UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number		811-02575
Morgan Stanley Liquid Asset Fund Inc.
(Exact name of registrant as specified in charter)
522 Fifth Avenue, New York, New York			10036
(Address of principal executive offices)			(Zip code)
Randy Takian 522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrant's telephone number, including area code:		212-296-6963
Date of fiscal year end:	August 31, 2009
Date of reporting period:	November 30, 2008

Item 1.  Schedule of Investments.

The Fund’s schedule of investments as of the close of the reporting period prepared pursuant to Rule 12-12 of Regulation S-X is as follows:

Morgan Stanley Liquid Asset Fund Inc.

Portfolio of Investments · November 30, 2008 (unaudited)

			ANNUALIZED
PRINCIPAL			YIELD
AMOUNT IN			ON DATE OF	MATURITY
THOUSANDS		DESCRIPTION	PURCHASE	DATE	VALUE
		Commercial Paper (43.9%)
		Asset-Backed - Consumer (12.1%)
$	263,032	Barton Capital LLC (a)	1.00 - 1.50%	12/05/08 - 01/23/09	$	262,512,798
59,814		Jupiter Securitization (a)	1.40 - 2.20	12/09/08 - 01/22/09	59,747,669
230,000		Old Line Funding, LLC (a)	1.10 - 2.00	12/05/08 - 01/23/09	229,831,791
93,000		Park Avenue Rec Co LLC (a)	1.00 - 1.50	12/05/08 - 12/12/08	92,973,861
20,000		Salisbury Receivables Co. (a)	1.00	12/09/08	19,994,444
					665,060,563
		Asset-Backed - Corporate (1.5%)
55,000		Amsterdam Funding Corp. (a)	1.06	12/15/08	54,974,089
30,000		Atlantis One Funding (a)	0.65	12/01/08	29,998,917
					84,973,006
		Asset-Backed - Diversified (9.1%)
197,000		Falcon Asset Securities (a)	1.40 - 1.75	12/04/08 - 01/23/09	196,711,486
40,000		Kitty Hawk Funding Corp (a)	2.75	12/11/08	39,963,333
30,000		Ranger Funding Co. LLC (a)	1.40 - 3.95	12/10/08 - 01/22/09	49,921,792
185,000		Sheffield Receiving Corp (a)	0.95 - 2.95	12/03/08 - 01/23/09	184,846,931
27,000		Yorktown Capital LLC (a)	1.45	01/21/09	26,942,363
					498,385,904
		Banking (3.7%)
75,000		Bank of America Corp.	2.86	12/11/08	74,928,375
125,000		Citigroup Funding Inc.	2.91	12/04/08 - 12/05/08	124,945,438
					199,873,813
		Financial Conglomerates (2.1%)
115,000		General Electric Capital Corp.	2.45 - 2.72	12/08/08 - 12/30/08	114,817,131
		Insurance (0.6%)
31,500		ING America Insurance Holding Inc.	2.76	12/05/08	31,485,510
		International Banks (14.8%)
170,000		BNP Paribas Finance Inc	0.68	12/01/08 - 12/23/08	169,909,039
27,550		Barclays US Funding LLC	2.81	12/09/08	27,528,496
50,000		Calyon North America Inc.	1.35	12/22/08	49,956,875
23,000		Intesa Funding LLC	2.89	12/08/08	22,983,383
25,000		Royal Bank of Scotland Group (a)	3.06	03/16/09	24,772,625
262,000		Societe Generale N.A., Inc.	1.40 - 2.85	12/15/08 - 12/29/08	261,755,141
253,000		UBS Finance (Delaware) LLC	1.35 - 2.84	12/05/08 - 12/22/08	252,812,751
					809,718,309
		Total Commercial Paper (Cost $2,404,314,235)			2,404,314,235
		Certificates of Deposit (14.8%)
		International Banks
75,000		Allied Irish Banks PLC	2.92	12/30/08	75,000,640
100,000		Banco Bilbao Vizcaya Argentaria	3.07	12/30/08	100,005,760
77,000		Banco Santander Central Hispano SA	3.01	12/18/08	76,999,970
200,000		Calyon - NY	2.72 - 3.17	12/10/08 - 3/13/09	200,000,000
75,000		Credit Industrial	3.00	12/12/08	75,000,000
110,000		Intesa Bank Ireland PLC	2.91	12/09/08	110,000,000
144,000		Royal Bank of Scotland PLC	2.88 - 3.15	12/15/08 - 2/23/09	143,998,312
30,000		Skandinaviska Enskilda	2.89	12/29/08	30,000,248
		Total Certificates of Deposit (Cost $811,004,929)			811,004,929
		Floating Rate Notes (9.6%)
		Domestic Banks(0.7%)
41,000		Wachovia Bank, NA	4.41(b)	02/04/09(c)	41,000,000
		Finance-Auto (1.6%)
85,000		Toyota Motor Credit Corp.	1.77(b)	07/10/09(c)	85,000,000

	International Banks (7.3%)
50,000	Bank of Nova Scotia - NY	3.10(b)	05/06/09(c)		50,000,000
165,000	Barclays Bank PLC	1.90 - 3.26(b)	04/14/09 - 07/20/09(c)		165,000,000
43,000	Deutsche Bank AG	3.41(b)	01/21/09(c)		43,000,000
63,000	KBC Bank NV - NY	1.77(b)	12/16/08(c)		63,000,000
78,000	Royal Bank of Scotland plc	2.17(b)	01/09/09(c)		78,000,573
					399,000,573
	Total Floating Rate Notes (Cost $525,000,573)				525,000,573
	Repurchase Agreement (31.2%)
400,000	Banc of America Securities Inc. (dated 11/28/08; proceeds $400,010,000; fully collateralized by Federal National Mortgage Assoc. 0.00% due 01/30/09, value at $408,000,200.) (Cost $400,000,000)	0.30	12/01/08		400,000,000
955,000	Barclays Capital, Inc. (dated 11/28/08; proceeds $955,019,896; fully collateralized by Federal National Mortgage Assoc. 5.00% - 6.00% due 04/01/33 - 11/01/38, Federal Home Loan Mortgage Corp 5.00% - 6.00% due 07/01/37 - 11/01/38, value at $983,650,000.) (Cost $955,000,000)	0.25	12/01/08		955,000,000
350,000	BNP Paribas Securities Corp. (dated 11/28/08; proceeds $350,008,750; fully collateralized by Federal National Mortgage Assoc. 4.84% - 6.21% due 08/01/36 - 10/01/38 and Federal Home Loan Mortgage Corp. 5.51% - 5.98% due 08/01/36 - 09/01/38 valued at $360,500,000) (Cost $350,000,000)	0.30	12/01/08		350,000,000
	Total Repurchase Agreements (Cost $1,705,000,000)				1,705,000,000
	Total Investments (Cost $5,445,319,737) (d)		99.5	%	5,445,319,737
	Other Assets in Excess of Liabilities		0.5		28,173,699
	Net Assets		100.0	%	$	5,473,493,436

(a)	Resale is restricted to qualified institutional investors.
(b)	Rate shown is the rate in effect at November 30, 2008.
(c)	Date of next interest rate reset.
(d)	Cost is the same for federal income tax purposes.

MS Liquid Asset Fund

Notes to the Portfolio of Investments

FAS 157

11/30/2008

The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), effective December 1, 2007. In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. FAS 157 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund’s investments. The inputs are summarized in the three broad levels listed below.

· Level 1 – quoted prices in active markets for identical investments

· Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

· Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used as of November 30, 2008 in valuing the Fund’s investments carried at value:

			Fair Value Measurements at November 30, 2008 Using
			Quoted Prices In	Significant		Significant
			Active Market for	Other Observable		Unobservable
			Identical Assets	Inputs		Inputs
	Total		(Level 1)	(Level 2)		(Level 3)
Investments in Securities	$	5,445,319,737	—	$	5,445,319,737	—

Valuation of Investments — Portfolio securities are valued at amortized cost, which approximates market value, in accordance with Rule 2a-7 under the Investment Company Act of 1940.

Item 2.  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-Q 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 Fund’s internal control over financial reporting that occurred during the registrant’s fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

Item 3.  Exhibits.

(a) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto.

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 Liquid Asset Fund Inc.

/s/ Randy Takian

Randy Takian

Principal Executive Officer

January 20, 2009

                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/ Randy Takian

Randy Takian

Principal Executive Officer

January 20, 2009

/s/ Francis Smith

Francis Smith

Principal Financial Officer

January 20, 2009