N-CSR 1 file001.htm FORM N-CSR




                                 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: 811-08265

Morgan Stanley S&P 500 Index 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, 2005

Date of reporting period: August 31, 2005


Item 1 - Report to Shareholders

Welcome, Shareholder:

In this report, you'll learn about how your investment in Morgan Stanley S&P 500 Index Fund performed during the annual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the Fund's financial statements and a list of Fund investments.

This material must be preceded or accompanied by a prospectus for the fund being offered.

Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the Fund will achieve its investment objective. The Fund is subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.



	Fund Report
	For the year ended August 31, 2005

Total Return for the 12 Months Ended August 31, 2005


Class A	Class B			Class C			Class D			S&P 500^® Index¹			Lipper S&P 500 Objective Funds Index²
11.81%		11.04	%		11.18	%		12.11	%		12.54	%		12.30	%

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 12 months ended August 31, 2005 were characterized by changing market sentiment and uncertainty. At the start of the fiscal year, investors were distracted by rising oil prices, the pace of economic growth, inflation, and the intentions of the Federal Reserve (the "Fed"). The geopolitical landscape and the upcoming U.S. presidential election further unsettled investors. As the period progressed, however, sentiment improved and stocks advanced. The presidential election proceeded without major incident, the economy appeared to be on track for moderate growth, and investors seemed to come to terms with higher oil prices and the Federal Open Market Committee's "measured" rate hikes. The market ended 2004 on a bright note, with stocks rallying briskly in November and December.

The tide shifted dramatically in early 2005. Stocks retreated as investors sought to lock in gains. The Fed's ongoing increases to the federal funds target rate became more troubling. As oil prices soared and inflationary pressures loomed, the future pace of U.S. economic growth seemed less certain. The travails of the auto industry further dampened investor's spirits. This gloomy climate gave way to optimism in late spring and early summer. Oil prices remained extraordinarily high, but encouraging economic data, increased consumer confidence, waning inflationary fears and many solid corporate earnings announcements boosted the stock market.

During the final weeks of the period, the market slowed its pace. Gross domestic product data was a bit weaker than expected, and oil prices remained high as the hurricane season ensued and the Fed raised rates once again. Uncertainty grew during the final days of the period as Hurricane Katrina caused immeasurable damage to the Gulf Coast region. Although oil prices soared to unprecedented heights, the market demonstrated resiliency overall.

Performance Analysis

Morgan Stanley S&P 500 Index Fund underperformed both the S&P 500^® Index and the Lipper S&P 500 Objective Funds Index for the 12-month period ended August 31, 2005, assuming no deduction of applicable sales charges. From a broad market-capitalization perspective, the largest stocks of the index lagged their smaller counterparts. Stocks with historically lower price-to-earnings ratios (value stocks) outperformed those with historically higher valuations (growth stocks).

The most significant positive contributors were energy, technology, and consumer discretionary stocks. Against the backdrop of skyrocketing commodity prices, energy companies benefited from increased profitability and the favorable supply/demand dynamics of an expanding global economy. Within the technology sector, company restructurings, well-received product launches, and favorable earnings announcements helped rekindle investor interest in the sector. Technology stocks were also well positioned to benefit as the market began to favor stocks with higher growth potential, as was particularly the case during the latter months of the reporting period. In the consumer discretionary sector, home builders and specialty retailers posted notable gains.

Other pockets of particularly strong performance included utilities, real estate investment trusts (REITs) and healthcare equipment and services. Utilities were boosted by a range of factors, including rising energy costs, improved financials, a low rate environment, increased usage and consolidation trends. Investor interest in real estate and income was a boon to REITs, while steady profitability and decent across-the-board earnings supported the appreciation of healthcare equipment and services stocks.

Although the consumer discretionary sector contributed positive performance overall, it also included some of the poorest performing stocks, specifically within the auto and auto-related parts industry. As leading auto makers announced a string of disappointing news, the sector declined precipitously. Credit downgrades, bankruptcy fears, increased competition abroad, labor problems and pension funding and poor earnings were among the factors driving stocks downward. The food and staples retailing and pharmaceutical and biotechnology industries also lagged, albeit considerably less than the beleaguered auto industry. Food and staples retailers fell as higher energy costs and higher funding costs began to cut into profits. A number of pharmaceutical companies came under considerable pressure due to highly publicized product recalls and litigation, while pipeline issues and patent challenges added to a climate of negative sentiment. While many biotechnology companies advanced, others were hindered by issues similar to those encountered by the pharmaceuticals.

Overall, the telecommunications and basic materials sectors contributed the least to overall gains. Both sectors earned muted gains and neither enjoys a substantial weighting within the index. Concerns about competition, an uncertain regulatory climate, and company-specific events dampened the telecommunications sector. Meanwhile, basic materials companies saw a decline in profits as rising commodity prices increased the production costs of papers, chemicals and metals.

The investment performance of the S&P 500^® Index does not include the impact of any expenses, sales charges or fees. Indexes are unmanaged and such costs would lower performance. As a result, the Fund's performance will not exactly track the performance of the Index. It is not possible to invest directly in an index.

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


TOP 10 HOLDINGS
Exxon Mobil Corp.	3.4	%
General Electric Co.	3.2
Microsoft Corp.	2.4
Citigroup, Inc.	2.0
Pfizer, Inc.	1.7
Johnson & Johnson	1.7
Bank of America Corp.	1.5
Intel Corp.	1.4
American International Group, Inc.	1.4
Wal-Mart Stores, Inc.	1.3


TOP FIVE INDUSTRIES
Pharmaceuticals: Major	6.3	%
Integrated Oil	5.6
Industrial Conglomerates	5.3
Major Banks	4.5
Financial Conglomerates	4.2

Data as of August 31, 2005. 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 stocks of companies included in the S&P 500^® Index. The "Investment Adviser," Morgan Stanley Investment Advisors Inc., "passively" manages the Fund's assets by investing in stocks in approximately the same proportion as they are represented in the Index. For example, if the common stock of a specific company represents five percent of the Index, the Investment Manager typically will invest the same percentage of the Fund's assets in that stock. The S&P 500^® Index is a well-known stock market index that includes common stocks of 500 companies representing a significant portion of the market value of all common stocks publicly traded in the United States. The Fund may invest in foreign companies that are included in the S&P 500^® Index.

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 by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semiannual reports are filed on Form N-CSRS and the annual reports are filed on Form N-CSR. 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 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

Performance of $10,000 Investment

Average Annual Total Returns — Period Ended August 31, 2005


	Class A Shares* (since 09/26/97)			Class B Shares** (since 09/26/97)			Class C Shares† (since 09/26/97)			Class D Shares†† (since 09/26/97)
Symbol	SPIAX			SPIBX			SPICX			SPIDX
1 Year		11.81%	³		11.04%	³		11.18%	³		12.11%	³
		5.94	⁴		6.04	⁴		10.18	⁴		—
5 Years		(3.34)	³		(4.09)	³		(4.08)	³		(3.14)	³
		(4.38)	⁴		(4.48)	⁴		(4.08)	⁴		—
Since Inception		4.15	³		3.35	³		3.37	³		4.39	³
		3.44	⁴		3.35	⁴		3.37	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 the most recent month-end performance figures, please visit www.morganstanley.com or speak with your Financial Advisor. Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class A, Class B, Class C, and Class D shares will vary due to differences in sales charges and expenses.

The maximum front-end sales charge for Class A is 5.25%.

The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%. The CDSC declines to 0% after six years.

†

The maximum contingent deferred sales charge for Class C is 1% for shares redeemed within one year of purchase.

††

Class D has no sales charge.

(1)

The Standard & Poor's 500 Index (S&P 500^®) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. Indexes are unmanaged and their returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)

The Lipper S&P 500 Objective Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper S&P 500 Objective 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.

(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.

‡

Ending value assuming a complete redemption on August 31, 2005.



	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 03/01/05 – 08/31/05.

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs, and will not help you determine the relative total cost of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.


	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	03/01/05		08/31/05		03/01/05 – 08/31/05
Class A
Actual (2.00% return)	$	1,000.00	$	1,020.00	$	3.31
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.93	$	3.31
Class B
Actual (1.66% return)	$	1,000.00	$	1,016.60	$	7.12
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.15	$	7.12
Class C
Actual (1.74% return)	$	1,000.00	$	1,017.40	$	7.12
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.15	$	7.12
Class D
Actual (2.13% return)	$	1,000.00	$	1,021.30	$	2.04
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,023.19	$	2.04

Expenses are equal to the Fund's annualized expense ratio of 0.65%, 1.40%, 1.40% and 0.40% for Class A, Class B, Class C and Class D shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). If the Fund had borne all of its expenses, the annualized expense ratios would have been 0.66%, 1.41%, 1.41% and 0.41%, for Class A, Class B, Class C and Class D shares, respectively.

Investment Advisory Agreement Approval

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Investment Adviser under the Advisory Agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Fund's Administrator under the Administration Agreement, including accounting, clerical, bookkeeping, compliance, business management and planning, and the provision of supplies, office space and utilities. (The Investment Adviser and the Administrator together are referred to as the "Adviser" and the Advisory and Administration Agreements together are referred to as the "Management Agreement.") The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as reported to the Board by Lipper Inc. ("Lipper").

The Board reviewed and considered the qualifications of the portfolio managers, the senior administrative managers and other key personnel of the Adviser who provide the administrative and investment advisory services to the Fund. The Board determined that the Adviser's portfolio managers and key personnel are well qualified by education and/or training and experience to perform the services in an efficient and professional manner. The Board concluded that the nature and extent of the advisory and administrative services provided were necessary and appropriate for the conduct of the business and investment activities of the Fund. The Board also concluded that the overall quality of the advisory and administrative services was satisfactory.

Performance Relative to Comparable Funds Managed by Other Advisers

The Board reviewed the Fund's performance for the one-, three- and five-year periods ended November 30, 2004, as shown in reports provided by Lipper (the "Lipper Reports"), compared to the performance of comparable funds selected by Lipper (the "performance peer group"), and noted that the Fund's performance was lower than its performance peer group average for all three periods. The Board considered that the Fund's performance, relative to its performance peer group, has steadily improved, as the gap between the Fund's performance and the average of its performance peer group has steadily narrowed from the five- to the three- to the one-year period. The Board concluded that the Fund's performance was improving and can reasonably be expected to be competitive with its performance peer group.

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

The Board reviewed the advisory and administrative fees (together, the "management fee") paid by the Fund under the Management Agreement. The Board noted that the rate was comparable to the management fee rates charged by the Adviser to any other funds it manages with investment strategies comparable to those of the Fund.

Fees and Expenses Relative to Comparable Funds Managed by Other Advisers

The Board reviewed the management fee rate and the total expense ratio of the Fund. The Board noted that: (i) the Fund's management fee rate was lower than the average management fee rate for funds, selected by Lipper (the "expense peer group"), managed by other advisers with investment strategies comparable to those of the Fund, as shown in the Lipper Report for the Fund; and (ii) the Fund's total expense ratio was also lower than the average total expense ratio of the funds included in the Fund's expense peer group, with total expenses, other than brokerage and 12b-1 fees, being capped at 0.40%. The Board concluded that the Fund's management fee and total expense ratio were competitive with those of its expense peer group.

Breakpoints and Economies of Scale

The Board reviewed the structure of the Fund's management fee schedule under the Management Agreement and noted that it does not include any breakpoints. The Board recommended that the Adviser consider incorporating breakpoints in the management fee schedule. The Adviser agreed to introduce a breakpoint which would reduce the management fee from 0.20% to 0.18% on assets above $2 billion. The Board concluded that the proposed new breakpoint in the management fee would reflect economies of scale as assets increase.

Profitability of Adviser and Affiliates

The Board considered and reviewed information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last two years from their relationship with the Fund and the Morgan Stanley Fund Complex and reviewed with the Controller of the Adviser the cost allocation methodology used to determine the Adviser's profitability. Based on their review of the information they received, the Board concluded that the profits earned by the Adviser and its affiliates were not excessive in light of the advisory, administrative and other services provided to the Fund.

Fall-Out Benefits

The Board considered so-called "fall-out benefits" derived by the Adviser and its affiliates from their relationship with the Fund and the Fund Complex, such as "float" benefits derived from handling of checks for purchases and redemptions of Fund shares through a broker-dealer affiliate of the Adviser. The Board also considered that a broker-dealer affiliate of the Adviser receives from the Fund 12b-1 fees for distribution and shareholder services. The Board also considered that an affiliate of the Adviser, through a joint venture, receives revenue in connection with trading done on behalf of the Fund through an electronic trading system network ("ECN"). The Board concluded that the float benefits and the above-referenced ECN-related revenue were relatively small and that the 12b-1 fees were competitive with those of other broker-dealer affiliates of investment advisers of mutual funds.

Soft Dollar Benefits

The Board considered whether the Adviser realizes any benefits as a result of brokerage transactions executed through "soft dollar" arrangements. Under such arrangements, brokerage commissions paid by the Fund and/or other funds managed by the Adviser would be used to pay for research that a securities broker obtains from third parties, or to pay for both research and execution services from securities brokers who effect transactions for the Fund. The Adviser informed the Board that the Fund's commissions are used to pay for execution services only.

Adviser Financially Sound and Financially Capable of Meeting the Fund's Needs

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board noted that the Adviser's operations remain profitable, although increased expenses in recent years have reduced the Adviser's profitability. The Board concluded that the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement.

Historical Relationship Between the Fund and the Adviser

The Board also reviewed and considered the historical relationship between the Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund's operations and the Board's confidence in the competence and integrity of the senior managers and key personnel of the Adviser. The Board concluded that it is beneficial for the Fund to continue its relationship with the Adviser.

Other Factors and Current Trends

The Board considered the controls and procedures adopted and implemented by the Adviser and monitored by the Fund's Chief Compliance Officer and concluded that the conduct of business by the Adviser indicates a good faith effort on its part to adhere to high ethical standards in the conduct of the Fund's business.

General Conclusion

After considering and weighing all of the above factors, the Board concluded it would be in the best interest of the Fund and its shareholders to approve renewal of the Management Agreement for another year.

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005


NUMBER OF SHARES			VALUE
		Common Stocks (99.1%)
		Advertising/Marketing Services (0.2%)
	58,357	Interpublic Group of Companies, Inc. (The)*	$	707,870
	25,305	Omnicom Group, Inc.		2,035,534
				2,743,404
		Aerospace & Defense (1.5%)
	114,030	Boeing Co.		7,642,291
	27,651	General Dynamics Corp.		3,168,528
	16,635	Goodrich Corp.		762,216
	16,376	L-3 Communications Holdings, Inc.		1,340,867
	55,755	Lockheed Martin Corp.		3,470,191
	49,551	Northrop Grumman Corp.		2,779,316
	62,405	Raytheon Co.		2,447,524
	24,586	Rockwell Collins, Inc.		1,183,324
				22,794,257
		Agricultural Commodities/ Milling (0.1%)
	86,077	Archer-Daniels-Midland Co.		1,937,593
		Air Freight/Couriers (0.9%)
	41,685	FedEx Corp.		3,394,826
	153,717	United Parcel Service, Inc. (Class B)		10,896,998
				14,291,824
		Airlines (0.1%)
	101,796	Southwest Airlines Co.		1,355,923
		Alternative Power Generation (0.0%)
	74,244	Calpine Corp.*		227,929
		Aluminum (0.2%)
	120,352	Alcoa, Inc.		3,224,230
		Apparel/Footwear (0.5%)
	20,661	Cintas Corp.		852,266
	52,042	Coach, Inc.*		1,727,274
	16,646	Jones Apparel Group, Inc.		469,084
	14,979	Liz Claiborne, Inc.		614,588
	31,518	Nike, Inc. (Class B)		2,487,085
	7,740	Reebok International Ltd.		435,762
	13,798	V.F. Corp.		818,359
				7,404,418
		Apparel/Footwear Retail (0.4%)
	104,570	Gap, Inc. (The)	$	1,987,876
	52,466	Limited Brands, Inc.		1,153,203
	33,920	Nordstrom, Inc.		1,139,034
	64,918	TJX Companies, Inc. (The)		1,357,435
				5,637,548
		Auto Parts: O.E.M. (0.2%)
	20,735	Dana Corp.		279,093
	77,443	Delphi Corp.		429,809
	20,796	Eaton Corp.		1,329,280
	26,501	Johnson Controls, Inc.		1,589,530
	17,757	Visteon Corp.*		175,439
				3,803,151
		Automotive Aftermarket (0.0%)
	8,827	Cooper Tire & Rubber Co.		149,176
	24,280	Goodyear Tire & Rubber Co. (The)*		407,904
				557,080
		Beverages: Alcoholic (0.4%)
	107,136	Anheuser-Busch Companies, Inc.		4,747,196
	12,438	Brown-Forman Corp. (Class B)		704,364
	27,003	Constellation Brands Inc. (Class A)*		743,123
	10,832	Molson Coors Brewing Co. (Class B)		694,440
				6,889,123
		Beverages: Non-Alcoholic (1.0%)
	312,329	Coca-Cola Co. (The)		13,742,476
	48,690	Coca-Cola Enterprises Inc.		1,088,222
	27,044	Pepsi Bottling Group, Inc. (The)		797,257
				15,627,955
		Biotechnology (1.5%)
	170,768	Amgen Inc.*		13,644,363
	47,558	Biogen Idec Inc.*		2,004,570
	20,436	Chiron Corp.*		744,688
	34,814	Genzyme Corp.*		2,477,712
	62,349	Gilead Sciences, Inc.*		2,681,007

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005 continued


NUMBER OF SHARES			VALUE
	34,191	MedImmune, Inc.*	$	1,023,337
	6,893	Millipore Corp.*		440,807
				23,016,484
		Broadcasting (0.2%)
	70,367	Clear Channel Communications, Inc.		2,343,221
	40,115	Univision Communications, Inc. (Class A)*		1,079,094
				3,422,315
		Building Products (0.2%)
	24,657	American Standard Companies, Inc.		1,124,359
	59,849	Masco Corp.		1,836,167
				2,960,526
		Cable/Satellite TV (0.6%)
	304,348	Comcast Corp. (Class A)*		9,358,701
		Casino/Gaming (0.2%)
	25,064	Harrah's Entertainment, Inc.		1,743,452
	47,439	International Game Technology		1,315,009
				3,058,461
		Chemicals: Agricultural (0.2%)
	37,008	Monsanto Co.		2,362,591
		Chemicals: Major Diversified (0.9%)
	132,650	Dow Chemical Co. (The)		5,730,480
	137,457	Du Pont (E.I.) de Nemours & Co.		5,439,174
	11,088	Eastman Chemical Co.		531,891
	16,646	Engelhard Corp.		473,579
	15,587	Hercules Inc.*		198,734
	26,630	Rohm & Haas Co.		1,156,008
				13,529,866
		Chemicals: Specialty (0.3%)
	31,639	Air Products & Chemicals, Inc.		1,752,801
	44,639	Praxair, Inc.		2,156,064
	9,503	Sigma-Aldrich Corp.		592,987
				4,501,852
		Commercial Printing/Forms (0.1%)
	29,435	Donnelley (R.R.) & Sons Co.		1,099,692
		Computer Communications (1.1%)
	65,830	Avaya Inc.*	$	671,466
	881,893	Cisco Systems, Inc.*		15,538,955
	12,543	QLogic Corp.*		433,486
				16,643,907
		Computer Peripherals (0.4%)
	331,575	EMC Corp.*		4,264,055
	16,384	Lexmark International, Inc. (Class A)*		1,031,864
	50,527	Network Appliance, Inc.*		1,199,511
	45,128	Seagate Technology Inc. (Escrow) (a)		0
				6,495,430
		Computer Processing Hardware (2.0%)
	113,700	Apple Computer, Inc.*		5,335,941
	334,102	Dell, Inc.*		11,894,031
	40,985	Gateway, Inc.*		124,594
	398,304	Hewlett-Packard Co.		11,056,919
	25,778	NCR Corp.*		882,123
	470,020	Sun Microsystems, Inc.*		1,786,076
				31,079,684
		Construction Materials (0.1%)
	14,092	Vulcan Materials Co.		1,012,510
		Containers/Packaging (0.2%)
	15,202	Ball Corp.		570,227
	14,788	Bemis Company, Inc.		386,706
	20,593	Pactiv Corp.*		399,710
	11,551	Sealed Air Corp.*		586,213
	17,178	Temple-Inland Inc.		661,181
				2,604,037
		Contract Drilling (0.4%)
	20,526	Nabors Industries, Ltd. (Bermuda)*		1,375,242
	18,747	Noble Corp. (Cayman Islands)		1,336,661
	14,942	Rowan Companies, Inc.*		555,842
	45,001	Transocean Inc. (Cayman Islands)*		2,656,859
				5,924,604

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005 continued


NUMBER OF SHARES			VALUE
		Data Processing Services (0.8%)
	17,451	Affiliated Computer Services, Inc. (Class A)*	$	906,579
	80,500	Automatic Data Processing, Inc.		3,441,375
	25,405	Computer Sciences Corp.*		1,131,793
	19,627	Convergys Corp.*		279,096
	107,450	First Data Corp.		4,464,548
	26,397	Fiserv, Inc.*		1,184,433
	49,093	Paychex, Inc.		1,675,544
				13,083,368
		Department Stores (0.4%)
	9,881	Dillard's, Inc. (Class A)		222,421
	36,390	Federated Department Stores, Inc.		2,510,169
	45,018	Kohl's Corp.*		2,361,194
	36,334	Penney (J.C.) Co., Inc.		1,766,922
				6,860,706
		Discount Stores (2.1%)
	15,689	Big Lots, Inc.*		185,287
	65,916	Costco Wholesale Corp.		2,863,391
	41,639	Dollar General Corp.		793,639
	23,011	Family Dollar Stores, Inc.		457,459
	14,109	Sears Holdings Corp.*		1,916,849
	121,902	Target Corp.		6,552,233
	461,685	Wal-Mart Stores, Inc.		20,757,358
				33,526,216
		Drugstore Chains (0.6%)
	111,785	CVS Corp.		3,283,125
	141,087	Walgreen Co.		6,536,561
				9,819,686
		Electric Utilities (3.2%)
	90,136	AES Corp. (The)*		1,418,741
	22,430	Allegheny Energy, Inc.*		676,489
	28,056	Ameren Corp.		1,541,116
	52,994	American Electric Power Co., Inc.		1,970,317
	40,088	CenterPoint Energy, Inc.		569,650
	27,369	Cinergy Corp.		1,205,331
	30,191	CMS Energy Corp.*		486,075
	33,548	Consolidated Edison, Inc.		1,573,737
	24,498	Constellation Energy Group, Inc.	$	1,439,258
	46,988	Dominion Resources, Inc.		3,593,642
	24,036	DTE Energy Co.		1,100,128
	127,883	Duke Energy Corp.		3,707,328
	44,961	Edison International		2,024,594
	29,255	Entergy Corp.		2,191,492
	92,339	Exelon Corp.		4,976,149
	45,516	FirstEnergy Corp.		2,322,681
	54,089	FPL Group, Inc.		2,330,695
	51,071	PG&E Corp.		1,916,184
	13,572	Pinnacle West Capital Corp.		609,790
	52,370	PPL Corp.		1,673,745
	34,317	Progress Energy, Inc.		1,495,878
	32,943	Public Service Enterprise Group, Inc.		2,126,471
	102,714	Southern Co. (The)		3,533,362
	28,562	TECO Energy, Inc.		497,264
	33,075	TXU Corp.		3,208,937
	55,510	Xcel Energy, Inc.		1,068,012
				49,257,066
		Electrical Products (0.4%)
	25,024	American Power Conversion Corp.		654,878
	12,813	Cooper Industries Ltd. (Class A) (Bermuda)		851,296
	57,503	Emerson Electric Co.		3,868,802
	23,189	Molex Inc.		620,538
				5,995,514
		Electronic Components (0.1%)
	25,406	Jabil Circuit, Inc.*		747,953
	72,525	Sanmina-SCI Corp.*		367,702
	134,161	Solectron Corp.*		550,060
				1,665,715
		Electronic Equipment/ Instruments (0.5%)
	59,669	Agilent Technologies, Inc.*		1,918,955
	227,437	JDS Uniphase Corp.*		361,625
	24,117	Rockwell Automation, Inc.		1,255,049
	21,029	Scientific-Atlanta, Inc.		804,570
	36,460	Symbol Technologies, Inc.		334,703
	12,214	Tektronix, Inc.		308,648

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005 continued


NUMBER OF SHARES			VALUE
	22,244	Thermo Electron Corp.*	$	620,608
	132,227	Xerox Corp.*		1,773,164
				7,377,322
		Electronic Production Equipment (0.4%)
	226,860	Applied Materials, Inc.		4,153,807
	27,168	KLA-Tencor Corp.		1,379,048
	19,059	Novellus Systems, Inc.*		510,972
	27,019	Teradyne, Inc.*		453,919
				6,497,746
		Electronics/Appliance Stores (0.2%)
	61,798	Best Buy Co., Inc.		2,945,293
	26,395	Circuit City Stores – Circuit City Group		445,812
	18,721	RadioShack Corp.		469,148
				3,860,253
		Electronics/Appliances (0.1%)
	39,620	Eastman Kodak Co.		965,539
	10,998	Maytag Corp.		207,862
	9,231	Whirlpool Corp.		702,018
				1,875,419
		Engineering & Construction (0.0%)
	11,948	Fluor Corp.		739,701
		Environmental Services (0.2%)
	37,376	Allied Waste Industries, Inc.*		298,261
	78,389	Waste Management, Inc.		2,150,210
				2,448,471
		Finance/Rental/Leasing (1.8%)
	34,791	Capital One Financial Corp.		2,861,212
	29,046	CIT Group, Inc.		1,315,203
	81,099	Countrywide Financial Corp.		2,740,335
	133,568	Fannie Mae		6,817,311
	95,301	Freddie Mac		5,754,274
	174,933	MBNA Corp.		4,408,312
	40,604	Providian Financial Corp.*		755,234
	8,878	Ryder System, Inc.		311,529
	57,894	SLM Corp.		2,880,227
				27,843,637
		Financial Conglomerates (4.2%)
	161,614	American Express Co.		8,927,557
	717,884	Citigroup, Inc.		31,421,783
	485,570	JPMorgan Chase & Co.	$	16,455,967
	40,540	Principal Financial Group, Inc.		1,856,732
	72,034	Prudential Financial, Inc.		4,636,829
	45,674	State Street Corp.		2,207,424
				65,506,292
		Financial Publishing/Services (0.3%)
	17,914	Equifax, Inc.		591,879
	51,694	McGraw-Hill Companies, Inc. (The)		2,492,685
	38,113	Moody's Corp.		1,871,729
				4,956,293
		Food Distributors (0.2%)
	87,358	SYSCO Corp.		2,916,010
		Food Retail (0.3%)
	50,829	Albertson's, Inc.		1,023,188
	100,568	Kroger Co.*		1,985,212
	61,850	Safeway Inc.		1,467,701
	18,779	Supervalu, Inc.		653,509
				5,129,610
		Food: Major Diversified (1.5%)
	44,807	Campbell Soup Co.		1,317,326
	71,468	ConAgra Foods Inc.		1,631,614
	51,017	General Mills, Inc.		2,352,904
	48,307	Heinz (H.J.) Co.		1,735,187
	48,247	Kellogg Co.		2,187,037
	231,084	PepsiCo, Inc.		12,674,957
	108,644	Sara Lee Corp.		2,064,236
				23,963,261
		Food: Meat/Fish/Dairy (0.0%)
	34,645	Tyson Foods, Inc. (Class A)		615,988
		Food: Specialty/Candy (0.3%)
	30,005	Hershey Foods Corp.		1,772,995
	18,659	McCormick & Co., Inc. (Non-Voting)		632,727
	27,023	Wrigley (Wm.) Jr. Co.		1,919,984
				4,325,706
		Forest Products (0.2%)
	15,297	Louisiana-Pacific Corp.		386,861
	33,794	Weyerhaeuser Co.		2,197,286
				2,584,147

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005 continued


NUMBER OF SHARES			VALUE
		Gas Distributors (0.3%)
	45,811	Dynegy, Inc. (Class A)*	$	199,736
	23,866	KeySpan Corp.		910,965
	6,091	Nicor Inc.		252,228
	37,514	NiSource, Inc.		905,588
	5,246	Peoples Energy Corp.		218,076
	34,454	Sempra Energy		1,544,228
				4,030,821
		Home Building (0.3%)
	17,653	Centex Corp.		1,195,991
	37,490	D.R. Horton, Inc.		1,384,131
	11,496	KB Home		852,543
	16,373	Pulte Homes, Inc.		1,411,353
				4,844,018
		Home Furnishings (0.1%)
	26,168	Leggett & Platt, Inc.		633,527
	37,991	Newell Rubbermaid, Inc.		890,129
				1,523,656
		Home Improvement Chains (1.3%)
	296,188	Home Depot, Inc. (The)		11,942,300
	106,598	Lowe's Companies, Inc.		6,855,317
	17,274	Sherwin-Williams Co.		800,823
				19,598,440
		Hospital/Nursing Management (0.3%)
	57,836	HCA, Inc.		2,851,315
	34,022	Health Management Associates, Inc. (Class A)		827,415
	11,922	Manor Care, Inc.		470,561
	64,660	Tenet Healthcare Corp.*		787,559
				4,936,850
		Hotels/Resorts/Cruiselines (0.5%)
	72,720	Carnival Corp. (Panama)		3,588,005
	52,695	Hilton Hotels Corp.		1,220,943
	27,390	Marriott International, Inc. (Class A)		1,731,322
	29,824	Starwood Hotels & Resorts Worldwide, Inc.		1,738,739
				8,279,009
		Household/Personal Care (2.5%)
	11,793	Alberto-Culver Co.	$	506,509
	65,137	Avon Products, Inc.		2,137,796
	21,272	Clorox Co. (The)		1,224,629
	72,197	Colgate-Palmolive Co.		3,790,343
	137,668	Gillette Co. (The)		7,416,175
	12,209	International Flavors & Fragrances, Inc.		440,745
	66,020	Kimberly-Clark Corp.		4,114,366
	341,481	Procter & Gamble Co. (The)		18,945,366
				38,575,929
		Industrial Conglomerates (5.3%)
	106,198	3M Co.		7,555,988
	37,975	Danaher Corp.		2,033,941
	1,463,583	General Electric Co.**		49,191,025
	117,715	Honeywell International, Inc.		4,506,130
	23,261	Ingersoll-Rand Co. Ltd. (Class A) (Bermuda)		1,852,041
	12,736	ITT Industries, Inc.		1,389,752
	18,623	Textron, Inc.		1,327,820
	278,690	Tyco International Ltd. (Bermuda)		7,755,943
	141,260	United Technologies Corp.		7,063,000
				82,675,640
		Industrial Machinery (0.3%)
	37,670	Illinois Tool Works Inc.		3,174,828
	16,586	Parker Hannifin Corp.		1,068,802
				4,243,630
		Industrial Specialties (0.2%)
	30,308	Ecolab Inc.		1,000,164
	23,689	PPG Industries, Inc.		1,491,933
				2,492,097
		Information Technology Services (1.3%)
	23,358	Citrix Systems, Inc.*		555,920
	71,603	Electronic Data Systems Corp.		1,603,907
	222,633	International Business Machines Corp.		17,948,672
	46,759	Unisys Corp.*		310,947
				20,419,446

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005 continued


NUMBER OF SHARES			VALUE
		Insurance Brokers/Services (0.2%)
	43,858	AON Corp.	$	1,312,231
	73,536	Marsh & McLennan Companies, Inc.		2,062,685
				3,374,916
		Integrated Oil (5.6%)
	11,848	Amerada Hess Corp.		1,505,881
	312,726	Chevron Corp.		19,201,376
	192,133	ConocoPhillips		12,669,250
	878,451	Exxon Mobil Corp.		52,619,215
	22,200	Murphy Oil Corp.		1,213,230
				87,208,952
		Internet Software/Services (0.4%)
	71,299	Siebel Systems, Inc.		588,217
	181,144	Yahoo!, Inc.*		6,039,341
				6,627,558
		Investment Banks/Brokers (2.0%)
	15,687	Bear Stearns Companies, Inc. (The)		1,576,544
	50,851	ETRADE Group, Inc.		813,616
	60,978	Goldman Sachs Group Inc. (The)		6,779,534
	38,169	Lehman Brothers Holdings Inc.		4,032,937
	130,455	Merrill Lynch & Co., Inc.		7,456,808
	151,189	Morgan Stanley (Note 4)		7,690,984
	157,242	Schwab (Charles) Corp. (The)		2,127,484
				30,477,907
		Investment Managers (0.4%)
	13,090	Federated Investors, Inc. (Class B)		406,575
	27,346	Franklin Resources, Inc.		2,199,712
	31,307	Janus Capital Group, Inc.		442,368
	58,401	Mellon Financial Corp.		1,895,112
	17,070	Price (T.) Rowe Group, Inc.		1,075,410
				6,019,177
		Life/Health Insurance (0.7%)
	69,233	AFLAC, Inc.		2,992,250
	18,759	Jefferson-Pilot Corp.		932,885
	23,970	Lincoln National Corp.		1,188,672
	101,196	MetLife, Inc.		4,956,580
	14,370	Torchmark Corp.	$	757,874
	41,096	UnumProvident Corp.		793,975
				11,622,236
		Major Banks (4.5%)
	554,964	Bank of America Corp.		23,880,101
	107,421	Bank of New York Co., Inc. (The)		3,283,860
	75,395	BB&T Corp.		3,058,775
	23,294	Comerica, Inc.		1,409,054
	32,056	Huntington Bancshares, Inc.		769,023
	56,257	KeyCorp		1,863,232
	82,002	National City Corp.		3,003,733
	39,125	PNC Financial Services Group		2,199,999
	64,018	Regions Financial Corp.		2,094,669
	46,889	SunTrust Banks, Inc.		3,295,359
	217,542	Wachovia Corp.		10,794,434
	232,847	Wells Fargo & Co.		13,882,338
				69,534,577
		Major Telecommunications (3.0%)
	52,530	ALLTEL Corp.		3,256,335
	110,562	AT&T Corp.		2,175,860
	252,675	BellSouth Corp.		6,642,826
	455,819	SBC Communications, Inc.		10,976,122
	402,982	Sprint Nextel Corp.		10,449,323
	381,860	Verizon Communications Inc.		12,490,641
				45,991,107
		Managed Health Care (1.6%)
	40,081	Aetna, Inc.		3,193,253
	62,599	Caremark Rx, Inc.*		2,925,251
	18,062	CIGNA Corp.		2,082,910
	14,500	Coventry Health Care, Inc.*		1,160,000
	22,333	Humana, Inc.*		1,075,557
	174,726	UnitedHealth Group Inc.		8,998,389
	84,540	WellPoint Inc.*		6,277,095
				25,712,455
		Media Conglomerates (2.1%)
	281,694	Disney (Walt) Co. (The)		7,095,872
	398,018	News Corp Inc. (Class A)		6,451,872
	646,611	Time Warner, Inc.		11,587,269
	222,491	Viacom Inc. (Class B) (Non-Voting)		7,562,469
				32,697,482

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005 continued


NUMBER OF SHARES			VALUE
		Medical Distributors (0.4%)
	14,546	AmerisourceBergen Corp.	$	1,086,150
	59,098	Cardinal Health, Inc.		3,522,832
	40,737	McKesson Corp.		1,901,196
				6,510,178
		Medical Specialties (2.3%)
	27,232	Applera Corp. – Applied Biosystems Group		585,488
	14,505	Bard (C.R.), Inc.		933,107
	7,389	Bausch & Lomb, Inc.		560,012
	85,659	Baxter International, Inc.		3,454,627
	34,847	Becton, Dickinson & Co.		1,833,998
	34,756	Biomet, Inc.		1,282,149
	103,475	Boston Scientific Corp.*		2,781,408
	16,576	Fisher Scientific International, Inc.*		1,068,820
	44,849	Guidant Corp.		3,168,133
	21,815	Hospira, Inc.*		869,110
	166,910	Medtronic, Inc.		9,513,870
	17,166	Pall Corp.		490,948
	17,892	PerkinElmer, Inc.		370,364
	49,997	St. Jude Medical, Inc.*		2,294,862
	51,736	Stryker Corp.		2,822,199
	16,201	Waters Corp.*		736,659
	34,080	Zimmer Holdings, Inc.*		2,800,354
				35,566,108
		Miscellaneous Commercial Services (0.0%)
	18,093	Sabre Holdings Corp. (Class A)		347,024
		Miscellaneous Manufacturing (0.1%)
	28,114	Dover Corp.		1,144,240
		Motor Vehicles (0.5%)
	253,963	Ford Motor Co.		2,532,011
	78,034	General Motors Corp.		2,667,982
	39,283	Harley-Davidson, Inc.		1,935,081
				7,135,074
		Multi-Line Insurance (1.7%)
	358,089	American International Group, Inc.		21,198,869
	40,933	Hartford Financial Services Group, Inc. (The)		2,990,156
	22,031	Loews Corp.	$	1,931,898
	17,591	Safeco Corp.		917,195
				27,038,118
		Office Equipment/Supplies (0.1%)
	14,024	Avery Dennison Corp.		749,443
	31,743	Pitney Bowes, Inc.		1,372,885
				2,122,328
		Oil & Gas Pipelines (0.3%)
	88,947	El Paso Corp.		1,031,785
	14,975	Kinder Morgan, Inc.		1,429,663
	78,773	Williams Companies, Inc. (The)		1,767,666
				4,229,114
		Oil & Gas Production (1.5%)
	32,527	Anadarko Petroleum Corp.		2,955,729
	45,289	Apache Corp.		3,243,598
	53,196	Burlington Resources, Inc.		3,925,333
	65,374	Devon Energy Corp.		3,972,778
	33,016	EOG Resources, Inc.		2,107,411
	16,076	Kerr-McGee Corp.		1,415,170
	54,958	Occidental Petroleum Corp.		4,563,163
	49,808	XTO Energy Inc.		1,982,358
				24,165,540
		Oil Refining/Marketing (0.6%)
	9,251	Ashland, Inc.		562,368
	50,424	Marathon Oil Corp.		3,242,767
	18,999	Sunoco, Inc.		1,381,227
	35,428	Valero Energy Corp.		3,773,082
				8,959,444
		Oilfield Services/Equipment (1.2%)
	46,753	Baker Hughes Inc.		2,746,739
	22,344	BJ Services Co.		1,409,460
	69,791	Halliburton Co.		4,324,948
	23,743	National Oilwell, Inc.*		1,524,538
	81,304	Schlumberger Ltd. (Netherlands Antilles)		7,010,844
	19,092	Weatherford International Ltd. (Bermuda)*		1,292,719
				18,309,248

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005 continued


NUMBER OF SHARES			VALUE
		Other Consumer Services (0.8%)
	22,559	Apollo Group, Inc. (Class A)*	$	1,774,491
	45,610	Block (H.&R.), Inc.		1,229,190
	145,113	Cendant Corp.		2,951,598
	167,639	eBay, Inc.*		6,787,703
				12,742,982
		Other Consumer Specialties (0.1%)
	20,071	Fortune Brands, Inc.		1,745,776

		Other Metals/Minerals (0.1%)
	13,369	Phelps Dodge Corp.		1,437,569

		Packaged Software (3.7%)
	67,480	Adobe Systems, Inc.		1,824,659
	31,546	Autodesk, Inc.*		1,362,787
	30,570	BMC Software, Inc.*		611,400
	73,445	Computer Associates International, Inc.		1,980,077
	53,607	Compuware Corp.*		485,679
	25,587	Intuit Inc.*		1,172,908
	11,951	Mercury Interactive Corp.*		438,243
	1,386,598	Microsoft Corp.		37,992,785
	52,563	Novell, Inc.*		345,865
	610,165	Oracle Corp.*		7,913,840
	37,486	Parametric Technology Corp.*		227,165
	164,470	Symantec Corp.*		3,450,576
				57,805,984
		Personnel Services (0.1%)
	16,682	Monster Worldwide, Inc.*		521,146
	22,007	Robert Half International, Inc.		741,196
				1,262,342
		Pharmaceuticals: Generic Drugs (0.1%)
	30,092	Mylan Laboratories, Inc.		553,392
	15,203	Watson Pharmaceuticals, Inc.*		524,199
				1,077,591
		Pharmaceuticals: Major (6.3%)
	213,988	Abbott Laboratories	$	9,657,278
	269,681	Bristol-Myers Squibb Co.		6,599,094
	410,340	Johnson & Johnson		26,011,453
	156,363	Lilly (Eli) & Co.		8,603,092
	304,025	Merck & Co., Inc.		8,582,626
	1,026,054	Pfizer, Inc.		26,133,595
	203,557	Schering-Plough Corp.		4,358,155
	184,706	Wyeth		8,457,688
				98,402,981
		Pharmaceuticals: Other (0.3%)
	17,999	Allergan, Inc.		1,656,808
	46,983	Forest Laboratories, Inc.*		2,086,045
	33,358	King Pharmaceuticals, Inc.*		490,363
				4,233,216
		Precious Metals (0.2%)
	24,795	Freeport-McMoRan Copper & Gold, Inc. (Class B)		1,045,605
	61,538	Newmont Mining Corp.		2,435,674
				3,481,279
		Property – Casualty Insurers (1.2%)
	39,669	ACE Ltd. (Cayman Islands)		1,761,700
	92,216	Allstate Corp. (The)		5,183,461
	26,957	Chubb Corp. (The)		2,344,181
	22,999	Cincinnati Financial Corp.		942,499
	27,433	Progressive Corp. (The)		2,644,816
	92,979	St. Paul Travelers Companies, Inc. (The)		3,999,027
	19,336	XL Capital Ltd. (Class A) (Cayman Islands)		1,343,852
				18,219,536
		Publishing: Books/Magazines (0.0%)
	6,203	Meredith Corp.		304,567
		Publishing: Newspapers (0.4%)
	9,788	Dow Jones & Co., Inc.		399,840
	34,275	Gannett Co., Inc.		2,492,478
	9,576	Knight-Ridder, Inc.		613,630
	20,084	New York Times Co. (The) (Class A)		641,282
	41,127	Tribune Co.		1,545,141
				5,692,371

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005 continued


NUMBER OF SHARES			VALUE
		Pulp & Paper (0.3%)
	35,898	Georgia-Pacific Corp.	$	1,151,967
	67,686	International Paper Co.		2,088,113
	25,723	MeadWestvaco Corp.		745,195
				3,985,275
		Railroads (0.5%)
	51,963	Burlington Northern Santa Fe Corp.		2,755,078
	29,885	CSX Corp.		1,312,848
	55,789	Norfolk Southern Corp.		1,986,646
	36,291	Union Pacific Corp.		2,477,587
				8,532,159
		Real Estate Investment Trusts (0.7%)
	13,149	Apartment Investment & Management Co. (Class A)		524,645
	27,440	Archstone-Smith Trust		1,105,832
	56,241	Equity Office Properties Trust		1,872,825
	39,552	Equity Residential		1,493,879
	25,384	Plum Creek Timber Co., Inc.		932,862
	25,759	ProLogis		1,120,774
	13,900	Public Storage, Inc.		938,528
	30,314	Simon Property Group, Inc.		2,305,986
	15,900	Vornado Realty Trust		1,367,718
				11,663,049
		Recreational Products (0.3%)
	13,393	Brunswick Corp.		589,292
	42,298	Electronic Arts, Inc.*		2,422,829
	23,129	Hasbro, Inc.		478,770
	56,804	Mattel, Inc.		1,024,176
				4,515,067
		Regional Banks (1.4%)
	48,708	AmSouth Bancorporation		1,281,995
	17,102	Compass Bancshares, Inc.		800,545
	71,997	Fifth Third Bancorp		2,981,396
	17,130	First Horizon National Corp.		669,440
	13,490	M&T Bank Corp.		1,438,304
	29,384	Marshall & Ilsley Corp.		1,286,138
	65,907	North Fork Bancorporation, Inc.		1,811,783
	28,059	Northern Trust Corp.		1,398,461
	42,931	Synovus Financial Corp.		1,235,125
	252,914	U.S. Bancorp	$	7,390,147
	12,377	Zions Bancorporation		864,657
				21,157,991
		Restaurants (0.7%)
	20,106	Darden Restaurants, Inc.		631,529
	174,908	McDonald's Corp.		5,675,765
	53,790	Starbucks Corp.*		2,637,862
	15,861	Wendy's International, Inc.		747,688
	39,984	Yum! Brands, Inc.		1,894,442
				11,587,286
		Savings Banks (0.6%)
	39,007	Golden West Financial Corp.		2,379,037
	50,324	Sovereign Bancorp, Inc.		1,173,556
	121,057	Washington Mutual, Inc.		5,033,550
				8,586,143
		Semiconductors (2.9%)
	54,501	Advanced Micro Devices, Inc.*		1,131,986
	51,278	Altera Corp.*		1,121,450
	51,059	Analog Devices, Inc.		1,861,101
	42,299	Applied Micro Circuits Corp.*		116,322
	40,386	Broadcom Corp. (Class A)*		1,756,791
	55,447	Freescale Semiconductor Inc. (Class B)*		1,335,164
	851,854	Intel Corp.		21,909,685
	42,226	Linear Technology Corp.		1,601,632
	53,514	LSI Logic Corp.*		515,875
	45,258	Maxim Integrated Products, Inc.		1,930,254
	84,850	Micron Technology, Inc.*		1,010,564
	48,172	National Semiconductor Corp.		1,200,928
	23,316	NVIDIA Corp.*		715,335
	24,891	PMC - Sierra, Inc.*		211,076
	229,373	Texas Instruments Inc.		7,495,910
	48,412	Xilinx, Inc.		1,359,893
				45,273,966
		Services to the Health Industry (0.4%)
	20,473	Express Scripts, Inc.*		1,184,568
	31,269	IMS Health Inc.		850,517

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005 continued


NUMBER OF SHARES			VALUE
	18,576	Laboratory Corp. of America Holdings*	$	916,168
	40,950	Medco Health Solutions Inc.*		2,017,607
	25,130	Quest Diagnostics Inc.		1,255,997
				6,224,857
		Specialty Insurance (0.2%)
	14,944	Ambac Financial Group, Inc.		1,024,860
	18,686	MBIA Inc.		1,083,227
	13,023	MGIC Investment Corp.		813,026
				2,921,113
		Specialty Stores (0.5%)
	30,812	AutoNation, Inc.*		641,198
	9,060	AutoZone, Inc.*		856,170
	40,769	Bed Bath & Beyond Inc.*		1,653,183
	43,585	Office Depot, Inc.*		1,307,550
	9,749	OfficeMax Inc.		288,083
	101,651	Staples, Inc.		2,232,256
	19,829	Tiffany & Co.		742,001
				7,720,441
		Specialty Telecommunications (0.1%)
	18,117	CenturyTel, Inc.		650,400
	47,001	Citizens Communications Co.		641,094
	230,751	Qwest Communications International, Inc.*		899,929
				2,191,423
		Steel (0.1%)
	12,387	Allegheny Technologies Inc.		342,129
	22,107	Nucor Corp.		1,248,603
	15,757	United States Steel Corp.		660,533
				2,251,265
		Telecommunication Equipment (1.6%)
	16,009	ADC Telecommunications, Inc.*		335,228
	22,417	Andrew Corp.*		258,468
	79,559	CIENA Corp.*		179,008
	27,638	Comverse Technology, Inc.*		712,508
	199,992	Corning, Inc.*		3,991,840
	611,347	Lucent Technologies Inc.*		1,882,949
	338,399	Motorola, Inc.		7,404,170
	225,430	QUALCOMM Inc.		8,951,825
	61,861	Tellabs, Inc.*		549,944
				24,265,940
		Tobacco (1.4%)
	285,785	Altria Group, Inc.	$	20,205,000
	16,067	Reynolds American, Inc.		1,348,664
	22,812	UST, Inc.		970,879
				22,524,543
		Tools/Hardware (0.1%)
	11,043	Black & Decker Corp.		941,968
	7,975	Snap-On, Inc.		283,113
	10,397	Stanley Works (The)		475,663
				1,700,744
		Trucks/Construction/Farm Machinery (0.6%)
	94,306	Caterpillar Inc.		5,233,040
	6,015	Cummins Inc.		520,117
	34,017	Deere & Co.		2,224,031
	9,088	Navistar International Corp.*		290,452
	23,990	PACCAR, Inc.		1,681,219
				9,948,859
		Wholesale Distributors (0.1%)
	24,074	Genuine Parts Co.		1,103,071
	11,513	Grainger (W.W.), Inc.		740,516
				1,843,587
		Total Common Stocks (Cost $1,341,775,869)		1,544,125,443


PRINCIPAL AMOUNT IN THOUSANDS
		Short-Term Investment (1.3%)
		Repurchase Agreement
$	19,774	Joint repurchase agreement account 3.575% due 09/01/05 (dated 08/31/05; proceeds $19,775,964) (b) (Cost $19,774,000)	19,774,000


Total Investments (Cost $1,361,549,869) (c) (d)	100.4	%		1,563,899,443
Liabilities in Excess of Other Assets	(0.4	)		(5,881,310	)
Net Assets	100.0	%	$	1,558,018,133

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments August 31, 2005 continued

Non-income producing security.

A portion of this security has been physically segregated in connection with open futures contracts in the amount of $1,071,000.

(a)

A security with total market value equal to $0 has been valued at its fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees.

(b)

Collateralized by federal agency and U.S. Treasury obligations.

(c)

Securities have been designated as collateral in an amount equal to $19,623,631, in connection with open futures contracts.

(d)

The aggregate cost for federal income tax purposes is $1,378,189,514. The aggregate gross unrealized appreciation is $390,168,200 and the aggregate gross unrealized depreciation is $204,458,271, resulting in net unrealized appreciation of $185,709,929.

Futures Contracts Open at August 31, 2005:



NUMBER OF CONTRACTS	LONG/ SHORT		DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION/ DEPRECIATION
240		Long	S&P 500 Index E-Mini September 2005	$	14,656,800		$	(3,086	)
20		Long	S&P 500 Index September 2005		6,107,000			71,555
						Net unrealized appreciation				$68,469

Summary of Investments



SECTOR	VALUE			PERCENT OF NET ASSETS
Finance	$	303,964,692			19.5	%
Health Technology		162,296,380			10.4
Electronic Technology		162,093,967			10.4
Energy Minerals		120,333,935			7.7
Consumer Non-Durables		119,926,923			7.7
Producer Manufacturing		112,893,888			7.2
Technology Services		97,936,356			6.3
Retail Trade		92,152,900			5.9
Consumer Services		87,143,174			5.6
Utilities		53,515,816			3.4
Communications		48,182,530			3.1
Health Services		36,874,162			2.4
Industrial Services		31,651,138			2.0
Process Industries		31,413,311			2.0
Transportation		24,179,906			1.6
Consumer Durables		23,896,834			1.6
Repurchase Agreement		19,774,000			1.3
Non-Energy Minerals		13,991,000			0.9
Distribution Services		11,269,775			0.7
Commercial Services		10,408,756			0.7
	$	1,563,899,443	*		100.4	%

Does not include outstanding long futures contracts with an underlying face amount of $20,763,800 with net unrealized appreciation of $68,469.

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Statements

Statement of Assets and Liabilities

August 31, 2005


Assets:
Investments in securities, at value (cost $1,355,627,163)	$	1,556,208,459
Investment in an affiliate, at value (cost $5,922,706)		7,690,984
Receivable for:
Dividends		3,255,294
Investments sold		733,465
Shares of beneficial interest sold		475,110
Variation margin		218,869
Prepaid expenses and other assets		92,182
Total Assets		1,568,674,363
Liabilities:
Payable for:
Shares of beneficial interest redeemed		8,086,047
Investments purchased		1,140,290
Distribution fee		987,288
Investment advisory fee		131,893
Administration fee		114,972
Transfer agent fee		43,859
Accrued expenses and other payables		151,881
Total Liabilities		10,656,230
Net Assets	$	1,558,018,133
Composition of Net Assets:
Paid-in-capital	$	1,579,541,159
Net unrealized appreciation		202,418,043
Accumulated undistributed net investment income		10,587,452
Accumulated net realized loss		(234,528,521	)
Net Assets	$	1,558,018,133
Class A Shares:
Net Assets	$	401,394,562
Shares Outstanding (unlimited authorized, $.01 par value)		30,238,980
Net Asset Value Per Share	$	13.27
Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value)	$	14.01
Class B Shares:
Net Assets	$	814,726,214
Shares Outstanding (unlimited authorized, $.01 par value)		63,516,126
Net Asset Value Per Share	$	12.83
Class C Shares:
Net Assets	$	153,708,313
Shares Outstanding (unlimited authorized, $.01 par value)		11,984,768
Net Asset Value Per Share	$	12.83
Class D Shares:
Net Assets	$	188,189,044
Shares Outstanding (unlimited authorized, $.01 par value)		14,042,025
Net Asset Value Per Share	$	13.40

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Statements continued

Statement of Operations

For the year ended August 31, 2005


Net Investment Income:
Income
Dividends	$	36,451,410
Dividends from an affiliate		183,344
Interest		298,375
Total Income		36,933,129
Expenses
Distribution fee (Class A shares)		832,622
Distribution fee (Class B shares)		9,976,186
Distribution fee (Class C shares)		1,567,589
Transfer agent fees and expenses		2,650,337
Investment advisory fee		2,291,352
Administration fee		1,132,755
Custodian fees		186,911
Shareholder reports and notices		175,188
Professional fees		173,903
Registration fees		42,588
Trustees' fees and expenses		22,054
Other		289,338
Total Expenses		19,340,823
Less: amounts waived/reimbursed		(155,241	)
Net Expenses		19,185,582
Net Investment Income		17,747,547
Net Realized and Unrealized Gain:
Net Realized Gain on:
Investments		83,460,974
Futures contracts		1,738,253
Net Realized Gain		85,199,227
Net Change in Unrealized Appreciation/Depreciation on:
Investments		84,178,398
Futures contracts		226,371
Net Appreciation		84,404,769
Net Gain		169,603,996
Net Increase	$	187,351,543

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Statements continued

Statement of Changes in Net Assets


	FOR THE YEAR ENDED AUGUST 31, 2005			FOR THE YEAR ENDED AUGUST 31, 2004
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	17,747,547		$	8,983,573
Net realized gain (loss)		85,199,227			(30,189,179	)
Net change in unrealized appreciation/depreciation		84,404,769			197,028,655
Net Increase		187,351,543			175,823,049
Dividends to Shareholders from Net Investment Income:
Class A shares		(4,386,734	)		(2,527,310	)
Class B shares		(6,352,859	)		(2,842,053	)
Class C shares		(1,072,102	)		(512,905	)
Class D shares		(3,188,310	)		(2,217,884	)
Total Dividends		(15,000,005	)		(8,100,152	)
Net decrease from transactions in shares of beneficial interest		(394,424,338	)		(122,306,210	)
Net Increase (Decrease)		(222,072,800	)		45,416,687
Net Assets:
Beginning of period		1,780,090,933			1,734,674,246
End of Period (Including accumulated undistributed net investment income of $10,587,452 and $8,082,298, respectively)	$	1,558,018,133		$	1,780,090,933

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements August 31, 2005

1. Organization and Accounting Policies

Morgan Stanley S&P 500 Index 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 to provide investment results that, before expenses, correspond to the total return of the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index"). The Fund was organized as a Massachusetts business trust on June 18, 1997 and commenced operations on September 26, 1997.

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 August 29, 2005, the Board of Trustees of the Fund approved the implementation of 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. 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) futures are valued at the latest price published by the commodities exchange on which they trade; (6) when market quotations are not readily available or Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") determines that the latest sale price, the bid price or the mean between the last reported bid and asked price do not reflect a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements August 31, 2005 continued

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; 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 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.

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements August 31, 2005 continued

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

Effective June 1, 2005, pursuant to an Investment Advisory Agreement, the Fund pays the Investment Adviser an advisory fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined as of the close of each business day: 0.12% to the portion of the daily net assets not exceeding $2 billion and 0.10% to the portion of the daily net assets in excess of $2 billion.

For the period November 1, 2004 to June 1, 2005, the Fund paid the Investment Adviser an advisory fee, accrued daily and payable monthly, by applying the annual rate of 0.12% to the Fund's daily net assets.

Effective November 1, 2004, 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.

Prior to November 1, 2004, the Fund had retained the Investment Adviser to provide administrative services and to manage the investment of the Fund's assets pursuant to an investment management agreement pursuant to which the Fund paid the Investment Adviser a monthly management fee accrued daily and payable monthly, by applying the annual rates of 0.20% to the net assets of the Fund determined as of the close of each business day.

The Investment Adviser has agreed to assume all operating expenses (except for distribution fees) and to waive the compensation provided for in its Investment Advisory Agreement to the extent that such expenses and compensation on an annualized basis exceed 0.40% of the daily net assets of the Fund.

3. Plan of Distribution

Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Adviser and Administrator. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A – up to 0.25% of the average daily net assets of Class A; (ii) Class B – up to 1.0% of the average daily net assets of Class B; and (iii) Class C – up to 1.0% of the average daily net assets of Class C.

In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements August 31, 2005 continued

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 $33,660,332 at August 31, 2005.

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 or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the year ended August 31, 2005, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.24% and 0.94%, respectively.

The Distributor has informed the Fund that for the year ended August 31, 2005, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $1,186, $2,186,308 and $25,330, respectively and received $164,303 in front-end sales charges from sales of the Fund's Class A shares. The respective shareholders pay such charges which are not an expense of the Fund.

4. Security Transactions and Transactions with Affiliates

The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the year ended August 31, 2005 aggregated $48,376,525 and $441,745,422, respectively. Included in the aforementioned are purchases and sales of common stock of Morgan Stanley, an affiliate of the Investment Adviser, Administrator and Distributor, of $344,815 and $2,212,286, respectively, as well as a realized gain of $993,910.

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 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.

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements August 31, 2005 continued

5. Shares of Beneficial Interest

Transactions in shares of beneficial interest were as follows:


	FOR THE YEAR ENDED AUGUST 31, 2005						FOR THE YEAR ENDED AUGUST 31, 2004
	SHARES			AMOUNT			SHARES			AMOUNT
CLASS A SHARES
Sold		5,235,373		$	70,363,664			11,255,434		$	134,194,035
Conversion from Class B		8,925,582			108,204,446			—			—
Reinvestment of dividends		328,035			4,280,860			206,673			2,449,074
Redeemed		(9,303,697	)		(119,585,456	)		(7,675,856	)		(92,058,323	)
Net increase – Class A		5,185,293			63,263,514			3,786,251			44,584,786
CLASS B SHARES
Sold		3,953,339			48,834,993			12,211,344			140,102,363
Conversion to Class A		(8,645,562	)		(108,204,446	)		—			—
Reinvestment of dividends		447,897			5,679,334			221,123			2,545,116
Redeemed		(27,578,164	)		(338,136,707	)		(26,528,825	)		(305,904,240	)
Net decrease – Class B		(31,822,490	)		(391,826,826	)		(14,096,358	)		(163,256,761	)
CLASS C SHARES
Sold		1,212,926			14,976,223			3,418,503			39,361,945
Reinvestment of dividends		78,995			1,000,865			41,702			479,992
Redeemed		(4,203,867	)		(51,963,157	)		(3,742,890	)		(43,289,520	)
Net decrease – Class C		(2,911,946	)		(35,986,069	)		(282,685	)		(3,447,583	)
CLASS D SHARES
Sold		3,756,182			48,375,150			4,739,786			56,679,623
Reinvestment of dividends		190,144			2,500,397			144,815			1,729,093
Redeemed		(6,226,828	)		(80,750,504	)		(4,866,322	)		(58,595,368	)
Net increase (decrease) – Class D		(2,280,502	)		(29,874,957	)		18,279			(186,652	)
Net decrease in Fund		(31,829,645	)	$	(394,424,338	)		(10,574,513	)	$	(122,306,210	)

6. Purposes of and Risks Relating to Certain Financial Instruments

The Fund may purchase and sell stock index futures ("futures contracts") for the following reasons: to simulate full investment in the S&P 500 Index while retaining a cash balance for fund management purposes; to facilitate trading; to reduce transaction costs; or to seek higher investment returns when a futures contract is priced more attractively than stocks comprising the S&P 500 Index.

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements August 31, 2005 continued

These 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.

The tax character of distributions paid was as follows:


	FOR THE YEAR ENDED AUGUST 31, 2005		FOR THE YEAR ENDED AUGUST 31, 2004
Ordinary income	$	15,000,005	$	8,100,152

As of August 31, 2005, the tax-basis components of accumulated losses were as follows:


Undistributed ordinary income	$	10,518,545
Undistributed long-term gains		—
Net accumulated earnings		10,518,545
Capital loss carryforward*		(217,749,622	)
Temporary differences		(1,878	)
Net unrealized appreciation		185,709,929
Total accumulated losses	$	(21,523,026	)

* During the year ended August 31, 2005, the Fund utilized $60,437,314 of its net capital loss carryforward. As of August 31, 2005, the Fund had a net capital loss carryforward of $217,749,622 of which $4,102,814 will expire on August 31, 2008, $1,186,260 will expire on August 31, 2009, $31,462,959 will expire on August 31, 2010, $156,244,657 will expire on August 31, 2011 and $24,752,932 will expire on August 31, 2012 to offset future capital gains to the extent provided by regulations.

As of August 31, 2005, the Fund had temporary book/tax differences primarily attributable to capital loss deferrals on wash sales and mark-to-market of open futures contracts and permanent book/tax differences

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements August 31, 2005 continued

primarily attributable to tax adjustments on real estate investment trusts held by the Fund. To reflect reclassifications arising from the permanent differences, accumulated undistributed net investment income was charged and accumulated net realized loss was credited $242,388.

8. Legal Matters

The Investment Adviser, certain affiliates of the Investment Adviser, certain officers of such affiliates and certain investment companies advised by the Investment Adviser or its affiliates, including the Fund, are named as defendants in a consolidated class action. This consolidated action also names as defendants certain individual Trustees and Directors of the Morgan Stanley funds. The consolidated amended complaint, filed in the United States District Court Southern District of New York on April 16, 2004, generally alleges that defendants, including the Fund, violated their statutory disclosure obligations and fiduciary duties by failing properly to disclose (i) that the Investment Adviser and certain affiliates of the Investment Adviser allegedly offered economic incentives to brokers and others to recommend the funds advised by the Investment Adviser or its affiliates to investors rather than funds managed by other companies, and (ii) that the funds advised by the Investment Adviser or its affiliates, including the Fund, allegedly paid excessive commissions to brokers in return for their efforts to recommend these funds to investors. The complaint seeks, among other things, unspecified compensatory damages, rescissionary damages, fees and costs. The defendants have moved to dismiss the action and intend to otherwise vigorously defend it. On March 9, 2005, Plaintiffs sought leave to supplement their complaint to assert claims on behalf of other investors. While the Fund and Adviser believe that each has meritorious defenses, the ultimate outcome of this matter is not presently determinable at this early stage of the litigation, and no provision has been made in the Fund's financial statements for the effect, if any, of this matter.

Morgan Stanley S&P 500 Index Fund

Financial Highlights

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


	FOR THE YEAR ENDED AUGUST 31,
	2005			2004			2003			2002			2001
Class A Shares
Selected Per Share Data:
Net asset value, beginning of period	$	12.03		$	10.97		$	9.91		$	12.17		$	16.20
Income (loss) from investment operations:
Net investment income‡		0.19			0.12			0.11			0.08			0.08
Net realized and unrealized gain (loss)		1.23			1.05			1.01			(2.34	)		(4.11	)
Total income (loss) from investment operations		1.42			1.17			1.12			(2.26	)		(4.03	)
Less dividends from net investment income		(0.18	)		(0.11	)		(0.06	)		—			—
Net asset value, end of period	$	13.27		$	12.03		$	10.97		$	9.91		$	12.17
Total Return†		11.81	%		10.70	%		11.36	%		(18.57	)%		(24.83	)%
Ratios to Average Net Assets⁽¹⁾⁽²⁾:
Expenses		0.64	%		0.70	%		0.70	%		0.73	%		0.69	%
Net investment income		1.52	%		1.03	%		1.11	%		0.73	%		0.59	%
Supplemental Data:
Net assets, end of period, in millions	$	401		$	301		$	233		$	161		$	159
Portfolio turnover rate		3	%		2	%		2	%		12	%		4	%

‡

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)

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


PERIOD ENDED:	EXPENSE RATIO			NET INVESTMENT INCOME RATIO
August 31, 2005		0.65	%		1.51	%
August 31, 2004		0.77			0.96
August 31, 2003		0.82			0.99
August 31, 2002		0.80			0.66
August 31, 2001		0.72			0.56

(2)

Reflects overall Fund ratios for investment income and non-class specific expenses.

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Highlights continued


	FOR THE YEAR ENDED AUGUST 31,
	2005			2004			2003			2002			2001
Class B Shares
Selected Per Share Data:
Net asset value, beginning of period	$	11.62		$	10.60		$	9.60		$	11.88		$	15.94
Income (loss) from investment operations:
Net investment income (loss)‡		0.10			0.03			0.03			(0.01	)		(0.03	)
Net realized and unrealized gain (loss)		1.18			1.02			0.97			(2.27	)		(4.03	)
Total income (loss) from investment operations		1.28			1.05			1.00			(2.28	)		(4.06	)
Less dividends from net investment income		(0.07	)		(0.03	)		—			—			—
Net asset value, end of period	$	12.83		$	11.62		$	10.60		$	9.60		$	11.88
Total Return†		11.04	%		9.88	%		10.42	%		(19.19	)%		(25.47	)%
Ratios to Average Net Assets⁽¹⁾⁽²⁾:
Expenses		1.40	%		1.46	%		1.50	%		1.50	%		1.50	%
Net investment income (loss)		0.76	%		0.27	%		0.31	%		(0.04	)%		(0.22	)%
Supplemental Data:
Net assets, end of period, in millions	$	815		$	1,108		$	1,160		$	1,169		$	1,544
Portfolio turnover rate		3	%		2	%		2	%		12	%		4	%

‡

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)

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


PERIOD ENDED:	EXPENSE RATIO			NET INVESTMENT INCOME (LOSS) RATIO
August 31, 2005		1.41	%		0.75	%
August 31, 2004		1.53			0.20
August 31, 2003		1.62			0.19
August 31, 2002		1.57			(0.11	)
August 31, 2001		1.53			(0.25	)

(2)

Reflects overall Fund ratios for investment income and non-class specific expenses.

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Highlights continued


	FOR THE YEAR ENDED AUGUST 31,
	2005			2004			2003			2002			2001
Class C Shares
Selected Per Share Data:
Net asset value, beginning of period	$	11.61		$	10.60		$	9.60		$	11.88		$	15.94
Income (loss) from investment operations:
Net investment income (loss)‡		0.10			0.03			0.03			0.00			(0.03	)
Net realized and unrealized gain (loss)		1.20			1.01			0.97			(2.28	)		(4.03	)
Total income (loss) from investment operations		1.30			1.04			1.00			(2.28	)		(4.06	)
Less dividends from net investment income		(0.08	)		(0.03	)		—			—			—
Net asset value, end of period	$	12.83		$	11.61		$	10.60		$	9.60		$	11.88
Total Return†		11.18	%		9.85	%		10.42	%		(19.19	)%		(25.47	)%
Ratios to Average Net Assets⁽¹⁾⁽²⁾:
Expenses		1.34	%		1.46	%		1.49	%		1.49	%		1.50	%
Net investment income (loss)		0.82	%		0.27	%		0.32	%		(0.03	)%		(0.22	)%
Supplemental Data:
Net assets, end of period, in millions	$	154		$	173		$	161		$	147		$	169
Portfolio turnover rate		3	%		2	%		2	%		12	%		4	%

‡

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)

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


PERIOD ENDED:	EXPENSE RATIO			NET INVESTMENT INCOME (LOSS) RATIO
August 31, 2005		1.35	%		0.81	%
August 31, 2004		1.53			0.20
August 31, 2003		1.61			0.20
August 31, 2002		1.56			(0.10	)
August 31, 2001		1.53			(0.25	)

(2)

Reflects overall Fund ratios for investment income and non-class specific expenses.

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Highlights continued


	FOR THE YEAR ENDED AUGUST 31,
	2005			2004			2003			2002			2001
Class D Shares
Selected Per Share Data:
Net asset value, beginning of period	$	12.14		$	11.06		$	10.00		$	12.26		$	16.28
Income (loss) from investment operations:
Net investment income‡		0.23			0.15			0.13			0.11			0.11
Net realized and unrealized gain (loss)		1.24			1.06			1.02			(2.37	)		(4.13	)
Total income (loss) from investment operations		1.47			1.21			1.15			(2.26	)		(4.02	)
Less dividends from net investment income		(0.21	)		(0.13	)		(0.09	)		—			—
Net asset value, end of period	$	13.40		$	12.14		$	11.06		$	10.00		$	12.26
Total Return†		12.11	%		10.97	%		11.59	%		(18.43	)%		(24.69	)%
Ratios to Average Net Assets⁽¹⁾⁽²⁾:
Expenses		0.40	%		0.46	%		0.50	%		0.50	%		0.50	%
Net investment income		1.76	%		1.27	%		1.31	%		0.96	%		0.78	%
Supplemental Data:
Net assets, end of period, in millions	$	188		$	198		$	180		$	136		$	118
Portfolio turnover rate		3	%		2	%		2	%		12	%		4	%

‡

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)

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


PERIOD ENDED:	EXPENSE RATIO			NET INVESTMENT INCOME RATIO
August 31, 2005		0.41	%		1.75	%
August 31, 2004		0.53			1.20
August 31, 2003		0.62			1.19
August 31, 2002		0.57			0.89
August 31, 2001		0.53			0.75

(2)

Reflects overall Fund ratios for investment income and non-class specific expenses.

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of
Morgan Stanley S&P 500 Index Fund:

We have audited the accompanying statement of assets and liabilities of Morgan Stanley S&P 500 Index Fund (the "Fund"), including the portfolio of investments, as of August 31, 2005, and the related statements of operations for the year then ended and changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2005, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Morgan Stanley S&P 500 Index Fund as of August 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
New York, New York
October 17, 2005

Morgan Stanley S&P 500 Index Fund

Trustee and Officer Information

Independent Trustees:

Name, Age and Address of
Independent Trustee

Position(s) Held with Registrant

Term of
Office and
Length of
Time
Served*

Principal Occupation(s)
During Past 5 Years**

Number of Portfolios
in Fund Complex Overseen by Trustee***

Other Directorships
Held by Trustee

Michael Bozic (64)
c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees
1177 Avenue of the Americas
New York, NY 10036

Trustee

Since
April 1994

Private Investor; Director or Trustee of the Retail Funds (since April 1994) and the Institutional Funds (since July 2003); formerly Vice Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); formerly variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck & Co.

197

Director of various business organizations.

Edwin J. Garn (72)
1031 N. Chartwell Court
Salt Lake City, UT 84103

Trustee

Since January 1993

Consultant; Director or Trustee of the Retail Funds (since January 1993) and the Institutional Funds (since July 2003); member of the Utah Regional Advisory Board of Pacific Corp. (utility company); formerly Managing Director of Summit Ventures LLC (lobbying and consulting firm) (2000-2004); United States Senator (R-Utah) (1974-1992) and Chairman, Senate Banking Committee (1980-1986), Mayor of Salt Lake City, Utah (1971-1974), Astronaut, Space Shuttle Discovery (April 12-19, 1985), and Vice Chairman, Huntsman Corporation (chemical company).

197

Director of Franklin Covey (time management systems), BMW Bank of North America, Inc. (industrial loan corporation), Escrow Bank USA (industrial loan corporation); United Space Alliance (joint venture between Lockheed Martin and the Boeing Company) and Nuskin Asia Pacific (multilevel marketing); member of the board of various civic and charitable organizations.

Wayne E. Hedien (71)
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Trustees
1177 Avenue of the Americas
New York, NY 10036

Trustee

Since September 1997

Retired; Director or Trustee of the Retail Funds; (Since September 1997) and the Institutional Funds (since July 2003); formerly associated with the Allstate Companies (1966-1994), most recently as Chairman of The Allstate Corporation (March 1993-December 1994) and Chairman and Chief Executive Officer of its wholly-owned subsidiary, Allstate Insurance Company (July 1989-December 1994).

197

Director of The PMI Group Inc. (private mortgage insurance); Trustee and Vice Chairman of The Field Museum of Natural History; director of various other business and charitable organizations.

Morgan Stanley S&P 500 Index Fund

Trustee and Officer Information continued

Name, Age and Address of
Independent Trustee

Position(s) Held with Registrant

Term of
Office and
Length of
Time
Served*

Principal Occupation(s)
During Past 5 Years**

Number of Portfolios
in Fund Complex Overseen by Trustee***

Other Directorships
Held by Trustee

Dr. Manuel H. Johnson (56)
c/o Johnson Smick Group, Inc.
888 16th Street, N.W.
Suite 740
Washington, D.C. 20006

Trustee

Since
July 1991

Senior Partner, Johnson Smick International, Inc., a consulting firm; Chairman of the Audit Committee and Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2003); Co-Chairman and a founder of the Group of Seven Council (G7C), an international economic commission; formerly Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

197

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

Joseph J. Kearns (63)
c/o Kearns & Associates LLC
PMB754
23852 Pacific Coast Highway
Malibu, CA 90265

Trustee

Since
July 2003

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

198

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

Michael E. Nugent (69)
c/o Triumph Capital, L.P.
445 Park Avenue
New York, NY 10022

Trustee

Since
July 1991

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

197

Director of various business organizations.

Fergus Reid (73)
c/o Lumelite Plastics Corporation
85 Charles Colman Blvd.
Pawling, NY 12564

Trustee

Since
July 2003

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

198

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

Morgan Stanley S&P 500 Index Fund

Trustee and Officer Information continued

Interested Trustees:

Name, Age and Address of
Interested Trustee

Position(s) Held with Registrant

Term of
Office and
Length of
Time
Served*

Principal Occupation(s)
During Past 5 Years**

Number of Portfolios
in Fund Complex Overseen by Trustee***

Other Directorships
Held by Trustee

Charles A. Fiumefreddo (72)
c/o Morgan Stanley Trust
Harborside Financial Center,
Plaza Two,
Jersey City, NJ 07311

Chairman of the Board and Trustee

Since
July 1991

Chairman and Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2003); formerly Chief Executive Officer of the Retail Funds (until September 2002).

197

None.

James F. Higgins (57)
c/o Morgan Stanley Trust
Harborside Financial Center,
Plaza Two,
Jersey City, NJ 07311

Trustee

Since
June 2000

Director or Trustee of the Retail Funds (since June 2000) and the Institutional Funds (since July 2003); Senior Advisor of Morgan Stanley (since August 2000); Director of the Distributor and Dean Witter Realty Inc.; previously President and Chief Operating Officer of the Private Client Group of Morgan Stanley (May 1999-August 2000), and President and Chief Operating Officer of Individual Securities of Morgan Stanley (February 1997-May 1999).

197

Director of AXA Financial, Inc. and The Equitable Life Assurance Society of the United States (financial services).

This is the earliest date the Trustee began serving the funds advised by Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") (the "Retail Funds").

The dates referenced below indicating commencement of services as Director/Trustee for the Retail Funds and the funds advised by Morgan Stanley Investment Management Inc. and Morgan Stanley AIP GP LP (the "Institutional Funds") reflect the earliest date the Director/Trustee began serving the Retail or Institutional Funds, as applicable.

***

The Fund Complex includes all open-end and closed-end funds (including all of their portfolios) advised by the Investment Adviser and any funds that have an investment adviser that is an affiliated person of the Investment Adviser (including, but not limited to, Morgan Stanley Investment Management Inc.).

Morgan Stanley S&P 500 Index Fund

Trustee and Officer Information continued

Officers:

Name, Age and Address of
Executive Officer

Position(s)
Held with
Registrant

Term of
Office and
Length of
Time
Served*

Principal Occupation(s) During Past 5 Years**

Ronald E. Robison (66)
1221 Avenue of the Americas
New York, NY 10020

President and Principal Executive Officer

Since May 2003

President (since September 2005) and Principal Executive Officer of funds in the Fund Complex (since May 2003); Managing Director of Morgan Stanley & Co. Incorporated and Morgan Stanley; Managing Director and Director of Morgan Stanley Investment Management Inc., Morgan Stanley Distribution Inc. and Morgan Stanley Distributors Inc.; Managing Director, Chief Administrative Officer and Director of Morgan Stanley Investment Advisors Inc. and Morgan Stanley Services Company Inc.; Chief Executive Officer and Director of Morgan Stanley Trust; Director of Morgan Stanley SICAV (since May 2004); President (since September 2005) and Principal Executive Officer (since May 2003) of the Van Kampen Funds; previously, Executive Vice President (July 2003-
September 2005) of funds in the Fund Complex and the Van Kampen Funds. He was also previously President and Director of the Institutional Funds (March 2001-July 2003), Chief Global Operations Officer of Morgan Stanley Investment Management Inc. and Chief Executive Officer and Chairman of Van Kampen Investor Services.

Joseph J. McAlinden (62)
1221 Avenue of the Americas
New York, NY 10020

Vice President

Since July 1995

Managing Director and Chief Investment Officer of the Investment Adviser and Morgan Stanley Investment Management Inc.; Chief Investment Officer of the Van Kampen Funds; Vice President of the Institutional Funds (since July 2003) and the Retail Funds (since July 1995).

Barry Fink (50)
1221 Avenue of the Americas
New York, NY 10020

Vice President

Since
February 1997

General Counsel (since May 2000) and Managing Director (since December 2000) of Morgan Stanley Investment Management; Managing Director (since December 2000), Secretary (since February 1997) and Director of the Investment Adviser and the Administrator; Vice President of the Retail Funds; Assistant Secretary of Morgan Stanley DW; Vice President of the Institutional Funds (since July 2003); Managing Director, Secretary and Director of the Distributor; previously Secretary (February 1997-July 2003) and General Counsel (February 1997-April 2004) of the Retail Funds; Vice President and Assistant General Counsel of the Investment Adviser and the Administrator (February 1997-December 2001).

Amy R. Doberman (43)
1221 Avenue of Americas
New York, NY 10020

Vice President

Since July 2004

Managing Director and General Counsel, U.S. Investment Management; Managing Director of Morgan Stanley Investment Management Inc. and the Investment Adviser, Vice President of the Institutional and Retail Funds (since July 2004); Vice President of the Van Kampen Funds (since August 2004); previously, Managing Director and General Counsel — Americas, UBS Global Asset Management (July 2000 – July 2004) and General Counsel, Aeltus Investment Management Inc. (January 1997 – July 2000).

Carsten Otto (41)
1221 Avenue of the Americas
New York, NY 10020

Chief Compliance
Officer

Since October
2004

Executive Director and U.S. Director of Compliance for Morgan Stanley Investment Management (since October 2004); Executive Director of the Investment Adviser and Morgan Stanley Investment Management Inc.; formerly Assistant Secretary and Assistant General Counsel of the Morgan Stanley Retail Funds.

Morgan Stanley S&P 500 Index Fund

Trustee and Officer Information continued

Name, Age and Address of
Executive Officer

Position(s)
Held with
Registrant

Term of
Office and
Length of
Time
Served*

Principal Occupation(s) During Past 5 Years**

Stefanie V. Chang (38)
1221 Avenue of the Americas
New York, NY 10020

Vice President

Since July 2003

Executive Director of Morgan Stanley & Co. Incorporated, Morgan Stanley Investment Management Inc. and the Investment Adviser; Vice President of the Institutional Funds (since December 1997) and the Retail Funds (since July 2003); formerly practiced law with the New York law firm of Rogers & Wells (now Clifford Chance US LLP).

Francis J. Smith (40)
c/o Morgan Stanley Trust
Harborside Financial Center,
Plaza Two,
Jersey City, NJ 07311

Treasurer and Chief Financial Officer

Treasurer since July 2003 and Chief Financial Officer since September 2002

Executive Director of the Investment Adviser and the Administrator (since December 2001); previously, Vice President of the Retail Funds (September 2002-July 2003); Vice President of the Investment Adviser and the Administrator (August 2000-November 2001) and Senior Manager at PricewaterhouseCoopers LLP (January 1998-August 2000).

Thomas F. Caloia (59)
c/o Morgan Stanley Trust
Harborside Financial Center,
Plaza Two,
Jersey City, NJ 07311

Vice President

Since July 2003

Executive Director (since December 2002) and Assistant Treasurer of the Investment Adviser, the Distributor and the Administrator; previously Treasurer of the Retail Funds (April 1989-July 2003); formerly First Vice President of the Investment Adviser, the Distributor and the Administrator.

Mary E. Mullin (38)
1221 Avenue of the Americas
New York, NY 10020

Secretary

Since July 2003

Executive Director of Morgan Stanley & Co. Incorporated, Morgan Stanley Investment Management Inc. and the Investment Adviser; Secretary of the Institutional Funds (since June 1999) and the Retail Funds (since July 2003); formerly practiced law with the New York law firms of McDermott, Will & Emery and Skadden, Arps, Slate, Meagher & Flom LLP.

This is the earliest date the Officer began serving the Retail Funds. Each Officer serves an indefinite term, until his or her successor is elected.

The dates referenced below indicating commencement of service as an Officer for the Retail and Institutional Funds reflect the earliest date the Officer began serving the Retail or Institutional Funds, as applicable.

2005 Federal Tax Notice (unaudited)

During the fiscal year ended August 31, 2005, 100% of the ordinary dividends paid by the Fund qualified for the dividends received deduction available to corporations. Additionally, please note that 100% of the Fund's ordinary dividends paid during the fiscal year ended August 31, 2005 qualified for the lower income tax rate available to individuals under the Jobs and Growth Tax Relief Reconciliation Act of 2003.

(This page has been left blank intentionally.)


Trustees Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael E. Nugent Fergus Reid Officers Charles A. Fiumefreddo Chairman of the Board Ronald E. Robison President and Principal Executive Officer Joseph J. McAlinden Vice President Barry Fink Vice President Amy R. Doberman Vice President Carsten Otto Chief Compliance Officer Stefanie V. Chang Vice President Francis J. Smith Treasurer and Chief Financial Officer Thomas F. Caloia Vice President Mary E. Mullin Secretary Transfer Agent Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 Independent Registered Public Accounting Firm Deloitte & Touche LLP Two World Financial Center New York, New York 10281 Investment Adviser Morgan Stanley Investment Advisors Inc. 1221 Avenue of the Americas New York, New York 10020 This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus. Read the Prospectus carefully before investing. Investments and services offered through Morgan Stanley DW Inc., member SIPC. Morgan Stanley Distributors Inc., member NASD. © 2005 Morgan Stanley 36007RPT-RA05-00849P-T08/05		MORGAN STANLEY FUNDS
		Morgan Stanley S&P 500 Index Fund Annual Report August 31, 2005




Item 2.  Code of Ethics.

(a) The Fund has adopted a code of ethics (the "Code of Ethics") that applies to
its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the Fund or a third
party.

(b) No information need be disclosed pursuant to this paragraph.

(c) The Fund has amended its Code of Ethics during the period covered by the
shareholder report presented in Item 1 hereto to delete from the end of the
following paragraph on page 2 of the Code the phrase "to the detriment of the
Fund.":

"Each Covered Officer must not use his personal influence or personal
relationship improperly to influence investment decisions or financial reporting
by the Fund whereby the Covered Officer would benefit personally (directly or
indirectly)."

Additionally, Exhibit B was amended to remove Mitchell M. Merin as a covered
officer.

(d) Not applicable.

(e) Not applicable.

(f)

    (1) The Fund's Code of Ethics is attached hereto as Exhibit A.

    (2) Not applicable.

    (3) Not applicable.


Item 3.  Audit Committee Financial Expert.

The Fund's Board of Trustees has determined that it has two "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees: Dr. Manuel H. Johnson and Joseph J. Kearns. Under
applicable securities laws, a person who is determined to be an audit committee
financial expert will not be deemed an "expert" for any purpose, including
without limitation for the purposes of Section 11 of the Securities Act of 1933,
as a result of being designated or identified as an audit committee financial
expert. The designation or identification of a person as an audit committee
financial expert does not impose on such person any duties, obligations, or
liabilities that are greater than the duties, obligations, and liabilities
imposed on such person as a member of the audit committee and Board of Trustees
in the absence of such designation or identification.




                                       2


Item 4.  Principal Accountant Fees and Services.

(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:



           2005
                                                            REGISTRANT            COVERED ENTITIES(1)

              AUDIT FEES...........................         $ 27,789              N/A

              NON-AUDIT FEES
                        AUDIT-RELATED FEES.........         $     540(2)          $   (2)
                        TAX FEES...................         $   5,481(3)          $   (4)
                        ALL OTHER FEES.............         $ -                   $ -
              TOTAL NON-AUDIT FEES.................         $   6,021             $

              TOTAL................................         $ 33,810              $


           2004
                                                            REGISTRANT            COVERED ENTITIES(1)
              AUDIT FEES...........................         $ 27,185              N/A

              NON-AUDIT FEES
                        AUDIT-RELATED FEES.........         $     452(2)          $ 5,067,400(2)
                        TAX FEES...................         $   4,889(3)          $   545,053(4)
                        ALL OTHER FEES.............         $ -                   $ -  (5)
              TOTAL NON-AUDIT FEES.................         $   5,341             $ 5,612,453

              TOTAL................................         $ 32,526              $ 5,612,453



              N/A- Not applicable, as not required by Item 4.

              (1)   Covered Entities include the Adviser (excluding
                    sub-advisors) and any entity controlling, controlled by or
                    under common control with the Adviser that provides ongoing
                    services to the Registrant.
              (2)   Audit-Related Fees represent assurance and related services
                    provided that are reasonably related to the performance of
                    the audit of the financial statements of the Covered
                    Entities' and funds advised by the Adviser or its
                    affiliates, specifically data verification and agreed-upon
                    procedures related to asset securitizations and agreed-upon
                    procedures engagements.
              (3)   Tax Fees represent tax compliance, tax planning and tax
                    advice services provided in connection with the preparation
                    and review of the Registrant's tax returns.
              (4)   Tax Fees represent tax compliance, tax planning and tax
                    advice services provided in connection with the review of
                    Covered Entities' tax returns.
              (5)   All other fees represent project management for future
                    business applications and improving business and operational
                    processes.



                                       3



(e)(1) The audit committee's pre-approval policies and procedures are as
follows:

                                                                      APPENDIX A

                                 AUDIT COMMITTEE
                          AUDIT AND NON-AUDIT SERVICES
                       PRE-APPROVAL POLICY AND PROCEDURES
                                     OF THE
                  MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS

                    AS ADOPTED AND AMENDED JULY 23, 2004,(1)


  1. STATEMENT OF PRINCIPLES

The Audit Committee of the Board is required to review and, in its sole
discretion, pre-approve all Covered Services to be provided by the Independent
Auditors to the Fund and Covered Entities in order to assure that services
performed by the Independent Auditors do not impair the auditor's independence
from the Fund.

The SEC has issued rules specifying the types of services that an independent
auditor may not provide to its audit client, as well as the audit committee's
administration of the engagement of the independent auditor. The SEC's rules
establish two different approaches to pre-approving services, which the SEC
considers to be equally valid. Proposed services either: may be pre-approved
without consideration of specific case-by-case services by the Audit Committee
("general pre-approval"); or require the specific pre-approval of the Audit
Committee or its delegate ("specific pre-approval"). The Audit Committee
believes that the combination of these two approaches in this Policy will result
in an effective and efficient procedure to pre-approve services performed by the
Independent Auditors. As set forth in this Policy, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.

The appendices to this Policy describe the Audit, Audit-related, Tax and All
Other services that have the general pre-approval of the Audit Committee. The
term of any general pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee considers and provides a different period and states
otherwise. The Audit Committee will annually review and pre-approve the services
that may be provided by the Independent Auditors without obtaining specific
pre-approval from the Audit Committee. The Audit Committee will add to or
subtract from the list of general pre-approved services from time to time, based
on subsequent determinations.

------------------------
(1)   This Audit Committee Audit and Non-Audit Services Pre-Approval Policy and
      Procedures (the "Policy"), adopted as of the date above, supersedes and
      replaces all prior versions that may have been adopted from time to time.



                                       4


The purpose of this Policy is to set forth the policy and procedures by which
the Audit Committee intends to fulfill its responsibilities. It does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the Independent Auditors to management.

The Fund's Independent Auditors have reviewed this Policy and believes that
implementation of the Policy will not adversely affect the Independent Auditors'
independence.

   2. DELEGATION

As provided in the Act and the SEC's rules, the Audit Committee may delegate
either type of pre-approval authority to one or more of its members. The member
to whom such authority is delegated must report, for informational purposes
only, any pre-approval decisions to the Audit Committee at its next scheduled
meeting.

   3. AUDIT SERVICES

The annual Audit services engagement terms and fees are subject to the specific
pre-approval of the Audit Committee. Audit services include the annual financial
statement audit and other procedures required to be performed by the Independent
Auditors to be able to form an opinion on the Fund's financial statements. These
other procedures include information systems and procedural reviews and testing
performed in order to understand and place reliance on the systems of internal
control, and consultations relating to the audit. The Audit Committee will
approve, if necessary, any changes in terms, conditions and fees resulting from
changes in audit scope, Fund structure or other items.

In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other Audit
services, which are those services that only the Independent Auditors reasonably
can provide. Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.

The Audit Committee has pre-approved the Audit services in Appendix B.1. All
other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).

   4. AUDIT-RELATED SERVICES

Audit-related services are assurance and related services that are reasonably
related to the performance of the audit or review of the Fund's financial
statements and, to the extent they are Covered Services, the Covered Entities or
that are traditionally performed by the Independent Auditors. Because the Audit
Committee believes that the provision of Audit-related services does not impair
the independence of the auditor and is consistent with the SEC's rules on
auditor independence, the Audit Committee may grant general pre-approval to
Audit-related services. Audit-related services include, among others, accounting
consultations related to accounting, financial reporting or disclosure matters




                                       5


not classified as "Audit services"; assistance with understanding and
implementing new accounting and financial reporting guidance from rulemaking
authorities; agreed-upon or expanded audit procedures related to accounting
and/or billing records required to respond to or comply with financial,
accounting or regulatory reporting matters; and assistance with internal control
reporting requirements under Forms N-SAR and/or N-CSR.

The Audit Committee has pre-approved the Audit-related services in Appendix B.2.
All other Audit-related services not listed in Appendix B.2 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).

   5. TAX SERVICES

The Audit Committee believes that the Independent Auditors can provide Tax
services to the Fund and, to the extent they are Covered Services, the Covered
Entities, such as tax compliance, tax planning and tax advice without impairing
the auditor's independence, and the SEC has stated that the Independent Auditors
may provide such services.

Pursuant to the preceding paragraph, the Audit Committee has pre-approved the
Tax Services in Appendix B.3. All Tax services in Appendix B.3 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).

   6. ALL OTHER SERVICES

The Audit Committee believes, based on the SEC's rules prohibiting the
Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.

The Audit Committee has pre-approved the All Other services in Appendix B.4.
Permissible All Other services not listed in Appendix B.4 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).

   7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS

Pre-approval fee levels or budgeted amounts for all services to be provided by
the Independent Auditors will be established annually by the Audit Committee.
Any proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services.

   8. PROCEDURES

All requests or applications for services to be provided by the Independent
Auditors that do not require specific approval by the Audit Committee will be
submitted to the Fund's Chief Financial Officer and must include a detailed
description of the services to be



                                       6


rendered. The Fund's Chief Financial Officer will determine whether such
services are included within the list of services that have received the general
pre-approval of the Audit Committee. The Audit Committee will be informed on a
timely basis of any such services rendered by the Independent Auditors. Requests
or applications to provide services that require specific approval by the Audit
Committee will be submitted to the Audit Committee by both the Independent
Auditors and the Fund's Chief Financial Officer, and must include a joint
statement as to whether, in their view, the request or application is consistent
with the SEC's rules on auditor independence.

The Audit Committee has designated the Fund's Chief Financial Officer to monitor
the performance of all services provided by the Independent Auditors and to
determine whether such services are in compliance with this Policy. The Fund's
Chief Financial Officer will report to the Audit Committee on a periodic basis
on the results of its monitoring. Both the Fund's Chief Financial Officer and
management will immediately report to the chairman of the Audit Committee any
breach of this Policy that comes to the attention of the Fund's Chief Financial
Officer or any member of management.

   9. ADDITIONAL REQUIREMENTS

The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the Independent Auditors
and to assure the auditor's independence from the Fund, such as reviewing a
formal written statement from the Independent Auditors delineating all
relationships between the Independent Auditors and the Fund, consistent with
Independence Standards Board No. 1, and discussing with the Independent Auditors
its methods and procedures for ensuring independence.

   10. COVERED ENTITIES

Covered Entities include the Fund's investment adviser(s) and any entity
controlling, controlled by or under common control with the Fund's investment
adviser(s) that provides ongoing services to the Fund(s). Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Fund's
audit committee must pre-approve non-audit services provided not only to the
Fund but also to the Covered Entities if the engagements relate directly to the
operations and financial reporting of the Fund. This list of Covered Entities
would include:

         Morgan Stanley Retail Funds
         ---------------------------
         Morgan Stanley Investment Advisors Inc.
         Morgan Stanley & Co. Incorporated
         Morgan Stanley DW Inc.
         Morgan Stanley Investment Management Inc.
         Morgan Stanley Investment Management Limited
         Morgan Stanley Investment Management Private Limited
         Morgan Stanley Asset & Investment Trust Management Co., Limited
         Morgan Stanley Investment Management Company
         Van Kampen Asset Management
         Morgan Stanley Services Company, Inc.
         Morgan Stanley Distributors Inc.
         Morgan Stanley Trust FSB



                                       7


         Morgan Stanley Institutional Funds
         ----------------------------------
         Morgan Stanley Investment Management Inc.
         Morgan Stanley Investment Advisors Inc.
         Morgan Stanley Investment Management Limited
         Morgan Stanley Investment Management Private Limited
         Morgan Stanley Asset & Investment Trust Management Co., Limited
         Morgan Stanley Investment Management Company
         Morgan Stanley & Co. Incorporated
         Morgan Stanley Distribution, Inc.
         Morgan Stanley AIP GP LP
         Morgan Stanley Alternative Investment Partners LP


(e)(2) Beginning with non-audit service contracts entered into on or after May
6, 2003, the audit committee also is required to pre-approve services to Covered
Entities to the extent that the services are determined to have a direct impact
on the operations or financial reporting of the Registrant. 100% of such
services were pre-approved by the audit committee pursuant to the Audit
Committee's pre-approval policies and procedures (attached hereto).

(f) Not applicable.

(g) See table above.

(h) The audit committee of the Board of Trustees has considered whether the
provision of services other than audit services performed by the auditors to the
Registrant and Covered Entities is compatible with maintaining the auditors'
independence in performing audit services.


Item 5. Audit Committee of Listed Registrants.

(a) The Fund has a separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act whose members are:
Michael Bozic, Edwin J. Garn, Wayne E. Hedien, Manual H. Johnson, Joseph J.
Kearns, Michael Nugent and Fergus Reid.

(b) Not applicable.


Item 6. Schedule of Investments

Refer to Item 1.


                                       8



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

Applicable only to reports filed by closed-end funds.


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

Applicable only to reports filed by closed-end funds.


Item 9. Closed-End Fund Repurchases

Applicable only to reports filed by closed-end funds.


Item 10. Submission of Matters to a Vote of Security Holders

Not applicable.


Item 11. Controls and Procedures

(a) The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Fund in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.

(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.


Item 12. Exhibits

(a) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.

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




                                        9



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

Morgan Stanley S&P 500 Index Fund

/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
October 20, 2005

         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
October 20, 2005

/s/ Francis Smith
Francis Smith
Principal Financial Officer
October 20, 2005




                                       10



                                                                    EXHIBIT 12 A


      CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS
            ADOPTED SEPTEMBER 28, 2004, AS AMENDED SEPTEMBER 20, 2005



I.       This Code of Ethics (the "Code") for the investment companies within
         the Morgan Stanley complex identified in Exhibit A (collectively,
         "Funds" and each, a "Fund") applies to each Fund's Principal Executive
         Officer, President, Principal Financial Officer and Treasurer (or
         persons performing similar functions) ("Covered Officers" each of whom
         are set forth in Exhibit B) for the purpose of promoting:

         o        honest and ethical conduct, including the ethical handling of
                  actual or apparent conflicts of interest between personal and
                  professional relationships.

         o        full, fair, accurate, timely and understandable disclosure in
                     reports and documents that a company files with, or submits
                  to, the Securities and Exchange Commission ("SEC") and in
                  other public communications made by the Fund;

         o        compliance with applicable laws and governmental rules and
                  regulations;

         o        prompt internal reporting of violations of the Code to an
                  appropriate person or persons identified in the Code; and

         o        accountability for adherence to the Code.

                  Each Covered Officer should adhere to a high standard of
business ethics and should be sensitive to situations that may give rise to
actual as well as apparent conflicts of interest. Any question about the
application of the Code should be referred to the General Counsel or his/her
designee (who is set forth in Exhibit C).

II.      COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS
         OF INTEREST

         OVERVIEW. A "conflict of interest" occurs when a Covered Officer's
private interest interferes, or appears to interfere, with the interests of, or
his service to, the Fund. For example, a conflict of interest would arise if a
Covered Officer, or a member of his family, receives improper personal benefits
as a result of his position with the Fund.

         Certain conflicts of interest arise out of the relationships between
Covered Officers and the Fund and already are subject to conflict of interest
provisions in the



                                       11


Investment Company Act of 1940 ("Investment Company Act") and the Investment
Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers
may not individually engage in certain transactions (such as the purchase or
sale of securities or other property) with the Fund because of their status as
"affiliated persons" (as defined in the Investment Company Act) of the Fund. The
Fund's and its investment adviser's compliance programs and procedures are
designed to prevent, or identify and correct, violations of these provisions.
This Code does not, and is not intended to, repeat or replace these programs and
procedures, and such conflicts fall outside the parameters of this Code, unless
or until the General Counsel determines that any violation of such programs and
procedures is also a violation of this Code.

         Although typically not presenting an opportunity for improper personal
benefit, conflicts may arise from, or as a result of, the contractual
relationship between the Fund and its investment adviser of which the Covered
Officers are also officers or employees. As a result, this Code recognizes that
the Covered Officers will, in the normal course of their duties (whether
formally for the Fund or for the investment adviser, or for both), be involved
in establishing policies and implementing decisions that will have different
effects on the Fund and its investment adviser. The participation of the Covered
Officers in such activities is inherent in the contractual relationship between
the Fund and the investment adviser and is consistent with the performance by
the Covered Officers of their duties as officers of the Fund. Thus, if performed
in conformity with the provisions of the Investment Company Act and the
Investment Advisers Act, such activities will be deemed to have been handled
ethically. In addition, it is recognized by the Funds' Boards of
Directors/Trustees ("Boards") that the Covered Officers may also be officers or
employees of one or more other investment companies covered by this or other
codes.

         Other conflicts of interest are covered by the Code, even if such
conflicts of interest are not subject to provisions in the Investment Company
Act and the Investment Advisers Act. The following list provides examples of
conflicts of interest under the Code, but Covered Officers should keep in mind
that these examples are not exhaustive. The overarching principle is that the
personal interest of a Covered Officer should not be placed improperly before
the interest of the Fund.

         Each Covered Officer must not:

         o        use his personal influence or personal relationships
                  improperly to influence investment decisions or financial
                  reporting by the Fund whereby the Covered Officer would
                  benefit personally (directly or indirectly);

         o        cause the Fund to take action, or fail to take action, for the
                  individual personal benefit of the Covered Officer rather than
                  the benefit of the Fund; or

         o        use material non-public knowledge of portfolio transactions
                  made or contemplated for, or actions proposed to be taken by,
                  the Fund to trade personally or cause others to trade
                  personally in contemplation of the market effect of such
                  transactions.


                                       12


         Each Covered Officer must, at the time of signing this Code, report to
the General Counsel all affiliations or significant business relationships
outside the Morgan Stanley complex and must update the report annually.

         Conflict of interest situations should always be approved by the
General Counsel and communicated to the relevant Fund or Fund's Board. Any
activity or relationship that would present such a conflict for a Covered
Officer would likely also present a conflict for the Covered Officer if an
immediate member of the Covered Officer's family living in the same household
engages in such an activity or has such a relationship. Examples of these
include:

         o        service or significant business relationships as a director on
                  the board of any public or private company;

         o        accepting directly or indirectly, anything of value, including
                  gifts and gratuities in excess of $100 per year from any
                  person or entity with which the Fund has current or
                  prospective business dealings, not including occasional meals
                  or tickets for theatre or sporting events or other similar
                  entertainment; provided it is business-related, reasonable in
                  cost, appropriate as to time and place, and not so frequent as
                  to raise any question of impropriety;

         o        any ownership interest in, or any consulting or employment
                  relationship with, any of the Fund's service providers, other
                  than its investment adviser, principal underwriter, or any
                  affiliated person thereof; and

         o        a direct or indirect financial interest in commissions,
                  transaction charges or spreads paid by the Fund for effecting
                  portfolio transactions or for selling or redeeming shares
                  other than an interest arising from the Covered Officer's
                  employment, such as compensation or equity ownership.

III.     DISCLOSURE AND COMPLIANCE

         o        Each Covered Officer should familiarize himself/herself with
                  the disclosure and compliance requirements generally
                  applicable to the Funds;

         o        each Covered Officer must not knowingly misrepresent, or cause
                  others to misrepresent, facts about the Fund to others,
                  whether within or outside the Fund, including to the Fund's
                  Directors/Trustees and auditors, or to governmental regulators
                  and self-regulatory organizations;

         o        each Covered Officer should, to the extent appropriate within
                  his area of responsibility, consult with other officers and
                  employees of the Funds and their investment advisers with the
                  goal of promoting full, fair, accurate, timely and
                  understandable disclosure in the reports and documents the
                  Funds file with, or submit to, the SEC and in other public
                  communications made by the Funds; and



                                       13


         o        it is the responsibility of each Covered Officer to promote
                  compliance with the standards and restrictions imposed by
                  applicable laws, rules and regulations.

IV.      REPORTING AND ACCOUNTABILITY

         Each Covered Officer must:

         o        upon adoption of the Code (thereafter as applicable, upon
                  becoming a Covered Officer), affirm in writing to the Boards
                  that he has received, read and understands the Code;

         o        annually thereafter affirm to the Boards that he has complied
                  with the requirements of the Code;

         o        not retaliate against any other Covered Officer, other officer
                  or any employee of the Funds or their affiliated persons for
                  reports of potential violations that are made in good faith;
                  and

         o        notify the General Counsel promptly if he/she knows or
                  suspects of any violation of this Code. Failure to do so is
                  itself a violation of this Code.

         The General Counsel is responsible for applying this Code to specific
situations in which questions are presented under it and has the authority to
interpret this Code in any particular situation. However, any waivers(2) sought
by a Covered Officer must be considered by the Board of the relevant Fund or
Funds.

         The Funds will follow these procedures in investigating and enforcing
this Code:

         o        the General Counsel will take all appropriate action to
                  investigate any potential violations reported to him;

         o        if, after such investigation, the General Counsel believes
                  that no violation has occurred, the General Counsel is not
                  required to take any further action;

         o        any matter that the General Counsel believes is a violation
                  will be reported to the relevant Fund's Audit Committee;

         o        if the directors/trustees/managing general partners who are
                  not "interested persons" as defined by the Investment Company
                  Act (the "Independent Directors/Trustees/Managing General
                  Partners") of the relevant Fund concur that a violation has
                  occurred, they will consider appropriate action, which may
                  include review of, and appropriate modifications to,
                  applicable


--------------------
(1) Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of
    a material departure from a provision of the code of ethics."




                                       14


                  policies and procedures; notification to appropriate personnel
                  of the investment adviser or its board; or a recommendation to
                  dismiss the Covered Officer or other appropriate disciplinary
                  actions;

         o        the Independent Directors/Trustees/Managing General Partners
                  of the relevant Fund will be responsible for granting waivers
                  of this Code, as appropriate; and

         o        any changes to or waivers of this Code will, to the extent
                  required, be disclosed as provided by SEC rules.

V.       OTHER POLICIES AND PROCEDURES

         This Code shall be the sole code of ethics adopted by the Funds for
purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and
forms applicable to registered investment companies thereunder. Insofar as other
policies or procedures of the Funds, the Funds' investment advisers, principal
underwriters, or other service providers govern or purport to govern the
behavior or activities of the Covered Officers who are subject to this Code,
they are superseded by this Code to the extent that they overlap or conflict
with the provisions of this Code unless any provision of this Code conflicts
with any applicable federal or state law, in which case the requirements of such
law will govern. The Funds' and their investment advisers' and principal
underwriters' codes of ethics under Rule 17j-1 under the Investment Company Act
and Morgan Stanley's Code of Ethics are separate requirements applying to the
Covered Officers and others, and are not part of this Code.

VI.      AMENDMENTS

         Any amendments to this Code, other than amendments to Exhibits A, B or
C, must be approved or ratified by a majority vote of the Board of each Fund,
including a majority of Independent Directors/Trustees/Managing General
Partners.

VII.     CONFIDENTIALITY

         All reports and records prepared or maintained pursuant to this Code
will be considered confidential and shall be maintained and protected
accordingly. Except as otherwise required by law or this Code, such matters
shall not be disclosed to anyone other than the Independent
Directors/Trustees/Managing General Partners of the relevant Fund or Funds and
their counsel, the relevant Fund or Funds and their counsel and the relevant
investment adviser and its counsel.




                                       15





VIII.    INTERNAL USE

         The Code is intended solely for the internal use by the Funds and does
not constitute an admission, by or on behalf of any Fund, as to any fact,
circumstance, or legal conclusion



I have read and understand the terms of the above Code. I recognize the
responsibilities and obligations incurred by me as a result of my being subject
to the Code. I hereby agree to abide by the above Code.


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

Date:
     --------------------



                                       16



                                    EXHIBIT A


                                    FUND LIST

                                       AT
                               SEPTEMBER 20, 2005


RETAIL FUNDS

OPEN-END RETAIL FUNDS

     TAXABLE MONEY MARKET FUNDS

1.  Active Assets Government Securities Trust ("AA Government")
2.  Active Assets Institutional Government Securities Trust ("AA Institutional
    Government")
3.  Active Assets Institutional Money Trust ("AA Institutional Money")
4.  Active Assets Money Trust ("AA Money")
5.  Morgan Stanley Liquid Asset Fund Inc. ("Liquid Asset")
6.  Morgan Stanley U.S. Government Money Market Trust ("Government Money")

     TAX-EXEMPT MONEY MARKET FUNDS

7.  Active Assets California Tax-Free Trust ("AA California")
8.  Active Assets Tax-Free Trust ("AA Tax-Free")
9.  Morgan Stanley California Tax-Free Daily Income Trust ("California Tax-Free
    Daily")
10. Morgan Stanley New York Municipal Money Market Trust ("New York Money")
11. Morgan Stanley Tax-Free Daily Income Trust ("Tax-Free Daily")

     EQUITY FUNDS

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



                                       17


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

     BALANCED FUNDS

49. Morgan Stanley Balanced Growth Fund ("Balanced Growth")+
50. Morgan Stanley Balanced Income Fund ("Balanced Income")+

     ASSET ALLOCATION FUND

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

     TAXABLE FIXED-INCOME FUNDS

52. Morgan Stanley Convertible Securities Trust ("Convertible Securities")+
53. Morgan Stanley Flexible Income Trust ("Flexible Income")+
54. Morgan Stanley Income Trust ("Income Trust")+
55. Morgan Stanley High Yield Securities Inc. ("High Yield Securities")+
56. Morgan Stanley Limited Duration Fund ("Limited Duration Fund")
57. Morgan Stanley Mortgage Securities Trust ("Mortgage Securities")+
58. Morgan Stanley Limited Duration U.S. Treasury Trust ("Limited Duration
    Treasury")
59. Morgan Stanley Total Return Income Securities Fund ("Total Return Income")+



                                       18


60. Morgan Stanley U.S. Government Securities Trust ("Government Securities")+

     TAX-EXEMPT FIXED-INCOME FUNDS

61. Morgan Stanley California Tax-Free Income Fund ("California Tax-Free")+
62. Morgan Stanley Limited Term Municipal Trust ("Limited Term Municipal")
63. Morgan Stanley New York Tax-Free Income Fund ("New York Tax-Free")+
64. Morgan Stanley Tax-Exempt Securities Trust ("Tax-Exempt Securities")+

     SPECIAL PURPOSE FUNDS

65. Morgan Stanley Select Dimensions Investment Series ("Select Dimensions")

    o    American Opportunities Portfolio
    o    Balanced Growth Portfolio
    o    Capital Opportunities Portfolio
    o    Developing Growth Portfolio
    o    Dividend Growth Portfolio
    o    Equally-Weighted S&P 500 Portfolio
    o    Flexible Income Portfolio
    o    Global Equity Portfolio
    o    Growth Portfolio
    o    Money Market Portfolio
    o    Utilities Portfolio


66. Morgan Stanley Variable Investment Series ("Variable Investment")

    o    Aggressive Equity Portfolio
    o    Dividend Growth Portfolio
    o    Equity Portfolio
    o    European Growth Portfolio
    o    Global Advantage Portfolio
    o    Global Dividend Growth Portfolio
    o    High Yield Portfolio
    o    Income Builder Portfolio
    o    Information Portfolio
    o    Limited Duration Portfolio
    o    Money Market Portfolio
    o    Quality Income Plus Portfolio
    o    S&P 500 Index Portfolio
    o    Strategist Portfolio
    o    Utilities Portfolio


CLOSED-END RETAIL FUNDS

     TAXABLE FIXED-INCOME CLOSED-END FUNDS



                                       19


67. Morgan Stanley Government Income Trust ("Government Income")
68. Morgan Stanley Income Securities Inc. ("Income Securities")
69. Morgan Stanley Prime Income Trust ("Prime Income")

     TAX-EXEMPT FIXED-INCOME CLOSED-END FUNDS

70. Morgan Stanley California Insured Municipal Income Trust ("California
    Insured Municipal")
71. Morgan Stanley California Quality Municipal Securities ("California Quality
    Municipal")
72. Morgan Stanley Insured California Municipal Securities ("Insured California
    Securities")
73. Morgan Stanley Insured Municipal Bond Trust ("Insured Municipal Bond")
74. Morgan Stanley Insured Municipal Income Trust ("Insured Municipal Income")
75. Morgan Stanley Insured Municipal Securities ("Insured Municipal Securities")
76. Morgan Stanley Insured Municipal Trust ("Insured Municipal Trust")
77. Morgan Stanley Municipal Income Opportunities Trust ("Municipal
    Opportunities")
78. Morgan Stanley Municipal Income Opportunities Trust II ("Municipal
    Opportunities II")
79. Morgan Stanley Municipal Income Opportunities Trust III ("Municipal
    Opportunities III")
80. Morgan Stanley Municipal Premium Income Trust ("Municipal Premium")
81. Morgan Stanley New York Quality Municipal Securities ("New York Quality
    Municipal")
82. Morgan Stanley Quality Municipal Income Trust ("Quality Municipal Income")
83. Morgan Stanley Quality Municipal Investment Trust ("Quality Municipal
    Investment")
84. Morgan Stanley Quality Municipal Securities ("Quality Municipal Securities")

+- Denotes Retail Multi-Class Fund

                               INSTITUTIONAL FUNDS

OPEN-END INSTITUTIONAL FUNDS

1.  Morgan Stanley Institutional Fund, Inc. ("Institutional Fund Inc.")

    Active Portfolios:
      o    Active International Allocation Portfolio
      o    Emerging Markets Portfolio
      o    Emerging Markets Debt Portfolio
      o    Equity Growth Portfolio
      o    European Real Estate Portfolio
      o    Focus Equity Portfolio
      o    Global Franchise Portfolio



                                       20


      o    Global Value Equity Portfolio
      o    International Equity Portfolio
      o    International Magnum Portfolio
      o    International Small Cap Portfolio
      o    Money Market Portfolio
      o    Municipal Money Market Portfolio
      o    Small Company Growth Portfolio
      o    U.S. Real Estate Portfolio
      o    Value Equity Portfolio

    Inactive Portfolios*:

      o    China Growth Portfolio
      o    Gold Portfolio
      o    Large Cap Relative Value Portfolio
      o    MicroCap Portfolio
      o    Mortgage-Backed Securities Portfolio
      o    Municipal Bond Portfolio
      o    U.S. Equity Plus Portfolio

2.  Morgan Stanley Institutional Fund Trust ("Institutional Fund Trust")

    Active Portfolios:

      o    Advisory Foreign Fixed Income II Portfolio
      o    Advisory Foreign Fixed Income Portfolio
      o    Advisory Mortgage Portfolio
      o    Balanced Portfolio
      o    Core Plus Fixed Income Portfolio
      o    Equity Portfolio
      o    High Yield Portfolio
      o    Intermediate Duration Portfolio
      o    International Fixed Income Portfolio
      o    Investment Grade Fixed Income Portfolio
      o    Limited Duration Portfolio
      o    Mid-Cap Growth Portfolio
      o    Municipal Portfolio
      o    U.S. Core Fixed Income Portfolio
      o    U.S. Mid-Cap Value Portfolio
      o    U.S. Small-Cap Value Portfolio
      o    Value Portfolio


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




                                       21


    Inactive Portfolios*:

      o    Balanced Plus Portfolio
      o    Growth Portfolio
      o    Investment Grade Credit Advisory Portfolio
      o    Mortgage Advisory Portfolio
      o    New York Municipal Portfolio
      o    Targeted Duration Portfolio
      o    Value II Portfolio

3.  The Universal Institutional Funds, Inc. ("Universal Funds")

    Active Portfolios:

      o    Core Plus Fixed Income Portfolio
      o    Emerging Markets Debt Portfolio
      o    Emerging Markets Equity Portfolio
      o    Equity and Income Portfolio
      o    Equity Growth Portfolio
      o    Global Franchise Portfolio
      o    Global Value Equity Portfolio
      o    High Yield Portfolio
      o    International Magnum Portfolio
      o    Mid-Cap Growth Portfolio
      o    Money Market Portfolio
      o    Small Company Growth Portfolio
      o    Technology Portfolio
      o    U.S. Mid-Cap Value Portfolio
      o    U.S. Real Estate Portfolio
      o    Value Portfolio

     Inactive Portfolios*:

      o    Balanced Portfolio
      o    Capital Preservation Portfolio
      o    Core Equity Portfolio
      o    International Fixed Income Portfolio
      o    Investment Grade Fixed Income Portfolio
      o    Latin American Portfolio
      o    Multi-Asset Class Portfolio
      o    Targeted Duration Portfolio

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


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



                                       22


     Active Portfolios:

      o    Government Portfolio
      o    Money Market Portfolio
      o    Prime Portfolio
      o    Tax-Exempt Portfolio
      o    Treasury Portfolio


     Inactive Portfolios*:

      o    Government Securities Portfolio
      o    Treasury Securities Portfolio


CLOSED-END INSTITUTIONAL FUNDS

5.   Morgan Stanley Asia-Pacific Fund, Inc. ("Asia-Pacific Fund")
6.   Morgan Stanley Eastern Europe Fund, Inc. ("Eastern Europe")
7.   Morgan Stanley Emerging Markets Debt Fund, Inc. ("Emerging Markets Debt")
8.   Morgan Stanley Emerging Markets Fund, Inc. ("Emerging Markets Fund")
9.   Morgan Stanley Global Opportunity Bond Fund, Inc. ("Global Opportunity")
10.  Morgan Stanley High Yield Fund, Inc. ("High Yield Fund")
11.  The Latin American Discovery Fund, Inc. ("Latin American Discovery")
12   The Malaysia Fund, Inc. ("Malaysia Fund")
13.  The Thai Fund, Inc. ("Thai Fund")
14.  The Turkish Investment Fund, Inc. ("Turkish Investment")

CLOSED-END FUND OF HEDGE FUNDS

15.  Morgan Stanley Institutional Fund of Hedge Funds ("Fund of Hedge Funds")



                                 IN REGISTRATION
MORGAN STANLEY RETAIL FUNDS
1.   Morgan Stanley American Franchise Fund

FUNDS OF HEDGE FUNDS
1.   Morgan Stanley Absolute Return Fund
2.   Morgan Stanley Institutional Fund of Hedge Funds II


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



                                       23





                                    EXHIBIT B

                               INSTITUTIONAL FUNDS
                                COVERED OFFICERS

          Ronald E. Robison -President and Principal Executive Officer
            James W. Garrett - Chief Financial Officer and Treasurer

                                  RETAIL FUNDS
                                COVERED OFFICERS

          Ronald E. Robison -President and Principal Executive Officer
               Frank Smith - Chief Financial Officer and Treasurer

                   MORGAN STANLEY INDIA INVESTMENT FUND, INC.
                                COVERED OFFICERS

          Ronald E. Robison - President and Principal Executive Officer
            James W. Garrett - Chief Financial Officer and Treasurer





                                       24





                                    EXHIBIT C

                                 GENERAL COUNSEL

                                   Barry Fink













                                       25



                                                                   EXHIBIT 12 B1

                  CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

                                 CERTIFICATIONS

I, Ronald E. Robison, certify that:

1.   I have reviewed this report on Form N-CSR of Morgan Stanley S&P 500 Index
     Fund;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations, changes in net
     assets, and cash flows (if the financial statements are required to include
     a statement of cash flows) of the registrant as of, and for, the periods
     presented in this report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Rule 30a-3(c) under the Investment Company Act of 1940) and internal
     control over financial reporting (as defined in Rule 30a-3(d) under the
     Investment Company Act of 1940) for the registrant and have:

a)   designed such disclosure controls and procedures, or caused such disclosure
     controls and procedures to be designed under our supervision, to ensure
     that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those
     entities, particularly during the period in which this report is being
     prepared;

b)   designed such internal control over financial reporting, or caused such
     internal control over financial reporting to be designed under our
     supervision, to provide reasonable assurance regarding the reliability of
     financial reporting and the preparation of financial statements for
     external purposes in accordance with generally accepted accounting
     principles;

c)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures and presented in this report our conclusions about the
     effectiveness of the disclosure controls and procedures, as of a date
     within 90 days prior to the filing date of this report based on such
     evaluation; and

d)   disclosed in this report any change in the registrant's internal control
     over financial reporting that occurred during the registrant's most recent
     fiscal half-year (the registrant's second fiscal half-year in the case of
     an annual report) that has materially affected, or is reasonably likely to
     materially affect, the registrant's internal control over financial
     reporting; and

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



                                       26


a)   all significant deficiencies and material weaknesses in the design or
     operation of internal control over financial reporting which are reasonably
     likely to adversely affect the registrant's ability to record, process,
     summarize, and report financial information; and

b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal controls
     over financial reporting.

Date: October 20, 2005
                                                     /s/ Ronald E. Robison
                                                     Ronald E. Robison
                                                     Principal Executive Officer



                                       27



                                                                   EXHIBIT 12 B2

                  CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

                                 CERTIFICATIONS

I, Francis Smith, certify that:

1.   I have reviewed this report on Form N-CSR of Morgan Stanley S&P 500 Index
     Fund;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations, changes in net
     assets, and cash flows (if the financial statements are required to include
     a statement of cash flows) of the registrant as of, and for, the periods
     presented in this report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Rule 30a-3(c) under the Investment Company Act of 1940) and internal
     control over financial reporting (as defined in Rule 30a-3(d) under the
     Investment Company Act of 1940) for the registrant and have:

a)   designed such disclosure controls and procedures, or caused such disclosure
     controls and procedures to be designed under our supervision, to ensure
     that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those
     entities, particularly during the period in which this report is being
     prepared;

b)   designed such internal control over financial reporting, or caused such
     internal control over financial reporting to be designed under our
     supervision, to provide reasonable assurance regarding the reliability of
     financial reporting and the preparation of financial statements for
     external purposes in accordance with generally accepted accounting
     principles;

c)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures and presented in this report our conclusions about the
     effectiveness of the disclosure controls and procedures, as of a date
     within 90 days prior to the filing date of this report based on such
     evaluation; and

d)   disclosed in this report any change in the registrant's internal control
     over financial reporting that occurred during the registrant's most recent
     fiscal half-year (the registrant's second fiscal half-year in the case of
     an annual report) that has materially affected, or is reasonably likely to
     materially affect, the registrant's internal control over financial
     reporting; and

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



                                       28


a)   all significant deficiencies and material weaknesses in the design or
     operation of internal control over financial reporting which are reasonably
     likely to adversely affect the registrant's ability to record, process,
     summarize, and report financial information; and

b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal controls
     over financial reporting.

Date: October 20, 2005
                                                    /s/ Francis Smith
                                                    Francis Smith
                                                    Principal Financial Officer




                                       29





                            SECTION 906 CERTIFICATION

                Certification Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002

Morgan Stanley S&P 500 Index Fund

         In connection with the Report on Form N-CSR (the "Report") of the
above-named issuer for the period ended August 31, 2005 that is accompanied by
this certification, the undersigned hereby certifies that:

1.       The Report fully complies with the requirements of Section 13(a) or
         15(d) of the Securities Exchange Act of 1934; and

2.       The information contained in the Report fairly presents, in all
         material respects, the financial condition and results of operations of
         the Issuer.



Date: October 20, 2005                            /s/ Ronald E. Robison
                                                  ---------------------------
                                                  Ronald E. Robison
                                                  Principal Executive Officer


A signed original of this written statement required by Section 906 has been
provided to Morgan Stanley S&P 500 Index Fund and will be retained by Morgan
Stanley S&P 500 Index Fund and furnished to the Securities and Exchange
Commission or its staff upon request.



                                       30



                            SECTION 906 CERTIFICATION

                Certification Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002

Morgan Stanley S&P 500 Index Fund

         In connection with the Report on Form N-CSR (the "Report") of the
above-named issuer for the period ended August 31, 2005 that is accompanied by
this certification, the undersigned hereby certifies that:

1.       The Report fully complies with the requirements of Section 13(a) or
         15(d) of the Securities Exchange Act of 1934; and

2.       The information contained in the Report fairly presents, in all
         material respects, the financial condition and results of operations of
         the Issuer.



Date: October 20, 2005                            /s/ Francis Smith
                                                  ----------------------
                                                  Francis Smith
                                                  Principal Financial Officer


A signed original of this written statement required by Section 906 has been
provided to Morgan Stanley S&P 500 Index Fund and will be retained by Morgan
Stanley S&P 500 Index Fund and furnished to the Securities and Exchange
Commission or its staff upon request.



                                       31