A little help with business-ease

I used to own this fund, TKF, the turkish fund, and made some money from it last year. I’m interested in it again, as I’m trying to spread some money around outside the US. The fund has a 5% dividend which is sweet, and Turkey has a strong economy which does well in wartime, and better in peace.

But, what the hell is going on here. Is Morgan Stanley going to sell more shares of TKF to raise funds? It’s weird. Or are they just trying to make the fund bigger as interest is improving?

The way I see it, if I own shares by june 6th or so, for every four shares I own, I can buy one new share they thrown into the mix at the offering price.

It’s a secondary offering, but I’ve never seen this in a fund.

What gives? Please give this a read and tell me whatcha think.


[quote]The Turkish Investment Fund, Inc. Announces Its Decision to Resume Its Rights Offering and Sets Proposed Record Date
Wednesday May 24, 5:43 pm ET

NEW YORK–(BUSINESS WIRE)–May 24, 2006–The Turkish Investment Fund, Inc. (the “Fund”) (NYSE: TKF - News), a closed-end management investment company, announced today that the Fund will resume the rights offering for its shares of common stock (the “Offering”) and the proposed record date of the Offering.

In a press release dated March 17, 2006, the Fund announced the filing of a Registration Statement with the Securities and Exchange Commission regarding a proposed rights offering to holders of the Fund’s common stock. In a press release dated May 12, 2006, the Fund announced a delay of the Offering. Following a subsequent review of market conditions by the Fund and its investment adviser, Morgan Stanley Investment Management Inc. (“MSIM”), MSIM and the Fund have decided to resume the Offering.

Subject to the registration statement for the Offering becoming effective under the Securities Act of 1933, as amended, the Fund will issue to stockholders of record as of June 5, 2006 (the “Record Date”) one non-transferable right for each share of common stock held. Four rights will entitle the holder to purchase one share of common stock at the subscription price.

The Offering will only be made by means of a prospectus to be distributed to Record Date stockholders on or about June 8, 2006. The subscription price has not yet been determined by the Fund. The subscription price, which will be determined on the expiration date of the Offering (the “Expiration Date”), will equal 95% of the average of the last reported sales price per share of the Fund’s common stock on the New York Stock Exchange on the Expiration Date of the Offering and for the four preceding trading days, with a requirement that the price be no lower than the net asset value per share of common stock of the Fund at the close of trading on the New York Stock Exchange on the Expiration Date.

Stockholders who fully exercise all rights issued to them will be entitled to subscribe for additional shares at the subscription price pursuant to an oversubscription privilege. If all available shares are then subscribed for, the Fund may issue additional shares in an amount up to 25% of the shares available pursuant to the Offering. If all subscription rights are exercised (including the additional 25%), the Fund will issue approximately 1,760,057 shares of its common stock in the Offering.

The subscription rights are exercisable from June 8, 2006 until, up to and including, 5:00 p.m. New York City time on June 28, 2006, the Expiration Date, unless extended by the Fund.[/quote]


You are right, for every 4 shares of TKF you own on 6 June, you are entitled to purchase one new share at the offering price.

The purpose for the corporate action should be made clear in the original release from Morgan Stanley.

You’d have to look at the prospectus to see why they are raising the funds. That is not available until you have purchased the shares and are elidgable for the rights offer. Or you can probably order one. The offering is not yet fully registered so it is only a proposal at this stage and might never eventuate.