<PAGE>
THE THAI FUND, INC.
- ---------------------------------------------
OFFICERS AND DIRECTORS
<TABLE>
<S> <C>
Barton M. Biggs Snoh Unakul
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS Frederick B. Whittemore
Warren J. Olsen DIRECTOR
PRESIDENT AND DIRECTOR James W. Grisham
Peter J. Chase VICE PRESIDENT
DIRECTOR Harold J. Schaaff, Jr.
John W. Croghan VICE PRESIDENT
DIRECTOR Joseph P. Stadler
David B. Gill VICE PRESIDENT
DIRECTOR Valerie Y. Lewis
Graham E. Jones SECRETARY
DIRECTOR James R. Rooney
Sukri Kaocharern TREASURER
DIRECTOR Joanna M. Haigney
John A. Levin ASSISTANT TREASURER
DIRECTOR
William G. Morton, Jr.
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, N.A.
73 Tremont Street
Boston, Massachusetts 02108
- ----------------------------------------------------------------
CUSTODIANS
The Thai Farmers Bank Limited (International)
400 Phahon Yothin Road
Bangkok, Thailand
The Chase Manhattan Bank, N.A. (Domestic)
770 Broadway
New York, New York 10003
- ----------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
The First National Bank of Boston
Investor Relations Department
P.O. Box 644, Mail Stop 45-02-09
Boston, Massachusetts 02102-0644
(617) 575-2900
- ----------------------------------------------------------------
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.
----------------------------
ANNUAL REPORT
DECEMBER 31, 1995
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
1995 turned out to be another volatile year for the Thailand stock market.
The Thailand stock market fell -6.11% in U.S. dollar terms in 1995, although
this masks the wide swings that took place over the year. The Thai Fund, Inc.
(the "Fund") outperformed the U.S. dollar adjusted Securities Exchange of
Thailand (the "Index") by 6.06% for the year, posting a total return of -0.05%,
based on net asset value per share. The Fund's outperformance of the Index was
attributable to its overweighted position in the banking and communications
sectors, which rose 10.4% and 2.2% respectively. Among the largest sectors, real
estate and building materials were the worst performing, declining 20.4% and
15.9% respectively. The Fund was underweighted in these two sectors. Of the
Fund's ten largest holdings, some of the best performing stocks included
Advanced Info (+27.4%), Siam Commercial Bank (+21.6%), Shinawatra Computer
(+13.1%), Finance One (+11.8%), and TelecomAsia (+9.2%). The Fund also bought
into two stocks aggressively, Serm Suk and Krungthai Thanakit, both of which
rose by more than 56% for the year. Since inception, the Fund has had a total
return based on net asset value per share of 363.82% compared with 244.39% for
the Index. The share price of the Fund closed the year at U.S. $22.38, which
represented a 10.08% discount from net asset value per share.
The year had started on a weak note triggered in large part by fears over a
possible devaluation of the Thai baht, following the Mexican peso crisis.
Although confidence eventually returned to the market, interest rates reached a
high of 20% during the height of the crisis. Strong buying of regional markets
by foreign investors lifted the broad market in the second quarter. This was
subsequently interrupted by the general election on July 2, Thailand's 18th in
its 62 years of democracy. The newly-elected coalition party led by Banharn's
Chart Thai Party was viewed negatively by investors and the market turned south
for the most part of the third quarter. Measures such as capping loan growth and
tightening monetary policy did not help sentiment. Earnings in general were
below expectations. Towards the end of the year, the market rose on the back of
foreign buying across the region.
The banking sector shone throughout the year, leading the market for the
most part. Earnings growth was strong although there were some disappointments
among the bigger banks. The building materials and chemical sectors experienced
wide swings in earnings. They rose on bullish sentiment but fell sharply when
prices of petrochemicals and steel started to fall in the second half of the
year. Finance stocks fell sharply in the initial half of the year but the larger
cap finance stocks regained most of their lost ground by the end of the year.
Communications rose on strong earnings from cellular operations.
Based on the Bank of Thailand's forecast, the Thai economy grew by 8.6% in
1995 and is projected to slow slightly to 8.3% in 1996. The current account
deficit should also decline from 7.1% of GDP in 1995 to about 6.5% in 1996.
Inflation is also expected to moderate from 5.8% to about 4.9% in 1996.
Investors can, therefore, expect fairly robust economic growth in 1996. Slightly
slower growth would prevent excesses from building up and overheating the
economy. This should underpin the equities market in 1996.
The consensus forecast for earnings growth in 1996 for Thailand is about
15-20%. This places the Thai market at a reasonable price earnings ratio of 16.5
for 1996. This is relatively attractive when compared with the region and
should, therefore, provide strong support for the market.
At this writing, the market was very strong in January, 1996 led by a
liquidity-driven rally. Foreign and local investors bought stocks aggressively
as the decline in local interest rates sparked bullish investments in the
market. The market should continue to perform well for the most part of this
year. 1995 earnings released by Thai companies thus far this year have been in
line with expectations. With potential earnings growth of 20% expected in 1996,
the market should do quite well relative to the region.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT
February 7, 1996
2
<PAGE>
The Thai Fund, Inc.
Investment Summary as of December 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION
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>
ONE YEAR 13.65% 13.65% -0.05% -0.05% -6.11% -6.11%
FIVE YEAR 156.35+++ 20.70+++ 237.92+++ 27.56+++ 110.07 15.99
SINCE INCEPTION* 316.96+++ 19.87+++ 363.82+++ 21.51+++ 244.39 17.00
</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:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1988* 1989 1990 1991 1992 1993 1994 1995
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%
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on per share net asset value 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) U.S. dollar adjusted Securities Exchange of Thailand (SET) Index.
* The Fund commenced operations on February 16, 1988.
** Unaudited.
+++ Adjusted for Rights Offering.
3
<PAGE>
The Thai Fund, Inc.
Portfolio Summary as of December 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Short-Term Investments 2.9%
Equity Securities 97.1%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Banking 31.9%
Financial Services 25.2%
Telecommunications 18.7%
Building Materials & Components 8.0%
Electrical & Electronics 6.8%
Energy Sources 4.6%
Real Estate 3.6%
Beverages & Tobacco 3.3%
Wholesale & International Trade 2.6%
Construction & Housing 2.5%
Other -7.2%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
1. Bangkok Bank Ltd. (Local) 11.0%
2. Thai Farmers Bank, Ltd.
(Local) 10.3
3. Siam Commercial Bank Co.,
Ltd. (Local) 8.2
4. Advanced Information Services
Co., Ltd. (Local) 7.6
5. TelecomAsia Corp., Ltd.
(Local) 5.3
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
6. Finance One Co., Ltd. (Local) 5.3%
7. National Finance & Securities
Co., Ltd. (Local) 5.2
8. Phatra Thanakit Co., Ltd.
(Local) 5.2
9. Shinawatra Computer Co., Ltd.
(Local) 4.7
10. Siam Cement Co., Ltd. (Local) 4.5
---
67.3%
---
---
</TABLE>
4
<PAGE>
FINANCIAL STATEMENTS
- ---------
STATEMENT OF NET ASSETS
- ---------
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
THAI INVESTMENT PLAN (116.5%)
- --------------------------------------------------
- ----------
THAI COMMON STOCKS (114.2%)
(Unless otherwise noted)
- -----------------------------------------------------------------
- -------------
APPLIANCES & HOUSEHOLD DURABLES (1.4%)
Sanyo Universal Electric Company, Ltd. 158,600 U.S.$ 693
Singer Thailand, Ltd. (Local) 250,150 3,634
------------------
4,327
------------------
- -----------------------------------------------------------------
- -------------
AUTOMOBILES (1.9%)
Swedish Motor Corp., Ltd. (Local) 1,500,000 5,955
------------------
- -----------------------------------------------------------------
- -------------
BANKING (31.9%)
Bangkok Bank Ltd. (Local) 4,020,000 34,471
Industrial Finance Corp. of Thailand
(Local) 980,653 3,329
Siam City Bank, Ltd. (Local) 2,100,000 2,105
Siam Commercial Bank Co., Ltd. (Local) 2,600,000 25,597
Thai Farmers Bank, Ltd. (Local) 4,724,000 32,256
Thai Military Bank, Ltd. (Local) 660,000 2,279
------------------
100,037
------------------
- -----------------------------------------------------------------
- -------------
BEVERAGES & TOBACCO (3.3%)
The Serm Suk Co., Ltd. (Local) 665,000 10,296
------------------
- -----------------------------------------------------------------
- -------------
BUILDING MATERIALS & COMPONENTS (8.0%)
American Standard Sanitaryware
Thailand, Ltd. (Local) 75,150 1,283
Siam Cement Co., Ltd. (Local) 264,000 14,002
Siam City Cement Co., Ltd (Local) 620,000 9,697
------------------
24,982
------------------
- -----------------------------------------------------------------
- -------------
CONSTRUCTION & HOUSING (2.5%)
+Bangkok Expressway Public Co., Ltd. 242,500 390
+Ch. Karnchang Public Co., Ltd. 326,000 3,391
Italian-Thai Development Corp. 390,000 3,994
------------------
7,775
------------------
</TABLE>
- -----------------------------------------------------------------
- -------------
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
- -------------
<S> <C> <C>
ELECTRICAL & ELECTRONICS (6.8%)
International Engineering Co., Ltd.
(Local) 1,221,000 U.S.$ 6,544
Shinawatra Computer Co., Ltd. (Local) 600,000 14,768
------------------
21,312
------------------
- -----------------------------------------------------------------
- -------------
ENERGY SOURCES (4.6%)
Banpu Public Co., Ltd. (Local) 260,000 5,656
+Electricity Generating Public Co.
(Local) 1,947,000 5,758
PTT Exploration & Production Co., Ltd.
(Local) 300,000 3,144
------------------
14,558
------------------
- -----------------------------------------------------------------
- -------------
FINANCIAL SERVICES (25.2%)
Dhana Siam Finance & Securities Co.,
Ltd. (Local) 2,500,000 12,703
Finance One Co., Ltd. (Local) 2,822,600 16,472
General Finance & Securities Co., Ltd.
(Local) 1,302,400 5,998
+Krungthai Thanakit plc 1,100,000 4,454
National Finance & Securities Co.,
Ltd. (Local) 3,436,000 16,232
Phatra Thanakit Co., Ltd. (Local) 2,200,000 16,157
Thai Investment & Securities Co., Ltd.
(Local) 237,000 6,849
------------------
78,865
------------------
- -----------------------------------------------------------------
- -------------
HEALTH & PERSONAL CARE (0.0%)
Bumrungrad Hospital Co., Ltd. (Local) 31,000 43
------------------
- -----------------------------------------------------------------
- -------------
INSURANCE (1.1%)
Ayudhya Life Assurance Co., Ltd.
(Local) 196,612 812
Bangkok Insurance Co., Ltd. (Local) 161,804 2,634
------------------
3,446
------------------
- -----------------------------------------------------------------
- -------------
MISCELLANEOUS MATERIALS & COMMODITIES (1.6%)
Charoen Pokphand Feedmill Co., Ltd.
(Local) 1,040,000 4,872
Thai Modern Plastic Industry Co., Ltd.
(Local) 12,700 12
------------------
4,884
------------------
- -----------------------------------------------------------------
- -------------
MULTI-INDUSTRY (1.0%)
Loxley Co., Ltd. (Local) 164,000 3,210
------------------
</TABLE>
- -----------------------------------------------------------------
- -------------
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
- -------------
<S> <C> <C>
REAL ESTATE (3.6%)
Land & House Co., Ltd. (Local) 715,600 U.S.$ 10,284
***+MBK Properties and Development plc 470,000 896
------------------
11,180
------------------
- -----------------------------------------------------------------
- -------------
TELECOMMUNICATIONS (18.7%)
Advanced Information Services Co.,
Ltd. (Local) 1,339,800 23,722
+TelecomAsia Corp., Ltd. (Local) 5,500,000 16,703
+Thai Telephone & Telecommunications
Co. (Local) 1,150,000 6,254
United Communications Industry (Local) 940,000 12,016
------------------
58,695
------------------
- -----------------------------------------------------------------
- -------------
TEXTILES & APPAREL (0.0%)
***+Thai Rung Textile 3,832 49
------------------
- -----------------------------------------------------------------
- -------------
WHOLESALE & INTERNATIONAL TRADE (2.6%)
International Cosmetics Co., Ltd.
(Local) 875,000 7,989
------------------
- -----------------------------------------------------------------
- -------------
TOTAL THAI COMMON STOCKS
(Cost U.S. $199,056) 357,603
------------------
- -----------------------------------------------------------------
- -------------
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT
(000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (2.3%)
(Interest Bearing Demand Account)
Thai Baht
(Cost U.S. $7,180) THB 179,617 7,130
---------------
- -----------------------------------------------------------------
- -------------
TOTAL THAI INVESTMENT PLAN
(Cost U.S. $206,236) 364,733
---------------
- -----------------------------------------------------------------
- -------------
SHORT TERM INVESTMENT (1.1%)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Chase Manhattan Bank, N.A., 5.35%,
dated 12/29/95, due 1/2/96, to be
repurchased at U.S. $3,409,
collateralized by U.S. $2,180 United
States Treasury Bonds 13.75%, due
8/15/04, valued at U.S. $3,480
(Cost U.S. $3,407) U.S.$ 3,407 3,407
---------------
</TABLE>
- -----------------------------------------------------------------
- -------------
<TABLE>
<CAPTION>
AMOUNT VALUE
(000) (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
TOTAL INVESTMENTS (117.6%)
(Cost U.S. $209,643) U.S.$ 368,140
---------------
- -----------------------------------------------------------------
- -------------
OTHER ASSETS (0.1%)
Cash U.S.$ 1
Dividends Receivable 101
Interest Receivable 8
Other Assets 28 138
--------- ---------------
- -----------------------------------------------------------------
- -------------
LIABILITIES (-17.7%)
Deferred Thai Taxes (15,855)
Payable for:
Dividends Declared (34,915)
Thai Taxes (4,062)
U.S. Investment Advisory Fees (164)
Offering Costs (80)
Thai Investment Advisory Fees (66)
Professional Fees (49)
Shareholder Reporting Expenses (39)
Custodian Fees (31)
Administrative Fees (23)
Directors' Fees and Expenses (20)
Other Liabilities (9) (39,458)
--------- ---------------
- -----------------------------------------------------------------
- -------------
NET ASSETS (100%)
Applicable to 12,572,354, issued and outstanding U.S. $0.01
par value shares (30,000,000 shares authorized) U.S.$ 312,965
-------------
- -----------------------------------------------------------------
- -------------
NET ASSET VALUE PER SHARE U.S$ 24.89
-------------
- -----------------------------------------------------------------
- -------------
AT DECEMBER 31, 1995, NET ASSETS CONSISTED OF:
- ----------------------------------------------------------------------------------
Common Stock U.S.$ 126
Capital Surplus 176,104
Distributions in Excess of Net
Investment Income (4,052)
Distributions in Excess of Net
Realized Gain (1,855)
Unrealized Appreciation on Investments
and Foreign Currency Translations
(net of accrual for Thai tax of
U.S.$15,855 on unrealized
appreciation.) 142,642
- ----------------------------------------------------------------------------------
TOTAL NET ASSETS U.S.$ 312,965
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
+ -- Non-income producing.
*** -- Security acquired through an initial public offering of shares and fair
valued at cost pending listing -- see Note A-1 to financial statements.
December 31, 1995 exchange rate -- Thai Baht (THB) 25.190=U.S.$1.00
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
STATEMENT OF OPERATIONS (000)
<S> <C>
- ------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends............................................... U.S.$ 7,983
Interest................................................ 1,012
- ------------------------------------------------------------------------------
Total Income.......................................... 8,995
- ------------------------------------------------------------------------------
EXPENSES
U.S Investment Advisory Fees............................ 2,000
Thai Investment Advisory Fees........................... 842
Custodian Fees.......................................... 363
Administrative Fees..................................... 278
Directors' Fees and Expenses............................ 126
Professional Fees....................................... 104
Shareholder Reporting Expenses.......................... 97
Transfer Agent Fees..................................... 28
Other Expenses.......................................... 115
- ------------------------------------------------------------------------------
Total Expenses........................................ 3,953
- ------------------------------------------------------------------------------
Net Investment Income Before Thai Tax................... 5,042
Less: Thai Tax on Investment Income..................... 459
- ------------------------------------------------------------------------------
Net Investment Income................................. 4,583
- ------------------------------------------------------------------------------
NET REALIZED GAIN
Investment Securities Sold (Net of Thai tax of U.S.
$3,532 on net realized gains).......................... 31,772
Foreign Currency Transactions........................... 19
- ------------------------------------------------------------------------------
Net Realized Gain..................................... 31,791
- ------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION
Investments............................................. (32,971)
Foreign Currency Translations........................... (77)
- ------------------------------------------------------------------------------
Change in Unrealized Appreciation..................... (33,048)
- ------------------------------------------------------------------------------
Total Net Realized Gain and Change in Unrealized
Appreciation............................................... (1,257)
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..... U.S.$ 3,326
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1994 1995
STATEMENT OF CHANGES IN NET ASSETS (000) (000)
<S> <C> <C>
- -----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income..................... U.S.$ 3,392 U.S.$ 4,583
Net Realized Gain......................... 33,539 31,791
Change in Unrealized Appreciation......... (86,638) (33,048)
- -----------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations................ (49,707) 3,326
- -----------------------------------------------------------------------------------
Distributions:
Net Investment Income..................... (3,693) (736)
In Excess of Net Investment Income........ -- (638)
Net Realized Gain......................... (52,150) (40,523)
In Excess of Net Realized Gain............ -- (1,855)
- -----------------------------------------------------------------------------------
Total Distributions....................... (55,843) (43,752)
- -----------------------------------------------------------------------------------
Capital Share Transactions:
Common Stock Issued through Rights
Offering (1,829,145 shares).............. 44,009 --
Offering Costs............................ (570) --
Reinvestment of Distributions (150,472 and
420,438 shares, respectively)............ 4,984 9,551
- -----------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Capital Share Transactions............... 48,423 9,551
- -----------------------------------------------------------------------------------
Total Decrease............................ (57,127) (30,875)
Net Assets:
Beginning of Year......................... 400,967 343,840
- -----------------------------------------------------------------------------------
End of Year (including distributions in
excess of net investment income of U.S.
$(3,507) and U.S. $(4,052),
respectively)............................ U.S.$343,840 U.S.$312,965
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
<S> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA AND RATIOS: 1991 1992 1993 1994 1995
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR,
JANUARY 1......................... U.S.$ 13.08 U.S.$ 15.41 U.S.$ 20.69 U.S.$ 39.42 U.S.$ 28.30
- --------------------------------------------------------------------------------------------------------------------------------
Offering Costs..................... -- -- -- (0.05) --
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment Income.............. 0.38 0.31 0.35 0.32 0.38
Net Realized and Unrealized Gain
(Loss) on Investments............. 2.62 4.96 19.27 (5.08) (0.19)
- --------------------------------------------------------------------------------------------------------------------------------
Total from Investment
Operations.................... 3.00 5.27 19.62 (4.76) 0.19
- --------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income.......... (0.21) -- (0.31 ) (0.35) (0.06)
In Excess of Net Investment
Income........................ -- -- (0.05 ) -- (0.05)
Net Realized Gain.............. (0.47) -- (0.45 ) (4.62) (3.23)
In Excess of Net Realized
Gain.......................... -- -- (0.06 ) -- (0.15)
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions............ (0.68) -- (0.87 ) (4.97) (3.49)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Asset
Value due to Capital Share
Transactions...................... 0.01+ 0.01+ (0.02 )+ (1.34)++ (0.11)+
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR,
DECEMBER 31....................... U.S.$ 15.41 U.S.$ 20.69 U.S.$ 39.42 U.S.$ 28.30 U.S.$ 24.89
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE MARKET VALUE, END OF
YEAR.............................. U.S.$ 16.25 U.S.$ 18.75 U.S.$ 36.88 U.S.$ 22.38 U.S.$ 22.38
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN:
Market Value................... 12.7% 15.4% 104.9 % (24.3)%+++ 13.7%
Net Asset Value (1)............ 23.1% 34.3% 98.9 % (10.4)%+++ (0.1)%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS, SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR
(THOUSANDS)....................... U.S.$154,344 U.S.$209,061 U.S.$400,967 U.S.$ 343,840 U.S.$ 312,965
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses Before Thai Tax
to Average Net Assets............. 1.44% 1.37% 1.22 % 1.13% 1.17%
Ratio of Expenses After Thai Tax to
Average Net Assets................ 1.69% 1.70% 1.38 % 1.22% 1.30%
Ratio of Net Investment Income to
Average Net Assets................ 2.45% 1.83% 1.42 % 1.01% 1.35%
Portfolio Turnover Rate (2)........ 10% 24% 22 % 22% 26%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Increase (decrease) due to shares issued from reinvestment of
distributions
++ Consists of $.09 per share decrease due to shares issued from reinvestment
of distributions and $1.25 per share decrease due to shares issued through
Rights Offering during the year.
+++ Adjusted for Rights Offering
(1) Total investment return based on per share net asset value reflects the
effects of changes in net asset value on the performance of the Fund
during each period, and assumes dividends and capital gains 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 of the Fund.
(2) Portfolio turnover rate is calculated by dividing the lesser of purchases
and sales of investment securities having maturities greater than one year
at the time of acquisition by the average monthly market value of those
investment securities.
Note: Current period permanent book-tax differences, if any, are not
included in the calculation of net investment income per share.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
- ------------
The Thai Fund, Inc. (the "Fund") was incorporated on June 10, 1987 and is
registered as a non-diversified, closed-end management investment company under
the Investment Company Act of 1940, as amended. The Fund's investment objective
is long-term capital appreciation through investments primarily in equity
securities. The Fund makes its investments in Thailand through the Thai
Investment Plan (the "Plan") established in conformity with Thai law. The Fund
is the sole unitholder of the Plan. The accompanying financial statements are
prepared on a consolidated basis and present the financial position and results
of operations of the Plan and the Fund.
A. The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such policies
are consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
1. SECURITY VALUATION: In valuing the Fund's assets, all listed securities for
which market quotations are readily available are valued at the last sales
price on the valuation date, or if there was no sale on such date, at the
mean between the current bid and asked prices. Securities which are traded
over-the-counter are valued at the average of the mean of current bid and
asked prices obtained from reputable brokers. Short-term securities which
mature in 60 days or less are valued at amortized cost. All other securities
and assets for which market values are not readily available (including
investments which are subject to limitations as to their sale) are valued at
fair value as determined in good faith by the Board of Directors (the
"Board"), although the actual calculations may be done by others.
2. INCOME TAXES: It is the Fund's intention to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for U.S. Federal income taxes is required in the
financial statements.
Distributions from the Plan to the Fund are subject to Thai income tax which
is withheld at a rate of 10% of the local currency gross distribution
amount. All distributions from the Plan to the Fund must be approved by The
Bank of Thailand ("BOT") pursuant to the laws of The Kingdom of Thailand.
For financial statement purposes, the Fund allocates the Thai income tax to
net investment income, net realized gains and net unrealized appreciation on
the basis of their relative amounts. For U.S. Federal income tax purposes,
the Thai income tax is deducted, when paid, from net investment income.
Capital surplus, accumulated undistributed net investment income and
accumulated net realized gain have been adjusted for current and prior
period permanent book-tax differences. Current period adjustments arose
principally from differing book-tax treatments for foreign currency
transactions, foreign taxes on net realized gains and gains on certain
securities of corporations designated as "passive foreign investment
companies".
3. REPURCHASE AGREEMENTS: In connection with transactions in repurchase
agreements, a bank as custodian for the Fund takes possession of the
underlying securities, the value of which equals or exceeds the principal
amount of the repurchase transaction, including accrued interest. To the
extent that any repurchase transaction exceeds one business day, the value
of the collateral is marked-to-market on a daily basis to determine the
adequacy of the collateral. In the event of default on the obligation to
repurchase, the Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. To the extent that proceeds from
the sale of the underlying securities are less than the repurchase price
under the agreement, the Fund may incur a loss. In the event of default or
bankruptcy by the other party to the agreement, realization and/or retention
of the collateral or proceeds may be subject to legal proceedings.
4. FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in Thai baht are translated
into U.S. dollars at the mean of the bid and asked prices of such currency
against U.S. dollars last quoted by a major bank as follows:
- investments, other assets and liabilities at the
prevailing rate of exchange on the valuation date;
- investment transactions and investment income at
the prevailing rate of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rate and market values at the close of the period, the Fund does not isolate
that portion of the results of operations arising as a result of
9
<PAGE>
changes in the foreign exchange rate from the fluctuations arising from
changes in the market prices of the securities held at period end.
Similarly, the Fund does not isolate the effect of changes in the foreign
exchange rate from the fluctuations arising from changes in the market
prices of securities sold during the period. Accordingly, realized and
unrealized foreign currency gains (losses) are included in the reported net
realized and unrealized gains (losses) on investment transactions and
balances.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses) from sales and maturities of forward foreign
currency contracts, dispositions of foreign currency, currency gains or
losses realized between the trade and settlement dates on securities
transactions, and the difference between the amount of investment income
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid. Net unrealized currency gains (losses) from valuing
foreign currency denominated assets and liabilities at period end exchange
rates are reflected as a component of unrealized appreciation (depreciation)
in the Statement of Net Assets. The change in net unrealized currency gains
(losses) for the period is reflected in the Statement of Operations.
5. FORWARD FOREIGN CURRENCY CONTRACTS: The Fund may enter into forward foreign
currency contracts to protect securities and related receivables and
payables against changes in future foreign exchange rates. A forward foreign
currency contract is an agreement between two parties to buy or sell
currency at a set price on a future date. The market value of the contract
will fluctuate with changes in currency exchange rates. The contract is
marked-to-market daily and the change in market value is recorded by the
Fund as unrealized gain or loss. The Fund records realized gains or losses
when the contract is closed equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
Risk may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and is
generally limited to the amount of unrealized gain on the contracts, if any,
at the date of default. Risks may also arise from unanticipated movements in
the value of a foreign currency relative to the U.S. dollar.
6. OTHER: Security transactions are accounted for on the date the securities
are purchased or sold. Realized gains and losses on the sale of investment
securities are determined on the specific identified cost basis. Interest
income is recognized on the accrual basis. Dividend income is recorded on
the ex-dividend date (except certain dividends which may be recorded as soon
as the Fund is informed of such dividend) net of applicable withholding
taxes where recovery of such taxes is not reasonably assured. Distributions
to shareholders are recorded on the ex-date. Income distributions and
capital gain distributions are determined in accordance with U.S. Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are principally due to the timing of the
recognition of losses on securities, the timing of deductibility of certain
foreign taxes and permanent differences as presented in note A-2.
B. Morgan Stanley Asset Management Inc. (the "U.S. Adviser") provides
investment advisory services to the Fund under the terms of an Investment
Advisory Agreement (the "Agreement"). Under the Agreement, the U.S. Adviser is
paid a fee computed weekly and payable monthly at an annual rate of .90% of the
Fund's first $50 million of average weekly net assets, .70% of the Fund's next
$50 million of average weekly net assets and .50% of the Fund's average weekly
net assets in excess of $100 million.
C. The Mutual Fund Public Company Limited (the "Thai Adviser") provides
investment advisory services to the Fund under the terms of a contract. Under
the contract, the Thai Adviser is paid a fee computed weekly and payable monthly
at an annual rate of .40% of the Fund's first $50 million of average weekly net
assets, .25% of the Fund's next $50 million of average weekly net assets and
.20% of the Fund's average weekly net assets in excess of $100 million.
D. Effective September 1, 1995, The Chase Manhattan Bank, N.A., through its
affiliate Chase Global Funds Services Company (the "Administrator"), (formerly
Mutual Funds Service Company, a wholly owned subsidiary of the United States
Trust Company of New York), provides administrative services to the Fund under
an Administration Agreement. Under the Administration Agreement, the
Administrator is paid a fee computed weekly and payable monthly at an annual
rate of .05% of the Fund's average weekly net assets, plus $100,000 per annum.
In addition, the Fund is charged certain out of pocket expenses by the
Administrator. Effective September 1, 1995, The Chase Manhattan Bank, N.A. acts
as custodian for the Fund's assets held in the United States. Prior to September
1, 1995, Mutual Funds Service Company and United States Trust Company of New
York provided administrative and custodian services, respectively, to the Fund
under the same terms, conditions and fees as stated above.
E. During the year ended December 31, 1995, the Fund made purchases and sales
totaling $98,592,000 and $90,337,000, respectively, of investment securities
other than long-term U.S. Government securities and short term investments.
There were no purchases or sales of long-term U.S. Government securities. At
December 31, 1995, the U.S. Federal income tax cost basis of securities was
$205,615,000 and accordingly, net unrealized appreciation for U.S. Federal
income tax purposes was $155,395,000, of which
10
<PAGE>
$163,234,000 related to appreciated securities and $7,839,000 related to
depreciated securities. For the year ended December 31, 1995, the Fund expects
to defer to January 1, 1996 for U.S. Federal income tax purposes, post-October
capital losses of $1,766,000 and post-October currency losses of $16,000.
F. The Fund issued to its shareholders of record as of the close of business on
November 18, 1994 transferrable rights to subscribe for up to an aggregate of
3,450,000 shares of Common Stock of the Fund at a rate of one share of Common
Stock for every three Rights held at the subscription price of $25.00 per share.
During December 1994, the Fund issued a total of 1,829,145 shares of Common
Stock on exercise of such Rights. Estimated Rights offering costs of $570,000
were charged directly against the proceeds of the Offering. The Fund has been
advised that Morgan Stanley & Co. Incorporated, an affiliate of the U.S. Adviser
received commissions of $1,715,000 and reimbursement of its expenses of $100,000
in connection with its participation in the Rights Offering.
G. At December 31, 1995, a significant portion of the Fund's net assets consist
of investments in the Thai Investment Plan, including Thai equity securities,
which may be subject to greater price volatility, lower liquidity and less
diversity than equity securities of companies based in the United States. In
addition, Thai equity securities may be subject to substantial governmental
involvement in the economy and greater social, economic and political
uncertainty.
H. During December 1995, the Board declared a total distribution of $2.78 per
share, of which $0.11 was derived from net investment income and $2.67 from net
realized gains payable on January 29, 1996, to shareholders of record on
December 29, 1995.
During the year ended 1995, the Board declared and the BOT approved
distributions of Baht 860,932,000 from the Plan to the Fund. The Fund received
U.S. $30,823,000 net of Thai income tax of U.S. $3,425,000 accrued during 1995.
The Fund will use all of the proceeds of the Plan's distributions to fund its
1995 distributions paid July 31, 1995 and payable January 29, 1996.
I. Each Director of the Fund who is not an officer of the Fund or an affiliated
person as defined under the Investment Company Act of 1940, as amended, may
elect to participate in the Directors' Deferred Compensation Plan (the "Plan").
Under the Plan, such Directors may elect to defer payment of a percentage of
their total fees earned as a Director of the Fund. These deferred portions are
treated, based on an election by the Director, as if they were either invested
in the Fund's shares or invested in U.S. Treasury Bills, as defined under the
Plan. The deferred fees payable, under the Plan, at December 31, 1995 totaled
$14,000 and are included in Payable for Directors' Fees and Expenses on the
Statement of Net Assets.
11
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
U.S. AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS
THREE MONTHS ENDED
- ---------------------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1995 1995 1995 1995
------------------- ------------------ ------------------- -------------------
TOTAL PER SHARE TOTAL PER SHARE TOTAL PER SHARE TOTAL PER SHARE
-------- --------- ------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income........ $ 4,141 $ 0.34 $ 2,011 $ 0.16 $ 1,971 $ 0.16 $ 872 $ 0.06
Net Investment Income
(Loss).................. $ 2,870 $ 0.24 $ 1,000 $ 0.08 $ 850 $ 0.07 $ (137) $ (0.01)
Net Realized Gain (Loss)
and Change
in Unrealized
Appreciation............ $(28,927) $ (2.50) $40,575 $ 3.34 $(22,193) $ (1.77) $ 9,288 $ 0.74
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... $(26,057) $ (2.26) $41,575 $ 3.42 $(21,343) $ (1.70) $ 9,151 $ 0.73
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1994 1994 1994 1994
------------------- ------------------ ------------------- -------------------
TOTAL PER SHARE TOTAL PER SHARE TOTAL PER SHARE TOTAL PER SHARE
-------- --------- ------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Income........ $ 2,532 $ 0.25 $ 2,179 $ 0.21 $ 1,918 $ 0.19 $ 840 $ 0.04
Net Investment Income.... $ 1,636 $ 0.16 $ 994 $ 0.10 $ 466 $ 0.05 $ 296 $ 0.01
Net Realized Gain (Loss)
and Change
in Unrealized
Appreciation............ $(93,431) $ (9.02) $16,499 $ 1.59 $ 57,774 $ 5.63 $(33,941) $ (3.28)
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... $(91,795) $ (8.86) $17,493 $ 1.69 $ 58,240 $ 5.68 $(33,645) $ (3.27)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The Fund may purchase shares of its Common Stock in the open market at such
prices and in such amounts as the Board of Directors may deem advisable.
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION (UNAUDITED):
For the year ended December 31, 1995, the Fund designates $27,647,000 as
long-term capital gain dividend and expects to pass through to shareholders
foreign tax credits of approximately $3,834,000.
12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------
To the Shareholders and Board of Directors of
The Thai Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
The Thai Fund, Inc. (the "Fund") at December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1995 by correspondence with the
custodians and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
February 9, 1996
13
<PAGE>
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
each shareholder will be deemed to have elected, unless The First National Bank
of Boston (the "Plan Agent") is otherwise instructed by the shareholder in
writing, to have all distributions automatically reinvested in Fund shares.
Participants in the Plan have the option of making additional voluntary cash
payments to the Plan Agent, semiannually, in any amount from $100 to $3,000, for
investment in Fund shares.
Dividend and capital gain distributions will be reinvested on the
reinvestment date in full and fractional shares. If the market price per share
equals or exceeds net asset value per share on the reinvestment date, the Fund
will issue shares to participants at net asset value. If net asset value is less
than 95% of the market price on the reinvestment date, shares will be issued at
95% of the market price. If net asset value exceeds the market price on the
reinvestment date, participants will receive shares valued at market price. The
Fund may purchase shares of its Common Stock in the open market in connection
with dividend reinvestment requirements at the discretion of the Board of
Directors. Should the Fund declare a dividend or capital gain distribution
payable only in cash, the Plan Agent will purchase Fund shares for participants
in the open market as agent for the participants.
The Plan Agent's fees for the reinvestment of dividends and distributions
will be paid by the Fund. However, each participant's account will be charged a
pro rata share of brokerage commissions incurred on any open market purchases
effected on such participant's behalf. A participant will also pay brokerage
commissions incurred on purchases made by voluntary cash payments. Although
shareholders in the Plan may receive no cash distributions, participation in the
Plan will not relieve participants of any income tax which may be payable on
such dividends or distributions.
In the case of shareholders, such as banks, brokers or nominees, which hold
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are participating in the
Plan.
Shareholders who do not wish to have distributions automatically reinvested
should notify the Plan Agent in writing. There is no penalty for
non-participation or withdrawal from the Plan, and shareholders who have
previously withdrawn from the Plan may rejoin at any time. Requests for
additional information or any correspondence concerning the Plan should be
directed to the Plan Agent at:
The Thai Fund, Inc.
The First National Bank of Boston
Dividend Reinvestment and Cash Purchase Plan
P.O. Box 1681
Boston, MA 02105
1-800-442-2001
14
