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: 811-08861

Morgan Stanley Value Fund
               (Exact name of registrant as specified in charter)

1221 Avenue of the Americas, New York, New York    10020
   (Address of principal executive offices)      (Zip code)

Ronald E. Robison
1221 Avenue of the Americas, New York, New York 10020
                     (Name and address of agent for service)

Registrant's telephone number, including area code: 212-762-4000

Date of fiscal year end: September 30, 2005

Date of reporting period: September 30, 2005


Item 1 - Report to Shareholders

Welcome, Shareholder:

In this report, you'll learn about how your investment in Morgan Stanley Value Fund performed during the annual 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 Fund's financial statements and a list of Fund investments.

This material must be preceded or accompanied by a prospectus for the fund being offered.

Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the Fund will achieve its investment objective. The Fund is subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.

	Fund Report
	For the year ended September 30, 2005

Total Return for the 12 Months Ended September 30, 2005

Class A						Class B						Class C						Class D						S&P 500® Index1						S&P 500/ Barra Value Index2						Lipper Large- Cap Value Funds Index3						Lipper Multi- Cap Value Funds Index4
9.71%							8.85	%					8.93	%					9.91	%					12.24	%					13.81	%					13.50	%					15.42	%

The performance of the Fund's four share classes varies because each has different expenses. The Fund's total returns assume the reinvestment of all distributions but do not reflect the deduction of any applicable sales charges. Such costs would lower performance. See Performance Summary for standardized performance and benchmark information.

Market Conditions

The stock market met with many uncertainties during the 12-month period, yet performed remarkably well. Among investors' chief concerns were rising interest rates and high energy prices. The Federal Open Market Committee (the Fed) continued to raise the federal funds target rate, prompting fears that the economy could slow notably. Also overhanging the markets were rising energy prices, which threatened to feed inflationary pressure, crimp corporate profits and stifle consumer spending as consumers struggle to pay higher gasoline prices and winter heating bills. Hurricanes Katrina and Rita amplified existing concerns about the direction of the economy and the likelihood of higher inflation. Although the full economic impact of the hurricanes was still uncertain at the end of the period, preliminary consumer data did show some signs of weakness.

Nonetheless, the market advanced during the 12 months overall, and with particular strength during the fourth quarter of 2004. Generally speaking, companies delivered on their earnings targets and profit margins appeared healthy, with the prominent exception of the auto industry. Stronger balance sheets encouraged an increase in merger and acquisition activity, and some high-profile initial public offerings helped improve positive sentiment for stock investing. Inflation, though trending upward, was relatively contained. In this environment, the energy sector, driven by high commodity prices, continued to dominate the overall market.

Performance Analysis

Morgan Stanley Value Fund underperformed the S&P 500^® Index, the S&P 500/Barra Value Index, the Lipper Large-Cap Value Funds Index and the Lipper Multi-Cap Value Funds Index for the 12 months ended September 30, 2005, assuming no deduction of applicable sales charges.

The Fund's underperformance relative to the S&P 500/Barra Value Index was largely attributable to holdings in the paper industry. Rising commodity prices drove up the costs of the raw materials and energy used in paper production, eroding paper companies' profit margins. Additionally, languishing demand and overcapacity in the industry resulted in weak pricing power. The paper industry, like all industries within the broader materials sector, tends to move cyclically with the economy. As such, we do expect some volatility in earnings for these types of businesses over time. We are patient and continue to monitor the situation carefully. The Fund lost ground in its healthcare

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weighting, which was primarily composed of pharmaceutical stocks. Although pharmaceutical stocks were not negative performers, within the S&P 500/Barra Value Index, healthcare equipment and services stocks were the stronger performing area of the broad healthcare sector. As a result, the Fund did not fully participate in the rally. Regardless, our long-term view of the Fund's pharmaceutical holdings remains intact.

Elsewhere in the portfolio, however, the Fund made gains relative to the S&P 500/Barra Value Index. For example, the Fund's limited exposure to financial stocks served the Fund well, as the overall sector encountered downward pressure from investors anxious about rising interest rates, a flattening yield curve, high consumer debt levels and the deceleration in the housing and mortgage refinancing boom. In our view, the expensive valuations of many financial stocks—particularly in light of a rising interest rate environment—did not signal a buying opportunity. Media stocks, which had been beaten down due to sluggish advertising revenues and increased competition from alternative formats such as satellite radio and MP3 players, also contributed positively to results. Healthier balance sheets (as evidenced by free cash flow generation) and improved sentiment helped select media stocks appreciate during the period.

There is no guarantee that any sectors mentioned will continue to perform well or that securities in such sectors will be held by the Fund in the future.

Investment Strategy

The Fund normally invests at least 65 percent of its assets in common stock that the Fund's "Investment Adviser," Morgan Stanley Investment Advisors Inc., believes is undervalued and currently is not being recognized within the marketplace. In deciding which securities to buy, hold or sell, the Investment Adviser begins with a universe of companies that have attributes that may qualify them as value companies. The Investment Adviser then screens these companies for liquidity and then relative value, using an appropriate valuation measure for each sector or industry. The Investment Adviser evaluates the companies relative to the competitive and market conditions within each industry. The Investment Adviser then conducts a fundamental analysis of each company to identify those companies believed to be attractively valued relative to other companies within the industry.

For More Information About
Portfolio Holdings

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semiannual reports are filed on Form N-CSRS and the annual reports are filed on Form N-CSR. Morgan Stanley also delivers the semiannual and annual reports to fund shareholders and makes these reports available on its public Web site, www.morganstanley.com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters on

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TOP 10 HOLDINGS
GlaxoSmithKline PLC (ADR) (United Kingdom)					5.7	%
Freddie Mac					3.8
Bristol-Myers Squibb Co.					3.7
SBC Communications, Inc.					3.3
Verizon Communications Inc.					3.2
Bank of America Corp.					3.2
Citigroup, Inc.					3.0
Georgia-Pacific Corp.					3.0
International Paper Co.					2.9
Clear Channel Communications, Inc.					2.5

TOP FIVE INDUSTRIES
Pharmaceuticals: Major					16.3	%
Major Banks					9.5
Major Telecommunications					8.7
Pulp & Paper					5.9
Media Conglomerates					4.8

Data as of September 30, 2005. Subject to change daily. All percentages for top 10 holdings and top five industries are as a percentage of net assets. These data are provided for informational purposes only and should not be deemed a recommendation to buy or sell the securities mentioned. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services.

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 (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.

Proxy Voting Policy and Procedures and Proxy Voting Record

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures without charge, upon request, by calling toll free (800) 869-NEWS or by visiting the Mutual Fund Center on our Web site at www.morganstanley.com. It is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov.

You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 by visiting the Mutual Fund Center on our Web site at www.morganstanley.com. This information is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov.

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Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling (800) 350-6414, 8:00 a.m. to 8:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

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	Performance Summary

Performance of $10,000 Investment

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Average Annual Total Returns — Period Ended September 30, 2005

						Class A Shares* (since 11/25/98)						Class B Shares** (since 11/25/98)						Class C Shares† (since 11/25/98)						Class D Shares†† (since 11/25/98)
Symbol						VLUAX						VLUBX						VLUCX						VLUDX
1 Year						9.71%5						8.85%5						8.93%5						9.91%5
						3.95   6						3.85   6						7.93   6						—
5 Years						5.54   5						4.72   5						4.76   5						5.78   5
						4.41   6						4.38   6						4.76   6						—
Since Inception						4.53   5						3.73   5						3.76   5						4.80   5
						3.71   6						3.73   6						3.76   6						—

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. For most recent month-end performance figures, please visit www.morganstanley.com or speak with your Financial Advisor. Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class A, Class B, Class C, and Class D shares will vary due to differences in sales charges and expenses.

	*	The maximum front-end sales charge for Class A is 5.25%.

	**	The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%. The CDSC declines to 0% after six years.

	†	The maximum contingent deferred sales charge for Class C is 1% for shares redeemed within one year of purchase.

	††	Class D has no sales charge.

	(1)	The Standard & Poor's 500 Index (S&P 500®) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. Indexes are unmanaged and their returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

	(2)	The S&P 500/Barra Value Index is a market capitalization-weighted index of the stocks in the S&P 500® Index having lower price-to-book ratios. Indexes are unmanaged and their returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

	(3)	The Lipper Large-Cap Value Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Large-Cap Value Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index. The Fund is in the Lipper Large-Cap Value Funds classification as of September 30, 2005.

	(4)	The Lipper Multi-Cap Value Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper Multi-Cap Value Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index.

	(5)	Figure shown assumes reinvestment of all distributions and does not reflect the deduction of any sales charges.

	(6)	Figure shown assumes reinvestment of all distributions and the deduction of the maximum applicable sales charge. See the Fund's current prospectus for complete details on fees and sales charges.

	‡	Ending value assuming a complete redemption on September 30, 2005.

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	Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees; and (2) ongoing costs, including advisory fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 04/01/05 – 09/30/05.

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs, and will not help you determine the relative total cost of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

				Beginning Account Value				Ending Account Value				Expenses Paid During Period*
				04/01/05				09/30/05				04/01/05 – 09/30/05
Class A
Actual (1.53% return)				$	1,000.00			$	1,015.30			$	5.05
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,020.05			$	5.06
Class B
Actual (1.11% return)				$	1,000.00			$	1,011.10			$	8.82
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,016.29			$	8.85
Class C
Actual (1.11% return)				$	1,000.00			$	1,011.10			$	8.82
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,016.29			$	8.85
Class D
Actual (1.59% return)				$	1,000.00			$	1,015.90			$	3.79
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,021.31			$	3.80

* Expenses are equal to the Fund's annualized expense ratio of 1.00%, 1.75%, 1.75% and 0.75% for Class A, Class B, Class C and Class D shares, respectively, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

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Investment Advisory Agreement Approval 

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Investment Adviser under the Advisory Agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Fund's Administrator under the Administration Agreement, including accounting, clerical, bookkeeping, compliance, business management and planning, and the provision of supplies, office space and utilities. (The Investment Adviser and the Administrator together are referred to as the "Adviser" and the Advisory and Administration Agreements together are referred to as the "Management Agreement.") The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as reported to the Board by Lipper Inc. ("Lipper").

The Board reviewed and considered the qualifications of the portfolio managers, the senior administrative managers and other key personnel of the Adviser who provide the administrative and investment advisory services to the Fund. The Board determined that the Adviser's portfolio managers and key personnel are well qualified by education and/or training and experience to perform the services in an efficient and professional manner. The Board concluded that the nature and extent of the advisory and administrative services provided were necessary and appropriate for the conduct of the business and investment activities of the Fund. The Board also concluded that the overall quality of the advisory and administrative services was satisfactory.

Performance Relative to Comparable Funds Managed by Other Advisers

The Board reviewed the Fund's performance for the one-, three- and five-year periods ended November 30, 2004, as shown in reports provided by Lipper (the "Lipper Reports"), compared to the performance of comparable funds selected by Lipper (the "performance peer group"), and noted that the Fund's performance was lower than its performance peer group average for the three-year period but better for the one- and five-year periods. The Board concluded that the Fund's overall performance was competitive with its performance peer group.

Fees Relative to Other Funds Managed by the Adviser with Comparable Investment Strategies

The Board reviewed the advisory and administrative fees (together, the "management fee") paid by the Fund under the Management Agreement. The Board noted that the rate was comparable to the management fee rates charged by the Adviser to any other funds it manages with investment strategies comparable to those of the Fund.

Fees and Expenses Relative to Comparable Funds Managed by Other Advisers

The Board reviewed the management fee rate and the total expense ratio of the Fund. The Board noted that: (i) the Fund's management fee rate was slightly higher than the average management fee rate for funds, selected by Lipper (the "expense peer group"), managed by other advisers with investment strategies comparable to those of the Fund, as shown in the Lipper Report for the Fund; but (ii) the Fund's total expense ratio was lower than the average total expense ratio of the funds included in the Fund's expense peer group. The Board concluded that the management fee rate was competitive in light of the fact that the Adviser managed the Fund so that the total expense ratio of the Fund was less than the total expense ratio of the funds in the expense peer group average.

Breakpoints and Economies of Scale

The Board reviewed the structure of the Fund's management fee schedule under the Management Agreement and noted that it includes breakpoints. The Board also reviewed the level of the Fund's management fee and noted that

9

the fee, as a percentage of the Fund's net assets, would decrease as net assets increase because the management fee includes breakpoints. The Board concluded that the Fund's management fee would reflect economies of scale as assets increase.

Profitability of Adviser and Affiliates

The Board considered and reviewed information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last two years from their relationship with the Fund and the Morgan Stanley Fund Complex and reviewed with the Controller of the Adviser the cost allocation methodology used to determine the Adviser's profitability. Based on their review of the information they received, the Board concluded that the profits earned by the Adviser and its affiliates were not excessive in light of the advisory, administrative and other services provided to the Fund.

Fall-Out Benefits

The Board considered so-called "fall-out benefits" derived by the Adviser and its affiliates from their relationship with the Fund and the Morgan Stanley Fund Complex, such as "float" benefits derived from handling of checks for purchases and redemptions of Fund shares through a broker-dealer affiliate of the Adviser and "soft dollar" benefits (discussed in the next section). The Board also considered that a broker-dealer affiliate of the Adviser receives from the Fund 12b-1 fees for distribution and shareholder services. The Board also considered that an affiliate of the Adviser, through a joint venture, receives revenue in connection with trading done on behalf of the Fund through an electronic trading system network ("ECN"). The Board concluded that the float benefits and the above-referenced ECN-related revenue were relatively small and that the 12b-1 fees were competitive with those of other broker-dealer affiliates of investment advisers of mutual funds.

Soft Dollar Benefits

The Board considered whether the Adviser realizes any benefits as a result of brokerage transactions executed through "soft dollar" arrangements. Under such arrangements, brokerage commissions paid by the Fund and/or other funds managed by the Adviser would be used to pay for research that a securities broker obtains from third parties, or to pay for both research and execution services from securities brokers who effect transactions for the Fund. The Adviser informed the Board that it does not use Fund commissions to pay for third party research. It does use commissions to pay for research which is bundled with execution services. The Board recognized that the receipt of such research from brokers may reduce the Adviser's costs but concluded that the receipt of such research strengthens the investment management resources of the Adviser, which may ultimately benefit the Fund and other funds in the Fund Complex.

Adviser Financially Sound and Financially Capable of Meeting the Fund's Needs

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board noted that the Adviser's operations remain profitable, although increased expenses in recent years have reduced the Adviser's profitability. The Board concluded that the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement.

Historical Relationship Between the Fund and the Adviser

The Board also reviewed and considered the historical relationship between the Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for

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managing the Fund's operations and the Board's confidence in the competence and integrity of the senior managers and key personnel of the Adviser. The Board concluded that it is beneficial for the Fund to continue its relationship with the Adviser.

Other Factors and Current Trends

The Board considered the controls and procedures adopted and implemented by the Adviser and monitored by the Fund's Chief Compliance Officer and concluded that the conduct of business by the Adviser indicates a good faith effort on its part to adhere to high ethical standards in the conduct of the Fund's business.

General Conclusion

After considering and weighing all of the above factors, the Board concluded it would be in the best interest of the Fund and its shareholders to approve renewal of the Management Agreement for another year.

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Morgan Stanley Value Fund

Portfolio of Investments September 30, 2005

NUMBER OF SHARES								VALUE
				Common Stocks (99.4%)
				Airlines (0.4%)
	101,000			Southwest Airlines Co.				$	1,499,850
				Aluminum (1.9%)
	326,400			Alcoa, Inc.					7,970,688
				Apparel/Footwear (0.7%)
	110,156			Jones Apparel Group, Inc.					3,139,446
				Beverages: Alcoholic (0.3%)
	30,140			Anheuser-Busch Companies, Inc.					1,297,225
				Beverages: Non-Alcoholic (1.5%)
	144,300			Coca-Cola Co. (The)					6,232,317
				Broadcasting (2.5%)
	318,600			Clear Channel Communications, Inc.					10,478,754
				Cable/Satellite TV (1.2%)
	653,800			Liberty Media Corp. (Class A)*					5,263,090
				Chemicals: Major     Diversified (3.4%)
	94,900			Dow Chemical Co. (The)					3,954,483
	198,900			Du Pont (E.I.) de Nemours & Co.					7,790,913
	69,200			Rohm & Haas Co.					2,846,196
									14,591,592
				Computer     Communications (0.6%)
	132,500			Cisco Systems, Inc.*					2,375,725
				Computer Peripherals (0.3%)
	20,900			Lexmark International, Inc. (Class A)*					1,275,945
				Computer Processing     Hardware (1.2%)
	92,500			Dell, Inc.*					3,163,500
	61,700			Hewlett-Packard Co.					1,801,640
									4,965,140
				Contract Drilling (0.2%)
	14,200			GlobalSantaFe Corp. (Cayman Islands)					647,804
				Data Processing Services (1.4%)
	72,400			Affiliated Computer Services, Inc. (Class A)*				$	3,953,040
	52,700			First Data Corp.					2,108,000
									6,061,040
				Department Stores (0.9%)
	55,708			Federated Department Stores, Inc.					3,725,194
				Discount Stores (1.8%)
	174,200			Wal-Mart Stores, Inc.					7,633,444
				Electric Utilities (4.6%)
	101,100			American Electric Power Co., Inc.					4,013,670
	56,900			Constellation Energy Group, Inc.					3,505,040
	40,700			Dominion Resources, Inc.					3,505,898
	121,000			FirstEnergy Corp.					6,306,520
	36,400			Public Service Enterprise Group, Inc.					2,342,704
									19,673,832
				Electronic Components (0.4%)
	116,700			Flextronics International Ltd. (Singapore)*					1,499,595
				Electronic Production     Equipment (0.1%)
	14,400			Novellus Systems, Inc.*					361,152
				Electronics/Appliance Stores (0.4%)
	42,300			Best Buy Co., Inc.					1,841,319
				Finance/Rental/Leasing (4.2%)
	32,000			Fannie Mae					1,434,240
	286,800			Freddie Mac					16,192,728
									17,626,968
				Financial Conglomerates (3.9%)
	281,800			Citigroup, Inc.					12,827,536
	106,400			JPMorgan Chase & Co.					3,610,152
									16,437,688
				Food: Major Diversified (3.8%)
	191,300			Kraft Foods Inc. (Class A)					5,851,867
	142,100			Unilever N.V. (NY Registered Shares) (Netherlands)					10,153,045
									16,004,912

See Notes to Financial Statements

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Morgan Stanley Value Fund

Portfolio of Investments September 30, 2005 continued

NUMBER OF SHARES								VALUE
				Household/Personal Care (2.0%)
	138,700			Kimberly-Clark Corp.				$	8,256,811
				Information Technology     Services (0.6%)
	23,900			Amdocs Ltd. (Guernsey)*					662,747
	22,900			International Business Machines Corp.					1,837,038
									2,499,785
				Integrated Oil (1.2%)
	37,500			Total S.A. (ADR) (France)					5,093,250
				Internet Software/Services (0.2%)
	37,400			Check Point Software Technologies Ltd. (Israel)*					909,568
				Investment Banks/Brokers (1.1%)
	8,400			Lehman Brothers Holdings Inc.					978,432
	57,300			Merrill Lynch & Co., Inc.					3,515,355
									4,493,787
				Life/Health Insurance (2.1%)
	28,500			AFLAC, Inc.					1,291,050
	43,500			Genworth Financial Inc. (Class A)					1,402,440
	48,300			MetLife, Inc.					2,406,789
	75,100			Torchmark Corp.					3,967,533
									9,067,812
				Major Banks (9.5%)
	319,400			Bank of America Corp.					13,446,740
	137,800			Bank of New York Co., Inc. (The)					4,052,698
	113,000			PNC Financial Services Group					6,556,260
	14,600			SunTrust Banks, Inc.					1,013,970
	105,246			Wachovia Corp.					5,008,657
	172,800			Wells Fargo & Co.					10,120,896
									40,199,221
				Major Telecommunications (8.7%)
	579,900			SBC Communications, Inc.					13,900,203
	393,900			Sprint Nextel Corp.					9,366,942
	416,000			Verizon Communications Inc.					13,599,040
									36,866,185
				Media Conglomerates (4.8%)
	291,700			Disney (Walt) Co. (The)				$	7,038,721
	405,500			Time Warner, Inc.					7,343,605
	185,400			Viacom Inc. (Class B) (Non-Voting)					6,120,054
									20,502,380
				Medical Distributors (1.6%)
	55,300			AmerisourceBergen Corp.					4,274,690
	38,200			Cardinal Health, Inc.					2,423,408
									6,698,098
				Medical Specialties (0.3%)
	59,600			Boston Scientific Corp.*					1,392,852
				Multi-Line Insurance (1.0%)
	55,000			American International Group, Inc.					3,407,800
	9,300			Hartford Financial Services Group, Inc. (The)					717,681
									4,125,481
				Oilfield Services/Equipment (0.4%)
	26,500			Halliburton Co.					1,815,780
				Packaged Software (0.4%)
	61,900			Microsoft Corp.					1,592,687
				Pharmaceuticals:     Major (16.3%)
	657,200			Bristol-Myers Squibb Co.					15,812,232
	467,900			GlaxoSmithKline PLC (ADR) (United Kingdom)					23,993,912
	234,200			Pfizer, Inc.					5,847,974
	115,400			Roche Holdings Ltd. (ADR) (Switzerland)					7,979,910
	96,600			Sanofi-Aventis (ADR) (France)					4,013,730
	270,100			Schering-Plough Corp.					5,685,605
	123,500			Wyeth					5,714,345
									69,047,708
				Property – Casualty Insurers (3.2%)
	900			Berkshire Hathaway, Inc. (Class B)*					2,457,900
	101,800			Chubb Corp. (The)					9,116,190
	46,025			St. Paul Travelers Companies, Inc. (The)					2,065,142
									13,639,232

See Notes to Financial Statements

13

Morgan Stanley Value Fund

Portfolio of Investments September 30, 2005 continued

NUMBER OF SHARES								VALUE
				Publishing: Newspapers (0.6%)
	18,000			Gannett Co., Inc.				$	1,238,940
	34,900			Tribune Co.					1,182,761
									2,421,701
				Pulp & Paper (5.9%)
	373,710			Georgia-Pacific Corp.					12,728,563
	416,642			International Paper Co.					12,415,932
									25,144,495
				Recreational Products (0.5%)
	131,700			Mattel, Inc.					2,196,756
				Semiconductors (0.1%)
	12,200			Intel Corp.					300,730
				Specialty Insurance (0.7%)
	32,800			Ambac Financial Group, Inc.					2,363,568
	21,000			Assurant, Inc.					799,260
									3,162,828
				Telecommunication Equipment (0.6%)
	79,200			Nokia Corp. (ADR) (Finland)					1,339,272
	29,300			Telefonaktiebolaget LM Ericsson (ADR) (Sweden)					1,079,412
									2,418,684
				Tobacco (1.9%)
	111,700			Altria Group, Inc.					8,233,407
				Total Common Stocks (Cost $384,001,202)					420,681,958

PRINCIPAL AMOUNT IN THOUSANDS								VALUE
				Short-Term Investment (0.7%)
				Repurchase Agreement
$	3,016			Joint repurchase agreement account 3.825% due 10/03/05 (dated 09/30/05; proceeds $3,016,961) (a) (Cost $3,016,000)				$	3,016,000

Total Investments (Cost $387,017,202) (b)					100.1	%			423,697,958
Liablilities in Excess of Other Assets					(0.1	)			(434,617	)
Net Assets					100.0	%		$	423,263,341

ADR American Depositary Receipt.

* Non-income producing security.

(a) Collateralized by federal agency and U.S. Treasury obligations.

(b) The aggregate cost for federal income tax purposes is $389,803,604. The aggregate gross unrealized appreciation is $51,026,355 and the aggregate gross unrealized depreciation is $17,132,001, resulting in net unrealized appreciation of $33,894,354.

See Notes to Financial Statements

14

Morgan Stanley Value Fund

Summary of Investments September 30, 2005

INDUSTRY				VALUE				PERCENT OF NET ASSETS
Pharmaceuticals: Major				$	69,047,708				16.3	%
Major Banks					40,199,221				9.5
Major Telecommunications					36,866,185				8.7
Pulp & Paper					25,144,495				5.9
Media Conglomerates					20,502,380				4.8
Electric Utilities					19,673,832				4.6
Finance/Rental/Leasing					17,626,968				4.2
Financial Conglomerates					16,437,688				3.9
Food: Major Diversified					16,004,912				3.8
Chemicals: Major Diversified					14,591,592				3.4
Property – Casualty Insurers					13,639,232				3.2
Broadcasting					10,478,754				2.5
Life/Health Insurance					9,067,812				2.1
Household/Personal Care					8,256,811				2.0
Tobacco					8,233,407				1.9
Aluminum					7,970,688				1.9
Discount Stores					7,633,444				1.8
Medical Distributors					6,698,098				1.6
Beverages: Non-Alcoholic					6,232,317				1.5
Data Processing Services					6,061,040				1.4
Cable/Satellite TV					5,263,090				1.2
Integrated Oil					5,093,250				1.2
Computer Processing Hardware					4,965,140				1.2
Investment Banks/Brokers					4,493,787				1.1
Multi-Line Insurance					4,125,481				1.0
Department Stores				$	3,725,194				0.9	%
Specialty Insurance					3,162,828				0.7
Apparel/Footwear					3,139,446				0.7
Repurchase Agreement					3,016,000				0.7
Information Technology Services					2,499,785				0.6
Publishing: Newspapers					2,421,701				0.6
Telecommunication Equipment					2,418,684				0.6
Computer Communications					2,375,725				0.6
Recreational Products					2,196,756				0.5
Electronics/Appliance Stores					1,841,319				0.4
Oilfield Services/Equipment					1,815,780				0.4
Packaged Software					1,592,687				0.4
Airlines					1,499,850				0.4
Electronic Components					1,499,595				0.4
Medical Specialties					1,392,852				0.3
Beverages: Alcoholic					1,297,225				0.3
Computer Peripherals					1,275,945				0.3
Internet Software/Services					909,568				0.2
Contract Drilling					647,804				0.2
Electronic Production Equipment					361,152				0.1
Semiconductors					300,730				0.1
				$	423,697,958				100.1	%

See Notes to Financial Statements

15

Morgan Stanley Value Fund

Financial Statements

Statement of Assets and Liabilities

September 30, 2005

Assets:
Investments in securities, at value (cost $387,017,202)				$	423,697,958
Receivable for:
Dividends					628,917
Investments sold					222,264
Shares of beneficial interest sold					71,465
Prepaid expenses and other assets					32,467
Total Assets					424,653,071
Liabilities:
Payable for:
Shares of beneficial interest redeemed					810,370
Distribution fee					245,777
Investment advisory fee					148,934
Investments purchased					81,919
Administration fee					28,368
Transfer agent fee					10,444
Accrued expenses and other payables					63,918
Total Liabilities					1,389,730
Net Assets				$	423,263,341
Composition of Net Assets:
Paid-in-capital				$	408,747,262
Net unrealized appreciation					36,680,756
Accumulated undistributed net investment income					3,552,837
Accumulated net realized loss					(25,717,514	)
Net Assets				$	423,263,341
Class A Shares:
Net Assets				$	73,558,822
Shares Outstanding (unlimited authorized, $.01 par value)					5,543,935
Net Asset Value Per Share				$	13.27
Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value)				$	14.01
Class B Shares:
Net Assets				$	249,346,328
Shares Outstanding (unlimited authorized, $.01 par value)					19,488,654
Net Asset Value Per Share				$	12.79
Class C Shares:
Net Assets				$	24,526,187
Shares Outstanding (unlimited authorized, $.01 par value)					1,916,315
Net Asset Value Per Share				$	12.80
Class D Shares:
Net Assets				$	75,832,004
Shares Outstanding (unlimited authorized, $.01 par value)					5,640,725
Net Asset Value Per Share				$	13.44

See Notes to Financial Statements

16

Morgan Stanley Value Fund

Financial Statements continued

Statement of Operations

For the year ended September 30, 2005

Net Investment Income:
Income
Dividends (net of $128,290 foreign withholding tax)				$	10,720,615
Interest					661,094
Total Income					11,381,709
Expenses
Distribution fee (Class A shares)					105,306
Distribution fee (Class B shares)					3,126,205
Distribution fee (Class C shares)					270,412
Investment advisory fee					1,969,403
Transfer agent fees and expenses					733,825
Administration fee					339,011
Shareholder reports and notices					88,661
Professional fees					78,622
Registration fees					63,498
Custodian fees					32,525
Trustees' fees and expenses					5,722
Other					27,412
Total Expenses					6,840,602
Net Investment Income					4,541,107
Net Realized and Unrealized Gain (Loss):
Net realized gain					51,254,430
Net change in unrealized appreciation					(15,392,010	)
Net Gain					35,862,420
Net Increase				$	40,403,527

See Notes to Financial Statements

17

Morgan Stanley Value Fund

Financial Statements continued

Statement of Changes in Net Assets

				FOR THE YEAR ENDED SEPTEMBER 30, 2005				FOR THE YEAR ENDED SEPTEMBER 30, 2004
Increase (Decrease) in Net Assets:
Operations:
Net investment income				$	4,541,107			$	2,031,686
Net realized gain					51,254,430				56,923,951
Net change in unrealized appreciation					(15,392,010	)			21,457,254
Net Increase					40,403,527				80,412,891
Dividends to Shareholders from Net Investment Income:
Class A shares					(191,856	)			(106,507	)
Class B shares					(1,523,708	)			—
Class C shares					(143,595	)			(5,176	)
Class D shares					(1,040,865	)			(513,324	)
Total Dividends					(2,900,024	)			(625,007	)
Net decrease from transactions in shares of beneficial interest					(60,153,539	)			(18,603,388	)
Net Increase (Decrease)					(22,650,036	)			61,184,496
Net Assets:
Beginning of period					445,913,377				384,728,881
End of Period (Including accumulated undistributed net investment income of $3,552,837 and $1,911,754, respectively)				$	423,263,341			$	445,913,377

See Notes to Financial Statements

18

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2005

1.   Organization and Accounting Policies

Morgan Stanley Value Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end management investment company. The Fund's investment objective is total return. The Fund was organized as a Massachusetts business trust on June 9, 1998 and commenced operations on November 25, 1998.

The Fund offers Class A shares, Class B shares, Class C shares and Class D shares. The four classes are substantially the same except that most Class A shares are subject to a sales charge imposed at the time of purchase and some Class A shares, and most Class B shares and Class C shares are subject to a contingent deferred sales charge imposed on shares redeemed within eighteen months, six years and one year, respectively. Class D shares are not subject to a sales charge. Additionally, Class A shares, Class B shares and Class C shares incur distribution expenses.

Effective August 29, 2005, the Board of Trustees of the Fund approved the implementation of a 2% redemption fee on Class A shares, Class B shares, Class C shares, and Class D shares, which is paid directly to the Fund, for shares redeemed within seven days of purchase. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading.

The following is a summary of significant accounting policies:

A.   Valuation of Investments — (1) an equity portfolio security listed or traded on the New York Stock Exchange ("NYSE") or American Stock Exchange or other exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (2) an equity portfolio security listed or traded on the Nasdaq is valued at the Nasdaq Official Closing Price; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (3) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and asked price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (4) for equity securities traded on foreign exchanges, the last reported sale price or the latest bid price may be used if there were no sales on a particular day; (5) when market quotations are not readily available or Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") determines that the latest sale price, the bid price or the mean between the last reported bid and asked price do not reflect a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the

19

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2005 continued

estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Fund's Trustees or by the Investment Adviser using a pricing service and/or procedures approved by the Trustees of the Fund; (6) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees; and (7) 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. Dividend income and other distributions are recorded on the ex-dividend date. Discounts are accreted and premiums are amortized over the life of the respective securities. Interest income is accrued daily.

C.   Repurchase Agreements — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated entities managed by the Investment Adviser, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements and are collateralized by cash, U.S. Treasury or federal agency obligations. The Fund may also invest directly with institutions in repurchase agreements. The Fund's custodian receives the collateral, which is marked-to-market daily to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest.

D.   Multiple Class Allocations — Investment income, expenses (other than distribution fees), and realized and unrealized gains and losses are allocated to each class of shares based upon the relative net asset value on the date such items are recognized. Distribution fees are charged directly to the respective class.

E.   Federal Income Tax Policy — It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required.

F.   Dividends and Distributions to Shareholders — Dividends and distributions to shareholders are recorded on the ex-dividend date.

G.   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

Effective November 1, 2004, pursuant to an Investment Advisory Agreement, the Fund pays the Investment Adviser an advisory fee, accrued daily and payable monthly, by applying the following annual rates to the net

20

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2005 continued

assets of the Fund determined as of the close of each business day: 0.42% to the portion of the daily net assets not exceeding $1 billion; 0.37% to the portion of the daily net assets exceeding $1 billion but not exceeding $2 billion; 0.32% to the portion of the daily net assets exceeding $2 billion but not exceeding $3 billion; and 0.27% to the portion of the daily net assets exceeding $3 billion.

Effective November 1, 2004 pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. (the "Administrator"), an affiliate of the Investment Adviser, the Fund pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.08% to the Fund's daily net assets.

Prior to November 1, 2004, the Fund had retained the Investment Adviser to provide administrative services and to manage the investment of the Fund's assets pursuant to an investment management agreement pursuant to which the Fund paid the Investment Adviser a monthly management fee accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined as of the close of each business day: 0.50% to the portion of the daily net assets not exceeding $1 billion; 0.45% to the portion of the daily net assets exceeding $1 billion but not exceeding $2 billion; 0.40% to the portion of the daily net assets exceeding $2 billion but not exceeding $3 billion; and 0.35% to the portion of the daily net assets exceeding $3 billion.

3.   Plan of Distribution

Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Adviser and Administrator. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A – up to 0.25% of the average daily net assets of Class A; (ii) Class B – up to 1.0% of the average daily net assets of Class B; and (iii) Class C – up to 1.0% of the average daily net assets of Class C.

In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $7,138,110 at September 30, 2005.

In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross

21

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2005 continued

sales credit to Morgan Stanley Financial Advisors or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the year ended September 30, 2005, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.25% and 0.99%, respectively.

The Distributor has informed the Fund that for the year ended September 30, 2005, it received contingent deferred sales charges from certain redemptions of the Fund's Class B shares and Class C shares of $597,218 and $3,805, respectively and received $37,761 in front-end sales charges from sales of the Fund's Class A shares. The respective shareholders pay such charges which are not an expense of the Fund.

4.   Security Transactions and Transactions with Affiliates

The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the year ended September 30, 2005, aggregated $135,366,191 and $166,384,290, respectively. Included in the aforementioned transactions are purchases and sales with other Morgan Stanley funds of $410,856 and $67,725, respectively, including a net realized gain of $3,784.

For the year ended September 30, 2005, the Fund incurred brokerage commissions of $3,574 with Morgan Stanley & Co., an affiliate of the Investment Adviser, Administrator and Distributor, for portfolio transactions executed on behalf of the Fund.

At September 30, 2005, Morgan Stanley Multi-Asset Class Fund - Domestic Portfolio, an affiliate of the Investment Adviser, Administrator and Distributor, held 313,923 Class D shares of beneficial interest of the Fund.

Morgan Stanley Trust, an affiliate of the Investment Adviser, Administrator and Distributor, is the Fund's transfer agent.

The Fund 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 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 Fund.

5.   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.

22

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2005 continued

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.

The tax character of distributions paid was as follows:

				FOR THE YEAR ENDED SEPTEMBER 30, 2005				FOR THE YEAR ENDED SEPTEMBER 30, 2004
Ordinary income				$	2,900,024			$	625,007

As of September 30, 2005, the tax-basis components of accumulated earnings were as follows:

Undistributed ordinary income				$	3,553,322
Undistributed long-term gains					—
Net accumulated earnings					3,553,322
Capital loss carryforward*					(22,931,103	)
Temporary differences					(494	)
Net unrealized appreciation					33,894,354
Total accumulated earnings				$	14,516,079

*During the year ended September 30, 2005, the Fund utilized $51,201,026 of its net capital loss carryforward. As of September 30, 2005, the Fund had a net capital loss carryforward of $22,931,103 which will expire on September 30, 2011 to offset future capital gains to the extent provided by regulations.

As of September 30, 2005, the Fund had temporary book/tax differences primarily attributable to capital loss deferrals on wash sales.

23

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2005 continued

6.   Shares of Beneficial Interest

Transactions in shares of beneficial interest were as follows:

				FOR THE YEAR ENDED SEPTEMBER 30, 2005								FOR THE YEAR ENDED SEPTEMBER 30, 2004
				SHARES				AMOUNT				SHARES				AMOUNT
CLASS A SHARES
Sold					445,064			$	5,819,585				463,137			$	5,372,372
Conversion from Class B					4,710,501				60,532,052				—				—
Reinvestments of dividends					12,722				166,404				8,236				89,692
Redeemed					(983,592	)			(12,931,455	)			(396,966	)			(4,578,115	)
Net increase – Class A					4,184,695				53,586,586				74,407				883,949
CLASS B SHARES
Sold					3,405,984				42,568,060				5,584,521				62,644,087
Conversion to Class A					(4,870,681	)			(60,532,052	)			—				—
Reinvestments of dividends					107,344				1,363,267				—				—
Redeemed					(7,463,094	)			(94,042,446	)			(8,535,235	)			(95,120,593	)
Net decrease – Class B					(8,820,447	)			(110,643,171	)			(2,950,714	)			(32,476,506	)
CLASS C SHARES
Sold					346,177				4,341,511				509,388				5,728,376
Reinvestments of dividends					10,474				133,024				469				4,955
Redeemed					(666,269	)			(8,434,784	)			(547,626	)			(6,131,795	)
Net decrease – Class C					(309,618	)			(3,960,249	)			(37,769	)			(398,464	)
CLASS D SHARES
Sold					1,424,160				18,645,521				2,348,837				27,254,020
Reinvestments of dividends					55,309				731,733				32,991				363,234
Redeemed					(1,398,215	)			(18,513,959	)			(1,241,104	)			(14,229,621	)
Net increase – Class D					81,254				863,295				1,140,724				13,387,633
Net decrease in Fund					(4,864,116	)		$	(60,153,539	)			(1,773,352	)		$	(18,603,388	)

7.   Legal Matters

The Investment Adviser, certain affiliates of the Investment Adviser, certain officers of such affiliates and certain investment companies advised by the Investment Adviser or its affiliates, including the Fund, are named as defendants in a consolidated class action. This consolidated action also names as defendants certain individual Trustees and Directors of the Morgan Stanley funds. The consolidated amended complaint, filed in the United States District Court Southern District of New York on April 16, 2004, generally alleges that defendants, including the Fund, violated their statutory disclosure obligations and fiduciary duties by failing properly to disclose (i) that the Investment Adviser and certain affiliates of the Investment Adviser allegedly offered economic incentives to brokers and others to recommend the funds advised by the Investment

24

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2005 continued

Adviser or its affiliates to investors rather than funds managed by other companies, and (ii) that the funds advised by the Investment Adviser or its affiliates, including the Fund, allegedly paid excessive commissions to brokers in return for their efforts to recommend these funds to investors. The complaint seeks, among other things, unspecified compensatory damages, rescissionary damages, fees and costs. The defendants have moved to dismiss the action and intend to otherwise vigorously defend it. On March 9, 2005, Plaintiffs sought leave to supplement their complaint to assert claims on behalf of other investors. While the Fund and Adviser believe that each has meritorious defenses, the ultimate outcome of this matter is not presently determinable at this early stage of the litigation, and no provision has been made in the Fund's financial statements for the effect, if any, of this matter.

25

Morgan Stanley Value Fund

Financial Highlights

Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:

				FOR THE YEAR ENDED SEPTEMBER 30,
				2005				2004				2003				2002				2001
Class A Shares
Selected Per Share Data:
Net asset value, beginning of period				$	12.23			$	10.10			$	7.86			$	10.74			$	10.33
Income (loss) from investment operations:
Net investment income‡					0.19				0.12				0.07				0.04				0.06
Net realized and unrealized gain (loss)					1.00				2.10				2.17				(2.92	)			0.35
Total income (loss) from investment operations					1.19				2.22				2.24				(2.88	)			0.41
Less dividends from net investment income					(0.15	)			(0.09	)			—				—				—
Net asset value, end of period				$	13.27			$	12.23			$	10.10			$	7.86			$	10.74
Total Return†					9.71	%			22.06	%			28.50	%			(26.82	)%			3.97	%
Ratios to Average Net Assets(1):
Expenses					0.97	%			1.28	%			1.53	%			1.42	%			1.45	%
Net investment income					1.50	%			1.06	%			0.78	%			0.36	%			0.50	%
Supplemental Data:
Net assets, end of period, in thousands					$73,559				$16,621				$12,972				$11,396				$26,350
Portfolio turnover rate					31	%			83	%			61	%			56	%			45	%

‡ The per share amounts were computed using an average number of shares outstanding during the period.

† Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.

(1) Reflects overall Fund ratios for investment income and non-class specific expenses.

See Notes to Financial Statements

26

Morgan Stanley Value Fund

Financial Highlights continued

				FOR THE YEAR ENDED SEPTEMBER 30,
				2005				2004				2003				2002				2001
Class B Shares
Selected Per Share Data:
Net asset value, beginning of period				$	11.80			$	9.74			$	7.64			$	10.52			$	10.20
Income (loss) from investment operations:
Net investment income (loss)‡					0.09				0.03				0.00				(0.04	)			(0.03	)
Net realized and unrealized gain (loss)					0.95				2.03				2.10				(2.84	)			0.35
Total income (loss) from investment operations					1.04				2.06				2.10				(2.88	)			0.32
Less dividends from net investment income					(0.05	)			—				—				—				—
Net asset value, end of period				$	12.79			$	11.80			$	9.74			$	7.64			$	10.52
Total Return†					8.85	%			21.15	%			27.49	%			(27.38	)%			3.14	%
Ratios to Average Net Assets(1):
Expenses					1.72	%			2.03	%			2.28	%			2.18	%			2.21	%
Net investment income (loss)					0.75	%			0.31	%			0.03	%			(0.40	)%			(0.26	)%
Supplemental Data:
Net assets, end of period, in thousands					$249,346				$334,125				$304,486				$321,210				$470,659
Portfolio turnover rate					31	%			83	%			61	%			56	%			45	%

‡ The per share amounts were computed using an average number of shares outstanding during the period.

† Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.

(1) Reflects overall Fund ratios for investment income and non-class specific expenses.

See Notes to Financial Statements

27

Morgan Stanley Value Fund

Financial Highlights continued

				FOR THE YEAR ENDED SEPTEMBER 30,
				2005				2004				2003				2002				2001
Class C Shares
Selected Per Share Data:
Net asset value, beginning of period				$	11.81			$	9.75			$	7.64			$	10.52			$	10.20
Income (loss) from investment operations:
Net investment income (loss)‡					0.10				0.04				0.01				(0.04	)			(0.03	)
Net realized and unrealized gain (loss)					0.95				2.02				2.10				(2.84	)			0.35
Total income (loss) from investment operations					1.05				2.06				2.11				(2.88	)			0.32
Less dividends from net investment income					(0.06	)			—				—				—				—
Net asset value, end of period				$	12.80			$	11.81*			$	9.75			$	7.64			$	10.52
Total Return†					8.93	%			21.15	%			27.62	%			(27.38	)%			3.14	%
Ratios to Average Net Assets(1):
Expenses					1.71	%			2.00	%			2.21	%			2.18	%			2.21	%
Net investment income (loss)					0.76	%			0.34	%			0.10	%			(0.40	)%			(0.26	)%
Supplemental Data:
Net assets, end of period, in thousands					$24,526				$26,297				$22,068				$21,688				$28,097
Portfolio turnover rate					31	%			83	%			61	%			56	%			45	%

‡ The per share amounts were computed using an average number of shares outstanding during the period.

† Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.

* Includes the effect of dividends from net investment income of $0.002 per share.

(1) Reflects overall Fund ratios for investment income and non-class specific expenses.

See Notes to Financial Statements

28

Morgan Stanley Value Fund

Financial Highlights continued

				FOR THE YEAR ENDED SEPTEMBER 30,
				2005				2004				2003				2002				2001
Class D Shares
Selected Per Share Data:
Net asset value, beginning of period				$	12.39			$	10.23			$	7.94			$	10.83			$	10.39
Income (loss) from investment operations:
Net investment income‡					0.23				0.16				0.09				0.06				0.09
Net realized and unrealized gain (loss)					0.99				2.12				2.20				(2.95	)			0.35
Total income (loss) from investment operations					1.22				2.28				2.29				(2.89	)			0.44
Less dividends from net investment income					(0.17	)			(0.12	)			—				—				—
Net asset value, end of period				$	13.44			$	12.39			$	10.23			$	7.94			$	10.83
Total Return†					9.91	%			22.42	%			28.84	%			(26.69	)%			4.23	%
Ratios to Average Net Assets(1):
Expenses					0.72	%			1.03	%			1.28	%			1.18	%			1.21	%
Net investment income					1.75	%			1.31	%			1.03	%			0.60	%			0.74	%
Supplemental Data:
Net assets, end of period, in thousands					$75,832				$68,870				$45,204				$25,424				$13,944
Portfolio turnover rate					31	%			83	%			61	%			56	%			45	%

‡ The per share amounts were computed using an average number of shares outstanding during the period.

† Calculated based on the net asset value as of the last business day of the period.

(1) Reflects overall Fund ratios for investment income and non-class specific expenses.

See Notes to Financial Statements

29

Morgan Stanley Value Fund

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of
Morgan Stanley Value Fund:

We have audited the accompanying statement of assets and liabilities of Morgan Stanley Value Fund (the "Fund"), including the portfolio of investments, as of September 30, 2005, and the related statements of operations for the year then ended and changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2005, by correspondence with the custodian and broker. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Morgan Stanley Value Fund as of September 30, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
New York, New York
November 21, 2005

30

Morgan Stanley Value Fund

Trustee and Officer Information

Independent Trustees:

Name, Age and Address of Independent Trustee

Position(s) Held with Registrant

Term of Office and Length of Time Served*

Principal Occupation(s) During Past 5 Years**

Number of Portfolios in Fund Complex Overseen by Trustee***

Other Directorships Held by Trustee

Michael Bozic (64) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036

Trustee

Since April 1994

Private Investor; Director or Trustee of the Retail Funds (since April 1994) and the Institutional Funds (since July 2003); formerly Vice Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); formerly variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck & Co.

197

Director of various business organizations.

Edwin J. Garn (72) 1031 N. Chartwell Court Salt Lake City, UT 84103

Trustee

Since January 1993

Consultant; Director or Trustee of the Retail Funds (since January 1993) and the Institutional Funds (since July 2003); member of the Utah Regional Advisory Board of Pacific Corp. (utility company); formerly Managing Director of Summit Ventures LLC (2000-2004) (lobbying and consulting firm); United States Senator (R-Utah) (1974-1992) and Chairman, Senate Banking Committee (1980-1986), Mayor of Salt Lake City, Utah (1971-1974), Astronaut, Space Shuttle Discovery (April 12-19, 1985), and Vice Chairman, Huntsman Corporation (chemical company).

197

Director of Franklin Covey (time management systems), BMW Bank of North America, Inc. (industrial loan corporation), Escrow Bank USA (industrial loan corporation); United Space Alliance (joint venture between Lockheed Martin and the Boeing Company) and Nuskin Asia Pacific (multilevel marketing); member of the board of various civic and charitable organizations.

Wayne E. Hedien (71) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036

Trustee

Since September 1997

Retired; Director or Trustee of the Retail Funds; (Since September 1997) and the Institutional Funds (since July 2003); formerly associated with the Allstate Companies (1966-1994), most recently as Chairman of The Allstate Corporation (March 1993-December 1994) and Chairman and Chief Executive Officer of its wholly-owned subsidiary, Allstate Insurance Company (July 1989-December 1994).

197

Director of The PMI Group Inc. (private mortgage insurance); Trustee and Vice Chairman of The Field Museum of Natural History; director of various other business and charitable organizations.

31

Morgan Stanley Value Fund

Trustee and Officer Information continued

Name, Age and Address of Independent Trustee

Position(s) Held with Registrant

Term of Office and Length of Time Served*

Principal Occupation(s) During Past 5 Years**

Number of Portfolios in Fund Complex Overseen by Trustee***

Other Directorships Held by Trustee

Dr. Manuel H. Johnson (56) c/o Johnson Smick Group, Inc. 888 16th Street, N.W. Suite 740 Washington, D.C. 20006

Trustee

Since July 1991

Senior Partner, Johnson Smick International, Inc., a consulting firm; Chairman of the Audit Committee and Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2003); Co-Chairman and a founder of the Group of Seven Council (G7C), an international economic commission; formerly Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

197

Director of NVR, Inc. (home construction); Director of KFX Energy; Director of RBS Greenwich Capital Holdings (financial holding company).

Joseph J. Kearns (63) c/o Kearns & Associates LLC PMB754 23852 Pacific Coast Highway Malibu, CA 90265

Trustee

Since July 2003

President, Kearns & Associates LLC (investment consulting); Deputy Chairman of the Audit Committee and Director or Trustee of the Retail Funds (since July 2003) and the Institutional Funds (since August 1994); previously Chairman of the Audit Committee of the Institutional Funds (October 2001-July 2003); formerly CFO of the J. Paul Getty Trust.

198

Director of Electro Rent Corporation (equipment leasing), The Ford Family Foundation, and the UCLA Foundation.

Michael E. Nugent (69) c/o Triumph Capital, L.P. 445 Park Avenue New York, NY 10022

Trustee

Since July 1991

General Partner of Triumph Capital, L.P., a private investment partnership; Chairman of the Insurance Committee and Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2001); formerly Vice President, Bankers Trust Company and BT Capital Corporation (1984-1988).

197

None

Fergus Reid (73) c/o Lumelite Plastics Corporation 85 Charles Colman Blvd. Pawling, NY 12564

Trustee

Since July 2003

Chairman of Lumelite Plastics Corporation; Chairman of the Governance Committee and Director or Trustee of the Retail Funds (since July 2003) and the Institutional Funds (since June 1992).

198

Trustee and Director of certain investment companies in the JPMorgan Funds complex managed by J.P. Morgan Investment Management Inc.

32

Morgan Stanley Value Fund

Trustee and Officer Information continued

Interested Trustees:

Name, Age and Address of Interested Trustee

Position(s) Held with Registrant

Term of Office and Length of Time Served*

Principal Occupation(s) During Past 5 Years**

Number of Portfolios in Fund Complex Overseen by Trustee***

Other Directorships Held by Trustee

Charles A. Fiumefreddo (72) c/o Morgan Stanley Trust Harborside Financial Center, Plaza Two, Jersey City, NJ 07311

Chairman of the Board and Trustee

Since July 1991

Chairman and Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2003); formerly Chief Executive Officer of the Retail Funds (until September 2002).

197

None

James F. Higgins (57) c/o Morgan Stanley Trust Harborside Financial Center, Plaza Two, Jersey City, NJ 07311

Trustee

Since June 2000

Director or Trustee of the Retail Funds (since June 2000) and the Institutional Funds (since July 2003); Senior Advisor of Morgan Stanley (since August 2000); Director of the Distributor and Dean Witter Realty Inc.; previously President and Chief Operating Officer of the Private Client Group of Morgan Stanley (May 1999-August 2000), and President and Chief Operating Officer of Individual Securities of Morgan Stanley (February 1997-May 1999).

197

Director of AXA Financial, Inc. and The Equitable Life Assurance Society of the United States (financial services).

    * This is the earliest date the Trustee began serving the funds advised by Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") (the "Retail Funds").

  ** The dates referenced below indicating commencement of services as Director/Trustee for the Retail Funds and the funds advised by Morgan Stanley Investment Management Inc. and Morgan Stanley AIP GP LP (the "Institutional Funds") reflect the earliest date the Director/Trustee began serving the Retail or Institutional Funds, as applicable.

*** The Fund Complex includes all open-end and closed-end funds (including all of their portfolios) advised by the Investment Adviser and any funds that have an investment adviser that is an affiliated person of the Investment Adviser (including, but not limited to, Morgan Stanley Investment Management Inc.).

33

Morgan Stanley Value Fund

Trustee and Officer Information continued

Officers:

Name, Age and Address of Executive Officer

Position(s) Held with Registrant

Term of Office and Length of Time Served*

Principal Occupation(s) During Past 5 Years**

Ronald E. Robison (66) 1221 Avenue of the Americas New York, NY 10020

President and Principal Executive Officer

Since May 2003

President (since September 2005) and Principal Executive Officer of funds in the Fund Complex (since May 2003); Managing Director of Morgan Stanley & Co. Incorporated and Morgan Stanley; Managing Director and Director of Morgan Stanley Investment Management Inc., Morgan Stanley Distribution Inc. and Morgan Stanley Distributors Inc.; Managing Director, Chief Administrative Officer and Director of Morgan Stanley Investment Advisors Inc. and Morgan Stanley Services Company Inc.; Chief Executive Officer and Director of Morgan Stanley Trust; Director of Morgan Stanley SICAV (since May 2004); President (since September 2005) and Principal Executive Officer (since May 2003) of the Van Kampen Funds; previously, Executive Vice President (July 2003-September 2005) of funds in the Fund Complex and the Van Kampen Funds. He was also previously President and Director of the Institutional Funds (March 2001-July 2003), Chief Global Operations Officer of Morgan Stanley Investment Management Inc. and Chief Executive Officer and Chairman of Van Kampen Investor Services.

Joseph J. McAlinden (62) 1221 Avenue of the Americas New York, NY 10020

Vice President

Since July 1995

Managing Director and Chief Investment Officer of the Investment Adviser and Morgan Stanley Investment Management Inc.; Chief Investment Officer of the Van Kampen Funds; Vice President of the Institutional Funds (since July 2003) and the Retail Funds (since July 1995).

Barry Fink (50) 1221 Avenue of the Americas New York, NY 10020

Vice President

Since February 1997

General Counsel (since May 2000) and Managing Director (since December 2000) of Morgan Stanley Investment Management; Managing Director (since December 2000), Secretary (since February 1997) and Director of the Investment Adviser and the Administrator; Vice President of the Retail Funds; Assistant Secretary of Morgan Stanley DW; Vice President of the Institutional Funds (since July 2003); Managing Director, Secretary and Director of the Distributor; previously Secretary (February 1997-July 2003) and General Counsel (February 1997-April 2004) of the Retail Funds; Vice President and Assistant General Counsel of the Investment Adviser and the Administrator (February 1997-December 2001).

Amy R. Doberman (43) 1221 Avenue of Americas New York, NY 10020

Vice President

Since July 2004

Managing Director and General Counsel, U.S. Investment Management; Managing Director of Morgan Stanley Investment Management Inc. and the Investment Adviser, Vice President of the Institutional and Retail Funds (since July 2004); Vice President of the Van Kampen Funds (since August 2004); previously, Managing Director and General Counsel — Americas, UBS Global Asset Management (July 2000 – July 2004) and General Counsel, Aeltus Investment Management Inc. (January 1997 – July 2000).

Carsten Otto (41) 1221 Avenue of the Americas New York, NY 10020

Chief Compliance Officer

Since October 2004

Executive Director and U.S. Director of Compliance for Morgan Stanley Investment Management (since October 2004); Executive Director of the Investment Adviser and Morgan Stanley Investment Management Inc.; formerly Assistant Secretary and Assistant General Counsel of the Morgan Stanley Retail Funds.

34

Morgan Stanley Value Fund

Trustee and Officer Information continued

Name, Age and Address of Executive Officer

Position(s) Held with Registrant

Term of Office and Length of Time Served*

Principal Occupation(s) During Past 5 Years**

Stefanie V. Chang (38) 1221 Avenue of the Americas New York, NY 10020

Vice President

Since July 2003

Executive Director of Morgan Stanley & Co. Incorporated, Morgan Stanley Investment Management Inc. and the Investment Adviser; Vice President of the Institutional Funds (since December 1997) and the Retail Funds (since July 2003); formerly practiced law with the New York law firm of Rogers & Wells (now Clifford Chance US LLP).

Francis J. Smith (40) c/o Morgan Stanley Trust Harborside Financial Center, Plaza Two, Jersey City, NJ 07311

Treasurer and Chief Financial Officer

Treasurer since July 2003 and Chief Financial Officer since September 2002

Executive Director of the Investment Adviser and the Administrator (since December 2001); previously, Vice President of the Retail Funds (September 2002-July 2003); Vice President of the Investment Adviser and the Administrator (August 2000-November 2001).

Thomas F. Caloia (59) c/o Morgan Stanley Trust Harborside Financial Center, Plaza Two, Jersey City, NJ 07311

Vice President

Since July 2003

Executive Director (since December 2002) and Assistant Treasurer of the Investment Adviser, the Distributor and the Administrator; previously Treasurer of the Retail Funds (April 1989-July 2003); formerly First Vice President of the Investment Adviser, the Distributor and the Administrator.

Mary E. Mullin (38) 1221 Avenue of the Americas New York, NY 10020

Secretary

Since July 2003

Executive Director of Morgan Stanley & Co. Incorporated, Morgan Stanley Investment Management Inc. and the Investment Adviser; Secretary of the Institutional Funds (since June 1999) and the Retail Funds (since July 2003); formerly practiced law with the New York law firms of McDermott, Will & Emery and Skadden, Arps, Slate, Meagher & Flom LLP.

    * This is the earliest date the Officer began serving the Retail Funds. Each Officer serves an indefinite term, until his or her successor is elected.

  ** The dates referenced below indicating commencement of service as an Officer for the Retail and Institutional Funds reflect the earliest date the Officer began serving the Retail or Institutional Funds, as applicable.

2005 Federal Tax Notice (unaudited)

For the fiscal year ended September 30, 2005, 100% of the ordinary dividends paid by the Fund qualified for the dividends received deduction available to corporations. Additionally, for the fiscal year ended September 30, 2005, 100% of the Fund's ordinary dividends paid during the fiscal year qualified for the lower income tax rate available to individuals under the Jobs and Growth Tax Relief Reconciliation Act of 2003.

35

Trustees Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael E. Nugent Fergus Reid Officers Charles A. Fiumefreddo Chairman of the Board Ronald E. Robison President and Principal Executive Officer Joseph J. McAlinden Vice President Barry Fink Vice President Amy R. Doberman Vice President Carsten Otto Chief Compliance Officer Stefanie V. Chang Vice President Francis J. Smith Treasurer and Chief Financial Officer Thomas F. Caloia Vice President Mary E. Mullin Secretary Transfer Agent Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 Independent Registered Public Accounting Firm Deloitte & Touche LLP Two World Financial Center New York, New York 10281 Investment Adviser Morgan Stanley Investment Advisors Inc. 1221 Avenue of the Americas New York, New York 10020 This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus. Read the Prospectus carefully before investing. Investments and services offered through Morgan Stanley DW Inc., member SIPC. Morgan Stanley Distributors Inc., member NASD. © 2005 Morgan Stanley 36045RPT-RA05-00933P-Y09/05		MORGAN STANLEY FUNDS
		Morgan Stanley Value Fund Annual Report September 30, 2005

Item 2.  Code of Ethics.

(a) The Fund has adopted a code of ethics (the "Code of Ethics") that applies to
its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the Fund or a third
party.

(b) No information need be disclosed pursuant to this paragraph.

(c) The Fund has amended its Code of Ethics during the period covered by the
shareholder report presented in Item 1 hereto to delete from the end of the
following paragraph on page 2 of the Code the phrase "to the detriment of the
Fund.":

"Each Covered Officer must not use his personal influence or personal
relationship improperly to influence investment decisions or financial reporting
by the Fund whereby the Covered Officer would benefit personally (directly or
indirectly)."

Additionally, Exhibit B was amended to remove Mitchell M. Merin as a covered
officer.

(d) Not applicable.

(e) Not applicable.

(f)

         (1) The Fund's Code of Ethics is attached hereto as Exhibit A.

         (2) Not applicable.

         (3) Not applicable.


Item 3.  Audit Committee Financial Expert.

The Fund's Board of Trustees has determined that it has two "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees: Dr. Manuel H. Johnson and Joseph J. Kearns. Under
applicable securities laws, a person who is determined to be an audit committee
financial expert will not be deemed an "expert" for any purpose, including
without limitation for the purposes of Section 11 of the Securities Act of 1933,
as a result of being designated or identified as an audit committee financial
expert. The designation or identification of a person as an audit committee
financial expert does not impose on such person any duties, obligations, or
liabilities that are greater than the duties, obligations, and liabilities
imposed on such person as a member of the audit committee and Board of Trustees
in the absence of such designation or identification.



                                       2




Item 4.  Principal Accountant Fees and Services.

(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:

           2005
                                          REGISTRANT       COVERED ENTITIES(1)
              AUDIT FEES.................  $  30,448              N/A

              NON-AUDIT FEES
                  AUDIT-RELATED FEES.....  $     540(2)    $          (2)
                  TAX FEES...............  $   5,746(3)    $          (4)
                  ALL OTHER FEES.........  $       -       $          -
              TOTAL NON-AUDIT FEES.......  $   6,286       $

              TOTAL......................  $  36,734       $


           2004
                                          REGISTRANT       COVERED ENTITIES(1)
              AUDIT FEES................  $   29,002              N/A

              NON-AUDIT FEES
                  AUDIT-RELATED FEES....  $      452(2)    $ 5,067,400(2)
                  TAX FEES..............  $    5,139(3)    $   545,053(4)
                  ALL OTHER FEES........  $        -       $         -(5)
              TOTAL NON-AUDIT FEES......  $    5,591       $ 5,612,453

              TOTAL.....................  $   34,593       $ 5,612,453

              N/A- Not applicable, as not required by Item 4.

              (1)   Covered Entities include the Adviser (excluding
                    sub-advisors) and any entity controlling, controlled by or
                    under common control with the Adviser that provides ongoing
                    services to the Registrant.
              (2)   Audit-Related Fees represent assurance and related services
                    provided that are reasonably related to the performance of
                    the audit of the financial statements of the Covered
                    Entities' and funds advised by the Adviser or its
                    affiliates, specifically data verification and agreed-upon
                    procedures related to asset securitizations and agreed-upon
                    procedures engagements.
              (3)   Tax Fees represent tax compliance, tax planning and tax
                    advice services provided in connection with the preparation
                    and review of the Registrant's tax returns.
              (4)   Tax Fees represent tax compliance, tax planning and tax
                    advice services provided in connection with the review of
                    Covered Entities' tax returns.
              (5)   All other fees represent project management for future
                    business applications and improving business and operational
                    processes.



                                       3




(e)(1) The audit committee's pre-approval policies and procedures are as
follows:

                                                                      APPENDIX A

                                 AUDIT COMMITTEE
                          AUDIT AND NON-AUDIT SERVICES
                       PRE-APPROVAL POLICY AND PROCEDURES
                                     OF THE
                  MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS

AS ADOPTED AND AMENDED JULY 23, 2004,(1)


1.   STATEMENT OF PRINCIPLES

The Audit Committee of the Board is required to review and, in its sole
discretion, pre-approve all Covered Services to be provided by the Independent
Auditors to the Fund and Covered Entities in order to assure that services
performed by the Independent Auditors do not impair the auditor's independence
from the Fund.

The SEC has issued rules specifying the types of services that an independent
auditor may not provide to its audit client, as well as the audit committee's
administration of the engagement of the independent auditor. The SEC's rules
establish two different approaches to pre-approving services, which the SEC
considers to be equally valid. Proposed services either: may be pre-approved
without consideration of specific case-by-case services by the Audit Committee
("general pre-approval"); or require the specific pre-approval of the Audit
Committee or its delegate ("specific pre-approval"). The Audit Committee
believes that the combination of these two approaches in this Policy will result
in an effective and efficient procedure to pre-approve services performed by the
Independent Auditors. As set forth in this Policy, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.

The appendices to this Policy describe the Audit, Audit-related, Tax and All
Other services that have the general pre-approval of the Audit Committee. The
term of any general pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee considers and provides a different period and states
otherwise. The Audit Committee will annually review and pre-approve the services
that may be provided by the Independent Auditors without obtaining specific
pre-approval from the Audit Committee. The Audit Committee will add to or
subtract from the list of general pre-approved services from time to time, based
on subsequent determinations.

----------
(1)       This Audit Committee Audit and Non-Audit Services Pre-Approval Policy
          and Procedures ("the Policy"), adopted as of the date above,
          supersedes supersedes and replaces all prior versions that may have
          been adopted from time to time.

                                       4



The purpose of this Policy is to set forth the policy and procedures by which
the Audit Committee intends to fulfill its responsibilities. It does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the Independent Auditors to management.

The Fund's Independent Auditors have reviewed this Policy and believes that
implementation of the Policy will not adversely affect the Independent Auditors'
independence.

2.   DELEGATION

As provided in the Act and the SEC's rules, the Audit Committee may delegate
either type of pre-approval authority to one or more of its members. The member
to whom such authority is delegated must report, for informational purposes
only, any pre-approval decisions to the Audit Committee at its next scheduled
meeting.

3.   AUDIT SERVICES

The annual Audit services engagement terms and fees are subject to the specific
pre-approval of the Audit Committee. Audit services include the annual financial
statement audit and other procedures required to be performed by the Independent
Auditors to be able to form an opinion on the Fund's financial statements. These
other procedures include information systems and procedural reviews and testing
performed in order to understand and place reliance on the systems of internal
control, and consultations relating to the audit. The Audit Committee will
approve, if necessary, any changes in terms, conditions and fees resulting from
changes in audit scope, Fund structure or other items.

In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other Audit
services, which are those services that only the Independent Auditors reasonably
can provide. Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.

The Audit Committee has pre-approved the Audit services in Appendix B.1. All
other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).

4.   AUDIT-RELATED SERVICES

Audit-related services are assurance and related services that are reasonably
related to the performance of the audit or review of the Fund's financial
statements and, to the extent they are Covered Services, the Covered Entities or
that are traditionally performed by the Independent Auditors. Because the Audit
Committee believes that the provision of Audit-related services does not impair
the independence of the auditor and is consistent with the SEC's rules on
auditor independence, the Audit Committee may grant general pre-approval to
Audit-related services. Audit-related services include, among others, accounting
consultations related to accounting, financial reporting or disclosure matters


                                       5


not classified as "Audit services"; assistance with understanding and
implementing new accounting and financial reporting guidance from rulemaking
authorities; agreed-upon or expanded audit procedures related to accounting
and/or billing records required to respond to or comply with financial,
accounting or regulatory reporting matters; and assistance with internal control
reporting requirements under Forms N-SAR and/or N-CSR.

The Audit Committee has pre-approved the Audit-related services in Appendix B.2.
All other Audit-related services not listed in Appendix B.2 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).

5.   TAX SERVICES

The Audit Committee believes that the Independent Auditors can provide Tax
services to the Fund and, to the extent they are Covered Services, the Covered
Entities, such as tax compliance, tax planning and tax advice without impairing
the auditor's independence, and the SEC has stated that the Independent Auditors
may provide such services.

Pursuant to the preceding paragraph, the Audit Committee has pre-approved the
Tax Services in Appendix B.3. All Tax services in Appendix B.3 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).

6.   ALL OTHER SERVICES

The Audit Committee believes, based on the SEC's rules prohibiting the
Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.

The Audit Committee has pre-approved the All Other services in Appendix B.4.
Permissible All Other services not listed in Appendix B.4 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).

7.   PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS

Pre-approval fee levels or budgeted amounts for all services to be provided by
the Independent Auditors will be established annually by the Audit Committee.
Any proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services.

8.   PROCEDURES

All requests or applications for services to be provided by the Independent
Auditors that do not require specific approval by the Audit Committee will be
submitted to the Fund's Chief Financial Officer and must include a detailed
description of the services to be


                                       6


rendered. The Fund's Chief Financial Officer will determine whether such
services are included within the list of services that have received the general
pre-approval of the Audit Committee. The Audit Committee will be informed on a
timely basis of any such services rendered by the Independent Auditors. Requests
or applications to provide services that require specific approval by the Audit
Committee will be submitted to the Audit Committee by both the Independent
Auditors and the Fund's Chief Financial Officer, and must include a joint
statement as to whether, in their view, the request or application is consistent
with the SEC's rules on auditor independence.

The Audit Committee has designated the Fund's Chief Financial Officer to monitor
the performance of all services provided by the Independent Auditors and to
determine whether such services are in compliance with this Policy. The Fund's
Chief Financial Officer will report to the Audit Committee on a periodic basis
on the results of its monitoring. Both the Fund's Chief Financial Officer and
management will immediately report to the chairman of the Audit Committee any
breach of this Policy that comes to the attention of the Fund's Chief Financial
Officer or any member of management.

9.   ADDITIONAL REQUIREMENTS

The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the Independent Auditors
and to assure the auditor's independence from the Fund, such as reviewing a
formal written statement from the Independent Auditors delineating all
relationships between the Independent Auditors and the Fund, consistent with
Independence Standards Board No. 1, and discussing with the Independent Auditors
its methods and procedures for ensuring independence.

10.  COVERED ENTITIES

Covered Entities include the Fund's investment adviser(s) and any entity
controlling, controlled by or under common control with the Fund's investment
adviser(s) that provides ongoing services to the Fund(s). Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Fund's
audit committee must pre-approve non-audit services provided not only to the
Fund but also to the Covered Entities if the engagements relate directly to the
operations and financial reporting of the Fund. This list of Covered Entities
would include:

         Morgan Stanley Retail Funds
         ---------------------------
         Morgan Stanley Investment Advisors Inc.
         Morgan Stanley & Co. Incorporated
         Morgan Stanley DW Inc.
         Morgan Stanley Investment Management Inc.
         Morgan Stanley Investment Management Limited
         Morgan Stanley Investment Management Private Limited
         Morgan Stanley Asset & Investment Trust Management Co., Limited
         Morgan Stanley Investment Management Company
         Van Kampen Asset Management
         Morgan Stanley Services Company, Inc.
         Morgan Stanley Distributors Inc.
         Morgan Stanley Trust FSB


                                       7


         Morgan Stanley Institutional Funds
         ----------------------------------
         Morgan Stanley Investment Management Inc.
         Morgan Stanley Investment Advisors Inc.
         Morgan Stanley Investment Management Limited
         Morgan Stanley Investment Management Private Limited
         Morgan Stanley Asset & Investment Trust Management Co., Limited
         Morgan Stanley Investment Management Company
         Morgan Stanley & Co. Incorporated
         Morgan Stanley Distribution, Inc.
         Morgan Stanley AIP GP LP
         Morgan Stanley Alternative Investment Partners LP


(e)(2) Beginning with non-audit service contracts entered into on or after May
6, 2003, the audit committee also is required to pre-approve services to Covered
Entities to the extent that the services are determined to have a direct impact
on the operations or financial reporting of the Registrant. 100% of such
services were pre-approved by the audit committee pursuant to the Audit
Committee's pre-approval policies and procedures (attached hereto).

(f) Not applicable.

(g) See table above.

(h) The audit committee of the Board of Trustees has considered whether the
provision of services other than audit services performed by the auditors to the
Registrant and Covered Entities is compatible with maintaining the auditors'
independence in performing audit services.


Item 5. Audit Committee of Listed Registrants.

(a) The Fund has a separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act whose members are:
Michael Bozic, Edwin J. Garn, Wayne E. Hedien, Manual H. Johnson, Joseph J.
Kearns, Michael Nugent and Fergus Reid.

(b) Not applicable.


Item 6. Schedule of Investments

Refer to Item 1.


                                       8


Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
        Management Investment Companies.

Applicable only to reports filed by closed-end funds.


Item 8. Portfolio Managers of Closed-End Management Investment Companies

Applicable only to reports filed by closed-end funds.


Item 9. Closed-End Fund Repurchases

Applicable only to reports filed by closed-end funds.


Item 10. Submission of Matters to a Vote of Security Holders

Not applicable.


Item 11. Controls and Procedures

(a) The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the 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.

(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.


Item 12. Exhibits

(a) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.

(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.


                                       9




                                   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 Value Fund

/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
November 21, 2005

         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
November 21, 2005

/s/ Francis Smith
Francis Smith
Principal Financial Officer
November 21, 2005


                                       10



                                                                    EXHIBIT 12 A


           CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL
                                    OFFICERS
            ADOPTED SEPTEMBER 28, 2004, AS AMENDED SEPTEMBER 20, 2005



I.       This Code of Ethics (the "Code") for the investment companies within
         the Morgan Stanley complex identified in Exhibit A (collectively,
         "Funds" and each, a "Fund") applies to each Fund's Principal Executive
         Officer, President, Principal Financial Officer and Treasurer (or
         persons performing similar functions) ("Covered Officers" each of whom
         are set forth in Exhibit B) for the purpose of promoting:

         o     honest and ethical conduct, including the ethical handling of
               actual or apparent conflicts of interest between personal and
               professional relationships.

         o     full, fair, accurate, timely and understandable disclosure in
               reports and documents that a company files with, or submits to,
               the Securities and Exchange Commission ("SEC") and in other
               public communications made by the Fund;

         o     compliance with applicable laws and governmental rules and
               regulations;

         o     prompt internal reporting of violations of the Code to an
               appropriate person or persons identified in the Code; and

         o     accountability for adherence to the Code.

                  Each Covered Officer should adhere to a high standard of
business ethics and should be sensitive to situations that may give rise to
actual as well as apparent conflicts of interest. Any question about the
application of the Code should be referred to the General Counsel or his/her
designee (who is set forth in Exhibit C).

II.      COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS
         OF INTEREST

         OVERVIEW. A "conflict of interest" occurs when a Covered Officer's
private interest interferes, or appears to interfere, with the interests of, or
his service to, the Fund. For example, a conflict of interest would arise if a
Covered Officer, or a member of his family, receives improper personal benefits
as a result of his position with the Fund.

         Certain conflicts of interest arise out of the relationships between
Covered Officers and the Fund and already are subject to conflict of interest
provisions in the


                                       11


Investment Company Act of 1940 ("Investment Company Act") and the Investment
Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers
may not individually engage in certain transactions (such as the purchase or
sale of securities or other property) with the Fund because of their status as
"affiliated persons" (as defined in the Investment Company Act) of the Fund. The
Fund's and its investment adviser's compliance programs and procedures are
designed to prevent, or identify and correct, violations of these provisions.
This Code does not, and is not intended to, repeat or replace these programs and
procedures, and such conflicts fall outside the parameters of this Code, unless
or until the General Counsel determines that any violation of such programs and
procedures is also a violation of this Code.

         Although typically not presenting an opportunity for improper personal
benefit, conflicts may arise from, or as a result of, the contractual
relationship between the Fund and its investment adviser of which the Covered
Officers are also officers or employees. As a result, this Code recognizes that
the Covered Officers will, in the normal course of their duties (whether
formally for the Fund or for the investment adviser, or for both), be involved
in establishing policies and implementing decisions that will have different
effects on the Fund and its investment adviser. The participation of the Covered
Officers in such activities is inherent in the contractual relationship between
the Fund and the investment adviser and is consistent with the performance by
the Covered Officers of their duties as officers of the Fund. Thus, if performed
in conformity with the provisions of the Investment Company Act and the
Investment Advisers Act, such activities will be deemed to have been handled
ethically. In addition, it is recognized by the Funds' Boards of
Directors/Trustees ("Boards") that the Covered Officers may also be officers or
employees of one or more other investment companies covered by this or other
codes.

         Other conflicts of interest are covered by the Code, even if such
conflicts of interest are not subject to provisions in the Investment Company
Act and the Investment Advisers Act. The following list provides examples of
conflicts of interest under the Code, but Covered Officers should keep in mind
that these examples are not exhaustive. The overarching principle is that the
personal interest of a Covered Officer should not be placed improperly before
the interest of the Fund.

         Each Covered Officer must not:

         o     use his personal influence or personal relationships improperly
               to influence investment decisions or financial reporting by the
               Fund whereby the Covered Officer would benefit personally
               (directly or indirectly);

         o     cause the Fund to take action, or fail to take action, for the
               individual personal benefit of the Covered Officer rather than
               the benefit of the Fund; or

         o     use material non-public knowledge of portfolio transactions made
               or contemplated for, or actions proposed to be taken by, the Fund
               to trade personally or cause others to trade personally in
               contemplation of the market effect of such transactions.


                                       12


         Each Covered Officer must, at the time of signing this Code, report to
the General Counsel all affiliations or significant business relationships
outside the Morgan Stanley complex and must update the report annually.

         Conflict of interest situations should always be approved by the
General Counsel and communicated to the relevant Fund or Fund's Board. Any
activity or relationship that would present such a conflict for a Covered
Officer would likely also present a conflict for the Covered Officer if an
immediate member of the Covered Officer's family living in the same household
engages in such an activity or has such a relationship. Examples of these
include:

         o     service or significant business relationships as a director on
               the board of any public or private company;

         o     accepting directly or indirectly, anything of value, including
               gifts and gratuities in excess of $100 per year from any person
               or entity with which the Fund has current or prospective business
               dealings, not including occasional meals or tickets for theatre
               or sporting events or other similar entertainment; provided it is
               business-related, reasonable in cost, appropriate as to time and
               place, and not so frequent as to raise any question of
               impropriety;

         o     any ownership interest in, or any consulting or employment
               relationship with, any of the Fund's service providers, other
               than its investment adviser, principal underwriter, or any
               affiliated person thereof; and

         o     a direct or indirect financial interest in commissions,
               transaction charges or spreads paid by the Fund for effecting
               portfolio transactions or for selling or redeeming shares other
               than an interest arising from the Covered Officer's employment,
               such as compensation or equity ownership.

III.     DISCLOSURE AND COMPLIANCE

         o     Each Covered Officer should familiarize himself/herself with the
               disclosure and compliance requirements generally applicable to
               the Funds;

         o     each Covered Officer must not knowingly misrepresent, or cause
               others to misrepresent, facts about the Fund to others, whether
               within or outside the Fund, including to the Fund's
               Directors/Trustees and auditors, or to governmental regulators
               and self-regulatory organizations;

         o     each Covered Officer should, to the extent appropriate within his
               area of responsibility, consult with other officers and employees
               of the Funds and their investment advisers with the goal of
               promoting full, fair, accurate, timely and understandable
               disclosure in the reports and documents the Funds file with, or
               submit to, the SEC and in other public communications made by the
               Funds; and


                                       13


         o     it is the responsibility of each Covered Officer to promote
               compliance with the standards and restrictions imposed by
               applicable laws, rules and regulations.

IV.      REPORTING AND ACCOUNTABILITY

         Each  Covered Officer must:

         o     upon adoption of the Code (thereafter as applicable, upon
               becoming a Covered Officer), affirm in writing to the Boards that
               he has received, read and understands the Code;

         o     annually thereafter affirm to the Boards that he has complied
               with the requirements of the Code;

         o     not retaliate against any other Covered Officer, other officer or
               any employee of the Funds or their affiliated persons for reports
               of potential violations that are made in good faith; and

         o     notify the General Counsel promptly if he/she knows or suspects
               of any violation of this Code. Failure to do so is itself a
               violation of this Code.

         The General Counsel is responsible for applying this Code to specific
situations in which questions are presented under it and has the authority to
interpret this Code in any particular situation. However, any waivers(2) sought
by a Covered Officer must be considered by the Board of the relevant Fund or
Funds.

         The Funds will follow these procedures in investigating and enforcing
this Code:

         o     the General Counsel will take all appropriate action to
               investigate any potential violations reported to him;

         o     if, after such investigation, the General Counsel believes that
               no violation has occurred, the General Counsel is not required to
               take any further action;

         o     any matter that the General Counsel believes is a violation will
               be reported to the relevant Fund's Audit Committee;

         o     if the directors/trustees/managing general partners who are not
               "interested persons" as defined by the Investment Company Act
               (the "Independent Directors/Trustees/Managing General Partners")
               of the relevant Fund concur that a violation has occurred, they
               will consider appropriate action, which may include review of,
               and appropriate modifications to, applicable

----------
(2)       Item 2 of Form N-CSR defines "waiver" as "the approval by the
          registrant of a material departure from a provision of the code of
          ethics."

                                       14


               policies and procedures; notification to appropriate personnel of
               the investment adviser or its board; or a recommendation to
               dismiss the Covered Officer or other appropriate disciplinary
               actions;

         o     the Independent Directors/Trustees/Managing General Partners of
               the relevant Fund will be responsible for granting waivers of
               this Code, as appropriate; and

         o     any changes to or waivers of this Code will, to the extent
               required, be disclosed as provided by SEC rules.

V.       OTHER POLICIES AND PROCEDURES

         This Code shall be the sole code of ethics adopted by the Funds for
purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and
forms applicable to registered investment companies thereunder. Insofar as other
policies or procedures of the Funds, the Funds' investment advisers, principal
underwriters, or other service providers govern or purport to govern the
behavior or activities of the Covered Officers who are subject to this Code,
they are superseded by this Code to the extent that they overlap or conflict
with the provisions of this Code unless any provision of this Code conflicts
with any applicable federal or state law, in which case the requirements of such
law will govern. The Funds' and their investment advisers' and principal
underwriters' codes of ethics under Rule 17j-1 under the Investment Company Act
and Morgan Stanley's Code of Ethics are separate requirements applying to the
Covered Officers and others, and are not part of this Code.

VI.      AMENDMENTS

         Any amendments to this Code, other than amendments to Exhibits A, B or
C, must be approved or ratified by a majority vote of the Board of each Fund,
including a majority of Independent Directors/Trustees/Managing General
Partners.

VII.     CONFIDENTIALITY

         All reports and records prepared or maintained pursuant to this Code
will be considered confidential and shall be maintained and protected
accordingly. Except as otherwise required by law or this Code, such matters
shall not be disclosed to anyone other than the Independent
Directors/Trustees/Managing General Partners of the relevant Fund or Funds and
their counsel, the relevant Fund or Funds and their counsel and the relevant
investment adviser and its counsel.


                                       15






VIII.    INTERNAL USE

         The Code is intended solely for the internal use by the Funds and does
not constitute an admission, by or on behalf of any Fund, as to any fact,
circumstance, or legal conclusion



I have read and understand the terms of the above Code. I recognize the
responsibilities and obligations incurred by me as a result of my being subject
to the Code. I hereby agree to abide by the above Code.


-------------------------

Date:_____________________



                                       16




                                    EXHIBIT A


                                    FUND LIST

                                       AT
                               SEPTEMBER 20, 2005


RETAIL FUNDS

OPEN-END RETAIL FUNDS

    TAXABLE MONEY MARKET FUNDS
    --------------------------

1.  Active Assets Government Securities Trust ("AA Government")
2.  Active Assets Institutional Government Securities Trust ("AA Institutional
    Government")
3.  Active Assets Institutional Money Trust ("AA Institutional Money")
4.  Active Assets Money Trust ("AA Money")
5.  Morgan Stanley Liquid Asset Fund Inc. ("Liquid Asset")
6.  Morgan Stanley U.S. Government Money Market Trust ("Government Money")

    TAX-EXEMPT MONEY MARKET FUNDS
    -----------------------------

7.  Active Assets California Tax-Free Trust ("AA California")
8.  Active Assets Tax-Free Trust ("AA Tax-Free")
9.  Morgan Stanley California Tax-Free Daily Income Trust ("California Tax-Free
    Daily")
10. Morgan Stanley New York Municipal Money Market Trust ("New York Money")
11. Morgan Stanley Tax-Free Daily Income Trust ("Tax-Free Daily")

    EQUITY FUNDS
    ------------

12. Morgan Stanley Aggressive Equity Fund ("Aggressive Equity")+
13. Morgan Stanley Allocator Fund ("Allocator Fund")+
14. Morgan Stanley American Opportunities Fund ("American Opportunities")+
15. Morgan Stanley Biotechnology Fund ("Biotechnology Fund")+
16. Morgan Stanley Capital Opportunities Trust ("Capital Opportunities")+
17. Morgan Stanley Developing Growth Securities Trust ("Developing Growth")+
18. Morgan Stanley Dividend Growth Securities Inc. ("Dividend Growth")+
19. Morgan Stanley Equally-Weighted S&P 500 Fund ("Equally-Weighted S&P 500")+
20. Morgan Stanley European Equity Fund Inc. ("European Equity")+
21. Morgan Stanley Financial Services Trust ("Financial Services")+
22. Morgan Stanley Fundamental Value Fund ("Fundamental Value")+
23. Morgan Stanley Global Advantage Fund ("Global Advantage")+
24. Morgan Stanley Global Dividend Growth Securities ("Global Dividend Growth")+


                                       17


25. Morgan Stanley Global Utilities Fund ("Global Utilities")+
26. Morgan Stanley Growth Fund ("Growth Fund")+
27. Morgan Stanley Health Sciences Trust ("Health Sciences")+
28. Morgan Stanley Income Builder Fund ("Income Builder")+
29. Morgan Stanley Information Fund ("Information Fund")+
30. Morgan Stanley International Fund ("International Fund")+
31. Morgan Stanley International SmallCap Fund ("International SmallCap")+
32. Morgan Stanley International Value Equity Fund ("International Value")+
33. Morgan Stanley Japan Fund ("Japan Fund")+
34. Morgan Stanley KLD Social Index Fund ("KLD Social Index")+
35. Morgan Stanley Mid-Cap Value Fund (Mid-Cap Value")+
36. Morgan Stanley Multi-Asset Class Fund ("Multi-Asset Class")+
         o     Domestic Portfolio
37. Morgan Stanley Nasdaq-100 Index Fund ("Nasdaq-100")+
38. Morgan Stanley Natural Resource Development Securities Inc. ("Natural
    Resource")+
39. Morgan Stanley Pacific Growth Fund Inc. ("Pacific Growth")+
40. Morgan Stanley Real Estate Fund ("Real Estate")+
41. Morgan Stanley Small-Mid Special Value Fund (Small-Mid Special Value")+
42. Morgan Stanley S&P 500 Index Fund ("S&P500 Index")+
43. Morgan Stanley Special Growth Fund ("Special Growth")+
44. Morgan Stanley Special Value Fund ("Special Value")+
45. Morgan Stanley Total Market Index Fund ("Total Market Index")+
46. Morgan Stanley Total Return Trust ("Total Return")+
47. Morgan Stanley Utilities Fund ("Utilities Fund")+
48. Morgan Stanley Value Fund ("Value Fund")+

    BALANCED FUNDS
    --------------

49. Morgan Stanley Balanced Growth Fund ("Balanced Growth")+
50. Morgan Stanley Balanced Income Fund ("Balanced Income")+

     ASSET ALLOCATION FUND

51. Morgan Stanley Strategist Fund ("Strategist Fund")+

    TAXABLE FIXED-INCOME FUNDS
    --------------------------

52. Morgan Stanley Convertible Securities Trust ("Convertible Securities")+
53. Morgan Stanley Flexible Income Trust ("Flexible Income")+
54. Morgan Stanley Income Trust ("Income Trust")+
55. Morgan Stanley High Yield Securities Inc. ("High Yield Securities")+
56. Morgan Stanley Limited Duration Fund ("Limited Duration Fund")
57. Morgan Stanley Mortgage Securities Trust ("Mortgage Securities")+
58. Morgan Stanley Limited Duration U.S. Treasury Trust ("Limited Duration
    Treasury")
59. Morgan Stanley Total Return Income Securities Fund ("Total Return Income")+


                                       18


60. Morgan Stanley U.S. Government Securities Trust ("Government Securities")+

    TAX-EXEMPT FIXED-INCOME FUNDS
    -----------------------------

61. Morgan Stanley California Tax-Free Income Fund ("California Tax-Free")+
62. Morgan Stanley Limited Term Municipal Trust ("Limited Term Municipal")
63. Morgan Stanley New York Tax-Free Income Fund ("New York Tax-Free")+
64. Morgan Stanley Tax-Exempt Securities Trust ("Tax-Exempt Securities")+

    SPECIAL PURPOSE FUNDS
    ---------------------

65. Morgan Stanley Select Dimensions Investment Series ("Select Dimensions")

         o     American Opportunities Portfolio
         o     Balanced Growth Portfolio
         o     Capital Opportunities Portfolio
         o     Developing Growth Portfolio
         o     Dividend Growth Portfolio
         o     Equally-Weighted S&P 500 Portfolio
         o     Flexible Income Portfolio
         o     Global Equity Portfolio
         o     Growth Portfolio
         o     Money Market Portfolio
         o     Utilities Portfolio

66. Morgan Stanley Variable Investment Series ("Variable Investment")

         o     Aggressive Equity Portfolio
         o     Dividend Growth Portfolio
         o     Equity Portfolio
         o     European Growth Portfolio
         o     Global Advantage Portfolio
         o     Global Dividend Growth Portfolio
         o     High Yield Portfolio
         o     Income Builder Portfolio
         o     Information Portfolio
         o     Limited Duration Portfolio
         o     Money Market Portfolio
         o     Quality Income Plus Portfolio
         o     S&P 500 Index Portfolio
         o     Strategist Portfolio
         o     Utilities Portfolio

CLOSED-END RETAIL FUNDS

    TAXABLE FIXED-INCOME CLOSED-END FUNDS
    -------------------------------------


                                       19


67. Morgan Stanley Government Income Trust ("Government Income")
68. Morgan Stanley Income Securities Inc. ("Income Securities")
69. Morgan Stanley Prime Income Trust ("Prime Income")

    TAX-EXEMPT FIXED-INCOME CLOSED-END FUNDS
    ----------------------------------------
70. Morgan Stanley California Insured Municipal Income Trust ("California
    Insured Municipal")
71. Morgan Stanley California Quality Municipal Securities ("California Quality
    Municipal")
72. Morgan Stanley Insured California Municipal Securities ("Insured California
    Securities")
73. Morgan Stanley Insured Municipal Bond Trust ("Insured Municipal Bond")
74. Morgan Stanley Insured Municipal Income Trust ("Insured Municipal Income")
75. Morgan Stanley Insured Municipal Securities ("Insured Municipal Securities")
76. Morgan Stanley Insured Municipal Trust ("Insured Municipal Trust")
77. Morgan Stanley Municipal Income Opportunities Trust ("Municipal
    Opportunities")
78. Morgan Stanley Municipal Income Opportunities Trust II ("Municipal
    Opportunities II")
79. Morgan Stanley Municipal Income Opportunities Trust III ("Municipal
    Opportunities III")
80. Morgan Stanley Municipal Premium Income Trust ("Municipal Premium")
81. Morgan Stanley New York Quality Municipal Securities ("New York Quality
    Municipal")
82. Morgan Stanley Quality Municipal Income Trust ("Quality Municipal Income")
83. Morgan Stanley Quality Municipal Investment Trust ("Quality Municipal
    Investment")
84. Morgan Stanley Quality Municipal Securities ("Quality Municipal Securities")

+- Denotes Retail Multi-Class Fund

                               INSTITUTIONAL FUNDS
                               -------------------

OPEN-END INSTITUTIONAL FUNDS

1.  Morgan Stanley Institutional Fund, Inc. ("Institutional Fund Inc.")

    Active Portfolios:

         o     Active International Allocation Portfolio
         o     Emerging Markets Portfolio
         o     Emerging Markets Debt Portfolio
         o     Equity Growth Portfolio
         o     European Real Estate Portfolio
         o     Focus Equity Portfolio
         o     Global Franchise Portfolio

                                       20



         o     Global Value Equity Portfolio
         o     International Equity Portfolio
         o     International Magnum Portfolio
         o     International Small Cap Portfolio
         o     Money Market Portfolio
         o     Municipal Money Market Portfolio
         o     Small Company Growth Portfolio
         o     U.S. Real Estate Portfolio
         o     Value Equity Portfolio
    Inactive Portfolios*:

         o     China Growth Portfolio
         o     Gold Portfolio
         o     Large Cap Relative Value Portfolio
         o     MicroCap Portfolio
         o     Mortgage-Backed Securities Portfolio
         o     Municipal Bond Portfolio
         o     U.S. Equity Plus Portfolio

2.  Morgan Stanley Institutional Fund Trust ("Institutional Fund Trust")

    Active Portfolios:
         o     Advisory Foreign Fixed Income II Portfolio
         o     Advisory Foreign Fixed Income Portfolio
         o     Advisory Mortgage Portfolio
         o     Balanced Portfolio
         o     Core Plus Fixed Income Portfolio
         o     Equity Portfolio
         o     High Yield Portfolio
         o     Intermediate Duration Portfolio
         o     International Fixed Income Portfolio
         o     Investment Grade Fixed Income Portfolio
         o     Limited Duration Portfolio
         o     Mid-Cap Growth Portfolio
         o     Municipal Portfolio
         o     U.S. Core Fixed Income Portfolio
         o     U.S. Mid-Cap Value Portfolio
         o     U.S. Small-Cap Value Portfolio
         o     Value Portfolio

----------
*        Have not commenced or have ceased operations


                                       21



    Inactive Portfolios*:
         o     Balanced Plus Portfolio
         o     Growth Portfolio
         o     Investment Grade Credit Advisory Portfolio
         o     Mortgage Advisory Portfolio
         o     New York Municipal Portfolio
         o     Targeted Duration Portfolio
         o     Value II Portfolio

3.  The Universal Institutional Funds, Inc. ("Universal Funds")

         Active Portfolios:
         o     Core Plus Fixed Income Portfolio
         o     Emerging Markets Debt Portfolio
         o     Emerging Markets Equity Portfolio
         o     Equity and Income Portfolio
         o     Equity Growth Portfolio
         o     Global Franchise Portfolio
         o     Global Value Equity Portfolio
         o     High Yield Portfolio
         o     International Magnum Portfolio
         o     Mid-Cap Growth Portfolio
         o     Money Market Portfolio
         o     Small Company Growth Portfolio
         o     Technology Portfolio
         o     U.S. Mid-Cap Value Portfolio
         o     U.S. Real Estate Portfolio
         o     Value Portfolio

    Inactive Portfolios*:

         o     Balanced Portfolio
         o     Capital Preservation Portfolio
         o     Core Equity Portfolio
         o     International Fixed Income Portfolio
         o     Investment Grade Fixed Income Portfolio
         o     Latin American Portfolio
         o     Multi-Asset Class Portfolio
         o     Targeted Duration Portfolio

4.  Morgan Stanley Institutional Liquidity Funds ("Liquidity Funds")

----------
*        Have not commenced or have ceased operations


                                       22


    Active Portfolios:

         o     Government Portfolio
         o     Money Market Portfolio
         o     Prime Portfolio
         o     Tax-Exempt Portfolio
         o     Treasury Portfolio
    Inactive Portfolios*:
         o     Government Securities Portfolio
         o     Treasury Securities Portfolio

CLOSED-END INSTITUTIONAL FUNDS

5.  Morgan Stanley Asia-Pacific Fund, Inc. ("Asia-Pacific Fund")
6.  Morgan Stanley Eastern Europe Fund, Inc. ("Eastern Europe")
7.  Morgan Stanley Emerging Markets Debt Fund, Inc. ("Emerging Markets Debt")
8.  Morgan Stanley Emerging Markets Fund, Inc. ("Emerging Markets Fund")
9.  Morgan Stanley Global Opportunity Bond Fund, Inc. ("Global Opportunity")
10. Morgan Stanley High Yield Fund, Inc. ("High Yield Fund")
11. The Latin American Discovery Fund, Inc. ("Latin American Discovery")
12  The Malaysia Fund, Inc. ("Malaysia Fund")
13. The Thai Fund, Inc. ("Thai Fund")
14. The Turkish Investment Fund, Inc. ("Turkish Investment")

CLOSED-END FUND OF HEDGE FUNDS

15. Morgan Stanley Institutional Fund of Hedge Funds ("Fund of Hedge Funds")

                                 IN REGISTRATION

MORGAN STANLEY RETAIL FUNDS
1. Morgan Stanley American Franchise Fund

FUNDS OF HEDGE FUNDS
1.  Morgan Stanley Absolute Return Fund
2.  Morgan Stanley Institutional Fund of Hedge Funds II

----------
*        Have not commenced or have ceased operations


                                       23






                                    EXHIBIT B
                                    ---------

                               INSTITUTIONAL FUNDS
                                COVERED OFFICERS
                                ----------------

          Ronald E. Robison -President and Principal Executive Officer
            James W. Garrett - Chief Financial Officer and Treasurer

                                  RETAIL FUNDS
                                COVERED OFFICERS
                                ----------------

          Ronald E. Robison -President and Principal Executive Officer
               Frank Smith - Chief Financial Officer and Treasurer

                   MORGAN STANLEY INDIA INVESTMENT FUND, INC.
                                COVERED OFFICERS
                                ----------------

          Ronald E. Robison - President and Principal Executive Officer
            James W. Garrett - Chief Financial Officer and Treasurer






                                       24






                                    EXHIBIT C
                                    ---------
                                 GENERAL COUNSEL
                                 ---------------

                                   Barry Fink










                                       25



                                                                   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 Value Fund;

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 registrant's most recent
     fiscal half-year (the registrant's second fiscal half-year in the case of
     an annual report) that has materially affected, or is reasonably likely to
     materially affect, the registrant's internal control over financial
     reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed to the
     registrant's auditors and the audit committee of the registrant's board of
     directors (or persons performing the equivalent functions):


                                       26


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: November 21, 2005
                                                 /s/ Ronald E. Robison
                                                 Ronald E. Robison
                                                 Principal Executive Officer




                                       27




                                                                   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 Value Fund;

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 registrant's most recent
     fiscal half-year (the registrant's second fiscal half-year in the case of
     an annual report) that has materially affected, or is reasonably likely to
     materially affect, the registrant's internal control over financial
     reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed to the
     registrant's auditors and the audit committee of the registrant's board of
     directors (or persons performing the equivalent functions):


                                       28


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: November 21, 2005
                                               /s/ Francis Smith
                                               Francis Smith
                                               Principal Financial  Officer


                                       29




                            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 Value Fund

         In connection with the Report on Form N-CSR (the "Report") of the
above-named issuer for the period ended September 30, 2005 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: November 21, 2005                           /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 Value Fund and will be retained by Morgan Stanley
Value Fund and furnished to the Securities and Exchange Commission or its staff
upon request.


                                       30




                            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 Value Fund

         In connection with the Report on Form N-CSR (the "Report") of the
above-named issuer for the period ended September 30, 2005 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: November 21, 2005                           /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 Value Fund and will be retained by Morgan Stanley
Value Fund and furnished to the Securities and Exchange Commission or its staff
upon request.


                                       31