fp0010888_nq.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number:  811-04893

THE TAIWAN FUND, INC.
(Exact name of registrant as specified in charter)

c/o STATE STREET BANK AND TRUST COMPANY
ONE LINCOLN STREET, P.O. BOX 5049
BOSTON, MA 02111-5049
 (Address of principal executive offices)(Zip code)

(Name and Address of Agent for Service)
 
Copy to:
 
The Taiwan Fund, Inc.
State Street Bank and Trust Company
Attention: Brian F. Link, Secretary
4 Copley Place,
5th Floor
Boston, MA 02116
Leonard B. Mackey, Jr., Esq.
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019


Registrant’s telephone number, including area code:  (877) 864-5056

Date of fiscal year end:  August 31

Date of reporting period:  May 31, 2014
 
 
 
 

ITEM 1.  SCHEDULE OF INVESTMENTS

THE TAIWAN FUND, INC.
Schedule of Investments/May 31, 2014 (Showing Percentage of Net Assets) (unaudited)
 
   
SHARES
    
US $
VALUE
(NOTE 2)
  
COMMON STOCKS – 94.6%
            
CONSTRUCTION — 5.1%
            
Building Material and Construction Industry — 5.1%
            
Acter Co., Ltd.
     522,000       1,819,179  
Goldsun Development & Construction Co., Ltd.
     5,141,980       1,809,138  
Good Friend International Holdings, Inc., TDR
     6,990,000       2,303,153  
King's Town Construction Co., Ltd. *
     3,759,764       3,122,113  
TOTAL CONSTRUCTION
             9,053,583  
                 
CONSUMER DISCRETIONARY — 8.6%
                
Auto Components — 1.5%
                
Cub Elecparts Inc.
     168,000       1,854,497  
Kenda Rubber Industrial Co., Ltd.
     333,000       764,049  
              2,618,546  
Building Material and Construction Industry — 0.6%
                
Sanitar Co., Ltd.
     864,000       991,199  
                 
Household Appliances — 1.2%
                
Basso Industry Corp.
     1,550,000       2,160,711  
                 
Leisure Time — 1.1%
                
Johnson Health Tech Co., Ltd.
     638,000       1,991,522  
                 
Textile Industry — 4.2%
                
Eclat Textile Co., Ltd.
     293,000       3,029,131  
Feng TAY Enterprise Co., Ltd.
     780,000       2,221,474  
Nan Liu Enterprise Co., Ltd.
     409,000       2,291,507  
              7,542,112  
TOTAL CONSUMER DISCRETIONARY
             15,304,090  
                 
ELECTRIC AND MACHINERY — 0.0%
                
Electric Machinery Industry — 0.0%
                
Depo Auto Parts Industrial Co., Ltd.
     1,000       4,402  
TOTAL ELECTRIC AND MACHINERY
             4,402  
                 
ELECTRONICS — 23.1%
                
Computer and Peripheral Equipment Industry — 3.1%
                
Advantech Co., Ltd.
     738,100       5,464,581  
                 
Electronic Parts/Components Industry — 1.4%
                
King Slide Works Co., Ltd.
     187,000       2,556,902  
                 
Electronic Products Distribution Industry — 4.2%
                
WT Microelectronics Co., Ltd.
     5,098,900       7,482,003  
                 
Optoelectronics Industry — 3.1%
                
Largan Precision Co., Ltd.
     86,000       5,621,384  
                 
Other Electronic Industry — 3.8%
                
Aurora Corp., Inc.
     3,569,000       6,891,501  
                 
Semiconductor Industry — 7.5%
                
MPI Corp.
     937,000       2,937,353  
Taiwan Semiconductor Manufacturing Co., Ltd.
     2,626,000       10,465,292  
              13,402,645  
TOTAL ELECTRONICS
             41,419,016  
                 
FINANCE — 8.5%
                
Financial and Insurance Industry — 8.5%
                
Cathay Financial Holding Co., Ltd.
     3,340,000       5,112,671  
CTBC Financial Holding Co., Ltd.
     8,500,000       5,414,284  
Fubon Financial Holding Co., Ltd.
     1,992,000       2,866,546  
Yuanta Financial Holding Co., Ltd.
     3,476,000       1,814,190  
TOTAL FINANCE
             15,207,691  
                 
HEALTHCARE — 6.4%
                
Biotechnology and Medical Care Industry — 3.9%
                
YungShin Global Holding Corp.
     3,129,000       7,074,959  
                 
Pharmaceuticals — 2.5%
                
Center Laboratories Inc. *
     600,000       1,878,908  
Formosa Laboratories Inc. *
     955,000       2,586,117  
              4,465,025  
TOTAL HEALTHCARE
             11,539,984  
                 
INDUSTRIALS — 5.5%
                
Construction — 1.4%
                
Kuo Toong International Co., Ltd.
     1,488,000       2,525,861  
                 
Machinery Industry — 4.1%
                
Airtac International Group
     160,000       1,739,507  
Hiwin Technologies Corp.
     373,000       3,831,319  
Nak Sealing Technologies Corp.
     378,000       1,790,065  
              7,360,891  
TOTAL INDUSTRIALS
             9,886,752  
                 
INFORMATION TECHNOLOGY — 25.6%
                
Electronic Parts/Components Industry — 4.3%
                
Hon Hai Precision Industry Co., Ltd.
     2,491,000       7,675,990  
                 
Semiconductor Industry — 17.5%
                
Actron Technology Corp.
     408,000       1,836,888  
Delta Electronics Inc.
     592,000       3,849,861  
Elite Advanced Laser Corp.
     1,084,000       4,898,434  
Epistar Corp. *
     1,204,000       2,730,386  
Hermes Microvision Inc.
     82,000       3,281,586  
King Yuan Electronics Co., Ltd.
     3,400,000       2,948,091  
MediaTek, Inc.
     162,000       2,631,072  
Novatek Microelectronics Corp. Ltd.
     1,275,000       6,526,905  
RichTek Technology Corp.
     450,000       2,596,255  
              31,299,478  
Software & Services Industry — 0.5%
                
Addcn Technology Co., Ltd.
     70,000       918,611  
                 
Technology Hardware — 3.3%
                
Catcher Technology Co., Ltd.
     398,000       3,557,186  
Micro-Star International Co., Ltd.
     1,546,000       2,299,498  
              5,856,684  
TOTAL INFORMATION TECHNOLOGY
             45,750,763  
                 
MATERIALS — 4.7%
                
Chemical Industry — 0.7%
                
Swancor Ind Co., Ltd.
     345,000       1,231,095  
                 
Construction — 0.0%
                
Taiwan Cement Corp.
     2,000       2,975  
 
The accompanying notes are an integral part of the financial statements.
 
 
 
 
 
SCHEDULE OF INVESTMENTS/ May 31, 2014 (unaudited) (continued)
 
   
SHARES
    
US $
VALUE
(NOTE 2)
  
MATERIALS —(continued)
                
Metals & Mining Industry — 1.5%
                
Yeong Guan Energy Technology Group Co., Ltd.
     565,000       2,713,311  
                 
Plastic Industry — 2.5%
                
Formosa Plastics Corp.
     1,720,000       4,399,593  
TOTAL MATERIALS
             8,346,974  
                 
TRANSPORTATION — 1.1%
                
Shipping and Transportation Industry — 1.1%
                
Taiwan High Speed Rail Corp. *
     12,597,600       1,961,975  
TOTAL TRANSPORTATION
             1,961,975  
                 
WHOLESALE AND RETAIL — 6.0%
                
Oil Gas and Electricity Industry General Industry — 1.1%
                
Formosa Petrochemical Corp.
     782,000       1,911,611  
                 
Trading and Consumers' Goods Industry — 4.9%
                
Mercuries & Associates, Ltd.
     9,912,429       6,297,436  
Test-Rite International Co., Ltd.
     3,576,260       2,588,079  
              8,885,515  
TOTAL WHOLESALE AND RETAIL
             10,797,126  
                 
TOTAL COMMON STOCKS (Cost — $153,154,364)
             169,272,356  
                 
TOTAL INVESTMENTS — 94.6% (Cost — $153,154,364)
             169,272,356  
                 
OTHER ASSETS AND LIABILITIES, NET—5.4%
             9,610,185  
                 
NET ASSETS—100.0%
             178,882,541  
 
Legend:
TDR – Taiwan Depositary Receipt
US $ – United States dollar
* Non-income producing

The accompanying notes are an integral part of the financial statements.
 
 
 
 
 
Notes to Schedule of Investments (unaudited)
May 31, 2014
 
1. Organization. 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 fund.
 
The Fund concentrates its investments in the securities listed on the Taiwan Stock Exchange. Because of this concentration, the Fund may be subject to additional certain risks not typically associated with investing in securities of U.S. companies or the U.S. government, including (1) volatility of the Taiwan securities market, (2) restrictions on repatriation of capital invested in Taiwan, (3) fluctuations in the rate of exchange between the New Taiwan (“NT”) Dollar and the U.S. Dollar, and (4) political and economic risks. In addition, Return of Capital (“ROC”) accounting, auditing, financial and other reporting standards are not equivalent to U.S. standards and, therefore, certain material disclosures may not be made, and less information may be available to investors investing in Taiwan than in the United States. There is also generally less regulation by governmental agencies and self-regulatory organizations with respect to the securities industry in Taiwan than there is in the United States.
 
2. Basis of Presentation. The preparation of the Schedule of Investments is in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and requires management to make estimates and assumptions that affect the reported amounts and disclosures in the Schedule of Investments during the reporting period. Management believes the estimates and security valuations are appropriate; however, actual results may differ from those estimates, and the security valuations reflected in the Schedule of Investments may differ from the value the Fund ultimately realizes upon the sale of the securities.
 
Security Valuation. All securities, including those traded over-the-counter, 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 were no sales 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). These securities are generally categorized as Level 1 securities in the fair value hierarchy. In certain instances where the price determined above may not represent fair market value, the value is determined in such manner as the Board of Directors (the “Board”) may prescribe. Foreign securities may be valued at fair value according to procedures approved by the Board if the closing price is not reflective of current market values due to trading or events occurring in the valuation time of the Fund. In addition, substantial changes in values in the U.S. markets subsequent to the close of a foreign market may also affect the values of securities traded in the foreign market. These securities may be categorized as Level 2 or Level 3 securities in the fair value hierarchy, depending on the valuation inputs. Short-term investments, having a maturity of 60 days or less are valued at amortized cost, which approximates market value, with accrued interest or discount earned included in interest receivable.
 
The Fund has adopted fair valuation accounting standards which establish a definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion in changes in valuation techniques and related inputs during the period. These inputs are summarized in the three broad levels listed below:
 
• Level 1 – quoted unadjusted prices for identical instruments in active markets to which the Fund has access at the date of measurement.
 
• Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.
 
• Level 3 – model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Fund’s own assumptions that market participants would use to price the asset or liability based on the best available information.
 
Investment in Securities
  
Level 1
    
Level 2
    
Level 3
    
Total
  
Common Stocks^
   $ 169,272,356     $ —     $ —     $ 169,272,356  
Total
   $ 169,272,356     $ —     $ —     $ 169,272,356  
 
^ See schedule of investments for industry breakout.
 
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
The Fund’s policy is to disclose transfers between Levels based on valuations at the end of the reporting period. As of May 31, 2014, there were no transfers between Levels 1, 2, or 3 based on the valuation input levels.
 
 
 
 
 
Notes to Schedule of Investments (unaudited) (continued)
May 31, 2014
 
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.
 
Security Transactions. Security transactions are accounted as of the trade date.
 
3.Tax Basis of Investments. Cost of investments for federal income tax purposes is substantially the same as for financial statement purposes. At May 31, 2014, the aggregate cost basis of the Fund’s investment securities for financial reporting purposes was $153,154,364. Net unrealized appreciation of the Fund’s investment securities was $16,117,992 of which $21,398,303 related to appreciated investment securities and $(5,280,311) related to depreciated investment securities.
 
4. Subsequent event. The Fund's Board of Directors has selected JF International Management Inc. (“JFIMI”) to serve as the Fund's new investment manager to replace the Fund's existing investment management arrangement with Allianz Global Investors U.S. LLC.  JFIMI is an indirect wholly-owned subsidiary of JPMorgan Chase & Co.  JFIMI commenced managing the Fund's portfolio under an interim investment management agreement on July 22, 2014 and, subject to approval by the Fund's stockholders, will enter into an investment management agreement with the Fund.
 
 
 
 

ITEM 2. CONTROLS AND PROCEDURES

(a)
The Registrant’s principal executive and principal financial officers have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this Form N-Q that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17 CFR 240.13a-15(b) or 240.15d-15(b)).

(b)
There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
 
ITEM 3. EXHIBITS
 
The certifications required by Rule 30a-2(a) of the 1940 Act (17 CFR 270.30a-2(a)), are attached as exhibits to this filing.
 
 
 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE TAIWAN FUND, INC.

By:
/s/ Simon Crinage
  
 
Simon Crinage
  
 
President of The Taiwan Fund, Inc.
  
     
Date:
July 30, 2014
  
 
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:
/s/ Simon Crinage
  
 
Simon Crinage
  
 
President of The Taiwan Fund, Inc.
  
     
Date:
July 30, 2014
  
     
By:
/s/ William C. Cox
  
 
William C. Cox
  
 
Treasurer of The Taiwan Fund, Inc.
  
     
Date:
July 30, 2014