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: 811-08916

Morgan Stanley Technology 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: March 31, 2007

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
Technology Fund (formerly Morgan Stanley Information Fund)* performed during the
semiannual period. We will provide an overview of the market conditions, and
discuss some of the factors that affected performance during the reporting
period. In addition, this report includes the 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.

*THE FUND'S NAME CHANGED EFFECTIVE JULY 28, 2006.

FUND REPORT

For the six months ended September 30, 2006

TOTAL RETURN FOR THE 6 MONTHS ENDED SEPTEMBER 30, 2006

<Table>
<Caption>
NYSE
ARCA LIPPER
TECH SCIENCE &
100 S&P TECHNOLOGY
CLASS A CLASS B CLASS C CLASS D INDEX(R)(1) 500(R)(2) FUNDS INDEX(3)

-6.46% -6.85% -6.85% -6.42% -5.19% 4.14% -5.88%
</Table>

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

MARKET CONDITIONS

The technology sector experienced a significant amount of volatility over the
six-month period ended September 30, 2006. Following a short-term rally at the
beginning of the year, returns deteriorated as investors grew increasingly
concerned about the slowing economy and what possible affect it would have on
technology spending. Feeding into these worries were the Federal Open Market
Committee's (the "Fed") ongoing adherence to its monetary policy in its effort
to tame inflation concerns, continued high oil and natural gas prices and a
number of mixed corporate earnings reports. Facing uncertainty, investors during
the spring and early summer months overwhelmingly preferred more defensive, less
cyclical areas of the market.

During the month of August, however, the technology sector entered positive
territory. After its 17th consecutive rate hike in June, the Fed opted to leave
the target federal funds rate unchanged in its August meeting. This pause was
well received by the market, and the stabilization of interest rates coupled
with the decline in energy and other commodities prices helped renew investors'
enthusiasm for technology goods and services. Evidence of a year-end revival
began to appear toward the end of the reporting period as personal computer
back-to-school sales surged, and businesses commenced their seasonal year-end
information technology (IT) spending. Rising expectations of strong sales within
the technology sector for the 2006 holiday season further enhanced the sector's
overall performance at the end of the period.

PERFORMANCE ANALYSIS

Morgan Stanley Technology Fund underperformed the NYSE Arca Tech 100 Index(R) as
well as the S&P 500(R), and the Lipper Science & Technology Funds Index for the
six months ended September 30, 2006, assuming no deduction of applicable sales
charges.

The new management team for the Morgan Stanley Technology Fund employs a
diversified approach in the allocation of assets within the technology sector.
The team believes that increased exposure to industries within the health care
sector, such as biotechnology, provides better diversification benefits. For
this period, however, investment in the biotechnology sector hampered the Fund's
overall performance due to a sluggish FDA approval process for new products and
increased competition from international drug manufacturers. Exposure to
semiconductor firms also hindered returns as the Fund's holdings within this
segment suffered from overstocked inventories, cyclical sales lag and depressed
gross margins. Furthermore, stock selection in certain Internet

information providers adversely affected overall performance. These companies
declined as advertising revenues diminished and investors reconsidered the
valuation on stock prices.

Despite these pressures on the Fund's overall performance, there were some
notable positive contributors during the period. Select companies within the
computer hardware industry boosted their market share, particularly through
sales of desktop and notebook computers. Manufacturers of components for LCD
televisions also enjoyed strong returns, as did companies that produce video
games and gaming software. Finally, the Fund's holdings in the aerospace/defense
sub-sector added to overall returns due to continued U.S. defense spending,
increased IT contracts from the U.S. government and strong international sales
for aerospace products.

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.

INVESTMENT STRATEGY

The Fund will normally invest at least 80 percent of its assets in common stocks
and other equity securities of companies located throughout the world considered
by the Fund's "Investment Adviser," Morgan Stanley Investment Advisers Inc., to
rely extensively on technology, science and communications in their product
development or operations at the time of investment. This policy may be changed
without shareholder approval; however, you would be notified in writing of any
changes. The companies in which the Fund may invest may be from any industry, as
long as they produce or deploy innovative technology. The Investment Adviser
focuses on those companies that it believes have the best potential for earnings
growth. The Fund normally holds common stocks and other equity securities of
companies located in at least three countries, one of which is the United
States. The Fund may invest up to 50 percent of its net assets in the securities
(including depositary receipts) of foreign companies; however, it will not
invest more than 25 percent of its net assets in any one foreign country. Up to
15 percent of the Fund's net assets may be invested in emerging market
securities (held either directly or in the form of depositary receipts), but of
which no more than 10 percent may be invested in local shares (shares traded in
the issuer's local or regional market). In addition, the Fund will not invest
more than 10 percent of its net assets in convertible securities. In deciding
which securities to buy, hold or sell, the Investment Adviser considers
business, economic and political conditions. The Investment Adviser generally
considers selling a portfolio holding when it determines that the holding no
longer satisfies its investment criteria.

<Table>
<Caption>
TOP 10 HOLDINGS

Apple Computer, Inc. 3.4%
Google, Inc. (Class A) 3.3
Microsoft Corp. 3.2
Lockheed Martin Corp. 3.1
Corning Inc. 3.0
International Business Machines Corp. 3.0
Genentech, Inc. 2.7
Amgen Inc. 2.6
Advanced Micro Devices, Inc. 2.5
DST Systems, Inc. 2.5
</Table>

<Table>
<Caption>
TOP FIVE INDUSTRIES

Semiconductors 16.2%
Packaged Software 16.0
Biotechnology 9.9
Telecommunications Equipment 7.9
Information Technology Services 6.1
</Table>

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.

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.

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.

PERFORMANCE SUMMARY

AVERAGE ANNUAL TOTAL RETURNS -- PERIOD ENDED SEPTEMBER 30, 2006

<Table>
<Caption>
CLASS A SHARES* CLASS B SHARES** CLASS C SHARES(+) CLASS D SHARES(++)
(since 07/28/97) (since 11/28/95) (since 07/28/97) (since 07/28/97)
SYMBOL IFOAX IFOBX IFOCX IFODX

1 YEAR (2.35)%(4) (3.14)%(4) (3.14)%(4) (2.20)%(4)
(7.47)(5) (7.99)(5) (4.11)(5) --
5 YEARS 1.18(4) 0.35(4) 0.42(4) 1.37(4)
0.10(5) (0.05)(5) 0.42(5) --
10 YEARS -- 2.85(4) -- --
-- 2.85(5) -- --
SINCE INCEPTION 3.41(4) 3.48(4) 2.62(4) 3.62(4)
2.80(5) 3.48(5) 2.62(5) --
</Table>

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 table does 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 NYSE Arca Tech 100 Index(R) is a price-weighted index comprised of
common stocks and American Depository Receipts (ADRs) of technology-related
companies listed on US exchanges. 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(R) to the NYSE Arca
Tech 100 Index(R) to more accurately reflect the Fund's investible
universe.

(2) The Standard & Poor's 500(R) Index (S&P 500(R)) 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.

(3) The Lipper Science & Technology Funds Index is an equally weighted
performance index of the largest qualifying funds (based on net assets) in
the Lipper Science & Technology 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.

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.

<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD *
------------- ------------- ---------------
04/01/06 -
04/01/06 09/30/06 09/30/06
------------- ------------- ---------------

CLASS A
Actual (-6.46% return)...................................... $1,000.00 $ 935.40 $ 8.59
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,016.19 $ 8.95
CLASS B
Actual (-6.85% return)...................................... $1,000.00 $ 931.50 $12.20
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,012.43 $12.71
CLASS C
Actual (-6.85% return)...................................... $1,000.00 $ 931.50 $12.20
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,012.43 $12.71
CLASS D
Actual (-6.42% return)...................................... $1,000.00 $ 935.80 $ 7.38
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,017.45 $ 7.69
</Table>

- ------------------
* Expenses are equal to the Fund's annualized expense ratios of 1.77%, 2.52%,
2.52% and 1.52% 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).

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 "performance peer group"). The Board also discussed with the Adviser
the performance goals and the actual results achieved in managing the Fund. When
a fund underperforms its performance peer group, the Board discusses with the
Adviser the causes of the underperformance and, where necessary, specific
changes to investment strategy or investment personnel. The Board concluded that
the Fund can reasonably be expected to be competitive with that of its
performance peer group based on recent action taken or proposed to be taken by
the Adviser with respect to the Fund's investment strategy and/or investment
personnel.

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 any other proprietary funds it manages with
investment strategies comparable to those of the Fund.

FEES AND EXPENSES RELATIVE TO COMPARABLE FUNDS MANAGED BY OTHER ADVISERS

The Board reviewed the management fee rate and 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.

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.

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.

Morgan Stanley Technology Fund
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 2006 (UNAUDITED)

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Common Stocks (100.1%)
Aerospace & Defense
(4.9%)
110,000 Lockheed Martin Corp. ... $ 9,466,600
110,000 Raytheon Co. (c)......... 5,281,100
------------
14,747,700
------------
Biotechnology (9.9%)
110,000 Amgen Inc.*.............. 7,868,300
100,000 Genentech, Inc.*......... 8,270,000
110,000 Genzyme Corp.*........... 7,421,700
50,000 Gilead Sciences, Inc.*... 3,435,000
100,000 MedImmune, Inc. (c)*..... 2,921,000
------------
29,916,000
------------
Computer Communications
(2.2%)
250,000 Cisco Systems, Inc.*..... 5,750,000
50,400 Riverbed Technology, Inc.
(c)*.................... 982,800
------------
6,732,800
------------
Computer Peripherals
(2.6%)
264,700 EMC Corp.*............... 3,171,106
130,200 Network Appliance,
Inc.*................... 4,818,702
192,300 Seagate Technology
(Escrow) Inc. (a)....... 0
------------
7,989,808
------------
Computer Processing
Hardware (5.9%)
135,000 Apple Computer, Inc.*.... 10,399,050
200,000 Hewlett-Packard Co. ..... 7,338,000
------------
17,737,050
------------
Data Processing Services
(5.9%)
115,000 Automatic Data
Processing, Inc. ....... 5,444,100
120,600 DST Systems, Inc. (c)*... 7,437,402
115,000 First Data Corp. ........ 4,830,000
------------
17,711,502
------------
</Table>

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Electronic Components
(2.5%)
100,000 Jabil Circuit, Inc. ..... $ 2,857,000
85,000 SanDisk Corp. (c)*....... 4,550,900
------------
7,407,900
------------
Electronic Equipment/
Instruments (1.5%)
115,000 Thermo Electron Corp.*... 4,522,950
------------
Electronic Production
Equipment (6.1%)
130,200 Applied Materials, Inc.
(c)..................... 2,308,446
150,200 KLA-Tencor Corp. (c)..... 6,679,394
130,200 Lam Research Corp.*...... 5,901,966
130,000 Novellus Systems, Inc.
(c)*.................... 3,595,800
------------
18,485,606
------------
Information Technology
Services (7.7%)
150,000 Amdocs Ltd.
(Guernsey)*............. 5,940,000
135,000 Citrix Systems, Inc.*.... 4,888,350
45,000 Cognizant Technology
Solutions Corp. (Class
A)*..................... 3,332,700
110,000 International Business
Machines Corp. ......... 9,013,400
------------
23,174,450
------------
Internet Software/
Services (5.6%)
275,000 BEA Systems, Inc.*....... 4,180,000
25,000 Google, Inc. (Class
A)*..................... 10,047,500
105,200 Yahoo!, Inc.*............ 2,659,456
------------
16,886,956
------------
Medical Specialties
(1.9%)
75,000 Bard (C.R.), Inc. ....... 5,625,000
------------
Other Consumer Services
(1.3%)
125,000 eBay Inc.*............... 3,545,000
25,100 Shutterfly, Inc. ........ 390,305
------------
3,935,305
------------
</Table>

See Notes to Financial Statements
12

Morgan Stanley Technology Fund
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Packaged Software (16.0%)
115,000 Adobe Systems, Inc.*..... $ 4,306,750
140,000 Autodesk, Inc.*.......... 4,869,200
100,000 Cognos, Inc. (Canada)*... 3,650,000
50,300 Commvault systems, Inc.
(c)*.................... 905,400
33,600 DivX Inc. (c)*........... 798,672
100,000 Hyperion Solutions Corp.
(c)*.................... 3,448,000
200,000 McAfee Inc.*............. 4,892,000
350,000 Microsoft Corp. ......... 9,565,500
200,000 Oracle Corp.*............ 3,548,000
130,200 SAP AG (ADR) (Germany)
(c)..................... 6,444,900
275,000 Symantec Corp.*.......... 5,852,000
------------
48,280,422
------------
Recreational Products
(2.0%)
110,000 Electronic Arts Inc.*.... 6,124,800
------------
Semiconductors (16.2%)
307,100 Advanced Micro Devices,
Inc. (c)*............... 7,631,435
100,000 Altera Corp.*............ 1,838,000
100,000 Analog Devices, Inc. .... 2,939,000
130,000 Broadcom Corp. (Class A)
(c)*.................... 3,944,200
130,200 Cypress Semiconductor
Corp. (c)*.............. 2,313,654
200,000 Intel Corp. ............. 4,114,000
125,000 Linear Technology Corp.
(c)..................... 3,890,000
200,000 Marvell Technology Group,
Ltd. (Bermuda) (c)*..... 3,874,000
100,000 Maxim Integrated
Products, Inc. ......... 2,807,000
130,200 Micron Technology,
Inc.*................... 2,265,480
100,000 National Semiconductor
Corp. (c)............... 2,353,000
150,000 NVIDIA Corp.*............ 4,438,500
130,200 Texas Instruments
Inc. ................... 4,329,150
100,000 Xilinx, Inc. ............ 2,195,000
------------
48,932,419
------------
</Table>

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Telecommunication
Equipment (7.9%)
375,000 Corning, Inc.*........... $ 9,153,750
110,000 Harris Corp. ............ 4,893,900
130,200 Motorola, Inc. (c)....... 3,255,000
135,000 Nokia Corp. (ADR)
(Finland) (c)........... 2,658,150
110,000 QUALCOMM, Inc. .......... 3,998,500
------------
23,959,300
------------
Total Common Stocks
(Cost $298,151,551)...... 302,169,968
------------
<Caption>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -----------

Short-Term Investments (10.8%)
Short-Term Debt
Securities held as
Collateral on Loaned
Securities (10.3%)
$ 775 Alliance & Leister Plc.,
5.32%, 10/29/07 (d)..... $ 775,000
1,550 Amsouth Bank, 5.30%,
11/13/06 (d)............ 1,550,000
388 Bancaja, 5.37%, 10/29/07
(d)..................... 387,500
Bank of America,
16 5.31%, 11/07/06 (d)..... 15,500
78 5.31%, 11/07/06 (d)..... 77,500
78 5.31%, 11/07/06 (d)..... 77,500
1,240 5.32%, 05/15/07 (d)..... 1,240,000
388 Bank of New York Co.,
Inc., 5.32%, 10/29/07
(d)..................... 387,500
Bear Stearns,
465 5.44%, 03/12/07 (d)..... 465,000
310 5.44%, 03/08/07 (d)..... 310,119
775 5.37%, 10/29/07 (d)..... 775,000
775 BNP Paribas Mtn., 5.36%,
10/29/07 (d)............ 775,000
542 CIC NY, 5.31%, 09/04/07
(d)..................... 542,424
362 Ciesco, LLC, 5.30%,
10/10/06................ 361,640
</Table>

See Notes to Financial Statements
13

Morgan Stanley Technology Fund
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

<Table>
<Caption>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------

$ 791 Dekabank Deutsche
Girozentrale, 5.51%
10/29/07 (d)............ $ 790,500
4,813 Deutsche Bank Securities
Inc., 5.40%, 10/02/06... 4,813,404
775 Dexia Bank NY, 5.33%,
09/28/07 (d)............ 774,848
775 Five Finance Inc., 5.33%,
11/17/06 (d)............ 775,014
Goldman Sachs Group, Inc.
729 5.49%, 10/01/07 (d)..... 728,500
388 5.38%, 10/29/07 (d)..... 387,500
388 HSBC Finance Corp.,
5.32%, 10/29/07 (d)..... 387,500
387 Liberty Lighthouse US
Capital, 5.33%, 02/01/07
(d)..................... 387,461
Manufacturers and
Traders,
1,550 5.32%, 04/19/07 (d)..... 1,549,873
232 5.31%, 12/29/06 (d)..... 232,485
408 Merrill Lynch and Co.,
5.46%, 04/26/07 (d)..... 407,502
388 Natexis Banques
Populaires NY, 5.35%,
02/28/07 (d)............ 387,500
National City Bank
Cleveland
736 5.32%, 03/01/07 (d)..... 736,180
387 5.32%, 09/18/07 (d)..... 387,471
1,550 National Rural Utilites
Coop., Fin., 5.32%,
10/29/07 (d)............ 1,550,000
899 Nationwide Building
Society, 5.42%, 10/01/07
(d)..................... 899,000
</Table>

<Table>
<Caption>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------

$ 769 Newport Funding Corp.,
5.33%, 10/02/06......... $ 769,420
1,162 Nordea Bank New York,
5.31%, 05/16/07 (d)..... 1,162,456
Norinchukin Bank NY,
388 5.31%, 10/10/06......... 387,671
775 5.33%, 11/01/06......... 775,000
Rhein-Main Securitisaton
Limited,
554 5.30%, 10/05/06......... 553,879
154 5.30%, 10/20/06......... 154,319
772 Scaldis Capital LLC,
5.29%, 10/20/06......... 771,596
775 Skandi New York, 5.32%,
10/29/07 (d)............ 775,000
775 SLM Corp., 5.33%,
10/29/07 (d)............ 775,000
154 Ticonderoga Funding LLC,
5.29%, 10/25/06......... 154,319
543 Unicredito Italiano Bank
(IRE) Plc., 5.34%,
10/29/07 (d)............ 542,500
Wells Fargo Bank San
Francisco N.A.,
155 5.30%, 12/01/06 (d)..... 155,000
1,162 5.31%, 12/18/06 (d)..... 1,162,482
------------
Total Short-Term Debt
Securities held as
collateral on loaned
securities
(Cost $31,073,063)....... 31,073,063
------------
</Table>

See Notes to Financial Statements
14

Morgan Stanley Technology Fund
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

<Table>
<Caption>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------

Repurchase Agreement (0.5%)
$ 1,427 Joint repurchase
agreement account 5.30%
due 10/02/06 (dated
09/29/06; proceeds
$1,427,630) (b)
(Cost $1,427,000)....... $ 1,427,000
------------
Total Short-Term
Investments (Cost
$32,500,063)............. 32,500,063
------------

Total Investments
(Cost $330,651,614) (e)..... 110.9% 334,670,031
Liabilities in Excess of
Other Assets................ (10.9) (32,829,175)
----- ------------
Net Assets.................. 100.0% $301,840,856
===== ============
</Table>

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

<Table>

ADR American Depositary Receipt
* Non-income producing security.
(a) A security with total market value equal to $0 has
been valued at its fair value as determined in good
faith under procedures established by and under the
general supervision of the Fund's Trustees.
(b) Collateralized by federal agency and U.S. Treasury
obligations.
(c) All or portion of securities on loan at September
30, 2006.
(d) Variable/Floating Rate Security -- interest rate
changes on these instruments are based on changes
in a designated base rate. The rates shown are
those in effect on September 30, 2006.
(e) The aggregate cost for federal income tax purposes
approximates the aggregate cost for book purposes.
The aggregate gross unrealized appreciation is
$18,442,845 and the aggregate gross unrealized
depreciation is $14,424,428, resulting in net
unrealized appreciation of $4,018,417.
</Table>

See Notes to Financial Statements
15

Morgan Stanley Technology Fund
SUMMARY OF INVESTMENTS - SEPTEMBER 30, 2006 (UNAUDITED)

<Table>
<Caption>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ---------------------------------------------------------

Semiconductors............... $ 48,932,419 16.2%
Packaged Software............ 48,280,422 16.0
Collateral on Loaned
Securities.................. 31,073,063 10.3
Biotechnology................ 29,916,000 9.9
Telecommunication
Equipment................... 23,959,300 7.9
Information Technology
Services.................... 23,174,450 7.7
Electronic Production
Equipment................... 18,485,606 6.1
Computer Processing
Hardware.................... 17,737,050 5.9
Data Processing Services..... 17,711,502 5.9
Internet Software/Services... 16,886,956 5.6
Aerospace & Defense.......... 14,747,700 4.9
</Table>

<Table>
<Caption>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ---------------------------------------------------------

Computer Peripherals......... 7,989,808 2.6
Electronic Components........ 7,407,900 2.5
Computer Communications...... 6,732,800 2.2
Recreational Products........ 6,124,800 2.0
Medical Specialties.......... 5,625,000 1.9
Electronic Equipment/
Instruments................. 4,522,950 1.5
Other Consumer Services...... 3,935,305 1.3
Repurchase Agreement......... 1,427,000 0.5
------------ -----
$334,670,031 110.9%
============ =====
</Table>

See Notes to Financial Statements
16

Morgan Stanley Technology Fund
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
September 30, 2006 (unaudited)

<Table>

Assets:
Investments in securities, at value
(cost $330,651,614) (including $30,480,692 of securities
loaned).................................................... $334,670,031
Cash........................................................ 6,353
Receivable for:
Dividends............................................... 67,785
Shares of beneficial interest sold...................... 57,302
Interest................................................ 420
Prepaid expenses and other assets........................... 43,643
---------------
Total Assets............................................ 334,845,534
---------------
Liabilities:
Collateral on securities loaned, at value................... 31,073,063
Payable for:
Shares of beneficial interest redeemed.................. 975,970
Investments purchased................................... 376,500
Distribution fee........................................ 188,031
Investment advisory fee................................. 165,865
Transfer agent fee...................................... 103,281
Administration fee...................................... 19,805
Accrued expenses and other payables......................... 102,163
---------------
Total Liabilities....................................... 33,004,678
---------------
Net Assets.............................................. $301,840,856
===============
Composition of Net Assets:
Paid-in-capital............................................. $2,456,540,025
Net unrealized appreciation................................. 4,018,417
Accumulated net investment loss............................. (2,941,938)
Accumulated net realized loss............................... (2,155,775,648)
---------------
Net Assets.............................................. $301,840,856
===============
Class A Shares:
Net Assets.................................................. $92,522,007
Shares Outstanding (unlimited authorized, $.01 par value)... 9,264,495
Net Asset Value Per Share............................... $9.99
===============
Maximum Offering Price Per Share,
(net asset value plus 5.54% of net asset value)......... $10.54
===============
Class B Shares:
Net Assets.................................................. $181,762,298
Shares Outstanding (unlimited authorized, $.01 par value)... 19,664,565
Net Asset Value Per Share............................... $9.24
===============
Class C Shares:
Net Assets.................................................. $23,860,747
Shares Outstanding (unlimited authorized, $.01 par value)... 2,582,754
Net Asset Value Per Share............................... $9.24
===============
Class D Shares:
Net Assets.................................................. $3,695,804
Shares Outstanding (unlimited authorized, $.01 par value)... 361,862
Net Asset Value Per Share............................... $10.21
===============
</Table>

See Notes to Financial Statements
17

Morgan Stanley Technology Fund
FINANCIAL STATEMENTS continued

Statement of Operations
For the six months ended September 30, 2006 (unaudited)

<Table>

Net Investment Loss:
Income
Dividends (net of $9,199 foreign withholding tax)........... $ 814,076
Interest.................................................... 97,909
Income from securities loaned -- Net........................ 6,515
------------
Total Income............................................ 918,500
------------
Expenses
Investment advisory fee..................................... 1,094,527
Transfer agent fees and expenses............................ 1,047,593
Distribution fee (Class A shares)........................... 120,587
Distribution fee (Class B shares)........................... 1,001,496
Distribution fee (Class C shares)........................... 130,375
Administration fee.......................................... 130,690
Shareholder reports and notices............................. 116,425
Professional fees........................................... 42,624
Custodian fees.............................................. 24,460
Registration fees........................................... 15,750
Trustees' fees and expenses................................. 133
Other....................................................... 19,005
------------
Total Expenses.......................................... 3,743,665
Less: expense offset........................................ (5,081)
------------
Net Expenses............................................ 3,738,584
------------
Net Investment Loss..................................... (2,820,084)
------------
Net Realized and Unrealized Gain (Loss):
Net Realized Loss on:
Investments................................................. (29,142,704)
Foreign exchange transactions............................... (3,351)
------------
Net Realized Loss....................................... (29,146,055)
------------
Net Change in Unrealized Appreciation/Depreciation on:
Investments................................................. 4,765,816
Net translation of other assets and liabilities denominated
in foreign currencies..................................... (292)
------------
Net Appreciation........................................ 4,765,524
------------
Net Loss................................................ (24,380,531)
------------
Net Decrease................................................ $(27,200,615)
============
</Table>

See Notes to Financial Statements
18

Morgan Stanley Technology Fund
FINANCIAL STATEMENTS continued

Statements of Changes in Net Assets

<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
SEPTEMBER 30, 2006 MARCH 31, 2006
------------------ --------------
(unaudited)

Increase (Decrease) in Net Assets:
Operations:
Net investment loss......................................... $ (2,820,084) $ (7,935,051)
Net realized gain (loss).................................... (29,146,055) 79,014,882
Net change in unrealized appreciation/depreciation.......... 4,765,524 (18,639,365)
------------ -------------
Net Increase (Decrease)................................. (27,200,615) 52,440,466
------------ -------------

Net decrease from transactions in shares of beneficial
interest.................................................. (61,612,837) (170,456,065)
------------ -------------
Net Decrease............................................ (88,813,452) (118,015,599)
Net Assets:
Beginning of period......................................... 390,654,308 508,669,907
------------ -------------
End of Period
(Including accumulated net investment losses of $2,941,938
and $121,854, respectively)................................. $301,840,856 $ 390,654,308
============ =============
</Table>

See Notes to Financial Statements
19

Morgan Stanley Technology Fund
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED)

1. Organization and Accounting Policies

Morgan Stanley Technology Fund (the "Fund"), formerly Morgan Stanley Information
Fund (the Fund's name changed effective July 28, 2006), 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
long-term capital appreciation. The Fund was organized as a Massachusetts
business trust on December 8, 1994 and commenced operations on November 28,
1995. On July 28, 1997, the Fund converted to a multiple class share structure.

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 thirty 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

Morgan Stanley Technology Fund
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

general supervision of the Fund's Trustees. Occasionally, developments affecting
the closing prices of securities and other assets may occur between the times at
which valuations of such securities are determined (that is, close of the
foreign market on which the securities trade) and the close of business on the
NYSE. If developments occur during such periods that are expected to materially
affect the value of such securities, such valuations may be adjusted to reflect
the 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. Foreign Currency Translation and Forward Foreign Currency Contracts -- The
books and records of the Fund are maintained in U.S. dollars as follows: (1) the
foreign currency market value of investment securities, other assets and
liabilities and forward foreign currency contracts ("forward contracts") are
translated at the exchange rates prevailing at the end of the period; and

Morgan Stanley Technology Fund
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

(2) purchases, sales, income and expenses are translated at the exchange rates
prevailing on the respective dates of such transactions. The resultant exchange
gains and losses are recorded as realized and unrealized gain/loss on foreign
exchange transactions. Pursuant to U.S. federal income tax regulations, certain
foreign exchange gains/losses included in realized and unrealized gain/loss are
included in or are a reduction of ordinary income for federal income tax
purposes. The Fund does not isolate that portion of the results of operations
arising as a result of changes in the foreign exchange rates from the changes in
the market prices of the securities. Forward contracts are valued daily at the
appropriate exchange rates. The resultant unrealized exchange gains and losses
are recorded as unrealized foreign currency gain or loss. The Fund records
realized gains or losses on delivery of the currency or at the time the forward
contract is extinguished (compensated) by entering into a closing transaction
prior to delivery.

F. Futures Contracts -- A futures contract is an agreement between two parties
to buy and sell financial instruments or contracts based on financial indices at
a set price on a future date. Upon entering into such a contract, the Fund is
required to pledge to the broker cash, U.S. Government securities or other
liquid portfolio securities equal to the minimum initial margin requirements of
the applicable futures exchange. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments known as
variation margin are recorded by the Fund as unrealized gains and losses. Upon
closing of the contract, the Fund realizes a gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed.

G. Security Lending -- Certain Funds may lend securities to qualified financial
institutions, such as broker-dealers, to earn additional income. Any increase or
decrease in the fair value of the securities loaned that might occur and any
interest earned or dividends declared on those securities during the term of the
loan would remain in the Fund. Funds that lend securities receive cash or
securities as collateral in an amount equal to or exceeding 100% of the current
fair value of the loaned securities. The collateral is marked-to-market daily,
by the securities lending agent, to ensure that a minimum of 100% collateral
coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any
cash collateral that is received in high-quality short-term investments.
Securities lending income is generated from the earnings on the invested
collateral and borrowing fees, less any rebates owed to the borrowers and
compensation to the lending agent.

The value of loaned securities and related collateral outstanding at September
30, 2006 are $30,480,692 and $31,073,063, respectively.

Morgan Stanley Technology Fund
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

H. 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.

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

J. Use of Estimates -- The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and disclosures.
Actual results could differ from those estimates.

2. Investment Advisory/Administration Agreements

Pursuant to an Investment Advisory Agreement with the Investment Adviser, the
Fund pays an advisory fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined at the close of
each business day: 0.67% to the portion of the daily net assets not exceeding
$500 million; 0.645% to the portion of the daily net assets exceeding $500
million but not exceeding $3 billion and 0.62% to the portion of the daily net
assets in excess of $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.

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 lesser of: (a) the average daily aggregate gross sales of the
Class B shares since the inception of the Fund (not including reinvestment of
dividend or capital gain distributions) less the average daily aggregate net
asset value of the Class B shares redeemed since the Fund's inception upon which
a contingent deferred sales charge has been imposed or waived; or (b) 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

Morgan Stanley Technology Fund
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

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 $99,286,107 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 six months 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 1.0%, respectively.

The Distributor has informed the Fund that for the six months 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 $150,
$247,591 and $1,884, respectively and received $7,759 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 six months ended September 30, 2006 aggregated
$167,826,982 and $209,084,604, respectively.

For the six months ended September 30, 2006, the Fund incurred brokerage
commissions of $65,127 with Morgan Stanley & Co., Inc., an affiliate of the
Investment Adviser, Administrator and Distributor, for portfolio transactions
executed on behalf of the Fund.

At September 30, 2006, Morgan Stanley Multi-Asset Class Fund, an affiliate of
the Investment Adviser, Administrator and Distributor, held 180,072 Class D
shares of beneficial interest of the Fund.

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

The Fund began an unfunded Deferred Compensation Plan (the "Compensation Plan")
which allows each independent Trustee to defer payment of all, or a portion, of
the fees he or she receives for

Morgan Stanley Technology Fund
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

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. Shares of Beneficial Interest

Transactions in shares of beneficial interest were as follows:

<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
SEPTEMBER 30, 2006 MARCH 31, 2006
------------------------- ---------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------

CLASS A SHARES
Sold............................................ 161,232 $ 1,575,232 445,117 $ 4,460,749
Conversion from Class B......................... 700,971 6,893,894 10,813,888 99,821,219
Redeemed........................................ (1,978,120) (19,409,270) (4,986,263) (50,632,105)
---------- ------------ ----------- -------------
Net decrease - Class A.......................... (1,115,917) (10,940,144) 6,272,742 53,649,863
---------- ------------ ----------- -------------
CLASS B SHARES
Sold............................................ 220,441 2,003,004 689,777 6,476,950
Conversion to Class A........................... (755,886) (6,893,894) (11,557,004) (99,821,219)
Redeemed........................................ (4,233,697) (38,458,313) (12,295,328) (115,385,747)
---------- ------------ ----------- -------------
Net decrease - Class B.......................... (4,769,142) (43,349,203) (23,162,555) (208,730,016)
---------- ------------ ----------- -------------
CLASS C SHARES
Sold............................................ 28,191 258,222 112,187 1,057,044
Redeemed........................................ (558,189) (5,065,212) (1,485,896) (14,021,817)
---------- ------------ ----------- -------------
Net decrease - Class C.......................... (529,998) (4,806,990) (1,373,709) (12,964,773)
---------- ------------ ----------- -------------
CLASS D SHARES
Sold............................................ 69,613 681,087 34,582 360,063
Redeemed........................................ (307,042) (3,197,587) (269,599) (2,771,202)
---------- ------------ ----------- -------------
Net decrease - Class D.......................... (237,429) (2,516,500) (235,017) (2,411,139)
---------- ------------ ----------- -------------
Net decrease in Fund............................ (6,652,486) $(61,612,837) (18,498,539) $(170,456,065)
========== ============ =========== =============
</Table>

6. 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

Morgan Stanley Technology Fund
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for tax purposes are reported as distributions of paid-in-capital.

As of March 31, 2006, the Fund had a net capital loss carryforward of
$2,119,010,401 of which $147,683,387 will expire on March 31, 2009,
$1,275,591,838 will expire on March 31, 2010, $670,621,776 will expire on March
31, 2011 and $25,113,400 will expire on March 31, 2012 to offset future capital
gains to the extent provided by regulations.

As of March 31, 2006, the Fund had temporary book/tax differences primarily
attributable to post-October losses (foreign currency losses incurred after
October 31 within the taxable year which are deemed to arise on the first
business day of the Fund's next taxable year) and capital loss deferrals on wash
sales.

7. 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.

8. Purposes of and Risks Relating to Certain Financial Instruments

The Fund may enter into forward contracts for many purposes, including to
facilitate settlement of foreign currency denominated portfolio transactions or
to manage foreign currency exposure associated with foreign currency denominated
securities.

To hedge against adverse interest rate and market risks, the Fund may enter into
interest rate futures contracts ("futures contracts").

Forward contracts and futures contracts involve elements of market risk in
excess of the amounts reflected in the Statement of Assets and Liabilities. The
Fund bears the risk of an unfavorable change in the foreign exchange rates
underlying the forward contracts or in the value of the underlying securities.
Risks may also arise upon entering into these contracts from the potential
inability of the counterparties to meet the terms of their contracts.

Certain Funds may lend securities to qualified financial institutions, such as
broker-dealers, to earn additional income. Risks in securities lending
transactions are that a borrower may not provide additional collateral when
required or return the securities when due, and that the value of the short-
term investments will be less than the amount of cash collateral plus any rebate
that is required to be returned to the borrower.

Morgan Stanley Technology Fund
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

9. Legal Matters

(1) Beginning October 25, 2002, purported class action complaints were filed in
the United States District Court for the Southern District of New York against
Morgan Stanley, the Fund (under its former name, the Morgan Stanley Information
Fund), Morgan Stanley Investment Advisors Inc., and certain subsidiaries of
Morgan Stanley alleging violations of federal securities laws in connection with
the underwriting and management of the Fund. These actions were consolidated
into one action in which plaintiffs allege that Morgan Stanley analysts issued
overly optimistic stock recommendations to obtain investment banking business,
and that the desire to obtain investment banking business influenced decisions
made by the Fund Manager. A similar consolidated complaint was filed with
respect to the fund formerly called the Morgan Stanley Technology Fund, which
merged with the Fund on October 6, 2003. Both consolidated complaints were
stayed pending a decision by the United States Court of Appeals for the Second
Circuit of an appeal from the dismissal of a very similar complaint filed by
plaintiffs against another mutual funds complex. The case involving the other
mutual funds complex recently settled, although court approval of the settlement
is pending. Upon confirmation from plaintiffs that they intend to pursue their
claims, the Fund, Morgan Stanley and the remaining defendants intend to move to
dismiss both consolidated complaints. The Fund and Morgan Stanley believe these
lawsuits have no merit. However, the ultimate outcome of these matters is not
presently determinable and no provisions has been made in the Fund's financial
statements for the effect, if any, of such matters. The Investment Manager has
agreed to indemnify the Fund against any losses and claims associated with the
complaint filed against the fund formerly called the Morgan Stanley Technology
Fund.

(2) 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,

Morgan Stanley Technology Fund
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2006 (UNAUDITED) continued

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. 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.

10. 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.

Morgan Stanley Technology Fund
FINANCIAL HIGHLIGHTS

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

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED MARCH 31,
MONTHS ENDED ----------------------------------------------------------------------------
SEPTEMBER 30, 2006 2006 2005 2004 2003 2002
------------------ -------- ------- ------- ------- -------
(unaudited)

Class A Shares
Selected Per Share Data:

Net asset value, beginning of
period....................... $10.68 $ 9.47 $10.14 $ 6.68 $11.29 $14.69
------ ------ ------ ------ ------ ------

Income (loss) from investment
operations:
Net investment loss++..... (0.06) (0.12) (0.05) (0.11) (0.05) 0.00
Net realized and
unrealized gain (loss).... (0.63) 1.33 (0.62) 3.57 (4.56) (3.40)
------ ------ ------ ------ ------ ------

Total income (loss) from
investment operations........ (0.69) 1.21 (0.67) 3.46 (4.61) (3.40)
------ ------ ------ ------ ------ ------

Net asset value, end of
period....................... $ 9.99 $10.68 $ 9.47 $10.14 $ 6.68 $11.29
====== ====== ====== ====== ====== ======

Total Return+................. (6.46)%(1) 12.78 % (6.61)% 51.80 % (40.83)% (23.15)%

Ratios to Average Net
Assets(3):
Total expenses (before expense
offset)...................... 1.77 %(2) 1.67 % 1.49 % 1.46 % 1.55 % 1.32 %

Net investment loss........... (1.21)%(2) (1.19)% (0.58)% (1.19)% (0.60)% 0.00 %

Supplemental Data:
Net assets, end of period, in
thousands.................... $92,522 $110,847 $38,891 $53,534 $20,434 $36,129

Portfolio turnover rate....... 52 %(1) 177 % 106 % 108 % 92 % 144 %
</Table>

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

<Table>

++ 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 Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</Table>

See Notes to Financial Statements
29

Morgan Stanley Technology Fund
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED MARCH 31,
MONTHS ENDED ----------------------------------------------------
SEPTEMBER 30, 2006 2006 2005 2004 2003 2002
------------------ -------- -------- -------- -------- --------
(unaudited)

Class B Shares
Selected Per Share Data:

Net asset value, beginning of period... $9.92 $8.87 $9.58 $6.36 $10.84 $14.22
----- ----- ----- ----- ------ ------

Income (loss) from investment
operations:
Net investment loss++.............. (0.09) (0.19) (0.13) (0.18) (0.11) (0.10)
Net realized and unrealized gain
(loss)............................. (0.59) 1.24 (0.58) 3.40 (4.37) (3.28)
----- ----- ----- ----- ------ ------

Total income (loss) from investment
operations............................ (0.68) 1.05 (0.71) 3.22 (4.48) (3.38)
----- ----- ----- ----- ------ ------

Net asset value, end of period......... $9.24 $9.92 $8.87 $9.58 $ 6.36 $10.84
===== ===== ===== ===== ====== ======

Total Return+.......................... (6.85)%(1) 11.84 % (7.41)% 50.63 % (41.38)% (23.70)%

Ratios to Average Net Assets(3):
Total expenses (before expense
offset)............................... 2.52 %(2) 2.45 % 2.35 % 2.30 % 2.40 % 2.10 %

Net investment loss.................... (1.96)%(2) (1.97)% (1.44)% (2.03)% (1.45)% (0.78)%

Supplemental Data:
Net assets, end of period, in
thousands............................. $181,762 $242,405 $421,973 $657,944 $373,470 $911,276

Portfolio turnover rate................ 52 %(1) 177 % 106 % 108 % 92 % 144 %
</Table>

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

<Table>

++ 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) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</Table>

See Notes to Financial Statements
30

Morgan Stanley Technology Fund
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED MARCH 31,
MONTHS ENDED --------------------------------------------------------
SEPTEMBER 30, 2006 2006 2005 2004 2003 2002
------------------ ------- ------- ------- ------- -------
(unaudited)

Class C Shares
Selected Per Share Data:

Net asset value, beginning of period...... $9.92 $8.86 $9.57 $6.36 $10.84 $14.17
----- ----- ----- ----- ------ ------

Income (loss) from investment operations:
Net investment loss++................. (0.09) (0.19) (0.13) (0.18) (0.11) (0.07)
Net realized and unrealized gain
(loss)................................ (0.59) 1.25 (0.58) 3.39 (4.37) (3.26)
----- ----- ----- ----- ------ ------

Total income (loss) from investment
operations............................... (0.68) 1.06 (0.71) 3.21 (4.48) (3.33)
----- ----- ----- ----- ------ ------

Net asset value, end of period............ $9.24 $9.92 $8.86 $9.57 $ 6.36 $10.84
===== ===== ===== ===== ====== ======

Total Return+............................. (6.85)%(1) 11.96 % (7.42)% 50.47 % (41.33)% (23.50)%

Ratios to Average Net Assets(3):
Total expenses (before expense offset).... 2.52 %(2) 2.45 % 2.34 % 2.29 % 2.40 % 1.88 %

Net investment loss....................... (1.96)%(2) (1.97)% (1.43)% (2.02)% (1.45)% (0.56)%

Supplemental Data:
Net assets, end of period, in thousands... $23,861 $30,866 $39,754 $60,555 $23,150 $52,145

Portfolio turnover rate................... 52 %(1) 177 % 106 % 108 % 92 % 144 %
</Table>

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

<Table>

++ 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) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</Table>

See Notes to Financial Statements
31

Morgan Stanley Technology Fund
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED MARCH 31,
MONTHS ENDED -----------------------------------------------------------
SEPTEMBER 30, 2006 2006 2005 2004 2003 2002
------------------ ------- ------- ------- ------- -------
(unaudited)

Class D Shares
Selected Per Share Data:

Net asset value, beginning of period...... $10.91 $ 9.65 $10.32 $ 6.78 $11.45 $14.86
------ ------ ------ ------ ------ ------

Income (loss) from investment operations:
Net investment income (loss)++........ (0.05) (0.10) (0.04) (0.09) (0.04) 0.02
Net realized and unrealized gain
(loss)................................ (0.65) 1.36 (0.63) 3.63 (4.63) (3.43)
------ ------ ------ ------ ------ ------

Total income (loss) from investment
operations............................... (0.70) 1.26 (0.67) 3.54 (4.67) (3.41)
------ ------ ------ ------ ------ ------

Net asset value, end of period............ $10.21 $10.91 $ 9.65 $10.32 $ 6.78 $11.45
====== ====== ====== ====== ====== ======

Total Return+............................. (6.42)%(1) 13.06 % (6.49)% 52.21 % (40.79)% (22.95)%

Ratios to Average Net Assets(3):
Total expenses (before expense offset).... 1.52 %(2) 1.45 % 1.35 % 1.30 % 1.40 % 1.10 %

Net investment income (loss).............. (0.96)%(2) (0.97)% (0.44)% (1.03)% (0.45)% 0.22 %

Supplemental Data:
Net assets, end of period, in thousands... $3,696 $6,537 $8,051 $11,470 $5,337 $27,603

Portfolio turnover rate................... 52 %(1) 177 % 106 % 108 % 92 % 144 %
</Table>

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

<Table>

++ 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) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</Table>

See Notes to Financial Statements
32

Morgan Stanley Technology Fund
RESULTS OF SPECIAL SHAREHOLDER MEETING

On August 1, 2006, a Special Meeting of Shareholders of the Fund was scheduled
in order to vote on the following proposals: (i) to elect Trustees; (ii) to
eliminate certain fundamental investment restrictions; (iii) to modify certain
fundamental investment restrictions; and (iv) to reclassify certain fundamental
policies as non-fundamental policies. The proposals failed to obtain the quorum
necessary in order to hold the meeting, and, therefore, the meeting was
adjourned several times, most recently until November 30, 2006, to permit
further solicitation of proxies.

(This Page Intentionally Left Blank)

TRUSTEES

Michael Bozic
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael E. Nugent
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

The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors and accordingly they do not
express an opinion thereon.

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.

[MORGAN STANLEY LOGO]

MORGAN STANLEY FUNDS

Morgan Stanley
Technology Fund

Semiannual Report
September 30, 2006

[MORGAN STANLEY LOGO]

TECHSAN-RA06-01031P-Y09/06

Item 2. Code of Ethics.

Not applicable for semiannual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semiannual reports.

Item 4. Principal Accountant Fees and Services

Not applicable for semiannual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semiannual reports.

Item 6.

Refer to Item 1.

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

Not applicable for semiannual reports.

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

Applicable only to reports filed by closed-end funds.

Item 9. Closed-End Fund Repurchases

Applicable 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) Code of Ethics -- Not applicable for semiannual reports.

(b) A separate certification for each principal executive officer and principal
financial officer of the registrant are attached hereto as part of EX-99.CERT.

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 Technology 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