<PAGE>
THE THAI FUND, INC.
- ---------------------------------------------
DIRECTORS AND OFFICERS
<TABLE>
<S> <C>
Barton M. Biggs William G. Morton, Jr.
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS Snoh Unakul
Warren J. Olsen DIRECTOR
PRESIDENT AND DIRECTOR James W. Grisham
Peter J. Chase VICE PRESIDENT
DIRECTOR Michael F. Klein
John W. Croghan VICE PRESIDENT
DIRECTOR Harold J. Schaaff, Jr.
David B. Gill VICE PRESIDENT
DIRECTOR Joseph P. Stadler
Graham E. Jones VICE PRESIDENT
DIRECTOR Valerie Y. Lewis
Sukri Kaocharern SECRETARY
DIRECTOR James R. Rooney
John A. Levin TREASURER
DIRECTOR Belinda A. Brady
ASSISTANT TREASURER
</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 Public Company Limited
1 Soi Thai Farmers
Ratburana Road, Ratburana
Bangkok, Thailand
The Chase Manhattan Bank
770 Broadway
New York, New York 10003
- ----------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
Boston Equiserve
Investor Relations Department
P.O. Box 644
Boston, Massachusetts 02102-0644
(617) 575-3120
- ----------------------------------------------------------------
LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
- ----------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
- ----------------------------------------------------------------
For additional Fund information, including the Fund's net asset value per share
and information regarding the investments comprising the Fund's portfolio,
please call 1-800-221-6726.
----------------------------------------------------------------
THE
THAI FUND,
INC.
----------------------------
FIRST QUARTER REPORT
MARCH 31, 1997
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the three months ended March 31, 1997, The Thai Fund, Inc. (the "Fund") had
a total return, based on net asset value per share, of -11.58% compared to
- -16.19% for the U.S. dollar adjusted Securities Exchange of Thailand Index (the
"Index"). For the one year ended March 31, 1997, the Fund had a total return,
based on net asset value per share, of -45.91% compared with -46.80% for the
Index. For the period from the Fund's commencement of operations on February 16,
1988 through March 31, 1997, the Fund's total return, based on net asset value
per share, was 162.76%, compared to 104.93% for the Index. On March 31, 1997,
the closing price of the Fund's shares on the New York Stock Exchange was
$16.25, representing a 17.6% premium to the Fund's net asset value per share.
The Thai market continued its downward spiral in the first quarter of 1997 as
the Thai Baht came under continued strong pressure and interest rates remained
high. Rumors again circulated about weaknesses among finance companies and
investors sold those stocks heavily. The announced merger between Finance One
and Thai Danu Bank likely signaled the start of a period of consolidation for
the financial industry. The lack of positive surprises from 1996 earnings and
macro-economic numbers released during the quarter also contributed to weakened
market sentiment. Finally, the sharp correction in the U.S. markets during the
quarter as well as the increase in U.S. interest rates provided additional
downward pressure on the Thai market.
The Fund's outperformance of the Index was mainly due to stock selection as
certain stocks in our portfolio outperformed the broader market. In terms of
sector strategy, the Fund did relatively well, having overweight positions in
the banking and communications sectors which outperformed the market. The Fund,
however, had little or no weight in the energy sector, which also outperformed
the broader market.
Looking ahead, the Thai stock market is unlikely to recover quickly in the
short-term. Concerns over the health of financial institutions and the earnings
outlook for the market as a whole not augur well for the equities market. Any
potential for upside in the market will be capped by constant fears of a Baht
devaluation.
On the other hand, the property rescue fund should be able to alleviate some of
the problems in the real estate market and the spate of runs on finance
companies appears to be slowly tapering off. The mergers of weak financial
institutions with stronger ones eventually will be good for the banking system,
and should be a positive for the market as a whole in the long run. Meanwhile,
given the weak sentiment in the market, there are many small- to mid-cap stocks
that are selling at extremely cheap valuations and, although the potential for
further losses seems high, many of these businesses are sound and are likely to
be worth considerably more in three years time. The Fund will look to purchase
some of these companies, albeit selectively and gradually.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT AND DIRECTOR
[SIGNATURE]
Ean Wah Chin
SENIOR PORTFOLIO MANAGER
[SIGNATURE]
Richard Toh
PORTFOLIO MANAGER
April 1997
2
<PAGE>
The Thai Fund, Inc.
Investment Summary as of March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION
TOTAL RETURN (%)
----------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (3)
------------------------ ------------------------ ------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C>
FISCAL YEAR TO DATE -0.76% -- -11.58% -- -16.19% --
ONE YEAR -33.01 -33.01% -45.91 -45.91% -46.80 -46.80%
FIVE YEAR 43.30+ 7.46+ 19.88+ 3.69+ -15.40 -3.29
SINCE INCEPTION* 208.96+ 13.16+ 162.76+ 11.17+ 104.93 8.18
</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:
TOTAL RETURN
1988* 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share $10.24 $18.88 $13.08 $15.41 $20.69 $39.42
Market Value Per Share $11.75 $32.25 $16.00 $16.25 $18.75 $36.88
Premium/(Discount) 14.7% 70.8% 22.3% 5.5% -9.4% -6.4%
Income Dividends $0.29 $0.36 $0.21 $0.21 - $0.36
Capital Gains Distributions - $2.09 $1.68 $0.47 - $0.51
Fund Total Return (2) -5.60% 109.87% -20.44% 23.08% 34.26% 98.89%
Index Total Return (3) 3.90% 120.97% -28.60% 15.80% 24.71% 88.40%
The Thai Fund, Inc. (2)
U.S. dollar adjusted Securities Exchange of Thailand (SET) Index
(3)
<CAPTION>
YEARS ENDED DECEMBER 31: THREE MONTHS
TOTAL RETURN ENDED
1994 1995 1996 MARCH 31, 1997
<S> <C> <C> <C> <C>
Net Asset Value Per Share $28.30 $24.89 $15.63 $13.82
Market Value Per Share $22.38 $22.38 $16.38 $16.25
Premium/(Discount) -20.9% -10.1% 4.8% 17.6%
Income Dividends $0.35 $0.11 $0.32 -
Capital Gains Distributions $4.62 $3.38 $0.08 -
Fund Total Return (2) -10.43%+ -0.05% -35.93% -11.58%
Index Total Return (3) -17.76% -6.11% -36.25% -16.19%
The Thai Fund, Inc. (2)
U.S. dollar adjusted Securities Exchange of Thailand (SET) Index
(3)
</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. 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, including dividends.
* The Fund commenced operations on February 16, 1988.
+ This return does not include the effect of the rights issued in connection
with the Rights Offering.
3
<PAGE>
The Thai Fund, Inc.
Portfolio Summary as of March 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 93.7%
Short-Term Investments 6.3%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Automobiles 5.0%
Banking 31.1%
Beverages & Tobacco 9.1%
Broadcasting & Publishing 5.8%
Building Materials & Components 6.1%
Chemicals 3.3%
Electrical & Electronics 3.2%
Financial Services 6.2%
Insurance 3.1%
Telecommunications 16.0%
Other 11.1%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
1. Bangkok Bank Ltd. 13.6%
2. Thai Farmers Bank Ltd. 9.8
3. The Serm Suk Co., Ltd. 9.1
4. Advanced Information Services
Co., Ltd. 7.0
5. Siam Commercial Bank Co.,
Ltd. 6.4
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
6. BEC World plc 5.8%
7. TelecomAsia Corp., Ltd. 4.7
8. United Communications
Industry 4.3
9. Thai Rung Union Car plc 4.2
10. Thai Investment & Securities
Co., Ltd. 3.6
---
68.5%
---
---
</TABLE>
4
<PAGE>
INVESTMENTS (UNAUDITED)
- ---------
MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
THAI INVESTMENT PLAN (101.0%)
- --------------------------------------------------
- ----------
THAI COMMON STOCKS (95.5%)
(Unless otherwise noted)
AUTOMOBILES (5.0%)
Swedish Motor Corp., Ltd. (Local) 1,371,100 U.S.$ 1,347
Thai Rung Union Car plc 1,660,000 7,611
Thai Stanley Electric Co., Ltd. 2,000 5
------------------
8,963
------------------
BANKING (31.1%)
Bangkok Bank Ltd. (Local) 3,600,000 24,689
Industrial Finance Corp. of Thailand
(Local) 950,000 2,379
Siam Commercial Bank Co., Ltd. (Local) 2,300,000 11,608
Thai Farmers Bank Ltd. (Local) 3,900,000 17,731
------------------
56,407
------------------
BEVERAGES & TOBACCO (9.1%)
The Serm Suk Co., Ltd. (Local) 1,149,800 16,480
------------------
BROADCASTING & PUBLISHING (5.8%)
BEC World plc 1,014,000 9,689
BEC World plc (Foreign) 86,000 788
------------------
10,477
------------------
BUILDING MATERIALS & COMPONENTS (6.1%)
American Standard Sanitaryware
Thailand, Ltd. (Local) 75,150 1,042
Siam Cement Co., Ltd. (Local) 264,000 6,347
Siam City Cement Co., Ltd (Local) 620,000 3,679
------------------
11,068
------------------
CHEMICALS (3.3%)
National Petrochemical plc 5,793,300 5,915
------------------
ELECTRICAL & ELECTRONICS (3.2%)
Shinawatra Computer Co., Ltd. (Local) 720,000 5,770
------------------
ENERGY SOURCES (0.0%)
Union Energy, Inc. 161,133 62
------------------
FINANCIAL SERVICES (6.2%)
Finance One Co., Ltd. (Local) 2,498,700 2,286
Phatra Thanakit Co., Ltd. (Local) 1,500,000 2,355
Thai Investment & Securities Co., Ltd.
(Local) 2,042,900 6,533
------------------
11,174
------------------
INSURANCE (3.1%)
Bangkok Insurance Co., Ltd. (Local) 261,800 3,429
Dhipaya Insurance PCL 1,013,700 2,148
Dhipaya Insurance PCL (Foreign) 49,000 104
------------------
5,681
------------------
MISCELLANEOUS MATERIALS & COMMODITIES (2.9%)
Charoen Pokphand Feedmill Co., Ltd.
(Local) 1,848,800 5,200
------------------
MULTI-INDUSTRY (0.6%)
Saha-Union Corp., Ltd. 1,933,600 1,136
------------------
REAL ESTATE (2.4%)
Land & House Co., Ltd. (Local) 715,600 3,501
Quality House Co., Ltd. (Local) 1,683,400 876
------------------
4,377
------------------
- -----------------------------------------------------------------
- -------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- -----------------------------------------------------------------
- -------------
TELECOMMUNICATIONS (16.0%)
Advanced Information Services Co.,
Ltd. (Local) 1,368,900 U.S.$ 11,709
Advanced Information Services Co.,
Ltd. (Foreign) 115,000 984
TelecomAsia Corp., Ltd. (Local) 5,000,000 8,524
United Communications Industry (Local) 1,200,000 7,767
------------------
28,984
------------------
TEXTILES & APPAREL (0.7%)
Thai Rung Textile 3,832 0
Thai Wacoal PCL 347,013 1,324
------------------
1,324
------------------
- -----------------------------------------------------------------
- -------------
TOTAL THAI COMMON STOCKS
(Cost U.S. $172,310) 173,018
------------------
- -----------------------------------------------------------------
- -------------
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT
(000)
<S> <C> <C> <C>
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (5.5%)
(Interest Bearing Demand Account)
Thai Baht
(Cost U.S. $10,062) THB 260,316 10,030
------------
- -----------------------------------------------------------------
- -------------
TOTAL THAI INVESTMENT PLAN
(Cost U.S. $182,372) 183,048
------------
- -----------------------------------------------------------------
- -------------
SHORT-TERM INVESTMENT (0.9%)
REPURCHASE AGREEMENT (0.9%)
Chase Securities, Inc. 6.00%, dated
3/31/97, due 4/1/97, to be
repurchased at U.S. $1,607,
collateralized by United States
Treasury Bonds, 11.25%, due 2/15/15,
valued at U.S. $1,625 (Cost U.S.
$1,607) U.S.$ 1,607 1,607
------------
- -----------------------------------------------------------------
- -------------
TOTAL INVESTMENTS (101.9%)
(Cost U.S. $183,979) 184,655
------------
- -----------------------------------------------------------------
- -------------
OTHER ASSETS AND LIABILITIES (-1.9%)
Other Assets 2,691
Liabilities (6,239) (3,548)
--------------- ------------
- -----------------------------------------------------------------
- -------------
NET ASSETS (100%)
Applicable to 13,101,845 issued and outstanding U.S.
$0.01 par value shares (30,000,000 shares authorized) U.S.$181,107
-------------
- -----------------------------------------------------------------
- -------------
NET ASSET VALUE PER SHARE U.S.$ 13.82
-------------
- -----------------------------------------------------------------------
</TABLE>
Note: Prior government approval for foreign investments may be required under
certain circumstances in some emerging markets, and foreign ownership
limitations may also be imposed by the charters of individual companies
in emerging markets. As a result, an additional class of shares
designated as "foreign" may be created and offered for investment. The
"local" and "foreign" shares' market values may vary.
5
