<PAGE>
[LOGO] The Germany
Fund, Inc.
LETTER TO THE SHAREHOLDERS
- --------------------------------------------------------------------------------
February 10, 2000
Dear Shareholder,
We are pleased to report that for the year ended December 31, 1999, the
share price of the Germany Fund rose 23.8%. This compares with a rise of 20.0%
for the Fund's benchmark, the DAX Index. Adjusted for $1.75 in distributions
paid during the year, the net asset value per share of your Fund appreciated
18.1%. During the fourth quarter, the Fund's net asset value per share and share
price both rose 24.6%, compared to 28.0% for the DAX. The Fund's relative
underperformance during the fourth quarter was largely due to the Fund's
restriction from holding equivalent percentages of shares in its portfolio that
match the index, as well as other factors.
After lagging most of Europe in 1999, Germany's economic recovery is
clearly underway and could be the market to watch in 2000. Germany is in the
middle of major structural reforms aimed at increasing its competitiveness to
the rest of Europe. First, the government intends to cut the corporate tax rate
from 40% to 25% by the end of 2001, which essentially returns DM6 billion to the
corporate sector. The move symbolizes the government's intention to remove
barriers to business by introducing one of the lowest tax rates in Europe. The
second structural reform, and potentially even more positive for the German
equity market, is the plan to remove altogether the capital gains tax on the
unwinding of cross-shareholding by German corporations. This should increase the
already considerable M&A activity currently taking place. The managers of your
Fund have accordingly reduced its weighting in non-German stocks to 4.3% at
year-end (from almost 8% at the beginning of the fourth quarter).
The Germany Fund continued its open-market purchases of its shares, buying
1,003,800 shares during the past year. The Fund's discount to its share price
averaged 10.4% during the year, compared to 12.7% for 1998.
At the December Board Meeting, the Directors of your Fund elected Paul W.
Higgins as President and Chief Executive Officer to succeed Kenneth J. Tarr who
retired from Deutsche Bank at the end of last year. Mr. Higgins has been with
Bankers Trust Company for 25 years and is head of Private Banking--Americas. At
the same meeting the Board elected Hanspeter Ackermann to the position of Chief
Investment Officer, reflecting his principal role with the Fund since joining
Deutsche Bank Securities in 1996.
Sincerely,
/s/ Christian Strenger /s/ Paul W. Higgins
Christian Strenger Paul W. Higgins
Chairman President and
Chief Executive Officer
1
<PAGE>
FUND HISTORY AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
STATISTICS:
Net Assets .................................................. $249,596,009
Shares Outstanding .......................................... 14,744,203
NAV Per Share ............................................... $ 16.93
TOTAL RETURNS:
Period NAV
- ------ ---
1 year ended 12/31/99 ....................................... 18.08%
3 years ended 12/31/99* ..................................... 21.28%
5 years ended 12/31/99* ..................................... 20.42%
* Average annual return
DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS:
Record Ordinary LT Capital
Date Income Gains Total
- ------ -------- ---------- -----
11/19/99 .................... $0.29 $0.90 $1.19
9/1/99 ...................... -- $0.56 $0.56
11/16/98 .................... $1.46 $1.76 $3.22
9/1/98 ...................... $0.17 $0.45 $0.62
11/17/97 .................... $0.62 $2.23 $2.85
9/3/97 ...................... $0.07 $0.24 $0.31
12/19/96 .................... $0.34 $0.72 $1.06
9/3/96 ...................... -- $0.13 $0.13
12/27/95 .................... $0.29 $0.64 $0.93
OTHER INFORMATION:
NYSE Ticker Symbol ................................................... GER
NASDAQ Symbol......................................................... XGERX
Dividend Reinvestment Plan............................................ Yes
Voluntary Cash Purchase Program....................................... Yes
Annual Expense Ratio.................................................. 1.26%
[The following table was depicted as a bar chart in the printed material.]
NET ASSET VALUE MARKET VALUE DAX
--------------- ------------ ---
Year ended 12/31/99 18.08% 23.83% 19.98%
Year ended 12/31/98 22.66% 23.45% 26.38%
2
<PAGE>
PORTFOLIO BY MARKET SECTOR AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
[The following table was depicted as a pie chart in the printed material.]
Automotive (9.3%)
Pharmaceuticals (4.5%)
Telecommunications (26.7%)
Steel (1.2%)
Retail (2.7%)
Transportation (1.0%)
Utilities (3.5%)
Chemical (10.5%)
Banking (11.3%)
Medical Equipment (1.8%)
Electrical (7.2%)
Computer Services (5.3%)
Insurance (15.0%)
10 LARGEST EQUITY HOLDINGS AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
% of
Portfolio
---------
1. Deutsche Telekom 15.14
2. Mannesmann 11.54
3. Allianz 9.17
4. Siemens 7.18
5. Daimler-Chrysler 6.43
6. SAP 5.34
7. Munchener Ruckversicherungs 4.90
8. BASF 4.84
9. Commerzbank 4.56
10. Dresdner Bank 3.20
3
<PAGE>
INTERVIEW WITH THE CHIEF INVESTMENT OFFICER
- --------------------------------------------------------------------------------
Question: In the Letter to Shareholders, you mention the abolition of the
capital gains tax on disposals of cross-shareholdings. Can you explain this tax
change in more detail, and what is the effect on the German equity market?
Answer: This past December, Germany's Finance Minister announced his plan to
eliminate a 50% capital gains tax on asset sales by companies, effective in
2001. The plan would finally clear the path to unprecedented corporate
restructuring within Germany. It would allow companies to divest, free of tax,
big equity stakes held in other corporations. The practice of cross-
shareholdings began after World War II in an attempt to rebuild Germany, but has
since become a roadblock in the modernization of Germany's industry. Investors
have long complained that the cross-shareholdings have hampered returns and held
back industry consolidation. This new development is expected to improve
Germany's competitiveness and to boost its capital markets by increasing
liquidity and allowing companies to make better use of their cash currently tied
up in long-term holdings. So far, industrial companies have been able to get
away with below average profit margins because their majority owners protected
them from hostile bids. Going forward, this protection will be removed, leading
to further industry consolidation and increased profitability.
Question: How extensive is the cross-share ownership?
Answer: A perfect example of the extensive cross-shareholdings is Allianz,
Europe's second biggest insurance company. Allianz owns stakes in 17 of the 30
companies in the DAX Index and is the biggest shareholder in Dresdner Bank and
HypoVereinsbank. Allianz has always maintained that the high tax rate was the
main reason they have not sold direct investments, despite poor performance in
some cases. Going forward, the market value of companies in similar situations
should rise substantially. On the first day of the announcement, the share price
of financials such as Allianz were up more than 10%. More importantly, however,
the move is a further milestone in the process of the restructuring corporate
Germany in order to become more competitive.
Question: What about the proposed reform of both the personal and corporate tax
rates?
Answer: In a move to revive growth, cut unemployment, and regain its role as the
main economic engine of European growth, the German government proposed in
December big cuts in both personal and corporate taxes. Under the plan, more
than $36 billion will be cut from the tax bill of companies and individuals over
the next five years. The reforms will bring Germany's high nominal tax rate into
line with the rest of Europe and should improve the country's competitiveness.
The corporate tax changes will lower the stated tax rate for companies from 40%
to 25% in 2001. After adjusting for local taxes, the effective tax rate will
become approximately 38%, down from nearly 60% today. The impact of the reforms
will lead to a significant boost in corporate earnings, foreign direct
investment, and benefit job creation.
The proposed personal income tax reforms involves introducing a more simplified
income tax system ranging from 15% for the lowest earners, to 45% for the top
income tax bracket. Under the current system, the tax rate ranges from 23.9% to
53%. German Finance Minister, Hans Eichel said the changes would put Germany "in
the lower half" of European Union countries' income tax rates, with Germany's
lowest tax rate being the lowest in the EU. The beneficiary of these reforms is
the general public which will have more disposable income. Both tax proposals
will be put to a vote by the federal government this coming summer.
Hanspeter Ackermann,
Chief Investment Officer of the Germany Fund
4
<PAGE>
REPORT FROM THE INVESTMENT ADVISER AND MANAGER
- --------------------------------------------------------------------------------
Outlook for the German Economy
Germany's rise in GDP growth of 0.7% in the third quarter was the
strongest since the first quarter of 1998, and it indicates that Germany has
overcome the period of low growth which followed the emerging markets crisis.
The main engine in Germany's economic growth was exports, which grew at an
annualized rate of 11.7%. Furthermore, the growth in exports has led to strong
increases in investment in machinery and equipment. Private consumption was also
strong due to higher disposable household income. As a result we are very
bullish about Germany's economic outlook in the 4th quarter just ended, and for
all of 2000. We believe 4th quarter GDP growth rose 1.2%, and expect it to rise
to 3.0% for the new year, double the growth achieved in 1999. In addition, the
economic growth will be broad based. High capital goods orders should continue
to prevail. Investment in construction is set to increase further, due to a
higher order backlog and improved business expectation in the sector. Private
consumption should also expand further, given the stronger than expected
Christmas retail sales. In addition, the reduction in unemployment from 10.2% to
9.8% and the anticipation of tax cuts should give an added boost to consumption.
But the biggest contributor to growth in 2000 will continue to come from
exports. Exports are benefiting from the weak Euro, which makes German goods
highly competitive. The pickup in growth in Europe and emerging markets should
add to the momentum.
The Fund's Portfolio Strategy
The German Finance Ministry's surprise announcement to exempt capital
gains realized by German corporations on their investments in other German
companies provides a powerful stimulus to the insurance sector, as well as the
major banks. All of them have substantial excess capital invested in industrial
holdings, which could be redeployed in higher returning assets. We are therefore
maintaining our overweight position in the financial sector. Economically
sensitive sectors such as steel and chemicals were strong performers in 1999,
and we believe the economic environment will continue to be supportive for
earnings upgrades during the first quarter of 2000. We therefore maintain our
slight overweight in this sector. The Fund plans to maintain its underweight
position in the automobile sector, despite its significant underperformance in
1999. Although the market conditions have been favorable for car manufactures,
the sector continues to suffer from shrinking margins due to pricing pressure
and rising marketing costs. In addition, year on year comparisons will become
increasingly difficult to improve upon after six consecutive years of growth in
car sales in Europe. We continue to like the telecom sector as corporate
activity (such as Vodafone Airtouch's bid for Mannesmann) and other
consolidation throughout Europe has just begun.
5
<PAGE>
PRINCIPAL BENEFITS OF CLOSED-END FUNDS
- --------------------------------------------------------------------------------
1. You have a chance to buy at a discount.
Presently your Fund's shares trade at a discount to net asset value. No
one has been able to explain satisfactorily why discounts and premiums exist
other than to note they are a barometer of market sentiment just like
price/earnings ratios. We believe the Fund's current discount offers you the
opportunity to magnify your investment by buying a dollar's worth of assets for
less than a dollar.
2. You have the opportunity for better investment management from a stable
fund environment.
Your Fund's managers are able to focus on the investment process. They
concentrate on which securities to buy and sell and when to do so. They have the
flexibility to sell when prices rise and buy when they fall.
The managers do not have to be concerned with inflows of money or outflows
as do open-end mutual fund managers. They may remain more fully invested,
without having to keep a cash cushion to meet redemptions. They can ride out
market down-turns without having to sell securities they would prefer to keep.
In addition, a constant inflow of money can also make mutual funds victims
of their own success. The inflows must be invested by the portfolio manager at
times when good investment opportunities may not exist, which can create a drag
on the fund's performance.
3. The closed-end fund's focus is on current shareholders.
With a fixed amount of capital, a closed-end fund is not generally
involved in attracting additional funds, and shareholders are not required to
pay for the costs of attracting new investors. The open-end mutual fund
portfolio manager, however, has an incentive to attract new shareholders because
the amount of fees earned by the management company in no small part depends on
adding new money to the fund. In order to market the mutual fund to new
shareholders, current mutual fund shareholders are often charged marketing fees
which reduce the current shareholders' returns. In contrast, closed-end fund
investors are not burdened with these fees. Thus, the closed-end fund portfolio
manager is able to focus on returns for current shareholders, not attracting new
ones.
4. Expenses may be lower.
Unlike open-end mutual funds, the closed-end funds do not have recurring
marketing fees. There are no back-end load charges or 12b-1 marketing fees.
We are pleased that your Fund continues to enjoy one of the lowest expense
ratios of all of the European funds, whether they be open-end or closed-end,
according to Lipper Analytical. This lower cost is passed on to you, our
shareholder.
5. You can trade on an exchange.
Our Fund has been listed on the New York Stock Exchange since inception.
You can control the timing of your purchases and sales unlike mutual funds which
only take orders for execution at the end of the day and at a price you do not
know in advance. You may also place restrictions on your orders just like any
other exchange traded stock such as limit orders or stop orders.
You have the benefit of seeing the interday trading activity in your
Fund's shares, which can assist you in identifying the right times to buy or
sell and make limit order strategies more useful.
6
<PAGE>
THE BOARD OF DIRECTORS OF THE FUND
- --------------------------------------------------------------------------------
A recent topic of interest at both the Investment Company Institute (the
trade association for all mutual fund companies), as well as the Securities and
Exchange Commission, has been the composition of, and role played by, funds'
boards of directors.
Since inception, your Board of Directors has consisted largely of
independent professionals having no business relationship with the manager or
adviser. There are several committees of the Board--including Audit, Advisory,
Securities Lending and Pricing--that consist solely of outside directors. These
committees play an important role in overseeing the working of the Fund and its
compliance with the various securities regulations.
There are five regularly-scheduled board meetings each year. These
meetings are combined for the three closed-end funds managed by the Deutsche
Bank Group: the Germany Fund, the New Germany Fund and the Central European
Equity Fund. While each Fund's board of directors focuses on matters relating to
such Fund, the effect of having combined boards of directors meetings expands
the professional knowledge contributed at the meetings. In addition to the board
meetings, there are combined committee meetings (primarily Audit and Advisory)
during the year. All committees of the board, with the exception of the
Nominating Committee of which the Fund's chairman is a member, consist
exclusively of disinterested directors who are able to represent shareholders
objectively.
The list of directors of all three closed-end funds and their principal
occupations is published each year in the proxy statements. We summarize this
information on page 8.
7
<PAGE>
DIRECTORS OF THE CLOSED-END FUNDS
- --------------------------------------------------------------------------------
Mr. Detlef Bierbaum, Partner, Sal. Oppenheim & Cie., (private bank)
Mr. John A. Bult, Chairman, PaineWebber International
*Hon. Richard R. Burt, Chairman, IEP Advisers, LLP; former U.S. Ambassador to
Germany
*Mr. John H. Cannon, Vice President & Treasurer, Venator Group
Mr. Michael W.R. Dobson, Member of the Deutsche Bank AG Board of Managing
Directors
*Mr. Richard Goeltz, Vice Chairman and Chief Financial Officer, American Express
Co.
*Dr. Franz-Wilhelm Hopp, Chairman, ERGO Versich-erungsgruppe AG (insurance)
*Dr. Claus Koehler, Economist; former Member of the Directorate of the
Bundesbank (German Central Bank)
*Mr. Ernst-Ulrich Matz, Chief Financial Officer, IWKA AG (engineering)
*Mr. Edward Schmults, former General Counsel, GTE Corp.; former partner, White &
Case, former Deputy Attorney General of the United States
*Mr. Hans G. Storr, former CFO, Philip Morris Companies Inc.
Mr. Christian Strenger, Chairman of the Boards of Directors of the Closed-End
Funds, former CEO, DWS (Deutsche Bank's mutual fund group)
*Dr. Juergen Strube, Chairman, BASF AG (chemicals)
*Dr. Frank Tromel, Chairman, Delton AG (industrial holding company)
*Mr. Robert Wadsworth, President, Robert H.Wadsworth & Associates, Inc. (fund
administration)
*Mr. Werner Walbrol, President and CEO, German American Chamber of Commerce
*Mr. Otto Wolff von Amerongen, Chairman, Otto Wolff AG (industrial holding
company); former director, Exxon Company
*Mr. Peter Zuhlsdorff, Chairman, DIH-German Industrie Holding, former Chairman
of the Board, Wella AG (hair care products)
Note: The Directors of the three funds (the Germany Fund, the New Germany Fund
and the Central European Equity Fund) meet together in combined board meetings
although they speak for their respective funds. Four Directors sit on all three
fund boards: Messrs. Bult, Dobson, Strenger and Wadsworth. The following sit
only on the boards of the Germany Fund and the Central European Equity Fund:
Messrs. Bierbaum, Burt, Koehler, Schmults, Storr, Strube, Walbroel and Wolff.
The following sit only on the board of the New Germany Fund: Messrs. Cannon,
Goeltz, Hopp, Matz, Troemel and Zuhlsdorff.
* indicates a "disinterested director"
8
<PAGE>
OFFICERS AND ADVISORS OF THE CLOSED-END FUNDS
- --------------------------------------------------------------------------------
Mr. Paul W. Higgins, President and Chief Executive Officer of the Closed-End
Funds, Managing Director and Head of Private Banking Americas of Deutsche
Bank
Mr. Hanspeter Ackermann, Chief Investment Officer of the Closed-End Funds and
Managing Director of Deutsche Bank Securities Inc.
Mr. Robert Gambee, Chief Operating Officer and Secretary of the Closed-End
Funds, Director of Deutsche Bank Securities Inc.
Mr. Joseph Cheung, Chief Financial Officer and Treasurer of the Closed-End Funds
and Vice President of Deutsche Bank Securities Inc.
Ms. Isabella Chan, Funds Administrator, Deutsche Bank Securities Inc.
Mr. Thomas Gill, Assistant Vice President of Deutsche Bank Securities Inc.
Mr. Christophe Bernard, Senior Portfolio Manager, Deutsche Asset Management
International GmbH
Mr. Thomas Bucher, Portfolio Manager, Deutsche Asset Management International
GmbH
Mr. John Bostelman, Partner, Sullivan & Cromwell, Counsel to the Funds
Mr. Frank P. Bruno, Partner of Brown & Wood, Counsel to the Independent
Directors
SHARES REPURCHASED
- --------------------------------------------------------------------------------
During the past five years, the Fund has been purchasing shares of its
common stock in the open market. Your Directors continue to believe the Fund
represents excellent value. The shares repurchased for the past five years are
as follows:
Calendar year 1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Shares repurchased -0- 474,460 982,512 3,516,802 1,003,800
VOLUNTARY CASH PURCHASE PROGRAM
- --------------------------------------------------------------------------------
The Fund has an attractive way to purchase additional shares at reduced
cost. This is the Voluntary Cash Purchase Program which is part of the Dividend
Reinvestment Plan. By enrolling in the Voluntary Cash Purchase Program, you may
make additional investments each month--as little as $100 in any month or as
much as $36,000 a year. Share purchases are combined to receive a beneficial
brokerage fee. Further information is contained at the end of this Annual
Report.
9
<PAGE>
THE GERMANY FUND, INC.
SCHEDULE OF INVESTMENTS -- DECEMBER 31, 1999
- --------------------------------------------------------------------------------
Shares Description Value
------ ----------- -----
INVESTMENTS IN GERMAN
SECURITIES--93.8% OF NET ASSETS
COMMON STOCKS--85.9%
AUTOMOTIVE--9.1%
97,000 Bayerische Motoren Werke .......................... $ 2,964,082
202,260 Daimler-Chrysler .................................. 15,747,195
70,000 Volkswagen ........................................ 3,949,790
------------
22,661,067
------------
BANKING--10.3%
96,000 Bayerische Hypothekenbank
und Vereinsbank .................................. 6,564,125
304,000 Commerzbank ....................................... 11,174,987
143,820 Dresdner Bank ..................................... 7,832,293
------------
25,571,405
------------
CHEMICAL--7.6%
230,500 BASF .............................................. 11,855,422
150,000 Bayer ............................................. 7,109,925
------------
18,965,347
------------
ELECTRICAL--7.0%
138,000 Siemens ........................................... 17,577,550
------------
INSURANCE--13.8%
66,800 Allianz ........................................... 22,467,160
47,300 Munchener Ruckversicherungs ....................... 12,011,376
------------
34,478,536
------------
MEDICAL EQUIPMENT--1.7%
50,000 Fresenius Medical Care ............................ 4,281,083
------------
PHARMACEUTICAL--1.8%
36,000 Schering .......................................... 4,356,720
------------
RETAIL--2.7%
125,000 Metro ............................................. 6,731,738
------------
STEEL--1.2%
100,000 Thyssen Krupp* .................................... 3,050,713
------------
TELECOMMUNICATIONS--26.2%
520,000 Deutsche Telekom .................................. 37,076,494
117,000 Mannesmann ........................................ 28,259,682
------------
65,336,176
------------
TRANSPORTATION--1.0%
110,000 Lufthansa ......................................... 2,562,599
------------
UTILITIES--3.5%
100,000 Endesa ............................................ 1,987,754
80,000 VEBA .............................................. 3,892,810
152,000 VIAG .............................................. 2,789,914
------------
8,670,478
------------
Total Common Stocks
(cost $124,631,389) ............................. 214,243,412
------------
PREFERRED STOCKS--7.9%
CHEMICAL--2.7%
102,000 Henkel ............................................ 6,737,789
------------
COMPUTER SERVICES--5.2%
21,700 SAP ............................................... 13,086,901
------------
Total Preferred Stocks
(cost $10,923,107) .............................. 19,824,690
------------
Total Investments in
German Securities
(cost $135,554,496) ............................. 234,068,102
------------
INVESTMENTS IN DUTCH
COMMON STOCKS--1.7%
BANKING--0.8%
80,000 ABN AMRO Holdings ................................. 2,000,864
------------
INSURANCE--0.9%
38,000 Internationale Nederlanden Groep .................. 2,297,081
------------
Total Investments in
Dutch Common Stocks
(cost $3,799,981) ............................... 4,297,945
------------
INVESTMENTS IN FRENCH
COMMON STOCKS--2.6%
PHARMACEUTICAL--2.6%
113,278 Aventis
(cost $3,978,105) ............................... 6,591,716
------------
Total Investments--98.1%
(cost $ 143,332,582) ............................. 244,957,763
Cash and other assets in
excess of Liabilities--1.9% ..................... 4,638,246
------------
NET ASSETS--100% .................................. $249,596,009
============
* Non-income producing securities
See Notes to Financial Statements.
10
<PAGE>
THE GERMANY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $143,332,582) ................ $ 244,957,763
Cash and foreign currency
(cost of foreign currency $4,042,057) .................. 4,628,859
Dividend receivable ...................................... 304,963
Interest receivable ...................................... 51,160
Foreign withholding tax refund receivable ................ 162,011
-------------
Total assets ........................................... 250,104,756
-------------
LIABILITIES
Payable for shares repurchased ........................... 187,647
Payable for securities lending brokers'
rebate and agency fees ................................. 41,245
Management fee payable ................................... 112,594
Investment advisory fee payable .......................... 57,760
Payable for Directors' fees and expenses ................. 2,000
Accrued expenses and accounts payable .................... 107,501
-------------
Total liabilities ...................................... 508,747
-------------
NET ASSETS ............................................... $ 249,596,009
=============
Net assets consist of:
Paid-in capital, $.001 par
(Authorized 80,000,000 shares) ......................... $ 155,310,963
Cost of 791,854 shares held in treasury .................. (10,805,463)
Undistributed net realized gain on investments
and foreign currency transactions ...................... 3,480,220
Net unrealized appreciation of investments
and foreign currency ................................... 101,610,289
-------------
Net assets ............................................... $ 249,596,009
=============
Net asset value per share
($249,596,009 divided by 14,744,203 shares of
common stock issued and outstanding) ................... $16.93
======
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the year ended
December 31, 1999
-----------------
NET INVESTMENT INCOME
Income
Dividends (net of foreign withholding
taxes of $374,901) ................................... $ 3,477,140
Interest ............................................... 37,685
Securities lending, net of borrowers'
rebate and agency fees ............................... 88,764
-------------
Total income ............................................. 3,603,589
-------------
Expenses
Management fee ......................................... 1,252,558
Investment advisory fee ................................ 646,829
Reports to shareholders ................................ 248,763
Custodian and Transfer Agent's
fees and expenses ................................. 206,699
Directors' fees and expenses ........................... 149,853
Legal fee .............................................. 32,202
Audit fee .............................................. 55,500
NYSE listing fee ....................................... 24,260
Miscellaneous .......................................... 130,810
-------------
Total expenses before custody credits* ................. 2,747,474
Less: custody credits .................................. (13,913)
-------------
Net expenses ........................................... 2,733,561
-------------
Net investment income .................................... 870,028
-------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investments ............................................ 20,167,335
Foreign currency transactions .......................... (367,645)
Net change in unrealized appreciation/depreciation on:
Investments ............................................ 17,639,101
Translation of other assets and
liabilities from foreign currency .................... (14,674)
-------------
Net gain on investments and
foreign currency transactions .......................... 37,424,117
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ 38,294,145
=============
* The custody credits are attributable to interest earned on U.S. cash
balances.
See Notes to Financial Statements.
11
<PAGE>
THE GERMANY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
year ended year ended
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income ................................................... $ 870,028 $ 2,983,269
Net realized gain (loss) on:
Investments ........................................................... 20,167,335 45,626,460
Foreign currency transactions ......................................... (367,645) 512,896
Net change in unrealized appreciation/depreciation on:
Investments ........................................................... 17,639,101 4,854,890
Translation of other assets and liabilities from foreign currency ..... (14,674) 13,531
------------- -------------
Net increase in net assets resulting from operations .................... 38,294,145 53,991,046
------------- -------------
Distributions to shareholders from:
Net investment income ................................................... (546,557) (2,983,269)
Net realized foreign currency gains* .................................... -- (720,027)
Net realized short term capital gains* .................................. (3,530,855) (17,137,087)
Net realized long term capital gains .................................... (20,446,494) (28,062,983)
------------- -------------
(24,523,906) (48,903,366)
------------- -------------
Capital share transactions:
Net proceeds from reinvestment of dividends
(1,252,699 and 3,951,509 shares, respectively) ........................ 16,568,036 56,522,712
Cost of shares repurchased (1,003,800 and 3,516,802 shares, respectively) (13,697,631) (56,830,882)
------------- -------------
Net increase (decrease) in net assets from capital share transactions ... 2,870,405 (308,170)
------------- -------------
Total increase in net assets .............................................. 16,640,644 4,779,510
NET ASSETS
Beginning of year ......................................................... 232,955,365 228,175,855
------------- -------------
End of year (including undistributed net investment income of
$0 as of December 31, 1999 and 1998) .................................... $ 249,596,009 $ 232,955,365
============= =============
</TABLE>
- ----------
*Characterized as ordinary income for tax purposes.
See Notes to Financial Statements.
12
<PAGE>
THE GERMANY FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- December 31, 1999
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
The Germany Fund, Inc. (the "Fund") was incorporated in Delaware on April 8,
1986 as a diversified, closed-end management investment company. Investment
operations commenced on July 23, 1986. Pursuant to shareholder approvals, the
Fund reincorporated in Maryland on August 29, 1990 and dissolved the charter of
incorporation in Delaware, and on October 16, 1996 the Fund changed from a
diversified to a non-diversified company.
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 generally accepted accounting principles
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,
or, if no sales price is available at that time, at the price established by the
exchange. Securities that are traded in the unregulated market are valued, if
bid and asked quotations are available, at the current bid price. If bid and
asked quotations are not available, then such securities 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.
Repurchase Agreements: The Fund's custodian takes possession of collateral
pledged for investments in repurchase agreements, the market value of which is
required to be at least 102 percent of the resale amount at the time of
purchase. The value of the collateral is marked-to-market on a daily basis and
additional collateral is requested from the counterparty, as necessary, to
ensure that its value is at least equal at all times to the total amount of the
repurchase obligation, including interest. If the seller defaults and the value
of the collateral declines or if bankruptcy proceedings commence with respect to
the seller of the security, realization of the collateral by the Fund may be
delayed or limited.
Loans of Portfolio Securities: The Fund may lend portfolio securities while it
continues to earn dividends on such securities loaned. The cash collateral
received is at least equal at all times to 105 percent of the market value of
the securities loaned, which are marked-to-market daily. Such collateral is
invested in short term instruments and any interest income in excess of agency
fees and of a predetermined rebate to the borrowers is earned by the Fund and is
identified separately in the Statement of Operations.
Foreign Currency Translation: The books and records of the Fund are maintained
in United States dollars. Assets and liabilities denominated in Euros ("EUR")
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 Federal income tax
regulations which may differ from generally accepted accounting principles.
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.
13
<PAGE>
THE GERMANY FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- December 31,1999 (continued)
- --------------------------------------------------------------------------------
During the year ended December 31, 1999, the Fund reclassified permanent book
and tax differences as follows:
Increase
(decrease)
----------
Undistributed net investment income ......................... $(323,471)
Undistributed net realized gain on investments
and foreign currency transactions ......................... 323,471
Paid-in capital ............................................. -0-
NOTE 2. MANAGEMENT AND INVESTMENT
ADVISORY AGREEMENTS
The Fund has entered into a Management Agreement with 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 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 $50 million, and .55% of such assets in excess of $50 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 will be 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,
will determine the suitable securities for investment by the Fund. The Manager
will also provide 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 objective, policies and restrictions, will make 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, will
transmit purchase and sale orders, and select brokers and dealers to execute
portfolio transactions on behalf of the Fund.
NOTE 3. TRANSACTIONS WITH AFFILIATES
For the year ended December 31, 1999, Deutsche Bank AG, the German parent of the
Manager and Investment Adviser, and its affiliates received $423,075 in
brokerage commissions as a result of executing agency transactions in portfolio
securities on behalf of the Fund.
Certain directors and officers of the Fund are also directors and officers of
either the Manager, the Investment Adviser or Deutsche Bank AG.
Certain directors of the Fund serve as directors of certain portfolio securities
held by the Fund.
NOTE 4. PORTFOLIO SECURITIES
Purchases and sales of investment securities, other than short-term investments,
for the year ended December 31, 1999 were $155,175,622 and $180,168,118,
respectively.
The cost of investments at December 31, 1999 was $143,675,538 for United States
Federal income tax purposes. Accordingly, as of December 31, 1999, net
unrealized appreciation of investments aggregated $101,282,225, of which
$104,493,417 and $3,211,192 related to unrealized appreciation and depreciation,
respectively.
During the period November 1, 1999 to December 31, 1999, the Fund incurred
foreign currency losses of $251,305. This loss was deferred for federal income
tax purposes to January 1, 2000.
NOTE 5. PORTFOLIO SECURITIES LOANED
For the year ended December 31, 1999, net earnings to the Fund from investing
the cash collateral received for portfolio securities loaned were $88,764, after
deducting borrowers' rebate and agency fees of $1,489,055 and $45,948,
respectively.
NOTE 6. CAPITAL
During the years ended December 31, 1999 and 1998, the Fund purchased 1,003,800
and 3,516,802 of its shares of common stock on the open market at a total cost
of $13,697,631 and $56,830,882, respectively. The weighted average discount of
these purchases comparing the purchase price to the net asset value at the time
of purchase was 11.3% and 11.6%, respectively. These shares were held in
treasury.
14
<PAGE>
THE GERMANY FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of common stock outstanding throughout each of the
years indicated:
<TABLE>
<CAPTION>
For the year ended December 31,
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per share operating performance:
Net asset value:
Beginning of year ............................. $ 16.07 $ 16.23 $ 15.76 $ 13.52 $ 12.89
-------- -------- -------- -------- --------
Net investment income ......................... .06 .23 .09 .08 .12
Net realized and unrealized gain on
investments and foreign currency transactions 2.57 3.41 3.50 3.34 1.64
-------- -------- -------- -------- --------
Increase from investment operations ........... 2.63 3.64 3.59 3.42 1.76
-------- -------- -------- -------- --------
Increase resulting from share repurchases ..... .12 .54 .19 .10 --
-------- -------- -------- -------- --------
Distributions from net investment income ...... (.04) (.23) -- -- (.12)
Distributions from net realized
foreign currency gains+ ..................... -- (.06) -- -- (.08)
Distributions from net realized
short-term capital gains+ ................... (.25) (1.35) (.69) (.34) (.15)
Distributions from net realized
long-term capital gains ..................... (1.46) (2.20) (2.47) (.85) (.71)
-------- -------- -------- -------- --------
Total distributions ........................... (1.75) (3.84) (3.16) (1.19) (1.06)
-------- -------- -------- -------- --------
Dilution in NAV from dividend reinvestment .... (.14) (.50) (.15) (.09) (.07)
-------- -------- -------- -------- --------
Net asset value:
End of year ................................. $ 16.93 $ 16.07 $ 16.23 $ 15.76 $ 13.52
======== ======== ======== ======== ========
Market value:
End of year ................................. $ 15.125 $ 13.875 $ 14.25 $ 12.625 $ 11.375
Total investment return for the year:++
Based upon market value ..................... 23.83% 23.45% 38.3% 21.55% 15.72%
Based upon net asset value .................. 18.08% 22.66% 23.16% 25.47% 13.12%
Ratio to average net assets:
Total expenses before custody credits* ..... 1.26% 1.16% 1.19% 1.26% 1.23%
Net investment income ....................... .40% 1.20% .49% .56% .88%
Portfolio turnover ............................ 71.52% 80.93% 81.2% 55.4% 41%
Net assets at end of year (000's omitted) ..... $249,596 $232,955 $228,175 $223,800 $189,686
</TABLE>
- ----------
+ Characterized as ordinary income for tax purposes.
++ Total investment return is calculated assuming that shares of the Fund's
common stock were purchased at the closing market price as of the
beginning of the period, 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
period. 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 value.
* The custody credits are attributable to interest earned on U.S. cash
balances. The ratios of total expenses after custody credits to average
net assets would have been 1.25% and 1.15% for 1999 and 1998,
respectively.
See Notes to Financial Statements.
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of The 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 Germany Fund, Inc. (the "Fund")
at December 31, 1999, 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.
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 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, 1999 by correspondence with the custodian, provide
a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
February 18, 2000
1999 U.S. TAX INFORMATION
(Unaudited)
- --------------------------------------------------------------------------------
The Fund intends to make an election under Internal Revenue Code Section
853 to pass through foreign taxes paid by the Fund to its shareholders. The
total amout of foreign taxes that will be passed through to the shareholders for
the fiscal year ended December 31, 1999 is $285,210. The foreign source income
for information reporting purposes is $682,341. The Fund made capital gain
distributions of $20,446,494 during the year.
This information is given to meet certain requirements of the Internal
Revenue Code. Shareholders should refer to their Form 1099-DIV to determine the
amounts includable on their respective tax returns for 1999.
16
<PAGE>
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
1537, Boston, Massachusetts 02205 (telephone 1-800-356-2754). 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.
17
<PAGE>
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 Partici pants 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.
18
<PAGE>
EXECUTIVE OFFICES
31 West 52nd Street, New York, NY 10019
(For latest net asset value, schedule of the Fund's largest hold- ings, 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
DETLEF BIERBAUM
Director
JOHN A. BULT
Director
+RICHARD R. BURT
Director
MICHAEL W. R. DOBSON
Director
PROF. DR. CLAUS KOEHLER
Director
+EDWARD C. SCHMULTS
Director
+HANS G. STORR
Director
DR. JUERGEN F. STRUBE
Director
+ROBERT H. WADSWORTH
Director
+WERNER WALBROEL
Director
OTTO WOLFF VON AMERONGEN
Director
PAUL W. HIGGINS
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
+ Members of the Audit Committee
All investment management decisions are made by a committee of United States and
German advisors.
- --------------------------------------------------------------------------------
This report, including the financial statements herein, is transmitted to the
shareholders of The 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 portfolio
manager and the report of 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 Deutsche Aktien index 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.
- --------------------------------------------------------------------------------
---------------------------
GER
Listed
[LOGO]
THE NEW YORK STOCK EXCHANGE
---------------------------
19
<PAGE>
SUMMARY OF GENERAL INFORMATION
- --------------------------------------------------------------------------------
THE FUND
The Germany Fund is a non-diversified, closed-end investment company listed on
the New York Stock Exchange with the symbol "GER". The Fund seeks long-term
capital appreciation primarily through investment in German equities. It is
managed by Deutsche Bank Securities Inc., using investment advice from the
Deutsche Asset Management International GmbH unit of Deutsche Bank AG, the
world's largest bank.
SHAREHOLDER INFORMATION
Daily prices for the Fund's shares are published in the New York Stock Exchange
Composite Trans actions section of newspapers under the designation "Germany
Fd". Net asset value and market price in formation 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 XGERX). It is also
available, together with the Deutsche mark exchange rate and the DAX index 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.
For periodic updates please also visit our Web site: http://www.gerfund.com.
- --------------------------------------------------------------------------------
There are three closed-end funds for your selection:
o Germany Fund--investing primarily in equities of major German
corporations. It may also invest up to 35% 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
Europe.
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.
- --------------------------------------------------------------------------------
101614
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[LOGO]
The Germany
Fund, Inc.
Annual Report
December 31, 1999
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