Taiwan Greater China Fund Monthly Update.

Market Environment -- December 2006

NEW YORK -- The Taiwan Greater China Fund's net asset value (NAV) in December lagged both its primary benchmarks, the Taiwan China Strategy Index (TCS Index) as computed by MSCI, and the Taiwan Stock Exchange Index (TAIEX). The Fund's share price, however, outperformed both the TCS Index and the TAIEX in US$ terms, as the discount narrowed. The Fund's NAV increased 2.3% and its share price grew 3.1% compared to a 2.5% increase of the TCS Index and a 2.9% growth in US$ terms of the TAIEX. The Fund's discount to net asset value averaged 7.0% during December as opposed to 8.4% in November, with a low of 5.5%, a high of 8.9%, and a closing value of 6.5%. During the month, the Taiwan dollar depreciated 0.5% against the U.S. dollar.

December continued the 4th quarter upward trend, with the TAIEX closing at more than a six year high. Tech, financial and non-tech sectors all closed at a high point but non-tech, lead by glass/ceramics and textiles, outperformed both the tech and financial sectors during December. Municipal elections were held early in the month with the KMT winning the mayoral contest in Taipei but the DPP candidate squeaking through in the Kaohsiung election. Given the scandals surrounding the ruling party, it was thought that the KMT would have a strong shot at winning the Kaohsiung contest, despite the fact that southern Taiwan is the DPP stronghold. The fact that the DPP won may indicate that the KMT will not have complete smooth sailing in the 2007/2008 parliamentary and presidential elections. The government also made several announcements on the China front in December. They approved long-pending applications from two semiconductor companies, Powerchip and ProMOS, to build 8" fabs, 0.25 micron fabs in China. They also approved allowing Taiwan semiconductor companies to use 0.18 micron technology in China, an improvement from the older 0.25 micron technology but still not state-of-the-art. Lastly, the government announced that it would begin to allow limited trading in the RMB, in preparation for the opening of the country to increased tourism from the Mainland in early 2007.

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(*) 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 http://www.taiwangreaterchinafund.com/. 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.

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Per Share Standing at December 31, 2006:
NAV                          NYSE
---                          ----
$7.07                        $6.61

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.