UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
466 LEXINGTON AVENUE
16TH FLOOR
NEW YORK, NEW YORK 10017
JANUARY 28, 2005
DEAR SHAREHOLDERS:
As you are already probably aware, dissident shareholder Phillip Goldstein
has targeted your Fund and dragged us into an expensive and disruptive proxy
contest. This is unfortunate, but your Board of Directors is committed to acting
in the best interest of ALL Fund shareholders.
WE URGE YOU NOT TO SUPPORT MR. GOLDSTEIN. ACT NOW TO PROTECT YOUR
INVESTMENT BY SIGNING, DATING AND MAILING PROMPTLY THE ENCLOSED BLUE PROXY CARD.
YOUR VOTE IS CRITICAL -- PLEASE ACT TODAY.
ELECTION OF DIRECTORS
DO YOU WANT PHILLIP GOLDSTEIN PARTICIPATING IN THE MANAGEMENT OF YOUR FUND?
- Mr. Goldstein and his hand-picked nominee may have interests that are
contrary to those of the Fund's long-term shareholders. While Mr.
Goldstein says that, if elected, he believes he and his other nominee
would be "more inclined to adopt one of the discount-reduction
alternatives" described in the Fund's 2003 Press Release, nowhere does
he disclose what specific actions he would be in favor of adopting. Is
he in favor of liquidating the Fund, as occurred in at least one other
instance of which we are aware where Mr. Goldstein became a director
of a closed-end fund? If he has some plan other than the ill-defined
self-tender he is advocating, he should tell the Fund's shareholders
what it is. As matters now stand, the Fund's shareholders can only
guess what precisely Mr. Goldstein has in mind for the Fund.
- William W. Priest, Jr. and Martin M. Torino, the Fund's nominees for
election as directors at the upcoming meeting, have substantially more
business and operational experience with respect to emerging markets
than Mr. Goldstein and his other nominee. Mr. Priest, during his ten
year tenure as the Chief Executive Officer for Credit Suisse Asset
Management, LLC, the Fund's investment manager, was responsible for an
organization that had substantial amounts of capital invested on
behalf of clients in the emerging markets. Mr. Torino, an Argentine
citizen and businessman, has been the Chief Executive Officer or the
Chairman of operating companies located in emerging markets for many
years. Messrs. Priest and Torino also have more experience serving on
the boards of investment companies, allowing them to better balance
the varied interests of all shareholders. All of that valuable
experience and the insights those directors bring to bear as Directors
of the Fund will be lost if Mr. Goldstein prevails.
- Mr. Goldstein alleges that the Fund's Directors were attempting to
hold a "hurried annual meeting so that two directors can be elected
without competition". That is simply untrue. The only reason the Fund
is holding its meeting earlier this year is that in 2004 the Fund's
fiscal year end was changed from November 30 to October 31, and the
Fund's By-Laws require that the annual meeting be held in the fourth
calendar month following the end of the fiscal year. The Fund's fiscal
year end was changed so that it would be aligned with the fiscal year
end of other closed-end funds in the Credit Suisse complex and thereby
achieve certain cost efficiencies which benefit the Fund's
shareholders.
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SELF-TENDER PROPOSAL
Mr. Goldstein's self-motivated recommendation that your Fund conduct a self
tender at net asset value is flawed in a number of respects. Consider these
facts that he failed to note in his proxy statement:
- Approximately 31% of your Fund's assets are held in private equity
investments (or subject to meeting capital calls with respect
thereto). Thus, a large self-tender that is funded by selling off the
Fund's liquid securities could result in your Fund having a much
higher percentage of its portfolio invested in illiquid securities
than the Fund's investment manager and Board deem CONSISTENT WITH
PRUDENT INVESTMENT PRACTICE. To help you better understand your Fund's
private equity investments, we have attached an overview of these
investments as Annex A.
- If alternatively your Fund sought to liquidate its private equity
investments in order to fund Mr. Goldstein's recommended self-tender
at net asset value, buyers for these illiquid securities could
discount their prices in anticipation of such a "forced" sale, AND
CAUSE YOUR FUND TO RECEIVE FAR LOWER PROCEEDS FOR THOSE INVESTMENTS
THAN IT MIGHT OTHERWISE.
- Your Board of Directors, mindful of these issues, has carefully
crafted a self-tender policy whereby annual self-tenders will be made
in an amount equal to the net proceeds realized by the Fund during
each year from its private equity investments less any capital
commitments that are funded during that year. Furthermore, by fixing
the tender price at 95% of net asset value, the repurchases may have
an accretive effect upon the Fund's net asset value for remaining
shareholders.
Please note that your Board of Directors does not intend to present on its
own motion Mr. Goldstein's recommendation for a vote at the annual meeting of
shareholders, which will be voted upon only if he presents the matter at the
meeting for a vote.
TIME IS SHORT TO CAST YOUR VOTE
RETURN THE ENCLOSED BLUE PROXY CARD TODAY
If you have any questions or need any assistance in the voting of your
proxy, please contact our proxy solicitors, D.F. King & Co., Inc., toll free at
(888) 414-5566.
On behalf of your Board, thank you for your cooperation, continued support
and prompt return of the enclosed BLUE proxy card.
Sincerely,
/s/ Michael E. Kenneally
MICHAEL E. KENNEALLY,
CHIEF EXECUTIVE OFFICER
THE EMERGING MARKETS TELECOMMUNICATIONS FUND, INC.
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ANNEX A
PRIVATE EQUITY INVESTMENTS
Under the Fund's non-fundamental investment policies, up to 25% of the
Fund's total assets, measured at the time the Fund makes or commits to make an
investment, may be invested in the equity securities of closely-held companies
or private placements of public companies ("private equity investments"). As of
October 31, 2004, the end of the Fund's most recent fiscal year, the Fund held
private equity investments with an aggregate fair value of $18.5 million, or
approximately 21% of the Fund's net assets, and had outstanding capital
commitments to invest an additional $8.7 million. The private equity investments
may be grouped into three broad categories:
- private equity funds, where the Fund typically is a limited partner in
a partnership that itself makes private equity investments under the
direction of the partnership's general partner or investment adviser;
- private equity funds of funds, where the Fund is typically a limited
partner in a partnership that in turn makes investments in a number of
private equity funds or direct investments, again under the direction
of the fund-of-fund's general partner or investment adviser; and
- direct investments, where the Fund has acquired a direct equity
interest, typically common or preferred stock, in an operating
company.
As of October 31, 2004, the composition of the Fund's private equity
portfolio within these three categories is as follows:
FAIR VALUE OF NET OUTSTANDING CAPITAL
TYPE OF INVESTMENT NUMBER ASSETS INVESTED COMMITMENTS
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Private Equity Funds 17 $ 10.3 million $ 6.9 million
Private Equity Fund-of-Funds 2 $ 5.9 million $ 1.8 million
Direct Investments 4 $ 2.3 million None
The investment strategies employed by the funds in which the Fund has
invested cover a broad range, affording the Fund a very diverse private equity
portfolio. By way of example, these include:
- a fund formed to invest primarily in well-established companies in
Latin America's major economies;
- a fund concentrating in the major Asia-Pacific markets, investing in
various areas of telecommunications, including internet businesses,
wireline and wireless telecommunications networks and reseller
businesses;
- a venture capital fund focusing on high technology, high growth, seed
through late-stage Israeli-related companies; and
- a fund investing in both public and private companies in India
involved in e-commerce, communications, internet and media activities.
Of the 19 funds in which the Fund has invested, as of the most recent dates
for which information is readily available, no single fund manager accounted for
more than 28% of the fair value of the combined net assets invested or subject
to outstanding capital commitments, while the top five managers accounted for
approximately 68% of the total.
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The Fund's private equity program has resulted in a significant enhancement
to the Fund's overall performance. During the period July 1992, when the Fund
commenced investing in private equity, though September 30, 2004, the annualized
internal rate of return ("IRR") of the private equity investments has been
9.8%(1), while for the same period the Fund's annualized return based on changes
in its net asset value was 5.0%.
Due to the percentage limitations with respect to private equity
investments, the Fund has not made a private equity investment (other than
pursuant to existing capital commitments) since February, 2001 and will not be
making any private equity investments so long as its self-tender policy is in
effect other than investments that are required pursuant to existing capital
commitments or in exceptional circumstances (subject to the percentage
limitations noted above), such as where the Board has determined that an
additional investment in a private equity fund is appropriate to seek to
preserve or enhance an existing Fund investment.
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(1) This reflects the combined results of private equity investments made by
the Fund and a predecessor fund, The Emerging Markets Infrastructure Fund,
Inc., which merged with the Fund in 2000. The private equity IRR is
determined using the monthly cash flows of the Fund to calculate the
internal rate of return, which is then annualized.
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