Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
THE R.O.C. TAIWAN FUND
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(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:
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applies:
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(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):
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(5) Total fee paid:
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[ ] 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
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(4) Date Filed:
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[LOGO AND LETTERHEAD OF THE R.O.C. TAIWAN FUND]
June 12, 2003
Dear R.O.C. Taiwan Fund Shareholder:
Your Board of Trustees is fighting a costly and time consuming battle to
protect your investment in The R.O.C. Taiwan Fund (the 'Trust') from a
short-term dissident shareholder from the Isle of Man, Laxey Partners Limited
('Laxey'). We believe that Laxey is trying to make a quick profit at your
expense.
ASK YOURSELF THESE QUESTIONS: IF LAXEY DIDN'T LIKE THE TRUST'S PERFORMANCE
OVER THE LAST SEVERAL YEARS, WHY DID LAXEY PURCHASE 4 MILLION SHARES OF THE
TRUST LESS THAN TEN MONTHS AGO? AND DOES LAXEY REALLY SEEK LIQUIDITY FOR YOUR
SHARES OR A LIQUIDATION OF THE TRUST?
We need your help in sending Laxey a message that it should take its get
rich quick scheme somewhere else. You can do this by discarding Laxey's proxy
materials and signing and returning the enclosed WHITE proxy card today.
YOUR BOARD NEEDS YOUR SUPPORT!
You should have received within the last week a letter from your Board of
Trustees, with an accompanying insert, urging you to support your Board by
voting the enclosed WHITE proxy card 'FOR' the election of Trustees, 'AGAINST'
the conversion proposal and 'AGAINST' Laxey's proposal to terminate the Trust's
investment advisory contract with International Investment Trust Company
('IIT'). The Trust's Annual Meeting will take place on June 24, less than two
weeks from today.
Unsurprisingly, the proxy statement Laxey sent you hardly even attempts to
refute most of our letter and insert -- for the simple reason that Laxey
couldn't. Laxey's proxy statement no longer includes some of the false and
misleading statements that we highlighted for you in our mailing of last
week -- for example, having been reminded that one of its co-owners stood up two
of your Trustees at a meeting in Laxey's own office last November, Laxey could
no longer pretend that neither the Board nor IIT had 'initiated any discussions
or other dialogue' with Laxey. But what Laxey has sent you remains grossly
misleading. AND WHAT LAXEY DOESN'T SAY AT ALL IS EVEN MORE TELLING.
CONSIDER THE FOLLOWING:
Laxey says in its proxy material (three times!) that according to
Morningstar, the Trust's market return trailed the market return of the
'category' assigned by Morningstar in 2000, 2001, 2002 and 2003 (through
May 30). BUT Laxey tells you nothing about that category or why you should
consider it relevant. WHY? Because Laxey knows that Morningstar groups in
one category all equity funds (both closed-end and open-end) that invest
in any part of the entire Asia/Pacific region (excluding Japan). Now ask
yourself -- is the performance of a fund that specializes in investing in
a country whose market has risen rapidly relevant in assessing the
performance of another fund (such as the Trust) that can only invest in a
country whose market has fallen or been flat? Is the performance of a
regional fund that can pick and choose among various countries' markets
relevant in assessing the performance of another fund (such as the Trust)
that specializes in one country within that region? OF COURSE NOT!
That is why the SEC requires open-end fund prospectuses to disclose a
fund's relative performance in relation to a market index of the kinds of
stocks in which that fund invests. In the Trust's case that index is the
Taiwan Stock Exchange Index (the 'TAIEX') -- and the Trust's market return
BEAT the TAIEX in four of the last five calendar years when the
depreciation of the NT (New Taiwan) Dollar against the US dollar is taken
into account. MOREOVER, DURING THAT FIVE-YEAR PERIOD (1998-2002) AS A
WHOLE, THE TRUST'S MARKET RETURN OUTPERFORMED THE TAIEX BY NEARLY FIVE
PERCENTAGE POINTS AFTER THE TAIEX IS TRANSLATED INTO US DOLLARS (AS IT
MUST BE IN ORDER FOR THE COMPARISON TO BE MEANINGFUL).
Laxey says that if your Board and IIT were serious about improving
shareholder relations, they would have taken 'concrete' actions, such as
offering an interval fund structure, to maximize shareholder value and
liquidity. BUT Laxey says almost nothing about what the implications of
converting the Trust into an interval fund would be. WHY? Because Laxey
knows that an interval fund structure, which few closed-end funds have
adopted, would require the Trust to make periodic tender offers for its
shares and therefore have the nearly certain effect (not merely the
'potential' as Laxey suggests) of substantially reducing the Trust's
assets available for investment in Taiwan. Laxey, to be sure, would have
only the right to participate in such offers on the same basis as any
other shareholder. BUT LAXEY ALSO KNOWS THAT IT STANDS TO GAIN THE MOST
BECAUSE MANY OF OUR SHAREHOLDERS -- UNLIKE LAXEY ITSELF -- ARE LIKELY TO
HAVE MORE LONG-TERM OBJECTIVES THAT WOULD NOT BENEFIT FROM A STEADILY
SHRINKING PORTFOLIO OF INVESTMENTS BY THE TRUST AND THE INCREASED EXPENSE
RATIO THAT IS TYPICALLY THE CASE FOR A SMALLER FUND. Nor would those
shareholders benefit from converting the Trust into an open-end fund,
which your Board believes would cast serious doubt on the ability of the
Trust to survive at all.
Laxey says that although the discount to net asset value at which the
Trust's
shares have traded has recently narrowed, that didn't happen until 'after
Laxey's intention to submit a proposal was first made public.' BUT, as we
pointed out in our letter last week, the discount first began falling
below 10% on a consistent basis in late March, more than two months after
Lacey's proposal first became public and TWO MONTHS BEFORE the public even
knew of the Board's decision to allow Laxey to present its proposal at the
Annual Meeting. Of course, Laxey also neglects to mention that the Trust's
discount (which was 9.22% as of the close of trading at the end of last
week, nearly three percentage points higher than what it was only one week
earlier) is less -- in many cases substantially so -- than the discount of
most other closed-end international equity funds (including most of those
in the Morningstar category referred to above).
Finally, Laxey says that it believes no other closed-end fund tracked by
Morningstar 'with assets greater than $100 million and investing solely in
international equity securities' has By-law limitations on shareholder
proposals as restrictive as those of the Trust. BUT LAXEY DOESN'T TELL YOU
that By-laws are only one part of a framework that also includes a fund's
charter and underlying statutory law, and that, as a general rule,
investment company boards of directors or trustees retain the discretion
(subject to the SEC proxy rule that Laxey could not comply with) to
determine whether to present for a binding shareholder vote proposals that
the board considers not in the best interests of ALL shareholders. You
also should know something else that Laxey probably did not bother to
check: when compared to the requirements in the Trust's organizing
documents, no other international equity fund investing in the
Asia/Pacific region or anywhere else is subject to as rigorous a
requirement to present an open-ending proposal for shareholder
consideration -- as will be the case at the Trust's upcoming Annual
Meeting for the eighth time since 1995.
* * *
The purpose of the Trust is to provide a convenient vehicle for investors
to participate in the Taiwan stock market. Your Board will continue to pursue
that mission while working closely with IIT in order to seek to maximize
shareholder value. THE PORTFOLIO STRATEGY UTILIZED BY IIT IS INTENDED TO PRODUCE
SUPERIOR RETURNS OVER THE LONG TERM, WITHOUT AT THE SAME TIME SUBJECTING OUR
SHAREHOLDERS' INVESTMENT TO UNDUE RISK OR VOLATILITY.
We are pleased that many of our shareholders have applauded the Trust's
announcement last October that the Trust intended to concentrate more of its
portfolio on companies trading in Taiwan having close links to the economy of
China. We understand that there will be periods when the Trust's concentration
in stocks particularly exposed to China will produce disappointing market
returns, as was the case during the first five months of this year when concerns
about SARS had an unfavorable impact on both the Taiwan and China markets. But
your Board also strongly believes that a large majority of the Trust's
shareholders share our objective of making the Trust
available to investors around the world, large and small, who want to invest in
the economies of Taiwan AND China over the long term.
While there can be no assurance, of course, that the Trust will achieve
superior returns, we CAN assure you that your Board will continue to carefully
monitor the Trust's performance. Your Board also will continue to consider
whether any actions should be taken for the purpose of seeking to further reduce
the Trust's discount, for the benefit of ALL of our shareholders, over the long
term. We urge you to give IIT the opportunity to continue serving your interests
by discarding any gold proxy card that you may receive and, if you have not
already voted on a WHITE proxy card, returning only the WHITE proxy card
included with this letter and voting 'FOR' the election of Trustees, 'AGAINST'
the conversion proposal and 'AGAINST' Laxey's proposal to terminate the Trust's
investment advisory contract with IIT. Even if you have already returned Laxey's
gold proxy card, you can change your vote by returning the enclosed WHITE proxy
card. If you have any questions, please call our proxy solicitors, MacKenzie
Partners, Inc., toll-free at 1-800-322-2885 or collect at 212-929-5500.
Your Board of Trustees
Shareholders are urged to read the Trust's proxy statement for its 2003
Annual Meeting of Shareholders, which contains important information concerning
the Trustees and executive officers of the Trust, the proposals that will be
voted on at the Annual Meeting and other matters. As a result of the additional
efforts required to respond to Laxey's proposal and decision to conduct a proxy
fight, the Trust's estimated expenses in connection with the solicitation of
shareholder votes for the Annual Meeting have risen to approximately $225,000 to
date and are expected to total approximately $300,000. The Trust and its
Trustees and executive officers may be deemed to be participants in the
solicitation of proxies from the Trust's shareholders with respect to the
matters described in this letter.
IF YOU HAVE ANY QUESTIONS OR NEED HELP VOTING YOUR SHARES,
PLEASE CALL:
[MACKENZIE LOGO]
105 Madison Avenue
New York, New York 10016
email: proxy@mackenziepartners.com
Call collect: (212) 929-5500
OR TOLL FREE: (800) 322-2885
Facsimile: (212) 929-0308