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, 2007

Date of reporting period: August 31, 2006

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, 2006

TOTAL RETURN FOR THE 6 MONTHS ENDED AUGUST 31, 2006

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

9.15% 8.67% 8.73% 9.23% 4.97% 9.41%
</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

Overall, the six-month period ending August 31, 2006 proved favorable for
securities within the utility sector. Uneven performance within the U.S.
domestic markets characterized the months of February, March and April as
investors digested a series of mixed signals from the economic and corporate
fronts. In May and June, the markets encountered a steep sell-off amid the
Federal Open Market Committee's (the "Fed") 16(th) and 17(th) consecutive rate
increases since June 2004. However, at its August policy meeting, the Fed did
leave the federal funds target rate unchanged after two years of consecutive
increases.

Despite the tightening mode maintained by the Fed throughout much of the period,
interest rates remained in a narrow range. In this environment, utility and
utility-related stocks continued to be preferred by investors for their yield
and dividend growth potential, especially as favorable tax treatment provided
additional incentive for investors seeking dividend income. Moreover, the
emphasis on fundamentals such as quality balance sheets helped to sustain the
appeal of these long-term total return vehicles.

Within the telecommunications segment, investor optimism was ignited on several
announcements concerning merger and acquisition activity. For these
telecommunications companies, expectations of the resulting synergies from their
restructurings has lent support to stronger profitability levels going forward
and increased the prospects for favorable price performance as well. Electric
and natural gas utilities continued to streamline their business strategies,
foregoing riskier diversification investments in favor of "back-to-basics"
models to better ensure strong balance sheets and improved earnings
predictability. Investors were also buoyed by above-average summer temperatures
and record-level energy demand, which they expect will help in these utilities'
near-term earnings comparisons. Finally, the global utilities sector performed
solidly for the period as the weakened U.S. dollar provided further support to
the performance of non-U.S. investments.

PERFORMANCE ANALYSIS

Morgan Stanley Global Utilities Fund outperformed the MSCI World Index and
underperformed the Lipper Utility Funds Index for the six months ended August
31, 2006, assuming no deduction of applicable sales charges.

Electric utilities and natural gas stocks were the dominant contributors to the
Fund's performance as oil and natural gas maintained their strong price levels
throughout the period. The Fund's focus in the telecommunications sector was
rewarded, due in

significant part to the exceptionally strong gains made in various industry
sub-sectors, particularly in wireless companies and diversified communications
firms. However, the Fund's smaller allocation to international electric
utilities, in particular, proved to be a missed opportunity, since greater
exposure to these companies would have further contributed to the overall total
return for the period.

The Fund ended the period fully invested, with an equity investment allocation
of 55 percent electric utilities, 16 percent the natural gas/energy sector and
29 percent in the telecommunication sector. Within the equity component, 19
percent were non-U.S. domiciled securities with a strong focus in
telecommunication firms.

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

<Table>
<Caption>
TOP 10 HOLDINGS

Telus Corporation (Non Voting) 4.5%
TXU Corp. 3.6
FPL Group, Inc. 3.5
Entergy Corp. 3.4
Exelon Corp. 3.4
AES Corp. (The) 3.1
PPL Corp. 3.1
American Tower Corp. (Class A) 2.9
PG&E Corp. 2.8
NRG Energy, Inc. 2.8
</Table>

<Table>
<Caption>
TOP FIVE COUNTRIES

United States 81.0%
Canada 9.7
Spain 4.8
Mexico 1.2
Russia 1.0
</Table>

Data as of August 31, 2006. Subject to change daily. All percentages for top 10
holdings and top five countries are as a percentage of net assets. These data
are provided for informational purposes only and should not be deemed a
recommendation to buy or sell the securities mentioned. Morgan Stanley is a
full-service securities firm engaged in securities trading and brokerage
activities, investment banking, research and analysis, financing and financial
advisory services.

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. THE SEMIANNUAL REPORTS AND

THE ANNUAL REPORTS ARE FILED ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE
COMMISSION (SEC) ON FORM N-CSRS AND FORM N-CSR, RESPECTIVELY. MORGAN STANLEY
ALSO DELIVERS THE SEMIANNUAL AND ANNUAL REPORTS TO FUND SHAREHOLDERS AND MAKES
THESE REPORTS AVAILABLE ON ITS PUBLIC WEB SITE, WWW.MORGANSTANLEY.COM. EACH
MORGAN STANLEY FUND ALSO FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH
THE SEC FOR THE FUND'S FIRST AND THIRD FISCAL QUARTERS ON FORM N-Q. MORGAN
STANLEY DOES NOT DELIVER THE REPORTS FOR THE FIRST AND THIRD FISCAL QUARTERS TO
SHAREHOLDERS, NOR ARE THE REPORTS POSTED TO THE MORGAN STANLEY PUBLIC WEB SITE.
YOU MAY, HOWEVER, OBTAIN THE FORM N-Q FILINGS (AS WELL AS THE FORM N-CSR AND
N-CSRS FILINGS) BY ACCESSING THE SEC'S WEB SITE, HTTP://WWW.SEC.GOV. YOU MAY
ALSO REVIEW AND COPY THEM AT THE SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC.
INFORMATION ON THE OPERATION OF THE SEC'S PUBLIC REFERENCE ROOM MAY BE OBTAINED
BY CALLING THE SEC AT (800) SEC-0330. YOU CAN ALSO REQUEST COPIES OF THESE
MATERIALS, UPON PAYMENT OF A DUPLICATING FEE, BY ELECTRONIC REQUEST AT THE SEC'S
E-MAIL ADDRESS (PUBLICINFO@SEC.GOV) OR BY WRITING THE PUBLIC REFERENCE SECTION
OF THE SEC, WASHINGTON, DC 20549-0102.

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
WITHOUT CHARGE BY VISITING THE MUTUAL FUND CENTER ON OUR WEB SITE AT
WWW.MORGANSTANLEY.COM. THIS INFORMATION IS ALSO AVAILABLE ON THE SECURITIES AND
EXCHANGE COMMISSION'S WEB SITE AT HTTP://WWW.SEC.GOV.

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, 2006

<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 10.05%(3) 9.22%(3) 9.21%(3) 10.27%(3)
4.28(4) 4.22(4) 8.21(4) --
5 YEARS 6.90(3) 6.11(3) 6.16(3) 7.17(3)
5.76(4) 5.80(4) 6.16(4) --
10 YEARS -- 9.99(3) -- --
-- 9.99(4) -- --
SINCE INCEPTION 9.12(3) 9.57(3) 8.34(3) 9.40(3)
8.48(4) 9.57(4) 8.34(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 1.0% 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 03/01/06 - 08/31/06.

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 *
------------- ------------- ---------------
03/01/06 -
03/01/06 08/31/06 08/31/06
------------- ------------- ---------------

CLASS A
Actual (9.15% return)....................................... $1,000.00 $1,091.50 $ 7.43
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,018.10 $ 7.17
CLASS B
Actual (8.67% return)....................................... $1,000.00 $1,086.70 $11.36
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,014.32 $10.97
CLASS C
Actual (8.73% return)....................................... $1,000.00 $1,087.30 $11.36
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,014.32 $10.97
CLASS D
Actual (9.23% return)....................................... $1,000.00 $1,092.30 $ 6.12
Hypothetical (5% annual return before expenses)............. $1,000.00 $1,019.36 $ 5.90
</Table>

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

* Expenses are equal to the Fund's annualized expense ratios of 1.41%, 2.16%,
2.16% and 1.16% 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).

Morgan Stanley Global Utilities Fund
PORTFOLIO OF INVESTMENTS - AUGUST 31, 2006 (UNAUDITED)

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

Common Stocks (98.9%)
Brazil (0.7%)
Telecommunications
60,000 Tim Participacoes
SA - ADR................ $ 1,760,400
------------
Canada (9.7%)
Energy
42,000 Canadian Natural
Resources Ltd.*......... 2,208,780
27,000 Nexen Inc. .............. 1,576,260
------------
3,785,040
------------
Other Metals/Minerals
40,000 Cameco Corporation
(Canada)................ 1,638,000
------------
Telecommunications
130,700 BCE Inc. ................ 3,266,193
85,000 Rogers Communications,
Inc. (Class B).......... 4,382,600
235,000 Telus Corp.
(Non-Voting)............ 11,203,438
------------
18,852,231
------------
Total Canada............. 24,275,271
------------
Mexico (1.2%)
Telecommunications
80,000 America Movil S.A. de
C.V. (Series L) (ADR)
(Mexico)................ 2,984,800
------------
Russia (1.0%)
Telecommunications
70,000 Mobile Telesystems
(Sponsored ADR)......... 2,562,000
------------
Spain (4.8%)
Electric Utilities
165,000 Iberdrola S.A. .......... 6,122,489
------------
Telecommunications
349,136 Telefonica S.A. ......... 5,990,252
------------
Total Spain.............. 12,112,741
------------
United Kingdom (0.5%)
Electric Utilities
20,000 International Power
Plc. - ADR.............. 1,218,800
------------
</Table>

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

United States (81.0%)
Electric Utilities
365,900 AES Corp. (The)*......... $ 7,771,716
100,300 Ameren Corp. ............ 5,371,065
85,000 CenterPoint Energy,
Inc. ................... 1,228,250
100,700 Consolidated Edison,
Inc. ................... 4,652,340
75,700 Dominion Resources,
Inc. ................... 6,047,673
125,000 DPL, Inc. ............... 3,475,000
211,200 Duke Energy Corp. ....... 6,336,000
60,000 El Paso Electric Co.*.... 1,434,600
110,700 Entergy Corp. ........... 8,595,855
138,200 Exelon Corp. ............ 8,427,436
114,600 FirstEnergy Corp. ....... 6,539,076
195,400 FPL Group, Inc. ......... 8,685,530
140,000 NRG Energy, Inc.*........ 7,089,600
170,000 PG&E Corp. .............. 7,128,100
220,000 PPL Corp. ............... 7,693,400
25,000 Progress Energy, Inc. ... 1,108,250
95,000 Reliant Energy, Inc.*.... 1,278,700
165,300 SCANA Corp. ............. 6,835,155
70,000 Sierra Pacific
Resources*.............. 1,032,500
160,900 Southern Co. (The)....... 5,514,043
135,000 TXU Corp. ............... 8,938,350
145,800 Wisconsin Energy
Corp. .................. 6,269,400
------------
121,452,039
------------
Electronic Equipment/
Instruments
50,000 Itron, Inc.*............. 2,799,000
------------
Energy
170,100 AGL Resources, Inc. ..... 6,189,939
29,000 Anadarko Petroleum
Corp. .................. 1,360,390
320,000 Dynegy, Inc. (Class
A)*..................... 1,984,000
140,200 Equitable Resources,
Inc. ................... 5,167,772
20,000 Kinder Morgan, Inc. ..... 2,087,200
75,000 Ormat Technologies
Inc. ................... 2,729,250
73,100 Questar Corp. ........... 6,326,074
</Table>

8
See Notes to Financial Statements

Morgan Stanley Global Utilities Fund
SUMMARY OF INVESTMENTS - AUGUST 31, 2006 (UNAUDITED)

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

43,000 Range Resources Corp. ... 1,203,140
132,000 Sempra Energy............ $ 6,563,040
100,000 Southwestern Energy
Co.*.................... 3,435,000
95,800 UGI Corp. ............... 2,375,840
------------
39,421,645
------------
Telecommunications
80,000 Alaska Communications
Systems Holdings,
Inc. ................... 1,103,200
95,073 ALLTEL Corp. ............ 5,153,907
200,360 American Tower Corp.
(Class A)*.............. 7,184,910
165,900 AT&T Inc. ............... 5,164,467
110,400 BellSouth Corp. ......... 4,495,488
100,000 Citizens Communications
Co. .................... 1,379,000
70,000 NII Holdings, Inc.*...... 3,734,500
55,000 SBA Communications
Corp.*.................. 1,415,700
155,000 Sprint Nextel Corp. ..... 2,622,600
170,000 Time Warner Telecom Inc.
(Class A)*.............. 3,054,900
110,200 Verizon Communications,
Inc. ................... 3,876,836
------------
39,185,508
------------
Total United States...... 202,858,192
------------
Total Common Stocks
(Cost $177,892,911)...... 247,772,204
------------
<Caption>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------

Short-Term Investment (1.1%)
Repurchase Agreement
$ 2,663 Joint repurchase
agreement account 5.27%
due 09/01/06 (dated
08/31/06; proceeds
$2,663,390) (a)
(Cost $2,663,000)....... $ 2,663,000
------------

Total Investments
(Cost $180,555,911) (b)..... 100.0% 250,435,204
Other Assets in Excess of
Liabilities................. 0.0 78,237
----- ------------
Net Assets.................. 100.0% $250,513,441
===== ============
</Table>

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

<Table>

ADR American Depositary Receipt
* Non-income producing security.
(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
$74,437,014 and the aggregate gross unrealized
depreciation is $4,557,721, resulting in net
unrealized appreciation of $69,879,293.
</Table>

9
See Notes to Financial Statements

Morgan Stanley Global Utilities Fund
SUMMARY OF INVESTMENTS - AUGUST 31, 2006 (UNAUDITED)

FORWARD FOREIGN CURRENCY CONTRACT OPEN AT AUGUST 31, 2006

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

CAD 52,425 $47,251 09/05/06 ($192)
=====

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

SUMMARY OF INVESTMENTS

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

Electric Utilities............. $128,793,328 51.4%
Telecommunications............. 71,335,191 28.5
Energy......................... 43,206,685 17.2
Electronic
Equipment/Instruments......... 2,799,000 1.1
Repurchase Agreement........... 2,663,000 1.1
Other Metals/Minerals.......... 1,638,000 0.7
------------ -----
$250,435,204** 100.0%
============ =====
</Table>

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

<Table>

** Does not include open forward foreign currency
contract with unrealized depreciation of $192.
</Table>

10
See Notes to Financial Statements

Morgan Stanley Global Utilities Fund
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
August 31, 2006 (unaudited)

<Table>

Assets:
Investments in securities, at value
(cost $180,555,911)....................................... $250,435,204
Cash........................................................ 535
Receivable for:
Dividends............................................... 729,797
Investments sold........................................ 232,348
Shares of beneficial interest sold...................... 102,011
Prepaid expenses and other assets........................... 37,273
------------
Total Assets............................................ 251,537,168
------------
Liabilities:
Payable for:
Shares of beneficial interest redeemed.................. 437,635
Investment advisory fee................................. 119,377
Distribution fee........................................ 105,488
Administration fee...................................... 16,755
Transfer agent fee...................................... 8,136
Unrealized depreciation on open forward foreign currency
contract.................................................. 192
Accrued expenses and other payables......................... 336,144
------------
Total Liabilities....................................... 1,023,727
------------
Net Assets.............................................. $250,513,441
============
Composition of Net Assets:
Paid-in-capital............................................. $228,292,443
Net unrealized appreciation................................. 69,879,242
Accumulated undistributed net investment income............. 1,720,048
Accumulated net realized loss............................... (49,378,292)
------------
Net Assets.............................................. $250,513,441
============
Class A Shares:
Net Assets.................................................. $164,254,582
Shares Outstanding (unlimited authorized, $.01 par value)... 9,720,496
Net Asset Value Per Share............................... $16.90
============
Maximum Offering Price Per Share,
(net asset value plus 5.54% of net asset value)......... $17.84
============
Class B Shares:
Net Assets.................................................. $79,084,779
Shares Outstanding (unlimited authorized, $.01 par value)... 4,553,161
Net Asset Value Per Share............................... $17.37
============
Class C Shares:
Net Assets.................................................. $4,430,630
Shares Outstanding (unlimited authorized, $.01 par value)... 262,544
Net Asset Value Per Share............................... $16.88
============
Class D Shares:
Net Assets.................................................. $2,743,450
Shares Outstanding (unlimited authorized, $.01 par value)... 161,746
Net Asset Value Per Share............................... $16.96
============
</Table>

11
See Notes to Financial Statements

Morgan Stanley Global Utilities Fund
FINANCIAL STATEMENTS continued

Statement of Operations
For the six months ended August 31, 2006 (unaudited)

<Table>

Net Investment Income:
Income
Dividends (net of $73,871 foreign withholding tax).......... $ 3,764,547
Interest.................................................... 62,932
-----------
Total Income............................................ 3,827,479
-----------
Expenses
Investment advisory fee..................................... 712,302
Distribution fee (Class A shares)........................... 198,246
Distribution fee (Class B shares)........................... 425,463
Distribution fee (Class C shares)........................... 22,305
Transfer agent fees and expenses............................ 195,669
Administration fee.......................................... 99,972
Shareholder reports and notices............................. 281,690
Registration fees........................................... 29,147
Custodian fees.............................................. 18,384
Professional fees........................................... 90,507
Trustees' fees and expenses................................. 1,228
Other....................................................... 24,034
-----------
Total Expenses.......................................... 2,098,947

Less: expense offset........................................ (963)
-----------
Net Expenses............................................ 2,097,984
-----------
Net Investment Income................................... 1,729,495
-----------
Net Realized and Unrealized Gain:
Net Realized Gain (Loss) on:
Investments................................................. 14,417,549
Foreign exchange transactions............................... (5,810)
-----------
Net Realized Gain....................................... 14,411,739
-----------
Net Change in Unrealized Appreciation/Depreciation on:
Investments................................................. 4,743,460
Translation of forward foreign currency contracts, other
assets and liabilities denominated
in foreign currencies..................................... (1,393)
-----------
Net Appreciation........................................ 4,742,067
-----------
Net Gain................................................ 19,153,806
-----------
Net Increase................................................ $20,883,301
===========
</Table>

12
See Notes to Financial Statements

Morgan Stanley Global Utilities Fund
FINANCIAL STATEMENTS continued

Statements of Changes in Net Assets

<Table>
<Caption>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
AUGUST 31, 2006 FEBRUARY 28, 2006
--------------- -----------------
(unaudited)

Increase (Decrease) in Net Assets:
Operations:
Net investment income....................................... $ 1,729,495 $ 4,015,866
Net realized gain........................................... 14,411,739 41,015,451
Net change in unrealized appreciation/depreciation.......... 4,742,067 (9,015,740)
------------ ------------
Net Increase............................................ 20,883,301 36,015,577
------------ ------------
Dividends to Shareholders from Net Investment Income
Class A shares.............................................. (3,318,955) (4,266,365)
Class B shares.............................................. (579,793) (362,530)
Class C shares.............................................. (44,552) (129,668)
Class D shares.............................................. (38,071) (50,759)
------------ ------------
Total Dividends......................................... (3,981,371) (4,809,322)
------------ ------------

Net decrease from transactions in shares of beneficial
interest.................................................. (28,479,393) (58,778,076)
------------ ------------
Net Decrease............................................ (11,577,463) (27,571,821)
Net Assets:
Beginning of period......................................... 262,090,904 289,662,725
------------ ------------
End of Period
(Including accumulated undistributed net investment income
of $1,720,048 and $3,971,924, respectively)................. $250,513,441 $262,090,904
============ ============
</Table>

13
See Notes to Financial Statements

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2006 (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.

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

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 including circumstances under which Morgan Stanley Investment
Advisors Inc. (the "Investment Adviser") determines that the latest sale price,
the bid price or the mean between the last reported bid and asked price do not
reflect a security's market value, portfolio securities are valued at their fair
value as determined in good faith under procedures established by and under the
general supervision of the Fund's Trustees. Occasionally, developments affecting
the closing prices

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2006 (UNAUDITED) continued

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

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2006 (UNAUDITED) continued

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

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

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 exceeding $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.

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2006 (UNAUDITED) continued

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") 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 $6,381,264
at August 31, 2006.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Financial Advisors and other authorized
financial representatives at the time of sale may be reimbursed in the
subsequent calendar year. For the six months ended August 31, 2006, 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,
2006, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares and Class C shares of $53,382 and $58, respectively
and received $10,438 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.

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2006 (UNAUDITED) continued

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, 2006 aggregated
$34,144,461 and $64,609,818, respectively. At August 31, 2006, the Fund's
receivable for investments sold included unsettled trades with Morgan Stanley &
Co., of $184,905.

For the six months ended August 31, 2006, the Fund incurred brokerage
commissions of $71,655 with Morgan Stanley & Co. Inc., an affiliate of the
Investment Adviser, Administrator and Distributor, for portfolio transactions
executed on behalf of the Fund.

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

At August 31, 2006, Morgan Stanley Multi-Asset Class Fund, an affiliate of the
Investment Adviser, Administrator and Distributor, owned 88,500 Class D shares
of beneficial interest of the Fund.

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 they receive for serving on the Board of Trustees. Each eligible
Trustee generally may elect to have their deferred amounts credited with a
return equal to the total return on one or more of the Morgan Stanley funds that
are offered as investment options under the Compensation Plan.
Appreciation/depreciation and distributions received from these investments are
recorded with an offsetting increase/decrease in the deferred compensation
obligation and do not affect the net asset value of the Fund.

5. Purposes of and Risks Relating to Certain Financial Instruments

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

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, 2006 (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, 2006 FEBRUARY 28, 2006
------------------------- ---------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------

CLASS A SHARES
Sold............................................ 55,568 $ 889,398 248,763 $ 3,798,892
Conversion from Class B......................... 512,033 8,174,260 11,674,182 169,190,617
Reinvestment of dividends....................... 179,795 2,756,258 240,081 3,610,814
Redeemed........................................ (1,245,784) (19,831,868) (2,293,434) (35,256,454)
---------- ------------ ----------- -------------
Net increase (decrease) - Class A............... (498,388) (8,011,952) 9,869,592 141,343,869
---------- ------------ ----------- -------------
CLASS B SHARES
Sold............................................ 42,597 696,533 669,922 10,069,997
Conversion to Class A........................... (500,927) (8,174,260) (11,658,877) (169,190,617)
Reinvestment of dividends....................... 29,207 460,889 19,040 292,646
Redeemed........................................ (868,522) (14,082,198) (2,603,923) (39,654,689)
---------- ------------ ----------- -------------
Net decrease - Class B.......................... (1,297,645) (21,099,036) (13,573,838) (198,482,663)
---------- ------------ ----------- -------------
CLASS C SHARES
Sold............................................ 5,936 94,567 150,392 2,152,093
Reinvestment of dividends....................... 2,504 38,389 7,772 116,423
Redeemed........................................ (40,335) (635,599) (222,140) (3,335,696)
---------- ------------ ----------- -------------
Net decrease - Class C.......................... (31,895) (502,643) (63,976) (1,067,180)
---------- ------------ ----------- -------------
CLASS D SHARES
Sold............................................ 114,417 1,861,259 31,934 484,633
Reinvestment of dividends....................... 1,456 22,398 2,533 38,219
Redeemed........................................ (47,581) (749,419) (70,850) (1,094,954)
---------- ------------ ----------- -------------
Net increase (decrease) - Class D............... 68,292 1,134,238 (36,383) (572,102)
---------- ------------ ----------- -------------
Net decrease in Fund............................ (1,759,636) $(28,479,393) (3,804,605) $ (58,778,076)
========== ============ =========== =============
</Table>

7. Federal Income Tax Status

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

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2006 (UNAUDITED) continued

As of February 28, 2006, the Fund had a net capital loss carryforward of
$62,995,718 which will expire on February 28, 2011 to offset future capital
gains to the extent provided by regulations.

As of February 28, 2006, 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.

8. Expense Offset

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

9. 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, were named as
defendants in a consolidated class action. This consolidated action also named
as defendants certain individual Trustees and Directors of the Morgan Stanley
funds. The consolidated amended complaint, filed in the United States District
Court for the Southern District of New York on April 16, 2004, generally alleged
that defendants, including the Fund, violated their statutory disclosure
obligations and fiduciary duties by failing properly to disclose (i) that the
Investment Adviser and certain affiliates of the Investment Adviser allegedly
offered economic incentives to brokers and others to recommend the funds advised
by the Investment Adviser or its affiliates to investors rather than funds
managed by other companies, and (ii) that the funds advised by the Investment
Adviser or its affiliates, including the Fund, allegedly paid excessive
commissions to brokers in return for their alleged efforts to recommend these
funds to investors. The complaint sought, among other things, unspecified
compensatory damages, rescissionary damages, fees and costs. On July 2, 2004,
defendants moved to dismiss the action. On March 9, 2005, plaintiffs filed a
Motion for Leave to File a Supplemental Pleading that would, among other things,
expand the allegations and alleged class. On April 14, 2006, the Court granted
defendants' motion to dismiss in its entirety, with prejudice. Additionally,
plaintiffs' Motion for Leave to File a Supplemental Pleading was denied. The
time for plaintiffs to appeal the orders granting defendants' motion to dismiss
and denying plaintiffs' motion for supplemental pleading has expired. This case
is now concluded.

10. New Accounting Pronouncement

In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies

Morgan Stanley Global Utilities Fund
NOTES TO FINANCIAL STATEMENTS - AUGUST 31, 2006 (UNAUDITED) continued

the accounting for income taxes by prescribing the minimum recognition threshold
a tax position must meet before being recognized in the financial statements.
FIN 48 is effective for fiscal years beginning after December 15, 2006. The Fund
will adopt FIN 48 during 2007 and the impact to the Fund's financial statements,
if any, is currently being assessed.

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

11. Fund Merger

On February 6, 2006, the Board of Trustees of the Fund approved an Agreement and
Plan of Reorganization by and between the Fund and Morgan Stanley Utilities Fund
("Utilities"), pursuant to which substantially all of the assets of the Fund
would be combined with those of Utilities and shareholders of the Fund would
become shareholders of Utilities, receiving shares of Utilities equal to the
value of their holdings in the Fund (the "Reorganization"). Each shareholder of
the Fund will receive the Class of shares of Utilities that corresponds to the
Class of shares of the Fund currently held by that shareholder. The
Reorganization is subject to the approval of shareholders of the Fund at a
special meeting of shareholders originally scheduled to be held on July 17,
2006, but which has subsequently been adjourned several times, most recently to
October 30, 2006, because the Fund failed to obtain the quorum necessary in
order to hold the prior meetings.

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, 2006 2006 2005 2004* 2003 2002
--------------- --------- --------- --------- --------- ---------
(unaudited)

Class A Shares
Selected Per Share Data:

Net asset value, beginning of period..... $15.83 $14.29 $12.01 $ 9.70 $12.47 $16.51
------ ------ ------ ------ ------ ------

Income (loss) from investment operations:
Net investment income++.............. 0.13 0.28 0.30 0.28 0.32 0.31
Net realized and unrealized gain
(loss)............................... 1.28 1.65 2.33 2.45 (2.73) (3.91)
------ ------ ------ ------ ------ ------

Total income (loss) from investment
operations.............................. 1.41 1.93 2.63 2.73 (2.41) (3.60)
------ ------ ------ ------ ------ ------

Less dividends and distributions from:
Net investment income................ (0.34) (0.39) (0.35) (0.42) (0.36) (0.08)
Net realized gain.................... -- -- -- -- -- (0.36)
------ ------ ------ ------ ------ ------

Total dividends and distributions........ (0.34) (0.39) (0.35) (0.42) (0.36) (0.44)
====== ====== ====== ====== ====== ======

Net asset value, end of period........... $16.90 $15.83 $14.29 $12.01 $ 9.70 $12.47
====== ====== ====== ====== ====== ======

Total Return+............................ 9.15%(1) 13.67% 22.68% 28.57% (19.79)% (22.21)%

Ratios to Average Net Assets(3):
Total expenses (before expense offset)... 1.41%(2) 1.18% 1.16% 1.18% 1.15 % 1.06 %

Net investment income.................... 1.65%(2) 1.78% 2.44% 2.57% 2.91 % 2.06 %

Supplemental Data:
Net assets, end of period, in
thousands............................... $164,255 $161,808 $4,990 $4,868 $4,387 $7,723

Portfolio turnover rate.................. 14%(1) 24% 18% 31% 18 % 19 %
</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>

22
See Notes to Financial Statements

Morgan Stanley Global Utilities Fund
FINANCIAL HIGHLIGHTS continued

<Table>
<Caption>
FOR THE SIX FOR THE YEAR ENDED FEBRUARY 28,
MONTHS ENDED --------------------------------------------------------
AUGUST 31, 2006 2006 2005 2004* 2003 2002
--------------- -------- --------- --------- --------- ---------
(unaudited)

Class B Shares
Selected Per Share Data:

Net asset value, beginning of period...... $16.10 $14.30 $12.00 $ 9.67 $12.40 $16.50
------ ------ ------ ------ ------ ------

Income (loss) from investment operations:
Net investment income++............... 0.07 0.16 0.21 0.20 0.24 0.20
Net realized and unrealized gain
(loss)................................ 1.32 1.69 2.34 2.44 (2.73) (3.89)
------ ------ ------ ------ ------ ------

Total income (loss) from investment
operations............................... 1.39 1.85 2.55 2.64 (2.49) (3.69)
------ ------ ------ ------ ------ ------

Less dividends and distributions from:
Net investment income................. (0.12) (0.05) (0.25) (0.31) (0.24) (0.05)
Net realized gain..................... -- -- -- -- -- (0.36)
------ ------ ------ ------ ------ ------

Total dividends and distributions......... (0.12) (0.05) (0.25) (0.31) (0.24) (0.41)
------ ------ ------ ------ ------ ------

Net asset value, end of period............ $17.37 $16.10 $14.30 $12.00 $ 9.67 $12.40
====== ====== ====== ====== ====== ======

Total Return+............................. 8.67%(1) 12.93% 21.74% 27.60% (20.43)% (22.75)%

Ratios to Average Net Assets(3):
Total expenses (before expense offset).... 2.16%(2) 1.93% 1.92% 1.93% 1.90 % 1.82 %

Net investment income..................... 0.90%(2) 1.03% 1.68% 1.82% 2.16 % 1.30 %

Supplemental Data:
Net assets, end of period, in thousands... $79,085 $94,176 $277,738 $298,012 $306,554 $562,343

Portfolio turnover rate................... 14%(1) 24% 18% 31% 18 % 19 %
</Table>

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

<Table>

23
See Notes to Financial Statements

Morgan Stanley Global Utilities Fund
FINANCIAL HIGHLIGHTS continued

Class C Shares
Selected Per Share Data:

Net asset value, beginning of period..... $15.69 $14.16 $11.89 $ 9.60 $12.33 $16.38
------ ------ ------ ------ ------ ------

Income (loss) from investment operations:
Net investment income++.............. 0.07 0.16 0.21 0.20 0.24 0.22
Net realized and unrealized gain
(loss)............................... 1.28 1.66 2.31 2.42 (2.70) (3.85)
------ ------ ------ ------ ------ ------

Total income (loss) from investment
operations.............................. 1.35 1.82 2.52 2.62 (2.46) (3.63)
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income................ (0.16) (0.29) (0.25) (0.33) (0.27) (0.06)
Net realized gain.................... -- -- -- -- -- (0.36)
------ ------ ------ ------ ------ ------

Total dividends and distributions........ (0.16) (0.29) (0.25) (0.33) (0.27) (0.42)
------ ------ ------ ------ ------ ------

Net asset value, end of period........... $16.88 $15.69 $14.16 $11.89 $ 9.60 $12.33
====== ====== ====== ====== ====== ======

Total Return+............................ 8.73%(1) 12.92% 21.71% 27.53% (20.15)% (22.78)%

Ratios to Average Net Assets(3):
Total expenses (before expense offset)... 2.16%(2) 1.93% 1.89% 1.93% 1.87 % 1.67 %

Net investment income.................... 0.90%(2) 1.03% 1.71% 1.82% 2.19 % 1.45 %

Supplemental Data:
Net assets, end of period, in
thousands............................... $4,431 $4,620 $5,076 $5,548 $5,502 $9,374

Portfolio turnover rate.................. 14%(1) 24% 18% 31% 18 % 19 %
</Table>

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

<Table>

24
See Notes to Financial Statements

Morgan Stanley Global Utilities Fund
FINANCIAL HIGHLIGHTS continued

Class D Shares
Selected Per Share Data:

Net asset value, beginning of period..... $15.91 $14.32 $12.04 $ 9.73 $12.53 $16.54
------ ------ ------ ------ ------ ------

Income (loss) from investment operations:
Net investment income++.............. 0.15 0.31 0.33 0.30 0.35 0.35
Net realized and unrealized gain
(loss)............................... 1.28 1.67 2.33 2.47 (2.73) (3.91)
------ ------ ------ ------ ------ ------

Total income (loss) from investment
operations.............................. 1.43 1.98 2.66 2.77 (2.38) (3.56)
------ ------ ------ ------ ------ ------

Less dividends and distributions from:
Net investment income................ (0.38) (0.39) (0.38) (0.46) (0.42) (0.09)
Net realized gain.................... -- -- -- -- -- (0.36)
------ ------ ------ ------ ------ ------

Total dividends and distributions........ (0.38) (0.39) (0.38) (0.46) (0.42) (0.45)
------ ------ ------ ------ ------ ------

Net asset value, end of period........... $16.96 $15.91 $14.32 $12.04 $ 9.73 $12.53
====== ====== ====== ====== ====== ======

Total Return+............................ 9.23%(1) 14.00% 22.94% 28.87% (19.56)% (21.98)%

Ratios to Average Net Assets(3):
Total expenses (before expense offset)... 1.16%(2) 0.93% 0.92% 0.93% 0.90 % 0.82 %

Net investment income.................... 1.90%(2) 2.03% 2.68% 2.82% 3.16 % 2.30 %

Supplemental Data:
Net assets, end of period, in
thousands............................... $2,743 $1,487 $1,859 $1,725 $1,371 $2,308

Portfolio turnover rate.................. 14%(1) 24% 18% 31% 18 % 19 %
</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>

25
See Notes to Financial Statements

(This Page Intentionally Left Blank)

TRUSTEES

Michael Bozic
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael E. Nugent
Fergus Reid

OFFICERS

Michael E. Nugent
Chairman of the Board

Ronald E. Robison
President and Principal Executive Officer

J. David Germany
Vice President

Dennis F. Shea
Vice President

Barry Fink
Vice President

Amy R. Doberman
Vice President

Carsten Otto
Chief Compliance Officer

Stefanie V. Chang Yu
Vice President

Francis J. Smith
Treasurer and Chief Financial Officer

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, 2006

[MORGAN STANLEY LOGO]

GUTSAR-37873RPT-RA06-00944P-Y08/06

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 second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.

Item 12. Exhibits

(a) 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 19, 2006

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

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

/s/ Francis Smith
- -------------------------------------
Francis Smith
Principal Financial Officer
October 19, 2006