UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM N-CSR

                   CERTIFIED SHAREHOLDER REPORT OF REGISTERED
                         MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-10273

Morgan Stanley International Value Equity 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: August 31, 2004

Date of reporting period: February 29, 2004


Item 1 - Report to Shareholders

Welcome, Shareholder:

In this report, you'll learn about how your investment in Morgan Stanley International Value Equity Fund performed during the semiannual 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.

	Fund Report
	For the six-month period ended February 29, 2004

Total Return for the Six Months Ended February 29, 2004

Class A						Class B						Class C						Class D						Morgan Stanley Capital International (MSCI) EAFE Index1						Lipper International Funds Index2
25.04%							24.57	%					24.67	%					25.31	%					25.22	%					23.04	%

Past performance is no guarantee of future results and current performance may be lower or higher than the figures shown. For more up-to-date information, including month-end performance firgures, please visit 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 performance of the Fund's four share classes varies because each has different expenses. The Fund's total return figures 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 information.

Market Conditions

The six-month period ended February 29, 2004 was marked by strong performance from cyclical sectors such as technology and industrials. These sectors led the market during the first four months of the period as the global economic recovery continued to show momentum. This trend held until the final two months of the period, when more defensive sectors such as consumer staples, pharmaceuticals and energy improved performance and assumed leadership of the market.

Regional performance for the period varied. Commodity-based countries such as Canada, Australia and New Zealand performed well, supported by rising commodity prices and the falling U.S. dollar. European markets also demonstrated great strength during the period as the U.S. dollar fell against the Euro. By contrast, the U.K. market lagged its European peers thanks to the preponderance of underperforming defensive sectors in its composition. Japan was similarly weak, although this underperformance may have stemmed in part from profit-taking after the sharp rally in the third quarter of last year.

Performance Analysis

International Value Equity Fund performed in line with the MSCI EAFE Index and outperformed the Lipper International Funds Index for the six months ended February 29, 2004. Although these positions became a positive driver for the Fund in the final two months of the period, this improved performance was not enough to counter the negative net effect of performance early in the period. In addition, the Fund's emphasis on mid-to-large-cap companies limited its exposure to the strong gains of smaller-cap companies.

The Fund benefited from several stock selection decisions over the period. Although the Fund was underweighted in the outperforming financials sector relative to the MSCI EAFE Index over the period, stock selection in areas such as Japanese non-life insurance financials more than compensated for the underweight. Favorable stock selection in the telecommunications sector likewise played a positive role in performance, as the Fund had entered the period slightly overweighted and added to selective holdings over the period based on our bottom-up analysis of several key companies.

2

TOP 10 HOLDINGS
Unilever NV					3.3	%
Nestle SA					2.8
Reed Elsevier PLC					2.7
Total S.A.					2.7
Fuji Photo Film Co., Ltd.					2.5
BP PLC					2.5
British American Tobacco PLC					2.4
Novartis AG					2.3
Royal Bank of Scotland Group PLC					2.3
Imperial Tobacco Group PLC					2.1

TOP 5 COUNTRIES
United Kingdom					33.0	%
Japan					20.2
Switzerland					10.4
France					8.4
Netherlands					8.3

Data as of February 29, 2004.    Subject to change daily. All percentages are a percentage of net assets. Provided for informational purposes only and should not be deemed a recommendation to buyor 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.

Investment Strategy

The Fund will normally invest at least 80% of its assets in a diversified portfolio of common stocks and other equity securities, including depositary receipts and securities convertible into common stock, of companies located outside of the United States. These companies may be of any asset size and may be located in developed or emerging market countries. The Fund invests in at least three different countries located outside of the United States. A company will be considered located outside of the United States if it (a) is not organized under the laws of the United States, (b) does not have securities which are principally traded on a U.S. stock exchange, (c) does not derive at least 50% of its revenues from goods produced or sold, investments made, or services performed in the United States, or (d) does not maintain at least 50% of its assets in the United States.

Proxy Voting Policies and Procedures

A description of the Fund's policies and procedures with respect to the voting of proxies relating to the Fund's portfolio securities is available without charge, upon request, by calling (800) 869-NEWS (6397). This information is also available on the Securities and Exchange Commission's Web site at http://www.sec.gov.

3

	Performance Summary

Average Annual Total Returns — Period Ended February 29, 2004

						Class A Shares* (since 04/26/01)						Class B Shares** (since 04/26/01)						Class C Shares† (since 04/26/01)						Class D Shares†† (since 04/26/01)
Symbol						IVQAX						IVQBX						IVQCX						IVQDX
1 Year							49.99%	3					48.77%	3					48.96%	3					50.47%	3
							42.12	4					43.77	4					47.96	4					—
Since Inception							8.07	3					7.24	3					7.25	3					8.33	3
							6.04	4					6.31	4					7.25	4					—

Past performance is not predictive of future returns. Investment return and principal value will fluctuate. When you sell fund shares, they may be worth less than their original cost. The table does 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.

Notes on Performance

(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 Funds Index is an equally weighted performance index of the largest qualifying funds (based on net assets) in the Lipper International 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.

* The maximum front-end sales charge for Class A is 5.25%.

** 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% for shares redeemed within one year of purchase.

†† Class D has no sales charge.

4

Morgan Stanley International Value Equity Fund

Portfolio of Investments February 29, 2004 (unaudited)

NUMBER OF SHARES								VALUE
				Common Stocks and Preferred Stock (95.2%)
				Australia (2.1%)
				Financial Conglomerates
	414,216			AMP Ltd.				$	1,569,129
				Major Banks
	163,662			National Australia Bank Ltd.					3,909,687
				Major Telecommunications
	1,873,761			Telstra Corp., Ltd.					6,924,330
				Total Australia					12,403,146
				Austria (0.4%)
				Major Telecommunications
	142,060			Telekom Austria AG*					2,067,094
				Belgium (0.5%)
				Financial Conglomerates
	125,395			Fortis					2,916,234
				Denmark (0.4%)
				Food: Specialty/Candy
	50,839			Danisco AS					2,513,366
				Finland (1.0%)
				Telecommunication Equipment
	264,916			Nokia Oyj					5,833,416
				France (8.4%)
				Food: Major Diversified
	35,453			Groupe Danone					6,212,596
				Integrated Oil
	85,321			Total S.A.					15,665,192
				Major Banks
	87,231			BNP Paribas S.A.					5,540,185
	40,952			Societe Generale					3,654,599
									9,194,784
				Major Telecommunications
	223,049			France Telecom S.A*					6,176,300
				Pharmaceuticals: Major
	149,961			Aventis S.A.					11,537,759
				Total France					48,786,631
				Germany (1.9%)
				Electric Utilities
	21,766			E. ON AG					1,478,904
				Major Telecommunications
	207,584			Deutsche Telekom AG (Registered Shares)*				$	4,078,355
				Motor Vehicles
	5,419			Porsche AG (Pref.)					3,170,015
				Multi-Line Insurance
	21,658			Muenchener Rueckver AG (Registered Shares)					2,538,722
				Total Germany					11,265,996
				Italy (4.1%)
				Integrated Oil
	357,253			ENI SpA					7,036,716
				Major Banks
	1,170,473			UniCredito Italiano SpA					6,198,544
				Major Telecommunications
	4,692,274			Telecom Italia SpA – RNC*					10,461,260
				Total Italy					23,696,520
				Japan (20.2%)
				Advertising/Marketing Services
	19,000			Asatsu – DK Inc.					478,480
				Broadcasting
	533			Fuji Television Network, Inc.					2,337,976
				Commercial Printing/Forms
	599,000			Dai Nippon Printing Co., Ltd.					9,325,092
				Computer Processing Hardware
	424,513			Fujitsu Ltd.*					2,557,963
				Electric Utilities
	173,000			Kansai Electric Power Co., Inc.					3,136,813
	131,700			Tokyo Electric Power Co., Inc.					2,894,505
									6,031,318
				Electrical Products
	98,000			Sumitomo Electric Industries, Ltd.					840,897
				Electronic Equipment/Instruments
	151,000			Canon, Inc.					7,370,238
	257,000			Konica Minolta Holdings, Inc.					2,951,264
									10,321,502

See Notes to Financial Statements

5

Morgan Stanley International Value Equity Fund

Portfolio of Investments February 29, 2004 (unaudited) continued

NUMBER OF SHARES								VALUE
				Electronics/Appliances
	467,000			Fuji Photo Film Co., Ltd.				$	14,583,059
				Food Retail
	92,900			Lawson, Inc.					3,215,769
				Gas Distributors
	1,202,000			Tokyo Gas Co., Ltd.					4,468,974
				Home Building
	268,000			Sekisui House, Ltd.					2,557,289
				Household/Personal Care
	265,000			Kao Corp.					5,593,636
				Investment Banks/Brokers
	273,000			Daiwa Securities Group Inc.					1,835,000
				Major Telecommunications
	1,382			Nippon Telegraph & Telephone Corp. (NTT)					6,403,773
				Movies/Entertainment
	23,400			Oriental Land Co. Ltd.					1,442,143
				Pharmaceuticals: Major
	342,400			Sankyo Co., Ltd.					7,415,531
				Pharmaceuticals: Other
	58,000			Shionogi & Co., Ltd.					1,018,718
	246,000			Yamanouchi Pharmaceutical Co., Ltd.					8,245,055
									9,263,773
				Property – Casualty Insurers
	455			Millea Holdings, Inc.					5,833,333
	322,000			Mitsui Sumitomo Insurance Co., Ltd.					2,830,769
									8,664,102
				Railroads
	470			Central Japan Railway Co.					4,071,612
				Real Estate Development
	515,000			Mitsubishi Estate Co., Ltd.					5,998,901
				Recreational Products
	23,900			Nintendo Co., Ltd.					2,298,077
				Semiconductors
	30,100			Rohm Co., Ltd.					3,404,167
				Specialty Telecommunications
	639			Vodafone Holdings K.K.				$	1,468,764
				Tobacco
	507			Japan Tobacco, Inc.					3,630,714
				Total Japan					118,208,512
				Netherlands (8.3%)
				Financial Conglomerates
	254,230			ING Groep NV (Share Certificates)					6,249,055
				Food: Major Diversified
	265,780			Unilever NV (Share Certificates)					19,369,820
				Food: Specialty/Candy
	82,239			CSM NV					1,838,626
				Industrial Specialties
	116,441			Akzo Nobel NV					4,507,025
				Integrated Oil
	208,734			Royal Dutch Petroleum Co.					10,350,138
				Major Telecommunications
	773,099			Koninklijke (Royal) KPN NV*					6,131,564
				Total Netherlands					48,446,228
				New Zealand (0.6%)
				Major Telecommunications
	842,056			Telecom Corporation of New Zealand Ltd.					3,312,832
				South Korea (1.0%)
				Semiconductors
	24,672			Samsung Electronics Co., Ltd. (GDR)					5,760,912
				Spain (1.4%)
				Major Telecommunications
	490,047			Telefonica S.A.*					7,999,738
				Sweden (1.2%)
				Major Banks
	96,886			ForeningsSparbanken AB					1,845,597
				Regional Banks
	779,579			Nordea Bank AB					5,424,056
				Total Sweden					7,269,653

See Notes to Financial Statements

6

Morgan Stanley International Value Equity Fund

Portfolio of Investments February 29, 2004 (unaudited) continued

NUMBER OF SHARES								VALUE
				Switzerland (10.4%)
				Chemicals: Agricultural
	75,931			Syngenta AG				$	5,292,689
				Chemicals: Specialty
	33,170			Ciba Specialty Chemicals AG (Registered Shares)*					2,394,794
				Construction Materials
	95,920			Holcim Ltd. (Regular Shares)					5,000,263
				Financial Conglomerates
	106,298			UBS AG (Registered Shares)					7,851,174
				Food: Major Diversified
	61,302			Nestle S.A. (Registered Shares)					16,257,259
				Major Banks
	98,640			Credit Suisse Group					3,607,638
				Pharmaceuticals: Major
	308,369			Novartis AG (Registered Shares)					13,658,364
	63,622			Roche Holding AG					6,597,912
									20,256,276
				Total Switzerland					60,660,093
				Taiwan (0.3%)
				Major Telecommunications
	114,313			Chunghwa Telecom Co., Ltd. (ADR)					1,879,306
				United Kingdom (33.0%)
				Aerospace & Defense
	966,215			Rolls-Royce Group PLC					3,967,569
				Beverages: Alcoholic
	1,043,343			Allied Domecq PLC					8,807,115
				Broadcasting
	2,812,813			ITV PLC*					7,271,410
				Catalog/Specialty Distribution
	342,227			GUS PLC					4,669,385
				Chemicals: Specialty
	356,685			BOC Group PLC					6,194,827
				Construction Materials
	133,375			RMC Group PLC					1,725,185
				Electric Utilities
	814,715			National Grid Transco PLC				$	6,554,069
				Financial Conglomerates
	204,239			Lloyds TSB Group PLC					1,706,877
				Food: Specialty/Candy
	1,059,394			Cadbury Schweppes PLC					8,779,474
				Household/Personal Care
	206,741			Reckitt Benckiser PLC					5,425,502
				Integrated Oil
	1,778,016			BP PLC					14,361,531
				Life/Health Insurance
	374,264			HHG PLC (CDI)*					303,811
	472,142			Prudential PLC					4,337,968
									4,641,779
				Major Banks
	1,303,921			Barclays PLC					11,773,355
	415,640			Royal Bank of Scotland Group PLC					13,219,497
									24,992,852
				Miscellaneous Commercial Services
	1,925,525			Hays PLC					5,031,589
	2,084,690			Rentokil Initial PLC					7,607,049
									12,638,638
				Other Metals/Minerals
	809,350			BHP Billiton PLC					7,462,620
				Other Transportation
	151,150			BAA PLC					1,481,138
				Pharmaceuticals: Major
	465,903			GlaxoSmithKline PLC					9,748,305
				Publishing: Books/Magazines
	1,703,088			Reed Elsevier PLC					15,758,969
				Pulp & Paper
	353,063			Bunzl PLC					2,939,105
				Tobacco
	920,606			British American Tobacco PLC					14,124,517
	559,670			Imperial Tobacco Group PLC					12,107,193
									26,231,710

See Notes to Financial Statements

7

Morgan Stanley International Value Equity Fund

Portfolio of Investments February 29, 2004 (unaudited) continued

NUMBER OF SHARES								VALUE
				Wholesale Distributors
	394,089			Wolseley PLC				$	5,983,838
				Wireless Telecommunications
	4,647,000			Vodafone Group PLC					11,644,342
				Total United Kingdom					192,986,240
				Total Common Stocks and Preferred Stock (Cost $444, 693,162)					556,005,917

PRINCIPAL AMOUNT IN THOUSANDS
				Short-Term Investment (2.4%)
				Repurchase Agreement
$	14,024			Joint repurchase agreement account 1.04% due 03/01/04 (dated 02/27/04; proceeds $14,025,215) (a) (Cost $14,024,000)					14,024,000

Total Investments (Cost $458,717,162) (b)(c)					97.6	%			570,029,917
Other Assets In Excess of Liabilities					2.4				13,929,464
Net Assets					100.0	%		$	583,959,381

ADR American Depository Receipt.

GDR Global Depository Receipt.

* Non-income producing security.

(a) Collateralized by federal agency and U.S. Treasury obligations.

(b) Securities have been designated as collateral in an amount equal to $19,494,153 in connection with open forward foreign currency contracts.

(c) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $112,581,853 and the aggregate gross unrealized depreciation is $1,269,098, resulting in net unrealized appreciation of $111,312,755.

Forward Foreign Currency Contracts Open at February 29, 2004:

CONTRACTS TO DELIVER								IN EXCHANGE FOR								DELIVERY DATE				UNREALIZED APPRECIATION/ (DEPRECIATION)
$					385,372			EUR					308,598				03/01/04			$	66
EUR					86,001			$					107,415				03/01/04				—
GBP					206,004			$					385,372				03/01/04				865
$					107,415			JPY					11,715,061				03/01/04				(135	)
$					56,744			EUR					45,471				03/02/04				49
EUR					341,184			$					424,159				03/02/04				(1,979	)
GBP					30,475			$					56,744				03/02/04				(137	)
$					424,159			JPY					46,363,427				03/02/04				414
JPY					2,100,000,000			EUR					15,642,458				05/17/04				213,948
Net unrealized appreciation																				$	213,091

Currency Abbreviations:

GBP	British Pound.

EUR	Euro.

JPY	Japanese Yen.

See Notes to Financial Statements

8

Morgan Stanley International Value Equity Fund

Summary of Investments February 29, 2004 (unaudited)

INDUSTRY				VALUE				PERCENT OF NET ASSETS
Advertising/Marketing Services				$	478,480				0.1	%
Aerospace & Defense					3,967,569				0.7
Beverages: Alcoholic					8,807,115				1.5
Broadcasting					9,609,386				1.7
Catalog/Specialty Distribution					4,669,385				0.8
Chemicals: Agricultural					5,292,689				0.9
Chemicals: Specialty					8,589,621				1.5
Commercial Printing/Forms					9,325,092				1.6
Computer Processing Hardware					2,557,963				0.4
Construction Materials					6,725,448				1.1
Electric Utilities					14,064,291				2.4
Electrical Products					840,897				0.1
Electronic Equipment/Instruments					10,321,502				1.8
Electronics/Appliances					14,583,059				2.5
Financial Conglomerates					20,292,469				3.5
Food Retail					3,215,769				0.5
Food: Major Diversified					41,839,675				7.2
Food: Specialty/Candy					13,131,466				2.2
Gas Distributors					4,468,974				0.8
Home Building					2,557,289				0.4
Household/Personal Care					11,019,138				1.9
Industrial Specialties					4,507,025				0.8
Integrated Oil					47,413,577				8.1
Investment Banks/Brokers					1,835,000				0.3
Life/Health Insurance					4,641,779				0.8
Major Banks					49,749,102				8.5
Major Telecommunications					55,434,552				9.5
Miscellaneous Commercial Services					12,638,638				2.2
Motor Vehicles					3,170,015				0.5
Movies/Entertainment					1,442,143				0.3
Multi-Line Insurance					2,538,722				0.4
Other Metals/Minerals					7,462,620				1.3
Other Transportation					1,481,138				0.2
Pharmaceuticals: Major					48,957,871				8.4
Pharmaceuticals: Other					9,263,773				1.6
Property – Casualty Insurers				$	8,664,102				1.5	%
Publishing: Books/Magazines					15,758,969				2.7
Pulp & Paper					2,939,105				0.5
Railroads					4,071,612				0.7
Real Estate Development					5,998,901				1.0
Recreational Products					2,298,077				0.4
Regional Banks					5,424,056				0.9
Repurchase Agreement					14,024,000				2.4
Semiconductors					9,165,079				1.6
Specialty Telecommunications					1,468,764				0.3
Telecommunication Equipment					5,833,416				1.0
Tobacco					29,862,424				5.1
Wholesale Distributors					5,983,838				1.0
Wireless Telecommunications					11,644,342				2.0
				$	570,029,917				97.6	%

TYPE OF INVESTMENT				VALUE				PERCENT OF NET ASSETS
Common Stocks				$	552,835,902				94.7	%
Preferred Stock					3,170,015				0.5
Short-Term Investment					14,024,000				2.4
				$	570,029,917				97.6	%

See Notes to Financial Statements

9

Morgan Stanley International Value Equity Fund

Financial Statements

Statement of Assets and Liabilities

February 29, 2004 (unaudited)

Assets:
Investments in securities, at value (cost $458,717,162)				$	570,029,917
Unrealized appreciation on open forward foreign currency contracts					213,091
Cash (including $13,795,368 in foreign currency)					13,795,863
Receivable for:
Shares of beneficial interest sold					2,862,532
Investments sold					2,836,414
Dividends					617,536
Foreign withholding taxes reclaimed					431,682
Prepaid expenses and other assets					89,954
Total Assets					590,876,989
Liabilities:
Payable for:
Investments purchased					5,582,404
Shares of beneficial interest redeemed					526,412
Investment management fee					470,444
Distribution fee					198,410
Accrued expenses and other payables					139,938
Total Liabilities					6,917,608
Net Assets				$	583,959,381
Composition of Net Assets:
Paid-in-capital				$	467,448,872
Net unrealized appreciation					111,353,800
Accumulated net investment loss					(912,786	)
Accumulated net realized gain					6,069,495
Net Assets				$	583,959,381
Class A Shares:
Net Assets				$	19,905,238
Shares Outstanding (unlimited authorized, $.01 par value)					1,644,877
Net Asset Value Per Share				$	12.10
Maximum Offering Price Per Share,         (net asset value plus 5.54% of net asset value)				$	12.77
Class B Shares:
Net Assets				$	198,449,890
Shares Outstanding (unlimited authorized, $.01 par value)					16,484,256
Net Asset Value Per Share				$	12.04
Class C Shares:
Net Assets				$	42,665,567
Shares Outstanding (unlimited authorized, $.01 par value)					3,553,640
Net Asset Value Per Share				$	12.01
Class D Shares:
Net Assets				$	322,938,686
Shares Outstanding (unlimited authorized, $.01 par value)					26,678,108
Net Asset Value Per Share				$	12.11

See Notes to Financial Statements

10

Morgan Stanley International Value Equity Fund

Financial Statements continued

Statement of Operations

For the six months ended February 29, 2004 (unaudited)

Net Investment Loss:
Income
Dividends (net of $343,106 foreign withholding tax)				$	3,008,469
Interest					98,335
Total Income					3,106,804
Expenses
Investment management fee					2,484,598
Distribution fee (Class A shares)					19,514
Distribution fee (Class B shares)					856,613
Distribution fee (Class C shares)					176,748
Transfer agent fees and expenses					418,931
Custodian fees					108,636
Registration fees					52,064
Professional fees					43,079
Shareholder reports and notices					40,669
Trustees' fees and expenses					2,198
Other					11,273
Total Expenses					4,214,323
Net Investment Loss					(1,107,519	)
Net Realized and Unrealized Gain:
Net Realized Gain on:
Investments					21,397,117
Foreign exchange transactions					387,064
Net Realized Gain					21,784,181
Net Change in Unrealized Appreciation/Depreciation on:
Investments					87,042,142
Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies					1,389,828
Net Appreciation					88,431,970
Net Gain					110,216,151
Net Increase				$	109,108,632

See Notes to Financial Statements

11

Morgan Stanley International Value Equity Fund

Financial Statements continued

Statement of Changes in Net Assets

				FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004				FOR THE YEAR ENDED AUGUST 31, 2003
					(unaudited	)
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)				$	(1,107,519	)		$	2,209,062
Net realized gain (loss)					21,784,181				(4,903,637	)
Net change in unrealized appreciation					88,431,970				33,477,840
Net Increase					109,108,632				30,783,265
Dividends to Shareholders from Net Investment Income:
Class A shares					(192,836	)			(66,893	)
Class B shares					(813,512	)			(102,829	)
Class C shares					(216,411	)			(47,743	)
Class D shares					(4,302,257	)			(1,176,635	)
Total Dividends					(5,525,016	)			(1,394,100	)
Net increase from transactions in shares of beneficial interest					68,036,285				130,604,410
Net Increase					171,619,901				159,993,575
Net Assets:
Beginning of period					412,339,480				252,345,905
End of Period (Including an accumulated net investment loss of $912,786 and accumulated undistributed investment income of $5,719,749, respectively)				$	583,959,381			$	412,339,480

See Notes to Financial Statements

12

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 29, 2004 (unaudited)

1.   Organization and Accounting Policies

Morgan Stanley International Value Equity 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 appreciation. The Fund seeks to achieve its objective by investing primarily in common stocks and other securities, including depository receipts and securities convertible into common stock, of companies located outside of the United States. The Fund was organized as a Massachusetts business trust on January 11, 2001 and commenced operations on April 26, 2001.

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 one year, 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 following is a summary of significant accounting policies:

A.   Valuation of Investments — (1) 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; (2) 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; (3) 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; (4) 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; (5) when market quotations are not readily available or Morgan Stanley Investment Advisors Inc. (the "Investment Manager") or Morgan Stanley Investment Management Limited (the "Sub-Advisor"), an affiliate of the Investment Manager, 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 Manager using a pricing service and/or procedures approved by the Trustees

13

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 29, 2004 (unaudited) continued

of the Fund; (6) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees; (7) 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 Manager, 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.   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.

14

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 29, 2004 (unaudited) continued

F.   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.

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

H.   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.

2.   Investment Management and Sub Advisory Agreements

Pursuant to an Investment Management Agreement, the Fund pays the Investment Manager a management fee, accrued daily and payable monthly, by applying the annual rate of 1.0% to the net assets of the Fund determined as of the close of each business day.

Under a Sub-Advisory Agreement between the Sub-Advisor and the Investment Manager, the Sub-Advisor provides the Fund with investment advice and portfolio management relating to the Fund's investments in securities, subject to the overall supervision of the Investment Manager. As compensation for its services provided pursuant to the Sub-Advisory Agreement, the Investment Manager paid the Sub-Advisor compensation of $1,118,069 for the six months ended February 29, 2004.

3.   Plan of Distribution

Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager and Sub-Advisor. 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 – 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 $4,916,131 at February 29, 2004.

15

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 29, 2004 (unaudited) continued

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 or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the six months ended February 29, 2004, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.25% and 1.0%, respectively.

The Distributor has informed the Fund that for the six months ended February 29, 2004, it received contingent deferred sales charges from certain redemptions of the Fund's Class B shares and Class C shares of $188,895 and $1,743, respectively and received $95,006 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.

4.   Security Transactions and Transactions with Affiliates

The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended February 29, 2004 aggregated $168,577,371, and $112,669,183, respectively.

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

5.   Purposes of and Risks Relating to Certain Financial Instruments

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

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

At February 29, 2004 investments in securities of issuers in the United Kingdom were 33.0% of the Fund's net assets. These investments, as well as other non-U.S. securities, may be affected by economic or political developments in this region.

At February 29, 2004 the Fund's cash balance consisted principally of interest bearing deposits with J.P. Morgan Chase, the Fund's custodian.

16

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 29, 2004 (unaudited) continued

6.   Shares of Beneficial Interest

Transactions in shares of beneficial interest were as follows:

				FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004								FOR THE YEAR ENDED AUGUST 31, 2003
				(unaudited)
				SHARES				AMOUNT				SHARES				AMOUNT
CLASS A SHARES
Sold					745,711			$	8,265,935				7,815,592			$	73,357,894
Reinvestment of dividends					14,970				168,115				6,532				57,093
Redeemed					(1,139,064	)			(11,762,984	)			(6,807,908	)			(64,466,822	)
Net increase (decrease) – Class A					(378,383	)			(3,328,934	)			1,014,216				8,948,165
CLASS B SHARES
Sold					3,182,013				35,155,560				4,376,290				38,333,996
Reinvestment of dividends					64,267				719,145				10,636				92,543
Redeemed					(1,741,351	)			(19,207,753	)			(5,082,826	)			(44,130,517	)
Net increase (decrease) – Class B					1,504,929				16,666,952				(695,900	)			(5,703,978	)
CLASS C SHARES
Sold					833,856				9,162,450				1,601,607				13,774,538
Reinvestment of dividends					17,791				198,545				5,021				43,632
Redeemed					(244,503	)			(2,669,251	)			(1,281,761	)			(10,945,201	)
Net increase – Class C					607,144				6,691,744				324,867				2,872,969
CLASS D SHARES
Sold					6,298,839				69,298,189				20,304,374				179,785,600
Reinvestment of dividends					316,234				3,551,312				106,487				930,697
Redeemed					(2,211,963	)			(24,842,978	)			(6,357,467	)			(56,229,043	)
Net increase – Class D					4,403,110				48,006,523				14,053,394				124,487,254
Net increase in Fund					6,136,800			$	68,036,285				14,696,577			$	130,604,410

7.   Federal Income Tax Status

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.

17

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 29, 2004 (unaudited) continued

As of August 31, 2003, the Fund had a net capital loss carryforward of $5,215,772 of which $2,443,651 will expire on August 31, 2010, and $2,772,121 will expire on August 21, 2011 to offset future capital gains to the extent provided by regulations.

As of August 31, 2003, the Fund had temporary book/tax differences primarily attributable to post-October losses (capital losses incurred after October 31 within the taxable year which are deemed to arise on the first business day of the Fund's next taxable year), capital loss deferrals on wash sales and mark-to-market of open forward foreign currency exchange contracts.

8. Legal Matters

The Investment Manager, certain affiliates of the Investment Manager, certain officers of such affiliates and certain investment companies advised by the Investment Manager or its affiliates, including the Fund, are named as defendants in a number of similar class action complaints which were recently consolidated. This consolidated action also names as defendants certain individual Trustees and Directors of the Morgan Stanley funds. The consolidated amended complaint generally alleges that defendants, including the Fund, violated their statutory disclosure obligations and fiduciary duties by failing properly to disclose (i) that the Investment Manager and certain affiliates of the Investment Manager allegedly offered economic incentives to brokers and others to recommend the funds advised by the Investment Manager or its affiliates to investors rather than funds managed by other companies, and (ii) that the funds advised by the Investment Manager or its affiliates, including the Fund, allegedly paid excessive commissions to brokers in return for their efforts to recommend these funds to investors. The complaint seeks, among other things, unspecified compensatory damages, rescissionary damages, fees and costs. The defendants intend to move to dismiss the action and otherwise vigorously to defend it. While the Fund believes that it has meritorious defenses, the ultimate outcome of this matter is not presently determinable at this early stage of the litigation, and no provision has been made in the Fund's financial statements for the effect, if any, of this matter.

18

Morgan Stanley International Value Equity Fund

Financial Highlights

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

				FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004				FOR THE YEAR ENDED AUGUST 31, 2003				FOR THE YEAR ENDED AUGUST 31, 2002				FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
				(unaudited)
Class A Shares
Selected Per Share Data:
Net asset value, beginning of period				$	9.80			$	9.21			$	9.60			$	10.00
Income (loss) from investment operations:
Net investment income (loss)‡					(0.01	)			0.09				0.03				0.03
Net realized and unrealized gain (loss)					2.45				0.57				(0.33	)			(0.43	)
Total income (loss) from investment operations					2.44				0.66				(0.30	)			(0.40	)
Less dividends from net investment income					(0.14	)			(0.07	)			(0.09	)			—
Net asset value, end of period				$	12.10			$	9.80			$	9.21			$	9.60
Total Return†					25.04	%(1)			7.12	%			(3.03	)%			(4.00)	% (1)
Ratios to Average Net Assets(3):
Expenses					1.52	%(2)			1.59	%			1.70	%			1.88	%(2)
Net investment income (loss)					(0.27)	% (2)			1.02	%			0.47	%			0.87	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$19,905				$19,827				$9,297				$9,013
Portfolio turnover rate					24	%(1)			32	%			52	%			13	%(1)

* Commencement of operations.

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

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

(1) Not annualized.

(2) Annualized.

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

See Notes to Financial Statements

19

Morgan Stanley International Value Equity Fund

Financial Highlights continued

				FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004				FOR THE YEAR ENDED AUGUST 31, 2003				FOR THE YEAR ENDED AUGUST 31, 2002				FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
				(unaudited)
Class B Shares
Selected Per Share Data:
Net asset value, beginning of period				$	9.71			$	9.14			$	9.57			$	10.00
Income (loss) from investment operations:
Net investment income (loss)‡					(0.06	)			0.01				(0.03	)			0.00
Net realized and unrealized gain (loss)					2.44				0.57				(0.33	)			(0.43	)
Total income (loss) from investment operations					2.38				0.58				(0.36	)			(0.43	)
Less dividends from net investment income					(0.05	)			(0.01	)			(0.07	)			—
Net asset value, end of period				$	12.04			$	9.71			$	9.14			$	9.57
Total Return†					24.57	%(1)			6.32	%			(3.74	)%			(4.30)	% (1)
Ratios to Average Net Assets(3):
Expenses					2.27	%(2)			2.36	%			2.45	%			2.63	%(2)
Net investment income (loss)					(1.02)	% (2)			0.25	%			(0.28	)%			0.12	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$198,450				$145,382				$143,200				$114,541
Portfolio turnover rate					24	%(1)			32	%			52	%			13	%(1)

* Commencement of operations.

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

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

(1) Not annualized.

(2) Annualized.

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

See Notes to Financial Statements

20

Morgan Stanley International Value Equity Fund

Financial Highlights continued

				FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004				FOR THE YEAR ENDED AUGUST 31, 2003				FOR THE YEAR ENDED AUGUST 31, 2002				FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
				(unaudited)
Class C Shares
Selected Per Share Data:
Net asset value, beginning of period				$	9.69			$	9.13			$	9.57			$	10.00
Income (loss) from investment operations:
Net investment income (loss)‡					(0.06	)			0.02				(0.03	)			0.00
Net realized and unrealized gain (loss)					2.45				0.56				(0.34	)			(0.43	)
Total income (loss) from investment operations					2.39				0.58				(0.37	)			(0.43	)
Less dividends from net investment income					(0.07	)			(0.02	)			(0.07	)			—
Net asset value, end of period				$	12.01			$	9.69			$	9.13			$	9.57
Total Return†					24.67	%(1)			6.24	%			(3.73	)%			(4.30)	% (1)
Ratios to Average Net Assets(3):
Expenses					2.27	%(2)			2.36	%			2.45	%			2.63	%(2)
Net investment income (loss)					(1.02)	% (2)			0.25	%			(0.28	)%			0.12	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$42,666				$28,556				$23,946				$15,558
Portfolio turnover rate					24	%(1)			32	%			52	%			13	%(1)

* Commencement of operations.

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

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

(1) Not annualized.

(2) Annualized.

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

See Notes to Financial Statements

21

Morgan Stanley International Value Equity Fund

Financial Highlights continued

				FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004				FOR THE YEAR ENDED AUGUST 31, 2003				FOR THE YEAR ENDED AUGUST 31, 2002				FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
				(unaudited)
Class D Shares
Selected Per Share Data:
Net asset value, beginning of period				$	9.81			$	9.23			$	9.60			$	10.00
Income (loss) from investment operations:
Net investment income‡					(0.00	)			0.12				0.10				0.04
Net realized and unrealized gain (loss)					2.47				0.55				(0.37	)			(0.44	)
Total income (loss) from investment operations					2.47				0.67				(0.27	)			(0.40	)
Less dividends from net investment income					(0.17	)			(0.09	)			(0.10	)			—
Net asset value, end of period				$	12.11			$	9.81			$	9.23			$	9.60
Total Return†					25.31	%(1)			7.39	%			(2.82	)%			(4.00)	% (1)
Ratios to Average Net Assets(3):
Expenses					1.27	%(2)			1.36	%			1.45	%			1.63	%(2)
Net investment income (loss)					(0.02)	% (2)			1.25	%			0.72	%			1.12	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$322,939				$218,574				$75,903				$12,128
Portfolio turnover rate					24	%(1)			32	%			52	%			13	%(1)

* Commencement of operations.

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

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

(1) Not annualized.

(2) Annualized.

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

See Notes to Financial Statements

22

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Trustees Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael E. Nugent Philip J. Purcell Fergus Reid Officers Charles A. Fiumefreddo Chairman of the Board Mitchell M. Merin President Ronald E. Robison Executive Vice President and Principal Executive Officer Barry Fink Vice President and General Counsel Joseph J. McAlinden Vice President Stefanie V. Chang Vice President Francis J. Smith Treasurer and Chief Financial Officer Thomas F. Caloia Vice President Mary E. Mullin Secretary Transfer Agent Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 Independent Auditors Deloitte & Touche LLP Two World Financial Center New York, New York 10281 Investment Manager Morgan Stanley Investment Advisors Inc. 1221 Avenue of the Americas New York, New York 10020 Sub-Advisor Morgan Stanley Investment Management Limited 25 Cabot Square, Canary Wharf London, United Kingdom E14 4QA The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors and accordingly they do not express an opinion thereon. 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. © 2004 Morgan Stanley 39906RPT-RA04-00028P-AO2/04		MORGAN STANLEY FUNDS
		Morgan Stanley International Value Equity Fund Semiannual Report February 29, 2004

Item 2.  Code of Ethics.

Not applicable for semiannual reports.


Item 3.  Audit Committee Financial Expert.

Not applicable for semiannual reports.


Item 4. Principal Accountant Fees and Services

Not applicable for semiannual reports.


Item 5. Audit Committee of Listed Registrants.

Not applicable for semiannual reports.


Item 6. [Reserved.]


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

Not applicable for semiannual reports.


Item 8. [Reserved.]


Item 9 - 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.

    There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Fund's internal controls
or in other factors that could significantly affect the Fund's internal controls
subsequent to the date of their evaluation.





(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.

Item 10 Exhibits
(a) Code of Ethics - Not applicable for semiannual reports.

(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.




                                       2





                                   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 Value Equity Fund

/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
April 20, 2004

         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
April 20, 2004

/s/ Francis Smith
Francis Smith
Principal Financial Officer
April 20, 2004





                                       3





                                                                   EXHIBIT 10 B1

                  CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

                                 CERTIFICATIONS

I, Ronald E. Robison, certify that:

1.   I have reviewed this report on Form N-CSR of Morgan Stanley International
     Value Equity Fund;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations, changes in net
     assets, and cash flows (if the financial statements are required to include
     a statement of cash flows) of the registrant as of, and for, the periods
     presented in this report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Rule 30a-3(c) under the Investment Company Act of 1940) for the
     registrant and have:

a)   designed such disclosure controls and procedures, or caused such disclosure
     controls and procedures to be designed under our supervision, to ensure
     that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those
     entities, particularly during the period in which this report is being
     prepared;

[b)  Omitted.]

c)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures and presented in this report our conclusions about the
     effectiveness of the disclosure controls and procedures, as of a date
     within 90 days prior to the filing date of this report based on such
     evaluation; and

d)   disclosed in this report any change in the registrant's internal control
     over financial reporting that occurred during the registrant's most recent
     fiscal half-year (the registrant's second fiscal half-year in the case of
     an annual report) that has materially affected, or is reasonably likely to
     materially affect, the registrant's internal control over financial
     reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed to the
     registrant's auditors and the audit committee of the registrant's board of
     directors (or persons performing the equivalent functions):


                                       4



a)   all significant deficiencies and material weaknesses in the design or
     operation of internal control over financial reporting which are reasonably
     likely to adversely affect the registrant's ability to record, process,
     summarize, and report financial information; and

b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal controls
     over financial reporting.

Date: April 20, 2004


                                                 /s/ Ronald E. Robison
                                                 Ronald E. Robison
                                                 Principal Executive Officer







                                       5




                                                                   EXHIBIT 10 B2

                  CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

                                 CERTIFICATIONS

I, Francis Smith, certify that:

6.   I have reviewed this report on Form N-CSR of Morgan Stanley International
     Value Equity Fund;

7.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

8.   Based on my knowledge, the financial statements and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations, changes in net
     assets, and cash flows (if the financial statements are required to include
     a statement of cash flows) of the registrant as of, and for, the periods
     presented in this report;

9.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Rule 30a-3(c) under the Investment Company Act of 1940) for the
     registrant and have:

b)   designed such disclosure controls and procedures, or caused such disclosure
     controls and procedures to be designed under our supervision, to ensure
     that material information relating to the registrant, including its
     consolidated subsidiaries, is made known to us by others within those
     entities, particularly during the period in which this report is being
     prepared;

[b)  Omitted.]

e)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures and presented in this report our conclusions about the
     effectiveness of the disclosure controls and procedures, as of a date
     within 90 days prior to the filing date of this report based on such
     evaluation; and

f)   disclosed in this report any change in the registrant's internal control
     over financial reporting that occurred during the registrant's most recent
     fiscal half-year (the registrant's second fiscal half-year in the case of
     an annual report) that has materially affected, or is reasonably likely to
     materially affect, the registrant's internal control over financial
     reporting; and

10.  The registrant's other certifying officer(s) and I have disclosed to the
     registrant's auditors and the audit committee of the registrant's board of
     directors (or persons performing the equivalent functions):

c)   all significant deficiencies and material weaknesses in the design or
     operation of internal control over financial reporting which are reasonably
     likely to adversely affect the registrant's ability to record, process,
     summarize, and report financial information; and



                                       6



d)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal controls
     over financial reporting.

Date: April 20, 2004

                                                   /s/ Francis Smith
                                                   Francis Smith
                                                   Principal Financial Officer


                                       7





                            SECTION 906 CERTIFICATION

                Certification Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002

Morgan Stanley International Value Equity Fund

     In connection with the Report on Form N-CSR (the "Report") of the
above-named issuer for the period ended February 29, 2004 that is accompanied by
this certification, the undersigned hereby certifies that:

1.   The Report fully complies with the requirements of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

2.   The information contained in the Report fairly presents, in all material
     respects, the financial condition and results of operations of the Issuer.



Date: April 20, 2004                              /s/ Ronald E. Robison
                                                  ---------------------------
                                                  Ronald E. Robison
                                                  Principal Executive Officer


A signed original of this written statement required by Section 906 has been
provided to Morgan Stanley International Value Equity Fund and will be retained
by Morgan Stanley International Value Equity Fund and furnished to the
Securities and Exchange Commission or its staff upon request.




                                       8




                            SECTION 906 CERTIFICATION

                Certification Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002

Morgan Stanley International Value Equity Fund

     In connection with the Report on Form N-CSR (the "Report") of the
above-named issuer for the period ended February 29, 2004 that is accompanied by
this certification, the undersigned hereby certifies that:

1.   The Report fully complies with the requirements of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

2.   The information contained in the Report fairly presents, in all material
     respects, the financial condition and results of operations of the Issuer.



Date: April 20, 2004                                 /s/ Francis Smith
                                                     ----------------------
                                                     Francis Smith
                                                     Principal Financial Officer


A signed original of this written statement required by Section 906 has been
provided to Morgan Stanley International Value Equity Fund and will be retained
by Morgan Stanley International Value Equity Fund and furnished to the
Securities and Exchange Commission or its staff upon request.




                                       9