Edgar Filing: THAI CAPITAL FUND INC

THE THAI CAPITAL FUND, INC.
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GENERAL INFORMATION
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THE FUND

The Thai Capital Fund, Inc. (the "Fund") is a non-diversified, closed-end
management investment company. The Fund seeks long-term capital appreciation
through investment primarily in equity securities of Thai companies. The Fund's
investments in Thailand are made through a wholly-owned Investment Plan
established under an agreement between SCB Asset Management Co., Ltd. (the
"Manager") and the Fund. The Fund's investments through the Investment Plan are
managed by the Manager. Daiwa SB Investments (H.K.) Ltd. provides the Manager
with advice regarding investments by the Investment Plan and manages the Fund's
assets held outside the Investment Plan.

SHAREHOLDER INFORMATION

The Fund's shares are listed on the Pacific Exchange, Inc. ("PCX") and the
NASDAQ. The Fund understands that its shares may trade periodically on certain
exchanges other than the PCX or NASDAQ, but the Fund has not listed its shares
on those other exchanges and does not encourage trading on those exchanges.

The Fund's trading symbols are "TF" on the PCX and "THCF" on NASDAQ. Weekly
comparative net asset value ("NAV") and market price information about the Fund
is published each Monday in THE WALL STREET JOURNAL, each Sunday in THE NEW YORK
TIMES, and each Saturday in BARRON'S, and also in many other newspapers. The
Fund's weekly NAV is also available by visiting www.daiwast.com or calling
(800) 933-3440 or (201) 915-3020. Also, the Fund's website includes a monthly
market review and a list of the Fund's top ten industries and holdings.

INQUIRIES

All general inquiries and requests for information should be directed to the
Fund at (800) 426-5523. All written inquiries should be directed to the Fund at
the following address:

The Thai Capital Fund, Inc.
c/o Daiwa Securities Trust Company
One Evertrust Plaza, 9th Floor
Jersey City, NJ 07302-3051

For specific information about your share account, please contact EquiServe
Trust Company, N.A. (the "Plan Agent") at the address shown below.

DIVIDEND REINVESTMENT PLAN

A Dividend Reinvestment Plan (the "Plan") is available to provide
Shareholders with automatic reinvestment of dividends and capital gain
distributions in additional Fund shares. A brochure fully describing the Plan's
terms and conditions is available from the Plan Agent at the following address:

The Thai Capital Fund, Inc.
c/o EquiServe Trust Company, N.A.
P.O. Box 43011
Providence, RI 02940-3011
Telephone: (800) 426-5523

THE THAI CAPITAL FUND, INC.
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January 22, 2003
DEAR SHAREHOLDERS:

The management of the Thai Capital Fund, Inc. (the "Fund") would like to
take this opportunity to inform its shareholders about the Thai economy, the
activities of the Stock Exchange of Thailand ("SET"), and the Fund's performance
for the year ended December 31, 2002.

A REVIEW OF THE THAI ECONOMY IN 2002

The overall economy expanded favorably over the first nine months of 2002.
The National Economic and Social Development Board ("NESDB") recently announced
a stronger-than-expected second quarter 2002 Gross Domestic Product ("GDP")
growth of 5.1% year-on year ("YoY"), more active than the first quarter 2002
growth of 3.9%. Local demand expanded well, and farm income rose strongly as
both output and prices of major crops rose. Domestic consumption has been the
main impetus for this high growth, and the Private Investment Index and exports
have improved steadily, despite a deceleration in public expenditure in the
second half of 2002.

The Manufacturing Production Index for the first nine months of 2002 rose by
7.3% YoY, with average capacity utilization at 58.6% (slightly better than 55.7%
in January 2002). Iron and steel products, electronics and electrical
appliances, construction materials, beverages and vehicles led the production
gains. Production driven by domestic consumption included automobiles, iron and
steel products and cement. Electronic and electrical appliances for export also
boosted production over the past quarters.

Stronger private consumption can be attributed to the rise in farm income
and consumer confidence and a low interest rate environment. These factors have
helped expand consumer credit. As a result, the Private Consumption Index rose
3.1% YoY in the first nine months of 2002.

Private investment also rose 22.4% YoY in the first nine months of 2002. The
primary draw for investment remains machinery and equipment and construction.

In 2002, government revenue collection amounted to Bt845.4 billion,
surpassing the target by Bt46 billion. Tax revenue rose 10.7% YoY and non-tax
revenue was up 8.1%. Government spending totaled Bt973.2 billion, an increase of
11.1% YoY. The government imposed measures to accelerate budget disbursement
during the first half of 2002, leading to a slower rate of disbursement in the
second half of 2002. The government cash balance recorded a cumulative deficit
of Bt116.6 billion.

In the first nine months of 2002, export value increased 2.8% YoY and import
value rose 1.3%. Export recovery was led by strong external demand for
electronic products (except computers) and higher prices for rice and rubber.
The trade balance registered a surplus of U.S. dollar ("USD") 2.193 billion and
the current account surplus was USD 4.899 billion. The overall balance of
payments reflected a surplus of USD 3.052 billion. International reserves stood
at USD 37.7 billion at the end of September 2002.

Core Consumer Price Index ("CPI") for June 2002 and July 2002 hit a record
(27-month) low at 0.2% YoY. In the first nine months of 2002, CPI rose only 0.4%
and core CPI rose 0.5%. The Producer Price Index ("PPI") rose 1.0%.

THE THAI CAPITAL FUND, INC.
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Overall liquidity in the system remains high. In November 2002, the Bank of
Thailand ("BoT") Monetary Policy Committee ("MPC") decided to cut its 14-day
repurchase rate by 25 basis points to 1.75%. The purpose behind the cut was to
narrow the spread between the U.S. Federal Funds rate and Thai rates as a route
to curbing capital flow and to help support exports.

Over the past nine months of 2002, commercial bank private credit showed
signs of improvement. Credit extension to manufacturing, commerce and real
estate fell at a diminishing rate and strong credit expansion has been seen for
housing, personal consumption and public utilities since the beginning of the
year. In the first nine months of 2002, the Thai baht fluctuated between Bt40.38
to Bt44.21 per USD, with an average of Bt42.87.

The economy continued its expansion through November 2002. The Manufacturing
Production Index grew 10.9% YoY with capacity utilization at 63.5%. Nearly every
industrial sector demonstrated expansion in production. Private investment rose
22% YoY, weakening slightly from October 2002 due to deceleration in
construction and equipment. External uncertainties also brought some delays in
investment, particularly imports in capital goods. Exports grew well, up 16.7%
YoY, to a value of USD 6.155 billion. Strong regional demand for high-tech
products and continued high prices for agricultural products contributed to the
strong growth in exports. As a result, private consumption rose by 4.6% YoY. The
current account and balance of payments both showed a surplus, the former USD
949 million and the latter USD 737 million. International reserves as of
November 2002 increased from the previous month to USD 37.7 billion.

THAI ECONOMIC OUTLOOK FOR 2003

We believe that Thailand's economic recovery should continue the momentum
seen in 2002. GDP growth for the third quarter of 2002 was recently announced at
5.8% YoY. The NESDB projects GDP growth for 2002 of 4.9%, substantially higher
than GDP growth for 2001 of 1.9%. The key drivers for 2002 GDP growth were
private consumption, strong investment and robust exports.

The BoT recently announced a GDP growth forecast for 2003 of 3-4%; however,
the NESDB projects 3.5-4.5%. The consensus view for 2003 indicates a slowdown in
growth to 4.2% from 4.8% in 2002. Key factors will continue to be private
consumption and investment. The continuation of a low interest rate environment
and tax measures in 2003 will further strengthen growth in private consumption
and investment.

In response to low interest rates, durable goods consumption should
accelerate in 2003. Auto sales numbered 409,312 in 2002, an increase of 37.8%
YoY. The Thai Automotive Club announced a projection of 15% growth YoY to
468,000 units for 2003. This averages out to new car sales of 39,000 per month
in 2003, increasing from 34,000 units in 2002. Management of listed residential
developers forecast growth for single detached houses of 10-15% for 2003 as
employment gradually improves along with investor and consumer confidence. This
will finally provide some help with financial institution non-performing loans
and promote more successful lending to Small to Medium Enterprises ("SME's").

In October 2002, the Cabinet approved funds of nearly Bt40 billion to
stimulate Thailand's "grassroots" economy, comprised of Bt21 billion of
emergency stimulus funds left over from the previous budget and Bt16 billion of
structural adjustment loans from the World Bank and the Asian Development Bank.
Apart from grassroots stimulus, the Cabinet also extended specific business tax
reductions and registration and transfer fees applicable to real-estate
transactions. The government also lifted the personal income tax exemption from

THE THAI CAPITAL FUND, INC.
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Bt50,000 to Bt80,000 to ease the tax burden on middle income earners and to
provide them with more purchasing power. These government stimulus measures,
including an eased monetary policy, will support domestic demand and help
alleviate any downside risk from a slowing global recovery.

In all, we view private consumption as continuing to be the key driver for
growth. A strong rise in farm income, a delay of Value Added Tax ("VAT")
increase until the next fiscal year (October 2003) and the low interest rate
environment should continue to strengthen consumer confidence. Private
investment shows signs of improvement as well. Recent strong growth in imports
of capital goods suggests a brighter outlook for private investment. At the same
time, export growth is tied to the pace of economic recovery in the world and
U.S. economies. Hence, external demand remains a major risk factor for 2003.

STOCK MARKET OVERVIEW IN 2002

Looking back to the first six months, to June 2002, equity markets around
the world had to contend with the prospect of global recession led by the U.S.,
"September 11", Argentina, and the bankruptcies of Enron and WorldCom which only
served to increase the levels of fear and uncertainty that pushed stock markets
around the world to new lows. Thailand was an exception. The year started off
with aggressive buying by foreign investors. The SET Index rose strongly by
28.06% from 303.85 points to 389.10 points in six months (peaking at 426.45
points), making it one of the best performing markets in the world.

However, Thailand's stock market declined to 331.79 points at the end of
September 2002 (-14.73% from mid-year), still up by 9.20% year-to-date. The SET
Index closed the year at 356.48 points, up by 17.32% over the year and 7.44% in
the fourth quarter of 2002.

On the fundamental side, Prime Minister Thaksin decided to open up the
retail industry in November 2002 to further foreign competition after the likes
of Tesco and Carrefour have taken 40% of the market. With Foreign Direct
Investment ("FDI") having already collapsed to just USD 143 million this year
(versus USD 2.1 billion last year), Tesco's FDI already represents 5% of the
total FDI in Thailand. Then, the retailer sector collapsed before the year end.

Moreover, the government also introduced laws to cap interest rate charges
on credit cards to 18% and to reinstate the minimum salary requirement of
Bt15,000 per month. Despite low credit card penetration rates, this effectively
limits the growth of new credit cards and most probably private consumption
demand in Thailand. The result of the new policy was to raise concerns over
slowing consumer spending and thus hit the consumer finance stocks.

In December 2002, tax incentives for the property market were extended. The
personal income tax exemption was also raised from Bt50,000 a year to Bt80,000 a
year. The total tax cuts will cost the government between Bt13 billion and
Bt15 billion. This will be replaced by a planned increase in VAT (from 7% to 10%
in October 2003), raising approximately Bt60 billion per year and helping to
balance the budget in 2007.

Similar to the U.S. Federal Reserve, the BoT cut interest rates (14-day
repo) by 25 basis points from 2.0% to 1.75%. In September 2002 the unemployment
rate rose to 1.9% from 1.7%. However, capacity utilization also rose in October
2002, to 61.6% from 60.0%. Thai Business Confidence in October 2002 also rose to
51.5 versus 49.5 in September 2002. In November 2002 the CPI increased 1.2% YoY
and import data jumped +14.4% YoY to USD 5.88 billion. The NESDB announced its
official third quarter 2002 GDP growth at 5.8%, higher than the

THE THAI CAPITAL FUND, INC.
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market expected. For the first nine months of 2002, the Thai economy registered
4.9% growth, helped by strong domestic demand. Private consumption grew 5%,
thanks mainly to higher farm income and low interest rates, boosting sentiment
before year end 2002.

THAI STOCK MARKET OUTLOOK FOR 2003

Economic figures indicate that strong private consumption will continue,
supported in part by high housing registrations of single detached houses and
automobile sales. Sales of automobiles were up 2.4% month-on-month ("MoM") to
37,481 units, a record high since 1997. We believe there is still some momentum
in consumption-led economic growth, but this is not likely to last long if
investment does not keep step. We need investment and exports to pick up further
in order to sustain economic growth.

We also maintain our concern about the decelerating U.S. economy and
possible war against Iraq. We believe the SET may enter the initial stage of
Phase II, which is when the market moves sideways with some occasional small
rallies, in the first month of 2003. The government has been active in providing
regulatory stimulus, such as extending property tax incentives and the personal
tax exemption. We believe, however, there may not be many tricks left in their
bag to pull out and expect them to fund the deficit by a planned increase in VAT
(from 7% to 10%) in October 2003.

In all, we view that the market has already priced in the uncertainty of
war. Given that positive key drivers remain private consumption and investment,
the continuation of a low interest rate environment and tax measures in 2003
will further strengthen growth in private consumption and investment and we
believe further downside is limited.

THE FUND'S PERFORMANCE AND STRATEGY

As of December 31, 2002, the Thai Capital Fund, Inc. consisted of 3,139,294
shares with total net assets of USD 13.61 million, representing a net asset
value per share of USD 4.34. Of this amount, Thai equity securities accounted
for 95.27%; the remainder was in cash and bank deposits.

Of the total net assets, 18.79% was invested in the banking sector, 15.71%
in energy, 13.34% in property development, 11.74% in communication, 8.29% in
building materials and 6.79% in entertainment and recreation. The remainder was
invested in the electronic components, finance and securities, and printing and
publishing sectors.

As of year end 2002 in Thai baht terms, the portfolio outperformed the
benchmark SET Index by 10.75% (+28.07% vs. +17.32%), primarily due to our
overweight position in Property, Printing and Publishing, Energy and the biggest
cement producer in Thailand.

As we mentioned that the key drivers remain positive, we are prepared to
invest as opportunities arise. However, we will focus on switching among sectors
rather than asset allocation plays. Cautious selection of sectors and stocks
still take priority. Although there are still uncertainties surrounding a global
economic recovery, local consumption-led growth and limited downside risk should
favor Thailand.

THE THAI CAPITAL FUND, INC.
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PORTFOLIO MANAGEMENT

Mr. Cholathee Pornrojnangkool has been the Fund's portfolio manager since
November 12, 2001. SCB Asset Management Co., Ltd. ("SCBAM") has employed
Mr. Pornrojnangkool since 1999 and he is currently a member of SCBAM's
Investment Committee. Previously, Mr. Pornrojnangkool was a private fund manager
at SCB Securities Ltd. He has eight years of investment experience.

Mrs. Naravadee Jaijongkit is responsible for overseeing SCBAM's Equity Group
and is a senior member of SCBAM's Investment Committee as well as its Management
Committee. Mrs. Jaijongkit joined the firm in 1998 and was previously with SCB
Securities Ltd. as a fund manager in its private client division.
Mrs. Jaijongkit has nine years of investment experience.

Finally, the Fund's management would like to express its sincere thanks to
all shareholders for their continued support and participation.

Sincerely yours,

[/S/ IKUO MORI]
IKUO MORI
CHAIRMAN OF THE BOARD

THE THAI CAPITAL FUND, INC.
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PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2002
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THAI COMMON, WARRANTS AND PREFERRED STOCKS--95.27%

-------------------------------------------
COMMON STOCKS--91.26%
--------------------------------------------------------------------------------

SHARES VALUE
---------- ------------

BANKS--17.54%
1,102,700 Bangkok Bank Public Co., Ltd.*..... $ 1,268,968
740,400 DBS Thai Danu Bank Public Co.,
Ltd.*............................. 86,065
1,673,700 Industrial Finance Corp. of
Thailand*......................... 196,498
455,500 Krung Thai Bank Public Co.,
Ltd.*............................. 70,950
1,267,400 The Thai Farmers Bank Public Co.,
Ltd.*............................. 766,082
------------
2,388,563
------------
BUILDING MATERIALS--8.29%
41,400 The Siam Cement Public Co., Ltd.... 1,128,018
------------
COMMERCE--1.48%
304,600 BIG C Supercenter Public Co.,
Ltd.*............................. 116,843
113,400 Siam Makro Public Co., Ltd......... 84,363
------------
201,206
------------
COMMUNICATION--11.74%
1,275,500 Advanced Info Service Public Co.,
Ltd............................... 1,052,681
190,900 Samart Corp. Public Co., Ltd.*..... 43,271
939,000 Shin Corporations Public Co.,
Ltd.*............................. 220,483
343,950 Shin Satellite Public Co., Ltd.*... 133,537
308,300 TelecomAsia Corp. Public Co.,
Ltd.*............................. 32,970

SHARES VALUE
---------- ------------

394,400 United Communication Industry
Public Co., Ltd.*................. $ 115,530
------------
1,598,472
------------
ELECTRONIC COMPONENTS--3.21%
584,840 Delta Electronics Thai Public Co.,
Ltd............................... 370,503
43,100 Hana Microelectronic Public Co.,
Ltd............................... 66,132
------------
436,635
------------
ENERGY--15.71%
333,900 Electricity Generating Public Co.,
Ltd............................... 289,155
342,100 PTT Exploration and Production
Public Co., Ltd................... 1,129,353
585,000 PTT Public Co., Ltd................ 574,607
345,600 Ratchaburi Electricity Generating
Holding Public Co., Ltd........... 145,425
------------
2,138,540
------------
ENTERTAINMENT & RECREATION--6.79%
125,300 BEC World Public Co., Ltd.......... 594,250
135,700 GMM Media Public Co., Ltd.*........ 82,813
1,200,000 ITV Public Co., Ltd.*.............. 119,960
17,300 Major Cineplex Group Public Co.,
Ltd.*............................. 32,578
282,777 United Broadcasting Corp. Public
Co., Ltd.*........................ 95,324
------------
924,925
------------

See accompanying notes to financial statements.

THE THAI CAPITAL FUND, INC.
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PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2002
--------------------------------------------------------------------------------

COMMON STOCKS (CONCLUDED)
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SHARES VALUE
---------- ------------

FINANCE & SECURITIES--2.55%
64,600 ABN Amro Asia Securities Public
Co., Ltd.......................... $ 57,445
139,600 Krungthai Card Public Co., Ltd.*... 42,515
800,000 National Finance Public Co.,
Ltd.*............................. 247,360
------------
347,320
------------
HOUSEHOLD GOODS--0.39%
102,700 Modernform Group Public Co.,
Ltd............................... 52,766
------------
MINING--1.46%
713,700 Padaeng Industry Public Co.,
Ltd.*............................. 199,106
------------
PRINTING & PUBLISHING--5.04%
327,900 Amarin Printing Group Public Co.,
Ltd............................... 686,076
------------
PROPERTY DEVELOPMENT--11.01%
83,100 Lalin Property Public Co., Ltd.*... 50,713
753,900 Land and House Public Co., Ltd..... 1,393,378
110,400 Sammakorn Public Co., Ltd.......... 54,668
------------
1,498,759
------------
RETAIL FOOD--1.77%
70,000 S&P Syndicate Public Co., Ltd...... 38,731
13,800 Serm Suk Public Co., Ltd........... 68,656
337,500 Thai Union Frozen Products Public
Co., Ltd.......................... 133,386
------------
240,773
------------
UTILITIES--2.24%
403,100 Eastern Water Resources Development
& Management Public Co., Ltd...... 304,568
------------

SHARES VALUE
---------- ------------

VEHICLES & PARTS--2.04%
60,300 Aapico Hitech Public Co., Ltd.*.... $ 44,159
475,000 Thai Rung Union Car Co., Ltd....... 84,478
46,900 Thai Stanley Electric Public Co.,
Ltd............................... 149,376
------------
278,013
------------
Total Common Stocks
(Cost--$13,074,061).......................... 12,423,740
------------

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PREFERRED STOCKS--1.65%
-------------------------------------------

BANKS--1.25%
267,800 The Siam Commercial Bank Public
Co., Ltd.*........................ 169,654
------------
FINANCE & SECURITIES--0.40%
104,100 TISCO Finance Public Co., Ltd.*.... 54,695
------------
Total Preferred Stocks
(Cost--$163,699)............................. 224,349
------------

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WARRANTS--2.36%
-------------------------------------------

PROPERTY DEVELOPMENT--2.33%
285,550 Land & House Public Co., Ltd.*..... 316,989
------------
RETAIL FOOD--0.03%
35,000 S&P Syndicate Public Co., Ltd.*.... 4,312
------------
Total Warrants (Cost--$0)...................... 321,301
------------
Total Thai Common, Warrants and
Preferred Stocks
(Cost--$13,237,760).......................... 12,969,390
------------

See accompanying notes to financial statements.

THE THAI CAPITAL FUND, INC.
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PORTFOLIO OF INVESTMENTS (CONCLUDED)
DECEMBER 31, 2002
--------------------------------------------------------------------------------

-------------------------------------------
SHORT-TERM INVESTMENTS--1.50%
-------------------------------------------

PRINCIPAL
AMOUNT
(000) VALUE
---------- ------------

THAI BAHT SAVINGS ACCOUNT--1.34%
2,535 Bank Credit Agricole Indosuez,
1.375%, (Payable on Demand)....... $ 58,940
5,298 Citibank N.A. Gold, 0.50%, (Payable
on Demand)........................ 123,177
------------
Total Thai Baht Savings Account................ 182,117
------------
U.S. DOLLAR TIME DEPOSIT--0.16%
$22 Bank of New York, 0.10%, due
1/2/03............................ 22,207
------------
Total Short-Term Investments
(Cost--$196,067)............................. 204,324
------------
Total Investments--96.77%
(Cost--$13,433,827).......................... 13,173,714
Other assets less liabilities--(3.23%)......... 439,906
------------
NET ASSETS (Applicable to 3,139,294 shares of
capital stock outstanding; equivalent to
$4.34 per share) (100.00%)................... $ 13,613,620
============

------------------------

* Non-income producing securities.

-------------------------------------------
TEN LARGEST EQUITY
CLASSIFICATIONS HELD
DECEMBER 31, 2002
-------------------------------------------

PERCENT OF
INDUSTRY NET ASSETS
-------- ----------

Banks#............................. 18.79%

Energy............................. 15.71

Property Development**............. 13.34

Communication...................... 11.74

Building Materials................. 8.29

Entertainment & Recreation......... 6.79

Printing & Publishing.............. 5.04

Electronic Components.............. 3.21

Finance & Securities#.............. 2.95

Utilities.......................... 2.24

-------------------------------------------
TEN LARGEST EQUITY
POSITIONS HELD
DECEMBER 31, 2002
-------------------------------------------

PERCENT OF
ISSUE NET ASSETS
----- ----------

Land and House Public Co.,
Ltd.**............................. 12.56%

Bangkok Bank Public Co., Ltd....... 9.32

PTT Exploration and Production
Public Co., Ltd.................. 8.30

The Siam Cement Public Co., Ltd.... 8.29

Advanced Info Service Public Co.,
Ltd................................ 7.73

The Thai Farmers Bank Public
Co., Ltd......................... 5.63

Amarin Printing Group Public Co.,
Ltd................................ 5.04

BEC World Public Co., Ltd.......... 4.37

PTT Public Co., Ltd................ 4.22

Delta Electronics Thai Public Co.,
Ltd................................ 2.72

------------------------

** Includes the value of warrants.

# Includes the value of preferred stocks.

See accompanying notes to financial statements.

THE THAI CAPITAL FUND, INC.
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STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2002
--------------------------------------------------------------------------------

ASSETS
Investment in securities, at value
(cost--$13,433,827)....................... $ 13,173,714
Cash denominated in foreign currency
(cost--$553,059).......................... 547,939
Interest receivable........................ 794
Prepaid expenses........................... 4,522
------------
Total assets............................. 13,726,969
------------
LIABILITIES
Accrued expenses and other liabilities..... 113,349
------------
NET ASSETS
Capital stock, $0.01 par value per share;
total 100,000,000 shares authorized;
3,139,294 shares issued and outstanding... 31,393
Paid-in capital in excess of par value..... 61,492,413
Accumulated net investment loss............ (2,396)
Accumulated net realized loss on
investments and foreign currency
transactions.............................. (47,642,555)
Net unrealized depreciation on investments
and other assets and liabilities
denominated in foreign currency........... (265,235)
------------
Net assets applicable to shares
outstanding............................. $ 13,613,620
============
NET ASSET VALUE PER SHARE............ $ 4.34
============

See accompanying notes to financial statements.

THE THAI CAPITAL FUND, INC.
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STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
--------------------------------------------------------------------------------

INVESTMENT INCOME:
Dividends.................................. $ 277,344
Interest................................... 4,112
----------
Total investment income.................. 281,456
----------
EXPENSES:
Administration fee and expenses............ 151,996
Investment advisory fee.................... 81,043
Investment management fee.................. 80,765
Legal fees and expenses.................... 79,569
Osaka Securities Exchange fees and
expenses.................................. 69,773
Audit and tax services..................... 53,100
Reports and notices to shareholders........ 35,702
Directors' fees and expenses............... 31,679
Transfer agency fee and expenses........... 29,009
Custodian fees and expenses................ 24,553
Insurance expense.......................... 7,601
Other...................................... 25,959
----------
Total expenses........................... 670,749
----------
Waiver of:
Administration fee....................... (50,000)
Investment advisory fee.................. (43,027)
----------
NET INVESTMENT LOSS AFTER WAIVERS............ (296,266)
----------
REALIZED AND UNREALIZED GAINS FROM INVESTMENT
ACTIVITIES AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized losses on investments......... (496,500)
Net realized foreign currency transaction
gains..................................... 34,727
Net change in unrealized appreciation
(depreciation) on equity investments...... 3,666,461
Net change in unrealized appreciation
(depreciation) on translation of
short-term investments and other assets
and liabilities denominated in foreign
currency.................................. (17,693)
----------
Net realized and unrealized gains from
investment activities and foreign
currency transactions....................... 3,186,995
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $2,890,729
==========

See accompanying notes to financial statements.

THE THAI CAPITAL FUND, INC.
----------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------

FOR THE YEARS ENDED
DECEMBER 31,
------------------------
2002 2001
----------- -----------

INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment loss................... $ (296,266) $ (522,310)
Net realized gain (loss) on:
Investments......................... (496,500) (2,015,064)
Foreign currency transactions....... 34,727 (96,276)
Net change in unrealized appreciation
(depreciation) on:
Investments in equity securities.... 3,666,461 2,746,812
Translation of short-term
investments and other assets and
liabilities denominated in foreign
currency........................... (17,693) 78,557
----------- -----------
Net increase in net assets resulting
from operations...................... 2,890,729 191,719
----------- -----------
NET ASSETS:
Beginning of year..................... 10,722,891 10,531,172
----------- -----------
End of year........................... $13,613,620 $10,722,891
=========== ===========

See accompanying notes to financial statements.

THE THAI CAPITAL FUND, INC.
----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Thai Capital Fund, Inc. (the "Fund") was incorporated in Maryland on
March 14, 1990 and commenced operations on May 30, 1990. It is registered with
the U.S. Securities and Exchange Commission as a non-diversified, closed-end
management investment company.

The Fund makes its investments in Thailand through a wholly-owned Investment
Plan pursuant to a contract with SCB Asset Management Co., Ltd. (the "Manager").
The accompanying financial statements are prepared on a consolidated basis and
present the financial position and results of operations of the Investment Plan
and the Fund.

The following significant accounting policies are in conformity with
generally accepted accounting principles in the United States of America for
investment companies. Such policies are consistently followed by the Fund in the
preparation of its financial statements. The preparation of its financial
statements in accordance with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the amounts and disclosures in the financial statements. Actual
reported results could differ from those estimates.

VALUATION OF INVESTMENTS--Securities listed on the Securities Exchange of
Thailand for which market quotations are readily available are valued at the
last sales price prior to the time of determination, or, if there were no sales
on such date, at the mean between the last current bid and ask prices.
Securities that are traded over-the-counter, if bid and asked quotations are
available, are valued at the mean between the current bid and asked prices. In
instances where quotations are not readily available or where the price
determined is deemed not to represent fair market value, fair value is
determined in good faith in such manner as the Board of Directors (the "Board")
may prescribe. Short-term investments having a maturity of sixty days or less
are valued at amortized cost, which approximates market value.

TAX STATUS--It is the Fund's intention to continue to qualify as a regulated
investment company and distribute substantially all of its taxable income.
Accordingly, no provision for U.S. Federal income or excise taxes is required in
the financial statements.

Remittances from the Investment Plan to the Fund are subject to a Thai
withholding tax of 10% and such remittances are required by Thai law to be
derived only from the Investment Plan's net income and net realized gains on the
sale of securities. The Fund records a provision for such taxes based upon the
Investment Plan's overall net increase in net assets resulting from operations
determined by reference to the Baht. Remittances for the payment of expenses are
not subject to a Thai withholding tax.

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--The Fund records dividends and
distributions payable to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations, which
may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are

THE THAI CAPITAL FUND, INC.
----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for tax purposes are reported as distributions of paid-in-capital.

FOREIGN CURRENCY TRANSLATION--The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities and other assets and liabilities stated in foreign
currency are translated at the exchange rate prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the rate
of exchange prevailing on the respective dates of such transactions. The
resulting exchange gains and losses are included in the Statement of Operations.
The Fund does not isolate the effect of fluctuations in foreign exchange rates
from the effect of fluctuations in the market price of securities.

INVESTMENT TRANSACTIONS AND INVESTMENT INCOME--Securities transactions are
recorded on the trade date (the date upon which the order to buy or sell is
executed). Realized and unrealized gains and losses from security and foreign
currency transactions are calculated on the identified cost basis. Dividend
income and corporate actions are recorded on the ex-date, except for certain
dividends and corporate actions involving foreign securities which may be
recorded after the ex-date, as soon as the Fund acquires information regarding
such dividends or corporate actions. Interest income is recorded on an accrual
basis.

INVESTMENT MANAGER AND INVESTMENT ADVISER

The Manager acts as the investment manager of the Investment Plan pursuant
to the Investment Contract. The Manager makes the investment management
decisions relating to the Fund's assets held through the Investment Plan. For
its management services, the Manager receives a fee, which accrues weekly and is
payable monthly in Baht, at an annual rate of 0.60% of the Investment Plan's
average net assets. At December 31, 2002, the Fund owed the Manager $7,182. In
addition, as permitted by the Investment Contract, the Fund reimburses the
Manager for its out-of-pocket expenses related to the Fund. During the year
ended December 31, 2002, no such expenses were paid to the Manager.

Under the International Investment Advisory Agreement, Daiwa SB Investments
(H.K.) Ltd. ("the Adviser") provides general and specific investment advice to
the Manager with respect to the Fund's assets held through the Investment Plan,
but the Manager makes the ultimate decisions regarding investments. In addition,
the Adviser manages the Fund's assets held outside the Investment Plan. The Fund
pays to the Adviser a fee, which accrues weekly and is payable monthly in U.S.
Dollars, at an annual rate equal to 0.60% of the Fund's average net assets. In
addition, as permitted by the Advisory Agreement, the Fund reimburses the
Adviser for its out-of-pocket expenses related to the Fund. However, for the
year ended December 31, 2002, there were no out-of-pocket expenses incurred by
the Adviser. Effective January 1, 2002 through May 31, 2002, the Adviser
voluntarily decreased its fee to 0.40% of the Fund's average net assets.
Effective June 1, 2002, the Adviser has voluntarily decreased its fee to 0.20%
of the Fund's average net assets. At December 31, 2002, the Fund owed the
Adviser $2,290, net of waivers.

ADMINISTRATOR AND CUSTODIAN AND OTHER RELATED PARTIES

Daiwa Securities Trust Company ("DSTC"), an affiliate of the Adviser,
provides certain administrative services to the Fund. For such services, the
Fund pays DSTC a monthly fee at an annual rate of 0.20% of the Fund's average
weekly net assets, with a minimum annual fee of $150,000. DSTC has voluntarily
decreased its minimum annual administration fee to $100,000 for the year ended
December 31, 2002. In addition, as permitted by the Administration Agreement,
the Fund reimburses DSTC for its out-of-pocket expenses related to the Fund.
During the year ended December 31, 2002, expenses of $1,996 were paid to the
Administrator, representing reimbursement to the Administrator of costs relating
to the attendance by its employees at meetings of the Fund's Board.

DSTC also acts as custodian for the Fund's U.S. assets. As compensation for
its services as custodian, DSTC receives a monthly fee and reimbursement of
out-of-pocket expenses. During the year ended December 31, 2002, DSTC earned
$7,303, as compensation for its custodial services to the Fund.

At December 31, 2002, the Fund owed $8,333 and $567 to DSTC for
administration and custodian fees, respectively.

The Fund paid or accrued $68,100 for the year ended December 31, 2002 for
legal services in conjunction with the Fund's ongoing operations to the Fund's
law firm, Clifford Chance US LLP, of which the Fund's Assistant Secretary is a
partner.

INVESTMENTS IN SECURITIES AND FEDERAL INCOME TAX MATTERS

During the year ended December 31, 2002, the Fund made purchases of
$1,831,333 and sales of $2,050,847 of investment securities, excluding
short-term investments. The aggregate cost of investments at December 31, 2002
for federal income tax purposes, was substantially the same as the cost of
securities for financial statement purposes. At December 31, 2002, net
unrealized depreciation, excluding short-term securities aggregated $268,370 of
which $3,268,267 related to appreciated securities and $3,536,637 related to
depreciated securities.

In order to present accumulated net investment loss and accumulated net
realized loss on investments on the Statement of Assets and Liabilities that
more closely represent their tax character, certain adjustments have been made
to paid-in capital in excess of par value, accumulated net investment loss and
accumulated net realized loss on investments.

For the year ended December 31, 2002, the adjustments were to decrease
accumulated net investment loss by $293,870, increase accumulated net realized
loss on investments by $34,727 and decrease paid-in-capital in excess of par by
$259,143, primarily relating to the Fund's net operating loss for the year ended
December 31, 2002 and the reclassification of realized foreign currency losses.
Net investment income, net realized losses and net assets were not affected by
this change.

THE THAI CAPITAL FUND, INC.
----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
--------------------------------------------------------------------------------

At December 31, 2002, the Fund had a remaining capital loss carryover of
$47,549,989 of which $8,055,254 expires in the year 2005, $24,330,001 expires in
the year 2006, $6,364,433 expires in the year 2007, $5,797,861 expires in the
year 2008, $2,320,539 expires in the year 2009 and $681,901 expires in the year
2010 available to offset future net capital gains.

At December 31, 2002, the Fund had deferred capital and foreign currency
losses of $92,565 and $2,396 respectively. For tax purposes, such losses will be
reflected in the period ended December 31, 2003.

As of December 31, 2002, the Fund had no distributable earnings.

CONCENTRATION OF RISK

The Fund's investments in Thailand involve certain considerations and risks
not typically associated with domestic investments as a result of, among others,
the possibility of future economic and political developments and the level of
government supervision and regulation of securities markets.

The currency transactions of the Fund and the Investment Plan are subject to
Thai foreign exchange control regulations. Remittances from the Plan require the
approval of the Exchange Control Officer of the Bank of Thailand. There can be
no assurance that approval of remittances from the Plan will be granted in a
timely fashion or at all.

The economic difficulties experienced in Thailand have had an impact on the
banking industry. All of the Fund's investments are held in Thailand through a
subcustodial arrangement with Bangkok Bank Public Company Limited (the
"subcustodian") and the Fund's securities in turn are being held by the Thailand
Securities Depository Company in book-entry form. In the event of failure of the
subcustodian, legal counsel has informed the Fund that the Fund would be able to
recover all of its securities held by the subcustodian. The Fund's ability to
enter into investment transactions pertaining to such securities may be
effectively restricted for the period of time required to resolve the Fund's
claim to recover such securities.

CAPITAL STOCK

There are 100,000,000 shares of $0.01 par value common stock authorized. Of
the 3,139,294 shares outstanding at December 31, 2002, Daiwa Securities America
Inc., a lead underwriter of the Fund and an affiliate of both the Adviser and
DSTC, owned 7,230 shares.

Effective August 5, 2002, the Fund's issued and outstanding shares had a
one-for-two reverse split. As a result the shares outstanding were reduced to
3,139,294. The financial statements have been adjusted on a retroactive basis to
reflect the reverse stock split.

THE THAI CAPITAL FUND, INC.
----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS+
--------------------------------------------------------------------------------

Selected data for a share of capital stock outstanding during each year is
presented below:

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------
2002 2001 2000 1999 1998
-------- -------- -------- -------- --------

Net asset value, beginning of year..................... $ 3.42 $ 3.36 $ 7.22 $ 6.24 $ 5.76
------- ------- ------- ------- -------
Net investment loss.................................... (0.09) (0.16)* (0.18)* (0.18) (0.10)
Net realized and unrealized gains (losses) on
investments and foreign currency transactions......... 1.01 0.22 * (3.68)* 1.16 0.58
------- ------- ------- ------- -------
Net increase (decrease) in net asset value resulting
from operations....................................... 0.92 0.06 (3.86) 0.98 0.48
------- ------- ------- ------- -------
Net asset value, end of year........................... $ 4.34 $ 3.42 $ 3.36 $ 7.22 $ 6.24
======= ======= ======= ======= =======
Per share market value, end of year.................... $ 3.970 $ 2.800 $ 3.250 $ 9.750 $ 7.626
======= ======= ======= ======= =======
Total investment return:
Based on market price at beginning and end of year... 41.79 % (13.85)% (66.67)% 27.87 % 1.67 %
Based on net asset value at beginning and end of
year................................................ 26.90 % 1.79 % (53.46)% 15.71 % 8.33 %
Ratios and supplemental data:
Net assets, end of year (in millions)................ $ 13.6 $ 10.7 $ 10.5 $ 22.6 $ 19.6
Ratios to average net assets of:
Expenses, excluding Thai taxes applicable to net
investment income................................. 4.29 % 5.98 % 4.73 % 3.92 % 3.83 %
Expenses, including Thai taxes applicable to net
investment income................................. 4.29 % 6.43 % 5.11 % 3.92 % 3.83 %
Expenses excluding waiver of Administration and
Advisory fee applicable to net investment
income............................................ 4.98 % 7.09 % 5.66 % 4.16 % 4.09 %
Expenses including waiver of Administration and
Advisory fee applicable to net investment
income............................................ 4.29 % 6.43 % 5.11 % 3.92 % 3.83 %
Net investment loss................................ (2.20)% (4.77)% (4.03)% (2.78)% (1.64)%
Portfolio turnover..................................... 14.62 % 20.85 % 45.46 % 63.45 % 38.91 %

---------------------------------------------------------------------------
+ Per share values are adjusted to reflect the one-for-two reverse stock
split effective August 5, 2002.
* After provision for Thai taxes.

THE THAI CAPITAL FUND, INC.
----------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------

To The Shareholders and
Board of Directors of
The Thai Capital Fund, Inc.

In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Thai Capital Fund, Inc. (the
"Fund") at December 31, 2002, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2002 by
correspondence with the custodians, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 12, 2003

THE THAI CAPITAL FUND, INC.
----------------------------------------------------------------------
TAX INFORMATION (UNAUDITED)
--------------------------------------------------------------------------------

The Fund is required by Subchapter M of the Internal Revenue Code of 1986,
as amended, to advise you within 60 days of the Fund's fiscal year end
(December 31, 2002) as to the federal tax status of any distributions received
by you during such fiscal year.

There will be no dividend payment or foreign tax credit with respect to the
fiscal year 2002.

SHAREHOLDERS ARE STRONGLY ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES OF THEIR INVESTMENT IN THE FUND.

THE THAI CAPITAL FUND, INC.
----------------------------------------------------------------------
INFORMATION CONCERNING DIRECTORS AND OFFICERS
--------------------------------------------------------------------------------

The following table sets forth information concerning each of the Directors
and Officers of the Fund. The Directors of the Fund will serve for terms
expiring on the date of subsequent Annual Meetings of Stockholders in the year
2004 for Class I Directors, 2005 for Class II Directors and 2003 for Class III
Directors, or until their successors are duly elected and qualified.

NUMBER OF
FUNDS IN
PRINCIPAL OCCUPATION FUND
OR EMPLOYMENT DURING PAST COMPLEX FOR
FIVE YEARS AND DIRECTOR OR WHICH
NAME (AGE) AND ADDRESS DIRECTORSHIPS IN OFFICER OF DIRECTOR
OF DIRECTORS/OFFICERS PUBLICLY HELD COMPANIES FUND SINCE SERVES (1)
--------------------------- ---------------------------------------- -------------- -----------

DIRECTORS
Austin C. Dowling (70) Retired; Director, The Japan Equity Class II 3
1002 E Long Beach Boulevard Fund, Inc., since 1992; Director, The Director since
North Beach, NJ 08008 Singapore Fund, Inc., since 2000. 1990

Martin J. Gruber (64) Professor of Finance, Leonard N. Stern Class I 3
229 South Irving Street School of Business, New York University, Director since
Ridgewood, NJ 07450 since 1965; Director, The Japan Equity 2000
Fund, Inc., since 1992; Director, The
Singapore Fund, Inc., since 2000;
Director, SG Cowen Income & Growth
Fund, Inc., from 1986 to 2001; Director,
SG Cowen Opportunity Fund, from 1987 to
2001; Director, SG Cowen Standby Reserve
Fund Inc., from 1985 to 2001; Director,
SG Cowen Standby Tax Exempt Reserve Fund
Inc., from 1986 to 2001; Trustee,
Deutsche Asset Management BT Family of
Funds, since 1992; Trustee, C.R.E.F.,
since 2001; Trustee, T.I.A.A., from 1996
to 2000.

THE THAI CAPITAL FUND, INC.
----------------------------------------------------------------------
INFORMATION CONCERNING DIRECTORS AND OFFICERS (CONTINUED)
--------------------------------------------------------------------------------

David G. Harmer (59) Executive Director, Department of Class I 3
4337 Bobwhite Court Community and Economic Development for Director since
Ogden, UT 84403 the State of Utah, since May 2002; 2000
Chairman, 2K2 Hosting Corporation, from
April 2001 to April 2002; President,
Jetway Systems, a division of FMC
Corporation, from 1997 until 2001;
Director, The Japan Equity Fund, Inc.,
since 1997; Director, The Singapore
Fund, Inc., since 1996.

* Ikuo Mori (54) Chairman and CEO, Daiwa Securities Chairman of 2
Daiwa Securities America America Inc., since 2001; Executive the Board and
Inc. Officer, Daiwa Securities Group Inc., Class III
Financial Square since 2001; President and COO, Daiwa Director since
32 Old Slip Securities America Inc., from 1996 to 2001
New York, NY 10005 2001; Chairman of the Board, The
Singapore Fund, Inc., since 2001.

Oren G. Shaffer (59) Vice Chairman and Chief Financial Class II 3
7331 Tilden Lane Officer of Qwest Communications Director since
Naples, FL 34108 International Inc., since July 2002; 2000
Executive Vice President and Chief
Financial Officer of Ameritech
Corporation, from 1994 to 2000;
Director, The Japan Equity Fund, Inc.,
since 2000; Director, The Singapore
Fund, Inc., since 1997.

THE THAI CAPITAL FUND, INC.
----------------------------------------------------------------------
INFORMATION CONCERNING DIRECTORS AND OFFICERS (CONCLUDED)
--------------------------------------------------------------------------------

OFFICERS
John J. O'Keefe (43) Vice President and Treasurer of The Vice President --
One Evertrust Plaza Japan Equity Fund, Inc. and The and Treasurer
Jersey City, NJ 07302-3051 Singapore Fund, Inc., since 2000; Vice of the Fund
President of the Fund Accounting since 2000
Department of Daiwa Securities Trust
Company since 2000; Assistant Controller
for Reserve Management Corporation from
1999 to 2000; Accounting Manager for
Prudential Investments from 1998 to
1999; and Assistant Vice President of
Daiwa Securities Trust Company from 1990
to 1998.
Judy Runrun T. Kushner (37) Secretary of The Japan Equity Secretary of --
One Evertrust Plaza Fund, Inc. and The Singapore the Fund since
Jersey City, NJ 07302-3051 Fund, Inc., since 2000; Vice President 2000
of Daiwa Securities Trust Company since
2000; Assistant Vice President of Daiwa
Securities Trust Company from 1998 to
2000; Financial Analyst of Canon USA
from 1997 to 1998.
Laurence E. Cranch (55) Assistant Secretary of The Japan Equity Assistant --
200 Park Avenue Fund, Inc. and The Singapore Secretary of
New York, NY 10166 Fund, Inc., since 1992; Partner in the the Fund since
law firm of Clifford Chance US LLP since 1990
1980.

------------------------
1 "Fund Complex" includes the Fund, The Japan Equity Fund, Inc., The Singapore
Fund, Inc. and other investment companies advised by SCB Asset Management Co.,
Ltd., Daiwa SB Investments (HK) Ltd., DBS Asset Management (United States)
Pte. Ltd., Daiwa SB Investments (Singapore) Ltd., Daiwa SB Investments (USA)
Ltd., Daiwa SB Investments Ltd. or their respective affiliates.

* Directors so noted are deemed by the Fund's counsel to be "interested persons"
(as defined in the U.S. Investment Company Act of 1940, as amended). Mr. Mori
is deemed an interested person of the Fund because of his affiliation with
Daiwa Securities America Inc., an affiliate of the Fund's investment adviser,
Daiwa SB Investments (HK) Ltd.

-----------------------------------------

BOARD OF DIRECTORS

Ikou Mori, CHAIRMAN
Austin C. Dowling
Martin J. Gruber
David G. Harmer
Oren G. Shaffer
----------------------------------------------

OFFICERS

John J. O'Keefe
VICE PRESIDENT AND TREASURER
Judy Runrun T. Kushner
SECRETARY
Laurence E. Cranch
ASSISTANT SECRETARY

----------------------------------------------

ADDRESS OF THE FUND
c/o Daiwa Securities Trust Company
One Evertrust Plaza, 9th Floor
Jersey City, New Jersey 07302
----------------------------------------------
INVESTMENT MANAGER
SCB Asset Management Co., Ltd.

INVESTMENT ADVISER
Daiwa SB Investments (H.K.) Ltd.

ADMINISTRATOR
Daiwa Securities Trust Company

CUSTODIANS
Bangkok Bank Public Company, Ltd.
(Thai Custodian)
Daiwa Securities Trust Company
(U.S. Custodian)

TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company, N.A.

LEGAL COUNSEL
Clifford Chance US LLP

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
----------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that from time to time the Fund may purchase shares of its
common stock in the open market at prevailing market prices.

This report is sent to shareholders of the Fund for their information. It is not
a prospectus, circular or representation intended for use in the purchase or
sale of shares of the Fund or of any securities mentioned in the report.

ANNUAL REPORT
DECEMBER 31, 2002

-------------------------

[THAI CAPITAL FUND LOGO]

THE THAI CAPITAL
FUND, INC.
------------------