SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENTS
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The Thai Fund, Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Name of Registrant as Specified in Its Charter)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Aggregate number of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4) Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Form, Schedule or Registration Statement No.:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3) Filing Party:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4) Date Filed:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
THE THAI FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------
To Our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of The
Thai Fund, Inc. (the "Fund") will be held on Wednesday, April 30, 1997, at
8:00 a.m. (New York time), in Conference Room 2 at 1221 Avenue of the Americas,
22nd Floor, New York, New York 10020, for the following purposes:
1. To elect three Class II Directors for a term of three years.
2. To ratify or reject the selection by the Board of Directors of
Price Waterhouse LLP as independent accountants of the Fund for the
fiscal year ending December 31, 1997.
3. To approve or disapprove an Investment Contract between the Fund
and The Mutual Fund Public Company Limited and a Technical Assistance and
Seconding Agreement among the Fund, Morgan Stanley Asset Management Inc.
and The Mutual Fund Public Company Limited.
4. To approve or disapprove a Fund Investment Agreement between the
Fund and Morgan Stanley Asset Management Inc.
5. To consider and act upon any other business as may properly come
before the Meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 24, 1997
are entitled to notice of, and to vote at, this Meeting or any adjournment
thereof.
VALERIE Y. LEWIS
SECRETARY
Dated: March [<circle>], 1997
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
<PAGE>
THE THAI FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
---------------
PROXY STATEMENT
---------------
This statement is furnished by the Board of Directors of The Thai Fund,
Inc. (the "Fund") in connection with the solicitation of Proxies for use at the
Annual Meeting of Stockholders (the "Meeting") to be held on Wednesday, April
30, 1997, at 8:00 a.m. (New York time), in Conference Room 2 at the principal
executive office of Morgan Stanley Asset Management Inc. (hereinafter "MSAM" or
the "Manager"), 1221 Avenue of the Americas, 22nd Floor, New York, New York
10020. It is expected that the Notice of Annual Meeting, Proxy Statement and
form of Proxy will first be mailed to stockholders on or about March 27, 1997.
The purpose of the Meeting and the matters to be acted upon are set forth
in the accompanying Notice of Annual Meeting of Stockholders. At the Meeting,
the Fund's stockholders will consider New Advisory Agreements (defined below)
to take effect following the consummation of the transactions contemplated by
an Agreement and Plan of Merger, dated as of February 4, 1997 (the "Merger
Agreement"), between Dean Witter, Discover & Co. ("Dean Witter Discover") and
Morgan Stanley Group Inc. ("MS Group"), the direct parent of MSAM, the Fund's
investment manager. Pursuant to the Merger Agreement, the Fund's investment
manager will become a direct subsidiary of the merged company, which will be
called Morgan Stanley, Dean Witter, Discover & Co. The Fund's New Advisory
Agreements are substantially identical to the Fund's Current Advisory
Agreements (defined below), except for the dates of execution.
If the accompanying form of Proxy is executed properly and returned,
shares represented by it will be voted at the Meeting in accordance with the
instructions on the Proxy. A Proxy may be revoked at any time prior to the time
it is voted by written notice to the Secretary of the Fund or by attendance at
the Meeting. If no instructions are specified, shares will be voted FOR the
election of the nominees for Directors, FOR ratification of Price Waterhouse
LLP as independent accountants of the Fund for the fiscal year ending December
31, 1997, FOR the approval of the New Management Agreements (defined below) and
FOR the approval of the New Fund Investment Agreement (defined below).
Abstentions and broker non-votes are each included in the determination of the
number of shares present and voting at the Meeting.
The Board has fixed the close of business on March 24, 1997 as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Meeting and at any adjournment thereof. On that date, the Fund had
[<circle>] shares of Common Stock outstanding and entitled to vote. Each share
will be entitled to one vote at the Meeting.
The expense of solicitation will be borne by the Fund and will include
reimbursement to brokerage firms and others for expenses in forwarding proxy
solicitation materials to beneficial owners. The solicitation of Proxies will
be largely by mail, but may include, without cost to the Fund, telephonic,
telegraphic or oral communications by regular employees of the Manager. The
solicitation of Proxies is also expected to include communications by employees
of Shareholder Communications Corporation, a proxy solicitation firm expected
to be engaged by the Fund at a cost not expected to exceed $[<circle>] plus
expenses.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR
ITS FISCAL YEAR ENDED DECEMBER 31, 1996, TO ANY STOCKHOLDER REQUESTING SUCH
REPORT. REQUESTS FOR THE ANNUAL REPORT SHOULD BE MADE IN WRITING TO THE THAI
FUND, INC., C/O CHASE GLOBAL FUNDS SERVICES COMPANY, P.O. BOX 2798, BOSTON,
MASSACHUSETTS 02108-2798, OR BY CALLING 1-800-221-6726.
<PAGE>
Chase Global Funds Services Company is an affiliate of the Fund's
administrator, The Chase Manhattan Bank ("Chase Bank"), and provides
administrative services to the Fund. The business address of Chase Bank and
Chase Global Funds Services Company is 73 Tremont Street, Boston, Massachusetts
02108.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF EACH OF THE
MATTERS MENTIONED IN ITEMS 1, 2, 3 AND 4 OF THE NOTICE OF ANNUAL MEETING.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Meeting, three Directors will be elected to hold office for a term
of three years and until their successors are duly elected and qualified. It is
the intention of the persons named in the accompanying form of Proxy to vote, on
behalf of the stockholders, for the election of John W. Croghan, Graham E. Jones
and Snoh Unakul as Class II Directors.
On or about the same date as the Meeting, each of the other closed-end,
U.S. registered investment companies advised by MSAM (except Morgan Stanley
India Investment Fund, Inc.) also is holding a meeting of stockholders at
which, among other things, such stockholders are considering a proposal to
elect as directors of such other investment companies the same people nominated
to be Directors of the Fund. Accordingly, if elected, all of the nominees for
Directors of the Fund also will act as directors of The Brazilian Investment
Fund, Inc., The Latin American Discovery Fund, Inc., The Malaysia Fund, Inc.,
Morgan Stanley Africa Investment Fund, Inc., Morgan Stanley Asia-Pacific Fund,
Inc., Morgan Stanley Emerging Markets Debt Fund, Inc., Morgan Stanley Emerging
Markets Fund, Inc., Morgan Stanley Global Opportunity Bond Fund, Inc., The
Morgan Stanley High Yield Fund, Inc., Morgan Stanley Russia & New Europe Fund,
Inc., The Pakistan Investment Fund, Inc. and The Turkish Investment Fund, Inc.
(collectively, with the Fund, the "MSAM closed-end funds"). The Board believes
that this arrangement enhances the ability of the Directors to deal
expeditiously with administrative matters common to the MSAM closed-end funds,
such as evaluating the performance of common service providers, including MSAM
and the administrators, transfer agents, custodians and accountants of the MSAM
closed-end funds.
Pursuant to the Fund's By-laws, the terms of office of the Directors are
staggered. The Board of Directors is divided into three classes, designated
Class I, Class II and Class III, with each class having a term of three years.
Each year the term of one class expires. Class I currently consists of Peter J.
Chase, David B. Gill and Warren J. Olsen. Class II currently consists of John
W. Croghan, Graham E. Jones and Snoh Unakul. Class III currently consists of
Barton M. Biggs, Sukri Kaocharern, John A. Levin and William G. Morton, Jr.
Only the Directors in Class II are being considered for election at this
Meeting.
Pursuant to the Fund's By-Laws, each Director holds office until (i) the
expiration of his term and until his successor has been elected and qualified,
(ii) his death, (iii) his resignation, (iv) December 31 of the year in which he
reaches seventy-three years of age, or (v) his removal as provided by statute
or the Articles of Incorporation.
The Board of Directors has an Audit Committee. The Audit Committee makes
recommendations to the full Board of Directors with respect to the engagement
of independent accountants and reviews with the independent accountants the
plan and results of the audit engagement and matters having a material effect
on the Fund's financial operations. The members of the Audit Committee are
currently John W. Croghan, John A. Levin and William G. Morton, Jr., none of
whom is an "interested person," as defined under the Investment Company Act of
1940, as amended (the "1940 Act"). The Chairman of the Audit Committee is Mr.
Levin. After the Meeting, the Audit Committee will continue to consist of
Directors of the Fund who are not "interested persons." The Audit Committee
met twice during the fiscal year ended December 31, 1996. The Board of
Directors does not have nominating or compensation committees or other
committees performing similar functions.
There were four meetings of the Board of Directors held during the fiscal
year ended December 31, 1996. For the fiscal year ended December 31, 1996, each
current Director, during his tenure, attended at least seventy-five percent of
2
<PAGE>
the aggregate number of meetings of the Board and of any committee on which he
served, except Mr. Biggs, who attended two of the four meetings of the Board.
Each of the nominees for Director has consented to be named in this Proxy
Statement and to serve as a director of the Fund if elected. The Board of
Directors has no reason to believe that any of the nominees named above will
become unavailable for election as a director, but if that should occur before
the Meeting, Proxies will be voted for such persons as the Board of Directors
may recommend.
Certain information regarding the Directors and officers of the Fund is
set forth below:
<TABLE>
<CAPTION>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
POSITION OWNED AS OF OWNED UNDER
WITH THE PRINCIPAL OCCUPATIONS AND MARCH <CIRCLE> DEFERRED FEE
NAME AND ADDRESS FUND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS<DAGGER> PERCENTAGE
- ---------------- ---------- ----------------------------- --- -------------- -------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Barton M. Biggs* Director and Chairman, Director and 64 10,000 - ***
1221 Avenue of the Americas Chairman of the Managing Director of Morgan
New York, New York 10020 Board since Stanley Asset Management Inc.
1995 and Chairman and Director of
Morgan Stanley Asset
Management Limited; Managing
Director of Morgan Stanley &
Co. Incorporated; Director of
Morgan Stanley Group Inc.;
Director of the Rand McNally
Company; Member of the Yale
Development Board; Director
and Chairman of the Board of
seventeen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management Inc.
Peter J. Chase Director Chairman and Chief Financial 64 499 - ***
1441 Paseo De Peralta since 1987 Officer, High Mesa
Santa Fe, New Mexico 87501 Technologies, LLC; Chairman
of CGL, Inc.; Director of
thirteen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management, Inc.
John W. Croghan Nominee; Chairman of Lincoln Capital 66 1,000 419 ***
200 South Wacker Drive Director Management Company; Director
Chicago, Illinois 60606 since 1995 of St. Paul Bancorp, Inc. and
Lindsay Manufacturing Co.;
Director of thirteen U.S.
registered investment
companies managed by Morgan
Stanley Asset Management
Inc.; Previously Director of
Blockbuster Entertainment
Corporation.
3
<PAGE>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
POSITION OWNED AS OF OWNED UNDER
WITH THE PRINCIPAL OCCUPATIONS AND MARCH <CIRCLE> DEFERRED FEE
NAME AND ADDRESS FUND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS<DAGGER> PERCENTAGE
- ---------------- ---------- ----------------------------- --- -------------- -------------------- ----------
David B. Gill Director Director of thirteen U.S. 70 1,161 338 ***
26210 Ingleton Circle since 1987 registered investment
Easton, Maryland 21601 companies managed by Morgan
Stanley Asset Management
Inc.; Director of the
Mauritius Fund Limited;
Director of Moneda Chile Fund
Limited; Director of First
NIS Regional Fund SIAC;
Director of Commonwealth
Africa Investment Fund Ltd.;
Chairman of the Advisory
Board of Advent Latin
American Private Equity Fund;
Chairman and Director of
Norinvest Bank; Director of
Surinvest International
Limited; Director of National
Registry Company; Previously
Director of Capital Markets
Department of the
International Finance
Corporation; Trustee,
Batterymarch Finance
Management; Chairman and
Director of Equity Fund of
Latin America S.A.; Director
of Commonwealth Equity Fund
Limited; and Director of
Global Securities, Inc.
Graham E. Jones Nominee; Senior Vice President of BGK 64 985 - ***
330 Garfield Street Director Properties; Trustee of nine
Suite 200 since 1987 investment companies managed
Santa Fe, New Mexico 87501 by Weiss, Peck & Greer,
Trustee of eleven investment
companies managed by Morgan
Grenfell Capital Management
Incorporated; Director of
thirteen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management Inc.; Previously
Chief Financial Officer of
Practice Management Systems,
Inc.
4
<PAGE>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
POSITION OWNED AS OF OWNED UNDER
WITH THE PRINCIPAL OCCUPATIONS AND MARCH <CIRCLE> DEFERRED FEE
NAME AND ADDRESS FUND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS<DAGGER> PERCENTAGE
- ---------------- ---------- ----------------------------- --- -------------- -------------------- ----------
Sukri Kaocharern Director Chairman of the Advisory 60 -- - ***
39 Soi Sapanky, since 1988 Board, M.D.X. Co. Ltd.;
Rama IV Road Chairman of Premier Financial
Thungmahamek, Yannawa, & Securities Co., Ltd.,
Bangkok 10120, Thailand Director of Premier Global
Corporation Co., Ltd.;
Director of Jutha Maritime
Co., Ltd.; Director of
Institute for Management
Education for Thailand
Foundation (IMBT); Director
of the Advisory Council,
Graduate Institute of
Business Administration
(SASIN) of Chulalongkorn
University; Director of Thai
Farmers Bank; and Chairman of
Tawana Co., Ltd. and Thai
Castor Oil Co., Ltd.
Previously Director of The
Federation of Thai
Industries; Director of the
Provincial Waterworks
Authority (PWA) and Chairman
of PWA's Sub-Committee on
Administration Development;
and President of Industrial
Finance Corporation of
Thailand.
John A. Levin Director President of John A. Levin & 58 1,000 306 ***
One Rockefeller Plaza since 1995 Co., Inc.; Director of
New York, New York 10020 fourteen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management Inc.
William G. Morton, Jr. Director Chairman and Chief Executive 60 331 - ***
1 Boston Place since 1995 Officer of Boston Stock
Boston, Massachusetts 02108 Exchange; Director of Tandy
Corporation; Director of
thirteen U.S. registered
investment companies managed
by Morgan Stanley Asset
Management Inc.
Warren J. Olsen Director Principal of Morgan Stanley & 40 1,001 - ***
1221 Avenue of the Americas since 1995 Co. Incorporated and Morgan
New York, New York 10020 and President Stanley Asset Management
since 1989 Inc.; Director of Sixteen and
President of seventeen U.S.
registered investment
companies managed by Morgan
Stanley Asset Management Inc.
5
<PAGE>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
POSITION OWNED AS OF OWNED UNDER
WITH THE PRINCIPAL OCCUPATIONS AND MARCH <CIRCLE> DEFERRED FEE
NAME AND ADDRESS FUND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS<DAGGER> PERCENTAGE
- ---------------- ---------- ----------------------------- --- -------------- -------------------- ----------
Snoh Unakul Nominee; Chairman of The Bank of Asia 65 -- - ***
1010 Sukhumvit Road Director Public Company Limited,
Bangkok 10110, Thailand since 1992 Premier Group of Companies,
Thailand Development Research
Institute and Council of
Trustees of Burapha
University; Director of Dole
Thailand, Ltd., The Siam
Cement Group; and Member of
the Investment Advisory
Council of The Thailand Fund,
Advisory Board of IBM
Thailand Co., Ltd. Previously
Deputy Prime Minister of
Thailand and Secretary
General of Nation Economic
and Social Development Board.
James W. Grisham* Vice Principal of Morgan Stanley & 55 -- - ***
1221 Avenue of the Americas President since Co. Incorporated and Morgan
New York, New York 10020 1992 Stanley Asset Management
Inc.; Officer of various
investment companies managed
by Morgan Stanley Asset
Management Inc.
Michael F. Klein* Vice Principal of Morgan Stanley & 37 -- - ***
1221 Avenue of the Americas President since Co. Incorporated and Morgan
New York, New York 10020 1996 Stanley Asset Management Inc.
and previously a Vice
President thereof; Officer of
various investment companies
managed by Morgan Stanley
Asset Management Inc.;
Previously practiced law with
the New York law firm of
Rogers & Wells.
Harold J. Schaaff, Jr.* Vice Principal of Morgan Stanley & 36 294 - ***
1221 Avenue of the Americas President since Co. Incorporated and Morgan
New York, New York 10020 1992 Stanley Asset Management
Inc.; General Counsel and
Secretary of Morgan Stanley
Asset Management Inc.;
Officer of various investment
companies managed by Morgan
Stanley Asset Management Inc.
Joseph P. Stadler* Vice Vice President of Morgan 42 -- - ***
1221 Avenue of the Americas President since Stanley & Co. Incorporated
New York, New York 10020 1994 and Morgan Stanley Asset
Management Inc.; Officer of
various investment companies
managed by Morgan Stanley
Asset Management Inc.;
Previously with Price
Waterhouse LLP.
6
<PAGE>
COMMON
STOCK SHARE
BENEFICIALLY EQUIVALENTS
POSITION OWNED AS OF OWNED UNDER
WITH THE PRINCIPAL OCCUPATIONS AND MARCH <CIRCLE> DEFERRED FEE
NAME AND ADDRESS FUND OTHER AFFILIATIONS AGE 1997** ARRANGEMENTS<DAGGER> PERCENTAGE
- ---------------- ---------- ----------------------------- --- -------------- -------------------- ----------
Valerie Y. Lewis* Secretary since Vice President of Morgan 41 -- - ***
1221 Avenue of the Americas 1990 Stanley & Co. Incorporated
New York, New York 10020 and Morgan Stanley Asset
Management Inc.; Officer of
various investment companies
managed by Morgan Stanley
Asset Management Inc.;
Previously with Citicorp.
James M. Rooney Treasurer since Assistant Vice President and 38 -- - ***
73 Tremont Street 1994 Manager of Fund
Boston, Massachusetts 02108 Administration, Chase Global
Funds Services Company;
Officer of various investment
companies managed by Morgan
Stanley Asset Management
Inc.; Previously Assistant
Vice President and Manager of
Fund Compliance and Control,
Scudder Stevens & Clark Inc.
and Audit Manager, Ernst &
Young LLP.
Belinda Brady Assistant Manager, Fund Administration, 28 -- - ***
73 Tremont Street Treasurer since Chase Global Funds Services
Boston, Massachusetts 02108 1996 Company; Officer of various
investment companies managed
by Morgan Stanley Asset
Management Inc.;
Previously with Price
Waterhouse LLP.
All Directors and Officers as a Group 16,271 1,629 ***
========== ===== ===
- --------------------
* "Interested person" within the meaning of the 1940 Act. Mr. Biggs is chairman, director and managing director of the Manager,
and Messrs. Olsen, Grisham, Klein, Schaaff and Stadler and Ms. Lewis are officers of the Manager.
** This information has been furnished by each nominee and officer.
*** Less than 1%.
<dagger> Indicates share equivalents owned by the Directors and held in cash accounts by the Fund on behalf of the Directors in
connection with the deferred fee arrangements described below.
</TABLE>
Each officer of the Fund will hold such office until a successor has been
duly elected and qualified.
The Fund pays each of its Directors who is not a director, officer or
employee of MSAM or its affiliates, in addition to certain out-of-pocket
expenses, an annual fee of $[<circle>] plus certain out-of-pocket expenses.
Each of the members of the Fund's Audit Committee, which will consist of the
Fund's Directors who are not "interested persons" of the Fund as defined in the
1940 Act, as amended, will receive an additional fee of $[<circle>] for serving
on such committee. Aggregate fees and expenses paid or payable to the Board of
Directors for the fiscal year ended December 31, 1996 were approximately
$[<circle>].
Each of the Directors who is not an "affiliated person" of MSAM within
the meaning of the 1940 Act may enter into a deferred fee arrangement (the "Fee
Arrangement") with the Fund, pursuant to which such Director may defer to a
later date the receipt of his Director's fees. The deferred fees owed by the
Fund are credited to a bookkeeping account maintained by the Fund on behalf of
such Director and accrue income from and after the date of credit in an amount
equal to the amount that would have been earned had such fees (and all income
earned thereon) been invested and reinvested either (i) in shares of the Fund
or (ii) at a rate equal to the prevailing rate applicable to 90-day United
7
<PAGE>
States Treasury Bills at the beginning of each calendar quarter for which this
rate is in effect, whichever method is elected by the Director.
Under the Fee Arrangement, deferred Director's fees (including the return
accrued thereon) will become payable in cash upon such Director's resignation
from the Board of Directors in generally equal annual installments over a
period of five years (unless the Fund has agreed to a longer or shorter payment
period) beginning on the first day of the year following the year in which such
Director's resignation occurred. In the event of a Director's death, remaining
amounts payable to him under the Fee Arrangement will thereafter be payable to
his designated beneficiary; in all other events, a Director's right to receive
payments is non-transferable. Under the Fee Arrangement, the Board of Directors
of the Fund, in its sole discretion, has reserved the right, at the request of
a Director or otherwise, to accelerate or extend the payment of amounts in the
deferred fee account at any time after the termination of such Director's
service as a director. In addition, in the event of liquidation, dissolution or
winding up of the Fund or the distribution of all or substantially all of the
Fund's assets and property to its stockholders (other than in connection with a
reorganization or merger into another fund advised by MSAM), all unpaid amounts
in the deferred fee account maintained by the Fund will be paid in a lump sum
to the Directors participating in the Fee Arrangement on the effective date
thereof.
Currently, Messrs. Croghan, Gill, Jones and Levin are the only Directors
who have entered into the Fee Arrangement with the Fund.
Set forth below is a table showing the aggregate compensation paid by the
Fund to each of its Directors, as well as the total compensation paid to each
Director of the Fund by the Fund and by other U.S. registered investment
companies advised by MSAM or its affiliates, (collectively, the "Fund Complex")
for their services as Directors of such investment companies for the fiscal
year ended December 31, 1996.
<TABLE>
<CAPTION>
PENSION OR NUMBER OF
RETIREMENT TOTAL COMPENSATION FUNDS IN
AGGREGATE BENEFITS ACCRUED FROM FUND AND FUND COMPLEX
COMPENSATION AS PART OF THE FUND COMPLEX PAID FOR WHICH
NAME OF DIRECTORS FROM FUND(2)(3) FUND'S EXPENSES TO DIRECTORS(2)(4) DIRECTOR SERVES(5)
- ------------------------------ ----------------- ---------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Barton M. Biggs(1) $ 0 None $ 0 17
Peter J. Chase 6,000 None 57,691 13
John W. Croghan 7,185 None 73,925 13
David B. Gill 6,133 None 59,910 13
Graham E. Jones 6,193 None 60,546 13
Sukri Kaocharern 9,800 None 9,800 1
John A. Levin 7,140 None 77,539 14
William G. Morton, Jr. 7,100 None 67,893 13
Warren J. Olsen(1) 0 None 0 17
Snoh Unakul 10,700 None 10,700 1
Frederick B. Whittemore(1)(6) 0 None 0 16
8
<PAGE>
- --------------------
(1) "Interested persons" of the Fund within the meaning of the 1940 Act. Messrs. Biggs and Olsen do not receive any compensation
from the Fund or any other investment company in the Fund Complex for their services as a director of such investment
companies.
(2) The amounts reflected in this table include amounts payable by the Fund and the Fund Complex for services rendered during the
fiscal year ended December 31, 1996, regardless of whether such amounts were actually received by the Directors during such
fiscal year.
(3) Mr. Croghan earned $7,185, Mr. Gill earned $133, Mr. Jones earned $4,693 and Mr. Levin earned $6,321 in deferred compensation
from the Fund, pursuant to the deferred fee arrangements described above, including any capital gains or losses or interest
associated therewith, during the fiscal year ended December 31, 1996. Such amounts are included in these Directors'
respective aggregate compensation from the Fund reported in this table.
(4) Mr. Croghan earned $72,671, Mr. Gill earned $21,027, Mr. Jones earned $21,605 and Mr. Levin earned $70,597 in deferred
compensation from the Fund and the Fund Complex, pursuant to the deferred fee arrangements described above, including any
capital gains or losses or interest associated therewith, during the fiscal year ended December 31, 1996. Such amounts are
included in these Directors' respective compensations from the Fund and the Fund Complex reported in this table.
(5) Indicates the total number of boards of directors of investment companies in the Fund Complex, including the Fund, on which
the Director served at any time during the fiscal year ended December 31, 1996.
(6) Mr. Whittemore resigned as a Director of the Fund effective March [<circle>], 1997.
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Fund's officers and directors, and persons who own more than ten
percent of a registered class of the Fund's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission") and the New York Stock Exchange, Inc. The Fund
believes that its officers and Directors complied with all applicable filing
requirements for the fiscal year ended December 31, 1996.
The election of Messrs. Croghan, Jones and Unakul requires the affirmative
vote of a majority of the votes cast at a meeting at which a quorum is present.
Under the Fund's By-laws, the presence in person or by proxy of stockholders
entitled to cast a majority of the votes entitled to be cast thereat shall
constitute a quorum. For this purpose, abstentions and broker non-votes will be
counted in determining whether a quorum is present at the Meeting, but will not
be counted as votes cast at the Meeting.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF THE THREE NOMINEES AS DIRECTORS.
SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)
The Board of Directors of the Fund, including a majority of the Directors
who are not interested persons of the Fund, has selected Price Waterhouse LLP
as independent accountants for the Fund for the fiscal year ending December 31,
1997. The ratification of the selection of independent accountants is to be
voted on at the Meeting, and it is intended that the persons named in the
accompanying Proxy will vote for Price Waterhouse LLP. Price Waterhouse LLP
acts as the independent accountants for certain of the other investment
companies advised by MSAM. Although it is not expected that a representative of
Price Waterhouse LLP will attend the Meeting, a representative will be
available by telephone to respond to stockholder questions, if any.
The Board's policy regarding engaging independent accountants' services
is that management may engage the Fund's principal independent accountants to
perform any services normally provided by independent accounting firms,
provided that such services meet any and all of the independence requirements
of the American Institute of Certified Public Accountants and the Securities
and Exchange Commission. In accordance with this policy, the Audit Committee
reviews and approves all services provided by the independent accountants prior
to their being rendered. The Board of Directors also receives a report from its
Audit Committee relating to all services that have been performed by the Fund's
independent accountants.
9
<PAGE>
The ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at a meeting at which a quorum
is present. For this purpose, abstentions and broker non-votes will be counted
in determining whether a quorum is present at the Meeting, but will not be
counted as votes cast at the Meeting.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" THIS
PROPOSAL NO. 2.
APPROVAL OF NEW ADVISORY CONTRACTS
(PROPOSALS NO. 3 AND NO. 4)
THE MANAGER
MSAM has acted as U.S. Adviser to the Fund since the Fund commenced its
investment operations. MSAM will be referred to herein as the "Manager" or,
alternatively, as the "U.S. Adviser."
The Manager currently is a wholly-owned subsidiary of MS Group and is
registered under the U.S. Investment Advisers Act of 1940, as amended. The
Manager provides portfolio management and named fiduciary services to various
closed-end and open-end investment companies, taxable and nontaxable
institutions, international organizations and individuals investing in United
States and international equities and fixed income securities. At December 31,
1996, MSAM had, together with its affiliated investment management companies
(which include Van Kampen American Capital, Inc. and Miller Anderson &
Sherrerd, LLP), assets under management (including assets under fiduciary
advisory control) totaling approximately $[<circle>] billion.
As an investment adviser, MSAM emphasizes a global investment strategy
and benefits from research coverage of a broad spectrum of investment
opportunities worldwide. MSAM draws upon the capabilities of its asset
management specialists located in its various offices throughout the world. It
also draws upon the research capabilities of MS Group and its other affiliates,
as well as the research and investment ideas of other companies whose brokerage
services MSAM utilizes. For the fiscal year ended December 31, 1996, the Fund
paid approximately $[<circle>] in brokerage commissions, of which approximately
$[<circle>] was paid by the Fund to affiliates of the Manager, including Morgan
Stanley & Co.
The address of the Manager is 1221 Avenue of the Americas, New York, New
York 10020. The principal address of MS Group is 1585 Broadway, New York, New
York 10036.
Certain information regarding the directors and the principal executive
officers of the Manager is set forth below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND
NAME AND ADDRESS POSITION WITH MSAM OTHER INFORMATION
- ---------------- ------------------ -------------------------------------------
<S> <C> <C>
Barton M. Biggs* Chairman, Director and Managing Chairman and Director of Morgan Stanley
Director Asset Management Limited; Managing Director
of Morgan Stanley & Co. Incorporated;
Director of Morgan Stanley Group Inc.
Peter A. Nadosy* Vice Chairman, Director and Managing Managing Director of Morgan Stanley & Co.
Director Incorporated; Director of Morgan Stanley
Asset Management Limited
James M. Allwin* President, Director and Managing Managing Director of Morgan Stanley & Co.
Director Incorporated; President of Morgan Stanley
Realty Inc.
10
<PAGE>
PRINCIPAL OCCUPATION AND
NAME AND ADDRESS POSITION WITH MSAM OTHER INFORMATION
- ---------------- ------------------ -------------------------------------------
Gordon S. Gray* Director and Managing Director Managing Director of Morgan Stanley & Co.
Incorporated; Director of Morgan Stanley
Asset Management Limited
Dennis G. Sherva* Director and Managing Director Managing Director of Morgan Stanley & Co.
Incorporated
- --------------------
* Business Address: 1221 Avenue of the Americas, New York, New York 10020
</TABLE>
THE THAI ADVISER
The Mutual Fund Public Company Limited ("MFC"), a Thai limited company
registered under the U.S. Investment Advisers Act of 1940, acts as Thai Adviser
to the fund and as manager of an investment plan (the "Investment Plan")
pursuant to the Investment Contract (defined below) and subject to the
provisions of the Seconding Agreement (defined below). MFC was organized on
March 14, 1975 as a company with limited liability under the laws of Thailand
to carry on investment management activities. Its principal address is 30th-
32nd Floor, Lake Rajada Building, 193-195 Ratchadaphisek Road, Khlong-Toey,
Bangkok 10110, Thailand.
MFC has four shareholders that each beneficially own more than 10% of
MFC's outstanding shares. The names, percentages of ownership of MFC and
addresses of such shareholders are as follows: The Industrial Finance
Corporation of Thailand (21.74%), 1770 New Petchburi Road, Bangkok 10310,
Thailand; Ministry of Finance ("MoF") (16.67%), Rama VI Road, Bangkok 10400,
Thailand; Government Savings Bank (13.33%), 470 Paholvotin Road, Bangkok 10400,
Thailand; and SET for Securities Depositary Center (26.47%), [ADDRESS]. The
Industrial Finance Corporation of Thailand and Government Savings Bank are each
controlled by the government of Thailand through the MoF.
MFC was established to provide a means for small investors to invest in
securities through the creation of investment plans in Thailand. As of
December 31, 1996, the assets of the investment plans managed by MFC totalled
[<circle>] million Baht ($[<circle>] at the December 31, 1996 rate of
exchange). MFC manages such investment plans for fees in a range of 0.9% to
1.5% of the net asset value thereof. MFC also manages provident investment
plans (pension and similar funds) since being granted a license therefor by the
Thai Ministry of Finance in December 1983. At December 31, 1996, the assets of
the [<circle>] provident funds managed by MFC for the benefit of approximately
[<circle>] employees totalled [<circle>] million Baht ($[<circle>] at the
December 31, 1996 rate of exchange). MFC acts as registrar for its investment
funds, which have about [<circle>] unitholders, and also acts as registrar and
transfer and paying agent with respect to bonds issued by various Thai state
enterprises.
Under its license and current Securities Exchange of Thailand
regulations, MFC is entitled to pay a brokerage commission with respect to its
trades on the Securities Exchange of Thailand at the concessionary rates of
0.3% and 0.06% for equity and debt securities, respectively, applicable to non-
member brokers (instead of the usual fixed rates of 0.5% and 0.1%,
respectively) of the gross consideration. The Investment Plan is entitled to
the benefit of these concessionary rates in executing its orders. Commissions
payable by MFC in connection with transactions executed other than on the
Securities Exchange of Thailand are at negotiated rates.
11
<PAGE>
Certain information regarding the directors and the principal executive
officers of the Thai Adviser is set forth below.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH MFC PRINCIPAL OCCUPATION
- --------------------------------------- --------------------------- -----------------------------------
<S> <C> <C>
Chavilit Thanachanant Chairman Chairman of The Industrial Finance
Corporation of Thailand.
Anan Panananda Director Deputy Director-General of the
Customs Department of The Ministry
of Finance
Anan Tantixalerm Director Inspector-General of The Ministry of
Finance
Nimnual Sriplung Director Deputy Director-General of The
Government Savings Bank
Surachai Srisomvong Director Assistant Director-General
(Administration) of The Government
Savings Bank
Anothai Tcehamontrikul Director Senior Executive Vice President of
The Industrial Finance Corporation
of Thailand
Yada Prapinmongkolkarn Director Vice-President of the Finance
Department of The Industrial Finance
Corporation of Thailand
Udom Vichayabhai President President of The Mutual Fund Public
Company Limited
</TABLE>
INFORMATION CONCERNING MORGAN STANLEY GROUP INC.
MS Group and various of its directly or indirectly owned subsidiaries,
including Morgan Stanley & Co. Incorporated ("Morgan Stanley & Co."), a
registered broker-dealer and investment adviser, and Morgan Stanley & Co.
International provide a wide range of financial services on a global basis.
Their principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring, real estate, project finance and
other corporate finance advisory activities; merchant banking and other
principal investment activities; stock brokerage and research services; asset
management; the trading of foreign exchange and commodities as well as
derivatives on a broad range or asset categories, rates and indices; real
estate advice, financing and investing; and global custody, securities
clearance services and securities lending.
INFORMATION CONCERNING DEAN WITTER, DISCOVER & CO.
Dean Witter Discover is a diversified financial services company offering
a broad range of nationally marketed credit and investment products with a
primary focus on individual customers. Dean Witter Discover has two principal
lines of business: credit services and securities. Its credit services business
consists primarily of the issuance, marketing and servicing of general purpose
credit cards and the provision of transaction processing services, private-
label credit cards services and real estate secured loans. It is the largest
single issuer of general purpose credit cards in the United States as measured
by number of accounts and cardmembers and the third largest originator and
servicer of credit card receivables, as measured by managed loans. Dean Witter
Discover's securities business is conducted primarily through its wholly owned
subsidiaries, Dean Witter Reynolds Inc. ("DWR") and Dean Witter InterCapital
Inc. ("Intercapital"). DWR is a full-service securities firm offering a wide
variety of securities products, with a particular focus on serving the
12
<PAGE>
investment needs of its individual clients through over 9,100 professional
account executives located in 361 branch offices. DWR is among the largest
members NYSE members and is a member of other major securities, futures and
options exchanges. Intercapital is a registered investment adviser that, along
with its subsidiaries, services investment companies, individual accounts and
institutional portfolios.
THE MERGER
Pursuant to the Merger Agreement, MS Group will be merged (the "Merger")
with and into Dean Witter Discover and the surviving corporation will be named
Morgan Stanley, Dean Witter, Discover & Co. Following the Merger, the Manager
will be a direct subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
Under the terms of the Merger Agreement, each of MS Group's common shares
will be converted into the right to receive 1.65 shares of Morgan Stanley, Dean
Witter, Discover & Co. common stock and each issued and outstanding share of
Dean Witter Discover common stock will remain outstanding and will thereafter
represent one share of Morgan Stanley, Dean Witter, Discover & Co. common
stock. Following the Merger, MS Group's former shareholders will own
approximately 45% and Dean Witter Discover's former shareholders will own
approximately 55% of the outstanding shares of common stock of Morgan Stanley,
Dean Witter, Discover & Co.
The Merger is expected to be consummated in mid-1997 and is subject to
certain closing conditions, including certain regulatory approvals and the
approval of shareholders of both MS Group and Dean Witter Discover.
The Board of Directors of Morgan Stanley, Dean Witter, Discovery & Co.
will consist of fourteen members, two of whom will be MS Group insiders and two
of whom will be Dean Witter Discover insiders. The remaining ten directors will
be independent directors, with MS Group and Dean Witter Discover each
nominating five of the ten. The Chairman and Chief Executive Officer of Morgan
Stanley, Dean Witter, Discovery & Co. will be the current Chairman and Chief
Executive Officer of Dean Witter Discover, Phillip Purcell. The President and
Chief Operating Officer of Morgan Stanley, Dean Witter, Discover & Co. will be
the current President of MS Group, John Mack.
The Manager does not anticipate any reduction in the quality of services
now provided to the Fund and does not expect that the Merger will result in any
material changes in the business of the Manager or in the manner in which the
Manager renders services to the Fund. Nor does the Manager anticipate that the
Merger or any ancillary transactions will have any adverse effect on its
ability to fulfill its obligations under the New Advisory Agreements (defined
below) with the Fund or to operate its business in a manner consistent with
past business practice.
THE ADVISORY AGREEMENTS
In anticipation of the Merger, a majority of the Directors of the Fund
who are not parties to the New Advisory Agreements or interested persons of any
such party ("Disinterested Directors") approved a new investment contract
between the Fund and the Thai Adviser, a new technical assistance and seconding
agreement among the Fund, the Manager and the Thai Adviser (together, the "New
Management Agreements") and a new fund investment agreement between the Fund
and the Manager (the "New Fund Investment Agreement"). The New Management
Agreements and the New Fund Investment Agreement are herein referred to
collectively as the "New Advisory Agreements." The forms of the New Advisory
Agreements are identical to the Fund's Current Advisory Agreements, except for
the dates of execution, effectiveness and termination. The holders of a
majority of the outstanding voting securities (within the meaning of the 1940
Act) of the Fund are being asked to approve the New Advisory Agreements. See
"The New Advisory Agreements" below.
The following is a summary of the Current Advisory Agreements and the New
Advisory Agreements. The description of the New Advisory Agreements is
qualified by reference to Annex A.
13
<PAGE>
THE CURRENT ADVISORY AGREEMENT. The current investment contract between
the Fund and the Thai Adviser, the current technical assistance and seconding
agreement among the Fund, the Manager and the Thai Adviser (together, the
"Current Management Agreements") and the current Fund investment agreement
between the Fund and the Manager (the "Current Fund Investment Agreement"), all
dated as of February 17, 1988, were last approved by stockholders of the Fund
at a meeting held on May 3, 1989. The Current Management Agreements and the
Current Fund Investment Agreement are herein referred to collectively as the
"Current Advisory Agreements."
Under the Investment Contract, the Thai Adviser manages the acquisition,
holding and disposition of the assets of the Investment Plan, in accordance
with the Fund's investment objective and policies and the supervision of the
Fund's Board of Directors. Under the related Technical Assistance and Seconding
Agreement (the "Seconding Agreement"), MSAM acts as U.S. Adviser to the Fund
and provides staff (the "Seconded Staff") to the Thai Adviser.
Under the Investment Contract together with the Seconding Agreement
(together, the "Current Management Agreements"), the Thai Adviser, through the
Seconded Staff, provides investment advice and, subject to the direction of the
Fund's Board of Directors, makes investment management decisions for the
Investment Plan. Under the Current Management Agreements, such Seconded Staff
receives research information from the Thai Adviser as well as research
information developed by such staff, and the U.S. Adviser provides investment
advice, and, subject to the direction of the Board of Directors, makes
investment management decisions with respect to assets of the Fund held outside
the Investment Plan.
Pursuant to the terms of the Current Management Agreements, the Advisers
supervise the acquisition and disposition of the investments of the Fund held
through the Investment Plan in accordance with the Fund's investment objective
and policies and guidelines and directions from the Fund's Board of Directors.
Under the Investment Contract, the Thai Adviser retains the legal title to all
assets held by the Investment Plan and must hold such assets separate from its
own assets, free and clear of all liens, claims and encumbrances; and the Thai
Adviser is also responsible for keeping all records in connection with the
Investment Plan required by Thai law. Under the Seconding Agreement, the U.S.
Adviser, in addition to providing management services as described above,
maintains or causes to be maintained all books and records required by the 1940
Act to the extent such books and records are not maintained or furnished by the
Fund's custodians or other agents.
Upon termination of the Current Management Agreements, if no successor
management agreement is adopted, the Investment Plan will be liquidated in an
orderly manner. Securities held by the Investment Plan that, due to Thai
foreign ownership limitations, may not be held by a non-Thai national such as
the Fund, will be sold in an orderly manner and the proceeds distributed to the
Fund; securities not so subject may be transferred to the direct ownership of
the Fund or sold, all in accordance with the directions of the Board of
Directors. Upon such termination, liquidation and transfer, the assets of the
Fund will be managed pursuant to the Fund Investment Agreement.
For its services under the Current Management Agreements, the Thai
Adviser is entitled to be paid in Baht, from the assets of the Fund and the
Investment Plan, a monthly fee of {1}/{12} of 0.40% of the first $50 million of
the Fund's average weekly net assets, {1}/{12} of 0.25% of such assets in
excess of $50 million up to and including $100 million and {1}/{12} of 0.20% of
the excess over $100 million of such assets. For its services under the Current
Management Agreements, the U.S. Adviser receives a monthly fee in U.S. Dollars
of {1}/{12} of 0.90% of the first $50 million of the Fund's average weekly net
assets, {1}/{12} of 0.70% of such assets in excess of $50 million up to and
including $100 million and {1}/{12} of 0.50% of the excess over $100 million.
Fees for services provided during less than a full month will be prorated. The
total advisory fees to be paid under the Current Management Agreements are
higher than advisory fees paid by most other U.S. investment companies,
primarily because of the additional time and expense required of the U.S. and
Thai Advisers in pursuing the Fund's objective of investing in Thai securities.
The aggregate fee and any payments for out-of-pocket expenses paid to the Thai
Adviser in the fiscal year ended December 31, 1996 was $[<circle>].
The net assets of the Fund as of February 28, 1997, as well as other U.S.
registered investment companies advised by the Manager, and the other U.S.
registered investment companies for which the Manager acts as sub-adviser, the
rates of compensation to the Manager, the aggregate amount of advisory fees paid
by the Fund to the Manager and the aggregate amount of any other material
payments by the Fund to the Manager is set forth at Annex B hereto.
14
<PAGE>
Under the Current Management Agreements, the Advisers pay the salaries
and expenses of those of the Fund's officers and employees, as well as fees and
expenses of those of the Fund's directors, who are also their respective
directors, officers or employees, except that the Fund pays fees of the Fund's
Advisory Council and bears travel expenses of officers and directors of the
Fund who are managing directors, officers or employees of the U.S. or Thai
Adviser to the extent such expenses relate to attendance at meetings of the
Fund's Board of Directors or any Committee thereof.
The Fund pays all of its other expenses, including, among others, the
following expenses with respect to the Fund and the Investment Plan:
organization expenses of the Fund and the Investment Plan (including out-of-
pocket expenses); fees, dues and expenses incurred by the Fund and the
Investment Plan in connection with membership in investment company
organizations; fees and expenses of the Fund's and the Investment Plan's
administrators, custodians, transfer agents and registrars, payment for
portfolio pricing services to a pricing agent, if any; expenses of preparing
share certificates, Units and other expenses, including but not limited to
stamp duties in connection with the issuance, offering, distribution, sale or
underwriting of securities issued by the Fund or the Investment Plan; expenses
of registering or qualifying securities of the Fund for sale; expenses relating
to investor and public relations; freight, insurance and other charges in
connection with the shipment of the Fund's and the Investment Plan's portfolio
securities; brokerage commissions, stamp duties or other costs of acquiring or
disposing of any portfolio securities of the Fund and the Investment Plan;
expenses of maintaining a register of holders of interests in the Fund and the
Investment Plan; expenses of preparing and distributing reports and notices to
the Fund, the Fund's Board of Directors, the Advisory Council, the Fund's
administrators, the U.S. Adviser, the Thai Adviser and the Fund's stockholders
and expenses of communications among such persons (other than by the Fund's
stockholders); expenses of dividends and distributions to the Fund and the
Fund's stockholders; costs of stationery; expenses incurred in preparing and
publishing notices; costs of stockholders' and other meetings; litigation
expenses; legal fees and expenses of U.S. and Thai counsel to the Fund and the
Investment Plan and, if such counsel are retained by the Fund's directors who
are not "interested persons" of the Investment Plan or the Fund, of such
counsel; fees and expenses of independent accountants of the Fund and the
Investment Plan; and expenses relating to the Fund's dividend reinvestment and
cash purchase plan.
The Advisory Sections of the Investment Contract will automatically
terminate in the event of (a) its assignment (as defined under the 1940 Act),
(b) termination of the Seconding Agreement or (c) suspension or revocation of
the Thai Adviser's license or status to act as adviser to the Fund or the
Unitholder (as defined in the Investment Contract) under U.S. or Thai law. Upon
termination of the Advisory Sections alone, the Fund, in accordance with U.S.
and Thai law, will, if possible, provide for a successor manager to execute an
agreement in substance similar to the Advisory Sections of the Investment
Contract and to the Seconding Agreement, with any changes that the parties
thereto agree upon.
The non-Advisory Sections of the Investment Contract continue until
December 25, 2012 unless terminated earlier. The Investment Contract, including
both the Advisory and non-Advisory Sections thereof, will terminate if
(a) there is any transfer, assignment or other disposition of the Fund's
interest in the Investment Plan or the delivery of a Unit to any person other
than the Fund; (b) the Thai Adviser notifies the Fund and the Thai custodian
that due to a change in Thai law, further operation of the Investment Plan in
accordance with the Investment Contract is, in the opinion of the Thai Adviser,
illegal or infeasible having regard solely to the interest of the Fund; (c) the
occurrence of certain calamities; (d) termination of the Thai custodian
pursuant to the Thai Custody Agreement if no successor custodian is appointed;
(e) termination of the Advisory Sections if no successor manager is appointed;
and (f) in the event of bankruptcy of the Fund or the Thai Adviser. Upon
termination of the Investment Contract, the Investment Plan will be liquidated
by a liquidator appointed by the Thai Adviser acting upon the instructions of
the Board of Directors of the Fund, and the assets of the Fund will be managed
pursuant to the Fund Investment Agreement.
The Seconding Agreement continues in effect from year to year provided
such continuance is specifically approved at least annually by (a) a vote of a
majority of those members of the Board of Directors who are neither parties to
the Seconding Agreement nor interested persons of the U.S. Adviser, the Thai
Adviser or the Fund, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by vote of a majority of either the Fund's
Board of Directors or the Fund's outstanding voting securities. The Seconding
Agreement may be terminated at any time without payment of any penalty by the
15
<PAGE>
Fund or by the U.S. Adviser upon 60 days' written notice. The Seconding
Agreement will automatically terminate (a) in the event of its assignment, as
defined under the 1940 Act, or (b) upon termination of the Investment Contract.
The Current Management Agreements provide that the U.S. and Thai Advisers
are not liable for any act or omission, error of judgment or mistake of law, or
for any loss suffered by the Fund in connection with matters to which the
Current Management Agreements relate, except for a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of such Advisers in the
performance of their respective duties, or from reckless disregard by such
Advisers of their respective obligations or duties under the Current Management
Agreements. The Fund has been advised by Thai counsel that judgments rendered
by non-Thai courts are not enforceable PER SE in Thailand, but may be
introduced as evidence in a separate action in a Thai court.
Under the Current Management Agreements, the U.S. and Thai Advisers are
permitted to provide investment advisory services to other clients, including
clients who may invest in Thai securities, and, in providing such services, may
use non-confidential information furnished by the other Adviser. Conversely,
information furnished by others to the U.S. and Thai Advisers in the course of
providing services to clients other than the Fund may be useful to the U.S. and
Thai Advisers in providing services to the Fund.
Under the Current Fund Investment Agreement, the U.S. Adviser will manage
the assets of the Fund upon termination of the Current Management Agreements if
no successor agreements are entered into.
For its services under the Fund Investment Agreement, the U.S. Adviser
will be entitled to be paid, beginning on the date of termination of the
Management Agreements, from the assets of the Fund, a monthly fee of {1}/{12}
of 0.90% of the first $50 million of the Fund's average weekly net assets,
{1}/{12} of 0.70% of such assets in excess of $50 million up and including $100
million and {1}/{12} of 0.50% of the excess over $100 million of such assets.
Fees for services provided during less than a full month will be prorated.
Under the Current Fund Investment Agreement, the Fund will pay all of its
other expenses, including the following expenses with respect to the Fund:
organization expenses of the Fund (including out-of-pocket expenses); fees,
dues and expenses incurred by the Fund in connection with membership in
investment company organizations; fees and expenses of the Fund's
administrators, custodians, transfer agents and registrars; payment for
portfolio pricing services to a pricing agent, if any; expenses of preparing
share and other certificates of the Fund, and other expenses, including but not
limited to stamp duties in connection with the issuance, offering,
distribution, sale or underwriting of securities issued by the Fund; expenses
of registering or qualifying securities of the fund for sale; expenses relating
to investor and public relations; freight, insurance and other charges in
connection with the shipment of the Fund's portfolio securities; brokerage
commissions, stamp duties or other costs of acquiring or disposing of any
portfolio securities of the Fund; expenses of preparing and distributing
reports and notices to the Fund, the Fund's Board of Directors, the Fund's
administrators, the U.S. Adviser and the Fund's stockholders and expenses of
communications among such persons (other than by the Fund's stockholders);
expenses of dividends and distributions to the Fund and the Fund's
stockholders; costs of stationery; expenses incurred in preparing and
publishing notices; costs of stockholders' and other meetings; litigation
expenses; legal fees and expenses of U.S. and Thai counsel to the Fund and, if
such counsel are retained by the Fund's directors who are not "interested
persons" of the Fund, of such counsel; fees and expenses of independent
accountants of the Fund; and expenses relating to the Fund's dividend
reinvestment and cash purchase plan.
Under the Current Advisory Agreements, the Thai Adviser places orders for
Thai securities to be held through the Investment Plan, and the U.S. Adviser
places orders for securities to be held directly by the Fund. Transactions
placed on the Securities Exchange of Thailand by the Thai Adviser are subject
to the commission rates of 0.3% and 0.06% for equity and debt securities,
respectively, available to the Thai Adviser.
The primary objective of the U.S. and Thai Advisers in choosing brokers
for the purchase and sale of securities for the portfolio is to obtain the most
favorable net results taking into account such factors as price, commission,
size of order, difficulty of execution and degree of skill required of the
broker/dealer. The capability and financial condition of the broker may also be
criteria for the choice of that broker. The placing and execution of orders for
16
<PAGE>
the Fund is also subject to restrictions under U.S. securities laws, including
certain prohibitions against trading among the Fund and its affiliates
(including the U.S. and Thai Advisers and their affiliates).
The Fund may place brokerage transactions through brokers who provide
investment research services to the Thai or U.S. Adviser, including market and
statistical information and quotations for portfolio evaluation purposes. The
terms "investment research" and "market and statistical information and
quotations" include advice as to the value of securities, the advisability of
investing in, purchasing or selling securities and the availability of
securities and potential buyers or sellers of securities, as well as the
furnishing of analyses and reports concerning issuers, industries, securities,
economic factors and trends and portfolio strategy, each and all as consistent
with those services mentioned in Section 28(e) of the Securities Exchange Act
of 1934.
Research provided to the U.S. or Thai Adviser in advising the Fund is in
addition to, and not in lieu of, the services required to be performed by such
Adviser itself, and neither Adviser's fee will be reduced as a result of the
receipt of such supplemental information. It is the opinion of the management
of the Fund that such information is only supplementary to each Adviser's own
research effort since the information must still be analyzed, weighed and
reviewed by such Adviser's staff. Such information may be useful to the U.S. or
Thai Adviser in providing services to clients other than the Fund, and not all
such information will necessarily be used by the U.S. or Thai Adviser in
connection with the Fund. Conversely, information provided to the U.S. or Thai
Adviser by brokers and dealers through whom other clients of such Adviser
effect securities transactions may prove useful to such Adviser in providing
services to the Fund.
When consistent with the policies of best execution, brokerage
transactions may be effected through the U.S. or Thai Adviser or affiliates
thereof.
Brokerage commissions paid by the Fund in the fiscal year ended
December 31, 1996 were $[<circle>], of which none was paid to any affiliates of
the U.S. or Thai Adviser. None of the Fund's aggregate brokerage commissions
was paid to affiliates in the fiscal year ended December 31, 1996. None of the
Fund's aggregate dollar amount of transactions involving the payment of
commissions was effected through affiliates in the same period.
THE NEW ADVISORY AGREEMENTS. The Board approved the proposed new advisory
agreements on March 13, 1997, the forms of which are attached as Annex A (the
"New Advisory Agreements"). The forms of the proposed New Advisory Agreements
are substantially identical to the Current Advisory Agreements, except for
their dates of execution.
The investment advisory fee as a percentage of net assets payable by the
Fund to the U.S. and Thai Advisers will be the same under the New Advisory
Agreements as under the Current Advisory Agreements. If the investment advisory
fee under the New Advisory Agreements had been in effect for the Fund's most
recently completed fiscal year, advisory fees paid to the U.S. and Thai
Advisers by the Fund would have been identical to those paid under the Current
Advisory Agreements.
The Board of the Fund held a meeting on March 13, 1997, at which meeting
the Directors, including the Disinterested Directors, unanimously approved the
New Advisory Agreements for the Fund and recommended the Agreement for approval
by the stockholders of the Fund. The New Advisory Agreements would take effect
upon the later to occur of (i) the obtaining of stockholder approval or (ii)
the closing of the Merger. The New Advisory Agreements will continue in effect
for an initial two year term and thereafter for successive annual periods as
long as such continuance is approved in accordance with the 1940 Act.
In evaluating the New Advisory Agreements, the Board took into account
that the Fund's Current Advisory Agreements and its New Advisory Agreements,
including their terms relating to the services to be provided thereunder by the
U.S. and Thai Advisers and the fees and expenses payable by the Fund, are
substantially identical, except for their dates of execution. The Board also
considered other possible benefits to the Manager and Morgan Stanley, Dean
Witter, Discover & Co. that may result from the Merger including the continued
use of Morgan Stanley & Co. and Dean Witter Discover brokers and its
affiliates, to the extent permitted by law, for brokerage services.
17
<PAGE>
The Board also examined the terms of the Merger Agreement and the
possible effects of the Merger upon the Manager's organization and upon the
ability of the Manager to provide advisory services to the Fund. The Board also
considered the skills and capabilities of the Manager. In this regard, the
Board was informed of the resources of Morgan Stanley, Dean Witter, Discover &
Co. to be made available to the Manager.
The Board also weighed the effect on the Fund of the Manager becoming an
affiliated person of Morgan Stanley, Dean Witter, Discover & Co. Following the
Merger, the 1940 Act will prohibit or impose certain conditions on the ability
of the Fund to engage in certain transactions with Morgan Stanley, Dean Witter,
Discover & Co. and its affiliates. For example, absent exemptive relief the
Fund will be prohibited from purchasing securities from Morgan Stanley & Co.
and DWR in transactions in which Morgan Stanley & Co. and/or DWR act as
principal. Currently the Fund is prohibited from making such purchases in only
those transactions in which Morgan Stanley & Co. or an affiliate acts as
principal. The Fund will also have to satisfy certain conditions in order to
engage in securities transactions in which Morgan Stanley & Co. or DWR is
acting as an underwriter. The Fund is already required to satisfy such
conditions when engaging in transactions in which Morgan Stanley & Co. or an
affiliate is acting as an underwriter. In this connection, management of the
Manager represented to the Board that they do not believe these prohibitions or
conditions will have a material effect on the management or performance of the
Fund.
After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Directors, and the
Disinterested Directors voting separately, unanimously approved the New
Advisory Agreements and voted to recommend their approval to the stockholders
of the Fund.
In the event that stockholders of the Fund do not approve some or all of
the New Advisory Agreements, the respective current agreements will remain in
effect and the Board will take such action as it deems in the best interest of
the Fund and its stockholders, which may include proposing that stockholders
approve agreements in lieu of the New Advisory Agreements. In the event the
Merger is not consummated, the U.S. and Thai Advisers would continue to serve
in their respective capacities to the Fund pursuant to the terms of the Current
Advisory Agreements.
STOCKHOLDER APPROVAL
To become effective, the New Advisory Agreements must be approved by a
vote of a majority of the outstanding voting securities of the Fund. The "vote
of a majority of the outstanding voting securities" is defined under the 1940
Act as the lesser of the vote of (i) 67% or more of the shares of the Fund
entitled to vote thereon present at the Meeting if the holders of more than 50%
of such outstanding shares of the Fund are present in person or represented by
proxy, or (ii) more than 50% of such outstanding shares of the Fund entitled to
vote thereon. The New Advisory Agreements were unanimously approved by the
Board after consideration of all factors which they determined to be relevant
to their deliberations, including those discussed above. The Board also
unanimously determined to submit the New Advisory Agreements for consideration
by the stockholders of the Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE NEW MANAGEMENT AGREEMENTS AND "FOR" THE APPROVAL OF THE NEW
FUND INVESTMENT AGREEMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Fund's management, the following person owned
beneficially more than 5% of the Fund's outstanding shares at March [<circle>],
1997:
18
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- -------------------------------------------------------- -------------------------------- ----------------
<S> <C> <C>
Franklin Resources, Inc.** 776,141* 6.4%
777 Mariners Island Blvd.
San Mateo, California 94404
Charles B. Johnson** 776,141* 6.4%
777 Mariners Island Blvd.
San Mateo, California 94404
Rupert H. Johnson, Jr.** 776,141* 6.4%
777 Mariners Island Blvd.
San Mateo, California 94404
- --------------------
* The Shares are beneficially owned by one or more open or closed-end investment companies or other
managed accounts which are advised by direct and indirect investment advisory subsidiaries of Franklin
Resources, Inc. Such advisory contracts grant to such Adviser Subsidiaries all voting and investment
power over the securities owned by such advisory clients. These subsidiaries are Templeton Investment
Counsel, Inc. ("TICI")(571,888 shares); accounts advised by TICI under sub-adviser agreements (165,722
shares); and Templeton Global Advisors Limited (38,531 shares).
** Based on a Schedule 13G filed with the Commission on February 13, 1997. As reported in such Schedule
13G, Messrs. Charles B. Johnson and Rupert H. Johnson, Jr. are principal shareholders of Franklin
Resources, Inc.
</TABLE>
OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of stockholders arise,
including any question as to an adjournment of the Meeting, the persons named
in the enclosed Proxy will vote thereon according to their best judgment in the
interests of the Fund.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
A stockholders' proposal intended to be presented at the Fund's Annual
Meeting of Stockholders in 1998 must be received by the Fund on or before
November 27, 1997, in order to be included in the Fund's proxy statement and
form of proxy relating to that meeting.
VALERIE Y. LEWIS
SECRETARY
Dated: March [<circle>], 1997
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH
TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
19
<PAGE>
ANNEX A
DRAFT of March 10, 1997
THE THAI FUND, INC.
INVESTMENT CONTRACT
<PAGE>
INDEX
Title Page
- ----- ----
1. Definitions...............................................
2. Establishment of the Fund.................................
3. Basic Obligations and Rights
of the Manager..........................................
4. Enforcement by Unitholder.................................
5. Units.....................................................
6. Calculation of Net Asset Value............................
7. Investment Objectives, Policies
and Limitations.........................................
8. Duration, Changes in Manager and
Custodian, and Termination..............................
9. Accounts and Statements...................................
10. Distributions.............................................
11. Payments..................................................
12. Currency..................................................
13. Council...................................................
14. Information and Notices...................................
15. Amendments................................................
16. Governing Law, Jurisdiction;
Language and Miscellaneous..............................
Exhibits
A Technical Assistance and Seconding Agreement
B Form of Certificate
C Form of Council Agreement
-2-
<PAGE>
Investment Contract (the "Investment Contract") dated as of
______________, 1997 by and among THE MUTUAL FUND PUBLIC COMPANY LIMITED
("MFC"), a Thai limited company, with its principal place of business located at
1770 IFCT Building, New Petchburi Road, Bangkok 10310, Thailand, and THE THAI
FUND, INC. (the "Unitholder"), a Maryland corporation, with its principal place
of business located at 1221 Avenue of the Americas, New York, New York 10020.
1. DEFINITIONS
In this Investment Contract, the following terms have the following
meanings:
"Advisory Sections" means Sections 3.1; 3.3; 3.4; 3.8;
Article 8 (other than Section 8.2(b)(Y) and Section 8.5,
insofar as such Section relates to appointment of liquidators
under Thai law); and Article 15 (other than Section
15.1(b)(Y));
"Assets" means all assets held by the Fund, including
but not limited to Thai Securities;
"Auditors" has the meaning ascribed thereto in Section
9.4(a);
"Beneficial Certificate" has the meaning ascribed
thereto in Section 5.2;
"Board of Directors" means the Board of Directors of the
Unitholder;
"BOT" means the Bank of Thailand or any successor agency
or institution of the Royal Thai Government from time to time
authorized by law to supervise mutual funds in Thailand;
"Business Day" means a day on which the SET and the New
York Stock Exchange are both open for business;
"Council" has the meaning ascribed thereto in Section
13.A.1;
"Custodian" means The Thai Farmers Bank Limited or its
successors or permitted assigns under the Thai Custody
Contract;
"District Court" has the meaning ascribed thereto in
Section 16.3;
-3-
<PAGE>
"Dollars" means U.S. dollars;
"Effective Date" means the date on which the
Registration Statement is first declared effective by the SEC
under the United States Securities Act of 1933, as amended;
"Financial Statements" has the meaning ascribed thereto
in Section 9.2;
"Fund" means the project established by this Agreement;
"Funds" means the Fund and the Unitholder, jointly and
severally, as if such entities were one entity;
"Investment Company Act" means the United States
Investment Company Act of 1940, as amended;
"Manager" means MFC or any successor thereto permitted
under U.S. Law;
"Registration Statement" means the Unitholder's
registration statement on Form N-2 filed with the SEC;
"SEC" means the United States Securities and Exchange
Commission;
"Securities" means all securities held by the Fund
pursuant to this Investment Contract;
"SET" has the meaning ascribed thereto in Section
6.2(a);
"Supreme Court" has the meaning ascribed thereto in
Section 16.3;
"Technical Assistance and Seconding Agreement" has the
meaning ascribed thereto in Section 3.1;
"Thai Custody Contract" means the Custody Contract among
the Unitholder, the Manager and the Custodian in respect of
the Fund;
"Thai NAV" has the meaning ascribed thereto in Section
6.1;
"Thai Securities" means all Securities of Thai companies
held by the Fund pursuant to this Agreement;
-4-
<PAGE>
"Underwriting Agreement" means the Underwriting
Agreement in respect of the Unitholder's shares of common
stock ($0.01 par value) executed on or about the date hereof;
"United States" means the United States of America
(including the States and the District of Columbia), its
territories, its possessions and other areas subject to its
jurisdiction;
"Unitholder" means The Thai Fund, Inc., a Maryland
corporation;
"U.S. GAAP" has the meaning ascribed thereto in Section
6.5;
"U.S. Law" means applicable United States federal law
(including the Internal Revenue Code, Securities Act of 1933,
Securities Exchange Act of 1934, Investment Company Act and
Investment Advisers Act of 1940, each as from time to time
amended) and New York law;
"U.S. Sections" shall mean the Advisory Sections and
Sections 2.1 (with respect to U.S. Law); 2.2; 3.6 (except
3.6(b)); 3.7; Article 4 (with respect to U.S. Law); Section
5.3; Article 6 (with respect to U.S. GAAP and U.S. Law);
Article 7 (except 7(2)); Article 9 (other than Sections
9.1(b)(ii) and 9.3); Section 11.1; Article 10; Article 12;
Article 13 (with respect to U.S. Law); Section 14.B; and
Article 16;
"Valuation Date" has the meaning ascribed thereto in
Section 6.1.
2. ESTABLISHMENT OF THE FUND
2.1 The Fund is hereby established as a securities investment fund with
effect on and from the Effective Date under the laws of the Kingdom of Thailand
for the exclusive benefit of the Unitholder. This Investment Contract, together
with the exhibits hereto and the relevant provisions of the laws and regulations
of the Kingdom of Thailand, and, with respect to the U.S. Sections, U.S. Law
alone, shall govern the relationships, which are contractual relationships,
between the Manager and the Unitholder.
2.2 The Unitholder shall be liable for all liabilities incurred by or
on behalf of the Fund in accordance with the terms of this Investment Contract
and the Technical Assistance and Seconding Agreement, provided,
-5-
<PAGE>
however, that this Section 2.2 shall not operate to enlarge in any way any
liabilities incurred by or on behalf of the Fund.
3. BASIC OBLIGATIONS AND RIGHTS OF THE MANAGER
3.1 (a) The Manager, as investment manager to the Fund, hereby
undertakes and agrees, upon the terms and conditions herein set forth in this
Investment Contract, to manage the acquisition, holding and disposition of
Assets, in accordance with the investment objectives and policies as set forth
in or contemplated by this Investment Contract and in accordance with
supervision and instructions of the Board of Directors and to prepare and make
available to the Unitholder research and statistical data in connection
therewith; subject, however, in all respects to the terms and conditions of the
Technical Assistance and Seconding Agreement attached hereto as Exhibit A, which
agreement shall be executed and delivered by the Manager simultaneously
herewith.
(b) For purposes of this Investment Contract, "instructions from the
Board of Directors" shall include the right to request a power of attorney from
the Manager in order to enforce claims of, or to defend claims against, the
Fund.
3.2 The Manager agrees to act hereunder in such capacity or capacities
as are necessary or appropriate under Thai law, including with respect to the
establishment of the Fund pursuant to Section 2.1 hereof. It is expressly agreed
that the Manager shall hold legal title to all Assets and that nothing herein
shall constitute the Manager, or require it to act as, agent, nominee or trustee
of the Unitholder with respect to legal title to Thai Securities. The Manager
shall hold legal, title to all Assets separate from its own assets, free and
clear of all liens, claims and encumbrances of any party except as provided by
this Investment Contract.
3.3 The Manager shall be entitled to be paid in Baht from the assets of
the Funds, as full compensation for the services rendered and expenses borne by
the Manager under the Advisory Sections hereunder and under the Technical
Assistance and Seconding Agreement, a monthly fee, payable, except as provided
below, within three Bangkok business days of the first day of each month
following the day on which such payment is computed, equal to 1/12 of 0.40% of
the value of the average weekly net assets of the Funds up to and including $50
million, plus 1/12 of 0.25% of the value of the next $50 million of the average
weekly net
-6-
<PAGE>
assets of the Funds, plus 1/12 of 0.20% of the value of the average weekly net
assets of the Funds over $100 million. The weekly net assets of the Funds for a
month shall be determined as of the close of business in New York on the last
New York Stock Exchange business day of each week where such last business day
falls within one month, and be averaged by dividing the total of such weekly net
assets by such number of such weeks in such month. Such fee shall be payable
from the Funds and shall be computed beginning on the "Closing Date" (as defined
in the Underwriting Agreement) until the termination of this Investment Contract
for whatever reason. The fee from the Closing Date to the end of the month
during which the Closing Date occurs shall be pro-rated according to the
proportion which such period bears to the full monthly period. Upon the
termination of the Advisory Sections before the end of any month, such fee for
such part of a month shall be pro-rated according to the proportion which such
period bears to the full monthly period, and shall be payable on the date of
termination of the Advisory Sections. For the purposes of this Investment
Contract, the net assets of the Funds shall be computed pursuant to the
directions of the Board of Directors.
3.4 The Manager agrees to pay, for the benefit of the Funds, certain
fees and expenses with respect to the Funds, as further provided by the
Technical Assistance and Seconding Agreement.
3.5 The Manager's services hereunder are not to be deemed exclusive and
the Manager is free to render similar services to others.
3.6 The Manager represents and warrants that it is duly (a) registered
and authorized as an investment adviser under the U.S. Investment Advisers Act
of 1940, as amended, and (b) licensed as an investment manager under the
Operation of Finance, Securities and Credit Foncier Companies of Thailand, B.E.
2522, and it agrees to maintain effective registration, authorization and
license, as the case may be, thereunder until the termination of the Advisory
Sections.
3.7 Neither the Manager nor any affiliate of the Manager shall receive
any compensation in connection with the placement or execution of any
transaction for the purchase or sale of securities or for the investment of
funds on behalf of the Fund, except that the Manager or the Manager's affiliates
may receive a commission, fee or other remuneration for acting as broker in
connection with the sale of securities to or by the Fund, but only to the extent
permitted under the Investment Company Act.
-7-
<PAGE>
3.8 The Manager may rely on information reasonably believed by the
Manager to be accurate and reliable. Neither the Manager, the Manager's
officers, directors, employees, agents or any controlling persons as defined in
the Investment Company Act shall be subject to any liability for any act or
omission, error of judgment or mistake of law or for any loss suffered by the
Funds in the course of, connected with or arising out of any services to be
rendered hereunder except by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Manager's duties or by reason of reckless
disregard on the part of the Manager of the Manager's obligations and duties
under this Investment Contract.
4. ENFORCEMENT BY UNITHOLDER
The Unitholder shall have the right at all times to enforce against the
Manager the obligations of the Manager under this Investment Contract, and to
enforce the obligations of the Manager, as Thai Manager, under the Technical
Assistance and Seconding Agreement.
5. UNITS
5.1 Units shall be issued to the Unitholder against payment therefor
with respect to all transfers of any assets to the Fund. The value of Units
shall, upon the initial transfer of any assets to the Fund, be $10.00, provided,
however, that the value of Units shall thereafter be determined in accordance
with Article 6 of this Investment Contract. Units shall not represent any right
in respect of any particular Assets but shall represent undivided interests of
equal value as further determined pursuant to Article 6.
5.2 Beneficial certificates (the "Beneficial Certificates")
representing one or more Units, in substantially the form of Exhibit B attached
hereto, shall be issued to the Unitholder in respect of all Units issued to the
Unitholder. Each Beneficial Certificate shall be signed on behalf of the
Manager.
5.3 Units are not transferable. The Manager shall not issue or deliver
a Unit or a Beneficial Certificate to any person other than the Unitholder. The
Unitholder may not transfer or assign Units or Beneficial Certificates.
-8-
<PAGE>
6. CALCULATION OF NET ASSET VALUE
6.1 The net asset value of the Assets (the "Thai NAV") at any time
shall be the value of the Assets less the liabilities of the Fund at such time.
The net asset value of Units at any time following the initial issuance thereof
as described in Section 5.1 shall be the Thai NAV divided by the number of Units
issued and outstanding as of such time. The Thai NAV shall be calculated by the
Unitholder's designee at the close of each week in Bangkok (a "Valuation Date")
as well as when required for the issue of Units pursuant to Article 5 hereof.
The Thai NAV shall be calculated by reference to the criteria set forth below
(and such other criteria as may be determined from time to time by the Board of
Directors).
6.2 The value of assets held in the Fund shall be determined as
follows:
(a) where the assets are equity securities listed and traded on
the Stock Exchange of Thailand (the "SET") and SET market quotations
are readily available, at the last sales price on such exchange on the
applicable Valuation Date or, if there is no sale on such exchange on
that date, the mean between the highest current bid and the lowest
current asked prices;
(b) where the assets are unlisted equity securities, at the mean
between current bid and asked prices, if any, of two reputable dealers;
(c) short-term investments having a maturity of 60 days or less
will be valued at cost with accrued interest or discount earned
included in interest receivable;
(d) securities which are listed on exchanges other than the SET
and other securities as to which market quotations are readily
available shall be valued at their market values; and
(e) all other securities and assets will be taken at fair value in
accordance with procedures determined by the Board of Directors.
6.3 In instances where price cannot be determined in accordance with
the above procedures, or in instances in which the Board of Directors determines
that it is impracticable or inappropriate to determine price in accordance with
the above procedures, the price will be determined in such manner as the Board
of Directors may prescribe.
-9-
<PAGE>
6.4 There shall be made such allowance (if any) as the Board of
Directors may consider appropriate in the case of any asset which the Board of
Directors considers may not be fully recoverable.
6.5 For purposes of determining the Thai NAV, liabilities shall include
the amount of any fee payable to the Manager hereunder or the Custodian under
the Thai Custody Contract and any fee payable pursuant to the Technical
Assistance and Seconding Agreement or other fees and expenses if, at the
direction of the Board of Directors, such fees and expenses are to be paid from
the assets of the Fund and accrued at or accruing to the applicable Valuation
Date but remaining unpaid. Other liabilities shall be determined in accordance
with United States generally accepted accounting principles ("U.S. GAAP").
6.6 Notwithstanding anything in this Agreement, (a) for purposes of all
reporting required under U.S. Law, the "Unitholder's designee" as used in this
Article 6 shall be The Vanguard Group, Inc., which shall determine the Thai NAV
in Dollars based upon information supplied by the Manager and/or the Custodian,
and (b) for purposes of all reporting required under Thai law, the "Unitholder's
designee" as used in this Article 6 shall be the Manager, which shall determine
the Thai NAV in Baht based upon information from The Vanguard Group, Inc.
7. INVESTMENT OBJECTIVES, POLICIES AND LIMITATIONS
The investment objectives, policies and limitations of the Funds will
be as described in the Registration Statement on the Effective Date, subject to
revision in accordance with (1) U.S. Law and (2) Thai law.
8. DURATION, CHANGES IN MANAGER
AND CUSTODIAN, AND TERMINATION
8.1 This Investment Contract shall become effective on the date hereof.
This Investment Contract, other than the Advisory Sections hereof, shall
continue in effect, if not continued in accordance with applicable U.S. Law and
Thai law, until December 25, 2012, or until terminated in accordance with
Section 8.4. The Advisory Sections shall continue in effect, if not continued in
accordance with applicable U.S. Law as further provided below, until two years
from the date hereof. If not sooner terminated, the Advisory Sections shall
continue in effect for successive periods of 12 months each thereafter; provided
that each
-10-
<PAGE>
such continuance shall be specifically approved annually by the vote of a
majority of the Board of Directors who are not parties to this Investment
Contract or interested persons (as such term is defined in the Investment
Company Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval and (a) either the vote of a majority of the
outstanding voting securities of the Unitholder, or (b) a majority of the Board
of Directors as a whole.
8.2 Notwithstanding anything in this Agreement to the contrary, the
Advisory Sections may be terminated at any time by the Unitholder, without the
payment of any penalty, upon a vote of a majority of the Board of Directors or a
majority of the outstanding voting securities of the Unitholder, or by the
Manager, on 60 days' written notice to the other parties. The Advisory Sections
shall automatically terminate (a) in the event of assignment of this Investment
Contract (as such term is defined in the Investment Company Act); (b)
termination of the Technical Assistance and Seconding Agreement; or (c) the
suspension or revocation of the Manager's license or status to act as manager to
the Fund or the Unitholder, under (X) U.S. Law, or (Y) Thai law, as the case may
be. Any notice shall be deemed given when received by the addressee.
8.3 Upon termination of the Advisory Sections, except as provided by
Section 8.4 hereof, the Unitholder shall, in accordance with (a) U.S. Law, and
(b) Thai law, provide for a successor manager to execute, as investment manager
under, an agreement in substance similar to the Advisory Sections of this
Investment Contract (which may be evidenced by an agreement to become party to
all provisions of this Investment Contract) and to the Technical Assistance and
Seconding Agreement, with all such changes, however, as the parties thereto
shall agree upon.
8.4 This Investment Contract, including the Advisory Sections, shall
terminate if:
(a) There is any transfer, assignment or other disposition of any
of the Unitholder's interest in the Fund, or any delivery of a Unit or
Beneficial Certificate to any person other than the Unitholder;
(b) The Manager notifies the Unitholder in writing that due to a
change in Thai law, in its opinion further operation of the Fund in
accordance with this Investment Contract is illegal or infeasible
having regard solely to the interests of the Unitholder;
-11-
<PAGE>
(c) There has been a suspension of trading for more than 1 day on
the Securities Exchange of Thailand; the declaration by Thailand
authorities of a banking moratorium; or any war, blockade, embargo,
insurrection or armed conflict or escalation of any thereof involving
Thailand or the United States, if in any such case the Board of
Directors determines that termination is in the best interests of
Unitholder;
(d) Termination of the Custodian's appointment pursuant to the
Thai Custody Contract if no successor custodian is appointed thereunder
or otherwise;
(e) A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Unitholder or the Manager
in any involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Unitholder or the Manager, as the case may be or for
any substantial part of the property thereof, or order the winding-up
or liquidation of the affairs thereof;
(f) The Unitholder or the Manager shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent to
the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the
Unitholder or the Manager, as the case may be, or for any substantial
part of the property thereof, or shall make any general assignment for
the benefit of creditors thereof, or shall fail generally to pay its
debts as they become due; or
(g) Upon the termination of the Advisory Sections if no successor
investment manager is appointed pursuant to Section 8.3.
8.5 Upon termination of this Investment Contract pursuant to Section
8.4, the Fund will be liquidated by a liquidator appointed by the Manager acting
upon the instructions and under the supervision of the Board of Directors. Such
liquidation will in an orderly manner dispose of Thai Securities which are
restricted as to foreign ownership and remit the proceeds thereof to the
Unitholder and, unless directed by the Board of Directors otherwise, cause all
other assets of the Fund to be
-12-
<PAGE>
registered in the name of Unitholder. To the extent that the Unitholder does not
take action in respect of Sections 5.3 and 8.4(a), (e) and (f) hereof, the
Manager will take all actions necessary to effectuate such sections and this
Section 8.5.
8.6 This Investment Contract may not be transferred, assigned, sold or
in any matter hypothecated or pledged by any party hereto other than as
permitted by Article 8 hereof.
8.7 As used in this Investment Contract, the phrase "majority of the
outstanding voting securities of the Unitholder" shall mean the affirmative vote
of the holders of a majority of the outstanding voting securities of the
Unitholder, cast in person at a meeting called for the purpose of voting on such
approval.
9. ACCOUNTS AND STATEMENTS
9.1 (a) The Manager shall maintain in its principal office in Bangkok
sufficient accounts and records to enable a complete and accurate view to be
formed by the Unitholder or its designee of the Assets and liabilities and the
income and expenditures of the Fund.
(b) Such accounts shall be kept in form necessary in order to prepare
financial statements (i) pursuant to U.S. GAAP and, (ii) in addition may be kept
in such form and language required by the BOT.
9.2 The Unitholder or its designee shall prepare financial statements
of the Funds for successive accounting periods, each accounting period
commencing immediately after the end of the last preceding such accounting
period (or in the case of the first such period from the date of establishment
of the Funds) and ending on December 31 in each year (the first such date being
December 31, 1988) (the "Financial Statements") and shall also prepare such
Financial Statements as of and for the monthly periods ending on the last day of
each calendar month (which monthly reports shall be prepared within ten business
days after the end of each month), in each case in U.S. dollars on the basis of
U.S. GAAP on the respective forms and containing the information for the time
being required by the SEC and the New York Stock Exchange.
9.3 The Manager or its designee shall prepare financial statements of
the Fund in the manner required by Thai law and shall make or cause to be made
all reports,
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publications, notices and filings with respect to the Fund required by Thai law.
9.4 Audit. The Manager and the Unitholder shall:
(a) cause the Financial Statements to be audited in accordance
with U.S. GAAP by an internationally recognized accountancy firm
authorized under the laws of the Kingdom of Thailand and the
regulations of the BOT (the "Auditors"). The initial Auditors shall be
Price Waterhouse. The Manager shall be entitled, with the prior written
approval of the Board of Directors, and the Board of Directors and the
shareholders of the Unitholder, to remove any person or firm of
Auditors and appoint another internationally recognized accountancy
firm to be the Auditors. The Manager and the Board of Directors shall
ensure that at all times there are such Auditors for the Fund;
(b) submit the Financial Statements together with the Auditors'
report and such report as the Manager may intend to make to the
Unitholder thereon to the Unitholder and the BOT; and
(c) comply with such requirements as the SEC may make with respect
to such statements and report.
9.5 Form of Auditor's Reports. The Auditors' report on the Financial
Statements of the Funds shall be in the form required by the SEC and the New
York Stock Exchange and prepared in accordance with U.S. GAAP. The Manager shall
sign all Financial Statements, if requested to do so by the Board of Directors.
A manager of the Auditors shall sign all Financial Statements of the Fund.
10. DISTRIBUTIONS
10.1 The Fund will distribute to the Unitholder, at least once each
year (on such dates as is determined by the Board of Directors), all or part of
the net profit of the Fund for such year. For this purpose, the net profit of
the Fund will be calculated in Dollars and will include dividends and interest
paid with respect to Securities, interest on bank deposits, net capital gains
from the sale of Securities and any other income arising from the Fund's
operations, less all expenses of the Investment Plan.
Except with respect to payment of expenses as may be further provided
in Section 10.2, the Fund shall not make any distribution to the Unitholder
except out of current net
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profits or accumulated prior years' net profits not previously distributed, or
otherwise as may be declared by the Board of Directors and permitted by the BOT.
10.2 Costs and expenses are payable and distributable out of the assets
of the Fund when and as determined by the Board of Directors.
10.3 Each shareholder of the Unitholder, shall, unless he elects
otherwise, reinvest all distributions he receives from the Unitholder.
11. PAYMENTS
11.1 Any moneys payable to the Manager or others by the Fund shall be
paid, upon order of the Unitholder (or its authorized designee acting in
accordance with the Thai Custody Contract), in the manner and to a Baht (or
Dollar, subject to Section 11.2 hereof) account notified by the Unitholder (or
its authorized designee acting in accordance with the Thai Custody Contract).
11.2 All payments to be made in currencies other than Baht are subject
to Thai law including exchange control law and regulations thereunder.
12. CURRENCY
Except as otherwise provided in this Investment Contract, the accounts
and records of the Fund, payments into the Fund and payments out of the Fund
shall be made in Baht. Distributions from the Fund shall be calculated in
Dollars. The Financial Statements of the Funds shall be prepared in Dollars,
provided, however, that financial statements may also be prepared as provided in
Section 9.3 hereof. Currency exchange rates between Baht and Dollars for
purposes of the Fund's accounts and records shall be determined by the Board of
Directors.
13. COUNCIL
A. Duties of Council
13.A.1. Until the termination of the Fund, a Council (the "Council")
shall be constituted and organized as hereinafter provided.
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13.A.2. The functions of the Council, subject to the Thai law and U.S.
Law and this Investment Contract, and all other relevant legislation and
regulation, shall be to:
(a) consult with the Manager on Thailand economic and securities
market matters; and
(b) exercise such other powers and rights as are provided
hereunder.
B. Agreements with Council Members
The Manager, subject to the oversight of the Board of Directors, shall
be authorized to enter into an agreement with each of the initial members of the
Council which shall be binding upon each of them and their successors, to
implement the terms and conditions contained herein in relation to the Council
and the members and for the exercise of the rights, powers and duties vested in
the Council and the members. Such agreement shall be executed on or before the
Effective Date, shall be in the form set out in Exhibit C and shall be capable
of variation only with the approval of the Board of Directors.
C. Meetings, Composition and Retirement
13.C.1. The members of the Council shall initially consist of the
persons listed below. The number of members of the Council shall be 5.
The members are initially expected to be:
Snoh Unakul
Sukri Kaocharern
Viroj Phutrakul
James P. Rooney
Udom Vichayabhai
13.C.2. The members of the Council may from time to time appoint any
person to be a member of the Council to replace a vacancy, provided that prior
thereto the Board of Directors and a majority of the members respectively shall
have given their respective approvals to such appointment. Such approvals shall
be appropriately reflected in the records of the Fund.
13.C.3. The office of a member of the Council shall be vacated in any
of the following events:
(a) if he shall resign upon giving notice in writing to the
Council, the Manager and the Unitholder;
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(b) if an order shall be made by any court claiming jurisdiction
on the ground of mental disorder for his detention or for the
appointment of a guardian; or
(c) the Board of Directors shall terminate such member with or
without prior notice.
D. Remuneration
Members of the Council shall receive fees as set forth in Exhibit C
hereto.
E. Meetings
13.E.1. Subject to the provisions of this Article 13, the members of
the Council may meet together for the dispatch of business, adjourn, and
otherwise regulate their meetings as they think fit. The Council shall from time
to time appoint a Chairman thereof and, at any meeting at which such Chairman is
not present, appoint a Chairman of the meeting.
13.E.2. The continuing members of the Council may act notwithstanding
any vacancies.
13.E.3. The Council shall meet at such times and such places in
Thailand as the Council may determine; provided, however, that the Council shall
meet at least one time each year.
13.E.4. Upon direction of the Chairman of the Council, the Manager
shall give not less than 15 days' notice of the time and place of a meeting of
the Council to each member and to the Unitholder and such notice shall specify
brief details of the business of such meeting. Any member may waive notice of
any meeting and any such waiver may be retroactive.
F. Quorum
The quorum necessary for the transaction of the business of the Council
shall be 3 members present in person. If, after 15 minutes, the quorum shall not
be present, the meeting shall stand adjourned to a date being 7 days later at
the same time and place as the original meeting and the members then present in
person at the adjourned meeting shall be a sufficient quorum. Notice of such
adjourned meeting shall be given. A meeting of the Council at which a quorum is
present shall be competent to exercise all powers for the time being exercisable
by the members of the Council.
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G. Decisions
13.G.1. Questions arising at any meeting of the Council shall be
determined by a majority of votes. In case of an equality of votes, the Chairman
of the Council (or if the Chairman is not present, the Chairman of the meeting)
shall have a second or casting vote.
13.G.2. A resolution in writing signed by all the members of the
Council shall be as effective as a resolution duly passed at a meeting of the
Council and may consist of several documents in the like form, each signed by
one or more members.
H. Information
The Manager shall supply to each member of the Council such information
as may reasonably be requested by the Council concerning the Kingdom of
Thailand's securities markets and details of any proposed investment in unlisted
securities.
I. Conflict of Interests
No member of the Council shall, as principal or agent, sell or deal in
the sale of, any asset of the Funds or purchase any asset from the Funds and
each member shall procure that none of his affiliates performs any such act
except as expressly authorized hereunder. Members of the Council shall be
subject to applicable provisions of U.S. Law.
J. Liability
Members of the Council may rely on information reasonably believed by
them to be accurate and reliable. Members of the Council shall not be subject to
any liability for any act or omission, error of judgment or mistake of law or
for any loss suffered by the Funds in the course of, connected with or arising
out of any services to be rendered hereunder except by reason of willful
misfeasance, bad faith or gross negligence in the performance of their duties or
by reason of reckless disregard by them of their obligations and duties under
this Agreement.
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14. INFORMATION AND NOTICES
A. Documents To Be Made Available; Offices
14.A.1. There shall be held available by the Manager for inspection by
any person without charge at the principal office of the Manager in Bangkok at
all reasonable business hours copies of:
(a) this Investment Contract as from time to time amended;
(b) the most current sales prospectus related to shares of the
Unitholder; and
(c) all filings made by the Unitholder with the SEC (including
financial statements) for the two latest fiscal years of the Unitholder
or (if less) for all periods since the establishment of the Unitholder.
14.A.2. The Manager shall at all times maintain an office or offices in
Bangkok and shall notify the Unitholder in the manner prescribed by Section
14.A.2 above of any change in the address of its principal office in Bangkok.
B. Notices
Except as otherwise provided herein, all notices or other
communications to the respective parties hereto shall be deemed to have been
duly made when delivered by airmail, telex or personal delivery at its address
specified below or to such other address as any of the parties hereto may
hereafter specify to the other in writing.
For the Manager:
The Mutual Fund Public Company Limited
1770 IFCT Building
New Petchburi Road
Bangkok, Thailand
For the Unitholder:
The Thai Fund, Inc.
c/o Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
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15. AMENDMENTS
15.1 This Investment Contract shall be capable of amendment only (a)
with the prior agreement of the Unitholder (which, in the case of the Advisory
Sections, shall be obtained in accordance with U.S. Law) and the Manager, and
(b) subject to (X) applicable U.S. Law and (Y) applicable Thai law, including
approval of the BOT.
15.2 Sections 5.3 and 8.4(a), (e) and (f) hereof, in addition to the
requirements of Section 15.1, may not be amended without the consent of
two-thirds of the outstanding voting securities of the Unitholder.
16. GOVERNING LAW, JURISDICTION; LANGUAGE AND MISCELLANEOUS
16.1 This Investment Contract and Beneficial Certificates shall be
governed by and construed in accordance with the laws of the Kingdom of
Thailand, provided, however, that all U.S. Sections and all matters arising out
of or relating thereto, or as to whether a provision is part of a U.S. Section,
shall be governed by U.S. Law.
16.2 The parties irrevocably agree that any suit, action or proceeding
against the Unitholder arising out of or relating to this Investment Contract
shall be subject exclusively to the jurisdictions of the United States District
Court for the Southern District of New York and the Supreme Court of the State
of New York, New York County, and irrevocably submit to the jurisdiction of each
such Court in connection with any such suit, action or proceeding. The parties
waive any objection to the laying of venue of any such suit, action or
proceeding in either such Court, and waive any claim that such suit, action or
proceeding has been brought in an inconvenient forum. The parties irrevocably
consent to service of process in connection with any such suit, action or
proceeding by prepaid mail at their respective addresses as set forth in this
Investment Contract.
16.3 The parties further agree that any suit, action or proceeding
against the Manager arising out of or relating to this Investment Contract may,
at the sole and unreviewable option of the Unitholder, be commenced in the
jurisdictions either (i) of the courts of the Kingdom of Thailand or (ii) of the
United States District Court for the Southern District of New York (the
"District Court") or the Supreme Court of the State of New York, New York County
(the "Supreme Court"). In the event the Unitholder exercises its option to
commence a suit, action or proceeding in either
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the District Court or the Supreme Court, the Manager irrevocably submits to the
jurisdiction of each such court in connection with any such suit, action or
proceeding, and the Manager further agrees that, in the event the District
Court, for whatever reason, declines to exercise or is determined not to have
jurisdiction in connection with any such suit, action or proceeding, the
Unitholder may commence a subsequent such suit, action or proceeding in the
Supreme Court, and the Manager irrevocably submits to the jurisdiction of the
Supreme Court in connection with any such subsequent suit, action or proceeding.
The Manager waives any objection to the laying of venue of any such suit, action
or proceeding in the District Court or the Supreme Court, and waives any claim
that such suit, action or proceeding has been brought in an inconvenient forum.
The Manager irrevocably consents to service of process in connection with any
such suit, action or proceeding by prepaid mail at its address as set forth in
this Investment Contract.
16.4 To the extent that the Manager or the Unitholder may now or
hereafter be entitled, in any jurisdiction in which judicial proceedings may at
any time be commenced with respect to this Investment Contract, to claim for
itself or its revenues or properties any immunity from suit, court jurisdiction,
attachment prior to judgment, attachment in aid of execution of a judgment,
execution of a judgment or from set-off, banker's lien, counterclaim or any
other legal process or remedy with respect to its obligations under this
Investment Contract and/or to the extent that in such jurisdiction there may be
attributed to the Manager or the Unitholder such an immunity (whether or not
claimed), the Manager and the Custodian each hereby to the fullest extent
permitted by applicable law irrevocably agrees not to claim, and hereby to the
fullest extent permitted by applicable law expressly waives, any such immunity,
including, without limitation, a complete waiver of immunity pursuant to the
United States Foreign Sovereign Immunities Act.
16.5 The governing language of this Investment Contract shall be
English.
16.6 The headings contained in this Investment Contract are for
reference only and shall not be deemed to limit or affect any of the provisions
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or representatives thereunto duly
authorized, all as of the date first above written.
THE MUTUAL FUND PUBLIC COMPANY LIMITED
By:
Name:
Title:
THE THAI FUND, INC.
By:
Name:
Title:
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EXHIBIT A
TECHNICAL ASSISTANCE AND SECONDING AGREEMENT
THIS AGREEMENT ("Agreement") is dated as of _______________, 1997 by
and among THE MUTUAL FUND PUBLIC COMPANY LIMITED (the "Thai Manager"), a Thai
limited company, with its principal office located at 1770 New Petchburi Road,
Bangkok, Thailand; MORGAN STANLEY ASSET MANAGEMENT INC. (the "U.S. Manager"), a
Delaware corporation, with its principal office located at 1221 Avenue of the
Americas, New York, New York 10020; and THE THAI FUND, INC. (the "Company"), a
Maryland corporation, with its principal office located at c/o Morgan Stanley
Asset Management Inc., 1221 Avenue of the Americas, New York, New York 10020.
W I T N E S S E T H:
WHEREAS, the Thai Manager has entered into an Investment Contract (as
defined below) for the establishment of a Thai investment fund (the "Thai
Fund"), whereunder the Thai Manager has assumed the management of the said fund
on the terms and conditions specified in the said Investment Contract; and
WHEREAS, the U.S. Manager has experience and expertise in the
management of assets, securities trading and investment research; and
WHEREAS, the parties hereto desire to provide for management of the
acquisition and disposition of securities by the Thai Fund, on the terms and
conditions hereinafter set forth; and
WHEREAS, the U.S. Manager and the Company desire that the U.S. Manager
render investment management services to the Company, on the terms and
conditions hereinafter set forth.
NOW THEREFORE, the parties hereto agree as follows:
1. Definitions
1.1 "Board of Directors" means the Board of Directors of the Company.
1.2 "Council" shall have the meaning ascribed thereto in the Investment
Contract.
<PAGE>
1.3 "District Court" shall have the meaning ascribed thereto in Section
7.2.
1.4 "Effective Date" means the date on which the Registration Statement
first is declared effective by the SEC under the United States Securities Act of
1933, as amended.
1.5 The "Funds" means the Company and the Thai Fund, jointly and
severally, as if such entities were one entity.
1.6 "Investment Company Act" means the U.S. Investment Company Act of
1940, as amended.
1.7 "Investment Contract" means the agreement dated as of ____________,
1997 between the Company and the Thai Manager.
1.8 "Registration Statement" means the Company's Registration Statement
on Form N-2 filed with the SEC.
1.9 "SEC" means the U.S. Securities and Exchange Commission.
1.10 "Seconded Staff" shall have the meaning ascribed thereto in
Section 2.1 hereof.
1.11 "Supreme Court" shall have the meaning ascribed thereto in Section
7.2.
1.12 "Thai Custodian" means The Thai Farmers Bank or its successors or
permitted assigns.
1.13 "Thai Employees" shall have the meaning ascribed thereto in
Section 3.2.
1.14 The "Thai Fund" shall have the meaning ascribed thereto above.
1.15 "Underwriting Agreement" means the Underwriting Agreement in
respect of the Company's shares of common stock ($0.01 par value) executed on or
about the date hereof.
1.16 "U.S. Assets" shall have the meaning ascribed thereto in Section
2.2 hereof.
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2. Services to be rendered by_the U.S. Manager
2.1 (a) The U.S. Manager shall (X) make available to the Thai Manager
seconded staff ("Seconded Staff"), such Seconded Staff to provide to the Thai
Manager advice with respect to all investment decisions for the Thai Fund and
all acquisitions and dispositions of securities by the Thai Fund, and (Y)
prepare and make available to the Thai Fund research and statistical data in
connection therewith, all in accordance with the Company's investment objectives
and policies and in accordance with supervision and instructions of the Board of
Directors.
(b) For purposes of this Agreement, "instructions from the Board of
Directors" shall include the right to request a power of attorney from the Thai
Manager in order to enforce claims of, or to defend claims against, the Fund.
2.2 The U.S. Manager shall make investment decisions for the Company
with respect to any assets other than those held through the Thai Fund (the
"U.S. Assets"), prepare and make available to the Company research and
statistical data in connection therewith, supervise the acquisition and
disposition of the U.S. Assets and select and place orders with brokers and
dealers for execution of transactions for U.S. Assets, all in accordance with
the Company's investment objectives and policies and in accordance with
guidelines and directions from the Board of Directors.
2.3 The U.S. Manager shall (i) assist the Funds as they may reasonably
request in the conduct of the Funds' business, subject to the direction and
control of the Board of Directors; (ii) maintain or cause to be maintained for
the Funds all books and records required under the Investment Company Act to the
extent that such books and records are not maintained or furnished by the Funds,
custodians or other agents of the Funds; (iii) furnish at the U.S. Manager's
expense for the use of the Funds such office space and facilities as the Funds
may require for their reasonable needs in the City of New York, and to furnish
at the U.S. Manager's expense clerical services in the United States related to
research, statistical and investment work; and (iv) pay the reasonable salaries,
fees and expenses of such of the Funds' officers and employees (including the
Funds' share of U.S. payroll taxes) and any fees and expenses of such of the
Funds' directors as are directors, officers or employees of the U.S. Manager;
provided, however, that the Funds, and not the U.S. Manager, shall pay the fees
of members of the Council and shall bear travel expenses of directors and
officers of the Funds who are managing
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directors, officers or employees of the U.S. Manager to the extent that such
expenses relate to attendance at meetings of the Board of Directors or any
committees thereof.
2.4 The U.S. Manager shall bear all expenses arising out of its duties
hereunder but shall not be responsible for any expenses of the Funds other than
those specifically allocated to the U.S. Manager in paragraphs 2.1, 2.2, 2.3,
2.4 and 2.5. In particular, but without limiting the generality of the
foregoing, the U.S. Manager shall not be responsible, except to the extent of
the compensation of such of the Funds' employees as are managing directors,
officers or employees of the U.S. Manager whose services may be involved, for
the following expenses with respect to the Funds: organization expenses of the
Funds (including out-of-pocket expenses); fees, dues and expenses, incurred by
the Funds in connection with membership in investment company organizations;
fees and expenses of the Funds' administrators, custodians, transfer agents and
registrars; payment for portfolio pricing services to a pricing agent, if any;
expenses of preparing share and other certificates of the Funds, and other
expenses, including but not limited to stamp duties, in connection with the
issuance, offering, distribution, sale or underwriting of securities issued by
the Company or the Thai Fund; expenses of registering or qualifying securities
of the Company for sale; expenses relating to investor and public relations;
freight, insurance and other charges in connection with the shipment of the
Funds' portfolio securities; brokerage commissions, stamp duties or other costs
of acquiring or disposing of any portfolio securities of the Funds; expenses of
maintaining a register of holders of interests in the Thai Fund; expenses of
preparing and distributing reports and notices to the Company, the Company's
Board of Directors, the Council, the Company's administrators, the U.S. Manager,
the Thai Manager and the Company's stockholders, and expenses of communications
among such persons (other than by the Company's stockholders); expenses of
dividends and distributions to the Company and the Company's stockholders; costs
of stationery; expenses incurred in preparing and publishing notices; costs of
stockholders' and other meetings; litigation expenses; legal fees and expenses
of counsel (United States and Thailand) to the Funds and if such counsel are
retained by the Company's directors who are not "interested persons" of the Thai
Fund or the Company, of such counsel; fees and expenses of independent
accountants of the Funds; or expenses relating to the Company's dividend
reinvestment and cash purchase plan.
2.5 In connection with the rendering of services required under
paragraphs 2.1, 2.2, 2.3 and 2.4 above,
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Section 3.1 hereof provides that the Thai Manager shall furnish certain services
to the U.S. Manager, and the U.S. Manager may contract with or consult with such
banks, other securities firms or other parties in Thailand or elsewhere as it
may deem appropriate to obtain information and advice, including investment
recommendations, advice regarding economic factors and trends, advice as to
currency exchange matters, and clerical and accounting services and other
assistance, but any fee, compensation or expenses to be paid to any such parties
shall be paid by the U.S. Manager, and no obligation shall be incurred on the
Funds' behalf in any such respect (except as to the Thai Manager for which the
Funds shall pay the fees described in Section 3.3 of the Investment Contract).
2.6 The Funds agree to pay in United States dollars to the U.S.
Manager, as full compensation for the services rendered and expenses borne by
the U.S. Manager hereunder, a monthly fee, payable, except as provided below,
within three New York business days of the first day of each month following the
day on which such payment is computed, equal to 1/12 of 0.90% of the value of
the average weekly net assets of the Funds up to and including $50 million, plus
1/12 of 0.70% of the value of the next $50 million of the average weekly net
assets of the Funds, plus 1/12 of 0.50% of the value of the average weekly net
assets of the Funds over $100 million. The weekly net assets of the Funds for a
month shall be determined as of the close of business in New York on the last
New York Stock Exchange business day of each week where such business day falls
within one month, and be averaged by dividing the total of such weekly net
assets by such numbers of weeks in such month. Such fee shall be computed
beginning on the "Closing Date" (as defined in the Underwriting Agreement) until
the termination of this Agreement for whatever reason. The fee from the Closing
Date to the end of the month during which the Closing Date occurs shall be
pro-rated according to the proportion which such period bears to the full
monthly period. Upon termination of this Agreement before the end of any month,
such fee for such part of a month shall be pro-rated according to the proportion
which such period bears to the full monthly period and shall be payable on the
date of termination of this Agreement. The fees payable from the Funds to the
U.S. Manager hereunder shall be paid from the Thai Fund and/or the U.S. Assets
as determined by the Board of Directors. All such fees paid from the Thai Fund
shall be paid subject to applicable Thai withholding tax. For the purposes of
this Agreement, the net assets of the Funds shall be computed pursuant to the
directions of the Board of Directors.
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2.7 Nothing herein shall be construed as prohibiting the U.S. Manager
from providing investment advisory services to, or entering into investment
advisory agreements with, other clients (including other registered investment
companies), including clients which may invest in securities of Thai issuers, or
from utilizing (in providing such services) information furnished to the U.S.
Manager by the Thai Manager or others.
2.8 The U.S. Manager may rely on information reasonably believed by it
to be accurate and reliable. Neither the U.S. Manager nor its officers,
directors, employees, agents or controlling persons as defined in the Investment
Company Act shall be subject to any liability for any act or omission, error of
judgment or mistake of law, or for any loss suffered by the Funds, in the course
of, connected with or arising out of any services to be rendered hereunder,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of the U.S. Manager in the performance of its duties or by reason of
reckless disregard on the part of the U.S. Manager of its obligations and duties
under this Agreement. Any person, even though also employed by the U.S. Manager,
whether or not as part of the Seconded Staff, who may be or may become an
employee of the Funds and paid by the Funds shall be deemed, when acting within
the scope of his employment by the Funds, to be acting in such employment solely
for the Funds and not as an employee or agent of the U.S. Manager.
3. Services to be rendered by the Thai Manager
3.1 The Thai Manager shall (i) furnish to the U.S. Manager or its
designee (a) a daily bulletin concerning Thai stock market developments, (b) a
weekly bulletin concerning securities and other assets owned by the Thai Fund,
(c) a weekly and month-end list of securities values of all Thai assets of the
Thai Fund, and (d) bulletins, from time to time requested by the U.S. Manager,
concerning Thai economic developments, industries and securities; (ii) furnish
to the U.S. Manager such additional information, investment recommendations,
advice and assistance, as the U.S. Manager shall from time to time reasonably
request in order that the U.S. Manager may provide the services undertaken by it
pursuant to Article 2 hereof; (iii) act in accordance with the advice of the
Seconded Staff in connection with all investment decisions for the Thai Fund and
all determinations as to acquisition and disposition of securities held by the
Thai Fund and with the selection and placing of orders with brokers and dealers
for execution for the Thai Fund; and (iv) exercise all rights associated with
such legal ownership of the assets of the Thai Fund, subject
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to the Company's investment objectives and policies and guidelines and
directions of the Board of Directors as set forth in Section 3.A.1 of the
Investment Contract.
3.2 The Thai Manager undertakes and agrees (i) to assist the Funds as
they may reasonably request in the conduct of the Funds' business subject to the
direction and control of the Board of Directors; (ii) to maintain or cause to be
maintained for the Funds all books and records required under Thai law and
regulations to the extent that such books and records are not maintained or
furnished by the Thai Custodian or other agents of the Funds; (iii) to furnish
at the Thai Manager's expense for the use of the Funds such office space and
facilities as the Funds may require for their reasonable needs in Thailand and
to furnish at the Thai Manager's expense clerical services in Thailand related
to research, statistical and investment work for the benefit of the Funds; and
(iv) to pay the reasonable salaries, fees and expenses of such of the Funds'
officers and employees (including the Funds' share of Thai payroll taxes) and
any fees and expenses of such of the Funds' directors as are directors, officers
or employees of the Thai Manager; provided, however, that the Funds, and not the
Thai Manager, shall pay the fees of members of the Council and shall bear travel
expenses of directors and officers of the Funds who are managing directors,
officers or employees of the Thai Manager ("Thai Employees") to the extent that
such expenses relate to attendance at meetings of the Board of Directors or any
committees thereof.
3.3 The Thai Manager shall bear all expenses arising out of its duties
hereunder but shall not be responsible for any expenses of the Funds other than
those specifically allocated to the Thai Manager in paragraphs 3.1, 3.2, 3.3 and
3.4. In particular, but without limiting the generality of the foregoing, the
Thai Manager shall not be responsible, except to the extent of the compensation
of such of the Funds' employees as are Thai Employees whose services may be
involved, for the following expenses with respect to the Funds: organization
expenses of the Funds (including out-of-pocket expenses); fees, dues and
expenses incurred by the Funds in connection with membership in investment
company organizations; fees and expenses of the Funds' administrators,
custodians, transfer agents and registrars; payment for portfolio pricing
services to a pricing agent, if any; expenses of preparing share and other
certificates of the Funds, and other expenses, including but not limited to
stamp duties in connection with the issuance, offering, distribution, sale or
underwriting of securities issued by the Company or the Thai Fund; expenses of
registering or qualifying securities of the Company for sale;
A-7
<PAGE>
expenses relating to investor and public relations; freight, insurance and other
charges in connection with the shipment of the Funds' portfolio securities;
brokerage commissions, stamp duties or other costs of acquiring or disposing of
any portfolio securities of the Funds; expenses of maintaining a register of
holders of interests in the Thai Fund; expenses of preparing and distributing
reports and notices to the Company, the Company's Board of Directors, the
Council, the Company's administrators, the U.S. Manager, the Thai Manager and
the Company's stockholders, and expenses of communications among such persons
(other than by the Company's stockholders); expenses of dividends and
distributions to the Company and the Company's stockholders; costs of
stationery; expenses incurred in preparing and publishing notices; costs of
stockholders' and other meetings; litigation expenses; legal fees and expenses
of counsel (United States and Thailand) to the Funds and, if such counsel are
retained by the Company's directors who are not "interested persons" of the Thai
Fund or the Company, of such counsel; fees and expenses of independent
accountants of the Funds; or expenses relating to the Company's dividend
reinvestment and cash purchase plan.
3.4 The U.S. Manager agrees to work with the Thai Manager, in order to
make their relationship as productive as possible for the benefit of the Funds,
and to further the development of the Thai Manager's ability to provide the
services contemplated by paragraphs 3.1, 3.2, 3.3 and 3.4 hereof. To this end
the U.S. Manager agrees to work closely with the Thai Manager's employees and to
work with the Thai Manager to assist it in developing its research techniques,
procedures and analysis. The U.S. Manager agrees not to furnish, without the
Thai Manager's consent, to any person other than the U.S. Manager's personnel
and directors and representatives of the Funds any tangible research material
that is prepared by the Thai Manager, that is not publicly available, and that
has been stamped or otherwise clearly indicated by the Thai Manager as being
confidential.
3.5 Nothing herein shall be construed as prohibiting the Thai Manager
from providing investment advisory services to, or entering into investment
advisory agreements with, other clients including other investment companies.
3.6 Neither the Thai Manager nor any affiliate of the Thai Manager
shall receive any compensation in connection with the placement or execution of
any transaction for the purchase or sale of securities or for the investment of
funds on behalf of the Funds, except that the Thai Manager or the Thai Manager's
affiliates may receive a commission, fee or other remuneration for acting as
broker in connection
A-8
<PAGE>
with the sale of securities to or by the Funds, if permitted under the
Investment Company Act, as amended.
3.7 The Thai Manager may rely on information reasonably believed by the
Thai Manager to be accurate and reliable. Neither the Thai Manager, the Thai
Manager's officers, directors, employees, agents nor any controlling persons as
defined in the Investment Company Act shall be subject to any liability for any
act or omission, error of judgment or mistake of law or for any loss suffered by
the Funds in the course of, connected with or arising out of any services to be
rendered hereunder except by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Thai Manager's duties or by reason of
reckless disregard by the Thai Manager of the Thai Manager's obligations and
duties under this Agreement. Any person even though also employed by the Thai
Manager, whether or not as part of the Seconded Staff, who may be or become an
employee of the Funds and paid by the Funds shall be deemed, when acting within
the scope of his employment by the Funds, to be acting in such employment solely
for the Funds, and not as employee or agent of the Thai Manager.
4. Effective Date and Termination
4.1 This Agreement shall become effective on the date hereof; shall
remain in effect for a period of two years from the date hereof and shall
continue in effect thereafter, but only so long as such continuance is
specifically approved at least annually by the affirmative vote of (i) a
majority of the members of the Board of Directors who are not parties to this
Agreement or interested persons of the Funds, the Thai Manager or the U.S.
Manager, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) a majority of the Board of Directors or the holders of a
majority of the outstanding voting securities of the Company. This Agreement may
nevertheless be terminated at any time, without any penalty, by the Company's
Board of Directors or by vote of holders of a majority of the outstanding voting
securities of the Company, or by the U.S. Manager, upon 60 days' written notice
delivered or sent by registered mail, postage prepaid, to the other parties
hereto, at their respective addresses given above or at any other address of
which any shall have notified the others in writing, and shall automatically be
terminated in the event of its assignment (as defined in the Investment Company
Act) or termination of the Advisory Sections of the Investment Contract as set
forth in Section 8.2 thereof or other termination pursuant to Section 8.4
thereof. Any notice shall be deemed given when received by the addressee.
A-9
<PAGE>
4.2 This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by either party hereto other than as permitted
pursuant to Section 4.1 hereof. It may be amended by mutual agreement, but only
after authorization of such amendment (a) by the affirmative vote of (i) the
holders of a majority of the outstanding voting securities of the Company; and
(ii) a majority of the members of the Board of Directors who are not interested
persons of the Funds, the Thai Manager or the U.S Manager, cast in person at a
meeting called for the purpose of voting on such approval; and (b) in accordance
with applicable Thai law.
5. Governing Law
This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the United
States and New York law.
6. Notices
Except as otherwise provided herein, all notices or other
communications to the respective parties hereto shall be deemed to have been
duly made when delivered by airmail, telex or personal delivery at its address
specified below or to such other address as any of the parties hereto may
hereafter specify to the other in writing.
For the Thai Manager:
The Mutual Fund Public Company Limited
1770 IFCT Building
New Petchburi Road
Bangkok, Thailand
For the U.S. Manager:
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
For the Company:
The Thai Fund, Inc.
c/o Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
A-10
<PAGE>
7. Jurisdiction.
7.1 The parties irrevocably agree that any suit, action or proceeding
against the Company or the U.S. Manager arising out of or relating to this
Agreement shall be subject exclusively to the jurisdictions of the United States
District Court for the Southern District of New York and the Supreme Court of
the State of New York, New York County, and irrevocably submit to the
jurisdiction of each such Court in connection with any such suit, action or
proceeding. The parties waive any objection to the laying of venue of any such
suit, action or proceeding in either such Court, and waive any claim that such
suit, action or proceeding has been brought in an inconvenient forum. The
parties irrevocably consent to service of process in connection with any such
suit, action or proceeding by prepaid mail at their respective addresses as set
forth in this Agreement.
7.2 The parties further agree that any suit, action or proceeding
against the Thai Manager arising out of or relating to this Agreement may, at
the sole and unreviewable option of the Company (or the U.S. Manager, if the
Company is not a party), be commenced in the jurisdictions either (i) of the
courts of the Kingdom of Thailand or (ii) of the United States District Court
for the Southern District of New York (the "District Court") or the Supreme
Court of the State of New York, New York County (the "Supreme Court"). In the
event the Company (or the U.S. Manager, if the Company is not a party) exercises
its option to commence a suit, action or proceeding in either the District Court
or the Supreme Court, the Thai Manager irrevocably submits to the jurisdiction
of each such court in connection with any such suit, action or proceeding, and
the Thai Manager further agrees that, in the event the District Court, for
whatever reason, declines to exercise or is determined not to have jurisdiction
in connection with any such suit, action or proceeding, the Company (or the U.S.
Manager, if the Company is not a party) may commence a subsequent such suit,
action or proceeding in the Supreme Court, and the Thai Manager irrevocably
submits to the jurisdiction of the Supreme Court in connection with any such
subsequent suit, action or proceeding. The Thai Manager waives any objection to
the laying of venue of any such suit, action or proceeding in the District Court
or the Supreme Court, and waives any claim that such suit, action or proceeding
has been brought in an inconvenient forum. The Thai Manager irrevocably consents
to service of process in connection with any such suit, action or proceeding by
prepaid mail at its address as set forth in this Agreement.
A-11
<PAGE>
7.3 To the extent that the Thai Manager or the Company may now or
hereafter be entitled, in any jurisdiction in which judicial proceedings may at
any time be commenced with respect to this Agreement, to claim for itself or its
revenues or properties any immunity from suit, court jurisdiction, attachment
prior to judgment, attachment in aid of execution of a judgment, execution of a
judgment or from set-off, banker's lien, counterclaim or any other legal process
or remedy with respect to its obligations under this Agreement and/or to the
extent that in such jurisdiction there may be attributed to the Thai Manager or
the Company such an immunity (whether or not claimed), the Thai Manager and the
Company each hereby to the fullest extent permitted by applicable law
irrevocably agrees not to claim, and hereby to the fullest extent permitted by
applicable law expressly waives, any such immunity, including, without
limitation, a complete waiver of immunity pursuant to the United States Foreign
Sovereign Immunities Act.
8. Language.
The governing language of this Agreement shall be English.
9. Headings.
The headings contained in this Agreement are for reference only and
shall not be deemed to limit or affect any of the provisions hereof.
A-12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or representatives thereunto duly
authorized, all as of the date first above written.
THE MUTUAL FUND PUBLIC COMPANY LIMITED
By
Name:
Title:
MORGAN STANLEY ASSET MANAGEMENT INC.
By
Name:
Title:
THE THAI FUND, INC.
By
Name:
Title:
A-13
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE
BENEFICIAL CERTIFICATE OF
THE THAI FUND PURSUANT TO
INVESTMENT CONTRACT
dated as of _______________, 1997
(the "Investment Contract")
Unitholder: The Thai Fund, Inc., a Maryland Corporation.
Issue Date of Units:
Issue Date of Certificate:
Total Number of Units represented hereby:
Per Unit Value:
Time and Place of Payment: As described in the Investment Contract.
Remuneration and other fees: As described in the Investment Contract.
Redemption: Only as specifically permitted in the Investment Contract.
Calculation of Net Asset Value: As described in the Investment
Contract.
Duration of the Fund: As described in the Investment Contract.
Notices: As described in the Investment Contract.
<PAGE>
Pursuant to the Investment Contract which establishes a fund, The Mutual Fund
Public Company Limited, as Thai Manager, issues this Beneficial Certificate
subject to all of the terms of the Investment Contract.
THE MUTUAL FUND PUBLIC COMPANY LIMITED
By:
Name:
Title:
Seal of The Mutual Fund Public Company Limited: [SEAL]
This Certificate and the interests represented hereby are non-transferable and
may not be held by persons other than The Thai Fund, Inc. This Certificate and
the interest represented hereby are in all respects governed by, and subject to,
the Investment Contract.
B-2
<PAGE>
EXHIBIT C
FORM OF COUNCIL AGREEMENT
_____________, 1997
[Name and Address of Member]
Dear _______________,
We refer to our earlier discussion regarding your proposed appointment
to the Council pursuant to The Thai Fund, Inc. Investment Contract (the
"Investment Contract"). We are now formally inviting you to become a member of
the Council upon the terms and conditions of the Investment Contract, a copy of
which is enclosed for your information.
You will note from Section 13.A.2 of the Investment Contract that the
principal functions of the Council include the following:
(a) consult with The Mutual Fund Public Company Limited on
Thailand economic and securities market matters; and
(b) exercise such other powers and rights as are provided under
the Investment Contract.
Each member's liabilities are limited pursuant to the Investment
Contract as described in Section 13.J thereof. Each member of the Council who
does not receive fees in connection with membership in the Fund's Board of
Directors will be paid an annual fee of $5,000 plus $500 for each meeting of the
Council attended in person.
Formal meetings of the Council will be held at least one time a year in
Thailand.
<PAGE>
If you would like to accept our offer to become a member of the
Council, please sign and return the duplicate of this letter by way of
agreement.
Yours faithfully,
The Mutual Fund Public Company Limited
The undersigned hereby confirm your offer to become a member of the Council,
upon the terms and conditions of the Investment Contract enclosed with your
letter.
Sincerely,
C-2
<PAGE>
DRAFT of March 10, 1997
FUND INVESTMENT AGREEMENT
THIS FUND INVESTMENT AGREEMENT ("Agreement") is dated as of
____________________, 1997 by and between MORGAN STANLEY ASSET MANAGEMENT INC.
(the "Manager"), a Delaware corporation, with its principal office located at
1221 Avenue of the Americas, New York, New York 10020 and THE THAI FUND, INC.
(the "Fund"), a Maryland corporation, with its principal office located at c/o
Morgan Stanley Asset Management, Inc., 1221 Avenue of the Americas, New York,
New York 10020.
W I T N E S S E T H:
WHEREAS, the Manager has experience and expertise in the management of
assets, securities trading and investment research; and
WHEREAS, the Manager and the Fund desire that the Manager render
investment management services to the Fund, on the terms and conditions
hereinafter set forth.
NOW THEREFORE, the parties hereto agree as follows:
1. Definitions
1.1 "Board of Directors" means the Board of Directors of the Fund.
1.2 "Initial Fund Investment Date" shall have the meaning ascribed thereto
in Section 2.5.
1.3 "Investment Company Act" means the U.S. Investment Company Act of
1940, as amended.
1.4 "Investment Contract" means the agreement dated as of February 17,
1988 between the Fund and the Thai Manager.
2. Services to be rendered by the Manager
2.1 The Manager hereby undertakes and agrees, upon the terms and
conditions herein set forth, to, make investment decisions for the Fund, to
prepare and make available to the Fund research and statistical data in
connection therewith, and to supervise the acquisition and disposition of
securities by the Fund, including the selec-
<PAGE>
tion of brokers or dealers to carry out the transactions, all in accordance with
the Fund's investment objectives and policies and in accordance with guidelines
and directions from the Fund's Board of Directors.
2.2 The Manager hereby further undertakes and agrees (i) to assist the
Fund as it may reasonably request in the conduct of its business, subject to the
direction and control of the Board of Directors; (ii) to maintain or cause to be
maintained for the Fund all books and records required under the Investment Fund
Act to the extent that such books and records are not maintained or furnished by
the administrator, custodian or other agents of the Fund; (iii) to furnish at
the Manager's expense for the use of the Fund such office space and facilities
as the Fund may require for its reasonable needs in the City of New York, and to
furnish at the Manager's expense clerical services in the United States related
to research, statistical and investment work; and (iv) to pay the reasonable
salaries, fees and expenses of such of the Fund's officers and employees
(including the Fund's share of U.S. payroll taxes) and any fees and expenses of
such of the Fund's directors as are directors, officers or employees of the
Manager; provided, however, that the Fund, and not the Manager, shall bear
travel expenses of directors and officers of the Fund who are managing
directors, officers or employees of the Manager to the extent that such expenses
relate to attendance at meetings of the Board of Directors or any committees
thereof.
2.3 The Manager shall bear all expenses arising out of its duties
hereunder but shall not be responsible for any expenses of the Fund other than
those specifically allocated to the Manager in paragraphs 2.1, 2.2, 2.3 and 2.4.
In particular, but without limiting the generality of the foregoing, the Manager
shall not be responsible, except to the extent of the compensation of such of
the Fund's employees as are managing directors, officers or employees of the
Manager whose services may be involved, for the following expenses with respect
to the Fund: organization expenses of the Fund (including out-of-pocket
expenses); fees, dues and expenses incurred by the Fund in connection with
membership in investment company organizations; fees and expenses of the Fund's
custodians, transfer agents and registrars; payment for portfolio pricing
services to a pricing agent, if any; expenses of preparing share and other
certificates of the Fund, and other expenses, including but not limited to stamp
duties, in connection with the issuance, offering, distribution, sale or
underwriting of securities issued by the Fund; expenses of registering or
qualifying securities of the Fund for sale; expenses
-2-
<PAGE>
relating to investor and public relations; freight, insurance and other charges
in connection with the shipment of the Fund's portfolio securities; brokerage
commissions, stamp duties or other costs of acquiring or disposing of any
portfolio securities of the Fund; expenses of preparing and distributing reports
and notices to the Fund, the Fund's Board of Directors, the Fund's
Administrators, the Manager and the Fund's stockholders, and expenses of
communications among such persons (other than by the Fund's stockholders);
expenses of dividends and distributions to the Fund and the Fund's stockholders;
costs of stationery; expenses incurred in preparing and publishing notices;
costs of stockholders' and other meetings; litigation expenses; legal fees and
expenses of counsel (United States and Thailand) to the Fund and, if such
counsel are retained by the Fund's directors who are not "interested persons" of
the Fund, of such counsel; fees and expenses of independent accountants of the
Fund; or expenses relating to the Fund's dividend reinvestment and cash purchase
plan.
2.4 In connection with the rendering of services required under paragraphs
2.1, 2.2 and 2.3 above, the Manager may contract with or consult with such
banks, other securities firms or other parties in Thailand or elsewhere as it
may deem appropriate to obtain information and advice, including investment
recommendations, advice regarding economic factors and trends, advice as to
currency exchange matters, and clerical and accounting services and other
assistance, but any fee, compensation or expenses to be paid to any such parties
shall be paid by the Manager, and no obligation shall be incurred on the Fund's
behalf in any such respect.
2.5 The Fund agrees to pay in United States dollars to the Manager, as
full compensation for the services rendered and expenses borne by the Manager
hereunder, a monthly fee, payable, except as provided below, on the first New
York business day of each month following the day on which such payment is
computed, equal to 1/12 of 0.90% of the value of the average weekly net assets
of the Fund up to and including $50 million, plus 1/12 of 0.70% of the value of
the next $50 million of the average weekly net assets of the Fund, plus 1/12 of
0.50% of the value of the average weekly net assets of the Fund over $100
million. The weekly net assets of the Funds for a month shall be determined as
of the close of business in New York on the last New York Stock Exchange
business day of each week where such last business day falls within one month,
and be averaged by dividing the total of such weekly net assets by such number
of such weeks in such month. Such fee shall be payable and be computed beginning
upon the termination of
-3-
<PAGE>
the Investment Contract (the "Initial Fund Investment Date") until the
termination of this Agreement for whatever reason. The fee from the Initial Fund
Investment Date to the end of the month during which the Initial Fund Investment
Date occurs shall be prorated according to the proportion which such period
bears to the full monthly period. Upon termination of this Agreement before the
end of any month, such fee for such part of a month shall be prorated according
to the proportion which such period bears to the full monthly period and shall
be payable on the date of termination of this Agreement. For the purpose of this
Agreement, the net assets of the Fund shall be computed pursuant to the
applicable provisions of the Articles of Incorporation and By-laws of the Fund.
2.6 Nothing herein shall be construed as prohibiting the Manager from
providing investment advisory services to, or entering into investment advisory
agreements with, other clients (including other registered investment
companies), including clients which may invest in securities of Thai issuers, or
from utilizing (in providing such services) information furnished to the Manager
by others.
2.7 The Manager may rely on information reasonably believed by it to be
accurate and reliable. Neither the Manager nor its officers, directors,
employees, agents or controlling persons as defined in the Investment Company
Act shall be subject to any liability for any act or omission, error of judgment
or mistake of law, or for any loss suffered by the Fund, in the course of,
connected with or arising out of any services to be rendered hereunder, except
by reason of willful misfeasance, bad faith or gross negligence on the part of
the Manager in the performance of its duties or by reason of reckless disregard
on the part of the Manager of its obligations and duties under this Agreement.
Any person, even though also employed by the Manager, who may be or may become
an employee of the Fund and paid by the Fund shall be deemed, when acting within
the scope of his employment by the Fund, to be acting in such employment solely
for the Fund and not as an employee or agent of the Manager.
3. Effective Date and Termination
3.1 This Agreement shall become effective on the date hereof; shall remain
in effect for a period of two years from the date hereof and shall continue in
effect thereafter, but only so long as such continuance is specifically approved
at least annually by the affirmative vote of (i) a majority of the members of
the Board of Directors who are not interested persons of the Fund or the
Manager, cast
-4-
<PAGE>
in person at a meeting called for the purpose of voting on such approval, and
(ii) a majority of the Board of Directors or the holders of a majority of the
outstanding voting securities of the Fund. This Agreement may nevertheless be
terminated at any time, without any penalty, by the Fund's Board of Directors or
by vote of holders of a majority of the outstanding voting securities of the
Fund, or by the Manager, upon 60 days' written notice delivered or sent by
registered mail, postage prepaid, to the other parties hereto, at their
respective addresses given above or at any other address of which any shall have
notified the others in writing. This Agreement shall automatically be terminated
in the event of its assignment, provided that an assignment to a corporate
successor to all or substantially all of the Manager's business or to a
wholly-owned subsidiary of such corporate successor which does not result in a
change of actual control or management of the Manager's business shall not be
deemed to be an assignment for purposes of this Agreement. Any notice shall be
deemed given when received by the addressee.
3.2 This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by either party hereto other than as permitted pursuant
to Section 3.1 hereof. It may be amended by mutual agreement, but only after
authorization of such amendment by the affirmative vote of (i) the holders of a
majority of the outstanding voting securities of the Fund; and (ii) a majority
of the members of the Board of Directors who are not interested persons of the
Fund or the Manager, cast in person at a meeting called for the purpose of
voting on such approval.
4. Governing Law
This Agreement shall be construed in accordance with the laws of the State
of New York, provided, however, that nothing herein shall be construed as being
inconsistent with the Investment Company Act. As used herein, the terms
"interested person", "assignment", and "vote of a majority
-5-
<PAGE>
of the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or representatives thereunto duly
authorized, all as of the date first above written.
MORGAN STANLEY ASSET MANAGEMENT INC.
By
Name:
Title:
THE THAI FUND, INC.
By
Name:
Title:
-6-
<PAGE>
ANNEX B
The following table indicates the size of each U.S. investment company
advised or sub-advised by the Manager, the amount of advisory fees or sub-
advisory fees paid to the Manager for the last fiscal year of such investment
company, the amount of other material fees paid to the Manager for such fiscal
year and the advisory fee rate. Average net assets are calculated on a daily
basis for open-end funds and on a weekly basis for closed-end funds.
<TABLE>
<CAPTION>
INVESTMENT COMPANY Net Assets as of Aggregate amount of Amount of Other Asset Management Fee as
FEBRUARY 28, 1997 Advisory / Material Payments to Percent
Subadvisory the Manager for of Average Net Assets
Fee for Last THE LAST FISCAL YEAR (ANNUAL RATE OF MSAM'S
FISCAL YEAR COMPENSATION)
<S> <C> <C> <C> <C>
Morgan Stanley Institutional Fund,
Inc. (1)
- -Active Country Allocation Portfolio $ 187,031,777 $ 1,168,571 $0 0.65% of average daily net
assets
- -Aggressive Equity Portfolio 121,791,751 400,006 0 0.80% of average daily net
assets
- -Asian Equity Portfolio 365,212,440 3,378,056 0 0.80% of average daily net
assets
- -Balanced Portfolio 7,573,877 74,832 0 0.50% of average daily net
assets
- -China Growth Portfolio (2) 0 0 0 1.00% of average daily net
assets
- -Emerging Growth Portfolio 82,677,378 1,024,956 0 1.00% of average daily net
assets
- -Emerging Markets Debt Portfolio 162,883,938 1,887,155 0 1.00% of average daily net
assets
- -Emerging Markets Portfolio 1,557,680,866 15,367,651 0 1.25% of average daily net
assets
- -Equity Growth Portfolio 467,132,622 1,192,888 0 0.60% of average daily net
assets
- -European Equity Portfolio 215,681,709 1,034,869 0 1.00% of average daily net
assets
- -Fixed Income Portfolio 122,195,042 559,304 0 0.35% of average daily net
assets
- -Global Equity Portfolio 87,115,900 630,346 0 0.80% of average daily net
assets
- -Global Fixed Income Portfolio 116,017,909 437,198 0 0.40% of average daily net
assets
- -Gold Portfolio(3) 38,303,227 274,000 0 1.00% of average daily net
assets
- -Growth and Income Fund (2) 0 0 0 0.75% of average daily net
assets
- -High Yield Portfolio 123,820,445 438,512 0 0.50% of average daily net
assets
- -International Equity Portfolio 2,412,774,091 15,860,657 0 0.80% of average daily net
assets
- -International Magnum Portfolio 124,710,803 381,756 0 0.80% of average daily net
assets
- -International Small Cap Portfolio 239,291,131 2,092,097 0 0.95% of average daily net
assets
- -Japanese Equity Portfolio 156,667,861 1,642,268 0 0.80% of average daily net
assets
- -Latin American Portfolio 55,950,497 287,055 0 1.10% of average daily net
assets
- -Money Market Portfolio 1,278,773,524 3,343,176 0 0.30% of average daily net
assets
- -Mortgaged-Backed Securities 0 0 0 0.30% of average daily net
Portfolio (2) assets
- -Municipal Bond Portfolio 43,819,386 134,963 0 0.30% of average daily net
assets
- -Municipal Money Market Portfolio 721,197,094 1,932,187 0 0.30% of average daily net
assets
- -Small Cap Value Equity Portfolio 29,921,023 345,122 0 0.85% of average daily net
assets
- -Technology Portfolio(4) 5,504,680 12,699 0 1.00% of average daily net
assets
- -U.S. Real Estate Portfolio 246,501,294 1,017,980 0 0.80% of average daily net
assets
- -Value Equity Portfolio 109,811,808 655,516 0 0.50% of average daily net
assets
Morgan Stanley Fund, Inc. (5)
- -American Value Fund 54,190,478 363,998 0 0.85% of average daily net
assets
- -Aggressive Equity Fund 30,105,256 31,323 0 0.90% of average daily net
assets
- -Asian Growth Fund 394,810,098 3,762,252 0 1.00% of average daily net
assets
- -Emerging Markets Fund 174,767,303 1,081,943 0 1.25% of average daily net
assets
- -Global Equity Allocation Fund 161,349,524 1,047,751 0 1.00% of average daily net
assets
- -Global Fixed Income Fund 9,525,078 121,568 0 0.75% of average daily net
assets
- -Government Obligations Money Market 122,965,353 0 0 0.45% of the first $250
(6) million
0.40% of the next $250
million
0.35% of the excess over
$500 million
- -High Yield Fund 16,444,430 12,710 0 0.75% of average daily net
assets
- -Japanese Equity Fund (2) 0 0 0 1.00% of average daily net
assets
- -International Magnum Fund 24,529,959 0 0 1.00% of average daily net
assets
- -Latin America Fund 53,413,053 218,502 0 1.25% of average daily net
assets
- -Money Market Fund (6) 153,358,157 0 0 0.45% of the first $250
million
0.40% of the next $250
million
0.35% of the excess over
$500 million
- -U.S. Real Estate Fund 21,362,116 8,641 0 1.00% of average daily net
asset
- -Worldwide High Income Fund 164,403,651 527,214 0 0.75% of average daily net
assets
Morgan Stanley Universal Funds, Inc.
- -Asian Equity (7) 0 0 0 0.80% of the first $500
million
0.75% of the next $500
million
0.70% of the excess over $1
billion
- -Balanced (2) 0 0 0 0.50% of the first $500
million
0.45% of the next $500
million
0.40% of the excess over $1
billion
- -Core Equity (2) 0 0 0 0.55% of the first $500
million
0.50% of the next $500
million
0.45% of the excess over $1
billion
- -Emerging Markets Debt (2) 0 0 0 0.75% of the first $500
million
0.70% of the next $500
million
0.65% of the excess over $1
billion
- -Emerging Markets Equity 15,607,752 32,000 0 1.25% of the first $500
million
1.20% of the next $500
million
1.15% of the excess over $1
billion
- -Fixed Income (8) 8,126,150 0 0 0.40% of the first $500
million
0.35% of the next $500
million
0.30% of the excess over $1
billion
- -Global Equity (8) 5,225,659 0 0 0.80% of the first $500
million
0.75% of the next $500
million
0.70% of the excess over $1
billion
- -Growth (8) 2,843,221 0 0 0.55% of the first $500
million
0.50% of the next $500
million
0.45% of the excess over $1
billion
- -High Yield (8) 8,228,296 0 0 0.50% of the first $500
million
0.45% of the next $500
million
0.40% of the excess over $1
billion
- -International Fixed Income (2) 0 0 0 0.50% of the first $500
million
0.45% of the next $500
million
0.40% of the excess over $1
billion
- -International Magnum (8) 10,283,605 0 0 0.80% of the first $500
million
0.75% of the next $500
million
0.70% of the excess over $1
billion
- -Mid-Cap Growth (2) 0 0 0 0.75% of the first $500
million
0.70% of the next $500
million
0.65% of the excess over $1
billion
- -Mid-Cap Value (8) 3,126,150 0 0 0.75% of the first $500
million
0.70% of the next $500
million
0.65% of the excess over $1
billion
- -Money Market (2) 0 0 0 0.30% of the first $500
million
0.25% of the next $500
million
0.20% of the excess over $1
billion
- -Multi-Asset Class (2) 0 0 0 0.65% of the first $500
million
0.60% of the next $500
million
0.55% of the excess over $1
billion
- -U.S. Real Estate (7) 0 0 0 0.80% of the first $500
million
0.75% of the next $500
million
0.70% of the excess over $1
billion
- -Value (8) 3,167,098 0 0 0.55% of the first $500
million
0.50% of the next $500
million
0.45% of the excess over $1
billion
The Brazilian Investment Fund, Inc. 58,816,028 425,000 0 0.90% of the first 50
million
0.70% of the next 50 million
0.50% of the excess over 100
million
The Latin American Discovery Fund, 204,346,643 1,899,000 0 1.15% of average weekly net
Inc. assets
The Malaysia Fund, Inc. 192,501,967 1,330,000 0 0.90% of the first 50
million
0.70% of the next 50 million
0.50% of the excess over 100
million
Morgan Stanley Africa Investment 310,803,693 3,106,000 0 1.20% of average weekly net
Fund,Inc. assets
Morgan Stanley Asia-Pacific Fund, 854,649,586 8,796,000 0 1.00% of average weekly net
Inc.. assets
Morgan Stanley Emerging Markets Debt 321,966,172 3,125,000 0 1.00% of average weekly net
Fund, Inc. assets
Morgan Stanley Emerging Markets 407,981,941 4,713,000 0 1.25% of average weekly net
Fund, Inc. assets
Morgan Stanley Global Opportunity 65,384,292 585,000 0 1.00% of average weekly net
Bond Fund, Inc. assets
Morgan Stanley High Yield Fund, Inc. 129,972,796 842,000 0 0.70% of average weekly net
assets
Morgan Stanley India Investment 341,625,451 3,812,000 0 1.10% of average weekly net
Fund, Inc. assets
Morgan Stanley Russia & New Europe 142,333,723 400,000 0 1.60% of average weekly net
Fund, Inc. assets
The Pakistan Investment Fund, Inc. 67,931,758 743,000 0 1.00% of average weekly net
assets
The Thai Fund, Inc. 183,531,329 1,812,000 0 0.90% of the first 50
million
0.70% of the next 50 million
0.50% of the excess over 100
million
The Turkish Investment Fund, Inc. 51,846,955 359,000 0 0.95% of the first 50
million
0.75% of the next 50 million
0.55% of the excess over 100
million
(1) Includes Class A and Class B shares.
(2) Currently Inactive.
(3) Management fee includes a 0.40% sub-advisory fee payable by the Manager.
(4) Commenced operations March 16, 1996.
(5) Includes Class A, Class B and Class C shares. Fiscal year end June 30, 1996.
(6) Formerly, a portfolio of PCS Cash Fund, which was merged with and into Morgan Stanley Fund, Inc. on September 27, 1996.
(7) Commenced operations March 3, 1997.
(8) Commenced operations January 2, 1997.
</TABLE>
PROXY
THE THAI FUND, INC.
C/O MORGAN STANLEY ASSET MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints WARREN J. OLSEN,
MICHAEL F. KLEIN, VALERIE Y. LEWIS and HAROLD J. SCHAAFF, JR., and each of
them, as proxies for the undersigned, with full power of substitution and
resubstitution, and hereby authorizes said proxies, and each of them, to
represent and vote, as designated on the reverse side, all stock of the
above Company held of record by the undersigned on March 24, 1997 at the
Annual Meeting of Stockholders to be held on April 30, 1997, and at any
adjournment thereof.
The undersigned hereby revokes any and all proxies with respect to
such stock heretofore given by the undersigned. The undersigned
acknowledges receipt of the Proxy Statement dated March [27], 1997.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.)
SEE REVERSE SIDE
<PAGE>
[X] Please mark your votes as in this sample.
1. Election of the following nominees as Directors:
FOR WITHHELD
[ ] [ ] Class II Nominees:
John W. Croghan, Graham E. Jones and Snoh Unakul
______________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
2. Ratification of the selection of Price Waterhouse LLP as independent
accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of the Investment Contract between the Fund and The Mutual
Fund Public Company Limited and the Technical Assistance and Seconding
Agreement among the Fund, Morgan Stanley Asset Management Inc. and The
Mutual Fund Public Company Limited.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Approval of the Fund Investment Agreement between the Fund and Morgan
Stanley Asset Management Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. In the discretion of such proxies, upon any and all other business as
may properly come before the Meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE TWO CLASS II NOMINEES AND IN FAVOR OF
PROPOSAL NO. 2, PROPOSAL NO. 3 AND PROPOSAL NO. 4
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY JOINT
TENANTS, EACH JOINT TENANT SHOULD SIGN.
SIGNATURES(S)___________________________________ DATE _______________,
1997
When signing as attorney, executor, administrator, trustee, guardian or
custodian, please sign full title as such. If a corporation, please sign
full corporate name by authorized officer and indicate the signer's office.
If a partnership, please sign in partnership name. PLEASE MARK, SIGN, DATE
AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
