Edgar Filing: NEW GERMANY FUND INC

THE NEW GERMANY
FUND,INC.

ANNUAL REPORT

DECEMBER 31, 2002

[GRAPHIC OMITTED]

THE NEW GERMANY
FUND,INC.

LETTER TO THE SHAREHOLDERS
--------------------------------------------------------------------------------
February 18, 2003
Dear Shareholder,

During 2002, the German equity market was most disappointing. For the fiscal
year ended December 31, 2002, the net asset value per share of the New Germany
Fund declined 39.6% while its benchmark declined 37.6% in US dollar terms. The
main reasons for the underperformance of the German market were that banks and
insurance companies' financials were hurt due to the fall in equity prices
deteriorating their capital requirements. Industrials suffered from the global
economic slowdown. The German equity market is dominated by banks, insurance
companies and industrials. The global economic slowdown impacts Germany more
than most other countries because it is more dependent on exports. Furthermore,
the economic policies of Chancellor Schroeder have focused on reducing the
budget deficit rather than stimulating economic growth. The consequence has been
an increase in different taxes. Although minor in most cases, they were rightly
criticized by economists. The preferred course of action would be to lower taxes
and reform the country's rigid labor laws, which are to blame for the rising
unemployment in Germany. Third, the press has frequently focused on Germany's
problems and suggested similarities with Japan's economic problems. Such
comparisons do not stand up to reality, as Japan has a multitude of problems
which do not apply to Germany.

The German business community and its fellow EU members are putting intensive
pressure on the German government to resolve its economic problems. Recently,
the eight largest business groups in Germany urged the Chancellor to change
directions of his tax policies in order to create incentives for investments
which will lead to growth and job creation. An impetus to change may come from
rising unemployment and the important state elections for Hesse and Lower Saxony
held in early February. The problems facing Germany have to be dealt with sooner
than most investors think. We believe that German equity valuations today look
attractive relative to its peers. As global economic growth accelerates, Germany
could benefit more than most other countries as a result of its export-driven
economy. Furthermore, mid-cap companies usually do better in an economic upturn
because they have greater pricing power and higher margins as they often operate
in profitable niche markets. Sincerely,

/S/ CHRISTIAN STRENGER /S/ RICHARD T. HALE

Christian Strenger Richard T. Hale
Chairman President

--------------------------------------------------------------------------------
FOR ADDITIONAL INFORMATION ABOUT THE FUND INCLUDING PERFORMANCE, DIVIDENDS,
PRESENTATIONS, PRESS RELEASES, DAILY NAV AND SHAREHOLDER REPORTS, PLEASE VISIT
WWW.NEWGERMANYFUND.COM
--------------------------------------------------------------------------------

FUND HISTORY AS OF DECEMBER 31, 2002
--------------------------------------------------------------------------------

STATISTICS:
Net Assets .........................................................$124,504,310
Shares Outstanding ................................................. 27,487,443
NAV Per Share ...................................................... $4.53

DIVIDEND AND CAPITALGAIN DISTRIBUTIONS:

YEAR/
RECORD ORDINARY LT CAPITAL
DATE INCOME GAINS TOTAL
------ -------- ---------- ------
2002 ............................ $ -- $ -- $ --
2001 ............................ $ -- $ -- $ --
11/20/00 ........................ $0.01 $1.30 $1.31
9/1/00 .......................... $0.07 $0.35 $0.42
11/19/99 ........................ $0.05 $1.02 $1.07
11/16/98 ........................ $1.00 $2.66 $3.66

TOTAL RETURNS:
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------
2002 2001 2000 1999 1998
----------- ---------- ---------- ---------- ----------

Net Asset Value ............................... (39.60)% (35.68)% (11.46)% (2.22)% 23.85%
Market Value .................................. (39.52)% (33.86)% (14.35)% 3.64% 21.58%
Benchmark ..................................... (37.58)% 1 (33.46)% 2 (16.13)% 2 (9.79)% 3 14.62% 3

----------
(1) Represents 60% MDAX/40% NEMAX 50 for 1/1/02-8/31/02 and 75% MDAX/25% NEMAX
50 for 9/1/02-12/31/02.
(2) Represents 60% MDAX/40% NEMAX 50.
(3) Represents the MDAX Index.

OTHER INFORMATION:

NYSE Ticker Symbol ...................................................... GF
NASDAQ Symbol ........................................................... XGFNX
Dividend Reinvestment Plan .............................................. Yes
Voluntary Cash Purchase Program ......................................... Yes
Annual Expense Ratio .................................................... 1.48%

----------
FUND PERFORMANCE IS HISTORICAL, ASSUMES REINVESTMENT OF ALL DIVIDENDS AND
CAPITAL GAINS, AND IS NOT INDICATIVE OF FUTURE RESULTS.

INVESTMENTS IN FUNDS INVOLVE RISK. SOME FUNDS HAVE MORE RISK THAN OTHERS. THESE
INCLUDE FUNDS THAT ALLOW EXPOSURE TO OR OTHERWISE CONCENTRATE INVESTMENTS IN
CERTAIN SECTORS, GEOGRAPHIC REGIONS, SECURITY TYPES, MARKET CAPITALIZATION OR
FOREIGN SECURITIES (E.G., POLITICAL OR ECONOMIC INSTABILITY, WHICH CAN BE
ACCENTUATED IN EMERGING MARKET COUNTRIES).

PORTFOLIO BY MARKET SECTOR AS OF DECEMBER 31, 2002 (AS % OF PORTFOLIO)
--------------------------------------------------------------------------------

[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

Machinery 7.3
Building Products 2
Food Products 3.2
Media 1.8
Chemical 2.6
Biotechnology 4.7
Internet Software & Services 2.8
Software 1.4
Personal Products 10.1
Diversified Financial 3.5
Auto Components 7.1
Air Freight and Couriers 3.8
Other 4.5
Textiles & Apparel 5.3
Semiconductor Equipment & Products 5.5
Distributors 5.8
Healthcare Providers & Services 6.3
Healthcare Equipment & Supplies 2.1
Specialty Retail 2.3
Pharmaceuticals 12.7
Construction & Engineering 3.2
Commercial Services & Supplies 2.0

10 LARGEST EQUITY HOLDINGS AS OF DECEMBER 31, 2002
--------------------------------------------------------------------------------

% of % of
Portfolio Portfolio
--------- ---------
1. Continental 7.1 6. Wella 4.3
2. Stada Arzneimittel 6.1 7. Fraport 3.8
3. Beiersdorf 5.8 8. Singulus Technologies 3.7
4. Medion 5.8 9. Merck 3.5
5. Puma 5.3 10. Rhoen Klinikum 3.3

INTERVIEW WITH THE CHIEF INVESTMENT OFFICER
--------------------------------------------------------------------------------

QUESTION: What has been the effect of the euro's recent strength on the Fund
and on Germany?

ANSWER: Since the end of 2001 the euro has appreciated over 21% against the
US dollar. There are both positive and negative effects of the euro strength,
but overall we believe it is a net positive, especially for US investors. In US
dollar terms, an investor who invested in German equities since December 2001
would have had a 21% higher return than a local European investor. While the
euro's strength weakens the competitiveness of German exporters relative to the
US, evidence shows that German exports have remained stable while the US trade
deficit continues to record new highs. Furthermore, a stronger euro facilitates
an easy monetary policy by the European Central Bank as a stronger currency
reduces inflationary pressures. Lower interest rates are exactly what Germany
needs, as they would increase economic activity and domestic spending. Another
positive effect is that the surge in the price of oil during the past year has
been less painful in Europe than in the US, as oil is priced in US dollars.

QUESTION: How will the regional elections of February 2nd affect the German
economy?

ANSWER: On February 2nd German Chancellor Gerhard Schroeder scored the worst
result in more than 50 years in two regional elections, in the state of Lower
Saxony and Hesse. In Lower Saxony, Schroeder's party, the Social Democrats
(SPD), were voted out of power after 13 years in the majority. In Hesse, the
opposition party, the Christian Democrats (CDU), increased its seats to rule
without a coalition partner for the first time ever. SPD's defeat in the two
elections increased the opposition's majority in the Bundesrat, the upper house
of parliament, making it harder for Schroeder to pass laws. In our view, the
recent elections were the preferred outcome and will be positive for Germany as
it makes Schroeder's planned tax increases almost impossible to be signed into
law. The pro-business CDU should make it very difficult, if not impossible, for
Chancellor Schroeder to push through any agenda that does not have the support
of the CDU. During the election campaign, the CDU made it very clear that they
will not agree to any tax increases. Longer term, having the CDU in control of
the upper house should lead to a more pro-growth policy, rather than the current
deficit reduction policy introduced by the SPD.

QUESTION: Why should I own German equities when economic growth is expected
to be stronger in the US?

ANSWER: While it is true that economic growth this year is expected to be
stronger in the US than in Europe, Europe does have significant advantages over
the US that could lead to outperformance over the longer term. First, US
companies suffer from an over-capacity problem that is much larger than in
Europe. US companies spent significantly more money on office equipment and
technology than European companies, so there is less room for growth. Second,
the US consumer has over-spent and sits on significantly higher debt levels than
any European country, especially Germany. For the euro-zone area, household debt
was 46% of GDP in 2001 while it was 82% in the US. Going forward, German
consumer spending should enjoy much higher growth relative to the US. Third,
Germany enjoys a large trade surplus, while the trade deficit in the US
continues to get larger and larger. The net effect of this is a transfer of cash
out of the US and into Germany and the rest of Europe. Over time, this should
lead to increased consumer power in Germany and Europe.

HANSPETER ACKERMANN, Chief Investment Officer of the New Germany Fund

REPORT FROM THE INVESTMENT ADVISER AND MANAGER
--------------------------------------------------------------------------------
OUTLOOK FOR THE GERMAN ECONOMY

Developments in the Middle East will continue to take their toll on both
financial markets and economic activity. Currently, risks remain heavily tilted
towards a military conflict in Iraq, which could take place during the first
quarter of the year. In any case, global growth should still be weakened by
lingering uncertainties. However, a peaceful solution cannot be ruled out
either. In this scenario, economic activity should start to pick up
significantly in the second quarter. Recent economic data seem to indicate that
Germany's economy might at least reach the bottom during the first quarter. The
latest production and order intake data from November surprised on the upside
and the ZEW index, a key business confidence indicator, jumped strongly in
January after falling six months in a row. Household consumption will probably
remain sluggish as tax hikes that came into effect at the beginning of the year
will dampen real disposable income growth. Moreover unemployment is still rising
and remains a problem. It is only towards the end of the year that we can expect
the labor market to stabilize. Inflation data have developed favorably last
year, helped by a marked decline in food prices. Inflation is forecast to be
just 1.0%, down from 1.3% last year. For 2003, Germany's economy is expected to
grow 0.6%. While relatively modest, it is an improvement over last year's growth
of only 0.2%. In 2004, the economy is expected to grow at a much more healthy
rate of 3.0%.

DIRECTORS OF THE FUND
--------------------------------------------------------------------------------

NAME, AGE, CLASS PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
---------------- --------------------------------------------

John A. Bult, 66 (1)(2) Chairman of PaineWebber International (1985 to present). Director of The France
Class II Growth Fund, Inc. and The Greater China Fund, Inc.

John H. Cannon, 60 Consultant. Vice President and Treasurer of Footlocker Inc. (over five years until
Class II 2001).

Richard Karl Goeltz, 60 Consultant. Vice Chairman and Chief Financial Officer of American Express Co.
Class I (1996-2000); Group Chief Financial Officer and Member of the Board of Directors of
National Westminster Bank Plc. (1992-1996). Director of The Warnaco Group, Inc.;
Member of the Court of Governors of the London School of Economics and Political
Science.

Dr. Franz Wilhelm Hopp, 60 Member of the Boards of Management of ERGO Versicherungsgruppe AG, ERGO
Class III Europa Beteiligungsgesellschaft AG and ERGO International AG. Chairman of the
Supervisory Boards of VORSORGE Lebensversicherung AG and Mediastream AG. Member of
the Supervisory Boards of MEAG Munich ERGO Kapitalanlagegesellschaft mbH,
Osterreichische Volksbanken AG, VICTORIA Pensionskasse AG, Internationales
Immobilieninstitute GmbH, Bankhaus Ellwanger & Geiger and Jenoptik AG. Former Member
of the Boards of Management of VICTORIA Holding, VICTORIA Lebensversicherung AG,
VICTORIA Versicherung AG, VICTORIA International, VICTORIA Ruckversicherung AG and
D.A.S. Versicherungs-AG.

Ernst-Ulrich Matz, 68 Consultant. Chief Financial Officer and member of the Board of Directors of IWKA
Class III Aktiengesellschaft (until 2000). Vice Chairman of the Supervisory Boards of Bopp &
Reuther AG. (until 2001). Member of the Supervisory Boards of Ex-Cell-O AG (until
2001) and ARO SA (until 2000). 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 Peters Associates AG.

Christian H. Strenger, 59 (1)(2) Director (since 1999) and Managing Director (1991-1999) of DWS Investment GmbH.
Class I Member of the Supervisory Boards of Fraport AG and Metro AG.

Dr.Frank Tromel, 66 Consultant. Deputy Chairman of the Supervisory Board of DELTON AG (until 2000).
Class III Member (since 2000) and Vice President (since 2002) of the German Accounting
Standards Board. Chairman of the Board of Managing Directors of DELTON AG
(1990-1999). Chairman of the Board of Managing Directors of ALTANA AG (1987-1990).
Member of the Board of ALTANA AG (1977-1987).

DIRECTORS OF THE FUND (CONTINUED)
--------------------------------------------------------------------------------------------------------------------------

NAME, AGE, CLASS PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
------------------- --------------------------------------------

Robert H. Wadsworth, 63 (1)(3) President, Robert H. Wadsworth Associates, Inc. (1982 to present). Formerly
Class II President and Trustee, Trust for Investment Managers (1999 to 2002), President,
Investment Company Administration, LLC (1992-2001) and President, Treasurer and
Director, First Fund Distributors, Inc. (1990-2002). Vice President, Professionally
Managed Portfolios (1992-2002) and Advisors Series Trust (1997-2002) (registered
investment companies); President, Guinness Flight Investment Funds, Inc. (registered
investment companies) (1994-1998).

Peter Zuhlsdorff, 62 Managing Director of Tenglemann Unternehmensgruppe (since 1998), Deutsche Industrie
Holding (holding company) (since 1997), and PZ Sportpark GmbH (since 1996). Chairman
of the Supervisory Boards of GfK AG, TV Loonland AG and Escada AG. Member of the
Supervisory Boards of Merck KGaA, Deutz AG, Kaisers Kaffee AG and Quelle AG.

---------------
Each has served as a Director of the Fund since the Fund's inception in 1990
except for Mr. Wadsworth, Dr. Hopp, Mr. Matz and Mr. Zuhlsdorff, who were
elected to the Board on June 19, 1992, June 18, 1993, June 29, 1995 and June 20,
1997, respectively. The term of office for Directors in Class II expires at the
2002 Annual Meeting, Class III at the next succeeding Annual Meeting and Class I
at the following succeeding Annual Meeting.

(1) Indicates that Mr. Wadsworth each also serve as a Director of The Germany
Fund, Inc. and The Central European Equity Fund, Inc., two other closed-end
registered investment companies for which Deutsche Bank Securities 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 U.B.S. PaineWebber Incorporated, a
registered broker-dealer; and Mr. Strenger is an "interested" Director
because of his affiliation with DWS--Deutsche Gesellschaft fur
Wertpapiersparen mbH ("DWS"), a majority-owned subsidiary of Deutsche Bank
and because of his ownership of Deutsche Bank shares.
(3) Indicates that Mr. Wadsworth also serves as a Director/Trustee of the BT
Investment Funds, BT Advisor Funds, BT Pyramid Mutual Funds, BT
Institutional Funds, BT Investment Portfolios, Cash Management Portfolio,
Treasury Money Portfolio, International Equity Portfolio, Equity 500 Index
Portfolio, Asset Management Portfolio, and Deutsche Asset Management VIT
Trust. He also serves as a Director/Trustee of the Morgan Grenfell
Investment Trust, Deutsche Investors Portfolios Trust, Deutsche Investors
Funds, Inc., Scudder Flag Investors Value Builder Fund, Inc., Scudder Flag
Investors Equity Partners Fund, Inc., Scudder Flag Investors Communications
Fund, Inc., and Deutsche Bank Alex. Brown Cash Reserves Fund, Inc. He also
serves as a Director/Trustee of RREEF Securities Trust, an open-end
investment company, and RREEF Real Estate Fund, Inc., a closed-end
investment company. These Funds are advised by either Deutsche Asset
Management, Inc., Deutsche Asset Management Investment Services Limited, or
Investment Company Capital Corp, each an indirect, wholly-owned subsidiary
of Deutsche Bank AG.

OFFICERS OF THE FUND
------------------------------------------------------------------------------------------------------------------------------------

NAME, AGE PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
------------- --------------------------------------------

Richard T. Hale, 57 Trustee and/or President of each of the investment companies advised by Deutsche
President and Chief Asset Management, Inc. or its affiliates; Managing Director, Deutsche Asset
Executive Officer Management; Managing Director, Deutsche Bank Securities Inc.; Director and
President, Investment Company Capital Corp.

Hanspeter Ackermann, 46 Managing Director of Deutsche Bank Securities Inc., Managing Director and Senior
Chief Investment Officer International Equity Portfolio Manager of Deutsche Bank Trust Company Americas.

Robert R. Gambee, 60 Director (since 1992), First Vice President (1987-1991) and Vice President
Chief Operating Officer (1978-1986) of Deutsche Bank Securities Inc., Director, Deutsche Bank AG, Director,
and Secretary Bankers Trust Co. Secretary of Flag Investors Funds, Inc. and Deutsche Bank
Investment Management, Inc. (1997-2000).

Joseph Cheung, 44 Vice President (since 1996), Assistant Vice President (1994-1996) and Associate
Chief Financial Officer (1991-1994) of Deutsche Bank Securities Inc.
and Treasurer
------

Each also serves as an Officer of The Germany Fund, Inc. and The Central
European Equity Fund, Inc., two other closed-end registered investment companies
for which Deutsche Bank Securities Inc. acts as manager.

THE NEW GERMANY FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
--------------------------------------------------------------------------------

SHARES DESCRIPTION VALUE
------------- ----------- -------------

INVESTMENTS IN GERMAN SECURITIES--88.0%
COMMON STOCKS--77.8%
AIR FREIGHT & COURIERS--3.6%
255,000 Fraport ........................ $ 4,538,312
-------------
AUTO COMPONENTS--6.8%
540,000 Continental* ................... 8,423,357
-------------
BIOTECHNOLOGY--0.8%
295,000 GPC Biotech* ................... 966,655
-------------
BUILDING PRODUCTS--1.9%
105,000 Buderus ........................ 2,418,339
-------------
CHEMICALS--2.5%
140,000 Celanese* ...................... 3,077,886
-------------
COMMERCIAL SERVICES &
SUPPLIES--1.9%
176,600 GFK ............................ 2,368,345
-------------
CONSTRUCTION &
ENGINEERING--3.1%
256,400 Bilfinger & Berger ............. 3,851,901
-------------
DISTRIBUTORS--5.5%
194,100 Medion ......................... 6,858,111
-------------
DIVERSIFIED FINANCIAL--3.4%
65,000 Deutsche Boerse ................ 2,596,731
151,789 Grenkeleasing* ................. 1,620,860
-------------
4,217,591
-------------
FOOD PRODUCTS--3.0%
230,000 Suedzucker ..................... 3,773,132
-------------
HEALTHCARE PROVIDERS &
SERVICES--2.8%
90,000 Gehe ........................... 3,495,599
-------------
INTERNET SOFTWARE & SERVICES--2.6%
589,200 T-Online International* ........ 3,281,554
-------------
IT CONSULTING &
SERVICES--0.0%
32,650 GFT Technology* ................ 44,436
-------------
MACHINERY--7.0%
132,000 Heidelberger Druckmaschinen .... 3,040,198
125,000 IWKA ........................... 1,334,797
331,500 Singulus Technologies* ......... 4,345,033
-------------
8,720,028
-------------

SHARES DESCRIPTION VALUE
------------- ----------- -------------

MEDIA--1.7%
126,949 Constantin Film* ............... $ 340,232
36,085 Springer (Axel)* ............... 1,775,537
-------------
2,115,769
-------------
METALS & MINING--0.5%
95,000 Salzgitter ..................... 595,739
-------------
MULTILINE RETAIL--0.9%
63,725 Douglas Holding ................ 1,122,792
-------------
PERSONAL PRODUCTS--5.6%
62,500 Beiersdorf ..................... 6,942,256
-------------
PHARMACEUTICALS--12.2%
155,000 Merck .......................... 4,121,645
105,000 Schwarz Pharma ................. 3,809,983
180,000 Stada Arzneimittel ............. 7,217,329
-------------
15,148,957
-------------
SEMICONDUCTOR EQUIPMENT &
PRODUCTS--2.4%
599,320 Kontron* ....................... 1,769,347
410,900 Suess MicroTec* ................ 1,152,859
-------------
2,922,206
-------------
SOFTWARE--1.3%
79,750 FJA ............................ 1,618,042
-------------
SPECIALTY RETAIL--2.2%
78,600 Fielmann ....................... 2,764,821
-------------
TEXTILES & APPAREL--5.1%
93,000 Puma ........................... 6,331,431
-------------
WATER UTILITIES--1.0%
92,650 Wedeco Water Technology* ....... 1,227,960
-------------
Total Common Stocks
(cost $119,251,606) .......... 96,825,219
-------------
PREFERRED STOCKS--10.2%
HEALTHCARE EQUIPMENT &
SUPPLIES--2.0%
65,000 Fresenius ...................... 2,480,368
-------------
HEALTHCARE PROVIDERS &
SERVICES--3.1%
137,850 Rhoen-Klinikum ................. 3,942,690
-------------
INDUSTRIAL
CONGLOMERATES--1.0%
105,000 Rheinmetall .................... 1,210,269
-------------

SHARES DESCRIPTION VALUE
------------- ----------- -------------

PERSONAL PRODUCTS--4.1%
85,000 Wella .......................... $ 5,072,230
-------------
Total Preferred Stocks
(cost $12,662,270) ........... 12,705,557
-------------
Total Investments in German
Securities
(cost $131,913,876) .......... 109,530,776
-------------

INVESTMENTS IN DUTCH
COMMON STOCKS--3.7%
BIOTECHNOLOGY--3.7%
222,940 Crucell* ....................... 697,854
769,150 Qiagen* ........................ 3,905,332
-------------
Total Investments in Dutch
Common Stocks
(cost $9,055,350) ............ 4,603,186
-------------

INVESTMENT IN FRENCH
COMMON STOCK--1.0%
COMMUNICATIONS EQUIPMENT--1.0%
67,500 Sr Teleperformance
(cost $1,325,726) ............ 1,279,050
-------------

INVESTMENT IN SWISS
COMMON STOCK--3.0%
SEMICONDUCTOR EQUIPMENT &
PRODUCTS--3.0%
210,000 Micronas Semiconductor*
(cost $5,239,631) ............ 3,678,103
-------------
Total Investments--95.7%
(cost $147,534,583) .......... 119,091,115
Cash and other assets in excess
of liabilities--4.3% ......... 5,413,195
-------------

NET ASSETS--100.0% ............. $ 124,504,310
=============

*Non-income producing security.

See Notes to Financial Statements.

THE NEW GERMANY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2002
--------------------------------------------------------------------------------

ASSETS
Investments, at value (cost $147,534,583) .. $ 119,091,115
Cash and foreign currency
(cost $5,145,538) ....................... 5,155,701
Foreign withholding tax refund receivable .. 472,977
Receivable for securities sold ............. 437,147
Interest receivable ........................ 9,676
-------------
Total assets ............................ 125,166,616
-------------
LIABILITIES
Payable for securities purchased ........... 376,990
Payable for shares repurchased ............. 87,420
Management fee payable ..................... 68,544
Investment advisory fee payable ............ 35,802
Accrued expenses and accounts payable ...... 93,550
-------------
Total liabilities ....................... 662,306
-------------
NET ASSETS ................................. $ 124,504,310
=============

Net assets consist of:
Paid-in capital, $.001 par
(Authorized 80,000,000 shares) .......... $ 432,874,599
Cost of 7,261,898 shares held in treasury .. (76,034,997)
Undistributed net realized foreign currency
gains(a) 54,535 Accumulated net realized
loss on investments and foreign currency
transactions ............................ (204,008,385)
Net unrealized depreciation of investments
and foreign currency .................... (28,381,442)
-------------
Net assets ................................. $ 124,504,310
=============

Net asset value per share
($124,504,310 (DIVIDE) 27,487,443 shares
of common stock issued and outstanding) . $4.53
=====

(a) Characterized as Ordinary income for U.S. tax purposes.

See Notes to Financial Statements.

THE NEW GERMANY FUND, INC.
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------

FOR THE
YEAR ENDED
DECEMBER 31, 2002
-----------------
NET INVESTMENTLOSS
Investment income
Dividends (net of foreign
withholding taxes of $234,094) .......... $1,542,605
Interest .................................. 98,242
-------------
Total investment income ...................... 1,640,847
-------------
Expenses
Management fee ............................ 1,000,089
Investment advisory fee ................... 509,277
Reports to shareholders ................... 267,880
Custodian and Transfer Agent's fees
and expenses ............................ 206,676
Directors' fees and expenses .............. 167,857
Legal fee ................................. 133,485
Audit fee ................................. 47,500
NYSE listing fee .......................... 36,961
Miscellaneous ............................. 26,525
-------------
Total expenses before custody credits* .... 2,396,250
Less: custody credits ..................... (5,795)
-------------
Net expenses .............................. 2,390,455
-------------
Net investment loss .......................... (749,608)
-------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investments ............................... (71,803,030)
Foreign currency transactions ............. 1,007,333
Net change in unrealized appreciation/
depreciation on:
Investments ............................... (12,869,858)
Translation of other assets and
liabilities from foreign currency ....... 35,163
-------------
Net loss on investments and foreign
currency transactions ..................... (83,630,392)
-------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................. $(84,380,000)
=============

--------
* The custody credits are attributable to
interest earned on U.S. cash balances.

See Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------

FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------
INCREASE (DECREASE)
IN NET ASSETS
Operations
Net investment loss ............ $ (749,608) $ (153,404)
Net realized gain (loss) on:
Investments ................. (71,803,030) (108,838,494)
Foreign currency
transactions .............. 1,007,333 (316,605)
Net change in unrealized
appreciation/depreciation on:
Investments ................. (12,869,858) (12,969,070)
Translation of other assets
and liabilities from
foreign currency .......... 35,163 (382,857)
------------- -------------
Net decrease in net assets
resulting from operations (84,380,000) (122,660,430)
------------- -------------

Capital share transactions:
Cost of shares repurchased
(870,500 and 1,276,000
shares, respectively) ....... (3,766,021) (10,278,616)
------------- -------------
Net decrease in net assets from
capital share transactions .. (3,766,021) (10,278,616)
------------- -------------
Total decrease in net assets .... (88,146,021) (132,939,046)

NET ASSETS
Beginning of year ................ 212,650,331 345,589,377
------------- -------------
End of year (including
undistributed net investment
income of $0 as of
December 31, 2002 and 2001 .... $ 124,504,310 $ 212,650,331
============= =============

See Notes to Financial Statements.

THE NEW GERMANY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
--------------------------------------------------------------------------------

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 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.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Cost of 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.

FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are maintained
in United States dollars.

Assets and liabilities denominated in euros and other foreign currency amounts
are translated into United States dollars at the 10:00 A.M. mid-point of the
buying and selling spot rates quoted by the Federal Reserve Bank of New York.
Purchases and sales of 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.

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.

TAXES: No provision has been made for United States Federal income tax because
the Fund intends to meet the requirements of the United States Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders.

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

During the year ended December 31, 2002, the Fund reclassified permanent book
and tax differences as follows:

INCREASE
(DECREASE)
----------
Undistributed net investment income ................. $749,608
Undistributed net realized gain on investments
and foreign currency transactions ................. (749,608)
Paid-in capital ..................................... 0

NOTE 2. MANAGEMENT ANDINVESTMENT
ADVISORY AGREEMENTS
The Fund has a Management Agreement with and related undertaking by
(collectively, the "Management Agreement") Deutsche Bank Securities Inc. (the
"Manager"), and an Investment Advisory Agreement with Deutsche Asset Management
International GmbH (the "Investment Adviser"). The Manager and the Investment
Adviser are affiliated companies.

THE NEW GERMANY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 (CONTINUED)
--------------------------------------------------------------------------------

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.

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 the 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
For the year ended December 31, 2002, Deutsche Bank AG, the German parent of the
Manager and Investment Adviser, and its affiliates received $232,488 in
brokerage commissions as a result of executing agency transactions in portfolio
securities on behalf of the Fund.

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.

NOTE 4. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments,
for the year ended December 31, 2002, were $155,715,757 and $158,840,286,
respectively.

The cost of investments at December 31, 2002 was $147,534,583 for United States
Federal income tax purposes. Accordingly, as of December 31, 2002, net
unrealized depreciation of investments aggregated $28,443,468, of which
$6,964,223 and $35,407,691 related to unrealized appreciation and depreciation,
respectively.

During the period November 1, 2002 to December 31, 2002, the Fund incurred
capital losses of $4,748,045. This loss was deferred for federal income tax
purposes to January 1, 2003.

For United States Federal income tax purposes, the Fund had a capital loss carry
forward at December 31, 2002 of approximately $199.3 million, of which $111.0
million and $88.3 million will expire in 2009 and 2010, respectively. No capital
gains distribution is expected to be paid to shareholders until future net gains
have been realized in excess of such carry forward.

NOTE 5. CAPITAL
During the years ended December 31, 2002 and 2001, the Fund purchased 870,500
and 1,276,000 of its shares of common stock on the open market at a total cost
of $3,766,021 and $10,278,616, respectively. The weighted average discount of
these purchases comparing the purchase price to the net asset value at the time
of purchase was 17.9% and 17.1%, respectively. These shares are held in
treasury.

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

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

FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
2002 2001 2000 1999 1998
--------- ------- ------- ------- --------

Per share operating performance:
Net asset value:
Beginning of year ........................................ $ 7.50 $ 11.66 $ 15.07 $ 16.54 $ 16.35
--------- ------- ------- ------- --------
Net investment income (loss) ............................. (.03) (.01) (.06) .06 .06
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ......... (2.97) (4.22) (1.60) (.60) 3.54
--------- ------- ------- ------- --------
Increase (decrease) from investment operations ........... (3.00) (4.23) (1.66) (.54) 3.60
--------- ------- ------- ------- --------
Increase resulting from share repurchases ................ .03 .07 .25 .32 .73
--------- ------- ------- ------- --------
Distributions from net investment income ................. -- -- -- -- (.06)
Distributions from net realized foreign currency gains ... -- -- -- -- (.02)
Distributions from net realized short-term capital gains . -- -- (.08) (.05) (.92)
Distributions from net realized long-term capital gains .. -- -- (1.65) (1.02) (2.66)
--------- ------- ------- ------- --------
Total distributions+ ..................................... -- -- (1.73) (1.07) (3.66)
--------- ------- ------- ------- --------
Dilution in NAV from dividend reinvestment ............... -- -- (.27) (.18) (.48)
--------- ------- ------- ------- --------
Net asset value:
End of year ........................................... $ 4.53 $ 7.50 $ 11.66 $ 15.07 $ 16.54
========= ======= ======= ======= ========
Market value:
End of year ........................................... $ 3.55 $ 5.87 $ 8.875 $ 12.25 $12.9375
Total investment return for the year:++
Based upon market value ............................... (39.52)% (33.86)% (14.35)% 3.64% 21.58%
Based upon net asset value ............................ (39.60)% (35.68)% (11.46)% (2.22)% 23.85%
Ratio to average net assets:
Total expenses before custody credits* ................ 1.48% 1.25% 1.09% 1.08% .98%
Net investment income (loss) .......................... (.46)% (.06)% (.40)% .40% .25%
Portfolio turnover ....................................... 98.55% 86.65% 69.61% 31.70% 63.27%
Net assets at end of year (000's omitted) ................ $124,504 $212,650 $345,589 $432,864 $505,058

-----------
+For U.S. tax purposes, total distributions consisted of:
Ordinary income ................................... -- -- $ .08 $ .05 $1.00
Long term capital gains ........................... -- -- 1.65 1.02 2.66
---- ---- ----- ----- -----
-- -- $1.73 $1.07 $3.66
---- ---- ----- ----- -----

++Total investment return based on market value is calculated assuming that
shares of the Fund's common stock were purchased at the closing market price
as of the beginning of the year, dividends, capital gains and other
distributions were reinvested as provided for in the Fund's dividend
reinvestment plan and then sold at the closing market price per share on the
last day of the year. The computation does not reflect any sales commission
investors may incur in purchasing or selling shares of the Fund. The total
investment return based on the net asset value is similarly computed except
that the Fund's net asset value is substituted for the closing market price.
*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
1.47%, 1.25%, 1.08%, 1.07% and .98% for 2002, 2001, 2000, 1999 and 1998,
respectively.

See Notes to Financial Statements.

REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
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, 2002, 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 accordance with auditing standards generally accepted in
the United States of America, which 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, 2002 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York,New York
February 7, 2003

PRIVACY POLICY AND PRACTICES
(UNAUDITED)
--------------------------------------------------------------------------------

The Fund collects nonpublic personal information about its customers
(stockholders) with respect to their transactions in shares of the Fund but only
for those stockholders whose shares are registered in their names. We do not
have knowledge of or collect personal information about stockholders who hold
Fund shares in "street name" such as brokers or banks.
We do not disclose any nonpublic personal information about our stockholders
or former stockholders to anyone, except as permitted by law.
We restrict access to nonpublic personal information about our stockholders to
those employees who need to know that information to provide services to our
stockholders. We maintain physical, electronic and procedural safeguards that
comply with federal standards to guard our stockholders' nonpublic personal
information.

VOLUNTARY CASH PURCHASE PROGRAM AND DIVIDEND REINVESTMENT PLAN
(UNAUDITED)
--------------------------------------------------------------------------------

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. A more complete description of the Plan is provided in
the Plan brochure available from the Fund or from Investors Bank & Trust
Company, the plan agent (the "Plan Agent"), Shareholder Services, P.O. Box 9130,
Boston, Massachusetts 02117 (telephone 1-800-437-6269). A stockholder should
read the Plan brochure carefully before enrolling in the Plan.
Under the Plan, participating stockholders ("Plan Participants") appoint the
Plan 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 Plan 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 Fund's 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 dividend or capital
gains distribution payable either in cash or in Fund shares, or payable only in
cash, the Plan Agent automatically receives Fund shares for the account of each
Plan Participant except as provided in the following paragraph. The number of
shares to be credited to a Plan Participant's account shall be determined by
dividing the equivalent dollar amount of the dividend or distribution payable to
such Plan participant by the lower of the net asset value per share or the
market price per share of the Fund's common stock on the payable 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.
Whenever the Fund declares a dividend or capital gains distribution payable
only in cash and the net asset value per share of the Fund's common stock
exceeds the market value per share on the payable date, the Plan Agent will
apply the amount of such dividend or distribution payable to Plan Participants
of the Fund in Fund shares (less such 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 such Plan Participant's account.
Such purchases will be made on or after the payable date for such dividend or
distribution, 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 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 on that date, then the 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 Plan 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 Plan Agent or that of a
nominee. The Plan 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 Plan Agent will deliver to a Plan
Participant, without charge, a certificate or certificates for the full shares
held by the Plan Agent.

VOLUNTARY CASH PURCHASES. Plan Participants have the option of making
investments in Fund shares through the Plan 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.

VOLUNTARY CASH PURCHASE PROGRAM AND DIVIDEND REINVESTMENT PLAN
(UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------

The Plan Agent will purchase shares for Plan Participants on or about the 15th
of each month. Cash payments received by the Plan Agent less than five business
days prior to a cash purchase investment date will be held by the Plan Agent
until the next month's investment date. Uninvested funds will not bear interest.
The Plan Agent will deduct a pro rata share of brokerage commissions incurred in
connection with voluntary cash purchases from the cash payments it receives from
Plan Participants on whose behalf the purchases were made. Plan Participants may
withdraw any voluntary cash payment by written notice received by the Plan Agent
not less than 48 hours before such payment is to be invested.

ENROLLMENT AND WITHDRAWAL. In order to become a Plan Participant, stockholders
must complete and sign the authorization form included in the Plan brochure and
return it directly to the Plan Agent if shares are registered in their name.
Stockholders who hold Fund shares in the name of a brokerage firm, bank or other
nominee should contact such nominee to arrange for it to participate in the Plan
on such stockholder's behalf. Participation in the dividend reinvestment feature
of the Plan is effective with the next dividend or capital gains distribution
payable after the Plan Agent receives a stockholder's written authorization,
provided such authorization is received prior to the record date for such
dividend or distribution. A stockholder's written authorization must be received
by the Plan Agent at least five business days in advance of the next cash
purchase investment date (normally the 15th of every month) in order to make a
cash purchase in that month.
Plan Participants may withdraw from the Plan without charge by written notice
to the Plan Agent. Plan Participants who choose to withdraw may elect to receive
stock certificates representing all of the full shares held by the Plan Agent on
their behalf, or to instruct the Plan 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 Plan Agent.

AMENDMENT AND TERMINATION OF PLAN. The Plan may only be amended or
supplemented by the Fund or by the Plan 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 Plan 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 shares representing 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 participant will include in income the amount of the cash
payment 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.

EXECUTIVE OFFICES
31 WEST 52ND STREET, NEW YORK, NY 10019

(FOR LATEST NET ASSET VALUE, SCHEDULE OF THE FUND'S LARGEST HOLDINGS, DIVIDEND
DATA AND SHAREHOLDER INQUIRIES, PLEASE CALL 1-800-GERMANY IN THE U.S. OR
617-443-6918 OUTSIDE OF THE U.S.)

MANAGER
DEUTSCHE BANK SECURITIES INC.

INVESTMENT ADVISER
DEUTSCHE ASSET MANAGEMENT INTERNATIONAL GMBH

CUSTODIAN AND TRANSFER AGENT
INVESTORS BANK & TRUST COMPANY

LEGAL COUNSEL
SULLIVAN & CROMWELL

INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP

DIRECTORS AND OFFICERS
CHRISTIAN STRENGER
CHAIRMAN AND DIRECTOR

JOHN A. BULT
DIRECTOR

+ JOHN H. CANNON
DIRECTOR

+ RICHARD KARLGOELTZ
DIRECTOR

DR. FRANZ WILHELM HOPP
DIRECTOR

ERNST-ULRICH MATZ
DIRECTOR

DR. FRANK TROMEL
DIRECTOR

+ ROBERT H. WADSWORTH
DIRECTOR

PETER ZUHLSDORFF
DIRECTOR

RICHARD T. HALE
PRESIDENT AND CHIEF EXECUTIVE OFFICER

HANSPETER ACKERMANN
CHIEF INVESTMENT OFFICER

ROBERT R. GAMBEE
CHIEF OPERATING OFFICER AND SECRETARY

JOSEPH M. CHEUNG
CHIEF FINANCIAL OFFICER AND TREASURER

------------------
+Member of the Audit Committee

All investment management decisions are made by a committee of United States and
German advisors.

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

Investors Bank & Trust Company
Shareholder Services
P.O. Box 9130
Boston, MA 02117
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 representation 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 shareholders, the interview with the chief investment
officer 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 accuracy 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 and NEMAX 50 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.
--------------------------------------------------------------------------------

-----------------
[GRAPHIC OMITTED]
GF
LISTED
NYSE
-----------------

Copies of this report and other information are
available at:www.newgermanyfund.com

Please note that the Fund is producing
monthly newsletters which are
e-mailed in Acrobat. If you would
like to receive these please call
our Shareholder Services Department:
1-800-GERMANY ext. 0
and a representative will take your request.

SUMMARY OF GENERAL INFORMATION
--------------------------------------------------------------------------------

THE FUND

The New Germany Fund, Inc. is a non-diversified, actively-managed
Exchange-Traded 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 THE NEW
YORK TIMES, 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-GERMANY (in
the U.S.) or 617-443-6918 (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 Web site:
www.newgermanyfund.com.

--------------------------------------------------------------------------------
THERE ARE THREE EXCHANGE-TRADED CLOSED-END FUNDS INVESTING IN EUROPEAN EQUITIES
MANAGED BY WHOLLY-OWNED SUBSIDIARIES OF THE DEUTSCHEBANK GROUP:

o Germany Fund--investing primarily in equities of major German corporations.
It may also invest up to 20% in equities of other Western European
companies (with no more than 15% in any single country).

o New Germany Fund--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).

o Central European Equity Fund--investing primarily in Central and Eastern
European companies as well as in Russia.

Please consult your broker for advice on any of the above or call 1-800-GERMANY
(in the U.S.) or 617-443-6918 (outside of the U.S.) for shareholder reports.
--------------------------------------------------------------------------------
6602