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MORGAN STANLEY FUNDS
1221 AVENUE OF THE AMERICAS
NEW YORK, NY 10020
July 7, 2006
U.S. Securities and Exchange Commission
Judiciary Plaza
100 F Street, N.E.
Washington, D.C. 20549
Attention: Larry Greene, Division of Investment Management
Mail Stop 0505
RE: MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS
Dear Mr. Greene:
We are writing to you on behalf of each of the Morgan Stanley Retail and
Institutional Funds listed on APPENDIX A (collectively, the "Funds") in order
to request selective review of certain amendments to each Fund's registration
statement on Form N-1A as filed, or to be filed in the future, pursuant to Rule
485(a) under the Securities Act of 1933, as amended.
I. BACKGROUND
As you may know, each Fund filed a preliminary proxy statement on Schedule 14A
this past May (on May 19, 2006, for each of the Morgan Stanley Retail Funds, and
on May 22, 2006, for each of the Morgan Stanley Institutional Funds). These
proxy statements contained proposals relating to: (i) the election of
Directors/Trustees to each Fund's board; (ii) the elimination, modification, and
reclassification as nonfundamental, of certain of the Funds' fundamental
investment policies; and (iii) certain other fund-specific matters. You provided
oral comments on these preliminary proxy statements on May 23, 2006, and the
Funds responded in writing to your comments shortly thereafter. The Funds then
filed definitive proxy materials in early June and are in the process of
soliciting shareholders in anticipation of their August 1, 2006 special meetings
of shareholders.
As you may also recall, the Funds filed amendments to their registration
statements pursuant to Rule 485(a), commencing on October 2004 and continuing
through November 2005, in order to comply with certain disclosure rules (E.G.,
market timing and portfolio holdings disclosures) promulgated by the Securities
and Exchange Commission. At that time, each Fund's prospectus and statement of
additional information were subject to a comprehensive staff review; despite an
oral request for selective review limited to the disclosure added as a result of
these rule-making initiatives, the Funds received, and responded to, oral
comments from you covering a wide variety of disclosure-related issues.
II. MATTERS FOR SELECTIVE REVIEW
Assuming that the proposals contained in the Funds' definitive proxy materials
are approved by shareholders, each Fund anticipates filing an amendment to its
registration statement pursuant to Rule 485(a) during the course of the next
year on or about the dates set forth on APPENDIX A. Aside from usual and
customary "annual update" changes, and certain other non-material disclosure
changes which could otherwise be included in a Rule 485(b) filing, the Funds
will make only those disclosure changes necessary to reflect and implement the
items approved by shareholders in connection with the aforementioned proxy
statements. Specifically, their respective registration statements will be
updated to
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include changes (insofar as they are approved by shareholders) limited to the
following (each of which shall be marked as a change in each Fund's EDGAR
submission):
1) Disclosure regarding the newly elected Directors/Trustees in the form
required by Item 12 of Form N-1A will be added to each Fund's statement of
additional information.
2) Each Fund's list of fundamental and non-fundamental investment policies
as set forth in its statement of additional information will be revised in the
manner described in its proxy materials.
3) Certain Funds are asking shareholders to eliminate or modify restrictive
fundamental policies with respect to purchases of investment company securities
and the lending of securities. To the extent that any such Fund intends to
engage in these activities or increase its exposure to these activities due to
the modification of its fundamental investment policies, such Fund may add or
modify related disclosure in its prospectus and/or statement of additional
information, as appropriate.
4) For Morgan Stanley Natural Resource Development Securities, Inc. and
Morgan Stanley Financial Services Trust, which are asking shareholders to modify
their classification from diversified to non-diversified, disclosure regarding
each Fund's status as a ``non-diversified'' fund and associated risks will be
added to each Fund's prospectus and/or statement of additional information, as
appropriate.
5) For Morgan Stanley U.S. Government Securities Trust, which is asking
shareholders to modify its policy on concentration in order to allow the Fund to
purchase agency securities, disclosure regarding the ability to invest in, and
the risks of, investing in agency securities will be added to its prospectus
and/or statement of additional information.
III. SELECTIVE REVIEW REQUEST
In light of your recent review of each Fund's proxy statement and registration
statement, the Funds believe that these upcoming amendments are ideal candidates
for selective review pursuant to the guidance set forth in Investment Company
Act Release No. 13768 ("IC-13768"). In accordance with IC-13768, we hereby
request selective review of each Fund's registration statement limited to the
disclosure items discussed under "Matters for Selective Review" above. Selective
review would serve to expedite the review process for the Funds as well as use
the staff's time more effectively.
Pursuant to the requirements of IC-13768, the Funds will file a copy of this
letter with each registration statement amendment made under Rule 485(a). Due to
other business, legal and operational realities over the course of the coming
year, a Fund may be required to make additional material changes to its
registration statement other than those described under "Matters for Selective
Review" above. Accordingly, each Fund hereby undertakes to supplement this
letter and file such supplemental correspondence with the Commission should an
amendment contain any additional material changes.
If you would like to discuss any of this matter in further detail or if you have
any questions, please feel free to contact me at (212) 762-7546.
Sincerely,
Alice Gerstel
cc: Richard Pfordte
Frank Donaty
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TABLE OF CONTENTS
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EXHIBIT A
MORGAN STANLEY RETAIL FUNDS
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FUND FILING DATE *
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Active Assets California Tax-Free Trust August 28, 2006
Active Assets Government Securities Trust August 28, 2006
Active Assets Institutional Government Securities Trust August 28, 2006
Active Assets Institutional Money Trust August 28, 2006
Active Assets Money Trust August 28, 2006
Active Assets Tax-Free Trust August 28, 2006
Morgan Stanley Allocator Fund March 28, 2007
Morgan Stanley Balanced Growth Fund(1) March 28, 2007
Morgan Stanley California Tax-Free Daily Income Trust February 28, 2007
Morgan Stanley California Tax-Free Income Fund February 28, 2007
Morgan Stanley Capital Opportunities Trust January 29, 2007
Morgan Stanley Convertible Securities Trust November 28, 2006
Morgan Stanley Developing Growth Securities Trust November 28, 2006
Morgan Stanley Dividend Growth Securities Inc. April 27, 2007
Morgan Stanley Equally-Weighted S&P 500 Fund August 28, 2006
Morgan Stanley European Equity Fund Inc. December 28, 2006
Morgan Stanley Financial Services Trust July 28, 2006
Morgan Stanley Flexible Income Trust December 28, 2006
Morgan Stanley Focus Growth Fund February 28, 2007
Morgan Stanley Fundamental Value Fund November 28, 2006
Morgan Stanley Global Advantage Fund July 28, 2006
Morgan Stanley Global Dividend Growth Securities May 28, 2007
Morgan Stanley Health Sciences Trust September 28, 2006
Morgan Stanley High Yield Securities Inc. October 27, 2006
Morgan Stanley Income Builder Fund November 28, 2006
Morgan Stanley Income Trust October 27, 2006
Morgan Stanley Information Fund (2) May 28, 2007
Morgan Stanley International Fund, December 28, 2006
Morgan Stanley International SmallCap Fund July 28, 2006
Morgan Stanley International Value Equity Fund, October 27, 2006
Morgan Stanley Japan Fund July 28, 2006
Morgan Stanley Limited Duration Fund June 29, 2006
Morgan Stanley Limited Term Municipal Trust May 28, 2007
Morgan Stanley Liquid Asset Fund Inc. October 27, 2006
Morgan Stanley Mid-Cap Value Fund October 27, 2006
Morgan Stanley Mortgage Securities Trust December 28, 2006
Morgan Stanley Multi-Asset Class Fund November 28, 2006
Morgan Stanley Nasdaq-100IndexFund January 29, 2007
Morgan Stanley Natural Resource Development Securities Inc. April 27, 2007
Morgan Stanley New York Municipal Money Market Trust February 28, 2007
Morgan Stanley New York Tax-Free Income Fund February 28, 2007
Morgan Stanley Pacific Growth Fund Inc. December 28, 2006
Morgan Stanley Real Estate Fund January 29, 2007
Morgan Stanley S&P 500 Index Fund October 27, 2006
Morgan Stanley Small-Mid Special Value Fund June 30, 2006
Morgan Stanley Special Growth Fund April 27, 2007
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TABLE OF CONTENTS
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Morgan Stanley Special Value Fund September 28, 2006
Morgan Stanley Strategist Fund September 28, 2006
Morgan Stanley Tax-Exempt Securities Trust February 28, 2007
Morgan Stanley Tax Free Daily Income Trust February 28, 2007
Morgan Stanley Total Market Index Fund September 28, 2006
Morgan Stanley Total Return Trust September 28, 2006
Morgan Stanley U.S. Government Money Market Trust March 28, 2007
Morgan Stanley U.S. Government Securities Trust February 28, 2007
Morgan Stanley Utilities Fund February 28, 2007
Morgan Stanley Value Fund November 28, 2006
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MORGAN STANLEY INSTITUTIONAL FUNDS
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Fund Filing Date *
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Morgan Stanley Institutional Fund, Inc. February 28, 2007
Morgan Stanley Institutional Fund Trust November 28, 2006
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* Represents a projected filing date. The actual filings may be slightly
earlier or slightly later than the projected date.
(1) Expected to be renamed Morgan Stanley Balanced Fund
(2) Expected to be renamed Morgan Stanley Technology Fund
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