<PAGE>
------------------------------------------------
THE
THAI FUND,
INC.
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THIRD QUARTER REPORT
SEPTEMBER 30, 2000 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
Harold J. Schaaff, Jr.
PRESIDENT AND DIRECTOR
John D. Barrett II
DIRECTOR
Gerard E. Jones
DIRECTOR
Graham E. Jones
DIRECTOR
John A. Levin
DIRECTOR
Andrew McNally IV
DIRECTOR
William G. Morton, Jr.
DIRECTOR
Samuel T. Reeves
DIRECTOR
Fergus Reid
DIRECTOR
Frederick O. Robertshaw
DIRECTOR
Stefanie V. Chang
VICE PRESIDENT
Arthur J. Lev
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Mary E. Mullin
SECRETARY
Belinda A. Brady
TREASURER
Robin L. Conkey
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
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
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
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INDEPENDENT ACCOUNTANTS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
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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/im.
<PAGE>
LETTER TO SHAREHOLDERS
--------
For the nine months ended September 30, 2000, The Thai Fund, Inc. (the "Fund")
had a total return, based on net asset value per share, of -46.06% compared to
-48.88% for the U.S. dollar adjusted Securities Exchange of Thailand (SET) Index
(the "Index"). For the period from the Fund's commencement of operations on
February 16, 1988 through September 30, 2000, the Fund's total return, based on
net asset value per share, was -38.48% compared to -50.43% for the Index. On
September 30, 2000, the closing price of the Fund's shares on the New York Stock
Exchange was $4 3/16,representing a 36.0% premium to the Fund's net asset value
per share.
The Thai market fell 14.9% in local currency terms during the third quarter.
Bank of Thailand's (BoT) disclosure of a further U.S. $20 billion of foreign
debt that was previously unaccounted for led the round of sell-offs. The
shocking disclosure meant that our initial view of the country's strong trade
surplus kick-starting the economy would be further delayed. Political concerns
following signs of rising dissension among the government coalition partners
dented sentiment further. Finally, investors were also concerned about the
negative impact of higher oil prices on the growth of Thailand, which is a net
importer of oil. The banks, electronics and telecommunications sectors
underperformed during the third quarter, while the energy and media sectors were
more resilient.
Thailand's second quarter of 2000 GDP grew by 6.6%, compared to expectations of
4-5% and the first quarter of 2000's growth of 5.3%. Growth was led by the
manufacturing sector, in particular the exportable industries such as computers,
telecommunications equipment, consumer electronics and vehicles. The
agricultural sector showed much improvement in the second quarter of 2000 and
grew 5.2% compared with a contraction of 1.6% in the first quarter of 2000. On
the trade front, exports remained resilient and rose by 15.2% during the third
quarter, albeit slower than the first quarter's growth of 21.1%. Import of goods
and services slowed down and grew by 16.0% compared to a growth of 45.1% in the
first quarter. The slow-down was due to a 4.9% contraction in imports of
services. Oil imports in local currency terms rose by over 50% during the third
quarter due to the rise in oil price.
The domestic economy remained sluggish, with domestic consumption growing by
4.8% during the third quarter compared to 5.1% in the first quarter. Despite a
weaker baht and higher oil price, headline CPI was still hovering around the 2%
level. The Thai baht depreciated from 39.2/U.S. dollar to 42.1/U.S. dollar over
the third quarter, in-line with the fall in regional currencies. Interest rates
remained low due to ample liquidity in the system.
The banks reported improved performance during the second quarter, but that was
largely ignored. Instead, investors were concerned that DBS Thai Danu's sale of
its non-performing loans (NPLs) at a hefty discount of 72.5% would lead to
another round of losses for the banks, as they would mark down the value of
their collateral. For some banks, it would also lead to another round of capital
raising as their capital adequacy ratio fell below the minimum 8% requirement
set by the BoT. Hopes of a national asset management corporation being set up to
solve the stagnating NPL situation in the system faded as Dr. Thaksin Shinwatra,
leader of opposition party Thai Rak Thai who mooted the idea, may be
disqualified from challenging in the coming elections. For the other sectors,
the second quarter earnings were mainly uneventful, with most coming in-line
with expectations.
Oil price movement is likely to have a significant impact on market sentiments
in the near term. If oil prices continue to stay high, production costs could
rise, leading to dampening demand. The trade surplus might also narrow and
inflation could rear its ugly head. Corporate earnings may also be dented
significantly. A general election by December is adding further uncertainty to
the market. As such, we continue to prefer the export sector and selected stocks
in the domestic sector, especially those we believe possess good management
quality and strong balance sheets.
Sincerely,
/s/ Harold J. Schaaff, Jr.
Harold J. Schaaff, Jr.
PRESIDENT AND DIRECTOR
October 2000
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.
FOREIGN INVESTING INVOLVES CERTAIN RISKS, INCLUDING CURRENCY FLUCTUATIONS AND
CONTROLS, RESTRICTIONS ON FOREIGN INVESTMENTS, LESS GOVERNMENTAL SUPERVISION AND
REGULATION, LESS LIQUIDITY AND THE POTENTIAL FOR MARKET VOLATILITY AND POLITICAL
INSTABILITY.
--------------------------------------------------------------------------------
DAILY NET ASSET AND MARKET VALUES, AS WELL AS MONTHLY PORTFOLIO INFORMATION FOR
THE FUND, ARE AVAILABLE ON OUR WEBSITE AT www.msdw.com/im.
2
<PAGE>
The Thai Fund, Inc.
Investment Summary as of September 30, 2000 (Unaudited)
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--------------------------------------------------------------------------------
<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>
YEAR TO DATE -46.40% -- -46.06% -- -48.88% --
ONE YEAR -48.46 -48.46% -27.01 -27.01% -30.99 -30.99%
FIVE YEAR -79.33 -27.04 -86.46 -32.96 -87.26 -33.77
TEN YEAR -54.13 -7.50 -62.02 -9.23 -74.02 -12.61
SINCE INCEPTION* -16.36 -1.40 -38.48 -3.77 -50.43 -5.41
</TABLE>
Past performance is not predictive of future performance.
--------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[GRAPH] (PLOT POINTS TO COME)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS
ENDED
SEPTEMBER 30,
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share .. $ 13.08 $15.41 $20.69 $39.42 $ 28.30 $24.89 $ 15.63 $ 3.81 $ 3.80 $ 5.71 $ 3.08
Market Value Per Share ......$ 16.00 $16.25 $18.75 $36.88 $ 22.38 $22.38 $ 16.38 $ 5.25 $ 5.88 $ 7.81 $ 4.19
Premium/(Discount) .......... 22.3% 5.5% -9.4% -6.4% -20.9% -10.1% 4.8% 37.8% 54.7% 36.8% 36.0%
Income Dividends ............$ 0.21 $ 0.21 -- $ 0.36 $ 0.35 $ 0.11 $ 0.32 $ 0.11 $ 0.19 -- --
Capital Gains Distributions .$ 1.68 $ 0.47 -- $ 0.51 $ 4.62 $ 3.38 $ 0.08 $ 0.12 -- -- --
Fund Total Return (2) ....... -20.44% 23.08% 34.26% 98.90% -10.40%+ -0.10% -35.93% -75.17% 2.88% 50.26% -46.06%
Index Total Return (3) ...... -28.60% 15.80% 24.71% 88.40% -17.76% -6.11% -36.25% -75.54% 22.43% 32.41% -48.88%
</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, 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 September 30, 2000 (Unaudited)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
DIVERSIFICATION OF TOTAL INVESTMENTS
[PIE CHART]
<TABLE>
<S> <C>
Equity Securities (99.2%)
Short-Term Investments (0.8%)
</TABLE>
------------------------------------------------------------------------------
[PIE CHART]
INDUSTRIES
<TABLE>
<S> <C>
Other* (16.6%)
Electrical (3.8%)
Equipment
Beverages (3.8%)
Electronic Equipment (4.6%)
& Instruments
Oil & Gas (6.2%)
Food Products (7.5%)
Media (7.6%)
Banks (13.5%)
Construction
Materials (13.3%)
Wireless
Telecommunication
Services (12.4%)
Diversified Telecommunication
Services (10.7%)
</TABLE>
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TEN LARGEST HOLDINGS**
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<S> <C>
1. Advanced Information Service PCL 8.3%
2. Siam City Cement PCL 7.4
3. Thai Farmers Bank PCL 7.1
4. BEC World PCL 7.1
5. PTT Exploration & Production PCL 6.2
6. Siam Cement PCL 5.9
7. TelecomAsia PCL 5.5
8. Charoen Pokphand Foods PCL 5.5
9. Shinawatra Satellite PCL 5.2
10. Delta Electronics (Thailand) PCL 4.6
----
62.8%
====
</TABLE>
* Other includes industries not shown separately and other assets and
liabilities.
** Excludes short-term investments.
4
<PAGE>
INVESTMENTS (UNAUDITED)
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
VALUE
SHARES (000)
--------------------------------------------------------------------------------
THAI INVESTMENT PLAN (100.3%)
--------------------------------------------------------------------------------
<S> <C> <C>
THAI COMMON STOCKS (99.4%)
(Unless otherwise noted)
--------------------------------------------------------------------------------
AIRLINES (2.7%)
Thai Airways International PCL 1,329,900 U.S. $1,089
------------
--------------------------------------------------------------------------------
AUTO COMPONENTS (0.4%)
Thai Storage Battery PCL 390,600 176
--------------------------------------------------------------------------------
BANKS (13.2%)
Bangkok Bank PCL 2,898,050 1,513
Siam Commercial Bank PCL
(Foreign) 2,533,900 963
Thai Farmers Bank PCL 6,137,200 2,913
------------
5,389
------------
--------------------------------------------------------------------------------
BEVERAGES (3.8%)
Serm Suk PCL 869,300 1,547
------------
--------------------------------------------------------------------------------
CHEMICALS (2.6%)
National Petrochemical PCL 1,526,300 1,041
------------
--------------------------------------------------------------------------------
CONSTRUCTION MATERIALS (13.3%)
Siam Cement PCL 382,800 2,398
Siam City Cement PCL 1,271,945 3,019
------------
5,417
------------
--------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (10.7%)
Shinawatra Satellite PCL 2,903,475 2,102
TelecomAsia PCL 3,435,600 2,262
------------
4,364
------------
--------------------------------------------------------------------------------
ELECTRIC UTILITIES (3.5%)
Electricity Generating PCL 1,950,800 1,412
------------
--------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (3.8%)
Hana Microelectronics PCL 600,600 1,554
------------
--------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (4.6%)
Delta Electronics (Thailand) PCL 341,490 1,880
------------
--------------------------------------------------------------------------------
FOOD PRODUCTS (7.5%)
Charoen Pokphand Foods PCL 1,966,696 2,229
Thai Union Frozen Products PCL 380,200 812
------------
3,041
------------
--------------------------------------------------------------------------------
HOUSEHOLD DURABLES (2.7%)
Compass East Industry PCL 348,700 1,101
------------
--------------------------------------------------------------------------------
INSURANCE (1.6%)
Bangkok Insurance PCL 248,100 654
------------
--------------------------------------------------------------------------------
MEDIA (7.6%)
BEC World PCL 568,000 2,885
United Broadcasting Corp. PCL 604,600 236
------------
3,121
------------
--------------------------------------------------------------------------------
MULTILINE RETAIL (0.3%)
Siam Makro PCL 110,100 131
------------
--------------------------------------------------------------------------------
OIL & GAS (6.2%)
PTT Exploration & Production PCL 1,003,800 2,525
------------
--------------------------------------------------------------------------------
REAL ESTATE (0.4%)
Golden Land Property
Development PCL 1,850,000 180
------------
--------------------------------------------------------------------------------
TEXTILES & APPAREL (2.1%)
Saha-Union PCL 884,200 220
Thai Rung Textile PCL 958 -- @
Thai Wacoal PCL 347,013 649
------------
869
------------
--------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (12.4%)
Advanced Information Service PCL 469,300 3,386
Shin Corps. PCL 489,000 1,683
------------
5,069
------------
--------------------------------------------------------------------------------
TOTAL THAI COMMON STOCKS
(Cost U.S.$69,914) 40,560
------------
--------------------------------------------------------------------------------
NO. OF
WARRANTS
--------------------------------------------------------------------------------
WARRANTS (0.3%)
--------------------------------------------------------------------------------
BANKS (0.3%)
(a)Siam Commercial Bank PCL,
expiring 5/10/02
(Cost U.S. $--@) 1,687,800 120
------------
--------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
(000)
--------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (0.6%)
(Interest Bearing Demand Account)
Thai Baht (Cost U.S.$269) THB 11,408 271
------------
--------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
--------------------------------------------------------------------------------
<S> <C> <C>
TOTAL THAI INVESTMENT PLAN
(Cost U.S.$70,183) U.S.$ 40,951
------------
-------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (0.1%)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT (0.1%)
(a)Chase Securities, Inc., 6.25% dated
9/29/00, due 10/02/00
(Cost U.S.$60) U.S.$ 60 60
------------
--------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.4%)
(Cost U.S.$70,243) 41,011
------------
--------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.4%)
Other Assets 88
Liabilities (283) (195)
------------------
--------------------------------------------------------------------------------
NET ASSETS (100%)
Applicable to 13,267,713 issued and
outstanding U.S.$0.01 par value shares
(30,000,000 shares authorized) U.S.$ 40,816
------------
--------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 3.08
------------
--------------------------------------------------------------------------------
</TABLE>
(a) -- The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of this
schedule of investments. The investment in the repurchase agreement is
through participation in a joint account with affiliated funds.
@ -- Value is less than U.S.$500.
September 30, 2000 exchange rate -- Thai Baht (THB) 42.135 =
U.S.$1.00
