SOURCE: The Taiwan Greater China Fund

November 12, 2007 11:56 ET

The Taiwan Greater China Fund's October 2007 Monthly Update

NEW YORK, NY--(Marketwire - November 12, 2007) - The Taiwan Greater China Fund's (NYSE: TFC) net asset value (NAV) in October underperformed its primary benchmark, the Taiwan China Strategy Index (TCS Index), as computed by MSCI, but outperformed the total return in US$ terms of Taiwan Stock Exchange Index (TAIEX). The Fund's share price during the month outperformed both the TCS Index and the TAIEX in US$ terms. The Fund's NAV increased 5.3% while its share price increase by 9.1%, compared to a 6.2% increase in the TCS Index and a 4.1% increase in US$ terms of the TAIEX. The Fund's discount to net asset value averaged 11.6% during October, with a low of 9.6%, a high of 13.6%, and a closing value of 9.6%. During the month, the Taiwan dollar appreciated 0.8% against the U.S. dollar.

On the heels of its recent easing of restrictions on the types of acceptable collateral for loans made by Taiwan's offshore banking units (OBUs), the Financial Supervisory Commission (FSC) announced in October its plans, pending the approval of the Mainland Affairs Council, to increase the amount of allowable unsecured loans made by the OBUs to companies in China owned by Taiwan entities from 10% to 15% of an OBU's total assets. As most OBUs are already at or near the current ceiling, this move is viewed as critical for Taiwan's OBUs to stave off competition from foreign banks and remain as the primary suppliers of rapidly growing foreign currency banking needs of Taiwan companies operating in China. Statistics announced in October showed that as of August-end Taiwan's OBUs had grown to US$86.4Bn in total assets, up 21% from the same point in 2006. In another sign of growing Taiwan investment in China, Cathay Life and Shin Kong Life separately announced in October that they had received approval from China to establish respectively the first Taiwan-owned property insurance company in China and the second Taiwan-China joint venture life insurance company (Cathay opened the first in 2005). Five other insurance companies in Taiwan have already received FSC approval for ventures in China and are currently seeking appropriate joint venture partners and Chinese regulatory approval.

Total Return              1 Month  3 Months  6 Months  YTD   1 Year 3 Years
------------              -------  --------  -------- ----- ------  -------
Fund (NAV) **                5.3%    13.7%     36.9%  32.7%  47.0%   100.9%
Fund (US$ Share Price)       9.1     15.4      34.4   28.3   45.5     97.7
Taiwan China Strategy Index  6.2     13.7      38.3   33.9   50.0    108.0
TAIEX (US$)                  4.1      7.2      31.2   29.1   46.8     95.6
NT$/US$                      0.8      1.5       3.0    0.6    2.7      2.9

Past results are not necessarily indicative of future performance of the Fund. Rates of return and principal value will fluctuate and you may have a gain or a loss when you sell shares. Performance figures reflect reinvested dividends and capital gains. Dividends and capital gains reinvested are on a net basis, after the deduction of applicable taxes. The returns shown above for the TCS Index are also calculated on a net basis but the TAIEX is measured on a gross return basis, with the full reinvestment of all dividends received. February 27, 2004 is a significant date for measurement as it is when the Fund fully implemented its China-focused investment strategy. Returns for the Fund, TCS Index and TAIEX in US Dollars. Source: Bloomberg except MSCI for TCS Index. For more information and important disclosures on the TCS Index please see the Fund's website at Returns, except 12-month period, are not annualized.

** Total returns reflect changes in NAV per share during each period and assume that dividends and capital gains distributions, if any, were reinvested. These percentages are not an indication of the performance of a shareholder's investment in the Fund based on market price

Portfolio Management

The Fund holds about 100% of its assets in equities. Such holdings are well diversified among top quality stocks, with investment decisions based on a fundamental approach to securities and economic analysis. Portfolio holdings and sector composition are subject to change.

Top Ten Holdings as of                  Industry Diversification as of
 October 31, 2007                        October 31, 2007

                             % of Net                              % of Net
Company                       Assets    Ten Largest Sectors         Assets
------                       --------   -------------------        --------
Hon Hai Precision Ind. Co.      9.6%    Computer Systems & Hardware   18.0%
Nan Ya Plastic Corp.            7.9     Semiconductors                17.9
Mediatek Inc.                   7.7     Plastics & Petrochemicals     13.0
Asustek Computer                5.2     Electronic Components         12.8
China Steel Corp.               4.7     Flat Panel Displays            8.9
Taiwan Semiconductor Mfg. Co.   4.4     Computer Peripherals/ODM       5.6
AU Optronics Corp               4.0     Steel                          4.7
Delta Electronics               3.7     Foods                          4.1
Foxconn Technology Corp.        2.9     Cement                         3.7
Innolux Display Corp.           2.7     Rubber                         1.6

Per Share Standing at October 31, 2007:
 NAV                 NYSE
-----               -----
$9.38               $8.48

The opinions and forecasts expressed are those of the portfolio manager and may not actually come to pass. The information presented is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of a particular security. Fund shares are not FDIC insured and are not deposits or other obligations of, or guaranteed by, any bank. Fund shares involve investment risk, including possible loss of principal.

Contact Information

  • The Taiwan Greater China Fund

    Portfolio Management:
    Steven R. Champion
    Rm. 1001, 10F, 205 DunHua N. Road
    Taipei, Taiwan, R.O.C.
    Tel: 886-2-2715-2988

    Shareholder Services:
    Patricia Baronowski
    The Altman Group
    New York, NY 10165
    Tel: 1-212-681-9600