Taiwan's military flexed its muscles yesterday, testing the ability of various missiles to hit their targets in a major annual drill. However, in addition to two missiles missing their targets, a drone crashed into a small town in the east of the island, creating a large crater and scaring residents. Adding to the confusion, a fishing boat reportedly sailed into the controlled area for exercise and a US refuelling vessel passed through waters near the drill. The live-fire drill, involving the navy, air force and army, was held in Chiupeng, a tightly guarded missile base facing the Pacific Ocean in Pingtung county in southern Taiwan. Drill commander Air Marshal Ma Chih-yung said it involved 26 missiles, including Tien Chien 2 (Sky Sword 2) air-to-air missiles, Hsiungfeng 2 (Brave Wind 2) ship-to-ship missiles, Tien Kung 2 (Sky Bow 2) surface-to-air missiles, Maverick air-to-surface missiles and the Hawk surface-to-air missiles. However, one Tien Kung 2 missile was unable to be launched because a drone failed to release its target in mid-air. And another drone, supposed to have been intercepted by a Hsiung Feng 2, went out of control and crashed in a town in Taitung, eastern Taiwan. No-one was injured, but nearby residents were shocked when they heard the loud explosion and found a big hole in the road. Two missiles - a Tien Chien 1 and a Hsiung Feng 2 - also missed their targets when fired, officers said. The exercise was temporarily disrupted when a fishing boat sailed into waters within the drill area. Ma declined to comment on the incident, but did say the military had been aware that a US refuelling vessel was passing by the drill area. Ma said the exercise was 'rather successful', given that 24 of the 26 missiles hit their targets. 'The sharpshooting rate is between 92.3 to 96.15 per cent,' Ma said . Yesterday's drill did not feature US-made Sparrow missiles, which saw misfires in January last year during an exercise inspected by Taiwanese President Ma Ying-jeou. Meanwhile, the island is ready to return a list of fighter upgrade options to the US before the end of this week, officials said. The defence ministry has completed its review of the list, proposed by the US to overhaul the Taiwanese air force's ageing F-16 A/B jet fighters. The entire package, including upgrading 145 of the planes and the installation of Active Electronically Scanned Array (AESA) radars and AIM 9X Sidewinder air-to-air missiles, would cost US$3.8 billion.