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Morgan Stanley China A Share Fund, Inc. Declares Year-End Dividend and Partial Retention of Capital Gains

^{Published on 2008-12-19 13:52:30, Last Modified on 2008-12-19 13:53:45 - Market Wire}
 

NEW YORK--([ BUSINESS WIRE ])--Morgan Stanley China A Share Fund, Inc. (NYSE: CAF) (the "Fund") announced today that it is declaring a year-end dividend of $0.1582 per share of net investment income and $3.7924 per share of long-term capital gains, of which $2.1199 will be retained by the Fund. The dividend will be payable on January 16, 2009 to stockholders of record at the close of business on December 31, 2008. The ex-dividend date will be December 29, 2008.

The Fund has elected to retain a portion of its realized capital gains for the tax year ending December 31, 2008 because of issues relating to the Fund's ability to repatriate funds from China. The Fund will pay the required federal corporate income taxes on these gains.

Stockholders of record on December 31, 2008 holding shares of the Fund in a taxable account must include their pro-rata share of the Fund's retained gains (as reported on IRS Form 2439) on their 2008 federal income tax returns. On their tax returns, they will be entitled to take an offsetting credit equal to their pro rata share of taxes that the Fund paid on its retained gains. Stockholders also will be entitled to increase their Fund investment's cost basis by the net amount of gains the Fund retained. On December 29, 2008, the Fund's net asset value will be reduced to reflect the accrual of the Fund's estimated tax liability as shown below.

Per share estimates of the Fund's retained capital gains and corresponding federal corporate income taxes paid are as follows:

Final amounts for the retained gain and tax paid will be reported to stockholders on IRS Form 2439, which is required to be mailed to stockholders by March 1, 2009. Stockholders who hold shares in "street name" will receive the Form from their brokerage firm. Stockholders who own shares directly will receive the Form from the Fund's transfer agent. These retained gains will not be reported on Form 1099-DIV, which will only reflect realized capital gains actually distributed to stockholders and taxable in 2008. Stockholders who hold the Fund in a taxable account should wait to file their tax returns until both Forms 2439 and 1099-DIV are received.

Stockholders of the Fund held in a qualified non-taxable account (for example, an IRA or 401(k) account) are entitled to a refund of the taxes paid by the Fund. Please consult your financial advisor, who can work with the account's custodian to facilitate this refund.

The amount of dividends paid by the Fund may vary from time to time. Past amounts of dividends are no guarantee of future dividend payment amounts. The final determination of the source and tax characteristics of the distribution will be made after the end of the year. Investing involves risk and it is possible to lose money on an investment in the Fund.

The Fund is a non-diversified, closed-end management investment company, the shares of which are listed on the New York Stock Exchange. The Fund's investment objective is to seek capital growth which it seeks to achieve by investing, under normal circumstances, at least 80 percent of its assets in A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges.

Morgan Stanley Investment Management Inc. ("MSIM") is the Fund's investment adviser. MSIM, together with its investment advisory affiliates, has nearly 1,000 investment professionals around the world and approximately $399 billion in assets under management or supervision as of November 30, 2008. By leveraging its global ‘community of boutiques' structure and the strength of Morgan Stanley, MSIM strives to provide outstanding long-term investment performance, service and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide.

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 600 offices in 37 countries. For further information about Morgan Stanley, please visit [ www.morganstanley.com ].

Neither the Fund nor its adviser can render advice on tax and tax accounting matters to stockholders. Stockholders are encouraged to consult with their tax advisor. The information announced herein was not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws.