-----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, CacdyQ9eooQNVExl2/z6S9OqqbXDXplxRJzIDAoQ8HxRF3DoNPmhZK67VgK/+BST t4GwmC6m8LWlaVVzFgCHMQ== 0000950123-08-007718.txt : 20080709 0000950123-08-007718.hdr.sgml : 20080709 20080709154641 ACCESSION NUMBER: 0000950123-08-007718 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20080430 FILED AS OF DATE: 20080709 DATE AS OF CHANGE: 20080709 EFFECTIVENESS DATE: 20080709 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY QUALITY MUNICIPAL INVESTMENT TRUS CENTRAL INDEX KEY: 0000876982 IRS NUMBER: 000000000 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: 08944993 BUSINESS ADDRESS: STREET 1: 522 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 800-869-6397 MAIL ADDRESS: STREET 1: 522 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10036 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 y57989nvcsrs.txt 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) 522 Fifth Avenue, New York, New York 10036 (Address of principal executive offices) (Zip code) Ronald E. Robison 522 Fifth Avenue, New York, New York 10036 (Name and address of agent for service) Registrant's telephone number, including area code: 212-296-6990 Date of fiscal year end: October 31, 2008 Date of reporting period: April 30, 2008 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. INCOME EARNED BY CERTAIN SECURITIES IN THE PORTFOLIO MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX (AMT). FUND REPORT For the six months ended April 30, 2008 MARKET CONDITIONS The six-month period under review was marked by disrupted credit markets, recession fears, deterioration of the housing market, and markdowns in the mortgage market as a result of forced selling. Although the fixed income market saw some improvements in the last month of the period, many of the same concerns and problems remained. The Federal Reserve (the "Fed") stepped in several times during the period to minimize the liquidity crisis. Not only did the Federal Open Market Committee reduce the target federal funds rate several times, from 4.5 percent to 2.0 percent, but in an unprecedented move, the Fed granted primary Treasury dealers (mostly brokerage firms) access to its discount window and loosened its collateral requirements, extending loans of Treasury securities in exchange for lower quality, less liquid securities. Finally, in what was most decidedly the biggest headline event, the Fed arranged and supported JPMorgan Chase's purchase of Bear Stearns, which was viewed by many as necessary to avoid serious market repercussions had the firm failed. The decline in short-term interest rates, coupled with the risk-averse environment during the period pushed Treasury yields lower, especially on the short end of the yield curve, causing the curve to steepen. The municipal yield curve steepened as well, with the yield differential between one-year and 30- year maturities reaching more than 300 basis points. Overall, municipal bonds underperformed their taxable counterparts as credit rating downgrades of various monoline bond insurers and the deterioration of the auction rate and variable rate markets posed additional challenges for the sector. After a record year for new municipal bond issuance in 2007, the amount of new issues coming to market in the first four months of 2008 declined. PERFORMANCE ANALYSIS For the six-month period ended April 30, 2008, the net asset value (NAV) of Morgan Stanley Quality Municipal Investment Trust (IQT) decreased from $14.50 to $13.98 per share. Based on this change plus reinvestment of tax-free dividends totaling $0.345 per share, the Trust's total NAV return was -0.94 percent. IQT's value on the New York Stock Exchange (NYSE) moved from $13.00 to $12.79 per share during the same period. Based on this change plus reinvestment of dividends, the Trust's total market return was 1.09 percent. IQT's NYSE market price was at an 8.51 percent discount to its NAV. During the fiscal period, the Trust purchased and retired 153,214 shares of common stock at a weighted average market discount of 10.51 percent. Past performance is no guarantee of future results. Monthly dividends for the second quarter of 2008, declared in April, were unchanged at $0.0575 per share. The dividend reflects the current level of the Trust's net investment income. IQT's level of undistributed net investment income was $0.067 per share on April 30, 2008 versus $0.050 per share six months earlier.(1) Throughout the six-month period, the Trust maintained a lower interest rate sensitivity (as measured by duration*), which was implemented through the use of a U.S. Treasury futures hedge. This defensive positioning benefited performance as it helped to minimize the price declines that resulted from rising 2 yields across the intermediate and long end of the municipal yield curve. In terms of the Trust's sector positioning, an overweight in the hospital/life care and tobacco sectors detracted from relative performance as spread widening in those sectors hindered returns. Conversely, an overweight in the public utility sector, particularly water and sewer bonds, benefited performance. The flight to quality that took place during the period helped boost the performance of the more solid infrastructure sectors such as utilities and the Trust's holdings there enhanced returns. 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 Auction Rate Preferred Shares (ARPS) outstanding, including their purchase in the open market or in privately negotiated transactions. - -------------------------------------------------------------------------------- PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES SHOWN. INVESTMENT RETURN, NET ASSET VALUE AND COMMON SHARE MARKET PRICE WILL FLUCTUATE AND TRUST SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Trust in the future. (1) Income earned by certain securities in the portfolio may be subject to the federal alternative minimum tax (AMT). * 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, trusts with shorter durations perform better in rising- interest-rate environments, while trusts with longer durations perform better when rates decline. Duration calculations are adjusted for leverage. 3
TOP FIVE SECTORS AS OF 04/30/08 General Obligation 13.8% Hospital 13.0 Water & Sewer 12.1 Transportation 11.2 Other Revenue 10.7
LONG-TERM CREDIT ANALYSIS AS OF 04/30/08 Aaa/AAA 47.4 Aa/AA 23.3 A/A 16.8 Baa/BBB 10.6 Ba/BB 0.3 N/R 1.6
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 04/30/08 California 22.7% Florida 16.9 Texas 16.3 New York 15.9 Georgia 11.9 New Jersey 8.6 South Carolina 6.2 Kentucky 5.9 Washington 5.8 Maryland 4.9 Pennsylvania 4.6 Colorado 4.5 Tennessee 4.4 Hawaii 3.9 Michigan 3.3 Alaska 3.2 Nevada 3.1 Indiana 3.1 District of Columbia 3.0 Illinois 2.0
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION (CONTINUED) Iowa 1.7% Ohio 1.6 Utah 1.6 North Carolina 1.1 Nebraska 1.0 Alabama 1.0 Missouri 1.0 Virginia 0.8 Arizona 0.5 New Mexico 0.5 Idaho 0.4 Massachusetts 0.2 ------ Total Long-Term Investments+ 161.6 Short-Term Investment 3.0 Liability for Floating Rate Note and Dealer Trust Obligations -10.9 Other Assets in Excess of Liabilities 0.5 Preferred Shares of Beneficial Interest -54.2 ------ Net Assets Applicable to Common Shareholders 100.0% ======
+ Does not include open long/short futures contracts with an underlying face value amount of $57,669,689 with unrealized appreciation of $290,068 and swap contracts with an unrealized depreciation of $71,972. Subject to change daily. Provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned or securities in the sectors shown above. Top five sectors are as a percentage of total investments. Long-term credit analysis are as a percentage of long-term investments. Summary of investments by state classification are as a percentage of net assets applicable to common shareholders. Securities are classified by sectors that represent broad groupings of related industries. 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. Rating allocations based upon ratings as issued by Standard and Poor's and Moody's, respectively. 4 FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS Each Morgan Stanley trust provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the trust's second and fourth fiscal quarters. The semiannual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley also delivers the semiannual and annual reports to trust shareholders and makes these reports available on its public web site, www.morganstanley.com. Each Morgan Stanley trust also files a complete schedule of portfolio holdings with the SEC for the trust's first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You may also review and copy them at the SEC's public reference room in Washington, DC. Information on the operation of the SEC's public reference room may be obtained by calling the SEC at 1-800-SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the public reference section of the SEC, Washington, DC 20549-0102. 5 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED)
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ---------------------------------------------------------------------------------------------------------- Tax-Exempt Municipal Bonds (161.6%) Alabama (1.0%) $ 2,000 Jefferson County, Alabama, School Ser 2004 A........... 5.50 % 01/01/22 $ 1,862,760 -------------- Alaska (3.2%) 4,000 North Slope Borough, Alaska, Ser 2000 B (MBIA Insd).... 0.00 06/30/09 3,873,400 3,000 Northern Tobacco Securitization Corporation, Alaska, Asset Backed Ser 2006 A.............................. 5.00 06/01/46 2,344,050 -------------- 6,217,450 -------------- Arizona (0.5%) 985 Arizona, Ser 2008 A COPs (FSA Insd).................... 5.00 09/01/24 1,026,922 -------------- California (22.7%) 690 Alvord Unified School District, California, Ser 2007 A (FSA Insd) (WI)...................................... 5.00 08/01/23 734,374 5,000 California, Economic Recovery, Ser 2004 A.............. 5.00 07/01/16 5,240,500 3,000 California, Various Purpose dtd 05/01/03............... 5.00 02/01/24 3,069,270 3,000 California Health Facilities Financing Authority, Cedars-Sinai Medical Center Ser 2005................. 5.00 11/15/34 2,926,740 2,000 California Infrastructure & Economic Development Bank, The Scripps Research Institute Ser 2005 A............ 5.00 07/01/29 2,049,480 3,000 California Statewide Communities Development Authority, John Muir Health Ser 2006 A.......................... 5.00 08/15/32 2,921,580 4,000 Golden State Tobacco Securitization Corporation, California, Asset Backed Ser 2007 A-1 (a)............ 5.125 06/01/47 3,236,340 4,000 Golden State Tobacco Securitization Corporation, California, Asset Backed Ser 2007 A-1................ 5.75 06/01/47 3,591,560 3,000 Golden State Tobacco Securitization Corporation, California, Enhanced Asset Backed Ser 2005 A (AMBAC Insd)................................................ 5.00 06/01/29 2,938,620 2,000 Golden State Tobacco Securitization Corporation, California, Enhanced Asset Backed Ser 2005 A......... 5.00 06/01/45 1,887,540 585 Indio Redevelopment Agency, California, Merged Redevelopment Project Area, Ser 2008 A (WI).......... 5.00 08/15/24 581,735 2,000 Los Angeles, California, Ser 2004 A (MBIA Insd)........ 5.00 09/01/24 2,067,840 1,920 Los Angeles Department of Water & Power, California, Water 2004 Ser C (MBIA Insd)......................... 5.00 07/01/23 1,991,309 4,000 Oxnard Financing Authority, California, Redwood Trunk Sewer & Headworks Ser 2004 A (FGIC Insd)............. 5.00 06/01/29 4,012,320 4,000 San Francisco City & County, California, Laguna Honda Hospital Ser 2005 I (FSA Insd) (a)................... 5.00 06/15/30 4,095,080
See Notes to Financial Statements 6 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ---------------------------------------------------------------------------------------------------------- $ 3,300 San Jose, California, Evergreen Community College District Election of 2004 Ser B (FSA Insd)........... 0.00 % 09/01/30 $ 1,021,383 2,000 Tobacco Securitization Authority of Northern California, Sacramento County Tobacco Securitization Corporation Ser 2005 A-1............................. 5.00 06/01/37 1,662,040 -------------- 44,027,711 -------------- Colorado (4.5%) 1,585 Colorado Educational & Cultural Facilities Authority, Peak to Peak Charter School Refg & Impr Ser 2004 (XLCA Insd).......................................... 5.25 08/15/34 1,605,193 390 Colorado Health Facilities Authority, Catholic Health Ser 2006 C-7 (FSA Insd).............................. 4.75 09/01/25 388,151 210 Colorado Housing & Finance Authority, 2000 Ser D-2 (AMT)................................................ 6.90 04/01/29 219,723 5,000 Colorado Springs, Utilities Ser 2001 A................. 5.00 11/15/29 5,051,550 1,500 University of Colorado Hospital Authority, Ser 2006 A.. 5.00 11/15/37 1,352,730 -------------- 8,617,347 -------------- District of Columbia (3.0%) 2,000 District of Columbia Ballpark, Ser 2006 B-1 (FGIC Insd)................................................ 5.00 02/01/31 1,888,260 575 District of Columbia Water and Sewer Authority, Public Utility Ser 2008 A (AGC Insd)........................ 5.00 10/01/27 594,331 265 District of Columbia Water and Sewer Authority, Public Utility Ser 2008 A (AGC Insd)........................ 5.00 10/01/28 272,582 3,000 Metropolitan Washington Airports Authority, District of Columbia & Virginia, Ser 2004 C-1 (AMT) (FSA Insd) (b).................................................. 5.00 10/01/20 3,024,450 -------------- 5,779,623 -------------- Florida (16.9%) 6,890 Florida State Board of Education, Capital Outlay Refg Ser 2001 D........................................... 5.375 06/01/18 7,325,035 945 Florida State Mid-Bay Bridge Auth, Ser 2008 (AGC Insd)................................................ 5.00 10/01/22 973,605 3,000 Highlands County Health Facilities Authority, Florida, Adventist Health Refg Ser 2005 C..................... 5.00 11/15/31 2,873,850 1,900 Jacksonville, Florida, Sales Tax Ser 2001 (AMBAC Insd)................................................ 5.50 10/01/18 2,001,669 2,000 Martin County, Florida, Utilities Ser 2001 (FGIC Insd)................................................ 5.00 10/01/26 2,033,980 1,000 Miami-Dade County, Florida, Ser 2005 A (MBIA Insd)..... 0.00(c) 10/01/30 742,410 8,000 South Miami Health Facilities Authority, Florida, Baptist Health Ser 2007 (a).......................... 5.00 08/15/42 7,866,600 1,000 St Johns, Industrial Development Authority, Florida, Glenmoor Refg 2006 Ser A 5.375 01/01/40 806,290 8,000 Tampa Bay Water, Florida, Ser 2001 B (FGIC Insd)....... 5.00 10/01/31 8,057,120 -------------- 32,680,559 --------------
See Notes to Financial Statements 7 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ---------------------------------------------------------------------------------------------------------- Georgia (11.9%) $ 3,000 Atlanta, Georgia, Airport Passenger Facilities Charge Airport Ser 2004 J (FSA Insd)........................ 5.00 % 01/01/34 $ 3,049,110 10,000 Georgia Road & Tollway Authority, Ser 2001............. 5.375 03/01/17 10,750,800 2,000 Georgia Road & Tollway Authority, Ser 2004............. 5.00 10/01/22 2,095,520 3,000 Georgia Road & Tollway Authority, Ser 2004............. 5.00 10/01/23 3,129,030 425 Main Street Natural Gas Inc, Georgia, Gas Project Ser 2008 A............................................... 6.25 07/15/28 423,019 2,000 Municipal Electric Authority of Georgia, Combustion Turbine Ser 2002 A (MBIA Insd)....................... 5.25 11/01/21 2,094,520 1,500 Municipal Electric Authority of Georgia, Combustion Turbine Ser 2002 A (MBIA Insd)....................... 5.25 11/01/22 1,568,385 -------------- 23,110,384 -------------- Hawaii (3.9%) 7,000 Hawaii, Airports Second Ser of 1991 (AMT) (ETM)........ 6.90 07/01/12 7,590,660 -------------- Idaho (0.4%) 1,000 Madison County Industrial Development Authority, Idaho, Madison Memorial Hospital Ser 2006 COPs.............. 5.25 09/01/37 843,910 -------------- Illinois (2.0%) 2,000 Chicago, Illinois, O' Hare Int'l Airport Third Lien Ser 2003 B-2 (AMT) (FSA Insd)............................ 5.75 01/01/23 2,068,120 1,035 Chicago Transit Authority, Illinois, Capital Grant Receipts Ser 2008 (AGC Insud)........................ 5.25 06/01/24 1,099,066 710 De Kalb County, Illinois, Community United School District No. 428 (FSA Insd) (WI)..................... 5.00 01/01/23 742,646 -------------- 3,909,832 -------------- Indiana (3.1%) 3,000 Indiana Health & Educational Facility Financing Authority, Clarian Health Ser 2006 A................. 5.25 02/15/40 2,925,060 3,000 Indiana Health Facilities Financing Authority, Community Health Ser 2005 A (AMBAC Insd)............. 5.00 05/01/35 3,000,000 -------------- 5,925,060 -------------- Iowa (1.7%) 1,275 Coralville, Iowa, Urban Renewal Ser 2007 C 5.00 06/01/47 1,092,114 2,200 Coralville, Iowa, Marriot Hotel & Convention Center Ser 2006 D COPs.......................................... 5.25 06/01/26 2,233,198 -------------- 3,325,312 --------------
See Notes to Financial Statements 8 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ---------------------------------------------------------------------------------------------------------- Kentucky (5.9%) $ 5,000 Louisville & Jefferson County Metropolitan Sewer District, Kentucky, Ser 1999 A (FGIC Insd)........... 5.75 % 05/15/33 $ 5,172,700 2,925 Louisville & Jefferson County Metropolitan Sewer District, Kentucky, Ser 2001 A (MBIA Insd)........... 5.375 05/15/20 3,090,409 3,075 Louisville & Jefferson County Metropolitan Sewer District, Kentucky, Ser 2001 A (MBIA Insd)........... 5.375 05/15/21 3,247,323 -------------- 11,510,432 -------------- Maryland (4.9%) 1,000 Baltimore County, Maryland, Oak Crest Village Ser 2007 A.................................................... 5.00 01/01/37 916,100 1,500 Maryland Health & Higher Educational Facilities Authority, King Farm Presbyterian Community 2006 Ser B.................................................... 5.00 01/01/17 1,447,215 3,000 Maryland Health & Higher Educational Facilities Authority, Medstar Health Refg Ser 2004.............. 5.375 08/15/24 3,022,020 1,000 Maryland Health & Higher Educational Facilities Authority, University of Maryland Medical Ser 2006 A.................................................... 5.00 07/01/41 970,010 3,000 Northeast Maryland Waste Disposal Authority, Montgomery County Ser 2003 (AMT) (AMBAC Insd)................... 5.50 04/01/16 3,095,970 -------------- 9,451,315 -------------- Massachusetts (0.2%) 415 Massachusetts Bay Transportation Authority, Assess 2000 Ser A................................................ 5.25 07/01/30 427,342 -------------- Michigan (3.3%) 3,000 Michigan State Hospital Finance Authority, Henry Ford Health Refg Ser 2006 A............................... 5.25 11/15/46 2,905,080 3,500 Michigan Strategic Fund, Detroit Edison Co Ser 2001 C.. 5.45 09/01/29 3,539,025 -------------- 6,444,105 -------------- Missouri (1.0%) 885 Fenton, Missouri, Gravois Bluffs Refg Ser 2006......... 4.50 04/01/21 881,708 1,000 Missouri Health & Educational Facilities Authority, Lutheran Senior Services Ser 2005 A.................. 5.375 02/01/35 963,530 -------------- 1,845,238 -------------- Nebraska (1.0%) 2,000 Nebraska Public Power District, Ser 2005 C (FGIC Insd)................................................ 5.00 01/01/41 1,970,400 -------------- Nevada (3.1%) 2,000 Clark County, Nevada, Airport Sub Lien Ser 2004 A (AMT) (FGIC Insd).......................................... 5.50 07/01/22 2,017,520
See Notes to Financial Statements 9 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ---------------------------------------------------------------------------------------------------------- $ 2,925 Las Vegas Water District, Nevada, Impr and Refg Ser 2003 A (FGIC Insd)................................... 5.25 % 06/01/22 $ 3,072,947 1,000 Reno, Nevada, Renown Regional Medical Center Ser 2007 A.................................................... 5.25 06/01/37 941,800 -------------- 6,032,267 -------------- New Jersey (8.6%) 1,000 New Jersey Economic Development Authority, Cigarette Tax Ser 2004......................................... 5.75 06/15/34 960,780 5,000 New Jersey Turnpike Authority, Ser 2003 A (AMBAC Insd)................................................ 5.00 01/01/30 5,033,600 7,000 New Jersey, 2001 Ser H (d)............................. 5.25 07/01/19 7,828,450 3,000 Tobacco Settlement Financing Corporation, New Jersey, Ser 2007-1A.......................................... 4.625 06/01/26 2,563,140 3,000 Tobacco Settlement Financing Corporation, New Jersey, Ser 2007-1B.......................................... 0.00 06/01/41 267,600 -------------- 16,653,570 -------------- New Mexico (0.5%) 920 New Mexico Finance Authority, Senior Lien Public Project Revolving Fund Ser 2008 A.................... 5.00 06/01/27 957,692 -------------- New York (15.9%) 2,000 Long Island Power Authority, New York, Ser 2004 A (AMBAC Insd)......................................... 5.00 09/01/34 2,022,600 3,000 Metropolitan Transportation Authority, New York, State Service Contract Refg Ser 2002 B (MBIA Insd)......... 5.50 07/01/20 3,194,190 3,000 Metropolitan Transportation Authority, New York, State Service Contract Ser 2002 A (MBIA Insd).............. 5.50 01/01/19 3,196,560 3,000 Nassau County Tobacco Settlement Corporation, New York, Asset Backed Ser 2006 A-3............................ 5.125 06/01/46 2,688,180 455 New York City, 2008 Subser L-1......................... 5.00 04/01/26 470,447 2,000 New York City Industrial Development Agency, Yankee Stadium Ser 2006 (FGIC Insd)......................... 5.00 03/01/46 1,908,240 4,000 New York City Municipal Water Finance Authority, 1998 Ser D (MBIA Insd).................................... 4.75 06/15/25 4,015,000 5,000 New York City Municipal Water Finance Authority, 2002 Ser G (FSA Insd)..................................... 5.00 06/15/34 5,054,450 3,000 New York City Municipal Water Finance Authority, 2003 Ser A................................................ 5.375 06/15/18 3,189,870 2,000 New York City Transitional Finance Authority, Refg 2003 Ser A................................................ 5.50(c) 11/01/26 2,137,860 2,000 New York State Energy & Research Development Authority, Brooklyn Union Gas Co 1991 Ser B (AMT)............... 10.514(e) 07/01/26 2,057,900 1,000 Seneca Nation of Indians, New York, Ser 2007 A......... 5.00 12/01/23 889,840 -------------- 30,825,137 --------------
See Notes to Financial Statements 10 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ---------------------------------------------------------------------------------------------------------- North Carolina (1.1%) $ 1,100 North Carolina Medical Care Commission, Salemtowne Refg Ser 2006............................................. 5.10 % 10/01/30 $ 953,348 1,200 University of North Carolina, Chapel Hill Ser 2003..... 5.00 12/01/24 1,244,292 -------------- 2,197,640 -------------- Ohio (1.6%) 3,000 Lorain County, Ohio, Catholic Healthcare Partners Ser 2001 A............................................... 5.75 10/01/18 3,170,640 -------------- Pennsylvania (4.6%) 2,000 Allegheny County Development Authority, Pennsylvania, West Penn Allegheny Health Ser 2007 A (a)............ 5.375 11/15/40 1,661,861 5,000 Pennsylvania Turnpike Commission, Ser 2004 A (AMBAC Insd)................................................ 5.00 12/01/34 5,098,100 2,000 Pennsylvania, First Ser 2003 (MBIA Insd) (a)........... 5.00 01/01/13(f) 2,162,570 -------------- 8,922,531 -------------- South Carolina (6.2%) 3,000 Charleston Educational Excellence Financing Corporation, South Carolina, Charleston County School District Ser 2005.................................... 5.25 12/01/29 3,056,220 40 Lexington County, South Carolina, Health Services District Inc., Lexington Medical Center Ser 2007..... 5.00 11/01/16 41,875 205 Richland County Environmental Improvement, South Carolina, 2007 Refg Ser A............................ 4.60 09/01/12 202,809 1,945 South Carolina Public Service Authority, Santee Cooper, 1997 Refg Ser A (MBIA Insd).......................... 5.00 01/01/29 1,957,856 1,500 South Carolina Public Service Authority, Santee Cooper, 2002 Refg Ser A (FSA Insd)........................... 5.125 01/01/20 1,587,165 1,000 South Carolina Public Service Authority, Santee Cooper, 2002 Refg Ser A (FSA Insd)........................... 5.125 01/01/21 1,054,620 4,000 South Carolina Public Service Authority, Santee Cooper, 2003 Refg Ser A (AMBAC Insd)......................... 5.00 01/01/27 4,085,520 -------------- 11,986,065 -------------- Tennessee (4.4%) 5,000 Sullivan County Health Educational & Housing Facilities Board, Tennessee, Wellmont Health Ser 2006 C......... 5.25 09/01/36 4,491,600 4,000 Tennessee Energy Acquisition Corporation, Ser 2006 A (a).................................................. 5.25 09/01/19 3,995,320 -------------- 8,486,920 -------------- Texas (16.3%) 1,090 Aldine Independent School District, Texas, Bldg & Refg Ser 2001 (PSF)....................................... 5.00 02/15/26 1,105,500 2,000 Alliance Airport Authority, Texas, Federal Express Corp Refg Ser 2006 (AMT).................................. 4.85 04/01/21 1,804,340
See Notes to Financial Statements 11 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ---------------------------------------------------------------------------------------------------------- $ 1,000 Austin, Texas, Water & Wastewater ROLS RR II R-674 (FSA Insd)................................................ 12.762(e)% 05/15/27 $ 1,069,220 5,000 Dallas-Fort Worth International Airport, Texas, Ser 2003 A (AMT) (FSA Insd).............................. 5.375 11/01/22 5,084,400 555 Friendswood Independent School District, Texas, Schoolhouse Ser 2008 (PSF) (WI)...................... 5.00 02/15/25 579,426 1,335 Harris County Health Facilities Development Corp, Texas, TECO Project, Ser 2008 (AGC Insd)............. 5.25 11/15/23 1,415,981 10,000 Houston, Texas, Combined Utility First Lien Refg 2004 Ser A (FGIC Insd).................................... 5.25 05/15/23 10,233,400 4,500 Houston, Texas, Combined Utility First Lien Refg 2004 Ser A (MBIA Insd).................................... 5.25 05/15/25 4,674,285 420 Houston, Texas, Community College System Sr-Lien- Student Fee Ser 2008 (FSA Insd) (WI)................. 5.00 04/15/23 441,172 2,300 Houston, Texas, Hotel Occupancy Ser 2001 B (FSA Insd) (g).................................................. 0.00 09/01/25 925,589 1,425 Houston Independent School District, Texas, Schoolhouse Ser 2008 (PSF)....................................... 5.00 02/15/26 1,478,266 5,100 North Texas Tollway Authority, System Rev Refunding Bond Ser 2008 D (AGC Insd) (g)....................... 0.00 01/01/28 1,865,121 1,000 Tarrant County Cultural Educational Facilities Finance Corp, Texas, Air Force Village II Inc Ser 2007....... 5.125 05/15/37 895,430 -------------- 31,572,130 -------------- Utah (1.6%) 3,000 Salt Lake City, Utah, IHC, Hospital Inc Refg Ser 1991 (ETM) (AMBAC Insd)................................... 9.823(e) 05/15/20 3,021,210 -------------- Virginia (0.8%) 1,750 Fairfax County Economic Development Authority, Virginia, Residential Care Facilities, Goodwin House Inc Ser 2007........................................ 5.125 10/01/37 1,533,000 -------------- Washington (5.8%) 2,000 Grant County Public Utilities District #2, Washington, Wanapum 2005 Ser A (FGIC Insd)....................... 5.00 01/01/29 2,006,620 2,000 Lewis County Public Utility District #1, Washington, Cowlitz Falls Refg Ser 2003 (MBIA Insd).............. 5.00 10/01/22 2,073,820 4,010 Port of Seattle, Washington, Passenger Facility Ser 1998 A (MBIA Insd) (a)............................... 5.00 12/01/23 4,044,560 3,000 Port of Seattle, Washington, Sub Lien Ser 1999 A (FGIC Insd)................................................ 5.25 09/01/22 3,110,640 -------------- 11,235,640 -------------- Total Tax-Exempt Municipal Bonds (Cost $313,234,147).......................... 313,160,804 --------------
See Notes to Financial Statements 12 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued
NUMBER OF SHARES (000) VALUE - ----------------------------------------------------------------------------------------------------------- Short-Term Investment (h) (3.0%) Investment Company 5,881 Morgan Stanley Institutional Liquidity Tax-Exempt Portfolio - Institutional Class (Cost $5,880,676)................................................... $ 5,880,676 -------------- Total Investments (Cost $319,114,823)....................................... 319,041,480 --------------
PRINCIPAL AMOUNT IN THOUSANDS - --------- Floating Rate Notes and Dealer Trusts Obligations Related to Securities Held (-10.9%) $ (21,010) Notes with interest rates ranging from 2.43% to 2.71% at April 30, 2008 and contractual maturities of collateral ranging from 06/15/22 to 06/01/47 (See Note 1D) (i) (Cost $(21,105,080)).................. (21,105,080) -------------- Total Net Investments (Cost $298,009,743) (j) (k)............. 153.7% 297,936,400 Other Assets in Excess of Liabilities ........................ 0.5 860,803 Preferred Shares of Beneficial Interest ...................... (54.2) (105,000,000) ------ -------------- Net Assets Applicable to Common Shareholders ................. 100.0% $ 193,797,203 ====== ==============
See Notes to Financial Statements 13 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued - ---------- Note: The categories of investments are shown as a percentage of net assets applicable to common shareholders. AMT Alternative Minimum Tax. COPs Certificates of Participation. ETM Escrowed to Maturity. PSF Texas Permanent School Fund Guarantee Program. ROLS Reset Option Longs. WI Security Purchased on a when-issued basis. (a) Underlying security related to inverse floaters entered into by the Trust (See Note 1D). (b) Joint exemption in locations shown. (c) Security is a "step-up" bond where the coupon increases on a pre- determined future date. (d) All or a portion of this security has been physically segregated in connection with open futures contracts in the amount of $420,054. (e) Current coupon rate for inverse floating rate municipal obligations (See Note 8). This rate resets periodically as the auction rate on the related security changes. Position in inverse floating rate municipal obligations have a total value of $6,148,330, which represents 3.2% of net assets applicable to common shareholders. (f) Prerefunded to call date shown. (g) Capital appreciation bond. (h) See Note 3 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Tax-Exempt Portfolio--Institutional Class. (i) Floating rate note obligations related to securities held. The interest rates shown reflect the rates in effect at April 30, 2008. (j) Securities have been designated as collateral in an amount equal to $64,894,406 in connection with open futures and swap contracts, securities purchased on a when-issued basis and inverse floating rate municipal obligations. (k) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $6,831,601 and the aggregate gross unrealized depreciation is $6,904,944, resulting in net unrealized depreciation of $73,343.
Bond Insurance: - --------------- AGC Assured Guaranty Corporation. AMBAC AMBAC Assurance Corporation. FGIC Financial Guaranty Insurance Company. FSA Financial Security Assurance Inc. MBIA Municipal Bond Investors Assurance Corporation. XLCA XL Capital Assurance Inc.
See Notes to Financial Statements 14 Morgan Stanley Quality Municipal Investment Trust PORTFOLIO OF INVESTMENTS - APRIL 30, 2008 (UNAUDITED) continued FUTURES CONTRACTS OPEN AT APRIL 30, 2008:
UNREALIZED NUMBER OF DESCRIPTION, DELIVERY UNDERLYING FACE APPRECIATION CONTRACTS LONG/SHORT MONTH AND YEAR AMOUNT AT VALUE (DEPRECIATION) - ------------------------------------------------------------------------------------------ 59 Long U.S. Treasury Note 2 Year $ 12,548,562 $(48,397) June 2008 81 Long U.S. Treasury Swap 10 Year 9,137,813 87,163 June 2008 75 Short U.S. Treasury Note 5 Year (8,398,829) 143,765 June 2008 110 Short U.S. Treasury Note 10 Year (12,739,375) 100,495 June 2008 127 Short U.S. Treasury Bond 20 Year (14,845,110) 7,042 June 2008 -------- Net Unrealized Appreciation.................. $290,068 ========
INTEREST RATE SWAP CONTRACTS OPEN AT APRIL 30, 2008:
NOTIONAL UNREALIZED AMOUNT PAYMENTS RECEIVED TERMINATION APPRECIATION COUNTERPARTY (000'S) MADE BY TRUST BY TRUST DATE (DEPRECIATION) - -------------------------------------------------------------------------------------------------------------------------- JPMorgan Chase Bank N.A. $13,100 Floating Rate 0.00%@ Fixed Rate 5.385% February 14, 2018 $ 148,947 Bank of America N.A. 12,410 Floating Rate 0.00@ Fixed Rate 5.580 February 28, 2018 226,607 Bank of America N.A. 3,700 Floating Rate 0.00@ Fixed Rate 5.070 April 14, 2018 (3,885) Bank of America N.A. 3,490 Floating Rate 0.00@ Fixed Rate 4.982 April 15, 2018 (14,728) Merrill Lynch & Co. 4,660 Floating Rate 0.00@ Fixed Rate 5.000 April 15, 2018 (16,729) JPMorgan Chase Bank N.A. 16,690 Fixed Rate 5.831 Floating Rate 0.00@ February 14, 2023 (182,255) Bank of America N.A. 15,865 Fixed Rate 5.990 Floating Rate 0.00@ February 28, 2023 (243,210) Bank of America N.A. 4,735 Fixed Rate 5.470 Floating Rate 0.00@ April 14, 2023 (3,125) Bank of America N.A. 4,250 Fixed Rate 5.380 Floating Rate 0.00@ April 15, 2023 7,862 Merrill Lynch & Co. 5,975 Fixed Rate 5.395 Floating Rate 0.00@ April 15, 2023 8,544 --------- Net Unrealized Depreciation................................................. $ (71,972) =========
- ---------- (@) Floating rate represents USD-3 months LIBOR.
See Notes to Financial Statements 15 Morgan Stanley Quality Municipal Investment Trust FINANCIAL STATEMENTS Statement of Assets and Liabilities April 30, 2008 (unaudited) Assets: Investments in securities, at value (cost $313,234,147)........ $313,160,804 Investment in affiliate, at value (cost $5,880,676)............ 5,880,676 Unrealized appreciation on open swap contracts................. 391,960 Receivable for: Interest.................................................... 4,683,544 Dividends from affiliate.................................... 18,794 Prepaid expenses and other assets.............................. 29,468 ------------ Total Assets................................................ 324,165,246 ------------ Liabilities: Floating rate note and dealer trusts obligations............... 21,105,080 Unrealized depreciation on open swap contracts................. 463,932 Payable for: Investments purchased....................................... 3,482,938 Variation margin............................................ 90,140 Investment advisory fee..................................... 70,684 Administration fee.......................................... 21,454 Transfer agent fee.......................................... 1,641 Accrued expenses and other payables............................ 132,174 ------------ Total Liabilities........................................... 25,368,043 ------------ Preferred shares of beneficial interest, (at liquidation value), (1,000,000 shares authorized of non-participating $.01 par value, 2,100 shares outstanding).................... 105,000,000 ------------ Net Assets Applicable to Common Shareholders................ $193,797,203 ============ Composition of Net Assets Applicable to Common Shareholders: Common shares of beneficial interest (unlimited shares authorized of $.01 par value, 13,865,373 shares outstanding)................................................. $194,150,201 Net unrealized appreciation.................................... 144,753 Accumulated undistributed net investment income................ 926,697 Accumulated net realized loss.................................. (1,424,448) ------------ Net Assets Applicable to Common Shareholders................ $193,797,203 ============ Net Asset Value Per Common Share ($193,797,203 divided by 13,865,373 common shares outstanding)................................................... $13.98 ======
See Notes to Financial Statements 16 Morgan Stanley Quality Municipal Investment Trust FINANCIAL STATEMENTS continued Statement of Operations For the six months ended April 30, 2008 (unaudited) Net Investment Income: Income Interest........................................................ $ 7,909,883 Dividends from affiliate........................................ 92,728 ----------- Total Income................................................. 8,002,611 ----------- Expenses Investment advisory fee......................................... 407,400 Interest and residual trust expenses............................ 393,704 Auction commission fees......................................... 131,040 Administration fee.............................................. 120,711 Professional fees............................................... 27,516 Custodian fees.................................................. 25,217 Shareholder reports and notices................................. 25,069 Listing fees.................................................... 10,059 Transfer agent fees and expenses................................ 9,134 Auction agent fees.............................................. 9,029 Trustees' fees and expenses..................................... 5,302 Other........................................................... 27,909 ----------- Total Expenses............................................... 1,192,090 Less: expense offset............................................ (25,152) Less: rebate from Morgan Stanley affiliated cash sweep (Note 3)............................................................ (3,626) ----------- Net Expenses................................................. 1,163,312 ----------- Net Investment Income........................................ 6,839,299 ----------- Realized and Unrealized Gain (Loss): Realized Gain (Loss) on: Investments..................................................... 358,413 Futures contracts............................................... (1,571,691) ----------- Net Realized Loss............................................ (1,213,278) ----------- Change in Unrealized Appreciation/Depreciation on: Investments..................................................... (6,830,458) Futures contracts............................................... 373,952 Swap contracts.................................................. (71,972) ----------- Net Change in Unrealized Appreciation/Depreciation........... (6,528,478) ----------- Net Loss..................................................... (7,741,756) ----------- Dividends to preferred shareholders from net investment income.. (1,810,165) ----------- Net Decrease.................................................... $(2,712,622) ===========
See Notes to Financial Statements 17 Morgan Stanley Quality Municipal Investment Trust FINANCIAL STATEMENTS continued Statements of Changes in Net Assets
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED APRIL 30, 2008 OCTOBER 31, 2007 -------------- ---------------- (unaudited) Increase (Decrease) in Net Assets: Operations: Net investment income.............................. $ 6,839,299 $ 13,762,929 Net realized loss.................................. (1,213,278) (288,719) Net change in unrealized appreciation/depreciation........................ (6,528,478) (9,252,797) Dividends to preferred shareholders from net investment income................................ (1,810,165) (3,991,260) ------------ ------------ Net Increase (Decrease)......................... (2,712,622) 230,153 ------------ ------------ Dividends and Distributions to Common Shareholders from: Net investment income.............................. (4,803,927) (9,798,457) Net realized gain.................................. -- (1,480,096) ------------ ------------ Total Dividends and Distributions............... (4,803,927) (11,278,553) ------------ ------------ Decrease from transactions in common shares of beneficial interest.............................. (1,973,563) (5,007,030) ------------ ------------ Net Decrease.................................... (9,490,112) (16,055,430) Net Assets Applicable to Common Shareholders: Beginning of period................................ 203,287,315 219,342,745 ------------ ------------ End of Period (Including accumulated undistributed net investment income of $926,697 and $701,490, respectively)..... $193,797,203 $203,287,315 ============ ============
See Notes to Financial Statements 18 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (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; (3) interest rate swaps are marked-to-market daily based upon quotations from market makers; (4) investments in open-end mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (5) 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 and are included in interest income. 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 19 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued 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 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. Floating Rate Note and Dealer Trust Obligations Related to Securities Held -- The Trust enters into transactions in which it transfers to Dealer Trusts ("Dealer Trusts"), fixed rate bonds in exchange for cash and residual interests in the Dealer Trusts' assets and cash flows, which are in the form of inverse floating rate investments. The Dealer Trusts fund the purchases of the fixed rate bonds by issuing floating rate notes to third parties and allowing the Trust to retain residual interest in the bonds. The Trust enters into shortfall agreements with the Dealer Trusts which commit the Trust to pay the Dealer Trusts, in certain circumstances, the difference between the liquidation value of the fixed rate bonds held by the Dealer Trusts and the liquidations value of the floating rate notes held by third parties, as well as any shortfalls in interest cash flows. The residual interests held by the Trust (inverse floating rate investments) include the right of the Trust (1) to cause the holders of the floating rate notes to tender their notes at par at the next interest rate reset date, and (2) to transfer the municipal bond from the Dealer Trusts to the Trust, thereby collapsing the Dealer Trusts. The Trust accounts for the transfer of bonds to the Dealer Trusts as secured borrowings, with the securities transferred remaining in the Trust's investment assets, and the related floating rate notes reflected as Trust liabilities under the caption "floating rate note and dealer trust obligations" on the Statement of Assets and Liabilities. The Trust records the interest income from the fixed rate bonds under the caption "Interest Income" and records the expenses related to floating rate note obligations and any administrative expenses of the Dealer Trusts under the caption "Interest and residual trust expenses" in the Trust's statement of Operations. The notes issued by the Dealer Trusts have interest rates that reset weekly and the floating rate note holders have the option to tender their notes to the Dealer Trusts for redemption at par at each reset date. At April 30, 2008, Trust investments with a value of $27,062,331 are held by the Dealer Trusts and serve as collateral for the $21,105,080 in the floating rate note and dealer trusts obligations outstanding at that date. Contractual maturities of the floating rate note obligations and interest rates in effect at April 30, 2008 are presented in the Portfolio of Investments. E. 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 as realized gains or losses in the Statement of 20 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued Operations. The Trust may pay or receive cash to collateralize interest rate swap contracts. Any cash received may be invested in Morgan Stanley Institutional Liquidity Funds. F. Federal Income Tax Policy -- It is the Trust's policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable and non taxable income to its shareholders. Therefore, no provisions for federal income taxes is required. The Trust files tax returns with the U.S. Internal Revenue Service, New York State and New York City. The Trust adopted the provisions of the Financial Accounting Standards Board ("FASB") Interpretation No. 48 ("FIN 48") Accounting for Uncertainty in Income Taxes, on April 29, 2008. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. If applicable, the Trust recognizes the interest accrued related to unrecognized tax benefits in the interest expense and penalties in other expenses in the Statement of Operations. Each of the tax years in the four year period ended April 30, 2008, remains subject to examination by taxing authorities. G. Dividends and Distributions to Shareholders -- Dividends and distributions to shareholders are recorded on the ex-dividend date. H. 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 Advisory/Administration Agreements Pursuant to an Investment Advisory Agreement with Morgan Stanley Investment Advisors Inc. (the "Investment Adviser"), the Trust pays an advisory fee, calculated weekly and payable monthly, by applying the annual rate of 0.27% to the Trust's average weekly net assets including preferred shares. Pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. (the "Administrator"), an affiliate of the Investment Adviser, the Trust pays an administration fee, calculated weekly and payable monthly, by applying the annual rate of 0.08% to the Trust's average weekly net assets including preferred shares. Under an agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Trust. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Trust. 21 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued 3. Security Transactions and Transactions with Affiliates The Trust invests in Morgan Stanley Institutional Liquidity Tax-Exempt Portfolio -- Institutional Class, an open-end management investment company managed by the Investment Adviser. Investment advisory fees paid by the Trust are reduced by an amount equal to the advisory and administrative service fees paid by Morgan Stanley Institutional Liquidity Tax-Exempt Portfolio -- Institutional Class with respect to assets invested by the Trust in Morgan Stanley Institutional Liquidity Tax-Exempt Portfolio -- Institutional Class. For the six months ended April 30, 2008, advisory fees paid were reduced by $3,626 relating to the Trust's investment in Morgan Stanley Institutional Liquidity Tax-Exempt Portfolio -- Institutional Class. Income distributions earned by the Trust are recorded as dividends from affiliate in the Statement of Operations and totaled $92,728 for the six months ended April 30, 2008. During the six months ended April 30, 2008, cost of purchases and sales of Morgan Stanley Institutional Liquidity Tax-Exempt Portfolio -- Institutional Class aggregated $23,536,373 and $23,194,683, respectively. The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended April 30, 2008 aggregated $17,471,193 and $15,264,967, respectively. 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. The Trustees voted to close the plan to new participants and eliminate the future benefits growth due to increases to compensation after July 31, 2003. Aggregate pension costs for the six months ended April 30, 2008, included in Trustees' fees and expenses in the Statement of Operations amounted to $2,644. At April 30, 2008, the Trust had an accrued pension liability of $56,581 which is included in accrued expenses in the Statement of Assets and Liabilities. The Trust has 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 or she 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. 22 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued 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 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 IN RESET RANGE OF SERIES SHARES+ THOUSANDS+ RATE+ DATE DIVIDEND RATES++ - ------ ------- ---------- ----- -------- ---------------- A 1,400 $70,000 2.377% 05/07/08 2.377% - 4.60% B 700 35,000 2.421 05/02/08 2.322 - 4.70
- ---------- + As of April 30, 2008. ++ For the six months ended April 30, 2008. Subsequent to April 30, 2008 and up through June 6, 2008, the Trust paid dividends to Series A and B at rates ranging from 1.971% to 2.377%, in the aggregate amount of $242,732. 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. 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. 23 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued 5. Common Shares of Beneficial Interest Transactions in common shares of beneficial interest were as follows:
CAPITAL PAID IN EXCESS OF SHARES PAR VALUE PAR VALUE ---------- --------- ------------ Balance, October 31, 2006....................... 14,383,944 $143,839 $200,986,955 Treasury shares purchased and retired (weighted average discount 7.64%)+++.................... (365,357) (3,653) (5,003,377) ---------- -------- ------------ Balance, October 31, 2007....................... 14,018,587 140,186 195,983,578 Treasury shares purchased and retired (weighted average discount 10.51%)+++................... (153,214) (1,532) (1,972,031) ---------- -------- ------------ Balance, April 30, 2008......................... 13,865,373 $138,654 $194,011,547 ========== ======== ============
- ---------- +++ The Trustees have voted to retire the shares purchased. 6. Dividends to Common Shareholders On April 8, 2008, the Trust declared the following dividends from net investment income:
AMOUNT RECORD PAYABLE PER SHARE DATE DATE - --------- ------------ ------------- $0.0575 May 23, 2008 May 30, 2008 $0.0575 June 20 2008 June 27, 2008
7. Expense Offset The expense offset represents a reduction of the fees and expenses for interest earned on cash balances maintained by the Trust with the transfer agent and custodian. 8. Purposes of and Risks Relating to Certain Financial Instruments The Trust may invest a portion of its assets in inverse floating rate instruments, either through outright purchases of inverse floating rate securities or through the transfer of bonds to a Dealer Trust in exchange for cash and residual interests in the Dealer Trust (See Note 1D). These investments are typically used by the Trust in seeking to enhance the yield of the portfolio. These instruments typically involve greater risks than a fixed rate municipal bond. In particular, these instruments are acquired through leverage or may have leverage embedded in them and therefore involve many of the risks associated with leverage. Leverage is a speculative technique that may expose the Trust to greater risk and increased costs. Leverage may cause the Trust's net asset value to be more volatile than if it had not been leveraged because leverage tends to magnify the effect of any increases or decreases in the value of the Trust's portfolio securities. The use of leverage may 24 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued also cause the Trust to liquidate portfolio positions when it may not be advantageous to do so in order to satisfy its obligations with respect to inverse floating rate instruments. To hedge against adverse interest rate changes, the Trust may invest in financial futures contracts or municipal bond index futures contracts ("futures contracts"). 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. The Trust may enter into interest rate swaps and may purchase or sell interest rate caps, floors and collars. The Trust expects to enter into these transactions primarily to manage interest rate risk, hedge portfolio positions and preserve a return or spread on a particular investment or portion of its portfolio. The Trust may also enter into these transactions to protect against any increase in the price of securities the Trust anticipates purchasing at a later date. Interest rate swap transactions are subject to market risk, risk of default by the other party to the transaction, risk of imperfect correlation and manager risk. Such risks may exceed the related amounts shown in the Statements of Assets and Liabilities. 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, 2007, the Trust had temporary book/tax differences primarily attributable to book amortization of discounts on debt securities and mark-to- market of open futures contracts. 10. Accounting Pronouncements On March 19, 2008, FASB released Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("FAS 161"). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about 25 Morgan Stanley Quality Municipal Investment Trust NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2008 (UNAUDITED) continued credit- risk-related contingent features in derivative agreements. The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements has not been determined. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Trust's financial statement disclosures. 26 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, 2008 2007 2006 2005 --------------- --------------- ----------- ----------- (unaudited) Selected Per Share Data: Net asset value, beginning of period......... $ 14.50 $ 15.25 $ 15.29 $ 15.64 -------- -------- -------- -------- Income (loss) from investment operations: Net investment income(1).................. 0.49 0.97 0.93 0.95 Net realized and unrealized gain (loss)... (0.55) (0.68) 0.36 (0.29) Common share equivalent of dividends paid to preferred shareholders(1)............... (0.13) (0.28) (0.20) (0.14) ------ ------ ------ ------ Total income (loss) from investment operations.................................. (0.19) 0.01 1.09 0.52 ------ ----- ----- ----- Less dividends and distributions from: Net investment income..................... (0.35) (0.69) (0.79) (0.81) Net realized gain......................... -- (0.10) (0.40) (0.13) ---------- - ------ ------ ------ Total dividends and distributions............ (0.35) (0.79) (1.19) (0.94) ------ ------ ------ ------ Anti-dilutive effect of acquiring treasury shares(1)................................... 0.02 0.03 0.06 0.07 ----- ----- ----- ----- Net asset value, end of period............... $ 13.98 $ 14.50 $ 15.25 $ 15.29 ======== ======== ======== ======== Market value, end of period.................. $ 12.79 $ 13.00 $ 13.87 $ 13.62 ======== ======== ======== ======== Total Return(2).............................. 1.09%(3) (0.70)% 11.12% 4.24% Ratios to Average Net Assets of Common Shareholders: Total expenses (before expense offset)....... 1.20%(4)(5)(7) 1.13%(6)(7) 0.93%(6) 0.85%(6) Total expenses (before expense offset, exclusive of interest and residual trust expenses)................................... 0.81%(4)(5)(7) 0.77%(6)(7) 0.85%(6) 0.85%(6) Net investment income before preferred stock dividends................................... 6.93%(4)(7) 6.55%(7) 6.34% 6.15% Preferred stock dividends.................... 1.83%(4) 1.90% 1.36% 0.93% Net investment income available to common shareholders................................ 5.09%(4)(7) 4.65%(7) 4.98% 5.22% Supplemental Data: Net assets applicable to common shareholders, end of period, in thousands................. $193,797 $203,287 $219,343 $229,415 Asset coverage on preferred shares at end of period...................................... 285% 294% 309% 318% Portfolio turnover rate...................... 5%(3) 10% 17% 18% FOR THE YEAR ENDED OCTOBER 31, ---------------------------- 2004 2003 ----------- ----------- Selected Per Share Data: Net asset value, beginning of period......... $ 15.36 $ 15.23 -------- -------- Income (loss) from investment operations: Net investment income(1).................. 0.96 1.01 Net realized and unrealized gain (loss)... 0.30 0.25 Common share equivalent of dividends paid to preferred shareholders(1)............... (0.12) (0.11) ------ ------ Total income (loss) from investment operations.................................. 1.14 1.15 ----- ----- Less dividends and distributions from: Net investment income..................... (0.89) (0.96) Net realized gain......................... (0.03) (0.09) ------ ------ Total dividends and distributions............ (0.92) (1.05) ------ ------ Anti-dilutive effect of acquiring treasury shares(1)................................... 0.06 0.03 ----- ----- Net asset value, end of period............... $ 15.64 $ 15.36 ======== ======== Market value, end of period.................. $ 13.99 $ 14.22 ======== ======== Total Return(2).............................. 5.05% 8.66% Ratios to Average Net Assets of Common Shareholders: Total expenses (before expense offset)....... 0.84%(6) 0.79%(6) Total expenses (before expense offset, exclusive of interest and residual trust expenses)................................... 0.84%(6) 0.79%(6) Net investment income before preferred stock dividends................................... 6.23% 6.54% Preferred stock dividends.................... 0.80% 0.71% Net investment income available to common shareholders................................ 5.43% 5.83% Supplemental Data: Net assets applicable to common shareholders, end of period, in thousands................. $244,137 $249,852 Asset coverage on preferred shares at end of period...................................... 332% 338% Portfolio turnover rate...................... 25% 21%
- ---------- (1) The per share amounts were computed using an average number of common shares outstanding during the period. (2) 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. (3) Not annualized. (4) Annualized. (5) Does not reflect the effect of expense offset of 0.03%. (6) Does not reflect the effect of expense offset of 0.01%. (7) Reflects rebate of certain Trust expenses in connection with the investments in Morgan Stanley Institutional Liquidity Tax-Exempt Portfolio-Institutional Class during the period. As a result of such rebate, the expenses as a percentage of its net assets had an effect of less than 0.005%.
See Notes to Financial Statements 27 Morgan Stanley Quality Municipal Investment Trust REVISED INVESTMENT POLICY (UNAUDITED) While the Trust's policy is to emphasize investments in municipal obligations with longer-term maturities because generally longer-term obligations, while more susceptible to market fluctuations resulting from changes in interest rates, produce higher yields than short-term obligations, the Trust no longer expects to maintain a specific average weighted maturity of its portfolio. As a result of changes in the fixed-income and municipal marketplace, the Trust's average portfolio maturity will vary depending upon market conditions and other factors. 28 Morgan Stanley Quality Municipal Investment Trust MORGAN STANLEY ADVISOR CLOSED END FUNDS AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY (UNAUDITED) We are required by federal law to provide you with a copy of our Privacy Policy annually. The following Policy applies to current and former individual investors in Morgan Stanley Advisor closed end funds. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders. Please note that we may amend this Policy at any time, and will inform you of any changes to this Policy as required by law. WE RESPECT YOUR PRIVACY We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Policy describes what non-public personal information we collect about you, why we collect it, and when we may share it with others. We hope this Policy will help you understand how we collect and share non-public personal information that we gather about you. Throughout this Policy, we refer to the non-public information that personally identifies you or your accounts as "personal information." 1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU? To serve you better and manage our business, it is important that we collect and maintain accurate information about you. We may obtain this information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources. FOR EXAMPLE: - - We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us. - - We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources. - - We may obtain information about your creditworthiness and credit history from consumer reporting agencies. - - We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements. - - If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer's operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of "cookies." "Cookies" recognize your computer each time you return to one of our sites, and help to improve our sites' 29 Morgan Stanley Quality Municipal Investment Trust MORGAN STANLEY ADVISOR CLOSED END FUNDS AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY (UNAUDITED) continued content and personalize your experience on our sites by, for example, suggesting offerings that may interest you. Please consult the Terms of Use of these sites for more details on our use of cookies. 2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU? To provide you with the products and services you request, to serve you better and to manage our business, we may disclose personal information we collect about you to our affiliated companies and to non-affiliated third parties as required or permitted by law. A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose personal information that we collect about you to our affiliated companies except to enable them to provide services on our behalf or as otherwise required or permitted by law. B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal information that we collect about you to non-affiliated third parties except to enable them to provide services on our behalf, to perform joint marketing agreements with other financial institutions, or as otherwise required or permitted by law. For example, some instances where we may disclose information about you to nonaffiliated third parties include: for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with these companies, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information with others except to fulfill that limited purpose. 3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE COLLECT ABOUT YOU? We maintain physical, electronic and procedural security measures to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information. 30 (This Page Intentionally Left Blank) TRUSTEES Frank L. Bowman Michael Bozic Kathleen A. Dennis James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael F. Klein Michael E. Nugent W. Allen Reed Fergus Reid OFFICERS Michael E. Nugent Chairperson of the Board Ronald E. Robison President and Principal Executive Officer Kevin Klingert Vice President Dennis F. Shea Vice President Amy R. Doberman Vice President Carsten Otto Chief Compliance Officer Stefanie V. Chang Yu Vice President Francis J. Smith Treasurer and Chief Financial Officer Mary E. Mullin Secretary TRANSFER AGENT Computershare Trust Company, N.A. P.O. Box 43078 Providence, RI 02940-3078 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP Two World Financial Center New York, New York 10281 LEGAL COUNSEL Clifford Chance US LLP 31 West 52nd Street New York, New York 10019 COUNSEL TO THE INDEPENDENT TRUSTEES Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036 INVESTMENT ADVISER Morgan Stanley Investment Advisors Inc. 522 Fifth Avenue New York, New York 10036 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. (c) 2008 Morgan Stanley [MORGAN STANLEY LOGO] MORGAN STANLEY FUNDS Morgan Stanley Quality Municipal Investment Trust Semiannual Report April 30, 2008 IQTSAN IU08-03254P-Y04/08 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. Refer to Item 1. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semiannual reports. Item 8. Portfolio Managers of Closed-End Management Investment Companies Applicable only to reports covering periods ending on or after December 31, 2005. Item 9. Closed-End Fund Repurchases
REGISTRANT PURCHASE OF EQUITY SECURITIES - ----------------------------------------------------------------------------------------------------------- Period (a) Total (b) Average (c) Total (d) Maximum Number of Price Paid Number of Number (or Shares (or per Share Shares (or Approximate Units) (or Unit) Units) Dollar Value) Purchased Purchased as of Shares (or Part of Publicly Units) that May Announced Yet Be Purchased Plans or Under the Plans Programs or Programs - ----------------------------------------------------------------------------------------------------------- November 1, -- November 30, 2007 29,500 12.5998 N/A N/A - ----------------------------------------------------------------------------------------------------------- December 1, -- December 31, 2007 54,511 12.5042 N/A N/A - ----------------------------------------------------------------------------------------------------------- January 1, -- January 31, 2008 49,403 13.3327 N/A N/A - ----------------------------------------------------------------------------------------------------------- February 1 -- February 29, 2008 19,800 13.2595 N/A N/A - ----------------------------------------------------------------------------------------------------------- March 1 -- March 31, 2008 N/A N/A - ----------------------------------------------------------------------------------------------------------- April 1, -- April 30, 2008 N/A N/A - ----------------------------------------------------------------------------------------------------------- Total 153,214 12.9241 N/A N/A - -----------------------------------------------------------------------------------------------------------
Item 10. Submission of Matters to a Vote of Security Holders Not applicable. Item 11. Controls and Procedures (a) The Trust's/Fund's principal executive officer and principal financial officer have concluded that the Trust's/Fund's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Trust/Fund 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. 2 (b) There were no changes in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. 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. 3 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 19, 2008 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 19, 2008 /s/ Francis Smith Francis Smith Principal Financial Officer June 19, 2008 4 EX-99.CERT 2 y57989exv99wcert.txt CERTIFICATION EXHIBIT 12 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 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 second fiscal quarter of the period covered by this 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): 5 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 19, 2008, /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer 6 EXHIBIT 12 B2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CERTIFICATIONS I, Francis Smith, 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 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 second fiscal quarter of the period covered by this 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): 7 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 19, 2008 /s/ Francis Smith Francis Smith Principal Financial Officer 8 EX-99.906CERT 3 y57989exv99w906cert.txt CERTIFICATION 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, 2008 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 19, 2008 /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. 9 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, 2008 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 19, 2008 /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. 10 -----END PRIVACY-ENHANCED MESSAGE-----