UNITED        STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

 

FORM        N-CSR

 

| Investment Company Act file number | 811-5983 |
|------------------------------------|----------|

 

The        New Germany Fund, Inc.

(Exact        Name of Registrant as Specified in Charter)

 

345 Park        Avenue

New        York, NY 10154

(Address of principal executive offices)                    (Zip code)

 

Registrant’s Telephone Number, including Area Code:(212) 454-7190

 

Paul        Schubert

345 Park        Avenue

New        York, NY 10154

(Name and        Address of Agent for Service)

 

| Date of fiscal year end: | 12/31 |
|--------------------------|-------|

 

| Date of reporting period: | 12/31/07 |
|---------------------------|----------|

 

 

**ITEM        1.**           **REPORT TO STOCKHOLDERS**

 

 

**SUMMARY OF GENERAL        INFORMATION**

**THE FUND**

The New Germany Fund, Inc. (the "Fund") is a        diversified, actively-managed closed-end fund listed on the New York Stock Exchange with        the symbol "GF." The Fund seeks long-term capital appreciation primarily through investment        in middle-market German equities. It is managed and advised by wholly-owned subsidiaries of        the Deutsche Bank Group.

**SHAREHOLDER        INFORMATION**

Prices for the Fund's shares are published daily        in the New York Stock Exchange Composite Transactions section of newspapers. Net asset        value and market price information are published each Monday in*The Wall Street Journal*and each Saturday in*Barron's*and other newspapers in a table called "Closed End        Funds". Daily information on the Fund's net asset value is available from NASDAQ (symbol        XGFNX). It is also available by calling: 1-800-437-6269 (in the U.S.) or 212-454-6266        (outside of the U.S.). In addition, a schedule of the Fund's largest holdings, dividend        data and general shareholder information may be obtained by calling these        numbers.

The foregoing information is also available on our        Website: www.newgermanyfund.com.

**There are three closed-end funds        investing in European equities managed by wholly-owned subsidiaries of the Deutsche Bank        Group:**

•  The European Equity Fund,        Inc.—investing primarily in equity or equity-linked securities of companies domiciled        in European countries that utilize the Euro currency.

•  The New Germany Fund,        Inc.—investing primarily in the middle market German companies and up to 20%        elsewhere in Western Europe (with no more than 10% in any single country).

•  The Central Europe and Russia        Fund, Inc.—investing primarily in Central European and Russian companies.

Please consult your broker for advice on any of        the above or call 1-800-437-6269(in the U.S.) or 212-454-6266 (outside of the U.S.)        for shareholder reports.

These funds focus their investments in certain        geographical regions, thereby increasing their vulnerability to developments in that        region. Investing in foreign securities presents certain unique risks not associated with        domestic investments, such as currency fluctuation, political and economic changes, and        market risks. This may result in greater share price volatility.

**The New Germany Fund,        Inc.**

**Annual Report**

**December 31, 2007**

20958

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**The New Germany        Fund, Inc.**

**LETTER TO THE        SHAREHOLDERS**

Dear Shareholder,

During the final quarter of the year, global        equity markets continued to suffer from the negative effects of the subprime crisis in the        United States (US). As the markets started to recover from their midsummer corrections,        they were once again hit by a significant sell-off in November 2007. Multi-billion dollar        write-downs in the banking sector triggered significant losses in the financial sector, and        the deepening US housing crisis increased recession fears for the US economy. Important        leading indicators such as the purchasing manager indices, continued to deteriorate        further, both in Europe and the US. In Germany, the IFO Business Climate Index also        continued to weaken, signaling slowing economic growth and the ZEW index, which measures        German investors' economic expectations, fell to a 15-year low.1 Rising        inflation and another jump in commodity prices triggered inflation fears. The oil price        continued to rise, closing in on the key psychological level of $100 (USD), which burdened        cyclical stocks, such as auto suppliers. Furthermore, the appreciation of the Euro to $1.49        (USD) at its peak, was an additional burden for German exporters, especially industrials.        Small- and mid-cap stocks were hit particularly hard and, in contrast to many large cap        stocks, were not able to recover until year end: the large-cap German DAX Index gained 2.6%        over the last quarter of 2007, while the mid-cap MDAX Index fell by        4.6%.2

For the fiscal year ended December 31, 2007, the        New Germany Fund's total return was 25.17% based on net asset value and 25.14% based on        share price. During the same period, the total return of the fund's benchmark, the Midcap        Market Performance Index, was 22.10%.3

During the fourth quarter, the fund established an        overweight position in the industrial sector by increasing existing positions, despite        trimming holdings in Heidelberger Druckmaschinen and Klöckner & Co.4 In        particular, management increased the fund's position in Q-Cells, the world's second largest        producer of solar cells. Starting from scratch in 2001, the company has been among the        fastest-growing players within the solar industry, and the stock posted strong performance        during the fourth quarter. While we increased the fund's weight in Q-Cells, they remained        skeptical about Conergy, Europe's biggest integrator of photovoltaic systems. During the        fourth quarter, Conergy issued two profit warnings, the CEO and the CFO left the company,        and an emergency capital injection signaled a severe liquidity crunch. Conergy was the        poorest performer in the Midcap Market Index universe in the fourth quarter. As a result,        the fund' s underweight position in the stock helped performance, though overall the fund's        overweight position in the industrial sector burdened performance. The fund's overweight        position in Sartorius, a leading international laboratory and process technology provider        covering the segments of biotechnology and mechatronics, detracted from performance for the        quarter. The stock declined after management reduced its targets for 2007, resulting in        analysts' downgrades, but we believe that the fundamentals of the business model remain        solid.

At the end of the fourth quarter, the New Germany        Fund had an overweight position in the financial sector. Overall, the fund's positions in        the financial sector had a neutral impact on performance. Having no position in IKB, a        German bank that was impacted by the US subprime crisis, helped the fund's performance,        while an overweight in IVG Immobilien, a German real estate manager and owner, burdened the        quarterly performance. IVG Immobilien's stock suffered from investors' fears about a global        economic downturn with negative consequences for office space demand and, hence, for rent        levels. Over the course of the

**For additional information about        the Fund including performance, dividends, presentations, press releases, daily NAV and        shareholder reports, please visit www.newgermanyfund.com**

        1

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**LETTER TO THE SHAREHOLDERS        (****continued****)**

third quarter, the fund had built up a position in        AWD, a financial advisory company, based on its attractive valuation and interesting        investment case. In December, the Swiss insurance company Swiss Life offered an all cash        tender, which valued AWD at a 36% premium to the weighted average share price of the last        three months, and the fund sold its position in AWD.

Over the last quarter, the fund kept its        overweight in the consumer discretionary sector; underweight positions in Arcandor and        Praktiker helped the fund's performance. Both stocks suffered from a weak Christmas        shopping quarter and tough fourth quarter comparisons as sales rose strongly in the fourth        quarter of 2006 ahead of the VAT increase in 2007. Over the course of the fourth quarter,        the fund maintained an overweight in the information technology sector, but stock selection        in the sector detracted from the fund's performance. During the fourth quarter, shares of        Versatel, an alternative provider of broadband and other telecommunications services to        residential and business customers, rose by almost 140%, mainly triggered by takeover        speculation. The fund's underweight position in the stock had a negative effect on        performance. During the fourth quarter of 2007, the fund increased its underweight in the        materials sector despite increasi ng its position in K+S, the manufacturer and marketer of        commercial salt products and fertilizers. K+S contributed positively to fund performance as        soaring global potash prices led to massive upgrades in analysts' earnings estimates for        2008. Over the course of 2007, K+S released two profit warnings as its hedging strategy was        very costly and burdened profitability, but the underlying trends were so strong that        market participants ignored 2007 results and started to take strong price increases and        rising earnings for financial year 2008 into consideration. The reasons for the        considerable price increases include strong demand for potash products amidst limited        supply; the rising importance of renewable raw materials for energy generation, which need        potash as a natural fertilizer; and rising crop prices, which enable farmers to pay higher        potash prices.

Also noteworthy, the Fund settled the long        outstanding litigation as discussed in Note 7 on page 23. The New Germany Fund's discount        to net asset value averaged 9.53% for the year ending December 31, 2007, compared with        9.31% for the prior year.

The sources, opinions and forecasts expressed are        as of the date of this report. There is no guarantee that the views, opinions and forecasts        expressed herein will come to pass. This information is subject to change at any time based        on market and other conditions and should not be construed as a recommendation for any        specific security. Past performance does not guarantee future results.

1  The IFO Business Climate        Index is a closely watched indicator of German business conditions, based on a monthly        survey of about 7,000 companies. It is widely seen as a barometer for economic conditions        in the whole of the Eurozone, which is a term used to describe the countries that joined        the third stage of EMU and adopted the euro.

2  DAX is a total rate of        return index of 30 selected German blue chips stocks traded on the Frankfurt stock        exchange. MDAX is a total rate of return index of 50 mid-cap issues that rank below the        DAX.

3  Midcap Market Performance        Index is a total return index that is composed of various MDAX and TecDAX issues,        reflecting the performance of the mid-caps across all sectors of the Prime Segment. TecDAX        is a total return index that tracks the 30 largest and most liquid issues from the various        technology sectors of the Prime Segment beneath the DAX.

Index returns assume reinvested dividends and,        unlike fund returns, do not reflect any fees or expenses. It is not possible to invest        directly into an index.

4  "Overweight" means the        fund holds a higher weighting in a given sector or security than the benchmark.        "Underweight" means the fund holds a lower weighting.

Sincerely,

|                                            |   |                                                            |   |                                                                                      |   |
|--------------------------------------------|--------|------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|
|                                            |
| Christian Strenger                Chairman |   | Ralf Oberbannscheidt                Lead Portfolio Manager |   | Michael G. Clark                President and Chief                Executive Officer |   |
|                                            |

 

**For additional information about        the Fund including performance, dividends, presentations, press releases, daily NAV and        shareholder reports, please visit www.newgermanyfund.com**

        2

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**ECONOMIC OUTLOOK**

The outlook for the world economy and equity        markets in 2008 has become more clouded as repercussions from the US subprime crisis spread        into wider areas of the financial sector, posing the risk of a sharp economic growth        deceleration, triggered by credit tightening and deteriorating consumer confidence.        Economists and equity strategists have taken a more cautious view and lowered their        forecasts, as troubles in the financial sector deepened with the announcement of write-offs        and softened the macro-economic indicators. The accelerating trend of wide-spread earnings        downgrades by equity analysts and the continued weakness of the US dollar are key risk        factors. At the same time, market participants are worried about inflation creeping up, not        least on the back of rising food and energy prices, and also raising concerns of        stagflation. We believe, however, these negatives will likely be balanced by continued        strength in the ever more important emerging-market economies, strong financial health of        the industrial sector and equities valuations, which are already pricing in a bearish        earnings scenario. Given the increased uncertainty, volatility is likely to remain high and        may offer tactical opportunities. Despite the VAT hike in 2007 and the falloff of consumer        sentiment, German GDP grew at about a 2.5% pace in 2007, and the labor market continued to        strengthen. The European Central Bank (ECB) raised interest rates twice during the course        of 2007, ending December at 4.0%. Inflation rose to 2.8%, which is in line with the ECB's        definition of price stability.

        3

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**FUND HISTORY AS OF DECEMBER 31,        2007**

**All performance shown is historical, assumes        reinvestment of all dividend and capital gain distributions, and does not guarantee future        results. Investment returns and principal value fluctuate with changing market conditions        so that, when sold, shares may be worth more or less than their original cost. Current        performance may be lower or higher than the performance data quoted. Please visit        www.newgermanyfund.com for the Fund's most recent performance.**

**TOTAL RETURNS:**

|                              |   | **For the years ended December                31,** |   |
|-----------------------------------|--------|-----------------------------------------------------|--------|
|                              |   | **2007**                                            |   | **2006** |   | **2005** |   | **2004** |   | **2003** |   |
| Net Asset                Value(a) |   |                                                | 25.17  | % |   |   | 43.94 | % |   |   | 13.68 | % |   |   | 24.44 | % |   |   | 93.07 | % |   |
| Market                Value(a)    |   |                                                | 25.14  | % |   |   | 44.13 | % |   |   | 18.94 | % |   |   | 30.50 | % |   |   | 102.42 | % |   |
| Benchmark                         |   |                                                | 22.10  | %                (1) |   |   | 42.51 | %                (1) |   |   | 14.17 | %                (1) |   |   | 23.46 | %                (1) |   |   | 78.56 | %                (2) |   |

 

  (a)          Total return based on net asset value reflects changes in the Fund's net asset        value during each period. Total return based on market value reflects changes in market        value. Each figure includes reinvestments of dividend and capital gain distributions, if        any, at prices received under the Fund's dividend reinvestment plan. These figures will        differ depending upon the level of any discount from or premium to net asset value at which        the Fund's shares trade during the period.

(1)  Represents the Midcap Market        Performance Index.***

(2)  Represents an arithmetic composite        consisting of 75% MDAX*/25% NEMAX 50** from 1/1/03–3/31/03 and 100% Midcap Market        Performance Index from 4/1/03–12/31/03.

    *  MDAX is a        total rate of return index of 50 mid-cap issues that rank below the DAX. DAX is the total        rate of return index of 30 selected German blue chips stocks traded on the Frankfurt stock        exchange.

 **  NEMAX 50 is comprised of the        50 largest technology issues from the Prime Segment that are ranked below the        DAX.

 ***  Midcap Market Performance        Index is a total return index that is composed of various MDAX and TecDAX**** issues,        reflecting the performance of the mid-caps across all sectors of the Prime        Segment.

****  TecDAX is a total return index        that tracks the 30 largest and most liquid issues from the various technology sectors of        the Prime Segment beneath the DAX.

Index returns assume reinvested dividends and,        unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest        directly into an index.

Investments in funds involve risk including the        loss of principal.

This Fund is diversified but primarily focuses its        investments in Germany, thereby increasing its vulnerability to developments in that        country. Investing in foreign securities presents certain unique risks not associated with        domestic investments, such as currency fluctuation and political and economic changes and        market risks. This may result in greater share price volatility.

Closed-end funds, unlike open-end funds, are not        continuously offered. Shares, once issued, are traded in the open market through a stock        exchange. Shares of closed-end funds frequently trade at a discount to net asset value. The        price of the Fund's shares is determined by a number of factors, several of which are        beyond the control of the Fund. Therefore, the Fund cannot predict whether its shares will        trade at, below or above net asset value.

The Fund has elected to not be subject to the        statutory calculation, notification and publication requirements of the German Investment        Tax Act (Investmentsteuergesetz). As a result, German investors in the Fund may be subject        to less favorable lump-sum taxation under German law.

        4

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**FUND HISTORY AS OF DECEMBER 31,        2007 (continued)**

**STATISTICS:**

| Net Assets         |   | $      | 480,723,638 |   |   |
|--------------------|--------|--------|-------------|--------|--------|
| Shares Outstanding |   |   | 24,804,698  |   |   |
| NAV Per Share      |   | $      | 19.38       |   |   |

 

**DIVIDEND AND CAPITAL GAIN        DISTRIBUTIONS:**

| **Record****Date** |   | **Payable****Date** |   | **Ordinary****Income** |   | **LT Capital****Gains** |   | **Total** |    |
|--------------------|--------|---------------------|--------|------------------------|--------|-------------------------|--------|-----------|---------|
| 12/21/07           |   | 01/10/08            |   | $                      | 0.255  |                    |   | $         | — |   |   | $ | 0.255 | ** |   |
| 05/03/07           |   | 05/15/07            |   | $                      | 0.340  |                    |   | $         | — |   |   | $ | 0.340 |   |   |
| 12/21/06           |   | 12/28/06            |   | $                      | 0.055  |                    |   | $         | — |   |   | $ | 0.055 |   |   |
| 05/05/06           |   | 05/15/06            |   | $                      | 0.150  |                    |   | $         | — |   |   | $ | 0.150 |   |   |
| 12/22/05           |   | 12/30/05            |   | $                      | 0.410  |                    |   | $         | — |   |   | $ | 0.410 |   |   |
| 05/19/05           |   | 05/27/05            |   | $                      | 0.140  |                    |   | $         | — |   |   | $ | 0.140 |   |   |
| 12/22/04           |   | 12/31/04            |   | $                      | 0.230  |                    |   | $         | — |   |   | $ | 0.230 |   |   |
| 05/06/04           |   | 05/14/04            |   | $                      | 0.050  |                    |   | $         | — |   |   | $ | 0.050 |   |   |
| 12/22/03           |   | 12/31/03            |   | $                      | 0.022  |                    |   | $         | — |   |   | $ | 0.022 |   |   |
| 07/24/03           |   | 07/30/03            |   | $                      | 0.003  |                    |   | $         | — |   |   | $ | 0.003 |   |   |
| 11/20/00           |   | 11/29/00            |   | $                      | 0.010  |                    |   | $         | 1.30    |   |   | $ | 1.310 |   |   |
| 09/01/00           |   | 09/15/00            |   | $                      | 0.070  |                    |   | $         | 0.35    |   |   | $ | 0.420 |   |   |

 

**OTHER INFORMATION:**

| NYSE Ticker Symbol               |   |   | GF    |   |   |
|----------------------------------|--------|--------|-------|--------|--------|
| NASDAQ Symbol                    |   |   | XGFNX |   |   |
| Dividend Reinvestment Plan       |   |   | Yes   |   |   |
| Voluntary Cash Purchase Program  |   |   | Yes   |   |   |
| Annual Expense Ratio (12/31/07)* |   |   | 1.00  | %      |   |

 

 *  Represents expense ratio before        custody credits. Please see "Financial Highlights" section of this report.

**  Although this distribution is        payable in 2008, it is taxable in 2007.

Fund statistics and expense ratio are subject to        change. Distributions are historical, will fluctuate and are not guaranteed.

        5

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**PORTFOLIO BY MARKET SECTOR AS OF        DECEMBER 31, 2007 (As a % of Portfolio's Assets)**

**10 LARGEST EQUITY HOLDINGS AS OF        DECEMBER 31, 2007 (As a % of Portfolio's Net Assets)**

|   | 1.  |   |   | K + S           |   |   | 6.9 | % |   |
|--------|-----|--------|--------|-----------------|--------|--------|-----|---|--------|
|   | 2.  |   |   | Fresenius       |   |   | 5.6 | % |   |
|   | 3.  |   |   | Q-Cells         |   |   | 5.3 | % |   |
|   | 4.  |   |   | EADS            |   |   | 4.7 | % |   |
|   | 5.  |   |   | SGL Carbon      |   |   | 3.8 | % |   |
|   | 6.  |   |   | GEA Group       |   |   | 3.7 | % |   |
|   | 7.  |   |   | Solarworld      |   |   | 3.3 | % |   |
|   | 8.  |   |   | IVG Immobilien  |   |   | 3.2 | % |   |
|   | 9.  |   |   | United Internet |   |   | 3.1 | % |   |
|   | 10. |   |   | Software        |   |   | 3.0 | % |   |

 

Portfolio by Market Sector and 10 Largest Equity        Holdings are subject to change and is not indicative of future portfolio        composition.

Following the Fund's fiscal first and third        quarter-ends, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The        forms are available on the SEC's Web site at www.sec.gov, and it also may be reviewed and        copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation        of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.

        6

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**INTERVIEW WITH THE LEAD PORTFOLIO        MANAGER — Ralf Oberbannscheidt**

***Question:*****One of the government's        major initiatives over the past few years has been to address German unemployment. Has any        progress been made?**

***Answer:***German unemployment fell to 8.4% in December —        its lowest level in more than a decade — helped by contributions from stable growth        in the economy and positive developments in the business cycle. Despite seeming high by        United States (US) standards, the German unemployment rate is calculated differently and        also represents a significant improvement over past years, when the rate had stubbornly        lingered above 10%. The strong labor market performance should continue to support private        consumption, as disposable income should benefit from the favorable trend in employment and        wage growth. The recent rise in inflation to more than 3% year-over-year in Germany and        still high capacity utilization should lead to an increase in negotiated wages, which we        expect to increase in line with inflation in 2008. Despite the trend toward higher wages,        we be lieve Germany continues to defend its market share in the face of fierce global        competition. However, with one in five jobs in Germany linked to the export market, a        potential slowdown in global demand could hinder the German employment picture.

***Question:*****Concerns of a potential        recession in the US are increasingly troubling investors. Is Germany also facing a possible        recession and what is the impact on German small- and mid-cap companies?**

***Answer:***The European Central Bank has maintained a bias        toward containing inflation, indicating that it is not overly concerned about an economic        slowdown. However, sentiment and other indicators have deteriorated, and while Germany and        the rest of Euroland may not be facing a recession, we believe a slowdown is ahead and the        risks are to the downside. In recent meetings, company managements have told us that they        do not see any indications of a slowdown in their business, but we believe their vision may        be limited at this point. Particularly with small- and mid-cap companies, uncertain        economic times are when it is most important to keep in close contact with company        managements. We will be talking regularly with the companies in which the fund invests and        watching for any sign of a slowdown (such as an increase in order cancellations), as we        continue to i nvestigate not only which sectors are being impacted but also which companies        appear best positioned to weather the storm.

***Question:*****In light of market        movements over the past six months, how do small- and mid-cap stocks look from a valuation        perspective?**

***Answer:***Over the last few months, 2008 earnings expectations        for German MDAX companies were unchanged while EPS estimates for TecDAX companies were        reduced by 5%. Consequently, the valuation premium of small- and mid-cap stocks compared to        large caps almost disappeared. German MDAX companies trade at around 12.8x 2008 estimated        earnings while German blue chips are trading at about 12.5x 2008 estimated earnings.        However, in light of elevated macro-economic risks, we remain cautious as 2008 estimated        earnings may see stronger downgrades for German small- and mid-cap stocks, though there are        a number of German small- and mid-cap companies that are global leaders in their sector and        thus well-positioned to pass on prices and maintain margins.

        7

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**DIRECTORS OF THE        FUND**

| **Name, Address and Age***                               |   | **Principal Occupation(s)****During Past Five Years**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | **Other Directorships Held by                Director**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
|----------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| John Bult, 71(1)(2)                Class II              |   | Chairman, PaineWebber International (since                1985)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Director, The European Equity Fund, Inc.                (since 1986) and The Central Europe and Russia Fund, Inc. (since 1990). Director,                The Greater China Fund, Inc. (closed end fund).                                                                                                                                                                                                                                                                                                                                     |   |
|                                                          |
| Ambassador                Richard R. Burt, 60(1) Class I |   | Senior Advisor, Kissinger McLarty Associates                (international strategic advisory) (since 2007). Chairman, Diligence, LLC                (international information and risk management firm) (2002-2007). Chairman, IEP                Advisors, Inc. (information services firm) (1998-2001). Chairman of the Board,                Weirton Steel Corp. (1996-2004). Formerly, Partner, McKinsey & Company                (consulting firm) (1991-1994). U.S. Ambassador to the Federal Republic of Germany                (1985-1989). |   | Director, The European Equity Fund, Inc. and                The Central Europe and Russia Fund, Inc. (since 2000). Board Member, IGT, Inc.                (gaming technology) (since 1995). Director, UBS family of Mutual Funds (since                1995). Board Member, IICL Technologies, Inc. (information technology and product                engineering) (since 1999). Member, Textron Inc. International Advisory Council                (aviation, automotive, industrial operations, and finance) (since                1996). |   |
|                                                          |
| John H. Cannon, 65(1) Class                II            |   | Consultant (since 2002); Vice President and                Treasurer, Venator Group/Footlocker Inc. (footwear retailer) (until                2002).                                                                                                                                                                                                                                                                                                                                                                                                      |   | Director of The Central Europe and Russia                Fund, Inc. and The European Equity Fund, Inc. (since 2004).                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                                          |
| Richard Karl Goeltz, 65                Class I           |   | Consultant. Vice Chairman and Chief Financial                Officer of American Express Co. (1996-2000); Former Chief Financial Officer and                Member of the Board of Directors of National Westminster Bank Plc. (1992-1996).                Former Executive Vice President-Finance (1986-1991) and Vice President-Finance                (1976-1986) of The Seagram Company Ltd.                                                                                                                                                          |   | Independent Non-Executive Director of Aviva                plc (financial services), Director of Delta Air Lines Inc., Federal Home Loan                Mortgage Corp. ("Freddie Mac") and The Warnaco Group Inc.; Member of the Court of                Governors and the Council of the London School of Economics and Political                Science.                                                                                                                                                                                   |   |
|                                                          |

 

        8

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**DIRECTORS OF THE FUND        (continued)**

| **Name, Address and Age***                          |   | **Principal Occupation(s)****During Past Five Years**                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **Other Directorships Held by                Director**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |
|-----------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Dr. Friedbert Malt, 66(1)Class III                  |   | Vice Chairman and Member of the Executive                Committee of NOL Neptune Orient Lines Ltd., Singapore ("NOL") (since 2002). Advisor                to the Board of Managing Directors of DZ Bank, Frankfurt (2002).                                                                                                                                                                                                                                                                                             |   | Member of the Board of NOL (since 2000).                Director, The European Equity Fund, Inc. (since 2007) and The New Germany Fund,                Inc. (since 2007). Director, TÜV Rheinland of North America, Inc. (independent                testing and assessment services).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|                                                     |
| Dr. Franz Wilhelm Hopp, 65                Class III |   | Former Member of the Boards of Management of                ERGO Versicherungsgruppe AG, ERGO Europa Beteiligungsgesellschaft AG, and ERGO                International AG (insurance) (over five years); Member of the Boards of Management                of VICTORIA Holding, VICTORIA Lebensversicherung AG, VICTORIA Versicherung AG,                VICTORIA International, VICTORIA Rückversicherung AG and D.A.S.                Versicherungs-AG. (insurance)                                              |   | Chairman of the Supervisory Board of                Ideenkapital Media Finance. Member of the Supervisory Boards of Jenoptik, AG; TMW                Immobilien AG; Oesterreichische Volksbanken; KarastadtQuelle Bank GmbH; GFKL                Financial Services AG; MEAG Munich ERGO Kapitalanlagegesellschaft mbH;                Internationales Immobilieninstitut GmbH; TMW Real Estate Group L.P., and Victoria                Volksbanken, Oesterreich. Member of the Administrative Boards of Frankfurter                Volksbank and HSBC Trinkaus & Burkhardt. Member of the Advisory Boards of                Dresdner Bank AG; EnBW Energie Baden-Wuerttemberg AG; Falke Bank AG;                Landeskreditbank Baden-Wuerttemberg; Millenium Entertainment Partners L.P. and MPE                Hotel, LLC. |   |
|                                                     |
| Ernst-Ulrich Matz, 73                Class III      |   | Consultant. Vice Chairman of the Supervisory                Boards of Bopp & Reuther AG (valve, control, measurement and safety technology)                (1990-2001). Chief Financial Officer and member of the Board of Directors of IWKA                Aktiengesellschaft (production and manufacturing technology) (1978-2000). Member of                the Supervisory Boards of Ex-Cell-O AG (machine tool and system manufacturer)                (1996-2001) and ARO SA (1978-2000) (resistance welding). |   | Member of the District Advisory Board of                Gerling- Konzern (until 2002); Chairman of the Rumanian Group in the German                East-West Trade Committee (until 2002); Member of Advisory Council of Herder GmbH                & Co. KG; Member of Supervisory Board of Photon AG. Member of the District                Advisory Board of Deutsche Bank AG, Mannheim (until 1999).                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|                                                     |

 

        9

----

**DIRECTORS OF THE FUND        (continued)**

| **Name, Address and Age***                             |   | **Principal Occupation(s)****During Past Five Years**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **Other Directorships Held by                Director**                                                                                                                                                                                                                                                                                                                                                                                           |   |
|--------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Christian H. Strenger, 64(1)(2)                Class I |   | Member of Supervisory Board (since 1999) and                formerly Managing Director (1991-1999) of DWS Investment GmbH (investment                management), a subsidiary of Deutsche Bank AG.                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Director of The European Equity Fund, Inc.                (since 1986) and The Central Europe and Russia Fund, Inc. (since 1990). Member,                Supervisory Board, Fraport AG (international airport business) and Hermes Focus                Asset Management Europe Ltd. (asset management).                                                                                                                                          |   |
|                                                        |
| Dr. Frank Trömel, 71(1) Class                III  |   | Deputy Chairman of the Supervisory Board of                DELTON AG (strategic management holding company operation in the pharmaceutical,                household products, logistics and power supply sectors) (2000-2006). Member (since                2000) and Vice-President (2002-2006) 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 (1987-1990) (management holding                company for pharmaceutical and chemical operation) and Member of the Board                (1977-1987). |   | Director, The European Equity Fund, Inc. and                The Central Europe and Russia Fund, Inc. (since 2005).                                                                                                                                                                                                                                                                                                                                |   |
|                                                        |
| Robert H. Wadsworth, 67(1)(3)                Class I   |   | President, Robert H. Wadsworth Associates,                Inc. (consulting firm) (May 1983-present).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | Director, The European Equity Fund, Inc.                (since 1986) and The Central Europe and Russia Fund, Inc. (since 1990) as well as                other funds in the Fund Complex as indicated.                                                                                                                                                                                                                                            |   |
|                                                        |
| Werner Walbröl, 70(1) Class                II     |   | President and Chief Executive Officer, The                European American Chamber of Commerce, Inc. Formerly, President and Chief Executive                Officer, The German American Chamber of Commerce, Inc. (until 2003).                                                                                                                                                                                                                                                                                                                                                                                                                               |   | Director of The European Equity Fund, Inc.                (since 1986) and The Central Europe and Russia Fund, Inc. (since 1990). Director,                TÜV Rheinland of North America, Inc. (independent testing and assessment                services). Director, The German American Chamber of Commerce, Inc. President and                Director, German-American Partnership Program (student exchange                programs). |   |
|                                                        |

 

        10

----

**DIRECTORS OF THE FUND        (continued)**

| **Name, Address and Age***                        |   | **Principal Occupation(s)****During Past Five Years**                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **Other Directorships Held by                Director**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|---------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Peter Zühlsdorff, 66                Class II |   | Managing Director of DIH Deutsche Industrie                Holding (holding company) (since 1997). Managing Director of DSD Duales System                Deutschland AG (recycling) (since 2004). Managing Director of Tengelmann                Unternehmensgruppe (food and specialty retailing) (1998-2003). Managing Director of                Bewerbungskommitee Leipzig 2012 GmbH (olympic bid committee) (2004) and Managing                Director of PZ Sportpark GmbH (1996-2003). |   | Chairman of the Supervisory Board, Sinn                Leffers AG (retail) and Escada AG (fashion). Member of the Supervisory Board, Deutz                AG (heavy machinery and engines) and Kaisers Tengelmann AG (food and specialty                retailing). Member of the Advisory Board, Tengelmann Verwaltungs-und                Beteiligungsgesellschaft GmbH (food and specialty retailing), DSD-Duales System                Deutschland GmbH, Bahlsen GmbH & Co. KG (bakery goods), Ziegler Film (TV and                film productions) and Deutsche Sporthilfe. |   |
|                                                   |

 

Each has served as a Director of the Fund since        the Fund's inception in 1990 except for Mr. Wadsworth, who was elected to the Board on June        19, 1992; Dr. Hopp, who was elected on June 18, 1993; Mr. Matz who was elected on June 29,        1995; Mr. Zühlsdorff, who was elected on June 20, 1997; Ambassador Burt, who was        elected on April 23, 2004, Mr. Walbröl, who was elected on April 23, 2004 and Dr. Malt        was elected to the Board on July 23, 2007. The term of office for Directors in Class I        expires at the 2010 Annual Meeting, Class II expires at the 2008 Annual Meeting and Class        III expires at the 2009 Annual Meeting.

(1)  Indicates that Messrs. Bult, Burt,        Cannon, Malt, Trömel, Walbröl, Wadsworth and Strenger each also serve as a        Director of The European Equity Fund, Inc. and The Central Europe and Russia Fund, Inc.,        two other closed-end registered investment companies for which Deutsche Investment        Management Americas, Inc. acts as manager.

(2)  Indicates "interested" Director, 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 Inc., a registered broker-dealer; and Mr. Strenger is an        "interested" Director because of his affiliation with DWS-Deutsche Gesellschaft für        Werpapiersparen mbH ("DWS"), a majority-owned subsidiary of Deutsche Bank AG and because of        his ownership of Deutsche Bank AG shares.

(3)  Indicates that Mr. Wadsworth also        serves as Director/Trustee of the following open-end investment companies: DWS Balanced        Fund, DWS Blue Chip Fund, DWS Equity Trust, DWS High Income Series, DWS State Tax-Free        Income Series, DWS Strategic Income Fund, DWS Target Fund, DWS Technology Fund, DWS U.S.        Government Securities Fund, DWS Value Series, Inc., DWS Variable Series II, Cash Account        Trust, Investors Cash Trust, Investors Municipal Cash Fund, Tax-Exempt California Money        Market Fund and DWS Money Funds. Mr. Wadsworth also serves as Director of Dreman Value        Income Edge Fund, Inc., DWS High Income Trust, DWS Multi-Market Income Trust, DWS Municipal        Income Trust, DWS Strategic Income Trust, and DWS Strategic Municipal Income Trust,        closed-end investment companies. These Funds are advised by Deutsche Investment Management        Americas Inc., an indirect wholly-owned subsidiary of Deutsche Bank AG.

(4)  Inception date of corporation which        was predecessor to the LLC.

*  The address of each director is 345        Park Avenue, New York, NY 10154.

        11

----

**OFFICERS OF THE        FUND***

| **Name, Age**                                                                   |   | **Principal Occupations During Past Five                Years**                                                                                                                                                                                                                                                                                                                       |   |
|---------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Michael G. Clark(2)(5), 42                President and Chief Executive Officer |   | Managing Director(4), Deutsche                Asset Management (2006-present); President of DWS family of funds; formerly,                Director of Fund Board Relations (2004-2006) and Director of Product Development                (2000-2004), Merrill Lynch Investment Managers; Senior Vice President Operations,                Merrill Lynch Asset Management (1999-2000) |   |
|                                                                                 |
| Paul Schubert(1)(5), 44                Chief Financial Officer and Treasurer    |   | Managing Director(4), Deutsche                Asset Management (since July 2004); formerly, Executive Director, Head of Mutual                Fund Services and Treasurer for UBS Family of Funds (1998-2004); Vice President and                Director of Mutual Fund Finance at UBS Global Asset Management                (1994-1998)                                            |   |
|                                                                                 |
| David Goldman(2)(5), 34                Secretary                                |   | Vice President, Deutsche Asset                Management                                                                                                                                                                                                                                                                                                                              |   |
|                                                                                 |
| John Millette(2)(6), 45                Assistant Secretary                      |   | Director(4), Deutsche Asset                Management                                                                                                                                                                                                                                                                                                                                 |   |
|                                                                                 |
| Elisa D. Metzer(2)(5), 45                Chief Legal Officer                    |   | Director(4), Deutsche Asset                Management (since September 2005); formerly, Counsel, Morrison and Foerster LLP                (1999-2005)                                                                                                                                                                                                                                 |   |
|                                                                                 |
| Brett Rogers(3)(5), 31                Chief Compliance Officer                  |   | Vice President, Deutsche Asset Management                (2005-present). Formerly, Assistant Vice President, Deutsche Asset                Management                                                                                                                                                                                                                                 |   |
|                                                                                 |

 

Each also serves as an Officer of The European        Equity Fund, Inc. and The Central Europe and Russia Fund, Inc., two other closed-end        registered investment companies for which Deutsche Investment Management Americas Inc. acts        as manager.

*  As a result of their respective        positions held with the Manager, these individuals are considered "interested persons" of        the Manager within the meaning of the 1990 Act. Interested persons receive no compensation        from the Fund.

(1)  Since 2004.

(2)  Since 2006.

(3)  Since 2007.

(4)  Executive title, not a board        directorship.

(5)  Address: 345 Park Avenue, New York,        New York 10154.

(6)  Address: Two International Place,        Boston, Massachusetts 02110.

        12

----

**SHARES REPURCHASED AND        ISSUED**

The Fund has been purchasing shares of its common        stock in the open market. Shares repurchased and shares issued for dividend reinvestment        for the past five years are as follows:

| Fiscal years ended December 31,                        |   | **2007** |    | **2006** |   | **2005** |    | **2004** |   | **2003** |    |
|--------------------------------------------------------|--------|----------|---------|----------|--------|----------|---------|----------|--------|----------|---------|
| Shares repurchased                                     |   |     | — |     |   |     | 155,500 |     |   |     | 689,500 |   |   |   | 1,245,300 |   |   |   | 1,079,300 |   |   |
| Shares issued for dividend                reinvestment |   |     | — |     |   |     | — |     |   |     | 369,273 |   |   |   | 81,662 |   |   |   | 35,920 |   |   |

 

**PRIVACY POLICY AND        PRACTICES**

We never sell customer lists or information about        individual clients (stockholders). We consider privacy fundamental to our client        relationships and adhere to the policies and practices described below to protect current        and former clients' information. Internal policies are in place to protect confidentiality,        while allowing client needs to be served. Only individuals who need to do so in carrying        out their job responsibilities may access client information. We maintain physical,        electronic and procedural safeguards that comply with federal and state standards to        protect confidentiality. These safeguards extend to all forms of interaction with us,        including the Internet.

In the normal course of business, we may obtain        information about stockholders whose shares are registered in their names. For purposes of        these policies, "clients" means stockholders of the Fund. (We generally do not have        knowledge of or collect personal information about stockholders who hold Fund shares in        "street" name," such as through brokers or banks.) Examples of the nonpublic personal        information collected are name, address, Social Security number and transaction and balance        information. To be able to serve our clients, certain of this client information may be        shared with affiliated and nonaffiliated third party service providers such as transfer        agents, custodians, and broker-dealers to assist us in processing transactions and        servicing the client's account with us. The organizations described above that receive        client information may only use it for the purpose designated by the Fund.

We may also disclose nonpublic personal        information about clients to other parties as required or permitted by law. For example, we        are required or we may provide information to government entities or regulatory bodies in        response to requests for information or subpoenas, to private litigants in certain        circumstances, to law enforcement authorities, or any time we believe it necessary to        protect the firm from such activity.

**PROXY VOTING**

A description of the Fund's policies and        procedures for voting proxies for portfolio securities and information about how the Fund        voted proxies related to its portfolio securities during the 12-month period ended June 30        is available on our Web site — www.germanyfund.com or on the SEC's Web site —        www.sec.gov. To obtain a written copy of the Fund's policies and procedures without charge,        upon request, call us toll free at (800) 437-6269.

**CERTIFICATIONS**

The Fund's chief executive officer has certified        to the New York Stock Exchange that, as of July 20, 2007, he was not aware of any violation        by the Fund of applicable NYSE corporate governance listing standards. The Fund's reports        to the Securities and Exchange Commission on Forms N-CSR, N-CSRS and N-Q contain        certifications by the Fund's chief executive officer and chief financial officer that        relate to the Fund's disclosure in such reports and that are required by rule 30a-2(a)        under the Investment Company Act of 1940.

        13

----

**THE NEW GERMANY FUND        SCHEDULE OF INVESTMENTS — DECEMBER 31, 2007**

| **Shares**                                                  |    | **Description**                                         |       | **Value****(a)**                                        |   |
|-------------------------------------------------------------|---------|---------------------------------------------------------|------------|---------------------------------------------------------|--------|
| **INVESTMENTS IN GERMAN****SECURITIES****–****92.7%** |    |                                                    |       |
|                                                        |    | **COMMON STOCKS –                84.3%**          |       |
|                                                        |    | **AEROSPACE & DEFENSE –                1.7%** |       |
|                                                        | 135,000 |                                                    |       | MTU Aero Engines Holding                                |   | $ | 7,888,320 |   |   |
|                                                        |    | **AUTO COMPONENTS –                2.2%**         |       |
|                                                        | 55,000  |                                                    |       | ElringKlinger                                           |   |   | 6,829,240 |   |   |
|                                                        | 80,000  |                                                    |       | Leoni                                                   |   |   | 3,926,630 |   |   |
|                                                        |    |                                                    | 10,755,870 |                                                    |   |
|                                                        |    | **CAPITAL MARKETS –                1.0%**         |       |
|                                                        | 55,000  |                                                    |       | MPC Muenchmeyer Petersen                Capital† |   |   | 4,913,839 |   |   |
|                                                        |    | **CHEMICALS – 11.9%**                             |       |
|                                                        | 140,200 |                                                    |       | K + S†                                           |   |   | 33,331,877 |   |   |
|                                                        | 220,000 |                                                    |       | Lanxess                                                 |   |   | 10,798,234 |   |   |
|                                                        | 45,000  |                                                    |       | Wacker Chemie†                                   |   |   | 12,996,007 |   |   |
|                                                        |    |                                                    | 57,126,118 |                                                    |   |
|                                                        |    | **COMMERCIAL BANKS –                1.1%**        |       |
|                                                        | 120,000 |                                                    |       | Aareal Bank                                             |   |   | 5,486,765 |   |   |
|                                                        |    | **COMPUTERS &****PERIPHERALS – 1.8%**         |       |
|                                                        | 90,000  |                                                    |       | Wincor Nixdorf                                          |   |   | 8,545,680 |   |   |
|                                                        |    | **CONSTRUCTION &****ENGINEERING – 6.2%**      |       |
|                                                        | 92,000  |                                                    |       | Bauer                                                   |   |   | 6,518,090 |   |   |
|                                                        | 177,200 |                                                    |       | Bilfinger Berger                                        |   |   | 13,662,301 |   |   |
|                                                        | 70,000  |                                                    |       | Hochtief                                                |   |   | 9,407,552 |   |   |
|                                                        |    |                                                    | 29,587,943 |                                                    |   |
|                                                        |    | **ELECTRICAL EQUIPMENT –                16.2%**   |       |
|                                                        | 145,000 |                                                    |       | Nordex*†                                         |   |   | 6,682,795 |   |   |
|                                                        | 180,000 |                                                    |       | Q-Cells*†                                        |   |   | 25,663,334 |   |   |
|                                                        | 335,000 |                                                    |       | SGL Carbon*                                             |   |   | 18,116,403 |   |   |
|                                                        | 264,000 |                                                    |       | Solarworld†                                      |   |   | 16,100,938 |   |   |
|                                                        | 377,220 |                                                    |       | Tognum*                                                 |   |   | 11,356,996 |   |   |
|                                                        |    |                                                    | 77,920,466 |                                                    |   |
|                                                        |    | **HEALTHCARE PROVIDERS &****SERVICES – 3.0%** |       |
|                                                        | 111,000 |                                                    |       | Celesio                                                 |   |   | 6,891,324 |   |   |
|                                                        | 232,000 |                                                    |       | Rhoen Klinikum                                          |   |   | 7,313,583 |   |   |
|                                                        |    |                                                    | 14,204,907 |                                                    |   |
|                                                        |    | **INDUSTRIAL****CONGLOMERATES – 2.5%**            |       |
|                                                        | 151,709 |                                                    |       | Rheinmetall                                             |   |   | 12,051,506 |   |   |

 

| **Shares** |    | **Description**                                                          |       | **Value****(a)**           |   |
|------------|---------|--------------------------------------------------------------------------|------------|----------------------------|--------|
|       |    | **INSURANCE – 2.3%**                                               |       |
|       | 42,000  |                                                                     |       | AMB Generali Holding       |   | $ | 6,549,497 |   |   |
|       | 100,000 |                                                                     |       | Hannover Ruckversicherungs |   |   | 4,608,824 |   |   |
|       |    |                                                                     | 11,158,321 |                       |   |
|       |    | **INTERNET SOFTWARE &****SERVICES – 3.1%**                     |       |
|       | 620,000 |                                                                     |       | United Internet            |   |   | 15,079,838 |   |   |
|       |    | **LIFE SCIENCES TOOLS &****SERVICES – 0.4%**                   |       |
|       | 35,000  |                                                                     |       | Gerresheimer*              |   |   | 1,953,090 |   |   |
|       |    | **MACHINERY – 7.3%**                                               |       |
|       | 505,000 |                                                                     |       | GEA Group*                 |   |   | 17,557,355 |   |   |
|       | 114,000 |                                                                     |       | Krones                     |   |   | 9,157,551 |   |   |
|       | 370,000 |                                                                     |       | Max Automation             |   |   | 3,210,546 |   |   |
|       | 65,234  |                                                                     |       | Pfeiffer Vacuum Technology |   |   | 5,241,161 |   |   |
|       |    |                                                                     | 35,166,613 |                       |   |
|       |    | **METALS & MINING –                2.5%**                      |       |
|       | 80,000  |                                                                     |       | Salzgitter                 |   |   | 11,925,971 |   |   |
|       |    | **PERSONAL PRODUCTS –                1.6%**                        |       |
|       | 99,483  |                                                                     |       | Beiersdorf                 |   |   | 7,702,213 |   |   |
|       |    | **PHARMACEUTICALS –                1.9%**                          |       |
|       | 145,000 |                                                                     |       | Stada Arzneimittel         |   |   | 8,906,863 |   |   |
|       |    | **REAL ESTATE MANAGEMENT & DEVELOPMENT                – 4.5%** |       |
|       | 120,000 |                                                                     |       | Deutsche Euroshop          |   |   | 4,119,456 |   |   |
|       | 450,000 |                                                                     |       | IVG Immobilien             |   |   | 15,500,549 |   |   |
|       | 400,000 |                                                                     |       | RCM Beteiligungs*          |   |   | 1,823,078 |   |   |
|       |    |                                                                     | 21,443,083 |                       |   |
|       |    | **SEMICONDUCTORS &****SEMICONDUCTOR****EQUIPMENT – 1.5%**      |       |
|       | 242,720 |                                                                     |       | Kontron                    |   |   | 4,864,637 |   |   |
|       | 371,600 |                                                                     |       | Suess MicroTec*            |   |   | 2,328,755 |   |   |
|       |    |                                                                     | 7,193,392  |                       |   |
|       |    | **SOFTWARE – 3.0%**                                                |       |
|       | 165,000 |                                                                     |       | Software AG                |   |   | 14,599,308 |   |   |
|       |    | **SPECIALITY RETAIL –                1.6%**                        |       |
|       | 134,625 |                                                                     |       | Douglas Holdings           |   |   | 7,758,245 |   |   |
|       |    | **TEXTILE, APPAREL &****LUXURY GOODS – 4.2%**                  |       |
|       | 139,000 |                                                                     |       | Hugo Boss Ag-Ord           |   |   | 8,040,828 |   |   |
|       | 30,500  |                                                                     |       | Puma†               |   |   | 12,163,351 |   |   |
|       |    |                                                                     | 20,204,179 |                       |   |

 

The accompanying notes are an        integral part of the financial statements.        14

----

**THE NEW GERMANY FUND        SCHEDULE OF INVESTMENTS — DECEMBER 31, 2007 (continued)**

| **Shares**                                             |    | **Description**                                             |       | **Value****(a)**                                                                          |   |
|--------------------------------------------------------|---------|-------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------|--------|
|                                                   |    | **THRIFTS &****MORTGAGE FINANCE – 0.6%**          |       |
|                                                   | 36,000  |                                                        |       | Interhyp†                                                                          |   | $ | 2,605,249 |   |   |
|                                                   |    | **TRADING COMPANIES &****DISTRIBUTORS – 0.3%**    |       |
|                                                   | 40,000  |                                                        |       | Kloeckner & Co.                                                                       |   |   | 1,606,880 |   |   |
|                                                   |    | **TRANSPORTATION****INFRASTRUCTURE – 0.9%**           |       |
|                                                   | 50,610  |                                                        |       | Hamburger Hafen und Logistik*                                                             |   |   | 4,509,796 |   |   |
|                                                   |    | **WIRELESS****TELECOMMUNICATIONS****SERVICES – 1.0%** |       |
|                                                   | 205,000 |                                                        |       | Freenet                                                                                   |   |   | 4,788,429 |   |   |
|                                                   |    |                                                        |       | Total Common Stocks                (cost $236,494,742)                                    |   |   | 405,082,884 |   |   |
|                                                   |    | **PREFERRED STOCKS –                8.4%**            |       |
|                                                   |    | **HEALTHCARE EQUIPMENT &****SUPPLIES – 6.7%**     |       |
|                                                   | 326,062 |                                                        |       | Fresenius                                                                                 |   |   | 27,102,117 |   |   |
|                                                   | 135,789 |                                                        |       | Sartorius                                                                                 |   |   | 5,355,735 |   |   |
|                                                   |    |                                                        | 32,457,852 |                                                                                      |   |
|                                                   |    | **MEDIA – 1.7%**                                      |       |
|                                                   | 333,400 |                                                        |       | Prosieben Sat. 1 Media†                                                            |   |   | 7,982,434 |   |   |
|                                                   |    |                                                        |       | Total Preferred Stock                (cost $19,150,228)                                   |   |   | 40,440,286 |   |   |
|                                                   |    |                                                        |       | Total Investments in                German Securities                (cost $255,644,970)  |   |   | 445,523,170 |   |   |
| **INVESTMENTS IN DUTCH****COMMON STOCKS – 6.3%** |    |                                                        |       |
|                                                   |    | **AEROSPACE & DEFENSE –                4.7%**     |       |
|                                                   | 705,000 |                                                        |       | EADS†                                                                              |   |   | 22,481,931 |   |   |
|                                                   |    | **LIFE SCIENCES TOOLS &****SERVICES – 1.6%**      |       |
|                                                   | 360,000 |                                                        |       | Qiagen*†                                                                           |   |   | 7,793,660 |   |   |
|                                                   |    |                                                        |       | Total Investments in                Dutch Common Stocks                (cost $19,200,186) |   |   | 30,275,591 |   |   |

 

| **Shares**                                              |       | **Description**              |   | **Value****(a)**                                                                                                                  |   |
|---------------------------------------------------------|------------|------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|
| **INVESTMENTS IN FRENCH****COMMON STOCKS – 0.3%** |       |                         |   |
|                                                    |       | **IT SERVICES – 0.3%** |   |
|                                                    | 40,000     |                         |   | Business & Decision*                (cost $1,022,425)                                                                         |   | $ | 1,364,387 |   |   |
|                                                    |       |                         |   | Total Investments in                Common & Preferred                Stocks – 99.3%                (cost $275,867,581) |   |   | 477,163,148 |   |   |
| **SECURITIES LENDING****COLLATERAL – 15.6%**      |       |                         |   |
|                                                    | 74,992,452 |                         |   | Daily Assets Institutional                Fund, 5.03%(b)(c)                (cost $74,992,452)                                     |   |   | 74,992,452 |   |   |
| **CASH EQUIVALENTS –                0.0%**        |       |                         |   |
|                                                    | 6,300      |                         |   | Cash Management QP Trust, 4.67%(c)                (cost $6,300)                                                                   |   |   | 6,300 |   |   |
|                                                    |       |                         |   | Total Investments – 114.9%                (cost $350,866,333)                                                               |   |   | 552,161,900 |   |   |
|                                                    |       |                         |   | Other Assets and Liabilities,                Net – (14.9%)                                                                  |   |   | (71,438,262 | ) |   |
|                                                    |       |                         |   | **NET ASSETS–100.0%**                                                                                                       |   | $ | 480,723,638 |   |   |

 

*  Non-income producing        securities.

†  All or a portion        of these securities were on loan. The value of all securities loaned at December 31, 2007        amounted to $70,832,173 which is 14.7% of the net assets.

(a)  Values stated in US        dollars.

(b)  Represents collateral        held in connection with securities lending. Income earned by the Fund is net of borrower        rebates.

(c)  Affiliated fund        managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized        seven-day yield at period end.

The accompanying notes are an        integral part of the financial statements.        15

----

**THE NEW GERMANY FUND        STATEMENT OF ASSETS AND LIABILITIES        DECEMBER 31, 2007**

| **ASSETS**                                                                                                                 |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|
| Investments:                                                                                                               |   |
| Investments, at value, (cost $275,867,581)                — including $70,832,173 of securities loaned               |   | $ | 477,163,148 |   |   |
| Investment in Cash Management QP Trust (cost                $6,300)                                                        |   |   | 6,300 |   |   |
| Investment in Daily Assets Fund Institutional                (cost $74,992,452)*                                           |   |   | 74,992,452 |   |   |
| Total investments, at value (cost                $350,866,333)                                                             |   |   | 552,161,900 |   |   |
| Cash                                                                                                                       |   |   | 3,502 |   |   |
| Foreign currency, at value (cost                $8,726,413)                                                                |   |   | 9,077,766 |   |   |
| Foreign withholding tax refund                receivable                                                                   |   |   | 29,145 |   |   |
| Interest receivable                                                                                                        |   |   | 28,251 |   |   |
| Due from insurance provider                                                                                                |   |   | 1,243,464 |   |   |
| Other assets                                                                                                               |   |   | 74,572 |   |   |
| Total assets                                                                                                               |   |   | 562,618,600 |   |   |
| **LIABILITIES**                                                                                                            |   |
| Payable upon return of securities                loaned                                                                    |   |   | 74,992,452 |   |   |
| Management fee payable                                                                                                     |   |   | 224,067 |   |   |
| Investment advisory fee payable                                                                                            |   |   | 105,393 |   |   |
| Payable for Directors' fees and                expenses                                                                    |   |   | 9,325 |   |   |
| Distributions payable                                                                                                      |   |   | 6,325,198 |   |   |
| Accrued expenses and accounts                payable                                                                       |   |   | 238,527 |   |   |
| Total liabilities                                                                                                          |   |   | 81,894,962 |   |   |
| **NET ASSETS**                                                                                                             |   | $ | 480,723,638 |   |   |
| Net assets consist of:                                                                                                     |   |
| Paid-in capital, $.001 par (Authorized                80,000,000 shares)                                                   |   | $ | 432,308,125 |   |   |
| Cost of 9,944,643 shares held in                Treasury                                                                   |   |   | (95,213,277 | ) |   |
| Distributions in excess of net investment                income                                                            |   |   | (1,440,194 | ) |   |
| Accumulated net realized loss on investments                and foreign currency                                           |   |   | (56,580,666 | ) |   |
| Net unrealized appreciation on investments                and foreign currency                                             |   |   | 201,649,650 |   |   |
| Net assets                                                                                                                 |   | $ | 480,723,638 |   |   |
| Net asset value per share ($480,723,638                ÷ 24,804,698) shares of common stock issued and outstanding) |   | $ | 19.38 |   |   |

 

*Represents collateral on securities        loaned.

The accompanying notes are an        integral part of the financial statements.        16

----

**THE NEW GERMANY FUND        STATEMENT OF OPERATIONS**

|                                                                                                              |   | **For the****year ended****December 31, 2007** |       |
|-------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|------------|
| **NET INVESTMENT INCOME:**                                                                                        |   |
| Investment Income                                                                                                 |   |
| Dividends (net of foreign withholding taxes                of $898,024)                                           |   | $                                              | 7,726,134  |   |   |
| Interest                                                                                                          |   |                                           | 302,473    |   |   |
| Interest - Cash Management QP                Trust                                                                |   |                                           | 1,425      |   |   |
| Securities lending, including income from                Daily Assets Fund Institutional, net of borrower rebates |   |                                           | 800,135    |   |   |
| Total investment income                                                                                           |   |                                           | 8,830,167  |   |   |
| Expenses:                                                                                                         |   |
| Management fee                                                                                                    |   |                                           | 2,641,686  |   |   |
| Investment advisory fee                                                                                           |   |                                           | 1,255,479  |   |   |
| Custodian fee                                                                                                     |   |                                           | 224,944    |   |   |
| Services to shareholders                                                                                          |   |                                           | 34,632     |   |   |
| Reports to shareholders and shareholder                meetings                                                   |   |                                           | 201,974    |   |   |
| Directors' fees and expenses                                                                                      |   |                                           | 201,170    |   |   |
| Professional fees                                                                                                 |   |                                           | 70,965     |   |   |
| NYSE Listing fee                                                                                                  |   |                                           | 12,415     |   |   |
| Total expenses before custody credits and                expense reductions                                       |   |                                           | 4,643,265  |   |   |
| Less: custody credits*                                                                                            |   |                                           | (1,685     | ) |   |
| Net expenses                                                                                                      |   |                                           | 4,641,580  |   |   |
| Net investment income                                                                                             |   |                                           | 4,188,587  |   |   |
| **REALIZED AND UNREALIZED GAIN                (LOSS)**                                                            |   |
| Net realized gain (loss) from:                                                                                    |   |
| Investments                                                                                                       |   |                                           | 64,350,706 |   |   |
| Foreign currency                                                                                                  |   |                                           | 846,566    |   |   |
| Change in net unrealized appreciation                (depreciation) during the period on:                         |   |
| Investments                                                                                                       |   |                                           | 27,839,655 |   |   |
| Foreign currency                                                                                                  |   |                                           | 324,290    |   |   |
| Net gain on investments and foreign                currency                                                       |   |                                           | 93,361,217 |   |   |
| **NET INCREASE IN NET ASSETS RESULTING FROM                OPERATIONS**                                           |   | $                                              | 97,549,804 |   |   |

 

*The custody credits are attributable        to interest earned on U.S. cash balances held on deposit at the custodian.

The accompanying notes are an        integral part of the financial statements.        17

----

**THE NEW GERMANY FUND        STATEMENTS OF CHANGES IN NET ASSETS**

|                                                                                                                                                                                                          |   | **For the****year ended****December 31, 2007** |        | **For the****year ended****December 31, 2006** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|-------------|------------------------------------------------|--------|
| **INCREASE (DECREASE) IN NET                ASSETS**                                                                                                                                                          |   |
| Operations:                                                                                                                                                                                                   |   |
| Net investment income                                                                                                                                                                                         |   | $                                              | 4,188,587   |                                           |   | $ | 1,059,769 |   |   |
| Net realized gain on:                                                                                                                                                                                         |   |
| Investments                                                                                                                                                                                                   |   |                                           | 64,350,706  |                                           |   |   | 47,015,213 |   |   |
| Foreign currency                                                                                                                                                                                              |   |                                           | 846,566     |                                           |   |   | 662,679 |   |   |
| Change in net unrealized appreciation                (depreciation) on:                                                                                                                                       |   |
| Investments                                                                                                                                                                                                   |   |                                           | 27,839,655  |                                           |   |   | 74,232,326 |   |   |
| Foreign currency                                                                                                                                                                                              |   |                                           | 324,290     |                                           |   |   | 29,997 |   |   |
| Net increase in net assets resulting from                operations                                                                                                                                           |   |                                           | 97,549,804  |                                           |   |   | 122,999,984 |   |   |
| Distributions to shareholders:                                                                                                                                                                                |   |
| Net investment income                                                                                                                                                                                         |   |                                           | (14,758,795 | )                                              |   |   | (5,084,963 | ) |   |
| Capital share transactions:                                                                                                                                                                                   |   |
| Cost of shares repurchased (0 and 155,500                shares, respectively)                                                                                                                                |   |                                           | —     |                                           |   |   | (1,807,438 | ) |   |
| Net decrease in net assets from capital share                transactions                                                                                                                                     |   |                                           | —     |                                           |   |   | (1,807,438 | ) |   |
| Total increase in net assets                                                                                                                                                                                  |   |                                           | 82,791,009  |                                           |   |   | 116,107,583 |   |   |
| **NET ASSETS**                                                                                                                                                                                                |   |
| Beginning of year                                                                                                                                                                                             |   |                                           | 397,932,629 |                                           |   |   | 281,825,046 |   |   |
| End of year (including distributions in                excess of net investment income of $1,440,194                and $836,571, as of December 31, 2007 and December 31, 2006,                respectively) |   | $                                              | 480,723,638 |                                           |   | $ | 397,932,629 |   |   |

 

The accompanying notes are an        integral part of the financial statements.        18

----

**THE NEW GERMANY FUND, INC.        FINANCIAL HIGHLIGHTS**

Selected data for a share of common stock        outstanding throughout each of the periods indicated:

|                                                                                                                   |   | **For the years ended December                31,** |    |
|------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|---------|
|                                                                                                                   |   | **2007**                                            |    | **2006** |   | **2005** |   | **2004** |   | **2003** |   |
| Per share operating performance:                                                                                       |   |
| Net asset value:                                                                                                       |   |
| Beginning of period                                                                                                    |   | $                                                   | 16.04   |   |   | $ | 11.29 |   |   | $ | 10.51 |   |   | $ | 8.72 |   |   | $ | 4.53 |   |   |
| Net investment income (loss)                                                                                           |   |                                                | .17     | (a) |   |   | .04 | (a) |   |   | (.01 | )(a) |   |   | (.01 | )(a) |   |   | — |   |   |
| Net realized and unrealized gain (loss)                on                investments and foreign currency transactions |   |                                                | 3.77    |   |   |   | 4.91 |   |   |   | 1.32 |   |   |   | 2.00 |   |   |   | 4.17 |   |   |
| Increase (decrease) from investment                operations                                                          |   |                                                | 3.94    |   |   |   | 4.95 |   |   |   | 1.31 |   |   |   | 1.99 |   |   |   | 4.17 |   |   |
| Increase resulting from share                repurchases                                                               |   |                                                | — |   |   |   | .01 |   |   |   | .04 |   |   |   | .08 |   |   |   | .05 |   |   |
| Distributions from net investment                income                                                                |   |                                                | (.60    | ) |   |   | (.21 | ) |   |   | (.55 | ) |   |   | (.28 | ) |   |   | (.03 | ) |   |
| Dilution in net asset value from dividend                reinvestment                                                  |   |                                                | — |   |   |   | — |   |   |   | (.02 | ) |   |   | .00 | (b) |   |   | .00 | (b) |   |
| Net asset value:                                                                                                       |   |
| End of period                                                                                                          |   | $                                                   | 19.38   |   |   | $ | 16.04 |   |   | $ | 11.29 |   |   | $ | 10.51 |   |   | $ | 8.72 |   |   |
| Market value:                                                                                                          |   |
| End of period                                                                                                          |   | $                                                   | 17.48   |   |   | $ | 14.47 |   |   | $ | 10.19 |   |   | $ | 9.05 |   |   | $ | 7.16 |   |   |
| Total investment return for the                period†:                                                         |   |
| Based upon market value                                                                                                |   |                                                | 25.14   | % |   |   | 44.13 | % |   |   | 18.94 | % |   |   | 30.50 | % |   |   | 102.42 | % |   |
| Based upon net asset value                                                                                             |   |                                                | 25.17   | % |   |   | 43.94 | % |   |   | 13.68 | % |   |   | 24.44 | % |   |   | 93.07 | % |   |
| Ratio to average net assets:                                                                                           |   |
| Total expenses before custody                credits*                                                                  |   |                                                | 1.00    | % |   |   | 1.30 | % |   |   | 1.64 | % |   |   | 1.24 | % |   |   | 1.40 | % |   |
| Net investment income (loss)                                                                                           |   |                                                | .90     | % |   |   | .31 | % |   |   | (.07 | )% |   |   | (.08 | )% |   |   | .05 | % |   |
| Portfolio turnover                                                                                                     |   |                                                | 47.42   | % |   |   | 45.46 | % |   |   | 51.70 | % |   |   | 58.42 | % |   |   | 86.07 | % |   |
| Net assets at end of period (000's                omitted)                                                             |   | $                                                   | 480,724 |   |   | $ | 397,933 |   |   | $ | 281,825 |   |   | $ | 265,810 |   |   | $ | 230,587 |   |   |

 

 (a) Based on average shares        outstanding during the period.

 (b) Amount is less than $.005        per share.

  †  Total        return based on net asset value reflects changes in the Fund's net asset value during each        period. Total return based on market value reflects changes in market value. Each figure        includes reinvestments of dividend and capital gain distributions, if any, at prices        received under the Fund's reinvestment plan. These figures will differ depending upon the        level of any discount from or premium to net asset value at which the Fund's shares trade        during the period.

  *  The custody        credits are attributable to interest earned on U.S. cash balances. The ratio of total        expenses after custody credits to average net assets are 1.00%, 1.30%, 1.63%, 1.24%, and        1.39% for 2007, 2006, 2005, 2004, and 2003, respectively.

        19

----

**THE NEW GERMANY FUND, INC.        NOTES TO FINANCIAL STATEMENTS — DECEMBER 31, 2007**

**NOTE 1. ACCOUNTING        POLICIES**

The New Germany Fund, Inc. (the "Fund") was        incorporated in Maryland on January 16, 1990 as a non-diversified, closed-end management        investment company. The Fund commenced investment operations on January 30, 1990. The Fund        became a diversified fund on October 26, 2007.

The following is a summary of significant        accounting policies followed by the Fund in the preparation of its financial statements.        The preparation of financial statements in accordance with accounting principles generally        accepted in the United States of America requires management to make estimates and        assumptions that affect the reported amounts and disclosures in the financial statements.        Actual results could differ from those estimates.

***Security Valuation:***Investments are stated at value. All securities for        which market quotations are readily available are valued at the last sales price on the        primary exchange on which they are traded prior to the time of valuation. If no sales price        is available at that time, and both bid and ask prices are available, the securities are        valued at the mean between the last current bid and ask prices; if no quoted asked prices        are available, they are valued at the last quoted bid price. All securities for which        market quotations are not readily available will be valued as determined in good faith by        the Board of Directors of the Fund. The Fund calculates its net asset value per share at        11:30 a.m., New York time.

In September 2006, The Financial Accounting        Standards Board (FASB) released Statement of Financial Accounting Standards No. 157, "Fair        Value Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a framework for        measuring fair value and expands disclosures about fair value measurements. FAS 157 is        effective for fiscal years beginning after November 15, 2007. As of December 31, 2007,        management does not believe the adoption of FAS 157 will impact the amounts reported in the        financial statements; however, additional disclosures will be required about the inputs        used to develop the measurements of fair value and the effect of certain of the        measurements reported in the statement of operations for a fiscal period.

***Securities Transactions and Investment        Income:***Securities transactions are        recorded on the trade date. Costof securities        sold is calculated using the identified cost method. Dividend income is recorded on the        ex-dividend date and interest income is recorded on an accrual basis. Such dividend income        is recorded net of unrecoverable foreign withholding tax.

***Securities Lending:***The Fund lends securities to financial institutions.        The Fund retains beneficial ownership of the securities it has loaned and continues to        receive interest and dividends paid by the securities and to participate in any changes in        their market value. The Fund requires the borrowers of the securities to maintain        collateral with the Fund consisting of liquid, unencumbered assets having a value at least        equal to or greater than the "Margin Percentage" of the value of the securities loaned.        "Margin Percentage" shall mean (i) for collateral which is denominated in the same currency        as the loaned securities, 102%, and (ii) for collateral which is denominated in a currency        different from that of the loaned securities, 105%. The Fund may invest the cash collateral        into a joint trading account in an affiliated money market fund pursuant to Exempt ive        Orders issued by the SEC. As of December 31, 2007, the collateral was invested in the Daily        Assets Institutional Fund, an affiliated money market fund managed by Deutsche Investment        Management. Deutsche Investment Americas Inc. receives a management fee (.06% annualized        effective rate as of December 31, 2007) on the cash collateral invested in the affiliated        money fund. The Fund receives compensation for lending its securities either in the form of        fees or by earning interest on invested cash collateral net of fees paid to a lending        agent, and a portion of the interest that is paid to the borrower of the securities. Either        the Fund or the borrower may terminate the loan. The Fund is subject to all investment        risks associated with the value of any cash collateral received, including, but not limited        to, interest rate, credit and liquidity risk associated with such investments.

***Foreign Currency Translation:***The books and records of the Fund are maintained in        United States dollars.

Assets and liabilities denominated in foreign        currency are translated into United States dollars at the 11:00 a.m. mid-point of the        buying and selling spot rates quoted by the Federal Reserve Bank of New York. Purchases and        sales of

        20

----

**THE NEW GERMANY FUND, INC.        NOTES TO FINANCIAL STATEMENTS —****DECEMBER 31,****2007        (continued)**

investment securities, income and expenses are        reported at the rate of exchange prevailing on the respective dates of such transactions.        The resultant gains and losses arising from exchange rate fluctuations are identified        separately in the Statement of Operations, except for such amounts attributable to        investments, which are included in net realized and unrealized gains and losses on        investments.

***Futures Contracts:***A futures contract is an agreement between a buyer or        seller and an established futures exchange or its clearinghouse in which the buyer or        seller agrees to take or make a delivery of a specific amount of a financial instrument at        a specified price on a specific date (settlement date). The Fund may enter into futures        contracts as a hedge against anticipated interest rate, currency or equity market changes,        and for duration management, risk management and return enhancement purposes.

Upon entering into a futures contract, the Fund is        required to deposit with a financial intermediary an amount ("initial margin") equal to a        certain percentage of the face value indicated in the futures contract. Subsequent payments        ("variation margin") are made or received by the Fund dependent upon the daily fluctuations        in the value of the underlying security and are recorded for financial reporting purposes        as unrealized gains or losses by the Fund. When entering into a closing transaction, the        Fund will realize a gain or loss equal to the difference between the value of the futures        contract to sell and the futures contract to buy. Futures contracts are valued at the most        recent settlement price.

Certain risks may arise upon entering into futures        contracts, including the risk that an illiquid secondary market will limit the Fund's        ability to close out a futures contract prior to the settlement date and that a change in        the value of a futures contract may not correlate exactly with the changes in the value of        the securities or currencies hedged. When utilizing futures contracts to hedge, the Fund        gives up the opportunity to profit from favorable price movements in the hedged positions        during the term of the contract.

***Contingencies:***In the normal course of business, the Fund may enter        into contracts with service providers that contain general indemnification clauses. The        Fund's maximum exposure under these arrangements is unknown as this would involve future        claims that may be made against theFund that        have not yet occurred. However, based on experience, the Fund expects the risk of loss to        be remote.

***Federal Income Taxes:***The Fund's policy is to comply with the requirements        of the Internal Revenue Code, as amended, which are applicable to regulated investment        companies, and to distribute all of its taxable income to its shareholders. Accordingly,        the Fund paid no federal income taxes and no federal income tax provision was        required.

The cost of investments at December 31, 2007 was        $353,399,274 for United States Federal income tax purposes. Accordingly, as of December 31,        2007, net unrealized appreciation of investments aggregated $198,762,626, of which        $202,766,038 and $4,003,412 related to gross unrealized appreciation and depreciation,        respectively.

For United States Federal income tax purposes, the        Fund had a capital loss carry forward at December 31, 2007 of approximately $56,536,000        which may be applied against any realized net taxable capital gains of each succeeding year        until fully utilized or until December 31, 2010, whichever occurs first.

During the year ended December 31, 2007, the Fund        utilized $55,053,000 of its prior year capital loss carryforward.

Additionally, based on the Fund's understanding of        the tax rules and rates related to income, gains and transactions for the foreign        jurisdictions in which it invests, the Fund will provide for foreign taxes, and where        appropriate, deferred foreign taxes.

The Fund has reviewed the tax positions for each        of the three open tax years as of December 31, 2007 and has determined that no provision        for income tax is required in the Fund's financial statements. Each of the fund's federal        tax returns for the prior three fiscal years remains subject to examination by the Internal        Revenue Service.

***Dividends and Distributions to        Shareholders:***The Fund records        dividends and distributions to its shareholders on the ex-dividend date. Income and capital        gain distributions are determined in accordance with United States Federal income tax        regulations which may differ from accounting principles generally accepted in the United        States of America. These differences, which could be temporary or permanent in nature, may        result in reclassification of

        21

----

**THE NEW GERMANY FUND, INC.        NOTES TO FINANCIAL STATEMENTS —****DECEMBER 31,****2007        (continued)**

distributions; however, net investment income, net        realized gains and net assets are not affected.

At December 31, 2007, the Fund's components of        distributable earnings (accumulated losses) on a tax-basis were as follows:

| Undistributed ordinary income* |   | $ | 1,089,919   |   |   |
|--------------------------------|--------|---|-------------|--------|--------|
| Capital loss carryforward      |   | $ | (56,536,000 | )      |   |
| Net unrealized appreciation    |   | $ | 198,762,626 |   |   |

 

*For tax purposes short-term capital        gains are considered ordinary income.

In addition, the tax character of distributions        paid to shareholders by the Fund is summarized as follows:

|                                              |   | **Year's Ended December 31** |       |
|---------------------------------------------------|--------|------------------------------|------------|
|                                              |   | **2007**                     |       | **2006** |   |
| Distributions from ordinary                income |   | $                            | 14,758,795 |   |   | $ | 5,084,963 |   |   |

 

During the year ended December 31, 2007, the Fund        reclassified permanent book and tax differences as follows:

|                                                                                                         |   | **Increase****(decrease)** |       |
|--------------------------------------------------------------------------------------------------------------|--------|----------------------------|------------|
| Distribution in excess of net investment                income                                               |   | $                          | 9,966,585  |   |   |
| Accumulated net realized loss on                investments                and foreign currency transactions |   | $                          | (9,976,902 | ) |   |
| Paid-in capital                                                                                              |   | $                          | 10,317     |   |   |

 

**NOTE 2. MANAGEMENT AND        INVESTMENT        ADVISORY AGREEMENTS**

The Fund has a Management Agreement with Deutsche        Investment Management Americas Inc. (the "Manager"). The Fund has an Investment Advisory        Agreement with Deutsche Asset Management International GmbH (the "Investment Adviser"). The        Manager and the Investment Adviser are affiliated companies.

The Management Agreement provides the Manager with        a fee, computed weekly and payable monthly, at the annual rates of .65% of the Fund's        average weekly net assets up to $100 million, .55% of such assets in excess of $100 million        and up to $500 million, and .50% of such assets in excess of $500 million. The Investment        Advisory Agreement provides the Investment Adviser with a fee, computed weekly and payable        monthly, at the annual rates of .35% of the Fund's average weekly net assets up to $100        million and .25% of such assets in excess of $100 million. Accordingly,for the year ended December 31, 2007, the combined        fee pursuant to the Management and Investment Advisory Agreements was equivalent to an        annual effective rate of .84% of the Fund's average net assets.

Pursuant to the Management Agreement, the Manager        is the corporate manager and administrator of the Fund and, subject to the supervision of        the Board of Directors and pursuant to recommendations made by the Fund's Investment        Adviser, determines suitable securities for investment by the Fund. The Manager also        provides office facilities and certain administrative, clerical and bookkeeping services        for the Fund. Pursuant to the Investment Advisory Agreement, the Investment Adviser, in        accordance with the Fund's stated investment objectives, policies and restrictions, makes        recommendations to the Manager with respect to the Fund's investments and, upon        instructions given by the Manager as to suitable securities for investment by the Fund,        transmits purchase and sale orders and selects brokers and dealers to execute portfolio        transactions on behalf of the Fund.

**NOTE 3.TRANSACTIONS WITH        AFFILIATES**

DWS Scudder Investments Service Company        ("DWS-SISC"), an affiliate of the Manager, is the transfer agent, dividend-paying agent and        shareholder service agent of the Fund. Prior to February 1, 2007, Investors Bank &        Trust Company was the transfer agent, dividend paying agent and shareholder service agent        of the Fund. Effective February 1, 2007, the Board of the Fund approved a new transfer        agency agreement between the Fund and DWS-SISC. The new transfer agency agreement is        identical in substance to the previous transfer agency agreement for the Fund, except for        the named transfer agent. Pursuant to a sub-transfer agency agreement between DWS-SISC and        DST Systems, Inc. ("DST"), DWS-SISC has delegated certain transfer agent and        dividend-paying agent function to DST. DWS-SISC compensates DST out of the shareholder        servicing fee it receives from the Fund. For the year ended December 31, 2007, the amount        charged to the Fund by DWS-SISC aggregated $34,632, of which $5,882 is unpaid.

For the year ended December 31, 2007, Deutsche        Bank AG, the German parent Manager and Investment Adviser, and its

        22

----

**THE NEW GERMANY FUND, INC.        NOTES TO FINANCIAL STATEMENTS —****DECEMBER 31,****2007        (continued)**

affiliates received $4,440 in brokerage        commissions as a result of executing agency transactions in portfolio securities on behalf        of the Fund, that the Board determined were effected in compliance with the Fund's Rule        17e-1 procedures.

Certain officers of the Fund are also officers of        either the Manager or Deutsche Bank AG.

The Fund pays each Director not affiliated with        the Manager retainer fees plus specified amounts for attended board and committee        meetings.

On July 23, 2007, the Board approved the DWS Cash        Management QP Trust (the "QP Trust") as the Fund's cash-sweep vehicle. The QP Trust is an        affiliated unregistered fund managed by the Investment Manager. The QP Trust seeks to        provide as high a level of current income as is consistent with the preservation of capital        and the maintenance of liquidity. The QP Trust does not pay the Investment Manager a        management fee for the affiliated funds' investments in the QP Trust.

**NOTE 4. PORTFOLIO        SECURITIES**

Purchases and sales of investment securities,        excluding short-term investments, for the year ended December 31, 2007, were $216,251,269,        and $222,889,779, respectively.

**NOTE 5. INVESTING IN FOREIGN        MARKETS**

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

**NOTE 6. CAPITAL**

During the years ended December 31, 2007 and        December 31, 2006, the Fund purchased 0 and 155,500 of its shares of common stock on the        open market at a total cost of $0 and $1,807,438, respectively. The weighted average        discount of these purchased shares comparing the purchased price to thenet asset value at the time of purchase was 0% and        10.1%, respectively. These shares are held in treasury.

**NOTE 7. LITIGATION**

On June 6, 2005, Robert H. Daniels, a shareholder        of the Fund, filed a putative class action complaint on behalf of all Fund shareholders        against the Fund and its Directors, in the Circuit Court for Baltimore City, Maryland. This        litigation arises out of an attempt in 2005 by a shareholder of the Fund to nominate and        elect directors who were not qualified as Directors pursuant to the Fund's director        qualification bylaw, which sets forth certain eligibility requirements for directors,        including a requirement of relevant experience and country knowledge consistent with the        Fund's strategy of investment in German companies. Mr. Daniels sought declaratory and        injunctive relief, as well as attorneys' fees, experts' fees and costs.

On July 12, 2005, the Fund and its Directors        removed the case to the United States District Court for the District of Maryland. On        August 26, 2005, the Fund and its directors filed a motion to dismiss the complaint on        various grounds. On March 29, 2006, the judge denied the motion to dismiss and litigation        proceeded. On March 21, 2007, the Fund and its directors moved for summary judgment        dismissing the action.

On July 23, 2007, the Board of Directors approved        the terms of a settlement of the action. The settlement dismissed the litigation without a        change to the bylaws. Pursuant to the settlement and an agreement with the shareholder        group that sought to nominate competing directors in 2005 and subsequent years, the Fund        would conduct an in-kind tender offer for 20% of the Fund's outstanding shares of common        stock at 96% of net asset value per share. The Fund's obligation to conduct the tender        offer, as well as the other terms of the settlement, became effective when the final        judgment and order was entered by the Court on October 15, 2007. The Fund commenced the        tender offer on December 21, 2007 (See Note 8).

**NOTE 8. TENDER        OFFER**

In connection with the previously announced        settlement of the civil class action Daniels vs. The New Germany Fund, Inc., on December        21, 2007 the Fund commenced an

        23

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**THE NEW GERMANY FUND, INC.        NOTES TO FINANCIAL STATEMENTS —****DECEMBER 31,****2007        (continued)**

in-kind tender offer for up to 4,960,940 of its        shares of common stock, representing approximately 20% of its issued and outstanding shares        at a price per share equal to 96% of the net asset value per share as of the close of        regular trading on the New York Stock Exchange on February 4, 2008.

The tender offer expired on February 1, 2008. The        Fund accepted 4,960,940 properly tendered shares at a price equal to 96% of the net asset        value on February 4, 2008. Approximately 9,708,691 shares of common stock, or approximately        39% of the Fund's common stock outstanding, were tendered through the stated expiration        date. In accordance with the terms of the tender offer, the Fund purchased shares on a pro        rata basis from all tendering shareholders. Accordingly, on a pro rata basis, 51.0979% of        shares of each shareholder who properly tendered were accepted for payment.

        24

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**REPORT OF INDEPENDENT REGISTERED        PUBLIC ACCOUNTING FIRM**

To the Board of Directors and        Shareholders of        The New Germany Fund, Inc.

In our opinion, the accompanying statement of        assets and liabilities, including the schedule of investments, and the related statements        of operations and of changes in net assets and the financial highlights present fairly, in        all material respects, the financial position of The New Germany Fund, Inc. (the "Fund") at        December 31, 2007, the results of its operations for the year then ended, the changes in        its net assets for each of the two years in the period then ended and the financial        highlights for each of the five years in the period then ended, in conformity with        accounting principles generally accepted in the United States of America. These financial        statements and financial highlights (hereafter referred to as "financial statements") are        the responsibility of the Fund's management; our responsibility is to express an opinion on        these financial statements based on our audits. We conducted our audits of these financial        statements in acc ordance with the standards of the Public Company Accounting Oversight        Board (United States). Those standards require that we plan and perform the audit to obtain        reasonable assurance about whether the financial statements are free of material        misstatement. An audit includes examining, on a test basis, evidence supporting the amounts        and disclosures in the financial statements, assessing the accounting principles used and        significant estimates made by management, and evaluating the overall financial statement        presentation. We believe that our audits, which included confirmation of securities at        December 31, 2007 by correspondence with the custodian and brokers, provide a reasonable        basis for our opinion.

PricewaterhouseCoopers LLP        New York, NY        February 22, 2008

        25

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**VOLUNTARY CASH PURCHASE PROGRAM        AND DIVIDEND REINVESTMENT PLAN        (unaudited)**

The Fund offers shareholders a Voluntary Cash        Purchase Program and Dividend Reinvestment Plan ("Plan") which provides for optional cash        purchases and for the automatic reinvestment of dividends and distributions payable by the        Fund in additional Fund shares. A more complete description of the Plan is provided in the        Plan brochure available from DWS Scudder Investments Service Company, the transfer agent        (the "Transfer Agent"), P.O. Box 219066, Kansas City, Missouri 64105 (telephone        1-800-437-6269). Computershare, Inc.* (the "Plan Agent") acts as the plan agent under the        Plan. A shareholder should read the Plan brochure carefully before enrolling in the        Plan.

Under the Plan, participating shareholders ("Plan        Participants") appoint the Transfer Agent to receive or invest Fund distributions as        described below under "Reinvestment of Fund Shares." In addition, Plan Participants may        make optional cash purchases through the Transfer Agent as often as once a month as        described below under "Voluntary Cash Purchases." There is no charge to Plan Participants        for participating in the Plan, although when shares are purchased under the Plan by the        Plan Agent on the New York Stock Exchange or otherwise on the open market, each Plan        Participant will pay a pro rata share of brokerage commissions incurred in connection with        such purchases, as described below under "Reinvestment of Fund Shares" and "Voluntary Cash        Purchases."

***Reinvestment of Fund Shares.***Whenever the Fund declares a capital gains        distribution, an income dividend or a return of capital distribution payable, at the        election of shareholders, either in cash or in Fund shares, or payable only in cash, the        Transfer Agent shall automatically elect to receive Fund shares for the account of each        Plan Participant.

Whenever the Fund declares a capital gains        distribution, an income dividend or a return of capital distribution payable only in cash        and the net asset value per share of the Fund's common stock equals or is less than the        market price per share on the valuation date (the "Market Parity or Premium"), the Transfer        Agent shall apply the amount of such dividend or distribution payable to a Plan Participant        to the purchase from the Fund of Fund Shares for a Plan Participant's account, except that        if the Fund does not offershares for such        purpose because it concludes Securities Act registration would be required and such        registration cannot be timely effected or is not otherwise a cost-effective alternative for        the Fund, then the Transfer Agent shall follow the procedure described in the next        paragraph. The number of additional shares to be credited to a Plan Participant's acc ount        shall be determined by dividing the dollar amount of the distribution payable to a Plan        Participant by the net asset value per share of the Fund's common stock on the valuation        date, or if the net asset value per share is less than 95% of the market price per share on        such date, then by 95% of the market price per share. The valuation date will be the        payable date for such dividend or distribution.

Whenever the Fund declares a capital gains        distribution, an income dividend or a return of capital distribution payable only in cash        and the net asset value per share of the Fund's common stock exceeds the market price per        share on the valuation date (the "Market Discount"), the Plan Agent shall apply the amount        of such dividend or distribution payable to a Plan Participant (less a Plan Participant's        pro rata share of brokerage commissions incurred with respect to open-market purchases in        connection with the reinvestment of such dividend or distribution) to the purchase on the        open market of Fund shares for a Plan Participant's account. The valuation date will be the        payable date for such dividend or distribution. Such purchases will be made on or shortly        after the valuation date and in no event more than 30 days after such date except where        temporary curtailment or suspension of purchase is necessary to comply with applicable        provisions of federal securities laws.

The Transfer Agent or the Plan Agent may aggregate        a Plan Participant's purchases with the purchases of other Plan Participants, and the        average price (including brokerage commissions) of all shares purchased by the Plan Agent        shall be the price per share allocable to each Plan Participant.

For all purposes of the Plan, the market price of        the Fund's common stock on a payable date shall be the last sales price on the New York        Stock Exchange on that date, or, if there is no sale on such Exchange (or, if different,        the principal exchange for Fund shares) on that date, then the

        26

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**VOLUNTARY CASH PURCHASE PROGRAM        AND DIVIDEND REINVESTMENT PLAN        (unaudited) (continued)**

mean between the closing bid and asked quotations        for such stock on such Exchange on such date. The net asset value per share of the Fund's        common stock on a valuation date shall be as determined by or on behalf of the        Fund.

The Transfer Agent may hold a Plan Participant's        shares acquired pursuant to the Plan, together with the shares of other Plan Participants        acquired pursuant to this Plan, in non-certificated form in the name of the Transfer Agent        or that of a nominee. The Transfer Agent will forward to each Plan Participant any proxy        solicitation material and will vote any shares so held for a Plan Participant only in        accordance with the proxy returned by a Plan Participant to the Fund. Upon a Plan        Participant's written request, the Transfer Agent will deliver to a Plan Participant,        without charge, a certificate or certificates for the full shares held by the Transfer        Agent.

***Voluntary Cash Purchases.***Plan Participants have the option of making        investments in Fund shares through the Transfer Agent as often as once a month. Plan        Participants may invest as little as $100 in any month and may invest up to $36,000        annually through the voluntary cash purchase feature of the Plan.

The Plan Agent shall apply such funds (less a Plan        Participant's pro rata share of brokerage commissions or other costs, if any) to the        purchase on the New York Stock Exchange (or, if different, on the principal exchange for        Fund shares) or otherwise on the open market of Fund shares for such Plan Participant's        account, regardless of whether there is a Market Parity or Premium or a Market Discount.        The Plan Agent will purchase shares for Plan Participants on or about the 15th of each        month. Cash payments received by the Transfer Agent less than five business days prior to a        cash purchase investment date will be held by the Transfer Agent until the next month's        investment date. Uninvested funds will not bear interest. Plan Participants may withdraw        any voluntary cash payment by written notice received by the Transfer Agent not less than        48 hours before such payment is to be invested.

***Enrollment and Withdrawal.***Both current shareholders and first-time investors in        the Fund are eligible to participatein the        Plan. Current shareholders my join the Plan by either enrolling their shares with the        Transfer Agent or by making an initial cash deposit of at least $250 with the Transfer        Agent. First-time investors in the Fund may join the Plan by making an initial cash deposit        of at least $250 with the Transfer Agent. In order to become a Plan Participant,        shareholders must complete and sign the enrollment form included in the Plan brochure and        return it, and, if applicable, an initial cash deposit of at least $250 directly to the        Transfer Agent if shares are registered in their name. Shareholders who hold Fund shares in        the name of a brokerage firm, bank or other nominee shou ld contact such nominee to arrange        for it to participate in the Plan on such shareholder's behalf.

If the Plan Participant elects to participate in        the Plan by enrolling current shares owned by the Plan Participant with the Transfer Agent,        participation in the dividend reinvestment feature of the Plan begins with the next        dividend or capital gains distribution payable after the Transfer Agent receives the Plan        Participant's written authorization, provided such authorization is received by the        Transfer Agent prior to the record date for such dividend or distribution. If such        authorization is received after such record date, the Plan Participant's participation in        the dividend reinvestment feature of the Plan begins with the following dividend or        distribution.

If the Plan Participant elects to participate in        the Plan by making an initial cash deposit of at least $250 with the Transfer Agent,        participation in the dividend reinvestment feature of the Plan begins with the next        dividend or capital gains distribution payable after the Transfer Agent receives the Plan        Participant's authorization and deposit, and after the Plan Agent purchases shares for the        Plan Participant on the New York Stock Exchange (or, if different, on the principal        exchange for Fund shares) or otherwise on the open market, provided that the authorization        and deposit are received, and the purchases are made by the Plan Agent prior to the record        date. If such authorization and deposit are received after the record date, or if the Plan        Agent purchases shares for the Plan Participant after the record date, the Plan

        27

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**VOLUNTARY CASH PURCHASE PROGRAM        AND DIVIDEND REINVESTMENT PLAN        (unaudited) (continued)**

Participant's participation in the dividend        reinvestment feature of the Plan begins with the following dividend or        distribution.

A shareholder's written authorization and cash        payment must be received by the Transfer Agent at least five business days in advance of        the next cash purchase investment date (normally the 15th of every month) in order for the        Plan Participant to participate in the voluntary cash purchase feature of the Plan in that        month.

Plan Participants may withdraw from the Plan        without charge by written notice to the Transfer Agent. Plan Participants who choose to        withdraw may elect to receive stock certificates representing all of the full shares held        by the Transfer Agent on their behalf, or to instruct the Transfer Agent to sell such full        shares and distribute the proceeds, net of brokerage commissions, to such withdrawing Plan        Participant. Withdrawing Plan Participants will receive a cash adjustment for the market        value of any fractional shares held on their behalf at the time of termination. Withdrawal        will be effective immediately with respect to distributions with a record date not less        than 10 days later than receipt of such written notice by the Transfer Agent.

***Amendment and Termination of        Plan.***The Plan may only be amended or        supplemented by the Fund or by the Transfer Agent by giving each Plan Participant written        notice at least 90 days prior to the effective date of such amendment or supplement, except        that such notice period may be shortened when necessary or appropriate in order to comply        with applicable law or the rules or policies of the Securities and Exchange Commission or        any other regulatory body.

The Plan may be terminated by the Fund or by the        Transfer Agent by written notice mailed to each Plan Participant. Such termination will be        effective with respect to all distributions with a record date at least 90 days after the        mailing of such written notice to the Plan Participants.

***Federal Income Tax Implications of        Reinvestment of Fund Shares.***Reinvestment of Fund shares does not relieve Plan        Participants from any income tax which may be payable on dividends or distributions. For        U.S. federal income tax purposes, when the Fund issues sharesrepresenting an income dividend or a capital gains        dividend, a Participant will include in income the fair market value of the shares received        as of the payment date, which will be ordinary dividend income or capital gains, as the        case may be. The shares will have a tax basis equal to such fair market value, and the        holding period for the shares will begin on the day after the date of distribution. If        shares are purchased on the open market by the Plan Agent, a Plan Participant will include        in income the amount of the cash pay ment made. The basis of such shares will be the        purchase price of the shares, and the holding period for the shares will begin on the day        following the date of purchase. State, local and foreign taxes may also be        applicable.

*  Effective October 15,        2007, the stock transfer business of UMB Bank, N.A. had been acquired by Computershare        Limited. Consequently, Computershare Limited's affiliate, Computershare Inc., became Plan        Agent under the Plan Agency Agreement.

        28

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**2007 U.S. TAX INFORMATION        (unaudited)**

The Fund paid foreign taxes of $898,024 and earned        $6,629,351 of foreign source income year during the year ended December 31, 2007. Pursuant        to section 853 of the Internal Revenue Code, the Fund designates $.04 per share as foreign        taxes paid and $.27 per share as income earned from foreign sources for the year ended        December 31, 2007.For Federal income tax purposes, the Fund designates approximately        $9,487,000, or the maximum amount allowable under tax law, as qualified dividend        income.

        29

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**INVESTMENT MANAGEMENT AGREEMENT        AND        INVESTMENT ADVISORY AGREEMENT APPROVAL**

The Fund's directors unanimously approved the        continuance of the management agreement between the Fund and Deutsche Investment Management        Americas Inc. ("DIMA") and the investment advisory agreement between the Fund and Deutsche        Asset Management International GmbH ("DeAMI") (together called the "agreements") at a        meeting held on July 23, 2007.

In preparation for the meeting, the directors had        requested and evaluated extensive materials from DIMA and DeAMI, including performance and        expense information for other investment companies with similar investment objectives        derived from data compiled by Lipper Inc. ("Lipper"). Prior to voting, the directors        reviewed the proposed continuance of the agreements with management and with experienced        counsel who are independent of DIMA and DeAMI and received a memorandum from such counsel        discussing the legal standards for their consideration of the proposed continuance. The        directors also discussed the proposed continuance in a private session with counsel at        which no representatives of DIMA or DeAMI were present. In reaching their determination        relating to continuance of the agreements, the directors considered all factors they        believed relevant, including the following:

1. information comparing the Fund's performance to        other investment companies with similar investment objectives and to an index;

2. the nature, extent and quality of investment        and administrative services rendered by DIMA and DeAMI;

3. payments received by DIMA and DeAMI from all        sources in respect to the Fund and all investment companies in the DWS Scudder family of        funds;

4. the costs borne by, and profitability of, DIMA        and DeAMI and their affiliates in providing services to the Fund and to all investment        companies in the DWS Scudder family of funds;

5. comparative fee and expense data for the Fund        and other investment companies with similar investment objectives;

6. the extent to which economies of scale would be        realized as the Fund grows and whether fee levels reflect these economies of scale for the        benefit of investors;

7. DIMA's and DeAMI's policies and practices        regarding allocation of the Fund's portfolio transactions, including the extent, if any, to        which DIMA and DeAMI benefit from soft dollar arrangements;

8. the Fund's portfolio turnover rates compared to        those of other investment companies with similar investment objectives;

9. fall-out benefits which DIMA, DeAMI and their        affiliates receive from their relationships with the Fund;

10. the professional experience and qualifications        of the Fund's portfolio management team and other senior personnel of DIMA and DeAMI;        and

11. the terms of the agreements.

The directors also considered their knowledge of        the nature and quality of the services provided by DIMA and DeAMI to the Fund gained from        their experience, where relevant as directors of the European Equity Fund and the Central        Europe and Russia Fund and other DWS Scudder funds, their confidence in DIMA's and DeAMI's        integrity and competence gained from that experience and DIMA's and DeAMI's responsiveness        to concerns raised by them in the past, including DIMA's and DeAMI's willingness to        consider and implement organizational and operational changes designed to improve        investment results and the services provided to the Fund.

In their deliberations, the directors did not        identify any particular information that was all-important or controlling, and each        director attributed different weights to the various factors.

The directors determined that the overall        arrangements between the Fund and DIMA, as provided in the management agreement, and        between the Fund and DeAMI, as provided in the investment advisory agreement, were fair and        reasonable in light of the services performed, expenses

        30

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**INVESTMENT MANAGEMENT AGREEMENT        AND        INVESTMENT ADVISORY AGREEMENT APPROVAL (continued)**

incurred and such other matters as the directors        considered relevant in the exercise of their reasonable judgment.

The material factors and conclusions that formed        the basis for the directors' reaching their determination to approve the continuance of the        agreements (including their determinations that DIMA and DeAMI should continue in those        roles for the Fund, and that the fees payable to DIMA and DeAMI pursuant to the agreements        are appropriate) were separately discussed by the directors.

**Nature, extent and quality of services provided        by DIMA and DeAMI**

The directors noted that, under the management        agreement, DIMA acts as the Fund's corporate manager and administrator and, subject to the        supervision of the Fund's board of directors and pursuant to recommendations made by DeAMI,        determines suitable securities for investment by the Fund. Under the investment advisory        agreement, DeAMI, in accordance with the Fund's investment objectives, policies and        limitations, makes recommendations with respect to the Fund's investments and, upon        instructions given by DIMA as to suitable securities for investment, transmits purchase and        sale orders and selects brokers and dealers to execute portfolio transactions on the Fund's        behalf. Under the management agreement, DIMA also handles the Fund's relationships with        shareholders, is responsible for compliance with regulatory and NYSE listing requirements,        negotiates arrangements with third party service providers, provides the Fund's directors        with relevant r eports, prepares the Fund's tax returns and SEC and shareholder reports,        calculates dividends and net asset value, oversees payment of the Fund's expenses and        maintains books and records. DIMA also provides the Fund with such office facilities and        executive and other personnel adequate to perform its services. DIMA pays all of the        compensation of the Fund's directors and officers who are interested persons of        DIMA.

The directors considered the scope and quality of        services provided by DIMA and DeAMI under the agreements and noted that the scope of        services provided had expanded over time as a result of regulatory and other developments.        The directors noted that, for example, DIMA is responsiblefor maintaining and monitoring its own and the Fund's        compliance programs, and these compliance programs have in recent years been refined and        enhanced in light of evolving regulatory requirements. The directors considered the quality        of the investment research capabilities of DIMA and DeAMI and the other resources they have        dedicated to performing services for the Fund. The quality of administrative and other        services, including DIMA's role in coordinating the activities of the Fund's other service        providers, also were considered. The directors concluded that, overall, they were satisfied        w ith the nature, extent and quality of services provided (and expected to be provided) to        the Fund under the agreements.

**Costs of Services Provided and Profitability to        DIMA and DeAMI**

At the request of the directors, DIMA provided        information concerning profitability of DIMA's and DeAMI's respective investment advisory        and investment company activities and their financial condition based on historical        information for 2005 and 2006. The directors reviewed with DIMA assumptions and methods of        allocation used by DIMA and DeAMI in preparing Fund specific profitability data. DIMA        stated its belief that the methods of allocation used were reasonable, but it noted that        there are limitations inherent in allocating costs to multiple individual advisory clients        served by an organization such as DIMA and DeAMI where each of the advisory clients draws        on, and benefits from, the research and other resources of the Deutsche Bank organization.        The directors recognized that it is difficult to make comparisons of profitability from        fund management contracts because comparative information is not generally publicly        available and is affecte d by numerous factors, including the structure of the particular        adviser, the types of funds it manages, its business mix, numerous assumptions regarding        allocations and the adviser's capital structure and cost of capital. In considering        profitability information, the directors considered the effect of possible fall-out        benefits, on DIMA's and DeAMI's expenses, including any affiliated brokerage        commissions.

The directors noted that during 2003 and 2004 DIMA        discontinued using soft dollars to receive third party

        31

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**INVESTMENT MANAGEMENT AGREEMENT        AND        INVESTMENT ADVISORY AGREEMENT APPROVAL (continued)**

research from brokers that execute purchases and        sales of securities for us, and revised their policies to prohibit consideration of the        sale of shares of DWS Scudder funds when selecting broker dealers to execute portfolio        transactions for the Fund or other DWS Scudder funds. DIMA and DeAMI may continue to        allocate brokerage to receive research generated by executing brokers and to receive other        information services.

The directors recognized that DIMA and DeAMI        should, in the abstract, each be entitled to earn a reasonable level of profits for the        services it provides to us and, based on their review, concluded that DIMA's and DeAMI's        levels of profitability from their relationships with us were not excessive.

**Investment Results**

In addition to the information received by the        directors for the meeting, the directors receive detailed performance information for the        Fund at each regular board meeting during the year. The directors reviewed information        showing the Fund's performance compared to that of other European Closed End Funds compiled        by Lipper (a total of 8 funds, including us). The directors also reviewed information        showing performance of the Fund's benchmark index, currently The Germany Midcap Market        Performance index of 80 stocks.

The comparative information showed that the Fund        ranked in the third quartile for the one-, three-year and five-year periods ended December        31, 2006 and in the bottom quartile for the 10-year period. Because of its mid cap focus,        the Fund's absolute performance in 2000-2002, following collapse of the mid cap market, was        negative, but in line with its benchmark. The Fund's results were significantly positive in        absolute terms in 2003-2006, and exceeded its benchmark, in 2003, 2004 and 2006. The Fund        exceeded its benchmark, often substantially, in all but three of the years in the 10 years        ended 2006. Taking into account these comparisons and the other factors considered,        including the recent excellent performance, the directors concluded that the Fund's        investment results over time were satisfactory.

**Management and Investment Advisory Fees and        Other Expenses**

The directors considered the management and        investment advisory fee rates paid by the Fund to DIMA and DeAMI. The directors recognized        that it is difficult to make comparisons of management and advisory fees because there are        variations in the services that are included in the fees paid by other funds. The Fund's        expense comparison group consisted of 33 closed end country funds. The information showed        that the Fund's current effective management fee rate of 0.806% was in the lowest third of        the comparison group and below the average and the median for the comparison group. It was        noted that the actual management fee rate for the same period was 0.850%. The directors        noted that the Fund's effective fee rate reflects the effect of breakpoints at an asset        level of $800 million for the comparison group review, while the actual management fee rate        was based on actual assets of the Fund as of December 31, 2006. The directors also        considered the Fu nd's total expense ratio in comparison to the fees and expenses of funds        within the comparison group. The directors recognized that the expense ratio information        for the Fund potentially reflected on DIMA's provision of services, as DIMA is responsible        for coordinating services provided to the Fund by others. The directors also noted that the        Fund's expense ratio was in the lowest third of the comparison group. The directors        concluded that the Fund's expense ratio was satisfactory.

**Economies of Scale**

The directors noted that the Fund's management fee        and investment advisory schedules do contain breakpoints that reduce the fee rate on assets        above specified levels. The directors recognized that breakpoints may be an appropriate way        for DIMA and DeAMI to share their economies of scale with some funds that have substantial        assets or that may grow materially over the next year. However, they also recognized that        there is no direct relationship between the economies of scale realized by funds and those        realized by DIMA and DeAMI as assets increase, largely because economies of scale are        realized (if at all) by DIMA and DeAMI across a variety of products and services, and not        only in respect of a single fund. Having taken these factors into account, the directors        concluded that the Fund's breakpoint arrangements were acceptable under the Fund's        circumstances.

        32

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**EXECUTIVE OFFICES**

*345 Park Avenue, New York, NY        10154*

**MANAGER**

*Deutsche Investment Management        Americas Inc.*

**INVESTMENT ADVISER**

*Deutsche Asset Management        International GmbH*

**CUSTODIAN**

*Brown Brothers Harriman &        Co.*

**T****RANSFER****A****GENT**

*DWS Scudder Investments Service        Company*

**LEGAL COUNSEL**

*Sullivan & Cromwell        LLP*

**INDEPENDENT REGISTERED PUBLIC ACCOUNTING        FIRM**

*PricewaterhouseCoopers        LLP*

**DIRECTORS AND OFFICERS**

CHRISTIAN H. STRENGER

*Chairman and        Director*

JOHN A. BULT

*Director*

RICHARD R. BURT

*Director*

JOHN H. CANNON

*Director*

RICHARD KARL GOELTZ

*Director*

DR. FRANZ WILHELM HOPP

*Director*

DR. FRIEDBERT MALT*

*Director*

ERNST-ULRICH MATZ

*Director*

DR. FRANK TRÖMEL

*Director*

ROBERT H. WADSWORTH

*Director*

WERNER WALBRÖL

*Director*

PETER ZÜHLSDORFF

*Director*

MICHAEL CLARK

*President and Chief Executive        Officer*

PAUL H. SCHUBERT

*Chief Financial Officer and        Treasurer*

ELISA METZGER

*Chief Legal Officer*

BRETT ROGERS

*Chief Compliance        Officer*

DAVID GOLDMAN

*Secretary*

JOHN MILLETTE

*Assistant Secretary*

*  Dr. Malt was elected to Board on July        23, 2007.

53313 (2/08)

**VOLUNTARY CASH PURCHASE        PROGRAM        AND DIVIDEND REINVESTMENT PLAN**

The Fund offers stockholders a Voluntary Cash        Purchase Program and Dividend Reinvestment Plan ("Plan") which provides for optional cash        purchases and for the automatic reinvestment of dividends and distributions payable by the        Fund in additional Fund shares. Plan participants may invest as little as $100 in any month        and may invest up to $36,000 annually. The Plan has been amended to allow current        shareholders, who are not already participants in the Plan, and first time investors to        enroll in the Plan by making an initial cash deposit of at least $250 with the plan agent.        Share purchases are combined to receive a beneficial brokerage fee. A brochure is available        by writing or telephoning the transfer agent:

DWS Scudder Investments Service        Company        210 W 10th Street 6th Floor        Attn Closed End Fund Area        Kansas City, MO 64105        Tel. 1-800-437-6269

This report, including the financial statements        herein, is transmitted to the shareholders of The New Germany Fund, Inc. for their        information. This is not a prospectus, circular or represen-tation intended for use in the        purchase of shares of the Fund or any securities mentioned in this report. The information        contained in the letter to the shareholders, the interview with the lead portfolio manager        and the report from the investment adviser and manager in this report is derived from        carefully selected sources believed reasonable. We do not guarantee its accu-racy or        completeness, and nothing in this report shall be construed to be a representation of such        guarantee. Any opinions expressed reflect the current judgment of the author, and do not        necessarily reflect the opinion of Deutsche Bank AG or any of its subsidiaries and        affiliates.

Notice is hereby given in accordance with Section        23(c) of the Investment Company Act of 1940 that the Fund may purchase at market prices        from time to time shares of its common stock in the open market.

Comparisons between changes in the Fund's net        asset value per share and changes in the MDAX, NEMAX 50 and Midcap Market Performance        indices should be considered in light of the Fund's investment policy and objectives, the        characteristics and quality of the Fund's investments, the size of the Fund and variations        in the foreign currency/dollar exchange rate.

Fund shares are not FDIC-insured and are not        deposits or other obligations of, or guaranteed by, any bank. Fund shares involve        investment risk, including possible loss of principal.

Copies of this report, monthly fact        sheets and other information are available at:        www.newgermanyfund.com

For latest net asset value, schedule        of the Fund's largest holdings, dividend data and shareholder inquiries, please call        1-800-437-6269 in the U.S. or 617-443-6918 outside of the U.S.

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|        | As of the end of the period, December 31, 2007, The New                        Germany Fund, Inc. has a code of ethics, as defined in Item 2 of Form                        N-CSR, that applies to its Principal Executive Officer and Principal                        Financial Officer.

                         

There have been no amendments to, or waivers from, a                        provision of the code of ethics during the period covered by this report                        that would require disclosure under Item 2.

                         

A copy of the code of ethics is filed as an exhibit to this                        Form N-CSR.

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| **ITEM 3.** | **AUDIT COMMITTEE FINANCIAL EXPERT**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|        | The Fund's Board of Directors                        has determined that the Fund has at least one"audit committee financial expert" serving on                        its audit committee: Mr. JohnH.                        Cannon, and Mr. Robert H. Wadsworth. Each of these audit committeemembers is "independent," meaning that he is                        not an "interestedperson" of the Fund                        (as that term is defined in Section 2(a)(19) of theInvestment Company Act of 1940) and he does                        not accept any consulting, advisory,or other compensatory fee from the Fund                        (except in the capacity as a Board orcommittee member).                                                  An "audit committee financial expert" is not an "expert" for any                        purpose,including for purposes of                        Section 11 of the Securities Act of 1933, as a resultof being designated as an "audit committee                        financial expert." Further, thedesignation of a person as an "audit                        committee financial expert" does not meanthat the person has any greater duties,                        obligations, or liability than thoseimposed on the person without the "audit                        committee financial expert"designation. Similarly, the designation of a                        person as an "audit committeefinancial expert" does not affect the duties,                        obligations, or liability of anyother                        member of the audit committee or board of directors. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **ITEM 4.** | **PRINCIPAL ACCOUNTANT FEES AND SERVICES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

**THE        NEW GERMANY FUND, INC.**

**FORM        N-CSR DISCLOSURE RE: AUDIT FEES**

The        following table shows the amount of fees that PricewaterhouseCoopers, LLP        (“PWC”), the Fund’s independent registered public accounting firm, billed        to the Fund during the Fund’s last two fiscal years. The Audit Committee approved in        advance all audit services and non-audit services that PWC provided to the Fund.

The        Audit Committee has delegated certain pre-approval responsibilities to its Chairman (or, in        his absence, any other member of the Audit Committee).

**Services that the Fund’s Independent Registered Public Accounting        Firm Billed to the Fund**

| Fiscal YearEndedDecember 31, | Audit Fees Billed to Fund | Audit-RelatedFees Billed to Fund | Tax Fees Billed to Fund | AllOther Fees Billed to Fund |
|------------------------------|---------------------------|----------------------------------|-------------------------|------------------------------|
| 2007                         | $68,500                   | $0                               | $0                      | $0                           |
| 2006                         | $63,000                   | $0                               | $0                      | $0                           |

 

The above        “Audit- Related Fees” were billed for agreed upon procedures        performed.

 

**Services that the Fund’s Independent Registered Public Accounting        Firm Billed to the Adviser and Affiliated Fund Service Providers**

The        following table shows the amount of fees billed by PWC to Deutsche Investment Management        Americas, Inc. (“DeIM” or the “Adviser”), and any entity        controlling, controlled by or under common control with DeIM (“Control        Affiliate”) that provides ongoing services to the Fund (“Affiliated Fund        Service Provider”), for engagements directly related to the Fund’s operations        and financial reporting, during the Fund’s last two fiscal years.

| Fiscal YearDecember 31, | Audit-RelatedFees Billed to Adviser and Affiliated Fund Service                        Providers | Tax Fees Billed to Adviser and Affiliated Fund Service                        Providers | AllOther Fees Billed to Adviser and Affiliated Fund Service                        Providers |
|-------------------------|--------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|
| 2007                    | $58,500                                                                                          | $25,000                                                                                 | $0                                                                                           |
| 2006                    | $155,500                                                                                         | $11,930                                                                                 | $0                                                                                           |

 

The        “Audit-Related Fees” were billed for services in connection with the        agreed-upon procedures related to fund mergers and additional costs related to annual        audits and the above “Tax Fees” were billed in connection with tax consultation        and agreed-upon procedures.

**Non-Audit Services**

The        following table shows the amount of fees that PWC billed during the Fund’s last two        fiscal years for non-audit services. The Audit Committee pre-approved all non-audit        services that PWC provided to the Adviser and any Affiliated Fund Service Provider that        related directly to the Fund’s operations and financial reporting. The Audit        Committee requested and received information from PWC about any non-audit services that PWC        rendered during the Fund’s last fiscal year to the Adviser and any Affiliated Fund        Service Provider. The Committee considered this information in evaluating PWC’s        independence.

| Fiscal YearEndedDecember 31, | TotalNon-Audit Fees Billed to Fund

(A) | Total Non-Audit Fees billed to Adviser and Affiliated                        Fund Service Providers (engagements related directly to the operations and                        financial reporting of the Fund)

(B) | Total Non-Audit Fees billed to Adviser and Affiliated                        Fund Service Providers (all other engagements)

(C) | Total of (A), (B)and (C) |
|------------------------------|-----------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|--------------------------|
| 2007                         | $0                                      | $25,000                                                                                                                                                                                                              | $600,000                                                                                                                         | $625,000                 |
| 2006                         | $0                                      | $11,930                                                                                                                                                                                                              | $0                                                                                                                               | $11,930                  |

 

All other        engagement fees were billed for services provided by PWC for services related to consulting        on an IT project.

 

|        |                                      |
|-------------|-------------------------------------------|
| **ITEM 5.** | **AUDIT COMMITTEE OF LISTED REGISTRANTS** |
|        |                                      |

 

|        | The registrant has a separately-designated                        standing audit committee established in accordance with Section 3(a)(58)(A)                        of the Securities Exchange Act of 1934, as amended. The registrant's audit                        committee consists of John H. Cannon (Chairman), Robert H. Wadsworth, Dr.                        Frank Tromel, Richard R. Burt, Dr. Friedbert Malt and Werner                        Walbrol. |
|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **ITEM 6.** | **SCHEDULE OF INVESTMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        | Not Applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **ITEM 7.** | **DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR                        CLOSED-END MANAGEMENT INVESTMENT COMPANIES**                                                                                                                                                                                                                                                                                                                                         |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

 

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

                         

**•**             Shareholder                        Rights — The advisor generally votes against proposals that restrict                        shareholder rights.

                         

**•**             Corporate                        Governance — The advisor generally votes for confidential and                        cumulative voting and against supermajority voting requirements for charter                        and bylaw amendments. The advisor generally votes for proposals to restrict                        a chief executive officer from serving on more than three outside board of                        directors. The advisor generally votes against proposals that require a                        company to appoint a chairman who is an independent director.

                         

**•**             Anti-Takeover                        Matters — The advisor generally votes for proposals that require                        shareholder ratification of poison pills or that request boards to redeem                        poison pills, and votes “against” the adoption of poison pills                        if they are submitted for shareholder ratification. The advisor generally                        votes for fair price proposals.

                         

**•**             Routine                        Matters — The advisor generally votes for the ratification of                        auditors, procedural matters related to the annual meeting, and changes in                        company name, and against bundled proposals and adjournment.

                         

The general provisions described above do not apply to                        investment companies. The advisor generally votes proxies solicited by                        investment companies in accordance with the recommendations of an                        independent third-party, except for proxies solicited by or with respect to                        investment companies for which the advisor or an affiliate serves as                        investment advisor or principal underwriter (“affiliated investment                        companies”). The advisor votes affiliated investment company proxies                        in the same proportion as the vote of the investment company’s other                        shareholders (sometimes called “mirror” or “echo”                        voting). Master fund proxies solicited from feeder funds are voted in                        accordance with applicable requirements of the Investment Company Act of                        1940.

                         

Although the Guidelines set forth the advisor’s                        general voting positions on various proposals, the advisor may, consistent                        with the Fund’s best interests, determine under some circumstances to                        vote contrary to those positions.

                         

The Guidelines on a particular issue may or may not reflect                        the view of individual members of the board, or of a majority of the board.                        In addition, the Guidelines may reflect a voting position that differs from                        the actual practices of the public companies within the Deutsche Bank                        organization or of the investment companies for which the advisor or an                        affiliate serves as investment advisor or sponsor.

                         

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

                         

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

                         

Under certain circumstances, the advisor may not be able to                        vote proxies or the advisor may find that the expected economic costs from                        voting outweigh the benefits associated with voting. For example, the                        advisor may not vote proxies on certain foreign securities due to local                        restrictions or customs. The advisor generally does not vote proxies on                        securities subject to share blocking restrictions. |
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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **ITEM 8.** | **PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT                        COMPANIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

 

**Portfolio Manager Team Disclosure**

 

The Fund is        managed by a team of investment professionals employed by the Investment Manager and the        Investment Advisor, who collaborate to develop and implement the Fund’s investment        strategy.

 

The        Investment Advisor’s portfolio managers make recommendations to the Investment        Manager’s portfolio managers with respect to the Fund’s investments; the        Investment Manager’s portfolio managers determine which securities are suitable for        the Fund’s investment. Upon instructions given by the Investment Manager’s        portfolio managers as to which securities are suitable for investment, the Investment        Advisor’s portfolio managers transmit purchase and sale orders and select brokers and        dealers to execute portfolio transactions on the Fund’s behalf.

 

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

 

Ralf        Oberbannscheidt, Director

|   | **•** | Joined Deutsche Asset Management in 1999 and the fund in                        2006. |
|--------|------------|---------------------------------------------------------------------------------------|

|   | **•** | Prior to that, served as senior portfolio manager for Global                        Equities and Global Sector head of Telecommunications, after 3 years of                        experience, including portfolio management at SEB Enskilda, Luxemberg and                        various positions at Dresdner Bank AG, Germany. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Master’s degree in business administration from the                        University of Trier, MBA International Business, MIIS Monterey, USA,                        completed bank training at Dresdner Bank, Duesseldorf. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Petra        Pflaum, CEFA

Senior Fund        Manager Equities; joined the fund in 2000.

|   | **•** | Director, Deutsche Asset Management, Frankfort (since 2006);                        Prior thereto Vice President, Deutsche Asset Management                        (2001-2006). |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Portfolio Manager for German and European small and mid caps                        and equity analyst for German local companies as well as a member of the                        European small and mid cap committee. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**Compensation of Portfolio Managers**

 

Portfolio        managers are eligible for total compensation comprised of base salary and discretionary        incentive compensation.

 

**Base        Salary**– Base salary generally represents a smaller        percentage of portfolio managers’ total compensation than discretionary incentive        compensation. Base salary is linked to job function, responsibilities and financial        services industry peer comparison through the use of extensive market data        surveys.

 

**Discretionary Incentive****Compensation        –**Generally,discretionary incentive        compensation comprises a greater proportion of total compensation as a portfolio        manager’s seniority and compensation levels increase. Discretionary incentive        compensation is determined based on an analysis of a number of factors, including among        other things, the performance of Deutsche Bank, the performance of the Asset Management        division, and the employee’s individual contribution. In evaluating individual        contribution, management will consider a combination of quantitative and qualitative        factors. A portion of the portfolio manager’s discretionary incentive compensation        may be delivered in long-term equity programs (usually in the form or Deutsche Bank equity)        (the “Equity Plan”). Top performing portfolio managers may earn discretionary        incentive compensation that is a multiple of their base salary.

 

|   | **•** | The quantitative analysis of a portfolio manager’s                        individual performance is based on, among other factors, performance of all                        of the accounts managed by the portfolio manager (which includes the fund                        and any other accounts managed by the portfolio manager) over a one-,                        three-, and five-year period relative to the appropriate Morningstar and                        Lipper peer group universes and/or benchmark index(es) with respect to each                        account. Additionally, the portfolio manager’s retail/institutional                        asset mix is weighted, as appropriate for evaluation purposes. Generally                        the benchmark index used is a benchmark index set forth in the fund's                        prospectus to which the fund's performance is compared. Additional or                        different appropriate peer group or benchmark indices may also be used.                        Primary weight is given to pre-tax portfolio performance over three-year                        and five-year time periods (adjusted as appropriate if the portfolio                        manager has served for less than five years) with lesser consideration                        given to portfolio performance over a one-year period. The increase or                        decrease in a fund’s assets due to the purchase or sale of fund                        shares is not considered a material factor. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | The qualitative analysis of a portfolio manager’s                        individual performance is based on, among other things, the results of an                        annual management and internal peer review process, and management's                        assessment of overall portfolio manager contributions to investor                        relations, the investment process and overall performance (distinct from                        fund and other account performance). Other factors, including contributions                        made to the investment team, as well as adherence to Compliance Policies                        and Procedures, Risk Management procedures, the firm’s Code of Ethics                        and “living the values” of the Advisor are also                        factors. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

The        quantitative analysis of a portfolio manager’s performance is given more weight in        determining discretionary incentive compensation that the qualitative portion.

 

Certain        portfolio managers may also participate in the Equity Plan. The amount of equity awarded        under the long-term equity programs is generally based on the individual’s total        compensation package and may comprise from 0% to 30% of the total compensation award. As        discretionary incentive compensation increases, the percentage of compensation awarded in        Deutsche Bank equity also increases. Portfolio managers may receive a portion of their        equity compensation in the form of shares in the proprietary mutual funds that they manage        or support.

**Fund        Ownership of Portfolio Managers**

The        following table shows the dollar range of shares owned beneficially and of record by each        member of the Fund’s portfolio management team in the Fund as well as in all DWS        Funds as a group (i.e. those funds advised by Deutsche Asset Management or its affiliates),        including investments by their immediate family members sharing the same household and        amounts invested through retirement and deferred compensation plans. This information is        provided as of the Fund’s most recent fiscal year end.

 

| **Name of****Portfolio Manager** | **Dollar Range of**

**Fund Shares Owned** | **Dollar Range of All DWS**

**Fund Shares Owned** |
|----------------------------------|--------------------------------------------|----------------------------------------------------|
| Ralf Oberbannscheidt             | $0                                         | $0                                                 |
| Petra Pflaum                     | $0                                         | $0                                                 |

 

Because the        fund’s portfolio managers are not resident in the US, they generally do not invest in        US registered investment companies, such as the Fund, on account of US tax and other        regulatory limitations applicable to foreign investors.

**Conflicts of Interest**

In addition        to managing the assets of the Fund, the Fund’s portfolio managers may have        responsibility for managing other client accounts of the Advisor or its affiliates. The        tables below show, for each portfolio manager, the number and asset size of (1) SEC        registered investment companies (or series thereof) other than the Fund, (2) pooled        investment vehicles that are not registered investment companies and (3) other accounts        (e.g., accounts managed for individuals or organizations) managed by each portfolio        manager. Total assets attributed to each portfolio manager in the tables below include        total assets of each account managed by them, although the manager may only manage a        portion of such account’s assets. The tables also show the number of performance        based fee accounts, as well as the total assets of the accounts for which the advisory fee        is based on the performance of the account. This information is provided as of the        Fund’s most recent fiscal year end.

 

**Other        SEC Registered Investment Companies Managed:**

 

| **Name of Portfolio Manager** | **Number of Registered Investment****Companies** | **Total Assets of Registered Investment****Companies** | **Number of Investment Company Accounts with                        Performance****Based Fee** | **Total Assets of Performance Based Fee****Accounts** |
|-------------------------------|--------------------------------------------------|--------------------------------------------------------|------------------------------------------------------------------------------------------------|-------------------------------------------------------|
| Ralf Oberbannscheidt          | 2                                                | $1,135,098,090                                         | -                                                                                              | $0                                                    |
| Petra Pflaum                  | -                                                | $0                                                     | -                                                                                              | $0                                                    |

 

**Other        Pooled Investment Vehicles Managed:**

 

| **Name of Portfolio****Manager** | **Number of Pooled Investment****Vehicles** | **Total Assets of Pooled Investment****Vehicles** | **Number of Pooled Investment Vehicle Accounts with                        Performance****Based Fee** | **Total Assets of Performance Based Fee****Accounts** |
|----------------------------------|---------------------------------------------|---------------------------------------------------|-------------------------------------------------------------------------------------------------------|-------------------------------------------------------|
| Ralf Oberbannscheidt             | -                                           | $0                                                | -                                                                                                     | $0                                                    |
| Petra Pflaum                     | -                                           | $0                                                | -                                                                                                     | $0                                                    |

 

**Other        Accounts Managed:**

 

 

| **Name of Portfolio****Manager** | **Number of Other****Accounts** | **Total Assets of****Other                        Accounts** | **Number of Other Accounts with Performance****Based Fee** | **Total Assets of Performance Based Fee****Accounts** |
|----------------------------------|---------------------------------|--------------------------------------------------------------|------------------------------------------------------------|-------------------------------------------------------|
| Ralf Oberbannscheidt             | 6                               | $2,800,000,000                                               | -                                                          | $0                                                    |
| Petra Pflaum                     | 3                               | $263,798,859                                                 | -                                                          | $0                                                    |

 

 

In addition        to the accounts above, an investment professional may manage accounts in a personal        capacity that may include holdings that are similar to, or the same as, those of the Funds.        The Advisor has in place a Code of Ethics that is designed to address conflicts of interest        and that, among other things, imposes restrictions on the ability of portfolio managers and        other “access persons” to invest in securities that may be recommended or        traded in the Funds and other client accounts.

Real,        potential or apparent conflicts of interest may arise when a portfolio manager has        day-to-day portfolio management responsibilities with respect to more than one fund or        account, including the following:

 

| **•** | Certain investments may be appropriate for the Fund and also                        for other clients advised by the Advisor, including other client accounts                        managed by the Fund’s portfolio management team. Investment decisions                        for the Fund and other clients are made with a view to achieving their                        respective investment objectives and after consideration of such factors as                        their current holdings, availability of cash for investment and the size of                        their investments generally. A particular security may be bought or sold                        for only one client or in different amounts and at different times for more                        than one but less than all clients. Likewise, because clients of the                        Advisor may have differing investment strategies, a particular security may                        be bought for one or more clients when one or more other clients are                        selling the security. The investment results achieved for the Fund may                        differ from the results achieved for other clients of the Advisor. In                        addition, purchases or sales of the same security may be made for two or                        more clients on the same day. In such event, such transactions will be                        allocated among the clients in a manner believed by the Advisor to be most                        equitable to each client, generally utilizing a pro rata allocation                        methodology. In some cases, the allocation procedure could potentially have                        an adverse effect or positive effect on the price or amount of the                        securities purchased or sold by the Fund. Purchase and sale orders for the                        Fund may be combined with those of other clients of the Advisor in the                        interest of achieving the most favorable net results to the Fund and the                        other clients. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| **•** | To the extent that a portfolio manager has responsibilities                        for managing multiple client accounts, a portfolio manager will need to                        divide time and attention among relevant accounts. The Advisor attempts to                        minimize these conflicts by aligning its portfolio management teams by                        investment strategy and by employing similar investment models across                        multiple client accounts. |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| **•** | In some cases, an apparent conflict may arise where the                        Advisor has an incentive, such as a performance-based fee, in managing one                        account and not with respect to other accounts it manages. The Advisor will                        not determine allocations based on whether it receives a performance-based                        fee from the client. Additionally, the Advisor has in place supervisory                        oversight processes to periodically monitor performance deviations for                        accounts with like strategies. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **•** | The Advisor and its affiliates and the investment team of                        the Funds may manage other mutual funds and separate accounts on a                        long-short basis. The simultaneous management of long and short portfolios                        creates potential conflicts of interest including the risk that short sale                        activity could adversely affect the market value of the long positions(and                        vice versa), the risk arising from sequential orders in long and short                        positions, and the risks associated with receiving opposing orders at the                        same time. The Advisor has adopted procedures that it believes are                        reasonably designed to mitigate these potential conflicts of interest.                        Included in these procedures are specific guidelines developed to ensure                        fair and equitable treatment for all clients whose accounts are managed by                        each Fund’s portfolio management team. The Advisor and the portfolio                        management team have established monitoring procedures, a protocol for                        supervisory reviews, as well as compliance oversight to ensure that                        potential conflicts of interest relating to this type of activity are                        properly addressed. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

         

The Advisor        is owned by Deutsche Bank AG, a multi-national financial services company. Therefore, the        Advisor is affiliated with a variety of entities that provide and/or engage in commercial        banking, insurance, brokerage, investment

banking,        financial advisory, broker-dealer activities (including sales and trading), hedge funds,        real estate and private equity investing, in addition to the provision of investment        management services to institutional and individual investors. Since Deutsche Bank AG, its        affiliates, directors, officers and employees (the “Firm”) are engaged in        businesses and have interests other than managing asset management accounts, such other        activities involve real, potential or apparent conflicts of interest. These interests and        activities include potential advisory, transactional and financial activities and other        interests in securities and companies that may be directly or indirectly purchased or sold        by the Firm for its clients’ advisory accounts. These are considerations of which        advisory clients should be aware and which may cause conflicts that could be to the        disadvantage of the Advisor’s advisory clients. The Advisor has instituted business        and compliance policies, procedures and disclosures that are designed to identify, monitor        and mitigate conflicts of interest and, as appropriate, to report them to the Fund’s        Board.

 

| **ITEM 9.** | **PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT                        INVESTMENT COMPANY AND AFFILIATED PURCHASERS** |
|-------------|---------------------------------------------------------------------------------------------------------------------------------|

 

|                             | (a)                                    | (b)                                | (c)                                                                                                     | (d)                                                                                                   |
|----------------------------------|----------------------------------------|------------------------------------|---------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------|
|                             | Total Number of Shares Purchased  | Average Price Paid per Share  | Total Number of Shares Purchased as Part of Publicly                        Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the                        Plans or Programs |
| Period                           |
|                             |
|                             |
|                             |                                   |                               |                                                                                                    |                                                                                                  |
| January 1 through January 31     | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| February 1 through February 28   | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| March 1 through March 31         | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| April 1 through April 30         | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| May 1 through May 31             | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| June 1 through June 30           | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| July 1 through July 31           | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| August 1 through August 31       | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| September 1 through September 30 | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| October 1 through October 31     | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| November 1 through November 30   | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
| December 1 through December 31   | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |
|                             |                                   |                               |                                                                                                    |                                                                                                  |
| Total                            | 0                                      | $0.00                              | n/a                                                                                                     | n/a                                                                                                   |

 

| **ITEM 10.** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY                        HOLDERS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|         | The Nominating Committee will consider                        nominee candidates properly submitted by stockholders in accordance with                        applicable law, the Fund's Articles of Incorporation or By-laws,                        resolutions of the Board and the qualifications and procedures set forth in                        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                        By-laws. 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 By-laws. 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. |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **ITEM 11.** | **CONTROLS AND PROCEDURES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|         | (a)                                 The Chief Executive                        and Financial Officers concluded that the Registrant’s Disclosure                        Controls and Procedures are effective based on the evaluation of the                        Disclosure Controls and Procedures as of a date within 90 days of the                        filing date of this report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

 

 

|         | (b)                                 There have been no                        changes in the registrant’s internal control over financial reporting                        that occurred during the registrant’s last half-year (the                        registrant’s second fiscal half-year in the case of the annual                        report) that has materially affected, or is reasonably likely to materially                        affect, the registrant’s internal controls over financial                        reporting. |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **ITEM 12.** | **EXHIBITS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|         | (a)(1)     Code of Ethics pursuant                        to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE                        ETH.                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|         | (a)(2)     Certification pursuant                        to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR                        270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.                                                                                                                                                                                                                                                                                                                                                                             |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|         | (b)         Certification                        pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR                        270.30a-2(b)) is furnished and attached hereto as Exhibit                        99.906CERT.                                                                                                                                                                                                                                                                                                                          |

 

 

 

 

Form N-CSR        Item F

 

**SIGNATURES**

 

Pursuant to        the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of        1940, the registrant has duly caused this report to be signed on its behalf by the        undersigned, thereunto duly        authorized.          

 

| Registrant: | The New Germany Fund, Inc. |
|-------------|----------------------------|

 

| By: | /s/Michael G. Clark |
|-----|---------------------|

|   | Michael G. Clark |
|--------|------------------|

President

 

| Date: | February 29, 2008 |
|-------|-------------------|

 

 

Pursuant to        the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of        1940, this report has been signed below by the following persons on behalf of the        registrant and in the capacities and on the dates indicated.

 

| Registrant: | The New Germany Fund, Inc. |
|-------------|----------------------------|

 

| By: | /s/Michael G. Clark |
|-----|---------------------|

|   | Michael G. Clark |
|--------|------------------|

President

 

| Date: | February 29, 2008 |
|-------|-------------------|

 

 

| By: | /s/Paul Schubert |
|-----|------------------|

|   | Paul Schubert |
|--------|---------------|

Chief Financial Officer and Treasurer

 

| Date: | February 29, 2008 |
|-------|-------------------|