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, 2004
DATE OF REPORTING PERIOD: December 31, 2004
Item 1. Reports to Stockholders.
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
The Fund's shares are 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 AMEX 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, a
list of the Fund's top ten industries and holdings, the proxy
voting policies and procedures, the code of ethics and the
audit committee charter.
Proxy Voting Policies and Procedures
A description of the policies and procedures that are
used by the Fund's Investment Manager to vote proxies
relating to the Fund's portfolio securities is available (1)
without charge, upon request, by calling (201) 915-3054; (2)
by visiting www.daiwast.com; and (3) as an exhibit to the
Fund's annual report on Form N-CSR which is available on the
website of the Securities and Exchange Commission (the
"Commission") at www.sec.gov. Information regarding how the
Investment Manager votes these proxies is now available by
calling the same number and available on the Commission's
website. The Fund has filed its first report on Form N-PX
covering the Fund's proxy voting record for the 12-month
period ended June 30, 2004.
Quarterly Portfolio of Investments
A Portfolio of Investments will be filed as of the end
of the first and third quarter of each fiscal year on Form N-
Q and will be available on the Commission's website at
www.sec.gov. Additionally, the Portfolio of Investments may
be reviewed and copied at the Commission's Public Reference
Room in Washington D.C. Information on the operation of the
Public Reference Room may be obtained by calling (800) SEC-
0330. The quarterly Portfolio of Investments will be made
available without charge, upon request, by calling (201) 915-
3054.
Inquiries
All general inquiries and requests for information
should be directed to the Fund at (201) 915-3054. 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
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.
January 24, 2005
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, 2004.
Thai Economic Review and Outlook
The Thai economy fared reasonably well in 2004, all
things considered. Growth for the entire year is projected
at 6.2% based on the latest estimates from the National
Economic and Social Development Board ("NESDB"), a decline
from the 6.9% posted in 2003 but well ahead of the 5.3%
growth recorded in 2002. Still, 6.2% is a far cry from the
forecasts of over 8.0% that policymakers were confidently
predicting in the early part of 2004. Reasons for over
optimism or economic underperformance include, among other
things, the bird flu, the violence in the southern border
provinces and the huge increase in oil prices in the world
market.
Drivers for growth in 2004 were first led by exports,
expected to reach a record US$96 billion for the year, or
22.5% higher than the year before. Steady gains in domestic
consumption and rising private investment also helped spur
overall economic activity. But whether 2004's performance
will carry forward into the new year remains fraught with
uncertainty, with the NESDB and other state agencies
projecting a wide range for economic growth of 5.5 to 6.5%
for 2005.
Investment will be one key area. With industry capacity
utilization up to 74.6% as of October 2004, businesses would
normally be expected to purchase new equipment, expand their
factories and increase their employment levels to support
future growth. But despite healthy macroeconomic figures,
business confidence remains relatively weak, reflecting in
part uncertainties ahead of the February 6, 2005 general
elections, as well as fears about the bird flu and southern
violence. Consumption and manufacturing activity in the
fourth quarter both slowed due to flagging confidence.
Rising interest rates and the falling U.S. dollar have
also unsettled the financial markets and corporate
treasurers-alike, while commodity prices, from steel to
petrochemicals to energy, all look to increase steadily into
2005.
Exports is another area fraught with uncertainty, having
been supported in 2004 by robust growth in Europe,-Japan and
the United States. However, the huge increase in energy
prices in the second half of the year will almost certainly
cut global economic growth in 2005, and thus affect
Thailand's export prospects. A weaker U.S. dollar also has
traders worried, although the Bank of Thailand has vowed to
maintain a policy stance aimed at ensuring currency-rate
stability to protect the competitiveness of local exporters.
Domestic consumption throughout the year remained
robust, particularly in durable goods, with growth of around
6.0%, a pace that has stayed relatively stable over the past
three years and is expected to continue into 2005.
Thai Stock Market Overview & Outlook
Corporate earnings over the first nine months of 2004
were up nearly 40% from 2003, economic growth remained
relatively robust at 6.0%, with exports at record highs and
investment picking up steadily. But such positives failed to
translate into gains for the SET, with the main Index down
over 13% for 2004. Certainly coming off the bull run of
2003, when the SET was the world's best performing market
with a 116% gain, 2004 has been a disappointment for many
investors hopeful of a sustained pickup in the market cycle.
Due to a more challenging global environment, slower
Gross Domestic Product ("GDP") growth, higher inflation and
higher interest rates, company earnings are expected to slow
considerably from 43% in 2004 to 7% in 2005. We think
several factors speak in favor of the Thai market going into
2005. Firstly, Thailand market's valuation is among the
lowest. Secondly, strong balance sheets and high free cash
flow generation provide a good safety net in a situation
where growth is slowing down. It also leaves Thai companies
in a good position to return cash to shareholders while still
being able to maintain a high capital expenditure level.
We also see another supportive factor in the
strengthening baht. We expect a potential stronger baht to
provide a further boost to the market with more global
investment funds attracted to the region. With Thailand's
market characteristics such as low valuation, high dividend
yield and upcoming key support from public and private
investments, the market should continue to attract foreign
investor inflows in 2005, in line with the last two months of
2004 where foreign net buying reached close to Bt45 billion.
Performance Evaluation
As of December 31, 2004, the Fund had net assets of
US$27.9 million, representing a net asset value per share of
US$8.88. Of this amount, Thai equity securities accounted
for 94.49%; the remainder was in cash, bank deposits and
promissory notes.
Of the total net assets, 20.08% was invested in the
energy sector, 19.06% in communications, 16.45% in banking,
9.70% in property development, 9.34% in building
materials and 4.10% in entertainment. The remainder was
invested in the printing and publishing, automotive,
electronic components and finance sectors.
In 2004, the Fund's portfolio performance was -7.22%
compared to the SET Index's decline of 13.48%, an
outperformance to the market of 6.26%. The Thai market
declined in 2004 as it was hit by a host of internal and
external factors, including the bird flu outbreak, unrest in
the south, non-performing loan concerns in the banking
sector, the high price of oil, and most importantly, 2003's
overshooting rally. The outperformance can be attributed to
better stock selection and the Fund's overweight position in
the communication and energy sectors, which performed better
than the SET Index.
Portfolio Management
Effective January 1, 2005, Mr. Thanakorn Phanphruk
replaced Mr. Cholathee Pornrojnangkool as the Fund's
portfolio-manager. SCB Asset Management Co., Ltd. has
employed Mr. Phanphruk as an equity fund manager since 1995.
Previously, Mr. Phanphruk was an assistant fund manager for
The Mutual Fund Public Company Limited and an investment
analyst at Siam Commercial Bank Public Company Limited. He
has fourteen 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,
IKUO MORI
Chairman of the Board
PORTFOLIO OF INVESTMENTS
December 31, 2004
THAI COMMON, WARRANTS AND PREFERRED STOCKS-94.49%
COMMON STOCKS-93.15%
Shares
Value
Banks-16.45%
1,000,900
Bangkok Bank Public Co., Ltd.
$
2,667,651
776,800
Bank of Ayudhya Public Co., Ltd.*
238,889
1,115,000
Kasikornbank Public Co., Ltd.*
1,500,165
1,881,239
Thai Military Bank Public Co., Ltd.
181,274
4,587,979
Building Materials-9.34%
414,000
The Siam Cement Public Co., Ltd.
2,588,780
54,000
Tycoons Worldwide Group Public Co.,
Ltd.
16,883
2,605,663
Chemicals-1.39%
90,000
National Petrochemical Public Co.,
Ltd.
246,792
82,000
Thai Olefins Public Co., Ltd.
140,797
387,589
Commerce-1.08%
304,600
BIG C Supercenter Public Co., Ltd.
147,535
56,700
C.P. 7-Eleven Public Co., Ltd.
82,825
55,500
Siam Makro Public Co., Ltd..
69,694
300,054
Communication-19.06%
952,500
Advanced Info Service Public Co.,
Ltd.
2,611,883
1,909,000
Samart Corp. Public Co., Ltd.*.
359,582
1,302,600
Shin Corporations Public Co., Ltd.
1,326,946
687,900
Shin Satellite Public Co., Ltd.
315,561
100
True Corp. Public Co., Ltd.
21
394,400
United Communication Industry
Public Co., Ltd.*
702,468
5,316,461
Electrical-0.19%
259,200
Mida Assets Public Co., Ltd.
52,145
Electronic Components-1.81%
738,100
Hana Microelectronic Public Co.,
Ltd.
368,854
700,000
KCE Electronics Public Co., Ltd.
135,441
504,295
Energy-20.05%
100,000
Electricity Generating Public Co.,
Ltd.
189,643
342,100
PTT Exploration and Production
Public Co., Ltd.
2,542,471
645,000
PTT Public Co., Ltd.
2,859,636
5,591,750
Entertainment & Recreation-4.10%
1,131,000
BEC World Public Co., Ltd.
455,058
135,700
GMM Media Public Co., Ltd.
69,553
747,600
ITV Public Co., Ltd.*
264,395
268,253
Major Cineplex Group Public Co.,
Ltd.
91,433
160,300
MCOT Public Co., Ltd.
91,199
272,777
United Broadcasting Corp. Public
Co., Ltd.*
171,269
1,142,907
Finance & Securities-1.35%
64,600
Asia Plus Securities Public Co.,
Ltd.
118,370
270,000
Siam General Factoring Public Co.,
Ltd.*
34,043
348,600
Thitikorn Public Co., Ltd.
58,516
267,600
TISCO Finance Public Co., Ltd.
166,647
377,576
Household Goods-0.33%
102,700
Modernform Group Public Co., Ltd.
90,802
Mining-0.96%
683,800
Padaeng Industry Public Co., Ltd.*
268,118
Printing & Publishing-3.20%
3,451,579
Amarin Printing and Publishing
Public Co., Ltd.
893,396
Property Development-8.64%
1,361,000
Italian-Thai Development Public
Co., Ltd.
334,838
415,500
Lalin Property Public Co., Ltd.
67,084
6,478,200
Land and House Public Co., Ltd.
1,676,798
540,700
Noble Development Public Co., Ltd.
$ 56,813
1,104,000
Sammakorn Public Co., Ltd.
57,717
995,100
SinoThai Engineering & Construction
Public Co., Ltd.
215,491
2,408,741
Retail Food-1.10%
70,000
S&P Syndicate Public Co., Ltd.
43,413
138,000
Serm Suk Public Co., Ltd.
77,097
290,900
Thai Union Frozen Products Public
Co., Ltd.
184,884
305,394
Transportation-
0.50%
150,000
Thoresen Thai Agencies Public Co.,
Ltd.
139,349
Utilities-0.91%
298,862
Eastern Water Resources Development
& Management Public Co., Ltd.
254,664
Vehicles & Parts-2.69%
482,750
Aapico Hitech Public Co., Ltd.
408,264
100,000
Thai Rung Union Car Co., Ltd.
26,909
93,800
Thai Stanley Electric Public Co.,
Ltd.
314,905
750,078
Total Common
Stocks
(Cost-
$13,403,238)
25,976,96
1
PREFERRED STOCKS-0.25%
Shares
Value
Finance & Securities-0.25%
109,900
TISCO Finance Public Co., Ltd.
(Cost-$48,168)
$ 69,707
WARRANTS-1.09%
Shares
Value
Energy-0.03%
79,696
Eastern Water Resources Development
& Management Public Co., Ltd.
7,107
Household Goods-0.00%
10,270
Modernform Group Public Co., Ltd.
895
Property Development-1.06%
1,331,400
Land & House Public Co., Ltd.,
expires 9/2/08*
295,141
Total Warrants (Cost-$0)
303,143
Total Thai Common, Warrants and Preferred Stocks
(Cost-$13,451,406)
26,349,81
1
SHORT-TERM INVESTMENTS-4.60%
Principal Amount
(000)
Value
THAI BAHT PROMISSORY NOTES-4.13%
20,000
Bangkok First Investment and Trust
Public Co., Ltd. 1.25% (Payable on
Demand)
512,548
25,000
UOB Radanasin Bank Public Co.,
Ltd., 1.50% (Payable on Demand)
640,686
Total Thai Baht Promissory Notes
1,153,234
U.S. DOLLAR TIME DEPOSIT-0.47%
Principal Amount
(000)
Value
$131
Bank of New York, 0.05%, due 1/3/05
130,836
Total Short-Term Investments (Cost-$1,254,068)
1,284,070
Total Investments-99.09% (Cost-$14,705,474)
27,633,88
1
Other assets less liabilities-0.91%
253,124
NET ASSETS (Applicable to 3,139,428 shares of
capital stock outstanding; equivalent to $8.88 per
share)-100.00%
$27,887,0
05
________________
* Non-income producing securities.
TEN LARGEST EQUITY POSITIONS HELD
December 31, 2004
Issue
Percent
of Net
Assets
PTT Public Co., Ltd.
10.25%
Bangkok Bank Public Co., Ltd.
9.57
Advanced Info Service Public Co.,
Ltd.
9.37
The Siam Cement Public Co., Ltd.
9.28
PTT Exploration and Production
Public Co., Ltd.
9.12
Land and House Public Co., Ltd.**
7.07
Kasikornbank Public Co., Ltd.
5.38
Shin Corporations Public Co., Ltd.
4.76
Amarin Printing and Publishing
Public Co., Ltd.
3.20
United Communication Industry
Public Co., Ltd.
2.52
________________
** Includes the value of warrants.
# Includes the value of preferred stocks.
EQUITY CLASSIFICATIONS HELD
December 31, 2004
Industry
Percent
of Net
Assets
Energy **
20.08%
Communication
19.06
Banks
16.45
Property Development**
9.70
Building Materials
9.34
Entertainment & Recreation
4.10
Printing & Publishing
3.20
Vehicles & Parts
2.69
Electronic Components
1.81
Finance & Securities#
1.60
Chemicals
1.39
Retail Food
1.10
Commerce
1.08
Mining
0.96
Utilities
0.91
Transportation
0.50
Household Goods**
0.33
Electrical
0.19
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2004
Assets
Investment in securities, at value (cost-
$14,705,474)
$
27,633,88
1
Cash denominated in foreign currency (cost-
$475,383)
476,083
Interest and dividends receivable
3,773
Prepaid expenses
6,635
Total assets
28,120,37
2
Liabilities
Dividend payable
125,577
Accrued Thai tax provision
12,557
Accrued expenses and other liabilities
95,233
Total liabilities
233,367
Net Assets
Capital stock, $0.01 par value per share;
total 100,000,000 shares authorized;
3,139,428 shares issued and outstanding
31,394
Paid-in capital in excess of par value
61,493,51
3
Undistributed net investment income
44,082
Accumulated net realized loss on investments
and foreign currency transactions
(46,611,1
28)
Net unrealized appreciation on investments and
other assets and liabilities denominated in
foreign currency
12,929,14
4
Net assets applicable to shares outstanding
$
27,887,00
5
Net Asset Value Per Share
$ 8.88
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2004
Investment income:
Dividends
$769,815
Interest
9,271
Total investment income
779,086
Expenses:
Investment management fee
158,827
Investment advisory fee
158,466
Administration fee and expenses
151,455
Audit and tax services
79,340
Legal fees and expenses
49,788
Reports and notices to shareholders
36,280
Custodian fees and expenses
34,618
Directors' fees and expenses
25,001
Insurance expense
..
Transfer agency fee and expenses
11,304
Other
33,227
Total expenses before expense waivers
752,988
Less waiver of:
Administration fee
(50,000)
Investment advisory fee
(105,644)
Net expenses
597,344
Net investment income before taxes
181,742
Provision for Thai tax applicable to net
investment income
14,724
Net investment income
167,018
Realized and unrealized gains from investment
activities and foreign currency transactions:
Net realized gains on investments
326,411
Net realized foreign currency transaction
gains
4,627
Net change in unrealized appreciation
(depreciation) on equity investments
(2,697,284
)
Net change in unrealized appreciation
(depreciation) on translation of short-term
investments and other assets and
liabilities denominated in foreign currency
1,318
Net realized and unrealized losses from
investment activities and foreign currency
transactions
(2,364,928
)
Net decrease in net assets resulting from
operations
$(2,197,91
0)
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended
December 31
2004
2003
Increase (decrease) in net assets from
operations:
Net investment income
$ 167,018
$ 114,171
Net realized gain on:
Investments
326,411
705,016
Foreign currency transactions
4,627
80,875
Net change in unrealized appreciation
(depreciation) on:
Investments in equity securities
(2,697,284
)
15,864,059
Translation of short-term
investments and other assets and
liabilities denominated in foreign
currency
1,318
26,286
Net increase (decrease) in net assets
resulting from operations
(2,197,910
)
16,790,407
Dividends and distributions to
shareholders from:
Net investment income
(125,577)
(194,636)
From capital stock transactions:
Sale of capital stock resulting from
reinvestment of dividends
1,101
- -
Net increase (decrease) in net assets
(2,322,386
)
16,595,771
Net assets:
Beginning of year
30,209,391
13,613,620
End of year (including undistributed
net investment income of $44,082 for
2004)
$27,887,00
5
$30,209,39
1
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 nondiversified,
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 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, 2004, the Fund owed the Manager $15,999. 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, 2004, 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, 2004, 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, 2004. At December 31, 2004, the Fund owed
the Adviser $4,660, 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 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, 2004. In
addition, as permitted by the Administration Agreement, the
Fund reimburses DSTC for its out-of-pocket expenses related
to the Fund. During the year ended December 31, 2004,
expenses of $1,455 were paid to the Administrator,
representing reimbursement to the Administrator of costs
relating to the attendance by its employees at meetings of
the Fund's Board.
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, 2004, DSTC earned $6,821,
as compensation for its custodial services to the Fund.
At December 31, 2004, the Fund owed $8,333 and $501 to
DSTC for administration and custodian fees, respectively.
The Fund paid or accrued $48,412 for the year ended
December 31, 2004 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, 2004, the Fund made
purchases of $2,777,455 and sales of $3,118,502 of investment
securities, excluding short-term investments. The aggregate
cost of investments at December 31, 2004 for federal income
tax purposes was substantially the same as the cost of
securities for financial statement purposes. At December 31,
2004, net unrealized appreciation, excluding short-term
securities aggregated $12,898,406 of which $14,555,442
related to appreciated securities and $1,657,036 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 principles, 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 income.
For the year ended December 31, 2004, the adjustment was
to increase accumulated net realized loss on investments and
foreign currency transactions by $4,627 and to increase
undistributed net investment income by $4,627. Net
investment income, net realized losses and net assets
applicable to common shareholders were not affected by this
change.
The tax character of the distributions paid during the
fiscal year ended December 31, 2004 and December-31, 2003 was
the same for financial statement and tax purposes.
At December 31, 2004, the Fund had a remaining capital
loss carryover of $46,611,127, of which $7,116,392 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 current year, the Fund utilized capital loss
carryforwards of $326,411.
The tax basis components of distributable earnings do
not differ from the amounts reflected in the Statement of
Assets and Liabilities.
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. During the year ended December 31,
2004, 134 shares were issued as a result of the reinvestment
of dividends paid to those shareholders electing to reinvest
dividends. Of the 3,139,428 shares outstanding at December
31, 2004, Daiwa Securities America Inc., a lead underwriter
of the Fund and an affiliate of both the Adviser and DSTC,
owns 7,251 shares.
Subsequent Event
On December 14, 2004, a distribution was declared by the
Board. The distribution of $0.04 per share was paid on
January 20, 2005, to shareholders of record at December 31,
2004. The ex-dividend date was December 29, 2004.
FINANCIAL HIGHLIGHTS+
Selected data for a share of capital stock outstanding
during each year is presented below:
For the Years Ended October 31,
2004
2003
2002
2001
2000
Net asset value,
beginning of year
$ 9.62
$ 4.34
$ 3.42
$ 3.36
$ 7.22
Net investment income
(loss)
0.05*
0.03*
(0.09)
(0.16)
*
(0.18)
*
Net realized and
unrealized gains
(losses) on
investments and
foreign currency
transactions
(0.75)
5.31
1.01
0.22*
(3.68)
*
Net increase (decrease)
in net asset value
resulting from
operations
(0.70)
5.34
0.92
0.06
(3.86)
Less: dividends and
distributions to
shareholders
Net investment income
(0.04)
(0.06)
- -
- -
- -
Net asset value, end of
year
$ 8.88
$ 9.62
$ 4.34
$ 3.42
$ 3.36
Per share market value,
end of year
$ 8.490
$ 9.250
$ 3.970
$ 2.800
$ 3.250
Total investment return:
Based on market price
at beginning and end
of year, assuming
reinvestment of
dividends
(7.40)
%
13.56%
41.79%
(13.8)
5%
(66.67
)%
Based on net asset
value at beginning
and end of year,
assuming reinvestment
of dividends
(6.89)
%
123.09
%
26.90%
1.79%
(53.46
)%
Ratios and supplemental
data:
Net assets, end of
year
(in millions)
$ 27.9
$ 30.2
$ 13.6
$ 10.7
$ 10.5
Ratios to average net
assets of:
Expenses, excluding
Thai taxes applicable
to net investment
income
2.26%
2.63%
4.29%
5.98%
4.73%
Expenses, including
Thai taxes applicable
to net investment
income
2.26%
2.74%
4.29%
6.43%
5.11%
Expenses, excluding
waiver of
Administration and
Advisory fee
applicable to net
investment income
2.32%
3.31%
4.98%
7.09%
5.66%
Expenses, including
waiver of
Administration and
Advisory fee
applicable to net
investment income
2.85%
2.63%
4.29%
6.43%
5.11%
Net investment income
(loss)
0.63%
0.62%
(2.20)
%
(4.77)
%
(4.03)
%
Portfolio turnover
11.21%
11.86%
14.62%
20.85%
45.46%
________________________
+ Per share values are adjusted to reflect the one-for-two
reverse stock split effective August 5, 2002.
* After provision for Thai taxes.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2004, 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards
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, 2004 by
correspondence with the custodians, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, New York 10017
February 16, 2005
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, 2004) 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 14, 2004 the Board of Directors of the Fund declared
a total distribution of $0.04 per share, all of which
resulted from net investment income. The dividend was paid
on January 20, 2005 to shares of record at the close of
business on December 31, 2004. The entire amount of this
distribution is reportable as 2004 income.
There is no foreign tax deduction or credit available to
shareholders for calendar year 2004.
Shareholders are strongly advised to consult their own
tax advisors with respect to the tax consequences of their
investment in the Fund.
Name (Age) and
Address
of
Directors/Office
rs
Principal Occupation
or Employment During Past
Five Years and
Directorships in
Publicly Held Companies
Direct
or or
Office
r of
Fund
Since
Number
of
Funds
in
Fund
Comple
x for
Which
Direct
or
Serves
(1)
Directors
Austin C.
Dowling (72)
1002 E Long
Beach
Boulevard
North Beach,
NJ 08008
Retired; Director, The Japan
Equity Fund, Inc., since 1992;
Director, The Singapore Fund,
Inc., since 2000.
Class
II
Direct
or
since
1990
3
Martin J.
Gruber (67)
229 South
Irving Street
Ridgewood, NJ
07450
Professor of Finance, Leonard
N. Stern School of Business,
New York University, since
1965; Director, The Japan
Equity Fund, Inc., since 1992;
Director, The Singapore Fund,
Inc., since 2000; Trustee,
Scudder New York Mutual Funds,
since 1992; Trustee, C.R.E.F.,
since 2001 and Chairman from
December 2003; Trustee,
T.I.A.A., from 1996 to 2000.
Class
I
Direct
or
since
2000
3
David G.
Harmer (61)
4337 Bobwhite
Court
Ogden, UT
84403
Executive Director, Department
of Community and Economic
Development for the State of
Utah since May 2002 to January
2005; Chairman, 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 Singapore
Fund, Inc., since 1996.
Class
I
Direct
or
since
2000
3
* Ikuo Mori (55)
Daiwa
Securities
America Inc.
Financial
Square
32 Old Slip
New York, NY
10005
Chairman and CEO, Daiwa
Securities American, Inc.,
since 2001; Executive Officer,
Daiwa Securities Group Inc.,
since 2001; President and COO,
Daiwa Securities America
Inc., from 1996 to 2001;
Chairman of the Board, the
Singapore Fund, Inc., since
2001.
Chairm
an of
the
Board
and
Class
III
Direct
or
since
2001
2
Oren G.
Shaffer (62)
1801
California
Street
Denver, CO
80202
Vice Chairman and Chief
Financial Officer, Qwest
Communications International
Inc., since July 2002;
Executive Vice President and
Chief Financial Officer,
Ameritech Corporation, from
1994 to 2000; Director, The
Japan Equity Fund, Inc., since
2000; Director, The Singapore
Fund, Inc., since 1997.
Class
II
Direct
or
since
2000
3
John J.
O'Keefe (45)
One Evertrust
Plaza
Jersey City,
NJ 07302-3051
Vice President, the Fund
Accounting Department of Daiwa
Securities Trust Company,
since 2000; Assistant
Controller, Reserve Management
Corporation, from 1999 to
2000; Accounting Manager,
Prudential Investments, from
1998 to 1999; and Assistant
Vice President, Daiwa
Securities Trust Company from
1990 to 1998; Vice President
and Treasurer, The Japan
Equity Fund, Inc. and The
Singapore Fund, Inc., since
2000.
Vice
Presid
ent
and
Treasu
rer of
the
Fund
since
2000
- -
Yuko Uchida
(26)
One Evertrust
Plaza
Jersey City,
NJ 07302-3051
Secretary, The Singapore Fund,
Inc. and The Japan Equity
Fund, Inc., since 2004; Client
Reporting Department of Daiwa
Securities Trust Company,
since 2002.
Secret
ary of
the
Fund
since
2004
- -
Anthony
Cambria (50)
One Evertrust
Plaza
Jersey City,
NJ 07302-3051
Chief Compliance Officer, the
Singapore Fund, Inc. and The
Japan Equity Fund, Inc., since
2004; Director and Executive
Vice President, Daiwa
Securities Trust Company,
since 1999.
Chief
Compli
ance
Office
r of
the
Fund
since
2004
- -
Leonard B.
Mackey, Jr.
(53)
31 West 52nd
Street
New York, NY
10019-6131
Partner in the law firm of
Clifford Chance US LLP, since
1983; Assistant Secretary, The
Singapore Fund, Inc. and The
Japan Equity Fund, Inc., since
2004.
Assist
ant
Secret
ary of
the
Fund
since
2004
- -
_________________
1 "Fund Complex" includes the Fund, The Japan Equity Fund,
Inc., The Singapore 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 (Singapore) 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.
(This page has been left blank intentionally.)
(This page has been left blank intentionally.)
BOARD OF DIRECTORS
Ikuo Mori, Chairman
Austin C. Dowling
Martin J. Gruber
David G. Harmer
Oren G. Shaffer
OFFICERS
John J. O'Keefe
Vice President and Treasurer
Yuko Uchida
Secretary
Anthony Cambria
Chief Compliance Officer
Leonard B. Mackey, Jr.
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
CUSTODIAN
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 REGISTERED
PUBLIC
ACCOUNTING FIRM
PricewaterhouseCoopers LLP
Notice is hereby given in
accordance with Section
23(c) of the Investment
Company 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.
Annual Report
December 31, 2004
THE THAI CAPITAL FUND, INC.
LOGO
Item 2. Code of Ethics.
(a) The registrant has adopted a code of ethics (the "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 11(a).
(b) No information need be disclosed pursuant to this
paragraph.
(c) The registrant has not amended the Code of Ethics during
the period covered by the shareholder report presented
in Item 1 hereto.
(d) The registrant has not granted a waiver or an implicit
waiver from a provision of its Code of Ethics.
(e) Not applicable.
(f) (1) The Code of Ethics is attached hereto as Exhibit
11(a).
(2) Not applicable.
(3) Not applicable.
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.
(a) (b)(c)(d) and (g). Based on fees billed for the periods
shown:
2004
Registrant
Covered
Entities(1)
Audit Fees
$56,440
N/A
Non-Audit Fees
Audit-Related Fees
- -
- -
Tax Fees
(2)
$6,600
- -
All Other Fees
- -
- -
Total Non-Audit Fees
$6,600
- -
Total
$63,040
- -
2003
Registr
ant
Covered
Entities(1)
Audit Fees
$54,700
N/A
Non-Audit Fees
Audit-Related Fees
- -
- -
Tax Fees
(2)
$6,000
- -
All Other Fees
- -
- -
Total Non-Audit Fees
$6,000
- -
Total
$60,700
- -
_____________________
N/A- Not applicable, as not required by Item 4.
(1) "Covered Entities" include the registrant's
investment adviser (excluding any sub-adviser whose
role is primarily portfolio management and is
subcontracted with or overseen by another
investment adviser) and any entity controlling,
controlled by or under common control with the
registrant's adviser that provides ongoing services
to the registrant.
(2) Tax Fees represent fees received for tax compliance
services provided to the registrant, including the
review of tax returns.
(e) (1) Before the registrant's principal accountant is
engaged to render audit or non-audit services to
the registrant and non-audit services to the
registrant's investment adviser and its affiliates,
each engagement is approved by the registrant's
audit committee.
(f) (2) 100% of the services described in each of (b)
through (d) of this Item 4 were approved by the
registrant's audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(g) Not applicable.
(h) See table above.
(i) The registrant's audit committee of the board of
directors has considered whether the provision of non-
audit services that were rendered to Covered Entities
that were not pre-approved pursuant to paragraph
(C)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the auditors' independence in
performing audit services.
Item 5. Audit Committee of Listed Registrants.
The registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act. The members of the audit
committee are as follows: Austin C. Dowling, Martin J.
Gruber, David G. Harmer and Oren G. Shaffer.
Item 6. Schedule of Investments.
A Schedule of Investments is included as part of the
report to shareholders filed under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures
for Closed-End Management Investment Companies.
The registrant has delegated to its investment adviser
the voting of proxies relating to the registrant's portfolio
securities. The registrant's policies and procedures and
those used by the investment adviser 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 adviser or any of its
affiliates, are contained in the investment adviser's Proxy
Voting Guidelines, which are attached hereto as Exhibit
11(c).
Item 8. Purchase of Equity Securities by Closed-End
Management Investment Company and Affiliated Purchasers.
REGISTRANT PURCHASES OF EQUITY SECURITIES
Period
(a)
Total
Number of
Shares
(or
Units)
Purchased
(b)
Average
Price
Paid per
Share
(or
Unit)
(c)
Total Number
of Shares
(or Units)
Purchased as
Part of
Publicity
Announced
Plans or
Programs
(d)
Maximum Number
(or Approximate
Dollar Value) of
Shares (or Units)
that may yet be
Purchased Under
the Plans or
Programs
November
0
N/A
0
0
December
0
N/A
0
0
January
0
N/A
0
0
February
0
N/A
0
0
March
0
N/A
0
0
April
0
N/A
0
0
May
0
N/A
0
0
June
0
N/A
0
0
July
0
N/A
0
0
August
0
N/A
0
0
September
0
N/A
0
0
October
0
N/A
0
0
Total
0
N/A
0
0
Item 9. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by
which shareholders may recommend nominees to the registrant's
board of directors.
Item 10. Controls and Procedures.
(a) Based on an evaluation of the registrant's disclosure
controls and procedures as of February 16, 2005, 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.
Item 11. Exhibits.
(a) Code of Ethics for Principal Executive and Senior
Financial Officers.
(b) Certifications required by Rule 30a-2(a) of the
Investment Company Act of 1940, as amended, and Section
906 of the Sarbanes-Oxley Act of 2002 are attached
hereto.
(c) Proxy Voting Guidelines for the registrant and its
adviser.
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.
The Thai Capital Fund, Inc.
By \s\ John J. O'Keefe
John J. O'Keefe, Vice
President & Treasurer
Date: February 25, 2005
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 \s\ John J. O'Keefe
John J. O'Keefe, Vice
President & Treasurer
Date: February 25, 2005
By \s\ Ikuo Mori
Ikuo Mori, Chairman
Date: February 25, 2005
EXHIBIT 11 (a)
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL
OFFICERS
I. This Code of Ethics (the "Code") for The Thai Capital
Fund, Inc., The Singapore Fund, Inc. and The Japan
Equity Fund, Inc. (each a "Fund" and collectively the
"Funds") applies to each Fund's President and Treasurer
(or persons performing similar functions) ("Covered
Officers") for the purpose of promoting:
? honest and ethical conduct, including the ethical
handling of actual or apparent conflicts of
interest between personal and professional
relationships;
? full, fair, accurate, timely and understandable
disclosure in reports and documents that a Fund
files with, or submits to, the Securities and
Exchange Commission ("SEC") and in other public
communications made by a Fund;
? compliance with applicable laws and governmental
rules and regulations;
? prompt internal reporting of violations of the Code
to an appropriate person or persons identified in
the Code; and
? accountability for adherence to the Code.
Each Covered Officer should adhere to a high standard of
business ethics and should be sensitive to situations that
may give rise to actual as well as apparent conflicts of
interest. A Fund will expect all Covered Officers to comply
at all times with the principles in this Code. A violation
of this Code by an employee is grounds for disciplinary
action up to and including discharge and possible legal
prosecution. Any question about the application of the Code
should be referred to the Audit Committee of the Fund's Board
of Directors ( the "Audit Committee").
II. Covered Officers Should Handle Ethically Actual and
Apparent Conflicts of Interest
Overview. A "conflict of interest" occurs when a
Covered Officer's private interest interferes with the
interests of, or his service to, a Fund. For example, a
conflict of interest would arise if a Covered Officer, or a
member of his family, receives improper personal benefits as
a result of his position with a Fund.
Certain conflicts of interest arise out of the
relationships between Covered Officers and a Fund and already
are subject to conflict of interest provisions in the
Investment Company Act of 1940 (the "Investment Company Act")
and the Investment Advisers Act of 1940 (the "Investment
Advisers Act"). For example, Covered Officers may not
individually engage in certain transactions (such as the
purchase or sale of securities or other property) with a Fund
because of their status as "affiliated persons" of a Fund.
The compliance programs and procedures of a Fund and the
Fund's Investment Manager and Investment Adviser are designed
to prevent, or identify and correct, violations of these
provisions. Certain conflicts of interest also arise out of
the personal securities trading activities of the Covered
Officers and the possibility that they may use information
regarding a Fund's securities trading activities for their
personal benefit. Each Fund's Code of Ethics under Rule 17j-
1 under the Investment Company Act is designed to address
these conflicts of interest. This Code does not, and is not
intended to, replace these programs and procedures or a
Fund's Rule 17j-1 Code of Ethics, and this Code's provisions
should be viewed as being additional and supplemental to such
programs, procedures and code.
Although typically not presenting an opportunity for
improper personal benefit, conflicts arise from, or as a
result of, the contractual relationship between a Fund and
its Investment Adviser or Investment Manager of which the
Covered Officers are also officers or employees. As a
result, this Code recognizes that the Covered Officers will,
in the normal course of their duties (whether formally for a
Fund or for its Investment Adviser or Investment Manager, or
for all parties), be involved in establishing policies and
implementing decisions that will have different effects on
the Investment Adviser or Investment Manager and a Fund. The
participation of the Covered Officers in such activities is
inherent in the contractual relationship between a Fund and
its Investment Adviser or Investment Manager and is
consistent with the performance by the Covered Officers of
their duties as officers of a Fund. Thus, if performed in
conformity with the provisions of the Investment Company Act
and the Investment Advisers Act, such activities will be
deemed to have been handled ethically. In addition, it is
recognized by a Fund's Board of Directors (the "Board") that
the Covered Officers may also be officers or employees of one
or more other investment companies covered by other codes.
Each Covered Officer must not:
? use his personal influence or personal
relationships improperly to influence investment
decisions or financial reporting by a Fund whereby
the Covered Officer would benefit personally to the
detriment of a Fund;
? cause a Fund to take action, or fail to take
action, for the individual personal benefit of the
Covered Officer rather than the benefit of the
Fund; and
? use material non-public knowledge of portfolio
transactions made or contemplated for, or actions
proposed to be taken by, a Fund to trade personally
or cause others to trade personally in
contemplation of the market effect of such
transactions.
Each Covered Officer must, at the time of signing this
Code, report all material business affiliations outside a
Fund and must update the report annually.
Covered Officers should avoid situations which involve
the appearance of, or potential for, conflicts of interest.
Examples of these situations include:
? accepting directly or indirectly, anything of
value, including gifts and gratuities in excess of
$100 per year from any person or entity with which
a Fund has current or prospective business
dealings, not including occasional meals or tickets
to theatre or sporting events or other similar
entertainment, provided it is business-related,
reasonable in cost, appropriate as to time and
place and not so frequent as to raise any question
of impropriety;
? any ownership interest in, or any consulting or
employment relationship with, any of a Fund's
service providers, other than its Investment
Adviser or Investment Manager or any affiliated
person thereof; and
? a direct or indirect financial interest in
commissions, transaction charges or spreads paid by
a Fund for effecting portfolio transactions or for
selling or redeeming shares other than an interest
arising from the Covered Officer's employment, such
as compensation or equity ownership.
In situations involving a Covered Officer which involve
the appearance of, or the potential for, conflicts of
interest, but where the Covered Officer believes that no
significant conflict of interest exist, the Covered Officer
must obtain prior written approval from the Audit Committee
before becoming involved in that situation. No such approval
shall be considered a waiver of this Code.
III. Disclosure and Compliance
? Each Covered Officer should familiarize himself
with the disclosure and compliance requirements
generally applicable to a Fund;
? Each Covered Officer should not knowingly
misrepresent, or cause others to misrepresent,
facts about a Fund to others, whether within or
outside a Fund, including to a Fund's directors and
auditors, or to governmental regulators and self-
regulatory organizations;
? Each Covered Officer should, to the extent
appropriate within his area of responsibility,
consult with other officers and employees of a Fund
and its Investment Adviser or Investment Manager
with the goal of promoting full, fair, accurate,
timely and understandable disclosure in the reports
and documents a Fund files with, or submits to, the
SEC and in other public communications made by a
Fund; and
? It is the responsibility of each Covered Officer to
promote compliance with the standards and
restrictions imposed by applicable laws, rules and
regulations.
IV. Reporting and Accountability
Each Covered Officer must:
? upon adoption of the Code or (thereafter as
applicable, upon becoming a Covered Officer),
affirm in writing to the Board that he has
received, read and understands the Code;
? annually thereafter affirm to the Board that he has
complied with the requirements of the Code;
? not retaliate against any other Covered Officer or
any employee of a Fund or their affiliated persons
for reports of potential violations that are made
in good faith; and
? notify the Audit Committee promptly if he knows of
any violation of this Code. Failure to do so is
itself a violation of this Code.
The Audit Committee is responsible for applying this
Code to specific situations in which questions are presented
under it and has the authority to interpret this Code in any
particular situation. Any waivers sought by a Covered
Officer must be considered by the Audit Committee.
A copy of this Code shall be delivered to each employee
of a Fund and each employee of its Investment Adviser and
Investment Manager annually together with a memorandum
requesting that any violations of the Code be communicated
immediately to the Audit Committee.
Each Fund will follow these procedures in investigating
and enforcing this Code:
? the Audit Committee will take all appropriate
action to investigate any potential violations
reported to it;
? if, after such investigation, the Audit Committee
believes that no violation has occurred, the Audit
Committee is not required to take any further
action;
? if the Audit Committee determines that a violation
has occurred, it will consider appropriate action,
which may include review of, and appropriate
modifications to, applicable policies and
procedures; notification to appropriate personnel
of the Investment Adviser or its board; or a
recommendation to dismiss the Covered Officer;
? the Audit Committee will be responsible for
granting waivers of this Code, as appropriate; and
? any changes to or waivers of this Code will, to the
extent required, be disclosed as provided by SEC
rules.
V. Changes To or Waivers of the Code
No change to or waiver of any provision of this Code
will be effective until a Fund discloses the nature of any
amendment to, or waiver from, a provision of the Code in its
Form N-CSR, or on its website within five business days
following the date of the amendment or waiver if this method
of disclosure has been established in its Form N-CSR and made
available on its website for twelve months. Any waiver of
provisions of this Code will be reported in filings with the
SEC and otherwise reported to a Fund's stockholders to the
full extent required by the rules of the SEC and by any
applicable rules of any securities exchange on which a Fund's
securities are listed.
VI. Other Policies and Procedures
This Code shall be the sole code of ethics adopted by
each Fund for purposes of Section 406 of the Sarbanes-Oxley
Act of 2002 and the rules and forms applicable to registered
investment companies thereunder. Insofar as other policies
or procedures of a Fund or its Investment Adviser, Investment
Manager or other service providers govern or purport to
govern the behavior or activities of the Covered Officers who
are subject to this Code, they are superseded by this Code to
the extent that they conflict with the provisions of this
Code.
VII. Amendments
Any amendments to this Code must be approved or ratified
by a majority vote of the Audit Committee and the Board,
including a majority of directors who are not interested
persons as defined in the Investment Company Act.
VIII. Confidentiality
All reports and records prepared or maintained pursuant
to this Code will be considered confidential and shall be
maintained and protected accordingly. Except as otherwise
required by law or this Code, such matters shall not be
disclosed to anyone other than the Audit Committee, the
Board, the Fund and its counsel and its Investment Adviser
and Investment Manager and their respective counsel.
IX. Internal Use
The Code is intended solely for the internal use by a
Fund and does not constitute an admission, by or on behalf of
a Fund, as to any fact, circumstance or legal conclusion.
I have read and understand the terms of the Code. I
recognize the responsibilities and obligations incurred by me
as a result of my being subject to the Code. I hereby agree
to abide by the Code.
_________________________
Date:_____________________
EXHIBIT 11 (b)
CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John J. O'Keefe, certify that:
1. I have reviewed this report on Form N-CSR of The Thai
Capital Fund, Inc.
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in
light of the circumstances under which such statements
were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report,
fairly present in all material respects the financial
condition, results of operations, changes in net assets,
and cash flows (if the financial statements are required
to include a statement of cash flows) of the registrant
as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Rule 30a-2(c)
under the Investment Company Act of 1940) and internal
control over financial reporting (as defined in Rule
30a-3(d) under the Investment Company Act of 1940) for
the registrant and have:
(a) Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures
to be designed under our supervision, to ensure
that material information relating to the
registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial
reporting, or caused such internal control over
financial reporting to be designed under our
supervision, to provide reasonable assurance
regarding the reliability of financial reporting
and the preparation of financial statements for
external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in
this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of a
date within 90 days prior to the filing date of
this report based on such evaluation; and
(d) Disclosed in this report any change in the
registrant's internal control over financial
reporting that occurred during the second fiscal
quarter of the period covered by this report that
has materially affected, or is reasonably likely to
materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have
disclosed, to the registrant's auditors and the audit
committee of the registrant's board of directors (or
persons performing the equivalent functions):
(a) all significant deficiencies and material
weaknesses in the design or operation of internal
control which are reasonably likely to adversely
affect the registrant's ability to record, process,
summarize, and report financial information; and
(b) any fraud, whether or not material, that involves
management or other employees who have a
significant role in the registrant's internal
controls over financial reporting.
Date: February 25, 2005
By \s\ John J. O'Keefe
John J. O'Keefe, Vice
President & Treasurer
CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ikuo Mori, certify that:
1. I have reviewed this report on Form N-CSR of The Thai
Capital Fund, Inc.
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in
light of the circumstances under which such statements
were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report,
fairly present in all material respects the financial
condition, results of operations, changes in net assets,
and cash flows (if the financial statements are required
to include a statement of cash flows) of the registrant
as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Rule 30a-2(c)
under the Investment Company Act of 1940) and internal
control over financial reporting (as defined in Rule
30a-3(d) under the Investment Company Act of 1940) for
the registrant and have:
(a) designed such disclosure controls and procedures,
or caused such disclosure controls and procedures
to be designed under our supervision, to ensure
that material information relating to the
registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial
reporting, or caused such internal control over
financial reporting to be designed under our
supervision, to provide reasonable assurance
regarding the reliability of financial reporting
and the preparation of financial statements for
external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in
this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of a
date within 90 days prior to the filing date of
this report based on such evaluation; and
(d) Disclosed in this report any change in the
registrant's internal control over financial
reporting that occurred during the second fiscal
quarter of the period covered by this report that
has materially affected, or is reasonably likely to
materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have
disclosed, to the registrant's auditors and the audit
committee of the registrant's board of directors (or
persons performing the equivalent functions):
(a) all significant deficiencies and material
weaknesses in the design or operation of internal
control which are reasonably likely to adversely
affect the registrant's ability to record, process,
summarize, and report financial information; and
(b) any fraud, whether or not material, that involves
management or other employees who have a
significant role in the registrant's internal
controls over financial reporting.
Date: February 25, 2005
By \s\ Ikuo Mori
Ikuo Mori, Chairman
EXHIBIT B (2)
CERTIFICATION
PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, the Vice President & Treasurer of The
Thai Capital Fund, Inc. (the "Fund"), with respect to the
Form N-CSR for the period ended December 31, 2004 as filed
with the Securities and Exchange Commission, hereby
certifies, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
1. such Form N-CSR fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
2. the information contained in such Form N-CSR fairly
presents, in all material respects, the financial
condition and results of operations of the Funds.
Date: February 25, 2005
By \s\ John J. O'Keefe
John J. O'Keefe, Vice
President & Treasurer
This certification is being furnished solely pursuant to
18 U.S.C. Section 1350 and is not being filed as part of the
Report or as a separate disclosure document.
EXHIBIT B (2)
CERTIFICATION
PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, the Chairman of The Thai Capital Fund,
Inc. (the "Fund"), with respect to the Form N-CSR for the
period ended December 31, 2004 as filed with the Securities
and Exchange Commission, hereby certifies, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that:
1. such Form N-CSR fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
2. the information contained in such Form N-CSR fairly
presents, in all material respects, the financial
condition and results of operations of the Funds.
Date: February 25, 2005
By \s\ Ikuo Mori
Ikuo Mori, Chairman
This certification is being furnished solely pursuant to
18 U.S.C. Section 1350 and is not being filed as part of the
Report or as a separate disclosure document.
EXHIBIT 11 (c)
Proxy Voting Policy and Procedures
The Board of Directors of The Thai Capital Fund, Inc. (the
"Fund") hereby adopts the following policy and procedures
with respect to voting proxies relating to Fund securities
managed by SCB Asset Management. (the "Investment Manager").
I. Policy
It is the policy of the Board of Directors of the Fund
(the "Board") to delegate the responsibility for voting
proxies relating to securities held by the Fund to the
Investment Manager as part of the Investment Manager's
general management of the Fund's assets, subject to the
Board's continuing oversight. The Board of Directors of the
Fund hereby delegates such responsibility to the Investment
Manager, and directs the Investment Manager to vote proxies
relating to Fund portfolio securities managed by the
Investment Manager consistent with the duties and procedures
set forth below. The Investment Manager may retain one or
more vendors to review, monitor and recommend how to vote
proxies in a manner consistent with the duties and procedures
set forth below, to ensure such proxies are voted on a timely
basis and to provide reporting and/or record retention
services in connection with proxy voting for the Fund.
II. Fiduciary Duty
The right to vote a proxy with respect to securities
held by the Fund is an asset of the Fund. The Investment
Manager, to which authority to vote on behalf of the Fund is
delegated, acts as a fiduciary of the Fund and must vote
proxies in a manner consistent with the best interest of the
Fund and its shareholders. In discharging this fiduciary
duty, the Investment Manager must maintain and adhere to its
policies and procedures for addressing conflicts of interest
and must vote in a manner substantially consistent with its
policies, procedures and guidelines, as presented to the
Board.
III. Procedures
The following are the procedures adopted by the Board
for the administration of this policy.
A. Review of Investment Manager's Proxy Voting
Procedures. The Investment Manager shall present
to the Board their policies, procedures and other
guidelines for voting proxies at least annually,
and must notify the Board promptly of material
changes to any of these documents, including
changes to policies addressing conflicts of
interest.
B. Voting Record Reporting. The Investment Manager
shall provide the voting record information
necessary for the completion and filing of Form N-
PX to the Fund at least annually. Such voting
record information shall be in a form acceptable to
the Fund and shall be provided at such time(s) as
are required for the timely filing of Form N-PX and
at such additional time(s) as the Fund and the
Investment Manager may agree from time to time.
With respect to those proxies that the Investment
Manager has identified as involving a conflict of
interest , the Investment Manager shall submit a
separate report indicating the nature of the
conflict of interest and how that conflict was
resolved with respect to the voting of the proxy.
C. Record Retention. The Investment Manager shall
maintain such records with respect to the voting of
proxies as may be required by the Investment
Advisers Act of 1940 and the rules promulgated
thereunder or by the Investment Company Act of 1940
and the rules promulgated thereunder.
D. Conflicts of Interest. Any actual or potential
conflicts of interest between the Investment
Manager and the Fund's shareholders arising from
the proxy voting process will be addressed by the
Investment Manager and the Investment Manager's
application of its proxy voting procedures pursuant
to the delegation of proxy voting responsibilities
to the Investment Manager. In the event that the
Investment Manager notifies the officer(s) of the
Fund that a conflict of interest cannot be resolved
under the Investment Manager's Proxy Voting
Procedures, such officer(s) are responsible for
notifying the Chairman of the Board of the Fund of
the irreconcilable conflict of interest and
assisting the Chairman with any actions he
determines are necessary.
IV. Revocation
The delegation by the Board of the authority to vote
proxies relating to securities of the Fund is entirely
voluntary and may be revoked by the Board, in whole or in
part, at any time.
V. Annual Filing
The Fund shall file an annual report of each proxy voted
with respect to securities of the Fund during the twelve-
month period ended June 30 on Form N-PX not later than August
31 of each year.
VI. Disclosures
A. The Fund shall include in its annual report filed
on Form N-CSR:
1. a description of this policy and of the
policies and procedures used by the Fund and
the Investment Manager to determine how to
vote proxies relating to portfolio securities
or copies of such policies and procedures; and
2. a statement disclosing that a description of
the policies and procedures used by or on
behalf of the Fund to determine how to vote
proxies relating to securities of the Fund is
available without charge, upon request, by
calling the Fund's toll-free telephone number;
through a specified Internet address, if
applicable; and on the SEC's website; and
3. a statement disclosing that information
regarding how the Fund voted proxies relating
to Fund securities during the most recent 12-
month period ended June 30 is available
without charge, upon request, by calling the
Fund's toll-free telephone number; or through
a specified Internet address; or both; and on
the SEC's website.
VII. Review of Policy
The Board shall review from time to time this policy to
determine its sufficiency and shall make and approve any
changes that it deems necessary from time to time.
Adopted:
Proxy voting policy for SCB Asset Management Co., Ltd.
Statement of Policies and Procedures for
Voting Proxies
Introduction
As a registered investment adviser, SCB Asset Management
Co., Ltd. ("SCBAM," "we" or "us") has a fiduciary duty to act
solely in the best interests of our clients. As part of this
duty, we recognize that we must exercise voting rights in the
best interests of our clients.
SCBAM recognizes the importance of good corporate
governance in ensuring that management and boards of
directors fulfill their obligations to shareholders. As part
of our investment process, we take into account the attitudes
of management and boards of directors on corporate governance
issues when deciding whether to invest in a company.
SCBAM is a global investment manager, and invests
significantly in emerging markets. It should be noted that
protection for shareholders may vary significantly from
jurisdiction to jurisdiction, and in some cases may be
substantially less than in the U.S. or developed countries.
This statement is intended to comply with Rule 206(4)-6
of the Investment Advisers Act of 1940. It sets forth the
policy and procedures of SCBAM for voting proxies for our
clients, including investment companies registered under the
Investment Company Act of 1940.
PROXY VOTING POLICIES
It is the general policy of SCBAM to support management
of the companies in which it invests and will cast votes in
accordance with management's proposals. However, SCBAM
reserves the right to depart from this policy in order to
avoid voting decisions that we believe may be contrary to our
clients' best interests.
Elections of Directors: In many instances, election of
directors is a routine voting issue. Unless there is a proxy
fight for seats on the Board or we determine that there are
other compelling reasons for withholding votes for directors,
we will vote in favor of the management proposed slate of
directors. That said, we believe that directors have a duty
to respond to shareholder actions that have received
significant shareholder support. We may withhold votes for
directors that fail to act on key issues such as failure to
implement proposals to declassify boards, failure to
implement a majority vote requirement, failure to submit a
rights plan to a shareholder vote and failure to act on
tender offers where a majority of shareholders have tendered
their shares.
Appointment of Auditors: The selection of an
independent accountant to audit a company's financial
statements is generally a routine business matter. SCBAM
believes that management remains in the best position to
choose the accounting firm and will generally support
management's recommendation.
Changes in Capital Structure: Changes in a company's
charter, articles of incorporation or by-laws are often
technical and administrative in nature. Absent a compelling
reason to the contrary, SCBAM will cast its votes in
accordance with the company's management on such proposals.
However, we will review and analyze on a case-by-case basis
any non-routine proposals that are likely to affect the
structure and operation of the company or have a material
economic effect on the company.
Corporate Restructurings, Mergers and Acquisitions:
SCBAM believes proxy votes dealing with corporate
reorganizations are an extension of the investment decision
and will take account of our investment process policy in
deciding how to vote.
Corporate Governance: SCBAM recognizes the importance
of good corporate governance in ensuring that management and
the board of directors fulfill their obligations to the
shareholders. We generally favor proposals promoting
transparency and accountability within a company.
Social and Corporate Responsibility: SCBAM recognizes
the importance of supporting sound and responsible policies
in relation to social, political and environmental issues.
However, in the interests of shareholders, we reserve the
right to vote against proposals that are unduly burdensome or
result in unnecessary and excessive costs to the company. We
may abstain from voting on social proposals that do not have
a readily determinable financial impact on shareholder value.
Executive Compensation: SCBAM believes that company
management and the compensation committee of the board of
directors should, within reason, be given latitude to
determine the types and mix of compensation and benefit
awards offered. Whether proposed by a shareholder or
management, we will review proposals relating to executive
compensation plans and, if deemed excessive, may vote against
the proposals.
PROXY VOTING PROCEDURES
Proxy voting
Our portfolio management team is responsible for the
coordination of SCBAM's proxy voting. They liaise with the
Product managers and/or the Proxy voting committee to
ascertain how SCBAM will vote. They will then instruct the
relevant Custodians. The portfolio management team is also
responsible for ensuring that full and adequate records of
proxy voting are kept.
The Product managers will implement the Proxy voting
policies by instructing proxy voting in accordance with the
general principles contained herein.
Proxy Voting Committee
We have formed a Proxy Voting Committee to regularly
review our general proxy policies and consider specific proxy
voting matters as and when deemed necessary. Members of the
committees include senior investment personnel and
representatives of the Legal & Compliance Department. The
committee may also evaluate proxies where we face a material
conflict of interest (as discussed below).
Conflicts of Interest
SCBAM recognizes that there is a potential conflict of
interest when we vote a proxy solicited by an issuer with
whom we have any material business or personal relationship
that may affect how we vote on the issuer's proxy. We
believe that oversight by the proxy voting committee ensures
that proxies are voted with only our clients' best interests
in mind. In order to avoid any perceived conflict of
interests, the following procedures have been established for
use when we encounter a potential conflict.
1. The portfolio management team will refer to the
Legal and compliance team any proxy votes that are
issued by existing clients or where SCBAM holds a
significant voting percentage of the company. The
Legal and compliance team will make the initial
determination about whether a material conflict of
interest exists based on the facts and
circumstances of each particular situation.
2. If our proposed vote is consistent with our stated
proxy voting policy, no further review is
necessary.
3. If our proposed vote is contrary to our stated
proxy voting policy but is also contrary to
management's recommendation, no further review is
necessary.
4. If our proposed vote is contrary to our stated
proxy voting policy and is consistent with
management's recommendation, the proposal is
escalated to the proxy committee for final review
and determination.
Proxies of Certain Non-U.S. Issuers
Proxy voting in certain countries requires "share
blocking." That is, shareholders wishing to vote their
proxies must deposit their shares shortly before the date of
the meeting (usually one-week) with a designated depositary.
During this blocking period, shares that will be voted at the
meeting cannot be sold until the meeting has taken place and
the shares are returned to the clients' custodian banks.
SCBAM may determine that the value of exercising the vote
does not outweigh the detriment of not being able to transact
in the shares during this period. Accordingly, if share
blocking is required we may abstain from voting those shares.
In such a situation we would have determined that the cost of
voting exceeds the expected benefit to the client.
Proxy Voting Record
Clients may obtain information on how SCBAM voted with
respect to their proxies by contacting our Client services
team at SCB Asset Management Co., Ltd., 130-132 Sindhorn
Tower 3 Bldg., 23rd Floor, Wireless Road, Phatumwam, Bangkok
10330, Thailand, Tel No. 66-2263-2800 ext. 2222, Fax No.
66-2263-4001 or email www.marketing@scbam.com.
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NYA 714546.1