TGCF_Def14a_0707
TAIWAN
GREATER CHINA FUND
July 24,
2007
c/o
Brown
Brothers Harriman
P.O.
Box
962047
Boston,
MA 02196-2047
Telephone:
1-800-343-9567
Dear
Shareholders:
You
are
cordially invited to attend the Annual Meeting of Shareholders (the “Meeting”)
of the Taiwan Greater China Fund (the “Trust”, formerly known as The R.O.C.
Taiwan Fund), which will be held at the offices of Clifford Chance LLP, 31
W.
52nd Street, New York, New York, 10019-6131 on Tuesday, August 21, 2007 at
9:30
a.m., New York City time. A formal notice and a Proxy Statement regarding the
Meeting, a proxy card for your vote at the Meeting and a postage prepaid
envelope in which to return your proxy are enclosed. Shareholders who plan
on
attending the Meeting will be required to provide valid identification in order
to gain admission.
At
the
Meeting, Shareholders will:
| (i) |
Elect
two Trustees, each to serve for a term expiring on the date of the
2010
Annual Meeting of Shareholders or the special meeting in lieu thereof;
|
| (ii) |
Consider
whether to approve a new investment advisory agreement between the
Trust
and Nanking Road Capital Management, LLC (the “Proposed
Adviser”);
|
| (iii) |
Consider
whether to approve the conversion of the Trust from a closed-end
investment company into an open-end investment company; and
|
| (iv) |
Transact
such other business as may properly come before the Meeting or any
adjournment thereof.
|
The
Board
of Trustees recommends that you vote for
each of
the nominees for Trustee named in the accompanying Proxy Statement. The
investments of the Trust are currently managed internally by employees of the
Trust. The new investment advisory agreement is with the Proposed Adviser,
a
company recently formed by those employees. The Trustees believe that entering
into the new investment advisory agreement will permit the Trust to reduce
its
expenses for management of its investments by taking advantage of economies
of
scale achieved by the Proposed Adviser by providing advisory services to clients
in addition to the Trust. Accordingly, the Board of Trustees recommends that
you
vote
for
approval
of the new investment advisory agreement.
The
Board
of Trustees recommends that you vote against approval of the conversion of
the
Trust from a closed-end investment company to an open-end investment company.
Whether
or not you plan to attend the Meeting in person, it is important that your
shares be represented and voted. After reading the enclosed notice and Proxy
Statement, please complete, date, sign and return the enclosed proxy card at
your earliest convenience. Your return of the proxy card will not prevent you
from voting in person at the Meeting should you later decide to do
so.
If
you
are a beneficial owner holding shares through a broker-dealer or other nominee,
please note that, under the rules of the New York Stock Exchange, broker-dealers
or other nominees may either use their discretion to vote your shares on the
proposal described in paragraphs (i) and (iii) above without your instructions,
or leave your shares unvoted. Under those rules, broker-dealers are not
permitted to vote shares on the proposal described in paragraph (ii) above
without instructions. Accordingly, the Board of Trustees of the Trust urges
all
beneficial owners of shares who are not also record owners of such shares to
contact the institutions through which their shares are held and give
appropriate instructions, if necessary, to vote their shares. The Trust will
also be pleased to cooperate with any appropriate arrangement pursuant to which
beneficial owners desiring to attend the Meeting may be identified as such
and
admitted to the Meeting as Shareholders.
Time
will
be provided during the Meeting for discussion, and Shareholders present will
have an opportunity to ask questions about matters of interest to
them.
Respectfully,
Steven
R.
Champion David
N.
Laux
President Chairman
of the Board of Trustees
Important
Matters Will Be Considered At The Meeting. Accordingly, All Shareholders,
Regardless Of The Size Of Their Holdings, Are Urged To Sign And Mail The
Enclosed Proxy In The Enclosed Envelope, Or To Give Appropriate Instructions
To
Persons Holding Shares of Record On Their Behalf,
Promptly.
TAIWAN
GREATER CHINA FUND
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD AUGUST 21, 2007
To
the
Shareholders of the Taiwan Greater China Fund:
NOTICE
IS
HEREBY GIVEN that the Annual Meeting of Shareholders (the “Meeting”) of the
Taiwan Greater China Fund (the “Trust”, formerly known as The R.O.C. Taiwan
Fund) will be held at the offices of Clifford Chance LLP, 31 W. 52nd Street,
New
York, New York, on Tuesday, August 21, 2007 at 9:30 a.m., New York City time,
for the following purposes:
| 1. |
To
elect two Trustees, each to serve for a term expiring on the date
of the
2010 Annual Meeting of Shareholders or the special meeting in lieu
thereof.
|
| 2. |
To
approve a new investment advisory agreement between the Trust and
Nanking
Road Capital Management, LLC (the “Proposed
Adviser”)
|
| 3. |
To
consider whether to approve the conversion of the Trust from a closed-end
investment company into an open-end investment company; and
|
| 4. |
To
transact such other business as may properly come before the Meeting
or
any adjournment thereof.
|
The
Board
of Trustees of the Trust has fixed the close of business on July 11, 2007 as
the
record date for the determination of Shareholders entitled to notice of and
to
vote at the Meeting and at any adjournment thereof. Shareholders are entitled
to
one vote for each share of beneficial interest of the Trust held of record
on
the record date with respect to each matter to be voted upon at the
Meeting.
You
are
cordially invited to attend the Meeting. All Shareholders are requested to
complete, date and sign the enclosed proxy card and return it promptly, and
no
later than August 20, 2007, in the envelope provided for that purpose, which
does not require any postage if mailed in the United States. If you are able
to
attend the Meeting, you may, if you wish, revoke the proxy and vote personally
on all matters brought before the Meeting. The enclosed proxy is being solicited
by the Board of Trustees of the Trust.
BY
ORDER
OF THE BOARD OF TRUSTEES
Cheryl
Chang, Secretary
July
24,
2007
TAIWAN
GREATER CHINA FUND
PROXY
STATEMENT
INTRODUCTION
This
Proxy Statement is furnished in connection with the solicitation of proxies
on
behalf of the Board of Trustees (the “Board of Trustees” or the “Board”, the
Trustees of the Board are referred to as the “Trustees”) of the Taiwan Greater
China Fund (the “Trust”, formerly known as The R.O.C. Taiwan Fund) for use at
the Annual Meeting (the “Meeting”) of holders of shares (the “Shareholders”) of
the Trust (the “Shares”) to be held at the offices of Clifford Chance LLP, 31 W.
52nd Street, New York, New York, on Tuesday, August 21, 2007 at 9:30 a.m.,
New
York City time, and at any adjournment thereof.
This
Proxy Statement and the accompanying proxy are first being mailed to
Shareholders on or about July 24, 2007. Any Shareholder giving a proxy has
the
power to revoke it by mail (addressed to The Altman Group,
1200
Wall Street West, 3rd Floor, Lyndhurst, NJ 07071),
or in
person at the Meeting, by executing a superseding proxy or by submitting a
notice of revocation to the Trust. All properly executed proxies received by
mail on or before the close of business on August 20, 2006 or delivered
personally at the Meeting will be voted as specified in such proxies or, if
no
specification is made, for proposals 1 and 2.
The
Board
of Trustees has fixed the close of business on Wednesday, July 11, 2007, as
the
record date for the determination of Shareholders entitled to notice of and
to
vote at the Meeting and at any adjournment thereof. Shareholders of record
will
be entitled to one vote for each Share. No Shares have cumulative voting rights
for the election of the Trustees.
As
of the
record date, the Trust had 15,235,536
Shares outstanding. Abstentions will be counted as present for all purposes
in
determining the existence of a quorum.
One-third
of the Trust's outstanding Shares, present in person or represented by proxy
at
the Meeting, will constitute a quorum for the transaction of business at the
Meeting. The affirmative vote of a plurality of the Shares present or
represented by proxy and voting on the matter in question at the Meeting is
required to elect the nominees for election as Trustees. As provided under
the
Investment Company Act of 1940, as amended (the “Investment Company Act”),
approval of the new investment advisory agreement requires the affirmative
vote
of the lesser of (a) 67% or more of the outstanding Shares present or
represented at the Meeting, if holders of more than 50% of the outstanding
Shares of the Trust entitled to vote are present or represented by proxy at
the
Meeting, or (b) more than 50% of the outstanding Shares of the Trust entitled
to
vote. Approval of converting the Trust from a closed-end fund to an open-end
fund requires the affirmative vote of a majority of the outstanding shares.
Shares
represented by duly executed proxies will be voted at the Meeting in accordance
with the instructions given. However,
if no instructions are specified on the proxy with respect to a proposal, shares
will be voted FOR the election of the two nominees for Trustees, FOR the
approval of the new investment advisory agreement, AGAINST approval of
conversion of the Trust to an open-end fund and in accordance with the judgment
of the persons appointed as proxies upon any other matter that may properly
come
before the Meeting. A
Shareholder may revoke a previously submitted proxy at any time prior to the
Meeting by (i) a written revocation, which must be signed and include the
Shareholder’s name and account number, received by the Secretary of the Trust at
c/o Brown Brothers Harriman, P.O. Box 962047, Boston, MA 02196-2047; (ii)
properly executing a later-dated proxy; or (iii) attending the Meeting and
voting in person. Abstentions will be treated as votes present and not cast
at
the meeting. Accordingly, abstentions will not have the effect of votes in
opposition to the election of a Trustee under Proposal 1 but will effectively
be
treated as an “Against” vote for the approval of the new investment advisory
agreement under Proposal 2 and conversion of the Trust to an open-end fund
under
Proposal 3.
The
Trust
knows of no business that may or will be presented for consideration at the
Meeting, other than those mentioned in Proposals 1, 2 and 3 described herein.
If
any matter not referred to above is properly presented, the persons named on
the
enclosed proxy will vote in accordance with their discretion. However, any
business that is not on the agenda for the Meeting may be presented for
consideration or action at the Meeting only with the approval of the Board
of
Trustees.
The
address of Brown Brothers Harriman, which provides certain administrative
services for the Trust, is 40 Water Street, Boston, Massachusetts 02109-3661.
BENEFICIAL
OWNERSHIP OF SHARES
The
following table provides information, as of July
11,
2007, except as noted, regarding the beneficial ownership of Shares by (i)
each
person or group known to the Trust to be the beneficial owner of more than
5% of
the Shares outstanding, (ii) each of the Trust's Trustees or Trustee nominees,
(iii) each executive officer of the Trust and (iv) all Trustees, Trustee
nominees and executive officers of the Trust as a group. Except as noted, each
of the named owners has sole voting and dispositive power over the Shares
listed.
|
Name
and Address of
Beneficial
Owner
|
Amount
of Beneficial Ownership
|
Percent
of Fund
|
|
City
of London Investment Group plc (“CLIG”)
City
of London Investment Management Company Limited (“CLIM”)
10
Eastcheap
London
EC3M 1LX
U.K.
|
2,759,577(1)
|
18.11%
|
|
NewGate
LLP
80
Field Point Road
12th
Floor
Greenwich
CT 06830
U.S.A.
|
1,643,120(2)
|
10.78%
|
|
Sarasin
Invesment Fund Ltd.
155
Bishopsgate
London
EC2M 3XY
|
1,049,000(3)
|
6.89%
|
|
Lazard
Asset Management LLC (“Lazard”)
30
Rockefeller Plaza
New
York, New York 10112
U.S.A.
|
1,230,080(4)
|
8.07%
|
----------------------------------------------------------------------------------------------------
TRUSTEES
AND EXECUTIVE OFFICERS
|
Name
|
Amount
of Beneficial Ownership
|
Percent
of Fund
|
Dollar
Range of Beneficial
Ownership
**
|
|
Steven
R. Champion
|
18,500
|
*
|
Over
$100,000
|
|
David
Laux
|
6,000
|
*
|
$10,001-$50,000
|
|
Frederick
C. Copeland, Jr.
|
7,000
|
*
|
$50,001-$100,000
|
|
Robert
P. Parker
|
2,000
|
*
|
$10,001-$50,000
|
|
Edward
B. Collins
|
3,000
|
*
|
$10,001-$50,000
|
|
Tsung-Ming
Chung
|
0
|
N/A
|
None
|
|
Pedro-Pablo
Kuczynski
|
2,300
|
*
|
$10,000-$50,000
|
|
All
Trustees, Trustee nominees and executive officers as a
group
|
38,800
|
*
|
|
*Less
than 1%
**
Based
on the net asset value of the Shares on July 11, 2007 ($8.28).
(1) Based
upon information provided by CLIG and CLIM in a Statement on Schedule 13G
jointly filed on February 6, 2007 with respect to ownership as of December
29,
2006. In that statement, CLIM reported that it held its 2,759,577
Shares
as investment adviser to certain investment funds. CLIG reported that its
ownership included the 2,759,577
Shares
held by CLIM as a result of CLIG’s status as the parent holding company of CLIM.
CLIG and CLIM stated that they held sole voting power and sole dispositive
power
over their Shares.
(2)
Based
upon information provided by Newgate LLP in a Statement on Schedule 13G filed
on
January 18, 2007 with respect to its ownership as of December 31, 2006,
declaring that it held sole voting and sole dispositive power over its
Shares.
(3) Based
upon information disclosed on Bloomberg. This information reflects that Sarasin
Emerging Sar Fund holds 495,299 Shares, and SaraPro Emerging Markets Fund holds
306,010 Shares. The Trust believes that Sarasin holds voting and shared
dispositive power over all such Shares.
(4)
Based
upon information provided by Lazard in a Statement on Schedule 13G filed on
February 8, 2007 with respect to its ownership as of January 31, 2007, declaring
that it held sole voting and sole dispositive power over its
Shares.
PROPOSAL
1.
ELECTION OF TRUSTEES
The
two
nominees for election to the Board of Trustees are Mr. David N. Laux and Mr.
Pedro-Pablo Kuczynski. Mr. Laux is currently a Trustee of the Trust and the
Chairman of the Board of Trustees, and if reelected, will serve for a term
expiring on the date of the 2010 Annual Meeting of Shareholders or the special
meeting in lieu thereof. Mr. Kuczynski is currently a Trustee of the Trust,
and
if elected, will serve for a term expiring on the date of the 2010 Annual
Meeting of Shareholders or the special meeting in lieu thereof. Messrs. Laux
and
Kuczynski were nominated by the Board of Trustees, at a meeting held in January
2007, upon the recommendation of the Trust’s Nominating Committee.
The
persons named in the accompanying proxy will, in the absence of contrary
instructions, vote all proxies FOR the election of Messrs. Laux
and
Kuczynski. Each nominee has indicated his consent to be named in the
accompanying proxy and that he will serve if elected. If Messrs. Laux and
Kuczynski should be unable to serve (an event not now anticipated), the proxies
will be voted for such person(s), if any, as is designated by the Board of
Trustees to replace Mr. Laux and/or Mr. Kuczynski as the case may be.
INFORMATION
CONCERNING NOMINEES
The
following table sets forth certain information concerning Messrs. Laux
and
Kuczynski:
|
Name
(Age) and
Address
|
Position(s)
Held
with the
Trust
|
Term
of Office and
Length
of Time
Served
|
Principal
Occupation(s)
During
the Past
Five
Years
|
Other
Business
Experience,
Other
Positions
with Affiliated
Persons
of the Trust and
Other
Directorships
Held
by Nominee
|
|
Non-Interested
Nominees
|
|
|
|
|
|
David
N. Laux (79)
The
Hampshire, Apt. No. 701
1101
N. Elm St. Greensboro, N.C. 27401 U.S.A.
|
Trustee
and
Chairman
of the Board
|
Trustee
since 1992 and until
the
2007 Annual Meeting of
Shareholders
or the special
meeting
in lieu thereof; Chairman of the Board since July 2004
|
Chairman,
Great Dads (non-profit), since 2004; President, US-Taiwan
Business
Forum,
from
2000 to 2005; Director, International Foundation, since
2001
|
President,
US-ROC (Taiwan)
Business
Council, 1990-2000;
Chairman
and Managing
Director,
American Institute
in
Taiwan, 1987-90; Director
of
Asian Affairs, National
Security
Council, The White
House,
1982-86
|
|
Pedro-Pablo
Kuczynski (68)
Chequehuanla
967
San
Isidro, Lima, Peru
|
Trustee
|
Trustee
since September, 2006 and until the 2007 Annual Meeting of Shareholders
or
the special meeting in lieu thereof.
|
Senior
Advisor and Partner, The Rohatyn Group (emerging markets manager),
since
2007; Prime Minister of Peru, from 2005-2006;
Minister
of Economy of Peru, 2004-2005
Minister
of Economy of Peru, 2001-2002;
Partner
and CEO, Latin America Enterprise Fund (private equity), since
2003
|
Chairman
and Director, Advanced Metallurgical Group (“AMG, N.V.”), since 2007;
Director, Ternium Inc., since 2007
|
INFORMATION
CONCERNING OTHER TRUSTEES
The
following table sets forth certain information concerning the Trustees of the
Trust (other than Messrs. Laux and Kuczynski).
|
Name
(Age) and
Address
|
Position(s)
Held
with the
Trust
|
Term
of Office and
Length
of Time
Served
|
Principal
Occupation(s)
During
the Past
Five
Years
|
Other
Business
Experience,
Other
Positions
with Affiliated
Persons
of the Trust and
Other
Directorships
Held
by Nominee
|
|
Non-Interested
Trustees
|
|
|
|
|
|
Edward
B. Collins (64)
160
Sansome Street, 18th
Floor,
San Francisco,
California
94104
U.S.A.
|
Trustee
|
Trustee
since 2000 and until the 2009 Annual Meeting of Shareholders or the
special meeting in lieu thereof
|
Managing
Director, China Vest Group (venture capital investment), since prior
to
2000
|
Director,
Mediostream, since 2001; Chairman, California Bank of Commerce, since
2006; Director, Chic Holdings, since 2005; Partner, McCutchen, Doyle,
Brown & Enersen (law firm), 1987-95
|
|
Frederick
C. Copeland, Jr. (65)
11
Deer Ridge Road
Avon,
Connecticut 06001 U.S.A.
|
Trustee
and Vice Chairman of the Board
|
Trustee
since May 2004 and
until
the 2008 Annual
Meeting
of Shareholders or
the
special meeting in lieu
thereof;
Vice Chairman of the Board since February 2006
|
Vice
Chairman, Director, Chairman of Executive Committee, Far East National
Bank since 2004; Principal, Deer Ridge
Associates,
LLC (financial
consulting),
2001- 2006
|
President,
Chief
Executive
Officer and Chief Operating
Officer,
Aetna International (insurance),
from
1995 to 2001;
Executive
Vice President,
Aetna,
Inc. (insurance), from 1997 to 2001;
Chairman,
President and
Chief
Executive Officer, Fleet
Bank,
N.A., 1993-1995;
President
and Chief
Executive
Officer, Citibank
Canada
Ltd., 1987-1993;
Taiwan
Country Head,
Citibank,
1983-1987
|
|
Tsung-Ming
Chung (58)
4F,
No.1, Lane 21, Hsing-Hua Road
Kwei-Shan
Industrial Zone,
Taoyuan,
Taiwan, R.O.C.
|
Trustee
|
Trustee
since 2006 and until the 2009 Annual Meeting of Shareholders or the
special meeting in lieu thereof
|
Chairman
and Chief Executive Officer, Dynapak International Technology Corp;
Chairman, Systems and Chips, Inc.; Director, Arima Group (technology)
|
Director,
Far Eastern International Bank; Director and Chairman of Audit Committee,
Taiwan Mobile Co.; Director and Audit Committee Chairman, Semiconductor
Manufacturing International Corporation
|
|
Robert
P. Parker (65)
101
California Street,
Suite
2830
San
Francisco, California 94111 U.S.A
|
Trustee
TTrustee
|
Trustee
since 1998 and until
the
2008 Annual Meeting of
Shareholders
or the special
meeting
in lieu thereof; and
Chairman
of the Board from February 2004 to July 2004
|
Chairman,
Parker Price
Venture
Capital, Inc.
(formerly
known as Allegro
Capital,
Inc.), since 1997
|
Director,
NexFlash Technologies, Inc.,2001-2005
Partner,
McCutchen, Doyle, Brown & Enersen (law firm),
1988-97
|
BOARD
STRUCTURE
Since
the
inception of the Trust in 1989, the Trustees of the Trust have been divided
into
three classes, each having a term of three years, with the term of one class
expiring each year. As of the date of this proxy statement, the Board has six
members, with at least two members in each of the three classes.
BOARD
AND COMMITTEE MEETINGS
The
Board
of Trustees of the Trust held five meetings during the fiscal year ended
December 31, 2006. Each Trustee attended at least 75% of the total of (i) all
meetings of the Board of Trustees and (ii) all meetings of each committee of
the
Board on which he served during the fiscal year ended December 31,
2006.
EXECUTIVE
COMMITTEE
The
Trust's Board of Trustees has an Executive Committee, which, subject to certain
restrictions, may exercise all powers and authority of the Board between
meetings of the Board. The current members of the Executive Committee are
Messrs. David N. Laux (Chair), Edward B. Collins and Robert P. Parker, all
of
whom are not “interested persons” of the Trust, as defined in Section 2(a)(19)
of the Investment Company Act of 1940, as amended (the “Investment Company
Act”), and are independent Trustees of the Trust, as defined under the rules of
the New York Stock Exchange (the “NYSE”). The Executive Committee did not hold
an Executive Committee Meeting during the fiscal year ended December 31, 2006.
The Executive Committee does not have a charter.
NOMINATING
COMMITTEE
The
Board
of Trustees has a Nominating Committee, the current members of which are Messrs.
Robert P. Parker (Chair) and David N. Laux. The members of the Nominating
Committee are not “interested persons” of the Trust, as defined in Section
2(a)(19) of the Investment Company Act, and also are independent Trustees of
the
Trust, as defined under the rules of the NYSE. The Nominating Committee has
a
charter, which is available on the Trust’s website at
www.taiwangreaterchinafund.com. The charter provides that the Nominating
Committee will consider recommendations of Trustee nominees submitted by
Shareholders. Any such recommendations should be sent to the Trust's Nominating
Committee c/o Brown Brothers Harriman, P.O. Box 962047, Boston, Massachusetts
02196-2047, ATTN: Investor Services Counsel, Fund Administration. The charter
also provides that the Nominating Committee will consider potential candidates
who are personally known to members of the Nominating Committee, persons who
are
recommended to the Nominating Committee by other members of the Board and other
persons known by Board members or persons identified by any search firm retained
by the Nominating Committee. In considering whether to recommend that an
individual be nominated as a Trustee, the Nominating Committee will take the
following criteria, among others, into account: (i) the Board's size and
composition; (ii) applicable listing standards and laws; (iii) an individual's
expertise (especially with regard to matters relating to Taiwan, mainland China
and public and private investment funds), experience and willingness to serve
actively; (iv) whether an individual will enhance the functioning of the Board
and the compatibility of his or her views concerning the manner in which the
Trust should be governed with the Board’s assessment of the interests of the
Trust’s shareholders; and (v) the number of company boards of directors on which
such individual serves.
During
the fiscal year ended December 31, 2006, the Nominating Committee did not retain
any search firm or pay a fee to any third party to identify Trustee
candidates.
The
Nominating Committee held two meetings during the fiscal year ended December
31,
2006. On January 26, 2007, the Nominating Committee recommended that Messrs.
David N. Laux and Pedro-Pablo Kuczynski, respectively, be nominated to stand
for
election at the 2007 Annual Meeting of Shareholders.
COMPENSATION
COMMITTEE
The
Board
of Trustees has a Compensation Committee, current members of which are Messrs.
Frederick C. Copeland, Jr. (Chair), Edward B. Collins and David N. Laux. The
members of the Compensation Committee are not “interested persons” of the Trust,
as defined in Section 2(a)(19) of the Investment Company Act, and also are
independent Trustees of the Trust, as defined under the rules of the NYSE.
The
function of the Compensation Committee is to set and review the compensation
and
terms of employment of the Trust's Chief Executive and Chief Financial Officer
and to oversee the compensation of the Trust's other employees. The Compensation
Committee met once during the fiscal year ended December 31, 2006.
AUDIT
COMMITTEE AND INDEPENDENT PUBLIC ACCOUNTANTS
The
Board
of Trustees has an Audit Committee established in accordance with Section
3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and Rule 32a-4 of the Investment Company Act. The current members of the
Audit Committee are Messrs. Edward B. Collins (Chair), Frederick C. Copeland,
Jr., Robert P. Parker and Tsung-Ming Chung. The members of the Audit Committee
are not interested persons of the Trust, as defined in the Investment Company
Act, and also are independent Trustees of the Trust, as defined in the rules
of
the NYSE.
The
responsibilities of the Audit Committee include, among other things, review
and
selection of the independent public accountants of the Trust, review of the
Trust's financial statements prior to their submission to the Board of Trustees
and of other accounting matters of the Trust, and review of the administration
of the Trust's Codes of Ethics and Whistleblower Policy.
Audit
Committee Report
The
Audit
Committee held two meetings during the fiscal year ended December 31, 2006
and
also met on February 26, 2007. At those meetings the Audit Committee, among
other things:
(i)
approved the selection of KPMG LLP (“KPMG”) as the Trust's independent public
accountants for its 2006 and 2007 fiscal years;
(ii)
reviewed the audited financial statements of the Trust for its 2005 and 2006
fiscal years and discussed those statements with the Trust's management and
KPMG;
(iii)
discussed with the Trust's management and KPMG those matters requiring
discussion by the Accounting Standards Board's Statement of Auditing Standards
No. 61 as currently in effect, including the independence of KPMG;
(iv)
received the written disclosures and the letters from KPMG required by the
Independence Standards Board's Standard No. 1 as currently in
effect;
(v)
reviewed the charter for the Audit Committee;
(vi)
reviewed the status of the Trust’s conversion to internal management;
and
(vii)
pre-approved the payment of fees for permitted non-audit services.
Based
upon the reviews, discussions and consideration described above, the Audit
Committee recommended to the Board of Trustees that the Trust's audited
financial statements be included in its Annual Report to Shareholders for the
Trust's fiscal year ended December 31, 2006.
Edward
B.
Collins
Frederick
C. Copeland Jr.
Robert
P.
Parker
Tsung-Ming
Chung
Representatives
of KPMG are expected to be available at the Meeting, will have an opportunity
to
make a statement if they desire to do so and are expected to be available during
the Meeting to respond to appropriate questions from Shareholders.
AUDIT
FEES
The
aggregate fees billed for professional services rendered by KPMG, the Trust’s
independent auditors, in connection with the annual audit of the Trust’s
financial statements and for services normally provided by KPMG in connection
with statutory and regulatory filings or engagements for the fiscal years ended
December 31, 2005 and December 31, 2006 were $80,000 and $84,000,
respectively.
NON-AUDIT
FEES
Audit-Related
Fees. The Trust did not pay KPMG any audit-related fees (other than those
disclosed under “Audit Fees” above), and there were no audit-related fees paid
by the Trust to KPMG that were required to be approved by the Trust’s Audit
Committee, in its 2005 and 2006 fiscal years.
Tax
Fees.
The aggregate fees billed for professional services rendered by KPMG for the
preparation of the Trust’s federal income and excise tax returns and the
provision of tax advice and planning services for the 2005 and 2006 fiscal
years
were $27,250 and $25,175, respectively.
All
Other
Fees. There were no other fees billed for professional services rendered by
KPMG
for services to the Trust other than the fees for services referenced above
for
the 2005 and 2006 fiscal years.
Aggregate
Amount of Non-Audit Fees. The aggregate amount of non-audit fees billed by
KPMG
for services rendered to the Trust for its 2005 and 2006 fiscal years were
$27,250 and $25,175, respectively.
AUDIT
COMMITTEE’S PRE-APPROVAL POLICIES AND PROCEDURES
The
Audit
Committee approves the engagement of the Trust’s accountants to render audit or
non-audit services before such accountants perform such services.
All
services described under “Audit Fees” and “Non-Audit Fees” above that required
approval were pre-approved by the Audit Committee before KPMG’s engagement to
perform them.
POLICY
ON TRUSTEES’ ATTENDANCE AT ANNUAL SHAREHOLDER MEETINGS
The
Trust’s policy with regard to attendance by members of the Board of Trustees at
its Annual Meetings of Shareholders is that all Trustees are expected to attend,
absent extenuating circumstances. All four Trustees attended the 2006 Annual
Meeting.
COMMUNICATIONS
WITH THE BOARD OF TRUSTEES
Shareholders
who wish to communicate with the Board of Trustees with respect to matters
relating to the Trust may address their correspondence to the Board as a whole
or to individual members c/o Brown Brothers Harriman, P.O. Box 962047, Boston,
Massachusetts 02196-2047, ATTN: Investor Services Counsel, Fund
Administration.
OFFICERS
OF THE TRUST
The
following table sets forth certain information concerning the officers of the
Trust. Information regarding Mr. Laux, the Chairman of the Board, is set forth
in the Trustee table above. The Chairman and the President (Messrs. Laux and
Champion, respectively) each holds office until his successor is duly elected
and qualified, and all other officers hold office at the discretion of the
Trustees.
|
Name
(Age) and
Address
|
Position(s)
Held
with the
Trust
|
Length
of Time
Served
|
Principal
Occupation(s)
During
the Past
Five
Years
|
|
Steven
R. Champion (61)
Bank
Tower Room 1001
205
Dun Hua North Road
Taipei,
Taiwan, R.O.C.
|
President,
Chief
Executive
Officer
and
Portfolio
Manager;
President from May 1989 to June 1992
|
Since
February 2004
|
Executive
Vice President,
Bank
of Hawaii, 2001-2003;
Chief
Investment Officer,
Aetna
International (Insurance), from
prior
to 2000 to 2001
|
|
Cheryl
Chang (42)
Bank
Tower Room 1001
205
Dun Hua North Road
Taipei,
Taiwan, R.O.C.
|
Secretary,
Treasurer,
Chief Financial
Officer
and Chief Compliance Officer
|
Secretary,
Treasurer and Chief Financial Officer since June 2004; Chief Compliance
Officer since September 2004
|
Senior
Manager, KPMG
(Taipei
Office), from prior to
2000
to 2004; Assurances
and
Advisory Unit of
International
Practice
Group,
KPMG (audit, tax, finance and risk advisory) (Taipei
Office),
2000-2004
|
|
Dirk
Bennet (60)
Bank
Tower
Room
1001
205
Dun Hua North Road
Taipei,
Taiwan, R.O.C.
|
Vice
President, Assistant Secretary
|
Assistant
Secretary since May 1996; Vice President since February
2004
|
Manager,
Research Department of International Investment Trust Company Limited
(investment advisor) from August 1992 to September
2004
|
TRUSTEE
AND OFFICER COMPENSATION
The
compensation received by each Trustee and officer of the Trust for the fiscal
year ended December 31, 2006 is set forth below.
|
Name
|
Position
|
Total
Compensation from the Trust Paid to Trustees and officers
(1)(2)
|
|
Edward
B. Collins
|
Trustee
|
$23,000
(2)
|
|
Frederick
C. Copeland, Jr.
|
Trustee
|
$27,353(2)
|
|
David
N. Laux
|
Trustee
|
$29,000(2)
|
|
Robert
P. Parker
|
Trustee
|
$25,000
(2)
|
|
Tsung-Ming
Chung
|
Trustee
|
$10,329(2)
|
|
Pedro-Pablo
Kuczynski
|
Trustee
|
$5,359(2)
|
|
Steven
R. Champion
|
President,
Chief Executive Officer, Portfolio Manager
|
$524,963
|
|
Cheryl
Chang
|
Chief
Financial Officer, Secretary, Treasurer, Chief Compliance Officer
|
$113,146
|
(1)
The
Trustees and officers of the Trust do not receive any pension or retirement
benefits from the Trust.
(2)
Compensation consists of a $2,000 meeting fee for each Board of Trustees’
meeting or committee meeting attended in person, $1,000 meeting fee for each
Board of Trustees’ meeting or committee meeting attended by telephone and an
annual retainer of $12,000 ($20,000 for the Chairman and $17,000 for the Vice
Chairman).
REQUIRED
VOTE
The
affirmative vote of a plurality of Shares present or represented by proxy and
voting on the matter in question at the Meeting is required to elect the
nominees for election as Trustees. Abstentions will be treated as votes present
and not cast at the meeting. Abstentions will not have the effect of votes
in
opposition to the election of a Trustee under this Proposal 1.
The
Board of Trustees unanimously recommends that Shareholders vote “FOR” the
election of the nominees as Trustees. The
persons named in the accompanying proxy will, in the absence of contrary
instructions, vote all proxies “FOR” Proposal 1.
PROPOSAL
2: APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
The
Trust
is registered as a diversified, closed-end management investment company under
the Investment Company Act and has operated as a closed-end fund since the
reorganization of The Taiwan (R.O.C.) Fund, which was an open-end fund not
registered in the United States, into the Trust on May 19, 1989.
The
Board
of Trustees held a meeting on June 26, 2007 and, at that meeting, approved,
subject to shareholder approval, a new investment advisory agreement (the
“Advisory Agreement”) with the proposed adviser. The Advisory Agreement is
attached to this proxy statement as Exhibit A and the discussion contained
herein regarding the Advisory Agreement is qualified in its entirety by
reference to the attached Advisory Agreement. The proposed adviser, Nanking
Road
Capital Management, LLC (the “Proposed Adviser”), is a company currently being
organized by the employees of the Trust who currently manage the Trust’s
investments. The
Proposed Adviser is in the process of registering as an investment advisory
company with the U.S. Securities and Exchange Commission (the "SEC"). While
the
Proposed Adviser expects to complete the process prior to the Annual Meeting
of
Shareholders, the new advisory agreement will not take effect until the process
is completed. The employees who currently manage the Trust’s investments will
continue to manage the Trust’s investments until the advisory agreement becomes
effective.
Article
IV, Section 4.1 of the Declaration of Trust provides the Board of Trustees
with
the authority to enter, subject to shareholder approval, into one or more
investment advisory or management contracts appointing an investment manager
who
shall undertake such management, investment advisory, statistical and research
facilities and services, promotional activities and such other facilities and
services, if any, as the Trustees may determine. Currently, the Trust is
internally managed by its employees.
The
Advisory Agreement between the Trust and the Proposed Adviser provides that
the
Proposed Adviser shall provide the Trust with advisory services and obligates
the Proposed Adviser to make all investment decisions for the assets of the
Trust (the “Assets”)
and to
manage the investment and reinvestment of the Assets in accordance with the
investment objective and policies of the Trust, as such investment objective
and
policies are amended from time to time by the Board (or with the concurrence
of
the Trust’s shareholders, in each case in accordance with the requirements of
the Investment Company Act), and subject always to the restrictions of the
Trust’s Declaration of Trust and By-Laws, as amended or restated from time to
time. The Proposed Adviser shall, at the instruction of the Board of Trustees,
assist and make recommendations to, the Executive Committee of the Trust with
respect to the Board of Trustees’ duty to determine in good faith the fair
values of the Trust’s securities in the absence of readily available market
quotations and in circumstances where certain events or circumstances would
indicate the market quotation of a security is not reliable pursuant to the
procedures and criteria set forth in the Trust’s Valuation Procedures. Under the
Advisory Agreement, the Proposed Adviser shall vote the Trust’s proxies in
accordance with the proxy voting policies, which may be amended from time to
time by the Board and communicated to the Proposed Adviser.
Under
the
Advisory Agreement, the Proposed Adviser shall provide the Trust with a Chief
Executive Officer, Chief Financial Officer, and Chief Compliance Officer;
subject to the request and approval of the Board. Under the Advisory Agreement,
the Proposed Adviser shall make such reports to the Board as the Board may
deem
necessary or advisable and as may be required by rules and regulations under
the
Investment Company Act and shall provide such other services and advice as
the
Board may reasonably request.
Investment
Advisory Fees
For
the
services provided pursuant to the Advisory Agreement, the Proposed Adviser
is
entitled to receive from the Trust, an advisory fee, based on the portion of
average daily net assets of the Trusts at the following rates: 1.25% of the
first $150 million of the Fund’s average weekly net assets; and 1.00% of the
Fund’s average weekly net assets in excess of $150 million. Such fees will be
computed weekly and payable monthly. The net asset value of the Trust’s Assets
shall be determined in the manner provided in the Trust’s prospectus that
printed and filed with the SEC following the Trust’s reorganization into the
Trust on May 19, 1989.
.
Board
Considerations
The
Board
of Trustees has considered the appointment of the Proposed Adviser as the
Trust’s investment manager, subject to shareholder approval of the Advisory
Agreement. Upon shareholder approval, the Board of Trustees will enter into
the
Advisory Agreement, effectively immediately, with the Proposed Adviser for
the
services described under the Advisory Agreement. Set forth below are the factors
that the Board of Trustees considered in approving the Proposed Adviser and
the
Advisory Agreement.
Benefits
to Shareholders:
The
Board
of Trustees considered the Trust’s internal investment structure against more
standard external investment advisory structures and determined that it would
be
in the best interests of shareholders to replace the Trust’s internal investment
management structure with an external investment manager established by the
employees of the Trust who are currently managing the Trust’s investments. The
Board of Trustees noted that a change to an external investment advisory
structure with the Proposed Adviser would maintain the Trust’s current
management team that had created a strong performance track record for the
Trust
over the past three and a half years1 .
The
Board of Trustees noted that, in engaging the Proposed Adviser as the Trust’s
investment adviser, the Trust would continue to benefit from the team’s
experience in managing the Trust and their reputation among the investment
community. The Trustees considered the potential reduction and capping of
investment management and other expenses in conjunction with an investment
manager, in particular, the potential of the external manager to reduce the
Trust’s investment management fees through economies of scale in operational
costs from managing investments for other clients as well as the Fund. In
addition, the Board of Trustees reviewed the proposed advisory fee schedule
which contained breakpoints to reduce the fees as the Trust’s assets increased,
specifically the reduction of its advisory fees as follows: 1.25% of the first
$150 million of the Fund’s average weekly net assets; and 1.00% of the Fund’s
average weekly net assets in excess of $150 million. The Board of Trustees
considered that a change to an external investment advisory structure would
provide Shareholders with increased transparency and stronger governance
procedures through the discipline of the annual review of the Proposed Adviser.
The
potential reduction in management fees is dependent upon the proposed adviser
retaining additional investment advisory clients and that the Trust will reach
a
size in assets under management so that it may enjoy the benefit of a reduction
in fees. There is no guarantee that either event will occur.
Nature,
Extent and Quality of Services:
In
considering the nature, extent and quality of the services to be provided by
the
Proposed Adviser the Board of Trustees received a presentation by the Proposed
Adviser as to the services it would provide and as to its qualifications to
manage the Trust. In this connection, the Trustees considered the nature and
quality of the services provided by the principals of the Proposed Adviser
as
employees of the Trust since the Trust internalized its investment management
in
2004. On this basis, the Board determined the Proposed Adviser to be capable
and
qualified to perform the services to be provided under the Advisory Agreement
and that the nature and extent of the services to be provided by the Proposed
Adviser would be of uniformly high quality and could be expected to remain
so.
Fund
Performance:
The
Board
of Trustees noted that, in view of the Trust’s distinctive investment objective
of long term capital appreciation through investments in securities of Taiwan
issuers, primarily by investing in Taiwan listed companies that derive or expect
to derive a significant portion of their revenues from operations in, or exports
to, mainland China and based upon the information provided in the materials
and
upon reports provided by internal management at the meeting on June 26, 2007
and
throughout the year, the investment performance of the Trust’s portfolio was
satisfactory. The Board of Trustees further concluded that, although the number
of comparable funds was limited, on the basis of this limited number, the
Trust’s expense ratio, once the Advisory Agreement took effect, could be
expected to be in keeping with the expense ratios of direct competitors.
Accordingly, the Board of Trustees determined that the overall performance
of
the Trust could be expected to be satisfactory.
1
For the
three year period ending June 29, 2007, following the Trust’s conversion to an
internal management structure, the Trust’s total return based on the market
price of its stock was +63.6%, and the total return based on its net asset
value
was +68.8%. This compares to a total return for the same period of 71.0%
for the
Trust’s benchmark index, Taiwan Greater China Strategy index. For the
one-,five-, and ten year periods ended June 29, 2007, the Fund’s average annual
total return based on the market price of its stock was +25.00%, +9.91% and
-1.50%, respectively. For the one-, five-, and ten year periods ended June
30,
2007, the Fund’s average annual total return based on its net asset value was
+33.05%, +10.64% and -3.14%, respectively.
Profitability/Costs:
The
Board
of Trustees reviewed the projected profitability of the Proposed Adviser in
connection with the provision of services to the Trust. The Trustees reviewed
the Proposed Adviser’s projected costs in providing services to the Trust. The
Board of Trustees concluded that the profitability projections in no way
rendered the Proposed Adviser’s advisory fees excessive. The Board of Trustees
considered other ways that the Proposed Adviser could benefit from its
relationship with the Trust and noted that other than the advisory fee, there
was no other investment advisor and brokerage fee received or receivable by
the
Proposed Adviser from the Trust. The Board of Trustees concluded that the
Proposed Adviser would not, at this point, derive other significant benefits
from its relationship with the Trust.
Economies
of Scale:
The
Board
of Trustees, on the basis of their analysis of the information and materials
provided by the Proposed Adviser, determined that the Advisory Agreement
provided opportunity for the Trust to realize economies of scale with respect
to
investment management fees as the Trust grew its asset size. The Board of
Trustees determined that, in addition, the proposed fee under the Advisory
Agreement reflected the benefits expected from such economies of scale with
respect to the Proposed Adviser’s potential management of additional client’s
assets.
Fees:
The
Board
of Trustees considered that the fees contained in the Advisory Agreement
provided a framework to pass on to shareholders expense savings. In order to
better evaluate the Proposed Adviser’s advisory fees, the Board of Directors
reviewed comparative information with respect to fees paid by comparable funds.
The Board of Trustees noted that, due to the Fund’s distinctive investment
objective, the number of comparable funds was limited. The Board of Trustees
determined that, based on the limited data available, the Proposed Adviser’s
fees were reasonable.
Board
Conclusions
The
Board
based its consideration and evaluation of the Proposed Adviser on the
information it was presented and the specific factors regarding the nature,
extent and quality of services to be provided, including the good relative
performance of the principals of the Proposed Adviser in managing the Trust’s
investments as employees of the Trust and the projected profitability and costs
associated with the Proposed Adviser. The Board of Trustees concluded that
the
compensation to be paid to the Proposed Adviser would be fair and reasonable
in
light of the services to be provided and expenses to be incurred by the Proposed
Adviser.
REQUIRED
VOTE
As
provided by the Investment Company Act, approval of Proposal 2 requires the
affirmative vote of a majority of the outstanding voting securities of the
Trust, which means the affirmative vote of the lesser of (a) 67% or more of
the
outstanding Shares present or represented at the Meeting, if holders of more
that 50% of the outstanding Shares of the Trust entitled to vote are present
or
represented by proxy at the Meeting, or (b) more than 50% of the outstanding
Shares of the Trust entitled to vote. Abstentions and broker “non-votes” will be
treated as votes present but not cast for purposes of Proposal 2 and will
therefore have the effect of a vote cast against Proposal 2.
The
Board of Trustees believes that an Advisory Agreement between the Trust and
the
Proposed Adviser is in the best interests of Shareholders of the Trust.
Accordingly, the Board of Trustees unanimously recommends that Shareholders
vote
“FOR” Proposal 2. The persons named in the accompanying proxy will, in the
absence of contrary instructions, vote all proxies “FOR” Proposal 2.
Abstentions
and “non-votes” will be treated as votes present and not cast at the meeting.
Abstentions and “non-votes” will however, have the effect of votes in opposition
to this Proposal 2.
PROPOSAL
3: CONVERSION OF THE TRUST FROM A CLOSED-END INVESTMENT COMPANY TO AN OPEN-END
INVESTMENT COMPANY
BACKGROUND
AND SUMMARY
The
Trust
is registered as a closed-end investment company under the Investment Company
Act and has operated as a closed-end fund since the reorganization of The Taiwan
(R.O.C.) Fund (which was an open-end fund not registered in the United States)
into the Trust on May 19, 1989. The Trust’s Amended and Restated Declaration of
Trust (the “Declaration of Trust”) and By-Laws provide that the Board of
Trustees is required to submit to the Shareholders at their next annual meeting
a binding resolution to convert the Trust into an open-end investment company
if
the Shares trade on the NYSE at an average discount from their net asset value
(“NAV”) of more than 10% during any twelve-week period beginning after the most
recent such vote (which occurred at the Trust’s 2005 annual meeting). For these
purposes the average variation of the trading price of the Shares from their
NAV
is determined on the basis of such variances for each trading day (which means
each day when the NYSE is open for trading) during the applicable twelve-week
period and then the average of such daily variances is determined for the
applicable 12-week period as of the end of such period. The affirmative vote
of
a majority of the Shares outstanding and entitled to vote is required for the
adoption of such a resolution.
By
the
terms of the Declaration of Trust, this requirement became effective on June
1,
1992, and since then the Shareholders have voted on such a resolution ten times;
in 1995 and each of the years from 1997 through 2005. In each instance the
Board
recommended that Shareholders vote against the resolution to convert the Trust
into an open-end investment company, and such resolution was not adopted by
the
Shareholders. In the most recent vote, on July 21, 2005, 21.65% of the
outstanding Shares were voted in favor of the proposal, 40.03% were voted
against, and 20.71 % were either not present at the meeting, were not voted
or
abstained from voting on that particular matter (which are effectively votes
against the proposal).
After
the
vote in 2005, the Shares, like those of most other closed-end country funds,
continued to trade at a discount. The average discount for the period from
the
2005 Annual Meeting of Shareholders until the record date for the 2007 Annual
Meeting of Shareholders, however, has been smaller than in recent years. During
all but one of the twelve-week periods since the 2005 Annual Meeting of
Shareholders until the record date for the 2007 Annual Meeting of Shareholders,
the Shares traded at an average discount of 10% or less. Only during the
twelve-week period ending on July 13, 2007 did the Shares trade at an average
discount of more than 10%, requiring the Board of Trustees to submit to the
Shareholders the proposal described herein. The average discount ranged from
a
high of 10.27% for the twelve-week period ended July 13, 2007 to a low of 5.65%
of the twelve-week period ended June 23, 2006.
On
July
13, 2007, the Shares’ trading price on the NYSE closed at a discount to NAV per
Share of 10.26%. Conversion of the Trust to an open-end investment company
would
eliminate the trading market in the Shares and provide Shareholders with a
continuing opportunity to redeem their Shares from the Trust at their NAV.
The
proposal will be adopted, as provided in the Declaration of Trust, only if
approved by holders of a majority of the Shares outstanding and entitled to
vote.
The
Board
of Trustees of the Trust considered information concerning the legal,
operational and practical differences between closed-end and open-end investment
companies, the Trust’s performance to date as a closed-end fund, the historical
relationship between the market price of the Shares and their NAV, the possible
effects of conversion on the Trust and alternatives to conversion. The Board
of
Trustees resolved to recommend to the Trust’s Shareholders that they vote
against the proposal to convert the Trust to an open-end investment
company.
In
making
this recommendation, the Board of Trustees considered measures taken since
the
last vote by Shareholders to convert the Trust to an open-end investment company
and determined that such measures have proved effective in lowering the discount
at which the Shares have traded in relation to their NAV. These measures
(described in further detail below) included the establishment of a share
repurchase program. The average daily discount from June 21, 2005 to July 13,
2007 was 7.54%
In
addition, the Board of Trustees
considered the steps taken in an effort to improve the Trust’s performance and
the effect conversion of the Trust to an open-end investment company may
have on
performance. In February 2004, the Trust implemented the Board’s new strategy of
investing primarily in Taiwan Stock Exchange listed companies which derive
or
which are expected to derive a substantial portion of their revenues by
exporting to or operating in mainland China. For the three year period from
June
30, 2004 to June 29, 2007, the Trust’s Share price and NAV price lagged its
primary benchmark, the Taiwan China Strategy Index2 (the “TCS
Index”) on a total return basis. The total return of the TCS Index is computed
with dividends reinvested, after the deduction of applicable withholding
taxes.
The Trust also measures its performance against two other benchmarks; the
Morgan
Stanley Capital International, Inc. Taiwan Index (the “MSCI Taiwan Index”) and
the Taiwan Stock Exchange Total Return Index (the “TAIEX”). Against the MSCI
Taiwan Index, both the Trust’s Share price and its NAV outperformed that index
for that period. The Trust’s price and NAV, however, both underperformed the
TAIEX for that period. The MSCI Taiwan Index is also computed with dividends
reinvested, after the deduction of applicable withholding taxes. The TAIEX
total
returns are calculated on a gross basis, with dividends reinvested but without
the deduction of any withholding taxes. The TCS Index was developed by the
Trust
in cooperation with Morgan Stanley Capital International (“MSCI”) and is
calculated by MSCI.
The
Board
of Trustees believes that conversion to an open-end investment company could
adversely affect the functioning of the Trust’s investment operations and its
investment performance, as described below under “Effect of Conversion on the
Trust -- Portfolio Management.” The Board also believes that conversion could
expose the Trust to the risk of a substantial reduction in its size and a
corresponding loss of economies of scale and increase in its expenses as a
percentage of NAV, as described below under “Effect of Conversion on the Trust -
Potential Increase in Expense Ratio and Decrease in Size.”
Since
the
reorganization of the Trust in 1989, the Shares periodically have traded at
a
premium (although not in recent years) above NAV. (See below under “Differences
Between Open-end and Closed-end Investment Companies - Fluctuation of Capital;
Redeemability of Shares; Elimination of Discount and Premium”.) The Shares’
average annual discount/premium (determined by comparing the Shares’ NAV to
their closing price on the NYSE on each trading day pursuant to the Trust’s
by-laws) by year is as follows:
2 *
Source: MSCI. This information is for internal use only and may not be
redistributed or used in connection with creating or offering any securities,
financial products or indices. Neither MSCI nor any other third party involved
in or related to compiling, computing or creating the MSCI data (the “MSCI
Parties”) makes any express or implied warranties or representations with
respect to such data (or the results to be obtained by the use thereof),
and the
MSCI Parties hereby expressly disclaim all warranties of originality, accuracy,
completeness, merchantability or fitness for a particular purpose with
respect
to such data. Without limiting any of the foregoing, in no event shall
any of
the MSCI Parties have any liability for any direct, indirect, special,
punitive,
consequential or any other damages (including lost profits) even if notified
of
the possibility of such damages.
The
Taiwan China Strategy Index is a custom index calculated by MSCI for, and
as
requested by, Taiwan Greater China Fund. To calculate this Index MSCI starts
with the MSCI Taiwan Index and then excludes those securities selected
by Taiwan
Greater China Fund on a quarterly basis based on Taiwan Greater China Fund’s
screening criteria. MSCI has no role in developing, reviewing or approving
Taiwan Greater China Fund’s investing criteria or the list of companies excluded
from the MSCI Taiwan Index by Taiwan Greater China Fund to create the Taiwan
China Strategy Index.
|
YEAR
|
DISCOUNT(-)/
PREMIUM
|
|
1989
(May 12 to December 31)
|
2.71%
|
|
1990
|
-9.47%
|
|
1991
|
-3.29%
|
|
1992
|
4.26%
|
|
1993
|
3.45%
|
|
1994
|
0.75%
|
|
1995
|
1.23
%
|
|
1996
|
3.28%
|
|
1997
|
-17.06%
|
|
1998
|
-17.67%
|
|
1999
|
-14.24%
|
|
2000
|
-18.82%
|
|
2001
|
-14.51%
|
|
2002
|
-14.95%
|
|
2003
|
-11.33%
|
|
2004
|
-9.99%
|
|
2005
|
-7.55%
|
|
2006
|
-7.30%
|
|
2007
(January 1, 2007 to June 30, 2007)
|
-8.38%
|
The
Board
of Trustees believes that eliminating the discount would not justify the
fundamental changes that conversion would entail to the Trust’s portfolio
management and operations, the risk of reduced size and the potential adverse
effect on the Trust’s investment performance.
In
order
to attempt to reduce or possibly eliminate the discount, the Board continues
to
seek to increase awareness about the Trust through Shareholder and market
communications and meetings by management with members of the investment
community specializing in the closed-end funds sector. While these efforts
have
not eliminated the Shares’ tendency in recent years to trade at a discount to
NAV, the Board of Trustees believes that such efforts have materially lessened
the discount as well as had a favorable effect on Shareholder relations by
keeping major Shareholders informed concerning the Trust’s investment strategies
and policies and by informing the Board of those Shareholders’ views concerning
the Trust’s management, strategies and policies.
In
addition, the Board of Trustees recognizes that discounts as well as premiums
can be a likely result of the closed-end format because of the probability
that
the shares of a closed-end fund will trade at a higher or lower price than
the
NAV per share. In addition, the Board of Trustees recognizes that discounts
(and
possible premiums) are an inherent consequence of the closed-end fund format.
Discounts can vary widely over time, and a market discount can offer an
investment advantage. For example, Shareholders have the opportunity to purchase
additional Shares in the market at the discounted price when the Shares trade
below their NAV. Shareholders who make such purchases could benefit in
circumstances in which the gap between the NAV and the market price of the
Shares narrows or is eliminated after they make their purchases, especially
when
the NAV is also increasing as a result of increases in the value of the Trust’s
investments. Correlatively, Shareholders could be disadvantaged if they buy
Shares at a premium or a small discount to NAV and the premium disappears or
the
discount widens, particularly if they decide to sell their Shares under such
circumstances. The Shares’ NAV at the end of each week is published in
compilations of such information for all closed-end funds in publications such
as The Wall Street Journal, The New York Times and Barron’s; the daily NAV at
the close of the preceding trading day in Taiwan can be obtained by calling
the
Trust at 1-800-343-9567 or
by
accessing the Trust’s website at www.taiwangreaterchinafund.com.
The
Board
of Trustees has considered, from time to time, various alternative measures
that
could be adopted for the purpose of seeking to reduce the discount to NAV at
which the Shares have traded. On November 1, 2004, the Trust commenced a share
repurchase program that allows for the repurchase of up to 10% of the
outstanding Shares of the Trust. In connection with the share repurchase
program, the Board of Trustees authorized management to repurchase Trust Shares
in one or more block transactions as defined under Rule 10-b(18)(a)(5) of the
Securities Exchange Act of 1934 (the “1934 Act”), provided that no block
exceeded 500,000 Shares on any day, no more than 1,000,000 Shares in total
were
repurchased in block transactions, and that such Share repurchases were made
on
the New York Stock Exchange and in compliance with the safe harbor provided
by
Rule 10b-18 1934 Act. As of February 28, 2005, the Trust had repurchased the
maximum amount of Shares allowed to be purchased in block transactions. The
Trust continues to effect non-block repurchases under its share repurchase
program.
At
the
2005 Annual Meeting of Shareholders, both the Board of Trustees and Shareholders
approved the adoption of an interval fund structure. Since that approval, the
Trust has conducted 4 semi-annual repurchase offers for between 5% and 25%
of
the Trust’s outstanding securities. The Fund repurchased approximately 801,870
shares at its most recently completed semi-annual repurchase offer on June
29,
2007.
If
the
proposal to convert the Trust from a closed-end investment company into an
open-end investment company is not approved, and the Shares continue to trade
at
a discount and the average discount is again greater than 10% during a
twelve-week period then the Shareholders will again have an opportunity to
consider converting the Trust into an open-end investment company at the next
Shareholders meeting. The Board of Trustees may also decide at any time to
present to the Shareholders the question of whether the Trust should be
converted to an open-end investment company; however, under the Declaration of
Trust such a voluntary submission would require the approval of two-thirds
of
the outstanding Shares for its adoption.
As
described below under “Measures to be Adopted if the Trust Becomes
an
Open-end
Fund -- Redemption Fee,” if the Shareholders vote to convert the Trust into an
open-end fund, the Board of Trustees may cause the Trust to impose a fee payable
to the Trust on all redemptions of up to 2.00% of redemption proceeds for a
certain period of time after conversion. In an effort to deter market timing
of
Shares after the conversion of the Trust from an open-end investment company,
the Board of Trustees may also decide to impose redemption fees in connection
with transactions within certain periods of time after the purchase of Shares
from the Trust.
DIFFERENCES
BETWEEN OPEN-END AND CLOSED-END INVESTMENT COMPANIES
1. Fluctuation
of Capital; Redeemability of Shares; Elimination of Discount and
Premium.
Closed-end investment companies generally do not redeem their outstanding shares
or engage in the continuous sale of new securities, and thus operate with a
relatively fixed capitalization. The shares of closed-end investment companies
are normally bought and sold in the securities market at prevailing market
prices, which may be equal to, less than or more than NAV. From May 12, 1989
to
July 13, 2007 the Shares traded on the NYSE at prices ranging from 31.55 %
below
NAV (on April 27, 1990) to 35.36% above NAV (December 31, 1993). The Shares
last
traded at a premium of .079% above NAV on October 2, 1996. On July 13, 2007,
the
closing price of a Share on the NYSE was 10.26% below its NAV.
Although
it is now possible, subject to certain restrictions, for both institutions
and
individuals outside Taiwan to invest directly in Taiwan stocks, the Board of
Trustees believes that many foreign investors, and particularly foreign
individuals, continue to invest in the Taiwan market through a managed
intermediary like the Trust. In February 2004, the Board revised the Trust’s
investment strategy to provide that the Trust will primarily invest in Taiwan
companies that derive or expect to derive a significant portion of their
revenues from operations in or exports to mainland China, and the Board believes
that substantial expertise is required to select and assess companies with
that
profile. However, additional alternatives to the Trust may develop as vehicles
for investment in Taiwan securities by investors outside Taiwan, which could
have the effect of increasing any discount at which the Shares trade in relation
to their NAV.
By
contrast, open-end investment companies in the United States, commonly referred
to as mutual funds, issue redeemable securities with respect to which,
traditionally, no secondary trading market has been permitted to develop.
(Although this has changed in recent years with the establishment of
exchange-traded open-end funds, it remains true that the vast majority of
open-end funds, both in number and total assets, do not offer secondary market
trading in their shares.) Except during periods when the NYSE is closed or
trading thereon is restricted, or when redemptions may otherwise be suspended
in
an emergency as permitted by the Investment Company Act, the holders of these
redeemable securities have the right to surrender them to the mutual fund and
obtain in return their proportionate share of the mutual fund’s NAV at the time
of the redemption (less any redemption fee charged by the fund or contingent
deferred sales charge imposed by the fund’s distributor). The Board of Trustees
has, in the past, not made any decision with respect to whether, upon conversion
to an open-end investment company, the Trust would follow an exchange traded
open-end format or one of a more traditional open-end investment company, which
would not have a secondary trading market.
Most
mutual funds also continuously issue new shares to investors at a price based
upon their shares’ NAV at the time of issuance. Accordingly, an open-end fund
experiences continuing inflows and outflows of cash and may experience net
sales
or net redemptions of its shares.
Upon
conversion of the Trust into an open-end investment company, Shareholders who
wished to realize the value of their Shares would be able to do so by redeeming
their Shares at NAV (less the redemption fee, if any, discussed below under
“Measures to be Adopted if the Trust Becomes an Open-end Fund -- Redemption
Fee”), which would rise or fall based upon the performance of the Trust’s
investment portfolio. The trading market for the Shares at a discount from
NAV
would be eliminated. Conversion would also eliminate, however, any possibility
that the Shares could trade at a premium over NAV.
Please
note that the interval fund structure adopted by the Trust in 2005 provides
Shareholders a semi-annual opportunity to liquidate a portion (but not
necessarily all) of their Shares at net asset value, less a 2% repurchase
fee.
2. Cash
Reserves.
Because
closed-end investment companies are not required to meet redemptions, their
cash
reserves can be substantial or minimal, depending on the investment manager’s
investment strategy. The managers of many open-end investment companies, on
the
other hand, believe it desirable to maintain cash reserves adequate to meet
anticipated redemptions without prematurely liquidating their portfolio
securities. Although many open-end funds operate successfully in this
environment, the maintenance of larger cash reserves required to operate
prudently as an open-end investment company when net redemptions are anticipated
may reduce an open-end investment company’s ability to achieve its investment
objective by limiting its investment flexibility and the scope of its investment
opportunities. In addition, open-end investment companies are subject to a
requirement that no more than 15% of their net assets may be invested in
securities that are not readily marketable or are otherwise considered to be
illiquid. However, the Trust currently does not invest in, nor does it
anticipate investing in, illiquid securities to any material
extent.
3. Raising
Capital.
Closed-end investment companies may not issue new shares at a price below NAV
except in rights offerings to existing Shareholders, in payment of distributions
and in certain other limited circumstances. Accordingly, the ability of
closed-end funds to raise new capital is restricted, particularly at times
when
their shares are not trading at a premium to NAV. The shares of open-end
investment companies, on the other hand, are offered by such companies (in
most
cases continuously) at NAV, or at NAV plus a sales charge, and the absence
of a
secondary trading market generally makes it impossible to acquire such shares
in
any other way. The Trust most recently raised additional capital in 1995, when
it obtained net offering proceeds of approximately $64,000,000 upon the
completion of a public offering of additional Shares at a small premium to
NAV.
4. NYSE
Delisting; State and Federal Fees on Sales of Shares.
If the
Trust converted to an open-end fund, the Shares would immediately be delisted
from the NYSE. Some investment managers believe that the listing of an
investment company on a U.S. stock exchange, particularly the NYSE, represents
a
valuable asset, especially in terms of attracting non-U.S. investors. Delisting
would save the Trust annual NYSE fees of approximately $25,000; but the absence
of a stock exchange listing, combined with the need to issue new Shares when
investors wish to increase their holdings, would have the effect of requiring
the Trust to pay federal registration fees, except to the extent that the
underwriter of such sales paid some or all of such fees. Any net savings or
increased cost to the Trust because of the different expenses would not,
however, be expected to materially affect the Trust’s expense
ratio.
5. Underwriting;
Brokerage Commissions or Sales Charges on Purchases and
Sales.
Open-end investment companies typically seek to sell new shares on a continuous
basis in order to offset redemptions and avoid shrinkage in size. Shares of
“load” open-end investment companies are normally offered and sold through a
principal underwriter, which deducts a sales charge from the purchase price
at
the time of purchase or from the redemption proceeds at the time of redemption,
receives a distribution fee from the fund (called a Rule 12b-1 fee), or both,
to
compensate it and securities dealers for sales and marketing services (see
“Measures to be Adopted if the Trust Becomes an Open-end Fund -- Underwriting
and Distribution” below). Shares of “no-load” open-end investment companies are
sold at NAV, without a sales charge, with the fund’s investment adviser or an
affiliate normally bearing the cost of sales and marketing from its own
resources. Shares of closed-end investment companies, on the other hand, are
bought and sold in secondary market transactions at prevailing market prices
subject to the brokerage commissions charged by the broker-dealer firms
executing such transactions. Except in the case of shares sold pursuant to
a
rights offering, when a closed-end fund sells newly issued shares, it typically
does so in an underwritten public offering in which an underwriting fee of
4% or
more is imposed. Except in the case of a rights offering, such sales can be
made
only at or above the shares’ then applicable NAV after the deduction of such an
underwriting fee.
6. Shareholder
Services.
Open-end investment companies typically provide more services to shareholders
and may incur correspondingly higher shareholder servicing expenses. One service
that is generally offered by open-end funds is enabling shareholders to transfer
their investment from one fund into another fund that is part of the same
“family” of open-end funds at little or no cost to the shareholders. The Trust
has, in the past, engaged in no discussions with any family of funds to become
a
part of such family, and there can be no assurance that the Trust would be
able
to make such an arrangement if the Shareholders voted to convert the Trust
to an
open-end fund. If the requisite majority of the Shareholders approve this
Proposal 3, the Board of Trustees would weigh the cost of any particular service
against the anticipated benefit of such service. The Board of Trustees has
not,
in the past maintained a view as to which, if any, Shareholder services it
would
seek to make available to Shareholders and implement as part of the Trust’s
joining a family of funds or otherwise.
7. Leverage.
Open-end investment companies are prohibited by the Investment Company Act
from
issuing “senior securities” representing indebtedness (i.e., bonds, debentures,
notes and other similar securities), other than indebtedness to banks with
respect to which there is asset coverage of at least 300% for all borrowings,
and may not issue preferred stock. Closed-end investment companies, on the
other
hand, are permitted to issue senior securities representing indebtedness when
the 300% asset coverage test is met, may issue preferred stock subject to a
200%
asset coverage test and are not limited to borrowings solely from banks. This
greater ability to issue senior securities gives closed-end investment companies
more flexibility in “leveraging” their shareholders’ investments than is
available to open-end investment companies. This difference is not likely to
be
of importance with respect to the Trust, however, because the Trust’s
fundamental investment policies (which may be changed only with Shareholder
consent) forbid it to borrow more than 5% of its NAV (a restriction that would
continue to apply if the Trust were an open-end fund) or to issue preferred
stock (even though such issuance is permitted by the Trust’s Declaration of
Trust).
8. Annual
Shareholders Meetings.
The
Trust is organized as a Massachusetts business trust under the terms of the
Declaration of Trust. As a closed-end investment company listed on the NYSE,
the
Trust is required by the rules of the NYSE to hold annual meetings of its
Shareholders. This requirement would cease upon a delisting of the Shares from
the NYSE. A provision in the Declaration of Trust provides that, if the Trust
were converted to an open-end investment company, the Declaration of Trust
could
be amended to provide that the Trust would no longer be required to hold annual
meetings. However, no vote is being sought on such a proposal at this time.
If
the Trust were no longer required to hold annual meetings of Shareholders,
it
would still be required by the Investment Company Act to have periodic meetings
to approve certain matters and, under certain circumstances, to elect Trustees.
(See the discussion below under “Measures to be Adopted if the Trust Becomes an
Open-end Fund -- Effect on the Trust’s Declaration of Trust.”) The Trust would
save the cost of annual meetings, which management estimates to be approximately
$40,000 per year; however, these savings would not be expected to materially
affect the Trust’s expense ratio.
9. Reinvestment
of Dividends and Distributions.
Like
the plans of many other closed-end funds, the Trust’s Dividend Reinvestment Plan
(the “Plan”) permits Shareholders to elect to reinvest their dividends and
distributions on a different basis than would be the case if the Trust converted
to an open-end investment company. Currently, if the Shares are trading at
a
discount, the agent for the Plan will attempt to buy as many of the Shares
as
are needed for this purpose on the NYSE or elsewhere. This permits a reinvesting
Shareholder to benefit by purchasing additional Shares at a discount, and this
buying activity may tend to lessen any discount. If Shares are trading at a
premium, reinvesting Shareholders are issued Shares at the higher of NAV and
95%
of the market price. As an open-end investment company, all dividends and
distributions would be reinvested at NAV unless Shareholders elected to receive
their dividends and distributions in cash.
10. Capital
Gains.
The
treatment of capital gains required under the Internal Revenue Code of
1986,
as amended (the “Code”) may be disadvantageous to non-redeeming shareholders of
an open-end fund. Although the fund’s manager may be able to sell portfolio
securities at a price that does not reflect a taxable gain in order to raise
cash to satisfy redeeming shareholders, a mutual fund that is required to sell
portfolio securities may realize a net capital gain if the fund’s basis in the
portfolio securities sold is less than the sale price obtained. The Code imposes
both an income tax and an excise tax on a regulated investment company’s net
capital gain (regardless of whether the fund is open-end or closed-end) unless
the gain is distributed to all shareholders, including non-redeeming
shareholders. Furthermore, in order to make a capital gain distribution, a
fund
may need to sell additional portfolio securities, thereby reducing further
its
size and, possibly, creating additional capital gain. While, as noted, taxes
on
such gains are also imposed on closed-end funds, a closed-end fund does not
face
the possible need to sell appreciated securities in order to raise funds to
meet
redemption requests.
EFFECT
OF CONVERSION ON THE TRUST
In
addition to the inherent characteristics of open-end investment companies
described above, the Trust’s conversion to an open-end investment company would
potentially have the consequences described below.
1. Portfolio
Management.
As
noted above, a closed-end investment company operates with a relatively fixed
capitalization while the capitalization of an open-end investment company
fluctuates depending upon whether it experiences net sales or net redemptions
of
its shares. To the extent that this is true, if the Trust were to convert to
an
open-end investment company, the Trust might be faced with a need to invest
new
monies near market highs and to sell portfolio securities in a falling market
when it might otherwise wish to invest. Because the Trust is a closed-end fund,
however, the Trust currently is not required to invest new monies or liquidate
portfolio holdings at what may be inopportune times, and can manage its
portfolio with a primary emphasis on long-term considerations.
The
Board
of Trustees has, in the past, believed that the closed-end format is better
suited than the open-end format to the Trust’s investment objective of achieving
long-term capital appreciation through investment primarily in publicly traded
equity securities of Taiwan issuers, particularly in view of the Trust’s primary
strategic focus on companies whose business is becoming increasingly integrated
with the economy of mainland China. The Board of Trustees has expressed in
the
past that, notwithstanding developments in Taiwan that have had the effect
of
liberalizing restrictions on investment by foreign investors in the Taiwan
securities market, investor psychology towards Taiwan (and mainland China)
remains susceptible to rapid and extreme swings that would be likely to have
a
material and unpredictable impact on inflows and outflows from the Trust if
it
were to become an open-end fund. The Board of Trustees has expressed in the
past
their belief that the Trust could better pursue its long-term investment
objective without short-term pressures to invest new monies or liquidate
portfolio holdings at times when its investment style would dictate doing
otherwise. Furthermore, the Board of Trustees believed that a need for the
Trust
to maintain some level of cash reserves to fund redemptions on an on-going
basis
could restrict the Trust’s ability to remain fully invested in equity securities
in circumstances in which its portfolio manager otherwise thought it
advantageous to be so invested.
2. Potential
Increase in Expense Ratio and Decrease in Size.
Conversion to an open-end investment company would raise the possibility of
the
Trust suffering substantial redemptions of Shares, particularly in the period
immediately following the conversion, although the potential implementation
of a
redemption fee of up to 2.00% for a certain period of time described below
under
“Measures to be Adopted if the Trust Becomes an Open-end Fund” might reduce the
number of redemptions that would otherwise occur shortly after the conversion.
Unless the Trust’s principal underwriter, if any, were able to generate sales of
new Shares sufficient to offset these redemptions or the performance of the
Trust’s investments was sufficiently favorable to offset net redemptions, the
size of the Trust would be expected to shrink. (See “Measures to be Adopted if
the Trust Becomes an Open-end Fund -- Underwriting and Distribution.”) Because a
majority of the Trust’s operating expenses are fixed and others decline as a
percentage of the Trust’s NAV as the NAV increases, a decrease in the Trust’s
asset size would likely increase the ratio of its operating expenses to its
income and net assets and, as a result, decrease the Trust’s net income per
Share. Such a decrease in size could result in a decision by the Board of
Trustees to terminate and liquidate the Trust if the amount of the Trust’s
assets were reduced such that it was no longer considered economically feasible
for the Trust to continue to carry on business.
3. Continuous
Public Offering Costs.
In
addition, the Trust might be required to engage in a continuous public offering
intended, at a minimum, to offset redemptions. A continuous public offering
of
the Shares would require the Trust to maintain current registrations under
federal and state securities laws and regulations, which would involve
additional costs. See “Differences Between Open-end and Closed-end Investment
Companies -- Underwriting; Brokerage Commissions or Sales Charges on Purchases
and Sales” above.
4. Possible
Sales of Portfolio Securities.
If the
Trust were to experience substantial redemptions of Shares following its
conversion to an open-end investment company, it would probably not have
sufficient cash reserves to fund such redemptions and therefore could be
required to sell portfolio securities at inopportune times and incur increased
transaction costs in order to raise cash to meet such redemptions. In addition,
the Trust could incur capital gains in connection with such transactions. See
“Differences Between Open-end and Closed-end Investment Companies -- Capital
Gains” above.
5. Conversion
Costs.
The
process of converting the Trust to an open-end investment company would involve
legal and other expenses to the Trust, including the preparation of a
registration statement under the Securities Act of 1933, as amended (the
“Securities Act”) (see “Measures to be Adopted if the Trust Becomes an Open-end
Fund -- Timing” below), and the payment of necessary fees with respect to such
registration statement and the sale of Shares in various states. The Board
of
Trustees has been advised that these conversion expenses, which would be paid
by
the Trust and would result in a one-time increase in the Trust’s expenses, could
be expected to total at least [$150,000]. Because the Trust is unable to
determine at this time the actual costs that would be involved, it is possible
that the conversion expenses would be substantially higher.
MEASURES
THAT MAY BE ADOPTED IF THE TRUST BECOMES AN OPEN-END
FUND
If
the
Shareholders voted to convert the Trust to an open-end fund, the Board of
Trustees may take the following actions.
1. Redemption
Fee.
In
order to reduce the number of redemptions of the Shares immediately following
the conversion of the Trust to an open-end investment company (thereby reducing
any disruption of the Trust’s normal portfolio management) and to offset the
brokerage and other costs of such redemptions, the Board of Trustees may decide
that the Trust should impose a redemption fee for a period of time, to be
retained by the Trust, of up to 2.00% of the redemption proceeds payable by
the
Trust on all redemptions. While not required, such a fee would be similar to
fees that have been proposed by other funds considering a conversion from
closed-end to open-end status. In an effort to deter market timing of Shares
after the conversion of the Trust to an open-end investment company, the Board
of Trustees may also decide to impose redemption fees in connection with
transactions within a certain period of time after the purchase of Shares from
the Trust.
2. Underwriting
and Distribution.
If the
Shareholders voted to convert the Trust to an open-end investment company,
the
Board would consider whether to select a principal underwriter of the Shares.
The Shares could be offered and sold directly by the Trust itself, and by any
other broker-dealers who enter into selling agreements with the principal
underwriter. The Trust has engaged in no discussions with prospective principal
underwriters, and there can be no assurance regarding whether satisfactory
arrangements with a principal underwriter would be achieved. The Board of
Trustees reserves the right to cause the Trust to enter into an underwriting
agreement with a principal underwriter in such form and subject to such
conditions as the Board of Trustees deems desirable. If a principal underwriter
were selected, there could be no assurance that any such broker-dealer firms
would be able to generate sufficient sales of Shares to offset redemptions,
particularly in the initial months following conversion.
3. Effect
on the Trust’s Declaration of Trust.
The
Declaration of Trust provides that, if the Shareholders voted to change the
Trust’s subclassification under the Investment Company Act from a closed-end
investment company to an open-end investment company, provisions in the
Declaration of Trust (set forth in Exhibit B to this Proxy Statement) would
become effective that authorize the issuance of redeemable securities at NAV
and
provide that the outstanding Shares will be redeemable at the option of the
Shareholders. In addition, the Declaration of Trust provides that if the Trust
becomes an open-end fund and is no longer required by stock exchange rules
to
hold annual meetings for the election of Trustees, the Board of Trustees may
submit a proposal, which may be adopted by vote of a majority of the Trust’s
outstanding Shares, that the Trust cease to hold annual meetings of its
Shareholders and that it eliminate its staggered Board of Trustees. These
actions would have the consequence of requiring Shareholders’ meetings to be
held only when required by the Investment Company Act, either for the election
of Trustees (if a majority of the Trustees in office were not elected by the
Shareholders) or to approve specific matters in accordance with the Investment
Company Act’s requirements.
4. Timing.
If the
Shareholders voted to convert the Trust to an open-end investment company,
a
number of steps would be required to implement such conversion, including the
preparation, filing and effectiveness of a registration statement under the
Securities Act covering the offering of the Shares and the negotiation and
execution of a new or amended agreement with the Trust’s transfer agent. It is
anticipated that such conversion would become effective by approximately
February 1, 2008 and that the discount, if any, at which the Shares trade in
relation to their NAV would be reduced in anticipation of the ability to redeem
Shares at NAV upon the completion of the conversion. The provisions of the
Declaration of Trust set forth in Appendix C would become effective
simultaneously with the effectiveness of the registration statement referred
to
above under the Securities Act. If, as noted immediately above in “Effect on the
Trust’s Declaration of Trust,” the Board of Trustees submitted, and Shareholders
approved, a proposal that the Trust no longer hold annual meetings of
Shareholders after becoming an open-end fund, the attendant savings in the
cost
of holding such meetings (see “Differences Between Open-end and Closed-end
Investment Companies -- Annual Shareholders Meetings”) would accrue in the years
following such approval.
REQUIRED
VOTE
An
affirmative vote of a majority of all outstanding Shares is required to approve
the conversion of the Trust from a closed-end investment company into an
open-end investment company. Abstentions and “non-votes” will be treated as
votes present and not cast at the meeting. Abstentions and “non-votes” will
however, have the effect of votes in opposition to this Proposal 3.
The
Board of Trustees recommends that Shareholders vote “AGAINST” conversion of the
Trust from a closed-end investment management company into an open-end
investment management company. The persons named in the accompanying proxy
will,
in the absence of contrary instructions, vote all proxies “AGAINST” this
proposal 3.
MISCELLANEOUS
Proxies
will be solicited by mail and may be solicited in person or by telephone, email
or facsimile by officers or employees of the Trust. The Trust has also retained
The Altman Group to assist in the solicitation of proxies from Shareholders
at
an anticipated cost not to exceed $7,000 plus reimbursement of out-of-pocket
expenses. The expenses connected with the solicitation of these proxies and
with
any further proxies that may be solicited by such officers or employees or
by
The Altman Group in person or by telephone, email or facsimile will be borne
by
the Trust. The Trust will reimburse banks, brokers and other persons holding
Shares registered in their names or in the names of their nominees for their
expenses incurred in sending proxy material to and obtaining proxies from the
beneficial owners of such Shares.
The
Trust’s Annual Report For The Year Ended December 31, 2006, Including Financial
Statements, Was Mailed On Or About March 1, 2007 To Shareholders Of Record
On
March 1, 2007. However, A Copy Of This Report Will Be Provided, Without Charge,
To Any Shareholder Upon Request. Please Call 1-800-343-9567 Or Write To The
Taiwan Greater China Fund C/O Brown Brothers Harriman & Co., P.O. Box
962047, Boston, Massachusetts 02196-2047 Attn: Investor Services Counsel, Fund
Administration, To Request The Report.
In
the
event that a quorum is not obtained for the transaction of business at the
Meeting by August 20, 2007, the persons named as proxies in the enclosed proxy
may propose one or more adjournments of the Meeting to permit further
solicitation of proxies in order to obtain such a quorum. Any such adjournment
would require the affirmative vote of the holders of a majority of the Shares
voting that are present in person or by proxy at the session of the Meeting
to
be adjourned. The persons named as proxies in the enclosed proxy will vote
in
favor of such adjournment if a quorum is not obtained. The costs of any such
additional solicitation and of any adjourned session will be borne by the
Trust.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act and Section 30(h) of the Investment Company Act,
as
applied to the Trust, require that the Trust’s officers, Trustees and persons
who beneficially own more than ten percent of the Trust’s Shares (“Reporting
Persons”) file reports of ownership of the Trust’s Shares and changes in such
ownership with the SEC. Based solely upon a review of Forms 3 and 4 and
amendments thereto furnished to the Trust pursuant to Rule 16a-3(e) of the
Exchange Act during fiscal year 2006 and
Form
5 and amendments thereto furnished to the Trust with respect to fiscal year
2006, the Trust believes that the following Reporting Persons did not make
timely filings:
| · |
In
September 2006, Mr. Tsung-Ming Chung’s initial statement of beneficial
ownership of securities, which was reported on Form 3, was filed
late.
|
| · |
In
October 2006, Mr. Pedro-Pablo Kuczynski’s initial statement of beneficial
ownership of securities, which was reported on Form 3, was filed
late.
|
SHAREHOLDER
PROPOSALS AND NOMINATIONS
Any
proposal by a Shareholder intended to be presented at the 2008 Annual Meeting
of
Shareholders must be received by the Taiwan Greater China Fund c/o Brown
Brothers Harriman, P.O. Box 962047, Boston, Massachusetts 02196-2047, ATTN:
Investor Services Counsel, not later than March 21, 2008. The Board of Trustees
will consider whether any such proposal should be submitted to a Shareholder
vote in light of applicable rules and interpretations promulgated by the
Commission; but a Shareholder's timely submission of a proposal will not
automatically confer a right to have that proposal presented for a vote at
the
Trust's 2008 Annual Meeting. Any nomination by a Shareholder of a person to
stand for election as a Trustee at the 2008 Annual Meeting of Shareholders
must
be received by the Trust c/o Secretary, Bank Tower, Room 1001, DunHua North
Road, Taipei, Taiwan, Republic of China not later than April 21,
2008.
BY
ORDER
OF THE BOARD OF TRUSTEES
Cheryl
Chang
Secretary
July
24,
2007
EXHIBIT
A
INVESTMENT
ADVISORY AND MANAGEMENT AGREEMENT
Agreement,
dated as of _________, 2007 between the TAIWAN GREATER CHINA FUND, a
Massachusetts business trust (the “Fund”),
and
Nanking Road Capital Management, LLC, a [limited liability company organized
under the laws of the State of Connecticut] and registered as an investment
adviser with the Securities and Exchange Commission (the “Proposed
Adviser”).
The
Fund
is a closed-end, diversified management investment company registered under
the
Investment Company Act of 1940 (the “1940
Act”),
the
shares of beneficial interests in which are registered under the Securities
Exchange Act of 1934 and listed on the New York Stock Exchange. The Fund’s
investment objective is long-term capital appreciation through investment in
securities of Taiwan issuers, primarily by investing in Taiwan listed companies
that derive or expect to derive a significant portion of their revenues from
operations in or exports to mainland China.
The
Fund
desires to retain the Proposed Adviser to render investment management and
certain other services with respect to the Fund’s assets, and the Proposed
Adviser is willing to render such services.
NOW,
THEREFORE, in consideration of the mutual covenants hereafter contained, the
parties hereto hereby agree as follows:
1. Appointment
of Proposed Adviser.
(a)
The
Fund hereby employs the Proposed Adviser for the period and on the terms and
conditions set forth herein, subject at all times to the supervision of the
Board of Trustees of the Fund (the “Board”),
to:
(i)
Make
all investment decisions for the assets of the Fund (the “Assets”)
and to
manage the investment and reinvestment of the Assets in accordance with the
investment objective and policies of the Fund, as such investment objective
and
policies are amended from time to time by the Board (or with the concurrence
of
the Fund’s shareholders, in each case in accordance with the requirements of the
1940 Act), and subject always to the restrictions of the Fund’s Declaration of
Trust and By-Laws, as amended or restated from time to time. Should the Board
at
any time make any definite determination as to investment policy and notify
the
Proposed Adviser thereof, the Proposed Adviser shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Proposed
Adviser shall vote the Fund’s proxies in accordance with the Fund’s proxy voting
policies, which may be amended from time to time by the Board and communicated
to the Proposed Adviser. The Proposed Adviser shall make such reports to the
Board concerning such proxy voting as the Board may deem necessary or advisable
and as may be required by rules and regulations under the 1940 Act. The Fund
acknowledges that no assurance has been or can be provided that the investment
objective of the Fund can or will be achieved. The Proposed Adviser shall take,
on behalf of the Fund, all actions that the Proposed Adviser deems necessary
to
implement the investment policies of the Fund and to place all orders for the
purchase or sale of portfolio securities for the Fund with brokers or dealers
selected by the Proposed Adviser, and in connection therewith, the Proposed
Adviser is authorized as agent of the Fund to give instructions to the
custodians from time to time of the Assets as to deliveries of securities and
payments of cash for the account of the Fund. In connection with the selection
of such brokers or dealers and the placing of such orders, the Proposed Adviser
is directed at all times to seek to use its best efforts to obtain for the
Fund
the most favorable net results available (“best
execution”).
In
using its best efforts to obtain for the Fund best execution, the Proposed
Adviser shall consider all factors it deems relevant, including, by way of
illustration, price, the size of the transaction, the nature of the market
security, the amount of the commission, the timing of the transaction taking
into account market prices and trends, the reputation, experience and financial
stability of the broker or dealer involved and the quality of service rendered
by the broker or dealer in other transaction. Subject to such policies as the
Fund may communicate to the Proposed Adviser in writing, the Proposed Adviser
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement solely by reason of its having caused the Fund to
pay
a broker or dealer that provides brokerage and research services to the Proposed
Adviser or its affiliates an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another broker
or
dealer would have charged for effecting that transaction, if the Proposed
Adviser determines in good faith that such amount of commission was reasonable;
(ii)
As
requested and if appointed as such by the Board, provide the Fund, at the
Proposed Adviser’s expense, with a chief executive officer and a chief financial
officer;
(iii)
As
requested and if appointed as such by the Board in accordance with the
requirements of the rules and regulations under the 1940 Act (including but
not
limited to approval by the Board of the compensation to be paid to the Fund’s
chief compliance officer), provide the Fund, at the Proposed Adviser’s expense,
with a chief compliance officer;
(iv)
Prepare the Fund’s periodic financial statements, in accordance with the
requirements of the 1940 Act and the rules and regulations thereunder, and
assist the administrator of the Fund, as requested, in the valuation of the
Fund’s assets and the determination of its liabilities;
(v)
Prepare and make available to the Fund pertinent research and statistical data;
(vi)
Maintain or cause to be maintained for the Fund all books and records required
under the 1940 Act, to the extent that such books and records are not maintained
or furnished by administrators, custodians or other agents of the Fund;
and
(vii)
Provide the Fund with such other services and advice, consistent with the
foregoing, as the Board may reasonably request.
(b)
The
Proposed Adviser accepts such appointment and agrees during the term of this
Agreement to render such services, to permit any of its managers, members,
officers or employees to serve without compensation as directors or officers
of
the Fund if elected to such positions and to assume the obligations herein
for
the compensation herein provided. The Proposed Adviser shall for all purposes
herein provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. Compensation. For
the services and facilities described in Section 1, the Fund agrees to pay
in
United States dollars to the Proposed Adviser, a fee in accordance with the
schedule set forth as Appendix A hereto. For the month and year in which this
Agreement becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that this Agreement is in effect
during such month and year, respectively.
3. Investment
in Fund Stock. The
Proposed Adviser agrees that it will not make a short sale of any shares of
the
Fund.
4. Non-Exclusivity
of Services. Nothing
herein shall be construed as prohibiting the Proposed Adviser or any of its
affiliates from providing investment advisory services to, or entering into
investment advisory agreements with, any other clients (including other
registered investment companies), including clients which may invest in
Taiwanese or Chinese equity securities, so long as the Proposed Adviser’s
services to the Fund pursuant to this Agreement are not materially impaired
thereby, except that, without the prior written consent of the Fund the Proposed
Adviser may not act as the investment adviser or Proposed Adviser to any other
investment company that is listed on the New York Stock Exchange and that has
the same investment strategy as the Fund. The Proposed Adviser is not obligated
to purchase or sell for the Fund any security which the Proposed Adviser or
its
affiliates may purchase or sell for their own accounts or the accounts of other
clients.
5. Standard
of Care; Indemnification. The
Proposed Adviser may rely on information reasonably believed by it to be
accurate and reliable. Neither the Proposed Adviser nor its officers, managers,
members, employees, agents or controlling persons (as defined in the 1940 Act)
shall be subject to any liability for any act or omission, error of judgment
or
mistake of law, or for any loss suffered by the Fund, in the course of,
connected with or arising out of any services to be rendered hereunder except
by
reason of willful misfeasance, bad faith or gross negligence on the part of
the
Proposed Adviser in the performance of its duties or by reason of reckless
disregard on the part of the Proposed Adviser of its obligations and duties
under this Agreement. Any person, even though also employed by the Proposed
Adviser, who may be or become an employee of the Fund shall be deemed, when
acting within the scope of his employment by the Fund, to be acting in such
employment solely for the Fund and not as an employee or agent of the Proposed
Adviser. In no event shall the Proposed Adviser have any responsibility for
the
acts or omissions of any other adviser of the Fund.
The
Fund
shall indemnify and hold harmless the Proposed Adviser, its officers, managers,
members, employees, agents, controlling persons or other affiliates (each an
“Indemnified
Party”)
for
any losses, costs and expenses incurred or suffered by any Indemnified Party
arising from any action, proceeding or claims that may be brought against such
Indemnified Party in connection with the performance or non-performance of
its
functions under this Agreement, except for such losses, costs and expenses
resulting from willful misfeasance, bad faith or gross negligence in the
performance of such Indemnified Party’s duties or from reckless disregard on the
part of such Indemnified Party of such Indemnified Party’s obligations and
duties under this Agreement.
6. Allocation
of Charges and Expenses.
(a)
The
Proposed Adviser shall assume and pay for maintaining its staff and personnel
and shall at its own expense provide the equipment, office space and facilities
necessary to perform its obligations hereunder. The Proposed Adviser shall
pay
the salaries and expenses of such of the Fund’s officers and employees and any
fees and expenses of such of the Fund’s Trustees who are managers, members,
officers or employees of the Proposed Adviser or any of its affiliates,
provided,
however,
that
the Fund, and not the Proposed Adviser, shall bear travel expenses or an
appropriate fraction thereof of Trustees and officers of the Fund who are
managers, members, officers or employees of the Proposed Adviser to the extent
that such expenses relate to attendance at meetings of the Board or any
committee thereof, and provided further
that
such expenses are incurred in accordance with the Fund’s travel policy.
(b)
In
addition to the fee of the Proposed Adviser, the Fund shall assume and pay
the
following expenses: legal fees and expenses of counsel to the Fund; auditing
and
accounting expenses; taxes and governmental fees; New York Stock Exchange
listing fees; dues and expenses incurred in connection with membership in
investment company organizations; fees and expenses of the Fund’s custodian,
sub-custodian, transfer agents and registrars; fees and expenses with respect
to
administration, except as may be herein expressly provided otherwise; expenses
for portfolio pricing services by a pricing agent, if any; expenses of preparing
share certificates and other expenses in connection with the issuance, offering
and underwriting of shares issued by the Fund; expenses relating to investor
and
public relations; expenses of registering or qualifying securities of the Fund
for public sale; freight, insurance and other charges in connection with the
shipment of the Fund’s portfolio securities; brokerage commissions or other
costs of acquiring or disposing of any portfolio holding of the Fund; expenses
of preparation and distribution of reports, notices and dividends to
shareholders; expenses of the Fund’s dividend reinvestment and cash purchase
plan; costs of stationery; any litigation expenses; and costs of stockholder’s
and other meetings.
7. Potential
Conflicts of Interest.
(a) Subject
to applicable statutes and regulations, managers, members, officers, employees,
agents or owners of the Proposed Adviser may be interested in the Fund as a
director, officer, agent or otherwise.
(b)
If
the Proposed Adviser considers the purchase or sale of securities for the Fund
and other advisory clients of the Proposed Adviser at or about the same time,
transactions in such securities shall be made for the Fund and such other
clients in accordance with the Proposed Adviser’s trade allocation procedures,
as they may be amended from time to time and approved by the Board.
8. Duration
and Termination.
(a)
This
Agreement shall be effective for a period of two years from the date hereof
and
shall continue in effect from year to year thereafter, provided that such
continuance is specifically approved at least annually by (i) a majority of
the
members of the Board who are neither parties to this Agreement nor interested
persons of the Fund or of the Proposed Adviser or of any entity regularly
furnishing investment advisory services with respect to the Fund pursuant to
an
agreement with the Proposed Adviser, cast in person at a meeting called for
the
purpose of voting on such approval, and (ii) separately by the Board (all
Trustees voting) or by vote of a majority of the Fund’s outstanding voting
securities.
(b)
This
Agreement may nevertheless be terminated at any time, without payment of
penalty, by the Proposed Adviser or by the Fund acting pursuant to a vote of
the
Board or by vote of a majority of the Fund’s outstanding securities upon 60
days’ written notice. This Agreement shall automatically be terminated in the
event of its assignment, provided,
however,
that a
transaction that does not, in accordance with the 1940 Act and applicable rules
thereunder, result in a change of actual control or management of the Proposed
Adviser’s business shall not be deemed to be an assignment for the purposes of
this Agreement.
(c)
Termination of this Agreement shall not (i) affect the right of the Proposed
Adviser to receive payments of any unpaid balance of the compensation described
in Section 2 earned prior to such termination or (ii) extinguish the Proposed
Adviser’s right of indemnification under Section 5.
As
used
herein, the terms “interested person,” “assignment” and “vote of a majority of
the outstanding voting securities” shall have the meanings set forth in the 1940
Act.
9. Amendment. This
Agreement may be amended by mutual agreement if required by the 1940 Act or
other applicable law, provided that any such amendment shall only become
effective after the affirmative vote of (i) the holders of a majority of the
outstanding voting securities of the Fund and (ii) a majority of the members
of
the Board who are not interested persons of the Fund or of the Proposed Adviser,
cast in person at a meeting called for the purpose of voting on such approval.
10. Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York, provided,
however,
that
nothing herein shall be construed in a manner inconsistent with the 1940 Act.
11. Notices. Any
communication hereunder must be in writing and must be made by letter, telex
or
facsimile. Any communication or document to be made or delivered by one person
to another pursuant to this Agreement shall (unless that other person has by
15
days’ notice to the other specified another address) be made or delivered to
that other person at the following relevant address:
If
to the
Proposed Adviser:
[ ]
Attention:
Telephone
No.:
Facsimile
No.:
With
copies to:
[
]
Attention:
Telephone
No.:
Facsimile
No.:
If
to the
Fund:
Taiwan
Greater China Fund
c/o
Brown
Brothers Harriman
P.O.
Box
962047
Boston,
MA 02196-2047
Attention:
Telephone
No.:
Facsimile
No.:
With
copies to:
Clifford
Chance US LLP
31
West
52nd Street
New
York,
New York 10019-6131
Attention:
Leonard Mackey, Esq.
Telephone
No.: 212-878-8000
Facsimile
No.: 212-878-8375
and
shall, if made by letter, be deemed to have been received when delivered by
hand
or if sent by mail within 10 days if the letter is sent by first class mail,
and
shall, if sent by facsimile, be deemed to have been received upon production
of
a transmission report by the machine from which the facsimile was sent
indicating that the facsimile was sent in its entirety to the facsimile number
of the recipient and provided that a hard copy of the notice so served by
facsimile is posted that same day as the notice was served by electronic means.
12. Jurisdiction. Each
party hereto irrevocably agrees that any suit, action or proceeding against
either of the Proposed Adviser or the Fund arising out of or relating to this
Agreement shall be subject to the jurisdiction of the United States District
Court for the Southern District of New York or the Supreme Court of the State
of
New York, New York County, and each party hereto irrevocably submits to the
jurisdiction of each such court in connection with any such suit, action or
proceeding. Each party hereto waives any objection to the laying of venue of
any
such suit, action or proceeding in either such court, and waives any claim
that
such suit, action or proceeding has been brought in an inconvenient forum.
Each
party hereto irrevocably consents to service of process in connection with
any
such suit, action or proceeding by mailing a copy thereof by registered or
certified mail, postage prepaid, to its address as set forth in this Agreement.
13. Representation
and Warranty of the Proposed Adviser. The
Proposed Adviser represents and warrants that it is duly registered as an
investment adviser under the U.S. Investment Advisers Act of 1940 and that
it
will use its reasonable efforts to maintain effective such registration during
the term of this Agreement.
14. Representation
and Warranty of the Fund. The
Fund represents and warrants that it has full legal right to enter into this
Agreement and to perform the obligations hereunder and that it has obtained
all
necessary consents and approvals to enter into this Agreement.
15. Provision
of Certain Information by the Fund. The
Fund shall furnish the Proposed Adviser with copies of the Fund’s Declaration of
Trust, By-Laws and Registration Statement on Form N-2, as amended or restated
from time to time, any press releases made by the Fund and any reports made
by
the Fund to its shareholders, as soon as practicable after such documents become
available. The Fund shall furnish the Proposed Adviser with any further
documents, materials or information that the Proposed Adviser may reasonably
request to enable it to perform its duties pursuant to this Agreement.
16. Press
Releases, Reports, Other Disclosures. Any
reports, press releases or other disclosures made by the Fund that contain
statements about the management of assets by the Proposed Adviser shall be
subject to the prior approval of the Proposed Adviser.
17. Severability. If
any provision of the Agreement is determined by a court of competent
jurisdiction to be invalid or unenforceable, such finding shall not affect
the
validity or enforceability of the remaining portions of this Agreement.
18. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original but all of which together shall constitute one and the same
instrument.
19. Captions. The
captions in this Agreement are included for convenience of reference only and
in
no way define any of the provisions hereof or otherwise affect their
construction or effect.
IN
WITNESS WHEREOF, the parties have executed this Agreement by their officers
thereunto duly authorized as of the day and year first written above.
|
TAIWAN
GREATER CHINA FUND
|
| |
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
Title:
|
|
[NAME
OF NEW ADVISER]
|
| |
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
Title:
|
"Taiwan
Greater China Fund" means and refers to the Trustees from time to time serving
under the Amended and Restated Declaration of Trust of the Trust dated July
15,
1988, as amended, a copy of which is on file with the Secretary of The
Commonwealth of Massachusetts. The execution of this con-tract has been
authorized by the Trustees of the Trust, this contract has been executed on
behalf of the Trust by an authorized officer or agent of the Trust acting as
such and not individually, and neither such authorization by such Trustees
nor
such execution by such officer shall be deemed to have been made by any of
them
individually or to impose any liability on any of them personally, but shall
bind only the assets and property of the Trust as provided in the Amended and
Restated Declaration of Trust.
Appendix
A
The
Proposed Adviser shall receive a fee for its services under the Agreement,
computed weekly and payable monthly, at the annual rates as set forth
below:
| |
|
1.25%
of the first $150 million of the Fund’s average weekly net assets;
and
|
| |
|
1.00%
of the Fund’s average weekly net assets in excess of $150
million.
|
The
net
asset value of the Assets shall be determined in the manner provided in the
Fund’s Registration Statement on Form N-2.
EXHIBIT
B
ARTICLE
X OF THE TRUST’S DECLARATION OF TRUST REDEMPTIONS
In
the
event that the Shareholders of the Trust vote to convert the Trust from a
“Closed-end company” to an “Open-end company”. . . , the following provisions
shall, upon the effectiveness of such conversion, become effective:
SECTION
10.1. REDEMPTIONS. All outstanding Shares may be redeemed at the option of
the
holders thereof, upon and subject to the terms and conditions provided in this
Article X. The Trust shall, upon application of any Shareholder or pursuant
to
authorization from any Shareholder, redeem or repurchase from such Shareholder
outstanding Shares for an amount per Share determined by the Trustees in
accordance with any applicable laws and regulations; provided that (a) such
amount per Share shall not exceed the cash equivalent of the proportionate
interest of each Share in the assets of the Trust attributable thereto at the
time of the redemption or repurchase and (b) if so authorized by the Trustees,
the Trust may, at any time and from time to time, charge fees for effecting
such
redemption or repurchase, at such rates as the Trustees may establish, as and
to
the extent permitted under the 1940 Act, and may, at any time and from time
to
time, pursuant to the 1940 Act, suspend such right of redemption. The procedures
for and fees, if any, chargeable in connection with the effecting and suspending
redemption of Shares shall be as set forth in the prospectus filed as part
of
the Trust’s effective Registration Statement with the Commission from time to
time. Payment will be made in such manner as described in such
prospectus.
SECTION
10.2. REDEMPTIONS OF ACCOUNTS. The Trustees may redeem Shares of any Shareholder
at a redemption price determined in accordance with Section 10.1 if, immediately
following a redemption of Shares for any reason, the aggregate net asset value
of the Shares in such Shareholder’s account is less than an amount determined by
the Trustees. If the Trustees redeem Shares pursuant to this Section 10.2,
a
Shareholder will be notified that the value of his account is less than such
amount and be allowed sixty (60) days to make an additional investment before
the redemption is processed.
ANNUAL
MEETING OF SHAREHOLDERS OF
TAIWAN
GREATER CHINA FUND
August
21, 2007
This
Proxy is Solicited on Behalf of the Board of Trustees
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
Please
detach along perforated line and mail in the envelope provided.
Please
note that the Trust has retained The Altman Group to assist in the solicitation
of proxies from Shareholders.
Signature
of Shareholder Date: Signature of Shareholder Date:
To
change
the address on your account, please check the box at right and indicate your
new
address in the address space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method.
The
following items are proposed by the Trust:
| 1. |
The
election of two Trustees: Mr. David N. Laux, to serve for a term
expiring
on the date of the 2010 Annual Meeting of Shareholders or the special
meeting in lieu thereof; and Mr. Pedro-Pablo Kuczynski, to serve
for a
term expiring on the date of the 2010 Annual Meeting of Shareholders
or
the special meeting in lieu
thereof.
|
| 2. |
To
approve a new investment advisory agreement between the Trust and
the
Proposed Adviser.
|
| 3. |
Consider
whether to approve the conversion of the Trust from a closed-end
investment company into an open-end investment
company
|
|
For
all Nominees
|
Withheld
from all Nominees
|
For
all Nominees EXCEPT
Nominee(s)
written below
|
| |
|
|
|
For
Proposal 2
|
Withheld
from Proposal 2
|
Against
Proposal 2
|
| |
|
|
|
For
Proposal 3
|
Withheld
from Proposal 3
|
Against
Proposal 3
|
| |
|
|
Properly
executed proxies will be voted in the manner directed herein by the undersigned.
If no such directions are given, such proxies will be voted FOR Proposal 1,
FOR
Proposal 2 and AGAINST Proposal 3.
Please
sign and return promptly in the enclosed envelope. No postage is required if
mailed in the United States.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
TO
INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS
CARD.
Note:
Please sign exactly as your name or names appear on this Proxy. When shares
are
held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer
is
a corporation, please sign full corporate name by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
TAIWAN
GREATER CHINA FUND
This
Proxy is Solicited on Behalf of the Board of Trustees
Annual
Meeting of Shareholders
August
21, 2007
The
undersigned hereby appoints Steven R. Champion and Cheryl Chang, or each or
either of them, as Proxies of the undersigned, with full power of substitution
to each of them, to vote all shares of the Taiwan Greater China Fund (the
"Trust") which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Trust (the "Meeting") to be held at the offices of Clifford
Chance LLP US, 31 W. 52nd Street, New York, New York, Tuesday, August 21, 2007
at 9:30 a.m., Eastern time, and at any adjournment thereof, in the manner
indicated on the reverse side and, in their discretion, on any other business
that may properly come before the Meeting or any such adjournment.
(Continued
and to be signed on the reverse side.)
COMMENTS: