UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----
FORM N-CSR S
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-06062
THE THAI CAPITAL FUND, INC.
(Exact name of registrant as specified in charter)
----
c/o Daiwa Securities Trust Company
One Evertrust Plaza, 9th Floor
Jersey City, New Jersey 07302-3051
(Address of principal executive offices) (Zip code)
c/o Daiwa Securities Trust Company
One Evertrust Plaza, 9th Floor
Jersey City, New Jersey 07302-3051
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201)
915-3054
DATE OF FISCAL YEAR END: December 31, 2005
DATE OF REPORTING PERIOD: June 30, 2005
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. ss. 3507.
Item 1. Reports to Stockholders.
GENERAL INFORMATION
The Fund
The Thai Capital Fund, Inc. (the "Fund") is a non-
diversified, closed-end management investment
company. The Fund seeks long-term capital appreciation
through investment primarily in equity
securities of Thai companies. The Fund's investments in
Thailand are made through a wholly-owned
Investment Plan established under an agreement between SCB
Asset Management Co., Ltd. (the
"Manager") and the Fund. The Fund's investments through the
Investment Plan are managed by the
Manager. Daiwa SB Investments (H.K.) Ltd. provides the
Manager with advice regarding investments by
the Investment Plan and manages the Fund's assets held
outside the Investment Plan.
Shareholder Information
The Fund's shares are listed on the American Stock Exchange
("AMEX"). The Fund understands
that its shares may trade periodically on certain exchanges
other than the AMEX, but the Fund has not
listed its shares on those other exchanges and does not
encourage trading on those exchanges.
The Fund's AMEX trading symbol is "TF". Weekly comparative
net asset value ("NAV") and
market price information about the Fund is published each
Monday in The Wall Street Journal, each
Sunday in The New York Times and each Saturday in Barron's,
and also in many other newspapers. The
Fund's weekly NAV is also available by visiting
www.daiwast.com or calling (800) 933-3440 or (201)
915-3020. Also, the Fund's website includes a monthly market
review, a list of the Fund's top ten
industries and holdings, the proxy voting policies and
procedures, the code of ethics and the audit
committee charter.
Proxy Voting Policies and Procedures
A description of the policies and procedures that are used by
the Fund's Investment Manager to
vote proxies relating to the Fund's portfolio securities is
available (1) without charge, upon request, by
calling (201) 915-3054; (2) by visiting www.daiwast.com; and
(3) as an exhibit to the Fund's annual
report on Form N-CSR which is available on the website of the
Securities and Exchange Commission (the
"Commission") at www.sec.gov. Information regarding how the
Investment Manager votes these proxies
is now available by calling the same number and available on
the Commission's website. The Fund has
filed its second report on Form N-PX covering the Fund's
proxy voting record for the 12-month period
ended June 30, 2005.
Quarterly Portfolio of Investments
A Portfolio of Investments will be filed as of the end of the
first and third quarter of each fiscal
year on Form N-Q and will be available on the Commission's
website at www.sec.gov. Additionally, the
Portfolio of Investments may be reviewed and copied at the
Commission's Public Reference Room in
Washington D.C. Information on the operation of the Public
Reference Room may be obtained by calling
(800) SEC-0330. The quarterly Portfolio of Investments will
be made available without charge, upon
request, by calling (201) 915-3054.
Inquiries
All general inquiries and requests for information should be
directed to the Fund at (201) 915-
3054. All written inquiries should be directed to the Fund
at the following address:
The Thai Capital Fund, Inc.
c/o Daiwa Securities Trust Company
One Evertrust Plaza, 9th Floor
Jersey City, NJ 07302-3051
For specific information about your share account, please
contact American Stock Transfer and
Trust Company (the "Plan Agent") at the address shown below.
Dividend Reinvestment Plan
A Dividend Reinvestment Plan (the "Plan") is available to
provide Shareholders with automatic
reinvestment of dividends and capital gain distributions in
additional Fund shares. A brochure fully
describing the Plan's terms and conditions is available from
the Plan Agent at the following address:
The Thai Capital Fund, Inc.
c/o American Stock Transfer and Trust Company
59 Maiden Lane
New York, NY 10038
Telephone: (866) 669-9905; (718) 921-8124
www.amstock.com
July 27, 2005
Dear Shareholders:
The management of the Thai Capital Fund, Inc. (the "Fund")
would like to take this opportunity
to inform its shareholders about the Thai economy, the
activities of the Stock Exchange of Thailand
("SET") and the Fund's performance for the six months ended
June 30, 2005.
Thai Economic Review and Outlook
The Thai economy in the first half of 2005 has remained weak
in spite of momentum of 6.1%
Gross Domestic Product ("GDP") growth from last year. Export
growth has been decelerating.
Declining oil prices could be a short term positive factor,
although expectations for oil consumption still
remains high, especially in China. Thus, an uptrend in the
long term price of oil may still fit the general
economists' model. High capacity utilization suggests that
investment will pick up, but the private sector
may be cautious about over-expansion in view of high oil
prices, higher inflation, rising interest rates and
the weakening of consumer confidence. Our views are lowering
GDP growth from 5.0% to 4.4% for
2005 and 4.85% for 2006, while the Bank of Thailand ("BoT")
just revised the GDP range downward for
2005 from between 4.5% to 5.5% to between 3.5% to 4.5%. In
the first quarter of 2005, GDP growth of
3.3% was lower than the market expectation range of 3.5% to
3.8%. Mainly, the negative impact was due
to the high price of oil, increasing from $40 per barrel in
November to $50 in March. As a result of the
higher import value of oil the trade gap is narrower.
Moreover, the impact of the tsunami on the tourist
industry caused income from the service segment to decrease
dramatically. The drought that occurred in
early of January caused agricultural production to slightly
decrease while commodity prices increased
significantly due to excess demand.
The Thai economy should remain sluggish in the second half of
2005, due to continued concerns
about rising domestic fuel prices and trade deficits. The El
Nino-led drought is now taking a toll on the
Thai petrochemical sector, in terms of potential water
shortage at the two reservoirs supplying water to
the petrochemical complex in the Rayong province. We believe
that weakening demand under a cost-
push inflation scenario will eat into corporate margins in
the second half of 2005.
Second quarter 2005 GDP growth of 4.2% to 4.5% year-on-year
("YoY") is expected. Adjusted
seasonally, GDP growth is expected to show a 1.0% to 1.4%
rise quarter-on-quarter ("QoQ") in the
second quarter of 2005. Data for April and May indicates
that the industrial sector is supporting GDP
growth with services adding to growth slightly. However, the
agricultural sector is pulling growth down.
Our conclusions are drawn from three indicators: the major
crop index, the Manufacturing Production
Index ("MPI") and tourist arrivals. The major crop index was
down 5.6% YoY, but the MPI rose 7%
YoY and tourist numbers rose 0.6% YoY. In view of the fact
that the industrial sector contributes 39% of
GDP and the agricultural sector only 9%, we believe that the
7% rise in the MPI YoY is a strong indicator
that in the second quarter of 2005 GDP will come out stronger
than the first quarter of 2005's 3.3% YoY,
particularly in view of the strong correlation (91%) of the
MPI to GDP growth.
The stronger MPI in April and May was not followed by
stronger demand-side indicators. The
Private Consumption Index was up only 0.2% YoY and export
volume ticked up only 0.7% YoY. We
therefore believe that the industrial sector is piling up
inventories. Lacking an inventory index from the
BoT, we scrutinized inventory index data compiled by the
Ministry of Industry and found that the
inventory index went up 22% YoY in April and May. In the
first quarter of 2005, the National Economic
and Social Development Board ("NESDB") data showed that
inventory accounted for 5.9% of GDP,
much higher than the 2.1% average rate seen in each of the
first two quarters in 1998 through 2004. The
higher inventories in April and May could slow production
figures in the second half of 2005, as
producers may prefer running down inventories to producing
more goods if demand slows.
We see a greater chance of an interest rate increase on July
20. In the presence of higher inflation
expected in coming months (June CPI = 3.8%; first half of
2005 = 3.2%), the strong MPI figures in the
presence of a high current account deficit will have a
negative implication on the 14-day repo rate at the
Monetary Policy Committee's ("MPC") meeting on July 20, as it
will provide reason for the MPC to raise
the repo rate, by an expected 0.25% to 2.75%. This is
following the 0.25% increase in the U.S. Fed
Funds rate to 3.25% at the end of June.
Mega projects may be delayed. The Ministry of Commerce
expects a trade deficit of
US$8.2 billion for 2005 (five month 2005 deficit = US$6.3
billion), indicating the Ministry is expecting a
deficit of US$280 million per month on average during July
through December. It expects a US$6 billion
surplus in the net services account (five month 2005 estimate
= +US$2.2 billion), giving a current account
deficit of US$2 billion for 2005 (five month 2005 estimate =
-US$4.4 billion). Meanwhile, the BoT
expects a deficit in the current account after taking into
consideration the government's mega projects of
US$3.1 billion or 1.8% of GDP in 2005, which will then rise
to US$6.7 billion or 3% of GDP on average
during 2006-2009. This suggests that the BoT will decrease
its GDP forecast for 2005 to 3.5% to 4.5%,
and we also feel that in the end the government will have to
put off at least some of the mega projects, as
going ahead with them would put the current account deficit
beyond the government's self-imposed 2%
ceiling.
Thailand: Infrastructure Investments (Bt bn)
2005
2006
2007
2008
2009
2005-2009
% of total
Mass Transit
1
47
98
144
134
423
25%
Transport and Communications
35
48
81
80
84
329
19%
Residential
15
54
64
57
23
214
13%
Water Resources
-
38
54
54
54
200
12%
Education
0
14
27
27
27
96
6%
Public Health
2
12
29
27
26
96
6%
Other
15
42
73
96
116
342
20%
Total
67
255
426
485
464
1,701
100%
Source: Ministry of Finance
Thai Stock Market Overview & Outlook
In the first quarter of 2005, the SET Index generally
continued with its upward momentum from
the last two months of 2004, fed by investor optimism about
the national election results in early February
2005. The positive momentum was further supported by an
influx of foreign funds. The Index started at
668.10 and peaked on February 28, 2005 during intra-day
trading, and reached the peak at 746.10 or
about 10.76% before giving up its gains to fall below the
700-point psychological support level in mid-
March due to profit-taking. The Index declined to end the
first quarter at 680.30 points or an increase of
2.0%. In the second quarter of 2005, the SET Index moved
sideways in the 660 to 690 range with
moderate trading volume at Baht 19,000 million per day,
compare to Baht 16,000 million per day in the
previous quarter. At the end of the quarter, the SET Index
ended at 675.50, down 4.8 points or 0.70%.
Mainly, the market was stagnant because of the increasing oil
prices. Thus, investors appeared to be
waiting for the oil price impact to listed companys' bottom
lines. However, since the Thai stock market is
dominated by the energy sector, which counts for 27% of
market capital weighting, the impact from high
oil prices could transfer to positive earnings in energy-
related stocks. In summary, in the first half of
2005, the SET Index moved from 668.10 to 675.50 or an 1.1%
increase.
We continue to take an overall bearish view on the Thai stock
market in the near term due to a
number of negative factors, including continuing high oil
prices, rising interest rates, Thailand's
worsening trade position, weaker economic growth projections
and expectations of a continuing
slowdown in corporate earnings growth. We believe that the
SET Index will continue to trade in range
from 640 to 750 over the next two quarters with reduced
trading volume. Stock markets, whether in
Thailand or elsewhere, are driven by corporate earnings,
short-term earnings and long-term earnings
prospects. Short-term earnings probably will not be either
positive or negative. Listed companies will
have to release their second quarter results by around August
15. We believe that, on average, most
companies' results will still show earnings growth from the
previous year, but an earnings decline from
the previous quarter. The fact that costs are increasing
faster than selling prices as higher fuel prices are
gradually factored into the pricing chain means that there
will likely be more full-year earnings down-
grades on lower margins than earnings upgrades. In fact,
second half corporate earnings prospects do not
look very positive, at the moment. Longer-term earnings
prospects, at this point, are not clear. Expansion
projects initiated over the last couple of years are going
through as planned and beginning to contribute to
sales growth, but margins and return on investment are
falling. We are forecasting average earnings per
share ("EPS") growth this year of only 6.3%, down from 74.5%
in 2003 and 34.1% in 2004. Due to
conservative assumptions for 2006, we are forecasting average
EPS growth next year of only 1.6%.
One of the positives that we keep reiterating is that the
Thai stock market is cheap at the current
SET Index level of 659.64, with stocks trading on an average
of 9.0 times earnings for 2005 and 8.9 times
earnings for 2006, as well as dividend yields of 4.25% and
4.43% for this year and next, respectively.
Normally, we are confident in maintaining the level of equity
of less than 10 times earnings, or the overall
market on an average of under 10 times earnings. The
dividend yield argument is still prevalent and
should be a supporting factor for the market. However,
dividends are paid out of earnings and if earnings
are not growing, the dividend payout will not either. At the
same time, rising deposit interest rates make
holding stocks for the dividend yield relatively less
attractive. Over the last month, seven banks
announced interest rate increases and we believe that
additional rate hikes of about 50 basis points within
the next six months are likely.
On another positive note, foreigners have returned to the
Thai stock market, with net purchases of
Bt16.7 billion in June and Bt6.4 billion in July (as of July
27). This brings total net purchases for 2005
year-to-date to Bt82.3 billion. We believe that this is due
to net buying within the Southeast Asia region.
As of July 27, South Korea's stock market was the best
performer in the region, up 22% year-to-date,
followed by Jakarta (+17.8%) and Singapore (+13%). By
contrast, the Thai market was the worst
regional performer, down 0.4%.
Performance Evaluation
As of June 30, 2005, the Fund had net assets of US$26.5
million, representing a net asset value per
share of US$8.43. Of this amount, Thai equity securities
accounted for 92.92%; the remainder was in
cash, bank deposits and promissory notes.
For the first half of 2005, portfolio performance was 1.11%
compared to the SET Index's 1.10%, or
in line with the market. Generally, the portfolio structure
has a beta of around 1.0x compared to the
benchmark and the cash position ranges around 5-9% of assets.
Since our market view for the second
half of the year is sideways in a range of 640-750, our
strategy is to hold the current position and reduce
equity around the upper band of the range and switch to low
beta stocks. The energy sector is still the
favorite among the domestic sectors. Also, we will avoid
cyclical stocks such as the petrochemical and
commodity sectors in order to reduce portfolio volatility.
Portfolio Management
Effective January 1, 2005, Mr. Thanakorn Phanphruk replaced
Mr. Cholathee Pornrojnangkool as
the Fund's portfolio manager. SCB Asset Management Co., Ltd.
has employed Mr. Phanphruk as an
equity fund manager since 1995. Previously, Mr. Phanphruk
was an assistant fund manager for The
Mutual Fund Public Company Limited and an investment analyst
at Siam Commercial Bank Public
Company Limited. He has fourteen years of investment
experience.
Finally, the Fund's management would like to express its
sincere thanks to all shareholders for
their continued support and participation.
Sincerely,
IKUO MORI
Chairman of the Board
PORTFOLIO OF INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
THAI COMMON STOCKS AND WARRANTS-92.92%
COMMON STOCKS-92.15%
Shares
Value
Agribusiness-1.30%
3,338,000
Charoen Pokphan Foods Public Co., Ltd
$343,439
Automotive-1.46%
100,150
Aapico Hitech Public Co, ltd
82,020
100,000
Thai Rung Union Car Co., Ltd
17,107
93,800
Thai Stanley Electric Public Co., Ltd.
286,794
385,921
Banks-22.43%
1,000,900
Bangkok Bank Public Co., Ltd.
2,453,067
1,058,800
Bank of Ayudhya Public Co., Ltd.*
316,021
899,200
Kasikornbank Co., Ltd.
1,200,097
4,031,100
Krung Thai Bank Co., Ltd.
909,712
428,000
Siam City Bank Public Co., Ltd.
258,607
8,005,439
Thai Military Bank Public Co., Ltd.*
796,464
5,933,968
Building
Materials-8.98%
4,549,000
Sahaviriya Steel Industries Public Co., Ltd.
211,941
391,000
The Siam Cement Public Co., Ltd.
2,163,261
2,375,202
Commerce-1.28%
304,600
BIG C Supercenter Public Co., Ltd.
$178,872
567,000
C.P. 7-Eleven Public Co., Ltd.
77,737
55,500
Siam Makro Public Co., Ltd.
82,826
339,435
Communication-
14.57%
698,500
Advanced Info Service Public Co., Ltd.
1,661,077
1,101,200
Samart Corp. Public Co., Ltd.*
168,347
1,239,700
Shin Corporations Public Co., Ltd.
1,128,094
836,400
Shin Satellite Public Co., Ltd.*
320,677
517,000
True Corp Public Co., Ltd.*
130,473
394,400
United Communication Industry Public Co., Ltd.*
447,421
3,856,089
Electronic
Components-0.31%
700,000
KCE Electronics Public Co., Ltd.
83,232
Energy-24.48%
205,400
Electricity Generating Public Co., Ltd.
393,754
144,200
PTT Exploration and Production Public Co., Ltd.
1,343,674
645,000
PTT Public Co., Ltd.
3,412,036
605,200
Ratchaburi Electricity Generating Holding Public Co., Ltd.
594,773
Energy (Concluded)
475,000
Thai Oil Public Co., Ltd.
$731,922
6,476,159
Entertainment and
Recreation-1.03%
74,100
GMM Media Public Co., Ltd.
21,937
373,800
ITV Public Co., Ltd.*
99,777
272,777
United Broadcasting Corp. Public Co., Ltd.*
150,918
272,632
Finance and Securities-
1.93%
646,000
Asia Plus Securities Public Co., Ltd.
78,066
219,800
Phatra Secrities Public Co., Ltd.*
157,343
455,500
TISCO Finance Public Co., Ltd.
276,329
511,738
Household Goods-
0.32%
102,700
Modernform Group Public Co., Ltd.
85,978
Mining-0.78%
683,800
Padaeng Industry Public Co., Ltd.
207,413
Petrochemicals-1.29%
40,000
Thai Olefins Public Co., Ltd.
55,812
227,800
The Aromatics (Thailand) Public Co. Ltd.
284,681
340,493
Printing & Publishing-
3.23%
3,451,579
Amarin Printing and Publishing Public Co., Ltd.
854,310
Property Development-
2.06%
1,060,000
Italian-Thai Development Public Co., Ltd.
$254,644
540,700
Noble Development Public Co., Ltd.
55,107
1,104,000
Sammakorn Public Co., Ltd.
60,009
705,000
SinoThai Engineering and Construction Public Co., Ltd.
183,050
543,810
Retail Food-1.14%
70,000
S&P Syndicate Public Co., Ltd.
38,898
138,000
Serm Suk Public Co., Ltd.
67,644
290,900
Thai Union Frozen Products Public Co., Ltd.
194,122
300,664
Transportation-5.56%
1,145,300
Bangkok Expressway Public Co., Ltd.
722,587
448,100
Precious Shipping Public Co., Ltd.
464,845
167,300
Thai Airways International Public Co., Ltd.
161,373
149,000
Thoresen Thai Agencies Public Co., Ltd.
122,931
1,471,736
Total Common Stocks
(Cost-$15,996,400)
24,382,219
WARRANTS-0.77%
Household Goods-
0.00%
10,270
Modernform Group Public Co., Ltd., expires 12/1/07*
$646
Property Development-
0.73%
1,331,400
Land and House Public Co., Ltd., expires 9/2/08*
176,077
165,850
SinoThia Engineering & Construction Public Co., Ltd., expires
4/18/08*
17,386
193,463
Utilities-0.04%
796,960
Eastern Water Resourses Development & Management Public Co.,
Ltd., expires 11/28/07*
10,056
Total Warrants
(Cost-$13,003)
204,165
Total Thai Common and
Warrants
(Cost-$16,009,403)
24,586,384
SHORT TERM INVESTMENTS-1.09%
U.S. DOLLAR TIME
DEPOSIT-0.15%
$39
Bank of New York, 0.05%, due 7/1/05
$38,916
U.S. TREASURY
BILL-0.94%
250
U.S. Tresury Bill, 2.88%, due 7/28/05
249,471
Total Short-Term
Investments
(Cost-$287,134)
288,387
Total Investments-
94.01%
(Cost-$16,296,537)
24,874,771
Other assets less
liabilities-5.99%
1,584,766
NET ASSETS
(Applicable to 3,139,500
shares of capital stock
outstanding; equivalent to
$8.43 per share)-
100.00%
$26,459,537
* Non-income producing Securities
EQUITY CLASSIFICATIONS HELD
June 30, 2005 (unaudited)
Industry
Percent of Net Assets
Energy
24.48%
Banks
22.43
Communication
14.57
Building Materials
9.98
Transportation
5.56
Printing & Publishing
3.23
Property Development**
2.79
Finance & Securities
1.93
Automotive
1.46
Agribusiness
1.30
Petrochemicals
1.29
Commerce
1.28
Retail Food
1.14
Entertainment & Recreation
1.03
Mining
0.73
Household Goods**
0.32
Electronic Components
0.31
Utilities**
0.04
** Include the value of warrants.
TEN LARGEST EQUITY POSITIONS HELD
June 30, 2005 (unaudited)
Issue
Percent of Net Assets
PTT Public Co., Ltd.
12.90%
Bangkok Bank Public Co., Ltd.
9.27
The Siam Cement Public Co., Ltd.
8.18
Advanced Info Service Public Co., Ltd.
6.28
PTT Exploration and Production Public Co., Ltd.
5.08
Kasikornbank Public Co., Ltd.
4.54
Shin Corporations Public Co., Ltd.
4.26
Krung Thai Bank Public Co., Ltd.
3.44
Amarin Printing and Publishing Public Co., Ltd.
3.23
Thai Military Bank Public Co., Ltd.
3.01
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2005 (unaudited)
Assets
Investment in securities, at value (cost-$16,296,537)
$ 24,874,771
Cash denominated in foreign currency (cost-$1,521,890).
1,498,902
Receivable for securities sold
430,855
Interest and dividends receivable
9,559
Prepaid expenses
20,432
Total assets
26,834,519
Liabilities
Payable for securities purchased
240,528
Accrued Thai tax provision
42,132
Payable for advisory fees
4,421
Payable for other affiliates
9,941
Accrued expenses and other liabilities
77,960
Total liabilities
374,982
Net Assets
Capital stock, $0.01 par value per share; total 100,000,000
shares authorized;
3,139,500 shares issued and outstanding
31,395
Paid-in capital in excess of par value
61,494,187
Accumulated net investment income
423,268
Accumulated net realized loss on investments and foreign
currency transactions
(44,044,897)
Net unrealized appreciation on investments and other assets
and liabilities
denominated in foreign currency
8,555,584
Net assets applicable to shares outstanding
$ 26,459,537
Net Asset Value Per Share
$ 8.43
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2005 (unaudited)
Investment income:
Dividends
$ 748,411
Interest
5,466
Total investment income
753,877
Expenses:
Investment advisory fee
84,671
Investment management fee
84,336
Administration fee and expenses
76,838
Legal fees and expenses
48,179
Audit and tax services
31,737
Reports and notices to shareholders
22,194
Custodian fees and expenses
17,272
Directors' fees and expenses
14,876
Insurance expense
6,960
Transfer agency fee and expenses
5,703
Other
19,798
Total expenses before expense waivers
412,564
Less waiver of:
Administration fee
(25,000)
Investment advisory fee
(56,447)
Net expenses
331,117
Net investment income before taxes
422,760
Provision for Thai tax applicable to net investment income
43,574
Net investment income
379,186
Realized and unrealized gains from investment activities and
foreign currency
transactions:
Net realized gains on investments
2,688,130
Net realized foreign currency transaction losses
(121,899)
Net change in unrealized appreciation (depreciation) on
equity investments
(4,321,425)
Net change in unrealized appreciation (depreciation) on
translation of short-term
investments and other assets and liabilities denominated in
foreign currency
(52,136)
Net realized and unrealized losses from investment activities
and foreign
currency transactions
(1,807,330)
Net decrease in net assets resulting from operations
$(1,428,14)
See accompanying notes to financial statements
STATEMENT OF CHANGES IN NET ASSETS
For the Six
Months
Ended June
30, 2005
(unaudited)
For the
Year
Ended
December
31, 2004
Increase (decrease) in net assets from operations:
Net investment income
$ 379,186
$ 167,018
Net realized gain (loss) on:
Investments
2,688,130
326,411
Foreign currency transactions
(121,899)
4,627
Net change in unrealized appreciation (depreciation) on:
Investments in equity securities
(4,321,425)
(2,697,284)
Translation of short-term investments and other assets and
liabilities
denominated in foreign currency
(52,136)
1,318
Net decrease in net assets resulting from operations
(1,428,144)
(2,197,910)
Dividends and distributions to shareholders from:
Net investment income
-
(125,577)
From capital stock transactions:
Sale of capital stock resulting from reinvestment of
dividends
676
1,101
Net decrease in net assets
(1,427,468)
(2,322,386)
Net assets:
Beginning of period.
27,887,005
30,209,391
End of period (including undistributed net investment income
of
$423,268 and $44,082, respectively)
$26,459,537
$27,887,005
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Thai Capital Fund, Inc. (the "Fund") was incorporated in
Maryland on March 14, 1990 and
commenced operations on May 30, 1990. It is registered with
the U.S. Securities and Exchange
Commission as a non-diversified, closed-end management
investment company.
The Fund makes its investments in Thailand through a wholly-
owned Investment Plan pursuant to
a contract with SCB Asset Management Co., Ltd. (the
"Manager"). The accompanying financial
statements are prepared on a consolidated basis and present
the financial position and results of operations
of the Investment Plan and the Fund.
The following significant accounting policies are in
conformity with generally accepted
accounting principles in the United States of America for
investment companies. Such policies are
consistently followed by the Fund in the preparation of its
financial statements. The preparation of its
financial statements in accordance with accounting principles
generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the amounts and disclosures
in the financial statements. Actual reported results could
differ from those estimates.
Valuation of Investments-Securities listed on the Securities
Exchange of Thailand for which
market quotations are readily available are valued at the
last sales price prior to the time of determination,
or, if there were no sales on such date, at the mean between
the last current bid and ask prices. Securities
that are traded over-the-counter, if bid and asked quotations
are available, are valued at the mean between
the current bid and asked prices. In instances where
quotations are not readily available or where the
price determined is deemed not to represent fair market
value, fair value is determined in good faith in
such manner as the Board of Directors (the "Board") may
prescribe. Short-term investments having a
maturity of sixty days or less are valued at amortized cost,
which approximates market value.
Tax Status-It is the Fund's intention to continue to qualify
as a regulated investment company
and distribute substantially all of its taxable income.
Accordingly, no provision for U.S. federal income
or excise taxes is required in the financial statements.
Remittances from the Investment Plan to the Fund are subject
to a Thai withholding tax of 10%
and such remittances are required by Thai law to be derived
only from the Investment Plan's net income
and net realized gains on the sale of securities. The Fund
records a provision for such taxes based upon
the Investment Plan's overall net increase in net assets
resulting from operations determined by reference
to the Baht, except that there is currently no provision
required for the component of the net increase in
net assets relating to capital gains, if any, because the
Fund intends to utilize its U.S. tax loss carryforward
available to offset any such gains. Remittances for the
payment of expenses are not subject to a Thai
withholding tax.
Dividends and Distributions to Shareholders-The Fund records
dividends and distributions
payable to its shareholders on the ex-dividend date. The
amount of dividends and distributions from net
investment income and net realized capital gains are
determined in accordance with federal income tax
regulations, which may differ from generally accepted
accounting principles. These "book/tax"
differences are either considered temporary or permanent in
nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-
basis treatment; temporary differences do not require
reclassification. Dividends and distributions which
exceed net investment income and net realized capital gains
for tax purposes are reported as distributions
of paid-in-capital.
Foreign Currency Translation-The books and records of the
Fund are maintained in U.S.
dollars as follows: (1) the foreign currency market value of
investment securities and other assets and
liabilities stated in foreign currency are translated at the
exchange rate prevailing at the end of the period;
and (2) purchases, sales, income and expenses are translated
at the rate of exchange prevailing on the
respective dates of such transactions. The resulting
exchange gains and losses are included in the
Statement of Operations. The Fund does not isolate the
effect of fluctuations in foreign exchange rates
from the effect of fluctuations in the market price of
securities.
Investment Transactions and Investment Income-Securities
transactions are recorded on the
trade date (the date upon which the order to buy or sell is
executed). Realized and unrealized gains and
losses from security and foreign currency transactions are
calculated on the identified cost basis.
Dividend income and corporate actions are recorded on the ex-
date, except for certain dividends and
corporate actions involving foreign securities which may be
recorded after the ex-date, as soon as the
Fund acquires information regarding such dividends or
corporate actions. Interest income is recorded on
an accrual basis.
Investment Manager and Investment Adviser
The Manager acts as the investment manager of the Investment
Plan pursuant to the Investment
Contract. The Manager makes the investment management
decisions relating to the Fund's assets held
through the Investment Plan. For its management services,
the Manager receives a fee, which accrues
weekly and is payable monthly in Baht, at an annual rate of
0.60% of the Investment Plan's average net
assets. At June 30, 2005, the Fund owed the Manager $14,850.
In addition, as permitted by the
Investment Contract, the Fund reimburses the Manager for its
out-of-pocket expenses related to the Fund.
During the six months ended June 30, 2005, no such expenses
were paid to the Manager.
Under the International Investment Advisory Agreement, Daiwa
SB Investments (H.K.) Ltd.
("the Adviser") provides general and specific investment
advice to the Manager with respect to the
Fund's assets held through the Investment Plan, but the
Manager makes the ultimate decisions regarding
investments. In addition, the Adviser manages the Fund's
assets held outside the Investment Plan. The
Fund pays to the Adviser a fee, which accrues weekly and is
payable monthly in U.S. Dollars, at an
annual rate equal to 0.60% of the Fund's average net assets.
In addition, as permitted by the Advisory
Agreement, the Fund reimburses the Adviser for its out-of-
pocket expenses related to the Fund. During
the six months ended June 30, 2005, no such expenses were
paid to the Adviser. The Adviser has
voluntarily decreased its fee to 0.20% of the Fund's average
net assets for the fiscal year ended
December 31, 2005. At June 30, 2005, the Fund owed the
Adviser $4,421, net of waivers.
Administrator and Custodian and Other Related Parties
Daiwa Securities Trust Company ("DSTC"), an affiliate of the
Adviser, provides certain
administrative services to the Fund. For such services, the
Fund pays DSTC a monthly fee at an annual
rate of 0.20% of the Fund's average weekly net assets, with a
minimum annual fee of $150,000. DSTC
has voluntarily decreased its minimum annual administration
fee to $100,000 for the year ended
December 31, 2005. In addition, as permitted by the
Administration Agreement, the Fund reimburses
DSTC for its out-of-pocket expenses related to the Fund.
During the six months ended June 30, 2005,
expenses of $1,838 were paid to the Administrator,
representing reimbursement to the Administrator of
costs relating to the attendance by its employees at meetings
of the Fund's Board.
DSTC also acts as custodian for the Fund's U.S. assets. As
compensation for its services as
custodian, DSTC receives a monthly fee and reimbursement of
out-of-pocket expenses. During the six
months ended June 30, 2005, DSTC earned $2,859, as
compensation for its custodial services to the Fund.
At June 30, 2005, the Fund owed $8,333, $1,167 and $441 to
DSTC for administration,
compliance and custodian fees, respectively.
The Fund paid or accrued $47,902 for the six months ended
June 30, 2005 for legal services in
conjunction with the Fund's ongoing operations provided by
the Fund's law firm, Clifford Chance US
LLP, of which the Fund's Assistant Secretary is a partner.
Investments in Securities and Federal Income Tax Matters
During the six months ended June 30, 2005, the Fund made
purchases of $9,896,330 and sales of
$10,026,463 of investment securities, excluding short-term
investments. The aggregate cost of
investments at June 30, 2005 for federal income tax purposes
was substantially the same as the cost of
securities for financial statement purposes. At June 30,
2005, net unrealized appreciation, excluding
short-term securities aggregated $8,576,981 of which
$10,074,561 related to appreciated securities and
$1,497,580 related to depreciated securities.
At December 31, 2004, the Fund had a remaining capital loss
carryover of $46,611,127, of which
$7,116,392 expires in the year 2005, $24,330,001 expires in
the year 2006, $6,364,433 expires in the year
2007, $5,797,861 expires in the year 2008, $2,320,539 expires
in the year 2009 and $681,901 expires in
the year 2010 available to offset future net capital gains.
Concentration of Risk
The Fund's investments in Thailand involve certain
considerations and risks not typically
associated with domestic investments as a result of, among
others, the possibility of future economic and
political developments and the level of government
supervision and regulation of securities markets.
The currency transactions of the Fund and the Investment Plan
are subject to Thai foreign
exchange control regulations. Remittances from the Plan
require the approval of the Exchange Control
Officer of the Bank of Thailand. There can be no assurance
that approval of remittances from the Plan
will be granted in a timely fashion or at all.
The economic difficulties experienced in Thailand have had an
impact on the banking industry.
All of the Fund's investments are held in Thailand through a
subcustodial arrangement with Bangkok
Bank Public Company Limited (the "subcustodian") and the
Fund's securities in turn are being held by
the Thailand Securities Depository Company in book-entry
form. In the event of failure of the
subcustodian, legal counsel has informed the Fund that the
Fund would be able to recover all of its
securities held by the subcustodian. The Fund's ability to
enter into investment transactions pertaining to
such securities may be effectively restricted for the period
of time required to resolve the Fund's claim to
recover such securities.
Capital Stock
There are 100,000,000 shares of $0.01 par value common stock
authorized. During the six
months ended June 30, 2005, 72 shares were issued as a result
of the reinvestment of dividends paid to
those shareholders electing to reinvest dividends. Of the
3,139,500 shares outstanding at June 30, 2005,
Daiwa Securities America Inc., a lead underwriter of the Fund
and an affiliate of both the Adviser and
DSTC, owns 8,763 shares.
FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding during
each period is presented below:
For the Six
Months
Ended
June 30,
2005
For the Years Ended December 31,
(unaudited)
2004
2003
2002
2001
2000
Net asset value, beginning of period
$ 8.88
$ 9.62
$ 4.34
$ 3.42
$ 3.36
$ 7.22
Net investment income (loss)
0.12 *
0.05 *
0.03 *
(0.09)
(0.16) *
(0.18) *
Net realized and unrealized gains (losses)
on investments and foreign
currency transactions
(0.57)
(0.75)
5.31
1.01
0.22 *
(3.68) *
Net increase (decrease) in net asset value
resulting from operations
(0.45)
(0.70)
5.34
0.92
0.06
(3.86)
Less: dividends and distributions to
shareholders
Net investment income
-
(0.04)
(0.06)
-
-
-
Net asset value, end of period
$ 8.43
$ 8.88
$ 9.62
$ 4.34
$ 3.42
$ .36
Per share market value, end of period
$ 8.890
$ 8.490
$ 9.250
$ 3.970
$ 2.800
$ 3.250
Total investment return:
Based on market price at beginning and
end of period, assuming reinvestment of
dividends
5.15%
(7.40)%
134.56%
41.79%
(13.85)%
(66.67)%
Based on net asset value at beginning and
end of period, assuming reinvestment of
dividends
(4.67)%
(6.89)%
123.09%
26.90%
1.79%
(53.46)%
Ratios and supplemental data:
Net assets, end of period
(in millions)
$ 26.5
$ 27.9
$ 30.2
$ 13.6
$ 10.7
$ 10.5
Ratios to average net assets of:
Net expenses, excluding Thai taxes
applicable to net investment income
2.35%**
2.26%
2.63%
4.29%
5.98%
4.73%
Net expenses, including Thai taxes applicable
to net investment income
2.66%**
2.32%
2.74%
4.29%
6.43%
5.11%
Gross expenses, excluding waiver of
Administration and Advisory fee and
including Thai taxes applicable to net
investment income
2.93%**
2.85%
3.31%
4.98%
7.09%
5.66%
Net investment income (loss)
2.69%**
0.63%
0.62%
(2.20)%
(4.77)%
(4.03)%
Portfolio turnover
38.66%
11.21%
11.86%
14.62%
20.85%
45.46%
+ Per share values are adjusted to reflect the one-for-two
reverse stock split effective August 5, 2002.
* After provision for Thai taxes. **Annualized.
** Annualized
RESULTS OF ANNUAL MEETING OF STOCKHOLDERS (UNAUDITED)
On June 2, 2005, the Annual Meeting of Stockholders of The
Thai Capital Fund, Inc. (the
"Fund") was held and the following matter was voted upon and
passed.
(1) Election of two Class II Directors to the Board of
Directors of the Fund to serve for a
term expiring on the date on which the Annual Meeting of
Stockholders is held in the year 2008.
Number of Shares/Votes
Class II
Voted For
Proxy AuthorityWithheld
Austin C. Dowling
1,700,486
420,036
Oren G. Shaffer
1,702,114
418,409
In addition to the Directors re-elected at the Meeting,
Martin J. Gruber, David G. Harmer and
Ikuo Mori were the other members of the Board who continued
to serve as Directors of the Fund.
(2) At the adjourned Meeting of Stockholders held on July
14, 2005, the proposal to increase
the management fee was not approved because the required
number of votes was not obtained.
Voted For
Voted Against
Abstentions
895,516
525,945
74,802
AN IMPORTANT NOTICE CONCERNING OUR PRIVACY POLICY
This Privacy Notice describes the types of non-public
information we collect about you, the ways
we safeguard the confidentiality of this information and when
this information may be shared with others.
In this Privacy Notice, the terms "we," "our" and "us" refer
to the Fund. The term "you" in this Privacy
Notice refers broadly to all of our individual stockholders
(including prospective and former individual
stockholders).
In order to provide you with services, we collect certain
non-public information about you. We
obtain this personal information from the following sources:
? Applications and other forms you submit to us.
? Dealings and transactions with us or others.
We do not disclose any non-public personal information about
you to anyone, except as permitted
by law. For instance, so that we may effect transactions
that you request or authorize, we may disclose
the information we collect to companies that perform services
on our behalf, such as printers and mailers
that assist us in the distribution of investor materials.
These companies will use this information only for
the services for which we hired them, and are not permitted
to use or share this information for any other
purpose.
We maintain physical, electronic and procedural security
measures that comply with federal
standards to safeguard your non-public personal information.
Access to such information is restricted to
those agents of the Fund who are trained in the proper
handling of client information and who need to
know that information in order to provide services to
stockholders.
BOARD CONSIDERATION AND APPROVAL OF INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENTS
Nature, Extent and Quality of Services
At a Meeting of the Board of Directors of The Thai Capital
Fund, Inc. held on June 2, 2005, the
Board reviewed and considered the nature and extent of the
investment advisory services provided by
Daiwa SB Investments (HK) Ltd. (the "Investment Adviser")
under the Advisory Agreement and SCB
Asset Management Co., Ltd. (the "Investment Manager" and,
together with the Investment Adviser, the
"Advisers") under the Investment Management Agreement. The
Board reviewed and considered the
qualifications of the portfolio manager, the senior
administrative managers and other key personnel of the
Investment Manager who provide the investment advisory
services to the Fund. The Board determined
that the portfolio manager and key personnel of the
Investment Manager are qualified by education and/or
training and experience to perform the services in an
efficient and professional manner. The Board also
reviewed the services provided to the Fund by the Investment
Adviser and the personnel of the
Investment Adviser who provide those services. The Board
concluded that the nature and extent of the
advisory services provided were necessary and appropriate for
the conduct of the business and investment
activities of the Fund. The Board also concluded that the
overall quality of the advisory services was
satisfactory.
Performance Relative to the Fund's Benchmark
The Board reviewed the Fund's performance for the last one-,
three- and five-year periods, as
well as for the last 20 quarters, as provided in the
materials distributed to the Board prior to the Meeting,
compared to the Fund's benchmark, the Stock Exchange of
Thailand Index. The Board noted that the
Fund's performance for the last one- and three-year periods
was higher than the Fund's benchmark, and
was only slightly lower for the five-year period. The Board
further noted that, for the last 20 quarters, the
Fund's performance varied as compared to the benchmark,
however, the Fund generally performed in line
with the benchmark. The Board concluded that the Fund's
overall performance was competitive with that
of its benchmark.
Fees Relative to Other Funds Advised by the Advisers
The Board reviewed the advisory fee paid by the Fund under
the Advisory Agreement and the
Investment Management Agreement (together, the "advisory
fee"). The Board also reviewed information
showing the advisory fees paid by other funds managed by each
of the Advisers as compared to the
advisory fee paid by the Fund. The Board noted that while
the Investment Manager does not manage any
other U.S. registered funds, it does advise approximately 18
other closed- and open-end funds with
advisory fees with only one fund with an advisory fee lower
than the Fund. The Board further noted that
the Investment Adviser does not advise any other closed-end
funds that would provide an appropriate
comparison to the Fund's advisory fee. The Board concluded
that the advisory fee paid by the Fund was
appropriate as compared to other funds advised by the
Advisers.
Fees and Expenses Relative to Comparable Funds Managed by
Other Advisers
The Board considered the advisory fees paid by the other
funds in the Fund Complex, The Japan
Equity Fund, Inc. and The Singapore Fund, Inc., as compared
to the advisory fee paid to the Fund's
Advisers. While The Japan Equity Fund, Inc. has a lower fee
rate and The Singapore Fund, Inc. has a
slightly higher fee rate than the Fund, the assets in each
fund are more than triple that of the Fund, and
thus the actual fee paid to the advisers of those funds is
significantly higher. In addition, the Board
reviewed the fee paid to the only other U.S. registered
closed-end fund investing in Thailand, The Thai
Fund. The Board noted that not only was the advisory fee
rate for The Thai Fund significantly higher
than for the Fund, but the assets of The Thai Fund were
approximately four times that of the Fund
resulting in an even higher fee. In addition, the Board
examined the advisory fees paid to other closed-
end funds investing in a single country. While the fees vary
widely, the majority of these fees paid in
connection with these country funds were in the 1.00% and
higher range, especially for those funds that
invested in countries in Asia. The Board concluded that the
Fund's advisory fee was competitive with
these other country funds. The Board did, however, note that
the total expense ratio of the Fund was
higher than that of the other funds in the Fund Complex, The
Thai Fund and many other country funds.
The Board attributed this higher total expense ratio to the
lower net assets of the Fund.
Breakpoints and Economies of Scale
The Board reviewed the structure of the Fund's management fee
schedule under the Advisory
Agreement and Investment Management Agreement and noted that
it does not include any breakpoints.
The Board considered that the Fund is closed-end and that the
Fund's assets are not likely to grow with
new sales. The Board concluded that economies of scale for
this Fund were not a factor that needed to be
considered at the current asset levels.
Profitability of the Advisers
The Board considered and reviewed a profitability report for
each of the Advisers for the last year
included in the materials previously provided to the Board.
Based on their review of the information they
received, the Board concluded that the profits earned by each
Adviser were not excessive in light of the
advisory services provided to the Fund.
Advisers Financially Sound and Financially Capable of Meeting
the Fund's Needs
The Board considered whether each of the Advisers is
financially sound and has the resources
necessary to perform its obligations under the Advisory
Agreement and Investment Management
Agreement, to which it is a party. The Board noted that each
Adviser's operations remain profitable. The
Board concluded that each of the Advisers has the financial
resources necessary to fulfill its obligations
under the Advisory Agreement and Investment Management
Agreement, to which it is a party.
Historical Relationship Between the Fund and the Advisers
The Board also reviewed and considered the historical
relationship between the Fund and the
Advisers, including the organizational structure of each of
the Advisers, the policies and procedures
formulated and adopted by each of the Advisers for managing
the Fund's assets and the Board's
confidence in the competence and integrity of the senior
managers and key personnel of each of the
Advisers. The Board concluded that it is beneficial for the
Fund to continue its relationship with the
Advisers.
Other Factors and Current Trends
The Board considered the controls and procedures adopted and
implemented by each of the
Advisers and monitored by the Fund's Chief Compliance Officer
and concluded that the conduct of
business by each of the Advisers indicates a good faith
effort on its part to adhere to high ethical
standards in the conduct of the Fund's business.
General Conclusion
After considering and weighing all of the above factors, the
Board concluded it would be in the
best interests of the Fund and its shareholders to approve
renewal of each of the Advisory Agreement and
Investment Management Agreement for another year.
BOARD OF DIRECTORS
Ikuo Mori, Chairman
Austin C. Dowling
Martin J. Gruber
David G. Harmer
Oren G. Shaffer
OFFICERS
John J. O'Keefe
Vice President and Treasure
Yuko Uchida
Secretary
Anthony Cambria
Chief Compliance Officer
Leonard B. Mackey, Jr.
Semi-Annual Report
Assistant Secretary
June 30, 2005
ADDRESS OF THE FUND
c/o Daiwa Securities Trust Company
One Evertrust Plaza, 9th Floor
Jersey City, NJ 07302-3051
INVESTMENT MANAGER
SCB Asset Management Co., Ltd.
INVESTMENT ADVISER
Daiwa SB Investments (H.K.) Ltd.
ADMINISTRATOR
Daiwa Securities Trust Company
CUSTODIANS
Bangkok Bank Public Company, Ltd.
(Thai Custodian)
Daiwa Securities Trust Company
(U.S. Custodian)
TRANSFER AGENT AND
REGISTRAR
American Stock Transfer and Trust
Company
LEGAL COUNSEL
Clifford Chance US LLP
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
Notice is hereby given in accordance with
Section 23(c) of the Investment Company
Act of 1940 that from time to time the
Fund may purchase shares of its common
stock in the open market at prevailing
market prices.
This report is sent to shareholders of the
Fund for their information. It is not a
prospectus, circular or representation
intended for use in the purchase or sale of
shares of the Fund or of any securities
mentioned in the report.
The financial information included herein
is taken from the records of the Fund
without examination by the Independent
Registered Public Accounting Firm which
does not express an opinion thereon.
Item 2. Code of Ethics.
Not applicable for this semi-annual report.
Item 3. Audit Committee Financial Expert.
Not applicable for this semi-annual report.
Item 4. Principal Accountant Fees and Services.
Not applicable for this semi-annual report.
Item 5. Audit Committee of Listed Registrants.
Not applicable for this semi-annual report.
Item 6. Schedule of Investments.
The Registrant's "Schedule I-Investments in securities of
unaffiliated issuers" (as set forth in 17 CFR
210.12-12) is included in Item 1 of this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures
for Closed-End Management
Investment Companies.
Not applicable for this semi-annual report.
Item 8. Portfolio Managers of Closed-End Management
Investment Companies.
Not applicable for this semi-annual report.
Item 9. Purchase of Equity Securities By Closed-End
Management Investment Company and
Affiliated Purchasers.
REGISTRANT PURCHASES OF EQUITY SECURITIES
Period
(a)
Total Number of
Shares (or Units)
Purchased
(b)
Average Price
Paid per Share
(or Unit)
(c)
Total Number of
Shares (or Units)
Purchased as Part of
Publicity Announced
Plans or Programs
(d)
Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that may yet be
Purchased Under the Plans or
Programs
November
0
N/A
0
0
December
0
N/A
0
0
January
0
N/A
0
0
February
0
N/A
0
0
March
0
N/A
0
0
April
0
N/A
0
0
Total
0
N/A
0
0
Item 10. Submission of Matters to a Vote of Security
Holders.
There have not been any material changes to the procedures by
which shareholders may recommend
nominees to the Registrant's board of directors since those
procedures were last disclosed in response to
the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or
this Item.
Item 11. Controls and Procedures.
(a) The Registrant's principal executive officer and
principal financial officers, based on their
evaluation of the Registrant's disclosure controls and
procedures as of a date within 90 days of
the filing of this report, have concluded that such controls
and procedures are adequately
designed to ensure that information required to be disclosed
by the registrant in Form N-CSR is
accumulated and communicated to the Registrant's management,
including the principal
executive officer and principal financial officer, or persons
performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.
(b) There were no changes in the Registrant's internal
control over financial reporting that occurred
during the Registrant's second fiscal quarter of the period
covered by this report that has
materially affected, or is reasonably likely to materially
affect, the Registrant's internal control
over financial reporting.
Item 12. Exhibits.
(a) Any code of ethics, or amendment thereto, that is the
subject of the disclosure required by Item 2,
to the extent that the registrant intends to satisfy the Item
2 requirements through filing of an
exhibit:
Not applicable for this semi-annual report.
(b) A separate certification for each principal executive
officer and principal financial officer of the
registrant as required by Rule 30a-2 under the Act (17 CFR
270.30a-2) in the exact form set forth
below:
Attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment
Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the
undersigned, thereunto duly authorized.
(Registrant)
The Thai Capital Fund, Inc.
By (Signature and Title)*
/s/ John J. O'Keefe
John J. O'Keefe, Vice President and Treasurer
Date: August 25, 2005
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment
Company Act of 1940, this report has been signed below by the
following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By (Signature and Title)*
/s/ John J. O'Keefe
John J. O'Keefe, Vice President and Treasurer
Date: August 25, 2005
By (Signature and Title)*
/s/ Ikuo Mori
Ikuo Mori, Chairman
Date: August 25, 2005
* Print the name and title of each signing officer under
his or her signature.
EXHIBIT 11(b)
CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John J. O'Keefe, certify that:
1. I have reviewed this report on Form N-CSR of The Thai
Capital Fund, Inc.
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or
omit to state a material fact necessary to make the
statements made, in light of the circumstances
under which such statements were made, not misleading with
respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this
report, fairly present in all material respects the financial
condition, results of operations, changes
in net assets, and cash flows (if the financial statements
are required to include a statement of
cash flows) of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-
3(c) under the Investment Company
Act of 1940) and internal control over financial reporting
(as defined in Rule 30a-3(d) under the
Investment Company Act of 1940) for the registrant and have:
(a) designed such disclosure controls and procedures, or
caused such disclosure controls and
procedures to be designed under our supervision, to ensure
that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by
others within those entities, particularly during the period
in which this report is being
prepared;
(b) designed such internal control over financial reporting,
or caused such internal control
over financial reporting to be designed under our
supervision, to provide reasonable
assurance regarding the reliability of financial reporting
and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting
principles;
(c) evaluated the effectiveness of the registrant's
disclosure controls and procedures and
presented in this report our conclusions about the
effectiveness of the disclosure controls
and procedures, as of a date within 90 days prior to the
filing date of this report based on
such evaluation;
(d) disclosed in this report any change in the registrant's
internal control over financial
reporting that occurred during the second fiscal quarter of
the period covered by this
report that has materially affected, or is reasonably likely
to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have
disclosed, to the registrant's auditors and the
audit committee of the registrant's board of directors (or
persons performing the equivalent
functions):
(a) all significant deficiencies and material weaknesses in
the design or operation of internal
control which are reasonably likely to adversely affect the
registrant's ability to record,
process, summarize, and report financial information; and
(b) any fraud, whether or not material, that involves
management or other employees who
have a significant role in the registrant's internal controls
over financial reporting.
Date: August 25, 2005
/s/ John J. O'Keefe
John J. O'Keefe, Vice President and
Treasurer
CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ikuo Mori, certify that:
1. I have reviewed this report on Form N-CSR of The Thai
Capital Fund, Inc.
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or
omit to state a material fact necessary to make the
statements made, in light of the circumstances
under which such statements were made, not misleading with
respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this
report, fairly present in all material respects the financial
condition, results of operations, changes
in net assets, and cash flows (if the financial statements
are required to include a statement of
cash flows) of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer and I are
responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-
3(c) under the Investment Company
Act of 1940) and internal control over financial reporting
(as defined in Rule 30a-3(d) under the
Investment Company Act of 1940) for the registrant and have:
(a) designed such disclosure controls and procedures, or
caused such disclosure controls and
procedures to be designed under our supervision, to ensure
that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by
others within those entities, particularly during the period
in which this report is being
prepared;
(b) designed such internal control over financial reporting,
or caused such internal control
over financial reporting to be designed under our
supervision, to provide reasonable
assurance regarding the reliability of financial reporting
and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting
principles;
(c) evaluated the effectiveness of the registrant's
disclosure controls and procedures and
presented in this report our conclusions about the
effectiveness of the disclosure controls
and procedures, as of a date within 90 days prior to the
filing date of this report based on
such evaluation;
(d) disclosed in this report any change in the registrant's
internal control over financial
reporting that occurred during the second fiscal quarter of
the period covered by this
report that has materially affected, or is reasonably likely
to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have
disclosed, to the registrant's auditors and the
audit committee of the registrant's board of directors (or
persons performing the equivalent
functions):
(a) all significant deficiencies and material weaknesses in
the design or operation of internal
control which are reasonably likely to adversely affect the
registrant's ability to record,
process, summarize, and report financial information; and
(b) any fraud, whether or not material, that involves
management or other employees who
have a significant role in the registrant's internal controls
over financial reporting.
Date: August 25, 2005
/s/ Ikuo Mori
Ikuo Mori, Chairman
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, the Vice President and Treasurer of The Thai
Capital Fund, Inc. (the "Fund"),
with respect to the Form N-CSR for the period ended October
31, 2004 as filed with the Securities and
Exchange Commission, hereby certifies, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. such Form N-CSR fully complies with the requirements of
section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
2. the information contained in such Form N-CSR fairly
presents, in all material respects, the
financial condition and results of operations of the Fund.
Dated: August 25, 2005
/s/ John J. O'Keefe
John J. O'Keefe
This certification is being furnished solely pursuant to 18
U.S.C. Section 1350 and is not being
filed as part of the Report or as a separate disclosure
document.
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, the Chairman of The Thai Capital Fund, Inc.
(the "Fund"), with respect to the
Form N-CSR for the period ended June 30, 2004 as filed with
the Securities and Exchange Commission,
hereby certifies, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that:
1. such Form N-CSR fully complies with the requirements of
section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
2. the information contained in such Form N-CSR fairly
presents, in all material respects, the
financial condition and results of operations of the Fund.
Dated: August 25, 2005
/s/ Ikuo Mori
Ikuo Mori
This certification is being furnished solely pursuant to 18
U.S.C. Section 1350 and is not being
filed as part of the Report or as a separate disclosure
document.
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NYA 747694.1
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NYA 747694.1
The Thai Capital Fund, Inc.