[ANNOTATED FORM N-CSR FOR ANNUAL REPORTS]
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
|
811-05348
|
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The Thai Fund, Inc.
|
(Exact name of registrant as
specified in charter)
|
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522 Fifth Avenue New York, NY
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10036
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(Address of principal executive
offices)
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|
(Zip code)
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Randy Takian
522 Fifth Avenue New York, New York 10036
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(Name and address of agent for
service)
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Registrants telephone number, including
area code:
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1-800-221-6726
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Date of fiscal year end:
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12/31
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|
|
Date of reporting period:
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12/31/08
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Form N-CSR is
to be used by management investment companies to file reports with the
Commission not later than 10 days after the transmission to stockholders of any
report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270-30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure
review, inspection, and policymaking roles.
A registrant
is required to disclose the information specified by Form N-CSR, and the
Commission will make this information public. A registrant is not required to
respond to the collection of information contained in form N-CSR unless the
Form displays a currently valid Office of Management and Budget (OMB) control
number. Please direct comments concerning the accuracy of the information
collection burden estimate and any suggestions for reducing the burden to
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington,
DC 20549-0609. The OMB has reviewed this collection of information under the
clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Funds annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 is as follows:
|
2008
Annual Report
|
|
|
|
December 31, 2008
|
The Thai Fund, Inc.
(TTF)
Morgan Stanley
Investment Management Inc.
Investment Adviser
|
The Thai
Fund, Inc.
|
|
|
|
Overview (unaudited)
|
Letter to Stockholders
Performance
For the year ended December 31,
2008, The Thai Fund, Inc. (the Fund) had total returns of of -44.65%,
based on net asset value, and -51.95% based on market value per share
(including reinvestment of distributions), compared to its benchmark, the
Securities Exchange of Thailand (SET) Index (the Index), expressed in U.S.
dollars which returned -49.21%. On December 31, 2008, the closing price of
the Funds shares on the New York Stock Exchange was $5.81, representing a
11.8% discount to the Funds net asset value per share. Past performance is no
guarantee of future results.
Factors
Affecting Performance
·
In 2008, the Securities Exchange of Thailand
Index fell 49.21% in U.S. dollar terms. All Asia Pacific markets fell sharply
this year, and Thailand was no exception. All sectors within the Index posted
double-digit negative returns, with the more defensive sectors such as consumer
staples, utilities and telecom services materially outperforming the more
cyclical sectors including industrials, materials, financials and information
technology, which experienced strong downward pressure.
·
The reporting year was a volatile period for
the Thai stock market and the economy as a whole. The return to democracy
following elections in December 2007 raised consumer and business
sentiment strongly, leading to a pick-up in consumption spending. The newly
elected government got to work swiftly and implemented several pump-priming
policies which further propelled the market. However, the sharp rise in food
and energy prices during second quarter of 2008 brought the rally to a sudden
halt as Thailand is a heavy importer of oil.
·
Although inflation abated in the second half
of 2008, the economy has shown signs of slowdown, as recent trade data was
worse than the provisional estimates. Exports slowed in October, turning the
trend sharply lower. Manufacturing output growth also slowed dramatically with
capacity utilization dropping to 66.4% in October after tracking above 70%
for most of the year. Slowing consumption growth was signaled by contraction in
the private consumption index. Political turmoil in the second half of 2008
that eventually led to the closure of the Bangkok airport dealt a heavy blow to
the important tourist industry. Tourist arrivals declined, with the trend level
dropping back to October 2006 levels. This implies a big revenue loss for
Thailand given that tourist revenues comprise over 6% of Gross Domestic Product
(GDP).
·
On the political front, sentiment was weighed
down in the second quarter of the year when pro-Taksin Prime Minister Samak
proposed changes to the constitution, which met with strong opposition.
Subsequently, the government faced a barrage of political issues which
detracted them from their focus on the economy. In the third quarter, Prime
Minister Samak was forced to step down. He was succeeded by Somchai Wongsawat,
who was forced to step down in October. The new Prime Minister Abhisit
Vejjajiva assumed power in December, leading to some political calm but
underlying differences between the rural and elite remain unresolved, bringing
into question the durability of this new political regime.
·
Domestically, the Bank of Thailand announced a
larger than expected interest rate cut in December. Declining inflation untied
the central banks hands to respond to the economic slowdown brought about by
the ongoing global financial crisis.
·
Thai GDP growth slowed throughout the year.
The countrys GDP growth for 2008 of 3.4% (based on consensus estimates) was
lower than its real GDP growth of 4.9% in 2007 and 5.2% in 2006.
Management
Strategies
·
The Fund outperformed the Index over the 12-month
period, with both sector allocation and stock selection contributing to
relative performance.
2
|
The Thai
Fund, Inc.
|
|
|
|
Overview (unaudited)
|
Letter to Stockholders (contd)
·
From an asset allocation perspective, a
relative underweight exposure to the materials sector combined with a higher
cash holding in the Fund helped relative performance. However, underweights in
the telecommunication services and utilities sectors detracted from relative performance,
as did an overweight in financials.
·
In terms of stock selection, selection within
the energy sector was a material contributor to the Funds outperformance, but
this was partially offset by the negative impact of selection within the
consumer discretionary and industrials sectors.
·
The Fund seeks long-term capital appreciation
and integrates top-down sector allocation and bottom-up stock selection with a
growth bias. The team utilizes a rigorous fundamental research approach that
considers dynamics, valuation, and sentiment and focuses on companies with
strong management and solid earnings.
Sincerely,
|
|
|
Randy Takian
|
President and Principal
Executive Officer
|
January 2009
|
3
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Portfolio of Investments
|
|
Shares
|
|
Value
(000)
|
|
THAI INVESTMENT PLAN (102.8%)
|
|
|
|
|
|
COMMON
STOCKS (102.8%)
(Unless Otherwise Noted)
|
|
|
|
|
|
Airlines (0.8%)
|
|
|
|
|
|
Thai Airways International PCL
|
|
3,863,300
|
|
$
|
874
|
|
Beverages (0.5%)
|
|
|
|
|
|
Serm Suk PCL
|
|
2,252,600
|
|
509
|
|
Building Products (0.7%)
|
|
|
|
|
|
Dynasty Ceramic PCL
|
|
2,335,500
|
|
734
|
|
Capital Markets (1.9%)
|
|
|
|
|
|
Kim Eng Securities Thailand PCL
|
|
8,511,600
|
|
1,993
|
|
Commercial Banks (21.3%)
|
|
|
|
|
|
Bangkok Bank PCL
|
|
3,453,050
|
|
7,021
|
|
Bank of Ayudhya PCL
|
|
10,811,500
|
|
2,998
|
|
Kasikornbank PCL
|
|
3,376,700
|
|
4,473
|
|
Krung Thai Bank PCL
|
|
4,235,700
|
|
469
|
|
Siam Commercial Bank PCL
|
|
5,167,100
|
|
7,373
|
|
|
|
|
|
22,334
|
|
Construction & Engineering (3.2%)
|
|
|
|
|
|
Italian-Thai Development PCL
|
|
51,070,600
|
|
3,383
|
|
Construction Materials (2.5%)
|
|
|
|
|
|
Siam Cement PCL
|
|
863,100
|
|
2,591
|
|
Consumer Finance (0.1%)
|
|
|
|
|
|
Krungthai Card PCL
|
|
742,200
|
|
172
|
|
Diversified Telecommunication Services (0.6%)
|
|
|
|
|
|
Thaicom PCL (a)
|
|
7,737,800
|
|
666
|
|
Food & Staples Retailing (7.1%)
|
|
|
|
|
|
CP ALL PCL
|
|
14,650,900
|
|
5,256
|
|
Siam Makro PCL
|
|
1,087,600
|
|
2,150
|
|
|
|
|
|
7,406
|
|
Hotels, Restaurants & Leisure (5.5%)
|
|
|
|
|
|
Minor International PCL
|
|
24,448,270
|
|
5,754
|
|
Household Durables (6.8%)
|
|
|
|
|
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Asian Property Development PCL
|
|
32,656,500
|
|
2,313
|
|
Golden Land Property PCL
|
|
9,352,900
|
|
581
|
|
Lalin Property PCL
|
|
3,970,000
|
|
122
|
|
Land & Houses PCL
|
|
35,009,900
|
|
3,902
|
|
Quality House PCL
|
|
6,852,000
|
|
190
|
|
|
|
|
|
7,108
|
|
Insurance (1.2%)
|
|
|
|
|
|
Bangkok Insurance PCL
|
|
228,065
|
|
1,226
|
|
Marine (3.6%)
|
|
|
|
|
|
Precious Shipping PCL
|
|
4,502,900
|
|
|
1,434
|
|
Thoresen Thai Agencies PCL
|
|
4,640,000
|
|
2,311
|
|
|
|
|
|
3,745
|
|
Media (9.4%)
|
|
|
|
|
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BEC World PCL
|
|
9,714,400
|
|
5,682
|
|
Major Cineplex Group PCL
|
|
10,836,900
|
|
2,247
|
|
MCOT PCL
|
|
5,141,200
|
|
1,920
|
|
|
|
|
|
9,849
|
|
Multiline Retail (2.8%)
|
|
|
|
|
|
Big C Supercenter PCL
|
|
2,605,700
|
|
2,915
|
|
Oil, Gas & Consumable Fuels (25.0%)
|
|
|
|
|
|
Banpu plc
|
|
538,200
|
|
3,717
|
|
PTT Exploration & Production PCL
|
|
3,117,900
|
|
9,840
|
|
PTT PCL
|
|
2,449,300
|
|
12,622
|
|
|
|
|
|
26,179
|
|
Real Estate (1.6%)
|
|
|
|
|
|
Amata Corp. PCL
|
|
2,353,800
|
|
290
|
|
MBK PCL
|
|
937,800
|
|
1,349
|
|
|
|
|
|
1,639
|
|
Textiles, Apparel & Luxury Goods
(0.0%)
|
|
|
|
|
|
Thai Rung Textile Co., Ltd. (a)(b)(c)(d)
|
|
958
|
|
|
|
Wireless Telecommunication Services (8.2%)
|
|
|
|
|
|
Advanced Info Service PCL
|
|
3,695,600
|
|
8,588
|
|
TOTAL THAI INVESTMENT PLAN
(Cost $143,672)
|
|
|
|
107,665
|
|
SHORT-TERM INVESTMENT (0.9%)
|
|
|
|
|
|
Investment Company (0.9%)
|
|
|
|
|
|
Morgan Stanley Institutional Liquidity
Funds Money Market
Portfolio Institutional Class
(Cost $942) (e)
|
|
942,011
|
|
942
|
|
TOTAL INVESTMENTS
(103.7%) (Cost $144,614) (f)
|
|
|
|
108,607
|
|
LIABILITIES IN EXCESS OF OTHER ASSETS
(-3.7%)
|
|
|
|
(3,915
|
)
|
NET ASSETS
(100%)
|
|
|
|
$
|
104,692
|
|
(a)
Non-income producing security.
(b)
Security has been deemed illiquid at December 31,
2008.
(c)
At December 31, 2008, the Fund held less
than $500 of fair valued securities, representing less than 0.05% of net
assets. Those securities have been fair valued as determined in good faith
under procedures established by and under the general supervision of the Funds
Directors.
(d)
Restricted security not registered under the
Securities Act of 1993. Acquired 4/89 at a cost of $49,000. At December 31,
2008, this security had a market value of less than $500, representing less
than 0.05% of net assets.
4
|
The
accompanying notes are an integral part of the financial statements.
|
|
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Portfolio of Investments (contd)
(e)
See Note G within the Notes to Financial
Statements regarding investment in Morgan Stanley Institutional Liquidity Money
Market Portfolio Institutional Class.
(f)
The approximate market value and percentage of
total investments, $107,665,000 and 99.1%, respectively, represent the
securities that have been fair valued under the fair valuation policy for
international investments as described in Note A within the Notes to Financial
Statements.
Portfolio
Composition
Classification
|
|
Percentage of
Total Investments
|
|
Oil, Gas & Consumable Fuels
|
|
24.1
|
%
|
Commercial Banks
|
|
20.6
|
|
Media
|
|
9.1
|
|
Wireless Telecommunication Services
|
|
7.9
|
|
Food & Staples Retailing
|
|
6.8
|
|
Household Durables
|
|
6.5
|
|
Hotels, Restaurants & Leisure
|
|
5.3
|
|
Other*
|
|
18.8
|
|
Short-Term Investments
|
|
0.9
|
|
Total Investments
|
|
|
100.0
|
%
|
|
|
|
|
|
*
Industries which do not appear in the above
table, as well as those which represent less than 5% of total investments, if
applicable, are included in the category labeled Other.
|
The
accompanying notes are an integral part of the financial statements.
|
5
|
|
The Thai
Fund, Inc.
|
|
|
|
Financial Statements
|
Statement of Assets and Liabilities
|
|
December 31, 2008
(000)
|
|
Assets:
|
|
|
|
Investments in Securities of Unaffiliated
Issuers, at Value (Cost $143,672)
|
|
$
|
107,665
|
|
Investment in Security of Affiliated
Issuer, at Value (Cost $942)
|
|
942
|
|
Total Investments in Securities, at Value
(Cost $144,614)
|
|
108,607
|
|
Foreign Currency, at Value (Cost $3,990)
|
|
3,899
|
|
Receivable from Affiliate
|
|
@
|
|
Dividends Receivable
|
|
1
|
|
Other Assets
|
|
4
|
|
Total Assets
|
|
112,511
|
|
Liabilities:
|
|
|
|
Payable For:
|
|
|
|
Dividends Declared
|
|
7,167
|
|
Thai Repatriation Tax
|
|
448
|
|
U.S. Investment Advisory Fees
|
|
67
|
|
Thai Investment Advisory Fees
|
|
49
|
|
Administration Fees
|
|
4
|
|
Custodian Fees
|
|
36
|
|
Directors Fees and Expenses
|
|
@
|
|
Other Liabilities
|
|
48
|
|
Total Liabilities
|
|
7,819
|
|
Net Assets
|
|
|
|
Applicable to 15,890,623 Issued and
Outstanding $0.01 Par Value Shares (30,000,000 Shares Authorized)
|
|
$
|
104,692
|
|
Net Asset Value Per Share
|
|
$
|
6.59
|
|
Net Assets Consist of:
|
|
|
|
Common Stock
|
|
$
|
159
|
|
Paid-in Capital
|
|
140,606
|
|
Undistributed Net Investment Income
|
|
101
|
|
Accumulated Net Realized Loss
|
|
(147
|
)
|
Unrealized Appreciation (Depreciation) on
Investments and Foreign Currency Translations
|
|
(36,027
|
)
|
Net Assets
|
|
$
|
104,692
|
|
@
Amount is less than $500.
6
|
The
accompanying notes are an integral part of the financial statements.
|
|
|
The Thai Fund, Inc.
|
|
|
|
Financial Statements
|
Statement of Operations
|
|
Year Ended
December 31, 2008
(000)
|
|
Investment Income:
|
|
|
|
Dividends from Securities of Unaffiliated
Issuers
|
|
$
|
7,025
|
|
Dividends from Security of Affiliated
Issuer
|
|
45
|
|
Interest from Securities of Unaffiliated
Issuers
|
|
39
|
|
Total Investment Income
|
|
7,109
|
|
Expenses:
|
|
|
|
U.S. Investment Advisory Fees (Note B)
|
|
1,162
|
|
Thai Repatriation Tax Expense
|
|
712
|
|
Thai Investment Advisory Fees (Note B)
|
|
411
|
|
Administration Fees (Note C)
|
|
138
|
|
Custodian Fees (Note D)
|
|
155
|
|
Professional Fees
|
|
118
|
|
Stockholder Reporting Expenses
|
|
31
|
|
Stockholder Servicing Agent Fees
|
|
12
|
|
Directors Fees and Expenses
|
|
3
|
|
Other Expenses
|
|
42
|
|
Total Expenses
|
|
2,784
|
|
Waiver of Administration Fees (Note C)
|
|
(72
|
)
|
Rebate from Morgan Stanley Affiliated Cash
Sweep (Note G)
|
|
(2
|
)
|
Expense Offset (Note D)
|
|
|
@
|
Net Expenses
|
|
2,710
|
|
Net Investment Income
|
|
4,399
|
|
Net Realized Gain (Loss) on:
|
|
|
|
Investments
|
|
13,634
|
|
Foreign Currency Transactions
|
|
67
|
|
Net Realized Gain
|
|
13,701
|
|
Change in Unrealized Appreciation
(Depreciation) on:
|
|
|
|
Investments
|
|
(110,292
|
)
|
Foreign Currency Translations
|
|
(48
|
)
|
Change in Unrealized Appreciation
(Depreciation)
|
|
(110,340
|
)
|
Net Realized Gain (Loss) and Change in
Unrealized Appreciation (Depreciation)
|
|
(96,639
|
)
|
Net Decrease in Net Assets Resulting from
Operations
|
|
$
|
(92,240
|
)
|
@ Amount is less
than $500.
|
The accompanying notes are an integral part of the financial
statements.
|
7
|
|
The Thai Fund, Inc.
|
|
|
|
Financial Statements
|
Statements of Changes in Net Assets
|
|
Year Ended
December 31, 2008
(000)
|
|
Year Ended
December 31, 2007
(000)
|
|
Increase (Decrease) in Net Assets
|
|
|
|
|
|
Operations:
|
|
|
|
|
|
Net Investment Income
|
|
$
|
4,399
|
|
$
|
3,072
|
|
Net Realized Gain
|
|
13,701
|
|
15,168
|
|
Net Change in Unrealized Appreciation
(Depreciation)
|
|
(110,340
|
)
|
46,642
|
|
Net Increase (Decrease) in Net Assets
Resulting from Operations
|
|
(92,240
|
)
|
64,882
|
|
Distributions from and/or in Excess of:
|
|
|
|
|
|
Net Investment Income
|
|
(4,388
|
)
|
(3,747
|
)
|
Net Realized Gain
|
|
(2,806
|
)
|
|
|
Total Distributions
|
|
(7,194
|
)
|
(3,747
|
)
|
Capital Share Transactions:
|
|
|
|
|
|
Reinvestment of Distributions (5,052 and
6,662 shares, respectively)
|
|
58
|
|
54
|
|
Net Increase in Net Assets Resulting from
Capital Share
Transactions
|
|
58
|
|
54
|
|
Total Increase (Decrease)
|
|
(99,376
|
)
|
61,189
|
|
Net Assets:
|
|
|
|
|
|
Beginning of Period
|
|
204,068
|
|
142,879
|
|
End of Period (Including Undistributed Net
Investment Income of $101 and $23, respectively)
|
|
$
|
104,692
|
|
$
|
204,068
|
|
8
|
The accompanying notes are an integral part of the financial
statements.
|
|
|
The Thai Fund, Inc.
|
|
|
|
Financial Highlights
|
Selected Per Share Data and Ratios
|
|
Year Ended December 31,
|
|
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
Net Asset Value, Beginning of Period
|
|
$
|
12.85
|
|
$
|
9.00
|
|
$
|
8.32
|
|
$
|
8.32
|
|
$
|
8.93
|
|
Net Investment Income
|
|
0.28
|
|
0.19
|
|
0.24
|
|
0.23
|
|
0.13
|
|
Net Realized and Unrealized Gain (Loss) on
Investments
|
|
(6.08
|
)
|
3.90
|
|
0.76
|
|
(0.01
|
)
|
(0.62
|
)
|
Total from Investment Operations
|
|
(5.80
|
)
|
4.09
|
|
1.00
|
|
0.22
|
|
(0.49
|
)
|
Distributions from and/or in Excess of:
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Income
|
|
(0.28
|
)
|
(0.24
|
)
|
(0.26
|
)
|
(0.22
|
)
|
(0.12
|
)
|
Net Realized Gain
|
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
Total Distributions
|
|
(0.46
|
)
|
(0.24
|
)
|
(0.26
|
)
|
(0.22
|
)
|
(0.12
|
)
|
Dilutive Effect of Shares Issued through
Rights Offering and Offering Costs
|
|
|
|
|
|
(0.06
|
)
|
|
|
|
|
Net Asset Value, End of Period
|
|
$
|
6.59
|
|
$
|
12.85
|
|
$
|
9.00
|
|
$
|
8.32
|
|
$
|
8.32
|
|
Per Share Market Value, End of Period
|
|
$
|
5.81
|
|
$
|
13.05
|
|
$
|
11.00
|
|
$
|
9.49
|
|
$
|
8.95
|
|
TOTAL INVESTMENT RETURN:
|
|
|
|
|
|
|
|
|
|
|
|
Market Value
|
|
(51.95
|
)%
|
21.02
|
%
|
18.97
|
%
|
8.26
|
%
|
(12.91
|
)%
|
Net Asset Value(1)
|
|
(44.65
|
)%
|
45.65
|
%
|
11.03
|
%
|
2.10
|
%
|
(5.71
|
)%
|
RATIOS, SUPPLEMENTAL DATA:
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets, End of Period (Thousands)
|
|
$
|
104,692
|
|
$
|
204,068
|
|
$
|
142,879
|
|
$
|
110,432
|
|
$
|
110,396
|
|
Ratio of Expenses to Average Net Assets(2)
|
|
1.57
|
%+
|
1.49
|
%+
|
1.74
|
%
|
1.76
|
%
|
1.73
|
%
|
Ratio of Net Investment Income to Average
Net Assets(2)
|
|
2.55
|
%+
|
1.76
|
%+
|
2.66
|
%
|
2.79
|
%
|
1.62
|
%
|
Portfolio Turnover Rate
|
|
15
|
%
|
24
|
%
|
43
|
%
|
26
|
%
|
36
|
%
|
(2) Supplemental Information on the
Ratios to Average Net Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Ratios Before Expenses Waived by Administrator:
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of Expenses to Average Net Assets
|
|
1.61
|
%+
|
1.53
|
%+
|
1.78
|
%
|
1.79
|
%
|
1.74
|
%
|
Ratio of Net Investment Income to Average
Net Assets
|
|
2.51
|
%+
|
1.72
|
%+
|
2.62
|
%
|
2.76
|
%
|
1.61
|
%
|
(1)
|
Total investment return
based on net asset value per share reflects the effects of changes in net
asset value on the performance of the Fund during each period, and assumes
dividends and distributions, if any, were reinvested. This percentage is not
an indication of the performance of a stockholders investment in the Fund
based on market value due to differences between the market price of the
stock and the net asset value per share of the Fund.
|
|
Per share amount is based
on average shares outstanding.
|
+
|
Reflects rebate of certain
Fund expenses in connection with the investments in Morgan Stanley
Institutional Liquidity Funds Money Market Portfolio Institutional
Class during the period. As a result of such rebate, the expenses as a
percentage of its net assets were effected by less than 0.005%.
|
|
Amount is less than $0.005
per share.
|
|
The accompanying notes are an integral part of the financial
statements.
|
9
|
|
The Thai Fund, Inc.
|
|
|
|
December 31,
2008
|
Notes to Financial Statements
The Thai Fund, Inc. (the
Fund) was incorporated on June 10, 1987 and is registered as a
non-diversified, closed-end management investment company under the Investment
Company Act of 1940, as amended (the 1940 Act). The Funds investment
objective is long-term capital appreciation through investment primarily in
equity securities of companies organized under the laws of the Kingdom of
Thailand. To the extent that the Fund invests in derivative instruments that
the Adviser believes have economic characteristics similar to equity securities
of companies organized under the laws of the Kingdom of Thailand, such
investments will be counted for purposes of the Funds policy in the previous
sentence. To the extent the Fund makes such investments, the Fund will be
subject to the risks of such derivative instruments as described herein. The
Fund makes its investments in Thailand through the Thai Investment Plan (the Plan)
established in conformity with Thai law. The Fund is the sole unit holder of
the Plan. The accompanying financial statements are prepared on a consolidated
basis and present the financial position and results of operations of the Plan
and the Fund. All significant intercompany transactions have been eliminated in
consolidation.
A. Accounting
Policies:
The
following significant accounting policies are in conformity with U.S. generally
accepted accounting principles. Such policies are consistently followed by the
Fund in the preparation of its financial statements. U.S. generally accepted
accounting principles may require management to make estimates and assumptions
that affect the reported amounts and disclosures in the consolidated financial
statements. Actual results may differ from those estimates.
1.
Security Valuation:
Securities listed on a
foreign exchange are valued at their closing price except as noted below.
Unlisted securities and listed securities not traded on the valuation date for
which market quotations are readily available are valued at the mean between
the current bid and asked prices obtained from reputable brokers. Equity
securities listed on a U.S. exchange are valued at the latest quoted sales
price on the valuation date. Equity securities listed or traded on NASDAQ, for
which market quotations are available, are valued at the NASDAQ Official
Closing Price. Debt securities purchased with remaining maturities of 60 days
or less are valued at amortized cost, if it approximates market value.
All
other securities and investments for which market values are not readily
available, including restricted securities, and those securities for which it
is inappropriate to determine prices in accordance with the aforementioned
procedures, are valued at fair value as determined in good faith under
procedures adopted by the Board of Directors (the Directors), although the
actual calculations may be done by others. Factors considered in making this
determination may include, but are not limited to, information obtained by
contacting the issuer, analysts, or the appropriate stock exchange (for
exchange-traded securities), analysis of the issuers financial statements or
other available documents and, if necessary, available information concerning
other securities in similar circumstances.
Most
foreign markets close before the New York Stock Exchange (NYSE). Occasionally,
developments that could affect the closing prices of securities and other
assets may occur between the times at which valuations of such securities are
determined (that is, close of the foreign market on which the securities trade)
and the close of business on the NYSE. If these developments are expected to
materially affect the value of the securities, the valuations may be adjusted
to reflect the estimated fair value as of the close of the NYSE, as determined
in good faith under procedures established by the Directors.
2.
Foreign Currency Translation:
The books and records of the
Fund are maintained in U.S. dollars. Amounts denominated in Thai Baht are
translated into U.S. dollars at the mean of the bid and asked prices of such
currency against U.S. dollars last quoted by a major bank as follows:
·
investments, other assets and liabilities at
the prevailing rate of exchange on the valuation date;
·
investment transactions and investment income
at the prevailing rate of exchange on the dates of such transactions.
Although
the net assets of the Fund are presented at the foreign exchange rate and
market values at the close of the period, the Fund does not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rate from the fluctuations arising from changes in the market
prices of the securities held at period end. Similarly, the Fund does not
isolate the effect of changes in the foreign exchange rate from the
fluctuations arising from changes in the market prices of securities sold
during the period. Accordingly, realized and unrealized foreign currency gains
(losses) on investments in securities are included in the reported net realized
and unrealized gains (losses) on investment transactions and balances.
|
The Thai Fund, Inc.
|
|
|
|
December 31,
2008
|
Notes to Financial Statements (contd)
Net
realized gains (losses) on foreign currency transactions represent net foreign
exchange gains (losses) from sales and maturities of foreign currency exchange
contracts, dispositions of foreign currency, currency gains or losses realized
between the trade and settlement dates on securities transactions, and the
difference between the amount of investment income recorded on the Funds books
and the U.S. dollar equivalent amounts actually received or paid. Net
unrealized currency gains (losses) from valuing foreign currency denominated
assets and liabilities at period end exchange rates are reflected as a
component of unrealized appreciation (depreciation) on investments and foreign
currency translations in the Statement of Assets and Liabilities. The change in
net unrealized currency gains (losses) on foreign currency translations for the
period is reflected in the Statement of Operations.
A
significant portion of the Funds net assets consist of investments in Thai
equity securities, which may be subject to greater price volatility, lower
liquidity and less diversity than equity securities of companies based in the
United States. In addition, Thai equity securities may be subject to
substantial governmental involvement in the economy and greater social,
economic and political uncertainty.
Governmental
approval for foreign investments may be required in advance of making an
investment under certain circumstances in some countries, and the extent of
foreign investments in domestic companies may be subject to limitation in other
countries. Foreign ownership limitations also may be imposed by the charters of
individual companies to prevent, among other concerns, violations of foreign
investment limitations. As a result, an additional class of shares (identified
as Foreign in the Portfolio of Investments) may be created and offered for
investment. The local and foreign shares market values may differ. In the
absence of trading of the foreign shares in such markets, the Fund values the
foreign shares at the closing exchange price of the local shares. Such
securities, if any, are identified as fair valued in the Portfolio of
Investments.
3.
Derivatives:
The Fund may use derivatives
to achieve its investment objectives. The Fund may engage in transactions in
futures contracts on foreign currencies, stock indices, as well as in options,
swaps and structured products. Consistent with the Funds investment objectives
and policies, the Fund may use derivatives for non-hedging as well as hedging
purposes.
Following
is a description of derivative instruments that the Fund has utilized and their
associated risks:
Foreign
Currency Exchange Contracts: The Fund may enter into foreign currency exchange
contracts generally to attempt to protect securities and related receivables
and payables against changes in future foreign exchange rates and, in certain
situations, to gain exposure to a foreign currency. A foreign currency exchange
contract is an agreement between two parties to buy or sell currency at a set
price on a future date. The market value of the contract will fluctuate with
changes in currency exchange rates. The contract is marked-to-market daily and
the change in market value is recorded by the Fund as unrealized gain or loss.
The Fund records realized gains or losses when the contract is closed equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed. Risk may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms of
their contracts and is generally limited to the amount of unrealized gain on
the contracts, if any, at the date of default. Risks may also arise from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar. At December 31, 2008, the Fund did not have any outstanding
foreign currency exchange contracts.
4.
Restricted Securities:
The Fund may invest in
unregistered or otherwise restricted securities. The term restricted securities
refers to securities that are unregistered or are held by control persons of
the issuer and securities that are subject to contractual restrictions on their
resale. As a result, restricted securities may be more difficult to value and
the Fund may have difficulty disposing of such assets either in a timely manner
or for a reasonable price. In order to dispose of an unregistered security, the
Fund, where it has contractual rights to do so, may have to cause such security
to be registered. A considerable period may elapse between the time the
decision is made to sell the security and the time the security is registered
so that the Fund could sell it. Contractual restrictions on the resale of
securities vary in length and scope and are generally the result of a
negotiation between the issuer and acquiror of the securities. The Fund would,
in either case, bear market risks during that period.
5.
New Accounting Pronouncement:
On March 19, 2008,
Financial Accounting Standards Board (FASB) released Statement of Financial
Accounting Standards No. 161, Disclosures about Derivative Instruments
and Hedging
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Notes to Financial Statements (contd)
Activities
(SFAS 161). SFAS 161 requires qualitative disclosures about objectives and
strategies for using derivatives, quantitative disclosures about fair value
amounts of and gains and losses on derivative instruments, and disclosures
about credit-risk-related contingent features in derivative agreements. The
application of SFAS 161 is required for fiscal years and interim periods
beginning after November 15, 2008. At this time, management is evaluating
the implications of SFAS 161 and its impact on the financial statements has not
yet been determined.
6.
Fair Value Measurement:
The Fund adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 157, Fair
Value Measurements (SFAS 157), effective January 1, 2008. In accordance
with SFAS 157, fair value is defined as the price that the Fund would receive
to sell an investment or pay to transfer a liability in a timely transaction with
an independent buyer in the principal market, or in the absence of a principal
market the most advantageous market for the investment or liability. SFAS 157
establishes a three-tier hierarchy to distinguish between (1) inputs that
reflect the assumptions market participants would use in valuing an asset or
liability developed based on market data obtained from sources independent of
the reporting entity (observable inputs) and (2) inputs that reflect the
reporting entitys own assumptions about the assumptions market participants
would use in valuing an asset or liability developed based on the best
information available in the circumstances (unobservable inputs) and to
establish classification of fair value measurements for disclosure purposes.
Various inputs are used in determining the value of the Funds investments. The
inputs are summarized in the three broad levels listed below.
Level
1 quoted prices in active markets for identical securities
Level
2 other significant observable inputs (including quoted prices for similar
investments, interest rates, prepayment speeds, credit risk, etc.)
Level
3 significant unobservable inputs (including the Funds own assumptions in
determining the fair value of investments)
The
inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The
following is a summary of the inputs used as of December 31, 2008 in
valuing the Funds investments carried at value:
Valuation Inputs
|
|
Investments
in Securities
(000)
|
|
Level 1 - Quoted Prices
|
|
$
|
942
|
|
Level 2 - Other Significant Observable
Inputs
|
|
107,665
|
|
Level 3 - Significant Unobservable Inputs
|
|
|
*
|
Total
|
|
$
|
108,607
|
|
The
following is a reconciliation of investments in which significant unobservable
inputs (Level 3) were used in determining value:
|
|
Investments
in Securities
(000)
|
|
Balance as of 12/31/07
|
|
$
|
*
|
Accrued discounts/premiums
|
|
|
|
Realized gain (loss)
|
|
|
|
Change in unrealized appreciation
(depreciation)
|
|
|
|
Net purchases (sales)
|
|
|
|
Net transfers in and/or out of Level 3
|
|
|
|
Balance as of 12/31/08
|
|
$
|
*
|
The amount of total gains (losses) for the
period included in earnings attributable to the change in unrealized gains
(losses) relating to assets and liabilities still held at 12/31/08.
|
|
$
|
|
*Includes
a security which is valued at zero.
7.
Other:
Security transactions are
accounted for on the date the securities are purchased or sold. Realized gains
(losses) on the sale of investment securities are determined on the specific
identified cost basis. Interest income is recognized on the accrual basis.
Dividend income and distributions are recorded on the ex-dividend date (except
certain dividends which may be recorded as soon as the Fund is informed of such
dividends) net of applicable withholding taxes.
B. Investment
Advisory Fees:
Morgan
Stanley Investment Management Inc. (the U.S. Adviser or MS Investment
Management) provides investment advisory services to the Fund
12
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Notes to Financial Statements (contd)
under the terms of an
Investment Advisory Agreement (the Agreement). Under the Agreement, the U.S.
Adviser is paid a fee computed weekly and payable monthly at an annual rate of
0.90% of the Funds first $50 million of average weekly net assets, 0.70% of
the Funds next $50 million of average weekly net assets and 0.50% of the
Funds average weekly net assets in excess of $100 million.
MFC Asset Management Public
Company Limited (the Thai Adviser) provides investment advisory services to
the Fund under the terms of a contract. Effective May 1, 2008, the Thai
Adviser was paid a fee computed weekly and payable monthly at an annual rate of
0.32% of the Funds first $50 million of average weekly net assets, 0.20% of
the Funds next $50 million of average weekly net assets and 0.16% of the
Funds average weekly net assets in excess of $100 million. Prior to May 1,
2008, the Thai Adviser was paid a fee computed weekly and payable monthly at an
annual rate of 0.40% of the Funds first $50 million of average weekly net
assets, 0.25% of the Funds next $50 million of average weekly net assets and
0.20% of the Funds average weekly net assets in excess of $100 million.
The U.S. Adviser has entered
into a Sub-Advisory Agreement with Morgan Stanley Investment Management Company
(the Sub-Adviser), a wholly-owned subsidiary of Morgan Stanley. The
Sub-Adviser, subject to the control and supervision of the Fund, its Officers,
Directors and the U.S. Adviser, and in accordance with the investment
objectives, policies and restrictions of the Fund, makes certain day-to-day
investment decisions and places certain purchase and sale orders. The U.S.
Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory
fees the U.S. Adviser receives from the Fund.
C. Administration
Fees:
MS
Investment Management also serves as Administrator to the Fund pursuant to an
Administration Agreement. Under the Administration Agreement, the
administration fee is 0.08% of the Funds average weekly net assets. MS
Investment Management has agreed to limit the administration fee through a
waiver so that it will be no greater than the previous administration fee of
0.02435% of the Funds average weekly net assets plus $24,000 per annum. This
waiver is voluntary and may be terminated at any time. For the year ended December 31,
2008, approximately $72,000 of administration fees were waived pursuant to this
arrangement. Under a sub-administration agreement between the Administrator and
JPMorgan Investor Services Co. (JPMIS), a corporate affiliate of JPMorgan
Chase Bank, N.A., JPMIS provides certain administrative services to the Fund.
For such services, the Administrator pays JPMIS a portion of the fee the
Administrator receives from the Fund. Administration costs (including
out-of-pocket expenses) incurred in the ordinary course of providing services
under the administration agreement, except pricing services and extraordinary
expenses, are covered under the administration fee.
D. Custodian Fees:
JPMorgan Chase Bank, N.A. (the
Custodian) serves as Custodian for the Funds assets held in the United
States. The Custodian holds cash, securities, and other assets of the Fund as
required by the 1940 Act. Custody fees are payable monthly based on assets held
in custody, investment purchases and sales activity and account maintenance
fees, plus reimbursement for certain out-of-pocket expenses. The Plans assets
in Thailand are held by Kasikornbank Public Company Limited.
The Fund has entered into an
arrangement with its Custodian whereby credits realized on uninvested cash
balances were used to offset a portion of the Funds expenses. These custodian
credits are shown as Expense Offset on the Statement of Operations.
E. Federal Income
Taxes:
It
is the Funds intention to continue to qualify as a regulated investment
company and distribute all of its taxable income. Accordingly, no provision for
Federal income taxes is required in the financial statements. Dividend income
and distributions to stockholders are recorded on the ex-dividend date.
Distributions of income from
the Plan to the Fund are subject to Thai income tax at a rate of 10% of the
distribution amount, which is withheld at the time of distribution. All
distributions from the Plan to the Fund must be approved by The Bank of
Thailand (BOT) pursuant to the laws of The Kingdom of Thailand. The Fund
accrues and allocates the Thai income tax to net investment income, net
realized gains and net unrealized appreciation on the basis of their relative
amounts. For U.S. Federal income tax purposes, the Thai income tax is deducted,
when paid, from net investment income. These income taxes are shown as Thai
repatriation tax expense on the Statement of Operations.
Financial Accounting
Standards Board Interpretation No. 48
Accounting
for Uncertainty in Income Taxes (FIN 48)
sets forth a minimum
threshold for financial statement recognition of the benefit of a tax position
taken or expected to be taken in a tax return. Management has concluded there
are no significant uncertain tax positions that would require recognition in
the financial statements. If applicable, the Fund recognizes interest
13
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Notes to Financial Statements (contd)
accrued related to
unrecognized tax benefits in Interest Expense and penalties in Other
expenses on the Statement of Operations. The Fund files tax returns with the
U.S. Internal Revenue Service, New York and various states. Generally, each of
the tax years in the four year period ended December 31, 2008, remains
subject to examination by taxing authorities.
The tax character of
distributions paid may differ from the character of distributions shown on the
Statements of Changes in Net Assets due to short-term capital gains being
treated as ordinary income for tax purposes. The tax character of distributions
paid during fiscal 2008 and 2007 was as follows:
2008 Distributions
Paid From:
(000)
|
|
2007 Distributions
Paid From:
(000)
|
Ordinary
Income
|
|
Long-term
Capital
Gain
|
|
Ordinary
Income
|
|
Long-term
Capital
Gain
|
$4,388
|
|
$2,806
|
|
$3,747
|
|
$
|
The amount and character of
income and capital gain distributions to be paid by the Fund are determined in
accordance with Federal income tax regulations, which may differ from U.S.
generally accepted accounting principles. The book/tax differences are
considered either temporary or permanent in nature.
Temporary differences are
generally due to differing book and tax treatments for the timing of the
recognition of gains (losses) on certain investment transactions and the timing
of the deductibility of certain expenses.
Permanent differences,
primarily due to differing treatments of gains (losses) related to foreign
currency transactions and distribution redesignations, resulted in the
following reclassifications among the components of net assets at December 31,
2008:
Increase (Decrease)
|
Undistributed
(Distributions in
Excess of) Net
Investment
Income (Loss)
(000)
|
|
Accumulated
Net Realized
Gain (Loss)
(000)
|
|
Paid-in
Capital
(000)
|
$67
|
|
$(67)
|
|
$
|
At December 31, 2008,
the components of distributable earnings on a tax basis were as follows:
Undistributed
Ordinary
Income
(000)
|
|
|
Undistributed
Long-term
Capital Gain
(000)
|
|
$113
|
|
|
$
|
|
At December 31, 2008,
the U.S. Federal income tax cost basis of investments was approximately
$144,762,000 and, accordingly, net unrealized depreciation for U.S. Federal
income tax purposes was $36,155,000 of which $11,604,000 related to appreciated
securities and $47,759,000 related to depreciated securities.
Net capital, currency and
passive foreign investment company (PFIC) losses incurred after October 31,
and within the taxable year are deemed to arise on the first day of the Funds
next taxable year. For the year ended December 31, 2008, the Fund deferred
to January 2, 2009, for U.S. Federal income tax purposes, currency losses
of approximately $10,000.
During the year ended December 31,
2008, the Fund utilized capital loss carryforward for U.S. Federal income tax
purposes of approximately $10,828,000.
To the extent that capital
loss carryforwards are used to offset any future capital gains realized during
the carryforward period as provided by U.S. Federal income tax regulations, no
capital gains tax liability will be incurred by the Fund for gains realized and
not distributed. To the extent that capital gains are offset, such gains will
not be distributed to the stockholders.
F. Contractual
Obligations:
The
Fund enters into contracts that contain a variety of indemnifications. The
Funds maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
G. Security
Transactions and Transactions with Affiliates:
The Fund invests in the
Institutional Class of the Morgan Stanley Institutional Liquidity Money
Market Portfolio, an open-end management investment company managed by the
Adviser. Investment Advisory fees paid by the Fund are reduced by an amount
equal to its pro-rata share of advisory and administration fees paid by the
Morgan Stanley Institutional Liquidity Money Market Portfolio. For the year
ended December 31, 2008, advisory fees paid were reduced by approximately
$2,000 relating to the Funds investment in the Morgan Stanley Institutional
Liquidity Money Market Portfolio.
14
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Notes to Financial Statements (contd)
A summary of the Funds
transactions in shares of the affiliated issuer during the year ended December 31,
2008 is as follows:
Market Value
December 31,
2007
(000)
|
|
Purchases
at Cost
(000)
|
|
Sales
Proceeds
(000)
|
|
Dividend
Income
(000)
|
|
Market Value
December 31,
2008
(000)
|
$275
|
|
$5,817
|
|
$5,150
|
|
$45
|
|
$942
|
During the year ended December 31,
2008, the Fund made purchases and sales totaling approximately $32,282,000 and
$24,152,000, respectively, of investment securities other than long-term U.S.
Government securities and short-term investments. There were no purchases or
sales of long-term U.S. Government securities.
During the year ended December 31,
2008, the Fund incurred no brokerage commissions with Morgan Stanley &
Co. Incorporated, an affiliated broker/dealer.
H. Other:
On June 19, 2007, the
Directors approved a procedure whereby the Fund may, when appropriate, purchase
shares in the open market or in privately negotiated transactions at a price not
above market value or net asset value, whichever is lower at the time of the
purchase. During the year ended December 31, 2008, the Fund did not
repurchase any of its shares.
On December 5, 2008, the
Officers of the Fund, pursuant to authority granted by the Directors, declared
a distribution of $0.2744 per share, derived from net investment income, and
$0.1766 per share, derived from capital gains, payable on January 30,
2009, to stockholders of record on December 19, 2008.
I. Supplemental
Proxy Information (unaudited):
On June 19, 2008, an annual meeting of the Funds
stockholders was held for the purpose of voting on the following matter, the
results of which were as follows:
Election of Directors by all
stockholders:
|
|
For
|
|
Withhold
|
|
Kathleen A. Dennis
|
|
9,393,450
|
|
306,538
|
|
Joseph J. Kearns
|
|
9,364,882
|
|
335,106
|
|
Michael E. Nugent
|
|
9,363,221
|
|
336,767
|
|
Fergus Reid
|
|
9,361,937
|
|
338,051
|
|
Federal
Income Tax Information (unaudited)
For Federal income tax
purposes, the following information is furnished with respect to the
distributions paid by the Fund during its taxable year ended December 31,
2008.
The Fund designated and paid
approximately $2,806,000 as long-term capital gain distribution.
For Federal income tax
purposes, the following information is furnished with respect to the Funds
earnings for its taxable year ended December 31, 2008.
When distributed, certain
earnings may be subject to a maximum tax rate of 15% as provided for the Jobs
and Growth Tax Relief Reconciliation Act of 2004. The Fund designated up to a
maximum of approximately $4,387,000 as taxable at this lower rate.
For non-U.S. residents, the
Fund may designate up to a maximum of $35,000 as qualifying as interest-related
dividends.
In January, the Fund provides
tax information to stockholders for the preceding calendar year.
15
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Notes to Financial Statements (contd)
For More
Information About Portfolio Holdings (unaudited)
The Fund provides a complete
schedule of portfolio holdings in its semi-annual and annual reports within 60
days of the end of the Funds second and fourth fiscal quarters. The
semi-annual reports and the annual reports are filed electronically with the Securities
and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR,
respectively. Morgan Stanley also delivers the semi-annual and annual reports
to Fund stockholders and makes these reports available on its public website,
www.morganstanley.com/msim. Each Morgan Stanley fund also files a complete
schedule of portfolio holdings with the SEC for the Funds first and third
fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports
for the first and third fiscal quarters to stockholders, nor are the reports
posted to the Morgan Stanley public website. You may, however, obtain the Form N-Q
filings (as well as the Form N-CSR and N-CSRS filings) by accessing the
SECs website, www.sec.gov. You may also review and copy them at the SECs
public reference room in Washington, DC. Information on the operation of the
SECs Public Reference Room may be obtained by calling the SEC at 1(800)
SEC-0330. You can also request copies of these materials, upon payment of a
duplicating fee, by electronic request at the SECs e-mail address
(publicinfo@sec.gov) or by writing the public reference section of the SEC,
Washington, DC 20549-0102.
In addition to filing a
complete schedule of portfolio holdings with the SEC each fiscal quarter, the
Fund makes portfolio holdings information available by periodically providing
the information on its public website, www.morganstanley.com/msim.
The Fund provides a complete
schedule of portfolio holdings on the public website on a calendar-quarter
basis approximately 31 calendar days after the close of the calendar quarter.
The Fund also provides Top 10 holdings information on the public website
approximately 15 business days following the end of each month. You may obtain
copies of the Funds monthly or calendar-quarter website postings, by calling
1(800) 231-2608.
Proxy Voting
Policy and Procedures and Proxy Voting Record (unaudited)
A copy of (1) the Funds
policies and procedures with respect to the voting of proxies relating to the
Funds portfolio securities; and (2) how the Fund voted proxies relating
to portfolio securities during the most recent twelve-month period ended June 30,
is available without charge, upon request, by calling 1 (800) 548-7786 or by
visiting our website at www.morganstanley.com/msim. This information is also
available on the SECs website at www.sec.gov.
16
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Portfolio Management (unaudited)
The Fund is managed by
members of the Emerging Markets Equity team. The team consists of portfolio
managers and analysts. Current members of the team jointly and primarily responsible
for the day-to-day management of the Funds portfolio are James Cheng, a
Managing Director of the Sub-Adviser, Munib Madni, an Executive Director of the
Sub-Adviser, and Ruchir Sharma, a Managing Director of the Adviser. Mr. Cheng
has been associated with the Sub-Adviser in an investment management capacity
since July 2006 and joined the team managing the Fund in August 2008.
Prior to July 2006, Mr. Cheng worked in an investment management
capacity at Invesco Asia Limited, Asia Strategic Investment Management Limited
and Munich Re Asia Capital Management. Mr. Munib has been associated with
the Sub-Adviser in an investment management capacity since February 2005
and joined the team managing the Fund in August 2008. Prior to August 2008,
Mr. Munib was associate director of Australian equities at Aberdeen Asset
Management (December 2000 to January 2005). Previously, he was a
portfolio manager, Australian equities, at Equitilink Investment Management (December 1994
to December 2000). Mr. Sharma has been associated with the Adviser in
an investment management capacity since 1996 and joined the team managing the
Fund in August 2008.
17
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Report of Independent Registered Public
Accounting Firm
To the
Stockholders and Board of Directors of
The Thai Fund, Inc.
We have audited the
accompanying consolidated statement of assets and liabilities of The Thai Fund, Inc.
(the Fund), including the consolidated portfolio of investments, as of December 31,
2008, and the related consolidated statement of operations for the year then
ended, the consolidated statements of changes in net assets for each of the two
years in the period then ended, and the consolidated financial highlights for
each of the five years in the period then ended. These consolidated financial
statements and consolidated financial highlights are the responsibility of the
Funds management. Our responsibility is to express an opinion on these
consolidated financial statements and consolidated financial highlights based
on our audits.
We conducted our audits 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 and
financial highlights are free of material misstatement. We were not engaged to
perform an audit of the Funds internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Funds internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements and
financial highlights, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. Our procedures included confirmation of securities owned as of December 31,
2008, by correspondence with the custodian. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the
consolidated financial statements and consolidated financial highlights
referred to above present fairly, in all material respects, the consolidated
financial position of The Thai Fund, Inc. at December 31, 2008, the
consolidated results of its operations for the year then ended, the
consolidated changes in its net assets for each of the two years in the period
then ended, and the consolidated financial highlights for each of the five
years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
Boston, Massachusetts
February 24, 2009
18
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Dividend Reinvestment and Cash Purchase Plan
(unaudited)
Pursuant
to the Dividend Reinvestment and Cash Purchase Plan (the Plan), each
stockholder will be deemed to have elected, unless Computershare Trust Company,
N.A. (the Plan Agent) is otherwise instructed by the stockholder in writing,
to have all distributions automatically reinvested in Fund shares. Participants
in the Plan have the option of making additional voluntary cash payments to the
Plan Agent, annually, in any amount from $100 to $3,000, for investment in Fund
shares.
Dividend
and capital gain distributions will be reinvested on the reinvestment date in
full and fractional shares. If the market price per share equals or exceeds net
asset value per share on the reinvestment date, the Fund will issue shares to
participants at net asset value or, if net asset value is less than 95% of the
market price on the reinvestment date, shares will be issued at 95% of the
market price. If net asset value exceeds the market price on the reinvestment
date, participants will receive shares valued at market price. The Fund may
issue shares of its Common Stock in connection with dividend reinvestment
requirements at the discretion of the Board of Directors. Should the Fund
declare a dividend or capital gain distribution payable only in cash, the Plan
Agent will purchase Fund shares for participants in the open market as agent
for the participants.
The
Plan Agents fees for the reinvestment of dividends and distributions will be
paid by the Fund. However, each participants account will be charged a pro
rata share of brokerage commissions incurred on any open market purchases
effected on such participants behalf. A participant will also pay brokerage
commissions incurred on purchases made by voluntary cash payments. Although
stockholders in the Plan may receive no cash distributions, participation in
the Plan will not relieve participants of any income tax which may be payable
on such dividends or distributions.
In
the case of stockholders, such as banks, brokers or nominees, that hold shares
for others who are the beneficial owners, the Plan Agent will administer the
Plan on the basis of the number of shares certified from time to time by the
stockholder as representing the total amount registered in the stockholders
name and held for the account of beneficial owners who are participating in the
Plan.
Stockholders
who do not wish to have distributions automatically reinvested should notify
the Plan Agent in writing. There is no penalty for non-participation or
withdrawal from the Plan, and stockholders who have previously withdrawn from
the Plan may rejoin at any time. Requests for additional information or any
correspondence concerning the Plan should be directed to the Plan Agent at:
The Thai Fund, Inc.
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, Rhode Island 02940-3078
1(800) 231-2608
19
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Morgan Stanley Institutional Closed End Funds
An Important Notice Concerning Our
U.S. Privacy Policy (unaudited)
We are required by federal
law to provide you with a copy of our Privacy Policy annually.
The following Policy applies
to current and former individual investors in Morgan Stanley Institutional
closed end funds. This Policy is not applicable to partnerships, corporations,
trusts or other non-individual clients or account holders. Please note that we
may amend this Policy at any time, and will inform you of any changes to this
Policy as required by law.
We Respect
Your Privacy
We appreciate that you have
provided us with your personal financial information. We strive to maintain the
privacy of such information while we help you achieve your financial
objectives. This Policy describes what non-public personal information we collect
about you, why we collect it, and when we may share it with others. We hope
this Policy will help you understand how we collect and share non-public
personal information that we gather about you. Throughout this Policy, we refer
to the non-public information that personally identifies you or your accounts
as personal information.
1. What
Personal Information Do We Collect About You?
To serve you better and
manage our business, it is important that we collect and maintain accurate
information about you. We may obtain this information from applications and
other forms you submit to us, from your dealings with us, from consumer
reporting agencies, from our Web sites and from third parties and other
sources.
For example:
·
We may collect information such as your name,
address, e-mail address, telephone/fax numbers, assets, income and investment
objectives through applications and other forms you submit to us.
·
We may obtain information about account
balances, your use of account(s) and the types of products and services
you prefer to receive from us through your dealings and transactions with us
and other sources.
·
We may obtain information about your
creditworthiness and credit history from consumer reporting agencies.
·
We may collect background information from and
through third-party vendors to verify representations you have made and to
comply with various regulatory requirements.
·
If you interact with us through our public and
private Web sites, we may collect information that you provide directly through
online communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name, your
computers operating system and Web browser, your use of our Web sites and your
product and service preferences, through the use of cookies. Cookies
recognize your computer each time you return to one of our sites, and help to
improve our sites content and personalize your experience on our sites by, for
example, suggesting offerings that may interest you. Please consult the Terms
of Use of these sites for more details on our use of cookies.
2. When Do
We Disclose Personal Information We Collect About You?
To provide you with the
products and services you request, to serve you better and to manage our business,
we may disclose personal information we collect about you to our affiliated
companies and to non-affiliated third parties as required or permitted by law.
A. Information We Disclose to Our Affiliated Companies.
We do not disclose personal information that
we collect about you to our affiliated companies except to enable them to
provide services on our behalf or as otherwise required or permitted by law.
20
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Morgan Stanley Institutional Closed End Funds
An Important Notice Concerning Our
U.S. Privacy Policy (contd)
B. Information We Disclose to Third Parties.
We do not disclose personal information that
we collect about you to non-affiliated third parties except to enable them to
provide services on our behalf, to perform joint marketing agreements with
other financial institutions, or as otherwise required or permitted by law. For
example, some instances where we may disclose information about you to nonaffiliated
third parties include: for servicing and processing transactions, to offer our
own products and services, to protect against fraud, for institutional risk
control, to respond to judicial process or to perform services on our behalf.
When we share personal information with these companies, they are required to
limit their use of personal information to the particular purpose for which it
was shared and they are not allowed to share personal information with others
except to fulfill that limited purpose.
3. How Do We
Protect the Security and Confidentiality of Personal Information We Collect
About You?
We maintain physical,
electronic and procedural security measures to help safeguard the personal
information we collect about you. We have internal policies governing the
proper handling of client information. Third parties that provide support or
marketing services on our behalf may also receive personal information, and we
require them to adhere to confidentiality standards with respect to such
information.
21
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Director and Officer Information (unaudited)
Independent Directors:
Name, Age and Address of
Independent Director
|
|
Position(s)
Held with
Registrant
|
|
Length of
Time
Served*
|
|
Principal
Occupation(s) During Past 5 Years
|
|
Number of
Portfolios in
Fund
Complex
Overseen
by
Independent
Director**
|
|
Other Directorships Held
by
Independent Directors
|
Frank L. Bowman (64)
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Trustees
1177 Avenue of the Americas
New York, NY 10036
|
|
Director
|
|
Since August
2006
|
|
President, Strategic
Decisions, LLC (consulting) (since February 2009); Director or Trustee
of various Retail Funds and Institutional Funds (since August 2006);
Chairperson of the Insurance Sub-Committee of the Insurance, Valuation and
Compliance Committee (since February 2007); served as President and
Chief Executive Officer of the Nuclear Institute (policy organization)
through November 2008; retired as Admiral in the U.S. Navy in January 2005
after serving over 8 years as Director of the Naval Nuclear Propulsion
Program and Deputy Administrator Naval Reactors in the National Nuclear
Security Administration at the U.S. Department of Energy (1996-2004).
Knighted as Honary Knight Commander of the Most Excellent Order of the
British Empire; awarded the Officer de lOrde National du Mérite by the
French Government.
|
|
161
|
|
Director of Armed Services YMCA of the USA; member,
BP America External Advisory Council (energy); member, National Academy of Engineers.
|
|
|
|
|
|
|
|
|
|
|
|
Michael Bozic (68)
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Directors
1177 Avenue of the
Americas
New York, NY 10036
|
|
Director
|
|
Since
April 1994
|
|
Private investor;
Chairperson of the Insurance, Valuation and Compliance Committee (since
October 2006); Director or Trustee of the Retail Funds (since
April 1994) and Institutional Funds (since July 2003); formerly,
Chairperson of the Insurance Committee (July 2006-September 2006), Vice
Chairman of Kmart Corporation (December 1998-October 2000),
Chairman and Chief Executive Officer of Levitz Furniture Corporation
(November 1995-November 1998) and President and Chief Executive
Officer of Hills Department Stores (May 1991-July 1995); variously
Chairman, Chief Executive Officer, President and Chief Operating Officer
(1987-1991) of the Sears Merchandise Group of Sears Roebuck & Co.
|
|
163
|
|
Director of various business organizations.
|
|
|
|
|
|
|
|
|
|
|
|
Kathleen A. Dennis (55)
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Directors
1177 Avenue of the Americas
New York, NY 10036
|
|
Director
|
|
Since
August
2006
|
|
President, Cedarwood
Associates (mutual fund and investment management) (since July 2006);
Chairperson of the Money Market and Alternatives Sub-Committee of the
Investment Committee (since October 2006) and Director or Trustee of
various Retail Funds and Institutional Funds (since August 2006);
formerly, Senior Managing Director of Victory Capital Management (1993-2006).
|
|
161
|
|
Director of various non-profit organizations.
|
22
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Director and Officer Information (contd)
Independent Directors
(contd):
Name, Age and Address of
Independent Director
|
|
Position(s)
Held with
Registrant
|
|
Length of
Time
Served*
|
|
Principal
Occupation(s) During Past 5 Years
|
|
Number of
Portfolios in
Fund
Complex
Overseen
by
Independent
Director**
|
|
Other Directorships Held
by
Independent Directors
|
Dr. Manuel H.
Johnson (60)
c/o Johnson Smick Group, Inc.
888 16th Street, N.W.
Suite 740
Washington, D.C. 20006
|
|
Director
|
|
Since
July
1991
|
|
Senior Partner, Johnson
Smick International, Inc. (consulting firm); Chairperson of the
Investment Committee (since October 2006) and Director or Trustee of the
Retail Funds (since July 1991) and Institutional Funds (since
July 2003); Co-Chairman and a founder of the Group of Seven Council
(G7C) (international economic commission); formerly, Chairperson of the Audit
Committee (July 1991-September 2006); Vice Chairman of the Board of
Governors of the Federal Reserve System and Assistant Secretary of the U.S.
Treasury.
|
|
163
|
|
Director of NVR, Inc. (home construction);
Director of Evergreen Energy.
|
|
|
|
|
|
|
|
|
|
|
|
Joseph J. Kearns (66)
c/o Kearns & Associates LLC
PMB754
23852 Pacific Coast
Highway
Malibu, CA 90265
|
|
Director
|
|
Since
August
1994
|
|
President,
Kearns & Associates LLC (investment consulting); Chairperson of the
Audit Committee (since October 2006) and Director or Trustee of the Retail
Funds (since July 2003) and Institutional Funds (since
August 1994); formerly Deputy Chairperson of the Audit Committee
(July 2003-September 2006) and Chairperson of the Audit Committee
of the Institutional Funds (October 2001-July 2003); formerly, CFO of
the J. Paul Getty Trust.
|
|
164
|
|
Director of Electro Rent
Corporation (equipment leasing) and The Ford Family Foundation.
|
|
|
|
|
|
|
|
|
|
|
|
Michael F. Klein (50)
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Directors
1177 Avenue of the Americas
New York, NY 10036
|
|
Director
|
|
Since
August
2006
|
|
Chief Operating Officer
and Managing Director, Aetos Capital, LLC (since March 2000) and
Co-President, Aetos Alternatives Management, LLC (since January 2004);
Chairperson of the Fixed Income Sub-Committee of the Investment Committee
(since October 2006) and Director or Trustee of various Retail Funds and
Institutional Funds (since August 2006); formerly, Managing Director,
Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment
Management, President, Morgan Stanley Institutional Funds
(June 1998-March 2000) and Principal, Morgan Stanley & Co.
Inc. and Morgan Stanley Dean Witter Investment Management
(August 1997-December 1999).
|
|
161
|
|
Director of certain
investment funds managed or sponsored by Aetos Capital LLC; Director of
Sanitized AG and Sanitized Marketing AG (specialty chemicals).
|
|
|
|
|
|
|
|
|
|
|
|
Michael E. Nugent (72)
c/o Triumph Capital, L.P.
445 Park Avenue
New York, NY 10022
|
|
Chairperson of the Board
and Director
|
|
Chairperson of the
Boards since July 2006 and Director since July 1991
|
|
General Partner, Triumph
Capital, L.P. (private investment partnership); Chairman of the Boards of the
Retail Funds and Institutional Funds (since July 2006); Director or
Trustee of the Retail Funds (since July 1991) and Institutional Funds
(since July 2001); formerly, Chairperson of the Insurance Committee
(until July 2006).
|
|
163
|
|
None.
|
23
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Director and Officer Information (contd)
Independent Directors
(contd):
Name, Age and Address of
Independent Director
|
|
Position(s)
Held with
Registrant
|
|
Length of
Time
Served*
|
|
Principal Occupation(s) During Past 5 Years
|
|
Number of
Portfolios in
Fund
Complex
Overseen
by
Independent
Director**
|
|
Other Directorships Held by
Independent Directors
|
W. Allen Reed (61)
c/o Kramer Levin Naftalis &
Frankel LLP
Counsel to the
Independent Directors
1177 Avenue of the Americas
New York, NY 10036
|
|
Director
|
|
Since
August
2006
|
|
Chairperson of the Equity Sub-Committee of the
Investment Committee (since October 2006) and Director or Trustee of
various Retail and Institutional Funds (since August 2006); formerly,
President and CEO of General Motors Asset Management; Chairman and Chief
Executive Officer of the GM Trust Bank and Corporate Vice President of
General Motors Corporation (July 1994-December 2005).
|
|
161
|
|
Director of Temple-Inland Industries (packaging and
forest products); Director of Legg Mason, Inc. and Director of the
Auburn University Foundation.
|
|
|
|
|
|
|
|
|
|
|
|
Fergus Reid (76)
c/o Lumelite Plastics
Corporation
85 Charles Coleman Blvd.
Pawling, NY 12564
|
|
Director
|
|
Since
June
1992
|
|
Chairman of Lumelite Plastics Corporation;
Chairperson of the Governance Committee and Director or Trustee of the Retail
Funds (since July 2003) and Institutional Funds (since June 1992).
|
|
164
|
|
Trustee and Director of certain investment companies
in the JPMorgan Funds complex managed by JP Morgan Investment Management Inc.
|
Interested Directors:
Name, Age and Address of
Interested Director
|
|
Position(s)
Held with
Registrant
|
|
Term of
Office and
Length of
Time
Served*
|
|
Principal Occupation(s) During Past 5 Years
|
|
Number of
Portfolios in
Fund
Complex
Overseen
by
Interested
Director**
|
|
Other Directorships Held by
Interested Director
|
James F. Higgins (61)
c/o Morgan Stanley Trust
Harborside Financial Center
Plaza Two
Jersey City, NJ 07311
|
|
Director
|
|
Since
June
2000
|
|
Director or Trustee of
the Retail Funds (since June 2000) and Institutional Funds (since
July 2003); Senior Advisor of Morgan Stanley (since August 2000).
|
|
162
|
|
Director of AXA Financial, Inc. and The
Equitable Life Assurance Society of the United States (financial services).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
This is the earliest date the Director began serving
the Retail Funds or Institutional Funds. Each Director serves an indefinite
term, until his or her successor is elected.
**
The Fund Complex includes all funds advised by Morgan
Stanley Investment Management Inc. (MSIM) that have an investment advisor
that is an affiliated entity of MSIM (including but not limited to, Morgan
Stanley Investment Advisors Inc. (MSIA) and Morgan Stanley AIP GP LP). The
Retail Funds are those funds advised by MSIA. The Institutional Funds are
certain U.S. registered funds advised by MSIM and Morgan Stanley AIP GP LP.
For the period September 26, 2008 through
February 5, 2009 W. Allen Reed was an interested Director. At all other
times covered by this report, Mr. Reed was an Independent Director.
24
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Director and Officer Information (contd)
Executive Officers:
Name, Age and Address of Executive Officer
|
|
Position(s) Held
with Registrant
|
|
Term of Office
and Length of
Time Served*
|
|
Principal Occupation(s) During Past 5 Years
|
Randy Takian (34)
Morgan Stanley Investment Management Inc.
522 Fifth Avenue
New York, NY 10036
|
|
President and Principal Executive Officer
|
|
Since September 2008
|
|
President and Principal Executive Officer (since
September 2008) of funds in the Fund Complex; President and Chief
Executive Officer of Morgan Stanley Services Company Inc. (since
September 2008). President of Morgan Stanley Investment Advisors Inc. (since
July 2008). Head of the Retail and Intermediary business within Morgan
Stanley Investment Management (since July 2008). Head of Liquidity and
Bank Trust business (since July 2008) and the Latin American franchise
(since July 2008) at Morgan Stanley Investment Management. Managing
Director, Director and/or Officer of the Adviser and various entities
affiliated with the Adviser. Formerly, Head of Strategy and Product
Development for the Alternatives Group and Senior Loan Investment Management.
Formerly with Bank of America (July 1996-March 2006), most recently
as Head of the Strategy, Mergers and Acquisitions team for Global Wealth and
Investment Management.
|
|
|
|
|
|
|
|
Kevin Klingert (46)
Morgan Stanley Investment Management Inc.
522 Fifth Avenue
New York, NY 10036
|
|
Vice President
|
|
Since
June 2008
|
|
Global Head, Chief Operating Officer and acting Chief
Investment Officer of the Global Fixed Income Group of the Adviser and Morgan
Stanley Investment Advisors Inc. (since April 2008). Head of Global
Liquidity Portfolio Management and co-Head of Liquidity Credit Research of
Morgan Stanley Investment Management (since December 2007). Managing
Director of the Adviser and Morgan Stanley Investment Advisors Inc. (since
December 2007). Previously, Managing Director on the Management
Committee and head of Municipal Portfolio Management and Liquidity at
BlackRock (October 1991 to January 2007).
|
|
|
|
|
|
|
|
Amy R. Doberman (46)
Morgan Stanley Investment Management Inc.
522 Fifth Avenue
New York, NY 10036
|
|
Vice President
|
|
Since
July 2004
|
|
Managing Director of Morgan Stanley Investment
Management (since July 2004); Vice President of the Retail Funds and
Institutional Funds (since July 2004); Vice President of the Van Kampen
Funds (since August 2004); Secretary (since February 2006) and
Managing Director (since July 2004) of the Adviser and various entities
affiliated with the Adviser. Formerly, Managing Director and General Counsel
Americas, UBS Global Asset Management (July 2000-July 2004).
|
|
|
|
|
|
|
|
Carsten Otto (45)
Morgan Stanley Investment Management Inc.
522 Fifth Avenue
New York, NY 10036
|
|
Chief Compliance Officer
|
|
Since October 2004
|
|
Managing Director and Global Head of Compliance for
Morgan Stanley Investment Management (since April 2007) and Chief
Compliance Officer of the Retail Funds and Institutional Funds (since
October 2004). Formerly, U.S. Director of Compliance
(October 2004-April 2007) and Assistant Secretary and Assistant
General Counsel of the Retail Funds.
|
|
|
|
|
|
|
|
Stefanie V. Chang Yu (42)
Morgan Stanley Investment Management Inc.
522 Fifth Avenue
New York, NY 10036
|
|
Vice President
|
|
Since December 1997
|
|
Managing Director of the Adviser and various entities
affiliated with the Adviser; Vice President of the Retail Funds (since
July 2002) and Institutional Funds (since December 1997). Formerly,
Secretary of various entities affiliated with the Adviser.
|
|
|
|
|
|
|
|
Mary E. Mullin (41)
Morgan Stanley Investment Management Inc.
522 Fifth Avenue
New York, NY 10036
|
|
Secretary
|
|
Since June 1999
|
|
Executive Director of the Adviser and various
entities affiliated with the Adviser; Secretary of the Retail Funds (since
July 2003) and Institutional Funds (since June 1999).
|
25
|
The Thai
Fund, Inc.
|
|
|
|
December 31, 2008
|
Director and Officer Information (contd)
Executive Officers (contd):
Name, Age and Address of
Executive Officer
|
|
Position(s) Held
with Registrant
|
|
Term of Office
and Length of
Time Served*
|
|
Principal
Occupation(s) During Past 5 Years
|
James W. Garrett (40)
Morgan Stanley Investment Management Inc.
522 Fifth Avenue
New York, NY 10036
|
|
Treasurer and Chief
Financial Officer
|
|
Treasurer since
February 2002 and Chief Financial Officer since July 2003
|
|
Head of Global Fund
Administration; Managing Director of the Adviser and various entities
affiliated with the Adviser; Treasurer and Chief Financial Officer of the
Institutional Funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* This is the earliest date the Officer began serving the Retail
Funds or Institutional Funds. Each Officer serves an indefinite term, until his
or her successor is elected.
In accordance with Section 303A. 12(a) of the
New York Stock Exchange Listed Company Manual, the Funds Annual CEO
Certification certifying as to compliance with NYSEs Corporate Governance
Listing Standards was submitted to the Exchange on October 3, 2008.
The Funds Principal Executive Officer and Principal
Financial Officer Certifications required by Section 302 of the
Sarbanes-Oxley Act of 2002 were filed with the Funds N-CSR and are available
on the Securities and Exchange Commissions Website at http://www.sec.gov.
26
The Thai Fund, Inc.
Directors
|
|
Michael E. Nugent
|
Kevin Klingert
|
|
Vice
President
|
Frank L. Bowman
|
|
|
Amy R. Doberman
|
Michael Bozic
|
Vice
President
|
|
|
Kathleen A. Dennis
|
Stefanie V. Chang Yu
|
|
Vice
President
|
James F. Higgins
|
|
|
James W. Garrett
|
Dr. Manuel H. Johnson
|
Treasurer
and Chief Financial Officer
|
|
|
Joseph J. Kearns
|
Carsten Otto
|
|
Chief
Compliance Officer
|
Michael F. Klein
|
|
|
Mary E. Mullin
|
W. Allen Reed
|
Secretary
|
|
|
Fergus Reid
|
|
|
|
Officers
|
|
Michael E. Nugent
|
|
Chairman
of the Board and Director
|
|
|
|
Randy Takian
|
|
President
and Principal
|
|
Executive
Officer
|
|
Investment
Adviser and Administrator
Morgan Stanley Investment
Management Inc.
522 Fifth Avenue
New York, New York 10036
Custodian
JPMorgan Chase Bank, N.A.
270 Park Avenue
New York, New York 10017
Stockholder
Servicing Agent
Computershare Trust Company,
N.A.
250 Royall Street
Canton, Massachusetts 02021
Legal
Counsel
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019-6131
Independent
Registered Public Accounting Firm
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
For additional Fund
information, including the Funds net asset value per share and information
regarding the investments comprising the Funds portfolio, please call 1(800)
231-2608 or visit our website at www.morganstanley.com/msim. All investments
involve risks, including the possible loss of principal.
© 2009 Morgan Stanley
CETTFANN IU09-00637I-Y12/08
Item 2.
Code of Ethics.
(a) The Fund has adopted
a code of ethics (the Code of Ethics) that applies to its principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, regardless of whether
these individuals are employed by the Fund or a third party.
(b)
No information need be disclosed pursuant to
this paragraph.
(c)
Not applicable.
(d)
Not applicable.
(e)
Not applicable.
(f)
(1) The Funds Code of
Ethics is attached hereto as Exhibit 12 A.
(2) Not applicable.
(3) Not applicable.
Item 3.
Audit Committee Financial Expert.
The Funds Board of Trustees has determined that Joseph J. Kearns, an independent Trustee, is an audit committee financial expert serving on its audit committee. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an expert for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant
Fees and Services.
(a)(b)(c)(d) and (g). Based
on fees billed for the periods shown:
2008
|
|
Registrant
|
|
Covered Entities(1)
|
|
Audit Fees
|
|
$
|
53,800
|
|
N/A
|
|
|
|
|
|
|
|
Non-Audit Fees
|
|
|
|
|
|
Audit-Related Fees
|
|
$
|
|
$
|
742,276
|
(2)
|
Tax Fees
|
|
$
|
3,380
|
(3)
|
$
|
99,522
|
(4)
|
All Other Fees
|
|
$
|
|
$
|
246,887
|
(5)
|
Total Non-Audit Fees
|
|
$
|
3,380
|
|
$
|
1,088,685
|
|
|
|
|
|
|
|
Total
|
|
$
|
57,180
|
|
$
|
1,088,685
|
|
2007
|
|
Registrant
|
|
Covered Entities(1)
|
|
Audit Fees
|
|
$
|
40,200
|
|
N/A
|
|
|
|
|
|
|
|
Non-Audit Fees
|
|
|
|
|
|
Audit-Related Fees
|
|
$
|
|
$
|
731,800
|
(2)
|
Tax Fees
|
|
$
|
3,100
|
(3)
|
$
|
104,020
|
(4)
|
All Other Fees
|
|
$
|
|
$
|
166,270
|
(5)
|
Total Non-Audit Fees
|
|
$
|
3,100
|
|
$
|
1,002,090
|
|
|
|
|
|
|
|
Total
|
|
$
|
43,300
|
|
$
|
1,002,090
|
|
N/A- Not
applicable, as not required by Item 4.
(1)
Covered Entities include the Adviser (excluding sub-advisors) and any
entity controlling, controlled by or under common control with the Adviser that
provides ongoing services to the Registrant.
(2)
Audit-Related Fees represent assurance and related services provided
that are reasonably related to the performance of the audit of the financial
statements of the Covered Entities and funds advised by the Adviser or its
affiliates, specifically attestation services provided in connection with a SAS
70 Report and advisory consulting work.
(3)
Tax Fees represent tax advice and compliance services provided in
connection with the review of the Registrant's tax returns.
(4)
Tax Fees represent tax advice services provided to Covered Entities,
including research and identification of PFIC entities.
(5)
All Other Fees represent attestation services provided in connection
with performance presentation standards and a compliance review project
performed
1
(e)(1) The audit
committees pre-approval policies and procedures are as follows:
APPENDIX A
AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS
AS ADOPTED AND AMENDED JULY 23, 2004,(1)
1.
Statement of Principles
The Audit Committee of the Board is required to
review and, in its sole discretion, pre-approve all Covered Services to be
provided by the Independent Auditors to the Fund and Covered Entities in order
to assure that services performed by the Independent Auditors do not impair the
auditors independence from the Fund.
The SEC has issued rules specifying the types
of services that an independent auditor may not provide to its audit client, as
well as the audit committees administration of the engagement of the
independent auditor. The SECs rules establish
two different approaches to pre-approving services, which the SEC considers to
be equally valid. Proposed services
either: may be pre-approved without consideration of specific case-by-case
services by the Audit Committee (
general pre-approval
); or require the
specific pre-approval of the Audit Committee or its delegate (
specific
pre-approval
). The Audit Committee
believes that the combination of these two approaches in this Policy will
result in an effective and efficient procedure to pre-approve services
performed by the Independent Auditors.
As set forth in this Policy, unless a type of service has received
general pre-approval, it will require specific pre-approval by the Audit
Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services
exceeding pre-approved cost levels or budgeted amounts will also require
specific pre-approval by the Audit Committee.
The appendices to this Policy describe the Audit,
Audit-related, Tax and All Other services that have the general pre-approval of
the Audit Committee. The term of any
general pre-approval is 12 months from the date of pre-approval, unless
the Audit Committee considers and provides a different period and states
otherwise. The Audit Committee will
annually review and pre-approve the services that may be provided by the
Independent Auditors without obtaining specific pre-approval from the Audit
Committee. The Audit Committee will add
to or subtract from the list of general pre-approved services from time to
time, based on subsequent determinations.
(1)
This Audit Committee Audit and Non-Audit
Services Pre-Approval Policy and Procedures (the
Policy
), adopted as
of the date above, supersedes and replaces all prior versions that may have
been adopted from time to time.
2
The purpose of this Policy is to set forth the
policy and procedures by which the Audit Committee intends to fulfill its
responsibilities. It does not delegate
the Audit Committees responsibilities to pre-approve services performed by the
Independent Auditors to management.
The Funds Independent Auditors have reviewed this
Policy and believes that implementation of the Policy will not adversely affect
the Independent Auditors independence.
2.
Delegation
As provided in the Act and the SECs rules, the
Audit Committee may delegate either type of pre-approval authority to one or
more of its members. The member to whom
such authority is delegated must report, for informational purposes only, any
pre-approval decisions to the Audit Committee at its next scheduled meeting.
3.
Audit Services
The annual Audit services engagement terms and fees
are subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial
statement audit and other procedures required to be performed by the Independent
Auditors to be able to form an opinion on the Funds financial statements. These other procedures include information
systems and procedural reviews and testing performed in order to understand and
place reliance on the systems of internal control, and consultations relating
to the audit. The Audit Committee will
approve, if necessary, any changes in terms, conditions and fees resulting from
changes in audit scope, Fund structure or other items.
In addition to the annual Audit services engagement
approved by the Audit Committee, the Audit Committee may grant general
pre-approval to other Audit services, which are those services that only the
Independent Auditors reasonably can provide.
Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit
services in Appendix B.1. All other
Audit services not listed in Appendix B.1 must be specifically pre-approved by
the Audit Committee (or by any member of the Audit Committee to which
pre-approval has been delegated).
4.
Audit-related Services
Audit-related services are assurance and related
services that are reasonably related to the performance of the audit or review
of the Funds financial statements and, to the extent they are Covered
Services, the Covered Entities or that are traditionally performed by the
Independent Auditors. Because the Audit
Committee believes that the provision of Audit-related services does not impair
the independence of the auditor and is consistent with the SECs rules on
auditor independence, the Audit Committee may grant general pre-approval to
Audit-related services. Audit-related
services include, among others, accounting consultations related to accounting,
financial reporting or disclosure matters
3
not classified as Audit services; assistance with
understanding and implementing new accounting and financial reporting guidance
from rulemaking authorities; agreed-upon or expanded audit procedures related
to accounting and/or billing records required to respond to or comply with
financial, accounting or regulatory reporting matters; and assistance with
internal control reporting requirements under Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the
Audit-related services in Appendix B.2.
All other Audit-related services not listed in Appendix B.2 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
5.
Tax Services
The Audit Committee believes that the Independent Auditors
can provide Tax services to the Fund and, to the extent they are Covered
Services, the Covered Entities, such as tax compliance, tax planning and tax
advice without impairing the auditors independence, and the SEC has stated
that the Independent Auditors may provide such services.
Pursuant to the preceding paragraph, the Audit
Committee has pre-approved the Tax Services in Appendix B.3. All Tax services in Appendix B.3 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
6.
All Other Services
The Audit Committee believes, based on the SECs rules prohibiting
the Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted.
Accordingly, the Audit Committee believes it may grant general
pre-approval to those permissible non-audit services classified as All Other
services that it believes are routine and recurring services, would not impair
the independence of the auditor and are consistent with the SECs rules on
auditor independence.
The Audit Committee has pre-approved the All Other
services in Appendix B.4. Permissible
All Other services not listed in Appendix B.4 must be specifically pre-approved
by the Audit Committee (or by any member of the Audit Committee to which
pre-approval has been delegated).
7.
Pre-Approval Fee Levels or
Budgeted Amounts
Pre-approval fee levels or budgeted amounts for all
services to be provided by the Independent Auditors will be established
annually by the Audit Committee. Any
proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The
Audit Committee is mindful of the overall relationship of fees for audit and
non-audit services in determining whether to pre-approve any such services.
8.
Procedures
All requests or applications for services to be
provided by the Independent Auditors that do not require specific approval by
the Audit Committee will be submitted to the Funds Chief Financial Officer and
must include a detailed description of the services to be
4
rendered. The
Funds Chief Financial Officer will determine whether such services are
included within the list of services that have received the general
pre-approval of the Audit Committee. The
Audit Committee will be informed on a timely basis of any such services
rendered by the Independent Auditors.
Requests or applications to provide services that require specific
approval by the Audit Committee will be submitted to the Audit Committee by
both the Independent Auditors and the Funds Chief Financial Officer, and must
include a joint statement as to whether, in their view, the request or
application is consistent with the SECs rules on auditor independence.
The Audit Committee has designated the Funds Chief
Financial Officer to monitor the performance of all services provided by the
Independent Auditors and to determine whether such services are in compliance
with this Policy. The Funds Chief
Financial Officer will report to the Audit Committee on a periodic basis on the
results of its monitoring. Both the Funds
Chief Financial Officer and management will immediately report to the chairman
of the Audit Committee any breach of this Policy that comes to the attention of
the Funds Chief Financial Officer or any member of management.
9.
Additional Requirements
The Audit Committee has determined to take
additional measures on an annual basis to meet its responsibility to oversee
the work of the Independent Auditors and to assure the auditors independence
from the Fund, such as reviewing a formal written statement from the
Independent Auditors delineating all relationships between the Independent
Auditors and the Fund, consistent with Independence Standards Board No. 1,
and discussing with the Independent Auditors its methods and procedures for
ensuring independence.
10.
Covered Entities
Covered Entities include the Funds investment
adviser(s) and any entity controlling, controlled by or under common
control with the Funds investment adviser(s) that provides ongoing
services to the Fund(s). Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Funds
audit committee must pre-approve non-audit services provided not only to the
Fund but also to the Covered Entities if the engagements relate directly to the
operations and financial reporting of the Fund.
This list of Covered Entities would include:
Morgan
Stanley Retail Funds
Morgan
Stanley Investment Advisors Inc.
Morgan
Stanley & Co. Incorporated
Morgan
Stanley DW Inc.
Morgan
Stanley Investment Management Inc.
Morgan
Stanley Investment Management Limited
Morgan
Stanley Investment Management Private Limited
Morgan
Stanley Asset & Investment Trust Management Co., Limited
Morgan
Stanley Investment Management Company
Van
Kampen Asset Management
Morgan
Stanley Services Company, Inc.
Morgan
Stanley Distributors Inc.
Morgan
Stanley Trust FSB
5
Morgan
Stanley Institutional Funds
Morgan
Stanley Investment Management Inc.
Morgan
Stanley Investment Advisors Inc.
Morgan
Stanley Investment Management Limited
Morgan
Stanley Investment Management Private Limited
Morgan
Stanley Asset & Investment Trust Management Co., Limited
Morgan
Stanley Investment Management Company
Morgan
Stanley & Co. Incorporated
Morgan
Stanley Distribution, Inc.
Morgan
Stanley AIP GP LP
Morgan
Stanley Alternative Investment Partners LP
(e)(2)
Beginning with non-audit service contracts entered into on or after May 6,
2003, the audit committee also is required to pre-approve services to Covered
Entities to the extent that the services are determined to have a direct impact
on the operations or financial reporting of the Registrant. 100% of such
services were pre-approved by the audit committee pursuant to the Audit
Committees pre-approval policies and procedures (attached hereto).
(f) Not applicable.
(g) See table above.
(h) The audit committee of the Board of Trustees
has considered whether the provision of services other than audit services
performed by the auditors to the Registrant and Covered Entities is compatible
with maintaining the auditors independence in performing audit services.
Item
5. Audit Committee of Listed Registrants.
(a) The
Fund has a separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act whose members
are: Frank Joseph Kearns, Michael Nugent and Allen Reed.
(b) Not
applicable.
Item
6. Schedule of Investments
(a)
Refer to Item 1.
(b)
Not used.
Item
7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management
Investment Companies.
6
APPROVED
FEBRUARY 28, 2008
MORGAN STANLEY INVESTMENT MANAGEMENT
PROXY VOTING POLICY AND PROCEDURES
I.
POLICY STATEMENT
Introduction
- Morgan
Stanley Investment Managements (MSIM) policy and procedures for voting
proxies (Policy) with respect to securities held in the accounts of clients
applies to those MSIM entities that provide discretionary investment management
services and for which an MSIM entity has authority to vote proxies. This Policy is reviewed and updated as necessary
to address new and evolving proxy voting issues and standards.
The
MSIM entities covered by this Policy currently include the following: Morgan
Stanley Investment Advisors Inc., Morgan Stanley AIP GP LP, Morgan Stanley
Investment Management Inc., Morgan Stanley Investment Management Limited,
Morgan Stanley Investment Management Company, Morgan Stanley Asset &
Investment Trust Management Co., Limited, Morgan Stanley Investment Management
Private Limited, Van Kampen Asset Management, and Van Kampen Advisors Inc.
(each an MSIM Affiliate and collectively referred to as the MSIM Affiliates
or as we below).
Each
MSIM Affiliate will use its best efforts to vote proxies as part of its
authority to manage, acquire and dispose of account assets. With respect to the
MSIM registered management investment companies (Van Kampen, Institutional and
Advisor Fundscollectively referred to herein as the MSIM Funds), each MSIM
Affiliate will vote proxies under this Policy pursuant to authority granted
under its applicable investment advisory agreement or, in the absence of such
authority, as authorized by the Board of Directors/Trustees of the MSIM Funds.
An MSIM Affiliate will not vote proxies if the named fiduciary for an ERISA
account has reserved the authority for itself, or in the case of an account not
governed by ERISA, the investment management or investment advisory agreement
does not authorize the MSIM Affiliate to vote proxies. MSIM Affiliates will vote proxies in a
prudent and diligent manner and in the best interests of clients, including beneficiaries
of and participants in a clients benefit plan(s) for which the MSIM
Affiliates manage assets, consistent with the objective of maximizing long-term
investment returns (Client Proxy Standard).
In certain situations, a client or its fiduciary may provide an MSIM
Affiliate with a proxy voting policy. In
these situations, the MSIM Affiliate will comply with the clients policy.
Proxy
Research Services
- RiskMetrics Group ISS Governance Services (ISS)
and Glass Lewis (together with other proxy research providers as we may retain
from time to time, the Research Providers) are independent advisers that
specialize in providing a variety of fiduciary-level proxy-related services to
institutional investment managers, plan sponsors, custodians, consultants, and
other institutional investors. The
services provided include in-depth research, global issuer analysis, and voting
recommendations. While we may review and utilize the recommendations of the
Research Providers in
7
making
proxy voting decisions, we are in no way obligated to follow such
recommendations. In addition to research, ISS provides vote execution,
reporting, and recordkeeping.
Voting Proxies for Certain
Non-U.S. Companies
- Voting proxies of companies located in some
jurisdictions, particularly emerging markets, may involve several problems that
can restrict or prevent the ability to vote such proxies or entail significant
costs. These problems include, but are
not limited to: (i) proxy
statements and ballots being written in a language other than English; (ii) untimely
and/or inadequate notice of shareholder meetings; (iii) restrictions on
the ability of holders outside the issuers jurisdiction of organization to
exercise votes; (iv) requirements to vote proxies in person; (v) the
imposition of restrictions on the sale of the securities for a period of time
in proximity to the shareholder meeting; and (vi) requirements to provide
local agents with power of attorney to facilitate our voting instructions. As a result, we vote clients non-U.S.
proxies on a best efforts basis only, after weighing the costs and benefits of
voting such proxies, consistent with the Client Proxy Standard. ISS has been retained to provide assistance
in connection with voting non-U.S. proxies.
II.
GENERAL PROXY VOTING GUIDELINES
To promote consistency in
voting proxies on behalf of its clients, we follow this Policy (subject to any
exception set forth herein), including the guidelines set forth below. These guidelines address a broad range of
issues, and provide general voting parameters on proposals that arise most
frequently. However, details of specific
proposals vary, and those details affect particular voting decisions, as do
factors specific to a given company. Pursuant to the procedures set forth
herein, we may vote in a manner that is not in accordance with the following
general guidelines, provided the vote is approved by the Proxy Review Committee
(see Section III for description) and is consistent with the Client Proxy
Standard. Morgan Stanley AIP GP LP will
follow the procedures as described in Appendix A.
We endeavor to integrate
governance and proxy voting policy with investment goals and to follow the
Client Proxy Standard for each client. At times, this may result in split
votes, for example when different clients have varying economic interests in
the outcome of a particular voting matter (such as a case in which varied
ownership interests in two companies involved in a merger result in different
stakes in the outcome). We also may
split votes at times based on differing views of portfolio managers, but such a
split vote must be approved by the Proxy Review Committee.
We may abstain on matters
for which disclosure is inadequate.
A.
Routine Matters.
We generally support r
outine
management proposals. The following are
examples of routine management proposals:
·
Approval of financial statements and auditor
reports.
8
·
General updating/corrective amendments to the
charter, articles of association or bylaws.
·
Most proposals related to the conduct of the
annual meeting, with the following exceptions.
We generally oppose proposals that relate to the transaction of such
other business which may come before the meeting, and open-ended requests for adjournment. However, where management
specifically states the reason for requesting an adjournment and the requested
adjournment would facilitate passage of a proposal that would otherwise be supported
under this Policy (i.e. an uncontested corporate transaction), the adjournment
request will be supported.
We generally support shareholder proposals
advocating confidential voting procedures and independent tabulation of voting
results.
B.
Board
of Directors
1.
Election of directors
: In the
absence of a proxy contest, we generally support the boards nominees for
director except as follows:
a.
We consider withholding
support from or voting against interested directors if the companys board does
not meet market standards for director independence, or if otherwise we believe
board independence is insufficient. We
refer to prevalent market standards as promulgated by a stock exchange or other
authority within a given market (e.g., New York Stock Exchange or Nasdaq rules for
most U.S. companies, and The Combined Code on Corporate Governance in the
United Kingdom). Thus, for an NYSE company with no controlling shareholder, we
would expect that at a minimum a majority of directors should be independent as
defined by NYSE. Where we view market
standards as inadequate, we may withhold votes based on stronger independence
standards. Market standards notwithstanding, we generally do not view long
board tenure alone as a basis to classify a director as non-independent,
although lack of board turnover and fresh perspective can be a negative factor
in voting on directors.
i.
At a company
with a shareholder or group that controls the company by virtue of a majority
economic interest in the company, we have a reduced expectation for board
independence, although we believe the presence of independent directors can be
helpful, particularly in staffing the audit committee, and at times we may
withhold support from or vote against a nominee on the view the board or its
committees are not sufficiently independent.
ii.
We consider withholding support from or
voting against a nominee if he or she is affiliated with a major shareholder
that has representation on a board disproportionate to its economic interest.
9
b.
Depending on market
standards, we consider withholding support from or voting against a nominee who
is interested and who is standing for election as a member of the companys
compensation, nominating or audit committee.
c.
We consider withholding
support from or voting against a nominee if we believe a direct conflict exists
between the interests of the nominee and the public shareholders, including
failure to meet fiduciary standards of care and/or loyalty. We may oppose directors where we conclude
that actions of directors are unlawful, unethical or negligent. We consider opposing individual board members
or an entire slate if we believe the board is entrenched and/or dealing
inadequately with performance problems, and/or acting with insufficient
independence between the board and management.
d.
We consider withholding
support from or voting against a nominee standing for election if the board has
not taken action to implement generally accepted governance practices for which
there is a bright line test. For
example, in the context of the U.S. market, failure to eliminate a dead hand or
slow hand poison pills would be seen as a basis for opposing one or more
incumbent nominees.
e.
In markets that encourage
designated audit committee financial experts, we consider voting against
members of an audit committee if no members are designated as such.
f.
We consider withholding
support from or voting against a nominee who has failed to attend at least 75%
of board meetings within a given year without a reasonable excuse.
g.
We consider withholding
support from or voting against a nominee who serves on the board of directors
of more than six companies (excluding investment companies). We also consider voting against a director
who otherwise appears to have too many commitments to serve adequately on the
board of the company.
2.
Board independence:
We generally support U.S. shareholder
proposals requiring that a certain percentage (up to 66
2
/
3
%) of the companys board members be independent
directors, and promoting all-independent audit, compensation and
nominating/governance committees.
3.
Board diversity:
We consider on a case-by-case basis
shareholder proposals urging diversity of board membership with respect to
social, religious or ethnic group.
10
4.
Majority voting:
We generally support proposals requesting or
requiring majority voting policies in election of directors, so long as there
is a carve-out for plurality voting in the case of contested elections.
5.
Proxy access:
We consider on a case-by-case basis
shareholder proposals to provide procedures for inclusion of shareholder
nominees in company proxy statements.
6.
Proposals to elect all directors
annually:
We generally
support proposals to elect all directors annually at public companies (to declassify
the Board of Directors) where such action is supported by the board, and
otherwise consider the issue on a case-by-case basis based in part on overall
takeover defenses at a company.
7.
Cumulative voting:
We generally support proposals to eliminate
cumulative voting in the U.S. market context. (Cumulative voting provides that
shareholders may concentrate their votes for one or a handful of candidates, a
system that can enable a minority bloc to place representation on a
board). U.S. proposals to establish
cumulative voting in the election of directors generally will not be supported.
8.
Separation of Chairman and
CEO positions:
We vote on
shareholder proposals to separate the Chairman and CEO positions and/or to
appoint a non-executive Chairman based in part on prevailing practice in
particular markets, since the context for such a practice varies. In many non-U.S. markets, we view separation
of the roles as a market standard practice, and support division of the roles
in that context.
9.
Director retirement age and
term limits:
Proposals
recommending set director retirement ages or director term limits are voted on
a case-by-case basis.
10.
Proposals to limit directors
liability and/or broaden indemnification of directors.
Generally, we will support such proposals provided that the officers and
directors are eligible for indemnification and liability protection if they
have acted in good faith on company business and were found innocent of any
civil or criminal charges for duties performed on behalf of the company.
C.
Corporate
transactions and proxy fights.
We examine
proposals relating to mergers, acquisitions and other special corporate
transactions (i.e., takeovers, spin-offs, sales of assets, reorganizations,
restructurings and recapitalizations) on a case-by-case basis. However, proposals for mergers or other
significant transactions that are friendly and approved by the Research
Providers generally will be supported and in those instances will not need to
be reviewed by the Proxy Review Committee, where there is no portfolio manager
objection and where there is no material conflict of interest. We also analyze proxy contests on a
case-by-case basis.
11
D.
Changes
in capital structure.
1.
We generally support the
following:
·
Management and shareholder
proposals aimed at eliminating unequal voting rights, assuming fair economic
treatment of classes of shares we hold.
·
Management
proposals to increase the authorization of existing classes of common stock (or
securities convertible into common stock) if: (i) a clear business purpose
is stated that we can support and the number of shares requested is reasonable
in relation to the purpose for which authorization is requested; and/or (ii) the
authorization does not exceed 100% of shares currently authorized and at least
30% of the total new authorization will be outstanding.
·
Management
proposals to create a new class of preferred stock or for issuances of
preferred stock up to 50% of issued capital, unless we have concerns about use
of the authority for anti-takeover purposes.
·
Management
proposals to authorize share repurchase plans, except in some cases in which we
believe there are insufficient protections against use of an authorization for
anti-takeover purposes.
·
Management proposals to
reduce the number of authorized shares of common or preferred stock, or to
eliminate classes of preferred stock.
·
Management proposals to
effect stock splits.
·
Management proposals to effect reverse stock
splits if management proportionately reduces the authorized share amount set
forth in the corporate charter. Reverse
stock splits that do not adjust proportionately to the authorized share amount
generally will be approved if the resulting increase in authorized shares
coincides with the proxy guidelines set forth above for common stock increases.
·
Management proposals for
higher dividend payouts.
2.
We generally oppose the
following (notwithstanding management support):
·
Proposals to add classes of stock that would
substantially dilute the voting interests of existing shareholders.
·
Proposals to increase the authorized or issued
number of shares of existing classes of stock that are unreasonably dilutive,
particularly if there are no preemptive rights for existing shareholders.
12
·
Proposals that
authorize share issuance at a discount to market rates, except where authority
for such issuance is de minimis, or if there is a special situation that we
believe justifies such authorization (as may be the case, for example, at a
company under severe stress and risk of bankruptcy).
·
Proposals
relating to changes in capitalization by 100% or more.
We consider on a case-by-case basis shareholder proposals to increase
dividend payout ratios, in light of market practice and perceived market
weaknesses, as well as individual company payout history and current
circumstances. For example, currently we
perceive low payouts to shareholders as a concern at some Japanese companies,
but may deem a low payout ratio as appropriate for a growth company making good
use of its cash, notwithstanding the broader market concern.
E.
Takeover
Defenses and Shareholder Rights
1.
Shareholder
rights plans:
We generally support
proposals to require shareholder approval or ratification of shareholder rights
plans (poison pills). In voting on
rights plans or similar takeover defenses, we consider on a case-by-case basis
whether the company has demonstrated a need for the defense in the context of
promoting long-term share value; whether provisions of the defense are in line
with generally accepted governance principles; and the specific context if the
proposal is made in the midst of a takeover bid or contest for control.
2.
Supermajority
voting requirements:
We generally oppose requirements for supermajority votes
to amend the charter or bylaws, unless the provisions protect minority
shareholders where there is a large shareholder. In line with this view, in the absence of a
large shareholder we support reasonable shareholder proposals to limit such
supermajority voting requirements.
3.
Shareholder
rights to call meetings:
We consider
proposals to enhance shareholder rights to call meetings on a case-by-case
basis.
4.
Reincorporation:
We consider management and shareholder proposals to reincorporate to a different
jurisdiction on a case-by-case basis. We
oppose such proposals if we believe the main purpose is to take advantage of
laws or judicial precedents that reduce shareholder rights.
5.
Anti-greenmail
provisions:
Proposals relating to the adoption of anti-greenmail provisions
will be supported, provided that the proposal: (i) defines greenmail; (ii) prohibits
buyback offers to large block holders (holders of at least 1% of the
outstanding shares and in certain cases, a greater amount, as determined by the
Proxy Review Committee) not made to all shareholders or not approved by
disinterested shareholders; and (iii) contains no anti-takeover measures
or other provisions restricting the rights of shareholders.
13
6.
Bundled
proposals:
We may consider opposing
or abstaining on proposals if disparate issues are bundled and presented for
a single vote.
F. Auditors.
We generally
support management proposals for selection or ratification of independent auditors. However, we may consider opposing such
proposals with reference to incumbent audit firms if the company has suffered
from serious accounting irregularities and we believe rotation of the audit
firm is appropriate, or if fees paid to the auditor for non-audit-related
services are excessive. Generally, to
determine if non-audit fees are excessive, a 50% test will be applied (i.e.,
non-audit-related fees should be less than 50% of the total fees paid to the
auditor). We generally vote against proposals to indemnify auditors.
G.
Executive
and Director Remuneration.
1.
We generally
support the following proposals:
·
Proposals
for employee equity compensation plans and other employee ownership plans,
provided that our research does not indicate that approval of the plan would be
against shareholder interest. Such
approval may be against shareholder interest if it authorizes excessive
dilution and shareholder cost, particularly in the context of high usage (run
rate) of equity compensation in the recent past; or if there are objectionable
plan design and provisions.
·
Proposals
relating to fees to outside directors, provided the amounts are not excessive
relative to other companies in the country or industry, and provided that the
structure is appropriate within the market context. While stock-based compensation to outside
directors is positive if moderate and appropriately structured, we are wary of
significant stock option awards or other performance-based awards for outside
directors, as well as provisions that could result in significant forfeiture of
value on a directors decision to resign from a board (such forfeiture can
undercut director independence).
·
Proposals
for employee stock purchase plans that permit discounts up to 15%, but only for
grants that are part of a broad-based employee plan, including all
non-executive employees.
·
Proposals
for the establishment of employee retirement and severance plans, provided that
our research does not indicate that approval of the plan would be against
shareholder interest.
14
2.
Shareholder proposals
requiring shareholder approval of all severance agreements will not be
supported, but proposals that require shareholder approval for agreements in
excess of three times the annual compensation (salary and bonus) generally will
be supported. We generally oppose shareholder proposals that would establish
arbitrary caps on pay. We consider on a
case-by-case basis shareholder proposals that seek to limit Supplemental
Executive Retirement Plans (SERPs), but support such proposals where we
consider SERPs to be excessive.
3.
Shareholder proposals
advocating stronger and/or particular pay-for-performance models will be
evaluated on a case-by-case basis, with consideration of the merits of the
individual proposal within the context of the particular company and its labor
markets, and the companys current and past practices. While we generally support emphasis on
long-term components of senior executive pay and strong linkage of pay to
performance, we consider whether a proposal may be overly prescriptive, and the
impact of the proposal, if implemented as written, on recruitment and
retention.
4.
We consider shareholder
proposals for U.K.-style advisory votes on pay on a case-by-case basis.
5.
We generally support
proposals advocating reasonable senior executive and director stock ownership
guidelines and holding requirements for shares gained in option exercises.
6.
Management proposals
effectively to re-price stock options are considered on a case-by-case
basis. Considerations include the
companys reasons and justifications for a re-pricing, the companys
competitive position, whether senior executives and outside directors are
excluded, potential cost to shareholders, whether the re-pricing or share
exchange is on a value-for-value basis, and whether vesting requirements are
extended.
H.
Social,
Political and Environmental Issues.
We
consider proposals relating to social, political and environmental issues on a
case-by-case basis to determine whether they will have a financial impact on
shareholder value. However, we generally vote against proposals requesting
reports that are duplicative, related to matters not material to the business,
or that would impose unnecessary or excessive costs. We may abstain from voting
on proposals that do not have a readily determinable financial impact on
shareholder value. We generally oppose proposals requiring adherence to
workplace standards that are not required or customary in market(s) to
which the proposals relate.
15
I. Fund of Funds
.
Certain Funds
advised by an MSIM Affiliate invest only in other MSIM Funds. If an underlying fund has a shareholder
meeting, in order to avoid any potential conflict of interest, such proposals
will be voted in the same proportion as the votes of the other shareholders of
the underlying fund, unless otherwise determined by the Proxy Review Committee.
III.
ADMINISTRATION OF POLICY
The MSIM Proxy
Review Committee (the Committee) has overall responsibility for creating and
implementing the Policy, working with an MSIM staff group (the Corporate Governance
Team). The Committee, which is
appointed by MSIMs Chief Investment Officer of Global Equities (CIO),
consists of senior investment professionals who represent the different
investment disciplines and geographic locations of the firm. Because proxy voting is an investment
responsibility and impacts shareholder value, and because of their knowledge of
companies and markets, portfolio managers and other members of investment staff
play a key role in proxy voting, although the Committee has final authority
over proxy votes.
The Committee
Chairperson is the head of the Corporate Governance Team, and is responsible
for identifying issues that require Committee deliberation or ratification. The
Corporate Governance Team, working with advice of investment teams and the
Committee, is responsible for voting on routine items and on matters that can
be addressed in line with these Policy guidelines. The Corporate Governance Team has
responsibility for voting case-by-case where guidelines and precedent provide
adequate guidance, and to refer other case-by-case decisions to the Proxy
Review Committee.
The Committee
will periodically review and have the authority to amend, as necessary, the
Policy and establish and direct voting positions consistent with the Client
Proxy Standard.
A. Committee Procedures
The Committee will meet at least monthly to (among other matters)
address any outstanding issues relating to the Policy or its implementation.
The Corporate Governance Team will timely communicate to ISS MSIMs Policy (and
any amendments and/or any additional guidelines or procedures the Committee may
adopt).
The Committee will meet on an ad hoc basis to (among other matters): (1) authorize
split voting (i.e., allowing certain shares of the same issuer that are the
subject of the same proxy solicitation and held by one or more MSIM portfolios
to be voted differently than other shares) and/or override voting (i.e.,
voting all MSIM portfolio shares in a manner contrary to the Policy); (2) review
and approve upcoming votes, as appropriate, for matters for which specific
direction has been provided in this Policy; and (3) determine how to vote
matters for which specific direction has not been provided in this Policy.
16
Members of the Committee may take into account Research Providers
recommendations and research as well as any other relevant information they may
request or receive, including portfolio manager and/or analyst research, as
applicable. Generally, proxies related to securities held in accounts
that are managed pursuant to quantitative, index or index-like strategies (Index
Strategies) will be voted in the same manner as those held in actively managed
accounts, unless economic interests of the accounts differ. Because
accounts managed using Index Strategies are passively managed accounts,
research from portfolio managers and/or analysts related to securities held in
these accounts may not be available. If the affected securities are
held only in accounts that are managed pursuant to Index Strategies, and the
proxy relates to a matter that is not described in this Policy, the Committee
will consider all available information from the Research Providers, and to the
extent that the holdings are significant, from the portfolio managers and/or
analysts.
B. Material Conflicts
of Interest
In addition to the procedures discussed above, if the Committee
determines that an issue raises a material conflict of interest, the Committee
will request a special committee to review, and recommend a course of action
with respect to, the conflict(s) in question (Special Committee).
The Special Committee shall be comprised of the Chairperson of the
Proxy Review Committee, the Chief Compliance Officer or his/her designee, a
senior portfolio manager (if practicable, one who is a member of the Proxy
Review Committee) designated by the Proxy Review Committee, and MSIMs relevant
Chief Investment Officer or his/her designee, and any other persons deemed
necessary by the Chairperson. The Special Committee may request the assistance
of MSIMs General Counsel or his/her designee who will have sole discretion to
cast a vote. In addition to the research
provided by Research Providers, the Special Committee may request analysis from
MSIM Affiliate investment professionals and outside sources to the extent it
deems appropriate.
C. Identification of Material Conflicts
of Interest
A potential
material conflict of interest could exist in the following situations, among
others:
1.
The issuer soliciting the vote is a
client of MSIM or an affiliate of MSIM and the vote is on a material matter
affecting the issuer.
2.
The proxy relates to Morgan Stanley
common stock or any other security issued by Morgan Stanley or its affiliates
except if echo voting is used, as with MSIM Funds, as described herein.
3.
Morgan Stanley has a material pecuniary
interest in the matter submitted for a vote (e.g., acting as a financial
advisor to a party to a merger or acquisition for which Morgan Stanley will be
paid a success fee if completed).
17
If the
Chairperson of the Committee determines that an issue raises a potential
material conflict of interest, depending on the facts and circumstances, the
Chairperson will address the issue as follows:
1.
If the matter relates to a topic that is
discussed in this Policy, the proposal will be voted as per the Policy.
2.
If the matter is not discussed in this
Policy or the Policy indicates that the issue is to be decided case-by-case,
the proposal will be voted in a manner consistent with the Research Providers,
provided that all the Research Providers have the same recommendation, no
portfolio manager objects to that vote, and the vote is consistent with MSIMs
Client Proxy Standard.
3.
If the Research Providers
recommendations differ, the Chairperson will refer the matter to the Committee
to vote on the proposal. If the
Committee determines that an issue raises a material conflict of interest, the
Committee will request a Special Committee to review and recommend a course of
action, as described above.
Notwithstanding the above, the Chairperson of the Committee may request
a Special Committee to review a matter at any time as he/she deems necessary to
resolve a conflict.
D.
Proxy
Voting Reporting
The Committee and the Special Committee, or their designee(s), will
document in writing all of their decisions and actions, which documentation
will be maintained by the Committee and the Special Committee, or their
designee(s), for a period of at least 6 years.
To the extent these decisions relate to a security held by an MSIM Fund,
the Committee and Special Committee, or their designee(s), will report their
decisions to each applicable Board of Trustees/Directors of those Funds at each
Boards next regularly scheduled Board meeting. The report will contain
information concerning decisions made by the Committee and Special Committee
during the most recently ended calendar quarter immediately preceding the Board
meeting.
The Corporate Governance Team will timely communicate to applicable
portfolio managers and to ISS, decisions of the Committee and Special Committee
so that, among other things, ISS will vote proxies consistent with their
decisions.
MSIM will promptly
provide a copy of this Policy to any client requesting it. MSIM will also, upon
client request, promptly provide a report indicating how each proxy was voted
with respect to securities held in that clients account.
MSIMs Legal
Department is responsible for filing an annual Form N-PX on behalf of each
MSIM Fund for which such filing is required, indicating how all proxies were
voted with respect to such Funds holdings.
18
APPENDIX A
The following procedures apply to accounts managed by Morgan Stanley
AIP GP LP (AIP).
Generally, AIP will follow the guidelines set forth in Section II
of MSIMs Proxy Voting Policy and Procedures.
To the extent that such guidelines do not provide specific direction, or
AIP determines that consistent with the Client Proxy Standard, the guidelines
should not be followed, the Proxy Review Committee has delegated the voting
authority to vote securities held by accounts managed by AIP to the Liquid
Markets investment team and the Private Markets investment team of AIP. A summary of decisions made by the investment
teams will be made available to the Proxy Review Committee for its information
at the next scheduled meeting of the Proxy Review Committee.
In certain cases, AIP may determine to abstain from determining (or
recommending) how a proxy should be voted (and therefore abstain from voting
such proxy or recommending how such proxy should be voted), such as where the
expected cost of giving due consideration to the proxy does not justify the
potential benefits to the affected account(s) that might result from
adopting or rejecting (as the case may be) the measure in question.
Waiver of Voting Rights
For regulatory reasons, AIP may either 1) invest in a class of securities
of an underlying fund (the Fund) that does not provide for voting rights; or
2) waive 100% of its voting rights with respect to the following:
1.
Any rights with respect to the removal
or replacement of a director, general partner, managing member or other person
acting in a similar capacity for or on behalf of the Fund (each individually a Designated
Person, and collectively, the Designated Persons), which may include, but
are not limited to, voting on the election or removal of a Designated Person in
the event of such Designated Persons death, disability, insolvency,
bankruptcy, incapacity, or other event requiring a vote of interest holders of
the Fund to remove or replace a Designated Person; and
2.
Any rights in connection with a determination
to renew, dissolve, liquidate, or otherwise terminate or continue the Fund,
which may include, but are not limited to, voting on the renewal, dissolution,
liquidation, termination or continuance of the Fund upon the occurrence of an
event described in the Funds organizational documents;
provided
,
however
,
that, if the Funds organizational documents require the consent of the Funds
general partner or manager, as the case may be, for any such termination or
continuation of the Fund to be effective, then AIP may
exercise its voting rights with respect
to such matter.
19
APPENDIX B
The following procedures apply to the portion of the Van Kampen Dynamic
Credit Opportunities Fund (VK Fund) sub advised by Avenue Europe
International Management, L.P. (Avenue).
(
The
portion of the VK Fund managed solely by Van Kampen Asset Management will
continue to be subject to MSIMs Policy.)
1.
Generally
: With respect to Avenues portion of the VK
Fund, the Board of Trustees of the VK Fund will retain sole authority and
responsibility for proxy voting. The Advisers involvement in the
voting process of Avenues portion of the VK Fund is a purely administrative
function, and serves to execute and deliver the proxy voting decisions made by
the VK Fund Board in connection with the Avenue portion of the VK Fund, which
may, from time to time, include related administrative tasks such as receiving
proxies, following up on missing proxies, and collecting data related to
proxies. As such, the Adviser shall not
be deemed to have voting power or shared voting power with Avenue with respect
to Avenues portion of the Fund.
2.
Voting Guidelines
:
All proxies, with respect to Avenues portion of the VK Fund, will be
considered by the VK Fund Board or such subcommittee as the VK Fund Board may
designate from time to time for determination and voting approval. The VK Board or its subcommittee will timely
communicate to MSIMs Corporate Governance Group its proxy voting decisions, so
that among other things the votes will be effected consistent with the VK Boards
authority.
3.
Administration
:
The VK Board or its subcommittee will meet on an adhoc basis as may be
required from time to time to review proxies that require its review and
determination. The VK Board or its
subcommittee will document in writing all of its decisions and actions which
will be maintained by the VK Fund, or its designee(s), for a period of at least
6 years. If a subcommittee is
designated, a summary of decisions made by such subcommittee will be made
available to the full VK Board for its information at its next scheduled
respective meetings.
20
Item 8. Portfolio Managers of Closed-End Management Investment
Companies
FUND MANAGEMENT
The Fund is managed by members of the Emerging Markets Equity team. The team consists of portfolio managers and analysts. Current members of the team jointly and primarily responsible for the day-to-day management of the Funds portfolio are James Cheng, a Managing Director of the Sub-Adviser, Munib Madni, an Executive Director of the Sub-Adviser, and Ruchir Sharma, a Managing Director of the Adviser. Mr. Cheng has been associated with the Sub-Adviser in an investment management capacity since July 2006 and joined the team managing the Fund in August 2008. Prior to July 2006, Mr. Cheng worked in an investment management capacity at Invesco Asia Limited, Asia Strategic Investment Management Limited and Munich Re Asia Capital Management. Mr. Munib has been associated with the Sub-Adviser in an investment management capacity since February 2005 and joined the team managing the Fund in August 2008. Prior to August 2008, Mr. Munib was associate director of Australian equities at Aberdeen Asset Management (December 2000 to January 2005). Previously, he was a portfolio manager, Australian equities, at Equitilink Investment Management (December 1994 to December 2000). Mr. Sharma has been associated with the Adviser in an investment management capacity since 1996 and joined the team managing the Fund in August 2008.
The composition of the team may change without notice from time to time.
OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGER
The following information is as of December 31, 2008:
Mr. Cheng managed eight registered investment companies with a total of approximately $3 billion in assets; one pooled investment vehicle other than registered investment companies with a total of approximately $3.3 million in assets; and five other accounts with a total of approximately $3.9 billion in assets. Of these other accounts, one account with a total of approximately $300 million in assets had performance based fees.
Mr. Munib managed three registered investment companies with a total of approximately $162.2 million in assets; no pooled investment vehicles other than registered investment companies; and three other accounts with a total of approximately $179.7 million in assets. Of these other accounts, two accounts with a total of approximately $13.7 million in assets had performance based fees.
Mr. Sharma managed 14 registered investment companies with a total of approximately $4.1 billion in assets; five pooled investment vehicles other than registered investment companies with a total of approximately $1.7 billion in assets; and 23 other accounts with a total of approximately $7.3 billion in assets. Of these other accounts, four accounts with a total of approximately $1.1 billion in assets, had performance based fees.
21
Because the portfolio managers manage assets for other investment
companies, pooled investment vehicles, and/or other accounts (including
institutional clients, pension plans and certain high net worth individuals),
there may be an incentive to favor one client over another resulting in
conflicts of interest. For instance, the Adviser and/or Sub-Adviser may receive
fees from certain accounts that are higher than the fee it receives from the
Fund, or it may receive a performance-based fee on certain accounts. In those
instances, the portfolio managers may have an incentive to favor the higher
and/or performance-based fee accounts over the Fund. In addition, a conflict of interest could
exist to the extent the Adviser and/or Sub-Adviser has proprietary investments
in certain accounts, where portfolio managers have personal investments in
certain accounts or when certain accounts are investment options in the
Advisers and/or Sub-Advisers employee benefits and/or deferred compensation
plans. The portfolio manager may have an
incentive to favor these accounts over others.
If the Adviser and/or Sub-Adviser manage accounts that engage in short sales
of securities of the type in which the Fund invests, the Adviser and/or Sub-Adviser
could be seen as harming the performance of the Fund for the benefit of the
accounts engaged in short sales if the short sales cause the market value of
the securities to fall. The Adviser has
adopted trade allocation and other policies and procedures that it believes are
reasonably designed to address these and other conflicts of interest.
PORTFOLIO MANAGER
COMPENSATION STRUCTURE
Portfolio managers receive a combination of base compensation and
discretionary compensation, comprised of a cash bonus and several deferred
compensation programs described below. The methodology used to determine
portfolio manager compensation is applied across all accounts managed by the
portfolio managers.
BASE SALARY COMPENSATION. Generally, portfolio managers receive base
salary compensation based on the level of their position with the Adviser
and/or Sub-Adviser.
DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio
managers may receive discretionary compensation.
Discretionary compensation can include:
·
Cash Bonus;
·
Morgan Stanleys
Long-Term Incentive Compensation Program awards a mandatory program that
defers a portion of discretionary year-end compensation into restricted stock
units or other awards or other investments based on Morgan Stanley common stock
that are subject to vesting and other conditions;
·
Investment
Management Alignment Plan (IMAP) awards a mandatory program that defers a
portion of discretionary year-end compensation and notionally invests it in
designated funds advised by the Adviser and/or Sub-Adviser or its affiliates.
The award is subject to vesting and other conditions. Portfolio managers must
notionally invest a
22
minimum of 25% to a maximum of 100% of their IMAP deferral account into
a combination of the designated open-end funds they manage that are included in
the IMAP Fund menu;
·
Voluntary Deferred
Compensation Plans voluntary programs that permit certain employees to elect
to defer a portion of their discretionary year-end compensation and directly or
notionally invest the deferred amount across a range of designated investment
funds, including funds advised by the Adviser or its affiliates.
Several factors determine discretionary compensation, which can vary by
portfolio management team and circumstances. In order of relative importance,
these factors include:
·
Investment
performance. A portfolio managers compensation is linked to the pre-tax
investment performance of the funds/accounts managed by the portfolio manager.
Investment performance is calculated for one-, three- and five-year periods
measured against an appropriate securities market index (or indices) for the
funds/accounts managed by the portfolio manager. The assets managed by the portfolio
managers in funds, pooled investment vehicles and other accounts are described
in Other Accounts Managed by the Portfolio Managers above. Generally, the
greatest weight is placed on the three- and five-year periods.
·
Revenues generated
by the investment companies, pooled investment vehicles and other accounts
managed by the portfolio manager.
·
Contribution to
the business objectives of the Adviser and/or Sub-Adviser.
·
The dollar amount
of assets managed by the portfolio manager.
·
Market compensation
survey research by independent third parties.
·
Other qualitative
factors, such as contributions to client objectives.
·
Performance of
Morgan Stanley and Morgan Stanley Investment Management Inc., and the overall
performance of the investment team(s) of which the portfolio is a member.
SECURITIES OWNERSHIP
OF PORTFOLIO MANAGER
As of December 31, 2008, the portfolio manager did not own any
shares of the Fund.
23
Item 9. Closed-End Fund Repurchases
None.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
(a) The Funds principal executive officer and principal
financial officer have concluded that the Funds disclosure controls and
procedures are sufficient to ensure that information required to be disclosed
by the Fund in this Form N-CSR was recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange Commissions
rules and forms, based upon such officers evaluation of these controls
and procedures as of a date within 90 days of the filing date of the report.
(b) There were no changes in the registrants 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 registrants internal control over financial
reporting.
Item 12. Exhibits
(a) The Code of Ethics for Principal Executive and Senior
Financial Officers is attached hereto.
(b) A separate certification for each principal executive officer
and principal financial officer of the registrant are attached hereto as part
of EX-99.CERT.
24
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 Fund, Inc.
|
|
|
|
By:
|
/s/
|
Randy
Takian
|
|
Name:
|
Randy
Takian
|
Title:
|
Principal
Executive Officer
|
Date:
|
February
19, 2009
|
|
|
|
|
|
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
By:
|
/s/
|
Randy
Takian
|
|
Name:
|
Randy
Takian
|
Title:
|
Principal
Executive Officer
|
Date:
|
February
19, 2009
|
By:
|
/s/
|
James
W. Garrett
|
|
Name:
|
James
W. Garrett
|
Title:
|
Principal
Financial Officer
|
Date:
|
February
19, 2009
|
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