<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 Chase Manhattan Bank, N.A.
73 Tremont Street
Boston, Massachusetts 02108
--------------------------------------------------------
CUSTODIANS
Morgan Stanley Trust Company (International)
One Pierrepont Plaza
Brooklyn, New York 11201
The Chase Manhattan Bank, N.A. (Domestic)
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
--------------------------------------------------------
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.
------------------------------------------------------
THE
TURKISH
INVESTMENT
FUND, INC.
------------------------------------------------------
FIRST QUARTER REPORT
JANUARY 31, 1996
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- -------
Once again we finish a quarter dominated by politics in Turkey. For the three
months ended January 31, 1996, the total return of the Turkish Investment Fund,
Inc., based on net asset value per share, was -10.29% compared to -10.65% for
the MSCI Turkey Index. For the twelve month period ended January 31, 1996, the
Fund had a total return of 28.19% compared with 25.92% for the Index for the
same period. Since inception in December 1989, the Fund's total return based on
net asset value per share is -49.49% compared to -14.49% for the Index.
As always, it has been somewhat of a roller coaster ride: a bear market in
November and December, somewhat mitigated by a sharp run-up in January.
Following inconclusive general elections this past December in which the
Islamist party, Refah, out-polled the more mainstream parties of the
secular-based center right, the search for government coalition has lasted
throughout the first quarter of 1996. Now it seems the search is over. As of
this writing, the current caretaker, Prime Minister Tansu Ciller, and Mesut
Yilmaz of the similarly secular center right ANAP party have agreed to form a
coalition which will keep Refah, the Islamist party, out of power. Up until the
last moment it had seemed as if Refah would strike a deal with ANAP, in light of
the continuing inability of Yilmaz and Ciller to come to terms.
Nevertheless, pressure from the avowedly secular business community, the media
and the military made Yilmaz change his mind. Ciller's agreeing to allow Yilmaz
to assume the premiership for the first year was a key concession; previously
Ciller had insisted upon continuing as Prime Minister.
What does this all mean? Firstly, it means that the pro-economic reform platform
of ANAP and Ciller's DYP will continue to influence policy making in Ankara.
While support will be needed from some of the smaller left-wing parties to
secure a majority, the fact that the two mainstream center-right parties are
working together for the first time will be a huge boost for the reform process.
This will be especially important for the still-lagging privatization program.
As Yilmaz will only have one year in office before turning over the reins of
power to Ciller for the second and third years (Yilmaz resumes power during the
fourth year), he has considerable incentive to jump-start privatization as a
means of addressing the budget deficit. Upwards of $3 billion is ready for sale
if the go ahead is given. Yilmaz's economic team -- considered superior to
Ciller's -- will also be in charge of the Central Bank and the finance ministry.
All in all, one could not have hoped for a better political solution.
For many staunchly secular Turks, the prospect of Refah in a coalition
government was difficult to bear. It is important to point out, however, that
ANAP's flirtation with Refah did not so much represent the erosion of secular
values in Turkey as it did the time-honored tradition of horse-trading and
backroom dealing that characterizes Turkish coalition politics. Yilmaz, unable
to strike a deal with Ciller or any of the smaller fringe parties was,
pragmatically, examining the Refah option. At the same time, the collapse of the
Refah-ANAP talks should not be seen as a triumph for secularism over Islam but
just another example of political parties in Turkey agreeing to disagree.
Refah's rise in the polls of late is more a reflection of the dissatisfaction
many Turks feel with the incumbent parties and their inability to stabilize the
economy than it is a move away from the secularist ideals upon which the
republic was founded in 1923.
Given all the uncertainty, the capital markets have held up fairly well. Demand
for TL-denominated paper remains strong in line with the high real rates of
interest the government has been forced to offer of late. The stock market,
since June of last year, has been discounting political uncertainty into stock
prices and investors now seem ready to accept any government
2
<PAGE>
as better than no government at all. On the strength of the improved political
outlook, the ISE has gained over 40% in dollar returns from November through
February of this year. With political concerns out of the way for the time
being, attention can now be focused on corporate fundamentals which seem
excellent: EPS growth of 20%, in dollar terms, for 1996 and a market PER of
8.5x.
We maintain our overweight positions in blue chip defensives such as Migros, Ege
Bira, Netas and Trakya Cam and have continued our weighting in Eregli Demir
Celik, the iron and steel manufacturer. Eregli, a profitable company in its own
right, is first on the list of companies to be privatized while also being a
beneficiary of the continued recovery of the Turkish economy.
Sincerely,
[SIGNATURE]
Warren J. Olsen
PRESIDENT
[SIGNATURE]
Marianne L. Hay
SENIOR PORTFOLIO MANAGER
[SIGNATURE]
Landon Thomas
PORTFOLIO MANAGER
March 5, 1996
3
<PAGE>
The Turkish Investment Fund, Inc.
Investment Summary as of January 31, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION
TOTAL RETURN (%)
----------------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (1)(3)**
-------------------------- -------------------------- --------------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C>
-------------------------- -------------------------- --------------------------
FISCAL YEAR TO DATE 8.62% -- -10.29% -- -10.65% --
ONE YEAR 21.56 21.56% 28.19 28.19% 25.92 25.92%
FIVE YEAR -29.62 -6.78 -48.87 -12.55 -51.49 -13.47
SINCE INCEPTION* -39.41 -7.81 -49.49 -10.50 -14.49 -2.51
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
A BAR GRAPH PRESENTING FUND TOTAL RETURN AND INDEX TOTAL RETURN, AS LISTED
BELOW, IS REFLECTED HERE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PERIODS ENDED OCTOBER 31:
3 MONTHS ENDED
1/31/96
1990* 1991 1992 1993 1994 1995 (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share $12.78 $5.16 $4.69 $9.41 $4.89 $5.93 $5.21
Market Value Per Share $9.38 $7.00 $6.00 $10.38 $6.88 $5.88 $6.25
Premium/(Discount) -26.6% 35.7% 27.9% 10.3% 40.7% -0.8% 20.0%
Income Dividends $0.03 - $0.07 $0.04 $0.12 - $0.12
Capital Gains Distributions - $0.07 $0.17 - - - -
Fund Total Return (2) 14.80% -59.27% -6.36% 102.39% -47.61% 21.27% -10.29%
Index Total Return (1)(3)** 93.17% -64.65% -21.03% 156.26% -45.26% 26.48% -10.65%
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on per share net asset value reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. These percentages are not an indication of the performance of a
shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value
per share of the Fund.
(3) The MSCI Turkey Index is an unmanaged index of common stocks.
* The Fund commenced operations on December 5, 1989.
** Unaudited.
4
<PAGE>
The Turkish Investment Fund, Inc.
Portfolio Summary as of January 31, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 97.8%
Short-Term Investments 2.2%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Food & Household Products 17.5%
Building Materials & Components 16.4%
Beverages & Tobacco 16.3%
Textiles & Apparel 9.6%
Telecommunications 8.5%
Financial Services 7.0%
Multi-Industry 5.7%
Broadcasting & Publishing 5.4%
Metals--Non-Ferrous 4.9%
Banking 2.7%
Automobiles 2.3%
Insurance 1.8%
Other 1.9%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
1. Migros 10.2%
2. Netas 8.4
3. Ege Biracilik 7.5
4. Aksa 6.6
5. Alarko Holding AS 5.7
<CAPTION>
PERCENT OF
NET ASSETS
----------
<C> <S> <C>
6. Sabah 5.4%
7. Guney Biracilik Ve Malt Sanayii 5.0
8. Eregli Demir Ve Celik 4.9
9. Garanti Bankasi 4.8
10. Trakya Cam Sanayii 4.3
----------
62.8%
----------
----------
</TABLE>
5
<PAGE>
INVESTMENTS (UNAUDITED)
- ---------
JANUARY 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
TURKISH COMMON STOCKS (98.1%)
- --------------------------------------------------
- ----------
AUTOMOBILES (2.3%)
Tofas Turk Otomobil
Fabrikasi 7,476,000 U.S. $ 856
-------------
- ---------------------------------------------------------
- ------------
BANKING (2.7%)
Demirbank 15,000,000 990
-------------
- ---------------------------------------------------------
- ------------
BEVERAGES & TOBACCO (16.3%)
Ege Biracilik 7,386,000 2,760
Guney Biracilik Ve Malt
Sanayii 11,750,000 1,850
Turk Tuborg 2,480,000 1,380
-------------
5,990
-------------
- ---------------------------------------------------------
- ------------
BROADCASTING & PUBLISHING (5.4%)
Sabah 97,501,000 1,977
-------------
- ---------------------------------------------------------
- ------------
BUILDING MATERIALS & COMPONENTS (16.4%)
CBS Boya Sanayi 36,000,000 1,231
GoltasYeni-New 6,000,000 1,240
Marshall Boya 10,896,000 1,005
Trakya Cam Sanayii 12,800,000 1,588
Turk Demir Dokum
Fabrikalari 8,286,996 962
-------------
6,026
-------------
- ---------------------------------------------------------
- ------------
FINANCIAL SERVICES (7.0%)
Garanti Bankasi 19,883,000 1,771
Global Securities
Services, Inc. 9,475,000 784
Global Securities
Services, Inc.-New 1,072 --
-------------
2,555
-------------
- ---------------------------------------------------------
- ------------
FOOD & HOUSEHOLD PRODUCTS (17.5%)
Kerevitas Gida 11,785,725 1,106
Migros 3,740,400 3,747
Tat Konserve Sanayii 2,275,000 1,556
-------------
6,409
-------------
- ---------------------------------------------------------
- ------------
INSURANCE (1.8%)
Gunes Sigorta 7,470,000 665
-------------
- ---------------------------------------------------------
- ------------
METALS -- NON-FERROUS (4.9%)
Eregli Demir Ve Celik 17,700,000 1,802
Rabak Elektrolitik Bakir 3,272,280 --
-------------
1,802
-------------
- ---------------------------------------------------------
- ------------
MULTI-INDUSTRY (5.7%)
Alarko Holding AS 5,268,600 2,095
-------------
- ---------------------------------------------------------
- ------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
TELECOMMUNICATIONS (8.5%)
Netas 8,475,000 U.S. $ 3,100
-------------
- ---------------------------------------------------------
- ------------
TEXTILES & APPAREL (9.6%)
Aksa 5,724,991 2,413
Bossa 12,500,000 1,113
Mensucat Santral 3,606,400 --
-------------
3,526
-------------
- ---------------------------------------------------------
- ------------
TOTAL TURKISH COMMON STOCKS
(Cost U.S. $39,318) 35,991
-------------
- ---------------------------------------------------------
- ------------
FACE
AMOUNT VALUE
(000) (000)
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.9%)
(Interest Bearing Demand Account)
Turkish Lira
(Cost U.S. $708) TRL 43,147,749 686
-------------
- ---------------------------------------------------------
- ------------
SHORT-TERM INVESTMENT (0.3%)
REPURCHASE AGREEMENT (0.3%)
Chase Manhattan Bank,
N.A., 5.55%, dated
1/31/96, due 2/1/96, to
be repurchased at U.S.
$126, collateralized by
U.S. $80 United States
Treasury Bonds, due
8/15/13, valued at U.S.
$127
(Cost U.S. $126) U.S. $ 126 126
-------------
- ---------------------------------------------------------
- ------------
TOTAL INVESTMENTS (100.3%)
(Cost U.S. $40,152) 36,803
-------------
- ---------------------------------------------------------
- ------------
OTHER ASSETS AND LIABILITIES (-0.3%)
Other Assets 4
Liabilities (108) (104)
-------------- -------------
- ---------------------------------------------------------
- ------------
NET ASSETS (100%)
- ---------------------------------------------------------
- ------------
Applicable to 7,043,085 issued and
outstanding U.S. $0.01 par value shares
(30,000,000 shares authorized) U.S. $ 36,699
----------
- ---------------------------------------------------------
- ------------
NET ASSET VALUE PER SHARE U.S. $ 5.21
----------
- ---------------------------------------------------------
- ------------
January 31, 1996 exchange rate -- Turkish Lira (TRL)
62,880 = U.S. $1.00
</TABLE>
6
