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: August 31, 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 annual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the Fund's financial statements and a list of Fund investments.

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

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

	Fund Report
	For the year ended August 31, 2005

Total Return for the 12 Months Ended August 31, 2005

Class A						Class B						Class C						Class D						Morgan Stanley Capital International (MSCI) EAFE Index1						Lipper International Large-Cap Core Funds Index2
19.95%							19.09	%					19.11	%					20.21	%					23.58	%					24.08	%

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

Overall, international equities performed robustly during the 12-month period ended August 31, 2005, with the MSCI EAFE Index rising 23.6 percent in dollar terms. Throughout much of the period, a weakening U.S. dollar was a notable factor in driving market returns. However, in the later half of the reporting period, a resurging dollar regained much of the ground that it lost to the euro and yen in 2004. The pound, meanwhile, remained essentially flat.

During the reporting period, the Nordic region led as high energy prices were a boon to its commodity-focused markets. Other developed European markets also posted noteworthy gains. Despite increased economic and political uncertainty in the region, global economic growth trends fueled demand for goods and resources. Not all markets performed equally well, however. In the United Kingdom, higher interest rates and utility bills and a flagging real estate market weighed on consumer sentiment and spending.

The Far East component of the MSCI EAFE Index lagged, despite continued signs of improvement and a turnaround in economic indicators that generally exceeded consensus expectations. For example, in Japan, exports flourished due to demand from China, while consumer sectors strengthened as the reporting period progressed. The real estate market grew healthier, banks made considerable progress in clearing problem loans, and deflation abated. Nonetheless, Japan was one of the weakest performing markets within the index.

All 10 sectors within the MSCI EAFE Index posted solid, double-digit gains. Against the backdrop of sustained high energy and commodity prices and rising demand, the energy and materials sectors advanced at an especially brisk clip. The utilities sector followed, propelled by companies that were able to benefit as wholesale electricity prices rose higher alongside oil and gas prices. The industrials, financials and consumer staples sectors also surpassed the overall index return. Meanwhile, the information technology, consumer discretionary, healthcare and telecommunications sectors lagged the pace of the overall index.

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Performance Analysis

Morgan Stanley International Value Equity Fund underperformed the MSCI EAFE Index and the Lipper International Large-Cap Core Funds Index for the 12 months ending August 31, 2005, assuming no deduction of applicable sales charges.

The Fund's utilities, consumer discretionary and financials exposures detracted from returns. Relative to the MSCI EAFE Index, the Fund was overweighted in Japanese utilities, based on our analysis of stock price valuations. However, in this case, our valuation bias was at odds with the market's preference for European utilities companies. Within the consumer discretionary sector, the Fund was underweighted in the auto industry. This strategy reflected our concerns about overleveraged consumers and the susceptibility of the consumer discretionary sector to a spending slowdown. An emphasis on Japanese consumer discretionary companies further dampened performance.

The Fund's financials sector positioning proved disadvantageous as well. Due to our view that many financial stocks, primarily banks, are vulnerable to both slowing consumer expenditures and higher interest rates, the Fund was underweighted in the sector relative to the MSCI Index. However, the sector continued to perform strongly as investors shrugged off the Federal Open Market Committee's rate hikes and the 10-year Treasury yield remained close to historical lows.

In contrast, strong security selection across a number of areas benefited performance. For example, within the Fund's consumer staples exposure, merger-and acquisition activity in the beverage industry and continued strong performance of tobacco stocks buoyed returns. Materials stocks were also a boon to performance. Here, strong global steel demand and China's insatiable demand for raw materials provided support to the sector.

The Fund's telecommunication exposure yielded mixed results. As discussed, this sector did not advance as rapidly as other areas of the global equity markets during the reporting period. In this environment, an overweighted position in telecommunications tempered the Fund's pace versus the MSCI Index. Security selection within that sector enhanced performance, however, as announcements of anticipated increases in dividend payouts renewed the interest of yield-oriented investors. Our longer-term view is that telecommunications still offer the best combination of stock value and immunity to slowing house prices and consumer expenditures.

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

3

TOP 10 HOLDINGS
France Telecom S.A.					4.2	%
Nestle S.A. (Registered Shares)					4.0
BP PLC					3.5
Total S.A.					3.1
Unilever NV (Share Certificates)					3.0
Imperial Tobacco Group PLC					2.5
Vodafone Group PLC					2.5
Telefonica S.A.					2.2
Dai Nippon Printing Co., Ltd.					2.1
UBS AG (Registered Shares)					2.0

TOP FIVE COUNTRIES
United Kingdom					27.2	%
Japan					20.4
France					10.6
Switzerland					10.1
Netherlands					8.7

Data as of August 31, 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.

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

4

Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to shareholders, nor are the reports posted to the Morgan Stanley public Web site. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC's Web site, http://www.sec.gov. You may also review and copy them at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC's e-mail address (publicinfo@sec.gov) or by writing the Public Reference section of the SEC, Washington, DC 20549-0102.

Proxy Voting Policy and Procedures
and Proxy Voting Record

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

You may obtain information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 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.

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

Performance of $10,000 Investment

6

Average Annual Total Returns — Period Ended August 31, 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							19.95%	3					19.09%	3					19.11%	3					20.21%	3
							13.65	4					14.09	4					18.11	4					—
Since Inception							8.92	3					8.09	3					8.09	3					9.17	3
							7.58	4					7.73	4					8.09	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 most recent month-end performance figures, please visit www.morganstanley.com or speak with your Financial Advisor. Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Performance for Class A, Class B, Class C, and Class D shares will vary due to differences in sales charges and expenses.

* The maximum 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.

‡ Ending value assuming a complete redemption on August 31, 2005.

7

	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 advisory fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 03/01/05 – 08/31/05.

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*
				03/01/05				08/31/05				03/01/05 – 08/31/05
Class A
Actual (0.61% return)				$	1,000.00			$	1,006.10			$	6.98
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,018.25			$	7.02
Class B
Actual (0.23% return)				$	1,000.00			$	1,002.30			$	10.85
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,014.37			$	10.92
Class C
Actual (0.23% return)				$	1,000.00			$	1,002.30			$	10.85
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,014.37			$	10.92
Class D
Actual (0.69% return)				$	1,000.00			$	1,006.90			$	5.82
Hypothetical (5% annual return before expenses)				$	1,000.00			$	1,019.41			$	5.85

* Expenses are equal to the Fund's annualized expense ratio of 1.38%, 2.15%, 2.15% and 1.15% for Class A, Class B, Class C and Class D shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

8

Investment Advisory Agreement Approval 

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Investment Adviser under the Advisory Agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Adviser, to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Fund's Administrator under the Administration Agreement, including accounting, clerical, bookkeeping, compliance, business management and planning, and the provision of supplies, office space and utilities. (The Investment Adviser, Sub-Adviser and Administrator together are referred to as the "Adviser" and the Advisory, Sub-Advisory and Administration Agreements together are referred to as the "Management Agreement.") The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as reported to the Board by Lipper Inc. ("Lipper").

The Board reviewed and considered the qualifications of the portfolio managers, the senior administrative managers and other key personnel of the Adviser who provide the administrative and investment advisory services to the Fund. The Board determined that the Adviser's portfolio managers and key personnel are well qualified by education and/or training and experience to perform the services in an efficient and professional manner. The Board concluded that the nature and extent of the advisory and administrative services provided were necessary and appropriate for the conduct of the business and investment activities of the Fund. The Board also concluded that the overall quality of the advisory and administrative services was satisfactory.

Performance Relative to Comparable Funds Managed by Other Advisers

The Board reviewed the Fund's performance for one- and three-year periods ended November 30, 2004, and for the period from April 30, 2001 to November 30, 2004, as shown in reports provided by Lipper (the "Lipper Reports"), compared to the performance of comparable funds selected by Lipper (the "performance peer group"), and noted that the Fund's performance was better than its performance peer group average for all three periods. The Board concluded that the Fund's performance was satisfactory.

Fees Relative to Other Funds Managed by the Adviser with Comparable Investment Strategies

The Board reviewed the advisory and administrative fees (together, the "management fee") paid by the Fund under the Management Agreement. The Board noted that the rate was comparable to the management fee rates charged by the Adviser to any other funds it manages with investment strategies comparable to those of the Fund.

Fees and Expenses Relative to Comparable Funds Managed by Other Advisers

The Board reviewed the management fee rate and the total expense ratio of the Fund. The Board noted that: (i) the Fund's management fee rate was lower than the average management fee rate for funds, selected by Lipper (the "expense peer group"), managed by other advisers with investment strategies comparable to those of the Fund, as shown in the Lipper Report for the Fund; and (ii) the Fund's total expense ratio was also lower than the average total expense ratio of the funds included in the Fund's expense peer group. The Board concluded that the Fund's management fee and total expense ratio were competitive with those of the Fund's expense peer group.

Breakpoints and Economies of Scale

The Board reviewed the structure of the Fund's management fee schedule under the Management Agreement and noted that it did not include any breakpoints although assets were relatively large and, therefore, recommended

9

that the Adviser consider incorporating breakpoints in the management fee. The Adviser informed the Board that the Fund will be closed to new investors when the Fund's assets reach $1 billion, subject to certain limited exceptions. The Board considered that the management fee and total expense ratio were already low in comparison with the Fund's expense peer group and noted the Adviser's stated intention to close the Fund to new investors when the Fund reaches $1 billion. The Board concluded that the management fee effectively reflects economies of scale at current levels.

Profitability of Adviser and Affiliates

The Board considered and reviewed information concerning the costs incurred and profits realized by the Adviser and its affiliates during the last two years from their relationship with the Fund and the Morgan Stanley Fund Complex and reviewed with the Controller of the Adviser the cost allocation methodology used to determine the Adviser's profitability. Based on their review of the information they received, the Board concluded that the profits earned by the Adviser and its affiliates were not excessive in light of the advisory, administrative and other services provided to the Fund.

Fall-Out Benefits

The Board considered so-called "fall-out benefits" derived by the Adviser and its affiliates from their relationship with the Fund and the Fund Complex, such as "float" benefits derived from handling of checks for purchases and redemptions of Fund shares through a broker-dealer affiliate of the Adviser and "soft dollar" benefits (discussed in the next section). The Board also considered that a broker-dealer affiliate of the Adviser receives from the Fund 12b-1 fees for distribution and shareholder services. The Board also considered that an affiliate of the Adviser, through a joint venture, receives revenue in connection with trading done on behalf of the Fund through an electronic trading system network ("ECN"). The Board concluded that the float benefits and the above-referenced ECN-related revenue were relatively small and that the 12b-1 fees were competitive with those of other broker-dealer affiliates of investment advisers of mutual funds.

Soft Dollar Benefits

The Board considered whether the Adviser realizes any benefits as a result of brokerage transactions executed through "soft dollar" arrangements. Under such arrangements, brokerage commissions paid by the Fund and/or other funds managed by the Adviser would be used to pay for research that a securities broker obtains from third parties, or to pay for both research and execution services from securities brokers who effect transactions for the Fund. The Adviser informed the Board that it does not use Fund commissions to pay for third party research. It does use commissions to pay for research which is bundled with execution services. The Board recognized that the receipt of such research from brokers may reduce the Adviser's costs but concluded that the receipt of such research strengthens the investment management resources of the Adviser, which may ultimately benefit the Fund and other funds in the Fund Complex.

Adviser Financially Sound and Financially Capable of Meeting the Fund's Needs

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board noted that the Adviser's operations remain profitable, although increased expenses in recent years have reduced the Adviser's profitability. The Board concluded that the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement.

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Historical Relationship Between the Fund and the Adviser

The Board also reviewed and considered the historical relationship between the Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund's operations and the Board's confidence in the competence and integrity of the senior managers and key personnel of the Adviser. The Board concluded that it is beneficial for the Fund to continue its relationship with the Adviser.

Other Factors and Current Trends

The Board considered the controls and procedures adopted and implemented by the Adviser and monitored by the Fund's Chief Compliance Officer and concluded that the conduct of business by the Adviser indicates a good faith effort on its part to adhere to high ethical standards in the conduct of the Fund's business.

General Conclusion

After considering and weighing all of the above factors, the Board concluded it would be in the best interest of the Fund and its shareholders to approve renewal of the Management Agreement for another year.

11

Morgan Stanley International Value Equity Fund

Portfolio of Investments August 31, 2005

NUMBER OF SHARES								VALUE
				Common Stocks (95.8%)
				Australia (a) (0.6%)
				Chemicals: Major Diversified
	141,261			Orica Ltd.				$	2,041,141
				Major Telecommunications
	951,593			Telstra Corp., Ltd.					3,361,808
				Total Australia					5,402,949
				Austria (a) (1.7%)
				Major Telecommunications
	701,103			Telekom Austria AG					14,741,917
				Belgium (a) (0.8%)
				Financial Conglomerates
	231,706			Fortis					6,620,243
				Canada (0.5%)
				Major Banks
	69,699			Royal Bank of Canada					4,741,928
				France (a) (10.6%)
				Food Retail
	93,787			Carrefour S.A.					4,367,182
				Integrated Oil
	103,026			Total S.A.					27,128,493
				Major Banks
	127,467			BNP Paribas S.A.					9,322,565
	60,910			Societe Generale					6,611,879
									15,934,444
				Major Telecommunications
	1,212,331			France Telecom S.A.					36,627,517
				Pharmaceuticals: Major
	94,403			Sanofi-Aventis					8,096,955
				Total France					92,154,591
				Germany (a) (5.0%)
				Chemicals: Major Diversified
	124,317			Bayer AG					4,400,526
				Chemicals: Specialty
	84,631			Linde AG					6,266,742
				Industrial Conglomerates
	142,066			Siemens AG (Registered Shares)					10,786,937
				Major Telecommunications
	369,036			Deutsche Telekom AG (Registered Shares)				$	7,023,684
				Motor Vehicles
	208,643			Bayerische Motoren Werke (BMW) AG					9,428,301
				Multi-Line Insurance
	51,985			Muenchener Rueckver AG (Registered Shares)					5,838,294
				Total Germany					43,744,484
				Italy (a) (3.2%)
				Integrated Oil
	399,252			ENI SpA					11,831,347
				Major Telecommunications
	6,190,724			Telecom Italia SpA - RNC					16,311,038
				Total Italy					28,142,385
				Japan (a) (20.4%)
				Advertising/Marketing Services
	60,700			Asatsu – DK Inc.					1,789,532
				Commercial Printing/Forms
	1,137,000			Dai Nippon Printing Co., Ltd.					18,174,372
				Electric Utilities
	509,400			Kansai Electric Power Co., Inc. (The)					10,864,836
				Electronic Equipment/     Instruments
	304,700			Canon, Inc.					15,423,158
	132,700			Kyocera Corp.					9,237,417
	1,740,000			Mitsubishi Electric Corp.					9,371,453
	1,595,000			NEC Corp.					8,567,149
									42,599,177
				Electronics/Appliances
	245,700			Fuji Photo Film Co., Ltd.					7,960,977
				Food Retail
	117,100			Lawson, Inc.					4,384,667
				Gas Distributors
	1,654,000			Osaka Gas Co., Ltd.					5,299,573
	2,410,000			Tokyo Gas Co., Ltd.					9,015,293
									14,314,866

See Notes to Financial Statements

12

Morgan Stanley International Value Equity Fund

Portfolio of Investments August 31, 2005 continued

NUMBER OF SHARES								VALUE
				Household/Personal Care
	587,000			Kao Corp.				$	13,998,580
				Investment Banks/Brokers
	109,000			Daiwa Securities Group Inc.					743,418
				Major Banks
	1,578,000			Shinsei Bank, Ltd.					9,773,928
				Movies/Entertainment
	109,300			Oriental Land Co. Ltd.					6,525,595
				Pharmaceuticals: Other
	215,000			Astellas Pharma Inc.					7,669,988
				Property – Casualty Insurers
	327			Millea Holdings, Inc.					4,820,672
	570,000			Mitsui Sumitomo Insurance Co., Ltd.					5,829,918
									10,650,590
				Railroads
	1,187			Central Japan Railway Co.					9,095,933
				Real Estate Development
	351,000			Mitsubishi Estate Co., Ltd.					4,204,038
				Semiconductors
	68,400			Rohm Co., Ltd.					6,255,988
				Wireless Telecommunications
	5,588			NTT DoCoMo, Inc.					9,002,843
				Total Japan					178,009,328
				Netherlands (a) (8.7%)
				Financial Conglomerates
	297,187			ING Groep NV (Share Certificates)					8,679,762
				Food: Major Diversified
	378,762			Unilever NV (Share Certificates)					26,175,029
				Food: Specialty/Candy
	172,342			CSM NV					4,819,341
				Industrial Specialties
	165,434			Akzo Nobel NV					6,807,592
				Integrated Oil
	440,115			Royal Dutch Shell PLC (Class A)					14,347,978
				Major Banks
	453,146			ABN AMRO Holding NV				$	10,898,839
				Major Telecommunications
	413,483			Koninklijke (Royal) KPN NV					3,913,992
				Total Netherlands					75,642,533
				New Zealand (a) (0.8%)
				Major Telecommunications
	1,688,007			Telecom Corporation of New Zealand Ltd					7,142,306
				Singapore (a) (0.5%)
				Regional Banks
	542,000			United Overseas Bank Ltd					4,584,039
				South Korea (a) (1.3%)
				Semiconductors
	42,810			Samsung Electronics Co., Ltd. (GDR) - 144A**					11,263,081
				Spain (a) (2.4%)
				Integrated Oil
	75,163			Repsol YPF, S.A.					2,225,966
				Major Telecommunications
	1,135,119			Telefonica S.A.					18,807,233
				Total Spain					21,033,199
				Sweden (a) (1.4%)
				Metal Fabrications
	616,859			SKF AB (B Shares)					7,561,952
				Regional Banks
	467,168			Nordea Bank AB					4,537,939
				Total Sweden					12,099,891
				Switzerland (a) (10.1%)
				Construction Materials
	210,319			Holcim Ltd. (Registered Shares)					13,640,927
				Financial Conglomerates
	212,786			UBS AG (Registered Shares)					17,467,267
				Food: Major Diversified
	125,550			Nestle S.A. (Registered Shares)					35,296,028
				Major Banks
	105,226			Credit Suisse Group					4,579,383

See Notes to Financial Statements

13

Morgan Stanley International Value Equity Fund

Portfolio of Investments August 31, 2005 continued

NUMBER OF SHARES								VALUE
				Pharmaceuticals: Major
	353,934			Novartis AG (Registered Shares)				$	17,212,966
				Total Switzerland					88,196,571
				Taiwan (0.6%)
				Major Telecommunications
	256,833			Chunghwa Telecom Co., Ltd. (ADR)					4,944,035
				United Kingdom (a) (27.2%)
				Aerospace & Defense
	1,357,574			Rolls-Royce Group PLC*					8,291,501
				Catalog/Specialty Distribution
	368,772			Gus PLC					6,069,772
				Chemicals: Specialty
	693,490			BOC Group PLC					13,151,346
				Electric Utilities
	1,298,602			National Grid PLC					12,326,200
	731,964			Scottish Power PLC					6,644,675
									18,970,875
				Food: Specialty/Candy
	1,340,595			Cadbury Schweppes PLC					13,270,447
				Hotels/Resorts/Cruiselines
	768,042			InterContinental Hotels Group PLC					10,392,137
				Household/Personal Care
	267,997			Reckitt Benckiser PLC					8,328,653
				Integrated Oil
	2,679,825			BP PLC					30,538,700
				Major Banks
	623,214			Barclays PLC					6,225,081
	434,825			Royal Bank of Scotland Group PLC					12,711,342
									18,936,423
				Other Metals/Minerals
	758,712			BHP Billiton PLC					11,311,991
				Other Transportation
	302,575			BAA PLC					3,346,604
				Personnel Services
	3,078,018			Hays PLC					7,308,928
				Pharmaceuticals: Major
	550,612			GlaxoSmithKline PLC				$	13,370,690
				Publishing: Books/Magazines
	1,446,354			Reed Elsevier PLC					13,630,069
				Pulp & Paper
	337,215			Bunzl PLC					3,317,541
				Tobacco
	475,505			British American Tobacco PLC					9,595,931
	795,242			Imperial Tobacco Group PLC					22,154,717
									31,750,648
				Wholesale Distributors
	209,059			Wolseley PLC					4,267,537
				Wireless Telecommunications
	7,802,590			Vodafone Group PLC					21,446,500
				Total United Kingdom					237,700,362
				Total Common Stocks (Cost $708,639,699)					836,163,842
				Preferred Stock (a) (1.4%)
				Germany
				Motor Vehicles
	15,533			Porsche AG (Cost $10,017,229)					12,142,932

PRINCIPAL AMOUNT IN THOUSANDS
				Short-Term Investment (0.6%)
				Repurchase Agreement
$	5,122			Joint repurchase agreement account 3.59% due 09/01/05 (dated 08/31/05; proceeds $5,122,511) (b) (Cost $5,122,000)					5,122,000

Total Investments (Cost $723,778,928) (c) (d)					97.8	%			853,428,774
Other Assets in Excess of Liabilities					2.2				19,045,528
Net Assets					100.0	%		$	872,474,302

See Notes to Financial Statements

14

Morgan Stanley International Value Equity Fund

Portfolio of Investments August 31, 2005 continued

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 $838,620,811 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 $8,399,208 in connection with open forward foreign currency contract.

(d) The aggregate cost for federal income tax purposes is $726,976,673. The aggregate gross unrealized appreciation is $132,053,766 and the aggregate gross unrealized depreciation is $5,601,665 resulting in net unrealized appreciation of $126,452,101.

Forward Foreign Currency Contract Open at
August 31, 2005:

CONTRACT     TO DELIVER

IN    EXCHANGE FOR

DELIVERY     DATE

UNREALIZED DEPRECIATION

GBP   4,800,000

JPY   924,556,817

10/25/05

$

(243,512

)

Currency Abbreviations:
GBP    British Pound.
JPY    Japanese Yen.

See Notes to Financial Statements

15

Morgan Stanley International Value Equity Fund

Summary of Investments August 31, 2005

	INDUSTRY				VALUE				PERCENT OF NET ASSETS
	Major Telecommunications				$	112,873,530				12.9	%
	Integrated Oil					86,072,484				9.9
	Major Banks					64,864,945				7.4
	Food: Major Diversified					61,471,057				7.0
	Electronic Equipment/ Instruments					42,599,177				4.9
	Pharmaceuticals: Major					38,680,611				4.4
	Financial Conglomerates					32,767,272				3.8
	Tobacco					31,750,648				3.6
	Wireless Telecommunications					30,449,343				3.5
	Electric Utilities					29,835,711				3.4
	Household/Personal Care					22,327,233				2.6
	Motor Vehicles					21,571,233				2.5
	Chemicals: Specialty					19,418,088				2.2
	Commercial Printing/Forms					18,174,372				2.1
	Food: Specialty/Candy					18,089,788				2.1
	Semiconductors					17,519,069				2.0
	Gas Distributors					14,314,866				1.6
	Construction Materials					13,640,927				1.6
	Publishing: Books/Magazines					13,630,069				1.6
	Other Metals/Minerals					11,311,991				1.3
	Industrial Conglomerates					10,786,937				1.2
	Property – Casualty Insurers					10,650,590				1.2
	Hotels/Resorts/Cruiselines					10,392,137				1.2
	Regional Banks				$	9,121,978				1.0	%
	Railroads					9,095,933				1.0
	Food Retail					8,751,849				1.0
	Aerospace & Defense					8,291,501				1.0
	Electronics/Appliances					7,960,977				0.9
	Pharmaceuticals: Other					7,669,988				0.9
	Metal Fabrications					7,561,952				0.9
	Personnel Services					7,308,928				0.8
	Industrial Specialties					6,807,592				0.8
	Movies/Entertainment					6,525,595				0.7
	Chemicals: Major Diversified					6,441,667				0.7
	Catalog/Specialty Distribution					6,069,772				0.7
	Multi-Line Insurance					5,838,294				0.7
	Repurchase Agreement					5,122,000				0.6
	Wholesale Distributors					4,267,537				0.5
	Real Estate Development					4,204,038				0.5
	Other Transportation					3,346,604				0.4
	Pulp & Paper					3,317,541				0.4
	Advertising/Marketing Services					1,789,532				0.2
	Investment Banks/Brokers					743,418				0.1
					$	853,428,774*				97.8	%

* Does not include the outstanding forward foreign currency contract with an unrealized depreciation of $243,512.

See Notes to Financial Statements

16

Morgan Stanley International Value Equity Fund

Financial Statements

Statement of Assets and Liabilities

August 31, 2005

Assets:
Investments in securities, at value (cost
$723,778,928)				$	853,428,774
Cash (including foreign currency of
$17,282,656 value, with a cost of
$17,230,038)					17,283,489
Receivable for:
Investments sold					2,200,497
Dividends					1,663,335
Shares of beneficial interest sold					1,413,752
Foreign withholding taxes reclaimed					461,784
Prepaid expenses and other assets					48,116
Total Assets					876,499,747
Liabilities:
Unrealized depreciation on open forward foreign currency contract					243,512
Payable for:
Shares of beneficial interest redeemed					1,310,698
Investments purchased					798,712
Investment advisory fee					632,229
Compensated forward foreign
currency contracts					497,477
Distribution fee					305,411
Administration fee					63,223
Transfer agent fee					16,011
Accrued expenses and other payables					158,172
Total Liabilities					4,025,445
Net Assets				$	872,474,302
Composition of Net Assets:
Paid-in-capital				$	694,828,020
Net unrealized appreciation					129,450,185
Accumulated undistributed net investment
income					6,780,956
Accumulated undistributed net realized
gain					41,415,141
Net Assets				$	872,474,302
Class A Shares:
Net Assets				$	96,963,004
Shares Outstanding (unlimited authorized,
$.01 par value)					7,384,774
Net Asset Value Per Share				$	13.13
Maximum Offering Price Per Share,
(net asset value plus 5.54% of net
asset value)				$	13.86
Class B Shares:
Net Assets				$	238,780,685
Shares Outstanding (unlimited authorized,
$.01 par value)					18,424,263
Net Asset Value Per Share				$	12.96
Class C Shares:
Net Assets				$	73,598,342
Shares Outstanding (unlimited authorized,
$.01 par value)					5,698,026
Net Asset Value Per Share				$	12.92
Class D Shares:
Net Assets				$	463,132,271
Shares Outstanding (unlimited authorized,
$.01 par value)					35,164,550
Net Asset Value Per Share				$	13.17

Statement of Operations

For the year ended August 31, 2005

Net Investment Income:
Income
Dividends (net of $2,125,669 foreign withholding tax)				$	20,530,239
Interest					357,785
Total Income					20,888,024
Expenses
Investment advisory fee					6,584,776
Distribution fee (Class A shares)					127,796
Distribution fee (Class B shares)					2,503,235
Distribution fee (Class C shares)					660,196
Transfer agent fees and expenses					1,324,580
Administration fee					548,821
Custodian fees					318,093
Shareholder reports and notices					129,932
Registration fees					113,810
Professional fees					93,199
Trustees' fees and expenses					9,314
Other					55,383
Total Expenses					12,469,135
Net Investment Income					8,418,889
Net Realized and Unrealized Gain:
Net Realized Gain/Loss on:
Investments					53,275,349
Foreign exchange transactions					(912,229	)
Net Realized Gain					52,363,120
Net Change in Unrealized     Appreciation/Depreciation on:
Investments					72,269,377
Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies					(725,728	)
Net Appreciation					71,543,649
Net Gain					123,906,769
Net Increase				$	132,325,658

See Notes to Financial Statements

17

Morgan Stanley International Value Equity Fund

Financial Statements continued

Statement of Changes in Net Assets

				FOR THE YEAR ENDED AUGUST 31, 2005				FOR THE YEAR ENDED AUGUST 31, 2004
Increase in Net Assets:
Operations:
Net investment income				$	8,418,889			$	4,210,247
Net realized gain					52,363,120				50,602,386
Net change in unrealized appreciation					71,543,649				34,984,706
Net Increase					132,325,658				89,797,339
Dividends and Distributions to Shareholders from:
Net investment income
Class A shares					(255,127	)			(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					(51,878,592	)			(5,525,016	)
Net increase from transactions in shares of beneficial interest					164,401,650				131,013,783
Net Increase					244,848,716				215,286,106
Net Assets:
Beginning of period					627,625,586				412,339,480
End of Period (Including accumulated undistributed net investment income of $6,780,956 and $4,177,845, respectively)				$	872,474,302			$	627,625,586

See Notes to Financial Statements

18

Morgan Stanley International Value Equity Fund

Notes to Financial Statements August 31, 2005

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 eighteen months, six years and one year, respectively. Class D shares are not subject to a sales charge. Additionally, Class A shares, Class B shares and Class C shares incur distribution expenses.

Effective August 29, 2005, the Board of Trustees of the Fund approved the implementation of a 2% redemption fee on Class A shares, Class B shares, Class C shares, and Class D shares, which is paid directly to the Fund, for shares redeemed within thirty days of purchase. The redemption fee is designed to protect the Fund and its remaining shareholders from the effects of short-term trading.

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-Adviser"), 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

19

Morgan Stanley International Value Equity Fund

Notes to Financial Statements August 31, 2005 continued

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 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

20

Morgan Stanley International Value Equity Fund

Notes to Financial Statements August 31, 2005 continued

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.

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-Adviser, the Fund pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.08% to the Fund's daily net assets.

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-Adviser and the Investment Adviser, the Sub-Adviser invests the Fund's assets including the placing 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-Adviser compensation of $2,633,910 for the year ended August 31, 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-Adviser. The Fund has adopted a Plan of Distribution (the "Plan")

21

Morgan Stanley International Value Equity Fund

Notes to Financial Statements August 31, 2005 continued

pursuant to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the Distributor a fee which is accrued daily and paid monthly at the following annual rates: (i) Class A – up to 0.25% of the average daily net assets of Class A; (ii) Class B – up to 1.0% of the average daily net assets of Class B; and (iii) Class C – up to 1.0% of the average daily net assets of Class C.

In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $3,271,097 at August 31, 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 year ended August 31, 2005, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.24% and 1.0%, respectively.

The Distributor has informed the Fund that for the year ended August 31, 2005, it received contingent deferred sales charges from certain redemptions of the Fund's Class B shares and Class C shares of $396,784 and $13,708, respectively and received $357,935 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 year ended August 31, 2005 aggregated $382,989,489 and $260,372,709, respectively.

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

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan") which allows each independent Trustee to defer payment of all, or a portion, of the fees he 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

22

Morgan Stanley International Value Equity Fund

Notes to Financial Statements August 31, 2005 continued

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.   Shares of Beneficial Interest^†

Transactions in shares of beneficial interest were as follows:

				FOR THE YEAR ENDED AUGUST 31, 2005								FOR THE YEAR ENDED AUGUST 31, 2004
				SHARES				AMOUNT				SHARES				AMOUNT
CLASS A SHARES
Sold					2,195,097			$	27,837,321				1,530,883			$	17,592,382
Conversion from Class B					4,011,596				51,029,618				—				—
Reinvestment of dividends and distributions					164,528				2,079,635				14,970				168,114
Redeemed					(1,179,918	)			(15,061,601	)			(1,375,642	)			(14,573,285	)
Net increase – Class A					5,191,303				65,884,973				170,211				3,187,211
CLASS B SHARES
Sold					7,337,002				92,445,156				6,570,253				75,026,278
Conversion to Class A					(4,053,373	)			(51,029,618	)			—				—
Reinvestment of dividends and distributions					1,195,207				14,987,886				64,267				719,145
Redeemed					(4,163,480	)			(52,481,554	)			(3,504,940	)			(39,958,938	)
Net increase – Class B					315,356				3,921,870				3,129,580				35,786,485
CLASS C SHARES
Sold					1,927,173				24,099,086				1,886,915				21,540,876
Reinvestment of dividends and distributions					308,961				3,862,017				17,791				198,545
Redeemed					(848,990	)			(10,664,283	)			(540,320	)			(6,150,943	)
Net increase – Class C					1,387,144				17,296,820				1,364,386				15,588,478
CLASS D SHARES
Sold					12,160,190				154,642,552				12,378,522				141,573,102
Reinvestment of dividends and distributions					1,911,429				24,198,694				316,234				3,551,312
Redeemed					(7,975,255	)			(101,543,259	)			(5,901,568	)			(68,672,805	)
Net increase – Class D					6,096,364				77,297,987				6,793,188				76,451,609
Net increase in Fund					12,990,167			$	164,401,650				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.

23

Morgan Stanley International Value Equity Fund

Notes to Financial Statements August 31, 2005 continued

6.   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 August 31, 2005, investments in securities of issuers in the United Kingdom were 27.2% 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.

At August 31, 2005, the Fund's cash balance consisted principally of interest bearing deposits with J.P. Morgan Chase, the Fund's custodian.

7.   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, filed in the United States District Court Southern District of New York on April 16, 2004, 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 9, 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.

24

Morgan Stanley International Value Equity Fund

Notes to Financial Statements August 31, 2005 continued

8.   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.

The tax character of distributions paid was as follows:

				FOR THE YEAR ENDED AUGUST 31, 2005				FOR THE YEAR ENDED AUGUST 31, 2004
Ordinary income				$	16,875,757			$	5,525,016
Long-term capital gains					35,002,835				—
Total distributions				$	51,878,592			$	5,525,016

As of August 31, 2005, the tax-basis components of accumulated earnings were as follows:

Undistributed ordinary income				$	14,041,492
Undistributed long-term gains					39,787,650
Net accumulated earnings					53,829,142
Foreign tax credit pass-through					2,028,027
Post-October losses					(2,516,089	)
Temporary differences					(2,190,750	)
Net unrealized appreciation					126,495,952
Total accumulated earnings				$	177,646,282

As of August 31, 2005, the Fund had temporary book/tax differences primarily attributable to post-October losses (foreign currency 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, foreign tax credit pass-through and mark-to-market of open forward foreign currency exchange contracts and permanent book/tax differences attributable to foreign currency losses. To reflect reclassifications arising from the permanent differences, accumulated undistributed net investment income was charged and accumulated undistributed net realized gain was credited $912,229.

25

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 YEAR ENDED AUGUST 31,																FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
				2005				2004				2003				2002
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‡					0.19				0.12				0.09				0.03				0.03
Net realized and unrealized gain (loss)					2.11				1.95				0.57				(0.33	)			(0.43	)
Total income (loss) from investment operations					2.30				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				$	13.13			$	11.73			$	9.80			$	9.21			$	9.60
Total Return†					19.95	%			21.22	%			7.12	%			(3.03)	%			(4.00)	% (1)
Ratios to Average Net Assets(3):
Expenses					1.39	%			1.52	%			1.59	%			1.70	%			1.88	%(2)
Net investment income					1.24	%			0.94	%			1.02	%			0.47	%			0.87	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$96,963				$25,728				$19,827				$9,297			$9,013
Portfolio turnover rate					34	%			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

26

Morgan Stanley International Value Equity Fund

Financial Highlights continued

				FOR THE YEAR ENDED AUGUST 31,																FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
				2005				2004				2003				2002
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)‡					0.05				0.02				0.01				(0.03	)			0.00
Net realized and unrealized gain (loss)					2.13				1.94				0.57				(0.33	)			(0.43	)
Total income (loss) from investment operations					2.18				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				$	12.96			$	11.62			$	9.71			$	9.14			$	9.57
Total Return†					19.09	%			20.22	%			6.32	%			(3.74)	%			(4.30)	% (1)
Ratios to Average Net Assets(3):
Expenses					2.15	%			2.28	%			2.36	%			2.45	%			2.63	%(2)
Net investment income (loss)					0.48	%			0.18	%			0.25	%			(0.28)	%			0.12	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$238,781				$210,485				$145,382				$143,200				$114,541
Portfolio turnover rate					34	%			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

27

Morgan Stanley International Value Equity Fund

Financial Highlights continued

				FOR THE YEAR ENDED AUGUST 31,																FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
				2005				2004				2003				2002
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)‡					0.06				0.02				0.02				(0.03	)			0.00
Net realized and unrealized gain (loss)					2.12				1.95				0.56				(0.34	)			(0.43	)
Total income (loss) from investment operations					2.18				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				$	12.92			$	11.59			$	9.69			$	9.13			$	9.57
Total Return†					19.11	%			20.31	%			6.24	%			(3.73)	%			(4.30)	% (1)
Ratios to Average Net Assets(3):
Expenses					2.15	%			2.28	%			2.36	%			2.45	%			2.63	%(2)
Net investment income (loss)					0.48	%			0.18	%			0.25	%			(0.28)	%			0.12	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$73,598				$49,971				$28,556				$23,946				$15,558
Portfolio turnover rate					34	%			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

28

Morgan Stanley International Value Equity Fund

Financial Highlights continued

				FOR THE YEAR ENDED AUGUST 31,																FOR THE PERIOD APRIL 26, 2001* THROUGH AUGUST 31, 2001
				2005				2004				2003				2002
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‡					0.19				0.14				0.12				0.10				0.04
Net realized and unrealized gain (loss)					2.14				1.97				0.55				(0.37	)			(0.44	)
Total income (loss) from investment operations					2.33				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				$	13.17			$	11.75			$	9.81			$	9.23			$	9.60
Total Return†					20.21	%			21.59	%			7.39	%			(2.82)	%			(4.00)	% (1)
Ratios to Average Net Assets(3):
Expenses					1.15	%			1.28	%			1.36	%			1.45	%			1.63	%(2)
Net investment income					1.48	%			1.18	%			1.25	%			0.72	%			1.12	%(2)
Supplemental Data:
Net assets, end of period, in thousands					$463,132				$341,442				$218,574				$75,903				$12,128
Portfolio turnover rate					34	%			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

29

Morgan Stanley International Value Equity Fund

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of
Morgan Stanley International Value Equity Fund:

We have audited the accompanying statement of assets and liabilities of Morgan Stanley International Value Equity Fund (the "Fund"), including the portfolio of investments, as of August 31, 2005, and the related statements of operations for the year then ended and changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of August 31, 2005, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Morgan Stanley International Value Equity Fund as of August 31, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
New York, New York
October 17, 2005

30

Morgan Stanley International Value Equity Fund

Trustee and Officer Information

Independent Trustees:

Name, Age and Address of Independent Trustee

Position(s) Held with Registrant

Term of Office and Length of Time Served*

Principal Occupation(s) During Past 5 Years**

Number of Portfolios in Fund Complex Overseen by Trustee***

Other Directorships Held by Trustee

Michael Bozic (64) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036

Trustee

Since April 1994

Private Investor; Director or Trustee of the Retail Funds (since April 1994) and the Institutional Funds (since July 2003); formerly Vice Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); formerly variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck & Co.

197

Director of various business organizations.

Edwin J. Garn (72) 1031 N. Chartwell Court Salt Lake City, UT 84103

Trustee

Since January 1993

Consultant; Director or Trustee of the Retail Funds (since January 1993) and the Institutional Funds (since July 2003); member of the Utah Regional Advisory Board of Pacific Corp. (utility company); formerly Managing Director of Summit Ventures LLC (lobbying and consulting firm) (2000-2004); United States Senator (R-Utah) (1974-1992) and Chairman, Senate Banking Committee (1980-1986), Mayor of Salt Lake City, Utah (1971-1974), Astronaut, Space Shuttle Discovery (April 12-19, 1985), and Vice Chairman, Huntsman Corporation (chemical company).

197

Director of Franklin Covey (time management systems), BMW Bank of North America, Inc. (industrial loan corporation), Escrow Bank USA (industrial loan corporation); United Space Alliance (joint venture between Lockheed Martin and the Boeing Company) and Nuskin Asia Pacific (multilevel marketing); member of the board of various civic and charitable organizations.

Wayne E. Hedien (71) c/o Kramer Levin Naftalis & Frankel LLP Counsel to the Independent Trustees 1177 Avenue of the Americas New York, NY 10036

Trustee

Since September 1997

Retired; Director or Trustee of the Retail Funds; (Since September 1997) and the Institutional Funds (since July 2003); formerly associated with the Allstate Companies (1966-1994), most recently as Chairman of The Allstate Corporation (March 1993-December 1994) and Chairman and Chief Executive Officer of its wholly-owned subsidiary, Allstate Insurance Company (July 1989-December 1994).

197

Director of The PMI Group Inc. (private mortgage insurance); Trustee and Vice Chairman of The Field Museum of Natural History; director of various other business and charitable organizations.

31

Morgan Stanley International Value Equity Fund

Trustee and Officer Information continued

Name, Age and Address of Independent Trustee

Position(s) Held with Registrant

Term of Office and Length of Time Served*

Principal Occupation(s) During Past 5 Years**

Number of Portfolios in Fund Complex Overseen by Trustee***

Other Directorships Held by Trustee

Dr. Manuel H. Johnson (56) c/o Johnson Smick Group, Inc. 888 16th Street, N.W. Suite 740 Washington, D.C. 20006

Trustee

Since July 1991

Senior Partner, Johnson Smick International, Inc., a consulting firm; Chairman of the Audit Committee and Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2003); Co-Chairman and a founder of the Group of Seven Council (G7C), an international economic commission; formerly Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

197

Director of NVR, Inc. (home construction); Director of KFX Energy; Director of RBS Greenwich Capital Holdings (financial holding company).

Joseph J. Kearns (63) c/o Kearns & Associates LLC PMB754 23852 Pacific Coast Highway Malibu, CA 90265

Trustee

Since July 2003

President, Kearns & Associates LLC (investment consulting); Deputy Chairman of the Audit Committee and Director or Trustee of the Retail Funds (since July 2003) and the Institutional Funds (since August 1994); previously Chairman of the Audit Committee of the Institutional Funds (October 2001-July 2003); formerly CFO of the J. Paul Getty Trust.

198

Director of Electro Rent Corporation (equipment leasing), The Ford Family Foundation, and the UCLA Foundation.

Michael E. Nugent (69) c/o Triumph Capital, L.P. 445 Park Avenue New York, NY 10022

Trustee

Since July 1991

General Partner of Triumph Capital, L.P., a private investment partnership; Chairman of the Insurance Committee and Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2001); formerly Vice President, Bankers Trust Company and BT Capital Corporation (1984-1988).

197

Director of various business organizations.

Fergus Reid (73) c/o Lumelite Plastics Corporation 85 Charles Colman Blvd. Pawling, NY 12564

Trustee

Since July 2003

Chairman of Lumelite Plastics Corporation; Chairman of the Governance Committee and Director or Trustee of the Retail Funds (since July 2003) and the Institutional Funds (since June 1992).

198

Trustee and Director of certain investment companies in the JPMorgan Funds complex managed by J.P. Morgan Investment Management Inc.

32

Morgan Stanley International Value Equity Fund

Trustee and Officer Information continued

Interested Trustees:

Name, Age and Address of Interested Trustee

Position(s) Held with Registrant

Term of Office and Length of Time Served*

Principal Occupation(s) During Past 5 Years**

Number of Portfolios in Fund Complex Overseen by Trustee***

Other Directorships Held by Trustee

Charles A. Fiumefreddo (72) c/o Morgan Stanley Trust Harborside Financial Center, Plaza Two, Jersey City, NJ 07311

Chairman of the Board and Trustee

Since July 1991

Chairman and Director or Trustee of the Retail Funds (since July 1991) and the Institutional Funds (since July 2003); formerly Chief Executive Officer of the Retail Funds (until September 2002).

197

None.

James F. Higgins (57) c/o Morgan Stanley Trust Harborside Financial Center, Plaza Two, Jersey City, NJ 07311

Trustee

Since June 2000

Director or Trustee of the Retail Funds (since June 2000) and the Institutional Funds (since July 2003); Senior Advisor of Morgan Stanley (since August 2000); Director of the Distributor and Dean Witter Realty Inc.; previously President and Chief Operating Officer of the Private Client Group of Morgan Stanley (May 1999-August 2000), and President and Chief Operating Officer of Individual Securities of Morgan Stanley (February 1997-May 1999).

197

Director of AXA Financial, Inc. and The Equitable Life Assurance Society of the United States (financial services).

    * This is the earliest date the Trustee began serving the funds advised by Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") (the "Retail Funds").

  ** The dates referenced below indicating commencement of services as Director/Trustee for the Retail Funds and the funds advised by Morgan Stanley Investment Management Inc. and Morgan Stanley AIP GP LP (the "Institutional Funds") reflect the earliest date the Director/Trustee began serving the Retail or Institutional Funds, as applicable.

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

33

Morgan Stanley International Value Equity Fund

Trustee and Officer Information continued

Officers:

Name, Age and Address of Executive Officer

Position(s) Held with Registrant

Term of Office and Length of Time Served*

Principal Occupation(s) During Past 5 Years**

Ronald E. Robison (66) 1221 Avenue of the Americas New York, NY 10020

President and Principal Executive Officer

Since May 2003

President (since September 2005) and Principal Executive Officer of funds in the Fund Complex (since May 2003); Managing Director of Morgan Stanley & Co. Incorporated and Morgan Stanley; Managing Director and Director of Morgan Stanley Investment Management Inc., Morgan Stanley Distribution Inc. and Morgan Stanley Distributors Inc.; Managing Director, Chief Administrative Officer and Director of Morgan Stanley Investment Advisors Inc. and Morgan Stanley Services Company Inc.; Chief Executive Officer and Director of Morgan Stanley Trust; Director of Morgan Stanley SICAV (since May 2004); President (since September 2005) and Principal Executive Officer (since May 2003) of the Van Kampen Funds; previously, Executive Vice President (July 2003-September 2005) of funds in the Fund Complex and the Van Kampen Funds. He was also previously President and Director of the Institutional Funds (March 2001-July 2003), Chief Global Operations Officer of Morgan Stanley Investment Management Inc. and Chief Executive Officer and Chairman of Van Kampen Investor Services.

Joseph J. McAlinden (62) 1221 Avenue of the Americas New York, NY 10020

Vice President

Since July 1995

Managing Director and Chief Investment Officer of the Investment Adviser and Morgan Stanley Investment Management Inc.; Chief Investment Officer of the Van Kampen Funds; Vice President of the Institutional Funds (since July 2003) and the Retail Funds (since July 1995).

Barry Fink (50) 1221 Avenue of the Americas New York, NY 10020

Vice President

Since February 1997

General Counsel (since May 2000) and Managing Director (since December 2000) of Morgan Stanley Investment Management; Managing Director (since December 2000), Secretary (since February 1997) and Director of the Investment Adviser and the Administrator; Vice President of the Retail Funds; Assistant Secretary of Morgan Stanley DW; Vice President of the Institutional Funds (since July 2003); Managing Director, Secretary and Director of the Distributor; previously Secretary (February 1997-July 2003) and General Counsel (February 1997-April 2004) of the Retail Funds; Vice President and Assistant General Counsel of the Investment Adviser and the Administrator (February 1997-December 2001).

Amy R. Doberman (43) 1221 Avenue of Americas New York, NY 10020

Vice President

Since July 2004

Managing Director and General Counsel, U.S. Investment Management; Managing Director of Morgan Stanley Investment Management Inc. and the Investment Adviser, Vice President of the Institutional and Retail Funds (since July 2004); Vice President of the Van Kampen Funds (since August 2004); previously, Managing Director and General Counsel — Americas, UBS Global Asset Management (July 2000 – July 2004) and General Counsel, Aeltus Investment Management Inc. (January 1997 – July 2000).

Carsten Otto (41) 1221 Avenue of the Americas New York, NY 10020

Chief Compliance Officer

Since October 2004

Executive Director and U.S. Director of Compliance for Morgan Stanley Investment Management (since October 2004); Executive Director of the Investment Adviser and Morgan Stanley Investment Management Inc.; formerly Assistant Secretary and Assistant General Counsel of the Morgan Stanley Retail Funds.

34

Morgan Stanley International Value Equity Fund

Trustee and Officer Information continued

Name, Age and Address of Executive Officer

Position(s) Held with Registrant

Term of Office and Length of Time Served*

Principal Occupation(s) During Past 5 Years**

Stefanie V. Chang (38) 1221 Avenue of the Americas New York, NY 10020

Vice President

Since July 2003

Executive Director of Morgan Stanley & Co. Incorporated, Morgan Stanley Investment Management Inc. and the Investment Adviser; Vice President of the Institutional Funds (since December 1997) and the Retail Funds (since July 2003); formerly practiced law with the New York law firm of Rogers & Wells (now Clifford Chance US LLP).

Francis J. Smith (40) c/o Morgan Stanley Trust Harborside Financial Center, Plaza Two, Jersey City, NJ 07311

Treasurer and Chief Financial Officer

Treasurer since July 2003 and Chief Financial Officer since September 2002

Executive Director of the Investment Adviser and the Administrator (since December 2001); previously, Vice President of the Retail Funds (September 2002-July 2003); Vice President of the Investment Adviser and the Administrator (August 2000-November 2001) and Senior Manager at PricewaterhouseCoopers LLP (January 1998-August 2000).

Thomas F. Caloia (59) c/o Morgan Stanley Trust Harborside Financial Center, Plaza Two, Jersey City, NJ 07311

Vice President

Since July 2003

Executive Director (since December 2002) and Assistant Treasurer of the Investment Adviser, the Distributor and the Administrator; previously Treasurer of the Retail Funds (April 1989-July 2003); formerly First Vice President of the Investment Adviser, the Distributor and the Administrator.

Mary E. Mullin (38) 1221 Avenue of the Americas New York, NY 10020

Secretary

Since July 2003

Executive Director of Morgan Stanley & Co. Incorporated, Morgan Stanley Investment Management Inc. and the Investment Adviser; Secretary of the Institutional Funds (since June 1999) and the Retail Funds (since July 2003); formerly practiced law with the New York law firms of McDermott, Will & Emery and Skadden, Arps, Slate, Meagher & Flom LLP.

    * This is the earliest date the Officer began serving the Retail Funds. Each Officer serves an indefinite term, until his or her successor is elected.

  ** The dates referenced below indicating commencement of service as an Officer for the Retail and Institutional Funds reflect the earliest date the Officer began serving the Retail or Institutional Funds, as applicable.

2005 Federal Tax Notice (unaudited)

During the fiscal year ended August 31, 2005, the Fund paid to its shareholders $0.60 per share from long-term capital gains. Additionally, please note that 73.64% of the Fund's ordinary dividends paid during the fiscal year ended August 31, 2005 qualified for the lower income tax rate available to individuals under the Jobs and Growth Tax Relief Reconciliation Act of 2003.

The Fund has elected, pusuant to section 853 of the Internal Revenue Code, to pass through foreign taxes of $0.03 per share to its shareholders, of which 100% would be allowable as a credit. The Fund generated net foreign source income of $0.12 per share with respect to this election.

35

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 Ronald E. Robison 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-Adviser Morgan Stanley Investment Management Limited 25 Cabot Square, Canary Wharf London, United Kingdom E14 4QA 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-RA05-00835P-Y08/05		MORGAN STANLEY FUNDS
		Morgan Stanley International Value Equity Fund Annual Report August 31, 2005

Item 2.  Code of Ethics.

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

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

(c) The Fund has amended its Code of Ethics during the period covered by the
shareholder report presented in Item 1 hereto to delete from the end of the
following paragraph on page 2 of the Code the phrase "to the detriment of the
Fund.":

"Each Covered Officer must not use his personal influence or personal
relationship improperly to influence investment decisions or financial reporting
by the Fund whereby the Covered Officer would benefit personally (directly or
indirectly)."

Additionally, Exhibit B was amended to remove Mitchell M. Merin as a covered
officer.

(d) Not applicable.

(e) Not applicable.

(f)

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

         (2) Not applicable.

         (3) Not applicable.


Item 3.  Audit Committee Financial Expert.

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

                                       2





Item 4.  Principal Accountant Fees and Services.

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




           2005
                                                            REGISTRANT            COVERED ENTITIES(1)

              AUDIT FEES........................            $ 37,930              N/A

              NON-AUDIT FEES
                        AUDIT-RELATED FEES......            $    540 (2)          $   (2)
                        TAX FEES................            $  5,746 (3)          $   (4)
                        ALL OTHER FEES..........            $ -                   $ -
              TOTAL NON-AUDIT FEES..............            $  6,286              $

              TOTAL.............................            $ 44,216              $


           2004
                                                            REGISTRANT            COVERED ENTITIES(1)
              AUDIT FEES........................            $ 36,243              N/A

              NON-AUDIT FEES
                        AUDIT-RELATED FEES......            $    452 (2)          $ 5,067,400 (2)
                        TAX FEES................            $  6,607 (3)          $   545,053  (4)
                        ALL OTHER FEES..........            $ -                   $ - (5)
              TOTAL NON-AUDIT FEES..............            $  7,059              $ 5,612,453

              TOTAL.............................            $ 43,302              $ 5,612,453



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

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

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

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

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

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

                                       3



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

                                                                      APPENDIX A

                                 AUDIT COMMITTEE
                          AUDIT AND NON-AUDIT SERVICES
                       PRE-APPROVAL POLICY AND PROCEDURES
                                     OF THE
                  MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS

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


     1. STATEMENT OF PRINCIPLES

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

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

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

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

                                       4



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

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

     2. DELEGATION

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

     3. AUDIT SERVICES

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

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

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

     4. AUDIT-RELATED SERVICES

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

                                       5



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

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

     5. TAX SERVICES

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

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

     6. ALL OTHER SERVICES

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

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

     7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS

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

     8. PROCEDURES

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

                                       6



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

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

     9. ADDITIONAL REQUIREMENTS

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

     10. COVERED ENTITIES

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

         Morgan Stanley Retail Funds
         ---------------------------
         Morgan Stanley Investment Advisors Inc.
         Morgan Stanley & Co. Incorporated
         Morgan Stanley DW Inc.
         Morgan Stanley Investment Management Inc.
         Morgan Stanley Investment Management Limited
         Morgan Stanley Investment Management Private Limited
         Morgan Stanley Asset & Investment Trust Management Co., Limited
         Morgan Stanley Investment Management Company
         Van Kampen Asset Management
         Morgan Stanley Services Company, Inc.
         Morgan Stanley Distributors Inc.
         Morgan Stanley Trust FSB

                                       7




         Morgan Stanley Institutional Funds
         ----------------------------------
         Morgan Stanley Investment Management Inc.
         Morgan Stanley Investment Advisors Inc.
         Morgan Stanley Investment Management Limited
         Morgan Stanley Investment Management Private Limited
         Morgan Stanley Asset & Investment Trust Management Co., Limited
         Morgan Stanley Investment Management Company
         Morgan Stanley & Co. Incorporated
         Morgan Stanley Distribution, Inc.
         Morgan Stanley AIP GP LP
         Morgan Stanley Alternative Investment Partners LP


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

(f) Not applicable.

(g) See table above.

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


Item 5. Audit Committee of Listed Registrants.

(a) The Fund has a separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act whose members are:
Michael Bozic, Edwin J. Garn, Wayne E. Hedien, Manual H. Johnson, Joseph J.
Kearns, Michael Nugent and Fergus Reid.

(b) Not applicable.


Item 6. Schedule of Investments

Refer to Item 1.

                                       8




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

Applicable only to reports filed by closed-end funds.


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

Applicable only to reports filed by closed-end funds.


Item 9. Closed-End Fund Repurchases

Applicable only to reports filed by closed-end funds.


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

Not applicable.


Item 11. Controls and Procedures

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

(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the 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) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.

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

                                       9



                                   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
October 20, 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
October 20, 2005

/s/ Francis Smith
Francis Smith
Principal Financial Officer
October 20, 2005


                                       10




                                                                    EXHIBIT 12 A


           CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL
           -----------------------------------------------------------
                                    OFFICERS
                                    --------
            ADOPTED SEPTEMBER 28, 2004, AS AMENDED SEPTEMBER 20, 2005
            ---------------------------------------------------------


I.   This Code of Ethics (the "Code") for the investment companies within the
     Morgan Stanley complex identified in Exhibit A (collectively, "Funds" and
     each, a "Fund") applies to each Fund's Principal Executive Officer,
     President, Principal Financial Officer and Treasurer (or persons performing
     similar functions) ("Covered Officers" each of whom are set forth in
     Exhibit B) for the purpose of promoting:

     o    honest and ethical conduct, including the ethical handling of actual
          or apparent conflicts of interest between personal and professional
          relationships.

     o    full, fair, accurate, timely and understandable disclosure in reports
          and documents that a company files with, or submits to, the Securities
          and Exchange Commission ("SEC") and in other public communications
          made by the Fund;

     o    compliance with applicable laws and governmental rules and
          regulations;

     o    prompt internal reporting of violations of the Code to an appropriate
          person or persons identified in the Code; and

     o    accountability for adherence to the Code.

     Each Covered Officer should adhere to a high standard of business ethics
and should be sensitive to situations that may give rise to actual as well as
apparent conflicts of interest. Any question about the application of the Code
should be referred to the General Counsel or his/her designee (who is set forth
in Exhibit C).

II.  COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF
     INTEREST

     OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private
interest interferes, or appears to interfere, with the interests of, or his
service to, the Fund. For example, a conflict of interest would arise if a
Covered Officer, or a member of his family, receives improper personal benefits
as a result of his position with the Fund.

     Certain conflicts of interest arise out of the relationships between
Covered Officers and the Fund and already are subject to conflict of interest
provisions in the

                                       11



Investment Company Act of 1940 ("Investment Company Act") and the Investment
Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers
may not individually engage in certain transactions (such as the purchase or
sale of securities or other property) with the Fund because of their status as
"affiliated persons" (as defined in the Investment Company Act) of the Fund. The
Fund's and its investment adviser's compliance programs and procedures are
designed to prevent, or identify and correct, violations of these provisions.
This Code does not, and is not intended to, repeat or replace these programs and
procedures, and such conflicts fall outside the parameters of this Code, unless
or until the General Counsel determines that any violation of such programs and
procedures is also a violation of this Code.

     Although typically not presenting an opportunity for improper personal
benefit, conflicts may arise from, or as a result of, the contractual
relationship between the Fund and its investment adviser of which the Covered
Officers are also officers or employees. As a result, this Code recognizes that
the Covered Officers will, in the normal course of their duties (whether
formally for the Fund or for the investment adviser, or for both), be involved
in establishing policies and implementing decisions that will have different
effects on the Fund and its investment adviser. The participation of the Covered
Officers in such activities is inherent in the contractual relationship between
the Fund and the investment adviser and is consistent with the performance by
the Covered Officers of their duties as officers of the Fund. Thus, if performed
in conformity with the provisions of the Investment Company Act and the
Investment Advisers Act, such activities will be deemed to have been handled
ethically. In addition, it is recognized by the Funds' Boards of
Directors/Trustees ("Boards") that the Covered Officers may also be officers or
employees of one or more other investment companies covered by this or other
codes.

     Other conflicts of interest are covered by the Code, even if such conflicts
of interest are not subject to provisions in the Investment Company Act and the
Investment Advisers Act. The following list provides examples of conflicts of
interest under the Code, but Covered Officers should keep in mind that these
examples are not exhaustive. The overarching principle is that the personal
interest of a Covered Officer should not be placed improperly before the
interest of the Fund.

     Each Covered Officer must not:

     o    use his personal influence or personal relationships improperly to
          influence investment decisions or financial reporting by the Fund
          whereby the Covered Officer would benefit personally (directly or
          indirectly);

     o    cause the Fund to take action, or fail to take action, for the
          individual personal benefit of the Covered Officer rather than the
          benefit of the Fund; or

     o    use material non-public knowledge of portfolio transactions made or
          contemplated for, or actions proposed to be taken by, the Fund to
          trade personally or cause others to trade personally in contemplation
          of the market effect of such transactions.

                                       12



     Each Covered Officer must, at the time of signing this Code, report to the
General Counsel all affiliations or significant business relationships outside
the Morgan Stanley complex and must update the report annually.

     Conflict of interest situations should always be approved by the General
Counsel and communicated to the relevant Fund or Fund's Board. Any activity or
relationship that would present such a conflict for a Covered Officer would
likely also present a conflict for the Covered Officer if an immediate member of
the Covered Officer's family living in the same household engages in such an
activity or has such a relationship. Examples of these include:

     o    service or significant business relationships as a director on the
          board of any public or private company;

     o    accepting directly or indirectly, anything of value, including gifts
          and gratuities in excess of $100 per year from any person or entity
          with which the Fund has current or prospective business dealings, not
          including occasional meals or tickets for theatre or sporting events
          or other similar entertainment; provided it is business-related,
          reasonable in cost, appropriate as to time and place, and not so
          frequent as to raise any question of impropriety;

     o    any ownership interest in, or any consulting or employment
          relationship with, any of the Fund's service providers, other than its
          investment adviser, principal underwriter, or any affiliated person
          thereof; and

     o    a direct or indirect financial interest in commissions, transaction
          charges or spreads paid by the Fund for effecting portfolio
          transactions or for selling or redeeming shares other than an interest
          arising from the Covered Officer's employment, such as compensation or
          equity ownership.

III. DISCLOSURE AND COMPLIANCE

     o    Each Covered Officer should familiarize himself/herself with the
          disclosure and compliance requirements generally applicable to the
          Funds;

     o    each Covered Officer must not knowingly misrepresent, or cause others
          to misrepresent, facts about the Fund to others, whether within or
          outside the Fund, including to the Fund's Directors/Trustees and
          auditors, or to governmental regulators and self-regulatory
          organizations;

     o    each Covered Officer should, to the extent appropriate within his area
          of responsibility, consult with other officers and employees of the
          Funds and their investment advisers with the goal of promoting full,
          fair, accurate, timely and understandable disclosure in the reports
          and documents the Funds file with, or submit to, the SEC and in other
          public communications made by the Funds; and

                                       13



     o    it is the responsibility of each Covered Officer to promote compliance
          with the standards and restrictions imposed by applicable laws, rules
          and regulations.

IV.  REPORTING AND ACCOUNTABILITY

     Each Covered Officer must:

     o    upon adoption of the Code (thereafter as applicable, upon becoming a
          Covered Officer), affirm in writing to the Boards that he has
          received, read and understands the Code;

     o    annually thereafter affirm to the Boards that he has complied with the
          requirements of the Code;

     o    not retaliate against any other Covered Officer, other officer or any
          employee of the Funds or their affiliated persons for reports of
          potential violations that are made in good faith; and

     o    notify the General Counsel promptly if he/she knows or suspects of any
          violation of this Code. Failure to do so is itself a violation of this
          Code.

     The General Counsel is responsible for applying this Code to specific
situations in which questions are presented under it and has the authority to
interpret this Code in any particular situation. However, any waivers(2) sought
by a Covered Officer must be considered by the Board of the relevant Fund or
Funds.

     The Funds will follow these procedures in investigating and enforcing this
Code:

     o    the General Counsel will take all appropriate action to investigate
          any potential violations reported to him;

     o    if, after such investigation, the General Counsel believes that no
          violation has occurred, the General Counsel is not required to take
          any further action;

     o    any matter that the General Counsel believes is a violation will be
          reported to the relevant Fund's Audit Committee;

     o    if the directors/trustees/managing general partners who are not
          "interested persons" as defined by the Investment Company Act (the
          "Independent Directors/Trustees/Managing General Partners") of the
          relevant Fund concur that a violation has occurred, they will consider
          appropriate action, which may include review of, and appropriate
          modifications to, applicable


--------------
(2)  Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of
     a material departure from a provision of the code of ethics."

                                       14






          policies and procedures; notification to appropriate personnel of the
          investment adviser or its board; or a recommendation to dismiss the
          Covered Officer or other appropriate disciplinary actions;

     o    the Independent Directors/Trustees/Managing General Partners of the
          relevant Fund will be responsible for granting waivers of this Code,
          as appropriate; and

     o    any changes to or waivers of this Code will, to the extent required,
          be disclosed as provided by SEC rules.

V.   OTHER POLICIES AND PROCEDURES

     This Code shall be the sole code of ethics adopted by the Funds for
purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and
forms applicable to registered investment companies thereunder. Insofar as other
policies or procedures of the Funds, the Funds' investment advisers, principal
underwriters, or other service providers govern or purport to govern the
behavior or activities of the Covered Officers who are subject to this Code,
they are superseded by this Code to the extent that they overlap or conflict
with the provisions of this Code unless any provision of this Code conflicts
with any applicable federal or state law, in which case the requirements of such
law will govern. The Funds' and their investment advisers' and principal
underwriters' codes of ethics under Rule 17j-1 under the Investment Company Act
and Morgan Stanley's Code of Ethics are separate requirements applying to the
Covered Officers and others, and are not part of this Code.

VI.  AMENDMENTS

     Any amendments to this Code, other than amendments to Exhibits A, B

or C, must be approved or ratified by a majority vote of the Board of each Fund,
including a majority of Independent Directors/Trustees/Managing General
Partners.

VII. CONFIDENTIALITY

     All reports and records prepared or maintained pursuant to this Code will
be considered confidential and shall be maintained and protected accordingly.
Except as otherwise required by law or this Code, such matters shall not be
disclosed to anyone other than the Independent Directors/Trustees/Managing
General Partners of the relevant Fund or Funds and their counsel, the relevant
Fund or Funds and their counsel and the relevant investment adviser and its
counsel.

                                       15



VIII. INTERNAL USE

     The Code is intended solely for the internal use by the Funds and does not
constitute an admission, by or on behalf of any Fund, as to any fact,
circumstance, or legal conclusion


I have read and understand the terms of the above Code. I recognize the
responsibilities and obligations incurred by me as a result of my being subject
to the Code. I hereby agree to abide by the above Code.


-------------------------

Date:
     --------------------


                                       16




                                    EXHIBIT A
                                    ---------


                                    FUND LIST

                                       AT
                               SEPTEMBER 20, 2005


RETAIL FUNDS
------------

OPEN-END RETAIL FUNDS

     TAXABLE MONEY MARKET FUNDS
     --------------------------

1.   Active Assets Government Securities Trust ("AA Government")

2.   Active Assets Institutional Government Securities Trust ("AA Institutional
     Government")

3.   Active Assets Institutional Money Trust ("AA Institutional Money")

4.   Active Assets Money Trust ("AA Money")

5.   Morgan Stanley Liquid Asset Fund Inc. ("Liquid Asset")

6.   Morgan Stanley U.S. Government Money Market Trust ("Government Money")


     TAX-EXEMPT MONEY MARKET FUNDS
     -----------------------------

7. Active Assets California Tax-Free Trust ("AA California")

8.   Active Assets Tax-Free Trust ("AA Tax-Free")

9.   Morgan Stanley California Tax-Free Daily Income Trust ("California Tax-Free
     Daily")

10.  Morgan Stanley New York Municipal Money Market Trust ("New York Money")

11.  Morgan Stanley Tax-Free Daily Income Trust ("Tax-Free Daily")

     EQUITY FUNDS
     ------------

12.  Morgan Stanley Aggressive Equity Fund ("Aggressive Equity")+

13.  Morgan Stanley Allocator Fund ("Allocator Fund")+

14.  Morgan Stanley American Opportunities Fund ("American Opportunities")+

15.  Morgan Stanley Biotechnology Fund ("Biotechnology Fund")+

16.  Morgan Stanley Capital Opportunities Trust ("Capital Opportunities")+

17.  Morgan Stanley Developing Growth Securities Trust ("Developing Growth")+

18.  Morgan Stanley Dividend Growth Securities Inc. ("Dividend Growth")+

19.  Morgan Stanley Equally-Weighted S&P 500 Fund ("Equally-Weighted S&P 500")+

20.  Morgan Stanley European Equity Fund Inc. ("European Equity")+

21.  Morgan Stanley Financial Services Trust ("Financial Services")+

22.  Morgan Stanley Fundamental Value Fund ("Fundamental Value")+

23.  Morgan Stanley Global Advantage Fund ("Global Advantage")+

24.  Morgan Stanley Global Dividend Growth Securities ("Global Dividend
     Growth")+

                                       17



25.  Morgan Stanley Global Utilities Fund ("Global Utilities")+

26.  Morgan Stanley Growth Fund ("Growth Fund")+

27.  Morgan Stanley Health Sciences Trust ("Health Sciences")+

28.  Morgan Stanley Income Builder Fund ("Income Builder")+

29.  Morgan Stanley Information Fund ("Information Fund")+

30.  Morgan Stanley International Fund ("International Fund")+

31.  Morgan Stanley International SmallCap Fund ("International SmallCap")+

32.  Morgan Stanley International Value Equity Fund ("International Value")+

33.  Morgan Stanley Japan Fund ("Japan Fund")+

34.  Morgan Stanley KLD Social Index Fund ("KLD Social Index")+

35.  Morgan Stanley Mid-Cap Value Fund (Mid-Cap Value")+

36.  Morgan Stanley Multi-Asset Class Fund ("Multi-Asset Class")+

     o    Domestic Portfolio

37.  Morgan Stanley Nasdaq-100 Index Fund ("Nasdaq-100")+

38.  Morgan Stanley Natural Resource Development Securities Inc. ("Natural
     Resource")+

39.  Morgan Stanley Pacific Growth Fund Inc. ("Pacific Growth")+

40.  Morgan Stanley Real Estate Fund ("Real Estate")+

41.  Morgan Stanley Small-Mid Special Value Fund (Small-Mid Special Value")+

42.  Morgan Stanley S&P 500 Index Fund ("S&P500 Index")+

43.  Morgan Stanley Special Growth Fund ("Special Growth")+

44.  Morgan Stanley Special Value Fund ("Special Value")+

45.  Morgan Stanley Total Market Index Fund ("Total Market Index")+

46.  Morgan Stanley Total Return Trust ("Total Return")+

47.  Morgan Stanley Utilities Fund ("Utilities Fund")+

48.  Morgan Stanley Value Fund ("Value Fund")+

     BALANCED FUNDS
     --------------

49.  Morgan Stanley Balanced Growth Fund ("Balanced Growth")+

50.  Morgan Stanley Balanced Income Fund ("Balanced Income")+

     ASSET ALLOCATION FUND
     ---------------------

51.  Morgan Stanley Strategist Fund ("Strategist Fund")+

     TAXABLE FIXED-INCOME FUNDS
     --------------------------

52.  Morgan Stanley Convertible Securities Trust ("Convertible Securities")+

53.  Morgan Stanley Flexible Income Trust ("Flexible Income")+

54.  Morgan Stanley Income Trust ("Income Trust")+

55.  Morgan Stanley High Yield Securities Inc. ("High Yield Securities")+

56.  Morgan Stanley Limited Duration Fund ("Limited Duration Fund")

57.  Morgan Stanley Mortgage Securities Trust ("Mortgage Securities")+

58.  Morgan Stanley Limited Duration U.S. Treasury Trust ("Limited Duration
     Treasury")

59.  Morgan Stanley Total Return Income Securities Fund ("Total Return Income")+

                                       18



60.  Morgan Stanley U.S. Government Securities Trust ("Government Securities")+

     TAX-EXEMPT FIXED-INCOME FUNDS
     -----------------------------

61.  Morgan Stanley California Tax-Free Income Fund ("California Tax-Free")+

62.  Morgan Stanley Limited Term Municipal Trust ("Limited Term Municipal")

63.  Morgan Stanley New York Tax-Free Income Fund ("New York Tax-Free")+

64.  Morgan Stanley Tax-Exempt Securities Trust ("Tax-Exempt Securities")+

     SPECIAL PURPOSE FUNDS
     ---------------------

65.  Morgan Stanley Select Dimensions Investment Series ("Select Dimensions")

     o    American Opportunities Portfolio

     o    Balanced Growth Portfolio

     o    Capital Opportunities Portfolio

     o    Developing Growth Portfolio

     o    Dividend Growth Portfolio

     o    Equally-Weighted S&P 500 Portfolio

     o    Flexible Income Portfolio

     o    Global Equity Portfolio

     o    Growth Portfolio

     o    Money Market Portfolio

     o    Utilities Portfolio

66.  Morgan Stanley Variable Investment Series ("Variable Investment")

     o    Aggressive Equity Portfolio

     o    Dividend Growth Portfolio

     o    Equity Portfolio

     o    European Growth Portfolio

     o    Global Advantage Portfolio

     o    Global Dividend Growth Portfolio

     o    High Yield Portfolio

     o    Income Builder Portfolio

     o    Information Portfolio

     o    Limited Duration Portfolio

     o    Money Market Portfolio

     o    Quality Income Plus Portfolio

     o    S&P 500 Index Portfolio

     o    Strategist Portfolio

     o    Utilities Portfolio


CLOSED-END RETAIL FUNDS
-----------------------

     TAXABLE FIXED-INCOME CLOSED-END FUNDS
     -------------------------------------

                                       19



67.  Morgan Stanley Government Income Trust ("Government Income")

68.  Morgan Stanley Income Securities Inc. ("Income Securities")

69.  Morgan Stanley Prime Income Trust ("Prime Income")

     TAX-EXEMPT FIXED-INCOME CLOSED-END FUNDS
     ----------------------------------------

70.  Morgan Stanley California Insured Municipal Income Trust ("California
     Insured Municipal")

71.  Morgan Stanley California Quality Municipal Securities ("California Quality
     Municipal")

72.  Morgan Stanley Insured California Municipal Securities ("Insured California
     Securities")

73.  Morgan Stanley Insured Municipal Bond Trust ("Insured Municipal Bond")

74.  Morgan Stanley Insured Municipal Income Trust ("Insured Municipal Income")

75.  Morgan Stanley Insured Municipal Securities ("Insured Municipal
     Securities")

76.  Morgan Stanley Insured Municipal Trust ("Insured Municipal Trust")

77.  Morgan Stanley Municipal Income Opportunities Trust ("Municipal
     Opportunities")

78.  Morgan Stanley Municipal Income Opportunities Trust II ("Municipal
     Opportunities II")

79.  Morgan Stanley Municipal Income Opportunities Trust III ("Municipal
     Opportunities III")

80.  Morgan Stanley Municipal Premium Income Trust ("Municipal Premium")

81.  Morgan Stanley New York Quality Municipal Securities ("New York Quality
     Municipal")

82.  Morgan Stanley Quality Municipal Income Trust ("Quality Municipal Income")

83.  Morgan Stanley Quality Municipal Investment Trust ("Quality Municipal
     Investment")

84.  Morgan Stanley Quality Municipal Securities ("Quality Municipal
     Securities")

+-   Denotes Retail Multi-Class Fund

                               INSTITUTIONAL FUNDS
                               -------------------

OPEN-END INSTITUTIONAL FUNDS

1.   Morgan Stanley Institutional Fund, Inc. ("Institutional Fund Inc.")

     Active Portfolios:

          o    Active International Allocation Portfolio

          o    Emerging Markets Portfolio

          o    Emerging Markets Debt Portfolio

          o    Equity Growth Portfolio

          o    European Real Estate Portfolio

          o    Focus Equity Portfolio

          o    Global Franchise Portfolio


                                       20




          o    Global Value Equity Portfolio

          o    International Equity Portfolio

          o    International Magnum Portfolio

          o    International Small Cap Portfolio

          o    Money Market Portfolio

          o    Municipal Money Market Portfolio

          o    Small Company Growth Portfolio

          o    U.S. Real Estate Portfolio

          o    Value Equity Portfolio

     Inactive Portfolios*:

          o    China Growth Portfolio

          o    Gold Portfolio

          o    Large Cap Relative Value Portfolio

          o    MicroCap Portfolio

          o    Mortgage-Backed Securities Portfolio

          o    Municipal Bond Portfolio

          o    U.S. Equity Plus Portfolio

2.   Morgan Stanley Institutional Fund Trust ("Institutional Fund Trust")

     Active Portfolios:

          o    Advisory Foreign Fixed Income II Portfolio

          o    Advisory Foreign Fixed Income Portfolio

          o    Advisory Mortgage Portfolio

          o    Balanced Portfolio

          o    Core Plus Fixed Income Portfolio

          o    Equity Portfolio

          o    High Yield Portfolio

          o    Intermediate Duration Portfolio

          o    International Fixed Income Portfolio

          o    Investment Grade Fixed Income Portfolio

          o    Limited Duration Portfolio

          o    Mid-Cap Growth Portfolio

          o    Municipal Portfolio

          o    U.S. Core Fixed Income Portfolio

          o    U.S. Mid-Cap Value Portfolio

          o    U.S. Small-Cap Value Portfolio

          o    Value Portfolio

-----------------
* Have not commenced or have ceased operations

                                       21



     Inactive Portfolios*:

          o    Balanced Plus Portfolio

          o    Growth Portfolio

          o    Investment Grade Credit Advisory Portfolio

          o    Mortgage Advisory Portfolio

          o    New York Municipal Portfolio

          o    Targeted Duration Portfolio

          o    Value II Portfolio

3.   The Universal Institutional Funds, Inc. ("Universal Funds")

     Active Portfolios:

          o    Core Plus Fixed Income Portfolio

          o    Emerging Markets Debt Portfolio

          o    Emerging Markets Equity Portfolio

          o    Equity and Income Portfolio

          o    Equity Growth Portfolio

          o    Global Franchise Portfolio

          o    Global Value Equity Portfolio

          o    High Yield Portfolio

          o    International Magnum Portfolio

          o    Mid-Cap Growth Portfolio

          o    Money Market Portfolio

          o    Small Company Growth Portfolio

          o    Technology Portfolio

          o    U.S. Mid-Cap Value Portfolio

          o    U.S. Real Estate Portfolio

          o    Value Portfolio


     Inactive Portfolios*:

          o    Balanced Portfolio

          o    Capital Preservation Portfolio

          o    Core Equity Portfolio

          o    International Fixed Income Portfolio

          o    Investment Grade Fixed Income Portfolio

          o    Latin American Portfolio

          o    Multi-Asset Class Portfolio

          o    Targeted Duration Portfolio


4. Morgan Stanley Institutional Liquidity Funds ("Liquidity Funds")

------------------

                                       22



     Active Portfolios:

          o    Government Portfolio

          o    Money Market Portfolio

          o    Prime Portfolio

          o    Tax-Exempt Portfolio

          o    Treasury Portfolio


     Inactive Portfolios*:

          o    Government Securities Portfolio

          o    Treasury Securities Portfolio


CLOSED-END INSTITUTIONAL FUNDS

5.   Morgan Stanley Asia-Pacific Fund, Inc. ("Asia-Pacific Fund")

6.   Morgan Stanley Eastern Europe Fund, Inc. ("Eastern Europe")

7.   Morgan Stanley Emerging Markets Debt Fund, Inc. ("Emerging Markets Debt")

8.   Morgan Stanley Emerging Markets Fund, Inc. ("Emerging Markets Fund")

9.   Morgan Stanley Global Opportunity Bond Fund, Inc. ("Global Opportunity")

10.  Morgan Stanley High Yield Fund, Inc. ("High Yield Fund")

11.  The Latin American Discovery Fund, Inc. ("Latin American Discovery")

12   The Malaysia Fund, Inc. ("Malaysia Fund")

13.  The Thai Fund, Inc. ("Thai Fund")

14. The Turkish Investment Fund, Inc. ("Turkish Investment")


CLOSED-END FUND OF HEDGE FUNDS

15.  Morgan Stanley Institutional Fund of Hedge Funds ("Fund of Hedge Funds")


                                 IN REGISTRATION

MORGAN STANLEY RETAIL FUNDS

1.   Morgan Stanley American Franchise Fund

FUNDS OF HEDGE FUNDS

1.   Morgan Stanley Absolute Return Fund

2.   Morgan Stanley Institutional Fund of Hedge Funds II


--------------
* Have not commenced or have ceased operations

                                       23



                                    EXHIBIT B
                                    ---------

                               INSTITUTIONAL FUNDS
                                COVERED OFFICERS
                                ----------------

          Ronald E. Robison - President and Principal Executive Officer
            James W. Garrett - Chief Financial Officer and Treasurer

                                  RETAIL FUNDS
                                COVERED OFFICERS
                                ----------------

          Ronald E. Robison - President and Principal Executive Officer
               Frank Smith - Chief Financial Officer and Treasurer

                   MORGAN STANLEY INDIA INVESTMENT FUND, INC.
                                COVERED OFFICERS
                                ----------------

          Ronald E. Robison - President and Principal Executive Officer
            James W. Garrett - Chief Financial Officer and Treasurer

                                       24






                                    EXHIBIT C
                                    ---------

                                 GENERAL COUNSEL
                                 ---------------

                                   Barry Fink




















                                       25




                                                                   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):

                                       26



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: October 20, 2005
                                                /s/ Ronald E. Robison
                                                Ronald E. Robison
                                                Principal Executive Officer


                                       27




                                                                   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):


                                       28



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: October 20, 2005
                                                /s/ Francis Smith
                                                Francis Smith
                                                Principal Financial  Officer







                            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 August 31, 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: October 20, 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.

                                       29



                            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 August 30, 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: October 31, 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.




                                       30