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)

522 Fifth Avenue, New York, New York 10036
(Address of principal executive offices) (Zip code)

Ronald E. Robison
522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)

Registrant's telephone number, including area code: 212-296-6990

Date of fiscal year end: August 31, 2008

Date of reporting period: February 29, 2008

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 29, 2008

TOTAL RETURN FOR THE 6 MONTHS ENDED FEBRUARY 29, 2008

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

-8.81% -9.15% -9.11% -8.71% -11.07% -8.83%

</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 broad stock market declined during the six months ended February 29, 2008.
In this period, investors grappled with whether the U.S. was entering a
recession and how deep it was likely to be. The economy continued to slow,
according to a number of metrics. Although gross domestic product (GDP) growth
for the third quarter was a robust 4.9 percent, the economic growth rate slowed
drastically to 0.6 percent for the fourth quarter. The housing market continued
to slide, amid rising foreclosures and mounting inventories of unsold homes,
reducing homeowners' ability to withdraw equity to finance other purchases.
Consumers also felt the pain of soaring energy and food prices--price pressures
which, along with the weakening U.S. dollar, contributed to inflation fears.
Jobs and manufacturing data were also disappointing during the period. Moreover,
the effects of the subprime mortgage market collapse rippled through the
economy, as credit markets tightened significantly and large financial
institutions suffered multi-billion dollar losses in related investments.

The Federal Open Market Committee (the "Fed") remained responsive, easing
monetary conditions through several reductions in the target federal funds rate
and taking other actions to encourage liquidity in the capital markets. However,
the Fed's official statements continued to signal caution about the future risks
to economic growth. The federal government created an economic stimulus plan to
bolster consumer spending, but any potential long-term benefit remains to be
seen.

Mid-cap value stocks (which comprise the Russell Midcap(R) Value Index and
generally represent the Fund's universe of investable stocks) underperformed the
broad market during the period. Given the uncertainties about economic growth,
investors turned away from value stocks toward growth stocks, which are
perceived to have greater potential for above-average growth in less robust
economic conditions.

PERFORMANCE ANALYSIS

All share classes of Morgan Stanley Mid-Cap Value Fund outperformed the Russell
Midcap(R) Value Index, and Class A and D shares outperformed while Class B and C
shares underperformed the Lipper Mid-Cap Value Funds Index for the six months
ended February 29, 2008, assuming no deduction of applicable sales charges.

The Fund's outperformance relative to the Russell Midcap Value Index was driven
by stock selection and an underweight position in the financial services sector.
Specifically, the Fund held limited exposure to banks in general, which were one
of the hardest hit segments within the financial services sector during the
period. Yet, one of the Fund's few bank holdings performed very well for a
number of company specific reasons. The Fund also added value with an
underweight in diversified financial stocks, which performed poorly, and an
overweight in insurance stocks, which declined less severely than other areas
within the financial sector. Elsewhere, stock selection in the energy sector
bolstered relative gains. One of the Fund's energy holdings benefited from its
exposure to Brazil, in which a significant offshore oil reserve was recently
discovered. The utilities sector was another strong point for the Fund's
relative performance. Our stock selection in the sector focused mainly on
nuclear and coal power generation companies, which gained pricing power from
rising commodity prices.

However, other investments turned out to be disadvantageous for the Fund. In the
consumer discretionary sector, stock selection had a negative effect on relative
performance, namely due to a holding in an entertainment stock with volatile
earnings during the period. The materials sector also hurt relative results. In

this sector, a paper company held by the Fund was unable to pass rising
production costs through to customers, which crimped profit margins. Finally,
the Fund's consumer staples sector lost ground with a holding in a
pharmaceutical retailer whose financial health was under question by investors
and analysts.

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

Hudson City Bancorp, Inc. 3.6%
Hess Corp. 3.5
Beckman Coulter, Inc. 3.4
Newfield Exploration Co. 3.2
Estee Lauder Companies, Inc. (The)
(Class A) 3.1
Marsh & McLennan Companies, Inc. 3.1
ACE Ltd. (Cayman Islands) 2.9
Aspen Insurance Holdings Ltd.
(Bermuda) 2.9
Diebold, Inc. 2.9
ConAgra Foods Inc. 2.8
</Table>

<Table>
<Caption>
TOP FIVE INDUSTRIES

Electric Utilities 9.2%
Property/Casualty Insurance 7.3
Household/Personal Care 5.1
Savings Banks 3.6
Integrated Oil 3.5
</Table>

Data as of February 29, 2008. 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 NOVEMBER 30, 2007, THESE MARKET
CAPITALIZATIONS RANGED BETWEEN $703 MILLION AND $30.8 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 CHANGES IN THE COMPANY OR CHANGES IN ECONOMIC OR MARKET TRENDS. THE
INVESTMENT ADVISER MAY PURCHASE STOCKS THAT TYPICALLY DO NOT PAY DIVIDENDS. THE
FUND MAY ALSO USE DERIVATIVE INSTRUMENTS AS DISCUSSED IN THE PROSPECTUS. THESE
DERIVATIVE INSTRUMENTS WILL BE COUNTED TOWARD THE 80 PERCENT POLICY DISCUSSED
ABOVE TO THE EXTENT THEY HAVE ECONOMIC CHARACTERISTICS SIMILAR TO THE SECURITIES
INCLUDED WITHIN THAT POLICY.

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) 869-NEWS, 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 29, 2008

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 (3.32)%(3) (4.02)%(3) (4.00)%(3) (3.07)%(3)
(8.39) (4) (7.65) (4) (4.72) (4) --

5 YEARS 17.57 (3) 16.67 (3) 16.74 (3) 17.85 (3)
16.30 (4) 16.45 (4) 16.74 (4) --

SINCE INCEPTION 8.62 (3) 7.80 (3) 7.85 (3) 8.88 (3)
7.70 (4) 7.80 (4) 7.85 (4) --

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/msim 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 09/01/07 - 02/29/08.

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*
------------- ------------- --------------
09/01/07 -
09/01/07 02/29/08 02/29/08
------------- ------------- --------------

CLASS A
Actual (-8.81% return)......................... $1,000.00 $ 911.90 $ 6.70
Hypothetical (5% annual return before
expenses).................................... $1,000.00 $1,017.85 $ 7.07
CLASS B
Actual (-9.15% return)......................... $1,000.00 $ 908.50 $10.25
Hypothetical (5% annual return before
expenses).................................... $1,000.00 $1,014.12 $10.82
CLASS C
Actual (-9.11% return)......................... $1,000.00 $ 908.90 $10.20
Hypothetical (5% annual return before
expenses).................................... $1,000.00 $1,014.17 $10.77
CLASS D
Actual (-8.71% return)......................... $1,000.00 $ 912.90 $ 5.52
Hypothetical (5% annual return before
expenses).................................... $1,000.00 $1,019.10 $ 5.82
</Table>

- ---------
* Expenses are equal to the Fund's annualized expense ratios of 1.40%, 2.15%,
2.14% and 1.16% for Class A, Class B, Class C and Class D shares,
respectively, multiplied by the average account value over the period,
multiplied by 182/366 (to reflect the one-half year period).

Morgan Stanley Mid-Cap Value Fund
PORTFOLIO OF INVESTMENT - FEBRUARY 29, 2008 (UNAUDITED)

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

Common Stocks (96.1%)

Aerospace & Defense (2.8%)
112,976 Goodrich Corp. ......................... $ 6,691,568
------------

Biotechnology (2.2%)
275,120 Affymetrix, Inc.*....................... 5,276,802
------------

Computer Peripherals (2.4%)
173,400 Zebra Technologies Corp. (Class A)*..... 5,777,688
------------

Department Stores (0.7%)
65,200 Macy's, Inc. ........................... 1,609,136
------------

Drugstore Chains (2.4%)
2,185,170 Rite Aid Corp.*......................... 5,834,404
------------

Electric Utilities (9.2%)
153,690 American Electric Power Co., Inc. ...... 6,288,995
220,680 DPL, Inc. .............................. 5,629,547
88,404 NRG Energy, Inc.*....................... 3,648,433
149,050 Wisconsin Energy Corp. ................. 6,501,561
------------
22,068,536
------------
Electronic Components (2.4%)
571,624 Flextronics International Ltd.
(Singapore)*........................... 5,796,267
------------

Electronic Equipment/Instruments (2.9%)
284,680 Diebold, Inc. .......................... 6,866,482
------------

Finance/Rental/Leasing (1.6%)
166,700 CIT Group, Inc. ........................ 3,704,075
------------

Food: Major Diversified (2.9%)
308,520 ConAgra Foods, Inc. .................... 6,818,293
------------
Home Furnishings (2.0%)
215,310 Newell Rubbermaid, Inc. ................ 4,887,537
------------

Household/Personal Care (5.1%)
173,240 Estee Lauder Companies, Inc. (The)
(Class A).............................. 7,376,559
113,280 International Flavors & Fragrances,
Inc. .................................. 4,885,766
------------
12,262,325
------------
Industrial Specialties (2.5%)
276,480 Valspar Corp. (The)..................... 5,996,851
------------

Information Technology Services (2.5%)
439,710 Perot Systems Corp. (Class A)*.......... 6,063,601
------------

Insurance Brokers/Services (3.1%)
289,253 Marsh & McLennan Companies, Inc. ....... 7,367,274
------------

Integrated Oil (3.5%)
89,180 Hess Corp. ............................. 8,309,792
------------

Investment Banks/Brokers (2.5%)
75,133 Bear Stearns Companies, Inc. (The)...... 6,000,121
------------

Investment Managers (2.4%)
223,272 Invesco Ltd. ........................... 5,717,996
------------

Medical Distributors (2.4%)
135,800 Owens & Minor, Inc. .................... 5,835,326
------------

Medical Specialties (3.5%)
122,410 Beckman Coulter, Inc. .................. 8,262,675
------------

Miscellaneous Manufacturing (2.8%)
208,490 Pentair, Inc. .......................... 6,800,944
------------
</Table>

See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
PORTFOLIO OF INVESTMENT - FEBRUARY 29, 2008 (UNAUDITED) continued

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

Office Equipment/Supplies (3.3%)
37,500 Avery Dennison Corp. ................... $ 1,924,500
168,340 Pitney Bowes, Inc. ..................... 6,023,205
------------
7,947,705
------------
Oil & Gas Pipelines (2.6%)
381,320 El Paso Corp. .......................... 6,215,516
------------

Oil & Gas Production (3.2%)
140,150 Newfield Exploration Co.*............... 7,761,507
------------

Other Consumer Services (3.1%)
69,178 Apollo Group, Inc. (Class A)*........... 4,246,146
503,210 Orbitz Worldwide, Inc.*................. 3,175,255
------------
7,421,401
------------
Property -- Casualty Insurers (7.3%)
125,480 ACE Ltd. (Cayman Islands)............... 7,056,995
77,491 Allied World Assurance Holdings Ltd. ... 3,374,733
243,600 Aspen Insurance Holdings Ltd.
(Bermuda).............................. 7,049,784
------------
17,481,512
------------
Pulp & Paper (2.4%)
908,500 Domtar Corp............................. 5,787,145
------------

Regional Banks (2.0%)
71,027 Northern Trust Corp. ................... 4,803,556
------------

Savings Banks (3.6%)
551,000 Hudson City Bancorp, Inc. .............. 8,744,370
------------

Services to the Health Industry (3.2%)
382,266 HEALTHSOUTH Corp.*...................... 6,146,837
73,300 Omnicare, Inc. ......................... 1,537,834
------------
7,684,671
------------
Specialty Stores (1.8%)
377,860 Office Depot, Inc.*..................... 4,296,268
------------

Trucks/Construction/Farm Machinery
(1.8%)
245,487 Tata Motors Ltd (ADR) (India)........... 4,300,932
------------
Total Common Stocks
(Cost $232,134,204)..................... 230,392,276
------------
Investment Trusts/Mutual Funds (2.1%)
93,900 Market Vectors Gold Miners ETF (Cost
$3,462,957)............................ 4,987,968
------------

<Caption>
NUMBER OF
SHARES (000)
- ------------

Short-Term Investment (a) (2.6%)
Investment Company
6,196 Morgan Stanley Institutional Liquidity
Money Market Portfolio -- Institutional
Class (Cost $6,195,892)................ 6,195,892
------------

</Table>

<Table>

Total Investments
(Cost $241,793,053)(b)..................... 100.8% 241,576,136
Liabilities in Excess of Other Assets...... (0.8) (1,849,925)
----- ------------
Net Assets................................. 100.0% $239,726,211
===== ============

</Table>

<Table>
<Caption>
- ------------

ADR American Depositary Receipt

* Non-income producing security.

(a) See note 4 to the financial statements regarding investments in
Morgan Stanley Institutional Liquidity Money Market
Portfolio -- Institutional Class.

(b) The aggregate cost for federal income tax purposes approximates
the aggregate cost for book purposes. The aggregate gross
unrealized appreciation is $31,566,926 and the aggregate gross
unrealized depreciation is $31,783,843, resulting in net
unrealized depreciation of $216,917.
</Table>

See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
SUMMARY OF INVESTMENTS BY INDUSTRY - FEBRUARY 29, 2008 (UNAUDITED)

PERCENT OF
TOTAL
INDUSTRY VALUE INVESTMENTS
- -----------------------------------------------------------------------------------

Electric Utilities..................................... $ 22,068,536 9.1%
Property -- Casualty Insurers.......................... 17,481,512 7.2
Household/Personal Care................................ 12,262,325 5.1
Savings Banks.......................................... 8,744,370 3.6
Integrated Oil......................................... 8,309,792 3.4
Medical Specialties.................................... 8,262,675 3.4
Office Equipment/Supplies.............................. 7,947,705 3.3
Oil & Gas Production................................... 7,761,507 3.2
Services To The Health Industry........................ 7,684,671 3.2
Other Consumer Services................................ 7,421,401 3.1
Insurance Brokers/Services............................. 7,367,274 3.0
Electronic Equipment/Instruments....................... 6,866,482 2.8
Food: Major Diversified................................ 6,818,293 2.8
Miscellaneous Manufacturing............................ 6,800,944 2.8
Aerospace & Defense.................................... 6,691,568 2.8
Oil & Gas Pipelines.................................... 6,215,516 2.6
Investment Company..................................... 6,195,892 2.6
Information Technology Services........................ 6,063,601 2.5
Investment Banks/Brokers............................... 6,000,121 2.5
Industrial Specialties................................. 5,996,851 2.5
Medical Distributors................................... 5,835,326 2.4
Drugstore Chains....................................... 5,834,404 2.4
Electronic Components.................................. 5,796,267 2.4
Pulp & Paper........................................... 5,787,145 2.4
Computer Peripherals................................... 5,777,688 2.4
Investment Managers.................................... 5,717,996 2.4
Biotechnology.......................................... 5,276,802 2.2
Investment Trusts/Mutual Funds......................... 4,987,968 2.1
Home Furnishings....................................... 4,887,537 2.0
Regional Banks......................................... 4,803,556 2.0
Trucks/Construction/Farm Machinery..................... 4,300,932 1.8
Specialty Stores....................................... 4,296,268 1.8
Finance/Rental/Leasing................................. 3,704,075 1.5
Department Stores...................................... 1,609,136 0.7
------------ -----
$241,576,136 100.0%
============ =====

</Table>

See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
February 29, 2008 (unaudited)

<Table>

Assets:
Investments in securities, at value (cost $235,597,161)......... $235,380,244
Investment in affiliate, at value (cost $6,195,892)............. 6,195,892
Cash............................................................ 24,572
Receivable for:
Dividends.................................................... 439,982
Investments sold............................................. 271,976
Shares of beneficial interest sold........................... 265,545
Dividends from affiliate..................................... 24,489
Interest..................................................... 1,950
Prepaid expenses and other assets............................... 20,564
Receivable from Distributor..................................... 893
------------
Total Assets................................................. 242,626,107
------------
Liabilities:
Payable for:
Investments purchased........................................ 2,197,781
Shares of beneficial interest redeemed....................... 373,763
Investment advisory fee...................................... 140,825
Distribution fee............................................. 36,121
Administration fee........................................... 15,744
Transfer agent fee........................................... 5,246
Accrued expenses and other payables............................. 130,416
------------
Total Liabilities............................................ 2,899,896
------------
Net Assets................................................... $239,726,211
============
Composition of Net Assets:
Paid-in-capital................................................. $238,566,748
Net unrealized depreciation..................................... (216,917)
Accumulated undistributed net investment income................. 387,218
Accumulated undistributed net realized gain..................... 989,162
------------
Net Assets................................................... $239,726,211
============
Class A Shares:
Net Assets...................................................... $17,074,381
Shares Outstanding (unlimited authorized, $.01 par value)....... 1,923,085
Net Asset Value Per Share.................................... $8.88
=====
Maximum Offering Price Per Share,
(net asset value plus 5.54% of net asset value).............. $9.37
=====
Class B Shares:
Net Assets...................................................... $32,092,400
Shares Outstanding (unlimited authorized, $.01 par value)....... 3,893,715
Net Asset Value Per Share.................................... $8.24
=====
Class C Shares:
Net Assets...................................................... $7,210,126
Shares Outstanding (unlimited authorized, $.01 par value)....... 871,303
Net Asset Value Per Share.................................... $8.28
=====
Class D Shares:
Net Assets...................................................... $183,349,304
Shares Outstanding (unlimited authorized, $.01 par value)....... 20,263,930
Net Asset Value Per Share.................................... $9.05
=====

</Table>

See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL STATEMENTS continued

Statement of Operations
For the six months ended February 29, 2008 (unaudited)

<Table>

Net Investment Income:
Income
Dividends....................................................... $ 1,876,800
Dividends from affiliate........................................ 176,177
Interest........................................................ 175,135
------------
Total Income................................................. 2,228,112
------------
Expenses
Investment advisory fee......................................... 995,598
Transfer agent fees and expenses................................ 322,453
Distribution fee (Class A shares)............................... 22,897
Distribution fee (Class B shares)............................... 192,133
Distribution fee (Class C shares)............................... 40,694
Administration fee.............................................. 110,622
Shareholder reports and notices................................. 93,860
Registration fees............................................... 26,827
Professional fees............................................... 23,900
Custodian fees.................................................. 14,569
Trustees' fees and expenses..................................... 1,663
Other........................................................... 16,807
------------
Total Expenses............................................... 1,862,023
Less: amounts waived/reimbursed................................. (5,625)
Less: expense offset............................................ (1,956)
------------
Net Expenses................................................. 1,854,442
------------
Net Investment Income........................................ 373,670
------------
Net Realized and Unrealized Gain (Loss):
Net realized gain............................................... 13,253,628
Net change in unrealized appreciation/depreciation.............. (37,052,364)
------------
Net Loss..................................................... (23,798,736)
------------
Net Decrease.................................................... $(23,425,066)
============

</Table>

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 29, 2008 AUGUST 31, 2007
----------------- ---------------
(unaudited)

Increase (Decrease) in Net Assets:
Operations:
Net investment income............................. $ 373,670 $ 977,609
Net realized gain................................. 13,253,628 59,974,331
Net change in unrealized
appreciation/depreciation....................... (37,052,364) (2,599,661)
------------ ------------
Net (Decrease) Increase........................ (23,425,066) 58,352,279
------------ ------------
Dividends and Distributions to Shareholders from:
Net investment income
Class A shares................................. (40,823) (27,967)
Class D shares................................. (925,131) (834,891)
Net realized gain
Class A shares................................. (4,428,696) (1,747,287)
Class B shares................................. (9,591,552) (5,332,448)
Class C shares................................. (2,024,591) (976,501)
Class D shares................................. (49,299,460) (24,088,069)
------------ ------------
Total Dividends and Distributions.............. (66,310,253) (33,007,163)
------------ ------------
Net increase (decrease) from transactions in
shares of beneficial interest................... 34,860,438 (14,932,054)
------------ ------------
Net (Decrease) Increase........................ (54,874,881) 10,413,062
Net Assets:
Beginning of period............................... 294,601,092 284,188,030
------------ ------------
End of Period
(Including accumulated undistributed net
investment income of $387,218 and $979,502,
respectively)..................................... $239,726,211 $294,601,092
============ ============

</Table>

See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 29, 2008 (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. 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. Effective March 31, 2008, Class D shares will be
renamed Class I shares.

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 or exchanged 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

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 29, 2008 (UNAUDITED) continued

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; (7) investments in open-end mutual funds, including the Morgan Stanley
Institutional Liquidity Funds, are valued at the net asset value as of the close
of each business day; and (8) 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 and are included in interest income. Interest income is
accrued daily.

C. 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.

D. 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.

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

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 29, 2008 (UNAUDITED) continued

required. The Fund files tax returns with the U.S. Internal Revenue Service, New
York State and New York City. The Fund adopted the provisions of the Financial
Accounting Standards Board ("FASB") Interpretation No. 48 ("FIN 48") Accounting
for Uncertainty in Income Taxes on February 28, 2008. FIN 48 sets forth a
minimum threshold for financial statement recognition of the benefit of a tax
position taken or expected to be taken in a tax return. The implementation of
FIN 48 did not result in any unrecognized tax benefits in the accompanying
financial statements. If applicable, the Fund recognizes interest accrued
related to unrecognized tax benefits in interest expense and penalties in other
expenses in the Statement of Operations. Each of the tax years in the four year
period ended February 29, 2008, remains subject to examination by taxing
authorities.

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

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

2. Investment Advisory/Administration Agreements
Pursuant to an Investment Advisory Agreement 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.

Under an agreement between the Administrator and State Street Bank and Trust
Company ("State Street"), State Street provides certain administrative services
to the Fund. For such services, the Administrator pays State Street a portion of
the fee the Administrator receives from the Fund.

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

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 29, 2008 (UNAUDITED) continued

the average daily net assets of Class A shares; (ii) Class B -- up to 1.0% of
the average daily net assets of Class B shares; and (iii) Class C -- up to 1.0%
of the average daily net assets of Class C shares.

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts totaled $277,164
at February 29, 2008.

At February 29, 2008, 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 what 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 29, 2008.

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 29, 2008, the
distribution fee was accrued for Class A shares and Class C shares at the annual
rate of 0.24% and 0.99%, respectively.

The Distributor has informed the Fund that for the six months ended February 29,
2008, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $91, $21,268 and
$1,156, respectively and received $9,210 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 Fund invests in Morgan Stanley Institutional Liquidity Money Market
Portfolio -- Institutional Class, an open-end management investment company
managed by the Investment Adviser. Investment advisory fees paid by the Fund are
reduced by an amount equal to the advisory and administrative

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 29, 2008 (UNAUDITED) continued

service fees paid by Morgan Stanley Institutional Liquidity Money Market
Portfolio -- Institutional Class with respect to assets invested by the Fund in
Morgan Stanley Institutional Liquidity Money Market Portfolio -- Institutional
Class. For the six months ended February 29, 2008, advisory fees paid were
reduced by $5,625 relating to the Fund's investment in Morgan Stanley
Institutional Liquidity Money Market Portfolio -- Institutional Class. Income
distributions earned by the Fund are recorded as dividends from affiliate in the
Statement of Operations and totaled $176,177 for the six months ended February
29, 2008. During the six months ended February 29, 2008, cost of purchases and
sales of investments in Morgan Stanley Institutional Liquidity Money Market
Portfolio -- Institutional Class aggregated $41,332,274 and $54,768,462,
respectively.

The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended February 29, 2008 aggregated
$55,512,258 and $79,546,707, respectively. Included in the aforementioned
transactions are purchases and sales of $412,819 and $1,617,759, respectively,
with other Morgan Stanley funds, including realized losses of $359,327

For the six months ended February 29, 2008, the Fund incurred brokerage
commissions of $2,220 with Morgan Stanley & Co., an affiliate of the Investment
Adviser, Administrator and Distributor, for portfolio transactions executed on
behalf of the Fund.

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

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan")
which allows each independent Trustee to defer payment of all, or a portion, of
the fees he or she receives for serving on the Board of Trustees. Each eligible
Trustee generally may elect to have the deferred amounts credited with a return
equal to the total return on one or more of the Morgan Stanley funds that are
offered as investment options under the Compensation Plan.
Appreciation/depreciation and distributions received from these investments are
recorded with an offsetting increase/decrease in the deferred compensation
obligation and do not affect the net asset value of the Fund.

5. Federal Income Tax Status
The amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 29, 2008 (UNAUDITED) continued

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, 2007, the Fund had temporary book/tax differences primarily
attributable to capital loss defferals on wash sales.

6. Shares of Beneficial Interest
Transactions in shares of beneficial interest were as follows:

<Table>
<Caption>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
FEBRUARY 29, 2008 ENDED
------------------------- AUGUST 31, 2007
(unaudited) -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------

CLASS A SHARES
Sold.................................. 171,043 $ 2,142,517 256,736 $ 3,175,422
Conversion from Class B............... 130,929 1,337,493 209,533 2,598,416
Reinvestment of distributions......... 418,995 4,118,719 138,984 1,627,510
Redeemed.............................. (282,358) (3,139,098) (373,287) (4,664,653)
---------- ------------ ---------- ------------
Net increase - Class A................ 438,609 4,459,631 231,966 2,736,695
---------- ------------ ---------- ------------
CLASS B SHARES
Sold.................................. 108,334 1,223,861 249,242 2,937,732
Conversion to Class A................. (122,540) (1,337,493) (220,634) (2,598,416)
Reinvestment of distributions......... 954,012 8,719,674 422,544 4,707,142
Redeemed.............................. (560,653) (5,698,115) (1,128,673) (13,351,355)
---------- ------------ ---------- ------------
Net increase (decrease) - Class B..... 379,153 2,907,927 (677,521) (8,304,897)
---------- ------------ ---------- ------------
CLASS C SHARES
Sold.................................. 73,379 787,612 78,580 937,327
Reinvestment of distributions......... 204,707 1,879,207 83,083 928,034
Redeemed.............................. (119,284) (1,246,452) (168,502) (2,000,435)
---------- ------------ ---------- ------------
Net increase (decrease) - Class C..... 158,802 1,420,367 (6,839) (135,074)
---------- ------------ ---------- ------------
CLASS D SHARES
Sold.................................. 926,970 9,973,916 1,975,192 24,806,412
Reinvestment of distributions......... 4,229,634 42,380,933 1,757,267 20,876,328
Redeemed.............................. (2,388,080) (26,282,336) (4,360,733) (54,911,518)
---------- ------------ ---------- ------------
Net increase (decrease) - Class D..... 2,768,524 26,072,513 (628,274) (9,228,778)
---------- ------------ ---------- ------------
Net increase (decrease) in Fund....... 3,745,088 $ 34,860,438 (1,080,668) $(14,932,054)
========== ============ ========== ============

</Table>

Morgan Stanley Mid-Cap Value Fund
NOTES TO FINANCIAL STATEMENTS - FEBRUARY 29, 2008 (UNAUDITED) continued

7. 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.

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

9. Accounting Pronouncement
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 Trust'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 SIX FOR THE YEAR ENDED AUGUST 31,
MONTHS ENDED ---------------------------------------------
FEBRUARY 29, 2008 2007 2006 2005 2004 2003
----------------- ------- ------- ------- ------ ------
(unaudited)

Class A Shares
Selected Per Share Data:
Net asset value, beginning of period......... $12.67 $11.68 $12.46 $11.08 $10.11 $ 8.19
------ ------ ------ ------ ------ ------

Income (loss) from investment operations:
Net investment income (loss)++............ 0.01 0.04 0.03 (0.02) (0.02) (0.03)
Net realized and unrealized gain (loss)... (0.84) 2.36 1.25 2.52 0.99 1.95
------ ----- ----- ----- ----- -----

Total income (loss) from investment
operations.................................. (0.83) 2.40 1.28 2.50 0.97 1.92
------ ----- ----- ----- ----- -----

Less dividends and distributions from:
Net investment income..................... (0.03) (0.02) -- -- -- --
Net realized gain......................... (2.93) (1.39) (2.06) (1.12) -- --
------ ------ ------ ------ ----- -----

Total dividends and distributions............ (2.96) (1.41) (2.06) (1.12) -- --
------ ------ ------ ------ ----- -----
Net asset value, end of period............... $ 8.88 $12.67 $11.68 $12.46 $11.08 $10.11
====== ====== ====== ====== ====== ======

Total Return+................................ (8.81)%(1) 21.51 % 11.30% 23.55 % 9.50 % 23.63 %

Ratios to Average Net Assets(3):
Total expenses (before expense offset)....... 1.40 %(2)(4) 1.40 % (4)1.39% 1.40 % 1.40 % 1.47 %

Net investment income (loss)................. 0.21 %(2)(4) 0.28 %(4) 0.23% (0.08)% (0.14)% (0.39)%

Supplemental Data:
Net assets, end of period, in thousands...... $17,074 $18,806 $14,634 $11,757 $3,878 $3,173

Portfolio turnover rate...................... 21 %(1) 80 % 52% 72 % 151 % 165 %
</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.
(4) Reflects waivers of certain Fund expenses in connection with the
investments in Morgan Stanley Institutional Liquidity Money Market
Portfolio -- Institutional Class during the period. As a result of such
waivers the expenses as a percentage of its net assets had an effect of
less than 0.005%.
</Table>

See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED AUGUST 31,
MONTHS ENDED -----------------------------------------------
FEBRUARY 29, 2008 2007 2006 2005 2004 2003
----------------- ------- ------- ------- ------- -------
(unaudited)

Class B Shares
Selected Per Share Data:
Net asset value, beginning of period......... $11.99 $11.18 $12.09 $10.85 $9.98 $ 8.15
------ ------ ------ ------ ----- ------

Income (loss) from investment operations:
Net investment loss++..................... (0.03) (0.06) (0.06) (0.09) (0.10) (0.09)
Net realized and unrealized gain (loss)... (0.79) 2.26 1.21 2.45 0.97 1.92
------- ----- ----- ----- ----- -----

Total income (loss) from investment
operations.................................. (0.82) 2.20 1.15 2.36 0.87 1.83
------ ----- ----- ----- ----- -----

Less distributions from net realized gain.... (2.93) (1.39) (2.06) (1.12) -- --
------ ------ ------ ------ ----- -----

Net asset value, end of period............... $ 8.24 $11.99 $11.18 $12.09 $10.85 $ 9.98
====== ====== ====== ====== ====== ======

Total Return+................................ (9.15)%(1) 20.48 % 10.48 % 22.58 % 8.72 % 22.45 %

Ratios to Average Net Assets(3):
Total expenses (before expense offset)....... 2.15 %(2)(4) 2.16 %(4) 2.15 % 2.16 % 2.16 % 2.24 %

Net investment loss.......................... (0.54)%(2)(4) (0.48)%(4)(0.53)% (0.84)% (0.90)% (1.16)%

Supplemental Data:
Net assets, end of period, in thousands...... $32,092 $42,122 $46,862 $56,389 $60,987 $56,823

Portfolio turnover rate...................... 21 %(1) 80 % 52 % 72 % 151 % 165 %
</Table>

- ----------

<Table>

See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL HIGHLIGHTS continued

Class C Shares
Selected Per Share Data:
Net asset value, beginning of period......... $12.02 $11.21 $12.11 $10.86 $ 9.98 $ 8.15
------ ------ ------ ------ ------ ------

Income (loss) from investment operations:
Net investment loss++..................... (0.03) (0.06) (0.06) (0.08) (0.09) (0.09)
Net realized and unrealized gain (loss)... (0.78) 2.26 1.22 2.45 0.97 1.92
------ ----- ----- ----- ----- -----

Total income (loss) from investment
operations.................................. (0.81) 2.20 1.16 2.37 0.88 1.83
------ ----- ----- ----- ----- -----

Less distributions from net realized gain.... (2.93) $ (1.39) (2.06) (1.12) -- --
------ ------- ------ ------ ----- -----

Net asset value, end of period............... $ 8.28 $12.02 $11.21 $12.11 $10.86 $ 9.98
====== ====== ====== ====== ====== ======

Total Return+................................ (9.11)%(1) 20.52 % 10.56 % 22.66 % 8.82 % 22.45 %

Ratios to Average Net Assets(3):
Total expenses (before expense offset)....... 2.14 %(2)(4) 2.15 %(4) 2.13 % 2.04 % 2.08 % 2.24 %

Net investment loss.......................... (0.53)%(2)(4) (0.47)%(4) (0.51)% (0.72)% (0.82)% (1.16)%

Supplemental Data:
Net assets, end of period, in thousands...... $7,210 $8,563 $8,061 $8,268 $8,119 $7,238

Portfolio turnover rate...................... 21 %(1) 80 % 52 % 72 % 151 % 165 %
</Table>

- ----------

<Table>

See Notes to Financial Statements

Morgan Stanley Mid-Cap Value Fund
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED AUGUST 31,
MONTHS ENDED ----------------------------------------------------------
FEBRUARY 29, 2008 2007 2006 2005 2004 2003
----------------- -------- -------- -------- ----------- -----------
(unaudited)

Class D Shares
Selected Per Share Data:
Net asset value, beginning of period......... $12.87 $11.84 $ 4.37 $ 2.94 $ 1.94 $ 0.00
------ ------ ------ ------ ------ ------

Income (loss) from investment operations:
Net investment income (loss)++............ 0.03 0.07 0.06 0.02 0.01 (0.01)
Net realized and unrealized gain (loss)... (0.86) 2.40 1.26 2.53 0.99 1.95
------ ----- ----- ----- ----- -----

Total income (loss) from investment
operations.................................. (0.83) 2.47 1.32 2.55 1.00 1.94
------ ----- ----- ----- ----- -----

Less dividends and distributions from:
Net investment income..................... (0.06) (0.05) -- -- -- --
Net realized gain......................... (2.93) (1.39) (2.06) (1.12) -- --
------ ------ ------ ------ ----------- -----------

Total dividends and distributions............ (2.99) (1.44) (2.06) (1.12) -- --
------ ------ ------ ------ ----------- -----------

Net asset value, end of period............... $ 9.05 $12.87 $ 3.63 $ 4.37 $ 2.94 $ 1.94
====== ====== ====== ====== ====== ======

Total Return+................................ (8.71)%(1) 21.81% 11.54% 23.87% 9.75% 23.63 %

Ratios to Average Net Assets(3):
Total expenses (before expense offset)....... 1.16 %(2)(4) 1.16%(4) 1.15% 1.16% 1.16% 1.24 %

Net investment income (loss)................. 0.45 %(2)(4) 0.52%(4) 0.47% 0.16% 0.10% (0.16)%

Supplemental Data:
Net assets, end of period, in thousands...... $183,349 $225,109 $214,631 $259,160 $236,039 $209,035

Portfolio turnover rate...................... 21 %(1) 80% 52% 72% 151% 165 %
</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.
(4) Reflects waivers of certain Fund expenses in connection with the
investments in Morgan Stanley Institutional Liquidity Money Market
Portfolio -- Institutional Class during the period. As a result of such
waivers the expenses as a percentage of its net assets had an effect of
less than 0.005%.
</Table>

See Notes to Financial Statements

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

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.
522 Fifth Avenue
New York, New York 10036

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 Prospectus
carefully before investing.

Morgan Stanley Distributors Inc., member FINRA.

[MORGAN STANLEY LOGO]

MORGAN STANLEY FUNDS

Morgan Stanley
Mid-Cap Value Fund

Semiannual Report
February 29, 2008

MDPSAN
IU08-02124-P-Y02/08

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 17, 2008

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 17, 2008

/s/ Francis Smith
Francis Smith
Principal Financial Officer
April 17, 2008