In this report, you'll learn about how your investment in Morgan Stanley International Fund performed during the annual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the Fund's financial statements and a list of Fund investments.

This material must be preceded or accompanied by a prospectus for the fund being offered.

Market forecasts provided in this report may not necessarily come to pass. There is no assurance that the Fund will achieve its investment objective. The Fund is subject to market risk, which is the possibility that market values of securities owned by the Fund will decline and, therefore, the value of the Fund's shares may be less than what you paid for them. Accordingly, you can lose money investing in this Fund. Please see the prospectus for more complete information on investment risks.

The performance of the Fund's four share classes varies because each has different expenses. The Fund's total returns assume the reinvestment of all distributions but do not reflect the deduction of any applicable sales charges. Such costs would lower performance. See Performance Summary for standardized performance and benchmark information.

During the one-year period ended October 31, 2006, global equities moved steadily higher until mid-May when they suffered a significant sell-off. Since that time, global equities have churned but still grinded higher. Recently, equity markets in the U.S., Europe and Asia all touched five-year highs. For the 12 months overall, the MSCI EAFE Index gained 27.52 percent. All developed markets — Asia ex-Japan, Europe and Japan — produced double-digit returns during the period. Sector performance, however, was a bit more mixed. Utilities and materials led, while telecommunication services and energy were the primary laggards.

As of the close of the period, markets had risen considerably since July; therefore we believe there may be some market correction. The big economic questions of the day relate to the extent and duration of the U.S. housing downturn and the future of inflation. We do not believe the housing recession is over, but we think its intensity will fade and that the U.S. economy will be aided by current global growth (in Europe and Asia). Inflation remains an issue, but labor participation is low and the Federal Reserve Board is watchful. We believe the current slowdown demonstrates restrained equity valuations and fairly solid corporate (and consumer) balance sheets. If inflation indeed melts away a bit here, we believe it may be a positive influence on equity markets. The sharp rise in leveraged buyout/private equity funding is a cause for some concern, but we believe a reduced supply of public equities and increasing merger and acquisition activity are market supportive. Despite all the worries about the impact of higher interest rates and reduced liquidity, credit spreads and credit default spreads have tightened.

Morgan Stanley International Fund underperformed the Morgan Stanley Capital International (MSCI) EAFE Index and the Lipper International Large-Cap Core Funds Index for the 12 months ended October 31, 2006, assuming no deduction of applicable sales charges.

Relative to the MSCI EAFE Index, the underweight allocation to Europe was the primary detractor from returns. In contrast, the portfolio's emerging market and Asia ex-Japan (namely, Hong Kong and Singapore) exposures offset Japan's underperformance. During this period, sector positions were muted and did not materially impact performance.

We have been disappointed with the underperformance of the Japanese market, but the portfolio remains

overweight in this region for a couple of reasons. First, although economic growth has been disappointing, we think Japan's underlying fundamentals of domestic — and export — growth might provide a positive backdrop for current and future earnings. Though household spending, industrial production and exports have been below expectations, the yen appears very competitive by our measures and therefore supportive to the economy. Furthermore, the trajectories of job growth, small to medium-size business sentiment/bank borrowings, and real estate prices are still headed upward. Second, the underperformance of Japanese equities relative to global equities year-to-date has been excessive by historical standards and, on some technical measures, looks to be bottoming.

During the period, the portfolio was fully invested, with overweight positions in Japan and developed Asia and a roughly 4 percent average weight in emerging markets. We did not make significant changes to the investment strategy during the course of the 12 months based on our ongoing belief that a "soft landing" is likely in the U.S. economy and that global equity markets may still have room to grow.

There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future.

Data as of October 31, 2006. Subject to change daily. All percentages for top 10 holdings and top five countries are as a percentage of net assets. These data are provided for informational purposes only and should not be deemed a recommendation to buy or sell the securities mentioned. 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.

The Fund will normally invest at least 65 percent of its assets in a diversified portfolio of international common stocks and other equity securities. The Fund's "Investment Adviser," Morgan Stanley Investment Advisors Inc., uses a "top-down" approach that emphasizes country and sector selection and weightings over individual stock selection.

Each Morgan Stanley fund provides a complete schedule of portfolio holdings in its semiannual and annual reports within 60 days of the end of the fund's second and fourth fiscal quarters. The semiannual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley also delivers the semiannual and annual reports to fund shareholders and makes these reports available on its public web site, www.morganstanley.com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the fund's first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's web site, http://www.sec.gov. You may also review and copy them at the SEC's public reference room in Washington, DC. Information on the operation of the SEC's public reference room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the public reference section of the SEC, Washington, DC 20549-0102.

You may obtain a copy of the Fund's Proxy Voting Policy and Procedures without charge, upon request, by calling toll free (800) 869-NEWS or by visiting the Mutual Fund Center on our Web site at www.morganstanley.com. It is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov.

You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 without charge by visiting the Mutual Fund Center on our Web site at www.morganstanley.com. This information is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov.

To reduce printing and mailing costs, the Fund attempts to eliminate duplicate mailings to the same address. The Fund delivers a single copy of certain shareholder documents, including shareholder reports, prospectuses and proxy materials, to investors with the same last name who reside at the same address. Your participation in this program will continue for an unlimited period of time unless you instruct us otherwise. You can request multiple copies of these documents by calling (800) 350-6414, 8:00 a.m. to 8:00 p.m., ET. Once our Customer Service Center has received your instructions, we will begin sending individual copies for each account within 30 days.

Performance data quoted represents past performance, which is no guarantee of future results and current performance may be lower or higher than the figures shown. For most recent month-end performance figures, please visit www.morganstanley.com or speak with your Financial Advisor. Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class A, Class B, Class C, and Class D shares will vary due to differences in sales charges and expenses.

** The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%. The CDSC declines to 0% after six years.

† The maximum contingent deferred sales charge for Class C is 1.0% for shares redeemed within one year of purchase.

(1) The Morgan Stanley Capital International (MSCI) EAFE Index measures the performance for a diverse range of global stock markets within Europe, Australasia, and the Far East. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. "Net dividends" reflects a reduction in dividends after taking into account withholding of taxes by certain foreign countries represented in the Index. Indexes are unmanaged and their returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(2) The Lipper International Large-Cap Core Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International Large-Cap Core Funds classification. The Index, which is adjusted for capital gains distributions and income dividends, is unmanaged and should not be considered an investment. There are currently 30 funds represented in this Index.

(3) Figure shown assumes reinvestment of all distributions and does not reflect the deduction of any sales charges.

(4) Figure shown assumes reinvestment of all distributions and the deduction of the maximum applicable sales charge. See the Fund's current prospectus for complete details on fees and sales charges.

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees; and (2) ongoing costs, including advisory fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 05/01/06 – 10/31/06.

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

The second line of the table below provides information about hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs, and will not help you determine the relative total cost of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

* Expenses are equal to the Fund's annualized expense ratio of 1.30%, 2.05%, 2.05% and 1.05% for Class A, Class B, Class C and Class D shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

VVPR A tax recovery coupon, when presented with the corresponding share dividend coupon, there's a reduction in the Belgian tax rate, applicable to individual tax payers resident of Belgium and non-profit organizations.

** Comprised of securities in separate entities that are traded as a single stapled security.

† Consists of one or more class of securities traded together as a unit; stocks with attached warrants.

‡ Securities with total market value equal to $0 have been valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees.

(a) Variable/Floating Rate Security - interest rate changes on these instruments are based on changes in designated base rate. The rates shown are those in effect on October 31, 2006.

(c) Securities have been designated as collateral in an amount equal to $119,824,673, in connection with open forward foreign currency contracts and open futures contracts.

(d) The aggregate cost for federal income tax purposes is $280,532,434. The aggregate gross unrealized appreciation is $108,595,343 and the aggregate gross unrealized depreciation is $5,252,287, resulting in net unrealized appreciation of $103,343,056.

* Does not include open long and short futures contracts with underlying face amounts of $6,277,115 and $2,359,539, respectively, and net unrealized appreciation of $15,336 and unrealized depreciation of $85,635, respectively. Also open forward foreign currency contracts with net unrealized appreciation of $447,280.

Morgan Stanley International Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end management investment company. The Fund's investment objective is long-term capital growth. The Fund was organized as a Massachusetts business trust on October 23, 1998 and commenced operations June 28, 1999.

The Fund offers Class A shares, Class B shares, Class C shares and Class D shares. The four classes are substantially the same except that most Class A shares are subject to a sales charge imposed at the time of purchase and some Class A shares, and most Class B shares and Class C shares are subject to a contingent deferred sales charge imposed on shares redeemed within eighteen months, six years and one year, respectively. Class D shares are not subject to a sales charge. Additionally, Class A shares, Class B shares and Class C shares incur distribution expenses.

The Fund will assess a 2% redemption fee on Class A shares, Class B shares, Class C shares, and Class D shares, which is paid directly to the Fund, for shares redeemed within thirty days of purchase, subject to certain exceptions. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading.

A. Valuation of Investments — (1) for equity securities traded on foreign exchanges, the last reported sale price or the latest bid price may be used if there were no sales on a particular day; (2) an equity portfolio security listed or traded on the New York Stock Exchange ("NYSE") or American Stock Exchange or other exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (3) an equity portfolio security listed or traded on the Nasdaq is valued at the Nasdaq Official Closing Price; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (4) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and asked price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (5) futures are valued at the latest price published by the commodities exchange on which they trade; (6) when market quotations are not readily available including circumstances under which Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") determines that the latest sale price, the bid price or the mean between the last reported bid and asked price do not reflect a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If

developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Fund's Trustees or by the Investment Adviser using a pricing service and/or procedures approved by the Trustees of the Fund; (7) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees; and (8) short-term debt securities having a maturity date of more than sixty days at time of purchase are valued on a mark-to-market basis until sixty days prior to maturity and thereafter at amortized cost based on their value on the 61st day. Short-term debt securities having a maturity date of sixty days or less at the time of purchase are valued at amortized cost.

B. Accounting for Investments — Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. Dividend income and other distributions are recorded on the ex-dividend date except for certain dividends on foreign securities which are recorded as soon as the Fund is informed after the ex-dividend date. Discounts are accreted and premiums are amortized over the life of the respective securities. Interest income is accrued daily.

C. Repurchase Agreements — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated entities managed by the Investment Adviser, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements and are collateralized by cash, U.S. Treasury or federal agency obligations. The Fund may also invest directly with institutions in repurchase agreements. The Fund's custodian receives the collateral, which is marked-to-market daily to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest.

D. Multiple Class Allocations — Investment income, expenses (other than distribution fees), and realized and unrealized gains and losses are allocated to each class of shares based upon the relative net asset value on the date such items are recognized. Distribution fees are charged directly to the respective class.

E. Futures Contracts — A futures contract is an agreement between two parties to buy and sell financial instruments or contracts based on financial indices at a set price on a future date. Upon entering into such a contract, the Fund is required to pledge to the broker cash, U.S. Government securities or other liquid portfolio securities equal to the minimum initial margin requirements of the applicable futures exchange. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments known as variation margin are recorded by the Fund as unrealized gains and losses. Upon closing of the contract, the Fund realizes a gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

F. Foreign Currency Translation and Forward Foreign Currency Contracts — The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and forward foreign currency contracts ("forward contracts") are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are recorded as realized and unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities. Forward contracts are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are recorded as unrealized foreign currency gain or loss. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery.

G. Security Lending — The Fund may lend securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund receives cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily, by the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in high-quality short-term investments. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent.

The value of loaned securities and related collateral outstanding at October 31, 2006 are $24,357,631 and $25,515,815, respectively. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.

H. Federal Income Tax Policy — It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required.

I. Dividends and Distributions to Shareholders — Dividends and distributions to shareholders are recorded on the ex-dividend date.

J. Use of Estimates — The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.

Pursuant to an Investment Advisory Agreement with the Investment Adviser, the Fund pays an advisory fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined as of the close of each business day: 0.65% to the portion of the daily net assets not exceeding $1 billion and 0.60% to the portion of the daily net assets in excess of $1 billion.

Pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. ("the Administrator"), an affiliate of the Investment Adviser, the Fund pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.08% to the Fund's daily net assets.

Effective November 18, 2005, the Investment Adviser has agreed to cap the Fund's operating expenses (except for brokerage and 12b-1 fees) for one year by assuming the Fund's "other expenses" and/or waiving the Fund's advisory fees, and the Administrator has agreed to waive the Fund's administrative fees, to the extent such operating expenses on an annualized basis exceed 1.05% of the average daily net assets of the fund.

Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Adviser and Administrator. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A — up to 0.25% of the average daily net assets of Class A; (ii) Class B — up to 1.0% of the average daily net assets of Class B; and (iii) Class C — up to 1.0% of the average daily net assets of Class C.

In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $18,679,626 at October 31, 2006.

In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Financial Advisors and other authorized financial representatives at the time of sale may be reimbursed in the subsequent calendar year. For the year ended October 31, 2006, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.25% and 0.99%, respectively.

The Distributor has informed the Fund that for the year ended October 31, 2006, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $252, $160,472 and $1,871, respectively and received $119,678 in front-end sales charges from sales of the Fund's Class A shares. The respective shareholders pay such charges which are not an expense of the Fund.

The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the year ended October 31, 2006 aggregated $45,762,322 and $192,694,218, respectively. Included in the aforementioned transactions are sales of $115,836,237 with other Morgan Stanley funds, including realized gains of $31,461,319.

Morgan Stanley Trust, an affiliate of the Investment Adviser, Administrator, and Distributor, is the Fund's transfer agent.

The Fund has an unfunded Deferred Compensation Plan (the "Compensation 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. 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 Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Fund.

The Fund may enter into forward contracts for many purposes, including to facilitate settlement of foreign currency denominated portfolio transactions or to manage foreign currency exposure associated with foreign currency denominated securities.

To hedge against adverse interest rate, foreign currency and market risks, the Fund may purchase and sell interest rate, currency and index futures ("futures contracts").

Forward contracts and futures contracts involve elements of market risk in excess of the amounts reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rates underlying the forward contracts or an unfavorable change in the value of

the securities underlying the futures contracts. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.

The Fund may lend securities to qualified financial institutions, such as broker-dealers, to earn additional income. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

At October 31, 2006, investments in securities of issuers in Japan and the United Kingdom represented 28.8% and 21.1%, respectively, of the Fund's net assets. These investments, as well as other non-U.S. investments, which involve risks and considerations not present with respect to U.S. securities, may be affected by economic or political developments in these regions.

At October 31, 2006, the Fund's cash balance consisted principally of interest bearing deposits with J.P. Morgan Chase, the Fund's custodian.

The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for tax purposes are reported as distributions of paid-in-capital.

As of October 31, 2006, the tax-basis components of accumulated earnings were as follows:

*During the year ended October 31, 2006, the Fund utilized $50,716,041 of its net capital loss carryforward. As of October 31, 2006, the Fund had a net capital loss carryforward of $93,524,441 of which $39,077,364 will expire on October 31, 2010 and $54,447,077 will expire on October 31, 2011 to offset future capital gains to the extent provided by regulations.

As of October 31, 2006, the Fund had temporary book/tax differences primarily attributable to the mark-to-market of open forward foreign currency exchange contracts and passive foreign investment companies ("PFICs"), foreign tax credit pass-through and capital loss deferrals on wash sales and permanent book/tax differences primarily attributable to foreign currency gains and tax adjustments on PFICs sold by the Fund. To reflect reclassifications arising from the permanent differences, paid-in-capital was charged $960, accumulated net realized loss was charged $1,495,468 and accumulated undistributed net investment income was credited $1,496,428.

The expense offset represents a reduction of the fees and expenses for interest earned on cash balances maintained by the Fund with the transfer agent.

The Investment Adviser, certain affiliates of the Investment Adviser, certain officers of such affiliates and certain investment companies advised by the Investment Adviser or its affiliates, including the Fund, were named as defendants in a consolidated class action. This consolidated action also named as defendants certain individual Trustees and Directors of the Morgan Stanley funds. The consolidated amended complaint, filed in the United States District Court for the Southern District of New York on April 16, 2004, generally alleged that defendants, including the Fund, violated their statutory disclosure obligations and fiduciary duties by failing properly to disclose (i) that the Investment Adviser and certain affiliates of the Investment Adviser allegedly offered economic incentives to brokers and others to recommend the funds advised by the Investment Adviser or its affiliates to investors rather than funds

managed by other companies, and (ii) that the funds advised by the Investment Adviser or its affiliates, including the Fund, allegedly paid excessive commissions to brokers in return for their alleged efforts to recommend these funds to investors. The complaint sought, among other things, unspecified compensatory damages, rescissionary damages, fees and costs. On July 2, 2004, defendants moved to dismiss the action. On March 9, 2005, plaintiffs filed a Motion for Leave to File a Supplemental Pleading that would, among other things, expand the allegations and alleged class. On April 14, 2006, the Court granted defendants' motion to dismiss in its entirety, with prejudice. Additionally, plaintiffs' Motion for Leave to File a Supplemental Pleading was denied. The time for plaintiffs to appeal the orders granting defendants' motion to dismiss and denying plaintiffs' motion for supplemental pleading has expired. This case is now concluded.

In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Fund will adopt FIN 48 for the fiscal year ending 2008 and the impact to the Fund's financial statements, if any, is currently being assessed.

In addition, in September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures.

Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:

‡ The per share amounts were computed using an average number of shares outstanding during the period.

† Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.

(1) Reflects overall Fund ratios for investment income and non-class specific expenses.

(2) If the Fund had borne all its expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been 1.32% and 1.16%, respectively.

‡ The per share amounts were computed using an average number of shares outstanding during the period.

† Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.

(1) Reflects overall Fund ratios for investment income and non-class specific expenses.

‡ The per share amounts were computed using an average number of shares outstanding during the period.

† Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period.

(1) Reflects overall Fund ratios for investment income and non-class specific expenses.

‡ The per share amounts were computed using an average number of shares outstanding during the period.

† Calculated based on the net asset value as of the last business day of the period.

(1) Reflects overall Fund ratios for investment income and non-class specific expenses.

We have audited the accompanying statement of assets and liabilities of Morgan Stanley International Fund (the "Fund"), including the portfolio of investments, as of October 31, 2006, and the related statements of operations for the year then ended and changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2006, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Morgan Stanley International Fund as of October 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

On August 1, 2006, a Special Meeting of Shareholders of the Fund was scheduled in order to vote on the proposals set forth below. The proposals failed to obtain the necessary quorum in order to hold the meeting, and, therefore, the meeting was adjourned until August 23, 2006, to permit further solicitation of proxies. The meeting was held on August 23, 2006 and the voting results with respect to these proposals were as follows:

* Broker "non-votes" are shares held in street name for which the broker indicates that instructions have not been received from the beneficial owners or other persons entitled to vote and for which the broker does not have discretionary voting authority.

* This is the earliest date the Trustee began serving the funds advised by Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") (the "Retail Funds") or the funds advised by Morgan Stanley Investment Management Inc. and Morgan Stanley AIP GP LP (the "Institutional Funds").

** The Fund Complex includes all open-end and closed-end funds (including all of their portfolios) advised by the Investment Adviser and any funds that have an investment adviser that is an affiliated person of the Investment Adviser (including, but not limited to, Morgan Stanley Investment Management Inc.) as of October 31, 2006.

* This is the earliest date the Officer began serving the Retail Funds or the Institutional Funds.

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

Morgan Stanley Trust
Harborside Financial Center, Plaza Two
Jersey City, New Jersey 07311

Morgan Stanley Investment Advisors Inc.
1221 Avenue of the Americas
New York, New York 10020

This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS.

This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus. Read the Prospectus carefully before investing.

Investments and services offered through Morgan Stanley DW Inc., member SIPC. Morgan Stanley Distributors Inc., member NASD.

Item 2. Code of Ethics.

(a) The Fund has adopted a code of ethics (the “Code of Ethics”) that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Fund or a third party.

(b) No information need be disclosed pursuant to this paragraph.

(d) Not applicable.

(e) Not applicable.

(f)

(1) The Fund’s Code of Ethics is attached hereto as Exhibit 12 A.

(2) Not applicable.

(3) Not applicable.

Item 3. Audit Committee Financial Expert.

The Fund’s Board of Trustees has determined that Joseph J. Kearns, an “independent” Trustees, is an “audit committee financial expert” serving on its audit committee. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification

Item 4. Principal Accountant Fees and Services.

(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:

2006

	Registrant			Covered Entities(1)
Audit Fees	$	33,600		N/A

Non-Audit Fees
Audit-Related Fees	$	531	(2)	$	5,217,590	(2)
Tax Fees	$	6,980	(3)	$	1,472,895	(4)
All Other Fees	$		(5)	$	—
Total Non-Audit Fees	$	7,511		$	6,690,485

Total	$	41,111		$	6,690,485

2005

	Registrant			Covered Entities(1)
Audit Fees	$	32,787		N/A

Non-Audit Fees
Audit-Related Fees	$	540	(2)	$	3,215,745	(2)
Tax Fees	$	7,001	(3)	$	24,000	(4)
All Other Fees	$		(5)	$	—
Total Non-Audit Fees	$	7,541		$	3,239,745

Total	$	40,328		$	3,239,745

N/A- Not applicable, as not required by Item 4.

(1) Covered Entities include the Adviser (excluding sub-advisors) and any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Registrant.

(2) Audit-Related Fees represent assurance and related services provided that are reasonably related to the performance of the audit of the financial statements of the Covered Entities’ and funds advised by the Adviser or its affiliates, specifically data verification and agreed-upon procedures related to asset securitizations and agreed-upon procedures engagements.

(3) Tax Fees represent tax compliance, tax planning and tax advice services provided in connection with the preparation and review of the Registrant’s tax returns.

(4) Tax Fees represent tax compliance, tax planning and tax advice services provided in connection with the review of Covered Entities’ tax returns.

(5) All other fees represent project management for future business applications and improving business and operational processes.

(e)(1) The audit committee’s pre-approval policies and procedures are as follows:

APPENDIX A

AUDIT COMMITTEE

AUDIT AND NON-AUDIT SERVICES

PRE-APPROVAL POLICY AND PROCEDURES

OF THE

MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS

AS ADOPTED AND AMENDED JULY 23, 2004,(1)

1. Statement of Principles

The Audit Committee of the Board is required to review and, in its sole discretion, pre-approve all Covered Services to be provided by the Independent Auditors to the Fund and Covered Entities in order to assure that services performed by the Independent Auditors do not impair the auditor’s independence from the Fund.

The SEC has issued rules specifying the types of services that an independent auditor may not provide to its audit client, as well as the audit committee’s administration of the engagement of the independent auditor. The SEC’s rules establish two different approaches to pre-approving services, which the SEC considers to be equally valid. Proposed services either: may be pre-approved without consideration of specific case-by-case services by the Audit Committee (“general pre-approval”); or require the specific pre-approval of the Audit Committee or its delegate (“specific pre-approval”). The Audit Committee believes that the combination of these two approaches in this Policy will result in an effective and efficient procedure to pre-approve services performed by the Independent Auditors. As set forth in this Policy, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee (or by any member of the Audit Committee to which pre-approval authority has been delegated) if it is to be provided by the Independent Auditors. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit Committee.

The appendices to this Policy describe the Audit, Audit-related, Tax and All Other services that have the general pre-approval of the Audit Committee. The term of any general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers and provides a different period and states otherwise. The Audit Committee will annually review and pre-approve the services that may be provided by the Independent Auditors without obtaining specific pre-approval from the Audit Committee. The Audit Committee will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.

(1) This Audit Committee Audit and Non-Audit Services Pre-Approval Policy and Procedures (the “Policy”), adopted as of the date above, supersedes and replaces all prior versions that may have been adopted from time to time.

The purpose of this Policy is to set forth the policy and procedures by which the Audit Committee intends to fulfill its responsibilities. It does not delegate the Audit Committee’s responsibilities to pre-approve services performed by the Independent Auditors to management.

The Fund’s Independent Auditors have reviewed this Policy and believes that implementation of the Policy will not adversely affect the Independent Auditors’ independence.

2. Delegation

As provided in the Act and the SEC’s rules, the Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.

3. Audit Services

The annual Audit services engagement terms and fees are subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by the Independent Auditors to be able to form an opinion on the Fund’s financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Fund structure or other items.

In addition to the annual Audit services engagement approved by the Audit Committee, the Audit Committee may grant general pre-approval to other Audit services, which are those services that only the Independent Auditors reasonably can provide. Other Audit services may include statutory audits and services associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.

The Audit Committee has pre-approved the Audit services in Appendix B.1. All other Audit services not listed in Appendix B.1 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).

4. Audit-related Services

Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements and, to the extent they are Covered Services, the Covered Entities or that are traditionally performed by the Independent Auditors. Because the Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor and is consistent with the SEC’s rules on auditor independence, the Audit Committee may grant general pre-approval to Audit-related services. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters

not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements under Forms N-SAR and/or N-CSR.

The Audit Committee has pre-approved the Audit-related services in Appendix B.2. All other Audit-related services not listed in Appendix B.2 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).

5. Tax Services

The Audit Committee believes that the Independent Auditors can provide Tax services to the Fund and, to the extent they are Covered Services, the Covered Entities, such as tax compliance, tax planning and tax advice without impairing the auditor’s independence, and the SEC has stated that the Independent Auditors may provide such services.

Pursuant to the preceding paragraph, the Audit Committee has pre-approved the Tax Services in Appendix B.3. All Tax services in Appendix B.3 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).

6. All Other Services

The Audit Committee believes, based on the SEC’s rules prohibiting the Independent Auditors from providing specific non-audit services, that other types of non-audit services are permitted. Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services, would not impair the independence of the auditor and are consistent with the SEC’s rules on auditor independence.

The Audit Committee has pre-approved the All Other services in Appendix B.4. Permissible All Other services not listed in Appendix B.4 must be specifically pre-approved by the Audit Committee (or by any member of the Audit Committee to which pre-approval has been delegated).

7. Pre-Approval Fee Levels or Budgeted Amounts

Pre-approval fee levels or budgeted amounts for all services to be provided by the Independent Auditors will be established annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful of the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services.

8. Procedures

All requests or applications for services to be provided by the Independent Auditors that do not require specific approval by the Audit Committee will be submitted to the Fund’s Chief Financial Officer and must include a detailed description of the services to be

rendered. The Fund’s Chief Financial Officer will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a timely basis of any such services rendered by the Independent Auditors. Requests or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by both the Independent Auditors and the Fund’s Chief Financial Officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence.

The Audit Committee has designated the Fund’s Chief Financial Officer to monitor the performance of all services provided by the Independent Auditors and to determine whether such services are in compliance with this Policy. The Fund’s Chief Financial Officer will report to the Audit Committee on a periodic basis on the results of its monitoring. Both the Fund’s Chief Financial Officer and management will immediately report to the chairman of the Audit Committee any breach of this Policy that comes to the attention of the Fund’s Chief Financial Officer or any member of management.

9. Additional Requirements

The Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the Independent Auditors and to assure the auditor’s independence from the Fund, such as reviewing a formal written statement from the Independent Auditors delineating all relationships between the Independent Auditors and the Fund, consistent with Independence Standards Board No. 1, and discussing with the Independent Auditors its methods and procedures for ensuring independence.

10. Covered Entities

Covered Entities include the Fund’s investment adviser(s) and any entity controlling, controlled by or under common control with the Fund’s investment adviser(s) that provides ongoing services to the Fund(s). Beginning with non-audit service contracts entered into on or after May 6, 2003, the Fund’s audit committee must pre-approve non-audit services provided not only to the Fund but also to the Covered Entities if the engagements relate directly to the operations and financial reporting of the Fund. This list of Covered Entities would include:

Morgan Stanley Retail Funds

Morgan Stanley Investment Advisors Inc.

Morgan Stanley & Co. Incorporated

Morgan Stanley DW Inc.

Morgan Stanley Investment Management Inc.

Morgan Stanley Investment Management Limited

Morgan Stanley Investment Management Private Limited

Morgan Stanley Asset & Investment Trust Management Co., Limited

Morgan Stanley Investment Management Company

Van Kampen Asset Management

Morgan Stanley Services Company, Inc.

Morgan Stanley Distributors Inc.

Morgan Stanley Trust FSB

Morgan Stanley Institutional Funds

Morgan Stanley Investment Management Inc.

Morgan Stanley Investment Advisors Inc.

Morgan Stanley Investment Management Limited

Morgan Stanley Investment Management Private Limited

Morgan Stanley Asset & Investment Trust Management Co., Limited

Morgan Stanley Investment Management Company

Morgan Stanley & Co. Incorporated

Morgan Stanley Distribution, Inc.

Morgan Stanley AIP GP LP

Morgan Stanley Alternative Investment Partners LP

(e)(2) Beginning with non-audit service contracts entered into on or after May 6, 2003, the audit committee also is required to pre-approve services to Covered Entities to the extent that the services are determined to have a direct impact on the operations or financial reporting of the Registrant. 100% of such services were pre-approved by the audit committee pursuant to the Audit Committee’s pre-approval policies and procedures (attached hereto).

(f) Not applicable.

(g) See table above.

(h) The audit committee of the Board of Trustees has considered whether the provision of services other than audit services performed by the auditors to the Registrant and Covered Entities is compatible with maintaining the auditors’ independence in performing audit services.

Item 5. Audit Committee of Listed Registrants.

(a) The Fund has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are: Frank Bowman, Wayne Hedien, Joseph Kearns, Michael Nugent and Allen Reed.

(b) Not applicable.

Item 6. Schedule of Investments

Refer to Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Applicable only to reports filed by closed-end funds.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Applicable only to reports filed by closed-end funds.

Item 9. Closed-End Fund Repurchases

Applicable only to reports filed by closed-end funds.

Item 10. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 11. Controls and Procedures

(a) The Fund’s principal executive officer and principal financial officer have concluded that the Fund’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.

(b) There were no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits

(a) The Code of Ethics for Principal Executive and Senior Financial Officers is attached hereto.

(b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Morgan Stanley International Fund

/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
December 19, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
December 19, 2006

/s/ Francis Smith
Francis Smith
Principal Financial Officer
December 19, 2006

Investment Company Act file number:			811-09081

Morgan Stanley International Fund
(Exact name of registrant as specified in charter)

1221 Avenue of the Americas, New York, New York					10020
(Address of principal executive offices)					(Zip code)

Ronald E. Robison 1221 Avenue of the Americas, New York, New York 10020
(Name and address of agent for service)

Registrant’s telephone number, including area code:				212-762-4000

Date of fiscal year end:	October 31, 2006

Date of reporting period:		October 31, 2006

Total Return for the 12 Months Ended October 31, 2006
Class A			Class B			Class C			Class D			MSCI EAFE Index¹			Lipper International Large-Cap Core Funds Index²
	25.21	%		24.28	%		24.34	%		25.61	%		27.52	%		26.44	%

TOP 10 HOLDINGS
Toyota Motor Corp.	2.0	%
BP PLC	1.8
GlaxoSmithKline PLC	1.4
HSBC Holdings PLC	1.4
Total S.A.	1.2
Nestle S.A. (Registered Shares)	1.2
Royal Dutch Shell PLC (A Shares)	1.1
Mitsubishi UFJ Financial Group, Inc.	1.0
Vodafone Group PLC	1.0
UBS AG (Registered Shares)	1.0
TOP FIVE COUNTRIES
Japan	28.8	%
United Kingdom	21.1
Germany	9.4
France	8.3
Switzerland	5.7

	Beginning Account Value		Ending Account Value		Expenses Paid During Period *
	05/01/06		10/31/06		05/01/06 – 10/31/06
Class A
Actual (1.39% return)	$	1,000.00	$	1,013.90	$	6.60
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.65	$	6.61
Class B
Actual (1.01% return)	$	1,000.00	$	1,010.10	$	10.39
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,014.87	$	10.41
Class C
Actual (1.01% return)	$	1,000.00	$	1,010.10	$	10.39
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,014.87	$	10.41
Class D
Actual (1.53% return)	$	1,000.00	$	1,015.30	$	5.33
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.91	$	5.35

NUMBER OF SHARES			VALUE
		Common Stocks (97.8%)
		Australia (3.7%)
		Aluminum
	37,438	Alumina Ltd.	$	195,040
		Beverages: Alcoholic
	37,487	Foster's Group Ltd.		187,171
		Beverages: Non-Alcoholic
	9,819	Coca-Cola Amatil Ltd.		52,902
		Biotechnology
	1,766	CSL Ltd.		76,678
		Building Products
	36,849	CSR Ltd.		92,420
		Casino/Gaming
	7,441	TABCORP Holdings Ltd.		95,041
		Chemicals: Major Diversified
	9,241	Orica Ltd.		174,115
		Construction Materials
	19,249	Boral Ltd.		108,328
	15,387	James Hardie Industries NV (CDI)		93,740
	30,746	Rinker Group Ltd.		441,499
				643,567
		Containers/Packaging
	29,065	Amcor Ltd.		155,695
		Engineering & Construction
	4,416	Leighton Holdings Ltd.		72,710
		Financial Conglomerates
	3,839	Macquarie Bank Ltd.		221,545
	10,126	Suncorp-Metway Ltd. (b)		163,042
				384,587
		Food Retail
	19,725	Coles Myer Ltd.		207,355
	19,021	Woolworths Ltd.		304,643
				511,998

NUMBER OF SHARES			VALUE
		Gas Distributors
	8,535	AGL Energy Ltd.*	$	101,417
	4,929	Alinta Ltd.		40,444
	108,362	Origin Energy Ltd.		601,441
				743,302
		Hospital/Nursing Management
	17,492	Symbion Health Ltd.		44,413
		Industrial Conglomerates
	3,619	Ansell Ltd.		31,068
	6,903	Wesfarmers Ltd.		184,568
				215,636
		Investment Managers
	24,422	AMP Ltd.		179,598
		Investment Trusts/ Mutual Funds
	42,757	Macquarie Infrastructure Group (Stapled Securities)**		111,872
		Major Banks
	26,584	Australia and New Zealand Banking Group Ltd.		597,605
	21,970	Commonwealth Bank of Australia		811,233
	29,418	National Australia Bank Ltd.		869,453
	31,067	Westpac Banking Corp.		575,973
				2,854,264
		Major Telecommunications
	39,612	Telstra Corp., Ltd.		121,428
		Medical/Nursing Services
	2,665	Sonic Healthcare Ltd. (b)		27,128
		Miscellaneous Commercial Services
	18,177	Brambles Industries Ltd.		175,604
		Multi-Line Insurance
	31,198	Insurance Australia Group Ltd.		134,035

NUMBER OF SHARES			VALUE
		Oil & Gas Production
	79,581	Santos Ltd.	$	652,383
	43,545	Woodside Petroleum Ltd. (b)		1,265,742
				1,918,125
		Oil Refining/Marketing
	15,113	Caltex Australia Ltd.		259,132
		Other Metals/Minerals
	115,873	BHP Billiton Ltd.		2,446,942
	10,049	Rio Tinto Ltd. (b)		609,868
				3,056,810
		Other Transportation
	14,252	Sydney Roads Group (Stapled Securities)* **		12,577
	11,186	Transurban Group (Stapled Securities)**		62,520
				75,097
		Pharmaceuticals: Other
	17,492	Mayne Pharma Ltd.		59,172
		Precious Metals
	10,722	Newcrest Mining Ltd.		197,953
		Property - Casualty Insurers
	12,758	QBE Insurance Group Ltd.		243,936
		Publishing: Newspapers
	18,368	John Fairfax Holdings Ltd.		69,103
		Pulp & Paper
	15,735	PaperlinX Ltd.		50,184
		Real Estate Development
	7,770	Lend Lease Corp., Ltd.		101,289
		Real Estate Investment Trusts
	1,340	Stockland (Stapled Securities)**		7,863
		Steel
	24,665	BlueScope Steel Ltd. (b)		138,235
	18,278	OneSteel Ltd.		59,567
				197,802

NUMBER OF SHARES			VALUE
		Trucking
	6,924	Toll Holdings Ltd.	$	83,078
		Total Australia		13,568,748
		Austria (1.0%)
		Building Products
	3,590	Wienerberger AG		186,607
		Containers/Packaging
	255	Mayr-Melnhof Karton AG		47,031
		Electric Utilities
	4,550	Oesterreichische Elektrizitaetswirtschafts AG (Verbund) (Class A)		227,100
		Industrial Machinery
	416	Andritz AG		75,462
		Major Banks
	1,872	Bank Austria Creditanstalt		271,133
	10,985	Erste Bank der oesterreichischen Sparkassen AG (b)		747,917
	1,617	Raiffeisen International Bank-Holding AG		185,003
				1,204,053
		Major Telecommunications
	19,779	Telekom Austria AG		492,218
		Multi-Line Insurance
	1,329	Wiener Staedtische Versicherung AG		85,482
		Oil Refining/Marketing
	9,704	OMV AG		527,445
		Other Transportation
	625	Flughafen Wien AG		56,033
		Real Estate Development
	20,208	Immofinanz Immobilien Anlagen AG*		245,000
	6,631	Meinl European Land Ltd.*		146,316
				391,316

NUMBER OF SHARES			VALUE
		Brazil (0.0%)
		Aerospace & Defense
	4,422	Empresa Brasileira de Aeronautica S.A.	$	45,797
		Beverages: Alcoholic
	39,339	Companhia de Bebidas das Americas		15,530
		Steel
	1,105	Arcelor Brasil, S.A.		19,391
	604	Companhia Siderurgica Nacional S.A.		18,721
				38,112
		Tobacco
	1,200	Souza Cruz S.A.		18,234
		Total Brazil		117,673
		Cayman Islands (0.1%)
		Industrial Specialties
	37,500	Kingboard Chemical Holdings Ltd.		133,314
		Major Telecommunications
	76,000	Hutchison Telecommunications International Ltd.*		146,377
		Total Cayman Islands		279,691
		Denmark (0.5%)
		Biotechnology
	1,550	Novozymes A/S (B Shares)		124,178
		Electrical Products
	1,700	Vestas Wind Systems A/S*		47,872
		Major Banks
	15,944	Danske Bank A/S		668,700
		Marine Shipping
	41	A P Moller - Maersk A/S		371,285
		Pharmaceuticals: Major
	4,450	Novo Nordisk A/S (Series B)		335,944
		Telecommunication Equipment
	4,500	GN Store Nord A/S		63,168

NUMBER OF SHARES			VALUE
		Trucks/Construction/ Farm Machinery
	1,518	Wartsila Oyj (B Shares)	$	69,645
		Total Finland		4,833,021
		France (8.3%)
		Advertising/Marketing Services
	2,240	Publicis Groupe		86,675
		Aerospace & Defense
	3,679	Thales S.A. (b)		170,011
	342	Zodiac S.A.		21,360
				191,371
		Apparel/Footwear
	714	Hermes International		77,498
	5,577	LVMH Moet Hennessy Louis Vuitton S.A.		581,133
				658,631
		Auto Parts: O.E.M.
	2,683	Valeo S.A. (b)		100,975
		Automotive Aftermarket
	2,421	Compagnie Generale des Etablissements Michelin (B Shares)		197,431
		Broadcasting
	2,759	Societe Television Francaise 1 (b)		93,730
		Building Products
	9,213	Compagnie de Saint-Gobain		679,003
		Chemicals: Major Diversified
	1,594	Arkema*		77,811
		Chemicals: Specialty
	3,778	Air Liquide S.A.		804,223
		Construction Materials
	1,038	Imerys S.A. (b)		89,682
	5,520	Lafarge S.A.		741,799
				831,481

NUMBER OF SHARES			VALUE
		Data Processing Services
	558	Atos Origin S.A.*	$	31,761
		Department Stores
	1,436	PPR		214,234
		Electric Utilities
	3,280	Suez S.A. (Brussels Exchange)		146,340
	20,351	Suez S.A. (Paris Exchange) (b)		910,576
	3,280	Suez-Strip VVPR*		42
				1,056,958
		Electrical Products
	6,397	Schneider Electric S.A.		664,537
		Electronics/Appliances
	5,560	Thomson		95,863
		Engineering & Construction
	7,982	Bouygues S.A.		465,325
	4,217	Vinci S.A.		474,938
				940,263
		Food Distributors
	4,533	Sodexho Alliance S.A.		243,433
		Food Retail
	13,148	Carrefour S.A.		801,052
	1,733	Casino Guichard Perrachon		146,964
				948,016
		Food: Major Diversified
	5,688	Groupe Danone		833,336
		Hotels/Resorts/Cruiselines
	8,803	Accor S.A.		611,151
		Industrial Conglomerates
	3,385	Alstom*		312,331
		Information Technology Services
	4,278	Capgemini S.A.		242,951
		Integrated Oil
	63,760	Total S.A. (b)		4,316,706

NUMBER OF SHARES			VALUE
		Internet Software/Services
	1,686	Business Objects S.A.* (b)	$	62,140
		Life/Health Insurance
	2,812	CNP Assurances		295,886
		Major Banks
	30,238	BNP Paribas		3,324,506
	11,926	Societe Generale		1,981,639
				5,306,145
		Major Telecommunications
	41,719	France Telecom S.A.		1,083,470
		Media Conglomerates
	20,102	Vivendi		761,159
		Medical Specialties
	1,227	Essilor International S.A.		128,717
		Motor Vehicles
	2,756	PSA Peugeot Citroen		158,309
	2,837	Renault S.A.		331,826
				490,135
		Multi-Line Insurance
	67,459	Axa		2,569,822
		Office Equipment/Supplies
	1,215	Neopost S.A.		148,546
		Oilfield Services/Equipment
	796	Technip S.A.		47,938
		Other Consumer Specialties
	302	Societe BIC S.A.		19,425
		Packaged Software
	1,570	Dassault Systemes S.A.		85,675
		Pharmaceuticals: Major
	27,606	Sanofi-Aventis		2,346,370
		Publishing: Books/Magazines
	3,217	Lagardere S.C.A.		231,347
		Real Estate Development
	1,633	Gecina S.A. (b)		231,745
	1,377	Klepierre		207,716
	2,226	Unibail (b)		484,644
				924,105

NUMBER OF SHARES			VALUE
		Regional Banks
	13,826	Credit Agricole S.A.	$	587,746
		Telecommunication Equipment
	43,275	Alcatel S.A.		549,514
	1,977	Safran S.A.		44,734
				594,248
		Water Utilities
	4,407	Veolia Environnement		269,794
		Total France		30,185,539
		Germany (9.1%)
		Air Freight/Couriers
	30,740	Deutsche Post AG (Registered Shares)		851,299
		Airlines
	9,758	Deutsche Lufthansa AG (Registered Shares)		225,029
		Apparel/Footwear
	8,910	Adidas AG		446,423
	520	Puma AG		184,375
				630,798
		Auto Parts: O.E.M.
	5,580	Continental AG		623,959
		Chemicals: Major Diversified
	22,902	BASF AG		2,018,453
	21,406	Bayer AG		1,077,708
				3,096,161
		Chemicals: Specialty
	3,313	Linde AG		328,350
		Department Stores
	3,393	KarstadtQuelle AG*		79,675
	6,156	Metro AG		365,710
				445,385
		Electric Utilities
	26,484	E.ON AG		3,177,095
	17,716	RWE AG		1,750,627
				4,927,722

NUMBER OF SHARES			VALUE
		Apparel/Footwear Retail
	52,500	Esprit Holdings Ltd.	$	508,280
		Broadcasting
	16,000	Television Broadcasts Ltd.		91,749
		Electric Utilities
	95,300	CLP Holdings Ltd.		605,297
	76,000	Hongkong Electric Holdings Ltd.		357,638
				962,935
		Electronic Production Equipment
	1,000	ASM Pacific Technology Ltd.		5,188
		Engineering & Construction
	35,000	Hopewell Holdings Ltd.		103,951
	128,269	New World Development Co., Ltd.		219,672
				323,623
		Financial Conglomerates
	68,000	Wharf (Holdings) Ltd. (The)		230,814
		Gas Distributors
	207,483	Hong Kong & China Gas Co., Ltd.		475,378
		Hotels/Resorts/Cruiselines
	58,642	Shangri-La Asia Ltd.		127,271
		Industrial Conglomerates
	114,900	Hutchison Whampoa Ltd.		1,019,337
	50,000	Swire Pacific Ltd. (Class A)		528,112
				1,547,449
		Investment Banks/Brokers
	57,000	Hong Kong Exchanges & Clearing Ltd.		451,445
		Major Banks
	84,440	Bank of East Asia, Ltd. (The)		403,326
	200,500	BOC Hong Kong (Holdings) Ltd.		448,552
	39,000	Hang Seng Bank Ltd.		496,921
				1,348,799

NUMBER OF SHARES			VALUE
	10,000	Sapporo Holdings, Ltd.	$	51,304
	7,000	Takara Holdings Inc.		43,754
				805,624
		Beverages: Non-Alcoholic
	2,200	ITO EN, Ltd.		69,791
		Broadcasting
	20	Fuji Television Network, Inc.		41,727
	4,400	Tokyo Broadcasting System, Inc.		101,206
				142,933
		Building Products
	9,862	JS Group Corp.		202,384
	16,000	Nippon Sheet Glass Company, Ltd. (b)		71,826
	18,500	Toto Ltd.		183,181
				457,391
		Chemicals: Agricultural
	5,500	Nissan Chemical Industries, Ltd. (b)		70,872
		Chemicals: Major Diversified
	47,000	Asahi Kasei Corp.		300,205
	32,500	Mitsubishi Chemical Holdings Corp.		207,867
				508,072
		Chemicals: Specialty
	8,000	Daicel Chemical Industries, Ltd.		53,151
	28,588	Dainippon Ink and Chemicals, Inc.		108,045
	18,546	Denki Kagaku Kogyo Kabushiki Kaisha		70,568
	6,108	JSR Corp. (b)		153,549
	10,000	Kaneka Corp.		96,622
	14,056	Kuraray Co., Ltd.		159,129
	23,599	Mitsubishi Rayon Co., Ltd.		148,919
	20,500	Mitsui Chemicals, Inc.		140,757
	14,997	Shin-Etsu Chemical Co., Ltd.		983,557
	24,000	Showa Denko K.K. (b)		104,660
	6,000	Sumitomo Bakelite Co., Ltd.		45,507

NUMBER OF SHARES			VALUE
		Steel
	2,136	Boehler-Uddeholm AG	$	132,427
	4,336	voestalpine AG		204,467
				336,894
		Total Austria		3,629,641
		Belgium (1.0%)
		Chemicals: Specialty
	1,975	Solvay S.A.		255,578
		Electronic Equipment/ Instruments
	1,997	Agfa Gevaert NV		50,385
		Financial Conglomerates
	42,807	Fortis		1,796,790
		Major Banks
	24,154	Dexia		652,264
	3,321	KBC Groep NV		362,795
				1,015,059
		Major Telecommunications
	3,180	Belgacom S.A.		130,110
		Metal Fabrications
	209	Bekaert NV		22,285
		Other Metals/Minerals
	840	Umicore		130,356
		Pharmaceuticals: Other
	3,318	UCB S.A.		205,370
		Total Belgium		3,605,933
		Bermuda (0.1%)
		Apparel/Footwear
	32,500	Yue Yuen Industrial (Holdings) Ltd.		98,406
		Construction Materials
	31,000	Cheung Kong Infrastructure Holdings Ltd.		92,868
		Total Bermuda		191,274

NUMBER OF SHARES			VALUE
		Engineering & Construction
	2,343	Hochtief AG	$	153,095
		Financial Conglomerates
	13,676	Depfa Bank PLC		229,686
	5,781	Hypo Real Estate Holding AG		363,352
				593,038
		Food: Specialty/Candy
	3,310	Suedzucker AG		81,696
		Hotels/Resorts/Cruiselines
	9,809	TUI AG (b)		214,563
		Household/Personal Care
	2,204	Beiersdorf AG		125,167
		Industrial Conglomerates
	6,674	MAN AG		593,234
	34,443	Siemens AG (Registered Shares)		3,098,909
	15,637	ThyssenKrupp AG		580,319
				4,272,462
		Industrial Machinery
	2,250	Heidelberger Druckmaschinen AG		102,396
		Investment Banks/Brokers
	4,376	Deutsche Boerse AG		705,565
		Major Banks
	25,218	Commerzbank AG (b)		895,015
	21,123	Deutsche Bank AG (Registered Shares)		2,658,247
	2,214	Deutsche Postbank AG		164,671
				3,717,933
		Major Telecommunications
	122,221	Deutsche Telekom AG (Registered Shares) (b)		2,115,068
		Medical Distributors
	3,392	Celesio AG		174,886
		Medical/Nursing Services
	2,772	Fresenius Medical Care AG & Co. KGaA		369,823

NUMBER OF SHARES			VALUE
		Motor Vehicles
	34,865	DaimlerChrysler AG (Registered Shares)	$	1,988,914
	6,765	Volkswagen AG		667,369
				2,656,283
		Multi-Line Insurance
	16,643	Allianz SE (Registered Shares)		3,088,691
	8,377	Muenchener Rueckversicherungs- Gesellschaft AG (Registered Shares)		1,359,647
				4,448,338
		Packaged Software
	9,551	SAP AG		1,900,019
		Pharmaceuticals: Major
	2,120	Merck KGaA		223,478
		Pharmaceuticals: Other
	3,070	Altana AG		171,331
		Total Germany		33,153,844
		Greece (0.3%)
		Casino/Gaming
	6,990	Greek Organisation of Football Prognostics S.A.		249,599
		Construction Materials
	1,850	Titan Cement Co. S.A.		97,083
		Major Banks
	8,821	National Bank of Greece S.A.		400,312
		Regional Banks
	9,713	Alpha Bank A.E.		282,623
	4,879	EFG Eurobank Ergasias		162,265
				444,888
		Total Greece		1,191,882
		Hong Kong (2.6%)
		Airlines
	57,000	Cathay Pacific Airways Ltd.		124,440

NUMBER OF SHARES			VALUE
		Major Telecommunications
	203,611	PCCW Ltd. (b)	$	124,873
		Miscellaneous Manufacturing
	87,000	Johnson Electric Holdings Ltd.		68,569
		Railroads
	78,047	MTR Corp., Ltd.		187,448
		Real Estate Development
	83,000	Cheung Kong (Holdings) Ltd.		902,812
	104,000	Hang Lung Properties Ltd.		226,782
	40,000	Henderson Land Development Co., Ltd.		220,116
	37,305	Hysan Development Co., Ltd.		94,010
	23,493	Kerry Properties Ltd. (b)		86,690
	65,368	Sino Land Co., Ltd.		113,797
	71,000	Sun Hung Kai Properties Ltd.		776,393
				2,420,600
		Real Estate Investment Trusts
	90,500	Link REIT		186,173
		Tools/Hardware
	51,000	Techtronic Industries Co., Ltd.		72,260
		Wholesale Distributors
	101,200	Li & Fung Ltd.		264,785
		Total Hong Kong		9,522,079
		Ireland (0.0%)
		Major Banks
	3,300	Allied Irish Banks PLC		90,125
		Italy (0.6%)
		Investment Banks/Brokers
	637	Mediobanca SpA		14,795
		Major Banks
	6,615	Capitalia SpA		58,461
	51,927	Banca Intesa SpA		354,872
	11,449	SanPaolo IMI SpA (b)		244,446
	147,481	UniCredito Italiano SpA		1,222,458
				1,880,237

NUMBER OF SHARES			VALUE
	52,000	Sumitomo Chemical Co., Ltd.	$	370,825
	21,500	Tosoh Corp.		91,000
				2,526,289
		Commercial Printing/Forms
	16,000	Dai Nippon Printing Co., Ltd.		238,187
	17,000	Toppan Printing Co., Ltd.		186,353
				424,540
		Computer Processing Hardware
	68,000	Fujitsu Ltd.		554,699
		Construction Materials
	22,000	Taiheiyo Cement Corp.		88,414
		Containers/Packaging
	7,617	Toyo Seikan Kaisha, Ltd.		147,846
		Department Stores
	12,000	Daimaru, Inc. (The)		143,856
	4,000	Hankyu Department Stores, Inc.		32,869
	7,914	Isetan Co., Ltd.		139,400
	16,907	Marui Co., Ltd.		227,402
	17,716	Mitsukoshi, Ltd.		90,890
	15,040	Takashimaya Co., Ltd.		220,938
				855,355
		Electric Utilities
	17,300	Chubu Electric Power Co., Inc.		479,282
	26,500	Kansai Electric Power Co., Inc. (The)		625,395
	10,300	Kyushu Electric Power Co., Inc.		240,876
	19,800	Tohoku Electric Power Co., Inc.		438,495
	31,000	Tokyo Electric Power Co., Inc. (The)		901,240
				2,685,288
		Electrical Products
	7,000	Fuji Electric Holdings Co., Ltd.		38,068
	9,000	Fujikura Ltd. (b)		96,272

NUMBER OF SHARES			VALUE
	24,500	Furukawa Electric Co., Ltd. (The)	$	174,925
	1,300	Mabuchi Motor Co., Ltd.		75,810
	12,000	Matsushita Electric Works, Ltd.		134,724
	14,560	NGK Insulators, Ltd.		197,578
	4,504	Nidec Corp. (b)		344,684
	26,500	Sumitomo Electric Industries, Ltd.		375,237
	1,500	Ushio Inc.		31,231
				1,468,529
		Electronic Components
	7,100	Alps Electric Co., Ltd. (b)		71,091
	15,100	Citizen Watch Co., Ltd.		125,371
	2,200	Hirose Electric Co., Ltd.		293,459
	21,200	Hoya Corp.		819,359
	4,400	Ibiden Co., Ltd.		230,628
	8,700	Murata Manufacturing Co., Ltd.		608,516
	7,000	Nippon Electric Glass Co., Ltd. (b)		150,834
	4,000	Taiyo Yuden Co., Ltd.		61,633
	4,652	TDK Corp. (b)		363,966
				2,724,857
		Electronic Equipment/ Instruments
	46,004	Canon Inc.		2,466,397
	14,600	Casio Computer Co., Ltd. (b)		295,246
	2,347	Keyence Corp. (b)		519,772
	21,530	Konica Minolta Holdings, Inc.*		286,821
	6,400	Kyocera Corp.		574,057
	77,500	Matsushita Electric Industrial Co., Ltd.		1,620,244
	83,552	Mitsubishi Electric Corp.		728,713
	86,500	NEC Corp.		445,259
	24,000	Oki Electric Industry Co., Ltd.		56,640
	8,304	Omron Corp.		214,434
	25,432	Ricoh Co., Ltd.		502,334
	66,000	Sanyo Electric Co., Ltd. * (b)		126,413
	4,400	Seiko Epson Corp.		111,176

NUMBER OF SHARES			VALUE
	130,026	Toshiba Corp. (b)	$	822,738
	9,000	Yokogawa Electric Corp.		123,514
				8,893,758
		Electronic Production Equipment
	8,300	Advantest Corp. (b)		419,436
	8,900	Tokyo Electron Ltd. (b)		665,122
				1,084,558
		Electronics/Appliance Stores
	4,400	Yamada Denki Co., Ltd. (b)		437,931
		Electronics/Appliances
	16,600	FUJIFILM Holdings Corp.		616,024
	12,000	Nikon Corp.		246,772
	6,704	Pioneer Corp. (b)		106,679
	31,500	Sharp Corp.		561,586
	27,196	Sony Corp.		1,127,838
				2,658,899
		Engineering & Construction
	8,000	Chiyoda Corp.		145,019
	6,000	Comsys Holdings Corp. (b)		63,514
	11,546	JGC Corp.		179,780
	51,000	Kajima Corp.		243,771
	34,571	Obayashi Corp.		226,729
	10,000	Okumura Corp.		50,534
	36,000	Shimizu Corporation		213,630
	49,000	Taisei Corp.		166,755
				1,289,732
		Finance/Rental/Leasing
	840	Acom Co., Ltd.		32,321
	700	Aeon Credit Service Co., Ltd.		15,652
	800	Aiful Corp.		27,636
	2,000	Credit Saison Co., Ltd.		72,339
	1,100	Promise Co., Ltd.		39,786
	1,360	Takefuji Corp. (b)		49,307
				237,041
		Financial Conglomerates
	366	Mizuho Financial Group, Inc.		2,851,013

NUMBER OF SHARES			VALUE
	18,000	Mitsubishi UFJ Securities Co., Ltd.	$	220,094
	55,500	Nikko Cordial Corp.		664,861
	130,950	Nomura Holdings, Inc.		2,312,200
	84	SBI E*TRADE Securities Co., Ltd.		88,345
	16,000	Shinko Securities Co., Ltd.		61,975
				4,931,245
		Life/Health Insurance
	9,500	T&D Holdings, Inc.		694,528
		Major Banks
	54,000	Bank of Yokohama, Ltd. (The)		417,409
	32,000	Chiba Bank, Ltd. (The)		286,755
	34,000	Joyo Bank, Ltd. (The)		198,563
	300	Mitsubishi UFJ Financial Group, Inc.		3,770,842
	25,123	Mitsui Trust Holdings, Inc.		295,805
	179	Resona Holdings, Inc.		544,882
	45,000	Shinsei Bank, Ltd.		259,726
	27,000	Shizuoka Bank, Ltd. (The) (b)		288,585
	227	Sumitomo Mitsui Financial Group, Inc.		2,484,481
	56,081	Sumitomo Trust & Banking Co., Ltd. (The)		603,248
				9,150,296
		Major Telecommunications
	72	Nippon Telegraph & Telephone Corp.		362,616
		Marine Shipping
	5,000	Mitsui O.S.K. Lines, Ltd.		41,684
	44,015	Nippon Yusen Kabushiki Kaisha		285,655
				327,339
		Medical Specialties
	5,400	Olympus Corp.		171,766
	7,750	Terumo Corp. (b)		313,446
				485,212
		Metal Fabrications
	16,000	Minebea Co., Ltd.		97,546
	72,000	Mitsubishi Materials Corp.		283,814

NUMBER OF SHARES			VALUE
	43,604	Mitsui Mining & Smelting Co., Ltd.	$	211,029
	27,553	NSK Ltd.		230,884
	19,551	NTN Corp.		160,989
				984,262
		Miscellaneous Commercial Services
	350	OBIC Co., Ltd.		74,280
	9,985	Secom Co., Ltd.		499,463
	1,610	USS Co., Ltd.		102,148
				675,891
		Miscellaneous Manufacturing
	15,527	Ebara Corp. (b)		60,674
	3,500	Kurita Water Industries Ltd.		71,526
				132,200
		Motor Vehicles
	76,209	Honda Motor Co., Ltd.		2,697,779
	113,005	Nissan Motor Co., Ltd.		1,353,741
	122,855	Toyota Motor Corp.		7,279,907
	1,500	Yamaha Motor Co., Ltd.		41,043
				11,372,470
		Movies/Entertainment
	2,400	Oriental Land Co., Ltd. (b)		135,853
	3,650	TOHO Co., Ltd.		68,974
				204,827
		Office Equipment/Supplies
	3,300	Kokuyo Co., Ltd.		50,988
		Oil & Gas Production
	21	INPEX Holdings Inc.*		171,663
		Oil Refining/Marketing
	60,000	Nippon Oil Corp.		446,345
	7,400	Showa Shell Sekiyu K.K.		82,953
	12,000	TonenGeneral Sekiyu K.K.		114,305
				643,603
		Other Consumer Services
	2,454	Benesse Corp.		88,130

NUMBER OF SHARES			VALUE
	25,000	Nishi-Nippon City Bank, Ltd. (The)	$	118,640
				756,006
		Restaurants
	5,407	Skylark Co., Ltd.		115,584
		Semiconductors
	2,000	NEC Electronics Corp.* (b)		63,959
	5,805	Rohm Co., Ltd.		534,090
	5,000	Sanken Electric Co., Ltd		58,487
				656,536
		Specialty Stores
	2,900	Shimachu Co., Ltd.		83,070
	6,000	UNY Co., Ltd.		75,366
				158,436
		Specialty Telecommunications
	39	Index Holdings (b)		26,945
		Steel
	13,200	JFE Holdings, Inc. (b)		530,483
	67,000	Kobe Steel, Ltd.		205,096
	172,108	Nippon Steel Corp. (b)		700,499
	102,000	Sumitomo Metal Industries, Ltd.		383,754
				1,819,832
		Telecommunication Equipment
	3,000	Uniden Corp.		28,858
		Textiles
	4,571	Nisshinbo Industries, Inc.		46,433
	33,608	Teijin Ltd.		187,653
	47,000	Toray Industries, Inc.		338,786
				572,872
		Tobacco
	155	Japan Tobacco Inc.		675,930
		Trucks/Construction/ Farm Machinery
	1,400	Hitachi Construction Machinery Co., Ltd.		33,279
	43,500	Komatsu Ltd.		784,823

NUMBER OF SHARES			VALUE
		Norway (0.6%)
		Chemicals: Agricultural
	6,967	Yara International ASA	$	121,989
		Financial Conglomerates
	9,153	DNB NOR ASA		119,814
		Food: Specialty/Candy
	8,750	Orkla ASA		448,251
		Industrial Conglomerates
	23,435	Norsk Hydro ASA		538,453
		Integrated Oil
	18,400	Statoil ASA		464,973
		Major Telecommunications
	20,900	Telenor ASA		329,993
		Miscellaneous Manufacturing
	515	Tomra Systems ASA		3,461
		Pulp & Paper
	5,700	Norske Skogindustrier ASA		89,780
		Telecommunication Equipment
	5,200	Tandberg ASA (b)		60,037
	2,700	Tandberg Television ASA*		27,953
				87,990
		Total Norway		2,204,704
		Poland (0.6%)
		Aluminum
	118	Grupa Kety S.A.		7,656
		Information Technology Services
	733	Prokom Software S.A.		29,030
		Major Telecommunications
	47,214	Telekomunikacja Polska S.A.		347,483
		Oil Refining/Marketing
	20,425	Polski Koncern Naftowy Orlen S.A.		323,564
		Other Metals/Minerals
	8,725	KGHM Polska Miedz S.A.		315,309

NUMBER OF SHARES			VALUE
	476	Fomento de Construcciones y Contratas S.A.	$	41,490
	966	Grupo Ferrovial, S.A.		89,255
				442,039
		Gas Distributors
	18,484	Gas Natural SDG, S.A.		734,098
		Information Technology Services
	921	Indra Sistemas, S.A.		20,452
		Integrated Oil
	12,719	Repsol YPF, S.A. (b)		422,032
		Major Banks
	47,275	Banco Bilbao Vizcaya Argentaria, S.A.		1,141,488
	91,587	Banco Santander Central Hispano S.A.		1,584,938
				2,726,426
		Major Telecommunications
	67,551	Telefonica S.A.		1,301,750
		Other Transportation
	5,791	Abertis Infraestructuras S.A.		156,752
		Real Estate Development
	1,071	Sacyr Vallehermoso S.A. (b)		54,754
		Regional Banks
	12,150	Banco Popular Espanol S.A.		210,569
		Steel
	3,562	Acerinox, S.A.		83,643
		Tobacco
	4,483	Altadis, S.A.		214,545
		Water Utilities
	2,396	Sociedad General de Aguas de Barcelona, S.A. (Class A) (b)		84,119
		Total Spain		7,558,112

NUMBER OF SHARES			VALUE
		Sweden (2.3%)
		Advertising/Marketing Services
	3,300	Eniro AB	$	39,494
		Apparel/Footwear Retail
	9,850	Hennes & Mauritz AB (B Shares)		424,522
		Broadcasting
	1,050	Modern Times Group AB (B Shares) * (b)		60,435
		Electronics/Appliances
	6,300	Electrolux AB (Series B)		115,277
		Engineering & Construction
	12,080	Skanska AB (B Shares)		215,189
		Household/Personal Care
	6,086	Svenska Cellulosa AB (B Shares)		279,140
		Industrial Machinery
	650	Alfa Laval AB		24,057
	10,200	Assa Abloy AB (B Shares) (b)		196,165
	11,160	Atlas Copco AB (A Shares) (b)		325,801
	7,407	Atlas Copco AB (B Shares)		211,113
	31,545	Sandvik AB		385,169
				1,142,305
		Major Banks
	14,800	Skandinaviska Enskilda Banken AB (A Shares) (b)		413,637
	24,500	Svenska Handelsbanken AB (A Shares)		633,890
				1,047,527
		Major Telecommunications
	4,105	Tele2 AB (B Shares)		43,165
	42,848	TeliaSonera AB		311,240
				354,405
		Medical Specialties
	5,000	Getinge AB (B Shares)		88,377
		Metal Fabrications
	8,408	SKF AB (B Shares) (b)		135,236

NUMBER OF SHARES			VALUE
	2,450	Schindler Holding AG (Participation Certificates)	$	140,740
				291,919
		Chemicals: Agricultural
	3,064	Syngenta AG (Registered Shares)*		494,901
		Chemicals: Specialty
	1,864	Ciba Specialty Chemicals AG (Registered Shares)		114,121
	6,452	Clariant AG (Registered Shares)*		89,222
	1,090	Lonza Group AG (Registered Shares) (b)		84,129
				287,472
		Computer Peripherals
	4,810	Logitech International SA (Registered Shares)*		126,457
		Construction Materials
	5,686	Holcim Ltd. (Registered Shares)		489,605
		Electronic Equipment/ Instruments
	1,204	Kudelski S.A. (Bearer Shares)		37,123
		Financial Conglomerates
	61,908	UBS AG (Registered Shares)		3,698,154
		Food: Major Diversified
	12,327	Nestle S.A. (Registered Shares)		4,212,072
		Household/Personal Care
	200	Givaudan S.A. (Registered Shares)		165,621
		Industrial Conglomerates
	49,138	ABB Ltd. (Registered Shares)		730,868
		Major Banks
	22,466	Credit Suisse Group (Registered Shares)		1,354,679

NUMBER OF SHARES			VALUE
	2,653	Berkeley Group Holdings PLC (The) (Units)† *	$	72,865
	6,048	Persimmon PLC		153,997
	13,114	Taylor Woodrow PLC		90,982
	9,081	Wimpey (George) PLC		91,104
				584,844
		Home Improvement Chains
	24,918	Kingfisher PLC		125,112
		Hotels/Resorts/Cruiselines
	7,759	Carnival PLC		378,700
	18,479	InterContinental Hotels Group PLC		355,622
				734,322
		Household/Personal Care
	31,514	Reckitt Benckiser PLC		1,371,033
		Industrial Conglomerates
	18,262	Smiths Group PLC		329,502
	30,982	Tomkins PLC		143,593
				473,095
		Industrial Machinery
	8,278	FKI PLC		15,118
		Information Technology Services
	31,141	LogicaCMG PLC		98,299
	18,461	Misys PLC		71,742
				170,041
		Integrated Oil
	99,781	BG Group PLC		1,323,622
	582,857	BP PLC		6,481,113
	111,123	Royal Dutch Shell PLC (A Shares)		3,853,158
	77,634	Royal Dutch Shell PLC (B Shares)		2,780,780
				14,438,673

PRINCIPAL AMOUNT IN THOUSANDS			VALUE
		Short-Term Investments (7.0%)
		Short-Term Debt Securities held as Collateral on Loaned Securities
		Alliance & Leister PLC.,
$	764	5.31% 11/30/07 (a)	$	764,384
		Amsouth Bank,
	1,529	5.30% 11/13/06 (a)		1,528,768
		Aspen Funding Corp.,
	152	5.29% 11/15/06		152,140
		Bancaja,
	382	5.37% 11/30/07 (a)		382,192
		Bank of America,
	168	5.31% 11/07/06 (a)		168,164
	1,223	5.32% 05/15/07 (a)		1,223,014
		Bank of New York Co., Inc.,
	382	5.31% 11/30/07 (a)		382,192
		Barton Capital Corp.,
	632	5.30% 11/08/06		632,344
		Bear Stearns,
	764	5.36% 11/30/07 (a)		764,384
	306	5.37% 03/08/07 (a)		305,870
	459	5.37% 03/12/07 (a)		458,630
		BNP Paribas Mtn.,
	764	5.36% 11/30/07 (a)		764,384
		CIC NY,
	535	5.31% 09/04/07 (a)		534,999
		Dekabank Deutsche Girozentrale,
	780	5.39% 11/30/07 (a)		779,671
		Deutsche Bank Securities Inc.,
	1,837	5.33% 11/01/06		1,836,529
		Dexia Bank NY,
	764	5.33% 09/28/07 (a)		764,234
		Five Finance Inc.,
	764	5.33% 11/17/06 (a)		764,397
		Goldman Sachs Group, Inc.,
	382	5.37% 11/30/07 (a)		382,192

PRINCIPAL AMOUNT IN THOUSANDS			VALUE
$	719	5.42% 10/31/07 (a)	$	718,521
		HSBC Finance Corp.,
	382	5.31% 11/30/07 (a)		382,192
		Liberty Lighthouse US Capital,
	382	5.33% 02/01/07 (a)		382,154
		Manufacturers and Traders,
	229	5.31% 12/29/06 (a)		229,305
		Merrill Lynch and Co.,
	402	5.35% 04/26/07 (a)		401,789
		Natexis Banques Populaires NY,
	764	5.34% 04/05/07 (a)		764,384
	382	5.35% 02/28/07 (a)		382,192
		National City Bank Cleveland,
	726	5.32% 03/01/07 (a)		726,096
	382	5.32% 09/18/07 (a)		382,163
		National Rural Utilities Coop.,
	1,529	5.31% 11/30/07 (a)		1,528,768
		Nationwide Building Society,
	887	5.42% 10/31/07 (a)		886,685
		Nordea Bank New York,
	1,147	5.31% 05/16/07 (a)		1,146,532
		Norinchukin Bank NY,
	764	5.33% 11/01/06		764,384
		Scaldis Capital LLC,
	609	5.29% 11/07/06		609,000
		Skandi New York,
	764	5.31% 11/30/07 (a)		764,384
		SLM Corp.,
	764	5.32% 11/30/07 (a)		764,384
		Unicredito Italiano Bank (IRE) Plc,
	535	5.33% 11/30/07 (a)		535,069
		Wells Fargo Bank San Francisco N.A.,
	153	5.30% 12/01/06 (a)		152,877
	1,147	5.31% 12/18/06 (a)		1,146,558

PRINCIPAL AMOUNT IN THOUSANDS					VALUE
		World Savings Bank FSB
$	260	5.32% 10/19/07 (a)			$	259,890
		Total Short-Term Investments (Cost $25,515,815)				25,515,815
Total Investments (Cost $275,354,351) (c) (d)			105.6	%		383,875,490
Liabilities in Excess of Other Assets			(5.6	)		(20,436,121	)
Net Assets			100.0	%	$	363,439,369

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH, AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	32	Long	HANG SENG Index Future November/2006	$	3,772,838		$	(16,030	)
	14	Long	NIKKEI 225 (OSE) December/2006		1,957,247			30,134
	8	Long	CAC40 10 EURO Future November/2006		547,030			1,232
	3	Short	TOPIX Index Future December/2006		(413,895	)		3,223
	38	Short	DJ EURO STOXX 50 December/2006		(1,945,644	)		(88,858	)
			Net Unrealized Depreciation				$	(70,299	)

CONTRACTS TO DELIVER		IN EXCHANGE FOR		DELIVERY DATE	UNREALIZED APPRECIATION (DEPRECIATION)
GBP	125,000	$	237,788	11/01/06	$	(625	)
$	231,914	AUD	306,096	11/16/06		4,937
$	2,576,351	AUD	3,399,553	11/16/06		54,155
$	14,355,247	EUR	11,211,621	11/16/06		(33,822	)
$	2,829,196	GBP	1,495,260	11/16/06		23,112
$	1,272,794	GBP	673,229	11/16/06		11,436
$	4,189,677	HKD	32,485,497	11/16/06		(10,292	)
HKD	105,720,805	$	13,635,395	11/16/06		34,003
$	5,406,357	JPY	623,028,596	11/16/06		(66,631	)
JPY	4,134,885,845	$	35,892,172	11/16/06		453,736
$	897,564	JPY	103,432,639	11/16/06		(11,085	)
$	6,341,524	JPY	730,797,200	11/16/06		(78,156	)
JPY	171,890,772	$	1,492,652	11/16/06		19,445
$	6,942,418	EUR	5,444,650	12/14/06		22,595
EUR	770,175	$	982,420	12/14/06		(2,819	)
$	13,401,593	EUR	10,505,944	12/14/06		38,032
EUR	41,535,543	$	53,009,736	12/14/06		(124,191	)
EUR	6,200,664	$	7,908,947	12/14/06		(23,190	)
$	2,417,663	EUR	1,896,117	12/14/06		7,926
$	21,979,936	EUR	17,232,408	12/14/06		64,449
$	14,673,866	EUR	11,501,292	12/14/06		39,047
$	6,809,839	GBP	3,568,275	12/14/06		(1,618	)
$	7,343,745	JPY	856,545,000	12/14/06		26,836
Net Unrealized Appreciation					$	447,280

Currency Abbreviations:
AUD				Australian Dollar.
GBP				British Pound.
EUR				Euro.
HKD				Hong Kong Dollar.
JPY				Japanese Yen.

INDUSTRY	VALUE		PERCENT OF NET ASSETS
Major Banks	$	46,953,482		12.9	%
Collateral on Loaned Securities		25,515,815		7.0
Integrated Oil		21,833,345		6.0
Pharmaceuticals: Major		20,252,055		5.6
Motor Vehicles		15,398,582		4.2
Financial Conglomerates		14,228,271		3.9
Electric Utilities		14,078,430		3.9
Other Metals/Minerals		11,844,381		3.3
Real Estate Development		10,815,657		3.0
Industrial Conglomerates		10,322,490		2.8
Major Telecommunications		9,971,082		2.7
Multi-Line Insurance		9,964,614		2.7
Electronic Equipment/ Instruments		9,070,013		2.5
Food: Major Diversified		7,551,391		2.1
Regional Banks		7,396,632		2.0
Investment Banks/Brokers		6,622,841		1.8
Food Retail		5,335,864		1.5
Wireless Telecommunications		5,286,282		1.5
Telecommunication Equipment		4,512,583		1.2
Chemicals: Major Diversified		4,493,689		1.2
Chemicals: Specialty		4,201,912		1.2
Beverages: Alcoholic		4,101,693		1.1
Steel		4,036,087		1.1
Pharmaceuticals: Other		4,010,224		1.1
Industrial Machinery		3,921,221		1.1
Wholesale Distributors		3,773,054		1.0
Engineering & Construction		3,758,492		1.0
Household/Personal Care		3,283,410		0.9
Life/Health Insurance		3,168,751		0.9
Electronics/Appliances		3,004,582		0.8
Gas Distributors		2,991,052		0.8
Construction Materials		2,886,193		0.8
Electronic Components		2,823,042		0.8
Railroads		2,745,753		0.8
Property - Casualty Insurers		2,661,285		0.7
Oil & Gas Production		2,612,863		0.7

Assets:
Investments in securities, at value (cost $275,354,351) (including $24,357,631 of securities loaned)	$	383,875,490
Unrealized appreciation on open forward foreign currency contracts		799,709
Cash (including $4,171,147 in foreign currency, at value with cost of $4,098,667 and $1,453,543 in segregation)		5,624,690
Receivable for:
Dividends		583,082
Shares of beneficial interest sold		428,971
Foreign withholding taxes reclaimed		121,827
Variation margin		110,533
Compensated forward foreign currency contracts		16,586
Prepaid expenses and other assets		27,863
Total Assets		391,588,751
Liabilities:
Collateral on securities loaned at value		25,515,815
Unrealized depreciation on open forward foreign currency contracts		352,429
Payable for:
Shares of beneficial interest redeemed		574,069
Investment advisory fee		225,379
Distribution fee		201,744
Administration fee		25,145
Transfer agent fee		11,498
Payable to bank		1,104,113
Accrued expenses and other payables		139,190
Total Liabilities		28,149,382
Net Assets	$	363,439,369
Composition of Net Assets:
Paid-in-capital	$	350,618,790
Net unrealized appreciation		108,973,974
Accumulated undistributed net investment income		1,880,548
Accumulated net realized loss		(98,033,943	)
Net Assets	$	363,439,369
Class A Shares:
Net Assets	$	143,729,867
Shares Outstanding (unlimited authorized, $.01 par value)		10,935,778
Net Asset Value Per Share	$	13.14
Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value)	$	13.87
Class B Shares:
Net Assets	$	166,184,327
Shares Outstanding (unlimited authorized, $.01 par value)		12,813,430
Net Asset Value Per Share	$	12.97
Class C Shares:
Net Assets	$	30,551,633
Shares Outstanding (unlimited authorized, $.01 par value)		2,361,337
Net Asset Value Per Share	$	12.94
Class D Shares:
Net Assets	$	22,973,542
Shares Outstanding (unlimited authorized, $.01 par value)		1,736,971
Net Asset Value Per Share	$	13.23

Net Investment Income: Income
Dividends (net of $682,565 foreign withholding tax)	$	8,666,566
Interest		221,489
Income from securities loaned - net		3,470
Total Income		8,891,525
Expenses
Investment advisory fee		2,331,459
Distribution fee (Class A shares)		327,875
Distribution fee (Class B shares)		1,703,395
Distribution fee (Class C shares)		279,948
Transfer agent fees and expenses		571,094
Administration fee		286,949
Custodian fees		205,212
Shareholder reports and notices		176,206
Professional fees		87,543
Registration fees		52,717
Trustees' fees and expenses		4,870
Other		133,457
Total Expenses		6,160,725
Less: amounts waived/reimbursed		(79,629	)
Less: expense offset		(2,696	)
Net Expenses		6,078,400
Net Investment Income		2,813,125
Net Realized and Unrealized Gain: Net Realized Gain on:
Investments		51,879,901
Futures contracts		789,270
Foreign exchange transactions		874,313
Net Realized Gain		53,543,484
Net Change in Unrealized Appreciation/Depreciation on:
Investments		23,850,885
Futures contracts		(31,800	)
Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies		(300,153	)
Net Appreciation		23,518,932
Net Gain		77,062,416
Net Increase	$	79,875,541