<PAGE>
THE TURKISH INVESTMENT FUND, INC.
---------------------------------------------
OFFICERS AND DIRECTORS
<TABLE>
<S> <C>
Barton M. Biggs Frederick B. Whittemore
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS James W. Grisham
Warren J. Olsen VICE PRESIDENT
PRESIDENT AND DIRECTOR Harold J. Schaaff, Jr.
Peter J. Chase VICE PRESIDENT
DIRECTOR Joseph P. Stadler
John W. Croghan VICE PRESIDENT
DIRECTOR Valerie Y. Lewis
David B. Gill SECRETARY
DIRECTOR James R. Rooney
Graham E. Jones TREASURER
DIRECTOR Joanna M. Haigney
John A. Levin ASSISTANT TREASURER
DIRECTOR
William G. Morton, Jr.
DIRECTOR
</TABLE>
---------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Morgan Stanley Asset Management Limited
25 Cabot Square
Canary Wharf
London EI4 4QA
England
--------------------------------------------------------
ADMINISTRATOR
The United States Trust Company of New York
73 Tremont Street
Boston, Massachusetts 02108
--------------------------------------------------------
CUSTODIANS
Morgan Stanley Trust Company
One Pierrepont Plaza
Brooklyn, New York 11201
The United States Trust Company of New York
770 Broadway
New York, New York 10003
--------------------------------------------------------
SHAREHOLDER SERVICING AGENT
Investors Bank and Trust Company
89 South Street
Boston, Massachusetts 02111
(800) 342-8756
--------------------------------------------------------
LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
--------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
--------------------------------------------------------
------------------------------------------------------
THE
TURKISH
INVESTMENT
FUND, INC.
------------------------------------------------------
THIRD QUARTER REPORT
JULY 31, 1995
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- --------
For the third quarter ended July 31, 1995, the total return based on net asset
value per share of The Turkish Investment Fund, Inc. increased by 13.13%
compared to a 0.40% decrease in the U.S. dollar adjusted Morgan Stanley Capital
International (MSCI) Turkey Index for the same period. Strength in some of the
Fund's key cyclical weightings such as Marshall and Goodyear as well as a good
quarter by Migros helped the Fund's performance this quarter.
Over the quarter the market has been volatile -- hitting a high of 53,000 and a
low of 43,000. Continued positive sentiment on interest rates and liquidity
boosted the market to its peak, from where it has recently retreated as
investors become more concerned with the future direction of interest rates and
inflation. The market's rally in 1995 has been driven by a decrease in inflation
from 125% to 82% and a subsequent decrease in interest rates. The government has
also been successful in extending the maturity of its domestic borrowing from
the usual three month and shorter term to maturities as long as one year.
Together with improving corporate performance and a pickup in the domestic
economy, these factors drove the market to its peak of 53,000.
Nevertheless, halfway through 1995 there is some concern that the interest rate
cycle is now set to reverse and move upwards. Inflation in July was higher than
expected (84% year-on-year) and the government will have to rely significantly
on both the domestic and foreign debt markets in the coming months. Recent
improvements in the Turkish economy -- the current account is in a small
surplus, half-yearly budget deficit targets are in line with IMF targets and
Central Bank FX reserves at $14 billion are at an all-time high -- have recently
allowed Turkey to access foreign debt markets for the first time since the
financial crisis of early 1994.
Even so, with Public Sector Borrowing Requirement still in the 8% to 10% range,
domestic borrowing will remain a necessity. Another factor which is likely to
put upward pressure on rates is the strong resurgence within the domestic
economy. While GDP growth for the first quarter was down by 0.2%, the next three
quarters are likely to be very dynamic leading to expected year-end growth of
3.1%, a large swing from the negative growth of 5.5% in 1994. Industrial
production for the year is up by 6% as iron and steel, glass, paper and ceramic
industries have all been thriving of late. A strong Turkish lira has also
resulted in a mini-import boom. With the recovery having been first set off by
strong exports in the second half of 1994, and now being taken to the next level
by the domestic economic revival, the only missing ingredient remains consumer
spending -- the locomotive behind 1993's year of 7% growth. Already, we are
seeing signs of improved appliance and car sales as consumers begin to regain
confidence.
Another factor which will affect market confidence is politics. National
elections are scheduled for the fall of 1996 but there have been numerous
attempts of late by opposition parties to bring elections forward by a year. So
far, Prime Minister Tansu Ciller has been able to keep her fragile coalition
government intact but there have been some close calls as her left-of-center
coalition partner, the CHP party, has vocally challenged the government on
privatization -- about which it is ambivalent -- and constitutional reform --
about which the government is ambivalent. Nevertheless, the government was able
to recently pass a preliminary bill with some democratic reforms which should
appease the European Parliament which will be voting on 1996 customs union
between the EU and Turkey this fall.
Nevertheless, until the market becomes more confident over the government's
chances in the
2
<PAGE>
1996 elections, the market is unlikely to move upwards -- despite the robust
economy and strong corporate earnings. Accordingly, we have raised our cash
position to 10% while increasing our position in stocks likely to benefit during
an election year such as Netas, the provider of telecommunications equipment to
the government telecommunications monopoly.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT
[SIGNATURE]
Marianne L. Hay
SENIOR PORTFOLIO MANAGER
[SIGNATURE]
Landon Thomas
PORTFOLIO MANAGER
August 18, 1995
3
<PAGE>
INVESTMENTS (UNAUDITED)
- ---------
JULY 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
TURKISH COMMON STOCKS (90.3%)
(Unless otherwise noted)
- -----------------------------------------------------------
- -------------
APPLIANCES & HOUSEHOLD DURABLES (2.9%)
Arcelik AS 4,689,062 U.S.$ 1,480
-----------
- -----------------------------------------------------------
- -------------
AUTOMOBILES (6.1%)
Otosan Otomobil Sanayii AS 3,200,000 1,382
Tofas Turk Otomobil Fabrikasi 7,476,000 1,697
-----------
3,079
-----------
- -----------------------------------------------------------
- -------------
BEVERAGES & TOBACCO (11.5%)
Ege Biracilik Ve Malt Sanayii 3,000,000 3,190
Guney Biracilik Ve Malt
Sanayii 10,083,040 2,568
-----------
5,758
-----------
- -----------------------------------------------------------
- -------------
BUILDING MATERIALS & COMPONENTS (15.5%)
Izocam Ticaret Ve Sanayi AS 5,716,417 1,393
Marshall Boya Ve Vernik
Sanayii 23,520,000 3,282
Trakya Cam Sanayii AS 7,800,000 968
Turk Demir Dokum Fabrikalari
AS 9,999,996 2,148
-----------
7,791
-----------
- -----------------------------------------------------------
- -------------
FINANCIAL SERVICES (3.6%)
Global Securities Ltd. 342,800 45
Global Securities Ltd. (New) 5,734,102 762
Turkiye Garanti Bankasi AS 7,300,000 1,019
-----------
1,826
-----------
- -----------------------------------------------------------
- -------------
FOOD & HOUSEHOLD PRODUCTS (16.2%)
Kerevitas Gida 750,000 2,076
Migros Turk TAS 3,117,000 4,418
Tat Konserve Sanayii AS 2,275,000 1,638
-----------
8,132
-----------
- -----------------------------------------------------------
- -------------
HEALTH & PERSONAL CARE (2.7%)
Eczacibasi Ilac Sanayii Ve Ticaret AS
4,491,750 1,343
-----------
- -----------------------------------------------------------
- -------------
INDUSTRIAL COMPONENTS (4.3%)
Goodyear Lastikleri TAS 4,250,000 2,165
-----------
- -----------------------------------------------------------
- -------------
INSURANCE (3.2%)
Anadolu Sigoria 6,800,000 1,619
-----------
- -----------------------------------------------------------
- -------------
METALS -- NON-FERROUS (5.6%)
Eregli Demir Ve Celik Fabrikalari TAS
17,700,000 2,823
Rabak Elektrolitik Bakir Ve Mamulleri
3,272,280 --
-----------
2,823
-----------
- -----------------------------------------------------------
- -------------
MULTI-INDUSTRY (6.9%)
Alarko Holding AS 2,320,000 2,055
Usas Ucak Servisi AS 260,000 1,411
-----------
3,466
-----------
</TABLE>
- -----------------------------------------------------------------
- -------------
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -----------------------------------------------------------------
- -------------
<S> <C> <C>
TELECOMMUNICATIONS (7.8%)
Netas Telekomunik 9,475,000 U.S.$ 3,935
-------------
- -----------------------------------------------------------------
- -------------
TEXTILES & APPAREL (4.0%)
Aksa Akrilik Kimya Sanayii AS 2,160,000 2,009
Mensucat Santral TAS 3,606,400 --
-------------
2,009
-------------
- -----------------------------------------------------------------
- -------------
TOTAL TURKISH COMMON STOCKS
(Cost U.S. $35,684) 45,426
-------------
- ---------------------------------------------------------
- ------------
FACE
AMOUNT
(000)
- ---------------------------------------------------------
- ------------
SHORT TERM INVESTMENTS (9.9%)
- ---------------------------------------------------------
- ------------
REPURCHASE AGREEMENTS (9.9%)
Chase Manhattan Corp., 5.70%,
dated 7/31/95, due 8/1/95, to be
repurchased at U.S. $2,500,
collateralized by U.S. $2,580
United States Treasury Notes
4.25%, due 5/15/96, valued at
U.S. $2,551 U.S.$ 2,500 2,500
U.S. Trust, 5.60%, dated 7/31/95,
due 8/1/95, to be repurchased at
U.S. $2,498, collateralized by
U.S. $2,590 United States
Treasury Bills, due 8/17/95,
valued at U.S. $2,583 2,498 2,498
-------------
- -----------------------------------------------------------------
- -------------
TOTAL SHORT TERM INVESTMENTS
(Cost U.S. $4,998) 4,998
-------------
- -----------------------------------------------------------------
- -------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (2.4%)
(Interest Bearing Demand Account)
Turkish Lira (Cost U.S. $1,217) TRL 54,847,561 1,215
-------------
- -----------------------------------------------------------------
- -------------
TOTAL INVESTMENTS (102.6%)
(Cost U.S. $41,899) 51,639
-------------
- -----------------------------------------------------------------
- -------------
OTHER ASSETS AND LIABILITIES (-2.6%)
Other Assets 266
Liabilities (1,590) (1,324)
-------------- -------------
- -----------------------------------------------------------------
- -------------
NET ASSETS (100%)
Applicable to 7,039,767 issued and
outstanding U.S.$.01 par value shares
(30,000,000 shares authorized) U.S.$ 50,315
------------
- -----------------------------------------------------------------
- -------------
NET ASSET VALUE PER SHARE U.S.$ 7.15
------------
- -----------------------------------------------------------------
- -------------
</TABLE>
July 31, 1995 exchange rate -- Turkish Lira (TRL) 45,150=U.S. $1.00
4
