Edgar Filing: MORGAN STANLEY MUNICIPAL INCOME OPPORTUNITIES TRUST III

Schedule 14A Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934 (Amendment No. )

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[ ] Preliminary Proxy Statement
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[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11(c) or Section 240.14

Morgan Stanley Municipal Income Opportunities Trust III
-------------------------------------------------
(Name of Registrant as Specified in its Charter)

Lou Anne D. McInnis
--------------------------------------------------------------------------------
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MORGAN STANLEY
MUNICIPAL INCOME OPPORTUNITIES TRUST III

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 26, 2005

The Annual Meeting of Shareholders of MORGAN STANLEY MUNICIPAL INCOME
OPPORTUNITIES TRUST III (the "Trust"), an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts, will be held in
the Auditorium, 3rd Floor, 1221 Avenue of the Americas, New York, New York
10020, on October 26, 2005 at 9:00 a.m., New York City time, for the following
purposes:

1. To elect four Trustees to serve until the year 2008 Annual Meeting
or, in each case, until their successors shall have been elected and
qualified; and

2. To transact such other business as may properly come before the
Meeting or any adjournment thereof.

Shareholders of record as of the close of business on August 24, 2005 are
entitled to notice of and to vote at the Meeting. If you cannot be present in
person, your management would greatly appreciate your filling in, signing and
returning the enclosed proxy promptly in the envelope provided for that purpose.
Alternatively, if you are eligible to vote telephonically by touchtone telephone
or electronically on the Internet (as discussed in the enclosed Proxy Statement)
you may do so in lieu of attending the Meeting in person.

In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of the holders of a majority of the Trust's shares present in
person or by proxy at the Meeting. The persons named as proxies will vote in
favor of such adjournment those proxies which have been received by the date of
the Meeting.

MARY E. MULLIN,
Secretary

September 20, 2005
New York, New York

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IMPORTANT

YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF SENDING
FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED
PROXY. IF YOU ARE UNABLE TO BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY IN ORDER THAT THE NECESSARY QUORUM MAY BE
REPRESENTED AT THE MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. CERTAIN SHAREHOLDERS WILL BE ABLE TO VOTE
TELEPHONICALLY BY TOUCHTONE TELEPHONE OR ELECTRONICALLY ON THE INTERNET BY
FOLLOWING INSTRUCTIONS CONTAINED ON THEIR PROXY CARDS OR ON THE ENCLOSED
VOTING INFORMATION CARD.
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MORGAN STANLEY
MUNICIPAL INCOME OPPORTUNITIES TRUST III

1221 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10020

--------------------
PROXY STATEMENT
--------------------

ANNUAL MEETING OF SHAREHOLDERS

OCTOBER 26, 2005

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Board") of MORGAN STANLEY MUNICIPAL
INCOME OPPORTUNITIES TRUST III ("OIC") (the "Trust"), for use at the Annual
Meeting of Shareholders of the Trust to be held on October 26, 2005 (the
"Meeting"), and at any adjournments thereof. The first mailing of this Proxy
Statement is expected to be made on or about September 22, 2005.

If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meeting, the proxies named therein will vote the shares
("Shares") represented by the proxy in accordance with the instructions marked
thereon. Unmarked proxies submitted by shareholders of the Trust
("Shareholders") will be voted for each of the nominees for election as Trustee.
A proxy may be revoked at any time prior to its exercise by any of the
following: written notice of revocation to the Secretary of the Trust, execution
and delivery of a later dated proxy to the Secretary of the Trust (whether by
mail or, as discussed below, by touchtone telephone or the Internet) (if
returned and received in time to be voted), or attendance and voting at the
Meeting. Attendance at the Meeting will not in and of itself revoke a proxy.

Shareholders of record of the Trust as of the close of business on August
24, 2005, the record date for the determination of Shareholders entitled to
notice of and to vote at the Meeting (the "Record Date"), are entitled to one
vote for each Share held and a fractional vote for a fractional Share. On the
Record Date there were 8,741,496 Shares of beneficial interest of the Trust
outstanding, all with $0.01 par value. No person was known to own as much as 5%
of the outstanding Shares of the Trust on that date. The percentage ownership of
Shares of the Trust changes from time to time depending on purchases and sales
by Shareholders and the total number of Shares outstanding.

The cost of soliciting proxies for the Meeting, consisting principally of
printing and mailing expenses, will be borne by the Trust. The solicitation of
proxies will be by mail, which may be supplemented by solicitation by mail,
telephone or otherwise through Trustees, officers of the Trust or officers and
regular employees of Morgan Stanley Investment Advisors Inc. ("Morgan Stanley
Investment Advisors" or the "Investment Adviser"), Morgan Stanley Trust
("Transfer Agent"), Morgan Stanley Services Company Inc. ("Morgan Stanley
Services" or the "Administrator") and/or Morgan Stanley DW Inc. ("Morgan Stanley
DW"), without special compensation therefor. In addition, the Trust may employ
Computershare Fund Services, Inc. ("Computershare") to make telephone calls to
Shareholders to remind them to vote. The Trust may also employ Computershare as
proxy solicitor if it appears that the required number of votes to achieve a
quorum will not be received. In the event of a solicitation by Computershare,
the Trust would pay the solicitor a project management fee not to exceed $3,000
and the expenses outlined below.

Shareholders will be able to vote their shares by touchtone telephone or by
Internet by following the instructions on the proxy card or on the Voting
Information Card accompanying this Proxy Statement. To vote by touchtone
telephone or by Internet, Shareholders can access the website or call the
toll-free number listed on the proxy card or noted in the enclosed voting
instructions. To vote by touchtone telephone or by Internet, Shareholders will
need the number that appears on the proxy card in the shaded box.

In certain instances, the Transfer Agent and/or Computershare may call
Shareholders to ask if they would be willing to have their votes recorded by
telephone. The telephone voting procedure is designed to authenticate
Shareholders' identities, to allow Shareholders to authorize the voting of their
shares in accordance with their instructions and to confirm that their
instructions have been recorded properly. No recommendation will be made as to
how a Shareholder should vote on any proposal other than to refer to the
recommendations of the Board. The Trust has been advised by counsel that these
procedures are consistent with the requirements of applicable law. Shareholders
voting by telephone in this manner will be asked for their social security
number or other identifying information and will be given an opportunity to
authorize proxies to vote their shares in accordance with their instructions. To
ensure that the Shareholders' instructions have been recorded correctly, they
will receive a confirmation of their instructions in the mail. A special
toll-free number set forth in the confirmation will be available in case the
information contained in the confirmation is incorrect. Although a Shareholder's
vote may be taken by telephone, each Shareholder will receive a copy of this
Proxy Statement and may vote by mail using the enclosed proxy card or by
touchtone telephone or the Internet as set forth above. The last proxy vote
received in time to be voted, whether by proxy card, touchtone telephone or
Internet, will be the vote that is counted and will revoke all previous votes by
the Shareholder. With respect to reminder calls by Computershare, expenses would
be approximately $1.00 per outbound telephone contact. With respect to the
solicitation of a telephone vote by Computershare, approximate additional
expenses range between $3.75 and $6.00 per telephone vote transacted, $2.75 and
$3.25 per outbound or inbound telephone contact and costs relating to obtaining
Shareholders' telephone numbers and providing additional materials upon
Shareholder request, which would be borne by the Trust.

Only one copy of this Proxy Statement will be delivered to multiple
Shareholders sharing an address unless we have received contrary instructions
from one or more of the Shareholders. Upon written or oral request, we will
deliver a separate copy of this Proxy Statement to a Shareholder at a shared
address to which a single copy of this Proxy Statement was delivered. Should any
Shareholder wish to receive a separate Proxy Statement or should Shareholders
sharing an address wish to receive a single Proxy Statement in the future,
please contact (800) 869-NEWS (toll-free).

ELECTION OF TRUSTEES

The number of Trustees has been fixed by the Trustees, pursuant to the
Trust's Declaration of Trust, at nine. There are presently nine Trustees. At the
Meeting, pursuant to the Trust's Declaration of Trust, four nominees (Wayne E.
Hedien, Dr. Manuel H. Johnson, Joseph J. Kearns and Fergus Reid) are standing
for election at this Meeting to serve until the year 2008 Annual Meeting, in
accordance with the Trust's Declaration of Trust, as amended.

Seven of the current nine Trustees (Michael Bozic, Edwin J. Garn, Wayne E.
Hedien, Dr. Manuel H. Johnson, Joseph J. Kearns, Michael E. Nugent and Fergus
Reid) are "Independent Trustees," that is, Trustees who are not "interested
persons" of the Trust, as that term is defined in the Investment Company Act of
1940, as amended (the "1940 Act"). The other two current Trustees, Charles A.
Fiumefreddo and James F. Higgins, are "interested trustees," that is, Trustees
who are "interested persons" (as that term is defined in the 1940 Act) of the
Trust and Morgan Stanley Investment Advisors and thus, are not Independent
Trustees. The nominees for election as Trustees of the Trust have been proposed
by the Trustees now serving or, in the case of the

nominees for positions as Independent Trustees, by the Independent Trustees now
serving. All of the Trustees have previously been elected by the Shareholders
of the Trust.

The nominees of the Board of Trustees for election as Trustee are listed
below. It is the intention of the persons named in the enclosed form of proxy,
unless instructed by proxy to withhold authority to vote for the nominees, to
vote all validly executed proxies for the election of these nominees: Wayne E.
Hedien, Dr. Manuel H. Johnson, Joseph J. Kearns and Fergus Reid. Should any of
the nominees become unable or unwilling to accept nomination or election, the
persons named in the proxy will exercise their voting power in favor of such
person or persons as the Board may recommend or, in the case of an Independent
Trustee nominee, as the Independent Trustees of the Trust may recommend. All of
the nominees have consented to being named in this Proxy Statement and to serve
if elected. The Trust knows no reason why any of said nominees would be unable
or unwilling to accept nomination or election. The election of the nominees
listed above requires the approval of a majority of the shares of the Trust
represented and entitled to vote at the Meeting.

Pursuant to the provisions of the Trust's Declaration of Trust, the
Trustees are divided into three separate classes, each class having a term of
three years. The term of office of one of the three classes will expire each
year.

The Board of Trustees previously has determined that any nominee for
election as Trustee will stand for election as Trustee and serve as Trustee in
one of the three classes of Trustees as follows: Class I-Messrs. Bozic,
Fiumefreddo and Higgins; Class II-Messrs. Hedien, Johnson, Kearns and Reid; and
Class III-Messrs. Garn and Nugent. Each nominee will, if elected, serve a term
of up to approximately three years running for the period assigned to that class
and terminating at the date of the Annual Meeting of Shareholders so designated
by the Board, or any adjournment thereof. As a consequence of this method of
election, the replacement of a majority of the Board could be delayed for up to
two years. In accordance with the above, the Class II Trustees are standing for
election at this Meeting and will, if elected, serve until the year 2008 Annual
Meeting or, in each case, until their successors shall have been elected and
qualified.

The Board of the Trust consists of nine Trustees. These same individuals
also serve as directors or trustees for all of the funds advised by the
Investment Adviser (the "Retail Funds") and certain of the funds advised by
Morgan Stanley Investment Management Inc. and Morgan Stanley AIP GP LP (the
"Institutional Funds"). The table below sets forth the following information as
of December 31, 2004 regarding the nominees for election as Trustee, and each of
the other Trustees (both the Independent Trustees and the Interested Trustees),
as well as the executive officers of the Trust, and each of their age, address,
term of office and length of time served, their principal business occupations
during the past five years, the number of portfolios in the Fund Complex
(defined below) overseen by each Trustee or nominee Trustee and other
directorships, if any, held by the Trustees. The Fund Complex includes all
open-end and closed-end funds (including all of their portfolios) advised by the
Investment Adviser and any funds that have an investment adviser that is an
affiliated person of the Investment Adviser (including, but not limited to,
Morgan Stanley Investment Management Inc.).

INDEPENDENT TRUSTEES

NUMBER OF
PORTFOLIOS IN
FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS OF HELD WITH TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN OTHER DIRECTORSHIPS HELD
INDEPENDENT TRUSTEE THE TRUST SERVED* PAST 5 YEARS** BY TRUSTEE BY TRUSTEE
----------------------------- ------------- -------------- -------------------------------- -------------- -------------------------

Michael Bozic (64) Trustee Since Private investor; Director or 197 Director of various
c/o Kramer Levin April 1994 Trustee of the Retail Funds business organizations.
Naftalis & Frankel LLP (since April 1994) and the
Counsel to the Institutional Funds (since
Independent Trustees July 2003); formerly Vice
1177 Avenue of the Americas Chairman of Kmart Corporation
New York, NY 10036 (December 1998-October 2000),
Chairman and Chief Executive
Officer of Levitz Furniture
Corporation (November
1995-November 1998) and
President and Chief Executive
Officer of Hills Department
Stores (May 1991-July 1995);
formerly variously Chairman,
Chief Executive Officer,
President and Chief Operating
Officer (1987-1991) of the
Sears Merchandise Group of
Sears, Roebuck & Co.

Edwin J. Garn (72) Trustee Since Consultant; Director or 197 Director of Franklin
1031 N. Chartwell Court January 1993 Trustee of the Retail Funds Covey (time management
Salt Lake City, UT 84103 (OIB); Since (since January 1993) and the systems), BMW Bank of
Inception Institutional Funds (since North America, Inc.
(IMS and July 2003); member of the Utah (industrial loan
ICS) Regional Advisory Board of corporation, Escrow Bank
Pacific Corp. (utility USA (industrial loan
company); formerly Managing corporation)), United
Director of Summit Ventures Space Alliance (joint
LLC (lobbying and consulting venture between Lockheed
firm) (2000-2004); United Martin and the Boeing
States Senator (R-Utah) Company) and Nuskin Asia
(1974-1992) and Chairman, Pacific (multilevel
Senate Banking Committee marketing); member of the
(1980-1986), Mayor of Salt board of various civic
Lake City, Utah (1971-1974), and charitable
Astronaut, Space Shuttle organizations.
Discovery (April 12-19, 1985),
and Vice Chairman, Huntsman
Corporation (chemical
company).

Wayne E. Hedien (71) Trustee Since Retired; Director or Trustee 197 Director of The PMI
c/o Kramer Levin September of the Retail Funds (since Group Inc. (private
Naftalis & Frankel LLP 1997 September 1997) and the mortgage insurance);
Counsel to the Institutional Funds (since Trustee and Vice
Independent Trustees July 2003); formerly Chairman of The Field
1177 Avenue of the Americas associated with the Allstate Museum of Natural
New York, NY 10036 Companies (1966-1994), most History; director of
recently as Chairman of The various other business
Allstate Corporation (March and charitable
1993-December 1994) and organizations.
Chairman and Chief Executive
Officer of its wholly-owned
subsidiary, Allstate Insurance
Company (July 1989-December 1994).

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* This is the earliest date the Trustee began serving the Retail Funds. Each
Trustee serves an indefinite term, until his or her successor is elected.
** The dates referenced below indicating commencement of service as
Trustee/Director for the Retail and Institutional Funds reflect the
earliest date the Trustee/Director began serving the Retail or
Institutional Funds, as applicable.

Dr. Manuel H. Johnson (56) Trustee Since July Senior Partner, 197 Director of NVR, Inc.
c/o Johnson Smick 1991 (OIB); Johnson Smick (home construction);
Group Inc. Since International, Inc., Director of KFX Energy;
888 16th Street, N.W. Inception of a consulting firm; Director of RBS
Suite 740 the Fund Chairman of the Greenwich Capital
Washington, D.C. 20006 (IMS and Audit Committee and Holdings (financial
ICS) Director or Trustee holding company).
of the Retail Funds
(since July 1991)
and the
Institutional Funds
(since July 2003);
Co-Chairman and a
founder of the Group
of Seven Council
(G7C), an
international
economic commission;
formerly Vice
Chairman of the
Board of Governors
of the Federal
Reserve System and
Assistant Secretary
of the U.S.
Treasury.

Joseph J. Kearns (63) Trustee Since July President, Kearns & 198 Director of Electro Rent
c/o Kearns & Associates LLC 2003 Associates LLC Corporation (equipment
PMB754 (investment leasing), The Ford Family
23852 Pacific Coast consulting); Deputy Foundation, and the
Highway Chairman of the UCLA Foundation.
Malibu, CA 90265 Audit Committee and
Director or Trustee
of the Retail Funds
(since July 2003)
and the
Institutional Funds
(since August 1994);
previously Chairman
of the Audit
Committee of the
Institutional Funds
(October 2001-July
2003); formerly CFO
of the J. Paul Getty
Trust.

Michael E. Nugent (69) Trustee Since July General Partner of 197 Director of various
c/o Triumph Capital, L.P. 1991 (OIB); Triumph Capital, business organizations.
445 Park Avenue Since L.P., a private
New York, NY 10022 Inception of investment
the Fund partnership;
(IMS and Chairman of the
ICS) Insurance Committee
and Director or
Trustee of the
Retail Funds (since
July 1991) and the
Institutional Funds
(since July 2001);
formerly Vice
President, Bankers
Trust Company and BT
Capital Corporation
(1984-1988).

Fergus Reid (73) Trustee Since Chairman of Lumelite 198 Trustee and Director of
c/o Lumelite Plastics July 2003 Plastics certain investment
Corporation Corporation; companies in the
85 Charles Colman Blvd. Chairman of the JPMorgan Funds complex
Pawling, NY 12564 Governance Committee managed by J.P. Morgan
and Director or Investment Management
Trustee of the Inc.
Retail Funds (since
July 2003) and the
Institutional Funds
(since June 1992).

INTERESTED TRUSTEES

The Trustees who are affiliated with the Investment Adviser or affiliates
of the Investment Adviser (as set forth below) and executive officers of the
Trust, their age, address, term of office and length of time served, their
principal business occupations during the past five years, the number of
portfolios in the Fund Complex overseen by each Management Trustee (as of
December 31, 2004) and the other directorships, if any, held by the Trustee, are
shown below.

NUMBER OF
PORTFOLIOS IN
FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS OF HELD WITH TIME PRINCIPAL OCCUPATION(S) DURING OVERSEEN OTHER DIRECTORSHIPS HELD
MANAGEMENT TRUSTEE THE TRUST SERVED* PAST 5 YEARS** BY TRUSTEE BY TRUSTEE
------------------------------ ------------- ------------- --------------------------------- -------------- ------------------------

Charles A. Fiumefreddo (72) Chairman of Since July Chairman and Director or Trustee 197 None.
c/o Morgan Stanley Trust the Board 1991 (OIB); of the Retail Funds (since July
Harborside Financial Center, and Trustee Since 1991) and the Institutional Funds
Plaza Two, Inception (since July 2003); formerly Chief
Jersey City, NJ 07311 (IMS and Executive Officer of the Retail
ICS) Funds (until September 2002).

James F. Higgins (57) Trustee Since June Director or Trustee of the Retail 197 Director of AXA
c/o Morgan Stanley Trust 2000 Funds (since June 2000) and the Financial, Inc. and The
Harborside Financial Center, Institutional Funds (since July Equitable Life
Plaza Two, 2003); Senior Advisor of Morgan Assurance Society of
Jersey City, NJ 07311 Stanley (since August 2000); the United States
Director of the Distributor and (financial services).
Dean Witter Realty Inc.;
previously President and Chief
Operating Officer of the Private
Client Group of Morgan Stanley
(May 1999-August 2000), and
President and Chief Operating
Officer of Individual Securities
of Morgan Stanley (February
1997-May 1999).

OFFICERS OF THE TRUST

POSITION(S)
NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF
EXECUTIVE OFFICER THE TRUST TIME SERVED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS**
----------------------------- --------------------- --------------------- ----------------------------------------------------------

Ronald E. Robison (66) President; Executive Since April 2003 President of the Morgan Stanley Institutional and
1221 Avenue of the Americas Vice President and Retail Funds (since September 2005); Principal Executive
New York, NY Principal Executive Officer of Funds in the Fund complex (since May 2003);
Officer Managing Director of Morgan Stanley & Co. Incorporated,
Morgan Stanley Investment Management Inc. and Morgan
Stanley; Managing Director and Director of Morgan
Stanley Investment Management Inc. and Morgan
Stanley Distribution, Inc.; Managing Director, Chief
Administrative Officer and Director of the Investment
Adviser and the Administrator; Director of the Transfer
Agent; Managing Director and Director of the Distributor;
Executive Vice President and Principal Executive Officer
of the Institutional Funds (since July 2003) and the
Retail Funds (since April 2003); Director of Morgan
Stanley SICAV (since May 2004); Executive Vice President
and Principal Executive Officer of the Van Kampen Funds;
previously President and Director of the Institutional
Funds (March 2001-July 2003) and Chief Global Operations
Officer of Morgan Stanley Investment Management Inc.

Joseph J. McAlinden (62) Vice President Since July 1995 Managing Director and Chief Investment Officer of the
1221 Avenue of the Americas Investment Adviser and Morgan Stanley Investment
New York, NY 10020 Management Inc.; Chief Investment Officer of the Van
Kampen Funds; Vice President of the Institutional Funds
(since July 2003) and the Retail Funds (since July 1995).

Barry Fink (50) Vice President Since February 1997 General Counsel (since May 2000) and Managing Director
1221 Avenue of the Americas (since December 2000) of Morgan Stanley Investment
New York, NY 10020 Management; Managing Director (since December 2000),
Secretary (since February 1997) and Director (since
July 1998) of the Investment Adviser and the
Administrator; Assistant Secretary of Morgan Stanley DW;
Vice President of the Institutional Funds (since July
2003); Managing Director, Secretary and Director of the
Distributor; previously Secretary (February 1997-April
2004) of the Retail Funds and General Counsel (February
1997-April 2004) of the Retail Funds; Vice President and
Assistant General Counsel of the Investment Adviser and
the Administrator (February 1997-December 2001).

----------
* This is the earliest date the Officer began serving the Retail Funds. Each
Officer serves an indefinite term, until his or her successor is elected.
** The dates referenced below indicating commencement of service as an Officer
for the Retail and Institutional Funds reflect the earliest date the
Officer began serving the Retail or Institutional Funds, as applicable.

POSITION(S)
NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF
EXECUTIVE OFFICER THE TRUST TIME SERVED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS**
------------------------------ ----------------- ------------------------- ---------------------------------------------------------

Amy R. Doberman (43) Vice President Since July 2004 Managing Director and General Counsel, U.S. Investment
1221 Avenue of the Americas Management; Managing Director of Morgan Stanley
New York, NY 10020 Investment Management Inc. and the Investment Adviser,
Vice President of the Institutional and Retail Funds
(since July 2004); Vice President of the Van Kampen Funds
(since August 2004); previously, Managing Director and
General Counsel -- Americas, UBS Global Asset Management
(July 2000-July 2004) and General Counsel, Aeltus
Investment Management, Inc. (January 1997-July 2000).

Carsten Otto (41) Chief Since October Executive Director and U.S. Director of Compliance for
1221 Avenue of the Americas Compliance 2004 Morgan Stanley Investment Management (since October
New York, NY 10020 Officer 2004); Executive Director of the Investment Adviser and
Morgan Stanley Investment Management Inc.; formerly
Assistant Secretary and Assistant General Counsel of the
Morgan Stanley Retail Funds.

Stefanie V. Chang (38) Vice President Since July 2003 Executive Director of Morgan Stanley & Co. Incorporated,
1221 Avenue of the Americas Morgan Stanley Investment Management Inc. and the
New York, NY 10020 Investment Adviser; Vice President of the Institutional
Funds (since December 1997) and the Retail Funds (since
July 2003); formerly practiced law with the New York law
firm of Rogers & Wells (now Clifford Chance US LLP).

Francis J. Smith (40) Treasurer and Treasurer since Executive Director of the Investment Adviser and the
c/o Morgan Stanley Trust Chief Financial July 2003 and Chief Administrator (since December 2001); previously, Vice
Harborside Financial Center, Officer Financial Officer since President of the Retail Funds (September 2002-July 2003);
Plaza Two, September 2002 Vice President of the Investment Adviser and the
Jersey City, NJ 07311 Administrator (August 2000-November 2001) and Senior
Manager at PricewaterhouseCoopers LLP
(January 1998-August 2000).

Thomas F. Caloia (59) Vice President Since July 2003 Executive Director (since December 2002) and Assistant
c/o Morgan Stanley Trust Treasurer of the Investment Adviser, the Distributor and
Harborside Financial Center, the Administrator; previously Treasurer of the Retail
Plaza Two, Funds (April 1989-July 2003); formerly First Vice
Jersey City, NJ 07311 President of the Investment Adviser, the Distributor and
the Administrator.

Mary E. Mullin (38) Secretary Since July 2003 Executive Director of Morgan Stanley & Co. Incorporated,
1221 Avenue of the Americas Morgan Stanley Investment Management Inc. and the
New York, NY 10020 Investment Adviser; Secretary of the Institutional Funds
(since June 1999) and the Retail Funds (since July 2003);
formerly practiced law with the New York law firms of
McDermott, Will & Emery and Skadden, Arps, Slate,
Meagher & Flom LLP.

For each Trustee, the dollar range of equity securities beneficially owned
by the Trustee in the Trust and in the Family of Investment Companies (Family of
Investment Companies includes all of the registered investment companies advised
by the Investment Adviser, Morgan Stanley Investment Management Inc. and Morgan
Stanley AIP GP LP) as of December 31, 2004 is shown below.

AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN
ALL REGISTERED INVESTMENT COMPANIES OVERSEEN
DOLLAR RANGE OF EQUITY SECURITIES IN THE TRUST BY TRUSTEE IN FAMILY OF INVESTMENT
NAME OF TRUSTEE (AS OF DECEMBER 31, 2004) COMPANIES (AS OF DECEMBER 31, 2004)
------------------------ ------------------------------------------------ -----------------------------------------------

INDEPENDENT:
Michael Bozic None over $100,000
Edwin J. Garn None over $100,000
Wayne E. Hedien None over $100,000
Dr. Manuel H. Johnson None over $100,000
Joseph J. Kearns(1) None over $100,000
Michael E. Nugent None over $100,000
Fergus Reid(1) None over $100,000
INTERESTED:
Charles A. Fiumefreddo None over $100,000
James F. Higgins None over $100,000

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(1) Includes the total amount of compensation deferred by the Trustee at his
election pursuant to a deferred compensation plan. Such deferred
compensation is placed in a deferral account and deemed to be invested in
one or more of the Retail Funds or Institutional Funds (or portfolio
thereof) that are offered as investment options under the plan. As of
December 31, 2004, the value (including interest) of the deferral accounts
for Messrs. Kearns and Reid was $584,856 and $667,002, respectively,
pursuant to the deferred compensation plan.

As to each Independent Trustee and his immediate family members, no person
owned beneficially or of record securities in an investment adviser or principal
underwriter of the Trust, or a person (other than a registered investment
company) directly or indirectly controlling, controlled by or under common
control with an investment adviser or principal underwriter of the Trust.

THE INDEPENDENT TRUSTEES AND THE COMMITTEES

Law and regulation establish both general guidelines and specific duties
for the Independent Trustees. Seven Trustees have no affiliation or business
connection with the Investment Adviser or any of its affiliated persons and do
not own stock or other securities issued by the Investment Adviser's parent
company, Morgan Stanley. These are the "disinterested" or "independent"
Trustees. The Retail Funds seek as Independent Trustees individuals of
distinction and experience in business and finance, government service or
academia; these are people whose advice and counsel are in demand by others and
for whom there is often competition. To accept a position on the Retail Funds'
Boards, such individuals may reject other attractive assignments because the
Retail Funds make substantial demands on their time. All of the Independent
Trustees serve as members of the Audit Committee. In addition, three Trustees,
including two Independent Trustees, serve as members of the Insurance Committee,
and three Independent Trustees serve as members of the Governance Committee.

The Independent Trustees are charged with recommending to the full Board
approval of management, advisory and administration contracts, and distribution
and underwriting agreements; continually reviewing Fund performance; checking on
the pricing of portfolio securities, brokerage commissions, transfer agent costs
and performance, and trading among funds in the same complex; and approving
fidelity bond and related insurance coverage and allocations, as well as other
matters that arise from time to time.

The Board of Trustees of the Trust has a separately-designated standing
Audit Committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended. The Audit Committee is charged with
recommending to the full Board the engagement or discharge of the Trust's
independent registered public accounting firm; directing investigations into
matters within the scope of the independent registered public accounting firms'
duties, including the power to retain outside specialists; reviewing with the
independent registered public accounting firm the audit plan and results of the
auditing engagement; approving professional services provided by the independent
registered public accounting firm

and other accounting firms prior to the performance of such services; reviewing
the independence of the independent registered public accounting firm;
considering the range of audit and non-audit fees; reviewing the adequacy of
the Trust's system of internal controls; and preparing and submitting Committee
meeting minutes to the full Board.

The members of the Audit Committee of the Trust are currently Michael
Bozic, Edwin J. Garn, Wayne E. Hedien, Dr. Manuel H. Johnson, Joseph J. Kearns,
Michael E. Nugent and Fergus Reid. None of the members of the Trust's Audit
Committee is an "interested person," as defined under the 1940 Act (with such
disinterested Trustees being "Independent Trustees" or individually,
"Independent Trustee"). Each Independent Trustee is also "independent" from the
Trust under the listing standards of the New York Stock Exchange, Inc. (NYSE).
The current Chairman of the Audit Committee of the Trust is Dr. Manuel H.
Johnson. The current Deputy Chairman of the Audit Committee of the Trust is Mr.
Joseph J. Kearns. The Board of Trustees for the Trust has adopted a formal
written charter for the Audit Committee which sets forth the Audit Committee's
responsibilities. A copy of the Audit Committee Charter is attached to this
Proxy Statement as Appendix A.

The Board of Trustees of the Trust also has a Governance Committee. The
Governance Committee identifies individuals qualified to serve as Independent
Trustees on the Trust's Board and on committees of such Board and recommends
such qualified individuals for nomination by the Trust's Independent Trustees as
candidates for election as Independent Trustees, advises the Trust's Board with
respect to Board composition, procedures and committees, develops and recommends
to the Trust's Board a set of corporate governance principles applicable to the
Trust, monitors and makes recommendations on corporate governance matters and
policies and procedures of the Trust's Board of Trustees and any Board
committees and oversees periodic evaluations of the Trust's Board and its
committees. The members of the Governance Committee of the Trust are currently
Michael Bozic, Edwin J. Garn and Fergus Reid, each of whom is an Independent
Trustee. The current Chairman of each Governance Committee is Fergus Reid. The
Board of Trustees for the Trust has adopted a formal written charter for the
Governance Committee which sets forth the Governance Committee's
responsibilities. A copy of the Governance Committee Charter is attached to this
Proxy Statement as Appendix B.

The Trust does not have a separate nominating committee. While the Trust's
Governance Committee recommends qualified candidates for nominations as
Independent Trustees, the Board of Trustees of the Trust believes that the task
of nominating prospective Independent Trustees is important enough to require
the participation of all current Independent Trustees, rather than a separate
committee consisting of only certain Independent Trustees. Accordingly, each
current Independent Trustee (Michael Bozic, Edwin J. Garn, Wayne E. Hedien, Dr.
Manuel H. Johnson, Joseph J. Kearns, Michael E. Nugent and Fergus Reid)
participates in the election and nomination of candidates for election as
Independent Trustees for the Trust for which the Independent Trustee serves.
Persons recommended by the Trust's Governance Committee as candidates for
nomination as Independent Trustees shall possess such knowledge, experience,
skills, expertise and diversity so as to enhance the Board's ability to manage
and direct the affairs and business of the Trust, including, when applicable, to
enhance the ability of committees of the Board to fulfill their duties and/or to
satisfy any independence requirements imposed by law, regulation or any listing
requirements of the NYSE. While the Independent Trustees of the Trust expect to
be able to continue to identify from their own resources an ample number of
qualified candidates for the Trust's Board as they deem appropriate, they will
consider nominations from Shareholders to the Board. Nominations from
Shareholders should be in writing and sent to the Independent Trustees as
described below under the caption "Shareholder Communications."

Finally, the Board has formed an Insurance Committee to review and monitor
the insurance coverage maintained by the Trust. The Insurance Committee
currently consists of Messrs. Nugent, Fiumefreddo and Hedien. Messrs. Nugent and
Hedien are Independent Trustees. The current Chairman of the Insurance Committee
is Mr. Michael E. Nugent.

The following chart sets forth the number of meetings of the Board, the
Independent Trustees, the Audit Committee, the Insurance Committee and the
Governance Committee of the Trust during its most recent fiscal year. For the
2005 fiscal year, each Trustee attended at least seventy-five percent of the
aggregate number of meetings of the Board and any committee on which he served
held during the time such Trustee was a member of the Board.

NUMBER OF BOARD AND COMMITTEE MEETINGS HELD DURING LAST FISCAL YEAR

BOARD OF INDEPENDENT AUDIT INSURANCE GOVERNANCE
FISCAL TRUSTEES TRUSTEES COMMITTEE COMMITTEE COMMITTEE
NAME OF TRUST YEAR-END MEETINGS MEETINGS MEETINGS MEETINGS MEETINGS
--------------- ---------- ---------- ------------- ----------- ----------- -----------

OIC ........... 03/31/05 22 4 10 7 3

For annual or special meetings, Trustees may but are not required to attend
the meeting; and for the Trust's last annual shareholder meeting, no Trustees
attended the meeting.

AUDIT COMMITTEE REPORT

At the meeting held on October 28, 2004, the Board of Trustees of the
Trust, including a majority of the Trustees who are not "interested persons" of
the Trust, as defined under the 1940 Act, acting on the recommendation of the
Audit Committee of the Trust, selected Deloitte & Touche LLP to act as the
independent registered public accounting firm for the Trust for the fiscal year
ended March 31, 2005 for the Trust.

The Audit Committee has reviewed and discussed the financial statements of
the Trust with management as well as with Deloitte & Touche LLP, the independent
registered public accounting firm for the Trust. In the course of its
discussions, the Audit Committee also discussed with Deloitte & Touche LLP any
relevant matters required to be discussed under Statement on Auditing Standards
No. 61. Based on this review, the Audit Committee recommended to the Board of
Trustees that the Trust's audited financial statements be included in the
Trust's Annual Report to Shareholders for the most recent fiscal year for filing
with the Securities and Exchange Commission. The Audit Committee has received
the written disclosures and the letter from Deloitte & Touche LLP required under
Independence Standards Board No. 1 and has discussed with the independent
registered public accounting firm their independence.

The Audit Committee

Dr. Manuel H. Johnson (Chairman)
Joseph J. Kearns (Deputy
Chairman)
Michael Bozic
Edwin J. Garn
Wayne E. Hedien
Michael E. Nugent
Fergus Reid

Representatives from Deloitte & Touche LLP are expected to be present at
the Meeting. Shareholders will have the opportunity to make a statement if they
desire to do so and the representatives from Deloitte & Touche LLP are expected
to be available to respond to appropriate questions.

ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR THE RETAIL
FUNDS AND INSTITUTIONAL FUNDS

The Independent Trustees and the Trust's management believe that having the
same Independent Trustees for each of the Retail Funds and Institutional Funds
avoids the duplication of effort that would arise from having different groups
of individuals serving as Independent Trustees for each of the funds or even of
sub-groups of funds. They believe that having the same individuals serve as
Independent Trustees of all the Retail Funds and Institutional Funds tends to
increase their knowledge and expertise regarding matters which affect the Fund
complex generally and enhances their ability to negotiate on behalf of each fund
with the funds' service providers. This arrangement also precludes the
possibility of separate groups of Independent Trustees arriving at conflicting
decisions regarding operations and management of the funds and avoids the cost
and confusion that would likely ensue. Finally, having the same Independent
Trustees serve on all fund boards enhances the ability of each fund to obtain,
at modest cost to each separate fund, the services of Independent Trustees of
the caliber, experience and business acumen of the individuals who serve as
Independent Trustees of the Retail Funds and Institutional Funds.

SHAREHOLDER COMMUNICATIONS. Shareholders may send communications to the
Trust's Board of Trustees. Shareholders should send communications intended for
the Trust's Board by addressing the communications directly to that Board (or
individual Board members) and/or otherwise clearly indicating in the salutation
that the communication is for the Board (or individual Board members) and by
sending the communication to either the Trust's office or directly to such Board
member(s) at the address specified for each Trustee previously noted. Other
shareholder communications received by the Trust not directly addressed and sent
to the Boards will be reviewed and generally responded to by management, and
will be forwarded to the Board only at the management's discretion based on the
matters contained therein.

SHARE OWNERSHIP BY TRUSTEES

The Trustees have adopted a policy pursuant to which each Trustee and/or
his or her spouse is required to invest at least $100,000 in any of the Funds in
the Morgan Stanley Retail and Institutional Funds on whose boards the Trustee
serves. In addition, the policy contemplates that the Trustees will, over time,
increase their aggregate investment in the funds above the $100,000 minimum
requirement. The Trustees may allocate their investments among specific funds in
any manner they determine is appropriate based on their individual investment
objectives. Any future Trustee will be given a one year period following his or
her election within which to comply with the foregoing. As of the date of this
Proxy Statement, each Trustee is in compliance with the policy. As of June 30,
2005, the total value of the investments by the Trustees and/or their spouses in
shares of the Morgan Stanley Funds was approximately $32.4 million. This amount
includes compensation deferred by the Trustee at his election pursuant to a
deferred compensation plan. Such deferred compensation is placed in a deferral
account and deemed to be invested in one or more of the Retail Funds or
Institutional Funds (or portfolio thereof) that are offered as investment
options under the plan.

As of the Record Date for this Meeting, the aggregate number of shares of
beneficial interest of the Trust owned by the Trust's officers and Trustees as
a group was less than one percent of the Trust's shares of beneficial interest
outstanding.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires that the
Trust's executive officers and Trustees, and beneficial owners of more than 10%
of its shares, make certain filings on a timely basis under Section 16(a) of the
Exchange Act. Based solely on the Trust's review of copies of such reports of
ownership

furnished to the Trust, the Trust believes that during the past fiscal year all
of its officers, Trustees and greater than 10% beneficial holders complied with
all applicable filing requirements.

COMPENSATION OF INDEPENDENT TRUSTEES

Each Independent Trustee receives an annual retainer fee of $168,000 for
serving the Retail Funds and Institutional Funds. In addition, each Independent
Trustee receives $2,000 for attending each of the four quarterly board meetings
and two performance meetings that occur each year, so that an Independent
Trustee who attended all six meetings would receive total compensation of
$180,000 for serving the Trust. The Chairman of the Audit Committee receives an
additional annual retainer fee of $60,000. Other Committee Chairmen and the
Deputy Chairman of the Audit Committee receive an additional annual retainer fee
of $30,000. The aggregate compensation paid to each Independent Trustee is paid
by the Retail Funds and Institutional Funds and is allocated on a pro rata basis
among each of the operational funds/portfolios of the Retail Funds and
Institutional Funds based on the relative net assets of each of the
funds/portfolios. Mr. Fiumefreddo receives an annual fee for his services as
Chairman of the Board of the Retail Funds and the Institutional Funds and for
administrative services provided to the Board of Trustees.

The Trust also reimburses the Trustees for travel and other out-of-pocket
expenses incurred by them in connection with attending such meetings. Trustees
of the Trust who are or have been employed by the Investment Adviser or an
affiliated company receive no compensation or expense reimbursement from the
Trust for their services as Trustee.

Effective April 1, 2004, the Trust began a Deferred Compensation Plan (the
"DC 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
throughout the year. 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 Retail Funds or Institutional Funds (or portfolios thereof) that are
offered as investment options under the DC Plan. At the Trustee's election,
distributions are either in one lump sum payment, or in the form of equal annual
installments over a period of five years. The rights of an eligible Trustee and
the beneficiaries to the amounts held under the DC Plan are unsecured and such
amounts are subject to the claims of the creditors of the Trust.

Prior to April 1, 2004, the Institutional Funds maintained a similar
Deferred Compensation Plan (the "Prior DC Plan"), which also allowed each
Independent Trustee to defer payment of all, or a portion, of the fees he or she
received for serving on the Board of Trustees throughout the year. The DC Plan
amends and supersedes the Prior DC Plan and all amounts payable under the Prior
DC Plan are now subject to the terms of the DC Plan (except for amounts due to
be paid during the calendar year 2004 which will remain subject to the terms of
the Prior DC Plan).

The following table shows aggregate compensation payable to the Trust's
Trustees from the Trust for the fiscal year ended March 31, 2005 and the
aggregate compensation payable to the Trust's Trustees by the Fund Complex
(which includes all of the Retail and Institutional Funds) for the calendar year
ended December 31, 2004.

COMPENSATION

NUMBER OF PORTFOLIOS
TOTAL IN THE FUND COMPLEX TOTAL COMPENSATION
COMPENSATION FROM FROM WHICH THE TRUSTEE FROM THE FUND
NAME OF INDEPENDENT TRUSTEE THE TRUST RECEIVED COMPENSATION(5) COMPLEX(5)
--------------------------- --------- ------------------------ ----------

Michael Bozic(1)(3) ............... 97 197 $178,000
Edwin J. Garn(1)(3) ............... 97 197 178,000
Wayne E. Hedien(1)(2) ............. 97 197 178,000
Dr. Manuel H. Johnson(1) .......... 131 197 238,000
Joseph J. Kearns(1)(4) ............ 120 198 211,000
Michael E. Nugent(1)(2) ........... 114 197 208,000
Fergus Reid(1)(3) ................. 114 198 213,000

NAME OF INTERESTED TRUSTEE
--------------------------
Charles A. Fiumefreddo(2) ......... 207 197 360,000
James F. Higgins .................. 0 197 0

----------
(1) Member of the Audit Committee. Dr. Johnson is the Chairman of the Audit
Committee and Mr. Kearns is the Deputy Chairman of the Audit Committee.
(2) Member of the Insurance Committee. Mr. Nugent is the Chairman of the
Insurance Committee.
(3) Member of the Governance Committee. Mr. Reid is the Chairman of the
Governance Committee.
(4) Includes amounts deferred at the election of the Trustee under the DC Plan.
(5) Because the funds in the Fund Complex have different fiscal year ends, the
amounts shown in these columns are presented on a calendar year basis.

Prior to December 31, 2003, 49 of the Retail Funds (the "Adopting Funds"),
including the Trust, had adopted a retirement program under which an Independent
Trustee who retired after serving for at least five years as an Independent
Trustee of any such fund (an "Eligible Trustee") would have been entitled to
retirement payments based on factors such as length of service, upon reaching
the eligible retirement age. On December 31, 2004, the amount of accrued
retirement benefits for each Eligible Trustee was frozen, and will be payable,
together with a return of 8% per annum, at or following each such Eligible
Trustee's retirement as shown in the table below.

The following tables illustrate the retirement benefits accrued to the
Trust's Independent Trustees for the fiscal year ended March 31, 2005 and by the
Adopting Funds for the calendar year ended December 31, 2004, and the estimated
retirement benefits for the Independent Trustees, to commence upon their
retirement, from the Trust as of March 31, 2005 and from the Adopting Funds as
of December 31, 2004. Messrs. Kearns and Reid did not participate in the
retirement program.

ESTIMATED ANNUAL
RETIREMENT BENEFITS BENEFITS
ACCRUED AS EXPENSES UPON RETIREMENT(1)
--------------------- --------------------
BY ALL FROM FROM ALL
BY THE ADOPTING THE ADOPTING
NAME OF INDEPENDENT TRUSTEE TRUST FUNDS TRUST FUNDS
--------------------------- -------- ---------- -------- ---------

Michael Bozic ................. $422 $19,437 $ 997 $46,871
Edwin J. Garn ................. 401 28,779 984 46,917
Wayne E. Hedien ............... 819 37,860 844 40,020
Dr. Manuel H. Johnson ......... 410 19,701 1,451 68,630
Michael E. Nugent ............. 739 35,471 1,299 61,377

------------
(1) Total compensation accrued under the retirement plan, together with a
return of 8% per annum, will be paid annually commencing upon retirement
and continuing for the remainder of the Trustee's life.

In addition, Messrs. Bozic, Garn, Hedien, Johnson and Nugent received a
lump sum benefit from the liquidation of a fund in the retirement plan in 2004
in the amount of $3,639, $6,935, $5,361, $2,915 and $6,951, respectively.

THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION FOR EACH OF THE TRUSTEES NOMINATED FOR ELECTION.

THE INVESTMENT ADVISER

Morgan Stanley Investment Advisors Inc. is the Trust's investment adviser
pursuant to an investment advisory agreement. Morgan Stanley Investment Advisors
maintains its offices at 1221 Avenue of the Americas, New York, New York 10020.
Morgan Stanley Investment Advisors is a wholly-owned subsidiary of Morgan
Stanley, a preeminent global financial services firm that maintains leading
market positions in each of its three primary businesses -- securities, asset
management and credit services.

The Principal Executive Officers of Morgan Stanley Investment Advisors are
Owen D. Thomas, President and Chief Executive Officer, Ronald E. Robison,
Managing Director, Chief Administrative Officer and Director, and Barry Fink,
Managing Director, Secretary and Director. Mr. Thomas is currently a Managing
Director of Morgan Stanley. The principal occupations of Messrs. Robison and
Fink are described under the section "Election of Trustees." The business
address of the Executive Officer and other Directors is 1221 Avenue of the
Americas, New York, New York 10020.

Morgan Stanley Services Company Inc. (the "Administrator"), a wholly owned
subsidiary of the Investment Adviser, serves as the Administrator of the Trust
pursuant to an administration agreement. The Investment Adviser and the
Administrator serve in various investment management, advisory, management and
administrative capacities to investment companies and pension plans and other
institutional and individual investors. The address of the Administrator is that
of the Investment Adviser set forth above.

Morgan Stanley has its offices at 1585 Broadway, New York, New York 10036.
Morgan Stanley is a full service securities firm engaged in securities trading
and brokerage activities, as well as providing investment banking, research and
analysis, financing and financial advisory services. There are various lawsuits
pending against Morgan Stanley involving material amounts which, in the opinion
of its management, will be resolved with no material effect on the consolidated
financial position of the company.

FEES PAID TO THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

AUDIT FEES

The aggregate fees for professional services billed by Deloitte & Touche
LLP in connection with the annual audit and review of financial statements of
the Trust for its fiscal years ended March 31, 2004 and March 31, 2005, were
approximately $27,830 and $29,002, respectively.

AUDIT-RELATED FEES

The aggregate audit-related fees billed by Deloitte & Touche LLP related to
the annual audit of the Trust's financial statements for the fiscal years ended
March 31, 2004 and 2005, were approximately $684 and $452, respectively, for the
translation of financial statements for data verification and agreed-upon
procedures related to asset securitizations and agreed-upon procedures
engagements.

TAX FEES

The aggregate fees billed by Deloitte & Touche LLP in connection with tax
compliance, tax advice and tax planning for the Trust for the fiscal years ended
March 31, 2004 and 2005, were approximately $4,134 and $4,585, respectively,
which represent fees paid for the review of the Federal, state and local tax
returns for the Trust.

ALL OTHER FEES

There were no fees billed by Deloitte & Touche LLP for any other products
and services not set forth above for the Trust for the fiscal years ended March
31, 2004 and 2005.

AUDIT COMMITTEE PRE-APPROVAL

The Trust's Audit Committee's policy is to review and pre-approve all
auditing and non-auditing services to be provided to the Trust by the Trust's
independent registered public accounting firm. The Audit Committee Audit and
Non-Audit Pre-Approval Policy and Procedures requires the Trust's Audit
Committee to either generally pre-approve certain services without consideration
of specific case-by-case services, or requires the specific pre-approval of
services by the Audit Committee or its delegate. Under the Policy, unless a type
of service has received general pre-approval, it will require specific
pre-approval by the Audit Committee if it is to be provided by the independent
registered public accounting firm. Any services that are generally pre-approved
may require specific pre-approval by the Audit Committee if the services exceed
pre-approved cost levels or budgeted amounts. All of the audit and the tax
services described above for which Deloitte & Touche LLP billed the Trust's fees
for the fiscal year ended March 31, 2005 were pre-approved by the Audit
Committee.

AGGREGATE NON-AUDIT FEES PAID BY THE INVESTMENT ADVISER AND AFFILIATED ENTITIES

The aggregate fees billed for professional services rendered by Deloitte &
Touche LLP for all other services provided to the Investment Adviser and to any
entities controlling, controlled by or under common control with the Investment
Adviser for the fiscal years ended March 31, 2004 and 2005 amounted to
approximately $4 million and $5.5 million, respectively. Such services for the
2004 and 2005 fiscal years included: (i) audit-related fees of approximately
$3.4 million and $3.2 million, respectively, for the issuance of

a report under Statement on Accounting Standards No. 70 titled "Reports on the
Processing of Transactions by Service Organizations" and (ii) all other fees of
approximately $652,000 and $24,000, respectively, related to services such as
performance attestation, operational control reviews and the provision of
educational seminars.

The Audit Committee of the Trust has considered whether the provision of
non-audit services and the provision of services to affiliates of the Investment
Adviser is compatible with maintaining the independence of Deloitte & Touche
LLP.

ADDITIONAL INFORMATION

Abstentions and, if applicable, broker "non-votes" will not count as votes
in favor of any proposal, and broker "non-votes" will not be deemed to be
present at the Meeting for purposes of determining whether a particular proposal
to be voted upon has been approved. Broker "non-votes" are shares held in street
name for which the broker indicates that instructions have not been received
from the beneficial owners or other persons entitled to vote and for which the
broker does not have discretionary voting authority.

SHAREHOLDER PROPOSALS

Proposals of security holders intended to be presented at the next Annual
Meeting of Shareholders must be received no later than June 25, 2006, for
inclusion in the proxy statement and proxy for that meeting. The mere submission
of a proposal does not guarantee its inclusion in the proxy materials or its
presentation at the meeting. Certain rules under the federal securities laws
must be met.

REPORTS TO SHAREHOLDERS

THE TRUST'S MOST RECENT ANNUAL REPORT FOR ITS FISCAL YEAR ENDED MARCH 31,
2005, HAS BEEN PREVIOUSLY SENT TO SHAREHOLDERS AND IS AVAILABLE WITHOUT CHARGE
UPON REQUEST FROM NINA WESSEL AT MORGAN STANLEY TRUST, HARBORSIDE FINANCIAL
CENTER, PLAZA TWO, 2ND FLOOR, JERSEY CITY, NEW JERSEY 07311 (TELEPHONE
1-800-869-NEWS) (TOLL-FREE).

INTEREST OF CERTAIN PERSONS

Morgan Stanley, Morgan Stanley Investment Advisors, Morgan Stanley DW,
Morgan Stanley Services and certain of their respective Directors, Officers, and
employees, including persons who are Trustees or Officers of the Trust, may be
deemed to have an interest in certain of the proposals described in this Proxy
Statement to the extent that certain of such companies and their affiliates have
contractual and other arrangements, described elsewhere in this proxy statement,
pursuant to which they are paid fees by the Trust, and certain of those
individuals are compensated for performing services relating to the Trust and
may also own shares of Morgan Stanley. Such companies and persons may thus be
deemed to derive benefits from the approvals by Shareholders of such proposals.

OTHER BUSINESS

The management of the Trust knows of no other matters which may be
presented at the Meeting. However, if any matters not now known properly come
before the Meeting, it is intended that the persons named in the

attached form of proxy, or their substitutes, to vote all shares that they are
entitled to vote on any such matter, utilizing such proxy in accordance with

By Order of the Board of Trustees

MARY E. MULLIN
Secretary

(This page has been left blank intentionally.)

APPENDIX A

CHARTER OF THE
AUDIT COMMITTEE
OF THE
MORGAN STANLEY FUNDS

The Board of Directors/Trustees (the "Board") of each fund advised or
managed by Morgan Stanley Investment Advisors Inc. or Morgan Stanley Services
Company Inc. (each, a "Fund," collectively, the "Funds") has adopted and
approved this charter for the audit committee of each Fund (the "Audit
Committee").

1. Structure and Membership Requirements:

1.01 The Audit Committee shall consist of at least three "independent"
directors/trustees. "Independent" shall have the meaning ascribed
to it in New York Stock Exchange Listed Company Standard
303.01(2) and (3).

1.02 Each member of the Audit Committee shall not be an "interested
person" of the Funds, as that term is defined in Section 2(a)(19)
of the Investment Company Act of 1940.

1.03 Each member of the Audit Committee shall be "financially
literate," as such term is interpreted by the Fund's Board in its
business judgment, or must become financially literate within a
reasonable period of time after his or her appointment to the
Audit Committee.

1.04 At least one member of the Audit Committee must have accounting
or related financial management expertise, as such qualification
is interpreted by the Fund's Board in its business judgment.

2. Meetings:

2.01 The Audit Committee shall meet at least twice each calendar year.

3. Duties and Powers:

3.01 Each Fund's outside auditor is ultimately accountable to the
Audit Committee and to the Board. The Audit Committee, subject to
the Board's approval and oversight, has the authority and
responsibility, to select, evaluate and, where appropriate,
replace the outside auditor. To the extent required by law, this
includes nominating the selected outside auditor to be considered
for approval or ratification by shareholders at their next annual
meeting.

3.02 The Audit Committee shall approve the scope of professional
services to be provided to the Funds by the outside auditor.

3.03 The Audit Committee shall review with the outside auditor the
audit plan and results of the auditing engagement.

3.04 The Audit Committee shall review the independence of the outside
auditor, including:

(a) ensuring that the outside auditor submits to the Audit
Committee, at least annually, a letter delineating all
relationships between the auditor and the Funds;

(b) engaging in a dialogue with the outside auditor with respect
to any disclosed relationships or services that may impact the
objectivity and independence of the outside auditor; and

A-1

(c) recommending the Board take action in response to the outside
auditor's report of any of the relationships discussed in (b)
above, to the extent necessary and appropriate for the Audit
Committee to satisfy itself of the outside auditor's
independence.

3.05 The Audit Committee shall oversee any other aspects of the Funds'
audit process as it deems necessary and appropriate.

3.06 The Audit Committee is empowered to review the Funds' system of
internal controls.

3.07 The Audit Committee shall have the resources and authority as it
deems appropriate to discharge its responsibilities, including
the authority to retain special counsel and other experts or
consultants at the expense of the appropriate Fund(s).

4. Review of Charter:

4.01 The Audit Committee shall review and assess the adequacy of this
charter annually.

4.02 Any changes to the charter must be recommended by the Audit
Committee and approved by the Board.

A-2

APPENDIX B

JOINT GOVERNANCE COMMITTEE CHARTER

OF THE

MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS

AS ADOPTED ON JULY 31, 2003
AND AS AMENDED ON
APRIL 22, 2004

B-1

1. MISSION STATEMENT

The Governance Committee (the "Governance Committee") is a committee of the
Board of Trustees/Directors (referred to herein as the "Trustees" and
collectively as the "Board") of each Fund listed in the attached Exhibit A(1).
The purpose of the Governance Committee is to: (1) evaluate the suitability of
potential candidates for election to the Board and recommend candidates for
nomination by the Independent Trustees (as defined below); (2) develop and
recommend to the Board a set of corporate governance principles applicable to
the Fund, monitor corporate governance matters and make recommendations to the
Board and act as the administrative committee with respect to Board policies and
procedures, and committee policies and procedures; and (3) oversee periodic
evaluations of the Board and any committees of the Board.

2. COMPOSITION

The Governance Committee shall be comprised of three or more Trustees of
the Board. Governance Committee members shall be designated by the full Board,
and the manner of selection of the Governance Committee chair shall also be
designated by the full Board.

Each member of the Governance Committee shall be an independent director or
trustee. A person shall be considered to be independent if he or she: (a) is
independent as defined in New York Stock Exchange Listed Company Standard 303.01
(2) and (3); (b) is a "disinterested person" as defined in Section 2(a)(19) of
the Investment Company Act of 1940, as amended; and (c) does not accept,
directly or indirectly, any consulting, advisory or other compensatory fee from
any of the Funds or their investment advisor or any affiliated person of the
advisor, other than fees from the Funds for serving as a member of the Funds'
Boards or Committees of the Boards. Such independent directors or trustees are
referred to herein as the "Independent Trustees."

3. MEETING OF THE GOVERNANCE COMMITTEE

The Governance Committee shall fix its own rules of procedure, which shall
be consistent with the Fund's organizational documents and this Governance
Committee Charter. The Governance Committee shall meet at such times as may be
determined as appropriate by the Committee. The Governance Committee, in its
discretion, may ask Trustees, members of management or others, whose advice and
counsel are sought by the Governance Committee, to attend its meetings (or
portions thereof) and to provide such pertinent information as the Governance
Committee requests.

The Governance Committee shall cause to be maintained minutes of all
meetings and records to those meetings and provide copies of such minutes to the
Board and the Fund.

4. AUTHORITY

The Governance Committee shall have the authority to carry out its duties
and responsibilities as set forth in this Governance Committee Charter.

----------
(1) This Joint Governance Committee Charter has been adopted by each Fund.
Solely for the sake of clarity and simplicity, this Joint Governance
Committee Charter has been drafted as if there is a single Fund, a single
Governance Committee and a single Board. The terms "Governance Committee,"
"Trustees" and "Board" mean the Governance Committee, Trustees and the
Board of each Fund, respectively, unless the context otherwise requires.
The Governance Committee, Trustees and the Board of each Fund, however,
shall act separately and in the best interests of its respective Fund.

B-2

5. GOALS, DUTIES AND RESPONSIBILITIES OF THE GOVERNANCE COMMITTEE

In carrying out its duties and responsibilities, the Governance Committee's
policies and procedures will remain flexible, so that it may be in a position to
react or respond to changing circumstances or conditions. The following are the
duties and responsibilities of the Governance Committee:

a. Board Candidates and Nominees

The Governance Committee shall have the following goals and
responsibilities with respect to Board candidates and nominees:

i. evaluate the suitability of potential trustee/director candidates
proposed by Trustees, shareholders or others;

ii. recommend, for nomination by the Independent Trustees, candidates
for election as an Independent Trustee by the shareholders or
appointment by the Board, as the case may be, pursuant to the
Fund's organizational documents. Persons recommended by the
Governance Committee shall possess such knowledge, experience,
skills, expertise and diversity so as to enhance the Board's
ability to manage and direct the affairs and business of the
Fund, including, when applicable, to enhance the ability of
committees of the Board to fulfill their duties and/or to satisfy
any independence requirements imposed by law, regulation or any
listing requirements of the New York Stock Exchange ("NYSE") as
applicable to the Fund; and

iii. review the suitability for continued service as a
trustee/director of each Independent Trustee when his or her term
expires and at such other times as the Governance Committee deems
necessary or appropriate, and to recommend whether or not the
Independent Trustee should be re-nominated by the Independent
Trustees.

b. Corporate Governance

The Governance Committee shall have the following goals and principles
with respect to Board corporate governance:

i. monitor corporate governance principles for the Fund, which shall
be consistent with any applicable laws, regulations and listing
standards, considering, but not limited to, the following:

(1) trustee/director qualification standards to reflect the
independence requirements of the Sarbanes-Oxley Act of 2002,
as amended ("SOX") and the rules thereunder, the Investment
Company Act of 1940, as amended ("the 1940 Act"), and the
NYSE;

(2) trustee/director duties and responsibilities;

(3) trustee/director access to management, and, as necessary and
appropriate, independent advisers; and

(4) trustee/director orientation and continuing education;

ii. review periodically the corporate governance principles adopted
by the Board to assure that they are appropriate for the Fund and
comply with the requirements of SOX, the 1940 Act and the NYSE,
and to recommend any desirable changes to the Board;

B-3

iii. consider other corporate governance issues that arise from time
to time, and to develop appropriate recommendations for the
Board; and

c. Periodic Evaluations

The Governance Committee shall be responsible for overseeing the
evaluation of the Board as a whole and each Committee. The Governance
Committee shall establish procedures to allow it to exercise this
oversight function.

In conducting this review, the Governance Committee shall evaluate
whether the Board appropriately addresses the matters that are or
should be within its scope pursuant to the set of corporate governance
principles adopted by the Governance Committee. The Governance
Committee shall address matters that the Governance Committee considers
relevant to the Board's performance, including at least the following:
the adequacy, appropriateness and quality of the information and
recommendations presented by management of the Fund to the Board, and
whether the number and length of meetings of the Board were adequate
for the Board to complete its work in a thorough and thoughtful manner.

The Governance Committee shall report to the Board on the results of
its evaluation, including any recommended changes to the principles of
corporate governance, and any recommended changes to the Fund's or the
Board's or a Committee's policies or procedures. This report may be
written or oral.

6. EVALUATION OF THE GOVERNANCE COMMITTEE

The Governance Committee shall, on an annual basis, evaluate its
performance under this Joint Governance Committee Charter. In conducting this
review, the Governance Committee shall evaluate whether this Joint Governance
Committee Charter appropriately addresses the matters that are or should be
within its scope. The Governance Committee shall address matters that the
Governance Committee considers relevant to its performance, including at least
the following: the adequacy, appropriateness and quality of the information and
recommendations presented by the Governance Committee to the Board, and whether
the number and length of meetings of the Governance Committee were adequate for
the Governance Committee to complete its work in a thorough and thoughtful
manner.

The Governance Committee shall report to the Board on the results of its
evaluation, including any recommended amendments to this Joint Governance
Committee Charter, and any recommended changes to the Fund's or the Board's
policies or procedures. This report may be written or oral.

7. INVESTIGATIONS AND STUDIES; OUTSIDE ADVISERS

The Governance Committee may conduct or authorize investigations into or
studies of matters within the Governance Committee's scope of responsibilities,
and may retain, at the Fund's expense, such independent counsel or other
advisers as it deems necessary.

B-4

EXHIBIT A
---------

FUND LIST
---------

MORGAN STANLEY
RETAIL AND INSTITUTIONAL FUNDS
AT
AUGUST 31, 2005

RETAIL FUNDS
------------

OPEN-END RETAIL FUNDS

TAXABLE MONEY MARKET FUNDS
--------------------------

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

TAX-EXEMPT MONEY MARKET FUNDS
-----------------------------

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

EQUITY FUNDS
------------

12. Morgan Stanley Aggressive Equity Fund
13. Morgan Stanley Allocator Fund
14. Morgan Stanley American Opportunities Fund
15. Morgan Stanley Biotechnology Fund
16. Morgan Stanley Capital Opportunities Trust
17. Morgan Stanley Developing Growth Securities Trust
18. Morgan Stanley Dividend Growth Securities Inc.
19. Morgan Stanley Equally-Weighted S&P 500 Fund
20. Morgan Stanley European Equity Fund Inc.
21. Morgan Stanley Financial Services Trust
22. Morgan Stanley Fund of Funds
o Domestic Portfolio
23. Morgan Stanley Fundamental Value Fund
24. Morgan Stanley Global Advantage Fund
25. Morgan Stanley Global Dividend Growth Securities
26. Morgan Stanley Global Utilities Fund
27. Morgan Stanley Growth Fund
28. Morgan Stanley Health Sciences Trust

B-5

29. Morgan Stanley Income Builder Fund
30. Morgan Stanley Information Fund
31. Morgan Stanley International Fund
32. Morgan Stanley International SmallCap Fund
33. Morgan Stanley International Value Equity Fund
34. Morgan Stanley Japan Fund
35. Morgan Stanley KLD Social Index Fund
36. Morgan Stanley Mid-Cap Value Fund
37. Morgan Stanley Nasdaq-100 Index Fund
38. Morgan Stanley Natural Resource Development Securities Inc.
39. Morgan Stanley Pacific Growth Fund Inc.
40. Morgan Stanley Real Estate Fund
41. Morgan Stanley Small-Mid Special Value Fund
42. Morgan Stanley S&P 500 Index Fund
43. Morgan Stanley Special Growth Fund
44. Morgan Stanley Special Value Fund
45. Morgan Stanley Total Market Index Fund
46. Morgan Stanley Total Return Trust
47. Morgan Stanley Utilities Fund
48. Morgan Stanley Value Fund

BALANCED FUNDS
--------------

49. Morgan Stanley Balanced Growth Fund
50. Morgan Stanley Balanced Income Fund

ASSET ALLOCATION FUND
---------------------

51. Morgan Stanley Strategist Fund

TAXABLE FIXED-INCOME FUNDS
--------------------------

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

TAX-EXEMPT FIXED-INCOME FUNDS
-----------------------------

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

B-6

SPECIAL PURPOSE FUNDS
---------------------

65. Morgan Stanley Select Dimensions Investment Series
o American Opportunities Portfolio
o Balanced Growth Portfolio
o Capital Opportunities Portfolio
o Developing Growth Portfolio
o Dividend Growth Portfolio
o Equally-Weighted S&P 500 Portfolio
o Flexible Income Portfolio
o Global Equity Portfolio
o Growth Portfolio
o Money Market Portfolio
o Utilities Portfolio
66. Morgan Stanley Variable Investment Series
o Aggressive Equity Portfolio
o Dividend Growth Portfolio
o Equity Portfolio
o European Growth Portfolio
o Global Advantage Portfolio
o Global Dividend Growth Portfolio
o High Yield Portfolio
o Income Builder Portfolio
o Information Portfolio
o Limited Duration Portfolio
o Money Market Portfolio
o Quality Income Plus Portfolio
o S&P 500 Index Portfolio
o Strategist Portfolio
o Utilities Portfolio

CLOSED-END RETAIL FUNDS
-----------------------

TAXABLE FIXED-INCOME CLOSED-END FUNDS
-------------------------------------

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

TAX-EXEMPT FIXED-INCOME CLOSED-END FUNDS
----------------------------------------

70. Morgan Stanley California Insured Municipal Income Trust
71. Morgan Stanley California Quality Municipal Securities
72. Morgan Stanley Insured California Municipal Securities
73. Morgan Stanley Insured Municipal Bond Trust
74. Morgan Stanley Insured Municipal Income Trust
75. Morgan Stanley Insured Municipal Securities
76. Morgan Stanley Insured Municipal Trust
77. Morgan Stanley Municipal Income Opportunities Trust

B-7

78. Morgan Stanley Municipal Income Opportunities Trust II
79. Morgan Stanley Municipal Income Opportunities Trust III
80. Morgan Stanley Municipal Premium Income Trust
81. Morgan Stanley New York Quality Municipal Securities
82. Morgan Stanley Quality Municipal Income Trust
83. Morgan Stanley Quality Municipal Investment Trust
84. Morgan Stanley Quality Municipal Securities

INSTITUTIONAL FUNDS
-------------------

OPEN-END INSTITUTIONAL FUNDS
----------------------------

1. Morgan Stanley Institutional Fund, Inc.

Active Portfolios:
o Active International Allocation Portfolio
o Emerging Markets Portfolio
o Emerging Markets Debt Portfolio
o Equity Growth Portfolio
o European Real Estate Portfolio
o Focus Equity Portfolio
o Global Franchise Portfolio
o Global Value Equity Portfolio
o International Equity Portfolio
o International Magnum Portfolio
o International Small Cap Portfolio
o Money Market Portfolio
o Municipal Money Market Portfolio
o Small Company Growth Portfolio
o U.S. Real Estate Portfolio
o Value Equity Portfolio

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

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

B-8

2. Morgan Stanley Institutional Fund Trust

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

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

3. The Universal Institutional Funds, Inc.

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

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

B-9

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

4. Morgan Stanley Institutional Liquidity Funds

Active Portfolios:
o Government Portfolio
o Money Market Portfolio
o Prime Portfolio
o Tax-Exempt Portfolio
o Treasury Portfolio

Inactive Portfolios*:
o Government Securities Portfolio
o Treasury Securities Portfolio

CLOSED-END INSTITUTIONAL FUNDS

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

CLOSED-END FUND OF HEDGE FUNDS

15. Morgan Stanley Institutional Fund of Hedge Funds

IN REGISTRATION
MORGAN STANLEY RETAIL FUNDS

16. Morgan Stanley American Franchise Fund

FUNDS OF HEDGE FUNDS

17. Morgan Stanley Absolute Return Fund
18. Morgan Stanley Institutional Fund of Hedge Funds II

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

B-10

EVERY SHAREHOLDER'S VOTE IS IMPORTANT

YOUR PROXY VOTE IS IMPORTANT!

AND NOW YOU CAN VOTE YOUR PROXY ON THE
PHONE OR THE INTERNET.

IT SAVES MONEY! TELEPHONE AND INTERNET
VOTING SAVES POSTAGE COSTS. SAVINGS
WHICH CAN HELP MINIMIZE FUND EXPENSES.

IT SAVES TIME! TELEPHONE AND INTERNET
VOTING IS INSTANTANEOUS - 24 HOURS A
DAY.

IT'S EASY! JUST FOLLOW THESE SIMPLE
STEPS:

1. READ YOUR PROXY STATEMENT AND HAVE
IT AT HAND.

2. CALL TOLL-FREE 1-866-241-6192 OR GO
TO WEBSITE: HTTPS://VOTE.PROXY-DIRECT.COM

3. FOLLOW THE RECORDED OR ON-SCREEN
DIRECTIONS.

4. DO NOT MAIL YOUR PROXY CARD WHEN YOU
VOTE BY PHONE OR INTERNET.

Please detach at perforation before mailing.

PROXY MORGAN STANLEY MUNICIPAL INCOME OPPORTUNITES TRUST III PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 26, 2005

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Stefanie V. Chang, Barry Fink and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to vote
on behalf of the undersigned at the Annual Meeting of Shareholders of the above
mentioned trust on October 26, 2005 at 9:00 a.m., New York City time, and at any
adjournment thereof, on the proposals set forth in the Notice of Meeting.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE TRUSTEES SET FORTH ON THE REVERSE HEREOF AND AS RECOMMENDED BY THE
BOARD OF TRUSTEES.

VOTE VIA THE INTERNET: HTTPS://VOTE.PROXY-DIRECT.COM
VOTE VIA THE TELEPHONE: 1-866-241-6192
--------------------------------------------------
999 99999 999 999
--------------------------------------------------

NOTE: Please sign exactly as your name appears on
this proxy card. All joint owners should sign. When
signing as executor, administrator, attorney,
trustee or guardian or as custodian for a minor,
please give full title as such. If a corporation,
please sign in full corporate name and indicate the
signer's office. If a partner, sign in the
partnership name.

---------------------------------------------------
Signature

---------------------------------------------------
Signature (if held jointly)

---------------------------------------------------
Date 15604_MCE_G

(Please see reverse side)

EVERY SHAREHOLDER'S VOTE IS IMPORTANT

PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY

Please detach at perforation before mailing.

TO VOTE BY MAIL, PLEASE COMPLETE AND RETURN THIS CARD.

YOU ALSO MAY VOTE A PROXY BY TOUCH-TONE PHONE OR BY INTERNET (SEE ENCLOSED
VOTING INFORMATION CARD FOR FURTHER INSTRUCTIONS).

PLEASE MARK VOTES AS IN THIS EXAMPLE: [ ]

1. Election of four (4) Trustees: FOR WITHHOLD FOR ALL
EXCEPT
01. Wayne E. Hedien 02. Dr. Manuel H. Johnson [ ] [ ] [ ]
03. Joseph J. Kearns 04. Fergus Reid

To withhold authority to vote for any nominee(s)
mark "For All Except" and write the nominee
number(s) on the line provided:

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

15604_MCE_G

YOUR VOTE IS IMPORTANT! PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD TODAY