<Page>
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 AMERICAS 22ND FLOOR NEW YORK, NY 10020
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
RONALD E. ROBISON
1221 AVENUE OF THE AMERICAS 33RD FLOOR NEW YORK, NY 10020
- -------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-888 378-1630
----------------------------
Date of fiscal year end: 10/31/04
--------------------------
Date of reporting period: 4/30/04
-------------------------
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, DC 20549-0609. The OMB has reviewed this collection of
information under the clearance requirements of 44 U.S.C. Section 3507.
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
The Fund's semi-annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
<Page>
2004 SEMI-ANNUAL REPORT
THE TURKISH INVESTMENT FUND, INC.
APRIL 30, 2004
DIRECTORS
CHARLES A. FIUMEFREDDO RONALD E. ROBISON
MICHAEL BOZIC EXECUTIVE VICE PRESIDENT
EDWIN J. GARN AND PRINCIPAL EXECUTIVE
WAYNE E. HEDIEN OFFICER
JAMES F. HIGGINS
DR. MANUEL H. JOHNSON JOSEPH J. MCALINDEN
JOSEPH J. KEARNS VICE PRESIDENT
MICHAEL NUGENT
FERGUS REID BARRY FINK
VICE PRESIDENT [MORGAN STANLEY LOGO]
OFFICERS
CHARLES A. FIUMEFREDDO STEFANIE V. CHANG
CHAIRMAN OF THE BOARD VICE PRESIDENT THE TURKISH INVESTMENT
FUND, INC.
MITCHELL M. MERIN JAMES W. GARRETT
PRESIDENT 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
31 WEST 52ND STREET
NEW YORK, NY 10019
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
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 MORGAN STANLEY
www.morganstanley.com/im. INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER
(C) 2004 MORGAN STANLEY
<Page>
THE TURKISH INVESTMENT FUND, INC.
Overview (unaudited)
LETTER TO STOCKHOLDERS
PERFORMANCE
For the six months ended April 30, 2004, The Turkish Investment Fund, Inc. (the
"Fund") had a total return, based on net asset value per share, of 26.98%
compared to 13.98% for the U.S. dollar adjusted Morgan Stanley Capital
International (MSCI) Turkey Index (the "Index"). On April 30, 2004, the closing
price of the Fund's shares on the New York Stock Exchange was $10.93,
representing a 20.9% premium to the Fund's net asset value per share.
FACTORS AFFECTING PERFORMANCE
- During the six months ending April 30, 2004, Turkish equities gained
13.98% as the market performed well, given the improving economic and
political environment.
- Turkish equities, however, did not escape the period in review without
renewed volatility. After a period of relative tranquility, volatility in
Turkey spiked in April. Turkish equities posted their weakest performance
since March 2003, declining 16.9% in April after gaining 125.3% in 2003
and another 13.1% in the first three months of 2004.
- The difficulties in April were based primarily on external factors though
internal reasons exist as well. Externally, fears of future U.S. interest
rate hikes and a China slowdown hurt all equity markets, while domestic
sentiment weakened given the disappointment over the failed Cyprus
reunification plan.
- Investor confidence in the economic and political policies of the popular
Ak political party, the continuing decline in inflation expectations, and
the strengthening Turkish Lira have all helped to reduce real interest
rates to their lowest level in three years.
- The falling interest rate environment has helped to alleviate the domestic
debt burden on the economy and lowering perceptions of risk for Turkish
real assets, while fueling a resumption in credit growth, investment, and
consumption.
- The consensus expectation for Turkey's gross domestic product growth is
above 5.5% for 2004, driven by declining real interest rates as well as a
pick-up in private investment and consumption. The country may achieve
single digit inflation for the first time in more than 30 years.
- In terms of relative performance, both sector allocation and stock
selection were positive contributors. Stock selection within financials,
materials, and consumer discretionary sectors were particularly strong. On
a sector allocation basis, our overweight position in consumer
discretionary, telecommunication services, and industrials coupled with
underweight positions in energy and financials contributed positively to
relative performance. Stock selection within industrials and
telecommunication services detracted slightly from relative returns.
MANAGEMENT STRATEGIES
- The Fund continues to integrate 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.
- Despite the strong performance of the Turkish equity market in 2003,
earnings growth continues to outpace the rise in asset prices. We continue
to focus on various sectors that will benefit from improving domestic
demand, including financials, consumer discretionary, industrials, and
telecommunications.
Sincerely,
/s/ Ronald E. Robison
Ronald E. Robison
Executive Vice President--
Principal Executive Officer
May 2004
2
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THE TURKISH INVESTMENT FUND, INC.
STATEMENT OF NET ASSETS
April 30, 2004 (unaudited)
STATEMENT OF NET ASSETS
<Table>
<Caption>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
TURKISH COMMON STOCKS (95.7%)
(UNLESS OTHERWISE NOTED)
AIRLINES (3.9%)
Turk Hava Yollari Anonim
Ortakligi 357,944,000 (a) $ 1,965
================================================================================
AUTO COMPONENTS (6.0%)
Uzel Makina Sanayii AS 628,006,000 (a) 3,072
================================================================================
AUTOMOBILES (5.6%)
Tofas Turk Otomobil
Fabrikasi AS 1,265,248,192 (a) 2,850
================================================================================
BUILDING PRODUCTS (7.2%)
Trakya Cam Sanayii AS 1,590,134,692 3,666
================================================================================
COMMERCIAL BANKS (11.5%)
Akbank TAS 429,783,000 1,997
Turkiye Garanti Bankasi AS 12,756,600 (a) 390
Yapi ve Kredi Bankasi AS 1,630,875,000 3,473
- --------------------------------------------------------------------------------
5,860
================================================================================
CONSTRUCTION MATERIALS (9.7%)
Adana Cimento Sanayii
Turk Anonim Sirketi 427,663,185 (a) 1,483
Akcansa Cimento AS 1,314,402,500 3,423
- --------------------------------------------------------------------------------
4,906
================================================================================
CONTAINERS & PACKAGING (5.5%)
Anadolu Cam Sanayii AS 1,043,114,286 2,790
================================================================================
HEALTH CARE PROVIDERS & SERVICES (4.4%)
Acibadem Saglik Hizmetleri ve
Ticaret AS 266,573,000 2,214
================================================================================
HOUSEHOLD DURABLES (5.0%)
Arcelik AS 472,313,200 2,527
================================================================================
INDUSTRIAL CONGLOMERATES (3.2%)
Enka Insaat ve Sanayi AS 85,361,112 1,653
================================================================================
INSURANCE (5.3%)
Aksigorta AS 985,212,700 2,670
================================================================================
MEDIA (9.2%)
Galatasaray Sportif Sinai
ve Ticari Yatirimlar AS 33,183,000 1,390
Hurriyet Gazetecilik ve
Matbaacilik AS 1,159,796,403 (a) 3,286
- --------------------------------------------------------------------------------
4,676
================================================================================
MULTILINE RETAIL (5.1%)
Carsi Buyuk Magazacilik AS 2,528,899,500 (a) 2,617
================================================================================
WIRELESS TELECOMMUNICATION SERVICES (14.1%)
Turkcell Iletisim Hizmetleri AS 468,130,368 (a) 5,075
Turkcell Iletisim Hizmetleri
AS ADR 74,100 (a) $ 2,108
- --------------------------------------------------------------------------------
7,183
================================================================================
TOTAL TURKISH COMMON STOCKS
(Cost $41,646) 48,649
================================================================================
<Caption>
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (0.4%)
REPURCHASE AGREEMENT (0.4%)
J.P. Morgan Securities, Inc., 0.91%,
dated 4/30/04, due 5/3/04,
repurchase price $207
(Cost $207) $ 207 (b) 207
================================================================================
TOTAL INVESTMENTS (96.1%)
(Cost $41,853) 48,856
================================================================================
<Caption>
AMOUNT AMOUNT
(000) (000)
- --------------------------------------------------------------------------------
OTHER ASSETS (14.8%)
Receivable for Investments Sold 7,480
Other 11 7,491
================================================================================
LIABILITIES (-10.9%)
Payable For:
Investments Purchased (5,356)
Investment Advisory Fees (43)
Directors' Fees and Expenses (29)
Custodian Fees (17)
Administrative Fees (5)
Other Liabilities (84) (5,534)
================================================================================
NET ASSETS (100%)
Applicable to 5,619,406, issued and
outstanding $0.01 par value shares
(30,000,000 shares authorized) $ 50,813
================================================================================
NET ASSET VALUE PER SHARE $ 9.04
================================================================================
AT APRIL 30, 2004, NET ASSETS CONSISTED OF:
Common Stock $ 56
Paid-in Capital 65,451
Undistributed (Distributions in
Excess of) Net Investment Income (29)
Accumulated Net Realized Gain (Loss) (21,692)
Unrealized Appreciation (Depreciation)
on Investments and Foreign
Currency Translations 7,027
================================================================================
TOTAL NET ASSETS $ 50,813
================================================================================
</Table>
(a) Non-income producing.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of this statement of
net assets. The investment in the repurchase agreement is through
participation in a joint account with affiliated funds.
ADR American Depositary Receipt
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<Page>
THE TURKISH INVESTMENT FUND, INC.
Financial Statements
<Table>
<Caption>
SIX MONTHS ENDED
APRIL 30, 2004
(UNAUDITED)
STATEMENT OF OPERATIONS (000)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of $41 foreign taxes withheld) $ 404
================================================================================
EXPENSES
Investment Advisory Fees 244
Custodian Fees 50
Professional Fees 36
Administrative Fees 20
Stockholder Reporting Expenses 19
Directors' Fees and Expenses 16
Other Expenses 28
================================================================================
TOTAL EXPENSES 413
================================================================================
NET INVESTMENT INCOME (LOSS) (9)
================================================================================
NET REALIZED GAIN (LOSS) ON:
Investments 12,869
Foreign Currency Transactions (75)
================================================================================
NET REALIZED GAIN (LOSS) 12,794
================================================================================
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:
Investments (2,061)
Foreign Translations 24
================================================================================
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) (2,037)
================================================================================
TOTAL NET REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) 10,757
================================================================================
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 10,748
================================================================================
</Table>
<Table>
<Caption>
SIX MONTHS ENDED
APRIL 30, 2004 YEAR ENDED
(UNAUDITED) OCTOBER 31, 2003
STATEMENT OF CHANGES IN NET ASSETS (000) (000)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income (Loss) $ (9) $ 124
Net Realized Gain (Loss) 12,794 6,596
Change in Unrealized Appreciation
(Depreciation) (2,037) 8,787
================================================================================
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 10,748 15,507
================================================================================
Distributions from and/or in excess of:
Net Investment Income (111) --
================================================================================
Capital Share Transactions:
Reinvestment of Distributions
(245 shares in 2004) 3 --
Repurchase of Shares
(30,685 shares in 2003) -- (142)
================================================================================
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE TRANSACTIONS 3 (142)
================================================================================
TOTAL INCREASE (DECREASE) 10,640 15,365
================================================================================
Net Assets:
Beginning of Period 40,173 24,808
- --------------------------------------------------------------------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED
(DISTRIBUTIONS IN EXCESS OF) NET INVESTMENT
INCOME OF $(29) AND $91, RESPECTIVELY) $ 50,813 $ 40,173
================================================================================
</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>
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 2004 ---------------------------------------------------------
(UNAUDITED) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.15 $ 4.39 $ 4.23 $ 17.69 $ 9.52 $ 4.94
- --------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (0.00)+# 0.02+ (0.03) 0.06 (0.12) 0.05
Net Realized and Unrealized Gain (Loss)on
Investments 1.91 2.74 0.18 (10.03) 8.03 4.58
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.91 2.76 0.15 (10.24) 7.91 4.63
- --------------------------------------------------------------------------------------------------------------------------
Distributions from and/or in excess of:
Net Investment Income (0.02) -- (0.00)# -- (0.03) (0.12)
Net Realized Gain -- -- -- (3.23) -- --
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.02) -- (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 $ 9.04 7.15 $ 4.39 $ 4.23 $ 17.69 $ 9.52
==========================================================================================================================
PER SHARE MARKET VALUE, END OF PERIOD $ 10.93 $ 7.36 $ 4.07 $ 4.41 $ 13.38 $ 8.19
==========================================================================================================================
TOTAL INVESTMENT RETURN:
Market Value 48.78%** 80.84% (7.64)% (55.14)% 63.60% 94.34%
Net Asset Value (1) 26.98%** 62.64% 3.86% (67.47)% 86.09% 97.06%
==========================================================================================================================
RATIOS, SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (THOUSANDS) $ 50,813 $ 40,173 $ 24,808 $ 25,718 $ 108,138 $ 62,476
- --------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.58%* 1.85% 1.86%@ 1.94% 1.26% 1.96%
Ratio of Net Investment Income (Loss) to
Average Net Assets (0.04)%* 0.41% (0.49)% 0.83% (0.57)% 0.66%
Portfolio Turnover Rate 72%** 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.
* Annualized
** Not Annualized
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
THE TURKISH INVESTMENT FUND, INC.
April 30, 2004 (unaudited)
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.
Such policies are consistently followed by the Fund in the preparation of its
financial statements. Accounting principles generally accepted in the United
States 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: Equity securities listed on a U.S. exchange are valued
at the latest quoted sales price on the valuation date. Equity securities
listed or traded on NASDAQ, for which market quotations are available, are
valued at the NASDAQ Official Closing Price. Securities listed on a foreign
exchange are valued at their closing price. Unlisted securities and listed
securities not traded on the valuation date for which market quotations are
readily available are valued at the mean between the current bid and asked
prices obtained from reputable brokers. Debt securities purchased with
remaining maturities of 60 days or less are valued at amortized cost, if it
approximates value.
All other securities and investments for which market values are not readily
available, including restricted securities, and those securities for which
it is inappropriate to determine prices in accordance with the
aforementioned procedures, are valued at fair value as determined in good
faith under procedures adopted by the Board of Directors, although the
actual calculations may be done by others. Factors considered in making this
determination may include, but are not limited to, information obtained by
contacting the issuer, analysts, or the appropriate stock exchange (for
exchange-traded securities), analysis of the issuer's financial statements
or other available documents and, if necessary, available information
concerning other securities in similar circumstances.
Most foreign markets close before the New York Stock Exchange (NYSE).
Occasionally, developments that could affect the closing prices of
securities and other assets may occur between the times at which valuations
of such securities are determined (that is, close of the foreign market on
which the securities trade) and the close of business on the NYSE. If these
developments are expected to materially affect the value of the securities,
the valuations may be adjusted to reflect the estimated fair value as of the
close of the NYSE, as determined in good faith under procedures established
by the Board of Directors.
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 counterparty 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
counterparty to the agreement, realization and/or retention of the
collateral or proceeds may be subject to legal proceedings.
The Fund, along with other affiliated investment companies, may utilize a
joint trading account for the purpose of entering into one or more
repurchase agreements.
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
6
<Page>
THE TURKISH INVESTMENT FUND, INC.
April 30, 2004 (unaudited)
NOTES TO FINANCIAL STATEMENTS (CONT'D)
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 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. The
Custodian holds cash, securities, and other assets of the Fund as required by
the 1940 Act. 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
7
<Page>
THE TURKISH INVESTMENT FUND, INC.
April 30, 2004 (unaudited)
NOTES TO FINANCIAL STATEMENTS (CONT'D)
and distributions to stockholders are recorded on the ex-dividend date.
The Fund may be subject to taxes imposed by countries in which it invests. Such
taxes are generally based on income and/or capital gains earned or repatriated.
Taxes are accrued and applied to net investment income, net realized gains and
net unrealized appreciation as such income and/or gains are earned.
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 was 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>
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 book and tax basis differences may result in reclassifications among
undistributed (distributions in excess of) net investment income (or accumulated
net investment loss), accumulated net realized gain (loss) and paid-in capital.
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 April 30, 2004, the U.S. Federal income tax cost basis of investments
(excluding foreign currency if applicable) was $41,853,000 and, accordingly, net
unrealized appreciation for U.S. Federal income tax purposes was $7,003,000, of
which $7,900,000 related to appreciated securities and $897,000 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.
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. CONTRACTUAL OBLIGATIONS: The Fund enters into contracts that contain a
variety of indemnifications. The Fund's maximum exposure under these
arrangements is unknown. However, the Fund has not had prior claims or
losses pursuant to these contracts and expects the risk of loss to be
remote.
G. OTHER: During the six months ended April 30, 2004, the Fund made purchases
and sales totaling $35,699,000 and $38,931,000, 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 six months ended April 30, 2004, the Fund incurred $2,000 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 six months ended April
30, 2004, the Fund did not repurchase shares. From the inception of the program
through April 30, 2004, 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.
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
9
<Page>
ITEM 2. CODE OF ETHICS. Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semi-annual
reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semi-annual
reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable for semi-annual
reports.
ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable for the semi-annual
report.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. Not applicable for semi-annual reports.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. Not applicable for the semi-annual report.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable
for the semi-annual report.
ITEM 10. CONTROLS AND PROCEDURES.
The Fund's principal executive officer and principal 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.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Fund's internal controls
or in other factors that could significantly affect the Fund's internal controls
subsequent to the date of their evaluation.
ITEM 11. EXHIBITS.
(a) Code of Ethics - Not applicable for semi-annual reports.
(b) Certifications of Principal Executive Officer and Principal Financial
Officer attached hereto as part of EX-99.CERT.
<Page>
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: June 22, 2004
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: June 22, 2004
By: /s/ James W. Garrett
Name: James W. Garrett
Title: Principal Financial Officer
Date: June 22, 2004