Morgan Stanley Value Fund (MVUAX) N-CSR Certified annual shareholder report (management investment company)

                                  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, 2006

Date of reporting period: September 30, 2006


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, 2006

Total Return for the 12 Months Ended September 30, 2006

Class A						Class B						Class C						Class D						Russell 1000® Value Index1						S&P 500®2						Lipper Large- Cap Value Funds Index3
14.20%							13.37	%					13.38	%					14.47	%					14.62	%					10.79	%					12.59	%

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

In the 12-month period ended September 30, 2006, stocks posted respectable gains despite growing uncertainty about the U.S. economy’s growth prospects. Although the economy continued to register modest growth, gross domestic product (GDP) growth came in below expectations in several quarters. Housing trends began to slow and the consumer sectors of the market suffered from increasingly negative sentiment. Corporations, for the most part, reported decent earnings. A healthy pace of stock repurchases, dividend increases, merger and acquisition activity and other corporate restructurings did help bolster investor confidence. However, rising commodity prices, record oil prices and the potential for higher interest rates — not just in the U.S. but globally — heightened fears about inflation and recession.

Moreover, investors kept a watchful eye on the actions of the Federal Open Market Committee (the ‘‘Fed’’) as it continued to raise the federal funds target rate. For most of the period, speculation about the Fed’s ability to both contain inflation and allow the economy to continue growing (albeit at a less robust rate) drove investor sentiment. In particular, in the second quarter of 2006, stock price volatility increased considerably following the Fed’s 16^th consecutive increase. However, after the 17^th rate increase in June, the Fed paused its monetary tightening, leaving the federal funds rate unchanged in both its August and September meetings. The market began to edge upward in the final two months of the period, as oil and gasoline prices eased from their highs and inflation data appeared tame.

Performance Analysis

Morgan Stanley Value Fund underperformed the Russell 1000^® Value Index and outperformed the S&P 500^® and the Lipper Large-Cap Value Funds Index for the 12 months ended September 30, 2006, assuming no deduction of applicable sales charges.

Relative to the Russell 1000 Value Index, the Fund lost ground in the health care sector. Pharmaceutical stocks, which comprise the bulk of the Fund’s health care representation, and health care equipment and services stocks detracted from gains. Stock selection in the consumer staples sector hampered performance, due to a number of individual company-specific events. The technology sector was another negative influence, as our stock selections did not keep pace with the Russell 1000 Value Index’s technology stocks.

2

In contrast, the energy and materials sectors bolstered the Fund’s performance. Within the energy sector, we have continued to find a lack of compelling opportunities, and as a result the Fund has held a significant underweight relative to the Russell 1000 Value Index for some time. As oil and natural gas prices retreated from their highs, energy stocks’ performance slipped. The Fund’s minimal exposure to the sector therefore proved advantageous during the period. Within the materials sector, the Fund’s paper holdings benefited from consolidation activity that was well received by the market as well as improving fundamentals in the paper industry. Stock selection and the resulting overweight in the materials sector drove positive performance.

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

TOP 10 HOLDINGS
Freddie Mac					4.2	%
Bank of America Corp.					3.8
International Paper Co.					3.7
Verizon Communications, Inc.					3.6
Citigroup, Inc.					3.4
AT&T Inc.					3.0
GlaxoSmithKline PLC (ADR) (United Kingdom)					2.8
Bristol-Myers Squibb Co.					2.7
Wal-Mart Stores, Inc.					2.2
Du Pont (E.I.) de Nemours & Co.					2.2

TOP FIVE INDUSTRIES
Pharmaceuticals: Major					15.9	%
Major Banks					10.5
Major Telecommunications					8.5
Media Conglomerates					5.0
Finance/Rental/Leasing					4.7

Data as of September 30, 2006. 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.

3

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 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. The semiannual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley also delivers the semiannual and annual reports to 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 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.

4

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 twelve-month period ended June 30 without charge 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.

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.

5

	Performance Summary

Performance of $10,000 Investment

6

Average Annual Total Returns — Period Ended September 30, 2006

						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							14.20%	4					13.37%	4					13.38%	4					14.47%	4
							8.21	5					8.37	5					12.38	5					—
5 Years							7.54	4					6.72	4					6.76	4					7.78	4
							6.38	5					6.41	5					6.76	5					—
Since Inception							5.71	4					4.91	4					4.94	4					5.99	4
							4.99	5					4.91	5					4.94	5					—

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 1.0% for shares redeemed within one year of purchase.

†† Class D has no sales charge.

(1) The Russell 1000^® Value Index measures the performance of those companies in the Russell 1000^® Index with lower price-to-book ratios and lower forecasted growth values. 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. The Fund's primary benchmark is being changed from the S&P 500^® to the Russell 1000^® Value Index to more accurately reflect the Fund’s investible universe.

(2) 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. The S&P 500/Barra Value Index results are no longer calculated as of second quarter 2006. The S&P 500^® is replacing the S&P 500/Barra Value Index as the Fund's secondary 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.

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

(5) 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, 2006.

7

	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 04/01/06 – 09/30/06.

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*
				04/01/06				09/30/06				04/01/06 – 09/30/06
Class A
Actual (6.83% return)				$	1,000.00			$	1,068.30			$	5.18
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,020.05			$	5.06
Class B
Actual (6.38% return)				$	1,000.00			$	1,063.80			$	9.05
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,016.29			$	8.85
Class C
Actual (6.38% return)				$	1,000.00			$	1,063.80			$	9.05
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,016.29			$	8.85
Class D
Actual (6.89% return)				$	1,000.00			$	1,068.90			$	3.89
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,021.31			$	3.80

* Expenses are equal to the Fund's annualized expense ratios 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). If the Fund had borne all of its expenses, the annualized expense ratios would have been 1.02%, 1.77%, 1.77% and 0.77% for Class A, Class B, Class C and Class D shares, respectively.

8

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 at the Investment Adviser’s expense. (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 advisory and administrative 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

On a regular basis, the Board reviews the performance of all funds in the Morgan Stanley Fund Complex, including the Fund, compared to their peers, paying specific attention to the underperforming funds. In addition, the Board specifically reviewed the Fund’s performance for the one-, three- and five-year periods ended November 30, 2005, as shown in a report provided by Lipper (the ‘‘Lipper Report’’), compared to the performance of comparable funds selected by Lipper. The Board considered that adherence to the Fund’s investment strategy may result in periods of underperformance, but that, over time, adherence to the Fund’s investment strategy is appropriate. The Board concluded that the performance of the Fund was acceptable.

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

The Board reviewed the advisory and administrative fee (together, the ‘‘management fee’’) rate paid by the Fund under the Management Agreement. The Board noted that the management fee rate was comparable to the management fee rates charged by the Adviser to other proprietary funds it manages with investment strategies comparable to those of the Fund taking into account the scope of the services provided.

Fees and Expenses Relative to Comparable Funds Managed by Other Advisers

The Board reviewed the management fee rate and total expense ratio of the Fund as compared to the average management fee rate and average total expense ratio 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. The Board concluded that the Fund’s management fee rate and total expense ratio were competitive with those of its expense peer group.

9

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 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 the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and affiliates during the last year from their relationship with the Fund and during the last two years from their relationship with the Morgan Stanley Fund Complex and reviewed with the Adviser the cost allocation methodology used to determine the profitability of the Adviser and affiliates. Based on its review of the information it received, the Board concluded that the profits earned by the Adviser and 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 affiliates from their relationship with the Fund and the Morgan Stanley Fund Complex, such as sales charges on sales of Class A shares and ‘‘float’’ benefits derived from handling of checks for purchases and sales 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 sold a joint venture that owned an electronic trading system network (‘‘ECN’’), which may be used by the Adviser for trading on behalf of the Fund. As part of the sale of the joint venture, the affiliate receives a 10-year payout based on the revenue stream from trading on the ECN. Although the affiliate disgorges the portion of the payout that is comprised of commissions received from trades executed by the Adviser on the ECN to a charitable organization, the Board considered the fact that trades by the Adviser would increase order flow, and, thus, result in a potential fall-out benefit to the affiliate. The Board concluded that the float benefits were relatively small, the sales charges and 12b-1 fees were competitive with those of other broker-dealers, the affiliate disgorged revenues in connection with the ECN-related revenue and the potential fall-out benefit from increased order flow was relatively small.

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 Morgan Stanley Fund Complex.

10

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 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 that it would be in the best interest of the Fund and its shareholders to approve renewal of the Management Agreement for another year.

11

Morgan Stanley Value Fund

Portfolio of Investments September 30, 2006

NUMBER OF SHARES								VALUE
				Common Stocks (94.3%)
				Airlines (0.3%)
	63,500			Southwest Airlines Co.				$	1,057,910
				Aluminum (2.0%)
	221,800			Alcoa, Inc.					6,219,272
				Beverages: Alcoholic (0.6%)
	38,440			Anheuser-Busch Companies, Inc.					1,826,284
				Beverages: Non-Alcoholic (1.7%)
	116,500			Coca-Cola Co. (The)					5,205,220
				Broadcasting (1.8%)
	187,544			Clear Channel Communications, Inc.					5,410,644
				Cable/Satellite TV (2.0%)
	164,900			Comcast Corp. (Class A)*					6,076,565
				Catalog/Specialty     Distribution (0.8%)
	119,750			Liberty Media Corp. – Interactive (Series A)*					2,440,505
				Chemicals: Major Diversified (3.0%)
	7,800			Dow Chemical Co. (The)					304,044
	160,000			Du Pont (E.I.) de Nemours & Co.					6,854,400
	43,500			Rohm & Haas Co.					2,059,725
									9,218,169
				Computer Communications (0.6%)
	73,600			Cisco Systems, Inc.*					1,692,800
				Computer Processing Hardware (1.4%)
	140,700			Dell Inc.*					3,213,588
	28,700			Hewlett-Packard Co.					1,053,003
									4,266,591
				Data Processing Services (0.9%)
	13,865			Affiliated Computer Services, Inc. (Class A)*					719,039
	47,600			First Data Corp.					1,999,200
									2,718,239
				Department Stores (0.5%)
	37,816			Federated Department Stores, Inc.					1,634,029
				Discount Stores (2.2%)
	139,500			Wal-Mart Stores, Inc.				$	6,880,140
				Electric Utilities (0.9%)
	63,100			American Electric Power Co., Inc.					2,294,947
	10,600			FirstEnergy Corp.					592,116
									2,887,063
				Electronic Components (0.3%)
	64,700			Flextronics International Ltd. (Singapore)*					817,808
				Electronic Production Equipment (0.4%)
	30,100			KLA-Tencor Corp.					1,338,547
				Finance/Rental/Leasing (4.7%)
	27,500			Fannie Mae					1,537,525
	195,400			Freddie Mac					12,960,882
									14,498,407
				Financial Conglomerates (4.6%)
	212,300			Citigroup, Inc.					10,544,941
	72,600			JPMorgan Chase & Co.					3,409,296
									13,954,237
				Food: Major Diversified (3.2%)
	136,500			Kraft Foods Inc. (Class A)					4,867,590
	203,700			Unilever N.V. (NY Registered Shares) (Netherlands)					4,998,798
									9,866,388
				Food: Specialty/Candy (0.5%)
	34,400			Cadbury Schweppes PLC (ADR) (United Kingdom)					1,471,288
				Home Improvement Chains (0.3%)
	27,100			Lowe's Companies, Inc.					760,426
				Household/Personal Care (1.8%)
	86,500			Kimberly-Clark Corp.					5,653,640
				Industrial Conglomerates (0.5%)
	47,300			General Electric Co.					1,669,690
				Information Technology Services (0.6%)
	23,400			International Business Machines Corp.					1,917,396
				Integrated Oil (0.6%)
	26,400			Total S.A. (ADR) (France)					1,740,816

See Notes to Financial Statements

12

Morgan Stanley Value Fund

Portfolio of Investments September 30, 2006 continued

NUMBER OF SHARES								VALUE
				Investment Banks/     Brokers (0.9%)
	36,900			Merrill Lynch & Co., Inc.				$	2,886,318
				Life/Health Insurance (2.1%)
	31,300			AFLAC, Inc.					1,432,288
	25,400			Genworth Financial Inc. (Class A)					889,254
	36,400			MetLife, Inc.					2,063,152
	30,400			Torchmark Corp.					1,918,544
									6,303,238
				Major Banks (10.5%)
	214,700			Bank of America Corp.					11,501,479
	93,200			Bank of New York Co., Inc. (The)					3,286,232
	12,200			Barclays Plc. (ADR) (United Kingdom)					619,394
	52,500			PNC Financial Services Group					3,803,100
	18,100			SunTrust Banks, Inc.					1,398,768
	107,746			Wachovia Corp.					6,012,227
	149,400			Wells Fargo & Co.					5,405,292
									32,026,492
				Major Telecommunications (8.5%)
	283,400			AT&T Inc.					9,227,504
	12,875			Embarq Corp.					622,764
	294,100			Sprint Nextel Corp.					5,043,815
	301,100			Verizon Communications, Inc.					11,179,843
									26,073,926
				Media Conglomerates (5.0%)
	112,000			Disney (Walt) Co. (The)					3,461,920
	125,000			News Corp. (Class B)					2,580,000
	283,600			Time Warner, Inc.					5,170,028
	114,300			Viacom, Inc. (Class B)*					4,249,674
									15,461,622
				Medical Distributors (0.8%)
	37,700			Cardinal Health, Inc.					2,478,398
				Medical Specialties (0.6%)
	123,600			Boston Scientific Corp.*					1,828,044
				Movies/Entertainment (0.7%)
	23,950			Liberty Media Corp. – Capital (Series A)*					2,001,502
				Multi-Line Insurance (1.2%)
	41,100			American International Group, Inc.				$	2,723,286
	11,100			Hartford Financial Services Group, Inc. (The)					962,925
									3,686,211
				Packaged Software (0.8%)
	40,100			McAfee Inc.*					980,846
	53,300			Microsoft Corp.					1,456,689
									2,437,535
				Pharmaceuticals: Major (15.9%)
	73,800			Abbott Laboratories					3,583,728
	330,700			Bristol-Myers Squibb Co.					8,241,044
	161,400			GlaxoSmithKline PLC (ADR) (United Kingdom)					8,591,322
	68,700			Eli Lilly & Co.					3,915,900
	182,700			Pfizer, Inc.					5,181,372
	61,400			Roche Holdings Ltd. (ADR) (Switzerland)					5,324,915
	69,800			Sanofi-Aventis (ADR) (France)					3,104,006
	255,100			Schering-Plough Corp.					5,635,159
	102,400			Wyeth					5,206,016
									48,783,462
				Property – Casualty     Insurers (3.6%)
	800			Berkshire Hathaway Inc. (Class B)*					2,539,200
	107,780			Chubb Corp. (The)					5,600,249
	59,225			St. Paul Travelers Companies, Inc. (The)					2,777,060
									10,916,509
				Publishing: Newspapers (0.4%)
	21,800			Gannett Co., Inc.					1,238,894
				Pulp & Paper (3.7%)
	323,442			International Paper Co.					11,200,797
				Regional Banks (0.4%)
	41,000			U.S. Bancorp					1,362,020
				Semiconductors (1.2%)
	182,000			Intel Corp.					3,743,740

See Notes to Financial Statements

13

Morgan Stanley Value Fund

Portfolio of Investments September 30, 2006 continued

NUMBER OF SHARES								VALUE
				Telecommunication     Equipment (0.4%)
	28,500			Nokia Corp. (ADR) (Finland)				$	561,165
	20,200			Telefonaktiebolaget LM Ericsson (ADR) (Sweden)					695,890
									1,257,055
				Tobacco (1.4%)
	56,200			Altria Group, Inc.					4,302,110
				Total Common Stocks (Cost $246,538,376)					289,209,947

PRINCIPAL AMOUNT IN THOUSANDS
				Short-Term Investment (5.2%) Repurchase Agreement
$	15,910			Joint repurchase agreement account 5.325% due 10/02/06 (dated 09/29/06; proceeds $15,917,060) (a) (Cost $15,910,000)					15,910,000

Total Investments
(Cost$262,448,376)(b)				99.5%					305,119,947
Other Assets in Excess of Liabilities				0.5					1,402,860
Net Assets				100.0%				$	306,522,807

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 $262,987,737. The aggregate gross unrealized appreciation is $49,638,910 and the aggregate gross unrealized depreciation is $7,506,700, resulting in net unrealized appreciation of $42,132,210.

See Notes to Financial Statements

14

Morgan Stanley Value Fund

Summary of Investments September 30, 2006

INDUSTRY				VALUE				PERCENT OF NET ASSETS
Pharmaceuticals: Major				$  48,783,462					15.9	%
Major Banks				32,026,492					10.5
Major Telecommunications				26,073,926					8.5
Repurchase Agreement				15,910,000					5.2
Media Conglomerates				15,461,622					5.0
Finance/Rental/Leasing				14,498,407					4.7
Financial Conglomerates				13,954,237					4.6
Pulp & Paper				11,200,797					3.7
Property – Casualty Insurers				10,916,509					3.6
Food: Major Diversified				9,866,388					3.2
Chemicals: Major Diversified				9,218,169					3.0
Discount Stores				6,880,140					2.2
Life/Health Insurance				6,303,238					2.1
Aluminum				6,219,272					2.0
Cable/Satellite TV				6,076,565					2.0
Household/Personal Care				5,653,640					1.8
Broadcasting				5,410,644					1.8
Beverages: Non-Alcoholic				5,205,220					1.7
Tobacco				4,302,110					1.4
Computer Processing Hardware				4,266,591					1.4
Semiconductors				3,743,740					1.2
Multi-Line Insurance				3,686,211					1.2
Electric Utilities				2,887,063					0.9
Investment Banks/Brokers				2,886,318					0.9
Data Processing Services				$    2,718,239					0.9	%
Medical Distributors				2,478,398					0.8
Catalog/Specialty Distribution				2,440,505					0.8
Packaged Software				2,437,535					0.8
Movies/Entertainment				2,001,502					0.7
Information Technology Services				1,917,396					0.6
Medical Specialties				1,828,044					0.6
Beverages: Alcoholic				1,826,284					0.6
Integrated Oil				1,740,816					0.6
Computer Communications				1,692,800					0.6
Industrial Conglomerates				1,669,690					0.5
Department Stores				1,634,029					0.5
Food: Specialty/Candy				1,471,288					0.5
Regional Banks				1,362,020					0.4
Electronic Production Equipment				1,338,547					0.4
Telecommunication Equipment				1,257,055					0.4
Publishing: Newspapers				1,238,894					0.4
Airlines				1,057,910					0.3
Electronic Components				817,808					0.3
Home Improvement Chains				760,426					0.3
				$305,119,947					99.5	%

See Notes to Financial Statements

15

Morgan Stanley Value Fund

Financial Statements

Statement of Assets and Liabilities

September 30, 2006

Assets:
Investments in securities, at value (cost $262,448,376)				$305,119,947
Receivable for:
Investments sold				2,630,973
Dividends				406,874
Shares of beneficial interest sold				65,075
Interest				4,707
Prepaid expenses and other assets				29,857
Total Assets				308,257,433
Liabilities:
Payable for:
Investments purchased				706,899
Shares of beneficial interest redeemed				634,864
Distribution fee				194,380
Investment advisory fee				89,727
Administration fee				20,062
Transfer agent fee				2,778
Accrued expenses and other payables				85,916
Total Liabilities				1,734,626
Net Assets				$306,522,807
Composition of Net Assets:
Paid-in-capital				$253,452,206
Net unrealized appreciation				42,671,571
Accumulated undistributed net investment income				2,678,853
Accumulated undistributed net realized gain				7,720,177
Net Assets				$306,522,807
Class A Shares:
Net Assets				$77,031,770
Shares Outstanding (unlimited authorized, $.01 par value)				5,187,221
Net Asset Value Per Share				$14.85
Maximum Offering Price Per Share,     (net asset value plus 5.54% of net asset value)				$15.67
Class B Shares:
Net Assets				$195,893,493
Shares Outstanding (unlimited authorized, $.01 par value)				13,656,716
Net Asset Value Per Share				$14.34
Class C Shares:
Net Assets				$21,859,016
Shares Outstanding (unlimited authorized, $.01 par value)				1,524,182
Net Asset Value Per Share				$14.34
Class D Shares:
Net Assets				$11,738,528
Shares Outstanding (unlimited authorized, $.01 par value)				779,785
Net Asset Value Per Share				$15.05

See Notes to Financial Statements

16

Morgan Stanley Value Fund

Financial Statements continued

Statement of Operations

For the year ended September 30, 2006

Net Investment Income:
Income
Dividends (net of $81,192 foreign withholding tax)				$	8,516,401
Interest					511,826
Total Income					9,028,227
Expenses
Distribution fee (Class A shares)					183,242
Distribution fee (Class B shares)					2,186,035
Distribution fee (Class C shares)					216,765
Investment advisory fee					1,411,121
Transfer agent fees and expenses					569,747
Administration fee					268,785
Shareholder reports and notices					118,120
Professional fees					76,026
Registration fees					56,012
Custodian fees					25,654
Trustees' fees and expenses					4,580
Other					35,638
Total Expenses					5,151,725
Less: amounts waived/reimbursed					(46,992	)
Less: expense offset					(2,536	)
Net Expenses					5,102,197
Net Investment Income					3,926,030
Net Realized and Unrealized Gain:
Net realized gain					33,437,691
Net change in unrealized appreciation					5,990,815
Net Gain					39,428,506
Net Increase				$	43,354,536

See Notes to Financial Statements

17

Morgan Stanley Value Fund

Financial Statements continued

Statements of Changes in Net Assets

				FOR THE YEAR ENDED SEPTEMBER 30, 2006				FOR THE YEAR ENDED SEPTEMBER 30, 2005
Increase (Decrease) in Net Assets:
Operations:
Net investment income				$	3,926,030			$	4,541,107
Net realized gain					33,437,691				51,254,430
Net change in unrealized appreciation					5,990,815				(15,392,010	)
Net Increase					43,354,536				40,403,527
Dividends to Shareholders from Net Investment Income:
Class A shares					(1,480,914	)			(191,856	)
Class B shares					(2,682,519	)			(1,523,708	)
Class C shares					(279,290	)			(143,595	)
Class D shares					(357,291	)			(1,040,865	)
Total Dividends					(4,800,014	)			(2,900,024	)
Net decrease from transactions in shares of beneficial interest					(155,295,056	)			(60,153,539	)
Net Decrease					(116,740,534	)			(22,650,036	)
Net Assets:
Beginning of period					423,263,341				445,913,377
End of Period (Including accumulated undistributed net investment income of $2,678,853 and $3,552,837, respectively)				$	306,522,807			$	423,263,341

See Notes to Financial Statements

18

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2006

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.

The Fund will assess 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, subject to certain exceptions. 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 including circumstances under which 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

19

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2006 continued

adjusted to reflect the 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

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 assets of the Fund

20

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2006 continued

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.

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.

Effective November 18, 2005, the Investment Adviser has agreed to cap the Fund’s operating expenses (except for brokerage and 12b-1 fees) for one year by assuming the Fund’s ‘‘other expenses’’ and/or waiving the Fund’s advisory fees, and the Administrator has agreed to waive the Fund’s administrative fees, to the extent such operating expenses on an annualized basis exceed 0.75% of the average daily net assets of the Fund.

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 $5,089,778 at September 30, 2006.

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 sales credit to Morgan Stanley Financial Advisors and other authorized financial representatives at the time of sale may be reimbursed in the subsequent calendar year. For the year ended September 30, 2006, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.25% and 0.97%, respectively.

21

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2006 continued

The Distributor has informed the Fund that for the year ended September 30, 2006, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $755, $462,138 and $2,012, respectively and received $41,212 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, 2006, aggregated $42,836,704 and $213,642,521, respectively. Included in the aforementioned transactions is a purchase of $25,432 and sales of $49,678,904 with other Morgan Stanley funds, including net realized gains of $8,156,944.

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 or she receives for serving on the Board of Trustees. Each eligible Trustee generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the 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. 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.

22

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2006 continued

The tax character of distributions paid was as follows:

				FOR THE YEAR ENDED SEPTEMBER 30, 2006				FOR THE YEAR ENDED SEPTEMBER 30, 2005
Ordinary income				$	4,800,014			$	2,900,024

As of September 30, 2006, the tax-basis components of accumulated earnings were as follows:

Undistributed ordinary income				$	2,679,612
Undistributed long-term gains					8,259,592
Net accumulated earnings					10,939,204
Temporary differences					(813	)
Net unrealized appreciation					42,132,210
Total accumulated earnings				$	53,070,601

During the year ended September 30, 2006, the Fund utilized its net capital loss carryforward of $22,934,798.

As of September 30, 2006, the Fund had temporary book/tax differences primarily attributable to capital loss deferrals on wash sales.

6.   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, were named as defendants in a consolidated class action. This consolidated action also named as defendants certain individual Trustees and Directors of the Morgan Stanley funds. The consolidated amended complaint, filed in the United States District Court for the Southern District of New York on April 16, 2004, generally alleged 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 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 alleged efforts to recommend these funds to investors. The complaint sought, among other things, unspecified compensatory damages, rescissionary damages, fees and costs. On July 2, 2004, defendants moved to dismiss the action. On March 9, 2005, plaintiffs filed a Motion for Leave to File a Supplemental Pleading that would, among other things, expand the allegations and alleged class. On April 14, 2006, the Court granted defendants’ motion to dismiss in its entirety, with prejudice.

23

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2006 continued

Additionally, plaintiffs’ Motion for Leave to File a Supplemental Pleading was denied. The time for plaintiffs to appeal the orders granting defendants’ motion to dismiss and denying plaintiffs’ motion for supplemental pleading has expired. This case is now concluded.

7.   Shares of Beneficial Interest

Transactions in shares of beneficial interest were as follows:

				FOR THE YEAR ENDED SEPTEMBER 30, 2006								FOR THE YEAR ENDED SEPTEMBER 30, 2005
				SHARES				AMOUNT				SHARES				AMOUNT
CLASS A SHARES
Sold					444,791			$	6,192,647				445,064			$	5,819,585
Conversion from Class B					927,909				12,924,224				4,710,501				60,532,052
Reinvestment of dividends					95,731				1,303,852				12,722				166,404
Redeemed					(1,825,145	)			(25,244,513	)			(983,592	)			(12,931,455	)
Net increase (decrease) – Class A					(356,714	)			(4,823,790	)			4,184,695				53,586,586
CLASS B SHARES
Sold					442,594				5,918,933				3,405,984				42,568,060
Conversion to Class A					(958,162	)			(12,924,224	)			(4,870,681	)			(60,532,052	)
Reinvestment of dividends					180,304				2,387,231				107,344				1,363,267
Redeemed					(5,496,674	)			(73,423,510	)			(7,463,094	)			(94,042,446	)
Net decrease – Class B					(5,831,938	)			(78,041,570	)			(8,820,447	)			(110,643,171	)
CLASS C SHARES
Sold					102,042				1,373,757				346,177				4,341,511
Reinvestment of dividends					19,947				263,903				10,474				133,024
Redeemed					(514,122	)			(6,808,545	)			(666,269	)			(8,434,784	)
Net decrease – Class C					(392,133	)			(5,170,885	)			(309,618	)			(3,960,249	)
CLASS D SHARES								��
Sold					104,304				1,438,481				1,424,160				18,645,521
Reinvestment of dividends					15,223				209,776				55,309				731,733
Redeemed					(4,980,467	)			(68,907,068	)			(1,398,215	)			(18,513,959	)
Net increase (decrease) – Class D					(4,860,940	)			(67,258,811	)			81,254				863,295
Net decrease in Fund					(11,441,725	)		$	(155,295,056	)			(4,864,116	)		$	(60,153,539	)

8.   Expense Offset

The expense offset represents a reduction of the fees and expenses for interest earned on cash balances maintained by the Fund with the transfer agent.

24

Morgan Stanley Value Fund

Notes to Financial Statements September 30, 2006 continued

9.   New Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Fund will adopt FIN 48 for the fiscal year ending 2008 and the impact to the Fund’s financial statements, if any, is currently being assessed.

In addition, in September 2006, Statement of Financial Accounting Standards No. 157 , Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund’s financial statement disclosures.

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,
				2006				2005				2004				2003				2002
Class A Shares
Selected Per Share Data:
Net asset value, beginning of period					$13.27				$12.23				$10.10				$  7.86				$10.74
Income (loss) from investment operations:
Net investment income‡					0.23				0.19				0.12				0.07				0.04
Net realized and unrealized gain (loss)					1.63				1.00				2.10				2.17				(2.92	)
Total income (loss) from investment operations					1.86				1.19				2.22				2.24				(2.88	)
Less dividends from net investment income					(0.28	)			(0.15	)			(0.09	)			—				—
Net asset value, end of period					$14.85				$13.27				$12.23				$10.10				$  7.86
Total Return†					14.20	%			9.71	%			22.06	%			28.50	%			(26.82	)%
Ratios to Average Net Assets(1):
Total expenses (before expense offset)					1.00	% (2)			0.97	%			1.28	%			1.53	%			1.42	%
Net investment income					1.69	% (2)			1.50	%			1.06	%			0.78	%			0.36	%
Supplemental Data:
Net assets, end of period, in thousands					$77,032				$73,559				$16,621				$12,972				$11,396
Portfolio turnover rate					13	%			31	%			83	%			61	%			56	%

‡ 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.

(2) If the Fund had borne all expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been as follows:

PERIOD ENDED				EXPENSE RATIO				NET INVESTMENT INCOME RATIO
September 30, 2006					1.01	%			1.68	%

See Notes to Financial Statements

26

Morgan Stanley Value Fund

Financial Highlights continued

				FOR THE YEAR ENDED SEPTEMBER 30,
				2006				2005				2004				2003				2002
Class B Shares
Selected Per Share Data:
Net asset value, beginning of period					$12.79				$11.80				$  9.74				$7.64				$10.52
Income (loss) from investment operations:
Net investment income (loss)‡					0.12				0.09				0.03				0.00				(0.04	)
Net realized and unrealized gain (loss)					1.58				0.95				2.03				2.10				(2.84	)
Total income (loss) from investment operations					1.70				1.04				2.06				2.10				(2.88	)
Less dividends from net investment income					(0.15	)			(0.05	)			—				—				—
Net asset value, end of period					$14.34				$12.79				$11.80				$9.74				$  7.64
Total Return†					13.37	%			8.85	%			21.15	%			27.49	%			(27.38	)%
Ratios to Average Net Assets(1):
Total expenses (before expense offset)					1.75	% (2)			1.72	%			2.03	%			2.28	%			2.18	%
Net investment income (loss)					0.94	% (2)			0.75	%			0.31	%			0.03	%			(0.40	)%
Supplemental Data:
Net assets, end of period, in thousands					$195,893				$249,346				$334,125				$304,486				$321,210
Portfolio turnover rate					13	%			31	%			83	%			61	%			56	%

‡ 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.

(2) If the Fund had borne all expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been as follows:

PERIOD ENDED				EXPENSE RATIO				NET INVESTMENT INCOME RATIO
September 30, 2006					1.76	%			0.93	%

See Notes to Financial Statements

27

Morgan Stanley Value Fund

Financial Highlights continued

				FOR THE YEAR ENDED SEPTEMBER 30,
				2006				2005				2004				2003				2002
Class C Shares
Selected Per Share Data:
Net asset value, beginning of period					$12.80				$11.81				$  9.75				$7.64				$10.52
Income (loss) from investment operations:
Net investment income (loss)‡					0.13				0.10				0.04				0.01				(0.04	)
Net realized and unrealized gain (loss)					1.57				0.95				2.02				2.10				(2.84	)
Total income (loss) from investment operations					1.70				1.05				2.06				2.11				(2.88	)
Less dividends from net investment income					(0.16	)			(0.06	)			—				—				—
Net asset value, end of period					$14.34				$12.80				$11.81*				$9.75				$  7.64
Total Return†					13.38	%			8.93	%			21.15	%			27.62	%			(27.38	)%
Ratios to Average Net Assets(1):
Total expenses (before expense offset)					1.72	% (2)			1.71	%			2.00	%			2.21	%			2.18	%
Net investment income (loss)					0.97	% (2)			0.76	%			0.34	%			0.10	%			(0.40	)%
Supplemental Data:
Net assets, end of period, in thousands					$21,859				$24,526				$26,297				$22,068				$21,688
Portfolio turnover rate					13	%			31	%			83	%			61	%			56	%

‡ 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.

(2) If the Fund had borne all expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been as follows:

PERIOD ENDED				EXPENSE RATIO				NET INVESTMENT INCOME RATIO
September 30, 2006					1.73	%			0.96	%

See Notes to Financial Statements

28

Morgan Stanley Value Fund

Financial Highlights continued

				FOR THE YEAR ENDED SEPTEMBER 30,
				2006				2005				2004				2003				2002
Class D Shares
Selected Per Share Data:
Net asset value, beginning of period					$13.44				$12.39				$10.23				$  7.94				$10.83
Income (loss) from investment operations:
Net investment income‡					0.29				0.23				0.16				0.09				0.06
Net realized and unrealized gain (loss)					1.63				0.99				2.12				2.20				(2.95	)
Total income (loss) from investment operations					1.92				1.22				2.28				2.29				(2.89	)
Less dividends from net investment income					(0.31	)			(0.17	)			(0.12	)			—				—
Net asset value, end of period					$15.05				$13.44				$12.39				$10.23				$  7.94
Total Return†					14.47	%			9.91	%			22.42	%			28.84	%			(26.69	)%
Ratios to Average Net Assets(1):
Total expenses (before expense offset)					0.75	% (2)			0.72	%			1.03	%			1.28	%			1.18	%
Net investment income					1.94	% (2)			1.75	%			1.31	%			1.03	%			0.60	%
Supplemental Data:
Net assets, end of period, in thousands					$11,739				$75,832				$68,870				$45,204				$25,424
Portfolio turnover rate					13	%			31	%			83	%			61	%			56	%

‡ 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.

(2) If the Fund had borne all expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been as follows:

PERIOD ENDED				EXPENSE RATIO				NET INVESTMENT INCOME RATIO
September 30, 2006					0.76	%			1.93	%

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, 2006, 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, 2006, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. 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, 2006, 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, 2006

30

Morgan Stanley Value Fund

Results of Special Shareholder Meeting (unaudited)

On August 1, 2006, a Special Meeting of Shareholders of the Fund was scheduled in order to vote on the proposals set forth below. The proposals failed to obtain the necessary quorum in order to hold the meeting, and, therefore, the meeting was adjourned until August 23, 2006 and further adjourned to September 27, 2006 to permit further solicitation of proxies. The meeting was held on September 27, 2006 and the voting results with respect to these proposals were as follows:

(1) Election of Trustees:

				For				Withhold				Abstain				BNV*
Frank L. Bowman					11,508,561				414,438				0				0
Kathleen A. Dennis					11,517,189				405,810				0				0
James F. Higgins					11,512,203				410,796				0				0
Joseph J. Kearns					11,507,668				415,331				0				0
Michael F. Klein					11,508,679				414,320				0				0
W. Allen Reed					11,500,011				422,988				0				0
Fergus Reid					11,500,881				422,118				0				0

(2) Elimination of certain fundamental investment restrictions:

				For				Against				Abstain				BNV*
Elimination of the fundamental policy restricting the Fund's ability to     pledge assets					9,990,174				352,343				388,513				1,191,969
Elimination of the fundamental policy restricting purchases of securities      on margin					9,977,125				364,044				389,861				1,191,969
Elimination of the fundamental policy prohibiting investments in oil, gas,      and other types of minerals or mineral leases					10,002,246				336,599				392,185				1,191,969
Elimination of the fundamental policy prohibiting investments for      purposes of exercising control					10,039,676				319,557				371,797				1,191,969

(3) Modify certain fundamental investment restrictions:

				For				Against				Abstain				BNV*
Modify fundamental policy regarding diversification					10,064,781				293,359				372,890				1,191,969
Modify fundamental policy regarding borrowing money					10,000,955				364,900				365,175				1,191,969
Modify fundamental policy regarding loans					10,004,631				364,783				361,616				1,191,969
Modify fundamental policy regarding investment in commodities,      commodity contracts and futures contracts					10,004,175				352,970				373,885				1,191,969
Modify fundamental policy regarding issuance of senior securities					10,039,139				318,363				373,528				1,191,969

(4) Reclassify certain fundamental policies as non-fundamental policies:

				For				Against				Abstain				BNV*
Reclassification as non-fundamental the fundamental policy regarding      the short sale of securities					10,014,678				337,361				378,991				1,191,969

* Broker ‘‘non-votes’’ are shares held in street name for which the broker indicates that instructions have not been received from the beneficial owners or other persons entitled to vote and for which the broker does not have discretionary voting authority.

31

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 Independent Trustee**

Other Directorships Held by Independent Trustee

Frank L. Bowman (61) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036

Trustee

Since August 2006

President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) (since February 2005); Director or Trustee of various Retail and Institutional Funds (since August 2006) formerly variously, Admiral in the U.S. Navy, Director of Naval Nuclear Propulsion Program and Deputy Administrator—Naval Reactors in the National Nuclear Security Administration at the U.S. Department of Energy (1996-2004). Honorary Knight Commander of the Most Excellent Order of the British Empire.

161

Director of the National Energy Foundation, the U.S. Energy Association, the American Council for Capital Formation and the Armed Services YMCA of the USA.

Michael Bozic (65) 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; Chairperson of the Valuation, Insurance and Compliance Committee (since October 2006); Director or Trustee of the Retail Funds (since April 1994) and the Institutional Funds (since July 2003); formerly Chairperson of the Insurance Committee (July 2006-September 2006); 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); variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck & Co.

175

Director of various business organizations.

32

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 Independent Trustee**

Other Directorships Held by Independent Trustee

Kathleen A. Dennis (53) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036

Trustee

Since August 2006

President, Cedarwood Associates (mutual fund consulting) (since July 2006); Chairperson of the Closed-End, Money Market and Alternatives Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail and Institutional Funds (since August 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006).

161

None.

Edwin J. Garn (73) 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 (lobbying and consulting firm) (2000-2004); 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).

175

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 (72) 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).

175

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.

33

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 Independent Trustee**

Other Directorships Held by Independent Trustee

Dr. Manuel H. Johnson (57) 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., (consulting firm); Chairperson of the Investment Committee (since October 2006) 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 Chairman of the Audit Committee (July 1991-September 2006); Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

175

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

Joseph J. Kearns (64) c/o Kearns & Associates LLC PMB754 23852 Pacific Coast Highway Malibu, CA 90265

Trustee

Since July 2003

President, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 2003) and the Institutional Funds (since August 1994); formerly Deputy Chairperson of the Audit Committee (July 2003- September 2006) and Chairperson of the Audit Committee of the Institutional Funds (October 2001-July 2003); formerly CFO of the J. Paul Getty Trust.

176

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

Michael F. Klein (47) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036

Trustee

Since August 2006

Chief Operating Officer and Managing Director, Aetos Capital, LLC (since March 2000); Chairman of the Fixed-Income Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee (since August 2006) of various Retail and Institutional Funds; formerly Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management, President, Morgan Stanley Institutional Funds (June 1998-March 2000) and Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

161

Director of certain investment funds managed or sponsored by Aetos Capital LLC.

34

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 Independent Trustee**

Other Directorships Held by Independent Trustee

Michael E. Nugent (70) c/o Triumph Capital, L.P. 445 Park Avenue New York, NY 10022

Chairman of the Board and Trustee

Chairman of the Board since July 2006 and Trustee since July 1991

General Partner of Triumph Capital, L.P., a private investment partnership; Chairman of the Board of the Retail Funds and Institutional Funds (since July 2006) and Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2001); formerly Chairman of the Insurance Committee (until July 2006); Vice President, Bankers Trust Company and BT Capital Corporation (1984-1988).

175

None.

W. Allen Reed (59) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036

Trustee

Since August 2006

Chairperson of the Equity Sub-Commitee of the Investment Committee (since October 2006) and Director or Trustee (since August 2006) of various Retail and Institutional Funds. President and CEO of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

161

Director of GMAC (financial services), GMAC Insurance Holdings and Temple-Inland Industries (Packaging, Banking and Forrest Products); member of the Board of Executives of the Morgan Stanley Capital International Editorial Board; Director of Legg Mason and Director of various investment fund advisory boards.

Fergus Reid (74) c/o Lumelite Plastics Corporation 85 Charles Colman Blvd. Pawling, NY 12564

Trustee

Since July 2003

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

176

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

35

Morgan Stanley Value Fund

Trustee and Officer Information continued

Interested Trustee:

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 Interested Trustee**

Other Directorships Held by Interested Trustee

James F. Higgins (58) 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).

175

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’’) or the funds advised by Morgan Stanley Investment Management Inc. and Morgan Stanley AIP GP LP (the ‘‘Institutional Funds’’).

** 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.) as of October 2, 2006.

36

Morgan Stanley Value Fund

Trustee and Officer Information continued

Executive 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 (67) 1221 Avenue of the Americas New York, NY 10020

President and Principal Executive Officer

President since September 2005 and Principal Executive Officer since May 2003

President (since September 2005) and Principal Executive Officer (since May 2003) of funds in the Fund Complex; President (since September 2005) and Principal Executive Officer (since May 2003) of the Van Kampen Funds; Managing Director, Director and/or Officer of the Investment Adviser and various entities affiliated with the Investment Adviser; Director of Morgan Stanley SICAV (since May 2004). Formerly, Executive Vice President (July 2003 to September 2005) of funds in the Fund Complex and the Van Kampen Funds; President and Director of the Institutional Funds (March 2001 to July 2003); Chief Global Operating Officer of Morgan Stanley Investment Management Inc.; Chief Administrative Officer of Morgan Stanley Investment Advisors Inc.; Chief Administrative Officer of Morgan Stanley Services Company Inc.

J. David Germany (52) Morgan Stanley Investment Management Ltd. 25 Cabot Square Canary Wharf, London United Kingdom E144QA

Vice President

Since February 2006

Managing Director and (since December 2005) Chief Investment Officer – Global Fixed Income of Morgan Stanley Investment Management; Managing Director and Director of Morgan Stanley Investment Management Limited; Vice President of the Retail and Institutional Funds (since February 2006).

Dennis F. Shea (53) 1221 Avenue of the Americas New York, NY 10020

Vice President

Since February 2006

Managing Director and (since February 2006) Chief Investment Officer – Global Equity of Morgan Stanley Investment Management; Vice President of the Retail and Institutional Funds (since February 2006). Formerly, Managing Director and Director of Global Equity Research at Morgan Stanley.

Barry Fink (51) 1221 Avenue of the Americas New York, NY 10020

Vice President

Since February 1997

Managing Director and General Counsel of Morgan Stanley Investment Management; Managing Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Vice President of the Retail Funds and (since July 2003) the Institutional Funds. Formerly, Secretary, General Counsel and/or Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Secretary and General Counsel of the Retail Funds.

Amy R. Doberman (44) 1221 Avenue of the Americas New York, NY 10020

Vice President

Since July 2004

Managing Director and General Counsel, U.S. Investment Management of Morgan Stanley Investment Management (since July 2004); Vice President of the Retail Funds and the Institutional Funds (since July 2004); Vice President of the Van Kampen Funds (since August 2004); Secretary (since February 2006) and Managing Director (since July 2004) of the Investment Adviser and various entities affiliated with the Investment Adviser. Formerly, Managing Director and General Counsel – Americas, UBS Global Asset Management (July 2000 to July 2004).

Carsten Otto (42) 1221 Avenue of the Americas New York, NY 10020

Chief Compliance Officer

Since October 2004

Managing Director and U.S. Director of Compliance for Morgan Stanley Investment Management (since October 2004); Managing Director and Chief Compliance Officer of Morgan Stanley Investment Management. Formerly, Assistant Secretary and Assistant General Counsel of the Retail Funds.

Stefanie V. Chang Yu (39) 1221 Avenue of the Americas New York, NY 10020

Vice President

Since December 1997

Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Vice President of the Retail Funds (since July 2002) and the Institutional Funds (since December 1997). Formerly, Secretary of various entities affiliated with the Investment Adviser.

37

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

Francis J. Smith (41) 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 various entities affiliated with the Investment Adviser; Treasurer and Chief Financial Officer of the Retail Funds (since July 2003). Formerly, Vice President of the Retail Funds (September 2002 to July 2003).

Mary E. Mullin (39) 1221 Avenue of the Americas New York, NY 10020

Secretary

Since June 1999

Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Secretary of the Retail Funds (since July 2003) and the Institutional Funds (since June 1999).

    * This is the earliest date the Officer began serving the Retail Funds or the Institutional Funds.

2006 Federal Tax Notice (unaudited)

For the fiscal year ended September 30, 2006, 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, 2006, 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.

38

(This page has been left blank intentionally.)

Trustees Frank L. Bowman Michael Bozic Kathleen A. Dennis Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael F. Klein Michael E. Nugent W. Allen Reed Fergus Reid Officers Michael E. Nugent Chairman of the Board Ronald E. Robison President and Principal Executive Officer J. David Germany Vice President Dennis F. Shea Vice President Barry Fink Vice President Amy R. Doberman Vice President Carsten Otto Chief Compliance Officer Stefanie V. Chang Yu Vice President Francis J. Smith Treasurer and Chief Financial Officer Mary E. Mullin Secretary Transfer Agent 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. © 2006 Morgan Stanley VLURPT-RA06-01026P-Y09/06		MORGAN STANLEY FUNDS
		Morgan Stanley Value Fund Annual Report September 30, 2006

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)  Not applicable.

(d)  Not applicable.

(e)  Not applicable.

(f)

     (1)  The Fund's Code of Ethics is attached hereto as Exhibit 12 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:

      2006
                                              REGISTRANT     COVERED ENTITIES(1)
        AUDIT FEES..................           $ 30,200        N/A

        NON-AUDIT FEES
            AUDIT-RELATED FEES......           $    531 (2)    $ 5,328,768 (2)
            TAX FEES................           $  5,400 (3)    $ 1,640,675 (4)
            ALL OTHER FEES..........           $      -        $         -
        TOTAL NON-AUDIT FEES........           $  5,931        $ 6,969,443

        TOTAL.......................           $ 36,131        $ 6,969,443


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

        NON-AUDIT FEES
            AUDIT-RELATED FEES......           $    540 (2)    $ 3,215,745 (2)
            TAX FEES................           $  5,746 (3)    $    24,000 (4)
            ALL OTHER FEES..........           $      -        $         -
        TOTAL NON-AUDIT FEES........           $  6,286        $ 3,239,745

        TOTAL.......................           $ 36,734        $ 3,239,745

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.



                                       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 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/Directors 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 second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.


Item 12. Exhibits

(a) 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, 2006

     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, 2006

/s/ Francis Smith
Francis Smith
Principal Financial Officer
November 21, 2006







                                       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 30, 2006


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



                                       17


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

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

47.  Morgan Stanley Balanced Fund ("Balanced")+

     ASSET ALLOCATION FUND
     ---------------------

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

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

49.  Morgan Stanley Convertible Securities Trust ("Convertible Securities")+
50.  Morgan Stanley Flexible Income Trust ("Flexible Income")+
51.  Morgan Stanley Income Trust ("Income Trust")+
52.  Morgan Stanley High Yield Securities Inc. ("High Yield Securities")+
53.  Morgan Stanley Limited Duration Fund ("Limited Duration Fund")
54.  Morgan Stanley Limited Duration U.S. Treasury Trust ("Limited Duration
     Treasury")
55.  Morgan Stanley Mortgage Securities Trust ("Mortgage Securities")+
56.  Morgan Stanley U.S. Government Securities Trust ("Government Securities")+

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


                                       18


57.  Morgan Stanley California Tax-Free Income Fund ("California Tax-Free")+
58.  Morgan Stanley Limited Term Municipal Trust ("Limited Term Municipal")
59.  Morgan Stanley New York Tax-Free Income Fund ("New York Tax-Free")+
60.  Morgan Stanley Tax-Exempt Securities Trust ("Tax-Exempt Securities")+

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

61.  Morgan Stanley Select Dimensions Investment Series ("Select Dimensions")
     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    Focus Growth Portfolio
     o    Global Equity Portfolio
     o    Growth Portfolio
     o    Money Market Portfolio
     o    Utilities Portfolio

62.  Morgan Stanley Variable Investment Series ("Variable Investment")
     o    Aggressive Equity Portfolio
     o    Dividend Growth Portfolio
     o    Equity Portfolio
     o    European Equity Portfolio
     o    Global Advantage Portfolio
     o    Global Dividend Growth Portfolio
     o    High Yield Portfolio
     o    Income Builder Portfolio
     o    Limited Duration Portfolio
     o    Money Market Portfolio
     o    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
     -------------------------------------

63.  Morgan Stanley Government Income Trust ("Government Income")
64.  Morgan Stanley Income Securities Inc. ("Income Securities")
65.  Morgan Stanley Prime Income Trust ("Prime Income")


                                       19


     TAX-EXEMPT FIXED-INCOME CLOSED-END FUNDS
     ----------------------------------------

66.  Morgan Stanley California Insured Municipal Income Trust ("California
     Insured Municipal")
67.  Morgan Stanley California Quality Municipal Securities ("California Quality
     Municipal")
68.  Morgan Stanley Insured California Municipal Securities ("Insured California
     Securities")
69.  Morgan Stanley Insured Municipal Bond Trust ("Insured Municipal Bond")
70.  Morgan Stanley Insured Municipal Income Trust ("Insured Municipal Income")
71.  Morgan Stanley Insured Municipal Securities ("Insured Municipal
     Securities")
72.  Morgan Stanley Insured Municipal Trust ("Insured Municipal Trust")
73.  Morgan Stanley Municipal Income Opportunities Trust ("Municipal
     Opportunities")
74.  Morgan Stanley Municipal Income Opportunities Trust II ("Municipal
     Opportunities II")
75.  Morgan Stanley Municipal Income Opportunities Trust III ("Municipal
     Opportunities III")
76.  Morgan Stanley Municipal Premium Income Trust ("Municipal Premium")
77.  Morgan Stanley New York Quality Municipal Securities ("New York Quality
     Municipal")
78.  Morgan Stanley Quality Municipal Income Trust ("Quality Municipal Income")
79.  Morgan Stanley Quality Municipal Investment Trust ("Quality Municipal
     Investment")
80.  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    Focus Equity Portfolio
     o    Global Franchise Portfolio
     o    Global Real Estate Portfolio
     o    Global Value Equity Portfolio
     o    International Equity Portfolio
     o    International Growth Equity Portfolio
     o    International Magnum Portfolio
     o    International Real Estate Portfolio
     o    International Small Cap Portfolio


                                       20


     o    Large Cap Relative Value Portfolio
     o    Money Market Portfolio
     o    Municipal Money Market Portfolio
     o    Small Company Growth Portfolio
     o    Systematic Active large Cap Core Portfolio
     o    Systematic Active Small Cap Core Portfolio
     o    Systematic Active Small Cap Growth Portfolio
     o    Systematic Active Small Cap Value Portfolio
     o    U.S. Large Cap Growth Portfolio
     o    U.S. Real Estate 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 Portfolio
     o    Advisory Foreign Fixed Income II Portfolio
     o    Advisory Foreign Fixed Income Portfolio
     o    Balanced Portfolio
     o    Core Fixed Income Portfolio
     o    Core Plus Fixed Income Portfolio
     o    Equity Portfolio
     o    Equity Plus 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    Long Duration Fixed Income Portfolio
     o    Mid-Cap Growth Portfolio
     o    Municipal Portfolio


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


                                       21


     o    U.S. Mid-Cap Value Portfolio
     o    U.S. Small-Cap Value Portfolio
     o    Value Portfolio

     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 Real Estate Portfolio
     o    Global Value Equity Portfolio
     o    High Yield Portfolio
     o    International Growth Equity Portfolio
     o    International Magnum Portfolio
     o    Mid-Cap Growth Portfolio
     o    Small Company Growth 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


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


                                       22


     o    Targeted Duration Portfolio

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

     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")
15.  India Investment Fund ("India Investment")

CLOSED-END FUND OF HEDGE FUNDS

16.  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
              Francis 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 second fiscal quarter of
     the period covered by this report that has materially affected, or is
     reasonably likely to materially affect, the registrant's internal control
     over financial reporting; and

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



                                       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, 2006

                                                  /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 second fiscal quarter of
     the period covered by this report that has materially affected, or is
     reasonably likely to materially affect, the registrant's internal control
     over financial reporting; and

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



                                       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, 2006
                                                 /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, 2006 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, 2006                             /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, 2006 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, 2006                            /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