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:
[X] Preliminary proxy statement.
[ ] 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.
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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)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
-2-
THE NEW GERMANY FUND, INC.
345 PARK AVENUE
NEW YORK, NEW YORK 10154
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
[o], 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 [o], New York time, on [o], 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 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 [o],
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 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 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 account cannot vote your shares this
year for Proposals 1 and 3 (as it has in past routine annual meetings) unless
you sign and return the proxy voting form it will send you.
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 [o].
By Order of the Board of Directors
Bruce A. Rosenblum
Secretary
Dated: [o], 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
[o], 2005
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PROXY STATEMENT
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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 [o], New York time,
on [o], 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 (as it has in past routine annual
meetings) unless you sign, date and mail promptly the proxy voting form it will
send you.
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 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.
-2-
The close of business on [o], 2005 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Meeting. On that date, the Fund had [o] 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 [o], 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 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 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
-3-
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.
YOUR BOARD STRONGLY BELIEVES THAT ITS NOMINEES ARE BETTER QUALIFIED, MEET THE
DIRECTOR QUALIFICATION REQUIREMENTS IN THE FUND'S BY-LAWS, 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.
-4-
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.
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 2007)
--------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX [2] SHARES
OVERSEEN OF COMMON
BY STOCK
LENGTH DIRECTOR BENEFICIALLY
NAME, OF PRINCIPAL OR NOMINEE OTHER DIRECTORSHIPS HELD OWNED AT
ADDRESS[1] POSITION(S) TIME OCCUPATION(S) FOR BY DIRECTOR OR NOMINEE FOR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR 2005 [3]
------------ ----------- ------ ---------------------- ------------ --------------------------- -------------
NON-INTERESTED DIRECTORS
------------------------
John H. Director Since Consultant (since 3 Director of The Germany Fund, 3,836
Cannon, 63 1990 2002); Vice President Inc. (since 2004) and The
and Treasurer Venator Central Europe and Russia Fund,
Group/ Footlocker Inc. Inc. (since 2004).[2]
(footwear retailer)
(until 2001).
Werner Director Since President and Chief 3 Director of The Central Europe 427
Walbrol, 67 2004 Executive Officer, The and Russia Fund, Inc. (since
European American 1990) and The Germany Fund, Inc.
Chamber of Commerce, (since 1986);[2] Director, TUV
Inc. Senior Adviser, Rheinland of North America, Inc.
Coudert Brothers LLP. (independent testing and
Formerly, President and assessment services). President
Chief Executive and Director, German-American
Officer, The German Partnership Program (student
American Chamber of exchange programs). Director,
Commerce, Inc. (until AXA Art Insurance Corporation
2004). (fine art and collectible
insurer).
-5-
CLASS II DIRECTORS
(TERM WILL EXPIRE IN 2005; NOMINEES FOR TERM EXPIRING IN 2007)
--------------------------------------------------------------
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX [2] SHARES
OVERSEEN OF COMMON
BY STOCK
LENGTH DIRECTOR BENEFICIALLY
NAME, OF PRINCIPAL OR NOMINEE OTHER DIRECTORSHIPS HELD OWNED AT
ADDRESS [1] POSITION(S) TIME OCCUPATION(S) FOR BY DIRECTOR OR NOMINEE FOR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR 2005 [3]
------------ ----------- ------ ---------------------- ------------ --------------------------- -------------
NON-INTERESTED DIRECTORS
------------------------
Peter Director Since Managing Director of 1 Chairman of the Supervisory None
Zuhlsdorff, 1997 DIH Deutsche Industrie Board, Merck KGaA
64 Holding (holding (pharmaceuticals and chemicals)
company) (since 1997); and Escada AG (fashion); Member
Managing Director of of the Supervisory Board, GfK AG
DSD Duales System (market research), Deutz AG
Deutschland AG (heavy machinery and engines),
(recycling) (since Kaisers Tengelmann AG (food and
2004); Managing specialty retailing)) and TV
Director of Tengelmann Loonland AG (entertainment
Unternehmensgruppe distribution); Member of the
(food and specialty Advisory Board, Tengelmann
retailing) (1998-2003); Verwaltungs-und
Managing Director of Beteiligungsgesellschaft GmbH
Bewerbungskommitee (food and specialty retailing).
Leipzig 2012 GmbH
(olympic bid committee)
(2004), and Managing
Director of PZ
Sportpark GmbH
(1996-2003).
INTERESTED DIRECTOR [4]
--------------------
John Bult, Director Since Chairman, PaineWebber 3 Director of The Germany Fund, 2,721
69 1990 International (asset Inc. (since 1986) and The
management) (since 1985). 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
COMPLEX [2] SHARES
OVERSEEN OF COMMON
BY STOCK
LENGTH DIRECTOR BENEFICIALLY
NAME, OF PRINCIPAL OR NOMINEE OTHER DIRECTORSHIPS HELD OWNED AT
ADDRESS [1] POSITION(S) TIME OCCUPATION(S) FOR BY DIRECTOR OR NOMINEE FOR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR 2005 [3]
------------ ----------- ------ ---------------------- ------------ --------------------------- -------------
NON-INTERESTED DIRECTORS
------------------------
Dr. Franz Director Since Former Member of the 1 Chairman of the Supervisory Board None
Wilhelm 1993 Boards of Management of of Ideenkapital Media Finance
Hopp, 62 ERGO Versicherungsgruppe (investments and finance).
AG, ERGO Europa Member of the Supervisory Boards
Beteiligungsgesellschaft of Jenoptik, AG (environmental
AG, and ERGO systems and other technologies);
International AG TMW Immobilien AG (real estate);
(insurance) (over five Oesterreichische Volksbanken
years). Former Member (banking); KarstadtQuelle Bank
of the Boards of GmbH; GFKL Financial Services AG;
Management of VICTORIA MEAG Munich ERGO
Holding; VICTORIA Kapitalanlagegesellschaft mbH
Lebensversicherung AG (asset management);
(life insurance); Internationales
VICTORIA Versicherung AG Immobilieninstitut GmbH (real
(insurance); VICTORIA estate); TMW Real Estate Group
International; VICTORIA L.P., and Victoria Volksbanken,
Ruckversicherung AG Oesterreich (bank). Member of
(reinsurance) and D.A.S. the Administrative Boards of
Versicherungs-AG. Frankfurter Volksbank (bank) and
(insurance). HSBC Trinkaus & Burkhardt
(bank). Member of the Advisory
Boards of Dresdner Bank AG; EnBW
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 1 Member of the District Advisory None
Matz, 71 1995 Chairman of the Board of Gerling-Konzern (until
Supervisory Boards of 2002); Chairman of the Rumanian
Bopp & Reuther AG Group in the German East-West
(valve, control, Trade Committee (until 2002);
measurement and safety Member of Advisory Council of
technology) (until Herder GmbH & Co. KG
2001). Chief Financial (publishing); Member of
Officer and member of Supervisory Board of Photon AG
the Board of Directors (laser engineering). Member of
of IKWA the District Advisory Board of
Aktiengesellschaft Deutsche Bank AG, Mannheim (until
(production and 1999).
manufacturing
technology) (1978 until
2000). Member of the
Supervisory Boards of
Ex-Cell-O AG (machine
tool and system
manufacturer) (until
2001) and ARO SA (until
2000) (resistance
welding).
-7-
CLASS III DIRECTORS
(TERM WILL EXPIRE IN 2006)
--------------------------
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX [2] SHARES
OVERSEEN OF COMMON
BY STOCK
LENGTH DIRECTOR BENEFICIALLY
NAME, OF PRINCIPAL OR NOMINEE OTHER DIRECTORSHIPS HELD OWNED AT
ADDRESS [1] POSITION(S) TIME OCCUPATION(S) FOR BY DIRECTOR OR NOMINEE FOR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS DIRECTOR 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
COMPLEX [2] SHARES
OVERSEEN OF COMMON
BY STOCK
LENGTH DIRECTOR BENEFICIALLY
NAME, OF PRINCIPAL OR NOMINEE OTHER DIRECTORSHIPS HELD OWNED AT
ADDRESS [1] POSITION(S) TIME OCCUPATION(S) FOR BY DIRECTOR OR NOMINEE FOR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR 2005 [3]
------------ ----------- ------ ---------------------- ------------ --------------------------- -------------
NON-INTERESTED DIRECTORS
------------------------
Ambassador Director Since Chairman, Diligence Inc. 55 Director of The Central Europe 427
Richard R. 2004 (information collection, and Russia Fund, Inc. (since
Burt, 58 analysis, consulting and 2000) and The Germany Fund, Inc.
business intelligence) (since 2000), as well as other
(since 2001). Chairman, funds in the Fund Complex as
IEP Advisors LLP indicated.[6] Board Member, IGT,
(information services Inc. (gaming technology) (since
firm) (1998-2001). 1995). Board Member, Hollinger
Chairman of the Board, International (printing and
Weirton Steel Corp. publishing) (since 1995). Board
(since 1996). Partner, Member, HCL Technologies, Inc.
McKinsey & Company (information technology and
(1991-1994). U.S. product engineering) (since
Ambassador to the Federal 1999). Member, Textron
Republic of Germany Corporation International
(1985-1989). Advisory Council (aviation,
automotive, industrial operations
and finance) (since 1996).
Director, UBS family of mutual
funds.
-8-
CLASS I DIRECTORS
(TERM WILL EXPIRE IN 2007)
--------------------------
NUMBER OF
PORTFOLIOS
IN FUND
COMPLEX [2] SHARES
OVERSEEN OF COMMON
BY STOCK
LENGTH DIRECTOR BENEFICIALLY
NAME, OF PRINCIPAL OR NOMINEE OTHER DIRECTORSHIPS HELD OWNED AT
ADDRESS [1] POSITION(S) TIME OCCUPATION(S) FOR BY DIRECTOR OR NOMINEE FOR MARCH 31,
& AGE WITH FUND SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR 2005 [3]
------------ ----------- ------ ---------------------- ------------ --------------------------- -------------
NON-INTERESTED DIRECTORS
------------------------
Richard Karl Director Since Consultant. Retired Vice 1 Independent Non-Executive 9,973
Goeltz, 62 1990 Chairman and Chief Director of Aviva plc (financial
Financial Officer of services), Director of Federal
American Express Co. Home Loan Mortgage Corporation
(1996-2000). Former (Freddie Mac) and The Warnaco
Chief Financial Officer Group Inc. (apparel); Member of
of National Westminster the Court of Governors and the
Bank Plc (1992-1996). Council of the London School of
Former Executive Vice Economics and Political Science;
President-Finance Director of the Opera Orchestra
(1986-1991) and Vice of New York; Trustee of the
President-Finance London Philharmonic Orchestra
(1976-1986) of The Trust; Director of the English
Seagram Company Ltd. Chamber Orchestra Music Society.
Robert H. Director Since President, Robert H. 86 Director of The Germany Fund, 7,283
Wadsworth, 64 1992 Wadsworth Associates, Inc. (since 1986) and The Central
Inc. (consulting firm) Europe and Russia Fund, Inc.
(May 1983 to present). (since 1990), as well as other
Formerly, President and funds in the Fund Complex as
Trustee, Trust for indicated.[8]
Investment Managers
(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).
INTERESTED DIRECTOR[4]
----------------------
Christian H. Director Since Director (since 1999) 3 Director of The Germany Fund, None
Strenger, 61 and 1990 and formerly Managing Inc. (since 1986) and The Central
Chairman Director (1991-1999) of Europe and Russia Fund, Inc.
DWS Investment GmbH (since 1990).[2] Member,
(investment management), Supervisory Board, Fraport AG
a subsidiary of Deutsche (international airport
Bank AG. business). Board member, Incepta
PLC (media and advertising).
Non-executive Board Member of
Hermes Focus Asset Management
Europe Ltd.
-9-
EXECUTIVE OFFICERS [9]
----------------------
TERM OF SHARES OF
OFFICE COMMON STOCK
AND BENEFICIALLY
POSITIONS(S) LENGTH OF PRINCIPAL OWNED AT
NAME, ADDRESS [1] WITH TIME OCCUPATION(S) MARCH 31,
& AGE FUND SERVED DURING PAST FIVE YEARS 2005 [3]
----------------- ------------ --------- -------------------------------------------------------------- --------------
Julian Sluyters, 44 President Since Managing Director, Deutsche Asset Management (since May 2004); None
and Chief 2004 President and Chief Executive Officer, UBS Fund Services
Executive (2001-2003); Chief Administrative Officer (1998-2001) and
Officer Senior Vice President and Director of Mutual Fund Operations
(1991 to 1998) UBS Global Asset Management.
Paul H. Schubert, 42 Chief Since Managing Director, Deutsche Asset Management (since July 2004); None
Financial 2004 formerly, Executive Director, Head of Mutual Fund Services and
Officer Treasurer for UBS Family of Funds at UBS Global Asset
Management (1994-2004).
Sandra M. Chief Since Director, Deutsche Asset Management (2004-present); Director of None
Schaufler, 37 Investment 2004 Equity Sales, HVB Capital Markets (2001-2003); Portfolio
Office Manager, Deutsche Asset Management (1997-2001).
Vincent J. Vice Since Managing Director, Deutsche Asset Management (2003 to present). None
Esposito, 48 [10] President 2003 Formerly, Managing Director and Head of Relationship
Management, Putnam Investments (March 1999-2003).
Bruce A. Rosenblum, Secretary Since Director, Deutsche Asset Management (2002 to present). None
44 2003 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, Treasurer Since Director, Deutsche Asset Management (April 2000 to present). None
45 [10] 2003
Kathleen Sullivan Assistant Since Director, Deutsche Asset Management (2002 to present). None
D'Eramo, 47 [10] Treasurer 2003 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, 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 24,667
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 Deutsch Asset Management, Inc., Deutsche Asset Management Investment
Services Limited, or Investment Company Capital Corp, each an indirect,
wholly-owned subsidiary of Deutsche Bank AG.
(7) Inception date of the corporation which was the predecessor to the limited
liability company.
-10-
(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 Focus Value Plus Growth Fund, 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.
(10) Indicates ownership of securities of Deutsche Bank either directly or
through Deutsche Bank's deferred compensation plan.
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
DOLLAR RANGE OF EQUITY OVERSEEN BY DIRECTOR OR NOMINEE IN FAMILY OF
NAME OF DIRECTOR OR NOMINEE SECURITIES IN THE FUND [1] INVESTMENT 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 stockholder
initiatives (the "Special Stockholder 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 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.
-11-
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 Stockholder 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
Stockholder Initiatives Committee met once during the past fiscal year.
The Nominating Committee is comprised of 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.
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 Stockholder 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 the address listed in the Notice of Annual Meeting of
Stockholders accompanying this Proxy Statement, 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
-12-
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 $199,370
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 $171,500
Werner Walbrol $7,500 $37,000
Peter Zuhlsdorff $9,000 $9,000
------- --------
Total $93,250 $491,370
======= ========
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.
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has approved PricewaterhouseCoopers LLP (the "Firm"
or "PwC") 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
-13-
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 FEES(1) AUDIT RELATED TAX FEES(3) ALL OTHER FEES(4)
FEES(2)
ADVISER ADVISER ADVISER
FUND FUND ENTITIES FUND ENTITIES FUND ENTITIES
------------- ------------------- -------------------- --------------------
2004.................... $54,900 - - $6,700 - - -
2003.................... $51,164 - - $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."
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 a
Fund in the ordinary course of its operation or by an Adviser Entity in the
ordinary course of its operation 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.
-14-
AGGREGATE
FISCAL YEAR NON-AUDIT FEES
----------- --------------
2004 $266,472
2003 $1,880,929
AUDIT COMMITTEE REPORT
The purposes of the Audit Committee are to 1) 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 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
-15-
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 is 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
to 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 through
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). Divesting
quickly the holdings of your Fund would likely depress prices.
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.
-16-
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.
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 last 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.
-17-
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 [O], 2005 no person, to the knowledge of management, owned of
record or beneficially more than 5% of the outstanding Common Stock of the Fund,
other than as set forth below:
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OUTSTANDING COMMON STOCK
------------------- ----------------------- ------------------------
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.
(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.
-18-
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 [O],
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 [O], 2006 and [O], 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.
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.
-19-
Bruce A. Rosenblum
Secretary
Dated: [0], 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.
-20-
ANNEX A
THE NEW GERMANY, 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 Charter or
Bylaws, 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 Bylaws 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.
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.
A-1
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 Bylaws.
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 Bylaws, and must not have any Conflict of Interest, as
defined in the Fund's Bylaws. 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, (ii) 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.
CONSIDERATION OF CANDIDATES RECOMMENDED BY STOCKHOLDERS
The 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 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.
A-2
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 (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-1
(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.
(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.
B-2
"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,
(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-3
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 [O], New York time, on [O], 2004 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 undersigned all votes that the undersigned is entitled to cast
at such meeting and otherwise to represent the undersigned at the meeting with
all powers possessed by the undersigned if personally present at the meeting.
The undersigned hereby acknowledges receipt of the Notice of the 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 nominees WITHHOLD AUTHORITY FOR all nominees except as
for director listed below. /_/ as to all listed nominees. /_/ marked to the 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 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 /_/
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).
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Signature
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Signature, if held jointly
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Dated: _______________, 2005
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