Edgar Filing: CHUNGHWA TELECOM CO LTD

Currency

Maturity Period

Contract Amount

(In Thousands)

June 30, 2010

Currency swap contracts

US$45,000/NT$1,426,395

Form 6-K

1934 Act Registration No. 1-31731

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

Dated August 26, 2011

Chunghwa Telecom Co., Ltd.

(Translation of Registrant’s Name into English)

21-3 Hsinyi Road Sec. 1,

Taipei, Taiwan, 100 R.O.C.

(Address of Principal Executive Office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of form 20-F or Form 40-F.)

Form 20-F x Form 40-F ¨

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes ¨ No x

(If “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant Chunghwa Telecom Co., Ltd. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: 2011/08/26


Chunghwa Telecom Co., Ltd.

By:		/s/ Shu Yeh
Name:		Shu Yeh
Title:		Senior Vice President CFO

Exhibit


Exhibit		Description

1		Press Release to Report Operating Results for the first half of 2011

2		Financial Statements for the Six Months Ended June 30, 2011 and 2010 and Independent Accountants’ Review Report (Stand Alone)

3		Consolidated Financial Statements for the Six Months Ended June 30, 2011 and 2010 and Independent Accountants’ Review Report

4		GAAP Reconciliations of Consolidated Financial Statements for the Six Months Ended June 30, 2010 and 2011

Exhibit 1

LOGO

Chunghwa Telecom Reports Consolidated Operating Results

for the Second Quarter and First Half of 2011

Taipei, Taiwan, R.O.C. August 26, 2011 - Chunghwa Telecom Co., Ltd. (TAIEX: 2412, NYSE: CHT) (“Chunghwa” or “the Company”) today reported its operating results for the second quarter and first half of 2011. All figures were prepared in accordance with generally accepted accounting principles of the Republic of China (“ROC GAAP”) on a consolidated basis.

(Comparisons, unless otherwise stated, are to the prior year period)

Second Quarter 2011 Financial Highlights

Total consolidated revenue increased by 9.6% to NT$54.42 billion

Mobile communications revenue increased by 1.1% to NT$22.35 billion; mobile value-added services (VAS) revenue increased by 42% to NT$3.77 billion

Internet revenue increased by 3.4% to NT$6.25 billion; internet VAS revenue increased by 13.9% to NT$0.67 billion

Domestic fixed communications revenue increased by 14.1% to NT$19.78 billion

International fixed communications revenue increased by 3.9% to NT$3.86 billion

Total operating costs and expenses increased by 12.3% to NT$39.01 billion

Net income totaled NT$13.30 billion, representing a 2.8% increase

Basic earnings per share (EPS) increased by 27.6% to NT$1.71

First Half 2011 Financial Highlights

Total consolidated revenue increased by 7.7% to NT$106.9 billion

Mobile communications revenue increased by 1.9% to NT$45.20 billion; mobile VAS revenue increased by 40.4% to NT$7.29 billion

Internet revenue increased by 3.5% to NT$12.33 billion; internet VAS revenue increased by 15.4% to NT$1.24 billion

Domestic fixed communications revenue increased by 12.9% to NT$39.0 billion

International fixed communications revenue decreased by 0.4% to NT$7.65 billion

Total operating costs and expenses increased by 11.6% to NT$77.54 billion

Net income totaled NT$25.13 billion, representing a 0.6% increase

Basic EPS increased by 24.4% to NT$3.21

Dr. Shyue-Ching Lu, Chairman and Chief Executive Officer of Chunghwa Telecom, said, “I’m pleased to report that continued business expansion enabled us to achieve revenues of NT$54.4 billion during the second quarter 2011. Higher fixed line revenue resulting from the shift in pricing right of a fixed to mobile call from mobile to fixed network operators continued to be a key growth driver, as did mobile VAS and handset sales.

“Our desire to build on this top-line growth and leverage our reputation for innovative offerings and premium customer service led to the launch of our “Digital Rainforest” initiative during the second quarter. This initiative builds on the significant traction we have already gained from our inroads into the digital business ecosystem, and represents a cohesive strategy for integrating and reinvigorating our activities within this space. Key elements of “Digital Rainforest” include a cloud computing initiative called hicloud PaaS, a cutting edge broadband service, integrated service platforms, and domestic and international collaboration on reducing carbon emissions to promote sustainability. We are also implementing our new channel strategy by transforming our service centers to convey our new image as we embrace the cloud computing era. I am confident that this “Digital Rainforest” initiative will provide additional momentum to our growth going forward.”

Revenue

Chunghwa’s total consolidated revenue for the second quarter of 2011 increased by 9.6% year-over-year to NT$54.42 billion, of which 41.1% was from the mobile business, 11.5% was from the internet business, 36.3% was from the domestic fixed business, 7.1% was from the international fixed business, and the remainder was from others. Despite the National Communications Commission (“NCC”) tariff reduction that came into effect on April 1, 2010, Chunghwa succeeded in maintaining its growth momentum, due mainly to an increase in fixed line revenue resulting from the shift in the pricing right of a fixed-to-mobile call from the mobile operator to fixed network operator, as well as mobile VAS and handset sales. In addition, construction revenue from the Company’s property development subsidiary also contributed to Chunghwa’s revenue growth.

Total revenue for the mobile business amounted to NT$22.35 billion for the second quarter 2011, representing a year-on-year increase of 1.1%, mainly due to growth in mobile VAS revenue and handset sales relating to smartphone promotions, which offset the decline in mobile voice revenue. The decline in mobile voice revenue resulted primarily from the shift in pricing right for fixed to mobile calls from mobile to fixed operators.

Chunghwa’s internet business revenue increased by 3.4% year-over-year to NT$6.25 billion in the second quarter of 2011, mainly attributable to growth in the number of broadband subscribers and the migration of Asymmetric Digital Subscriber Line (“ADSL”) subscribers to fiber solutions.

For the second quarter of 2011, domestic fixed revenue totaled NT$19.78 billion, representing an increase of 14.1% year-over-year. Local revenues increased by 33.6% year-over-year, mainly due to the shift in pricing right for fixed to mobile calls. The 13.9% decline in Domestic Long Distance (“DLD”) revenues was due to mobile and Voice over Internet Protocol (“VOIP”) substitution, as well as reflecting the mandated tariff reduction.

Broadband access revenue, including ADSL and Fiber to the x (“FTTx”), increased by 3% year-over-year to NT$5.14 billion. Although ADSL access revenue decreased as more ADSL subscribers migrated to fiber solutions and because of the mandated tariff reduction, the decrease was fully offset by growth in FTTx access revenue.

International fixed line revenue increased by 3.9% to NT$3.86 billion, primarily due to growth in international long distance service and international leased line revenue.

Other revenue grew by 369.3%, primarily due to the increase in construction revenue from our property development subsidiary.

For the first half of 2011, total revenue was NT$106.9 billion, a 7.7% increase compared to the same period last year. Of this total, 36.5% was contributed by the domestic fixed business, 42.3% was from the mobile business, 11.5% was from the Internet business, the international fixed business accounted for 7.2%, and the remainder was from others.

Costs and Expenses

Total operating costs and expenses for the second quarter of 2011 amounted to NT$39.0 billion, an increase of 12.3% compared to the same period of 2010. This increase was mainly due to the increase in interconnection costs and transition fees resulting from the shift in pricing right of fixed-to-mobile calls, as well as higher costs of handsets sold.

Total operating costs and expenses for the first half of 2011 increased by 11.6% year-over-year to NT$77.54 billion, due mainly to the same reasons as for the second quarter.

Income Tax

Income tax expense for the second quarter of 2011 was NT$2.32 billion, representing a 19.7% increase, compared to NT$1.94 billion for the same period of 2010. The decrease is because in June 2010, the government reduced the income tax rate from 20% to 17% and the reduction of income tax expense for the first half 2010 was fully reflected in June 2010.

EBITDA and Net Income

EBITDA for the second quarter of 2011 remained flat, at NT$23.42 billion. Income from operations increased by 3.4% to NT$15.41 billion, reflecting the higher revenue.

The EBITDA margin for the second quarter of 2011 was 43.02% compared to 47.33% in the same period of 2010, and the operating margin was 28.3%, compared to 30.0% in the previous year. Net income increased by 2.8% year-over-year to NT$13.30 billion. Earnings per share increased by 27.6% year-over-year to NT$1.71, primarily due to the higher net income and the capital reduction in January 2011, which reduced the total number of outstanding shares by 20%.

Capital Expenditure (“Capex”)

Total capex for the second quarter of 2011 amounted to NT$5.54 billion, a 7.6% year-over-year increase. Of the NT$5.54 billion capex figure, 59.6% was used for the domestic fixed communications business, 21.2% was for the mobile business, 9.3% was for the internet business, 6.8% was for the international fixed communications business, and the remainder was for other uses.

Cash Flow

Cash flow from operating activities for the second quarter of 2011 decreased by 5.6% year-over-year to NT$16.28 billion, mainly due to higher performance-based bonus payout relating to increased net income for year 2010.

Business and Operational Highlights

Broadband/HiNet

•

As of June 30, FTTx subscribers had reached 2.2 million, accounting for 49.7% of total broadband users. This year, the Company is continuing to execute on its strategy to encourage FTTx migration. On June 22, the Company further reduced its broadband service tariffs, especially for speeds of 20Mbps and 50Mbps to stimulate the momentum of migration and subscription. The initiative has been very well received.

•

HiNet broadband subscribers totaled 3.63 million at the end of June 2011, a year-over-year rise of 2.2%.

Mobile

•

As of June 30, 2011, Chunghwa had 9.86 million mobile subscribers, an increase of 4.4% compared to 9.45 million at the end of June 2010.

•

As of June 30, 2011, the Company had 1.15 million mobile internet subscribers, demonstrating strong growth momentum compared to 809 thousand subscribers as of December 2010. As a result, the Company has set a new year-end mobile internet subscriber target of1.4 million.

•

Mobile VAS revenue for the second quarter of 2011 rose 42% year-over-year to NT$3.77 billion, with mobile Internet revenue increasing 87.2% year-over-year, making it the largest contributor to VAS revenue.

Domestic/International Fixed-line

•

As of the end of June 2011, the Company maintained its leading fixed-line market position, with fixed-line subscribers totaling 12.27 million.

•

As of August 26, 2011, Chunghwa’s Multimedia-on-demand (MOD) subscriber number has reached over 930 thousand and continues to rise, suggesting that the enriched content is meeting customer needs.

Financial Statements

Financial statements and additional operational data can be found on the Company’s website at www.cht.com.tw/ir/filedownload.

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. These statements constitute “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Statements that are not historical facts, including statements about Chunghwa’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, but not limited to the risks outlined in Chunghwa’s filings with the U.S. Securities and Exchange Commission on Forms F-1, F-3, 6-K and 20-F, in each case as amended. The forward-looking statements in this press release reflect the current belief of Chunghwa as of the date of this press release and Chunghwa undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date, except as required under applicable law.

This press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

SPECIAL NOTE REGARDING NON-GAAP FINANCIAL MEASURES

A body of generally accepted accounting principles is commonly referred to as “GAAP”. A non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable U.S. GAAP measure. We disclose in this report certain non-GAAP financial measures, including EBITDA. EBITDA for any period is defined as consolidated net income (loss) excluding (i) depreciation and amortization, (ii) total net comprehensive financing cost (which is comprised of net interest expense, exchange gain or loss, monetary position gain or loss and other financing costs and derivative transactions), (iii) other expenses, net, (iv) income tax, (v) cumulative effect of change in accounting principle, net of tax and (vi) (income) loss from discontinued operations.

In managing our business we rely on EBITDA as a means of assessing our operating performance. We believe that EBITDA can be useful to facilitate comparisons of operating performance between periods and with other companies because it excludes the effect of (i) depreciation and amortization, which represents a non-cash charge to earnings, (ii) certain financing costs, which are significantly affected by external factors, including interest rates, foreign currency exchange rates and inflation rates, which have little or no bearing on our operating performance, (iii) income tax (iv) other expenses or income not related to the operation of the business.

EBITDA is not a measure of financial performance under U.S. GAAP or ROC GAAP. EBITDA should not be considered as an alternate measure of net income or operating income, as determined on a consolidated basis using amounts derived from statements of operations prepared in accordance with U.S. GAAP or ROC GAAP, as an indicator of operating performance or as cash flows from operating activity or as a measure of liquidity. EBITDA has material limitations that impair its value as a measure of a company’s overall profitability since it does not address certain ongoing costs of our business that could significantly affect profitability such as financial expenses and income taxes, depreciation, pension plan reserves or capital expenditures and associated charges. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data, the non-GAAP results should be reviewed together with the GAAP results and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

About Chunghwa Telecom

Chunghwa Telecom (TAIEX 2412, NYSE: CHT) is Taiwan’s leading telecom service provider. The Company provides fixed-line, mobile and Internet and data services to residential and business customers in Taiwan.


		Contact:		Fu-fu Shen
		Phone:		+886 2 2344 5488
		Email:		chtir@cht.com.tw

Exhibit 2

INDEPENDENT AUDITORS’ REPORT

To The Board of Directors and Stockholders of

Chunghwa Telecom Co., Ltd.

We have audited the accompanying balance sheets of Chunghwa Telecom Co., Ltd. as of June 30, 2011 and 2010, and the related statements of income, changes in stockholders’ equity and cash flows for the six months ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Viettel-CHT Co., Ltd. and Senao Networks Inc., an equity method investee of SENAO, as of and for the six months ended June 30, 2011, and Taiwan International Standard Electronics Co., Ltd., Viettel-CHT Co., Ltd. and Senao Networks Inc., an equity method investee of SENAO, as of and for the six months ended June 30, 2010. The aggregate carrying values of these equity method investees were NT$329,744 thousand and NT$864,047 thousand, respectively, as of June 30, 2011 and 2010 and the equity in earnings were NT$21,237 thousand and NT$100,723 thousand, respectively, for the six months ended June 30, 2011 and 2010, respectively. The financial statements of Viettel-CHT Co., Ltd. and Senao Networks, Inc. as of and for the six months ended June 30, 2011, and the financial statements of Taiwan International Standard Electronics Co., Ltd., Viettel-CHT Co., Ltd. and Senao Networks, Inc. as of and for the six months ended June 30, 2010, were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for these equity method investees, is based solely on the reports of the other auditors.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards required that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the financial reports of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of the Company as of June 30, 2011 and 2010, and the results of their operations and cash flows for the six months then ended in conformity with the Securities and Exchange Act, the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business Accounting Law and Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the Republic of China.

- 1 -

We have also audited the consolidated financial statements of the Company and its subsidiaries as of and for the six months ended June 30, 2011 and 2010, and have expressed a modified unqualified opinion on those consolidated financial statements.

/S/ DELOITTE & TOUCHE

Deloitte & Touche

Taipei, Taiwan

The Republic of China

August 5, 2011

Notice to Readers

The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

- 2 -

CHUNGHWA TELECOM CO., LTD.

BALANCE SHEETS

JUNE 30, 2011 AND 2010

(Amounts in Thousands of New Taiwan Dollars, Except Par Value Data)


	2011				2010
	Amount		%		Amount		%
ASSETS

CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)	$	75,486,490		17	$	87,041,371		20
Financial assets at fair value through profit or loss (Notes 2 and 5)		8,615		—		—		—
Available-for-sale financial assets (Notes 2 and 6)		1,884,513		—		5,599,108		1
Held-to-maturity financial assets (Notes 2 and 7)		2,174,334		1		1,190,089		—
Trade notes and accounts receivable, net of allowance for doubtful accounts of $2,472,880 thousand in 2011 and $2,688,665 thousand in 2010 (Notes 2 and 8)		20,062,171		5		11,191,243		3
Receivables from related parties (Note 23)		830,939		—		305,995		—
Other monetary assets (Note 9)		2,571,859		1		2,653,656		1
Inventories, net (Notes 2 and 10)		1,231,929		—		866,496		—
Deferred income tax assets (Notes 2 and 20)		113,148		—		35,636		—
Other current assets (Note 11)		6,190,665		1		5,915,568		1


Total current assets		110,554,663		25		114,799,162		26


LONG-TERM INVESTMENTS
Investments accounted for using equity method (Notes 2 and 12)		11,042,799		2		10,209,904		2
Financial assets carried at cost (Notes 2 and 13)		2,315,474		1		2,294,648		1
Held-to-maturity financial assets (Notes 2 and 7)		11,278,945		3		6,948,228		2
Other monetary assets (Notes 14 and 24)		1,000,000		—		1,000,000		—


Total long-term investments		25,637,218		6		20,452,780		5


PROPERTY, PLANT AND EQUIPMENT (Notes 2, 15 and 23)
Cost
Land		101,259,801		23		101,292,062		23
Land improvements		1,551,502		—		1,538,691		—
Buildings		65,853,017		15		65,695,722		15
Computer equipment		14,523,179		3		15,408,439		3
Telecommunications equipment		645,404,022		145		655,365,545		146
Transportation equipment		2,657,185		1		1,972,585		—
Miscellaneous equipment		6,397,336		1		6,985,801		2

Total cost		837,646,042		188		848,258,845		189
Revaluation increment on land		5,762,611		1		5,800,909		1

		843,408,653		189		854,059,754		190
Less: Accumulated depreciation		560,161,398		126		562,610,473		125

		283,247,255		63		291,449,281		65
Construction in progress and advances related to acquisition of equipment		12,549,124		3		10,991,199		2


Property, plant and equipment, net		295,796,379		66		302,440,480		67


INTANGIBLE ASSETS (Note 2)
3G concession		5,614,566		1		6,363,175		1
Others		456,271		—		347,278		—


Total intangible assets		6,070,837		1		6,710,453		1


OTHER ASSETS
Idle assets (Note 2)		878,896		—		878,896		—
Refundable deposits		1,556,985		1		1,389,649		—
Deferred income tax assets (Notes 2 and 20)		403,171		—		342,824		—
Others (Note 23)		4,466,516		1		3,310,929		1


Total other assets		7,305,568		2		5,922,298		1


TOTAL	$	445,364,665		100	$	450,325,173		100

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CHUNGHWA TELECOM CO., LTD.

BALANCE SHEETS

JUNE 30, 2011 AND 2010

(Amounts in Thousands of New Taiwan Dollars, Except Par Value Data)


	2011					2010
	Amount			%		Amount			%
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Financial liabilities at fair value through profit or loss (Notes 2 and 5)	$	974			—	$	23,656			—
Trade notes and accounts payable		8,050,983			2		5,724,762			1
Payables to related parties (Note 23)		1,864,578			—		1,536,006			—
Income tax payable (Notes 2 and 20)		4,527,973			1		4,672,688			1
Accrued expenses (Note 16)		11,340,929			3		11,169,742			2
Dividends payable (Note 18)		42,854,462			10		39,369,041			9
Other current liabilities (Note 17)		19,260,776			4		15,802,629			4


Total current liabilities		87,900,675			20		78,298,524			17


DEFERRED INCOME		2,577,550			—		2,542,574			1


RESERVE FOR LAND VALUE INCREMENTAL TAX (Note 15)		94,986			—		94,986			—


OTHER LIABILITIES
Accrued pension liabilities (Notes 2 and 22)		1,375,031			1		1,240,197			—
Customers’ deposits (Note 23)		5,406,693			1		5,886,625			1
Deferred credit - profit on intercompany transactions (Note 23)		966,585			—		1,485,916			1
Others		269,133			—		396,359			—


Total other liabilities		8,017,442			2		9,009,097			2


Total liabilities		98,590,653			22		89,945,181			20


STOCKHOLDERS’ EQUITY (Notes 2, 6, 15 and 18)
Common stock - $10 par value;
Authorized: 12,000,000 thousand shares
Issued: 7,757,447 thousand shares in 2011 and 9,696,808 thousand shares in 2010		77,574,465			18		96,968,082			21

Additional paid-in capital
Capital surplus		169,496,289			38		169,496,289			38
Donated capital		13,170			—		13,170			—
Equity in additional paid-in capital reported by equity-method investees		26,891			—		6,742			—

Total additional paid-in capital		169,536,350			38		169,516,201			38

Retained earnings
Legal reserve		66,122,145			15		61,361,255			14
Special reserve		2,675,894			—		2,675,894			1
Unappropriated earnings		25,131,631			6		24,998,325			5

Total retained earnings		93,929,670			21		89,035,474			20

Other adjustments
Cumulative translation adjustments		(104,093	)		—		12,059			—
Unrecognized net loss of pension		(40,617	)		—		(44,105	)		—
Unrealized gain (loss) on financial instruments		115,408			—		(911,165	)		—
Unrealized revaluation increment		5,762,829			1		5,803,446			1

Total other adjustments		5,733,527			1		4,860,235			1


Total stockholders’ equity		346,774,012			78		360,379,992			80


TOTAL	$	445,364,665			100	$	450,325,173			100

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche audit report dated August 5, 2011)

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CHUNGHWA TELECOM CO., LTD.

STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Amounts in Thousands of New Taiwan Dollars, Except Earnings Per Share Data)


	2011				2010
	Amount		%		Amount		%

NET REVENUES (Note 23)	$	95,529,120		100	$	91,772,655		100

OPERATING COSTS (Note 23)		51,867,203		54		47,499,697		52


GROSS PROFIT		43,661,917		46		44,272,958		48


OPERATING EXPENSES (Note 23)
Marketing		12,722,536		13		11,965,629		13
General and administrative		1,759,467		2		1,679,541		2
Research and development		1,645,455		2		1,541,309		2


Total operating expenses		16,127,458		17		15,186,479		17


INCOME FROM OPERATIONS		27,534,459		29		29,086,479		31


NON-OPERATING INCOME AND GAINS
Equity in earnings of equity method investees, net		1,026,964		1		356,261		1
Gain on disposal of property plant and equipment, net		781,352		1		—		—
Interest income		310,895		—		189,850		—
Gain on disposal of financial instruments, net		38,441		—		—		—
Foreign exchange gain, net		—		—		144,459		—
Others		91,094		—		133,167		—


Total non-operating income and gains		2,248,746		2		823,737		1


NON-OPERATING EXPENSES AND LOSSES
Foreign exchange loss, net		95,358		—		—		—
Valuation loss on financial instruments, net		26,637		—		34,787		—
Interest expense		60		—		75,472		—
Loss on disposal of financial instruments, net		—		—		18,211		—
Loss on disposal of property, plant and equipment, net		—		—		13,139		—
Others		8,913		—		14,400		—


Total non-operating expenses and losses		130,968		—		156,009		—


INCOME BEFORE INCOME TAX		29,652,237		31		29,754,207		32

INCOME TAX EXPENSES (Notes 2 and 20)		4,521,061		5		4,762,789		5


NET INCOME	$	25,131,176		26	$	24,991,418		27

(Continued)

- 5 -

CHUNGHWA TELECOM CO., LTD.

STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Amounts in Thousands of New Taiwan Dollars, Except Earnings Per Share Data)


	2011				2010
	Income Before Income Tax		Net Income		Income Before Income Tax		Net Income

EARNINGS PER SHARE (Note 21)
Basic earnings per share	$	3.79	$	3.21	$	3.07	$	2.58

Diluted earnings per share	$	3.78	$	3.20	$	3.06	$	2.57

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche audit report dated August 5, 2011)

(Concluded)

- 6 -

CHUNGHWA TELECOM CO., LTD.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Amounts in Thousands of New Taiwan Dollars, Except Dividend Per Share Data)


														Other Adjustments
																				Unrealized Gain (Loss) on Financial Instruments
	Common Stock						Retained Earnings							Cumulative Translation Adjustments			Unrecognized Net Loss of Pension						Unrealized Revaluation Increment			Total Stockholders’ Equity
	Shares (Thousands)		Amount		Additional Paid-in Capital		Legal Reserve		Special Reserve		Unappropriated Earnings			Cumulative Translation Adjustments			Unrecognized Net Loss of Pension						Unrealized Revaluation Increment			Total Stockholders’ Equity
BALANCE, JANUARY 1, 2011		7,757,447	$	77,574,465	$	169,515,102	$	61,361,255	$	2,675,894	$	47,615,807		$	(102,885	)	$	(40,182	)	$	176,048		$	5,803,238		$	364,578,742
Adjustment of additional paid-in capital from revaluation of land to income upon disposal		—		—		—		—		—		—			—			—			—			(40,409	)		(40,409	)
Appropriation of 2010 earnings
Legal reserve		—		—		—		4,760,890		—		(4,760,890	)		—			—			—			—			—
Cash dividends - NT$5.52 per share		—		—		—		—		—		(42,854,462	)		—			—			—			—			(42,854,462	)
Net income for the six months ended June 30, 2011		—		—		—		—		—		25,131,176			—			—			—			—			25,131,176
Unrealized loss on financial instruments held by investees		—		—		—		—		—		—			—			—			(75,046	)		—			(75,046	)
Equity adjustments in investees		—		—		21,248		—		—		—			—			—			—			—			21,248
Cumulative translation adjustment for foreign-currency investments held by investees		—		—		—		—		—		—			(1,208	)		—			—			—			(1,208	)
Defined benefit pension plan adjustments of investees		—		—		—		—		—		—			—			(435	)		—			—			(435	)
Unrealized gain on financial instruments		—		—		—		—		—		—			—			—			14,406			—			14,406

BALANCE, JUNE 30, 2011		7,757,447	$	77,574,465	$	169,536,350	$	66,122,145	$	2,675,894	$	25,131,631		$	(104,093	)	$	(40,617	)	$	115,408		$	5,762,829		$	346,774,012

BALANCE, JANUARY 1, 2010		9,696,808	$	96,968,082	$	169,509,763	$	56,987,241	$	2,675,894	$	43,749,962		$	7,626		$	(43,750	)	$	(447,129	)	$	5,803,446		$	375,211,135
Appropriation of 2009 earnings
Legal reserve		—		—		—		4,374,014		—		(4,374,014	)		—			—			—			—			—
Cash dividends - NT$4.06 per share		—		—		—		—		—		(39,369,041	)		—			—			—			—			(39,369,041	)
Net income for the six months ended June 30, 2010		—		—		—		—		—		24,991,418			—			—			—			—			24,991,418
Unrealized loss on financial instruments held by investees		—		—		—		—		—		—			—			—			(45,861	)		—			(45,861	)
Equity adjustments in investees		—		—		6,438		—		—		—			—			—			—			—			6,438
Cumulative translation adjustment for foreign-currency investments held by investees		—		—		—		—		—		—			4,433			—			—			—			4,433
Defined benefit pension plan adjustments of investees		—		—		—		—		—		—			—			(355	)		—			—			(355	)
Unrealized loss on financial instruments		—		—		—		—		—		—			—			—			(418,175	)		—			(418,175	)

BALANCE, JUNE 30, 2010		9,696,808	$	96,968,082	$	169,516,201	$	61,361,255	$	2,675,894	$	24,998,325		$	12,059		$	(44,105	)	$	(911,165	)	$	5,803,446		$	360,379,992

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche audit report dated August 5, 2011)

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CHUNGHWA TELECOM CO., LTD.

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Amounts in Thousands of New Taiwan Dollars)


	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	25,131,176		$	24,991,418
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts		77,156			188,941
Depreciation and amortization		15,875,963			17,081,292
Valuation loss on financial instruments, net		26,637			34,787
Amortization of premium of financial assets		28,100			18,075
Loss (gain) on disposal of financial instruments, net		(38,441	)		18,211
Loss (gain) on disposal of property, plant and equipment, net		(781,352	)		13,139
Equity in earnings of equity method investees, net		(1,026,964	)		(356,261	)
Dividends received from equity investees		534,662			281,516
Deferred income taxes		(64,431	)		80,663
Changes in operating assets and liabilities:
Financial instruments held for trading		41,460			19,943
Trade notes and accounts receivable		(7,185,263	)		(307,209	)
Receivables from related parties		(364,517	)		77,223
Other current monetary assets		(483,026	)		(889,357	)
Inventories		(111,906	)		320,026
Other current assets		(2,244,716	)		(2,568,245	)
Trade notes and accounts payable		(1,160,166	)		(2,052,643	)
Payables to related parties		(467,353	)		(300,670	)
Income tax payable		116,432			514,702
Accrued expenses		(5,921,226	)		(5,330,318	)
Other current liabilities		1,922,579			645,279
Deferred income		(11,360	)		58,810
Accrued pension liabilities		92,009			32,240


Net cash provided by operating activities		23,985,453			32,571,562


CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets		(3,105,675	)		(1,765,364	)
Proceeds from disposal of available-for-sale financial assets		2,263,889			12,389,853
Acquisition of held-to-maturity financial assets		(3,697,604	)		(3,714,635	)
Proceeds from disposal of held-to-maturity financial assets		587,923			587,500
Acquisition of financial assets carried at cost		(10,120	)		(68,600	)
Acquisition of investments accounted for using equity method		(356,063	)		—
Return of capital on investments accounted for by the equity method		815,827			—
Acquisition of property, plant and equipment		(9,769,858	)		(9,247,910	)
Proceeds from disposal of property, plant and equipment		647,987			13,609
Increase in intangible assets		(132,540	)		(47,561	)
Increase in other assets		(686,096	)		(2,514,433	)


Net cash used in investing activities		(13,442,330	)		(4,367,541	)

(Continued)

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CHUNGHWA TELECOM CO., LTD.

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Amounts in Thousands of New Taiwan Dollars)


	2011			2010

CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in customers’ deposits	$	(365,866	)	$	(30,466	)
Increase in other liabilities		2,325			171,245
Capital reduction		(19,393,617	)		(9,696,808	)


Net cash used in financing activities		(19,757,158	)		(9,556,029	)


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(9,214,035	)		18,647,992

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		84,700,525			68,393,379


CASH AND CASH EQUIVALENTS, END OF PERIOD	$	75,486,490		$	87,041,371


SUPPLEMENTAL INFORMATION
Interest paid	$	60		$	14

Income tax paid	$	4,469,060		$	4,167,424


NON-CASH FINANCING ACTIVITIES
Dividends payable	$	42,854,462		$	39,369,041


CASH AND NON-CASH INVESTING ACTIVITIES
Increase in property, plant and equipment	$	10,899,799		$	8,409,882
Payables to suppliers		(1,129,941	)		838,028

	$	9,769,858		$	9,247,910

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche audit report dated August 5, 2011)

(Concluded)

- 9 -

CHUNGHWA TELECOM CO., LTD.

NOTES TO FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1.	GENERAL

Chunghwa Telecom Co., Ltd. (“Chunghwa”) was incorporated on July 1, 1996 in the Republic of China (“ROC”) pursuant to the Article 30 of the Telecommunications Act. Chunghwa is a company limited by shares and, prior to August 2000, was wholly owned by the Ministry of Transportation and Communications (“MOTC”). Prior to July 1, 1996, the current operations of Chunghwa were carried out under the Directorate General of Telecommunications (“DGT”). The DGT was established by the MOTC in June 1943 to take primary responsibility in the development of telecommunications infrastructure and to formulate policies related to telecommunications. On July 1, 1996, the telecom operations of the DGT were spun-off to as Chunghwa which continues to carry out the business and the DGT continues to be the industry regulator.

As the dominate telecommunications service provider of fixed-line and Global System for Mobile Communications (GSM) in the ROC, Chunghwa is subject to additional regulations imposed by ROC.

Effective August 12, 2005, the MOTC had completed the process of privatizing Chunghwa by reducing the government ownership to below 50% in various stages. In July 2000, Chunghwa received approval from the Securities and Futures Commission (the “SFC”) for a domestic initial public offering and its common shares were listed and traded on the Taiwan Stock Exchange (the “TSE”) on October 27, 2000. Certain of Chunghwa’s common shares had been sold, in connection with the foregoing privatization plan, in domestic public offerings at various dates from August 2000 to July 2003. Certain of Chunghwa’s common shares had also been sold in an international offering of securities in the form of American Depository Shares (“ADS”) on July 17, 2003 and were listed and traded on the New York Stock Exchange (the “NYSE”). The MOTC sold common shares of Chunghwa by auction in the ROC on August 9, 2005 and completed the second international offering on August 10, 2005. Upon completion of the share transfers associated with these offerings on August 12, 2005, the MOTC owned less than 50% of the outstanding shares of Chunghwa and completed the privatization plan.

As of June 30, 2011 and 2010, the Company had 24,505 and 24,277 employees, respectively.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements were prepared in conformity with the Securities and Exchange Act, the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business Accounting Law, Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the ROC (“ROC GAAP”). The significant accounting policies are summarized as follows:

Foreign-currency Transactions

Foreign-currency transactions other than derivative contracts are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign-currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in earnings. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at prevailing exchange rates with the resulting gains or losses recognized in earnings.

- 10 -

At the balance sheet date, foreign-currency nonmonetary assets (such as equity instruments) and liabilities that are measured at fair value are revalued using prevailing exchange rates. When a gain or loss on a nonmonetary item is recognized in stockholders’ equity, any exchange component of that gain or loss shall be recognized in stockholders’ equity. Conversely, when a gain or loss on a non-monetary item is recognized in earnings, any exchange component of that gain or loss shall be recognized in earnings.

Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at exchange rates at trade dates.

The financial statements of foreign equity investees and consolidated subsidiaries are translated into New Taiwan dollars at the following exchange rates. Assets and liabilities - spot rates at year-end; stockholders’ equity - historical rates, income and expenses - average rates during the year.

The resulting translation adjustments of financial statements shall be recorded as cumulative translation adjustments, a separate component of stockholders’ equity.

Accounting Estimates

Under above guidelines, law and principles, certain estimates and assumptions have been used for the allowance for doubtful accounts, allowance for loss on inventories, depreciation of property, plant and equipment, impairment of assets, bonuses to employees, directors and supervisors, pension cost, income tax, etc. Actual results may differ from these estimates.

Classification of Current and Noncurrent Assets and Liabilities

Current assets include cash and cash equivalents, and those assets held primarily for trading purposes or to be realized, sold or consumed within one year from the balance sheet date. All other assets are classified as noncurrent. Current liabilities are obligations incurred for trading purposes or to be settled within one year from the balance sheet date. All other liabilities are classified as noncurrent.

Cash Equivalents

Cash equivalents are commercial paper and treasury bills purchased with maturities of three months or less from the date of acquisition. The carrying amount approximates fair value.

Financial Assets and Liabilities at Fair Value Through Profit or Loss

Financial instruments classified as financial assets or financial liabilities at fair value through profit or loss (“FVTPL”) include financial assets or financial liabilities held for trading and are designated as at FVTPL on initial recognition. The Company recognizes a financial asset or a financial liability when the Company becomes a party to the contractual provisions of the financial instrument. A financial asset is derecognized when the Company losses control of its contractual rights over the financial asset. A financial liability is derecognized when the obligation specified in the relevant contract is discharged, cancelled or expired.

Financial instruments at FVTPL are initially measured at fair value. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized as expenses as incurred. Financial assets or financial liabilities at FVTPL are remeasured at fair value, subsequently with changes in fair value recognized in earnings. Cash dividends received subsequently (including those received in the period of investment) are recognized as income. On derecognition of a financial asset or a financial liability, the difference between its carrying amount and the sum of the consideration received and receivable or consideration paid and payable is recognized in earnings. A regular way purchases or sales of financial assets are accounted for using trade date accounting.

- 11 -

Derivatives that do not meet the criteria for hedge accounting are classified as financial assets or financial liabilities held for trading. When the fair value is positive, the derivative is recognized as a financial asset; when the fair value is negative, the derivative is recognized as a financial liability.

Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows: Swap contracts are estimated by valuation techniques.

Available-for-sale Financial Assets

Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Changes in fair value from subsequent remeasurement are reported as a separate component of stockholders’ equity. The corresponding accumulated gains or losses are recognized in earnings when the financial asset is derecognized from the balance sheet. A regular way purchase or sale of financial assets is accounted for using trade date accounting.

The recognition and derecognition of available-for-sale financial assets are the same with those of financial assets at FVTPL.

Fair values are determined as follows: Listed stocks - at closing prices at the balance sheet date; open-end mutual funds - at net asset values at the balance sheet date; bonds - quoted at prices provided by the Taiwan GreTai Securities Market; and financial assets and financial liabilities without quoted prices in an active market - at values determined using valuation techniques.

Cash dividends are recognized in earnings on the ex-dividend date, except for the dividends declared before acquisition are treated as a reduction of investment cost. Stock dividends are recorded as an increase in the number of shares and do not affect investment income. The total number of shares subsequent to the increase of stock dividends is used for recalculate cost per share.

An impairment loss is recognized when there is objective evidence that the financial asset is impaired. If, in a subsequent period, the amount of the impairment loss decreases, for equity securities, the previously recognized impairment loss is reversed to the extent to the decrease and recorded as an adjustment to stockholders’ equity; for debt securities, the amount of the decrease is recognized in earnings, provided that the decrease is clearly attributable to an event which occurred after the impairment loss was recognized.

Held-to-maturity Financial Assets

Held-to-maturity financial assets are carried at amortized cost using the effective interest method. Those financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Gains and losses are recognized at the time of derecognition, impairment or amortization. A regular way purchase or sale of financial assets is accounted for using trade date accounting.

If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases and the decrease is clearly attributable to an event which occurred after the impairment loss was recognized, the previously recognized impairment loss is reversed to the extent of the decrease. The reversal may not result in a carrying amount that exceeds the amortized cost that would have been determined as if no impairment loss had been recognized.

Financial Assets Carried at Cost

Investments in equity instruments with no quoted prices in an active market and with fair values that cannot be reliably measured, such as non-publicly traded stocks and stocks traded in the Emerging Stock Market, are measured at their original cost. The accounting treatment for dividends on financial assets carried at cost is the same with that for dividends on available-for-sale financial assets. An impairment loss is recognized when there is objective evidence that the asset is impaired. A reversal of this impairment loss is disallowed.

- 12 -

Impairment of Accounts Receivable

An allowance for doubtful accounts is provided on the basis of a review of the collectibility of accounts receivable before January 1, 2011. The Company assesses the probability of collections of accounts receivable by examining the aging analysis of the outstanding receivables and assessing the value of the collateral provided by customers.

On January 1, 2011, the Company adopted the third-time revised Statement of Financial Accounting Standards (SFAS) No. 34, “Financial Instruments: Recognition and Measurement.” One of the main revisions is that the impairment of receivables originated by the Company should be covered by SFAS No. 34. Accounts receivable are assessed for impairment at the end of each reporting period and considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the accounts receivable, the estimated future cash flows of the asset have been affected.

The amount of the impairment loss recognized is the difference between the asset carrying amount and the present value of estimated future cash flows, after taking into account the related collateral and guarantees, discounted at the receivable’s original effective interest rate.

The carrying amount of the accounts receivable is reduced through the use of an allowance account.

Inventories

Inventories including merchandise and work-in-process are stated at the lower of cost (weighted-average cost) or net realizable value item by item, except for those that may be appropriate to group items of similar or related inventories. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. The calculation of the cost of inventory is derived using the weighted average method.

Investments Accounted for Using Equity Method

Investments in companies in which the Company exercises significant influence over the operating and financial policy decisions are accounted for by the equity method. Under the equity method, the investment is initially stated at cost and subsequently adjusted for its proportionate share in the net earnings of the investee companies. Any cash dividends received are recognized as a reduction in the carrying value of the investments.

Gains or losses on sales from the Company to equity method investees wherein the Company exercises significant influence over these equity investees are deferred in proportion to the Company’s ownership percentage in the investees until such gains or losses are realized through transactions with third parties. Gains or losses on sales from equity method investees to Chunghwa are deferred in proportion to the Chunghwa’s ownership percentages in the investees until they are realized through transactions with third parties.

When the Company subscribes for additional investees shares at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment in the investee differs from the amount of the Company share of the investee’s equity. The Company records such a difference as an adjustment to long-term investments with the corresponding amount charged or credited to additional paid-in capital to the extent available, with the balance charged to retained earnings.

Property, Plant and Equipment

Property, plant and equipment are stated at cost plus a revaluation increment, if any, less accumulated depreciation and accumulated impairment loss. The interest costs that are directly attributable to the acquisition, construction of a qualifying asset are capitalized as property, plant and equipment. Major renewals and betterments are capitalized, while maintenance and repairs are expensed as incurred.

- 13 -

When an indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of depreciation, as if no impairment loss had been recognized.

An impairment loss on a revalued asset is charged to “unrealized revaluation increment” under equity to the extent available, with the balance is recognized as a loss in earnings. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment loss could be reversed and recognized as a gain, with the remaining credited to “unrealized revaluation increment”.

Depreciation expense is computed using the straight-line method over the following estimated service lives: land improvements - 10 to 30 years; buildings - 10 to 60 years; computer equipment - 2 to 10 years; telecommunications equipment - 6 to 15 years; transportation equipment - 5 to 10 years; and miscellaneous equipment - 3 to 12 years.

Upon sale or disposal of property, plant and equipment, the related cost, accumulated depreciation, accumulated impairment losses and any unrealized revaluation increment are deducted from the corresponding accounts, and any gain or loss is recorded as non-operating gains or losses in the period of sale or disposal.

Intangible Assets

Intangible assets mainly include 3G Concession, computer software and patents.

The 3G Concession is valid through December 31, 2018. The 3G Concession is amortized on a straight-line basis from the date operations commence through the date the license expires. Computer software costs and patents are amortized using the straight-line method over the estimated useful lives of 2-20 years.

Expenditure on research shall be expensed as incurred. Development Costs are capitalized when those costs meet relative criteria and are amortized using the straight-line method over estimated useful lives. Development costs do not meet relative criteria shall be expensed as incurred.

When an indication of impairment is identified for intangible assets, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, as if no impairment loss had been recognized.

Idle Assets

Idle assets are carried at the lower of recoverable amount or carrying amount.

Pension Costs

For defined benefit pension plans, net periodic pension benefit cost is recorded in the statement of income and includes service cost, interest cost, expected return on plan assets, amortization of prior service costs, amortization of pension gains (losses) and curtailment or settlement gains (losses).

- 14 -

The Company recognizes into income, any unrecognized actuarial net gains or losses that exceed 10% of the larger of projected benefit obligations or plan assets, defined as the “corridor”. Amounts inside this 10% corridor are amortized over the average remaining service life of active plan participants. Actuarial net gains and losses occur when actual experience differs from any of the many assumptions used to value the plans. Differences between the expected and actual returns on plan assets and changes in interest rate, which affect the discount rate used to value projected plan obligations, can have a significant impact on the calculation of pension net gains and losses from year to year.

The curtailments and settlement gains (losses) resulted from Chunghwa’s early retirement programs. Curtailment/settlement gains or losses are equal to the changes of underfunded status plus a pro rata portion of the unrecognized prior service cost, unrecognized net gains (losses), and unrecognized transition obligations/assets, before the settlement/curtailment event multiplied by the percentage reduction in projected benefit obligation.

The projected benefit obligation represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels.

The carrying amount of accrued pension liability should be the sum of the following amounts when the calculation is positive: (a) projected benefit obligation as of balance sheet date, (b) minus (plus) unamortized actuarial loss (gain), (c) minus unamortized prior service cost, and (d) minus the fair value of plan assets. If the amount determined by above calculation is negative, it is viewed as prepaid pension cost. The prepaid pension cost is measured at the lower of: (a) the amount determined above, and (b) the sum of the following amounts: (i) unamortized actuarial loss, (ii) unamortized prior service cost, and (iii) the present value of refunds from the plan or reductions in future contributions to the plan.

The measurement of benefit obligations and net periodic cost (income) is based on estimates and assumptions approved by the Company’s management such as compensation, age and seniority, as well as certain assumptions, including estimates of discount rates, expected return on plan assets and rate of compensation increases.

For employees under defined contribution pension plans, pension costs are recorded based on the actual contributions made to employees’ individual pension accounts during their service periods.

Income Tax

The Company applies inter-period allocations for its income tax, whereby deferred income tax assets and liabilities are recognized for the tax effects of temporary differences and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled.

Any tax credits arising from, research and development are recognized using the flow-through method.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

Income taxes (10%) on undistributed earnings is recorded in the year of stockholders approval which is the year subsequent to the year the earnings are generated.

- 15 -

Revenue Recognition

Revenues are recognized when they are realized or realizable and earned. Revenues are realized or realizable and earned when the Company has persuasive evidence of an arrangement, the goods have been delivered or the services have been rendered to the customer, the sales price is fixed or determinable and collectibility is reasonably assured.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts agreed between the Company and the customers for goods sold in the normal course of business, net of sales discounts and volume rebates. For trade receivables due within one year from the balance sheet date, as the nominal value of the consideration to be received approximates its fair value and transactions are frequent, fair value of the consideration is not determined by discounting all future receipts using an imputed rate of interest.

Usage revenues from fixed-line services (including local, domestic long distance and international long distance), cellular services, internet and data services, and interconnection and call transfer fees from other telecommunications companies and carriers are billed in arrears and are recognized based upon minutes of traffic processed when the services are provided in accordance with contract terms.

Other revenues are recognized as follows: (a) one-time subscriber connection fees (on fixed-line services) are deferred and recognized over the average expected customer service periods, (b) monthly fees (on fixed-line services, wireless and Internet and data services) are accrued every month, and (c) prepaid services (fixed-line, cellular and Internet) are recognized as income based upon actual usage by customers or when the right to use those services expires.

Where the Company enters into transactions which involve both the provision of air time bundled with products such as 3G data card and handset, total consideration received from handsets in these arrangements are allocated and measured using units of accounting within the arrangement based on relative fair values limited to the amount that is not contingent upon the delivery of other items or services.

Where the Company sells products to third party cellular phone stores the Company records the direct sale of the products, typically handsets, as gross revenue when the Company is the primary obligor in the arrangement and when title is passed and the products are accepted by the stores.

Expense Recognition

The costs of providing services are recognized as incurred. The cost includes incentives to third party dealers for inducing business which are payable when the end user enters into an airtime contract.

3.	EFFECT OF CHANGES IN ACCOUNTING PRINCIPLE

The Company adopted the newly-revised Statements of Financial Accounting Standards No. 34, “Financial Instruments,” (“SFAS No. 34”) beginning from January 1, 2011. When an enterprise adopts the revised provisions, the initial recognition of loans and receivables shall be accounted for under SFAS No. 34. There is no effect on the net income and after-tax basic earnings per share for the six months ended June 30, 2011.

- 16 -

4.	CASH AND CASH EQUIVALENTS


	June 30
	2011		2010

Cash
Cash on hand	$	69,632	$	84,234
Bank deposits		2,832,687		3,787,544
Negotiable certificate of deposit, annual yield rate - ranging from 0.63%-0.84% and 0.37%-0.45% for 2011 and 2010, respectively		65,750,000		69,600,000

		68,652,319		73,471,778

Cash equivalents
Commercial paper, annual yield rate - ranging from 0.56%-0.57% and 0.25%-0.28% for 2011 and 2010, respectively		5,495,439		9,987,330
Treasury bills, annual yield rate - ranging from 0.56% and 0.25%-0.28% for 2011 and 2010, respectively		1,338,732		3,582,263

		6,834,171		13,569,593


	$	75,486,490	$	87,041,371

As of June 30, 2011 and 2010, foreign deposits in bank were as follows:


	June 30
	2011		2010

United States of America - New York (US$668 thousand and US$1,188 thousand for 2011 and 2010, respectively)	$	19,199	$	38,374

5.	FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS


	June 30
	2011		2010

Derivatives - financial assets
Currency swap contracts	$	8,615	$	—


Derivatives - financial liabilities
Currency swap contracts	$	974	$	23,656

Chunghwa entered into currency swap contracts to reduce its exposure to foreign currency risk and variability in operating results due to fluctuations in exchange rates and stock prices. However, these derivatives do not meet the criteria for hedge accounting and were classified as financial assets or financial liabilities held for trading.

Outstanding currency swap contracts as of June 30, 2011 and 2010 were as follows:


	Currency	Maturity Period	Contract Amount (In Thousands)

June 30, 2011

Currency swap contracts	US$/NT$	2011.07, 09	US$52,000/NT$1,505,348
	US$/NT$	2011.08	US$10,000/NT$286,899

(Continued)

- 17 -

(Concluded)

Net gain (loss) arising from financial assets and liabilities at fair value through profit or loss for the six months ended June 30, 2011 and 2010 were $14,823 thousand (including realized settlement gain of $41,460 thousand and valuation loss of $26,637 thousand) and $(10,390) thousand (including realized settlement gain of $19,943 thousand and valuation loss of $30,333 thousand), respectively.

6.	AVAILABLE-FOR-SALE FINANCIAL ASSETS


	June 30
	2011		2010

Open-end mutual funds	$	1,884,513	$	5,525,810
Domestic listed stocks		—		73,298


	$	1,884,513	$	5,599,108

Movements of unrealized gain (loss) on available-for-sale financial assets were as follows:


	Six Months Ended June 30
	2011			2010

Balance, beginning of period	$	(20,542	)	$	(466,803	)
Recognized in stockholders’ equity		12,228			(456,329	)
Transferred to profit or loss		2,178			38,154


Balance, end of period	$	(6,136	)	$	(884,978	)

7.	HELD-TO-MATURITY FINANCIAL ASSETS


	June 30
	2011		2010

Corporate bonds, nominal interest rate ranging from 1.20%-2.95% and 0.77%-4.75% for 2011 and 2010, respectively; effective interest rate ranging from 1.00%-2.95% and 0.50%-2.95% for 2011 and 2010, respectively	$	12,346,982	$	7,639,850
Bank debentures, nominal interest rate ranging from 1.37%-2.11% and 1.87%-2.11% for 2011 and 2010, respectively; effective interest rate ranging from 1.25%-2.45% and 1.14%-2.90% for 2011 and 2010, respectively		1,106,297		498,467

		13,453,279		8,138,317
Less: Current portion		2,174,334		1,190,089


	$	11,278,945	$	6,948,228

- 18 -

8.	ALLOWANCE FOR DOUBTFUL ACCOUNTS


	Six Months Ended June 30
	2011			2010

Balance, beginning of period	$	2,528,044		$	2,774,868
Provision for doubtful accounts		71,275			181,291
Accounts receivable written off		(126,439	)		(267,494	)


Balance, end of period	$	2,472,880		$	2,688,665

9.	OTHER CURRENT MONETARY ASSETS


	June 30
	2011		2010

Dividend receivable	$	491,495	$	260,996
Accrued custodial receipts from other carriers		8,575		498,910
Other		2,071,789		1,893,750


	$	2,571,859	$	2,653,656

10.

INVENTORIES, NET


	June 30
	2011		2010

Merchandise	$	386,966	$	501,738
Work in process		844,963		364,758


	$	1,231,929	$	866,496

The operating costs related to inventories were $5,418,571 thousand (including the valuation loss on inventories of $232,613 thousand) and $4,130,733 thousand (including the valuation loss on inventories of $56,294 thousand) for the six months ended June 30, 2011 and 2010, respectively.

11.

OTHER CURRENT ASSETS


	June 30
	2011		2010

Spare parts	$	2,556,054	$	2,264,197
Prepaid expenses		2,537,791		2,499,809
Prepaid rents		796,355		909,320
Miscellaneous		300,465		242,242


	$	6,190,665	$	5,915,568

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12.

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD


	June 30
	2011				2010
	Carrying Amount		% of Ownership		Carrying Amount		% of Ownership
Listed
Senao International Co., Ltd. (“SENAO”)	$	1,330,533		28	$	1,263,026		28

Non-listed
Light Era Development Co., Ltd. (“LED”)		3,522,010		100		2,891,613		100
Chunghwa Investment Co., Ltd. (“CHI”)		1,914,178		89		1,653,215		89
Chunghwa System Integration Co., Ltd. (“CHSI”)		694,042		100		707,252		100
Chunghwa Telecom Singapore Pte., Ltd. (“CHTS”)		615,496		100		1,426,836		100
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		548,719		40		508,841		40
CHIEF Telecom Inc. (“CHIEF”)		523,632		69		486,227		69
Donghwa Telecom Co., Ltd. (“DHT”)		502,560		100		239,338		100
International Integrated System, Inc. (IISI)		251,264		33		251,982		49
Viettel-CHT Co., Ltd. (“Viettel-CHT”)		245,265		30		273,140		30
Chunghwa International Yellow Pages Co., Ltd. (“CIYP”)		179,849		100		176,704		100
Prime Asia Investments Group Ltd. (B.V.I.) (“Prime Asia”)		164,699		100		—		100
Dian Zuan Integrating Marketing Co., Ltd. (“DZIM”)		112,079		40		—		—
Skysoft Co., Ltd. (“SKYSOFT”)		97,455		30		87,234		30
Spring House Entertainment Tech. Inc. (“SHE”)		91,142		56		64,866		56
Chunghwa Telecom Global, Inc. (“CHTG”)		72,129		100		75,974		100
KingWaytek Technology Co., Ltd. (“KWT”)		66,243		33		64,834		33
Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”)		41,161		100		—		—
So-net Entertainment Taiwan Co., Ltd. (“So-net”)		31,532		30		26,155		30
Chunghwa Telecom Japan Co., Ltd. (“CHTJ”)		18,411		100		12,667		100
New Prospect Investments Holdings Ltd. (B.V.I.) (“New Prospect”)		—		100		—		100

		9,691,866				8,946,878

Long term prepaid investment
Chunghwa Sochamp Technology Inc. (“CHST”)		20,400		—		—		—


	$	11,042,799			$	10,209,904

Chunghwa Telcom Singapore Pte., Ltd. reduced its capital by $815,827 thousand in March 2011. The reduction amount was received by Chunghwa on March 17, 2011.

Chunghwa increased its investment in Donghwa Telecom Co., Ltd. (“DHT”) for $320,740 thousand in August 2010. DHT engages mainly in international telecommunications, IP fictitious internet and internet transfer services.

- 20 -

InfoExplorer Co., Ltd. (“IFE”) issued new shares as the consideration to merge with International Integrated System Inc. and e-ToYou International, Inc. on April 1, 2011. After the merger, IFE became the surviving entity and was renamed as International Integrated System, Inc. (IISI). International Integrated System, Inc. and e-ToYou International, Inc. were dissolved. As a result of the additional shares being issued by IFE in connection with this transaction, Chunghwa’s ownership interest in IISI decreased from 49% to 33% after the merger, and following the stockholders’ meeting of IISI on June 24, 2011, Chunghwa lost control of the board of directors. Due to this loss of control, IISI was deconsolidated and going forward the investment is accounted for as an equity method investment.

Chunghwa increased its investment in Prime Asia Investments Group Ltd. (B.V.I.) (“Prime Asia”) by $177,176 thousand in March 2011. Prime Asia is operating as an investment company.

Chunghwa, President Chain Store Corporation and EasyCard Corporation established a joint venture, DZIM, in May 2011. Chunghwa invested $114,640 thousand cash and held 40% ownership of DZIM. DZIM engages mainly in information technology service and general advertisement service.

Chunghwa has established Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”) in May 2011. by investing $43,847 thousand cash. CHTV engages mainly in providing information and communications technology, international circuit, and intelligent energy network service.

Chunghwa has established New Prospect Investments Holdings Ltd. (B.V.I.) (“New Prospect”) in March 2006, but not on operation stage yet. The holding company is operating as investment company and Chunghwa has 100% ownership right in an amount of US$1 in the holding company.

Chunghwa has prepaid $20,400 thousand cash to invest in Chunghwa Sochamp Technology Inc. (“CHST”) in June 2011. The ownership of CHST is 51%. CHST has completed the registration procedure on July 1, 2011. CHST mainly engages in license plate recognition system.

Market value of the listed investment accounted for using equity method calculated at its closing prices as of June 30, 2011 and 2010 was $9,258,737 thousand and $3,703,495 thousand, respectively.

The details of equity in earnings and losses of equity method investees were as follows:


	Six Months Ended June 30
	2011		2010

Light Era Development Co., Ltd. (“LED”)	$	550,536	$	(35,064	)
Senao International Co., Ltd. (“SENAO”)		185,867		175,160
Others		290,561		216,165


	$	1,026,964	$	356,261

The equity in earnings and losses for the six months ended June 30, 2011 and 2010 were based on the audited financial statements.

All accounts of Chunghwa’s subsidiaries were included in Chunghwa’s consolidated financial statements.

- 21 -

13.

FINANCIAL ASSETS CARRIED AT COST


	June 30
	2011				2010
	Carrying Amount		% of Ownership		Carrying Amount		% of Ownership

Non-listed
Taipei Financial Center Corp. (“TFC”)	$	1,789,530		12	$	1,789,530		12
Industrial Bank of Taiwan II Venture Capital Co., Ltd. (“IBT II”)		200,000		17		200,000		17
Global Mobile Corp. (“GMC”)		127,018		8		127,018		11
iD Branding Ventures (“iDBV”)		75,000		8		75,000		8
Innovation Works Development Fund, L.P. (“IWDF”)		38,035		6		38,035		13
RPTI Intergroup International Ltd.(“RPTI”)		34,500		10		34,500		10
Innovation Works Limited (“IW”)		31,391		2		10,565		2
CQi Energy Infocom Inc. (“CQi”)		20,000		18		20,000		18
Essence Technology Solution, Inc. (“ETS”)		—		7		—		9


	$	2,315,474			$	2,294,648

Chunghwa invested in IWDF for $38,035 thousand in June 2010. IWDF invests mainly in start-up companies of E-commerce, mobile internet and cloud computing, etc.

Chunghwa invested in IW for $10,565 thousand, $10,706 thousand and $10,120 thousand in June 2010, July 2010 and January 2011, respectively. IW invests mainly in start-up companies and mentors such companies in the E-commerce, mobile internet and cloud computing fields, etc.

Chunghwa invested in CQi for $20,000 thousand in June 2010. CQi engages mainly in intelligent energy network management services.

The above investments that do not have a quoted market price in an active market and whose fair values cannot be reliably measured are carried at original cost.

14.

OTHER MONETARY ASSETS - NONCURRENT


	June 30
	2011		2010

Piping Fund	$	1,000,000	$	1,000,000

As part of the government’s effort to upgrade the existing telecommunications infrastructure, Chunghwa and other public utility companies were required by the ROC government to contribute a total of $1,000,000 thousand to a Piping Fund administered by the Taipei City Government. This fund were used to finance various telecommunications infrastructure projects.

- 22 -

15.

PROPERTY, PLANT AND EQUIPMENT


	June 30
	2011		2010
Cost
Land	$	101,259,801	$	101,292,062
Land improvements		1,551,502		1,538,691
Buildings		65,853,017		65,695,722
Computer equipment		14,523,179		15,408,439
Telecommunications equipment		645,404,022		655,365,545
Transportation equipment		2,657,185		1,972,585
Miscellaneous equipment		6,397,336		6,985,801

Total cost		837,646,042		848,258,845
Revaluation increment on land		5,762,611		5,800,909

		843,408,653		854,059,754

Accumulated depreciation
Land improvements		1,023,327		978,932
Buildings		18,989,364		17,860,557
Computer equipment		10,936,268		11,939,517
Telecommunications equipment		522,449,777		524,159,918
Transportation equipment		1,497,528		1,739,103
Miscellaneous equipment		5,265,134		5,932,446

		560,161,398		562,610,473

Construction in progress and advances related to acquisition of equipment		12,549,124		10,991,199


Property, plant and equipment, net	$	295,796,379	$	302,440,480

Pursuant to the related regulations, Chunghwa revalued its land owned as of April 30, 2000 based on the publicly announced values on July 1, 1999. These revaluations which have been approved by the Ministry of Auditing resulted in increases in the carrying values of property, plant and equipment of $5,986,074 thousand, liabilities for land value incremental tax of $211,182 thousand, and stockholder’s equity - other adjustments of $5,774,892 thousand.

The amendment to the Land Tax Act, relating to the article to permanently lower land value incremental tax, went effective from February 1, 2005. In accordance with the lowered tax rates, Chunghwa recomputed its land value incremental tax, and reclassified the reserve for land value incremental tax of $116,196 thousand to stockholder’s equity - other adjustments. As of June 30, 2011, the unrealized revaluation increment was decreased to $5,762,829 thousand by disposal of revaluation assets.

Depreciation on property, plant and equipment for the six months ended June 30, 2011 and 2010 was $15,242,326 thousand and $16,500,893 thousand, respectively. No interest expense was capitalized for the six months ended June 30, 2011 and 2010.

- 23 -

16.

ACCRUED EXPENSES


	June 30
	2011		2010

Accrued salary and compensation	$	4,021,788	$	4,109,125
Accrued employees’ bonuses and remuneration to directors and supervisors		3,242,904		2,822,183
Accrued franchise fees		1,198,012		1,139,941
Accrued maintance fees		788,968		543,722
Other accrued expenses		2,089,257		2,554,771


	$	11,340,929	$	11,169,742

17.

OTHER CURRENT LIABILITIES


	June 30
	2011		2010

Advances receipts	$	9,998,973	$	6,638,287
Payables to equipment suppliers		1,818,164		1,520,387
Payables to contractors		1,776,213		1,472,126
Amounts collected in trust for others		1,310,918		2,294,417
Refundable customers’ deposits		1,178,068		1,067,024
Miscellaneous		3,178,440		2,810,388


	$	19,260,776	$	15,802,629

18.

STOCKHOLDERS’ EQUITY

Under Chunghwa’s Articles of Incorporation, Chunghwa’s authorized capital is $120,000,000,000 which is divided into 12,000,000,000 common shares (at $10 par value per share), among which 7,757,447 shares are issued and outstanding as of June 30, 2011.

For the purpose of privatizing Chunghwa, the MOTC sold 1,109,750 thousand common shares of Chunghwa in an international offering of securities in the form of American Depositary Shares (“ADS”) amounting to 110,975 thousand units (one ADS represents ten common shares) on the New York Stock Exchange on July 17, 2003. Afterwards, the MOTC sold 1,350,682 thousand common shares in the form of ADS amounting to 135,068 thousand units on August 10, 2005. Subsequently, the MOTC and Taiwan Mobile Co., Ltd. sold 505,389 thousand and 58,959 thousand common shares of Chunghwa, respectively, in the form of ADS totally amounting to 56,435 thousand units on September 29, 2006. The MOTC and Taiwan Mobile Co., Ltd. have sold 3,024,780 thousand common shares in the form of ADS amounting to 302,478 thousand units. As of June 30, 2011, the outstanding ADSs were 527,503 thousand common shares, which equaled approximately 52,750 thousand units and represented 6.80 % of Chunghwa’s total outstanding common shares.

The ADS holders generally have the same rights and obligations as other common stockholders, subject to the provision of relevant laws. The exercise of such rights and obligations shall comply with the related regulations and deposit agreement, which stipulate, among other things, that ADS holders can, through deposit agents:

Exercise their voting rights,

Sell their ADSs, and

- 24 -

Receive dividends declared and subscribe to the issuance of new shares.

Under the ROC Company Law, additional paid-in capital may only be utilized to offset deficits. For those companies having no deficits, additional paid-in capital arising from capital surplus can be used to increase capital stock and distribute to stockholders in proportion to their ownership at the ex-dividend date. Also, such amounts can only be declared as a stock dividend by Chunghwa at an amount calculated in accordance with the provisions of existing regulations. The combined amount of any portions capitalized each year may not exceed 10 percent of common stock issued. However, where a company undergoes an organizational change (such as a merger, acquisition, or reorganization) that results in the capitalization of undistributed earnings after the organizational change, the above restriction does not apply.

In addition, before distributing a dividend or making any other distribution to stockholders, Chunghwa must pay all outstanding taxes, recover any past losses and set aside a legal reserve equal to 10% of its net income, and depending on its business needs or requirements, may also set aside a special reserve. In accordance with the Articles of Incorporation, no less than 50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings shall be distributed in the following order: (a) from 2% to 5% of distributable earnings shall be distributed to employees as employee bonus; (b) no more than 0.2% of distributable earnings shall be distributed to board of directors and supervisors as remuneration; and (c) cash dividends to be distributed shall not be less than 50% of the total amount of dividends to be distributed. If cash dividends to be distributed is less than NT$0.10 per share, such cash dividend shall be distributed in the form of common shares.

For the six months ended June 30, 2011 and 2010, the accrual amounts for bonuses to employees and remuneration to directors and supervisors is based on management estimates including past experience and probable amount to be paid in accordance with Chunghwa’s Articles of Incorporation and Implementation Guidance for the Employee’s Bonus Distribution of Chunghwa Telecom Co., Ltd.

If the initial accrual amounts of the aforementioned bonus are significantly different from the amounts proposed by the board of directors, the difference is charged to the earnings of the year making the initial estimate. Otherwise, the difference between initial accrual amounts and the amounts resoluted in the shareholders’ meeting is charged to the earnings of the following year as a result of change of accounting estimate.

Under the ROC Company Law, the appropriation for legal reserve shall be made until the accumulated reserve equals the aggregate par value of the outstanding capital stock of Chunghwa. This reserve can only be used to offset a deficit, or when reaching 50% of the aggregate par value of the outstanding capital stock of Chunghwa, up to 50% of the reserve may, at the option of Chunghwa, be declared as a stock dividend and transferred to capital.

The appropriations and distributions of the 2010 and 2009 earnings of Chunghwa have been approved by the stockholders on June 24, 2011 and June 18, 2010 as follows:


	Appropriation of Earnings				Dividend Per Share
	2010		2009		2010		2009

Legal reserve	$	4,760,890	$	4,374,014
Cash dividends		42,854,462		39,369,041	$	5.52	$	4.06

The amounts for bonuses to employees and remuneration to directors and supervisors approved in the stockholders’ meeting on June 24, 2011, were $2,144,074 thousand and $45,044 thousand paid by cash, respectively. There was no difference between the initial accrual amounts and the amounts resolved in stockholders’ meeting of the aforementioned bonuses to employees and the remuneration to directors and supervisors.

- 25 -

The amounts for bonuses to employees and remuneration to directors and supervisors approved in the stockholders’ meeting on June 18, 2010, were $1,800,929 thousand and $41,211 thousand paid by cash, respectively. There was no difference between the initial accrual amounts and the amounts resolved in stockholders’ meeting of the aforementioned bonuses to employees and the remuneration to directors and supervisors.

Information on the appropriation of Chunghwa’s 2010 earnings, employees bonuses and remuneration to directors and supervisors resolved by the board of directors and approved by the stockholders is available at the Market Observation Post System website.

The stockholders, at the stockholders’ meeting held on June 18, 2010, resolved to reduce the amount of $19,393,617 thousand in capital of Chunghwa by a cash distribution to its stockholders. The abovementioned 2010 capital reduction proposal was effectively registered with FSC. The board of directors of Chunghwa were authorized to designate the record date of capital reduction as of October 26, 2010. Subsequently, the stock transfer date of capital reduction was January 15, 2011. The amount due to stockholders for capital reduction was $19,393,617 thousand and such cash payment to stockholders was made in January 2011.

The stockholders, at a meeting held on June 19, 2009, resolved to transfer capital surplus in the amount of $9,696,808 thousand to common capital stock. The abovementioned 2009 capital increase proposal was effectively registered with FSC. The board of directors authorized the chairman of directors to decide the ex-dividend date of the aforementioned proposal and the chairman decided the ex-dividend date as August 9, 2009.

The stockholders, at the stockholders’ meeting held on June 19, 2009, also resolved to reduce the amount of capital in Chunghwa by a cash distribution to its stockholders in order to improve the financial condition of Chunghwa and better utilize its excess funds. The abovementioned 2009 capital reduction proposal was effectively approved by FSC. The board of directors of Chunghwa further authorized the chairman of board of directors of Chunghwa to designate the record date of capital reduction as of October 26, 2009. Subsequently, common capital stock was reduced by $9,696,808 thousand and the stock transfer date of capital reduction was January 28, 2010. The amount due to stockholders for capital reduction was paid in February 2010.

19.

COMPENSATION, DEPRECIATION AND AMORTIZATION EXPENSES


	Six Months Ended June 30, 2011
	Operating Costs		Operating Expenses		Total

Compensation expense
Salaries	$	5,931,656	$	4,235,200	$	10,166,856
Insurance		518,207		371,215		889,422
Pension		853,227		580,198		1,433,425
Other compensation		4,745,163		3,299,851		8,045,014


	$	12,048,253	$	8,486,464	$	20,534,717


Depreciation expense	$	14,428,537	$	813,789	$	15,242,326

Amortization expense	$	569,871	$	63,766	$	633,637

- 26 -


	Six Months Ended June 30, 2010
	Operating Costs		Operating Expenses		Total

Compensation expense
Salaries	$	6,056,874	$	4,198,957	$	10,255,831
Insurance		495,741		344,126		839,867
Pension		836,712		557,955		1,394,667
Other compensation		4,647,825		3,213,702		7,861,527


	$	12,037,152	$	8,314,740	$	20,351,892


Depreciation expense	$	15,663,186	$	837,707	$	16,500,893

Amortization expense	$	503,300	$	77,099	$	580,399

20.

INCOME TAX

A reconciliation between income tax expense computed by applying the statutory income tax rate to income before income tax and income tax payable is as follows:


	Six Months Ended June 30
	2011			2010

Income tax expense computed at statutory income tax rate	$	5,040,880		$	5,058,215
Add (deduct) tax effects of:
Permanent differences		(302,126	)		(66,648	)
Temporary differences		23,867			(18,836	)
10% undistributed earnings tax		45			1,286
Investment tax credits		(208,152	)		(289,949	)


Income tax payable	$	4,554,514		$	4,684,068

Income tax expense consists of the following:


	Six Months Ended June 30
	2011			2010

Income tax payable	$	4,554,514		$	4,684,068
Income tax - separated		10,506			3,688
Income tax - deferred		(64,431	)		80,663
Adjustments of prior years’ income tax		20,472			(5,630	)


	$	4,521,061		$	4,762,789

In May 2010, the Legislative Yuan passed the amendment of Article 5 of the Income Tax Law, which reduces the income tax rate of profit-seeking enterprises from 20% to 17%, effective January 1, 2010. After the Legislative Yuan passed the amendment of Article 5 of the Income Tax Law, Chunghwa recalculated its deferred income tax assets and liabilities in accordance with the amended Article and recorded the resulting difference as an income tax expense or benefit.

- 27 -

Under Article 10 of the Statute for Industrial Innovation (SII) passed by the Legislative Yuan in April 2010, a profit-seeking enterprise may deduct up to 15% of its research and development expenditures from its income tax payable for the fiscal year in which these expenditures are incurred, but this deduction should not exceed 30% of the income tax payable for that fiscal year. This incentive took effect from January 1, 2010 and is effective till December 31, 2019.

Net deferred income tax assets (liabilities) consists of the following:


	June 30
	2011			2010

Current
Provision for doubtful accounts	$	194,344		$	290,142
Unrealized accrued expense		50,312			56,167
Unrealized foreign exchange loss (gain)		14,424			(36,839	)
Valuation gain on financial instruments, net		(1,299	)		(1,890	)
Other		49,711			18,198

		307,492			325,778
Valuation allowance		(194,344	)		(290,142	)


Net deferred income tax assets - current	$	113,148		$	35,636


Noncurrent
Accrued pension cost	$	314,144		$	291,222
Impairment loss		61,355			51,602
Abandonment of equipment not approved by National Tax Administration		27,672			—


Net deferred income tax assets - noncurrent	$	403,171		$	342,824

The related information under the Integrated Income Tax System is as follows:


	June 30
	2011		2010

Balance of Imputation Credit Account (ICA)	$	8,934,216	$	11,589,546

The actual creditable ratios distribution of Chunghwa’s of 2010 and 2009 for earnings were 18.76% and 26.49%, respectively.

Undistributed earnings information

As of June 30, 2011 and 2010, there is no earnings generated prior to June 30, 1998 in Chunghwa’s undistributed earnings.

Income tax returns through the year ended December 31, 2006 have been examined by the ROC tax authorities.

- 28 -

21.

EARNINGS PER SHARE

EPS was calculated as follows:


	Amount (Numerator)						Weighted- average Number of Common Shares Outstanding (Denominator)		Earnings Per Share (Dollars)
	Income Before Income Tax			Net Income					Income Before Income Tax		Net Income

Six months ended June 30, 2011

Basic EPS
Income attributable to stockholders	$	29,652,237		$	25,131,176			7,821,735	$	3.79	$	3.21

Effect of dilutive potential common stock
SENAO’s stock options		(3,729	)		(3,729	)		—
Employee bonus		—			—			27,430


Diluted EPS
Income attributable to stockholders (including effect of dilutive potential common stock)	$	29,648,508		$	25,127,447			7,849,165	$	3.78	$	3.20


Six months ended June 30, 2010

Basic EPS
Income attributable to stockholders	$	29,754,207		$	24,991,418			9,696,808	$	3.07	$	2.58

Effect of dilutive potential common stock
SENAO’s stock options		(3,866	)		(3,866	)		—
Employee bonus		—			—			35,947


Diluted EPS
Income attributable to stockholders (including effect of dilutive potential common stock)	$	29,750,341		$	24,987,552			9,732,755	$	3.06	$	2.57

In March 2007, the ARDF issued an Interpretation 96-052 that requires companies to recognize bonuses paid to employees, directors and supervisors as an expense rather than an appropriation of earnings beginning from January 1, 2008. According to the Interpretation 97-169 issued by ARDF in May 2008, Chunghwa presumed that the employees bonuses to be paid will be settled in shares and takes those shares into consideration when calculating the weighted average number of outstanding shares used in the calculation of diluted EPS if the shares have a dilutive effect for the six months ended June 30, 2011 and 2010. The number of shares is calculated by dividing the amount of bonuses by the closing price of the Chunghwa’s shares of the balance sheet date. The dilutive effect of the shares needs to be considered until the stockholders resolve the number of shares to be distributed to employees in their meeting in the following year.

The diluted earnings per share for the six months ended June 30, 2011 and 2010 was due to the effect of potential common stock related to stock options granted by SENAO.

- 29 -

22.

PENSION PLAN

Chunghwa completed privatization plans on August 12, 2005. Chunghwa is required to pay all accrued pension obligations including service clearance payment, lump sum payment under civil service plan, additional separation payments, etc. upon the completion of the privatization in accordance with the Statute Governing Privatization of Stated-owned Enterprises. After paying all pension obligations for privatization, the plan assets of Chunghwa should be transferred to the Fund for Privatization of Government-owned Enterprises (the “Privatization Fund”) under the Executive Yuan. On August 7, 2006, Chunghwa transferred the remaining balance of fund to the Privatization Fund. However, according to the instructions of MOTC, Chunghwa would, on behalf of the MOTC to pay all accrued pension obligations including service clearance payment, lump sum payment under civil service plan, additional separation payments, etc. upon the completion of the privatization.

The pension plan under the Labor Pension Act of ROC (the “LPA”) is effective beginning July 1, 2005 and this pension mechanism is considered as a defined contribution plan. Based on the LPA, Chunghwa makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

Chunghwa’s pension plan is considered as a defined benefit plan under the Labor Standards Law that provide benefits based on an employee’s length of service and average six-month salary prior to retirement. Chunghwa contributes an amount at 15% or less of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the names of the Committees in the Bank of Taiwan.

The balance of Chunghwa’s plan assets subject to defined benefit plan were $14,187,100 thousand and $11,746,275 thousand as of June 30, 2011 and 2010, respectively.

Pension costs of Chunghwa were $1,473,781 thousand ($1,401,794 thousand subject to defined benefit plan and $71,987 thousand subject to defined contribution plan) and $1,431,803 thousand ($1,372,432 thousand subject to defined benefit plan and $59,371 thousand subject to defined contribution plan) for the six months ended June 30, 2011 and 2010, respectively.

23.

TRANSACTIONS WITH RELATED PARTIES

The ROC Government, one of Chunghwa’s customers held significant equity interest in Chunghwa. Chunghwa provides fixed-line services, wireless services, Internet and data and other services to the various departments and institutions of the ROC Government and other state-owned enterprises in the normal course of business and at arm’s-length prices. The information on service revenues from government bodies and related organizations have not been provided because details of the type of transactions were not summarized by Chunghwa. Chunghwa believes that all costs of doing business are reflected in the financial statements.

Chunghwa engages in business transactions with the following related parties:


Company		Relationship

Senao International Co., Ltd. (“SENAO”)		Subsidiary
Light Era Development Co., Ltd. (“LED”)		Subsidiary
Chunghwa Telecom Singapore Pte., Ltd. (“CHTS”)		Subsidiary
CHIEF Telecom, Inc. (“CHIEF”)		Subsidiary
Chunghwa Telecom Japan Co., Ltd. (“CHTJ”)		Subsidiary
Chunghwa International Yellow Pages Co., Ltd. (“CIYP”)		Subsidiary
Chunghwa System Integration Co., Ltd. (“CHSI”)		Subsidiary

(Continued)

- 30 -


Company		Relationship

Spring House Entertainment Tech. Inc. (“SHE”)		Subsidiary
Chunghwa Telecom Global, Inc. (“CHTG”)		Subsidiary
Donghwa Telecom Co., Ltd. (“DHT”)		Subsidiary
New Prospect Investments Holdings Ltd. (B.V.I.) (“New Prospect”)		Subsidiary
Prime Asia Investments Group Ltd. (B.V.I.) (“Prime Asia”)		Subsidiary
Chunghwa Investment Co., Ltd. (“CHI”)		Subsidiary
Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”)		Subsidiary
Chunghwa Investment Holding Co., Ltd. (“CIHC”)		Subsidiary of CHI
Chunghwa Precision Test Tech. Co., Ltd. (“CHPT”)		Subsidiary of CHI
Unigate Telecom Inc. (“Unigate”)		Subsidiary of CHIEF
CHIEF Telecom (Hong Kong) Limited (“CHK”)		Subsidiary of CHIEF, which completed its liquidation procedure in September 2010
Chief International Corp. (“CIC”)		Subsidiary of CHIEF
Concord Technology Co., Ltd. (“Concord”)		Subsidiary of CHSI
Glory Network System Service (Shanghai) Co., Ltd. (“Glory”)		Subsidiary of Concord
Senao International (Samoa) Holding Ltd. (SIS)		Subsidiary of SENAO
Senao International HK Limited (SIHK)		Subsidiary of SIS
CHI One Investment Co., Ltd. (“COI”)		Subsidiary of CHI
Yao Yong Real Property Co., Ltd. (“YYRP”)		Subsidiary of LED
Chunghwa Precision Test Tech. USA Corporation (“CHPT (US)”)		Subsidiary of CHPT
Chunghwa Hsingta Company Ltd. (“CHC”)		Subsidiary of Prime Asia
Chunghwa Telecom (China) Co., Ltd. (“CTC”)		Subsidiary of CHC
Senao Trading (Fujian) Co., Ltd. (“STF”)		Subsidiary of SENAO
Senao International Trading (Shanghai) Co., Ltd. (“SITS”)		Subsidiary of SENAO
Senao International Trading (Jiangsu) Co., Ltd. (“SITJ”)		Subsidiary of SENAO
Senao International Trading (Shanghai) Co., Ltd. (“SEITS”)		Subsidiary of SENAO
Ceylon Innovation Co., Ltd. (“CEI”)		Subsidiary of SHE
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		Equity-method investee
So-net Entertainment Taiwan Co., Ltd. (“So-net”)		Equity-method investee
Skysoft Co., Ltd. (“SKYSOFT”)		Equity-method investee
KingWaytek Technology Co., Ltd. (“KWT”)		Equity-method investee
International Integrated System, Inc. (“IISI”)		Equity-method investee, which was a subsidiary of Chunghwa before Chunghwa lost control over IISI on June 24, 2011
Senao Networks, Inc. (“SNI”)		Equity-method investee of SENAO
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		Equity-method investee of CHTS

(Concluded)

- 31 -

Significant transactions with the above related parties are summarized as follows:


	June 30
	2011				2010
	Amount		%		Amount		%
1) Receivables

Trade notes, accounts receivable and other receivables
SENAO	$	655,936		79	$	228,078		75
DHT		49,426		6		8,237		3
CIYP		29,818		4		10,244		3
CHIEF		29,083		3		23,075		7
CHTG		23,540		3		17,296		6
CHSI		15,029		2		2,706		1
Others		28,107		3		16,359		5


	$	830,939		100	$	305,995		100


2) Payables

Trade notes payable, accounts payable, and accrued expenses
SENAO	$	804,475		43	$	633,902		41
CHSI		238,009		13		162,390		11
TISE		204,210		11		321,543		21
IISI		57,985		3		7,929		1
CHTG		56,835		3		45,319		3
DHT		49,834		3		36,901		2
CHIEF		46,332		2		40,324		3
LED		20,504		1		494		—
SKYSOFT		14,312		1		3,668		—
CIYP		11,985		1		3,804		—
Others		11,936		—		29,383		2

		1,516,417		81		1,285,657		84


Payables to constructors
CHSI		14,491		1		2,157		—
Others		—		—		1,560		—

		14,491		1		3,717		—


Amounts collected in trust for others
SENAO		273,566		15		234,915		15
SHE		18,508		1		—		—
So-net		15,411		1		—		—
SKYSOFT		14,078		1		—		—
Others		12,107		—		11,717		1

		333,670		18		246,632		16


	$	1,864,578		100	$	1,536,006		100

3) Customer’s deposits

CHSI	$	21,047		1	$	51,078		1
CHTG		14,106		—		15,408		—
Others		3,579		—		5,452		—


	$	38,732		1	$	71,938		1

- 32 -


	Six Months Ended June 30
	2011				2010
	Amount		%		Amount		%

4) Revenues

SENAO	$	719,522		1	$	956,329		1
CHIEF		140,514		—		124,162		—
So-net		120,639		—		155,523		—
LED		100,054		—		10,427		—
DHT		50,026		—		—		—
CHTG		45,096		—		28,448		—
SKYSOFT		21,944		—		18,777		—
CHTJ		18,951		—		—		—
CHTS		18,250		—		7,511		—
Others		22,921		—		27,537		—


	$	1,257,917		1	$	1,328,714		1


5) Operating costs and expenses

SENAO	$	3,165,536		5	$	2,376,748		4
TISE		242,226		1		461,035		1
CHSI		188,882		—		293,915		1
CHIEF		149,265		—		145,567		—
CHTG		97,498		—		62,793		—
IISI		76,494		—		27,196		—
CHTJ		28,050		—		7,788		—
DHT		27,065		—		14,886		—
SKYSOFT		23,972		—		6,976		—
KWT		17,580		—		219		—
CHTS		16,879		—		11,726		—
CIYP		13,961		—		15,309		—
SHE		12,894		—		26,102		—
Others		4,749		—		830		—


	$	4,065,051		6	$	3,451,090		6


6) Acquisition of property, plant and equipment

CHSI	$	346,299		3	$	174,478		2
TISE		217,448		3		19,879		—
CHTJ		37,591		—		5,994		—
IISI		36,619		—		—		—
CHTG		17,538		—		16,470		—
DHT		—		—		25,465		—
Others		694		—		63		—


	$	656,189		6	$	242,349		2

Chunghwa has entered into a contract with ST-2 Satellite Ventures Pte., Ltd. on March 12, 2010 to lease capacity on the ST-2 satellite. This lease term is 15 years which will start from the official operation of ST-2 satellite and the total contract value is approximately $6,000,000 thousand (SG$260,723 thousand). ST-2 satellite has launched in May 2011 and will begin its official operation in August 2011. The Company has prepaid $3,155,764 thousand which has classified as other assets - others as of June 30, 2011.

- 33 -

Chunghwa has leased property to LED since April 2010. The lease term is 15 years and the rent is charged monthly. Based on the agreement of both parties, the lease contract was terminated on April 1, 2011.

Chunghwa sold the land with a carrying value of $936,016 thousand to LED at the price of $2,421,932 thousand in 2008. However, since the gain on disposal of land amounting to $1,485,916 thousand is unrealized, the gain was recognized as deferred credit - profit on intercompany transactions. Gain on disposal of land $473,422 thousand was recognized for the six months ended June 30, 2011.

Chunghwa sold the land with a carrying value of $378,927 thousand to LED at price of $207,030 thousand in 2008 and resulted in a disposal loss amounting to $171,897 thousand. The disposal loss on land is unrealized and the unrealized loss is included in other assets - others. The unrealized loss is not recognized in earnings until it is sold to the third party and realized in the future.

The foregoing transactions with related parties were determined in accordance with mutual agreements.

24.

SIGNIFICANT COMMITMENTS AND CONTINGENCIES

As of June 30, 2011, in addition to those disclosed in other notes, Chunghwa’s remaining commitments under non-cancellable contracts with various parties were as follows:

Acquisition of land and buildings of $96,258 thousand.

Acquisition of telecommunications equipment of $21,045,886 thousand.

Contracts to print billing, envelopes and telephone directories of $30,116 thousand.

Chunghwa also has non-cancellable operating leases covering certain buildings, computers, computer peripheral equipment and operating system software under contracts that expire in various years. Future lease payments were as follows:


Year	Amount

2011 (from July 1, 2011 to December 31, 2011)	$	1,089,657
2012		1,566,827
2013		1,080,217
2014		867,905
2015 and thereafter		1,002,221

A commitment to contribute $2,000,000 thousand to a Piping Fund administered by the Taipei City Government, of which $1,000,000 thousand was contributed by Chunghwa on August 15, 1996 (classified as long-term investment - other monetary assets). If the fund is not sufficient, Chunghwa will contribute the remaining $1,000,000 thousand upon notification from the Taipei City Government. Based on Chunghwa’s understanding of the Piping Fund terms, if the project is considered to be no longer necessary by the ROC government, Chunghwa will receive back its proportionate share of the net equity of the Piping Fund upon its dissolution. Chunghwa does not know when its contribution to the Piping Fund will be returned; therefore, Chunghwa did not discount the face amount of its contribution on the Piping Fund.

- 34 -

A portion of the land used by Chunghwa during the period July 1, 1996 to December 31, 2004 was co-owned by Chunghwa and Taiwan Post Co., Ltd. (the former Chunghwa Post Co., Ltd. directorate General of Postal Service). In accordance with the claims process in Taiwan, on July 12, 2005, the Taiwan Taipei District Court sent a claim notice to Chunghwa to reimburse Chunghwa Post Co., Ltd. in the amount of $767,852 thousand for land usage compensation due to the portion of land usage area in excess of Chunghwa’s ownership and along with interest calculated at 5% interest rate from June 30, 2005 to the payment date. Chunghwa stated that both parties have the right to use co-management land without consideration. Chunghwa Post Co., Ltd. can not request payment for land compensation. Furthermore, Chunghwa believes that the computation used to derive the land usage compensation amount is inaccurate because most of the compensation amount has expired as result of the expiration clause. Therefore, Chunghwa filed an appeal at the Taiwan Taipei District Court. On March 30, 2009, the Taiwan Taipei District Court rendered its judgment that Chunghwa only need to pay $16,870 thousand along with interest calculated at 4% per annum from July 23, 2005 and 4% of the court fees as the court judgment compensation. However, Chunghwa Post Co., Ltd. did not accept the judgment and filed an appeal at Taiwan High Court. Chunghwa also filed an appeal at the Taiwan High Court within the statutory period. On April 7, 2010, the Taiwan High Court rendered its judgment, ruling that Chunghwa was required to pay $23,284 thousand as compensation in addition to the $16,870 thousand from the Taiwan Taipei District Court judgment, along with interest calculated at 5% per annum from July 23, 2005 to the payment date and 12.5% of Chunghwa Post Co., Ltd.’s court fees from its original suit and subsequent appeal as compensation. Chunghwa has filed an appeal to the Supreme Court of the Republic of China within the statutory period. On June 9, 2011, the Supreme Court of the Republic of China remanded the aforementioned judgment from Taiwan High Court and the case was remanded back to the Taiwan High Court.

25.

FAIR VALUES OF FINANCIAL INSTRUMENTS

Carrying amount and fair value of financial instruments were as follows:


	June 30
	2011				2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Assets
Cash and cash equivalents	$	75,486,490	$	75,486,490	$	87,041,371	$	87,041,371
Financial assets at fair value through profit or loss		8,615		8,615		—		—
Available-for-sale financial assets		1,884,513		1,884,513		5,599,108		5,599,108
Held-to-maturity financial assets - current		2,174,334		2,174,334		1,190,089		1,190,089
Trade notes and accounts receivable, net		20,062,171		20,062,171		11,191,243		11,191,243
Receivables from related parties		830,939		830,939		305,995		305,995
Other current monetary assets		2,571,859		2,571,859		2,653,656		2,653,656
Financial assets carried at cost		2,315,474		—		2,294,648		—
Held-to-maturity financial assets - noncurrent		11,278,945		11,278,945		6,948,228		6,948,228
Other noncurrent monetary assets		1,000,000		1,000,000		1,000,000		1,000,000
Refundable deposits		1,556,985		1,556,985		1,389,649		1,389,649
Liabilities
Financial liabilities at fair value through profit or loss		974		974		23,656		23,656
Trade notes and accounts payable		8,050,983		8,050,983		5,724,762		5,724,762
Payables to related parties		1,864,578		1,864,578		1,536,006		1,536,006
Accrued expenses		11,340,929		11,340,929		11,169,742		11,169,742
Dividends Payable		42,854,462		42,854,462		39,369,041		39,369,041
Payables to equipment suppliers (included in “other current liabilities”)		1,818,164		1,818,164		1,520,387		1,520,387
Payables to constructors (included in “other current liabilities”)		1,776,213		1,776,213		1,472,126		1,472,126
Amounts collected in trust for others (included in “other current liabilities”)		1,310,918		1,310,918		2,294,417		2,294,417
Refundable customers’ deposits (included in “other current liabilities”)		1,178,068		1,178,068		1,067,024		1,067,024
Customers’ deposits		5,406,693		5,406,693		5,886,625		5,886,625

- 35 -

Methods and assumptions used in the estimation of fair values of financial instruments:

The fair values of certain financial instruments recognized in the balance sheet generally correspond to the market prices of the financial assets. Because of the short maturities of these instruments, the carrying value represents a reasonable basis to estimate fair values. This method does not apply to the financial instruments discussed in Notes 2 and 3 below.

If the financial instruments have quoted market prices in an active market, the quoted market prices are viewed as fair values. If the market prices of the available-for-sale financial assets are not readily available, valuation techniques are used incorporating estimates and assumptions that are consistent with prevailing market conditions.

Financial assets carried at cost are investments in nonlisted shares, which have no quoted prices in an active market and entail an unreasonably high cost to obtain verifiable fair values. Therefore, no fair value is presented.

Fair values of financial assets and liabilities using quoted market prices or valuation techniques were as follows:


	Amount Based on Quoted Market Price				Amount Determined Using Valuation Techniques
	June 30				June 30
	2011		2010		2011		2010

Assets
Financial assets at fair value through profit or loss	$	—	$	—	$	8,615	$	—
Available-for-sale financial assets		1,884,513		5,599,108		—		—
Liabilities
Financial liabilities at fair value through profit or loss		—		—		974		23,656

Information about financial risks

Market risk

The foreign exchange rate fluctuations would result in Chunghwa’s foreign-currency-dominated assets and liabilities, outstanding currency swap contracts exposed to rate risk.

The financial instruments categorized as available-for-sale financial assets are mainly listed stocks and open-end mutual funds. Therefore, the market risk is the fluctuations of market price. In order to manage this risk, Chunghwa would assess the risk before investing; therefore, no material market risk is anticipated.

Credit risk

Credit risk represents the potential loss that would be incurred by Chunghwa if the counter-parties or third-parties breached contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties of the aforementioned financial instruments are reputable financial institutions and corporations. Management does not expect Chunghwa’s exposure to default by those parties to be material. The Company held a variety of financial instruments, the maximum credit exposed amount is the same as their carrying amounts.

- 36 -

Liquidation risk

Chunghwa has sufficient operating capital to meet cash needs upon settlement of derivative financial instruments. Therefore, the liquidation risk is low.

The financial instruments of Chunghwa categorized as available-for-sale financial assets are publicly-traded, easily converted to cash. Therefore, no material liquidation risk is anticipated. The financial instruments categorized as financial assets carried at cost are investments that do not have a quoted market price in an active market. Therefore, material liquidation risk is anticipated.

Cash flow interest rate risk

Chunghwa engages in investments in fixed-interest-rate debt securities. Therefore, cash flows from such securities are not expected to fluctuate significantly due to changes in market interest rates.

According to the regulations of Securities and Futures Bureau, Chunghwa should disclose the derivative transactions of Chunghwa’s investees, SENAO and CHI, which was as follows:

Holding period and contract amounts

SENAO and CHI entered into forward exchange contracts and index future contracts to reduce the exposure to foreign currency risk and price risk. The financial risk management objective of SENAO and CHI are to minimize risks due to market risk.

The outstanding forward exchange contracts of SENAO as of June 30, 2011 and 2010 were as follows:

Currency

Maturity Period

Contract Amount

(In Thousands)

June 30, 2011

Buy

NT$

/US$

2011.07

NT$

236,986/US$8,200

June 30, 2010

Buy

NT$

/US$

2010.07

NT$

76,956/US$2,400

There was no outstanding index future contracts of June 30, 2011. Outstanding index future contracts of CHI on June 30, 2010 was as follows:

Maturity Period

Units

Contract Amount
(In Thousands)

June 30, 2010

TAIEX futures

2010.07

NT$

17,198

Net gain of SANEO arising from derivative financial products for the six months ended June 30, 2011 and 2010 were $3,789 thousand and $5,068 thousand, respectively.

Net gain (loss) of CHI arising from derivative financial products for the six months ended June 30, 2011 and 2010 were $(2,795) thousand and $222 thousand, respectively.

- 37 -

Market risk

The foreign exchange rate fluctuations would result in SENAO’s foreign-currency-dominated assets and liabilities and open forward exchange contracts exposed to rate risk.

The fluctuations of market price would result in CHI’s index future contracts exposed to price risk.

Credit risk

Credit risk represents the potential loss that would be incurred by SENAO and CHI if the counter-parties or third-parties breached contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties to the aforementioned financial instruments are reputable financial institutions. Management does not expect SENAO’s and CHI’s exposure to default by those parties to be material. The largest amount of exposure to default by those parties of the financial instruments of SENAO and CHI is the same as carrying value.

Liquidation risk

SENAO and CHI have sufficient operating capital to meet cash needs upon settlement of derivative financial instruments. Therefore, the liquidation risk is low.

26.

ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the SFC for Chunghwa and its investees:

Financings provided: None.

Endorsement/guarantee provided: Please see Table 1.

Marketable securities held: Please see Table 2.

Marketable securities acquired and disposed of at costs or prices at least $100 million or 20% of the paid-in capital: Please see Table 3.

Acquisition of individual real estate at costs of at least $100 million or 20% of the paid-in capital: None.

Disposal of individual real estate at prices of at least $100 million or 20% of the paid-in capital: Please see Table 4.

Total purchases from or sales to related parties amounting to at least $100 million or 20% of the paid-in capital: Please see Table 5.

Receivables from related parties amounting to $100 million or 20% of the paid-in capital: Please see Table 6.

Names, locations, and other information of investees on which the Company exercises significant influence: Please see Table 7.

Financial transactions: Please see Notes 5 and 25.

Investment in Mainland China: Please see Table 8.

- 38 -

27.

SEGMENT FINANCIAL INFORMATION

Segment information: Please see Table 9.

28.

OTHERS

The significant information of foreign-currency financial assets and liabilities as below:


	June 30
	2011						2010
	Foreign Currencies		Exchange Rate		New Taiwan Dollars		Foreign Currencies		Exchange Rate		New Taiwan Dollars

Financial assets

Monetary items
Cash
USD	$	3,356		28.73	$	96,402	$	19,140		32.28	$	617,791
EUR		1,749		41.63		72,792		1,071		39.32		42,109
GBP		5		46.19		217		2		48.4		98
Available-for-sale financial assets
USD		65,605		28.73		1,884,513		47,023		32.28		1,517,817
EUR		—		41.63		—		34,578		39.32		1,359,623
Accounts receivable
USD		160,186		28.73		4,601,330		127,512		32.28		4,115,827
EUR		145		41.63		6,042		148		39.32		5,817
Investments accounted for using equity method
USD		2,511		28.73		72,129		2,354		32.28		75,974
HKD		136,195		3.69		502,560		57,951		4.13		239,338
SGD		26,326		23.38		615,496		62,063		22.99		1,426,836
JPY		51,571		0.357		18,411		34,895		0.363		12,667
VND		212,167,407		0.00135		286,426		167,570,552		0.00163		273,140
RMB		36,883		4.4655		164,699		—		4.7780		—

Financial liabilities

Monetary items
Payables
USD		113,839		28.73		3,270,022		107,610		32.28		3,473,445
EUR		27,179		41.63		1,131,462		27,952		39.32		1,099,081
JPY		—		0.357		—		8,882		0.363		3,224
SGD		30		23.38		706		26		22.99		598
HKD		960		3.69		3,544		501		4.13		2,071

- 39 -

TABLE 1

CHUNGHWA TELECOM CO., LTD.

ENDORSEMENTS/GUARANTEES PROVIDED

SIX MONTHS ENDED JUNE 30, 2011

(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)


No.	Endorsement/Guarantee Provider	Guaranteed Party		Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party			Maximum Balance for the Year		Ending Balance			Amount of Endorsement/ Guarantee Collateralized by Properties			Ratio of Accumulated Endorsement/ Guarantee to Net Equity Per Latest Financial Statements			Maximum Endorsement/ Guarantee Amount Allowable
No.	Endorsement/Guarantee Provider	Name	Nature of Relationship (Note 2)				Maximum Balance for the Year		Ending Balance									Maximum Endorsement/ Guarantee Amount Allowable

0	Chunghwa Telecom Co., Ltd.	Donghwa Telecom Co., Ltd.	b	$	3,467,740 (Note 3	)	$	1,056,514	$	1,056,514 (Note 4	)	$	—			0.3	%	$	13,870,960 (Note 6	)
25	Yao Yong Real Property Co., Ltd.	Light Era Development Co., Ltd.	d		3,808,224 (Note 7	)		2,750,000		2,750,000 (Note 5	)		2,750,000 (Note 5	)		0.8	%		3,808,224 (Note 7	)


Note 1:	Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:
	a.	“0” for the Company.
	b.	Subsidiaries are numbered from “1”.
Note 2:	Relationships between the endorsement/guarantee provider and the guaranteed party:
	a.	Trading partner.
	b.	Majority owned subsidiary.
	c.	The Company and subsidiary owns over 50% ownership of the investee company.
	d.	A subsidiary jointly owned by the Company and the Company’s directly-owned subsidiary.
	e.	Guaranteed by the Company according to the construction contract.
	f.	An investee company. The guarantees were provided based on the Company’s proportionate share in the investee company.
Note 3:	The maximum amount of endorsement or guarantee is up to 1% of the total stockholders’ equity of the latest financial statements of the Company.
Note 4:	The actual amount used by guaranteed party is $1,056,514 thousand.
Note 5:	The actual amount used by guaranteed party is $2,450,000 thousand.
Note 6:	The maximum amount of endorsement or guarantee is up to 4% of the total stockholders’ equity of the latest financial statements of the Company.
Note 7:	The maximum amount of endorsement or guarantee is up to 200% of the total asset of the latest financial statements of Yao Yong Real Property Co., Ltd.

- 40 -

TABLE 2

CHUNGHWA TELECOM CO., LTD.

MARKETABLE SECURITIES HELD

JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note

0	Chunghwa Telecom Co., Ltd.	Stocks
		Senao International Co., Ltd.	Subsidiary	Investments accounted for using equity method		71,773	$	1,330,533		28	$	9,258,737	Note 5
		Light Era Development Co., Ltd.	Subsidiary	Investments accounted for using equity method		300,000		3,522,010		100		3,522,242	Note 1
		Chunghwa Investment Co., Ltd.	Subsidiary	Investments accounted for using equity method		178,000		1,914,178		89		1,971,085	Note 1
		Chunghwa System Integration Co., Ltd.	Subsidiary	Investments accounted for using equity method		60,000		694,042		100		634,598	Note 1
		Chunghwa Telecom Singapore Pte., Ltd.	Subsidiary	Investments accounted for using equity method		26,383		615,496		100		615,496	Note 1
		Taiwan International Standard Electronics Co., Ltd.	Equity-method investee	Investments accounted for using equity method		1,760		548,719		40		744,930	Note 1
		CHIEF Telecom Inc.	Subsidiary	Investments accounted for using equity method		37,942		523,632		69		468,761	Note 1
		Donghwa Telecom Co., Ltd.	Subsidiary	Investments accounted for using equity method		129,590		502,560		100		502,560	Note 1
		International Integrated System, Inc.	Equity-method investee	Investments accounted for using equity method		22,498		251,264		33		220,564	Note 1
		Viettel-CHT Co., Ltd.	Equity-method investee	Investments accounted for using equity method		—		245,265		30		245,265	Note 1
		Chunghwa International Yellow Pages Co., Ltd.	Subsidiary	Investments accounted for using equity method		15,000		179,849		100		179,874	Note 1
		Prime Asia Investments Group Ltd. (B.V.I.)	Subsidiary	Investments accounted for using equity method		1		164,699		100		164,699	Note 1
		Dian Zuan Integrating Marketing Co., Ltd.	Equity-method investee	Investments accounted for using equity method		11,464		112,079		40		112,079	Note 1
		Skysoft Co., Ltd.	Equity-method investee	Investments accounted for using equity method		4,438		97,455		30		58,088	Note 1
		Spring House Entertainment Tech. Inc.	Subsidiary	Investments accounted for using equity method		5,996		91,142		56		75,408	Note 1
		Chunghwa Telecom Global, Inc.	Subsidiary	Investments accounted for using equity method		6,000		72,129		100		88,468	Note 1

(Continued)

- 41 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011										Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)			Percentage of Ownership		Market Value or Net Asset Value			Note
		Kingwaytek Technology Co., Ltd.		Equity-method investee	Investments accounted for using equity method		1,703		66,243			33		23,582		Note 1
		Chunghwa Telecom Vietnam Co., Ltd.		Subsidiary	Investments accounted for using equity method		—		41,161			100		41,161		Note 1
		So-net Entertainment Taiwan Co., Ltd.		Equity-method investee	Investments accounted for using equity method		3,429		31,532			30		14,107		Note 1
		Chunghwa Telecom Japan Co., Ltd.		Subsidiary	Investments accounted for using equity method		1		18,411			100		18,411		Note 1
		New Prospect Investments Holdings Ltd. (B.V.I.)		Subsidiary	Investments accounted for using equity method		—		— (US$1 dollar	)		100		— (US$1 dollar	)	Note 3
		Chunghwa Sochamp Technology Inc.		Subsidiary	Investments accounted for using equity method		2,040		20,400			—		20,400		Note 9
		Taipei Financial Center Corp.		—	Financial assets carried at cost		172,927		1,789,530			12		1,415,843		Note 2
		Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)		—	Financial assets carried at cost		20,000		200,000			17		207,170		Note 2
		Global Mobile Corp.		—	Financial assets carried at cost		12,696		127,018			8		79,762		Note 2
		iD Branding Ventures		—	Financial assets carried at cost		7,500		75,000			8		82,155		Note 2
		Innovation Works Development Fund, L.P.		—	Financial assets carried at cost		—		38,035			6		22,784		Note 2
		RPTI Intergroup International Ltd.		—	Financial assets carried at cost		4,765		34,500			10		33,398		Note 2
		Innovation Works Limited		—	Financial assets carried at cost		1,000		31,391			2		23,724		Note 2
		CQi Energy Infocom Inc.		—	Financial assets carried at cost		2,000		20,000			18		(2,866	)	Note 2
		Essence Technology Solution, Inc.		—	Financial assets carried at cost		200		—			7		919		Note 2

(Continued)

- 42 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011							Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership	Market Value or Net Asset Value		Note

		Beneficiary certificates (mutual fund)
		HSBC Glbl Emerging Markets Bd A Inc.		—	Available-for-sale financial assets		288	$	163,912	—	$	161,826	Note 4
		Templeton Global Bond A Acc $		—	Available-for-sale financial assets		418		307,114	—		314.315	Note 4
		PIMCO Global Investment Grade Credit - Ins H Acc		—	Available-for-sale financial assets		751		307,246	—		307,451	Note 4
		PIMCO GIS Total Return Bond Fund - H Institutional Class (Acc)		—	Available-for-sale financial assets		770		534,453	—		527,092	Note 4
		Janus US Flexible Income Bond Fund		—	Available-for-sale financial assets		671		230,472	—		228,568	Note 4
		PIMCO GIS Diversified Bond Fund - H Institutional Class (Acc)		—	Available-for-sale financial assets		984		347,452	—		345,261	Note 4

		Bonds
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005		—	Held-to-maturity financial assets		—		309,749	—		309,749	Note 7
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-B Issue in 2006		—	Held-to-maturity financial assets		—		408,122	—		408,122	Note 7
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-B Issue in 2006		—	Held-to-maturity financial assets		—		306,092	—		306,092	Note 7
		Taiwan Power Co. 3rd Unsecured Corporate Bond-A Issue in 2006		—	Held-to-maturity financial assets		—		200,200	—		200,200	Note 7
		Formosa Petrochemical Corporation 4th Unsecured Corporate Bonds Issue in 2006		—	Held-to-maturity financial assets		—		150,080	—		150,080	Note 7
		Formosa Petrochemical Corporation 5th Unsecured Corporate Bonds Issue in 2006		—	Held-to-maturity financial assets		—		200,249	—		200,249	Note 7
		Yuanta Securities Co., Ltd. 1st Unsecured Corporate Bonds-B Issue in 2007		—	Held-to-maturity financial assets		—		201,499	—		201,499	Note 7
		China Development Financial Holding Corporation 1st Unsecured Corporate Bonds Issue in 2006		—	Held-to-maturity financial assets		—		200,594	—		200,594	Note 7
		China Development Financial Holding Corporation 1st Unsecured Corporate Bonds Issue in 2006		—	Held-to-maturity financial assets		—		200,594	—		200,594	Note 7
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-A Issue in 2008		—	Held-to-maturity financial assets		—		102,439	—		102,439	Note 7
		China Steel Corporation 1st Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		102,116	—		102,116	Note 7
		China Steel Corporation 2nd Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		100,014	—		100,014	Note 7
		China Steel Corporation 2nd Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		102,003	—		102,003	Note 7
		Yuanta FHC 1st Unsecured Corporate Bonds-A Issue in 2009		—	Held-to-maturity financial assets		—		100,000	—		100,000	Note 7
		Taiwan Power Co. 3rd Unsecured Corporate Bond-B Issue in 2008		—	Held-to-maturity financial assets		—		154,281	—		154,281	Note 7
		Taiwan Power Co. 5rd Unsecured Corporate Bond-A Issue in 2008		—	Held-to-maturity financial assets		—		149,995	—		149,995	Note 7
		Taiwan Power Co. 4th Unsecured Corporate Bond-B Issue in 2008		—	Held-to-maturity financial assets		—		51,006	—		51,006	Note 7

(Continued)

- 43 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note

		Taiwan Power Co. 5th Unsecured Corporate Bond-A Issue in 2008		—	Held-to-maturity financial assets		—	$	300,979		—	$	300,979	Note 7
		Taiwan Power Co. 5th Unsecured Corporate Bond-B Issue in 2008		—	Held-to-maturity financial assets		—		206,192		—		206,192	Note 7
		Taiwan Power Co. 6th Unsecured Corporate Bond-A Issue in 2008		—	Held-to-maturity financial assets		—		270,434		—		270,434	Note 7
		Taiwan Power Co. 8th Unsecured Corporate Bond-A Issue in 2008		—	Held-to-maturity financial assets		—		154,067		—		154,067	Note 7
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		404,246		—		404,246	Note 7
		NAN YA Company 3rd Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		202,630		—		202,630	Note 7
		China Development Financial Holding Corporation 1st Unsecured Corporate Bonds-A Issue in 2008		—	Held-to-maturity financial assets		—		102,107		—		102,107	Note 7
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		99,942		—		99,942	Note 7
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		101,603		—		101,603	Note 7
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		408,320		—		408,320	Note 7
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		49,962		—		49,962	Note 7
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		205,036		—		205,036	Note 7
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-A Issue in 2009		—	Held-to-maturity financial assets		—		200,732		—		200,732	Note 7
		FCFC 1st Unsecured Corporate Bonds Issue in 2009		—	Held-to-maturity financial assets		—		251,807		—		251,807	Note 7
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		201,226		—		201,226	Note 7
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		40,558		—		40,558	Note 7
		Taiwan Power Co. 2th Secured Corporate Bond-B Issue in 2009		—	Held-to-maturity financial assets		—		100,390		—		100,390	Note 7
		Taiwan Power Co. 2th Secured Corporate Bond-B Issue in 2009		—	Held-to-maturity financial assets		—		348,909		—		348,909	Note 7
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		99,933		—		99,933	Note 7
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		304,636		—		304,636	Note 7
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		203,306		—		203,306	Note 7
		NAN YA Company 2nd Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		200,623		—		200,623	Note 7
		NAN YA Company 2nd Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		50,353		—		50,353	Note 7

(Continued)

- 44 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note

		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—	$	302,990		—	$	302,990	Note 7
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		199,684		—		199,684	Note 7
		MLPC 1st Unsecured Corporate Bond Issue in 2008		—	Held-to-maturity financial assets		—		305,133		—		305,133	Note 7
		MLPC 1st Unsecured Corporate Bond Issue in 2008		—	Held-to-maturity financial assets		—		199,816		—		199,816	Note 7
		Formosa Petrochemical Corporation 4th Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		200,690		—		200,690	Note 7
		Formosa Petrochemical Corporation 4th Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		305,139		—		305,139	Note 7
		Formosa Petrochemical Corporation 4th Unsecured Corporate Bonds Issue in 2008		—	Held-to-maturity financial assets		—		202,487		—		202,487	Note 7
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009		—	Held-to-maturity financial assets		—		176,981		—		176,981	Note 7
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009		—	Held-to-maturity financial assets		—		100,996		—		100,996	Note 7
		FCFC 2st Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		201,178		—		201,178	Note 7
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		302,989		—		302,989	Note 7
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		100,505		—		100,505	Note 7
		Taiwan Power Co 3rd Secured Corporate Bond-A Issue in 2010		—	Held-to-maturity financial assets		—		201,662		—		201,662	Note 7
		Taiwan Power Co 4th Secured Corporate Bond-A Issue in 2010		—	Held-to-maturity financial assets		—		300,738		—		300,738	Note 7
		Taiwan Power Co 4th Secured Corporate Bond-A Issue in 2010		—	Held-to-maturity financial assets		—		299,785		—		299,785	Note 7
		Mega Securities Co., Ltd. 1st Unsecured Corporate Bond Issue in 2009		—	Held-to-maturity financial assets		—		300,000		—		300,000	Note 7
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		50,551		—		50,551	Note 7
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		299,589		—		299,589	Note 7
		Yuanta FHC 1st Unsecured Corporate Bonds-A lssue in 2011		—	Held-to-maturity financial assets		—		300,000		—		300,000	Note 7
		FCFC 1st Unsecured Corporate Bonds Issue in 2011		—	Held-to-maturity financial assets		—		299,358		—		299,358	Note 7
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2011		—	Held-to-maturity financial assets		—		149,687		—		149,687	Note 7
		China Development Industrial Bank 2nd Financial Debentures Issue in 2006		—	Held-to-maturity financial assets		—		199,709		—		199,709	Note 7
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010		—	Held-to-maturity financial assets		—		100,751		—		100,751	Note 7
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010		—	Held-to-maturity financial assets		—		201,879		—		201,879	Note 7

(Continued)

- 45 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011										Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)			Percentage of Ownership		Market Value or Net Asset Value			Note

		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010		—	Held-to-maturity financial assets		—	$	303,958			—	$	303,958		Note 7
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-D Issue in 2011		—	Held-to-maturity financial assets		—		300,000			—		300,000		Note 7
1	Senao International Co., Ltd.	Stocks
		Senao Networks, Inc.		Equity-method investee	Investments accounted for using equity method		16,824		300,207			41		300,207		Note 1
		Senao International (Samoa) Holding Ltd.		Subsidiary	Investments accounted for using equity method		9,875		230,406 (US$ 8,000	)		100		230,528 (US$ 8,004	)	Note 1
		N.T.U. Innovation Incubation Corporation		—	Financial assets carried at cost		1,200		12,000			9		12,984		Note 2
		Beneficiary certificates (mutual fund)
		Fuh Hwa Global Short-term Income Fund		—	Available-for-sale financial assets		4,850		50,000			—		52,207		Note 4
		Fuh Hwa Strategic High Income Fund		—	Available-for-sale financial assets		9,149		100,000			—		104,847		Note 4
		Taishin Lucky Money Market Fund		—	Available-for-sale financial assets		4,687		50,000			—		50,131		Note 4
		Taishin Ta-Chong Money Market Fund		—	Available-for-sale financial assets		3,676		50,000			—		50,140		Note 4
2	CHIEF Telecom Inc.	Stocks
		Unigate Telecom Inc.		Subsidiary	Investments accounted for using equity method		200		1,864			100		1,864		Note 1
		Chief International Corp.		Subsidiary	Investments accounted for using equity method		200		8,370 (US$ 291	)		100		8,370 (US$ 291	)	Note 1
		eASPNet Inc.		—	Financial assets carried at cost		833		—			2		—		Note 2
		3 Link Information Service Co., Ltd.		—	Financial assets carried at cost		374		3,450			10		6,885		Note 2
3	Chunghwa System Integration Co., Ltd.	Stocks
		Concord Technology Co., Ltd.		Subsidiary	Investments accounted for using equity method		1,010		7,864 (US$ 274	)		100		7,864 (US$ 274	)	Note 1
7	Spring House Entertainment Tech. Inc.	Stocks
		Ceylon Innovation Co., Ltd.		Subsidiary	Investments accounted for using equity method		—		979			100		979		Note 1

(Continued)

- 46 -

No.

Held Company Name

Marketable Securities Type and Name

Relationship with the Company

Financial Statement Account

June 30, 2011

Note

Shares
(Thousands/
Thousand Units)

Carrying Value
(Note 6)

Percentageof
Ownership

Market Value or
Net Asset Value

Light Era Development Co., Ltd.

Stocks

Yao Yong Real Property Co., Ltd.

Subsidiary

Investments accounted for using equity method

83,290

2,809,963

100

2,809,963

Note 1

Chunghwa Telecom Singapore Pte., Ltd.

Stocks

ST-2 Satellite Ventures Pte., Ltd.

Equity-
method
investee

Investments accounted for using equity method

18,102

411,995

(SG$ 17,621)

411,995

(SG$ 17,621

)

Note 1

Chunghwa Investment Co., Ltd.

Stocks

Chunghwa Precision Test Tech. Co., Ltd.

Subsidiary

Investments accounted for using equity method

10,317

118,723

Note 1

Chunghwa Investment Holding Co., Ltd.

Subsidiary

Investments accounted for using equity method

1,043

14,116

(US$ 491

)

100

14,116

(US$ 491

)

Note 1

Tatung Technology Inc.

Equity-
method
investee

Investments accounted for using equity method

5,000

18,825

Note 1

Panda Monium Company Ltd.

Equity-
method
investee

Investments accounted for using equity method

602

—

Note 1

CHIEF Telecom Inc.

Equity-
method
investee

Investments accounted for using equity method

2,000

24,381

24,736

Note 1

Senao International Co., Ltd.

Equity-
method
investee

Investments accounted for using equity method

1,001

46,873

—

129,129

Note 5

Digimax Inc.

—

Financial assets carried at cost

2,000

15,080

14,578

Note 2

(Continued)

- 47 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note

		iD Branding Ventures		—	Financial assets carried at cost		2,500	$	25,000		3	$	25,591	Note 2
		ChipSip Technology Co., Ltd.		—	Financial assets carried at cost		485		4,370		1		3,500	Note 8
		Uni Display Inc.		—	Financial assets carried at cost		4,630		55,450		3		40,199	Note 2
		A2peak Power Co., Ltd.		—	Financial assets carried at cost		990		9,858		3		7,977	Note 2
		Taimide Technology Ltd.		—	Financial assets carried at cost		897		19,923		1		44,168	Note 2
		CoaTronics Inc.		—	Financial assets carried at cost		1,200		12,000		9		4,725	Note 2
		VisEra Technologies Company Ltd.		—	Financial assets carried at cost		649		29,371		—		11,236	Note 2
		Ultra Fine Optical Technology Co., Ltd.		—	Financial assets carried at cost		1,800		27,000		8		24,307	Note 2
		Procrystal Technology Co., Ltd.		—	Financial assets carried at cost		1,200		78,000		2		24,393	Note 2
		Tons Lightology Inc.		—	Financial assets carried at cost		1,050		66,150		4		50,400	Note 8
		Alder Optomechanical Corp.		—	Financial assets carried at cost		350		29,750		—		29,750	Note 8
		Aide Energy (Cayman) Holding Co., Ltd.		—	Financial assets carried at cost		800		29,940		1		29,940	Note 2
		XinTec Inc.		—	Financial assets carried at cost		24		1,076		—		913	Note 8
		DelSolar Co., Ltd.		—	Financial assets carried at cost		127		6,083		—		4,504	Note 8
		Subtron Technology Co., Ltd.		—	Financial assets carried at cost		187		3,483		—		4,573	Note 8
		Cando Corporation		—	Financial assets carried at cost		376		4,938		—		5,264	Note 8
		Huga Optotech Inc.		—	Financial assets carried at cost		423		12,870		—		11,860	Note 8
		Tatung Fine Chemicals Co.		—	Financial assets carried at cost		117		9,135		—		6,957	Note 8
		Win Semiconductors Corp.		—	Financial assets carried at cost		370		10,555		—		13,612	Note 8
		OptiVision Technology Inc.		—	Financial assets carried at cost		325		10,188		—		3,289	Note 8
		Lextar Electronics Corp.		—	Financial assets carried at cost		334		16,243		—		12,064	Note 8
		SuperAlloy Industrial Co., Ltd.		—	Financial assets carried at cost		509		7,124		—		5,803	Note 8
		G-TECH Optoelectronics Corporation		—	Financial assets carried at cost		17		1,747		—		1,813	Note 8
		Hiroca Holdings Ltd.		—	Financial assets carried at cost		140		17,847		—		17,258	Note 8
		Formosa Plastics Corporation		—	Available-for-sale financial assets		11		648		—		1,108	Note 5
		Fubon Financial Holding Co., Ltd.		—	Available-for-sale financial assets		371		13,576		—		16,401	Note 5
		Cathay Financial Holding Co., Ltd.		—	Available-for-sale financial assets		66		3,442		—		2,913	Note 5
		Dynapack International Technology Corp.		—	Available-for-sale financial assets		1		67		—		89	Note 5
		Taiwan Hon Chuan Enterprise Co., Ltd.		—	Available-for-sale financial assets		122		7,042		—		10,567	Note 5
		Asia Cement Corporation		—	Available-for-sale financial assets		80		2,567		—		3,280	Note 5
		Anpec Electronics Corporation		—	Available-for-sale financial assets		65		2,629		—		1,885	Note 5
		China Steel Corporation		—	Available-for-sale financial assets		222		6,650		—		7,668	Note 5
		Wei Chuan Foods Corp.		—	Available-for-sale financial assets		203		8,912		—		6,608	Note 5
		Gemtek Technology Co., Ltd.		—	Available-for-sale financial assets		71		3,970		—		2,244	Note 5
		Coxon Precise Industrial Co., Ltd.		—	Available-for-sale financial assets		107		8,206		—		6,720	Note 5

(Continued)

- 48 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note
		Altek Corp.		—	Available-for-sale financial assets		36		1,824		—		1,487	Note 5
		I-Chiun Precision Industry Co., Ltd.		—	Available-for-sale financial assets		150		7,320		—		3,510	Note 5
		Delta Electronics, Inc.		—	Available-for-sale financial assets		70		8,383		—		7,385	Note 5
		MasterLink Securities Corporation		—	Available-for-sale financial assets		250		3,162		—		3,213	Note 5
		Evergreen Marine Corp. (Taiwan) Ltd.		—	Available-for-sale financial assets		80		1,821		—		1,848	Note 5
		Chipbond Technology Corporation		—	Available-for-sale financial assets		80		3,632		—		3,268	Note 5
		Chung Hwa Pulp Corp.		—	Available-for-sale financial assets		140		2,217		—		2,100	Note 5
		Taiwan Cement Corp.		—	Available-for-sale financial assets		80		2,505		—		3,424	Note 5
		China Airlines Ltd.		—	Available-for-sale financial assets		190		4,127		—		3,705	Note 5
		Hon Hai Precision Ind. Co., Ltd.		—	Available-for-sale financial assets		3		324		—		331	Note 5
		Insyde Software Corp.		—	Available-for-sale financial assets		15		2,218		—		2,378	Note 5
		Makalot Industrial Co., Ltd.		—	Available-for-sale financial assets		10		731		—		752	Note 5
		Nan Ya Printed Circuit Board Corporation		—	Available-for-sale financial assets		15		1,741		—		1,635	Note 5

(Continued)

- 49 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note
		Taiflex Scientific Co., Ltd.		—	Available-for-sale financial assets		40	$	2,318		—	$	2,472	Note 5
		PChome Store Inc.		—	Available-for-sale financial assets		325		14,072		—		49,400	Note 5
		IC Plus Corp.		—	Available-for-sale financial assets		210		5,630		—		5,000	Note 5
		Swancor Ind, Co., Ltd.		—	Available-for-sale financial assets		24		1,326		—		1,332	Note 5
		Apex Biotechnology Corp.		—	Available-for-sale financial assets		8		422		—		504	Note 5
		Cyberlink Co.		—	Available-for-sale financial assets		46		5,736		—		3,943	Note 5
		Optotech Corporation		—	Available-for-sale financial assets		320		7,106		—		5,648	Note 5
		Sino-American Silicon Products Inc.		—	Available-for-sale financial assets		76		8,085		—		7,196	Note 5
		Tang Eng Iron Works Co., Ltd.		—	Available-for-sale financial assets		135		3,930		—		3,928	Note 5
		Pan Jit International Inc.		—	Available-for-sale financial assets		20		649		—		647	Note 5
		Ability Enterprise Co., Ltd.		—	Available-for-sale financial assets		55		2,909		—		2,178	Note 5
		Yuanta Financial Holdings		—	Available-for-sale financial assets		200		4,279		—		3,980	Note 5
		Sunrex Technology Corporation		—	Available-for-sale financial assets		85		2,538		—		2,257	Note 5
		Taiwan Semiconductor Co., Ltd.		—	Available-for-sale financial assets		245		6,146		—		5,439	Note 5
		Everlight Electronics Co., Ltd.		—	Available-for-sale financial assets		90		8,248		—		6,939	Note 5
		Visual Photonics Epitaxy Co., Ltd.		—	Available-for-sale financial assets		43		3,197		—		3,054	Note 5
		Ene Technology Inc.		—	Available-for-sale financial assets		54		2,813		—		1,680	Note 5
		Realtek Semiconductor Corp.		—	Available-for-sale financial assets		81		6,047		—		4,482	Note 5
		ALi Corporation		—	Available-for-sale financial assets		105		5,634		—		4,357	Note 5
		Acme Electronics Corporation		—	Available-for-sale financial assets		70		7,052		—		6,790	Note 5
		Taiwan PCB Techvest Co., Ltd.		—	Available-for-sale financial assets		100		4,900		—		3,155	Note 5
		China Synthetic Rubber Corporation		—	Available-for-sale financial assets		120		3,615		—		3,612	Note 5
		Chung Hung Steel Corporation		—	Available-for-sale financial assets		101		1,807		—		1,487	Note 5
		Newmax Technology Co., Ltd.		—	Available-for-sale financial assets		26		3,316		—		2,918	Note 5
		Tingyi (Cayman Islands) Holding Corp.		—	Available-for-sale financial assets		35		1,492		—		1,543	Note 5
		Daxon Technology Inc.		—	Available-for-sale financial assets		217		6,135		—		4,872	Note 5
		Edison Opto Corporation		—	Available-for-sale financial assets		50		7,850		—		5,970	Note 5

(Continued)

- 50 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note
		Kung Long Batteries Industrial Co., Ltd.		—	Available-for-sale financial assets		30		1,816		—		1,518	Note 5
		Digital China Holdings Limited		—	Available-for-sale financial assets		55		1,671		—		1,282	Note 5
		TXC Corporation		—	Available-for-sale financial assets		95		5,371		—		4,769	Note 5
		Richtek Technology Corp.		—	Available-for-sale financial assets		6		1,311		—		1,182	Note 5
		Uni-President Enerprises Corp.		—	Available-for-sale financial assets		115		4,861		—		4,784	Note 5
		Global Unichip Corp.		—	Available-for-sale financial assets		10		1,110		—		1,135	Note 5
		Ruentex Development Co., Ltd.		—	Available-for-sale financial assets		145		6,818		—		5,851	Note 5
		eMemory Technology Inc.		—	Available-for-sale financial assets		1		73		—		65	Note 5
		Far Eastern Department Stores Ltd.		—	Available-for-sale financial assets		40		1,970		—		2,300	Note 5
		Taiwan Semiconductor Manufacturing Co., Ltd.		—	Available-for-sale financial assets		80		5,466		—		5,776	Note 5
		Fulltech Fiber Glass Corp.		—	Available-for-sale financial assets		50		1,578		—		1,325	Note 5
		Wistron NeWeb Corporation		—	Available-for-sale financial assets		18		1,886		—		1,620	Note 5
		San Shing Fastech Corp.		—	Available-for-sale financial assets		675		24,331		—		30,847	Note 5
		USI Corp.		—	Available-for-sale financial assets		160		6,256		—		5,288	Note 5
		Media Tek Inc.		—	Available-for-sale financial assets		15		5,022		—		4,680	Note 5
		President Chain Store Corp.		—	Available-for-sale financial assets		10		1,212		—		1,660	Note 5
		Macronix International Co., Ltd.		—	Available-for-sale financial assets		90		1,945		—		1,584	Note 5
		Dukang Distillers Holdings Ltd.		—	Available-for-sale financial assets		70		1,316		—		934	Note 5
		Champion Microelectronic Corp.		—	Available-for-sale financial assets		122		6,350		—		4,374	Note 5
		Unimicron Corporation		—	Available-for-sale financial assets		20		949		—		1,022	Note 5

(Continued)

- 51 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note

		Sesoda Corporation		—	Available-for-sale financial assets		138	$	4,882		—	$	5,244	Note 5
		Taiwan Cooperative Bank		—	Available-for-sale financial assets		245		5,925		—		5,721	Note 5
		Lite-On Technology Corp.		—	Available-for-sale financial assets		10		247		—		382	Note 5
		Oris Tech Co., Ltd.		—	Available-for-sale financial assets		5		201		—		265	Note 5
		Chung-Hsin Electic & Machinery MFG. Corp.		—	Available-for-sale financial assets		50		935		—		857	Note 5
		Huaku Development Co., Ltd.		—	Available-for-sale financial assets		33		2,665		—		2,815	Note 5
		Huang Hsiang Construction Corporation		—	Available-for-sale financial assets		47		3,729		—		3,577	Note 5
		Elite Advanced Laser Corporation		—	Available-for-sale financial assets		26		2,265		—		2,122	Note 5
		Taiwan FamilyMart Co., Ltd.		—	Available-for-sale financial assets		11		1,419		—		1,551	Note 5
		Taiwan 50 Index		—	Available-for-sale financial assets		105		6,199		—		6,179	Note 5
		Radium Life Tech Co., Ltd.		—	Available-for-sale financial assets		75		2,767		—		2,820	Note 5
		Chia Chang Co., Ltd.		—	Available-for-sale financial assets		34		2,101		—		1,800	Note 5
		Shining Building Business Co., Ltd.		—	Available-for-sale financial assets		25		1,062		—		1,102	Note 5
		Gigasolar Materials Corporation		—	Available-for-sale financial assets		253		37,245		—		159,832	Note 5
		Beneficiary certificates (mutual)
		Mega Diamond Bond Fund		—	Available-for-sale financial assets		4,185		50,001		—		50,304	Note 4
		Manulife Emerging Market High Yield Bond Fund-A		—	Available-for-sale financial assets		990		9,965		—		10,079	Note 4
		Paradigm high Yield Bond Fund-A		—	Available-for-sale financial assets		1,399		15,000		—		15,532	Note 4
		HSBS Asian High Yield Bond Fund-A		—	Available-for-sale financial assets		300		3,014		—		3,014	Note 4
		Jih Sun MIT Mainstream Fund		—	Available-for-sale financial assets		500		5,000		—		4,810	Note 4
		Cathay Mandarin Fund		—	Available-for-sale financial assets		1,600		16,000		—		15,024	Note 4
		Fubon Agribusiness Equity Fund		—	Available-for-sale financial assets		1,000		10,000		—		9,940	Note 4
		Capital India Medium & Small Capital Equity Fund		—	Available-for-sale financial assets		500		5,000		—		5,020	Note 4

(Continued)

- 52 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note
		Fuh Hwa Global Fixed Income Fund of Funds		—	Available-for-sale financial assets		550		6,012		—		7,150	Note 4
		Cathy Man AHL Futures Trust Fund of Funds		—	Available-for-sale financial assets		997		10,053		—		9,686	Note 4
		Fuh Hwa Emerging Market Active Allocation Fund of Funds		—	Available-for-sale financial assets		1,000		10,000		—		9,980	Note 4
		Franklin Templeton Sinoam Franklin Templeton Global Fund of Funds		—	Available-for-sale financial assets		870		11,621		—		11,432	Note 4
		PowerShares QQQ		—	Available-for-sale financial assets		2		2,853		—		3,278	Note 4
		iShares Dow Jones U.S. Financial Sector Index Fund		—	Available-for-sale financial assets		2		4,325		—		4,047	Note 4
		Pro Shares UltraShort 20+ Year Treasury		—	Available-for-sale financial assets		7		6,769		—		6,443	Note 4
		iShares FTSE/Xinhua A50 China Index ETF		—	Available-for-sale financial assets		85		4,113		—		4,060	Note 4
		iShares CSI A-Share Consumer Staples Index ETF		—	Available-for-sale financial assets		20		1,733		—		1,668	Note 4
		WISE-CSI 300 China Tracker		—	Available-for-sale financial assets		14		2,046		—		1,883	Note 4
		Bonds
		Hua Nan Financial Holdings Company 1st Unsecured Subordinate Corporate Bonds Issue in 2006		—	Available-for-sale financial assets		5,000		50,815		—		51,120	Note 5
		AU Optronics Corporation 1^st Secured Corporate Bonds Issue in 2008		—	Available-for-sale financial assets		5,000		50,406		—		50,524	Note 5

(Continued)

- 53 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2011										Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)			Percentage of Ownership		Market Value or Net Asset Value			Note
		Convertible bonds
		Epistar Corporation Ltd. 3rd Convertible Bond		—	Financial assets at fair value through profit or loss		17	$	1,815			—	$	1,819		Note 5
		Everlight Electronics Co., Ltd. 3rd Convertible Bonds		—	Financial assets at fair value through profit or loss		50		5,411			—		5,212		Note 5
		King Slide Works Co., Ltd. 2nd Convertible Bond		—	Financial assets at fair value through profit or loss		50		5,000			—		5,047		Note 5
		Everlight Electronics Co., Ltd. 4th Convertible Bonds		—	Financial assets at fair value through profit or loss		50		5,000			—		5,270		Note 5
		Ability Enterprise Co., Ltd. 1st Unsecured Convertible Bonds		—	Financial assets at fair value through profit or loss		40		4,008			—		4,002		Note 5
		TUL the Third Security Convertible Bond		—	Financial assets at fair value through profit or loss		15		1,500			—		1,482		Note 5
		Yuanta Financial Holding Co., Ltd. 1st Domestic Convertible Bond		—	Financial assets at fair value through profit or loss		85		8,500			—		9,393		Note 5
		Synnex Technology International Corporation 1st Unsecured Convertible Bond Issue in 2008		—	Financial assets at fair value through profit or loss		35		4,974			—		4,441		Note 5
		Ruentex Industry Co., Ltd. 2010 1st Domestic Unsecured Convertible Corporate Bonds		—	Financial assets at fair value through profit or loss		100		10,074			—		9,910		Note 5
		Ruentex Development Co., Ltd. 2010 1st Domestic Unsecured Convertible Corporate Bonds.		—	Financial assets at fair value through profit or loss		110		11,092			—		10,808		Note 5
		Synnex Technology International Corporation 2nd Unsecured Covertiable Bond Issue		—	Financial assets at fair value through profit or loss		100		10,020			—		10,010		Note 5
		Far Eastern Department Store Ltd. 1st Domestic Unsecured Convertible Corporate Bond		—	Financial assets at fair value through profit or loss		70		7,000			—		7,560		Note 5
		Asia Optical 3.rd Domestic Unsecured Convertible Bond		—	Financial assets at fair value through profit or loss		15		1,504			—		1,567		Note 5
		Shenmao Technology Inc. 1st Convertiable Bond		—	Financial assets at fair value through profit or loss		15		1,500			—		1,618		Note 5
18	Concord Technology Co., Ltd.	Stocks
		Glory Network System Service (Shanghai) Co., Ltd.		Subsidiary	Investments accounted for using equity method		1,010	(RMB	7,864 1,771	)		100	(RMB	7,864 1,771	)	Note 1
20	Chunghwa Precision Test Tech. Co., Ltd.	Stocks
		Chunghwa Precision Test Tech. USA Corporation		Subsidiary	Investments accounted for using equity method		400	(US$	10,200 355	)		100	(US$	10,200 355	)	Note 1
22	Senao International (Samoa) Holding Ltd.	Stocks
		Senao International HK Limited		Subsidiary	Investments accounted for using equity method		9,180	(US$	210,775 7,318	)		100	(US$	210,775 7,318	)	Note 1
		HopeTech Technologies Limited		Equity- method investee	Investments accounted for using equity method		5,240	(US$	19,239 668	)		45	(US$	19,239 668	)	Note 1
23	Senao International HK Limited	Stocks
		Senao Trading (Fujian) Co., Ltd.		Subsidiary	Investments accounted for using equity method		—	(US$	42,746 1,484	)		100	(US$	42,746 1,484	)	Note 1

(Continued)

- 54 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011										Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)			Percentage of Ownership		Market Value or Net Asset Value			Note
		Senao International Trading (Shanghai) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	$ (US$	64,163 2,228	)		100	$ (US$	64,163 2,228	)	Note 1
		Senao International Trading (Shanghai) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	57,294 1,989	)		100	(US$	57,294 1,989	)	Note 1 and 10
		Senao International Trading (Jiangsu) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	45,453 1,578	)		100	(US$	45,453 1,578	)	Note 1
24	Chunghwa Investment Holding Co., Ltd.	Stocks
		CHI One Investment Co., Limited	Subsidiary	Investments accounted for using equity method		3,500	(HK$	4,433 1,201	)		100	(HK$	4,433 1,201	)	Note 1
26	CHI One Investment Co., Limited	Stocks
		Xiamen Sertec Business Technology Co., Ltd.	Equity-method investee	Investments accounted for using equity method		—	(RMB	3,924 881	)		49	(RMB	3,924 881	)	Note 1
27	Prime Asia Investments Group, Ltd. (B.V.I.)	Stocks
		Chunghwa Hsingta Company Ltd.	Subsidiary	Investments accounted for using equity method		—	(RMB	164,699 36,882	)		100	(RMB	164,699 36,882	)	Note 1
29	Chunghwa Hsingta Company Ltd.	Stocks
		Chunghwa Telecom (China) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(RMB	164,699 36,882	)		100	(RMB	164,699 36,882	)	Note 1


Note 1:		The net asset values of investees were based on audited financial statements.
Note 2:		The net asset values of investees were based on unaudited financial statements.
Note 3:		New Prospect Investments Holdings Ltd. (B.V.I.) was incorporated in March 2006, but not yet begun operation as of June 30, 2011.
Note 4:		The net asset values of beneficiary certificates (mutual fund) were based on the net asset values on June 30, 2011.
Note 5:		Market value was based on the closing price of June 30, 2011.
Note 6:		Showing at their original carrying amounts without adjustments for fair values, except for held-to-maturity financial assets.
Note 7:		The net asset values of investees were based on amortized cost.
Note 8:		Market value of emerging stock was based on the average trading price on June 30, 2011.
Note 9:		Prepayment for long-term investment, NT$20,400 thousand, was injected in Chunghwa Sochamp Technology Inc. by Chunghwa in June 2011. Chunghwa Sochamp Technology Inc. completed its registration on July 1^st, 2011, and Chunghwa owns 51% of ownership of Chunghwa Sochamp Technology Inc.
Note 10:		The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 55 -

TABLE 3

CHUNGHWA TELECOM CO., LTD.

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

SIX MONTHS ENDED JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars)


No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship		Beginning Balance				Acquisition				Disposal									Ending Balance
No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship		Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)		Shares (Thou- sands/ Thou- sand Units)		Amount		Shares (Thou- sands/ Thou- sand Units)		Amount		Carrying Value (Note 1)			Gain (Loss) on Disposal		Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)

0	Chunghwa Telecom Co., Ltd.	Stocks
		Prime Asia Investments Group Ltd.	Investments accounted for using equity method		—		Subsidiary		—	$	—		1	$	177,176		—	$	—	$	—		$	—		1	$	164,699 (Note 3	)
		Chunghwa Telecom Singapore Pte., Ltd.	Investments accounted for using equity method		—		Subsidiary		61,869		1,399,258		—		—		35,486		815,827		815,827 (Note 5	)		—		26,383		615,496 (Note 3	)
		Dian Zuan Integrating Marketing Co., Ltd.	Investments accounted for using equity method		—		—		—		—		11,464		114,640		—		—		—			—		11,464		112,079 (Note 3	)
		Beneficiary certificates (mutual fund)
		Yuanta Wan Tai Money Market	Available-for-sale financial assets		—		—		—		—		137,562		2,000,000		137,562		2,001,073		2,000,000			1,073		—		—

(Continued)

- 56 -


No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship		Beginning Balance					Acquisition					Disposal									Ending Balance
No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship		Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)			Shares (Thou- sands/ Thou- sand Units)		Amount			Shares (Thou- sands/ Thou- sand Units)		Amount		Carrying Value (Note 1)		Gain (Loss) on Disposal			Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)
		PIMCO GIS Total Return Bond Fund - H Institutional Class (Acc)	Available-for-sale financial assets		—		—		349		242,784			421		291,669			—		—		—		—			770		534,453
		PIMCO GIS Diversified Bond Fund - E Institutional Class (Inc)	Available-for-sale financial assets		—		—		—		—			656		236,082			656		231,176		236,082		(4,906	)		—		—
		Janus US Flexible Income Bond Fund	Available-for-sale financial assets		—		—		—		—			671		230,472			—		—		—		—			671		230,472
		PIMCO GIS Diversified Bond Fund - H Institutional Class (Acc)	Available-for-sale financial assets		—		—		—		—			984		347,452			—		—		—		—			984		347,452
		Bonds
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005	Held-to-maturity financial assets		—		—		—		—			—		300,000 (Note 2	)		—		—		—		—			—		300,000 (Note 2	)
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-B Issue in 2006	Held-to-maturity financial assets		—		—		—		300,000 (Note 2	)		—		400,000 (Note 2	)		—		—		—		—			—		700,000 (Note 2	)

(Continued)

- 57 -

No.

Company
Name

Marketable
Securities
Type and
Name

Financial
Statement
Account

Counter-
party

Nature of
Relationship

Beginning Balance

Acquisition

Disposal

Ending Balance

Shares
(Thousands/
Thousand
Units)

Amount
(Note 1)

Shares
(Thousands/
Thousand
Units)

Amount

Shares
(Thousands/
Thousand
Units)

Amount

Carrying
Value
(Note 1)

Gain
(Loss)
on
Disposal

Shares
(Thousands/
Thousand
Units)

Amount
(Note 1)

Yuanta Securities Co., Ltd. 1st Unsecured Corporate Bonds-B Issue in 2007

Held-to-maturity financial assets

—

400,000

(Note 2

)

—

200,000

(Note 2

)

200,000

(Note 2

)

—

200,000

(Note 2

)

China Steel Corporation 2nd Unsecured Corporate Bonds Issue in 2008

Held-to-maturity financial assets

—

100,000

(Note 2

)

—

100,000

(Note 2

)

—

200,000

(Note 2

)

Taiwan Power Co. 3rd Unsecured Corporate Bond-B Issue in 2008

Held-to-maturity financial assets

—

150,000

(Note 2

)

—

150,000

(Note 2

)

Taiwan Power Co. 8th Unsecured Corporate Bond-A Issue in 2008

Held-to-maturity financial assets

—

150,000

(Note 2

)

—

150,000

(Note 2

)

Mega Financial Holding Co., Ltd. 2nd Unsecured Corporate Bonds-A Issued in 2007

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

300,000

(Note 2

)

—

(Continued)

- 58 -

No.

Company Name

Marketable
Securities Type
and Name

Financial
Statement
Account

Counter-
party

Nature of
Relationship

Beginning
Balance

Acquisition

Disposal

Ending
Balance

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount
(Note 1)

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount

Carrying
Value
(Note 1)

Gain
(Loss)
on
Disposal

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount
(Note 1)

Taiwan Power Co. 2th Secured Corporate Bond-B Issue in 2009

Held-to-maturity financial assets

—

100,000

(Note 2

)

—

100,000

(Note 2

)

NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

—

600,000

(Note 2

)

MLPC 1st Unsecured Corporate Bond Issue in 2008 Bond-A Issue in 2007

Held-to-maturity financial assets

—

200,000

(Note 2

)

—

300,000

(Note 2

)

—

500,000

(Note 2

)

Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009

Held-to-maturity financial assets

—

175,000

(Note 2

)

—

100,000

(Note 2

)

—

275,000

(Note 2

)

Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

100,000

(Note 2

)

—

400,000

(Note 2

)

Taiwan Power Co 4th Secured Corporate Bond-A Issue in 2010

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

—

600,000

(Note 2

)

Yuanta FHC 1st Unsecured Corporate Bonds-A lssue in 2011

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

FCFC 1st Unsecured Corporate Bonds Issue in 2011

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2011

Held-to-maturity financial assets

—

150,000

(Note 2

)

—

150,000

(Note 2

)

(Continued)

- 59 -


No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship		Beginning Balance					Acquisition					Disposal								Ending Balance
No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relationship		Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)			Shares (Thou- sands/ Thou- sand Units)		Amount			Shares (Thou- sands/ Thou- sand Units)		Amount		Carrying Value (Note 1)		Gain (Loss) on Disposal		Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010	Held-to-maturity financial assets		—		—		—		300,000 (Note 2	)		—		300,000 (Note 2	)		—		—		—		—		—		600,000 (Note 2	)
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-D Issue in 2011	Held-to-maturity financial assets		—		—		—		—			—		300,000 (Note 2	)		—		—		—		—		—		300,000 (Note 2	)
1	Senao International Co., Ltd.	Stocks
		Senao International (Samoa) Holding Ltd.	Investments accounted for using equity method		—		Subsidiary		875	(US$	27,452 875	)		9,000	(US$	261,777 9,000	)		—		—		—		—		9,875	(US$	289,929 9,875 (Note 4	) )
		Beneficiary certificates (mutual fund)
		Fuh Hwa Strategic High Income Fund	Available-for-sale financial assets		—		—		5,000		50,000			6,649		75,000			2,500		28,225		25,000		3,225		9,149		100,000
22	Senao International (Samoa) Holding Ltd.	Stocks
		Senao International HK Limited	Investments accounted for using equity method		—		Subsidiary		180	(US$	5,647 180	)		9,000	(US$	261,777 9,000	)		—		—		—		—		9,180	(US$	267,424 9,180 (Note 4	) )
27	Prime Asia Investments Group Ltd.	Stocks
		Chunghwa Hsingta Company Ltd.	Investments accounted for using equity method		—		Subsidiary		—		—			—		177,176 (RMB 39,376	)		—		—		—		—		—		164,699 (RMB 36,882 (Note 3	) )

(Continued)

- 60 -

No.

Company
Name

Marketable
Securities
Type and
Name

Financial
Statement
Account

Counter-
party

Nature of
Relationship

Beginning
Balance

Acquisition

Disposal

Ending Balance

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount
(Note 1)

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount

Carrying
Value
(Note 1)

Gain
(Loss)
on
Disposal

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount
(Note 1)

Chunghwa Hsingta Company Ltd.

Stocks

Chunghwa Telecom (China) Co., Ltd.

Investments accounted for using equity method

—

Subsidiary

—

(RMB

177,176

39,376

)

—

(RMB

164,699

36,882

(Note 3

)

Note 1:

Showing at their original carrying amounts without adjustments for fair values.

Note 2:

Stated at its nominal amounts.

Note 3:

The ending balance includes equity in earnings or losses of equity method investees and cumulative transaction adjustments.

Note 4:

Stated at its original investment amounts.

Note 5:

The amount decrease was because of capital reduction.

(Concluded)

- 61 -

TABLE 4

CHUNGHWA TELECOM CO., LTD.

ACQUISITION OF REAL ESTATE AMOUNTING AT COST OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

SIX MONTHS ENDED JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars)

Company
Name

Type of
Property

Transaction
Date

Original
Acquisition
Date

Carrying
Amount

Transaction
Amount

Proceeds
Collection
Status

Gain
(Loss)
on
Disposal

Counter-party

Nature of
Relationship

Purpose of
Disposal

Price
Reference

Other
Terms

Chunghwa Telecom Co., Ltd. (Chunghwa)

Land

March
2011

April
2000

338,347

647,717

$615,331 was collected in March 2011; the rest of $32,386 will be collected upon land delivery

305,280

Taiwan Stock Exchange Corporation (TSE)

None

With the presence of TSE, to create cluster effect of IDC clients

In accordance with land valuation report and mutual agreement

—

- 62 -

TABLE 5

CHUNGHWA TELECOM CO., LTD.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

SIX MONTHS ENDED JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars)


No.	Company Name	Related Party	Nature of Relationship	Transaction Details						Abnormal Transaction (Note 2)		Notes/Accounts Payable or Receivable
No.	Company Name	Related Party	Nature of Relationship	Purchase/Sale	Amount			% to Total	Payment Terms	Units Price	Payment Terms	Ending Balance (Note 1)			% to Total
0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	Sales	$	719,522 (Note 4	)	1	30 days	—	—	$	655,936 (Note 5	)		3
				Purchase		3,165,536 (Note 3	)	6	30-90 days	—	—		(804,475 (Note 6	) )		(10	)
		CHIEF Telecom Inc.	Subsidiary	Sales		140,514 (Note 7	)	—	30 days	—	—		29,083 (Note 8	)		—
				Purchase		149,265		—	60 days	—	—		(46,332 (Note 9	) )		—
		Chunghwa System Integration Co., Ltd.	Subsidiary	Purchase		188,882 (Note 10	)	—	30 days	—	—		(252,500 (Note 11	) )		(3	)
		Taiwan International Standard Electronics Co., Ltd.	Equity-method investee	Purchase		242,226		—	30-90 days	—	—		(204,210	)		(2	)
		Light Era Development Co., Ltd.	Subsidiary	Sales		100,054 (Note 12	)	—	—	—	—		—			—
		So-net Entertainment Taiwan	Equity-method investee	Sales		120,369		—	60 days	—	—		8,484			—
1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		3,152,955 (Note 3	)	26	30-90 days	—	—		825,835 (Note 6	)		44
				Purchase		697,103 (Note 4	)	7	30 days	—	—		(399,303 (Note 5	) )		(18	)
2	CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		149,265		26	60 days	—	—		46,205 (Note 9	)		34
				Purchase		140,066 (Note 7	)	29	30 days	—	—		(28,814 (Note 8	) )		(36	)
3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		681,493 (Note 10	)	85	30 days	—	—		252,319 (Note 11	)		84


Note 1:		Excluding payment and receipts collected in trust for others.
Note 2:		Transaction terms were determined in accordance with mutual agreements.
Note 3:		The difference was because Senao International Co., Ltd. classified the amount as other current liabilities.
Note 4:		The difference was because Senao International Co., Ltd. classified the amount as operating expenses.

(Continued)

- 63 -


Note 5:		The difference was because Senao International Co., Ltd. classified the amount as other payables.
Note 6:		The difference was because Chunghwa Telecom Co., Ltd. classified the amount as amounts collected in trust for others.
Note 7:		The difference was because CHIEF Telecom Inc. classified the amount as operating expenses.
Note 8:		The difference was because CHIEF Telecom Inc. classified the amount as other current liabilities.
Note 9:		The difference was because CHIEF Telecom Inc. classified the amount as other receivables.
Note 10:		The difference was because Chunghwa Telecom Co., Ltd. classified the amount as inventories, property, plant and equipment, and intangible assets.
Note 11:		The difference was because Chunghwa System Integration Co., Ltd. classified the amount as other current assets.
Note 12:		The difference was because Light Era Development Co., Ltd. classified the amount as intangible assets and operating expenses.

(Concluded)

- 64 -

TABLE 6

CHUNGHWA TELECOM CO., LTD.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars)


No.	Company Name	Related Party	Nature of Relationship	Ending Balance		Turnover		Overdue				Amounts Received in		Allowance
No.	Company Name	Related Party	Nature of Relationship	Ending Balance		Rate (Note 1)		Amounts		Action Taken		Subsequent Period		for Bad Debts

0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	$	655,936		11.58	$	—		—	$	655,936	$	—
1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		1,077,810		7.70		—		—		1,077,733		—
3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		252,319		2.97		—		—		228,041		—


Note 1:		Payments and receipts collected in trust for others are excluded from the accounts receivable for calculating the turnover rate.

- 65 -

TABLE 7

CHUNGHWA TELECOM CO., LTD.

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE

SIX MONTHS ENDED JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of June 30, 2011						Net Income (Loss) of the Investee			Recog- nized Gain (Loss) (Notes 1 and 2)			Note
					June 30, 2011		December 31, 2010		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
					June 30, 2011		December 31, 2010		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value

0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Sindian, New Taipei City	Selling and maintaining mobile phones and its peripheral products	$	1,065,813	$	1,065,813		71,773		28	$	1,330,533	$	659,390		$	185,867		Subsidiary
		Light Era Development Co., Ltd.	Taipei	Housing, office building development, rent and sale services		3,000,000		3,000,000		300,000		100		3,522,010		550,643			550,536		Subsidiary
		Chunghwa Investment Co., Ltd.	Taipei	Telecommunications, telecommunications value-added services and other related professional investment		1,738,709		1,738,709		178,000		89		1,914,178		79,657			70,670		Subsidiary
		Chunghwa System Integration Co., Ltd.	Taipei	Providing communication and information aggregative services		838,506		838,506		60,000		100		694,042		8,740			14,720		Subsidiary
		Chunghwa Telecom Singapore Pte., Ltd.	Singapore	Telecommunication wholesale, internet transfer services international data and long distance call wholesales to carriers		574,112		1,389,939		26,383		100		615,496		5,823			5,823		Subsidiary
		Taiwan International Standard Electronics Co., Ltd.	Taipei	Manufacturing, selling, designing, and maintaining of telecommunications systems and equipment		164,000		164,000		1,760		40		548,719		263,938			99,919		Equity- method investee
		CHIEF Telecom Inc.	Taipei	Internet communication and internet data center (“IDC”) service		482,165		482,165		37,942		69		523,632		79,807			56,658		Subsidiary
		Donghwa Telecom Co., Ltd.	Hong Kong	International telecommunications IP fictitious internet and internet transfer services		522,003		522,003		129,590		100		502,560		(5,574	)		(5,574	)	Subsidiary
		International Integrated System, Inc.	Banqiao, New Taipei City	IT solution provider, IT application consultation, system integration and package solution		283,500		283,500		22,498		33		251,264		(56,899	)		(26,732	)	Equity- method investee

(Continued)

- 66 -


No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount			Balance as of June 30, 2011					Net Income (Loss) of the Investee			Recog- nized Gain (Loss) (Notes 1 and 2)			Note
					June 30, 2011	December 31, 2010		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
					June 30, 2011	December 31, 2010		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
		Viettel-CHT Co., Ltd.	Vietnam	IDC services	288,327		288,327		—		30	245,265		46,589			13,983		Equity- method investee
		Chunghwa International Yellow Pages Co., Ltd.	Taipei	Yellow pages sales and advertisement services	150,000		150,000		15,000		100	179,849		24,149			24,123		Subsidiary
		Prime Asia Investments Group Ltd. (B.V.I.)	British Virgin Islands	Investment	177,176		—		1		100	164,699		(11,136	)		(11,136	)	Subsidiary
		Dian Zuan Integrating Marketing Co., Ltd.	Taipei	Information technology service and general advertisement service	114,640		—		11,464		40	112,079		(6,403	)		(2,561	)	Equity- method investee
		Skysoft Co., Ltd.	Taipei	Providing of music on-line, software, electronic information, and advertisement services	67,025		67,025		4,438		30	97,455		39,227			11,768		Equity- method investee
		Spring House Entertainment Tech. Inc.	Taipei	Network services, producing digital entertainment contents and broadband visual sound terrace development	62,209		62,209		5,996		56	91,142		26,368			14,777		Subsidiary
		Chunghwa Telecom Global, Inc.	United States	International data and internet services and long distance call wholesales to carriers	70,429		70,429		6,000		100	72,129		8,502			9,579		Subsidiary
		KingWaytek Technology Co., Ltd.	Taipei	Publishing books, data processing and software services	71,770		71,770		1,703		33	66,243		15,363			2,353		Equity- method investee
		Chunghwa Telecom Vietnam Co., Ltd.	Vietnam	Information and communications technology, international circuit, and intelligent energy network service	43,847 (VND 30,921,368)		—		—		100	41,161 (VND 30,603,757)		(439) (VND (324,531)	)		(439) (VND (324,531)	)	Subsidiary
		So-net Entertainment Taiwan	Taipei	Online service and sale of computer hardware	60,008		60,008		3,429		30	31,532		20,895			6,335		Equity- method investee
		Chunghwa Telecom Japan Co., Ltd.	Japan	Telecom business, information process and information provide service, development and sale of software and consulting services in telecommunication	17,291		17,291		1		100	18,411		6,295			6,295		Subsidiary

(Continued)

- 67 -

No.

Investor
Company

Investee
Company

Location

Main Businesses
and Products

Original Investment
Amount

Balance as of June 30, 2011

Net Income
(Loss) of
the Investee

Recog-
nized
Gain (Loss)
(Notes 1
and 2)

Note

June 30,
2011

December 31,
2010

Shares
(Thousands)

Percentage
of
Ownership
(%)

Carrying
Value

New Prospect Investments Holdings Ltd. (B.V.I.)

British
Virgin
Islands

Investment

—

(Note 3

)

—

(Note 3

)

—

100

—

(Note 3

)

—

(Note 3

)

Subsidiary

Chunghwa Sochamp Technology Inc.

Taipei

License plate recognition system

20,400

(Note 4

)

—

2,040

—

20,400

(Note 4

)

—

Subsidiary

Senao International Co., Ltd.

Senao Networks, Inc.

Linkou, New
Taipei City

Telecommunication facilities manufactures and sales.

206,190

16,824

300,207

62,726

25,713

Equity-
method
investee

Senao International (Samoa) Holding Ltd.

Samoa Islands

International investment

289,229

(US$ 9,875

)

27,452

(US$ 875

)

9,875

100

230,406

(US$ 8,000

)

(US$

(53,960

(1,856

)

))

(53,547)

(US$(1,840)

)

Subsidiary

(Continued)

- 68 -


No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of June 30, 2011							Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
No.	Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2011			December 31, 2010			Shares (Thousands)		Percentage of Ownership (%)		Carrying Value			Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
2	CHIEF Telecom Inc.	Unigate Telecom Inc.	Taipei	Telecommunication and internet service	$	2,000		$	2,000			200		100	$	1,864		$	(73	)	$	(73 (Note 4	) )	Subsidiary
		Chief International Corp.	Samoa Islands	Network communication and engine room hiring		6,068 (US$ 200	)		6,068 (US$ 200	)		200		100		8,370 (US$ 291	)		520 (US$18	)		520 (US$18	)	Subsidiary
3	Chunghwa System Integrated Co., Ltd.	Concord Technology Co., Ltd.	Brunei	Providing advanced business solutions to telecommunications		31,973 (US$ 1,010	)		31,973 (US$ 1,010	)		1,010		100		7,864 (US$ 274	)		(2,276 (US$(94	) ))		(2,276 (US$(94	) ))	Subsidiary
7	Spring House Entertainment Tech. Inc.	Ceylon Innovation Co., Ltd.	Taipei	International trading, general advertisement and book publishment service		1,000			—			—		100		979			(21	)		(21	)	Subsidiary
8	Light Era Development Co., Ltd.	Yao Yong Real Property Co., Ltd.	Taipei	Real estate leasing business		2,809,963			2,824,180			83,290		100		2,809,963			22,774			(14,217	)	Subsidiary
9	Chunghwa Telecom Singapore Pte., Ltd.	ST-2 Satellite Ventures Pte., Ltd.	Singapore	Operation of ST-2 telecommunication satellite		409,061 (SG$ 18,102	)		409,061 (SG$ 18,102	)		18,102		38		411,995 (SG$ 16,521	)		(13,422 (SG$(580	) ))		(3,118 (SG$(136	) ))	Equity- method investee
14	Chunghwa Investment Co., Ltd.	Chunghwa Precision Test Tech Co., Ltd.	Tao Yuan	Semiconductor testing components and printed circuit board industry production and marketing of electronic products		91,875			91,875			110,317		53		118,723			5,590			3,004		Subsidiary
		Chunghwa Investment Holding Co., Ltd.	Burnei	General investment		34,483 (US$ 1,043	)		34,483 (US$ 1,043	)		1,043		100		14,116 (US$ 491	)		(3,861 (US$(133	) ))		(3,861 (US$(133	) ))	Subsidiary
		Tatung Technology Inc.	Taipei	The product of SET TOP BOX		50,000			50,000			5,000		28		18,825			57,088			15,446		Equity- method investee
		Panda Monium Company Ltd.	Cayman	The production of animation		20,000 (US$ 602	)		20,000 (US$ 602	)		602		43		—			—			—		Equity- method investee
		CHIEF Telecom Inc.	Taipei	Telecommunication and internet service		20,000			20,000			20,000		4		23,481			79,807			2,921		Equity- method investee
		Senao International Co., Ltd.	Sindian, New Taipei City	Selling and maintaining mobile phones and its peripheral products		49,731			49,731			1,001		—		46,873			659,390			1,581		Equity- method investee
18	Concord Technology Co., Ltd.	Glory Network System Service (Shanghai) Co., Ltd.	Shanghai	Providing advanced business solutions to telecommunications		31,973 (US$ 1,010	)		31,973 (US$ 1,010	)		1,010		100		7,864 (RMB 1,771	)		(2,726 (US$(94	) ))		(2,726 (US$(94	) ))	Subsidiary

- 69 -


No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of June 30, 2011							Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
No.	Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2011			December 31, 2010			Shares (Thousands)		Percentage of Ownership (%)		Carrying Value			Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note

20	Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech. USA Corporation	United States	Semiconductor testing components and printed circuit board industry production and marketing of electronic products	(US$	12,636 400	)	(US$	12,636 400	)		400		100	(US$	10,200 355	)	(US$	(1,171 (40	) ))	(US$	(1,171 (40	) ))	Subsidiary

22	Senao International (Samoa) Holding Ltd.	Senao International HK Limited	Hong Kong	Sales of communication business	(US$	267,424 9,180	)	(US$	5,647 180	)		9,180		100	(US$	210,775 7,318	)	(US$	(54,785 (1,885	) ))	(US$	(54,785 (1,885	) ))	Subsidiary

		HopeTech Technologies Limited	Hong Kong	Information technology and telecommunication products sales	(US$	21,177 675	)	(US$	21,177 675	)		5,240		45	(US$	19,239 668	)	(US$	146 5	)	(US$	66 2	)	Equity- method investee

24	Chunghwa Investment Holding Co., Ltd.	CHI One Investment Co., Limited	Hong Kong	General investment	(HK$	14,483 3,924	)	(HK$	14,483 3,924	)		3,500		100	(HK$	4,433 1,201	)	(HK$	(3,861 (1,034	) ))	(HK$	(3,861 (1,034	) ))	Subsidiary

26	CHI One Investment Co., Limited	Xiamen Sertec Business Technology Co., Ltd.	Xiamen	Customer Services and platform rental activities	(RMB	13,862 2,963	)	(RMB	13,862 2,963	)		—		49		3,924 (RMB 881	)	(RMB	(7,881) (1,764	))	(RMB	(3,862) (866	))	Equity- method investee

23	Senao International HK Limited.	Senao Trading (Fujian) Co., Ltd.	Fujian	Information technology services and sale of communication products	(US$	58,665 2,000	)		—			—		100	(US$	42,746 1,484	)	(US$	(15,511 (534	) ))	(US$	(15,511 (534	) ))	Subsidiary

		Senao International Trading (Shanghai) Co., Ltd.	Shanghai	Information technology services and sale of communication products	(US$	87,429 3,000	)		—			—		100	(US$	64,158 2,228	)	(US$	(23,106 (795	) ))	(US$	(23,106 (795	) ))	Subsidiary

		Senao International Trading (Shanghai) Co., Ltd.	Shanghai	Information technology services and sale of communication products	(US$	57,510 2,000	)		—			—		100	(US$	57,294 1,989	)	(US$	(447 (15	) ))	(US$	(447 (15	) ))	Subsidiary (Note 5)

		Senao International Trading (Jiangsu) Co., Ltd.	Jiangsu	Information technology services and sale of communication products	(US$	58,092 2,000	)		—			—		100	(US$	45,453 1,578	)	(US$	(12,617 (434	) ))	(US$	(12,617 (434	) ))	Subsidiary

27	Prime Asia Investments Group, Ltd. (B.V.I.)	Chunghwa Hsingta Co., Ltd.	Hong Kong	Investment	(RMB	177,176 39,376	)		—			—		100	(RMB	164,699 36,882	)	(RMB	(11,136) (2,494	))	(RMB	(11,136) (2,494	))	Subsidiary

- 70 -

No.

Investor
Company

Investee
Company

Location

Main
Businesses
and Products

Original Investment
Amount

Balance as of June 30, 2011

Net Income
(Loss) of the
Investee

Recognized
Gain (Loss)
(Notes 1
and 2)

Note

June 30, 2011

December 31,
2010

Shares
(Thousands)

Percentage
of
Ownership
(%)

Carrying
Value

Chunghwa Hsingta Company Ltd.

Chunghwa Telecom (China) Co., Ltd.

Shanghai

Planning and design of energy conservation and software and hareware system services, and intergartion of information system

(RMB

177,176

39,376

)

—

100

(RMB

164,699

36,882

)

(RMB

(11,136)

(2,494

))

(RMB

(11,136)

(2,494

))

Subsidiary



Note 1:		The equity in net income (loss) of investees was based on audited financial statements.
Note 2:		The equity in net income (loss) of investees includes amortization of differences between the investment cost and net value and elimination of unrealized transactions.
Note 3:		New Prospect Investments Holdings Ltd. (B.V.I.) was incorporated in March 2006, but have not yet begun operation as of June 30, 2011. Chunghwa has 100% ownership right in an amount of US$1 in the holding company.
Note 4:		Prepayment for long-term investment, NT$20,400 thousand, was injected in Chunghwa Sochamp Technology Inc. by Chunghwa in June 2011. Chunghwa Sochamp Technology Inc. completed its registration on July 1^st, 2011, and Chunghwa owns 51% of ownership of Chunghwa Sochamp Technology Inc.
Note 5:		The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

- 71 -

TABLE 8

CHUNGHWA TELECOM CO., LTD.

INVESTMENT IN MAINLAND CHINA

SIX MONTHS ENDED JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars, in Thousands of U.S. Dollars)


Investee	Main Businesses and	Total Amount of Paid-in		Investment	Accumulated Outflow of Investment from Taiwan as of January 1,		Investment Flows				Accumulated Outflow of Investment from Taiwan as of June 30,		% Ownership of Direct or Indirect			Investment Gain (Loss)			Carrying Value as of June 30,		Accumulated Inward Remittance of Earnings as of June 30,
Investee	Products	Capital		Type	2011		Outflow		Inflow		2011		Investment			(Note 2)			2011		2011

Glory Network System Service (Shanghai) Co., Ltd.	Providing advanced business solutions to telecommunications	$	31,973	Note 1	$	31,973	$	—	$	—	$	31,973		100	%	$	(2,726	)	$	7,864	$	—

Xiamen Sertec Business Technology Co., Ltd.	Customer services and platform rental activities		28,282	Note 1		13,862		—		—		13,862		49	%		(3,862	)		3,924		—

Senao Trading (Fujian) Co., Ltd.	Information technology services and sale of communication products		58,665	Note 1		—		58,665		—		58,665		100	%		(15,511	)		42,746		—

Senao International Trading (Shanghai) Co., Ltd.	Information technology services and sale of communication products		87,429	Note 1		—		87,429		—		87,429		100	%		(23,106	)		64,163		—

Senao International Trading (Shanghai) Co., Ltd. (Note 7)	Information technology services and sale of communication products		57,510	Note 1		—		57,510		—		57,510		100	%		(447	)		57,294		—

Senao International Trading (Jiangsu) Co., Ltd.	Information technology services and sale of communication products		58,092	Note 1		—		58,092		—		58,092		100	%		(12,617	)		45,453		—

Chunghwa Telecom (China) Co., Ltd.	Energy conserving and providing installation, design and maintenance services		177,176	Note 1		—		177,176		—		177,176		100	%		(11,136	)		164,699		—



Accumulated Investment in Mainland China as of June 30, 2011		Investment Amounts Authorized by Investment Commission, MOEA			Upper Limit on Investment Stipulated by Investment Commission, MOEA

$ (US$	31,973 1,010)	$ (US$	48,169 1,500	)	$	380,759 (Note 3	)
(US$	13,862 431)	(US$	79,882 2,500	)		1,391,514 (Note 4	)
(US$	261,696 9,000)	(US$	261,696 9,000	)		2,631,296 (Note 5	)
(US$	177,176 6,000)	(US$	177,176 6,000	)		210,218,307 (Note 6	)

(Continued)

- 72 -


Note 1:		Investments were through an holding company registered in a third region.
Note 2:		Recognition of investment gains (losses) was calculated based on the investee’s audited financial statements.
Note 3:		The amount was calculated based on the net assets value of Chunghwa System Integration Co., Ltd.
Note 4:		The amount was calculated based on the consolidated net assets value of Chunghwa Investment Co., Ltd.
Note 5:		The amount was calculated based on the consolidated net assets value of Senao International Co., Ltd.
Note 6:		The amount was calculated based on the consolidated net assets value of Chunghwa Telecom Co., Ltd.
Note 7:		The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 73 -

TABLE 9

CHUNGHWA TELECOM CO., LTD.

SEGMENT INFORMATION

SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Amount in Thousands of New Taiwan Dollars)


	Domestic Fixed Communications Business		Mobile Communications Business		Internet Business		International Fixed Communications Business		Others			Adjustment			Total
Six months ended June 30, 2011

Revenues from external customers	$	39,148,983	$	36,830,954	$	11,859,619	$	7,568,737	$	120,827		$	—		$	95,529,120

Intersegment revenues (Note 2)	$	7,103,517	$	3,190,165	$	800,140	$	702,355	$	210		$	(11,796,387	)	$	—

Segment income before tax	$	10,378,723	$	13,062,738	$	5,205,132	$	1,238,579	$	(232,935	)	$	—		$	29,652,237

Total assets	$	227,425,681	$	58,605,600	$	16,686,818	$	2,331,361	$	120,315,205		$	—		$	445,364,665


Six months ended June 30, 2010

Revenues from external customers	$	34,622,057	$	37,951,198	$	11,479,325	$	7,615,617	$	104,458		$	—		$	91,772,655

Intersegment revenues (Note 2)	$	6,912,479	$	981,947	$	453,020	$	703,484	$	341		$	(9,051,271	)	$	—

Segment income before tax	$	9,183,574	$	14,897,239	$	4,927,700	$	1,441,941	$	(696,247	)	$	—		$	29,754,207

Total assets	$	230,477,555	$	58,162,645	$	15,788,304	$	20,259,179	$	125,637,490		$	—		$	450,325,173


Note 1:	The Company organizes its reporting segments based on types of organizational business. The five reporting segments are segregated as below: Domestic fixed communications business, mobile communications business, internet business, international fixed communications business and others.

	•	Domestic fixed communications business - the provision of local telephone services, domestic long distance telephone services, broadband access, and related services;

	•	Mobile communications business - the provision of mobile services, sales of mobile handsets and data cards, and related services;

	•	Internet business - the provision of HiNet services and related services;

	•	International fixed communications business - the provision of international long distance telephone services and related services;

	•	Others - the provision of non-Telecom Services, and the corporate related items not allocated to reportable segments.

Note 2:	Represents intersegment revenues from goods and services.
Note 3:	According to Regulations Governing Network Interconnection among Telecommunications Enterprises Article 20, ownership of the tariffs for the communications between mobile telecommunications network and fixed telecommunications network except for international communications shall follow the following principles:

	The tariff is collected from the call-originating subscribers by the call-originating telecommunications enterprises pursuant to the pricing of the mobile telecommunications network enterprises, and the revenue from the tariff belongs to the mobile telecommunications network enterprises. However, from January 1, 2011, the tariff shall be both priced and collected from the call-originating subscribers by the call-originating telecommunications enterprise; revenue from the tariff shall belong to the call-originating telecommunications enterprises as well.

- 74 -

Exhibit 3

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of

Chunghwa Telecom Co., Ltd.

We have audited the accompanying consolidated balance sheets of Chunghwa Telecom Co., Ltd. and subsidiaries (“the Company”) as of June 30, 2011 and 2010, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the six months ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of Viettel-CHT Co., Ltd. and Senao Networks, Inc. as of and for the six months ended June 30, 2011, and Taiwan International Standard Electronics Co., Ltd., Viettel-CHT Co., Ltd. and Senao Networks, Inc. as of and for the six months ended June 30, 2010. The aggregate carrying values of these equity method investees were NT$545,472 thousand and NT$1,070,032 thousand, respectively, as of June 30, 2011 and 2010 and the equity in earnings were NT$39,696 thousand and NT$121,546 thousand, respectively, for the six months ended June 30, 2011 and 2010. The financial statements of Viettel-CHT Co., Ltd. and Senao Networks, Inc. as of and for the six months ended June 30, 2011, and the financial statements of Taiwan International Standard Electronics Co., Ltd., Viettel-CHT Co., Ltd. and Senao Networks, Inc. as of and for the six months ended June 30, 2010, were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for these equity method investees, is based solely on the reports of the other auditors.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those standards required that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the financial reports of other auditors provide a reasonable basis for our opinion.

- 1 -

In our opinion, based on our audits and the reports of the other auditors, such consolidated financial statements referred to in the first paragraph present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2011 and 2010, and the results of their operations and their cash flows for the six months ended June 30, 2011 and 2010, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, and accounting principles generally accepted in the Republic of China.

/S/ DELOITTE & TOUCHE

Deloitte & Touche

Taipei, Taiwan

The Republic of China

August 5, 2011

Notice to Readers

The accompanying consolidated financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and consolidated financial statements shall prevail.

- 2 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars, Except Par Value Data)


	2011				2010
	Amount		%		Amount		%
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)	$	81,456,553		18	$	92,779,286		20
Financial assets at fair value through profit or loss (Notes 2 and 5)		86,754		—		40,169		—
Available-for-sale financial assets (Notes 2 and 6)		2,878,467		1		6,434,268		1
Held-to-maturity financial assets (Notes 2 and 7)		2,174,334		—		1,190,089		—
Trade notes and accounts receivable, net of allowance for doubtful accounts of $2,494,601 thousand in 2011 and $2,715,117 thousand in 2010 (Notes 2 and 8)		21,645,020		5		12,261,827		3
Receivables from related parties (Note 28)		15,093		—		28,447		—
Other current monetary assets (Note 9)		2,286,814		—		2,728,765		1
Inventories, net (Notes 2, 10, 21 and 30)		5,284,029		1		3,628,034		1
Deferred income tax assets (Notes 2 and 25)		163,538		—		73,416		—
Restricted assets (Notes 21, 29 and 30)		39,886		—		179,746		—
Other current assets (Notes 10, 11, 21 and 28)		7,069,099		2		6,532,047		1

Total current assets		123,099,587		27		125,876,094		27

LONG-TERM INVESTMENTS
Investments accounted for using equity method (Notes 2 and 12)		2,127,025		—		1,688,180		—
Financial assets carried at cost (Notes 2 and 13)		2,833,803		1		2,647,091		1
Available-for-sale financial assets (Notes 2 and 6)		54,400		—		—		—
Held-to-maturity financial assets (Notes 2 and 7)		11,278,945		3		6,948,228		2
Other monetary assets (Notes 14 and 30)		1,000,000		—		1,000,000		—

Total long-term investments		17,294,173		4		12,283,499		3

PROPERTY, PLANT AND EQUIPMENT (Notes 2, 15, 28, and 29)
Cost
Land		103,686,841		23		103,719,102		23
Land improvements		1,551,502		—		1,538,691		—
Buildings		67,590,584		15		67,431,298		15
Computer equipment		15,120,336		3		16,027,525		3
Telecommunications equipment		646,857,011		142		656,803,063		143
Transportation equipment		2,658,456		1		1,973,764		—
Miscellaneous equipment		6,550,429		1		7,161,270		2

Total cost		844,015,159		185		854,654,713		186
Revaluation increment on land		5,762,611		1		5,800,909		2

		849,777,770		186		860,455,622		188
Less: Accumulated depreciation		561,609,695		123		563,925,063		123

		288,168,075		63		296,530,559		65
Construction in progress and advances related to acquisition of equipment		12,698,552		3		10,981,125		2

Property, plant and equipment, net		300,866,627		66		307,511,684		67

INTANGIBLE ASSETS (Note 2)
3G concession		5,614,566		1		6,363,175		2
Goodwill		245,184		—		283,054		—
Others		571,819		—		509,726		—

Total intangible assets		6,431,569		1		7,155,955		2

OTHER ASSETS
Leased assets		405,910		—		416,941		—
Idle assets (Note 2)		901,224		—		908,652		—
Refundable deposits (Note 28)		1,649,892		1		1,475,313		—
Deferred income tax assets (Notes 2 and 25)		503,591		—		430,685		—
Restricted assets (Note 29)		8,093		—		32,039		—
Others (Note 28)		4,501,440		1		3,280,459		1

Total other assets		7,970,150		2		6,544,089		1

TOTAL	$	455,662,106		100	$	459,371,321		100

- 3 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars, Except Par Value Data)


	2011					2010
	Amount			%		Amount			%
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Short-term loans (Note 16)	$	100,000			—	$	3,433,687			1
Short-term bills payable (Note 17)		—			—		59,946			—
Financial liabilities at fair value through profit or loss (Notes 2 and 5)		2,079			—		23,656			—
Trade notes and accounts payable (Note 21)		10,369,022			2		6,851,912			1
Payables to related parties (Note 28)		318,102			—		338,956			—
Income tax payable (Notes 2 and 25)		4,704,609			1		4,808,885			1
Accrued expenses (Note 18)		12,370,041			3		12,029,043			3
Dividends payable (Note 22)		42,854,462			9		39,369,041			8
Current portion of long-term loans (Note 20)		306,117			—		108,839			—
Other current liabilities (Notes 10, 19, 21 and 28)		21,996,952			5		17,905,314			4

Total current liabilities		93,021,384			20		84,929,279			18

NONCURRENT LIABILITIES
Long-term loans (Note 20)		2,308,606			—		164,717			—
Deferred income (Note 2)		2,577,550			1		2,542,574			1

Total noncurrent liabilities		4,886,156			1		2,707,291			1

RESERVE FOR LAND VALUE INCREMENTAL TAX (Note 15)		94,986			—		94,986			—

OTHER LIABILITIES
Accrued pension liabilities (Notes 2 and 27)		1,382,183			1		1,248,556			—
Customers’ deposits (Note 28)		5,452,712			1		5,914,124			2
Others		460,840			—		488,365			—

Total other liabilities		7,295,735			2		7,651,045			2

Total liabilities		105,298,261			23		95,382,601			21

EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT (Notes 2, 6, 15 and 22)
Common stock - $10 par value; Authorized: 12,000,000 thousand shares
Issued: 7,757,447 thousand shares in 2011 and 9,696,808 thousand shares in 2010		77,574,465			17		96,968,082			21

Additional paid-in capital
Capital surplus		169,496,289			37		169,496,289			37
Donated capital		13,170			—		13,170			—
Equity in additional paid-in capital reported by equity-method investees		26,891			—		6,742			—

Total additional paid-in capital		169,536,350			37		169,516,201			37

Retained earnings
Legal reserve		66,122,145			14		61,361,255			13
Special reserve		2,675,894			1		2,675,894			1
Unappropriated earnings		25,131,631			6		24,998,325			5

Total retained earnings		93,929,670			21		89,035,474			19

Other adjustments
Cumulative translation adjustments		(104,093	)		—		12,059			—
Unrecognized net loss of pension		(40,617	)		—		(44,105	)		—
Unrealized gain (loss) on financial instruments		115,408			—		(911,165	)		—
Unrealized revaluation increment		5,762,829			1		5,803,446			1

Total other adjustments		5,733,527			1		4,860,235			1

Total equity attributable to stockholders of the parent		346,774,012			76		360,379,992			78
MINORITY INTERESTS IN SUBSIDIARIES		3,589,833			1		3,608,728			1

Total stockholders’ equity		350,363,845			77		363,988,720			79

TOTAL	$	455,662,106			100	$	459,371,321			100

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated August 5, 2011)

- 4 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars, Except Earnings Per Share Data)


	2011				2010
	Amount		%		Amount		%

NET REVENUES (Note 28)	$	106,899,683		100	$	99,279,077		100

OPERATING COSTS (Note 28)		62,597,753		59		55,137,795		56


GROSS PROFIT		44,301,930		41		44,141,282		44


OPERATING EXPENSES (Note 28)
Marketing		11,023,766		10		10,753,718		11
General and administrative		2,224,099		2		2,035,993		2
Research and development		1,698,319		2		1,564,428		1


Total operating expenses		14,946,184		14		14,354,139		14


INCOME FROM OPERATIONS		29,355,746		27		29,787,143		30


NON-OPERATING INCOME AND GAINS (Note 28)
Interest income		323,363		1		206,251		—
Gain on disposal of property, plant and equipment, net		299,807		—		—		—
Equity in earnings of equity method investees, net		164,240		—		93,402		—
Gain on disposal of financial instruments, net		130,845		—		64,992		—
Foreign exchange gain, net		—		—		146,122		—
Others		142,350		—		215,321		1


Total non-operating income and gains		1,060,605		1		726,088		1


NON-OPERATING EXPENSES AND LOSSES
Foreign exchange loss, net		88,550		—		—		—
Valuation loss on financial instruments, net		30,892		—		35,972		—
Interest expense		17,101		—		89,494		—
Loss on disposal of property, plant and equipment, net		—		—		13,127		—
Others		27,557		—		25,546		—


Total non-operating expenses and losses		164,100		—		164,139		—


INCOME BEFORE INCOME TAX		30,252,251		28		30,349,092		31

INCOME TAX EXPENSES (Notes 2 and 25)		4,636,953		4		4,906,185		5


CONSOLIDATED NET INCOME	$	25,615,298		24	$	25,442,907		26

(Continued)

- 5 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars, Except Earnings Per Share Data)


	2011				2010
	Amount		%		Amount		%

ATTRIBUTED TO
Stockholders of the parent	$	25,131,176		24	$	24,991,418		25
Minority interests		484,122		—		451,489		1


	$	25,615,298		24	$	25,442,907		26


	2011				2010
	Before Income Tax		After Income Tax		Before Income Tax		After Income Tax

EARNINGS PER SHARE (Note 26)
Basic earnings per share	$	3.79	$	3.21	$	3.07	$	2.58

Diluted earnings per share	$	3.78	$	3.20	$	3.06	$	2.57

The accompanying notes are an integral part of the consolidated financial statements.


(With Deloitte & Touche audit report dated August 5, 2011)		(Concluded)

- 6 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars)


														Other Adjustments
	Common Stock						Retained Earnings							Cumulative Translation Adjustments			Unrecognized Net Loss of Pension			Unrealized Gain (Loss) on Financial Instruments			Unrealized Revaluation Increment			Minority Interests in Subsidiaries			Total Stockholders’ Equity
	Shares (Thousands)		Amount		Additional Paid-in Capital		Legal Reserve		Special Reserve		Unappropriated Earnings			Cumulative Translation Adjustments			Unrecognized Net Loss of Pension			Unrealized Gain (Loss) on Financial Instruments			Unrealized Revaluation Increment			Minority Interests in Subsidiaries			Total Stockholders’ Equity
BALANCE, JANUARY 1, 2011		7,757,447	$	77,574,465	$	169,515,102	$	61,361,255	$	2,675,894	$	47,615,807		$	(102,885	)	$	(40,182	)	$	176,048		$	5,803,238		$	4,024,372		$	368,603,114
Adjustment of additional paid-in capital from revaluation of land to income upon disposal		—		—		—		—		—		—			—			—			—			(40,409	)		—			(40,409	)
Appropriation of 2010 earnings
Legal reserve		—		—		—		4,760,890		—		(4,760,890	)		—			—			—			—			—			—
Cash dividends - NT$5.52 per share		—		—		—		—		—		(42,854,462	)		—			—			—			—			—			(42,854,462	)
Consolidated net income for the six months ended June 30, 2011		—		—		—		—		—		25,131,176			—			—			—			—			484,122			25,615,298
Decrease in minority interests		—		—		—		—		—		—			—			—			—			—			(909,826	)		(909,826	)
Equity adjustments in investees		—		—		21,248		—		—		—			—			—			—			—			—			21,248
Cumulative translation adjustment for foreign-currency investments held by investees		—		—		—		—		—		—			(1,208	)		—			—			—			(21	)		(1,229	)
Defined benefit pension plan adjustments of investees		—		—		—		—		—		—			—			(435	)		—			—			(56	)		(491	)
Unrealized gain on financial instruments		—		—		—		—		—		—			—			—			(60,640	)		—			(8,758	)		(69,398	)

BALANCE, JUNE 30, 2011		7,757,447	$	77,574,465	$	169,536,350	$	66,122,145	$	2,675,894	$	25,131,631		$	(104,093	)	$	(40,617	)	$	115,408		$	5,762,829		$	3,589,833		$	350,363,845

- 7 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars)


														Other Adjustments
	Common Stock						Retained Earnings							Cumulative Translation Adjustments		Unrecognized Net Loss of Pension			Unrealized Gain (Loss) on Financial Instruments			Unrealized Revaluation Increment		Minority Interests in Subsidiaries			Total Stockholders’ Equity
	Shares (Thousands)		Amount		Additional Paid-in Capital		Legal Reserve		Special Reserve		Unappropriated Earnings			Cumulative Translation Adjustments		Unrecognized Net Loss of Pension			Unrealized Gain (Loss) on Financial Instruments			Unrealized Revaluation Increment		Minority Interests in Subsidiaries			Total Stockholders’ Equity
BALANCE, JANUARY 1, 2010		9,696,808	$	96,968,082	$	169,509,763	$	56,987,241	$	2,675,894	$	43,749,962		$	7,626	$	(43,750	)	$	(447,129	)	$	5,803,446	$	3,752,479		$	378,963,614
Appropriation of 2009 earnings
Legal reserve		—		—		—		4,374,014		—		(4,374,014	)		—		—			—			—		—			—
Cash dividends - NT$ 4.06 per share		—		—		—		—		—		(39,369,041	)		—		—			—			—		—			(39,369,041	)
Consolidated net income for the six months ended June 30, 2010		—		—		—		—		—		24,991,418			—		—			—			—		451,489			25,442,907
Decrease in minority interests		—		—		—		—		—		—			—		—			—			—		(591,683	)		(591,683	)
Unrealized loss on financial instruments held by investees		—		—		—		—		—		—			—		—			—			—		(4,462	)		(4,462	)
Equity adjustments in investees		—		—		6,438		—		—		—			—		—			—			—		—			6,438
Cumulative translation adjustment for foreign-currency investments held by investees		—		—		—		—		—		—			4,433		—			—			—		949			5,382
Defined benefit pension plan adjustments of investees		—		—		—		—		—		—			—		(355	)		—			—		(44	)		(399	)
Unrealized loss on financial instruments		—		—		—		—		—		—			—		—			(464,036	)		—		—			(464,036	)

BALANCE, JUNE 30, 2010		9,696,808	$	96,968,082	$	169,516,201	$	61,361,255	$	2,675,894	$	24,998,325		$	12,059	$	(44,105	)	$	(911,165	)	$	5,803,446	$	3,608,728		$	363,988,720

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated August 5, 2011)

- 8 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars)


	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income	$	25,615,298		$	25,442,907
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts		78,279			192,488
Depreciation and amortization		16,071,323			17,289,111
Amortization of premium of financial assets		28,622			18,075
Valuation loss on financial instruments, net		30,892			35,972
Gain on disposal of financial instruments, net		(130,845	)		(64,992	)
Loss (gain) on disposal of property, plant and equipment, net		(299,807	)		13,127
Loss on disposal of leased assets, net		7			—
Equity in earnings of equity method investees, net		(164,240	)		(93,402	)
Dividends received from equity investees		118,989			5,273
Deferred income taxes		(152,977	)		85,473
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial instruments held for trading		41,715			19,306
Trade notes and accounts receivable		(7,589,680	)		(496,397	)
Receivables from related parties		94,088			32,704
Other monetary assets		(107,407	)		(590,501	)
Inventories		(738,253	)		420,662
Other current assets		(2,340,170	)		(2,838,189	)
Increase (decrease) in:
Trade notes and accounts payable		(1,531,599	)		(2,703,620	)
Payables to related parties		175,654			75,100
Income tax payable		137,984			497,329
Accrued expenses		(5,990,580	)		(5,408,502	)
Other current liabilities		2,578,309			920,715
Deferred income		(12,480	)		57,690
Accrued pension liabilities		90,013			31,232


Net cash provided by operating activities		26,003,135			32,941,561


CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of designated financial assets at fair value through profit or loss		(41,250	)		(9,217	)
Proceeds from disposal of designated financial assets at fair value through profit or loss		60,326			2,306
Acquisition of available-for-sale financial assets		(3,621,387	)		(2,233,927	)
Proceeds from disposal of available-for-sale financial assets		2,930,127			12,841,269
Acquisition of held-to-maturity financial assets		(3,697,604	)		(3,714,635	)
Proceeds from disposal of held-to-maturity financial assets		587,923			587,500
Acquisition of financial assets carried at cost		(167,065	)		(179,284	)
Proceeds from disposal of financial assets carried at cost		5,276			134,864
Liquidating dividend		318			—

(Continued)

- 9 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars)


	2011			2010

Acquisition of investments accounted for using equity method	$	(135,040	)	$	(13,863	)
Acquisition of property, plant and equipment		(9,919,781	)		(9,320,533	)
Proceeds from disposal of property, plant and equipment		648,010			73,038
Increase in intangible assets		(137,395	)		(49,822	)
Decrease (increase) in restricted assets		12,061			(10,748	)
Increase in other assets		(1,029,173	)		(1,909,754	)


Net cash used in investing activities		(14,504,654	)		(3,802,806	)


CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans		(15,000	)		2,670,686
Increase (decrease) in short-term bills payable		(229,896	)		59,946
Repayment of long-term loans		(842,430	)		(65,022	)
Decrease in customers’ deposits		(376,192	)		(69,502	)
Increase (decrease) in other liabilities		(1,567	)		197,433
Capital reduction		(19,393,617	)		(9,696,808	)
Proceeds from exercise of employee stock option granted by subsidiary		63,200			69,945
Acquisition of additional interests in subsidiary		(10,171	)		(30,188	)


Net cash used in financing activities		(20,805,673	)		(6,863,510	)


EFFECT OF EXCHANGE RATE CHANGES		1,229			8,532


EFFECT OF CHANGE ON CONSOLIDATED SUBSIDIARIES		(112,706	)		(2,763,981	)


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(9,418,669	)		19,519,796

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		90,875,222			73,259,490


CASH AND CASH EQUIVALENTS, END OF PERIOD	$	81,456,553		$	92,779,286


SUPPLEMENTAL INFORMATION
Interest paid (excluding capitalized interest expense)	$	17,315		$	17,640

Income tax paid	$	4,636,445		$	4,314,655


NON-CASH FINANCING ACTIVITIES
Dividends payable	$	42,854,462		$	39,369,041

Current portion of long-term loans	$	51,652		$	54,435


CASH AND NON-CASH INVESTING ACTIVITIES
Increase in property, plant and equipment	$	11,023,673		$	8,467,303
Payables to equipment suppliers		(1,120,633	)		853,527
Prepayments for equipment		16,741			(297	)

	$	9,919,781		$	9,320,533

(Continued)

- 10 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars)

InfoExplorer Co., Ltd. (“IFE”) merged with International Integrated System Inc. and e-ToYou International Inc. on April 1, 2011. After the merger, IFE became the surviving entity and was renamed as International Integrated System, Inc. (IISI). International Integrated System, Inc. and e-ToYou International, Inc. were dissolved. As IFE issued new shares for the aforementioned share swap, the following table presents the allocation of acquisition costs of International Integrated System Inc. and e-ToYou International Inc. to assets acquired and liabilities assumed based on their fair values on the basis of the final data obtained on April 1, 2011:


Cash	$	46,592
Accounts receivables		199,592
Financial assets at fair value through profit and loss		38,073
Other monetary assets		17,822
Long-term investments		34,051
Property, plant, and equipment		4,996
Refundable deposits		43,553
Other assets		4,472
Accounts payables		(79,713	)
Other current liabilities		(25,145	)
Other liabilities		(38,480	)

Common stock issued by IFE	$	245,813

Chunghwa has lost control over International Integrated System Inc. (“IISI”) on June 24, 2011. The following table presents assets and liabilities of IISI based on their fair values on the basis of the final data obtained on June 24, 2011:


Current assets (excluding cash)	$	591,925
Long-term investments		64,219
Property, plant, and equipment		59,891
Intangible assets		2,679
Other assets		130,173
Current liabilities		(276,356	)
Other liabilities		(102,917	)
Net assets		(628,912	)

Cash	$	(159,298	)

(Continued)

- 11 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars)

The acquisition of Yao Yong Real Property Co., Ltd. (“YYRP”) by Light Era Development Co., Ltd. (LED) was made on March 1, 2010. The following table presents the allocation of acquisition costs of YYRP to assets acquired and liabilities assumed based on their fair values on the basis of the final data obtained on April 12, 2010:


Cash and cash equivalents	$	29,686
Other monetary assets		13,439
Deferred income tax assets		5,603
Property, plant, and equipment		2,781,547
Customers’ deposits		(34,857	)
Accrued expenses		(1,312	)
Other current liabilities		(1,311	)

Total		2,792,795
Percentage of ownership		100	%

		2,792,795
Goodwill		872

Acquisition costs of acquired subsidiary	$	2,793,667

The accompanying notes are an integral part of the consolidated financial statements.


(With Deloitte & Touche audit report dated August 5, 2011)		(Concluded)

- 12 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1.	GENERAL

As the dominate telecommunications service provider of fixed-line and Global System for Mobile Communications (“GSM”) in the ROC, Chunghwa is subject to additional regulations imposed by ROC.

Senao International Co., Ltd. (“SENAO”) was incorporated in 1979. SENAO engages mainly in selling and maintaining mobile phone and its peripheral products. Chunghwa acquired 31.33% shares of SENAO on January 15, 2007 and has substantial control in SENAO by obtaining half of the seats of the board of directors of SENAO on April 12, 2007.

Senao International (Samoa) Holding Ltd. (SIS) was established by SENAO in 2009. SIS engages mainly in international investment activities.

Senao International HK Limited (SIHK) was established by SIS in 2009. SIHK engages mainly in international investment activities.

Senao Trading (Fujian) Co., Ltd. (“STF”) was established by SIHK in 2011. STF engages mainly in sale of information and communication technology products.

Senao International Trading (Shanghai) Co., Ltd. (“SITS”) was established by SIHK in 2011. SITS engages mainly in sale of information and communication technology products.

Senao International Trading (Shanghai) Co., Ltd. (“SEITS”) was established by SIHK in 2011. SEITS engages mainly in provision of information and communication maintenance services.

- 13 -

The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

Senao International Trading (Jiangsu) Co., Ltd. (“SITJ”) was established by SIHK in 2011. SITJ engages mainly in sale of information and communication technology products.

Chunghwa established Chunghwa International Yellow Pages Co., Ltd. (“CIYP”) in January 2007. CIYP engages mainly in yellow pages sales and advertisement services.

CHIEF Telecom Inc. (“CHIEF”) was incorporated in 1991. CHIEF engages mainly in internet communication and internet data center (“IDC”) service. Chunghwa acquired 70% shares of CHIEF on September 2006.

Unigate Telecom Inc. (“Unigate”) was established by CHIEF in 1999. Unigate engages mainly in telecommunication and information software service.

CHIEF Telecom (Hong Kong) Limited (“CHIEF (HK)”) was established by CHIEF in 2003. CHIEF (HK) engages mainly in internet communication and internet data center (“IDC”) service. On August 20, 2009, the stockholders of CHIEF (HK) resolved to dissolve CHIEF (HK). CHIEF (HK) completed the liquidation procedures and obtained the required approval from local government on September 24, 2010.

Chief International Corp. (“CIC”) was established by CHIEF in 2008. CIC engages mainly in internet communication and internet data center (“IDC”) service.

Chunghwa System Integration Co., Ltd. (“CHSI”) was incorporated in 2002. CHSI engages mainly in providing communication and information integration services. Chunghwa has acquired 100% shares of CHSI in December 2007.

Concord Technology Co., Ltd. (“Concord”), a subsidiary of CHSI, was incorporated in 2006. Concord engages mainly in investment.

Glory Network System Service (Shanghai) Co., Ltd. (“GNSS (Shanghai)”), a subsidiary of Concord, was incorporated in 2006. GNSS (Shanghai) engages mainly in planning and designing of systems and communications and information integration services.

Chunghwa Telecom Global, Inc. (“CHTG”) was incorporated in 2004. CHTG engages mainly in international data and internet services and long distance call wholesales to carriers. Chunghwa acquired 100% shares of CHTG in December 2007.

Donghwa Telecom Co., Ltd. (“DHT”) was incorporated in 2004. DHT engages mainly in international telecommunications, IP fictitious internet and internet transfer services. Chunghwa acquired 100% shares of DHT in December 2007.

Spring House Entertainment Tech. Inc. (“SHE”) was incorporated in 2000. SHE engages mainly in network services, producing digital entertainment content and broadband visual sound terrace development. SHE was an equity method investee before Chunghwa obtained a controlling interest over it in January 2008.

Ceylon Innovation Co., Ltd. (“CEI”) was established by SHE in April 2011. CEI has not started its operation and will engage mainly in international trade, general advertisement and book publishing service.

Chunghwa established Light Era Development Co., Ltd. (“LED”) in January 2008. LED engages mainly in development of property for rent and sale.

- 14 -

Yao Yong Real Property Co., Ltd. (“YYRP”) was incorporated in 2002. YYRP engages mainly in real estate management and leasing business. LED acquired 100% ownership interest of YYRP on March 1, 2010.

Chunghwa established Chunghwa Telecom Singapore Pte. Ltd. (“CHTS”) in July 2008. CHTS engages mainly in telecommunication wholesale, internet transfer services, international data, long distance call wholesales to carriers and the world satellite business.

Chunghwa established Chunghwa Telecom Japan Co., Ltd. (“CHTJ”) in October 2008. CHTJ engages mainly in telecommunication business, information processing and information providing service, development and sale of software and consulting services in telecommunication.

InfoExplorer Co., Ltd. (“IFE”) issued new shares as the consideration to merge with International Integrated System Inc. and e-ToYou International, Inc. on April 1, 2011. After the merger, IFE became the surviving entity and was renamed as International Integrated System, Inc. (“IISI”). International Integrated System, Inc. and e-ToYou International, Inc. were dissolved. As a result of the additional shares being issued by IFE in connection with this transaction, Chunghwa’s ownership interest in IISI decreased from 49% to 33% after the merger, and after the stockholders’ meeting of IISI on June 24, 2011, Chunghwa lost control of the board of directors. Due to this loss of control, IISI was deconsolidated and a loss of $841 thousand was realized as a result of the deconsolidation and going forward the investment is accounted for as an equity method investment.

Chunghwa Investment Co., Ltd. (“CHI”) was established in 2002. CHI engages mainly in professional investing in telecommunication business, and telecommunication valued-added services. CHI was equity-method investee of the parent company. Chunghwa acquired over 50% shares of CHI on September 2009.

Chunghwa Precision Test Tech. Co., Ltd. (“CHPT”) was established in 2005 as the subsidiary of CHI. CHPT engages mainly in production and marketing in semiconductor testers and printed circuit board.

Chunghwa Precision Test Tech. USA Corporation (“CHPT (US)”) was established by CHPT in 2010. CHPT (US) engages mainly in production and marketing in semiconductor testers and printed circuit boards.

Chunghwa Investment Holding Company (“CIHC”) was established by CHI in 2004. CIHC engages mainly in general investment activities.

CHI One Investment Co., Ltd. (COI) was established by CIHC in 2009. COI engages mainly in investment activities.

Chunghwa has established New Prospect Investments Holdings Ltd. (“New Prospect”) in March 2006. The holding company is operating as investment company and Chunghwa has 100% ownership interest in an amount of US$1 in the holding company as of June 30, 2011.

Chunghwa has established Prime Asia Investments Group Ltd. (“Prime Asia”) in March 2006. Prime Asia engages mainly in investment activities.

Chunghwa Hsingta Company Ltd. (“CHC”) was established by Prime Asia in December 2010. CHC engages mainly in investment activities.

Chunghwa Telecom (China) Co., Ltd. (“CTC”) was established by CHC in March 2011. CTC engages mainly in energy conserving and providing services of planning, design, and intergration of information systems.

- 15 -

Chunghwa has established Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”) in May 2011. CHTV engages mainly in providing information and communications technology, international circuit, and intelligent energy network service.

As of June 30, 2011 and 2010, the Company had 28,093 and 27,608 employees, respectively.

The following diagram presents information regarding the relationship and ownership percentages between Chunghwa and its subsidiaries as of June 30, 2011:

LOGO

Chunghwa together with its subsidiaries are hereinafter referred to collectively as the “Company”. Minority interests in the aforementioned subsidiaries are presented as a separate component of stockholders’ equity.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements were prepared in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the ROC (“ROC GAAP”). The significant accounting policies are summarized as follows:

Principle of Consolidation

The Company accounts for business combinations in accordance with the requirements of the Statement of Financial Accounting Standards No. 25, “Business Combinations”.

The accompanying consolidated financial statements include the accounts of all directly and indirectly majority owned subsidiaries of the Company, and the accounts of investees in which the Company’s ownership percentage is less than 50% but over which the Company has a controlling interest. All significant intercompany transactions and balances are eliminated upon consolidation.

- 16 -

The consolidated financial statements for the six months ended June 30, 2011 include the accounts of Chunghwa, SENAO, SIS, SIHK, STF, SITS, SITJ, SEITS, CIYP, CHIEF, Unigate, CIC, CHSI, Concord, GNSS (Shanghai), CHTG, DHT, SHE, CEI, LED, YYRP, CHTS, CHTJ, IISI, IESA, IEHK, CHI, CHPT, CHPT (US), CIHC, COI, New Prospect, Prime Asia, CHC, CTC, and CHTV. The accounts of IISI, IESA and IEHK were deconsolidated on June 24, 2011 (see Note 1). The consolidated financial statements for the six months ended June 30, 2010 include the accounts of Chunghwa, SENAO, SIS, SIHK, CIYP, CHIEF, Unigate, CHIEF (HK), CIC, CHSI, Concord, GNSS (Shanghai), CHTG, DHT, SHE, LED, YYRP, CHTS, CHTJ, IISI, IESA, IEHK, CHI, CHPT, CIHC, COI, New Prospect and Prime Asia.

For foreign subsidiaries using their local currency as their functional currency, assets and liabilities are translated into New Taiwan dollars at the exchange rates in effect on the balance sheet date; stockholders’ equity accounts are translated into New Taiwan dollars at historical exchange rates and income statement accounts are translated into New Taiwan dollars at average exchange rates during the period.

Foreign-currency Transactions

Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at exchange rates at trade dates.

The financial statements of foreign equity investees and consolidated subsidiaries are translated into New Taiwan dollars at the following exchange rates. Assets and liabilities - spot rates at period-end; stockholders’ equity - historical rates, income and expenses - average rates during the period.

The resulting translation adjustments of financial statements shall be recorded as cumulative translation adjustments, a separate component of stockholders’ equity.

Accounting Estimates

Current and Noncurrent Assets and Liabilities

- 17 -

LED engages mainly in development of property for rent and sale. The assets and liabilities of LED related to property development within its operating cycle, which is over one year, are classified as current items. Assets and liabilities related to property development over its operating cycle are classified as noncurrent items.

Cash Equivalents

Cash equivalents are commercial paper and treasury bills purchased with maturities of three months or less from the date of acquisition. The carrying amount approximates fair value.

Financial Assets and Liabilities at Fair Value Through Profit or Loss

Financial instruments at FVTPL are initially measured at fair value. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized as expenses as incurred. Financial assets or financial liabilities at FVTPL are remeasured at fair value, subsequently with changes in fair value recognized in earnings. Cash dividends received subsequently (including those received in the period of investment) are recognized as income. On derecognition of a financial asset or a financial liability, the difference between its carrying amount and the sum of the consideration received and receivable or consideration paid and payable is recognized in earnings. Regular way purchases or sales of financial assets are accounted for using trade date accounting.

Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows: forward exchange contracts and currency swap contracts are estimated by valuation techniques; index future contracts are determined at their market quotation on the balance sheet date; bonds are based on prices quoted by GreTai Securities Market (GTSM).

Available-for-sale Financial Assets

The recognition and derecognition of available-for-sale financial assets are the same with those of financial assets at FVTPL.

- 18 -

Cash dividends are recognized in earnings on the ex-dividend date, except for the dividends declared before acquisition which are treated as a reduction of investment cost. Stock dividends are recorded as an increase in the number of shares and do not affect investment income. The total number of shares subsequent to the increase of stock dividends is used for recalculate cost per share. The difference between the initial carrying amount of a debt instrument and its maturity amount is amortized using the effective interest method, with the amortized interest recognized in profit or loss.

An impairment loss is recognized when there is objective evidence that the financial asset is impaired. If, in a subsequent period, the amount of the impairment loss decreases, for equity securities, the previously recognized impairment loss is reversed to the extent of the decrease and recorded as an adjustment to stockholders’ equity; for debt securities, the amount of the decrease is recognized in earnings, provided that the decrease is clearly attributable to an event which occurred after the impairment loss was recognized.

Held-to-maturity Financial Assets

Financial Assets Carried at Cost

Impairment of Accounts Receivable

The carrying amount of the accounts receivable is reduced through the use of an allowance account.

- 19 -

Inventories

Buildings and Lands Consigned to Constructing Firm

Inventories of LED are stated at the lower of cost or net realizable value item by item, except for those that may be appropriate to group as similar items or related inventories. Land acquired before the construction is classified as land held for development, and then reclassified as land held under development after LED begins its construction project. Prepayment for licensing and other miscellaneous costs have been capitalized as part of inventory.

When using the completed-contract method for its construction projects, LED recognizes the proceeds from customers as advances from customers for land and building before the construction project is completed. After completion of the construction project and ownership is transferred to the customers, LED recognizes the relevant revenues.

When using percentage-of-completion method, profits are recorded based on LED’s estimates of the percentage of completion of individual contracts, commencing when the work performed under the contracts reaches a point where the final costs can be estimated with reasonable accuracy. Changes in job performance, job conditions and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined. If the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract is recorded in the period in which it becomes evident.

The percentage of completion is measured based on the completion of the contract milestones predetermined by the architects and engineers. Construction in progress is stated at cost plus (less) amounts associated with estimated profit (loss) recognized on the basis of the percentage-of-completion method.

Investments Accounted for Using Equity Method

Gains or losses on sales from the Company to equity method investees wherein Chunghwa exercises significant influence over these equity method investees are deferred in proportion to the Company’s ownership percentage in the investees until such gains or losses are realized through transactions with third parties. Gains or losses on sales from equity method investees to Chunghwa are deferred in proportion to Chunghwa’s ownership percentages in the investees until they are realized through transactions with third parties.

- 20 -

Property, Plant and Equipment

An impairment loss on a revalued asset is charged to “unrealized revaluation increment” under equity to the extent available, with the balance recognized as a loss in earnings. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment loss could be reversed and recognized as a gain, with the remaining credited to “unrealized revaluation increment”.

Depreciation expense is computed using the straight-line method over the following estimated service lives: land improvements - 10 to 30 years; buildings - 3 to 60 years; computer equipment - 2 to 15 years; telecommunication equipment - 2 to 30 years; transportation equipment - 3 to 10 years; and miscellaneous equipment - 2 to 12 years.

Intangible Assets

Intangible assets mainly including 3G Concession, computer software, patents and goodwill.

The 3G Concession is valid through December 31, 2018. The 3G Concession fee is amortized on a straight-line basis from the date operations commence through the date the license expires. Computer software costs and patents are amortized using the straight-line method over the estimated useful lives of 2 to 20 years.

Expenditure on research shall be expensed as incurred. Development costs are capitalized when those costs meet relative criteria and are amortized using the straight-line method over estimated useful lives. Development costs that do not meet relative criteria shall be expensed as incurred.

When an indication of impairment is identified for intangible assets other than goodwill, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, as if no impairment loss had been recognized.

Goodwill represents the excess of the consideration paid for business acquisition over the fair value of identifiable net assets acquired. Goodwill is tested for impairment annually. If an event occurs or circumstances change which indicates that the fair value of goodwill is below its carrying amount, an impairment loss is recognized. A subsequent reversal of such impairment loss is not allowed.

Idle Assets

Idle assets are carried at the lower of recoverable amount or carrying amount.

- 21 -

Pension Costs

For defined benefit pension plans, net periodic pension benefit cost is recorded in the consolidated statement of income and includes service cost, interest cost, expected return on plan assets, amortization of prior service costs, amortization of pension gains (losses) and curtailment or settlement gains (losses).

The curtailments and settlement gains (losses) resulted from Chunghwa’s early retirement programs. Curtailment/settlement gains or losses are equal to the changes of underfunded status plus the a pro rata portion of the unrecognized prior service cost, unrecognized net gains (losses), and unrecognized transition obligations/assets, before the settlement/curtailment event multiplied by the percentage reduction in projected benefit obligation.

The projected benefit obligation represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels.

The measurement of benefit obligations and net periodic cost (income) is based on estimates and assumptions approved by the company’s management such as compensation, age and seniority, as well as certain assumptions, including estimates of discount rates, expected return on plan assets and rate of compensation increases.

For employees under defined contribution pension plans, pension costs are recorded based on the actual contributions made to employees’ individual pension accounts during their service periods.

Income Tax

Any tax credits arising from research and development expenditures are recognized using the flow-through method.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

Income taxes (10%) on undistributed earnings is recorded in the year of stockholders approval which is the year subsequent to the year the earnings are generated.

- 22 -

Share-based Compensation

Employee stock options granted on or after January 1, 2008 are accounted for using fair value method in accordance with SFAS No. 39, “Accounting for Share-based Payment.” The adoption of SFAS No. 39 did not have any impact on the Company.

Employee stock options granted between January 1, 2004 and December 31, 2007 were accounted for under the interpretations issued by the Accounting Research and Development Foundation (the “ARDF”). The Company adopted the intrinsic value method, under which compensation cost was amortized over the vesting period.

Revenue Recognition

Expense Recognition

The costs of providing services are recognized as incurred.

- 23 -

3.	EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES

The Company adopted the newly-revised Statements of Financial Accounting Standards No. 34, “Financial Instruments,” (“SFAS No. 34”) beginning from January 1, 2011. When an enterprise adopts the revised provisions, the initial recognition of loans and receivables shall be accounted for under SFAS No. 34. There is no effect on the consolidated net income and after-tax basic earnings per share for the six months ended June 30, 2011.

4.	CASH AND CASH EQUIVALENTS


	June 30
	2011		2010

Cash
Cash on hand	$	178,242	$	146,938
Bank deposits		7,726,228		8,591,310
Negotiable certificate of deposit, annual yield rate - ranging from 0.63%-0.84% and 0.37%-0.85% for 2011 and 2010, respectively		65,750,000		69,600,761

		73,654,470		78,339,009

Cash equivalents
Commercial paper, annual yield rate - ranging from 0.45%-0.63% and 0.25%-0.33% for 2011 and 2010, respectively		6,463,351		10,858,014
Treasury bills, annual yield rate - ranging from 0.56% and 0.25%- 0.28% for 2011 and 2010, respectively		1,338,732		3,582,263

		7,802,083		14,440,277


	$	81,456,553	$	92,779,286

5.	FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS


	June 30
	2011		2010

Derivatives - financial assets
Currency swap contracts	$	8,615	$	—
Forward exchange contracts		—		498
Index future contracts		—		31

		8,615		529
Designated financial assets at fair value through profit or loss
Convertible bonds		78,139		39,640


	$	86,754	$	40,169


Derivatives - financial liabilities
Forward exchange contracts	$	1,105	$	—
Currency swap contracts		974		23,656


	$	2,079	$	23,656

The Company entered into currency swap contracts, forward exchange contracts and index future contracts to reduce its exposure to foreign currency risk and variability in operating results due to fluctuations in exchange rates and stock prices. However, the aforementioned derivatives did not meet the criteria for hedge accounting and were classified as financial assets or financial liabilities held for trading.

- 24 -

Outstanding currency swap contracts and forward exchange contracts as of June 30, 2011 and 2010:


			Contract Amount
	Currency	Maturity Period	(In Thousands)

June 30, 2011

Currency swap contracts	US$/NT$	2011.07, 09	US$	52,000/NT$1,505,348
	US$/NT$	2011.08	US$	10,000/NT$286,899
Forward exchange contracts - buy	NT$/US$	2011.07	NT$	236,986/US$8,200

June 30, 2010

Currency swap contracts	US$/NT$	2010.07	US$	45,000/NT$1,426,395
Forward exchange contracts - buy	NT$/US$	2010.07	NT$	76,956/US$2,400

The company did not have any outstanding index future contracts on June 30, 2011.

Outstanding index future contracts on June 30, 2010 were as follows:


			Contract
			Amount
	Maturity Period	Units	(In Thousands)

June 30, 2010

TAIEX futures	2010.07	12	NT$	17,198

As of June 30, 2010, the deposits paid for index future contracts were $924 thousand.

The convertible bonds owned by subsidiaries are hybrid financial instruments that are designated to be measured at fair value and changes in fair value are recognized in earnings.

Net gain (loss) arising from financial assets and liabilities at fair value through profit or loss for the six months ended June 30, 2011 and 2010 were $14,009 thousand (including realized settlement gain of $44,453 thousand and valuation loss of $30,444 thousand) and $(6,212) thousand (including realized settlement gain of $25,306 thousand and valuation loss of $31,518 thousand), respectively.

6.	AVAILABLE-FOR-SALE FINANCIAL ASSETS


	June 30
	2011		2010

Open-end mutual funds	$	2,315,658	$	6,009,788
Domestic listed stocks		515,565		321,681
Corporate bonds		101,644		102,799

		2,932,867		6,434,268
Less: Current portion		2,878,467		6,434,268


	$	54,400	$	—

- 25 -

Movements of unrealized gain (loss) on available-for-sale financial assets were as follows:


	Six Months Ended June 30
	2011			2010

Balance, beginning of period	$	176,048		$	(447,129	)
Recognized in stockholders’ equity		(62,819	)		(502,191	)
Transferred to profit or loss		2,179			38,155


Balance, end of period	$	115,408		$	(911,165	)

7.	HELD-TO-MATURITY FINANCIAL ASSETS


	June 30
	2011		2010

Corporate bonds, nominal interest rate ranging from 1.20%-2.95% and 0.77%-4.75% for 2011 and 2010, respectively; effective interest rate ranging from 1.00%-2.95% and 0.50%-2.95% for 2011 and 2010, respectively	$	12,346,982	$	7,639,850
Bank debentures, nominal interest rate ranging from 1.37%-2.11% and 1.87%-2.11% for 2011 and 2010, respectively; effective interest rate ranging from 1.25%-2.45% and 1.14%-2.90% for 2011 and 2010, respectively		1,106,297		498,467

		13,453,279		8,138,317
Less: Current portion		2,174,334		1,190,089


	$	11,278,945	$	6,948,228

8.	ALLOWANCE FOR DOUBTFUL ACCOUNTS


	Six Months Ended June 30
	2011			2010

Balance, beginning of period	$	2,551,464		$	2,798,679
Provision for doubtful accounts		72,832			184,357
Accounts receivable written off		(131,442	)		(267,919	)
Impact on changes of consolidated subsidiaries		1,747			—


Balance, end of period	$	2,494,601		$	2,715,117

9.	OTHER MONETARY ASSETS - CURRENT


	June 30
	2011		2010

Accrued custodial receipts from other carriers	$	8,575	$	498,910
Other		2,278,239		2,229,855


	$	2,286,814	$	2,728,765

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10.

INVENTORIES


	June 30
	2011		2010

Merchandise	$	2,910,391	$	1,907,431
Work in process		843,547		367,233

		3,753,938		2,274,664
Construction in progress		544,697		—
Land held under development		495,513		803,620
Land held for sale		454,065		—
Land held for development		35,816		469,874
Prepayment for construction		—		79,876


	$	5,284,029	$	3,628,034

The operating costs related to inventories were $15,481,412 thousand and $12,370,431 thousand for the six months ended June 30, 2011 and 2010, which included valuation loss on inventories of $320,296 thousand and $61,272 thousand, respectively.

Land held for sale on June 30, 2011 was for Wan-Xi project $421,608 thousand and Li-Shui (B) project $32,457 thousand. Both projects were completed before June 30, 2011.

Land held under development and construction in progress on June 30, 2011 was for Guang-Diang, Li-Shui (A), and Covent projects. Guang-Diang and Li-Shui (A) projects are expected to be completed in 2012. Covent Project is expected to be completed in 2011.

LED recognizes the relevant revenues of Guang-Diang Project by percentage of completion method. The related information were as follows (in thousands):


	June 30, 2011

Percentage of completion method

Guang-Diang project
Contract price	$	983,129

Estimated construction cost	$	425,258

Land held under development	$	64,987

Construction in progress
Construction cost	$	240,365
Recognized cumulative gain		300,971

Total	$	541,336

Deferred marketing expenses (classified as other current assets)	$	27,444

Advance from land and building (classified as other current liabilities)	$	171,989

Percentage of completion		64	%
Expected year of completion		2012

Land held under development on June 30, 2010 was for Guang-Diang project $64,987 thousand, Wan-Xi project $706,176 thousand and Li-Shui (B) project $32,457 thousand.

- 27 -

11.

OTHER CURRENT ASSETS


	June 30
	2011		2010

Prepaid expenses	$	3,043,504	$	2,683,586
Spare parts		2,556,054		2,264,197
Prepaid rents		844,584		909,830
Miscellaneous		624,957		674,434


	$	7,069,099	$	6,532,047

12.

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD


	June 30
	2011				2010
	Carrying Amount		% of Ownership		Carrying Amount		% of Ownership

Non-listed
Taiwan International Standard Electronics Co., Ltd. (“TISE”)	$	548,719		40	$	508,841		40
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		411,995		38		410,268		38
Senao Networks, Inc. (“SNI”)		300,207		41		288,051		41
International Integrated System, Inc. (“IISI”)		251,264		33		—		—
Viettel-CHT Co., Ltd. (“Viettel-CHT”)		245,265		30		273,140		30
Dian Zuan Integrating Marketing Co., Ltd. (“DZIM”)		112,079		40		—		—
Skysoft Co., Ltd. (“SKYSOFT”)		97,455		30		87,234		30
KingWaytek Technology Co., Ltd. (“KWT”)		66,243		33		64,834		33
So-net Entertainment Taiwan Limited (“So-net”)		31,532		30		26,155		30
HopeTech Technologies Limited (“HopeTech”)		19,117		45		—		—
Tatung Technology Inc.		18,825		28		17,037		28
Xiamen Sertec Business Technology Co., Ltd. (“Sertec”)		3,924		49		12,620		49
Panda Monium Company Ltd.		—		43		—		43

		2,106,625				1,688,180
Prepaid investment
Chunghwa Sochamp Technology Inc. (“CHST”)		20,400		—		—		—


	$	2,127,025			$	1,688,180

SIS invested in HopeTech on September 2010 by investing $21,177 thousand cash to acquire 45% of its shares. HopeTech engages mainly in information technology services and sale of communication products.

InfoExplorer Co., Ltd. (“IFE”) issued new shares as the consideration to merge with International Integrated System Inc. and e-ToYou International, Inc. on April 1, 2011. After the merger, IFE became the surviving entity and was renamed as International Integrated System, Inc. (IISI). International Integrated System, Inc. and e-ToYou International, Inc. were dissolved. As a result of the additional shares being issued by IFE in connection with this transaction, Chunghwa’s ownership interest in IISI decreased from 49% to 33% after the merger, and after the stockholders’ meeting of IISI on June 24, 2011, Chunghwa lost control of the board of directors. Due to this loss of control, IISI was deconsolidated and a loss of $841 thousand was realized as a result of the deconsolidation and going forward the investment is accounted for as an equity method investment.

- 28 -

COI established Sertec with Xiamen Information Investment Co., Ltd. in 2010, by investing $13,862 thousand cash and held 49% ownership of Sertec. Sertec engages mainly in customer service and platform rental activities.

Chunghwa has prepaid $20,400 thousand cash to invest in CHST in June 2011. The ownership of CHST is 51%. CHST has completed the registration procedure on July 1, 2011. CHST mainly engages in license plate recognition system.

The equity in earnings and losses for the six months ended June 30, 2011 and 2010 were based on the audited financial statements.

13.

FINANCIAL ASSETS CARRIED AT COST


	June 30
	2011				2010
	Carrying Amount		% of Ownership		Carrying Amount		% of Ownership

Non-listed
Taipei Financial Center Corp. (“TFC”)	$	1,789,530		12	$	1,789,530		12
Industrial Bank of Taiwan II Venture Capital Co., Ltd. (“IBT II”)		200,000		17		200,000		17
Global Mobile Corp. (“GMC”)		127,018		8		127,018		11
iD Branding Ventures (“iDBV”)		99,504		11		99,504		11
Procrystal Technology Co., Ltd.		78,000		2		—		—
Tons Lightology Inc.		66,150		4		—		—
UniDisplay Inc.		55,450		3		46,000		3
Innovation Works Development Fund, L.P. (“IWDF”)		38,035		6		38,035		13
RPTI Intergroup International Ltd. (“RPTI”)		34,500		10		34,500		10
Innovation Works Limited		31,391		2		10,565		2
Aide Energy (Cayman) Holding Co., Ltd.		29,940		1		—		—
Alder Optomechanical Corp.		29,750		—		—		—
VisEra Technologies Company Ltd.		29,371		—		—		—
Ultra Fine Optical Technology Co., Ltd.		27,000		8		—		—
CQi Energy Infocom Inc. (“CQi”)		20,000		18		20,000		18
Taimide Technology Ltd.		19,923		1		7,200		1
Hiroca Holdings Ltd.		17,847		—		—		—
Lextar Electronics Corp.		16,243		—		13,753		—
Digimax Inc. (“DIG”)		15,080		4		23,935		4
Huga Optotech Inc.		12,870		—		10,477		—
N.T.U Innovation Incubation Corporation		12,000		9		12,000		9
CoaTronics Inc.		12,000		9		12,000		9
Win Semiconductors Corp.		10,555		—		10,555		—
Optivision Technology Inc.		10,188		—		10,188		—

(Continued)

- 29 -


	June 30
	2011				2010
	Carrying Amount		% of Ownership		Carrying Amount		% of Ownership

A2peak Power Co., Ltd. (“A2P”)	$	9,858		3	$	27,500		3
Tatung Fine Chemicals Co.		9,135		—		8,023		—
SuperAlloy Industrial Co., Ltd.		7,124		—		2,214		—
DelSolar Co., Ltd.		6,096		—		6,096		—
Cando Corporation		4,947		—		4,947		—
ChipSip Technology Co. (“ChipSip”)		4,370		1		22,750		3
Subtron Technology Co., Ltd.		3,653				3,289		—
3 Link Information Service Co., Ltd.		3,450		10		3,450		10
G-Tech Optoelectronics Corp.		1,747		—		—		—
XinTec Inc.		1,078		—		1,078		—
Giga Solar Materials Corp.		—		—		56,807		2
Crystal Media Inc. (“CMI”)		—		—		11,642		5
Daxon Technology Corporation		—		—		9,593		—
Edison Opto Corporation		—		—		7,925		—
Champion Microelectronic Corp.		—		—		6,125		—
J Touch Corporation		—		—		4,161		—
Taidoc Technology Corporation		—		—		3,498		—
eMemory Technology Inc.		—		—		2,733		—
Essence Technology Solution, Inc. (“ETS”)		—		7		—		9
eASPNet Inc.		—		2		—		2


	$	2,833,803			$	2,647,091

(Concluded)

After evaluating the financial assets carried at cost, CHI determined the investments in ChipSip, CMI, A2P, and DIG were impaired and recognized impairment losses of $12,969 thousand, $9,370 thousand, $16,038 thousand and $20,920 thousand for the year ended December 31, 2010.

The above investments that do not have a quoted market price in an active market and whose fair values cannot be reliably measured are carried at original cost.

14.

OTHER MONETARY ASSETS - NONCURRENT


	June 30
	2011		2010

Piping Fund	$	1,000,000	$	1,000,000

As part of the government’s effort to upgrade the existing telecommunications infrastructure, Chunghwa and other public utility companies were required by the ROC government to contribute a total of $1,000,000 thousand to a Piping Fund administered by the Taipei City Government. This funds was used to finance various telecommunications infrastructure projects.

- 30 -

15.

PROPERTY, PLANT AND EQUIPMENT


	June 30
	2011		2010

Cost
Land	$	103,686,841	$	103,719,102
Land improvements		1,551,502		1,538,691
Buildings		67,590,584		67,431,298
Computer equipment		15,120,336		16,027,525
Telecommunications equipment		646,857,011		656,803,063
Transportation equipment		2,658,456		1,973,764
Miscellaneous equipment		6,550,429		7,161,270

Total cost		844,015,159		854,654,713
Revaluation increment on land		5,762,611		5,800,909

		849,777,770		860,455,622

Accumulated depreciation
Land improvements		1,023,327		978,932
Buildings		19,188,818		18,017,192
Computer equipment		11,386,570		12,339,433
Telecommunications equipment		523,148,016		524,825,747
Transportation equipment		1,498,709		1,740,283
Miscellaneous equipment		5,364,255		6,023,476

		561,609,695		563,925,063

Construction in progress and advances related to acquisition of equipment		12,698,552		10,981,125


Property, plant and equipment, net	$	300,866,627	$	307,511,684

The amendment to the Land Tax Act, relating to the article to permanently lower land value incremental tax, went effective from February 1, 2005. In accordance with the lowered tax rates, Chunghwa recomputed its land value incremental tax, and reclassified the reserve for land value incremental tax of $116,196 thousand to stockholders’ equity - other adjustments. As of June 30, 2011, the unrealized revaluation increment was decreased to $5,762,829 thousand by disposal of revaluation assets.

Depreciation on property, plant and equipment for the six months ended June 30, 2011 and 2010 was $15,378,742 thousand and was $16,637,014 thousand, respectively. The capitalized interest expense for the six months ended June 30, 2011 amounted to $50 thousand, and the capitalized rates were 1.10%-1.13%. No interest was capitalized for the six months ended June 30, 2010.

16.

SHORT-TERM LOANS


	June 30
	2011		2010

Unsecured loans - annual rate - 1.10%-1.53% and 1.10%-1.29% for 2011 and 2010, respectively	$	100,000	$	195,687
Secured loan - annual rate - 0.81%-0.84%		—		3,238,000


	$	100,000	$	3,433,687

- 31 -

17.

SHORT-TERM BILLS PAYABLE


	June 30
	2011		2010

Commercial paper - annual rate - 0.64%-0.70%	$	—	$	59,946

18.

ACCRUED EXPENSES


	June 30
	2011		2010

Accrued salary and compensation	$	4,541,229	$	4,548,819
Accrued employees’ bonuses and remuneration to directors and supervisors		3,526,468		3,021,691
Accrued franchise fees		1,198,012		1,139,941
Accrued maintenance fees		788,968		543,722
Other accrued expenses		2,315,364		2,774,870


	$	12,370,041	$	12,029,043

19.

OTHER CURRENT LIABILITIES


	June 30
	2011		2010

Advance receipts	$	11,395,072	$	7,391,094
Payables to equipment suppliers		1,820,142		1,520,787
Payables to contractors		1,776,213		1,472,126
Amounts collected in trust for others		1,324,884		2,400,587
Refundable customers’ deposits		1,178,068		1,067,024
Miscellaneous		4,502,573		4,053,696


	$	21,996,952	$	17,905,314

20.

LONG-TERM LOANS (INCLUDING LONG-TERM LOANS - CURRENT PORTION)


	June 30
	2011		2010

Secured loans - annual rate 0.92%-1.75% and 1.37% for 2011 and 2010, respectively	$	2,455,649	$	14,014
Unsecured loans - annual rate 2.01%-2.17% and 2.01%-2.04% for 2011 and 2010, respectively		159,074		259,542

		2,614,723		273,556
Less: Current portion of long-term loans		306,117		108,839


	$	2,308,606	$	164,717

LED obtained a secured loan from Chang Hwa Bank in September 2010. Interest is paid monthly and the principal is paid yearly from December 2011 and due in September 2015.

- 32 -

LED obtained a secured loan from First Commercial Bank in September 2010. Interest is paid monthly and the principal is paid yearly from September 2014 and due in September 2017. The loan was repaid early in June 2011.

CHIEF obtained an unsecured loan from Bank of Taiwan in January 2009. Interest and principal amount are payable monthly from January 2009 and due in January 2013.

SHE requested a loan from the Industrial Development Bureau, Ministry of Economic Affairs and obtained a secured loan from Taiwan Business Bank. Interest is paid monthly and the principal is paid every three months from January 2009 and due in April 2013. The loan was repaid early in April 2010.

CHPT obtained a secured loan from the E. Sun Commercial Bank in February 2009. Interest and the principal are paid monthly from March 2009 and due in February 2013.

21.

MATURITY ANALYSIS OF ASSETS AND LIABILITIES

The Company classified LED’s assets and liabilities of the construction operations as current and noncurrent according to the length of the operating cycle of the construction operations. Maturity analysis of LED’s related assets and liabilities was as follows:


	June 30, 2011
	Within One Year		Over One Year		Total

Assets

Inventories	$	—	$	1,530,091	$	1,530,091
Deferred expenses (classified as other current assets)		—		59,563		59,563
Restricted assets		—		39,051		39,051


	$	—	$	1,628,705	$	1,628,705

Liabilities

Payables to contractors (classified as other current liabilities)	$	—	$	20,512	$	20,512
Advance from land and buildings (classified as other current liabilities)		—		655,390		655,390


	$	—	$	675,902	$	675,902


	June 30, 2010
	Within One Year		Over One Year		Total

Assets

Inventories	$	—	$	1,353,370	$	1,353,370
Deferred expenses (classified as other current assets)		—		141,220		141,220
Restricted assets		—		129,911		129,911


	$	—	$	1,624,501	$	1,624,501

(Continued)

- 33 -


	June 30, 2010
	Within One Year		Over One Year		Total

Liabilities

Trade notes and accounts payable	$	1,247	$	—	$	1,247
Advance from land and building (classified as other current liabilities)		—		431,028		431,028


	$	1,247	$	431,028	$	432,275

(Concluded)

22.

STOCKHOLDERS’ EQUITY

Under Chunghwa’s Articles of Incorporation, Chunghwa’s authorized capital is $120,000,000 thousand which is divided into 12,000,000 thousand common shares (at $10 par value per share), among which 7,757,447 thousand common shares are issued and outstanding as of June 30, 2011.

Exercise their voting rights,

Sell their ADSs, and

Receive dividends declared and subscribe to the issuance of new shares.

- 34 -

In addition, before distributing a dividend or making any other distribution to stockholders, Chunghwa must pay all outstanding taxes, offset deficits in prior years and set aside a legal reserve equal to 10% of its net income, and depending on its business needs or requirements, may also set aside a special reserve. In accordance with the Articles of Incorporation, no less than 50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings shall be distributed in the following order: (a) from 2% to 5% of distributable earnings shall be distributed to employees as employee bonus; (b) no more than 0.2% of distributable earnings shall be distributed to board of directors and supervisors as remuneration; and (c) cash dividends to be distributed shall not be less than 50% of the total amount of dividends to be distributed. If cash dividends to be distributed is less than $0.10 per share, such cash dividend shall be distributed in the form of common shares.

For the six months ended June 30, 2011 and 2010, the accrual amounts for bonuses to employees and remuneration to directors and supervisors were accrued on past experiences and probable amount to be paid in accordance with Chunghwa’s Articles of Incorporation and Implementation Guidance for the Employee’s Bonus Distribution of Chunghwa Telecom Co., Ltd.

If the initial accrual amounts of the aforementioned bonus are significantly different from the amounts proposed by the board of directors, the difference is charged to the earnings of the year making the initial estimate. Otherwise, the difference between initial accrual amounts and the amounts resoluted in the stockholders’ meeting is charged to the earnings of the following year as a result of change of accounting estimate.

The appropriations and distributions of the 2010 and 2009 earnings of Chunghwa have been approved by the stockholders on June 24, 2011 and June 18, 2010 as follows:


	Appropriation of Earnings				Dividends Per Share
	For Fiscal Year 2010		For Fiscal Year 2009		For Fiscal Year 2010		For Fiscal Year 2009

Legal reserve	$	4,760,890	$	4,374,014
Cash dividends		42,854,462		39,369,041	$	5.52	$	4.06

The amounts for bonuses to employees and remuneration to directors and supervisors approved in the shareholders’ meeting on June 24, 2011, were $2,144,074 thousand and $45,044 thousand, respectively. There was no difference between the initial accrual amounts and the amounts resolved in shareholders’ meeting of the aforementioned bonuses to employees and the remuneration to directors and supervisors.

Information on the appropriation of Chunghwa’s 2010 earnings, employees bonuses and remuneration to directors and supervisors approved by the stockholders is available at the Market Observation Post System website.

- 35 -

The stockholders, at the stockholders’ meeting held on June 18, 2010, resolved to reduce the amount of $19,393,617 thousand in capital of Chunghwa by a cash distribution to its stockholders. The abovementioned 2010 capital reduction proposal was effectively approved by FSC. The board of directors of Chunghwa was authorized to designate the record date of capital reduction as of October 26, 2010. Subsequently, the stock transfer record date of capital reduction was designated as January 15, 2011. The amount due to stockholders for capital reduction was $19,393,617 thousand and such cash payment to stockholders was made in January 2011.

23.

SENAO’ STOCK-BASED COMPENSATION PLANS

SENAO share-based compensation plans (“SENAO Plans”) described as follows:


Effective Date	Grant Date	Stock Options Units (Thousand)		Exercise Price

2004.12.01	2004.12.28		6,500		$ 10.0 (Original price $11.6	)
2004.12.01	2005.11.28		1,500		13.5 (Original price $18.3	)
2005.09.30	2006.05.05		10,000		12.1 (Original price $16.9	)
2007.10.16	2007.10.31		6,181		42.6 (Original price $44.2	)


			24,181

Each option is eligible to subscribe for one common share when exercisable. Under the terms of the Plans, the options are granted at an exercise price equal to the closing price of the SENAO’s common shares listed on the TSE on the higher of closing price or par value. The SENAO Plans have exercise price adjustment formula upon the issuance of new common shares, capitalization of retained earnings and/or capital reserves, stock split as well as distribution of cash dividends (except for 2007 Plan), except (i) in the case of issuance of new shares in connection with mergers and in the case of cancellation of outstanding shares in connection with capital reduction (2007 Plan is out of this exception), and (ii) except if the exercise price after adjustment exceeds the exercise price before adjustment. The options of all the Plans are valid for six years and the graded vesting schedule for which 50% of option granted will vest two years after the grant date and another two tranches of 25% will vest three and four years after the grant date respectively.

- 36 -

Information about SENAO’s outstanding stock options for the six months ended June 30, 2011 and 2010 were as follows:


	Stock Options Outstanding
	2011					2010
	Number of Options (Thousand)			Weighted Average Exercise Price (NT$)		Number of Options (Thousand)			Weighted Average Exercise Price (NT$)

Options outstanding, beginning of period		5,103		$	36.15		9,323		$	30.92
Options exercised		(1,812	)		34.81		(3,179	)		22.00
Options expired		(28	)		42.60		(82	)		33.76


Options outstanding, end of period		3,263			36.74		6,062			35.56


Options exercisable, end of period		1,902					3,238

As of June 30, 2011, information about SENAO’s outstanding and exercisable options was as follows:


Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options (Thousand)		Weighted- average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options (Thousand)		Weighted Average Exercise Price (NT$)

$	12.1		627		0.83	$	12.1		627	$	12.1
$	42.6		2,636		2.42		42.6		1,275		42.6

As of June 30, 2010, information about SENAO’s outstanding and exercisable options was as follows:


Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options (Thousand)		Weighted- average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options (Thousand)		Weighted Average Exercise Price (NT$)

$	10.0-$13.3		1,393		1.82	$	13.26		1,393	$	13.26
$	14.4		64		1.42		14.40		64		14.40
$	42.6		4,605		3.42		42.60		1,781		42.60

No compensation cost was recognized under the intrinsic value method for the six months ended June 30, 2011 and 2010. Had SENAO used the fair value method to recognize the compensation cost, there would have been no significant impact on the consolidated net income and earnings per share.

Had SENAO used the fair value method to evaluate the options using the Black-Scholes model, the assumptions of SENAO for the six months ended June 30, 2011 would have been as follows:


	October 31, 2007			May 5, 2006			November 28, 2005			December 28, 2004

Expected dividend yield		1.49	%		—			—			—
Risk free interest rate		2.00	%		1.75	%		2.00	%		1.88	%

(Continued)

- 37 -


	October 31, 2007			May 5, 2006			November 28, 2005			December 28, 2004

Expected life		4.375 years			4.375 years			4.375 years			4.375 years
Expected volatility		39.82	%		39.63	%		43.40	%		49.88	%
Weighted-average fair value of grants	$	13.69		$	5.88		$	6.93		$	4.91

(Concluded)

24.

COMPENSATION, DEPRECIATION AND AMORTIZATION EXPENSES


	Six Months Ended June 30, 2011
	Operating Costs		Operating Expenses		Total

Compensation expense
Salaries	$	6,282,069	$	5,370,056	$	11,652,125
Insurance		547,590		444,580		992,170
Pension		872,503		625,805		1,498,308
Other compensation		4,809,702		3,362,266		8,171,968


	$	12,511,864	$	9,802,707	$	22,314,571


Depreciation expense	$	14,530,413	$	848,329	$	15,378,742

Amortization expense	$	578,587	$	104,933	$	683,520


	Six Months Ended June 30, 2010
	Operating Costs		Operating Expenses		Total

Compensation expense
Salaries	$	6,317,576	$	5,114,628	$	11,432,204
Insurance		517,070		403,466		920,536
Pension		850,060		597,371		1,447,431
Other compensation		4,679,483		3,266,769		7,946,252


	$	12,364,189	$	9,382,234	$	21,746,423


Depreciation expense	$	15,759,829	$	877,185	$	16,637,014

Amortization expense	$	527,549	$	115,493	$	643,042

25.

INCOME TAX

Income tax expense consisted of the following:


	Six Months Ended June 30
	2011			2010

Income tax payable	$	4,743,575		$	4,819,213
Income tax - separated		10,506			3,688
Income tax - deferred		(152,977	)		85,473
Adjustments of prior years’ income tax		35,849			(2,189	)


Income tax	$	4,636,953		$	4,906,185

- 38 -

In May 2010, the Legislative Yuan passed the amendment of Article 5 of the Income Tax Law, which reduced the income tax rate of profit-seeking enterprises to 17%, effective January 1, 2010. The Company recalculated its deferred income tax assets and liabilities in accordance with the amended Article and recorded the resulting difference as an income tax expense or benefit.

Net deferred income tax assets (liabilities) consisted of the following:


	June 30
	2011			2010

Current

Deferred income tax assets (liabilities)
Provision for doubtful accounts	$	195,773		$	291,792
Unrealized accrued expense		50,312			56,167
Valuation loss on inventory		19,594			14,667
Unrealized foreign exchange loss (gain)		15,055			(36,894	)
Estimated warranty liabilities		10,265			17,422
Investment tax credit		9,125			2,144
Loss carryforward		—			835
Valuation gain on financial instruments, net		(1,299	)		(1,890	)
Other		67,596			20,365

		366,421			364,608
Valuation allowance		(202,883	)		(291,192	)


Net deferred income tax assets - current	$	163,538		$	73,416


Noncurrent

Deferred income tax assets
Accrued pension cost	$	311,103		$	288,606
Loss carryforward		82,215			95,239
Impairment loss		62,933			52,289
Abandonment of equipment not approved by National Tax Administration		27,672			—
Equity in losses of equity method investees, net		15,834			—
Investment tax credit		5,881			15,180
Other		3,056			12,906

		508,694			464,220
Valuation allowance		(5,103	)		(33,535	)


Net deferred income tax assets - noncurrent	$	503,591		$	430,685

- 39 -

As of June 30, 2011, details for investment tax credit of CHI and CHPT are as follows:


Law/Statue	Items	Remaining Creditable Amount		Expiry Year

Statute for Upgrading Industries	Pioneer Industry Investment Tax Credit	$	7,395		2011


Statute for Upgrading Industries	Personnel training expenditures	$	7,060		2013
	Purchase of machinery and equipment		551		2013


		$	7,611

As of June 30, 2011, loss carryforward of CHIEF, Unigate, CEI, LED and CHI are as follows:


Company	Total Amounts		Unused Amounts		Expiry Year

CHIEF	$	15,251	$	2,829		2014
		17,267		17,267		2015
		14,943		14,943		2016
		8,558		8,558		2017
		1,409		1,409		2018
Unigate		13		13		2017
		6		6		2018
		8		8		2020
		13		13		2021
CEI		4		4		2021
LED		5,426		5,426		2018
		7,571		7,571		2019
		7,957		7,957		2020
		15,637		15,637		2021
CHI		574		574		2020


	$	94,637	$	82,215

The related information under the Integrated Income Tax System is as follows:


	June 30
	2011		2010

Balance of Imputation Credit Account (“ICA”) Chunghwa	$	8,934,216	$	11,589,546

The actual creditable ratios distribution of Chunghwa’s of 2010 and 2009 for earnings were 18.76% and 26.49%, respectively.

Undistributed earnings information

All Chunghwa’s earnings generated prior to June 30, 1998 have been appropriated.

Chunghwa’s income tax returns have been examines by tax authorities through 2006. The following subsidiaries’ income tax returns have been examined by tax authorities through 2008: SENAO, CHIEF, CHSI, YYRP and CHI. The following subsidiaries income tax returns have been examined by authorities through 2009: Unigate, CHPT, CIYP, SHE and LED.

- 40 -

26.

EARNINGS PER SHARE

EPS was calculated as follows:


	Amount (Numerator)						Weighted- average Number of Common Shares (Thousand) (Denominator)		Earnings Per Share (Dollars)
	Income Before Income Tax			Net Income					Income Before Income Tax		Net Income

Six months ended June 30, 2011

Basic EPS
Income attributable to stockholders of the parent	$	29,652,237		$	25,131,176			7,821,735	$	3.79	$	3.21

Effect of dilutive potential common stock
SENAO’s stock options		(3,729	)		(3,729	)		—
Employee bonus		—			—			27,430


Diluted EPS
Income attributable to stockholders of the parent (including effect of dilutive potential common stock)	$	29,648,508		$	25,127,447			7,849,165	$	3.78	$	3.20


Six months ended June 30, 2010

Basic EPS
Income attributable to stockholders of the parent	$	29,754,207		$	24,991,418			9,696,808	$	3.07	$	2.58

Effect of dilutive potential common stock
SENAO’s stock options		(3,866	)		(3,866	)		—
Employee bonus		—			—			35,947


Diluted EPS
Income attributable to stockholders of the parent (including effect of dilutive potential common stock)	$	29,750,341		$	24,987,552			9,732,755	$	3.06	$	2.57

The diluted earnings per share for the six months ended June 30, 2011 and 2010 were also due to the effect of potential common stock of stock options by SENAO.

- 41 -

27.

PENSION PLAN

Chunghwa completed privatization plans on August 12, 2005. Chunghwa is required to pay all accrued pension obligations including service clearance payment, lump sum payment under civil service plan, additional separation payments, etc. upon the completion of the privatization in accordance with the Statute Governing Privatization of Stated-owned Enterprises. After paying all pension obligations for privatization, the plan assets of Chunghwa should be transferred to the Fund for Privatization of Government-owned Enterprises (the “Privatization Fund”) under the Executive Yuan. On August 7, 2006, Chunghwa transferred the remaining balance of fund to the Privatization Fund. However, according to the instructions of MOTC, Chunghwa is requested to pay all accrued pension obligations including service clearance payment, lump sum payment under civil service plan, additional separation payments, etc. upon the completion of the privatization.

The pension plan under the Labor Pension Act of ROC (the “LPA”) is considered as a defined contribution plan. Based on the LPA, Chunghwa and its subsidiaries make monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

The Company’s pension plan is considered as a defined benefit plan under the Labor Standards Law that provide benefits based on an employee’s length of service and average six-month salary prior to retirement. Chunghwa and its subsidiaries contribute an amount no more than 15% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the names of the Committees in the Bank of Taiwan.

Pension costs of the Company were $1,537,609 thousand ($1,405,285 thousand subject to defined benefit plan and $132,324 thousand subject to defined contribution plan) and $1,483,120 thousand ($1,375,829 thousand subject to defined benefit plan and $107,291 thousand subject to defined contribution plan) for the six months ended June 30, 2011 and 2010, respectively.

28.

TRANSACTIONS WITH RELATED PARTIES

Chunghwa engages in business transactions with the following related parties:


Company		Relationship

Taiwan International Standard Electronics Co., Ltd. (“TISE”)		Equity-method investee
Kingwaytek Technology Co., Ltd. (“KWT”)		Equity-method investee
Skysoft Co., Ltd. (“SKYSOFT”)		Equity-method investee
So-net Entertainment Taiwan Limited (“So-net”)		Equity-method investee
Dian Zuan Integrating Marketing Co., Ltd. (“DZIM”)		Equity-method investee
Senao Networks, Inc. (“SNI”)		Equity-method investee of SENAO
HopeTech Technologies Limited (“HopeTech”)		Equity-method investee of SIS
Senao Technical and Cultrual Foundation (“STCF”)		A nonprofit organization of which the funds donated by SENAO exceeds one third of its total funds

(Continued)

- 42 -


Company		Relationship

International Integrated System, Inc. (“IISI”)		Equity-method investee, which was a subsidiary of Chunghwa before Chunghwa lost control over IISI on June 24, 2011
Institute for Information Industry (“III”)		Investor with significant influence over IISI
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		Equity-method investee of CHTS

(Concluded)

Significant transactions with the above related parties are summarized as follows:


	June 30
	2011				2010
	Amount		%		Amount		%

1) Receivables

Trade notes and accounts receivable
III	$	—		—	$	27,555		97
Others		15,093		100		892		3


	$	15,093		100	$	28,447		100


2) Prepaid expenses (including in other current assets)

III	$	—		—	$	666		—


3) Refundable deposit

III	$	—		—	$	383		—


4) Payables

Trade notes payable, accounts payable, and accrued expenses
TISE	$	204,210		64	$	321,543		95
IISI		58,064		18		—		—
SKYSOFT		28,390		9		3,668		1
So-net		15,766		5		5,531		2
Others		11,672		4		6,654		2

		318,102		100		337,396		100
Payables to contractors
Others		—		—		1,560		—


	$	318,102		100	$	338,956		100


5) Advances from customers (including in other current liabilities)

Others	$	2,736		—	$	2,736		—


6) Customers’ deposits

Others	$	3,121		—	$	—		—

- 43 -


	Six Months Ended June 30
	2011				2010
	Amount		%		Amount		%

7) Revenues

So-net	$	120,639		—	$	155,589		—
HopeTech		46,127		—		—		—
SKYSOFT		21,944		—		18,777		—
III		—		—		20,507		—
Others		2,547		—		8,333		—


	$	191,257		—	$	203,206		—


8) Operating costs and expenses

TISE	$	242,226		—	$	461,035		—
SKYSOFT		23,972		—		6,976		—
KWT		17,580		—		219		—
Others		24,170		—		17,433		—


	$	307,948		—	$	485,663		—


9) Non-operating income and gains

SNI	$	15,619		1	$	13,926		2
Others		2		—		1,847		—


	$	15,621		1	$	15,773		2


10) Acquisition of property, plant and equipment

TISE	$	217,448		—	$	19,879		—

SENAO rents out part of its plant to SNI, and the rent is collected monthly.

The foregoing transactions with related parties were determined in accordance with mutual agreements.

- 44 -

29.

PLEDGED ASSETS

The following assets are pledged as collaterals for short-term and long-term bank loans and contract deposits by LED, CHIEF, SHE, CHPT and CHTS.


	June 30
	2011		2010

Property, plant and equipment, net	$	2,754,534	$	637,432
Restricted assets		8,928		81,874


	$	2,763,462	$	719,306

30.

SIGNIFICANT COMMITMENTS AND CONTINGENCIES

As of June 30, 2011, in addition to those disclosed in other notes, the Company’s remaining commitments under non-cancellable contracts with various parties were as follows:

Acquisition of land and buildings of $96,258 thousand.

Acquisition of telecommunications equipment of $21,419,856 thousand.

Unused letters of credit of $300,000 thousand.

Contracts to print billing, envelops and selling gifts of $30,116 thousand.

LED has already contracted to advance sale of land and buildings for $3,433,357 thousand, and collected $655,390 thousand in advance according to the contracts.

For the purpose of completion the construction, acquisition of the building construction license and registration ownerships of all buildings for LightEra Covent Garden Project, LED signed the trust deeds with Land Bank of Taiwan and China Real Estate Management Co., Ltd., for the fund management, property rights and related development to the extent of authority they are given.

Trust assets are as follow:


	June 30, 2011

Restricted assets - bank deposits	$	39,051
Land held under development		207,317


	$	246,368

The Company also has non-cancellable operating leases covering certain buildings, computers, computer peripheral equipment and operating system software under contracts that expire in various years.

- 45 -

Future lease payments were as follows:


Year	Rental Amount

2011 (from July 1, 2011 to December 31, 2011)	$	936,624
2012		1,521,392
2013		1,182,457
2014		925,756
2015 and thereafter		1,048,247

A commitment to contribute $2,000,000 thousand to a Piping Fund administered by the Taipei City Government, of which $1,000,000 thousand was contributed by Chunghwa on August 15, 1996 (classified as long-term investment - other monetary assets). If the fund is not sufficient, Chunghwa will contribute the remaining $1,000,000 thousand upon notification from the Taipei City Government. Based on Chunghwa’s understanding of the Piping Fund terms, if the project is considered to be no longer necessary by the ROC government, Chunghwa will receive back its proportionate share of the net equity of the Piping Fund upon its dissolution. The Company does not know when its contribution to the Piping Fund will be returned; therefore, the Company did not discount the face amount of its contribution to the Piping Fund.

A portion of the land used by Chunghwa during the period July 1, 1996 to December 31, 2004 was co-owned by Chunghwa and Taiwan Post Co., Ltd. (the former Chunghwa Post Co., Ltd. directorate General of Postal Service). In accordance with the claims process in Taiwan, on July 12, 2005, the Taiwan Taipei District Court sent a claim notice to Chunghwa to reimburse Chunghwa Post Co., Ltd. in the amount of $767,852 thousand for land usage compensation due to the portion of land usage area in excess of Chunghwa’s ownership and along with interest calculated at 5% interest rate from June 30, 2005 to the payment date. Chunghwa stated that both parties have the right to use co-management land without consideration. Chunghwa Post Co., Ltd. can’t request payment for land compensation. Furthermore, Chunghwa believes that the computation used to derive the land usage compensation amount is inaccurate because most of the compensation amount has expired as result of the expiration clause. Therefore, Chunghwa filed an appeal at the Taiwan Taipei District Court. On March 30, 2009, the Taiwan Taipei District Court rendered its judgment that Chunghwa only need to pay $16,870 thousand along with interest calculated at 4% per annum from July 23, 2005 and 4% of the court fees as the court judgment compensation. However, Chunghwa Post Co., Ltd. did not accept the judgment and filed an appeal at Taiwan High Court. Chunghwa also filed an appeal at the Taiwan High Court within the statutory period. On April 7, 2010, the Taiwan High Court rendered its judgment, ruling that Chunghwa was required to pay $23,284 thousand as compensation in addition to the $16,870 thousand from the Taiwan Taipei District Court judgment, along with interest calculated at 5% per annum from July 23, 2005 to the payment date and 12.5% of Chunghwa Post Co., Ltd.’s court fees from its original suit and subsequent appeal as compensation. Chunghwa has filed an appeal to the Supreme Court of the Republic of China within the statutory period. On June 9, 2011, the Supreme Court of the Republic of China remanded the aforementioned judgment from Taiwan High Court and the case was remanded back to the Taiwan High Court.

- 46 -

31.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Carrying amount and fair values of financial instruments were as follows:


	June 30
	2011				2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Assets
Cash and cash equivalents	$	81,456,553	$	81,456,553	$	92,779,286	$	92,779,286
Financial assets at fair value through profit or loss		86,754		86,754		40,169		40,169
Available-for-sale financial assets		2,878,467		2,878,467		6,434,268		6,434,268
Held-to-maturity financial assets - current		2,174,334		2,174,334		1,190,089		1,190,089
Trade notes and accounts receivable, net		21,645,020		21,645,020		12,261,827		12,261,827
Receivables from related parties		15,093		15,093		28,447		28,447
Other current monetary assets		2,286,814		2,286,814		2,728,765		2,728,765
Restricted assets - current		39,886		39,886		179,746		179,746
Financial assets carried at cost		2,833,803		—		2,647,091		—
Available-for-sale financial assets-noncurrent		54,400		54,400		—		—
Held-to-maturity financial assets - noncurrent		11,278,945		11,278,945		6,948,228		6,948,228
Other noncurrent monetary assets		1,000,000		1,000,000		1,000,000		1,000,000
Refundable deposits		1,649,892		1,649,892		1,475,313		1,475,313
Restricted assets - noncurrent		8,093		8,093		32,039		32,039
Liabilities
Short-term loans		100,000		100,000		3,433,687		3,433,687
Short-term bills payable		—		—		59,946		59,946
Financial liabilities at fair value through profit or loss		2,079		2,079		23,656		23,656
Trade notes and accounts payable		10,369,022		10,369,022		6,851,912		6,851,912
Payables to related parties		318,102		318,102		338,956		338,956
Accrued expenses		12,370,041		12,370,041		12,029,043		12,029,043
Dividends payable		42,854,462		42,854,462		39,369,041		39,369,041
Payables to equipment suppliers (included in “other current liabilities”)		1,820,142		1,820,142		1,520,787		1,520,787
Payables to contractors (included in “other current liabilities”)		1,776,213		1,776,213		1,472,126		1,472,126
Amounts collected in trust for others (included in “other current liabilities”)		1,324,884		1,324,884		2,400,587		2,400,587
Refundable customers’ deposits (included in “other current liabilities”)		1,178,068		1,178,068		1,067,024		1,067,024
Current portion of long-term loans		306,117		306,117		108,839		108,839
Long-term loans		2,308,606		2,308,606		164,717		164,717
Customers’ deposits		5,452,712		5,452,712		5,914,124		5,914,124

Methods and assumptions used in the estimation of fair values of financial instruments:

If the financial instruments have quoted market prices in an active market, the quoted market prices are viewed as fair values. If the market price of the other financial instruments are not readily available, valuation techniques are used incorporating estimates and assumptions that are consistent with prevailing market conditions.

- 47 -

The fair value of long-term loans (including current portion) is discounted based on projected cash flow which approximate their carrying amounts. The projected cash flows were discounted using the interest rate of similar long-term loans.

Fair values of financial assets and liabilities using quoted market price or valuation techniques were as follows:


	Amount Based on Quoted Market Price				Amount Determined Using Valuation Techniques
	June 30				June 30
	2011		2010		2011		2010

Assets
Financial assets at fair value through profit or loss	$	78,139	$	39,671	$	8,615	$	498
Available-for-sale financial assets		2,831,223		6,331,469		101,644		102,799
Liabilities
Financial liabilities at fair value through profit or loss		—		—		2,079		23,656

Information about financial risks

Market risk

The foreign exchange rate fluctuations would result in the Company’s foreign-currency-dominated assets and liabilities, outstanding currency swap contracts, and forward exchange contracts exposed to rate risk.

The fluctuations of market price would result in the index future contracts exposed to price risk.

The financial instruments categorized as available-for-sale financial assets are mainly listed stocks, open-end mutual funds and corporate bonds. Therefore, the market risk is the fluctuations of market price. In order to manage this risk, the Company would assess the risk before investing; therefore, no material market risk is anticipated.

Credit risk

Credit risk represents the potential loss that would be incurred by the Company if the counter-parties or third-parties breached contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties of the aforementioned financial instruments are reputable financial institutions and corporations. Management does not expect the Company’s exposure to default by those parties to be material.

The Company held a variety of financial instruments, the maximum credit exposed amount is the same as their carrying amounts.

Liquidation risk

The Company has sufficient operating capital to meet cash needs upon settlement of derivative financial instruments. Therefore, the liquidation risk is low.

The financial instruments of the Company categorized as available-for-sale financial assets are publicly-traded, easily converted to cash. Therefore, no material liquidation risk is anticipated. The financial instruments categorized as financial assets carried at cost are investments that do not have a quoted market price in an active market. Therefore, material liquidation risk is anticipated.

- 48 -

Cash flow interest rate risk

The Company engages in investments in fixed-interest-rate debt securities. Therefore, cash flows from such securities are not expected to fluctuate significantly due to changes in market interest rates.

32.

ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the SFC for Chunghwa and its investees:

Financings provided: None.

Endorsement/guarantee provided: Please see Table 1.

Marketable securities held: Please see Table 2.

Marketable securities acquired and disposed of at costs or prices at least $100 million or 20% of the paid-in capital: Please see Table 3.

Acquisition of individual real estate at costs of at least $100 million or 20% of the paid-in capital: None.

Disposal of individual real estate at prices of at least $100 million or 20% of the paid-in capital: Please see Table 4.

Total purchases from or sales to related parties amounting to at least $100 million or 20% of the paid-in capital: Please see Table 5.

Receivables from related parties amounting to $100 million or 20% of the paid-in capital: Please see Table 6.

Names, locations, and other information of investees on which the Company exercises significant influence: Please see Table 7.

Financial transactions: Please see Notes 5 and 31.

Investment in Mainland China: Please see Table 8.

Intercompany relationships and significant intercompany transaction: Please see Table 9.

33.

THE FINANCIAL INFORMATION OF OPERATING SEGMENTS

Segment information: Please see Table 10.

- 49 -

34.

OTHERS

The significant information of foreign-currency financial assets and liabilities as below:


	June 30
	2011						2010
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)		Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)

Financial assets

Monetary items
Cash
US Dollar	$	14,435		28.73	$	414,718	$	21,365		32.28	$	689,662
HK Dollar		631		3.69		2,328		391		4.13		1,615
JP Yen		148		0.357		53		50		0.363		18
GBP Dollar		31		46.19		1,432		2		48.4		97
Euro Dollar		1,750		41.63		72,853		1,072		39.32		42,151
RMB		10,882		4.4655		48,594		33		4.759		157
Accounts receivable
US Dollar		154,914		28.73		4,450,682		126,290		32.28		4,076,623
Euro Dollar		145		41.63		6,036		148		39.32		5,819
GBP Dollar		11		46.19		508		3		48.4		145
Available-for-sale financial assets
US Dollar		66,084		28.73		1,898,593		47,172		32.28		1,522,712
HK Dollar		2,062		3.69		7,609		—		4.13		—
Euro Dollar		—		41.63		—		34,578		39.32		1,359,607
Investments accounted for using equity method
US Dollar		805		28.73		23,041		391		32.28		12,620
VND Dollar		181,677,778		0.00135		245,265		167,570,552		0.00163		273,140
SG Dollar		17,621		23.38		411,995		17,846		22.99		410,268

Financial liabilities

Monetary items
Payable to suppliers
US Dollar		114,613		28.73		3,292,826		106,830		32.28		3,448,445
Euro Dollar		27,180		41.63		1,131,503		27,954		39.32		1,099,151
HK Dollar		965		3.69		3,561		506		4.13		2,090
SG Dollar		30		23.38		701		26		22.99		598
JP Yen		—		0.357		—		8,882		0.363		3,224
RMB		8,635		4.4655		38,560		—		4.759		—

- 50 -

TABLE 1

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

SIX MONTHS ENDED JUNE 30, 2011

(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)


		Guaranteed Party		Limits on Endorsement/ Guarantee Amount Provided to								Amount of Endorsement/			Ratio of Accumulated Endorsement/ Guarantee to Net Equity			Maximum Endorsement/
No.	Endorsement/ Guarantee Provider	Name	Nature of Relationship (Note 2)	Each Guaranteed Party			Maximum Balance for the Year		Ending Balance			Guarantee Collateralized by Properties			Per Latest Financial Statements			Guarantee Amount Allowable

0	Chunghwa Telecom Co., Ltd.	Donghwa Telecom Co., Ltd.	b	$	3,467,740 (Note 3	)	$	1,056,514	$	1,056,514 (Note 4	)	$	—			0.3	%	$	13,870,960 (Note 6	)

25	Yao Yong Real Property Co., Ltd.	Light Era Development Co., Ltd.	d		3,808,224 (Note 7	)		2,750,000		2,750,000 (Note 5	)		2,750,000 (Note 5	)		0.8	%		3,808,224 (Note 7	)


Note 1:	Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:

	a.	“0” for the Company.
	b.	Subsidiaries are numbered from “1”.

Note 2:	Relationships between the endorsement/guarantee provider and the guaranteed party:

	a.	Trading partner.
	b.	Majority owned subsidiary.
	c.	The Company and subsidiary owns over 50% ownership of the investee company.
	d.	A subsidiary jointly owned by the Company and the Company’s directly-owned subsidiary.
	e.	Guaranteed by the Company according to the construction contract.
	f.	An investee company. The guarantees were provided based on the Company’s proportionate share in the investee company.

Note 3:	The maximum amount of endorsement or guarantee is up to 1% of the total stockholders’ equity of the latest financial statements of the Company.

Note 4:	The actual amount used by guaranteed party is $1,056,514 thousand.

Note 5:	The actual amount used by guaranteed party is $2,450,000 thousand.

Note 6:	The maximum amount of endorsement or guarantee is up to 4% of the total stockholders’ equity of the latest financial statements of the Company.

Note 7:	The maximum amount of endorsement or guarantee is up to 200% of the asset value of the latest financial statements of Yao Yong Real Property Co., Ltd.

- 51 -

TABLE 2

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011										Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)			Percentage of Ownership		Market Value or Net Asset Value			Note

0	Chunghwa Telecom Co., Ltd.	Stocks
		Senao International Co., Ltd.	Subsidiary	Investments accounted for using equity method		71,773	$	1,330,533 (Note 9	)		28	$	9,258,737		Note 5
		Light Era Development Co., Ltd.	Subsidiary	Investments accounted for using equity method		300,000		3,522,010 (Note 9	)		100		3,522,242		Note 1
		Chunghwa Investment Co., Ltd.	Subsidiary	Investments accounted for using equity method		178,000		1,914,178 (Note 9	)		89		1,971,085		Note 1
		Chunghwa System Integration Co., Ltd.	Subsidiary	Investments accounted for using equity method		60,000		694,042 (Note 9	)		100		634,598		Note 1
		Chunghwa Telecom Singapore Pte., Ltd.	Subsidiary	Investments accounted for using equity method		26,383		615,496 (Note 9	)		100		615,496		Note 1
		Taiwan International Standard Electronics Co., Ltd.	Equity-method investee	Investments accounted for using equity method		1,760		548,719			40		744,930		Note 1
		CHIEF Telecom Inc.	Subsidiary	Investments accounted for using equity method		37,942		523,632 (Note 9	)		69		468,761		Note 1
		Donghwa Telecom Co., Ltd.	Subsidiary	Investments accounted for using equity method		129,590		502,560 (Note 9	)		100		502,560		Note 1
		International Integrated System, Inc.	Equity-method investee	Investments accounted for using equity method		22,498		251,264			33		220,564		Note 1
		Viettel-CHT Co., Ltd.	Equity-method investee	Investments accounted for using equity method		—		245,265			30		245,265		Note 1
		Chunghwa International Yellow Pages Co., Ltd.	Subsidiary	Investments accounted for using equity method		15,000		179,849 (Note 9	)		100		179,874		Note 1
		Prime Asia Investments Group Ltd. (B.V.I.)	Subsidiary	Investments accounted for using equity method		1		164,699 (Note 9	)		100		164,699		Note 1
		Dian Zuan Integrating Marketing Co., Ltd.	Equity-method investee	Investments accounted for using equity method		11,464		112,079			40		112,079		Note 1
		Skysoft Co., Ltd.	Equity-method investee	Investments accounted for using equity method		4,438		97,455			30		58,088		Note 1
		Spring House Entertainment Tech. Inc.	Subsidiary	Investments accounted for using equity method		5,996		91,142 (Note 9	)		56		75,408		Note 1
		Chunghwa Telecom Global, Inc.	Subsidiary	Investments accounted for using equity method		6,000		72,129 (Note 9	)		100		88,468		Note 1
		Kingwaytek Technology Co., Ltd.	Equity-method investee	Investments accounted for using equity method		1,703		66,243			33		23,582		Note 1
		Chunghwa Telecom Vietnam Co., Ltd.	Subsidiary	Investments accounted for using equity method		—		41,161 (Note 9	)		100		41,161		Note 1
		So-net Entertainment Taiwan Co., Ltd.	Equity-method investee	Investments accounted for using equity method		3,429		31,532			30		14,107		Note 1
		Chunghwa Telecom Japan Co., Ltd.	Subsidiary	Investments accounted for using equity method		1		18,411 (Note 9	)		100		18,411		Note 1
		New Prospect Investments Holdings Ltd. (B.V.I.)	Subsidiary	Investments accounted for using equity method		—		— (US$1 dollar (Note 9	) )		100	(US$	— 1 dollar	)	Note 3

(Continued)

- 52 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011									Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value			Note

		Chunghwa Sochamp Technology Inc.	Subsidiary	Investments accounted for using equity method		2,040	$	20,400		—	$	20,400		Note 10
		Taipei Financial Center Corp.	—	Financial assets carried at cost		172,927		1,789,530		12		1,415,843		Note 2
		Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)	—	Financial assets carried at cost		20,000		200,000		17		207,170		Note 2
		Global Mobile Corp.	—	Financial assets carried at cost		12,696		127,018		8		79,762		Note 2
		iD Branding Ventures	—	Financial assets carried at cost		7,500		75,000		8		82,155		Note 2
		Innovation Works Development Fund, L.P.	—	Financial assets carried at cost		—		38,035		6		22,784		Note 2
		RPTI Intergroup International Ltd.	—	Financial assets carried at cost		4,765		34,500		10		33,398		Note 2
		Innovation Works Limited	—	Financial assets carried at cost		1,000		31,391		2		23,724		Note 2
		CQi Energy Infocom Inc.	—	Financial assets carried at cost		2,000		20,000		18		(2,866	)	Note 2
		Essence Technology Solution, Inc.	—	Financial assets carried at cost		200		—		7		919		Note 2

		Beneficiary certificates (mutual fund)
		HSBC Glbl Emerging Markets Bd A Inc.	—	Available-for-sale financial assets		288		163,912		—		161,826		Note 4
		Templeton Global Bond A Acc $	—	Available-for-sale financial assets		418		307,114		—		314.315		Note 4
		PIMCO Global Investment Grade Credit - Ins H Acc	—	Available-for-sale financial assets		751		307,246		—		307,451		Note 4
		PIMCO GIS Total Return Bond Fund - H Institutional Class (Acc)	—	Available-for-sale financial assets		770		534,453		—		527,092		Note 4
		Janus US Flexible Income Bond Fund	—	Available-for-sale financial assets		671		230,472		—		228,568		Note 4
		PIMCO GIS Diversified Bond Fund - H Institutional Class (Acc)	—	Available-for-sale financial assets		984		347,452		—		345,261		Note 4

		Bonds
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005	—	Held-to-maturity financial assets		—		309,749		—		309,749		Note 7
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-B Issue in 2006	—	Held-to-maturity financial assets		—		408,122		—		408,122		Note 7
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-B Issue in 2006	—	Held-to-maturity financial assets		—		306,092		—		306,092		Note 7
		Taiwan Power Co. 3rd Unsecured Corporate Bond-A Issue in 2006	—	Held-to-maturity financial assets		—		200,200		—		200,200		Note 7

		Formosa Petrochemical Corporation 4th Unsecured Corporate Bonds Issue in 2006	—	Held-to-maturity financial assets		—		150,080		—		150,080		Note 7
		Formosa Petrochemical Corporation 5th Unsecured Corporate Bonds Issue in 2006	—	Held-to-maturity financial assets		—		200,249		—		200,249		Note 7
		Yuanta Securities Co., Ltd. 1st Unsecured Corporate Bonds-B Issue in 2007	—	Held-to-maturity financial assets		—		201,499		—		201,499		Note 7
		China Development Financial Holding Corporation 1st Unsecured Corporate Bonds Issue in 2006	—	Held-to-maturity financial assets		—		200,594		—		200,594		Note 7
		China Development Financial Holding Corporation 1st Unsecured Corporate Bonds Issue in 2006	—	Held-to-maturity financial assets		—		200,594		—		200,594		Note 7
		Chinese Petroleum Corporation 1st Unsecured Corporate Bond-A Issue in 2008	—	Held-to-maturity financial assets		—		102,439		—		102,439		Note 7
		China Steel Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		102,116		—		102,116		Note 7

(Continued)

- 53 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note

		China Steel Corporation 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—	$	100,014		—	$	100,014	Note 7
		China Steel Corporation 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		102,003		—		102,003	Note 7
		Yuanta FHC 1st Unsecured Corporate Bonds-A Issue in 2009	—	Held-to-maturity financial assets		—		100,000		—		100,000	Note 7
		Taiwan Power Co. 3rd Unsecured Corporate Bond-B Issue in 2008	—	Held-to-maturity financial assets		—		154,281		—		154,281	Note 7
		Taiwan Power Co. 5rd Unsecured Corporate Bond-A Issue in 2008	—	Held-to-maturity financial assets		—		149,995		—		149,995	Note 7
		Taiwan Power Co. 4th Unsecured Corporate Bond-B Issue in 2008	—	Held-to-maturity financial assets		—		51,006		—		51,006	Note 7
		Taiwan Power Co. 5th Unsecured Corporate Bond-A Issue in 2008	—	Held-to-maturity financial assets		—		300,979		—		300,979	Note 7
		Taiwan Power Co. 5th Unsecured Corporate Bond-B Issue in 2008	—	Held-to-maturity financial assets		—		206,192		—		206,192	Note 7
		Taiwan Power Co. 6th Unsecured Corporate Bond-A Issue in 2008	—	Held-to-maturity financial assets		—		270,434		—		270,434	Note 7
		Taiwan Power Co. 8th Unsecured Corporate Bond-A Issue in 2008	—	Held-to-maturity financial assets		—		154,067		—		154,067	Note 7
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		404,246		—		404,246	Note 7
		NAN YA Company 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		202,630		—		202,630	Note 7
		China Development Financial Holding Corporation 1st Unsecured Corporate Bonds-A Issue in 2008	—	Held-to-maturity financial assets		—		102,107		—		102,107	Note 7
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		99,942		—		99,942	Note 7
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		101,603		—		101,603	Note 7
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		408,320		—		408,320	Note 7

		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		49,962		—		49,962	Note 7
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		205,036		—		205,036	Note 7
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-A Issue in 2009	—	Held-to-maturity financial assets		—		200,732		—		200,732	Note 7
		FCFC 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		251,807		—		251,807	Note 7
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		201,226		—		201,226	Note 7
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		40,558		—		40,558	Note 7
		Taiwan Power Co. 2nd Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		100,390		—		100,390	Note 7
		Taiwan Power Co. 2nd Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		348,909		—		348,909	Note 7

(Continued)

- 54 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note

		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—	$	99,933		—	$	99,933	Note 7
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		304,636		—		304,636	Note 7
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		203,306		—		203,306	Note 7
		NAN YA Company 2nd Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		200,623		—		200,623	Note 7
		NAN YA Company 2nd Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		50,353		—		50,353	Note 7
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		302,990		—		302,990	Note 7
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		199,684		—		199,684	Note 7
		MLPC 1st Unsecured Corporate Bond Issue in 2008	—	Held-to-maturity financial assets		—		305,133		—		305,133	Note 7
		MLPC 1st Unsecured Corporate Bond Issue in 2008	—	Held-to-maturity financial assets		—		199,816		—		199,816	Note 7
		Formosa Petrochemical Corporation 4th Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		200,690		—		200,690	Note 7
		Formosa Petrochemical Corporation 4th Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		305,139		—		305,139	Note 7
		Formosa Petrochemical Corporation 4th Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		202,487		—		202,487	Note 7
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		176,981		—		176,981	Note 7
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		100,996		—		100,996	Note 7
		FCFC 2st Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		201,178		—		201,178	Note 7
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		302,989		—		302,989	Note 7
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		100,505		—		100,505	Note 7

		Taiwan Power Co 3rd Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		201,662		—		201,662	Note 7
		Taiwan Power Co 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		300,738		—		300,738	Note 7
		Taiwan Power Co 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		299,785		—		299,785	Note 7
		Mega Securities Co., Ltd. 1st Unsecured Corporate Bond Issue in 2009	—	Held-to-maturity financial assets		—		300,000		—		300,000	Note 7
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		50,551		—		50,551	Note 7
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		299,589		—		299,589	Note 7

(Continued)

- 55 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011										Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)			Percentage of Ownership		Market Value or Net Asset Value			Note

		Yuanta FHC 1St Unsecured Corporate Bonds-A Issue in 2011	—	Held-to-maturity financial assets		—	$	300,000			—	$	300,000		Note 7
		FCFC 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		299,358			—		299,358		Note 7
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		149,687			—		149,687		Note 7
		China Development Industrial Bank 2nd Financial Debentures Issue in 2006	—	Held-to-maturity financial assets		—		199,709			—		199,709		Note 7
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010	—	Held-to-maturity financial assets		—		100,751			—		100,751		Note 7
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010	—	Held-to-maturity financial assets		—		201,879			—		201,879		Note 7
		TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010	—	Held-to-maturity financial assets		—		303,958			—		303,958		Note 7
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-D Issue in 2011	—	Held-to-maturity financial assets		—		300,000			—		300,000		Note 7

1	Senao International Co., Ltd.	Stocks
		Senao Networks, Inc.	Equity-method investee	Investments accounted for using equity method		16,824		300,207			41		300,207		Note 1
		Senao International (Samoa) Holding Ltd.	Subsidiary	Investments accounted for using equity method		9,875	(US$	230,406 8,000 (Note 9	) )		100	(US$	230,528 8,004	)	Note 1

		N.T.U. Innovation Incubation Corporation	—	Financial assets carried at cost		1,200		12,000			9		12,984		Note 2

		Beneficiary certificates (mutual fund)
		Fuh Hwa Global Short-term Income Fund	—	Available-for-sale financial assets		4,850		50,000			—		52,207		Note 4
		Fuh Hwa Strategic High Income Fund	—	Available-for-sale financial assets		9,149		100,000			—		104,847		Note 4
		Taishin Lucky Money Market Fund	—	Available-for-sale financial assets		4,687		50,000			—		50,131		Note 4
		Taishin Ta-Chong Money Market Fund	—	Available-for-sale financial assets		3,676		50,000			—		50,140		Note 4

2	CHIEF Telecom Inc.	Stocks
		Unigate Telecom Inc.	Subsidiary	Investments accounted for using equity method		200		1,864 (Note 9	)		100		1,864		Note 1

		Chief International Corp.	Subsidiary	Investments accounted for using equity method		200	(US$	8,370 291 (Note 9	) )		100	(US$	8,370 291	)	Note 1

		eASPNet Inc.	—	Financial assets carried at cost		833		—			2		—		Note 2
		3 Link Information Service Co., Ltd.	—	Financial assets carried at cost		374		3,450			10		6,885		Note 2

3	Chunghwa System Integration Co., Ltd.	Stocks
		Concord Technology Co., Ltd.	Subsidiary	Investments accounted for using equity method		1,010	(US$	7,864 274 (Note 9	) )		100	(US$	7,864 274	)	Note 1

7	Spring House Entertainment Tech. Inc.	Stocks
		Ceylon Innovation Co., Ltd.	Subsidiary	Investments accounted for using equity method		—		979 (Note 9	)		100		979		Note 1

(Continued)

- 56 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011										Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)			Percentage of Ownership		Market Value or Net Asset Value			Note

8	Light Era Development Co., Ltd.	Stocks
		Yao Yong Real Property Co., Ltd.	Subsidiary	Investments accounted for using equity method		83,290	$	2,809,963 (Note 9	)		100	$	2,809,963		Note 1

9	Chunghwa Telecom Singapore Pte., Ltd.	Stocks
		ST-2 Satellite Ventures Pte., Ltd.	Equity-method investee	Investments accounted for using equity method		18,102	(SG$	411,995 17,621	)		38	(SG$	411,995 17,621	)	Note 1

14	Chunghwa Investment Co., Ltd.	Stocks
		Chunghwa Precision Test Tech. Co., Ltd.	Subsidiary	Investments accounted for using equity method		10,317		118,723 (Note 9	)		53		118,723		Note 1
		Chunghwa Investment Holding Co., Ltd.	Subsidiary	Investments accounted for using equity method		1,043	(US$	14,116 491 (Note 9	) )		100	(US$	14,116 491	)	Note 1
		Tatung Technology Inc.	Equity-method investee	Investments accounted for using equity method		5,000		18,825			28		18,825		Note 1
		Panda Monium Company Ltd.	Equity-method investee	Investments accounted for using equity method		602		—			43		—		Note 1
		CHIEF Telecom Inc.	Equity-method investee	Investments accounted for using equity method		2,000		24,381 (Note 9	)		4		24,736		Note 1
		Senao International Co., Ltd.	Equity-method investee	Investments accounted for using equity method		1,001		46,873 (Note 9	)		—		129,129		Note 5
		Digimax Inc.	—	Financial assets carried at cost		2,000		15,080			4		14,578		Note 2
		iD Branding Ventures	—	Financial assets carried at cost		2,500		25,000			3		25,591		Note 2
		ChipSip Technology Co., Ltd.	—	Financial assets carried at cost		485		4,370			1		3,500		Note 8
		Uni Display Inc.	—	Financial assets carried at cost		4,630		55,450			3		40,199		Note 2
		A2peak Power Co., Ltd.	—	Financial assets carried at cost		990		9,858			3		7,977		Note 2
		Taimide Technology Ltd.	—	Financial assets carried at cost		897		19,923			1		44,168		Note 2
		CoaTronics Inc.	—	Financial assets carried at cost		1,200		12,000			9		4,725		Note 2
		VisEra Technologies Company Ltd.	—	Financial assets carried at cost		649		29,371			—		11,236		Note 2
		Ultra Fine Optical Technology Co., Ltd.	—	Financial assets carried at cost		1,800		27,000			8		24,307		Note 2
		Procrystal Technology Co., Ltd.	—	Financial assets carried at cost		1,200		78,000			2		24,393		Note 2
		Tons Lightology Inc.	—	Financial assets carried at cost		1,050		66,150			4		50,400		Note 2
		Alder Optomechanical Corp.	—	Financial assets carried at cost		350		29,750			—		29,750		Note 8
		Aide Energy (Cayman) Holding Co., Ltd.	—	Financial assets carried at cost		800		29,940			1		29,940		Note 8

(Continued)

- 57 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note
		XinTec Inc.	—	Financial assets carried at cost		24		1,076		—		913	Note 8
		DelSolar Co., Ltd.	—	Financial assets carried at cost		127		6,083		—		4,504	Note 8
		Subtron Technology Co., Ltd.	—	Financial assets carried at cost		187		3,483		—		4,573	Note 8
		Cando Corporation	—	Financial assets carried at cost		376		4,938		—		5,264	Note 8
		Huga Optotech Inc.	—	Financial assets carried at cost		423		12,870		—		11,860	Note 8
		Tatung Fine Chemicals Co.	—	Financial assets carried at cost		117		9,135		—		6,957	Note 8
		Win Semiconductors Corp.	—	Financial assets carried at cost		370		10,555		—		13,612	Note 8
		OptiVision Technology Inc.	—	Financial assets carried at cost		325		10,188		—		3,289	Note 8
		Lextar Electronics Corp.	—	Financial assets carried at cost		334		16,243		—		12,064	Note 8
		SuperAlloy Industrial Co., Ltd.	—	Financial assets carried at cost		509		7,124		—		5,803	Note 8
		G-TECH Optoelectronics Corporation	—	Financial assets carried at cost		17		1,747		—		1,813	Note 8
		Hiroca Holdings Ltd.	—	Financial assets carried at cost		140		17,847		—		17,258	Note 8
		Formosa Plastics Corporation	—	Available-for-sale financial assets		11		648		—		1,108	Note 5
		Fubon Financial Holding Co., Ltd.	—	Available-for-sale financial assets		371		13,576		—		16,401	Note 5
		Cathay Financial Holding Co., Ltd.	—	Available-for-sale financial assets		66		3,442		—		2,913	Note 5
		Dynapack International Technology Corp.	—	Available-for-sale financial assets		1		67		—		89	Note 5
		Taiwan Hon Chuan Enterprise Co., Ltd.	—	Available-for-sale financial assets		122		7,042		—		10,567	Note 5

(Continued)

- 58 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note

		Asia Cement Corporation	—	Available-for-sale financial assets		80	$	2,567		—	$	3,280	Note 5
		Anpec Electronics Corporation	—	Available-for-sale financial assets		65		2,629		—		1,885	Note 5
		China Steel Corporation	—	Available-for-sale financial assets		222		6,650		—		7,668	Note 5
		Wei Chuan Foods Corp.	—	Available-for-sale financial assets		203		8,912		—		6,608	Note 5
		Gemtek Technology Co., Ltd.	—	Available-for-sale financial assets		71		3,970		—		2,244	Note 5
		Coxon Precise Industrial Co., Ltd.	—	Available-for-sale financial assets		107		8,206		—		6,720	Note 5
		Altek Corp.	—	Available-for-sale financial assets		36		1,824		—		1,487	Note 5
		I-Chiun Precision Industry Co., Ltd.	—	Available-for-sale financial assets		150		7,320		—		3,510	Note 5
		Delta Electronics, Inc.	—	Available-for-sale financial assets		70		8,383		—		7,385	Note 5
		MasterLink Securities Corporation	—	Available-for-sale financial assets		250		3,162		—		3,213	Note 5
		Evergreen Marine Corp. (Taiwan) Ltd.	—	Available-for-sale financial assets		80		1,821		—		1,848	Note 5
		Chipbond Technology Corporation	—	Available-for-sale financial assets		80		3,632		—		3,268	Note 5
		Chung Hwa Pulp Corp.	—	Available-for-sale financial assets		140		2,217		—		2,100	Note 5
		Taiwan Cement Corp.	—	Available-for-sale financial assets		80		2,505		—		3,424	Note 5
		China Airlines Ltd.	—	Available-for-sale financial assets		190		4,127		—		3,705	Note 5
		Hon Hai Precision Ind. Co., Ltd.	—	Available-for-sale financial assets		3		324		—		331	Note 5
		Insyde Software Corp.	—	Available-for-sale financial assets		15		2,218		—		2,378	Note 5
		Makalot Industrial Co., Ltd.	—	Available-for-sale financial assets		10		731		—		752	Note 5
		Nan Ya Printed Circuit Board Corporation	—	Available-for-sale financial assets		15		1,741		—		1,635	Note 5
		Taiflex Scientific Co., Ltd.	—	Available-for-sale financial assets		40		2,318		—		2,472	Note 5
		PChome Store Inc.	—	Available-for-sale financial assets		325		14,072		—		49,400	Note 5
		IC Plus Corp.	—	Available-for-sale financial assets		210		5,630		—		5,000	Note 5
		Swancor Ind, Co., Ltd.	—	Available-for-sale financial assets		24		1,326		—		1,332	Note 5
		Apex Biotechnology Corp.	—	Available-for-sale financial assets		8		422		—		504	Note 5
		Cyberlink Co.	—	Available-for-sale financial assets		46		5,736		—		3,943	Note 5
		Optotech Corporation	—	Available-for-sale financial assets		320		7,106		—		5,648	Note 5

(Continued)

- 59 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note
		Sino-American Silicon Products Inc.	—	Available-for-sale financial assets		76		8,085		—		7,196	Note 5
		Tang Eng Iron Works Co., Ltd.	—	Available-for-sale financial assets		135		3,930		—		3,928	Note 5
		Pan Jit International Inc.	—	Available-for-sale financial assets		20		649		—		647	Note 5
		Ability Enterprise Co., Ltd.	—	Available-for-sale financial assets		55		2,909		—		2,178	Note 5
		Yuanta Financial Holdings	—	Available-for-sale financial assets		200		4,279		—		3,980	Note 5
		Sunrex Technology Corporation	—	Available-for-sale financial assets		85		2,538		—		2,257	Note 5
		Taiwan Semiconductor Co., Ltd.	—	Available-for-sale financial assets		245		6,146		—		5,439	Note 5
		Everlight Electronics Co., Ltd.	—	Available-for-sale financial assets		90		8,248		—		6,939	Note 5
		Visual Photonics Epitaxy Co., Ltd.	—	Available-for-sale financial assets		43		3,197		—		3,054	Note 5
		Ene Technology Inc.	—	Available-for-sale financial assets		54		2,813		—		1,680	Note 5
		Realtek Semiconductor Corp.	—	Available-for-sale financial assets		81		6,047		—		4,482	Note 5
		ALi Corporation	—	Available-for-sale financial assets		105		5,634		—		4,357	Note 5
		Acme Electronics Corporation	—	Available-for-sale financial assets		70		7,052		—		6,790	Note 5
		Taiwan PCB Techvest Co., Ltd.	—	Available-for-sale financial assets		100		4,900		—		3,155	Note 5
		China Synthetic Rubber Corporation	—	Available-for-sale financial assets		120		3,615		—		3,612	Note 5
		Chung Hung Steel Corporation	—	Available-for-sale financial assets		101		1,807		—		1,487	Note 5
		Newmax Technology Co., Ltd.	—	Available-for-sale financial assets		26		3,316		—		2,918	Note 5
		Tingyi (Cayman Islands) Holding Corp.	—	Available-for-sale financial assets		35		1,492		—		1,543	Note 5
		Daxon Technology Inc.	—	Available-for-sale financial assets		217		6,135		—		4,872	Note 5
		Edison Opto Corporation	—	Available-for-sale financial assets		50		7,850		—		5,970	Note 5
		Kung Long Batteries Industrial Co., Ltd.	—	Available-for-sale financial assets		30		1,816		—		1,518	Note 5
		Digital China Holdings Limited	—	Available-for-sale financial assets		55		1,671		—		1,282	Note 5

(Continued)

- 60 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note

		TXC Corporation	—	Available-for-sale financial assets		95	$	5,371		—	$	4,769	Note 5
		Richtek Technology Corp.	—	Available-for-sale financial assets		6		1,311		—		1,182	Note 5
		Uni-President Enerprises Corp.	—	Available-for-sale financial assets		115		4,861		—		4,784	Note 5
		Global Unichip Corp.	—	Available-for-sale financial assets		10		1,110		—		1,135	Note 5
		Ruentex Development Co., Ltd.	—	Available-for-sale financial assets		145		6,818		—		5,851	Note 5
		eMemory Technology Inc.	—	Available-for-sale financial assets		1		73		—		65	Note 5
		Far Eastern Department Stores Ltd.	—	Available-for-sale financial assets		40		1,970		—		2,300	Note 5
		Taiwan Semiconductor Manufacturing Co., Ltd.	—	Available-for-sale financial assets		80		5,466		—		5,776	Note 5
		Fulltech Fiber Glass Corp.	—	Available-for-sale financial assets		50		1,578		—		1,325	Note 5
		Wistron NeWeb Corporation	—	Available-for-sale financial assets		18		1,886		—		1,620	Note 5
		San Shing Fastech Corp.	—	Available-for-sale financial assets		675		24,331		—		30,847	Note 5
		USI Corp.	—	Available-for-sale financial assets		160		6,256		—		5,288	Note 5
		Media Tek Inc.	—	Available-for-sale financial assets		15		5,022		—		4,680	Note 5
		President Chain Store Corp.	—	Available-for-sale financial assets		10		1,212		—		1,660	Note 5
		Macronix International Co., Ltd.	—	Available-for-sale financial assets		90		1,945		—		1,584	Note 5
		Dukang Distillers Holdings Ltd.	—	Available-for-sale financial assets		70		1,316		—		934	Note 5
		Champion Microelectronic Corp.	—	Available-for-sale financial assets		122		6,350		—		4,374	Note 5
		Unimicron Corporation	—	Available-for-sale financial assets		20		949		—		1,022	Note 5
		Sesoda Corporation	—	Available-for-sale financial assets		138		4,882		—		5,244	Note 5
		Taiwan Cooperative Bank	—	Available-for-sale financial assets		245		5,925		—		5,721	Note 5
		Lite-On Technology Corp.	—	Available-for-sale financial assets		10		247		—		382	Note 5
		Oris Tech Co., Ltd.	—	Available-for-sale financial assets		5		201		—		265	Note 5
		Chung-Hsin Electic & Machinery MFG. Corp.	—	Available-for-sale financial assets		50		935		—		857	Note 5
		Huaku Development Co., Ltd.	—	Available-for-sale financial assets		33		2,665		—		2,815	Note 5
		Huang Hsiang Construction Corporation	—	Available-for-sale financial assets		47		3,729		—		3,577	Note 5

(Continued)

- 61 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note
		Elite Advanced Laser Corporation	—	Available-for-sale financial assets		26		2,265		—		2,122	Note 5
		Taiwan FamilyMart Co., Ltd.	—	Available-for-sale financial assets		11		1,419		—		1,551	Note 5
		Taiwan 50 Index	—	Available-for-sale financial assets		105		6,199		—		6,179	Note 5
		Radium Life Tech Co., Ltd.	—	Available-for-sale financial assets		75		2,767		—		2,820	Note 5
		Chia Chang Co., Ltd.	—	Available-for-sale financial assets		34		2,101		—		1,800	Note 5
		Shining Building Business Co., Ltd.	—	Available-for-sale financial assets		25		1,062		—		1,102	Note 5
		Gigasolar Materials Corporation	—	Available-for-sale financial assets		253		37,245		—		159,832	Note 5

		Beneficiary certificates (mutual fund)
		Mega Diamond Bond Fund	—	Available-for-sale financial assets		4,185		50,001		—		50,304	Note 4
		Manulife Emerging Market High Yield Bond Fund-A	—	Available-for-sale financial assets		990		9,965		—		10,079	Note 4
		Paradigm high Yield Bond Fund-A	—	Available-for-sale financial assets		1,399		15,000		—		15,532	Note 4
		HSBS Asian High Yield Bond Fund-A	—	Available-for-sale financial assets		300		3,014		—		3,014	Note 4
		Jih Sun MIT Mainstream Fund	—	Available-for-sale financial assets		500		5,000		—		4,810	Note 4
		Cathay Mandarin Fund	—	Available-for-sale financial assets		1,600		16,000		—		15,024	Note 4
		Fubon Agribusiness Equity Fund	—	Available-for-sale financial assets		1,000		10,000		—		9,940	Note 4
		Capital India Medium & Small Capital Equity Fund	—	Available-for-sale financial assets		500		5,000		—		5,020	Note 4
		Fuh Hwa Global Fixed Income Fund of Funds	—	Available-for-sale financial assets		550		6,012		—		7,150	Note 4
		Cathy Man AHL Futures Trust Fund of Funds	—	Available-for-sale financial assets		997		10,053		—		9,686	Note 4
		Fuh Hwa Emerging Market Active Allocation Fund of Funds	—	Available-for-sale financial assets		1,000		10,000		—		9,980	Note 4
		Franklin Templeton Sinoam Franklin Templeton Global Fund of Funds	—	Available-for-sale financial assets		870		11,621		—		11,432	Note 4

(Continued)

- 62 -


No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2011								Note
No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 6)		Percentage of Ownership		Market Value or Net Asset Value		Note

		PowerShares QQQ	—	Available-for-sale financial assets		2	$	2,853		—	$	3,278	Note 4
		iShares Dow Jones U.S. Financial Sector Index Fund	—	Available-for-sale financial assets		2		4,325		—		4,047	Note 4
		Pro Shares UltraShort 20+ Year Treasury	—	Available-for-sale financial assets		7		6,769		—		6,443	Note 4
		iShares FTSE/Xinhua A50 China Index ETF	—	Available-for-sale financial assets		85		4,113		—		4,060	Note 4
		iShares CSI A-Share Consumer Staples Index ETF	—	Available-for-sale financial assets		20		1,733		—		1,668	Note 4
		WISE-CSI 300 China Tracker	—	Available-for-sale financial assets		14		2,046		—		1,883	Note 4
		Bonds
		Hua Nan Financial Holdings Company 1st Unsecured Subordinate Corporate Bonds Issue in 2006	—	Available-for-sale financial assets		5,000		50,815		—		51,120	Note 5
		AU Optronics Corporation 1^st Secured Corporate Bonds Issue in 2008	—	Available-for-sale financial assets		5,000		50,406		—		50,524	Note 5

		Convertible bonds
		Epistar Corporation Ltd. 3rd Convertible Bond	—	Financial assets at fair value through profit or loss		17		1,815		—		1,819	Note 5
		Everlight Electronics Co., Ltd. 3rd Convertible Bonds	—	Financial assets at fair value through profit or loss		50		5,411		—		5,212	Note 5
		King Slide Works Co., Ltd. 2nd Convertible Bond	—	Financial assets at fair value through profit or loss		50		5,000		—		5,047	Note 5
		Everlight Electronics Co., Ltd. 4th Convertible Bonds	—	Financial assets at fair value through profit or loss		50		5,000		—		5,270	Note 5
		Ability Enterprise Co., Ltd. 1st Unsecured Convertible Bonds	—	Financial assets at fair value through profit or loss		40		4,008		—		4,002	Note 5
		TUL the Third Security Convertible Bond	—	Financial assets at fair value through profit or loss		15		1,500		—		1,482	Note 5
		Yuanta Financial Holding Co., Ltd. 1st Domestic Convertible Bond	—	Financial assets at fair value through profit or loss		85		8,500		—		9,393	Note 5
		Synnex Technology International Corporation 1st Unsecured Convertible Bond Issue in 2008	—	Financial assets at fair value through profit or loss		35		4,974		—		4,441	Note 5

		Ruentex Industry Co., Ltd. 2010 1st Domestic Unsecured Convertible Corporate Bonds	—	Financial assets at fair value through profit or loss		100		10,074		—		9,910	Note 5
		Ruentex Development Co., Ltd. 2010 1st Domestic Unsecured Convertible Corporate Bonds.	—	Financial assets at fair value through profit or loss		110		11,092		—		10,808	Note 5
		Synnex Technology International Corporation 2nd Unsecured Covertiable Bond Issue	—	Financial assets at fair value through profit or loss		100		10,020		—		10,010	Note 5
		Far Eastern Department Store Ltd. 1st Domestic Unsecured Convertible Corporate Bond	—	Financial assets at fair value through profit or loss		70		7,000		—		7,560	Note 5
		Asia Optical 3.rd Domestic Unsecured Convertible Bond	—	Financial assets at fair value through profit or loss		15		1,504		—		1,567	Note 5
		Shenmao Technology Inc. 1st Convertiable Bond	—	Financial assets at fair value through profit or loss		15		1,500		—		1,618	Note 5

(Continued)

- 63 -

No.

Held Company Name

Marketable Securities Type and Name

Relationship with the Company

Financial Statement Account

June 30, 2011

Note

Shares
(Thousands/
Thousand Units)

Carrying Value
(Note 6)

Percentage of
Ownership

Market Value
or Net Asset
Value

Concord Technology Co., Ltd.

Stocks

Glory Network System Service (Shanghai) Co., Ltd.

Subsidiary

Investments accounted for using equity method

1,010

(RMB

7,864

1,771

(Note 9

)

100

(RMB

7,864

1,771

)

Note 1

Chunghwa Precision Test Tech. Co., Ltd.

Stocks

Chunghwa Precision Test Tech. USA Corporation

Subsidiary

Investments accounted for using equity method

400

(US$

10,200

355

(Note 9

)

100

(US$

10,200

355

)

Note 1

Senao International (Samoa) Holding Ltd.

Stocks

Senao International HK Limited

Subsidiary

Investments accounted for using equity method

9,180

(US$

210,775

7,318

(Note 9

)

100

(US$

210,775

7,318

)

Note 1

HopeTech Technologies Limited

Equity-method investee

Investments accounted for using equity method

5,240

(US$

19,239

668

)

(US$

19,239

668

)

Note 1

Senao International HK Limited

Stocks

Senao Trading (Fujian) Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

(US$

42,746

1,484

(Note 9

)

100

(US$

42,746

1,484

)

Note 1

Senao International Trading (Shanghai) Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

(US$

64,163

2,228

(Note 9

)

100

(US$

64,163

2,228

)

Note 1

Senao International Trading (Shanghai) Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

(US$

57,294

1,989

(Note 9

)

100

(US$

57,294

1,989

)

Note 1 and 11

Senao International Trading (Jiangsu) Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

(US$

45,453

1,578

(Note 9

)

100

(US$

45,453

1,578

)

Note 1

Chunghwa Investment Holding Co., Ltd.

Stocks

CHI One Investment Co., Limited

Subsidiary

Investments accounted for using equity method

3,500

(HK$

4,433

1,201

(Note 9

)

100

(HK$

4,433

1,201

)

Note 1

CHI One Investment Co., Limited

Stocks

Xiamen Sertec Business Technology Co., Ltd.

Equity-method investee

Investments accounted for using equity method

—

(RMB

3,924

881

)

(RMB

3,924

881

)

Note 1

Prime Asia Investments Group, Ltd. (B.V.I.)

Stocks

Chunghwa Hsingta Company Ltd.

Subsidiary

Investments accounted for using equity method

—

(RMB

164,699

36,882

(Note 9

)

100

(RMB

164,699

36,882

)

Note 1

Chunghwa Hsingta Company Ltd.

Stocks

Chunghwa Telecom (China) Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

(RMB

164,699

36,882

(Note 9

)

100

(RMB

164,699

36,882

)

Note 1

(Continued)

- 64 -


Note 1:		The net asset values of investees were based on audited financial statements.
Note 2:		The net asset values of investees were based on unaudited financial statements.
Note 3:		New Prospect Investments Holdings Ltd. (B.V.I.) was incorporated in March 2006, but not yet begun operation as of June 30, 2011.
Note 4:		The net asset values of beneficiary certificates (mutual fund) were based on the net asset values on June 30, 2011.
Note 5:		Market value was based on the closing price of June 30, 2011.
Note 6:		Showing at their original carrying amounts without adjustments for fair values, except for held-to-maturity financial assets.
Note 7:		The net asset values of investees were based on amortized cost.
Note 8:		Market value of emerging stock was based on the average trading price on June 30, 2011.
Note 9:		The amount was eliminated upon consolidation.
Note 10:		Prepayment for long-term investment, NT$20,400 thousand, was injected in Chunghwa Sochamp Technology Inc. by the Company in June 2011. Chunghwa Sochamp Technology Inc. completed its registration on July 1, 2011, and the Company owns 51% of ownership of Chunghwa Sochamp Technology Inc.
Note 11:		The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 65 -

TABLE 3

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

SIX MONTHS ENDED JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars)


No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party	Nature of Relation- ship	Beginning Balance				Acquisition				Disposal										Ending Balance
No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party	Nature of Relation- ship	Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)		Shares (Thou- sands/ Thou- sand Units)		Amount		Shares (Thou- sands/ Thou- sand Units)		Amount		Carrying Value (Note 1)			Gain (Loss) on Disposal			Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)

0	Chunghwa Telecom Co., Ltd.	Stocks
		Prime Asia Investments Group Ltd.	Investments accounted for using equity method	—	Subsidiary		—	$	—		1	$	177,176		—	$	—	$	—		$	—			1	$	164,699 (Notes 3 and 6	)
		Chunghwa Telecom Singapore Pte., Ltd.	Investments accounted for using equity method	—	Subsidiary		61,869		1,399,258		—		—		35,486		815,827		815,827 (Note 5	)		—			26,383		615,496 (Notes 3 and 6	)
		Dian Zuan Integrating Marketing Co., Ltd.	Investments accounted for using equity method	—	—		—		—		11,464		114,640		—		—		—			—			11,464		112,079 (Note 3	)

		Beneficiary certificates (mutual fund)

		Yuanta Wan Tai Money Market	Available-for-sale financial assets	—	—		—		—		137,562		2,000,000		137,562		2,001,073		2,000,000			1,073			—		—
		PIMCO GIS Total Return Bond Fund - H Institutional Class (Acc)	Available-for-sale financial assets	—	—		349		242,784		421		291,669		—		—		—			—			770		534,453
		PIMCO GIS Diversified Bond Fund - E Institutional Class (Inc)	Available-for-sale financial assets	—	—		—		—		656		236,082		656		231,176		236,082			(4,906	)		—		—
		Janus US Flexible Income Bond Fund	Available-for-sale financial assets	—	—		—		—		671		230,472		—		—		—			—			671		230,472
		PIMCO GIS Diversified Bond Fund - H Institutional Class (Acc)	Available-for-sale financial assets	—	—		—		—		984		347,452		—		—		—			—			984		347,452

(Continued)

- 66 -

No.

Company Name

Marketable
Securities Type
and Name

Financial
Statement Account

Counter-
party

Nature
of
Relation-

ship

Beginning
Balance

Acquisition

Disposal

Ending
Balance

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount
(Note 1)

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount

Carrying
Value
(Note 1)

Gain
(Loss)
on
Disposal

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount
(Note 1)

Bonds

Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

Chinese Petroleum Corporation 1st Unsecured Corporate Bond-B Issue in 2006

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

400,000

(Note 2

)

—

700,000

(Note 2

)

Yuanta Securities Co., Ltd. 1st Unsecured Corporate Bonds-B Issue in 2007

Held-to-maturity financial assets

—

400,000

(Note 2

)

—

200,000

(Note 2

)

200,000

(Note 2

)

—

200,000

(Note 2

)

China Steel Corporation 2nd Unsecured Corporate Bonds Issue in 2008

Held-to-maturity financial assets

—

100,000

(Note 2

)

—

100,000

(Note 2

)

—

200,000

(Note 2

)

Taiwan Power Co. 3rd Unsecured Corporate Bond-B Issue in 2008

Held-to-maturity financial assets

—

150,000

(Note 2

)

—

150,000

(Note 2

)

Taiwan Power Co. 8th Unsecured Corporate Bond-A Issue in 2008

Held-to-maturity financial assets

—

150,000

(Note 2

)

—

150,000

(Note 2

)

Mega Financial Holding Co., Ltd. 2nd Unsecured Corporate Bonds-A Issued in 2007

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

300,000

(Note 2

)

—

(Continued)

- 67 -

No.

Company Name

Marketable
Securities Type
and Name

Financial
Statement
Account

Counter-
party

Nature
of
Relation-

ship

Beginning
Balance

Acquisition

Disposal

Ending
Balance

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount
(Note 1)

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount

Carrying
Value
(Note 1)

Gain
(Loss)
on
Disposal

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount
(Note 1)

Taiwan Power Co. 2nd Secured Corporate Bond-B Issue in 2009

Held-to-maturity financial assets

—

100,000

(Note 2

)

—

100,000

(Note 2

)

NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

—

600,000

(Note 2

)

MLPC 1st Unsecured Corporate Bond Issue in 2008Bond-A Issue in 2007

Held-to-maturity financial assets

—

200,000

(Note 2

)

—

300,000

(Note 2

)

—

500,000

(Note 2

)

Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009

Held-to-maturity financial assets

—

175,000

(Note 2

)

—

100,000

(Note 2

)

—

275,000

(Note 2

)

Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

100,000

(Note 2

)

—

400,000

(Note 2

)

Taiwan Power Co 4th Secured Corporate Bond-A Issue in 2010

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

—

600,000

(Note 2

)

Yuanta FHC 1st Unsecured Corporate Bonds-A lssue in 2011

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

FCFC 1st Unsecured Corporate Bonds Issue in 2011

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2011

Held-to-maturity financial assets

—

150,000

(Note 2

)

—

150,000

(Note 2

)

TaipeiFubon Bank 5th Financial Debenturees-A Issue in 2010

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

—

600,000

(Note 2

)

HSBC Bank (Taiwan) Limited 1st Financial Debenture-D Issue in 2011

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

(Continued)

- 68 -


No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party	Nature of Relation- ship	Beginning Balance					Acquisition					Disposal								Ending Balance
No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party	Nature of Relation- ship	Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)			Shares (Thou- sands/ Thou- sand Units)		Amount			Shares (Thou- sands/ Thou- sand Units)		Amount		Carrying Value (Note 1)		Gain (Loss) on Disposal		Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)

1	Senao International Co., Ltd.	Stocks
		Senao International (Samoa) Holding Ltd.	Investments accounted for using equity method	—	Subsidiary		875	(US$	27,452 875	)		9,000	(US$	261,777 9,000	)		—		—		—		—		9,875	(US$	289,929 9,875 (Notes 4 and 6	) )
		Beneficiary certificates (mutual fund)

		Fuh Hwa Strategic High Income Fund	Available-for-sale financial assets	—	—		5,000		50,000			6,649		75,000			2,500		28,225		25,000		3,225		9,149		100,000

22	Senao International (Samoa) Holding Ltd.	Stocks
		Senao International HK Limited	Investments accounted for using equity method	—	Subsidiary		180	(US$	5,647 180	)		9,000	(US$	261,777 9,000	)		—		—		—		—		9,180	(US$	267,424 9,180 (Notes 4 and 6	) )

27	Prime Asia Investments Group Ltd.	Stocks
		Chunghwa Hsingta Company Ltd.	Investments accounted for using equity method	—	Subsidiary		—		—			—	(RMB	177,176 39,376	)		—		—		—		—		—	(RMB	164,699 36,882 (Notes 3 and 6	) )

(Continued)

- 69 -

No.

Company
Name

Marketable
Securities Type
and Name

Financial
Statement
Account

Counter-
party

Nature of
Relation-
ship

Beginning
Balance

Acquisition

Disposal

Ending Balance

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount
(Note 1)

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount

Carrying
Value
(Note 1)

Gain
(Loss)
on
Disposal

Shares
(Thou-
sands/
Thou-
sand
Units)

Amount
(Note 1)

Chunghwa Hsingta Company Ltd.

Stocks

Chunghwa Telecom (China) Co., Ltd.

Investments accounted for using equity method

—

Subsidiary

—

(RMB

177,176

39,376

)

—

(RMB

164,699

36,882

(Notes 3
and 6

)

Note 1:

Showing at their original carrying amounts without adjustments for fair values.

Note 2:

Stated at its nominal amounts.

Note 3:

The ending balance includes equity in earnings or losses of equity method investees and cumulative transaction adjustments.

Note 4:

Stated at its original investment amounts.

Note 5:

The amount decrease was because of capital reduction.

Note 6:

The amount was eliminated upon consolidation.

(Concluded)

- 70 -

TABLE 4

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ACQUISITION OF REAL ESTATE AMOUNTING AT COST OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

SIX MONTHS ENDED JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars)

Company
Name

Type of
Property

Transaction
Date

Original
Acquisition
Date

Carrying
Amount

Transaction
Amount

Proceeds

Collection
Status

Gain
(Loss)
on
Disposal

Counter-
party

Nature of
Relationship

Purpose
of
Disposal

Price

Reference

Other
Terms

Chunghwa Telecom Co., Ltd. (Chunghwa)

Land

March 2011

April 2000

338,347

647,717

$615,331 was collected in March 2011; the rest of $32,386 will be collected upon land delivery

305,280

Taiwan Stock Exchange Corporation (TSE)

None

With the presence of TSE, to create cluster effect of IDC clients

In accordance with land valuation report and mutual agreement

—

- 71 -

TABLE 5

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

SIX MONTHS ENDED JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars)


No.	Company Name	Related Party	Nature of Relationship	Transaction Details							Abnormal Transaction (Note 2)				Notes/Accounts Payable or Receivable
No.	Company Name	Related Party	Nature of Relationship	Purchase/Sale	Amount			% to Total		Payment Terms	Units Price		Payment Terms		Ending Balance (Note 1)			% to Total

0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	Sales	$	719,522 (Notes 4 and 13	)		1	30 days		—		—	$	655,936 (Notes 5 and 13	)		3
				Purchase		3,165,536 (Notes 3 and 13	)		6	30-90 days		—		—		(804,475 (Notes 6 and 13	) )		(10	)
		CHIEF Telecom Inc.	Subsidiary	Sales		140,514 (Notes 7 and 13	)		—	30 days		—		—		29,083 (Notes 8 and 13	)		—
				Purchase		149,265 (Note 13	)		—	60 days		—		—		(46,332 (Notes 9 and 13	) )		—
		Chunghwa System Integration Co., Ltd.	Subsidiary	Purchase		188,882 (Notes 10 and 13	)		—	30 days		—		—		(252,500 (Notes 11 and 13	) )		(3	)
		Taiwan International Standard Electronics Co., Ltd.	Equity-method investee	Purchase		242,226			—	30-90 days		—		—		(204,210	)		(2	)
		Light Era Development Co., Ltd.	Subsidiary	Sales		100,054 (Notes 12 and 13	)		—	—		—		—		— (Note 13	)		—
		So-net Entertainment Taiwan	Equity-method investee	Sales		120,369			—	60 days		—		—		8,484			—

1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		3,152,955 (Notes 3 and 13	)		26	30-90 days		—		—		825,835 (Notes 6 and 13	)		44
				Purchase		697,103 (Notes 4 and 13	)		7	30 days		—		—		(399,303 (Notes 5 and 13	) )		(18	)

2	CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		149,265 (Note 13	)		26	60 days		—		—		46,205 (Notes 9 and 13	)		34
				Purchase		140,066 (Notes 7 and 13	)		29	30 days		—		—		(28,814 (Notes 8 and 13	) )		(36	)

3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		681,493 (Notes 10 and 13	)		85	30 days		—		—		252,319 (Notes 11 and 13	)		84


Note 1:		Excluding payment and receipts collected in trust for others.
Note 2:		Transaction terms were determined in accordance with mutual agreements.
Note 3:		The difference was because Senao International Co., Ltd. classified the amount as other current liabilities.
Note 4:		The difference was because Senao International Co., Ltd. classified the amount as operating expenses.

(Continued)

- 72 -


Note 5:		The difference was because Senao International Co., Ltd. classified the amount as other payables.
Note 6:		The difference was because Chunghwa Telecom Co., Ltd. classified the amount as amounts collected in trust for others.
Note 7:		The difference was because CHIEF Telecom Inc. classified the amount as operating expenses.
Note 8:		The difference was because CHIEF Telecom Inc. classified the amount as other current liabilities.
Note 9:		The difference was because CHIEF Telecom Inc. classified the amount as other receivables.
Note 10:		The difference was because Chunghwa Telecom Co., Ltd. classified the amount as inventories, property, plant and equipment, and intangible assets.
Note 11:		The difference was because Chunghwa System Integration Co., Ltd. classified the amount as other current assets.
Note 12:		The difference was because Light Era Development Co., Ltd. classified the amount as intangible assets and operating expenses.
Note 13:		The amount was eliminated upon consolidation.

(Concluded)

- 73 -

TABLE 6

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars)


							Turnover		Overdue				Amounts Received in		Allowance
No.	Company Name	Related Party	Nature of Relationship	Ending Balance			Rate (Note 1)		Amounts		Action Taken		Subsequent Period		for Bad Debts

0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	$	655,936 (Note 2	)		11.58	$	—		—	$	655,936	$	—

1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		1,077,809 (Note 2	)		7.70		—		—		1,077,733		—

3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		252,319 (Note 2	)		2.97		—		—		228,041		—


Note 1:		Payments and receipts collected in trust for others are excluded from the accounts receivable for calculating the turnover rate.
Note 2:		The amount was eliminated upon consolidation.

- 74 -

TABLE 7

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE

SIX MONTHS ENDED JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of June 30, 2011							Net Income (Loss) of the Investee			Recog- nized Gain (Loss) (Notes 1 and 2)			Note
No.	Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2011		December 31, 2010		Shares (Thou- sands)		Percent- age of Owner- ship (%)		Carrying Value			Net Income (Loss) of the Investee						Note

0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Sindian, New Taipei City	Selling and maintaining mobile phones and its peripheral products	$	1,065,813	$	1,065,813		71,773		28	$	1,330,533 (Note 4	)	$	659,390		$	185,867 (Note 4	)	Subsidiary
		Light Era Development Co., Ltd.	Taipei	Housing, office building development, rent and sale services		3,000,000		3,000,000		300,000		100		3,522,010 (Note 4	)		550,643			550,536 (Note 4	)	Subsidiary
		Chunghwa Investment Co., Ltd.	Taipei	Telecommunications, telecommunications value-added services and other related professional investment		1,738,709		1,738,709		178,000		89		1,914,178 (Note 4	)		79,657			70,670 (Note 4	)	Subsidiary
		Chunghwa System Integration Co., Ltd.	Taipei	Providing communication and information aggregative services		838,506		838,506		60,000		100		694,042 (Note 4	)		8,740			14,720 (Note 4	)	Subsidiary
		Chunghwa Telecom Singapore Pte., Ltd.	Singapore	Telecommunication wholesale, internet transfer services international data and long distance call wholesales to carriers		574,112		1,389,939		26,383		100		615,496 (Note 4	)		5,823			5,823 (Note 4	)	Subsidiary
		Taiwan International Standard Electronics Co., Ltd.	Taipei	Manufacturing, selling, designing, and maintaining of telecommunications systems and equipment		164,000		164,000		1,760		40		548,719			263,938			99,919		Equity-method investee
		CHIEF Telecom Inc.	Taipei	Internet communication and internet data center (“IDC”) service		482,165		482,165		37,942		69		523,632 (Note 4	)		79,807			56,658 (Note 4	)	Subsidiary
		Donghwa Telecom Co., Ltd.	Hong Kong	International telecommunications IP fictitious internet and internet transfer services		522,003		522,003		129,590		100		502,560 (Note 4	)		(5,574	)		(5,574 (Note 4	) )	Subsidiary
		InfoExplorer Co., Ltd.	Banqiao, New Taipei City	IT solution provider, IT application consultation, system integration and package solution		283,500		283,500		22,498		33		251,264			(56,899	)		(26,732 (Note 6	) )	Equity-method investee
		Viettel-CHT Co., Ltd.	Vietnam	IDC services		288,327		288,327		—		30		245,265			46,589			13,983		Equity-method investee
		Chunghwa International Yellow Pages Co., Ltd.	Taipei	Yellow pages sales and advertisement services		150,000		150,000		15,000		100		179,849 (Note 4	)		24,149			24,123 (Note 4	)	Subsidiary
		Prime Asia Investments Group Ltd. (B.V.I.)	British Virgin Islands	Investment		177,176		—		1		100		164,699 (Note 4	)		(11,136	)		(11,136 (Note 4	) )	Subsidiary

(Continued)

- 75 -


No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of June 30, 2011							Net Income (Loss) of the Investee			Recog- nized Gain (Loss) (Notes 1 and 2)			Note
No.	Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2011			December 31, 2010			Shares (Thou- sands)		Percent- age of Owner- ship (%)		Carrying Value			Net Income (Loss) of the Investee						Note
		Dian Zuan Integrating Marketing Co., Ltd.	Taipei	Information technology service and general advertisement service		114,640			—			11,464		40		112,079			(6,403	)		(2,561	)	Equity-method investee
		Skysoft Co., Ltd.	Taipei	Providing of music on-line, software, electronic information, and advertisement services		67,025			67,025			4,438		30		97,455			39,227			11,768		Equity-method investee
		Spring House Entertainment Tech. Inc.	Taipei	Network services, producing digital entertainment contents and broadband visual sound terrace development		62,209			62,209			5,996		56		91,142 (Note 4	)		26,368			14,777 (Note 4	)	Subsidiary
		Chunghwa Telecom Global, Inc.	United States	International data and internet services and long distance call wholesales to carriers		70,429			70,429			6,000		100		72,129 (Note 4	)		8,502			9,579 (Note 4	)	Subsidiary
		KingWay Technology Co., Ltd.	Taipei	Publishing books, data processing and software services		71,770			71,770			1,703		33		66,243			15,363			2,353		Equity-method investee
		Chunghwa Telecom Vietnam Co., Ltd.	Vietnam	Information and communications technology, international circuit, and intelligent energy network service		43,847 (VND 30,921,368	)		—			—		100		41,161 (VND 30,603,757 (Note 4	) )		(439) (VND (324,531))			(439) (VND (324,531)) (Note 4)		Subsidiary
		So-net Entertainment Taiwan	Taipei	Online service and sale of computer hardware		60,008			60,008			3,429		30		31,532			20,895			6,335		Equity-method investee
		Chunghwa Telecom Japan Co., Ltd.	Japan	Telecom business, information process and information provide service, development and sale of software and consulting services in telecommunication		17,291			17,291			1		100		18,411 (Note 4	)		6,295			6,295 (Note 4	)	Subsidiary
		New Prospect Investments Holdings Ltd. (B.V.I.)	British Virgin Islands	Investment		— (Note 3	)		— (Note 3	)		—		100		— (Notes 3 and 4	)		—			— (Notes 3 and 4	)	Subsidiary
		Chunghwa Sochamp Technology Inc.	Taipei	License plate recognition system		20,400 (Note 5	)		—			2,040		—		20,400 (Notes 5	)		—			—		Subsidiary

(Continued)

- 76 -

No.

Investor
Company

Investee
Company

Location

Main

Businesses

and

Products

Original Investment
Amount

Balance as of
June 30, 2011

Net
Income
(Loss)
of the
Investee

Recog-
nized
Gain
(Loss)
(Notes 1
and 2)

Note

June 30,
2011

December 31,
2010

Shares
(Thou-
sands)

Percent-
age
of
Owner-
ship
(%)

Carrying
Value

Senao International Co., Ltd.

Senao Networks, Inc.

Linkou, New Taipei City

Telecommunication facilities manufactures and sales

206,190

16,824

300,207

62,726

25,713

Equity-method investee

Senao International (Samoa) Holding Ltd.

Samoa Islands

International investment

289,229

(US$ 9,875

)

27,452

(US$ 875

)

9,875

100

230,406

(US$ 8,000)

(Note 4)

(53,960)

(US$ (1,856))

(US$

(53,547)

(1,840))

(Note 4)

Subsidiary

CHIEF Telecom Inc.

Unigate Telecom Inc.

Taipei

Telecommunication and internet service

2,000

200

100

1,864

(Note 4

)

(73

)

(73

(Note 4

)

Subsidiary

Chief International Corp.

Samoa Islands

Network communication and engine room hiring

6,068

(US$ 200

)

6,068

(US$ 200

)

200

100

8,370

(US$ 291

(Note 4

)

520

(US$ 18

)

520

(US$ 18

(Note 4

)

Subsidiary

(Continued)

- 77 -


No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of June 30, 2011							Net Income (Loss) of the Investee			Recog- nized Gain (Loss) (Notes 1 and 2)			Note
No.	Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2011			December 31, 2010			Shares (Thou- sands)		Percent- age of Owner- ship (%)		Carrying Value			Net Income (Loss) of the Investee						Note

3	Chunghwa System Integrated Co., Ltd.	Concord Technology Co., Ltd.	Brunei	Providing advanced business solutions to telecommunications	$	31,973 (US$ 1,010	)	$	31,973 (US$ 1,010	)		1,010		100	$	7,864 (US$ 274 (Note 4	) )	$	(2,276 (US$ (94	) ))	$	(2,276 (US$ (94 (Note 4	) )) )	Subsidiary

7	Spring House Entertainment Tech. Inc.	Ceylon Innovation Co., Ltd.	Taipei	International trading, general advertisement and book publishment service		1,000			—			—		100		979 (Note 4	)		(21	)		(21 (Note 4	) )	Subsidiary

8	Light Era Development Co., Ltd.	Yao Yong Real Property Co., Ltd.	Taipei	Real estate leasing business		2,809,963			2,824,180			83,290		100		2,809,963 (Note 4	)		22,774			(14,217 (Note 4	) )	Subsidiary

9	Chunghwa Telecom Singapore Pte., Ltd.	ST-2 Satellite Ventures Pte., Ltd.	Singapore	Operation of ST-2 telecommunication satellite		409,061 (SG$ 18,102	)		409,061 (SG$ 18,102	)		18,102		38		411,995 (SG$ 16,521	)		(13,422 (SG$ (580	) ))		(3,118 (SG$ (136	) ))	Equity-method investee

14	Chunghwa Investment Co., Ltd.	Chunghwa Precision Test Tech Co., Ltd.	Tao Yuan	Semiconductor testing components and printed circuit board industry production and marketing of electronic products		91,875			91,875			110,317		53		118,723 (Note 4	)		5,590			3,004 (Note 4	)	Subsidiary
		Chunghwa Investment Holding Co., Ltd.	Burnei	General investment		34,483 (US$ 1,043	)		34,483 (US$ 1,043	)		1,043		100		14,116 (US$ 491 (Note 4	) )		(3,861 (US$ (133	) ))		(3,861 (US$ (133 (Note 4	) )) )	Subsidiary
		Tatung Technology Inc.	Taipei	The product of SET TOP BOX		50,000			50,000			5,000		28		18,825			57,088			15,446		Equity-method investee
		Panda Monium Company Ltd.	Cayman	The production of animation		20,000 (US$ 602	)		20,000 (US$ 602	)		602		43		—			—			—		Equity-method investee
		CHIEF Telecom Inc.	Taipei	Telecommunication and internet service		20,000			20,000			20,000		4		23,481 (Note 4	)		79,807			2,921 (Note 4	)	Equity-method investee
		Senao International Co., Ltd.	Sindian, New Taipei City	Selling and maintaining mobile phones and its peripheral products		49,731			49,731			1,001		—		46,873 (Note 4	)		659,390			1,581 (Note 4	)	Equity-method investee

18	Concord Technology Co., Ltd.	Glory Network System Service (Shanghai) Co., Ltd.	Shanghai	Providing advanced business solutions to telecommunications		31,973 (US$ 1,010	)		31,973 (US$ 1,010	)		1,010		100		7,864 (RMB 1,771 (Note 4	) )		(2,726 (US$ (94	) ))		(2,726 (US$ (94 (Note 4	) )) )	Subsidiary

20	Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech. USA Corporation	United States	Semiconductor testing components and printed circuit board industry production and marketing of electronic products		12,636 (US$ 400	)		12,636 (US$ 400	)		400		100		10,200 (US$ 355 (Note 4	) )		(1,171 (US$ (40	) ))		(1,171 (US$ (40 (Note 4	) )) )	Subsidiary

(Continued)

- 78 -


No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of June 30, 2011							Net Income (Loss) of the Investee			Recog- nized Gain (Loss) (Notes 1 and 2)			Note
No.	Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2011			December 31, 2010			Shares (Thou- sands)		Percent- age of Owner- ship (%)		Carrying Value			Net Income (Loss) of the Investee						Note

22	Senao International (Samoa) Holding Ltd.	Senao International HK Limited	Hong Kong	Sales of communication business		267,424 (US$ 9,180	)		5,647 (US$ 180	)		9,180		100		210,775 (US$ 7,318 (Note 4	) )		(54,785 (US$ (1,885	) ))		(54,785 (US$ (1,885 (Note 4	) )) )	Subsidiary
		HopeTech Technologies Limited	Hong Kong	Information technology and telecommunication products sales		21,177 (US$ 675	)		21,177 (US$ 675	)		5,240		45		19,239 (US$ 668	)		146 (US$ 5	)		66 (US$ 2	)	Equity-method investee

24	Chunghwa Investment Holding Co., Ltd.	CHI One Investment Co., Limited	Hong Kong	General investment		14,483 (HK$ 3,924	)		14,483 (HK$ 3,924	)		3,500		100		4,433 (HK$ 1,201 (Note 4	) )		(3,861 (HK$ (1,034	) ))		(3,861 (HK$ (1,034 (Note 4	) )) )	Subsidiary

26	CHI One Investment Co., Limited	Xiamen Sertec Business Technology Co., Ltd.	Xiamen	Customer Services and platform rental activities		13,862 (RMB 2,963	)		13,862 (RMB 2,963	)		—		49		3,924 (RMB 881	)		(7,881 (RMB (1,764	) ))		(3,862 (RMB (866	) ))	Equity-method investee

23	Senao International HK Limited.	Senao Trading (Fujian) Co., Ltd.	Fujian	Information technology services and sale of communication products		58,665 (US$ 2,000	)		—			—		100		42,746 (US$ 1,484 (Note 4	) )		(15,511 (US$ (534	) ))		(15,511 (US$ (534 (Note 4	) )) )	Subsidiary
		Senao International Trading (Shanghai) Co., Ltd.	Shanghai	Information technology services and sale of communication products		87,429 (US$ 3,000	)		—			—		100		64,158 (US$ 2,228 (Note 4	) )		(23,106 (US$ (795	) ))		(23,106 (US$ (795 (Note 4	) )) )	Subsidiary
		Senao International Trading (Shanghai) Co., Ltd.	Shanghai	Information technology services and sale of communication products		57,510 (US$ 2,000	)		—			—		100		57,294 (US$ 1,989 (Note 4	) )		(447 (US$ (15	) ))		(447 (US$ (15 (Note 4	) )) )	Subsidiary (Note 7)
		Senao International Trading (Jiangsu) Co., Ltd.	Jiangsu	Information technology services and sale of communication products		58,092 (US$ 2,000	)		—			—		100		45,453 (US$ 1,578 (Note 4	) )		(12,617 (US$ (434	) ))		(12,617 (US$ (434 (Note 4	) )) )	Subsidiary

27	Prime Asia Investments Group, Ltd. (B.V.I.)	Chunghwa Hsingta Co., Ltd.	Hong Kong	Investment		177,176 (RMB 39,376	)		—			—		100		164,699 (RMB 36,882 (Note 4	) )		(11,136 (RMB (2,494	) ))		(11,136 (RMB (2,494)) (Note 4)	)	Subsidiary

29	Chunghwa Hsingta Company Ltd.	Chunghwa Telecom (China) Co., Ltd.	China	Planning and design of energy conservation and software and hareware system services, and intergartion of information system		177,176 (RMB 39,376	)		—			—		100		164,699 (RMB 36,882 (Note 4	) )		(11,136 (RMB (2,494))	)		(11,136 (RMB (2,494)) (Note 4)	)	Subsidiary

(Continued)

- 79 -


Note 1:		The equity in net income (loss) of investees was based on audited financial statements.
Note 2:		The equity in net income (loss) of investees includes amortization of differences between the investment cost and net value and elimination of unrealized transactions.
Note 3:		New Prospect Investments Holdings Ltd. (B.V.I.) was incorporated in March 2006, but have not yet begun operation as of June 30, 2011. Chunghwa has 100% ownership right in an amount of US$1 in the holding company.
Note 4:		The amount was eliminated upon consolidation.
Note 5:		Prepayment for long-term investment, NT$20,400 thousand, was injected in Chunghwa Sochamp Technology Inc. by the Company in June 2011. Chunghwa Sochamp Technology Inc. completed its registration on July 1, 2011, and the Company owns 51% of ownership of Chunghwa Sochamp Technology Inc.
Note 6:		The amount occurred before June 24, 2011, was eliminated upon consolidation.
Note 7:		The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 80 -

TABLE 8

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INVESTMENT IN MAINLAND CHINA

SIX MONTHS ENDED JUNE 30, 2011

(Amounts in Thousands of New Taiwan Dollars, in Thousands of U.S. Dollars)


	Main Businesses	Total Amount of Paid-in		Investment	Accumulated Outflow of Investment from Taiwan as of January 1,		Investment Flows				Accumulated Outflow of Investment from Taiwan as of June 30,		% Ownership of Direct or Indirect			Investment Gain (Loss)			Carrying Value as of June 30,			Accumulated Inward Remittance of Earnings as of June 30,
Investee	and Products	Capital		Type	2011		Outflow		Inflow		2011		Investment			(Note 2)			2011			2011

Glory Network System Service (Shanghai) Co., Ltd.	Providing advanced business solutions to telecommunications	$	31,973	Note 1	$	31,973	$	—	$	—	$	31,973		100	%	$	(2,726 (Note 7	) )	$	7,864 (Note 7	)	$	—

Xiamen Sertec Business Technology Co., Ltd.	Customer services and platform rental activities		28,282	Note 1		13,862		—		—		13,862		49	%		(3,862	)		3,924			—

Senao Trading (Fujian) Co., Ltd.	Information technology services and sale of communication products		58,665	Note 1		—		58,665		—		58,665		100	%		(15,511 (Note 7	) )		42,746 (Note 7	)		—

Senao International Trading (Shanghai) Co., Ltd.	Information technology services and sale of communication products		87,429	Note 1		—		87,429		—		87,429		100	%		(23,106 (Note 7	) )		64,163 (Note 7	)		—

Senao International Trading (Shanghai) Co., Ltd. (Note 8)	Information technology services and sale of communication products		57,510	Note 1		—		57,510		—		57,510		100	%		(447 (Note 7	) )		57,294 (Note 7	)		—

Senao International Trading (Jiangsu) Co., Ltd.	Information technology services and sale of communication products		58,092	Note 1		—		58,092		—		58,092		100	%		(12,617 (Note 7	) )		45,453 (Note 7	)		—

Chunghwa Telecom (China) Co., Ltd.	Energy conserving and providing installation, design and maintenance services		177,176	Note 1		—		177,176		—		177,176		100	%		(11,136 (Note 7	) )		164,699 (Note 7	)		—


Accumulated Investment in Mainland China as of June 30, 2011			Investment Amounts Authorized by Investment Commission, MOEA			Upper Limit on Investment Stipulated by Investment Commission, MOEA
$	31,973		$	48,169		$	380,759
(US$	1,010	)	(US$	1,500	)		(Note 3	)
	13,862			79,882			1,391,514
(US$	431	)	(US$	2,500	)		(Note 4	)
	261,696			261,696			2,631,296
(US$	9,000	)	(US$	9,000	)		(Note 5	)
	177,176			177,176			210,218,307
(US$	6,000	)	(US$	6,000	)		(Note 6	)

(Continued)

- 81 -


Note 1:		Investments were through an holding company registered in a third region.
Note 2:		Recognition of investment gains (losses) was calculated based on the investee’s audited financial statements.
Note 3:		The amount was calculated based on the net assets value of Chunghwa System Integration Co., Ltd.
Note 4:		The amount was calculated based on the consolidated net assets value of Chunghwa Investment Co., Ltd.
Note 5:		The amount was calculated based on the consolidated net assets value of Senao International Co., Ltd.
Note 6:		The amount was calculated based on the consolidated net assets value of Chunghwa Telecom Co., Ltd.
Note 7:		The amount was eliminated upon consolidation.
Note 8:		The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 82 -

TABLE 9

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Amount in Thousands of New Taiwan Dollars)


Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)

2011	0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	a	Accounts receivable	$	655,936		—		—
					Accounts payable		804,475		—		—
					Amounts collected in trust for others		273,566		—		—
					Revenues		697,103		—		—
					Non-operating income and gains		5		—		—
					Operating costs and expenses		3,165,536		—		—
					Property, plant and equipment		694		—
					Work in process		266		—		—
					Office supplies		5		—
					Customer’s deposits		1,447		—		—
			CHIEF Telecom Inc.	a	Accounts receivable		29,083		—		—
					Accounts payable		46,332		—		—
					Amounts collected in trust for others		3,477		—		—
					Revenues		140,514		—		—
					Operating costs and expenses		149,265		—		—
					Customer’s deposits		333		—		—
			Chunghwa Precision Test Tech Co., Ltd.	a	Accounts receivable		272		—		—
					Accounts payable		239		—		—
					Revenues		1,019		—		—
					Non-operating income and gains		88		—		—
					Operating costs and expenses		1		—		—
					Customer’s deposits		158		—		—
			Chunghwa International Yellow Pages Co., Ltd.	a	Accounts receivable		29,818		—		—
					Accounts payable		11,985		—		—
					Amounts collected in trust for others		8,550		—		—
					Revenues		6,741		—		—
					Operating costs and expenses		13,961		—		—
					Work in process		2,903		—		—
					Property, plant and equipment		40		—		—
			Chunghwa System Integration Co., Ltd.	a	Accounts receivable		15,029		—		—
					Accounts payable		252,500		—		—
					Revenues		3,703		—		—
					Non-operating income and gains		836		—		—
					Operating costs and expenses		188,882		—		—
					Property, plant and equipment		346,299		—		—
					Office supplies		1,335		—
					Work in process		85,989		—		—
					Spare parts		358		—		—

(Continued)

- 83 -


Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)

					Intangible assets	$	58,334		—		—
					Other deferred expenses		3,441		—		—
					Customer’s deposits		21,047		—		—
			Chunghwa Telecom Global, Inc.	a	Accounts receivable		23,540		—		—
					Accounts payable		56,835		—		—
					Revenues		45,096		—		—
					Operating costs and expenses		97,498		—		—
					Property, plant and equipment		17,538		—		—
					Customer’s deposits		14,106		—		—
			Donghwa Telecom Co., Ltd.	a	Accounts receivable		49,426		—		—
					Accounts payable		49,834		—		—
					Revenues		50,026		—		—
					Operating costs and expenses		27,065		—		—
			Spring House Entertainment Tech. Inc.	a	Accounts receivable		8,249		—		—
				a	Accounts payable		3,874		—		—
					Amounts collected in trust for others		18,508		—		—
					Revenues		4,982		—		—
					Non-operating income and gains		1		—		—
					Operating costs and expenses		12,894		—		—
					Customer’s deposits		5		—		—
			Chunghwa Telecom Japan Co., Ltd.	a	Accounts receivable		4,526		—		—
					Accounts payable		997		—		—
					Revenues		18,951		—		—
					Operating costs and expenses		28,050		—		—
					Property, plant and equipment		37,591		—		—
			Light Era Development Co., Ltd.	a	Accounts payable		20,504		—		—
					Revenues		100,054		—		—
			Chunghwa Telecom Singapore Co., Ltd.	a	Accounts receivable		2,228		—		—
					Accounts payable		2,579		—		—
					Revenues		18,250		—		—
					Operating costs and expenses		16,879		—		—
			Chunghwa Investment Co., Ltd.	a	Operating costs and expenses		3,360		—		—
			International Integrated System Inc.	a	Revenues		4,085		—		—
					Operating costs and expenses		76,494		—		—

	1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		825,835		—		—
					Other receivables		251,975		—		—
					Prepaid expenses		231		—		—
					Accounts payable		399,303		—		—
					Other payables		256,633		—		—
					Advances from customers		13,531				—
					Revenues		3,152,955		—		—
					Non-operating income and gains		15		—		—
					Purchase		697,103		—		—
					Operating costs and expenses		22,419		—		—
					Non-operating costs and expenses		5		—		—
					Refundable deposits		1,447		—		—

(Continued)

- 84 -


Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)

			Chunghwa System Integration Co., Ltd.	c	Revenues	$	17		—		—
			Spring House Entertainment Tech. Inc.	c	Revenues		336		—		—
			Chunghwa International Yellow Pages Co., Ltd.	c	Revenues		20		—		—
			CHIEF Telecom Inc.	c	Revenues		1		—		—
			International Integrated System Inc.		Revenues		246		—		—

	2	CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		49,682		—		—
					Prepaid expenses		127		—		—
					Accounts payable		28,814		—		—
					Advances from customers		269		—		—
					Revenues		149,265		—		—
					Operating costs and expenses		140,514		—		—
					Refundable deposits		333		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		1		—		—
			Chunghwa System Integration Co., Ltd.	c	Accounts receivable		8		—		—
					Revenues		46		—		—
			Chunghwa Telecom Singapore Co., Ltd.	c	Accounts receivable		1,252		—		—
					Accounts payable		983		—		—
					Revenues		3,080		—		—
					Operating costs and expenses		2,681		—		—
			Donghwa Telecom Co., Ltd.	c	Accounts receivable		75		—		—
					Revenues		430		—		—
			Chunghwa Telecom Japan Co., Ltd.	c	Accounts payable		461		—		—
					Operating costs and expenses		1,516		—		—
			Chunghwa Telecom Global, Inc.	c	Operating costs and expenses		18		—		—
			Yao Yong Real Property Co., Ltd.	c	Operating costs and expenses		43,352		—		—

	3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		252,319		—		—
					Prepaid expenses		181		—		—
					Accrued expenses		7,620		—		—
					Other payables		1,150		—		—
					Amounts collected in trust for others		6,238		—		—
					Advances from customers		21				—
					Other deferred revenues		3,145		—		—
					Revenues		681,493		—		—
					Operating costs and expenses		4,539		—		—
					Refundable deposits		21,047		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		17		—		—
			CHIEF Telecom Inc.	c	Accounts payable		8		—		—
					Operating costs and expenses		46		—		—
			Chunghwa International Yellow Pages Co., Ltd.	c	Revenues		25		—		—
			Spring House Entertainment Tech. Inc.	c	Revenues		4		—		—
			Chunghwa Precision Test Tech. Co., Ltd.	c	Revenues		139		—		—
			International Integrated System Inc.	c	Revenues		5,382		—		—
					Operating costs		82		—		—

(Continued)

- 85 -


Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)

	4	Chunghwa International Yellow Pages Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable	$	11,945		—		—
					Accrued custodial receipts		7,763		—		—
					Prepaid expenses		827		—		—
					Accounts payable		4,806		—		—
					Amounts collected in trust for others		23,122		—		—
					Advances from customers		4,793		—		—
					Revenues		13,972		—		—
					Operating costs and expenses		6,712		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		20		—		—
			Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		25		—		—

	5	Chunghwa Telecom Global, Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		56,835		—		—
					Prepaid expenses		23,540		—		—
					Advances from customers		16,773		—		—
					Revenues		98,459		—		—
					Operating costs and expenses		45,292		—		—
					Refundable deposits		14,106		—		—
			CHIEF Telecom Inc.	c	Revenues		18		—		—
			Chunghwa Precision Test Tech. Co., Ltd.	c	Accounts receivable		133		—		—
					Revenues		804		—		—

	7	Spring House Entertainment Tech. Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		22,382		—		—
					Accrued expenses		440		—		—
					Advances from customers		7,809		—		—
					Revenues		12,894		—		—
					Operating costs and expenses		4,983		—		—
					Refundable deposits		5		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		336		—		—
			Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		4		—		—

	6	Donghwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		14,002		—		—
					Prepaid expenses		35,832		—		—
					Accounts payable		25,763		—		—
					Advances from customers		23,663		—		—
					Revenues		27,065		—		—
					Operating costs and expenses		50,026		—		—
			CHIEF Telecom Inc.	c	Accounts payable		75		—		—
					Operating costs and expenses		430		—		—
			Chunghwa Telecom Singapore Co., Ltd.	c	Accounts payable		1,451		—		—
					Operating costs and expenses		2,615		—		—

	8	Light Era Development Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		16,451		—		—
					Prepaid expenses		521		—		—
					Operating costs and expenses		99,844		—		—
					Inventory		3,533		—		—
					Intangible assets		209		—		—

(Continued)

- 86 -


Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)

			International Integrated System Inc.	c	Revenues	$	5,175		—		—
					Operating costs		8		—		—

	9	Chunghwa Telecom Singapore Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		2,579		—		—
					Accounts payable		2,228		—		—
					Revenues		16,879		—		—
					Operating costs and expenses		18,250		—		—
			CHIEF Telecom Inc.	c	Accounts receivable		983		—		—
					Accounts payable		1,252		—		—
					Revenues		2,681		—		—
					Operating costs and expenses		3,080		—		—
			Donghwa Telecom Co., Ltd.	c	Accounts receivable		1,451		—		—
					Revenues		2,615		—		—
			Chunghwa Telecom Japan Co., Ltd.	c	Prepaid expenses		872		—		—

	10	Chunghwa Telecom Japan Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		997		—		—
					Accounts payable		3,504		—		—
					Advances from customers		38,613		—		—
					Revenues		28,050		—		—
					Operating costs and expenses		18,951		—		—
			CHIEF Telecom Inc.	c	Accounts receivable		461		—		—
					Revenues		1,516		—		—
			Chunghwa Telecom Singapore Co., Ltd.	c	Advances from customers		872		—		—

	14	Chunghwa Investment Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Revenues		3,360		—		—

	20	Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Prepaid expenses		239		—		—
					Accounts payable		272		—		—
					Operating costs and expenses		1,107		—		—
					Non-operating income and gains		1		—		—
					Refundable deposits		158		—		—
			Chunghwa Telecom Global, Inc.	c	Accounts payable		133		—		—
					Operating costs and expenses		804		—		—
			Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		139		—		—

	25	Yao Yong Real Property Co., Ltd.	CHIEF Telecom Inc.	c	Revenues		43,352		—		—

(Continued)

- 87 -


Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)

2010	0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	a	Accounts receivable	$	228,078		—		—
					Accounts payable		633,902		—		—
					Amounts collected in trust for others		234,915		—		—
					Revenues		956,329		—		1
					Non-operating income and gains		3		—		—
					Operating costs and expenses		2,376,748		—		2
					Property, plant and equipment		64		—		—
					Work in process		91		—		—
					Office supplies		163		—		—
			CHIEF Telecom Inc.	a	Accounts receivable		23,075		—		—
					Accounts payable		40,324		—		—
					Amounts collected in trust for others		2,511		—		—
					Revenues		124,162		—		—
					Operating costs and expenses		145,567		—		—
			Unigate Telecom Inc.	a	Revenues		218		—		—
			Chunghwa International Yellow Pages Co., Ltd.	a	Accounts receivable		10,244		—		—
					Accounts payable		3,804		—		—
					Amounts collected in trust for others		9,205		—		—
					Revenues		7,890		—		—
					Operating costs and expenses		15,309		—		—
			Chunghwa System Integration Co., Ltd.	a	Accounts receivable		2,706		—		—
					Accounts payable		162,390		—		—
					Payables to contractors		2,157		—		—
					Revenues		15,148		—		—
					Non-operating income and gains		268		—		—
					Operating costs and expenses		293,915		—		—
					Work in process		1,605		—		—
					Spare parts		8,941		—		—
					Property, plant and equipment		174,478		—		—
					Intangible assets		7,524		—		—
					Other deferred expenses		985		—		—
			Chunghwa Telecom Global, Inc.	a	Accounts receivable		17,296		—		—
					Accounts payable		45,319		—		—
					Revenues		28,448		—		—
					Operating costs and expenses		62,793		—		—
					Property, plant and equipment		16,470		—		—
			Donghwa Telecom Co., Ltd.	a	Accounts receivable		8,237		—		—
					Accounts payable		36,901		—		—
					Operating costs and expenses		14,886		—		—
					Property, plant and equipment		25,465		—		—
			Spring House Entertainment Tech. Inc.	a	Accounts receivable		6,939		—		—
					Accounts payable		17,569		—		—
					Revenues		1,340		—		—
					Operating costs and expenses		26,102		—		—

(Continued)

- 88 -


Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)

			Chunghwa Telecom Japan Co., Ltd.	a	Accounts receivable	$	4,101		—		—
					Accounts payable		3,493		—		—
					Operating costs and expenses		7,788		—		—
					Property, plant and equipment		5,994		—		—
			Light Era Development Co., Ltd.	a	Accounts receivable		1,144		—		—
					Accounts payable		494		—		—
					Revenues		10,427		—		—
					Operating costs and expenses		669		—		—
			Chunghwa Telecom Singapore Pte., Ltd.	a	Accounts receivable		1,443		—		—
					Accounts payable		2,548		—		—
					Revenues		7,511		—		—
					Operating costs and expenses		11,726		—		—
			International Integrated System Inc.	a	Accounts receivable		50		—		—
					Accounts payable		7,929		—		—
					Revenues		736		—		—
					Operating costs and expenses		27,196		—		—
			Chunghwa Precision Test Tech. Co., Ltd.	a	Accounts receivable		1,788		—		—
					Accounts payable		241		—		—
					Revenues		1,234		—		—
					Non-operating income and gains		451		—		—
					Operating costs and expenses		1		—		—

	1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		619,795		—		—
					Accrued custodial receipts		246,108		—		—
					Prepaid expenses		2,914		—		—
					Accounts payable		148,145		—		—
					Amounts collected in trust for others		79,933		—		—
					Advances from customers		10,941		—		—
					Revenues		2,366,115		—		2
					Non-operating income and gains		10		—		—
					Non-operating costs and expenses		3		—		—
					Operating costs and expenses		956,329		—		1
			Chunghwa System Integration Co., Ltd.	c	Revenues		4		—		—
			Spring House Entertainment Tech. Inc.	c	Revenues		43		—		—
			Chunghwa International Yellow Pages Co., Ltd.	c	Revenues		49		—		—
					Operating costs and expenses		48		—		—
			Light Era Development Co., Ltd.	c	Revenues		151		—		—

	2	CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		42,717		—		—
					Prepaid expenses		118		—		—
					Accounts payable		22,806		—		—
					Advances from customers		269		—		—
					Revenues		145,567		—		—
					Operating costs and expenses		124,162		—		—

(Continued)

- 89 -


Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)

			Unigate Telecom Inc.	c	Accounts payable	$	1,694		—		—
					Revenues		11		—		—
					Operating costs and expenses		1,241		—		—
			Chunghwa System Integration Co., Ltd.	c	Accounts receivable		14		—		—
					Revenues		124		—		—
			Donghwa Telecom Co., Ltd.	c	Accounts receivable		303		—		—
					Revenues		504		—		—
			Yao Yong Real Property Co., Ltd.	c	Accounts payable		4,283		—		—
					Non-operating income and gains		72		—		—
					Operating costs and expenses		28,983		—		—

	3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		164,547		—		—
					Accounts payable		2,706		—		—
					Revenues		487,448		—		—
					Operating costs and expenses		15,416		—		—
			CHIEF Telecom Inc.	c	Accounts payable		14		—		—
					Operating costs and expenses		124		—		—
			Chunghwa International Yellow Pages Co., Ltd.	c	Revenues		64		—		—
					Operating costs and expenses		78		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		4		—		—
			International Integrated System Inc.	c	Accounts receivable		65		—		—
					Accounts payable		143		—		—
					Revenues		722		—		—
					Operating costs and expenses		143		—		—

	5	Chunghwa Telecom Global, Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		45,306		—		—
					Prepaid expenses		13		—		—
					Accounts payable		16,118		—		—
					Advances from customers		1,178		—		—
					Revenues		79,263		—		—
					Operating costs and expenses		28,448		—		—

	7	Spring House Entertainment Tech. Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		17,569		—		—
					Advances from customers		6,939		—		—
					Revenues		26,102		—		—
					Operating costs and expenses		1,340		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		43		—		—

	15	Unigate Telecom Inc.	Chunghwa Telecom Co., Ltd.	b	Operating costs and expenses		218		—		—
			CHIEF Telecom Inc.	c	Accounts receivable		1,694		—		—
					Revenues		1,241		—		—
					Operating costs and expenses		11		—		—

(Continued)

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Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)

	4	Chunghwa International Yellow Pages Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable	$	3,295		—		—
					Accrued custodial receipts		9,205		—		—
					Prepaid expenses		509		—		—
					Accounts payable		8,437		—		—
					Advances from customers		1,807		—		—
					Revenues		15,309		—		—
					Operating costs and expenses		7,890		—		—
			Senao International Co., Ltd.	c	Revenues		48		—		—
					Operating costs and expenses		49		—		—
			Chunghwa System Integration Co., Ltd.	c	Revenues		78		—		—
					Operating costs and expenses		46		—		—
					Property, plant and equipment		18		—		—

	6	Donghwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		36,901		—		—
					Accounts payable		7,853		—		—
					Advances from customers		384		—		—
					Revenues		40,351		—		—
			CHIEF Telecom Inc.	c	Accounts payable		303		—		—
					Operating costs and expenses		504		—		—
			Chunghwa Telecom Singapore Pte., Ltd.	c	Accounts payable		905,143		—		—
					Operating costs and expenses		2,682		—		—

	8	Light Era Development Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Prepaid expenses		494		—		—
					Accounts payable		1,144		—		—
					Revenues		669		—		—
					Operating costs and expenses		10,427		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		151		—		—

	11	InfoExplorer Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		7,929		—		—
					Accounts payable		50		—		—
					Revenues		27,196		—		—
					Operating costs and expenses		736		—		—
			Chunghwa System Integration Co., Ltd.	c	Accounts receivable		143		—		—
					Accounts payable		65		—		—
					Revenues		143		—		—
					Operating costs and expenses		722		—		—

	10	Chunghwa Telecom Japan Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		3,493		—		—
					Accounts Payable		4,101		—		—
					Revenues		13,782		—		—

(Continued)

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Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)

	9	Chunghwa Telecom Singapore Pte., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable	$	2,548		—		—
					Accounts payable		1,443		—		—
					Revenues		11,726		—		—
					Operating costs and expenses		7,511		—		—
			Donghwa Telecom Co., Ltd.	c	Accounts receivable		905,143		—		—
					Revenues		2,682		—		—

	20	Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Prepaid expenses		241		—		—
					Accounts payable		1,788		—		—
					Non-operating income and gains		1		—		—
					Operating costs and expenses		1,685		—		—

	25	Yao Yong Real Property Co., Ltd.	CHIEF Telecom Inc.	c	Rent receivables		4,283		—		—
					Revenues		28,983		—		—
					Operating costs and expenses		72		—		—

Note 1:

Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:

“0” for the Company.

Subsidiaries are numbered from “1”.

Note 2:

Related party transactions are divided into three categories as follows:

The Company to subsidiaries.

Subsidiaries to the Company.

Subsidiaries to subsidiaries.

Note 3:

Transaction terms were determined in accordance with mutual agreements.

Note 4:

For assets and liabilities, amount is shown as a percentage to consolidated total assets as of June 30, 2011, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the six months ended June 30, 2011.

Note 5:

The amount was eliminated upon consolidation.

(Concluded)

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TABLE 10

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

SEGMENT INFORMATION

SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Amount in Thousands of New Taiwan Dollars)


	Domestic Fixed Communications Business		Mobile Communications Business		Internet Business		International Fixed Communications Business		Others			Adjustment			Total

Six months ended June 30, 2011

Revenues from external customers	$	38,977,534	$	45,194,984	$	12,332,410	$	7,652,623	$	2,742,132		$	—		$	106,899,683

Intersegment revenues (Note 2)	$	7,275,777	$	3,225,824	$	858,435	$	1,249,090	$	330,617		$	(12,939,743	)	$	—

Segment income before tax	$	10,378,723	$	13,833,969	$	5,286,509	$	1,253,038	$	(499,988	)	$	—		$	30,252,251

Total assets	$	227,367,833	$	65,708,230	$	17,815,621	$	23,519,252	$	121,251,170		$	—		$	455,662,106


Six months ended June 30, 2010

Revenues from external customers	$	34,531,832	$	44,332,353	$	11,912,530	$	7,685,014	$	817,348		$	—		$	99,279,077

Intersegment revenues (Note 2)	$	7,002,938	$	1,008,705	$	497,105	$	777,127	$	376,443		$	(9,662,318	)	$	—

Segment income before tax	$	9,185,239	$	15,611,985	$	4,984,664	$	1,475,002	$	(907,798	)	$	—		$	30,349,092

Total assets	$	230,427,685	$	63,899,852	$	17,003,915	$	21,629,202	$	126,410,667		$	—		$	459,371,321

Note 1:

The Company organizes its reporting segments based on types of organizational business. The five reporting segments are segregated as below: Domestic fixed communications business, mobile communications business, internet business, international fixed communications business and others.

•

Domestic fixed communications business - the provision of local telephone services, domestic long distance telephone services, broadband access, and related services;

•

Mobile communications business - the provision of mobile services, sales of mobile handsets and data cards, and related services;

•

Internet business - the provision of HiNet services and related services;

•

International fixed communications business - the provision of international long distance telephone services and related services;

•

Others - the provision of non-Telecom Services, and the corporate related items not allocated to reportable segments.

Note 2:

Represents intersegment revenues from goods and services.

Note 3:

According to Regulations Governing Network Interconnection among Telecommunications Enterprises Article 20, ownership of the tariffs for the communications between mobile telecommunications network and fixed telecommunications network except for international communications shall follow the following principles:

The tariff is collected from the call-originating subscribers by the call-originating telecommunications enterprises pursuant to the pricing of the mobile telecommunications network enterprises, and the revenue from the tariff belongs to the mobile telecommunications network enterprises. However, from January 1, 2011, the tariff shall be both priced and collected from the call-originating subscribers by the call-originating telecommunications enterprise; revenue from the tariff shall belong to the call-originating telecommunications enterprises as well.

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Exhibit 4

1.	SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING POLICIES FOLLOWED BY THE COMPANY AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES OF AMERICA (UNAUDITED) (AMOUNTS IN MILLIONS OF NEW TAIWAN DOLLARS, UNLESS STATED OTHERWISE)

The following is a reconciliation of consolidated net income and stockholders’ equity under ROC GAAP as reported in the audited consolidated financial statements to unaudited consolidated net income and stockholders’ equity determined under US GAAP. For the descriptions of principal differences between ROC GAAP and US GAAP, please refer to Form 20-F filed with the Securities and Exchange Commission of the United States (the “SEC”) on April 20, 2011 (File No. 001-31731).

Net Income Reconciliation


	Six Months Ended
	June 30
	2011			2010
	NT$			NT$

Consolidated net income based on ROC GAAP	$	25,615		$	25,443
Adjustment:
a. Property, plant and equipment
1. Adjustments of gains and losses on disposal of property, plant and equipment		480			—
2. Adjustments for depreciation expenses		55			62
b. 10% tax on unappropriated earnings		1,969			1,720
d. Revenues recognized from deferred income of prepaid phone cards		—			28
e. Revenues recognized from deferred one-time connection fees		488			630
f. Share-based compensation		(1	)		(2	)
g. Defined benefit pension plan		1			—
i. Income tax effect of US GAAP adjustments		(122	)		(276	)
j. Noncontrolling interests of acquired subsidiary		—			(1	)
Other minor GAAP differences not listed above		(20	)		(15	)

Net adjustment		2,850			2,146


Consolidated net income based on US GAAP	$	28,465		$	27,589


Attributable to
Stockholders of the parent	$	28,023		$	27,114
Noncontrolling interests		442			475


	$	28,465		$	27,589


Basic earnings per common share	$	3.58		$	2.80


Diluted earnings per common share	$	3.57		$	2.79

(Continued)

- 1 -


	Six Months Ended
	June 30
	2011		2010
	NT$		NT$
Weighted-average number of common shares outstanding (in 1,000 shares)
Basic		7,821,735		9,696,808

Diluted		7,849,165		9,732,755


Net income per pro forma equivalent ADSs
Basic	$	35.83	$	27.96

Diluted	$	35.66	$	27.86


Weighted-average number of pro forma equivalent ADSs (in 1,000 shares)
Basic		782,174		969,681

Diluted		784,917		973,276

(Concluded)

Stockholders’ Equity Reconciliation


		June 30
		2011			2010
		NT$			NT$

Total stockholders’ equity based on ROC GAAP		$	350,364		$	363,989
Adjustment:
a.	Property, plant and equipment
	1. Capital surplus reduction		(60,168	)		(60,168	)
	2. Adjustment on depreciation expenses, and disposal gains and losses		4,823			4,203
	3. Adjustments of revaluation of land		(5,763	)		(5,803	)
b.	10% tax on unappropriated earnings		(2,448	)		(2,317	)
d.	Deferred income of prepaid phone cards
	1. Capital surplus reduction		(2,798	)		(2,798	)
	2. Adjustment on deferred income recognition		2,798			2,568
e.	Revenues recognized from deferred one-time connection fees
	1. Capital surplus reduction		(18,487	)		(18,487	)
	2. Adjustment on deferred income recognition		16,188			15,212
f.	Share-based compensation
	1. Adjustment on capital surplus		15,706			15,702
	2. Adjustment on retained earnings		(15,706	)		(15,702	)
g.	1. Accrual for accumulative other comprehensive income under pension guidance		(610	)		(2	)
	2. Accrual for pension cost		(27	)		(28	)
h.	Adjustment for pension plan upon privatization
	1. Adjustment on capital surplus		1,782			1,782
	2. Adjustment on retained earnings		(9,665	)		(9,665	)

(Continued)

- 2 -


	June 30
	2011			2010
	NT$			NT$
i. Income tax effect of US GAAP adjustments	$	4,654		$	4,962
j. Noncontrolling interests of acquired
Subsidiary		(21	)		27
Other GAAP differences not listed above		130			167

Net adjustment		(69,612	)		(70,347	)


Total equity based on US GAAP	$	280,752		$	293,642


Attributable to
Stockholders of the parent	$	277,359		$	290,091
Noncontrolling interests		3,393			3,551


	$	280,752		$	293,642

(Concluded)

Cash Flows Differences

The Company applies ROC SFAS No. 17, “Statement of Cash Flows”. Its objectives and principles are similar to those set out in U.S. standards. The principal differences between the two standards relate to classification. Cash flows from investing activities for changes in other assets, and cash flows from financing activities for changes in customers’ deposits, other liabilities and cash bonuses paid to employees, directors and supervisors are reclassified to operating activities under U.S. standards. In addition, the effect of change on consolidated subsidiaries, which was shown as a separate item under ROC standards, is reclassified to investing activities under U.S. standards.


Note 1:	There is a significant difference in the classification of items on the statements of income under ROC GAAP and US GAAP. Those items include:

	(1)	Gains (losses) on disposal of property, plant and equipment and other assets, and impairment loss on property, plant and equipment and other assets, and other assets and loss arising from natural calamities:

		• Under ROC GAAP: Such accounts are included in non-operating income (expenses).

		• Under US GAAP: Such accounts are included in cost of revenues.

2.	RECENT ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

In May 2011, the Financial Accounting Standards Board (FASB) amended the accounting standards related to fair value measurements to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards (IFRSs). The amended guidance changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. This guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2011 and early adoption is not permitted. The Company is currently evaluating the impact of the adoption of the update.

In June 2011, the FASB issued new amendments relating to that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and early adoption is permitted. The adoption of the amendments did not have a material effect on the Company’s consolidated financial statements.

- 3 -