Morgan Stanley Funds - Euro Enhanced Yield Fund assigned 'AAf/S1+' rating

Standard & Poor's Ratings Services said today that it assigned its 'AAf' fund credit quality rating and 'S1+' volatility rating to the Morgan Stanley Funds PLC - Euro Enhanced Yield Fund.

The 'AAf ' rating signifies the very strong protection the fund's portfolio provides against losses from credit defaults. The 'S1+' volatility rating recognizes that the fund possesses extremely low sensitivity to changing market conditions. The assigned ratings follow the launch of the fund yesterday.

The Euro Enhanced Yield Fund is the latest subfund to be launched under Morgan Stanley Funds PLC, an open-ended investment company structured as an umbrella fund and domiciled in Ireland. As with the U.S. Dollar Enhanced Yield Fund, also rated 'AAf/S1+', the Euro Enhanced Yield Fund is a higher return product within the umbrella fund. The fund's investment objective is to provide investors with a high level of current income to the extent consistent with maintaining capital stability and liquidity. The return objective is three-month EURIBOR, net of fees. The other subfunds under the umbrella are money market funds. Standard & Poor's has assigned 'AAAm' Principal Stability Fund ratings to the Euro Liquidity Fund, Sterling Liquidity Fund, and U.S. Dollar Liquidity Fund.

The Euro Enhanced Yield Fund is managed by the highly experienced Global Short Duration Team at London-based Morgan Stanley Investment Management Ltd., the fund's investment manager. The team operates under conservative investment practices and strict investment guidelines, and draws from the resources of the wider fixed income team. To achieve its return objective of three-month EURIBOR, net of fees, the fund invests in a broad range of fixed income and money market securities predominantly comprising ABS and MBS. Derivatives will be used for the purposes of effective portfolio management, such as managing interest rate risk. The fund has a defensive interest rate strategy, managing target duration to less than one year, and limited spread risk. All investments will be rated 'A-' or better, at the time of purchase. Standard & Poor's will review pertinent fund information and the portfolio holdings report on a month basis, as part of its surveillance process.

Morgan Stanley Investment Management is the asset management division of Morgan Stanley (A+/Positive/A-1). As of March 31, 2007, Morgan Stanley Investment Management had more than $496 billion in assets under management firmwide. More than 50 investment professionals are dedicated to fixed income and money-market fund management, managing more than $185 billion in assets. Morgan Stanley Fund PLC has appointed State Street Custodial Services (Ireland) Ltd., ultimately owned by State Street Corp. (AA-/Stable/A-1+), to act as custodian of the fund. State Street Fund Services (Ireland) Ltd. acts as the fund's administrator.