UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------
FORM N-CSR
- --------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811- 06062
THE THAI CAPITAL FUND, INC.
(Exact name of registrant as specified in charter)
- --------
c/o Daiwa Securities Trust Company
One Evertrust Plaza, 9th Floor
Jersey City, New Jersey 07302-3051
(Address of principal executive offices) (Zip code)
c/o Daiwa Securities Trust Company
One Evertrust Plaza, 9th Floor
Jersey City, New Jersey 07302-3051
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201)
915-3054
DATE OF FISCAL YEAR END: December 31, 2003
DATE OF REPORTING PERIOD: December 31, 2003
<Page>
ITEM 1 - ANNUAL REPORT
ANNUAL REPORT
DECEMBER 31, 2003
THE THAI CAPITAL
FUND, INC.
<Page>
THE THAI CAPITAL FUND, INC.
GENERAL INFORMATION
THE FUND
The Thai Capital Fund, Inc. (the "Fund") is a non-
diversified, closed-end
management investment company. The Fund seeks long-term
capital appreciation
through investment primarily in equity securities of Thai
companies. The Fund's
investments in Thailand are made through a wholly-owned
Investment Plan
established under an agreement between SCB Asset Management
Co., Ltd. (the
"Manager") and the Fund. The Fund's investments through the
Investment Plan are
managed by the Manager. Daiwa SB Investments (H.K.) Ltd.
provides the Manager
with advice regarding investments by the Investment Plan and
manages the Fund's
assets held outside the Investment Plan.
SHAREHOLDER INFORMATION
Commencing December 24, 2003, the Fund's shares were
listed on the American
Stock Exchange ("AMEX"). The Fund understands that its shares
may trade
periodically on certain exchanges other than the AMEX, but
the Fund has not
listed its shares on those other exchanges and does not
encourage trading on
those exchanges.
The Fund's trading symbol is "TF". Weekly comparative
net asset value
("NAV") and market price information about the Fund is
published each Monday in
THE WALL STREET JOURNAL, each Sunday in THE NEW YORK TIMES,
and each Saturday in
BARRON'S, and also in many other newspapers. The Fund's
weekly NAV is also
available by visiting www.daiwast.com or calling (800) 933-
3440 or (201)
915-3020. Also, the Fund's website includes a monthly market
review and a list
of the Fund's top ten industries and holdings.
INQUIRIES
All general inquiries and requests for information
should be directed to
the Fund at (800) 426-5523. All written inquiries should be
directed to the Fund
at the following address:
The Thai Capital Fund,
Inc.
c/o Daiwa Securities Trust
Company
One Evertrust Plaza, 9th
Floor
Jersey City, NJ 07302-3051
For specific information about your share account,
please contact EquiServe
Trust Company, N.A. (the "Plan Agent") at the address shown
below.
DIVIDEND REINVESTMENT PLAN
A Dividend Reinvestment Plan (the "Plan") is available
to provide
Shareholders with automatic reinvestment of dividends and
capital gain
distributions in additional Fund shares. A brochure fully
describing the Plan's
terms and conditions is available from the Plan Agent at the
following address:
The Thai Capital Fund,
Inc.
c/o EquiServe Trust
Company, N.A.
P.O. Box 43010
Providence, RI 02940-3010
Telephone: (800) 426-5523
<Page>
A brief summary of the material aspects of the Plan
follows:
WHO CAN PARTICIPATE IN THE PLAN? If you wish to
participate and your shares
are held in your name, no action is required on your part, as
you are
automatically enrolled by the Plan Agent. However, if your
shares are held in
the name of a brokerage firm, bank or nominee, you should
instruct your nominee
to participate in the Plan on your behalf. If your nominee is
unable to
participate in the Plan for you, you should request that your
shares be
registered in your name, so that you may participate directly
in the Plan.
Please contact the Plan Agent if you would like more
information about how to
change your registration so that you may participate in the
Plan.
MAY I WITHDRAW FROM THE PLAN? If your shares are held in
your own name and
you wish to receive all dividends and capital gain
distributions in cash rather
than in shares, you may withdraw from the Plan without
penalty at any time by
contacting the Plan Agent. If your shares are held in nominee
name, you should
be able to withdraw from the Plan without penalty at any time
by sending written
notice to your nominee. If you withdraw, you will receive a
share certificate
for all full shares or, if you wish, the Plan Agent will sell
your shares and
send you the proceeds, after the deduction of brokerage
commissions. The Plan
Agent will convert any fractional shares to cash at the then-
current market
price and send to you a check for the proceeds.
HOW ARE THE DIVIDENDS AND DISTRIBUTIONS REINVESTED? If
the market price of
the Fund's shares on the payment date should equal or exceed
their net asset
value per share, the Fund will issue new shares to you at the
higher of net
asset value or 95% of the then-current market price. If the
market price is
lower than net asset value per share, the Fund will issue new
shares to you at
the market price. If the dividends or distributions are
declared and payable as
cash only, you will receive shares purchased for you by the
Plan Agent on the
AMEX or otherwise on the open market to the extent available.
IS THERE A COST TO PARTICIPATE? There are no Plan
charges or brokerage
charges for shares issued directly by the Fund. However, each
participant will
pay a pro rata portion of brokerage commissions for shares
purchased on the AMEX
or on the open market by the Plan Agent.
WHAT ARE THE TAX IMPLICATIONS? The automatic
reinvestment of dividends and
distributions does not relieve you of any income tax which
may be payable (or
required to be withheld) on such dividends and distributions.
In addition, the
Plan Agent will reinvest dividends for foreign participants
and for any
participants subject to federal backup withholding after the
deduction of the
amounts required to be withheld.
PLEASE NOTE THAT, IF YOU PARTICIPATE IN THE PLAN THROUGH
A BROKERAGE
ACCOUNT, YOU MAY NOT BE ABLE TO CONTINUE AS A PARTICIPANT IF
YOU TRANSFER THOSE
SHARES TO ANOTHER BROKER. CONTACT YOUR BROKER OR NOMINEE OR
THE PLAN AGENT TO
ASCERTAIN WHAT IS THE BEST ARRANGEMENT FOR YOU TO PARTICIPATE
IN THE PLAN.
2
<Page>
January 23, 2004
DEAR SHAREHOLDERS:
The management of The Thai Capital Fund, Inc. (the
"Fund") would like to
take this opportunity to inform its shareholders about the
Thai economy, the
activities of the Stock Exchange of Thailand ("SET") and the
Fund's performance
for the year ended December 31, 2003.
A REVIEW OF THE THAI ECONOMY IN 2003
The economy continued to expand during the third and
fourth quarter,
supported by strong domestic consumption and external demand.
Private
consumption was given a boost by improvement in both consumer
and business
sentiment and high prices for agricultural products. Export
value increased on
the back of increases in both price and quantity. The tourism
industry clearly
has fully recovered from the impact of SARS.
We see indications of slowing growth in the third
quarter relative to the
second quarter, the result of the return to normal trend
lines of consumption
growth from the abnormally high growth seen in the preceding
quarter. At the
same time, the foundations of the Thai economy appear to be
strengthening,
reflected in low inflation, improved employment rate, rising
bank lending
growth, continued current account surplus, increased foreign
reserve and
declining external debt.
For the entire 2003 fiscal year, government revenue grew
by 13.6%
year-on-year ("YoY"), while spending contracted 3.4%. The
disbursement rate
(excluding principal repayment) was 89.1% vs. 89.2% in fiscal
year 2002. The
cash balance was in surplus by Bt34.3 billion. The Consumer
Price Index ("CPI")
rose by 1.9% YoY and core CPI was unchanged from the same
quarter.
Moreover, the Thai economy as a whole remained strong
with healthy growth
seen in farm income, exports and private investment. Leading
economic indicators
and business confidence also edged up.
The National Economic and Social Development Board
("NESDB") has revised
2003 Gross Domestic Product ("GDP") growth to 6.3%. It
expects inflation to
remain benign at 1.9% along with a healthy current account
surplus of US$7.9
billion. NESDB 2004 growth forecast was raised to 7.0% on the
back of 17%
private investment growth and 14% export growth.
Interestingly, government
investment is projected to grow by only 2.0% and consumption
by only 5.7%.
The Ministry of Finance revised its forecast of GDP
growth for 2004 to 8.3%
due to a Bt135.5 billion increase in the government budget.
This does not
include the Bt900 billion of off-budget railway and road
construction.
THAI STOCK MARKET OVERVIEW & OUTLOOK
The SET Index increased by 116.60% in 2003. Fears of
terrorism during the
Asia-Pacific Economic Cooperation ("APEC") meeting were
thankfully unrealized
and the successful conclusion of the APEC meeting spurred a
sharp rebound in the
market. Good third quarter 2003 earnings results in both the
bank and non-bank
sectors provided the major catalyst for the strong SET
performance. Finally, in
December, Thailand was the region's best performing market,
rising over 22%.
Key events upon which investors focused were the
successful
recapitalization of the Bank of Ayudhya, and a new plan to
carve out remaining
problem loans in the system. At the same time, the large
capitalization sectors
were quiet in general as foreign activity slowed in the third
quarter. Quarterly
performance in the third quarter was concentrated in the mid-
cap and small-cap
sectors, including stocks undergoing rehabilitation, with the
3
<Page>
property sector rising 60.55%, the vehicle sector 82.78%, the
finance sector
52.03% and rehabilitation sector 55.34%. The electronics
sector consolidated as
investors digested modest earnings expectations, up just
0.41%
quarter-on-quarter. Large-cap stocks were back in the month
of December mostly
as a result of retail investors.
The last several months proved to be an important
turning point in which
foreign investors no longer appear to determine the direction
of the SET. We
believe that domestic confidence is driving the SET and will
be able to continue
to do so this year with some corrections from time to time.
We see continuation of gains given a still-attractive
earnings yield gap in
favor of equities. Sectors that benefit the most from excess
domestic spending
power are those in which supply is limited in the short run,
specifically real
estate and building materials. For the same reason, resource-
based stocks may
also continue to benefit.
PERFORMANCE EVALUATION
As of December 31, 2003, the Fund had net assets of
US$30.2 million,
representing a net asset value per share of US$9.62. Of this
amount, Thai equity
securities accounted for 96.20%; the remainder was in cash,
bank deposits and
promissory notes.
Of the total net assets, 19.13% was invested in the
energy sector, 19.02%
in banks, 14.93% in communications, 12.65% in property
development, 8.89% in
building materials and 6.61% in entertainment and recreation.
The remainder was
invested in the vehicles and parts, printing and publishing
and finance and
securities sectors.
In 2003, in Thai baht terms, the Fund's portfolio
increased by +111.45%
compared to the SET Index's increase of +116.60%, an
underperformance to the
market of 5.15%. The reasons behind this are given below:
1. The stocks under rehabilitation that were still
trading in the stock
market provided returns of 376.78% against overall
SET returns of only
116.60% (including the rehabilitation sector),
peaking with a return
of 576.5% during the year.
2. The rehabilitation sector accounted for only 4.89%
of market
capitalization, sixth of the 30 stock market
sectors at the end of the
year, implying it has a material effect on
calculations of the SET
Index return.
3. In view of the shaky fundamental status of the
stocks still in the
rehabilitation sector, we are not comfortable
investing in these
stocks, believing the stocks to be enormously
speculative and are
being played by those who are betting that
Thailand's economic
recovery will extend as far as these essentially
dead companies.
4. We invest on the basis of fundamentals and do not
play in-and-out on
market volatility.
THE FUND'S INVESTMENT STRATEGY
The first quarter of 2004 could be very volatile given
that the market went
up 116.6% YoY and 19.52% in December. The January effect may
be seen, as well as
profit-taking, especially in the energy, petrochemical and
banking sectors.
Trading volume therefore should continue to be strong.
Economic growth should
continue in 2004, driven by heavy government expenditure that
will boost
domestic consumption and investment. We expect brokers to
revise their economic
forecasts upwards. Sector reform in telecommunications and TV
concessions are
likely to be seen in the first half of 2004 as well as bank
redemption of
Stapled Limited Interest Preferred Stock ("SLIPS") and
Capital Augmented
Preference Shares ("CAPS"). We expect the SET Index to
increase further in 2004,
supported by economic growth, high government expenditures
and corporate
profits.
4
<Page>
PORTFOLIO MANAGEMENT
Mr. Cholathee Pornrojnangkool has been the Fund's
portfolio manager since
November 12, 2001. SCB Asset Management Co., Ltd. ("SCBAM")
has employed Mr.
Pornrojnangkool since 1999, and he is currently a member of
SCBAM's Investment
Committee. Previously, Mr. Pornrojnangkool was a private fund
manager at SCB
Securities Ltd. He has nine years of investment experience.
Finally, the Fund's management would like to express its
sincere thanks to
all shareholders for their continued support and
participation.
Sincerely yours,
/s/ IKUO MORI
IKUO MORI
CHAIRMAN OF THE BOARD
5
<Page>
THE THAI CAPITAL FUND, INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
THAI COMMON, WARRANTS AND PREFERRED STOCKS--96.20%
COMMON STOCKS--94.66%
<Table>
<Caption>
SHARES VALUE
--------- -----------
BANKS--18.95%
1,102,700 Bangkok Bank
Public Co., Ltd.*
$ 3,038,302
776,800 Bank of Ayudhya
Public Co., Ltd.*
276,870
740,400 DBS Thai Danu Bank
Public Co., Ltd.*
97,323
1,673,700 Industrial Finance
Corp. of Thailand*
230,580
1,267,400 Kasikornbank
Public Co., Ltd.*
2,082,448
--------------
5,725,523
--------------
BUILDING MATERIALS--8.89%
414,000 The Siam Cement
Public Co., Ltd.
2,658,160
54,000 Tycoons Worldwide
Group Public
Co., Ltd.*
26,072
--------------
2,684,232
--------------
COMMERCE--0.95%
304,600 BIG C Supercenter
Public Co., Ltd.
141,675
56,700 C.P. 7-Eleven
Public Co., Ltd.*
80,263
55,500 Siam Makro
Public Co., Ltd.
64,535
--------------
286,473
--------------
COMMUNICATION--14.93%
964,500 Advanced Info Service
Public Co., Ltd.
2,072,374
1,909,000 Samart Corp.
Public Co., Ltd.*
540,469
1,302,600 Shin Corporations
Public Co., Ltd.
1,275,939
343,950 Shin Satellite
Public Co., Ltd.*
291,264
164,400 TelecomAsia Corp.
Public Co., Ltd.*
30,337
394,400 United Communication
Industry Public
Co., Ltd.*
299,092
--------------
4,509,475
--------------
ELECTRICAL--1.07%
459,200 Mida Assets
Public Co., Ltd.*
322,116
--------------
ELECTRONIC COMPONENTS--1.24%
118,500 Hana Microelectronic
Public Co., Ltd.
374,434
100 Thai Precision
Manufacturing
Co., Ltd.*+
--
--------------
374,434
--------------
ENERGY--19.13%
333,900 Electricity Generating
Public Co., Ltd.
759,637
342,100 PTT Exploration and
Production Public
Co., Ltd.
2,282,990
585,000 PTT Public Co., Ltd.
2,735,739
--------------
5,778,366
--------------
ENTERTAINMENT & RECREATION--6.58%
113,100 BEC World
Public Co., Ltd.
646,127
144,200 EGV Entertainment
Public Co., Ltd.
42,283
135,700 GMM Media
Public Co., Ltd.
113,199
1,200,000 ITV Public Co., Ltd.*
902,434
</Table>
6
<Page>
<Table>
<Caption>
VALUE
SHARES -----------
- --------------
201,700 Major Cineplex Group
Public Co., Ltd.
$ 81,578
282,777 United Broadcasting
Corp. Public
Co., Ltd.*
203,721
--------------
1,989,342
--------------
FINANCE & SECURITIES--1.86%
64,600 ABN Amro Asia
Securities Public Co.,
Ltd.
145,335
270,000 Siam General Factoring
Public Co., Ltd.*
67,569
348,600 Thitikorn
Public Co., Ltd.*
126,893
267,600 TISCO Finance
Public Co., Ltd.*
221,536
--------------
561,333
--------------
HOUSEHOLD GOODS--0.31%
102,700 Modernform Group
Public Co., Ltd.
94,108
--------------
MINING--0.95%
683,800 Padaeng Industry
Public Co., Ltd.*
286,935
--------------
PRINTING & PUBLISHING--2.85%
327,900 Amarin Printing Group
Public Co., Ltd.
862,029
--------------
PROPERTY DEVELOPMENT--11.54%
76,100 Italian-Thai Development
Public Co., Ltd.*
265,467
415,500 Lalin Property
Public Co., Ltd.
115,534
6,478,200 Land and House
Public Co., Ltd.
2,014,218
540,700 Noble Development
Public Co., Ltd.
198,185
110,400 Sammakorn
Public Co., Ltd.
113,024
1,495,100 Sino Thai Engineering &
Construction
Public Co., Ltd.*
778,546
--------------
3,484,974
--------------
RETAIL FOOD--1.27%
70,000 S&P Syndicate
Public Co., Ltd.
46,449
138,000 Serm Suk
Public Co., Ltd.
109,012
292,500 Thai Union Frozen
Products Public
Co., Ltd.
229,211
--------------
384,672
--------------
UTILITIES--1.12%
243,100 Eastern Water
Resources
Development &
Management Public
Co., Ltd.
337,983
--------------
VEHICLES & PARTS--3.02%
66,330 Aapico Hitech
Public Co., Ltd.
261,566
475,000 Thai Rung Union Car
Co., Ltd.
177,706
46,900 Thai Stanley Electric
Public Co., Ltd.
474,220
--------------
913,492
--------------
Total Common Stocks
(Cost--$13,411,824)
28,595,487
--------------
</Table>
7
<Page>
PREFERRED STOCKS--0.37%
<Table>
<Caption>
SHARES
VALUE
- -----------
--------------
BANKS--0.07%
16,300 The Siam Commercial
Bank Public
Co., Ltd.*
$ 22,044
- --------------
FINANCE & SECURITIES--0.30%
109,900 TISCO Finance
Public Co., Ltd.*
90,288
--------------
Total Preferred Stocks
(Cost--$54,220)
112,332
--------------
WARRANTS--1.17%
ENTERTAINMENT & RECREATION--0.03%
36,050 EGV Entertainment
Public Co., Ltd.,
expires 2008*+
6,014
50,425 Major Cineplex Group
Public Co., Ltd.,
expires 2006*+
3,824
--------------
9,838
--------------
PROPERTY DEVELOPMENT--1.11%
1,331,400 Land & House
Public Co., Ltd.,
expires 9/2/08*
336,555
--------------
RETAIL FOOD--0.03%
35,000 S&P Syndicate
Public Co., Ltd.,
expires 4/5/07*
7,520
--------------
Total Warrants
(Cost--$0)
353,913
--------------
Total Thai Common, Warrants and
Preferred Stocks
(Cost--$13,466,044)
29,061,732
--------------
</Table>
SHORT-TERM INVESTMENTS--3.17%
<Table>
<Caption>
PRINCIPAL
AMOUNT
(000)
VALUE
- -----------
--------------
THAI BAHT PROMISSORY NOTES--2.09%
10,000 The Book Club Finance
Public Co., Ltd.,
1.00%, (Payable
on Demand)
$ 252,782
15,000 UOB Radanasin Bank
Public Co., Ltd., 0.75%,
(Payable on Demand)
379,174
--------------
Total Thai Baht Promissory Notes
631,956
--------------
THAI BAHT SAVINGS ACCOUNT--0.66%
2,572 Bank Credit Agricole
Indosuez, 0.50%,
(Payable on Demand)
65,025
5,343 Citibank N.A. Gold, 0.75%,
(Payable on Demand)
135,058
--------------
Total Thai Baht Savings Account
200,083
--------------
U.S. DOLLAR TIME DEPOSIT--0.42%
125 Bank of New York, 0.05%,
due 1/2/04
124,618
--------------
Total Short-Term Investments
(Cost--$929,108)
956,657
--------------
Total Investments--99.37%
(Cost--$14,395,152)
30,018,389
Other assets less liabilities--0.63%
191,002
--------------
NET ASSETS (Applicable to 3,139,294
shares of capital stock outstanding;
equivalent to $9.62 per
share)--100.00%
$ 30,209,391
==============
</Table>
- ----------
* Non-income producing securities.
+ Unlisted security. This unlisted security has been
valued in good faith
in such a manner as prescribed by the Board of
Directors.
8
<Page>
THE THAI CAPITAL FUND, INC.
TEN LARGEST EQUITY CLASSIFICATIONS HELD DECEMBER 31, 2003
<Table>
<Caption>
PERCENT OF
INDUSTRY NET ASSETS
- -------- ----------
Energy 19.13%
Banks# 19.02
Communication 14.93
Property Development** 12.65
Building Materials 8.89
Entertainment & Recreation** 6.61
Vehicles & Parts 3.02
Printing & Publishing 2.85
Finance & Securities# 2.16
Retail Food** 1.30
</Table>
TEN LARGEST EQUITY POSITIONS HELD DECEMBER 31, 2003
<Table>
<Caption>
PERCENT OF
ISSUE NET ASSETS
- ----- ----------
Bangkok Bank Public Co., Ltd. 10.06%
PTT Public Co., Ltd. 9.06
The Siam Cement Public Co., Ltd. 8.80
Land and House Public Co., Ltd.** 7.78
PTT Exploration and Production
Public Co., Ltd. 7.56
Kasikornbank Public Co., Ltd. 6.89
Advanced Info Service Public Co., Ltd. 6.86
Shin Corporations Public Co., Ltd. 4.22
ITV Public Co., Ltd. 2.99
Amarin Printing Group Public Co.,
Ltd. 2.85
</Table>
- ----------
# Includes the value of preferred stocks.
** Includes the value of warrants.
9
<Page>
THE THAI CAPITAL FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003
<Table>
ASSETS
Investment in securities, at value (cost--$14,395,152)
$ 30,018,389
Cash denominated in foreign currency (cost--$473,624)
475,489
Interest receivable
851
Prepaid expenses
7,236
---------------
Total assets
30,501,965
- ---------------
LIABILITIES
Dividend Payable
194,636
Accrued Thai tax provision
19,500
Accrued expenses and other liabilities
78,438
---------------
Total liabilities
292,574
---------------
NET ASSETS
Capital stock, $0.01 par value per share; total
100,000,000
shares authorized; 3,139,294 shares issued and
outstanding 31,393
Paid-in capital in excess of par value
61,492,413
Accumulated net investment loss
(1,986)
Accumulated net realized loss on investments and foreign
currency transactions
(46,937,539)
Net unrealized appreciation on investments and other
assets
and liabilities denominated in foreign currency
15,625,110
---------------
Net assets applicable to shares outstanding
$ 30,209,391
===============
NET ASSET VALUE PER SHARE
$ 9.62
===============
</Table>
See accompanying notes to financial
statements.
10
<Page>
THE THAI CAPITAL FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
<Table>
INVESTMENT INCOME:
Dividends
$ 610,500
Interest
8,103
---------------
Total investment income
618,603
---------------
EXPENSES:
Administration fee
150,000
Investment management fee
112,198
Investment advisory fee
111,031
Audit and tax services
60,750
Legal fees and expenses
54,803
Reports and notices to shareholders
31,955
Custodian fees and expenses
27,942
Directors' fees and expenses
22,069
Transfer agency fee and expenses
13,857
Insurance expense
12,593
Other
11,755
---------------
Total expenses
608,953
---------------
Net investment income before waivers and tax
9,650
Waiver of:
Administration fee
(50,000)
Investment advisory fee
(74,021)
Provision for Thai tax applicable to net investment income
19,500
---------------
NET INVESTMENT INCOME AFTER WAIVERS AND TAX
114,171
---------------
REALIZED AND UNREALIZED GAINS FROM INVESTMENT ACTIVITIES AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gains on investments
705,016
Net realized gains on foreign currency transactions
80,875
Net change in unrealized appreciation (depreciation) on
equity investments
15,864,059
Net change in unrealized appreciation (depreciation) on
translation of short-term investments and other assets
and
liabilities denominated in foreign currency
26,286
---------------
Net realized and unrealized gains from investment activities
and foreign currency transactions
16,676,236
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$ 16,790,407
===============
</Table>
See accompanying notes to financial
statements.
11
<Page>
THE THAI CAPITAL FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------------
2003 2002
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss)
$ 114,171 $ (296,266)
Net realized gain (loss) on:
Investments
705,016 (496,500)
Foreign currency transactions
80,875 34,727
Net change in unrealized appreciation (depreciation) on:
Investments in equity securities
15,864,059 3,666,461
Translation of short-term investments and other assets
and
liabilities denominated in foreign currency
26,286 (17,693)
--------------- ---------------
Net increase in net assets resulting from operations
16,790,407 2,890,729
--------------- ---------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
(194,636) --
--------------- ---------------
Net increase in net assets
16,595,771 2,890,729
NET ASSETS:
Beginning of year
13,613,620 10,722,891
--------------- ---------------
End of year
$ 30,209,391 $ 13,613,620
=============== ===============
</Table>
See accompanying notes to financial
statements.
12
<Page>
THE THAI CAPITAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Thai Capital Fund, Inc. (the "Fund") was
incorporated in Maryland on
March 14, 1990 and commenced operations on May 30, 1990. It
is registered with
the U.S. Securities and Exchange Commission as a non-
diversified, closed-end
management investment company.
The Fund makes its investments in Thailand through a
wholly-owned
Investment Plan pursuant to a contract with SCB Asset
Management Co., Ltd. (the
"Manager"). The accompanying financial statements are
prepared on a consolidated
basis and present the financial position and results of
operations of the
Investment Plan and the Fund.
The following significant accounting policies are in
conformity with
generally accepted accounting principles in the United States
of America for
investment companies. Such policies are consistently followed
by the Fund in the
preparation of its financial statements. The preparation of
its financial
statements in accordance with accounting principles generally
accepted in the
United States of America requires management to make
estimates and assumptions
that affect the amounts and disclosures in the financial
statements. Actual
reported results could differ from those estimates.
VALUATION OF INVESTMENTS--Securities listed on the
Securities Exchange of
Thailand for which market quotations are readily available
are valued at the
last sales price prior to the time of determination, or, if
there were no sales
on such date, at the mean between the last current bid and
ask prices.
Securities that are traded over-the-counter, if bid and asked
quotations are
available, are valued at the mean between the current bid and
asked prices. In
instances where quotations are not readily available or where
the price
determined is deemed not to represent fair market value, fair
value is
determined in good faith in such manner as the Board of
Directors (the "Board")
may prescribe. Short-term investments having a maturity of
sixty days or less
are valued at amortized cost, which approximates market
value.
TAX STATUS--It is the Fund's intention to continue to
qualify as a
regulated investment company and distribute substantially all
of its taxable
income. Accordingly, no provision for U.S. Federal income or
excise taxes is
required in the financial statements.
Remittances from the Investment Plan to the Fund are
subject to a Thai
withholding tax of 10% and such remittances are required by
Thai law to be
derived only from the Investment Plan's net income and net
realized gains on the
sale of securities. The Fund records a provision for such
taxes based upon the
Investment Plan's overall net increase in net assets
resulting from operations
determined by reference to the Baht, except that there is
currently no provision
required for the component of the net increase in net assets
relating to capital
gains, if any, because the Fund intends to utilize its U.S.
tax loss
carryforward available to offset any such gains. Remittances
for the payment of
expenses are not subject to a Thai withholding tax.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--The Fund
records dividends and
distributions payable to its shareholders on the ex-dividend
date. The amount of
dividends and distributions from net investment income and
net realized capital
gains are determined in accordance with federal income tax
regulations, which
may differ from generally accepted accounting principles.
These "book/tax"
differences are either considered temporary
13
<Page>
or permanent in nature. To the extent these differences are
permanent in nature,
such amounts are reclassified within the capital accounts
based on their federal
tax-basis treatment; temporary differences do not require
reclassification.
Dividends and distributions which exceed net investment
income and net realized
capital gains for tax purposes are reported as distributions
of paid-in-capital.
FOREIGN CURRENCY TRANSLATION--The books and records of
the Fund are
maintained in U.S. dollars as follows: (1) the foreign
currency market value of
investment securities and other assets and liabilities stated
in foreign
currency are translated at the exchange rate prevailing at
the end of the
period; and (2) purchases, sales, income and expenses are
translated at the rate
of exchange prevailing on the respective dates of such
transactions. The
resulting exchange gains and losses are included in the
Statement of Operations.
The Fund does not isolate the effect of fluctuations in
foreign exchange rates
from the effect of fluctuations in the market price of
securities.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--
Securities transactions are
recorded on the trade date (the date upon which the order to
buy or sell is
executed). Realized and unrealized gains and losses from
security and foreign
currency transactions are calculated on the identified cost
basis. Dividend
income and corporate actions are recorded on the ex-date,
except for certain
dividends and corporate actions involving foreign securities
which may be
recorded after the ex-date, as soon as the Fund acquires
information regarding
such dividends or corporate actions. Interest income is
recorded on an accrual
basis.
INVESTMENT MANAGER AND INVESTMENT ADVISER
The Manager acts as the investment manager of the
Investment Plan pursuant
to the Investment Contract. The Manager makes the investment
management
decisions relating to the Fund's assets held through the
Investment Plan. For
its management services, the Manager receives a fee, which
accrues weekly and is
payable monthly in Baht, at an annual rate of 0.60% of the
Investment Plan's
average net assets. At December 31, 2003, the Fund owed the
Manager $14,747. In
addition, as permitted by the Investment Contract, the Fund
reimburses the
Manager for its out-of-pocket expenses related to the Fund.
During the year
ended December 31, 2003, no such expenses were paid to the
Manager.
Under the International Investment Advisory Agreement,
Daiwa SB Investments
(H.K.) Ltd. ("the Adviser") provides general and specific
investment advice to
the Manager with respect to the Fund's assets held through
the Investment Plan,
but the Manager makes the ultimate decisions regarding
investments. In addition,
the Adviser manages the Fund's assets held outside the
Investment Plan. The Fund
pays to the Adviser a fee, which accrues weekly and is
payable monthly in U.S.
Dollars, at an annual rate equal to 0.60% of the Fund's
average net assets. In
addition, as permitted by the Advisory Agreement, the Fund
reimburses the
Adviser for its out-of-pocket expenses related to the Fund.
During the year
ended December 31, 2003 no such expenses were paid to the
Adviser. The Adviser
has voluntarily decreased its fee to 0.20% of the Fund's
average net assets for
the fiscal year ended December 31, 2003. At December 31,
2003, the Fund owed the
Adviser $4,478, net of waivers.
ADMINISTRATOR AND CUSTODIAN AND OTHER RELATED PARTIES
Daiwa Securities Trust Company ("DSTC"), an affiliate of
the Adviser,
provides certain administrative services to the Fund. For
such services, the
Fund pays DSTC a monthly fee at an annual rate of 0.20% of
the Fund's
14
<Page>
average weekly net assets, with a minimum annual fee of
$150,000. DSTC has
voluntarily decreased its minimum annual administration fee
to $100,000 for the
year ended December 31, 2003. In addition, as permitted by
the Ad ministration
Agreement, the Fund reimburses DSTC for its out-of-pocket
expenses related to
the Fund. During the year ended December 31, 2003, no such
expenses were paid to
the Administrator.
DSTC also acts as custodian for the Fund's U.S. assets.
As compensation for
its services as custodian, DSTC receives a monthly fee and
reimbursement of
out-of-pocket expenses. During the year ended December 31,
2003, DSTC earned
$6,988, as compensation for its custodial services to the
Fund.
At December 31, 2003, the Fund owed $8,333 and $533 to
DSTC for
administration and custodian fees, respectively.
The Fund paid or accrued $54,252 for the year ended
December 31, 2003 for
legal services in conjunction with the Fund's ongoing
operations provided by the
Fund's law firm, Clifford Chance US LLP, of which the Fund's
Assistant Secretary
is a partner.
INVESTMENTS IN SECURITIES AND FEDERAL INCOME TAX MATTERS
During the year ended December 31, 2003, the Fund made
purchases of
$2,064,879 and sales of $2,541,611 of investment securities,
excluding
short-term investments. The aggregate cost of investments at
December 31, 2003
for federal income tax purposes, was substantially the same
as the cost of
securities for financial statement purposes. At December 31,
2003, net
unrealized appreciation, excluding short-term securities
aggregated $15,595,688
of which $16,977,516 related to appreciated securities and
$1,381,828 related to
depreciated securities.
Distributions to shareholders, which are determined in
accordance with
federal income tax regulations, and which may differ from
generally accepted
accounting principals, are recorded on the ex-dividend date.
In order to present
undistributed net investment income (loss) and accumulated
net realized gains
(losses) in the Statement of Assets and Liabilities in a way
that more closely
represents their tax character, an adjustment has been made
to accumulated net
realized gains (losses) on investments and undistributed net
investment loss.
For the year ended December 31, 2003, the adjustment was
to increase
accumulated net realized loss on investments and foreign
currency transactions
by $80,875 and to decrease undistributed (accumulated) net
investment loss by
$80,875. Net investment income, net realized losses and net
assets applicable to
common shareholders were not affected by this change. The
difference between
book basis and tax basis was due to the ordinary income
dividend payable.
For the year ended December 31, 2003, the tax character
of total
distributions paid to common shareholders as reflected in the
Statement of
Changes in Net Assets was $194,636 of ordinary income.
At December 31, 2003, the Fund had a remaining capital
loss carryover of
$46,937,538, of which $7,442,803 expires in the year 2005,
$24,330,001 expires
in the year 2006, $6,364,433 expires in the year 2007,
$5,797,861 expires in the
year 2008, $2,320,539 expires in the year 2009 and $681,901
expires in the year
2010 available to offset future net capital gains. During the
year ended
December 31, 2003, $612,451 of capital loss carryover was
utilized by the Fund.
15
<Page>
CONCENTRATION OF RISK
The Fund's investments in Thailand involve certain
considerations and risks
not typically associated with domestic investments as a
result of, among others,
the possibility of future economic and political developments
and the level of
government supervision and regulation of securities markets.
The currency transactions of the Fund and the Investment
Plan are subject
to Thai foreign exchange control regulations. Remittances
from the Plan require
the approval of the Exchange Control Officer of the Bank of
Thailand. There can
be no assurance that approval of remittances from the Plan
will be granted in a
timely fashion or at all.
The economic difficulties experienced in Thailand have
had an impact on the
banking industry. All of the Fund's investments are held in
Thailand through a
subcustodial arrangement with Bangkok Bank Public Company
Limited (the
"subcustodian") and the Fund's securities in turn are being
held by the Thailand
Securities Depository Company in book-entry form. In the
event of failure of the
subcustodian, legal counsel has informed the Fund that the
Fund would be able to
recover all of its securities held by the subcustodian. The
Fund's ability to
enter into investment transactions pertaining to such
securities may be
effectively restricted for the period of time required to
resolve the Fund's
claim to recover such securities.
CAPITAL STOCK
There are 100,000,000 shares of $0.01 par value common
stock authorized. Of
the 3,139,294 shares outstanding at December 31, 2003, Daiwa
Securities America
Inc., a lead underwriter of the Fund and an affiliate of both
the Adviser and
DSTC, owned 7,230 shares.
SUBSEQUENT EVENT
On December 3, 2003, a distribution was declared by the
Board. The
distribution of $0.062 per share was paid on January 29,
2004, to shareholders
of record at December 31, 2003. The ex-dividend date was
March 8, 2004.
16
<Page>
THE THAI CAPITAL FUND, INC.
FINANCIAL HIGHLIGHTS+
Selected data for a share of capital stock outstanding during
each year is
presented below:
<Table>
<Caption>
FOR THE YEARS ENDED DECEMBER 31,
- -----------------------------------------------------------
2003 2002 2001 2000 1999
- -------- -------- -------- -------- --------
Net asset value, beginning of year
$ 4.34 $ 3.42 $ 3.36 $ 7.22 $ 6.24
- -------- -------- -------- -------- --------
Net investment income (loss)
0.03* (0.09) (0.16)* (0.18)* (0.18)
Net realized and unrealized gains (losses) on investments and
foreign currency transactions
5.31 1.01 0.22* (3.68)* 1.16
- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value resulting
from operations
5.34 0.92 0.06 (3.86) 0.98
- -------- -------- -------- -------- --------
Less: dividends and distributions to shareholders
Net investment income
(0.06) -- -- -- --
- -------- -------- -------- -------- --------
Net asset value, end of year
$ 9.62 $ 4.34 $ 3.42 $ 3.36 $ 7.22
======== ======== ======== ======== ========
Per share market value, end of year
$ 9.250 $ 3.970 $ 2.800 $ 3.250 $ 9.750
======== ======== ======== ======== ========
Total investment return:
Based on market price at beginning and end of year
134.56% 41.79% (13.85)% (66.67)% 27.87%
Based on net asset value at beginning and end of year
123.09% 26.90% 1.79% (53.46)% 15.71%
Ratios and supplemental data:
Net assets, end of year (in millions)
$ 30.2 $ 13.6 $ 10.7 $ 10.5 $ 22.6
Ratios to average net assets of:
Expenses, excluding Thai taxes applicable to net
investment
income
2.63% 4.29% 5.98% 4.73% 3.92%
Expenses, including Thai taxes applicable to net
investment
income
2.74% 4.29% 6.43% 5.11% 3.92%
Expenses, excluding waiver of Administration and
Advisory
fee applicable to net investment income
3.31% 4.98% 7.09% 5.66% 4.16%
Expenses, including waiver of Administration and
Advisory
fee applicable to net investment income
2.63% 4.29% 6.43% 5.11% 3.92%
Net investment income (loss)
0.62% (2.20)% (4.77)% (4.03)% (2.78)%
Portfolio turnover
11.86% 14.62% 20.85% 45.46% 63.45%
</Table>
- ----------
+ Per share values are adjusted to reflect the one-for-two
reverse stock split
effective August 5, 2002.
* After provision for Thai taxes.
17
<Page>
THE THAI CAPITAL FUND, INC.
REPORT OF INDEPENDENT AUDITORS
To The Shareholders and
Board of Directors of
The Thai Capital Fund, Inc.
In our opinion, the accompanying statement of assets and
liabilities,
including the portfolio of investments, and the related
statements of operations
and of changes in net assets and the financial highlights
present fairly, in all
material respects, the financial position of The Thai Capital
Fund, Inc. (the
"Fund") at December 31, 2003, the results of its operations
for the year then
ended, the changes in its net assets for each of the two
years in the period
then ended and the financial highlights for each of the five
years in the period
then ended, in conformity with accounting principles
generally accepted in the
United States of America. These financial statements and
financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the
Fund's management; our responsibility is to express an
opinion on these
financial statements based on our audits. We conducted our
audits of these
financial statements in accordance with auditing standards
generally accepted in
the United States of America, which require that we plan and
perform the audit
to obtain reasonable assurance about whether the financial
statements are free
of material misstatement. An audit includes examining, on a
test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing
the accounting principles used and significant estimates made
by management, and
evaluating the overall financial statement presentation. We
believe that our
audits, which included confirmation of securities at December
31, 2003 by
correspondence with the custodians, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 20, 2004
18
<Page>
THE THAI CAPITAL FUND, INC.
TAX INFORMATION (UNAUDITED)
The Fund is required by Subchapter M of the Internal
Revenue Code of 1986,
as amended, to advise you within 60 days of the Fund's fiscal
year end (December
31, 2003) as to the federal tax status of distributions
totaling $0.062 per
share received by you during such fiscal year.
Accordingly, the Fund is hereby advising you that on
December 3, 2003 the
Board of Directors of the Fund declared a total distribution
of $0.062 per
share, all of which resulted from net investment income. The
dividend was paid
on January 29, 2004 to shares of record at the close of
business on December 31,
2003. The entire amount of this distribution is reportable as
2003 income.
There is no foreign tax deduction or credit available to
shareholders for
calendar year 2003.
SHAREHOLDERS ARE STRONGLY ADVISED TO CONSULT THEIR OWN
TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES OF THEIR INVESTMENT IN THE
FUND.
19
<Page>
THE THAI CAPITAL FUND, INC.
INFORMATION CONCERNING DIRECTORS AND OFFICERS (UNAUDITED)
The following table sets forth information concerning
each of the Directors
and Officers of the Fund. The Directors of the Fund will
serve for terms
expiring on the date of subsequent Annual Meetings of
Stockholders in the year
2004 for Class I Directors, 2005 for Class II Directors and
2006 for Class III
Directors, or until their successors are duly elected and
qualified.
<Table>
<Caption>
NUMBER OF
FUNDS IN
PRINCIPAL
OCCUPATION
FUND
OR EMPLOYMENT
DURING PAST
COMPLEX FOR
FIVE YEARS
AND DIRECTOR OR
WHICH
NAME (AGE) AND ADDRESS
DIRECTORSHIPS IN OFFICER OF
DIRECTOR
OF DIRECTORS/OFFICERS PUBLICLY HELD
COMPANIES FUND SINCE
SERVES (1)
- -------------------------------------------------------------
- -------------------------------------------------------------
- -----
DIRECTORS
Austin C. Dowling (71) Retired; Director, The Japan
Equity Fund, Inc., since 1992; Class II Director since
3
1002 E Long Beach Boulevard Director, The Thai Capital
Fund, Inc., since 2000. 1990
North Beach, NJ 08008
Martin J. Gruber (65) Professor of Finance, Leonard
N. Stern School of Business, Class I Director since 3
229 South Irving Street New York University, since
1965; Director, The Japan Equity 2000
Ridgewood, NJ 07450 Fund, Inc., since 1992;
Director, The Thai Capital Fund, Inc.,
since 2000; Director, SG
Cowen Income & Growth Fund, Inc.,
from 1986 to 2001; Director,
SG Cowen Opportunity Fund,
from 1987 to 2001; Director,
SG Cowen Standby Reserve Fund
Inc., from 1985 to 2001;
Director, SG Cowen Standby Tax
Exempt Reserve Fund Inc.,
from 1986 to 2001; Trustee,
Deutsche Asset Management BT
Family of Funds, since 1992;
Trustee, C.R.E.F., since
2001; Trustee, T.I.A.A., from 1996
to 2000; Chairman of the
Board, TIAA-CREF since
February 2004.
David G. Harmer (60) Executive Director,
Department of Community and Economic Class I Director
since 3
4337 Bobwhite Court Development for the State of
Utah, since May 2002; Chairman, 2000
Ogden, UT 84403 2K2 Hosting Corporation, from
April 2001 to April 2002;
President, Jetway Systems, a
division of FMC Corporation,
from 1997 until 2001;
Director, The Japan Equity Fund,
Inc., since 1997; Director,
The Thai Capital Fund, Inc., since
1996.
* Ikuo Mori (54) Chairman and CEO, Daiwa
Securities America Inc., since Chairman of the Board
2
Daiwa Securities America Inc. 2001; Executive Officer,
Daiwa Securities Group Inc., since and Class III Director
Financial Square 2001; President and COO,
Daiwa Securities America Inc., since 2001
32 Old Slip from 1996 to 2001; Chairman
of the Board, The Thai Capital
New York, NY 10005 Fund, Inc., since 2001.
Oren G. Shaffer (60) Vice Chairman and Chief
Financial Officer, Qwest Class II Director since
3
1801 California Street Communications International
Inc., since July 2002; 2000
Denver,CO 80202 Executive Vice President and
Chief Financial Officer,
Ameritech Corporation, from
1994 to 2000; Director, The
Japan Equity Fund, Inc.,
since 2000; Director, The
Thai Capital Fund, Inc.,
since 1997.
</Table>
20
<Page>
<Table>
<Caption>
NUMBER OF
FUNDS IN
PRINCIPAL
OCCUPATION
FUND
OR EMPLOYMENT
DURING PAST
COMPLEX FOR
FIVE YEARS
AND DIRECTOR OR
WHICH
NAME (AGE) AND ADDRESS
DIRECTORSHIPS IN OFFICER OF
DIRECTOR
OF DIRECTORS/OFFICERS PUBLICLY HELD
COMPANIES FUND SINCE
SERVES (1)
- -------------------------------------------------------------
- -------------------------------------------------------------
- -----
OFFICERS
John J. O'Keefe (44) Vice President, the Fund
Accounting Department of Daiwa Vice President and
- --
One Evertrust Plaza Securities Trust Company
since 2000; Assistant Controller, Treasurer of the Fund
Jersey City, NJ 07302-3051 Reserve Management
Corporation from 1999 to 2000; since 2000
Accounting Manager,
Prudential Investments from 1998 to
1999; Assistant Vice
President, Daiwa Securities Trust
Company from 1990 to 1998;
Vice President and Treasurer,
The Japan Equity Fund, Inc.
and The Thai Capital Fund, Inc.,
since 2000.
Mariedor Pineda (29) Production Analyst, Daiwa
Securities Trust Company since Secretary of the Fund
- --
One Evertrust Plaza 1999; Assistant Supervisor,
CAMBA-Park Slope Women's since 2003
Jersey City, NJ 07302-3051 Shelter, from 1996 to 1999.
Secretary, The Thai Capital
Fund, Inc. and The Japan
Equity Fund, Inc., since 2003.
Laurence E. Cranch (56) Assistant Secretary, The
Japan Equity Fund, Inc. and The Assistant Secretary of
- --
200 Park Avenue Thai Capital Fund, Inc.,
since 1992; Partner in the law firm the Fund since 1990
New York, NY 10166 of Clifford Chance US LLP
since 1980.
</Table>
- ----------
(1) "Fund Complex" includes the Fund, The Japan Equity Fund,
Inc., The
Thai Capital Fund, Inc. and other investment companies
advised by SCB Asset
Management Co., Ltd., Daiwa SB Investments (H.K.) Ltd.,
DBS Asset
Management (United States) Pte. Ltd., Daiwa SB
Investments (Thai Capital)
Ltd., Daiwa SB Investments (USA) Ltd., Daiwa SB
Investments Ltd. or their
respective affiliates.
* Directors so noted are deemed by the Fund's counsel to
be "interested
persons" (as defined in the U.S. Investment Company Act
of 1940, as
amended). Mr. Mori is deemed an interested person of the
Fund because of
his affiliation with Daiwa Securities America Inc., an
affiliate of the
Fund's investment adviser, Daiwa SB Investments (H.K.)
Ltd.
21
<Page>
(This page has been left blank
intentionally.)
<Page>
(This page has been left blank
intentionally.)
<Page>
BOARD OF DIRECTORS
Ikou Mori, CHAIRMAN
Austin C. Dowling
Martin J. Gruber
David G. Harmer
Oren G. Shaffer
OFFICERS
John J. O'Keefe
VICE PRESIDENT AND TREASURER
Mariedor Pineda
SECRETARY
Laurence E. Cranch
ASSISTANT SECRETARY
ADDRESS OF THE FUND
c/o Daiwa Securities Trust Company
One Evertrust Plaza, 9th Floor
Jersey City, NJ 07302-3051
INVESTMENT MANAGER
SCB Asset Management Co., Ltd.
INVESTMENT ADVISER
Daiwa SB Investments (H.K.) Ltd.
ADMINISTRATOR
Daiwa Securities Trust Company
CUSTODIANS
Bangkok Bank Public Company, Ltd.
(Thai Custodian)
Daiwa Securities Trust Company
(U.S. Custodian)
TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company, N.A.
LEGAL COUNSEL
Clifford Chance US LLP
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
Notice is hereby given in accordance with Section 23(c) of
the Investment
Comapny Act of 1940 that from time to time the Fund may
purchase shares of its
common stock in the open market at prevailing market prices.
This report is sent to shareholders of the Fund for their
information. It is not
a prospectus, circular or representation intended for use in
the purchase or
sale of shares of the Fund or of any securities mentioned in
the report.
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to
the registrant's
principal executive officer and principal financial and
accounting officer. A copy of the registrant's code of
ethics is attached Hereto as Exhibit 10 (a)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's board of directors has determined that the
registrant has at least one audit committee financial expert
serving on its audit committee. The audit committee
financial expert is Oren G. Shaffer who is "independent" for
purposes of this item.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not
Applicable.
ITEMS 5-6. (RESERVED)
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES
FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
The registrant has delegated to its investment manager the
voting of proxies relating to the registrant's portfolio
securities. The policies and procedures used by the
investment manager to determine how to vote proxies relating
to the registrant's portfolio securities, including the
procedures used when a vote presents a conflict of interest
involving the investment manager, are contained in the
investment manager's Proxy Voting Guidelines, which are
attached hereto as Exhibit 10 (b) and Exhibit 10 (c)
ITEMS 8. (RESERVED)
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the registrant's
disclosure controls and procedures as of February 20,
2004, the disclosure controls and procedures are
reasonably designed to ensure that the information
required in filings on Forms N-CSR is recorded,
processed, summarized, and reported on a timely basis.
(b) There were no significant changes in the
registrant's internal controls or in other factors
that could affect these controls subsequent to the
date of our evaluation, including any corrective
actions with regard to significant deficiencies and
material weaknesses.
ITEMS 10. EXHIBITS. File the exhibits listed below as part of
this Form. Letter or number the exhibits in the sequence
indicated.
(a) Any code of ethics, or amendment thereto, that is
the subject of the disclosure required by Item 2, to
the extent that the registrant intends to satisfy the
Item 2 requirements through filing of an exhibit:
(b) Registrant's proxy voting policy and procedures.
(c) Manager's proxy voting policy and procedures.
(d) A separate certification for each principal
executive officer and principal financial officer of
the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2) in the exact form set forth below:
Attached hereto.
SIGNATURES
Pursuant to the requirements of the securities Exchange Act
of 1934 and the Investment Company Act of 1940, the
registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
(Registrant) The Thai Capital
Fund, Inc.
By (Signature and Title)* \s\ John J. O'Keefe
--------------------------
John J. O'Keefe, Vice
President & Treasurer
Date: March 8, 2004
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, this report
has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates
indicated.
By (Signature and Title)* \s\ John J. O'Keefe
--------------------------
John J. O'Keefe, Vice
President & Treasurer
Date: March 8, 2004
By (Signature and Title)* \s\ Ikou Mori
--------------------------
Ikou Mori, Chairman
Date: March 8, 2004
* Print the name and title of each signing officer under his
or her signature.