R O C TAIWAN FUND, N-30D, 1996-03-01

R O C TAIWAN FUND
N-30D, 1996-03-01

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<PAGE>

Dear Stockholders

The net asset value (NAV) per share of The R.O.C. Taiwan Fund declined 29.1%
in 1995, compared to the 27.4% fall in the Taiwan Stock Exchange Index
(TAIEX). During the year, the New Taiwan dollar depreciated 3.5% against the
U.S. dollar. When calculated in the local currency, the Fund slightly
outperformed the Index.

1995 was a grim year for Taiwan's stock market. A large sell-off of shares
early in the first quarter as domestic funds raised cash for big dividend
distributions coupled with investor unease over new settlement procedures got
the market off to a poor start from which it never really recovered. It was
then battered by concerns over a sluggish real estate market and rising
political tensions with China following Taiwan President Lee Teng-hui's
private trip to the U.S. in June. These two factors continued to weigh on the
market for the rest of the year. To a lesser extent, slower earnings growth of
cyclical stocks_including paper, plastics and steel_played a role in the
downturn.

The market did manage to rally in December, with the TAIEX rising 8.3%. This
gain came after the ruling Kuomintang party eked out a narrow majority in
legislative elections held at the beginning of the month. Interest rates also
fell as the central bank loosened monetary policy.

Still, there was one bright spot all year. Foreign demand remained buoyant,
lifting Taiwan's export growth to an eight-year high of 20%. Fueled by this
strong advance, Taiwan's economy grew an estimated 6.4% in 1995, compared to
6.5% the year before. The poor performance of the property and stock markets,
however, contributed to slowed expansion of consumption, which had racked up
real growth of more than 8% in each of the previous three years.

The government is forecasting a slight rise in economic growth to 6.5% in
1996. Exports are projected to remain brisk and may receive an added boost by
improved relations with China and the relaxation of that country's economic
stringency measures. The official forecast also calls for strong growth in
private investment, with much of the spending on large-scale petrochemical
projects and new high-tech ventures. Given projections for continuing moderate
inflation of less than 4%, the current low-interest-rate environment should
remain for much of the year. This would not only aid investment spending but
also support the beginnings of a recovery in the property market.

The interview on page 2 provides an analysis of our portfolio strategy and
current outlook for 1996.
<PAGE>

We appreciate your support over the last year and look forward to discussing
our market outlook and portfolio strategy with you in future reports.

<PAGE>

Q. How did the Fund perform last year?

A. First, let me say there were no winners. This was in marked contrast with
1994, when the Fund beat the 17.4% rise in the Taiwan Stock Exchange Index
(TAIEX) with a gain of 23.4%. The Fund actually bettered the TAIEX in local
currency terms last year but still declined 26.7%. Unfortunately, the
political tensions with China led to capital flight, and the New Taiwan dollar
depreciated 3.5%.

Basically, we maintained our full-investment strategy in 1995. The Fund was
therefore not immune to the market downturn. Through the first three quarters,
the Fund outperformed the market because of our overweighting in technology
stocks and reductions in the plastics, textile and paper sectors.

At this point, we built up holdings of financial shares to about 25% of the
portfolio from 13% at the end of the third quarter. This sector was up almost
double that of the TAIEX in the fourth quarter, but the Fund underperformed
the index because our holding was less than the 33% market weighting of
financial shares. By contrast, technology shares were down slightly in the
period.

Q. Why did you shift emphasis from technology stocks to financials?

The switch into financial shares was made for a couple of reasons. First,
there was little upside demand in the technology stocks since almost everyone
else also had huge holdings in these shares by the end of the third quarter,
and we had some concerns about these stocks' growth prospects in 1996. In
contrast, financial stocks were underweighted in virtually everyone's
portfolio because of high price-to-earnings ratios, especially of the three
big commercial banks.

Historically, however, these shares tend to outperform in pre-election periods
because most efforts to support the market at such times focus on this sector
due to its heavy weighting. This is made easier by the relatively small share
float of many listed companies in the financial sector resulting, in part,
from large cross-holdings of these companies. The timing also appeared right
since Taiwan had legislative elections in early December and will hold its
first direct election for president in March. In addition, there were
improving fundamentals resulting from the downward trend in interest rates in
the second half of the year.

Q. Were there any positives for the Fund's investors?
<PAGE>

A. Looking forward, the Trustees have proposed reductions both in the
management fee and custodian fee. These proposals will be decided by
shareholders later this year and are in line with the Fund's long-term goal of
reducing costs. In addition, net proceeds before expenses from our public
offering completed in November raised almost $53 million for the Fund. This
was done under tight cost discipline and at no dilution in value for existing
shareholders. The increase in capital should also reduce the cost structure of
the Fund.

As part of our efforts to provide added value, we were also one of the first
funds to invest in shares on Taiwan's over-the-counter (OTC) market. The
investment in Dyna Image_though a tiny proportion of our portfolio_proved
quite successful. Based on careful analysis and prudent recommendations of the
highly professional research team at International Investment Trust Company,
we will continue to look for good investments in this new area of opportunity.

Q. What is your outlook for the market in 1996?

A. I expect prospects for the year to be brighter starting from the second
quarter. This is based on three factors. First and foremost is the expected
stabilizing of the relationship between China and Taiwan after the
presidential election in March. Second, if the government also continues with
its current expansionary monetary policy, domestic demand ought to pick up and
boost the economy. We just started to see the initial results in December,
when the rate of monetary growth rose for the first time in 18 months. And
finally, should the capital outflow of last year be reversed and interest of
foreign investors increase, the market will benefit.

Q. What is your strategy then?

A. First, I will focus on those sectors benefiting from the expected pick-up
in domestic demand. These will include machinery, pharmaceutical and cement
shares, which have been beaten down over the last few years but should see
some improvement. Beginning in the second quarter, I will also closely monitor
technology companies, especially those producing computer peripheral products.
The lower prices of SRAM and DRAM semiconductors used in the computer industry
should stimulate demand for computer-related peripherals.

In addition, we will continue to move into small-capitalization issues with
strong growth prospects and limited share floats. Lastly, I like certain
stocks, like those of some shipping companies, that may perform better than
the overall market after the presidential election in March. At that time, we
anticipate the political
<PAGE>

tensions with China will lessen considerably and the mutually rewarding
economic ties will increasingly drive the relationship again. The opening of
direct transportation links between China and Taiwan could very well be the
first signal of this change.

<PAGE>

Portfolio Highlights
Year Ended December 31, 1995

Ten Largest Holdings
Percent of
Company Net Assets

Chang Hwa Commercial Bank 3.80%
Mosel Vitelic Inc. 3.68
Fuh Hwa Securities Finance Co. 3.62
Acer Inc. 3.24
First Commercial Bank 3.00
Evergreen Marine Corp. 2.96
International Bills Finance Co. 2.93
Taiwan Glass Industrial Corp. 2.72
Cathay Life Insurance Co. 2.57
China Synthetic Rubber Corp. 2.55

Industry Diversification
Percent of
Net Assets

Financials (other than Banks) 13.76%
Electronics 13.32
Banking 12.06
Semiconductors 8.79
Plastics 7.58
<PAGE>

Textiles 6.59
Electrical & Machinery 5.70
Transportation 5.65
Rubber 4.50
Steel & Other Metals 3.67
<PAGE>

THE R.O.C. TAIWAN FUND
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(WITH AUDITORS' REPORT THEREON)
<PAGE>

CONSOLIDATED SCHEDULE OF INVESTMENTS
The R.O.C. Taiwan Fund/December 31, 1995
COMMON & PREFERRED STOCKS -- 95.91%

<TABLE>
<CAPTION>
$ of Market Value
Number of Shares Description Net Assets (U.S. Dollars)
- ---------------- ----------- ---------- --------------
Banking -- 12.06%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3,297,000 Chang Hwa Commercial Bank................... 3.80 $11,971,502
2,583,180 The First Commercial Bank................... 3.00 9,426,973
2,240,800 * China Development Corp...................... 2.09 6,574,876
3,005,000 * China Trust Commercial Bank................. 1.57 4,926,591
1,570,000 * Taipei Business Bank........................ 1.30 4,088,392
400,000 * Tainan Business Bank........................ 0.30 931,597
-----------
37,919,931
<CAPTION>
Other Financials -- 13.76%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
6,028,000 * Fuh Hwa Securities Finance Co., Ltd......... 3.62 11,386,099
11,306,000 * International Bills Finance Co., Ltd........ 2.93 9,205,692
1,757,000 Cathay Life Insurance Co., Ltd.............. 2.57 8,087,420
4,978,000 * China Bills Finance Co., Ltd................ 2.15 6,755,401
4,105,000 * Chung Hsing Bills Finance Co., Ltd.......... 1.64 5,149,129
1,075,000 Shinkong Fire & Marine Insurance Co., Ltd... 0.85 2,681,093
-----------
43,264,834
<CAPTION>
Cement -- 1.81%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1,765,700 Hsing Ta Cement Co., Ltd.................... 0.71 2,221,291
2,147,490 Universal Cement Corp....................... 0.59 1,874,574
1,042,065 Asia Cement Corp............................ 0.51 1,605,235
-----------
5,701,100
<CAPTION>
Chemical -- 1.64%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2,100,000 * Oriental Union Chemical Corp................ 1.01 3,188,703
1,022,000 * Asia Chemical Corp.......................... 0.38 1,180,745
358,616 Yung Shin Pharmaceutical Ind. Co., Ltd...... 0.25 782,602
-----------
5,152,050
<CAPTION>
Construction N 1.13%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2,864,281 * Goldsun Development & Construction Co., Ltd. 0.68 2,122,079
623,074 Cathay Construction Co., Ltd................ 0.25 786,127
655,508 * Delpha Construction Co., Ltd................ 0.20 641,924
-----------
3,550,130
<CAPTION>
Electrical & Machinery N 5.70%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4,080,250 Tatung Co., Ltd............................. 2.43 7,632,230
2,132,494 * Taichung Machinery Works Co., Ltd........... 1.02 3,206,758
1,115,450 * Shihlin Electric & Engineering Co., Ltd..... 0.70 2,188,761
990,000 * Phoenixtec Power Co., Ltd................... 0.63 1,997,066
1,057,033 Teco Electric and Machinery Co., Ltd........ 0.62 1,957,828
970,000 * Ensure Co., Ltd............................. 0.30 939,226
-----------
17,921,869
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. (Continued)
<PAGE>

CONSOLIDATED SCHEDULE OF INVESTMENTS
The R.O.C. Taiwan Fund/December 31, 1995
COMMON & PREFERRED STOCKS -- 95.91%
<TABLE>
<CAPTION>
$ of Market Value
Number of Shares Description Net Assets (U.S. Dollars)
- ---------------- ----------- ---------- --------------

Electronics -- 13.32%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4,377,784 * Acer Inc.................................... 3.24 $10,195,829
2,755,000 * Wus Printed Circuit Co., Ltd................ 1.82 5,709,059
2,395,250 * Orient Semiconductor Electronics Co., Ltd... 1.31 4,128,984
1,322,130 * Hon Hai Precision Ind. Co., Ltd............. 1.13 3,564,150
1,350,611 * Advanced Semiconductor Engineering, Inc..... 1.05 3,294,173
1,210,800 * Siliconware Precision Industries Co., Ltd... 1.03 3,241,827
1,581,400 Taiwan Liteon Electronic Co., Ltd........... 0.75 2,372,245
1,700,000 * Chuntex Electronic Co., Ltd................. 0.65 2,057,583
1,491,000 * Primax Electronics Co., Ltd................. 0.64 2,023,363
1,724,000 * Opto Tech. Corp............................. 0.61 1,903,261
1,680,672 * Picvue Electronics Ltd...................... 0.46 1,442,425
1,306,000 * Mitac International Corp.................... 0.40 1,250,196
284,400 Compeq Manufacturing Co., Ltd............... 0.23 724,952
5,000 * Dyna Image Corp............................. 0.00 9,930
-----------
41,917,977
<CAPTION>
Food -- 2.21%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4,661,160 * Wei Chuan Foods Corp........................ 1.24 3,914,930
2,509,000 * Great Wall Enterprise Co., Ltd.............. 0.60 1,886,466
1,800,000 * Eagle Holding Corp.......................... 0.37 1,148,726
-----------
6,950,122
<CAPTION>
Hotel -- 0.25%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
699,000 The Ambassador Hotel........................ 0.25 789,628
-----------
789,628
<CAPTION>
Glass -- 2.72%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4,658,170 Taiwan Glass Industrial Corp................ 2.72 8,542,399
---------
8,542,399
<CAPTION>
Paper -- 1.50%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3,882,172 * Cheng Loong Co., Ltd........................ 1.00 3,132,506
1,960,000 * Long Chen Paper Co., Ltd.................... 0.44 1,394,609
200,000 Yuen Foong Yu Paper Mfg. Co., Ltd........... 0.06 183,385
-----------
4,710,500
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. (Continued)

3
<PAGE>

Plastics -- 7.58%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4,974,000 Grand Pacific Petrochemical Corp........... 2.11 $ 6,622,270
480,000 Grand Pacific Petrochemical Corp. Pf....... 0.19 609,132
3,196,822 Formosa Plastics Corp...................... 1.52 4,795,526
2,300,000 * Taiwan Styrene Monomer Corp................ 1.20 3,787,640
2,034,073 Nan Ya Plastics Corp....................... 0.98 3,088,598
1,500,000 Taiwan Polypropylene Co., Ltd.............. 0.84 2,629,745
1,800,000 * China Petrochemical Development Corp....... 0.47 1,478,819
900,000 China General Plastics Corp................ 0.27 835,137
-----------
23,846,867
<CAPTION>
Retailing -- 0.44%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1,398,000 * Collins Co., Ltd........................... 0.44 1,399,795
-----------
1,399,795
<CAPTION>
Rubber -- 4.50%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4,977,998 China Synthetic Rubber Corp................ 2.55 8,015,189
2,835,600 * Taiwan Synthetic Rubber Corp............... 1.26 3,983,256
1,855,810 * Cheng Shin Rubber Ind. Co., Ltd............ 0.69 2,171,294
-----------
14,169,739
<CAPTION>
Semiconductors N 8.79%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3,916,452 * Mosel Vitelic Inc.......................... 3.68 11,563,337
3,196,968 United Microelectronics Corp............... 2.53 7,973,366
899,000 United Microelectronics Corp. Pf........... 0.54 1,698,093
2,564,500 * Macronix International Co., Ltd............ 1.54 4,844,003
500,000 * Taiwan Semiconductor Manufacturing Co., Ltd 0.50 1,558,775
-----------
27,637,574
<CAPTION>
Steel & Other Metals N 3.67%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4,465,000 * Ornatube Enterprise Co., Ltd............... 1.01 3,177,003
3,047,000 China Steel Corp........................... 0.78 2,447,434
2,026,000 * Tung Ho Steel Enterprise Corp.............. 0.70 2,199,509
1,989,000 * Kao Hsing Chang Iron & Steel Corp.......... 0.51 1,612,210
1,105,000 Feng Hsin Iron & Steel Co., Ltd............ 0.39 1,228,003
1,108,000 * China Steel Structure Co., Ltd............. 0.28 894,040
-----------
11,558,199
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. (Continued)

4
<PAGE>

Textiles -- 6.59%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5,447,685 Formosa Chemicals & Fiber Corporation 1.52 $ 4,775,341
3,701,000 * Nien Hsing Textile Co., Ltd.......... 1.36 4,262,292
3,594,000 * Everest Textile Co., Ltd............. 1.06 3,348,161
4,219,000 * Chung Fu Textile Ltd................. 0.91 2,862,699
2,430,000 * Universal Textile Co., Ltd........... 0.63 1,978,581
2,600,000 * Chia Her Industrial Co., Ltd......... 0.57 1,792,775
1,970,400 * Shinkong Synthetic Fibers Corp....... 0.54 1,705,536
-----------
20,725,385
<CAPTION>
Transportation -- 5.65%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5,724,109 Evergreen Marine Corp. (Taiwan) Ltd.. 2.96 9,300,496
3,532,000 * First Steamship Co., Ltd............. 0.89 2,811,091
2,208,000 * Sincer Navigation Corp............... 0.73 2,291,817
2,015,000 U-Ming Marine Transport Corp......... 0.68 2,135,834
1,063,000 Yang Ming Marine Transport Corp...... 0.39 1,239,809
-----------
17,779,047
<CAPTION>
Others -- 2.59%
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1,310,000 * Taiwan Secom Co., Ltd................ 1.10 3,459,380
1,711,360 * Ton Yi Industrial Corp............... 0.73 2,291,019
959,000 Giant Manufacturing Co., Ltd......... 0.44 1,389,345
530,000 CTCI Corporation..................... 0.27 841,702
100,000 * Pao Cheng Corp....................... 0.05 152,210
1,519 * Miscellaneous securities............. 0.00 1,374
-----------
8,135,030

TOTAL COMMON & PREFERRED STOCKS (COST $311,074,381)..... $301,672,176

</TABLE>

* These stocks did not pay a cash dividend during the year
ended December 31, 1995.

- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. (Continued)

5
<PAGE>

CONSOLIDATED SCHEDULE OF INVESTMENTS
The R.O.C. Taiwan Fund/December 31, 1995
SHORT-TERM INVESTMENTS -- 5.40%
<TABLE>
<CAPTION>
% of Market Value
Net Assets (U.S. Dollars)
---------- --------------
Commercial Paper -- 2.27%
- -------------------------------------------------------------------------------------------------------------
Principal Amount Issuer (Guarantor)
- ---------------- ------------------
<S> <C> <C> <C>
$ 733,541 Printemps Department Store Co. (Grand Commercial Bank),
5.95%, Due 01/05/96.......................................... 0.23 $ 733,066
366,771 Printemps Department Store Co. (Grand Commercial Bank),
5.80%, Due 01/05/96.......................................... 0.12 366,539
1,833,853 Yung Chang Securities Co. Ltd. (Entie Commercial Bank),
5.75%, Due 01/10/96.......................................... 0.58 1,831,259
733,541 Airlux Electrical Co., Ltd. (Grand Commercial Bank),
5.50%, Due 01/11/96.......................................... 0.23 732,438
183,385 Concord Securities Co., Ltd. (The Chinese Bank),
5.80%, Due 01/12/96.......................................... 0.06 183,065
1,833,853 Jih Sun Securities Co., Ltd. (Far Eastern IntOl Bank),
5.75% Due 01/12/96........................................... 0.58 1,830,685
1,100,312 Tai Yu Securities Co., Ltd. (Chinatrust Commercial Banking
Corp.), 5.75%, Due 01/18/96.................................. 0.35 1,097,375
366,771 Fuh Hwu Securities Finance Co., 5.50%, Due 1/30/96............ 0.12 365,177
------------
7,139,604
<CAPTION>
Bankers' Acceptance -- 3.13%
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Principal Amount Accepting Bank (Issuer)
- ---------------- -----------------------
$733,541 Banque Nationale de Paris (Chung Yu Enterprises),
5.75%, Due 01/04/96.......................................... 0.23 $ 733,196
201,724 Chemical Bank (Lo Chih Enterprises),
6.25%, Due 01/05/96.......................................... 0.06 201,584
733,541 Dah An Commercial Bank (Sinkang Industrial Ltd.),
5.95%, Due 01/05/96.......................................... 0.23 733,065
366,771 Banque Nationale de Paris (Universal Finance Co.),
6.00%, Due 01/08/96.......................................... 0.12 366,351
550,156 Hollandshe Bank-Unie N.A. (Universal Finance Co.),
6.00%, Due 01/08/96.......................................... 0.17 549,526
1,833,853 Dai-Ichi Kangyo Bank (Yuen Foong Yu Paper Mfg Co., Ltd.),
5.95%, Due 01/08/96.......................................... 0.59 1,831,777
1,833,853 Bank of America (Fu Wan Services Co., Ltd.),
5.80%, Due 01/09/96.......................................... 0.59 1,831,530
220,062 Shanghai Commercial & Savings Bank (Horng Shing & Co., Ltd.),
5.90%, Due 01/10/96.......................................... 0.07 219,743
366,771 Dah An Commercial Bank (Tai E Textile Co., Ltd.),
5.50%, Due 01/10/96.......................................... 0.12 366,277
1,100,312 Toronto-Dominion Bank (Swire International Co., Ltd.),
5.75%, Due 01/11/96.......................................... 0.35 1,098,584
733,541 The Chinese Bank (San Shing Hardware Works Co., Ltd.),
5.50%, Due 01/16/96.......................................... 0.23 731,892
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. (Continued)

6
<PAGE>

TOTAL INVESTMENTS IN SECURITIES AT MARKET VALUE 101.31 318,643,835

LIABILITIES (NET OF OTHER ASSETS) (1.31) (4,112,124)
------ ------------
NET ASSETS 100.00 $314,531,711
====== ============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.

7
<PAGE>

CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
The R.O.C. Taiwan Fund/December 31, 1995 (Expressed in US Dollars)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities at market value (Notes 8 and 11):

Common and preferred stocks (cost -- $311,074,381)......................... $ 301,672,176
Short-term investments (amortized cost -- $16,971,659)..................... 16,971,659
------------------
318,643,835
Cash (Note 3)............................................................... 5,621,597
Receivable for sale of investments.......................................... 1,260,738
Dividends and interest receivable........................................... 31,436
Prepaid insurance........................................................... 35,177
Other receivables........................................................... 224
------------------
Total assets............................................................ 325,593,007
------------------
<CAPTION>
LIABILITIES................................................................. <C>
<S>
Payable for securities purchased............................................ 10,315,584
Management fee payable (Note 4)............................................. 365,773
Custodian fees payable (Note 5)............................................. 48,866
Administrative fee payable (Note 6)......................................... 24,602
Accrued Republic of China taxes............................................. 36,257
Other payables.............................................................. 270,214
------------------
Total liabilities....................................................... 11,061,296
------------------
Net assets (Note 9)......................................................... $ 314,531,711
==================
Net asset value per share (33,815,376 shares issued and outstanding)........ $ 9.30
==================
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.

8
<PAGE>

CONSOLIDATED STATEMENT OF OPERATIONS
The R.O.C. Taiwan Fund/For the Year Ended December 31, 1995
(Expressed in US Dollars)
- --------------------------------------------------------------------------------

<S> <C>
INVESTMENT INCOME
Dividends........................................................... $ 2,028,757
Interest............................................................ 1,882,093
----------------
3,910,850

REPUBLIC OF CHINA TAXES (NOTE 2)..................................... (2,100,478)
----------------
1,810,372
----------------

EXPENSES
Management fee (Note 4)............................................. 4,277,604
Custodian fees (Note 5)............................................. 564,286
Professional fees................................................... 297,541
Administrative fee (Note 6)......................................... 287,721
Insurance expenses.................................................. 76,750
Trustee fees (Note 7)............................................... 60,750
Other expenses...................................................... 401,368
----------------
5,966,020
----------------
Net investment loss.................................................. (4,155,648)
----------------

REALIZED AND UNREALIZED LOSS FROM
INVESTMENTS AND FOREIGN CURRENCY (NOTE
8)
Net realized loss from investments:
Proceeds from sales, net.......................................... 218,642,612
Cost of securities sold........................................... 236,607,893
----------------
Net realized loss............................................... (17,965,281)
----------------
Net decrease in unrealized
appreciation (depreciation) on
investments
(excluding short-term investments):
Balance, end of year.............................................. (9,402,204)
Balance, beginning of year........................................ 61,996,272
----------------
Net decrease in unrealized appreciation on...................... (71,398,476)
investments.................................................... ----------------
Net realized and unrealized loss from
investments........................................................ (89,363,757)
----------------
Net decrease in unrealized
appreciation from translation of
assets and liabilities in foreign
currencies........................................................ (10,082,188)
----------------
Net decrease in net assets resulting
from operations.................................................... $ (103,601,593)
================
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.

9
<PAGE>

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
The R.O.C. Taiwan Fund/For the Years Ended December 31, 1995 and 1994
(Expressed in US Dollars)
- --------------------------------------------------------------------------------

<S> <C> <C>
1995 1994
-------- --------
FROM OPERATIONS
Net investment loss............................................................... $ (4,155,648) $ (2,682,640)
Net realized gain (loss) from investments......................................... (17,965,281) 74,091,888
Net realized gain from foreign currency transactions.............................. - 45,720
Net increase (decrease) in unrealized appreciation on investments................. (71,398,476) 86,615
Net decrease in unrealized appreciation on translation of assets
and liabilities in foreign currencies........................................... (10,082,188) (1,877,893)
------------------ -----------------
Net increase (decrease) in net assets resulting from operations................... (103,601,593) 69,663,690
------------------ -----------------

SHARE TRANSACTIONS
Net proceeds from sale of shares (Note 10).................................... 52,472,397 -
------------------ -----------------
Increase (Decrease) in Net Assets................................................. (51,129,196) 69,663,690
Net Assets, beginning of year..................................................... 365,660,907 295,997,217
------------------ -----------------
Net Assets, end of year........................................................... $ 314,531,711 $ 365,660,907
================== =================
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.

10
<PAGE>

CONSOLIDATED FINANCIAL HIGHLIGHTS
The R.O.C. Taiwan Fund (Expressed in US Dollars)
- --------------------------------------------------------------------------------

Years Ended December 31,
---------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................ 13.12 10.62 8.51 9.53 9.15
Net investment income (loss)................................ (0.15) (0.09) 0.16 (0.01) (0.01)
Net realized and unrealized gain
(loss) on
investments and foreign currency transactions.............. (3.35) 2.66 2.35 (1.08) 0.62
Net realized and unrealized gain
(loss) on
translation of currency.................................... (0.35) (0.07) (0.25) 0.11 0.52
------- -------- ------- -------- -------
Total from investment operations........................ (3.85) 2.50 2.26 (0.98) 1.13

NET EFFECT OF ADDITIONAL SHARES ISSUED....................... 0.03 - - (0.02) -

LESS:
Dividends from net investment income........................ - - (0.15) - -
Distributions from capital gains............................ - - - (0.02) (0.75)
------- -------- ------- -------- -------
Total distributions*.................................... - - (0.15) (0.02) (0.75)
------- -------- ------- -------- -------
NET ASSET VALUE, END OF YEAR................................. 9.30 13.12 10.62 8.51 9.53
======= ======== ======= ======== =======
PER SHARE MARKET PRICE, END OF YEAR.......................... 10.50 11.88 13.75 8.75 10.25

TOTAL INVESTMENT RETURN (%):
Based on the TrustOs market price........................... (11.62) (13.60) 59.42 (14.44) 39.98
Based on the TrustOs net asset value........................ (29.12) 23.54 26.73 (10.50) 11.48

RATIOS AND SUPPLEMENTAL DATA:
Net Assets, end of year (in thousands)...................... 314,532 365,661 295,997 237,240 244,073
Ratio of expenses to average net assets..................... 1.98 1.99 2.18 2.47 2.11
Ratio of net investment income (loss)
to average
nets assets (%)............................................ (1.38) (0.84) 1.79 (0.09) (0.15)
Portfolio turnover ratio (%)................................ 81 97 151 45 35
</TABLE>

* In order to avoid taxation at the Trust level, the Trust has followed a policy
of distributing all ordinary income and capital gains, calculated for U.S.
Federal income tax purposes. See Note 9 for information concerning
differences between the calculation of the TrustOs capital gains for tax and
financial purposes. The Trustees of the Trust chose to make an elective
distribution in 1991, which constituted a return of capital for U.S. Federal
income tax purposes and a distribution from previously undistributed capital
gains for financial statement purposes.

- --------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.

11
<PAGE>

The R.O.C. Taiwan Fund (the "Trust") was established in July 1988 as a
Massachusetts business trust. The Trust is a closed-end diversified management
investment company and is registered under the Investment Company Act of 1940
(the OAct"). On March 15, 1989, International Investment Trust Company Limited
("IIT") subscribed for and purchased the Trust's initial issue of 1,000 shares
of beneficial interest ("shares") for $100,000. The activities of the Trust
between the date of its organization and March 15, 1989, were limited to
organizational matters and registration with the Securities and Exchange
Commission.

On May 19, 1989, the Trust acquired the entire beneficial interest in the net
assets of The Taiwan (R.O.C.) Fund (the "Fund") in exchange for approximately
21,656,000 newly issued shares and issued an additional 6,407 shares to IIT in
respect of its initial investment. On that date, the Trust also completed a
public offering of 4,112,626 shares at a price of $14.55 per share. The
acquisition was consummated pursuant to the authorization given by the
Unitholders of the Fund to reorganize the Fund by transferring the beneficial
interest in its net assets to the Trust at a special meeting of Unitholders on
April 18, 1989. The Fund, which commenced operations on October 27, 1983, was
established under the laws of the Republic of China as an open-end contractual
investment fund pursuant to an investment contract between IIT and Central Trust
of China, as custodian.

On May 19, 1989, the net assets of the Trust, excluding the proceeds of the
public offering, were approximately $110,000 and the net assets of the Fund were
approximately $308,000,000. For financial reporting purposes, the acquisition
has been accounted for as a purchase transaction. During the period from March
15, 1989 to May 19, 1989, the Trust's results of operations were insignificant.
For U.S. federal income tax purposes, the acquisition was treated as a
reorganization in which, pursuant to special rules and regulations of the
Internal Revenue Service, the Trust was deemed to have acquired the individual
assets and assumed the individual liabilities of the Fund at their fair values
at May 18, 1989.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

A -- Principles of consolidation -- The consolidated 0financial statements
include the accounts of the Trust and the Fund. All significant intercompany
transactions and balances have been eliminated in consolidation.

B -- Valuation of investments -- Common and preferred stocks represent
securities that are traded on the Taiwan Stock Exchange or the Taiwan over-the-
counter market. Such securities are valued at the closing market price, or, if
not quoted at the end of the year, generally at the last quoted closing market
price. Short-term investments are valued using the amortized cost method which
approximates market value. Under this method, securities are valued at cost and
the difference between the cost of each security and its value at maturity is
accrued into income on a straight-line basis over the days to maturity.

C -- Security transactions and investment income -- Security transactions are
recorded on the date the transactions are entered into (the trade date).
Dividend income is recorded on the ex-dividend date, and interest income is
recorded on the accrual basis as it is earned.

D -- Realized gains and losses -- Realized gains and losses on security
transactions are determined using the average cost method for the cost of
investments.

E -- Foreign currency -- The Trust does not separately record that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.

F -- Currency translation -- Substantially all of the Trust's income is earned,
and its expenses are largely paid, in New Taiwan Dollars ("NT$"). The cost and
market value of securities, currency holdings and other assets and liabilities
which are denominated in NT$ are reported in the accompanying financial
statements after translation into United States dollars based on the closing
market rate for United States dollars in Taiwan at the end of the year. At
December 31, 1995, this rate was approximately NT$27.265 to $1.00. Investment
income and expenses are translated at an average exchange rate for the year.
Currency translation gains or losses are reported as a separate component of
changes in net assets resulting from operations.

(Continued)
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The R.O.C. Taiwan Fund/December 31, 1995 (Expressed in US Dollars)
- --------------------------------------------------------------------------------
G -- Distributions to shareholders -- Income distributions and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These temporary book and
tax differences are primarily due to differing treatments for net capital losses
and deferral of wash sales.

H -- Taxes -- The Trust intends to continue to elect and to continue to qualify
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"). If the Trust complies with all of the applicable
requirements of the Code, it will not be subject to U.S. federal income taxes on
its investment company taxable income and capital gains that it distributes to
its shareholders, provided that, among other things, at least 90% of its
investment company taxable income for each taxable year is distributed. However,
under certain circumstances, the Trust may be subject to excise taxes unless it
meets distribution requirements as specified by the Code.

The Republic of China ("R.O.C.") levies a tax at the rate of 20% on cash
dividends and interest received by the Trust on investments in R.O.C.
securities. In addition, a 20% tax is levied based on the par value of certain
types of stock dividends received by the Trust.

Effective January 1, 1990, realized gains on securities transactions are not
subject to income tax in the R.O.C.; instead, a securities transaction tax of
0.3% of the market value of stocks sold or transferred, and 0.1% of the market
value of bonds and beneficial certificates sold or transferred is levied.
Proceeds from sales of investments are net of securities transaction tax paid of
approximately $659,000 for the year ended December 31, 1995.

I -- Use of estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.

NOTE 3 -- CASH

Cash includes demand deposits located primarily at State Street Bank and Trust
Company and Central Trust of China or other permitted financial institutions
with offices in the R.O.C. and a time deposit of $987,000 with a maturity date
of January 4, 1996. The interest rate on the time deposit was 3%.

NOTE 4 -- INVESTMENT MANAGEMENT

Pursuant to an investment contract (the "Investment Contract"), IIT (the
"Manager"), an R.O.C. corporation, is responsible, among other things, for
investing and managing the assets of the Trust and administering the Trust's
affairs. The Trust pays the Manager a monthly fee in NT$ at the annual rate of
1.45% of the net asset value ("NAV") up to NT$7 billion, 1.30% of such NAV in
excess of NT$7 billion up to NT$10 billion, 1.15% of such NAV in excess of NT$10
billion up to NT$13 billion, and 1.00% of such NAV in excess of NT$13 billion of
the total assets held in Taiwan under the Investment Contract.

NOTE 5 -- CUSTODIANS

Pursuant to the Investment Contract, the Central Trust of China ("CTC") serves
as custodian of the assets of the Trust held in the R.O.C. CTC is controlled by
the government of the R.O.C. The Trust pays the custodian a monthly fee in NT$
at the annual rate of 0.19% of the NAV up to NT$7 billion, 0.17% of such NAV in
excess of NT$7 billion up to NT$10 billion, 0.15% of such NAV in excess of NT$10
billion up to NT$13 billion, and 0.13% of such NAV in excess of NT$13 billion of
the total assets held in Taiwan under the Investment Contract, subject to a
minimum annual fee of NT$2.4 million (approximately $91,000). CTC owns
approximately 8% of the outstanding capital stock of IIT.

State Street Bank and Trust Company ("SSBTC") acts as custodian for the Trust's
assets held in the United States. The Trust pays SSBTC a monthly administrative
fee and a transaction fee for those transactions executed in the United States.

(Continued)

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The R.O.C. Taiwan Fund/December 31, 1995 (Expressed in US Dollars)
- --------------------------------------------------------------------------------

NOTE 6 -- ADMINISTRATOR

T. Rowe Price Services, Inc. (the "Administrator") acts as the administrator of
the Trust. The Trust pays the Administrator a monthly fee at annual rates of
0.1% of the Trust's average weekly NAV up to $250 million, 0.075% of such value
in excess of $250 million up to $500 million, and 0.05% of such value in excess
of $500 million, subject to a minimum annual fee of $200,000.

NOTE 7 -- TRUSTEE FEES

The Trust pays each trustee who is not an "interested person" of the Manager (as
defined by U.S. securities laws) an annual fee of $7,500, plus $750 for each
trusteesO meeting and committee meeting attended effective July 1, 1992. All
other trustees receive no separate compensation or reimbursement.

NOTE 8 -- INVESTMENTS IN SECURITIES

Purchases and proceeds from sales, excluding short-term investments, for the
year ended December 31, 1995, included approximately $278,000,000 for stock
purchases and approximately $219,000,000 for stock sales, respectively.

At December 31, 1995, the cost of investments, excluding short-term investments
and bonds, for U.S. federal income tax purposes was approximately $321,000,000.
At December 31, 1995, for U.S. federal income tax purposes, the aggregate gross
unrealized appreciation on these investments was approximately $12,000,000 and
the aggregate gross unrealized depreciation on these investments was
approximately $32,000,000 or a net unrealized depreciation of approximately
$20,000,000. See Note 9 for information concerning the Trust's tax loss
carryforward as of December 31, 1995.

NOTE 9 -- COMPONENTS OF NET ASSETS
<S> <C>
Par value of shares of beneficial interest $ 338,154
Additional paid-in capital 346,558,280
Undistributed net investment loss (691,789)
Accumulated realized loss on investments (57,810,626)
Unrealized depreciation on investments (9,402,204)
Cumulative translation adjustment 35,539,896
------------
Net Assets 314,531,711
============
</TABLE>

The accumulated realized loss on investments in the amount of $57,810,626 at
December 31, 1995 represents certain book and tax temporary differences which
mainly are a capital loss carryforward of approximately $36,000,000, deferred
capital losses due to wash sales of approximately $15,000,000 and deferred
capital losses incurred during November and December 1995 of approximately
$7,000,000.

The undistributed net investment loss in the amount of $(691,789) at December
31, 1995 represents certain book and tax temporary differences resulting from
the receipt by the Trust of common stock dividends on preferred securities owned
during the year. Such temporary difference will be eliminated when the Trust
disposes of the common stocks received.

In connection with the Trust's acquisition of the entire beneficial interest in
the Fund, the cost basis of the portfolio securities then held by the Fund was
reset, for U.S. federal income tax purposes, at their market prices on May 18,
1989 when, in general, such market prices exceeded the prices at which such
securities were acquired (See Note 1). Accordingly, since May 19, 1989, the
Trust's capital gains calculated for U.S. federal income tax purposes have been
lower (and its losses, so calculated, have been higher) than its gains
calculated for financial statement purposes. At December 31, 1995, the Trust
had a net capital loss carryforward for U.S. federal income tax purposes of
approximately $36,000,000, of which approximately $3,000,000 may be used to
reduce future taxable gains through 2000, approximately $22,000,000 may be used
to reduce future taxable gains through the year 2001 and approximately
$11,000,000 may be used to reduce future taxable gains through the year 2003.
It is the intention of the Trustees of the Trust not to make any distribution of
realized gains until the net capital loss carryforwards have been offset or
expired.

(Continued)

3
<PAGE>

The Trust's "Declaration of TrustO permits the Trustees to issue an unlimited
number of shares or additional classes of other securities. The shares have a
par value of $0.01, and no other classes of securities are outstanding at
present. At December 31, 1995, 33,815,376 shares were outstanding.

On November 10, 1995 the Trust completed the sale of 5,944,700 shares of
beneficial interest in a public offering. Proceeds to the Trust, before
deducting expenses of the offering of $435,433, amounted to $52,907,830.

NOTE 11 -- INVESTMENT RISKS

The Trust invests primarily in publicly traded equity and debt securities of
R.O.C. issuers, including the R.O.C. government. The Trust's investments in
these securities involve considerations not typically associated with investing
in securities of U.S. issuers including; price volatility of the R.O.C.
securities market, policies on foreign investments and on repatriation of
capital invested in the R.O.C., dependence of the R.O.C. on an export-oriented
economy, external and domestic political considerations, taxation and economic
developments. Since foreign securities are primarily denominated in N.T.
dollars, changes in the relationship of the N.T. dollar to the U.S. dollar may
significantly affect the value of the investments and earnings of the Trust.

- --------------------------------------------------------------------------------
The Fund and its predecessor, The Taiwan (R.O.C.) Fund, have been certified as
distributing funds by the Board of Inland Revenue of the United Kingdom for the
period from their inception to December 31, 1994. The Fund intends to apply for
such status for succeeding accounting periods.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Daniel Chiang has been the portfolio manager and a trustee of the Fund, as well
as its President and Chief Executive Officer, since April 1994. He is also the
Executive Vice President of International Investment Trust Co. (IIT), the Fund's
investment manager. Mr. Chiang has 11 years experience in the financial industry
and for the past eight years has worked at IIT, where he previously served as
Vice President in charge of the dealing department.
- --------------------------------------------------------------------------------

4
<PAGE>

Independent Auditors' Report
----------------------------

The Trustees and Shareholders of
The R.O.C. Taiwan Fund

We have audited the accompanying consolidated statement of assets and
liabilities of The R.O.C. Taiwan Fund, a Massachusetts business trust (the
"Trust"), including the consolidated schedule of investments, as of December 31,
1995, and the related consolidated statement of operations for the year then
ended, the consolidated statements of changes in net assets for each of the
years in the two-year period then ended, and the consolidated financial
highlights for each of the years in the five-year period then ended. These
consolidated financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial highlights
based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements. Our procedures
included the physical examination of short term investments owned as of December
31, 1995, and confirmation of securities owned as of December 31, 1995, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
R.O.C. Taiwan Fund as of December 31, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period ended December 31, 1995, in conformity with generally
accepted accounting principles in the United States of America.

Taipei, Taiwan
January 5, 1996
<PAGE>

THE R.O.C. TAIWAN FUND

Manager
International Investment Trust Company Limited
17th Floor
167 Fuhsing North Road
Taipei, Taiwan, Republic of China
Telephone: (02) 713-7702
Fax: 886-2-717-3077

Officers and Trustees
Theodore S. S. Cheng, Chairman and Trustee
Daniel Chiang, President and Chief Executive
Officer, Trustee, and Fund Manager
Raymund A. Kathe, Trustee and Audit Committee
Member
Pedro-Pablo Kuczynski, Trustee
David N. Laux, Trustee and Audit Committee
Member
Alfred F. Miossi, Trustee and Audit Committee
Member
Li-Yin Kung, Trustee and Audit Committee
Member
Gregory Kuo-Hua Wang, Trustee
James M. Wang, Chief Financial Officer,
Treasurer, and Secretary
Edwin C. Laurenson, Assistant Vice President
and Assistant Secretary
Marc E. Perlmutter, Assistant Vice President
and Assistant Secretary

Custodian:
Central Trust of China
49 Wuchang Street, Sec. 1
Taipei, Taiwan
Republic of China

Transfer Agent and U.S. Custodian,
Paying and Plan Agent:
State Street Bank and Trust Co.
P. O. Box 8200
Boston, Massachusetts 02266-8200
U.S.A.

U.S. Adminstrator:
Dewe Rogerson Inc.
850 Third Avenue
New York, NY 10022
U.S.A.
Telephone: (212) 688-6840

For information on the Fund, including the NAV, please call toll free
1-800-343-9567,

Annual Report
December 31, 1995