<PAGE>
THE TURKISH INVESTMENT FUND, INC.
--------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
Barton M. Biggs Fergus Reid
CHAIRMAN OF THE BOARD DIRECTOR
OF DIRECTORS
Frederick 0. Robertshaw
Harold J. Schaaff, Jr. DIRECTOR
PRESIDENT AND DIRECTOR
Stefanie V. Chang
John D. Barrett II VICE PRESIDENT
DIRECTOR
Arthur J. Lev
Gerard E. Jones VICE PRESIDENT
DIRECTOR
Joseph P. Stadler
Graham E. Jones VICE PRESIDENT
DIRECTOR
Mary E. Mullin
John A. Levin SECRETARY
DIRECTOR
Belinda A. Brady
Andrew McNally IV TREASURER
DIRECTOR
Robin L. Conkey
William G. Morton, Jr. ASSISTANT TREASURER
DIRECTOR
Samuel T. Reeves
DIRECTOR
--------------------------------------------------------------------------------
INVESTMENT ADVISERS
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
Morgan Stanley Dean Witter Investment Management Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
--------------------------------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
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CUSTODIAN
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
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SHAREHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
(800) 278-4353
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LEGAL COUNSEL
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
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INDEPENDENT ACCOUNTANTS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
--------------------------------------------------------------------------------
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.msdw.com/im.
---------------------------------------------
THE
TURKISH
INVESTMENT
FUND, INC.
---------------------------------------------
THIRD QUARTER REPORT
JULY 31, 2000
MORGAN STANLEY DEAN WITTER
INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
------------
For the nine months ended July 31, 2000, The Turkish Investment Fund, Inc. (the
"Fund") had a total return, based on net asset value per share, of -9.21%
compared to -17.11% for the U.S. dollar adjusted Morgan Stanley Capital
International (MSCI) Turkey Index (the "Index"). For the period from the Fund's
commencement of operations on December 5, 1989 through July 31, 2000, the Fund's
total return, based on net asset value per share, was 95.31% compared to 142.93%
for the Index. On July 31, 2000, the closing price of the Fund's shares on the
New York Stock Exchange was $14 3/16 representing a 24.6% discount to the Fund's
net asset value per share.
The Fund's outperformance relative to the Index was driven by good stock
selection, particularly within consumer-related sectors. Our overweight position
in the consumer discretionary sector added to performance. A notable contributor
to performance during the third quarter was brewery and Coca-Cola bottler
Anadolu Efes. We believe this beverage company is well positioned to benefit
from a pick up in Turkish consumer demand. Our overweight stance in the
telecommunication services sector detracted from performance, in sympathy with
the sector on a global basis.
Turkish equities were weighed down during the three months ended July 31, 2000
by higher-than-expected inflation, delays in the privatization process, and
investor concerns over a widening current account deficit. Inflation has been
somewhat sticky in declining, primarily due to high food prices (after a poor
harvest) and high oil prices, as Turkey is a net importer of oil. Last year,
Turkey was in a recession following the Russian crisis and the devastating
earthquake that struck in August. Consequently, the increase in Turkey's current
account deficit was expected, as the current account is coming off a low base in
1999 and consumer demand has begun to recover. Moreover, the Turkish lira's
monthly depreciation rate was set in December 1999 for the period from January
1, 2000 through June 30, 2001, and its strength versus the Euro has fostered
consumer spending on imported goods. Turkish equities also faced selling
pressure during May as structural changes in the MSCI Emerging Markets Index
slightly decreased Turkey's weight in that index, effective after the close on
May 31.
After a constitutional amendment to bring President Demirel back for another
term was defeated, political compromise allowed for the election of a new
President, Ahmet Sezar, on May 5. However, political harmony was soon disrupted
and market sentiment was dampened by political uncertainty surrounding
corruption allegations against Mesut Yilmaz, the leader of the ANAP party, which
is a member in the coalition government, and Tansu Ciller, leader of the DYP
party. These allegations against leaders of the political parties were later
dismissed.
Recent privatizations, notably the sale of the third wireless license,
significantly exceeded expectations. Proceeds from the sale of the license will
be $2.5 billion, compared to government expectations of $1 billion for two
licenses. Turkcell, the largest wireless operator in Turkey, was listed in July,
and was Turkey's and the region's largest initial public offering. We believe
the addition of telecommunications services companies will positively affect the
Index, adding more diversity as the Index's heavy weight in the banking sector
decreases. There has been a delay in Turkey's privatization plans for
telecommunications services provider TURK Telekom, owing to the government's
indecisiveness as to what percentage of Turk Telekom should be sold to a
strategic investor and whether or not to grant management control. This lack of
privatization of Turk Telekom will likely lead to the government missing its
target of $7.6 billion in privatization revenues for 2000.
We believe improving industrial production indicates the economy is turning
around, and fiscal surplus figures reflect the government's improved dedication
and responsibility towards meeting budget goals. Automobile sales (in volume
terms) have swiftly increased, rising 76% year-over-year for the January-July
period. Although supporting the underlying picture of strong domestic demand,
an increase in the share of imported cars may also indicate further pressure on
the current account. It may be premature to gauge the IMF program's effects on
helping to reduce inflation, yet we believe CPI inflation for 2000 may reach 35%
by year-end.
We believe equities will appreciate once political tensions subside and
uncertainties behind the anticipated privatization of Turk Telecom are resolved.
We are cau-
2
<PAGE>
tiously optimistic on inflation and the current account. We are not overly
concerned about balance of payment problems at this point, as the current
account deficit is being financed by improving reserves, which are supported by
portfolio investments, tourism revenues and workers' remittances. The contents
of the 2001 budget will be decided in the fall, and we will be looking for
indications of restraint in government expenditures and perhaps the maintenance
of earthquake taxes for another year.
The Turkish government and economy has demonstrated great resilience following
the devastating earthquake last August, and we are encouraged by the
government's steadfastness to meeting IMF targets in addition to the continuity
of the coalition government.
Sincerely,
/s/ Harold J. Schaaff, Jr.
Harold J. Schaaff, Jr.
PRESIDENT AND DIRECTOR
August 2000
THE INFORMATION CONTAINED IN THIS OVERVIEW REGARDING SPECIFIC SECURITIES IS
FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A
RECOMMENDATION TO PURCHASE OR SELL THE SECURITIES MENTIONED.
FOREIGN INVESTING INVOLVES CERTAIN RISKS, INCLUDING CURRENCY FLUCTUATIONS AND
CONTROLS, RESTRICTIONS ON FOREIGN INVESTMENTS, LESS GOVERNMENTAL SUPERVISION AND
REGULATION, LESS LIQUIDITY AND THE POTENTIAL FOR MARKET VOLATILITY.
--------------------------------------------------------------------------------
DAILY NET ASSET AND MARKET VALUES, AS WELL AS MONTHLY PORTFOLIO INFORMATION FOR
THE FUND, ARE AVAILABLE ON OUR WEBSITE AT WWW.MSDW.COM/IM.
3
<PAGE>
The Turkish Investment Fund, Inc.
Investment Summary as of July 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
======================================================================================================================
HISTORICAL TOTAL RETURN (%)
INFORMATION ---------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) INDEX (3)
-------------------- -------------------- --------------------
AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
YEAR-TO-DATE -20.07% -- -9.21% -- -17.11% --
ONE YEAR 89.44 89.44% 105.98 105.98% 78.33 78.33%
FIVE YEAR 129.73 18.10 187.70 23.53 126.73 17.79
TEN YEAR 22.55 2.05 31.62 2.79 23.73 2.15
SINCE INCEPTION* 47.24 3.70 95.31 6.48 142.93 8.69
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
----------------------------------------------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[CHART]
<CAPTION>
YEARS ENDED OCTOBER 31: NINE MONTHS
ENDED
JULY 31,
1990* 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value
Per Share ......... $ 12.78 $ 5.16 $ 4.69 $ 9.41 $ 4.89 $ 5.93 $ 5.57 $ 8.74 $ 4.94 $ 9.52 $ 18.82
Market Value
Per Share ......... $ 9.38 $ 7.00 $ 6.00 $ 10.38 $ 6.88 $ 5.88 $ 5.38 $ 7.63 $ 4.31 $ 8.19 $ 14.19
Premium/ (Discount) .. -26.6% 35.7% 27.9% 10.3% 40.7% -0.8% -3.5% -12.7% -12.8% -14.0% -24.6%
Income Dividends ..... $ 0.03 -- $ 0.07 $ 0.04 $ 0.12 -- $ 0.12 $ 0.14 $ 0.14 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% -4.09% 60.76% -42.39% 97.06% -9.21%
Index Total Return (3) 93.17% -64.65% -21.03% 156.26% -45.26% 26.48% -4.24% 87.70% -50.28% 78.92% -17.11%
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) 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. 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 Morgan Stanley Capital International (MSCI) Turkey Index is an
unmanaged index of common stocks.
* The Fund commenced operations on December 5, 1989.
4
<PAGE>
The Turkish Investment Fund, Inc.
Portfolio Summary as of July 31, 2000 (Unaudited)
================================================================================
DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Short-Term Investments (0.5%)
Equity Securities (99.5%)
</TABLE>
--------------------------------------------------------------------------------
INDUSTRIES
[CHART]
<TABLE>
<S> <C>
Other (12.5%)
Banks (26.0%)
Household Durables (9.4%)
Communications Equipment (8.4%)
Automobiles (8.3%)
Beverages (8.0%)
Diversified Financials (8.0%)
Communications: Mobile (7.6%)
Media (4.5%)
Insurance (4.2%)
Construction Materials (3.1%)
</TABLE>
--------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<S> <C>
1. Yapi ve Kredi Bankasi AS 18.2%
2. Anadolu Efes Biracilik ve Malt Sanayii AS 8.0
3. Turkiye Garanti Bankasi AS 7.8
4. Turkcell Iletisim Hizmetleri AS 7.6
5. Netas Northern Electric
Telekomunikasyon AS 6.7
6. Arcelik AS 5.2%
7. Ford Otomotiv Sanayi AS 4.8
8. Dogan Sirketler Grubu Holding AS 4.4
9. Vestel Elektronik Sanayi ve Ticaret AS 4.2
10. Dogan Yayin Holding AS 4.0
----
70.9%
====
</TABLE>
5
<PAGE>
INVESTMENTS (UNAUDITED)
--------
JULY 31, 2000
<TABLE>
<CAPTION>
VALUE
SHARES (000)
------------------------------------------------------------------------
<S> <C> <C>
TURKISH COMMON STOCKS (99.4)%
(Unless otherwise noted)
AUTO COMPONENTS (1.7%)
Brisa Bridgestone Sabanci Lastik
Sanayi ve Ticaret AS 27,454,000 U.S.$ 2,053
------------
AUTOMOBILES (8.3%)
Ford Otomotiv Sanayi AS 102,812,000 5,745
Tofas Turk Otomobil
Fabrikasi AS 176,500,000 2,708
Yazicilar AS 23,110,000 1,528
------------
9,981
------------
BANKS (26.0%)
Turkiye Garanti Bankasi AS 834,500,000 9,457
Yapi ve Kredi Bankasi AS 2,080,760,041 21,942
------------
31,399
------------
BEVERAGES (8.0%)
Anadolu Efes Biracilik ve
Malt Sanayii AS 160,896,981 9,623
------------
BUILDING PRODUCTS (1.5%)
Trakya Cam Sanayii AS 147,914,122 1,839
------------
COMMUNICATIONS EQUIPMENT (8.4%)
Alcatel Teletas Telekomunikasyon
Endustri ve Ticaret AS 9,290,000 2,047
Netas Northern Electric
Telekomunikasyon AS 75,568,000 8,088
------------
10,135
------------
COMMUNICATIONS: MOBILE (7.6%)
Turkcell Iletisim Hizmetleri AS 136,000,000 9,204
------------
CONSTRUCTION MATERIALS (3.1%)
Adana Cimento Sanayii TAS 92,548,668 1,209
Akcansa Cimento AS 119,805,000 1,640
Goltas Goller Bolgesi Cimento
Sanayi ve Ticaret AS 55,600,000 941
------------
3,790
------------
CONSUMER SERVICES/PRODUCTS (0.7%)
Sezginler Gida Sanayii AS 36,583,000 849
------------
DIVERSIFIED FINANCIALS (8.0%)
Alarko Holding AS 46,135,000 2,033
Dogan Sirketler Grubu
Holding AS 213,632,800 5,296
Ihlas Holding AS 97,090,000 2,139
Turk Ekonomi Bankasi AS 9,500 65
Yapi Kredi Koray Gayrimenkul
Yatirim Ortakligi AS 15,362,000 114
------------
9,647
------------
ELECTRIC UTILITIES (0.4%)
Cukurova Elektrik AS 546,000 U.S.$ 417
------------
ELECTRICAL EQUIPMENT (1.1%)
Sarkuysan Elektrolitik Bakir
Sanayi ve Ticaret AS 50,100,000 1,360
------------
FOOD & DRUG RETAILING (1.8%)
Migros Turk TAS 13,338,000 2,204
------------
GAS UTILITIES (2.2%)
Aygaz AS 62,394,000 2,701
------------
HOUSEHOLD DURABLES (9.4%)
Arcelik AS 167,570,700 6,264
Vestel Elektronik Sanayi ve
Ticaret AS 23,809,000 5,059
------------
11,323
------------
INSURANCE (4.2%)
Aksigorta AS 102,007,000 1,927
Anadolu Hayat Sigorta AS 81,357,000 3,169
------------
5,096
------------
MEDIA (4.5%)
Dogan Yayin Holding AS 349,809,500 4,845
Sabah Yayincilik AS 127,200,000 551
------------
5,396
------------
METALS & MINING (2.5%)
Eregli Demir ve Celik
Fabrikalari TAS 85,633,000 3,066
------------
TOTAL TURKISH COMMON STOCKS
(Cost U.S.$119,872) 120,083
------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
--------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT (0.5%)
REPURCHASE AGREEMENT (0.5%)
(a) Chase Securities, Inc., 6.35%
dated 7/31/00, due
8/01/2000
(Cost U.S.$577) U.S$ 577 U.S.$ 577
------------
TOTAL INVESTMENTS (99.9%)
(Cost $120,449) 120,660
------------
<CAPTION>
AMOUNT
(000)
--------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS AND LIABILITIES (0.1%)
Other Assets 1,218
Liabilities (1,085) 133
----------- ------------
NET ASSETS (100%)
Applicable to 6,419,181 issued
and outstanding U.S$0.01 par
value shares (30,000,000 shares
authorized) U.S.$120,793
============
NET ASSET VALUE PER SHARE U.S.$ 18.82
============
</TABLE>
(a) -- The repurchase agreement is fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the portfolio.
The investment in the repurchase agreement is through participation in a joint
account with affiliated funds.
July 31, 2000 exchange rate -- Turkish Lira (TRL)
635,350 = U.S.$1.00.
7
