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: 811-07119

Morgan Stanley Global Utilities 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: February 28, 2006

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

THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE FUND BEING
OFFERED.

MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE
IS NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. THE FUND IS
SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY THAT MARKET VALUES OF
SECURITIES OWNED BY THE FUND WILL DECLINE AND, THEREFORE, THE VALUE OF THE
FUND'S SHARES MAY BE LESS THAN WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE
MONEY INVESTING IN THIS FUND. PLEASE SEE THE PROSPECTUS FOR MORE COMPLETE
INFORMATION ON INVESTMENT RISKS.

FUND REPORT

For the six-months ended August 31, 2005

TOTAL RETURN FOR THE SIX MONTHS ENDED AUGUST 31, 2005

<Table>
<Caption>
MORGAN
STANLEY
CAPITAL LIPPER
INTERNATIONAL UTILITY
(MSCI) FUNDS
CLASS A CLASS B CLASS C CLASS D WORLD INDEX(1) INDEX(2)

12.74% 12.37% 12.42% 12.93% 2.68% 12.54%
</Table>

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

During the six-months ended August 31, 2005, the pace of economic growth and
energy prices dominated investor attention. After opening on a more subdued
note, sentiment brightened as the reporting period progressed; renewed optimism
surrounding the U.S. economy rippled across the globe. However, during the final
weeks of the period, continued high oil prices cast doubt on the pace of
economic growth and consumer confidence. The final days of the reporting period
brought heightened apprehension as Hurricane Katrina unleashed catastrophic
devastation to the Gulf Coast. The immediate economic impact was most evident in
the energy sector, as gasoline and natural gas prices soared.

Although the broad market produced relatively lackluster gains overall,
utilities stocks performed with consistent strength during the six-month period.
Many electric utilities companies -- particularly those with relatively low-cost
excess coal and nuclear generation -- benefited from higher commodity prices.
Natural gas companies with exploration and production affiliations were well
positioned against the backdrop of exceptionally strong oil and natural gas
prices. The telecommunications sector saw more mixed performance. For example,
U.S. telecommunication operating companies (Regional Bells) struggled amid the
threat of competition and regulatory uncertainty. In contrast, global growth and
consolidation trends helped to buoy the wireless industry. U.S. wireless-related
industries, such as tower companies, generated especially robust gains.

In the United States, interest rates remained at historically low levels,
despite the ongoing increases to the federal funds target rate. In this
environment, investors rewarded utilities stocks for their yield and dividend
potential. Favorable tax treatment of dividend income, a mainstay of utilities
companies, furthered the sector's appeal. Additionally, utilities companies'
increased focus on basic services and decreased dependence on comparatively
higher risk diversification efforts resulted in cleaner balance sheets and
enhanced earnings predictability. Merger and acquisition activity was also well
received by the market.

PERFORMANCE ANALYSIS

Morgan Stanley Global Utilities Fund outperformed the Morgan Stanley Capital
International World Index for the six months ended August 31, 2005, assuming no
deduction of applicable sales charges. For the same period, the Fund's Class A
and Class D shares outperformed the Lipper Utility Funds Index, while its Class
B and C shares underperformed the Lipper Index, assuming no deduction of
applicable sales charges.

While higher energy costs were a key underlying factor behind the rather
lackluster performance of many stocks in the broad market, these same trends
helped support the Fund's performance during the period. For example, the market
rewarded many electric utilities companies which had excess cheap power to sell
into a high-cost market. The Fund's natural gas holdings provided exposure to
the exploration and production (E&P) element of the business were likewise in
robust demand for their commodity value. In addition, and separately, selective
telecommunication sectors contributed to fund performance, with particular solid
gains from wireless operators and tower companies. The exceptionally strong
worldwide usage growth of wireless related services account for the favorable
investor recognition.

Overall, electric and natural gas were the dominant contributors to performance
while the broad telecom sector remained flat for the period. The Fund is fully
invested with 99 percent equity and 1 percent cash. Within the equity component,
electric utilities account for the most substantial weighting (62 percent);
followed by telecommunications (22 percent) and natural gas (16 percent).
Reflecting our analysis of attractive growth opportunities, wireless and
wireless related companies represent the vast majority of the Fund's
telecommunications exposure (19 percent), compared with minimal emphasis on
regional bell operating companies (3 percent). Since the beginning of the fiscal
year, the Fund's allocation to non-U.S. domiciled companies has declined
modestly to 13 percent of the portfolio. The primary industry sector represented
in the non-U.S. portion of the portfolio is telecommunications; the primary
geographic areas represented in the portfolio are Canada and Spain.

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.

<Table>
<Caption>
TOP 10 HOLDINGS

Telus Corp. (Non-Voting) 4.9%
FPL Group, Inc. 4.1
Exelon Corp. 3.9
TXU Corp. 3.8
Entergy Corp. 3.7
PPL Corp. 3.7
Ameren Corp. 3.5
Dominion Resources Inc. 3.5
SCANA Corp. 3.4
Constellation Energy Group, Inc. 3.2
</Table>

<Table>
<Caption>
COUNTRY ALLOCATION

United States 85.9%
Canada 6.6
Spain 2.3
United Kingdom 1.9
</Table>

Data as of August 31, 2005. Subject to change daily. All percentages for top 10
holdings and country allocation 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 SECURITIES OF
COMPANIES FROM AROUND THE WORLD THAT ARE PRIMARILY ENGAGED IN THE UTILITIES
INDUSTRY. THESE SECURITIES CAN INCLUDE COMMON STOCK AND OTHER EQUITY SECURITIES
(INCLUDING PREFERRED STOCK, CONVERTIBLE SECURITIES AND DEPOSITARY RECEIPTS) AS
WELL AS INVESTMENT GRADE FIXED-INCOME SECURITIES (INCLUDING ZERO COUPON
SECURITIES). A COMPANY WILL BE CONSIDERED TO BE PRIMARILY ENGAGED IN THE
UTILITIES INDUSTRY IF IT DERIVES AT LEAST 50 PERCENT OF ITS REVENUES OR EARNINGS
FROM THE UTILITIES INDUSTRY OR DEVOTES AT LEAST 50 PERCENT OF ITS ASSETS TO
ACTIVITIES IN THE INDUSTRY. THESE MAY INCLUDE COMPANIES INVOLVED IN, AMONG OTHER
AREAS: GAS AND ELECTRIC ENERGY, WATER DISTRIBUTION, TELECOMMUNICATIONS,
COMPUTERS AND OTHER NEW OR EMERGING TECHNOLOGY, THE INTERNET AND INTERNET
RELATED SERVICES. THE COMPANIES MAY BE TRADITIONALLY REGULATED PUBLIC UTILITIES
AS WELL AS FULLY OR PARTIALLY DEREGULATED AND UNREGULATED UTILITY COMPANIES. THE
FUND'S "INVESTMENT ADVISER," MORGAN STANLEY INVESTMENT ADVISORS INC., WILL SHIFT
THE FUND'S ASSETS BETWEEN DIFFERENT TYPES OF UTILITIES, AMONG COMPANIES OF
DIFFERENT COUNTRIES, AND BETWEEN EQUITY AND FIXED-INCOME SECURITIES, BASED ON
PREVAILING MARKET, ECONOMIC AND FINANCIAL CONDITIONS. THE FUND WILL BE INVESTED
IN AT LEAST THREE COUNTRIES (INCLUDING THE UNITED STATES). IF THE FUND HOLDS ANY
FIXED-INCOME SECURITIES, THE AVERAGE WEIGHTED MATURITY OF THESE INVESTMENTS IS
NORMALLY EXPECTED TO BE GREATER THAN SEVEN YEARS.

FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS

EACH MORGAN STANLEY FUND PROVIDES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS IN
ITS SEMIANNUAL AND ANNUAL REPORTS WITHIN 60 DAYS OF THE END OF THE FUND'S SECOND
AND FOURTH FISCAL QUARTERS BY FILING THE SCHEDULE ELECTRONICALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEMIANNUAL REPORTS ARE FILED ON
FORM N-CSRS AND THE ANNUAL REPORTS ARE FILED ON FORM N-CSR. MORGAN STANLEY ALSO
DELIVERS THE SEMIANNUAL AND ANNUAL REPORTS TO FUND SHAREHOLDERS AND MAKES THESE
REPORTS AVAILABLE ON ITS PUBLIC WEB SITE, WWW.MORGANSTANLEY.COM. EACH MORGAN
STANLEY FUND ALSO FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC
FOR THE FUND'S FIRST AND THIRD FISCAL QUARTERS ON FORM N-Q. MORGAN STANLEY DOES
NOT DELIVER THE REPORTS FOR THE FIRST AND THIRD FISCAL QUARTERS TO SHAREHOLDERS,
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 TWELVE-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.

PERFORMANCE SUMMARY

AVERAGE ANNUAL TOTAL RETURNS -- PERIOD ENDED AUGUST 31, 2005

<Table>
<Caption>
CLASS A SHARES* CLASS B SHARES** CLASS C SHARES(+) CLASS D SHARES(++)
(since 07/28/97) (since 05/31/94) (since 07/28/97) (since 07/28/97)
SYMBOL GUTAX GUTBX GUTCX GUTDX

1 YEAR 34.48%(3) 33.57%(3) 33.55%(3) 34.88%(3)
27.42(4) 28.57(4) 32.55(4) --
5 YEARS 0.70(3) (0.06)(3) 0.00(3) 0.96(3)
(0.38)(4) (0.40)(4) 0.00(4) --
10 YEARS -- 9.74(3) -- --
-- 9.74(4) -- --
SINCE INCEPTION 9.01(3) 9.61(3) 8.23(3) 9.30(3)
8.29(4) 9.61(4) 8.23(4) --
</Table>

Performance data quoted represents past performance, which is no guarantee of
future results and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
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 table does not reflect the deduction
of taxes that a shareholder would pay on fund distributions or the redemption of
fund shares. Performance for Class A, Class B, Class C, and Class D shares will
vary due to differences in sales charges and expenses.

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

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

+ The maximum contingent deferred sales charge for Class C is 1% for shares
redeemed within one year of purchase.

++ Class D has no sales charge.

(1) The Morgan Stanley Capital International (MSCI) World Index measures
performance from a diverse range of global stock markets including the
U.S., Canada, New Zealand, 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 Utility Funds Index is an equally weighted performance index of
the largest qualifying funds (based on net assets) in the Lipper Utility
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.

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.

<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD *
------------- ------------- ---------------
03/01/05 -
03/01/05 08/31/05 08/31/05
------------- ------------- ---------------

CLASS A
Actual (12.74% return)...................................... $1,000.00 $1,127.40 $ 6.17
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,019.41 $ 5.85
CLASS B
Actual (12.37% return)...................................... $1,000.00 $1,123.70 $10.17
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,015.63 $ 9.65
CLASS C
Actual (12.42% return)...................................... $1,000.00 $1,124.20 $10.17
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,015.63 $ 9.65
CLASS D
Actual (12.93% return)...................................... $1,000.00 $1,129.30 $ 4.83
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,020.67 $ 4.58
</Table>

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

* Expenses are equal to the Fund's annualized expense ratio of 1.15%, 1.90%,
1.90% and 0.90% 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).

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 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 and
the Administrator together are referred to as the "Adviser" and the 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 the one-, three- and five-year
periods ending November 30, 2004, as shown in reports (the "Lipper Reports")
provided by Lipper Inc. ("Lipper"), compared to the performance of comparable
funds selected by Lipper (the "performance peer group"), and noted that the
Fund's performance was lower than its performance peer group average for all
three periods. The Board discussed with the Adviser possible steps to improve
performance. The Adviser informed the Board that in order to try to improve
performance, the Adviser had strengthened the investment team and improved the
quality of research provided to the Fund. The Board concluded that the changes
were reasonably designed to improve performance.

FEES AND EXPENSES RELATIVE TO COMPARABLE FUNDS MANAGED BY OTHER ADVISERS

The Board reviewed the advisory and administrative fees (together, the
"management fee") paid by the Fund under the Management Agreement and the total
expense ratio of the Fund. The Board noted that: (i) the Fund's management fee
rate was higher 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; but (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 includes breakpoints. The Board also
reviewed the level of the Fund's management fee and noted that the fee, as a
percentage of the Fund's net assets, would decrease as net assets increase
because the management fee includes breakpoints. The Board concluded that the
Fund's management fee would reflect economies of scale as assets increase.

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 Morgan Stanley 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 Morgan Stanley 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.

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.

Morgan Stanley Global Utilities Fund
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2005 (UNAUDITED)

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

Common Stocks (98.9%)
Canada (6.6%)
Telecommunications
190,000 BCE Inc. ................ $ 4,978,000
397,000 Telus Corp.
(Non-Voting)............ 14,633,697
------------
Total Canada............. 19,611,697
------------
Spain++ (4.5%)
Electric Utilities
270,000 Iberdrola S.A. .......... 6,948,350
------------
Telecommunications
389,136 Telefonica S.A. ......... 6,447,405
------------
Total Spain.............. 13,395,755
------------
United Kingdom (1.9%)
Telecommunications
206,100 Vodafone Group PLC
(ADR)................... 5,616,225
------------
United States (85.9%)
Electric Utilities
394,900 AES Corp. (The)*......... 6,215,726
191,300 Ameren Corp. ............ 10,508,109
176,000 Cinergy Corp. ........... 7,751,040
130,000 CMS Energy Corp.*........ 2,093,000
161,700 Consolidated Edison,
Inc. ................... 7,585,347
162,900 Constellation Energy
Group, Inc. ............ 9,570,375
135,700 Dominion Resources,
Inc. ................... 10,378,336
90,000 DPL, Inc. ............... 2,429,100
230,400 Energy East Corp. ....... 6,041,088
145,700 Entergy Corp. ........... 10,914,387
215,200 Exelon Corp. ............ 11,597,128
84,600 FirstEnergy Corp. ....... 4,317,138
280,400 FPL Group, Inc. ......... 12,082,436
125,000 PG&E Corp. .............. 4,690,000
339,000 PPL Corp. ............... 10,834,440
70,500 Public Service Enterprise
Group, Inc. ............ 4,550,775
81,900 Puget Energy, Inc. ...... 1,864,863
</Table>

<Table>
<Caption>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------

240,300 SCANA Corp. ............. $ 10,186,317
240,900 Southern Co. (The)....... 8,286,960
90,000 TECO Energy, Inc. ....... 1,566,900
115,000 TXU Corp. ............... 11,157,300
155,800 Wisconsin Energy
Corp. .................. 6,102,686
------------
160,723,451
------------
Energy
242,100 AGL Resources, Inc. ..... 9,042,435
108,100 Equitable Resources,
Inc. ................... 8,150,740
167,300 KeySpan Corp. ........... 6,385,841
90,000 Kinder Morgan, Inc. ..... 8,592,300
77,600 NiSource, Inc. .......... 1,873,264
140,000 NRG Energy Inc.*......... 5,602,800
94,100 Questar Corp. ........... 7,341,682
128,000 Sempra Energy............ 5,736,960
94,500 Southern Union Co.*...... 2,326,590
155,800 UGI Corp. ............... 4,307,870
------------
59,360,482
------------
Telecommunications
95,073 ALLTEL Corp. ............ 5,893,575
360,360 American Tower Corp.
(Class A)*.............. 8,590,982
85,400 BellSouth Corp. ......... 2,245,166
110,000 Crown Castle
International Corp.*.... 2,723,600
165,100 Nextel Partners, Inc.
(Class A)*.............. 4,332,224
130,900 SBC Communications,
Inc. ................... 3,152,072
175,000 Sprint Nextel Corp. ..... 4,537,750
90,200 Verizon Communications
Inc. ................... 2,950,442
------------
Total United States...... 34,425,811
------------
254,509,744
------------
Total Common Stocks
(Cost $202,108,758)...... 293,133,421
------------
</Table>

See Notes to Financial Statements
11

Morgan Stanley Global Utilities Fund
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2005 (UNAUDITED) continued

<Table>
<Caption>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------

Short-Term Investment (0.7%)
Repurchase Agreement
$ 2,024 Joint repurchase
agreement account 3.575%
due 09/01/05 (dated
08/31/05; proceeds
$2,024,201) (a)
(Cost $2,024,000)....... $ 2,024,000
------------
</Table>

<Table>

Total Investments
(Cost $204,132,758) (b)..... 99.6% $295,157,421
Other Assets in Excess of
Liabilities................. 0.4 1,201,717
----- ------------
Net Assets.................. 100.0% $296,359,138
===== ============
</Table>

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

<Table>

ADR American Depositary Receipt.
* Non-income producing security.
++ Securities with total market value equal to
$13,395,755 have been valued at their fair value as
determined in good faith under procedures
established by and under the general supervision of
the Fund's Trustees.
(a) Collateralized by federal agency and U.S. Treasury
obligations.
(b) The aggregate cost for federal income tax purposes
approximates the aggregate cost for book purposes.
The aggregate gross unrealized appreciation is
$96,708,422 and the aggregate gross unrealized
depreciation is $5,683,759, resulting in net
unrealized appreciation of $91,024,663.
</Table>

FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT AUGUST 31, 2005:

<Table>
<Caption>
IN
CONTRACTS EXCHANGE DELIVERY UNREALIZED
TO DELIVER FOR DATE DEPRECIATION
- ---------------------------------------------------------------

CAD 216,575 $181,462 09/02/05 $(1,009)
=======
</Table>

<Table>

Currency Abbreviation:
- -----------------------
CAD Canadian Dollar.
</Table>

SUMMARY OF INVESTMENTS

<Table>
<Caption>
PERCENT OF
INDUSTRY* VALUE NET ASSETS
- --------------------------------------------------

Electric Utilities.... $167,671,801 56.6%
Telecommunications.... 66,101,138 22.3
Energy................ 59,360,482 20.0
Repurchase Agreement.. 2,024,000 0.7
------------ ----
$295,157,421 99.6%
============ ====
</Table>

- ---------------------
* Does not include outstanding forward foreign currency contracts with
unrealized depreciation of $1,009.

See Notes to Financial Statements
12

Morgan Stanley Global Utilities Fund
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
August 31, 2005 (unaudited)

<Table>

Assets:
Investments in securities, at value (cost $204,132,758)..... $295,157,421
Receivable for:
Investments sold........................................ 1,995,545
Dividends............................................... 834,872
Shares of beneficial interest sold...................... 55,138
Foreign withholding taxes reclaimed..................... 17,174
Prepaid expenses and other assets........................... 79,690
------------
Total Assets............................................ 298,139,840
------------
Liabilities:
Unrealized depreciation on open forward foreign currency
contracts................................................. 1,009
Payable for:
Investments purchased................................... 988,313
Shares of beneficial interest redeemed.................. 425,679
Investment advisory fee................................. 151,854
Distribution fee........................................ 149,566
Administration fee...................................... 21,313
Transfer agent fee...................................... 5,111
Accrued expenses and other payables......................... 37,857
------------
Total Liabilities....................................... 1,780,702
------------
Net Assets.............................................. $296,359,138
============
Composition of Net Assets:
Paid-in-capital............................................. $292,484,086
Net unrealized appreciation................................. 91,027,528
Accumulated undistributed net investment income............. 2,177,384
Accumulated net realized loss............................... (89,329,860)
------------
Net Assets.............................................. $296,359,138
============
Class A Shares:
Net Assets.................................................. $172,532,072
Shares Outstanding (unlimited authorized, $.01 par value)... 10,989,059
Net Asset Value Per Share............................... $15.70
============
Maximum Offering Price Per Share,
(net asset value plus 5.54% of net asset value)......... $16.57
============
Class B Shares:
Net Assets.................................................. $115,092,662
Shares Outstanding (unlimited authorized, $.01 par value)... 7,184,352
Net Asset Value Per Share............................... $16.02
============
Class C Shares:
Net Assets.................................................. $6,977,069
Shares Outstanding (unlimited authorized, $.01 par value)... 446,763
Net Asset Value Per Share............................... $15.62
============
Class D Shares:
Net Assets.................................................. $1,757,335
Shares Outstanding (unlimited authorized, $.01 par value)... 111,526
Net Asset Value Per Share............................... $15.76
============
</Table>

See Notes to Financial Statements
13

Morgan Stanley Global Utilities Fund
FINANCIAL STATEMENTS continued

Statement of Operations
For the six months ended August 31, 2005 (unaudited)

<Table>

Net Investment Income:
Income
Dividends (net of $75,664 foreign withholding tax).......... $ 4,441,003
Interest.................................................... 72,654
-----------
Total Income............................................ 4,513,657
-----------
Expenses
Investment advisory fee..................................... 834,865
Distribution fee (Class A shares)........................... 150,896
Distribution fee (Class B shares)........................... 819,305
Distribution fee (Class C shares)........................... 32,096
Transfer agent fees and expenses............................ 262,338
Administration fee.......................................... 117,174
Professional fees........................................... 40,037
Registration fees........................................... 16,288
Shareholder reports and notices............................. 14,893
Custodian fees.............................................. 13,690
Trustees' fees and expenses................................. 1,699
Other....................................................... 11,241
-----------
Total Expenses.......................................... 2,314,522
-----------
Net Investment Income................................... 2,199,135
-----------
Net Realized and Unrealized Gain:
Net Realized Gain (Loss) on:
Investments................................................. 15,511,848
Foreign exchange transactions............................... (14,035)
-----------
Net Realized Gain....................................... 15,497,813
-----------
Net Change in Unrealized Appreciation/Depreciation on:
Investments................................................. 16,883,671
Translation of other assets and liabilities denominated in
foreign currencies........................................ (9,058)
-----------
Net Appreciation........................................ 16,874,613
-----------
Net Gain................................................ 32,372,426
-----------
Net Increase................................................ $34,571,561
===========
</Table>

See Notes to Financial Statements
14

Morgan Stanley Global Utilities Fund
FINANCIAL STATEMENTS continued

Statement of Changes in Net Assets

<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
AUGUST 31, 2005 FEBRUARY 28, 2005
--------------- -----------------
(unaudited)

Increase (Decrease) in Net Assets:
Operations:
Net investment income....................................... $ 2,199,135 $ 4,778,898
Net realized gain........................................... 15,497,813 10,462,965
Net change in unrealized appreciation....................... 16,874,613 38,746,055
------------ ------------
Net Increase............................................ 34,571,561 53,987,918
------------ ------------
Dividends to Shareholders from Net Investment Income:
Class A shares.............................................. (4,266,366) (137,674)
Class B shares.............................................. (362,529) (5,581,802)
Class C shares.............................................. (129,668) (104,781)
Class D shares.............................................. (50,759) (48,952)
------------ ------------
Total Dividends......................................... (4,809,322) (5,873,209)
------------ ------------

Net decrease from transactions in shares of beneficial
interest.................................................. (23,065,826) (68,604,493)
------------ ------------
Net Increase (Decrease)................................. 6,696,413 (20,489,784)
Net Assets:
Beginning of period......................................... 289,662,725 310,152,509
------------ ------------
End of Period
(Including accumulated undistributed net investment income
of $2,177,384 and $4,787,571, respectively)................. $296,359,138 $289,662,725
============ ============
</Table>

15
See Notes to Financial Statements

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2005 (UNAUDITED)

1. Organization and Accounting Policies

Morgan Stanley Global Utilities 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 to
seek both capital appreciation and current income. The Fund was organized as a
Massachusetts business trust on October 22, 1993 and commenced operations on May
31, 1994. On July 28, 1997, the Fund converted to a multiple class share
structure.

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") 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

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2005 (UNAUDITED) continued

assets may occur between the times at which valuations of such securities are
determined (that is, close of the foreign market on which the securities trade)
and the close of business on the NYSE. If developments occur during such periods
that are expected to materially affect the value of such securities, such
valuations may be adjusted to reflect the estimated fair value of such
securities as of the close of the NYSE, as determined in good faith by the
Fund's Trustees or by the Investment Adviser using a pricing service and/or
procedures approved by the Trustees of the Fund; (6) certain portfolio
securities may be valued by an outside pricing service approved by the Fund's
Trustees; and (7) short-term debt securities having a maturity date of more than
sixty days at time of 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

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2005 (UNAUDITED) continued

respective dates of such transactions. The resultant exchange gains and losses
are recorded as realized and unrealized gain/loss on foreign exchange
transactions. Pursuant to U.S. federal income tax regulations, certain foreign
exchange gains/losses included in realized and unrealized gain/loss are included
in or are a reduction of ordinary income for federal income tax purposes. The
Fund does not isolate that portion of the results of operations arising as a
result of changes in the foreign exchange rates from the changes in the market
prices of the securities. Forward contracts are valued daily at the appropriate
exchange rates. The resultant unrealized exchange gains and losses are recorded
as unrealized foreign currency gain or loss. The Fund records realized gains or
losses on delivery of the currency or at the time the forward contract is
extinguished (compensated) by entering into a closing transaction prior to
delivery.

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

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 Agreements

Pursuant to an Investment Advisory Agreement, the Fund pays the Investment
Adviser an advisory fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.57% to the portion of the daily net assets not exceeding
$500 million; 0.545% to the portion of the daily net assets exceeding $500
million but not exceeding $1 billion; 0.52% to the portion of the daily net
assets exceeding $1 billion but not exceeding $1.5 billion; and 0.495% to the
portion of the daily net assets in excess of $1.5 billion.

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

3. Plan of Distribution

Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the
"Distributor"), an affiliate of the Investment Adviser and Administrator. The
Fund has adopted a Plan of Distribution (the "Plan")

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2005 (UNAUDITED) 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 lesser of: (a) the average daily
aggregate gross sales of the Class B shares since the inception of the Fund (not
including reinvestment of dividend or capital gain distributions) less the
average daily aggregate net asset value of the Class B shares redeemed since the
Fund's inception upon which a contingent deferred sales charge has been imposed
or waived; or (b) 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 $7,201,678
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 six months ended August 31, 2005, the distribution fee was accrued for
Class A shares and Class C shares at the annual rate of 0.25% and 1.0%,
respectively.

The Distributor has informed the Fund that for the six months ended August 31,
2005, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $137, $91,218
and $73, respectively and received $25,004 in front-end sales charges from sales
of the Fund's Class A shares. The respective shareholders pay such charges which
are not an expense of the Fund.

4. Security Transactions and Transactions with Affiliates

The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended August 31, 2005 aggregated
$28,523,630 and $51,800,940, respectively.

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2005 (UNAUDITED) continued

For the six months ended August 31, 2005, the Fund incurred brokerage
commissions of $25,920 with Morgan Stanley & Co. Inc., an affiliate of the
Investment Adviser, Administrator and Distributor, for portfolio transactions
executed on behalf of the Fund. At August 31, 2005, the Fund's payable for
investments purchased included unsettled trades with Morgan Stanley & Co., Inc.
of $256,225.

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

The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan")
which allows each independent Trustee to defer payment of all, or a portion, of
the fees he receives for serving on the Board of Trustees. Each eligible Trustee
generally may elect to have the deferred amounts credited with a return equal to
the total return on one or more of the Morgan Stanley funds that are offered as
investment options under the Compensation Plan. Appreciation/depreciation and
distributions received from these investments are recorded with an offsetting
increase/decrease in the deferred compensation obligation and do not affect the
net asset value of the Fund.

5. Federal Income Tax Status

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

As of February 28, 2005, the Fund had a net capital loss carryforward of
$103,686,656 of which $25,457,455 will expire on February 28, 2010, and
$78,229,201 will expire on February 28, 2011 to offset future capital gains to
the extent provided by regulations.

As of February 28, 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) and capital loss deferrals on wash
sales.

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2005 (UNAUDITED) continued

6. Shares of Beneficial Interest

Transactions in shares of beneficial interest were as follows:

<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
AUGUST 31, 2005 FEBRUARY 28, 2005
--------------------------- -------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------

CLASS A SHARES
Sold............................................ 122,130 $ 1,818,522 58,494 $ 720,812
Conversion from Class B......................... 11,210,304 161,975,708 -- --
Reinvestment of dividends....................... 240,081 3,610,814 8,671 99,024
Redeemed........................................ (932,748) (14,068,442) (123,115) (1,527,205)
----------- ------------- ---------- ------------
Net increase (decrease) - Class A............... 10,639,767 153,336,602 (55,950) (707,369)
----------- ------------- ---------- ------------
CLASS B SHARES
Sold............................................ 527,674 7,808,443 668,510 8,544,246
Conversion to Class A........................... (11,203,287) (161,975,708) -- --
Reinvestment of dividends....................... 19,040 292,646 408,632 4,695,178
Redeemed........................................ (1,583,719) (23,458,699) (6,482,545) (79,663,139)
----------- ------------- ---------- ------------
Net decrease - Class B.......................... (12,240,292) (177,333,318) (5,405,403) (66,423,715)
----------- ------------- ---------- ------------
CLASS C SHARES
Sold............................................ 137,335 1,947,476 31,874 403,258
Reinvestment of dividends....................... 7,772 116,423 8,332 94,816
Redeemed........................................ (56,759) (842,415) (148,409) (1,823,692)
----------- ------------- ---------- ------------
Net increase (decrease) - Class C............... 88,348 1,221,484 (108,203) (1,325,618)
----------- ------------- ---------- ------------
CLASS D SHARES
Sold............................................ 20,040 296,150 46,515 576,115
Reinvestment of dividends....................... 2,533 38,219 3,651 41,699
Redeemed........................................ (40,884) (624,963) (63,602) (765,605)
----------- ------------- ---------- ------------
Net decrease - Class D.......................... (18,311) (290,594) (13,436) (147,791)
----------- ------------- ---------- ------------
Net decrease in Fund............................ (1,530,488) $ (23,065,826) (5,582,992) $(68,604,493)
=========== ============= ========== ============
</Table>

7. Purposes of and Risks Relating to Certain Financial Instruments

The Fund may enter into forward foreign currency contracts ("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.

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2005 (UNAUDITED) continued

8. Legal Matters

The Investment Adviser, certain affiliates of the Investment Adviser, certain
officers of such affiliates and certain investment companies advised by the
Investment Adviser or its affiliates, including the Fund, are named as
defendants in a consolidated class action. This consolidated action also names
as defendants certain individual Trustees and Directors of the Morgan Stanley
funds. The consolidated amended complaint, 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.

Morgan Stanley Global Utilities Fund
FINANCIAL HIGHLIGHTS

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

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED FEBRUARY 28,
MONTHS ENDED ----------------------------------------------------------------
AUGUST 31, 2005 2005 2004* 2003 2002 2001
--------------- -------- -------- -------- -------- --------
(unaudited)

Class A Shares
Selected Per Share Data:
Net asset value, beginning of
period............................... $14.29 $12.01 $ 9.70 $12.47 $16.51 $20.02
------ ------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income++........... 0.15 0.30 0.28 0.32 0.31 0.29
Net realized and unrealized gain
(loss)............................ 1.65 2.33 2.45 (2.73) (3.91) (1.22)
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations........................... 1.80 2.63 2.73 (2.41) (3.60) (0.93)
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income............. (0.39) (0.35) (0.42) (0.36) (0.08) (0.26)
Net realized gain................. -- -- -- -- (0.36) (2.32)
------ ------ ------ ------ ------ ------
Total dividends and distributions..... (0.39) (0.35) (0.42) (0.36) (0.44) (2.58)
------ ------ ------ ------ ------ ------
Net asset value, end of period........ $15.70 $14.29 $12.01 $ 9.70 $12.47 $16.51
====== ====== ====== ====== ====== ======
Total Return+......................... 12.74%(1) 22.68% 28.57% (19.79)% (22.21)% (5.05)%
Ratios to Average Net Assets(3):
Expenses.............................. 1.15%(2) 1.16% 1.18% 1.15% 1.06% 1.00%
Net investment income................. 1.93%(2) 2.44% 2.57% 2.91% 2.06% 1.54%
Supplemental Data:
Net assets, end of period, in
thousands............................ $172,532 $4,990 $4,868 $4,387 $7,723 $16,970
Portfolio turnover rate............... 10%(1) 18% 31% 18% 19% 31%
</Table>

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

<Table>

* Year ended February 29.
++ The per share amounts were computed using an average number
of shares outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated
based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</Table>

See Notes to Financial Statements
23

Morgan Stanley Global Utilities Fund
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED FEBRUARY 28,
MONTHS ENDED ---------------------------------------------------------------------
AUGUST 31, 2005 2005 2004* 2003 2002 2001
--------------- --------- --------- --------- --------- ---------
(unaudited)

Class B Shares
Selected Per Share Data:
Net asset value, beginning of
period.......................... $14.30 $12.00 $ 9.67 $12.40 $16.50 $20.01
------ ------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income++...... 0.08 0.21 0.20 0.24 0.20 0.15
Net realized and unrealized
gain (loss).................. 1.69 2.34 2.44 (2.73) (3.89) (1.22)
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations........... 1.77 2.55 2.64 (2.49) (3.69) (1.07)
------ ------ ------ ------ ------ ------
Less dividends and distributions
from:
Net investment income........ (0.05) (0.25) (0.31) (0.24) (0.05) (0.12)
Net realized gain............ -- -- -- -- (0.36) (2.32)
------ ------ ------ ------ ------ ------
Total dividends and
distributions................... (0.05) (0.25) (0.31) (0.24) (0.41) (2.44)
------ ------ ------ ------ ------ ------
Net asset value, end of period... $16.02 $14.30 $12.00 $ 9.67 $12.40 $16.50
====== ====== ====== ====== ====== ======
Total Return+.................... 12.37%(1) 21.74% 27.60% (20.43)% (22.75)% (5.76)%
Ratios to Average Net Assets(3):
Expenses......................... 1.90%(2) 1.92% 1.93% 1.90% 1.82% 1.74%
Net investment income............ 1.18%(2) 1.68% 1.82% 2.16% 1.30% 0.80%
Supplemental Data:
Net assets, end of period, in
thousands....................... $115,093 $277,738 $298,012 $306,554 $562,343 $914,995
Portfolio turnover rate.......... 10%(1) 18% 31% 18% 19% 31%
</Table>

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

<Table>

See Notes to Financial Statements
24

Morgan Stanley Global Utilities Fund
FINANCIAL HIGHLIGHTS continued

Class C Shares
Selected Per Share Data:
Net asset value, beginning of
period............................... $14.16 $11.89 $ 9.60 $12.33 $16.38 $19.90
------ ------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income++........... 0.09 0.21 0.20 0.24 0.22 0.14
Net realized and unrealized gain
(loss)............................ 1.66 2.31 2.42 (2.70) (3.85) (1.21)
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations........................... 1.75 2.52 2.62 (2.46) (3.63) (1.07)
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income............. (0.29) (0.25) (0.33) (0.27) (0.06) (0.13)
Net realized gain................. -- -- -- -- (0.36) (2.32)
------ ------ ------ ------ ------ ------
Total dividends and distributions..... (0.29) (0.25) (0.33) (0.27) (0.42) (2.45)
------ ------ ------ ------ ------ ------
Net asset value, end of period........ $15.62 $14.16 $11.89 $ 9.60 $12.33 $16.38
====== ====== ====== ====== ====== ======
Total Return+......................... 12.42%(1) 21.71% 27.53% (20.15)% (22.78)% (5.81)%
Ratios to Average Net Assets(3):
Expenses.............................. 1.90%(2) 1.89% 1.93% 1.87% 1.67% 1.78%
Net investment income................. 1.18%(2) 1.71% 1.82% 2.19% 1.45% 0.76%
Supplemental Data:
Net assets, end of period, in
thousands............................ $6,977 $5,076 $5,548 $5,502 $9,374 $15,266
Portfolio turnover rate............... 10%(1) 18% 31% 18% 19% 31%
</Table>

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

<Table>

See Notes to Financial Statements
25

Morgan Stanley Global Utilities Fund
FINANCIAL HIGHLIGHTS continued

Class D Shares
Selected Per Share Data:
Net asset value, beginning of
period............................... $14.32 $12.04 $ 9.73 $12.53 $16.54 $20.06
------ ------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income++........... 0.16 0.33 0.30 0.35 0.35 0.29
Net realized and unrealized gain
(loss)............................ 1.67 2.33 2.47 (2.73) (3.91) (1.18)
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations........................... 1.83 2.66 2.77 (2.38) (3.56) (0.89)
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income............. (0.39) (0.38) (0.46) (0.42) (0.09) (0.31)
Net realized gain................. -- -- -- -- (0.36) (2.32)
------ ------ ------ ------ ------ ------
Total dividends and distributions..... (0.39) (0.38) (0.46) (0.42) (0.45) (2.63)
------ ------ ------ ------ ------ ------
Net asset value, end of period........ $15.76 $14.32 $12.04 $ 9.73 $12.53 $16.54
====== ====== ====== ====== ====== ======
Total Return+......................... 12.93%(1) 22.94% 28.87% (19.56)% (21.98)% (4.85)%
Ratios to Average Net Assets(3):
Expenses.............................. 0.90%(2) 0.92% 0.93% 0.90% 0.82% 0.78%
Net investment income................. 2.18%(2) 2.68% 2.82% 3.16% 2.30% 1.76%
Supplemental Data:
Net assets, end of period, in
thousands............................ $1,757 $1,859 $1,725 $1,371 $2,308 $2,750
Portfolio turnover rate............... 10%(1) 18% 31% 18% 19% 31%
</Table>

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

<Table>

* Year ended February 29.
++ The per share amounts were computed using an average number
of shares outstanding during the period.
+ Calculated based on the net asset value as of the last
business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and
non-class specific expenses.
</Table>

See Notes to Financial Statements
26

(This Page Intentionally Left Blank)

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

The financial statements included herein have been taken from the records of the
Fund without examination by the independent auditors and accordingly they do not
express an opinion thereon.

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

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

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

[MORGAN STANLEY LOGO]

MORGAN STANLEY FUNDS

Morgan Stanley
Global Utilities Fund

Semiannual Report
August 31, 2005

[MORGAN STANLEY LOGO]

37873RPT-RA05-00858P-Y08/05

Item 2. Code of Ethics.

Not applicable for semiannual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semiannual reports.

Item 4. Principal Accountant Fees and Services

Not applicable for semiannual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semiannual reports.

Item 6.

Refer to Item 1.

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

Not applicable for semiannual reports.

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

Applicable only to reports filed by closed-end funds.

Item 9. Closed-End Fund Repurchases

Applicable to reports filed by closed-end funds.

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

Not applicable.

Item 11. Controls and Procedures

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

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

Item 12. Exhibits

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

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

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 Global Utilities 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