SUB-ADVISORY AGREEMENT


         AGREEMENT made as of the 11th day of August, 2003, by and between
MORGAN STANLEY INVESTMENT ADVISORS INC., a Delaware corporation (hereinafter
referred to as "Morgan Stanley Investment Advisors"), and MORGAN STANLEY
INVESTMENT MANAGEMENT LIMITED, a company incorporated under the laws of England
(hereinafter referred to the "Local Manager").


                              W I T N E S S E T H:
                               - - - - - - - - - -

         WHEREAS, Morgan Stanley International Value Equity Fund (the "Fund") is
a Massachusetts business trust engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940,
as amended (hereinafter referred to as the "Investment Company Act"); and

         WHEREAS, Morgan Stanley Investment Advisors and the Local Manager are
engaged principally in rendering investment advisory services and are registered
as investment advisers under the Investment Advisors Act of 1940, as amended;
and

         WHEREAS, the Local Manager is regulated by the Financial Services
Authority in the United Kingdom; and

         WHEREAS, Morgan Stanley Investment Advisors has entered into an
investment advisory agreement (the "Advisory Agreement") with the Fund dated
February 14, 2001, pursuant to which Morgan Stanley Investment Advisors provides
management and investment and advisory services to the Fund; and

         WHEREAS, the Local Manager is willing to provide investment management
services to Morgan Stanley Investment Advisors in connection with the Fund's
operations on the terms and conditions hereinafter set forth and including the
terms and conditions contained in Annex 1 and Annex 2 to this Agreement;

         NOW THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Local Manager and Morgan Stanley Investment Advisors
hereby agree as follows:

                                   ARTICLE I

                           Duties of the Local Manager

         Morgan Stanley Investment Advisors hereby employs the Local Manager to
act as discretionary investment manager to Morgan Stanley Investment Advisors
and to furnish the investment management services described below, subject to
the broad supervision of Morgan Stanley Investment Advisors and the Fund, for
the period and on the terms and conditions set forth in this Agreement. The
Local Manager hereby accepts such employment and agrees during such period, at
its own expense, to render, or arrange for the rendering of, such services and
to assume the obligations herein set forth for the compensation provided for
herein. Morgan Stanley Investment Advisors and its affiliates shall for all
purposes herein be deemed an Intermediate Customer as defined under the rules
and guidance promulgated by the Financial Services Authority (hereinafter
referred to as the "FSA Rules"). The Local Manager and its affiliates shall for
all purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund.





         The Local Manager shall have full discretion, power and authority on
the Fund's behalf to buy, sell, retain, exchange or otherwise deal in
investments and other assets, make deposits, subscribe to issues and offers for
sale and accept placings of any investments, enter into foreign currency
transactions on a spot or forward basis, effect transactions on any markets,
take all day to day decisions and otherwise act as the Local Manager judges

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