<SEC-DOCUMENT>0000897204-01-500065.txt : 20011030
<SEC-HEADER>0000897204-01-500065.hdr.sgml : 20011030
ACCESSION NUMBER:		0000897204-01-500065
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20011025

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TAIWAN FUND INC
		CENTRAL INDEX KEY:			0000804123
		STANDARD INDUSTRIAL CLASSIFICATION:	 []
		IRS NUMBER:				042942862
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-04893
		FILM NUMBER:		1766615

	BUSINESS ADDRESS:	
		STREET 1:		225 FRANKLIN STREET
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02110
		BUSINESS PHONE:		6176622789

	MAIL ADDRESS:	
		STREET 1:		225 FRANKLIN STREET
		STREET 2:		PO BOX 9110
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02110
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>nya367849.txt
<DESCRIPTION>AMENDMENT NO. 31
<TEXT>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                         FORM N-2 REGISTRATION STATEMENT
                    UNDER THE INVESTMENT COMPANY ACT OF 1940

                                AMENDMENT NO. 31

                 -----------------------------------------------
                              THE TAIWAN FUND, INC.
                  ---------------------------------------------
               (Exact Name of Registrant as Specified in Charter)

                               225 FRANKLIN STREET
                           BOSTON, MASSACHUSETTS 02110
                  --------------------------------------------
                    (Address of Principal Executive Offices)

                                 1-800-636-9242
                  --------------------------------------------
              (Registrant's Telephone Number, Including Area Code)


                            LAURENCE E. CRANCH, ESQ.
                       CLIFFORD CHANCE ROGERS & WELLS LLP
                                 200 PARK AVENUE
                            NEW YORK, NEW YORK 10166
                                 (212) 878-8000
                  --------------------------------------------
                    (Name and Address for Agent for Service)






<PAGE>




                                EXPLANATORY NOTE

This filing is made  solely for the  purpose of filing as  Exhibits  (i) the new
Investment  Management  and Custodian  Contract  dated August 22, 2001 among the
Fund, HSBC Asset  Management  (Taiwan)  Limited ("HSBC Taiwan")  (formerly China
Securities  Investment  Trust  Corporation   ("CSITC"))  and  the  International
Commercial Bank of China, the Fund's custodian ("ICBC"), (ii) the new U.S. Asset
Advisory Agreement dated August 22, 2001 between the Fund and HSBC Taiwan, (iii)
the Interim  Management  and Custodian  Contract  dated August 6, 2001 among the
Fund,  CSITC and ICBC,  (iv) the Interim U.S.  Asset  Advisory  Agreement  dated
August  6,  2001  between  the Fund and  CSITC  and (v) the  Foreign  Securities
Depositary Agreement dated June 30, 2001 between the Fund and ICBC.



                           PART C - OTHER INFORMATION

ITEM   24. FINANCIAL STATEMENTS AND EXHIBITS

(1)    FINANCIAL STATEMENTS

       (i)    Portfolio of Investments as of August 31, 1995

       (ii)   Statement of Assets and Liabilities as of August 31, 1995

       (iii)  Statement of Operations for the fiscal year ended August 31, 1995

       (iv)   Statement  of Changes in Net  Assets  for the fiscal  years  ended
              August 31, 1994 and 1995 (v) Financial  Highlights  for the fiscal
              years ended August 31,  1992-1995,  the  eight-month  period ended
              August 31, 1991 and the fiscal years ended December 31, 1989-1990

       (vi)   Notes to Financial Statements for the fiscal year ended August 31,
              1995

       (vii)  Report of Independent Accountants dated October 17, 1995

       (viii) Portfolio of Investments as of February 29, 1996 (unaudited)

       (ix)   Statement  of Assets  and  Liabilities  as of  February  29,  1996
              (unaudited)

       (x)    Statement of Operations  for the six-month  period ended  February
              29, 1996 (unaudited)

       (xi)   Statement of Changes in Net Assets for the six-month periods ended
              February 28, 1995 and February 29, 1996

       (xii)  Financial  Highlights for the six-month  period ended February 29,
              1996  (unaudited),  fiscal years ended August 31,  1992-1995,  the
              eight-month  period  ended  August 31,  1991 and the fiscal  years
              ended December 31, 1989-1990

       (xiii) Notes to  Financial  Statements  for the  six-month  period  ended
              February 29, 1996 (unaudited)

(2)    EXHIBITS

       (a)    Restated Certificate of Incorporation (previously filed as Exhibit
              1 to Pre-Effective Amendment No. 3 to Registrant's Registration)

       (b)    Amended and  Restated  By-Laws  (previously  filed as Exhibit 1 to
              Amendment No. 28 to  Registrant's  Registration  Statement on Form
              N-2 (File No.  811-4893)  filed with the  Securities  and Exchange
              Commission on October 27, 1999)

       (c)    Not applicable

       (d)(1) Specimen certificate for Common Stock (previously filed as Exhibit
              4 to Amendment  No. 8 to  Registrant's  Registration  Statement on
              Form  N-2  (File  No.  811-4893)  filed  with the  Securities  and
              Exchange Commission on May 1, 1989).

       (e)    Dividend  Reinvestment  and Cash Purchase  Plan of the  Registrant
              (previously  filed as Exhibit 10(E) to  Registrant's  Registration
              Statement  on  Form  N-2  (File  No.   33-21789)  filed  with  the
              Securities  and Exchange  Commission on April 27,1988  ("Amendment
              No. 5")

       (f)    Not applicable

       (g)(1) Securities  Investment Trust  Investment  Management and Custodian
              Contract dated as of August 22, 2001 among Registrant,  HSBC Asset
              Management (Taiwan) Limited and The International  Commercial Bank
              of China(*)

       (2)    Investment  Advisory  and  Management  Agreement  Relating to U.S.
              Dollar Assets dated as of August 22, 2001 between  Registrant  and
              HSBC Asset Management (Taiwan) Limited (*)

       (3)    Interim  Securities  Investment  Trust  Management  and  Custodian
              Contract  dated as of  August  6,  2001  among  Registrant,  China
              Securities  Investment  Trust  Corporation  and The  International
              Commercial Bank of China(*)

       (4)    Interim Advisory and Management  Agreement Relating to U.S. Dollar
              Assets  dated as of  August  6, 2001  among  Registrant  and China
              Securities Investment Trust Corporation(*)

       (h)(1) Form of  Underwriting  Agreement  (incorporated  by  reference  to
              Exhibit  h(1) to  Pre-Effective  Amendment  No. 1 to  Registrant's
              Registration  Statement on Form N-2 (File No. 333-2697) previously
              filed with the  Securities  and Exchange  Commission  on April 26,
              1996 ("Pre-Effective Amendment No. 1-1996")

       (2)    Form of Agreement among Underwriters (incorporated by reference to
              Exhibit h(2) to Pre-Effective Amendment No. 1-1996)

       (3)    Form of Selected Dealer  Agreement  (incorporated  by reference to
              Exhibit h(3) to Pre-Effective Amendment No. 1-1996)

       (i)    Not applicable

       (j)(1) See Exhibit (g)(1)

       (2)    Custodian  Agreement Relating to U.S. Dollar Assets dated December
              16,  1986  between  Registrant  and  State  Street  Bank and Trust
              Company (previously filed as Exhibit 9(B) to Amendment No. 5)

       (3)    Foreign Securities  Depositary Agreement dated as of June 30, 2001
              between Registrant and International Commercial Bank of China(*)

       (k)(1) Registrar,  Transfer  Agency and Service  Agreement dated December
              16,  1986  between  Registrant  and  State  Street  Bank and Trust
              Company (previously filed as Exhibit 10(D) to Amendment No. 5)

       (2)    Administration  Agreement dated April 1, 1994 between State Street
              Bank and Trust  Company and the  Registrant  (previously  filed as
              Exhibit k(2) to Pre-Effective  No. 1 to Registrant's  Registration
              Statement  on  Form  N-2  (File  No.   33-92378)  filed  with  the
              Securities   and   Exchange    Commission   on   June   19,   1995
              ("Pre-Effective Amendment No. 1")

       (3)    Accounting  Services  Agreement  dated April 1, 1994 between State
              Street Bank and Trust Company and the Registrant (previously filed
              as Exhibit k(3) to Pre-Effective Amendment No. 1)

       (l)    Opinion and consent of Rogers & Wells (previously filed as Exhibit
              (1) to the Registration  Statement on Form N-2 (File No. 811-4893)
              filed with the Securities and Exchange Commission on May 2, 1996)

       (m)    Not applicable

       (n)(1) Opinion  and  consent  of Lee & Li  (previously  filed as  Exhibit
              (n)(1)  to the  Registration  Statement  on  Form  N-2  (File  No.
              811-4893) filed with the Securities and Exchange Commission on May
              2, 1996)

       (2)    Consent of Coopers & Lybrand L.L.P.  (previously  filed as Exhibit
              (n)(2)  to the  Registration  Statement  on  Form  N-2  (File  No.
              811-4893) filed with the Securities and Exchange Commission on May
              2, 1996)

       (o)    Not applicable

       (p)    See Exhibit (g)(1)

       (q)    Not applicable

*      Filed herewith.


<PAGE>






                                   SIGNATURES

       Pursuant to the  requirements  of the Investment  Company Act of 1940, as
amended,  the  Registrant  has duly caused this  Amendment  to the  Registration
Statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in Taipei, Taiwan, on the 15th day of October, 2001.



                                                THE TAIWAN FUND, INC.

                                                By:       /s/ Benny Hu
                                                      --------------------
                                                      Benny Hu
                                                      President





                                  EXHIBIT INDEX


Exhibit No.                   Description of Document                Location of
                                                                     Exhibit in
                                                                     Sequential
                                                                      Numbering
                                                                       System

1           Securities Investment Trust Investment Management            2(g)(1)
             and Custodian Contract dated as of August 22, 2001

2           Investment Advisory and Management Agreement Relating to     2(g)(2)
            U.S. Dollar Assets dated as of August 22, 2001

3           Interim Securities Investment Trust Management and           2(g)(3)
            Custodian Contract dated as of August 6, 2001

4           Interim Advisory and Management Agreement Relating to        2(g)(4)
            U.S. Dollar Assets dated as of August 6, 2001

5           Foreign Securities Depositary Agreement dated as of          2(j)(3)
            June 30, 2001



<PAGE>

                                                                       EXHIBIT 1

                                                                 English Version




                              THE TAIWAN TRUST FUND

                          SECURITIES INVESTMENT TRUST -

                  INVESTMENT MANAGEMENT AND CUSTODIAN CONTRACT



                                 August 22, 2001





<PAGE>



                              THE TAIWAN TRUST FUND

                          SECURITIES INVESTMENT TRUST -

                  INVESTMENT MANAGEMENT AND CUSTODIAN CONTRACT



                                      INDEX
                                      -----
ARTICLE                                                                     PAGE
-------                                                                     ----

1.       INTRODUCTION AND POLICY...............................................1

2.       BASIC OBLIGATIONS AND RIGHTS..........................................1

3.       ASSETS HELD IN THE TRUST FUND.........................................3

4.       UNITS.................................................................4

5.       CALCULATION OF NET ASSET VALUE........................................5

6.       REDEMPTION OF UNITS...................................................6

7.       SUSPENSION OF VALUATION, ISSUES, REDEMPTIONS AND PAYMENTS.............7

8.       EXPENSES..............................................................7

9.       MANAGEMENT AND CUSTODIAN FEES.........................................8

10.      INVESTMENT OBJECTIVES AND POLICIES AND RESTRICTIONS..................10

11.      DURATION, CHANGES IN MANAGER AND CUSTODIAN, AND TERMINATION..........12

12.      ACCOUNTS AND STATEMENTS..............................................13

13.      DISTRIBUTIONS........................................................14

14.      CURRENCY.............................................................14

15.      INFORMATION AND NOTICES..............................................14

16.      AMENDMENTS...........................................................15

17.      CONNECTED PERSONS....................................................15

18.      ATTACHMENT...........................................................15

19.      GOVERNING LAW, JURISDICTION AND LANGUAGE.............................15

20.      EFFECTIVE DATE.......................................................16

EXHIBIT A....................................................................A-1



<PAGE>

                    SECURITIES INVESTMENT TRUST - INVESTMENT

                        MANAGEMENT AND CUSTODIAN CONTRACT

1.     INTRODUCTION AND POLICY

       1.1 The Taiwan Trust Fund (the "Trust  Fund") is a securities  investment
trust fund established under the laws of the Republic of China for the exclusive
benefit of The Taiwan Fund,  Inc.  (the  "Unitholder")  of 225 Franklin  Street,
Boston,  Massachusetts  on the  basis  of  this  Securities  Investment  Trust -
Investment Management and Custodian Contract (the "Investment  Contract") among,
HSBC Asset  Management  (Taiwan) Limited  (formerly China Securities  Investment
Trust  Corporation  ("CSITC"))  ("HSBC Taiwan" or the  "Manager"),  of 99 Tunhwa
South Rd.,  Section 2,  Taipei,  Taiwan,  Republic of China,  The  International
Commercial Bank of China (the "Custodian") of 100 Chilin Road,  Taipei,  Taiwan,
Republic of China and the Unitholder.  This Investment  Contract,  together with
relevant  provisions of the laws and regulations of the Republic of China, alone
shall govern the  relationship,  which is a contractual  relationship (the Trust
Fund is not a separate  legal entity)  among the Manager,  the Custodian and the
Unitholder.  This  Investment  Contract  supersedes  and replaces the Securities
Investment Trust - Investment  Management and Custodian  Contract dated December
16,  1986,  as amended  (the  "Original  Investment  Contract"),  as well as the
Interim  Securities  Investment  Trust -  Investment  Management  and  Custodian
Contract dated August 6, 2001 (the "Interim Investment Contract"), each of which
contains  substantially  the  same  terms  and  conditions  as  this  Investment
Contract.  This Investment Contract was made necessary by a change in control of
CSITC which automatically  terminated the Original Investment Contract on August
6, 2001.  The Interim  Investment  Contract  became  effective on August 6, 2001
pursuant to Rule 15a-4 under the United States  Investment  Company Act of 1940,
as amended,  to permit additional time for the shareholders of the Unitholder to
approve this  Investment  Contract.  Where the context  requires,  references to
"this  Investment  Contract"  herein  include the Original  Investment  Contract
and/or the Interim Investment Contract.

       1.2 The investment objective of establishing the Trust Fund is to achieve
for  the  benefit  of  the  Unitholder  capital  growth  through  investment  in
securities listed on the Taiwan Stock Exchange, and other debentures, government
bonds and money market instruments.

2.     BASIC OBLIGATIONS AND RIGHTS

2.1    The obligation and duties of the Manager are as follows:

       (a) The Manager shall be obligated to manage the investment of the assets
held by the Custodian in the Trust Fund for the  exclusive,  full benefit of the
Unitholder (including making investment  decisions,  supervising the acquisition
and disposition of  investments,  instructing the Custodian with respect thereto
and otherwise  with respect to the assets held in the Trust Fund,  and selecting
brokers or dealers to carry out portfolio transactions) in good faith and to the
best of its ability and without  gaining any  advantage for itself or any of its
Connected  Persons (as defined in Article 17 below)  thereby except as expressly
provided in this  Investment  Contract,  all in accordance with the Trust Fund's
investment  objectives  and  policies  and in  accordance  with  guidelines  and
directions from the Unitholder's Board of Directors;

       (b) The Manager shall be obligated to account to the  Unitholder  for any
loss in value of assets of the Trust Fund where such loss has been caused by its
willful or negligent default,  reckless disregard of its duties hereunder or bad
faith;

       (c) The Manager shall be  responsible  to the Unitholder for the acts and
omissions of all persons to whom it may delegate any of its functions as Manager
as if they were its own acts and omissions;

       (d) The Manager  shall  promptly  report to the  Securities  and Exchange
Commission  of the  Ministry of Finance of the Republic of China (the "SEC") and
to Unitholder any matter which,  in the opinion of the Manager,  is an actual or
anticipated  breach by the Custodian of any of the provisions of this Investment
Contract  or of any  relevant  provisions  of the  laws and  regulations  of the
Republic of China;

       (e)  The  Manager  shall,  to the  extent  permitted  by the  laws of the
Republic of China,  take such action to enforce on behalf,  and for the benefit,
of the  Unitholder  the  obligations  of the  Custodian  under  this  Investment
Contract  as it shall think fit or as shall from time to time be required by the
SEC or the Unitholder;

       (f) Notwithstanding and without prejudice to any other provisions of this
Investment  Contract,  the Manager shall, and shall instruct all brokers used by
the Manager in relation to the sale or purchase of assets for the account of the
Trust Fund to, act in accordance  with the best practice then  applicable in the
ROC  for  the  settlement  of  sales  and  purchases  of  securities  and  other
investments;

       (g) The proper costs incurred by the Manager in enforcing the obligations
of the  Custodian  shall be borne out of the  assets of the Trust  Fund.  To the
extent that they are not borne by a person other than the  Manager,  the Manager
shall be entitled to an  indemnity  out of the assets of the Trust Fund  against
all claims  (and  against all costs and  expenses  in  relation to such  claims)
incurred or  suffered by it as a result of its acting as the Manager  under this
Investment  Contract  which  claims are not  attributable  to its own willful or
negligent  default,  reckless  disregard  of its duties  hereunder  or bad faith
("disabling  conduct");   provided  that  the  Manager  shall  not  receive  any
indemnification  out of the assets held in the Trust Fund against any  liability
to the Unitholder or its  shareholders  to which the Manager would  otherwise be
subject  unless there has been (1) a final  decision on the merits by a court or
other body  before whom the  proceeding  alleging  liability  of the Manager was
brought that the Manager was not liable by reason of disabling conduct, or (2) a
reasonable determination, based upon a review of the facts, that the Manager was
not liable by reason of  disabling  conduct,  by (i) the vote of a majority of a
quorum of the Unitholder's  directors who are neither "interested  directors" as
defined in the United States  Investment  Company Act of 1940 nor parties to the
proceeding ("disinterested,  non-party directors"), or (ii) an independent legal
counsel in a written  opinion;  and provided further that, the Manager shall not
receive out of the assets held in the Trust Fund an advance of  attorneys'  fees
or other  expenses  incurred  by it in  defending  a  proceeding  alleging  such
liability except upon the undertaking of the Manager to repay the advance unless
it is ultimately determined that it is entitled to indemnification,  but only if
at least one of the  following  is also  required as a condition to the advance:
(1) the Manager shall provide a security for its undertaking, (2) the Unitholder
shall be insured against losses arising by reason of any lawful advances, or (3)
a  majority  of a  quorum  of  the  disinterested,  non-party  directors  of the
Unitholder,  or  an  independent  legal  counsel  in a  written  opinion,  shall
determine,  based on a review of readily  available  facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Manager ultimately
will be found entitled to indemnification; and

       (h) The Manager  shall  perform  its  obligations  under this  Investment
Contract so as to (i) comply with all laws and  regulations  of the  Republic of
China and of the United States applicable to the Manager and the Unitholder, and
(ii) permit the  Unitholder to qualify as a regulated  investment  company under
applicable United States tax law.

2.2    The obligations and duties of the Custodian are as follows:

       (a)  The  Custodian   shall  be   responsible   absolutely   and  without
qualification as a fiduciary to the Unitholder for the safekeeping of all assets
held in the Trust Fund for the time being,  and of all amounts from time to time
set  aside  and  held for the  purpose  of  distribution  to the  Unitholder  in
accordance with this Investment  Contract (see relevant provisions under Article
3 below),  and shall  indemnify the  Unitholder in the event of any loss of such
assets and amounts resulting from a breach of its duties hereunder;  such assets
and amounts shall be adequately  insured  against loss; and the Custodian  shall
not be responsible for the willful or negligent default  (including  non-payment
or  failure to  deliver  securities)  by  securities  brokers  or other  persons
selected by the Manager and dealt with by the Custodian,  unless such default is
contributed to by the Custodian;

       (b) The Custodian shall comply with the instructions of the Manager given
from  time to time on  behalf  of the  Unitholder  pursuant  to this  Investment
Contract  in relation  to the  disposition  of the assets held in the Trust Fund
from time to time and the exercise of rights and obligations  attaching  thereto
except where, in the opinion of the Custodian, to do so would or might involve a
breach of this Investment Contract or of any relevant provisions of the laws and
regulations of the Republic of China;

       (c) The Custodian  shall report to the SEC and the  Unitholder any matter
which in the opinion of the Custodian is an actual or anticipated  breach by the
Manager of any of the provisions of this Investment  Contract or of any relevant
provisions of the laws and regulations of the Republic of China; and

       (d) To the  extent  that  they are not borne by a person  other  than the
Custodian,  the Custodian  shall be entitled to indemnity out of the assets held
in the Trust Fund  against  all claims  incurred or suffered by it which are not
attributable to its own willful or negligent default,  reckless disregard of its
duties hereunder or bad faith.

       (e) The  assets  held in the Trust Fund will not be subject to any right,
charge,  security interest,  lien or claim of any kind in favor of the Custodian
or its creditors; beneficial ownership of the assets held in the Trust Fund will
be freely transferable  without payment of money or value to the Custodian;  the
Custodian  will maintain  adequate  records  identifying  the assets held in the
Trust Fund as being held for the  benefit of the  Unitholder;  the  Unitholder's
independent  public  accountants  will be given  access to such  records  during
normal  business  hours upon request;  and the Manager  (acting on behalf of the
Unitholder) will receive periodic reports from the Custodian with respect to the
safekeeping of the assets held in the Trust Fund, including, but not limited to,
notification of any transfer of assets to or from the Trust Fund.


       The Custodian  shall not be responsible for any investment loss of assets
held in the Trust Fund and shall have no  responsibility  to the  Manager or the
Unitholder  other  than as  provided  in  Articles  2.2 and  3.5  hereof  and as
otherwise expressly set forth in this Investment Contract.

       2.3 The Unitholder  shall have the right at all times to enforce  against
the Manager the  obligations  of the  Manager  and  against  the  Custodian  the
obligations of the Custodian under this Investment Contract.

3.     ASSETS HELD IN THE TRUST FUND

       3.1 All  assets  held in the Trust Fund shall at all times be held by the
Custodian  and,  where in  registered  form,  shall be registered in the name of
"Special   Account  for  the  Taiwan   Trust  Fund  under  the  Custody  of  the
International Commercial Bank of China."

3.2    The Trust Fund is established for an unspecified period.

       3.3 No offering of the shares of the  Unitholder  ("Shares")  can be made
without prior approval of the SEC. The  Unitholder  will deliver the proceeds of
any offering (after  deduction of offering  expenses and amounts not intended to
be held in the Trust Fund) to the Custodian under this Investment  Contract.  As
evidence of its  exclusive  interest in the assets held by the  Custodian in the
Trust Fund, the Unitholder has been issued Units,  and shall receive  additional
Units to the extent that the proceeds of any  additional  offering of its shares
are delivered to the Custodian under this Investment Contract.

       3.4 The  provisions of Article 18-2 of the Securities and Exchange Law of
the Republic of China (the  "Securities  Law") shall apply to the assets held in
the  Trust  Fund and  such  assets  shall  not form  part of the  assets  of the
Custodian or of the Manager.  To the extent that legitimate claims made by third
parties  against  the assets  held in the Trust  Fund  exceed the value of those
assets,  the  satisfaction  of such claims  shall be the  responsibility  of the
Unitholder and not the Manager or Custodian.

       3.5 The  Custodian  shall not  dispose  of assets  held in the Trust Fund
except:

       (a)    in accordance with instructions received by it from the Manager in
              relation to:

              (1)    the  investment of or realization on assets for the account
                     of the Trust Fund; or

              (2)    the payment or  discharge of other  amounts of  liabilities
                     properly payable or dischargeable out of the assets held in
                     the Trust Fund in  accordance  with the  provisions of this
                     Investment Contract; or

              (3)    the payment of amounts to the  Unitholder as  distributions
                     of income as provided in this Investment Contract; or

              (4)    the payment of amounts to the Unitholder upon redemption of
                     Units; or

       (b)    to the Unitholder on final liquidation of the Trust Fund; or

       (c)    as otherwise required by any mandatory provision of law.

4.     UNITS

       4.1 The Manager  and the  Custodian  shall each  maintain a record of the
number  of Units  held  from time to time by the  Unitholder.  A Unit  shall not
represent  any  right  in  respect  of  any  particular  assets  but a pro  rata
entitlement  to all of the net assets held in the Trust Fund,  and a contractual
right against the Manager and the Custodian accordingly.

       4.2 A beneficial  certificate (the  "Certificate")  in a form approved by
the Manager  and the SEC,  and in  substantially  the form of Exhibit A attached
hereto,  has been issued to the  Unitholder in respect of all Units  acquired by
it. The  Certificate  has been signed on behalf of the Manager and the Custodian
and indicates  thereon the amount of funds delivered to the Custodian under this
Investment  Contract.  If any  additional  Units are issued,  a  replacement  or
additional  Certificate shall be issued reflecting such issuance, and the amount
of funds delivered to the Custodian with respect to such issuance.

       4.3 The issue of Units  shall be subject to the prior  approval of and to
any conditions imposed by the SEC.

       4.4 Each Unit  issued in the  initial  issue of Units which took place in
December 1986 represented US$1 or its equivalent in NT Dollars  delivered to the
Custodian under the Original Investment Contract.

       4.5 Each Unit issued  after the initial  issue of Units has  represented,
and (if additional Units are issued) shall represent,  that amount (delivered to
the  Custodian  hereunder)  obtained by dividing (a) the amount equal to the net
asset value (as defined in the following sentence) of the previously outstanding
Units  calculated  as at the date (or, if that date is not a  Valuation  Date as
defined in Article 5 below, on the next following  Valuation  Date)  immediately
following the date of receipt by the Manager of the  application for issuance of
the Units in question by (b) the number of Units  outstanding  (including  Units
scheduled to be redeemed on that Valuation Date but excluding Units scheduled to
be issued on that Valuation Date). "Net asset value" shall mean the value of the
assets held in the Trust Fund less the  liabilities of the Trust Fund (including
such  provisions  and  allowances  for  contingencies  as the  Manager may think
appropriate  in respect of the costs and  expenses  payable out of the assets of
the Trust  Fund as set forth in  Article 8 below),  as  calculated  pursuant  to
Article 5.

       4.6 Payment for each Unit shall be made in cash in advance of issue. Once
the relevant  amount to be  delivered to the  Custodian in respect of a Unit has
been paid,  no further  amount shall be payable by the  Unitholder in respect of
that Unit.

       4.7 No fractions of Units may be issued.

5.     CALCULATION OF NET ASSET VALUE

       5.1 The net asset  value of the assets held in the Trust Fund and the net
asset value per Unit shall be  calculated by the Manager as at each business day
in Taipei  (a  "Valuation  Date") by  reference  to (inter  alia) the  following
criteria:

       5.2 The value of assets  held in the Trust  Fund,  other  than  cash,  or
assets not specified in (a) to (d) below which are  considered by the Manager to
be the effective equivalent of cash ("cash equivalents"), shall be determined as
follows:

       (a)    where  the  assets  are  listed  and  traded on the  Taiwan  Stock
              Exchange, by reference to the last dealt price on such exchange on
              the applicable  Valuation Date or, if there is no last dealt price
              on such  exchange  on that  date,  the  last  dealt  price on such
              exchange on or before the relevant Valuation Date;

       (b)    where the  assets are  bonds,  debentures  or notes not listed and
              traded on the Taiwan Stock Exchange, by reference to the valuation
              thereof on the  applicable  Valuation  Date by the Stock  Brokers'
              Association of Taipei, or, if there is no such valuation, at their
              par  value  plus  interest  accrued  but  unpaid  to the  relevant
              Valuation Date;

       (c)    where  the  assets  are  money  market  instruments,  at cost plus
              interest  accrued  but  unpaid  from the date of  purchase  to the
              applicable Valuation Date; and

       (d)    in any other case by reference to valuation procedures  consistent
              with guidelines from time to time laid down by the SEC.

       5.3 In the case of any interest-bearing  investment,  or other investment
on which income is accruing, not included within (b) or (c) above there shall be
included in the value  thereof all interest or other  income  accruing up to the
applicable Valuation Date.

       5.4 Cash and cash equivalents and amounts receivable and prepaid shall be
included at the full face or market value thereof.

       5.5  There  shall be made  such  allowance  (if any) as the  Manager  may
consider  appropriate  in the case of any asset which the Manager  considers may
not be fully recoverable.

       5.6 Unperformed or partially performed  agreements for the acquisition or
disposal of assets shall be treated as if they had been completely performed.

       5.7  Liabilities  shall  include  the  amount of any fee  payable  to the
Custodian  or the Manager as  contemplated  by Article 9 below and accrued at or
accruing to the applicable Valuation Date but remaining unpaid.

       5.8 The  number of Units  outstanding  at any time  shall  include  Units
scheduled  to be redeemed on or as of the  applicable  Valuation  Date but shall
exclude Units  scheduled to be issued on or as of the applicable  Valuation Date
but shall exclude Units scheduled to be issued on or as of that Valuation Date.

       5.9 With respect to acquisition or disposition transactions initiated but
not fully  consummated,  there may be  excluded  from the value of any assets in
respect of the acquisition or disposition of which  brokerage,  duties and other
similar  costs would fail to be paid out of the assets held in the Trust Fund if
they had been  acquired  or disposed  of, as the case may be, on the  applicable
Valuation  Date an amount not exceeding the Manager's  bona fide estimate of the
amount of such costs which would have been so payable.

       5.10 Any  currency  transaction  shall  be made at the rate  which is the
average of the rates of exchange quoted on the applicable  Valuation Date by the
Foreign  Exchange  Trading  Centre in Taipei as the rates for buying and selling
the one currency for the other.

       5.11  If  in  any   respect   extraordinary   circumstances   render   it
impracticable  or  inappropriate  to  conduct  a  valuation  on the basis of the
foregoing  provisions  of this  Article  5,  the  Manager  shall  to the  extent
necessary follow other valuation procedures consistent with guidelines from time
to time laid down by the SEC.

6.     REDEMPTION OF UNITS

       6.1  Subject to Article  6.2 and  relevant  laws and  regulations  of the
Republic of China governing foreign investment and foreign exchange control, the
Unitholder may redeem all or any of its Units by delivering  the  Certificate in
respect of the Units to be redeemed  together  with an  appropriate  request for
redemption  to the Manager at its principal  office in Taipei.  The amount to be
paid to the Unitholder upon any redemption of Units shall be the net asset value
per Unit as at the  Valuation  Date next  following  the date of  receipt by the
Manager of the applicable  redemption  request and the accompanying  Certificate
(such  Valuation  Date being a  "Redemption  Date")  multiplied by the number of
Units being redeemed.

       6.2 Such net asset value per Unit shall be calculated in accordance  with
Article 4 and Article 5 above except that: if the number of Units which, but for
this  provision,  would be subject to redemption on any Redemption  Date exceeds
ten (10)  percent of the  number of Units  issued  and  outstanding  immediately
before such Redemption Date, the Manager may limit the number of Units which are
redeemed  on such  Redemption  Date to ten (10)  percent  of the number of Units
issued and outstanding  immediately  before such Redemption  Date. In such case,
the Manager shall as reasonably  practicable  dispose of such assets as required
to redeem those Units subject to redemption but not redeemed on such  Redemption
Date.

       6.3 The Manager shall,  no later than 5 days after the  Redemption  Date,
cause the Custodian to pay the redemption proceeds to the Unitholder.

       6.4 When the  Unitholder  requests the redemption of less than all of the
Units  represented by the Certificate,  the Manager shall, in addition to making
redemption  payments in accordance with Article 6.3 above,  within fourteen days
after the  applicable  Redemption  Date,  issue  free of charge  therefor  a new
Certificate to represent the Units not requested to be redeemed.

7.     SUSPENSION OF VALUATION, ISSUES, REDEMPTIONS AND PAYMENTS

       7.1 The Manager may temporarily  suspend  valuation of the assets held in
the Trust Fund in the following events:

       (a)    when the  Taiwan  Stock  Exchange  is  closed  otherwise  than for
              ordinary  holidays  or  if  dealings  thereon  are  restricted  or
              suspended; or

       (b)    in the case of  breakdown of the means of  communication  normally
              used for the  valuation of any material part of the assets held in
              the Trust  Fund,  or if for any reason  the value of any  material
              part of the assets held in the Trust Fund may not be determined as
              rapidly and accurately as required; or

       (c)    when,  as a result of  political,  economic,  military or monetary
              reasons or of any circumstance  beyond the control of the Manager,
              disposal of assets held in the Trust Fund or  determination of the
              value of assets held in the Trust Fund and/or  liabilities  of the
              Trust Fund are to any material  extent not  reasonably or normally
              practicable.

       7.2 During such time as  valuation  is  suspended as specified in Article
7.1, no issue or  redemption of Units shall be made and no payment shall be made
of any  redemption  moneys  payable  but unpaid in respect of any Units  already
redeemed.

8.     EXPENSES

       8.1 The following items shall be the only costs and expenses  payable out
of the assets held in the Trust Fund:

       (a)    the acquisition price and brokerage, stamp duty and similar direct
              acquisition  costs of assets acquired for the account of the Trust
              Fund;

       (b)    brokerage,  stock  transfer  tax,  stamp duty and  similar  direct
              disposal costs arising on the disposal of assets held in the Trust
              Fund;

       (c)    all stamp and similar duties and charges payable from time to time
              in respect of the Trust Fund;

       (d)    all  expenses  incurred  in relation  to the  registration  of any
              assets in the name of the  Custodian  for the benefit of the Trust
              Fund;

       (e)    all expenses  properly incurred in the collection and distribution
              of income derived from assets held in the Trust Fund;

       (f)    all  fees and  expenses  of any  auditors  or  legal  advisers  in
              connection with the assets held in the Trust Fund;

       (g)    all  taxation  payable in respect  of income of  (including  stock
              dividends), or the holding of or dealings with assets held in, the
              Trust Fund;

       (h)    all proper  expenses  including  postage  and telex and  telephone
              costs incurred by the Custodian in connection with the acquisition
              or disposal of any assets held in the Trust Fund;

       (i)    any  compensation  payable  to the  Manager  or the  Custodian  as
              contemplated by Article 9 below;

       (j)    legal  fees  and  expenses   incurred  in   connection   with  the
              interpretation  or amendment for the benefit of the  Unitholder of
              this  Investment  Contract;  and  all  such  proper  costs  as are
              provided for in Articles 2.1(g) and 2.2(d);

       (k)    the cost relating to the publication of Unit prices and/or the net
              asset value,  and the printing,  mailing and similar costs for any
              regular report sent to the Unitholder;

       (l)    all  attestation  fees incurred in connection with the issuance of
              Certificates;

       (m)    all ordinary and necessary  expenses incurred by the Unitholder in
              connection  with its  organization,  the  public  offering  of its
              Shares to  investors  in the  United  States  and  elsewhere,  its
              registration and operation as a regulated investment company under
              the  Investment  Company  Act of 1940 and its  qualification  as a
              regulated  investment  company  under the United  States  Internal
              Revenue Code, all as described in the Prospectus of the Unitholder
              dated  December 16, 1986 used for the public  offering and sale of
              the  Unitholder's  shares  (together  with, and as supplemented or
              updated  by,  each  subsequent   Prospectus  used  for  subsequent
              offerings and sales of such shares, the "Prospectus"); and

       (n)    all other  necessary  and  appropriate  costs,  fees and  expenses
              incurred  by the Manager or the  Custodian  on behalf of the Trust
              Fund  or  the  Unitholder  in  the  course  of  performing   their
              respective  duties;  provided  that, the Manager and the Custodian
              shall each bear all expenses  associated  with the  performance of
              its duties hereunder  (including  employee  salaries and overhead)
              other than expenses to be paid out of the assets held in the Trust
              Fund as  specifically  provided in this  Article 8 and the Manager
              shall bear the fees and expenses of the Unitholder's  officers and
              directors who are interested persons of the Manager.

9.     MANAGEMENT AND CUSTODIAN FEES

       9.1 As compensation for the investment  management  services and expenses
borne by the Manager pursuant to this Investment Contract,  the Manager shall be
entitled  to  receive  out of the assets  held in the Trust  Fund a monthly  fee
payable in NT Dollars.  Such fee shall  consist of a basic fee (the "Basic Fee")
and performance  adjustments (the  "Performance  Adjustments"),  which may serve
either to increase or decrease the Basic Fee.

       (a)    The  Basic Fee shall be  computed  promptly  after the end of each
              month by  multiplying  (i) the  average  daily Net Fund  Value (as
              defined below) for such month by (ii) an annual rate of 1.30%. For
              any period of less than a full month during which this  Investment
              Contract  is in effect with  respect to the Trust Fund,  the Basic
              Fee shall be calculated by  multiplying  (i) the average daily Net
              Fund Value for such period  prorated  according to the  proportion
              that the  number  of  business  days in such  period  bears to the
              number of business days in such month times (ii) an annual rate of
              1.30%.  As used  herein,  "Net Fund Value" shall mean the value of
              the net assets of the Unitholder (including the assets held in the
              Trust Fund) calculated as described under "Net Asset Value" in the
              Prospectus.

       (b)    The Basic Fee shall be subject to upward or  downward  Performance
              Adjustments on the basis of investment performance, as follows:


       The  Performance   Adjustment  shall  be  made  by  multiplying  (x)  the
Applicable Performance Adjustment Rate times (y) the average Net Fund Value over
the performance  period.  The resulting  Performance  Adjustments  shall then be
added to or  subtracted  from the Basic Fee.  The  performance  periods  and the
Applicable Performance Adjustment Rates shall be calculated as follows:

              (1) First,  the  performance  period shall commence with the first
       business day of the first full month following the date upon which 75% or
       more of the assets constituting the Net Fund Value are invested in equity
       securities. During the first eleven (11) months thereafter there shall be
       no Performance Adjustment.  Starting with the twelfth month of operation,
       the Performance Adjustment shall take effect. Following the twelfth month
       a  new  month  shall  be  added  to  the  performance  period  until  the
       performance  period equals 36 months.  Thereafter the performance  period
       shall  consist  of  the  current  month  plus  the  previous  35  months.
       Notwithstanding  the  provisions of this Article  9.1(b)(1),  Performance
       Adjustments  under  this  Investment  Contract  shall  be made as if this
       Investment  Contract  were  a  continuation  of the  Original  Investment
       Contract  and  the  Interim  Investment  Contract,   rather  than  a  new
       Investment  Contract.  In  addition,  the  termination  of  the  Original
       Investment  Contract and the Interim  Investment  Contract shall not, for
       purposes  of the  last  paragraph  of  Article  9.1(b)  of  the  Original
       Investment  Contract  or the  Interim  Investment  Contract  be  deemed a
       termination thereof and thereby result in any prorated fee calculation.

              (2) Second,  compute  the  percentage  difference  between (a) the
       opening Net Fund Value per Share of the  Unitholder on the first business
       day of the performance period and (b) the sum of (1) the closing Net Fund
       Value per Share on the last  business  day of such  period  plus (ii) the
       value of the  Unitholder's  cash  distributions  to its  shareholders per
       Share made during the performance  period plus (iii) the value of capital
       gains  taxes per Share paid or payable by or on behalf of the  Unitholder
       on undistributed  realized long-term capital gains during the performance
       period.

              (3) Third,  compute the percentage change in Taiwan Stock Exchange
       Index (the "Index")  during such period.  In making such  computation the
       value  of cash  distributions  made  during  the  performance  period  by
       companies whose securities comprise the Index shall be accumulated to the
       end of such period and added to the closing value of the Index, with cash
       distributions  of the  securities  comprising  the Index being treated as
       reinvested in the Index as of the end of each calendar quarter  following
       the  payment  of the cash  distribution.  (In both such  computations  of
       percentages,  the  percentage  rate shall be rounded to the nearest  full
       basis point (0.01%)  (rounding up if a  computation  produces a result of
       exactly one-half basis point (0.005%))).

              (4) Fourth,  the Applicable  Performance  Adjustment Rate shall be
       the Applicable  Adjustment Percentage (as defined in (5) below) times the
       number  (whether  positive  or  negative)  obtained  by  subtracting  the
       percentage  change in the Index  during the  performance  period from the
       percentage  change in the Net Fund Value of a Share  during that  period,
       provided  that if the number thus  obtained  is greater  than ten (either
       positive of negative) the Applicable Performance Adjustment Rate shall be
       the Applicable  Performance  Adjustment Percentage times ten (positive or
       negative, as appropriate).

              (5) The Applicable  Adjustment  Percentage shall be an annual rate
       of 0.03%.


       In computing  the  investment  performance  of the Net Fund Value and the
investment  record  of the  Index,  distributions  of  realized  capital  gains,
dividends paid out of investment  income,  the value of capital gains' taxes per
share paid or payable on undistributed realized long-term capital gains, and all
cash  distributions  of the companies  whose stocks  comprise the Index shall be
treated as  reinvested  in  accordance  with Rule 205-1 or any other  applicable
rules under the United States Investment Advisers Act of 1940.


       In the case of  termination  of the Trust Fund, the transfer of the Trust
Fund to another  securities  investment trust enterprise,  or the termination of
this  Investment  Contract  during  any month,  the fee for that month  shall be
reduced proportionately on the basis of the number of business days during which
this Investment  Contract is in effect during that month.  The Basic Fee rate in
that month  shall be computed on the basis of and applied to the Net Fund Value,
averaged  over that  month and  ending on the last  business  day on which  this
Investment  Contract is in effect. The amount of the Performance  Adjustment (or
Adjustments)  shall be  computed  on the  basis of and  applied  to the Net Fund
Value,  averaged  over the 36-month  period  ending on the last  business day on
which this  Investment  Contract is in effect,  provided that if this Investment
Contract has been in effect for lass than 36 months,  the  computation  shall be
made on the basis of the period of time during  which this  Investment  Contract
has been in effect.

       9.2 As compensation for the custodial  services and expenses borne by the
Custodian pursuant to this Investment Contract,  the Custodian shall be entitled
to  receive  out of the  assets  held in the  Trust  Fund a fee  which  shall be
computed and paid promptly  after the end of each month by  multiplying  (i) the
average  daily net asset  value of the  assets  held in the Trust  Fund for such
month by (ii) an  annual  rate of 0.2%,  provided  that the  Custodian  shall be
entitled to receive a minimum annual fee of 2.0 million NT Dollars.

10.    INVESTMENT OBJECTIVES AND POLICIES AND RESTRICTIONS

       10.1 The  Unitholder's  investment  objective in placing  proceeds of its
offering in the Trust Fund is to seek  long-term  capital  appreciation  through
investment  primarily in equity securities of Republic of China companies listed
on the  Taiwan  stock  Exchange,  as more  fully  described  in the  Prospectus.
Investment  may  also be made in debt  securities  listed  on the  Taiwan  Stock
Exchange and in debt securities traded on the over-the-counter market.

       10.2 The assets held in the Trust Fund,  after having been  remitted into
the Republic of China and delivered to the Custodian,  shall be invested only in
securities  and money  market  instruments  denominated  in NT Dollars and in NT
Dollars cash and banking and similar  accounts,  except to the extent  otherwise
permitted by Republic of China law and regulations.

       10.3 The Manager  agrees  that it will not,  using the assets held in the
Trust Fund:

       (a)    Purchase  any  security  (other  than   obligations  of  the  U.S.
              Government, its agencies or instrumentalities,  subject to Article
              10.2),  if as a result:  (i) as to 75% of the  assets  held in the
              Trust  Fund,  more than 5% of the total  assets  held in the Trust
              Fund  (taken at their  current  value)  would then be  invested in
              securities of a single issuer, (ii) as to the remaining 25% of the
              assets held in the Trust Fund,  more than 10% of the total  assets
              held in the Trust Fund (taken at their  current  value) would then
              be invested in the  securities of a single issuer (except that the
              Manager  may invest  not more than 25% of the  assets  held in the
              Trust Fund in obligations  of the Republic of China  Government or
              its  agencies  or  instrumentalities),  (iii) more than 10% of the
              voting equity securities (at the time of such purchase) of any one
              issuer would be held in the Trust Fund,  and (iv) more than 25% of
              the total  assets held in the Trust Fund (taken at current  value)
              would be invested in a single industry; or

       (b)    purchase any equity  securities which, at the time the purchase is
              made, are not (i) listed and traded on the Taiwan Stock  Exchange,
              (ii)  purchased in initial public  offerings and secondary  public
              offerings but only if such securities will be listed on the Taiwan
              Stock  Exchange  immediately  following  such  offering,  or (iii)
              traded in the over-the-counter market in Taiwan; or

       (c)    purchase partnership interests; or

       (d)    borrow money or pledge the assets in the Trust Fund; or

       (e)    purchase  securities on margin,  except for short-term  credits as
              may be necessary for clearance of transactions; or

       (f)    make short sales of securities or maintain a short position; or

       (g)    buy or sell  commodities or commodity  contracts or real estate or
              interests  in real  estate,  except that it may enter into foreign
              currency exchange  contracts,  foreign currency futures contracts,
              and options on foreign  currencies  and foreign  currency  futures
              contracts for bona fide hedging purposes; or

       (h)    act as an underwriter of securities of other issuers; or

       (i)    make loans,  including loans of cash of portfolio  securities,  to
              any person; for purposes of this investment restriction,  the term
              "loans" shall not include the purchase of a portion of an issue of
              publicly distributed bonds, debentures of other securities; or

       (j)    purchase  securities  issued by any  issuer  which  owns,  whether
              directly or  indirectly  or in concert with another  person,  more
              than 5% of the equity securities (whether voting of non-voting) of
              the Adviser or which takes a significant role in the management of
              the Adviser; or

       (k)    issue senior securities; or

       (l)    purchase beneficiary certificates  representing interests in other
              ROC securities investment trust funds or effect any transaction in
              securities  with  another  ROC  securities  investment  trust fund
              managed by the Manager.

       10.4 Nothing in Article 10.3 above shall require the sale or  disposition
of any  relevant  assets  held in the Trust Fund  where any of the  restrictions
there set out is  breached  as a result of any event  outside the control of the
Manager  and  occurring  after the  investment  in the  relevant  assets is made
(including  but  not  limited  to  redemptions  of  Units  or  securities,   any
reorganization  or  amalgamation  of  any  company  and  the  suspension  of any
listing),  but no further  relevant  assets shall be acquired until the relevant
limitation  can again be  complied  with,  except  pursuant  to the  exercise of
subscription  rights to purchase  securities of an ROC issuer at a time when the
Fund's  portfolio  holdings  of  securities  of that  issuer  (or that  issuer's
industry) would otherwise exceed the limits set forth in clause (i), (ii), (iii)
or  (iv) of  Article  10.3(a),  where  prior  to such  exercise  and  after  the
announcement of such rights, the Manager sells at least the number of securities
which it subsequently purchases through the exercise of the rights.

       10.5 To not less than the extent (if any) from time to time  required  by
the SEC a  proportion  of the assets held in the Trust Fund shall be retained at
all times in liquid form in assets of a type specified by the SEC.

       10.6 The Manager shall not hold or have an interest in securities  issued
by the  Unitholder  or securities  issued by any  investment  fund  investing in
Republic of China securities in the management of which the Manager participates
or has an interest.

       10.7 To the maximum  possible  extent all  transactions  in assets in the
Trust Fund shall be carried out through  stock  exchanges  and other  officially
designated  markets.  Subject to any limitations  which may be imposed under the
U.S.  Investment  Company  Act of 1940 and any  rules  and  regulations  adopted
thereunder,  such  transactions  may be  carried  out  through a broker who is a
connected  person of the  Manager to such  extent as the  Manager  may think fit
provided  that the cost  thereof is not greater  than it would have been had the
transactions been carried out through a broker who was not a connected person.

11.    DURATION, CHANGES IN MANAGER AND CUSTODIAN, AND TERMINATION

       11.1 The  Trust  Fund is  established  for an  unspecified  period.  This
Investment Contract shall become effective on August 22, 2001 and shall continue
in effect until  August 22,  2003.  If not sooner  terminated,  this  Investment
Contract  shall  continue  in effect for  successive  periods of 12 months  each
thereafter,  provided that each such continuance shall be specifically  approved
annually by the vote of a majority of the  Unitholder's  Board of Directors  who
are not parties to this Investment  Contract or interested persons (as such term
is defined in the U.S.  Investment  Company Act of 1940) of any such party, cast
in person at a meeting called for the purpose of voting on such approval and (a)
either  the vote of a  majority  of the  outstanding  voting  securities  of the
Unitholder, or (b) a majority of the Unitholder's Board of Directors as a whole.
Notwithstanding the foregoing, this Investment Contract may be terminated at any
time by the  Unitholder,  without the payment of any  penalty,  upon a vote of a
majority of the Unitholder's Board of Directors or a majority of the outstanding
voting  securities of the  Unitholder,  or by the Manager or the  Custodian,  on
sixty (60) days' written notice to the other parties.  This Investment  Contract
shall  automatically  terminate in the event of its  assignment (as such term is
defined in the U.S. Investment Company Act of 1940). Any transfer, assignment or
other  disposition  of any of the Units by the  Unitholder  shall  constitute an
assignment of this Investment  Contract.  As used herein the phrase "majority of
the outstanding  voting securities" shall have the meaning set forth in the U.S.
Investment  Company Act of 1940. In addition,  this  Investment  Contract  shall
automatically  terminate  if either the Manager or the  Custodian  is removed as
provided in this Article 11.

       11.2 The Investment Contract shall also terminate if

       (a)    the SEC by notice in writing to the Manager  and/or the  Custodian
              so requires; or

       (b)    the Manager  notifies the  Unitholder,  the  Custodian and the SEC
              that  in its  opinion  further  operation  of the  Trust  Fund  in
              accordance with this Investment Contract is illegal, impracticable
              or  inadvisable  having  regard  solely  to the  interests  of the
              Unitholder.

       11.3  Upon  termination  of  this  Investment  Contract,   unless  a  new
Investment  Contract is entered into (as provided in Article 11.7),  the Manager
shall, within three (3) months after the effective date of termination, promptly
dispose  of assets  held in the Trust Fund at  reasonable  prices,  satisfy  any
liabilities  relating to the Trust Fund, and distribute the available balance to
the Unitholder.

       11.4 The SEC may order that the Manager or  Custodian be removed and that
a new Manager or Custodian be appointed  within six months if the SEC  considers
that the Manager or (as the case may be) the  Custodian is incapable of carrying
out its functions properly.

       11.5 The Manager and/or the Custodian may be removed by the Unitholder by
60 days' written notice to the other parties hereto.

       11.6 If either the  Manager or the  Custodian  goes into  liquidation  or
bankruptcy or if its permit to act as Manager or Custodian has been revoked,  it
shall be deemed to have been  forthwith  removed  as Manager or (as the case may
be) Custodian.

       11.7  If  the  Manager  and/or  Custodian  is  removed  or  resigns,  the
Unitholder  may  appoint a new  Manager  and/or  Custodian  and enter into a new
Investment  Contract  containing  substantially the same terms and conditions as
this Investment Contract.  The appointment of a new Manager shall be approved by
the Custodian  and by the SEC and the  appointment  of a new Custodian  shall be
approved  by the Manager  and by the SEC,  provided  that if the SEC has, in the
circumstances  specified in the  Regulations  Governing  the  Administrating  of
Securities  Investment Trust Funds (effective  August 10, 1983), as from time to
time amended,  required the  appointment of a new Manager or a new Custodian and
the Unitholder  has not appointed a new Manager or a new Custodian  within three
months after the SEC has so required,  the SEC may require the  liquidation  and
distribution of the assets held in the Trust Fund as provided in Article 11.3.

12.    ACCOUNTS AND STATEMENTS

       12.1 The  Manager  shall  maintain  in its  principal  office  in  Taipei
sufficient  accounts and records to enable a complete  and  accurate  view to be
formed of the assets and liabilities and the income and expenditure of the Trust
Fund, all transactions for the account of the Trust Fund and amounts received in
the Trust  Fund in  respect  of issues of Units and paid out on  redemptions  of
Units and by way of distributions.

       12.2 The Manager shall prepare financial statements of the Trust Fund for
successive  accounting  periods,  each accounting period commencing  immediately
after the end of the last  preceding such  accounting  period (as in the case of
the first such  period  from the date of  establishment  of the Trust  Fund) and
ending on  December  31 in each year (the  "final  statements")  and shall  also
prepare such  financial  statements as at and for the monthly  periods ending on
the last day of each  calendar  month (which  monthly  reports shall be prepared
within ten days  after the end of each  month),  in each case in the  respective
forms and containing the information for the time being required by the SEC.

       12.3 The Manager shall:

       (a)    cause  the  final  statements  to be  audited  by a person or firm
              authorized  under  the  laws  of the  Republic  of  China  and the
              regulations of the SEC ("Auditors");

       (b)    submit  the final  statements,  together  with such  report as the
              Manager may intend to make to the  Unitholder in relation  thereto
              and the  Auditors'  report  thereon,  to the SEC for  comment  and
              approval   within  two  months  after  the  end  of  the  relevant
              accounting period;

       (c)    comply with such  requirements  as the SEC may make in relation to
              such  statements  and report  within  two weeks  after the date on
              which such requirements are made; and

       (d)    send to the  Unitholder  and to the SEC,  copies of all such final
              statements  within  twelve  weeks  after  the end of the  relevant
              accounting period.

       12.4 The Manager shall sign and the Custodian shall countersign all final
and monthly statements which shall then be published in Taipei.

       12.5 The Auditors' report on the final statements of the Trust Fund shall
be in the form required by the SEC and where  relevant shall indicate the extent
to which such a report cannot be given and the reasons therefor.

13.    DISTRIBUTIONS

       13.1  Distributions of income in respect of each accounting  period ended
December 31, will be made not later than March 31 in the next  following year to
the  Unitholder.  Distributions  may not be made out of capital.  The Manager in
conjunction  with  the  Auditors  shall  determine  what is  income  and what is
capital,  except that stock  dividends  and gains  (realized or  unrealized)  on
investments  shall not be  regarded  as income and  realized  discounts  on debt
securities  and money market  instruments  may be regarded as income.  Costs and
expenses payable out of the assets held in the Trust Fund may be charged against
income or capital as the Manager in conjunction with the Auditors may determine,
provided  that the  allocation  of such  costs and  expenses  as to income or to
capital shall be consistent from year to year. When expenses are charged against
capital,  they may be  amortized  on a  straight  line  basis  over a period not
exceeding five years.

       13.2 The  aggregate  amount of each  distribution  shall be credited to a
separate  account in the name of the Custodian  and such amount shall  thereupon
cease to form part of the assets of the Trust  Fund  accordingly,  but  interest
earned on such amount  pending  payment  shall be paid into and form part of the
assets of the Trust Fund.

14.    CURRENCY

       14.1 The accounts and records of the Trust Fund shall be maintained in NT
Dollars,  payments into the Trust Fund on the issue of Units and payments out of
the Trust Fund on the redemption of Units and by way of  distributions  shall be
made in NT Dollars,  the net asset  value of the assets held in the.  Trust Fund
shall be  calculated in NT Dollars,  and the  financial  statements of the Trust
Fund shall be prepared in NT Dollars.

15.    INFORMATION AND NOTICES

       15.1 There shall be held  available for  inspection by any person without
charge at the  principal  office  of the  Manager  in  Taipei at all  reasonable
business hours copies of:

       (a)    this Investment Contract as from time to time amended;

       (b)    the current sales prospectus (if any) in relation to Shares of the
              Unitholder;

       (c)    all  interim  and final  statements,  together  with any  relevant
              Auditors' reports and reports of the Manager relative thereto, for
              the two latest  accounting  periods of the Trust Fund or (if less)
              for all periods since the establishment of the Trust Fund, and all
              interim and final statements for such periods.

       15.2  All  notices  to the  Unitholder  shall be sent to it by hand or by
airmail at its registered address.

       15.3 The  Manager  shall at all times  maintain  an office or  offices in
Taipei and shall  notify  the  Unitholder  of any  change in the  address of its
principal office in Taipei for the time being.

16.    AMENDMENTS

       This  Investment  Contract  shall be amended only with the prior  written
agreement of the  Manager,  the  Custodian  and the  Unitholder,  subject to the
approval of the SEC, and subject to approval in accordance  with applicable U.S.
law.

       Notwithstanding  the  foregoing,  if any of the parties to this Agreement
changes its name, such changed name shall be automatically substituted therefore
hereunder.

17.    CONNECTED PERSONS

       For the  purposes of this  Investment  Contract,  a person is a connected
person of another if:

       (a)    together  with  any  person  acting  in  concert  with  it in this
              connection, it owns or otherwise controls for its own account, and
              directly or indirectly, an interest of more than five percent (5%)
              (or,  in the case of an  interest  of the  Custodian,  ten percent
              (10%)) of that other, whether or not a voting interest; or

       (b)    it is a director or supervisor of or takes any significant  active
              role in the management of that other.

18.    ATTACHMENT

       The  Attachment  I  hereto  (a  list of the  Board  of  Directors  of the
Unitholder) shall be regarded as part of this Investment Contract. Any directors
listed  therein  can be  replaced  from  time  to time in  accordance  with  the
procedures applicable to a Delaware corporation.

19.    GOVERNING LAW, JURISDICTION AND LANGUAGE

       19.1 The Trust Fund, this Investment  Contract and the Certificate  shall
be governed by, and this Investment  Contract and the  Certificate  construed in
accordance with, the laws of the Republic of China.

       19.2 Any dispute  arising  out of or in respect of the Trust  Fund,  this
Investment  Contract  or the  Certificate  shall be subject to the  nonexclusive
jurisdiction of the courts of the Republic of China having original jurisdiction
and, in the case of any action against the Manager or the  Custodian,  any court
having original  jurisdiction in the place in which the Manager of the Custodian
has its principal office.

       19.3 The governing language of this Investment Contract shall be Chinese,
but documents  issued in relation to the Trust Fund may be in either the Chinese
or the English language.



<PAGE>



20.    EFFECTIVE DATE

       This Investment Contract shall become effective on the date hereof.

Dated:   August 22, 2001

                                           HSBC ASSET MANAGEMENT (TAIWAN)
                                           LIMITED, AS MANAGER



                                           By: /s/   I. Ming Lin
                                                  ------------------------------

                                           THE INTERNATIONAL COMMERCIAL BANK
                                              OF CHINA, AS CUSTODIAN



                                           By: /s/   Shih-Gin Chen
                                                  ------------------------------

                                           THE TAIWAN FUND, INC.
                                              (The Unitholder)



                                           By:       Haichi Vicki Hau
                                              ----------------------------------



<PAGE>


                                                                       EXHIBIT A

                                                                    (Front page)

                            (Beneficiary Certificate)

                     HSBC Asset Management (Taiwan) Limited

                                Taiwan Trust Fund

Date of Issue:

Manager  ..................                       Custodian
-------                                           ---------

HSBC Asset Management (Taiwan) Limited      International Commercial Bank of
99 Tunhwa South Rd.                         China
Section 2                                   100 Chilin Road
Taipei, Taiwan ROC                          Taipei, Taiwan, ROC



Name of the Holder of this.                     Total Number of Units Comprised
Beneficiary Certificate:...                     by this Beneficiary Certificate:

The Taiwan Fund, Inc.......
                                                --------------------------------
225 Franklin St............                     (There is no charge for the
Boston, Massachusetts USA..                     issuance of this certificate)

         ..................

Other Notes:
-----------

1.       This Certificate acknowledges receipt by the Manager and the Custodian
         of the funds constituting the Units referred to herein, and is issued
         in accordance with the provisions of the Regulations Governing the
         Administration of Securities Investments Trust Funds of the Republic of
         China and the Securities Investment Trust-Investment Management and
         Custodian Contract dated December 16, 1986, as superseded (the
         "Investment Contract"). The Unitholder will be entitled to repatriate
         the earnings and principal in respect of Units in accordance with the
         provisions of the Regulations Governing Securities Investment by
         Overseas Chinese and Foreign Investors and Procedures for Remittance.

2.       Reference should be made to the relevant ROC regulations relating to
         securities investment trusts, the Investment Contract and the
         Prospectus dated December 16, 1986 (as superseded by later
         Prospectuses) published by The Taiwan Fund, Inc.



<PAGE>


                                                                  (Reverse page)

                            (Beneficiary Certificate)

1.       Investment Policy and Scope


         The investment objective of the Taiwan Trust Fund (the "Trust Fund") is
to achieve capital appreciation through investment in securities listed on the
Taiwan Stock Exchange, money market instruments, government bonds, and
debentures.

2.       Duration of the Trust Fund


         The duration of the Trust Fund shall be determined in accordance with
the provisions of the Investment Contract.

3.       Calculation and Announcement of the Net Asset Value per Unit
         ------------------------------------------------------------


         The net asset value per Unit of the Trust Fund is calculated in NT$ by
dividing the value of the assets of the Trust Fund less its liabilities by the
number of Units in issue and rounding any fraction of NT$l up or down to the
nearest NT Dollar (NT$0.5 being rounded up). The net asset value per Unit is
calculated and published on a daily basis.

4.       Redemption


         After one year from the date of issue, the Holder of the Units
comprised in this Certificate may apply for redemption by submitting this
Certificate to the Manager or its agent together with a written application. The
redemption price will be the net asset value per Unit as calculated in
accordance with the method specified in the preceding paragraph on the next
valuation date following the receipt of the redemption application by the
Manager or its agent less the Manager's assessment of the cost of realizing an
appropriate amount of the Trust Fund's assets. Redemption proceeds will normally
be paid out within five days after the valuation date.

5.       Fees Payable to the Manager and the Custodian
         ---------------------------------------------


         The Manager shall be entitled to receive out of the assets held in the
Trust Fund a monthly fee payable in NT Dollars. Such fee shall consist of a
basic fee and performance adjustments, as more fully described in the Investment
Contract. The Custodian shall be entitled to receive out of the assets held in
the Trust Fund an annual fee (payable monthly) equal to 0.2% of the average
daily net asset value of the assets held in the Trust Fund, subject to a minimum
annual fee of 2.0 million NT Dollars.

6.       Distribution


         Distributions of income will be made within three months after the
close of each fiscal year to the Unitholder. Capital gains and stock dividends
will not be considered as income.

7.       Liquidation


         Upon expiration of the term of this Trust Fund or termination of the
Investment Contract, the Manager shall, within three months, liquidate the Trust
Fund and distribute the available balance to the Unitholder according to its
entitlements.

8.       Amendment and Termination of the Investment Contract


         The Investment Contract may be amended with the prior approval of the
Securities and Exchange Commission, by the Manager and the Custodian with the
approval of the Unitholder. The Investment Contract may be terminated in
accordance with provisions of the relevant Republic of China Securities
Investment Trust Fund regulations and provisions of the Investment Contract.



<PAGE>


                                  ATTACHMENT I

Board of Directors of The Taiwan Fund, Inc.:

David Dean

Benny T. Hu

Lawrence J. Lau

Joe O. Rogers

Jack C. Tang

Gloria Wang

Shao-Yu Wang

Lawrence F. Weber


<PAGE>

                                                                       EXHIBIT 2



                               INVESTMENT ADVISORY
                            AND MANAGEMENT AGREEMENT


       THIS AGREEMENT dated as of August 22, 2001 between THE TAIWAN FUND, INC.,
a Delaware  corporation (the "Fund"), and HSBC ASSET MANAGEMENT (TAIWAN) LIMITED
("HSBC Taiwan")  (formerly China  Securities  Investment Trust  Corporation),  a
Republic of China ("ROC")  corporation  ("HSBC Taiwan" or the "Adviser")  having
its principal office in Taipei, Taiwan, ROC.

       WHEREAS,  the Fund is a  diversified,  closed-end  management  investment
company  registered  under the Investment  Company Act of 1940 (the "1940 Act"),
and the  Adviser  is an  investment  adviser  registered  under  the  Investment
Advisers  Act of  1940  (the  "Advisers  Act"),  and is  authorized  by the  ROC
Securities and Exchange Commission (the "CSEC") to conduct business in the ROC;

       WHEREAS,  the Fund, the Adviser and the International  Commercial Bank of
China  ("ICBC")  have  entered  into a  Securities  Investment  Trust-Investment
Management  and Custodian  Contract dated of even date herewith (as the same may
be amended or modified,  the "Management  Contract") providing for management by
the Adviser of assets of the Fund held in the ROC;

       WHEREAS,  certain  of the  assets  of the Fund may be held in the  United
States, either pending remittance to the ROC of the net proceeds of any offering
of the Common  Stock of the Fund,  or after  distribution  to the Fund under the
Management Contract (whether as investment income or unit redemption  proceeds),
or upon  borrowing by the Fund from a bank in the United States for temporary or
emergency  purposes,  or  otherwise as permitted  under  applicable  ROC law and
regulations  (such  assets  of the Fund  being  referred  to herein as the "U.S.
Assets"); and

       WHEREAS,  the Fund  desires to retain the  Adviser to furnish  investment
advisory and management services for the Fund's assets in the United States, and
the Adviser is willing to furnish such services;

       NOW  THEREFORE,  in  consideration  of the premises and mutual  covenants
herein contained, it is agreed between the parties as follows:

       1.  Appointment  of the Adviser.  The Fund appoints the Adviser to act as
investment  adviser to the Fund with  respect to the U.S.  Assets for the period
and on the  terms  set  forth  in  this  Agreement.  The  Adviser  accepts  such
appointment  and  agrees  to  furnish  the  services  herein  set  forth for the
compensation provided.

       2. Custodian.  The State Street Bank and Trust (the "U.S. Custodian") has
been retained by the Fund to act as custodian for the U.S. Assets. The Fund will
deliver to the U.S. Custodian a photocopy of this Agreement executed by the Fund
and the Adviser.

       3. Investment  Advisory and Management  Services.  The Adviser undertakes
and agrees:

              (a) To manage the investment of the U.S. Assets for the exclusive,
       full  benefit  of  the  Fund  (including  making  investment   decisions,
       supervising the  acquisition and disposition of investments,  instructing
       the U.S. Custodian with respect thereto and otherwise with respect to the
       U.S. Assets held by the U.S. Custodian,  and selecting brokers or dealers
       to carry out portfolio transactions) in good faith and to the best of its
       ability  and  without  gaining  any  advantage  for  itself or any of its
       Connected  Persons (as defined in Article 17 of the Management  Contract)
       thereby except as expressly  provided in this Agreement or the Management
       Contract,  all in accordance with the investment  objectives and policies
       set forth in the Management  Contract and in accordance  with  guidelines
       and directions from the Fund's Board of Directors;

              (b) To  account  to the  Fund  for any  loss in  value of the U.S.
       Assets  where  such loss has been  caused  by its  willful  or  negligent
       default or reckless disregard of its duties hereunder;

              (c) To be  responsible  to the Fund for the acts and  omissions of
       all persons to whom it may delegate  any of its  functions as the Adviser
       as if they were its own acts and omissions;

              (d)  Notwithstanding and without prejudice to any other provisions
       of this Agreement, to, and to instruct all brokers used by the Adviser in
       relation  to the sale or  purchase  of assets for the account of the Fund
       to, act in  accordance  with the best practice  then  applicable  for the
       settlement of sales and purchases of  securities  and other  investments;
       and

              (e) To perform its  obligations  under this Agreement so as to (i)
       comply  with all laws and  regulations  of the United  States and the ROC
       applicable  to the  Adviser  and (ii)  permit  the Fund to  qualify  as a
       regulated investment company under applicable United States tax law.

       4.  Compensation.  The Adviser  acknowledges  that the compensation to be
paid to it pursuant to Article 9 of the  Management  Contract  shall  constitute
full and sufficient  compensation for performance by it of its obligations under
this Agreement.

       5. Expenses.  Expenses shall be borne by the Adviser in accordance  with,
and to the extent provided under, Article 8 of the Management Contract.

       6. Duration and Termination. (a) This Agreement shall become effective on
the date first above  written,  and shall  continue in effect  until  August 22,
2003. If not sooner  terminated,  this  Agreement  shall  continue in effect for
successive  periods  of 12  months  each  thereafter;  provided  that  each such
continuance shall be specifically approved annually by the vote of a majority of
the  Fund's  Board  of  Directors  who are not  parties  to  this  Agreement  or
interested  persons (as such term is defined in the 1940 Act) of any such party,
cast in person at a meeting  called for the  purpose of voting on such  approval
and (i) either the vote of a majority of the  outstanding  voting  securities of
the Fund,  or (ii) a  majority  of the  Fund's  Board of  Directors  as a whole.
Notwithstanding  the foregoing,  this Agreement may be terminated at any time by
the Fund,  without  the payment of any  penalty,  upon vote of a majority of the
Fund's Board of Directors or a majority of the outstanding  voting securities of
the Fund,  or by the Adviser,  on sixty (60) days'  written  notice to the other
party.  This  Agreement  shall  automatically  terminate  in  the  event  of its
assignment  (as such term is defined in the 1940 Act). As used herein the phrase
"majority of the outstanding voting securities" shall have the meaning set forth
in the 1940 Act. In addition,  this Agreement shall  automatically  terminate if
the Adviser is removed as provided in Article 11 of the Management Contract.

              (b) Without  limitation  of the  provisions  of clause  (a),  this
       Agreement  shall also  terminate  upon the  termination of the Management
       Contract in accordance with the provisions thereof.

              (c) Upon termination of this Agreement,  unless a new Agreement is
       entered into (as provided in clause (f)), the Adviser shall, within three
       months after the effective date of termination,  promptly dispose of U.S.
       Assets at  reasonable  prices,  satisfy any  liabilities  relating to the
       Fund, and distribute the available balance to the Fund.

              (d) The  Adviser  may be removed  by the Fund by 60 days'  written
       notice.

              (e) If the Adviser goes into  liquidation or bankruptcy,  or if it
       ceases to be registered as an investment  adviser under the Advisers Act,
       or if its ROC permit to act as Manager under the Management  Contract has
       been  revoked,  it shall be  deemed  to have been  forthwith  removed  as
       Adviser.

              (f) If the Adviser is removed or  resigns,  the Fund may appoint a
       new Adviser and enter into a new Agreement  containing  substantially the
       same terms and conditions as this  Agreement,  subject to satisfaction of
       the  requirements  set forth in, and subject to the provisions of Article
       11.7 of the Management Contract.

              (g)  This  Agreement  shall  continue  in full  force  and  effect
       notwithstanding the resignation or removal of ICBC, or any successor,  as
       Custodian under the Management Contract.

       7.  Liability  of the  Adviser.  The  Adviser  may  rely  on  information
reasonably  believed by it to be accurate and reliable.  Except as may otherwise
be provided by the 1940 Act, neither the Adviser nor its stockholders, officers,
directors, employees or agents shall be subject to, and the Fund shall indemnify
and hold such persons  harmless  from and  against,  any  liability  for and any
damages,  expenses or losses  incurred in connection with any act or omission in
the course of,  connected  with or arising  out of any  services  to be rendered
hereunder,  except  by  reason  of  willful  misfeasance,  bad  faith  or  gross
negligence in the  performance of the Adviser's  duties or by reason of reckless
disregard  of  the  Adviser's   obligations  and  duties  under  this  Agreement
("disabling  conduct");   provided  that  the  Adviser  shall  not  receive  any
indemnification  from  the  Fund  against  any  liability  to  the  Fund  or its
shareholders  to which the Adviser would  otherwise be subject  unless there has
been (1) a final decision on the merits by a court or other body before whom the
proceeding  alleging  liability  of the Adviser was brought that the Adviser was
not liable by reason of disabling  conduct,  or (2) a reasonable  determination,
based upon a review of the facts,  that the  Adviser was not liable by reason of
disabling  conduct,  by (i) the vote of a  majority  of a quorum  of the  Fund's
directors who are neither "interested directors" as defined in the United States
Investment  Company Act of 1940 nor parties to the  proceeding  ("disinterested,
non-party  directors"),  or (ii)  an  independent  legal  counsel  in a  written
opinion;  and provided further that, the Adviser shall not receive an advance of
attorneys'  fees or other  expenses  incurred by it in  defending  a  proceeding
alleging such liability  except upon the undertaking of the Adviser to repay the
advance   unless  it  is   ultimately   determined   that  it  is   entitled  to
indemnification, but only if at least one of the following is also required as a
condition  to the  advance:  (1) the Adviser  shall  provide a security  for its
undertaking,  (2) the Fund shall be insured  against losses arising by reason of
any  lawful  advances,  or (3) a  majority  of a  quorum  of the  disinterested,
non-party  directors of the Fund, or an  independent  legal counsel in a written
opinion,  shall  determine,  based on a review of  readily  available  facts (as
opposed to a full trial-type inquiry),  that there is reason to believe that the
Adviser ultimately will be found entitled to indemnification.

       8.  Services Not  Exclusive.  It is  understood  that the services of the
Adviser  are not deemed to be  exclusive,  and nothing in this  Agreement  shall
prevent the Adviser,  or any affiliate thereof,  from providing similar services
to other investment companies and other clients (whether or not their investment
objectives  and policies  are similar to those of the Fund) or from  engaging in
other activities. When other clients of the Adviser desire to purchase or sell a
security  at the same time  such  security  is  purchased  for the  Fund,  it is
understood  that  such  purchases  and  sales  and  will be made  as  nearly  as
practicable  on a pro rata  basis in  proportion  to the  amounts  desired to be
purchased or sold by each client.

       9. Miscellaneous.

              (a)  This  Agreement  shall  be  governed  by and  constructed  in
       accordance with the laws of the State of Delaware;  provided that nothing
       herein shall be construed as being  inconsistent with (i) the 1940 Act or
       the  Advisers Act or  regulations  issued  under such  statutes,  or (ii)
       applicable ROC law and regulations.

              (b) The captions in this  Agreement  are included for  convenience
       only and in no way  define or  delimit  any of the  provisions  hereof or
       otherwise affect their instruction or effect.

              (c) If any  provision  of  this  Agreement  shall  be held or made
       invalid by a court decision, statute, rule or otherwise, the remainder of
       this  Agreement  shall not be affected  thereby and, to this extent,  the
       provisions of this Agreement shall be deemed to be severable.

              (d) Nothing herein shall be construed as constituting  the Adviser
       an agent of the Fund.

              (e) If any of the parties to this Agreement changes its name, such
       changed name shall be automatically substituted therefore hereunder.


       IN WITNESS WHEREOF,  the parties hereto have caused this instrument to be
executed as of the day and year first above written.



                                          HSBC ASSET MANAGEMENT (TAIWAN) LIMITED




                                          By:      I. Ming Lin
                                              ----------------------------------




                                          THE TAIWAN FUND, INC.





                                          By:      Haichi Vicki Hau
                                              ----------------------------------



<PAGE>


                                                                       EXHIBIT 3

                                                                 English Version




                              THE TAIWAN TRUST FUND

                          SECURITIES INVESTMENT TRUST -

              INTERIM INVESTMENT MANAGEMENT AND CUSTODIAN CONTRACT



                                 August 6, 2001



<PAGE>

                              THE TAIWAN TRUST FUND

                          SECURITIES INVESTMENT TRUST -

              INTERIM INVESTMENT MANAGEMENT AND CUSTODIAN CONTRACT



                                      INDEX

ARTICLE                                                                     PAGE
-------                                                                     ----


1.       INTRODUCTION AND POLICY...............................................1

2.       BASIC OBLIGATIONS AND RIGHTS..........................................1

3.       ASSETS HELD IN THE TRUST FUND.........................................3

4.       UNITS.................................................................4

5.       CALCULATION OF NET ASSET VALUE........................................5

6.       REDEMPTION OF UNITS...................................................6

7.       SUSPENSION OF VALUATION, ISSUES, REDEMPTIONS AND PAYMENTS.............7

8.       EXPENSES..............................................................7

9.       MANAGEMENT AND CUSTODIAN FEES.........................................8

10.      INVESTMENT OBJECTIVES AND POLICIES AND RESTRICTIONS..................10

11.      DURATION, CHANGES IN MANAGER AND CUSTODIAN, AND TERMINATION..........12

12.      ACCOUNTS AND STATEMENTS..............................................13

13.      DISTRIBUTIONS........................................................14

14.      CURRENCY.............................................................14

15.      INFORMATION AND NOTICES..............................................14

16.      AMENDMENTS...........................................................15

17.      CONNECTED PERSONS....................................................15

18.      ATTACHMENT...........................................................15

19.      GOVERNING LAW, JURISDICTION AND LANGUAGE.............................15

20.      EFFECTIVE DATE.......................................................16



<PAGE>

               SECURITIES INVESTMENT TRUST - INTERIM INVESTMENT

                        MANAGEMENT AND CUSTODIAN CONTRACT

1.     INTRODUCTION AND POLICY

       1.1 The Taiwan Trust Fund (the "Trust  Fund") is a securities  investment
trust fund established under the laws of the Republic of China for the exclusive
benefit of The Taiwan Fund,  Inc.  (the  "Unitholder")  of 225 Franklin  Street,
Boston, Massachusetts on the basis of this Securities Investment Trust - Interim
Investment Management and Custodian Contract (the "Interim Investment Contract")
among, China Securities Investment Trust Corporation ("CSITC" or the "Manager"),
of 99 Tunhwa  South Rd.,  Section 2,  Taipei,  Taiwan,  Republic  of China,  The
International  Commercial  Bank of China (the  "Custodian")  of 100 Chilin Road,
Taipei,  Taiwan,  Republic of China and the Unitholder.  This Interim Investment
Contract,  together with relevant  provisions of the laws and regulations of the
Republic of China,  alone shall govern the relationship,  which is a contractual
relationship  (the Trust Fund is not a separate legal entity) among the Manager,
the Custodian and the Unitholder.  This Interim Investment  Contract  supersedes
and  replaces  the  Securities  Investment  Trust -  Investment  Management  and
Custodian Contract dated December 16, 1986, as amended (the "Original Investment
Contract"),  which contains  substantially the same terms and conditions as this
Interim Investment Contract. This Interim Investment Contract was made necessary
by a change in control of CSITC  which  automatically  terminated  the  Original
Investment Contract on August 6, 2001.

       1.2 The investment objective of establishing the Trust Fund is to achieve
for  the  benefit  of  the  Unitholder  capital  growth  through  investment  in
securities listed on the Taiwan Stock Exchange, and other debentures, government
bonds and money market instruments.

2.     BASIC OBLIGATIONS AND RIGHTS

       2.1 The obligation and duties of the Manager are as follows:

              (a) The Manager shall be obligated to manage the investment of the
       assets held by the  Custodian in the Trust Fund for the  exclusive,  full
       benefit  of  the  Unitholder   (including  making  investment  decisions,
       supervising the  acquisition and disposition of investments,  instructing
       the  Custodian  with respect  thereto and  otherwise  with respect to the
       assets held in the Trust Fund, and selecting  brokers or dealers to carry
       out portfolio  transactions) in good faith and to the best of its ability
       and without  gaining  any  advantage  for itself or any of its  Connected
       Persons  (as  defined in Article 17 below)  thereby  except as  expressly
       provided in this Interim Investment Contract,  all in accordance with the
       Trust Fund's  investment  objectives and policies and in accordance  with
       guidelines and directions from the Unitholder's Board of Directors;

              (b) The Manager  shall be obligated  to account to the  Unitholder
       for any loss in value of  assets of the Trust  Fund  where  such loss has
       been caused by its willful or negligent  default,  reckless  disregard of
       its duties hereunder or bad faith;

              (c) The Manager shall be  responsible  to the  Unitholder  for the
       acts and  omissions  of all  persons to whom it may  delegate  any of its
       functions as Manager as if they were its own acts and omissions;

              (d) The  Manager  shall  promptly  report  to the  Securities  and
       Exchange  Commission  of the Ministry of Finance of the Republic of China
       (the "SEC") and to  Unitholder  any matter  which,  in the opinion of the
       Manager,  is an actual or  anticipated  breach by the Custodian of any of
       the  provisions  of this Interim  Investment  Contract or of any relevant
       provisions of the laws and regulations of the Republic of China;

              (e) The Manager shall, to the extent  permitted by the laws of the
       Republic  of China,  take such  action to enforce on behalf,  and for the
       benefit,  of the Unitholder the  obligations of the Custodian  under this
       Interim  Investment  Contract as it shall think fit or as shall from time
       to time be required by the SEC or the Unitholder;

              (f)  Notwithstanding and without prejudice to any other provisions
       of this  Interim  Investment  Contract,  the  Manager  shall,  and  shall
       instruct  all  brokers  used by the  Manager in  relation  to the sale or
       purchase  of  assets  for  the  account  of the  Trust  Fund  to,  act in
       accordance  with the best  practice  then  applicable  in the ROC for the
       settlement of sales and purchases of securities and other investments;

              (g) The proper  costs  incurred  by the Manager in  enforcing  the
       obligations  of the  Custodian  shall be borne  out of the  assets of the
       Trust Fund.  To the extent that they are not borne by a person other than
       the Manager,  the Manager  shall be entitled to an  indemnity  out of the
       assets of the Trust Fund  against all claims  (and  against all costs and
       expenses  in  relation  to such  claims)  incurred or suffered by it as a
       result  of its  acting  as the  Manager  under  this  Interim  Investment
       Contract  which  claims  are  not  attributable  to its  own  willful  or
       negligent  default,  reckless  disregard  of its duties  hereunder or bad
       faith ("disabling conduct");  provided that the Manager shall not receive
       any  indemnification out of the assets held in the Trust Fund against any
       liability  to the  Unitholder  or its  shareholders  to which the Manager
       would  otherwise be subject unless there has been (1) a final decision on
       the merits by a court or other body before whom the  proceeding  alleging
       liability  of the Manager was brought  that the Manager was not liable by
       reason of disabling  conduct,  or (2) a reasonable  determination,  based
       upon a review of the facts,  that the Manager was not liable by reason of
       disabling  conduct,  by (i) the vote of a  majority  of a  quorum  of the
       Unitholder's  directors who are neither "interested directors" as defined
       in the United  States  Investment  Company Act of 1940 nor parties to the
       proceeding ("disinterested, non-party directors"), or (ii) an independent
       legal  counsel in a written  opinion;  and  provided  further  that,  the
       Manager  shall not  receive  out of the assets  held in the Trust Fund an
       advance of attorneys' fees or other expenses  incurred by it in defending
       a proceeding  alleging such liability  except upon the undertaking of the
       Manager to repay the advance unless it is ultimately  determined  that it
       is entitled to indemnification, but only if at least one of the following
       is also  required as a condition  to the advance:  (1) the Manager  shall
       provide a  security  for its  undertaking,  (2) the  Unitholder  shall be
       insured against losses arising by reason of any lawful advances, or (3) a
       majority of a quorum of the  disinterested,  non-party  directors  of the
       Unitholder,  or an independent legal counsel in a written opinion,  shall
       determine,  based on a review of readily available facts (as opposed to a
       full  trial-type  inquiry),  that  there is  reason to  believe  that the
       Manager ultimately will be found entitled to indemnification; and

              (h) The Manager shall perform its  obligations  under this Interim
       Investment  Contract so as to (i) comply with all laws and regulations of
       the Republic of China and of the United States  applicable to the Manager
       and the  Unitholder,  and (ii)  permit  the  Unitholder  to  qualify as a
       regulated investment company under applicable United States tax law.

       2.2 The obligations and duties of the Custodian are as follows:

              (a) The  Custodian  shall be  responsible  absolutely  and without
       qualification as a fiduciary to the Unitholder for the safekeeping of all
       assets held in the Trust Fund for the time being, and of all amounts from
       time to time set aside and held for the  purpose of  distribution  to the
       Unitholder  in  accordance  with this Interim  Investment  Contract  (see
       relevant  provisions  under  Article 3 below),  and shall  indemnify  the
       Unitholder in the event of any loss of such assets and amounts  resulting
       from a breach of its duties  hereunder;  such assets and amounts shall be
       adequately   insured  against  loss;  and  the  Custodian  shall  not  be
       responsible for the willful or negligent default  (including  non-payment
       or failure to deliver  securities) by securities brokers or other persons
       selected  by the  Manager  and dealt with by the  Custodian,  unless such
       default is contributed to by the Custodian;

              (b) The  Custodian  shall  comply  with  the  instructions  of the
       Manager given from time to time on behalf of the  Unitholder  pursuant to
       this Interim  Investment  Contract in relation to the  disposition of the
       assets  held in the  Trust  Fund from  time to time and the  exercise  of
       rights and obligations  attaching thereto except where, in the opinion of
       the  Custodian,  to do so would or might involve a breach of this Interim
       Investment  Contract  or of  any  relevant  provisions  of the  laws  and
       regulations of the Republic of China;

              (c) The Custodian  shall report to the SEC and the  Unitholder any
       matter which in the opinion of the Custodian is an actual or  anticipated
       breach by the Manager of any of the provisions of this Interim Investment
       Contract or of any relevant provisions of the laws and regulations of the
       Republic of China; and

              (d) To the extent  that they are not borne by a person  other than
       the  Custodian,  the Custodian  shall be entitled to indemnity out of the
       assets held in the Trust Fund against all claims  incurred or suffered by
       it which are not  attributable  to its own willful or negligent  default,
       reckless disregard of its duties hereunder or bad faith.

              (e) The  assets  held in the Trust Fund will not be subject to any
       right, charge,  security interest,  lien or claim of any kind in favor of
       the Custodian or its creditors;  beneficial  ownership of the assets held
       in the Trust Fund will be freely transferable without payment of money or
       value to the  Custodian;  the Custodian  will maintain  adequate  records
       identifying  the  assets  held in the  Trust  Fund as being  held for the
       benefit  of  the  Unitholder;   the   Unitholder's   independent   public
       accountants  will be given access to such records during normal  business
       hours upon request;  and the Manager (acting on behalf of the Unitholder)
       will  receive  periodic  reports from the  Custodian  with respect to the
       safekeeping  of the assets  held in the Trust  Fund,  including,  but not
       limited to,  notification  of any transfer of assets to or from the Trust
       Fund.


       The Custodian  shall not be responsible for any investment loss of assets
held in the Trust Fund and shall have no  responsibility  to the  Manager or the
Unitholder  other  than as  provided  in  Articles  2.2 and  3.5  hereof  and as
otherwise expressly set forth in this Interim Investment Contract.

       2.3 The Unitholder  shall have the right at all times to enforce  against
the Manager the  obligations  of the  Manager  and  against  the  Custodian  the
obligations of the Custodian under this Interim Investment Contract.

3.     ASSETS HELD IN THE TRUST FUND

       3.1 All  assets  held in the Trust Fund shall at all times be held by the
Custodian  and,  where in  registered  form,  shall be registered in the name of
"Special   Account  for  the  Taiwan   Trust  Fund  under  the  Custody  of  the
International Commercial Bank of China."

       3.2 The Trust Fund is established for an unspecified period.

       3.3 No offering of the shares of the  Unitholder  ("Shares")  can be made
without prior approval of the SEC. The  Unitholder  will deliver the proceeds of
any offering (after deduction of offering expenses and  organizational  expenses
and amounts not  intended to be held in the Trust Fund) to the  Custodian  under
this Interim Investment  Contract.  As evidence of its exclusive interest in the
assets held by the Custodian in the Trust Fund,  the  Unitholder has been issued
Units, and shall receive additional Units to the extent that the proceeds of any
additional  offering of its shares are  delivered  to the  Custodian  under this
Interim Investment Contract.

       3.4 The  provisions of Article 18-2 of the Securities and Exchange Law of
the Republic of China (the  "Securities  Law") shall apply to the assets held in
the  Trust  Fund and  such  assets  shall  not form  part of the  assets  of the
Custodian or of the Manager.  To the extent that legitimate claims made by third
parties  against  the assets  held in the Trust  Fund  exceed the value of those
assets,  the  satisfaction  of such claims  shall be the  responsibility  of the
Unitholder and not the Manager or Custodian.

       3.5 The  Custodian  shall not  dispose  of assets  held in the Trust Fund
except:

              (a) in  accordance  with  instructions  received  by it  from  the
       Manager in relation to:

              (1)    the  investment of or realization on assets for the account
                     of the Trust Fund; or

              (2)    the payment or  discharge of other  amounts of  liabilities
                     properly payable or dischargeable out of the assets held in
                     the Trust Fund in  accordance  with the  provisions of this
                     Interim Investment Contract; or

              (3)    the payment of amounts to the  Unitholder as  distributions
                     of income as provided in this Interim Investment  Contract;
                     or

              (4)    the payment of amounts to the Unitholder upon redemption of
                     Units; or

              (b) to the Unitholder on final liquidation of the Trust Fund; or

              (c) as otherwise required by any mandatory provision of law.

4.     UNITS

       4.1 The Manager  and the  Custodian  shall each  maintain a record of the
number  of Units  held  from time to time by the  Unitholder.  A Unit  shall not
represent  any  right  in  respect  of  any  particular  assets  but a pro  rata
entitlement  to all of the net assets held in the Trust Fund,  and a contractual
right against the Manager and the Custodian accordingly.

       4.2 A beneficial  certificate  ("Certificate")  in a form approved by the
Manager and the SEC, and in substantially the form of Exhibit A attached hereto,
has been issued to the  Unitholder  in respect of all Units  acquired by it. The
Certificate  has been  signed on behalf of the  Manager  and the  Custodian  and
indicates thereon the amount of funds initially delivered to the Custodian under
this Interim Investment Contract.

       4.3 The issue of Units  shall be subject to the prior  approval of and to
any conditions imposed by the SEC.

       4.4 Each Unit  issued in the  initial  issue of Units which took place in
December 1986 represented US$1 or its equivalent in NT Dollars  delivered to the
Custodian under this Interim Investment Contract.

       4.5 Each Unit issued  after the initial  issue of Units has  represented,
and (if additional Units are issued) shall represent,  that amount (delivered to
the  Custodian  hereunder)  obtained by dividing (a) the amount equal to the net
asset value (as defined in the following sentence) of the previously outstanding
Units  calculated  as at the date (or, if that date is not a  Valuation  Date as
defined in Article 5 below, on the next following  Valuation  Date)  immediately
following the date of receipt by the Manager of the  application for issuance of
the Units in question by (b) the number of Units  outstanding  (including  Units
scheduled to be redeemed on that Valuation Date but excluding Units scheduled to
be issued on that Valuation Date). "Net asset value" shall mean the value of the
assets held in the Trust Fund less the  liabilities of the Trust Fund (including
such  provisions  and  allowances  for  contingencies  as the  Manager may think
appropriate  in respect of the costs and  expenses  payable out of the assets of
the Trust  Fund as set forth in  Article 8 below),  as  calculated  pursuant  to
Article 5.

       4.6 Payment for each Unit shall be made in cash in advance of issue. Once
the relevant  amount to be  delivered to the  Custodian in respect of a Unit has
been paid,  no further  amount shall be payable by the  Unitholder in respect of
that Unit.

       4.7 No fractions of Units may be issued.

5.     CALCULATION OF NET ASSET VALUE

       5.1 The net asset  value of the assets held in the Trust Fund and the net
asset value per Unit shall be  calculated by the Manager as at each business day
in Taipei  (a  "Valuation  Date") by  reference  to (inter  alia) the  following
criteria:

       5.2 The value of assets  held in the Trust  Fund,  other  than  cash,  or
assets not specified in (a) to (d) below which are  considered by the Manager to
be the effective equivalent of cash ("cash equivalents"), shall be determined as
follows:

              (a) where the assets  are  listed  and traded on the Taiwan  Stock
       Exchange,  by reference  to the last dealt price on such  exchange on the
       applicable  Valuation  Date or, if there is no last  dealt  price on such
       exchange on that date, the last dealt price on such exchange on or before
       the relevant Valuation Date;

              (b) where the assets are bonds, debentures or notes not listed and
       traded on the  Taiwan  Stock  Exchange,  by  reference  to the  valuation
       thereof  on  the   applicable   Valuation  Date  by  the  Stock  Brokers'
       Association of Taipei,  or, if there is no such  valuation,  at their par
       value plus interest accrued but unpaid to the relevant Valuation Date;

              (c) where the assets are money  market  instruments,  at cost plus
       interest  accrued but unpaid from the date of purchase to the  applicable
       Valuation Date; and

              (d) in  any  other  case  by  reference  to  valuation  procedures
       consistent with guidelines from time to time laid down by the SEC.

       5.3 In the case of any interest-bearing  investment,  or other investment
on which income is accruing, not included within (b) or (c) above there shall be
included in the value  thereof all interest or other  income  accruing up to the
applicable Valuation Date.

       5.4 Cash and cash equivalents and amounts receivable and prepaid shall be
included at the full face or market value thereof.

       5.5  There  shall be made  such  allowance  (if any) as the  Manager  may
consider  appropriate  in the case of any asset which the Manager  considers may
not be fully recoverable.

       5.6 Unperformed or partially performed  agreements for the acquisition or
disposal of assets shall be treated as if they had been completely performed.

       5.7  Liabilities  shall  include  the  amount of any fee  payable  to the
Custodian  or the Manager as  contemplated  by Article 9 below and accrued at or
accruing to the applicable Valuation Date but remaining unpaid.

       5.8 The  number of Units  outstanding  at any time  shall  include  Units
scheduled  to be redeemed on or as of the  applicable  Valuation  Date but shall
exclude Units  scheduled to be issued on or as of the applicable  Valuation Date
but shall exclude Units scheduled to be issued on or as of that Valuation Date.

       5.9 With respect to acquisition or disposition transactions initiated but
not fully  consummated,  there may be  excluded  from the value of any assets in
respect of the acquisition or disposition of which  brokerage,  duties and other
similar  costs would fail to be paid out of the assets held in the Trust Fund if
they had been  acquired  or disposed  of, as the case may be, on the  applicable
Valuation  Date an amount not exceeding the Manager's  bona fide estimate of the
amount of such costs which would have been so payable.

       5.10 Any  currency  transaction  shall  be made at the rate  which is the
average of the rates of exchange quoted on the applicable  Valuation Date by the
Foreign  Exchange  Trading  Centre in Taipei as the rates for buying and selling
the one currency for the other.

       5.11  If  in  any   respect   extraordinary   circumstances   render   it
impracticable  or  inappropriate  to  conduct  a  valuation  on the basis of the
foregoing  provisions  of this  Article  5,  the  Manager  shall  to the  extent
necessary follow other valuation procedures consistent with guidelines from time
to time laid down by the SEC.

6.     REDEMPTION OF UNITS

       6.1  Subject to Article  6.2 and  relevant  laws and  regulations  of the
Republic of China governing foreign investment and foreign exchange control, the
Unitholder may redeem all or any of its Units by delivering  the  Certificate in
respect of the Units to be redeemed  together  with an  appropriate  request for
redemption  to the Manager at its principal  office in Taipei.  The amount to be
paid to the Unitholder upon any redemption of Units shall be the net asset value
per Unit as at the  Valuation  Date next  following  the date of  receipt by the
Manager of the applicable  redemption  request and the accompanying  Certificate
(such  Valuation  Date being a  "Redemption  Date")  multiplied by the number of
Units being redeemed.

       6.2 Such net asset value per Unit shall be calculated in accordance  with
Article 4 and Article 5 above except that: if the number of Units which, but for
this  provision,  would be subject to redemption on any Redemption  Date exceeds
ten (10)  percent of the  number of Units  issued  and  outstanding  immediately
before such Redemption Date, the Manager may limit the number of Units which are
redeemed  on such  Redemption  Date to ten (10)  percent  of the number of Units
issued and outstanding  immediately  before such Redemption  Date. In such case,
the Manager shall as reasonably  practicable  dispose of such assets as required
to redeem those Units subject to redemption but not redeemed on such  Redemption
Date.

       6.3 The Manager shall,  no later than 5 days after the  Redemption  Date,
cause the Custodian to pay the redemption proceeds to the Unitholder.

       6.4 When the  Unitholder  requests the redemption of less than all of the
Units  represented by the Certificate,  the Manager shall, in addition to making
redemption  payments in accordance with Article 6.3 above,  within fourteen days
after the  applicable  Redemption  Date,  issue  free of charge  therefor  a new
Certificate to represent the Units not requested to be redeemed.

7.     SUSPENSION OF VALUATION, ISSUES, REDEMPTIONS AND PAYMENTS

       7.1 The Manager may temporarily  suspend  valuation of the assets held in
the Trust Fund in the following events:

              (a) when the Taiwan Stock  Exchange is closed  otherwise  than for
       ordinary holidays or if dealings thereon are restricted or suspended; or

              (b)  in the  case  of  breakdown  of the  means  of  communication
       normally  used for the  valuation of any material part of the assets held
       in the Trust Fund, or if for any reason the value of any material part of
       the assets  held in the Trust Fund may not be  determined  as rapidly and
       accurately as required; or

              (c) when, as a result of political, economic, military or monetary
       reasons  or of any  circumstance  beyond  the  control  of  the  Manager,
       disposal of assets held in the Trust Fund or  determination  of the value
       of assets held in the Trust Fund and/or liabilities of the Trust Fund are
       to any material extent not reasonably or normally practicable.

       7.2 During such time as  valuation  is  suspended as specified in Article
7.1, no issue or  redemption of Units shall be made and no payment shall be made
of any  redemption  moneys  payable  but unpaid in respect of any Units  already
redeemed.

8.     EXPENSES

       8.1 The following items shall be the only costs and expenses  payable out
of the assets held in the Trust Fund:

              (a) the  acquisition  price and brokerage,  stamp duty and similar
       direct  acquisition costs of assets acquired for the account of the Trust
       Fund;

              (b)  brokerage,  stock transfer tax, stamp duty and similar direct
       disposal costs arising on the disposal of assets held in the Trust Fund;

              (c) all stamp and similar duties and charges  payable from time to
       time in respect of the Trust Fund;

              (d) all expenses  incurred in relation to the  registration of any
       assets in the name of the Custodian for the benefit of the Trust Fund;

              (e)  all  expenses   properly   incurred  in  the  collection  and
       distribution of income derived from assets held in the Trust Fund;

              (f) all fees and  expenses of any  auditors  or legal  advisers in
       connection with the assets held in the Trust Fund;

              (g) all taxation  payable in respect of income of (including stock
       dividends),  or the holding of or dealings with assets held in, the Trust
       Fund;

              (h) all proper expenses  including postage and telex and telephone
       costs  incurred by the Custodian in connection  with the  acquisition  or
       disposal of any assets held in the Trust Fund;

              (i) any  compensation  payable to the Manager or the  Custodian as
       contemplated by Article 9 below;

              (j)  legal  fees and  expenses  incurred  in  connection  with the
       interpretation  or amendment  for the benefit of the  Unitholder  of this
       Interim  Investment  Contract;  and all such proper costs as are provided
       for in Articles 2.1(g) and 2.2(d);

              (k) the cost relating to the publication of Unit prices and/or the
       net asset  value,  and the  printing,  mailing and similar  costs for any
       regular report sent to the Unitholder;

              (l) all attestation  fees incurred in connection with the issuance
       of Certificates;

              (m) all ordinary and necessary expenses incurred by the Unitholder
       in connection with its organization, the public offering of its Shares to
       investors  in the  United  States and  elsewhere,  its  registration  and
       operation as a regulated  investment company under the Investment Company
       Act of 1940 and its qualification as a regulated investment company under
       the  United  States  Internal  Revenue  Code,  all  as  described  in the
       Prospectus of the Unitholder  dated December 16, 1986 (the  "Prospectus")
       used  for  the  public  offering  and  sale  of the  Unitholder's  shares
       (together  with,  and as  supplemented  or updated  by,  each  subsequent
       prospectus used for subsequent  offerings and sales of such shares,  (the
       "Prospectus"); and

              (n) all other necessary and appropriate  costs,  fees and expenses
       incurred by the Manager or the  Custodian  on behalf of the Trust Fund or
       the  Unitholder  in the course of  performing  their  respective  duties;
       provided that, the Manager and the Custodian shall each bear all expenses
       associated  with  the  performance  of its  duties  hereunder  (including
       employee salaries and overhead) other than expenses to be paid out of the
       assets held in the Trust Fund as specifically  provided in this Article 8
       and the  Manager  shall bear the fees and  expenses  of the  Unitholder's
       officers and directors who are interested persons of the Manager.

9.     MANAGEMENT AND CUSTODIAN FEES

       9.1 As compensation for the investment  management  services and expenses
borne by the Manager pursuant to this Interim Investment  Contract,  the Manager
shall be  entitled to receive out of the assets held in the Trust Fund a monthly
fee  payable in NT  Dollars.  Such fee shall  consist of a basic fee (the "Basic
Fee") and performance  adjustments (the  "Performance  Adjustments"),  which may
serve either to increase or decrease the Basic Fee.

              (a) The Basic Fee shall be computed promptly after the end of each
       month by  multiplying  (i) the  average  daily Net Fund Value (as defined
       below) for such month by (ii) an annual rate of 1.30%.  For any period of
       less than a full month during which this Interim  Investment  Contract is
       in  effect  with  respect  to the  Trust  Fund,  the  Basic  Fee shall be
       calculated by  multiplying  (i) the average daily Net Fund Value for such
       period  prorated  according to the proportion that the number of business
       days in such period  bears to the number of  business  days in such month
       times (ii) an annual  rate of 1.30%.  As used  herein,  "Net Fund  Value"
       shall mean the value of the net assets of the  Unitholder  (including the
       assets held in the Trust Fund)  calculated as described  under "Net Asset
       Value" in the Prospectus.

              (b)  The  Basic  Fee  shall  be  subject  to  upward  or  downward
       Performance  Adjustments  on the  basis  of  investment  performance,  as
       follows:

       The  Performance   Adjustment  shall  be  made  by  multiplying  (x)  the
Applicable Performance Adjustment Rate times (y) the average Net Fund Value over
the performance  period.  The resulting  Performance  Adjustments  shall then be
added to or  subtracted  from the Basic Fee.  The  performance  periods  and the
Applicable Performance Adjustment Rates shall be calculated as follows:

                     (1) First,  the performance  period shall commence with the
              first business day of the first full month following the date upon
              which 75% or more of the  assets  constituting  the Net Fund Value
              are  invested in equity  securities.  During the first eleven (11)
              months  thereafter  there  shall  be  no  performance  Adjustment.
              Starting  with the twelfth  month of  operation,  the  Performance
              Adjustment  shall take effect.  Following  the twelfth month a new
              month  shall  be  added  to  the  performance   period  until  the
              performance  period equals 36 months.  Thereafter the  performance
              period  shall  consist of the current  month plus the  previous 35
              months.  Notwithstanding the provisions of this Article 9.1(b)(1),
              Performance  Adjustments  under this Interim  Investment  Contract
              shall  be made  as if  this  Interim  Investment  Contract  were a
              continuation of the Original  Investment  Contract,  rather than a
              new  Investment  Contract.  In addition,  the  termination  of the
              Original  Investment Contract and this Interim Investment Contract
              shall not, for purposes of the last paragraph of Article 9.1(b) of
              the  Original  Investment  Contract  or  this  Interim  Investment
              Contract be deemed a termination thereof and thereby result in any
              prorated fee calculation.

                     (2) Second,  compute the percentage  difference between (a)
              the  opening  Net Fund  Value per Share of the  Unitholder  on the
              first  business day of the  performance  period and (b) the sum of
              (1) the closing Net Fund Value per Share on the last  business day
              of such  period  plus  (ii)  the  value of the  Unitholder's  cash
              distributions  to its  shareholders  per  Share  made  during  the
              performance period plus (iii) the value of capital gains taxes per
              Share  paid  or  payable  by or on  behalf  of the  Unitholder  on
              undistributed   realized   long-term   capital  gains  during  the
              performance period.

                     (3) Third,  compute the  percentage  change in Taiwan Stock
              Exchange  Index (the "Index")  during such period.  In making such
              computation  the  value  of cash  distributions  made  during  the
              performance  period by  companies  whose  securities  comprise the
              Index shall be  accumulated to the end of such period and added to
              the closing  value of the Index,  with cash  distributions  of the
              securities comprising the Index being treated as reinvested in the
              Index as of the end of each calendar quarter following the payment
              of  the  cash   distribution.   (In  both  such   computations  of
              percentages,  the percentage  rate shall be rounded to the nearest
              full basis point (0.01%) (rounding up if a computation  produces a
              result of exactly one-half basis point (0.005%))).

                     (4) Fourth,  the  Applicable  Performance  Adjustment  Rate
              shall be the Applicable  Adjustment  Percentage (as defined in (5)
              below) times the number (whether positive or negative) obtained by
              subtracting  the  percentage   change  in  the  Index  during  the
              performance  period  from the  percentage  change  in the Net Fund
              Value of a Share during that period,  provided  that if the number
              thus  obtained is greater  than ten (either  positive of negative)
              the Applicable Performance Adjustment Rate shall be the Applicable
              Performance Adjustment Percentage times ten (positive or negative,
              as appropriate).

                     (5) The Applicable Adjustment Percentage shall be an annual
              rate of 0.03%.

       In computing  the  investment  performance  of the Net Fund Value and the
investment  record  of the  Index,  distributions  of  realized  capital  gains,
dividends paid out of investment  income,  the value of capital gains' taxes per
share paid or payable on undistributed realized long-term capital gains, and all
cash  distributions  of the companies  whose stocks  comprise the Index shall be
treated as  reinvested  in  accordance  with Rule 205-1 or any other  applicable
rules under the United States Investment Advisers Act of 1940.

       In the case of  termination  of the Trust Fund, the transfer of the Trust
Fund to another  securities  investment trust enterprise,  or the termination of
this Interim Investment  Contract during any month, the fee for that month shall
be reduced  proportionately  on the basis of the number of business  days during
which this Interim Investment Contract is in effect during that month. The Basic
Fee rate in that month  shall be computed on the basis of and applied to the Net
Fund  Value,  averaged  over that month and ending on the last  business  day on
which  this  Interim  Investment  Contract  is in  effect.  The  amount  of  the
Performance  Adjustment (or  Adjustments)  shall be computed on the basis of and
applied to the Net Fund Value,  averaged over the 36-month  period ending on the
last  business  day on which  this  Interim  Investment  Contract  is in effect,
provided  that if this Interim  Investment  Contract has been in effect for lass
than 36 months, the computation shall be made on the basis of the period of time
during which this Interim Investment Contract has been in effect.

       9.2 The compensation  earned by the Manager under this Interim Investment
Contract  will be held in an  interest-bearing  escrow  account  with the Fund's
Custodian.  If a majority of the Fund's  outstanding voting securities approve a
new  Investment  Contract  with CSITC  within 150 days of the  execution of this
Interim  Investment  Contract,  the  amount  in the  escrow  account  (including
interest  earned) will then be paid to CSITC. If a majority of the  Unitholder's
outstanding  voting  securities  do not approve a new  Investment  Contract with
CSITC,  CSITC will be paid,  out of the escrow  account,  the lesser of: (1) any
costs  incurred in performing  this Interim  Investment  Contract (plus interest
earned on that amount  while in escrow);  or (2) the total  amount in the escrow
account (plus interest earned).

       9.3 As compensation for the custodial  services and expenses borne by the
Custodian pursuant to this Interim Investment  Contract,  the Custodian shall be
entitled  to receive  out of the assets held in the Trust Fund a fee which shall
be computed and paid promptly after the end of each month by multiplying (i) the
average  daily net asset  value of the  assets  held in the Trust  Fund for such
month by (ii) an  annual  rate of 0.2%,  provided  that the  Custodian  shall be
entitled to receive a minimum annual fee of 2.0 million NT Dollars.

10.    INVESTMENT OBJECTIVES AND POLICIES AND RESTRICTIONS

       10.1 The  Unitholder's  investment  objective in placing  proceeds of its
offering in the Trust Fund is to seek  long-term  capital  appreciation  through
investment  primarily in equity securities of Republic of China companies listed
on the  Taiwan  stock  Exchange,  as more  fully  described  in the  Prospectus.
Investment  may  also be made in debt  securities  listed  on the  Taiwan  Stock
Exchange and in debt securities traded on the over-the-counter market.

       10.2 The assets held in the Trust Fund,  after having been  remitted into
the Republic of China and delivered to the Custodian,  shall be invested only in
securities  and money  market  instruments  denominated  in NT Dollars and in NT
Dollars cash and banking and similar  accounts,  except to the extent  otherwise
permitted by Republic of China law and regulations.

       10.3 The Manager  agrees  that it will not,  using the assets held in the
Trust Fund:

              (a)  Purchase  any security  (other than  obligations  of the U.S.
       Government, its agencies or instrumentalities,  subject to Article 10.2),
       if as a result:  (i) as to 75% of the assets held in the Trust Fund, more
       than 5% of the  total  assets  held in the  Trust  Fund  (taken  at their
       current  value) would then be invested in securities of a single  issuer,
       (ii) as to the remaining  25% of the assets held in the Trust Fund,  more
       than 10% of the  total  assets  held in the  Trust  Fund  (taken at their
       current  value)  would then be  invested  in the  securities  of a single
       issuer  (except  that the  Manager  may  invest  not more than 25% of the
       assets  held in the Trust Fund in  obligations  of the  Republic of China
       Government or its agencies of instrumentalities),  (iii) more than 10% of
       the voting equity  securities  (at the time of such  purchase) of any one
       issuer  would be held in the  Trust  Fund,  and (iv) more than 25% of the
       total  assets  held in the Trust Fund (taken at current  value)  would be
       invested in a single industry; or

              (b) purchase any equity securities which, at the time the purchase
       is made, are not (i) listed and traded on the Taiwan Stock Exchange, (ii)
       purchased in initial public  offerings and secondary public offerings but
       only if such  securities  will be listed  on the  Taiwan  Stock  Exchange
       immediately   following   such   offering,   or  (iii)   traded   in  the
       over-the-counter market in Taiwan; or

              (c) purchase partnership interests; or

              (d) borrow money or pledge the assets in the Trust Fund; or

              (e) purchase  securities on margin,  except for short-term credits
       as may be necessary for clearance of transactions; or

              (f) make short sales of securities  or maintain a short  position;
       or

              (g) buy or sell commodities or commodity  contracts or real estate
       or  interests  in real  estate,  except  that it may enter  into  foreign
       currency  exchange  contracts,  foreign currency futures  contracts,  and
       options on foreign  currencies and foreign currency futures contracts for
       bona fide hedging purposes; or

              (h) act as an underwriter of securities of other issuers; or

              (i) make loans,  including loans of cash of portfolio  securities,
       to any person;  for  purposes of this  investment  restriction,  the term
       "loans"  shall not  include  the  purchase  of a  portion  of an issue of
       publicly distributed bonds, debentures of other securities; or

              (j) purchase  securities issued by any issuer which owns,  whether
       directly or indirectly or in concert with another person, more than 5% of
       the equity  securities  (whether  voting of non-voting) of the Adviser or
       which takes a significant role in the management of the Adviser; or

              (k) issue senior securities; or

              (l) purchase beneficiary  certificates  representing  interests in
       other ROC securities  investment trust funds or effect any transaction in
       securities with another ROC securities  investment  trust fund managed by
       the Manager.

       10.4 Nothing in Article 10.3 above shall require the sale or  disposition
of any  relevant  assets  held in the Trust Fund  where any of the  restrictions
there set out is  breached  as a result of any event  outside the control of the
Manager  and  occurring  after the  investment  in the  relevant  assets is made
(including  but  not  limited  to  redemptions  of  Units  or  securities,   any
reorganization  or  amalgamation  of  any  company  and  the  suspension  of any
listing),  but no further  relevant  assets shall be acquired until the relevant
limitation  can again be  complied  with,  except  pursuant  to the  exercise of
subscription  rights to purchase  securities of an ROC issuer at a time when the
Fund's  portfolio  holdings  of  securities  of that  issuer  (or that  issuer's
industry) would otherwise exceed the limits set forth in clause (i), (ii), (iii)
or  (iv) of  Article  10.3(a),  where  prior  to such  exercise  and  after  the
announcement of such rights, the Manager sells at least the number of securities
which it subsequently purchases through the exercise of the rights.

       10.5 To not less than the extent (if any) from time to time  required  by
the SEC a  proportion  of the assets held in the Trust Fund shall be retained at
all times in liquid form in assets of a type specified by the SEC.

       10.6 The Manager shall not hold or have an interest in securities  issued
by the  Unitholder  or securities  issued by any  investment  fund  investing in
Republic of China securities in the management of which the Manager participates
or has an interest.

       10.7 To the maximum  possible  extent all  transactions  in assets in the
Trust Fund shall be carried out through  stock  exchanges  and other  officially
designated  markets.  Subject to any limitations  which may be imposed under the
U.S.  Investment  Company  Act of 1940 and any  rules  and  regulations  adopted
thereunder,  such  transactions  may be  carried  out  through a broker who is a
connected  person of the  Manager to such  extent as the  Manager  may think fit
provided  that the cost  thereof is not greater  than it would have been had the
transactions been carried out through a broker who was not a connected person.

11.    DURATION, CHANGES IN MANAGER AND CUSTODIAN, AND TERMINATION

       11.1 The  Trust  Fund is  established  for an  unspecified  period.  This
Interim  Investment  Contract  shall  become  effective  on  August 6, 2001 (the
closing date of the sale by China  Development  Industrial  Bank ("CDIB") of its
52.87% interest in CSITC to HSBC Asset Management  (Europe)  Limited  ("HSBC")),
and shall  continue in effect  until the earlier of (i) the 150th day  following
the  effective  date of this Interim  Investment  Contract or (ii) the date upon
which a  majority  of the Fund's  outstanding  voting  securities  approve a new
investment  contract and it becomes  effective.  Notwithstanding  the foregoing,
this  Interim  Investment  Contract  may  be  terminated  at  any  time  by  the
Unitholder, without the payment of any penalty, upon a vote of a majority of the
Unitholder's  Board  of  Directors  or a  majority  of  the  outstanding  voting
securities of the  Unitholder,  or by the Manager or the Custodian,  on ten (10)
days' written  notice to the other  parties.  This Interim  Investment  Contract
shall  automatically  terminate in the event of its  assignment (as such term is
defined in the U.S. Investment Company Act of 1940). Any transfer, assignment or
other  disposition  of any of the Units by the  Unitholder  shall  constitute an
assignment  of this  Interim  Investment  Contract.  As used  herein  the phrase
"majority of the outstanding voting securities" shall have the meaning set forth
in the U.S. Investment Company Act of 1940. In addition, this Interim Investment
Contract shall automatically terminate if either the Manager or the Custodian is
removed as provided in this Article 11.

       11.2 The Interim Investment Contract shall also terminate if

              (a) the  SEC by  notice  in  writing  to the  Manager  and/or  the
       Custodian so requires; or

              (b) the Manager notifies the Unitholder, the Custodian and the SEC
       that in its opinion  further  operation  of the Trust Fund in  accordance
       with this  Interim  Investment  Contract  is  illegal,  impracticable  or
       inadvisable having regard solely to the interests of the Unitholder.

       11.3 Upon termination of this Interim Investment  Contract,  unless a new
Interim  Investment  Contract is entered into (as provided in Article 11.7), the
Manager shall,  within three (3) months after the effective date of termination,
promptly dispose of assets held in the Trust Fund at reasonable prices,  satisfy
any liabilities relating to the Trust Fund, and distribute the available balance
to the Unitholder.

       11.4 The SEC may order that the Manager or  Custodian be removed and that
a new Manager or Custodian be appointed  within six months if the SEC  considers
that the Manager or (as the case may be) the  Custodian is incapable of carrying
out its functions properly.

       11.5 The Manager and/or the Custodian may be removed by the Unitholder by
60 days' written notice to the other parties hereto.

       11.6 If either the  Manager or the  Custodian  goes into  liquidation  or
bankruptcy or if its permit to act as Manager or Custodian has been revoked,  it
shall be deemed to have been  forthwith  removed  as Manager or (as the case may
be) Custodian.

       11.7  If  the  Manager  and/or  Custodian  is  removed  or  resigns,  the
Unitholder  may  appoint a new  Manager  and/or  Custodian  and enter into a new
Interim  Investment  Contract  containing   substantially  the  same  terms  and
conditions as this Interim Investment Contract. The appointment of a new Manager
shall be approved by the Custodian and by the SEC and the  appointment  of a new
Custodian shall be approved by the Manager and by the SEC,  provided that if the
SEC  has,  in the  circumstances  specified  in the  Regulations  Governing  the
Administrating of Securities Investment Trust Funds (effective August 10, 1983),
as from time to time amended, required the appointment of a new Manager or a new
Custodian and the  Unitholder has not appointed a new Manager or a new Custodian
within  three  months  after the SEC has so  required,  the SEC may  require the
liquidation and distribution of the assets held in the Trust Fund as provided in
Article 11.3.

12.    ACCOUNTS AND STATEMENTS

       12.1 The  Manager  shall  maintain  in its  principal  office  in  Taipei
sufficient  accounts and records to enable a complete  and  accurate  view to be
formed of the assets and liabilities and the income and expenditure of the Trust
Fund, all transactions for the account of the Trust Fund and amounts received in
the Trust  Fund in  respect  of issues of Units and paid out on  redemptions  of
Units and by way of distributions.

       12.2 The Manager shall prepare financial statements of the Trust Fund for
successive  accounting  periods,  each accounting period commencing  immediately
after the end of the last  preceding such  accounting  period (as in the case of
the first such  period  from the date of  establishment  of the Trust  Fund) and
ending on  December  31 in each year (the  "final  statements")  and shall  also
prepare such financial statements for the monthly periods ending on the last day
of each calendar month (which monthly  reports shall be prepared within ten days
after  the end of  each  month),  in  each  case  in the  respective  forms  and
containing the information for the time being required by the SEC.

       12.3 The Manager shall:

              (a) cause the final  statements  to be audited by a person or firm
       authorized under the laws of the Republic of China and the regulations of
       the SEC ("Auditors");

              (b) submit the final statements,  together with such report as the
       Manager may intend to make to the Unitholder in relation  thereto and the
       Auditors' report thereon,  to the SEC for comment and approval within two
       months after the end of the relevant accounting period;

              (c) comply with such  requirements as the SEC may make in relation
       to such  statements  and report  within two weeks after the date on which
       such requirements are made; and

              (d)  send to the  Unitholder  and to the SEC,  copies  of all such
       final  statements  within  twelve  weeks  after  the end of the  relevant
       accounting period.

       12.4 The Manager shall sign and the Custodian shall countersign all final
and monthly statements which shall then be published in Taipei.

       12.5 The Auditors' report on the final statements of the Trust Fund shall
be in the form required by the SEC and where  relevant shall indicate the extent
to which such a report cannot be given and the reasons therefor.

13.    DISTRIBUTIONS

       13.1  Distributions of income in respect of each accounting  period ended
December 31, will be made not later than March 31 in the next  following year to
the  Unitholder.  Distributions  may not be made out of capital.  The Manager in
conjunction  with  the  Auditors  shall  determine  what is  income  and what is
capital,  except that stock  dividends  and gains  (realized or  unrealized)  on
investments  shall not be  regarded  as income and  realized  discounts  on debt
securities  and money market  instruments  may be regarded as income.  Costs and
expenses payable out of the assets held in the Trust Fund may be charged against
income or capital as the Manager in conjunction with the Auditors may determine,
provided  that the  allocation  of such  costs and  expenses  as to income or to
capital shall be consistent from year to year. When expenses are charged against
capital,  they may be  amortized  on a  straight  line  basis  over a period not
exceeding five years.

       13.2 The  aggregate  amount of each  distribution  shall be credited to a
separate  account in the name of the Custodian  and such amount shall  thereupon
cease to form part of the assets of the Trust  Fund  accordingly,  but  interest
earned on such amount  pending  payment  shall be paid into and form part of the
assets of the Trust Fund.

14.    CURRENCY

       14.1 The accounts and records of the Trust Fund shall be maintained in NT
Dollars,  payments into the Trust Fund on the issue of Units and payments out of
the Trust Fund on the redemption of Units and by way of  distributions  shall be
made in NT  Dollars,  the net asset  value of the assets  held in the Trust Fund
shall be  calculated in NT Dollars,  and the  financial  statements of the Trust
Fund shall be prepared in NT Dollars.

15.    INFORMATION AND NOTICES

       15.1 There shall be held  available for  inspection by any person without
charge at the  principal  office  of the  Manager  in  Taipei at all  reasonable
business hours copies of:

              (a) this Interim Investment Contract as from time to time amended;

              (b) the current sales prospectus (if any) in relation to Shares of
       the Unitholder;

              (c) all interim and final  statements,  together with any relevant
       Auditors'  reports and reports of the Manager relative  thereto,  for the
       two  latest  accounting  periods  of the Trust  Fund or (if less) for all
       periods since the  establishment  of the Trust Fund,  and all interim and
       final statements for such periods.

       15.2  All  notices  to the  Unitholder  shall be sent to it by hand or by
airmail at its registered address.

       15.3 The  Manager  shall at all times  maintain  an office or  offices in
Taipei and shall  notify  the  Unitholder  of any  change in the  address of its
principal office in Taipei for the time being.

16.    AMENDMENTS

       This  Interim  Investment  Contract  shall be amended only with the prior
written agreement of the Manager,  the Custodian and the Unitholder,  subject to
the approval of the SEC, and subject to approval in accordance  with  applicable
U.S. law.

       Notwithstanding  the  foregoing,  if any of the parties to this Agreement
changes its name, such changed name shall be automatically  substituted therefor
hereunder.

17.    CONNECTED PERSONS

       For the  purposes  of this  Interim  Investment  Contract,  a person is a
connected person of another if:

              (a)  together  with any person  acting in concert  with it in this
       connection,  it owns or  otherwise  controls  for  its own  account,  and
       directly or  indirectly,  an interest of more than five percent (5%) (or,
       in the case of an interest of the  Custodian,  ten percent (10%)) of that
       other, whether or not a voting interest; or

              (b) it is a director  or  supervisor  of or takes any  significant
       active role in the management of that other.

18.    ATTACHMENT

       The  Attachment  I  hereto  (a  list of the  Board  of  Directors  of the
Unitholder) shall be regarded as part of this Interim Investment  Contract.  Any
directors  listed  therein can be replaced from time to time in accordance  with
the procedures applicable to a Delaware corporation.

19.    GOVERNING LAW, JURISDICTION AND LANGUAGE

       19.1 The Trust Fund,  Interim  Investment  Contract  and the  Certificate
shall be governed by, and this Interim  Investment  Contract and the Certificate
construed in accordance with, the laws of the Republic of China.

       19.2 Any dispute  arising  out of or in respect of the Trust  Fund,  this
Interim  Investment  Contract  or  the  Certificate  shall  be  subject  to  the
nonexclusive jurisdiction of the courts of the Republic of China having original
jurisdiction  and,  in the  case  of  any  action  against  the  Manager  or the
Custodian,  any court  having  original  jurisdiction  in the place in which the
Manager of the Custodian has its principal office.

       19.3 The governing language of this Interim Investment  Contract shall be
Chinese, but documents issued in relation to the Trust Fund may be in either the
Chinese or the English language.



<PAGE>


20.    EFFECTIVE DATE

         This Interim Investment Contract shall become effective on August 6,
2001 (the closing date of the sale by CDIB of its interest in CSITC to HSBC).

Dated:   August 6, 2001

                                              CHINA SECURITIES INVESTMENT TRUST
                                                 CORPORATION, AS MANAGER



                                              By:        I. Ming Lin
                                                 ------------------------------

                                              THE INTERNATIONAL COMMERCIAL BANK
                                                 OF CHINA, AS CUSTODIAN



                                              By:        Shih-Gin Chen
                                                 ------------------------------

                                              THE TAIWAN FUND, INC.
                                                 (The Unitholder)



                                              By:        Haichi Vicki Hau
                                                 ------------------------------



<PAGE>


                                                                       EXHIBIT A

                                                                    (Front page)

                            (Beneficiary Certificate)

                  China Securities Investment Trust Corporation

                                Taiwan Trust Fund

Date of Issue:

Manager  ..................                     Custodian
-------                                         ---------

China Securities Investment Trust Corporation   International Commercial
99 Tunhwa South Rd.                             Bank of China
Section 2                                       100 Chilin Road
Taipei, Taiwan ROC                              Taipei, Taiwan, ROC



Name of the Holder of this.                     Total Number of Units Comprised
Beneficiary Certificate:                        by this Beneficiary Certificate:

The Taiwan Fund, Inc
                                                -----------------------------
225 Franklin St                                 (There is no charge for the
Boston, Massachusetts USA..                     issuance of this certificate)



Other Notes:


1.       This Certificate acknowledges receipt by the Manager and the Custodian
         of the funds constituting the Units referred to herein, and is issued
         in accordance with the provisions of the Regulations Governing the
         Administration of Securities Investments Trust Funds of the Republic of
         China and the Securities Investment Trust-Investment Management and
         Custodian Contract dated December 16, 1986, as superseded (the
         "Investment Contract"). The Unitholder will be entitled to repatriate
         the earnings and principal in respect of Units in accordance with the
         provisions of the Regulations Governing Securities Investment by
         Overseas Chinese and Foreign Investors and Procedures for Remittance.

2.       Reference should be made to the relevant ROC regulations relating to
         securities investment trusts, the Investment Contract and the
         Prospectus dated December 16, 1986 (as superseded by later
         Prospectuses) published by The Taiwan Fund, Inc.



<PAGE>


                                 (Reverse page)

                            (Beneficiary Certificate)

1.       Investment Policy and Scope

         The investment objective of the Taiwan Trust Fund (the "Trust Fund") is
to achieve capital appreciation through investment in securities listed on the
Taiwan Stock Exchange, money market instruments, government bonds, and
debentures.

2.       Duration of the Trust Fund

         The duration of the Trust Fund shall be determined in accordance with
the provisions of the Investment Contract.

3.       Calculation and Announcement of the Net Asset Value per Unit

         The net asset value per Unit of the Trust Fund is calculated in NT$ by
dividing the value of the assets of the Trust Fund less its liabilities by the
number of Units in issue and rounding any fraction of NT$l up or down to the
nearest NT Dollar (NT$0.5 being rounded up). The net asset value per Unit is
calculated and published on a daily basis.

4.       Redemption

         After one year from the date of issue, the Holder of the Units
comprised in this Certificate may apply for redemption by submitting this
Certificate to the Manager or its agent together with a written application. The
redemption price will be the net asset value per Unit as calculated in
accordance with the method specified in the preceding paragraph on the next
valuation date following the receipt of the redemption application by the
Manager or its agent less the Manager's assessment of the cost of realizing an
appropriate amount of the Trust Fund's assets. Redemption proceeds will normally
be paid out within five days after the valuation date.

5.       Fees Payable to the Manager and the Custodian

         The Manager shall be entitled to receive out of the assets held in the
Trust Fund a monthly fee payable in NT Dollars. Such fee shall consist of a
basic fee and performance adjustments, as more fully described in the Investment
Contract. The Custodian shall be entitled to receive out of the assets held in
the Trust Fund an annual fee (payable monthly) equal to 0.2% of the average
daily net asset value of the assets held in the Trust Fund, subject to a minimum
annual fee of 2.0 million NT Dollars.

6.       Distribution

         Distributions of income will be made within three months after the
close of each fiscal year to the Unitholder. Capital gains and stock dividends
will not be considered as income.

7.       Liquidation

         Upon expiration of the term of this Trust Fund or termination of the
Investment Contract, the Manager shall, within three months, liquidate the Trust
Fund and distribute the available balance to the Unitholder according to its
entitlements.

8.       Amendment and Termination of the Investment Contract

         The Investment Contract may be amended with the prior approval of the
Securities and Exchange Commission, by the Manager and the Custodian with the
approval of the Unitholder. The Investment Contract may be terminated in
accordance with provisions of the relevant Republic of China Securities
Investment Trust Fund regulations and provisions of the Investment Contract.




<PAGE>


                                  ATTACHMENT I

Board of Directors of The Taiwan Fund, Inc.:

David Dean

Benny T. Hu

Lawrence J. Lau

Joe O. Rogers

Jack C. Tang

Gloria Wang

Shao-Yu Wang

Lawrence F. Weber



<PAGE>


                                                                       EXHIBIT 4



                           INTERIM INVESTMENT ADVISORY
                            AND MANAGEMENT AGREEMENT



         THIS INTERIM AGREEMENT dated as of August 6, 2001 between THE TAIWAN
FUND, INC., a Delaware corporation (the "Fund"), and CHINA SECURITIES INVESTMENT
TRUST CORPORATION, a Republic of China ("ROC") corporation ("CSITC" or the
"Adviser") having its principal office in Taipei, Taiwan, ROC.


         WHEREAS, the Fund is a diversified, closed-end management investment
company registered under the Investment Company Act of 1940 (the "1940 Act"),
and the Adviser is an investment adviser registered under the Investment
Advisers Act of 1940 (the "Advisers Act"), and is authorized by the ROC
Securities and Exchange Commission (the "CSEC") to conduct business in the ROC;


         WHEREAS, the Fund, the Adviser and the International Commercial Bank of
China ("ICBC") have entered into a Securities Investment Trust-Interim
Investment Management and Custodian Contract dated of even date herewith (as the
same may be amended or modified, the "Interim Management Contract") providing
for management by the Adviser of assets of the Fund held in the ROC;


         WHEREAS, certain of the assets of the Fund may be held in the United
States, either pending remittance to the ROC of the net proceeds of any offering
of the Common Stock of the Fund, or after distribution to the Fund under the
Interim Management Contract (whether as investment income or unit redemption
proceeds), or upon borrowing by the Fund from a bank in the United States for
temporary or emergency purposes, or otherwise as permitted under applicable ROC
law and regulations (such assets of the Fund being referred to herein as the
"U.S. Assets"); and


         WHEREAS, the Fund desires to retain the Adviser to furnish investment
advisory and management services for the Fund's assets in the United States, and
the Adviser is willing to furnish such services;


         NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties as follows:

       1.  Appointment  of the Adviser.  The Fund appoints the Adviser to act as
investment  adviser to the Fund with  respect to the U.S.  Assets for the period
and on the terms set forth in this Interim  Agreement.  The Adviser accepts such
appointment  and  agrees  to  furnish  the  services  herein  set  forth for the
compensation provided.

       2. Custodian.  The State Street Bank and Trust (the "U.S. Custodian") has
been retained by the Fund to act as custodian for the U.S. Assets. The Fund will
deliver to the U.S.  Custodian a photocopy of this Interim Agreement executed by
the Fund and the Adviser.

       3. Investment  Advisory and Management  Services.  The Adviser undertakes
and agrees:

              (a) To manage the investment of the U.S. Assets for the exclusive,
       full  benefit  of  the  Fund  (including  making  investment   decisions,
       supervising the  acquisition and disposition of investments,  instructing
       the U.S. Custodian with respect thereto and otherwise with respect to the
       U.S. Assets held by the U.S. Custodian,  and selecting brokers or dealers
       to carry out portfolio transactions) in good faith and to the best of its
       ability  and  without  gaining  any  advantage  for  itself or any of its
       Connected  Persons (as  defined in Article 17 of the  Interim  Management
       Contract) thereby except as expressly  provided in this Interim Agreement
       or the Interim Management Contract, all in accordance with the investment
       objectives and policies set forth in the Interim Management  Contract and
       in accordance  with  guidelines and  directions  from the Fund's Board of
       Directors;

              (b) To  account  to the  Fund  for any  loss in  value of the U.S.
       Assets  where  such loss has been  caused  by its  willful  or  negligent
       default or reckless disregard of its duties hereunder;

              (c) To be  responsible  to the Fund for the acts and  omissions of
       all persons to whom it may delegate  any of its  functions as the Adviser
       as if they were its own acts and omissions;

              (d)  Notwithstanding and without prejudice to any other provisions
       of this  Interim  Agreement,  to, and to instruct all brokers used by the
       Adviser in  relation to the sale or purchase of assets for the account of
       the Fund to, act in accordance with the best practice then applicable for
       the   settlement  of  sales  and   purchases  of  securities   and  other
       investments; and

              (e) To perform its obligations  under this Interim Agreement so as
       to (i) comply with all laws and  regulations of the United States and the
       ROC  applicable  to the  Adviser and (ii) permit the Fund to qualify as a
       regulated investment company under applicable United States tax law.

       4.  Compensation.  The Adviser  acknowledges  that the compensation to be
paid to it  pursuant  to  Article 9 of the  Interim  Management  Contract  shall
constitute  full  and  sufficient  compensation  for  performance  by it of  its
obligations under this Interim Agreement.

       5. Expenses.  Expenses shall be borne by the Adviser in accordance  with,
and to the extent provided under, Article 8 of the Interim Management Contract.

       6.  Duration and  Termination.  (a) This Interim  Agreement  shall become
effective on the date first above  written,  and shall  continue in effect until
the earlier of (i) the 150th day after the  execution of this Interim  Agreement
or (ii)  the  date  upon  which a  majority  of the  Fund's  outstanding  voting
securities  approve a new Investment  Advisory and  Management  Agreement and it
becomes effective.  Notwithstanding the foregoing, this Interim Agreement may be
terminated  at any time by the Fund,  without the payment of any  penalty,  upon
vote of a  majority  of the  Fund's  Board of  Directors  or a  majority  of the
outstanding voting securities of the Fund, or by the Adviser,  on ten (10) days'
written notice to the other party.  This Interim  Agreement shall  automatically
terminate  in the event of its  assignment  (as such term is defined in the 1940
Act). As used herein the phrase "majority of the outstanding  voting securities"
shall have the  meaning  set forth in the 1940 Act. In  addition,  this  Interim
Agreement shall automatically terminate if the Adviser is removed as provided in
Article 11 of the Interim Management Contract.

              (b) Without  limitation  of the  provisions  of clause  (a),  this
       Interim  Agreement  shall  also  terminate  upon the  termination  of the
       Interim Management Contract in accordance with the provisions thereof.

              (c)  Upon  termination  of this  Interim  Agreement,  unless a new
       Interim  Agreement  is entered  into (as  provided  in clause  (f)),  the
       Adviser   shall,   within  three  months  after  the  effective  date  of
       termination,  promptly  dispose  of U.S.  Assets  at  reasonable  prices,
       satisfy  any  liabilities  relating  to  the  Fund,  and  distribute  the
       available balance to the Fund.

              (d) The  Adviser  may be removed  by the Fund by 60 days'  written
       notice.

              (e) If the Adviser goes into  liquidation or bankruptcy,  or if it
       ceases to be registered as an investment  adviser under the Advisers Act,
       or if its ROC  permit  to act as  Manager  under the  Interim  Management
       Contract  has been  revoked,  it shall be deemed  to have been  forthwith
       removed as Adviser.

              (f) If the Adviser is removed or  resigns,  the Fund may appoint a
       new Adviser and enter into a new Agreement  containing  substantially the
       same  terms  and  conditions  as  this  Interim  Agreement,   subject  to
       satisfaction  of the  requirements  set  forth  in,  and  subject  to the
       provisions of Article 11.7 of the Interim Management Contract.

              (g) This Interim Agreement shall continue in full force and effect
       notwithstanding the resignation or removal of ICBC, or any successor,  as
       Custodian under the Interim Management Contract.

       7.  Liability  of the  Adviser.  The  Adviser  may  rely  on  information
reasonably  believed by it to be accurate and reliable.  Except as may otherwise
be provided by the 1940 Act, neither the Adviser nor its stockholders, officers,
directors, employees or agents shall be subject to, and the Fund shall indemnify
and hold such persons  harmless  from and  against,  any  liability  for and any
damages,  expenses or losses  incurred in connection with any act or omission in
the course of,  connected  with or arising  out of any  services  to be rendered
hereunder,  except  by  reason  of  willful  misfeasance,  bad  faith  or  gross
negligence in the  performance of the Adviser's  duties or by reason of reckless
disregard of the Adviser's  obligations and duties under this Interim  Agreement
("disabling  conduct");   provided  that  the  Adviser  shall  not  receive  any
indemnification  from  the  Fund  against  any  liability  to  the  Fund  or its
shareholders  to which the Adviser would  otherwise be subject  unless there has
been (1) a final decision on the merits by a court or other body before whom the
proceeding  alleging  liability  of the Adviser was brought that the Adviser was
not liable by reason of disabling  conduct,  or (2) a reasonable  determination,
based upon a review of the facts,  that the  Adviser was not liable by reason of
disabling  conduct,  by (i) the vote of a  majority  of a quorum  of the  Fund's
directors who are neither "interested directors" as defined in the United States
Investment  Company Act of 1940 nor parties to the  proceeding  ("disinterested,
non-party  directors"),  or (ii)  an  independent  legal  counsel  in a  written
opinion;  and provided further that, the Adviser shall not receive an advance of
attorneys'  fees or other  expenses  incurred by it in  defending  a  proceeding
alleging such liability  except upon the undertaking of the Adviser to repay the
advance   unless  it  is   ultimately   determined   that  it  is   entitled  to
indemnification, but only if at least one of the following is also required as a
condition  to the  advance:  (1) the Adviser  shall  provide a security  for its
undertaking,  (2) the Fund shall be insured  against losses arising by reason of
any  lawful  advances,  or (3) a  majority  of a  quorum  of the  disinterested,
non-party  directors of the Fund, or an  independent  legal counsel in a written
opinion,  shall  determine,  based on a review of  readily  available  facts (as
opposed to a full trial-type inquiry),  that there is reason to believe that the
Adviser ultimately will be found entitled to indemnification.

       8.  Services Not  Exclusive.  It is  understood  that the services of the
Adviser are not deemed to be  exclusive,  and nothing in this Interim  Agreement
shall prevent the Adviser,  or any affiliate  thereof,  from  providing  similar
services to other  investment  companies and other clients (whether or not their
investment  objectives  and  policies  are similar to those of the Fund) or from
engaging  in other  activities.  When  other  clients of the  Adviser  desire to
purchase or sell a security at the same time such  security is purchased for the
Fund, it is understood  that such purchases and sales and will be made as nearly
as  practicable  on a pro rata basis in proportion to the amounts  desired to be
purchased or sold by each client.

       9. Miscellaneous.

              (a) This Interim Agreement shall be governed by and constructed in
       accordance with the laws of the State of Delaware;  provided that nothing
       herein shall be construed as being  inconsistent with (i) the 1940 Act or
       the  Advisers Act or  regulations  issued  under such  statutes,  or (ii)
       applicable ROC law and regulations.

              (b) The  captions  in this  Interim  Agreement  are  included  for
       convenience  only and in no way define or delimit  any of the  provisions
       hereof or otherwise affect their instruction or effect.

              (c) If any  provision of this Interim  Agreement  shall be held or
       made  invalid  by a  court  decision,  statute,  rule or  otherwise,  the
       remainder of this Interim Agreement shall not be affected thereby and, to
       this extent,  the provisions of this Interim Agreement shall be deemed to
       be severable.

              (d) Nothing herein shall be construed as constituting  the Adviser
       an agent of the Fund.

              (e) If any of the parties to this  Interim  Agreement  changes its
       name,  such changed  name shall be  automatically  substituted  therefore
       hereunder.


       IN WITNESS WHEREOF,  the parties hereto have caused this instrument to be
executed as of the day and year first above written.



                               CHINA SECURITIES INVESTMENT TRUST CORPORATION




                               By:      I. Ming Ling
                                   -----------------------------------------




                               THE TAIWAN FUND, INC.





                               By:      Haichi Vicki Hau
                                   -----------------------------------------






<PAGE>


                                                                       EXHIBIT 5


                     FOREIGN SECURITIES DEPOSITARY AGREEMENT



         THIS AGREEMENT dated as of June 30, 2001 between THE TAIWAN FUND, INC.,
a diversified, closed-end management investment company (the "Fund")
incorporated in Delaware and registered under the Investment Company Act of 1940
(the "1940 Act"), and the INTERNATIONAL COMMERCIAL BANK OF CHINA (the
"Custodian"), a company organized under the laws of the Republic of China
("ROC").


         WHEREAS, the Fund, China Securities Investment Trust Corporation
("CSITC" or the "Adviser") and the Custodian have entered into a Securities
Investment Trust-Investment Management and Custodian Contract dated as of
December 16, 1986 (as the same may be amended or modified, the "Management
Contract") providing for management by the Adviser of assets of the Fund held in
the ROC and custody of the assets of the Fund held in the ROC by the Custodian;
and


         WHEREAS, the Fund and the Custodian desire to set forth their
understanding of the obligations and responsibilities of the Custodian with
respect to the custodian services to be performed in connection with any assets
of the Fund held by a foreign securities depositary;


         NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties as follows:

       1. Foreign Securities  Depositories.  Unless instructed  otherwise by the
Fund, the Custodian may deposit and/or maintain non-U.S. investments of the Fund
in any non-U.S.  securities depository (a central or book entry system or agency
established  for purposes of  recording  the  ownership  and/or  entitlement  to
investment  securities for a given market)  provided such securities  depository
meets the requirements of an "eligible  securities  depository" under Rule 17f-7
promulgated  under the Investment  Company Act of 1940 (the "1940 Act"),  or any
successor rule or regulation  ("Rule 17f-7") or which by order of the Securities
and Exchange Commission is exempted therefrom.

       2.  Monitoring and Risk Assessment of Securities  Depositories.  Prior to
the placement of any assets of the Fund with a non-U.S.  securities  depository,
the Custodian: (a) shall provide to the Fund or its authorized representative an
assessment of the custody risks associated with  maintaining  assets within such
securities  depository;  and (b) shall have  established a system to monitor the
custody risks associated with maintaining assets with such securities depository
on a continuing  basis (and shall monitor such risks) and to promptly notify the
Fund and the  Adviser of any  material  changes  in such  risks.  The  Custodian
confirms  that it has provided to the Adviser an assessment of the custody risks
associated with maintaining assets within each non-U.S. securities depositary in
which the Custodian currently deposits and/or maintains non-U.S.  investments of
the Fund,  and that it has  established  a system to monitor the  custody  risks
associated with  maintaining  assets with each such  securities  depositary on a
continuing basis. If the Custodian  determines that the custody arrangement with
any such securities  depository no longer meets the  requirements of Rule 17f-7,
the Custodian will cause the Fund's assets to be withdrawn  therefrom as soon as
reasonably  practical.  In  performing  its duties  under this  subsection,  the
Custodian shall use reasonable care, prudence and diligence and may rely on such
reasonable sources of information as may be available  including but not limited
to: (i) published ratings; (ii) information supplied by a subcustodian that is a
participant  in  such   securities   depository;   (iii)  industry   surveys  or
publications;  (iv)  information  supplied  by  the  depository  itself,  by its
auditors (internal or external) or by the relevant foreign regulatory authority.
It is  acknowledged  that  information  procured  through  some or all of  these
sources may not be  independently  verifiable  by the  Custodian and that direct
access  to  securities   depositories  is  limited  under  most   circumstances.
Accordingly,  the Custodian  shall not be responsible for errors or omissions in
its  duties  hereunder  provided  that  it  has  performed  its  monitoring  and
assessment  duties  with  reasonable  care,  prudence  and  diligence.  The risk
assessment  shall be  provided  to the Fund and its Adviser by such means as the
Custodian  shall  reasonably  establish.  Advice of any material  change in such
assessment  may be  provided  by the  Custodian  in the  manner  established  as
customary between the Fund and the Custodian for transmission of material market
information.

       3. Duration and Termination. This Agreement shall become effective on the
date first above written,  and shall continue in effect until the termination of
the Management  Contract,  or any successor management contract with the Fund to
which the Custodian is a party.  Notwithstanding  the foregoing,  this Agreement
may be terminated  at any time by the Fund,  without the payment of any penalty,
or by the Custodian, on sixty (60) days' written notice to the other party.

       4. Governing Law. This Agreement  shall be governed by and constructed in
accordance with the laws of the Republic of China;  provided that nothing herein
shall be construed as being  inconsistent  with (i) the 1940 Act or the Advisers
Act or regulations  issued under such statutes,  or (ii)  applicable ROC law and
regulations.


       IN WITNESS WHEREOF,  the parties hereto have caused this instrument to be
executed as of the day and year first above written.



                              INTERNATIONAL COMMERCIAL BANK OF CHINA


                              By:      Shih-Gin Chen
                                 ----------------------------------------------
                                  Title: Senior Vice President & General Manager



                              THE TAIWAN FUND, INC.


                              By:      Haichi Vicki Hau
                                  ----------------------------------------------
                                  Title: Treasurer



</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
