Advisory Class
Prospectus Supplement

September 28, 2007

Morgan Stanley Institutional Liquidity Funds

Supplement dated September 28, 2007 to the Advisory Class Prospectus dated February 28, 2007

Advisory Class Portfolios
    
Money Market Portfolio
    
Prime Portfolio
    
Government Portfolio
    
Government Securities Portfolio
    
Treasury Portfolio
    
Treasury Securities Portfolio
    
Tax-Exempt Portfolio

All references in the Prospectus to the Fund’s Sub-Adviser are hereby deleted. Any services previously provided by the Sub-Adviser are now being provided by the Investment Adviser. The investment process utilized in managing each of the Portfolios has not changed and the same personnel will be managing the Portfolios.

The first sentence of the second paragraph of the section of the Prospectus entitled ‘‘General Shareholder Information – Distributions’’ is hereby deleted and replaced with the following:

The Portfolios declare income dividends on each business day based on their respective daily net income to shareholders of record.

Please retain this supplement for future reference.

LFADVPSPT