<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER'S MESSAGE
- ---------------------------------------------------------------------------
A message from Michael
Chen, Portfolio Manager
of The Taiwan Fund, Inc.
Dear Shareholder:
We are pleased to present the Semi-Annual Report of The Taiwan Fund, Inc. (the
"Fund") for the six months ended February 29, 1996. During this six month
period, the Fund's net asset value ("NAV") declined by 3.43% in both U.S.
dollars and New Taiwan dollar terms, as the New Taiwan dollar remained at about
the same level against the U.S. currency. During the same period, the Taiwan
Stock Exchange ("TAIEX") Index declined by 0.25%. The Fund underperformed the
TAIEX Index because the Fund was overweighted (compared to the TAIEX Index) in
technology stocks and these stocks underperformed the overall market by over 11%
during this six month period. In the fourth quarter of 1995, the Fund adjusted
its portfolio to lessen this overweighting, and thus limited its comparative
underperformance.
In January 1996, the Fund paid a dividend of $0.025 per share from investment
income. On February 29, 1996, the Fund's shares were trading at $21.125,
compared to $21.625 on August 31, 1995. The share price represented a premium of
19.82% over the Fund's NAV.
Since June 1995, Taiwan has been confronted by China's testing of surface to
surface guided missiles across the Taiwan Strait. These military exercises,
which caught Taiwan by surprise, have had a negative impact on Taiwan's economy.
Sluggish consumption and investment reduced Taiwan's Gross Domestic Product
("GDP") growth down to 4.86% (annualized) in the fourth quarter of 1995.
Management of the Fund believes that the negative sentiment in the economy
continued during the first quarter of 1996. The weak domestic demand was
exacerbated by large capital outflows, estimated to amount to $15 billion since
China commenced its military exercises. Fortunately, the Central Bank of China
("CBC") managed to support the local currency at the rate of NT$27.50 to US$1,
due to Taiwan's healthy foreign exchange reserves. However, this currency
support caused a drain in liquidity. In January 1996, the growth rate of M2, the
broadly based money supply indicator, declined to 7.84% year-on-year, the lowest
in a
2
<PAGE>
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
decade. The stock market also experienced a decline during this six month
period. Investors withdrew from the market and the TAIEX Index reached a low of
approximately 4,500 due to the lack of liquidity in the market. In an attempt to
stabilize the market, the Taiwan government implemented its NT$200 billion
Stabilization Fund in March of 1996. The funding for the Stabilization Fund was
provided by various financial institutions, including state-owned banks, the
postal savings and the Labor Retirement Fund. A committee of seven was formed to
make investment decisions on behalf of the Stabilization Fund.
Since the Presidential election held on March 23, 1996, the tensions between
Taiwan and China have begun to ease, and China appears to be focusing on
restoring diplomatic relations with major powers. However, because the Chinese
government has always stated that it would use military force as a last resort
if Taiwan declares independence, the possibility of future military exercises
and threats can not be ruled out. As the tension between China and Taiwan eases,
the confidence level within Taiwan may recover gradually. While this may imply a
better outlook for liquidity and the stock market, the economy may take somewhat
longer to improve.
In 1995, while domestic demand was sluggish, foreign demand produced most of
Taiwan's economic growth, due in part to the booming technology sector and the
growing export market in China. However, management of the Fund believes that
foreign demand growth will slow down in 1996 due to a cyclical downturn in the
technology industry and stagnating trade with China. Consequently, a recovering
domestic demand may be the best way to revive the economy this year. We think
the government of Taiwan will adopt an expansionary policy on both monetary and
fiscal fronts, which will aim at increasing private consumption and investment.
As a result, management of the Fund intends to focus investment of the portfolio
in domestic-demand-driven sectors.
Currently, Management of the Fund utilizes a value approach to stock selection.
Because stock prices have corrected significantly since late 1994, many
companies are selling at what appear to be very good values. By good value we
mean low
Michael Chen on the tension between Taiwan and China:
China escalated its military threats by staging a third missile test in early
March of this year. From March 8 to 15, four guided missiles were fired at
target areas close to Taiwan's two major ports, Keelung and Kaoshiung. These
military exercises were thought to have been designed to show China's ability to
blockade Taiwan, which would significantly damage Taiwan's economy. China also
assembled up to 150,000 troops in the Fujien Province for a live-ammunition
exercise during the week of Taiwan's recent Presidential election.
While China heightened its military threats right before the election, the
Unites States responded to this escalation by sending two aircraft carriers into
the region and urged China not to use military force against Taiwan. China's
exercises ended without triggering any further military confrontation.
China has not announced any new military exercises since Taiwan's Presidential
election on March 23, 1996. While the possibility of future military threats can
not be ruled out, China appears to have changed its immediate strategy from
military threats to diplomacy. The tension between China and Taiwan, at least
for the time being, seems to have eased.
3
<PAGE>
- ---------------------------------------------------------------------------
PORTFOLIO MANAGER'S MESSAGE (CONTINUED)
- ---------------------------------------------------------------------------
price-to-sales ratios (PSR) and price to book ratios (PBR). Stocks in cyclical
industries tend to sell at good values during cyclical downturns. As the overall
market itself is selling at historically low PBRs and PSRs, we believe the
market is showing good upside potential and that the current environment is
favorable for value investors seeking to buy quality stocks at attractive
prices.
The Fund outperformed the TAIEX Index in 1995 due to an overweight position in
the technology sector. However, in the fourth quarter of 1995, we took the
position that the growth momentum in the demand for personal computers could not
be sustained in 1996 and thus the current shortage in supply of key computer
components, and in particular integrated circuits, will soon be eased. This, we
think may lead to reduced profit margins and, most likely, stock prices in the
technology sector as well. Based on these factors, we reduced the Fund's
exposure to technology stocks and switched to a more balanced portfolio. The
Fund also reduced its holdings in shipping stocks because freight rates appear
to have peaked in the current cycle and have started to decline. The Fund added
holdings in several of the domestic-demand-driven sectors such as cement, paper,
steel, auto, construction and finance. The Fund also increased holdings in
several China concept stocks, which are companies deriving revenue and profit
from China, anticipating an improved economic outlook in China after a period of
tight credit control.
In summary, the Fund is now focused on domestic-demand-driven sectors. A value
approach is adopted to select stocks. While we anticipate a liquidity-driven
rally in the near term, a sustainable bull market will await improved outlook in
the economy and corporate earnings growth.
We thank you for your continued support and look forward to reviewing our
outlook and investment strategy again in coming reports.
Sincerely yours,
Michael Chen
Portfolio Manager
Michael Chen on Taiwan's Presidential Election:
The Presidential election ended smoothly with a high turnout rate of 76.04% of
the registered voters. Lee Teng hui, the candidate nominated by the ruling
Kumintang Party ("KMT"), claimed a landslide victory, winning almost 54% of the
vote. The pro-Taiwan-independence Democratic Progressive Party ("DPP")
candidate, Peng Ming-min, received approximately 21% of the vote, a record low
for the DPP in recent years. Lin Yang-kang, an independent candidate affiliated
with the opposition New Party, received almost 15% of the vote. Another
independent candidate, Chen Li-an, received about 10%. Both Lin and Chen
appeared to be more pro-unification than the other two candidates.
The result implied that most of the voters preferred the status quo. Winning a
majority of the vote, President Lee Teng-hui effectively has the people's
mandate and will have a strong position in solving many of the political and
economic problems Taiwan is facing now, including the current tension with
China. DPP, which usually wins around 35% of the vote, experienced a major
setback in this election.
4
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO SNAPSHOT
- ---------------------------------------------------------------------------
<TABLE>
<S> <C>
TOP TEN EQUITY HOLDINGS
-------------------------------------------------
HOLDINGS AS OF FEBRUARY 29, 1996 %
- ---------------------------------------------
CHINA STEEL CORP. 4.9
- ---------------------------------------------
CATHAY LIFE INSURANCE CO. LTD. 4.0
- ---------------------------------------------
TAIWAN GLASS 3.9
- ---------------------------------------------
ADVANCED SEMICONDUCTOR ENGINEERING, INC. 3.8
- ---------------------------------------------
FUH HWA SECURITIES 2.8
- ---------------------------------------------
CHENG SHIN RUBBER INDUSTRIAL CO. 2.6
- ---------------------------------------------
CHINA BILLS FINANCE CORP. 2.5
- ---------------------------------------------
CHINA PETROCHEMICAL DEVELOPMENT CORP. 2.5
- ---------------------------------------------
CHUNG HSING BILLS 2.5
- ---------------------------------------------
FORMOSA PLASTIC 2.4
- ---------------------------------------------
TOP TEN EQUITY INDUSTRY WEIGHTINGS
-------------------------------------------------
WEIGHTINGS AS OF FEBRUARY 29, 1996 %
- ---------------------------------------------
Electronics 14.3
- ---------------------------------------------
Banks 13.8
- ---------------------------------------------
Building Materials 10.8
- ---------------------------------------------
Iron & Steel 9.3
- ---------------------------------------------
Textiles & Apparel 8.9
- ---------------------------------------------
Automobiles, Tires & Accessories 7.9
- ---------------------------------------------
Plastics 5.9
- ---------------------------------------------
Computers & Business Equipment 5.8
- ---------------------------------------------
Chemicals 5.6
- ---------------------------------------------
Insurance 5.5
- ---------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
TOP TEN EQUITY HOLDINGS
-------------------------------------------------
HOLDINGS AS OF AUGUST 31, 1995 %
- ---------------------------------------------
Taiwan Semiconductor Manufacturing Co. 7.9
- ---------------------------------------------
Acer, Inc. 5.2
- ---------------------------------------------
China Steel Corp. 4.7
- ---------------------------------------------
Compeq Manufacturing Co., Inc. 4.2
- ---------------------------------------------
Nan Ya Plastics Corp. 3.5
- ---------------------------------------------
Yang Ming Marine 3.5
- ---------------------------------------------
Taiwan Glass 3.5
- ---------------------------------------------
Tatung Co. 2.8
- ---------------------------------------------
Formosa Plastic 2.7
- ---------------------------------------------
Hualon Teijran 2.7
- ---------------------------------------------
TOP TEN EQUITY INDUSTRY WEIGHTINGS
-------------------------------------------------
WEIGHTINGS AS OF AUGUST 31, 1995 %
- ---------------------------------------------
Electronics 21.6
- ---------------------------------------------
Computers & Business Equipment 10.1
- ---------------------------------------------
Shipping 9.3
- ---------------------------------------------
Textiles & Apparel 8.0
- ---------------------------------------------
Plastics 6.4
- ---------------------------------------------
Building Materials 6.3
- ---------------------------------------------
Consumer Electronics 5.8
- ---------------------------------------------
Chemicals 5.5
- ---------------------------------------------
Iron & Steel 4.7
- ---------------------------------------------
Automobiles, Tires & Accessories 3.6
- ---------------------------------------------
</TABLE>
6
<PAGE>
THE TAIWAN FUND, INC.
INVESTMENTS/FEBRUARY 29, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
US$
VALUE
SHARES (NOTE 1)
------------ -------------
<S> <C> <C> <C>
COMMON STOCKS - 97.7%
</TABLE>
<TABLE>
<S> <C> <C>
BASIC INDUSTRIES - 24.1%
CHEMICALS - 5.6%
Asia Chemical Corp................................ 1,808,325 $ 2,216,181
China Petrochemical Development Corp. (a)......... 9,000,000 6,513,201
Oriental Union Chemical (a)....................... 1,882,800 2,218,442
Taita Chemical Co. Ltd............................ 956,000 1,216,816
Union Petrochemical............................... 2,019,000 2,400,949
------------
14,565,589
------------
DRUGS & HEALTH CARE - 1.0%
Yung Shin Pharmaceuticals......................... 1,115,300 2,453,838
------------
IRON & STEEL - 9.3%
China Steel Corp.................................. 17,561,000 12,900,291
Chun Yuan Steel................................... 2,904,000 2,397,294
Kao Hsing Chang Iron & Steel (a).................. 3,456,000 2,563,910
Mayer Steel Pipe Co. Ltd. (a)..................... 1,282,000 1,062,972
OrnaTube Enterprises (a).......................... 3,878,000 2,369,278
Ton Yi Industrial Corp. (a)....................... 2,606,000 3,117,950
------------
24,411,695
------------
METALS & MINING - 0.4%
Walsin Lihwa Corp................................. 1,282,565 1,091,426
------------
PAPER & FOREST PRODUCTS - 1.9%
Cheng Loong Co. Ltd. (a).......................... 4,045,000 2,927,322
Yuen Foong Yu Paper Manufacturing................. 2,477,000 2,125,871
------------
5,053,193
------------
PLASTICS - 5.9%
Formosa Plastic................................... 4,345,980 6,337,690
Grand Pacific Petrochemical....................... 3,000,000 3,545,712
Nan Ya Plastics Corp.............................. 1,581,334 2,329,043
Sun Yad Plastic Co. Ltd. (a)...................... 273,800 185,202
Taiwan Styrene Monomer (a)........................ 2,000,000 3,083,861
------------
15,481,508
------------
TOTAL BASIC INDUSTRIES............................ 63,057,249
------------
CONSTRUCTION & REAL ESTATE - 10.8%
BUILDING MATERIALS - 10.8%
Asia Cement....................................... 3,881,900 6,126,790
Cathay Construction............................... 2,850,000 3,503,164
Gold Sun Development & Construction (a)........... 4,115,099 2,888,261
Hsing Ta Cement (a)............................... 581,000 735,283
Lucky Cement Corp................................. 1,695,000 1,799,913
Pacific Construction (a).......................... 2,000,000 1,345,552
Taiwan Glass...................................... 5,090,000 10,180,740
Tung Ho Steel (a)................................. 2,100,000 1,756,491
------------
28,336,194
------------
DURABLES - 19.5%
AUTOMOBILES, TIRES & ACCESSORIES - 7.9%
Cheng Shin Rubber Industrial Co. (a).............. 6,046,792 $ 6,772,900
China Motor Co.................................... 4,131,000 5,723,729
Ensure Co. (a).................................... 907,000 831,202
Giant Manufacturing............................... 2,589,000 3,540,127
Yue Loong Motor (a)............................... 4,972,000 3,742,832
------------
20,610,790
------------
CONSUMER ELECTRONICS - 2.7%
Sampo Corp........................................ 5,387,696 4,545,587
Tatung Co......................................... 1,499,827 2,683,522
------------
7,229,109
------------
TEXTILES & APPAREL - 8.9%
Far East Textile.................................. 3,052,000 2,552,767
Formosa Chemical & Fibre.......................... 7,238,000 6,080,362
Formosa Taffeta Co. Ltd........................... 2,000,000 1,549,204
Hualon Teijran (a)................................ 8,000,000 4,713,070
Nien Hsing Textile Co. Ltd. (a)................... 2,618,000 3,198,953
Ruentex Industries................................ 1,500,000 845,516
Shinkong Synthetic Fibers (a)..................... 4,708,000 3,390,007
Tainan Spinning Co. (a)........................... 1,599,000 1,029,249
------------
23,359,128
------------
TOTAL DURABLES.................................... 51,199,027
------------
FINANCE - 19.3%
BANKS - 13.8%
Chang Hwa Bank.................................... 682,500 2,432,359
China Bills Finance Corp. (a)..................... 5,500,000 6,540,476
Chung Hsing Bills (a)............................. 5,650,000 6,451,742
First Commercial Bank............................. 702,000 2,552,913
Fuh Hwa Securities................................ 4,500,000 7,282,348
Hwa Nan Commercial Bank Ltd....................... 810,000 2,444,905
ICBC.............................................. 2,000,000 5,200,378
International Bills Finance Corp. (a)............. 5,000,000 3,327,515
------------
36,232,636
------------
INSURANCE - 5.5%
Cathay Life Insurance Co. Ltd..................... 2,424,000 10,490,072
Shin Kong Life Insurance Co....................... 1,760,000 3,904,284
------------
14,394,356
------------
TOTAL FINANCE..................................... 50,626,992
------------
</TABLE>
6 The accompanying notes are an integral part of the financial statements.
<PAGE>
INVESTMENTS/FEBRUARY 29, 1996 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
US$
VALUE
SHARES (NOTE 1)
------------ -------------
<S> <C> <C> <C>
COMMON STOCKS - CONTINUED
</TABLE>
<TABLE>
<S> <C> <C>
NONDURABLES - 0.8%
FOODS - 0.8%
AGV Products Corp. (a)............................ 1,117,000 $ 816,485
Great Wall Enterprises (a)........................ 1,000,000 618,227
Ve Wong........................................... 800,000 651,684
------------
2,086,396
------------
TECHNOLOGY - 20.1%
COMPUTERS & BUSINESS EQUIPMENT - 5.8%
Acer, Inc. (a).................................... 2,919,838 6,211,744
D Link Corp. (a).................................. 2,512,000 4,476,253
Delta Electronics Inc. (a)........................ 2,306,467 3,170,574
Silitek........................................... 1,100,000 1,224,089
------------
15,082,660
------------
ELECTRONICS - 14.3%
Advanced Semiconductor Engineering, Inc. (a)...... 4,155,972 9,899,490
Compeq Manufacturing Co., Inc..................... 2,679,780 5,993,398
Hou Hai Precision (a)............................. 588,349 1,048,407
Liton Electronics................................. 1,734,048 2,364,783
Mosel Vitelic Inc. (a)............................ 995,000 2,370,081
Opto Tech Corporation (a)......................... 1,000,000 927,340
Siliconware Precision Industry (a)................ 2,198,987 5,357,922
Taiwan Mask Corp. (a)............................. 1,829,240 3,924,837
Taiwan Semiconductor Manufacturing Co. (a)........ 1,940,000 5,467,670
------------
37,353,928
------------
TOTAL TECHNOLOGY.................................. 52,436,588
------------
TRANSPORTATION - 3.1%
SHIPPING - 3.1%
Sincere Navigation (a)............................ 1,505,000 1,340,916
U Ming Marine..................................... 1,786,150 1,630,386
Yang Ming Marine.................................. 5,000,000 5,109,463
------------
8,080,765
------------
TOTAL COMMON STOCK
(Identified Cost - $276,705,950)................ 255,823,211
------------
<CAPTION>
PRINCIPAL
AMOUNT
NT$
---------
<S> <C> <C>
CERTIFICATES OF DEPOSIT - 0.1%
Dah An Commercial Bank 7.95%, 3/18/96 (b)
(Identified Cost - $372,428).................... 10,232,470 372,117
------------
COMMERCIAL PAPER - 1.7%
Chan Ki Construction 7.95%, 3/12/96 (b)........... 59,584,125 $ 2,166,853
Golden Old Cock/Feedmeal 5.40%,
3/27/96 (b)..................................... 49,802,012 1,811,114
Hosu Construction 5.40%, 3/28/96 (b).............. 9,958,789 362,164
------------
TOTAL COMMERCIAL PAPER
(Identified Cost - $4,342,025).................. 4,340,131
------------
TIME DEPOSITS - 0.3%
Chinfon Bank 6.50%, 3/23/96
(Identified Cost -- $918,861)................... 25,085,835 912,279
------------
<CAPTION>
MATURITY
AMOUNT
US$
-----------
<S> <C> <C>
REPURCHASE AGREEMENT - 0.2%
With State Street Bank and Trust Company at
2.000%, dated 2/26/96, due 3/4/96
(collateralized by U.S. Treasury Notes 5.875%,
5/31/96, market value $614,492)................. 602,234 602,000
------------
TOTAL INVESTMENTS - 100%
(COST - $282,941,264)........................... $262,049,738
------------
------------
</TABLE>
LEGEND:
NT$ - New Taiwan dollar
US$ - United States dollar
(a) Non-income producing (No cash dividends paid during preceding 12 months)
(b) Certificates of Deposit and Commercial Paper that are traded through Bills
Finance Corporations must be guaranteed by a major bank. Since there is no
recognized credit rating system in the Republic of China, the guarantee may
not be comparable to a guarantee issued by a U.S. institution.
INCOME TAX INFORMATION:
At February 29, 1996, the aggregate cost of investment securities for income tax
purposes was $286,215,100. Net unrealized depreciation aggregated $24,165,362,
of which $5,942,562 related to appreciated investment securities and $30,107,924
related to depreciated investment securities.
The accompanying notes are an integral part of the financial statements. 7
<PAGE>
FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (Unaudited)
<S> <C> <C>
ASSETS
Investment in securities, at value (including
repurchase agreement of $602,000) (cost
$282,941,264) (Notes 1 and 2) - See accompanying
schedule........................................ $ 262,049,738
Cash.............................................. 49,265
Cash in New Taiwan dollars (cost $318,233)........ 318,174
Receivables for investments sold.................. 4,503,226
Interest receivable............................... 28,210
--------------
Prepaid expenses.................................. 7,005
--------------
Total assets.................................... 266,955,618
LIABILITIES
Payable for investments purchased................. $ 4,790,297
Accrued management fee............................ 371,198
Taiwan withholding tax payable (Note 1)........... 5,615
Other payables and accrued expenses............... 383,686
------------
Total liabilities............................... 5,550,796
--------------
NET ASSETS........................................ $ 261,404,822
--------------
--------------
Net Assets consist of (Note 1):
Paid in capital................................... $ 300,321,349
Accumulated net investment income (loss).......... (1,305,507)
Accumulated undistributed net realized gain (loss)
on investments and foreign currency............. (16,719,570)
Net unrealized appreciation (depreciation) on:
Investment securities........................... (20,891,526)
Assets and liabilities denominated in foreign
currencies..................................... 76
--------------
NET ASSETS........................................ $ 261,404,822
--------------
--------------
NET ASSET VALUE, per share ($261,404,822
DIVIDED BY 14,826,714 shares outstanding)...... $17.63
-----
-----
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six Months Ended February 29, 1996 (Unaudited)
<S> <C> <C>
INVESTMENT INCOME
Dividends......................................... $ 1,304,802
Interest.......................................... 597,794
--------------
1,902,596
Less: Taiwan withholding tax (Note 1)............. (359,587)
--------------
Total Income.................................... 1,543,009
EXPENSES
Management fee (Note 3)
Basic fee....................................... $ 2,036,144
Performance adjustment.......................... (444,795)
Custodian fees and expenses....................... 271,497
Legal............................................. 176,027
Accounting fees and expenses (Note 3)............. 114,178
Taiwan stock dividend tax (Note 1)................ 96,869
Reports to shareholders........................... 68,237
Audit............................................. 45,267
Directors compensation............................ 43,976
Delaware franchise tax............................ 28,492
Insurance fees.................................... 21,137
Miscellaneous..................................... 11,852
Transfer agent fees............................... 8,976
--------------
Total expenses.................................. 2,477,857
--------------
NET INVESTMENT INCOME (LOSS)...................... (934,848)
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTES 1 AND 3)
Net realized gain (loss) on:
Investment securities........................... (18,722,466)
Foreign currency transactions................... (4,073,653) (22,796,119)
--------------
Change in net unrealized appreciation
(depreciation) on:
Investment securities........................... 14,412,631
Assets and liabilities denominated in foreign
currencies..................................... (8,682) 14,403,949
-------------- --------------
Net gain (loss)................................... (8,392,170)
--------------
Net increase (decrease) in net assets resulting
from operations................................. $ (9,327,018)
--------------
--------------
</TABLE>
8 The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED
FEBRUARY 29, YEAR ENDED
1996 AUGUST 31,
(UNAUDITED) 1995
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C>
Operations
Net investment income (loss).................... $ (934,848) $ (2,245,089)
Net realized gain (loss) on investments......... (22,796,119) 19,199,023
Change in net unrealized appreciation
(depreciation) on investments and foreign
currency transactions.......................... 14,403,949 (104,269,069)
------------ ------------
Net increase (decrease) in net assets resulting
from operations................................ (9,327,018) (87,315,135)
------------ ------------
Distributions to shareholders
From net investment income...................... (370,659) --
From net realized gains......................... -- (66,261,035)
In excess of net realized gains................. -- (2,399,848)
------------ ------------
Total distributions to shareholders............. (370,659) (68,660,883)
------------ ------------
Share transactions
Net proceeds from sales of shares (Note 4)...... -- 62,858,255
Reinvestment of distributions from net
investment income.............................. 7,217 490,170
------------ ------------
Net increase (decrease) in net assets resulting
from share transactions........................ 7,217 63,348,425
------------ ------------
Total increase (decrease) in net assets....... (9,690,460) (92,627,593)
------------ ------------
NET ASSETS
Beginning of period............................. 271,095,282 363,722,875
------------ ------------
End of period (including accumulated net
investment loss of $1,305,507 and $0
respectively).................................. $261,404,822 $271,095,282
------------ ------------
------------ ------------
OTHER INFORMATION
Shares
Sold (Note 4)................................... -- 3,530,085
Issued in reinvestment of distributions from net
investment income.............................. 357 21,907
------------ ------------
Net increase (decrease)........................... 357 3,551,992
------------ ------------
------------ ------------
</TABLE>
9
<PAGE>
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS+
EIGHT
SIX MONTHS MONTHS
FEBRUARY 29, YEARS ENDED AUGUST 31, ENDED YEAR ENDED
1996 -------------------------------------------------------- AUGUST 31 DECEMBER 31,
(UNAUDITED) 1995 1994 1993 1992 1991 1990
------------ ------------ ------------ ------------- ------------- ----------- ------------
SELECTED PER SHARE DATA
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 18.28 $ 32.26 $ 18.06 $ 19.68 $ 19.67 $ 16.51 $ 22.35
------------ ------------ ------------ ------------- ------------- ----------- ------------
Income from Investment
Operations
Net investment income
(loss)..................... (0.06)** (0.19) (0.24) 0.20 0.06 (0.10) 0.56
Net realized and unrealized
gain (loss) on
investments................ (0.56) (7.27) 14.20 (1.70) (0.20) 1.84 (6.16)
------------ ------------ ------------ ------------- ------------- ----------- ------------
Total from investment
operations................. (0.62) (7.46) 13.96 (1.50) (0.14) 1.74 (5.60)
------------ ------------ ------------ ------------- ------------- ----------- ------------
Less Distributions
From net investment
income..................... (0.03) -- (0.14) (0.12) -- -- (0.53)
In excess of net investment
income..................... -- -- (0.01) -- -- -- --
From net realized gains..... -- (5.88) -- -- -- -- (1.16)
In excess of net realized
gains...................... -- (0.21) -- -- -- -- --
------------ ------------ ------------ ------------- ------------- ----------- ------------
Total distributions......... (0.03) (6.09) (0.15) (0.12) -- -- (1.69)
------------ ------------ ------------ ------------- ------------- ----------- ------------
Antidilution/(Dilution)
resulting from additional
offering of shares at market
and reinvestment of
dividends at market......... -- (0.40) 0.44 -- 0.46 2.07 2.03
Offering expenses............. -- (0.03) (0.05) -- (0.31) (0.65) (0.58)
------------ ------------ ------------ ------------- ------------- ----------- ------------
Net asset value, end of
period...................... $ 17.63 $ 18.28 $ 32.26 $ 18.06 $ 19.68 $ 19.67 $ 16.51
------------ ------------ ------------ ------------- ------------- ----------- ------------
------------ ------------ ------------ ------------- ------------- ----------- ------------
Market value, end of period... $ 21.13 $ 21.63 $ 31.88 $ 20.13 $ 17.88 $ 24.13 $ 20.50
------------ ------------ ------------ ------------- ------------- ----------- ------------
------------ ------------ ------------ ------------- ------------- ----------- ------------
TOTAL RETURN ++
Per-share market value........ (2.2)% (12.0)% 59.2% 13.3% (25.9)% 17.7% (55.7)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000
omitted).................... $ 261,405 $ 271,095 $ 363,723 $ 145,190 $ 158,168 $ 124,974 $ 69,597
Ratio of expenses to average
net assets.................. 1.82%*+++ 2.43%+++ 2.49%+++ 2.67%+++ 2.94%+++ 3.47%* 2.34%
Ratio of net investment income
(loss) to average net
assets...................... (0.69)%* (0.78)% (1.01)% 1.05% 0.29% (0.79)%* 2.80%
Portfolio turnover rate....... 53% 159% 267% 163% 129% 298%* 226%
Average commission rate***.... $ 0.002 -- -- -- -- -- --
</TABLE>
* ANNUALIZED
** INVESTMENT INCOME PER SHARE REFLECTS A REGULAR DIVIDEND FROM CHINA STEEL
CORP. OF $0.05 PER SHARE.
*** FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS REQUIRED
TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR TRADES ON WHICH
COMMISSIONS ARE CHARGED.
+ BASED ON AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
++ TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
+++ EXPENSE RATIO INCLUDES 20% TAX PAID ON STOCK DIVIDENDS RECEIVED BY THE FUND.
IF STOCK DIVIDEND TAXES PAID WERE EXCLUDED FROM THE FUND'S EXPENSE RATIO,
THE EXPENSE RATIO WOULD HAVE BEEN 1.75% FOR THE SIX MONTHS ENDED FEBRUARY
29, 1996 AND 2.02%, 2.28%, 2.49% AND 2.71%, FOR THE YEARS ENDED AUGUST 31,
1995, 1994, 1993 AND 1992, RESPECTIVELY.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES.
The Taiwan Fund, Inc. (the "Fund"), a Delaware corporation, is registered under
the Investment Company Act of 1940, as amended (the Act), as a diversified
closed-end management investment company.
The Fund is not permitted to invest directly in the securities of Republic of
China (ROC) companies. Therefore, it invests through a contractual securities
investment trust fund arrangement. This arrangement was established by means of
the Securities Investment Trust, Investment Management and Custodian Contract
(Management Contract) among China Securities Investment Trust Corporation
(Adviser), the International Commercial Bank of China (Custodian) and the Fund.
Under the Management Contract the Adviser manages and invests the assets of the
Fund and the Custodian holds the assets. The Fund is the sole beneficiary of the
assets held under the Management Contract and, as required by ROC regulations,
its interest in the assets is evidenced by units of beneficial interest.
Effective July, 1995, the Fund is treated as a Qualified Foreign Institutional
Investor (QFII) which limits the Fund's ownership of a company's shares to no
more than 7.5% of such shares. In addition, all QFIIs together can not own more
than 15% of a company's shares. Effective March 3, 1996, all QFIIs together can
not own more than 20% of a company's shares. All Funds managed by China
Securities Investment Trust Company (CSITC) are limited in aggregate to 10%
ownership of a company's shares.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates. The policies described below
are consistently followed by the Fund in the preparation of its financial
statements in conformity with U.S. generally accepted accounting principles.
SECURITY VALUATION. All securities for which market quotations are readily
available are valued at the last sales price prior to the time of determination
of the Fund's net asset value per share or, if there was no sales price on such
date, at the closing price quoted for such securities (but if bid and asked
quotations are available, at the mean between the last current bid and asked
prices, rather than such quoted closing price). Securities which are traded
over-the-counter are valued at the mean between the current bid and asked prices
or, if no quotations are available, are valued as determined in good faith by
the Board of Directors of the Fund. In certain instances where the price
determined above may not represent fair market value, the value is determined in
such manner as the Board may prescribe. Short-term investments, having a
maturity of 60 days or less are valued at cost which approximates market value,
with accrued interest or discount earned included in interest receivable.
FOREIGN CURRENCY TRANSLATION. The financial accounting records of the Fund are
maintained in U.S. dollars. Investment securities, other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
current exchange rate. Purchases and sales of securities, income receipts and
expense payments are translated into U.S. dollars at the exchange rate on the
dates of the transactions.
Reported net realized gains and losses on foreign currency transactions
represent net gains and losses from disposition of foreign currencies, currency
gains and losses realized between the trade dates and settlement dates of
security transactions, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. The effects of
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
changes in foreign currency exchange rates on investments in securities are not
segregated in the Statement of Operations from the effects of changes in market
prices of those securities, but are included in realized and unrealized gain or
loss on investments in securities.
TAXES. As a qualified regulated investment company under Subchapter M of the
Internal Revenue Code, the Fund is not subject to income taxes to the extent
that it distributes all of its investment company taxable income and net
realized capital gains for its fiscal year. In addition to federal income tax
for which the Fund is liable on undistributed amounts, the Fund is subject to
federal excise tax on undistributed investment company taxable income and net
realized capital gains. The schedule of investments includes information
regarding income taxes under the caption "Income Tax Information." The Fund is
organized in Delaware and as such is required to pay Delaware an annual
franchise tax. Also, the Fund is currently subject to a Taiwan security
transaction tax of 0.3% on equities and 0.1% on corporate bonds and mutual fund
shares of the transaction amount.
The Fund's functional currency for tax reporting purposes is the New Taiwan
dollar.
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date, except
where the ex-dividend date may have passed, certain dividends from foreign
securities are recorded as soon as the Fund is informed of the ex-dividend date.
Dividends are typically declared by Taiwanese companies in the Fund's third
fiscal quarter of each year. As a result, the Fund receives substantially less
dividend income in the first half of its year. Interest income, which includes
accretion of original discount, is accrued as earned.
Dividend and interest income generated in Taiwan is subject to a 20% withholding
tax. Stock dividends received (except those which have resulted from
capitalization of capital surplus) are taxable at 20% of the par value of the
stock dividends received.
DISTRIBUTIONS TO SHAREHOLDERS. The distributable income from the assets held
under the Management Contract, which is limited to cash dividends and interest
income received, may be distributed to the Fund only once in each year at the
Fund's discretion and is recorded on the ex-dividend date. Realized capital
gains and stock dividends may also be distributed to the Fund. Within the above
limitations the Fund will, under current ROC regulations, be able to remit out
of the ROC the proceeds of income and capital gains distributions, unit
redemptions and other distributions of assets held under the Management
Contract.
The Fund distributes to shareholders at least annually, substantially all of its
taxable ordinary income and expects to distribute its taxable net realized
gains. Certain foreign currency gains (losses) are taxable as ordinary income
and, therefore, increase (decrease) taxable ordinary income available for
distribution. Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), shareholders may elect to have all distributions automatically
reinvested in Fund shares. (See page 16 for a summary of the Plan.) Shareholders
who do not participate in the Plan will receive all distributions in cash paid
by check in U.S. dollars.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions and losses deferred due to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid in capital.
12
<PAGE>
- ---------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are accounted for as of the trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. PURCHASES AND SALES OF SECURITIES.
Purchases and sales of securities, other than short-term securities, aggregated
$155,597,099 and $135,103,429, respectively.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEE. As the Fund's investment adviser, CSITC receives a fee that is
computed daily at an annual rate of 1.50% of the Fund's average net assets. The
basic fee is subject to a performance adjustment (up to a maximum of +- .50%)
based on the Fund's investment performance as compared to the Taiwan Stock
Exchange Index over a rolling 36-month period. For the six month period ended
February 29, 1996, the management fee was equivalent to an annual rate of 1.17%
of average net assets.
DIRECTORS FEES. No director, officer or employee of the Investment Manager or
its' affiliates will receive any compensation from the Fund for serving as an
officer or director of the Fund. The Fund pays each of its directors who is not
a director, officer or employee of the Investment Manager an annual fee of
$7,500 plus $750 for each Board of Directors' meeting or Audit Committee meeting
attended. In addition, the Fund will reimburse each of the directors for travel
and out-of-pocket expenses incurred in connection with Board of Directors'
meetings.
ADMINISTRATION FEES. State Street Bank and Trust Company ("State Street")
provides, or arranges for the provision of certain administrative and accounting
services for the Fund, including maintaining the books and records of the Fund,
and preparing certain reports and other documents required by federal and/or
state laws and regulations. For these services, the Fund pays State Street a fee
at the annual rate of 0.09% of the Fund's average daily net assets up to $150
million, 0.06% of the next $150 million, and 0.04% of those assets in excess of
$300 million, subject to certain minimum requirements.
4. FUND SHARES.
At February 29, 1996, there were 20,000,000 shares of $0.01 par value capital
stock authorized, of which 14,826,714 were issued and outstanding. On January
31, 1996, the Fund issued 357 shares of its common stock, valued at $7,217, to
shareholders participating in the Fund's Dividend Reinvestment and Cash Purchase
Plan.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
5. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED).
<TABLE>
<CAPTION>
NET INCREASE (DECREASE)
IN NET ASSETS
INVESTMENT NET INVESTMENT NET GAIN (LOSS) RESULTING
INCOME INCOME (LOSS) ON INVESTMENTS FROM OPERATIONS
----------------------- ------------------------ ------------------------- -------------------------
TOTAL PER SHARE TOTAL PER SHARE TOTAL PER SHARE TOTAL PER SHARE
------------ --------- ------------- --------- -------------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996
For the quarters ended:
November 30, 1995 $ 1,051,957 $ 0.07 $ (368,985) $ (0.02) $ (8,279,100) $ (0.55) $ (8,648,085) $ (0.57)
February 29, 1996 491,052 0.03 (565,863) (0.04) (113,070) (0.01) (678,933) (0.05)
1995
For the quarters ended:
November 30, 1994 $ 1,532,687 $ 0.17 $ (297,059) $ (0.03) $ (33,857,011) $ (3.00) $ (34,154,070) $ (3.03)
February 28, 1995 855,573 0.09 (371,616) (0.03) 4,489,450 0.39 4,117,834 0.36
May 31, 1995 1,210,163 0.11 (132,518) (0.01) (8,254,262) (0.73) (8,386,780) (0.74)
August 31, 1995 1,193,713 0.09 (1,443,896) (0.12) (47,448,223) (3.93) (48,892,119) (4.05)
1994
For the quarters ended:
November 30, 1993 $ 441,764 $ 0.05 $ (166,793) $ (0.02) $ 17,775,492 $ 2.21 $ 17,608,699 $ 2.19
February 28, 1994 308,979 0.03 (1,474,695) (0.15) 28,097,283 3.09 26,622,588 2.94
May 31, 1994 1,660,975 0.15 219,482 0.02 14,817,418 1.31 15,036,900 1.33
August 31, 1994 1,195,876 0.18 (1,037,185) (0.09) 85,676,333 7.59 84,639,148 7.50
1993
For the quarters ended:
November 30, 1992 $ 1,507,260 $ 0.19 $ 446,355 $ 0.06 $ (2,575,302) $ (0.32) $ (2,128,947) $ (0.26)
February 28, 1993 1,290,702 0.16 356,074 0.04 5,140,218 0.64 5,496,292 0.68
May 31, 1993 1,644,255 0.20 550,079 0.07 (779,494) (0.10) (229,415) (0.03)
August 31, 1993 1,316,185 0.16 269,869 0.03 (15,429,363) (1.92) (15,159,494) (1.89)
</TABLE>
14
<PAGE>
OTHER INFORMATION
- ---------------------------------------------------------------------------
RESULTS OF ANNUL STOCKHOLDER MEETING VOTING
1) ELECTION OF DIRECTORS -- The stockholders of the Fund elected Benny T. Hu,
Harvey H.W. Chang, Joe O. Rogers, Jack C. Tang, Shao-Yu Wang, David Dean and
Lawrence F. Weber to the Board of Directors to hold office until their
successors are elected and qualified.
2) RATIFICATION OR REJECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS -- The
stockholders of the Fund ratified the selection of Coopers & Lybrand L.L.P.
as independent public accountants of the Fund for the fiscal year ending
1996.
3) APPROVAL OR DISAPPROVAL OF REINCORPORATION OF THE FUND -- The stockholders of
the Fund did not approve an Agreement of Merger reincorporating the Fund,
currently a Delaware corporation, as a Maryland Corporation by means of a
merger of the Fund into a wholly-owned, newly formed Maryland subsidiary.
4) APPROVAL OR DISAPPROVAL OF AN AMENDMENT TO THE FUND'S RESTATED CERTIFICATE OF
INCORPORATION -- The stockholders of the Fund did not approve an amendment to
the Fund's Restated Certificate of Incorporation, increasing the number of
authorized shares of Common Stock from 20,000,000 to 60,000,000.
5) APPROVAL OR DISAPPROVAL OF AN AMENDMENT PERMITTING THE FUND TO PURCHASE
TAIWAN STOCK EXCHANGE LISTED SECURITIES ISSUED IN INITIAL OR SUBSEQUENT
PUBLIC OFFERINGS -- The stockholders of the Fund did not approve an amendment
to the Fund's investment limitations permitting the Fund to purchase Taiwan
Stock Exchange listed securities issued in initial and subsequent public
offerings.
6) APPROVAL OR DISAPPROVAL OF AN AMENDMENT PERMITTING THE FUND TO ENGAGE IN
CURRENCY HEDGING TRANSACTIONS -- The stockholders of the Fund did not approve
an amendment to the Fund's investment limitations permitting the Fund to
engage in currency hedging transactions.
15
<PAGE>
SUMMARY OF DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
- ---------------------------------------------------------------------------
WHAT IS THE DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN?
The Dividend Reinvestment and Cash Purchase Plan (the "Plan") offers
shareholders of The Taiwan Fund, Inc. (the "Fund") a prompt and simple way to
reinvest their dividends and capital gains distributions in shares of the Fund.
The Fund will distribute to shareholders, at least annually, substantially all
of its net income and expects to distribute annually its net realized capital
gains. State Street Bank and Trust Company acts as Plan Agent for shareholders
in administering the Plan. The Plan also allows you to make optional cash
investments in Fund shares through the Plan Agent.
WHO CAN PARTICIPATE IN THE PLAN?
If you own shares in your own name, you can elect to participate directly in the
Plan. If you own shares that are held in the name of a brokerage firm, bank, or
other nominee, you should contact your nominee to arrange for them to
participate on your behalf.
WHAT DOES THE PLAN OFFER?
The Plan has two components; reinvestment of dividends and capital gains
distributions, and a voluntary cash purchase feature.
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
If you choose to participate in the Plan, your dividends and capital gains
distributions will be promptly invested for you, automatically increasing your
holdings in the Fund. If the Fund declares a dividend or capital gains
distribution payable in cash, you will automatically receive shares purchased by
the Plan Agent on the New York Stock Exchange or otherwise on the open market.
If a distribution is declared which is payable in shares or cash at the option
of the shareholder and if on the valuation date (generally the payable date) the
market price of shares is equal to or exceeds their net asset value, the Fund
will issue new shares to you at the greater of the following: (a) net asset
value per share or (b) 95% of the market price per share. If the market price
per share on the valuation date is less than the net asset value per share, the
Fund will issue new shares to you at the market price per share on the valuation
date.
All reinvestments are in full and fractional share, carried to three decimal
places. In the case of foreign (non-U.S.) shareholders, reinvestment will be
made net of applicable withholding tax.
VOLUNTARY CASH PURCHASE OPTION
Plan participants have the option of making investments in Fund shares through
the Plan Agent. You may invest any amount from $100 to $3,000 semi-annually. The
Plan Agent will purchase shares for you on the New York Stock Exchange or
otherwise on the open market on or about February 15 and August 15. If you hold
shares in your own name, you should deal directly with the Plan Agent. We
suggest you send your check to the following address to be received on or about
February 5 or August 5 to allow time for processing: State Street Bank and Trust
Company, P.O. Box 8200, Boston, MA 02266.
16
<PAGE>
- ---------------------------------------------------------------------------
The Plan Agent will return any cash payments received more than thirty days
prior to February 15 or August 15, and you will not receive interest on
uninvested cash payments. If you own shares that are held in the name of a
brokerage firm, bank, or other nominee, you should contact your nominee to
arrange for them to participate in the cash purchase option on your behalf.
IS THERE A COST TO PARTICIPATE?
Each participant will pay a pro rata portion of brokerage commissions payable
with respect to purchases of shares by the Plan Agent on the New York Stock
Exchange or otherwise on the open market. Otherwise, there is no charge to
participants for reinvesting dividends and capital gains distributions, since
the Plan Agent's fees are paid by the Fund. Brokerage charges for purchasing
shares through the Plan are expected to be less than the usual brokerage charges
for individual transactions, because the Plan Agent will purchase stock for all
participants in blocks, resulting in lower commissions for each individual
participant.
For purchases from voluntary cash payments, participants are charged a service
fee of $.75 for each investment and a pro rata share of the brokerage
commissions.
Brokerage commissions and service fees, if any, will be deducted from amounts to
be invested.
WHAT ARE THE TAX IMPLICATIONS FOR PARTICIPANTS?
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
If the Fund issues shares upon reinvestment of a dividend or capital gains
distribution, for U.S. federal income tax purposes, the amount reportable in
respect of the reinvested amount of the dividend or distribution will be the
fair market value of the shares received as of the payment date, which will be
reportable as ordinary dividend income and/ or long term capital gains. The
shares will have a tax basis equal to such fair market value, and the holding
period for the shares will begin on the day after the payment date. State, local
and foreign taxes may also be applicable.
ONCE ENROLLED IN THE PLAN, MAY I WITHDRAW FROM IT?
You may withdraw from the Plan without penalty at any time by written notice to
the Plan Agent.
If you withdraw, you will receive, without charge, stock certificates issued in
your name for all full shares, or, if you wish, the Plan Agent will sell your
shares and send you the proceeds, less a service fee of $2.50 and less brokerage
commissions. The Plan Agent will convert any fractional shares you hold at the
time of your withdrawal to cash at the current market price and send you a check
for the proceeds.
17
<PAGE>
SUMMARY OF DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (CONTINUED)
- --------------------------------------------------------------------------------
WHOM SHOULD I CONTACT FOR ADDITIONAL INFORMATION?
If you hold shares in your own name, please address all notices, correspondence,
questions, or other communications regarding the Plan to: State Street Bank and
Trust Company, P.O. Box 8200, Boston, MA 02266, 1-800-426-5523. If your shares
are not held in your name, you should contact your brokerage firm, bank, or
other nominee for more information and to arrange for them to participate in the
Plan on your behalf.
EITHER THE FUND OR THE PLAN AGENT MAY AMEND OR TERMINATE THE PLAN. EXCEPT IN THE
CASE OF AMENDMENTS NECESSARY OR APPROPRIATE TO COMPLY WITH APPLICABLE LAW, RULES
OR POLICIES OR A REGULATORY AUTHORITY, PARTICIPANTS WILL BE MAILED WRITTEN
NOTICE AT LEAST 90 DAYS BEFORE THE EFFECTIVE DATE OF ANY AMENDMENT. IN THE CASE
OF TERMINATION, PARTICIPANTS WILL BE MAILED WRITTEN NOTICE AT LEAST 90 DAYS
BEFORE THE RECORD DATE OF ANY DIVIDEND OR CAPITAL GAINS DISTRIBUTION BY THE
FUND.
18
<PAGE>
- ---------------------------------------------------------------------------
UNITED STATES ADDRESS
The Taiwan Fund, Inc.
225 Franklin Street
Boston, MA
1-800-636-9242
INVESTMENT ADVISER
China Securities Investment Trust Corporation
Taipei, Taiwan
DIRECTORS AND OFFICERS
Benny T. Hu, President and Director
Harvey H.W. Chang, Director
David Dean, Director
Joe O. Rogers, Director
Jack C. Tang, Director
S.Y. Wang, Director
Lawrence F. Weber, Director
Gloria Wang, Treasurer and Secretary
Laurence E. Cranch, Assistant Secretary
TRANSFER AGENT,
DIVIDEND PAYING AGENT,
AND REGISTRAR
State Street Bank and Trust Company
Boston, MA
CUSTODIANS
The International Commercial Bank of China
Taipei, Taiwan
State Street Bank and Trust Company
Boston, MA
LEGAL COUNSEL
Rogers & Wells, New York, NY
Lee and Li, Taipei, Taiwan
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
Boston, MA
