<PAGE>
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THE
THAI FUND,
INC.
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FIRST QUARTER REPORT
MARCH 31, 1999
MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER
THE THAI FUND, INC.
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DIRECTORS AND OFFICERS
Barton M. Biggs
CHAIRMAN OF THE BOARD
OF DIRECTORS
Michael F. Klein
PRESIDENT AND DIRECTOR
Peter J. Chase
DIRECTOR
John W. Croghan
DIRECTOR
David B. Gill
DIRECTOR
Graham E. Jones
DIRECTOR
Sukri Kaocharern
DIRECTOR
John A. Levin
DIRECTOR
William G. Morton, Jr.
DIRECTOR
Snoh Unakul
DIRECTOR
Stefanie V. Chang
VICE PRESIDENT AND ACTING
SECRETARY
Harold J. Schaaff, Jr.
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Joanna M. Haigney
TREASURER
Belinda A. Brady
ASSISTANT TREASURER
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U.S. INVESTMENT ADVISER
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
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THAI INVESTMENT ADVISER
The Mutual Fund Public Company Limited
30th-32nd Floor, Lake Rajada Building
193-195 Ratchadaphisek Road
Khlong-Toey, Bangkok 10110 Thailand
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ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
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CUSTODIANS
The Thai Farmers Bank Public Company Limited
1 Soi Thai Farmers
Ratburana Road, Ratburana
Bangkok, Thailand
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The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
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SHAREHOLDER SERVICING AGENT
Boston Equiserve
Investor Relations Department
P.O. Box 644
Boston, Massachusetts 02102-0644
(800) 730-6001
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LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
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INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
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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 or visit our website at
www.msdw.com/institutional/investmentmanagement.
<PAGE>
LETTER TO SHAREHOLDERS
- ----------
For the three months ended March 31, 1999, The Thai Fund, Inc. (the "Fund") had
a total return, based on net asset value per share, of -6.32% compared to -3.44%
for the U.S. dollar adjusted Securities Exchange of Thailand (SET) Index (the
"Index"). For the period since the Fund's commencement of operations on February
16, 1988 through March 31, 1999, the Fund's total return, based on net asset
value per share, was -28.89% compared to -29.29% for the Index. On March 31,
1999, the closing price of the Fund's shares on the New York Stock Exchange was
$6 3/4, representing a 89.6% premium to the Fund's net asset value per share.
Economic recovery prospects in Thailand improved in the first quarter of 1999 as
the Thai government approved some significant structural reforms, a benign
external environment allowed further monetary and fiscal policy easing and some
progress was made in the recapitalization of the banking system. Import trends
remain weak and a drought hurt short-term agricultural prospects, but more signs
emerged of economic bottoming.
A key achievement in this first quarter was the parliamentary approval of a
series of laws designed to improve Thailand's bankruptcy and foreclosure laws
and its legal infrastructure. Passage of these laws will shorten the time needed
to foreclose on bad debts in Thailand, but the major impact should be to prompt
past-due borrowers to negotiate with the banks to restructure their debts.
Non-performing and impaired loans in the Thai banking system have almost reached
half of all outstanding debt. Without significant debt rehabilitation, the Thai
banking system risked sliding into an irrecoverable condition. These laws should
give the banks a stick with which they can negotiate with past due debtors, and
the banks have announced ambitious targets for debt restructurings in 1999.
Early progress has been encouraging and an accelerating number of past due
corporate loans are being restructured.
The recapitalization of the Thai banking system is also making progress. Thai
Farmers Bank and Bangkok Bank were able to raise significant quantities of tier
1 and 2 capital and may now have raised enough new capital to weather the
crisis. Siam Commercial Bank commenced a capital raising exercise in April,
which could become a blueprint for bank recapitalizations in Thailand. Foreign
banks are close to taking control of several smaller banks. Banks are the key
financial intermediaries in Thailand and the restored health of the banking
system would enhance Thailand's ability to grow at a rapid pace again.
Foreign direct investment into Thailand was very strong in 1998 and the
follow-on effects of this investment started to enhance performance at the
individual stock level. For example, Holderbank, the Swiss-based cement giant,
recently assumed management control of Siam City Cement Co., Ltd. ("SCCC"). The
company announced a major rights issue that will partially finance SCCC's debt
restructuring exercise. Non-core subsidiaries are being divested to reduce debt
while exports have increased through Holderbank's global network. These types of
transactions should improve corporate performance in Thailand. Not
coincidentally, SCCC was one of the market's strongest performers in the first
quarter of 1999.
The Thai government signed a seventh letter of intent ("LOI") with the IMF
outlining economic policies in Thailand. This LOI contains plans for further
fiscal easing. At the end of March 1999, the Thai government announced plans to
cut taxes, including an income tax rebate and a 3% reduction in VAT. Earlier
plans for fiscal stimulus had emphasized government spending but the authorities
had failed to actually spend the additional resources. A shift to tax cuts
should be faster to implement and will allow individual economic agents to spend
the money, probably improving efficiency. Inflation has been very modest and
interest rates continued to decline during the first quarter of 1999. Lower
rates will improve the government's finances and ease the economy's debt burden.
Exports remain fairly weak, still registering year-on-year declines. However, on
a seasonally adjusted basis exports also seem to have bottomed. Stronger
intra-Asian trade should be supportive of exports as the year progresses. In the
first quarter of 1999 the Fund's holdings of export-oriented stocks
underperformed the broader market.
Sincerely,
/s/ Michael F. Klein
Michael F. Klein
PRESIDENT AND DIRECTOR
April 1999
THE INFORMATION CONTAINED IN THIS OVERVIEW REGARDING SPECIFIC SECURITIES IS FOR
INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION TO
PURCHASE OR SELL THE SECURITIES MENTIONED.
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DAILY NET ASSET AND MARKET VALUES, AS WELL AS MONTHLY PORTFOLIO CHARACTERISTICS,
CAN NOW BE ACCESSED AT WWW.MSDW.COM/INSTITUTIONAL/INVESTMENTMANAGEMENT.
2
<PAGE>
The Thai Fund, Inc.
Investment Summary as of March 31, 1999 (Unaudited)
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<TABLE>
<CAPTION>
HISTORICAL TOTAL RETURN (%)
INFORMATION -----------------------------------------------------------------------
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 14.89% -- -6.32% -- -3.44% --
One Year -22.64 -22.64% -35.58 -35.58% -20.88 -20.88%
Five Year -61.28+ -17.28+ -82.04+ -29.06+ -80.91 -28.19
Ten Year 3.54+ 0.35+ -32.46+ -3.85+ -45.89 -5.96
Since Inception* 34.82+ 2.72+ -28.89+ -3.02+ -29.29 -3.07
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
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RETURNS AND PER SHARE INFORMATION
[GRAPH]
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS
ENDED
MARCH 31,
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share.... $18.88 $13.08 $15.41 $20.69 $39.42 $28.30 $24.89 $15.63 $ 3.81 $ 3.80 $ 3.56
Market Value Per Share....... $32.25 $16.00 $16.25 $18.75 $36.88 $22.38 $22.38 $16.38 $ 5.25 $ 5.88 $ 6.75
Premium/(Discount)........... 70.8% 22.3% 5.5% -9.4% -6.4% -20.9% -10.1% 4.8% 37.8% 54.7% 89.6%
Income Dividends............. $ 0.36 $ 0.21 $ 0.21 -- $ 0.36 $ 0.35 $ 0.11 $ 0.32 $ 0.11 $ 0.19 --
Capital Gains Distributions.. $ 2.09 $ 1.68 $ 0.47 -- $ 0.51 $ 4.62 $ 3.38 $ 0.08 $ 0.12 -- --
Fund Total Return (2)........ 109.87% -20.44% 23.08% 34.26% 98.90% -10.40%+ -0.10% -35.93% -75.17% 2.88% -6.32%
Index Total Return (3)....... 120.97% -28.59% 15.80% 24.71% 88.14% -17.63% -6.17% -36.25% -75.54% 22.43% -3.44%
</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, expressed in U.S. dollars.
* 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, 1999 (Unaudited)
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DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Equity Securities (95.5%)
Short-Term Investments (4.5%)
</TABLE>
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SECTORS
[CHART]
<TABLE>
<S> <C>
Banking (18.5%)
Beverages & Tobacco (6.4%)
Broadcasting & Publishing (7.1%)
Building Materials & Components (15.5%)
Electrical & Electronics (10.8%)
Energy Sources (4.6%)
Food & Household Products (5.5%)
Telecommunications (4.6%)
Telecommunications--Wireless (4.6%)
Transportation--Airlines (5.9%)
Other (16.5%)
</TABLE>
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TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<S> <C>
1. Thai Farmers Bank Co., Ltd. 10.0%
2. Siam Cement Co., Ltd. 9.9
3. BEC World Co., Ltd. 7.1
4. Shinawatra Computer Co., Ltd. 6.7
5. The Serm Suk Co., Ltd. 6.4
6. Thai Airways International Public Co. Ltd. 5.9
7. Bangkok Bank Co., Ltd. 5.8
8. Siam City Cement Co., Ltd. 5.7
9. PTT Exploration & Production Public Co., Ltd. 4.6
10. Advanced Information Services Co., Ltd. 4.6
-----
66.7%
-----
-----
</TABLE>
4
<PAGE>
FINANCIAL STATEMENTS
- ---------
STATEMENT OF NET ASSETS (UNAUDITED)
- ---------
MARCH 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
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<S> <C> <C>
THAI INVESTMENT PLAN (97.2%)
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THAI COMMON STOCKS (95.7%)
(Unless otherwise noted)
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AUTOMOBILES (1.2%)
Thai Stanley Electric Co., Ltd. 715,000 U.S.$ 271
Thai Storage Battery Co., Ltd. 390,600 315
----------
586
----------
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BANKING (18.5%)
Bangkok Bank Co., Ltd. 2,005,250 2,750
Siam Commercial Bank Co., Ltd 2,565,500 1,247
Thai Farmers Bank Co., Ltd. 3,167,750 4,723
----------
8,720
----------
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BEVERAGES & TOBACCO (6.4%)
The Serm Suk Co., Ltd. 1,117,600 3,036
----------
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BROADCASTING & PUBLISHING (7.1%)
BEC World Co., Ltd. 700,300 3,375
----------
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BUILDING MATERIALS & COMPONENTS (15.5%)
Siam Cement Co., Ltd. 333,700 4,656
Siam City Cement Co., Ltd. 825,647 2,682
----------
7,338
----------
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CHEMICALS (1.5%)
National Petrochemical Co., Ltd. 1,526,300 691
----------
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ELECTRICAL & ELECTRONICS (10.8%)
Delta Electronics Public Co., Ltd. 444,900 1,931
Shinawatra Computer Co., Ltd. 1,447,400 3,160
----------
5,091
----------
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ENERGY SOURCES (4.6%)
PTT Exploration & Production Public 279,200 2,186
Co., Ltd. ----------
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FOOD & HOUSEHOLD PRODUCTS (5.5%)
Compass East Industry Public Co., 348,700 1,485
Ltd.
Thai Union Frozen Products Public 380,200 1,124
Co. Ltd. ----------
2,609
----------
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INSURANCE (1.6%)
Bangkok Insurance Co., Ltd. 248,100 740
----------
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MISCELLANEOUS MATERIALS & COMMODITIES (2.5%)
Charoen Pokphand Feedmill Co., Ltd. 1,137,800 1,159
----------
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REAL ESTATE (1.0%)
Golden Land Property Development 1,850,000 U.S.$ 493
Public Co., Ltd. ----------
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TELECOMMUNICATIONS (4.6%)
Shinawatra Satellite Public Co., 1,700,000 917
Ltd.
TelecomAsia Corp. Public Co., Ltd. 2,184,800 1,236
----------
2,153
----------
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TELECOMMUNICATIONS--WIRELESS (4.6%)
Advanced Information Services Co., 349,800 2,180
Ltd. ----------
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TEXTILES & APPAREL (2.4%)
Saha-Union Co., Ltd. 1,483,600 553
Thai Rung Textile Co., Ltd. 3,832 --@
Thai Wacoal Co., Ltd. 347,013 559
----------
1,112
----------
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TRANSPORTATION--AIRLINES (5.9%)
Thai Airways International Public 1,967,700 2,777
Co. Ltd. ----------
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UTILITIES--ELECTRICAL & GAS (2.0%)
Electricity Generating Public Co. 650,900 953
Ltd. ----------
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TOTAL THAI COMMON STOCKS
(Cost U.S.$70,527) 45,199
----------
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FACE
AMOUNT
(000)
- ------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.5%)
(Interest Bearing Demand Account)
Thai Baht (Cost U.S.$690) THB 25,922 690
----------
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TOTAL THAI INVESTMENT PLAN
(Cost U.S.$71,217) 45,889
----------
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SHORT-TERM INVESTMENTS (3.0%)
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REPURCHASE AGREEMENT (3.0%)
Chase Securities, Inc. 4.65%, dated
3/31/99, due 4/1/99,
to be repurchased at
U.S.$1,417, collateralized by
U.S.$1,105, United States
Treasury Bonds, 8.50%, due
2/15/20, valued at U.S.$1,429
(Cost U.S.$1,417) U.S.$ 1,417 1,417
----------
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TOTAL INVESTMENTS (100.2%)
(Cost U.S.$72,634) 47,306
----------
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</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AMOUNT
(000) (000)
- -------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS AND LIABILITIES (-0.2%)
Other Assets U.S.$ 143
Liabilities (234) (91)
------------ -----------
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NET ASSETS (100%)
Applicable to 13,267,713 issued and
outstanding U.S.$0.01 par value shares
(30,000,000 shares authorized) U.S.$47,215
-----------
- -------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 3.56
-----------
- -------------------------------------------------------------
</TABLE>
@ -- Amount is less than U.S.$500.
6
