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.
[_] Definitive proxy statement.
[X] 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.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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The New Germany Fund, Inc. [LOGO]
Dear Stockholder:
We recently mailed to you proxy materials with a White proxy card in
connection with the upcoming Annual Meeting of Stockholders of The New Germany
Fund, Inc. to be held on June 20, 2006. Your Board of Directors strongly urges
you to vote FOR the re-election of three experienced Directors of the Fund
(Proposal 1), FOR the ratification of the appointment of PricewaterhouseCoopers
LLP as the Fund's independent auditors (Proposal 2), and AGAINST Proposals 3, 4
and 5.
We also want to alert you that you will probably soon be getting (or you
may already have received) proxy solicitation material with a green proxy card
from Phillip Goldstein and his hedge fund, Opportunity Partners L.P. Do not be
misled. Mr. Goldstein's solicitation is not endorsed by the Fund or your Board.
o Mr. Goldstein's agenda is to install a minority of directors who
will seek to have the Fund take actions that would essentially
terminate the Fund or disrupt its ability to make investments under
its current strategy, while simultaneously incurring expenses.
o Goldstein's short-term financial interests are not aligned with the
financial interests of the Fund's long-term stockholders, who have
seen their investment in the Fund appreciate remarkably in recent
years. For example, a $10,000 investment in the Fund at March 31,
2003 would have grown in market value to $40,133 by March 31, 2006,
as shown in the graph on the reverse of this letter.
o Goldstein was dismissive of the Fund's outstanding performance in
his recently distributed proxy materials, where he claimed that the
last three years aren't representative of the Fund's long-term
performance. However, the Fund also outperformed its benchmark at
the 1-, 3-, 5- and 10-year intervals, based on market price as of
March 31, 2006.
o Goldstein also has suggested in his proxy materials that the Fund
should have liquidated in 1998, which would have left stockholders
with about $16.50 per share at that time (based on the Fund's NAV
performance in 1998). But from March 31, 1998 to March 31, 2006, the
Fund returned nearly 40% more than that amount to stockholders,
through market price appreciation and substantial dividends.
We invite you to consider the information in the attached Performance Summary
and make your own decision. If you want the opportunity to continue to enjoy the
performance of the Fund, please support your Board by voting the White proxy
card.
Regardless of the number of shares you own, your vote is very important.
We urge you to vote FOR your Board's nominees and AGAINST Mr. Goldstein's
stockholder proposals. Please complete, sign and date the enclosed White Proxy
Card and return it in the enclosed postage-paid envelope. Please discard any
green proxy card you receive. Should you need another copy of our proxy
materials, or if you have any questions, please contact The Altman Group, Inc.,
the Fund's proxy solicitors, toll-free at 1-800-884-5101.
We thank you for your support.
Sincerely,
The Board of Directors of
The New Germany Fund
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Please be sure to complete, sign and date the enclosed White Proxy Card to
ensure that your vote is counted. 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 complete, sign and
return the White proxy voting form it will send you. If you have already
returned a green proxy card, you can still support your Board by returning a
White Proxy Card. Only your latest dated proxy card will count.
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The New Germany Fund, Inc. [LOGO]
Performance Summary
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Stockholders of the Fund have seen their investment in the Fund appreciate very
substantially in recent years - a total market return of over 300% from March
31, 2003 to March 31, 2006. A $10,000 investment in the Fund at March 31, 2003
would have grown in market value to $40,133 by March 31, 2006, as shown in the
graph below. The graph also shows how the Fund's performance over that period
easily beat that of its benchmark, the German Midcap Market Performance Index
(MMPI). In fact, the Fund's market return for March 31, 2003 to March 31, 2006
surpassed that of the MMPI by 80 percentage points.
[The following table was represented by a line chart in the printed material.]
Date New Germany Fund Benchmark New Germany Fund Benchmark
---- ---------------- --------- ---------------- ---------
3/31/03 $ 10,000 $ 10,000 0.00% 0.00%
4/30/03 $ 12,062 $ 11,894 20.62% 18.94%
5/30/03 $ 13,277 $ 13,245 32.77% 32.45%
6/30/03 $ 13,927 $ 13,502 39.27% 35.02%
7/31/03 $ 15,602 $ 14,338 56.02% 43.38%
8/29/03 $ 16,252 $ 15,033 62.52% 50.33%
9/30/03 $ 16,647 $ 15,336 66.47% 53.36%
10/31/03 $ 18,654 $ 17,135 86.54% 71.35%
11/28/03 $ 19,558 $ 17,563 95.58% 75.63%
12/31/03 $ 20,299 $ 18,698 102.99% 86.98%
1/30/04 $ 21,773 $ 19,670 117.73% 96.70%
2/27/04 $ 22,709 $ 20,364 127.09% 103.64%
3/31/04 $ 20,894 $ 19,381 108.94% 93.81%
4/30/04 $ 20,809 $ 19,502 108.09% 95.02%
5/28/04 $ 20,619 $ 19,425 106.19% 94.25%
6/30/04 $ 22,304 $ 20,230 123.04% 102.30%
7/31/04 $ 21,162 $ 19,323 111.62% 93.23%
8/31/04 $ 20,534 $ 18,600 105.34% 86.00%
9/30/04 $ 21,533 $ 19,703 115.33% 97.03%
10/31/04 $ 22,990 $ 20,316 129.90% 103.16%
11/30/04 $ 24,703 $ 22,134 147.03% 121.34%
12/31/04 $ 26,489 $ 23,084 164.89% 130.84%
1/31/05 $ 26,343 $ 22,959 163.43% 129.59%
2/28/05 $ 27,806 $ 23,905 178.06% 139.05%
3/31/05 $ 26,753 $ 23,017 167.53% 130.17%
4/30/05 $ 25,875 $ 22,068 158.75% 120.68%
5/31/05 $ 26,424 $ 22,837 164.24% 128.37%
6/30/05 $ 27,702 $ 23,565 177.02% 135.65%
7/31/05 $ 29,099 $ 25,208 190.99% 152.08%
8/31/05 $ 30,466 $ 25,572 204.66% 155.72%
9/30/05 $ 31,120 $ 26,361 211.20% 163.61%
10/31/05 $ 29,099 $ 24,933 190.99% 149.33%
11/30/05 $ 29,604 $ 25,584 196.04% 155.84%
12/31/05 $ 31,507 $ 26,356 215.07% 163.56%
1/31/06 $ 36,392 $ 29,789 263.92% 197.89%
2/28/06 $ 37,567 $ 30,808 275.67% 208.08%
3/31/06 $ 40,133 $ 32,189 301.33% 221.89%
The longer term value proposition of your Fund and its investment objective is
well served by the closed-end format that has been opposed by Mr. Goldstein and
his hedge fund. Country funds, like your Fund, have tended to be closed-end
because the volatility of investor demand for individual countries can cause an
open-end fund to experience wide swings in net purchases (which often adds cash
in rising markets and dilutes returns) and net redemptions (which often forces
sales in falling markets and aggravates the downside). Your Fund is generally
over 80% invested in small- and mid-cap German companies with limited liquidity.
Open-ending may force the Fund to divest, at great expense, the very same
holdings from which the Fund's stockholders have profited handsomely in recent
years. Further, not having to worry about raising cash on a moment's notice to
meet redemption requests allows your Fund's manager to keep your Fund fully
invested and to search out the medium- and smaller-sized German companies that
are the Fund's mandate.
Each of the three hedge fund-supported stockholder proposals that your Board
opposes seeks to deny other stockholders the opportunity to continue to
participate in the long-term prosperity of the Fund. One proposal seeks to
terminate the investment advisory agreement between the Fund and its investment
adviser, but its proponent freely admits that his real goal is to use this
threat to force the Fund to open-end. A second proposal would make it easier for
short-term hedge funds to override the Fund's bylaws and nominate candidates for
election as directors who have an open-ending agenda, regardless of their lack
of qualifications. A third proposal would recommend that the Fund open-end,
conduct tender offers or liquidate. All three proposals are designed to force
the Fund to abandon its closed-end structure. This would benefit the hedge funds
that have invested in the Fund for short-term gain, but would harm the Fund's
ability to continue to achieve its investment objectives, and ultimately lead to
the Fund's termination.