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CUSIP NO. 874036106 13D PAGE 1 of 12
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
The Taiwan Fund, Inc
-----------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
--------------------------------------
(Title of Class of Securities)
874036106
(CUSIP Number)
Barry M. Olliff
c/o City of London Investment Management Company Limited
10 Eastcheap, London EC3M ILX, England
+44 207 711 0771
----------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
August 14, 2003
---------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), (f) or (g), check the following box [_].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act.
(Continued on following pages)
(Page 1 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 2 of 12
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--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
City of London Investment Group PLC, a company incorporated under
the laws of England and Wales.
------------ -------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |_|
(B) |_|
------------ -------------------------------------------------------------------
3 SEC USE ONLY
------------ -------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
------------ -------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(D) OR 2(E)
|_|
------------ -------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
England and Wales
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7 SOLE VOTING POWER
NUMBER OF 1,156,500
SHARES ------ -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ------ -------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,156,500
WITH ------ -------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
------------ -------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,156,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
|_|
------------ -------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.07%
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14 TYPE OF REPORTING PERSON*
HC
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(Page 2 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 3 of 12
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--------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
City of London Investment Management Company Limited, a company
incorporated under the laws of England and Wales.
------------ -------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) |_|
(B) |_|
------------ -------------------------------------------------------------------
3 SEC USE ONLY
------------ -------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
------------ -------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E)
|_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
England and Wales
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 1,126,500
SHARES ------ -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ------ -------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,126,500
WITH ------ -------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
------------ -------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,126,500
------------ -------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
|_|
------------ -------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.88%
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14 TYPE OF REPORTING PERSON*
IA
============ ===================================================================
(Page 3 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 4 of 12
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ITEM 1. SECURITY AND ISSUER.
-------------------
This statement relates to the shares of common stock, par value $.01
per share (the "Shares"), of The Taiwan Fund, Inc. (the "Fund"). The
principal executive offices of the Fund are located at 225 Franklin
Street, Boston, Massachusetts 02110.
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
(a), (b) and (c). This statement is being filed by City of London
Investment Group PLC ("CLIG") and City of London Investment Management
Company Limited ("CLIM," and together with CLIG, the "Reporting
Persons").
The principal business of CLIG is serving as the parent holding
company for the City of London group of companies, including CLIM. The
business address and principal executive offices of CLIG are 10
Eastcheap, London EC3M ILX, England. The directors and executive
officers of CLIG, their business addresses and present principal
occupation or employment are set forth on Annex A attached to this
Schedule 13D.
CLIM is an emerging markets fund manager which specializes in
investing in closed-end investment companies and is a registered
investment adviser under Section 203 of the Investment Advisers Act of
1940. CLIM is controlled by CLIG. CLIM is principally engaged in the
business of providing investment advisory services to various public
and private investment funds, including The Emerging World Fund
("EWF"), a Dublin, Ireland-listed open-ended investment company,
Global Emerging Markets Country Fund ("GEM"), a private investment
fund organized as a Delaware business trust, Investable Emerging
Markets Country Fund ("IEM"), a private investment fund organized as a
Delaware business trust, MP Emerging Markets Country Fund ("MPEM"), a
private investment fund organized as a Delaware business trust, and
GFM (Institutional) Emerging Markets Country Fund ("GFM"), an
open-ended fund organized under the laws of the Province of Ontario.
The business address and principal executive offices of CLIM are 10
Eastcheap, London EC3M ILX, England. The directors and executive
officers of CLIM, their business addresses and present principal
occupation or employment are set forth on Annex A attached to this
Schedule 13D.
CLIG also controls City of London Quantitative Management Ltd.
("CLQM"), which acts as an investment adviser to Global Optimization
Fondo de Inversion Internacional ("Global"), a closed-end fund
organized under the laws of Chile. EWF, GEM, IEM, MPEM, GFM, and
Global are referred to herein as the "City of London Funds."
The Shares to which this Schedule 13D relates are owned directly by
the City of London Funds.
(d) and (e). During the last five years, none of the Reporting Persons
or, to the knowledge or belief of the Reporting Persons, none of the
natural persons identified in this Item 2, has
(Page 4 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 5 of 12
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been convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanours), or has been a party to any civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violations with respect to such laws.
(f). Each of the Reporting Persons is a company incorporated under the
laws of England and Wales. Each natural person identified in this Item
2 is a citizen of Great Britain.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
Beneficial ownership of the Shares to which this statement relates was
acquired by the Reporting Persons with invested capital of the City of
London Funds.
The aggregate purchase price of the 1,156,500 Shares beneficially
owned by the Reporting Persons was $9,735,019, inclusive of brokerage
commissions.
The aggregate purchase price of the 190,784 Shares beneficially owned
by EWF was $1,621,147, inclusive of brokerage commissions.
The aggregate purchase price of the 490,966 Shares beneficially owned
by GEM was $4,153,548, inclusive of brokerage commissions.
The aggregate purchase price of the 425,350 Shares beneficially owned
by IEM was $3,552,943, inclusive of brokerage commissions.
The aggregate purchase price of the 19,400 Shares beneficially owned
by GFM was $156,279, inclusive of brokerage commissions.
The aggregate purchase price of the 30,000 Shares beneficially owned
by Global was $251,100, inclusive of brokerage commissions.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
From time to time, the Reporting Persons have acquired beneficial
ownership of Shares in the ordinary course of business for investment
purposes and have held Shares in such capacity. The Reporting Persons,
collectively, are currently one of the Fund's largest stockholders.
The Reporting Persons believe the Board of Directors of the Fund has
failed to take meaningful actions to solve the persistent
under-performance problem of the Fund's net asset value ("NAV") with
respect to its benchmark, the Taiwan Weighted Stock Exchange Index
("TAIEX"). In addition, the Reporting Persons are concerned about the
Fund's investment manager's record of appointing portfolio managers
and its potential
(Page 5 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 6 of 12
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implications on the Fund and its performance.
NAV Performance
---------------
The Reporting Persons are concerned about the performance of the Fund
as compared to its benchmark index.
The portfolio review prepared by the Fund's investment manager, HSBC
Asset Management (Taiwan) Limited ("HSBC"), on June 2003 shows that
the performance of the Fund was very poor when compared to its
benchmark index. The report states that the annualized total return of
the Fund since inception in December 1986, assuming dividends and
capital gains were re-invested, was 5.90% compared to an annualized
total return for the Taiwan Weighted Stock Exchange Index (TAIEX) of
9.99%. These figures translate to a simple conclusion: the Fund has
provided only 60% of the Taiwanese equity market appreciation.
Since HSBC began managing the Fund in August 2001, the Fund has
under-performed its benchmark on a consistent basis as the following
table shows:
TWN NAV TAIEX Index % Under
% change % change Performance
-------- -------- -----------
Year to date 15.09% 19.33% -4.25%
1 year 3.41% 6.88% -3.47%
2 years 7.06% 19.50% -12.43%
Source: Bloomberg. Information as of August 1, 2003
The Fund's objective is to attain long-term capital appreciation by
investing in the Taiwan equity market and out-performing its benchmark
index. As such, it was meant to be a vehicle by which investors could
implement their asset strategy in Taiwan as part of their global
portfolio. History shows, however, that the Fund's objective has not
been met. Performance has lagged the benchmark by a significant
margin.
The Reporting Persons believe that the performance of the Fund is
unacceptable. We believe that the Board has clearly failed in one of
its principal tasks, which is to ensure that the investment manager
delivers a performance compared to the benchmark that serves the
shareholders' best interests. The Reporting Persons, as any other
shareholders, need to know that the Fund will perform consistently at
least as well as the benchmark index so as not to negate any country
asset allocation decision.
The Fund's poor performance also concerns the Reporting Persons
because they believe that the Fund, while intending to outperform its
benchmark, may make investment decisions which may considerably
increase the level of investment risk and may eventually increase the
probability of a greater market price discount to NAV and greater
losses to stockholders.
(Page 6 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 7 of 12
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Investment Manager's Record of Appointing Portfolio Managers
------------------------------------------------------------
The Reporting Persons are concerned about HSBC's record of appointing
portfolio managers.
After the departure of Mr. Albert King as portfolio manager of the
Fund and contemporaneous with the change in ownership of HSBC, from
and after 2001 HSBC seems to have embarked upon a risky, and certainly
not beneficial for the shareholders' best interests, process of
frequently replacing the Fund's portfolio managers.
In May 2002 the Fund announced that Ms. Li-Jeng Chen had resigned from
her position as the portfolio manager of the Fund in connection with
her decision to leave HSBC to pursue other interests. The Fund further
announced that Mr. Vincent Lai would succeed Ms. Chen as the Fund's
lead portfolio manager.
Approximately a year later, on July 24, 2003, the Fund announced that
Mr. Vincent Lai had also resigned from his position as the portfolio
manager of the Fund in connection with his decision to leave HSBC to
pursue other interests. The Fund further announced that Mr. Alan Huang
would be acting as the Fund's lead portfolio manager.
As stated above, the Reporting Persons believe that HSBC has not only
failed to deliver any meaningful value to shareholders through
investment performance but has also added an unacceptable degree of
risk by replacing portfolio managers in such a short period of time.
We believe that lack of consistency in producing returns and the
uncertainty regarding portfolio managers negatively affect shareholder
value and are not in the shareholders' best interests, given that not
only has the Fund's net asset value under-performed the benchmark
index but the Fund's discount to NAV has tended to increase.
Possible Actions
----------------
The Reporting Persons believe that management and the Board should now
openly and publicly commit to the stockholders to address the
substantial and persistent under-performance of the Fund as compared
to its benchmark index and to enhance stockholder value through
whatever means necessary, with no prejudice for or against any option
(e.g., open-ending (including by way of merger), liquidation,
conversion to interval status, conversion to an index-based
exchange-traded fund (or, if permissible, an actively managed ETF),
termination of the investment management agreement, etc.).
The Reporting Persons would consider supporting stockholder proposals
aimed at addressing, in a more meaningful manner, the Fund's discount
to NAV and enhancing stockholder value, as well as a Board that is
fully committed to openly serving the best interests of the Fund's
stockholders. Such proposals might include, but are not necessarily
limited to, an opposing slate of directors who would be committed to
addressing the discount and any of the actions described above or
other actions intended to terminate the
(Page 7 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 8 of 12
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Fund's investment advisory agreement with HSBC. The Reporting Persons
also may consider submitting nominees for election as directors or a
stockholder proposal for consideration at the next meeting of
stockholders of the Fund.
In addition to the foregoing, the Reporting Persons may consider the
feasibility and advisability of various alternative courses of action
with respect to their investments in the Fund, and the Reporting
Persons reserve the right, subject to applicable law, (i) to hold
their Shares as passive investors or as active investors (whether or
not as members of a "group" with other beneficial owners of Shares or
otherwise), (ii) to acquire beneficial ownership of additional Shares
in the open market, in privately negotiated transactions or otherwise,
(iii) to dispose of all or part of their holdings of Shares, (iv) to
take other actions which could involve one or more of the types of
transactions or have one or more of the results described in Item 4 of
this Schedule 13D, or (v) to change their intentions with respect to
any or all of the matters referred to in this Item 4. The Reporting
Persons' decisions and actions with respect to such possibilities will
depend upon a number of factors, including, but not limited to, the
actions of the Fund, market activity in the Shares, an evaluation of
the Fund and its prospects, general market and economic conditions,
conditions specifically affecting the Reporting Persons and other
factors which the Reporting Persons may deem relevant to their
investment decisions.
Except as set forth herein, no contract, arrangement, relationship or
understanding (either oral or written) exists among the Reporting
Persons as to the acquisition, disposition, voting or holding of
Shares. Except as set forth herein, no Reporting Person has any
present plan or proposal that would result in or relate to any of the
transactions required to be described in Item 4 of Schedule 13D.
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER.
-------------------------------------
(a) and (b). As of August 13, 2003, EWF, GEM, IEM, GFM and Global
owned directly 190,784, 490,966, 425,350, 19,400 and 30,000 Shares,
respectively, representing approximately 1.17%, 3.0%, 2.6%, 0.12% and
0.18%, respectively, of the 16.4 million Shares outstanding as of June
30, 2003, as reported in the Fund's Form 8-K filed with the Securities
and Exchange Commission on July 17, 2003.
As of August 13, 2003, CLIG, through its control of CLIM, had sole
voting and dispositive power with respect to all 1,156,500 Shares
owned directly by the City of London Funds, representing approximately
7.07% of the 16.4 million Shares outstanding as of June 30, 2003, as
reported in the Fund's Form 8-K filed with the Securities and Exchange
Commission on July 17, 2003.
As of August 13, 2003, CLIM, in its capacity as investment adviser to
the City of London Funds, had sole voting and dispositive power with
respect to all 1,126,500 Shares owned directly by the City of London
Funds, representing approximately 6.88% of the 16.4 million Shares
outstanding as of June 30, 2003, as reported in the Fund's Form 8-K
filed with the Securities and Exchange Commission on July 17, 2003.
(Page 8 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 9 of 12
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(c). Information with respect to all transactions in the Shares
beneficially owned by the Reporting Persons that were effected during
the past 60 days is set forth in Annex B to this Schedule 13D.
(d). None
(e). Not Applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
---------------------------------------------------------------------
TO SECURITIES OF THE ISSUER.
---------------------------
Except as set forth in Item 4 of this Schedule 13D, none of the
Reporting Persons has any contract, arrangement, understanding or
relationship (legal or otherwise) with any person with respect to any
securities of the Fund including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or
the voting of any securities of the Fund, joint ventures, loan or
option arrangements, puts or calls, guaranties of profits, division of
profits or losses, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
None
(Page 9 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 10 of 12
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: August 14, 2003
CITY OF LONDON INVESTMENT GROUP PLC
/ s / Barry M. Olliff
---------------------------------------
Name: Barry M. Olliff
Title: Director
CITY OF LONDON INVESTMENT
MANAGEMENT COMPANY LIMITED
/ s / Barry M. Olliff
---------------------------------------
Name: Barry M. Olliff
Title: Director
(Page 10 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 11 of 12
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ANNEX A
-------
DIRECTORS AND EXECUTIVE OFFICERS
The names of the directors and executive officers of CLIG and their business
addresses and present principal occupation or employment are set forth below. If
no business address is given, the business address of such director or executive
officer is c/o City of London Investment Group PLC, 10 Eastcheap, London EC3M
ILX, England.
Andrew Davison Chairman
Barry Olliff Chief Executive Officer
Douglas Allison Finance Director
Peter O'Sullivan Compliance Director
Omar Ashur Non-Executive Director
George Robb Non-Executive Director
The names of the directors and executive officers of CLIM and their business
addresses and present principal occupation or employment are set forth below. If
no business address is given, the business address of such director or executive
officer is c/o City of London Investment Management Limited, 10 Eastcheap,
London EC3M ILX, England.
Barry Olliff Chief Investment Officer
Douglas Allison Finance Director
Peter O'Sullivan Compliance Director
Clayton Gillece Director
Michael Russell Director
(Page 11 of 12 Pages)
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CUSIP NO. 874036106 13D PAGE 12 of 12
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ANNEX B
-------
INFORMATION WITH RESPECT TO TRANSACTIONS
IN THE FUND'S COMMON STOCK
DURING THE PAST SIXTY DAYS
Number of Shares City of London
of Common Stock Fund which Price Per Share
Date Purchased/(Sold)(1) Purchased/(Sold)(1) (US$)
_________ _______________ ______________ _____________
6/17/2003 (1,300) (GFM) 9.78
6/18/2003 (5,000) (GFM) 9.82
_____________________
(1) All purchases/sales were effected through open market or privately
negotiated transactions.
(Page 12 of 12 Pages)