<PAGE>
THE THAI FUND, INC.
- ---------------------------------------------
OFFICERS AND DIRECTORS
<TABLE>
<S> <C>
Barton M. Biggs William G. Morton, Jr.
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS Snoh Unakul
Frederick B. Whittemore DIRECTOR
VICE-CHAIRMAN OF THE BOARD James W. Grisham
OF DIRECTORS VICE PRESIDENT
Warren J. Olsen Michael F. Klein
PRESIDENT AND DIRECTOR VICE PRESIDENT
Peter J. Chase Harold J. Schaaff, Jr.
DIRECTOR VICE PRESIDENT
John W. Croghan Joseph P. Stadler
DIRECTOR VICE PRESIDENT
David B. Gill Valerie Y. Lewis
DIRECTOR SECRETARY
Graham E. Jones James R. Rooney
DIRECTOR TREASURER
Sukri Kaocharern Belinda A. Brady
DIRECTOR ASSISTANT TREASURER
John A. Levin
DIRECTOR
</TABLE>
- ---------------------------------------------
U.S. INVESTMENT ADVISER
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- ----------------------------------------------------------------
THAI INVESTMENT ADVISER
The Mutual Fund Public Company Limited
30th-32nd Floor, Lake Rajada Building
193-195 Ratchadaphisek Road
Khlong-Toey, Bangkok 10110 Thailand
- ----------------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
- ----------------------------------------------------------------
CUSTODIANS
The Thai Farmers Bank Limited
400 Phahon Yothin Road
Bangkok, Thailand
The Chase Manhattan Bank
770 Broadway
New York, New York 10003
- ----------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
Boston Equiserve
Investor Relations Department
P.O. Box 644
Boston, Massachusetts 02102-0644
(617) 575-3120
- ----------------------------------------------------------------
LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
- ----------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
- ----------------------------------------------------------------
For additional Fund information, including the Fund's net asset value per share
and information regarding the investments comprising the Fund's portfolio,
please call 1-800-221-6726.
----------------------------------------------------------------
THE
THAI FUND,
INC.
----------------------------
THIRD QUARTER REPORT
SEPTEMBER 30, 1996
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the nine months ended September 30, 1996, The Thai Fund, Inc. (the "Fund")
had a total return, based on net asset value per share, of -11.75% compared with
- -14.99% for the U.S. dollar adjusted Securities Exchange of Thailand Index (the
"Index"). For the period since the Fund's commencement of operations on February
16, 1989 through September 30, 1996, the Fund's total return, based on net asset
value per share, was 309.31% compared with 226.07% for the Index. For the three
months ended September 30, 1996, the Fund had a total return, based on net asset
value per share, of -11.66% compared with -12.05% for the Index. On September
30, 1996, the closing price of the Fund's shares on the New York Stock Exchange
was $22.00, representing a 1.2% premium to the net asset value per share.
The Thai market, affected by a variety of negative developments, experienced a
climatic sell-off in the third quarter of the year. On the economic front,
export growth slowed dramatically, casting doubts on the bullish economic
forecasts for the year. Interest rates rose as the Thai bhat came under selling
pressure. In addition, there were further rumors about bad debts circulating in
the economy and rising non-performing loans at finance companies. By the end of
the quarter, the no-confidence motion against the Prime Minister resulted in his
resignation and dissolution of the parliament, causing the market to rise almost
5% on September 30.
Year-to-date, the Thai market continued to underperform the Asian region.
Earnings estimates have continued to be cut by analysts throughout most of the
year, whereas earnings revisions have been upwards for the most other regional
markets. As earnings uncertainty continued to cloud the Thai market, foreign
inflows into the Asian region headed for safer and more liquid markets.
Political uncertainties also sidelined many foreign investors throughout the
period.
As noted above, the Fund performed in line with the SET Index in the third
quarter and has outperformed the Index year-to-date. In terms of sector
weightings over the third quarter, the Fund was overweighted in the finance and
communications sectors, both of which underperformed the Index. The banking
sector, however, where the Fund also was overweighted, did better, declining
8.0% against the broader market's decline of 11.9%. Year-to-date, the Banking
sector rose 1.4% against a 15.0% decline in the Index. The finance and
communications sectors fell 25.1% and 29.9%, respectively, for the nine months
ended September 30. Five of the Fund's top ten holdings outperformed the Index
while five underperformed. The relative outperforming stocks were Bangkok Bank
(-5.0%), Serm Suk (-6.5%), Thai Investment & Securities Co. (-6.9%) and Thai
Farmers Bank (-7.4%). Similarly, on a year-to-date basis, six of the Fund's top
ten holdings have outperformed the Index. Among the better performers have been
Serm Suk (+41.0%), Thai Investment & Securities Co. (+37.4%) and Bangkok Bank
(+5.6%). The underperformers included Shinawatra computer (-29.4%), Finance One
(-26.5%) and Advanced Information Services (-22.0%).
Headed into the fourth quarter, the market should show improvement after the
climatic sell-off in the previous quarter, although it is unlikely that the
market will rise further without an improvement in both the macro and micro
economic environments. This will require both earnings improvement and a rebound
in the economy. There are patchy signs of a minor economic recovery already, but
whether it can be sustained remains to be seen. The scheduled November 17
elections are viewed as positive in terms of building investor confidence, but
may also cap the upside market as investors adopt a wait-and-see attitude. By
most measures, Thailand now is probably one of the cheapest markets in the
region and should find favor among institutional investors. We intend to stay
fully invested and look for improvement in the fourth quarter.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT AND DIRECTOR
[SIGNATURE]
Ean Wah Chin
SENIOR PORTFOLIO MANAGER
[SIGNATURE]
Richard Toh
PORTFOLIO MANAGER
October 29, 1996
2
<PAGE>
The Thai Fund, Inc.
Investment Summary as of September 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION (UNAUDITED)
TOTAL RETURN (%)
--------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (1)(3)
------------------------ ---------------------- ------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
------------------------ ---------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR TO DATE -0.70% -- -11.75% -- -14.99% --
ONE YEAR 2.32 2.32% -9.88 -9.88% -16.19 -16.19%
FIVE YEAR 102.10+ 15.11+ 135.22+ 18.66+ 63.35 10.31
SINCE INCEPTION* 314.02+ 17.90+ 309.31+ 17.75+ 226.07 14.68
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
A BAR CHART REFLECTING THE DATA BELOW IS REFLECTED HERE.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31:
1988* 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share $10.24 $18.88 $13.08 $15.41 $20.69 $39.42 $28.30 $24.89
Market Value Per Share $11.75 $32.25 $16.00 $16.25 $18.75 $36.88 $22.38 $22.38
Premium/(Discount) 14.7% 70.8% 22.3% 5.5% -9.4% -6.4% -20.9% -10.1%
Income Dividends $0.29 $0.36 $0.21 $0.21 - $0.36 $0.35 $0.11
Capital Gains Distributions - $2.09 $1.68 $0.47 - $0.51 $4.62 $3.38
Fund Total Return (2) -5.60% 109.87% -20.44% 23.08% 34.26% 98.89% -10.43%+ -0.05%
Index Total Return (1)(3)
** 3.90% 120.97% -28.60% 15.80% 24.71% 88.40% -17.76% -6.11%
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31: SEPTEMBER 30,1996
(UNAUDITED)
<S> <C> <C>
Net Asset Value Per Share $21.75
Market Value Per Share $22.00
Premium/(Discount) 1.2%
Income Dividends $0.22
Capital Gains Distributions $0.01
Fund Total Return (2) -11.75% *
Index Total Return (1)(3)
** -14.99%
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on net asset value per share reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. This return does not include the effect of dilution in
connection with the Rights Offering. These percentages are not an indication
of the performance of a shareholder's investment in the Fund based on market
value due to differences between the market price of the stock and the net
asset value per share of the Fund.
(3) The U.S. dollar adjusted Securities Exchange of Thailand (SET) Index is a
capitalization weighted index of all stocks traded on the Stock Exchange of
Thailand.
* The Fund commenced operations on February 16, 1988.
** Unaudited.
+ Adjusted for Rights Offering.
3
<PAGE>
The Thai Fund, Inc.
Portfolio Summary as of September 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 97.7%
Short-Term Investments 2.3%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Automobiles 3.0%
Banking 31.2%
Beverages 7.2%
Broadcasting & Publishing 3.6%
Building Materials & Components 5.3%
Electrical & Electronics 4.1%
Financial Services 21.5%
Miscellaneous Materials & Commodities 2.3%
Real Estate 2.6%
Telecommunications 13.0%
Other 6.2%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
1. Bangkok Bank Ltd. 11.4%
2. Thai Farmers Bank Ltd. 9.8
3. Siam Commercial Bank Co. Ltd. 8.7
4. The Serm Suk Co. Ltd. 7.2
5. Advanced Information Services
Co. Ltd. 5.8
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
6. Thai Investment & Securities
Co. Ltd. 4.9%
7. Dhana Siam Finance &
Securities Co. Ltd. 4.1
8. Finance One Co. Ltd. 4.1
9. Shinawatra Computer Co. Ltd. 4.1
10. Phatra Thanakit Co. Ltd. 3.7
---
63.8%
---
---
</TABLE>
4
<PAGE>
INVESTMENTS (UNAUDITED)
- ---------
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
THAI INVESTMENT PLAN (104.4%)
- --------------------------------------------------
- ----------
THAI COMMON STOCKS (102.5%)
(Unless otherwise noted)
- -----------------------------------------------------------------
- -------------
APPLIANCES & HOUSEHOLD DURABLES (1.5%)
Sanyo Universal Electric Co. Ltd. 158,600 U.S.$ 536
Singer Thailand Ltd. (Local) 500,300 3,621
------------------
4,157
------------------
- -----------------------------------------------------------------
- -------------
AUTOMOBILES (3.0%)
Swedish Motor Corp. Ltd. (Local) 1,500,000 2,655
Thai Rung Union Car plc 1,000,000 5,939
------------------
8,594
------------------
- -----------------------------------------------------------------
- -------------
BANKING (31.2%)
Bangkok Bank Ltd. (Local) 3,600,000 32,283
Industrial Finance Corp. of Thailand
(Local) 950,000 3,718
Siam Commercial Bank Co. Ltd. (Local) 2,500,000 24,779
Thai Farmers Bank Ltd. (Local) 4,000,000 27,374
Thai Farmers Bank Ltd. (Warrants), expiring
9/30/99 525,000 518
------------------
88,672
------------------
- -----------------------------------------------------------------
- -------------
BEVERAGES (7.2%)
The Serm Suk Co. Ltd. (Local) 950,000 20,551
------------------
- -----------------------------------------------------------------
- -------------
BROADCASTING & PUBLISHING (3.6%)
BEC World plc 1,000,000 10,305
------------------
- -----------------------------------------------------------------
- -------------
BUILDING MATERIALS & COMPONENTS (5.3%)
American Standard Sanitaryware Thailand
Ltd. (Local) 75,150 1,271
Siam Cement Co. Ltd. (Local) 264,000 9,636
Siam City Cement Co. Ltd. (Local) 620,000 4,243
------------------
15,150
------------------
- -----------------------------------------------------------------
- -------------
CHEMICALS (1.5%)
National Petrochemical plc 4,000,000 4,169
------------------
</TABLE>
- -----------------------------------------------------------------
- -------------
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
- -------------
<S> <C> <C>
CONSTRUCTION & HOUSING (1.0%)
Italian-Thai Development Corp. 390,000 U.S.$ 2,822
------------------
- -----------------------------------------------------------------
- -------------
ELECTRICAL & ELECTRONICS (4.1%)
Shinawatra Computer Co. Ltd. (Local) 667,800 11,504
------------------
- -----------------------------------------------------------------
- -------------
FINANCIAL SERVICES (21.5%)
Dhana Siam Finance & Securities Co. Ltd.
(Local) 2,600,000 11,760
Finance One Co. Ltd. (Local) 2,752,600 11,692
General Finance & Securities Co. Ltd.
(Local) 1,200,000 3,257
National Finance & Securities Co. Ltd.
(Local) 3,300,000 10,189
Phatra Thanakit Co. Ltd. (Local) 2,000,000 10,383
Thai Investment & Securities Co. Ltd.
(Local) 2,000,000 13,845
------------------
61,126
------------------
- -----------------------------------------------------------------
- -------------
INSURANCE (1.9%)
Bangkok Insurance Co. Ltd. (Local) 261,800 4,119
Diphaya Insurance Co. Ltd. 350,000 1,342
------------------
5,461
------------------
- -----------------------------------------------------------------
- -------------
MISCELLANEOUS MATERIALS & COMMODITIES (2.3%)
Charoen Pokphand Feedmill Co. Ltd. (Local) 1,848,800 6,653
------------------
- -----------------------------------------------------------------
- -------------
MULTI-INDUSTRY (0.6%)
Loxley Co. Ltd. (Local) 164,000 1,600
------------------
- -----------------------------------------------------------------
- -------------
REAL ESTATE (2.6%)
Land & House Co. Ltd. (Local) 715,600 7,374
------------------
- -----------------------------------------------------------------
- -------------
TELECOMMUNICATIONS (13.0%)
Advanced Information Services Co. Ltd.
(Local) 1,200,000 16,425
TelecomAsia Corp. Ltd. (Local) 5,000,000 10,128
United Communications Industry (Local) 1,000,000 10,383
------------------
36,936
------------------
- -----------------------------------------------------------------
- -------------
TEXTILES & APPAREL (0.0%)
Thai Rung Textile 3,832 49
------------------
</TABLE>
- -----------------------------------------------------------------
- -------------
5
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
- -------------
<S> <C> <C>
WHOLESALE & INTERNATIONAL TRADE (2.2%)
International Cosmetics Co. Ltd. (Local) 875,000 U.S.$ 6,161
------------------
- -----------------------------------------------------------------
- -------------
TOTAL THAI COMMON STOCKS
(Cost U.S. $203,502) 291,284
------------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
FACE
AMOUNT
(000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.9%)
(Interest Bearing Demand Account)
Thai Baht
(Cost U.S. $5,654) THB 139,789 5,498
------------------
- -----------------------------------------------------------------
- -------------
TOTAL THAI INVESTMENT PLAN (104.4%)
(Cost U.S. $209,156) 296,782
------------------
- -----------------------------------------------------------------
- -------------
SHORT-TERM INVESTMENT (0.5%)
- ---------------------------------------------------------
- ------------
REPURCHASE AGREEMENT (0.5%)
Chase Securities, Inc. 5.40%, dated
9/30/96, due 10/1/96, to be repurchased at
U.S. $1,373, collateralized by U.S. $1,010
United States Treasury Notes 10.625%, due
8/15/15, valued at U.S. $1,390 (Cost U.S.
$1,373) U.S.$ 1,373 1,373
------------------
- -----------------------------------------------------------------
- -------------
TOTAL INVESTMENTS (104.9%)
(Cost U.S. $210,529) 298,155
------------------
- -----------------------------------------------------------------
- -------------
OTHER ASSETS AND LIABILITIES (-4.9%)
Other Assets 1,553
Liabilities (15,504) (13,951)
------------- ------------------
- -----------------------------------------------------------------
- -------------
NET ASSETS (100%)
Applicable to 13,065,189, issued and outstanding U.S.
$0.01 par value shares (30,000,000 shares authorized) U.S.$ 284,204
-------------
- -----------------------------------------------------------------
- -------------
NET ASSET VALUE PER SHARE U.S. $ 21.75
-------------
- --------------------------------------------------------------------------------
- -------------
</TABLE>
6
