fund, the Bank and a Futures Commission Merchant
                  registered under the Commodity Exchange Act, relating to
                  compliance with the rules of the Commodity Futures Trading
                  Commission and/or any Contract Market, or any similar
                  organization or organizations, regarding account deposits in
                  connection with transactions by the Fund.

                           2.       The responsibilities and liabilities of the
                  Bank as to Futures, puts and calls traded on commodities
                  exchanges, any Futures Commission Merchant account and the
                  Segregated Account shall be limited as set forth in
                  subparagraph (a) (2) of this Section 6.8 as if such
                  subparagraph referred to Futures Commission Merchants rather
                  than brokers, and Futures and puts and calls thereon instead
                  of options.

                  6.9      Segregated Account. The Bank shall upon receipt of
Proper Instructions establish and maintain a Segregated Account or Accounts for
and on behalf of the Fund, into which Account or Accounts may be transferred
upon receipt of Proper Instructions cash and/or Portfolio Securities:

                  (a)      in accordance with the provisions of any agreement
         among the Fund, the Bank and a broker-dealer registered under the
         Exchange Act and a member of the NASD or any Futures Commission
         Merchant registered under the Commodity Exchange Act, relating to
         compliance with the rules of the Options Clearing Corporation and of
         any registered national securities exchange or the Commodity Futures
         Trading Commission or any registered Contract Market, or of

                                      -10-
<PAGE>

         any similar organization or organizations regarding escrow or other
         arrangements in connection with transactions by the Fund;

                  (b)      for the purpose of segregating cash or securities in
         connection with options purchased or written by the Fund or commodity
         futures purchased or written by the Fund;

                  (c)      for the deposit of liquid assets, such as cash, U.S.
         Government securities or other high grade debt obligations, having a
         market value (marked to the market on a daily basis) at all times equal
         to not less than the aggregate purchase price due on the settlement
         dates of all the Fund's then outstanding forward commitment or
         "when-issued" agreements relating to the purchase of Portfolio
         Securities and all the Fund's then outstanding commitments under
         reverse repurchase agreements entered into with broker-dealer firms;

                  (d)      for the deposit of any Portfolio Securities which the
         Fund has agreed to sell on a forward commitment basis, all in
         accordance with Investment Company Act Release No. 10666;

                  (e)      for the purposes of compliance by the Fund with the
         procedures required by Investment Company Act Release No. 10666, or any
         subsequent release or releases of the Securities and Exchange
         Commission relating to the maintenance of Segregated Accounts by
         registered investment companies;

                  (f)      for other proper corporate purposes, but only, in the
         case of the clause (f), upon receipt of, in addition to Proper
         Instructions, a certified copy of a resolution of the Board, signed by
         an officer of the Fund and certified by the Secretary or an Assistant
         Secretary, setting forth the purpose or purposes of such Segregated
         Account and declaring such purposes to be proper corporate purposes.

                  (g)      Assets may be withdrawn from the Segregated Account
         pursuant to Proper Instructions only

                           (i)      in accordance with the provisions of any
                  agreements referenced in (a) or (b) above;

                           (ii)     for sale or delivery to meet the Fund's
                  obligations under outstanding firm commitment or when-issued
                  agreements for the purchase of Portfolio Securities and under
                  reverse repurchase agreements;

                           (iii)    for exchange for other liquid assets of
                  equal or greater value deposited in the Segregated Account;

                           (iv)     to the extent that the Fund's outstanding
                  forward commitment or when-issued agreements for the purchase
                  of portfolio

                                      -11-
<PAGE>

                  securities or reverse repurchase agreements are sold to other
                  parties or the Fund's obligations thereunder are met from
                  assets of the Fund other than those in the Segregated Account;
                  or

                           (v)      for delivery upon settlement of a forward
                  commitment agreement for the sale of Portfolio Securities.

                  6.10     Interest Bearing Call or Time Deposits. The Bank
hall, upon receipt of Proper Instructions relating to the purchase by the Fund
of interest bearing fixed term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Fund appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Fund and the responsibility of the Bank
therefor shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Fund.

                  6.11     Transfer of Securities. The Bank will transfer,
exchange, deliver or release Portfolio Securities held by it hereunder, insofar
as such Securities are available for such purpose, provided that before making
any transfer, exchange, delivery or release under this Section the Bank will
receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this Section 6.11,
specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Bank to ascertain the
applicable subsection, only

                  (a)      upon sales of Portfolio Securities for the account of
         the Fund, against contemporaneous receipt by the Bank of payment
         therefor in full, each such payment to be in the amount of the sale
         price shown in a broker's confirmation of sale of the Portfolio
         Securities, if available, received by the Bank before such payment is
         made, as confirmed in the Proper Instructions received by the Bank
         before such payment is made;

                  (b)      in exchange for or upon conversion into other
         securities alone or other securities and cash pursuant to any plan of
         merger, consolidation, reorganization, share split-up, change in par
         value, recapitalization or readjustment or otherwise, upon exercise of
         subscription, purchase or sale or other similar rights represented by
         such Portfolio Securities, or for the purpose of tendering shares in
         the event of a tender offer therefor, provided however that in the
         event of an offer of exchange, tender offer, or other exercise of
         rights requiring the physical tender or delivery of Portfolio
         Securities, the Bank shall have no liability for failure to so tender
         in a timely manner unless such Proper

                                      -12-
<PAGE>

         Instructions are received by the Bank at least two business days prior
         to the date required for tender, and unless the Bank (or its agent or
         subcustodian hereunder) has actual possession of such Security at least
         two business days prior to the date of tender;

                  (c)      upon conversion of Portfolio Securities pursuant to
         their terms into other securities;

                  (d)      [RESERVED]

                  (e)      in the case of option contracts owned by the Fund,
         for presentation to the endorsing broker;

                  (f)      when such Portfolio Securities are called, redeemed
         or retired or otherwise become payable;

                  (g)      for the purpose of effectuating the pledge of
         Portfolio Securities held by the Bank in order to collateralize loans
         made to the Fund by any bank, including the Bank; provided, however,
         that such Portfolio Securities will be released only upon payment to
         the Bank for the account of the Fund of the moneys borrowed, except
         that in cases where additional collateral is required to secure a
         borrowing already made, and such fact is made to appear in the Proper
         Instructions, further Portfolio Securities may be released for that
         purpose without any such payment. In the event that any such pledged
         Portfolio Securities are held by the Bank, they will be so held for the
         account of the lender, and after notice to the Fund from the lender in
         accordance with the normal procedures of the lender, that an event of
         deficiency or default on the loan has occurred, the Bank may deliver
         such pledged Portfolio Securities to or for the account of the lender;

                  (h)      for the purpose of releasing certificates
         representing Portfolio Securities, against contemporaneous receipt by
         the Bank of the fair market value of such security, as set forth in
         Proper Instructions received by the Bank before such payment is made;

                  (i)      for the purpose of delivering Portfolio Securities
         lent by the Fund to a bank or broker dealer, but only against receipt
         in accordance with street delivery custom except as otherwise provided
         herein, of adequate collateral as agreed upon from time to time by the
         Fund and the Bank, and upon receipt of payment in connection with any
         repurchase agreement relating to such securities entered into by the
         Fund;

                  (j)      for other authorized transactions of the Fund or for
         other proper corporate purposes; provided that before making such
         transfer, the Bank will also receive a certified copy of a resolution
         of the Board, signed by an Authorized Person (other than the officer
         certifying such resolution) and certified by its

                                      -13-
<PAGE>

         Secretary or Assistant Secretary, specifying the Portfolio Securities
         to be delivered, setting forth the transaction in or purpose for which
         such delivery is to be made, declaring such transaction to be an
         authorized transaction of the Fund or such purpose to be a proper
         corporate purpose, and naming the person or persons to whom delivery of
         such securities shall be made; and

                  (k)      upon termination of this Agreement as hereinafter set
         forth pursuant to Section 8 and Section 14 of this Agreement.

         As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) Securities or cash receivable in exchange
thereof or shall be delivered to the Bank.

         7.       [RESERVED]

         8.       Merger, Dissolution, etc. of Fund. In the case of the
following transactions, not in the ordinary course of business, namely, the
merger of the Fund into or the consolidation of the Fund with another investment
company, the sale by the Fund of all, or substantially all, of its assets to
another investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the Fund set
forth in an Officers' Certificate, accompanied by a certified copy of a
resolution of the Board authorizing any of the foregoing transactions. Upon
completion of such delivery and disbursement and the payment of the fees,
disbursements and expenses of the Bank, this Agreement will terminate.

         9.       Actions of Bank Without Prior Authorization. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, it will without prior authorization or instruction
of the Fund or the transfer agent:

                  9.1      Endorse for collection and collect on behalf of and
in the name of the Fund all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Fund and receive and hold for the account of the Fund all income,
dividends, interest and other payments or distribution of cash with respect to
the Portfolio Securities held thereunder;

                  9.2      Present for payment all coupons and other income
items held by it for the account of the Fund which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of the Fund;

                  9.3      Receive and hold for the account of the Fund all
securities received as a distribution on Portfolio Securities as a result of a
stock dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of

                                      -14-
<PAGE>

rights and similar securities issued with respect to any Portfolio Securities
held by it hereunder.

                  9.4      Execute as agent on behalf of the Fund all necessary
ownership and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;

                  9.5      Present for payment all Portfolio Securities which
are called, redeemed, retired or otherwise become payable, and hold cash
received by it upon payment for the account of the Fund; and

                  9.6      Exchange interim receipts or temporary securities for
definitive securities.

         10.      Collection; Defaults. The Bank will use all reasonable effort
to collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Fund notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities.

         If Portfolio Securities upon which such income is payable are in
default or payment is refused after due demand or presentation, the Bank will
notify the Fund in writing of any default or refusal to pay within two business
days from the day on which it receives knowledge of such default or refusal. In
addition, the Bank will send the Fund a written report once each month showing
any income on any portfolio Security held by it which is more than ten days
overdue on the date of such report and which has not previously been reported.

         11.      Maintenance of Records; Accounting Services. The Bank will
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the Act and will furnish the Fund daily
with a statement of condition of the Fund. The Bank will furnish to the Fund at
the end of every month, and at the close of each quarter of the Fund's fiscal
year, a list of the Portfolio Securities and the aggregate amount of cash held
by it for the Fund. The books and records of the Bank pertaining to its actions
under this Agreement and reports by the Bank or its independent accountants
concerning its accounting system, procedures for safeguarding securities and
internal accounting controls will be open to inspection and audit at reasonable
times by officers of

                                      -15-
<PAGE>

or auditors employed by the Fund and will be preserved by the Bank in the manner
and in accordance with the applicable rules and regulations under the Act. The
Bank will provide the Fund, at such times as the Fund may reasonably require,
with copies of such reports by independent public accountants.

         The Bank shall keep the books of account and render statements or
copies from time to time as reasonably requested by the Treasurer or any
executive officer of the Fund.

         The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.

         12.      Fund Evaluation. The Bank shall compute and, unless otherwise
directed by the Board, determine as of the close of business on the New York
Stock Exchange ("NYSE") on the each day of the week on which said Exchange is
open for unrestricted trading and as of such other days and hours, if any, as
may be authorized by the Board, the net asset value of a share of capital stock
of the Fund, such determination to be made in accordance with the provisions of
the Articles and By-laws of the Fund and Prospectus and Statement of Additional
Information relating to the Fund, as they may from time to time be amended, and
any applicable resolutions of the Board at the time in force and applicable; and
promptly to notify the Fund, and, with respect to such computation on the last
such day of each week, to notify Lipper Analytical Services, or such other
persons as the Fund may request of the results of such computation and
determination. In computing the net asset value hereunder, the Bank may rely in
good faith upon information furnished to it by any Authorized Person in respect
of (i) the manner of accrual of the liabilities of the Fund and in respect of
liabilities of the Fund not appearing on its books of account kept by the Bank,
(ii) reserves, if any, authorized by the Board or that no such reserves have
been authorized, (iii) the source of the quotations to be used in computing the
net asset value, and (iv) the value to be assigned to any security for which no
price quotations are available, and the Bank shall not be responsible for any
loss occasioned by such reliance or for any good faith reliance on any
quotations received from a source pursuant to (iii) above.

         13.      Concerning the Bank.

                  13.1     Performance of Duties; Standard of Care. In
performing its duties hereunder and any other duties listed on any Schedule
hereto, if any, the Bank will be entitled to receive and act upon the advice of
independent counsel of its own selection, which may be counsel for the Fund, and
will be without liability for any action taken or thing done or omitted to be
done in accordance with this Agreement in good faith in conformity with such
advice. In the performance of its duties hereunder, the Bank will be protected
and not be liable, and will be indemnified and saved harmless for any action
taken or omitted to be taken by it in good faith reliance upon the terms of this
Agreement, any Officers' Certificate, Proper Instructions, resolution of the
Board, telegram, notice,

                                      -16-
<PAGE>

request, certificate or other instrument reasonably believed by the Bank to be
genuine and for any other loss to the Fund except in the case of its negligence,
wilful misfeasance or misconduct in the performance of its duties or negligent
disregard of its obligations and duties hereunder. The Bank shall give prompt
written notice to the Fund of any claim against it for which indemnification may
be sought hereunder, specifying the amount and nature of the claim. The Fund
shall have the right to participate at its own expense in the defense of any
such matter or its settlement, or, if in the opinion of the Bank its financial
condition or business would not be impaired thereby, the Bank may authorize the
Fund, if it so desires, to take over the defense of such matters so long as such
defense is expeditious.

         The Bank will be under no duty or obligation to inquire into and will
not be liable for:

                  (a)      the validity of the issue of any Portfolio Securities
         purchased by or for the Fund, the legality of the purchases thereof or
         the propriety of the price incurred therefor;

                  (b)      the legality of any sale of any Portfolio Securities
         by or for the Fund or the propriety of the amount for which the same
         are sold;

                  (c)      the legality of an issue or sale of any common stock
         of the Fund or the sufficiency of the amount to be received therefor;

                  (d)      the legality of the repurchase of any common stock of
         the Fund or the propriety of the amount to be paid therefor;

                  (e)      the legality of the declaration of any dividend by
         the Fund or the legality of the distribution of any Portfolio
         Securities as payment in kind of such dividend; or

                  (f)      any property or moneys of the Fund unless and until
         received by it, and any such property or moneys delivered or paid by it
         pursuant to the terms hereof.

         Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of the Fund are such as may properly be held by the Fund
under the provisions of its Articles or By-laws, any federal or state statutes
or any rule or regulation of any governmental agency.

         Notwithstanding anything in this Agreement to the contrary, in no event
shall the Bank be liable hereunder or to any third party for any losses or
damages of any kind resulting from acts of God, earthquakes, fires, floods,
storms or other disturbances of nature, epidemics, strikes, riots,
nationalization, expropriation, currency restrictions, acts of war, civil war or
terrorism, insurrection, nuclear fusion, fission or radiation, the

                                      -17-
<PAGE>

interruption, loss or malfunction of utilities, transportation, or computers
(hardware or software) and computer facilities, the unavailability of energy
sources and other similar happenings or events except as results from the Bank's
own negligence, willful misfeasance or misconduct.

                  13.2     Agents and Subcustodians. The Bank may employ agents
in the performance of its duties hereunder and shall be responsible for the acts
and omissions of such agents as if performed by the Bank hereunder.

         Upon receipt of Proper Instructions, the Bank may employ subcustodians
with respect to domestic securities, provided that any such subcustodian meets
at least the minimum qualifications required by Section 17(f) (1) of the Act to
act as a custodian of the Fund's assets. Provided the Bank has received a
certified copy of a resolution of the Board specifically approving the
appointment of an Eligible Foreign Custodian and the depositing of Portfolio
Securities which are Foreign Securities therewith and the Bank has not received
an Officer's Certificate indicating that such approval has been withdrawn, the
Bank may deposit such Foreign Securities and cash with such Eligible Foreign
Custodian, as a subcustodian hereunder, as set forth on Schedule A hereto, as
may be amended by the parties from time to time. The Bank shall have no
liability to the Fund or any other person by reason of any act or omission of
any subcustodian and the Fund shall indemnify the Bank and hold it harmless from
and against any and all actions, suits and claims, arising directly or
indirectly out of the performance of any subcustodian, provided however, that
this provision shall not protect the Bank in the event of the Bank's own
negligence, willful misfeasance or misconduct or from any negligent disregard of
its own duties hereunder. Upon request of the Bank, the Fund shall assume the
entire defense of any action, suit, or claim subject to the foregoing indemnity.
The Fund shall pay all fees and expenses of any subcustodian as shall be
mutually agreed upon prior to the appointment of such subcustodian.

                  13.3     Insurance. The Bank shall use the same care with
respect to the safekeeping of Portfolio Securities and cash of the Fund held by
it as it uses in respect of its own similar property but it need not maintain
any special insurance for the benefit of the Fund.

                  13.4     Fees and Expenses of Bank. The Fund will pay or
reimburse the Bank from time to time for any transfer taxes payable upon
transfer of Portfolio Securities made hereunder, and for all necessary proper
disbursements, expenses and charges made or incurred by the Bank in the
performance of this Agreement (including any duties listed on any Schedule
hereto, it any) including any indemnities for any loss, liabilities or expense
to the Bank as provided above. For the services rendered by the Bank hereunder,
the Fund will pay to the Bank such compensation or fees at such rate and at such
times as shall be agreed upon in writing by the parties from time to time. The
Bank will also be entitled to reimbursement by the Fund for all reasonable
expenses incurred in conjunction with termination of this Agreement by the Fund.

                                      -18-
<PAGE>

                  13.5     Advances by Bank. The Bank may, in its sole
discretion, advance funds on behalf of the Fund to make any payment permitted by
this Agreement upon receipt of any proper authorization required by this
Agreement for such payments by the Fund. Should such a payment or payments, with
advanced funds, result in an overdraft (due to insufficiencies of the Fund's
account with the Bank, or for any other reason) this Agreement deems any such
overdraft or related indebtedness, a loan made by the Bank to the Fund payable
on demand and bearing interest at the current rate charged by the Bank for such
loans unless the Fund shall provide the Bank with agreed upon compensating
balances. The Fund agrees that the Bank shall have a continuing lien and
security interest to the extent of any overdraft or indebtedness, in and to any
property at any time held by it for the Fund's benefit or in which the Fund has
an interest and which is then in the Bank's possession or control (or in the
possession or control of any third party acting on the Bank's behalf). The Fund
authorizes the Bank, in its sole discretion, at any time to charge any overdraft
or indebtedness, together with interest due thereon against any balance of
account standing to the credit of the Fund on the Bank's books.

         14.      Termination.

                  14.1     This Agreement may be terminated at any time without
penalty upon sixty days written notice delivered by either party to the other by
means of registered mail, and upon the expiration of such sixty days this
Agreement will terminate; provided, however, that the effective date of such
termination may be postponed to a date not more than ninety days from the date
of delivery of such notice (i) by the Bank in order to prepare for the transfer
by the Bank of all of the assets of the Fund held hereunder, and (ii) by the
Fund in order to give the Fund an opportunity to make suitable arrangements for
a successor custodian. At any time after the termination of this Agreement, the
Fund will, at its request, have access to the records of the Bank relating to
the performance of its duties as custodian.

                  14.2     In the event of the termination of this Agreement,
the Bank will immediately upon receipt or transmittal, as the case may be, of
notice of termination, commence and prosecute diligently to completion the
transfer of all cash and the delivery of all Portfolio Securities duly endorsed
and all records maintained under Section 11 to the successor custodian when
appointed by the Fund. The obligation of the Bank to deliver and transfer over
the assets of the Fund held by it directly to such successor custodian will
commence as soon as such successor is appointed and will continue until
completed as aforesaid. If the Fund does not select a successor custodian within
ninety (90) days from the date of delivery of notice of termination the Bank
may, subject to the provisions of subsection (14.3), deliver the Portfolio
Securities and cash of the Fund held by the Bank to a bank or trust company of
its own selection which meets the requirements of Section 17(f) (1) of the Act
and has a reported capital, surplus and undivided profits aggregating not less
than $2,000,000, to be held as the property of the Fund under terms similar to
those on which they were held by the Bank, whereupon such

                                      -19-
<PAGE>

bank or trust company so selected by the Bank will become the successor
custodian of such assets of the Fund with the same effect as though selected by
the Board.

                  14.3     Prior to the expiration of ninety (90) days after
notice of termination has been given, the Fund may furnish the Bank with an
order of the Fund advising that a successor custodian cannot be found willing
and able to act upon reasonable and customary terms and that there has been
submitted to the shareholders of the Fund the question of whether the Fund will
be liquidated or will function without a custodian for the assets of the Fund
held by the Bank. In that event the Bank will deliver the Portfolio Securities
and cash of the Fund held by it, subject as aforesaid, in accordance with one of
such alternatives which may be approved by the requisite vote of shareholders,
upon receipt by the Bank of a copy of the minutes of the meeting of shareholders
at which action was taken, certified by the Fund's Secretary and an opinion of
counsel to the Fund in form and content satisfactory to the Bank.

         15.      Notices. Any notice or other instrument in writing authorized
or required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:

                  (a)      In the case of notices sent to the Fund to:

                                    The Future Germany Fund, Inc.
                                    Deutsche Bank Capital Corporation
                                    31 West 52nd Street
                                    New York, New York  10019

                  (b)      In the case of notices sent to the Bank to:

                                    Investors Bank & Trust Company
                                    One Lincoln Plaza
                                    P.O. Box 1537
                                    Boston, Massachusetts  02205-1537

         or at such other place as such party may from time to time designate in
writing.

         16.      Amendments. This Agreement may not be altered or amended,
except by an instrument in writing, executed by both parties, and in the case of
the Fund, such alteration or amendment will be authorized and approved by its
Board.

         17.      Parties. This Agreement will be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement will not be assignable by the
Fund without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by

                                      -20-
<PAGE>

its Board; and provided further that termination proceedings pursuant to Section
14 hereof will not be deemed to be an assignment within the meaning of this
provision.

         18.      Governing Law. This Agreement and all performance hereunder
will be governed by the laws of the Commonwealth of Massachusetts.

                                      -21-
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate and their respective corporate seals to be affixed hereto
as of the date first above written by their respective officers thereunto duly
authorized.

                                                 THE FUTURE GERMANY FUND, INC.

                                                 By ____________________________
                                                    President

ATTEST:

_________________________________
VP, Secretary & Treasurer

                                                 INVESTORS BANK & TRUST COMPANY

                                                 By

ATTEST:

_________________________________

                                      -22-
<PAGE>

                                   Schedule A
                                       to
                    Amended and Restated Custodian Agreement
                    between The Future Germany Fund, Inc. and
                         Investors Bank & Trust Company

         The following entities are appointed subcustodians of the Fund with
respect to foreign securities and cash incidental to transactions in such
securities:

         1.       Euro-clear, Brussels, Belgium

         2.       Deutsche Bank AG, Frankfurt am Main, Germany

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.J.2
<SEQUENCE>14
<FILENAME>y93068a1exv99wjw2.txt
<DESCRIPTION>DELEGATION AGREEMENT
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(j)(2)

                              DELEGATION AGREEMENT

         AGREEMENT, dated as of July 21, 1997 by and between Investors Bank &
Trust Company, a Massachusetts trust company (the "Delegate"), and The Central
European Equity Fund, Inc., organized under the laws of Maryland (the "Fund").

         WHEREAS, pursuant to the provisions of Rule 17f-5(b) under the
Investment Company Act of 1940, and subject to the terms and conditions set
forth herein, the Board of Directors of the Fund desires to delegate to the
Delegate, and the Delegate hereby agrees to accept and assume, certain
responsibilities described herein concerning Assets held outside of the United
States.

         NOW THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:

1.       Definitions

         Capitalized terms in this Agreement have the following meanings--

         a.       Assets

                  Assets means any of Fund's investments (including foreign
currencies) for which the primary market is outside the United States, and such
cash and cash equivalents as are reasonably necessary to effect Fund's
transactions in such investments.

         b.       Authorized Representative

                  Authorized Representative means any one of the persons who are
empowered, on behalf of the parties to this Agreement, to receive notices from
the other party, to send notices to the other party, to add or delete
jurisdictions pursuant to Article 4, and to otherwise bind the respective
parties with respect to the subject matter of this Agreement.

         c.       Board

                  Board means the Board of Directors (or the body authorized to
exercise authority similar to that of the board of directors of a corporation)
of Fund.

         d.       Compulsory Securities Depository

                  Compulsory Securities Depository means a Securities Depository
the use of which is mandatory (i) by law or regulation; (ii) because securities
cannot be withdrawn from the depository; or (iii) because maintaining securities
outside the Securities Depository is not consistent with prevailing custodial
practices.

         e.       Eligible Foreign Custodian

                  Eligible Foreign Custodian has the meaning set forth in Rule
17f-5(a)(1).

<PAGE>

         f.       Foreign Custody Manager

                  Foreign Custody Manager has the meaning set forth in Rule
17f-5(a)(2).

         g.       Monitor

                  Monitor has the meaning used in Rule 17f-5(c)(3).

         h.       Permissible Foreign Custodian

                  Permissible Foreign Custodian means any person with whom
Assets may be placed and maintained outside the United States under (i) the
Investment Company Act of 1940 or (ii) an order of the U.S. Securities and
Exchange Commission, without regard to Rule 17f-5.

         i.       Securities Depository

                  Securities Depository has the meaning set forth in Rule
17f-5(a)(6).

2.       Representations

         a.       Delegate's Representations

                  Delegate represents that it is a trust company chartered under
the laws of the Commonwealth of Massachusetts. Delegate confirms that Fund's
existing foreign subcustody arrangements are in conformity with Article 7.

         b.       Fund's Representations

                  Fund represents that the Board has adopted the resolution
attached as Appendix G.

3.       Jurisdictions Covered

         a.       Initial Jurisdictions

                  The authority delegated by this Agreement applies only with
respect to Assets held in the jurisdictions listed in Appendix A. Delegate shall
have no responsibility for the selection, evaluation or Monitoring of any
jurisdiction in which the Fund invests or holds Assets.

         b.       Added Jurisdictions

                  Jurisdictions may be added to Appendix A by written agreement
in the form of Appendix B. Delegate's responsibility and authority with respect
to any jurisdiction so added will commence at the later of (i) the time that
Delegate's Authorized Representative and Board's Authorized Representative have
both executed a copy of Appendix B listing such jurisdiction, or (ii) the time
that Delegate's Authorized Representative receives a copy of such fully executed
Appendix B.

                                       2
<PAGE>

         c.       Withdrawn Jurisdictions

                  Board may withdraw its delegation with respect to any
jurisdiction upon written notice to Delegate. Delegate may withdraw its
acceptance of delegated authority with respect to any jurisdiction upon written
notice to Board. Thirty days (or such longer period as to which the parties
agree) after receipt of any such notice by the Authorized Representative of the
party other than the party giving notice, Delegate shall have no further
responsibility or authority under this Agreement with respect to the
jurisdiction or jurisdictions as to which authority is withdrawn, except that
the Fund may withdraw authority at any time as to any jurisdiction and Delegate
may withdraw its acceptance of delegated authority as to any jurisdiction upon
less than thirty days' notice if Delegate states in its notice that it believes
it cannot perform its responsibilities as to the jurisdiction for which it is
withdrawing.

4.       Delegation of Authority to Act as Foreign Custody Manager

         a.       Selection of Eligible Foreign Custodians

                  Subject to the provisions of this Agreement and the
requirements of Rule 17f-5 (and any other applicable law), Delegate is
authorized and directed to place and maintain Assets in the care of any Eligible
Foreign Custodian or Custodians selected by it in each jurisdiction to which
this Agreement applies.

         b.       Contracts With Eligible Foreign Custodians

                  Subject to the provisions of this Agreement and the
requirements of Rule 17f-5 (and any other applicable law), Delegate is
authorized to enter into, on behalf of Fund, such written contracts governing
Fund's foreign custody arrangements with such Eligible Foreign Custodians as
Delegate deems appropriate.

5.       Delegation of Authority to Place Assets With Permissible Foreign
Custodians

                  Subject to the requirements of the Investment Company Act of
1940 (and any other applicable law or order), Delegate is authorized to place
and maintain Assets in the care of any permissible Foreign Custodian or
Custodians in each jurisdiction to which this Agreement applies and to enter
into, on behalf of Fund, such written contracts governing Fund's foreign custody
arrangements with such Permissible Foreign Custodians as Delegate deems
appropriate. Articles 6, 7b, 7c, 7d, and 8 of this Agreement shall not apply to
Delegate's exercise of authority under this Article 5.

6.       Monitoring of Eligible Foreign Custodians and Contracts

         In each case in which Delegate has exercised the authority delegated
under this Agreement to place Assets with an Eligible Foreign Custodian,
Delegate is authorized to, and shall, on behalf of Fund, establish a system to
Monitor the appropriateness of maintaining Assets with such Eligible Foreign
Custodian. In each case in which Delegate has exercised the authority delegated
under this Agreement to enter into a written contract governing Fund's foreign
custody arrangements, Delegate is authorized to, and shall, on behalf of Fund,
establish a system to Monitor the appropriateness of such contract.

                                       3
<PAGE>

7. Guidelines and Procedures for the Exercise of Delegated Authority

         a.       Selection of Eligible Foreign Custodians

                  In exercising the authority delegated under this Agreement to
place Assets with an Eligible Foreign Custodian, Delegate shall determine that
Assets will be subject to reasonable care, based on the standards applicable to
custodians in the market in which the Assets will be held, after considering all
factors relevant to the safekeeping of such assets, including, without
limitation;

                  i.       The Eligible Foreign Custodian's practices,
                           procedures, and internal controls, including, but not
                           limited to, the physical protections available for
                           certificated securities (if applicable), the method
                           of keeping custodial records, and the security and
                           data protection practices;

                  ii.      Whether the Eligible Foreign Custodian has the
                           financial strength to provide reasonable care for
                           Assets;

                  iii.     The Eligible Foreign Custodian's general reputation
                           and standing and, in the case of a Securities
                           Depository, the Securities Depository's operating
                           history and number of participants;

                  iv.      Whether Fund will have jurisdiction over and be able
                           to enforce judgments against the Eligible Foreign
                           Custodian, such as by virtue of the existence of any
                           offices of the Eligible Foreign Custodian in the
                           United States or the Eligible Foreign Custodian's
                           consent to service of process in the United States;
                           and

                  v.       In the case of an Eligible Foreign Custodian that is
                           a Securities Depository, any additional factors and
                           criteria set forth in Appendix C to this Agreement.

         b.       Evaluation of Written Contracts

                  In exercising the authority delegated under this Agreement to
enter into written contracts governing Fund's foreign custody arrangements with
an Eligible Foreign Custodian, Delegate shall determine that such contracts (or,
in the case of a Securities Depository, such contract, the rules or established
practices or procedures of the depository, or any combination of the foregoing)
provide reasonable care for Assets based on the standards applicable to Eligible
Foreign Custodians in the relevant market after considering all relevant
factors, including those set forth in a. above. In making this determination,
Delegate shall ensure that the terms of such contracts comply with the
requirements of Rule 17f-5(c)(2).

         c.       Monitoring

                  In exercising the authority delegated under this Agreement to
establish a system to Monitor the appropriateness of maintaining Assets with an
Eligible Foreign Custodian or the appropriateness of a written contract
governing Fund's foreign custody

                                       4
<PAGE>

arrangements, Delegate shall consider the factors noted in a. and b. above and
any factors and criteria set forth in Appendix D to this Agreement.

8.       Standard of Care

                  In exercising the authority delegated under this Agreement,
Delegate agrees to exercise reasonable care, prudence and diligence such as a
person having responsibility for the safekeeping of assets of an investment
company registered under the Investment Company Act of 1940 would exercise.

9.       Reporting Requirements

         Delegate agrees to provide written reports notifying Board of the
placement of Assets with a particular Eligible Foreign Custodian or Permissible
Foreign Custodian and of any material change in Fund's foreign custody
arrangements. Such reports shall be provided to Board quarterly for
consideration at the next regularly scheduled meeting of the Board or earlier if
deemed necessary or advisable by the Delegate in its sole discretion. Such
report shall, among other things, confirm jurisdictions in which there have been
no material changes in foreign custody arrangements. The Delegate shall give
reasonably prompt notice to the Board of any jurisdictions in which the Delegate
believes it can no longer perform the services required by this Agreement.

10.      Provision of Information Regarding Jurisdictions

         With respect to the jurisdictions listed in Appendix A, or added
thereto pursuant to Article 4, Delegate agrees to provide annually to Board,
such information relating to Country Risk, if available, as is specified in
Appendix E to this Agreement.

11.      Limitation of Liability

         Notwithstanding anything in this Agreement to the contrary, in no event
shall the Delegate or any of its officers, directors, employees or agents
(collectively, the "Indemnified Parties") be liable to the Fund or any third
party, and the Fund shall indemnify and hold the Delegate and the Indemnified
Parties harmless from and against any and all loss, damage, liability, actions,
suits, claims, costs and expenses, including legal fees, (a "Claim") arising as
a result of any act or omission of the Delegate or any Indemnified Party under
this Agreement, except for any Claim resulting solely from a breach of the
standard of care set forth in Article 8 or the negligence, willful misfeasance
or bad faith of the Delegate or any Indemnified Party. Neither the Delegate nor
the Indemnified Parties shall be liable for, and the Delegate and the
Indemnified Parties shall be indemnified against, any Claim arising as a result
of:

         i.       Any act or omission by the Delegate or any Indemnified Party
                  in reasonable good faith reliance upon the terms of this
                  Agreement, any resolution of the Board, telegram, telecopy,
                  notice, request, certificate or other instrument reasonably
                  believed by the Delegate to genuine;

                                       5
<PAGE>

         ii.      Any information which the Delegate provides or does not to
                  provide under Section 11 hereof, or

         iii.     Any acts of God, earthquakes, fires, floods, storms or other
                  disturbances of nature, epidemics, strikes, riots,
                  nationalization, expropriation, currency restrictions, acts of
                  war, civil war or terrorism, insurrection, nuclear fusion,
                  fission or radiation, the interruption, loss or malfunction of
                  utilities, transportation or computers (hardware or software)
                  and computer facilities, the unavailability of energy sources
                  and other similar happenings or events;

provided that such claim does not arise from a breach of the standard of care
set forth in Article 8 hereof or the negligence, willful misfeasance or bad
faith of the Delegate or the Indemnified Party.

12.      No Additional Compensation

         Delegate agrees to perform its responsibilities hereunder without any
additional compensation from Fund beyond Delegate's compensation as set forth in
the Custodian Agreement between the Fund and the Delegate. The Fund shall bear
all expenses related to the custody of Assets, including expenses related to the
relocation of Assets, as set forth in such Custodian Agreement.

13.      Effectiveness and Termination of Agreement

         This Agreement shall be effective as of the later of the date of
execution on behalf of Board or Delegate and shall remain in effect until
terminated as provided herein. This Agreement may be terminated at any time,
without penalty, by written notice from the terminating party to the
non-terminating party. Termination will become effective 30 days after receipt
by the non-terminating party of such notice.

14.      Authorized Representatives and Notices

         The respective Authorized Representatives of Fund and Board, and the
addresses to which notices and other documents under this Agreement are to be
sent to each, are as set forth in Appendix F. Any Authorized Representative of a
party may add or delete persons from that party's list of Authorized
Representatives by written notice to an Authorized Representative of the other
party.

15.      Governing Law

         Fund and Delegate intend that the delegation contemplated hereby shall
be made in accordance with Rule 17f-5 and that the provisions hereof shall be
interpreted accordingly. This Agreement shall otherwise be construed in
accordance with the laws of the Commonwealth of Massachusetts without regard to
principals of choice of law.

                                       6
<PAGE>

                  [Remainder of Page Intentionally Left Blank]

                                       7
<PAGE>

         IN WITNESS WHEREOF, Authorized Representatives of Board and of Delegate
have affixed their signatures as of the date first written above.

        INVESTORS BANK & TRUST COMPANY

        By: _____________________________________

        Name:

        Title:


        THE CENTRAL EUROPEAN EQUITY FUND, INC.

        By: _____________________________________

        Name:

        Title:

                                       8
<PAGE>

List of Appendices

A   --   Jurisdictions Covered

B   --   Additional Jurisdictions Covered

C   --   Additional Factors and Criteria To Be Applied in the Selection of
         Eligible Foreign Custodians That Are Securities Depositories

D   --   Additional Factors and Criteria To Be Applied in Entering Into Written
         Contracts Governing Foreign Custody Arrangements

E   --   Information Regarding Country Risk

F   --   Authorized Representatives

G   --   Resolution of the Board

                                       9
<PAGE>

                                   APPENDIX A

                              JURISDICTIONS COVERED

                     THE CENTRAL EUROPEAN EQUITY FUND, INC.

Austria
Belgium
Croatia
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Latvia
Luxembourg
Netherlands
Norway
Poland
Portugal
Romania
Russia
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
Turkey
Ukraine
United Kingdom

                                      A-1
<PAGE>

                                   APPENDIX B

                        ADDITIONAL JURISDICTIONS COVERED

         Pursuant to Article 4 of this Agreement, Delegate and Board agree that
the following jurisdictions shall be added to Appendix A:

         [INSERT LIST]

                  INVESTORS BANK & TRUST COMPANY

                  By: ____________________________________

                  Name:

                  Title:

                  THE NEW GERMANY FUND, INC.

                  By: ____________________________________

                  Name:

                  Title:

         DATE: _________________________________

                                      A-2
<PAGE>

                                   APPENDIX C

                      ADDITIONAL FACTORS AND CRITERIA TO BE
                  APPLIED IN THE SELECTION OF ELIGIBLE FOREIGN
                   CUSTODIANS THAT ARE SECURITIES DEPOSITORIES

         In addition to the factors set forth in Rule 17f-5(c)(1), in selecting
Eligible Foreign Custodians that are Securities Depositories, Delegate shall
consider the following factors, if such information is available (check all that
apply):

                        None
- ------------------
         X              Whether use is voluntary or compulsory
- ------------------
         X              Ownership
- ------------------
         X              Operating History
- ------------------
                        Established rules, practices and procedures
- ------------------
         X              Membership
- ------------------
         X              Financial strength
- ------------------
         X              Governing regulatory body
- ------------------
                        Other (list below):
- ------------------

                                      A-3
<PAGE>

                                   APPENDIX D

                       FACTORS AND CRITERIA TO BE APPLIED
                IN THE ESTABLISHING SYSTEMS FOR THE MONITORING OF
                   FOREIGN CUSTODY ARRANGEMENTS AND CONTRACTS

         In establishing systems for the Monitoring of foreign custody
arrangements and contracts with Eligible Foreign Custodians, Delegate shall
consider the following factors, if such information is available (check all that
apply):

                        None
- ------------------
         X              Operating performance
- ------------------
         X              Established practices and procedures
- ------------------
         X              Relationship with market regulators
- ------------------
         X              Contingency planning Other (list below):
- ------------------

                                      A-4
<PAGE>

                                   APPENDIX E

                       INFORMATION REGARDING COUNTRY RISK

         To aid the Board in its determinations regarding Country Risk, Delegate
will furnish Board annually with respect to the jurisdictions specified in
Article 3, the following information:

1.       Copy of Subcustodian Agreement

2.       Legal Opinion, if available, with regard to:

         a)       Access to books and records by the Fund's accountants

         b)       Ability to recover assets in the event of bankruptcy of a
                  custodian

         c)       Ability to recover assets in the event of a loss

         d)       Likelihood of expropriation or nationalization, if available

         e)       Ability to repatriate or convert cash or cash equivalents

3.       Audit Report

4.       Copy of Balance Sheet from Annual Report

5.       Summary of Central Depository Information

6.       Country Profile Matrix containing market practice for:

         a)       Delivery versus payment

         b)       Settlement method

         c)       Currency restrictions

         d)       Buy-in practice

         e)       Foreign ownership limits

         f)       Unique market arrangements

                                      A-5
<PAGE>

                                   APPENDIX F

                           AUTHORIZED REPRESENTATIVES

         Notices under this Agreement shall be sent to, and shall be executed on
behalf of the respective parties by, any one of the following --

         1.        Board

                   a. __________________________(name)

                      __________________________(title)

                      __________________________(address)

                   b. __________________________(name)

                      __________________________(title)

                      __________________________(address)

                   c. __________________________(name)

                      __________________________(title)

                      __________________________(address)

         2.        Delegate

                   a. __________________________(name)

                      __________________________(title)

                      __________________________(address)

                   b. __________________________(name)

                      __________________________(title)

                      __________________________(address)

                   c. __________________________(name)

                      __________________________(title)

                      __________________________(address)

                                      A-6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.K
<SEQUENCE>15
<FILENAME>y93068a1exv99wk.txt
<DESCRIPTION>TRANSFER AGENCY AND SERVICE AGREEMENT
<TEXT>
<PAGE>

                                                                  EXHIBIT (2)(k)

                      TRANSFER AGENCY AND SERVICE AGREEMENT

         AGREEMENT effective as of the 23rd day of July, 1993 by and between THE
FUTURE GERMANY FUND, INC., established under the laws of the State of Delaware,
(the "Company"), and INVESTORS BANK & TRUST COMPANY, a Massachusetts trust
company (the "Bank").

                                   WITNESSETH:

         WHEREAS, the Company desires to appoint the Bank as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and the Bank desires to accept such appointment;

         WHEREAS, the Bank is duly registered as a transfer agent as provided in
Section 17A(c) of the Securities Exchange Act of 1934, as amended;

         NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, the Company and the Bank agree as follows:

                                   ARTICLE 1.
                    TERMS OF APPOINTMENT; DUTIES OF THE BANK

         1.01.    Subject to the terms and conditions set forth in this
Agreement, the Company hereby, employs and appoints the Bank to act as, and the
Bank agrees to act as transfer agent for the Company's authorized and issued
shares of beneficial interest ("Shares"), dividend disbursing agent and agent in
connection with any accumulation or similar plans provided to the shareholders
of the Company ("Shareholders") and set out in the currently effective
prospectus of the Company, including without limitation any periodic investment
plan.

         1.02.    The Bank agrees that it will perform the following services:

                  (a)      In connection with procedures established from time
to time by agreement between the Company and the Bank, the Bank shall:

                           (i)      Accounts: set up accounts on behalf of each
         registered Shareholder, and maintain in such account the appropriate
         number of Shares of each such Shareholder. The Bank shall maintain
         confidential records showing for each Shareholder's account the
         following: (i) names, addresses and tax identification numbers; (ii)
         numbers of Shares held; (iii) historical information (as available from
         prior transfer agents) regarding the account of each Shareholder,
         including dividends paid and date and price of all transactions on a
         Shareholder's account; (iv) any stop or restraining order placed
         against a Shareholder's account; (v) information with respect to
         withholdings; (vi) any capital gain or dividend reinvestment order,
         plan application, dividend address and correspondence relating to the
         current maintenance of a Shareholder's account; (vii) certificate
         numbers and denominations for any Shareholders holding certificates;
         (viii) any

                                       1
<PAGE>

         information required in order for the Bank to perform the calculations
         contemplated or required by this Agreement; and (ix) such other
         information and data as may be required by applicable law.

                           (ii)     Transfers: effect transfers of Shares by the
         registered owners thereof upon receipt of appropriate instructions and
         documentation. If Shares to be transferred are represented by
         outstanding certificates, the Bank will, upon surrender to it of the
         certificates in proper form for transfer, and upon cancellation
         thereof, countersign and issue new certificates for a like number of
         Shares and deliver the same. If the Shares to be transferred are not
         represented by outstanding certificates, the Bank will, upon an order
         therefor by or on behalf of the registered holder thereof in proper
         form, credit the same to the transferee on its books. The Bank reserves
         the right to refuse to transfer Shares until it is satisfied that the
         requested transfer is legally authorized, and it shall incur no
         liability for the refusal, in good faith, to make transfers which the
         Bank, in its judgment, deems improper or unauthorized, or until it is
         satisfied that there is no basis for any claims adverse to such
         transfer. The Bank may, in effecting transfers, rely upon the
         provisions of the Uniform Act for the Simplification of Fiduciary
         Security Transfers or the Uniform Commercial Code, as the same may be
         amended from time to time, which in the opinion of legal counsel for
         the Company or of its own legal counsel, protect it in not requiring
         certain documents in connection with the transfer of Shares, and the
         Company shall indemnify the Bank for any act done or omitted by it in
         reliance upon such laws or opinions of counsel of the Company or of its
         own counsel. The Bank may establish such additional rules and
         regulations governing the transfer or registration of Shares as it may
         deem advisable and consistent with such rules and regulations generally
         adopted by transfer agents, or with the written consent of the Company,
         any other rules and regulations.

                           (iii)    Distributions: prepare and transmit payments
         for dividends and distributions declared by the Company. The Company
         will promptly notify the Bank of the declaration of any dividend or
         distribution. The Company shall furnish to the Bank a resolution of the
         Board of Directors of the Company certified by its Secretary: (i)
         authorizing the declaration of dividends on a specified periodic basis
         and authorizing the Bank to rely on oral instructions or a certificate
         specifying the date of the declaration of such dividend or
         distribution, the date of payment thereof, the record date as of which
         Shareholders entitled to payment shall be determined and the amount
         payable per share to Shareholders of record as of the date and the
         total amount payable to the Bank on the payment date; or (ii) setting
         forth the date of the declaration of any dividend or distribution, the
         date of payment thereof, the record date as of which Shareholders
         entitled to payment shall be determined, and the amount payable per
         share to the Shareholders of record as of that date and the total
         amount payable to the Bank on the payment date. Upon receipt of funds
         in a dividend disbursing account equal to the cash amount of any
         dividend or distribution to be paid out, the Bank will calculate,
         prepare and mail checks to Shareholders (at the address as it appears
         on the records of the Bank), or (where appropriate) credit such
         dividend or

                                       2
<PAGE>

         distribution to the account of Shareholders, and maintain and safeguard
         all underlying records. The Bank will replace lost checks at its
         discretion and in conformity with regular business practices. The Bank
         shall not be liable for any improper payments made in accordance with a
         resolution of the Board of Directors of the Company. If the Bank shall
         not receive from the Company sufficient cash to make payment to all
         Shareholders of the Company as of the record date, the Bank shall, upon
         notifying the Company, withhold payment to all Shareholders of record
         as of the record date until such sufficient cash is provided to the
         Bank.

                           (iv)     Dividend Reinvestment Plan Agent: act as
         agent for Shareholders pursuant to any dividend reinvestment plan or
         other similar plan as may be agreed upon from time to time by the
         Company and the Bank.

                           (v)      Records: The Bank shall keep records
         relating to the services to be performed hereunder, in the form and
         manner as it may deem advisable. To the extent required by Section 31
         of the Investment Company Act of 1940, as amended, and the Rules
         thereunder, the Bank agrees that all such records prepared or
         maintained by the Bank relating to the services to be performed by the
         Bank hereunder are the confidential property of the Company and will be
         preserved, maintained and made available in accordance with such
         Section and Rules, and will be surrendered to the Company on and in
         accordance with its request. All records shall be reasonably available
         for inspection and use by the Company.

                           (vi)     Certificates: at the expense of the Company,
         the Bank shall maintain an adequate supply of blank share certificates
         with respect to the Shares providing for the issuance of certificates
         to meet the Bank's requirements therefor. Such share certificates shall
         be properly signed by facsimile. The Company agrees that,
         notwithstanding the death, resignation, or removal of any officer of
         the Company whose signature appears on such certificates, the Bank may
         continue to countersign certificates which bear such signatures until
         otherwise directed by the Company. Share certificates may be issued and
         accounted for entirely by the Bank and do not require any third party
         registrar or other endorsing party.

                           (vii)    Replacement Certificates: issue replacement
         share certificates in lieu of certificates which have been lost,
         stolen, mutilated or destroyed, without any further action by the Board
         of Directors or any officer of the Company, upon receipt by the Bank of
         properly executed affidavits and lost certificate bonds, in form
         satisfactory to the Bank with the Company and the Bank as obligees
         under the bond. At the discretion of the Bank, and at its sole risk,
         the Bank may issue replacement certificates without requiring the
         affidavits and lost certificate bonds described above and the Bank
         agrees to indemnify the Company against any and all losses or claims
         which may arise by reason of the issuance of such new certificates in
         the place of the ones allegedly lost, stolen or destroyed.

                                       3
<PAGE>

                           (viii)   Issuance of Shares: Record the issuance of
         Shares of the Company and maintain pursuant to SEC Rule l7Ad-l0(e) a
         record of the total number of Shares of the Company which are
         authorized, based upon data provided to it by the Company, and issued
         and outstanding. The Bank shall have no obligation, when recording the
         issuance of Shares, to monitor the issuance of such Shares or to take
         cognizance of any laws relating to the issue or sale of such Shares,
         which functions shall be the sole responsibility of the Company.

                  (b)      In addition to and not in lieu of the services set
forth in the above paragraph (a) or in any Schedule hereto, if any, the Bank
shall: (i) perform all of the customary services of a registrar, transfer agent,
dividend disbursing agent and, as relevant, agent in connection with
accumulation or similar plans (including without limitation any periodic
investment plan), including but not limited to: preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes on accounts
as applicable, including non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required with respect
to dividends and distributions by federal authorities for all registered
Shareholders, preparing and mailing confirmations, and statements of account to
Shareholders for all confirmable transactions in Shareholder accounts,
responding to Shareholder telephone calls and Shareholder correspondence,
preparing and mailing activity statements for Shareholders, and providing
Shareholder account information.

                  (c)      In addition to the duties expressly provided for
herein, the Bank shall perform such other duties and functions and shall be paid
such amounts therefore as may from time to time be agreed to in writing and
attached as a schedule to this Agreement.

                  (d)      Procedures applicable to the services to be performed
hereunder may be established from time to time by agreement between the Company
and the Bank. The Bank shall have the right to utilize any shareholder
accounting and recordkeeping systems which, in its opinion, qualifies to perform
any services to be performed hereunder.

                                   ARTICLE 2.
                               FEES AND EXPENSES

         2.01.    For performance by the Bank pursuant to this Agreement, the
Company agrees to pay the Bank such fees as set out in the initial fee schedule
attached hereto. Such fees and out-of-pocket expenses and advances identified
under Section 2.02 below may be changed from time to time subject to mutual
written agreement between the Company and the Bank.

         2.02.    In addition to the fee paid under Section 2.01 above, the
Company agrees to reimburse the Bank for out-of-pocket expenses or advances
incurred by the Bank for the items set out in the fee schedule attached hereto.
In addition, any other expenses incurred by the Bank at the request or with the
consent of the Company including,

                                       4
<PAGE>

without limitation, any equipment or supplies specifically ordered by the
Company or required to be purchased by the Company, will be reimbursed by the
Company.

         2.03.    The Company agrees to pay all fees and reimbursable expenses
within five days following the mailing of the respective billing notice. Postage
for mailing of dividends, proxies, reports and other mailings to all Shareholder
accounts shall be advanced to the Bank by the Company at least seven (7) days
prior to the mailing date of such materials.

                                   ARTICLE 3.
                   REPRESENTATIONS AND WARRANTIES OF THE BANK

         The Bank represents and warrants to the Company that:

         3.01.    It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts and registered as a
transfer agent as provided in Section l7A(C) of the Securities Exchange Act of
1934, as amended.

         3.02.    It is empowered under applicable laws and by its charter and
By-laws to enter into and perform this Agreement.

         3.03.    All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.

         3.04.    It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.

                                   ARTICLE 4.
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company represents and warrants to the Bank that:

         4.01.    It is a corporation duly organized and existing and in good
standing under the laws of the state of its incorporation as set forth in the
preamble hereto.

         4.02.    It is empowered under applicable laws and by its charter
documents and By-Laws to enter into and perform this Agreement.

         4.03.    All proceedings required by said charter documents and By-Laws
have been taken to authorize it to enter into and perform this Agreement.

         4.04.    It is an closed-end investment company registered under the
Investment Company Act of 1940.

         4.05.    A registration statement on Form N-2 (including a prospectus
and statement of additional information) under the Securities Act of 1933 is
currently effective and appropriate federal and state securities law filings
have been made and will continue to be made, with respect to all Shares of the
Company being offered for sale.

                                       5
<PAGE>

                                   ARTICLE 5.
                                 INDEMNIFICATION

         5.01.    Except as set forth in subparagraph (f) hereof, the Bank shall
not be responsible for, and the Company shall indemnify and hold the Bank
harmless from and against, any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to:

                  (a)      All actions taken or omitted to be taken by the Bank
or its agent or subcontractors in good faith in reliance on or use by the Bank
or its agents or subcontractors of information, records and documents which (i)
are received by the Bank or its agents or subcontractors and furnished to it by
an "Authorized Person" (as such term is defined in the Amended and Restated
Custodian Agreement by and between the Bank and the Company of even date
herewith) or on behalf of the Company, (ii) have been prepared and/or maintained
by the Company or any other person or firm on behalf of the Company, and (iii)
were received by the Bank or its agents or subcontractors from a prior transfer
agent.

                  (b)      Any action taken or omitted to be taken by the Bank
in connection with its appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed.

                  (c)      The Company's refusal or failure to comply with the
terms of this Agreement, or which arise out of the Company's lack of good faith,
negligence or willful misconduct or which arise out of the breach of any
representation or warranty of the Company hereunder.

                  (d)      The reliance on, or the carrying out by the Bank or
its agents or subcontractors of any instructions or requests, whether written or
oral, of Authorized Persons of the Company.

                  (e)      The offer or sale of Shares by the Company in
violation of any requirement under the federal securities laws or regulations or
the securities laws or regulations of any state that such Shares be registered
in such state or in violation of any stop order or other determination or ruling
by any federal agency or any state with respect to the offer or sale of such
Shares in such state.

         5.02.    The Bank shall indemnify and hold the Company harmless from
and against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributed to any action or failure or
omission to act by the Bank as a result of the Bank's negligence, willful
misfeasance or misconduct in the performance of its duties or negligent
disregard of its obligations and duties hereunder.

         5.03.    At any time the Bank may apply to any officer of the Company
for instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the

                                       6
<PAGE>

Company for any action taken or omitted by it in reliance upon such instructions
received from an Authorized Person or upon the opinion of such counsel. The
Bank, its agents and subcontractors shall be protected and indemnified in acting
upon any paper or document furnished by or on behalf of the Company, reasonably
believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents provided the
Bank or its agents or subcontractors by machine readable input, telex, CRT data
entry or other similar means authorized by the Company, and shall not be held to
have notice of any change of authority of any person, until receipt of written
notice thereof from the Company. The Bank, its agents and subcontractors shall
also be protected and indemnified in recognizing stock certificates which are
reasonably believed to bear the proper manual or facsimile signatures of the
officer of the Company, and one proper countersignature of any former transfer
agent or registrar, or of a co-transfer agent or co-registrar.

         5.04.    In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, interruption
of electrical power or other utilities, equipment or transmission failure or
damage reasonably beyond its control or other causes reasonably beyond its
control, such party shall not be liable to the other for any damages resulting
from such failure to perform or otherwise from such causes.

         5.05.    In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent, which consent shall not be unreasonably
withheld.

                                   ARTICLE 6.
                      COVENANTS OF THE COMPANY AND THE BANK

         6.01.    The Company shall promptly furnish to the Bank the following:

                  (a)      A certified copy of the resolution of the Directors
of the Company authorizing the appointment of the Bank and the execution and
delivery of this Agreement.

                  (b)      A copy of the charter documents and By-Laws of the
Company and all amendments thereto.

                  (c)      Copies of each vote of the Directors designating
authorized persons to give instructions to the Bank.

                                       7
<PAGE>

                  (d)      Certificates as to any change in any officer,
Director or Authorized Person of the Company.

                  (e)      If applicable, a specimen of the certificate of
Shares of the Company in the form approved by the Directors, with a certificate
of the Secretary of the Company as to such approval.

                  (f)      Specimens of all new certificates for Shares,
accompanied by the Directors' resolutions approving such forms.

                  (g)      All account application forms and other documents
relating to shareholder accounts or relating to any plan, program or service
offered by the Company.

                  (h)      A list of Shareholders of the Company with the name,
address and tax identification number of each Shareholder, and the number of
Shares of the Company held by each, certificate numbers and denominations (if
any certificates have been issued), lists of any account against which stops
have been placed, together with the reasons for said stops, and the number of
Shares redeemed by the Company.

                  (i)      An opinion of counsel for the Company with respect to
the validity of the Shares and the status of such Shares under the Securities
Act of 1933.

                  (j)      Copies of the Company registration statement on Form
N-2, its current prospectus and statement of additional information, if any.

                  (k)      Such other certificates, documents or opinions as may
mutually be deemed necessary or appropriate for the Bank in the proper
performance of its duties.

         6.02.    The Bank hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Company for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.

         6.03.    The Bank and the Company agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.

         6.04.    In case of any requests or demands for the inspection of the
Shareholder records of the Company, the Bank will endeavor to notify the Company
and to secure instructions from an Authorized Person of the Company as to such
instruction. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.

                                       8
<PAGE>

                                    ARTICLE 7.
                                TERM OF AGREEMENT

         7.01.    This Agreement shall become effective on the date hereof (the
"Effective Date") and shall continue in effect from year to year thereafter,
provided that this Agreement may be terminated by either party at any time
without payment of any penalty upon ninety (90) days written notice to the
other. In the event such notice is given by the Company, it shall be accompanied
by a resolution of the Board of Directors, certified by the Secretary, electing
to terminate this Agreement and designating a successor transfer agent.

         7.02.    Should the Company exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Company. Additionally, the Bank reserves the right to charge for
any other reasonable expenses associated with such termination.

                                    ARTICLE 8.
                                   ASSIGNMENT

         8.01.    Except as provided in Section 8.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.

         8.02.    This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.

         8.03.    The Bank, may without further consent on the part of the
Company, subcontract for the performance of services to be provided hereunder to
third parties, including any affiliate of the Bank, provided that the Bank shall
remain liable hereunder for any acts or omissions of any subcontractor as if
performed by the Bank.

                                    ARTICLE 9.
                                    AMENDMENT

         9.01.    This Agreement may be amended or modified by a written
agreement executed by both parties.

                                  ARTICLE 10.
                           MASSACHUSETTS LAW TO APPLY

         10.01.   This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.

                                       9
<PAGE>

                                   ARTICLE 11.
                               MERGER OF AGREEMENT

         11.01.   This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.

                                        THE FUTURE GERMANY FUND, INC.

                                        By:_____________________________________

ATTEST:

_________________________________

                                        INVESTORS BANK & TRUST COMPANY

                                        By:_____________________________________

ATTEST:

_________________________________

                                       10

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.N
<SEQUENCE>16
<FILENAME>y93068a1exv99wn.txt
<DESCRIPTION>CONSENT OF PRICEWATERHOUSECOOPERS LLP
<TEXT>
<PAGE>
                                                                   Exhibit 99.N





                         CONSENT OF INDEPENDENT AUDITORS
                         -------------------------------


We hereby consent to the incorporation by reference in this Registration
Statement on Form N-2 of our report dated December 22, 2003, relating to the
financial statements and financial highlights which appears in the October 31,
2003 Annual Report to Shareholders of The Central Europe and Russia Fund, Inc.,
which are also incorporated by reference into the Registration Statement. We
also consent to the references to us under the headings "Financial Highlights"
and "Experts" in such Registration Statement.



/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
New York, New York
February 5, 2004



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.R.1
<SEQUENCE>17
<FILENAME>y93068a1exv99wrw1.txt
<DESCRIPTION>CODE OF ETHICS
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(r)(1)

                             THE GERMANY FUND, INC.
                           THE NEW GERMANY FUND, INC.
                     THE CENTRAL EUROPEAN EQUITY FUND, INC.

                    As amended and restated on July 10, 2000

                                 Code of Ethics


1.       Purposes

                  This Code of Ethics has been adopted by the Board of Directors
of each Fund in accordance with Rule 17j-1(b) under the U.S. Investment Company
Act of 1940 (the "Act"). Rule 17j-1 under the Act generally proscribes
fraudulent or manipulative practices with respect to purchases or sales of
securities held or to be acquired by investment companies, if effected by
associated persons of such companies. The purposes of this Code of Ethics is to
provide, for Access Persons who are not subject to the codes of ethics of
Deutsche Bank Securities Inc. or Deutsche Asset Management International GmbH
(the Funds' Manager and Investment Adviser, respectively; collectively referred
to as the "Advisers"), regulations and procedures consistent with the Act and
Rule 17j-1 designed to give effect to the general prohibitions set forth in Rule
17j-1 as follows:

                  (a)      It is unlawful for any affiliated person of or
         principal underwriter for a Fund, or any affiliated person of an
         investment adviser of or principal underwriter for a Fund, in
         connection with the
<PAGE>



         purchase or sale, directly or indirectly, by the person of a Security
         Held or to be Acquired by the Fund:

                           (1)      To employ any device, scheme or artifice to
                  defraud the Fund;

                           (2)      To make any untrue statement of a material
                  fact to the Fund or omit to state a material fact necessary in
                  order to make the statements made to the Fund, in light of the
                  circumstances under which they are made, not misleading;

                           (3)      To engage in any act, practice, or course of
                  business that operates or would operate as a fraud or deceit
                  on the Fund; or

                           (4)      To engage in any manipulative practice with
                  respect to the Fund.

2.       Definitions

                  (a)      "Access Person" means (i) any director, officer or
         Advisory Person of the Fund; and (ii) any director, officer or general
         partner of a principal underwriter who, in the ordinary course of
         business, makes, participates in or obtains information regarding, the
         purchase or sale of Covered Securities by the Fund for which the
         principal underwriter acts, or whose functions or duties in the
         ordinary course of business relate to the making of any recommendation
         to the Fund regarding the purchase or sale of Covered Securities.

                  (b)      "Advisers" mean Deutsche Bank Securities Inc. and
         Deutsche Asset Management International GmbH.

                  (c)      "Adviser's Code of Ethics" means the code of ethics
         of the applicable Adviser as adopted from time to time by the Board of
         Directors of a Fund in accordance with the Act and the rules
         thereunder.

                  (d)      "Advisory Person" of the Fund means: (i) any employee
         of the Fund (or of any company in a Control Relationship with the Fund)
         who, in connection with his or her regular functions or duties, makes,
         participates in, or obtains information regarding the

                                      -2-
<PAGE>

         purchase or sale of Covered Securities by the Fund, or whose functions
         relate to the making of any recommendations with respect to the
         purchases or sales; and (ii) any natural person in a Control
         Relationship with the Fund who obtains information concerning
         recommendations made to the Fund with regard to the purchase or sale of
         Covered Securities by the Fund.

                  (e)      "Control" has the same meaning as set forth in
         Section 2(a)(9) of the Act. Under that Section, beneficial ownership of
         over 25% of the voting securities of a company constitutes Control of
         that company until such time (if ever) as the U.S. Securities and
         Exchange Commission conducts an administrative proceeding and issues an
         order to the contrary.

                  (f)      "Control Relationship" means Controlling, Controlled
         by or under common Control with.

                  (g)      "Covered Security" means a security as defined in
         Section 2(a)(36) of the Act, except that it does not include: (i)
         direct obligations of the Government of the United States; (ii)
         bankers' acceptances, bank certificates of deposit, commercial paper
         and high quality short-term debt instruments, including repurchase
         agreements; and (iii) shares issued by open-end investment companies
         registered under the Act.

                  (h)      "Fund" means, as applicable, The Germany Fund, Inc.,
         The New Germany Fund, Inc. and The Central European Equity Fund, Inc.

                  (i)      "Initial Public Offering" or "IPO" includes IPOs that
         do not involve any offer in the United States.

                  (j)      "Investment Personnel" of the Fund means: (i) any
         employee of the Fund (or of any company in a Control Relationship with
         the Fund) who, in connection with his or her regular functions or
         duties, makes or participates in making recommendations regarding the
         purchase or sale of securities by the Fund; and (ii) any natural person
         who controls the Fund and who obtains information concerning
         recommendations made to

                                      -3-
<PAGE>

         the Fund regarding the purchase or sale of securities by the Fund.

                  (k)      "Limited Offering" means an offering that is exempt
         from registration under the U.S. Securities Act of 1933 pursuant to
         Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule 505 or Rule
         506 under the Securities Act. A Limited Offering includes a U.S.
         private placement and a Rule 144A offering.

                  (l)      "Personal Account" refers to the following types of
         accounts that hold Securities: (i) a brokerage or bank account of an
         individual subject to this Code and Statement; (ii) a brokerage or bank
         account of such an individual's spouse (other than a legally separated
         or divorced spouse); or (iii) a brokerage or bank account in which such
         individual, his/her spouse/domestic partner, minor children or other
         persons living in their home have a beneficial interest (i.e., share in
         the profits even if there is no influence on voting or disposition of
         any securities in the account); and (iv) any other account (except a
         client account) with respect to which the individual or his/her
         spouse/domestic partner has investment discretion or Control.

                  (m)      "Purchase or sale" of a security or Covered Security
         includes the writing of an option to purchase or sell a security or
         Covered Security.

                  (n)      "Security Held or to be Acquired by the Fund" means:
         (i) any Covered Security which, within the most recent 15 days, (A) is
         or has been held by the Fund or (B) is being or has been considered by
         the Fund or an Adviser for purchase by the Fund; and (ii) any option to
         purchase or sell, and any security convertible into or exchangeable
         for, a Covered Security described in the foregoing clause (i).

3.       Application

                  Certain Access Persons of the Funds are officers, directors or
Advisory Persons of an Adviser. The Advisers have their own Codes of Ethics that
have also been adopted by the Funds as to these overlapping persons pursuant to

                                      -4-
<PAGE>

Rule 17j-1 under the Act. Any Access Person who is subject to an Adviser's Code
of Ethics and who complies with such Code shall not be subject to the provisions
of this Code.

4. Prohibited Purchases and Sales

                  (a)      No Access Person shall purchase or sell, directly or
indirectly, any Covered Security in which he or she has, or by reason of such
transaction acquires, any direct or indirect ownership in a Personal Account and
which to his or her actual knowledge at the time of such purchase or sale, is a
Security Held or to be Acquired by the Fund. In addition, all Investment
Personnel of the Fund must obtain approval from the Fund before directly or
indirectly acquiring in any of their Personal Accounts securities in an Initial
Public Offering or in a Limited Offering.

                  (b)      No Access Person shall reveal to any other person
(except in the normal course of his or her duties on behalf of the Fund) any
information regarding transactions in Covered Securities by the Fund or
consideration by the Fund or an Adviser of any such transaction.

                  (c)      No Access Person shall recommend any transaction in
Covered Securities by the Fund without having disclosed his or her interest, if
any, in such

                                      -5-
<PAGE>

Covered Securities or the issuer thereof, including without limitation (i) his
or her direct or indirect ownership in a Personal Account of any securities of
such issuer, (ii) any contemplated transaction by such person in such
securities, (iii) any position with such issuer or its affiliates and (iv) any
present or proposed business relationship between such issuer or its affiliates,
on the one hand, and such person or any party in which such person has a
significant interest, on the other; provided, however, that in the event the
interest of such Access Person in such securities or issuer is not material to
his or her personal net worth and any contemplated transaction by such person in
such securities cannot reasonably be expected to have a material adverse effect
on any such transaction by the Fund or on the market for the securities
generally, such Access Person shall not be required to disclose his or her
interest in the securities or issuer thereof in connection with any such
recommendation.

5.       Exempted Transactions

                  The prohibitions of Section 4 of this Code shall not apply to:

                  (a)      Purchases or sales of Covered Securities effected in
         any account over which the Access Person has no direct or indirect
         influence or control.

                                      -6-
<PAGE>

                  (b)      Purchases or sales of Covered Securities which are
         not eligible for purchase or sale by the Fund.

                  (c)      Purchases or sales of Covered Securities which are
         non-volitional on the part of either the Access Person or the Fund.

                  (d)      Purchases of Covered Securities which are part of an
         automatic dividend reinvestment plan or automatic payroll deduction
         plan.

                  (e)      Purchases of Covered Securities effected upon the
         exercise of rights issued by an issuer pro rata to all holders of a
         class of its securities, to the extent such rights were acquired from
         such issuer, and sales of such rights so acquired.

6.       Reporting

                  (a)      Every Access Person shall report to the Fund the
         information described in Section 6(c) of this Code with respect to
         holdings and transactions (other than personal transactions in
         securities exempted under Section 5 of this Code) in any security in
         any Personal Account of the Access Person.

                  (b)      A director of the Fund who is not an "affiliated
         person" of the Fund (other than by virtue of being a director) or of
         the Advisors within the

                                      -7-
<PAGE>

         meaning of Section 2(a)(3) of the Act (i) need not make any Initial
         Holdings Report or Annual Holdings Report (as described in clause (c)
         below), (ii) is required to report particular transactions in a
         Quarterly Transaction Report (as described in clause (c) below) and is
         subject to the prohibition of Section 4(a) only if such director, at
         the time of that transaction, knew or, in the ordinary course of
         fulfilling his or her official duties as a director of the Fund, should
         have known that, during the 15-day period immediately before or after
         the director's transaction in a Covered Security, the Fund purchased or
         sold the Covered Security, or the Fund or the Adviser considered
         purchasing or selling the Covered Security, and (iii) is required to
         report the establishment of a Personal Account in a Quarterly
         Transaction Report only if it holds a security required to be reported
         pursuant to foregoing clause (ii).

                  (c)      Reports shall be made (x) no later than 10 days after
         a person becomes an Access Person ("Initial Holdings Report")(1), (y)
         no later than 10 days after the

- -----------------------
(1)      Existing Access Persons on March 1, 2000 do not have to file Initial
         Holdings Report.

                                      -8-
<PAGE>

         end of a calendar quarter ("Quarterly Transaction Report") and (z)
         annually ("Annual Holdings Report"), and shall contain the following
         information:

                           (i)      in the case of the Initial Holdings Report:
                  (A) the title, number of shares and principal amount of each
                  Covered Security in each Personal Account of the Access Person
                  when the person became an Access Person; (B) the name of each
                  broker, dealer or bank with whom the Access Person maintained
                  such Personal Account as of the date the person become an
                  Access Person; and (C) the date that the report is submitted
                  by the Access Person.

                           (ii)     in the case of a Quarterly Transaction
                  Report: (A) with respect to any transaction during the quarter
                  in a Covered Security in a Personal Account of the Access
                  Person, (1) the date of the transaction, the title, the
                  interest rate and maturity date (if applicable), the number of
                  shares and the principal amount of each Covered Security
                  involved, (2) the nature of the transaction (i.e., purchase,
                  sale or any other type of acquisition or disposition), (3) the

                                      -9-
<PAGE>

                  price of the Covered Security at which the transaction was
                  effected, (4) the name of the broker, dealer or bank with or
                  through which the transaction was effected and (5) the date
                  that the report is submitted by the Access Person; and (B)
                  with respect to establishment of any Personal Account by the
                  Access Person, (1) the name of the broker, dealer or bank with
                  whom the Access Person established the account, (2) the date
                  the account was established and (3) the date that the report
                  is submitted by the Access Person.

                           (iii)    in the case of each Annual Holdings Report:
                  (A) the title, number of shares and principal amount of each
                  Covered Security in each Personal Account of the Access
                  Person; (B) the name of each broker, dealer or bank with whom
                  the Access Person maintains such Personal Account; and (C) the
                  date that the report is submitted by the Access Person.

                  (d)      Any such report may contain a statement that the
         report shall not be construed as an admission by the person making such
         report that he has any direct

                                      -10-
<PAGE>

         or indirect beneficial ownership in the security to which the report
         relates.

7.       Sanctions

                  Upon discovering a violation of this Code, the Board of
Directors of the Fund may take such actions or impose such sanctions as it deems
appropriate, including, inter alia, a letter of censure or suspension or
termination of the employment of the violator.

                                      -11-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.R.2
<SEQUENCE>18
<FILENAME>y93068a1exv99wrw2.txt
<DESCRIPTION>CODE OF ETHICS
<TEXT>
<PAGE>
                                                               EXHIBIT (2)(r)(2)

                        DEUTSCHE ASSET MANAGEMENT - U.S.

                                 CODE OF ETHICS

                                              EFFECTIVE DATE: JANUARY 1, 2004

                                              A Member of the
                                              DEUSTCHE BANK GROUP [GRAPHIC]

<PAGE>

                        DEUTSCHE ASSET MANAGEMENT - U.S.

                                 CODE OF ETHICS

<TABLE>
<S>                                                                                             <C>
   I.    OVERVIEW...........................................................................    1

  II.    GENERAL RULE.......................................................................    1

 III.    DEFINITIONS........................................................................    2

  IV.    RESTRICTIONS.......................................................................    4
              General.......................................................................    4
              Specific Blackout Period Restrictions.........................................    4
              New Issues (IPOs).............................................................    6
              Short-Term Trading............................................................    6
              Restricted List...............................................................    7
              Private Placements............................................................    7

   V.    COMPLIANCE PROCEDURES..............................................................    7
              Designated Brokerage Accounts.................................................    7
              Pre-Clearance.................................................................    8
              Scudder Proprietary Mutual Fund Holdings......................................    8
              Reporting Requirements........................................................    8
              Confirmation of Compliance with Policies......................................    9

  VI.    OTHER PROCEDURES/RESTRICTIONS......................................................    9
              Service on Boards of Directors................................................    9
              Outside Business Affiliations.................................................    9
              Executorships.................................................................    10
              Trusteeships..................................................................    10
              Custodianships and Powers of Attorney.........................................    10
              Gifts.........................................................................    11
              Rules for Dealing with Governmental Officials and Political Candidates........    13
              Confidentiality...............................................................    14

 VII.    SANCTIONS .........................................................................    14

VIII.    INTERPRETATIONS AND EXCEPTIONS.....................................................    14

APPENDIX:

[  ]   Schedule A...........................................................................    15
[  ]   Personal Securities Holdings Report..................................................    16
[  ]   Quarterly Personal Securities Trading Report.........................................    17
[  ]   Annual Acknowledgement of Obligations Under the Code of Ethics.......................    19
[  ]   Request For Approval of Fiduciary, Corporate Or Other Outside Activity...............    21
[  ]   Annual Review of Personal Activities Form............................................    22
</TABLE>

<PAGE>

                                                               EXHIBIT (2)(r)(2)

                        DEUTSCHE ASSET MANAGEMENT - U.S.

                                 CODE OF ETHICS

I.   OVERVIEW

This Code of Ethics ("Code") sets forth the specialized rules for business
conduct and guidelines for the personal investing activities that generally are
required of employees involved in the United States investment management areas
of the Deutsche Bank Group and its affiliates (collectively "Deutsche Asset
Management" or "DeAM").(1)

The provisions of this Code shall apply to all DeAM employees, as categorized in
the Definition Section on the next page and such other employees as the
Compliance Department ("Compliance")(2) may determine from time to time. This
Code supplements the Deutsche Bank Code of Professional Conduct and Compliance
Policies and Procedures Manual ("Compliance Manual") (available at
http://docbase.backoff.nyc.dbna.com/Policy:/General/Code of Professional
Conduct/Code of Professional Conduct and
http://docbase.backoff.nyc.dbna.com/Policy:/Compliance/Deutsche Asset
Management/Deutsche Asset Management). Each Employee must observe those
policies, as well as abide by the additional principles and rules set forth in
this Code, and any other applicable legal vehicle or division specific policies
and obligations.


II.  GENERAL RULE

DeAM employees will, in varying degrees, participate in or be aware of fiduciary
and investment services provided to registered investment companies,
institutional investment clients, employee benefit trusts and other types of
investment advisory accounts. The fiduciary relationship mandates adherence to
the highest standards of conduct and integrity. We will at all times conduct
ourselves with integrity and distinction, putting first the interests of our
clients.

Accordingly, personnel acting in a fiduciary capacity must carry out their
duties for the EXCLUSIVE BENEFIT of the client accounts. Consistent with this
fiduciary duty, the interests of DeAM clients take priority over the investment
desires of DeAM and DeAM personnel. All DeAM personnel must conduct themselves
in a manner consistent with the requirements and procedures set forth in this
Code.

- -------------------------
(1) Deutsche Asset Management is the marketing name in the U.S. for the asset
management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas
(formerly Bankers Trust Co.), Deutsche Bank Securities Inc. (limited
applicability, see Appendix A), Deutsche Asset Management Inc., Deutsche Asset
Management Investment Services Ltd., Deutsche Investment Management Americas
Inc. (and its affiliates, including Scudder Investor Services, Inc. and Scudder
Distributors Inc.) and Scudder Trust Company.

(2) "Compliance" refers to the DB Americas centralized Compliance Unit
(generally referred to herein as "Central Compliance," and/or its unit
specifically designated to the DeAM business unit: "DeAM Compliance").

<PAGE>

[  ] There must be no conflict, or appearance of conflict, between the
     self-interest of any employee and the responsibility of that employee to
     Deutsche Bank, its shareholders or its clients.(3)

[  ] Employees must never improperly use their position with Deutsche Bank for
     personal or private gain to themselves, their family or any other person.

DeAM employees may also be required to comply with other policies imposing
separate requirements. Specifically, they may be subject to laws or regulations
that impose restrictions with respect to personal securities transactions,
including, but not limited to, Section 17(j) and Rule 17j-1 under the Investment
Company Act of 1940 (the "Act"). The purpose of this Code of Ethics is to ensure
that, in connection with his or her personal trading, no Employee (as defined
below) shall conduct any of the following acts upon a client account:

   -      To employ any device, scheme or artifice to defraud;

   -      To make any untrue statement of a material fact, or omit to state a
          material fact necessary in order to make the statement not misleading;

   -      To engage in any act, practice or course of business that operates or
          would operate as a fraud or deceit; or

   -      To engage in any manipulative practice.

III. DEFINITIONS

A.       "Investment Personnel" shall mean and include:

             Portfolio Managers, traders and analysts (and other employees who
             work directly with Portfolio Managers in an assistant capacity). As
             those responsible for making investment decisions (or participating
             in such decisions) in client accounts or providing information or
             advice to Portfolio Managers or otherwise helping to execute or
             implement the Portfolio Managers' recommendations, Investment
             Personnel occupy a comparatively sensitive position, and thus
             additional rules outlined herein apply to such individuals.


B.       "Access Person" shall mean and include:

         (i)      Officers and directors of DeAM entities and officers and
                  directors of DeAM-sponsored investment companies who are
                  affiliated persons of DeAM entities. Also included are
                  employees of these entities who have access to timely
                  information relating to investment management activities,
                  research and/or client portfolio holdings as well as those who
                  in the course of their job regularly receive access to client
                  trading activity (this would generally include members of the
                  Investment Operations and Treasurer's Offices). Also included
                  here are persons in a control relationship (as defined in
                  Section 2(a)(9) of the Act) to DeAM who

- --------------------------
(3) The rules herein cannot anticipate all situations which may involve a
possible conflict of interest. If an employee becomes aware of a personal
interest that is, or might be, in conflict with the interest of a client, that
person should disclose the potential conflict to DeAM Compliance or Legal prior
to executing any such transaction.

                                                                               2

<PAGE>

                  obtain information concerning investment recommendations made
                  to any client account.

         (ii)     Any other personnel with responsibilities related to the asset
                  management business or frequent interaction with Access
                  Persons or Investment Personnel as determined by Compliance
                  (e.g., Legal, Compliance, Risk, Operations, Sales & Marketing,
                  as well as certain long-term temporary employees and
                  consultants).

C.       "Non-Access Person" shall mean and include:

             DeAM personnel who are not defined in Section III A. or B. above,
             and who have access to neither client trading activity nor
             recommendations made in relation to any client account. An example
             includes employees of the Mutual Funds Call Center in Chicago.

D.       "Employees" is a general term which shall include all DeAM employees,
         including Investment Personnel, Access Persons and Non-Access Persons
         as well as those non-DeAM employees who are subject to this Code of
         Ethics (see III.B.(ii) above).

E.       "Accounts" shall mean all securities accounts, whether brokerage or
         otherwise, securities held directly outside of accounts AND shall
         include open-end and closed-end mutual fund accounts

F.       "Employee Related Account" of any person subject to this Code shall
         mean:

             (i)      The Employee's own Accounts;

             (ii)     The Employee's spouse's/domestic partner's Accounts and
                      the Accounts of minor children and other relatives living
                      in the Employee's home;

             (iii)    Accounts in which the Employee, his/her spouse/domestic
                      partner, minor children or other relatives living in their
                      home have a beneficial interest (i.e., share in the
                      profits even if there is no influence on voting or
                      disposition of the shares); and

             (iv)     Accounts (including corporate Accounts and trust Accounts)
                      over which the Employee or his/her spouse/domestic partner
                      exercises investment discretion or direct or indirect
                      influence or control.

         NOTE:ANY PERSON SUBJECT TO THIS CODE IS RESPONSIBLE FOR COMPLIANCE
              WITH THESE RULES WITH RESPECT TO ANY EMPLOYEE RELATED ACCOUNT, AS
              APPLICABLE.

G.       "Securities" shall include equity or debt securities, derivatives of
         securities (such as options, warrants, and ADRs), futures, commodities,
         securities indices, Exchange Traded Funds, government and municipal
         bonds and similar instruments, but DO NOT INCLUDE:

                  (i)      Bankers' acceptances, bank certificates of deposit,
                           commercial paper and high quality short-term debt
                           instruments, including repurchase agreements.

H.       "Mutual Funds" shall include all mutual funds ( open-end and closed-end
         mutual funds), but WILL EXCLUDE:

                                                                               3

<PAGE>

(i)      Shares of open-end Money Market mutual funds (unless otherwise directed
         by Compliance);


IV.      RESTRICTIONS

For purposes of this Code, a prohibition or requirement applicable to any
Employee applies also to transactions in securities and mutual funds for any of
that Employee's personal accounts, including transactions executed by that
Employee's spouse or relatives living in that Employee's household (see
definition under III.F).

A.       GENERAL

         (i)      The Basic Policy: Employees have a personal obligation to
                  conduct their investing activities and related securities and
                  mutual fund transactions lawfully and in a manner that avoids
                  actual or potential conflicts between their own interests and
                  the interests of Deutsche Asset Management and its clients.
                  Employees must carefully consider the nature of their DeAM
                  responsibilities - and the type of information that he or she
                  might be deemed to possess in light of any particular
                  securities and mutual fund transaction - before engaging in
                  that transaction.

         (ii)     Material Nonpublic Information: Employees in possession of
                  material nonpublic information about or affecting securities,
                  or their issuer, are prohibited from buying or selling such
                  securities, or advising any other person to buy or sell such
                  securities. See also Compliance Manual -- Confidential,
                  Material, Non-Public Information, Chinese Walls, Insider
                  Trading and Related Matters Policy.

         (iii)    Corporate and Departmental Restricted Lists: Employees are not
                  permitted to buy or sell any securities that are included on
                  the Corporate Restricted List (available on the intranet)
                  and/or other applicable departmental restricted lists.

         (iv)     "Frontrunning:" Employees are prohibited from buying or
                  selling securities, mutual funds or other instruments in their
                  Employee Related Accounts so as to benefit from the employee's
                  knowledge of the Firm's or a client's trading positions, plans
                  or strategies, or forthcoming research recommendations.

B.       SPECIFIC BLACKOUT PERIOD RESTRICTIONS

         (i)      Investment Personnel and Access Persons shall not knowingly
                  effect the purchase or sale of a Security for an Employee
                  Related Account on a day during which any client account has a
                  "buy" or "sell" order for the same Security, until that order
                  is executed or withdrawn.

         (ii)     Investment Personnel shall not effect the purchase or sale of
                  a Security for an Employee Related Account within SEVEN
                  CALENDAR DAYS BEFORE OR SEVEN

                                                                               4

<PAGE>

                  CALENDAR DAYS AFTER the same Security is traded (or
                  contemplated to be traded) by a client account with which the
                  individual is associated.

         (iii)    Investment Personnel and other persons with real time access
                  to a global research sharing system platform (e.g., "GERP"(4))
                  shall not effect the purchase or sale of a Security for an
                  Employee Related Account within SEVEN CALENDAR DAYS BEFORE OR
                  SEVEN CALENDAR DAYS AFTER the same Security (a) is added
                  to/deleted from or has its weighting changed in the "Model"
                  Portfolio; or (b) has its internal rating upgraded or
                  downgraded; or (c) has research coverage initiated.

         (iv)     Employees must always act to avoid any actual or potential
                  conflict of interest between their DeAM duties and
                  responsibilities, and their personal investment activities. To
                  avoid potential conflicts, absent specific written approval
                  from their Managing Officer(5) and Compliance, Employees
                  should not personally invest in securities issued by companies
                  with which they have significant dealings on behalf of DeAM,
                  or in investment vehicles sponsored by the companies.
                  Additional rules that apply to securities transactions by
                  Employees, including the requirement for Employees to
                  pre-clear personal securities transactions and rules regarding
                  how Employee Related Accounts must be maintained, are
                  described in more detail later in this Code.

         (v)      Deutsche Bank Securities: During certain times of the year,
                  all Deutsche Bank employees are prohibited from conducting
                  transactions in the equity and debt securities of Deutsche
                  Bank, which affect their beneficial interest in the firm.
                  Central Compliance generally imposes these "blackout" periods
                  around the fiscal reporting of corporate earnings. Blackouts
                  typically begin two days prior to the expected quarterly or
                  annual earnings announcement, and end after earnings are
                  released publicly. Additional restricted periods may be
                  required for certain individuals and events, and Compliance
                  will announce when such additional restricted periods are in
                  effect.

         (vi)     EXCEPTIONS TO BLACKOUT PERIODS (ABOVE ITEMS I, II, AND III
                  ONLY)

                  The following Securities are exempt from the specified
                  blackout periods:

                    [ ]

                    [ ]    The purchase or sale of 500 shares or less in the top
                           400 companies comprising the S&P 500 Index;

                    [ ]    Securities indices;

- ------------------------
(4) GERP (Global Equity Research Portal) is a web-based application (Active
Equity businesses) allowing for the publishing and dissemination of research and
model portfolios in real-time by the Global Sector Teams, Portfolio Selection
Teams, Local Research Teams, designated PIC/PB users and Small Cap Teams to
Portfolio Managers, who will use GERP for investment recommendations and
portfolio construction for clients.

(5) For purposes of this policy, "MANAGING OFFICER" is defined as an officer of
at least the Managing Director level to whom the employee directly or indirectly
reports, who is in charge of the employee's unit (e.g., a Department Head,
Division Head, Function Head, Group Head, General Manager, etc).

                                                                               5

<PAGE>

                       [ ] ETF's (Exchange Traded Funds - e.g., SPDRs or
                           "Spiders" (S&P 500 Index), DIAs or "Diamonds" (Dow
                           Jones Industrial Average, etc.);

                       [ ] Government and municipal bonds;

                       [ ] Shares purchased under an issuer sponsored Dividend
                           Reinvestment Plan ("DRIPs"), other than optional
                           purchases;

                       [ ] To the extent acquired from the issuer, purchases
                           effected upon the exercise of rights issued pro rata
                           to holders of a class of securities; and

                       [ ] Securities purchased under an employer sponsored
                           stock purchase plan or upon the exercise of employee
                           stock options.

       NOTE: Transactions in Securities in derivative instruments, including
       warrants, convertible Securities, futures and options, etc. shall be
       restricted in the same manner as the underlying Security.

C.       NEW ISSUES (IPOs)

         Investment Personnel, Access Persons and Non-Access Persons are
         prohibited from purchasing or subscribing for Securities pursuant to an
         initial public offering. This prohibition applies even if Deutsche Bank
         (or any affiliate of Deutsche Bank) has no underwriting role and/or is
         not involved with the distribution.

D.       SHORT -TERM TRADING

         Employees must always conduct their personal trading activities
         lawfully, properly and responsibly, and are encouraged to adopt
         long-term investment strategies that are consistent with their
         financial resources and objectives. Deutsche Bank generally discourages
         short-term trading strategies, and employees are cautioned that such
         strategies may inherently carry a higher risk of regulatory and other
         scrutiny. In any event, excessive or inappropriate trading that
         interferes with job performance, or compromises the duty that Deutsche
         Bank owes to its clients and shareholders, will not be tolerated.

Employees are prohibited from transacting in the purchase and sale, or sale and
purchase, of the same (or equivalent) Securities and mutual funds within 30
calendar days. The 30-day holding period also applies to each short vs. the box
sale, which is the only short sale permitted activity. Therefore, for purposes
of this section, the assumption is a last-in, first out order of transaction in
a particular Security and mutual fund. The following Securities are exempted
from this restriction:

                       [ ] Shares purchased under an issuer sponsored Dividend
                           Reinvestment Plan ("DRIPs"), other than optional
                           purchases;

                       [ ] To the extent acquired from the issuer, purchases
                           effected upon the exercise of rights issued pro rata
                           to holders of a class of securities;

                       [ ] Securities purchased under an employer sponsored
                           stock purchase plan; and

                       [ ] Securities pre-cleared and purchased with a
                           specific stop-limit provision attached.

                                                                               6

<PAGE>

   E.    RESTRICTED LIST

         All Deutsche Bank employees are prohibited from buying or selling any
         securities that are included on the Corporate Restricted List
         (available on the intranet at:
         http://cct-grl-prd.svc.btco.com/corp/cct/grl/grl_init.htm or the
         "Americas Portal" (http://americasportal.cc.db.com/) listed under
         "Quick Links.") and/or other applicable departmental restricted lists.
         Please see Compliance Manual -- Restricted List: Overview &
         Instructions Policy.

   F.    PRIVATE PLACEMENTS

         Prior to effecting a transaction in private securities (i.e.,
         Securities not requiring registration with the Securities and Exchange
         Commission, and sold directly to the investor), all Employees must
         first, in accordance with Deutsche Bank policy, obtain the approval of
         his/her supervisor and then pre-clear the transaction with the Central
         Compliance Department, including completing the questionnaire. Any
         person who has previously purchased privately-placed Securities must
         disclose such purchases to the Compliance Department before he or she
         participates in a Fund's or an advisory client's subsequent
         consideration of an investment in the Securities of the same or a
         related issuer.


V.       COMPLIANCE PROCEDURES

   A.    DESIGNATED BROKERAGE ACCOUNTS

         All Employees must obtain the explicit permission of the Central
         Compliance Department prior to opening a new Employee Related Account.
         Upon joining Deutsche Bank, new Employees are required to disclose all
         of their Employee Related Accounts (as previously defined) to Central
         Compliance and must carry out the instructions provided to conform such
         accounts, if necessary, to the Firm's policies.

         Under no circumstance is an Employee permitted to open or maintain any
         Employee Related Account that is undisclosed to Compliance. Also, the
         policies, procedures and rules described throughout this Code apply to
         all Employee Related Accounts.

         Accordingly, all Employees are required to open and maintain their
         Employee Related Accounts in accordance with the Compliance Manual --
         Employee/Employee-Related Trading, Procedures for Establishing
         Brokerage Accounts and Procedures for Pre-Clearing Personal Trades,
         including directing their brokers to supply duplicate copies of
         transaction confirmations and periodic account statements, as well as
         additional division-specific requirements, if any.

                                                                               7

<PAGE>

B.       PRE-CLEARANCE

         Proposed Securities and closed-end mutual fund transactions must be
         pre-cleared by all Employees with the Central Compliance Department
         (and approved by a Supervisor) in accordance with the Compliance Manual
         -- Employee/Employee-Related Trading Policy via the intranet based
         Employee Trade Request ("ETR") system prior to their being placed with
         the broker. Such approvals are good only for the day on which they are
         issued. Employees are personally responsible for ensuring that the
         proposed transaction does not violate the Firm's policies or applicable
         securities laws and regulations by virtue of the employee's Deutsche
         Bank responsibilities or information he or she may possess about the
         securities or their issuer.

         The following Securities are exempted from the pre-clearance
         requirement:

                       [ ]

                       [ ]

                       [ ] Open-end mutual funds;

                       [ ] Shares purchased under an issuer sponsored Dividend
                           Reinvestment Plan ("DRIPs"), other than optional
                           purchases;

                       [ ] Accounts expressly exempted by Central Compliance
                           which are managed under the exclusive direction of an
                           outside money manager;

                       [ ] Securities pre-cleared and purchased with a
                           specific stop-limit provision attached do not require
                           additional pre-clearance prior to execution.

                       [ ] To the extent acquired from the issuer, purchases
                           effected upon the exercise of rights issued pro rata
                           to holders of a class of securities; and

                       [ ] Securities purchased under an employer sponsored
                           stock purchase plan.

C.       Scudder Proprietary Mutual Fund Holdings

         All employees are required to maintain their holdings of Scudder
         proprietary mutual funds in the Deutsche Bank 401(k) plan, in E*Trade
         or Deutsche Bank Alex Brown brokerage accounts, or directly with
         Scudder Investments.

D.       REPORTING REQUIREMENTS

         (i) Disclosure of Employee Related Accounts/Provision of Statements
             As stated in section VA. above, upon joining Deutsche Bank, new
             employees are required to disclose all of their Employee Related
             Accounts to Central Compliance, and must carry out the instructions
             provided to conform such accounts, if necessary, to Deutsche Bank
             policies. In addition, pursuant to Rule 17j-1 of the Act, no later
             than ten days after an individual becomes an Employee (i.e.,
             joining/transferring into DeAM, etc.), he or she must also complete
             and return a "Personal Securities Holdings Report" (see Appendix)
             for Securities and mutual fund holdings to DeAM Compliance.

         (ii) Quarterly Personal Securities Trading Reports ("PSTs")

                                                                               8

<PAGE>

              Pursuant to Rule 17j-1 of the Act, within ten (10) days of the end
              of each calendar quarter, all Employees must submit to DeAM
              Compliance a PST report for Securities and mutual fund holdings,
              unless exempted by a division-specific requirement, if any. All
              PSTs that have reportable personal Securities and mutual fund
              transactions for the quarter will be reviewed by the appropriate
              supervisory and/or Compliance person .

         (iii) Annual Acknowledgement of Accounts
               Once each year, at a date to be specified by Central Compliance,
               each Employee must acknowledge that they do or do not have
               brokerage and mutual fund accounts. Employees with brokerage and
               mutual fund accounts must acknowledge each account.

E.       CONFIRMATION OF COMPLIANCE WITH POLICIES

         Annually, each Employee is required to sign a statement acknowledging
         that he or she has received this Code, as amended or updated, and
         confirm his or her adherence to it. Understanding and complying with
         this Code, and truthfully completing the Acknowledgment is the
         obligation of each Employee (see Appendix - "Annual Acknowledgement of
         Obligations Under the Code of Ethics"). Failure to perform this
         obligation may result in disciplinary action, including dismissal, as
         well as possible civil and criminal penalties.

VI.  OTHER PROCEDURES/RESTRICTIONS

  A.     SERVICE ON BOARDS OF DIRECTORS

         Service on Boards of publicly traded companies should be limited to a
         small number of instances. However, such service may be undertaken
         after approval from the regional head of Deutsche Asset Management and
         Compliance, based upon a determination that these activities are
         consistent with the interests of DeAM and its clients. Employees
         serving as directors will not be permitted to participate in the
         process of making investment decisions on behalf of clients which
         involve the subject company.

         DeAM Compliance will periodically present updates on such information
         to the DeAM Investment Committee for review and approval.

  B.     OUTSIDE BUSINESS AFFILIATIONS

         Employees may not maintain outside business affiliations (e.g.,
         officer, director, governor, trustee, part-time employment, etc.)
         without the prior written approval of the appropriate senior officer of
         their respective business units after consultation with Compliance (see
         request form in the Appendix), and disclosure to the Office of the
         Secretary as required.

  C.     EXECUTORSHIPS

                                                                               9

<PAGE>

         The duties of an executor are often arduous, time consuming and, to a
         considerable extent, foreign to our business. As a general rule, DeAM
         discourages acceptance of executorships by members of the organization.
         However, business considerations or family relationships may make it
         desirable to accept executorships under certain wills. In all cases
         (other than when acting as Executor for one's own spouse, parent or
         spouse's parent), it is necessary for the individual to have the
         written authorization of the firm to act as an executor. All such
         existing or prospective relationships should be reported in writing to
         DeAM Compliance.

         When DeAM Employees accept executorships under clients' wills, the
         organization considers these individuals to be acting for DeAM and that
         fees received for executors' services rendered while associated with
         the firm are exclusively DeAM income. In such instances, the firm will
         indemnify the individual and the individual will be required at the
         time of qualifying as executor to make a written assignment to DeAM
         Compliance of any executor's fees due under such executorship. Copies
         of this assignment and DeAM's authorization to act as executor (see
         Appendix - "Request For Approval of Fiduciary, Corporate Or Other
         Outside Activity") are to be filed in the client's file.

         Generally speaking, it is not desirable for members of the organization
         to accept executorships under the wills of persons other than a client,
         a spouse or a parent. Authorization may be given in other situations
         assuming that arrangements for the anticipated workload can be made
         without undue interference with the individual's responsibilities to
         DeAM. For example, this may require the employment of an agent to
         handle the large amount of detail which is usually involved. In such a
         case, the firm would expect the individual to retain the commission.
         There may be other exceptions which will be determined based upon the
         facts of each case.

D.       TRUSTEESHIPS

         It can be desirable for members of the organization to act individually
         as trustees for clients' trusts. Such relationships are not
         inconsistent with the nature of our business. As a general rule, DeAM
         does not accept trustee's commissions where it acts as investment
         counsel. As in the case of most executorships, all trusteeships must
         have the written approval of the Firm (see Appendix).

         It is recognized that Employees may be asked to serve as trustees of
         trusts which do not employ DeAM. The Firm will normally authorize
         Employees to act as trustees for trusts of their immediate family.
         Other non-client trusteeships can conflict with our clients' interests
         so that acceptance of such trusteeships will be authorized only in
         unusual circumstances.

E.       CUSTODIANSHIPS AND POWERS OF ATTORNEY

         It is expected that most custodianships will be for minors of an
         individual's immediate family. These will be considered as
         automatically authorized and do not require written approval of the
         Firm. However, the written approval of DeAM (see Appendix) is required
         for all other custodianships.

                                                                              10

<PAGE>

         Entrustment with a Power of Attorney to execute Securities transactions
         on behalf of another requires written approval of the Firm.
         Authorization will only be granted if DeAM believes such a role will
         not be unduly time consuming or create conflicts of interest.

F.       GIFTS

         Units of the Deutsche Bank Group may neither solicit nor accept
         inducements.(6) However, gifts offered or received which have no undue
         influence on providing financial services are not generally prohibited.
         Special circumstances may apply to employees acting in certain
         capacities within the organization.(7) If you have questions regarding
         the capacity in which you are acting, consult the Compliance Group.

         (i)      Accepting Gifts

                  Employees are prohibited from soliciting personal payment or
                  gift to influence, support or reward service, transaction or
                  business involving Deutsche Bank, or that appears to be made
                  or offered in anticipation of future service, transaction or
                  business opportunity. A payment or gift includes any fee,
                  compensation, remuneration or thing of value.

                  The acceptance of some types of UNSOLICITED reasonable
                  business gifts are permissible, providing the following
                  requirements are met:

                  1.  Cash gifts of any amount are prohibited. This includes
                      cash equivalents such as gift certificates, bonds,
                      securities or other items that may be readily converted to
                      cash.

                  2.  Gifts, other than cash, given in connection with special
                      occasions (e.g., promotions, retirements, weddings), of
                      reasonable value as defined by the Business Group's
                      procedures are permissible.

                  3.  Reasonable and conventional business courtesies, such as
                      joining a client or vendor in attending sporting events,
                      golf outings or concerts, provided that such activities
                      involve no more than the customary amenities.

                  4.  The cost of working session meals or reasonable related
                      expenses involving the discussion or review of business
                      matters related to Deutsche Bank may be paid by the
                      client, vendor or others, provided that such costs would
                      have

- ------------------
(6) Under the Bank Bribery Act and other applicable laws and regulations, severe
penalties may be imposed on anyone who offers or accepts such improper payments
or gifts. If you receive or are offered an improper payment or gift, or if you
have any questions as to the application or interpretation of Deutsche Bank's
rules regarding the acceptance of gifts, you must bring the matter to the
attention of the Compliance Department.

(7) In accordance with regulations and practices in various jurisdictions, as
well as the rules of the New York Stock Exchange and the National Association of
Securities Dealers, certain employees may be subject to more stringent gift
giving and receiving guidelines. In general, these rules apply to the receipt of
gifts by and from "associated persons" or where such gratuity is in relation to
the business of the employer. If you have any questions regarding your role
relative to these rules contact the Compliance Group.

                                                                              11

<PAGE>

                      otherwise been reimbursable to the employee by Deutsche
                      Bank in accordance with its travel and entertainment and
                      expense reimbursement policies. The employee must report
                      to their management gifts received according to the
                      procedures established within their Business Group.
                      Business Group Management is responsible for ensuring
                      relevant gift information is documented in the Business
                      Group's log of gifts and the log is forwarded to the
                      Compliance Group on request. Business Group Management
                      will bring apparent or perceived issues to the attention
                      of the Compliance Group.

         (ii)     Gift Giving (to Persons other than Government Officials)

                  In appropriate circumstances, it may be acceptable for
                  Deutsche Bank employees to extend gifts to clients or others
                  who do business with Deutsche Bank. Employees should be
                  certain that the gift does not give rise to a conflict of
                  interest, or appearance of conflict, and that there is no
                  reason to believe that the gift violates applicable codes of
                  conduct of the recipient.

                  Employees may make business gifts at Deutsche Bank's expense,
                  provided:

                  1.  The gift is not cash or a cash equivalent - regardless of
                      amount.

                  2.  The gift is of reasonable value in the circumstances, and
                      should not exceed a value of U.S. $100 unless the specific
                      prior approval of an appropriate manager is obtained.

                  3.  The gift is lawful and in accordance with regulatory rules
                      and generally accepted business practices of the governing
                      jurisdictions.

                  4.  The employee is authorized to give gifts by his/her
                      Business Group Management and follows all procedures
                      established within his/her Group.

                  Business Group Management will ensure that relevant gift
                  information is documented in the Business Group's log of gifts
                  and that the log is forwarded to the Compliance Group on a
                  monthly basis. Business Group Management is responsible for
                  bringing any apparent or perceived issues to the attention of
                  the Compliance Group.

         (iii)    Gifts to Government Officials

                  The Compliance Department must be contacted prior to making
                  gifts to a governmental employee or official. Various
                  governmental agencies, legislative bodies and jurisdictions
                  may have rules and regulations regarding the receipt of gifts
                  by their employees or officials. In some cases, government
                  employees or officials may be prohibited from accepting any
                  gifts. (See next section for additional rules regarding
                  political contributions.)

         (iv)     Non-Cash Compensation

                                                                              12

<PAGE>

                  Employees, Registered Representatives and Associated Persons
                  of Deutsche Asset Management broker dealer affiliates must
                  also comply with National Association of Securities Dealers,
                  Inc. (NASD(R)) Rules governing the payment of Non-Cash
                  Compensation. Non-Cash Compensation encompasses any form of
                  compensation received in connection with the sale and
                  distribution of variable contracts and investment company
                  securities that is not cash compensation, including, but not
                  limited to, merchandise, gifts and prizes, travel expenses,
                  meals and lodging. For more information on the policy go to
                  http://intra.scudder.com/glcomp/sales/noncashtoc.asp

G.       RULES FOR DEALING WITH GOVERNMENTAL OFFICIALS AND POLITICAL CANDIDATES

         (i)      Corporate Payments or Political Contributions

                  No corporate payments or gifts of value may be made to any
                  outside party, including any government official or political
                  candidate or official, for the purpose of securing or
                  retaining business for Deutsche Bank, or influencing any
                  decision on its behalf.

                  -   The Federal Election Campaign Act prohibits corporations
                      and labor organizations from using their general treasury
                      funds to make contributions or expenditures in connection
                      with federal elections, and therefore DEUTSCHE BANK
                      DEPARTMENTS MAY NOT MAKE CONTRIBUTIONS TO U.S. FEDERAL
                      POLITICAL PARTIES OR CANDIDATES.

                  -   Corporate contributions to political parties or candidates
                      in jurisdictions not involving U.S. Federal elections are
                      permitted only when such contributions are made in
                      accordance with applicable local laws and regulations, the
                      prior approval of a member of the DeAM Executive Committee
                      has been obtained and the Deutsche Bank Americas Regional
                      Cost Committee has been notified.

                      Under the Foreign Corrupt Practices Act, Bank Bribery Law,
                      Elections Law and other applicable regulations, severe
                      penalties may be imposed on Deutsche Bank and on
                      individuals who violate these laws and regulations.
                      Similar laws and regulations may also apply in various
                      countries and legal jurisdictions where Deutsche Bank does
                      business.

         (ii)     Personal Political Contributions

                  No personal payments or gifts of value may be made to any
                  outside party, including any government official or political
                  candidate or official, for the purpose of securing business
                  for Deutsche Bank or influencing any decision on its behalf.
                  Employees should always exercise care and good judgment to
                  avoid making any political contribution that may give rise to
                  a conflict of interest or the appearance of conflict. For
                  example, if a DeAM business unit engages in business with a
                  particular governmental entity or official, DeAM employees
                  should avoid making personal political contributions to
                  officials or candidates who may appear to be in a position to
                  influence the award of business to Deutsche Bank.

         (iii)    Entertainment of Government Officials

                                                                              13

<PAGE>

                  Entertainment and other acts of hospitality toward government
                  or political officials should never compromise or appear to
                  compromise the integrity or reputation of the official or
                  Deutsche Bank. When hospitality is extended, it should be with
                  the expectation that it will become a matter of public
                  knowledge.

   H.    CONFIDENTIALITY

         Employees must not divulge contemplated or completed securities
         transactions or trading strategies of DeAM clients to any person,
         except as required by the performance of such person's duties and only
         on a need-to-know basis. In addition, the Deutsche Bank standards
         contained in the Compliance Manual -- Confidential, Material,
         Non-Public Information, Chinese Walls, Insider Trading and Related
         Matters Policy, as well as those within the Code of Professional
         Conduct must be observed.


VII.     SANCTIONS

Any Employee who violates this Code may be subject to disciplinary actions,
including possible dismissal. In addition, any Securities transactions executed
in violation of this Code, such as short-term trading or trading during blackout
periods, may subject the employee to sanctions, ranging from warnings and
trading privilege suspensions, to financial penalties, including but not limited
to, unwinding the trade and/or disgorging of the profits. Finally, violations
and suspected violations of criminal laws will be reported to the appropriate
authorities as required by applicable laws and regulations.


VIII.    INTERPRETATIONS AND EXCEPTIONS

Compliance shall have the right to make final and binding interpretations of
this Code, and may grant an exception to certain of the above restrictions, as
long as no abuse or potential abuse is involved. Each Employee must obtain
approval from DeAM Compliance before taking action regarding such an exception.
Any questions regarding the applicability, meaning or administration of this
Code shall be referred in advance of any contemplated transaction, to DeAM
Compliance.

In addition, DeAM has an Ethics Committee that is empowered to administer,
apply, interpret and enforce the Code.

                                                                              14

<PAGE>

                                   SCHEDULE A

The following entities(8) have adopted the Deutsche Asset Management Code of
Ethics:

                         Deutsche Fund Management, Inc.
                          DB Investment Managers, Inc.
         Deutsche Asset Management Inc. (formerly Morgan Grenfell Inc.)
              Deutsche Asset Management Investment Services Limited
                  Deutsche Investment Management Americas Inc.
                          DB Absolute Return Strategies
                        Investment Company Capital Corp.
                           Scudder Distributors, Inc.
                        Scudder Financial Services, Inc.
                         Scudder Investor Services, Inc.
                              Scudder Trust Company

- ---------------------------

.. (8) The references in the document to DeAM employees include employees of the
entities that have adopted the Deutsche Asset Management Code of Ethics. DBSI
adopts this Code only in its role as Investment Manager of The Central Europe
and Russia Fund, Inc., The Germany Fund, Inc., and The New Germany Fund, Inc.

                                                                              15

<PAGE>


PERSONAL SECURITIES HOLDINGS REPORT                    DEUTSCHE ASSET MANAGEMENT
Return to DeAM Compliance NYC20-2401
- --------------------------------------------------------------------------------

Employee Name________________ Department__________________ Location_____________
                 (print)

Social Security Number ___________________    Contact Number____________________

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------
                                                                                                              Name in which
Ticker Symbol                                                                    Name of                     Security/Mutual
 (or CUSIP)                                                        Number of     or Bank                        Fund/Acct.
 Mutual Fund    Issuer/Company  Security Type  Principal Amount     Shares    Broker/Dealer Account Number       is held
- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------
<S>             <C>             <C>            <C>                <C>        <C>           <C>              <C>
- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------

- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------

- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------

- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------

- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------

- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------

- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------

- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------

- -------------   --------------  -------------  ----------------   ---------  ------------- --------------   ---------------
</TABLE>

THE UNDERSIGNED DOES NOT BY THIS REPORT ADMIT THAT HE/SHE HAS ANY DIRECT
BENEFICIAL OWNERSHIP IN THE SECURITIES LISTED.

[ ] I certify that the securities and mutual funds listed above and/or the
    holdings statements attached reflect all my Reportable Securities and mutual
    fund holdings as of the date I submit this Form.

[ ] I currently have no Reportable Securities and/or mutual funds holdings to
    report.

NOT ALL SECURITIES ARE REQUIRED TO BE REPORTED. REPORTABLE SECURITIES HOLDINGS
DO NOT INCLUDE , BANKERS' ACCEPTANCES, BANK CERTIFICATES OF DEPOSIT , COMMERCIAL
PAPER AND HIGH QUALITY SHORT-TERM DEBT INSTRUMENTS, INCLUDING REPURCHASE
AGREEMENTS.

              SIGNATURE ____________________________  DATE _____________________

<PAGE>

                                                       DEUTSCHE ASSET MANAGEMENT

QUARTERLY PERSONAL SECURITIES TRADING REPORT

CONFIDENTIAL - COMPLETE FORM ON INTRANET BY 10TH DAY OF START OF SUBSEQUENT
QUARTER

                ____________________________________, 20________
                                Quarter

__________     __________________      __________      ________      ___________
Print Name     Social Security No.     Department      Location      Contact No.

This form must be filed quarterly, whether or not you have had any transactions,
by the 10th day of the start of the subsequent quarter and must cover all
Employee Related Accounts in which you have a direct or indirect beneficial
interest. These would include any accounts, including those of clients, in which
you have a beneficial interest, including those of your spouse and relatives
living in your household (unless you obtain written permission from Central
Compliance to exclude these accounts), and all non-client accounts over which
you act in an advisory capacity. Refer to Code of Ethics for a full explanation
of reporting requirements.

Please answer the questions.  Check the appropriate answer.

1.   I [ ] had [ ] had no REPORTABLE TRANSACTIONS* during the above quarter.
     (List all Reportable Transactions on the reverse.) If any such purchases or
     sales were transacted without obtaining preclearance, so indicate.

2.   (a) Did you receive any gifts or entertainment from brokers, dealers,
     investment bankers, vendors or other service providers during the above
     quarter?
         [ ] Yes   [ ] No (go to #3)

     (b) Did you report the gift to your business group manager?
         [ ] Yes   [ ] No

3.       Did you establish any brokerage and/or mutual fund accounts during the
         quarter?
         [ ] Yes   [ ] No

         Name of Brokerage and/or Mutual Fund Firm______________________________

         Account Number_______________________________________________

         Date Account was opened______________________________________

                                                ________________________________
                                                            Signature

*REPORTABLE TRANSACTIONS are all transactions, regardless of size, in Securities
or Derivatives (including futures & options), except transactions in bankers'
acceptances, bank certificates of deposit, commercial paper and high quality
short-term debt instruments, including repurchase agreements. Non-volitional
transactions are not required to be reported. The following types of trades will
be deemed non-volitional: stock split, automatic tender offer, stock gained from
mergers or spin-off companies, dividends received in shares, demutualizations,
trust distributions and dividend reinvestment plans.

<PAGE>

SALES

<TABLE>
<CAPTION>
- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ------------
Security       Ticker/  Issuer/ Trade       Principal    Broker/             Interest  Maturity    Gift/Waiver/
 Type    Units Cusip   Company   Date Price   Amount  Dealer/Bank(3) Acct #   Rate(1)   Date(1)     AIP/NBI(2)
======== ===== ======= ======== ===== ===== ========= ============== ======= ========  ========    ============
<S>      <C>   <C>     <C>      <C>   <C>   <C>       <C>            <C>     <C>       <C>         <C>
- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ------------
</TABLE>

PURCHASES

<TABLE>
<CAPTION>
- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ---------------
Security       Ticker/  Issuer/ Trade       Principal    Broker/             Interest  Maturity    Gift/Waiver/AIP/
  Type   Units  Cusip  Company   Date Price   Amount  Dealer/Bank(3) Acct #   Rate(1)   Date(1)         NBI(2)
======== ===== ======= ======== ===== ===== ========= ============== ======= ========  ========    ===============
<S>      <C>   <C>     <C>      <C>   <C>   <C>       <C>            <C>     <C>       <C>         <C>
- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ---------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ---------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ---------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ---------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ---------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ---------------

- -------- ----- ------- -------- ----- ----- --------- -------------- ------- --------- --------    ---------------
</TABLE>

FOOTNOTES (Use additional forms if necessary to report all transactions.)

(1) For Fixed Income securities only.

(2) Indicate here if transaction is a Gift, Waiver, Automatic Investment Plan,
    or No Beneficial Interest (you do not have any direct or indirect beneficial
    ownership in such transactions).

(3) If you have made a direct issuer trade (i.e. traded directly with the
    company) enter N/A in this column

<PAGE>

                                                       DEUTSCHE ASSET MANAGEMENT

ANNUAL ACKNOWLEDGEMENT OF OBLIGATIONS UNDER THE CODE OF ETHICS

                            Complete Form on intranet

- ----------     ------------------    ----------      --------     -----------
Print Name     Social Security No.   Department      Location     Contact No.

1.       CODE OF ETHICS

         I have read/reread the Code of Ethics and attachments thereto and
         understand them and recognize that I am subject to them. Further, I
         have disclosed or reported all personal transactions required to be
         disclosed or reported pursuant to the requirements of the Code and I
         certify that I complied with the provisions of the Code of Ethics
         applicable to me over the past year.

                  (a)      CHECK THE APPROPRIATE STATEMENT (CHECK ONLY ONE):

                  [ ] I have arranged for provision to DeAM Compliance of a
                  complete report of all my holdings information in the form of
                  duplicate account statements for all of my Employee Related
                  Accounts. I have disclosed the existence of all brokerage
                  accounts to Central Compliance. (Holdings of bankers'
                  acceptances, bank certificates of deposit, commercial paper
                  and high quality short-term debt instruments, including
                  repurchase agreements, are not required to be reported to the
                  DeAM Compliance); or

                  [ ] I have not arranged for provision to DeAM Compliance of
                  all of my holdings, so I have submitted a supplemental report
                  of all current holdings which DeAM Compliance has not thus far
                  received, concurrently herewith (Use "Personal Securities
                  Holdings Report" to list additional holdings not on file with
                  DeAM Compliance); or

                  [ ] I am an Employee who has no holdings and no
                  bank/broker/dealer accounts.

                  (b) The following is a complete list of all my Employee
                  Related Accounts:

      ACCOUNT NUMBER                                           BROKER NAME
- --------------------------------                         -----------------------
- --------------------------------                         -----------------------
- --------------------------------                         -----------------------
- --------------------------------                         -----------------------

2.       INSIDER TRADING

         I have read the material on Insider Trading in the Deutsche Bank
         Compliance Policies and Procedures Manual and Code of Professional
         Conduct. I understand and agree to conform with the policies and
         procedures.

<PAGE>

3.       POLITICAL CONTRIBUTIONS

         I have not made any political contributions in connection with
         obtaining or maintaining advisory contracts to governmental entities.

4.       EMPLOYEE COMPLIANCE QUESTIONNAIRE

         I have read the Compliance Questionnaire regarding disciplinary, legal,
         or administrative matters. There have been no changes to answers that I
         have previously reported.

- -------------------                        -------------------------------------
Date                                                     Signature

<PAGE>

                                                       DEUTSCHE ASSET MANAGEMENT

                  REQUEST FOR APPROVAL OF FIDUCIARY, CORPORATE

                            OR OTHER OUTSIDE ACTIVITY

Return to DeAM Compliance NYC20-2401

- ----------     ------------------    ----------      --------     -----------
Print Name     Social Security No.   Department      Location     Contact No.

1.   I believe that the activity described below is not in conflict with the
     interests of the firm or its clients and I request that it be approved.

2.   ACTIVITY (check one and include the start date of the Activity)*

     [  ]  Trustee   ____________          [  ]  Business Consultant ___________
     [  ]  Executor  ____________          [  ]  Director  _____________
     [  ]  Custodian ____________          [  ] Other (describe) _______________
     [  ] Power of Attorney (over investments) __________

3. NAME OF TRUST, ESTATE, ACCOUNT, CORPORATION OR OTHER ENTITY

4. TIMING/STATUS (check one)       [ ] I am currently serving.
                                   [ ] I anticipate serving.(Must be reviewed
                                   and re-approved when actual service begins.)

5. SALIENT FACTS (relationship, nature of duties, client status and any facts
   indicating possible conflict or lack thereof):


6. ASSIGNMENT STATUS (check one)
                [ ] I hereby assign any income from this activity to the firm.
                [ ] I believe any income should appropriately be retained by me.
                [ ] No income is expected from this activity.

- -------------------                                   --------------------------
Date                                                  Employee's Signature


I have reviewed and approved the above activity. The Firm reserves the right to
withdraw this approval at any time.

- -------------------                                   --------------------------
Date                                                    Manager's Signature

*If applicable, I have provided account information to Central Compliance for
the account(s) I oversee.

<PAGE>

                                                       DEUTSCHE ASSET MANAGEMENT

ANNUAL REVIEW OF PERSONAL ACTIVITIES FORM

Complete Form on intranet

- ----------     ------------------    ----------      --------     -----------
Print Name     Social Security No.   Department      Location     Contact No.

As required annually of all members of Deutsche Asset Management, please
indicate all fiduciary, corporate and outside relationships, positions and
responsibilities. Below you are asked to refer to Code of Ethics, Part VI where
your reporting obligations are examined in greater detail. This report includes
all activities covered in Code of Ethics, Part VI whether or not previously
authorized by the firm.

IF NECESSARY, ATTACH EXTRA SHEETS FOR CATEGORIES REQUIRING LENGTHY ANSWERS AND
USE HEADING AS OUTLINED BELOW.

1.     EXECUTORSHIPS*: (including those in which you are currently serving and
       all known future appointments as Executor.)

<TABLE>
<CAPTION>
                                              CLIENT          AUTHORIZED
                                              OF FIRM          BY FIRM
ESTATE                                         YES/NO           YES/NO
- ------                                        --------       ------------
<S>                                           <C>            <C>
</TABLE>

*Reporting unnecessary if position held with respect to the estate of one's
spouse or parent.

2.      TRUSTEESHIPS:  (including T-1, T-10 and DB Directed Trusts (Internal
                       Trusts)* and other client Trusteeships and all known
                       future appointments as Trustee

<TABLE>
<CAPTION>
                                  CLIENT OF FIRM            AUTHORIZED BY FIRM
TRUST TITLE                           YES/NO                       YES/NO
- -----------                       ---------------           -------------------
<S>                               <C>                       <C>
</TABLE>

* Please indicate under Section 2 the account numbers of any INTERNAL TRUSTS
WITH WHICH YOU ARE ASSOCIATED.

<PAGE>

- --------------------------------------------------------------------------------
3.       CUSTODIANSHIPS *

<TABLE>
<CAPTION>
                                    RELATIONSHIP             AUTHORIZED BY FIRM*
NAME OF MINOR                       TO CUSTODIAN                   YES/NO
- -------------                       ------------             -------------------
<S>                                 <C>                      <C>
</TABLE>


*Reporting unnecessary in the case of members of one's family
- --------------------------------------------------------------------------------
4.   DIRECTORSHIPS*

<TABLE>
<CAPTION>
                                          AUTHORIZED    YEAR                           ARE FEES
                          NAME OF          BY FIRM      FIRST         ESTIMATED      TURNED OVER
                        ORGANIZATION       YES/NO      ELECTED       ANNUAL FEES       TO FIRM?
                       -------------     -----------   -------       ------------    ------------
<S>                    <C>               <C>           <C>           <C>             <C>
</TABLE>

*Other than DeAM Funds or affiliated corporations.
- -------------------------------------------------------------------------------
5. BUSINESS CONSULTING POSITIONS

<TABLE>
<CAPTION>
                                           AUTHORIZED BY     YEAR       ESTIMATED
                                               FIRM          FIRST       ANNUAL      ARE FEES
CORPORATION OR INSTITUTION                    YES/NO        RETAINED      FEES      TURNED OVER
- --------------------------                 -------------    --------    ---------   -----------
<S>                                        <C>              <C>         <C>         <C>
</TABLE>

- --------------------------------------------------------------------------------

6. PUBLIC AND CHARITABLE POSITIONS - Describe position and organization briefly.
Also indicate whether authorized by the Firm or not.

7. POWERS OF ATTORNEY OVER INVESTMENTS- Describe position briefly. Also indicate
whether authorized by the Firm or not.

8. OUTSIDE ACTIVITIES - For additional information about rules applicable to
outside activities refer to Code of Ethics - Part VI.

- -------------------------------           -------------------------------------
        Date                                           Signature
(Attach extra sheets if needed)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.R.3
<SEQUENCE>19
<FILENAME>y93068a1exv99wrw3.txt
<DESCRIPTION>CODE OF ETHICS
<TEXT>
<PAGE>

                                                               EXHIBIT (2)(r)(3)

                  DEUTSCHE ASSET MANAGEMENT INTERNATIONAL GMBH
                   DWS INTERNATIONAL PORTFOLIO MANAGEMENT GMBH

                         CODE OF ETHICS AND STATEMENT OF
                         POLICY AND PROCEDURES REGARDING
                        PERSONAL SECURITIES TRANSACTIONS

1.       PURPOSES

         (a)      As a registered investment adviser and a fiduciary, Deutsche
Asset Management International GmbH ("DeAM(i)") and DWS International Portfolio
Management ("DWSIPM") owe an undivided duty of loyalty to the investment
companies (i.e., funds) and other persons or entities for which DeAM(i)/DWSIPM
serves as investment manager or adviser ("Clients"). DeAM(i)/DWSIPM must avoid
even the appearance of a conflict that may compromise the trust Clients have
placed in DeAM(i) /DWSIPM and must insist on strict adherence to fiduciary
standards and compliance with all applicable U.S. federal and state securities
laws. Adherence to this Code of Ethics and Statement of Policy and Procedures
Regarding Personal Securities Transactions (the "Code and Statement") is a
condition of service with DeAM(i)/DWSIPM.

         (b)      The Code and Statement is intended to comply with Rule 17j-1
under the U.S. Investment Company Act of 1940, as amended (the "Investment
Company Act"), which requires DeAM(i)/DWSIPM to adopt a code of ethics
containing provisions reasonably necessary to prevent specified individuals from
engaging in certain conduct. Under Rule 17j-1(b), certain conduct by (i)
affiliated persons of investment companies managed or advised by DeAM(i)/DWSIPM,
(ii) DeAM(i)/DWSIPM itself as adviser of these companies, (iii) affiliated
persons of DeAM(i)/DWSIPM, (iv) the principal underwriter of the investment
companies and (v) affiliated persons of their principal underwriter, with
respect to purchases or sales of Securities Held or to be Acquired by a Client
that is an investment company is prohibited. DeAM(i) /DWSIPM understands that
each such investment company has adopted its own code of ethics. As set forth in
Section 3 below, this Code and Statement applies to all employees and other
Access Persons of DeAM(i) /DWSIPM. The Code and Statement is also intended to
comply with the provisions of Rule 204-2 under the U.S. Investment Advisers Act
of 1940, as amended (the "Advisers Act"), which requires DeAM(i)/DWSIPM to
maintain records of Securities transactions in Personal Accounts of certain of
its personnel. Access Persons are reminded that in addition to this Code and
Statement, their activities are subject to other applicable compliance policies
of DeAM(i)/DWSIPM.

         (c)      This Code and Statement is intended to ensure that the
personal securities transactions of persons subject thereto are conducted in
accordance with the following principles:

                  (i)      A duty at all times to place first the interests of
         Clients;

                  (ii)     The requirement that all personal securities
         transactions be conducted consistent with this Code and Statement and
         in such a manner as to avoid any actual or potential conflict

<PAGE>

         of interest or any abuse of an individual's responsibility and position
         of trust; and

                  (iii)    The fundamental standard that DeAM(i)/DWSIPM
         personnel not take inappropriate advantage of their positions.

         (d)      In addition to the specific prohibitions on certain personal
Securities transactions as set forth below, all Access Persons are prohibited,
in connection with the Purchase or Sale, directly or indirectly, by such persons
of a Security Held or to be Acquired by a Client, from:

                  (i)      Employing any device, scheme or artifice to defraud
         any Client;

                  (ii)     Making to any Client any untrue statement of a
         material fact or omitting to state to such Client a material fact
         necessary in order to make the statements made, in light of the
         circumstances under which they are made, not misleading;

                  (iii)    Engaging in any act, practice or course of business
         which operates or would or rate as a fraud or deceit upon any Client;

                  (iv)     Engaging in any manipulative practice with respect to
         any Client; or

                  (v)      Revealing to any other person (except in the normal
         course of his or her duties on behalf of a Client) any information
         regarding Securities transactions by any Client or the consideration by
         any Client or DeAM(i)/DWSIPM of any such Securities transactions.

2.       DEFINITIONS

         The following definitions apply for purposes of the Code and Statement
in addition to the definitions contained elsewhere herein.

         (a)      "Access Person" means any director, officer or Advisory Person
of DeAM(i)/DWSIPM and any other personnel so designated by the Compliance
Officer because of their asset management responsibilities or frequent
interactions with Access Persons.

         (b)      "Advisory Person" means: (i) any employee of DeAM(i) /DWSIPM
or an employee of any company (such as Deutsche Bank AG) in a Control
Relationship to DeAM(i)/DWSIPM who, in connection with his or her regular
functions or duties, makes, participates in, or obtains information regarding
the purchase or sale of Covered Securities by a Client, or whose functions
relate to the making of any recommendations with respect to the purchases or
sales; and (ii) any natural person in a Control Relationship to DeAM(i)/DWSIPM
who obtains information concerning recommendations made to a Client with regard
to the purchase or sale of Covered Securities by the Client.

         (c)      A Security is "being considered for purchase or sale" when a
recommendation to purchase or sell a Security has been made and

                                      -2-
<PAGE>

communicated, and with respect to the person making the recommendation, when
such person seriously considers making such a recommendation.

         (d)      "Beneficial Ownership" includes ownership by any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares a direct or indirect pecuniary interest
in a Security.

         (e)      "Client" has the meaning defined in Section 1(a) of this Code.

         (f)      "Compliance Officer" refers to DeAM(i)'s/DWSIPM<180>s
Compliance Officer.

         (g)      "Control" shall have the same meaning as set forth in Section
2(a)(9) of the Investment Company Act. Under that Section, beneficial ownership
of over 25% of the voting securities of a company constitutes Control of that
company until such time (if ever) as the U.S. Securities and Exchange Commission
conducts an administrative proceeding and issues an order to the contrary.

         (h)      "Control Relationship" means Controlling, Controllable by or
under common Control with.

         (i)      "Covered Security" means a security as defined in Section
2(a)(36) of the Investment Company Act, except that it does not include: (i)
direct obligations of the Government of the United States; (ii) bankers'
acceptances, bank certificates of deposit, commercial paper and high quality
short-term debt instruments, including repurchase agreements; and (iii) shares
issued by open-end investment companies registered under the Investment Company
Act.

         (j)      "Investment Personnel" means (i) any employee of DeAM(i)
/DWSIPM or any employee of a company (such as Deutsche Bank AG) in a Control
Relationship to DeAM(i)/DWSIPM who, in connection with his or her regular
functions or duties, makes or participates in making recommendations regarding
the purchase or sale of Securities by a Client; and (ii) any natural person who
Controls DeAM(i)/DWSIPM and who obtains information concerning recommendations
made to the relevant Client regarding the purchase or sale of Securities by that
Client.

         (k)      "Initial Public Offering" or "IPO" includes IPOs that do not
involve any offer in the United States.

         (l)      "Personal Account" refers to the following types of accounts
that hold Securities (i) a brokerage or bank account of an individual subject to
this Code and Statement; (ii) a brokerage or bank account (except a client
account) in which such individual has investment discretion or control; and
(iii) a brokerage or bank account in which such individual otherwise has a
beneficial interest (i.e. shares in the profits even if there is no influence on
voting or disposition of the Securities). DeAM(i)/DWSIPM has concluded that an
individual does not have beneficial ownership of an account of such individual's
spouse, minor child or other person sharing the same household as such
individual (a "Family Member Independent Account") if such individual does not
have any investment discretion or control of the account and does not share in
the profits of the account. The

                                      -3-
<PAGE>

Compliance Officer is authorized to make inquiry into any particular
individual's situation and determine that a Family Member Independent Account
shall be treated as a Personal Account for purposes of this Code and Statement.

         (m)      "Purchase or Sale" of a Security or a Covered Security
includes, among other things, the writing or purchase of an option to purchase
or sell a Security or a Covered Security.

         (n)      "Security" also includes derivatives, commodities, options or
forward contracts.

         (o)      "Security Held or to be Acquired by a Client" means: (i) any
Covered Security which, within the most recent 15 days, (A) is or has been held
by a Client or (B) is being or has been considered by DeAM(i)/DWSIPM for
purchase by a Client; and (ii) any option to purchase or sell, and any security
convertible into or exchangeable for, a Covered Security described in the
foregoing clause (i).

3.       APPLICATION

         (a)      This Code and Statement applies to all Access Persons.

         (b)      DeAM(i)/DWSIPM will provide all Access Persons with a copy of
this Code and Statement.

4.       EXEMPTED TRANSACTIONS

         The reporting requirements of Section 6 of this Code shall not apply
to:

         (a)      Purchases or Sales of Covered Securities effected in any
account over which the Access Person has no direct or indirect influence or
Control;

         (b)      Purchases or Sales of Covered Securities which are involuntary
on the part of either the Access Person or the Client (e.g., if a debtor fails
to redeem a debt and the creditor to whom the securities were pledged forces the
debtor to sell the securities), subject to the provisions of Section 5 of this
Code.

         (c)      Purchases of Covered Securities which are either: made solely
with the dividend proceeds received in a dividend reinvestment plan; or part of
an automatic payroll deduction plan, whereby an Access Person purchases
Securities issued by an employer.

         (d)      Purchases of Covered Securities effected upon the exercise of
rights issued by an issuer pro rata to all holders of a class of its Securities,
to the extent such rights were acquired from such issuer, and any sales of such
rights so acquired.

         (e)      Purchases or Sales of Covered Securities which are not
eligible for purchase or sale by a Client.


5.       PROHIBITED PURCHASES AND SALES

                                      -4-
<PAGE>

         (a)      BASIC PRINCIPLE.

         In effecting transactions for its Access Persons, they will be treated
no more favorably than Clients, except in the particular instances dealt with in
this Code and Statement. Transactions for Access Persons may not conflict with
the interests of Clients or DeAM(i)/DWSIPM. In the event of conflict of
interests, the interests of Clients and of DeAM(i)/DWSIPM take precedence.
Access Persons should refrain from transactions which make a dubious impression
or which could damage the credibility of DeAM(i)/DWSIPM or its Access Persons.
No Access Person shall recommend any transaction in Covered Securities by a
Client without having disclosed his or her interest, if any, in such Covered
Securities or the issuer thereof, including without limitation (i) his or her
direct or indirect ownership in a Personal Account of any Securities of such
issuer, (ii) any contemplated transaction by such person in such Securities,
(iii) any position with such issuer or its affiliates and (iv) any present or
proposed business relationship between such issuer or its affiliates, on the one
hand, and such person or any party in which such person has a significant
interest, on the other; provided, however, that in the event the interest of
such Access Person in such securities or issuer is not material to his or her
personal net worth and any contemplated transaction by such person in such
securities cannot reasonably be expected to have a material adverse effect on
any such transaction by the Client or on the market for the securities
generally, such Access Person shall not be required to disclose his or her
interest in the securities or issuer thereof in connection with any such
recommendation.

         (b)      FRONT-RUNNING.

         Personal Account transactions in the relevant securities/deriv-atives
may not be executed either before (if the Access Person has knowledge that
Securities/derivatives are being considered for purchase or sale) or during the
execution of (an) external or internal order(s) in such Securities/derivatives
with a view to gaining advantages from price changes which may result from
execution of the said order(s).

         (c)      PERSONAL ACCOUNT TRANSACTIONS/PROHIBITIONS WITH RESERVED RIGHT
                  OF PERMISSION.

         Personal Account transactions in Securities/derivatives which are on
the restricted list are prohibited unless approved in advance by the Compliance
Officer who may give permission on a case-by-case basis.

         (d)      ACCESS PERSON TRANSACTIONS AS AN INSTRUMENT OF PORTFOLIO
                  INVESTMENT

         It is prohibited for Access Persons to engage in transactions involving
frequent buying and selling purely for the purpose of gaining advantages from
short-term price fluctuations. Access Persons should also refrain from deals
which are disproportionate to their income or assets.

         No Access Person shall engage in any naked short sale of a Security.

                                      -5-
<PAGE>

         (e)      INITIAL PUBLIC OFFERINGS

         All Investment Personnel must obtain approval from the Compliance
Officer before directly or indirectly acquiring in any of their Personal
Accounts any Securities in an Initial Public Offering.

         Approved purchases of Securities of an IPO must be routed for execution
via a Deutsche Bank AG account through the respective account/safe-custody
account section. Multiple subscriptions through different sections/departments
of Deutsche Bank AG are not permissible. If allotments have to be reduced, the
respective divisional management or an office nominated by management decides in
agreement with Compliance (Head office) on the nature and form of allotment to
Access Persons or to third parties for whom the Access Person is acting. In the
allotment Access Persons are not to receive preferential treatment vis-a-vis
Deutsche Bank AG customers.

         (f)      PRIVATE PLACEMENT

         Purchases of Securities in a private placement (whether of a public or
private company) are not permissible.

         (g)      MANDATES

         Access Persons shall not serve on the boards of directors of any public
company, absent express prior authorization from the managing director of
DeAM(i) in charge of compliance (or his or her designee).

         (h)      GIFTS

         Access Persons shall not receive any gift, favor, preferential
treatment, valuable consideration or other thing of more than a de minimis value
in any year from a person or entity from, to or through whom a Client purchases
or sells Securities, or an issuer of Securities.

6.       REPORTING

         (a)      Every Access Person shall report to the Compliance Officer the
information described in Section 6(b) of this Code with respect to holdings and
transactions (other than personal transactions in Securities exempted under
Section 4 of this Code and Statement) in any Security in any Personal Account of
the Access Person.

         (b)      Every report required by Section 6(a) and shall be made (x) no
later than 10 days after a person becomes an Access Person ("Initial Holdings
Report"), (y) no later than 10 days after the end of a calendar quarter
("Quarterly Transaction Report") and (z) annually ("Annual Holdings Report"),
and shall contain the following information:

                  (i)      in the case of the Initial Holdings Report: (A) the
         title, number of shares and principal amount of each Covered Security
         in each Personal Account of the Access Person when the person became an
         Access Person; (B) the name of each broker, dealer or bank with whom
         the Access Person maintained such Personal Account as of the date the
         person become an Access

                                      -6-
<PAGE>

         Person; and (C) the date that the report is submitted by the Access
         Person.

                  (ii)     in the case of a Quarterly Transaction Report: (A)
         with respect to any transaction during the quarter in a Covered
         Security in a Personal Account of the Access Person, (1) the date of
         the transaction, the title, the interest rate and maturity date (if
         applicable), the number of shares and the principal amount of each
         Covered Security involved, (2) the nature of the transaction (i.e.,
         purchase, sale or any other type of acquisition or disposition), (3)
         the price of the Covered Security at which the transaction was
         effected, (4) the name of the broker, dealer or bank with or through
         which the transaction was effected and (5) the date that the report is
         submitted by the Access Person; and (B) with respect to establishment
         of any Personal Account by the Access Person, (1) the name of the
         broker, dealer or bank with whom the Access Person established the
         account, (2) the date the account was established and (3) the date that
         the report is submitted by the Access Person.

                  (iii)    in the case of each Annual Holdings Report: (A) the
         title, number of shares and principal amount of each Covered Security
         in each Personal Account of the Access Person; (B) the name of each
         broker, dealer or bank with whom the Access Person maintains such
         Personal Account; and (C) the date that the report is submitted by the
         Access Person.

         Any such report may contain a statement that the report shall not be
         construed as an admission by the person making such report that he has
         any direct or indirect beneficial ownership in the security to which
         the report relates.

         (The daily report which is automatically generated by the EDP system
         shall be deemed to comply with clause (ii) of this Section 6(b))

         (c)      The Compliance Officer shall maintain the reports required by
paragraph (a) above and such other records, if any, as are required by Rule
17j-1 under the Investment Company Act and Rule 204-2 under the Advisers Act.
All reports furnished pursuant to this Section will be kept confidential,
subject to the rights of inspection by the Compliance Officer and by other third
parties pursuant to applicable law.

         (d)      The Compliance Officer shall at least annually submit a
written a report to the board of directors or trustees of each Client that is an
SEC-registered investment company a written report that:

                  (i)      describes any issues arising under this Code and
         Statement since the last report, including information about material
         violation of this Code and Statement and any sanctions imposed in
         response to the material violations, and

                  (ii)     certifies that DeAM(i)/DWSIPM has adopted procedures
         reasonably necessary to prevent Access Persons from violating this Code
         and Statement.

                                      -7-
<PAGE>

7.       SANCTIONS

         Upon discovering a violation of this Code and Statement, DeAM(i)
/DWSIPM, with the advice of the Compliance Officer, may take such actions or
impose such sanctions, if any, as it deems appropriate, including, inter alia, a
letter of censure or suspension, a fine, or a recommendation of the termination
of the employment of the violator.

                                      -8-

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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