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, 2005

Date of reporting period: February 28, 2005


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. Please see the prospectus for more complete information on investment risks.

	Fund Report
	For the six-month period ended February 28, 2005

Total Return for the Six Months Ended February 28, 2005

Class A						Class B						Class C						Class D						Morgan Stanley Capital International (MSCI) EAFE Index1						Lipper International Large-Cap Core Funds Index2
19.22%							18.81	%					18.83	%					19.39	%					21.18	%					20.47	%

Performance data quoted represent past performance, which is no guarantee of future results. Current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, 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 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.

Market Conditions

International equity markets performed generally strongly for the six months ended February 28, 2005. Currency valuations and the weakness of the U.S. dollar were a major factor in the MSCI EAFE Index's return for the period, as the Index returned significantly less in local currency terms. Continental European markets outperformed the U.K. for the period, due primarily to the strength of the Euro. The recovery in the Japanese equity market seen earlier in 2004 faltered during the six months under review as concerns over the impact of high oil prices on the domestic economy weighed heavily on the market. The commodity-based markets of New Zealand and Australia outperformed other regions for the six months.

While all sectors in the MSCI EAFE Index were positive for the period, some sectors outperformed others. Basic materials and energy stocks were the strongest-performing for the period, boosted by the rising price of oil and the strong contract price increases for iron ore and coking coal that were struck with Japanese steel producers. The financial and industrial sectors also saw strong performance for the period, while telecommunications, consumer staples and consumer discretionary modestly underperformed the broader market. Technology and health care stocks were the major laggards for the period.

Performance Analysis

Morgan Stanley International Value Equity Fund underperformed the MSCI EAFE Index and the Lipper International Large-Cap Core Funds Index for the six months ended February 28, 2005, assuming no deduction of sales charges. Over the period relative performance was hurt in part by stock selection in the utilities sector, as the Fund was overweight in Japanese utilities relative to the MSCI EAFE Index. The performance of these holdings lagged as investors largely preferred European utilities during the six months. An underweighted position in financials relative to the MSCI EAFE Index was also negative for the Fund.

2

The sector performed strongly during the period as investors remained unworried by the Federal Open Market Committee's moves to raise the federal funds target rate, and the 10-year Treasury yield remained close to historical lows. Performance was further hurt by stock selection in consumer staples as the Fund's consumer staples holdings came under pressure due to profit taking in early 2005 after a strong fourth quarter in the previous year. On a country basis, an underweighted exposure to the strongly performing Australian currency and local market relative to the MSCI EAFE Index also hurt the Fund's performance.

Other positions were more beneficial for the Fund and contributed to its positive performance for the period. Stock selection in the telecommunications sector benefited performance during a period of renewed investor interest in telecommunications as many companies announced increased dividend payouts. Stock selection in the materials sector was positive, as the Fund was helped by holdings in a number of companies that made gains due to the strong global steel demand and China's demand for raw materials, and stock selection in the technology sector also benefited performance. The Fund was further helped by stock selection in the U.K., where a number of tobacco and energy stocks performed well, and in Italy, where telecommunications companies made positive contributions.

There is no guarantee that any sectors mentioned will continue to perform well or be held by the Fund in the future.

Investment Strategy

The Fund will normally invest at least 80 percent 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 percent 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 percent of its assets in the United States.

For More Information About Portfolio Holdings

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 by filing the schedule electronically with the Securities and Exchange Commission (SEC). The semiannual reports are filed on Form N-CSRS and the annual reports are filed on Form N-CSR. 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,

3

TOP 10 HOLDINGS
France Telecom S.A.					3.9	%
Nestle S.A.					3.6
Unilever NV					3.2
BP PLC					2.7
Imperial Tobacco Group PLC					2.4
Fuji Photo Film Co., Ltd					2.2
Total S.A.					2.2
Vodafone Group PLC					2.1
Telefonica S.A.					2.1
Allied Domecq PLC					2.1

TOP FIVE COUNTRIES
United Kingdom					29.2	%
Japan					18.8
Switzerland					10.0
France					8.3
Netherlands					8.1

Data as of February 28, 2005. 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.

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 copies of a fund's fiscal quarter filings by contacting Morgan Stanley Client Relations at (800) 869-NEWS.

Proxy Voting Policies and Procedures

A description of (1) the Fund's policies and procedures with respect to the voting of proxies relating to the Fund's portfolio securities and (2) how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, 2004, is available without charge, upon request, by calling (800) 869-NEWS or 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.

4

Householding Notice

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.

5

	Performance Summary

Average Annual Total Returns — Period Ended February 28, 2005

						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							15.57%	3					14.67%	3					14.67%	3					15.84%	3
							9.50	4					9.67	4					13.67	4					—
Since Inception							9.97	3					9.13	3					9.13	3					10.23	3
							8.44	4					8.72	4					9.13	4					—

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 the most recent month-end performance figures, 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 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.

* 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.

(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 10 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.

6

	Expense Example

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 management 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 09/01/04 – 02/28/05.

Actual Expenses

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.

Hypothetical Example for Comparison Purposes

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.

				BEGINNING ACCOUNT VALUE				ENDING ACCOUNT VALUE				EXPENSES PAID DURING PERIOD*
				09/01/04				02/28/05				09/01/04 – 02/28/05
Class A
Actual (19.22% return)				$	1,000.00			$	1,192.20			$	7.66
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,017.80			$	7.05
Class B
Actual (18.81% return)				$	1,000.00			$	1,188.10			$	11.72
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,014.08			$	10.79
Class C
Actual (18.83% return)				$	1,000.00			$	1,188.30			$	11.72
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,014.08			$	10.79
Class D
Actual (19.39% return)				$	1,000.00			$	1,193.90			$	6.31
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,019.04			$	5.81

* Expenses are equal to the Fund's annualized expense ratio of 1.41%, 2.16%, 2.16% and 1.16% respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

7

Morgan Stanley International Value Equity Fund

Portfolio of Investments February 28, 2005 (unaudited)

NUMBER OF SHARES								VALUE
				Common Stocks (94.7%)
				Australia (a) (1.0%)
				Major Telecommunications
	1,947,709			Telstra Corp., Ltd.				$	8,128,812
				Austria (a) (1.3%)
				Major Telecommunications
	560,898			Telekom Austria AG					11,143,962
				Belgium (a) (0.7%)
				Financial Conglomerates
	204,701			Fortis					5,752,214
				Canada (0.8%)
				Major Banks
	108,669			Royal Bank of Canada					6,364,056
				Finland (a) (0.5%)
				Telecommunication Equipment
	236,898			Nokia Oyj					3,823,645
				France (a) (8.3%)
				Integrated Oil
	77,857			Total S.A.					18,505,771
				Major Banks
	75,230			BNP Paribas S.A.					5,451,222
	53,810			Societe Generale					5,671,563
									11,122,785
				Major Telecommunications
	1,080,187			France Telecom S.A.*					32,591,382
				Pharmaceuticals: Major
	101,777			Sanofi-Aventis					8,135,297
				Total France					70,355,235
				Germany (a) (5.3%)
				Chemicals: Major Diversified
	141,229			Bayer AG					4,932,666
				Chemicals: Specialty
	74,767			Linde AG					5,138,161
				Industrial Conglomerates
	125,508			Siemens AG (Registered Shares)					9,833,338
				Major Telecommunications
	606,755			Deutsche Telekom AG (Registered Shares)*				$	12,695,705
				Motor Vehicles
	147,165			Bayerische Motoren Werke (BMW) AG					6,290,806
				Multi-Line Insurance
	46,399			Muenchener Rueckver AG (Registered Shares)					5,720,039
				Total Germany					44,610,715
				Italy (a) (4.1%)
				Integrated Oil
	352,717			ENI SpA					9,210,648
				Major Banks
	1,419,295			UniCredito Italiano SpA					8,274,636
				Major Telecommunications
	5,469,190			Telecom Italia SpA - RNC					17,240,876
				Total Italy					34,726,160
				Japan (a) (18.8%)
				Advertising/Marketing Services
	60,700			Asatsu – DK Inc.					1,824,617
				Commercial Printing/Forms
	1,019,000			Dai Nippon Printing Co., Ltd.					17,123,920
				Electric Utilities
	614,700			Kansai Electric Power Co., Inc. (The)					12,261,559
				Electronic     Equipment/Instruments
	270,900			Canon, Inc.					14,332,250
	117,300			Kyocera Corp.					8,744,088
	762,000			NEC Corp.					4,960,078
									28,036,416
				Electronics/Appliances
	495,300			Fuji Photo Film Co., Ltd.					18,744,672
				Food Retail
	113,100			Lawson, Inc.					4,309,133

See Notes to Financial Statements

8

Morgan Stanley International Value Equity Fund

Portfolio of Investments February 28, 2005 (unaudited) continued

NUMBER OF SHARES								VALUE
				Gas Distributors
	1,461,000			Osaka Gas Co., Ltd.				$	4,402,650
	2,130,000			Tokyo Gas Co., Ltd.					8,571,044
									12,973,694
				Household/Personal Care
	519,000			Kao Corp.					12,321,921
				Investment Banks/Brokers
	108,000			Daiwa Securities Group Inc.					738,063
				Major Telecommunications
	832			Nippon Telegraph & Telephone Corp.					3,603,589
				Movies/Entertainment
	97,100			Oriental Land Co. Ltd.					6,357,407
				Pharmaceuticals: Other
	197,800			Yamanouchi Pharmaceutical Co., Ltd.					7,031,356
				Property – Casualty Insurers
	289			Millea Holdings, Inc.					4,228,039
	504,000			Mitsui Sumitomo Insurance Co., Ltd.					4,483,992
									8,712,031
				Railroads
	120			Central Japan Railway Co.					1,033,574
				Real Estate Development
	535,000			Mitsubishi Estate Co., Ltd.					6,520,385
				Semiconductors
	60,400			Rohm Co., Ltd.					6,071,774
				Tobacco
	220			Japan Tobacco, Inc.					2,390,105
				Wireless Telecommunications
	4,954			NTT DoCoMo, Inc.					8,405,289
				Total Japan					158,459,505
				Netherlands (a) (8.1%)
				Financial Conglomerates
	317,826			ING Groep NV (Share Certificates)					9,750,649
				Food: Major Diversified
	402,753			Unilever NV (Share Certificates)				$	26,769,182
				Food: Specialty/Candy
	83,915			CSM NV					2,652,187
				Industrial Specialties
	146,154			Akzo Nobel NV					6,586,465
				Integrated Oil
	203,665			Royal Dutch Petroleum Co.					12,810,139
				Major Banks
	220,974			ABN AMRO Holding NV					6,085,912
				Major Telecommunications
	370,228			Koninklijke (Royal) KPN NV					3,578,114
				Total Netherlands					68,232,648
				New Zealand (a) (0.8%)
				Major Telecommunications
	1,491,269			Telecom Corporation of New Zealand Ltd.					6,934,347
				South Korea (a) (1.6%)
				Semiconductors
	51,492			Samsung Electronics Co., Ltd. (GDR) – 144A**					13,317,170
				Spain (a) (2.1%)
				Major Telecommunications
	979,907			Telefonica S.A.					17,984,762
				Sweden (a) (1.5%)
				Metal Fabrications
	116,311			SKF AB (B Shares)					5,761,990
				Regional Banks
	693,154			Nordea Bank AB					7,279,001
				Total Sweden					13,040,991
				Switzerland (a) (10.0%)
				Construction Materials
	185,806			Holcim Ltd. (Registered Shares)					12,321,039
				Financial Conglomerates
	187,987			UBS AG (Registered Shares)					16,316,466

See Notes to Financial Statements

9

Morgan Stanley International Value Equity Fund

Portfolio of Investments February 28, 2005 (unaudited) continued

NUMBER OF SHARES								VALUE
				Food: Major Diversified
	110,916			Nestle S.A. (Registered Shares)				$	30,770,866
				Major Banks
	96,985			Credit Suisse Group*					4,220,172
				Pharmaceuticals: Major
	327,455			Novartis AG (Registered Shares)					16,416,484
	42,136			Roche Holding AG					4,436,624
									20,853,108
				Total Switzerland					84,481,651
				Taiwan (0.6%)
				Major Telecommunications
	244,295			Chunghwa Telecom Co., Ltd. (ADR)					5,325,631
				United Kingdom (a) (29.2%)
				Aerospace & Defense
	1,199,348			Rolls-Royce Group PLC*					5,991,374
				Beverages: Alcoholic
	1,732,069			Allied Domecq PLC					17,290,091
				Broadcasting
	1,738,190			ITV PLC					3,866,291
				Catalog/Specialty Distribution
	329,158			GUS PLC					5,958,782
				Chemicals: Specialty
	612,662			BOC Group PLC					11,666,620
				Electric Utilities
	1,307,331			National Grid Transco PLC					12,721,826
				Food: Specialty/Candy
	1,096,006			Cadbury Schweppes PLC					10,752,568
				Household/Personal Care
	339,882			Reckitt Benckiser PLC					10,694,322
				Integrated Oil
	2,110,873			BP PLC					22,829,034
				Life/Health Insurance
	448,814			Prudential PLC					4,088,011
				Major Banks
	1,429,195			Barclays PLC				$	15,492,924
	245,007			Royal Bank of Scotland Group PLC					8,392,791
									23,885,715
				Other Metals/Minerals
	840,125			BHP Billiton PLC					12,519,354
				Other Transportation
	267,310			BAA PLC					3,123,355
				Personnel Services
	3,078,018			Hays PLC					7,931,488
				Pharmaceuticals: Major
	677,365			GlaxoSmithKline PLC					16,242,790
				Publishing: Books/Magazines
	1,606,439			Reed Elsevier PLC					16,357,839
				Pulp & Paper
	549,280			Bunzl PLC					5,262,294
				Tobacco
	699,600			British American Tobacco PLC					12,848,666
	750,005			Imperial Tobacco Group PLC					19,989,864
									32,838,530
				Wholesale Distributors
	189,130			Wolseley PLC					4,039,879
				Wireless Telecommunications
	6,893,189			Vodafone Group PLC					18,077,566
				Total United Kingdom					246,137,729
				Total Common Stocks (Cost $637,916,742)					798,819,233
				Preferred Stock (1.1%)
				Germany (a)
				Motor Vehicles
	13,375			Porsche AG (Cost $7,669,750)					9,651,271

See Notes to Financial Statements

10

Morgan Stanley International Value Equity Fund

Portfolio of Investments February 28, 2005 (unaudited) continued

PRINCIPAL AMOUNT IN THOUSANDS								VALUE
				Short-Term Investment (1.1%) Repurchase Agreement
$	9,469			Joint repurchase agreement account 2.63% due 03/01/05 (dated 02/28/05; proceeds $9,469,692) (b) (Cost $9,469,000)				$	9,469,000

Total Investments (Cost $655,055,492) (c) (d)					96.9	%			817,939,504
Other Assets in Excess of Liabilities					3.1				25,716,481
Net Assets					100.0	%		$	843,655,985

ADR American Depositary Receipt.

GDR Global Depositary Receipt.

* Non-income producing security.

** Resale is restricted to qualified institutional investors.

(a) Securities with a total market value of $796,780,817 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.

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

(c) Securities have been designated as collateral in an amount equal to $38,449,092 in connection with open forward foreign currency contracts.

(d) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $164,446,712 and the aggregate gross unrealized depreciation is $1,562,700, resulting in net unrealized appreciation of $162,884,012.

Forward Foreign Currency Contracts Open at February 28, 2005:

CONTRACTS TO DELIVER								IN EXCHANGE FOR								DELIVERY DATE				UNREALIZED APPRECIATION/ (DEPRECIATION)
CHF				961,234				EUR				623,247					03/01/05			$	(2,561	)
EUR				557,766				JPY				77,306,365					03/01/05				1,202
$				369,832				EUR				280,899					03/01/05				1,910
$				344,933				EUR				260,307					03/02/05				(443	)
CHF				779,299				EUR				506,302					03/02/05				(729	)
GBP				8,300,000				EUR				11,853,892					04/25/05				(199,784	)
GBP				12,500,000				JPY				2,368,011,250					04/25/05				(1,206,281	)
Net unrealized depreciation																				$(1,406,686)

Currency Abbreviations:

GBP	British Pound.

EUR	Euro.

JPY	Japanese Yen.

CHF	Swiss Franc.

See Notes to Financial Statements

11

Morgan Stanley International Value Equity Fund

Summary of Investments February 28, 2005 (unaudited)

INDUSTRY				VALUE				PERCENT OF NET ASSETS
Major Telecommunications				$	119,227,180				14.1	%
Integrated Oil					63,355,592				7.5
Major Banks					59,953,276				7.1
Food: Major Diversified					57,540,048				6.8
Pharmaceuticals: Major					45,231,195				5.4
Tobacco					35,228,635				4.2
Financial Conglomerates					31,819,329				3.8
Electronic Equipment/Instruments					28,036,416				3.3
Wireless Telecommunications					26,482,855				3.1
Electric Utilities					24,983,385				3.0
Household/Personal Care					23,016,243				2.7
Semiconductors					19,388,944				2.3
Electronics/Appliances					18,744,672				2.2
Beverages: Alcoholic					17,290,091				2.0
Commercial Printing/Forms					17,123,920				2.0
Chemicals: Specialty					16,804,781				2.0
Publishing: Books/Magazines					16,357,839				1.9
Motor Vehicles					15,942,077				1.9
Food: Specialty/Candy					13,404,755				1.6
Gas Distributors					12,973,694				1.5
Other Metals/Minerals					12,519,354				1.5
Construction Materials					12,321,039				1.5
Industrial Conglomerates					9,833,338				1.2
Repurchase Agreement					9,469,000				1.1
Property – Casualty Insurers					8,712,031				1.0
Personnel Services					7,931,488				0.9
Regional Banks					7,279,001				0.9
Pharmaceuticals: Other					7,031,356				0.8
Industrial Specialties					6,586,465				0.8
Real Estate Development					6,520,385				0.8
Movies/Entertainment					6,357,407				0.7
Aerospace & Defense					5,991,374				0.7
Catalog/Specialty Distribution					5,958,782				0.7
Metal Fabrications					5,761,990				0.7
Multi-Line Insurance					5,720,039				0.7
Pulp & Paper				$	5,262,294				0.6	%
Chemicals: Major Diversified					4,932,666				0.6
Food Retail					4,309,133				0.5
Life/Health Insurance					4,088,011				0.5
Wholesale Distributors					4,039,879				0.5
Broadcasting					3,866,291				0.5
Telecommunication Equipment					3,823,645				0.5
Other Transportation					3,123,355				0.4
Advertising/Marketing Services					1,824,617				0.2
Railroads					1,033,574				0.1
Investment Banks/Brokers					738,063				0.1
				$	817,939,504	*			96.9	%

* Does not include outstanding forward foreign currency contracts with net unrealized depreciation of $1,406,686.

See Notes to Financial Statements

12

Morgan Stanley International Value Equity Fund

Financial Statements

Statement of Assets and Liabilities

February 28, 2005 (unaudited)

Assets:
Investments in securities, at value (cost $655,055,492)				$	817,939,504
Cash (including foreign currency of $21,447,698 value, with a cost of $21,340,067 )					21,448,190
Receivable for:
Shares of beneficial interest sold					4,104,330
Investments sold					2,272,239
Dividends					1,306,762
Foreign withholding taxes reclaimed					240,385
Prepaid expenses and other assets					111,366
Total Assets					847,422,776
Liabilities:
Unrealized depreciation on open forward foreign currency contracts					1,406,686
Payable for:
Investments purchased					739,349
Shares of beneficial interest redeemed					659,011
Investment advisory fee					501,621
Distribution fee					271,575
Administration fee					50,162
Accrued expenses and other payables					138,387
Total Liabilities					3,766,791
Net Assets				$	843,655,985
Composition of Net Assets:
Paid-in-capital				$	670,746,443
Net unrealized appreciation					161,623,851
Accumulated net investment loss					(1,122,670	)
Accumulated undistributed net realized gain					12,408,361
Net Assets				$	843,655,985
Class A Shares:
Net Assets					$37,894,503
Shares Outstanding (unlimited authorized, $.01 par value)					2,903,098
Net Asset Value Per Share				$	13.05
Maximum Offering Price Per Share, (net asset value plus 5.54% of net asset value)				$	13.77
Class B Shares:
Net Assets				$	286,308,954
Shares Outstanding (unlimited authorized, $.01 par value)					22,136,947
Net Asset Value Per Share				$	12.93
Class C Shares:
Net Assets				$	70,446,561
Shares Outstanding (unlimited authorized, $.01 par value)					5,465,164
Net Asset Value Per Share				$	12.89
Class D Shares:
Net Assets				$	449,005,967
Shares Outstanding (unlimited authorized, $.01 par value)					34,334,472
Net Asset Value Per Share				$	13.08

See Notes to Financial Statements

13

Morgan Stanley International Value Equity Fund

Financial Statements continued

Statement of Operations

For the six months ended February 28, 2005 (unaudited)

Net Investment Loss:
Income
Dividends (net of $611,386 foreign withholding tax)				$	5,213,521
Interest					168,291
Total Income					5,381,812
Expenses
Investment advisory fee					3,133,978
Distribution fee (Class A shares)					39,606
Distribution fee (Class B shares)					1,222,547
Distribution fee (Class C shares)					298,859
Transfer agent fees and expenses					554,925
Administration fee					203,741
Custodian fees					150,151
Registration fees					58,653
Shareholder reports and notices					51,346
Professional fees					32,493
Trustees' fees and expenses					4,199
Other					28,281
Total Expenses					5,778,779
Net Investment Loss					(396,967	)
Net Realized and Unrealized Gain:
Net Realized Gain on:
Investments					22,233,211
Foreign exchange transactions					2,035,358
Net Realized Gain					24,268,569
Net Change in Unrealized Appreciation/Depreciation on:
Investments					105,503,543
Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies					(1,786,228	)
Net Appreciation					103,717,315
Net Gain					127,985,884
Net Increase				$	127,588,917

See Notes to Financial Statements

14

Morgan Stanley International Value Equity Fund

Financial Statements continued

Statement of Changes in Net Assets

				FOR THE SIX MONTHS ENDED FEBRUARY 28, 2005				FOR THE YEAR ENDED AUGUST 31, 2004
					(unaudited	)
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)				$	(396,967	)		$	4,210,247
Net realized gain					24,268,569				50,602,386
Net change in unrealized appreciation					103,717,315				34,984,706
Net Increase					127,588,917				89,797,339
Dividends and Distributions to Shareholders from:
Net investment income
Class A shares					(255,126	)			(192,836	)
Class B shares					(882,629	)			(813,512	)
Class C shares					(245,494	)			(216,411	)
Class D shares					(3,520,299	)			(4,302,257	)
Net realized gain
Class A shares					(2,060,286	)			—
Class B shares					(15,865,806	)			—
Class C shares					(3,896,769	)			—
Class D shares					(25,152,182	)			—
Total Dividends and Distributions					(51,878,591	)			(5,525,016	)
Net increase from transactions in shares of beneficial interest					140,320,073				131,013,783
Net Increase					216,030,399				215,286,106
Net Assets:
Beginning of period					627,625,586				412,339,480
End of Period (Including an accumulated net investment loss of $1,122,670 and undistributed investment income of $4,177,845, respectively)				$	843,655,985			$	627,625,586

See Notes to Financial Statements

15

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 28, 2005 (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 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 Adviser") or Morgan Stanley Investment Management Limited (the "Sub-Advisor"), an affiliate of 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; (6) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees; and (7) short-term debt securities having a maturity date of more than sixty days at time of

16

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 28, 2005 (unaudited) continued

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.   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.

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.

17

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 28, 2005 (unaudited) continued

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 Advisory/Administration and Sub-Advisory Agreements

Effective November 1, 2004, pursuant to an Investment Advisory Agreement, the Fund pays the Investment Adviser an advisory fee, accrued daily and payable monthly, by applying the annual rate of 0.80% to the net assets of the Fund determined as of the close of each business day.

Effective November 1, 2004, pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. (the "Administrator"), an affiliate of the Investment Adviser and Sub-Advisor, 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.

Prior to November 1, 2004, the Fund had retained the Investment Adviser to provide administrative services and to manage the investment of the Fund's assets pursuant to an investment management agreement pursuant to which the Fund paid the Investment Adviser a monthly 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 Adviser, the Sub-Advisor invests the Fund's assets including the placing of orders for the purchase and sales of portfolio securities. As compensation for its services provided pursuant to the Sub-Advisory Agreement, the Investment Adviser paid the Sub-Advisor compensation of $1,253,591 for the six months ended February 28, 2005.

3.   Plan of Distribution

Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Adviser, Administrator 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 – 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

18

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 28, 2005 (unaudited) continued

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 $4,037,458 at February 28, 2005.

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 28, 2005, 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 28, 2005, it received contingent deferred sales charges from certain redemptions of the Fund's Class B shares and Class C shares of $172,093 and $6,304, respectively and received $197,696 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 28, 2005 aggregated $207,808,666, and $130,006,892, respectively.

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

Effective April 1, 2004, the Fund began 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 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.

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.

19

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 28, 2005 (unaudited) continued

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 28, 2005, the Fund's cash balance consisted principally of interest bearing deposits with J.P. Morgan Chase, the Fund's custodian.

At February 28, 2005, investments in securities of issuers in the United Kingdom were 29.2% of the Fund's net assets. These investments, as well as other non-U.S. securities, which involve risks and considerations not present with respect to U.S. securities, may be affected by economic or political developments in this region.

6.   Shares of Beneficial Interest†

Transactions in shares of beneficial interest were as follows:

				FOR THE SIX MONTHS ENDED FEBRUARY 28, 2005								FOR THE YEAR ENDED AUGUST 31, 2004
				(unaudited)
				SHARES				AMOUNT				SHARES				AMOUNT
CLASS A SHARES
Sold					1,050,237			$	13,237,611				1,530,883			$	17,592,382
Reinvestment of dividends and distributions					164,528				2,079,635				14,970				168,114
Redeemed					(505,138	)			(6,403,688	)			(1,375,642	)			(14,573,285	)
Net increase – Class A					709,627				8,913,558				170,211				3,187,211
CLASS B SHARES
Sold					4,648,271				58,174,122				6,570,253				75,026,278
Reinvestment of dividends and distributions					1,195,206				14,987,886				64,267				719,145
Redeemed					(1,815,437	)			(22,670,188	)			(3,504,940	)			(39,958,938	)
Net increase – Class B					4,028,040				50,491,820				3,129,580				35,786,485
CLASS C SHARES
Sold					1,171,873				14,532,974				1,886,915				21,540,876
Reinvestment of dividends and distributions					308,961				3,862,017				17,791				198,545
Redeemed					(326,552	)			(4,066,907	)			(540,320	)			(6,150,943	)
Net increase – Class C					1,154,282				14,328,084				1,364,386				15,588,478
CLASS D SHARES
Sold					6,591,546				83,075,243				12,378,522				141,573,102
Reinvestment of dividends and distributions					1,911,430				24,198,694				316,234				3,551,312
Redeemed					(3,236,690	)			(40,687,326	)			(5,901,568	)			(68,672,805	)
Net increase – Class D					5,266,286				66,586,611				6,793,188				76,451,609
Net increase in Fund					11,158,235			$	140,320,073				11,457,365			$	131,013,783

† The Fund will suspend offering its shares to new investors when the Fund's assets reach $1 billion. Following the general suspension of the offering of the Fund's shares to new investors, the Fund will continue to offer its shares to existing shareholders and may recommence offering its shares to other new investors in the future.

20

Morgan Stanley International Value Equity Fund

Notes to Financial Statements February 28, 2005 (unaudited) continued

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.

As of August 31, 2004, the Fund had temporary book/tax differences primarily attributable to capital loss deferrals on wash sales, foreign tax credit pass-through and mark-to-market of open forward foreign currency exchange contracts.

8.   Legal Matters

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, are named as defendants in a consolidated class action. 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 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 efforts to recommend these funds to investors. The complaint seeks, among other things, unspecified compensatory damages, rescissionary damages, fees and costs. The defendants have moved to dismiss the action and intend to otherwise vigorously defend it. On March 10, 2005, Plaintiffs sought leave to supplement their complaint to assert claims on behalf of other investors. While the Fund and Adviser believe that each 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.

21

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 28, 2005				FOR THE YEAR ENDED AUGUST 31,												FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
								2004				2003				2002
				(unaudited)
Class A Shares
Selected Per Share Data:
Net asset value, beginning of period				$	11.73			$	9.80			$	9.21			$	9.60			$	10.00
Income (loss) from investment operations:
Net investment income‡					0.00				0.12				0.09				0.03				0.03
Net realized and unrealized gain (loss)					2.22				1.95				0.57				(0.33	)			(0.43	)
Total income (loss) from investment operations					2.22				2.07				0.66				(0.30	)			(0.40	)
Less dividends and distributions from:
Net investment income.					(0.10	)			(0.14	)			(0.07	)			(0.09	)			—
Net realized gain					(0.80	)			—				—				—				—
Total dividends and distributions					(0.90	)			(0.14	)			(0.07	)			(0.09	)			—
Net asset value, end of period				$	13.05			$	11.73			$	9.80			$	9.21			$	9.60
Total Return†					19.22	% (1)			21.22	%			7.12	%			(3.03	)%			(4.00)	% (1)
Ratios to Average Net Assets(3):
Expenses					1.41	% (2)			1.52	%			1.59	%			1.70	%			1.88	%(2)
Net investment income					0.07	% (2)			0.94	%			1.02	%			0.47	%			0.87	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$37,895				$25,728				$19,827				$9,297				$9,013
Portfolio turnover rate					18	% (1)			43	%			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

22

Morgan Stanley International Value Equity Fund

Financial Highlights continued

				FOR THE SIX MONTHS ENDED FEBRUARY 28, 2005				FOR THE YEAR ENDED AUGUST 31,												FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
								2004				2003				2002
				(unaudited)
Class B Shares
Selected Per Share Data:
Net asset value, beginning of period				$	11.62			$	9.71			$	9.14			$	9.57			$	10.00
Income (loss) from investment operations:
Net investment income (loss)‡					(0.04	)			0.02				0.01				(0.03	)			0.00
Net realized and unrealized gain (loss)					2.19				1.94				0.57				(0.33	)			(0.43	)
Total income (loss) from investment operations					2.15				1.96				0.58				(0.36	)			(0.43	)
Less dividends and distributions from:
Net investment income.					(0.04	)			(0.05	)			(0.01	)			(0.07	)			—
Net realized gain					(0.80	)			—				—				—				—
Total dividends and distributions					(0.84	)			(0.05	)			(0.01	)			(0.07	)			—
Net asset value, end of period				$	12.93			$	11.62			$	9.71			$	9.14			$	9.57
Total Return†					18.81	%(1)			20.22	%			6.32	%			(3.74	)%			(4.30)	% (1)
Ratios to Average Net Assets(3):
Expenses					2.16	%(2)			2.28	%			2.36	%			2.45	%			2.63	%(2)
Net investment income (loss)					(0.68)	% (2)			0.18	%			0.25	%			(0.28	)%			0.12	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$286,309				$210,485				$145,382				$143,200				$114,541
Portfolio turnover rate					18	%(1)			43	%			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

23

Morgan Stanley International Value Equity Fund

Financial Highlights continued

				FOR THE SIX MONTHS ENDED FEBRUARY 28, 2005				FOR THE YEAR ENDED AUGUST 31,												FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
								2004				2003				2002
				(unaudited)
Class C Shares
Selected Per Share Data:
Net asset value, beginning of period				$	11.59			$	9.69			$	9.13			$	9.57			$	10.00
Income (loss) from investment operations:
Net investment income (loss)‡					(0.04	)			0.02				0.02				(0.03	)			0.00
Net realized and unrealized gain (loss)					2.19				1.95				0.56				(0.34	)			(0.43	)
Total income (loss) from investment operations					2.15				1.97				0.58				(0.37	)			(0.43	)
Less dividends and distributions from:
Net investment income					(0.05	)			(0.07	)			(0.02	)			(0.07	)			—
Net realized gain					(0.80	)			—				—				—				—
Total dividends and distributions					(0.85	)			(0.07	)			(0.02	)			(0.07	)			—
Net asset value, end of period				$	12.89			$	11.59			$	9.69			$	9.13			$	9.57
Total Return†					18.83	%(1)			20.31	%			6.24	%			(3.73	)%			(4.30)	% (1)
Ratios to Average Net Assets(3):
Expenses					2.16	%(2)			2.28	%			2.36	%			2.45	%			2.63	%(2)
Net investment income (loss)					(0.68)	% (2)			0.18	%			0.25	%			(0.28	)%			0.12	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$70,447				$49,971				$28,556				$23,946				$15,558
Portfolio turnover rate					18	%(1)			43	%			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

24

Morgan Stanley International Value Equity Fund

Financial Highlights continued

				FOR THE SIX MONTHS ENDED FEBRUARY 28, 2005				FOR THE YEAR ENDED AUGUST 31,												FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
								2004				2003				2002
				(unaudited)
Class D Shares
Selected Per Share Data:
Net asset value, beginning of period				$	11.75			$	9.81			$	9.23			$	9.60			$	10.00
Income (loss) from investment operations:
Net investment income‡					0.02				0.14				0.12				0.10				0.04
Net realized and unrealized gain (loss)					2.22				1.97				0.55				(0.37	)			(0.44	)
Total income (loss) from investment operations					2.24				2.11				0.67				(0.27	)			(0.40	)
Less dividends and distributions from:
Net investment income					(0.11	)			(0.17	)			(0.09	)			(0.10	)			—
Net realized gain					(0.80	)			—				—				—				—
Total dividends and distributions					(0.91	)			(0.17	)			(0.09	)			(0.10	)			—
Net asset value, end of period				$	13.08			$	11.75			$	9.81			$	9.23			$	9.60
Total Return†					19.39	% (1)			21.59	%			7.39	%			(2.82	)%			(4.00)	% (1)
Ratios to Average Net Assets(3):
Expenses					1.16	% (2)			1.28	%			1.36	%			1.45	%			1.63	%(2)
Net investment income					0.32	% (2)			1.18	%			1.25	%			0.72	%			1.12	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$449,006				$341,442				$218,574				$75,903				$12,128
Portfolio turnover rate					18	% (1)			43	%			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

25

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(This page has been left blank intentionally.)

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 Fergus Reid Officers Charles A. Fiumefreddo Chairman of the Board Mitchell M. Merin President Ronald E. Robison Executive Vice President and Principal Executive Officer Joseph J. McAlinden Vice President Barry Fink Vice President Amy R. Doberman Vice President Carsten Otto Chief Compliance Officer 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 Registered Public Accounting Firm Deloitte & Touche LLP Two World Financial Center New York, New York 10281 Investment Adviser 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. © 2005 Morgan Stanley 39906RPT-RA05-00297P-Y02/05		MORGAN STANLEY FUNDS
		Morgan Stanley International Value Equity Fund Semiannual Report February 28, 2005

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.

Refer to Item 1.


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

Not applicable for semiannual reports.


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 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 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 12. 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 19, 2005

         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 19, 2005

/s/ Francis Smith
Francis Smith
Principal Financial Officer
April 19, 2005

                                       3






                                                                   EXHIBIT 12 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) and internal
     control over financial reporting (as defined in Rule 30a-3(d) 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)   designed such internal control over financial reporting, or caused such
     internal control over financial reporting to be designed under our
     supervision, to provide reasonable assurance regarding the reliability of
     financial reporting and the preparation of financial statements for
     external purposes in accordance with generally accepted accounting
     principles;

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 19, 2005
                                                     /s/ Ronald E. Robison
                                                     Ronald E. Robison
                                                     Principal Executive Officer



                                       5



                                                                   EXHIBIT 12 B2

                  CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

                                 CERTIFICATIONS
                                 --------------

I, Francis Smith, 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) and internal
     control over financial reporting (as defined in Rule 30a-3(d) 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)   designed such internal control over financial reporting, or caused such
     internal control over financial reporting to be designed under our
     supervision, to provide reasonable assurance regarding the reliability of
     financial reporting and the preparation of financial statements for
     external purposes in accordance with generally accepted accounting
     principles;

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):

                                       6



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 19, 2005
                                                    /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 28, 2005 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 19, 2005                                 /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 28, 2005 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 19, 2005                                 /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