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: 811-10359

Morgan Stanley Mid-Cap 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: August 31, 2007

Date of reporting period: February 28, 2007

Item 1 - Report to Shareholders

Welcome, Shareholder:

In this report, you'll learn about how your investment in Morgan Stanley Mid-Cap
Value 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.

FUND REPORT

For the six months ended February 28, 2007

TOTAL RETURN FOR THE 6 MONTHS ENDED FEBRUARY 28, 2007

<Table>
<Caption>
RUSSELL LIPPER
MIDCAP(R) MID-CAP
VALUE VALUE
CLASS A CLASS B CLASS C CLASS D INDEX(1) FUNDS INDEX(2)

14.61% 14.04% 14.11% 14.71% 13.95% 13.51%
</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 six-month period ended February 28, 2007 was very strong for stocks,
although the stock market ended the period on a sour note. The potential for an
economic recession in the U.S. overshadowed the market for most of 2006, but
several factors contributed to easing worries later in the year. The Federal
Open Market Committee (the "Fed") discontinued its monetary tightening policy
beginning in August, and oil prices retreated from the high set in July 2006.
Inflation levels hovered above the Fed's stated acceptable range, but remained
controlled. Although economic growth was clearly moderating, consumer spending
was strong due to lower energy prices and income growth. For the most part,
corporate earnings reports were still meeting or exceeding expectations, company
balance sheets were healthy, and the exceptionally strong pace of merger and
acquisition activity, stock buybacks and dividend increases continued to bolster
positive sentiment for stocks. However, stocks encountered significant
volatility in the final days of the reporting period. Observers attributed the
downturn to a number of external causes, including China's major market
correction on February 27 or the difficulties in the U.S. sub-prime mortgage
market, but market fundamentals appeared intact.

PERFORMANCE ANALYSIS

Morgan Stanley Mid-Cap Value Fund outperformed the Russell Midcap(R) Value Index
and the Lipper Mid-Cap Value Funds Index for the six months ended February 28,
2007, assuming no deduction of applicable sales charges.

The materials sector added most to the Fund's performance relative to the
Russell Midcap Value Index. A large holding in this sector contributed strong
gains during the period, as a new management team helped improve the company's
operating efficiencies.

Stock selection in the consumer staples sector also benefited the Fund's
results, especially a consumer products company and a packaged foods company
that both did well during the period. The health care sector rounded out the top
three contributing sectors. Here, an acquisition announcement by one of the
Fund's pharmaceutical holdings was well received by investors and the stock
advanced strongly.

Although all sectors represented in the Fund's portfolio had positive returns on
an absolute basis during the reporting period, two areas detracted from
performance relative to the Russell Midcap Value Index. Stock selection in the
industrials sector slowed the Fund's pace, due to a lagging airline stock. In
addition, the industrials sector was the second best performing group in the
Russell Midcap Value Index, and the Fund's underweight allocation limited the
positive effect of the sector's rally. In the consumer discretionary sector, the
Fund's minimal exposure to the market's strongly performing retail stocks turned
out to be disadvantageous.

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.

<Table>
<Caption>
TOP 10 HOLDINGS

Diebold, Inc. 3.1%
International Flavors & Fragrances, Inc. 2.8
Sealed Air Corp. 2.8
KKR Financial Corp. 2.8
Marsh & McLennan Companies, Inc. 2.7
Hess Corp. 2.7
Beckman Coulter, Inc. 2.6
ACE Ltd. (Cayman Islands) 2.6
Nalco Holding Co. 2.6
Constellation Energy Group, Inc. 2.6
</Table>

<Table>
<Caption>
TOP FIVE INDUSTRIES

Property - Casualty Insurance 7.0%
Investment Banks/Brokers 6.2
Household/Personal Care 4.9
Electric Utilities 4.9
Electronic Equipment/Instruments 3.1
</Table>

Data as of February 28, 2007. 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.

INVESTMENT STRATEGY

THE FUND WILL NORMALLY INVEST AT LEAST 80 PERCENT OF ITS ASSETS IN COMMON STOCK
AND OTHER EQUITY SECURITIES, INCLUDING DEPOSITARY RECEIPTS AND SECURITIES
CONVERTIBLE INTO COMMON STOCK, OF COMPANIES TRADED ON A U.S. SECURITIES EXCHANGE
WITH MARKET CAPITALIZATIONS THAT FALL WITHIN THE RANGE OF COMPANIES INCLUDED IN
THE RUSSELL MIDCAP(R) VALUE INDEX. AS OF OCTOBER 31, 2006, THESE MARKET
CAPITALIZATIONS RANGED BETWEEN $1.6 BILLION AND $17.8 BILLION. IN PURSUING ITS
INVESTMENT OBJECTIVE, THE FUND'S "INVESTMENT ADVISER," MORGAN STANLEY INVESTMENT
ADVISORS INC., SEEKS ATTRACTIVELY VALUED COMPANIES EXPERIENCING A CHANGE THAT
THE INVESTMENT ADVISER BELIEVES COULD HAVE A POSITIVE IMPACT ON A COMPANY'S
OUTLOOK, SUCH AS A CHANGE IN MANAGEMENT, INDUSTRY DYNAMICS OR OPERATIONAL
EFFICIENCY. IN DETERMINING WHETHER SECURITIES SHOULD BE SOLD, THE INVESTMENT
ADVISER CONSIDERS A NUMBER OF FACTORS, INCLUDING APPRECIATION TO FAIR VALUE,
FUNDAMENTAL CHANGE IN THE COMPANY OR CHANGES IN ECONOMIC OR MARKET TRENDS. THE
INVESTMENT ADVISER MAY PURCHASE STOCKS THAT TYPICALLY DO NOT PAY DIVIDENDS.

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 FEBRUARY 28, 2007

<Table>
<Caption>
CLASS A SHARES* CLASS B SHARES** CLASS C SHARES(+) CLASS D SHARES(++)
(since 10/29/01) (since 10/29/01) (since 10/29/01) (since 10/29/01)
SYMBOL MDFAX MDFBX MDFCX MDFDX

1 YEAR 17.42%(3) 16.44%(3) 16.50%(3) 17.70%(3)
11.26(4) 11.44(4) 15.50(4) --
5 YEARS 10.99(3) 10.14(3) 10.20(3) 11.25(3)
9.80(4) 9.87(4) 10.20(4) --
SINCE INCEPTION 11.03(3) 10.17(3) 10.23(3) 11.28(3)
9.91(4) 10.05(4) 10.23(4) --
</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 Russell Midcap(R) Value Index measures the performance of those Russell
Midcap(R) Index companies with lower price-to-book ratios and lower
forecasted growth values. The stocks are also members of the Russell
1000(R) Value Index. The Index is unmanaged and its returns do not include
any sales charges or fees. Such costs would lower performance. It is not
possible to invest directly in an index.

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

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

(4) 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 09/01/06 - 02/28/07.

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*
------------- ------------- ---------------
09/01/06 -
09/01/06 02/28/07 02/28/07
------------- ------------- ---------------

CLASS A
Actual (14.61% return)...................................... $1,000.00 $1,146.10 $ 7.56
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,017.75 $ 7.10
CLASS B
Actual (14.04% return)...................................... $1,000.00 $1,140.40 $11.62
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,013.93 $10.94

CLASS C
Actual (14.11% return)...................................... $1,000.00 $1,141.10 $11.57
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,013.98 $10.89
CLASS D
Actual (14.71% return)...................................... $1,000.00 $1,147.10 $ 6.34
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,018.89 $ 5.96
</Table>

- ------------------
* Expenses are equal to the Fund's annualized expense ratios of 1.42%, 2.19%,
2.18% and 1.19% for Class A, Class B, Class C and Class D shares,
respectively, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).

Morgan Stanley Mid-Cap Value Fund
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 2007 (UNAUDITED)

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

Common Stocks (95.4%)
Aerospace & Defense
(2.5%)
153,086 Goodrich Corp. .......... $ 7,508,868
------------
Biotechnology (1.8%)
211,100 Affymetrix, Inc.*........ 5,431,603
------------
Computer Communications
(2.2%)
351,800 Juniper Networks,
Inc.*................... 6,652,538
------------
Containers/ Packaging
(2.8%)
129,760 Sealed Air Corp. ........ 8,361,734
------------
Drugstore Chains (2.2%)
1,110,470 Rite Aid Corp.*.......... 6,629,506
------------
Electric Utilities (4.9%)
97,846 Constellation Energy
Group, Inc. ............ 7,697,545
142,530 Wisconsin Energy
Corp. .................. 6,834,313
------------
14,531,858
------------
Electronic Components
(1.5%)
400,734 Flextronics International
Ltd. (Singapore)*....... 4,380,023
------------
Electronic Equipment/
Instruments (3.1%)
197,860 Diebold, Inc. ........... 9,372,628
------------
Engineering &
Construction (1.2%)
74,920 McDermott International,
Inc. (Panama)*.......... 3,611,144
------------
Financial Conglomerates
(1.5%)
220,810 Conseco Inc.*............ 4,405,159
------------
Food: Major Diversified
(1.9%)
228,490 ConAgra Foods, Inc. ..... 5,764,803
------------

NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Gas Distributors (2.1%)
259,860 NiSource, Inc. .......... $ 6,182,069
------------
Home Furnishings (2.1%)
202,450 Newell Rubbermaid,
Inc. ................... 6,199,019
------------
Hospital/Nursing
Management (0.7%)
294,570 Tenet Healthcare
Corp.*.................. 2,011,913
------------
Household/Personal Care
(4.9%)
129,650 Estee Lauder Companies,
Inc. (The) (Class A).... 6,207,642
181,740 International Flavors &
Fragrances, Inc. ....... 8,505,432
------------
14,713,074
------------
Insurance Brokers/
Services (2.7%)
275,460 Marsh & McLennan
Companies, Inc. ........ 8,104,033
------------
Integrated Oil (2.7%)
151,830 Hess Corp. .............. 8,054,581
------------
Internet Retail (1.2%)
88,850 Amazon.com, Inc.*........ 3,477,589
------------
Investment Banks/ Brokers
(6.2%)
90,650 Edwards (A.G.), Inc. .... 5,820,636
136,940 Lazard Ltd. (Class A)
(Bermuda)............... 7,051,041
301,520 Schwab (Charles) Corp.
(The)................... 5,572,090
------------
18,443,767
------------
Investment Managers
(2.1%)
263,800 Amvescap PLC (ADR)
(United Kingdom)........ 6,296,906
------------
Medical Distributors
(1.0%)
92,000 Owens & Minor, Inc. ..... 3,033,240
------------
</Table>

7
See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 2007 (UNAUDITED) continued

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

Medical Specialties
(3.1%)
47,420 Applera Corp. - Applied
Biosystems Group........ $ 1,464,330
122,620 Beckman Coulter, Inc. ... 7,867,299
------------
9,331,629
------------
Motor Vehicles (1.0%)
376,150 Ford Motor Co. .......... 2,979,108
------------
Office Equipment/
Supplies (1.8%)
115,130 Pitney Bowes, Inc. ...... 5,492,852
------------
Oil & Gas Pipelines
(1.9%)
393,060 El Paso Corp. ........... 5,652,203
------------
Oilfield Services/
Equipment (1.6%)
83,440 Cameron International
Corp.*.................. 4,730,214
------------
Other Consumer Services
(2.0%)
128,800 Apollo Group, Inc. (Class
A)*..................... 6,090,952
------------
Pharmaceuticals: Generic
Drugs (0.7%)
73,730 Watson Pharmaceuticals,
Inc.*................... 1,943,523
------------
Property - Casualty
Insurers (7.0%)
138,180 ACE Ltd. (Cayman
Islands)................ 7,760,189
177,500 Allied World Assurance
Holdings Ltd.
(Bermuda)............... 7,399,975
220,660 Aspen Insurance Holdings
Ltd. (Bermuda).......... 5,847,490
------------
21,007,654
------------
Publishing: Newspapers
(1.7%)
140,950 Dow Jones & Co., Inc. ... 5,082,657
------------

NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Real Estate Investment
Trusts (2.8%)
298,320 KKR Financial Corp. ..... $ 8,242,582
------------
Regional Banks (1.9%)
95,080 Northern Trust Corp. .... 5,733,324
------------
Savings Banks (2.4%)
527,080 Hudson City Bancorp,
Inc. ................... 7,062,872
------------
Semiconductors (2.0%)
180,510 Linear Technology
Corp. .................. 5,991,127
------------
Services to the Health
Industry (2.0%)
250,306 Healthsouth Corp. ....... 5,997,332
------------
Specialty Insurance
(0.3%)
32,820 Security Capital
Assurance Ltd.
(Bermuda)............... 976,067
------------
Specialty Stores (2.1%)
192,350 Office Depot, Inc.*...... 6,416,796
------------
Specialty
Telecommunications (2.5%)
169,490 CenturyTel, Inc. ........ 7,584,677
------------
Telecommunication
Equipment (1.8%)
495,560 Andrew Corp.*............ 5,262,847
------------
Tobacco (1.0%)
53,760 UST, Inc. ............... 3,121,306
------------
Tools/Hardware (1.9%)
111,490 Snap-On, Inc. ........... 5,585,649
------------
</Table>

8
See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 2007 (UNAUDITED) continued

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

Water Utilities (2.6%)
323,280 Nalco Holding Co.*....... $ 7,726,392
------------
Total Common Stocks
(Cost $230,680,247)...... 285,177,818
------------
Investment Trusts/Mutual Funds (1.2%)
55,660 streetTRACKS Gold Trust*
(Cost $2,723,373)........ 3,699,164
------------
Total Long-Term
Investments
(Cost $233,403,620)...... 288,876,982
------------

PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------
Short-Term Investment (4.2%)
Repurchase Agreement
$ 12,530 Joint repurchase
agreement account 5.315%
due 03/01/07 (dated
02/28/07; proceeds
$12,531,850) (a)
(Cost $12,530,000)...... $ 12,530,000
------------
Total Investments
(Cost $245,933,620) (b)..... 100.8% 301,406,982
Liabilities in Excess of
Other Assets................ (0.8) (2,308,207)
----- ------------
Net Assets.................. 100.0% $299,098,775
===== ============
</Table>

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

<Table>

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
approximates the aggregate cost for book purposes.
The aggregate gross unrealized appreciation is
$57,591,803 and the aggregate gross unrealized
depreciation is $2,118,441, resulting in net
unrealized appreciation of $55,473,362.
</Table>

9
See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
SUMMARY OF INVESTMENTS - FEBRUARY 28, 2007 (UNAUDITED)

<Table>
<Caption>
PERCENT OF
INDUSTRY VALUE TOTAL INVESTMENTS
- ------------------------------------------------------------------------------------------------

Property - Casualty Insurers................................ $ 21,007,654 7.0%
Investment Banks/Brokers.................................... 18,443,767 6.1
Household/Personal Care..................................... 14,713,074 4.9
Electric Utilities.......................................... 14,531,858 4.8
Repurchase Agreement........................................ 12,530,000 4.2
Electronic Equipment/Instruments............................ 9,372,628 3.1
Medical Specialties......................................... 9,331,629 3.1
Containers/Packaging........................................ 8,361,734 2.8
Real Estate Investment Trusts............................... 8,242,582 2.7
Insurance Brokers/Services.................................. 8,104,033 2.7
Integrated Oil.............................................. 8,054,581 2.7
Water Utilities............................................. 7,726,392 2.6
Specialty Telecommunications................................ 7,584,677 2.5
Aerospace & Defense......................................... 7,508,868 2.5
Savings Banks............................................... 7,062,872 2.3
Computer Communications..................................... 6,652,538 2.2
Drugstore Chains............................................ 6,629,506 2.2
Specialty Stores............................................ 6,416,796 2.1
Investment Managers......................................... 6,296,906 2.1
Home Furnishings............................................ 6,199,019 2.1
Gas Distributors............................................ 6,182,069 2.0
Other Consumer Services..................................... 6,090,952 2.0
Services To The Health Industry............................. 5,997,332 2.0
Semiconductors.............................................. 5,991,127 2.0
Food: Major Diversified..................................... 5,764,803 1.9
Regional Banks.............................................. 5,733,324 1.9
Oil & Gas Pipelines......................................... 5,652,203 1.9
Tools/Hardware.............................................. 5,585,649 1.9
Office Equipment/Supplies................................... 5,492,852 1.8
Biotechnology............................................... 5,431,603 1.8
Telecommunication Equipment................................. 5,262,847 1.7
Publishing: Newspapers...................................... 5,082,657 1.7
Oilfield Services/Equipment................................. 4,730,214 1.6
Financial Conglomerates..................................... 4,405,159 1.5
Electronic Components....................................... 4,380,023 1.4
Investment Trusts/Mutual Funds.............................. 3,699,164 1.2
Engineering & Construction.................................. 3,611,144 1.2
Internet Retail............................................. 3,477,589 1.2
Tobacco..................................................... 3,121,306 1.0
Medical Distributors........................................ 3,033,240 1.0
Motor Vehicles.............................................. 2,979,108 1.0
Hospital/Nursing Management................................. 2,011,913 0.7
Pharmaceuticals: Generic Drugs.............................. 1,943,523 0.6
Specialty Insurance......................................... 976,067 0.3
------------ -----
$301,406,982 100.0%
============ =====
</Table>

10
See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
February 28, 2007 (unaudited)

<Table>

Assets:
Investments in securities, at value
(cost $245,933,620)....................................... $301,406,982
Receivable for:
Investments sold........................................ 3,099,894
Dividends............................................... 417,015
Shares of beneficial interest sold...................... 366,907
Interest................................................ 1,850
Prepaid expenses and other assets........................... 36,828
Receivable from Distributor................................. 1,794
------------
Total Assets............................................ 305,331,270
------------
Liabilities:
Payable for:
Investments purchased................................... 5,533,889
Shares of beneficial interest redeemed.................. 404,230
Investment advisory fee................................. 169,025
Distribution fee........................................ 46,597
Administration fee...................................... 18,781
Accrued expenses and other payables......................... 59,973
------------
Total Liabilities....................................... 6,232,495
------------
Net Assets.............................................. $299,098,775
============
Composition of Net Assets:
Paid-in-capital............................................. $226,370,164
Net unrealized appreciation................................. 55,473,362
Accumulated undistributed net investment income............. 473,090
Accumulated undistributed net realized gain................. 16,782,159
------------
Net Assets.............................................. $299,098,775
============
Class A Shares:
Net Assets.................................................. $17,467,321
Shares Outstanding (unlimited authorized, $.01 par value)... 1,462,115
Net Asset Value Per Share............................... $11.95
============
Maximum Offering Price Per Share,
(net asset value plus 5.54% of net asset value)......... $12.61
============
Class B Shares:
Net Assets.................................................. $45,755,236
Shares Outstanding (unlimited authorized, $.01 par value)... 4,033,140
Net Asset Value Per Share............................... $11.34
============
Class C Shares:
Net Assets.................................................. $8,785,567
Shares Outstanding (unlimited authorized, $.01 par value)... 772,229
Net Asset Value Per Share............................... $11.38
============
Class D Shares:
Net Assets.................................................. $227,090,651
Shares Outstanding (unlimited authorized, $.01 par value)... 18,739,547
Net Asset Value Per Share............................... $12.12
============
</Table>

11
See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL STATEMENTS continued

Statement of Operations
For the six months ended February 28, 2007 (unaudited)

<Table>

Net Investment Income:
Income
Dividends................................................... $ 2,113,171
Interest.................................................... 404,536
-----------
Total Income............................................ 2,517,707
-----------
Expenses
Investment advisory fee..................................... 1,061,896
Transfer agent fees and expenses............................ 338,443
Distribution fee (Class A shares)........................... 18,641
Distribution fee (Class B shares)........................... 236,149
Distribution fee (Class C shares)........................... 42,022
Shareholder reports and notices............................. 160,635
Administration fee.......................................... 117,988
Professional fees........................................... 27,002
Registration fees........................................... 18,607
Custodian fees.............................................. 11,381
Trustees' fees and expenses................................. 2,555
Other....................................................... 13,209
-----------
Total Expenses.......................................... 2,048,528

Less: expense offset........................................ (2,018)
-----------
Net Expenses............................................ 2,046,510
-----------
Net Investment Income................................... 471,197
-----------
Net Realized and Unrealized Gain:
Net Realized Gain on:
Investments................................................. 23,344,359
Futures contracts........................................... 332,298
-----------
Net Realized Gain....................................... 23,676,657
-----------
Net Change in Unrealized Appreciation/Depreciation on:
Investments................................................. 16,134,214
Futures contracts........................................... (95,960)
-----------
Net Appreciation........................................ 16,038,254
-----------
Net Gain................................................ 39,714,911
-----------
Net Increase................................................ $40,186,108
===========
</Table>

12
See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL STATEMENTS continued

Statements of Changes in Net Assets

<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
FEBRUARY 28, 2007 AUGUST 31, 2006
----------------- ---------------
(unaudited)

Increase (Decrease) in Net Assets:
Operations:
Net investment income....................................... $ 471,197 $ 867,820
Net realized gain........................................... 23,676,657 30,524,130
Net change in unrealized appreciation....................... 16,038,254 1,594,714
------------ ------------
Net Increase............................................ 40,186,108 32,986,664
------------ ------------
Dividends and Distributions to Shareholders from:
Net investment income
Class A shares.......................................... (27,967) --
Class D shares.......................................... (834,891) --

Net realized gain
Class A shares.......................................... (1,747,287) (2,049,097)
Class B shares.......................................... (5,332,448) (8,985,414)
Class C shares.......................................... (976,501) (1,375,828)
Class D shares.......................................... (24,088,069) (39,580,076)
------------ ------------
Total Dividends and Distributions....................... (33,007,163) (51,990,415)
------------ ------------

Net increase (decrease) from transactions in shares of
beneficial interest....................................... 7,731,800 (32,382,074)
------------ ------------
Net Increase (Decrease)................................. 14,910,745 (51,385,825)
Net Assets:
Beginning of period......................................... 284,188,030 335,573,855
------------ ------------
End of Period
(Including accumulated undistributed net investment income
of $473,090 and $864,751, respectively)..................... $299,098,775 $284,188,030
============ ============
</Table>

13
See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 28, 2007 (UNAUDITED)

1. Organization and Accounting Policies

Morgan Stanley Mid-Cap 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
above-average total return. The Fund was organized as a Massachusetts business
trust on April 12, 2001 and commenced operations on October 29, 2001.

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

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 28, 2007 (UNAUDITED) continued

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. 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

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 28, 2007 (UNAUDITED) continued

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.

F. 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.

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

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

2. Investment Advisory/Administration Agreements

Pursuant to an Investment Advisory Agreement with 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: 0.72% to the portion of the daily net assets not exceeding $1
billion; and 0.65% to the portion of the daily net assets exceeding $1 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 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

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 28, 2007 (UNAUDITED) continued

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 $635,926
at February 28, 2007.

At February 28, 2007, included in the Statement of Assets and Liabilities, is a
receivable from the Fund's Distributor, an affiliate, which represents payments
due to be reimbursed to the Fund under the Plan. Because the Plan is referred to
as a "reimbursement plan," the Distributor reimburses to the Fund any 12b-1 fees
collected in excess of the actual distribution expenses incurred. This
receivable represents this excess amount as of February 28, 2007.

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 February 28, 2007, the
distribution fee was accrued for Class A shares and Class C shares at the annual
rate of 0.23% and 0.99%, respectively.

The Distributor has informed the Fund that for the six months ended February 28,
2007, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $44,653 and $367, respectively
and received $12,355 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 February 28, 2007 aggregated
$109,216,675 and $118,240,963, respectively. Included in the aforementioned
transactions are purchases and sales of $327,054 and $1,294,432, respectively,
with other Morgan Stanley funds, including realized gains of $427,744.

For the six months ended February 28, 2007, the Fund incurred brokerage
commissions of $4,363 with Morgan Stanley & Co., an affiliate of the Investment
Adviser, Administrator and Distributor, for portfolio transactions executed on
behalf of the Fund.

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 28, 2007 (UNAUDITED) continued

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. 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.

6. Purposes of and Risks Relating to Certain Financial Instruments

To hedge against adverse interest rate, foreign currency and market risks, the
Fund may purchase and sell interest rate, currency and index futures ("futures
contracts").

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

7. Federal Income Tax Status

The amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for tax purposes are reported as distributions of paid-in-capital.

As of August 31, 2006, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales and mark-to-market of open
futures contracts.

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 28, 2007 (UNAUDITED) continued

8. Shares of Beneficial Interest

Transactions in shares of beneficial interest were as follows:

<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
FEBRUARY 28, 2007 AUGUST 31, 2006
------------------------- -------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------

CLASS A SHARES
Sold.............................................. 139,380 $ 1,701,535 373,783 $ 4,415,939
Conversion from Class B........................... 105,557 1,282,048 187,930 2,175,060
Reinvestment of dividends and distributions....... 138,985 1,627,510 167,733 1,846,739
Redeemed.......................................... (174,317) (2,128,216) (420,276) (4,876,465)
---------- ------------ ---------- ------------
Net increase - Class A............................ 209,605 2,482,877 309,170 3,561,273
---------- ------------ ---------- ------------
CLASS B SHARES
Sold.............................................. 141,597 1,642,286 397,562 4,554,510
Conversion to Class A............................. (110,890) (1,282,048) (195,778) (2,175,060)
Reinvestment of distributions..................... 422,544 4,707,142 760,394 8,052,576
Redeemed.......................................... (612,194) (7,168,053) (1,434,255) (16,238,696)
---------- ------------ ---------- ------------
Net decrease - Class B............................ (158,943) (2,100,673) (472,077) (5,806,670)
---------- ------------ ---------- ------------
CLASS C SHARES
Sold.............................................. 41,096 484,567 93,622 1,053,107
Reinvestment of distributions..................... 83,083 928,034 123,179 1,306,931
Redeemed.......................................... (71,290) (827,872) (179,932) (2,016,462)
---------- ------------ ---------- ------------
Net increase - Class C............................ 52,889 584,729 36,869 343,576
---------- ------------ ---------- ------------
CLASS D SHARES
Sold.............................................. 1,139,452 14,056,021 2,634,989 31,192,643
Reinvestment of dividends and distributions....... 1,757,267 20,876,328 2,982,017 33,219,666
Redeemed.......................................... (2,280,852) (28,167,482) (8,096,001) (94,892,562)
---------- ------------ ---------- ------------
Net increase (decrease) - Class D................. 615,867 6,764,867 (2,478,995) (30,480,253)
---------- ------------ ---------- ------------
Net increase (decrease) in Fund................... 719,418 $ 7,731,800 (2,605,033) $(32,382,074)
========== ============ ========== ============
</Table>

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 28, 2007 (UNAUDITED) continued

9. 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 and is to be
applied to all open tax years as of the effective date. 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 Mid-Cap Value Fund
FINANCIAL HIGHLIGHTS

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

<Table>
<Caption>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR ENDED AUGUST 31, OCTOBER 29, 2001*
MONTHS ENDED ----------------------------------------- THROUGH
FEBRUARY 28, 2007 2006 2005 2004 2003 AUGUST 31, 2002
----------------- -------- -------- -------- -------- -----------------
(unaudited)

Class A Shares
Selected Per Share Data:
Net asset value, beginning of period.... $11.68 $12.46 $11.08 $10.11 $ 8.19 $10.00
------ ------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income (loss)++........ 0.02 0.03 (0.02) (0.02) (0.03) (0.04)
Net realized and unrealized gain
(loss)............................... 1.66 1.25 2.52 0.99 1.95 (1.76)
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations............................ 1.68 1.28 2.50 0.97 1.92 (1.80)
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income................. (0.02) -- -- -- -- (0.01)
Net realized gain..................... (1.39) (2.06) (1.12) -- -- --
------ ------ ------ ------ ------ ------
Total dividends and distributions....... (1.41) (2.06) (1.12) -- -- (0.01)
------ ------ ------ ------ ------ ------
Net asset value, end of period.......... $11.95 $11.68 $12.46 $11.08 $10.11 $ 8.19
====== ====== ====== ====== ====== ======
Total Return+........................... 14.61 %(1) 11.30% 23.55% 9.50% 23.44% (17.99)%(1)
Ratios to Average Net Assets(3):
Total expenses (before expense
offset)................................ 1.42 %(2) 1.39% 1.40% 1.40% 1.47% 1.45 %(2)(4)
Net investment income (loss)............ 0.29 %(2) 0.23% (0.08)% (0.14)% (0.39)% (0.58)%(2)(4)
Supplemental Data:
Net assets, end of period, in
thousands.............................. $17,467 $14,634 $11,757 $3,878 $3,173 $3,053
Portfolio turnover rate................. 39 %(1) 52% 72% 151% 165% 121 %(1)
</Table>

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

<Table>

* Commencement of operations.
++ 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.
(4) If the Fund had borne all its expenses that were reimbursed
or waived by the Investment Adviser, the annualized expense
and net investment loss ratios would have been 1.66% and
(0.79)%, respectively.
</Table>

21
See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL HIGHLIGHTS continued

Class B Shares
Selected Per Share Data:
Net asset value, beginning of period..... $11.18 $12.09 $10.85 $ 9.98 $8.15 $10.00
------ ------ ------ ------ ----- ------
Income (loss) from investment operations:
Net investment loss++.................. (0.03) (0.06) (0.09) (0.10) (0.09) (0.10)
Net realized and unrealized gain
(loss)................................ 1.58 1.21 2.45 0.97 1.92 (1.75)
------ ------ ------ ------ ----- ------
Total income (loss) from investment
operations.............................. 1.55 1.15 2.36 0.87 1.83 (1.85)
------ ------ ------ ------ ----- ------
Less dividends and distributions from:
Net investment income.................. -- -- -- -- -- 0.00++
Net realized gain...................... (1.39) (2.06) (1.12) -- -- --
------ ------ ------ ------ ----- ------
Total dividends and distributions........ (1.39) (2.06) (1.12) -- -- 0.00
------ ------ ------ ------ ----- ------
Net asset value, end of period........... $11.34 $11.18 $12.09 $10.85 $9.98 $ 8.15
====== ====== ====== ====== ===== ======
Total Return+............................ 14.04 %(1) 10.48% 22.58% 8.72% 22.45% (18.47)%(1)
Ratios to Average Net Assets(3):
Total expenses (before expense offset)... 2.19 %(2) 2.15% 2.16% 2.16% 2.24% 2.20 %(2)(4)
Net investment loss...................... (0.48)%(2) (0.53)% (0.84)% (0.90)% (1.16)% (1.33)%(2)(4)
Supplemental Data:
Net assets, end of period, in
thousands............................... $45,755 $46,862 $56,389 $60,987 $56,823 $53,948
Portfolio turnover rate.................. 39 %(1) 52% 72% 151% 165% 121 %(1)
</Table>

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

<Table>

* Commencement of operations.
++ 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.
++ Less than $0.005 per share.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
(4) If the Fund had borne all its expenses that were reimbursed
or waived by the Investment Adviser, the annualized expense
and net investment loss ratios would have been 2.41% and
(1.54)%, respectively.
</Table>

22
See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR ENDED AUGUST 31, OCTOBER 29, 2001*
MONTHS ENDED --------------------------------- THROUGH
FEBRUARY 28, 2007 2006 2005 2004 2003 AUGUST 31, 2002
----------------- ------ ------ ------ ------ -----------------
(unaudited)

Class C Shares
Selected Per Share Data:
Net asset value, beginning of period......... $11.21 $12.11 $10.86 $ 9.98 $ 8.15 $10.00
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment loss++...................... (0.03) (0.06) (0.08) (0.09) (0.09) (0.10)
Net realized and unrealized gain (loss).... 1.59 1.22 2.45 0.97 1.92 (1.75)
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations.................................. 1.56 1.16 2.37 0.88 1.83 (1.85)
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income...................... -- -- -- -- -- 0.00++
Net realized gain.......................... (1.39) (2.06) (1.12) -- -- --
------ ------ ------ ------ ------ ------
Total dividends and distributions............ (1.39) (2.06) (1.12) -- -- 0.00
------ ------ ------ ------ ------ ------
Net asset value, end of period............... $11.38 $11.21 $12.11 $10.86 $ 9.98 $ 8.15
====== ====== ====== ====== ====== ======
Total Return+................................ 14.11 %(1) 10.56% 22.66% 8.82% 22.45% (18.48)%(1)
Ratios to Average Net Assets(3):
Total expenses (before expense offset)....... 2.18 %(2) 2.13% 2.04% 2.08% 2.24% 2.20 %(2)(4)
Net investment loss.......................... (0.47)%(2) (0.51)% (0.72)% (0.82)% (1.16)% (1.33)%(2)(4)
Supplemental Data:
Net assets, end of period, in thousands...... $8,786 $8,061 $8,268 $8,119 $7,238 $6,354
Portfolio turnover rate...................... 39 %(1) 52% 72% 151% 165% 121 %(1)
</Table>

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

<Table>

* Commencement of operations.
++ 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.
++ Less than $0.005 per share.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
(4) If the Fund had borne all its expenses that were reimbursed
or waived by the Investment Adviser, the annualized expense
and net investment loss ratios would have been 2.41% and
(1.54)%, respectively.
</Table>

23
See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR ENDED AUGUST 31, OCTOBER 29, 2001*
MONTHS ENDED --------------------------------------------- THROUGH
FEBRUARY 28, 2007 2006 2005 2004 2003 AUGUST 31, 2002
----------------- --------- --------- --------- --------- -----------------
(unaudited)

Class D Shares
Selected Per Share Data:
Net asset value, beginning of period.... $11.84 $12.58 $11.15 $10.15 $ 8.21 $10.00
------ ------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income (loss)++........ 0.03 0.06 0.02 0.01 (0.01) (0.04)
Net realized and unrealized gain
(loss)............................... 1.69 1.26 2.53 0.99 1.95 (1.73)
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations............................ 1.72 1.32 2.55 1.00 1.94 (1.77)
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income................. (0.05) -- -- -- -- (0.02)
Net realized gain..................... (1.39) (2.06) (1.12) -- -- --
------ ------ ------ ------ ------ ------
Total dividends and distributions....... (1.44) (2.06) (1.12) -- -- (0.02)
------ ------ ------ ------ ------ ------
Net asset value, end of period.......... $12.12 $11.84 $12.58 $11.15 $10.15 $ 8.21
====== ====== ====== ====== ====== ======
Total Return+........................... 14.71 %(1) 11.54% 23.87% 9.75% 23.63% (17.76)%(1)
Ratios to Average Net Assets(3):
Total expenses (before expense
offset)................................ 1.19 %(2) 1.15% 1.16% 1.16% 1.24% 1.20 %(2)(4)
Net investment income (loss)............ 0.52 %(2) 0.47% 0.16% 0.10% (0.16)% (0.33)%(2)(4)
Supplemental Data:
Net assets, end of period, in
thousands.............................. $227,091 $214,631 $259,160 $236,039 $209,035 $95,150
Portfolio turnover rate................. 39 %(1) 52% 72% 151% 165% 121 %(1)
</Table>

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

<Table>

* Commencement of operations.
++ 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 month.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
(4) If the Fund had borne all its expenses that were reimbursed
or waived by the Investment Adviser, the annualized expense
and net investment loss ratios would have been 1.41% and
(0.54)%, respectively.
</Table>

24
See Notes to Financial Statements

Morgan Stanley Mid-Cap 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 later 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:

<Table>
<Caption>
FOR WITHHOLD ABSTAIN BNV*
-------------------------------------------------

Frank L. Bowman............................................. 13,694,617 464,383 0 0
Kathleen A. Dennis.......................................... 13,682,332 476,668 0 0
James F. Higgins............................................ 13,694,389 464,611 0 0
Joseph J. Kearns............................................ 13,694,191 464,809 0 0
Michael F. Klein............................................ 13,695,992 463,008 0 0
W. Allen Reed............................................... 13,688,029 470,971 0 0
Fergus Reid................................................. 13,692,162 466,838 0 0
</Table>

The following Trustees were not standing for reelection at this meeting: Michael
Bozic, Dr. Manuel H. Johnson and Michael E. Nugent.

(2) Modify certain fundamental investment restrictions:

<Table>
<Caption>
FOR AGAINST ABSTAIN BNV*
-----------------------------------------------------

Modify fundamental policy regarding diversification...... 13,047,856 340,636 400,896 369,612
Modify fundamental policy regarding borrowing money...... 12,968,871 405,533 414,984 369,612
Modify fundamental policy regarding loans................ 12,984,831 391,756 412,801 369,612
Modify fundamental policy regarding investment in
commodities, commodity contracts and futures
contracts.............................................. 13,007,311 364,979 417,098 369,612
Modify fundamental policy regarding issuance of senior
securities............................................. 13,017,030 351,755 420,603 369,612
</Table>

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

* 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.

(This Page Intentionally Left Blank)

TRUSTEES

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

OFFICERS

Michael E. Nugent
Chairperson of the Board

Ronald E. Robison
President and Principal Executive Officer

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

LEGAL COUNSEL

Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019

COUNSEL TO THE INDEPENDENT TRUSTEES

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

INVESTMENT ADVISER

Morgan Stanley Investment Advisors Inc.
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.

Morgan Stanley Distributors Inc., member NASD

[MORGAN STANLEY LOGO]

MORGAN STANLEY FUNDS

Morgan Stanley
Mid-Cap Value Fund

Semiannual Report
February 28, 2007

[MORGAN STANLEY LOGO]

MDPSAN-IU07-00454P-Y02/07

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 Mid-Cap Value Fund

/s/ Ronald E. Robison
- -------------------------------------
Ronald E. Robison
Principal Executive Officer
April 19, 2007

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
April 19, 2007

/s/ Francis Smith
- -------------------------------------
Francis Smith
Principal Financial Officer
April 19, 2007