Frequently Asked Questions
What is a closed-end fund? A closed-end fund is a publicly traded investment management company. Capital is generally raised through an initial public offering (IPO) of shares, just as for any publicly offered operating company; proceeds are invested in securities as determined by the investment objectives set by the particular fund’s charter. After the IPO, the shares of a closed-end fund typically trade on a secondary market, such as the New York Stock Exchange. The price of the shares is soley determined by market demand and the shares may trade at either a discount or premium to the net asset value (NAV) of the fund.
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How does a closed-end fund differ from an open-end or mutual fund? The major differences between a closed-end fund and a traditional open-end or mutual fund have to do with how investors buy and sell shares. Closed-end funds generally do not redeem their shares, although they may have certain buy-back programs, nor do they engage in the continuous sale of new shares. Hence, closed-end funds generally have a relatively fixed number of outstanding shares. Purchase and sale of shares, therefore, take place on the secondary market, which is the New York Stock Exchange in the case of the Fund.
In contrast, typically there is no such secondary market for open-end or mutual funds. Rather, the mutual fund company redeems shares upon the request of investors at a price equal to the fund's net asset value per share (NAV), less any redemption fee and other charges. Most mutual funds also continuously issue new shares to investors at a price based upon their shares’ NAV, less any sales charge. As a result, an open-end fund experiences continuing inflows and outflows of cash and may experience net sales or net redemptions of its shares.
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What is a diversified fund? A diversified fund has at least 75% of the value of its total assets represented by securities limited in respect of any one issuer to an amount not greater in value than 5% of the total assets of the fund, at the time those securities are purchased. For example, a diversified fund must hold at minimum 16 issuers (one issuer in the 25% basket and 15 issuers in the 75% basket). If changes in the market value of any holding cause these limits to be surpassed, the fund is not required to sell the security to fall within the above requirements. The fund, however, would not be allowed to increase the holding of that security until such time as it would conform to the diversification requirements. A diversified fund is also limited with respect to 75% of its total assets from owning more than 10% of the outstanding voting securities of an issuer. A non-diversified fund has none of these requirements.
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Why do many closed-end funds trade at a discount to their NAV? There is no simple answer. Supply and demand determine the price at which investors buy and sell a closed-end fund's shares in the secondary market. Investor sentiment, particularly related to emerging markets, may often influence the market price. But other factors, such as performance, liquidity, yield and dividend distributions, may also affect the extent to which a closed-end fund's market price differs from its NAV. The Fund cannot predict whether its shares will trade at, below or above NAV.
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At the Fund's Annual Meeting in June 2005, a proposal was approved to adopt an interval fund structure. What is an interval fund? An interval fund is a closed-end fund that offers to repurchase its shares at specified periods. However, shareholders are not required to accept these offers to sell their shares back to the fund. In the proposal approved by the Fund's shareholders, semi-annual repurchase offers will be made. The percentage of outstanding shares that the Fund can offer to repurchase will be determined by the Fund's Board of Trustees shortly before the start of each offer, but must be between 5% and 25% of the Fund's then outstanding shares. If the repurchase offer is oversubscribed, the Fund may (but is not required to) repurchase another 2% of shares outstanding.
The price that shareholders will receive on a repurchase will be based on the net asset value (NAV) per share of the Fund as of a specified and disclosed date. The Fund will deduct a fee of 2% of the repurchase proceeds to help defray the costs associated with the repurchase offers. The Board of Trustees has set December 30, 2005 as the pricing date for the first repurchase offer.
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What is the Fund’s proxy voting policy? The Fund’s policy with regard to voting stocks held in its portfolio is to vote in accordance with the recommendations of Institutional Shareholder Services, Inc. ("ISS") unless both the Fund’s President and Chief Financial Officer raise a question about the application of such a recommendation in a particular voting situation, in which event the decision as to how to vote such a proxy is made by the Executive Committee of the Fund’s Board of Trustees. For more information, see ISS’s Summary Voting Guidelines for Proxy Voting in the Corporate Governance section of this website.
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Does the Fund pay dividends? It is the Fund’s policy to distribute all ordinary income and net capital gains calculated in accordance with U.S. federal income tax regulations. The Fund last paid a dividend in July 2004, when it distributed a dividend of $0.01 per share. For the Fund’s dividend history, click here.
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How do I invest in the Taiwan Greater China Fund? Like any other stock traded on the New York Stock Exchange, you may buy shares through your broker. Closed-end funds can generally be held in ordinary brokerage accounts, retirement plan accounts, and trust or custodial accounts. If you are considering investing in the Fund, you should carefully consider the investment objective of the Fund, its risk profile and its expense ratio. As with all investment decisions, you should consult your financial advisor before investing.
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Where do I get information on the Fund’s Market Price and NAV? The Fund’s Market Price is available through Yahoo Finance by clicking on Current Market Price on the Fund’s home page. It can also be found in the Wall Street Journal and other major newspapers. The Fund’s current NAV is available on the Fund’s Home page. The Fund’s Market Price, NAV and discount from February 27, 2004 are available on the Historical Performance page.
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How can I get information on the portfolio of the Fund? The Fund publishes its top ten portfolio holdings in its Monthly Report which is available on this website under Reports and Filings. Every three months, the Fund also publishes its entire portfolio in its Quarterly, Semi-annual and Annual Reports.
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How can I receive other information on the Fund? All of the reports issued by the Fund are available on this website under Reports and Filings. However, if you wish to be on the Fund’s email list, you may send an email request to Shareholder Services. The Fund's SEC filings are also available on the SEC website at www.sec.gov.
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