Active Assets Institutional Government Securities Trust, et al. – ‘485APOS’ on 8/28/06

On:  Monday, 8/28/06, at 5:19pm ET   ·   Accession #:  1047469-6-11340   ·   File #s:  333-81184, 811-21024

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Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485APOS     Post-Effective Amendment                              62    311K 

Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 2006 

                                                     REGISTRATION NO.: 333-81184
                                                                       811-21024

================================================================================

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

----------

FORM N-1A 

REGISTRATION STATEMENT
                       UNDER THE SECURITIES ACT OF 1933                      |X|
                         PRE-EFFECTIVE AMENDMENT NO.                         |_|
                        POST-EFFECTIVE AMENDMENT NO. 5                       |X|
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY 
                                  ACT OF 1940                                |X|
                                AMENDMENT NO. 7                              |X|

----------

ACTIVE ASSETS INSTITUTIONAL GOVERNMENT SECURITIES TRUST 
(A MASSACHUSETTS BUSINESS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

1221 AVENUE OF THE AMERICAS 
NEW YORK, NEW YORK 10020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) 

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (800) 869-6397

AMY R. DOBERMAN, ESQ. 
1221 AVENUE OF THE AMERICAS 
NEW YORK, NEW YORK 10020
(NAME AND ADDRESS OF AGENT FOR SERVICE) 

----------

COPY TO:

       CARL FRISCHLING, ESQ.                             STUART M. STRAUSS, ESQ.
KRAMER LEVIN NAFTALIS & FRANKEL LLP                      CLIFFORD CHANCE US LLP 
  1177 AVENUE OF THE AMERICAS                            31 WEST 52ND STREET
      NEW YORK, NEW YORK 10036                          NEW YORK, NEW YORK 10019

----------

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: 

As soon as practicable after this Post-Effective Amendment becomes effective. 

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):

|_|  Immediately upon filing pursuant to paragraph (b)      
|_|  On (date) pursuant to paragraph (b)                    
|_|  60 days after filing pursuant to paragraph (a)(1)      
|X|  On October 31, 2006 pursuant to paragraph (a)(1)       
|_|  75 days after filing pursuant to paragraph (a)(2)      
|_|  On (date) pursuant to paragraph (a)(2) of Rule 485.    

AMENDING THE PROSPECTUS                                     

If appropriate, check the following box:                    

          |_|  This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.      

================================================================================

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MORGAN STANLEY FUNDS                                                            

Active Assets -- Institutional Money Trust                                      
Institutional Government Securities Trust     

TWO SEPARATE MONEY MARKET FUNDS OFFERED EXCLUSIVELY TO INVESTORS WHO HAVE AN    
ACTIVE ASSETS ACCOUNT(R) OR BUSINESSCAPE(R) ACCOUNT WITH MORGAN STANLEY DW INC. 

[Morgan Stanley LOGO]                                                           

The Securities and Exchange Commission has not approved or disapproved these    
securities or passed upon the adequacy of this PROSPECTUS. Any representation to
the contrary is a criminal offense.                                             

Prospectus                                                                      

October 31, 2006                                                                

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Contents                                                                        

ELIGIBLE INVESTORS/OVERVIEW                                                    1

THE FUNDS                                                                       

ACTIVE ASSETS INSTITUTIONAL MONEY TRUST                                         
   Investment Objectives                                                       2
   Principal Investment Strategies                                             2
   Principal Risks                                                             3
   Past Performance                                                            4
   Fees and Expenses                                                           5
   Portfolio Holdings                                                          5

ACTIVE ASSETS INSTITUTIONAL GOVERNMENT SECURITIES TRUST                         
   Investment Objectives                                                       6
   Principal Investment Strategies                                             6
   Principal Risks                                                             7
   Past Performance                                                            8
   Fees and Expenses                                                           9
   Portfolio Holdings                                                          9

FUND MANAGEMENT                                                               10

SHAREHOLDER INFORMATION                                                         
   Pricing Fund Shares                                                        11
   How Are Fund Investments Made?                                             11
   How are Fund Shares Sold?                                                  12
   Distributions                                                              14
   Frequent Purchases and Redemptions                                         14
   Tax Consequences                                                           14
   Additional Information                                                     15

FINANCIAL HIGHLIGHTS                                                          16

This PROSPECTUS contains important information about the Funds. Please read it  
carefully and keep it for future reference.                                     

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ELIGIBLE INVESTORS/OVERVIEW                                                     

Active Assets Institutional Money Trust and Active Assets Institutional         
Government Securities Trust (each, a "Fund," and together, the "Funds") are two 
separate money market funds offered exclusively to investors who have an Active 
Assets Account or BusinesScape Account (the "Accounts") with Morgan Stanley DW  
Inc. ("Morgan Stanley DW"). (Morgan Stanley DW is affiliated with Morgan Stanley
Investment Advisors Inc., the Funds' "Investment Adviser.")                     

The various account and service fees charged in connection with your Account are
currently waived for investors in the Funds. At any time, Morgan Stanley DW may 
change the fees charged and the services provided in connection therewith, as   
set forth in the Account agreements. For details on the Accounts, please read   
the respective Account agreement.                                               

The minimum amount required to make an initial investment in either Fund is $5  
million. Thereafter, the value of your investment must be maintained at a       
minimum of $2 million. The Investment Adviser, in its sole discretion, may waive
these requirements in certain circumstances.                                    

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THE FUNDS                                                                       
ACTIVE ASSETS INSTITUTIONAL MONEY TRUST                                         

INVESTMENT OBJECTIVES                                                           

[GRAPHIC] The Fund is a money market fund that seeks high current income,       
preservation of capital and liquidity.                                          

PRINCIPAL INVESTMENT STRATEGIES                                                 

[GRAPHIC] The Fund invests in high quality, short-term debt obligations. In     
selecting investments, the Fund's "Investment Adviser," Morgan Stanley          
Investment Advisors Inc., seeks to maintain the Fund's share price at $1.00. The
share price remaining stable at $1.00 means that the Fund would preserve the    
principal value of your investment.                                             

The Fund may invest in the following money market securities:                   

-    Commercial paper.                                                          

-    Corporate debt obligations, including but not limited to commercial paper  
and certificates of deposit.                                          

-    Debt obligations of U.S.-regulated banks (including domestic branches of   
foreign banks) and instruments secured by those obligations (including
certificates of deposit).                                             

-    Certificates of deposit of savings banks and savings and loan associations.

-    Debt obligations issued or guaranteed as to principal and interest by the  
U.S. Government, its agencies or instrumentalities.                   

-    Repurchase agreements (which may be viewed as a type of secured lending by 
the Fund).                                                            

-    U.S. dollar-denominated foreign bank obligations.                          

-    Adjustable rate government securities with final maturities in excess of   
397 days.                                                             

-    Asset-backed securities.                                                   

-    Promissory notes and funding agreements.                                   

-    Tax-exempt variable rate demand notes.                                     

In pursuing the Fund's investment objective, the Investment Adviser has         
considerable leeway in deciding which investments it buys, holds or sells on a  
day to day basis and which trading strategies it uses. For example, the         
Investment Adviser in its discretion may determine to use some permitted trading
strategies while not using others.                                              

[SIDENOTE]                                                                      

MONEY MARKET                                                                    

A MUTUAL FUND HAVING THE GOAL TO SELECT SECURITIES TO PROVIDE CURRENT INCOME    
WHILE SEEKING TO MAINTAIN A STABLE SHARE PRICE OF $1.00.                        

YIELD                                                                           

THE FUND'S YIELD REFLECTS THE ACTUAL INCOME THE FUND PAYS TO YOU EXPRESSED AS A 
PERCENTAGE OF THE FUND'S SHARE PRICE. BECAUSE THE FUND'S INCOME FROM ITS        
PORTFOLIO SECURITIES WILL FLUCTUATE, THE INCOME IT IN TURN DISTRIBUTES TO YOU   
AND THE FUND'S YIELD WILL VARY.                                                 

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PRINCIPAL RISKS                                                                 

[GRAPHIC] There is no assurance that the Fund will achieve its investment       
objectives. Shares of the Fund are not bank deposits and are not insured or     
guaranteed by the Federal Deposit Insurance Corporation ("FDIC") or any other   
government agency. Although the Fund seeks to preserve the value of your        
investment at $1.00 per share, if it is unable to do so, it is possible to lose 
money by investing in the Fund.                                                 

CREDIT AND INTEREST RATE RISKS. A principal risk of investing in the Fund is    
associated with its debt obligation investments. All debt obligations, such as  
bonds, are subject to two types of risk: credit risk and interest rate risk.    

Credit risk refers to the possibility that the issuer of a security will be     
unable to make interest payments and/or repay the principal on its debt.        
Interest rate risk refers to fluctuations in the value of a debt security       
resulting from changes in the general level of interest rates.                  

The Investment Adviser actively manages the Fund's assets to reduce the risk of 
losing any principal investment as a result of credit or interest rate risks.   
The Fund's assets are reviewed to maintain or improve creditworthiness. In      
addition, federal regulations require money market funds to invest only in debt 
obligations of high quality and short-term maturities.                          

PROMISSORY NOTES AND FUNDING AGREEMENTS RISK. The Fund may invest in unsecured  
promissory notes and funding agreements. The secondary market, if any, for      
unsecured promissory notes and funding agreements is limited; thus, such        
investments purchased by the Fund may be treated as illiquid. The Fund may      
invest up to 10% in illiquid securities, including unsecured promissory notes   
and funding agreements.                                                         

ASSET-BACKED SECURITIES RISK. The Fund may invest in asset-backed securities.   
Some asset-backed securities entail prepayment risk, which may vary depending on
the type of asset. Securities subject to prepayment risk generally offer less   
potential for gains when interest rates decline, and may offer a greater        
potential for loss when interest rates rise. In addition, rising interest rates 
may cause prepayments to occur at a slower than expected rate, thereby          
effectively lengthening the maturity of the security and making the security    
more sensitive to interest rate changes.                                        

TAX-EXEMPT VARIABLE RATE DEMAND NOTES RISK. The Fund may invest in tax-exempt   
variable rate demand notes. Due to cyclical supply and demand considerations, at
times the yields on these obligations can exceed the yield on taxable money     
market obligations.                                                             

FOREIGN MONEY MARKET SECURITIES. The Fund may invest in U.S. dollar-denominated 
money market instruments and other short-term debt obligations issued by foreign
banks. Although the Fund will invest in these securities only if the Investment 
Adviser determines they are of comparable quality to the Fund's U.S.            
investments, investing in securities of foreign issuers involves some additional
risks. These risks may include higher costs of foreign investing, and the       
possibility of adverse political, economic or other developments affecting the  
issuers of these securities.                                                    

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PAST PERFORMANCE                                                                

[GRAPHIC] The bar chart and table below provide some indication of the risks of 
investing in the Fund. The Fund's past performance does not indicate how the    
Fund will perform in the future.                                                

ANNUAL TOTAL RETURNS--CALENDAR YEARS                                            

[CHART] 

                                                                [Download Table]

2001   2002   2003   2004   2005
----   ----   ----   ----   ----
                                
4.19%  1.67%  1.03%  1.25%      

The year-to-date total return as of September 30, 2006 was ___%.                

During the period shown in the bar chart, the highest return for a calendar     
quarter was ___% (quarter ended ___________) and the lowest return for a        
calendar quarter was ___% (quarter ended ___________).                          

[SIDE NOTE]                                                                     

ANNUAL TOTAL RETURNS.                                                           

THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S SHARES HAS VARIED FROM YEAR  
TO YEAR OVER THE PAST FIVE CALENDAR YEARS.                                      

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AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 2005)                          

                                                        [Enlarge/Download Table]

                                                                          LIFE OF FUND        
                                         PAST 1 YEAR  PAST 5 YEARS   (SINCE FEBRUARY 15, 2000)
                                         -----------  ------------  ------------------------- 
                                                                                              
Active Assets Institutional Money Trust                     %                   %             

For the Fund's most recent 7-day annualized yield you may call toll-free (800)  
869-NEWS.                                                                       

FEES AND EXPENSES                                                               

[GRAPHIC] The table below briefly describes the fees and expenses that you may  
pay if you buy and hold shares of the Fund. The Fund is a no-load fund. The Fund
does not impose any sales charges or distribution and service (12b-1) fees.     

ANNUAL FUND OPERATING EXPENSES                                                  

Advisory fee                               %                                    
Distribution and service (12b-1) fees   None                                    
Other expenses                             %                                    
Total annual Fund operating expenses1      %                                    

(1)  The Investment Adviser and the Administrator have agreed to assume all     
     operating expenses of the Fund (except for brokerage fees) and to waive the
 compensation provided for in the Investment Advisory and Administrative
Agreements, as applicable, to the extent that such expenses and       
   compensation on an annualized basis exceed 0.20% of the average daily net
assets of the Fund. This arrangement had no effect on the expenses set
forth in the table above.                                             

EXAMPLE                                                                         

This example is intended to help you compare the cost of investing in the Fund  
with the cost of investing in other mutual funds.                               

The example assumes that you invest $10,000 in the Fund, your investment has a  
5% return each year, and the Fund's operating expenses remain the same. Although
your actual costs may be higher or lower, the table below shows your costs at   
the end of each period based on these assumptions.                              

1 YEAR   3 YEARS   5 YEARS   10 YEARS                                           

$        $         $          $                                           

PORTFOLIO HOLDINGS                                                              

[GRAPHIC] A description of the Fund's policies and procedures with respect to   
the disclosure of the Fund's portfolio securities is available in the Fund's    
STATEMENT OF ADDITIONAL INFORMATION.                                            

[SIDENOTE]                                                                      

AVERAGE ANNUAL TOTAL RETURNS.                                                   

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS.                    

ANNUAL FUND OPERATING EXPENSES.                                                 

THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES    
PAID FOR THE FISCAL YEAR ENDED JUNE 30, 2006.                                   

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THE FUNDS                                                                       
ACTIVE ASSETS INSTITUTIONAL GOVERNMENT SECURITIES TRUST                         

INVESTMENT OBJECTIVES                                                           

[GRAPHIC] The Fund is a money market fund that seeks to provide high current    
income, preservation of capital and liquidity.                                  

PRINCIPAL INVESTMENT STRATEGIES                                                 

[GRAPHIC] The Fund invests at least 80% of its assets in high quality,          
short-term U.S. government securities. In selecting investments, the Fund's     
"Investment Adviser," Morgan Stanley Investment Advisors Inc., seeks to maintain
the Fund's share price at $1.00. The share price remaining stable at $1.00 means
that the Fund would preserve the principal value of your investment.            

The Fund may invest in the following U.S. government securities:                

-    U.S. Treasury bills, notes and bonds, all of which are direct obligations  
of the U.S. Government.                                               

-    Securities issued by agencies and instrumentalities of the U.S. Government 
   which are backed by the full faith and credit of the United States. Among
the agencies and instrumentalities issuing these obligations are the  
Government National Mortgage Association and the Federal Housing      
Administration.                                                       

-    Securities issued by agencies and instrumentalities which are not backed by
     the full faith and credit of the United States, but whose issuing agency or
    instrumentality has the right to borrow from the U.S. Treasury to meet its
 obligations. Among these agencies and instrumentalities are the Federal
   National Mortgage Association, the Federal Home Loan Mortgage Corporation
and the Federal Home Loan Banks.                                      

-    Securities issued by agencies and instrumentalities which are backed solely
by the credit of the issuing agency or instrumentality. Among these   
agencies and instrumentalities is the Federal Farm Credit System.     

The Fund also may invest up to 10% of its assets in Federal Deposit Insurance   
Corporation ("FDIC") insured certificates of deposit of banks and savings and   
loan institutions, and adjustable rate government securities with final         
maturities in excess of 397 days.                                               

In addition, the Fund may invest in repurchase agreements, which may be viewed  
as a type of secured lending by the Fund.                                       

In pursuing the Fund's investment objective, the Investment Adviser has         
considerable leeway in deciding which investments it buys, holds or sells on a  
day to day basis and which trading strategies it uses. For example, the         
Investment Adviser in its discretion may determine to use some permitted trading
strategies while not using others.                                              

[SIDENOTE]                                                                      

MONEY MARKET                                                                    

A MUTUAL FUND HAVING THE GOAL TO SELECT SECURITIES TO PROVIDE CURRENT INCOME    
WHILE SEEKING TO MAINTAIN A STABLE SHARE PRICE OF $1.00.                        

YIELD                                                                           

THE FUND'S YIELD REFLECTS THE ACTUAL INCOME THE FUND PAYS TO YOU EXPRESSED AS A 
PERCENTAGE OF THE FUND'S SHARE PRICE. BECAUSE THE FUND'S INCOME FROM ITS        
PORTFOLIO SECURITIES WILL FLUCTUATE, THE INCOME IT IN TURN DISTRIBUTES TO YOU   
AND THE FUND'S YIELD WILL VARY.                                                 

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PRINCIPAL RISKS                                                                 

[GRAPHIC] There is no assurance that the Fund will achieve its investment       
objectives. Shares of the Fund are not bank deposits and are not insured or     
guaranteed by the FDIC or any other government agency. Although the Fund seeks  
to preserve the value of your investment at $1.00 per share, if it is unable to 
do so, it is possible to lose money by investing in the Fund.                   

CREDIT AND INTEREST RATE RISKS. A principal risk of investing in the Fund is    
associated with its U.S. government securities investments, which are subject to
two types of risks: credit risk and interest rate risk. Credit risk refers to   
the possibility that the issuer of a security will be unable to make interest   
payments and/or repay the principal on its debt. Interest rate risk refers to   
fluctuations in the value of a debt security resulting from changes in the      
general level of interest rates.                                                

Credit risk is minimal with respect to the Fund's U.S. government securities    
investments. Repurchase agreements and insured certificates of deposit may      
involve a greater degree of credit risk. The Investment Adviser, however,       
actively manages the Fund's assets to reduce the risk of losing any principal   
investment as a result of credit or interest rate risks. In addition, federal   
regulations require money market funds to invest only in debt obligations of    
high quality and short-term maturities.                                         

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PAST PERFORMANCE                                                                

[GRAPHIC] The bar chart and table below provide some indication of the risks of 
investing in the Fund. The Fund's past performance does not indicate how the    
Fund will perform in the future.                                                

ANNUAL TOTAL RETURN--CALENDAR YEARS                                             

 [CHART]

                                                                [Download Table]

2003   2004   2005
----   ----   ----
                  
1.09%  1.30%      

The year-to-date total return as of September 30, 2006 was ___%.                

During the period shown in the bar chart, the highest return for a calendar     
quarter was ___% (quarter ended ___________) and the lowest return for a        
calendar quarter was ___% (quarter ended ___________).                          

[SIDENOTE]                                                                      

ANNUAL TOTAL RETURNS.                                                           

THIS CHART SHOWS HOW THE PERFORMANCE OF THE FUND'S SHARES HAS VARIED FROM YEAR  
TO YEAR OVER THE PAST THREE CALENDAR YEARS.                                     

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AVERAGE ANNUAL TOTAL RETURNS (AS OF DECEMBER 31, 2005)                          

                                                            LIFE OF FUND
                                          PAST 1 YEAR   (SINCE NOVEMBER 4, 2002)

Active Assets Institutional Government                                          
Securities Trust                            %                    %        

For the Fund's most recent 7-day annualized yield you may call toll-free (800)  
869-NEWS.                                                                       

FEES AND EXPENSES                                                               

[GRAPHIC] The table below briefly describes the fees and expenses that you may  
pay if you buy and hold shares of the Fund. The Fund is a no-load fund. The Fund
does not impose any sales charges or distribution and service (12b-1) fees.     

ANNUAL FUND OPERATING EXPENSES                                                  

Advisory fee                                 %                                  
Distribution and service (12b-1) fees     None                                  
Other expenses                               %                                  
Total annual Fund operating expenses(1)      %                                  

(1)  Through April 30, 2007, the Investment Adviser and the Administrator have  
agreed to cap the operating expenses of the Fund (except for brokerage
     fees) and to waive the compensation provided for in the Investment Advisory
 and Administration Agreements with the Fund, as applicable, as follows:
   0.10% of the Fund's daily net assets not exceeding $500 million; 0.15% of
   the Fund's daily net assets exceeding $500 million but not exceeding $750
   million; and 0.20% of the Fund's daily net assets exceeding $750 million.
 Thereafter, the Investment Adviser and the Administrator have agreed to
   assume all operating expenses of the Fund (except for brokerage fees) and
to waive the compensation provided for in the Investment Advisory and 
    Administrative Agreements, as applicable, to the extent that such expenses
   and compensation on an annualized basis exceed 0.20% of the average daily
    net assets of the Fund. The fees disclosed above reflect the assumption of
    such expenses and waiver of compensation by the Investment Adviser and the
 Administrator to the extent such operating expenses exceed 0.20% of the
 average daily net assets of the Fund. For the year ended June 30, 2006,
    taking the waiver/assumption into account, the total operating expenses of
the Fund were ___%.                                                   

EXAMPLE                                                                         

This example is intended to help you compare the cost of investing in the Fund  
with the cost of investing in other mutual funds.                               

The example assumes that you invest $10,000 in the Fund, your investment has a  
5% return each year, and the Fund's operating expenses remain the same. Although
your actual costs may be higher or lower, the table below shows your costs at   
the end of each period based on these assumptions.                              

1 YEAR   3 YEARS   5 YEARS   10 YEARS                                           

$        $         $          $                                           

PORTFOLIO HOLDINGS                                                              

[GRAPHIC] A description of the Fund's policies and procedures with respect to   
the disclosure of the Fund's portfolio securities is available in the Fund's    
STATEMENT OF ADDITIONAL INFORMATION.                                            

[SIDENOTE]                                                                      

AVERAGE ANNUAL TOTAL RETURNS.                                                   

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS.                    

ANNUAL FUND OPERATING EXPENSES.                                                 

THESE EXPENSES ARE DEDUCTED FROM THE FUND'S ASSETS AND ARE BASED ON EXPENSES    
PAID FOR THE FISCAL YEAR ENDED JUNE 30, 2006.                                   

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FUND MANAGEMENT                                                                 

Each Fund has retained the Investment Adviser--Morgan Stanley Investment        
Advisors Inc.--to provide investment advisory services. The Investment Adviser  
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. 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. The Investment Adviser's   
address is 1221 Avenue of the Americas, New York, NY 10020.                     

Each Fund pays the Investment Adviser a monthly advisory fee as full            
compensation for the services and facilities furnished to each Fund, and for    
each Funds' expenses assumed by the Investment Adviser, respectively. The fee is
based on each Funds' average daily net assets. For the fiscal year ended June   
30, 2006, each Fund accrued total compensation to the Investment Adviser        
amounting to % of the Funds' average daily net assets.                          

A discussion regarding the Board of Trustees' approval of the investment        
advisory agreements is available in each Fund's semiannual report to            
shareholders for the period ended December 31, 2005.                            

[SIDENOTE]                                                                      

MORGAN STANLEY INVESTMENT ADVISORS INC.                                         

THE INVESTMENT ADVISER IS WIDELY RECOGNIZED AS A LEADER IN THE MUTUAL FUND      
INDUSTRY, HAD APPROXIMATELY $___ BILLION IN ASSETS UNDER MANAGEMENT OR          
ADMINISTRATION AS OF SEPTEMBER 30, 2006.                                        

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SHAREHOLDER INFORMATION                                                         

PRICING FUND SHARES                                                             

[GRAPHIC] The price of each Fund's shares, called "net asset value," is based on
the amortized cost of the Fund's portfolio securities. The amortized cost       
valuation method involves valuing a debt obligation in reference to its cost    
rather than market forces.                                                      

The net asset value per share of each Fund is determined once daily at 4:00 p.m.
Eastern time on each day that the New York Stock Exchange is open. On days when 
the New York Stock Exchange closes prior to such time, the net asset value per  
share of the Funds will be determined at such earlier time. Shares will not be  
priced on days that the New York Stock Exchange is closed.                      

HOW ARE FUND INVESTMENTS MADE?                                                  

[GRAPHIC] Cash balances in your Account that are not invested in securities or  
other investments will be automatically invested in shares of the Fund of your  
choice on each day that the New York Stock Exchange is open for business.       
Investors with an Account may select any fund offered as a sweep investment,    
including the Funds and Active Assets Money Trust, Active Assets Tax-Free Trust,
Active Assets California Tax-Free Trust and Active Assets Government Securities 
Trust. Certain investors are no longer able to select Active Assets Money Trust 
or Active Assets Government Securities Trust. In each case, please read the     
respective fund's prospectus carefully prior to making an investment decision.  
You may change your investment selection at any time by notifying your Morgan   
Stanley Financial Advisor. Upon selecting a different fund, your shares held in 
the previously designated fund will automatically be sold and reinvested in     
shares of the newly selected fund.                                              

To help the government fight the funding of terrorism and money laundering      
activities, federal law requires all financial institutions to obtain, verify   
and record information that identifies each person who opens an account. What   
this means to you: when you open an account, we will ask your name, address,    
date of birth and other information that will allow us to identify you. If we   
are unable to verify your identity, we reserve the right to restrict additional 
transactions and/or liquidate your account at the next calculated net asset     
value after your account is closed (less any applicable sales/account charges   
and/or tax penalties) or take any other action required by law.                 

[SIDENOTE]                                                                      

CONTACTING A FINANCIAL ADVISOR                                                  

IF YOU ARE NEW TO THE MORGAN STANLEY FUNDS AND WOULD LIKE TO CONTACT A MORGAN   
STANLEY FINANCIAL ADVISOR, CALL TOLL-FREE 1-866-MORGAN8 FOR THE TELEPHONE NUMBER
OF THE MORGAN STANLEY OFFICE NEAREST YOU. YOU MAY ALSO ACCESS OUR OFFICE LOCATOR
ON OUR INTERNET SITE AT: www.morganstanley.com/funds                            

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WIRING MONEY TO YOUR ACCOUNT. If you want to purchase Fund shares by wiring     
federal funds to your account, contact your Morgan Stanley Financial Advisor. If
your wire is received prior to 4:00 p.m. Eastern time, your money will be       
invested in shares of the selected Fund on that day at the Fund's share price   
calculated on that day.                                                         

AUTOMATIC PURCHASES. Your Account will be reviewed on each business day to      
determine whether it has a cash balance as a result of any credits accrued that 
day. Credits to your Account may arise, for example, from sales of securities or
from direct cash payments into the Account. Debits to your Account may arise    
from purchases of securities, other Account charges (including, in the case of  
your BusinesScape Account, any principal and/or interest owed on your commercial
line of credit, if applicable), debit card purchases, cash advances or          
withdrawals, and any checks written against the Account. The cash balance,      
reduced by any debits to your Account incurred that day, will be used to        
purchase shares of your selected Fund on the next business day at the Fund's    
share price calculated on that next day. However, if you make a cash payment    
into your Active Assets Account (by check) after Morgan Stanley's deadline for  
processing checks has passed, then investment in the Fund may not occur until   
the second business day after the payment is made (at the share price calculated
on that day).                                                                   

ALL PURCHASES. You begin earning dividends the same day your Fund shares are    
purchased. Each Fund will effect orders to purchase shares on each day the New  
York Stock Exchange is open. Orders to purchase shares must be received prior to
4:00 p.m. Eastern time. In the event that the New York Stock Exchange closes    
prior to such time, orders must be received prior to such earlier time. Orders  
received after such time will be processed the following business day.          

HOW ARE FUND SHARES SOLD?                                                       

[GRAPHIC] VOLUNTARY SALES. If you wish to sell all or some of your Fund shares, 
you may do so by:                                                               

(a)  instructing your Morgan Stanley Financial Advisor to wire transfer federal 
funds to your bank;                                                   

(b)  writing a check against your Account in an amount equal to the value of    
shares you wish to sell (there may be fees imposed for writing these  
checks); or                                                           

(c)  obtaining cash using your debit card (there may be fees imposed and certain
limitations on withdrawals).                                          

Once you have taken any of these steps, your sale will normally be processed on 
that same day at the Fund's share price calculated that day. If you submit a    
wire instruction to sell shares of a Fund before 4:00 p.m. Eastern time, you    
will receive payment of your sale proceeds on that day. If you submit your      
instruction after such times, your shares will be sold on the next business day 
and you will receive the proceeds from the sale on that next day. If you seek to
sell Fund shares by writing a check against your Account, Fund shares will not  
be sold until the day on which the check is presented for payment. Prior to     
selling any Fund shares through any of the above methods you should call your   
Morgan Stanley Financial Advisor to determine the value of the Fund shares you  
own. If there is an insufficient value of Fund shares to cover your Account     
withdrawals, then Morgan Stanley DW may take the authorized steps described in  
your client account agreement. If you seek to sell shares by wire instruction,  
the amount covered in the instruction may not exceed the value of Fund shares   
you hold less any debits accrued to your Account; otherwise, the wire           
instruction will be refused and you will need to resubmit the instruction for a 
lesser amount.                                                                  

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AUTOMATIC SALES                                                                 

NEGATIVE BALANCES IN YOUR ACCOUNT. Your Account will be reviewed on each        
business day to determine whether the Account has a negative balance as a result
of debits incurred on that day. Of course, the negative balance will be reduced 
by any credits accrued to the Account on that day. On the same day, a sufficient
number of your Fund shares will automatically be sold to equal the value of the 
negative balance. The sale price of the Fund's shares will be the share price   
calculated on that day. If the value of your Fund shares is insufficient to     
equal the negative balance, Morgan Stanley DW is authorized to take the actions 
described in your client account agreement, including, if you are eligible,     
applying a margin loan to your account or accessing your line of credit, as     
applicable, to cover outstanding debits.                                        

In addition, if Morgan Stanley DW exercises its right to terminate the Account  
you are invested in, then all of your Fund shares will be sold.                 

INSUFFICIENT INVESTMENT AMOUNTS. If your investment in a Fund falls below the   
Fund's minimum maintenance requirement, your Fund shares will be sold and the   
proceeds will be reinvested as follows:                                         

                                                        [Enlarge/Download Table]

                              AND THE VALUE OF YOUR                                    
IF YOUR INVESTMENT IS IN     INVESTMENT IS LESS THAN  YOUR PROCEEDS WILL BE INVESTED IN
                                                                                       
Active Assets Institutional                                                            
Money Trust                  $2 million               Active Assets Money Trust        

Active Assets Institutional                           Active Assets Government         
Government Securities Trust  $2 million               Securities Trust                 

You should be aware that Active Assets Money Trust and Active Assets Government 
Securities Trust are subject to higher annual expenses than the Funds. In       
addition, if your investment is reinvested in shares of Active Assets Money     
Trust or Active Assets Government Securities Trust, you will lose one or more   
day's dividend because of the timing difference between the way the funds earn  
dividends. Please consult the appropriate fund's prospectus for more details.   

The value of your investment will be tracked on a 30-day rolling average basis. 
In the event the value of your investment does not meet the minimum maintenance 
requirement for your Fund, we will provide you notice that allows you 30 days to
increase your investment amount to satisfy the Fund's minimum maintenance       
requirement. A pattern of frequent notices may result in the Fund, in its       
discretion, automatically selling your shares, even if you meet the minimum     
maintenance requirement at the time of such sale. However, your shares will not 
be sold unless you had previously received a notice alerting you that the next  
time the value of your shares falls below your Fund's maintenance minimum (based
on a 30-day rolling average basis) your shares will automatically be sold.      

ALL SALES. You will not earn a dividend on the day your shares are sold. Orders 
to sell shares (redemption requests) will be processed on the day on which they 
are received, provided they are received prior to 4:00 p.m. Eastern time or, if 
the New York Stock Exchange closes earlier than 4:00 p.m., prior to such earlier
closing time. Orders received after such time will be processed the following   
business day. Generally, payment for Fund shares sold will be made on the day on
which the order is processed, but may be postponed under extraordinary          
circumstances when the Investment Adviser believes that same day payment is     
impractical or could have a material adverse impact on the Fund. For example, on
any day that the Bond Market Association recommends that the bond markets close 
early, payments may be postponed with respect to redemption requests received   
subsequent to the recommended closing time. Such                                

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postponements will normally be until the next business day, but will not        
exceed seven calendar days (or three business days, if the order is executed    
through a broker). If you request to sell shares that were recently purchased   
by check, the proceeds of the sale may not be sent to you until it has been     
verified that the check has been honored, which may take up to 15 calendar      
days from the date of purchase.                                                 

DISTRIBUTIONS                                                                   

[GRAPHIC] Each Fund passes substantially all of its earnings along to its       
investors as "distributions." Each Fund earns interest from fixed-income        
investments. These amounts are passed along to Fund shareholders as "income     
dividend distributions." Each Fund realizes capital gains whenever it sells     
securities for a higher price than it paid for them. These amounts may be passed
along as "capital gain distributions." The Investment Adviser does not          
anticipate that there will be significant capital gain distributions.           

Each Fund declares and pays income dividends on each day the New York Stock     
Exchange is open for business, of all of its daily net investment income to     
shareholders of record as of 4:00 p.m. Eastern time (or, on days when the New   
York Stock Exchange closes prior to such time, at such earlier time). Dividends 
are reinvested automatically in additional shares of the respective Fund        
(rounded to the last 1/100 of a share). Short-term capital gains, if any, are   
distributed periodically. Long-term capital gains, if any, are distributed at   
least once in December.                                                         

FREQUENT PURCHASES AND REDEMPTIONS                                              

[GRAPHIC] Because, as money market funds, each Fund's principal investment      
strategy is to maintain a stable share price, frequent purchases and redemptions
of shares by Fund shareholders generally do not present risks for other         
shareholders of each Fund. Therefore, the policies and procedures regulating    
frequent purchases and redemptions adopted by the Funds' Board of Trustees      
applicable to other Morgan Stanley Funds are not applicable with respect to     
frequent purchases and redemptions of each Fund shares. However, frequent       
trading by Fund shareholders can disrupt management of each Fund and raise its  
expenses. Therefore, we may not accept any request for a purchase when we       
believe that it is being used as a tool for market timing and we may bar        
shareholders who trade excessively from making further purchases for an         
indefinite period.                                                              

TAX CONSEQUENCES                                                                

[GRAPHIC] As with any investment, you should consider how your investment in a  
Fund will be taxed. The tax information in this PROSPECTUS is provided as       
general information. You should consult your own tax professional about the tax 
consequences of an investment in a Fund.                                        

Your distributions are normally subject to federal and state income tax when    
they are paid. A distribution also may be subject to local income tax. Any      
income dividend distributions and any short-term capital gain distributions are 
taxable to you as ordinary income. Any long-term capital gain distributions are 
taxable as long-term capital gains, no matter how long you have owned shares in 
a Fund. Depending on your state's rules, however, any income dividend           
distributions from the Institutional Government Securities Trust attributable to
interest earned on direct obligations of the U.S. government may be exempt from 
state and local taxes.                                                          

Every January, you will be sent a statement (IRS Form 1099-DIV) showing the     
taxable distributions paid to you in the previous year. The statement provides  
information on your dividends and capital gains for tax purposes.               

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When you open your Fund account, you should provide your social security or tax 
identification number. By providing this information, you will avoid being      
subject to federal backup withholding tax on taxable distributions and          
redemption proceeds (as of the date of this PROSPECTUS this rate is 28%). Any   
withheld amount would be sent to the IRS as an advance payment of your taxes due
on your income.                                                                 

ADDITIONAL INFORMATION                                                          

[GRAPHIC] The Investment Adviser and/or the distributor may pay additional      
compensation (out of their own funds and not as an expense of the Funds) to     
certain affiliated or unaffiliated brokers, dealers or other financial          
intermediaries or service providers in connection with the sale or retention of 
Fund shares and/or shareholder servicing. Such compensation may be significant  
in amount and the prospect of receiving any such additional compensation may    
provide such affiliated or unaffiliated entities with an incentive to favor     
sales of shares of the Funds over other investment options. Any such payments   
will not change the net asset value or the price of the Funds' shares. For more 
information, please see the Funds' STATEMENT OF ADDITIONAL INFORMATION.         

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ACTIVE ASSETS INSTITUTIONAL MONEY TRUST                                         
FINANCIAL HIGHLIGHTS                                                            

The financial highlights table is intended to help you understand the Fund's    
financial performance for the periods indicated. Certain information reflects   
financial results for a single Fund share throughout each period. The total     
returns in the table represent the rate an investor would have earned or lost on
an investment in the Fund (assuming reinvestment of all dividends and           
distributions).                                                                 

This information has been audited by _________, an independent registered public
accounting firm, whose report, along with the Fund's financial statements, are  
incorporated by reference in the STATEMENT OF ADDITIONAL INFORMATION from the   
Fund's annual report, which is available upon request.                          

Data to Come

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ACTIVE ASSETS INSTITUTIONAL GOVERNMENT SECURITIES TRUST                         
FINANCIAL HIGHLIGHTS                                                            

The financial highlights table is intended to help you understand the Fund's    
financial performance for the periods indicated. Certain information reflects   
financial results for a single Fund share throughout each period. The total     
returns in the table represent the rate an investor would have earned or lost on
an investment in the Fund (assuming reinvestment of all dividends and           
distributions).                                                                 

This information has been audited by _________, an independent registered public
accounting firm, whose report, along with the Fund's financial statements, are  
incorporated by reference in the STATEMENT OF ADDITIONAL INFORMATION from the   
Fund's annual report, which is available upon request.                          

Data to Come

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Additional information about each Fund's investments is available in each Funds'
ANNUAL and SEMIANNUAL REPORTS TO SHAREHOLDERS.                                  

The Funds' STATEMENT OF ADDITIONAL INFORMATION also provides additional         
information about the Funds. The STATEMENT OF ADDITIONAL INFORMATION is         
incorporated herein by reference (legally is part of this PROSPECTUS). For a    
free copy of any of these documents, to request other information about the     
Funds or to make shareholder inquiries, please call toll-free (800) 869-NEWS.   
Free copies of these documents are also available from our Internet site at:    
www.morganstanley.com/funds.                                                    

You also may obtain information about the Funds by calling your Morgan Stanley  
Financial Advisor or by visiting our Internet site.                             

Information about the Funds (including the STATEMENT OF ADDITIONAL INFORMATION) 
can be viewed and copied at the Securities and Exchange Commission's (the "SEC")
Public Reference Room in Washington, DC. Information about the Reference Room's 
operations may be obtained by calling the SEC at (202) 551-8090. Reports and    
other information about the Funds are available on the EDGAR database on the    
SEC's Internet site (www.sec.gov) and copies of this information may be         
obtained, after paying a duplicating fee, by electronic request at the following
E-mail address: publicinfo@sec.gov, or by writing the Public Reference Section  
of the SEC, Washington, DC 20549-0102.                                          

TICKER SYMBOLS:                                                                 

ACTIVE ASSETS INSTITUTIONAL MONEY TRUST                                    AVIXX

ACTIVE ASSETS INSTITUTIONAL GOVERNMENT SECURITIES TRUST                    AISXX

THE FUNDS' INVESTMENT COMPANY ACT FILE NOS. ARE:                                

ACTIVE ASSETS INSTITUTIONAL MONEY TRUST                                 811-9713

ACTIVE ASSETS INSTITUTIONAL GOVERNMENT SECURITIES TRUST                811-21024

Investments and services are offered through Morgan Stanley DW Inc., member     
SIPC. Morgan Stanley, Active Assets, Active Assets Account and BusinesScape are 
service marks of Morgan Stanley or its affiliates.                              

(C) 2006 Morgan Stanley                                                         

[Morgan Stanley LOGO]                                                           

MORGAN STANLEY FUNDS                                                            

Active Assets -- Institutional Money Trust                                      
Institutional Government                      
Securities Trust                              

37854 10/06                                                                     

Two separate money market funds offered exclusively to participants in the      
Active Assets or BusinesScape Accounts                                          

[Morgan Stanley LOGO]                                                           

Prospectus                                                                      

October 31, 2006                                                                

CLF#37854 PRO-00                                                                

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STATEMENT OF ADDITIONAL INFORMATION                                             

OCTOBER 31, 2006                                                                

ACTIVE ASSETS INSTITUTIONAL MONEY TRUST                                         

ACTIVE ASSETS INSTITUTIONAL GOVERNMENT SECURITIES TRUST                         

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

This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus. The     
PROSPECTUS (dated October 31, 2006) for Active Assets Institutional Money Trust 
and Active Assets Institutional Government Securities Trust (each, a "Fund") may
be obtained without charge from the Funds at their address or telephone number  
listed below or from Morgan Stanley DW Inc. at any of its branch offices.       

    The Funds' audited financial statements for the fiscal year ended June 30,
2006, including notes thereto and the report of ___________, are herein         
incorporated by reference from the Funds' Annual Reports. Copies of the Funds'  
ANNUAL REPORTS TO SHAREHOLDERS must accompany the delivery of this STATEMENT OF 
ADDITIONAL INFORMATION.                                                         

Active Assets Institutional Money Trust                                         
Active Assets Institutional Government Securities Trust                         
1221 Avenue of the Americas                                                     
New York, NY 10020                                                              
(800) 869-NEWS                                                                  

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TABLE OF CONTENTS                                                               
--------------------------------------------------------------------------------

I.    History of the Funds                                                     4
II.   Description of the Funds and Their Investments and Risks                 4
      A. Classification                                                        4
      B. Investment Strategies and Risks                                       4
      C. Investment Objectives/Policies/Investment Restrictions                7
      D. Disclosure of Portfolio Holdings                                      8
III.  Management of the Funds                                                 12
      A. Board of Trustees                                                    12
      B. Management Information                                               12
      C. Compensation                                                         20
IV.   Control Persons and Principal Holders of Securities                     22
V.    Investment advisory and Other Services                                  22
      A. Investment Adviser and Administrator                                 22
      B. Principal Underwriter                                                23
      C. Services Provided by The investment Adviser and Administrator        23
      D. Other Service Providers                                              24
      E. Codes of Ethics                                                      25
      F. Proxy Voting policy and Proxy Voting Record                          25
      G. Revenue Sharing                                                      26
VI.   Brokerage Allocation and Other Practices                                27
      A. Brokerage Transactions                                               27
      B. Commissions                                                          27
      C. Brokerage Selection                                                  27
      D. Directed Brokerage                                                   28
      E. Regular Broker-Dealers                                               28
VII.  Capital Stock and Other Securities                                      29
VIII. Purchase, Redemption and Pricing of Shares                              29
      A. Purchase/Redemption of Shares                                        29
      B. Offering Price                                                       29
IX.   Taxation of the Funds and Their Shareholders                            31
X.    Underwriters                                                            33
XI.   Performance Data                                                        33
XII.  Financial Statements                                                    33
XIII. Fund Counsel                                                            33

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GLOSSARY OF SELECTED DEFINED TERMS                                              
--------------------------------------------------------------------------------

     The terms defined in this glossary are frequently used in this STATEMENT OF
ADDITIONAL INFORMATION (other terms used occasionally are defined in the text of
the document).                                                                  

 "ADMINISTRATOR" OR "MORGAN STANLEY SERVICES" -- Morgan Stanley Services
Company Inc., a wholly-owned fund services subsidiary of the Investment Adviser.

    "CUSTODIAN" -- The Bank of New York is the Custodian of the Funds' assets.

"DISTRIBUTOR" -- Morgan Stanley Distributors Inc., a wholly-owned     
broker-dealer subsidiary of Morgan Stanley.                                     

"FINANCIAL ADVISORS" -- Morgan Stanley authorized financial services  
representatives.                                                                

"FUND" -- Either of Active Assets Institutional Money Trust or Active 
Assets Institutional Government Securities Trust, each a registered, no-load    
open-end investment company.                                                    

 "INDEPENDENT TRUSTEES" -- Trustees who are not "interested persons" (as
defined by the Investment Company Act of 1940, as amended ("Investment Company  
Act")) of the Funds.                                                            

"INVESTMENT ADVISER" -- Morgan Stanley Investment Advisors Inc., a    
wholly-owned investment adviser subsidiary of Morgan Stanley.                   

     "MORGAN STANLEY & CO." -- Morgan Stanley & Co. Incorporated, a wholly-owned
broker-dealer subsidiary of Morgan Stanley.                                     

     "MORGAN STANLEY DW" -- Morgan Stanley DW Inc., a wholly-owned broker-dealer
subsidiary of Morgan Stanley.                                                   

 "MORGAN STANLEY FUNDS" -- Registered investment companies for which the
Investment Adviser serves as the investment adviser and that hold themselves out
to investors as related companies for investment and investor services.         

 "TRANSFER AGENT" -- Morgan Stanley Trust, a wholly-owned transfer agent
subsidiary of Morgan Stanley.                                                   

"TRUSTEES" -- The Board of Trustees of the Funds.                     

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I. HISTORY OF THE FUNDS                                                         

     Each Fund was organized as a Massachusetts business trust, under a separate
Declaration of Trust. Active Assets Institutional Money Trust was organized on  
November 23, 1999. Active Assets Institutional Government Securities Trust was  
organized on January 18, 2002.                                                  

II. DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS                    

A. CLASSIFICATION                                                               

   Each Fund is an open-end, diversified management investment company whose
investment objectives are to provide high current income, preservation of       
capital and liquidity.                                                          

B. INVESTMENT STRATEGIES AND RISKS                                              

The following discussion of the Funds' investment strategies and risks
should be read with the sections of the Funds' PROSPECTUS entitled "Principal   
Investment Strategies" and "Principal Risks."                                   

    REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements. When
cash may be available for only a few days, it may be invested by the Funds in   
repurchase agreements until such time as it may otherwise be invested or used   
for payments of obligations of the Funds. These agreements, which may be viewed 
as a type of secured lending by the Funds, typically involve the acquisition by 
the Funds of debt securities from a selling financial institution such as a     
bank, savings and loan association or broker-dealer. The agreement provides that
a Fund will sell back to the institution, and that the institution will         
repurchase, the underlying security serving as collateral at a specified price  
and at a fixed time in the future, usually not more than seven days from the    
date of purchase. The collateral will be marked-to-market daily to determine    
that the value of the collateral, as specified in the agreement, does not       
decrease below the purchase price plus accrued interest. If such a decrease     
occurs, additional collateral will be requested and, when received, added to the
account to maintain full collateralization. The Funds will accrue interest from 
the institution until the time when the repurchase is to occur. Although this   
date is deemed by the Funds to be the maturity date of a repurchase agreement,  
the maturities of securities subject to repurchase agreements are not subject to
any limits. In addition, Active Assets Institutional Money Trust may invest in  
repurchase agreements backed by non-governmental collateral. Such repurchase    
agreements may be subject to the automatic stay provision of the Bankruptcy     
Code, and may result in the inability of a Fund to immediately liquidate the    
collateral in the event of default or bankruptcy by the seller.                 

While repurchase agreements involve certain risks not associated with 
direct investments in debt securities, the Funds follow procedures approved by  
the Trustees designed to minimize such risks. These procedures include effecting
repurchase transactions only with large, well capitalized and well established  
financial institutions, whose financial condition will be continually monitored 
by the Investment Adviser. In addition, as described above, the value of the    
collateral underlying the repurchase agreement will always be at least equal to 
the repurchase price which consists of the acquisition price paid to the seller 
of the securities plus the accrued resale premium, which is defined as the      
amount specified in the repurchase agreement or the daily amortization of the   
difference between the acquisition price and the resale price specified in the  
repurchase agreement. Such collateral will consist entirely of securities that  
are direct obligations of, or that are fully guaranteed as to principal and     
interest by, the United States or any agency thereof, and/or certificates of    
deposit, bankers' acceptances which are eligible for acceptance by a Federal    
Reserve Bank, and, if the seller is a bank, mortgage related securities (as such
term is defined in section 3(a)(41) of the Securities Exchange Act of 1934, as  
amended ("1934 Act")) that, at the time the repurchase agreement is entered     
into, are rated in the highest rating category by the Requisite Nationally      
Recognized Statistical Rating Organizations ("NRSRO") (as defined by Rule 2a-7  
under the Investment Company Act (the "Rule")) or unrated securities that are of
comparable quality to securities that are rated in the highest rating category  
by the Requisite NRSROs, as determined by the Board of Trustees of the Fund or  
its delegate. Additionally, upon an Event of Insolvency (as defined under Rule  
2a-7) with respect to the seller, the collateral must qualify the repurchase    
agreement for preferential treatment under a provision of applicable insolvency 
law providing an exclusion from any automatic stay of creditors' rights against 
the seller. In the event of a default or bankruptcy by a selling financial      
institution, the Funds will                                                     

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seek to liquidate such collateral. However, the exercising of a Fund's right to 
liquidate such collateral could involve certain costs or delays and, to the     
extent that proceeds from any sale upon a default of the obligation to          
repurchase were less than the repurchase price, the Funds could suffer a loss.  
It is the current policy of each Fund not to invest in repurchase agreements    
that do not mature within seven days if any such investment, together with any  
other illiquid assets held by the Fund, amounts to more than 10% of its net     
assets. A Fund's investments in repurchase agreements may at times be           
substantial when, in the view of the Fund's Investment Adviser, liquidity or    
other considerations warrant.                                                   

VARIABLE RATE AND FLOATING RATE OBLIGATIONS. Each Fund may invest in  
variable rate and floating rate obligations. The interest rate payable on a     
variable rate obligation is adjusted at predesignated periodic intervals and, on
a floating rate obligation, whenever there is a change in the market rate of    
interest on which the interest rate payable is based. Other features may include
the right whereby a Fund may demand prepayment of the principal amount of the   
obligation prior to its stated maturity (a "demand feature") and the right of   
the issuer to prepay the principal amount prior to maturity. The principal      
benefit of a variable rate obligation is that the interest rate adjustment      
minimizes changes in the market value of the obligation. As a result, the       
purchase of variable rate and floating rate obligations should enhance the      
ability of the Funds to maintain a stable net asset value per share and to sell 
obligations prior to maturity at a price that is approximately the full         
principal amount of the obligations. The principal benefit to a Fund of         
purchasing obligations with a demand feature is that liquidity, and the ability 
of the Fund to obtain repayment of the full principal amount of an obligation   
prior to maturity, is enhanced. The payment of principal and interest by issuers
of certain obligations purchased by a Fund may be guaranteed by letters of      
credit or other credit facilities offered by banks or other financial           
institutions. Such guarantees will be considered in determining whether an      
obligation meets a Fund's investment quality requirements.                      

  REVERSE REPURCHASE AGREEMENTS. Each Fund may also use reverse repurchase
agreements. Reverse repurchase agreements involve sales by a Fund of portfolio  
assets concurrently with an agreement by the Fund to repurchase the same assets 
at a later date at a fixed price. Generally, the effect of such a transaction is
that the Fund can recover all or most of the cash invested in the portfolio     
securities involved during the term of the reverse repurchase agreement, while  
it will be able to keep the interest income associated with those portfolio     
securities. Such transactions are only advantageous if the interest cost to the 
Fund of the reverse repurchase transaction is less than the cost of obtaining   
the cash otherwise. Opportunities to achieve this advantage may not always be   
available, and each Fund intends to use the reverse repurchase technique only   
when it will be to its advantage to do so. Each Fund will establish a segregated
account with its custodian bank in which it will maintain cash or cash          
equivalents or other portfolio securities equal in value to its obligations in  
respect of reverse repurchase agreements. Reverse repurchase agreements are     
considered borrowings by the Funds and for purposes other than meeting          
redemptions may not exceed 5% of each Fund's total assets.                      

   PRIVATE PLACEMENTS. Active Assets Institutional Money Trust may invest in
commercial paper issued in reliance on the so-called "private placement"        
exemption afforded by Section 4(2) of the Securities Act of 1933, as amended    
("Securities Act") and which may be sold to other institutional investors       
pursuant to Rule 144A under the Securities Act. Rule 144A permits the Fund to   
sell restricted securities to qualified institutional buyers without limitation.
The Investment Adviser, pursuant to procedures adopted by the Trustees, will    
make a determination as to the liquidity of each restricted security purchased  
by the Fund. If a restricted security is determined to be "liquid," the security
will not be included within the category "illiquid securities."                 

    LOANS OF PORTFOLIO SECURITIES. Each Fund may lend its portfolio securities
to brokers, dealers, banks and other institutional investors. By lending its    
portfolio securities, each Fund attempts to increase its net investment income  
through the receipt of interest on the cash collateral with respect to the loan 
or fees received from the borrower in connection with the loan. Any gain or loss
in the market price of the securities loaned that might occur during the term of
the loan would be for the account of each respective Fund. Each Fund employs an 
agent to implement the securities lending program and the agent receives a fee  
from the Fund for its services. Each Fund will not lend more than 331/3% of the 
value of its total assets.                                                      

     Each Fund may lend its portfolio securities so long as the terms, structure
and the aggregate amount of such loans are not inconsistent with the Investment 
Company Act or the Rules and Regulations or interpretations of the U.S.         
Securities and Exchange Commission ("SEC") thereunder, which currently require  
that (i) the borrower pledge and maintain with the Fund collateral consisting of
liquid, unencumbered assets having a value at all times not less than 100% of   
the value of the securities loaned; (ii) the borrower                           

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add to such collateral whenever the price of the securities loaned rises (i.e., 
the borrower "marks to market" on a daily basis); (iii) the loan be made subject
to termination by the Fund at any time; and (iv) the Fund receive a reasonable  
return on the loan (which may include the Fund investing any cash collateral in 
interest bearing short-term investments), any distributions on the loaned       
securities and any increase in their market value. In addition, voting rights   
may pass with the loaned securities, but each Fund will retain the right to call
any security in anticipation of a vote that the Investment Adviser deems        
material to the security on loan.                                               

     There may be risks of delay and costs involved in recovery of securities or
even loss of rights in the collateral should the borrower of the securities fail
financially. These delays and costs could be greater for foreign securities.    
However, loans will be made only to borrowers deemed by the Investment Adviser  
to be creditworthy and when, in the judgment of the Investment Adviser, the     
income which can be earned from such securities loans justifies the attendant   
risk. All relevant facts and circumstances, including the creditworthiness of   
the broker, dealer, bank or institution, will be considered in making decisions 
with respect to the lending of securities, subject to review by each Fund's     
Board of Trustees. Each Fund also bears the risk that the reinvestment of       
collateral will result in a principal loss. Finally, there is the risk that the 
price of the securities will increase while they are on loan and the collateral 
will not be adequate to cover their value.                                      

INVESTMENT STRATEGIES AND RISKS APPLICABLE TO ACTIVE ASSETS INSTITUTIONAL MONEY 
TRUST                                                                           

PROMISSORY NOTES. The Fund may invest in unsecured promissory notes.  
Promissory notes are generally debt obligations of the issuing entity and are   
subject to the risks of investing in corporate debt. The Fund may invest up to  
10% in illiquid securities, including unsecured bank promissory notes.          

  FUNDING AGREEMENTS. The Fund may invest in funding agreements. A funding
agreement is a contract between an issuer and a purchaser that obligates the    
issuer to pay a guaranteed rate of interest on a principal sum deposited by the 
purchaser. Funding agreements will also guarantee the return of principal and   
may guarantee a stream of payments over time. A funding agreement has a fixed   
maturity and may have either a fixed, variable or floating interest rate that is
based on an index and guaranteed for a fixed time period. The secondary market, 
if any, for these funding agreements is limited; thus, such investments         
purchased by the Fund may be treated as illiquid. The Fund may invest up to 10% 
in illiquid securities, including funding agreements.                           

  TAX-EXEMPT VARIABLE RATE DEMAND NOTES. The Fund may invest in tax-exempt
variable rate demand notes, which are variable rate tax-exempt debt obligations 
that give investors the right to demand principal repayment. Due to cyclical    
supply and demand considerations, at times the yields on these obligations can  
exceed the yield on taxable money market obligations.                           

 CORPORATE DEBT OBLIGATIONS. Corporate debt obligations are fixed income
securities issued by private corporations. Debtholders, as creditors, have a    
prior legal claim over common and preferred stockholders of the corporation as  
to both income and assets for the principal and interest due to the bondholder. 
The Fund will buy corporate debt obligations subject to any quality constraints 
set forth by the Rule under the Investment Company Act.                         

    ASSET-BACKED SECURITIES. Asset-backed securities are securities secured by
non-mortgage assets such as company receivables, truck and auto loans, leases   
and credit card receivables. Such securities are generally issued as            
pass-through certificates, which represent undivided fractional ownership       
interests in the underlying pools of assets. Such securities also may be debt   
instruments, which are also known as collateralized obligations and are         
generally issued as the debt of a special purpose entity, such as a trust,      
organized solely for the purpose of owning such assets and issuing such debt.   
Credit support for asset-backed securities may be based on the underlying assets
and/or provided by a third party through credit enhancements. Credit enhancement
techniques include letters of credit, insurance bonds, limited guarantees (which
are generally provided by the issuer), senior-subordinated structures and       
over-collateralization.                                                         

     Asset-backed securities are not issued or guaranteed by the U.S. Government
or its agencies of instrumentalities; however, the payment of principal and     
interest on such obligations may be guaranteed up to certain amounts for a      
certain period by a letter of credit issued by a financial institution (such as 
a bank or insurance company) unaffiliated with the issuers of such securities.  
The purchase of asset-backed securities raises risk considerations peculiar to  
the financing of the instruments underlying such securities. For example, there 
is a risk that another party could acquire an interest in the obligations       

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superior to that of the holders of the asset-backed securities. There also is   
the possibility that recoveries or repossessed collateral may not, in some      
cases, be available to support payments on those securities. Some asset-backed  
securities entail prepayment risk, which may vary depending on the type of      
asset. Securities subject to prepayment risk generally offer less potential for 
gains when interest rates decline, and may offer a greater potential for loss   
when interest rates rise. In addition, rising interest rates may cause          
prepayments to occur at a slower than expected rate, thereby effectively        
lengthening the maturity of the security and making the security more sensitive 
to interest rate changes.                                                       

ADJUSTABLE RATE GOVERNMENT SECURITIES. Adjustable rate government     
securities are variable rate securities where the variable rate of interest is  
readjusted no less frequently than every 397 days and deemed to have a maturity 
equal to the period remaining until the next readjustment of the interest rate. 

C. INVESTMENT OBJECTIVES/POLICIES/INVESTMENT RESTRICTIONS                       

   Each Fund's investment objectives, policies and restrictions listed below
have been adopted by the Funds as fundamental policies. Under the Investment    
Company Act, a fundamental policy may not be changed without the vote of a      
majority of the outstanding voting securities of the applicable Fund. The       
Investment Company Act defines a majority as the lesser of (a) 67% or more of   
the shares present at a meeting of shareholders, if the holders of 50% of the   
outstanding shares of the applicable Fund are present or represented by proxy;  
or (b) more than 50% of the outstanding shares of the applicable Fund. For      
purposes of the following restrictions: (i) all percentage limitations apply    
immediately after a purchase or initial investment; and (ii) any subsequent     
change in any applicable percentage resulting from market fluctuations or other 
changes in total or net assets does not require elimination of any security from
the portfolio, except in the case of borrowing and investments in illiquid      
securities).                                                                    

Each Fund will:                                                       

1. Seek high current income, preservation of capital and liquidity.   

Each Fund will not:                                                   

1. Invest in a manner inconsistent with its classification as a       
"diversified company" as provided by (i) the Investment Company Act, as amended 
from time to time, (ii) the rules and regulations promulgated by the SEC under  
the Investment Company Act, as amended from time to time, or (iii) an exemption 
or other relief applicable to a Fund from the provisions of the Investment      
Company Act, as amended from time to time.                                      

    2. Borrow money, except a Fund may borrow money to the extent permitted by
(i) the Investment Company Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the Investment Company Act, as amended 
from time to time, or (iii) an exemption or other relief applicable to the Fund 
from the provisions of the Investment Company Act, as amended from time to time.

    3. Purchase any securities, other than obligations of banks or of the U.S.
Government, or its agencies or instrumentalities, if, immediately after such    
purchase, 25% or more of the value of a Fund's total assets would be invested in
the securities of issuers in the same industry; however, there is no limitation 
as to investments in bank obligations or in obligations issued or guaranteed by 
the U.S. Government, its agencies or instrumentalities.                         

    4. Make loans of money or property to any person, except (a) to the extent
that securities or interests in which the Fund may invest are considered to be  
loans, (b) through the loan of portfolio securities, (c) by engaging in         
repurchase agreements or (d) as may otherwise be permitted by (i) the Investment
Company Act, as amended from time to time, (ii) the rules and regulations       
promulgated by the SEC under the Investment Company Act, as amended from time to
time, or (iii) an exemption or other relief applicable to a Fund from the       
provision of the Investment Company Act, as amended from time to time.          

  5. Purchase or sell real estate; however, a Fund may purchase marketable
securities issued by companies which invest in real estate or interests therein.

 6. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; provided that this restriction    
shall not prohibit a Fund from purchasing or selling options, futures contracts 
and related options thereon, forward contracts, swaps, caps, floors, collars and
any other financial instruments or from investing in securities or other        
instruments backed by physical commodities or as otherwise permitted by (i) the 
Investment Company Act, as amended from time to time, (ii) the rules and        
regulations promulgated by the SEC under the Investment Company Act, as amended 
from time to                                                                    

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time, or (iii) an exemption or other relief applicable to a Fund from the       
provisions of the Investment Company Act, as amended from time to time.         

7. Underwrite securities of other issuers.                            

  8. Issue senior securities, except a Fund may issue senior securities to
the extent permitted by (i) the Investment Company Act, as amended from time to 
time, (ii) the rules and regulations promulgated by the SEC under the Investment
Company Act, as amended from time to time, or (iii) an exemption or other relief
applicable to the Fund from the provisions of the Investment Company Act, as    
amended from time to time.                                                      

     In addition, as a non-fundamental policy, each Fund may not invest in other
investment companies in reliance on Section 12(d)(1)(F), 12(d)(1)(G), or        
12(d)(1)(J) of the Investment Company Act.                                      

     Each Fund has an operating policy, which may be changed by the Fund's Board
of Trustees, not to borrow except from a bank for temporary or emergency        
purposes in amounts not exceeding 5% (taken at the lower of cost or current     
value) of its total assets not including the amount borrowed). Notwithstanding  
any other investment policy or restriction, each Fund may seek to achieve its   
investment objectives by investing all or substantially all of its assets in    
another investment company having substantially the same investment objectives  
and policies as the Fund.                                                       

D. DISCLOSURE OF PORTFOLIO HOLDINGS                                             

The Funds' Board of Trustees and the Investment Adviser have adopted  
policies and procedures regarding disclosure of portfolio holdings (the         
"Policy"). Pursuant to the Policy, the Investment Adviser may disclose          
information concerning Fund portfolio holdings only if such disclosure is       
consistent with the antifraud provisions of the federal securities laws and the 
Funds' and the Investment Adviser's fiduciary duties to Fund shareholders. The  
Investment Adviser may not receive compensation or any other consideration in   
connection with the disclosure of information about the portfolio securities of 
the Funds. Consideration includes any agreement to maintain assets in the Funds 
or in other investment companies or accounts managed by the Investment Adviser  
or by any affiliated person of the Investment Adviser. Non-public information   
concerning portfolio holdings may be divulged to third parties only when the    
Funds have a legitimate business purpose for doing so and the recipients of the 
information are subject to a duty of confidentiality. Under no circumstances    
shall current or prospective Fund shareholders receive non-public portfolio     
holdings information, except as described below.                                

The Funds make available on their public website complete portfolio   
holdings information quarterly on a calendar quarter basis with a minimum 30    
calendar day lag.                                                               

    The Funds provide a complete schedule of portfolio holdings for the second
and fourth fiscal quarters in its semiannual and annual reports, and for the    
first and third fiscal quarters in its filings with the SEC on Form N-Q.        

    All other portfolio holdings information that has not been disseminated in
a manner making it available to investors generally as described above is       
non-public information for purposes of the Policy.                              

   The Funds may make selective disclosure of non-public portfolio holdings.
Third parties eligible to receive such disclosures currently include fund rating
agencies, information exchange subscribers, consultants and analysts, portfolio 
analytics providers and service providers provided that the third party         
expressly agrees to maintain the disclosed information in confidence and not to 
trade portfolio securities based on the non-public information. Non-public      
portfolio holdings information may not be disclosed to a third party unless and 
until the arrangement has been reviewed and approved pursuant to the            
requirements set forth in the Policy. Subject to the terms and conditions of any
agreement between the Investment Adviser or the Funds and the third party       
recipient, if these conditions for disclosure are satisfied, there shall be no  
restriction on the frequency with which Fund non-public portfolio holdings      
information is released, and no lag period shall apply (unless otherwise        
indicated below).                                                               

 The Investment Adviser may provide interest lists to broker-dealers who
execute securities transactions for the Funds without entering into a           
nondisclosure agreement with the broker-dealers, provided that the interest list
satisfies all of the following criteria: (1) the interest list must contain only
the CUSIP numbers and/or ticker symbols of securities held in all registered    
management investment companies advised by the Investment Adviser or any        
affiliate of the Investment Adviser (the "MSIM Funds") on an aggregate, rather  
than a fund-by-fund basis; (2) the interest list must not contain information   
about the number or value of shares owned by a specified MSIM Fund; (3) the     
interest list may identify the investment strategy, but not                     

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the particular MSIM Funds, to which the list relates; and (4) the interest list 
may not identify the portfolio manager or team members responsible for managing 
the MSIM Funds.                                                                 

     Fund shareholders may elect in some circumstances to redeem their shares of
the Fund in exchange for their pro rata share of the securities held by that    
Fund. Under such circumstances, Fund shareholders may receive a complete listing
of the holdings of the Fund up to seven calendar days prior to making the       
redemption request provided that they represent orally or in writing that they  
agree not to disclose or trade on the basis of the portfolio holdings           
information.                                                                    

The Funds may discuss or otherwise disclose performance attribution   
analyses (i.e., mention the effects of having a particular security in the      
portfolio(s)) where such discussion is not contemporaneously made public,       
provided that the particular holding has been disclosed publicly. Additionally, 
any discussion of the analyses may not be more current than the date the holding
was disclosed publicly.                                                         

    The Funds may disclose portfolio holdings to transition managers, provided
that the Funds have entered into a non-disclosure or confidentiality agreement  
with the party requesting that the information be provided to the transition    
manager and the party to the non-disclosure agreement has, in turn, entered into
a non-disclosure or confidentiality agreement with the transition manager.      

The Investment Adviser and/or the Funds have entered into ongoing     
arrangements to make available public and/or non-public information about the   
Funds' portfolio securities. Provided that the recipient of the information     
falls into one or more of the categories listed below, and the recipient has    
entered into a nondisclosure agreement with each Fund, or owes a duty of trust  
or confidence to the Investment Adviser or the Fund, the recipient may receive  
portfolio holdings information pursuant to such agreement without obtaining     
pre-approval from either the Portfolio Holdings Review Committee ("PHRC") or    
each Fund's Board of Trustees. In all such instances, however, the PHRC will be 
responsible for reporting to each Fund's Board of Trustees, or designated       
Committee thereof, material information concerning the ongoing arrangements at  
each Board's next regularly scheduled Board meeting. Categories of parties      
eligible to receive information pursuant to such ongoing arrangements include   
fund rating agencies, information exchange subscribers, consultants and         
analysts, portfolio analytics providers and service providers.                  

     The Investment Adviser and/or each Fund currently have entered into ongoing
arrangements with the following parties:                                        

                                                        [Enlarge/Download Table]

NAME                                          INFORMATION DISCLOSED            FREQUENCY(1)                   LAG TIME           
----------------------------------------  -----------------------------  ------------------------  ------------------------------
                                                                                                                                 
SERVICE PROVIDERS                                                                                                                

Institutional Shareholder Services (ISS)  Complete portfolio             Twice a month                          (2)              
   (proxy voting agent)(*)                holdings                                                                               

FT Interactive Data Pricing Service       Complete portfolio             As needed                              (2)              
   Provider(*)                            holdings                                                                               

Morgan Stanley Trust(*)                   Complete portfolio             As needed                              (2)              
                                          holdings                                                                               

The Bank of New York(*)                   Complete portfolio             As needed                              (2)              
                                          holdings                                                                               

FUND RATING AGENCIES                                                                                                             
Lipper(*)                                 Top ten and complete           Quarterly basis           Approximately 15 days after   
                                          portfolio holdings                                       quarter end and approximately 
                                                                                                   30 days after quarter end     

Morningstar(**)                           Top ten and complete           Quarterly basis           Approximately 15 days         
                                          portfolio holdings                                       after quarter end and         
                                                                                                   approximately 30 days after   
                                                                                                   quarter end                   

Standard & Poor's(*)                      Complete portfolio             Quarterly basis           Approximately 15 day lag      
                                          holdings                                                                               

Investment Company Institute(**)          Top ten portfolio holdings     Quarterly basis           Approximately 15 days         
                                                                                                   after quarter end             

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NAME                                          INFORMATION DISCLOSED             FREQUENCY(1)                  LAG TIME          
----------------------------------------  -----------------------------  ------------------------  -----------------------------
                                                                                                                                
CONSULTANTS AND ANALYSTS                                                                                                        
Americh Massena & Associates, Inc.(*)     Top ten and complete           Quarterly basis(5)        Approximately 10-12 days     
                                          portfolio holdings                                       after quarter end            

Bloomberg(**)                             Complete portfolio             Quarterly basis           Approximately 30 days after  
                                          holdings                                                 quarter end                  

Callan Associates(*)                      Top ten and complete           Monthly and quarterly     Approximately 10-12 days     
                                          portfolio holdings             basis, respectively(5)    after month/quarter end      

Cambridge Associates(*)                   Top ten and complete           Quarterly basis(5)        Approximately 10-12 days     
                                          portfolio holdings                                       after quarter end            

Citigroup(*)                              Complete portfolio holdings    Quarterly basis(5)        At least one day after       
                                                                                                   quarter end                  

Credit Suisse First Boston(*)             Top ten and complete           Monthly and quarterly     Approximately 10-12 days     
                                          portfolio holdings             basis, respectively       after month/quarter end      

CTC Consulting, Inc.(**)                  Top ten and complete           Quarterly basis           Approximately 15 days        
                                          portfolio holdings                                       after quarter end and        
                                                                                                   approximately 30 days after  
                                                                                                   quarter end, respectively    

Evaluation Associates(*)                  Top ten and complete           Monthly and quarterly     Approximately 10-12 days     
                                          portfolio holdings             basis, respectively(5)    after month/quarter end      

Fund Evaluation Group(**)                 Top ten portfolio holdings(3)  Quarterly basis           At least 15 days after       
                                                                                                   quarter end                  

Jeffrey Slocum & Associates(*)            Complete portfolio             Quarterly basis(5)        Approximately 10-12 days     
                                          holdings(4)                                              after quarter end            

Hammond Associates(**)                    Complete portfolio             Quarterly basis           At least 30 days after       
                                          holdings(4)                                              quarter end                  

Hartland & Co.(**)                        Complete portfolio             Quarterly basis           At least 30 days after       
                                          holdings(4)                                              quarter end                  

Hewitt Associates(*)                      Top ten and complete           Monthly and quarterly     Approximately 10-12 days     
                                          portfolio holdings             basis, respectively(5)    after month/quarter end      

Merrill Lynch(*)                          Top ten and complete           Monthly and quarterly     Approximately 10-12 days     
                                          portfolio holdings             basis, respectively(5)    after month/quarter end      

Mobius(**)                                Top ten portfolio holdings(3)  Monthly basis             At least 15 days after month 
                                                                                                   end                          

Nelsons(**)                               Top ten portfolio holdings(3)  Quarterly basis           At least 15 days after       
                                                                                                   quarter end                  

Prime Buchholz & Associates, Inc.(**)     Complete portfolio             Quarterly basis           At least 30 days after       
                                          holdings(4)                                              quarter end                  

PSN(**)                                   Top ten portfolio holdings(3)  Quarterly basis           At least 15 days after       
                                                                                                   quarter end                  

PFM Asset Management LLC(*)               Top ten and complete           Quarterly basis(5)        Approximately 10-12 days     
                                          portfolio holdings                                       after quarter end            

Russell Investment Group/Russell/         Top ten and complete           Monthly and quarterly     At least 15 days after       
   Mellon Analytical Services,            portfolio holdings             basis                     month end and at least 30    
   Inc.(**)                                                                                        days after quarter end,      
                                                                                                   repectively                  

Stratford Advisory Group, Inc.(*)         Top ten portfolio holdings(6)  Quarterly basis(5)        Approximately 10-12 days     
                                                                                                   after quarter end            

Thompson Financial(**)                    Complete portfolio             Quarterly basis           At least 30 days after       
                                          holdings(4)                                              quarter end                  

Watershed Investment Consultants,         Top ten and complete           Quarterly basis(5)        Approximately 10-12 days     
   Inc.(*)                                portfolio holdings                                       after quarter end            

Yanni Partners(**)                        Top ten portfolio holdings(3)  Quarterly basis           At least 15 days after       
                                                                                                   quarter end                  

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NAME                                          INFORMATION DISCLOSED             FREQUENCY(1)                  LAG TIME           
----------------------------------------  -----------------------------  ------------------------  ------------------------------
                                                                                                                                 
PORTFOLIO ANALYTICS PROVIDERS                                                                                                    
Fact Set(*)                               Complete portfolio holdings    Daily                        One day                    

----------                                                                      
(*)  This entity has agreed to maintain Fund non-public portfolio holdings      
  information in confidence and not to trade portfolio securities based on
the non-public portfolio holdings information.                        

(**) The Fund does not currently have a non-disclosure agreement in place with  
  this entity and therefore the entity can only receive publicly available
information.                                                          

(1)  Dissemination of portfolio holdings information to entities listed above   
may occur less frequently than indicated (or not at all).             

(2)  Information will typically be provided on a real time basis or as soon     
thereafter as possible.                                               

(3)  Complete portfolio holdings will also be provided upon request from time to
time on a quarterly basis, with at least a 30 day lag.                

(4)  Top ten portfolio holdings will also be provided upon request from time to 
time, with at least a 15 day lag.                                     

(5)  This information will also be provided upon request from time to time.     

(6)  Complete portfolio holdings will also be provided upon request from time to
time.                                                                 

In addition, persons who owe a duty of trust or confidence to the     
Investment Adviser or each Fund may receive non-public portfolio holdings       
information without entering into a non-disclosure agreement. Currently these   
persons include (i) each Fund's independent registered public accounting firm   
(as of each Fund's fiscal year end and on an as needed basis), (ii) counsel to  
each Fund (on an as needed basis), (iii) counsel to the Independent Trustees (on
an as needed basis) and (iv) members of the Board of Trustees (on an as needed  
basis).                                                                         

     All selective disclosures of non-public portfolio holdings information made
to third parties pursuant to the exemptions set forth in the Policy must be     
pre-approved by both the PHRC and each Fund's Board of Trustees (or a designated
Committee thereof), except for (i) disclosures made to third parties pursuant to
ongoing arrangements (discussed above); (ii) disclosures made to third parties  
pursuant to Special Meetings of the PHRC; (iii) broker-dealer interest lists;   
(iv) shareholder in-kind distributions; (v) attribution analyses; or (vi) in    
connection with transition managers. The Investment Adviser shall report        
quarterly to the Board of Trustees (or a designated Committee thereof)          
information concerning all parties receiving non-public portfolio holdings      
information pursuant to an exemption. Procedures to monitor the use of such     
non-public portfolio holdings information may include requiring annual          
certifications that the recipients have utilized such information only pursuant 
to the terms of the agreement between the recipient and the Investment Adviser  
and, for those recipients receiving information electronically, acceptance of   
the information will constitute reaffirmation that the third party expressly    
agrees to maintain the disclosed information in confidence and not to trade     
portfolio securities based on the material non-public information.              

In no instance may the Investment Adviser or the Funds receive any    
compensation or consideration in exchange for the portfolio holdings            
information.                                                                    

  The PHRC is responsible for creating and implementing the Policy and, in
this regard, has expressly adopted it. The following are some of the functions  
and responsibilities of the PHRC:                                               

     (a) The PHRC, which will consist of executive officers of each Fund and the
Investment Adviser or their designees, is responsible for establishing portfolio
holdings disclosure policies and guidelines and determining how portfolio       
holdings information will be disclosed on an ongoing basis.                     

  (b) The PHRC will periodically review and have the authority to amend as
necessary each Fund's portfolio holdings disclosure policies and guidelines (as 
expressed by the Policy).                                                       

 (c) The PHRC will meet at least quarterly to (among other matters): (1)
address any outstanding issues relating to the Policy, including matters        
relating to (i) disclosures made to third parties pursuant to ongoing           
arrangements (described above); (ii) broker-dealer interest lists; (iii)        
shareholder in-kind distributions; (iv) attribution analyses; or (v) in         
connection with transition managers; (2) review non-disclosure agreements that  
have been executed with third parties and determine whether the third parties   
will receive portfolio holdings information; and (3) generally review the       
procedures that the Investment Adviser employs to ensure that disclosure of     
information about portfolio securities is in the best interests of Fund         
shareholders, including procedures to address conflicts between the interests of
Fund shareholders, on the one hand, and those of the Investment Adviser, the    
Distributor or any affiliated person of the Funds, the Investment Adviser or the
Distributor, on the other.                                                      

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(d) Any member of the PHRC may call a Special Meeting of the PHRC to  
consider whether a third-party that is not listed in (c) above may receive      
non-public portfolio holdings information pursuant to a validly executed        
nondisclosure agreement. At least three members of the PHRC, or their designees,
and one member of the Funds' Audit Committee, or his or her designee, shall be  
present at the Special Meeting in order to constitute a quorum. At any Special  
Meeting at which a quorum is present, the decision of a majority of the PHRC    
members present and voting shall be determinative as to any matter submitted to 
a vote; provided, however, that the Audit Committee member, or his or her       
designee, must concur in the determination in order for it to become effective. 

 (e) The PHRC, or its designee(s), will document in writing all of their
decisions and actions, which documentation will be maintained by the PHRC, or   
its designee(s) for a period of at least six years. The PHRC, or its            
designee(s), will report their decisions to the Board of Trustees at each       
Board's next regularly scheduled Board meeting. The report will contain         
information concerning decisions made by the PHRC during the most recently ended
calendar quarter immediately preceding the Board meeting.                       

III. MANAGEMENT OF THE FUNDS                                                    

A. BOARD OF TRUSTEES                                                            

    The Board of Trustees of each of the Funds oversees the management of each
Fund, but does not itself manage each Fund. The Trustees review various services
provided by or under the direction of the Investment Adviser to ensure that the 
Funds' general investment policies and programs are properly carried out. The   
Trustees also conduct their review to ensure that administrative services are   
provided to the Funds in a satisfactory manner.                                 

    Under state law, the duties of the Trustees are generally characterized as
a duty of loyalty and a duty of care. The duty of loyalty requires a Trustee to 
exercise his or her powers in the interest of the Funds and not the Trustee's   
own interest or the interest of another person or organization. A Trustee       
satisfies his or her duty of care by acting in good faith with the care of an   
ordinarily prudent person and in a manner the Trustee reasonably believes to be 
in the best interest of each Fund and its shareholders.                         

B. MANAGEMENT INFORMATION                                                       

TRUSTEES AND OFFICERS. The Board of each Fund consists of 13 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"). Eleven Trustees have no affiliation or business 
connection with the Investment Adviser or any of its affiliated persons and do  
not own any stock or other securities issued by the Investment Adviser's parent 
company, Morgan Stanley. These are the "non-interested" or "Independent"        
Trustees. The other two Trustees (the "Management Trustees") are affiliated with
the Investment Adviser.                                                         

   The Independent Trustees of each Fund, 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 Independent Trustee (as of December 31, 2005) and other        
directorships, if any, held by the Trustees, are shown below. 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 advisor 
that is an affiliated person of the Investment Adviser (including, but not      
limited to, Morgan Stanley Investment Management Inc.).                         

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                                                                                        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       REGISTRANTS   SERVED*            PAST 5 YEARS           BY TRUSTEE           BY TRUSTEE        
------------------------------  -----------  ---------  ------------------------------  ----------  ---------------------------
                                                                                                                               
Frank L. Bowman (61)            Trustee      Since      President and Chief Executive      187**    Director of the National   
c/o Kramer Levin                             [August    Officer of the Nuclear Energy               Energy Foundation, the U.S.
Naftalis & Frankel LLP                       2006]      Institute (since February                   Energy Association, the    
Counsel to the                                          2005) (policy organization);                American Council for       
Independent Trustees                                    formerly variously, Admiral in              Capital Formation and the  
1177 Avenue of the                                      the U.S. Navy, Director of                  Armed Services YMCA of the 
Americas                                                Naval Nuclear Propulsion                    USA.                       
New York, NY 10036                                      Program and Deputy                                                     
                                                        Administrator -- Naval                                                 
                                                        Reactors in the National                                               
                                                        Nuclear Security                                                       
                                                        Administration at the U.S.                                             
                                                        Department of Energy                                                   
                                                        (1996-2004), Honorary Knight                                           
                                                        Commander of the Most                                                  
                                                        Excellent Order of the British                                         
                                                        Empire.                                                                

Michael Bozic (65)              Trustee      Since      Private investor; Chairman of      197      Director of various        
c/o Kramer Levin                             April      the Insurance Committee (since              business organizations.    
Naftalis & Frankel LLP                       1994       July 2006), Director or                                                
Counsel to the                                          Trustee of the Retail Funds                                            
Independent Trustees                                    (since April 1994) and the                                             
1177 Avenue of the                                      Institutional Funds (since                                             
Americas                                                July 2003); formerly Vice                                              
New York, NY 10036                                      Chairman of Kmart Corporation                                          
                                                        (December 1998-October 2000),                                          
                                                        Chairman and Chief Executive                                           
                                                        Officer of Levitz Furniture                                            
                                                        Corporation (November                                                  
                                                        1995-November 1998) and                                                
                                                        President and Chief Executive                                          
                                                        Officer of Hills Department                                            
                                                        Stores (May 1991-July 1995);                                           
                                                        formerly variously Chairman,                                           
                                                        Chief Executive Officer,                                               
                                                        President and Chief Operating                                          
                                                        Officer (1987-1991) of the                                             
                                                        Sears Merchandise Group of                                             
                                                        Sears, Roebuck & Co.                                                   

Kathleen A. Dennis (53)         Trustee      Since      President, Cedarwood               187**    None.                      
c/o Kramer Levin                             [August    Associates (since 2006)                                                
Naftalis & Frankel LLP                       2006]      (mutual fund consulting);                                              
Counsel to the                                          formerly, Senior Managing                                              
Independent Trustees                                    Director of Victory Capital                                            
1177 Avenue of the                                      Management (1993- 2006).                                               
Americas                                                                                                                       
New York, NY 10036                                                                                                             

----------                                                                      

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

**   As of _________, 2006.                                                     

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                                                                                        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       REGISTRANTS   SERVED*            PAST 5 YEARS           BY TRUSTEE           BY TRUSTEE        
------------------------------  -----------  ---------  ------------------------------  ----------  ---------------------------
                                                                                                                               
Edwin J. Garn (74)              Trustee      Since      Consultant; Director or            197      Director of Franklin Covey 
1031 N. Chartwell Court                      January    Trustee of the Retail Funds                 (time management systems), 
Salt Lake City, UT 84103                     1993       (since January 1993) and the                BMW Bank of North America, 
                                                        Institutional Funds (since                  Inc. (industrial loan      
                                                        July 2003); member of the Utah              corporation), Escrow Bank  
                                                        Regional Advisory Board of                  USA (industrial loan       
                                                        Pacific Corp. (utility                      corporation), United Space 
                                                        company); formerly Managing                 Alliance (joint venture    
                                                        Director of Summit Ventures                 between Lockheed Martin and
                                                        LLC (2000-2004) (lobbying and               the Boeing Company) and    
                                                        consulting firm); United                    Nuskin Asia Pacific        
                                                        States Senator (R-Utah)                     (multilevel marketing);    
                                                        (1974-1992) and Chairman,                   member of the board of     
                                                        Senate Banking Committee                    various civic and          
                                                        (1980-1986), Mayor of Salt                  charitable organizations.  
                                                        Lake City, Utah (1971-1974),                                           
                                                        Astronaut, Space Shuttle                                               
                                                        Discovery (April 12-19, 1985),                                         
                                                        and Vice Chairman, Huntsman                                            
                                                        Corporation (chemical                                                  
                                                        company).                                                              

Wayne E. Hedien (72)            Trustee      Since      Retired; Director or Trustee       197      Director of The PMI Group  
c/o Kramer Levin                             September  of the Retail Funds (since                  Inc. (private mortgage     
Naftalis & Frankel LLP                       1997       September 1997) and the                     insurance); Trustee and    
Counsel to the                                          Institutional Funds (since                  Vice Chairman of The Field 
Independent Trustees                                    July 2003); formerly                        Museum of Natural History; 
1177 Avenue of the                                      associated with the Allstate                director of various other  
Americas New York, NY 10036                             Companies (1966-1994), most                 business and charitable    
                                                        recently as Chairman of The                 organizations.             
                                                        Allstate Corporation (March                                            
                                                        1993-December 1994) and                                                
                                                        Chairman and Chief Executive                                           
                                                        Officer of its wholly- owned                                           
                                                        subsidiary, Allstate Insurance                                         
                                                        Company (July 1989-December                                            
                                                        1994).                                                                 

Dr. Manuel H. Johnson (57)      Trustee      Since      Senior Partner, Johnson Smick      197      Director of NVR, Inc. (home
c/o Johnson Smick                            July 1991  International, Inc., a                      construction); Director of 
Group, Inc.                                             consulting firm; Chairman of                KFX Energy; Director of RBS
888 16th Street, NW                                     the Audit Committee and                     Greenwich Capital Holdings 
Suite 740                                               Director or Trustee of the                  (financial holding         
Washington, D.C. 20006                                  Retail Funds (since July 1991)              company).                  
                                                        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 (64)           Trustee      Since      President, Kearns & Associates     198      Director of Electro Rent   
c/o Kearns &                                 August     LLC (investment consulting);                Corporation (equipment     
Associates LLC                               1994       Deputy Chairman of the Audit                leasing), The Ford Family  
PMB754                                                  Committee and Director or                   Foundation, and the UCLA   
23852 Pacific Coast Highway                             Trustee of the Retail Funds                 Foundation.                
Malibu, CA 90265                                        (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.                                                      

----------                                                                      

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

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                                                                                          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        REGISTRANTS    SERVED*             PAST 5 YEARS          BY TRUSTEE          BY TRUSTEE        
------------------------------  -----------  ----------  ------------------------------  ----------  --------------------------
                                                                                                                               
Michael F. Klein (47)           Trustee      Since       Chief Operating Officer and     187**       Director of certain       
c/o Kramer Levin                             [August     Managing Director, Aetos                    investment funds managed  
Naftalis & Frankel LLP                       2006]       Capital, LLC (since March                   or sponsored by Aetos     
Counsel to the                                           2000); Managing Director,                   Capital LLC.              
Independent Trustees                                     Morgan Stanley & Co. Inc. and                                         
1177 Avenue of the                                       Morgan Stanley Dean Witter                                            
Americas                                                 Investment Management and                                             
New York, NY 10036                                       President, Morgan Stanley                                             
                                                         Institutional Funds (June                                             
                                                         1998-March 2000); Principal,                                          
                                                         Morgan Stanley & Co. Inc. and                                         
                                                         Morgan Stanley Dean Witter                                            
                                                         Investment Management (August                                         
                                                         1997-December 1999).                                                  

Michael E. Nugent (70)          Chairman     Chairman    General Partner of Triumph      197          None.                    
c/o Triumph Capital, L.P.       of the       of the      Capital, L.P., a private                                              
445 Park Avenue                 Board        Board       investment partnership;                                               
New York, NY 10022              and          (since      Chairman of the Board of the                                          
                                Trustee      July 2006)  Retail Funds and Institutional                                        
                                             and         Funds (since July 2006),                                              
                                             Trustee     Director or Trustee of the                                            
                                             (since      Retail Funds (since July 1991)                                        
                                             July 1991)  and the Institutional Funds                                           
                                                         (since July 2001); formerly                                           
                                                         Chairman of the Insurance                                             
                                                         Committee (until July 2006),                                          
                                                         Vice President, Bankers Trust                                         
                                                         Company and BT Capital                                                
                                                         Corporation (1984-1988).                                              

W. Allen Reed (59)              Trustee      Since       President and CEO of General    187**       Director of GMAC          
c/o Kramer Levin                             [August     Motors Asset Management;                    (financial services),     
Naftalis & Frankel LLP                       2006]       Chairman and Chief Executive                GMAC Insurance Holdings,  
Counsel to the                                           Officer of the GM Trust Bank                iShares, Inc. (Exchange   
Independent Trustees                                     and Corporate Vice President                Traded Funds), and        
1177 Avenue of the                                       of General Motors Corporation               Temple-Inland Industries  
Americas                                                 (August 1994-December 2005).                (Packaging, Banking and   
New York, NY 10036                                                                                   Forrest Products);        
                                                                                                     member of the Board of    
                                                                                                     Executives of the New     
                                                                                                     York Stock Exchange, the  
                                                                                                     Investment Advisory       
                                                                                                     Committee for the New     
                                                                                                     York State Retirement     
                                                                                                     System and the Morgan     
                                                                                                     Stanley Capital           
                                                                                                     International Editorial   
                                                                                                     Board; Director of        
                                                                                                     various investment fund   
                                                                                                     advisory boards.          

Fergus Reid (74)                Trustee      Since       Chairman of Lumelite Plastics   198         Trustee and Director of   
c/o Lumelite Plastics                        June        Corporation; Chairman of the                certain investment        
Corporation                                  1992        Governance Committee and                    companies in the          
85 Charles Colman Blvd.                                  Director or Trustee of the                  JPMorgan Funds complex    
Pawling, NY 12564                                        Retail Funds (since July 2003)              managed by J.P. Morgan    
                                                         and the Institutional Funds                 Investment Management     
                                                         (since June 1992).                          Inc.                      

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

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

**   As of ________, 2006.                                                      

   The Trustees who are affiliated with the Investment Adviser or affiliates
of the Investment Adviser (as set forth below) and executive officers of the    
Funds, 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                                                          

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Complex overseen by each Management Trustee (as of December 31, 2005) and the   
other directorships, if any, held by the Trustee, are shown below.              

                                                        [Enlarge/Download Table]

                                                                                         NUMBER OF                             
                                                                                         PORTFOLIOS                            
                                                                                          IN FUND                              
                                                                                          COMPLEX                              
                                POSITION(S)  LENGTH OF                                  OVERSEEN BY                            
   NAME, AGE AND ADDRESS OF      HELD WITH      TIME    PRINCIPAL OCCUPATION(S) DURING   MANAGEMENT   OTHER DIRECTORSHIPS HELD 
      MANAGEMENT TRUSTEE        REGISTRANTS   SERVED*            PAST 5 YEARS             TRUSTEE            BY TRUSTEE        
------------------------------  -----------  ---------  ------------------------------  -----------  --------------------------
                                                                                                                               
Charles A. Fiumefreddo (73)     Trustee      Since      Director or Trustee of the      197          None.                     
c/o Morgan Stanley Trust                     July 1991  Retail Funds (since July 1991)                                         
Harborside Financial Center,                            and the Institutional Funds                                            
Plaza Two                                               (since July 2003); formerly                                            
Jersey City, NJ 07311                                   Chairman of the Board of the                                           
                                                        Retail Funds (July 1991-July                                           
                                                        2006) and the Institutional                                            
                                                        Funds (July 2003-July 2006)                                            
                                                        and Chief Executive Officer of                                         
                                                        the Retail Funds (until                                                
                                                        September 2002).                                                       

James F. Higgins (58)           Trustee      Since      Director or Trustee of the      197          Director of AXA Financial,
c/o Morgan Stanley Trust                     June       Retail Funds (since June 2000)               Inc. and The Equitable    
Harborside Financial                         2000       and the Institutional Funds                  Life Assurance Society of 
Center                                                  (since July 2003); Senior                    the United States         
Plaza Two                                               Advisor of Morgan Stanley                    (financial services).     
Jersey City, NJ 07311                                   (since August 2000).                                                   

-----------                                                                     

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

                                                        [Enlarge/Download Table]


                               POSITION(S)       LENGTH OF                                                                       
  NAME, AGE AND ADDRESS OF      HELD WITH          TIME                           PRINCIPAL OCCUPATION(S) DURING                 
     EXECUTIVE OFFICER         REGISTRANTS        SERVED*                                PAST 5 YEARS                            
---------------------------  --------------  -----------------  -----------------------------------------------------------------
                                                                                                                                 
Ronald E. Robison (67)       President and   President (since   President (since September 2005) and Principal Executive Officer 
1221 Avenue of the Americas  Principal       September 2005)    (since May 2003) of funds in the Fund Complex; President (since  
New York, NY 10020           Executive       and Principal      September 2005) and Principal Executive Officer (since May 2003) 
                             Officer         Executive Officer  of the Van Kampen Funds; Managing Director, Director and/or      
                                             (since May 2003)   Officer of the Investment Adviser and various entities affiliated
                                                                with the Investment Adviser; Director of Morgan Stanley SICAV    
                                                                (since May 2004). Formerly, Executive Vice President (July 2003  
                                                                to September 2005) of funds in the Fund Complex and the Van      
                                                                Kampen Funds; President and Director of the Institutional Funds  
                                                                (March 2001 to July 2003); Chief Global Operating Officer of     
                                                                Morgan Stanley Investment Management Inc.; Chief Administrative  
                                                                Officer of Morgan Stanley Investment Advisors Inc.; Chief        
                                                                Administrative Officer of Morgan Stanley Services Company Inc.   

J. David Germany (53)        Vice President  Since February     Managing Director and (since December 2005) Chief Investment     
Morgan Stanley Investment                    2006               Officer -- Global Fixed Income of Morgan Stanley Investment      
Management Limited                                              Management; Managing Director and Director of Morgan Stanley     
25 Cabot Square                                                 Investment Management Limited; Vice President (since February    
Canary Wharf, London                                            2006) of the Retail and Institutional Funds.                     
United Kingdom E144QA                                                                                                            

Dennis F. Shea (53)          Vice President  Since February     Managing Director and (since February 2006) Chief Investment     
1221 Avenue of the Americas                  2006               Officer -- Global Equity of Morgan Stanley Investment Management;
New York, NY 10020                                              Vice President (since February 2006) of the Retail and           
                                                                Institutional Funds. Formerly, Managing Director and Director of 
                                                                Global Equity Research at Morgan Stanley.                        

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

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

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                                  POSITION(S)         LENGTH OF                                                                  
    NAME, AGE AND ADDRESS OF       HELD WITH             TIME                         PRINCIPAL OCCUPATION(S) DURING             
       EXECUTIVE OFFICER          REGISTRANTS          SERVED*                               PAST 5 YEARS                        
------------------------------  ---------------  -------------------  -----------------------------------------------------------
                                                                                                                                 
Barry Fink (51)                 Vice President   Since February 1997  Managing Director and General Counsel of Morgan Stanley    
1221 Avenue of the Americas                                           Investment Management; Managing Director of the Investment 
New York, NY 10020                                                    Adviser and various entities affiliated with the Investment
                                                                      Adviser; Vice President of the Retail Funds and (since July
                                                                      2003) the Institutional Funds. Formerly, Secretary, General
                                                                      Counsel and/or Director of the Investment Adviser and      
                                                                      various entities affiliated with the Investment            
                                                                      Adviser; Secretary and General Counsel of the Retail Funds.

Amy R. Doberman (44)             Vice President   Since July 2004     Managing Director and General Counsel, U.S. Investment     
1221 Avenue of the Americas                                           Management of Morgan Stanley Investment Management (since  
New York, NY 10020                                                    July 2004); Vice President of the Retail Funds and the     
                                                                      Institutional Funds (since July 2004); Vice President of   
                                                                      the Van Kampen Funds (since August 2004); Secretary (since 
                                                                      February 2006) and Managing Director (since July 2004) of  
                                                                      the Investment Adviser and various entities affiliated with
                                                                      the Investment Adviser. Formerly, Managing Director and    
                                                                      General Counsel -- Americas, UBS Global Asset Management   
                                                                      (July 2000 to July 2004).                                  

Carsten Otto (42)               Chief            Since October 2004   Managing Director and U.S. Director of Compliance for      
1221 Avenue of the Americas     Compliance                            Morgan Stanley Investment Management (since October        
New York, NY 10020              Officer                               2004); Managing Director and Chief Compliance Officer of   
                                                                      Morgan Stanley Investment Management. Formerly, Assistant  
                                                                      Secretary and Assistant General Counsel of the Retail      
                                                                      Funds.                                                     

Stefanie V. Chang Yu (39)        Vice President  Since December       Executive Director of the Investment Adviser and various   
1221 Avenue of the Americas                      1997                 entities affiliated with the Investment Adviser; Vice      
New York, NY 10020                                                    President of the Retail Funds (since July 2002) and the    
                                                                      Institutional Funds (since December 1997). Formerly,       
                                                                      Secretary of various entities affiliated with the          
                                                                      Investment Adviser.                                        

Francis J. Smith (41)           Treasurer and    Treasurer since      Executive Director of the Investment Adviser and various   
c/o Morgan Stanley Trust        Chief Financial  July 2003 and Chief  entities affiliated with the Investment Adviser; Treasurer 
Harborside Financial Center     Officer          Financial Officer    and Chief Financial Officer of the Retail Funds (since July
Plaza Two Jersey City,                           since                2003). Formerly, Vice President of the Retail Funds        
NJ 07311                                         September 2002       (September 2002 to July 2003).                             

Mary E. Mullin (39)             Secretary        Since June 1999      Executive Director of the Investment Adviser and various   
1221 Avenue of the Americas                                           entities affiliated with the Investment Adviser; Secretary 
New York, NY 10020                                                    of the Retail Funds (since July 2003) and the Institutional
                                                                      Funds (since June 1999).                                   

----------                                                                      

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

   In addition, the following individuals who are officers of the Investment
Adviser or its affiliates serve as assistant secretaries of each of the Funds:  
Joanne Antico, Joseph C. Benedetti, Daniel E. Burton, Joanne Doldo, Tara A.     
Farrelly, Alice J. Gerstel, Eric C. Griffith, Lou Anne D. McInnis, Edward J.    
Meehan, Elisa Mitchell, Elizabeth Nelson, Debra Rubano, Rita Rubin, Sheri L.    
Schreck and Julien H. Yoo.                                                      

    For each Trustee, the dollar range of equity securities beneficially owned
by the Trustee in each of the Funds 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          

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Management Inc. and Morgan Stanley AIP GP LP) for the calendar year ended       
December 31, 2005, is shown below.                                              

                                                        [Enlarge/Download Table]

                                                                                 AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN
                                                                                  ALL REGISTERED INVESTMENT COMPANIES OVERSEEN 
                                DOLLAR RANGE OF EQUITY SECURITIES IN THE FUNDS  BY TRUSTEE IN FAMILY OF INVESTMENT COMPANIES   
       NAME OF TRUSTEE                     (AS OF DECEMBER31, 2005)                       (AS OF DECEMBER 31, 2005)            
------------------------------  ----------------------------------------------  -----------------------------------------------
                                                                                                                               
INDEPENDENT:                                                                                                                   
Frank L. Bowman(1)                                   n/a                                             None                      
Michael Bozic                                        None                                        over $100,000                 
Kathleen A. Dennis(1)                                n/a                                             None                      
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(2)                                  None                                        over $100,000                 
Michael F. Klein(1)                                  n/a                                         over $100,000                 
Michael E. Nugent                                    None                                        over $100,000                 
W. Allen Reed(1)                                     n/a                                             None                      
Fergus Reid(2)                                       None                                        over $100,000                 
INTERESTED:                                                                                                                    
Charles A. Fiumefreddo                          Over $100,000(3)                                 over $100,000                 
James F. Higgins                                     None                                        over $100,000                 

----------                                                                      

(1)  Messrs. Bowman, Klein and Reed and Ms. Dennis were elected to the Board of 
    each fund in the Fund Complex in August 2006 and therefore did not own any
equity securities in the Fund at December 31, 2005.                   

(2)  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, 2005, the value (including interest) of the deferral accounts
for Messrs. Kearns and Reid was $786,542 and $766,622, respectively,  
pursuant to the deferred compensation plan.                           

(3)  Active Assets Institutional Money Trust                                    

    As to each Independent Trustee and his immediate family members, no person
owned beneficially or of record securities in an investment advisor or principal
underwriter of each Fund, 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 each Fund.       

    INDEPENDENT TRUSTEES AND THE COMMITTEES. Law and regulation establish both
general guidelines and specific duties for the 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, four Trustees, including three    
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, Rule 12b-1 plans 
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         
Independent Trustees are required to select and nominate individuals to fill any
Independent Trustee vacancy on the board of any fund that has a Rule 12b-1 plan 
of distribution. Most of the Retail Funds have a Rule 12b-1 plan.               

    The Board of Trustees has a separately-designated standing Audit Committee
established in accordance with Section 3(a)(58)(A) of the Exchange Act. The     
Audit Committee is charged with recommending to the full Board the engagement or
discharge of the Funds' independent registered public accounting firm; directing
investigations into matters within the scope of the independent registered      
public accounting firm's 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 the 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 Funds'     
system of                                                                       

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internal controls; and preparing and submitting Committee meeting minutes to the
full Board. Each Fund has adopted a formal, written Audit Committee Charter.    
During the Funds' fiscal year ended June 30, 2006, the Audit Committee held ___ 
meetings.                                                                       

The members of the Audit Committee of the Funds 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 Funds' Audit      
Committee is an interested person, as defined under the Investment Company Act, 
of each Fund (with such disinterested Trustees being "Independent Trustees" or  
individually, "Independent Trustee"). Each Independent Trustee is also          
"independent" from each Fund under the listing standards of the New York Stock  
Exchange, Inc. (NYSE). The current Chairman of the Audit Committee of each Fund 
is Dr. Manuel H. Johnson.                                                       

 The Board of Trustees of each Fund also has a Governance Committee. The
Governance Committee identifies individuals qualified to serve as Independent   
Trustees on the Funds' Board and on committees of such Board and recommends such
qualified individuals for nomination by the Funds' Independent Trustees as      
candidates for election as Independent Trustees, advises the Funds' Board with  
respect to Board composition, procedures and committees, develops and recommends
to the Funds' Board a set of corporate governance principles applicable to each 
Fund, monitors and makes recommendations on corporate governance matters and    
policies and procedures of the Fund's Board of Trustees and any Board committees
and oversees periodic evaluations of the Fund's Board and its committees. The   
members of the Governance Committee of each Fund are currently Michael Bozic,   
Edwin J. Garn and Fergus Reid, each of whom is an Independent Trustee. The      
current Chairman of the Governance Committee is Fergus Reid. During the Funds'  
fiscal year ended June 30, 2006, the Governance Committee held ___ meetings.    

 The Funds do not have a separate nominating committee. While the Funds'
Governance Committee recommends qualified candidates for nominations as         
Independent Trustees, the Board of Trustees of the Funds believe 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 each Fund. Persons recommended by the Funds' 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 each 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 NYSE. While the Independent  
Trustees of each Fund expects to be able to continue to identify from their own 
resources an ample number of qualified candidates for the Funds' 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."     

  There were __ meetings of the Board of Trustees of each Fund held during
the fiscal year ended June 30, 2006. The Independent Trustees of each Fund also 
met _ times during that time, in addition to the __ meetings of the full Board. 

Finally, the Boards have formed an Insurance Committee to review and  
monitor the insurance coverage maintained by each Fund. The Insurance Committee 
currently consists of Messrs. Bozic, Fiumefreddo, Hedien and Nugent. Messrs.    
Bozic, Hedien and Nugent are Independent Trustees. The current Chairman of the  
Insurance Committee is Michael Bozic. During the Funds' fiscal year ended June  
30, 2006, the Insurance Committee held ____ meetings.                           

    ADVANTAGES OF HAVING SAME INDIVIDUALS AS TRUSTEES FOR THE RETAIL FUNDS AND
INSTITUTIONAL FUNDS. The Independent Trustees and each Fund'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 fund's service providers. This        
arrangement also precludes the possibility of separate groups of Independent    
Trustees arriving at conflicting decisions regarding                            

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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.                                           

TRUSTEE AND OFFICER INDEMNIFICATION. Each Fund's Declaration of Trust 
provides that no Trustee, Officer, employee or agent of the Fund is liable to   
the Fund or to a shareholder, nor is any Trustee, Officer, employee or agent    
liable to any third persons in connection with the affairs of the Fund, except  
as such liability may arise from his/her or its own bad faith, willful          
misfeasance, gross negligence or reckless disregard of his/her or its duties. It
also provides that all third persons shall look solely to Fund property for     
satisfaction of claims arising in connection with the affairs of the Fund. With 
the exceptions stated, the Declaration of Trust provides that a Trustee,        
Officer, employee or agent is entitled to be indemnified against all liability  
in connection with the affairs of each Fund.                                    

 SHAREHOLDER COMMUNICATIONS. Shareholders may send communications to the
Funds' Board of Trustees. Shareholders should send communications intended for  
the Funds' Board by addressing the communications directly to the 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 Funds' office or directly to such Board 
member(s) at the address specified for each Trustee previously noted. Other     
shareholder communications received by the Funds not directly addressed and sent
to the Board will be reviewed and generally responded to by managements, and    
will be forwarded to the Board only at management's discretion based on the     
matters contained therein.                                                      

C. COMPENSATION                                                                 

     Each Independent Trustee receives an annual fee of $180,000 for serving the
Retail Funds and the Institutional Funds. Prior to October 1, 2005, each        
Independent Trustee received an annual retainer fee of $168,000 for serving the 
Retail Funds and the Institutional Funds. In addition, each Independent Trustee 
received $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 received total compensation of $180,000 for serving   
the Funds.                                                                      

    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   
the Institutional Funds, and is allocated on a pro rata basis among each of the 
operational funds/portfolios of the Retail Funds and the Institutional Funds    
based on the relative net assets of each of the funds/portfolios. As of July 1, 
2006, Mr. Fiumefreddo resigned as Chairman of the Boards of the Retail Funds and
the Institutional Funds and was succeeded by Mr. Nugent. Prior to July 1, 2006, 
Mr. Fiumefreddo received an annual fee for his services as Chairman of the      
Boards of the Retail Funds and the Institutional Funds and for administrative   
services provided to each Board. As of July 1, 2006, Mr. Nugent received the    
annual fee of $360,000 for his services.                                        

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

  Effective April 1, 2004, each of the Funds 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 each Fund.                

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 paid    
during the calendar year 2004, which remain subject to the terms of the Prior DC
Plan).                                                                          

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 The following table shows aggregate compensation payable to each of the
Funds' Trustees from each of the Funds for the fiscal year ended June 30, 2006, 
and the aggregate compensation payable to each of the Funds' Trustees by the    
Fund Complex (which includes all of the Retail and Institutional Funds) for the 
calendar year ended December 31, 2005.                                          

                                                        [Enlarge/Download Table]

                                          COMPENSATION                                                
                                                     TOTAL                                            
                                   TOTAL         COMPENSATION        NUMBER OF                        
                               COMPENSATION          FROM        PORTFOLIOS IN THE                    
                                   FROM          ACTIVE ASSETS     FUND COMPLEX                       
                               ACTIVE ASSETS     INSTITUTIONAL    FROM WHICH THE    TOTAL COMPENSATION
                               INSTITUTIONAL      GOVERNMENT     TRUSTEE RECEIVED     FROM THE FUND   
NAME OF INDEPENDENT TRUSTEE*:   MONEY TRUST    SECURITIES TRUST   COMPENSATION(6)      COMPLEX(6)     
-----------------------------  -------------   ----------------  -----------------  ----------------- 
                                                                                                      
Michael Bozic(1)(2)(3)                                                  170              $180,000     
Edwin J. Garn(1)(3)                                                     170               178,000     
Wayne E. Hedien(1)(2)                                                   170               180,000     
Dr. Manuel H.Johnson(1)                                                 170               240,000     
Joseph J. Kearns(1)(4)                                                  171               217,000     
Michael E. Nugent(1)(2)(5)                                              170               210,000     
Fergus Reid(1)(3)                                                       171               215,000     
NAME OF INTERESTED TRUSTEE:                                                                           
Charles A. Fiumefreddo(2)(5)                                            170               360,000     
James F. Higgins                                                        170                     0     

----------                                                                      

*    Messrs. Bowman, Klein and Reed and Ms. Dennis were elected to the Board of 
each fund in the Fund Complex in August 2006 and therefore were not   
 compensated by such funds in the calendar year ended December 31, 2005.

(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. Bozic is the current Chairman of the
    Insurance Committee. Prior to July 1, 2006, Mr. Nugent was Chairman of the
Insurance Commitee.                                                   

(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)  As of July 1, 2006, Mr. Fiumefreddo resigned as Chairman of the Board of   
  the Retail and Institutional Funds and was succeeded by Mr. Nugent. As a
    result, Mr. Nugent receives the annual fee for this service as Chairman of
   the Board of the Retail Funds and the Institutional Funds from that date.

(6)  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"),
not including the Funds, 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, 2003, 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 table illustrates the retirement benefits accrued to the
Funds' Independent Trustees by the Adopting Funds for the calendar year ended   
December 31, 2005, and the estimated retirement benefits for the Independent    
Trustees, from the Adopting Funds for each calendar year following retirement.  
Only the Trustees listed below participated in the retirement program.          

                                                        [Enlarge/Download Table]

                               RETIREMENT BENEFITS ACCRUED AS  ESTIMATED ANNUAL BENEFITS UPON
                                        FUND EXPENSES                   RETIREMENT(1)        
                                       BY ALL ADOPTING                FROM ALL ADOPTING      
NAME OF INDEPENDENT TRUSTEE:                FUNDS                           FUNDS            
-----------------------------  ------------------------------  ------------------------------
                                                                                             
Michael Bozic                             $ 19,439                         $46,871           
Edwin J. Garn                              (10,738)(2)                      46,917           
Wayne E. Hedien                             37,860                          40,020           
Dr. Manuel H. Johnson                       19,701                          68,630           
Michael E. Nugent                           35,471                          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.               

(2)  Mr. Garn's retirement expense is negative due to the fact that his         
  retirement date has been extended to October 31, 2007, and therefore the
expense has been overaccrued.                                         

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IV. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES                         

    [The following owned 5% or more of the outstanding shares of Active Assets
Institutional Money Trust on October _, 2006: CFS/AAA Institutional Money Trust 
Omnibus Account, Attn: Peter Fu, AAA OPS, Harborside Financial Center, 6th Fl,  
Jersey City, NJ 07302 -- 18.55%; Royal Gold, Inc., Attention: Karen Gross, 1660 
Wynkoop St. Ste. 1000, Denver, CO 80202-1115 -- 8.52%; Stephen & Mary Birch     
Foundation, 103 Foulk Road, Wilmington, DE 19803-3742 -- 5.48%.]                

    [The following owned 5% or more of the outstanding shares of Active Assets
Institutional Government Securities Trust on October _, 2006: Maxim Integrated  
Products, Inc., Attention: Carl Jasper, 120 San Gabriel Road, Sunnyvale, CA     
94086-5125 -- 20.84%; CFS/AAA Institutional Government Securities Trust Omnibus 
Account, Attn: Peter Fu, AAA OPS, Harborside Financial Center, 6th Fl, Jersey   
City, NJ 07302 -- 20.45%.]                                                      

    [As of the date of this STATEMENT OF ADDITIONAL INFORMATION, the aggregate
number of shares of beneficial interest of the Funds owned by the Fund's        
officers and Trustees as a group was less than 1% of each Fund's shares of      
beneficial interest outstanding.]                                               

V. INVESTMENT ADVISORY AND OTHER SERVICES                                       

A. INVESTMENT ADVISER AND ADMINISTRATOR                                         

   The Investment Adviser to each Fund is Morgan Stanley Investment Advisors
Inc., a Delaware corporation, whose address is 1221 Avenue of the Americas, New 
York, NY 10020. The Investment Adviser is a wholly-owned subsidiary of Morgan   
Stanley, a Delaware corporation. Morgan Stanley is a preeminent global financial
services firm that maintains leading market positions in each of its three      
primary businesses: securities, asset management and credit services.           

   Prior to November 1, 2004, pursuant to an investment management agreement
(the "Management Agreement") with the Investment Adviser, each Fund had retained
the Investment Adviser to provide administrative services and to manage the     
investment of the Fund's assets, including the placing of orders for the        
purchase and sales of portfolio securities. Each Fund paid the Investment       
Adviser monthly compensation calculated daily by applying the annual rate of    
0.15% of the average daily net assets determined as of the close of each        
business day.                                                                   

The Board of Trustees of the Funds approved amending and restating,   
effective November 1, 2004, the Management Agreement of each Fund to remove the 
administrative services component from the Management Agreement and to reduce   
the investment advisory fee to the annual rate of 0.10% of the daily net assets.
The administration services previously provided to the Fund by the Investment   
Adviser are being provided by Morgan Stanley Services Company Inc.              
("Administrator"), a wholly-owned subsidiary of the Investment Adviser, pursuant
to a separate administration agreement ("Administration Agreement") entered into
by the Fund with the Administrator. Such change resulted in a 0.05% reduction in
the investment advisory fee concurrent with the implementation of a 0.05%       
administration fee pursuant to the new administration agreement. Under the terms
of the Administration Agreement, the Administrator provides the same            
administrative services previously provided by the Investment Adviser. The      
Funds' Investment Adviser continues to provide investment advisory services     
under a combined Amended and Restated Investment Advisory Agreement applicable  
to each Fund ("Investment Advisory Agreement").                                 

     In the case of Active Assets Institutional Government Securities Trust, the
Investment Adviser and Administrator have capped the Fund's expenses and waived 
the compensation provided for in its respective Investment Advisory and         
Administration Agreements with the Fund as follows through April 30, 2007: 0.10%
of the Fund's daily net assets not exceeding $500 million; 0.15% of the Fund's  
daily net assets exceeding $500 million but not exceeding $750 million; 0.20% of
the Fund's daily net assets exceeding $750 million.                             

Thereafter, in the case of Active Assets Institutional Government     
Securities Trust, and on an ongoing basis in the case of Active Assets          
Institutional Money Trust, the Investment Adviser and Administrator have agreed,
under each Fund's respective Investment Advisory Agreement and Administration   
Agreement, to assume Fund operating expenses (except for brokerage fees) and to 
waive the compensation provided under each agreement to the extent such         
operating expenses and compensation exceed on an annualized basis 0.20% of the  
average daily net assets of each Fund.                                          

Taking these waivers and assumptions of expenses into account, for the
fiscal years ended June 30, 2004, 2005 and 2006, Active Assets Institutional    
Money Trust accrued to the Investment Adviser total compensation under its      
Management Agreement and Investment Advisory Agreement in the amounts of        
$1,611,003, $989,790 and $_______, respectively.                                

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Taking these waivers and assumptions of expenses into account, for the
fiscal years ended June 30, 2004, 2005 and 2006, Active Assets Institutional    
Government Securities Trust accrued to the Investment Adviser total compensation
under its Management Agreement and Investment Advisory Agreement in the amounts 
of $65,556, $74,237 and $_____, respectively.                                   

  For the period November 1, 2004 through June 30, 2005 and for the fiscal
year ended June 30, 2006, Active Assets Institutional Money Trust accrued to the
Administrator total compensation under its Administration Agreement in the      
amount of $253,951 and $______, respectively.                                   

  For the period November 1, 2004 through June 30, 2005 and for the fiscal
year ended June 30, 2006, Active Assets Institutional Government Securities     
Trust accrued to the Administrator total compensation under its Administration  
Agreement in the amount of $146,072 and $______, respectively.                  

   Although the entities providing administrative services to the Funds have
changed, the Morgan Stanley personnel performing such services remain the same. 
Furthermore, the changes have not resulted in any increase in the amount of     
total combined fees paid by the Funds for investment advisory and administrative
services, or any decrease in the nature or quality of the investment advisory or
administrative services received by the Funds.                                  

B. PRINCIPAL UNDERWRITER                                                        

  Each Fund's principal underwriter is the Distributor (which has the same
address as the Investment Adviser). In this capacity, each Fund's shares are    
distributed by the Distributor. The Distributor has entered into a selected     
dealer agreement with Morgan Stanley DW, which through its own sales            
organization sells shares of each Fund. In addition, the Distributor may enter  
into similar agreements with other selected broker dealers. The Distributor, a  
Delaware corporation, is a wholly-owned subsidiary of Morgan Stanley.           

   The Investment Adviser compensates Morgan Stanley DW's Financial Advisors
by paying them, from the Investment Adviser's own funds, the following annual   
residual commissions, based on the current value of each account for investors  
in the Funds, for which they are the Financial Advisors of record:              

FUND                                                  ANNUAL RESIDUAL COMMISSION

Active Assets Institutional Money Trust                          0.03%          
Active Assets Institutional Government Securities                               
Trust                                                         0.03%       

     The residual is a charge which reflects residual commissions paid by Morgan
Stanley DW to its Financial Advisors and Morgan Stanley DW's expenses associated
with the servicing of shareholders' accounts, including the expenses of         
operating Morgan Stanley DW's branch offices in connection with the servicing of
shareholders' accounts, which expenses include lease costs, the salaries and    
employee benefits of operations and sales support personnel, utility costs,     
communications costs and the costs of stationery and supplies and other expenses
relating to branch office servicing of shareholder accounts.                    

   Each Fund and the Distributor have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act. Under each 
Distribution Agreement, the Distributor uses its best efforts in rendering      
services to the Fund, but in the absence of willful misfeasance, bad faith,     
gross negligence or reckless disregard of its obligations, the Distributor is   
not liable to the Funds or any of their shareholders for any error of judgment  
or mistake of law or for any act or omission or for any losses sustained by the 
Funds or their shareholders.                                                    

C. SERVICES PROVIDED BY THE INVESTMENT ADVISER AND ADMINISTRATOR                

The Investment Adviser manages the investment of each Fund's assets,  
including the placing of orders for the purchase and sale of portfolio          
securities. The Investment Adviser obtains and evaluates the information and    
advice relating to the economy, securities markets, and specific securities as  
it considers necessary or useful to continuously manage the assets of each Fund 
in a manner consistent with its investment objective.                           

Under the terms of each Administration Agreement, the Administrator   
maintains certain of each Fund's books and records and furnishes, at its own    
expense, the office space, facilities, equipment, clerical help and bookkeeping 
as each Fund may reasonably require in the conduct of its business. The         
Administrator also assists in the preparation of prospectuses, proxy statements 
and reports required to be filed with federal and state securities commissions  
(except insofar as the participation or assistance of the independent registered
public accounting firm and attorneys is, in the opinion of the Administrator,   
necessary or desirable). The Administrator also bears the cost of telephone     
service, heat, light, power and other utilities provided to the Funds.          

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Expenses not expressly assumed by the Investment Adviser under each   
Investment Advisory Agreement or by the Administrator under each Administration 
Agreement or by the Distributor will be paid by the applicable Fund. Such       
expenses include, but are not limited to: charges and expenses of any registrar,
custodian, stock transfer and dividend disbursing agent; brokerage commissions; 
taxes; engraving and printing share certificates; registration costs; the cost  
and expense of printing, including typesetting, and distributing prospectuses of
each Fund and supplements thereto to the Funds' shareholders; all expenses of   
shareholders' and Trustees' meetings and of preparing, printing and mailing of  
proxy statements and reports to shareholders; fees and travel expenses of       
Trustees or members of any advisory board or committee who are not employees of 
the Investment Adviser or any corporate affiliate of the Investment Adviser; all
expenses incident to any dividend, withdrawal or redemption options; charges and
expenses of any outside service used for pricing of each Fund's shares; fees and
expenses of legal counsel, including counsel to the Trustees who are not        
interested persons of the Funds or of the Investment Adviser (not including     
compensation or expenses of attorneys who are employees of the Investment       
Adviser); fees and expenses of each Fund's independent registered public        
accounting firm; membership dues of industry associations; interest on either   
Fund borrowings; postage; insurance premiums on property or personnel (including
officers and Trustees) of each Fund which inure to its benefit; extraordinary   
expenses (including, but not limited to, legal claims and liabilities and       
litigation costs and any indemnification relating thereto); and all other costs 
of each Fund's operation.                                                       

    Each Investment Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its           
obligations thereunder, the Investment Adviser is not liable to either Fund or  
any of its investors for any act or omission by the Investment Adviser or for   
any losses sustained by either Fund or its investors.                           

     Each Investment Advisory Agreement will remain in effect from year to year,
provided continuance of each Investment Advisory Agreement is approved at least 
annually by the vote of the holders of a majority, as defined in the Investment 
Company Act, of the outstanding shares of the applicable Fund, or by the        
Trustees; provided that in either event such continuance is approved annually by
the vote of a majority of the Independent Trustees.                             

Each Administration Agreement provides that in the absence of willful 
misfeasance, bad faith, gross negligence or reckless disregard of its           
obligations thereunder, the Administrator is not liable to the Funds or any of  
its investors for any act or omission by the Administrator or for any losses    
sustained by the Funds or their investors. Each Administration Agreement will   
continue unless terminated by either party by written notice delivered to the   
other party within 30 days.                                                     

D. OTHER SERVICE PROVIDERS                                                      

(1) TRANSFER AGENT/DIVIDEND-PAYING AGENT                              

   Morgan Stanley Trust is the Transfer Agent for each Fund's shares and the
Dividend Disbursing Agent for payment of dividends and distributions on each    
Fund's shares and agent for shareholders under various investment plans. The    
principal business address of the Transfer Agent is Harborside Financial Center,
Plaza Two, 2nd Floor, Jersey City, NJ 07311.                                    

(2) CUSTODIAN AND INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM       

The Bank of New York, 100 Church Street, New York, NY 10286, is the   
Custodian for each Fund's assets. Any of the Funds' cash balances with the      
Custodian in excess of $100,000 are unprotected by federal deposit insurance.   
These balances may, at times, be substantial.                                   

    ____________________, is the independent registered public accounting firm
of each Fund. Each Fund's independent registered public accounting firm is      
responsible for auditing the annual financial statements.                       

(3) AFFILIATED PERSONS                                                

The Transfer Agent is an affiliate of the Investment Adviser and the  
Distributor. As Transfer Agent and Dividend Disbursing Agent, the Transfer      
Agent's responsibilities include maintaining shareholder accounts, disbursing   
cash dividends and reinvesting dividends, processing account registration       
changes, handling purchase and redemption transactions, mailing prospectuses and
reports, mailing and tabulating proxies, processing share certificate           
transactions, and maintaining shareholder records and lists. For these services,
the Transfer Agent receives a per shareholder account fee from each Fund and is 
reimbursed for its out-of-pocket expenses in connection with such services.     

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E. CODES OF ETHICS                                                              

   The Funds, the Investment Adviser and the Distributor have each adopted a
Code of Ethics pursuant to Rule 17j-1 under the Investment Company Act. The     
Codes of Ethics are designed to detect and prevent improper personal trading.   
The Codes of Ethics permit personnel subject to the Codes to invest in          
securities, including securities that may be purchased, sold or held by the     
Funds, subject to a number of restrictions and controls, including prohibitions 
against purchases of securities in an initial public offering and a preclearance
requirement with respect to personal securities transactions.                   

F. PROXY VOTING POLICY AND PROXY VOTING RECORD                                  

 The Board of Trustees believes that the voting of proxies on securities
held by each Fund is an important element of the overall investment process. As 
such, the Trustees have delegated the responsibility to vote such proxies to    
Morgan Stanley Investment Management and its advisory affiliates ("MSIM"). The  
following is a summary of MSIM's Proxy Voting Policy ("Proxy Policy").          

    MSIM uses its best efforts to vote proxies on securities held in each Fund
as part of its authority to manage, acquire and dispose of Fund assets. In this 
regard, MSIM has formed a Proxy Review Committee ("Committee") for each Fund    
comprised of senior investment professionals that is responsible for creating   
and implementing the Proxy Policy. The Committee meets monthly but may meet more
frequently as conditions warrant. The Proxy Policy provides that MSIM will vote 
proxies in the best interests of clients consistent with the objective of       
maximizing long-term investment returns. The Proxy Policy provides that MSIM    
will generally vote proxies in accordance with pre-determined guidelines        
contained in the Proxy Policy. MSIM may vote in a manner that is not consistent 
with the pre-determined guidelines, provided that the vote is approved by the   
Committee.                                                                      

The Proxy Policy provides that, unless otherwise determined by the    
Committee, votes will be cast in the manner described below:                    

   -    Generally, routine proposals will be voted in support of management.

     -    With regard to the election of directors, where no conflict exists and
         where no specific governance deficiency has been noted, votes will be
cast in support of management's nominees.                   

 -    MSIM will vote in accordance with management's recommendation with
respect to certain non-routine proposals (i.e., reasonable  
    capitalization changes, stock repurchase programs, stock splits,
         certain compensation-related matters, certain anti-takeover measures,
etc.).                                                      

-    MSIM will vote against certain non-routine proposals (i.e.,      
unreasonable capitalization changes, requiring supermajority
    shareholder votes to amend by-laws, indemnification of auditors,
etc.), notwithstanding management support.                  

   -    MSIM will vote in its discretion with respect to certain non-routine
         proposals (i.e., mergers, acquisitions, take-overs, spin-offs, etc.),
        which may have a substantive financial or best interest impact on an
issuer.                                                     

   -    MSIM will vote for certain proposals it believes call for reasonable
         charter provisions or corporate governance practices (i.e., requiring
          auditors to attend annual shareholder meetings, requiring that members
    of compensation, nominating and audit committees be independent,
     reducing or eliminating supermajority voting requirements, etc.).

-    MSIM will vote against certain proposals it believes call for    
     unreasonable charter provisions or corporate governance practices
     (i.e., proposals to require a company to prepare reports that are
  costly to provide or that would require duplicative efforts or
     expenditure that are of a non-business nature or would provide no
pertinent information from the perspective of institutional 
shareholders, etc.).                                        

  -    Certain other proposals (i.e., proposals requiring directors to own
         large amounts of company stock to be eligible for election, proposals
   requiring diversity of board membership relating to broad based
        social, religious or ethnic groups, etc.) generally are evaluated by
    the Committee based on the nature of the proposal and the likely
impact on shareholders.                                     

     While the proxy voting process is well-established in the United States and
other developed markets with a number of tools and services available to assist 
an investment adviser, voting proxies of non-U.S. companies located in certain  
jurisdictions, particularly emerging markets, may involve a number of problems  

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that may restrict or prevent MSIM's ability to vote such proxies. As a result,  
non-U.S. proxies will be voted on a best efforts basis only, after weighing the 
costs and benefits to the respective Fund of voting such proxies.               

CONFLICTS OF INTEREST                                                           

If the Committee determines that an issue raises a potential material 
conflict of interest, or gives rise to the appearance of a potential material   
conflict of interest, the Committee will request a special committee to review, 
and recommend a course of action with respect to, the conflict in question.     

THIRD PARTIES                                                                   

To assist in its responsibility for voting proxies, MSIM may retain   
third-party services as experts in the proxy voting and corporate governance    
area. These proxy research providers are referred to herein as "Research        
Providers." The services provided to MSIM by the Research Providers include     
in-depth research, global issuer analysis, and voting recommendations. While    
MSIM may review and utilize recommendations made by the Research Providers in   
making proxy voting decisions, it is in no way obligated to follow such         
recommendations. In addition to research, Institutional Shareholder Services    
provides vote execution, reporting, and recordkeeping. The Committee carefully  
monitors and supervises the services provided by the Research Providers.        

FURTHER INFORMATION                                                             

     A copy of the Proxy Policy, as well as each Fund's most recent proxy voting
record for the 12-month period ended June 30, filed with the SEC, are available 
without charge on our web site at www.morganstanley.com/funds. Each Fund's proxy
voting record is also available without charge on the SEC's web site at         
www.sec.gov.                                                                    

G. REVENUE SHARING                                                              

The Investment Adviser and/or Distributor may pay compensation, out of
their own funds and not as an expense of the Funds, to Morgan Stanley DW and    
certain unaffiliated brokers, dealers or other financial intermediaries         
("Intermediaries") in connection with the sale or retention of Fund shares      
and/or shareholder servicing. For example, the Investment Adviser or the        
Distributor may pay additional compensation to Morgan Stanley DW and to         
Intermediaries for the purpose of promoting the sale of Fund shares, maintaining
share balances and/or for sub-accounting, administrative or shareholder         
processing services. Such payments are in addition to any distribution fees,    
service fees and/or transfer agency fees that may be payable by the Funds. The  
additional payments may be based on factors, including level of sales (based on 
gross or net sales or some specified minimum sales or some other similar        
criteria related to sales of the Funds and/or some or all other Morgan Stanley  
Funds), amount of assets invested by the Intermediary's customers (which could  
include current or aged assets of the Funds and/or some or all other Morgan     
Stanley Funds), the Funds' advisory fees, some other agreed upon amount, or     
other measures as determined from time to time by the Investment Adviser and/or 
Distributor. The amount of these payments may be different for different        
Intermediaries.                                                                 

   The Funds' Investment Adviser, out of its own assets, pays Morgan Stanley
DW and other Intermediaries an amount up to 0.18% annually of the value of the  
shares of the following money market funds (except shares, if any, held by      
participants in the Morgan Stanley Fund Solution(SM) Program, the Morgan Stanley
Personal PortfolioSM Program, the Morgan Stanley Funds Portfolio Architect(SM)  
Program and Morgan Stanley Corporate Retirement Solutions): New York Municipal  
Money Market Trust; Tax-Free Daily Income Trust; U.S. Government Money Market   
Trust; Liquid Asset Fund Inc., Active Assets California Tax-Free Trust; Active  
Assets Government Securities Trust; Active Assets Tax-Free Trust; Active Assets 
Money Trust; and California Tax-Free Daily Income Trust.                        

   The Funds' Investment Adviser, out of its own assets, pays Morgan Stanley
DW an amount equal to 0.20% annually of the value of Fund shares held through   
401(k) platforms in Morgan Stanley Corporate Retirement Solutions.              

   The prospect of receiving, or the receipt of, additional compensation, as
described above, by Morgan Stanley DW or other Intermediaries may provide Morgan
Stanley DW or other Intermediaries and/or Financial Advisors and other          
salespersons with an incentive to favor sales of shares of the Funds over other 
investment options with respect to which Morgan Stanley DW or an Intermediary   
does not receive additional compensation (or receives lower levels of additional
compensation). These payment arrangements, however, will not change the price   
that an investor pays for shares of the Funds. Investors may wish               

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to take such payment arrangements into account when considering and evaluating  
any recommendations relating to Fund shares.                                    

You should review carefully and disclosure by such brokers, dealers or
other Intermediaries as to their compensation.                                  

VI. BROKERAGE ALLOCATION AND OTHER PRACTICES                                    

A. BROKERAGE TRANSACTIONS                                                       

    Subject to the general supervision of the Trustees, the Investment Adviser
is responsible for decisions to buy and sell securities for each Fund, the      
selection of brokers and dealers to effect the transactions, and the negotiation
of brokerage commissions, if any. Purchases and sales of portfolio securities   
are normally transacted through dealers, issuers or underwriters. Such          
transactions are generally made on a net basis and do not involve payment of    
brokerage commissions. The cost of securities purchased from an underwriter     
usually includes a commission paid by the issuer to the underwriters;           
transactions with dealers normally reflect the spread between bid and asked     
prices.                                                                         

   During the fiscal years ended June 30, 2004, 2005 and 2006, Active Assets
Institutional Money Trust paid no such brokerage commissions or concessions.    

   During the fiscal years ended June 30, 2004, 2005 and 2006, Active Assets
Institutional Government Securities Trust paid no such brokerage commissions or 
concessions.                                                                    

B. COMMISSIONS                                                                  

Pursuant to an order of the SEC, each Fund may effect principal       
transactions in certain money market instruments with Morgan Stanley DW. Each   
Fund will limit its transactions with Morgan Stanley DW to U.S. government and  
government agency securities. The transactions will be effected with Morgan     
Stanley DW only when the price available from Morgan Stanley DW is better than  
that available from other dealers.                                              

   During the fiscal years ended June 30, 2004, 2005 and 2006, Active Assets
Institutional Money Trust did not effect any principal transactions with Morgan 
Stanley DW.                                                                     

   During the fiscal years ended June 30, 2004, 2005 and 2006, Active Assets
Institutional Government Securities Trust did not effect any principal          
transactions with Morgan Stanley DW.                                            

 Brokerage transactions in securities listed on exchanges or admitted to
unlisted trading privileges may be effected through Morgan Stanley DW, Morgan   
Stanley & Co. and other affiliated brokers and dealers. In order for an         
affiliated broker or dealer to effect any portfolio transactions on an exchange 
for either Fund, the commissions, fees or other remuneration received by the    
affiliated broker or dealer must be reasonable and fair compared to the         
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold on 
an exchange during a comparable period of time. This standard would allow the   
affiliated broker or dealer to receive no more than the remuneration which would
be expected to be received by an unaffiliated broker in a commensurate          
arm's-length transaction. Furthermore, the Trustees, including the Independent  
Trustees, have adopted procedures which are reasonably designed to provide that 
any commissions, fees or other remuneration paid to an affiliated broker or     
dealer are consistent with the foregoing standard. The Funds do not reduce the  
management fee they pay to the Investment Adviser by any amount of the brokerage
commissions they may pay to an affiliated broker or dealer.                     

   During the fiscal years ended June 30, 2004, 2005 and 2006, Active Assets
Institutional Money Trust paid no brokerage commissions to an affiliated broker 
or dealer.                                                                      

   During the fiscal years ended June 30, 2004, 2005 and 2006, Active Assets
Institutional Government Securities Trust paid no brokerage commissions to an   
affiliated broker or dealer.                                                    

C. BROKERAGE SELECTION                                                          

     The policy of each Fund regarding purchases and sales of securities for its
portfolio is that primary consideration will be given to obtaining the most     
favorable prices and efficient executions of transactions. The Investment       
Adviser is prohibited from directing brokerage transactions on the basis of the 
referral of clients on the sale of shares of advised investment companies.      

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     In seeking to implement the Funds' policies, the Investment Adviser effects
transactions with those brokers and dealers who the Investment Adviser believes 
provide the most favorable prices and are capable of providing efficient        
executions. If the Investment Adviser believes the prices and executions are    
obtainable from more than one broker or dealer, it may give consideration to    
placing portfolio transactions with those brokers and dealers who also furnish  
research and other services to the Funds or the Investment Adviser. The services
may include, but are not limited to, any one or more of the following:          
information as to the availability of securities for purchase or sale;          
statistical or factual information or opinions pertaining to investment; wire   
services; and appraisals or evaluations of portfolio securities.                

The information and services received by the Investment Adviser from  
brokers and dealers may be utilized by the Investment Adviser and any of its    
asset management affiliates in the management of accounts of some of their other
clients and may not in all cases benefit the Funds directly. While the receipt  
of such information and services is useful in varying degrees and would         
generally reduce the amount of research or services otherwise performed by the  
Investment Adviser and thereby reduce its expenses, it is of indeterminable     
value and the Funds do not reduce the management fee they pay to the Investment 
Adviser by any amount that may be attributable to the value of such services.   

Subject to the principle of obtaining best price and execution, the   
Investment Adviser may consider a broker-dealer's sales of shares of each Fund  
as a factor in selecting from among those broker-dealers qualified to provide   
comparable prices and execution on the Fund's portfolio transactions. The Funds 
do not, however, require a broker-dealer to sell shares of the Fund, in order   
for it to be considered to execute portfolio transactions, and will not enter   
into any arrangement whereby a specific amount or percentage of the Funds'      
transactions will be directed to a broker which sells shares of the Funds to    
customers. The Trustees review, periodically, the allocation of brokerage orders
to monitor the operation of these policies.                                     

 The Investment Adviser and certain of its affiliates currently serve as
investment adviser to a number of clients, including other investment companies,
and may in the future act as investment adviser to others. It is the practice of
the Investment Adviser and its affiliates to cause purchase and sale            
transactions to be allocated among clients whose assets they manage (including  
the Funds) in such manner they deem equitable. In making such allocations among 
the Funds and other client accounts, various factors may be considered,         
including the respective investment objectives, the relative size of portfolio  
holdings of the same or comparable securities, the availability of cash for     
investment, the size of investment commitments generally held and the opinions  
of the persons responsible for managing the portfolios of each Fund and other   
client accounts. The Investment Adviser and its affiliates may operate one or   
more order placement facilities and each facility will implement order          
allocation in accordance with the procedures described above. From time to time,
each facility may transact in a security at the same time as other facilities   
are trading in that security.                                                   

D. DIRECTED BROKERAGE                                                           

   During the fiscal year ended June 30, 2006, neither of the Funds paid any
brokerage commissions to brokers because of research services provided.         

E. REGULAR BROKER-DEALERS                                                       

 During the fiscal year ended June 30, 2006, Active Assets Institutional
Money Trust purchased securities issued by [Banc of America Securities LLC,     
Citigroup Global Markets Inc., Goldman Sachs Group, Inc., Deutsche Securities   
Inc., Lehman Brothers Inc. and JP Morgan Chase & Co.,] which issuers were among 
the ten brokers or dealers which executed transactions for or with Active Assets
Institutional Money Trust in the largest dollar amounts during the year. At June
30, 2006, Active Assets Institutional Money Trust held securities issued by     
[Banc of America Securities LLC, Goldman Sachs Group Inc., Citigroup Global     
Markets Inc. and Deutsche Securities Inc.] with market values of [$40,000,000,  
$20,000,000, $10,000,000 and $10,000,000, respectively.]                        

  [During the fiscal year ended June 30, 2006, Active Assets Institutional
Government Securities Trust did not purchase securities issued by brokers or    
dealers that were among the ten brokers or dealers which executed transactions  
for or with the Fund in the largest dollar amounts during the year. At June 30, 
2006, the Fund did not own any securities issued by any of such issuers.]       

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VII. CAPITAL STOCK AND OTHER SECURITIES                                         

 The shareholders of each Fund are entitled to a full vote for each full
share of beneficial interest held. The Funds are authorized to issue an         
unlimited number of shares of beneficial interest. All shares of beneficial     
interest of each Fund are of $0.01 par value and are equal as to earnings,      
assets and voting privileges.                                                   

Each Fund's Declaration of Trust permits the Trustees to authorize the
creation of additional series of shares (the proceeds of which would be invested
in separate, independently managed portfolios) and additional classes of shares 
within any series. The Trustees have not presently authorized any such          
additional series of classes of shares other than as set forth in the           
PROSPECTUS.                                                                     

   The Funds are not required to hold annual meetings of shareholders and in
ordinary circumstances the Funds do not intend to hold such meetings. The       
Trustees may call special meetings of shareholders for action by shareholder    
vote as may be required by the Investment Company Act or the respective Fund's  
Declaration of Trust. Under certain circumstances, the Trustees may be removed  
by the actions of the Trustees. In addition, under certain circumstances, the   
shareholders may call a meeting to remove the Trustees, and the Funds are       
required to provide assistance in communicating with shareholders about such a  
meeting. The voting rights of shareholders are not cumulative, so that holders  
of more than 50% of the shares voting can, if they choose, elect all Trustees   
being selected, while the holders of the remaining shares would be unable to    
elect any Trustees.                                                             

Under Massachusetts law, shareholders of a business trust may, under  
certain limited circumstances, be held personally liable as partners for the    
obligations of each Fund. However, each Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the respective   
Fund, requires that notice of such Fund obligations include such disclaimer, and
provides for indemnification out of the Fund's property for any shareholder held
personally liable for the obligations of the Fund. Thus, the risk of a          
shareholder incurring financial loss on account of shareholder liability is     
limited to circumstances in which a Fund itself would be unable to meet its     
obligations. Given the above limitations on shareholder personal liability, and 
the nature of each Fund's assets and operations, the possibility of a Fund being
unable to meet its obligations is remote and thus, in the opinion of            
Massachusetts counsel to the Funds, the risk to each Fund's shareholders of     
personal liability is remote.                                                   

     The Trustees themselves have the power to alter the number and the terms of
office of the Trustees (as provided for in each Fund's Declaration of Trust),   
and they may at any time lengthen or shorten their own terms or make their terms
of unlimited duration and appoint their own successors, provided that always at 
least a majority of the Trustees has been elected by the shareholders of the    
respective Fund.                                                                

VIII. PURCHASE, REDEMPTION AND PRICING OF SHARES                                

A. PURCHASE/REDEMPTION OF SHARES                                                

   Information concerning how Fund shares are offered to the public (and how
they are redeemed) is provided in the Funds' PROSPECTUS.                        

TRANSFER AGENT AS AGENT. With respect to the redemption of the Funds' 
shares or the application of proceeds to the purchase of new shares in a Fund,  
the Transfer Agent acts as agent for the Distributor and for the shareholder's  
authorized broker-dealer in the performance of such functions. With respect to  
redemptions, the Transfer Agent is liable for its own negligence and not for the
default or negligence of its correspondents or for losses in transit. The Funds 
are not liable for any default or negligence of the Transfer Agent, the         
Distributor or any authorized broker-dealer.                                    

B. OFFERING PRICE                                                               

    The price of each Fund's shares, called "net asset value," is based on the
value of each respective Fund's portfolio securities.                           

Each Fund utilizes the amortized cost method in valuing its portfolio 
securities for purposes of determining the net asset value of its shares. Each  
Fund utilizes the amortized cost method in valuing its portfolio securities even
though the portfolio securities may increase or decrease in market value,       
generally in connection with changes in interest rates. The amortized cost      
method of valuation involves valuing                                            

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a security at its cost at the time of purchase adjusted by a constant           
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. While this    
method provides certainty in valuation, it may result in periods during which   
value, as determined by amortized cost, is higher or lower than the price a Fund
would receive if it sold the investment. During such periods, the yield to      
investors in each Fund may differ somewhat from that obtained in a similar      
company which uses marked-to-market values for all of its portfolio securities. 
For example, if the use of amortized cost resulted in a lower (higher) aggregate
portfolio value on a particular day, a prospective investor in either Fund would
be able to obtain a somewhat higher (lower) yield than would result from        
investment in such a similar company and existing investors would receive less  
(more) investment income. The purpose of this method of calculation is to       
facilitate the maintenance of a constant net asset value per share of $1.00.    

   The use of the amortized cost method to value the portfolio securities of
each Fund and the maintenance of the per share net asset value of $1.00 is      
permitted pursuant to Rule 2a-7 under the Investment Company Act and is         
conditioned on its compliance with various conditions contained in the Rule     
including: (a) the Trustees are obligated, as a particular responsibility within
the overall duty of care owed to the Funds' shareholders, to establish          
procedures reasonably designed, taking into account current market conditions   
and each Fund's investment objectives, to stabilize the net asset value per     
share as computed for the purpose of distribution and redemption at $1.00 per   
share; (b) the procedures include (i) calculation, at such intervals as the     
Trustees determine are appropriate and as are reasonable in light of current    
market conditions, of the deviation, if any, between net asset value per share  
using amortized cost to value portfolio securities and net asset value per share
based upon available market quotations with respect to such portfolio           
securities; (ii) periodic review by the Trustees of the amount of deviation as  
well as methods used to calculate it; and (iii) maintenance of written records  
of the procedures, and the Trustees' considerations made pursuant to them and   
any actions taken upon such consideration; (c) the Trustees should consider what
steps should be taken, if any, in the event of a difference of more than 1/2 of 
1% between the two methods of valuation; and (d) the Trustees should take such  
action as they deem appropriate (such as shortening the average portfolio       
maturity, realizing gains or losses, withholding dividends or, as provided by   
the Declaration of Trust, reducing the number of outstanding shares of either   
Fund) to eliminate or reduce to the extent reasonably practicable material      
dilution or other unfair results to investors or existing shareholders which    
might arise from differences between the two method of valuation.               

Generally, for purposes of the procedures adopted under the Rule, the 
maturity of a portfolio security is deemed to be the period remaining           
(calculated from the trade date or such other date on which a Fund's interest in
the instrument is subject to market action) until the date on which in          
accordance with the terms of the security the principal amount must             
unconditionally be paid, or in the case of a security called for redemption, the
date on which the redemption payment must be made.                              

   A variable rate security that is subject to a demand feature is deemed to
have a maturity equal to the period remaining until the principal amount can be 
recovered through demand. A floating rate security that is subject to a demand  
feature is deemed to have a maturity equal to the period remaining until the    
principal amount can be recovered through demand.                               

    An "NRSRO" is a nationally recognized statistical rating organization. The
term "Requisite NRSROs" means (i) any two NRSROs that have issued a rating with 
respect to a security or class of debt obligations of an issuer, or (ii) if only
one NRSRO has issued a rating with respect to such security or issuer at the    
time a fund purchases or rolls over the security, that NRSRO.                   

   An Eligible Security is generally defined in the Rule to mean (i) a rated
security with a remaining maturity of 397 calendar days or less that has        
received a rating from the Requisite NRSROs in one of the two highest short-term
rating categories (within which there may be sub-categories or gradations       
indicating relative standing); or (ii) an Unrated Security that is of comparable
quality to a security meeting the requirements of (1) above, as determined by   
the Trustees; (iii) in addition, in the case of a security that is subject to a 
Demand Feature or Guarantee: (A) the Guarantee has received a rating from an    
NRSRO or the Guarantee is issued by a guarantor that has received a rating from 
an NRSRO with respect to a class of debt obligations (or any debt obligation    
within that class) that is comparable in priority and security to the Guarantee,
unless: (1) the Guarantee is issued by a person that directly or indirectly,    
controls, is controlled by or is under a common control with the issuer of the  
security subject to the Guarantee (other than a sponsor or a Special Purpose    
Entity with respect to an Asset Backed Security: (2) the security               

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subject to the Guarantee is a repurchase agreement that is Collateralized Fully;
or (3) the Guarantee itself is a Government Security and (B) the issuer of the  
Demand Feature, or another institution, has undertaken promptly to notify the   
holder of the security in the event the Demand Feature or Guarantee is          
substituted with another Demand Feature or Guarantee (if such substitution is   
permissible under the terms of the Demand Feature or Guarantee). Each Fund will 
limit its investments to securities that meet the requirements for Eligible     
Securities; however, each Fund may invest in adjustable rate government         
securities with final maturities in excess of 397 days.                         

As permitted by the Rule, the Trustees have delegated to the Funds'   
Investment Adviser the authority to determine which securities present minimal  
credit risks and which unrated securities are comparable in quality to rated    
securities.                                                                     

Also, as required by the Rule, each Fund will limit its investments in
securities, other than Government securities, so that, at the time of purchase: 
(a) except as further limited in (b) below with regard to certain securities, no
more than 5% of its total assets will be invested in the securities of any one  
issuer; and (b) with respect to Eligible Securities that have received a rating 
in less than the highest category by any one of the NRSROs whose ratings are    
used to qualify the security as an Eligible Security, or that have been         
determined to be of comparable quality: (i) no more than 5% in the aggregate of 
each Fund's total assets in all such securities, and (ii) no more than the      
greater of 1% of total assets, or $1 million, in the securities on any one      
issuer.                                                                         

     The presence of a line of credit or other credit facility offered by a bank
or other financial institution which guarantees the payment obligation of the   
issuer, in the event of a default in the payment of principal or interest of an 
obligation, may be taken into account in determining whether an investment is an
Eligible Security, provided that the guarantee itself is an Eligible Security.  

The Rule further requires that each Fund limit its investments to U.S.
dollar-denominated instruments that the Trustees determine present minimal      
credit risks and which are Eligible Securities. The Rule also requires each Fund
to maintain a dollar-weighted average portfolio maturity (not more than 90 days)
appropriate to its objective of maintaining a stable net asset value of $1.00   
per share and precludes the purchase of any instrument with a remaining maturity
of more than 397 days, except for obligations of the U.S. Government where the  
variable rate of interest is readjusted no less frequently than every 762       
calendar days and which shall be deemed to have a remaining maturity equal to   
the period remaining until the next readjustment of the interest rate. Should   
the disposition of a portfolio security result in a dollar-weighted average     
portfolio maturity of more than 90 days, the applicable Fund will invest its    
available cash in such a manner as to reduce such maturity to 90 days or less as
soon as is reasonably practicable.                                              

   If the Trustees determine that it is no longer in the best interests of a
Fund and its shareholders to maintain a stable price of $1 per share or if the  
Trustees believe that maintaining such price no longer reflects a market-based  
net asset value per share, the Trustees have the right to change from an        
amortized cost basis of valuation to valuation based on market quotations. The  
Funds will notify their respective shareholders of any such change.             

IX. TAXATION OF THE FUNDS AND THEIR SHAREHOLDERS                                

  Each Fund generally will make two basic types of distributions: ordinary
dividends and long-term capital gain distributions. These two types of          
distributions are reported differently on a shareholder's income tax return. The
tax treatment of the investment activities of the Funds will affect the amount, 
timing and character of the distributions made by each Fund. The following      
discussion is only a summary of certain tax considerations generally affecting  
the Funds and shareholders of the Funds and is not intended as a substitute for 
careful tax planning. Shareholders are urged to consult their own tax           
professionals regarding specific questions as to federal, state or local taxes. 

    Each Fund intends to declare and pay all of its net investment income (and
net short-term capital gains, if any) as dividends daily. Dividends are         
automatically reinvested in additional Fund shares at net asset value. Net      
investment income, for dividend purposes, includes accrued interest and original
issue and market discount, plus or minus any short-term gains or losses realized
on sales of portfolio securities, less the amortization of market premium and   
the estimated expenses of each Fund, respectively. Net income will be calculated
immediately prior to the determination of net asset value per share of each     
Fund.                                                                           

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  The Trustees of the Funds may revise the dividend policy or postpone the
payment of dividends if a Fund should have or anticipate any large unexpected   
expense, loss or fluctuation in net assets which, in the opinion of the         
Trustees, might have a significant adverse effect on shareholders. On occasion, 
in order to maintain a constant $1.00 per share net asset value, the Trustees   
may direct that the number of outstanding shares be reduced in each             
shareholder's account. Such reduction may result in taxable income to a         
shareholder in excess of the net increase (i.e., dividends, less such           
reductions), if any, in the shareholder's account for a period of time.         
Furthermore, such reduction may be realized as a capital loss when the shares   
are liquidated.                                                                 

It is each Fund's policy and practice that, if checks for dividends or
distributions paid in cash remain uncashed, no interest will accrue on amounts  
represented by such uncashed checks.                                            

TAXES. Each Fund has qualified and intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of 
1986, as amended. If so qualified, the Funds will not be subject to federal     
income taxes, provided that each Fund timely distributes all of its taxable net 
investment income and all of its net realized gains to its shareholders.        

  Each Fund generally intends to distribute sufficient income and gains so
that it will not pay corporate income tax on its earnings. Each Fund also       
generally intends to distribute to its shareholders in each calendar year a     
sufficient amount of ordinary income and capital gains to avoid the imposition  
of a 4% excise tax. However, a Fund may instead determine to retain all or part 
of any capital gains in any year for reinvestment. In such event, a Fund will   
pay federal income tax (and possibly excise tax) on such retained gains.        

Gains or losses on sales of securities by each Fund will generally be 
long-term capital gains or losses if the securities have a tax holding period of
more than one year at the time of such sale. Gains or losses on the sale of     
securities with a tax holding period of one year or less will be short-term     
capital gains or losses.                                                        

   Under certain tax rules, the Funds may be required to accrue a portion of
any discount at which certain securities are purchased as income each year even 
though the Funds receive no payments in cash on the security during the year. To
the extent that the Funds invest in such securities, they would be required to  
pay out such income as an income distribution in order to avoid taxation at the 
Fund level. Such distributions will be made from the available cash of the Funds
or by liquidation of portfolio securities if necessary. If a distribution of    
cash necessitates the liquidation of portfolio securities, the Investment       
Adviser will select which securities to sell. The Funds may realize a gain or   
loss from such sales. In the event the Funds realize net capital gains from such
transactions, their shareholders may receive a larger capital gain distribution,
if any, than they would in the absence of such transactions.                    

TAXATION OF DIVIDENDS AND DISTRIBUTIONS. Shareholders normally will be
subject to federal income tax, and state and/or local income taxes on dividends 
paid from interest income derived from taxable securities and on distributions  
of realized net short-term capital gains and long-term capital gains. Interest  
income and realized net short-term capital gains distributions are taxable to   
the shareholder as ordinary income regardless of whether the shareholder        
receives such distributions in additional shares or in cash. Shareholders       
normally will be subject to federal income taxes, and state and/or local income 
taxes, on dividends paid from interest income derived from taxable securities as
well as distributions of capital gains realized with respect to both taxable and
tax-exempt securities. However, any dividends attributable to interest earned on
direct obligations of the U.S. government may be exempt from state and local    
taxes. Dividends paid from interest income derived from taxable securities and  
distributions of net short-term capital gains (realized with respect to both    
taxable and tax-exempt securities) are taxable at ordinary income rates for     
federal tax purposes. Net long-term capital gains distributions are taxable to  
the shareholder as long-term capital gains, regardless of how long the          
shareholder has held the Fund shares and regardless of whether the shareholder  
receives such distribution in additional shares or in cash. Under current law,  
the maximum tax rate on long-term capital gains available to non-corporate      
shareholders generally is 15%. Without future congressional action, the maximum 
tax rate on long-term capital gains would return to 20% in 2011, and all        
dividends will be taxed at ordinary income rates.                               

    It is not anticipated that the ordinary dividends or net long-term capital
gains distributions will be eligible for the federal dividends received         
deduction available to corporations.                                            

   Shareholders are generally taxed on any ordinary dividend or capital gain
distribution from a Fund in the year they are actually distributed. However, if 
any such dividends or distributions are declared in October, November or        
December and paid in January then such amounts will be treated for tax purposes 
as received by the shareholders on December 31, to shareholders of record of    
such month.                                                                     

 Shareholders who are not citizens or residents of the United States and
certain foreign entities may be subject to withholding of United States tax on  
distributions made by the Funds of any taxable interest                         

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income and short-term capital gains. The Funds are not required to withhold any 
amounts with respect to distributions to foreign shareholders that are properly 
designated by the Funds as "interest-related dividends" or "short-term capital  
gain dividends," provided that the income would not be subject to federal income
tax if earned directly by the foreign shareholder. However, the Funds will      
continue to withhold these amounts regardless of the fact that they are not     
required to do so. Any amounts withheld from payments made to a shareholder may 
be refunded or credited against the shareholder's federal income tax liability, 
if any, provided that the required information is furnished to the IRS.         

    After the end of each calendar year, shareholders will be sent information
on their dividends and capital gain distributions for tax purposes, including   
the portion taxable as ordinary income and the portion taxable as long-term     
capital gains.                                                                  

PURCHASES AND REDEMPTIONS AND EXCHANGES OF FUND SHARES. Shareholders  
normally will be subject to federal income taxes and state and/or local income  
taxes on the sale or disposition of Fund shares. In general, a sale of shares   
results in capital gain or loss, and for individual shareholders, is taxable at 
a federal rate dependent upon the length of time the shares were held. A        
redemption of a shareholder's Fund shares is normally treated as a sale for tax 
purposes. Gain or loss on the sale or redemption of shares in a Fund is measured
by the difference between the amount received and the tax basis of the shares.  
Fund shares held for a period of one-year or less at the time of such sale or   
redemption will, for tax purposes, generally result in short-term capital gains 
or losses and those held for more than one year generally will result in        
long-term capital gains or losses. Under current law, the maximum tax rate on   
long-term capital gains available to non-corporate shareholders generally is    
15%. Without future congressional action, the maximum tax rate on long-term     
capital gains would return to 20% in 2011. However, as each Fund intends to     
maintain its share price at $1.00, preserving the principal value of a          
shareholder's investment, a shareholder generally will not realize gain or loss 
on the sale or redemption of shares in a Fund.                                  

X. UNDERWRITERS                                                                 

 Each Fund's shares are offered to the public on a continuous basis. The
Distributor, as the principal underwriter of the shares, has certain obligations
under the Distribution Agreement concerning the distribution of the shares.     
These obligations and the compensation the Distributor receives are described   
above in the section titled "Principal Underwriter."                            

XI. PERFORMANCE DATA                                                            

    Active Assets Institutional Money Trust's current yield for the seven days
ended June 30, 2006 was ___%. The seven day effective annual yield on June 30,  
2006 was ___%, assuming daily compounding.                                      

     Active Assets Institutional Government Securities Trust's current yield for
the seven days ended June 30, 2006 was ___%. The seven day effective annual     
yield on June 30, 2006 was ___%, assuming daily compounding.                    

XII. FINANCIAL STATEMENTS                                                       

    The Funds' audited financial statements for the fiscal year ended June 30,
2006, including notes thereto and the report of ___________________, are herein 
incorporated by reference from the Funds' annual reports. Copies of the Funds'  
ANNUAL REPORTS TO SHAREHOLDERS must accompany the delivery of this STATEMENT OF 
ADDITIONAL INFORMATION.                                                         

XIII. FUND COUNSEL                                                              

     Clifford Chance US LLP, located at 31 West 52nd Street, New York, NY 10019,
acts as the Funds' legal counsel.                                               

 *****

    This STATEMENT OF ADDITIONAL INFORMATION and the PROSPECTUS do not contain
all of the information set forth in the REGISTRATION STATEMENTS the Funds have  
filed with the SEC. The complete REGISTRATION STATEMENT for each Fund may be    
obtained from the SEC.                                                          

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ACTIVE ASSETS INSTITUTIONAL GOVERNMENT SECURITIES TRUST 
PART C
OTHER INFORMATION 

ITEM 23. EXHIBITS:                                                              

(a).      Declaration of Trust of the Registrant, is incorporated herein by     
        reference to Exhibit 1 of the Initial Registration Statement on Form
N-1A, filed on January 22, 2002.                            

(b).      Amended and Restated By-Laws of the Registrant, dated April 24, 2003, 
        is incorporated herein by reference to Exhibit (b) of Post-Effective
    Amendment No. 1 to Registration Statement on Form N-1A, filed on
August 29, 2003.                                            

(c).      None                                                                  

(d).      Amended and Restated Investment Advisory Agreement, dated November 1, 
2004, is incorporated herein by reference to Exhibit (d) of 
        Post-Effective Amendment No. 3 to the Registration Statement on Form
       N-1A of Morgan Stanley Small-Mid Special Value Fund, dated June 24,
2005.                                                       

(e)(1).   Form of Distribution Agreement between the Registrant and Morgan      
     Stanley Distributors Inc., is incorporated herein by reference to
     Exhibit 5(a) of Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-1A, filed on March 12, 2002.            

   (2).   Selected Dealer Agreement between Morgan Stanley Distributors Inc. and
          Morgan Stanley DW Inc., is incorporated herein by reference to Exhibit
        e(2) of Post-Effective Amendment No. 4 to the Registration Statement
   on Form N-1A of Morgan Stanley Fundamental Value Fund, filed on
January 25, 2006.                                           

(f).      Not applicable                                                        

(g)(1).   Form of Custodian Agreement between the Registrant and the Bank of New
York, is incorporated herein by reference to Exhibit 7(a)of 
       Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-1A, filed on March 12, 2002.                              

  (2).   Form of Amendment to the Custody Agreement between the Registrant and
        the Bank of New York, is incorporated herein by reference to Exhibit
          7(b) of Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on March 12, 2002.                         

   (3).   Form of Foreign Custody Manager Agreement between the Bank of New York
      and the Registrant, is incorporated herein by reference to Exhibit
          7(c) of Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-1A, filed on March 12, 2002.                         

(h)(1).   Amended and Restated Transfer Agency and Service Agreement, dated     
        November 1, 2004, between the Registrant and Morgan Stanley Services
          Company Inc., is incorporated herein by reference to Exhibit (h)(1) of
         Post-Effective Amendment No. 16 to the Registration Statement on Form
N-1A of Morgan Stanley Growth Fund, filed on May 27, 2005.  

(2).   Administration Agreement, dated November 1, 2004, between the      
        Registrant and Morgan Stanley Services Company Inc., is incorporated
         herein by reference to Exhibit (h)(2) of Post-Effective Amendment No.
          16 to the Registration Statement on Form N-1A of Morgan Stanley Growth
Fund, filed on May 27, 2005.                                

(i)(1).   Opinion of Clifford Chance US LLP, is incorporated herein by reference
to Exhibit (i)(1) of Post-Effective Amendment No. 2 to the  
  Registration Statement on Form N-1A, filed on August 30, 2004.

 (2).   Consent of Clifford Chance US LLP, to be filed by further amendment.

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  (3).   Opinion of Dechert LLP, Massachusetts Counsel, is incorporated herein
       by reference to Exhibit (i)(2) of Post-Effective Amendment No. 2 to
      the Registration Statement on Form N-1A, filed on August 30, 2004.

(j).      Consent of Independent Registered Public Accounting Firm, to be filed 
by further amendment.                                       

(k).      Not applicable                                                        

(l).      Investment Letter of Morgan Stanley Investment Advisors Inc. is       
   incorporated herein by reference to Exhibit 12 of Pre-Effective
        Amendment No. 1 to the Registration Statement on Form N-1A, filed on
March 12, 2002.                                             

(m).      Not applicable                                                        

(n).      Not applicable                                                        

(o).      Not applicable                                                        

(p)(1).   Code of Ethics of Morgan Stanley Investment Management, is            
        incorporated herein by reference to Exhibit (p)(1) of Post-Effective
         Amendment No. 16 to the Registration Statement on Form N-1A of Morgan
Stanley Growth Fund, filed on May 27, 2005.                 

(2).   Code of Ethics of Morgan Stanley Funds, is incorporated herein by  
         reference to Exhibit (p)(2) of Post-Effective Amendment No. 16 to the
      Registration Statement on Form N-1A of Morgan Stanley Growth Fund,
filed on May 27, 2005.                                      

(q).      Powers of Attorney of Trustees, dated April 25, 2006, is incorporated 
         herein by reference to Exhibit (q) of Post-Effective Amendment No. 23
          to the Registration Statement on Form N-1A of Morgan Stanley Utilities
Fund, filed on April 26, 2006.                              

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.           

None                                                                  

ITEM 25. INDEMNIFICATION.                                                       

    Pursuant to Section 5.3 of the Registrant's Declaration of Trust and under
Section 4.8 of the Registrant's By-Laws, the indemnification of the Registrant's
trustees, officers, employees and agents is permitted if it is determined that  
they acted under the belief that their actions were in or not opposed to the    
best interest of the Registrant, and, with respect to any criminal proceeding,  
they had reasonable cause to believe their conduct was not unlawful. In         
addition, indemnification is permitted only if it is determined that the actions
in question did not render them liable by reason of willful misfeasance, bad    
faith or gross negligence in the performance of their duties or by reason of    
reckless disregard of their obligations and duties to the Registrant. Trustees, 
officers, employees and agents will be indemnified for the expense of litigation
if it is determined that they are entitled to indemnification against any       
liability established in such litigation. The Registrant may also advance money 
for these expenses provided that they give their undertakings to repay the      
Registrant unless their conduct is later determined to permit indemnification.  

   Pursuant to Section 5.2 of the Registrant's Declaration of Trust, neither
the Investment Adviser nor any trustee, officer, employee or agent of the       
Registrant shall be liable for any action or failure to act, except in the case 
of bad faith, willful misfeasance, gross negligence or reckless disregard of    
duties to the Registrant. Pursuant to Section 9 of the Registrant's Investment  
Advisory Agreement, in the absence of willful misfeasance, bad faith, gross     
negligence or reckless disregard of its obligations under the Agreement, the    
Investment Adviser shall not be liable to the Registrant or any of its investors
for any error of judgment or mistake of law or for any act or omission by the   
Investment Adviser or for any losses sustained by the Registrant or its         
investors. Pursuant to Section 7 of the Registrant's Administration Agreement,  
the Administrator will use its best efforts in the performance of administrative
activities on behalf of each fund, but in the absence of willful misfeasance,   
bad faith, gross negligence or reckless disregard of its obligations hereunder, 
the Administrator shall not be liable to the Fund or any of its investors for   
any error of judgment or mistake of law or for any act or omission by the       
Administrator or for any losses sustained by the Fund or its investors.         

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Pursuant to Section 7 of the Registrant's Underwriting Agreement, the 
Registrant shall indemnify and hold harmless the Underwriter and each person, if
any, who controls the Underwriter against any loss, liability, claim, damage or 
expense (including the reasonable cost of investigating or defending any alleged
loss, liability, claim, damage or expense and reasonable counsel fees incurred  
in connection therewith) arising by reason of any person acquiring any Shares,  
which may be based upon the 1933 Act, or on any other statute or at common law, 
on the grounds that the Registration Statement or related Prospectus and        
Statement of Additional Information, as from time to time amended and           
supplemented, or the annual or interim reports to shareholders of the           
Registrant, includes an untrue statement of a material fact or omits to state a 
material fact required to be stated therein or necessary in order to make the   
statements therein not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, information furnished to the Registrant  
in connection therewith by or on behalf of the Underwriter; provided, however,  
that in no case (i) is the indemnity of the Registrant in favor of the          
Underwriter and any such controlling persons to be deemed to protect the        
Underwriter or any such controlling persons thereof against any liability to the
Registrant or its security holders to which the Underwriter or any such         
controlling persons would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason of  
reckless disregard of its obligations and duties under this Agreement; or (ii)  
is the Registrant to be liable under its indemnity agreement contained in this  
paragraph with respect to any claim made against the Underwriter or any such    
controlling persons, unless the Underwriter or any such controlling persons, as 
the case may be, shall have notified the Registrant in writing within a         
reasonable time after the summons or other first legal process giving           
information of the nature of the claim shall have been served upon the          
Underwriter or such controlling persons (or after the Underwriter or such       
controlling persons shall have received notice of such service on any designated
agent), but failure to notify the Registrant of any such claim shall not relieve
it from any liability which it may have to the person against whom such action  
is brought otherwise than on account of its indemnity agreement contained in    
this paragraph.                                                                 

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to trustees, officers and controlling      
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange  
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification 
against such liabilities (other than the payment by the Registrant of expenses  
incurred or paid by a trustee, officer, or controlling person of the Registrant 
in connection with the successful defense of any action, suit or proceeding) is 
asserted against the Registrant by such trustee, officer or controlling person  
in connection with the shares being registered, the Registrant will, unless in  
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such         
indemnification by it is against public policy as expressed in the Act, and will
be governed by the final adjudication of such issue.                            

 The Registrant hereby undertakes that it will apply the indemnification
provision of its by-laws in a manner consistent with Release 11330 of the       
Securities and Exchange Commission under the Investment Company Act of 1940     
("Investment Company Act"), so long as the interpretation of Sections 17(h) and 
17(i) of such Act remains in effect.                                            

The Registrant, in conjunction with the Investment Adviser, the       
Registrant's Trustees, and other registered investment management companies     
managed by the Investment Adviser, maintains insurance on behalf of any person  
who is or was a Trustee, officer, employee, or agent of the Registrant, or who  
is or was serving at the request of the Registrant as a trustee, director,      
officer, employee or agent of another trust or corporation, against any         
liability asserted against him and incurred by him or arising out of his        
position. However, in no event will Registrant maintain insurance to indemnify  
any such person for any act for which the Registrant itself is not permitted to 
indemnify him.                                                                  

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER                   

See "Fund Management" in the Prospectus regarding the business of the 
investment adviser. The following information is given regarding directors and  
officers of Morgan Stanley Investment Advisors Inc. ("Morgan Stanley Investment 
Advisors"). Morgan Stanley Investment Advisors is a wholly-owned subsidiary of  
Morgan Stanley & Co. Incorporated.                                              

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    Set forth below is the name and principal business address of each company
for which each director or officer of Morgan Stanley Investment Advisors Serves 
as a director, officer or employee:                                             

MORGAN STANLEY DISTRIBUTION, INC.                                               
MORGAN STANLEY DISTRIBUTORS INC.                                                
MORGAN STANLEY DW INC.                                                          
MORGAN STANLEY INVESTMENT ADVISORS                                              
MORGAN STANLEY INVESTMENT MANAGEMENT INC.                                       
VAN KAMPEN ADVISORS INC.                                                        
VAN KAMPEN INVESTMENT ASSET MANAGEMENT INC.                                     
VAN KAMPEN INVESTMENTS INC.                                                     
VAN KAMPEN INVESTMENT MANAGEMENT                                                
VAN KAMPEN INVESTOR SERVICES INC.                                               
1221 Avenue of the Americas, New York, New York 10020                           

MORGAN STANLEY SERVICES COMPANY INC.                                            
MORGAN STANLEY TRUST COMPANY                                                    
Harborside Financial Center, Plaza Two, Jersey City, New Jersey 07311           

Listed below are the officers and Trustees of Morgan Stanley Investment Advisors
Inc.                                                                            

                                                        [Enlarge/Download Table]

         NAME AND POSITION WITH                                                                              
MORGAN STANLEY INVESTMENT ADVISORS INC.            OTHER SUBSTANTIAL BUSINESS,PROFESSION,OR VOCATION         
---------------------------------------  --------------------------------------------------------------------
                                                                                                             
Owen D. Thomas                           President and Chief Operating Officer of Van Kampen Advisors, Inc., 
President, Chief Operating Officer and   Van Kampen Asset Management, Van Kampen Investments Inc., Morgan    
Director                                 Stanley Investment Management Inc. and Morgan Stanley Services      
                                         Company Inc.                                                        

Ronald E. Robison                        Managing Director of Van Kampen Asset Management, Van Kampen        
Managing Director and Director           Investments Inc., Director and Chief Administrative Officer of      
                                         Morgan Stanley Investment Management Inc. and Morgan Stanley        
                                         Services Company Inc., Director of Morgan Stanley Distributors Inc.,
                                         Morgan Stanley Trust, Morgan Stanley Distribution, Inc. and Van     
                                         Kampen Investor Services Inc.                                       

Amy R. Doberman                          Managing Director and General Counsel of Morgan Stanley Investment  
Managing Director and Secretary          Management                                                          

Dennis F. Shea                           Managing Director and Chief Investment Officer-Global Equity Group  
Managing Director and Chief Investment   of Morgan Stanley Asset Management                                  
Officer-Global Equity Group                                                                                  

J. David Germany                         Managing Director and Chief Investment Officer-Global Fixed Income  
Managing Director and Chief Investment   Group of Morgan Stanley Asset Management                            
Officer-Global Fixed Income Group                                                                            

Carsten Otto                             Managing Director and Chief Compliance Officer of Morgan Stanley    
Managing Director and Chief Compliance   Investment Management Inc., Van Kampen Advisors Inc. and Van Kampen 
Officer                                  Asset Management, Chief Compliance Officer of Van Kampen Investor   
                                         Services Inc. and Van Kampen Investments Inc.                       

Kenneth Castiglia                        Managing Director, Chief Financial Officer and Treasurer of Morgan  
Managing Director, Chief Financial       Stanley Asset Management.                                           
Officer and Treasurer                                                                                        

For information as to the business, profession, vocation or employment of a     
substantial nature of additional officers of the Investment Adviser, reference  
is made to the Investment Adviser's current Form ADV (File No. 801-42061) filed 
under the Investment Advisers Act of 1940, incorporated herein by reference.    

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ITEM 27. PRINCIPAL UNDERWRITERS                                                 

(a) Morgan Stanley Distributors Inc., a Delaware corporation, is the principal  
underwriter of the Registrant. Morgan Stanley Distributors is also the principal
underwriter of the following investment companies:                              

(1)  Active Assets California Tax-Free Trust                                    

(2)  Active Assets Government Securities Trust                                  

(3)  Active Assets Institutional Government Securities Trust                    

(4)  Active Assets Institutional Money Trust                                    

(5)  Active Assets Money Trust                                                  

(6)  Active Assets Tax-Free Trust                                               

(7)  Morgan Stanley Aggressive Equity Fund                                      

(8)  Morgan Stanley Allocator Fund                                              

(9)  Morgan Stanley Balanced Fund                                               

(10) Morgan Stanley California Tax-Free Daily Income Trust                      

(11) Morgan Stanley California Tax-Free Income Fund                             

(12) Morgan Stanley Capital Opportunities Trust                                 

(13) Morgan Stanley Convertible Securities Trust                                

(14) Morgan Stanley Developing Growth Securities Trust                          

(15) Morgan Stanley Dividend Growth Securities Inc.                             

(16) Morgan Stanley Equally-Weighted S&P 500 Fund                               

(17) Morgan Stanley European Equity Fund Inc.                                   

(18) Morgan Stanley Financial Services Trust                                    

(19) Morgan Stanley Flexible Income Trust                                       

(20) Morgan Stanley Fundamental Value Fund                                      

(21) Morgan Stanley Global Advantage Fund                                       

(22) Morgan Stanley Global Dividend Growth Securities                           

(23) Morgan Stanley Growth Fund                                                 

(24) Morgan Stanley Health Sciences Trust                                       

(25) Morgan Stanley High Yield Securities Inc.                                  

(26) Morgan Stanley Income Trust                                                

(27) Morgan Stanley International Fund                                          

(28) Morgan Stanley International SmallCap Fund                                 

(29) Morgan Stanley International Value Equity Fund                             

(30) Morgan Stanley Japan Fund                                                  

(31) Morgan Stanley Limited Duration Fund                                       

(32) Morgan Stanley Limited Duration U.S. Treasury Trust                        

(33) Morgan Stanley Limited Term Municipal Trust                                

(34) Morgan Stanley Liquid Asset Fund Inc.                                      

(35) Morgan Stanley Mid-Cap Value Fund                                          

(36) Morgan Stanley Mortgage Securities Trust                                   

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(37) Morgan Stanley Multi-Asset Class Fund                                      

(38) Morgan Stanley Nasdaq-100 Index Fund                                       

(39) Morgan Stanley Natural Resource Development Securities Inc.                

(40) Morgan Stanley New York Municipal Money Market Trust                       

(41) Morgan Stanley New York Tax-Free Income Fund                               

(42) Morgan Stanley Pacific Growth Fund Inc.                                    

(43) Morgan Stanley Prime Income Trust                                          

(44) Morgan Stanley Real Estate Fund                                            

(45) Morgan Stanley S&P 500 Index Fund                                          

(46) Morgan Stanley Select Dimensions Investment Series                         

(47) Morgan Stanley Small-Mid Special Value Fund                                

(48) Morgan Stanley Special Growth Fund                                         

(49) Morgan Stanley Special Value Fund                                          

(50) Morgan Stanley Strategist Fund                                             

(51) Morgan Stanley Tax-Exempt Securities Trust                                 

(52) Morgan Stanley Tax-Free Daily Income Trust                                 

(53) Morgan Stanley Technology Fund                                             

(54) Morgan Stanley Total Market Index Fund                                     

(55) Morgan Stanley Total Return Trust                                          

(56) Morgan Stanley U.S. Government Money Market Trust                          

(57) Morgan Stanley U.S. Government Securities Trust                            

(58) Morgan Stanley Utilities Fund                                              

(59) Morgan Stanley Value Fund                                                  

(60) Morgan Stanley Variable Investment Series                                  

(b) The following information is given regarding directors and officers of      
Morgan Stanley Distributors not listed in Item 25 above. The principal address  
of Morgan Stanley Distributors is 1221 Avenue of the Americas, New York, New    
York 10020. None of the following persons has any position or office with the   
Registrant.                                                                     

                                                        [Enlarge/Download Table]

NAME AND PRINCIPAL      POSITIONS AND OFFICES WITH          POSITIONS AND OFFICES WITH   
 BUSINESS ADDRESS               UNDERWRITER                         REGISTRANT           
------------------  ----------------------------------  ---------------------------------
                                                                                         
Ronald E. Robison   Director                            President and Principal Executive
                                                        Officer                          

Kenneth Castiglia   Director, Chief Financial Officer   None                             
                    and Treasurer                                                        

Michael Kiley       Director, Chief Executive Officer   None                             
                    and President                                                        

Brian Binder        Chief Administrative Officer        None                             

Stefanie Chang Yu   Secretary                           Vice President                   

Winston McLaughlin  Chief Compliance Officer            None                             

Gina Gallagher      Chief AML Office                    None                             

Pat Behnke          Financial and Operations Principal  None                             

(c) Not applicable.                                                             

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ITEM 28. LOCATION OF ACCOUNTS AND RECORDS                                       

    Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act, and the rules promulgated thereunder, are maintained as 
follows:                                                                        

The Bank of New York                  
100 Church Street                     
New York, New York 10286              
         (records relating to its function as custodian)

 Morgan Stanley Investment Advisors Inc.
1221 Avenue of the Americas           
New York, New York 10020              
                  (records relating to its function as investment adviser)

Morgan Stanley Trust                  
Harborside Financial Center, Plaza Two
2nd Floor                             
Jersey City, New Jersey 07311         
                 (records relating to its function as transfer agent and
dividend disbursing agent)            

Morgan Stanley Services Company Inc.  
Harborside Financial Center, Plaza Two
7th Floor                             
Jersey City, New Jersey 07311         
             (records relating to its function as administrator)

ITEM 29. MANAGEMENT SERVICES                                                    

    Registrant is not a party to any such management-related service contract.

ITEM 30. UNDERTAKINGS                                                           

None.                                                                 

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the    
Investment Company Act of 1940, the Registrant has duly caused this             
Post-Effective Amendment to the Registration Statement to be signed on its      
behalf by the undersigned, thereunto duly authorized, in the City of New York   
and State of New York on the 28th day of August, 2006.                          

                                      ACTIVE ASSETS INSTITUTIONAL GOVERNMENT
                SECURITIES TRUST

                         By: /s/ RONALD E. ROBISON
                                            ------------------------------------
                         Ronald E. Robison
                               President and Principal
                         Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this      
Post-Effective Amendment No. 5 has been signed below by the following persons in
the capacities and on the dates indicated.                                      

        SIGNATURES                         TITLE                  DATE
        ----------                         -----                  ----

(1) Principal Executive Officer        President and Principal                  
               Executive Officer

By: /s/ RONALD E. ROBISON                                                       
--------------------------------                                        
    Ronald E. Robison                                            August 28, 2006

(2) Principal Financial Officer        Chief Financial Officer                  

By: /s/ FRANCIS J. SMITH                                                        
--------------------------------                                        
    Francis J. Smith                                             August 28, 2006

(3) Majority of the Trustees                                                    

Charles A. Fiumefreddo                                                  
James F. Higgins                                                        

By: /s/ BARRY FINK                                                              
--------------------------------                                        
    Barry Fink                                                   August 28, 2006
Attorney-in-Fact                                                        

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

By: /s/ CARL FRISCHLING                                                         
--------------------------------                                        
Carl Frischling                                                         
    Attorney-in-Fact                                             August 28, 2006

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘485APOS’ Filing		Date		First		Last			Other Filings
		10/31/07		42					485BPOS
		4/30/07		12		43
		10/31/06		1		22			485BPOS
		9/30/06		7		13			N-Q
Filed on:		8/28/06		1		62			N-PX
		7/1/06		41		42
		6/30/06		8		54			24F-2NT,  N-CSR,  N-PX,  NSAR-B
		4/26/06		56
		4/25/06		56
		1/25/06		55
		12/31/05		8		42			N-CSRS,  NSAR-A,  NSAR-A/A
		10/1/05		41
		6/30/05		43		48			24F-2NT,  N-CSR,  N-PX,  NSAR-B
		6/24/05		55
		5/27/05		55		56
		11/1/04		43		55			497
		8/30/04		55		56			24F-2NT,  485BPOS
		6/30/04		43		48			24F-2NT,  N-CSR,  N-PX,  NSAR-B
		4/1/04		41
		12/31/03		42					N-CSRS,  NSAR-A
		8/29/03		55					485BPOS
		4/24/03		55
		11/4/02		12
		3/12/02		55		56			N-1A/A
		1/22/02		55					N-1A,  N-8A
		1/18/02		25
		2/15/00		8
		11/23/99		25
									List all Filings