<Page>
[ANNOTATED FORM N-CSR FOR ANNUAL REPORTS]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file
number: 811-05921
-------------------------------------------------
The Turkish Investment Fund, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1221 Avenue of the America's 22nd Floor New York, NY 10020
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Ronald E. Robison
1221 Avenue of the Americas, 34th Floor New York, New York 10020
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area
code: 1-800-221-6726
-----------------------------------
Date of fiscal year
end: 10/31
--------------------------------------------------------------
Date of reporting
period: 10/31
--------------------------------------------------------------
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
The Fund's as annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows: [Provide annual report.]
<Page>
THE TURKISH INVESTMENT FUND, INC.
DIRECTORS
CHARLES A. FIUMEFREDDO
MICHAEL BOZIC
EDWIN J. GARN
WAYNE E. HEDIEN
JAMES F. HIGGINS
DR. MANUEL H. JOHNSON
JOSEPH J. KEARNS
MICHAEL NUGENT
PHILIP J. PURCELL
FERGUS REID
OFFICERS
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
MITCHELL M. MERIN
PRESIDENT
RONALD E. ROBISON
EXECUTIVE VICE PRESIDENT
AND PRINCIPAL EXECUTIVE
OFFICER
JOSEPH J. McALINDEN
VICE PRESIDENT
BARRY FINK
VICE PRESIDENT
STEFANIE V. CHANG
VICE PRESIDENT
JAMES W. GARRETT
TREASURER AND CHIEF
FINANCIAL OFFICER
MICHAEL J. LEARY
ASSISTANT TREASURER
MARY E. MULLIN
SECRETARY
INVESTMENT ADVISERS
MORGAN STANLEY INVESTMENT MANAGEMENT INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
MORGAN STANLEY INVESTMENT MANAGEMENT LIMITED
25 CABOT SQUARE
CANARY WHARF
LONDON EI4 4QA
ENGLAND
ADMINISTRATOR
JPMORGAN INVESTOR SERVICES COMPANY
73 TREMONT STREET
BOSTON, MASSACHUSETTS 02108
CUSTODIAN
JPMORGAN CHASE BANK
270 PARK AVENUE
NEW YORK, NEW YORK 10017
STOCKHOLDER SERVICING AGENT
AMERICAN STOCK TRANSFER & TRUST COMPANY
59 MAIDEN LANE
NEW YORK, NEW YORK 10030
(800) 278-4353
LEGAL COUNSEL
CLIFFORD CHANCE US LLP
200 PARK AVENUE
NEW YORK, NEW YORK 10166
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
200 CLARENDON STREET
BOSTON, MASSACHUSETTS 02116
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.morganstanley.com/im.
(C)2003 MORGAN STANLEY
2003 ANNUAL REPORT
October 31, 2003
[MORGAN STANLEY LOGO]
THE TURKISH INVESTMENT FUND, INC.
MORGAN STANLEY
INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER
<Page>
THE TURKISH INVESTMENT FUND, INC.
Overview
LETTER TO STOCKHOLDERS
PERFORMANCE
For the year ended October 31, 2003, The Turkish Investment Fund, Inc. (the
"Fund") had a total return, based on net asset value per share, of 62.64%
compared to 83.28% for the U.S. dollar adjusted Morgan Stanley Capital
International (MSCI) Turkey Index (the "Index"). On October 31, 2003, the
closing price of the Fund's shares on the New York Stock Exchange was $7.36,
representing a 2.9% premium to the Fund's net asset value per share.
FACTORS AFFECTING PERFORMANCE
- During the twelve months ending October 31, 2003, the Turkish market was
among the most volatile markets globally. The volatility in the market was
primarily due to investor concern over the large existing external debt
burden, domestic elections in November 2002 and the geo-political
situation in the Middle-East.
- In November 2002, after underperforming for most of the year, the market
surged 41.7% following the November 3rd elections, ranking Turkey as the
best performing global equity market for the month. The equity market
rebounded due to prospects that the winning party, the Pro-Islamic Justice
and Development Party (AKP), would live up to campaign vows to support the
European Union (EU) reforms and the economic stabilization program backed
by a $16 billion dollar loan from the International Monetary Fund (IMF).
In December, however, overall performance was muted due to the EU
council's decision to start accession negotiations in 2004 on concerns
over the crisis in Iraq. During March, Turkey was the market most
negatively affected by the war in Iraq, but benefited in April from a
surge in domestic sentiment. This surge in sentiment was a result of
policy decisions by the IMF (a disbursement of $700 million dollars in
loans) and the Central Bank lowering rates. From the bottom of the market
in late March, the market soared over 120% through October 31, 2003. In
August, the IMF announced their decision to reschedule Turkey's debt.
Finally, during the month of September, the Turkish market rallied early
in anticipation of the $8.5 billion dollar aid package from the United
States and sold off after the agreement was finalized.
- Security selection detracted from the Fund's performance relative to the
Index, particularly in the material and financial sectors. Our overweight
in industrials also detracted from relative performance. During the period
under review, we were overweight companies which we believed would benefit
from declining real interest rates. Our relative underperformance is
partly due to our early decision to invest in these companies.
MANAGEMENT STRATEGIES
- The Fund continues to integrate a top-down sector allocation and bottom-up
stock selection with a growth bias utilizing a rigorous and fundamental
research approach that considers dynamics, valuation and sentiment.
- Given the accelerating trend in falling real interest rates and stable
inflation rates, we repositioned the portfolio to focus on financials and
consumer discretionary companies during the period.
Sincerely,
/s/ Ronald E. Robison
Ronald E. Robison
Executive Vice President and Principal Executive Officer November 2003
2
<Page>
THE TURKISH INVESTMENT FUND, INC.
STATEMENT OF NET ASSETS
October 31, 2003
STATEMENT OF NET ASSETS
<Table>
<Caption>
VALUE
SHARES (000)
- -----------------------------------------------------------------------------
TURKISH COMMON STOCKS (99.7%)
(UNLESS OTHERWISE NOTED)
AUTOMOBILES (5.0%)
Tofas Turk Otomobil Fabrikasi AS 1,265,248,192 (a) $ 2,012
=============================================================================
BUILDING PRODUCTS (5.2%)
Trakya Cam Sanayii AS 717,818,360 2,091
=============================================================================
COMMERCIAL BANKS (27.7%)
Akbank TAS 1,050,400,934 4,918
Turkiye Is Bankasi AS 1,225,571,000 (a) 6,192
- -----------------------------------------------------------------------------
11,110
=============================================================================
CONSTRUCTION MATERIALS (7.0%)
Adana Cimento Sanayii Turk Anonim Sirketi 121,342,000 374
Akcansa Cimento AS 699,500,000 2,450
- -----------------------------------------------------------------------------
2,824
=============================================================================
CONTAINERS & PACKAGING (0.9%)
Anadolu Cam Sanayii AS 201,351,000 380
=============================================================================
DIVERSIFIED FINANCIAL SERVICES (8.8%)
Haci Omer Sabanci Holding AS 461,705,000 1,959
Koc Holding AS 114,159,400 (a) 1,569
- -----------------------------------------------------------------------------
3,528
=============================================================================
HOUSEHOLD DURABLES (7.0%)
Arcelik AS 508,197,200 2,448
Turk Sise ve Cam Fabrikalari AS 238,000,000 (a) 367
- -----------------------------------------------------------------------------
2,815
=============================================================================
INDUSTRIAL CONGLOMERATES (3.0%)
Enka Insaat ve Sanayi AS 34,242,195 1,200
=============================================================================
INSURANCE (7.4%)
Aksigorta AS 758,417,000 2,989
=============================================================================
MEDIA (14.0%)
Dogan Yayin Holding AS 925,850,000 (a) 2,573
Hurriyet Gazetecilik ve Matbaacilik AS 1,159,796,403 (a) 3,067
- -----------------------------------------------------------------------------
5,640
=============================================================================
MULTILINE RETAIL (5.7%)
Carsi Buyuk Magazacilik AS 1,822,910,000 (a) 2,272
=============================================================================
WIRELESS TELECOMMUNICATION SERVICES (8.0%)
Turkcell Iletisim Hizmetleri AS 420,109,368 (a) 3,198
=============================================================================
TOTAL TURKISH COMMON STOCKS
(Cost $30,995) 40,059
=============================================================================
<Caption>
AMOUNT AMOUNT
(000) (000)
- -----------------------------------------------------------------------------
OTHER ASSETS (6.5%)
Cash $ 3
Receivable for Investments Sold 2,611
Other 3 $ 2,617
=============================================================================
LIABILITIES (-6.2%)
Payable For:
Investments Purchased (2,387)
Investment Advisory Fees (32)
Directors' Fees and Expenses (29)
Professional Fees (26)
Stockholder Reporting Expenses (16)
Custodian Fees (5)
Administrative Fees (5)
Other Liabilities (3) (2,503)
=============================================================================
NET ASSETS (100%)
Applicable to 5,619,161, issued and outstanding
$0.01 par value shares (30,000,000 shares
authorized) $ 40,173
=============================================================================
NET ASSET VALUE PER SHARE $ 7.15
=============================================================================
AT OCTOBER 31, 2003, NET ASSETS CONSISTED OF:
Common Stock $ 56
Paid-in Capital 65,448
Undistributed Net Investment Income (Accumulated
Net Investment Loss) 91
Accumulated Net Realized Gain (Loss) (34,486)
Unrealized Appreciation (Depreciation) on
Investments and Foreign Currency Translations 9,064
=============================================================================
TOTAL NET ASSETS $ 40,173
=============================================================================
</Table>
(a) -- Non-income producing.
@ -- Value is less than $500.
FOREIGN CURRENCY EXCHANGE CONTRACT INFORMATION:
The Fund had the following foreign currency exchange contract(s) open at
period end:
<Table>
<Caption>
NET
CURRENCY IN UNREALIZED
TO EXCHANGE APPRECIATION
DELIVER VALUE SETTLEMENT FOR VALUE (DEPRECIATION)
(000) (000) DATE (000) (000) (000)
- -----------------------------------------------------------------------------
US$ 2 $ 2 11/3/03 TRL 3,044 $ 2 $ --@
=============================================================================
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<Page>
THE TURKISH INVESTMENT FUND, INC.
Financial Statements
STATEMENT OF OPERATIONS
<Table>
<Caption>
YEAR ENDED
OCTOBER 31, 2003
(000)
- --------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of $12 of foreign taxes withheld) $ 677
Interest 3
==========================================================================================================================
TOTAL INVESTMENT INCOME 680
==========================================================================================================================
EXPENSES
Investment Advisory Fees 284
Professional Fees 83
Custodian Fees 61
Administrative Fees 39
Stockholder Reporting Expenses 34
Directors' Fees and Expenses 9
Other Expenses 46
==========================================================================================================================
TOTAL EXPENSES 556
==========================================================================================================================
NET INVESTMENT INCOME (LOSS) 124
==========================================================================================================================
NET REALIZED GAIN (LOSS) ON:
Investments 6,598
Foreign Currency Transactions (2)
==========================================================================================================================
NET REALIZED GAIN (LOSS) 6,596
==========================================================================================================================
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:
Investments 8,787
==========================================================================================================================
TOTAL NET REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 15,383
==========================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 15,507
==========================================================================================================================
</Table>
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED YEAR ENDED
OCTOBER 31, 2003 OCTOBER 31, 2002
(000) (000)
- --------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income (Loss) $ 124 $ (148)
Net Realized Gain (Loss) 6,596 (20,927)
Change in Unrealized Appreciation (Depreciation) 8,787 22,143
==========================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 15,507 1,068
==========================================================================================================================
Distributions from and/or in excess of:
Net Investment Income -- (26)
==========================================================================================================================
Capital Share Transactions:
Repurchase of Shares (30,685 and 434,459 shares, respectively) (142) (1,952)
==========================================================================================================================
TOTAL INCREASE (DECREASE) 15,365 (910)
==========================================================================================================================
Net Assets:
Beginning of Period 24,808 25,718
- --------------------------------------------------------------------------------------------------------------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (ACCUMULATED NET
INVESTMENT LOSS) OF $91 AND $(18), RESPECTIVELY) $ 40,173 $ 24,808
==========================================================================================================================
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<Page>
THE TURKISH INVESTMENT FUND, INC.
Financial Highlights
SELECTED PER SHARE DATA AND RATIOS
<Table>
<Caption>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 4.39 $ 4.23 $ 17.69 $ 9.52 $ 4.94
- ------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 0.02+ (0.03) 0.06 (0.12) 0.05
Net Realized and Unrealized Gain (Loss) on Investments 2.74 0.18 (10.30) 8.03 4.58
- ------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 2.76 0.15 (10.24) 7.91 4.63
- ------------------------------------------------------------------------------------------------------------------------------
Distributions from and/or in excess of:
Net Investment Income -- (0.00)# -- (0.03) (0.12)
Net Realized Gain -- -- (3.23) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.00)# (3.23) (0.03) (0.12)
- ------------------------------------------------------------------------------------------------------------------------------
Anti-Dilutive Effect of Share Repurchase Program 0.00# 0.01 0.01 0.29 0.07
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 7.15 $ 4.39 $ 4.23 $ 17.69 $ 9.52
==============================================================================================================================
PER SHARE MARKET VALUE, END OF PERIOD $ 7.36 $ 4.07 $ 4.41 $ 13.38 $ 8.19
==============================================================================================================================
TOTAL INVESTMENT RETURN:
Market Value 80.84% (7.64)% (55.14)% 63.60% 94.34%
Net Asset Value (1) 62.64% 3.86% (67.47)% 86.09% 97.06%
==============================================================================================================================
RATIOS, SUPPLEMENTAL DATA:
NET ASSETS, END OF PERIOD (THOUSANDS) $ 40,173 $ 24,808 $ 25,718 $ 108,138 $ 62,476
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.85% 1.86% @ 1.94% 1.26% 1.96%
Ratio of Net Investment Income (Loss) to Average Net
Assets 0.41% (0.49)% 0.83% (0.57)% 0.66%
Portfolio Turnover Rate 173% 164% 163% 155% 175%
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Total investment return based on net asset value per share reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. This percentage is not an indication of the performance of a
stockholder'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.
@ The effect of the reversal of the deferred directors' fees in fiscal year
2002 was to decrease the expense ratio by 0.23%.
+ Per share amount is based on average shares outstanding.
# Amount is less than $0.005 per share.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
THE TURKISH INVESTMENT FUND, INC.
October 31, 2003
NOTES TO FINANCIAL STATEMENTS
The Turkish Investment Fund, Inc. (the "Fund") was incorporated in Maryland
on September 27, 1988 and is registered as a non-diversified, closed-end
management investment company under the Investment Company Act of 1940, as
amended. The Fund's investment objective is long-term capital appreciation
through investments primarily in equity securities of Turkish corporations.
A. ACCOUNTING POLICIES: The following significant accounting policies are in
conformity with accounting principles generally accepted in the United States of
America. Such policies are consistently followed by the Fund in the preparation
of its financial statements. Accounting principles generally accepted in the
United States of America may require management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results may differ from those estimates.
1. SECURITY VALUATION: In valuing the Fund's assets, all listed securities for
which market quotations are readily available are valued at the last sale
price on the valuation date, or if there was no sale on such date, at the
mean between the current bid and asked prices or the bid price if only bid
quotations are available. Securities which are traded over-the-counter are
valued at the mean of the current bid and asked prices obtained from
reputable brokers. Securities may be valued by independent pricing
services. The prices provided by a pricing service take into account broker
dealer market price quotations for institutional size trading in similar
groups of securities, security quality, maturity, coupon and other security
characteristics as well as any developments related to the specific
securities. Short-term securities which mature in 60 days or less are
valued at amortized cost. For all other securities and investments for
which market values are not readily available, including restricted
securities, and where prices determined in accordance with the
aforementioned procedures are not reflective of fair market value, values
are determined in good faith, under fair valuation procedures adopted by
the Board of Directors, although actual calculations may be done by others.
2. REPURCHASE AGREEMENTS: The Fund may enter into repurchase agreements under
which the Fund lends excess cash and takes possession of securities with an
agreement that the counter-party will repurchase such securities. In connection
with transactions in repurchase agreements, a bank as custodian for the Fund
takes possession of the underlying securities (collateral), with a market value
at least equal to the amount of the repurchase transaction, including principal
and accrued interest. To the extent that any repurchase transaction exceeds one
business day, the value of the collateral is marked-to-market on a daily basis
to determine the adequacy of the collateral. In the event of default on the
obligation to repurchase, the Fund has the right to liquidate the collateral and
apply the proceeds in satisfaction of the obligation. In the event of default or
bankruptcy by the counter-party to the agreement, realization and/or retention
of the collateral or proceeds may be subject to legal proceedings.
3. FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in Turkish lira are
translated into U.S. dollars at the mean of the bid and asked prices of
such currency against U.S. dollars last quoted by a major bank as follows:
--investments, other assets and liabilities at the prevailing rate of
exchange on the valuation date;
--investment transactions and investment income at the prevailing rate of
exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rate and market values at the close of the period, the Fund does not
isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rate from the fluctuations arising from
changes in the market prices of the securities held at period end.
Similarly, the Fund does not isolate the effect of changes in the foreign
exchange rate from the fluctuations arising from changes in the market
prices of securities sold during the period. Accordingly, realized and
unrealized foreign currency gains (losses) due to securities transactions
are included in the reported net realized and unrealized gains (losses) on
investment transactions and balances.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses) from sales and maturities of foreign
currency exchange contracts, disposition of foreign currency, currency
gains or losses realized between the trade and settlement dates on
securities transactions, and the difference between the amount of
investment income and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent amounts actually received or paid.
Net unrealized currency gains (losses) from valuing foreign currency
denominated assets and liabilities at period end exchange rates are
reflected as a component of unrealized appreciation (depreciation) on
6
<Page>
THE TURKISH INVESTMENT FUND, INC.
October 31, 2003
NOTES TO FINANCIAL STATEMENTS (CONT'D)
investments and foreign currency translations in the Statement of Net
Assets. The change in net unrealized currency gains (losses) on foreign
currency translations for the period is reflected in the Statement of
Operations.
A significant portion of the Fund's net assets consists of equity
securities denominated in Turkish lira. Changes in currency exchange rates
will affect the value of and investment income from securities. Turkish
securities are often subject to greater price volatility, limited
capitalization and liquidity, and higher rates of inflation than securities
of companies based in the United States. In addition, Turkish securities
may be subject to substantial governmental involvement in the economy and
greater social, economic and political uncertainty.
The Fund may use derivatives to achieve its investment objectives. The Fund may
engage in transactions in futures contracts on foreign currencies, stock
indices, as well as in options, swaps and structured notes. Consistent with the
Fund's investment objectives and policies, the Fund may use derivatives for
non-hedging as well as hedging purposes.
Following is a description of derivative instruments that the Fund has utilized
and their associated risks:
4. FOREIGN CURRENCY EXCHANGE CONTRACTS: The Fund may enter into foreign
currency exchange contracts generally to attempt to protect securities and
related receivables and payables against changes in future foreign exchange
rates and, in certain situations, to gain exposure to a foreign currency. A
foreign currency exchange contract is an agreement between two parties to
buy or sell currency at a set price on a future date. The market value of
the contract will fluctuate with changes in currency exchange rates. The
contract is marked-to-market daily and the change in market value is
recorded by the Fund as unrealized gain or loss. The Fund records realized
gains or losses when the contract is closed equal to the difference between
the value of the contract at the time it was opened and the value at the
time it was closed. Risk may arise upon entering into these contracts from
the potential inability of counterparties to meet the terms of their
contracts and is generally limited to the amount of unrealized gain on the
contracts, if any, at the date of default. Risks may also arise from
unanticipated movements in the value of a foreign currency relative to the
U.S. dollar.
5. OTHER: Security transactions are accounted for on the date the securities
are purchased or sold. Realized gains and losses on the sale of investment
securities are determined on the specific identified cost basis. Interest
income is recognized on the accrual basis. Dividend income is recorded on
the ex-dividend date (except certain dividends which may be recorded as
soon as the Fund is informed of such dividends) net of applicable
withholding taxes.
B. ADVISERS: Morgan Stanley Investment Management Inc. and Morgan Stanley
Investment Management Limited (the "Advisers") provide investment advisory
services to the Fund under the terms of an Investment Advisory Agreement (the
"Agreement"). Under the Agreement, advisory fees are computed weekly and payable
monthly at an annual rate of 0.95% of the Fund's first $50 million of average
weekly net assets, 0.75% of the next $50 million of average weekly net assets
and 0.55% of average weekly net assets in excess of $100 million.
C. ADMINISTRATOR: JPMorgan Chase Bank, through its corporate affiliate J.P.
Morgan Investor Services Co. (the "Administrator"), provides administrative
services to the Fund under an Administration Agreement. The Administrator is
paid a fee computed weekly and payable monthly at an annual rate of 0.02435% of
the Fund's average weekly net assets, plus $24,000 per annum. In addition, the
Fund is charged for certain out-of-pocket expenses incurred by the Administrator
on its behalf.
D. CUSTODIAN: JPMorgan Chase Bank serves as custodian for the Fund. Custody
fees are payable monthly based on assets held in custody, investment purchase
and sales activity and account maintenance fees, plus reimbursement for certain
out-of-pocket expenses.
E. FEDERAL INCOME TAXES: It is the Fund's intention to continue to qualify as
a regulated investment company and distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required in the financial
statements. Dividend income and distributions to stockholders are recorded on
the ex-dividend date.
The tax character of distributions paid may differ from the character of
distributions shown on the Statements of Changes in Net Assets due to short-term
capital gains being treated as ordinary income for tax purposes. The tax
character of distributions paid during 2003 and 2002 were as follows:
<Table>
<Caption>
2003 DISTRIBUTIONS 2002 DISTRIBUTIONS
PAID FROM: PAID FROM:
(000) (000)
- ----------------------------------- -----------------------------
LONG-TERM LONG-TERM
ORDINARY CAPITAL ORDINARY CAPITAL
INCOME GAIN INCOME GAIN
- --------------------------------------------------------------------
$ -- $ -- $ 26 $ --
</Table>
7
<Page>
THE TURKISH INVESTMENT FUND, INC.
October 31, 2003
NOTES TO FINANCIAL STATEMENTS (CONT'D)
The amount and character of income and capital gain distributions to be paid by
the Fund are determined in accordance with Federal income tax regulations, which
may differ from accounting principles generally accepted in the United States.
The book/tax differences are considered either temporary or permanent in nature.
Temporary differences are attributable to differing book and tax treatments for
the timing of the recognition of gains and losses on certain investment
transactions and the timing of the deductibility of certain expenses.
Permanent differences may result in reclassifications among undistributed
(distributions in excess of) net investment income, accumulated net realized
gain (loss) and paid-in capital. Adjustments for permanent book-tax differences,
if any, are not reflected in ending undistributed (distributions in excess of)
net investment income for the purpose of calculating net investment income
(loss) per share in the financial highlights.
At October 31, 2003, the components of distributable earnings on a tax basis
were as follows:
<Table>
<Caption>
UNDISTRIBUTED UNDISTRIBUTED
ORDINARY INCOME LONG-TERM CAPITAL GAIN
(000) (000)
- -----------------------------------------------------------------
$ 111 $ --
- -----------------------------------------------------------------
</Table>
At October 31, 2003, the U.S. Federal income tax cost basis of investments
(excluding foreign currency if applicable) was $31,122,000 and, accordingly, net
unrealized appreciation for U.S. Federal income tax purposes was $8,937,000, of
which $8,942,000 related to appreciated securities and $5,000 related to
depreciated securities.
At October 31, 2003, the Fund had a capital loss carryforward for U.S. Federal
income tax purposes of approximately $34,359,000 available to offset future
capital gains of which $9,207,000 will expire on October 31, 2009 and
$25,152,000 will expire on October 31, 2010.
During the year ended October 31, 2003, the Fund utilized capital loss
carryforwards for U.S. Federal income tax purposes of approximately $6,236,000.
To the extent that capital loss carryovers are used to offset any future capital
gains realized during the carryover period as provided by U.S. Federal income
tax regulations, no capital gains tax liability will be incurred by a portfolio
for gains realized and not distributed. To the extent that capital gains are
offset, such gains will not be distributed to the stockholders.
F. OTHER: During the year ended October 31, 2003, the Fund made purchases and
sales totaling $51,959,000 and $51,283,000, respectively, of investment
securities other than long-term U.S. Government securities and short-term
investments. There were no purchases or sales of long-term U.S. Government
securities.
During the year ended October 31, 2003, the Fund incurred $35,000 of brokerage
commissions with Morgan Stanley & Co., Incorporated, an affiliate of the
Advisers.
On September 15, 1998, the Fund commenced a share repurchase program for
purposes of enhancing stockholder value and reducing the discount at which the
Fund's shares trade from their net asset value. For the year ended October 31,
2003, the Fund has repurchased 30,685 shares at an average discount of 12.12%.
From the inception of the program through October 31, 2003, the Fund has
repurchased 1,427,394 of its shares at an average discount of 17.25% from net
asset value per share. The Fund expects to continue to repurchase its
outstanding shares at such time and in such amounts as it believes will further
the accomplishment of the foregoing objectives, subject to review by the Board
of Directors.
8
<Page>
THE TURKISH INVESTMENT FUND, INC.
October 31, 2003
INDEPENDENT AUDITORS' REPORT
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF THE TURKISH INVESTMENT FUND, INC.
We have audited the accompanying statement of net assets of The Turkish
Investment Fund, Inc. (the "Fund") as of October 31, 2003, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the four years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for the year ended October 31, 1999 were audited by other auditors
whose report, dated November 29, 1999, expressed an unqualified opinion on those
financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of October 31, 2003 by correspondence with
the custodian and brokers, or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Turkish Investment Fund, Inc. at October 31, 2003, 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 four years
in the period then ended, in conformity with accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 5, 2003
9
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THE TURKISH INVESTMENT FUND, INC.
October 31, 2003
DIRECTOR AND OFFICER INFORMATION (UNAUDITED)
INDEPENDENT DIRECTORS:
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
TERM OF FUND
OFFICE AND COMPLEX
POSITION(S) LENGTH OF OVERSEEN
NAME, AGE AND ADDRESS OF HELD WITH TIME PRINCIPAL OCCUPATION(S) DURING BY OTHER DIRECTORSHIPS HELD
DIRECTOR REGISTRANT SERVED* PAST 5 YEARS DIRECTOR** BY DIRECTOR
- --------------------------- ------------ -------------- ------------------------------- ------------- -------------------------
Michael Bozic (62) Director Director Retired; Director or Trustee of 211 Director of Weirton Steel
1 Trimont Lane since 2003 the Retail Funds and the TCW/DW Corporation.
Apartment 1000A Term Trust 2003 and the
Pittsburgh, PA 15211 Institutional Funds; formerly
Vice Chairman of Kmart
Corporation, Chairman and Chief
Executive Officer of Levitz
Furniture Corporation and
President and Chief Executive
Officer of Hills Department
Stores; formerly variously
Chairman, Chief Executive
Officer, President and Chief
Operating Officer of the Sears
Merchandise Group of Sears,
Roebuck & Co.
Edwin J. Garn (71) Director Director Director or Trustee of the 211 Director of Franklin Covey
Summit Ventures LLC since 2003 Retail Funds and the TCW/DW (time management systems),
One Utah Center Term Trust 2003 and the BMW Bank of North America,
201 South Main Street Institutional Funds; member of Inc. (industrial loan
Salt Lake City, UT 84111 the Utah Regional Advisory corporation), United Space
Board of Pacific Corp.; Alliance (joint venture
formerly, United States between Lockheed Martin
Senator (R-Utah) and Chairman, and The Boeing Company)
Senate Banking Committee, and Nuskin Asia Pacific
Mayor of Salt Lake City, Utah, (multilevel marketing);
Astronaut, Space Shuttle member of the board of
Discovery and Vice Chairman, various civic and
Huntsman Corporation (chemical charitable organizations.
company).
Wayne E. Hedien (69) Director Director Retired; Director or Trustee 211 Director of the PMI Group
WEH Associates since 2003 of the Retail Funds and TCW/DW Inc. (private mortgage
5750 Old Orchard Road Term Trust 2003 and the insurance); Trustee and
Suite 530 Institutional Funds; formerly Vice Chairman of the Field
Skokie, IL 60077 associated with the Allstate Museum of Natural History;
Companies, most recently as director of various other
Chairman of The Allstate business and charitable
Corporation and Chairman and organizations.
Chief Executive Officer of its
wholly-owned subsidiary,
Allstate Insurance Company.
Dr. Manuel H. Johnson (54) Director Director Chairman of the Audit 211 Director of NVR, Inc.
Johnson Smick since 2003 Committee and Director or (home construction);
International, Inc. Trustee of the Retail Funds Chairman and Trustee of
2099 Pennsylvania Avenue, and TCW/DW Term Trust 2003 and the Financial Accounting
NW Suite 950 the Institutional Funds; Foundation (oversight
Washington, D.C. 20006 Senior Partner, Johnson Smick organization of the
International, Inc. Financial Accounting
(consulting firm); Co-Chairman Standards Board); Director
and a founder of the Group of of RBS Greenwich Capital
Seven Council (G7C), an Holdings (financial
international economic holdings company).
commission; formerly, Vice
Chairman of the Board of
Governors of the Federal
Reserve System and Assistant
Secretary of the U.S. Treasury.
Joseph J. Kearns (61) Director Director Deputy Chairman of the Audit 212 Director of Electro Rent
Kearns & Associates LLC since 1994 Committee and Director or Corporation (equipment
PMB754 Trustee of the Retail Funds leasing), The Ford Family
23852 Pacific Coast Hwy. and TCW/DW Term Trust 2003 and Foundation and the UCLA
Malibu, CA 90265 the Institutional Funds; Foundation.
previously Chairman of the
Audit Committee of the
Institutional Funds;
President, Kearns & Associates
LLC (investment consulting);
formerly, CFO of The J. Paul
Getty Trust.
Michael Nugent (67) Director Director Chairman of the Insurance 211 Director of various
Triumph Capital, L.P. since 2001 Committee and Director or business organizations.
445 Park Avenue, 10th Floor Trustee of the Retail Funds
New York, NY 10022 and TCW/DW Term Trust 2003 and
the Institutional Funds;
General Partner of Triumph
Capital, L.P., (private
investment partnership);
formerly, Vice President,
Bankers Trust Company and BT
Capital Corporation.
Fergus Reid (71) Director Director Director or Trustee of the 212 Trustee and Director of
Lumelite Plastics since 2001 Retail Funds and TCW/DW Term certain investment
85 Charles Coleman Blvd. Trust 2003 and the companies in the JPMorgan
Pawling, NY 12564 Institutional Funds; Chairman Funds complex managed by
of Lumelite Plastics JP Morgan Investment
Corporation. Management Inc.
</Table>
10
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THE TURKISH INVESTMENT FUND, INC.
October 31, 2003
DIRECTOR AND OFFICER INFORMATION (CONT'D)
INTERESTED DIRECTORS:
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
TERM OF FUND
OFFICE AND COMPLEX
POSITION(S) LENGTH OF OVERSEEN
NAME, AGE AND ADDRESS OF HELD WITH TIME PRINCIPAL OCCUPATION(S) DURING BY OTHER DIRECTORSHIPS HELD
DIRECTOR REGISTRANT SERVED* PAST 5 YEARS DIRECTOR** BY DIRECTOR
- --------------------------- ------------ -------------- ------------------------------- ------------- -------------------------
Charles A. Fiumefreddo (70) Chairman and Chairman Chairman and Director or 211 None
Morgan Stanley Funds Director and Director Trustee of the Retail Funds
Harborside Financial Center since 2003 and TCW/DW Term Trust 2003 and
Plaza Two 3rd Floor the Institutional Funds;
Jersey City, NJ 07311 formerly, Chief Executive
Officer of the Retail Funds
and TCW/DW Term Trust 2003.
James F. Higgins (55) Director Director Director or Trustee of the 211 Director of AXA Financial,
Morgan Stanley since 2003 Retail Funds and TCW/DW Term Inc. and The Equitable
Harborside Financial Center Trust 2003 and the Life Assurance Society of
Plaza Two 2nd Floor Institutional Funds; Senior the United States
Jersey City, NJ 07311 Advisor of Morgan Stanley; (financial services).
Director of Morgan Stanley
Distributors Inc. and Dean
Witter Realty Inc.; previously
President and Chief Operating
Officer of the Private Client
Group of Morgan Stanley and
President and Chief Operating
Officer of Individual
Securities of Morgan Stanley.
Philip J. Purcell (60) Director Director Director or Trustee of the 211 Director of American
Morgan Stanley since 2003 Retail Funds and TCW/DW Term Airlines, Inc. and its
1585 Broadway 39th Floor Trust 2003 and the parent company, AMR
New York, NY 10036 Institutional Funds; Chairman Corporation.
of the Board of Directors and
Chief Executive Officer of
Morgan Stanley and Morgan
Stanley DW Inc.; Director of
Morgan Stanley Distributors
Inc.; Chairman of the Board of
Directors and Chief Executive
Officer of Novus Credit
Services Inc.; Director and/or
officer of various Morgan
Stanley subsidiaries.
</Table>
* Each Director serves an indefinite term, until his or her successor is
elected.
** The Fund Complex includes all funds advised by Morgan Stanley Investment
Management Inc. and any funds that have an investment advisor that is an
affiliated entity of Morgan Stanley Investment Management Inc. (including,
but not limited to, Morgan Stanley Investments LP, Morgan Stanley
Investment Advisors Inc. and Van Kampen Asset Management Inc.).
11
<Page>
THE TURKISH INVESTMENT FUND, INC.
October 31, 2003
DIRECTOR AND OFFICER INFORMATION (CONT'D)
OFFICERS:
<Table>
<Caption>
TERM OF OFFICE AND
POSITION(S)HELD LENGTH OF TIME
NAME, AGE AND ADDRESS OF EXECUTIVE OFFICER WITH REGISTRANT SERVED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- -------------------------------------------- ----------------- ------------------- ------------------------------------------------
Mitchell M. Merin (50) President President since President and Chief Operating Officer of Morgan
Morgan Stanley Investment Management Inc. 2003 Stanley Investment Management Inc.; President,
1221 Avenue of the Americas 33rd Floor Director and Chief Executive Officer of Morgan
New York, NY 10020 Stanley Investment Advisors, Inc. and Morgan
Stanley Services Company Inc.; Chairman, Chief
Executive Officer and Director of Morgan
Stanley Distributors Inc.; Chairman and
Director of Morgan Stanley Trust; Director of
various Morgan Stanley subsidiaries; President
of Morgan Stanley Investments LP; President of
the Institutional Funds, the Retail Funds and
TCW/DW Term Trust 2003; Trustee and President
of the Van Kampen Closed-End funds; Trustee and
President of the Van Kampen Open-End funds.
Ronald E. Robison (64) Executive Vice Executive Vice Principal Executive Officer- Office of the Funds
Morgan Stanley Investment Management Inc. President and President and and Managing Director of Morgan Stanley
1221 Avenue of the Americas 34th Floor Principal Principal Investment Management Inc.; Managing Director
New York, NY 10020 Executive Executive of Morgan Stanley & Co. Incorporated; Managing
Officer Officer Director of Morgan Stanley; Managing Director,
since 2003 Chief Administrative Officer and Director of
Morgan Stanley Investment Advisors Inc. and
Morgan Stanley Services Company Inc.; Chief
Executive Officer and Director of Morgan
Stanley Trust; Executive Vice President and
Principal Executive Officer of the
Institutional Funds, the Retail Funds and
TCW/DW Term Trust 2003; previously President of
the Institutional Funds and Director of the
Institutional Funds.
Barry Fink (48) Vice President Vice President General Counsel and Managing Director of Morgan
Morgan Stanley Investment Management Inc. since 2003 Stanley Investment Management; Managing
1221 Avenue of the Americas 22nd Floor Director, Secretary and Director of Morgan
New York, NY 10020 Stanley Investment Advisors Inc. and Morgan
Stanley Services Company Inc.; Assistant
Secretary of Morgan Stanley DW Inc.; Chief
Legal Officer of Morgan Stanley Investments LP;
Vice President and General Counsel of the
Retail Funds and TCW/DW Term Trust 2003; Vice
President of the Institutional Funds; Vice
President and Secretary of Morgan Stanley
Distributors Inc.; previously Secretary of the
Retail Funds; previously Vice President and
Assistant General Counsel of Morgan Stanley
Investment Advisors Inc. and Morgan Stanley
Services Company Inc.
Joseph J. McAlinden (60) Vice President Vice President Managing Director and Chief Investment Officer
Morgan Stanley Investment Management Inc. since 2003 of Morgan Stanley Investment Advisors Inc.,
1221 Avenue of the Americas 33rd Floor Morgan Stanley Investment Management Inc.
New York, NY 10020 and Morgan Stanley Investments LP; Director of
Morgan Stanley Trust, Chief Investment Officer
of the Van Kampen Funds; Vice President of the
Institutional Funds and the Retail Funds.
Stefanie V. Chang (36) Vice President Vice President Executive Director of Morgan Stanley & Co.
Morgan Stanley Investment Management Inc. since 2001 Incorporated and Morgan Stanley Investment
1221 Avenue of the Americas 22nd Floor Management Inc. and Vice President of the
New York, NY 10020 Institutional Funds and the Retail Funds;
formerly practiced law with the New York law
firm of Rogers & Wells (now Clifford Chance US
LLP).
James W. Garrett (34) Treasurer and Treasurer since Executive Director of Morgan Stanley & Co.
Morgan Stanley Investment Management Inc. Chief Financial 2002 Incorporated and Morgan Stanley Investment
1221 Avenue of the Americas 34th Floor Officer CFO since 2003 Management Inc.; Treasurer and Chief Financial
New York, NY 10020 Officer of the Institutional Funds; Previously
with PriceWaterhouse LLP (now
PriceWaterhouseCoopers LLP).
Michael J. Leary (37) Assistant Assistant Assistant Director and Vice President of Fund
J.P. Morgan Investor Services Co. Treasurer Treasurer since Administration, J.P. Morgan Investor Services
73 Tremont Street 2003 Co. (formerly Chase Global Funds Company);
Boston, MA 02108 formerly Audit Manager at Ernst & Young LLP.
Mary E. Mullin (36) Secretary Secretary since Vice President of Morgan Stanley & Co.
Morgan Stanley Investment Management Inc. 2001 Incorporated and Morgan Stanley Investment
1221 Avenue of the Americas 22nd Floor Management Inc.; Secretary of the Institutional
New York, NY 10020 Funds and the Retail Funds; formerly practiced
law with the New York law firms of McDermott,
Will & Emery and Skadden, Arps, Slate, Meagher
& Flom LLP.
</Table>
- ----------------
* Each Officer serves an indefinite term, until his or her successor is
elected.
12
<Page>
THE TURKISH INVESTMENT FUND, INC.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
each stockholder will be deemed to have elected, unless American Stock Transfer
& Trust Company (the "Plan Agent") is otherwise instructed by the stockholder in
writing, to have all distributions automatically reinvested in Fund shares.
Participants in the Plan have the option of making additional voluntary cash
payments to the Plan Agent, annually, in any amount from $100 to $3,000, for
investment in Fund shares.
Dividend and capital gain distributions will be reinvested on the
reinvestment date in full and fractional shares. If the market price per share
equals or exceeds net asset value per share on the reinvestment date, the Fund
will issue shares to participants at net asset value. If net asset value is less
than 95% of the market price on the reinvestment date, shares will be issued at
95% of the market price. If net asset value exceeds the market price on the
reinvestment date, participants will receive shares valued at market price. The
Fund may purchase shares of its Common Stock in the open market in connection
with dividend reinvestment requirements at the discretion of the Board of
Directors. Should the Fund declare a dividend or capital gain distribution
payable only in cash, the Plan Agent will purchase Fund shares for participants
in the open market as agent for the participants.
The Plan Agent's fees for the reinvestment of dividends and distributions
will be paid by the Fund. However, each participant's account will be charged a
pro rata share of brokerage commissions incurred on any open market purchases
effected on such participant's behalf. A participant will also pay brokerage
commissions incurred on purchases made by voluntary cash payments. Although
stockholders in the Plan may receive no cash distributions, participation in the
Plan will not relieve participants of any income tax which may be payable on
such dividends or distributions.
In the case of stockholders, such as banks, brokers or nominees, that hold
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
stockholder as representing the total amount registered in the stockholder's
name and held for the account of beneficial owners who are participating in the
Plan.
Stockholders who do not wish to have distributions automatically reinvested
should notify the Plan Agent in writing. There is no penalty for
non-participation or withdrawal from the Plan, and stockholders who have
previously withdrawn from the Plan may rejoin at any time. Requests for
additional information or any correspondence concerning the Plan should be
directed to the Plan Agent at:
The Turkish Investment Fund, Inc.
American Stock Transfer & Trust Company
Dividend Reinvestment and Cash Purchase Plan
59 Maiden Lane
New York, New York 10030
1-800-278-4353
13
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ITEM 2. CODE OF ETHICS.
(a) The Fund has adopted a code of ethics (the "Code of Ethics") that applies
to its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the Fund or a third
party.
(b) No information need be disclosed pursuant to this paragraph.
(c) The Fund has not amended its Code of Ethics during the period covered by
the shareholder report presented in Item 1 hereto.
(d) The Fund has not granted a waiver or an implicit waiver from a provision of
its Code of Ethics.
(e) Not applicable.
(f)
(1) The Fund Code of Ethics is attached hereto as Exhibit A.
(2) Not applicable.
(3) Not applicable.
For Retail and Institutional Funds
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Fund's Board of Directors has determined that it has two "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Directors: Dr. Manuel H. Johnson and Joseph J. Kearns. Under
applicable securities laws, a person who is determined to be an audit committee
financial expert will not be deemed an "expert" for any purpose, including
without limitation for the purposes of Section 11 of the Securities Act of 1933,
as a result of being designated or identified as an audit committee financial
expert. The designation or identification of a person as an audit committee
financial expert does not impose on such person any duties, obligations, or
liabilities that are greater than the duties, obligations, and liabilities
imposed on such person as a
<Page>
member of the audit committee and Board of Directors in the absence of such
designation or identification.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED.]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Fund and its investment advisor's Proxy Voting Policies and Procedures are
as follows:
I. POLICY STATEMENT
INTRODUCTION - Morgan Stanley Investment Management's ("MSIM") policies and
procedures for voting proxies with respect to securities held in the accounts of
clients applies to those MSIM entities that provide discretionary Investment
Management services and for which a MSIM entity has the authority to vote their
proxies. The policies and procedures and general guidelines in this section will
be reviewed and, as necessary, updated periodically to address new or revised
proxy voting issues. The MSIM entities covered by these policies and procedures
currently include the following: Morgan Stanley Investment Advisors Inc., Morgan
Stanley Alternative Investment Partners, L.P., Morgan Stanley AIP GP LP, Morgan
Stanley Investment Management Inc., Morgan Stanley Investment Group Inc., Morgan
Stanley Investment Management Limited, Morgan Stanley Investment Management
Company, Morgan Stanley Asset & Investment Trust Management Co., Limited, Morgan
Stanley Investment Management Private Limited, Morgan Stanley Investments LP,
Morgan Stanley Hedge Fund Partners GP LP, Morgan Stanley Hedge Fund Partners LP,
Van Kampen Investment Advisory Corp., Van Kampen Asset Management Inc., and Van
Kampen Advisors Inc. (each a "MSIM Affiliate" and collectively referred to as
the "MSIM Affiliates").
2
<Page>
Each MSIM Affiliate will vote proxies as part of its authority to manage,
acquire and dispose of account assets. With respect to the MSIM registered
management investment companies (Van Kampen, Institutional and Advisor
Funds)(collectively referred to as the "MSIM Funds"), each MSIM Fund will vote
proxies pursuant to authority granted under its applicable investment advisory
agreement or, in the absence of such authority, as authorized by its Board of
Directors or Trustees. A MSIM Affiliate will not vote proxies if the "named
fiduciary" for an ERISA account has reserved the authority for itself, or in the
case of an account not governed by ERISA, the Investment Management Agreement
does not authorize the MSIM Affiliate to vote proxies. MSIM Affiliates will, in
a prudent and diligent manner, vote proxies in the best interests of clients,
including beneficiaries of and participants in a client's benefit plan(s) for
which we manage assets, consistent with the objective of maximizing long-term
investment returns ("Client Proxy Standard"). In certain situations, a client or
its fiduciary may provide a MSIM Affiliate with a statement of proxy voting
policy. In these situations, the MSIM Affiliate will comply with the client's
policy unless to do so would be inconsistent with applicable laws or regulations
or the MSIM Affiliate's fiduciary responsibility.
PROXY RESEARCH SERVICES - To assist the MSIM Affiliates in their responsibility
for voting proxies and the overall global proxy voting process, Institutional
Shareholder Services ("ISS") and the Investor Responsibility Research Center
("IRRC") have been retained as experts in the proxy voting and corporate
governance area. ISS and IRRC are independent advisers that specialize in
providing a variety of fiduciary-level proxy-related services to institutional
investment managers, plan sponsors, custodians, consultants, and other
institutional investors. The services provided to MSIM Affiliates include
in-depth research, global issuer analysis, and voting recommendations. In
addition to research, ISS provides vote execution, reporting, and recordkeeping.
MSIM's Proxy Review Committee (see Section IV.A. below) will carefully monitor
and supervise the services provided by the proxy research services.
VOTING PROXIES FOR CERTAIN NON-US COMPANIES - While the proxy voting process is
well established in the United States and other developed markets with a number
of tools and services available to assist an investment manager, voting proxies
of non-US companies located in certain jurisdictions, particularly emerging
markets, may involve a number of problems that may restrict or prevent a MSIM
Affiliate's ability to vote such proxies. These problems include, but are not
limited to: (i) proxy statements and ballots being written in a language other
than English; (ii) untimely and/or inadequate notice of shareholder meetings;
(iii) restrictions on the ability of holders outside the issuer's jurisdiction
of organization to exercise votes; (iv) requirements to vote proxies in person,
(v) the imposition of restrictions on the sale of the securities for a period of
time in proximity to the shareholder meeting; and (vi) requirements to provide
local agents with power of attorney to facilitate the MSIM Affiliate's voting
instructions. As a result, clients' non-U.S. proxies will be voted on a best
efforts basis only, consistent with the Client Proxy Standard. ISS has been
retained to provide assistance to the MSIM Affiliates in connection with voting
their clients' non-US proxies.
II. GENERAL PROXY VOTING GUIDELINES
3
<Page>
To ensure consistency in voting proxies on behalf of its clients, MSIM
Affiliates will follow (subject to any exception set forth herein) these Proxy
Voting Policies and Procedures, including the guidelines set forth below. These
guidelines address a broad range of issues, including board size and
composition, executive compensation, anti-takeover proposals, capital structure
proposals and social responsibility issues and are meant to be general voting
parameters on issues that arise most frequently. The MSIM Affiliates, however,
may vote in a manner that is contrary to the following general guidelines,
pursuant to the procedures set forth in Section IV. below, provided the vote is
consistent with the Client Proxy Standard.
III. GUIDELINES
A. MANAGEMENT PROPOSALS
1. When voting on routine ballot items the following proposals are
generally voted in support of management, subject to the review and
approval of the Proxy Review Committee, as appropriate.
- Selection or ratification of auditors.
- Approval of financial statements, director and auditor reports.
- Election of Directors.
- Limiting Directors' liability and broadening indemnification of
Directors.
- Requirement that a certain percentage (up to 66 2/3%) of its
Board's members be comprised of independent and unaffiliated
Directors.
- Requirement that members of the company's compensation,
nominating and audit committees be comprised of independent or
unaffiliated Directors.
- Recommendations to set retirement ages or require specific levels
of stock ownership by Directors.
- General updating/corrective amendments to the charter.
- Elimination of cumulative voting.
- Elimination of preemptive rights.
- Provisions for confidential voting and independent tabulation of
voting results.
4
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- Proposals related to the conduct of the annual meeting except
those proposals that relate to the "transaction of such other
business which may come before the meeting."
2. The following non-routine proposals, which potentially may have a
substantive financial or best interest impact on a shareholder, are
generally voted in support of management, subject to the review and
approval of the Proxy Review Committee, as appropriate.
CAPITALIZATION CHANGES
- Capitalization changes that eliminate other classes of stock and
voting rights.
- Proposals to increase the authorization of existing classes of
common stock (or securities convertible into common stock) if:
(i) a clear and legitimate business purpose is stated; (ii) the
number of shares requested is reasonable in relation to the
purpose for which authorization is requested; and (iii) the
authorization does not exceed 100% of shares currently authorized
and at least 30% of the new authorization will be outstanding.
- Proposals to create a new class of preferred stock or for
issuances of preferred stock up to 50% of issued capital.
- Proposals for share repurchase plans.
- Proposals to reduce the number of authorized shares of common or
preferred stock, or to eliminate classes of preferred stock.
- Proposals to effect stock splits.
- Proposals to effect reverse stock splits if management
proportionately reduces the authorized share amount set forth in
the corporate charter. Reverse stock splits that do not adjust
proportionately to the authorized share amount will generally be
approved if the resulting increase in authorized shares coincides
with the proxy guidelines set forth above for common stock
increases.
COMPENSATION
- Director fees, provided the amounts are not excessive relative to
other companies in the country or industry.
5
<Page>
- Employee stock purchase plans that permit discounts up to 15%,
but only for grants that are part of a broad based employee plan,
including all non-executive employees.
- Establishment of Employee Stock Option Plans and other employee
ownership plans.
ANTI-TAKEOVER MATTERS
- Modify or rescind existing supermajority vote requirements to
amend the charters or bylaws.
- Adoption of anti-greenmail provisions provided that the proposal:
(i) defines greenmail; (ii) prohibits buyback offers to large
block holders not made to all shareholders or not approved by
disinterested shareholders; and (iii) contains no anti-takeover
measures or other provisions restricting the rights of
shareholders.
3. The following non-routine proposals, which potentially may have a
substantive financial or best interest impact on the shareholder, are
generally voted AGAINST (notwithstanding management support), subject
to the review and approval of the Proxy Review Committee, as
appropriate.
- Capitalization changes that add classes of stock which
substantially dilute the voting interests of existing
shareholders.
- Proposals to increase the authorized number of shares of existing
classes of stock that carry preemptive rights or supervoting
rights.
- Creation of "blank check" preferred stock.
- Changes in capitalization by 100% or more.
- Compensation proposals that allow for discounted stock options
that have not been offered to employees in general.
- Amendments to bylaws that would require a supermajority
shareholder vote to pass or repeal certain provisions.
- Proposals to indemnify auditors.
4. The following types of non-routine proposals, which potentially may
have a potential financial or best interest impact on an issuer, are
voted as determined by the Proxy Review Committee.
6
<Page>
CORPORATE TRANSACTIONS
- Mergers, acquisitions and other special corporate transactions
(i.e., takeovers, spin-offs, sales of assets, reorganizations,
restructurings and recapitalizations) will be examined on a
case-by-case basis. In all cases, ISS and IRRC research and
analysis will be used along with MSIM Affiliates' research and
analysis, based on, among other things, MSIM internal
company-specific knowledge.
- Change-in-control provisions in non-salary compensation plans,
employment contracts, and severance agreements that benefit
management and would be costly to shareholders if triggered.
- Shareholders rights plans that allow appropriate offers to
shareholders to be blocked by the board or trigger provisions
that prevent legitimate offers from proceeding.
- Executive/Director stock option plans. Generally, stock option
plans should meet the following criteria:
(i) Whether the stock option plan is incentive based;
(ii) For mature companies, should be no more than 5% of the
issued capital at the time of approval;
(iii) For growth companies, should be no more than 10% of the
issued capital at the time of approval.
ANTI-TAKEOVER PROVISIONS
- Proposals requiring shareholder ratification of poison pills.
- Anti-takeover and related provisions that serve to prevent the
majority of shareholders from exercising their rights or
effectively deter the appropriate tender offers and other offers.
B. SHAREHOLDER PROPOSALS
1. The following shareholder proposals are generally supported, subject
to the review and approval of the Proxy Review Committee, as
appropriate:
- Requiring auditors to attend the annual meeting of shareholders.
- Requirement that members of the company's compensation,
nominating and audit committees be comprised of independent or
unaffiliated Directors.
7
<Page>
- Requirement that a certain percentage of its Board's members be
comprised of independent and unaffiliated Directors.
- Confidential voting.
- Reduction or elimination of supermajority vote requirements.
2. The following shareholder proposals will be voted as determined by the
Proxy Review Committee.
- Proposals that limit tenure of directors.
- Proposals to limit golden parachutes.
- Proposals requiring directors to own large amounts of stock to be
eligible for election.
- Restoring cumulative voting in the election of directors.
- Proposals that request or require disclosure of executive
compensation in addition to the disclosure required by the
Securities and Exchange Commission ("SEC") regulations.
- Proposals that limit retirement benefits or executive
compensation.
- Requiring shareholder approval for bylaw or charter amendments.
- Requiring shareholder approval for shareholder rights plan or
poison pill.
- Requiring shareholder approval of golden parachutes.
- Elimination of certain anti-takeover related provisions.
- Prohibit payment of greenmail.
3. The following shareholder proposals are generally not supported,
subject to the review and approval of the Committee, as appropriate.
- Requirements that the issuer prepare reports that are costly to
provide or that would require duplicative efforts or expenditures
that are of a non-business nature or would provide no pertinent
information from the perspective of institutional shareholders.
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- Restrictions related to social, political or special interest
issues that impact the ability of the company to do business or
be competitive and that have a significant financial or best
interest impact to the shareholders.
- Proposals that require inappropriate endorsements or corporate
actions.
IV. ADMINISTRATION OF PROXY POLICIES AND PROCEDURES
A. PROXY REVIEW COMMITTEE
1. The MSIM Proxy Review Committee ("Committee") is responsible for
creating and implementing MSIM's Proxy Voting Policy and Procedures
and, in this regard, has expressly adopted them. Following are some of
the functions and responsibilities of the Committee.
(a) The Committee, which will consist of members designated by MSIM's
Chief Investment Officer, is responsible for establishing MSIM's
proxy voting policies and guidelines and determining how MSIM
will vote proxies on an ongoing basis.
(b) The Committee will periodically review and have the authority to
amend as necessary MSIM's proxy voting policies and guidelines
(as expressed in these Proxy Voting Policy and Procedures) and
establish and direct voting positions consistent with the Client
Proxy Standard.
(c) The Committee will meet at least monthly to (among other
matters): (1) address any outstanding issues relating to MSIM's
Proxy Voting Policy and Procedures; and (2) generally review
proposals at upcoming shareholder meetings of MSIM portfolio
companies in accordance with this Policy and Procedures
including, as appropriate, the voting results of prior
shareholder meetings of the same issuer where a similar proposal
was presented to shareholders. The Committee, or its designee,
will timely communicate to ISS MSIM's Proxy Voting Policy and
Procedures (and any amendments to them and/or any additional
guidelines or procedures it may adopt).
(d) The Committee will meet on an ad hoc basis to (among other
matters): (1) authorize "split voting" (i.e., allowing certain
shares of the same issuer that are the subject of the same proxy
solicitation and held by one or more MSIM portfolios to be voted
differently than other shares) and/or "override voting" (i.e.,
voting all MSIM portfolio shares in a manner contrary to the
Procedures); (2) review and approve upcoming votes, as
appropriate, for matters
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for which specific direction has been provided in Sections I, II,
and III above; and (3) determine how to vote matters for which
specific direction has not been provided in Sections I, II and
III above. Split votes will generally not be approved within a
single Global Investor Group team. The Committee may take into
account ISS recommendations and the research provided by IRRC as
well as any other relevant information they may request or
receive.
(e) In addition to the procedures discussed above, if the Committee
determines that an issue raises a potential material conflict of
interest, or gives rise to the appearance of a potential material
conflict of interest, the Committee will designate a special
committee to review, and recommend a course of action with
respect to, the conflict(s) in question ("Special Committee").
The Special Committee may request the assistance of the Law and
Compliance Departments and will have sole discretion to cast a
vote. In addition to the research provided by ISS and IRRC, the
Special Committee may request analysis from MSIM Affiliate
investment professionals and outside sources to the extent it
deems appropriate.
(f) The Committee and the Special Committee, or their designee(s),
will document in writing all of their decisions and actions,
which documentation will be maintained by the Committee and the
Special Committee, or their designee(s) for a period of at least
6 years. To the extent these decisions relate to a security held
by a MSIM U.S. registered investment company, the Committee and
Special Committee, or their designee(s), will report their
decisions to each applicable Board of Trustees/Directors of those
investment companies at each Board's next regularly Scheduled
Board meeting. The report will contain information concerning
decisions made by the Committee and Special Committee during the
most recently ended calendar quarter immediately preceding the
Board meeting.
The Committee and Special Committee, or their designee(s), will timely
communicate to applicable PMs, the Compliance Departments and, as necessary to
ISS, decisions of the Committee and Special Committee so that, among other
things, ISS will vote proxies consistent with their decisions.
ITEM 8. [RESERVED.]
ITEM 9. CONTROLS AND PROCEDURES.
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(a) The Fund's chief executive officer and chief financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient
to ensure that information required to be disclosed by the Fund in this
Form N-CSR was recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and
forms, based upon such officers' evaluation of these controls and procedures
as of a date within 90 days of the filing date of the report.
(b) There were no changes in the Fund's internal control over financial
reporting that occurred during the registrant's most recent second fiscal
half-year that has materially affected, or is reasonably likely to materially
affect, the Fund's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a) [Attach the Code of Ethics]
(b)(1) [Attach the 302 Certification of Chief Executive Officer]
(b)(2) [Attach the 302 Certification of Chief Financial Officer]
[Note: the 906 Certifications are not exhibits to the Form but are filed with
the Form.]
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Turkish Investment Fund Inc.
--------------------------------------------------------------------
By: /s/ Ronald E. Robison
-----------------------------------------------------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: 12/18/03
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
-----------------------------------------------------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: 12/18/03
By: /s/ James W. Garrett
-----------------------------------------------------------------------------
Name: James W. Garrett
Title: Chief Financial Officer
Date: 12/18/03
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