N-CSRS 1 file1.htm FORM N-CSRS

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)

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

10036
(Zip code)

Ronald E. Robison

522 Fifth Avenue, New York, New York 10036

(Name and address of agent for service)

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

Date of fiscal year end: August 31, 2008

Date of reporting period: February 29, 2008

Item 1 - Report to Shareholders

Welcome, Shareholder:

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

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

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



	Fund Report
	For the six months ended February 29, 2008

Total Return for the 6 Months Ended February 29, 2008

Class A

Class B

Class C

Class D

S&P
500^®1

Lipper
S&P 500
Objective
Funds Index²

−9.08

−9.41

−8.95

−8.79

−8.91

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

Credit market woes initiated by the collapse of the subprime mortgage market and the increasing probability of recession led to turbulent market conditions in the six-month period ended February 29, 2008. In the third quarter of 2007, credit standards tightened significantly after rising home foreclosures led to a crisis in the subprime mortgage market. This event triggered additional financial crises, as mortgage lenders declared bankruptcy, high profile hedge funds imploded, and large financial institutions declared multi-billion dollar losses in investments related to mortgage securities. Economic data in the U.S. also began to signal trouble, and inflationary pressures were growing. Gross domestic product (GDP) growth slowed to 0.6 percent in the fourth quarter, down from 4.9 percent in the third quarter. With the housing market still contracting, weak manufacturing and employment data, rising commodity prices for food and energy, and a falling U.S. dollar, many investors adopted a much more pessimistic outlook and the stock market stayed volatile throughout the period. The Federal Open Market Committee (the ‘‘Fed’’) responded by lowering its target federal funds rate and taking other steps to boost liquidity in the credit market. The federal government also looked to aid the economy by providing an economic stimulus plan to bolster consumer spending. Nonetheless, the probability of recession appeared very high going into the end of the period.

Performance Analysis

All share classes of Morgan Stanley S&P 500 Index Fund underperformed the S&P 500^® and the Lipper S&P 500 Objective Funds Index for the six months ended February 29, 2008, assuming no deduction of applicable sales charges.

The materials, energy and consumer staples sectors were the only sectors with positive returns during the period for the Fund and the S&P 500. The materials and energy sectors continued to perform well because their profits are driven by the underlying commodity prices of their raw materials (metals or oil, for example), which continued to advance during the period. The consumer staples sector benefited from renewed investor interest in stocks with ‘‘defensive’’ characteristics; that is, stocks that may be more resilient in an economic downturn.

Areas of weakness for the Fund and the S&P 500 included the financials, telecommunication services and consumer discretionary sectors. The financials sector

suffered from a range of woes deriving from the credit crisis, turmoil in the mortgage securities market, declining real estate values and volatile financial markets. In telecommunication services, weak performance was driven by several factors, including concerns that a new plan to offer unlimited calling would induce price wars, an analyst downgrade of one of the larger telecom stocks, and investor rotation out of the sector. The consumer discretionary sector was hampered by the reported slowdown in consumer spending, as well as diminished expectations for consumer spending going forward.

Because the S&P 500 is market capitalization weighted (and that the Fund seeks to replicate the performance attributes of the index, before Fund fees), the overall contribution of each sector was influenced by its relative size within the index and the Fund portfolio. As such, the financials, information technology (which represents one of the largest sectors in the Fund and S&P 500) and consumer discretionary sectors detracted most from absolute performance, while energy, materials and consumer staples were the largest contributors for the period.

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


TOP 10 HOLDINGS
Exxon Mobil Corp.	4.1	%
General Electric Co.	2.9
Microsoft Corp.	1.9
AT&T Inc.	1.8
Procter & Gamble Co. (The)	1.8
Chevron Corp.	1.6
Johnson & Johnson	1.5
Bank of America Corp.	1.5
International Business Machines Corp.	1.3
Altria Group, Inc.	1.3


TOP FIVE INDUSTRIES
Integrated Oil	7.4	%
Pharmaceuticals: Major	5.9
Industrial Conglomerates	4.9
Major Banks	4.6
Electric Utilities	3.2

Data as of February 29, 2008. Subject to change daily. All percentages for top 10 holdings and top five industries are as a percentage of net assets. These data are provided for informational purposes only and should not be deemed a recommendation to buy or sell the securities mentioned. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services.

Investment Strategy

The Fund will normally invest at least 80 percent of its assets in common stocks of companies included in the S&P 500^®. 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 S&P 500. For example, if the common stock of a specific company represents five percent of the S&P 500, the Investment Adviser typically will invest the same percentage of the Fund’s assets in that stock. The S&P 500 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, including those that are in emerging market countries, that are included in the S&P 500.

For More Information About
Portfolio Holdings

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the fund’s second and fourth fiscal quarters. The semiannual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley also delivers the semiannual and annual reports to fund shareholders and makes these reports available on its public web site, www.morganstanley.com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund’s first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC’s web site, http://www.sec.gov. You may also review and copy them at the SEC’s public reference room in Washington, DC. Information on the operation of the SEC’s public reference room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s e-mail address (publicinfo@sec.gov) or by writing the public reference section of the SEC, Washington, DC 20549-0102.

Proxy Voting Policy and Procedures and
Proxy Voting Record

You may obtain a copy of the Fund’s Proxy Voting Policy and Procedures without charge, upon request, by calling toll free (800) 869-NEWS or by visiting the Mutual Fund Center on our Web site at www.morganstanley.com. It is also available on the Securities and Exchange Commission’s Web site at http://www.sec.gov.

You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 without charge by visiting the Mutual Fund Center on our Web site at www.morganstanley.com. This information is also available on the Securities and Exchange Commission’s Web site at http://www.sec.gov.

Householding Notice

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling (800) 869-NEWS, 8:00 a.m. to 8:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.



	Performance Summary

Average Annual Total Returns — Period Ended February 29, 2008


	Class A Shares* (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		(4.11)%	³		(4.81)%	³		(4.79)%	³		(3.84)%	³
		(9.14)	⁴		(9.54)	⁴		(5.73)	⁴		—
5 Years		10.97	³		10.13	³		10.14	³		11.22	³
		9.78	⁴		9.86	⁴		10.14	⁴		—
10 Years		3.40	³		2.76	³		2.62	³		3.64	³
		2.84	⁴		2.76	⁴		2.62	⁴		—
Since Inception		4.34	³		3.72	³		3.55	³		4.57	³
		3.80	⁴		3.72	⁴		3.55	⁴		—

Performance data quoted represents past performance, which is no guarantee of future results and current performance may be lower or higher than the figures shown. For most recent month-end performance figures, please visit www.morganstanley.com/msim or speak with your Financial Advisor. Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class A, Class B, Class C, and Class D shares will vary due to differences in sales charges and expenses.

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

The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%. The CDSC declines to 0% after six years. Effective April 2005, Class B shares will generally convert to Class A shares approximately eight years after the end of the calendar month in which the shares were purchased. Performance for periods greater than eight years reflects this conversion.

†

The maximum contingent deferred sales charge for Class C is 1.0% for shares redeemed within one year of purchase.

††

Class D has no sales charge.

(1)

The 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. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2)

The Lipper 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. The Fund is in the Lipper S&P 500 Objective Funds classification as of the date of this report.

(3)

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

(4)

Figure shown assumes reinvestment of all distributions and the deduction of the maximum applicable sales charge. See the Fund’s current prospectus for complete details on fees and sales charges.



	Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees; and (2) ongoing costs, including advisory fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 09/01/07 – 02/29/08.

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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


	Beginning Account Value		Ending Account Value		Expenses Paid During Period*
	09/01/07		02/29/08		09/01/07 – 02/29/08
Class A
Actual (−9.08% return)	$	1,000.00	$	909.20	$	2.75
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.98	$	2.92
Class B
Actual (−9.41% return)	$	1,000.00	$	905.90	$	6.35
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.20	$	6.72
Class C
Actual (−9.41% return)	$	1,000.00	$	905.90	$	6.26
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.30	$	6.62
Class D
Actual (−8.95% return)	$	1,000.00	$	910.50	$	1.62
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,023.17	$	1.71

Expenses are equal to the Fund’s annualized expense ratios of 0.59%, 1.34%, 1.32% and 0.34% for Class A, Class B, Class C and Class D shares, respectively, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). If the Fund had borne all its expenses, the annualized expense ratios would have been 0.68%, 1.43%, 1.41%, and 0.43% for Class A, Class B, Class C and Class D, respectively.

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited)


NUMBER OF SHARES			VALUE
		Common Stocks (99.5%)
		Advertising/Marketing Services (0.2%)
	38,090	Interpublic Group of Companies, Inc. (The)*	$	328,336
	26,410	Omnicom Group, Inc.		1,179,735
				1,508,071
		Aerospace & Defense (2.0%)
	62,630	Boeing Co.		5,185,138
	32,510	General Dynamics Corp.		2,660,944
	10,090	Goodrich Corp.		597,631
	10,160	L-3 Communications Holdings, Inc.		1,079,906
	28,040	Lockheed Martin Corp.		2,893,728
	27,340	Northrop Grumman Corp.		2,149,197
	11,160	Precision Castparts Corp.		1,231,952
	34,690	Raytheon Co.		2,249,300
	13,160	Rockwell Collins, Inc.		775,124
				18,822,920
		Agricultural Commodities/ Milling (0.2%)
	51,950	Archer-Daniels-Midland Co.		2,342,945
		Air Freight/Couriers (1.0%)
	13,720	C.H. Robinson Worldwide, Inc.		696,564
	17,220	Expeditors International of Washington, Inc.		677,090
	24,990	FedEx Corp.		2,202,369
	84,910	United Parcel Service, Inc. (Class B)		5,964,078
				9,540,101
		Airlines (0.1%)
	59,310	Southwest Airlines Co.		727,141
		Aluminum (0.3%)
	68,530	Alcoa, Inc.		2,545,204
		Apparel/Footwear (0.4%)
	29,750	Coach, Inc.*		902,020
	6,890	Jones Apparel Group, Inc.		97,218
	8,040	Liz Claiborne, Inc.		142,951
	31,030	Nike, Inc. (Class B)		1,868,006
	4,760	Polo Ralph Lauren Corp.		296,024
	7,110	V.F. Corp.		540,644
				3,846,863
		Apparel/Footwear Retail (0.4%)
	6,960	Abercrombie & Fitch Co. (Class A)	$	539,609
	37,630	Gap, Inc. (The)		758,997
	25,110	Limited Brands, Inc.		382,927
	15,190	Nordstrom, Inc.		562,486
	35,310	TJX Companies, Inc. (The)		1,129,920
				3,373,939
		Auto Parts: O.E.M. (0.3%)
	11,840	Eaton Corp.		954,659
	47,980	Johnson Controls, Inc.		1,576,623
	1	WABCO Holdings, Inc.		42
				2,531,324
		Automotive Aftermarket (0.1%)
	19,380	Goodyear Tire & Rubber Co. (The)*		525,198
		Beverages: Alcoholic (0.4%)
	59,300	Anheuser-Busch Companies, Inc.		2,792,437
	6,980	Brown-Forman Corp. (Class B)		445,115
	15,670	Constellation Brands Inc. (Class A)*		301,021
	11,040	Molson Coors Brewing Co. (Class B)		595,718
				4,134,291
		Beverages: Non-Alcoholic (2.0%)
	160,590	Coca-Cola Co. (The)		9,388,091
	23,130	Coca-Cola Enterprises Inc.		565,066
	11,210	Pepsi Bottling Group, Inc. (The)		381,252
	130,070	PepsiCo, Inc.		9,047,669
				19,382,078
		Biotechnology (1.3%)
	87,890	Amgen Inc.*		4,000,753
	23,611	Biogen Idec Inc.*		1,377,938
	31,180	Celgene Corp.*		1,757,616
	21,490	Genzyme Corp.*		1,524,071
	75,210	Gilead Sciences, Inc.*		3,558,937
	4,425	Millipore Corp.*		309,308
				12,528,623

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited) continued


NUMBER OF SHARES			VALUE
		Broadcasting (0.1%)
	40,230	Clear Channel Communications, Inc.	$	1,287,360
		Building Products (0.1%)
	29,800	Masco Corp.		556,962
	13,850	Trane, Inc.		623,943
				1,180,905
		Cable/Satellite TV (0.7%)
	248,320	Comcast Corp. (Class A)*		4,852,173
	58,010	DIRECTV Group, Inc. (The)*		1,453,150
				6,305,323
		Casino/Gaming (0.1%)
	25,490	International Game Technology		1,150,874
		Chemicals: Agricultural (0.5%)
	44,180	Monsanto Co.		5,110,742
		Chemicals: Major Diversified (0.8%)
	76,310	Dow Chemical Co. (The)		2,876,124
	72,650	Du Pont (E.I.) de Nemours & Co.		3,372,413
	6,550	Eastman Chemical Co.		431,056
	9,340	Hercules Inc.		171,109
	10,130	Rohm & Haas Co.		543,069
				7,393,771
		Chemicals: Specialty (0.5%)
	17,400	Air Products & Chemicals, Inc.		1,589,142
	4,585	Ashland Inc.		202,519
	25,530	Praxair, Inc.		2,049,548
	10,510	Sigma-Aldrich Corp.		578,260
				4,419,469
		Coal (0.2%)
	14,660	CONSOL Energy, Inc.		1,113,867
	21,400	Peabody Energy Corp.		1,211,668
				2,325,535
		Commercial Printing/Forms (0.1%)
	17,340	Donnelley (R.R.) & Sons Co.		551,932
		Computer Communications (1.4%)
	490,240	Cisco Systems, Inc.*		11,947,149
	42,158	Juniper Networks, Inc.*		1,130,677
	11,060	QLogic Corp.*		175,301
				13,253,127
		Computer Peripherals (0.4%)
	169,540	EMC Corp.*	$	2,634,652
	7,650	Lexmark International, Inc. (Class A)*		252,679
	27,810	Network Appliance, Inc.*		601,252
	45,128	Seagate Technology Inc. (Escrow) (a)*		0
				3,488,583
		Computer Processing Hardware (2.5%)
	70,750	Apple Inc.*		8,845,165
	181,080	Dell Inc.*		3,594,438
	208,320	Hewlett-Packard Co.		9,951,446
	66,950	Sun Microsytems*		1,097,980
				23,489,029
		Construction Materials (0.1%)
	8,740	Vulcan Materials Co.		612,674
		Containers/Packaging (0.1%)
	8,120	Ball Corp.		358,092
	8,120	Bemis Company, Inc.		201,538
	10,540	Pactiv Corp.*		266,873
	13,050	Sealed Air Corp.		315,941
				1,142,444
		Contract Drilling (0.7%)
	11,710	ENSCO International Inc.		700,726
	22,890	Nabors Industries, Ltd. (Bermuda)*		721,722
	21,660	Noble Corp. (Cayman Islands)		1,064,589
	9,063	Rowan Companies, Inc.		365,330
	25,565	Transocean Inc. (Cayman Islands)		3,592,118
				6,444,485
		Data Processing Services (0.7%)
	8,165	Affiliated Computer Services, Inc. (Class A)*		414,374
	42,520	Automatic Data Processing, Inc.		1,698,674
	14,060	Computer Sciences Corp.*		610,907
	10,520	Convergys Corp.*		151,909
	13,790	Fidelity National Information Services, Inc.		572,147
	13,300	Fiserv, Inc.*		699,846

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited) continued


NUMBER OF SHARES			VALUE
	26,950	Paychex, Inc.	$	847,847
	16,400	Total System Services, Inc.		364,572
	60,680	Western Union Co.		1,262,144
				6,622,420
		Department Stores (0.3%)
	4,620	Dillard’s, Inc. (Class A)		68,330
	25,350	Kohl’s Corp.*		1,126,554
	34,990	Macy’s, Inc.		863,553
	17,920	Penney (J.C.) Co., Inc.		828,083
				2,886,520
		Discount Stores (1.7%)
	7,310	Big Lots, Inc.*		123,174
	35,080	Costco Wholesale Corp.		2,172,154
	11,350	Family Dollar Stores, Inc.		217,352
	5,890	Sears Holdings Corp.*		563,202
	67,140	Target Corp.		3,532,235
	190,930	Wal-Mart Stores, Inc.		9,468,219
				16,076,336
		Drugstore Chains (0.8%)
	119,340	CVS Caremark Corp.		4,818,949
	80,130	Walgreen Co.		2,925,546
				7,744,495
		Electric Utilities (3.2%)
	54,080	AES Corp. (The)*		972,358
	13,430	Allegheny Energy, Inc.*		680,498
	16,810	Ameren Corp.		717,787
	32,320	American Electric Power Co., Inc.		1,322,534
	25,960	CenterPoint Energy, Inc.		381,093
	18,190	CMS Energy Corp.		261,754
	21,940	Consolidated Edison, Inc.		897,126
	14,600	Constellation Energy Group		1,289,910
	47,260	Dominion Resources, Inc.		1,887,564
	13,230	DTE Energy Co.		526,686
	101,900	Duke Energy Corp.		1,787,326
	26,330	Edison International		1,300,702
	15,710	Entergy Corp.		1,614,045
	53,330	Exelon Corp.		3,991,751
	24,630	FirstEnergy Corp.		1,664,742
	32,890	FPL Group, Inc.		1,982,938
	6,232	Integrys Energy Group, Inc.		286,236
	16,180	Pepco Holdings, Inc.		408,869
	28,610	PG&E Corp.		1,077,453
	8,110	Pinnacle West Capital Corp.	$	288,311
	30,070	PPL Corp.		1,364,577
	20,940	Progress Energy, Inc.		877,595
	41,100	Public Service Enterprise Group Inc.		1,812,510
	61,370	Southern Co. (The)		2,119,106
	17,020	TECO Energy, Inc.		254,960
	33,930	Xcel Energy, Inc.		672,493
				30,440,924
		Electrical Products (0.4%)
	14,550	Cooper Industries Ltd. (Class A) (Bermuda)		610,081
	63,610	Emerson Electric Co.		3,241,566
	11,440	Molex Inc.		257,743
				4,109,390
		Electronic Components (0.4%)
	16,810	Jabil Circuit, Inc.		217,185
	18,458	MEMC Electronic Materials, Inc.*		1,407,976
	18,440	SanDisk Corp.*		434,262
	40,180	Tyco Electronics Ltd. (Bermuda)		1,321,922
				3,381,345
		Electronic Equipment/ Instruments (0.3%)
	31,230	Agilent Technologies, Inc.*		955,950
	17,730	JDS Uniphase Corp.*		233,149
	12,060	Rockwell Automation, Inc.		659,803
	74,700	Xerox Corp.*		1,098,090
				2,946,992
		Electronic Production Equipment (0.3%)
	111,360	Applied Materials, Inc.		2,134,771
	14,720	KLA-Tencor Corp.		618,387
	9,380	Novellus Systems, Inc.*		207,110
	14,030	Teradyne, Inc.*		168,220
				3,128,488
		Electronics/Appliance Stores (0.2%)
	28,360	Best Buy Co., Inc.		1,219,764
	13,620	Circuit City Stores – Circuit City Group		60,200
	10,590	RadioShack Corp.		184,796
				1,464,760

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited) continued


NUMBER OF SHARES			VALUE
		Electronics/Appliances (0.1%)
	23,270	Eastman Kodak Co.	$	395,125
	4,960	Harman International Industries, Inc.		204,352
	6,250	Whirlpool Corp.		527,312
				1,126,789
		Engineering & Construction (0.2%)
	7,242	Fluor Corp.		1,008,448
	9,834	Jacobs Engineering Group, Inc.*		789,572
				1,798,020
		Environmental Services (0.2%)
	23,400	Allied Waste Industries, Inc.*		241,956
	41,080	Waste Management, Inc.		1,348,656
				1,590,612
		Finance/Rental/Leasing (0.8%)
	15,412	American Capital Strategies, Ltd.		559,301
	31,580	Capital One Financial Corp.		1,453,627
	15,320	CIT Group, Inc.		340,410
	46,760	Countrywide Financial Corp.		295,056
	38,590	Discover Financial Services		582,323
	79,040	Fannie Mae		2,185,456
	53,460	Freddie Mac		1,346,123
	4,690	Ryder System, Inc.		270,191
	43,950	SLM Corp.		861,860
				7,894,347
		Financial Conglomerates (3.1%)
	94,490	American Express Co.		3,996,927
	403,400	Citigroup, Inc.		9,564,614
	271,420	JPMorgan Chase & Co.		11,033,223
	13,660	Leucadia National Corp.*		618,252
	21,140	Principal Financial Group, Inc.		1,167,562
	36,690	Prudential Financial, Inc.		2,677,269
				29,057,847
		Financial Publishing/ Services (0.2%)
	10,650	Equifax, Inc.		364,443
	26,580	McGraw-Hill Companies, Inc. (The)		1,087,919
	17,330	Moody’s Corp.		658,193
				2,110,555
		Food Distributors (0.1%)
	49,140	SYSCO Corp.	$	1,378,868
		Food Retail (0.3%)
	55,040	Kroger Co. (The)		1,334,720
	35,750	Safeway Inc.		1,027,455
	17,080	SUPERVALU, Inc.		448,350
	11,260	Whole Foods Market, Inc.		395,789
				3,206,314
		Food: Major Diversified (1.0%)
	17,980	Campbell Soup Co.		580,574
	39,370	ConAgra Foods Inc.		870,077
	27,280	General Mills, Inc.		1,527,407
	25,610	Heinz (H.J.) Co.		1,129,657
	21,330	Kellogg Co.		1,081,858
	125,020	Kraft Foods Inc. (Class A)		3,896,873
	58,520	Sara Lee Corp.		739,108
				9,825,554
		Food: Meat/Fish/Dairy (0.1%)
	10,622	Dean Foods Co.		228,585
	22,130	Tyson Foods, Inc. (Class A)		318,893
				547,478
		Food: Specialty/Candy (0.2%)
	13,580	Hershey Foods Co. (The)		503,546
	10,320	McCormick & Co., Inc. (Non-Voting)		355,524
	17,600	Wrigley (Wm.) Jr. Co.		1,053,536
				1,912,606
		Forest Products (0.1%)
	16,930	Weyerhaeuser Co.		1,036,116
		Gas Distributors (0.4%)
	40,060	Dynegy, Inc. (Class A)*		296,444
	3,700	Nicor Inc.		126,170
	22,150	NiSource, Inc.		380,758
	13,960	Questar Corp.		771,290
	21,120	Sempra Energy		1,122,106
	51,090	Spectra Energy Corp.		1,180,690
				3,877,458
		Home Building (0.1%)
	9,838	Centex Corp.		218,305
	22,409	D.R. Horton, Inc.		314,398
	6,313	KB Home		151,070

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited) continued


NUMBER OF SHARES			VALUE
	11,260	Lennar Corp. (Class A)	$	209,549
	17,170	Pulte Homes, Inc.		232,482
				1,125,804
		Home Furnishings (0.1%)
	13,750	Leggett & Platt, Inc.		229,625
	22,658	Newell Rubbermaid, Inc.		514,337
				743,962
		Home Improvement Chains (0.7%)
	136,370	Home Depot, Inc. (The)		3,620,623
	118,180	Lowe’s Companies, Inc.		2,832,775
	8,420	Sherwin-Williams Co.		435,988
				6,889,386
		Hospital/Nursing Management (0.0%)
	38,310	Tenet Healthcare Corp.*		184,271
		Hotels/Resorts/Cruiselines (0.4%)
	35,300	Carnival Corp (Panama) (Units)†		1,389,055
	25,260	Marriott International, Inc. (Class A)		861,366
	16,090	Starwood Hotels & Resorts Worldwide, Inc.		761,540
	14,380	Wyndham Worldwide Corp.*		318,804
				3,330,765
		Household/Personal Care (2.6%)
	34,670	Avon Products, Inc.		1,319,540
	11,190	Clorox Co. (The)		651,146
	41,190	Colgate-Palmolive Co.		3,134,147
	9,200	Estee Lauder Companies, Inc. (The) (Class A)		391,736
	6,570	International Flavors & Fragrances, Inc.		283,364
	34,190	Kimberly-Clark Corp.		2,228,504
	250,950	Procter & Gamble Co. (The)		16,607,871
				24,616,308
		Industrial Conglomerates (5.0%)
	57,630	3M Co.		4,518,192
	20,460	Danaher Corp.		1,517,109
	816,620	General Electric Co.		27,062,787
	60,340	Honeywell International, Inc.		3,471,963
	22,010	Ingersoll-Rand Co. Ltd. (Class A) (Bermuda)	$	921,338
	14,650	ITT Corp.		823,916
	20,140	Textron, Inc.		1,090,984
	39,980	Tyco International Ltd. (Bermuda)		1,601,599
	79,880	United Technologies Corp.		5,632,339
				46,640,227
		Industrial Machinery (0.3%)
	33,400	Illinois Tool Works Inc.		1,638,938
	13,590	Parker Hannifin Corp.		878,322
				2,517,260
		Industrial Specialties (0.2%)
	14,110	Ecolab Inc.		660,207
	13,230	PPG Industries, Inc.		819,995
				1,480,202
		Information Technology Services (1.6%)
	15,330	Citrix Systems, Inc.*		504,817
	23,460	Cognizant Technology Solutions Corp. (Class A)*		708,727
	41,380	Electronic Data Systems Corp.		716,701
	111,340	International Business Machines Corp.		12,677,172
	14,630	Teradata Corp*		369,115
	28,100	Unisys Corp.*		116,053
				15,092,585
		Insurance Brokers/Services (0.2%)
	23,720	AON Corp.		986,989
	42,030	Marsh & McLennan Companies, Inc.		1,070,504
				2,057,493
		Integrated Oil (7.4%)
	170,610	Chevron Corp.		14,785,063
	129,250	ConocoPhillips		10,690,267
	441,480	Exxon Mobil Corp.		38,413,175
	22,460	Hess Corp.		2,092,823
	57,390	Marathon Oil Corp.		3,050,852
	15,200	Murphy Oil Corp.		1,221,776
				70,253,956

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited) continued


NUMBER OF SHARES			VALUE
		Internet Retail (0.3%)
	24,830	Amazon.com, Inc.*	$	1,600,790
	12,850	Gamestop Corp (Class A)*		544,326
	14,900	IAC/InterActiveCorp.*		296,510
				2,441,626
		Internet Software/Services (1.4%)
	13,430	Akamai Technologies, Inc.*		472,199
	18,710	Google Inc. (Class A)*		8,815,778
	17,850	VeriSign, Inc.*		621,180
	107,990	Yahoo! Inc.*		2,999,962
				12,909,119
		Investment Banks/Brokers (2.4%)
	18,740	Ameriprise Financial, Inc.		948,993
	9,330	Bear Stearns Companies, Inc. (The)		745,094
	75,690	Charles Schwab Corp. (The)		1,484,281
	4,357	CME Group, Inc.		2,236,448
	34,240	ETRADE Group, Inc.		146,205
	32,130	Goldman Sachs Group, Inc. (The)		5,450,212
	5,681	Intercontinental Exchange, Inc.*		740,234
	42,830	Lehman Brothers Holdings Inc.		2,183,902
	69,170	Merrill Lynch & Co., Inc.		3,428,065
	85,750	Morgan Stanley (Note 4)		3,611,790
	21,410	NYSE Euronext		1,405,995
				22,381,219
		Investment Managers (0.6%)
	6,990	Federated Investors, Inc. (Class B)		283,654
	13,070	Franklin Resources, Inc.		1,233,416
	12,400	Janus Capital Group, Inc.		300,328
	10,888	Legg Mason, Inc.		719,044
	21,340	Price (T.) Rowe Group, Inc.		1,078,310
	31,210	State Street Corp.		2,451,545
				6,066,297
		Life/Health Insurance (1.0%)
	39,420	AFLAC, Inc.		2,460,202
	35,440	Genworth Financial Inc. (Class A)		821,499
	21,750	Lincoln National Corp.		1,111,643
	59,840	MetLife, Inc.	$	3,486,278
	7,450	Torchmark Corp.		448,937
	29,160	UnumProvident Corp.		668,056
				8,996,615
		Major Banks (4.6%)
	358,630	Bank of America Corp.		14,251,956
	92,010	Bank of New York Mellon Corp.		4,036,479
	44,400	BB&T Corp.		1,382,172
	12,200	Comerica, Inc.		442,128
	29,570	Huntington Bancshares, Inc.		361,345
	31,410	KeyCorp		692,591
	51,200	National City Corp.		812,032
	28,250	PNC Financial Services Group, Inc.		1,735,398
	56,170	Regions Financial Corp.		1,190,804
	28,220	SunTrust Banks, Inc.		1,640,429
	139,520	U.S. Bancorp		4,467,430
	159,620	Wachovia Corp.		4,887,564
	272,660	Wells Fargo & Co.		7,969,852
				43,870,180
		Major Telecommunications (3.0%)
	490,060	AT&T Inc.		17,068,790
	12,350	Embarq Corp.		517,959
	229,810	Sprint Nextel Corp.		1,633,949
	233,550	Verizon Communications, Inc.		8,482,536
				27,703,234
		Managed Health Care (1.3%)
	40,430	Aetna, Inc.		2,005,328
	22,560	CIGNA Corp.		1,005,725
	12,510	Coventry Health Care, Inc.*		648,894
	13,690	Humana, Inc.*		935,438
	104,410	UnitedHealth Group Inc.		4,852,977
	46,170	WellPoint Inc.*		3,235,593
				12,683,955
		Media Conglomerates (1.7%)
	55,350	CBS Corp. (Class B)		1,263,087
	153,810	Disney (Walt) Co. (The)		4,984,982
	186,920	News Corp. (Class A)		3,441,197
	292,070	Time Warner, Inc.		4,559,213
	53,030	Viacom Inc. (Class B)*		2,107,943
				16,356,422

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited) continued


NUMBER OF SHARES			VALUE
		Medical Distributors (0.4%)
	13,570	AmerisourceBergen Corp.	$	566,140
	29,220	Cardinal Health, Inc.		1,728,071
	23,380	McKesson Corp.		1,373,809
	11,300	Patterson Companies, Inc.*		397,760
				4,065,780
		Medical Specialties (2.3%)
	13,590	Applera Corp. – Applied Biosystems Group		458,119
	8,230	Bard (C.R.), Inc.		780,122
	51,240	Baxter International, Inc.		3,024,185
	19,710	Becton, Dickinson & Co.		1,782,178
	108,420	Boston Scientific Corp.*		1,365,008
	40,230	Covidien Ltd.		1,721,442
	12,730	Hospira, Inc.*		541,789
	91,360	Medtronic, Inc.		4,509,529
	9,910	Pall Corp.		390,157
	9,580	PerkinElmer, Inc.		237,775
	27,660	St. Jude Medical, Inc.*		1,188,827
	19,240	Stryker Corp.		1,252,716
	34,090	Thermo Fisher Scientific, Inc.*		1,906,654
	10,110	Varian Medical Systems, Inc.*		530,269
	8,185	Waters Corp.*		487,908
	18,970	Zimmer Holdings, Inc.*		1,428,251
				21,604,929
		Miscellaneous Commercial Services (0.0%)
	10,910	Cintas Corp.		313,990
		Miscellaneous Manufacturing (0.1%)
	16,060	Dover Corp.		666,651
		Motor Vehicles (0.3%)
	170,510	Ford Motor Co.*		1,113,430
	45,730	General Motors Corp.		1,064,594
	19,510	Harley-Davidson, Inc.		724,992
				2,903,016
		Multi-Line Insurance (1.4%)
	204,940	American International Group, Inc.		9,603,488
	25,360	Hartford Financial Services Group, Inc. (The)		1,772,664
	35,520	Loews Corp.	$	1,486,157
	7,640	SAFECO Corp.*		353,426
				13,215,735
		Office Equipment/Supplies (0.1%)
	8,600	Avery Dennison Corp.		441,352
	17,530	Pitney Bowes Inc.		627,223
				1,068,575
		Oil & Gas Pipelines (0.3%)
	56,600	El Paso Corp.		922,580
	47,960	Williams Companies, Inc. (The)		1,727,519
				2,650,099
		Oil & Gas Production (2.4%)
	37,680	Anadarko Petroleum Corp.		2,401,723
	26,760	Apache Corp.		3,069,640
	36,700	Chesapeake Energy Corp.		1,659,574
	35,950	Devon Energy Corp.		3,692,784
	19,880	EOG Resources, Inc.		2,365,521
	13,870	Noble Energy, Inc.		1,073,538
	66,950	Occidental Petroleum Corp.		5,179,921
	12,060	Range Resources Corp.		737,831
	39,069	XTO Energy, Inc.		2,410,948
				22,591,480
		Oil Refining/Marketing (0.4%)
	9,500	Sunoco, Inc.		580,260
	11,070	Tesoro Corp.		411,140
	44,480	Valero Energy Corp.		2,569,609
				3,561,009
		Oilfield Services/Equipment (2.0%)
	25,710	Baker Hughes Inc.		1,730,026
	23,660	BJ Services Co.		613,740
	18,000	Cameron International Corp.*		764,640
	71,200	Halliburton Co.		2,726,960
	28,820	National-Oilwell Varco, Inc.*		1,795,486
	96,630	Schlumberger Ltd. (Netherlands Antilles)		8,353,664
	16,190	Smith International, Inc.		1,020,456
	27,250	Weatherford International Ltd. (Bermuda)*		1,878,070
				18,883,042

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited) continued


NUMBER OF SHARES			VALUE
		Other Consumer Services (0.4%)
	11,050	Apollo Group, Inc. (Class A)*	$	678,249
	26,260	Block (H&R), Inc.		489,749
	91,870	eBay Inc.*		2,421,693
	16,757	Expedia, Inc.*		384,238
				3,973,929
		Other Consumer Specialties (0.1%)
	12,340	Fortune Brands, Inc.		801,853
		Other Metals/Minerals (0.0%)
	7,080	Titanium Metals Corp.		145,990
		Packaged Software (3.1%)
	46,360	Adobe Systems, Inc.*		1,560,014
	18,660	Autodesk, Inc.*		580,139
	15,820	BMC Software, Inc.*		510,670
	31,660	CA Inc.		724,381
	23,130	Compuware Corp.*		184,115
	26,880	Intuit Inc.*		713,933
	650,120	Microsoft Corp.		17,696,266
	28,270	Novell, Inc.*		210,612
	318,640	Oracle Corp.*		5,990,432
	70,080	Symantec Corp.*		1,180,147
				29,350,709
		Personnel Services (0.1%)
	10,340	Monster Worldwide Inc.*		274,941
	13,010	Robert Half International, Inc.		350,619
				625,560
		Pharmaceuticals: Generic Drugs (0.1%)
	8,792	Barr Pharmaceuticals Inc.*		414,543
	24,430	Mylan Laboratories, Inc.		289,251
	8,406	Watson Pharmaceuticals, Inc.*		233,771
				937,565
		Pharmaceuticals: Major (6.0%)
	124,860	Abbott Laboratories		6,686,253
	159,870	Bristol-Myers Squibb Co.		3,614,661
	231,240	Johnson & Johnson		14,327,630
	79,740	Lilly (Eli) & Co.		3,988,595
	175,880	Merck & Co., Inc.		7,791,484
	551,880	Pfizer, Inc.		12,295,886
	130,880	Schering-Plough Corp.	$	2,840,096
	108,210	Wyeth		4,720,120
				56,264,725
		Pharmaceuticals: Other (0.3%)
	24,800	Allergan, Inc.		1,468,904
	25,200	Forest Laboratories, Inc.*		1,002,204
	19,750	King Pharmaceuticals, Inc.*		209,350
				2,680,458
		Precious Metals (0.5%)
	30,860	Freeport-McMoRan Copper & Gold, Inc.		3,112,540
	36,510	Newmont Mining Corp.		1,868,217
				4,980,757
		Property – Casualty Insurers (1.0%)
	26,630	ACE Ltd. (Cayman Islands)		1,497,671
	46,120	Allstate Corp. (The)		2,201,308
	31,010	Chubb Corp. (The)		1,578,409
	13,410	Cincinnati Financial Corp.		498,450
	56,410	Progressive Corp. (The)		1,033,995
	52,110	Travelers Companies, Inc. (The)		2,418,425
	14,400	XL Capital Ltd. (Class A) (Cayman Islands)		519,264
				9,747,522
		Publishing: Books/ Magazines (0.0%)
	3,156	Meredith Corp.		136,813
		Publishing: Newspapers (0.2%)
	18,760	Gannett Co., Inc.		565,614
	11,620	New York Times Co. (The) (Class A)		216,481
	7,240	Scripps (E.W.) Co. (Class A)		302,415
	500	Washington Post Co. (The) (Class B)		362,000
				1,446,510
		Pulp & Paper (0.2%)
	34,600	International Paper Co.		1,096,820
	14,930	MeadWestvaco Corp.		383,104
				1,479,924

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited) continued


NUMBER OF SHARES			VALUE
		Railroads (0.9%)
	24,080	Burlington Northern Santa Fe Corp.	$	2,113,742
	33,970	CSX Corp.		1,648,224
	31,290	Norfolk Southern Corp.		1,654,928
	21,220	Union Pacific Corp.		2,647,407
				8,064,301
		Real Estate Development (0.0%)
	15,990	CB Richard Ellis Group, Inc. (Class A)*		320,759
		Real Estate Investment Trusts (1.0%)
	8,059	Apartment Investment & Management Co. (Class A)		277,632
	6,360	AvalonBay Communities, Inc.		587,855
	9,640	Boston Properties, Inc.		830,679
	9,930	Developers Diversified Realty Corp.		382,901
	21,900	Equity Residential		836,142
	19,700	General Growth Properties, Inc		695,607
	42,210	Host Hotels & Resorts Inc.		683,380
	20,420	Kimco Realty Corp.		689,583
	13,920	Plum Creek Timber Co., Inc.		566,405
	20,810	ProLogis		1,121,243
	10,060	Public Storage, Inc.		818,481
	18,020	Simon Property Group, Inc.		1,510,076
	10,830	Vornado Realty Trust		904,955
				9,904,939
		Recreational Products (0.2%)
	7,110	Brunswick Corp.		115,822
	25,507	Electronic Arts Inc.*		1,206,226
	11,880	Hasbro, Inc.		306,148
	29,640	Mattel, Inc.		572,645
				2,200,841
		Regional Banks (0.4%)
	15,765	Commerce Bancorp, Inc.		595,602
	43,040	Fifth Third Bancorp		985,616
	10,210	First Horizon National Corp.		165,810
	6,040	M&T Bank Corp.		495,763
	20,790	Marshall & Ilsley Corp		482,328
	15,460	Northern Trust Corp.	$	1,045,560
	8,822	Zions Bancorporation		421,251
				4,191,930
		Restaurants (0.9%)
	11,470	Darden Restaurants, Inc.		353,620
	95,570	McDonald’s Corp.		5,171,293
	59,020	Starbucks Corp.*		1,060,589
	7,060	Wendy’s International, Inc.		171,417
	41,100	Yum! Brands, Inc.		1,415,895
				8,172,814
		Savings Banks (0.2%)
	42,050	Hudson City Bancorp, Inc.		667,334
	29,120	Sovereign Bancorp, Inc.		321,194
	70,200	Washington Mutual, Inc.		1,038,960
				2,027,488
		Semiconductors (2.0%)
	48,780	Advanced Micro Devices, Inc.*		351,704
	27,140	Altera Corp.		464,365
	24,510	Analog Devices, Inc.		659,809
	38,020	Broadcom Corp. (Class A)*		718,958
	472,460	Intel Corp.		9,425,577
	18,060	Linear Technology Corp.		500,443
	57,040	LSI Logic Corp.*		287,482
	17,310	Microchip Technology Inc.		532,802
	61,440	Micron Technology, Inc.*		462,029
	18,990	National Semiconductor Corp.		312,765
	44,890	NVIDIA Corp.*		960,197
	112,980	Texas Instruments Inc.		3,384,881
	23,760	Xilinx, Inc.		531,274
				18,592,286
		Services to the Health Industry (0.5%)
	20,370	Express Scripts, Inc.*		1,203,867
	15,680	IMS Health Inc.		352,957
	9,310	Laboratory Corp. of America Holdings*		719,756
	43,220	Medco Health Solutions Inc.*		1,915,078
	12,670	Quest Diagnostics Inc.		603,979
				4,795,637
		Specialty Insurance (0.1%)
	8,210	Ambac Financial Group, Inc.		91,459
	7,720	Assurant, Inc.		482,886

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited) continued


NUMBER OF SHARES			VALUE
	10,150	MBIA Inc.	$	131,646
	6,610	MGIC Investment Corp.		97,894
				803,885
		Specialty Stores (0.3%)
	11,150	AutoNation, Inc.*		162,456
	3,570	AutoZone, Inc.*		410,836
	21,400	Bed Bath & Beyond Inc.*		606,476
	22,050	Office Depot, Inc.*		250,709
	6,178	OfficeMax Inc.		131,406
	57,140	Staples, Inc.		1,271,365
	10,960	Tiffany & Co.		412,534
				3,245,782
		Specialty Telecommunications (0.3%)
	32,700	American Tower Corp. (Class A)*		1,256,988
	8,920	CenturyTel, Inc.		322,815
	26,490	Citizens Communications Co.		284,503
	126,880	Qwest Communications International, Inc.*		685,152
	38,550	Windstream Corp.		453,348
				3,002,806
		Steel (0.3%)
	8,260	Allegheny Technologies, Inc.		638,911
	23,270	Nucor Corp.		1,502,544
	9,540	United States Steel Corp.		1,034,613
				3,176,068
		Telecommunication Equipment (1.1%)
	6,950	Ciena Corp.*		179,519
	127,330	Corning Inc.		2,957,876
	184,580	Motorola, Inc.		1,840,263
	132,230	QUALCOMM, Inc.		5,602,585
	35,490	Tellabs, Inc.*		233,524
				10,813,767
		Tobacco (1.5%)
	170,200	Altria Group, Inc.		12,448,428
	13,830	Reynolds American, Inc.		881,248
	12,660	UST, Inc.		687,311
				14,016,987
		Tools/Hardware (0.1%)
	5,050	Black & Decker Corp.	$	347,289
	4,751	Snap-On, Inc.		237,170
	6,732	Stanley Works (The)		326,771
				911,230
		Trucks/Construction/Farm Machinery (1.0%)
	51,390	Caterpillar Inc.		3,717,039
	16,500	Cummins Inc.		831,270
	35,860	Deere & Co.		3,055,631
	10,490	Manitowoc Co., Inc.		427,363
	29,760	PACCAR, Inc.		1,290,989
	8,357	Terex Corp.*		563,680
				9,885,972
		Wholesale Distributors (0.1%)
	13,570	Genuine Parts Co.		559,763
	5,524	Grainger (W.W.), Inc.		406,898
				966,661
		Total Common Stocks
		(Cost $770,246,201)		941,660,845
NUMBER OF WARRANTS
		Warrants (0.0%)
		Aerospace & Defense
	317	Raytheon Co (expire 06/16/11) (Cost $3,867)*		9,031
NUMBER OF SHARES (000)
		Short-Term Investment (b) (0.4%)
		Investment Company
	3,837	Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class (Cost $3,836,660)		3,836,660


Total Investments (Cost $774,086,278) (c)(d)	99.9	%		945,506,536
Other Assets in Excess of Liabilities	0.1			438,572
Net Assets	100.0	%	$	945,945,108

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Portfolio of Investments February 29, 2008 (unaudited) continued

Non-income producing security.

A portion of this security has been physically segregated in connection with open futures contracts in the amount of $324,000.

†

Consist of one or more class of securities traded as a unit: stocks with attached trust shares.

(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 general supervision of the Fund’s Trustees.

(b)

See Note 4 to the financial statements regarding investments in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class.

(c)

Securities have been designated as collateral in an amount equal to $5,666,850, in connection with open futures contracts.

(d)

The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $285,633,479 and the aggregate gross unrealized depreciation is $114,213,671, resulting in net unrealized appreciation of $171,419,808.

Futures Contracts Open at August 31, 2007:


NUMBER OF CONTRACTS	LONG/ SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE		UNREALIZED DEPRECIATION
90	Long	S&P 500 Index E-Mini March 2008	$	5,990,850	$	(215,556	)

Summary of Investments


SECTOR	VALUE		PERCENT OF TOTAL INVESTMENTS
Finance	$	160,536,256		17.0	%
Energy Minerals		98,731,980		10.4
Electronic Technology		97,925,568		10.4
Health Technology		94,016,300		9.9
Consumer Non-Durables		78,282,165		8.3
Producer Manufacturing		68,600,304		7.3
Technology Services		63,974,833		6.8
Retail Trade		47,329,158		5.0
Consumer Services		42,160,810		4.5
Utilities		34,318,382		3.6
Industrial Services		31,366,258		3.3
Communications		30,706,040		3.2
Process Industries		23,369,497		2.5
Transportation		18,331,543		1.9
Health Services		17,663,863		1.9
Non-Energy Minerals		12,496,809		1.3
Consumer Durables		10,338,693		1.1
Distribution Services		6,411,309		0.7
Commercial Services		5,110,108		0.5
Investment Company		3,836,660		0.4
	$	945,506,536		100.0	%

Does not include open long futures contracts with an underlying face amount of $5,990,850 with total unrealized depreciation of $215,556.

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Statements

Statement of Assets and Liabilities

February 29, 2008 (unaudited)


Assets:
Investments in securities, at value (cost $767,173,701)	$	938,058,086
Investment in affiliate, at value (cost $6,913,027)		7,448,450
Cash		216,878
Receivable for:
Dividends		2,171,684
Shares of beneficial interest sold		353,842
Dividends from affiliate		27,123
Prepaid expenses and other assets		23,358
Receivable from Distributor		20,126
Total Assets		948,319,547
Liabilities:
Payable for:
Shares of beneficial interest redeemed		1,388,354
Distribution fee		414,574
Variation margin		155,250
Transfer agent fee		84,186
Administration fee		61,486
Investment advisory fee		44,466
Accrued expenses and other payables		226,123
Total Liabilities		2,374,439
Net Assets	$	945,945,108
Composition of Net Assets:
Paid-in-capital	$	836,683,442
Net unrealized appreciation		171,204,253
Accumulated undistributed net investment income		3,926,721
Accumulated net realized accumulated loss		(65,869,308	)
Net Assets	$	945,945,108
Class A Shares:
Net Assets	$	477,726,201
Shares Outstanding (unlimited authorized, $.01 par value)		33,343,034
Net Asset Value Per Share	$14.33
Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value)	$15.12
Class B Shares:
Net Assets	$	274,501,780
Shares Outstanding (unlimited authorized, $.01 par value)		19,655,573
Net Asset Value Per Share	$13.97
Class C Shares:
Net Assets	$	111,920,858
Shares Outstanding (unlimited authorized, $.01 par value)		8,058,725
Net Asset Value Per Share	$13.89
Class D Shares:
Net Assets	$81,796,269
Shares Outstanding (unlimited authorized, $.01 par value)		5,657,055
Net Asset Value Per Share	$14.46

Statement of Operations

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


Net Investment Income:
Income
Dividends	$	10,878,920
Dividends from affiliates		438,293
Total Income		11,317,213
Expenses
Distribution fee (Class A shares)		628,708
Distribution fee (Class B shares)		1,687,775
Distribution fee (Class C shares)		617,211
Transfer agent fees and expenses		871,327
Investment advisory fee		639,192
Administration fee		426,128
Shareholder reports and notices		81,665
Professional fees		79,729
Custodian fees		52,362
Registration fees		45,657
Trustees’ fees and expenses		7,199
Other		96,870
Total Expenses		5,233,823
Less: amounts waived/reimbursed		(492,507	)
Less: expense offset		(4,078	)
Net Expenses		4,737,238
Net Investment Income		6,579,975
Realized and Unrealized Gain (Loss):
Realized Gain (Loss) on:
Investments		21,943,924
Investment in affiliate		390,910
Futures contracts		(2,494,392	)
Net Realized Gain		19,840,442
Change in Unrealized Appreciation/ Depreciation on:
Investments		(121,203,270	)
Investment in affiliate		(2,227,626	)
Futures contracts		88,561
Net Change in Unrealized Appreciation/Depreciation		(123,342,335	)
Net Loss		(103,501,893	)
Net Decrease	$	(96,921,918	)

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Statements continued

Statements of Changes in Net Assets


	FOR THE SIX MONTHS ENDED FEBRUARY 29, 2008			FOR THE YEAR ENDED AUGUST 31, 2007
	(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	6,579,975		$	12,116,382
Net realized gain		19,840,442			62,543,767
Net change in unrealized appreciation/depreciation		(123,342,335	)		87,371,500
Net Increase (Decrease)		(96,921,918	)		162,031,649
Dividends to Shareholders from net investment income
Class A shares		(8,115,403	)		(6,681,274	)
Class B shares		(2,159,942	)		(2,921,671	)
Class C shares		(1,058,326	)		(1,008,726	)
Class D shares		(1,666,374	)		(1,688,390	)
Total Dividends		(13,000,045	)		(12,300,061	)
Net decrease from transactions in shares of beneficial interest		(69,715,556	)		(240,962,562	)
Net Decrease		(179,637,519	)		(91,230,974	)
Net Assets:
Beginning of period		1,125,582,627			1,216,813,601
End of Period
(Including accumulated undistributed net investment income of $3,926,721 and $10,346,791, respectively)	$	945,945,108		$	1,125,582,627

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements February 29, 2008 (unaudited)

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 March 31, 2008, Class D shares will be renamed Class I shares.

The Fund will assess a 2% redemption fee, on Class A shares, Class B shares, Class C shares, and Class D shares, which is paid directly to the Fund, for shares redeemed or exchanged within seven days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading.

The following is a summary of significant accounting policies:

A. Valuation of Investments — (1) an equity portfolio security listed or traded on the New York Stock Exchange (‘‘NYSE’’) or American Stock Exchange or other exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (2) an equity portfolio security listed or traded on the Nasdaq is valued at the Nasdaq Official Closing Price; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (3) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and asked price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (4) for equity securities traded on foreign exchanges, the last reported sale price or the latest bid price may be used if there were no sales on a particular day; (5) futures are valued at the latest price published by the commodities exchange on which they trade; (6) when market quotations are not readily available including circumstances under which Morgan Stanley Investment Advisors Inc. (the ‘‘Investment Adviser’’) determines that the latest sale price, the bid price or the mean between the last reported bid and asked price do not reflect a security’s market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund’s Trustees. Occasionally, developments affecting the closing prices of securities and other assets

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements February 29, 2008 (unaudited) continued

may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Fund’s Trustees or by the Investment Adviser using a pricing service and/or procedures approved by the Trustees of the Fund; (7) investments in open-end mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (8) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost.

B. Accounting for Investments — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. Dividend income and other distributions are recorded on the ex-dividend date. Discounts are accreted and premiums are amortized over the life of the respective securities and are included in interest income. Interest income is accrued daily.

C. Multiple Class Allocations — Investment income, expenses (other than distribution fees), and realized and unrealized gains and losses are allocated to each class of shares based upon the relative net asset value on the date such items are recognized. Distribution fees are charged directly to the respective class.

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

E. Federal Income Tax Policy — It is the Fund’s policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. The Fund files tax returns with the U.S. Internal Revenue Service, New York State and New York City. The Fund adopted the provisions of the Financial Accounting Standards Board (‘‘FASB’’) Interpretation No. 48 (‘‘FIN 48’’) Accounting for Uncertainty in Income Taxes on February 28, 2008. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements February 29, 2008 (unaudited) continued

implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statement of Operations. Each of the tax years in the four year period ended February 29, 2008, remains subject to examination by taxing authorities.

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

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

2. Investment Advisory/Administration Agreements

Pursuant to an Investment Advisory Agreement, 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.

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.

The Investment Adviser has agreed to cap the Fund’s operating expenses (except for brokerage and 12b-1 fees) by assuming the Fund’s ‘‘other expenses’’ and/or waiving the Fund’s advisory fees, and the Administrator has agreed to waive the Fund’s administrative fees, to the extent that such operating expenses exceed 0.34% of the average daily net assets of the Fund on an annualized basis.

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

3. Plan of Distribution

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

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements February 29, 2008 (unaudited) continued

In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $22,100,892 at February 29, 2008.

At February 29, 2008, included in the Statement of Assets and Liabilities, is a receivable from the Fund’s Distributor which represents payments due to be reimbursed to the Fund under the Plan. Because the Plan is what is referred to as a ‘‘reimbursement plan’’, the Distributor reimburses to the Fund any 12b-1 fees collected in excess of the actual distribution expenses incurred. This receivable represents this excess amount as of February 29, 2008. For the six months ended February 29, 2008, the distribution fee was accrued for Class B shares at an annual rate of 1.00%.

In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Financial Advisors and other authorized financial representatives at the time of sale may be reimbursed in the subsequent calendar year. For the six months ended February 29, 2008, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.25% and 0.98%, respectively.

The Distributor has informed the Fund that for the six months ended February 29, 2008, it received contingent deferred sales charges from certain redemptions of the Fund’s Class A shares, Class B shares and Class C shares of $18, $223,369 and $6,356, respectively and received $70,843 in front-end sales charges from sales of the Fund’s Class A shares. The respective shareholders pay such charges which are not an expense of the Fund.

4. Security Transactions and Transactions with Affiliates

The Fund invests in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class, an open-end management investment company managed by the Investment Adviser. Advisory fees paid by the Fund are reduced by an amount equal to the advisory and administrative service fees paid by Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class with respect to assets invested by the Fund in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class. For the six months ended February 29, 2008, advisory fees paid were reduced by $10,811 relating to the Fund’s investment in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class. Income distributions earned by the

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements February 29, 2008 (unaudited) continued

Fund are recorded as dividends from affiliate in the Statement of Operations and totaled $388,609 for the six months ended February 29, 2008. During the six months ended February 29, 2008, cost of purchases and sales of investments in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class aggregated $58,045,752 and $82,992,180, respectively.

The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended February 29, 2008 aggregated $20,874,174 and $73,146,499, respectively. Included in the aforementioned is a sale of common stock of Morgan Stanley, an affiliate of the Investment Adviser, Administrator and Distributor, of $680,468, as well as a realized gain of $390,910.

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 or she receives for serving on the Board of Trustees. Each eligible Trustee generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Fund.

5. Federal Income Tax Status

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

As of August 31, 2007 the Fund had temporary book/tax differences primarily attributable to capital loss deferrals on wash sales and mark-to-market of open futures contracts.

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements February 29, 2008 (unaudited) continued

6. Shares of Beneficial Interest

Transactions in shares of beneficial interest were as follows:


	FOR THE SIX MONTHS ENDED FEBRUARY 29, 2008						FOR THE YEAR ENDED AUGUST 31, 2007
	(unaudited)
	SHARES			AMOUNT			SHARES			AMOUNT
CLASS A SHARES
Sold		2,015,278		$	30,807,627			3,539,296		$	54,614,316
Conversion from Class B		1,920,887			30,525,446			6,618,766			102,760,105
Reinvestment of dividends		473,534			7,552,862			412,308			6,291,817
Redeemed		(3,641,317	)		(57,124,727	)		(9,876,598	)		(152,182,616	)
Net increase – Class A		768,382			11,761,208			693,772			11,483,622
CLASS B SHARES
Sold		379,757			5,796,612			933,431			13,996,770
Conversion to Class A		(1,977,175	)		(30,525,446	)		(6,815,658	)		(102,760,105	)
Reinvestment of dividends		124,336			1,935,914			178,146			2,649,028
Redeemed		(3,149,120	)		(47,732,414	)		(8,941,083	)		(134,090,687	)
Net decrease – Class B		(4,622,202	)		(70,525,334	)		(14,645,164	)		(220,204,994	)
CLASS C SHARES
Sold		216,736			3,267,334			698,056			10,465,417
Reinvestment of dividends		62,645			969,743			62,857			930,915
Redeemed		(738,182	)		(11,184,133	)		(1,875,401	)		(28,056,828	)
Net decrease – Class C		(458,801	)		(6,947,056	)		(1,114,488	)		(16,660,496	)
CLASS D SHARES
Sold		156,852			2,482,892			748,417			11,705,728
Reinvestment of dividends		95,394			1,533,941			94,934			1,461,039
Redeemed		(505,431	)		(8,021,207	)		(1,842,680	)		(28,747,461	)
Net decrease – Class D		(253,186	)		(4,004,374	)		(999,329	)		(15,580,694	)
Net decrease in Fund		(4,565,807	)	$	(69,715,556	)		(16,065,209	)	$	(240,962,562	)

7. Expense Offset

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

8. Purposes of and Risks Relating to Certain Financial Instruments

The Fund may 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;

Morgan Stanley S&P 500 Index Fund

Notes to Financial Statements February 29, 2008 (unaudited) continued

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.

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.

9. Accounting Pronouncement

In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund’s financial statement disclosures.

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 SIX MONTHS ENDED FEBRUARY 29, 2008			FOR THE YEAR ENDED AUGUST 31,
	FOR THE SIX MONTHS ENDED FEBRUARY 29, 2008			2007			2006			2005			2004			2003
	(unaudited)
Class A Shares
Selected Per Share Data:
Net asset value, beginning of period	$	16.01		$	14.17		$	13.27		$	12.03		$	10.97		$	9.91
Income (loss) from investment operations:
Net investment income‡		0.12			0.21			0.18			0.19			0.12			0.11
Net realized and unrealized gain (loss)		(1.55	)		1.85			0.91			1.23			1.05			1.01
Total income (loss) from investment operations		(1.43	)		2.06			1.09			1.42			1.17			1.12
Less dividends from net investment income		(0.25	)		(0.22	)		(0.19	)		(0.18	)		(0.11	)		(0.06	)
Net asset value, end of period	$	14.33		$	16.01		$	14.17		$	13.27		$	12.03		$	10.97
Total Return†.		(9.08)	% ⁽¹⁾		0.15	%		8.24	%		11.81	%		10.70	%		11.36	%
Ratios to Average Net Assets⁽³⁾⁽⁵⁾:
Total expenses (before expense offset)		0.59	%⁽²⁾⁽⁴⁾		0.58	% ⁽⁴⁾		0.62	%		0.64	%		0.70	%		0.70	%
Net investment income		1.54	%⁽²⁾⁽⁴⁾		1.37	% ⁽⁴⁾		1.32	%		1.52	%		1.03	%		1.11	%
Supplemental Data:
Net assets, end of period, in millions	$	477		$	522		$	452		$	401		$	301		$	233
Portfolio turnover rate		2	%⁽¹⁾		3	%		4	%		3	%		2	%		2	%

‡

The per share amounts were computed using an average number of shares outstanding during the period.

†

Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.

(1)

Not annualized.

(2)

Annualized.

(3)

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

(4)

Reflects waivers of certain Fund expenses in connection with the investments in Morgan Stanley Institutional Liquidity Money Market Portfolio – Institutional Class during the period. As a result of such waivers the expenses as a percentage of its net assets had an effect of less than 0.005%.

(5)

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


PERIOD ENDED	EXPENSE RATIO	NET INVESTMENT INCOME RATIO
February 29, 2008	0.68%	1.44%
August 31, 2007	0.65	1.30
August 31, 2006	0.66	1.28
August 31, 2005	0.65	1.51
August 31, 2004	0.77	0.96
August 31, 2003	0.82	0.99

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Highlights continued


	FOR THE SIX MONTHS ENDED FEBRUARY 29, 2008			FOR THE YEAR ENDED AUGUST 31,
	FOR THE SIX MONTHS ENDED FEBRUARY 29, 2008			2007			2006			2005			2004			2003
	(unaudited)
Class B Shares
Selected Per Share Data:
Net asset value, beginning of period	$	15.52		$	13.72		$	12.83		$	11.62		$	10.60		$	9.60
Income (loss) from investment operations:
Net investment income‡		0.06			0.09			0.07			0.10			0.03			0.03
Net realized and unrealized gain (loss)		(1.51	)		1.79			0.87			1.18			1.02			0.97
Total income (loss) from investment operations		(1.45	)		1.88			0.94			1.28			1.05			1.00
Less dividends from net investment income		(0.10	)		(0.08	)		(0.05	)		(0.07	)		(0.03	)		—
Net asset value, end of period	$	13.97		$	15.52		$	13.72		$	12.83		$	11.62		$	10.60
Total Return†		(9.41)	% ⁽¹⁾		13.76	%		7.35	%		11.04	%		9.88	%		10.42	%
Ratios to Average Net Assets⁽³⁾⁽⁵⁾:
Total expenses (before expense offset)		1.34	%⁽²⁾⁽⁴⁾		1.34	% ⁽⁴⁾		1.38	%		1.40	%		1.46	%		1.50	%
Net investment income		0.78	%⁽²⁾⁽⁴⁾		0.61	% ⁽⁴⁾		0.56	%		0.76	%		0.27	%		1.31	%
Supplemental Data:
Net assets, end of period, in millions	$	274		$	377		$	534		$	815		$	1,108		$	1,160
Portfolio turnover rate		2	%⁽¹⁾		3	%		4	%		2	%		2	%		2	%

‡

The per share amounts were computed using an average number of shares outstanding during the period.

†

Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.

(1)

Not annualized.

(2)

Annualized.

(3)

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

(4)

(5)


PERIOD ENDED	EXPENSE RATIO	NET INVESTMENT INCOME RATIO
February 29, 2008	1.43%	0.69%
August 31, 2007	1.41	0.54
August 31, 2006	1.42	0.52
August 31, 2005	1.41	0.75
August 31, 2004	1.53	0.20
August 31, 2003	1.62	0.19

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Highlights continued


	FOR THE SIX MONTHS ENDED FEBRUARY 29, 2008			FOR THE YEAR ENDED AUGUST 31,
	FOR THE SIX MONTHS ENDED FEBRUARY 29, 2008			2007			2006			2005			2004			2003
	(unaudited)
Class C Shares
Selected Per Share Data:
Net asset value, beginning of period	$	15.46		$	13.70		$	12.83		$	11.61		$	10.60		$	9.60
Income (loss) from investment operations:
Net investment income‡		0.06			0.09			0.08			0.10			0.03			0.03
Net realized and unrealized gain (loss)		(1.50	)		1.78			0.87			1.20			1.01			0.97
Total income (loss) from investment operations		(1.44	)		1.87			0.95			1.30			1.04			1.00
Less dividends from net investment income		(0.13	)		(0.11	)		(0.08	)		(0.08	)		(0.03	)		—
Net asset value, end of period	$	13.89		$	15.46		$	13.70		$	12.83		$	11.61		$	10.60
Total Return†		(9.41)	% ⁽¹⁾		13.68	%		7.45	%		11.18	%		9.85	%		10.42	%
Ratios to Average Net Assets⁽³⁾⁽⁵⁾:
Total expenses (before expense offset)		1.32	%⁽²⁾⁽⁴⁾		1.33	% ⁽⁴⁾		1.34	%		1.34	%		1.46	%		1.49	%
Net investment income		0.80	%⁽²⁾⁽⁴⁾		0.62	% ⁽⁴⁾		0.60	%		0.82	%		0.27	%		0.32	%
Supplemental Data:
Net assets, end of period, in millions	$	111		$	132		$	132		$	154		$	173		$	161
Portfolio turnover rate		2	%⁽¹⁾		3	%		4	%		3	%		2	%		2	%

‡

The per share amounts were computed using an average number of shares outstanding during the period.

†

Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.

(1)

Not annualized.

(2)

Annualized.

(3)

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

(4)

(5)


PERIOD ENDED	EXPENSE RATIO	NET INVESTMENT INCOME RATIO
February 29, 2008	1.41%	0.71%
August 31, 2007	1.40	0.55
August 31, 2006	1.38	0.56
August 31, 2005	1.35	0.81
August 31, 2004	1.53	0.20
August 31, 2003	1.61	0.20

See Notes to Financial Statements

Morgan Stanley S&P 500 Index Fund

Financial Highlights continued


	FOR THE SIX MONTHS ENDED FEBRUARY 29, 2008			FOR THE YEAR ENDED AUGUST 31,
	FOR THE SIX MONTHS ENDED FEBRUARY 29, 2008			2007			2006			2005			2004			2003

Class D Shares
Selected Per Share Data:
Net asset value, beginning of period	$	16.17		$	14.31		$	13.40		$	12.14		$	11.06		$	10.00
Income (loss) from investment operations:
Net investment income‡		0.14			0.25			0.21			0.23			0.15			0.13
Net realized and unrealized gain (loss)		(1.56	)		1.86			0.92			1.24			1.06			1.02
Total income (loss) from investment operations		(1.42	)		2.11			1.13			1.47			1.21			1.15
Less dividends from net investment income		(0.29	)		(0.25	)		(0.22	)		(0.21	)		(0.13	)		(0.09	)
Net asset value, end of period	$	14.46		$	16.17		$	14.31		$	13.40		$	12.14		$	11.06
Total Return†		(8.95)	%⁽¹⁾		14.86	%		8.46	%		12.11	%		10.97	%		11.59	%
Ratios to Average Net Assets⁽³⁾⁽⁵⁾:
Total expenses (before expense offset)		0.34	%⁽²⁾⁽⁴⁾		0.34	%⁽⁴⁾		0.38	%		0.40	%		0.46	%		0.50	%
Net investment income		1.78	%⁽²⁾⁽⁴⁾		1.61	%⁽⁴⁾		1.56	%		1.76	%		1.27	%		1.31	%
Supplemental Data:
Net assets, end of period, in millions	$81			$96			$99			$188			$198			$180
Portfolio turnover rate		2	%⁽¹⁾		3	%		4	%		3	%		2	%		2	%

‡

The per share amounts were computed using an average number of shares outstanding during the period.

†

Calculated based on the net asset value as of the last business day of the period.

(1)

Not annualized.

(2)

Annualized.

(3)

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

(4)

(5)


PERIOD ENDED	EXPENSE RATIO	NET INVESTMENT INCOME RATIO
February 29, 2008	0.43%	1.69%
August 31, 2007	0.41	1.54
August 31, 2006	0.42	1.52
August 31, 2005	0.41	1.75
August 31, 2004	0.53	1.20
August 31, 2003	0.62	1.19

See Notes to Financial Statements


Trustees Frank L. Bowman Michael Bozic Kathleen A. Dennis James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael F. Klein Michael E. Nugent W. Allen Reed Fergus Reid Officers Michael E. Nugent Chairperson of the Board Ronald E. Robison President and Principal Executive Officer J. David Germany Vice President Dennis F. Shea Vice President Amy R. Doberman Vice President Carsten Otto Chief Compliance Officer Stefanie V. Chang Yu Vice President Francis J. Smith Treasurer and Chief Financial Officer Mary E. Mullin Secretary Transfer Agent Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 Independent Registered Public Accounting Firm Deloitte & Touche LLP Two World Financial Center New York, New York 10281 Legal Counsel Clifford Chance US LLP 31 West 52nd Street New York, New York 10019 Counsel to the Independent Trustees Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036 Investment Adviser Morgan Stanley Investment Advisors Inc. 522 Fifth Avenue New York, New York 10036 The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors and accordingly they do not express an opinion thereon. This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund’s Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus. Read the Prospectus carefully before investing. Morgan Stanley Distributors Inc., member FINRA. © 2008 Morgan Stanley SPISAN IU08-02152P-T02/08		MORGAN STANLEY FUNDS
		Morgan Stanley S&P 500 Index Fund Semiannual Report February 29, 2008

Item 2. Code of Ethics.

Not applicable for semiannual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semiannual reports.

Item 4. Principal Accountant Fees and Services

Not applicable for semiannual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semiannual reports.

Item 6.

Refer to Item 1.

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

Not applicable for semiannual reports.

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

Applicable only to reports filed by closed-end funds.

Item 9. Closed-End Fund Repurchases

Applicable to reports filed by closed-end funds.

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

Not applicable.

Item 11. Controls and Procedures

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

(b) There were no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits

(a) Code of Ethics – Not applicable for semiannual reports.

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

SIGNATURES

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

Morgan Stanley S&P 500 Index Fund
/s/ Ronald E. Robison
Ronald E. Robison Principal Executive Officer April 17, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


/s/ Ronald E. Robison
Ronald E. Robison Principal Executive Officer April 17, 2008


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

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;

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;

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:

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;

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

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; 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):

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: April 17, 2008

				/s/ Ronald E. Robison
				Ronald E. Robison Principal Executive Officer

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;

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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; 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):

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: April 17, 2008

				/s/ Francis Smith
				Francis Smith Principal Financial Officer

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 February 29, 2008 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: April 17, 2008				/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.

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

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