<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THE TAIWAN EQUITY FUND, INC.
- --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
<PAGE>
THE TAIWAN EQUITY FUND, INC.
C/O DAIWA SECURITIES TRUST COMPANY
ONE EVERTRUST PLAZA
JERSEY CITY, NEW JERSEY 07302
(800) 426-5523
August 10, 1999
Dear Stockholders:
The Annual Meeting of Stockholders of The Taiwan Equity Fund, Inc. (the
"Fund") will be held at 12:00 Noon, New York time, on Friday, September 17,
1999, at the offices of Daiwa Securities America Inc., Financial Square, 32 Old
Slip, 14th Floor, New York, New York 10005. A Notice and 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 Annual Meeting, the stockholders will (i) elect one Class II director
and two Class I directors; (ii) consider the ratification of the selection of
PricewaterhouseCoopers LLP as independent accountants; (iii) consider the
approval of a new Investment Management Agreement between the Fund and Daiwa
Asset Management (H.K.) Ltd.; and (iv) consider the approval of a new Investment
Advisory Agreement between the Daiwa Asset Management (H.K.) Ltd. and National
Capital Management Corporation. In addition, the stockholders who will be
present at the Annual Meeting will hear an investment report on the Fund and
will have an opportunity to discuss matters of interest to them.
PLEASE NOTE THAT, IN CONNECTION WITH CONSIDERATION OF THE PROPOSED NEW
INVESTMENT MANAGEMENT AGREEMENT, THE INVESTMENT MANAGER ADVISED THE BOARD OF
DIRECTORS THAT IT WILL WAIVE A PORTION OF ITS FEES AND HAS SUBMITTED TO THE
BOARD OF DIRECTORS OF THE FUND A PLAN FOR ADDRESSING THE DISCOUNT AT WHICH THE
SHARES OF THE FUND TRADE FROM THEIR NET ASET VALUE. THE PROPOSAL AND PLAN ARE
DESCRIBED IN THE ENCLOSED PROXY STATEMENT.
If you will not be able to attend the Annual Meeting in person, please take
the time now to review the enclosed materials and vote your shares by proxy.
YOUR VOTE IS IMPORTANT.
The Board recommends that the stockholders vote in favor of matters (i)
through (iv).
Respectfully,
/s/ Masayasu Ohi
Masayasu Ohi
CHAIRMAN OF THE BOARD
STOCKHOLDERS ARE STRONGLY URGED TO PROMPTLY SIGN AND MAIL THE ACCOMPANYING PROXY
IN THE ENCLOSED RETURN ENVELOPE TO ENSURE A QUORUM AT THE MEETING.
YOUR VOTE IS IMPORTANT.
<PAGE>
THE TAIWAN EQUITY FUND, INC.
----------
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 17, 1999
------------------------
To the Stockholders of
The Taiwan Equity Fund, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The Taiwan
Equity Fund, Inc. (the "Fund") will be held at the offices of Daiwa Securities
America Inc., Financial Square, 32 Old Slip, 14th Floor, New York, New York
10005, on Friday, September 17, 1999, at 12:00 Noon, New York time, for the
following purposes:
1. To elect one Class II director to serve for a term expiring on the date
on which the Annual Meeting of Stockholders is held in the year 2000 and
two Class I directors to serve for a term expiring on the date on which
the Annual Meeting of Stockholders is held in the year 2002.
2. To ratify or reject the selection of PricewaterhouseCoopers LLP as
independent accountants of the Fund for its fiscal year ending December
31, 1999.
3. To approve or reject the new Investment Management Agreement between the
Fund and Daiwa Asset Management (H.K.) Ltd., as investment manager of the
Fund.
4. To approve or reject the new Investment Advisory Agreement between Daiwa
Asset Management (H.K.) Ltd. and National Capital Management Corporation,
as investment adviser of the Fund.
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on July 16, 1999 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting or any adjournments thereof.
You are cordially invited to attend the meeting. Stockholders who do not
expect to attend the meeting in person are requested to complete, date and sign
the enclosed form of proxy and return it promptly in the envelope provided for
that purpose. You may nevertheless vote in person at the meeting if you choose
to attend. Your vote is important. The enclosed proxy is being solicited by the
Board of Directors of the Fund.
By order of the Board of Directors,
Daniel F. Barry
SECRETARY
August 10, 1999
<PAGE>
THE TAIWAN EQUITY FUND, INC.
----------
PROXY STATEMENT
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of THE TAIWAN EQUITY FUND, INC. (the "Fund")
for use at the Annual Meeting of Stockholders, to be held at the offices of
Daiwa Securities America Inc., Financial Square, 32 Old Slip, 14th Floor, New
York, New York 10005, on Friday, September 17, 1999, at 12:00 Noon, New York
time, and at any adjournments thereof.
This Proxy Statement and the form of proxy are being mailed to stockholders
on or about August 10, 1999. Any stockholder giving a proxy in advance of the
Annual Meeting has the power to revoke it by mail (addressed to the Secretary,
The Taiwan Equity Fund, Inc., c/o Daiwa Securities Trust Company, One Evertrust
Plaza, 9th Floor, Jersey City, New Jersey 07302) or in person at the meeting, by
executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the meeting will be
voted as specified in the proxy or, if no specification is made, for each
proposal referred to in this Proxy Statement. Abstentions and broker non-votes
are each included in the determination of the number of shares present at the
meeting.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1998 TO ANY STOCKHOLDER REQUESTING SUCH REPORT.
REQUESTS FOR THE ANNUAL REPORT SHOULD BE MADE BY WRITING TO THE TAIWAN EQUITY
FUND, INC., C/O DAIWA SECURITIES TRUST COMPANY, ONE EVERTRUST PLAZA, 9TH FLOOR,
JERSEY CITY, NEW JERSEY 07302, ATTENTION: SHAREHOLDER RELATIONS, OR BY CALLING
(800) 426-5523 OR (718) 575-2000.
The Board of Directors has fixed the close of business on July 16, 1999 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting and at any adjournments thereof. Stockholders on the
record date will be entitled to one vote for each share held, with no shares
having cumulative voting rights. As of the record date, the Fund had 4,387,629
shares of common stock eligible to vote at the meeting. The following chart sets
forth, to the best knowledge and belief of the management of the Fund, certain
information regarding the beneficial ownership of the Fund's shares as of July
16, 1999 by each person known by the Fund to be the beneficial owner of more
than 5% of the outstanding shares:
1
<PAGE>
<TABLE>
<CAPTION>
SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OF
OF BENEFICIAL OWNER OWNED (1) CLASS
- ---------------------------------------- ------------ -------
<S> <C> <C>
City of London Investment Group PLC 729,482(2) 16.2%
10 Eastcheap
London EC3M ILX
England
President and Fellows of Harvard 462,100(3) 10.3%
College
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, MA 02210
Deep Discount Advisors, Inc. 418,300(4) 9.3%
Ron Olin Investment Management
Company
One West Pack Square, Suite 777
Asheville, NC 28801
</TABLE>
- ------------------------
(1) Beneficial share ownership is determined pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934. Accordingly, a beneficial owner of a
security includes any person who, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise has or
shares the power to vote such security or the power to dispose of such
security.
(2) The above information is based on copies of a statement on Schedule 13G
filed with the SEC on July 10, 1999, which indicates that City of London
Investment Group PLC has sole voting and dispositive power with respect to
all 729,482 shares.
(3) The above information is based on copies of a statement on Schedule 13G
filed with the SEC on February 12, 1999, which indicates that the President
and Fellows of Harvard College has sole voting and dispositive power with
respect to 462,100 shares.
(4) The above information is based on copies of a statement on Schedule 13G
filed with the SEC on February 10, 1999, which indicates that Deep Discount
Advisors, Inc. and Ron Olin Investment Management Company have shared voting
and dispositive power with respect to 327,200 shares and 91,100 shares,
respectively.
Management of the Fund knows of no business other than that mentioned in
Items 1 through 4 of the Notice of Meeting which will be presented for
consideration at the meeting. If any other matter is properly presented, it is
the intention of the persons named in the enclosed proxy to vote in accordance
with their best judgment.
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF
EACH OF THE MATTERS MENTIONED IN ITEMS 1 THROUGH 4 OF THE NOTICE OF MEETING.
(1) ELECTION OF DIRECTORS
Persons named in the accompanying form of proxy intend in the absence of
contrary instructions to vote all proxies for the election of the two nominees
listed below as directors of the Fund:
<TABLE>
<CAPTION>
CLASS I CLASS II
- -------------------- --------------------
<S> <C>
Oren G. Shaffer Masayasu Ohi
Sadamu Tsuneishi
</TABLE>
to serve for terms expiring on the date of the Annual Meeting of Stockholders as
follows: Class I in the year 2002 and Class II in the year 2000, or until their
successors are elected and qualified. If any such nominee should be unable to
serve, an event that is not now anticipated, the proxies will be voted for such
person, if any, as shall be designated by the Board of Directors to replace any
such nominee. The election of each director will require the affirmative vote of
a majority of the votes cast at the meeting. For this purpose, abstentions and
broker non-votes will not be counted as votes cast at the meeting.
At their September 3, 1998 meeting, the Board of Directors elected Mr.
Masayasu Ohi to fill the vacancy created by the resignation of Mr. Shuichi
Komori, whose resignation was effective as of September 1998. Mr. Komori had
served as a Class II director, and Mr. Ohi is therefore standing for election as
a Class II director. Although the terms of the Fund's Class II directors does
not expire until the date on which the Annual Meeting of Stockholders is held in
the year 2000, Maryland law and the Fund's By-laws require a director,
regardless of Class, who is elected by the Board of Directors to fill a vacancy
to stand for election at the next Annual Meeting of Stockholders.
INFORMATION CONCERNING NOMINEES AND DIRECTORS
The following table sets forth information concerning each of the nominees
as a director of the Fund, as well as the other current directors of the Fund.
Each of the nominees is now a director of the Fund and has consented to be named
in this Proxy Statement and to serve as a director of the Fund if elected.
3
<PAGE>
NOMINEES
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
FUND, IF ANY, PRINCIPAL OCCUPATION
EMPLOYMENT DURING PAST SHARES
FIVE YEARS AND BENEFICIALLY
NAME (AGE) AND ADDRESS DIRECTORSHIPS IN DIRECTOR OWNED JULY 16, PERCENT OF
OF NOMINEES/DIRECTORS PUBLICLY HELD COMPANIES SINCE 1999(+) CLASS
----------------------------------------- ---------------------------------------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C>
* Masayasu Ohi (51) Chairman of the Board of the Fund, since 1998 None --
Financial Square 1998; Chairman, since 1998, The Thai
32 Old Slip, 14th Floor Capital Fund, Inc.; Chairman, since
New York, NY 10005 1998, The Singapore Fund, Inc.; Chairman
and Chief Executive Officer, Daiwa
Securities America Inc., since 1998;
Executive Officer, Daiwa Securities
Group Inc., since 1999; Director, Daiwa
Securities Co. Ltd., from 1998 to 1999;
Joint Chief Executive of Daiwa Europe
Limited, from 1997 to 1998; President of
Daiwa Europe Limited, London, from 1994
to 1997.
Oren G. Shaffer (56) Executive Vice President and Chief 1994 5,000 **
30 S. Wacker Drive, 38th Floor Financial Officer of Ameritech
Chicago, IL 60606 Corporation, since 1994; President and
Director of Virgocap Inc., from 1992 to
1994; Executive Vice President, Chief
Financial Officer and Director, The
Goodyear Tire and Rubber Company, from
1984 to 1992; Director, Sunshine Mining
Company, since 1992; Director, Hygenic
Corporation, since 1993; Director, The
Singapore Fund, Inc., since 1997.
* Sadamu Tsuneishi (51) President and Director of the Fund; 1997 None --
2-10-5 Nihonbashi Kayabacho, General Manager, Accounting Section,
Chuo-ku, Tokyo, Japan General Affairs Department, Daiwa Asset
Management Co. Ltd., since February
1999; Managing Director, Daiwa Asset
Management (H.K.) Limited, from October
1997 to February 1999; General Manager,
Accounting Section, General Affairs
Department, Daiwa Asset Management Co.
Ltd., from May 1995 to July 1997; Fund
Manager, Overseas Investment
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRESENT OFFICE WITH THE
FUND, IF ANY, PRINCIPAL OCCUPATION
EMPLOYMENT DURING PAST SHARES
FIVE YEARS AND BENEFICIALLY
NAME (AGE) AND ADDRESS DIRECTORSHIPS IN DIRECTOR OWNED JULY 16, PERCENT OF
OF NOMINEES/DIRECTORS PUBLICLY HELD COMPANIES SINCE 1999(+) CLASS
----------------------------------------- ---------------------------------------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Sadamu Tsuneishi Department, Daiwa Asset Management Co.
(continued) Ltd., from July 1988 to May 1995.
OTHER CURRENT DIRECTORS
Martin J. Gruber (61) Professor of Finance, Leonard N. Stern 1994 1,737 **
229 South Irving Street School of Business, New York University,
Ridgewood, NJ 07450 since 1965; Director, SG Cowen Income &
Growth Fund Inc., since 1986; Director,
SG Cowen Opportunity Fund, since 1987;
Director, SG Cowen Standby Reserve Fund
Inc., since 1985; Director, SG Cowen
Standby Tax Exempt Reserve Fund Inc.,
since 1986; Trustee, BT Pyramid Fund,
since 1992; Trustee, BT Leadership
Trust, since 1993; Director, The Japan
Equity Fund, Inc., since 1992; Trustee,
T.I.A.A., since 1996.
Christina Y. Liu (44) Professor, Department of Finance, 1994 None --
16F-6, No. 410, Section 5, National Taiwan University, since 1993;
Chung-Hsiao East Road Taipei, Chairperson, Department of Finance,
Taiwan, ROC National Taiwan University, from 1994 to
1996; Associate Professor, Department of
Economics and Finance, City University
of New York, from 1992 to 1993.
</TABLE>
- ------------------------
+ The information as to beneficial ownership is based on statements furnished
to the Fund by the nominees and directors.
* Directors so noted are deemed by the Fund's counsel to be "interested
persons" (as defined in the U.S. Investment Company Act of 1940, as amended
(the "1940 Act") ) of the Fund or of the Fund's investment manager or
investment adviser. Mr. Ohi is deemed an interested person because of his
affiliation with Daiwa Securities America Inc., an affiliate of the Fund's
investment manager, Daiwa Asset Management (H.K.) Ltd. (the "Investment
Manager"), or because he is an officer of the Fund, or both. Mr. Tsuneishi
is an interested person because of his affiliation with the Fund's
Investment Manager, or because he is an officer of the Fund, or both.
** Represented less than 1% of the outstanding shares at July 16, 1999.
5
<PAGE>
The Fund's Board of Directors held four regular meetings during the fiscal
year ended December 31, 1998. Each incumbent director attended at least
seventy-five percent of the aggregate number of meetings of the Board of
Directors.
The Fund's Board of Directors has an Audit Committee which is responsible
for reviewing financial and accounting matters. The current members of the Audit
Committee are Dr. Gruber, Mr. Shaffer and Dr. Liu. The Audit Committee met twice
during the fiscal year ended December 31, 1998. The incumbent members of the
Audit Committee attended all the meetings held during the fiscal year. The Fund
has neither a compensation nor a nominating committee.
Section 16(a) of the U.S. Securities Exchange Act of 1934, as amended,
requires the Fund's officers and directors, and persons who own more than ten
percent of a registered class of the Fund's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange, Inc. The Fund believes that its
officers and directors have complied with all applicable filing requirements for
the fiscal year ended December 31, 1999, except that, inadvertently, such
reports were not filed on a timely basis for Mr. Gruber.
OFFICERS OF THE FUND
Mr. Ohi (age 51) has been Chairman of the Board of the Fund since September
1998 (see information provided above).
Mr. Tsuneishi (age 51) has been President of the Fund since December 1997
(see information provided above).
Daniel F. Barry (age 52) has been Vice President of the Fund since July 1994
and Secretary of the Fund since March 1999 and has been Director and Senior Vice
President of Daiwa Securities Trust Company ("DSTC"), the Fund's Administrator
and Custodian, since December 1998 and June 1993, respectively. From June 1990
to June 1993, he was Vice President, Mutual Fund Administration of DSTC.
Sean J. Peters (age 38) has been Treasurer of the Fund since June 1998; Vice
President of DSTC since June 1998; Assistant Controller of Reserve Management
Corporation from 1994 to 1998; Assistant Vice President of Bankers Trust Company
from 1992 to 1994.
John A. Koopman (age 29) has been Assistant Treasurer of the Fund since June
1998; Assistant Vice President of DSTC since June 1998; Assistant Treasurer of
Chase Manhattan Bank NA from 1992 to 1998.
Judy Runrun Tu (age 34) has been Assistant Secretary of the Fund since March
1999; Assistant Vice President of DSTC since March 1999; Financial Analyst of
Canon USA from 1997 to 1998; Marketing Coordinator of TotalTel USA from 1995 to
1997; Assistant Controller of Daniel Caron Ltd. from 1990 to 1995.
Laurence E. Cranch (age 52) has been Assistant Secretary of the Fund since
December 1994 and a partner in the law firm of Rogers & Wells LLP since 1980.
TRANSACTIONS WITH AND REMUNERATION OF OFFICERS AND DIRECTORS
The aggregate fee remuneration for directors not affiliated with Daiwa Asset
Management (H.K.) Ltd. (the "Investment Manager") or National Capital Management
Corp. (the "Investment Adviser") was U.S. $27,600 during the fiscal year ended
December 31, 1998. Each such non-affiliated director
6
<PAGE>
currently receives fees, paid by the Fund, of U.S. $750 for each directors'
meeting attended in person or by telephone, U.S. $600 for each audit committee
meeting attended in person or by telephone and an annual fee of U.S. $5,000. The
officers and interested directors of the Fund received no compensation from the
Fund.
DSTC, which pays the compensation and certain expenses of the officers of
DSTC who serve as officers of the Fund, receives an administration and custodian
fee.
Set forth below is a chart showing the aggregate fee compensation paid by
the Fund (in U.S. dollars) to each of its directors during the fiscal year ended
December 31, 1998, as well as the total fee compensation paid to each director
of the Fund by the Fund and by other investment companies advised by the
Investment Manager, the Investment Adviser or their respective affiliates
(collectively, the "Fund Complex") for their services as directors of such
investment companies during their respective fiscal years:
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
BENEFITS TOTAL COMPENSATION
AGGREGATE ACCRUED AS PART FROM FUND AND FUND
COMPENSATION OF COMPLEX PAID TO
NAME OF DIRECTOR FROM FUND FUND EXPENSES DIRECTORS
- ----------------------- ------------- --------------- ------------------
<S> <C> <C> <C>
Masayasu Ohi+* $ 0 None $ 0
Shuichi Komori*+ 0 None 0
Sadamu Tsuneishi+ 0 None 0
Oren G. Shaffer* 9,200 None 17,050
Martin J. Gruber* 9,200 None 18,400
Christina Y. Liu 9,200 None 9,200
</TABLE>
- ------------------------
* Also serves as a director of other investment companies for which an
affiliate of Daiwa Asset Management (H.K.) Limited, the Fund's investment
manager, serves as investment adviser.
+ Mr. Tsuneishi and Mr. Ohi, and his predecessor, Mr. Komori, who are
affiliated with the Investment Manager and are considered "interested
persons" of the Fund, did not receive any fee compensation from the Fund for
their services as directors. Mr. Ohi was elected to the Board of Directors
in September 1998 to replace Mr. Komori, who resigned.
(2) RATIFICATION OR REJECTION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
At a meeting held on March 4, 1999, the Board of Directors of the Fund,
including a majority of the directors who are not "interested persons" of the
Fund (as defined in the 1940 Act), selected PricewaterhouseCoopers LLP to act as
independent accountants for the Fund for the fiscal year ending December 31,
1999, subject to stockholder approval. The Fund knows of no direct financial
interest or material indirect financial interest of that firm in the Fund. One
or more representatives of PricewaterhouseCoopers LLP are expected to be present
at the Annual Meeting and will have an opportunity to make a statement if they
so desire. Such representatives are expected to be available to respond to
appropriate questions from stockholders.
7
<PAGE>
This selection of independent accountants is subject to the ratification or
rejection of the Fund's stockholders at the meeting. Ratification of the
selection of the independent accountants will require the affirmative vote of a
majority of the votes cast at the meeting. For this purpose, abstentions and
broker non-votes will not be counted as votes cast at the meeting.
(3) APPROVAL OF A NEW MANAGEMENT AGREEMENT
THE MANAGER
Daiwa Asset Management (H.K.) Ltd. (the "Manager"), the Fund's investment
manager, is a wholly-owned subsidiary of Daiwa Asset Management Co. Ltd.
("DAM"), with principal address at 25F, One Pacific Place, 88 Queensway, Hong
Kong. It was incorporated in August 1988 under the laws of Hong Kong. In
addition to the Fund, it currently provides investment advice regarding
investment in Asian and Oceanian markets to unit trusts managed by DAM and to
some offshore funds. As of April 30, 1999, the total assets managed under the
advice of the Manager was approximately US$ 183 million. DAM, incorporated in
Japan, has total assets under management amounting to approximately US$ 94.4
billion, as of March 31, 1999.
The Manager, having engaged in investment advisory business in Hong Kong
since 1988, emphasizes an Asian and Oceanian regional investment strategy and
benefits from research coverage of a broad spectrum of equity investment
opportunities in the Asian and Oceanian region, including Hong Kong, Singapore,
Malaysia, Thailand, Indonesia, the People's Republic of China, the Republic of
China ("ROC"), Korea, the Philippines and Australia. It draws upon the
capabilities of its four "country specialists" located in Hong Kong, and also
the research capabilities of Daiwa Institute of Research, Ltd., an affiliated
company, and its other affiliates, as well as the research and investment ideas
of other companies whose brokerage services it utilizes.
Daiwa Securities Group, Inc. and Daiwa Real Estate Co. Ltd. owned as of July
19, 1999, 51.78% and 10.57% of the outstanding stock of DAM, respectively. The
principal address of DAM is 2-10-5, Nihonbashi Kayabacho, Chuo-Ku, Tokyo,
103-0025, Japan. The principal address of Daiwa Institute of Research Ltd. is
15-6, Fuyuki, Kohto-ku, Tokyo, Japan, 135-8460. The principal address of Daiwa
Securities Group Inc. is 6-4, Otemachi 2-chome, Chiyoda-ku, Japan, 100-8101.
Certain information regarding the directors and the principal executive
officers of the Manager is set forth below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS AND POSITION WITH THE MANAGER
- ---------------------------- -----------------------------------------------------------
<S> <C>
Kitahara, Tadashi* Managing Director and Chief Investment Officer
Ando, Hiroshi* Director
Kitazawa, Kouji* Director
Akiyama, Shinya* Director
</TABLE>
- ------------------------
* Business Address: 25/F, One Pacific Place, 88 Queensway, Hong Kong
THE RESTRUCTURING
In February 1999, shareholders of Daiwa Securities Co. Ltd., which at the
time was a direct holder of approximately 5% of the shares of DAM, approved a
restructuring proposal to transform Daiwa Securities Co. Ltd. into a holding
company, and in the process renamed itself as the Daiwa Securities
8
<PAGE>
Group Inc. ("Daiwa Securities"). The motivation for this restructuring was to
better focus Daiwa Securities on its core competency in the securities related
business, in anticipation of the greater transformation of the Japanese
financial services industry.
As part of this restructuring process, certain affiliates of Daiwa
Securities were restructured as subsidiaries and, as a consequence, Daiwa
Securities increased its shareholding in DAM to 51.78% as of July 19, 1999,
thereby becoming a holder of a controlling block of stock (25% or more) in DAM,
thereby possibly resulting in an assignment of the Investment Management
Agreement dated July 18, 1994 (the "Original Management Agreement") between the
Fund and the Manager for the purposes of Section 15(a)(4) of the Investment
Company Act of 1940 (the "1940 Act"). The assignment of the Original Management
Agreement resulted in its automatic termination.
THE MANAGEMENT AGREEMENT
As a result of the possible termination of the Original Management
Agreement, a majority of the Directors of the Fund who are not officers of the
Fund or affiliated with the Manager or National Capital Management Corp. Limited
(the "Disinterested Directors"), voting in person, approved a new investment
management agreement (the "New Management Agreement") between the Fund and the
Manager. The New Management Agreement is substantially the same as the Fund's
Original Management Agreement, except for the date of execution and provisions
that the Manager will not be entitled to receive fees for services or
reimbursements for expenses unless and until the payment of fees and expenses
are approved by the stockholders of the Fund. The holders of a majority of the
outstanding voting securities (within the meaning of the 1940 Act) of the Fund
are being asked to approve the New Management Agreement including the payment of
fees and expenses of the Manager from July 9, 1999 to the date the New
Management Agreement is approved by the Fund's stockholders. See "The New
Management Agreement" below.
The following is a summary of the original Management Agreement and the New
Management Agreement. The description of the New Management Agreement is
qualified by reference to Annex A.
THE ORIGINAL MANAGEMENT AGREEMENT
The original Investment Management Agreement, dated as of July 18, 1994, was
last approved by stockholders of the Fund on July 18, 1994 at the Fund's
inception.
Under the terms of the Original Management Agreement, the Manager made
investment decisions, prepared research and statistical data and supervised the
purchase and sale of securities on behalf of the Fund. The Manager also
supervised the selection of brokers and dealers to carry out the transactions,
all in accordance with the Fund's investment objective and policies under the
direction and control of the Fund's Board of Directors. The Manager maintained
records and furnished or caused to be furnished all required records or other
information for the Fund to the extent such records, reports and other
information were not maintained or furnished by the Fund's administrator or
other agents. The Manager or one of its affiliates was responsible for the
compensation and expenses of those of the Fund's Directors, officers and
employees who were Directors, officers or employees of the Manager or any of its
affiliates, except that the Fund bore travel expenses or an appropriate fraction
thereof of officers and Directors of the Fund who were directors, officers or
employees of the Manager to the extent such expenses related to attendance at
meetings of the Fund's Board of Directors or any committee thereof.
9
<PAGE>
Under the terms of the Original Management Agreement, the Manager and its
affiliates were permitted to provide investment advisory services to other
clients, including clients who may invest in securities of ROC companies and, in
providing such services, may use non-confidential information furnished by the
Manager. Conversely, information furnished by others to the Manager in the
course of providing services to clients other than the Fund may have been useful
to, and used by, the Manager in providing services to the Fund.
The Original Management Agreement provided that the Manager was not liable
for any act or omission, error of judgment or mistake of law, or for any loss
suffered by the Fund in connection with matters to which the Original Management
Agreement related, except for a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Manager in the performance of its
duties, or from reckless disregard by the Manager of its obligations and duties
under the Original Management Agreement.
As compensation for the services of the Manager, the Fund paid the Manager a
fee, in U.S. dollars, computed weekly and payable monthly, at an annual rate of
1.20% of the Fund's average weekly net assets. As compensation for the services
of the Adviser, the Manager paid National Capital Management Corporation, the
Fund's investment adviser, a fee, in U.S. dollars, computed weekly and payable
monthly, at an annual rate of 0.08% of the Fund's average weekly net assets up
to $100 million and 0.06% of such net assets in excess of $100 million.
For the fiscal period ended December 31, 1998, the Fund paid a gross fee and
expenses of U.S. $731,631 to the Manager. For the fiscal period ended December
31, 1998, the Manager paid from its gross fee, fees and expenses of U.S. $48,188
to the Adviser.
In addition, Daiwa Securities Trust Company ("DSTC"), an affiliate of the
Manager, acts as Custodian and Administrator to the Fund. For its services as
Custodian and Administrator, DSTC received from the Fund net fees and expenses
of U.S. $31,989 and U.S. $150,000, respectively, for the fiscal year ended
December 31, 1998. Brokerage commissions of U.S. $69,642 were paid by the Fund
during the fiscal year ended December 31, 1998 to Daiwa Securities Co. Ltd.
(Taipei Branch), an affiliate of the Manager, in connection with the Fund's
portfolio transactions. DSTC will continue to act as the Fund's Administrator
and Custodian after approval of the New Management Agreement.
The Original Management Agreement had a provision for termination without
penalty at any time by the Fund or by the Manager upon 60 days' written notice.
THE NEW MANAGEMENT AGREEMENT
The Board of Directors of the Fund, (the "Board"), including the
Disinterested Directors, approved the New Management Agreement at a special
meeting of the Board of Directors held on July 9, 1999, (the form of which is
attached as Annex A), and recommended the New Management Agreement for approval
by the stockholders of the Fund. The New Management Agreement is substantially
the same as the Original Management Agreement. The New Management Agreement took
effect on July 9, 1999, subject to stockholder approval. The New Management
Agreement will continue in effect for an initial two-year term and thereafter
for successive annual periods as long as such continuance is approved in
accordance with the 1940 Act.
The investment management fee as a percentage of net assets payable by the
Fund to the Manager will be the same under the New Management Agreement as under
the Original Management Agreement.
10
<PAGE>
In evaluating the New Management Agreement, the Board took into account that
the Fund's Original Management Agreement and its New Management Agreement,
including that their terms relating to the services to be provided thereunder by
the Manager and the fees and expenses payable by the Fund, are identical, except
for the date of execution and the provision relating to the payment of fees and
expenses as described above.
The Board also examined the terms of the Daiwa Securities restructuring and
the possible effects of the restructuring upon the Manager's organization and
upon the ability of the Manager to provide Management services to the Fund. The
Board also considered the skills and capabilities of the Manager.
After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Directors, and the Disinterested
Directors voting separately, unanimously approved the New Management Agreement
and voted to recommend its approval to the stockholders of the Fund.
In the event that stockholders of the Fund do not approve the New Management
Agreement, the Board will take such action as it deems in the best interest of
the Fund and its stockholders, which may include proposing that stockholders
approve an agreement in lieu of the New Management Agreement.
MANAGER'S PROPOSAL REGARDING THE FUND'S DISCOUNT
In connection with the discount of the Fund's share price to net asset
value, the Manager has proposed to the Board of Directors that, if during any
four-week time period commencing on or after the date of the 1999 Annual Meeting
of Stockholders or adjournments thereto, the average discount rate of the Fund's
share price to net asset value is greater or equal to 10%, a special meeting of
the Board of Directors be called promptly thereafter to determine measures to be
taken to enable stockholders to realize net asset value. The Manager has also
commited to provide the Board of Directors at the time of such special meeting a
proposal to enable stockholders to realize net asset value as soon as
practicable thereafter. In order to contain the expense ratio of the Fund as a
result of the Fund's share repurchase program, the Manager has also advised the
Board of Directors that it will waive the portion of its investment management
fee in excess of 1.0% of the Fund's average weekly net assets, effective from
the date following the 1999 Annual Meeting of Stockholders.
STOCKHOLDER APPROVAL
To become effective, the New Management Agreement must be approved by a vote
of a majority of the outstanding voting securities of the Fund. The "vote of a
majority of the outstanding voting securities" is defined under the 1940 Act as
the lesser of the vote of (i) 67% or more of the shares of the Fund entitled to
vote thereon present at the Meeting if the holders of more than 50% of such
outstanding shares of the Fund are present in person or represented by proxy, or
(ii) more than 50% of such outstanding shares of the Fund entitled to vote
thereon. The New Management Agreement was approved by the Board after
consideration of all factors which they determined to be relevant to their
deliberations, including those discussed above. The Board also determined to
submit the New Management Agreement for consideration by the stockholders of the
Fund.
11
<PAGE>
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE NEW MANAGEMENT AGREEMENT INCLUDING THE PAYMENT OF FEES AND EXPENSES OF
THE MANAGER FROM JULY 9, 1999 TO THE DATE THE NEW MANAGEMENT AGREEMENT IS
APPROVED BY THE FUND'S STOCKHOLDERS.
(4) APPROVAL OF A NEW ADVISORY AGREEMENT
THE ADVISER
National Capital Management Corporation (the "Adviser") provides consulting
services in the ROC domestic securities market as well as to overseas mutual
funds. The Adviser was one of the first companies in Taiwan to set up an
account-officer system for its domestic portfolio advice business. Under this
system, an individual client receives the service of consultants in accordance
with the client's financial resources and risk, versus the return performance of
the portfolio. The Adviser was founded on October 24, 1984, and its principal
address is 7th Floor, 57 Po Ai Road, Taipei, Taiwan, R.O.C.
The parent of the Adviser is National Security Company and owns 85% of the
outstanding shares of the Adviser. Its principal business address is 7F, 2 Chung
Chings Rd., Sec. 3, Taipei , Taiwan, ROC.
Certain information regarding the directors and the principal executive
officers of the Adviser is set forth below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS AND POSITION WITH THE ADVISER
- ---------------------------- -----------------------------------
<S> <C>
Wen-Jur Huang* Chairman, National Capital
Management Corporation
Ming-Hune Hung* President, National Investment
Trust Co., Ltd.; Director
Jay-Chung Chang* Professor, Ming-Chane University;
Director.
Steven Lin* Executive Vice President, National
Capital Management Corporation
</TABLE>
- ------------------------
* Business Address: 7th Floor, 57 Po Ai Road, Taipei, Taiwan, ROC
AUTOMATIC TERMINATION OF ORIGINAL ADVISORY AGREEMENT
As a result of the restructuring of Daiwa Securities Group Inc. described in
Proposal 3 above, the original Investment Advisory Agreement dated July 18, 1994
(the "Original Advisory Agreement") between the Manager and Adviser may have
automatically terminated upon the termination of the Management Agreement.
THE ADVISORY AGREEMENT
As a result of the possible termination of the Original Advisory Agreement,
a majority of the Directors of the Fund who are not officers of the Fund or
affiliated with the Manager or the Adviser (the "Disinterested Directors"),
voting in person, approved a new investment management agreement (the "New
Advisory Agreement") between the Manager and the Adviser. The New Advisory
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<PAGE>
Agreement is substantially the same as the Fund's Original Advisory Agreement,
except for the date of execution and provisions that the Adviser will not be
entitled to receive fees for services or reimbursements for expenses from unless
and until the payment of fees and expenses are approved by the stockholders of
the Fund. The holders of a majority of the outstanding voting securities (within
the meaning of the 1940 Act) of the Fund are being asked to approve the New
Advisory Agreement including the payment of fees and expenses of the Adviser
from July 9, 1999 to the date the New Advisory Agreement is approved by the
Fund's stockholders. See "The New Advisory Agreement" below.
The following is a summary of the Original Advisory Agreement and the New
Advisory Agreement. The description of the New Advisory Agreement is qualified
by reference to Annex B.
THE ORIGINAL ADVISORY AGREEMENT
The Original Advisory Agreement was last approved by stockholders of the
Fund on July 18, 1994 at the Fund's inception.
Under the terms of the Original Advisory Agreement, the Adviser was required
to provide the Manager with investment recommendations and also to prepare and
make available research and statistical data and to provide specific advice to
the Manager regarding the ROC economy, industries and equities. The information
and investment advice received by the Manager from the Adviser was used for the
purpose of managing the Fund's investment portfolio and was evaluated by the
Manager's staff in light of their own expertise and information from other
sources.
The Adviser or one of its affiliates was responsible for the compensation
and expenses of the Fund's Directors, officers and employees who were Directors,
officers or employees of the Adviser or any of its affiliated persons, except
that the Fund bore travel expenses of officers and Directors of the Fund who
were directors, officers or employees of the Adviser to the extent such expenses
related to attendance at meetings of the Fund's Board of Directors or any
committee thereof.
The Original Advisory Agreement provided that the Adviser was not liable for
any act or omission, error of judgment or mistake of law, or for any loss
suffered by the Fund in connection with matters to which the Original Advisory
Agreement relates, except for a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Adviser in the performance of its
duties, or from reckless disregard by the Adviser of its obligations and duties
under the Advisory Agreement.
As compensation for the services of the Adviser, the Manager paid the
Adviser a fee, in U.S. dollars, computed weekly and payable monthly, at an
annual rate of 0.08% of the Fund's average weekly net assets up to $100 million
and 0.06% of such net assets in excess of $100 million.
For the fiscal period ended December 31, 1998, the investment manager paid
from its gross fee, fees and expenses of U.S. $48,188 to the Adviser. In
addition, National Securities, an affiliate of the Adviser, received brokerage
commissions of $2,319 from the Fund during that same period.
The Original Advisory Agreement also had a provision for termination without
penalty at any time by the Manager or by the Adviser upon 60 days' written
notice.
THE NEW ADVISORY AGREEMENT
The Board of Directors of the Fund (the "Board"), including the
Disinterested Directors, approved the New Advisory Agreement at a special
meeting of the Board of Directors held on July 9, 1999 (the form of which is
attached as Annex B), and recommended the New Advisory Agreement for
13
<PAGE>
approval by the stockholders of the Fund. The New Advisory Agreement is
substantially the same as the Original Advisory Agreement. The New Advisory
Agreement took effect on July 9, 1999, subject to stockholder approval. The New
Advisory Agreement will continue in effect for an initial two-year term and
thereafter for successive annual periods as long as such continuance is approved
in accordance with the 1940 Act.
The investment advisory fee as a percentage of net assets payable by the
Fund to the Adviser will be the same under the New Advisory Agreement as under
the Original Advisory Agreement.
In evaluating the New Advisory Agreement, the Board took into account that
the Fund's Original Advisory Agreement and its New Advisory Agreement, including
that their terms relating to the services to be provided thereunder by the
Adviser and the fees and expenses payable by the Fund, are identical, except for
the date of execution and the provision relating to the payment of fees and
expenses as described above. The Board also considered the skills and
capabilities of the Adviser.
After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Directors, and the Disinterested
Directors voting separately, unanimously approved the New Advisory Agreement and
voted to recommend its approval to the stockholders of the Fund.
In the event that stockholders of the Fund do not approve the New Advisory
Agreement, the Board will take such action as it deems in the best interest of
the Fund and its stockholders, which may include proposing that stockholders
approve an agreement in lieu of the New Advisory Agreement.
STOCKHOLDER APPROVAL
To become effective, the New Advisory Agreement must be approved by vote of
a majority of the outstanding voting securities of the Fund. The "vote of a
majority of the outstanding voting securities" is defined under the 1940 Act as
the lesser of the vote of (i) 67% or more of the shares of the Fund entitled to
vote thereon present at the Meeting if the holders of more than 50% of such
outstanding shares of the Fund are present in person or represented by proxy, or
(ii) more than 50% of such outstanding shares of the Fund entitled to vote
thereon. The New Advisory Agreement was approved by the Board after
consideration of all factors which they determined to be relevant to their
deliberations, including those discussed above. The Board also determined to
submit the New Advisory Agreement for consideration by the stockholders of the
Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE NEW ADVISORY AGREEMENT INCLUDING THE PAYMENT OF FEES AND EXPENSES OF THE
ADVISER FROM JULY 9, 1999 TO THE DATE THE NEW ADVISORY AGREEMENT IS APPROVED BY
THE FUND'S STOCKHOLDERS.
MISCELLANEOUS
Proxies will be solicited by mail and may be solicited in person or by
telephone or telegraph by officers, directors and employees of the Fund, the
Investment Manager or DSTC. The Fund has retained Corporate Investor
Communications, Inc. to assist in the proxy solicitation. The fee for such
services is estimated at U.S. $4,500, plus reimbursement of expenses. The
expenses connected with the solicitation of these proxies and with any further
proxies which may be solicited by the Fund's officers or agents in person, by
telephone or by telegraph will be borne by the Fund. The Fund will
14
<PAGE>
reimburse banks, brokers, and other persons holding the Fund's 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.
It is important that you promptly submit your vote as a stockholder of the
Fund. In the event that sufficient votes in favor of any proposal set forth in
the Notice of this meeting are not received by September 17, 1999, the persons
named as attorneys in the enclosed proxy may propose one or more adjournments of
the meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of the holders of a majority of the shares 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
those proxies which they are entitled to vote in favor of the proposal for which
further solicitation of proxies is to be made. They will vote against any such
adjournment those proxies required to be voted against such proposal. The costs
of any such additional solicitation and of any adjourned session will be borne
by the Fund.
STOCKHOLDER PROPOSALS
Any proposal by a stockholder of the Fund intended to be included in the
proxy materials for the year 2000 meeting of stockholders of the Fund must be
received by the Fund, c/o Daiwa Securities Trust Company, One Evertrust Plaza,
9th Floor, Jersey City, New Jersey 07302, not later than December 10, 1999.
The Fund's By-laws require that any proposal by a stockholder of the Fund
intended to be presented at a meeting of stockholders must be received by the
Fund, c/o Daiwa Securities Trust Company, One Evertrust Plaza, 9th Floor, Jersey
City, New Jersey 07302, not earlier than 90 days prior and not later than 60
days prior to such meeting of stockholders.
By order of the Board of Directors,
Daniel F. Barry
SECRETARY
One Evertrust Plaza
Jersey City, New Jersey 07302
August 10, 1999
15
<PAGE>
ANNEX A
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of this 9th day of July, 1999, by and between THE TAIWAN
EQUITY FUND, INC., a corporation organized under the laws of the State of
Maryland (the "Fund"), and DAIWA ASSET MANAGEMENT (H.K.) LTD., a corporation
organized under the laws of Hong Kong (the "Manager") whose registered office is
at 25/F, One Pacific Place, 88 Queensway, Hong Kong and registered as an
investment adviser and as a dealer under the Securities Ordinance of Hong Kong.
WHEREAS, the Fund is a non-diversified, closed-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund's investment objective is long-term capital appreciation,
which it seeks to achieve by investing primarily in equity securities issued by
companies located in or deriving revenues from, The Republic of China (the
"ROC"); and
WHEREAS, the Fund desires to retain the Manager to render investment
management services to the Fund with respect to its assets; and
WHEREAS, the Manager is willing to render such services; and
WHEREAS, Daiwa Investment Trust and Management Co. Ltd., a corporation
organized under the laws of Japan ("DIT"), has obtained a qualified foreign
institutional investor ("QFII") authorization ("QFII Authorization"), on behalf
of the Manager, from the Securities and Exchange Commission of the Republic of
China (the "ROC SEC") permitting the Manager to invest in securities in the
Republic of China; and
WHEREAS, the Fund, the Manager and DIT have entered into an agreement (a
copy of which is attached hereto as Exhibit A) pursuant to which DIT has
appointed the Manager to make investments and to give instructions relating
thereto on behalf of the Fund, under the QFII Authorization.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. APPOINTMENT OF MANAGER.
a. The Fund hereby employs the Manager for the period and on the terms and
conditions set forth herein, subject at all times to the supervision of the
Board of Directors of the Fund, to:
i. Provide to the Fund full discretionary portfolio management services
and to manage the investment and reinvestment of the assets of the Fund in
accordance with the investment objective and policies of the Fund, as set
forth in the Fund's Prospectus (as defined below). In acting as investment
manager for the Fund's assets, the Manager shall regularly supervise the
purchase and sale of securities on behalf of the Fund based, in part, on the
recommendations of National Capital Management Corp., a corporation
organized under the laws of the ROC (the "Investment Adviser"), pursuant to
an Investment Advisory Agreement dated of even date herewith between the
Manager and the Investment Adviser, a copy of which is attached as Exhibit B
hereto (the "Investment Advisory Agreement"). The Manager shall determine
from time to time what securities shall be purchased, sold or exchanged and
what portion of the Fund's assets shall be held in cash, U.S. Dollars and NT
Dollar denominated short-term debt instruments ("Temporary Investments") in
which the Fund may invest, subject always to the restrictions of
16
<PAGE>
the Fund's Articles of Incorporation and By-Laws, as further amended or
restated from time to time, the provisions of the 1940 Act and the Fund's
investment objective, investment policies and investment limitations, as the
same are set forth in the prospectus (the "Prospectus") of the Fund
contained in its registration statement on Form N-2 (File No. 33-74106) (the
"Registration Statement") filed with the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended, and the 1940 Act.
Should the Board of Directors of the Fund at any time make any definite
determination as to investment policy and notify the Manager thereof, the
Manager 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 Manager shall take, on behalf of the Fund, all actions
which it deems necessary to implement the investment policies of the Fund
applicable to the Fund's assets, including the Fund's Temporary Investments,
and with respect to the Fund's assets, including the Fund's Temporary
Investments, to place all orders for the purchase or sale of portfolio
securities for the Fund with brokers or dealers selected by it, and in
connection therewith, the Manager is authorized as agent of the Fund to give
instructions to the custodians from time to time of the Fund's 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 Manager is directed at all times to seek to obtain the
best results for the Fund as determined by the Board of Directors and set
forth in the Prospectus. Subject to this requirement and the provisions of
the 1940 Act, the Securities Exchange Act of 1934, as amended, and any other
applicable provisions of law, nothing shall prohibit the Manager from
selecting brokers or dealers with which it or the Fund is affiliated. In
addition, the Manager may employ the services and facilities of one or more
of its affiliates in selecting brokers or dealers and placing orders. The
use of any such services and facilities of an affiliate of the Manager shall
be at no expense to the Fund, beyond the fee payable to the Manager and
shall not diminish the Manager's duties and responsibilities with respect to
such selections and the placing of orders;
ii. Maintain for the Fund records and furnish or cause to be furnished
all required records or other information of the Fund to the extent that
such records, reports and other information are not maintained or furnished
by the Fund's administrators, custodians or other agents; and
iii. Advise the Fund as to the amounts and types of cash and securities
held in Temporary Investments.
b. The Manager accepts such employment and agrees during the term of this
Agreement to render such services, to permit any of its 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 set forth for the
compensation herein provided. The Manager 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 will pay to the Manager at the end of each calendar month (as accrued
weekly), an investment management fee in U.S. dollars computed at an annual rate
of 1.20% of the Fund's average weekly net assets. The Fund acknowledges that a
portion of such fee shall be paid by the Manager to the Investment Adviser for
its services under the Investment Advisory Agreement. 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 the Agreement is
in effect during such month and year, respectively. Notwithstanding
17
<PAGE>
anything to the contrary in this Section 2, the Adviser shall not be entitled to
receive fees for services provided pursuant to this Agreement for the period
from the date of this Agreement to the date on which this Agreement is approved
by the stockholders of the Fund unless and until the payment of fees and
expenses under this Agreement are approved by the stockholders of the Fund.
3. NON-EXCLUSIVITY OF SERVICES. The services of the Manager to the Fund
under this Agreement are not to be deemed exclusive, and the Manager shall be
free to render similar services or other services to others so long as its
services are not impaired thereby.
4. ALLOCATION OF CHARGES AND EXPENSES.
a. The Manager 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 Manager 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 Directors who are directors,
officers or employees of the Manager or any of its affiliates, PROVIDED,
HOWEVER, that the Fund, and not the Manager, shall bear travel expenses or an
appropriate fraction thereof of officers and Directors of the Fund who are
directors, officers or employees of the Manager to the extent that such expenses
relate to attendance at meetings held in connection with the Fund's operation,
including meetings of the Fund's Board of Directors or any committee thereof.
Notwithstanding anything to the contrary in this Section 4(a), the Adviser shall
not be entitled to receive reimbursement for its expenses from the Fund pursuant
to this Agreement for the period from the date of this Agreement to the date on
which this Agreement is approved by the stockholders of the Fund unless and
until the payment of fees and expenses under this Agreement are approved by the
stockholders of the Fund.
b. In addition to the fee of the Manager, the Fund shall assume and pay any
expenses for services rendered by any custodian for the safekeeping of the
Fund's securities or other property, for keeping its books of account, for any
other charges of any such custodian, and for calculating the net asset value of
the Fund as provided in the Prospectus. The Fund shall also assume and pay all
other charges and expenses of its operations, including compensation of the
Fund's directors (other than those affiliated with the Manager or the Investment
Adviser), the fees and expenses of its independent auditors, legal counsel and
administrator, any transfer or dividend disbursing agent, any registrar and any
administrator for its dividend reinvestment and cash purchase plan, the costs of
acquiring and disposing of portfolio securities (including freight, insurance
and other charges in connection with the shipment of portfolio securities),
interest, if any, on any obligations incurred by the Fund, the cost of share
certificates and of reports, membership dues in the Investment Company Institute
or any similar trade organization, insurance, reports and notices to
shareholders, New York Stock Exchange or other securities exchange listing fees,
any litigation expenses, costs of stockholder and other meetings, costs of
stationery, other like miscellaneous expenses and all taxes and fees payable to
federal, state or other governmental agencies on account of the registration of
securities issued by the Fund, filing of corporate documents or otherwise.
5. POTENTIAL CONFLICTS OF INTEREST. Subject to applicable statutes and
regulations, it is understood that directors, officers or agents of the Fund are
or may be interested in the Manager as directors, officers, employees, agents,
shareholders or otherwise, and that the directors, officers, employees, agents
and shareholders of the Manager may be interested in the Fund as a director,
officer, agent or otherwise.
18
<PAGE>
6. STANDARD OF CARE; INDEMNIFICATION.
a. The Manager will exercise its best judgment in rendering the services to
be provided by it hereunder. The Manager shall not be liable for any error of
judgment or of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, except loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Manager in the
performance of its obligations and duties or by reason of its reckless disregard
of its obligations and duties under this Agreement.
b. The Fund agrees to indemnify and hold harmless the Manager for any
losses, costs and expenses incurred or suffered by the Manager arising from any
action, proceeding or claims which may be brought against the Manager in
connection with the performance or non-performance in good faith of its
functions under this Agreement, except losses, costs and expenses resulting from
willful misfeasance, bad faith or gross negligence in the performance of the
Manager's duties or from reckless disregard on the part of the Manager of the
Manager's obligations and duties under this Agreement.
7. WARRANTIES, UNDERTAKINGS AND INDEMNITY OF THE FUND. The Fund warrants
that the information given in this Agreement to the Manager as requested in
writing by the Manager is true, complete and accurate and that the
representations made herein are accurate. The Manager is authorized at any time
to contact anyone, including the Fund's bankers, brokers or any credit agency,
for the purposes of verifying the information provided.
The Fund will forward, upon the execution of this Agreement, to the Manager,
the following documents relating to the Fund:
(i) Certified extract of the resolution of the board of directors of the
Fund, if any, relating to the execution of this Agreement;
(ii) Certified copy of the English version of the Fund's prospectus dated
July 18, 1994 and all relevant documents of the Fund; and
(iii) Certified copy of the Articles of Incorporation and Articles of
Amendment of the Fund;
8. SPECIFIC TERMS AND RISK DISCLOSURE. The Fund confirms that it has
notice of the provisions and the risk disclosure statement as set forth in the
Schedule attached hereto and agrees that the terms thereof are binding on the
Fund.
9. VOTING. The Manager may exercise any voting rights attached or related
to securities in which the Fund has invested as the Manager may deem
appropriate, or refrain from any such exercise at its discretion, subject always
to the Fund's specific instructions, if any.
10. DURATION AND TERMINATION. This Agreement shall become effective on the
date hereof and shall remain in force for a period of two years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in force from
year to year thereafter, but only as long as such continuance is specifically
approved at least annually in the manner required by the 1940 Act and the rules
and regulations of the SEC thereunder; provided, however, that if the
continuation of this Agreement is not approved, the Manager may continue to
serve in such capacity in the manner and to the extent permitted by the 1940 Act
and the rules and regulations of the SEC thereunder.
19
<PAGE>
This Agreement shall automatically terminate in the event of its assignment
and may be terminated at any time without the payment of any penalty by the Fund
or by the Manager on 60 days' written notice to the other party. The Fund may
effect termination by action of the Board of Directors or by vote of the holders
of a majority of the outstanding voting securities of the Fund.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Directors or by vote of the holders of a majority of
the outstanding voting securities of the Fund in the event that it shall have
been established by a court of competent jurisdiction that the Manager or any
officer or director of the Manager has taken any action which results in a
breach of the covenants of the Manager set forth herein.
The terms "assignment" and "vote of the holders of a majority of the
outstanding voting securities" shall have the meanings set forth in the 1940 Act
and the rules and regulations of the SEC thereunder.
Termination of this Agreement shall not affect the right of the Manager to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.
11. SURVIVAL. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall not
be thereby affected.
12. NOTICES. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
13. GOVERNING LAW. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of New York.
14. MISCELLANEOUS.
a. The Manager will inform the Fund as soon as possible of changes in the
control of the Manager.
b. The Fund confirms and acknowledges that the terms of this Agreement have
been fully explained to the Fund or to its representative in a language
understood by it or them and that the Fund agrees to be bound by the provisions
hereof.
c. The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
d. Terms not defined herein shall have the means set forth in the
Prospectus.
e. This Agreement may be executed simultaneously in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
f. This Agreement may be amended, changed, modified or altered only by a
written agreement signed by the parties hereto.
20
<PAGE>
IN WITNESS WHEREOF, the Fund and the Manager have caused this Agreement to
be executed as of the day and year first above written.
THE TAIWAN EQUITY FUND, INC.
By:
--------------------------------------
Name:
Title:
DAIWA ASSET MANAGEMENT
(H.K.) LTD.
By:
--------------------------------------
Name:
Title:
ATTEST:
By:
- --------------------------------------
Name:
Title:
ATTEST:
By:
- --------------------------------------
Name:
Title:
21
<PAGE>
SCHEDULE
PROVISION REQUIRED BY CODE OF CONDUCT FOR PERSONS REGISTERED
WITH THE HONG KONG SECURITIES AND FUTURES COMMISSION ("SFC")
The Manager understands that the Fund currently does not intend to utilize
margin or short selling facilities; however, if in the future, the Fund or the
Manager, at its discretion herein, wishes to utilize margin or short selling
facilities, the Fund agrees to comply with any rules of the SFC then applicable
to the Manager in respect of any such margin or short selling transactions
provided that such compliance does not violate the 1940 Act or the rules
thereunder.
RISK DISCLOSURE STATEMENT
A. IN RESPECT OF TRANSACTION IN SECURITIES, PLEASE NOTE THAT: THE PRICE OF
SECURITIES CAN AND DOES FLUCTUATE, AND ANY INDIVIDUAL SECURITY MAY EXPERIENCE
UPWARD OR DOWNWARD MOVEMENTS, AND MAY EVEN BECOME VALUELESS. THERE IS AN
INHERENT RISK THAT LOSSES MAY BE INCURRED RATHER THAN PROFIT MADE AS A RESULT OF
BUYING AND SELLING SECURITIES.
B. IN RESPECT OF TRANSACTIONS INVOLVING FUTURES CONTRACTS OR OPTIONS,
PLEASE NOTE THAT:
THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR OPTIONS CAN BE SUBSTANTIAL.
IN SOME CIRCUMSTANCES, YOU MAY SUSTAIN LOSSES IN EXCESS OF YOUR INITIAL MARGIN
FUNDS. PLACING CONTINGENT ORDERS, SUCH AS "STOP LOSS" OR "STOP-LIMIT" ORDER,
WILL NOT NECESSARILY ACHIEVE THE DESIRED RESULTS. MARKET CONDITIONS MAY MAKE IT
IMPOSSIBLE TO EXECUTE SUCH ORDERS. YOU MAY BE CALLED UPON SHORT NOTICE TO
DEPOSIT ADDITIONAL MARGIN FUNDS. IF THE REQUIRED FUNDS ARE NOT PROVIDED WITHIN
THE PRESCRIBED TIME, YOUR POSITION WILL BE LIQUIDATED. YOU WILL REMAIN LIABLE
FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT. YOU SHOULD THEREFORE STUDY AND
UNDERSTAND FUTURES CONTRACTS AND OPTIONS BEFORE YOU TRADE AND CAREFULLY CONSIDER
WHETHER SUCH TRADING IS SUITABLE IN THE LIGHT OF YOUR OWN FINANCIAL POSITION AND
INVESTMENT OBJECTIVES.
22
<PAGE>
ANNEX B
INVESTMENT ADVISORY AGREEMENT
This INVESTMENT ADVISORY AGREEMENT, dated as of July 9, 1994, is between
DAIWA ASSET MANAGEMENT (H.K.) LTD. (hereinafter called "DAM"), a company
organized under the laws of Hong Kong, located at 25/F, One Pacific Place, 88
Queensway, Hong Kong, and NATIONAL CAPITAL MANAGEMENT CORP. (hereinafter called
"NCM"), a company organized under the laws of The Republic of China ("ROC"),
located at 10F, 57, Po-Ai Rd., Taipei, Taiwan, ROC.
WHEREAS, DAM acts as investment manager to THE TAIWAN EQUITY FUND, INC.
(hereinafter called "the Fund"), and wishes to appoint NCM as its Investment
Adviser in respect to the Fund's investment portfolio, the parties to this
Agreement agree as follows:
1. ACCEPTANCE OF APPOINTMENT:
DAM hereby appoints NCM as its Investment Adviser for the Fund and NCM
hereby agrees to accept such appointment, subject to the terms and conditions
set forth herein.
2. ADVISORY SERVICES TO BE RENDERED:
NCM's investment advice shall be limited to the specific types of securities
permitted by the Fund's investment objective and policies and subject to the
Fund's investment restrictions, which will be furnished to NCM by DAM. NCM will
provide to DAM the following investment advisory services:
(a) NCM will review and analyze the ROC economy and the ROC industries and
review and evaluate the specific types of securities permitted by the Fund's
investment objective and policies and, as often as DAM reasonably deems
advisable, submit to DAM written recommendations for investment.
(b) NCM will prepare and make available periodic reports, analyses, model
portfolios, research and statistical data and provide specific advice to DAM
regarding the ROC economy, the ROC industries and the specific types of
securities permitted by the Fund's investment objective and policies. At all
times DAM shall be at liberty either to follow or disregard either wholly or
partially any information, advice, recommendation or model portfolio as to the
investments in accordance with the Fund's investment objective and policies, as
set forth in Fund's prospectus dated of even date herewith.
3. COMPENSATION:
NCM's fee for providing this service shall be in accordance with the
schedule set forth as Exhibit A hereto. Notwithstanding anything to the contrary
in this Section 3, the Adviser shall not be entitled to receive fees for
services provided pursuant to this Agreement for the period from the date of
this Agreement to the date on which this Agreement is approved by the
stockholders of the Fund unless and until the payment of fees and expenses under
this Agreement are approved by the stockholders of the Fund.
4. DURATION AND TERMINATION:
(a) This Agreement shall become effective on the date hereof and shall
remain in full force for a period of two years, unless sooner terminated as
hereinafter provided. This Agreement shall continue in force from year to year
thereafter, but only as long as such continuance is specifically approved at
least annually in the manner required by the Investment Company Act of 1940, as
amended (the
23
<PAGE>
"1940 Act") and the rules and regulations of the SEC thereunder; provided,
however, that if the continuation of this Agreement is not approved, the Manager
may continue to serve in such capacity in the manner and to the extent permitted
by the 1940 Act and the rules and regulations of the SEC thereunder.
(b) This Agreement shall terminate automatically without payment or penalty
by either party (i) in the event of termination of DAM's management agreement
with the Fund, or (ii) upon 60-days' notice or (iii) in the event of its
assignment (as defined in the 1940 Act).
5. REPRESENTATIONS AND WARRANTIES:
(a) DAM represents and warrants that: (i) it has the legal right, power and
authority to execute, deliver and perform this Agreement and to carry out all of
the transactions contemplated hereby; (ii) it has obtained all necessary
authorizations; (iii) the execution, delivery and performance of this Agreement
and the carrying out of any of the transactions contemplated hereby will not be
in conflict with, result in a breach of, or constitute a default under, any
agreement or other instrument to which DAM is a party or which is otherwise
known to DAM; (iv) it does not require the consent or approval of any
governmental agency or instrumentality, except any such consents and approvals
which DAM has obtained prior to the execution of this Agreement; (v) the
execution and delivery of this Agreement by DAM will not violate any law,
regulation, charter, by-law, order of any court or other government agency or
judgment applicable to DAM; and (vi) all persons executing this Agreement on
behalf of DAM are duly authorized to do so.
(b) NCM represents and warrants that it is a corporation organized under the
laws of The Republic of China and that it is registered as an investment adviser
under the U.S. Investment Advisers Act of 1940, as amended.
6. STANDARD OF CARE: INDEMNIFICATION:
(a) NCM will exercise its best judgment in rendering the services to be
provided by it hereunder. NCM shall not be liable for any error of judgment or
of law or for any loss suffered by DAM or by the Fund in connection with the
matters to which this Agreement relates, except loss resulting from willful
misfeasance, bad faith or gross negligence on the part of NCM in the performance
of its obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(b) DAM agrees to indemnify and hold harmless NCM, its officers, directors,
employees, agents, shareholders, or other affiliates (each an "Indemnified
Party"), for any losses, costs and expenses from proceedings or claims which may
be brought against such Indemnified Party in connection with the performance or
non-performance in good faith of its functions under this Agreement, except 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.
7. EXPENSES:
DAM and NCM will each pay the respective salaries and reasonable expenses of
the Fund's officers and employees, as well as the respective reasonable fees and
expenses of the Fund's Directors, who are directors, officers or employees of
DAM or any of its affiliated persons, or of NCM or any of its affiliated
persons, except that the Fund will bear travel expenses or an appropriate
fraction thereof of
24
<PAGE>
officers and Directors of the Fund who are directors, officers or employees of
DAM and NCM to the extent such expenses relate to attendance at meetings held in
connection with the Fund's operation, including meetings of the Fund's Board of
Directors or any committee thereof.
8. GENERAL:
DAM agrees that NCM shall have no responsibilities or duties with respect to
the subject matter of this Agreement other than those expressly set forth
herein. DAM also agrees to execute such documents as NCM may reasonably request
of DAM to assist NCM in carrying out its responsibilities and duties hereunder.
9. SEVERABILITY:
In case any one or more of the provisions contained in this Agreement should
be or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
in no way be affected, prejudiced or disturbed thereby.
10. NON-EXCLUSIVITY OF SERVICES:
The services of NCM to DAM under this Agreement are not to be deemed
exclusive, and NCM shall be free to render similar services or other services to
others so long as its services hereunder are not impaired thereby.
11. NOTICES:
Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for the receipt of such notice.
12. CONFIDENTIALITY:
NCM hereby agrees to keep confidential all documents, materials and other
information relating to the business of the Fund and not to disclose any of the
aforesaid without the prior consent of the Fund except that NCM may disclose the
aforesaid if it in good faith determines that such disclosure is necessary to
protect the interests of NCM upon two (2) days' prior notice to the Fund and DAM
or as soon as practicable under the circumstances in which (but in any case
prior to the time that) such disclosure is to be made.
13. GOVERNING LAW:
The provisions of and the validity and construction of this Agreement shall
be governed by and construed in accordance with the laws of the State of New
York.
25
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their authorized representatives as of the date and year first above written.
DAIWA ASSET MANAGEMENT
(H.K.) LTD.
By:
--------------------------------------
Name:
Title:
NATIONAL CAPITAL MANAGEMENT CORP.
By:
--------------------------------------
Name:
Title:
Acknowledged:
THE TAIWAN EQUITY FUND, INC.
By:
- ------------------------------------------
Name:
Title:
26
<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
FEE SCHEDULE
DAM shall pay NCM a fee, in U.S. dollars, each month for its advisory services
at the annual rates of 0.08% of the Fund's average weekly net assets for the
prior month on the first $100 million and 0.06% of the Fund's average weekly net
assets for the prior month on the excess over $100 million.
27
<PAGE>
SKU# TWCFD-PS-99
<PAGE>
THE TAIWAN EQUITY FUND, INC.
c/o Daiwa Securities Trust Company, One Evertrust Plaza, Jersey
City, New Jersey 07302
Proxy Solicited on Behalf of the Board of Directors for the
Annual Meeting of Stockholders on
September 17, 1999
The undersigned stockholder of The Taiwan Equity Fund, Inc. (the "Fund") hereby
appoints Daniel F. Barry, Sean J. Peters, John A. Koopman and Judy Runrun Tu, or
any of them, proxies of the undersigned, with full power of substitution, to
vote and act for and in the name and stead of the undersigned at the Annual
Meeting of Stockholders of the Fund to be held at the offices of Daiwa
Securities America, Inc., Financial Square, 32 Old Slip, 14th Floor, New York,
New York 10005, on September 17, 1999 at 12:00 noon, New York time, and at any
and all adjournments thereof, according to the number of votes the undersigned
would be entitled to cast if personally present.
The shares represented by this proxy will be voted in accordance with the
instructions given by the undersigned stockholder, but if no instructions are
given, this proxy will be voted in favor of proposals 1 through 4 as set
forth in this proxy. In addition, this proxy will be voted, in the discretion
of such proxies, upon such other business as may properly come before the
meeting or any adjournments thereof. The undersigned hereby revokes any and
all proxies heretofore given by the undersigned with respect to such shares.
The undersigned acknowledges receipt of the Proxy Statement dated August 10,
1999.
- -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND PROMPTLY RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Fund. Joint
owners should each sign. 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 indicate his or her title.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------ ---------------------------------
- ------------------------------------ ---------------------------------
- ------------------------------------ ---------------------------------
<PAGE>
<TABLE>
<S><C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ---------------------------------------------------------------
THE TAIWAN EQUITY FUND, INC.
- ---------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 THROUGH 4 BELOW. For Against Abstain
1. Election of two Class I directors For All With- For All 2. The ratification of the selection / / / / / /
to serve for a term expiring Nominees hold Except of PricewaterhouseCoopers LLP as
on the date on which the Annual / / / / / / independent accountants of the Fund
Meeting of Stockholders is for its fiscal year ending
held in the year 2002, and the December 31, 1999.
election of one Class II
director to serve for a term 3. The approval of the new / / / / / /
expiring on the date on Investment Management Agreement
which the Annual Meeting of between the Fund and Daiwa Asset
Stockholders is held in the Management (H.K.) Ltd. ("DAM
year 2000. HK"), including the payment of
fees and expenses of DAM HK from
CLASS I: Sadamu Tsuneishi, Oren G. Shaffer July 9, 1999 to the date the new
CLASS II: Masayasu Ohi Investment Management Agreement
is approved by the Fund's
NOTE: If you do not wish your shares voted "For" a particular stockholders.
nominee, mark the "For All Except" box and strike a line through
the name of the nominee in the list above. 4. The approval of the new / / / / / /
Investment Advisory
Agreement between DAM HK and
National Capital Management
CONTROL NUMBER: Corporation ("NCM"), including
the payment of fees and expenses
of NCM from July 9, 1999 to the
date the new Investment Advisory
Agreement is approved by the
Fund's stockholders.
-------------
Please be sure to sign and date this Proxy. Date
- ---------------------------------------------------------------
Mark box at right if an address change or comment
has been noted on the reverse side of this card. / /
- --------Stockholder sign here------------Co-owner sign here---- RECORD DATE SHARES:
</TABLE>
