-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DdH43TbaFvMOSEB8977jYoY7PMRurhNrSRQDgYgtwLaOXeaN5S0+7k7QD0EaftXB IBPOEmr24JnqTVkQa7BMMA== 0000950123-04-008034.txt : 20040630 0000950123-04-008034.hdr.sgml : 20040630 20040630143016 ACCESSION NUMBER: 0000950123-04-008034 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040430 FILED AS OF DATE: 20040630 EFFECTIVENESS DATE: 20040630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY QUALITY MUNICIPAL INVESTMENT TRUS CENTRAL INDEX KEY: 0000876982 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06346 FILM NUMBER: 04891049 BUSINESS ADDRESS: STREET 1: C/O MORGAN STANLEY TRUST STREET 2: HARBORSIDE FINANCIAL CENTER, PLAZA TWO CITY: JERSEY CITY STATE: NJ ZIP: 07311 BUSINESS PHONE: (212) 869-6397 FORMER COMPANY: FORMER CONFORMED NAME: MORGAN STANLEY QUALITY MUNICIPAL INVESTMENT TRUST DATE OF NAME CHANGE: 20011220 FORMER COMPANY: FORMER CONFORMED NAME: MORGAN STANLEY DEAN WITTER QUALITY MUNICIPAL INVESTMENT TRUS DATE OF NAME CHANGE: 19981221 FORMER COMPANY: FORMER CONFORMED NAME: INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST DATE OF NAME CHANGE: 19920929 N-CSRS 1 y97625nvcsrs.txt FORM N-CSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-06346 Morgan Stanley Quality Municipal Investment Trust (Exact name of registrant as specified in charter) 1221 Avenue of the Americas, New York, New York 10020 (Address of principal executive offices) (Zip code) Ronald E. Robison 1221 Avenue of the Americas, New York, New York 10020 (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: October 31, 2004 Date of reporting period: April 30, 2004 Item 1 - Report to Shareholders Welcome, Shareholder: In this report, you'll learn about how your investment in Morgan Stanley Quality Municipal Investment Trust performed during the semiannual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the Trust's financial statements and a list of Trust investments. Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the Trust will achieve its investment objective. The Trust is subject to market risk, which is the possibility that market values of securities owned by the Trust will decline and, therefore, the value of the Trust's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Trust. FUND REPORT For the six-month period ended April 30, 2004 MARKET CONDITIONS The U.S. economy continued to show improvement over the six-month period under review. On the positive side, gross domestic product growth topped 4 percent in both quarters. While strength in output has historically led to higher interest rates, yields remained stubbornly low across the curve. These yields reflected low levels of observed inflation in the economy and gradual improvement in employment. The Federal Open Market Committee maintained its accommodative monetary policy. Surprising job growth in March, combined with escalating oil prices, led investors to anticipate that the Fed would raise interest rates sooner rather than later. Yet at its April meeting the Federal Reserve did not change its short-term lending rate but did signal a prospective shift in policy. As a result, bond yields spiked across sectors and maturities. The supply of new municipal bonds in calendar 2003 reached record levels as municipalities took advantage of historically low interest rates. Many cities and states reduced expenditures by refinancing existing debt at lower yields. In other cases, municipalities attempted to meet budget needs by issuing additional debt. Then in the first months of 2004 bond sales began to slow. Low interest rates also had an impact on the demand for municipal bonds. Retail and mutual fund activity slowed as holders of municipal bonds saw little reason to sell bonds purchased at higher yields and reinvest at historically low yields. However, insurance companies and hedge funds purchased municipal bonds based on their attractiveness relative to taxable securities. Additionally, investors stretched for yield by buying lower-rated bonds, causing credit spreads to tighten. PERFORMANCE ANALYSIS The net asset value (NAV) of Morgan Stanley Quality Municipal Investment Trust (IQT) decreased from $15.36 to $15.05 per share for the six-month period ended April 30, 2004. Based on this change plus reinvestment of tax-free dividends totaling $0.45 per share and long-term capital gains of $0.027 per share, the Trust's total NAV return was 1.21 percent. The Trust's value on the New York Stock Exchange (NYSE) decreased from $14.22 to $13.28 per share during the same period. Based on this change plus reinvestment of distributions, the Trust's total market return was -3.47 percent. On April 30, 2004, IQT's NYSE market price was at an 11.76 percent discount to its NAV. Past performance is no guarantee of future results. Monthly dividends for the second quarter of 2004, declared in March, were unchanged at $0.075 per share. The dividend reflects the level of the Trust's undistributed net investment income and projected earnings power. The Trust's level of undistributed net investment income was $0.113 per share on April 30, 2004, versus $0.137 per share six months earlier. 2 The Trust's duration(1) was targeted to be shorter than its benchmark index. The duration, adjusted for leverage, was 12.3 years. Treasury futures were sold to reduce interest-rate exposure without raising cash in the portfolio. We maintained an average tax-exempt bond maturity objective of 20 years to take advantage of the steepness of the municipal yield curve. Revenue bonds in sectors with reliable income streams from essential services such as municipal electric, transportation and water and sewer systems were emphasized. The Trust's net assets, including preferred shares of $345 million, were diversified across 13 credits in 69 long-term sectors. As discussed in previous reports, the total income available for distribution to holders of common shares includes incremental income provided by the Trust's outstanding Auction Rate Preferred Shares (ARPS). ARPS dividends reflect prevailing short-term interest rates on maturities ranging from one week to two years. Incremental income to holders of common shares depends on two factors: the amount of ARPS outstanding, and the spread between the portfolio's cost yield and its ARPS auction rate and expenses. The greater the spread and the higher the amount of ARPS outstanding, the greater the amount of incremental income available for distribution to holders of common shares. The level of net investment income available for distribution to holders of common shares varies with the level of short-term interest rates. ARPS leverage also increases the price volatility of common shares and has the effect of extending portfolio duration. During the six-month period under review, ARPS leverage contributed approximately $0.09 per share to common-share earnings. The Trust has two ARPS series totaling $105 million and representing 30 percent of net assets including preferred shares. The series is currently in two-year auction modes with maturities ranging from September 2004 to September 2005. The yields ranged from 1.70 to 1.90 percent. The Trust's procedure for reinvesting all dividends and distributions in common shares is through purchases in the open market. This method helps support the market value of the Trust's shares. In addition, we would like to remind you that the Trustees have approved a procedure whereby the Trust may, when appropriate, purchase shares in the open market or in privately negotiated transactions at a price not above market value or net asset value, whichever is lower at the time of purchase. The Trust may also utilize procedures to reduce or eliminate the amount of outstanding ARPS, including their purchase in the open market or in privately negotiated transactions. - ---------------------------------------------------- 1 A measure of the sensitivity of a bond's price to changes in interest rates, expressed in years. Each year of duration represents an expected 1 percent change in the price of a bond for every 1 percent change in interest rates. The longer a bond's duration, the greater the effect of interest-rate movements on its price. Typically, Funds with shorter durations perform better in rising-rate environments, while Funds with longer durations perform better when rates decline. 3
LARGEST SECTORS Water & Sewer 21.2% Transportation 19.5% General Obligation 18.3% Electric 11.9% Refunded 9.3%
LONG-TERM CREDIT ANALYSIS Aaa/AAA 73.7% Aa/AA 13.6% A/A 8.4% Baa/BBB 4.3%
Data as of April 30, 2004. Subject to change daily. All percentages are as a percentage of long-term investments. Provided for informational purposes only and should not be deemed a recommendation to buy or sell the securities mentioned. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. 4 DISTRIBUTION BY MATURITY (% of Long-Term Portfolio) As of April 30, 2004 WEIGHTED AVERAGE MATURITY: 17 YEARS (BAR CHART) Portfolio structure is subject to change. Geographic Summary of Investments Based on Market Value as a Percent of Total Investments Alabama................ 0.6% Alaska................. 2.2 Arizona................ 1.5 California............. 3.4 Colorado............... 2.1 District of Columbia... 1.1 Florida................ 9.7 Georgia................ 7.4 Hawaii................. 2.4 Idaho.................. 0.2 Illinois............... 6.7% Indiana................ 1.3 Kentucky............... 3.4 Maryland............... 3.1 Massachusetts.......... 5.3 Michigan............... 1.0 Minnesota.............. 1.6 Nevada................. 0.9 New Jersey............. 4.8 New York............... 10.8 North Carolina......... 1.8% Ohio................... 0.9 Oregon................. 2.6 Pennsylvania........... 2.1 South Carolina......... 4.5 Tennessee.............. 3.1 Texas.................. 9.8 Utah................... 1.2 Washington............. 1.8 Wyoming................ 2.7 ----- Total.................. 100.0% =====
5 CALL AND COST (BOOK) YIELD STRUCTURE (Based on Long-Term Portfolio) As of April 30, 2004 PERCENT OF BONDS CALLABLE -- WEIGHTED AVERAGE CALL PROTECTION: 7 YEARS (BAR CHART) 2004(a) 3 2005 5 2006 1 2007 4 2008 2 2009 7 2010 16 2011 17 2012 20 2013 14 2014+ 11
COST (BOOK) YIELD(B) -- WEIGHTED AVERAGE BOOK YIELD: 5.3% (BAR CHART) 2004(a) 7.1 2005 6.1 2006 6.6 2007 6.1 2008 5.6 2009 5.7 2010 5.5 2011 5.2 2012 5.2 2013 4.6 2014+ 4.6
(a) May include issues callable in previous years. (b) Cost or "book" yield is the annual income earned on a portfolio investment based on its original purchase price before the Trust's operating expenses. For example, the Trust is earning a book yield of 7.1% on 3% of the long-term portfolio that is callable in 2004. Portfolio structure is subject to change. 6 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2004 (UNAUDITED)
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - --------------------------------------------------------------------------------------------------------- Tax-Exempt Municipal Bonds (137.5%) General Obligation (25.1%) $ 5,000 North Slope Borough, Alaska, Ser 2000 B (MBIA)........... 0.00% 06/30/09 $ 4,173,250 3,000 California, Various Purpose Dtd 05/01/03................. 5.00 02/01/24 2,892,150 3,300 San Diego Unified School District, California, 2003 Ser E (FSA).................................................. 5.00 07/01/28 3,305,775 Florida State Board of Education, 6,890 Capital Outlay Refg Ser 2001 D......................... 5.375 06/01/18 7,398,413 3,000 Capital Outlay Refg 2002 Ser C (MBIA).................. 5.00 06/01/20 3,102,810 10,000 Chicago School Reform Board, Illinois, Dedicated Tax Ser 1997 (Ambac)........................................... 5.75 12/01/27 11,166,400 7,000 New Jersey, 2001 Ser H................................... 5.25 07/01/19 7,624,610 5,000 North Carolina, Public School Building Ser 1999.......... 4.60 04/01/17 5,129,850 655 Oregon, Veterans' Welfare Ser 75......................... 6.00 04/01/27 673,353 Pennsylvania, 1,000 First Ser 2003 RITES PA - 1112 A (MBIA)................ 8.662++ 01/01/18 1,087,800 1,000 First Ser 2003 RITES PA - 1112 B (MBIA)................ 8.662++ 01/01/19 1,077,560 5,000 Charleston County School District, South Carolina, Ser 2004 A................................................. 5.00 02/01/22 5,121,800 5,000 Aldine Independent School District, Texas, Bldg & Refg Ser 2001 (PSF)......................................... 5.00 02/15/26 5,001,050 2,500 Mission Consolidated Independent School District, Texas, Bldg Ser 2000 (PSF).................................... 5.50 02/15/25 2,609,975 ------------- - -------- 60,364,796 58,345 ------------- - -------- Educational Facilities Revenue (3.4%) 1,480 Indiana University, Student Fee Ser K (MBIA)............. 5.875 08/01/20 1,573,536 1,200 University of North Carolina, Chapel Hill Ser 2003....... 5.00 12/01/24 1,215,000 5,000 Texas State University, Ser 2000 (FSA)................... 5.50 03/15/20 5,420,000 ------------- - -------- 8,208,536 7,680 ------------- - -------- Electric Revenue (16.3%) 5,000 California Department of Water Resources, Power Supply Ser 2002 A............................................. 5.875 05/01/16 5,489,250 Municipal Electric Authority of Georgia, 2,000 Combustion Turbine Ser 2002 A (MBIA)................... 5.25 11/01/21 2,095,640 1,500 Combustion Turbine Ser 2002 A (MBIA)................... 5.25 11/01/22 1,562,085 5,000 Southern Minnesota Municipal Power Agency, Ser 2002 A (Ambac)................................................ 5.25 01/01/16 5,482,550 Long Island Power Authority, New York, 4,000 Ser 2003 B............................................. 5.25 06/01/13 4,263,960 1,900 Ser 2000 A (FSA)....................................... 0.00 06/01/16 1,105,021
7 See Notes to Financial Statements Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2004 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - --------------------------------------------------------------------------------------------------------- South Carolina Public Service Authority, $ 1,500 2002 Refg Ser A (FSA).................................. 5.125% 01/01/20 $ 1,565,925 1,000 2002 Refg Ser A (FSA).................................. 5.125 01/01/21 1,039,380 2,000 1997 Refg Ser A (MBIA)................................. 5.00 01/01/29 2,004,260 10,000 Memphis, Tennessee, Jr Lien Refg 2002 (MBIA)............. 5.00 12/01/16 10,524,700 1,000 Intermountain Power Agency, Utah, Refg 1996 Ser D (Secondary FSA)........................................ 5.00 07/01/21 1,015,710 Lewis County Public Utility District No 1, Washington, 2,000 Cowlitz Falls Hydroelectric Refg Ser 2003 (MBIA)....... 5.00 10/01/22 2,032,220 1,000 Cowlitz Falls Hydroelectric Refg Ser 2003 (MBIA)....... 5.00 10/01/23 1,011,570 ------------- - -------- 39,192,271 37,900 ------------- - -------- Hospital Revenue (8.0%) Maryland Health & Higher Educational Facilities Authority, 3,000 Medstar Health Refg Ser 2004........................... 5.375 08/15/24 2,920,260 2,000 University of Maryland Medical Ser 2002................ 5.75 07/01/17 2,133,280 2,500 University of Maryland Medical Ser 2001................ 5.25 07/01/34 2,448,275 4,000 New Jersey Health Care Facilities Financing Authority, St Barnabas Medical Center Ser 1998 B (MBIA).............. 4.75 07/01/28 3,872,360 1,500 New York State Dormitory Authority Revenue, Mental Health Ser 2003 B............................................. 5.25 02/15/17 1,593,690 3,000 Lorain County, Ohio, Catholic Healthcare Partners Ser 2001 A................................................. 5.75 10/01/18 3,186,480 3,000 Lehigh County General Purpose Authority, Pennsylvania, St Lukes Hospital of Bethlehem Ser 2003................... 5.25 08/15/23 2,933,910 ------------- - -------- 19,088,255 19,000 ------------- - -------- Industrial Development/Pollution Control Revenue (5.6%) 2,000 Chicago, Illinois, Peoples Gas Light & Coke Co Refg 1995 Ser A.................................................. 6.10 06/02/25 2,105,740 3,500 Michigan Strategic Fund, Detroit Edison Co Ser 2001 C.... 5.45 09/01/29 3,568,145 2,000 New York State Energy Research & Development Authority, Brooklyn Union Gas Co 1991 Ser D (AMT)................. 12.456++ 07/01/26 2,374,580 5,000 Sabine River Authority, Texas, TXU Electric Co Refg Ser 2001 B (AMT) (Mandatory Tender 11/01/11)............... 5.75 05/01/30 5,292,750 ------------- - -------- 13,341,215 12,500 ------------- - -------- Mortgage Revenue - Multi-Family (3.1%) 7,140 Illinois Housing Development Authority, 1991 Ser A....... 8.25 07/01/16 7,425,600 ------------- - -------- Mortgage Revenue - Single Family (0.6%) 555 Colorado Housing & Finance Authority, 2000 Ser D-2 (AMT).................................................. 6.90 04/01/29 565,706 870 District of Columbia Housing Finance Agency, GNMA Collateralized Ser 1990 B (AMT)........................ 7.10 12/01/24 870,583 ------------- - -------- 1,436,289 1,425 ------------- - --------
8 See Notes to Financial Statements Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2004 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - --------------------------------------------------------------------------------------------------------- Public Facilities Revenue (4.5%) $ 5,000 Arizona School Facilities Board, School Impr Ser 2001.... 5.00% 07/01/19 $ 5,161,650 1,585 Colorado Educational & Cultural Facilities Authority, Peak to Peak Charter School Refg & Impr Ser 2004 (XLCA)................................................. 5.25 08/15/34 1,608,680 1,900 Jacksonville, Florida, Sales Tax Ser 2001 (Ambac)........ 5.50 10/01/18 2,064,445 2,000 Pennsylvania Public School Building Authority, Philadelphia School District Ser 2003 (FSA)............ 5.00 06/01/33 1,992,320 ------------- - -------- 10,827,095 10,485 ------------- - -------- Resource Recovery Revenue (1.3%) 3,000 Northeast Maryland Waste Disposal Authority, Montgomery - -------- County Ser 2003 (AMT) (Ambac).......................... 5.50 04/01/16 3,203,520 ------------- Transportation Facilities Revenue (26.8%) Alaska International Airports System, 1,500 Ser 2002 B (Ambac)..................................... 5.75 10/01/18 1,657,470 1,500 Ser 2002 B (Ambac)..................................... 5.75 10/01/19 1,654,455 3,000 Metropolitan Washington DC Airport Authority, Ser 2004 C (FSA) (AMT) (WI)....................................... 5.00 10/01/20 2,960,760 10,000 Hillsborough County Port District, Florida, Tampa Port Authority Special & Refg Ser 1995 (AMT) (FSA).......... 6.00 06/01/20 10,547,000 Georgia State Road & Toll Authority, 2,500 DRIVERS Ser 373........................................ 8.645++ 10/01/11 2,648,250 10,000 Ser 2001............................................... 5.375 03/01/17 10,849,400 2,000 Chicago, Illinois, O' Hare Int'l Airport Third Lien Ser 2003 B-2 (AMT) (FSA)................................... 5.75 01/01/23 2,136,680 5,000 Massachusetts Bay Transportation Authority, Assess 2000 Ser A.................................................. 5.25 07/01/30 5,065,300 5,000 New Jersey Turnpike Authority, Ser 2003 A (Ambac)........ 5.00 01/01/30 5,030,750 4,000 Port Authority of New York & New Jersey, Cons 135th Ser (XLCA)................................................. 5.00 09/15/29 4,008,640 Metropolitan Transportation Authority, New York, 3,000 State Service Contract Ser 2002 A (MBIA)............... 5.50 01/01/19 3,243,240 3,000 State Service Contract Refg Ser 2002 B (MBIA).......... 5.50 07/01/20 3,231,240 3,000 Triborough Bridge & Tunnel Authority, New York, Ser 2001 A...................................................... 5.00 01/01/32 2,970,930 5,000 Dallas-Fort Worth International Airport, Texas, Ser 2003 A (AMT) (FSA).......................................... 5.375 11/01/22 5,157,250 3,000 Port of Seattle, Washington, Sub Lien Ser 1999 A (FGIC)................................................. 5.25 09/01/22 3,107,280 ------------- - -------- 64,268,645 61,500 ------------- - -------- Water & Sewer Revenue (29.1%) 2,000 Birmingham, Alabama, Water & Sewer Ser 1998 A............ 4.75 01/01/21 1,987,360 5,000 Colorado Springs, Colorado, Utilities Ser 2001 A......... 5.00 11/15/29 5,013,900 2,000 Martin County, Florida, Utilities Ser 2001 (FGIC)........ 5.00 10/01/26 2,010,160 8,000 Tampa Bay Water, Florida, Ser 2001 B (FGIC).............. 5.00 10/01/31 8,002,160
9 See Notes to Financial Statements Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2004 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - --------------------------------------------------------------------------------------------------------- Louisville & Jefferson County Metropolitan Sewer District, Kentucky, $ 2,925 Ser 2001 A (MBIA)...................................... 5.375% 05/15/20 $ 3,118,810 3,075 Ser 2001 A (MBIA)...................................... 5.375 05/15/21 3,262,514 5,000 Ser 1999 A (FGIC)...................................... 5.75 05/15/33 5,359,800 1,585 Massachusetts Water Resources Authority, 2000 Ser A (FGIC)................................................. 6.00 08/01/13 1,802,478 2,925 Las Vegas Water District, Nevada, Impr and Refg Ser 2003 A (FGIC)............................................... 5.25 06/01/22 3,042,702 New York City Municipal Water Finance Authority, New York, 3,000 2003 Ser A............................................. 5.375 06/15/18 3,213,720 4,000 1998 Ser D (MBIA)...................................... 4.75 06/15/25 3,903,360 5,000 2002 Ser G (FSA)....................................... 5.00 06/15/34 4,992,750 7,500 Portland, Oregon, Sewer 2000 Ser A (FGIC)................ 5.75 08/01/19 8,324,250 6,000 Charleston, South Carolina, Refg Cap Impr Ser 1998 (FGIC)................................................. 4.50 01/01/24 5,666,280 10,000 Houston, Texas, Water & Sewer Jr Lien Refg Ser 2000 B (FGIC)................................................. 5.25 12/01/30 10,138,400 ------------- - -------- 69,838,644 68,010 ------------- - -------- Other Revenue (0.9%) 2,000 New York City Transitional Finance Authority, New York, - -------- Refg 2003 Ser A........................................ 5.50 11/01/26 2,210,480 ------------- Refunded (12.8%) 7,250 Atlanta, Georgia, Airport Ser 2000 A (FGIC).............. 5.50 01/01/10+ 8,170,532 7,000 Hawaii, Airports Second Ser of 1991 (AMT) (ETM).......... 6.90 07/01/12 8,267,980 10,000 Massachusetts, Ser 2000 C................................ 5.75 10/01/10+ 11,335,500 3,000 Salt Lake City, Utah, IHC Hospitals Inc Refg Ser 1991 (Ambac) (ETM).......................................... 12.202++ 05/15/20 3,025,530 ------------- - -------- 30,799,542 27,250 ------------- - -------- 316,235 Total Tax-Exempt Municipal Bonds (Cost $315,171,878)........................ 330,204,888 ------------- - --------
10 See Notes to Financial Statements Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2004 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - --------------------------------------------------------------------------------------------------------- Short-Term Tax-Exempt Municipal Obligations (5.4%) $ 780 Idaho Health Facilities Authority, St Luke's Regional Medical Center Ser 2000 (FSA) (Demand 05/03/04)........ 1.10*% 07/01/30 $ 780,000 2,820 Indiana Health Facility Financing Authority, Clarian Health Ser 2000 B (Demand 05/03/04)........................... 1.10* 03/01/30 2,820,000 9,300 Kemmerer, Wyoming, Exxon Corp Ser 1984 (Demand 05/03/04).............................................. 1.03* 11/01/14 9,300,000 ------------- - -------- 12,900 Total Short-Term Tax-Exempt Municipal Obligations (Cost $12,900,000)........ 12,900,000 ------------- - --------
$329,135 Total Investments (Cost $328,071,878) (a).......................... 142.9% 343,104,888 ======== Other Assets in Excess of Liabilities.............................. 0.9 2,242,647 Preferred Shares of Beneficial Interest............................ (43.8) (105,160,419) ----- ------------- Net Assets Applicable to Common Shareholders....................... 100.0% $ 240,187,116 ===== =============
- --------------------- Note: The categories of investments are shown as a percentage of net assets applicable to common shareholders. AMT Alternative Minimum Tax. DRIVERS Derivative Inverse Tax-Exempt Receipts. ETM Escrowed to maturity. PSF Texas Permanent School Fund Guarantee Program. RITES Residual Interest Tax-Exempt Securities. WI Security purchased on a when-issued basis. + Prerefunded to call date shown. ++ Current coupon rate for inverse floating rate municipal obligations. This rate resets periodically as the auction rate on the related security changes. Positions in inverse floating rate municipal obligations have a total value of $10,213,720 which represents 4.3% of net assets applicable to common shareholders. * Current coupon of variable rate demand obligation. (a) The aggregate cost for federal income tax purposes is $327,896,344. The aggregate gross unrealized appreciation is $16,443,430 and the aggregate gross unrealized depreciation is $1,234,886, resulting in net unrealized appreciation of $15,208,544. Bond Insurance: - --------------- Ambac Ambac Assurance Corporation. FGIC Financial Guaranty Insurance Company. FSA Financial Security Assurance Inc. MBIA Municipal Bond Investors Assurance Corporation. XLCA XL Capital Corporation.
11 See Notes to Financial Statements Morgan Stanley Quality Municipal Investment Trust FINANCIAL STATEMENTS Statement of Assets and Liabilities April 30, 2004 (unaudited) Assets: Investments in securities, at value (cost $328,071,878)............... $343,104,888 Cash................................ 68,780 Interest receivable................. 5,148,530 Prepaid expenses and other assets... 416,411 ------------ Total Assets.................... 348,738,609 ------------ Liabilities: Payable for: Investments purchased........... 3,018,870 Common shares of beneficial interest repurchased.......... 140,047 Investment management fee....... 118,465 Accrued expenses and other payables.......................... 113,692 ------------ Total Liabilities............... 3,391,074 ------------ Preferred shares of beneficial interest, (at liquidation value), (1,000,000 shares authorized of non-participating $.01 par value, 2,100 shares outstanding)......... 105,160,419 ------------ Net Assets Applicable to Common Shareholders.................. $240,187,116 ============ Composition of Net Assets Applicable to Common Shareholders: Common shares of beneficial interest (unlimited shares authorized of $.01 par value, 15,964,013 shares outstanding)...................... $222,599,921 Net unrealized appreciation......... 15,033,010 Accumulated undistributed net investment income................. 1,798,487 Accumulated undistributed net realized gain..................... 755,698 ------------ Net Assets Applicable to Common Shareholders.................. $240,187,116 ============ Net Asset Value Per Common Share ($240,187,116 divided by 15,964,013 common shares outstanding).......... $15.05 ============
Statement of Operations For the six months ended April 30, 2004 (unaudited) Net Investment Income: Interest Income...................... $ 8,852,174 ----------- Expenses Investment management fee............ 625,675 Auction commission fees.............. 273,307 Transfer agent fees and expenses..... 49,817 Professional fees.................... 30,865 Shareholder reports and notices...... 19,991 Custodian fees....................... 9,850 Auction agent fees................... 7,221 Trustees' fees and expenses.......... 4,864 Other................................ 18,216 ----------- Total Expenses................... 1,039,806 Less: expense offset................. (9,738) ----------- Net Expenses..................... 1,030,068 ----------- Net Investment Income............ 7,822,106 ----------- Net Realized and Unrealized Gain (Loss): Investments.......................... 1,455,209 Futures contracts.................... (1,049,443) ----------- Net Realized Gain................ 405,766 Net change in unrealized appreciation....................... (4,904,249) ----------- Net Loss......................... (4,498,483) ----------- Dividends to preferred shareholders from net investment income......... (981,580) ----------- Net Increase......................... $ 2,342,043 ===========
12 See Notes to Financial Statements Morgan Stanley Quality Municipal Investment Trust FINANCIAL STATEMENTS continued Statement of Changes in Net Assets
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED APRIL 30, 2004 OCTOBER 31, 2003 -------------- ---------------- (unaudited) Increase (Decrease) in Net Assets: Operations: Net investment income....................................... $ 7,822,106 $ 16,638,545 Net realized gain........................................... 405,766 797,277 Net change in unrealized appreciation....................... (4,904,249) 3,427,282 Dividends to preferred shareholders from net investment income.................................................... (981,580) (1,804,684) ------------ ------------ Net Increase............................................ 2,342,043 19,058,420 ------------ ------------ Dividends and Distributions to Common Shareholders from: Net investment income....................................... (7,264,179) (15,772,298) Net realized gain........................................... (447,688) (1,549,279) ------------ ------------ Total Dividends and Distributions....................... (7,711,867) (17,321,577) ------------ ------------ Decrease from transactions in common shares of beneficial interest.................................................. (4,294,635) (6,484,403) ------------ ------------ Net Decrease............................................ (9,664,459) (4,747,560) Net Assets Applicable to Common Shareholders: Beginning of period......................................... 249,851,575 254,599,135 ------------ ------------ End of Period (Including accumulated undistributed net investment income of $1,798,487 and $2,222,140, respectively)................. $240,187,116 $249,851,575 ============ ============
13 See Notes to Financial Statements Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2004 (UNAUDITED) 1. Organization and Accounting Policies Morgan Stanley Quality Municipal Investment Trust (the "Trust") is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The Trust's investment objective is to provide current income which is exempt from federal income tax. The Trust was organized as a Massachusetts business trust on July 2, 1991 and commenced operations on September 27, 1991. The following is a summary of significant accounting policies: A. Valuation of Investments -- (1) portfolio securities are valued by an outside independent pricing service approved by the Trustees. The pricing service uses both a computerized grid matrix of tax-exempt securities and evaluations by its staff, in each case based on information concerning market transactions and quotations from dealers which reflect the mean between the last reported bid and asked price. The portfolio securities are thus valued by reference to a combination of transactions and quotations for the same or other securities believed to be comparable in quality, coupon, maturity, type of issue, call provisions, trading characteristics and other features deemed to be relevant. The Trustees believe that timely and reliable market quotations are generally not readily available for purposes of valuing tax-exempt securities and that the valuations supplied by the pricing service are more likely to approximate the fair value of such securities; (2) futures are valued at the latest sale price on the commodities exchange on which they trade unless it is determined that such price does not reflect their market value, in which case they will be valued at their fair value as determined in good faith under procedures established by and under the supervision of the Trustees; and (3) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost. B. Accounting for Investments -- Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. Discounts are accreted and premiums are amortized over the life of the respective securities. Interest income is accrued daily. C. Futures Contracts -- A futures contract is an agreement between two parties to buy and sell financial instruments or contracts based on financial indices at a set price on a future date. Upon entering into such a contract, the Trust is required to pledge to the broker cash, U.S. Government securities or other liquid portfolio securities equal to the minimum initial margin requirements of the applicable futures exchange. Pursuant to the contract, the Trust agrees to receive from or pay to the 14 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2004 (UNAUDITED) continued broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments known as variation margin are recorded by the Trust as unrealized gains and losses. Upon closing of the contract, the Trust realizes a gain or loss 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. D. Federal Income Tax Policy -- It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable and nontaxable income to its shareholders. Accordingly, no federal income tax provision is required. E. Dividends and Distributions to Shareholders -- Dividends and distributions to shareholders are recorded on the ex-dividend date. F. Use of Estimates -- The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. 2. Investment Management Agreement Pursuant to an Investment Management Agreement with Morgan Stanley Investment Advisors Inc. ("the Investment Manager"), the Trust pays the Investment Manager a management fee, calculated weekly and payable monthly, by applying the annual rate of 0.35% to the Trust's weekly total net assets. 3. Security Transactions and Transactions with Affiliates The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended April 30, 2004 aggregated $30,788,115 and $42,138,740, respectively. Morgan Stanley Trust, an affiliate of the Investment Manager, is the Trust's transfer agent. At April 30, 2004, the Trust had transfer agent fees and expenses payable of approximately $12,000. The Trust has an unfunded noncontributory defined benefit pension plan covering certain independent Trustees of the Trust who will have served as independent Trustees for at least five years at the time of retirement. Benefits under this plan are based on factors which include years of service and compensation. Aggregate pension costs for the year ended April 30, 2004 included in Trustees' fees and expenses in the Statement of Operations amounted to $3,404. At April 30, 2004, the Trust had an accrued pension liability of $54,944 which is included in accrued expenses in the Statement of Assets and Liabilities. On December 2, 2003, the Trustees voted to close the plan to new 15 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2004 (UNAUDITED) continued participants and eliminate the future benefits growth due to increases to compensation after July 31, 2003. Effective April 1, 2004, the Trust began an unfunded Deferred Compensation Plan (the "Compensation Plan"), which allows each independent Trustee to defer payment of all, or a portion, of the fees he receives for serving on the Board of Trustees. Each eligible Trustee generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Trust. 4. Preferred Shares of Beneficial Interest The Trust is authorized to issue up to 1,000,000 non-participating preferred shares of beneficial interest having a par value of $.01 per share, in one or more series, with rights as determined by the Trustees, without approval of the common shareholders. The Trust has issued Series A and Series B Auction Rate Preferred Shares ("Preferred Shares") which have a liquidation value of $50,000 per share plus the redemption premium, if any, plus accumulated but unpaid dividends, whether or not declared, thereon to the date of distribution. The Trust may redeem such shares, in whole or in part, at the original purchase price of $50,000 per share plus accumulated but unpaid dividends, whether or not declared, thereon to the date of redemption. Dividends, which are cumulative, are reset through auction procedures.
AMOUNT RESET RANGE OF SERIES SHARES* IN THOUSANDS* RATE* DATE DIVIDEND RATES** - ------ ------- ------------- ----- -------- ---------------- A 1,400 $70,000 1.90% 09/08/04 1.90% B 700 35,000 1.70 09/02/05 1.70
- --------------------- * As of April 30, 2004. ** For the six months ended April 30, 2004. Subsequent to April 30, 2004 and up through June 4, 2004 the Trust paid dividends to Series A and B at rates ranging from 1.70% to 1.90% in the aggregate amount of $160,419. The Trust is subject to certain restrictions relating to the preferred shares. Failure to comply with these restrictions could preclude the Trust from declaring any distributions to common shareholders or purchasing common shares and/or could trigger the mandatory redemption of preferred shares at liquidation value. 16 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2004 (UNAUDITED) continued The preferred shares, which are entitled to one vote per share, generally vote with the common shares but vote separately as a class to elect two Trustees and on any matters affecting the rights of the preferred shares. 5. Common Shares of Beneficial Interest Transactions in common shares of beneficial interest were as follows:
CAPITAL PAID IN PAR EXCESS OF SHARES VALUE PAR VALUE ---------- --------- ------------ Balance, October 31, 2002................................... 16,716,613 $167,166 $233,211,793 Treasury shares purchased and retired (weighted average discount 7.04%)*.......................................... (454,800) (4,548) (6,479,855) ---------- -------- ------------ Balance, October 31, 2003................................... 16,261,813 162,618 226,731,938 Treasury shares purchased and retired (weighted average discount 7.83%)*.......................................... (297,800) (2,978) (4,291,657) ---------- -------- ------------ Balance, April 30, 2004..................................... 15,964,013 $159,640 $222,440,281 ========== ======== ============
- --------------------- * The Trustees have voted to retire the shares purchased. 6. Dividends to Common Shareholders On March 30, 2004, the Trust declared the following dividends from net investment income:
AMOUNT RECORD PAYABLE PER SHARE DATE DATE - --------- ------------- ------------- $0.075.. May 7, 2004 May 21, 2004 $0.075.. June 4, 2004 June 18, 2004
7. Expense Offset The expense offset represents a reduction of the custodian fees for earnings on cash balances maintained by the Trust. 8. Risks Relating to Certain Financial Instruments The Trust may invest a portion of its assets in residual interest bonds, which are inverse floating rate municipal obligations. The prices of these securities are subject to greater market fluctuations during periods of changing prevailing interest rates than are comparable fixed rate obligations. To hedge against adverse interest rate changes, the Trust may invest in financial futures contracts or municipal bond index futures contracts ("futures contracts"). 17 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2004 (UNAUDITED) continued These futures contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. The Trust bears the risk of an unfavorable change in the value of the underlying securities. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts. 9. Federal Income Tax Status The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for tax purposes are reported as distributions of paid-in-capital. As of October 31, 2003, the Trust had temporary book/tax differences primarily attributable to book amortization of discounts on debt securities, mark-to-market of open futures contracts and dividends payable. 18 Morgan Stanley Quality Municipal Investment Trust FINANCIAL HIGHLIGHTS Selected ratios and per share data for a common share of beneficial interest outstanding throughout each period:
FOR THE SIX FOR THE YEAR ENDED OCTOBER 31, MONTHS ENDED --------------------------------------------------------- APRIL 30, 2004 2003 2002 2001 2000 1999 -------------- --------- --------- --------- --------- --------- (unaudited) Selected Per Share Data: Net asset value, beginning of period................ $ 15.36 $ 15.23 $ 15.31 $ 14.64 $ 14.35 $ 15.66 -------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income*.......................... 0.48 1.01 1.07 1.17 1.18 1.16 Net realized and unrealized gain (loss)......... (0.27) 0.25 0.04 0.66 0.23 (1.28) Common share equivalent of dividends paid to preferred shareholders*......................... (0.06) (0.11) (0.13) (0.22) (0.25) (0.20) -------- -------- -------- -------- -------- -------- Total income (loss) from investment operations...... 0.15 1.15 0.98 1.61 1.16 (0.32) -------- -------- -------- -------- -------- -------- Less dividends and distributions from: Net investment income........................... (0.45) (0.96) (0.93) (0.93) (0.93) (0.90) Net realized gain............................... (0.03) (0.09) (0.14) (0.01) -- (0.11) -------- -------- -------- -------- -------- -------- Total dividends and distributions................... (0.48) (1.05) (1.07) (0.94) (0.93) (1.01) -------- -------- -------- -------- -------- -------- Anti-dilutive effect of acquiring treasury shares*............................................ 0.02 0.03 0.01 -- 0.06 0.02 -------- -------- -------- -------- -------- -------- Net asset value, end of period...................... $ 15.05 $ 15.36 $ 15.23 $ 15.31 $ 14.64 $ 14.35 ======== ======== ======== ======== ======== ======== Market value, end of period......................... $ 13.28 $ 14.22 $ 14.08 $ 15.08 $ 13.69 $ 13.00 ======== ======== ======== ======== ======== ======== Total Return+....................................... (3.47)%(1) 8.66% 0.52% 17.52% 12.84% (10.12)% Ratios to Average Net Assets of Common Shareholders: Total expenses (before expense offset).............. 0.82%(2)(3) 0.79%(3) 0.73%(3) 0.74%(3) 0.75% 0.71% Net investment income before preferred stock dividends.......................................... 6.20%(2) 6.54% 7.15% 7.83% 8.18% 7.66% Preferred stock dividends........................... 0.78%(2) 0.71% 0.86% 1.46% 1.74% 1.34% Net investment income available to common shareholders....................................... 5.42%(2) 5.83% 6.29% 6.37% 6.44% 6.32% Supplemental Data: Net assets applicable to common shareholders, end of period, in thousands............................... $240,187 $249,852 $254,599 $257,819 $247,389 $253,633 Asset coverage on preferred shares at end of period............................................. 328% 338% 342% 345% 335% 341% Portfolio turnover rate............................. 9%(1) 21% 17% 23% 20% 8%
- --------------------- * The per share amounts were computed using an average number of common shares outstanding during the period. + Total return is based upon the current market value on the last day of each period reported. Dividends and distributions are assumed to be reinvested at the prices obtained under the Trust's dividend reinvestment plan. Total return does not reflect brokerage commissions. (1) Not annualized. (2) Annualized. (3) Does not reflect the effect of expense offset of 0.01%.
19 See Notes to Financial Statements TRUSTEES Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael E. Nugent Fergus Reid OFFICERS Charles A. Fiumefreddo Chairman of the Board Mitchell M. Merin President Ronald E. Robison Executive Vice President and Principal Executive Officer Barry Fink Vice President Joseph J. McAlinden Vice President Stefanie V. Chang Vice President Francis J. Smith Treasurer and Chief Financial Officer Thomas F. Caloia Vice President Mary E. Mullin Secretary TRANSFER AGENT Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 INDEPENDENT AUDITORS Deloitte & Touche LLP Two World Financial Center New York, New York 10281 INVESTMENT MANAGER Morgan Stanley Investment Advisors Inc. 1221 Avenue of the Americas New York, New York 10020 The financial statements included herein have been taken from the records of the Trust without examination by the independent auditors and accordingly they do not express an opinion thereon. Investments and services offered through Morgan Stanley DW Inc., member SIPC. (c) 2004 Morgan Stanley [MORGAN STANLEY LOGO] MORGAN STANLEY FUNDS Morgan Stanley Quality Municipal Investment Trust Semiannual Report April 30, 2004 [MORGAN STANLEY LOGO] 38570RPT-RA04-00260P-Y04/04 Item 2. Code of Ethics. Not applicable for semiannual reports. Item 3. Audit Committee Financial Expert. Not applicable for semiannual reports. Item 4. Principal Accountant Fees and Services Not applicable for semiannual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semiannual reports. Item 6. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semiannual reports. Item 8. [Reserved.] Item 9 - Controls and Procedures (a) The Trust's principal executive officer and principal financial officer have concluded that the Trust's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Trust in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Trust's internal controls or in other factors that could significantly affect the Trust's internal controls subsequent to the date of their evaluation. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10 Exhibits (a) Code of Ethics - Not applicable for semiannual reports. (b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Morgan Stanley Quality Municipal Investment Trust /s/ Ronald E. Robison - --------------------- Ronald E. Robison Principal Executive Officer June 22, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Ronald E. Robison - --------------------- Ronald E. Robison Principal Executive Officer June 22, 2004 /s/ Francis Smith - ----------------- Francis Smith Principal Financial Officer June 22, 2004 3 EX-99.CERT 2 y97625exv99wcert.txt CERTIFICATIONS EXHIBIT 10 B1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER CERTIFICATIONS -------------- I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Morgan Stanley Quality Municipal Investment Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; [b) Omitted.] c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 4 a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: June 22, 2004 /s/ Ronald E. Robison --------------------- Ronald E. Robison Principal Executive Officer 5 EXHIBIT 10 B2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CERTIFICATIONS -------------- I, Francis Smith, certify that: 6. I have reviewed this report on Form N-CSR of Morgan Stanley Quality Municipal Investment Trust; 7. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 8. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 9. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: b) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; [b) Omitted.] e) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and f) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 10. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): c) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and 6 d) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: June 22, 2004 /s/ Francis Smith ------------------ Francis Smith Principal Financial Officer 7 EX-99.906CERT 3 y97625exv99w906cert.txt CERTIFICATIONS SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Morgan Stanley Quality Municipal Investment Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended April 30, 2004 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: June 22, 2004 /s/ Ronald E. Robison --------------------------- Ronald E. Robison Principal Executive Officer A signed original of this written statement required by Section 906 has been provided to Morgan Stanley Quality Municipal Investment Trust and will be retained by Morgan Stanley Quality Municipal Investment Trust and furnished to the Securities and Exchange Commission or its staff upon request. 8 SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Morgan Stanley Quality Municipal Investment Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended April 30, 2004 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: June 22, 2004 /s/ Francis Smith ---------------------- Francis Smith Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Morgan Stanley Quality Municipal Investment Trust and will be retained by Morgan Stanley Quality Municipal Investment Trust and furnished to the Securities and Exchange Commission or its staff upon request. 9 -----END PRIVACY-ENHANCED MESSAGE-----