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Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
The R.O.C. Taiwan Fund
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
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THE R.O.C. TAIWAN FUND April , 1997
c/o Dewe Rogerson, 850 Third Avenue, 20th Floor, New York, New York 10022,
Telephone: 1-800-343-9567
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders (the
'Meeting') of The R.O.C. Taiwan Fund (the 'Trust'), which will be held at the
offices of Paul, Weiss, Rifkind, Wharton & Garrison, 24th Floor, 1285 Avenue of
the Americas, New York, New York on Tuesday, June 3, 1997 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.
At the Meeting, shareholders will:
(i) Elect three trustees, each to serve for a term expiring on the date
of the 2000 Annual Meeting of Shareholders or the special meeting in
lieu thereof;
(ii) Consider and take action upon a proposal to ratify the selection by
the Board of Trustees of KPMG Peat Marwick as independent public
accountants of the Trust for its fiscal year ending December 31,
1997; and
(iii) Consider whether to approve the conversion of the Trust from a
closed-end investment company into an open-end investment company and
certain related matters.
The Board of Trustees recommends that you vote in favor of proposals (i)
and (ii) and against proposal (iii).
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,
please note that, under the rules of the New York Stock Exchange, broker-dealers
may not vote your shares on the proposal described in paragraph (iii) above
without your instructions. In addition, if you are a beneficial owner holding
shares through a bank or trust company nominee, you may find that such nominee
will not vote your shares in respect of some or all of the matters to be
considered at the Meeting without your 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.
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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,
<TABLE>
<S> <C>
THEODORE S.S. CHENG DANIEL K. L. CHIANG
Theodore S.S. Cheng Daniel K. L. Chiang
Chairman President and Chief Executive Officer
</TABLE>
IMPORTANT MATTERS WILL BE CONSIDERED AT THE MEETING, AND YOUR VOTE MAY BE
NECESSARY TO INSURE THE PRESENCE OF A QUORUM 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.
<PAGE>
<PAGE>
THE R.O.C. TAIWAN FUND
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 3, 1997
To the Shareholders of
The R.O.C. Taiwan Fund:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
'Meeting') of The R.O.C. Taiwan Fund (the 'Trust') will be held at the offices
of Paul, Weiss, Rifkind, Wharton & Garrison, 24th Floor, 1285 Avenue of the
Americas, New York, New York on Tuesday, June 3, 1997 at 9:30 a.m., New York
City time, for the following purposes:
1. To elect three trustees, each to serve for a term expiring on the date
of the 2000 Annual Meeting of Shareholders or the special meeting in
lieu thereof.
2. To consider the ratification of the selection by the Board of Trustees
of KPMG Peat Marwick as independent public accountants of the Trust for
its fiscal year ending December 31, 1997.
3. To consider whether to approve the conversion of the Trust from a
closed-end investment company into an open-end investment company and
certain related matters.
4. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Trustees has fixed the close of business on Friday, March 21,
1997 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 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
James M. Wang, Secretary
April , 1997
<PAGE>
<PAGE>
THE R.O.C. TAIWAN FUND
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the 'Board of Trustees' or the 'Board') of The
R.O.C. Taiwan Fund (the 'Trust') for use at the Annual Meeting (the 'Meeting')
of holders (the 'Shareholders') of shares of beneficial interest of the Trust
(the 'Shares') to be held at the offices of Paul, Weiss, Rifkind, Wharton &
Garrison, 24th Floor, 1285 Avenue of the Americas, New York, New York on
Tuesday, June 3, 1997 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 April , 1997. Any Shareholder giving a proxy has the
power to revoke it by mail (addressed to Marc E. Perlmutter, Assistant Secretary
of the Trust, at the Trust's address at c/o Dewe Rogerson, 850 Third Avenue,
20th Floor, New York, New York 10022) 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
June 2, 1997 or delivered personally at the Meeting will be voted as specified
in such proxies or, if no specification is made, for the nominees for election
named, for proposal II and against proposal III described below in this Proxy
Statement.
The Board of Trustees has fixed the close of business on Friday, March 21,
1997 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 trustees. Abstentions and 'non-votes' will be
counted as present in determining the existence of a quorum. (A 'non-vote'
occurs when a nominee (typically, a broker-dealer) holding shares for a
beneficial owner attends a meeting with respect to such shares (in person or by
proxy) but does not vote on one or more proposals because the nominee does not
have discretionary voting power with respect thereto and has not received
instructions from the beneficial owner.) The affirmative vote of a plurality of
the Shares present or represented by proxy and voting on the matter in question
at the Meeting will be required at the Meeting to elect the nominees for
election as trustees and for the ratification of KPMG Peat Marwick as
independent public accountants of the Trust; therefore, abstentions and
'non-votes' will not have the effect of votes in opposition to the election of a
trustee or 'no' votes on the proposed ratification of the selection of the
independent public accountants of the Trust. However, because proposal III below
would require for its adoption the affirmative vote of a majority of all
outstanding Shares, abstentions and 'non-votes' will have the effect of votes in
opposition to the adoption of proposal III. As of the record date, the Trust had
outstanding 33,815,376 Shares. One third of such Shares, present in person or
represented by proxy at the Meeting, will constitute a quorum for the
transaction of business at the Meeting.
International Investment Trust Company Limited, the investment adviser and
manager of the Trust (the 'Adviser'), knows of no business other than that
mentioned in proposals I, II and III below that will be presented for
consideration at the Meeting. If any other matter is properly presented, the
persons named in the enclosed proxy will vote in accordance with their
discretion.
1
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To the knowledge of the Adviser, no person owned beneficially more than 5%
of the outstanding Shares at March , 1997.
The Adviser's address is 17th Floor, 167 Fu Hsing North Road, Taipei,
Taiwan, Republic of China. The address of Dewe Rogerson Inc., which provides
certain administrative services for the Trust, is 850 Third Avenue, 20th Floor,
New York, New York 10022.
I. ELECTION OF TRUSTEES
The trustees of the Trust are divided into three classes, each having a
term of three years; the term of one class expires each year. The persons named
in the accompanying proxy will, in the absence of contrary instructions, vote
all proxies FOR the election of the three nominees listed below as trustees of
the Trust, each to serve for a term expiring on the date of the 2000 Annual
Meeting of Shareholders or the special meeting in lieu thereof. If any such
nominee should be unable to serve, an event not now anticipated, the proxies
will be voted for such person, if any, as is designated by the Board of Trustees
to replace such nominee.
INFORMATION CONCERNING NOMINEES
The following table sets forth certain information concerning each of the
nominees for election as a trustee of the Trust. Messrs. Kuczynski, Kung and
Wang are currently trustees of the Trust.
<TABLE>
<CAPTION>
Principal Occupation and Business Experience
(including all Directorships) during the
Name and Address of Position with the Trust and Past Five Years and Other
Nominee (Age) Term of Office as Trustee Positions with Affiliated Persons of the Trust
<S> <C> <C>
Pedro-Pablo Kuczynski Trustee since 1989 and until the 1997 Annual President and Chief Executive Officer, Latin
(58) Meeting of Shareholders or the special America Enterprise Capital Corporation,
Grand Bay Plaza meeting in lieu thereof since June 1995; President and Chief
2665 S. Bayshore Drive Executive Officer, Westfield Capital Ltd.,
Suite 1101 since 1992; Director, Siderurgica Argentina
Coconut Grove, Florida S.A.; Director, BHP Tintaya; Member of the
33133 International Advisory Board, Toyota Motor
U.S.A. Corporation; Director, Stein S.A.; Chairman
of the Board and Director, Edelnor S.A.;
Chairman, First Boston International, and
Managing Director, The First Boston
Corporation, 1982-92; Director of the
Adviser, 1989-1990; Minister of Energy and
Mines, Government of Peru, 1980-82;
President and Chief Executive Officer, Halco
Inc. (mining company), 1977-80
Li-Yin Kung (84) Trustee since 1989 and until the 1997 Annual Director, China Trust Bank of New York,
19 Capi Lane Meeting of Shareholders or the special since 1989; Director, The Chinese-American
Port Washington, NY meeting in lieu thereof Bank, since 1980
11050
U.S.A.
</TABLE>
(table continued on next page)
2
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(table continued from previous page)
<TABLE>
<CAPTION>
Principal Occupation and Business Experience
(including all Directorships) during the
Name and Address of Position with the Trust and Past Five Years and Other
Nominee (Age) Term of Office as Trustee Positions with Affiliated Persons of the Trust
<S> <C> <C>
* Gregory Kuo-Hua Trustee since 1989 and until the President, United World Chinese Commercial
Wang 1997 Annual Meeting of Bank ('UWCCB'), Taipei, Taiwan, since 1989;
(64) Shareholders or the special Executive Vice President, UWCCB, Taipei, Taiwan,
65 Kuanchien Road meeting in lieu thereof 1977-89; Director, UWCCB; Director
Taipei, Taiwan, R.O.C. of the Adviser, 1983-89; Chairman, UWCB Futures
Corporation; Vice Chairman, Grand Pacific
Petrochemical Corporation; Managing Director,
Bankers Institute of the R.O.C.; Managing
Director, National Credit Card Center of the R.O.C.;
Chief Supervisor, Taipei Foreign Exchange Market
Development Foundation; Supervisor, Taipei
Forex Inc.; Director, Bankers Association of the
Republic of China; Director, Grand Cathay
Securities Corp.; Director, Wyse Technology Inc.;
Director, Chinese National Association of Industry
and Commerce; Director, Taiwan Real-Estate
Management Company; Governor, Taipei World Trade
Center Club
</TABLE>
* Trustee considered by the Trust's counsel to be an 'interested person' (as
defined in the Investment Company Act of 1940, as amended (the 'Investment
Company Act')) of the Trust. Mr. Wang is deemed to be an interested person
because of his affiliation with UWCCB, a shareholder of the Adviser.
Mr. Wang, who is a citizen and resident of the Republic of China (the
'R.O.C.'), is neither a citizen nor a resident of the United States. There can
be no assurance that Mr. Wang will have any assets in the United States that
could be attached in connection with any action, suit or proceeding to enforce
the provisions of U.S. securities laws. The Trust has been advised by its
R.O.C. counsel that an R.O.C. court will enforce liabilities predicated solely
upon U.S. securities laws if (i) the court properly obtained jurisdiction,
(ii) there was proper service of process, (iii) the judgment does not
contravene public order or good morals and (iv) the judgments of R.O.C. courts
are reciprocally recognized by U.S. courts.
INFORMATION CONCERNING OTHER TRUSTEES
The names and addresses of the trustees of the Trust (other than the
trustees who are also nominees referred to above) are set forth below,
together with their positions, principal occupations and business experience
during the past five years.
<TABLE>
<CAPTION>
Principal Occupation and Business Experience
(including all Directorships) during the
Name and Address of Position with the Trust and Past Five Years and Other
Nominee (Age) Term of Office as Trustee Positions with Affiliated Persons of the Trust
<S> <C> <C>
* Theodore S.S. (i) Trustee since 1989 and until President, The International Commercial
Cheng the 1998 Annual Meeting of Bank of China ('ICBC'), Taipei, Taiwan,
(66) Shareholders or the special since 1987; Consultant to the Adviser, 1993;
5/F, ICBC Building meeting in lieu thereof; and (ii) Chairman and Director of the Adviser, 1987-1993;
100 Chilin Road Chairman of the Trust since 1989 Director, Grand Cathay Securities Co., Ltd.,
Taipei, Taiwan, R.O.C. since 1988; General Manager, ICBC, Tokyo,
Japan, 1985-87; Senior Vice President and General
Manager, ICBC, Tokyo, Japan, 1977-85
</TABLE>
(table continued on next page)
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(table continued from previous page)
<TABLE>
<CAPTION>
Principal Occupation and Business Experience
(including all Directorships) during the
Name and Address of Position with the Trust and Past Five Years and Other
Nominee (Age) Term of Office as Trustee Positions with Affiliated Persons of the Trust
<S> <C> <C>
* Daniel K.L. (i) Trustee since 1994 and until President of the Adviser since January
Chiang (41) the 1999 Annual Meeting of 1997; Director of the Adviser since
17th Floor Shareholders or the special February 1996; Executive Vice President
167 Fu Hsing North meeting in lieu thereof; and (ii) of the Adviser, 1993-96; Vice President
Road President and Chief Executive of the Adviser, 1987-93; Manager,
Taipei, Taiwan, R.O.C. Officer of the Trust since 1994 Continental Illinois National Bank,
Taipei, Taiwan, 1984-87
Raymund A. Kathe (73) Trustee since 1989 and until the Retired since 1995; International Adviser
1121 Crandon Blvd. 1999 Annual Meeting of to the Chairman of the Bank of Hawaii,
Key Biscayne, FL 33149 Shareholders or the special Honolulu, Hawaii, 1985-95; Senior Vice
U.S.A. meeting in lieu thereof President and Senior Corporate Officer,
Asia-Pacific, Citicorp/Citibank, N.A.,
1979-84
David N. Laux (69) Trustee since 1992 and until the President, USA-ROC Economic Council, since
815 Connecticut 1998 Annual Meeting of 1990; Director, BPI Packaging Technology,
Avenue, NW Shareholders or the special Inc.; Chairman and Managing Director,
Suite 1202 meeting in lieu thereof American Institute in Taiwan, 1986-90;
Washington, D.C. 20006 Director of Asian Affairs, National Security
U.S.A. Council, the White House, 1982-86; Director
of The Laux Company, 1977-1994
Alfred F. Miossi (74) Trustee since 1992 and until the Retired since 1987; Executive Vice President,
2511 Kenilworth 1998 Annual Meeting of Continental Illinois National Bank & Trust
Avenue Shareholders or the special Company of Chicago ('Continental'), 1971-87;
Wilmette, Illinois 60091 meeting in lieu thereof Head of International Financial Services at
U.S.A. Continental, 1985-87; Director of International
Affairs at Continental, 1980-85
</TABLE>
* Trustee considered by the Trust's counsel to be an 'interested person' (as
defined in the Investment Company Act) of the Trust. Mr. Cheng is deemed to
be an interested person because of his affiliation with ICBC, a shareholder
of the Adviser. Mr. Chiang is deemed to be an interested person because of
his affiliation with the Adviser.
None of the trustees of the Trust beneficially owned any Shares at March ,
1997.
The Board of Trustees of the Trust held four meetings during the fiscal year
ended December 31, 1996.
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. Theodore S.S. Cheng, Daniel K.L Chiang, Pedro-Pablo Kuczynski and
Gregory Kuo-Hua Wang. The Executive Committee did not meet during the fiscal
year ended December 31, 1996.
The Board of Trustees has an Audit Committee, the current members of which
are Messrs. Raymund A. Kathe, Li-Yin Kung, David N. Laux and Alfred F. Miossi.
The responsibilities of the Audit Committee include, among other things,
participation in the selection of the independent public accountants of the
Trust, review of financial statements of the Trust prior to their submission to
the trustees and of other accounting matters of the Trust, monitoring the
relationship of the Trust with the Adviser and review of the administration of
the Adviser's and the Trust's respective Codes of Ethics and the Adviser's
Policy and Procedures to Prevent Insider Trading. The Audit Committee held two
meetings during the year ended December 31, 1996. At those meetings the Audit
Committee, among other things, (i) reviewed the audited financial statements of
the Trust for its 1995
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fiscal year, (ii) approved the selection of KPMG Peat Marwick as the Trust's
independent public accountants for its 1996 fiscal year and (iii) reviewed the
investment management arrangements between the Trust and the Adviser, including
the management fee payable by the Trust to the Adviser, and proposed a reduction
of such fee that was subsequently approved at the Trust's 1996 Annual Meeting of
Shareholders.
The Board of Trustees has a Nominating Committee, the current members of
which are Messrs. David N. Laux, Alfred F. Miossi and Gregory Kuo-Hua Wang. The
Nominating Committee exercises such responsibilities as may be charged to it by
the Board of Trustees of the Trust from time to time and will consider, when
appropriate, recommendations submitted by Shareholders. The Nominating Committee
did not meet during the fiscal year ended December 31, 1996.
OFFICERS OF THE TRUST
The following is a list of the officers of the Trust. The Chairman and the
President each holds office until his successor is duly elected and qualified,
and all other officers hold office at the direction of the trustees.
Theodore S.S. Cheng: For information concerning Mr. Cheng, see 'Information
Concerning Other Trustees' above.
Daniel K.L. Chiang: For information concerning Mr. Chiang, see 'Information
Concerning Other Trustees' above.
James M. Wang (Age 40): Secretary, Treasurer and Chief Financial Officer of
the Trust since May 1996 and from 1992 to February 1996. From February 1996 to
April 1996 Mr. Wang served as Director of Finance and Administration of
International Paper Taiwan, Ltd. Mr. Wang served as Senior Tax Manager of Peat
Marwick (Taipei) from 1990 to 1992.
Dirk Bennett (Age 50): Assistant Vice President and Assistant Secretary of
the Trust since May 1996. Mr. Bennett has been Manager of the Research
Department of the Adviser since 1992. From 1987 to 1992 Mr. Bennett served as
the Publications Editor of the Adviser. From 1992 to 1994 Mr. Bennett served as
Advisor of the National Bureau of Standards, Ministry of Economic Affairs,
R.O.C.
Marc E. Perlmutter (Age 44): Assistant Vice President and Assistant
Secretary of the Trust since 1996. Mr. Perlmutter has been a partner of the law
firm of Paul, Weiss, Rifkind, Wharton & Garrison, U.S. legal counsel to the
Trust, since prior to 1992.
Edwin C. Laurenson (Age 48): Assistant Vice President and Assistant
Secretary of the Trust since 1996. Mr. Laurenson has been securities counsel to
the law firm of Paul, Weiss, Rifkind, Wharton & Garrison, U.S. legal counsel to
the Trust, since 1996. He was a principal attorney employed by such firm from
prior to 1992 until 1996.
5
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TRUSTEE AND OFFICER COMPENSATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Total Compensation
from the Trust
Name of Person Paid to Trustees(1)(2)
- -------------------------------------------------------------------------------------------
<S> <C>
Theodore S.S. Cheng(3) --
Daniel K.L. Chiang(3) --
Raymund A. Kathe $11,250
Pedro-Pablo Kuczynski $12,000
Li-Yin Kung $12,000
David N. Laux $12,000
Alfred F. Miossi $ 9,750
Gregory Kuo-Hua Wang(3) --
- -------------------------------------------------------------------------------------------
</TABLE>
(1) The trustees of the Trust do not receive any pension or retirement benefits
from the Trust or the Adviser.
(2) Each trustee of the Trust who is not affiliated with the Adviser currently
receives fees, paid by the Trust, of $750 for each Board of Trustees meeting
or committee meeting attended and an annual trustee's fee of $7,500. The
Adviser, which supervises the Trust's investments and pays the compensation
and certain expenses of the personnel and certain other interested persons
of the Adviser who serve as trustees and/or officers of the Trust, receives
an investment advisory fee.
(3) The trustees of the Trust who are officers of the Adviser, or who are
otherwise deemed to be interested persons (as defined in the Investment
Company Act) of the Adviser, receive no remuneration from the Trust.
II. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
At a meeting held on February 21, 1997, the Board of Trustees of the Trust,
including a majority of the trustees who were not interested persons of the
Trust as defined in the Investment Company Act, selected, by vote cast in
person, KPMG Peat Marwick to act as independent public accountants of the Trust
for the fiscal year ending December 31, 1997. The Trust knows of no direct or
material indirect financial interest of such firm in the Trust. One or more
representatives of KPMG Peat Marwick are expected to be present at the Meeting
and will have an opportunity to make a statement if they so wish. Such
representatives are expected to be available to respond to appropriate questions
from Shareholders.
KPMG Peat Marwick audited the financial statements for the year ended
December 31, 1996 included in the Trust's annual report to Shareholders and, in
connection with its audit services, also reviewed certain of the Trust's filings
with the United State Securities and Exchange Commission.
The selection of KPMG Peat Marwick by the Board of Trustees as independent
public accountants of the Trust is subject to ratification by the Shareholders
at the Meeting. The persons named in the accompanying proxy will, in the absence
of contrary instructions, vote all proxies FOR the ratification of the selection
of KPMG Peat Marwick as independent public accountants of the Trust for the
fiscal year ending December 31, 1997.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION
OF THE SELECTION OF KPMG PEAT MARWICK AS THE TRUST'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 1997.
6
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III. 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') provides
that, if the Shares trade on the New York Stock Exchange (the 'NYSE') at an
average discount from their net asset value ('NAV') of more than 10% during any
twelve-week period, 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. For these purposes the average
variation of the trading price of the Shares from their NAV is determined on the
basis of such variances as of the last trading day in each week.
In each of the twelve-week periods ended December 27, 1996 through March ,
1997, the Shares traded at an average discount of greater than 10%. Such
discount ranged from % for the week ended to % for the week ended .
Thus the Board of Trustees is required to submit to the Shareholders
the proposal described here. This requirement became effective on June 1, 1992,
and since then the only other twelve-week period in which the Shares traded at
an average discount of greater than 10% was the period ended April 28, 1995.
Because the Shares traded during that period at an average discount of
10.09%, at the Trust's Annual Meeting of Shareholders on July 28, 1995
a resolution to convert the Trust into an open-end investment company
was submitted to the Shareholders. The Board of Trustees recommended voting
against, and such proposal was defeated, with 3.4% of the outstanding
Shares voting in favor of the proposal, 26.3% against and 70.3% either
not present at the meeting or not voting on this particular matter.
On [April , 1997] the Shares' trading price on the NYSE closed at a discount
to NAV of [ ]%. Conversion would eliminate the trading market in the Shares and
provide each Shareholder with a continuing opportunity to redeem his Shares at
their NAV. However, for the reasons described below, the Board of Trustees
recommends that Shareholders vote against this proposal, which will be adopted
only if approved by holders of a majority of the outstanding Shares.
At a meeting on February 21, 1997 the Board of Trustees of the Trust
reviewed 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 and the possible effects of conversion on the Trust.
At that meeting the Board, including all of the trustees who are not interested
persons (as defined in the Investment Company Act) of the Trust, unanimously
concluded that it is in the best interests of the Trust and the Shareholders
that the Trust remain a closed-end investment company.
The Board of Trustees and the Adviser believe 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.' They also believe
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
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percentage of NAV, as described below under 'Effect of Conversion on the Trust
- -- Potential Increase in Expense Ratio and Decrease in Size.'
In deciding how to recommend that the Shareholders vote on this matter, the
Board of Trustees took note of the fact that, since the inception of the Trust
in 1989, the Shares frequently have traded at a premium 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) by year
is as follows:
<TABLE>
<CAPTION>
Year Disc/Prem
- ---- ----------
<S> <C>
1989 (May 12 to December 31)...................... 2.71%
1990.............................................. - 9.47%
1991.............................................. - 3.28%
1992.............................................. 4.40%
1993.............................................. 3.46%
1994.............................................. 0.75%
1995.............................................. 1.66%
1996.............................................. 2.95%
1997 (January 1 to April )....................... [ ]%
</TABLE>
The Board of Trustees believes that eliminating the possibility of a
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
reduce or eliminate the discount without impairing the Trust's closed-end format
and the benefits it derives therefrom, the Adviser has sought to increase
awareness about the Trust through Shareholder and market communications and
meetings with securities analysts and market professionals in the investment
community specializing in the closed-end funds sector. While the Adviser's
efforts in this respect have not eliminated the Shares' tendency at times to
trade at a discount to NAV, the Board of Trustees believes that such efforts
have been beneficial.
In addition, in 1991 the Board of Trustees authorized a periodic share
repurchase program under Rule 10b-18 under the Securities Exchange Act of 1934,
pursuant to which purchases of Shares may be made by the Trust when the Shares
trade at a discount to their NAV. Although purchases under that program were
made only during the second half of 1991, such purchases could be recommenced at
any time after appropriate notice to Shareholders. Shareholders also have the
opportunity to purchase additional Shares in the market at the discounted price
when the Shares trade below their NAV.
If this proposal is not approved, the Shares continue to trade at a discount
and the average discount is again greater than 10% during a twelve-week period,
the Board of Trustees and the Shareholders will have an opportunity to consider
again converting the Trust into an open-end investment company. (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
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Trustees may cause the Trust to impose a fee payable to the Trust on all
redemptions of up to .50% of redemption proceeds for a period of up to nine
months from conversion.
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 April , 1997 the Shares traded on the NYSE at prices
ranging from 31.55% below NAV (on April 27, 1990) to 34.73% above NAV (on May
18, 1989). The Shares most recently traded at a premium to their NAV on [ ]. On
, 1997 the closing price of a Share on the NYSE was [ % above/below] its NAV.
Although it is now possible, subject to certain restrictions, for both
institutions and individuals outside Taiwan to invest directly in R.O.C. stocks,
the Board of Trustees believes that most foreign investors continue to invest in
the R.O.C. market through a managed intermediary like the Trust. These
developments (particularly the ability of foreign indiviuals to invest directly)
have only recently taken effect, however, and additional alternatives to the
Trust can be expected to develop as vehicles for investment in R.O.C. securities
by investors outside the R.O.C., which could have the effect of reducing or
eliminating (or changing to a discount) any premium, or increasing any discount,
at which the Shares trade in relation to their NAV.
By contrast, open-end investment companies, commonly referred to as mutual
funds, issue redeemable securities with respect to which no secondary trading
market is permitted to develop. 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). It should be noted,
however, that although foreign exchange controls in the R.O.C. have been relaxed
in recent years and there have been no attempts by R.O.C. authorities to prevent
the remittance of funds out of the country in connection with the redemption of
securities issued by R.O.C. open-end investment funds, there can be no assurance
that such controls, which have historically been utilized for economic or
political reasons to regulate the flow of money into and out of the country,
will not be applied to delay or restrict remittances to the Trust in the future.
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. In that connection it should also be
noted that R.O.C. exchange control regulations could restrict the remittance of
funds into the R.O.C. from time to time (although they have not been so used in
recent years), thus preventing the Trust from replenishing its assets.
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 possible temporary redemption fee
discussed below under 'Measures to be Adopted if the Trust becomes an Open-end
Fund -- Redemption Fee'). The trading market for the Shares would be eliminated,
and with it the discount from NAV at which the Shares have periodically tended
to trade
9
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<PAGE>
on the NYSE. Conversion would also eliminate, however, any possibility that the
Shares could trade at a premium over NAV.
2. Cash Reserves; Raising Capital. 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. Most
open-end investment companies maintain cash reserves adequate to meet
anticipated redemptions without prematurely liquidating their portfolio
securities. 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.
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 trading at a discount 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.
3. 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. In addition, certain
investors, such as pension funds, have internal restrictions on the amount of
their portfolio that can be invested in non-listed securities. Delisting would
save the Trust annual NYSE fees of approximately $32,000; 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 and state fees on sales of Shares, 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.
4. 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, or receives a distribution fee from the fund, 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.
5. Shareholder Services. Open-end investment companies typically provide
more services to shareholders and 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
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shareholders. The Trust has 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, the Board of Trustees would weigh the cost of any
particular service against the anticipated benefit of such service. The Board of
Trustees has no current 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.
6. 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 various limitations and are not limited to borrowings 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. Although the Declaration
of Trust permits the Board of Trustees to create and issue preferred stock, the
trustees have no intention of doing so.
7. 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 $30,000 per year;
however, these savings would not be expected to materially affect the Trust's
expense ratio.
8. 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.
11
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<PAGE>
9. Qualification as a Regulated Investment Company. Treatment as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
'Code'), allows the Trust to be relieved of federal income tax on that part of
its investment company taxable income and net capital gain that is distributed
to its shareholders. To qualify for this treatment the Trust must meet several
requirements, one of which is that the Trust must derive less than 30% of its
gross income each taxable year from the sale or other disposition of securities,
options or futures contracts held for less than three months. It might not be
possible to satisfy this requirement if the Trust were converted to an open-end
fund, particularly if the Trust were required to sell recently acquired
portfolio securities because of unexpectedly large net redemptions. If the Trust
failed to qualify as a regulated investment company under the Code, its income
and capital gains would be subject to taxation at both the corporate level and,
when distributed, again at the shareholder level.
10. Capital Gains. The treatment of capital gains required under the Code
can be onerous to non-redeeming stockholders of an open-end fund. To raise cash
to satisfy redeeming stockholders, a mutual fund may be required to sell
portfolio securities. If the fund's basis in the portfolio securities sold is
less than the sale price obtained, net capital gain may be realized. The Code
imposes both an income tax and an excise tax on a regulated investment company's
net capital gain unless the gain is distributed to all stockholders, including
non-redeeming stockholders. Thus, unless adequate capital gain distributions are
made, non-redeeming stockholders may recognize a greater amount of capital gain.
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.
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. Some observers believe that open-end
funds tend to have larger net sales near market highs and larger net redemptions
near market lows. To the extent that this is true, if the Trust were to convert
to an open-end investment company, the Adviser could be required 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 Adviser currently is not required to invest new monies or liquidate
portfolio holdings at what may be inopportune times, and can manage the Trust's
portfolio with a greater emphasis on long-term considerations.
The Board of Trustees also believes 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 R.O.C. issuers. The Board of Trustees believes 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 remains susceptible of 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 open-end. The Board of Trustees
believes that the Adviser can better pursue the Trust's long-term investment
objective without short-term pressures to invest new monies or liquidate
portfolio holdings at times
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when the Adviser's investment style would dictate doing otherwise. Furthermore,
the Board of Trustees believes that a need for the Trust to maintain some level
of cash reserves to fund redemptions could restrict the Trust's ability to
remain fully invested in equity securities in circumstances in which the Adviser
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 temporary
redemption fee of up to 0.50% described below under 'Measures to be Adopted if
the Trust Becomes an Open-end Fund' might reduce the number of initial
redemptions that would otherwise occur. Unless the Trust's principal
underwriter, if any, were able to generate sales of new Shares sufficient to
offset these 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 certain of the Trust's operating
expenses are fixed and others (including the fees paid by the Trust to the
Adviser) 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 would also result in a
reduction in the amount of fees paid by the Trust to the Adviser and could
result in a decision by the Board of Trustees to terminate and liquidate the
Trust (or by the Adviser not to continue to act as such) 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. 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
and incur increased transaction costs in order to raise cash to meet such
redemptions. Any net gains resulting from sales of portfolio securities effected
to fund cash redemption obligations would normally be distributed to all
Shareholders, thereby further reducing the size of the Trust, and would be
taxable to them. See 'Differences Between Open-end and Closed-end Investment
Companies -- Capital Gains' above.
4. 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 (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 current expense
ratio, 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 TO 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 would take the following actions.
1. Redemption Fee. In order to reduce the number of redemptions of the
Shares immediately following conversion (thereby reducing any disruption of the
Trust's normal portfolio management), and to offset the brokerage and other
costs of such redemptions, for a period of up to nine months
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following the Trust's conversion to an open-end investment company, the Board
reserves the right to impose a fee, to be retained by the Trust, of up to 0.50%
of the redemption proceeds payable by the Trust on all redemptions. 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.
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 A 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 of 1933 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 no later than December 31, 1997 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 Exhibit A would become
effective simultaneously with the effectiveness of the registration statement
referred to above under the Securities Act of 1933.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST CONVERSION
OF THE TRUST FROM A CLOSED-END INVESTMENT COMPANY INTO AN OPEN-END INVESTMENT
COMPANY. The persons named in the accompanying proxy will, in the absence of
contrary instructions, vote all proxies AGAINST this proposal.
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MISCELLANEOUS
Proxies will be solicited by mail and may be solicited in person or by
telephone or facsimile by officers or employees of the Adviser. The Trust has
also retained MacKenzie Partners to assist in the solicitation of proxies from
Shareholders at an anticipated cost of $8,000 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 MacKenzie Partners in person, by telephone or by 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, 1996, INCLUDING
FINANCIAL STATEMENTS, WAS MAILED ON OR ABOUT MARCH 3, 1997 TO SHAREHOLDERS OF
RECORD ON MARCH 3, 1997. 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 TRUST AT c/o DEWE ROGERSON, 850 THIRD AVENUE, 20TH FLOOR, NEW YORK,
NEW YORK 10022 TO REQUEST THE REPORT.
In the event that a quorum is not obtained for the transaction of business
at the Meeting by June 3, the persons named as attorneys 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 attorneys in the enclosed proxy will vote in
favor of such adjournment if it is required. The costs of any such additional
solicitation and of any adjourned session will be borne by the Trust.
To the knowledge of the Trust, of persons who were affiliated persons of the
Adviser (as defined in the Investment Company Act) during 1996, only the
Kuomintang (the ruling political party in the R.O.C., which the Trustees believe
may be deemed to be a controlling person of the Adviser) did not make timely
filings, or failed to make filings, required during or with respect to 1996 by
rules of the U.S. Securities and Exchange Commission pursuant to section 30(f)
of the Investment Company Act, with respect to holdings of, or transactions in,
Shares during 1996 or prior years. Certain holding companies in the R.O.C.
through which, to the knowledge of the Trust, the Kuomintang owns its interests
in the Adviser, however, did make timely filings (or have provided statements in
lieu of required filings). In addition, if the Kuomintang is deemed to be a
controlling person of the Adviser, then all other persons controlled by the
Kuomintang would be required to file statements on Forms 3, 4 and 5 with respect
to ownership of, or transactions in, Shares. No such persons have made any such
filings.
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SHAREHOLDER PROPOSALS
Any proposal by a Shareholder intended to be presented at the 1998 Annual
Meeting of Shareholders must be received by the Trust at c/o Dewe Rogerson, 850
Third Avenue, 20th Floor, New York, New York 10022 not later than [ ]. 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 U.S. Securities and Exchange 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 1998 Annual Meeting.
BY ORDER OF THE BOARD OF TRUSTEES
James M. Wang
Secretary
c/o Dewe Rogerson
850 Third Avenue
20th Floor
New York, New York 10022
April , 1997
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EXHIBIT A
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.
A-1
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APPENDIX I: FORM OF PROXY
1.) The election of Trustees to serve for a term expiring on the date of the
2000 Annual Meeting of Shareholders or the special meeting in lieu thereof:
With- For all
For hold Except
[ ] [ ] [ ]
PEDRO-PABLO KUCZYNSKI
LI-YIN KUNG
GREGORY KUO-HUA WANG
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR
NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE
THROUGH THE NOMINEE'S NAME. YOUR SHARES WILL BE VOTED
FOR THE REMAINING NOMINEES.
2.) Ratification of the selection of KPMG Peat Marwick as independent public
accountants of the Trust for its fiscal year ending December 31, 1997.
For Against Abstain
[ ] [ ] [ ]
3.) Conversion of the Trust from a closed-end investment company into an open-
end investment company and certain related matters.
For Against Abstain
[ ] [ ] [ ]
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 ALL NOMINEES REFERRED TO IN ITEM 1, FOR THE PROPOSITION REFERRED
TO IN ITEM 2 AND AGAINST THE PROPOSITION REFERRED TO IN ITEM 3.
Please sign and return promptly in enclosed envelope. No postage is
required if mailed in the United States.
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2
Mark box at right if comments or address change have been noted on the
reverse of this card.
RECORD DATE SHARES:
THE R.O.C. TAIWAN FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Annual Meeting of Shareholders
June 3, 1997
The undersigned hereby appoints Daniel K. L. Chiang and James M. Wang,
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 R.O.C. Taiwan 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 Paul,
Weiss, Rifkind, Wharton & Garrison, 24th Floor, 1285 Avenue of the Americas, New
York, New York on Tuesday, June 3, 1997 at 9:30 a.m. New York City time, and at
any adjournment thereof, in the manner indicated below and, in their discretion,
on any other business that may properly come before the Meeting or any such
adjournment.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books of the
Trust. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where
more than one name appears, a majority must sign. If a corporation,
this signature should be that of an authorized officer who should state
his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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