<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 (International)
400 Phahon Yothin Road
Bangkok, Thailand
The Chase Manhattan Bank (Domestic)
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.
----------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1996
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the six months ended June 30, 1996, the total return for The Thai Fund, Inc.
(the "Fund"), based on net asset value per share, was -0.11% compared to -3.34%
for the U.S. dollar adjusted Securities Exchange of Thailand Index (the "SET
Index"). For the period since the Fund's commencement of operations on February
16, 1988 through June 30, 1996, the Fund's total return, based on net asset
value per share, was 363.32% compared with 270.73% for the SET Index. On June
28, 1996, the closing price of the Fund's shares on the New York Stock Exchange
was $23.625, representing a 4.0% discount to the Fund's net asset value per
share.
The investment environment continued to be difficult in Thailand in the second
quarter of the year. While the Thai market had begun 1996 on a strong note, it
succumbed to profit taking by February. As it became more apparent that 1995
earnings were going to be disappointing, investors became net sellers. Bad news
began to appear throughout the rest of the first half of the year. Constant
rumors of a cabinet re-shuffling and a no confidence debate did not help market
sentiment. First quarter corporate earnings came in below analysts'
expectations, further disappointing investors. Rumors that property developers
were not able to service their debts and that finance companies were faced with
escalating bad debts hit the property and finance companies' share prices.
Banks, which had held up better than other sectors throughout the correction,
gave in to selling pressures as well. Economic data released in the second
quarter showed the economy slowing faster than comfortable.
The sentiment in Thailand shows no signs of short-term improvement. Although
commercial banks are beginning to cut lending rates, some critics feel these
moves are too little too late. As long as earnings do not push up, the
probability of a sustained rally in the market remains dim in the very near
term. However, market valuation is inexpensive when compared to regional markets
and this should underpin the Thai market. With prospects of further interest
rate cuts and perhaps a cut in corporate tax rates, the market may receive a
boost. Overall, earnings should recover by next year and with economic growth
likely to stabilize in the second half of this year, the market should gradually
improve.
In the first half of 1996, the Fund added to its existing position of various
stocks. The largest addition was to Serm Suk, the Pepsi bottler and distributor.
The Fund also added fairly aggressively to Thai Investment & Securities Co.
Ltd., a finance and securities company, and to Charoen Pokphand Feedmill, a
feeds producer. T wo new stocks were added over the first half of the year,
National Petrochemical, a major olefins producer in Thailand, and BEC World, a
media company. The Fund will continue to select stocks on the basis of their
intrinsic values and we will continue to emphasize selecting good companies
rather than attempting to time the market. The Fund also will continue to reduce
the number of stocks in its portfolio in order to concentrate on stocks where
our conviction is highest.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT AND DIRECTOR
[SIGNATURE]
Ean Wah Chin
SENIOR PORTFOLIO MANAGER
[SIGNATURE]
Richard Toh
PORTFOLIO MANAGER
August 15, 1996
2
<PAGE>
The Thai Fund, Inc.
Investment Summary as of June 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 6.63% -- -0.11% -- -3.34% --
ONE YEAR 2.32 2.32% -3.82 -3.82% -13.02 -13.02%
FIVE YEAR 123.60+ 17.46+ 144.43+ 19.57+ 65.27 10.57
SINCE INCEPTION* 344.60+ 19.50+ 363.32+ 20.09+ 270.73 16.94
</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>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31: JUNE 30, 1996
(UNAUDITED)
<S> <C>
Net Asset Value Per Share $24.62
Market Value Per Share $23.63
Premium/(Discount) -4.0%
Income Dividends $0.22
Capital Gains Distributions $0.01
Fund Total Return (2) -0.11%
Index Total Return (1)(3)
** -3.34%
</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 June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 96.0%
Short-Term Investments 4.0%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Banking 31.5%
Beverages 6.0%
Building Materials & Components 6.4%
Construction & Housing 2.2%
Electrical & Electronics 3.7%
Financial Services 22.1%
Miscellaneous Materials & Commodities 2.4%
Real Estate 2.5%
Telecommunications 13.1%
Wholesale & International Trade 2.2%
Other 7.9%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
1. Bangkok Bank Ltd. 11.2%
2. Thai Farmers Bank Ltd. 9.7
3. Siam Commercial Bank Co. Ltd. 8.7
4. The Serm Suk Co. Ltd. 6.0
5. Advanced Information Services
Co. Ltd. 5.9
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
6. Finance One Co. Ltd. 4.3%
7. Phatra Thanakit Co. Ltd. 4.2
8. Dhana Siam Finance &
Securities Co. Ltd. 4.2
9. Thai Investment & Securities
Co. Ltd. 4.1
10. National Finance & Securities
Co. Ltd. 3.9
---
62.2%
---
---
</TABLE>
4
<PAGE>
FINANCIAL STATEMENTS
- ---------
STATEMENT OF NET ASSETS (UNAUDITED)
- ---------
JUNE 30, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
THAI INVESTMENT PLAN (104.4%)
- --------------------------------------------------
- ----------
THAI COMMON STOCKS (100.3%)
(Unless otherwise noted)
- -----------------------------------------------------------------
- -------------
APPLIANCES & HOUSEHOLD DURABLES (1.4%)
Sanyo Universal Electric Co. Ltd. 158,600 U.S.$ 550
Singer Thailand Ltd. (Local) 500,300 3,922
------------------
4,472
------------------
- -----------------------------------------------------------------
- -------------
AUTOMOBILES (1.3%)
Swedish Motor Corp. Ltd. (Local) 1,500,000 4,166
------------------
- -----------------------------------------------------------------
- -------------
BANKING (31.5%)
Bangkok Bank Ltd. (Local) 3,800,000 35,927
Industrial Finance Corp. of Thailand
(Local) 950,000 4,266
Siam City Bank Ltd. (Local) 1,800,000 1,667
Siam Commercial Bank Co. Ltd. (Local) 2,500,000 27,969
Thai Farmers Bank Ltd. (Local) 4,200,000 31,105
------------------
100,934
------------------
- -----------------------------------------------------------------
- -------------
BEVERAGES (6.0%)
The Serm Suk Co. Ltd. (Local) 825,500 19,121
------------------
- -----------------------------------------------------------------
- -------------
BROADCASTING & PUBLISHING (0.1%)
+BEC World plc 86,000 481
------------------
- -----------------------------------------------------------------
- -------------
BUILDING MATERIALS & COMPONENTS (6.4%)
American Standard Sanitaryware
Thailand Ltd. (Local) 75,150 1,273
Siam Cement Co. Ltd. (Local) 264,000 12,147
Siam City Cement Co. Ltd. (Local) 620,000 7,181
------------------
20,601
------------------
- -----------------------------------------------------------------
- -------------
CHEMICALS (1.8%)
National Petrochemical plc 4,000,000 5,791
------------------
- -----------------------------------------------------------------
- -------------
CONSTRUCTION & HOUSING (2.2%)
Ch. Karnchang Public Co. Ltd. 489,000 3,390
Italian-Thai Development Corp. 390,000 3,626
------------------
7,016
------------------
</TABLE>
- -----------------------------------------------------------------
- -------------
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
- -------------
<S> <C> <C>
ELECTRICAL & ELECTRONICS (3.7%)
Shinawatra Computer Co. Ltd. (Local) 550,400 U.S.$ 11,838
------------------
- -----------------------------------------------------------------
- -------------
ENERGY SOURCES (1.4%)
PTT Exploration & Production Co. Ltd.
(Local) 300,000 4,396
------------------
- -----------------------------------------------------------------
- -------------
FINANCIAL SERVICES (22.1%)
Dhana Siam Finance & Securities Co.
Ltd. (Local) 2,600,000 13,417
Finance One Co. Ltd. (Local) 2,752,600 13,880
General Finance & Securities Co. Ltd.
(Local) 1,200,000 4,254
National Finance & Securities Co. Ltd.
(Local) 3,300,000 12,610
Phatra Thanakit Co. Ltd. (Local) 2,000,000 13,473
Thai Investment & Securities Co. Ltd.
(Local) 310,000 2,308
Thai Investment & Securities Co. Ltd.
-- New 1,550,000 10,869
------------------
70,811
------------------
- -----------------------------------------------------------------
- -------------
INSURANCE (1.5%)
Bangkok Insurance Co. Ltd. (Local) 261,800 4,744
------------------
- -----------------------------------------------------------------
- -------------
MISCELLANEOUS MATERIALS & COMMODITIES (2.4%)
Charoen Pokphand Feedmill Co. Ltd.
(Local) 1,848,800 7,574
------------------
- -----------------------------------------------------------------
- -------------
MULTI-INDUSTRY (0.7%)
Loxley Co. Ltd. (Local) 164,000 2,429
------------------
- -----------------------------------------------------------------
- -------------
REAL ESTATE (2.5%)
Land & House Co. Ltd. (Local) 715,600 8,119
------------------
- -----------------------------------------------------------------
- -------------
TELECOMMUNICATIONS (13.1%)
Advanced Information Services Co. Ltd.
(Local) 1,200,000 18,814
+TelecomAsia Corp. Ltd. (Local) 5,000,000 10,636
+Thai Telephone & Telecommunications
Co. (Local) 360,000 773
United Communications Industry (Local) 900,000 11,842
------------------
42,065
------------------
</TABLE>
- -----------------------------------------------------------------
- -------------
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
- -------------
<S> <C> <C>
TEXTILES & APPAREL (0.0%)
+SectionThai Rung Textile 3,832 U.S.$ 49
------------------
- -----------------------------------------------------------------
- -------------
WHOLESALE & INTERNATIONAL TRADE (2.2%)
International Cosmetics Co. Ltd.
(Local) 875,000 6,997
------------------
- -----------------------------------------------------------------
- -------------
TOTAL THAI COMMON STOCKS
(Cost U.S. $188,579) 321,604
------------------
- -----------------------------------------------------------------
- -------------
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT
(000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (4.1%)
(Interest Bearing Demand Account)
Thai Baht
(Cost U.S. $13,265) THB 332,407 13,095
---------------
- -----------------------------------------------------------------
- -------------
TOTAL THAI INVESTMENT PLAN
(Cost U.S. $201,844) 334,699
---------------
- -----------------------------------------------------------------
- -------------
SHORT-TERM INVESTMENT (0.1%)
- ----------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Chase Securities, Inc. 5.15%, dated
6/28/96, due 7/1/96, to be
repurchased at U.S. $191,
collateralized by U.S. $190 United
States Treasury Notes 7.125%, due
9/30/99, valued at U.S. $194
(Cost U.S. $191) U.S.$ 191 191
---------------
- -----------------------------------------------------------------
- -------------
TOTAL INVESTMENTS (104.5%)
(Cost U.S. $202,035) 334,890
---------------
- -----------------------------------------------------------------
- -------------
OTHER ASSETS (1.8%)
Receivable for Investments Sold 5,854
Dividends Receivable 32
Interest Receivable 7
Other Assets 34 5,927
--------- ---------------
</TABLE>
- -----------------------------------------------------------------
- -------------
<TABLE>
<CAPTION>
AMOUNT AMOUNT
(000) (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
LIABILITIES (-6.3%)
Deferred Thai Taxes U.S.$ (13,302)
Payable for:
Thai Taxes U.S.$ (3,762)
Investments Purchased (1,606)
Dividends Declared (1,086)
U.S. Investment Advisory Fees (157)
Thai Investment Advisory Fees (75)
Shareholder Reporting Expenses (55)
Professional Fees (47)
Directors' Fees and Expenses (42)
Custodian Fees (31)
Administrative Fees (22)
Other Liabilities (118) (7,001)
------------ ---------------
- -----------------------------------------------------------------
- -------------
NET ASSETS (100%)
Applicable to 13,018,864 issued and outstanding U.S. $0.01 par
value shares (30,000,000 shares authorized) U.S.$ 320,514
-------------
- -----------------------------------------------------------------
- -------------
NET ASSET VALUE PER SHARE U.S.$ 24.62
-------------
- -----------------------------------------------------------------
- -------------
AT JUNE 30, 1996, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------------
Common Stock U.S.$ 130
Capital Surplus 187,877
Accumulated Net Investment Loss (3,072)
Accumulated Net Realized Gain 16,026
Unrealized Apppreciation on
Investments and Foreign Currency
Translations (net of accrued Thai tax
of U.S. $13,302 on unrealized
appreciation) 119,553
- -------------------------------------------------------------------------------------
TOTAL NET ASSETS U.S.$ 320,514
-------------
- -------------------------------------------------------------------------------------
- -------------
</TABLE>
+ -- Non-income producing.
Section -- Security acquired through an initial public offering of shares and
fair valued at cost pending listing -- see Note A-1 to financial
statments.
June 30, 1996 exhange rate -- Thai Baht (THB) 25.385=U.S.$1.00
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,1996
(UNAUDITED)
STATEMENT OF OPERATIONS (000)
<S> <C>
- ------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends............................................... U.S.$ 5,808
Interest................................................ 326
- ------------------------------------------------------------------------------
Total Income.......................................... 6,134
- ------------------------------------------------------------------------------
EXPENSES
U.S Investment Advisory Fees............................ 1,003
Thai Investment Advisory Fees........................... 415
Custodian Fees.......................................... 192
Administrative Fees..................................... 139
Directors' Fees and Expenses............................ 34
Professional Fees....................................... 49
Shareholder Reporting Expenses.......................... 45
Transfer Agent Fees..................................... 4
Other Expenses.......................................... 70
- ------------------------------------------------------------------------------
Total Expenses........................................ 1,951
- ------------------------------------------------------------------------------
Net Investment Income Before Thai Tax................... 4,183
Less: Thai Tax on Investment Income..................... 382
- ------------------------------------------------------------------------------
Net Investment Income................................. 3,801
- ------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS)
Investment Securities Sold (Net of Thai tax of U.S.
$1,882 on net realized gains).......................... 18,101
Foreign Currency Transactions........................... (21)
- ------------------------------------------------------------------------------
Net Realized Gain..................................... 18,080
- ------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION
Appreciation on Investments............................. (22,970)
Depreciation on Foreign Currency Translations........... (119)
- ------------------------------------------------------------------------------
Change in Unrealized Appreciation/Depreciation........ (23,089)
- ------------------------------------------------------------------------------
Total Net Realized Gain and Change in Unrealized
Appreciation/Depreciation.................................. (5,009)
- ------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.... U.S.$ (1,208)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
STATEMENT OF CHANGES IN NET ASSETS (000) (000)
<S> <C> <C>
- -----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income..................... U.S.$ 3,801 U.S.$ 4,583
Net Realized Gain......................... 18,080 31,791
Change in Unrealized
Appreciation/Depreciation................ (23,089) (33,048)
- -----------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations................ (1,208) 3,326
- -----------------------------------------------------------------------------------
Distributions:
Net Investment Income..................... (2,821) (736)
In Excess of Net Investment Income........ -- (638)
Net Realized Gain......................... (199) (40,523)
In Excess of Net Realized Gain............ -- (1,855)
- -----------------------------------------------------------------------------------
Total Distributions....................... (3,020) (43,752)
- -----------------------------------------------------------------------------------
Capital Share Transactions:
Reinvestment of Distributions (446,510 and
420,438 shares, respectively)............ 11,777 9,551
- -----------------------------------------------------------------------------------
Total Increase (Decrease)................. 7,549 (30,875)
Net Assets:
Beginning of Period....................... 312,965 343,840
- -----------------------------------------------------------------------------------
End of Period (including accumulated
(distributions in excess) of net
investment income (loss) of U.S.$3,072
and U.S.$4,052, respectively.)........... U.S.$320,514 U.S.$312,965
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
SELECTED PER SHARE JUNE 30, 1996 -------------------------------------------------------------------------------------
DATA AND RATIOS: (UNAUDITED) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF
PERIOD............... U.S.$ 24.89 U.S.$ 28.30 U.S.$ 39.42 U.S.$ 20.69 U.S.$ 15.41 U.S.$ 13.08
- --------------------------------------------------------------------------------------------------------------------------------
Offering Costs........ -- -- (0.05) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment
Income............... 0.31 0.38 0.32 0.35 0.31 0.38
Net Realized and
Unrealized Gain
(Loss) on
Investments.......... (0.33) (0.19) (5.08) 19.27 4.96 2.62
- --------------------------------------------------------------------------------------------------------------------------------
Total from
Investment
Operations....... (0.02) 0.19 (4.76) 19.62 5.27 3.00
- --------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment
Income........... (0.22) (0.06) (0.35) (0.31) -- (0.21)
In Excess of Net
Investment
Income........... -- (0.05) -- (0.05) -- --
Net Realized
Gain............. (0.01) (3.23) (4.62) (0.45) -- (0.47)
In Excess of Net
Realized Gain.... -- (0.15) -- (0.06) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total
Distributions.... (0.23) (3.49) (4.97) (0.87) -- (0.68)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in
Net Asset Value due
to Capital Share
Transactions......... (0.02)+ (0.11)+ (1.34)++ (0.02)+ 0.01+ 0.01+
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD............ U.S.$ 24.62 U.S.$ 24.89 U.S.$ 28.30 U.S.$ 39.42 U.S.$ 20.69 U.S.$ 15.41
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE MARKET
VALUE, END OF
PERIOD............... U.S.$ 23.63 U.S.$ 22.38 U.S.$ 22.38 U.S.$ 36.88 U.S.$ 18.75 U.S.$ 16.25
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT
RETURN:
Market Value...... 6.6% 13.7% (24.3)%+++ 104.9% 15.4% 12.7%
Net Asset Value
(1).............. (0.1)% (0.1)% (10.4)%+++ 98.9% 34.3% 23.1%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS, SUPPLEMENTAL
DATA
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF
PERIOD (THOUSANDS)... U.S.$320,514 U.S.$312,965 U.S.$343,840 U.S.$400,967 U.S.$209,061 U.S.$154,344
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses
Before Thai Tax to
Average Net Assets... 1.15%** 1.17% 1.13% 1.22% 1.37% 1.44%
Ratio of Expenses
After Thai Tax to
Average Net Assets... 1.37%** 1.30% 1.22% 1.38% 1.70% 1.69%
Ratio of Net
Investment Income to
Average Net Assets... 2.24%** 1.35% 1.01% 1.42% 1.83% 2.45%
Portfolio Turnover
Rate................. 8% 26% 22% 22% 24% 10%
Average Commission
Rate (2)............. U.S.$ 0.0141 N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
** Annualized
+ Increase (Decrease) due to shares issued on reinvestment of distributions
++ Consists of U.S.$0.09 per share decrease from reinvestment of distributions
and U.S.$1.25 per share decrease due to Common Stock issued through Rights
Offering during the year
+++ Adjusted for Rights Offering
(1) 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 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) Beginning with fiscal year 1996, the Fund is required to disclose the
average commission rate per share it paid for portfolio trades on which
commissions were charged during the period.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 (UNAUDITED)
- ------------
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. 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.
3. REPURCHASE AGREEMENTS: In connection with transactions in repurchase
agreements, a bank as custodian for the Fund takes possession of the
underlying securities, with a market value at least equal to the amount of
the repurchase transaction, including principal and 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. In the event of default or
bankruptcy by the counterparty 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 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 exchange contracts, dispositions of foreign currency, currency
gains or losses realized between the trade and
9
<PAGE>
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 EXCHANGE CONTRACTS: The Fund may enter into forward
foreign currency exchange contracts to attempt to protect securities and
related receivables and payables against changes in future foreign exchange
rates. A forward foreign currency exchange 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.
The amount and character of income and capital gain distributions to be paid
are determined in accordance with Federal income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing book and 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". These differences are also primarily due to differing book and
tax treatments of the timing of the recognition of losses on securities and
the timing of the deductibility of certain foreign taxes.
Permanent book and tax basis differences relating to shareholder
distributions may result in reclassifications to undistributed net
investment income (loss), accumulated net realized gain (loss) and capital
surplus.
Adjustments for permanent book-tax differences, if any, are not reflected in
ending undistributed net investment income (loss) for the purpose of
calculating net investment income (loss) per share in the financial
highlights.
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. The Chase Manhattan Bank, through its affiliate Chase Global Funds Services
Company (the "Administrator"), 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. The Chase Manhattan Bank, acts as custodian for the Fund's assets
held in the United States.
E. During the six months ended June 30, 1996, the Fund made purchases and sales
totaling $29,593,000 and $60,724,000, 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
June 30, 1996, the U.S. Federal income tax cost basis of securities was
$188,770,000 and accordingly, net unrealized appreciation for U.S. Federal
income tax purposes was $133,025,000, of which $154,241,000 related to
appreciated securities and $21,216,000 related to depreciated securities. For
the year ended December 31, 1995, the Fund expects to defer to
10
<PAGE>
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. 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.
G. 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 June 30, 1996 totaled
$23,000 and are included in Payable for Directors' Fees and Expenses on the
Statement of Net Assets.
H. SUPPLEMENTAL PROXY INFORMATION. The Annual Meeting of the Stockholders of
The Thai Fund, Inc. was held on June 5, 1996. The following is a summary of each
proposal presented and the total number of shares voted:
<TABLE>
<CAPTION>
VOTES IN VOTES VOTES
PROPOSAL: FAVOR OF AGAINST ABSTAINED
- -------------------------------------------------------------------------------------------- --------- ----------- -----------
<C> <S> <C> <C> <C>
1. To elect the following Directors: Peter J. Chase...................................... 6,770,843 108,078 --
David B. Gill......................................... 6,772,077 106,843 --
Warren J. Olsen....................................... 6,771,448 107,472 --
2. To ratify the selection of Price Waterhouse LLP as independent public accountants of
the Fund.............................................................................. 6,812,675 40,702 25,543
</TABLE>
- --------------------------------------------------------------------------------
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)*
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN NET INCREASE
(LOSS) AND CHANGE IN (DECREASE)
UNREALIZED IN NET ASSETS
INVESTMENT NET INVESTMENT APPRECIATION/ RESULTING
INCOME INCOME (LOSS) DEPRECIATION FROM OPERATIONS
------------------- -------------------- --------------------- ---------------------
QUARTER ENDED AMOUNT PER SHARE AMOUNT PER SHARE AMOUNT PER SHARE AMOUNT PER SHARE
- ------------------------- -------- --------- ------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
June 30, 1996............ $ 3,193 $ 0.25 $2,026 $ 0.16 $(17,814) $(1.38) $(15,788) $(1.22)
March 31, 1996........... 2,941 0.24 1,775 0.15 12,805 1.05 14,580 1.20
-------- --------- ------- ---------- --------- --------- --------- ---------
Total.................. $ 6,134 $ 0.49 $3,801 $ 0.31 $ (5,009) $(0.33) $ (1,208) $(0.02)
-------- --------- ------- ---------- --------- --------- --------- ---------
-------- --------- ------- ---------- --------- --------- --------- ---------
December 31, 1995........ $ 872 $ 0.06 $ (137) $(0.01) $ 9,288 $ 0.74 $ 9,151 $ 0.73
September 30, 1995....... 1,971 0.16 850 0.07 (22,193) (1.77) (21,343) (1.70)
June 30, 1995............ 2,011 0.16 1,000 0.08 40,575 3.34 41,575 3.42
March 31, 1995........... 4,141 0.34 2,870 0.24 (28,927) (2.50) (26,057) (2.26)
-------- --------- ------- ---------- --------- --------- --------- ---------
Total.................. $ 8,995 $ 0.72 $4,583 $ 0.38 $ (1,257) $(0.19) $ 3,326 $ 0.19
-------- --------- ------- ---------- --------- --------- --------- ---------
-------- --------- ------- ---------- --------- --------- --------- ---------
December 31, 1994........ $ 840 $ 0.04 $ 296 $ 0.01 $(33,941) $(3.28) $(33,645) $(3.27)
September 30, 1994....... 1,918 0.19 466 0.05 57,774 5.63 58,240 5.68
June 30, 1994............ 2,179 0.21 994 0.10 16,499 1.59 17,493 1.69
March 31, 1994........... 2,532 0.25 1,636 0.16 (93,431) (9.02) (91,795) (8.86)
-------- --------- ------- ---------- --------- --------- --------- ---------
Total.................. $ 7,469 $ 0.69 $3,392 $ 0.32 $(53,099) $(5.08) $(49,707) $(4.76)
-------- --------- ------- ---------- --------- --------- --------- ---------
-------- --------- ------- ---------- --------- --------- --------- ---------
- ---------------------------------------------------------------------------------------------------------------------
* Expressed in thousands of U.S. dollars except per
share amounts.
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.
</TABLE>
11
<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 Boston Equiserve (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.
Boston Equiserve
Dividend Reinvestment and Cash Purchase Plan
P.O. Box 1681
Boston, MA 02105-1681
1-800-442-2001
12
