SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement.
[X] Definitive proxy statement.
|_| Definitive additional materials.
|_| Soliciting material under Rule 14a-12.
|_| Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2)).
THE NEW GERMANY FUND, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
-2-
THE NEW GERMANY FUND, INC.
May 3, 2005
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Meeting") of The New Germany Fund, Inc. to be held at 10:00 A.M., New York
time, on June 21, 2005 at the offices of Deutsche Bank, Boardroom 27-A South,
27th Floor, 345 Park Avenue, New York, New York 10154. Your Board of Directors
and management look forward to greeting personally those stockholders able to
attend.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting. As you may be aware,
Opportunity Partners, L.P., a dissident stockholder controlled by Mr. Phillip
Goldstein, has announced its intention to solicit proxies against the nominees
of your Board of Directors and has also submitted a stockholder proposal. By now
you should have received our letter discussing Opportunity Partners' intention
and proposal. For your convenience, we have attached a copy of this letter.
We urge you to reject Opportunity Partners' and Mr. Goldstein's
solicitation and proposal. Please do not sign any proxy card sent to you by or
on behalf of Opportunity Partners or Mr. Goldstein. Please be assured that your
Board of Directors will continue to act in the best interest of all Fund
stockholders.
Your vote is important regardless of the number of shares you own. We urge
you to complete, sign, date and mail the enclosed White Proxy Card as soon as
possible even if you currently plan to attend the Meeting. If you hold your
shares in a brokerage or bank account, your broker or bank may allow you to vote
your shares by telephone or internet. Please consult the materials you receive
from your broker or bank prior to voting by telephone or internet.
On behalf of your Board of Directors, thank you for your continued
interest and support.
Sincerely,
/s/ Julian Sluyters
-------------------------------------
Julian Sluyters
President and Chief Executive Officer
THE NEW GERMANY FUND, INC.
April 12, 2005
Dear Stockholders:
The Independent Directors of your Fund are writing you this letter to
respond to misleading public criticisms of the Board of Directors from a
dissident stockholder. As you may be aware, Opportunity Partners, L.P., which is
controlled by Mr. Phillip Goldstein, has announced its intention to solicit
proxies against the nominees of your Board of Directors at the upcoming Annual
Meeting of Stockholders. Opportunity Partners has also submitted a proposal that
stockholders of the Fund "be afforded an opportunity to realize net asset value
for their shares as soon as practicable."
Your Fund has experienced strong performance in recent years. The Fund's
total return in 2004 was 24.44% based on net asset value (NAV) and 30.50% based
on the market price of Fund shares. In 2003, it was 93.07% based on NAV and
102.42% based on market price. Despite this strong performance, Mr. Goldstein
and his associates are attempting to mislead, for their own self-serving
purposes, the Fund's stockholders about the Fund's discount, closed-end
structure and Board of Directors. If Mr. Goldstein's efforts are successful, Mr.
Goldstein and his associates will likely take steps to either open-end or
liquidate the Fund, which will allow short-term arbitragers, such as Mr.
Goldstein, to gain while depriving long-term investors of their future
investment opportunities. The Board urges the stockholders not to support
Opportunity Partners' proposals.
OPPORTUNITY PARTNERS' PROPOSALS
Your Board strongly believes that Opportunity Partners' proposals are not
in the best interest of the Fund and its stockholders.
Nominees. Your Board's nominees for re-election as Directors are far
better qualified and meet the director qualification requirements in the Fund's
Bylaws, which require experience in business, investment, economic or political
matters of Germany. In addition, your Board's nominees will better serve the
interests of all stockholders. In contrast, Mr. Goldstein has conceded his
intended nominees are not qualified to serve as directors under the Fund's
Bylaws. As such, his nominees may not serve as directors of the Fund.
Realizing NAV. While recognizing that the discount is a widely prevalent
attribute of closed-end funds, your Board continues to believe that your Fund's
closed-end format, given its focus on German small and mid-cap stocks with
limited liquidity, is one of its essential features and that it is in the best
interest of its long-term stockholders to remain a closed-end fund. A short-term
stockholder in a hypothetical liquidation of the Fund on January 1, 2003 would
have made a modest one-time gain equal to the discount ($0.98, assuming no
expenses). However, a long-term stockholder who instead held those shares would
have seen a total appreciation of his or her investment by 166% through stock
price appreciation and dividends totaling $5.89 per share at March 31, 2005.
Your Board believes that potential for superior long-term gain is what the
majority of stockholders want.
Therefore, because Opportunity Partners' proposal will benefit only
short-term arbitragers, your Board recommends that you vote against it. We
explain our rationale in greater detail below.
GOLDSTEIN'S STATEMENTS VS. THE FACTS
Mr. Goldstein and his associates are attempting to mislead, for their own
self-serving purposes, the Fund's stockholders about your Fund's discount,
closed-end structure and Board of Directors. First, Mr. Goldstein and his
associates pretend that a discount deprives stockholders of value and that in
order to capture that value your Fund must convert to an open-end fund or
liquidate (either quickly or through a series of tender offers). Second, in
recent public statements Mr. Goldstein has suggested that your Board of
Directors is not acting in the interests of stockholders.
This is simply not the case. Here are the facts:
o your Board recently declined a request from Mr. Goldstein to waive
the long-standing director qualification requirements in your Fund's
Bylaws because your Board strongly believes that the interests of
the Fund and the stockholders are best served when its directors
have experience in matters relevant to the Fund's investment
business. The minimum qualifications in the Bylaws are keyed to
experience in business, investment, economic or political matters of
Germany, and not to the "agenda" of a particular nominee.
o your Board recently declined an invitation from Mr. Goldstein to
open-end the Fund or effect a tender offer or large share repurchase
because the Board believes that such actions do not serve the
long-term interests of the Fund's stockholders. Your Board believes
that the closed-end format is well-suited for the longer term value
function of your Fund because of its investment objective, as proven
by its superior performance in recent years. In addition, tender
offers deplete the Fund's capital, allow short-term arbitragers to
profit, raise the Fund's expense ratio for long-term investors and
have no long-term effect on the discount. Repeated tender offers
result in liquidation. While your Board will listen to the will of
the majority, your Board believes that a vocal minority should not
dictate the interests of the Fund's long-term stockholders.
o although Mr. Goldstein claims that the stockholders last year
approved his non-binding proposal to open-end the Fund or take
similar actions to enable stockholders to realize NAV, his proposal
received a favorable vote from the holders of only 27% of your
Fund's outstanding shares. The holders of the majority (55%) of the
Fund's outstanding shares did not even vote on the proposal, and 17%
voted against it. Any characterization of the vote as sending an
important message about wishes from a true majority of stockholders
is just wrong.
YOUR FUND'S STRUCTURE AND DISCOUNT
While your Board recognizes that your Fund's shares have traded at a
discount to their NAV, your Board believes there may be some misunderstanding
about the market discount of your Fund and other closed-end funds. Discounts are
widely prevalent in closed-end funds. Shares of closed-end funds, such as your
Fund, trade on the New York Stock Exchange like those of IBM or any other public
company, and market forces drive share price movements. In addition, the
discount is a function of the NAV and market price, each of which may be
influenced by different factors. In contrast, traditional open-end mutual funds
do not trade on a stock exchange, and must maintain liquidity reserves in order
to provide for stockholder liquidity by standing ready to buy back shares each
day at NAV. As a result, open-end funds usually limit their primary investments
to those with an active trading market, which constrains investment flexibility.
Also, open-end funds generally hold higher cash reserves in order to meet their
requirement to buy back shares. This uninvested cash is a drag on investment
returns.
Your Board believes that your Fund's closed-end format is one of its
essential features. Your Fund is especially well-suited to the closed-end format
because of its investment focus on small or mid-cap German companies (your Fund
is generally over 80% invested in these small- and mid-cap German companies).
This portion of the portfolio is less liquid than securities of larger
companies. Not having to worry about raising cash on a moment's notice to buy
back shares allows your Fund's manager to keep your Fund fully invested and to
search out the medium- and smaller-sized German companies that are your Fund's
mandate. Your Fund's performance has been excellent in recent years--up 24% in
2004 and 93% in 2003 in NAV terms.
SOME FACTS ABOUT MR. GOLDSTEIN
It is hypocritical for Mr. Goldstein to accuse your Board of Directors of
not acting in the interests of stockholders when it is clear that Mr.
Goldstein's motives are not aligned with the interests of your Fund's long-term
stockholders. Mr. Goldstein and his affiliates have only recently purchased
substantial numbers of your Fund's shares, and if Mr. Goldstein's efforts would
result in control, Mr. Goldstein will likely take steps to either open-end or
liquidate your Fund or cause it to make a large tender offer. In fact, Mr.
Goldstein and his affiliates have a history of raiding closed-end funds for
short-term arbitrage gain. These actions, if successful, will deprive long-term
investors of their future investment opportunities and could cripple your Fund
by shrinking its size and increasing its expense ratio (currently one of the
lowest among country funds)--all with no long-term effect on the discount.
This stockholder meeting is extremely important in light of the
announcement by Mr. Goldstein's Opportunity Partners of its intention to solicit
proxies against the nominees of your Board of Directors and in light of
Opportunity Partners' stockholder proposal with respect to net asset value.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, AND REGARDLESS OF THE NUMBER OF
SHARES YOU OWN, WE URGE YOU TO VOTE FOR YOUR BOARD'S NOMINEES AND AGAINST
OPPORTUNITY PARTNERS' STOCKHOLDER PROPOSAL. If you hold your shares in a
brokerage or bank account (in "street name"), your broker or bank cannot vote
your shares this year (as it has in past routine annual meetings) unless you
sign and return the proxy voting form it will send you. You will receive your
Board's proxy statement and white proxy voting form in a few weeks. Your Board
strongly urges you not to sign any proxy that may be sent to you by Mr.
Goldstein or Opportunity Partners.
Sincerely,
The Independent Directors of The New Germany Fund
Ambassador Richard R. Burt Dr. Frank Tromel
John H. Cannon Robert H. Wadsworth
Richard Karl Goeltz Werner Walbrol
Dr. Franz Wilhelm Hopp Peter Zuhlsdorff
Ernst-Ulrich Matz
STOCKHOLDERS ARE ADVISED TO READ THE PRELIMINARY PROXY STATEMENT AND THE
DEFINITIVE PROXY STATEMENT, WHEN IT BECOMES AVAILABLE, AND ANY OTHER RELEVANT
DOCUMENTS THAT THE FUND WILL FILE WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. STOCKHOLDERS AND OTHER INTERESTED PARTIES MAY OBTAIN,
FREE OF CHARGE, COPIES OF THE PRELIMINARY PROXY STATEMENT AND THE DEFINITIVE
PROXY STATEMENT (WHEN AVAILABLE) AND OTHER RELATED DOCUMENTS FILED BY THE FUND
AT THE SEC'S WEBSITE (HTTP:/WWW.SEC.GOV). THE PRELIMINARY PROXY STATEMENT AND
THE DEFINITIVE PROXY STATEMENT (WHEN AVAILABLE) AND OTHER RELATED DOCUMENTS
FILED WITH THE SEC MAY ALSO BE OBTAINED BY A STOCKHOLDER FROM THE FUND FREE OF
CHARGE. SUCH REQUESTS SHOULD BE DIRECTED BY MAIL TO THE NEW GERMANY FUND, INC.,
C/O DEUTSCHE ASSET MANAGEMENT, 345 PARK AVENUE, NYC20-2799, NEW YORK, NEW YORK
10154 OR BY TELEPHONE TO 1-800-437-6269.
THE NEW GERMANY FUND, INC.
345 PARK AVENUE
NEW YORK, NEW YORK 10154
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 21, 2005
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To our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of The New Germany Fund, Inc., a Maryland corporation (the "Fund"),
will be held at 10:00 A.M., New York time, on June 21, 2005 at the offices of
Deutsche Bank, Boardroom 27-A South, 27th Floor, 345 Park Avenue, New York, New
York 10154 for the following purposes:
1. To elect four (4) Directors, each to serve for a term of three years
and until their successors are elected and qualify.
2. To ratify the appointment by the Audit Committee and the Board of
Directors of PricewaterhouseCoopers LLP, an independent registered
public accounting firm, as independent auditors for the fiscal year
ending December 31, 2005.
3. To act upon, if properly presented, a certain stockholder proposal.
4. To transact such other business as may properly come before the
Meeting or any postponement or adjournment thereof.
Only holders of record of Common Stock at the close of business on April
22, 2005 are entitled to notice of, and to vote at, this Meeting or any
postponement or adjournment thereof.
This Meeting is extremely important in light of the announcement by
Opportunity Partners, L.P. ("Opportunity Partners"), a dissident stockholder
controlled by Mr. Phillip Goldstein, of its intention to solicit proxies against
the nominees of your Board of Directors (the "Board"). Opportunity Partners has
also submitted a stockholder proposal. Your vote is very important. Whether or
not you plan to attend the Meeting, and regardless of the number of shares you
own, we urge you to vote FOR your Board's nominees by promptly completing,
signing, dating and returning the enclosed White Proxy Card. We strongly urge
you not to sign any proxy card that may be sent to you by Mr. Goldstein or
Opportunity Partners. If you have previously returned any proxy card sent to you
by Mr. Goldstein or Opportunity Partners, you may change any vote you may have
cast in favor of Opportunity Partners' nominees, and vote instead for the
election of the Board's nominees by completing, signing and returning the
enclosed White Proxy Card in the accompanying envelope. If you hold your shares
in a brokerage or bank account (in "street name"), your broker or bank cannot
vote your shares this year for Proposals 1 and 3 (as it has been able to in past
routine annual meetings) unless you complete, sign and return the proxy voting
form it will send you. In addition, if you hold your shares in a brokerage or
bank account, your broker or bank may allow you to vote your shares by telephone
or internet. Please consult the materials you receive from your broker or bank
prior to voting by telephone or internet.
If you have any questions or need additional information, please contact
Georgeson Shareholder Communications Inc., the Fund's proxy solicitors, at 17
State Street, New York, New York 10004, or by telephone at 800-279-7155.
By Order of the Board of Directors
Bruce A. Rosenblum
Secretary
Dated: May 3, 2005
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE ENCLOSED
WHITE PROXY CARD AND PROMPTLY RETURN IT TO THE FUND. WE ASK YOUR COOPERATION IN
MAILING IN YOUR WHITE PROXY CARD PROMPTLY, SO THAT THE FUND DOES NOT INCUR ANY
ADDITIONAL EXPENSES OF SOLICITATION OF PROXIES.
THE NEW GERMANY FUND, INC.
345 PARK AVENUE
NEW YORK, NEW YORK 10154
ANNUAL MEETING OF STOCKHOLDERS
JUNE 21, 2005
---------------
PROXY STATEMENT
---------------
This Proxy Statement is furnished by the Board of Directors of The New
Germany Fund, Inc. (the "Board of Directors" or "Board"), a Maryland corporation
(the "Fund"), in connection with the solicitation of proxies for use at the
Annual Meeting of Stockholders (the "Meeting") to be held at 10:00 A.M., New
York time, on June 21, 2005 at the offices of Deutsche Bank, Boardroom 27-A
South, 27th Floor, 345 Park Avenue, New York, New York 10154. The purpose of the
Meeting and the matters to be considered are set forth in the accompanying
Notice of Annual Meeting of Stockholders.
THIS IS A VERY IMPORTANT ANNUAL MEETING OF STOCKHOLDERS OF THE FUND.
Despite the continued strong performance of your Fund (2004 return of 24.44%,
based on net asset value), Opportunity Partners, L.P. ("Opportunity Partners"),
a dissident stockholder controlled by Mr. Phillip Goldstein, has announced its
intention to solicit proxies against the nominees of your Board of Directors.
Your Board strongly believes that the Board's nominees for re-election as
Directors are far better qualified and meet the director qualification
requirements in the Fund's Bylaws, which require experience in business,
investment, economic or political matters of Germany. In addition, the Board's
nominees will better serve the interests of all stockholders. In contrast, Mr.
Goldstein has conceded in a public statement that Opportunity Partners' intended
nominees are not qualified to serve as directors in accordance with the Fund's
Bylaws. Accordingly, they may not be nominated or elected to serve as directors
of the Fund. Opportunity Partners has also submitted a non-binding proposal that
stockholders of the Fund "be afforded an opportunity to realize net asset value
for their shares as soon as practicable." While recognizing that the discount is
a widely prevalent attribute of closed-end funds, your Board continues to
believe that the Fund's closed-end format is one of its essential features,
given its focus on German small- and mid-cap stocks with limited liquidity, and
that this format is in the best interest of the Fund's long-term stockholders,
as proven by the Fund's excellent performance in recent years. The Board's
reasons for strongly opposing Opportunity Partners' nominees and Opportunity
Partners' proposal are set forth below. Please give this material careful
attention.
The Board of Directors strongly urges you to complete, sign, date and mail
promptly the White Proxy Card accompanying this Proxy Statement. If you hold
your shares in a brokerage or bank account (in "street name"), your broker or
bank cannot vote your shares this year for Proposals 1 and 3 (as it has in past
routine annual meetings) unless you complete, sign, date and mail promptly the
proxy voting form it will send you. In addition, if you hold your shares in a
brokerage or bank account, your broker or bank may allow you to vote your shares
by telephone or internet. Please consult the materials you receive from your
broker or bank prior to voting by telephone or internet.
1
If the accompanying White Proxy Card is executed properly and returned,
shares represented by it will be voted at the Meeting, and any postponement or
adjournment thereof, in accordance with the instructions on the White Proxy
Card. However, if no instructions are specified, shares will be voted FOR the
election of four (4) directors of the Fund ("Directors") nominated by the Board
(Proposal 1), FOR the ratification of the appointment by the Audit Committee and
the Board of PricewaterhouseCoopers LLP, an independent public accounting firm,
as independent auditors for the Fund (Proposal 2) and AGAINST the stockholder
proposal (Proposal 3). A proxy may be revoked at any time prior to the time it
is voted by written notice to the Secretary of the Fund, by submitting a
subsequently executed and dated proxy or by attending the Meeting and voting in
person. If a stockholder owns shares of the Fund in violation of applicable law,
including the Investment Company Act of 1940, as amended (the "1940 Act"), the
Fund may determine that any vote attributable to such shares shall not be
counted, or that such shares will not be counted for quorum purposes, or both.
Under Section 12(d)(1) of the 1940 Act, the acquisition of more than 3% of the
Fund's common stock by another fund (whether registered, private or offshore) is
unlawful. The votes cast on behalf of any such fund or by any other stockholder
whose holdings are unlawful will be invalid.
The close of business on April 22, 2005 has been fixed as the record date
for the determination of stock-holders entitled to notice of, and to vote at,
the Meeting. On that date, the Fund had 25,002,225 shares of Common Stock
outstanding and entitled to vote. Each share will be entitled to one vote on
each matter that comes before the Meeting. It is expected that the Notice of
Annual Meeting, this Proxy Statement and the form of White Proxy Card will first
be mailed to stockholders on or about May 3, 2005.
A quorum is necessary to hold a valid meeting. If stockholders entitled to
cast one-third of all votes entitled to be cast at the Meeting are present in
person or by proxy, a quorum will be established. The Fund intends to treat
properly executed proxies that are marked "abstain" and broker non-votes
(defined below) as present for the purposes of determining whether a quorum has
been achieved at the Meeting. Under Maryland law, abstentions do not constitute
a vote "for" or "against" a matter and will be disregarded in determining the
"votes cast" on an issue. A "broker non-vote" occurs when a broker holding
shares for a beneficial owner does not vote on a particular matter because the
broker does not have discretionary voting power with respect to that matter and
has not received instructions from the beneficial owner.
PROPOSAL 1: ELECTION OF DIRECTORS
The Fund's charter (the "Charter") provides that the Board of Directors be
divided into three classes of Directors serving staggered three-year terms and
until their successors are elected and qualify. The term of office for Directors
in Class II expires at the 2005 Annual Meeting, Class III at the next succeeding
annual meeting and Class I at the following succeeding annual meeting. Four
Class II nominees are proposed in this Proxy Statement for election. The four
Class II nominees, Messrs. John Bult, John H. Cannon, Werner Walbrol and Peter
Zuhlsdorff, are the only persons nominated by your Board of Directors for
election at this Meeting and, if elected, each will serve a three-year term of
office until the Annual Meeting of Stockholders in 2008 and until his respective
successor is elected and qualifies. The interests of the Fund and the
stockholders are best served when its Directors have experience in matters
relevant to the Fund's investment business. Accordingly, the Bylaws provide that
a nominee must have Relevant Experience and Country Knowledge and must not have
any Conflict of Interest. The relevant portions of the Fund's Bylaws describing
these requirements are included as Annex B to
2
this Proxy Statement. The Nominating Committee (excluding Mr. Cannon, who
excused himself from its deliberations and vote) concluded that each of the four
Class II nominees satisfies these requirements. An overview of the experience
and current duties of each of the Board's nominees is therefore appropriate.
John Bult. Mr. Bult has served for 20 years as Chairman of PaineWebber
International, which since 2002 has been the European private banking and
brokerage business of UBS AG, a pre-eminent global financial services business
headquartered in Switzerland that acquired PaineWebber Group in that year. In
that capacity Mr. Bult, who is fluent in English and German, has advised
European companies about U.S. markets and U.S. investors about European
companies and markets, including those in Germany. During his professional
career, Mr. Bult has served as a member of the Board of Directors of a number of
country-specific closed-end investment companies, including The France Growth
Fund, Inc., The Greater China Fund, Inc. and The Brazilian Equity Fund, Inc. Mr.
Bult has been a director of the Fund since its inception in 1990, and also
serves as a director of The Germany Fund, Inc. and The Central Europe and Russia
Fund, Inc., both of which are part of the Fund's Complex.
John H. Cannon. Mr. Cannon served as Vice President and Treasurer of
Venator Group/ Footlocker Inc., a footwear retailer, for nearly 18 years. Prior
to 1998, the firm was known as Woolworth Corporation. During his career at the
company, Mr. Cannon's duties included serving as Treasurer for its European
operations. Mr. Cannon, who has been a director of the Fund since its inception
in 1990, is the Chairman of its Audit Committee and has been designated as one
of its Audit Committee financial experts. Mr. Cannon, now a consultant since his
retirement in 2002, also serves as a director of The Germany Fund, Inc. and The
Central Europe and Russia Fund, Inc., both of which are part of the Fund's
Complex.
Werner Walbrol. Mr. Walbrol has a long career of advising German companies
about U.S. business matters and U.S. companies about German business matters. He
served for over 10 years as President and Chief Executive Officer, and is
currently a Director, of The German American Chamber of Commerce, which is part
of an international network of German Chambers of Commerce that has about 1,000
member chambers. Mr. Walbrol, who is fluent in English and German, is now a
Senior Adviser to Coudert Brothers LLP, an international law firm, and serves as
President and Chief Executive Officer of The European American Chamber of
Commerce, Inc. Mr. Walbrol is a member of the Fund's Audit Committee. He also
serves as a director of The Germany Fund, Inc. and The Central Europe and Russia
Fund, Inc., both of which are part of the Fund's Complex, since their inception.
Mr. Walbrol is also President and Director of the German-American Partnership
Program, a student exchange program. He is also a director of TUV Rheinland of
North America, Inc. and AXA Art Insurance Corporation.
Peter Zuhlsdorff. Mr. Zuhlsdorff has spent a long and active career as a
senior executive for German companies in the retail sector, which included
service from 1998 to 2003 as a senior executive of Tengelmann
Unternehmensgruppe, a 34 billion dollar global food and specialty retailing
company that owns A&P Supermarkets in the United States. He was Chairman of the
Board of Wella AG, a publicly traded hair and beauty products business, from
1991 to 1995. Since 2004, Mr. Zuhlsdorff has served as a senior executive of DSD
Duales System Deutschland AG, a large recycling business. Concurrently with
these positions he has been since 1997 a senior executive of DIH Deutsche
Industrie Holding, a private German company that owns interests in many
different types of businesses. He is fluent in English and German. Mr.
Zuhlsdorff is also active as an advisor to German companies through services as
a member of various Supervisory and Advisory Boards of German companies in many
industries, such as food and specialty retailing, recycling, fashion,
pharmaceuticals and chemicals, entertainment, and heavy machinery and equipment.
3
YOUR BOARD STRONGLY BELIEVES THAT ITS NOMINEES ARE BETTER QUALIFIED, MEET
THE DIRECTOR QUALIFICATION REQUIREMENTS IN THE FUND'S BYLAWS, AND WILL BETTER
SERVE THE INTERESTS OF ALL STOCKHOLDERS. ACCORDINGLY, WE UNANIMOUSLY RECOMMEND A
VOTE "FOR" EACH OF MESSRS. BULT, CANNON, WALBROL AND ZUHLSDORFF.
As we discussed, a dissident stockholder, Opportunity Partners, controlled
by Mr. Phillip Goldstein, has announced its intention to solicit proxies against
the nominees of your Board of Directors. Although Opportunity Partners has not
furnished complete information about the persons it has proposed for director,
based on the information provided to date and on Mr. Goldstein's own admission,
your Board's Nominating Committee determined that the persons Opportunity
Partners intends to propose are not qualified in accordance with the Fund's
Bylaws to serve as a director of the Fund. Your Board believes that through
their qualifications and experience, Messrs. Bult, Cannon, Walbrol and
Zuhlsdorff will serve the interests of all stockholders better than the nominees
of Opportunity Partners. The contribution of Opportunity Partners' nominees for
director will not, in the opinion of the Board, in any way compare with the
value the four Board nominees have contributed and will continue to contribute
to the Fund as a result of their extensive background in German business and
political affairs:
o The Board nominees of the Fund provide distinct and ongoing
resources for your Board of Directors, especially in the markets in
which the Fund invests.
o On the other hand, the business backgrounds of Opportunity Partners'
potential nominees do not indicate any experience in the markets in
which the Fund invests. WE INVITE YOU TO MAKE YOUR OWN COMPARISON OF
THE BIOGRAPHIES OF OPPORTUNITY PARTNERS' NOMINEES TO OUR NOMINEES
WHEN YOU RECEIVE ITS PROXY STATEMENT.
We believe that the open agenda being pursued by Opportunity Partners is
to install a minority of directors who will agitate for the Fund to conduct a
partial tender offer, open-end, or liquidate. Our reasons for believing those
actions are not in the interests of Fund stockholders are discussed at Proposal
3.
While the four Opportunity Partners candidates cannot become directors
under the Fund's Bylaws, we urge stockholders to vote FOR our nominees to send
an important message.
Should any vacancy occur on the Board of Directors, the remaining
Directors would be able to fill that vacancy by the affirmative vote of a
majority of the remaining Directors in office, even if the remaining Directors
do not constitute a quorum. Any Director elected by the Board to fill a vacancy
would hold office until the remainder of the full term of the class of Directors
in which the vacancy occurred and until a successor is elected and qualifies. If
the size of the Board is increased, additional Directors will be apportioned
among the three classes to make all classes as nearly equal as possible.
Unless authority is withheld, it is the intention of the persons named in
the accompanying form of White Proxy Card to vote each White Proxy Card for the
election of our four Class II nominees listed above. Each of our Class II
nominees is currently a member of the Board of Directors. Each Class II nominee
has indicated that he will continue to serve as a Director if elected, but if
any nominee should be unable to serve, proxies will be voted for any other
person determined by the persons named in the form of White Proxy Card in
accordance with their discretion. The Board of Directors has no reason to
believe that any of the above nominees will be unable to continue to serve as a
Director.
4
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 1
TO ELECT THE BOARD'S FOUR NOMINEES AS CLASS II DIRECTORS.
REQUIRED VOTE. Provided a quorum has been established, the affirmative
vote of a plurality of the votes cast at the Meeting is required for the
election of each Director. For purposes of the election of Directors,
abstentions and broker non-votes will have no effect on the result of the vote.
INFORMATION REGARDING DIRECTORS AND OFFICERS
The following table shows certain information about the nominees for
election as Directors and about Directors whose terms will continue, including
beneficial ownership of Common Stock of the Fund. All Directors resident in the
United States own Fund shares. Directors who are German residents would be
subject to adverse German tax consequences if they owned shares of a fund
organized outside of Germany, such as the Fund, that is not subject to German
regulation or tax reporting. Each Director has served as a Director of the Fund
for more than five years, many since the Fund's inception in 1990, except for
Ambassador Burt and Mr. Walbrol, who for many years have been directors of other
funds in the Fund Complex and were elected to the Board on April 23, 2004.
NOMINEES PROPOSED FOR ELECTION:
------------------------------------------------------------------------------------------------------------------------------------
CLASS II DIRECTORS
(TERM WILL EXPIRE IN 2005; NOMINEES FOR TERM EXPIRING IN 2008)
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND SHARES OF
COMPLEX(2) COMMON STOCK
OVERSEEN BENEFICIALLY
NAME, LENGTH BY DIRECTOR OTHER DIRECTORSHIPS OWNED AT
ADDRESS(1) POSITION(S) OF TIME PRINCIPAL OCCUPATION(S) OR NOMINEE HELD BY DIRECTOR OR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS FOR DIRECTOR NOMINEE FOR DIRECTOR 2005(3)
---------- ----------- ------- --------------------------- ------------ -------------------- -------------
Non-Interested Directors
John H. Director Since Consultant (since 2002); 3 Director of The Germany 3,836
Cannon, 63 1990 Vice President and Fund, Inc. (since 2004)
Treasurer, Venator and The Central Europe and
Group/Footlocker Inc. Russia Fund, Inc. (since
(footwear retailer) (until 2004).(2)
2001).
Werner Director Since President and Chief 3 Director of The Central 424
Walbrol, 2004 Executive Officer, The Europe and Russia Fund,
67(11) European American Chamber Inc. (since 1990) and The
of Commerce, Inc. Senior Germany Fund, Inc. (since
Adviser, Coudert Brothers 1986)(2); Director, TUV
LLP (law firm). Formerly, Rheinland of North
President and Chief America, Inc. (independent
Executive Officer, The testing and assessment
German American Chamber of services). Director, The
Commerce, Inc. (until German American Chamber of
2003). Commerce, Inc. President
and Director,
German-American
Partnership Program
(student exchange
programs). Director, AXA
Art Insurance Corporation
(fine art and collectible
insurer).
5
------------------------------------------------------------------------------------------------------------------------------------
CLASS II DIRECTORS
(TERM WILL EXPIRE IN 2005; NOMINEES FOR TERM EXPIRING IN 2008)
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND SHARES OF
COMPLEX(2) COMMON STOCK
OVERSEEN BENEFICIALLY
NAME, LENGTH BY DIRECTOR OTHER DIRECTORSHIPS OWNED AT
ADDRESS(1) POSITION(S) OF TIME PRINCIPAL OCCUPATION(S) OR NOMINEE HELD BY DIRECTOR OR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS FOR DIRECTOR NOMINEE FOR DIRECTOR 2005(3)
---------- ----------- ------- --------------------------- ------------ -------------------- -------------
NON-INTERESTED DIRECTORS
Peter Director Since Managing Director of DIH 1 Chairman of the None
Zuhlsdorff, 64 1997 Deutsche Industrie Holding Supervisory Board, Merck
(holding company) (since KGaA (pharmaceuticals and
1997); Managing Director chemicals) and Escada AG
of DSD Duales System (fashion); Member of the
Deutschland AG (recycling) Supervisory Board, GfK AG
(since 2004); Managing (market research), Deutz
Director of Tengelmann AG (heavy machinery and
Unternehmensgruppe (food engines), Kaisers
and specialty retailing) Tengelmann AG (food and
(1998-2003); Managing specialty retailing) and
Director of TV Loonland AG
Bewerbungskommitee Leipzig (entertainment
2012 GmbH (olympic bid distribution); Member of
committee) (2004); and the Advisory Board,
Managing Director of PZ Tengelmann Verwaltungs-und
Sportpark GmbH Beteiligungsgesellschaft
(1996-2003). GmbH (food and specialty
retailing).
------------------------------------------------------------------------------------------------------------------------------------
CLASS II DIRECTORS
(TERM WILL EXPIRE IN 2005; NOMINEES FOR TERM EXPIRING IN 2008)
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND SHARES OF
COMPLEX(2) COMMON STOCK
OVERSEEN BENEFICIALLY
NAME, LENGTH BY DIRECTOR OTHER DIRECTORSHIPS OWNED AT
ADDRESS(1) POSITION(S) OF TIME PRINCIPAL OCCUPATION(S) OR NOMINEE HELD BY DIRECTOR OR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS FOR DIRECTOR NOMINEE FOR DIRECTOR 2005(3)
---------- ----------- ------- --------------------------- ------------ -------------------- -------------
INTERESTED DIRECTOR(4)
John Bult, 69 Director Since Chairman, PaineWebber 3 Director of The Germany 2,721
1990 International (asset Fund, Inc. (since 1986)
management) (since 1985). and The Central Europe and
Russia Fund, Inc. (since
1990).(2) Director of The
Greater China Fund, Inc.
(closed-end fund).
6
Directors whose terms will continue:
------------------------------------------------------------------------------------------------------------------------------------
CLASS III DIRECTORS
(TERM WILL EXPIRE IN 2006)
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND SHARES OF
COMPLEX(2) COMMON STOCK
OVERSEEN BENEFICIALLY
NAME, LENGTH BY DIRECTOR OTHER DIRECTORSHIPS OWNED AT
ADDRESS(1) POSITION(S) OF TIME PRINCIPAL OCCUPATION(S) OR NOMINEE HELD BY DIRECTOR OR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS FOR DIRECTOR NOMINEE FOR DIRECTOR 2005(3)
---------- ----------- ------- --------------------------- ------------ -------------------- -------------
NON-INTERESTED DIRECTORS
Dr. Franz Director Since Former Member of the 1 Chairman of the None
Wilhelm Hopp, 1993 Boards of Management of Supervisory Board of
62 ERGO Versicherungsgruppe Ideenkapital Media Finance
AG, ERGO Europa (investments and finance).
Beteiligungsgesellschaft Member of the Supervisory
AG, and ERGO International Boards of Jenoptik, AG
AG (insurance) (over five (environmental systems and
years). Former Member of other technologies); TMW
the Boards of Management Immobilien AG (real
of VICTORIA Holding; estate); Oesterreichische
VICTORIA Volksbanken (bank);
Lebensversicherung AG KarstadtQuelle Bank GmbH;
(life insurance); VICTORIA GFKL Financial Services
Versicherung AG AG; MEAG Munich ERGO
(insurance); VICTORIA Kapitalanlagegesellschaft
International; VICTORIA mbH (asset management);
Ruckversicherung AG Internationales
(reinsurance) and D.A.S. Immobilieninstitut GmbH
Versicherungs-AG. (real estate); TMW Real
(insurance). Estate Group L.P.; and
Victoria Volksbanken,
Oesterreich (bank). Member
of the Administrative
Boards of Frankfurter
Volksbank (bank) and HSBC
Trinkaus & Burkhardt
(bank). Member of the
Advisory Boards of
Dresdner Bank AG; EnBW
1 Energie Baden-Wuerttemberg
AG (energy); Falke Bank
AG; Landeskreditbank
Baden- Wuerttemberg;
Millenium Entertainment
Partners L.P. (real
estate) and MPE Hotel, LLC
(real estate).
Ernst-Ulrich Director Since Consultant. Vice Chairman 1 Member of the District None
Matz, 71 1995 of the Supervisory Boards Advisory Board of
of Bopp & Reuther AG Gerling-Konzern (until
(valve, control, 2002); Chairman of the
measurement and safety Rumanian Group in the
technology) (until 2001). German East-West Trade
Chief Financial Officer Committee (until 2002);
and member of the Board of Member of the Advisory
Directors of IKWA Council of Herder GmbH &
Aktiengesellschaft Co. KG (publishing);
(production and Member of the Supervisory
manufacturing technology) Board of Photon AG (laser
(1978 until 2000). Member engineering). Member of
of the Supervisory Boards the District Advisory
of Ex-Cell-O AG (machine Board of Deutsche Bank AG,
tool and system Mannheim (until 1999).
manufacturer) (until 2001)
and ARO SA (until 2000)
(resistance welding).
7
------------------------------------------------------------------------------------------------------------------------------------
CLASS III DIRECTORS
(TERMS WILL EXPIRE IN 2006)
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND SHARES OF
COMPLEX(2) COMMON STOCK
OVERSEEN BENEFICIALLY
NAME, LENGTH BY DIRECTOR OTHER DIRECTORSHIPS OWNED AT
ADDRESS(1) POSITION(S) OF TIME PRINCIPAL OCCUPATION(S) OR NOMINEE HELD BY DIRECTOR OR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS FOR DIRECTOR NOMINEE FOR DIRECTOR 2005(3)
---------- ----------- ------- --------------------------- ------------ -------------------- -------------
NON-INTERESTED DIRECTORS
Dr. Frank Director Since Deputy Chairman of the 1 None. None
Tromel, 69(5) 1990 Supervisory Board of
DELTON AG (strategic
management holding company
operation in the
pharmaceutical, household
products, logistics and
power supply sectors)
(since 2000). Member
(since 2000) and
Vice-President (since
2002) of the German
Accounting Standards
Board; Chairman of the
Board of Managing
Directors of DELTON AG
(1990-1999); Chairman of
the Board of Managing
Directors of AL TANA AG
(management holding
company for the
pharmaceutical and
chemical operation)
(1987-1990) and Member of
the Board (1977-1987).
------------------------------------------------------------------------------------------------------------------------------------
CLASS I DIRECTORS
(TERM WILL EXPIRE IN 2007)
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND SHARES OF
COMPLEX(2) COMMON STOCK
OVERSEEN BENEFICIALLY
NAME, LENGTH BY DIRECTOR OTHER DIRECTORSHIPS OWNED AT
ADDRESS(1) POSITION(S) OF TIME PRINCIPAL OCCUPATION(S) OR NOMINEE HELD BY DIRECTOR OR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS FOR DIRECTOR NOMINEE FOR DIRECTOR 2005(3)
---------- ----------- ------- --------------------------- ------------ -------------------- -------------
NON-INTERESTED DIRECTORS
Ambassador Director Since Chairman, Diligence LLC 54 Director of The Central 424
Richard R. 2004 (international information Europe and Russia Fund,
Burt, 58 collection and Inc. (since 2000) and The
risk-management firm) Germany Fund, Inc. (since
(since 2002). Chairman, 2000), as well as other
IEP Advisors Inc. funds in the Fund Complex
(information services as indicated.(6) Board
firm) (1998- 2001). Member, IGT, Inc. (gaming
Chairman of the Board, technology) (since 1995).
Weirton Steel Corp. Board Member, Hollinger
(1996-2004). Formerly, International (printing
Partner, McKinsey & and publishing) (since
Company (consulting firm) 1995). Board Member, HCL
(1991-1994). U.S. Technologies, Inc.
Ambassador to the Federal (information technology
Republic of Germany and product engineering)
(1985-1991). (since 1999). Member,
Textron Inc. International
Advisory Council
(aviation, automotive,
industrial operations and
finance) (since 1996).
Director, UBS family of
mutual funds (since 1995).
8
------------------------------------------------------------------------------------------------------------------------------------
CLASS I DIRECTORS
(TERMS WILL EXPIRE IN 2007
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND SHARES OF
COMPLEX(2) COMMON STOCK
OVERSEEN BENEFICIALLY
NAME, LENGTH BY DIRECTOR OTHER DIRECTORSHIPS OWNED AT
ADDRESS(1) POSITION(S) OF TIME PRINCIPAL OCCUPATION(S) OR NOMINEE HELD BY DIRECTOR OR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS FOR DIRECTOR NOMINEE FOR DIRECTOR 2005(3)
---------- ----------- ------- --------------------------- ------------ -------------------- -------------
NON-INTERESTED DIRECTORS
Richard Karl Director Since Consultant. Retired Vice 1 Independent Non-Executive 9,878
Goeltz, 62 1990 Chairman and Chief Director of Aviva plc
Financial Officer of (financial services);
American Express Co. Director of Federal Home
(financial services) Loan Mortgage Corporation
(1996-2000). Former Chief (Freddie Mac) and The
Financial Officer of Warnaco Group Inc.
National Westminster Bank (apparel); Member of the
Plc (1992-1996). Former Court of Governors and the
Executive Vice Council of the London
President-Finance School of Economics and
(1986-1991) and Vice Political Science;
President-Finance Director of the Opera
(1976-1986) of The Seagram Orchestra of New York;
Company Ltd. Trustee of the London
Philharmonic Orchestra
Trust; Director of the
English Chamber Orchestra
Music Society.
Robert H. Director Since President, Robert H. 79 Director of The Germany 7,283
Wadsworth, 64 1992 Wadsworth Associates, Inc. Fund, Inc. (since 1986)
(consulting firm) (May and The Central Europe and
1983 to present). Russia Fund, Inc. (since
Formerly, President and 1990), as well as other
Trustee, Trust for funds in the Fund Complex
Investment Managers as indicated.(8)
(registered investment
companies) (April
1999-June 2002).
President, Investment
Company Administration,
L.L.C. (January
1992(7)-July 2001).
President, Treasurer and
Director, First Fund
Distributors, Inc. (mutual
fund distribution) (June
1990-January 2002). Vice
President, Professionally
Managed Portfolios (May
1991-January 2002) and
Advisors Series Trust
(registered investment
companies) (October
1996-January 2002).
------------------------------------------------------------------------------------------------------------------------------------
CLASS I DIRECTORS
(TERMS WILL EXPIRE IN 2007
------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND SHARES OF
COMPLEX(2) COMMON STOCK
OVERSEEN BENEFICIALLY
NAME, LENGTH BY DIRECTOR OTHER DIRECTORSHIPS OWNED AT
ADDRESS(1) POSITION(S) OF TIME PRINCIPAL OCCUPATION(S) OR NOMINEE HELD BY DIRECTOR OR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS FOR DIRECTOR NOMINEE FOR DIRECTOR 2005(3)
---------- ----------- ------- --------------------------- ------------ -------------------- -------------
INTERESTED DIRECTOR(4)
Christian H. Director Since Director (since 1999) and 3 Director of The Germany None
Strenger, 61 and 1990 formerly Managing Director Fund, Inc. (since 1986)
Chairman (1991-1999) of DWS and The Central Europe and
Investment GmbH Russia Fund, Inc. (since
(investment management), a 1990).(2) Member,
subsidiary of Deutsche Supervisory Board, Fraport
Bank AG. AG (international airport
business). Board member,
Incepta PLC (media and
advertising).
Non-executive Board Member
of Hermes Focus Asset
Management Europe Ltd.
9
------------------------------------------------------------------------------------------------------------------------------------
EXECUTIVE OFFICERS(9)
------------------------------------------------------------------------------------------------------------------------------------
SHARES OF
COMMON STOCK
BENEFICIALLY
TERM OF OFFICE OWNED AT
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) MARCH 31,
NAME, ADDRESS(1) & AGE WITH FUND TIME SERVED DURING PAST FIVE YEARS 2005(3)
---------------------- -------------------- -------------- ----------------------------------------- --------------
Julian Sluyters, 44 President and Chief Since 2004 Managing Director, Deutsche Asset None
Executive Officer Management (since 2004); President and
Chief Executive Officer, UBS Fund
Services (2001-2003); Chief
Administrative Officer (1998-2001) and
Senior Vice President and Director of
Mutual Fund Operations (1991-1998), UBS
Global Asset Management.
Paul H. Schubert, 42 Chief Financial Officer Since 2004 Managing Director, Deutsche Asset None
Management (since 2004). Formerly,
Executive Director, Head of Mutual Fund
Services and Treasurer for UBS Family of
Funds at UBS Global Asset Management
(1994-2004); Vice President and Director
of Mutual Fund Finance at UBS Global
Asset Management (1994-1998).
Sandra M. Schaufler, Chief Investment Officer Since 2004 Director, Deutsche Asset Management None
37(12) (since 2004); Director of Equity Sales,
HVB Capital Markets (2001-2003);
Portfolio Manager, Deutsche Asset
Management (1997-2001).
Vincent J. Esposito, Vice President Since 2003 Managing Director, Deutsche Asset None
48(10) Management (since 2003). Formerly,
Managing Director and Head of
Relationship Management, Putnam
Investments (1999-2003).
Bruce A. Rosenblum, 44 Secretary Since 2003 Director, Deutsche Asset Management None
(since 2002). Formerly, Vice President
of Deutsche Asset Management (2000-2002)
and partner with the law firm of
Freedman, Levy, Kroll & Simonds
(1997-2000).
Charles A. Rizzo, 45(10) Treasurer Since 2003 Managing Director, Deutsche Asset None
Management (since 2004). Formerly,
Director, Deutsche Asset Management
(2000-2004); Vice President and
Department Head, BT Alex. Brown
Incorporated (now Deutsche Bank
Securities Inc.) (1998-1999); Senior
Manager, Coopers & Lybrand L.L.P. (now
PricewaterhouseCoopers LLP) (1993-1998).
Kathleen Sullivan Assistant Treasurer Since 2003 Director, Deutsche Asset Management None
D'Eramo, 48(10) (since 2002). Manager, SevenFortyNine,
L.L.C. (since 2005) (commercial and
residential property). Formerly Senior
Vice President, Zurich Scudder
Investments (2000-2002); Vice President,
Zurich Scudder Investments and its
predecessor companies (1995-2000).
----------
(1) The mailing address of all directors and officers with respect to Fund
operations is c/o Deutsche Investment Management Americas Inc., 345 Park Avenue,
NYC20-2799, New York, New York 10154.
(2) The Fund Complex includes The Germany Fund, Inc. and The Central Europe and
Russia Fund, Inc., which are the other closed-end registered investment
companies for which Deutsche Investment Management Americas Inc. acts as
manager. It also includes 186 other open- and closed-end funds advised by
wholly-owned entities of the Deutsche Bank Group in the United States.
(3) All Directors and Executive Officers as a group (18 persons) owned 24,566
shares, which constitutes less than 1% of the outstanding Common Stock of the
Fund. Share numbers in this Proxy Statement have been rounded to the nearest
whole share.
(4) Indicates "Interested Person", as defined in the Investment Company Act of
1940, as amended (the "1940 Act"). Mr. Bult is an "interested" Director because
of his affiliation with PaineWebber International, an affiliate of UBS
Securities L.L.C., a registered broker-dealer; and Mr. Strenger is an
"interested" Director because of his affiliation with DWS-Deutsche Gesellschaft
fur Wertpapiersparen mbH ("DWS"), a subsidiary of Deutsche Bank AG, and because
of his ownership of Deutsche Bank AG shares.
(5) Mr. Tromel's son has been employed since March 1, 2002 by an indirect
subsidiary of Deutsche Bank AG.
(6) Ambassador Burt serves as a Director/Trustee 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 Investments VIT Funds, Scudder MG Investments
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. Ambassador Burt also serves as a Director
of Scudder RREEF Real Estate Fund, Inc. and Scudder RREEF Real Estate Fund
II, Inc., which are 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.
10
(7) Inception date of the corporation which was the predecessor to the limited
liability company.
(8) Mr. Wadsworth serves as a Director/Trustee of the following investment
companies: Scudder Aggressive Growth Fund, Scudder Blue Chip Fund, Scudder
Equity Trust, Scudder High Income Series, Scudder Investors Trust, Scudder
State Tax-Free Income Series, Scudder Strategic Income Fund, Scudder
Target Fund, Scudder Technology Fund, Scudder Total Return Fund, Scudder
U.S. Government Securities Fund, Scudder Value Series, Inc., Scudder
Variable Series II, Cash Account Trust, Cash Equivalent Fund, Investors
Cash Trust, Investors Municipal Cash Fund, Scudder Portfolios, Tax-Exempt
California Money Market Fund, Scudder Money Funds, Scudder Yieldwise
Funds, Scudder High Income Trust, Scudder Intermediate Government Trust,
Scudder Multi-Market Income Trust, Scudder Municipal Income Trust, Scudder
Strategic Income Trust, and Scudder Strategic Municipal Income Trust.
(9) Each also serving as an officer of The Germany Fund, Inc. and The Central
Europe and Russia Fund, Inc. The officers of the Fund are elected annually
by the Board of Directors at its meeting following the Annual Meeting of
Stockholders. Messrs. Sluyters, Schubert, Rosenblum and Rizzo, and Ms.
D'Eramo each also serves as an officer of other Funds in the Fund Complex.
(10) Indicates ownership of securities of Deutsche Bank either directly or
through Deutsche Bank's deferred compensation plan.
(11) Mr. Walbrol has a mortgage loan through Deutsche Bank. As of March 16,
2005, the principal amount outstanding was $601,295.77.
(12) Ms. Schaufler's husband, Mr. Hanspeter Ackermann, is the former Chief
Investment Officer for the Fund (resigned March 2004).
The following table contains additional information with respect to the
beneficial ownership of equity securities by each Director or Nominee in the
Fund and, on an aggregated basis, in any registered investment companies
overseen by the Director or Nominee within the same Family of Investment
Companies as the Fund:
AGGREGATE
DOLLAR RANGE OF
EQUITY SECURITIES IN
ALL FUNDS OVERSEEN BY
DIRECTOR OR NOMINEE IN
DOLLAR RANGE OF EQUITY FAMILY OF INVESTMENT
NAME OF DIRECTOR OR NOMINEE SECURITIES IN THE FUND(1) COMPANIES(1), (2)
--------------------------- ------------------------- ----------------------
John Bult $10,001 - $50,000 Over $100,000
Ambassador Richard R. Burt $1 - $10,000 $50,001 - $100,000
John H. Cannon $10,001 - $50,000 $10,001 - $50,000
Richard Karl Goeltz $50,001 - $100,000 $50,001 - $100,000
Dr. Franz Wilhelm Hopp None None
Ernst-Ulrich Matz None None
Christian H. Strenger None $10,001 - $50,000
Dr. Frank Tromel None None
Robert H. Wadsworth $50,001 - $100,000 Over $100,000
Werner Walbrol $1 - $10,000 Over $100,000
Peter Zuhlsdorff None None
----------
(1) Valuation date is March 31, 2005.
(2) The Family of Investment Companies consists of the Fund, The Germany Fund,
Inc. and The Central Europe and Russia Fund, Inc., which are closed-end
funds and share the same investment adviser and manager and hold
themselves out as related companies.
The Board of Directors presently has five standing committees including an
audit committee (the "Audit Committee"), an advisory committee (the "Advisory
Committee"), an executive committee (the "Executive Committee"), a nominating
committee (the "Nominating Committee") and a special committee on shareholder
initiatives (the "Special Shareholder Initiatives Committee").
The Audit Committee, comprising Messrs. Burt, Cannon, Wadsworth and
Walbrol, operates pursuant to a written charter. The Audit Committee's
organization and responsibilities are contained in the Audit Committee Report,
which is included in this Proxy Statement, and in its written charter. The
members of the Audit Committee are "independent" as required by the independence
standards of Rule 10A-3 under the Securities Exchange Act of 1934. The Board of
Directors has determined that each member of the Audit Committee is financially
literate and has determined that each of Messrs. Cannon and Wadsworth meets the
requirements for an audit committee financial expert under the rules of the
Securities and Exchange Commission ("SEC"). Although the Board has
11
determined that these individuals meet the requirements for an audit committee
financial expert, their responsibilities are the same as those of the other
audit committee members. They are not auditors or accountants, do not perform
"field work" and are not full-time employees. The SEC has determined that an
audit committee member who is designated as an audit committee financial expert
will not be deemed to be an "expert" for any purpose as a result of being
identified as an audit committee financial expert. The Audit Committee met seven
times during the fiscal year ended December 31, 2004.
The Advisory Committee, comprising Messrs. Cannon, Goeltz, Matz, Tromel
and Wadsworth, makes recommendations to the full Board with respect to the
Management Agreement between the Fund and Deutsche Investment Management
Americas Inc., and the Investment Advisory Agreement between the Fund and
Deutsche Asset Management International GmbH ("DeAM"). The Advisory Committee
met once during the past fiscal year, in connection with the annual continuance
of those agreements.
The Executive Committee, comprising Messrs. Cannon, Goeltz, Strenger and
Wadsworth, has the authority to act for the Board on all matters between
meetings of the Board, subject to any limitations under applicable state law.
During the past fiscal year the Executive Committee did not meet.
The Special Shareholder Initiatives Committee, comprising Messrs. Bult,
Burt, Cannon, Goeltz, Wadsworth and Walbrol, has the authority to act for the
Board on all matters relating to stockholder initiatives. The Special
Shareholder Initiatives Committee met once during the past fiscal year.
The Nominating Committee comprises Messrs. Cannon, Goeltz, Tromel and
Wadsworth. The Board has determined that each of the members of the Nominating
Committee is not an "interested person" as the term is defined in Section
2(a)(19) of the Investment Company Act of 1940, as amended. The Nominating
Committee's organization and responsibilities are set forth in the Nominating
Committee Charter, which is attached hereto as Annex A. Generally, the
Nominating Committee identifies, evaluates and selects and nominates, or
recommends to the Board of Directors, candidates for the Board or any committee
of the Board. To be eligible for nomination as a Director a person must, at the
time of such person's nomination, have Relevant Experience and Country Knowledge
and must not have any Conflict of Interest, as those terms are defined in the
Fund's Bylaws. The relevant portions of the Fund's Bylaws describing these
requirements are included as Annex B. The Nominating Committee may also take
into account additional factors listed in the Nominating Committee Charter,
which generally relate to the nominee's industry knowledge, business experience,
education, ethical reputation, special skills, ability to work well in group
settings and the ability to qualify as an "independent director."
The Nominating Committee will consider nominee candidates properly
submitted by stockholders in accordance with applicable law, the Fund's Charter
or Bylaws, resolutions of the Board and the qualifications and procedures set
forth in the Nominating Committee Charter and this proxy statement. A
stockholder or group of stockholders seeking to submit a nominee candidate (i)
must have beneficially owned at least 5% of the Fund's common stock for at least
two years, (ii) may submit only one nominee candidate for any particular meeting
of stockholders, and (iii) may submit a nominee candidate for only an annual
meeting or other meeting of stockholders at which directors will be elected. The
stockholder or group of stockholders must provide notice of the proposed nominee
pursuant to the requirements found in the Fund's Bylaws. Generally, this notice
must be received not less than 90 days nor more than 120 days prior to the first
anniversary of the date of mailing of the notice for the preceding year's annual
meeting. Such notice shall include the specific information required by the
Fund's Bylaws. The relevant portions describing these requirements are included
as Annex B. The Nominating Committee will evaluate nominee candidates properly
submitted by stockholders on the same basis as it considers and evaluates
candidates recommended by other sources. The Nominating Committee met once
during the past fiscal year.
12
All members on each of the five committees of the Board are non-interested
persons (except that Mr. Strenger, an interested person, is a member of the
Executive Committee, and Mr. Bult, an interested person, is a member of the
Special Shareholder Initiatives Committee).
During the past fiscal year, the Board of Directors had four regular
meetings, and each incumbent Director that served as a Director during the past
fiscal year, with the exception of Mr. Zuhlsdorff, attended at least 75% of the
aggregate number of meetings of the Board and meetings of Board Committees on
which that Director served. The Board has a policy that encourages Directors to
attend the Annual Meeting of Stockholders, to the extent that travel to the
Annual Meeting of Stockholders is reasonable for that Director. Two Directors
attended the 2004 Annual Meeting of Stockholders.
To communicate with the Board of Directors or an individual Director of
the Fund, a stockholder must send a written communication to the Fund's
principal office at 345 Park Avenue, NYC20-2799, New York, New York 10154 (c/o
The New Germany Fund, Inc.), addressed to (i) the Board of Directors of the Fund
or an individual Director, and (ii) the Secretary of the Fund. The Secretary of
the Fund will direct the correspondence to the appropriate parties.
The Fund pays each of its Directors who is not an interested person of the
Fund, of the investment adviser or of the manager an annual fee of $7,500 plus
$750 for each Board and Committee meeting attended. Each such Director who is
also a Director of The Germany Fund, Inc. or The Central Europe and Russia Fund,
Inc. also receives the same annual and per-meeting fees for services as a
Director of each such fund. 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 no such Director receives more than the annual
fee of two funds. Each of the Fund, The Germany Fund, Inc. and The Central
Europe and Russia Fund, Inc. reimburses the Directors (except for those employed
by the Deutsche Bank Group) for travel expenses in connection with Board
meetings. These three funds, together with 186 other open- and closed-end funds
advised by wholly-owned entities of the Deutsche Bank Group in the United
States, represent the entire Fund Complex within the meaning of the applicable
rules and regulations of the SEC. The following table sets forth (a) the
aggregate compensation from the Fund for the fiscal year ended December 31,
2004, and (b) the total compensation from each fund in the Fund Complex that
includes the Fund, for the 2004 fiscal year of each such fund, (i) for each
Director who is not an interested person of the Fund, and (ii) for all such
Directors as a group:
Aggregate Compensation Total Compensation
Name of Director From Fund From Fund Complex
---------------- ---------------------- ------------------
Ambassador Richard R. Burt $ 7,000 $198,370
John H. Cannon $13,500 $ 28,750
Richard Karl Goeltz $15,000 $ 15,000
Dr. Franz Wilhelm Hopp $ 9,000 $ 9,000
Ernst-Ulrich Matz $10,500 $ 10,500
Dr. Frank Tromel $11,250 $ 11,250
Robert H. Wadsworth $10,500 $171,000
Werner Walbrol $ 7,500 $ 37,000
Peter Zuhlsdorff $ 9,000 $ 9,000
------- --------
Total $93,250 $489,870
======= ========
No compensation is paid by the Fund to Directors who are interested
persons of the Fund or of any entity of the Deutsche Bank Group or to officers.
13
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has approved PricewaterhouseCoopers LLP (the "Firm" or
"PwC"), an independent registered public accounting firm, as independent
auditors for the Fund for the fiscal year ending December 31, 2005. A majority
of members of the Board of Directors, including a majority of the members of the
Board of Directors who are not "interested" Directors (as defined in the 1940
Act) of the Fund, have ratified the appointment of PwC as the Fund's independent
auditors for that fiscal year. Based principally on representations from the
Firm, the Fund knows of no direct financial or material indirect financial
interest of such Firm in the Fund. That Firm, or a predecessor firm, has served
as the independent auditors for the Fund since inception.
Neither our Charter nor Bylaws requires that the stockholders ratify the
appointment of PwC as our independent auditors. We are doing so because we
believe it is a matter of good corporate practice. If the stockholders do not
ratify the appointment, the Audit Committee and the Board of Directors will
reconsider whether or not to retain PwC, but may retain such independent
auditors. Even if the appointment is ratified, the Audit Committee and the Board
of Directors in their discretion may change the appointment at any time during
the year if they determine that such change would be in the best interests of
the Fund and its stockholders. It is intended that the persons named in the
accompanying form of proxy will vote for PwC. A representative of PwC will be
present at the Meeting and will have the opportunity to make a statement and is
expected to be available to answer appropriate questions concerning the Fund's
financial statements.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 2.
REQUIRED VOTE. Provided a quorum has been established, the affirmative
vote of a majority of the votes cast at the Meeting is required for the
ratification of the appointment by the Audit Committee and the Board of
Directors of PwC as independent auditors for the Fund for the fiscal year ending
December 31, 2005. For purposes of Proposal 2, abstentions will have no effect
on the result of the vote.
INFORMATION WITH RESPECT TO THE FUND'S INDEPENDENT AUDITORS
The following table shows fees paid to PwC by the Fund during the Fund's
two most recent fiscal years: (i) for audit and non-audit services provided to
the Fund, and (ii) for engagements for non-audit services pre-approved by the
Audit Committee for the Fund's manager and investment adviser and certain
entities controlling, controlled by, or under common control with the manager
and investment adviser that provide ongoing services to the Fund (collectively,
the "Adviser Entities"), which engagements relate directly to the operations and
financial reporting of the Fund. The Audit Committee of each Board will review,
at least annually, whether PwC's receipt of non-audit fees from the Fund, the
Fund's manager, the Fund's investment adviser and all Adviser Entities is
compatible with maintaining PwC's independence.
AUDIT AUDIT
FEES(1) RELATED FEES(2) TAX FEES(3) ALL OTHER FEES(4)
------ ---------------- --------------- -----------------
ADVISER ADVISER ADVISER
FUND FUND ENTITIES FUND ENTITIES FUND ENTITIES
------- ---- -------- ------ -------- ---- --------
2004 ......... $54,900 -- $431,907 $6,700 -- -- --
2003 ......... $51,164 -- $538,457 $9,267 -- -- --
----------
(1) "Audit Fees" are the aggregate fees billed for professional services for
the audit of the Fund's annual financial statements and services provided
in connection with statutory and regulatory filings or engagements.
(2) "Audit Related Fees" are the aggregate fees billed for assurance and
related services reasonably related to the performance of the audit or
review of financial statements and are not reported under "Audit Fees."
(3) "Tax Fees" are the aggregate fees billed for professional services for tax
advice, tax compliance and tax planning.
(4) "All Other Fees" are the aggregate fees billed for products and services
other than "Audit Fees," "Audit Related Fees" and "Tax Fees."
14
Audit Committee Pre-Approval Policies and Procedures. Generally, the Audit
Committee must pre-approve (i) all services to be performed for the Fund by the
Fund's independent auditors and (ii) all non-audit services to be performed by
the Fund's independent auditors for the Fund's investment adviser or any Adviser
Entities with respect to operations and financial reporting of the Fund. The
Chair of the Audit Committee may approve or deny the request to engage the
auditors to provide any fund services or fund-related services that are not
listed on the pre-approved list if the cost associated with the request is
$50,000 or less, or at the Chair's discretion, determine to call a special
meeting of the Audit Committee for the purpose of considering the proposal.
Should the Chair of the Audit Committee be unavailable, any other member of the
Audit Committee may serve as an alternate for the purpose of approving or
denying the request. The auditors shall report to the Audit Committee at each of
its regular meetings all audit or non-audit services to the Fund and all
non-audit services to the Adviser Entities that relate directly to the Fund's
operations and financial reporting initiated since the last such report was
rendered, including a general description of the services and projected fees and
the means by which such services were approved by the Audit Committee. The
engagement of the auditors to provide certain services customarily required by
the Fund in the ordinary course of its operations or by an Adviser Entity in the
ordinary course of its operations is approved by the Audit Committee subject to
pre-determined dollar limits. In all cases where an Adviser Entity engages the
auditors to provide audit or non-audit services not relating to Fund operations
or financial reporting, and the projected fees for such engagement exceed
$25,000, the auditors will notify the Audit Committee not later than their next
meeting.
All Non-Audit Fees. The table below shows the aggregate non-audit fees
billed by PwC for services rendered to the Fund and to the Advisor Entities that
provide ongoing services to the Fund, whether or not such engagements relate
directly to the operations and financial reporting of the Fund, for the two most
recent fiscal years for the Fund.
FISCAL YEAR AGGREGATE NON-AUDIT FEES
----------- ------------------------
2004 $259,972
2003 $3,976,267
AUDIT COMMITTEE REPORT
The purposes of the Audit Committee are 1) to assist the Board of
Directors in its oversight of (i) the integrity of the Fund's financial
statements; (ii) the Fund's compliance with legal and regulatory requirements;
(iii) the independent auditors' qualifications and independence; and (iv) the
performance of the independent auditors; and 2) to prepare this report. Each
Member of the Audit Committee is "independent," as required by the independence
standards of Rule 10A-3 under the Securities Exchange Act of 1934. The Audit
Committee operates pursuant to a written charter. As set forth in the Audit
Committee Charter, management of the Fund and applicable service providers are
responsible for the preparation, presentation and integrity of the Fund's
financial statements and for the effectiveness of internal control over
financial reporting. Management and applicable service providers are responsible
for maintaining appropriate accounting and financial reporting principles and
policies and internal control over financial reporting and other procedures that
provide for compliance with accounting standards and applicable laws and
regulations. The independent auditors are responsible for planning and carrying
out a proper audit of the Fund's annual financial statements and expressing an
opinion as to their conformity with generally accepted accounting principles.
In the performance of its oversight function, the Audit Committee has
considered and discussed the audited financial statements with Management and
the independent auditors of the Fund. The Audit Committee has also discussed
with the independent auditors the matters required to be discussed by Statement
on Auditing Standards
15
No. 61, Communication with Audit Committees, as currently in effect. The Audit
Committee has also considered whether the provision of any non-audit services
not pre-approved by the Audit Committee provided by the Fund's independent
auditors to the Fund's investment adviser, manager or to any entity controlling,
controlled by or under common control with the Fund's investment adviser or
manager that provides ongoing services to the Fund is compatible with
maintaining the auditors' independence. Finally, the Audit Committee has
received the written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as currently in effect, and has discussed
with the auditors their independence.
The members of the Audit Committee are not full-time employees of the Fund
and are not performing the functions of auditors or accountants. As such, it is
not the duty or responsibility of the Audit Committee or its members to conduct
"field work" or other types of auditing or accounting reviews or procedures or
to set auditor independence standards. Members of the Audit Committee
necessarily rely on the information provided to them by management and the
independent auditors. Accordingly, the Audit Committee's considerations and
discussions referred to above do not assure that the audit of the Fund's
financial statements has been carried out in accordance with generally accepted
auditing standards, that the financial statements are presented in accordance
with generally accepted accounting principles or that the Fund's auditors are in
fact "independent."
Based upon the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of the Audit
Committee referred to above and in the Charter, the Audit Committee recommended
to the Board of Directors of the Fund that the audited financial statements of
the Fund be included in the Fund's annual report to stockholders for the fiscal
year ended December 31, 2004.
Submitted by the Audit Committee
of the Fund's Board of Directors
Ambassador Richard R. Burt
John H. Cannon
Robert H. Wadsworth
Werner Walbrol
16
PROPOSAL 3: STOCKHOLDER PROPOSAL
The Fund has received a notice from Opportunity Partners (the "proponent")
that it intends to submit a proposal to stockholders at the Meeting proposing
that "[stock]holders of the Fund be afforded an opportunity to realize net asset
value for their shares as soon as practicable." The proponent's address and the
number of Fund shares beneficially owned by it are set forth under "Security
Ownership of Certain Beneficial Owners." The proponent owns one share of record.
FOR THE REASONS SET FORTH BELOW, YOUR BOARD UNANIMOUSLY OPPOSES PROPOSAL 3
AND STRONGLY URGES ALL STOCKHOLDERS TO VOTE "AGAINST" THE PROPOSAL ON THE
ENCLOSED WHITE PROXY CARD. PLEASE CAREFULLY READ THE DISCUSSION BELOW.
OPPOSING STATEMENT OF YOUR BOARD OF DIRECTORS
BACKGROUND
The language of the stockholder proposal is vague and without sufficient
detail but at its core, it appears to threaten the Fund's existing closed-end
structure, which your Board of Directors believes is essential to its investment
program. The Fund's total return in 2004 was 24.44% based on net asset value
(NAV) and 30.50% based on market price. In 2003, total return was 93.1% based on
NAV and 102.4% based on market price.
Shares of closed-end funds, such as the Fund, trade on the New York Stock
Exchange like those of any other public company. Market forces and perceptions
of the Fund's prospects drive price movements. The market price of the Fund's
shares is often lower than the value of the Fund's portfolio, which is called
its net asset value, just as the value of an industrial company's assets could
be below the market value of its stock.
In contrast, traditional open-end mutual funds do not trade on a stock
exchange. Instead, shareholder liquidity is achieved by the fund's standing
ready to buy back shares each day at NAV, called redemptions. Because daily NAV
redemptions are required by law for open-end funds, they must maintain liquidity
reserves. This is usually accomplished by limiting their primary investments to
securities with an active trading market, which constrains investment
flexibility. Also, open-end funds generally hold higher cash reserves in order
meet their requirement to buy back shares. This uninvested cash is a drag on
investment returns.
ADVANTAGES OF CLOSED-END STRUCTURE
The Board of Directors reaffirms to the Fund's stockholders that its
commitment to the Fund's current structure of being a non-diversified closed-end
management investment company that seeks capital appreciation primarily though
investment in small- and mid-cap German companies, which have limited liquidity.
Not having to worry about raising cash on a moment's notice to buy back
shares allows the Fund's manager to keep the Fund fully invested and to search
out the medium- and smaller-sized German companies that are the Fund's mandate.
In contrast, open-end funds must be prepared to liquidate securities regardless
of market conditions in order to satisfy stockholder redemption requests. Your
Fund is especially well-suited to the closed-end format because of its
investment focus on small or mid-cap German companies (the Fund is generally
over 80% invested in these small- and mid-cap German companies). Because your
Fund's holdings are often thinly traded, divesting quickly these holdings would
likely depress prices.
17
The closed-end structure also allows managers to preserve their investment
decisions during fluctuating markets. Due to the lack of mandatory redemptions,
the manager can stay focused on long-term goals rather than being forced to
respond to large sentiment swings. Money tends to come into open-end funds
during periods of good market performance and out of the same funds during
market lows. This forces managers in open-end funds to buy at high prices when
new money comes in and sell at low prices to cover redemptions during market
bottoms. The closed-end format protects managers from this pressure to focus
trading in a poorly timed fashion. As noted above, your Fund has had excellent
returns.
DISCOUNTS ARE WIDELY PREVALENT IN THE CLOSED-END STRUCTURE
Your Board of Directors recognizes that the Fund's shares have traded at a
discount to their net asset value. Your Board believes there may be some
misunderstandings about the market discount of your Fund and other closed-end
funds.
The discount is a function of the NAV and market price, each of which may
be influenced by different factors. There is debate whether the discount is the
cause of market price movements or is merely the effect. The discount is
considered by many to be the result of market supply and demand factors for
shares, although it is uncertain whether the dominant factors are fund-specific,
such as performance, or external, such as U.S. market sentiment towards foreign
investing. If, as we believe to be the case, the discount is the effect and not
the cause, there is no action that will have a long-term effect on the discount
other than liquidation or open-ending (which in the absence of a distribution
system and robust buying interest is equivalent to a slow-motion liquidation).
In any event, stockholders experience gain or loss based only on market
price changes in the Fund's shares and dividends on Fund shares. There are no
widely accepted economic theories for explaining the discount phenomenon.
However, the discount does not represent some kind of value that the board has a
duty to distribute to stockholders. That value can be obtained only if the Fund
is liquidated and the opportunity for future investment gain is terminated.
Recognizing that some stockholders nevertheless are troubled when the
discount appears to be "too high," your Board of Directors has for a number of
years conducted a share repurchase program to purchase shares at a discount,
which increases NAV per share. This repurchase program continues, along with
efforts to increase market awareness of your Fund.
TENDER OFFERS, AGGRESSIVE STOCK BUYBACKS AND OPEN-ENDING ARE LIKE LIQUIDATION
A tender offer reduces the discount only during the period of the tender
offer. Repeated tender offers will ultimately cause liquidation. With each
tender offer the fund becomes smaller and harder to manage and continued fixed
costs cause its expense ratio to become larger. At some point complete
liquidation becomes inevitable. The larger the periodic tender offers, the
stronger the effect of reducing the discount but the sooner the Fund shrinks to
the liquidation point.
Open market purchases also have no long-term effect on the discount. After
prolonged aggressive buybacks, the Fund will be at the same liquidation point as
after tender offers.
Although open-ending the Fund will by definition eliminate its discount,
doing so brings the investment flexibility limitations described above.
Furthermore, without a demonstrable demand by new U.S. investors to buy shares,
the redemption process will over time, possibly overnight, cause the same
shrinkage of the Fund to the liquidation point caused by periodic tender offers
and aggressive buybacks.
18
LONG-TERM INTEREST VS. SHORT-TERM INTERESTS
Long-term investors in your Fund do better than short-term investors. When
the proponent made a similar proposal at least year's annual meeting, it
received favorable votes from the holders of only 27% of the outstanding shares.
While the proponent has tried to claim that this represents a mandate, the
holders of the majority (55%) of the Fund's outstanding shares did not even vote
on the proposal, and 17% voted against it. Thus, last year's results demonstrate
that only a vocal minority wants to take the short-term approach. A short-term
stockholder in a hypothetical liquidation of the Fund on January 1, 2003 would
have made a modest one-time gain equal to the discount ($0.98, assuming no
expenses). However, a long-term stockholder who instead held those shares would
have benefited from a total appreciation of his or her investment by 166%
through stock price appreciation and dividends totaling $5.89 per share at March
31, 2005. Your Board believes that potential for superior long-term gain is what
the majority of stockholders want.
YOUR BOARD UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.
REQUIRED VOTE. Provided that a quorum has been established, the
affirmative vote of a majority of the votes cast at the Meeting is required to
approve Proposal 3. For purposes of Proposal 3, abstentions will have no effect
on the result of the vote. Proposal 3 is only a recommendation and, if it is
approved by the required vote, will have no binding effect on the Fund or the
Board of Directors. In considering whether or not to take action in response to
the proposal, the Board of Directors will give the request set forth in the
proposal such weight as it believes appropriate based on the voting of
stockholders for the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of April 28, 2005 no person, to the knowledge of management, owned of
record or beneficially more than 5% of the outstanding Common Stock of the Fund,
other than as set forth below:
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF OUTSTANDING
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP COMMON STOCK
------------------- ----------------------- ----------------------
Karpus Management, Inc.(1) 1,306,434 5.12%
14 Tobey Village Office Park
Pittsford, NY 14534
Phillip Goldstein(2) 2,134,496 8.36%
c/o Opportunity Partners L.P.
60 Heritage Drive
Pleasantville, NY 10570
SG Cowen Securities Corp.(3) 2,009,881 7.87%
1221 Avenue of the Americas
New York, NY 10020
Wachovia Corp.(4) 1,795,652 7.04%
One Wachovia Center
Charlotte, NC 28288-0137
----------
1) This information is based exclusively on information provided by such
entity on Schedule 13D filed with respect to the Fund on April 7, 2005.
According to such filing, Karpus Investment Management Profit Sharing Plan
owned 8,645 additional shares of the Fund, and certain principals of
Karpus Management, Inc. owned 11,180 additional shares of the Fund.
(2) This information is based exclusively on information provided by such
person on Schedule 13D filed with respect to the Fund on February 24,
2005.
19
(3) This information is based exclusively on information provided by such
entity on Schedule 13G filed with respect to the Fund on February 14,
2002.
(4) This information is based exclusively on information provided by such
entity on Schedule 13G filed with respect to the Fund on February 3, 2005.
ADDRESS OF INVESTMENT ADVISER AND MANAGER
The principal office of Deutsche Asset Management International GmbH, the
Fund's investment adviser, is located at Mainzer Landstrasse 178-190, D-60327
Frankfurt am Main, Federal Republic of Germany. The corporate office of Deutsche
Investment Management Americas Inc., the Fund's manager, is located at 345 Park
Avenue, New York, New York 10154.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Based on a review of reports filed by the Fund's directors and executive
officers, the investment manager, officers and directors of the investment
manager, affiliated persons of the investment manager and beneficial holders of
10% or more of the Fund's outstanding stock, and written representations by the
Reporting Persons that no year-end reports were required for such persons, all
filings required by Section 16(a) of the Securities and Exchange Act of 1934 for
the fiscal year ended December 31, 2004 were timely, except that Fund officers
Vincent J. Esposito and Sandra-Maria Schaufler each filed a Form 3 late. Each
person has since corrected his/her omission by making the necessary filing.
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of stockholders properly
come before the Meeting, including any question as to an adjournment of the
Meeting, the persons named in the enclosed White Proxy Card will vote thereon
according to their discretion. Abstentions and broker non-votes shall have no
effect on the outcome of a vote to adjourn the Meeting.
STOCKHOLDER PROPOSALS
In order for stockholder proposals otherwise satisfying the eligibility
requirements of SEC Rule 14a-8 to be considered for inclusion in the Fund's
proxy statement for the 2006 Annual Meeting, the proposals must be received at
The New Germany Fund, Inc., c/o Deutsche Asset Management, 345 Park Avenue,
NYC20-2799, New York, New York 10154, Attention: Secretary, on or before January
3, 2006.
In addition, the Fund's Bylaws currently provide that if a stockholder
desires to bring business (including director nominations) before the 2006
Annual Meeting that is or is not the subject of a proposal timely submitted for
inclusion in the Fund's proxy statement, written notice of such business as
prescribed in the Bylaws must be delivered to the Fund's Secretary, at the
principal executive offices of the Fund, between January 3, 2006 and February 2,
2006. For additional requirements, the stockholder may refer to the Bylaws, a
current copy of which may be obtained without charge upon request from the
Fund's Secretary. If the Fund does not receive timely notice pursuant to the
Bylaws, the proposal may be excluded from consideration at the meeting,
regardless of any earlier notice provided in accordance with SEC Rule 14a-8.
20
EXPENSES OF PROXY SOLICITATION
The cost of preparing, assembling and mailing material in connection with
this solicitation will be borne by the Fund. In addition to the use of mails,
proxies may be solicited personally by regular employees of the Fund or the
manager or by telephone or telegraph. Brokerage houses, banks and other
fiduciaries may be requested to forward proxy solicitation materials to their
principals to obtain authorization for the execution of proxies, and they will
be reimbursed by the Fund for out-of-pocket expenses incurred in this
connection. The Fund has also made arrangements with Georgeson Shareholder
Communications Inc. to assist in the solicitation of proxies, if called upon by
the Fund, at an estimated fee not to exceed $175,000 plus reimbursement of
normal expenses.
ANNUAL REPORT DELIVERY
The Fund will furnish, without charge, a copy of its annual report for the
fiscal year ended December 31, 2004 and the most recent semi-annual report, if
any, to any stockholder upon request. Such requests should be directed by mail
to The New Germany Fund, Inc., c/o Deutsche Asset Management, 345 Park Avenue,
NYC20-2799, New York, New York 10154 or by telephone to 1-800-437-6269. Annual
reports are also available on the Fund's web site: www.newgermanyfund.com.
Bruce A. Rosenblum
Secretary
Dated: May 3, 2005
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO HAVE
THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED WHITE PROXY CARD
AND RETURN IT TO THE FUND.
21
ANNEX A
THE NEW GERMANY FUND, INC.
(THE "FUND")
NOMINATING COMMITTEE CHARTER
(ADOPTED AS OF APRIL 23, 2004)
The Board of Directors (the "Board") of the Fund has adopted this Charter
to govern the activities of the Nominating Committee (the "Committee") of the
Board.
STATEMENT OF PURPOSES AND RESPONSIBILITIES
The primary purposes and responsibilities of the Committee are:
(i) to identify individuals qualified to become members of the Board in
the event that a position is vacated or created;
(ii) to consider all candidates proposed to become members of the Board,
subject to applicable law, the Fund's Articles of Incorporation or
By-laws, resolutions of the Board and the procedures and policies
set forth in this Charter and the Fund's annual proxy statement;
(iii) to select and nominate, or recommend for nomination by the Board,
candidates for election as Directors;
(iv) in the case of a director nominee to fill a Board vacancy created by
an increase in the size of the Board, to make a recommendation to
the Board as to the class of directors in which the individual
should serve;
(v) to make recommendations to the Board from time to time as to any
changes that the Committee believes to be desirable to the
provisions of the Fund's By-laws regarding minimum standards and
qualifications for service as a Director on the Board or to any
charter of committees of the Board regarding minimum standards and
qualifications for service as a committee member, and to recommend
to the Board, or to set, any additional standards or qualifications
considered necessary or desirable for service as a Director on the
Board or as a member of a committee of the Board;
(vi) to identify Board members qualified to fill vacancies on any
committee of the Board, taking into account any qualifications or
other criteria set forth in the charter of that committee, and to
recommend that the Board appoint the identified member or members to
that committee;
(vii) to make recommendations to the Board from time to time as to changes
that the Committee believes to be desirable to the size of the Board
or any committee thereof;
(viii) to review with counsel, at least annually, each Director's
affiliations and relationships for purposes of determining whether
such Director is a person who is not an "interested person" of the
Fund, as defined in Section 2(a)(19) of the Investment Company Act
of 1940, as amended;
(ix) to assist management in the preparation of the disclosure in the
Fund's annual proxy statement regarding the operations of the
Committee; and
(x) to perform any other duties or responsibilities expressly delegated
to the Committee by the Board from time to time relating to the
nomination of Board or committee members.
A-1
ORGANIZATION AND GOVERNANCE
The Committee shall consist solely of three or more members of the Board.
The Committee must consist entirely of Board members who are not "interested
persons" of the Fund, as defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended ("Independent Directors"). Members shall serve at the
pleasure of the Board and for such term or terms as the Board may determine.
One or more members of the Committee may be designated by the Board as the
Committee's chairperson or co-chairperson, as the case may be.
The Committee shall meet at least once a year at a time and place
determined by the Committee chairperson, with further meetings to occur, or
actions to be taken by unanimous written consent, when deemed necessary or
desirable by the Committee or its chairperson. Members of the Committee may
participate in a meeting of the Committee by means of conference call or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Committee meetings shall be held in accordance with
the Fund's By-laws.
CRITERIA FOR DIRECTOR NOMINEES
To be eligible for nomination as a Director a person must, at the time of
such person's nomination, have Relevant Experience and Country Knowledge, as
defined in the Fund's By-laws, and must not have any Conflict of Interest, as
defined in the Fund's By-laws. Whether a proposed nominee satisfies the
foregoing qualifications shall be determined by the Committee in its sole
discretion. The Committee may also take into account a wide variety of factors
in considering Director candidates, including (but not limited to): (i) the
candidate's knowledge in matters relating to the investment company industry;
(ii) any experience possessed by the candidate as a director or senior officer
of other public or private companies; (iii) the candidate's educational
background; (iv) the candidate's reputation for high ethical standards and
personal and professional integrity; (v) any specific financial, technical or
other expertise possessed by the candidate, and the extent to which such
expertise would complement the Board's existing mix of skills and
qualifications; (vi) the candidate's perceived ability to contribute to the
ongoing functions of the Board, including the candidate's ability and commitment
to attend meetings regularly, work collaboratively with other members of the
Board and carry out his or her duties in the best interests of the Fund; (vii)
the candidate's ability to qualify as an Independent Director; and (viii) such
other criteria as the Nominating Committee determines to be relevant in light of
the existing composition of the Board and any anticipated vacancies or other
factors.
IDENTIFICATION OF NOMINEES
In identifying potential nominees for the Board, the Committee may
consider candidates recommended by one or more of the following sources: (i) the
Fund's Directors, (ii) the Fund's officers, (iii) the Fund's investment manager,
investment adviser or their affiliates, (iv) the Fund's stockholders (see below)
and (v) any other source the Committee deems to be appropriate. The Committee
will not consider self-nominated candidates or candidates nominated by members
of a candidate's family, including such candidate's spouse, children, parents,
siblings, uncles, aunts, grandparents, nieces and nephews. The Committee may,
but is not required to, retain a third party search firm at the Fund's expense
to identify potential candidates.
A-2
CONSIDERATION OF CANDIDATES RECOMMENDED BY STOCKHOLDERS
The Committee will consider nominee candidates properly submitted by
stockholders in accordance with applicable law, the Fund's Articles of
Incorporation or By-laws, resolutions of the Board and the qualifications and
procedures set forth in this Charter and the Fund's annual proxy statement,
including the requirements that a stockholder or group of stockholders seeking
to submit a nominee candidate (i) must have beneficially owned at least 5% of
the Fund's common stock for at least two years, (ii) may submit only one nominee
candidate for any particular meeting of stockholders, and (iii) may submit a
nominee candidate for only an annual meeting or other meeting of stockholders at
which directors will be elected. The Committee will evaluate nominee candidates
properly submitted by stockholders on the same basis as it considers and
evaluates candidates recommended by other sources.
DELEGATION TO SUBCOMMITTEE
The Committee may, in its discretion, delegate all or a portion of its
duties and responsibilities to a subcommittee of the Committee.
RESOURCES AND AUTHORITY OF THE COMMITTEE
The Committee shall have the resources and authority appropriate to
discharge its duties and responsibilities, including the authority to select,
retain, terminate and approve the fees and other retention terms of special
counsel or other experts or consultants, as it deems appropriate, without
seeking approval of the Board or management. With respect to consultants or
search firms used to identify director candidates, this authority shall be
vested solely in the Committee.
A-3
ANNEX B
THE NEW GERMANY FUND, INC.
EXCERPTS OF BYLAWS
ARTICLE II
Section 13. Advance Notice of Stockholder Nominees for Director and Other
Stockholder Proposals. (a) Annual Meetings of Stockholders. (1) Nominations of
persons for election to the Board of Directors and the proposal of business to
be considered by the stockholders may be made at an annual meeting of
stockholders (i) pursuant to the Corporation's notice of meeting, (ii) by or at
the direction of the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record both at the time of giving of notice
provided for in this Section 13(a) and at the time of the annual meeting, who is
entitled to vote at the meeting and who complied with the notice procedures set
forth in this Section 13(a).
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (iii)
of paragraph (a)(1) of this Section 13, the stockholder must have
given timely notice thereof in writing to the Secretary of the
Corporation and such other business must otherwise be a proper
matter for action by the stockholders. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not less than 90 days nor more
than 120 days prior to the first anniversary of the date of mailing
of the notice for the preceding year's annual meeting; provided,
however, that in the event that the date of mailing of the notice
for the annual meeting is advanced or delayed by more than 30 days
from the first anniversary of the date of mailing of the notice for
the preceding year's annual meeting, notice by the stockholder to be
timely must be so delivered not earlier than the 120th day prior to
the date of mailing of the notice for such annual meeting and not
later than the close of business on the later of the 90th day prior
to the date of mailing of the notice for such annual meeting or the
tenth day following the day on which disclosure of the date of
mailing of the notice for such meeting is first made. In no event
shall the public announcement of a postponement or adjournment of an
annual meeting commence a new time period for the giving of a
stockholder's notice as described above. Such stockholder's notice
shall set forth (i) as to each person whom the stockholder proposes
to nominate for election or reelection as a director, (A) the name,
age, business address and residence address of such person, (B) the
class and number of shares of stock of the Corporation that are
beneficially owned by such person, (C) all other information
relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election
contest (even if an election contest is not involved), or is
otherwise required, in each case pursuant to Regulation 14A (or any
successor provision) under the Exchange Act or pursuant to the
Investment Company Act and the rules thereunder (including such
person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected), and (D) a
statement specifying which of clauses (1)-(7) of the definition of
"Relevant Experience and Country Knowledge" in Article III, Section
3 of the Bylaws the person being nominated satisfies, information
relating to such person sufficient to support a determination that
the person satisfies the specified clause or clauses of the
definition and a representation that the person does not have a
"Conflict of Interest" as defined in Article III, Section 3 of the
Bylaws; (ii) as to any other business that the stockholder proposes
to bring before the meeting, a description of the business desired
to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business
of such stockholder (including any anticipated benefit to the
stockholder therefrom) and of each beneficial owner, if any, on
whose behalf the proposal is made; and
B-1
(iii) as to the stockholder giving the notice and each beneficial
owner, if any, on whose behalf the nomination or proposal is made,
(x) the name and address of such stockholder, as they appear on the
Corporation's stock ledgers and a current name and address, if
different, and of such beneficial owner, and (y) the class and
number of shares of each class of stock of the Corporation which are
owned beneficially and of record by such stockholder and owned
beneficially by such beneficial owner.
(3) Notwithstanding anything in this subsection (a) of this
Section 13 to the contrary, in the event the Board of Directors
increases or decreases the maximum or minimum number of directors in
accordance with Article III, Section 2 of these Bylaws, and there is
no public announcement of such action at least 100 days prior to the
first anniversary of the date of mailing of the preceding year's
annual meeting, a stockholder's notice required by this Section
13(a) shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall
be delivered to the Secretary at the principal executive offices of
the Corporation not later than the close of business on the tenth
day following the day on which such public announcement is first
made by the Corporation.
(b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made
at a special meeting of stockholders at which directors are to be elected
(i) pursuant to the Corporation's notice of meeting, (ii) by or at the
direction of the Board of Directors or (iii) provided that the Board of
Directors has determined that directors shall be elected at such special
meeting, by any stockholder of the Corporation who is a stockholder of
record both at the time of giving of notice provided for in this Section
13 and at the time of the special meeting, who is entitled to vote at the
meeting and who complied with the notice procedures set forth in this
Section 13. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the
Board of Directors, any such stockholder may nominate a person or persons
(as the case may be) for election as a director as specified in the
Corporation's notice of meeting, if the stockholder's notice required by
paragraph (a)(2) of this Section 13 shall be delivered to the Secretary at
the principal executive offices of the Corporation not earlier than the
120th day prior to such special meeting and not later than the close of
business on the later of the 90th day prior to such special meeting or the
tenth day following the day on which public announcement is first made of
the date of the special meeting and of the nominees proposed by the Board
of Directors to be elected at such meeting. In no event shall the public
announcement of a postponement or adjournment of a special meeting
commence a new time period for the giving of a stockholder's notice as
described above.
(c) General. (1) Only such persons who are nominated in accordance
with the procedures set forth in this Section 13 and Article III, Section
3 of these Bylaws shall be eligible to serve as directors and only such
business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set
forth in this Section 13. The chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this Section 13 and, if any
proposed nomination or business is not in compliance with this Section 13,
to declare that such defective nomination or proposal be disregarded.
B-2
(2) For purposes of this Section 13, (a) the "date of mailing
of the notice" shall mean the date of the proxy statement for the
solicitation of proxies for election of directors and (b) "public
announcement" shall mean disclosure (i) in a press release reported
by the Dow Jones News Service, Associated Press or comparable news
service or (ii) in a document publicly filed by the Corporation with
the Securities and Exchange Commission pursuant to the Exchange Act
or the Investment Company Act.
(3) Notwithstanding the foregoing provisions of this Section
13, a stockholder shall also comply with all applicable requirements
of state law and of the Exchange Act and the Investment Company Act
and the rules and regulations thereunder with respect to the matters
set forth in this Section 13. Nothing in this Section 13 shall be
deemed to affect any right of stockholders to request inclusion of
proposals in, nor the right of the Corporation to omit a proposal
from, the Corporation's proxy statement pursuant to Rule 14a-8 (or
any successor provision) under the Exchange Act.
ARTICLE III
Section 3. Qualifications. Directors need not be stockholders. Each
Director shall hold office until the earlier of: (a) the expiration of his term
and his or her successor shall have been elected and qualifies, (b) his or her
death, (c) his or her resignation, or (d) his or her removal. To be eligible for
nomination as a director a person must, at the time of such person's nomination
by the Board of Directors, (a) have Relevant Experience and Country Knowledge
(as defined below), (b) not have any Conflict of Interest (as defined below) and
(c) not be of an age such that he will attain the age of over 70 years in the
calendar year in which his or her term will end; provided that clause (c) shall
not apply to any person who was a Director on October 15, 1999 or to any person
whom 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 the time of
nomination. Whether a proposed nominee satisfies the foregoing qualifications
shall be determined by the Nominating Committee or, in the absence of such a
Committee, by the Board of Directors, each in its sole discretion.
"Relevant Experience and Country Knowledge" means experience in business,
investment, economic or political matters of Germany or the United States
through service for 10 of the past 20 years (except where a shorter period is
noted) in one or more of the following principal occupations:
(1) senior executive officer or partner of a financial or industrial
business headquartered in Germany that has annual revenues of at
least the equivalent of US $500 million,
(2) senior executive officer or partner of a financial or industrial
business headquartered in the United States that has annual revenues
of at least the equivalent of US $500 million and whose management
responsibilities include supervision of European business
operations,
(3) director (or the equivalent) for 5 of the past 10 years of one or
more investment businesses or vehicles (including this Corporation)
a principal focus of which is investment in Germany and that have at
least the equivalent of US $250 million in combined total assets of
their own,
(4) senior executive officer or partner of an investment management
business having at least the equivalent of US $500 million in
securities of German companies or securities principally traded in
Germany under discretionary management for others,
B-3
(5) senior executive officer or partner (a) of a business consulting,
accounting or law firm having at least 100 professionals and (b)
whose principal responsibility involves or involved providing
services involving European matters for financial or industrial
businesses, investment businesses or vehicles or investment
management businesses as described in (1)-(4) above,
(6) senior official (including ambassador or minister) in the national
government, a government agency or the central bank of Germany or
the United States, in a major supranational agency or organization
of which Germany or the United States is a member, or in a leading
international trade organization relating to Germany or the United
States, in each case in the area of finance, economics, trade or
foreign relations, or
(7) current director or senior officer (without regard to years of
service) of an investment manager or adviser of the Corporation, or
of any entity controlling or under common control with an investment
manager or adviser of the Corporation.
For purposes of clauses (1)-(5) of the preceding sentence and clauses
(1)-(2) of the next paragraph, the term "financial or industrial business"
includes a financial or industrial business unit within a larger enterprise; the
term "investment businesses or vehicles" includes an investment business unit or
investment vehicle within a larger enterprise; the term "investment management
business" includes an investment management business unit within a larger
enterprise; and the term "investment vehicle" includes an investment vehicle
within a larger enterprise; but in each case only to the extent the unit
satisfies the revenue, asset and other requirements specified for the business
or vehicle in clauses (1)-(5) of the preceding sentence or clauses (1)-(2) of
the next paragraph.
"Conflict of Interest" means the presence of a conflict with the interests
of the Corporation or its operations through any of the following:
(1) current position as a director, officer, partner or employee of
another investment vehicle a significant (i.e., 25% or more of total
assets) focus of which is securities of German companies or
securities principally traded in German markets and that does not
have the same investment adviser as the Corporation or an investment
adviser affiliated with an investment adviser of the Corporation,
(2) current position as a director, officer, partner or employee of the
sponsor or equivalent of an investment vehicle described in the
previous point, or
(3) current position as an official of a governmental agency or
self-regulatory body having responsibility for regulating the
Corporation or the markets in which it proposes to invest.
B-4
[LOGO]
PROXY THE NEW GERMANY FUND, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder of The New Germany Fund, Inc., a Maryland
corporation (the "Fund"), hereby appoints Julian Sluyters, Bruce A. Rosenblum
and Patricia Rosch Carrington, or any of them, as proxies for the undersigned,
with full power of substitution in each of them, to attend the Annual Meeting of
the Stockholders of the Fund to be held at 10:00 A.M., New York time, on June
21, 2005 at the offices of Deutsche Bank, Boardroom 27-A South, 27th Floor, 345
Park Avenue, New York, New York 10154, and any adjournment or postponement
thereof, to cast on behalf of the under-signed all votes that the undersigned is
entitled to cast at such meeting and otherwise to represent the undersigned at
the meeting with all powers possessed by the undersigned if personally present
at the meeting. The undersigned hereby acknowledges receipt of the Notice of the
Annual Meeting of Stockholders and of the accompanying Proxy Statement, the
terms of each of which are incorporated by reference herein, and revokes any
proxy heretofore given with respect to such meeting.
THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST AS
INSTRUCTED BELOW. IF THIS PROXY IS EXECUTED BUT NO INSTRUCTION IS GIVEN, THE
VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST "FOR" EACH OF THE
NOMINEES FOR DIRECTOR, "FOR" PROPOSAL 2 AND "AGAINST" PROPOSAL 3, AS DESCRIBED
IN THE PROXY STATEMENT. ADDITIONALLY, THE VOTES ENTITLED TO BE CAST BY THE
UNDERSIGNED WILL BE CAST IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES
1. FOR each of the WITHHOLD AUTHORITY FOR all nominees except
nominees for director as to all listed as marked to the
listed below. [_] nominees. [_] contrary below. [_]
(Instructions: To withhold authority for any individual nominee,
strike a line through the nominee's name in the list below.)
John Bult
John H. Cannon
Werner Walbrol
Peter Zuhlsdorff
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 2
2. To ratify the appointment by the Audit Committee and the Board of
Directors of PricewaterhouseCoopers LLP, an independent public accounting
firm, as independent auditors for the fiscal year ending December 31,
2005.
FOR [_] AGAINST [_] ABSTAIN [_]
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" PROPOSAL 3
3. To approve a stockholder proposal to request that stockholders of the Fund
be afforded an opportunity to realize net asset value for their shares as
soon as practicable.
FOR [_] AGAINST [_] ABSTAIN [_]
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4. To vote and otherwise represent the undersigned on any other matter that
may properly come before the meeting or any adjournment or postponement
thereof in the discretion of the Proxy holder.
Please sign here exactly as name appears on the records of the Fund and
date. If the shares are held jointly, each holder should sign. When signing as
an attorney, executor, administrator, trustee, guardian, officer of a
corporation or other entity or in another representative capacity, please give
the full title under signature(s).
-------------------------------
Signature
-------------------------------
Signature, if held jointly
Dated: __________________, 2005