Morgan Stanley Investment Management Launches the Alternative Investment Partners Absolute Return Fund STS ("Absolute Return Fund STS")

Absolute Return Fund STS Demonstrates Further Enhancement of Alternative Investment Offerings

New York —

Morgan Stanley Investment Management ("MSIM") announced today that it has launched the Absolute Return Fund STS, an institutional-quality portfolio of hedge funds for special tax status investors, namely, tax-exempt and tax-deferred individual investors and smaller institutional clients. Expanding on the April 2006 launch of the Alternative Investment Partners Absolute Return Fund ("Absolute Return Fund") available to taxable investors, the Absolute Return Fund STS now allows the SEC-registered fund of hedge fund offerings of Morgan Stanley Alternative Investment Partners ("Morgan Stanley AIP") to be available to investors with taxable, tax-exempt and tax-deferred accounts.

With the launch of the Absolute Return Fund STS, tax-exempt and tax-deferred accounts, such as endowment funds, certain trust accounts and IRAs that are accredited investors, have access to hedge fund returns without incurring any unrelated business tax income (UBTI) as a result of the hedge fund investments made by Absolute Return Fund. The Absolute Return Fund and Absolute Return Fund STS (together, the "Funds") give investors access to the expertise and established track record of Morgan Stanley AIP for the relatively low minimum initial investment of $100,000.

Morgan Stanley AIP, founded in April 2000, manages portfolios of hedge funds and private equity assets for some of the world's largest institutions and high net worth individuals. The Funds are managed by Morgan Stanley AIP's Liquid Markets Team, headed by Mustafa Jama.

"We are excited to bring the expertise of Morgan Stanley AIP to even more of our clients," said Michael Kiley, Head of Americas Retail and Intermediary Distribution. "By filling out the product offering for the absolute return strategy to include tax-exempt and tax-deferred accounts, we're continuing to provide innovative solutions to accommodate individual investors' growing demand for a practical entry into the hedge fund marketplace."

The Absolute Return Fund STS is an SEC-registered vehicle that utilizes the same "absolute return strategy" utilized by the Absolute Return Fund to achieve attractive risk-adjusted returns over the broad range of market environments - but without the investment activity of the Absolute Return Fund giving rise to any UBTI.

"The Absolute Return Fund STS leverages the attractiveness of the Absolute Return Fund, while ensuring that UBTI is not ultimately incurred by the investor as a result of the Absolute Return Fund's investment activities," said Stuart Bohart, Head of Alternative Investments of Morgan Stanley Investment Management. "The launch of the Absolute Return Fund STS is a natural progression in our efforts to expand our sophisticated product offerings in the alternatives space and also meet the needs of our clients."

Morgan Stanley Investment Management, together with its investment advisory affiliates, has over 400 investment professionals around the world and $440 billion in assets under management or supervision as of May 31, 2006. These entities offer investment management services to a diverse client base, which includes governments, institutions, corporations and individuals.

Morgan Stanley (NYSE: MS) is a global financial services firm and a market leader in securities, investment management and credit services. With more than 600 offices in 30 countries, Morgan Stanley connects people, ideas, and capital to help clients achieve their financial aspirations.

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There is no assurance that a fund will achieve its investment objective.

Please consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The relevant prospectus contains this and other information about such Fund. To obtain a prospectus, contact your financial advisor. Please read such prospectus carefully before investing.

Investment in the Funds involves significant risks due to, among other things, the illiquidity of the interests, the nature of the Funds' investments and actual and potential conflicts of interest, including the payment of fees to persons marketing the Funds and of revenue sharing between the Funds' Adviser and certain of its affiliates. There can be no assurance that the Funds will achieve their investment objective or that there will be any return of capital. Investors should have the financial ability and willingness to accept the risks (including the risk of loss of the entire investment) for a predetermined period of time and should consult their financial, tax and accounting advisors regarding the appropriateness of making an investment in the Funds. This offering is open only to investors who meet certain criteria. Each of the Funds is offering shares solely pursuant to its prospectus, and any information regarding the Funds or shares in the Funds that is not contained in the relevant prospectus shall not constitute an offering of shares in the Funds. Consequently, this material has been prepared solely for informational purposes and is not an offer, or a solicitation, of an offer to buy or sell shares of the Funds or any other security or instrument or to participate in any trading strategy. No person or entity has been authorized in connection with this offering to give any information or make any representations other than as contained in the prospectus or in this marketing material. This does not constitute an offer to, or solicitation of, such person or entity.

Morgan Stanley does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. It was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws. Federal and state tax laws are complex and constantly changing. You should always consult your own legal or tax advisor for information concerning your individual situation.

The Absolute Return Fund and Absolute Return Fund STS are Delaware statutory trusts that issue shares. Morgan Stanley Distribution Inc. is a principal underwriter of Alternative Investment Partners Absolute Return Fund and Morgan Stanley Absolute Return Fund STS. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services.

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