<PAGE>
----------------------------------------------------------------
THE
PAKISTAN
INVESTMENT
FUND, INC.
----------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1999
MORGAN STANLEY DEAN WITTER
INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER
THE PAKISTAN INVESTMENT FUND, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
Barton M. Biggs
CHAIRMAN OF THE BOARD
OF DIRECTORS
Michael F. Klein
PRESIDENT AND DIRECTOR
Peter J. Chase
DIRECTOR
John W. Croghan
DIRECTOR
David B. Gill
DIRECTOR
Graham E. Jones
DIRECTOR
John A. Levin
DIRECTOR
William G. Morton, Jr.
DIRECTOR
Stefanie V. Chang
VICE PRESIDENT
Harold J. Schaaff, Jr.
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Mary E. Mullin
SECRETARY
Belinda A. Brady
TREASURER
Robin L. Conkey
ASSISTANT TREASURER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. INVESTMENT ADVISER
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------------------------------
PAKISTAN INVESTMENT ADVISER
International Asset Management Company Limited
Nacon House
Maulana Din Mohammed Wafar Road
Karachi, Pakistan
- --------------------------------------------------------------------------------
ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
- --------------------------------------------------------------------------------
CUSTODIAN
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
(800) 278-4353
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers 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 or visit our website at
www.msdw.com/institutional/investmentmanagement.
<PAGE>
LETTER TO SHAREHOLDERS
- ---------
For the year ended December 31, 1999, The Pakistan Investment Fund, Inc. (the
"Fund") had a total return, based on net asset value per share, of 44.56%
compared to 49.21% for the IFC Global Pakistan Total Return Index (the
"Index"). For the period from the Fund's commencement of operations on
December 27, 1993 through December 31, 1999, the Fund had a total return,
based on net asset value per share, of -73.50% compared to -57.91% for the
Index. On December 31, 1999, the closing price of the Fund's shares on the
New York Stock Exchange was $2-7/16 representing a 28.4% discount to the
Fund's net asset value per share.
As the market operated under `informal capital controls' throughout the year,
the Fund used a higher Pakistan exchange rate than the local interbank
exchange rate that is used by the Index. If the same exchange rate were used
for both the Fund and the Index, the Fund would have outperformed the Index.
FUND PERFORMANCE
The main drivers of the Fund's improved performance in 1999 have been (i)
investment strategy that emphasizes large capitalization, liquid blue-chip
stocks; (ii) a more active stock rotation driven by quick response to
changing sector and company fundamentals; and (iii) greater focus on market
timing and adjusting asset allocation between cash and equities.
The Fund went significantly underweight in fertilizer, chemicals, power and
banking sectors during the first half of 1999. The overweight sectors were
oil marketing, textiles/ synthetics and insurance. In the second half of
1999, power, banking and consumer goods sectors were also overweighted just
as they were starting to outperform.
The Fund operates in a market with a very narrow investable universe where
the top five most capitalized stocks make up almost 50% of the total market
capitalization. The Fund is often unable to match Index weightings in key
stocks due to limitations under diversification rules.
STOCK MARKET REVIEW
The Pakistan stock market witnessed extraordinary volatility last year.
January saw the Index at 945 in the aftermath of 1998 nuclear tests and
subsequent sanctions, followed by freezing of foreign currency accounts and
imposition of capital controls. After the external debt restructuring
agreement with multinational and bilateral lenders in the second quarter of
1999, the Index recovered to touch 1400. Immediately thereafter, the Kargill
crisis in Kashmir sent the market tumbling back to 1100 levels, where it
became range bound. Political uncertainty mounted in the second half of the
year with government focus shifted from the economy and towards its own
survival. The crisis reached its climax with the Prime Minister's sudden
decision to dismiss the army chief and the army's response of a bloodless
military coup. The Index fell by 150 points after the coup to 1120 on October
15, 1999. It then bounced back to close the year at 1409 - up 25% in just
under three months.
Interest rates have continued to remain low and there is excess liquidity in
the financial system after the withdrawal of banks' deposit lottery schemes.
This is the key driver in the recent run up in stock valuations. At the same
time, there is certainly more local investor confidence and a domestic
re-rating is taking place based on reduced political uncertainty, greater
transparency in policies as well as improving corporate sector fundamentals
and earnings growth outlook.
OUTLOOK FOR 2000
POLITICS
On the political front, the military backed technocratic government is likely
to continue operating for the foreseeable future. From an investor
perspective, the relative stability on the political front is likely to
reduce uncertainty. While there will continue to be international pressure
for a quick return to democracy, the military is likely to opt for a gradual
move towards greater representation beginning with local/district council
elections at grass root levels by the end of the year. In fact, their
credibility over the coming months is critically dependent on delivering on
the promises of good governance, accountability of corrupt elements and
sustained economic revival through reforms - key elements of the new
government's policy framework agenda.
Initial moves by the new administration have been in the right direction. The
crackdown on bank loan defaulters has resulted in 10 billion rupee being
recovered and some 30 billion rupee being rescheduled within two months
- -something not achieved by any government in the last two decades. There has
also been a move towards greater financial transparency of government
functionaries with the army chief, along with navy and airforce chiefs,
declaring their personal assets. A seven-member National Security Council has
also been formed consisting of heads of the three armed forces services and
key ministries.
ECONOMICS
On the economic front, an Economic Advisory Board (EAB) has been constituted,
headed by the finance minister who is a senior banker inducted from Citibank.
It has drawn up an exhaustive blueprint for economic re-
2
<PAGE>
form on a sector-by-sector basis with special focus on tax revenue
enhancement, documentation of the economy, boosting the agricultural sector
to both raise farm incomes and reduce imports of basic foodstuff,
accelerating capital market and banking sector reforms and laying the
foundations for developing export and information technology industries.
Privatization has again been revived, with emphasis on phasing the process
through domestic listing of public sector entities on the local stock
exchanges initially. A first move in this direction has been the formulation
and staffing of the Gas Regulatory Authority, something that was pending for
the last five years. This is a precursor to gas sector deregulation and
privatization of the gas utilities. Similar moves are expected in the oil
marketing and distribution sectors by the second half of 2000. Concerning the
telecommunications monopoly, PTCL has been shifted from the ministry of
communication to the ministry of technology. This is consistent with the new
administration's emphasis on technology development and realization of the
potential benefits of convergence between telecommunication & information
technology.
Signs of fiscal austerity are also emerging. Defense expenditure has been
slashed; petroleum product prices have been raised by 10% to compensate for
the rise in international crude oil prices, while 15% general sales tax has
been imposed on the energy sector. These measures will help generate revenue
in the second half of fiscal 2000. In the meantime, the Central Board of
Revenue is undergoing a shake up and sales tax collections are being
tightened. The full year target is to curtail fiscal deficit to 4.4% of GDP.
Lack of progress on resolving the Independent Power Producers (IPP) conflict
and continuing informal controls on capital repatriation by foreign investors
were major causes for poor market sentiment. The new administration has taken
some steps towards resolution of these issues. The central bank has cleared
most of the backlog of portfolio funds waiting for repatriation. It has also
issued a notice that it will strive to remain current on new requests for
repatriation. Central Bank's permission is no longer necessary to remit out
dividends, fees, etc. As far as the IPP issue is concerned, new reduced
tariff agreements have been signed by WAPDA with most IPPs barring the
National Power Group (Hubco). Here too, there are increasing signs that both
sides are being actively encouraged by the government to find an amicable
middle way and resolve the dispute.
While the above moves are a step in the right direction, it remains to be
seen how quickly and effectively they are implemented. If reasonable progress
becomes visible by budget time in June 2000, investor confidence should get a
major boost. The re-rating of the market by domestic investors which began in
December 1999, will then likely accelerate as confidence builds that reforms
will finally get implemented and sustained economic growth would have a
greater potential of being realized.
POTENTIAL RISK FACTORS
Despite positive developments in macro economic policy and corporate earnings
outlook, there are several risks that need to be kept in mind.
WEAK BALANCE OF PAYMENTS AND FOREIGN EXCHANGE RESERVES
Although exports were up by 9% in the first half of 1999, imports rose
faster, by 13%. The inflow of expatriate remittances also remained low
resulting in a higher current account deficit on a year-over-year basis. The
rise in petroleum prices and upturn in other commodity prices means that the
current account is likely to remain under pressure. With foreign exchange
reserves stuck in the $1.4-$1.5 billion range for the past six months, the
question that will become increasingly pressing is how will Pakistan fund its
2001 debt servicing requirements once the present breathing space created by
rescheduling ends.
The optimistic scenario is that if the government follows through with its
reform policies and meets IMF targets, there may be a possibility of a more
comprehensive external debt rescheduling in 2001. As part of global
real-politick, Pakistan may be required to sign the Comprehensive Test Ban
Treaty (CTBT) in return for a larger and longer term debt restructuring. If
such a scenario unfolds, sovereign credit ratings could improve in the medium
term and reduce international investors risk perception for Pakistan. The
pessimistic scenario is that the present administration gets mired in the
politics of pleasing various competing constituencies in order to legitimize
its stay in power. This would lead to loss of momentum on the economic reform
front and likely failure to meet the benchmarks agreed with the IMF. If this
happens and, further, if Pakistan takes a hard-line towards signing the CTBT,
a second rescheduling of external debt would be put in jeopardy.
DOMESTIC POLITICAL UNREST
Although the probability of general public dissent appears limited in the
immediate future, if some form of representation arrangements are not in
place by 2000, public resentment against the government might surface. This
could occur especially if the economy is not put back on an even keel by the
end of 2000.
3
<PAGE>
RELATIONS WITH INDIA
Pakistan's relations with India touched new lows during 1999 due to the
Kargill crisis and particularly in the aftermath of the recent hijacking
incident. The G-7 has voiced concerns at the increasing polarization between
the two nuclear weapon-possessing states. The United States has initiated
separate dialogues with both countries to explore common grounds that can
help ease tensions.
Given these risks, in the short-term, foreign inflows - both portfolio and
direct - are likely to remain subdued. However, if concrete progress is seen
on the economic front and there is a move towards greater representation, the
overall risk perception for Pakistan would improve.
INVESTMENT STRATEGY FOR 2000
Keeping the above discussion in view, we believe that the Pakistan market
certainly has the potential to continue re-rating upwards during the course
of 2000. As and when the various triggers come into play, the market is
likely to make fresh gains and consolidate at each level. Based on these
expectations, the Fund strategy will become slightly more aggressive as
confidence is built in policy implementation.
At present, our sector outlook leads us to overweight telecommunications,
power generation, oil and gas distribution and banks as well as textiles and
fast moving consumer goods. Emphasis will also be on companies that
concentrate on market share while remaining low cost producers in a moderate
to low inflation environment. Finally, as the broader market consolidates at
higher levels, IPO activity is likely to restart as several issues earmarked
for listing had been put off due to poor market conditions. The Fund will
look at these opportunities closely as they come up.
Sincerely,
/s/ Michael F. Klein
Michael F. Klein
PRESIDENT AND DIRECTOR
January 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.
- --------------------------------------------------------------------------------
DAILY NET ASSET AND MARKET VALUES, AS WELL AS MONTHLY PORTFOLIO INFORMATION
FOR THE FUND, ARE AVAILABLE ON OUR WEBSITE AT
www.msdw.com/institutional/investmentmanagement.
EFFECTIVE JANUARY, 2000, TIMOTHY JENSEN NO LONGER SERVES AS MANAGER OF THE
FUND. ASHUTOSH SINHA, WHO PREVIOUSLY SHARED PRIMARY RESPONSIBILITY WITH MR.
JENSEN, WILL CONTINUE TO HAVE PRIMARY RESPONSIBILITY FOR THE DAY-TO-DAY
MANAGEMENT OF THE FUND.
4
<PAGE>
The Pakistan Investment Fund, Inc.
Investment Summary as of December 31, 1999 (Unaudited)
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION
TOTAL RETURN (%)
------------------------------------------------------------------------
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>
One Year 32.89% 32.89% 44.56% 44.56% 49.21% 49.21%
Five Year -69.89 -21.34 -67.37 -20.07 -53.99 -14.38
Since Inception* -80.72 -23.95 -73.50 -19.81 -57.91 -13.41
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[GRAPH]
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993* 1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share . . . . . . $14.03 $11.42 $6.57 $4.77 $6.01 $2.37 $3.41
Market Value Per Share. . . . . . . . $15.50 $9.00 $5.25 $5.13 $4.88 $1.88 $2.44
Premium/(Discount). . . . . . . . . . 10.5% -21.2% -20.1% 7.5% -18.8% -20.7% -28.4%
Income Dividends. . . . . . . . . . . -- $0.03 $0.00# -- $0.01 $0.16 $0.07
Capital Gains Distributions . . . . . -- -- $0.00# -- -- -- --
Fund Total Return (2) . . . . . . . . -0.50% -18.36% -42.43% -27.40% 26.32% -57.25% 44.56%
Index Total Return (3). . . . . . . . N/A -8.51% -31.14% -19.46% 26.13% -55.88% 49.21%
</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 IFC Global Pakistan Total Return Index is an unmanaged index of
common stocks, including dividends.
* The Fund commenced operations on December 27, 1993.
# Amount is less than $0.01 per share.
5
<PAGE>
The Pakistan Investment Fund, Inc.
Portfolio Summary as of December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Equity Securities (95.1%)
Short-Term Investments (4.9%)
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
[CHART]
<TABLE>
<S> <C>
Other (5.1%)
Utilities -- Electrical & Gas (20.4%)
Transportation -- Airlines (1.7%)
Textiles & Apparel (4.4%)
Telecommunications -- Integrated (15.8%)
Banking (5.8%)
Insurance (3.2%)
Chemicals (13.5%)
Energy Sources (20.4%)
Forest Products & Paper (2.3%)
Health & Personal Care (7.4%)
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<S> <C>
1. Hub Power Co., Ltd. 16.8%
2. Pakistan Telecommunications Corp. 15.8
3. Pakistan State Oil Co., Ltd. 13.7
4. Lever Brothers Pakistan Ltd. 7.4
5. Engro Chemicals Ltd. 7.1
6. Shell Pakistan Ltd. 5.7
7. Fauji Fertilizer Co., Ltd. 5.6
8. Muslim Commercial Bank Ltd. 4.2
9. Sui Southern Gas Co. 3.6
10. Adamjee Insurance Co., Ltd. 3.2
----
83.1%
----
----
</TABLE>
* Excludes short-term investments.
6
<PAGE>
FINANCIAL STATEMENTS
- ---------
STATEMENT OF NET ASSETS
- ---------
DECEMBER 31, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (96.1%)
(Unless otherwise noted)
- -------------------------------------------------------------------------------
AUTOMOBILES (1.2%)
Pak Suzuki Motor Co., Ltd. 1,354,500 U.S.$ 460
--------------
- -------------------------------------------------------------------------------
BANKING (5.8%)
Askari Bank 2,172,591 637
Muslim Commercial Bank Ltd. 3,533,070 1,659
--------------
2,296
--------------
- -------------------------------------------------------------------------------
CHEMICALS (13.5%)
Engro Chemicals Ltd. 1,206,064 2,792
Fauji Fertilizer Co., Ltd. 2,245,200 2,203
ICI Pakistan Ltd. 1,733,500 336
--------------
5,331
--------------
- -------------------------------------------------------------------------------
ENERGY SOURCES (20.4%)
Pakistan Oilfields Ltd. 471,462 396
Pakistan State Oil Co., Ltd. 1,516,780 5,428
Shell Pakistan Ltd. 456,600 2,274
--------------
8,098
--------------
- -------------------------------------------------------------------------------
FINANCIAL SERVICES (0.0%)
(a)Trust Modaraba Ltd. 100 --@
--------------
- -------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER (2.3%)
Packages Ltd. 798,671 914
--------------
- -------------------------------------------------------------------------------
HEALTH & PERSONAL CARE (7.4%)
Lever Brothers Pakistan Ltd. 190,160 2,922
--------------
- -------------------------------------------------------------------------------
INSURANCE (3.2%)
Adamjee Insurance Co., Ltd. 1,325,201 1,284
--------------
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS -- INTEGRATED (15.8%)
(a,b)Pakistan Telecommunications Corp. GDR 30,383 1,225
Pakistan Telecommunications Corp. 'A' 12,611,800 5,049
--------------
6,274
--------------
- -------------------------------------------------------------------------------
TEXTILES & APPAREL (4.4%)
Ibrahim Fibre Ltd. 5,059,700 1,120
Nishat Mills Ltd. 1,220,211 603
Saif Textiles Mills Ltd. 100 --@
--------------
1,723
--------------
- -------------------------------------------------------------------------------
TRANSPORTATION -- AIRLINES (1.7%)
(a)Pakistan International Airlines Corp. 'A' 3,364,000 686
--------------
- -------------------------------------------------------------------------------
UTILITIES -- ELECTRICAL & GAS (20.4%)
(a)Hub Power Co., Ltd. 16,888,500 U.S.$ 6,651
(a)Sui Southern Gas Co. 5,206,983 1,441
--------------
8,092
--------------
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost U.S.$39,553) 38,080
--------------
- -------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT
(000)
- -------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (1.4%)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT (1.4%)
Chase Securities, Inc., 2.60%,
dated 12/31/99, due 1/3/00, to
be repurchased at U.S.$558,
collateralized by U.S.$575
United States Treasury Note,
6.125%, due 12/31/01, valued
at U.S.$574 (Cost U.S.$558) U.S.$ 558 558
--------------
- -------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (3.5%)
Pakistani Rupee
(Cost U.S.$1,364) PKR 73,946 1,364
--------------
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (101.0%)
(Cost U.S.$41,475) 40,002
--------------
- -------------------------------------------------------------------------------
OTHER ASSETS (1.3%)
Dividends Receivable U.S.$ 490
Other Assets 33 523
---------- --------------
- -------------------------------------------------------------------------------
LIABILITIES (-2.3%)
Payable For:
Dividends Declared (641)
Professional Fees (66)
Shareholder Reporting Expenses (37)
Directors' Fees and Expenses (35)
Investment Advisory Fees (33)
Custodian Fees (31)
Pakistani Investment Advisory Fees (17)
Administrative Fees (14)
Bank Overdraft (8)
Other Liabilities (21) (903)
---------- --------------
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
AMOUNT
(000)
- --------------------------------------------------------------------------------
<S> <C>
NET ASSETS (100%)
Applicable to 11,604,792, issued and
outstanding U.S.$0.01 par value shares
(100,000,000 shares authorized) U.S.$ 39,622
--------------
- -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 3.41
--------------
- -------------------------------------------------------------------------------
AT DECEMBER 31, 1999, NET ASSETS CONSISTED OF:
- -------------------------------------------------------------------------------
Common Stock U.S.$ 116
Capital Surplus 163,015
Distributions in Excess of Net Investment Income (7)
Accumulated Net Realized Loss (122,029)
Unrealized Depreciation on Investments and
Foreign Currency Translations (1,473)
--------------
- -------------------------------------------------------------------------------
TOTAL NET ASSETS U.S.$ 39,622
--------------
- -------------------------------------------------------------------------------
</TABLE>
(a) - Non-income producing
(b) - Security valued at fair value - see Note A-1 to financial statements.
@ - Value is less than U.S.$500.
GDR - Global Depositary Receipt
December 31, 1999 exchange rate - Pakistani Rupee (PKR) = 54.208 U.S.$1.00.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS YEAR ENDED
DECEMBER 31, 1999
(000)
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Dividends . . . . . . . . . . . . . . . . . . . . . . . . U.S.$ 1,949
Interest. . . . . . . . . . . . . . . . . . . . . . . . . 24
Less: Foreign Taxes Withheld. . . . . . . . . . . . . . . (212)
- --------------------------------------------------------------------------------
Total Income. . . . . . . . . . . . . . . . . . . . . . 1,761
- --------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees. . . . . . . . . . . . . . . . . 325
Administrative Fees . . . . . . . . . . . . . . . . . . . 129
Custodian Fees. . . . . . . . . . . . . . . . . . . . . . 116
Pakistani Investment Advisory Fees. . . . . . . . . . . . 93
Professional Fees . . . . . . . . . . . . . . . . . . . . 64
Shareholder Reporting Expenses. . . . . . . . . . . . . . 64
Directors' Fees and Expenses. . . . . . . . . . . . . . . 40
Transfer Agent Fees . . . . . . . . . . . . . . . . . . . 15
Other Expenses. . . . . . . . . . . . . . . . . . . . . . 61
- --------------------------------------------------------------------------------
Total Expenses. . . . . . . . . . . . . . . . . . . . . 907
- --------------------------------------------------------------------------------
Net Investment Income . . . . . . . . . . . . . . . . 854
- --------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS)
Investment Securities Sold. . . . . . . . . . . . . . . . (18,658)
- --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION
Appreciation on Investments . . . . . . . . . . . . . . . 30,675
Appreciation on Foreign Currency Translations . . . . . . 72
- --------------------------------------------------------------------------------
Change in Unrealized Appreciation/Depreciation. . . . . 30,747
- --------------------------------------------------------------------------------
Net Realized Loss and Change in Unrealized
Appreciation/Depreciation . . . . . . . . . . . . . . . . . 12,089
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . U.S.$ 12,943
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
STATEMENT OF CHANGES IN NET ASSETS (000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income . . . . . . . . U.S.$ 854 U.S.$ 2,625
Net Realized Loss . . . . . . . . . . (18,658) (24,479)
Change in Unrealized
Appreciation/Depreciation. . . . . . 30,747 (18,577)
- --------------------------------------------------------------------------------
Net Increase (Decrease) in Net
Assets Resulting from Operations . . 12,943 (40,431)
- --------------------------------------------------------------------------------
Distributions:
Net Investment Income . . . . . . . . (772) (1,857)
In Excess of Net Investment Income. . (7) (25)
- --------------------------------------------------------------------------------
Total Distributions . . . . . . . . . (779) (1,882)
- --------------------------------------------------------------------------------
Total Increase (Decrease) . . . . . . 12,164 (42,313)
Net Assets:
Beginning of Period . . . . . . . . . 27,458 69,771
- --------------------------------------------------------------------------------
End of Period (including
distributions in excess of net
investment income of U.S.$(7) and
U.S.$(25), respectively) . . . . . . U.S.$ 39,622 U.S.$ 27,458
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SELECTED PER SHARE DATA --------------------------------------------------------------------
AND RATIOS: 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...................... U.S. $ 2.37 U.S.$ 6.01 U.S.$ 4.77 U.S.$ 6.57 U.S.$ 11.42
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss).............................. 0.07 0.22 0.04 (0.04) (0.02)
Net Realized and Unrealized Gain (Loss) on Investments.... 1.04 (3.70) 1.21 (1.76) (4.83)
- --------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations...................... 1.11 (3.48) 1.25 (1.80) (4.85)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions:
Net Investment Income................................... (0.07) (0.16) (0.01) -- (0.00)#
In Excess of Net Investment Income...................... (0.00)# (0.00)# -- -- (0.00)#
Net Realized Gain....................................... -- -- -- -- (0.00)#
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions................................... (0.07) (0.16) (0.01) -- (0.00)#
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD............................ U.S.$ 3.41 U.S.$ 2.37 U.S.$ 6.01 U.S.$ 4.77 U.S.$ 6.57
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
PER SHARE MARKET VALUE, END OF PERIOD..................... U.S.$ 2.44 U.S.$ 1.88 U.S.$ 4.88 U.S.$ 5.13 U.S.$ 5.25
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TOTAL INVESTMENT RETURN:
Market Value............................................ 32.89% (58.30)% (4.63)% (2.38)% (41.63)%
Net Asset Value (1)..................................... 44.56% (57.25)% 26.32% (27.40)% (42.43)%
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RATIOS, SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (THOUSANDS)..................... U.S.$39,622 U.S.$27,458 U.S.$69,771 U.S.$55,399 U.S.$76,219
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Ratio of Expenses to Average Net Assets................... 2.38% 2.69% 2.25% 2.30% 2.20%
Ratio of Net Investment Income (Loss) to Average Net
Assets................................................... 2.24% 5.88% 0.61% (0.63)% (0.36)%
Portfolio Turnover Rate................................... 71% 55% 31% 28% 15%
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</TABLE>
# Amount is less than U.S.$0.01 per share.
(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 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.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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The Pakistan Investment Fund, Inc. (the "Fund") was incorporated in
Maryland on January 14, 1992, 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.
A. The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such
policies are consistently followed by the Fund in the preparation of its
financial statements. Generally accepted accounting principles 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
sales price on the valuation date, or if there was no sale on such date,
at the mean between the current bid and asked prices. Securities which
are traded over-the-counter are valued at the average of the mean of
current bid and asked prices obtained from reputable brokers. Short-term
securities which mature in 60 days or less are valued at amortized cost.
All other securities and assets for which market values are not readily
available (including investments which are subject to limitations as to
their sale) are valued at fair value as determined in good faith under
procedures approved by the Board of Directors, although the actual
calculations may be done by others.
2. 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 U.S. Federal income taxes is required in
the financial statements. The Fund is subject to withholding taxes on
dividends earned. Such tax is accrued at the time the applicable
dividend income is recorded.
The Fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on either income earned or
repatriated. The Fund accrues such taxes when the related income is
earned.
3. 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.
4. FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are
maintained in U.S. dollars. Amounts denominated in Pakistani rupees are
generally 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.
At December 31, 1999, the Pakistani currency has been fair valued under
procedures approved by the Board of Directors due to the imposition of
capital controls in Pakistan. The impact of such fair valuation
procedures was significant.
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
11
<PAGE>
gains (losses) from valuing foreign currency denominated assets and
liabilities at period end 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.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of U.S.
dollar denominated transactions as a result of, among other factors, the
possibility of lower levels of governmental supervision and regulation
of foreign securities markets and the possibility of political or
economic instability.
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 may
utilize and their associated risks:
5. 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 gains 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.
6. FORWARD COMMITMENTS AND WHEN-ISSUED/DELAYED DELIVERY SECURITIES: The
Fund may make forward commitments to purchase or sell securities.
Payment and delivery for securities which have been purchased or sold on
a forward commitment basis can take place a month or more (not to exceed
120 days) after the date of the transaction. Additionally, the Fund may
purchase securities on a when-issued or delayed delivery basis.
Securities purchased on a when-issued or delayed delivery basis are
purchased for delivery beyond the normal settlement date at a stated
price and yield, and no income accrues to the Fund on such securities
prior to delivery. When the Fund enters into a purchase transaction on a
when-issued or delayed delivery basis, it either establishes a
segregated account in which it maintains liquid assets in an amount at
least equal in value to the Fund's commitments to purchase such assets
as segregated on the Fund's records. Purchasing securities on a forward
commitment or when-issued or delayed-delivery basis may involve a risk
that the market price at the time of delivery may be lower than the
agreed upon purchase price, in which case there could be an unrealized
loss at the time of delivery.
7. SWAP AGREEMENTS: The Fund may enter into swap agreements to exchange
the return generated by one security, instrument or basket of
instruments for the return generated by another security, instrument or
basket of instruments. The following summarizes swaps which may be
entered into by the Fund:
INTEREST RATE SWAPS: Interest rate swaps involve the exchange of
commitments to pay and receive interest based on a notional principal
amount. Net periodic interest payments to be received or paid are
accrued daily and are recorded in the Statement of Operations as an
adjustment to interest income. Interest rate swaps are marked-to-market
daily based upon quotations from market makers and the change, if any,
is recorded as unrealized appreciation or depreciation in the Statement
of Operations.
TOTAL RETURN SWAPS: Total return swaps involve commitments to pay
interest in exchange for a market-linked return based on a notional
amount. To the extent the total return of the security, instrument or
basket of instruments underlying the transaction exceeds or falls short
of the offsetting interest obligation, the Fund will receive a payment
from or make a payment to the counterparty, respectively. Total return
swaps are marked-to-market daily based upon quotations from market
makers and the change, if any, is recorded as unrealized gains or losses
in the Statement of Operations. Periodic payments received or made at
the end of each measurement period, but prior to termination, are
recorded as realized gains or losses in the Statement of Operations.
Realized gains or losses on maturity or termination of interest rate and
total return swaps are presented in the Statement of Operations. Because
there is no organized market for these swap agreements, the value
reported in the Statement of Net Assets may differ from that which would
be realized in the event the Fund terminated its position in the
agreement. Risks may arise upon entering into these agreements from the
potential inability of the counterparties to meet
12
<PAGE>
the terms of the agreements and are generally limited to the amount of
net interest payments to be received and/or favorable movements in the
value of the underlying security, instrument or basket of instruments,
if any, at the date of default.
Risks also arise from potential losses from adverse market movements,
and such losses could exceed the related amounts shown in the Statement
of Net Assets.
8. STRUCTURED SECURITIES: The Fund may invest in interests in entities
organized and operated solely for the purpose of restructuring the
investment characteristics of sovereign debt obligations. This type of
restructuring involves the deposit with or purchase by an entity of
specified instruments and the issuance by that entity of one or more
classes of securities ("Structured Securities") backed by, or
representing interests in, the underlying instruments. Structured
Securities generally will expose the Fund to credit risks of the
underlying instruments as well as of the issuer of the Structured
Security. Structured Securities are typically sold in private placement
transactions with no active trading market. Investments in Structured
Securities may be more volatile than their underlying instruments,
however, any loss is limited to the amount of the original investment.
9. OVER-THE-COUNTER TRADING: Securities and other derivative instruments
that may be purchased or sold by the Fund are expected to regularly
consist of instruments not traded on an exchange. The risk of
nonperformance by the obligor on such an instrument may be greater, and
the ease with which the Fund can dispose of or enter into closing
transactions with respect to such an instrument may be less, than in the
case of an exchange-traded instrument. In addition, significant
disparities may exist between bid and asked prices for derivative
instruments that are not traded on an exchange. Derivative instruments
not traded on exchanges are also not subject to the same type of
government regulation as exchange traded instruments, and many of the
protections afforded to participants in a regulated environment may not
be available in connection with such transactions.
The Fund did not invest in Forward Commitments and When-Issued/Delayed
Delivery Securities, Swap Agreements, Structured Securities or participate in
Over-the-Counter Trading during the year ended December 31, 1999.
10. 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, net of applicable
withholding taxes where recovery of such taxes is not reasonably
assured. Distributions to shareholders are recorded on the ex-dividend
date.
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 generally
accepted accounting principles. The book/tax differences are either
considered 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 net investment income (loss), accumulated net
realized gain (loss) and paid in capital.
Adjustments for permanent book- tax differences, if any, are not
reflected in ending undistributed net investment income (loss) for the
purpose of calculating net investment income (loss) per share in the
financial highlights.
B. Morgan Stanley Dean Witter Investment Management Inc. (the "U.S.
Adviser") provides investment advisory services to the Fund under the terms
of an Investment Advisory and Management Agreement (the "Agreement"). Under
the Agreement, the U.S. Adviser is paid a fee computed weekly and payable
monthly at an annual rate of 1.00% of the Fund's average weekly net assets.
C. International Asset Management Company Limited (the "Pakistani Adviser")
provides investment advice, research and assistance on behalf of the Fund to
Morgan Stanley Dean Witter Investment Management Inc. under the terms of a
contract. Under the contract, the Pakistani Adviser is paid a fee computed
weekly and paid monthly at an annual rate of 0.30% of the Fund's average
weekly net assets.
D. The Chase Manhattan Bank, through its corporate affiliate Chase Global
Funds Services Company (the "Administrator"), provides administrative
services to the Fund under an Administration Agreement. Under the
Administration Agreement, the Administrator is paid a fee computed weekly and
payable monthly at an annual rate of 0.06% of the Fund's average weekly net
assets, plus $100,000 per annum. In addition, the Fund is charged certain
out-of- pocket expenses by the Administrator.
E. The Chase Manhattan Bank serves as custodian for the Fund. Custody fees
are payable monthly based on assets held in custody, investment purchases and
sales activity and account maintenance fees, plus reimbursement for certain
out-of-pocket expenses.
13
<PAGE>
F. During the year ended December 31, 1999, the Fund made purchases and
sales totaling $22,354,000 and $21,966,000, 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. At December 31, 1999, the U.S. Federal income tax cost basis of
securities was $45,234,000 and, accordingly, net unrealized depreciation for
U.S. Federal income tax purposes was $6,596,000, of which $4,685,000 related
to appreciated securities and $11,281,000 related to depreciated securities.
At December 31, 1999, the Fund had a capital loss carryforward for U.S.
Federal income tax purposes of approximately $116,829,000 available to offset
future capital gains of which $11,036,000 will expire on December 31, 2003,
$57,209,000 will expire on December 31, 2004, $10,411,000 will expire on
December 31, 2005, $12,604,000 will expire on December 31, 2006 and
$25,569,000 will expire on December 31, 2007. To the extent that capital
gains are offset, such gains will not be distributed to the shareholders. For
the year ended December 31, 1999, the Fund intends to elect to defer to
January 1, 2000, for U.S. Federal income tax purposes, post-October currency
losses of $3,000 and post-October capital losses of $76,000.
G. A significant portion of the Fund's net assets consist of equity
securities and currency denominated in Pakistani rupees. Changes in currency
exchange rates will affect the value of and investment income from such
investments. Pakistani securities are 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, Pakistani
securities may be subject to substantial governmental involvement in the
economy and greater social, economic and political uncertainty.
H. Each Director of the Fund who is not an officer of the Fund or an
affiliated person as defined under the Investment Company Act of 1940, as
amended, may elect to participate in the Directors' Deferred Compensation
Plan (the "Plan"). Under the Plan, such Directors may elect to defer payment
of a percentage of their total fees earned as a Director of the Fund. These
deferred portions are treated, based on an election by the Director, as if
they were either invested in the Fund's shares or invested in U.S. Treasury
Bills, as defined under the Plan. At December 31, 1999, the deferred fees
payable, under the Plan totaled $35,000 and are included in Payable for
Directors' Fees and Expenses on the Statement of Net Assets.
I. During December 1999, the Board of Directors declared a distribution of
$0.06 per share, derived from net investment income, payable on January 14,
2000, to shareholders of record on December 21, 1999.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
For the year ended December 31, 1999, the Fund expects to pass through
to shareholders foreign tax credits totaling approximately $212,000. In
addition, for the year ended December 31, 1999, gross income derived from
sources within a foreign country totaled $1,949,000.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------
To the Shareholders and Board of Directors of
The Pakistan Investment Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position
of The Pakistan Investment Fund, Inc. (the "Fund") at December 31, 1999, 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 five years in the period then ended, in conformity
with accounting principles generally accepted in the United States. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 18, 2000
15
<PAGE>
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), each shareholder will be deemed to have elected, unless American
Stock Transfer & Trust Company (the "Plan Agent") is otherwise instructed by
the shareholder 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. 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 shareholders 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 shareholders, such as banks, brokers or nominees, which
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 shareholder as representing the total amount registered in the
shareholder's name and held for the account of beneficial owners who are
participating in the Plan.
Shareholders 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 shareholders 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 Pakistan Investment Fund, Inc.
American Stock Transfer & Trust Company
Dividend Reinvestment and Cash Purchase Plan
40 Wall Street
New York, NY 10005
1-800-278-4353
16
