N-CSR 1 a11-4608_1ncsr.htm N-CSR

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			811-03692

Morgan Stanley Variable Investment Series
(Exact name of registrant as specified in charter)

522 Fifth Avenue, New York, New York					10036
(Address of principal executive offices)					(Zip code)

Sara Furber 522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)

Registrant’s telephone number, including area code:				212-296-6990

Date of fiscal year end:	December 31, 2010

Date of reporting period:		December 31, 2010

Item 1 - Report to Shareholders

MORGAN STANLEY
VARIABLE INVESTMENT SERIES

Annual Report

DECEMBER 31, 2010

The Portfolios are intended to be the funding vehicle for variable annuity contracts and variable life insurance policies offered by the separate accounts of certain life insurance companies.

Morgan Stanley Variable Investment Series

Table of Contents

Letter to the Shareholders					1

Expense Example					18

Portfolios of Investments:

Money Market					22

Limited Duration					24

Income Plus					34

Global Infrastructure					49

European Equity					52

Capital Opportunities					56

Aggressive Equity					58

Strategist					60

Financial Statements:

Statements of Assets and Liabilities					78

Statements of Operations					80

Statements of Changes in Net Assets					82

Notes to Financial Statements					90

Financial Highlights					120

Report of Independent Registered Public Accounting Firm					128

Trustee and Officer Information					129

Federal Tax Notice					135

Morgan Stanley Variable Investment Series

Letter to the Shareholders n December 31, 2010

Dear Shareholder:

Macroeconomic concerns and policy makers' responses to them drove gains in the financial markets in 2010. Investors watched the developed world's slow recovery and deflation risk and the emerging world's accelerating economies and mounting inflationary pressures for signs that either side could be dampening global growth. Governments and central banks in the developed world continued to bolster economies and asset prices with stimulative measures and accommodative monetary conditions. In contrast, rising commodity prices and food shortages contributed to inflationary pressures in the emerging markets. China shifted toward a tightening stance and other emerging market central banks were expected to follow, as economic growth in the emerging markets continued to outpace the global average.

Domestic Equity Overview

The U.S. equity market advanced during the 12-month period. By one measure, the S&P 500^® Index, the market was up 15.06% for the year. Intensifying worries about Europe's debt burden and mixed economic data in the U.S. caused the market to retreat early in the year and again in the summer, but these declines were more than offset by rallies in the spring (as the European Union and International Monetary Fund announced a bailout package for Greece and U.S. industrial production improved) and in the late summer (on the anticipation of the Federal Reserve's second round of Treasury assets purchases, known as QE2). The U.S. economy still faced some considerable challenges. Although corporate earnings continued to beat expectations and profit margins were healthy, companies were slow to hire. Concerns about the housing market and debt at the state and local level also weighed on investors' outlooks. Nevertheless, the market ended the year higher, bolstered by the general perception that a double-dip recession was likely averted.

Consumer discretionary, industrials and materials were among the best performing sectors, as investors sought stocks with exposure to the global economic recovery and/or emerging markets demand. The defensively oriented health care and utilities sectors lagged significantly, though all sectors within the S&P 500^® Index had positive returns during the period.

Fixed Income Overview

Over the course of 2010, 2-, 5-, 10-, and 30-year Treasury yields declined by 55, 68, 55, and 29 basis points, respectively. Bond investors anticipated that the Federal Reserve (the Fed) would start to raise short term rates in 2010, but the uneven economic performance of the U.S. economy led the Fed to leave its target federal funds rate unchanged for the second consecutive year.

The Federal Reserve Bank expanded its asset purchase program in November of 2010 and will buy an additional $600 billion in Treasuries, with the result that total Fed purchases over the next six months will amount to between $850 billion and $900 billion, effectively doubling the Fed's holdings of Treasuries. The

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Letter to the Shareholders n December 31, 2010 continued

aim of this new round of quantitative easing (QE2) is to support credit markets, with the hope that this will in turn spur increased economic activity.

Investors' increasing risk appetite was reflected in the generally strong performance of the corporate bond sector over the course of the year. Investment-grade credit bonds rallied, with overall credit spreads versus Treasuries ending the year 14 basis points tighter. The financials sector led investment-grade performance for the year, despite experiencing significant spread widening in the second quarter amid concerns about the indebtedness of some peripheral European countries, regulatory reforms in the U.S. financial sector and the Gulf oil spill. The energy sector lagged for the period. The high yield market performed even more strongly than investment grade debt.

The housing market remained weak in 2010 and foreclosure rates continued to climb. The government's Home Affordability Modification Program (HAMP) and other private programs designed to keep distressed mortgages from being sold in the market at distressed prices and to help homeowners keep their homes have not been as successful as expected. Furthermore, although calls for a nationwide moratorium on foreclosures were rejected, in October several large banks halted repossessions while they internally reviewed allegations of improper loan filings. Banks will therefore have to hold foreclosed homes for longer and the supply of homes for sale may be reduced, as foreclosures represent 30% of existing home sales. With the 30-year fixed mortgage rate reaching a historic low during the fourth quarter of 2010, refinancing activity picked up slightly despite tighter underwriting standards. Against this backdrop, the mortgage sector performed well, with higher coupon and long maturity (30-year) issues outperforming for the 12-month period.

With the Fed maintaining its target federal funds rate near zero percent during the 12-month period, money market yields remained relatively depressed. The Fed was widely expected to keep monetary policy accomodative for an extended period, likely postponing any interest rate hikes until later in 2011 or possibly in 2012.

International Equity Overview

International equities gained moderately for the year, with emerging markets outpacing developed markets (as measured by the MSCI Emerging Markets Index which returned 18.88% and MSCI EAFE Index which returned 7.75%, respectively). While emerging market equities as a whole performed well, China was a notable exception, with one of the lower returns of only 4.63% for the period. Markets in Southeast Asia and Latin America were among the top global performers for the year. The developed markets' advance was hampered primarily by Europe, as the region's sovereign debt crisis caused considerable volatility throughout the period. Not surprisingly, the most heavily indebted countries were among the weakest performers, including Greece, Ireland, Italy, Portugal and Spain. Conversely, Germany, the

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Letter to the Shareholders n December 31, 2010 continued

eurozone's largest economy, benefited from strong Gross Domestic Product (GDP) growth, low unemployment and robust consumer confidence.

As in the U.S., international sector performance was led by groups most likely to benefit from global economic recovery, including industrials, materials, consumer discretionary and technology.

Aggressive Equity Portfolio

For the 12-month period ended December 31, 2010, Variable Investment Series – Aggressive Equity Portfolio Class X shares produced a total return of 26.02%, outperforming the Russell 3000^® Growth Index (the "Index"), which returned 17.64%. For the same period, the Portfolio's Class Y shares returned 25.73%. Past performance is no guarantee of future results.

The performance of the Portfolio's two share classes varies because each has different expenses. The Portfolio's total returns assume the reinvestment of all distributions but do not reflect the deduction of any charges by your insurance company. Such costs would lower performance.

Performance data quoted represents past performance, which is no guarantee of future results and current performance may be lower or higher than the figures shown. For most recent month-end performance figures, please contact the issuing insurance company or speak with your Financial Advisor. Investment return and principal value will fluctuate. When you sell Portfolio shares, they may be worth less than their original cost. Total returns do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. Performance for Class Y shares will vary from the performance of Class X shares due to differences in expenses. Performance assumes reinvestment of all distributions for the underlying portfolio based on net asset value (NAV). It does not reflect the deduction of insurance expenses, an annual contract maintenance fee, or surrender charges. If performance information included the effect of these additional charges, the total returns would be lower.

Average Annual Total Returns as of December 31, 2010

	1 Year			5 Years			10 Years			Since Inception*
Class X		26.02	%		7.10	%		3.17	%		5.94	%
Class Y		25.73	%		6.86	%		2.91	%		2.51	%

(1) Ending value on December 31, 2010 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2) The Russell 3000^® Growth Index measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 3000^® Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 3000^® Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

* Inception dates of May 4, 1999 for Class X and June 5, 2000 for Class Y.

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Letter to the Shareholders n December 31, 2010 continued

the Portfolio, given these companies' attractive valuations and strong balance sheets. Our focus on free cash flow yield and rising return on capital led us to invest in high-quality names, which outperformed despite the volatility in the marketplace. Going forward, we maintain our three- to five-year outlook and continue seeking to capitalize on compelling opportunities to upgrade the portfolio.

Stock selection in technology had the largest positive effect on relative performance, although it was slightly offset by the negative influence of an overweight in the sector. Exposure to the computer services, software and systems industry drove gains. Stock selection in consumer discretionary was advantageous to relative performance, while an overweight in the sector was unfavorable. Outperformance came from the casinos and gambling industry. The health care sector was another source of relative strength, due to stock selection and an underweight in the sector. The medical equipment industry was the sector's leading contributor.

In contrast, relative gains were dampened by both stock selection and an underweight in the energy sector. Within the sector, our exposure to natural gas producers was the primary cause for the underperformance. An overweight in financial services detracted from performance, but relative weakness was partially offset by positive results from our stock selection. The financial data and systems industry was the most disadvantageous to relative performance within the sector.

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

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Letter to the Shareholders n December 31, 2010 continued

Capital Opportunities Portfolio

For the 12-month period ended December 31, 2010, Variable Investment Series – Capital Opportunities Portfolio Class X shares produced a total return of 27.76%, outperforming the Russell 3000^® Growth Index (the "Index"), which returned 17.64%. For the same period, the Portfolio's Class Y shares returned 27.43%. Past performance is no guarantee of future results.

Our emphasis on high-quality companies with sustainable competitive advantages led to positive results versus the broad market. Throughout the year, concerns about the U.S. economy and the financial conditions of several debt-ridden European nations intensified worries about the global economy's recovery and led to increased volatility in the marketplace. We were confident in the long-term prospects of the positions we held in the Portfolio, given these companies' attractive valuations and strong balance sheets. Our focus on free cash flow yield and rising return on capital led us to invest in high-quality names, which outperformed despite the volatility in the marketplace. Going forward, we maintain our three- to five-year outlook and continue seeking to capitalize on compelling opportunities to upgrade the portfolio.

Average Annual Total Returns as of December 31, 2010

	1 Year			5 Years			10 Years			Since Inception*
Class X		27.76	%		7.38	%		2.87	%		11.43	%
Class Y		27.43	%		7.11	%		2.61	%		2.07	%

(1) Ending value on December 31, 2010 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

* Inception dates of March 9, 1984 for Class X and June 5, 2000 for Class Y.

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Letter to the Shareholders n December 31, 2010 continued

Stock selection in technology had the largest positive effect on relative performance, although it was slightly offset by the negative influence of an overweight in the sector. Exposure to the computer services, software and systems industry drove gains. Stock selection in consumer discretionary was advantageous to relative performance, led by the casinos and gambling industry, although the Portfolio's overweight had a negative impact on performance. The health care sector was another source of relative strength, due to stock selection and an underweight in the sector. The medical equipment industry was the sector's leading contributor.

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

European Equity Portfolio

For the 12-month period ended December 31, 2010, Variable Investment Series – European Equity Portfolio Class X shares produced a total return of

Average Annual Total Returns as of December 31, 2010

	1 Year			5 Years			10 Years			Since Inception*
Class X		7.23	%		3.39	%		1.91	%		9.09	%
Class Y		6.96	%		3.13	%		1.66	%		0.83	%

(1) Ending value on December 31, 2010 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2) The Morgan Stanley Capital International (MSCI) Europe Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

* Inception dates of March 1, 1991 for Class X and June 5, 2000 for Class Y.

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Letter to the Shareholders n December 31, 2010 continued

7.23%, outperforming the MSCI Europe Index (the "Index"), which returned 3.88%. For the same period, the Portfolio's Class Y shares returned 6.96%. Past performance is no guarantee of future results.

On a sector basis, relative outperformance was driven by both stock selection and overweight exposures to the capital goods, automobiles and components, and retailing industries. Stock selection in health care equipment, insurance, telecommunication services, food, beverage and tobacco sectors further boosted relative performance. An underweight allocation in the utilities sector also was favorable to relative performance. At the country level, positive contributors included stock selection and an overweight position in Germany (where the Portfolio had significant exposure to the strong performance of exporters), stock selection in Belgium and Finland, and underweight allocations in the lagging markets of Italy and Spain.

In contrast, relative gains were dampened somewhat by stock selection in banks. In this sector, the Portfolio was invested in what we believe are more solid names, many of which are pricing in worst-case scenarios in spite of their financial strength, as the market has differentiated little between banks so far. An underweight allocation in consumer durables hurt performance because we underestimated the demand for luxury goods particularly in China and the emerging markets. An underweight allocation and stock selection in the materials sector and an overweight position in pharmaceuticals also dampened relative results. From a country perspective, stock selection in the U.K. and Greece and an underweight allocation in Denmark were unfavorable during the period.

We remain optimistic on the prospects for European equities in 2011. We believe Europe is split into two groups: one representing risk, the other opportunity. The financials sector (particularly insurance and banking) and the peripheral countries will likely contribute to ongoing volatility, as the spreads on credit default swaps indicate that sovereign default risks remain high, even after the bailouts for Greece and Ireland, and as European leaders seek a structural solution to the crisis.

However, we believe the risks presented by the sovereign debt crisis should be offset by attractive opportunities to invest. We expect that the European economy should be a major beneficiary of a global recovery, with its high exposure to emerging markets and exports boosted by a weak currency. Corporations look healthy, with record profit margins, growing revenues, and balance sheets with low leverage. The macro backdrop appears supportive for European equities, in our opinion. Inflation remains contained, falling within the range most favorable for equity performance, and we expect the European Central Bank

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Letter to the Shareholders n December 31, 2010 continued

to continue providing liquidity and to keep its zero interest rate policy for some time. Finally, we have already taken advantage of weak spots in the market to selectively add to the Portfolio and believe buying opportunities will continue as valuations in the region remain compelling. Our investment approach remains the same. We continue to seek high quality companies with high earnings visibility and predictability, stable and strong cash flow and low levels of debt trading at attractive valuations.

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

Global Infrastructure Portfolio

For the 12-month period ended December 31, 2010, Variable Investment Series – Global Infrastructure Portfolio Class X shares produced a total return of 6.93%, underperforming the Dow Jones Brookfield Global Infrastructure Index (the "Index"), which returned 12.46%, and the S&P Global BMI Index, which returned 15.11%, and outperforming the S&P 500^® Utilities Index/S&P Global Infrastructure Index, which returned 5.77%. For the same period, the Portfolio's Class Y shares returned 6.74%. Past performance is no guarantee of future results.

The performance of the Portfolio's two share classes varies because each has different expenses. The Portfolio's total returns assume the reinvestment of all

Average Annual Total Returns as of December 31, 2010

	1 Year			5 Years			10 Years			Since Inception*
Class X		6.93	%		4.26	%		1.36	%		7.34	%
Class Y		6.74	%		3.99	%		1.10	%		1.24	%

(1) Ending value on December 31, 2010 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2) The Dow Jones Brookfield Global Infrastructure Index^SM is a float-adjusted market capitalization weighted index that measures the stock performance of companies that exhibit strong infrastructure characteristics. The Index intends to measure all sectors of the infrastructure market. The Index was first published in July 2008; however, back-tested hypothetical performance information is available for this Index since December 31, 2002. Returns are calculated using the return data of the S&P Global BMI Index through December 31, 2002 and the return data of the Dow Jones Brookfield Global Infrastructure Index for periods thereafter. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. The Portfolio's secondary benchmark was changed in March 2010 from the S&P 500 Utilities Index/S&P Global Infrastructure Index to the Dow Jones Brookfield Global Infrastructure Index to more accurately reflect the Portfolio's investable universe.

(3) The S&P 500^® Utilities Index/S&P Global Infrastructure Index is a custom index represented by the performance of the S&P 500^® Utilities Index for periods from the Fund's inception to and including November 5, 2008 (the date the Portfolio completed implementation of the change to its principal investment strategy), and the performance of the S&P Global Infrastructure Index for periods thereafter. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(4) The Standard & Poor's Global BMI Index (S&P Global BMI Index) is a broad market index designed to capture exposure to equities in all countries in the world that meet minimum size and liquidity requirements. As of the date of this Report, there are approximately 11,000 index members representing 27 developed and 26 emerging market countries. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

* Inception dates of March 1, 1990 for Class X and June 5, 2000 for Class Y.

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Letter to the Shareholders n December 31, 2010 continued

distributions but do not reflect the deduction of any charges by your insurance company. Such costs would lower performance.

Infrastructure shares appreciated 12.46% during 2010, as measured by the Dow Jones Brookfield Global Infrastructure Index. Among the major infrastructure sectors, the gas midstream, pipeline companies, transmission and distribution, and communications sectors exhibited relative outperformance, while the toll roads, European regulated utilities and gas distribution utilities sectors underperformed the Index.

Despite consisting of companies with good cash flow resilience over the various ups and downs of the economic cycle, the listed infrastructure universe witnessed market conditions in 2010, which were dominated by macroeconomic considerations, in particular concerns about the health of the European financial system. Because of this, sectors with a high concentration of companies within the European region, in particular the toll roads and European regulated utilities, underperformed the broader infrastructure market — even though on a fundamental basis conditions broadly improved relative to 2009. Toward the end of the year, concerns about Europe were replaced with a focus on Asia, as politicians and central banks within the region attempted to control inflation brought on by rapid economic growth and the spillover effects of loose monetary policy within the U.S. and Western Europe. Within infrastructure, this shift in investor focus to concerns over inflation in Asia was realized most acutely within the gas distribution utilities sector, where increases in natural gas prices were put on hold for certain residential customers of Chinese gas utilities in order to mute inflationary pressures on that customer segment. Gas prices are typically a pass-through cost item within a gas distribution utility's cost structure, so this near-term inability to pass through energy costs should likely have a negative near-term impact on cash flows for these stocks.

Away from macroeconomic considerations within the gas distribution utilities, toll roads, and European regulated utilities sectors, positive underlying fundamentals within energy infrastructure provided support for gas midstream companies, and to a more moderate extent, pipeline companies. Relative outperformance for companies in the gas midstream sector was attributable to the resilient demand for and favorable economics associated with drilling for natural gas liquids and crude oil. New drilling by exploration and production companies in liquids-rich areas throughout North America was significant in 2010, and early indications are that this positive fundamental backdrop will continue in 2011. We believe much of the future impact of these positive fundamental trends are already reflected in stock prices; however, we acknowledge that gas midstream and pipeline companies are likely to further benefit in 2011 as they attempt to accommodate exploration and production company needs to gather, process, and transport new

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Letter to the Shareholders n December 31, 2010 continued

product. Furthermore, we note that on a stock-specific basis, a select few of these companies remain quite attractively valued.

Finally, we attribute strong transmission and distribution sector performance to merger and acquisition activity, the impact of favorable weather trends relative to last year, and increases in cash flow resulting from recent rate case rulings. Uncertainty about the U.S. economy over much of the year also provided support for this sector, as investors looked for high yielding companies with stable growth prospects. The communications sector benefited primarily due to strong fundamental growth trends, as wireless communications and satellite television providers continued to utilize wireless tower companies and fixed satellite operators to build out capacity for new content (data services associated with cellular phones for wireless communications companies and digital television services for the satellite television providers).

Portfolio performance over this time period reflected a number of changes coincident with our assumption of portfolio management responsibilities at the end of March 2010: the two most important being (1) a change in the Portfolio's sector benchmark to the Dow Jones Brookfield Global Infrastructure Index and (2) a shift in Portfolio holdings to reflect our fundamental, value-driven investment strategy. Holdings in the Portfolio now generally reflect companies with "core" infrastructure characteristics such as asset ownership/control, high barriers to entry, and cash flow stability. Furthermore, companies with exposure to commodity price fluctuations have been significantly reduced. While these changes have had a negative impact on short-term performance, we anticipate the changes in Portfolio strategy and company constituents should provide investors with a more attractive risk/return profile over the long run.

We have maintained our core investment philosophy as an infrastructure value investor. This results in the ownership of stocks whose share prices provide infrastructure exposure at the best valuation relative to their underlying assets and growth prospects. Our current research leads us to an overweight allocation in the Portfolio to a group of companies in the communications and toll roads sectors, and an underweight allocation to companies in the European regulated utilities, gas distribution utilities, transmission and distribution, and water sectors.

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

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Letter to the Shareholders n December 31, 2010 continued

Income Plus Portfolio

For the 12-month period ended December 31, 2010, Variable Investment Series – Income Plus Portfolio Class X shares produced a total return of 9.28%, outperforming the Barclays Capital U.S. Corporate Index (the "Index"), which returned 9.00%. For the same period, the Portfolio's Class Y shares returned 9.01%. Past performance is no guarantee of future results.

The Portfolio began the year overweight in financials (banks, insurance, finance and real estate investment trusts or REITs) as well as defensive sectors such as telecommunications, cable and diversified media. The overweight allocation in the financial sector was the largest contributor to the Portfolio's outperformance. Within financials, the Portfolio's largest overweight had been in banking, which outperformed the Index early in the year. As the year progressed, we reduced our exposure to banking and increased exposure to insurance, which rallied significantly in the second half of the year. Our position in REITs also helped drive performance, as the sector had the greatest excess return on the year. Our preference for owning these positions was predicated on the belief that these companies would increase their capital overall while continuing to reduce balance sheet risks.

Average Annual Total Returns as of December 31, 2010

	1 Year			5 Years			10 Years			Since Inception*
Class X		9.28	%		6.45	%		6.42	%		7.36	%
Class Y		9.01	%		6.18	%		6.16	%		6.62	%

(1) Ending value on December 31, 2010 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2) The Barclays Capital U.S. Corporate Index covers U.S. dollar-denominated, investment-grade, fixed rate, taxable securities sold by industrial, utility and financial issuers. It includes publicly issued U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity and quality requirements. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

* Inception dates of March 1, 1987 for Class X and June 5, 2000 for Class Y.

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Letter to the Shareholders n December 31, 2010 continued

The Portfolio's largest underweight position was in the health care sector, which underperformed the Index. The sector was hurt by spread tightening and relatively low yields versus government bonds, as well as investors' preference during the period for sectors with greater economic sensitivity. While the Portfolio did have exposure to the underperforming energy sector, it was underweight to the sector overall. Within energy, the Portfolio was overweight in pipeline master limited partnerships (MLPs), which have less exposure to volatility in oil and gas prices as well as to the fall-out from the oil spill in the Gulf of Mexico. We did take advantage of post-spill valuations to add selectively to exposure in the sector.

Our participation in new issues was concentrated at the lower-rated end of the Portfolio's investment universe, in companies with improving capital structures and (in the case of BB rated issues) the potential to become "cross-over" candidates, or companies which are upgraded from high yield to investment grade. The Portfolio's exposure to lower-quality names was also additive to returns, given their outperformance.

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

Limited Duration Portfolio

For the 12-month period ended December 31, 2010, Variable Investment Series – Limited Duration Portfolio Class X shares produced a total return of 2.35%, underperforming the Barclays Capital U.S.

Average Annual Total Returns as of December 31, 2010

	1 Year			5 Years			10 Years			Since Inception*
Class X		2.35	%		–0.22	%		1.49	%		1.91	%
Class Y		2.22	%		–0.44	%		1.25	%		1.54	%

(1) Ending value on December 31, 2010 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2) The Barclays Capital U.S. Credit Index (1-5 Year) includes U.S. corporate and specified foreign debentures and secured notes with maturities of one to five years. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

⁽³⁾ The Barclays Capital U.S. Government/Credit Index (1-5 Year) tracks the performance of U.S. government and corporate obligations, including U.S. government agency and Treasury securities, and corporate and Yankee bonds with maturities of one to five years. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index. The benchmark for the Portfolio is changing from the Barclays Capital U.S. Credit Index (1-5 Year) to the Barclays Capital U.S. Government/Credit Index (1-5 Year) effective 01/01/11.

* Inception dates of May 4, 1999 for Class X and June 5, 2000 for Class Y.

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Letter to the Shareholders n December 31, 2010 continued

Credit Index (1-5 Year) (the "Index"), which returned 5.44%. Beginning January 1, 2011, the benchmark is changing from the Barclays Capital U.S. Credit Index (1-5 Year) to the Barclays Capital U.S. Government/Credit Index (1-5 Year). The return for the Barclays Capital U.S. Government/Credit Index (1-5 Year) for the 12 months ended December 31, 2010 was 4.08%. For the same period, the Portfolio's Class Y shares returned 2.22%. Past performance is no guarantee of future results.

The Portfolio's underperformance of the Index was mainly attributable to its relative underweight in corporate credit. This positioning kept the Portfolio from fully benefiting from the sector's strong performance, as investment-grade credit spreads relative to Treasuries tightened during the year. The Portfolio's lower duration relative to that of the Index also detracted from relative performance, as this positioning was unfavorable in 2010's declining yield environment.

The underweight to the credit sector was largely the result of the Portfolio's allocation to asset-backed securities (ABS) and agency debt, which are not represented in the Index. The ABS position contributed to relative performance as spreads in the sector narrowed over the year.

With regard to the Portfolio's yield curve positioning, we employed tactical strategies involving interest rate swaps that were designed to take advantage of anomalies across the swap curve. For example, we positioned the Portfolio to benefit from an anticipated flattening between the three- and seven-year points of the yield curve. Overall, yield-curve trades did not have a significant impact on performance.

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

Money Market Portfolio

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in such funds.

As of December 31, 2010, Variable Investment Series – Money Market Portfolio had net assets of approximately $127 million with an average portfolio maturity of 23 days. For the seven-day period ended December 31, 2010, the Portfolio's Class X shares provided an effective annualized yield of 0.01% (subsidized) and –0.28% (non-subsidized) and a current yield of 0.01% (subsidized) and –0.28% (non-subsidized), while its

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Letter to the Shareholders n December 31, 2010 continued

30-day moving average yield for December was 0.01% (subsidized) and –0.29% (non-subsidized). Yield quotations more closely reflect the current earnings of the Portfolio. The non-subsidized yield reflects what the yield would have been had a fee and/or expense waiver not been in place during the period shown. For the 12-month period ended December 31, 2010, the Portfolio's Class X shares returned 0.01%. Past performance is no guarantee of future results.

For the seven-day period ended December 31, 2010, the Portfolio's Class Y shares provided an effective annualized yield of 0.01% (subsidized) and –0.53% (non-subsidized) and a current yield of 0.01% (subsidized) and –0.53% (non-subsidized), while its 30-day moving average yield for December was 0.01% (subsidized) and –0.54% (non-subsidized). Yield quotations more closely reflect the current earnings of the Portfolio. The non-subsidized yield reflects what the yield would have been had a fee and/or expense waiver not been in place during the period shown. For the 12-month period ended December 31, 2010, the Portfolio's Class Y shares returned 0.01%. Past performance is no guarantee of future results.

During the reporting period, three-month London Interbank Offered Rate (LIBOR) levels dropped significantly. In early July, the market had begun to stabilize from the European debt crisis of May/June, when fears of a Greece default and contagion drove three-month LIBOR approximately 30 basis points higher to just under 0.54%. As European banking system stress tests were completed and the European Central Bank subsequently extended full allotment, three-month tender auctions through year-end, three-month LIBOR levels gradually fell back to 0.285% by November, with a slight rise back up to 0.302% by year-end.

With LIBOR and LIBOR-OIS spread (the spread between LIBOR and the overnight indexed swap, a measure of market sentiment) again trading back down to tight levels, we found very little value in the money market curve. Our strategy in managing the Portfolio remained consistent with our long-term focus on capital preservation and very high liquidity and, as in the past, we adhered to a conservative approach. During the reporting period, we continued to emphasize purchasing high-quality corporate, financial, and banking obligations. We focused on maintaining high levels of liquidity and a prudent weighted average maturity and weighted average life to guard the Portfolio against the uncertainty caused by volatility in the financial markets. We continue to review all eligible securities on our purchase list to ensure that they continue to meet our high standards of minimal credit risk.

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

Morgan Stanley Variable Investment Series

Letter to the Shareholders n December 31, 2010 continued

Strategist Portfolio

For the 12-month period ended December 31, 2010, Variable Investment Series – Strategist Portfolio Class X shares produced a total return of 6.81%, underperforming the S&P 500^® Index (the "Index"), which returned 15.06%, and outperforming the Barclays Capital U.S. Government/Credit Index, which returned 6.59%. For the same period, the Portfolio's Class Y shares returned 6.50%. Past performance is no guarantee of future results.

Strategist Portfolio's flexible investment approach allows investment across stocks, bonds, cash and other investment classes. To determine the specific allocation among asset classes throughout the period, we rigorously evaluate a comprehensive array of quantitative and qualitative factors. The quantitative analysis comprises an extensive "top-down" asset class review of many macroeconomic variables, with primary focus on three core factors: monetary policy and its impact on liquidity, inflation trends, and corporate profitability. A second, more qualitative process then broadens the analysis to determine which sectors and industries would offer the best opportunities, in our view, given the macroeconomic climate. Individual holdings are then selected to provide desired exposure to asset classes and sectors.

Average Annual Total Returns as of December 31, 2010

	1 Year			5 Years			10 Years			Since Inception*
Class X		6.81	%		3.97	%		4.03	%		8.16	%
Class Y		6.50	%		3.70	%		3.76	%		3.55	%

(1) Ending value on December 31, 2010 for the underlying portfolio. This figure does not reflect the deduction of any account fees or sales charges.

(2) The Standard & Poor's 500^® Index (S&P 500^®) measures the performance of the large cap segment of the U.S. equities market, covering approximately 75% of the U.S. equities market. The Index includes 500 leading companies in leading industries of the U.S. economy. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

(3) The Barclays Capital U.S. Government/Credit Index tracks the performance of government and corporate obligations, including U.S. government agency and Treasury securities and corporate and Yankee bonds. The Index is unmanaged and its returns do not include any sales charges or fees. Such costs would lower performance. It is not possible to invest directly in an index.

* Inception dates of March 1, 1987 for Class X and June 5, 2000 for Class Y.

Morgan Stanley Variable Investment Series

Letter to the Shareholders n December 31, 2010 continued

The Portfolio's target allocation shifted throughout 2010, beginning with a gradual move from cash and bonds to equities in the first half of the year. By year end, the Portfolio's exposures reflected our views that the coming cycle would favor long-dated equity and commodity-based investments over debt and credit securities. The Portfolio entered 2011 with an overweight exposure to equities at 75% of total assets (versus an average balanced fund's 55% weight) and an underweight exposure to fixed income (20% versus an average balanced fund's 35% weight) and cash (5% versus an average balanced fund's 10% exposure).

Investors entered 2010 with a great deal of pessimism, as expectations for a robust global economic recovery appeared to evaporate under the weight of escalating unemployment, a fractured Congress, financial uncertainty, a deteriorating housing market and the potential for a European sovereign debt collapse. In fact, fears arose that the U.S. economy could fall back into recession (a "double-dip"), the likes of which the U.S. had not seen since the early 1980s.

Yet, in the wake of this pessimism, unexpected signs began to emerge in the first quarter — positive news on the number of Americans on unemployment insurance, improving industrial production and capacity utilization and, most importantly, corporate earnings continuing to exceed expectations. By April, the macro discussion had quickly shifted from recession to growth; the S&P 500 Index appreciated to levels not seen since pre-crisis while the 10-year U.S. Treasury note (considered a safe haven during the recession) climbed to a 4% yield, a level last seen in mid-2008.

Investors, unfortunately, would be forced to digest yet another growth "head-fake" as data following the first quarter's positive surprises reversed once again. It became clear that, although corporations were selectively investing for recovery, they generally were not hiring and were making most of their investments in plants and equipment outside the U.S. Additionally, the risks associated with the U.S. housing market, consumer confidence and European debt had not subsided. From April's stock market peak to August's low, the S&P 500 Index lost over 13%, while investors rushed back into the relative safety of government bonds, driving the 10-year U.S. Treasury note yield all the way back to 2.40 percent.

At this point, the Federal Reserve, recognizing the need to provide an additional measure of support, announced its second "bond buyback" program, in an attempt to reassure market participants that it would do everything in its power to keep interest rates low and capital flowing. The program hit its stride in November and December, just after the mid-term election uncertainty passed and real improvement in the U.S. job market and capital spending took hold in a more robust fashion.

Morgan Stanley Variable Investment Series

Letter to the Shareholders n December 31, 2010 continued

Throughout 2010, we viewed equity market corrections tied to macroeconomic concerns as opportunities to increase our exposures to undervalued U.S. equities. We focused our purchases in sectors that we feel have the desirable combination of cyclicality and value: information technology, industrials and financials.

The fixed income component of the Portfolio shifted during the period under review as well. As of December 31, 2010, the bond portfolio's exposure to U.S. government-issued securities fell from 40% to 34%, while the portfolio's exposure to corporate credits increased from 39% to 43%. The balance of the portfolio remained distributed among various asset-backed securities and short-term instruments.

During the period under review, instruments defined as derivatives were used only to position the fixed income portfolio to desired weights as reflected in the asset allocation mandate.

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

We appreciate your ongoing support of Morgan Stanley Variable Investment Series and look forward to continuing to serve your investment needs.

Very truly yours,

Sara Furber
President and Principal Executive Officer

Morgan Stanley Variable Investment Series

Expense Example n December 31, 2010

As a shareholder of the Portfolio, you incur two types of costs: (1) insurance company charges; and (2) ongoing costs, including advisory fees; distribution and service (12b-1) fees; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio 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 07/01/10 – 12/31/10.

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 Portfolio's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio'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 Portfolio 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 insurance company charges. 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 insurance company charges were included, your costs would have been higher.

Morgan Stanley Variable Investment Series

Expense Example n December 31, 2010 continued

Money Market

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/10		12/31/10		07/01/10 – 12/31/10
Class X
Actual (0.01% return)	$	1,000.00	$	1,000.10	$	1.76
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,023.44	$	1.79
Class Y
Actual (0.01% return)	$	1,000.00	$	1,000.10	$	1.76
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,023.44	$	1.79

@ Expenses are equal to the Portfolio's annualized expense ratios of 0.35% and 0.35% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). If the Portfolio had borne all of its expenses, the annualized expense ratios would have been 0.64% and 0.89% for Class X and Class Y shares, respectively.

Limited Duration

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/10		12/31/10		07/01/10 – 12/31/10
Class X
Actual (1.04% return)	$	1,000.00	$	1,010.40	$	2.94
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.28	$	2.96
Class Y
Actual (0.92% return)	$	1,000.00	$	1,009.20	$	4.20
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,021.02	$	4.23

@ Expenses are equal to the Portfolio's annualized expense ratios of 0.58% and 0.83% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Income Plus

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/10		12/31/10		07/01/10 – 12/31/10
Class X
Actual (4.55% return)	$	1,000.00	$	1,045.50	$	3.09
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.18	$	3.06
Class Y
Actual (4.47% return)	$	1,000.00	$	1,044.70	$	4.38
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.92	$	4.33

@ Expenses are equal to the Portfolio's annualized expense ratios of 0.60% and 0.85% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Morgan Stanley Variable Investment Series

Expense Example n December 31, 2010 continued

Global Infrastructure

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/10		12/31/10		07/01/10 – 12/31/10
Class X
Actual (21.71% return)	$	1,000.00	$	1,217.10	$	4.69
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.97	$	4.28
Class Y
Actual (21.44% return)	$	1,000.00	$	1,214.40	$	6.08
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.71	$	5.55

@ Expenses are equal to the Portfolio's annualized expense ratios of 0.84% and 1.09% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

European Equity

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/10		12/31/10		07/01/10 – 12/31/10
Class X
Actual (29.44% return)	$	1,000.00	$	1,294.40	$	5.78
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.16	$	5.09
Class Y
Actual (29.29% return)	$	1,000.00	$	1,292.90	$	7.22
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.90	$	6.36

@ Expenses are equal to the Portfolio's annualized expense ratios of 1.00% and 1.25% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). If the Portfolio had borne all of its expenses, the annualized expense ratios would have been 1.20% and 1.45% for Class X and Class Y shares, respectively.

Capital Opportunities

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/10		12/31/10		07/01/10 – 12/31/10
Class X
Actual (38.12% return)	$	1,000.00	$	1,381.20	$	3.54
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.23	$	3.01
Class Y
Actual (37.95% return)	$	1,000.00	$	1,379.50	$	5.04
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.97	$	4.28

@ Expenses are equal to the Portfolio's annualized expense ratios of 0.59% and 0.84% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Morgan Stanley Variable Investment Series

Expense Example n December 31, 2010 continued

Aggressive Equity

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/10		12/31/10		07/01/10 – 12/31/10
Class X
Actual (37.18% return)	$	1,000.00	$	1,371.80	$	6.70
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,019.56	$	5.70
Class Y
Actual (36.99% return)	$	1,000.00	$	1,369.90	$	8.18
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,018.30	$	6.97

@ Expenses are equal to the Portfolio's annualized expense ratios of 1.12% and 1.37% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Strategist

	Beginning Account Value		Ending Account Value		Expenses Paid During Period@
	07/01/10		12/31/10		07/01/10 – 12/31/10
Class X
Actual (11.63% return)	$	1,000.00	$	1,116.30	$	3.25
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,022.13	$	3.11
Class Y
Actual (11.40% return)	$	1,000.00	$	1,114.00	$	4.58
Hypothetical (5% annual return before expenses)	$	1,000.00	$	1,020.87	$	4.38

@ Expenses are equal to the Portfolio's annualized expense ratios of 0.61% and 0.86% for Class X and Class Y shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). If the Portfolio had borne all of its expenses, the annualized expense ratios would have been 0.62% and 0.87% for Class X and Class Y shares, respectively.

Morgan Stanley Variable Investment Series - Money Market

Portfolio of Investments n December 31, 2010

PRINCIPAL AMOUNT IN THOUSANDS			ANNUALIZED YIELD ON DATE OF PURCHASE			MATURITY DATE	VALUE
		Commercial Paper (38.6%)
		Asset-Backed Corporate (3.9%)
$	5,000	Atlantis One Funding (a)		0.15	%	01/03/11	$	4,999,958
		Domestic Banks (7.9%)
	5,000	JP Morgan Chase & Co.		0.01		01/03/11		4,999,997
	5,000	Wells Fargo & Co.		0.03		01/03/11		4,999,992
								9,999,989
		International Banks (26.8%)
	5,500	ABN Amro Funding USA LLC (a)		0.31 - 0.35		02/04/11 - 03/15/11		5,496,941
	500	BNZ International Funding (a)		0.42		06/07/11		499,084
	6,000	BPCE SA (a)		0.39 - 0.64		01/04/11 - 03/15/11		5,996,730
	5,000	Credit Suisse - New York Branch		0.25		01/24/11		4,999,202
	5,000	Deutsche Bank Financial LLC		0.25		01/21/11		4,999,306
	5,000	Nordea North America, Inc.		0.27		01/13/11		4,999,550
	5,000	Skandinaviska Enskilda (a)		0.29		02/01/11		4,998,751
	2,000	Sumitomo Mitsui Banking Corp. (a)		0.30		01/26/11		1,999,583
								33,989,147
		Total Commercial Paper (Cost $48,989,094)						48,989,094
		Repurchase Agreements (25.5%)
	15,402	Barclays Capital LLC (dated 12/31/10; proceeds $15,402,321; fully collateralized by a U.S. Government Obligation; U.S. Treasury Note 0.00% due 02/15/32; valued at $15,710,040)		0.25		01/03/11		15,402,000
	5,000	BNP Paribas Securities (dated 12/31/10; proceeds $5,000,071; fully collateralized by a U.S. Government Agency; Federal National Mortgage Association 4.50% due 09/01/40; valued at $5,150,001)		0.17		01/03/11		5,000,000
	12,000	Merrill Lynch & Co., Inc. (dated 12/31/10; proceeds $12,000,150; fully collateralized by U.S. Government Agencies; Federal Farm Credit Bank 0.00% due 10/07/11; Federal Home Loan Mortgage Corp. 5.97% due 01/05/11; Federal National Mortgage Association 0.00% - 5.25% due 08/01/12 - 01/15/19; valued at $12,240,059)		0.15		01/03/11		12,000,000
		Total Repurchase Agreements (Cost $32,402,000)						32,402,000

See Notes to Financial Statements
22

Morgan Stanley Variable Investment Series - Money Market

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			ANNUALIZED YIELD ON DATE OF PURCHASE			MATURITY DATE			VALUE
		Floating Rate Notes (20.5%)
		International Banks
$	6,000	Barclays Bank PLC		0.44	(b)%	01/19/11(c)			$	6,000,000
	6,000	BNP Paribas		0.65	(b)	03/23/11(c)				6,000,000
	5,000	Lloyds TSB Bank PLC		0.46	(b)	01/31/11(c)				5,000,000
	4,000	Royal Bank of Scotland PLC		0.49	(b)	02/10/11(c)				4,000,000
	5,000	Societe Generale		1.49	(b)	02/07/11(c)				5,000,000
		Total Floating Rate Notes (Cost $26,000,000)								26,000,000
		Certificates of Deposit (15.7%)
		International Banks
	5,000	Bank of Montreal - Chicago		0.23		01/14/11				5,000,000
	5,000	Credit AG CIB		0.31		02/04/11				5,000,000
	5,000	Credit Industriel et Commercial		0.50		01/05/11				5,000,000
	5,000	Svenska Handelsbanken NY		0.28		02/01/11				5,000,042
		Total Certificates of Deposit (Cost $20,000,042)								20,000,042
		Total Investments (Cost $127,391,136) (d)					100.3	%		127,391,136
		Liabilities in Excess of Other Assets					(0.3	)		(321,017	)
		Net Assets					100.0	%	$	127,070,119

(a) Resale is restricted to qualified institutional investors.

(b) Rate shown is the rate in effect at December 31, 2010.

(c) Date of next interest rate reset.

(d) Cost is the same for federal income tax purposes.

MATURITY SCHEDULE†

1 - 30 Days	65	%
31 - 60 Days	24
61 - 90 Days	10
91 - 120 Days	0
121+ Days	1
	100	%

† As a percentage of total investments.

See Notes to Financial Statements
23

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2010

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (51.2%)
		Agricultural Chemicals (0.6%)
$	350	Potash Corp. of Saskatchewan, Inc. (Canada)		5.25	%	05/15/14	$	383,012
		Agricultural Operations (0.4%)
	260	Bunge Ltd. Finance Corp.		5.35		04/15/14		273,495
		Auto - Cars/Light Trucks (0.6%)
	360	Daimler Finance North America LLC		7.30		01/15/12		382,590
	30	Nissan Motor Acceptance Corp. (144A) (a)		3.25		01/30/13		30,627
								413,217
		Beverages (0.6%)
	165	Anheuser-Busch InBev Worldwide, Inc.		4.125		01/15/15		173,942
	205	Anheuser-Busch InBev Worldwide, Inc. (144A) (a)		5.375		11/15/14		226,058
								400,000
		Beverages - Wine/Spirits (0.4%)
	265	Bacardi Ltd. (144A) (Bermuda) (a)		7.45		04/01/14		305,053
		Building Societies (0.4%)
	270	Nationwide Building Society (144A) (United Kingdom) (a)		4.65		02/25/15		272,454
		Cable/Satellite TV (0.7%)
	215	COX Communications, Inc.		4.625		06/01/13		230,214
	220	DirecTV Holdings LLC/DirecTV Financing Co., Inc.		4.75		10/01/14		234,668
								464,882
		Capital Markets (1.5%)
	425	Goldman Sachs Group, Inc. (The)		3.70		08/01/15		433,491
	230	Macquarie Group Ltd. (144A) (Australia) (a)		7.30		08/01/14		251,371
	365	UBS AG/Stamford CT (Series DPNT) (Switzerland)		3.875		01/15/15		376,526
								1,061,388
		Cellular Telecommunications (0.5%)
	340	Vodafone Group PLC (United Kingdom)		5.00		12/16/13		370,374
		Chemicals - Diversified (0.6%)
	350	Dow Chemical Co. (The)		5.90		02/15/15		387,874
		Commercial Banks (14.6%)
	355	ANZ National Int'l Ltd. (144A) (New Zealand) (a)		2.375		12/21/12		360,650
	315	Barclays Bank PLC (United Kingdom)		2.50		01/23/13		320,274
	390	Canadian Imperial Bank of Commerce (Canada)		1.45		09/13/13		388,974
	900	Commonwealth Bank of Australia (144A) (Australia) (a)		2.50		12/10/12		928,033

See Notes to Financial Statements
24

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	575	Commonwealth Bank of Australia (144A) (Australia) (a)		2.75	%	10/15/12	$	590,183
	340	Credit Suisse (Switzerland)		5.50		05/01/14		373,147
	120	Intesa Sanpaolo SpA (144A) (Italy) (a)		3.625		08/12/15		116,130
	365	Nordea Bank AB (144A) (Sweden) (a)		2.50		11/13/12		373,049
	2,300	Royal Bank of Scotland PLC (The) (144A) (United Kingdom) (a)		2.625		05/11/12		2,355,202
	380	Royal Bank of Scotland PLC (The) (United Kingdom)		4.875		03/16/15		389,078
	300	Standard Chartered PLC (144A) (United Kingdom) (a)		3.85		04/27/15		309,176
	320	Svenska Handelsbanken AB (144A) (Sweden) (a)		2.875		09/14/12		327,898
	1,545	Swedbank AB (144A) (Sweden) (a)		2.90		01/14/13		1,594,902
	750	Wells Fargo & Co. (Series I)		3.75		10/01/14		783,596
	810	Westpac Securities NZ Ltd. (144A) (New Zealand) (a)		2.50		05/25/12		829,148
								10,039,440
		Data Processing Services (0.3%)
	203	Fiserv, Inc.		6.125		11/20/12		219,638
		Diversified Financial Services (3.4%)
	300	Bank of America Corp.		4.50		04/01/15		305,193
	580	Citigroup, Inc. (See Note 6)		6.50		08/19/13		637,261
	280	General Electric Capital Corp. (MTN)		3.50		06/29/15		285,199
	700	General Electric Capital Corp. (Series A)		5.45		01/15/13		753,143
	250	JPMorgan Chase & Co.		3.40		06/24/15		255,202
	110	Societe Generale (144A) (France) (a)		3.10		09/14/15		107,614
								2,343,612
		Diversified Minerals (0.6%)
	350	Anglo American Capital PLC (144A) (United Kingdom) (a)		9.375		04/08/14		421,695
		Diversified Telecommunication Services (0.5%)
	375	AT&T, Inc.		2.50		08/15/15		374,087
		Electric - Integrated (2.4%)
	380	Dominion Resources, Inc.		5.70		09/17/12		409,064
	350	EDF SA (144A) (France) (a)		5.50		01/26/14		384,455
	350	Enel Finance International SA (144A) (Luxembourg) (a)		3.875		10/07/14		356,222
	265	NextEra Energy Capital Holdings, Inc.		5.35		06/15/13		287,263
	215	PPL Energy Supply LLC		6.30		07/15/13		237,004
								1,674,008

See Notes to Financial Statements
25

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Electric Utilities (0.3%)
$	215	Firstenergy Solutions Corp.		4.80	%	02/15/15	$	225,978
		Electronic Connectors (0.2%)
	140	Amphenol Corp.		4.75		11/15/14		149,697
		Electronic Measuring Instrument (0.6%)
	385	Agilent Technologies, Inc.		4.45		09/14/12		402,342
		Finance - Consumer Loans (0.5%)
	350	HSBC Finance Corp.		5.25		04/15/15		373,353
		Finance - Credit Card (1.2%)
	475	American Express Co.		7.25		05/20/14		541,544
	250	MBNA Corp.		6.125		03/01/13		268,554
								810,098
		Finance - Investment Banker/Broker (0.7%)
	75	Jefferies Group, Inc.		3.875		11/09/15		73,798
	365	TD Ameritrade Holding Corp.		2.95		12/01/12		373,632
								447,430
		Food - Retail (0.9%)
	330	Delhaize Group SA (Belgium)		5.875		02/01/14		364,433
	225	Kroger Co. (The)		7.50		01/15/14		259,593
								624,026
		Food Products (0.6%)
	345	Kraft Foods, Inc.		6.75		02/19/14		393,560
		Government Guaranteed Non-U.S. (0.9%)
	577	Societe Financement de l'Economie Francaise (144A) (France) (a)		3.375		05/05/14		608,182
		Health Care Providers & Services (0.8%)
	350	Medco Health Solutions, Inc.		7.25		08/15/13		397,790
	185	UnitedHealth Group, Inc.		5.25		03/15/11		186,577
								584,367
		Hotels & Motels (0.6%)
	420	Marriott International, Inc.		4.625		06/15/12		436,887
		Instruments - Scientific (0.3%)
	220	Thermo Fisher Scientific, Inc.		3.25		11/20/14		226,415
		Insurance (1.3%)
	225	MetLife, Inc. (See Note 6)		2.375		02/06/14		226,235
	270	Principal Financial Group, Inc.		7.875		05/15/14		311,289
	320	Prudential Financial, Inc. (MTN)		4.75		09/17/15		338,912
								876,436

See Notes to Financial Statements
26

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Life/Health Insurance (0.2%)
$	110	Aflac, Inc.		3.45	%	08/15/15	$	111,871
		Media (1.4%)
	300	Comcast Corp.		6.50		01/15/15		341,925
	200	Time Warner Cable, Inc.		8.25		02/14/14		232,314
	350	Viacom, Inc.		4.375		09/15/14		372,936
								947,175
		Medical - Biomedical/Genetics (0.5%)
	325	Biogen Idec, Inc.		6.00		03/01/13		351,212
		Metals & Mining (0.3%)
	190	ArcelorMittal (Luxembourg)		9.00		02/15/15		226,339
		Money Center Banks (1.3%)
	355	Deutsche Bank AG (Germany)		2.375		01/11/13		360,412
	500	Lloyds TSB Bank PLC (144A) (United Kingdom) (a)		2.80		04/02/12		512,371
								872,783
		Mortgage Banks (1.4%)
	575	Abbey National Treasury Services PLC (144A) (United Kingdom) (a)		3.875		11/10/14		570,293
	400	Cie de Financement Foncier (144A) (France) (a)		1.625		07/23/12		402,030
								972,323
		Multi-line Insurance (0.9%)
	260	American International Group, Inc.		3.65		01/15/14		264,817
	350	Monumental Global Funding III (144A) (a)		5.25		01/15/14		372,390
								637,207
		Multimedia (0.8%)
	290	NBC Universal, Inc. (144A) (a)		2.10		04/01/14		289,366
	245	News America, Inc.		5.30		12/15/14		270,976
								560,342
		Office Electronics (0.4%)
	210	Xerox Corp.		8.25		05/15/14		245,310
		Oil Companies - Exploration & Production (0.9%)
	350	EOG Co. of Canada (144A) (Canada) (a)		7.00		12/01/11		370,134
	215	Nexen, Inc. (Canada)		5.05		11/20/13		229,064
								599,198
		Oil Company - Integrated (0.3%)
	205	BP Capital Markets PLC (United Kingdom)		3.875		03/10/15		211,659

See Notes to Financial Statements
27

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Pipelines (1.6%)
$	180	Enterprise Products Operating LLC (Series B)		7.50	%	02/01/11	$	180,798
	225	Enterprise Products Operating LLC (Series O)		9.75		01/31/14		271,973
	320	Plains All American Pipeline LP/PAA Finance Corp.		4.25		09/01/12		333,829
	305	Spectra Energy Capital LLC		5.90		09/15/13		335,725
								1,122,325
		Retail - Drug Store (0.3%)
	180	CVS Caremark Corp.		5.75		08/15/11		185,610
		Retail - Restaurants (0.3%)
	185	Yum! Brands, Inc.		8.875		04/15/11		189,108
		Special Purpose Entity (0.4%)
	250	Harley-Davidson Funding Corp. (144A) (a)		5.25		12/15/12		261,930
		Specialty Retail (0.4%)
	220	Home Depot, Inc.		5.40		03/01/16		246,813
		Super-Regional Banks - U.S. (1.5%)
	405	Bank One Corp.		5.25		01/30/13		432,761
	300	Capital One Financial Corp.		7.375		05/23/14		341,638
	215	KeyCorp (MTN)		6.50		05/14/13		233,557
								1,007,956
		Telephone - Integrated (0.6%)
	375	Telecom Italia Capital SA (Luxembourg)		5.25		11/15/13		390,936
		Tobacco (0.4%)
	250	Altria Group, Inc.		4.125		09/11/15		261,673
		Transport - Services (0.3%)
	210	Ryder System, Inc. (MTN)		6.00		03/01/13		225,864
		Total Corporate Bonds (Cost $34,521,663)						35,190,634
		Foreign Government Obligation (2.3%)
	1,508	Denmark Government International Bond (Series E) (Denmark) (Cost $1,523,805)		2.75		11/15/11		1,541,351
		U.S. Government Agencies & Obligations (18.5%)
		Commercial Banks - FDIC Guaranteed (4.5%)
	1,000	KeyBank NA		3.20		06/15/12		1,037,746
	2,000	PNC Funding Corp.		2.30		06/22/12		2,051,662
								3,089,408

See Notes to Financial Statements
28

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		U.S. Government Agency (1.0%)
$	700	FDIC Structured Sale Guaranteed Notes Ser. A-1 (144A) - FDIC Guaranteed (a)		0.00	%	10/25/11	$	696,213
		U.S. Government Obligations (13.0%)
		U.S. Treasury Bonds
	1,020			3.50		02/15/39		879,113
	1,280			4.375		11/15/39		1,287,000
	2,250			7.50		11/15/24		3,152,812
		U.S. Treasury Notes
	1,400			0.375		08/31/12		1,397,704
	400			0.375		09/30/12		399,110
	1,550			1.875		09/30/17		1,476,254
	330			2.625		12/31/14		344,154
								8,936,147
		Total U.S. Government Agencies & Obligations (Cost $12,808,528)						12,721,768
		U.S. Government Agencies - Mortgage-Backed Securities (1.8%)
		Federal Home Loan Mortgage Corp. (ARM) (0.4%)
	125			5.519		01/01/38		132,595
	111			6.042		02/01/37		117,495
								250,090
		Federal National Mortgage Association (0.9%)
	406			6.50		01/01/32 - 11/01/33		455,444
	136			7.00		08/01/29 - 06/01/32		155,427
								610,871
		Federal National Mortgage Association (ARM) (0.5%)
	316			2.548		05/01/35		318,113
	64			5.736		03/01/38		67,401
								385,514
		Total U.S. Government Agencies - Mortgage-Backed Securities (Cost $1,213,983)						1,246,475
		Asset-Backed Securities (21.3%)
	100	Ally Master Owner Trust 2010-1 A (144A) (a)		2.01	(b)	01/15/15		101,866
	225	Ally Master Owner Trust 2010-3 A (144A) (a)		2.88		04/15/15		230,561
	800	American Express Credit Account Master Trust 2009-2 A		1.51	(b)	03/15/17		827,722
	172	ARI Fleet Lease Trust 2010-A A (144A) (a)		1.71	(b)	08/15/18		173,253

See Notes to Financial Statements
29

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	807	Capital One Multi-Asset Execution Trust 2005-A10 A		0.34	(b)%	09/15/15	$	801,903
	206	Chesapeake Funding LLC 2009-1 A (144A) (a)		2.26	(b)	12/15/20		208,273
	724	CIT Equipment Collateral 2010-VT1A A2 (144A) (a)		1.51		08/15/11		726,030
	600	Citibank Credit Card Issuance Trust 2009-A5 A5 (See Note 6)		2.25		12/23/14		613,653
	600	CNH Equipment Trust 2010-C A3		1.17		05/15/15		599,360
	750	CNH Equipment Trust 2010-A A3		1.54		07/15/14		756,303
	850	Discover Card Master Trust 2009-A1 A1		1.56	(b)	12/15/14		861,529
	775	Ford Credit Floorplan Master Owner Trust 2009-2 A		1.81	(b)	09/15/14		786,690
	375	Ford Credit Floorplan Master Owner Trust 2010-3 A1 (144A) (a)		4.20		02/15/17		396,357
	1,150	GE Capital Credit Card Master Note Trust 2009-1 A		2.36	(b)	04/15/15		1,175,115
	425	GE Equipment Midticket LLC 2010-1 A3 (144A) (a)		0.94		07/14/14		424,307
	625	Harley-Davidson Motorcycle Trust 2010-1 A3		1.16		02/15/15		624,362
	440	Harley-Davidson Motorcycle Trust 2009-4 A3		1.87		02/15/14		443,733
	488	Huntington Auto Trust 2009-1A A3 (144A) (a)		3.94		06/17/13		495,118
	575	Hyundai Auto Receivables Trust 2010-A A3		1.50		10/15/14		580,940
	425	MMAF Equipment Finance LLC 2009-AA A3 (144A) (a)		2.37		11/15/13		429,617
	525	MMCA Automobile Trust 2010-A A3 (144A) (a)		1.39		01/15/14		527,304
	725	Navistar Financial Corp. Owner Trust 2010-A A2 (144A) (a)		1.47		10/18/12		727,547
	575	Nissan Auto Lease Trust 2010-B A3		1.12		12/15/13		574,301
	200	Nissan Master Owner Trust Receivables 2010-AA A (144A) (a)		1.41	(b)	01/15/15		202,361
	400	Toyota Auto Receivables Owner Trust 2010-A A3		1.27		12/16/13		402,858
	725	Volvo Financial Equipment LLC 2010-1A A2 (144A) (a)		1.06		06/15/12		726,192
	235	Wheels SPV LLC 2009-1 A (144A) (a)		1.81	(b)	03/15/18		236,547
		Total Asset-Backed Securities (Cost $14,522,609)						14,653,802

See Notes to Financial Statements
30

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE			VALUE
		Collateralized Mortgage Obligation (0.6%)
		U.S. Government Agency
$	358	Federal Home Loan Mortgage Corp. 2182 ZC (Cost $383,359)		7.50	%	09/15/29			$	406,603
		Commercial Mortgage-Backed Securities (1.0%)
		Private Issues
	220	Bear Stearns Commercial Mortgage Securities 2004-T14 A4		5.20	(b)	01/12/41				235,491
	230	LB-UBS Commercial Mortgage Trust 2004-C2 A4		4.367		03/15/36				239,340
	190	Wachovia Bank Commercial Mortgage Trust 2004-C12 A4		5.305	(b)	07/15/41				204,803
		Total Commercial Mortgage-Backed Securities (Cost $653,835)								679,634
		Municipal Bond (0.4%)
	300	New Jersey Economic Development Authority (Cost $300,000)		1.302	(b)	06/15/13				299,685
		Short-Term Investments (3.0%)
		U.S. Government Obligations (c)(d) (1.8%)
	1,210	U.S. Treasury Bills (Cost $1,209,884)		0.037 - 0.134		01/27/11				1,209,884
NUMBER OF SHARES
		Investment Company (1.2%)
		831Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $830,785)								830,785
		Total Short-Term Investments (Cost $2,040,669)								2,040,669
		Total Investments (Cost $67,968,451) (e)(f)					100.1	%		68,780,621
		Liabilities in Excess of Other Assets					(0.1	)		(98,943	)
		Net Assets					100.0	%	$	68,681,678

ARM Adjustable Rate Mortgage. Interest rate in effect as of December 31, 2010.

FDIC Federal Deposit Insurance Corporation.

MTN Medium Term Note.

See Notes to Financial Statements
31

Morgan Stanley Variable Investment Series - Limited Duration

Portfolio of Investments n December 31, 2010 continued

(a) Resale is restricted to qualified institutional investors.

(b) Floating rate security. Rate shown is the rate in effect at December 31, 2010.

(c) A portion of this security has been physically segregated in connection with open futures and swap contracts.

(d) Purchased on a discount basis. The interest rates shown have been adjusted to reflect a money market equivalent yield.

(e) Securities have been designated as collateral in connection with open futures and swap contracts.

(f) The aggregate cost for federal income tax purposes is $68,432,617. The aggregate gross unrealized appreciation is $714,249 and the aggregate gross unrealized depreciation is $366,245 resulting in net unrealized appreciation of $348,004.

FUTURES CONTRACTS OPEN AT DECEMBER 31, 2010:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	46	Long	U.S. Treasury Notes 5 Year, March 2011	$	5,415,062		$	15,975
	31	Long	U.S. Treasury Notes 10 Year, March 2011		3,733,563			(88,851	)
	17	Short	U.S. Ultra Bond, March 2011		(2,160,594	)		66,370
	42	Short	U.S. Treasury Notes 2 Year, March 2011		(9,194,063	)		(9,986	)
Net Unrealized Depreciation							$	(16,492	)

INTEREST RATE SWAP CONTRACTS OPEN AT DECEMBER 31, 2010:

SWAP COUNTERPARTY	NOTIONAL AMOUNT (000)		FLOATING RATE INDEX	PAY/RECEIVE FLOATING RATE	FIXED RATE			TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Bank of America, N.A.	$	490	3 Month LIBOR	Receive		4.058	%	12/09/40	$	5,023
Bank of America, N.A.***		2,020	3 Month LIBOR	Pay		4.795		12/09/20		(3,293	)
Credit Suisse Group		6,515	3 Month LIBOR	Receive		0.80		10/28/13		69,385
Credit Suisse Group		2,730	3 Month LIBOR	Pay		2.098		10/28/17		(118,018	)
Deutsche Bank AG		500	3 Month LIBOR	Receive		4.39		12/20/40		(24,165	)
Deutsche Bank AG***		2,040	3 Month LIBOR	Pay		5.29		12/20/20		36,088
UBS AG		480	3 Month LIBOR	Receive		4.00		12/07/40		9,778
UBS AG***		2,020	3 Month LIBOR	Pay		4.65		12/07/20		(14,807	)
Net Unrealized Depreciation									$	(40,009	)

*** Forward interest rate swap. Periodic payments on specified notional amount with future effective date, unless terminated earlier.

LIBOR London Interbank Offered Rate.

See Notes to Financial Statements
32

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Portfolio of Investments n December 31, 2010 continued

ZERO COUPON SWAP CONTRACTS OPEN AT DECEMBER 31, 2010:

SWAP COUNTERPARTY	NOTIONAL AMOUNT (000)		FLOATING RATE INDEX	PAY/RECEIVE FLOATING RATE	TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Barclays Bank PLC^	$	1,590	3 Month LIBOR	Receive	11/15/19	$	(189,207	)
Barclays Bank PLC^^		1,590	3 Month LIBOR	Pay	11/15/19		21,665
Deutsche Bank AG^		1,100	3 Month LIBOR	Receive	11/15/21		(100,954	)
Deutsche Bank AG^^		1,100	3 Month LIBOR	Pay	11/15/21		1,789
JPMorgan Chase Bank N.A. New York^		705	3 Month LIBOR	Receive	11/15/19		(78,233	)
JPMorgan Chase Bank N.A. New York^		1,190	3 Month LIBOR	Receive	11/15/20		(140,697	)
JPMorgan Chase Bank N.A. New York^		2,260	3 Month LIBOR	Receive	11/15/22		(76,132	)
Net Unrealized Depreciation						$	(561,769	)

LIBOR London Interbank Offered Rate.

^ Portfolio will make payments of $616,586, $474,412, $267,984, $503,070, and $895,625, respectively, on termination date.

^^ Portfolio will receive payments of $436,614 and $367,331 on termination date.

LONG TERM CREDIT ANALYSIS (unaudited)

AAA	57.9	%
AA	12.4
A	12.2
BBB	16.3
B or BELOW	1.2
	100.0	%+

+ Does not include open long/short futures contracts with an underlying face amount of $20,503,282 and net unrealized depreciation of $16,492. Also does not include open swap contracts with net unrealized depreciation of $601,778.

See Notes to Financial Statements
33

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (90.0%)
		Advertising Agencies (0.2%)
$	410	Omnicom Group, Inc.		4.45	%	08/15/20	$	401,972
		Advertising Services (0.6%)
	1,195	WPP Finance (United Kingdom)		8.00		09/15/14		1,375,901
		Aerospace & Defense (0.6%)
	255	Bombardier, Inc. (144A) (Canada) (a)		7.50		03/15/18		274,763
	505	Bombardier, Inc. (144A) (Canada) (a)		7.75		03/15/20		546,662
	615	Meccanica Holdings USA (144A) (a)		7.375		07/15/39		641,268
								1,462,693
		Agricultural Chemicals (0.2%)
	535	Incitec Pivot Ltd. (144A) (Australia) (a)		4.00		12/07/15		521,999
		Agricultural Operations (0.3%)
	580	Bunge Ltd. Finance Corp.		8.50		06/15/19		681,121
		Airlines (0.4%)
	915	America West Airlines LLC (Series 011G) (AMBAC Insd)		7.10		04/02/21		910,730
		Apparel Manufacturers (0.1%)
	285	Levi Strauss & Co.		7.625		05/15/20		295,688
		Appliances (0.2%)
	450	Whirlpool Corp.		8.60		05/01/14		519,274
		Auto - Cars/Light Trucks (0.2%)
	395	Daimler Finance North America LLC		8.50		01/18/31		529,265
		Beverages - Wine/Spirits (0.1%)
	165	Constellation Brands, Inc.		7.25		09/01/16		175,725
		Building Product - Cement/Aggregation (1.2%)
	820	CRH America, Inc.		6.00		09/30/16		876,049
	480	CRH America, Inc.		8.125		07/15/18		555,632
	545	Holcim US Finance Sarl & Cie SCS (144A) (Luxembourg) (a)		6.00		12/30/19		566,933
	670	Lafarge SA (144A) (France) (a)		5.50		07/09/15		696,910
								2,695,524
		Building Product - Wood (0.3%)
	710	Masco Corp.		6.125		10/03/16		726,471
		Building Societies (1.2%)
	2,655	Nationwide Building Society (144A) (United Kingdom) (a)		6.25		02/25/20		2,771,507
		Cable/Satellite TV (1.5%)
	310	Cablevision Systems Corp.		7.75		04/15/18		326,275
	110	COX Communications, Inc. (144A) (a)		8.375		03/01/39		143,000
	180	CSC Holdings LLC		7.625		07/15/18		196,200

See Notes to Financial Statements
34

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	745	DirecTV Holdings LLC/DirecTV Financing Co., Inc.		4.60	%	02/15/21	$	736,781
	735	DirecTV Holdings LLC/DirecTV Financing Co., Inc.		5.875		10/01/19		800,206
	620	DirecTV Holdings LLC/DirecTV Financing Co., Inc.		7.625		05/15/16		688,188
	510	DISH DBS Corp.		7.125		02/01/16		529,125
								3,419,775
		Capital Markets (4.0%)
	5,035	Goldman Sachs Group, Inc. (The)		6.15		04/01/18		5,552,679
	1,565	Goldman Sachs Group, Inc. (The)		6.75		10/01/37		1,605,045
	1,305	Macquarie Group Ltd. (144A) (Australia) (a)		6.00		01/14/20		1,312,373
	605	Macquarie Group Ltd. (144A) (Australia) (a)		7.625		08/13/19		660,593
								9,130,690
		Casino Gaming (0.3%)
	590	Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp.		7.75		08/15/20		641,625
		Chemicals (0.6%)
	1,275	Mosaic Co. (The) (144A) (a)		7.625		12/01/16		1,372,228
		Chemicals - Diversified (0.7%)
	290	Dow Chemical Co. (The)		4.25		11/15/20		278,893
	660	Dow Chemical Co. (The)		8.55		05/15/19		828,439
	544	Lyondell Chemical Co. (144A) (a)		8.00		11/01/17		603,160
								1,710,492
		Chemicals - Specialty (0.7%)
	540	Albemarle Corp.		4.50		12/15/20		532,533
	545	Lubrizol Corp.		8.875		02/01/19		686,896
	445	Nalco Co. (144A) (a)		6.625		01/15/19		457,237
								1,676,666
		Commercial Banks (6.9%)
	545	Barclays Bank PLC (144A) (United Kingdom) (a)		6.05		12/04/17		559,847
	700	Barclays Bank PLC (United Kingdom)		6.75		05/22/19		791,942
	260	Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (144A) (Netherlands) (a)		11.00	(b)	06/30/19(c)		337,039
	280	Credit Suisse (Switzerland)		6.00		02/15/18		300,678
	290	Credit Suisse AG (Switzerland)		5.40		01/14/20		296,696
	425	Discover Bank/Greenwood		7.00		04/15/20		457,678
	715	Discover Bank/Greenwood		8.70		11/18/19		842,981
	725	First Horizon National Corp.		5.375		12/15/15		732,616
	1,185	Hana Bank (144A) (South Korea) (a)		4.50		10/30/15		1,205,944
	1,675	HBOS PLC (144A) (United Kingdom) (a)		6.75		05/21/18		1,570,589
	860	HSBC Bank USA NA		4.875		08/24/20		856,526
	595	Huntington BancShares, Inc.		7.00		12/15/20		627,596

See Notes to Financial Statements
35

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	1,185	Intesa Sanpaolo SpA (144A) (Italy) (a)		3.625	%	08/12/15	$	1,146,784
	1,240	Regions Financial Corp.		5.75		06/15/15		1,214,822
	925	Royal Bank of Scotland Group PLC (United Kingdom)		6.40		10/21/19		932,428
	1,175	Royal Bank of Scotland PLC (The) (United Kingdom)		4.875		03/16/15		1,203,070
	1,300	Santander US Debt SA Unipersonal (144A) (Spain) (a)		3.724		01/20/15		1,232,834
	885	Standard Chartered Bank (144A) (United Kingdom) (a)		6.40		09/26/17		948,264
	620	Woori Bank (144A) (South Korea) (a)		4.75		01/20/16		635,168
								15,893,502
		Consumer Finance (0.0%)
	55	American Express Co.		8.125		05/20/19		68,540
		Consumer Products - Miscellaneous (0.2%)
	460	Fortune Brands, Inc.		6.375		06/15/14		498,919
		Containers - Metal & Glass (0.3%)
	540	Ball Corp.		7.375		09/01/19		583,200
		Distribution/Wholesale (0.1%)
	225	Ingram Micro, Inc.		5.25		09/01/17		228,015
		Diversified Financial Services (9.1%)
	700	Ally Financial, Inc. (144A) (a)		6.25		12/01/17		700,875
	795	Bank of America Corp.		5.625		07/01/20		811,979
	1,865	Bank of America Corp.		5.75		12/01/17		1,943,526
	1,735	Citigroup, Inc. (See Note 6)		5.875		05/29/37		1,702,944
	480	Citigroup, Inc. (See Note 6)		6.125		05/15/18		526,638
	785	Citigroup, Inc. (See Note 6)		8.125		07/15/39		1,001,824
	3,210	Citigroup, Inc. (See Note 6)		8.50		05/22/19		3,991,253
	1,305	Credit Agricole SA (144A) (France) (a)		8.375	(b)	10/13/19(c)		1,347,413
	735	General Electric Capital Corp.		5.625		05/01/18		802,738
	75	General Electric Capital Corp. (MTN)		5.875		01/14/38		78,121
	6,350	General Electric Capital Corp. (Series G)		6.00		08/07/19		7,076,961
	975	JPMorgan Chase & Co.		4.25		10/15/20		954,116
								20,938,388
		Diversified Minerals (1.1%)
	840	Anglo American Capital PLC (144A) (United Kingdom) (a)		9.375		04/08/19		1,131,653
	305	Rio Tinto Finance USA Ltd. (Australia)		9.00		05/01/19		410,270
	475	Teck Resources Ltd. (Canada)		10.25		05/15/16		588,441
	195	Vale Overseas Ltd. (Cayman Islands)		6.875		11/21/36		214,984
	210	Vale Overseas Ltd. (Cayman Islands)		6.875		11/10/39		233,085
								2,578,433
		Diversified Telecommunication Services (2.4%)
	2,200	AT&T, Inc. (144A) (a)		5.35		09/01/40		2,076,461
	980	AT&T, Inc.		6.15		09/15/34		1,015,285

See Notes to Financial Statements
36

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	325	CenturyLink, Inc. (Series Q)		6.15	%	09/15/19	$	326,527
	400	Verizon Communications, Inc.		5.85		09/15/35		415,110
	530	Verizon Communications, Inc.		6.40		02/15/38		588,258
	715	Verizon Communications, Inc.		8.95		03/01/39		1,022,188
								5,443,829
		E-Commerce/Services (0.3%)
	560	Expedia, Inc.		5.95		08/15/20		565,600
		Electric - Generation (0.7%)
	1,610	AES Corp. (The)		8.00		06/01/20		1,714,650
		Electric - Integrated (5.1%)
	775	CMS Energy Corp.		6.25		02/01/20		794,787
	22	CMS Energy Corp.		6.30		02/01/12		23,390
	750	EDP Finance BV (144A) (Netherlands) (a)		4.90		10/01/19		640,418
	1,175	Enel Finance International SA (144A) (Luxembourg) (a)		5.125		10/07/19		1,166,487
	800	Entergy Gulf States Louisiana LLC		5.59		10/01/24		848,235
	2,100	Exelon Generation Co. LLC		4.00		10/01/20		1,969,149
	875	Iberdrola Finance Ireland Ltd. (144A) (Ireland) (a)		5.00		09/11/19		840,494
	150	NiSource Finance Corp.		6.125		03/01/22		161,948
	965	NiSource Finance Corp.		6.80		01/15/19		1,118,271
	1,510	PPL Energy Supply LLC		6.50		05/01/18		1,683,744
	230	Progress Energy, Inc.		7.05		03/15/19		273,310
	1,150	Puget Energy, Inc. (144A) (a)		6.50		12/15/20		1,133,032
	1,200	UIL Holdings Corp.		4.625		10/01/20		1,138,492
								11,791,757
		Electric Utilities (0.9%)
	975	FirstEnergy Solutions Corp.		6.05		08/15/21		1,003,542
	975	FirstEnergy Solutions Corp.		6.80		08/15/39		947,887
								1,951,429
		Electronic Equipment, Instruments & Components (0.3%)
	640	Corning, Inc.		7.25		08/15/36		730,598
		Electronic Parts Distribution (0.3%)
	595	Arrow Electronics, Inc.		5.125		03/01/21		570,006
		Energy Equipment & Services (0.8%)
	675	Weatherford International Ltd. (Bermuda)		5.125		09/15/20		672,917
	900	Weatherford International Ltd. (Bermuda)		9.625		03/01/19		1,156,595
								1,829,512
		Finance - Auto Loans (0.2%)
	465	Ford Motor Credit Co. LLC		7.00		04/15/15		500,157

See Notes to Financial Statements
37

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Finance - Consumer Loans (0.4%)
$	510	SLM Corp. (Series A)		5.00	%	10/01/13	$	511,642
	495	SLM Corp. (MTN)		8.00		03/25/20		502,695
								1,014,337
		Finance - Credit Card (0.4%)
	780	Capital One Bank USA NA		8.80		07/15/19		960,933
		Finance - Investment Banker/Broker (4.5%)
	610	Bear Stearns Cos. LLC (The)		5.55		01/22/17		649,164
	200	Jefferies Group, Inc.		3.875		11/09/15		196,795
	710	Jefferies Group, Inc.		6.875		04/15/21		739,242
	2,610	JPMorgan Chase Capital XXVII (Series AA)		7.00		11/01/39		2,741,414
	3,625	Merrill Lynch & Co., Inc. (MTN)		6.875		04/25/18		3,972,790
	930	Merrill Lynch & Co., Inc.		7.75		05/14/38		967,975
	1,120	TD Ameritrade Holding Corp.		5.60		12/01/19		1,174,929
								10,442,309
		Finance - Other Services (0.5%)
	165	NASDAQ OMX Group, Inc. (The)		5.25		01/16/18		166,686
	875	NASDAQ OMX Group, Inc. (The)		5.55		01/15/20		885,636
								1,052,322
		Food - Baking (0.2%)
	490	Grupo Bimbo SAB de CV (144A) (Mexico) (a)		4.875		06/30/20		494,367
		Food - Canned (0.2%)
	520	TreeHouse Foods, Inc.		7.75		03/01/18		564,850
		Food - Miscellaneous/Diversified (0.8%)
	860	ConAgra Foods, Inc.		7.00		10/01/28		966,621
	740	ConAgra Foods, Inc.		8.25		09/15/30		925,277
								1,891,898
		Food - Retail (0.5%)
	1,185	Delhaize Group SA (144A) (Belgium) (a)		5.70		10/01/40		1,131,913
		Food Products (1.2%)
	1,110	Kraft Foods, Inc.		5.375		02/10/20		1,196,821
	700	Kraft Foods, Inc.		6.875		02/01/38		815,435
	610	Kraft Foods, Inc.		6.875		01/26/39		713,081
								2,725,337
		Hotels & Motels (0.9%)
	565	Choice Hotels International, Inc.		5.70		08/28/20		549,650
	405	Hyatt Hotels Corp. (144A) (a)		6.875		08/15/19		443,477
	610	Marriott International, Inc.		6.375		06/15/17		683,029
	365	Wyndham Worldwide Corp.		5.75		02/01/18		371,680
								2,047,836

See Notes to Financial Statements
38

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Independent Power Producer (0.1%)
$	295	NRG Energy, Inc.		8.50	%	06/15/19	$	306,063
		Insurance (1.9%)
	965	MetLife, Inc. (See Note 6)		10.75		08/01/39		1,296,422
	1,025	Principal Financial Group, Inc.		8.875		05/15/19		1,291,532
	635	Prudential Financial, Inc. (MTN)		6.625		12/01/37		708,211
	1,000	Prudential Financial, Inc. (Series D)		7.375		06/15/19		1,180,944
								4,477,109
		Investment Management/Advisor Services (0.4%)
	855	Blackstone Holdings Finance Co. LLC (144A) (a)		6.625		08/15/19		880,322
		Life/Health Insurance (1.8%)
	660	Aflac, Inc.		8.50		05/15/19		817,360
	745	Lincoln National Corp.		8.75		07/01/19		933,346
	1,325	Pacific LifeCorp (144A) (a)		6.00		02/10/20		1,395,013
	925	Protective Life Corp.		7.375		10/15/19		1,003,058
								4,148,777
		Machinery - General Industry (0.3%)
	620	Roper Industries, Inc.		6.25		09/01/19		687,399
		Media (2.5%)
	800	Comcast Corp.		5.15		03/01/20		841,811
	820	Comcast Corp.		6.40		05/15/38		879,225
	100	Comcast Corp.		6.45		03/15/37		107,195
	1,200	Time Warner Cable, Inc.		6.75		07/01/18		1,400,916
	375	Time Warner Cable, Inc.		6.75		06/15/39		415,557
	155	Time Warner Cable, Inc.		8.25		04/01/19		192,838
	610	Time Warner, Inc.		6.50		11/15/36		668,869
	545	Time Warner, Inc.		7.70		05/01/32		667,182
	455	Viacom, Inc.		6.875		04/30/36		523,718
								5,697,311
		Medical - Biomedical/Genetics (0.5%)
	414	Celgene Corp.		3.95		10/15/20		394,390
	725	Life Technologies Corp.		6.00		03/01/20		777,948
								1,172,338
		Medical - Drugs (0.1%)
	150	Wyeth		6.45		02/01/24		177,107
		Medical - Hospitals (0.2%)
	305	HCA, Inc.		8.50		04/15/19		335,500
		Medical Labs & Testing Services (0.2%)
	500	Laboratory Corp. of America Holdings		4.625		11/15/20		496,462

See Notes to Financial Statements
39

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Metal - Aluminum (0.5%)
$	530	Alcoa, Inc.		5.87	%	02/23/22	$	527,605
	465	Alcoa, Inc.		6.75		07/15/18		507,413
								1,035,018
		Metal - Copper (0.4%)
	845	Southern Copper Corp.		5.375		04/16/20		858,505
		Metals & Mining (0.6%)
	820	ArcelorMittal (Luxembourg)		9.85		06/01/19		1,037,898
	390	Freeport-McMoRan Copper & Gold, Inc.		8.375		04/01/17		431,967
								1,469,865
		Money Center Banks (0.2%)
	505	Lloyds TSB Bank PLC (144A) (United Kingdom) (a)		5.80		01/13/20		499,484
		Multi-line Insurance (5.2%)
	1,125	Aegon N.V. (Netherlands)		4.625		12/01/15		1,160,777
	1,285	American Financial Group, Inc.		9.875		06/15/19		1,540,747
	2,320	American International Group, Inc.		6.40		12/15/20		2,438,652
	1,335	CNA Financial Corp.		7.35		11/15/19		1,466,581
	1,750	Farmers Insurance Exchange (144A) (a)		8.625		05/01/24		1,920,280
	1,195	Genworth Financial, Inc.		7.70		06/15/20		1,266,808
	1,250	Hartford Financial Services Group, Inc.		5.50		03/30/20		1,270,301
	850	XL Group PLC (Ireland)		5.25		09/15/14		876,570
								11,940,716
		Multiline Retail (0.3%)
	210	JC Penney Co., Inc.		5.65		06/01/20		202,125
	455	JC Penney Corp., Inc.		6.375		10/15/36		416,325
								618,450
		Multimedia (1.6%)
	1,045	NBC Universal, Inc. (144A) (a)		4.375		04/01/21		1,016,349
	680	NBC Universal, Inc. (144A) (a)		5.15		04/30/20		706,207
	170	News America, Inc.		6.40		12/15/35		183,235
	930	News America, Inc.		6.65		11/15/37		1,033,449
	370	News America, Inc.		7.85		03/01/39		462,142
	335	Vivendi SA (144A) (France) (a)		6.625		04/04/18		373,581
								3,774,963
		Office Electronics (0.4%)
	255	Xerox Corp.		5.625		12/15/19		273,828
	465	Xerox Corp.		6.35		05/15/18		524,950
								798,778

See Notes to Financial Statements
40

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Oil Companies - Exploration & Production (2.2%)
$	600	Anadarko Petroleum Corp.		6.95	%	06/15/19	$	674,253
	175	Anadarko Petroleum Corp.		8.70		03/15/19		214,037
	665	Chesapeake Energy Corp.		7.625		07/15/13		724,019
	715	EQT Corp.		8.125		06/01/19		833,209
	400	Gazprom Via Gaz Capital SA (144A) (Luxembourg) (a)		6.51		03/07/22		410,000
	950	Nexen, Inc. (Canada)		7.50		07/30/39		1,036,309
	180	Pioneer Natural Resources Co.		6.65		03/15/17		192,079
	480	Plains Exploration & Production Co.		7.625		06/01/18		507,600
	535	QEP Resources, Inc.		6.875		03/01/21		564,425
								5,155,931
		Oil Company - Integrated (1.4%)
	1,900	BP Capital Markets PLC (United Kingdom)		3.125		10/01/15		1,900,769
	950	Petro-Canada (Canada)		5.95		05/15/35		978,958
	410	Petrobras International Finance Co. (Cayman Islands)		5.75		01/20/20		427,453
								3,307,180
		Oil Refining & Marketing (0.3%)
	700	Valero Energy Corp.		6.125		02/01/20		744,744
		Paper & Related Products (1.5%)
	1,225	Georgia-Pacific LLC (144A) (a)		5.40		11/01/20		1,213,414
	130	Georgia-Pacific LLC (144A) (a)		8.25		05/01/16		147,388
	255	International Paper Co.		7.95		06/15/18		303,879
	210	International Paper Co.		9.375		05/15/19		270,535
	1,325	MeadWestvaco Corp.		7.375		09/01/19		1,399,602
								3,334,818
		Pipelines (4.5%)
	1,350	DCP Midstream Operating LP		3.25		10/01/15		1,329,255
	750	El Paso Pipeline Partners Operating Co. LLC		4.10		11/15/15		746,195
	1,750	Energy Transfer Partners LP		9.00		04/15/19		2,195,716
	275	Enterprise Products Operating LLC		5.25		01/31/20		286,568
	1,480	Kinder Morgan Finance Co. ULC (Canada)		5.70		01/05/16		1,505,900
	775	Midcontinent Express Pipeline LLC (144A) (a)		6.70		09/15/19		834,333
	1,095	Plains All American Pipeline LP/PAA Finance Corp.		6.70		05/15/36		1,146,421
	675	Plains All American Pipeline LP/PAA Finance Corp.		8.75		05/01/19		838,967
	225	Spectra Energy Capital LLC		8.00		10/01/19		274,556
	960	Texas Eastern Transmission LP		7.00		07/15/32		1,110,340
								10,268,251
		Property Trust (0.2%)
	500	WEA Finance LLC/WT Finance Aust Pty Ltd. (144A) (a)		6.75		09/02/19		557,938

See Notes to Financial Statements
41

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Real Estate Management & Development (0.4%)
$	815	Brookfield Asset Management, Inc. (Canada)		5.80	%	04/25/17	$	833,681
		Reinsurance (0.5%)
	370	Platinum Underwriters Finance, Inc. (Series B)		7.50		06/01/17		385,395
	775	Reinsurance Group of America, Inc.		6.45		11/15/19		819,339
								1,204,734
		REIT - Diversified (0.7%)
	735	Duke Realty LP		6.75		03/15/20		798,771
	790	Goodman Funding Pty Ltd. (144A) (Australia) (a)		6.375		11/12/20		759,086
								1,557,857
		REIT - Health Care (0.6%)
	860	Health Care, Inc.		6.125		04/15/20		906,897
	575	Healthcare Realty Trust, Inc.		5.75		01/15/21		576,169
								1,483,066
		REIT - Office Property (0.1%)
	245	BioMed Realty LP (144A) (a)		6.125		04/15/20		259,147
		REIT - Shopping Centers (0.2%)
	430	Federal Realty Investment Trust		5.90		04/01/20		456,837
		Retail - Automobile (0.3%)
	630	AutoNation, Inc.		6.75		04/15/18		653,625
		Retail - Drug Store (0.7%)
	1,509	CVS Pass-Through Trust		6.036		12/10/28		1,551,811
	117	CVS Pass-Through Trust (144A) (a)		8.353		07/10/31		139,860
								1,691,671
		Retail - Mail Order (0.3%)
	620	QVC, Inc. (144A) (a)		7.125		04/15/17		652,550
		Retail - Restaurants (0.5%)
	1,040	Yum! Brands, Inc.		6.875		11/15/37		1,184,163
		Semiconductor Equipment (0.4%)
	905	KLA-Tencor Corp.		6.90		05/01/18		996,950
		Special Purpose Entity (0.7%)
	800	Capital One Capital VI		8.875		05/15/40		839,000
	820	Harley-Davidson Funding Corp. (144A) (a)		6.80		06/15/18		865,020
								1,704,020
		Specialty Retail (0.4%)
	955	Home Depot, Inc.		5.875		12/16/36		996,699
		Super-Regional Banks - U.S. (0.4%)
	775	KeyCorp (MTN)		6.50		05/14/13		841,893

See Notes to Financial Statements
42

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Telecommunication Services (1.0%)
$	715	Qwest Corp.		6.50	%	06/01/17	$	779,350
	260	Qwest Corp.		6.875		09/15/33		256,750
	280	Qwest Corp.		8.375		05/01/16		333,200
	545	Sable International Finance Ltd. (144A) (Cayman Islands) (a)		7.75		02/15/17		579,062
	305	SBA Telecommunications, Inc.		8.25		08/15/19		334,738
								2,283,100
		Telephone - Integrated (2.1%)
	315	Deutsche Telekom International Finance BV (Netherlands)		6.75		08/20/18		373,065
	555	Deutsche Telekom International Finance BV (Netherlands)		8.75		06/15/30		747,884
	775	Frontier Communications Corp.		8.50		04/15/20		850,563
	655	Telecom Italia Capital SA (Luxembourg)		6.999		06/04/18		694,536
	660	Telecom Italia Capital SA (Luxembourg)		7.175		06/18/19		707,280
	1,330	Telefonica Europe BV (Netherlands)		8.25		09/15/30		1,549,245
								4,922,573
		Tobacco (0.7%)
	505	Altria Group, Inc.		10.20		02/06/39		732,023
	835	Lorillard Tobacco Co.		8.125		06/23/19		930,574
								1,662,597
		Transport - Rail (0.3%)
	545	CSX Corp.		6.15		05/01/37		587,936
		Transport - Services (0.2%)
	455	Ryder System, Inc. (MTN)		7.20		09/01/15		522,361
		Wireless Equipment (0.5%)
	1,070	American Tower Corp.		4.50		01/15/18		1,062,236
		Total Corporate Bonds (Cost $195,207,659)						207,532,708
		Convertible Bonds (4.2%)
		Advertising Agencies (0.2%)
	375	Omnicom Group, Inc. (d)		0.00		07/01/38		398,906
		Brewery (0.2%)
	330	Molson Coors Brewing Co.		2.50		07/30/13		383,625
		Building - Residential/Commercial (0.2%)
	344	DR Horton, Inc. (Series DHI)		2.00		05/15/14		390,440
		Casino Gaming (0.1%)
	208	International Game Technology		3.25		05/01/14		241,020

See Notes to Financial Statements
43

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Coal (0.1%)
$	282	Massey Energy Co.		3.25	%	08/01/15	$	276,713
		Computers - Memory Devices (0.6%)
	300	EMC Corp.		1.75		12/01/13		453,375
	300	NetApp, Inc.		1.75		06/01/13		536,250
	350	SanDisk Corp.		1.00		05/15/13		338,625
								1,328,250
		Containers - Metal & Glass (0.2%)
	374	Owens-Brockway Glass Container, Inc. (144A) (a)		3.00		06/01/15		378,207
		Electronic Parts Distribution (0.1%)
	300	Tech Data Corp.		2.75		12/15/26		313,875
		Food - Meat Products (0.2%)
	294	Tyson Foods, Inc.		3.25		10/15/13		361,988
		Gold Mining (0.2%)
	203	Goldcorp, Inc. (Canada)		2.00		08/01/14		248,928
	173	Newmont Mining Corp.		1.25		07/15/14		248,904
								497,832
		Internet Security (0.2%)
	350	Symantec Corp.		1.00		06/15/13		399,437
		Medical - Biomedical/Genetics (0.3%)
	300	Amgen, Inc.		0.375		02/01/13		301,500
	300	Life Technologies Corp.		1.50		02/15/24		363,750
								665,250
		Medical - Drugs (0.3%)
	300	Allergan Inc		1.50		04/01/26		340,500
	300	Cephalon, Inc.		2.50		05/01/14		341,625
								682,125
		Medical - Generic Drugs (0.1%)
	300	Mylan, Inc.		1.25		03/15/12		319,125
		Oil Company - Exploration & Production (0.2%)
	394	Chesapeake Energy Corp.		2.75		11/15/35		393,015
		Oil Field Machine & Equipment (0.2%)
	310	Cameron International Corp.		2.50		06/15/26		451,825
		REIT - Apartments (0.1%)
	300	ERP Operating LP		3.85		08/15/26		315,000
		REIT - Diversified (0.1%)
	300	Vornado Realty LP		3.875		04/15/25		334,125

See Notes to Financial Statements
44

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		REIT - Health Care (0.1%)
$	300	Health Care REIT, Inc.		4.75	%	07/15/27	$	333,375
		Retail - Consumer Electron (0.2%)
	427	RadioShack Corp. (144A) (a)		2.50		08/01/13		457,424
		Semiconductor Components - Integrated Circuts (0.1%)
	300	Linear Technology Corp. (Series A)		3.00		05/01/27		319,500
		Wireless Equipment (0.2%)
	351	SBA Communications Corp.		1.875		05/01/13		395,314
		Total Convertible Bonds (Cost $9,307,720)						9,636,371
		Foreign Government Obligations (0.8%)
	565	Export-Import Bank of Korea (South Korea)		4.125		09/09/15		575,423
	1,345	Korea Development Bank (South Korea)		4.375		08/10/15		1,385,541
		Total Foreign Government Obligations (Cost $1,906,083)						1,960,964
		U.S. Government Agency - Mortgage-Backed Security (0.0%)
	1	Federal Home Loan Mortgage Corp. (PC) Gold (Cost $1,482)		6.50		12/01/28		1,604
		Municipal Bond (0.3%)
		General Obligation
	600	State of California - Various Purpose (Cost $602,409)		5.95		04/01/16		635,628
		Commercial Mortgage-Backed Securities (1.0%)
		Private Issues (1.0%)
	475	Banc of America Commercial Mortgage, Inc. 2007-4 A4		5.742	(b)	02/10/51		506,734
	850	Bear Stearns Commercial Mortgage Securities 2007-T26 A4		5.471	(b)	01/12/45		908,472
	930	LB-UBS Commercial Mortgage Trust 2006-C6 A4 2006-C6 A4		5.372		09/15/39		996,303
		Total Commercial Mortgage-Backed Securities (Cost $1,894,554)						2,411,509

See Notes to Financial Statements
45

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

NUMBER OF SHARES			Value
		Convertible Preferred Stocks (0.5%)
		Diversified Financial Services (0.2%)
	350	Bank of America Corp. (Series L) $72.50	$	334,940
		Household Durables (0.3%)
	7,300	Stanley Black & Decker, Inc. (e)		795,547
		Total Convertible Preferred Stocks (Cost $1,090,418)		1,130,487

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE
		Short-Term Investments (2.0%)
		U.S. Government Obligation (f)(g) (0.5%)
$	1,260	U.S. Treasury Bill (Cost $1,259,878)		0.134	%	01/27/11				1,259,878
NUMBER OF SHARES (000)
		Investment Company (1.5%)
	3,382	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $3,382,277)								3,382,277
		Total Short-Term Investments (Cost $4,642,155)								4,642,155
		Total Investments (Cost $214,652,480) (i)(j)					98.8	%		227,951,426
		Other Assets in Excess of Liabilities					1.2			2,733,262
		Net Assets					100.0	%	$	230,684,688

MTN Medium Term Note.

PC Participation Certificate.

REIT Real Estate Investment Trust.

(a) Resale is restricted to qualified institutional investors.

(b) Floating rate security. Rate shown is the rate in effect at December 31, 2010.

(c) Security issued with perpetual maturity.

(d) Capital appreciation bond.

(e) Non-income producing security.

(f) Purchased on a discount basis. The interest rates shown have been adjusted to reflect a money market equivalent yield.

(g) A portion of this security has been physically segregated in connection with open futures and swap contracts.

See Notes to Financial Statements
46

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

(i) Securities have been designated as collateral in connection with open futures and swap contracts.

(j) The aggregate cost for federal income tax purposes is $215,100,198. The aggregate gross unrealized appreciation is $14,011,606 and the aggregate gross unrealized depreciation is $1,160,378 resulting in net unrealized appreciation of $12,851,228.

Bond Insurance:

AMBAC AMBAC Assurance Corporation.

FUTURES CONTRACTS OPEN AT DECEMBER 31, 2010:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	337	Long	U.S. Treasury Notes 5 Year, March 2011	$	39,671,219		$	(441,469	)
	105	Long	U.S. Treasury Notes 2 Year, March 2011		22,985,157			(51,586	)
	19	Short	U.S. Treasury Bonds 20 Year, March 2011		(2,320,375	)		86,780
	359	Short	U.S. Treasury Notes 10 Year, March 2011		(43,237,062	)		872,495
Net Unrealized Appreciation							$	466,220

CREDIT DEFAULT SWAP CONTRACTS OPEN AT DECEMBER 31, 2010:

SWAP COUNTERPARTY & REFERENCE OBLIGATION	BUY/SELL PROTECTION	NOTIONAL AMOUNT (000's)		INTEREST RATE			TERMINATION DATE	UNREALIZED DEPRECIATION			UPFRONT PAYMENTS		VALUE		CREDIT RATING OF REFERENCE OBLIGATION+
															(unaudited)
Barclays Capital Whirlpool Corp.	Buy	$	450		1.00	%	June 20, 2014	$	(21,141	)	$	24,264	$	3,123	BBB-

+ Credit rating as issued by Standard & Poor's.

See Notes to Financial Statements
47

Morgan Stanley Variable Investment Series - Income Plus

Portfolio of Investments n December 31, 2010 continued

INTEREST RATE SWAP CONTRACTS OPEN AT DECEMBER 31, 2010:

SWAP COUNTERPARTY	NOTIONAL AMOUNT (000)		FLOATING RATE INDEX	PAY/RECEIVE FLOATING RATE	FIXED RATE			TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Bank of America, N.A.	$	3,270	3 Month LIBOR	Receive		4.058	%	12/09/40	$	33,518
Bank of America, N.A.		3,270	3 Month LIBOR	Receive		4.37		12/20/40		(146,529	)
Bank of America, N.A.***		13,420	3 Month LIBOR	Pay		4.795		12/09/20		(21,875	)
Bank of America, N.A.***		13,380	3 Month LIBOR	Pay		5.27		12/20/20		226,122
Credit Suisse Group		21,865	3 Month LIBOR	Receive		0.80		10/28/13		232,862
Credit Suisse Group		9,160	3 Month LIBOR	Pay		2.098		10/28/17		(395,987	)
Goldman Sachs International		3,200	3 Month LIBOR	Receive		4.015		12/07/40		56,736
Goldman Sachs International***		13,430	3 Month LIBOR	Pay		4.67		12/07/20		(87,832	)
Net Unrealized Depreciation									$	(102,985	)

*** Forward interest rate swap. Periodic payments on specified notional amount with future effective date, unless terminated earlier.

LIBOR London Interbank Offered Rate.

LONG TERM CREDIT ANALYSIS (unaudited)

AAA	1.4	%
AA	8.1
A	28.8
BBB	48.9
BB	10.0
B or BELOW	2.8
	100.0	%++

++ Does not include open long/short futures contracts with an underlying face amount of $108,213,813 with net unrealized appreciation of $466,220. Also does not include open swap contracts with net unrealized depreciation of $124,126.

See Notes to Financial Statements
48

Morgan Stanley Variable Investment Series - Global Infrastructure

Portfolio of Investments n December 31, 2010

NUMBER OF SHARES			VALUE
		Common Stocks (97.2%) Australia (4.4%)
		Airports
	130,645	Australian Infrastructure Fund (Stapled Securities) (a)(b)	$	251,212
	280,513	MAP Group (Stapled Securities) (a)		857,856
				1,109,068
		Diversified
	156,400	DUET Group (Stapled Securities) (a)(b)		269,542
		Oil & Gas Storage & Transportation
	105,100	APA Group (Stapled Securities) (a)		435,359
		Toll Roads
	229,100	Transurban Group (Stapled Securities) (a)		1,199,734
		Transmission & Distribution
	301,706	Spark Infrastructure Group		350,243
		Total Australia		3,363,946
		Brazil (0.5%)
		Water
	7,800	Cia de Saneamento Basico do Estado de Sao Paulo (ADR)		412,464
		Canada (14.1%)
		Oil & Gas Storage & Transportation
	80,140	Enbridge, Inc.		4,535,329
	144,350	TransCanada Corp.		5,515,294
				10,050,623
		Ports
	10,150	Westshore Terminals Income Fund (Units) (b)		234,584
		Transmission & Distribution
	17,420	Fortis, Inc.		595,325
		Total Canada		10,880,532

NUMBER OF SHARES			VALUE
		China (5.1%)
		Oil & Gas Storage & Transportation
	198,000	Beijing Enterprises Holdings Ltd. (c)	$	1,227,820
	340,000	China Gas Holdings Ltd. (c)(e)		148,286
	204,000	ENN Energy Holdings Ltd. (c)		611,517
				1,987,623
		Ports
	258,327	China Merchants Holdings International Co., Ltd. (c)		1,020,307
		Toll Roads
	809,000	Jiangsu Expressway Co., Ltd. (H Shares) (c)		926,320
		Total China		3,934,250
		France (6.4%)
		Airports
	5,300	Aeroports de Paris (ADP)		418,360
		Communications
	23,530	Eutelsat Communications		861,233
	108,367	SES SA		2,579,822
				3,441,055
		Toll Roads
	126,627	Groupe Eurotunnel SA		1,113,420
		Total France		4,972,835
		Germany (0.7%)
		Airports
	9,025	Fraport AG Frankfurt Airport Services Worldwide		568,759
		Hong Kong (2.8%)
		Oil & Gas Storage & Transportation
	930,000	Hong Kong & China Gas Co., Ltd.		2,191,951
		Italy (5.2%)
		Oil & Gas Storage & Transportation
	221,998	Snam Rete Gas SpA		1,103,567
		Toll Roads

See Notes to Financial Statements
49

Morgan Stanley Variable Investment Series - Global Infrastructure

Portfolio of Investments n December 31, 2010 continued

NUMBER OF SHARES			VALUE
	99,268	Atlantia SpA	$	2,025,607
		Transmission & Distribution
	214,500	Terna Rete Elettrica Nazionale SpA		905,777
		Total Italy		4,034,951
		Japan (0.4%)
		Airports
	18,100	Japan Airport Terminal Co., Ltd.		279,336
		Mexico (1.6%)
		Airports
	17,400	Grupo Aeroportuario del Pacifico SAB de CV (ADR)		706,614
	8,900	Grupo Aeroportuario del Sureste SAB de CV (ADR)		502,405
		Total Mexico		1,209,019
		Netherlands (0.4%)
		Oil & Gas Storage & Transportation
	6,502	Koninklijke Vopak N.V.		307,145
		New Zealand (0.5%)
		Airports
	219,680	Auckland International Airport Ltd.		373,160
		Spain (6.2%)
		Diversified
	81,223	Ferrovial SA		806,988
		Oil & Gas Storage & Transportation
	21,885	Enagas		436,191
		Toll Roads
	195,976	Abertis Infraestructuras SA		3,523,655
		Total Spain		4,766,834
		Switzerland (0.5%)
		Airports
	936	Flughafen Zuerich AG		382,409
		United Kingdom (10.7%)

NUMBER OF SHARES			VALUE
		Transmission & Distribution
	618,900	National Grid PLC	$	5,336,010
		Water
	65,400	Pennon Group PLC		652,572
	37,900	Severn Trent PLC		873,343
	147,600	United Utilities Group PLC		1,362,320
				2,888,235
		Total United Kingdom		8,224,245
		United States (37.7%)
		Communications
	92,190	American Tower Corp. (Class A) (d)		4,760,691
	69,620	Crown Castle International Corp. (d)		3,051,445
	34,630	SBA Communications Corp. (Class A) (d)		1,417,752
				9,229,888
		Diversified
	161,930	Centerpoint Energy, Inc.		2,545,540
		Oil & Gas Storage & Transportation
	7,340	AGL Resources, Inc.		263,139
	17,030	Atmos Energy Corp.		531,336
	19,041	Kinder Morgan Management LLC (d)		1,273,462
	5,090	New Jersey Resources Corp.		219,430
	56,810	NiSource, Inc.		1,000,992
	23,440	Oneok, Inc.		1,300,217
	32,990	Southern Union Co.		794,069
	6,650	Southwest Gas Corp.		243,855
	151,936	Spectra Energy Corp.		3,796,881
				9,423,381
		Transmission & Distribution
	40,890	Consolidated Edison, Inc.		2,026,917
	35,850	ITC Holdings Corp.		2,221,983
	49,080	Northeast Utilities		1,564,671
	9,710	NorthWestern Corp.		279,939
	21,180	NSTAR		893,584
				6,987,094

See Notes to Financial Statements
50

Morgan Stanley Variable Investment Series - Global Infrastructure

Portfolio of Investments n December 31, 2010 continued

NUMBER OF SHARES					VALUE
		Water
	15,810	American Water Works Co., Inc.			$	399,835
	22,620	Aqua America, Inc.				508,498
						908,333
		Total United States				29,094,236
		Total Common Stocks (Cost $66,265,658)				74,996,072
NUMBER OF SHARES (000)
		Short-Term Investment (2.6%)
		Investment Company
	2,008	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $2,007,943)				2,007,943
Total Investments (Cost $68,273,601) (f)			99.8	%		77,004,015
Other Assets in Excess of Liabilities			0.2			192,639
Net Assets			100.0	%	$	77,196,654

ADR American Depositary Receipt.

(a) Comprised of securities in separate entities that are traded as a single stapled security.

(b) Consists of one or more class of securities traded together as a unit; stocks with attached warrants.

(c) Security trades on the Hong Kong exchange.

(d) Non-income producing security.

(e) Illiquid security.

(f) The aggregate cost for federal income tax purposes is $68,489,632. The aggregate gross unrealized appreciation is $9,580,077 and the aggregate gross unrealized depreciation is $1,065,694 resulting in net unrealized appreciation of $8,514,383.

SUMMARY OF INVESTMENTS INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Oil & Gas Storage & Transportation	$	25,935,840		33.7	%
Transmission & Distribution		14,174,449		18.4
Communications		12,670,943		16.5
Toll Roads		8,788,736		11.4
Airports		4,340,111		5.6
Water		4,209,032		5.5
Diversified		3,622,070		4.7
Investment Company		2,007,943		2.6
Ports		1,254,891		1.6
	$	77,004,015		100.0	%

See Notes to Financial Statements
51

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n December 31, 2010

NUMBER OF SHARES			VALUE
		Common Stocks (96.3%) Belgium (2.0%)
		Chemicals
	28,257	Umicore	$	1,469,622
		Finland (2.2%)
		Machinery
	28,452	Kone Oyj (Class B)		1,581,659
		France (10.0%)
		Commercial Banks
	25,988	BNP Paribas		1,653,400
	22,707	Societe Generale		1,220,418
				2,873,818
		Electrical Equipment
	12,901	Schneider Electric SA		1,930,849
		Hotels, Restaurants & Leisure
	23,390	Accor SA		1,040,834
		Multi-Utilities
	39,028	GDF Suez		1,400,320
		Total France		7,245,821
		Germany (13.4%)
		Automobiles
	18,162	Daimler AG (a)		1,231,219
		Food & Staples Retailing
	17,751	Metro AG		1,278,078
		Industrial Conglomerates
	19,997	Siemens AG (Registered Shares)		2,477,145
		Insurance
	8,173	Muenchener Rueckversicherungs AG (Registered Shares)		1,239,062
		Machinery
	13,198	MAN SE		1,569,481
		Pharmaceuticals
	26,191	Bayer AG		1,935,459
		Total Germany		9,730,444

NUMBER OF SHARES			VALUE
		Luxembourg (2.0%)
		Metals & Mining
	38,912	ArcelorMittal (b)	$	1,475,716
		Netherlands (1.7%)
		Diversified Telecommunication Services
	82,885	Koninklijke KPN N.V.		1,209,499
		Portugal (1.3%)
		Oil, Gas & Consumable Fuels
	49,664	Galp Energia SGPS SA (Class B)		951,695
		Spain (1.6%)
		Commercial Banks
	115,328	Banco Bilbao Vizcaya Argentaria SA		1,165,101
		Switzerland (13.4%)
		Food Products
	65,498	Nestle SA (Registered Shares)		3,835,311
		Insurance
	6,037	Zurich Financial Services AG		1,563,809
		Pharmaceuticals
	40,075	Novartis AG (Registered Shares)		2,355,210
	13,724	Roche Holding AG		2,010,896
				4,366,106
		Total Switzerland		9,765,226
		United Kingdom (46.8%)
		Aerospace & Defense
	132,082	Rolls-Royce Group PLC (a)		1,282,929
		Commercial Banks
	364,155	Barclays PLC		1,485,519
	280,857	HSBC Holdings PLC		2,851,044
				4,336,563
		Diversified Telecommunication Services
	385,691	TalkTalk Telecom Group PLC		962,123

See Notes to Financial Statements
52

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n December 31, 2010 continued

NUMBER OF SHARES			VALUE
		Food & Staples Retailing
	263,859	WM Morrison Supermarkets PLC	$	1,100,852
		Household Products
	27,294	Reckitt Benckiser Group PLC		1,500,021
		Insurance
	124,691	Prudential PLC		1,298,622
		Media
	132,082	Reed Elsevier PLC		1,115,098
		Metals & Mining
	47,246	Anglo American PLC		2,456,954
		Oil, Gas & Consumable Fuels
	112,647	BG Group PLC		2,276,123
	300,222	BP PLC (a)		2,179,114
	76,892	Royal Dutch Shell PLC (Class A)		2,563,666
	65,734	Tullow Oil PLC		1,292,338
				8,311,241
		Pharmaceuticals
	99,950	GlaxoSmithKline PLC		1,932,304
		Professional Services
	108,320	Experian PLC		1,347,667
		Specialty Retail
	192,765	Carphone Warehouse Group PLC (a)		1,187,876
	2,106,919	Dixons Retail PLC (a)		752,894
				1,940,770
		Tobacco
	55,404	British American Tobacco PLC		2,127,966
	52,308	Imperial Tobacco Group PLC		1,604,960
				3,732,926
		Wireless Telecommunication Services
	1,036,116	Vodafone Group PLC		2,678,329
		Total United Kingdom		33,996,399

NUMBER OF SHARES			VALUE
		United States (1.9%)
		Auto Components
	17,007	Autoliv, Inc. (SDR)	$	1,347,785
		Total Common Stocks (Cost $57,566,458)		69,938,967
		Preferred Stock (1.8%) Germany
		Health Care Equipment & Supplies
	15,574	Fresenius SE (Cost $1,226,434)		1,333,403
PRINCIPAL AMOUNT IN THOUSANDS
		Short-Term Investments (1.7%) Securities Held as Collateral on Loaned Securities (0.1%)
		Repurchase Agreements (0.0%)
$	6,348	Barclays Capital, Inc. (0.20%, dated 12/31/10, due 01/03/11; proceeds $6,349; fully collateralized by a U.S. Government Obligation; U.S. Treasury Note 0.00% due 11/15/20; valued at $6,475)		6,348
	3,480	Deutsche Bank Securities, Inc. (0.28%, dated 12/31/10, due 01/03/11; proceeds $3,480; fully collateralized by a U.S. Government Agency; Government National Mortgage Association 5.00% due 10/15/39; valued at $3,550)		3,480
		Total Repurchase Agreements (Cost $9,828)		9,828

See Notes to Financial Statements
53

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n December 31, 2010 continued

NUMBER OF SHARES (000)			VALUE
		Investment Company (0.1%)
	33	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $33,112)	$	33,112
		Total Securities Held as Collateral on Loaned Securities (Cost $42,940)		42,940
		Investment Company (1.6%)
	1,154	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $1,153,934)		1,153,934
		Total Short-Term Investments (Cost $1,196,874)		1,196,874

			VALUE
Total Investments (Cost $59,989,766) (c)(d)	99.8	%	$	72,469,244
Other Assets in Excess of Liabilities	0.2			176,298
Net Assets	100.0	%	$	72,645,542

SDR Swedish Depositary Receipt.

(a) Non-income producing security.

(b) All or a portion of this security was on loan at December 31, 2010.

(c) Securities have been designated as collateral in connection with open foreign currency exchange contracts.

(d) The aggregate cost for federal income tax purposes is $60,736,312. The aggregate gross unrealized appreciation is $15,690,967 and the aggregate gross unrealized depreciation is $3,958,035 resulting in net unrealized appreciation of $11,732,932.

FOREIGN CURRENCY EXCHANGE CONTRACTS OPEN AT DECEMBER 31, 2010:

COUNTERPARTY	CONTRACTS TO DELIVER		IN EXCHANGE FOR		DELIVERY DATE	UNREALIZED APPRECIATION (DEPRECIATION)
State Street Bank and Trust Co.	GBP	2,285,000	EUR	2,707,859	01/05/2011	$	56,136
State Street Bank and Trust Co.	EUR	2,684,250	GBP	2,285,000	01/05/2011		(24,586	)
State Street Bank and Trust Co.	GBP	2,365,000	EUR	2,777,562	02/04/2011		25,186
Net Unrealized Appreciation						$	56,736

Currency Abbreviations:

EUR Euro.

GBP British Pound.

See Notes to Financial Statements
54

Morgan Stanley Variable Investment Series - European Equity

Portfolio of Investments n December 31, 2010 continued

SUMMARY OF INVESTMENTS

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Oil, Gas & Consumable Fuels	$	9,262,936		12.8	%
Commercial Banks		8,375,482		11.6
Pharmaceuticals		8,233,869		11.4
Insurance		4,101,493		5.7
Metals & Mining		3,932,670		5.4
Food Products		3,835,311		5.3
Tobacco		3,732,926		5.1
Machinery		3,151,140		4.3
Wireless Telecommunication Services		2,678,329		3.7
Industrial Conglomerates		2,477,145		3.4
Food & Staples Retailing		2,378,930		3.3
Diversified Telecommunication Services		2,171,622		3.0
Specialty Retail		1,940,770		2.7
Electrical Equipment		1,930,849		2.7
Household Products		1,500,021		2.1

SUMMARY OF INVESTMENTS

INDUSTRY	VALUE			PERCENT OF TOTAL INVESTMENTS
Chemicals	$	1,469,622			2.0	%
Multi-Utilities		1,400,320			1.9
Auto Components		1,347,785			1.9
Professional Services		1,347,667			1.9
Health Care Equipment & Supplies		1,333,403			1.8
Aerospace & Defense		1,282,929			1.8
Automobiles		1,231,219			1.7
Investment Company		1,153,934			1.6
Media		1,115,098			1.5
Hotels, Restaurants & Leisure		1,040,834			1.4
	$	72,426,304	^		100.0	%

^ Does not reflect the value of securities held as collateral on loaned securities, and does not include open foreign currency exchange contracts with net unrealized appreciation of $56,736.

See Notes to Financial Statements
55

Morgan Stanley Variable Investment Series - Capital Opportunities

Portfolio of Investments n December 31, 2010

NUMBER OF SHARES			VALUE
		Common Stocks (95.8%)
		Air Freight & Logistics (2.2%)
	116,504	Expeditors International of Washington, Inc.	$	6,361,118
		Capital Markets (3.1%)
	109,046	Greenhill & Co., Inc.		8,906,877
		Chemicals (2.9%)
	118,809	Monsanto Co.		8,273,859
		Commercial Services & Supplies (2.6%)
	320,753	Edenred (France) (a)		7,593,093
		Computers & Peripherals (6.9%)
	61,516	Apple, Inc. (a)		19,842,601
		Distributors (2.9%)
	1,454,000	Li & Fung Ltd. (Bermuda) (b)		8,436,522
		Diversified Financial Services (7.3%)
	899,520	BM&F Bovespa SA (Brazil)		7,114,878
	206,649	Leucadia National Corp.		6,030,018
	205,122	MSCI, Inc. (Class A) (a)		7,991,553
				21,136,449
		Food Products (2.5%)
	113,202	Mead Johnson Nutrition Co.		7,046,824
		Health Care Technology (2.2%)
	156,339	athenahealth, Inc. (a)		6,406,772
		Hotels, Restaurants & Leisure (9.2%)
	172,668	Ctrip.com International Ltd. (ADR) (Cayman Islands) (a)		6,984,421
	252,017	Las Vegas Sands Corp. (a)		11,580,181
	165,755	PF Chang's China Bistro, Inc.		8,032,487
				26,597,089
		Information Technology Services (2.7%)
	191,314	Teradata Corp. (a)		7,874,484
		Internet & Catalog Retail (9.6%)
	114,138	Amazon.com, Inc. (a)		20,544,840
	39,478	NetFlix, Inc. (a)		6,936,285
				27,481,125

NUMBER OF SHARES			VALUE
		Internet Software & Services (11.3%)
	89,779	Baidu, Inc. (ADR) (Cayman Islands) (a)	$	8,666,367
	262,883	Facebook, Inc. (a)(c)(d)		5,231,372
	25,353	Google, Inc. (Class A) (a)		15,058,921
	167,300	Tencent Holdings Ltd. (Cayman Islands) (b)		3,635,366
				32,592,026
		Life Sciences Tools & Services (5.2%)
	139,045	Illumina, Inc. (a)		8,807,110
	94,068	Techne Corp.		6,177,446
				14,984,556
		Media (2.1%)
	100,297	Naspers Ltd. (Class N) (South Africa)		5,906,675
		Metals & Mining (5.2%)
	7,039,774	Lynas Corp. Ltd. (Australia) (a)		14,832,552
		Oil, Gas & Consumable Fuels (4.4%)
	97,071	Range Resources Corp.		4,366,254
	173,904	Ultra Petroleum Corp. (Canada) (a)		8,307,394
				12,673,648
		Professional Services (5.0%)
	135,829	CoStar Group, Inc. (a)		7,818,317
	194,113	Verisk Analytics, Inc. (Class A) (a)		6,615,371
				14,433,688
		Real Estate Management & Development (4.0%)
	349,106	Brookfield Asset Management, Inc. (Class A) (Canada)		11,621,739
		Semiconductors & Semiconductor Equipment (1.9%)
	241,304	Tessera Technologies, Inc. (a)		5,344,884

See Notes to Financial Statements
56

Morgan Stanley Variable Investment Series - Capital Opportunities

Portfolio of Investments n December 31, 2010 continued

NUMBER OF SHARES					VALUE
		Software (2.6%)
	57,118	Salesforce.com, Inc. (a)			$	7,539,576
		Total Common Stocks (Cost $190,892,292)				275,886,157
		Convertible Preferred Stock (0.5%)
		Alternative Energy
	488,605	Better Place, Inc. (Cost $1,465,815) (a)(c)(d)				1,465,815
NUMBER OF SHARES (000)
		Short-Term Investment (3.8%)
		Investment Company
	10,848	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $10,848,140)				10,848,140
Total Investments (Cost $203,206,247) (e)			100.1	%		288,200,112
Liabilities in Excess of Other Assets			(0.1	)		(344,052	)
Net Assets			100.0	%	$	287,856,060

ADR American Depositary Receipt.

(a) Non-income producing security.

(b) Security trades on the Hong Kong exchange.

(c) Illiquid security. Resale is restricted to qualified institutional investors.

(d) At December 31, 2010, the Portfolio held fair valued securities valued at $6,697,187, representing 2.3% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees.

(e) The aggregate cost for federal income tax purposes is $204,156,309. The aggregate gross unrealized appreciation is $92,516,355 and the aggregate gross unrealized depreciation is $8,472,552 resulting in net unrealized appreciation of $84,043,803.

SUMMARY OF INVESTMENTS

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Internet Software & Services	$	32,592,026		11.3	%
Internet & Catalog Retail		27,481,125		9.5
Hotels, Restaurants & Leisure		26,597,089		9.2
Diversified Financial Services		21,136,449		7.3
Computers & Peripherals		19,842,601		6.9
Life Sciences Tools & Services		14,984,556		5.2
Metals & Mining		14,832,552		5.2
Professional Services		14,433,688		5.0
Oil, Gas & Consumable Fuels		12,673,648		4.4
Real Estate Management & Development		11,621,739		4.0
Investment Company		10,848,140		3.8
Capital Markets		8,906,877		3.1
Distributors		8,436,522		2.9
Chemicals		8,273,859		2.9
Computers - Integrated System		7,874,484		2.7
Commercial Services & Supplies		7,593,093		2.6
Software		7,539,576		2.6
Food Products		7,046,824		2.5
Health Care Technology		6,406,772		2.2
Air Freight & Logistics		6,361,118		2.2
Media		5,906,675		2.1
Semiconductors & Semiconductor Equipment		5,344,884		1.9
Alternative Energy		1,465,815		0.5
	$	288,200,112		100.0	%

See Notes to Financial Statements
57

Morgan Stanley Variable Investment Series - Aggressive Equity

Portfolio of Investments n December 31, 2010

NUMBER OF SHARES			VALUE
		Common Stocks (96.0%)
		Air Freight & Logistics (2.3%)
	14,308	Expeditors International of Washington, Inc.	$	781,217
		Capital Markets (3.1%)
	13,121	Greenhill & Co., Inc.		1,071,723
		Chemicals (2.9%)
	14,296	Monsanto Co.		995,573
		Commercial Services & Supplies (2.7%)
	39,244	Edenred (France) (a)		929,012
		Computers & Peripherals (7.0%)
	7,402	Apple, Inc. (a)		2,387,589
		Distributors (3.0%)
	178,000	Li & Fung Ltd. (Bermuda) (b)		1,032,807
		Diversified Financial Services (7.5%)
	110,064	BM&F Bovespa SA (Brazil)		870,566
	24,866	Leucadia National Corp.		725,590
	24,682	MSCI, Inc. (Class A) (a)		961,611
				2,557,767
		Food Products (2.5%)
	13,621	Mead Johnson Nutrition Co.		847,907
		Health Care Technology (2.3%)
	18,812	athenahealth, Inc. (a)		770,916
		Hotels, Restaurants & Leisure (9.4%)
	21,205	Ctrip.com International Ltd. (ADR) (Cayman Islands) (a)		857,742
	29,950	Las Vegas Sands Corp. (a)		1,376,203
	20,356	PF Chang's China Bistro, Inc.		986,452
				3,220,397
		Information Technology Services (2.8%)
	23,495	Teradata Corp. (a)		967,054
		Internet & Catalog Retail (9.7%)
	13,734	Amazon.com, Inc. (a)		2,472,120
	4,856	NetFlix, Inc. (a)		853,199
				3,325,319

NUMBER OF SHARES			VALUE
		Internet Software & Services (9.7%)
	10,803	Baidu, Inc. (ADR) (Cayman Islands) (a)	$	1,042,814
	3,051	Google, Inc. (Class A) (a)		1,812,202
	20,400	Tencent Holdings Ltd. (Cayman Islands) (b)		443,284
				3,298,300
		Life Sciences Tools & Services (5.3%)
	17,076	Illumina, Inc. (a)		1,081,594
	11,319	Techne Corp.		743,319
				1,824,913
		Media (2.1%)
	12,220	Naspers Ltd. (Class N) (South Africa)		719,658
		Metals & Mining (5.2%)
	847,091	Lynas Corp. Ltd. (Australia) (a)		1,784,790
		Oil, Gas & Consumable Fuels (4.6%)
	11,921	Range Resources Corp.		536,207
	21,357	Ultra Petroleum Corp. (Canada) (a)		1,020,224
				1,556,431
		Professional Services (5.1%)
	16,344	CoStar Group, Inc. (a)		940,761
	23,839	Verisk Analytics, Inc. (Class A) (a)		812,433
				1,753,194
		Real Estate Management & Development (4.2%)
	42,874	Brookfield Asset Management, Inc. (Class A) (Canada)		1,427,276
		Semiconductors & Semiconductor Equipment (1.9%)
	29,036	Tessera Technologies, Inc. (a)		643,147

See Notes to Financial Statements
58

Morgan Stanley Variable Investment Series - Aggressive Equity

Portfolio of Investments n December 31, 2010 continued

NUMBER OF SHARES					VALUE
		Software (2.7%)
	6,989	Salesforce.com, Inc. (a)			$	922,548
		Total Common Stocks (Cost $22,367,196)				32,817,538
		Convertible Preferred Stocks (0.5%)
		Alternative Energy
	59,090	Better Place, Inc. (Cost $177,270) (a)(c)(d)				177,270
NUMBER OF SHARES (000)
		Short-Term Investment (3.6%)
		Investment Company
	1,244	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $1,244,382)				1,244,382
Total Investments (Cost $23,788,848) (e)			100.1	%		34,239,190
Liabilities in Excess of Other Assets			(0.1	)		(48,655	)
Net Assets			100.0	%	$	34,190,535

ADR American Depositary Receipt.

(a) Non-income producing security.

(b) Security trades on the Hong Kong exchange.

(c) Illiquid security. Resale is restricted to qualified institutional investors.

(d) At December 31, 2010, the Portfolio held fair valued securities valued at $177,270, representing 0.5% of net assets. These securities have been fair valued as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees.

(e) The aggregate cost for federal income tax purposes is $23,822,115. The aggregate gross unrealized appreciation is $11,438,858 and the aggregate gross unrealized depreciation is $1,021,783 resulting in net unrealized appreciation of $10,417,075.

SUMMARY OF INVESTMENTS

INDUSTRY	VALUE		PERCENT OF TOTAL INVESTMENTS
Internet & Catalog Retail	$	3,325,319		9.7	%
Internet Software & Services		3,298,300		9.6
Hotels, Restaurants & Leisure		3,220,397		9.4
Diversified Financial Services		2,557,767		7.5
Computers & Peripherals		2,387,589		7.0
Life Sciences Tools & Services		1,824,913		5.3
Metals & Mining		1,784,790		5.2
Professional Services		1,753,194		5.1
Oil, Gas & Consumable Fuels		1,556,431		4.6
Real Estate Management & Development		1,427,276		4.2
Investment Company		1,244,382		3.6
Capital Markets		1,071,723		3.1
Distributors		1,032,807		3.0
Chemicals		995,573		2.9
Information Technology Services		967,054		2.8
Commercial Services & Supplies		929,012		2.7
Software		922,548		2.7
Food Products		847,907		2.5
Air Freight & Logistics		781,217		2.3
Health Care Technology		770,916		2.3
Media		719,658		2.1
Semiconductors & Semiconductor Equipment		643,147		1.9
Alternative Energy		177,270		0.5
	$	34,239,190		100.0	%

See Notes to Financial Statements
59

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010

NUMBER OF SHARES			VALUE
		Common Stocks (71.5%)
		Aerospace & Defense (3.2%)
	47,930	Northrop Grumman Corp.	$	3,104,905
	60,130	Raytheon Co.		2,786,424
				5,891,329
		Capital Markets (1.3%)
	14,000	Goldman Sachs Group, Inc. (The)		2,354,240
		Chemicals (2.3%)
	84,385	EI Du Pont de Nemours & Co.		4,209,124
		Commercial Services & Supplies (2.9%)
	146,995	Waste Management, Inc.		5,419,706
		Communications Equipment (1.3%)
	119,000	Cisco Systems, Inc. (a)		2,407,370
		Computers & Peripherals (5.1%)
	176,000	Dell, Inc. (a)		2,384,800
	60,000	Hewlett-Packard Co.		2,526,000
	30,270	International Business Machines Corp.		4,442,425
				9,353,225
		Distributors (2.1%)
	73,965	Genuine Parts Co.		3,797,363
		Diversified Financial Services (4.0%)
	500,000	Citigroup, Inc. (See Note 6) (a)		2,365,000
	116,445	JPMorgan Chase & Co.		4,939,597
				7,304,597
		Diversified Telecommunication Services (3.1%)
	158,955	Verizon Communications, Inc.		5,687,410
		Food Products (3.8%)
	156,470	Archer-Daniels-Midland Co.		4,706,618
	67,670	Campbell Soup Co.		2,351,532
				7,058,150
		Hotels, Restaurants & Leisure (3.9%)
	46,850	McDonald's Corp.		3,596,206
	73,960	Yum! Brands, Inc.		3,627,738
				7,223,944
		Industrial Conglomerates (2.9%)
	294,010	General Electric Co.		5,377,443

See Notes to Financial Statements
60

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

NUMBER OF SHARES			VALUE
		Information Technology Services (2.7%)
	107,950	Automatic Data Processing, Inc.	$	4,995,926
		Insurance (2.9%)
	90,945	Chubb Corp.		5,423,960
		Internet Software & Services (1.4%)
	90,000	eBay, Inc. (a)		2,504,700
		Machinery (2.6%)
	52,345	Caterpillar, Inc.		4,902,633
		Multi-Utilities (3.4%)
	235,500	Centerpoint Energy, Inc.		3,702,060
	52,970	Integrys Energy Group, Inc.		2,569,575
				6,271,635
		Multiline Retail (0.8%)
	48,390	JC Penney Co., Inc.		1,563,481
		Oil, Gas & Consumable Fuels (8.7%)
	59,605	Chevron Corp.		5,438,956
	85,950	ConocoPhillips		5,853,195
	129,705	Marathon Oil Corp.		4,802,976
				16,095,127
		Pharmaceuticals (4.5%)
	173,180	Bristol-Myers Squibb Co.		4,585,806
	60,410	Johnson & Johnson		3,736,359
				8,322,165
		Real Estate Investment Trusts (REITs) (2.9%)
	42,670	Health Care REIT, Inc.		2,032,799
	90,825	Plum Creek Timber Co., Inc.		3,401,396
				5,434,195
		Semiconductors & Semiconductor Equipment (2.1%)
	183,805	Intel Corp.		3,865,419
		Software (2.2%)
	147,385	Microsoft Corp.		4,114,989
		Specialty Retail (0.5%)
	25,735	Home Depot, Inc.		902,269
		Tobacco (0.9%)
	27,690	Philip Morris International, Inc.		1,620,696
		Total Common Stocks (Cost $116,182,954)		132,101,096

See Notes to Financial Statements
61

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Corporate Bonds (8.7%)
		Advertising Services (0.1%)
$	100	WPP Finance (United Kingdom)		8.00	%	09/15/14	$	115,138
		Aerospace & Defense (0.1%)
	20	Bombardier, Inc. (144A) (Canada) (b)		7.50		03/15/18		21,550
	40	Bombardier, Inc. (144A) (Canada) (b)		7.75		03/15/20		43,300
	76	Systems 2001 Asset Trust (144A) (Cayman Islands) (b)		6.664		09/15/13		83,799
								148,649
		Agricultural Operations (0.0%)
	45	Bunge Ltd. Finance Corp.		8.50		06/15/19		52,846
		Airlines (0.1%)
	132	America West Airlines LLC (Series 011G) (AMBAC Insd)		7.10		04/02/21		131,414
		Auto - Cars/Light Trucks (0.1%)
	60	Daimler Finance North America LLC		7.30		01/15/12		63,765
	35	Nissan Motor Acceptance Corp. (144A) (b)		4.50		01/30/15		36,375
								100,140
		Beverages (0.0%)
	25	Anheuser-Busch InBev Worldwide, Inc. (144A) (b)		5.375		11/15/14		27,568
	50	Anheuser-Busch InBev Worldwide, Inc. (144A) (b)		7.20		01/15/14		57,219
								84,787
		Beverages - Wine/Spirits (0.0%)
	25	Constellation Brands, Inc.		7.25		09/01/16		26,625
		Building Product - Cement/Aggregation (0.1%)
	75	CRH America, Inc.		6.00		09/30/16		80,127
	30	Holcim US Finance Sarl & Cie SCS (144A) (Luxembourg) (b)		6.00		12/30/19		31,207
	55	Lafarge SA (144A) (France) (b)		5.50		07/09/15		57,209
								168,543
		Building Societies (0.1%)
	170	Nationwide Building Society (144A) (United Kingdom) (b)		6.25		02/25/20		177,460
		Cable/Satellite TV (0.1%)
	15	COX Communications, Inc. (144A) (b)		8.375		03/01/39		19,500
	25	CSC Holdings LLC		7.625		07/15/18		27,250
	30	DirecTV Holdings LLC/DirecTV Financing Co., Inc.		5.875		10/01/19		32,662
	30	DirecTV Holdings LLC/DirecTV Financing Co., Inc.		7.625		05/15/16		33,299
	40	DISH DBS Corp.		7.125		02/01/16		41,500
								154,211

See Notes to Financial Statements
62

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Capital Markets (0.3%)
$	305	Goldman Sachs Group, Inc. (The)		6.15	%	04/01/18	$	336,359
	80	Goldman Sachs Group, Inc. (The)		6.75		10/01/37		82,047
	60	Goldman Sachs Group, Inc. (The)		7.50		02/15/19		70,069
	125	Macquarie Group Ltd. (144A) (Australia) (b)		6.00		01/14/20		125,706
								614,181
		Casino Gaming (0.1%)
	100	Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp.		7.75		08/15/20		108,750
		Chemicals (0.1%)
	110	Mosaic Co. (The) (144A) (b)		7.625		12/01/16		118,388
		Chemicals - Specialty (0.0%)
	60	Albemarle Corp.		4.50		12/15/20		59,170
		Commercial Banks (1.1%)
	175	Barclays Bank PLC (United Kingdom)		6.75		05/22/19		197,985
	110	Commonwealth Bank of Australia (144A) (Australia) (b)		5.00		10/15/19		115,344
	160	Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (144A) (Netherlands) (b)		4.75		01/15/20		165,969
	100	Credit Agricole SA (144A) (France) (b)		3.50		04/13/15		100,764
	25	Credit Suisse (Switzerland)		6.00		02/15/18		26,846
	240	Credit Suisse AG (Switzerland)		5.40		01/14/20		245,541
	130	HBOS PLC (144A) (United Kingdom) (b)		6.75		05/21/18		121,896
	100	HSBC Bank PLC (144A) (United Kingdom) (b)		3.50		06/28/15		102,616
	105	PNC Funding Corp.		5.125		02/08/20		109,639
	60	PNC Funding Corp.		6.70		06/10/19		69,194
	50	Regions Financial Corp.		5.75		06/15/15		48,985
	100	Royal Bank of Scotland PLC (The) (United Kingdom)		4.875		03/16/15		102,389
	100	Standard Chartered Bank (144A) (United Kingdom) (b)		6.40		09/26/17		107,149
	100	Svenska Handelsbanken AB (144A) (Sweden) (b)		5.125		03/30/20		104,305
	270	Wells Fargo & Co.		5.625		12/11/17		299,372
	75	Westpac Banking Corp. (Australia)		3.00		08/04/15		75,460
								1,993,454
		Commercial Services & Supplies (0.0%)
	80	Waste Management, Inc.		6.125		11/30/39		85,914
		Computers & Peripherals (0.1%)
	100	International Business Machines Corp.		7.625		10/15/18		127,491

See Notes to Financial Statements
63

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Consulting Services (0.0%)
$	50	SAIC, Inc. (144A) (b)		5.95	%	12/01/40	$	50,879
		Consumer Finance (0.1%)
	70	American Express Co.		8.125		05/20/19		87,233
		Distribution/Wholesale (0.0%)
	45	Ingram Micro, Inc.		5.25		09/01/17		45,603
		Diversified Financial Services (0.8%)
	135	Bank of America Corp. (Series L)		5.65		05/01/18		138,145
	145	Bank of America Corp.		5.75		12/01/17		151,105
	110	Citigroup, Inc. (See Note 6)		5.875		05/29/37		107,968
	185	Citigroup, Inc. (See Note 6)		6.125		11/21/17		203,025
	70	Citigroup, Inc. (See Note 6)		6.125		05/15/18		76,801
	70	Citigroup, Inc. (See Note 6)		8.50		05/22/19		87,037
	160	General Electric Capital Corp.		5.625		05/01/18		174,746
	280	General Electric Capital Corp. (Series G)		6.00		08/07/19		312,055
	20	JPMorgan Chase & Co.		3.40		06/24/15		20,416
	80	JPMorgan Chase & Co.		4.25		10/15/20		78,286
	15	JPMorgan Chase & Co.		4.95		03/25/20		15,427
	30	JPMorgan Chase & Co.		6.00		01/15/18		33,551
								1,398,562
		Diversified Manufactured Operation (0.1%)
	90	Cooper US, Inc.		5.25		11/15/12		96,703
		Diversified Minerals (0.2%)
	100	Anglo American Capital PLC (144A) (United Kingdom) (b)		9.375		04/08/19		134,721
	70	Rio Tinto Finance USA Ltd. (Australia)		9.00		05/01/19		94,160
	60	Vale Overseas Ltd. (Cayman Islands)		5.625		09/15/19		64,206
	15	Vale Overseas Ltd. (Cayman Islands)		6.875		11/10/39		16,649
								309,736
		Diversified Telecommunication Services (0.2%)
	95	AT&T, Inc.		6.15		09/15/34		98,420
	125	AT&T, Inc.		6.30		01/15/38		132,307
	15	Verizon Communications, Inc.		5.85		09/15/35		15,567
	80	Verizon Communications, Inc.		6.35		04/01/19		92,484
	65	Verizon Communications, Inc.		8.95		03/01/39		92,926
								431,704
		E-Commerce/Services (0.0%)
	55	Expedia, Inc.		5.95		08/15/20		55,550

See Notes to Financial Statements
64

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Electric - Integrated (0.5%)
$	120	CMS Energy Corp.		6.25	%	02/01/20	$	123,064
	50	EDF SA (144A) (France) (b)		4.60		01/27/20		51,768
	125	Enel Finance International SA (144A) (Luxembourg) (b)		5.125		10/07/19		124,094
	150	Exelon Generation Co. LLC		5.20		10/01/19		157,198
	75	Iberdrola Finance Ireland Ltd. (144A) (Ireland) (b)		5.00		09/11/19		72,042
	100	NiSource Finance Corp.		6.125		03/01/22		107,966
	75	NiSource Finance Corp.		6.80		01/15/19		86,912
	75	Ohio Power Co. (Series M)		5.375		10/01/21		80,021
	55	PPL Energy Supply LLC		6.30		07/15/13		60,629
	35	PPL Energy Supply LLC		6.50		05/01/18		39,027
	80	Progress Energy, Inc.		7.05		03/15/19		95,064
								997,785
		Electric Utilities (0.1%)
	140	FirstEnergy Solutions Corp.		6.05		08/15/21		144,098
		Electronic Equipment, Instruments & Components (0.0%)
	20	Agilent Technologies, Inc.		5.50		09/14/15		21,747
	10	Corning, Inc.		6.625		05/15/19		11,560
	20	Corning, Inc.		7.25		08/15/36		22,831
								56,138
		Energy Equipment & Services (0.1%)
	85	Weatherford International Ltd. (Bermuda)		9.625		03/01/19		109,234
		Finance - Consumer Loans (0.0%)
	60	SLM Corp. (Series A)		5.00		10/01/13		60,193
		Finance - Credit Card (0.1%)
	110	American Express Credit Corp. (Series C)		7.30		08/20/13		124,029
		Finance - Investment Banker/Broker (0.4%)
	60	Bear Stearns Cos. LLC (The)		6.40		10/02/17		68,497
	200	Bear Stearns Cos. LLC (The)		7.25		02/01/18		237,349
	225	Merrill Lynch & Co., Inc. (MTN)		6.875		04/25/18		246,587
	105	TD Ameritrade Holding Corp.		5.60		12/01/19		110,150
								662,583
		Finance - Other Services (0.0%)
	80	NASDAQ OMX Group, Inc. (The)		5.55		01/15/20		80,972
		Food - Baking (0.1%)
	100	Grupo Bimbo SAB de CV (144A) (Mexico) (b)		4.875		06/30/20		100,891

See Notes to Financial Statements
65

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Food - Miscellaneous/Diversified (0.1%)
$	30	ConAgra Foods, Inc.		7.00	%	10/01/28	$	33,719
	55	ConAgra Foods, Inc.		8.25		09/15/30		68,771
								102,490
		Food - Retail (0.0%)
	21	Delhaize Group SA (144A) (Belgium) (b)		5.70		10/01/40		20,059
	65	Woolworths Ltd. (144A) (Australia) (b)		4.00		09/22/20		63,070
								83,129
		Food Products (0.1%)
	180	Kraft Foods, Inc.		7.00		08/11/37		211,416
		Health Care Providers & Services (0.0%)
	60	Medco Health Solutions, Inc.		7.125		03/15/18		70,511
	115	UnitedHealth Group, Inc.		6.625		11/15/37		129,441
								199,952
		Hotels & Motels (0.0%)
	40	Hyatt Hotels Corp. (144A) (b)		6.875		08/15/19		43,800
		Independent Power Producer (0.0%)
	45	NRG Energy, Inc.		8.50		06/15/19		46,688
		Insurance (0.2%)
	45	MetLife, Inc. (See Note 6)		7.717		02/15/19		55,334
	50	Principal Financial Group, Inc.		8.875		05/15/19		63,002
	85	Prudential Financial, Inc. (MTN)		4.75		09/17/15		90,023
	40	Prudential Financial, Inc. (MTN)		6.625		12/01/37		44,612
	20	Prudential Financial, Inc. (Series D)		7.375		06/15/19		23,619
								276,590
		Life/Health Insurance (0.0%)
	75	Pacific LifeCorp (144A) (b)		6.00		02/10/20		78,963
		Media (0.3%)
	50	CBS Corp.		8.875		05/15/19		63,002
	50	Comcast Corp.		5.15		03/01/20		52,613
	45	Comcast Corp.		5.70		05/15/18		49,599
	15	Comcast Corp.		6.45		03/15/37		16,079
	45	Time Warner Cable, Inc.		6.75		06/15/39		49,867
	65	Time Warner Cable, Inc.		8.75		02/14/19		82,837
	25	Time Warner, Inc.		4.875		03/15/20		26,084
	40	Time Warner, Inc.		5.875		11/15/16		45,205
	25	Time Warner, Inc.		7.70		05/01/32		30,605
	80	Viacom, Inc.		6.875		04/30/36		92,082
								507,973

See Notes to Financial Statements
66

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Medical - Biomedical/Genetics (0.1%)
$	55	Genzyme Corp. (144A)		3.625	%	06/15/15	$	56,523
	60	Life Technologies Corp.		6.00		03/01/20		64,382
								120,905
		Medical - HMO (0.2%)
	160	WellPoint, Inc.		6.375		06/15/37		175,234
		Medical Labs & Testing Services (0.1%)
	30	Laboratory Corp. of America Holdings		3.125		05/15/16		29,685
	100	Quest Diagnostics, Inc.		6.95		07/01/37		106,374
								136,059
		Metal - Copper (0.0%)
	20	Southern Copper Corp.		5.375		04/16/20		20,320
	30	Southern Copper Corp.		6.75		04/16/40		31,215
								51,535
		Metals & Mining (0.1%)
	15	ArcelorMittal (Luxembourg)		7.00		10/15/39		15,616
	50	ArcelorMittal (Luxembourg)		9.85		06/01/19		63,287
	30	Freeport-McMoRan Copper & Gold, Inc.		8.375		04/01/17		33,228
								112,131
		Mortgage Banks (0.1%)
	100	Abbey National Treasury Services PLC (144A) (United Kingdom) (b)		3.875		11/10/14		99,181
		Multi-line Insurance (0.1%)
	75	Aegon N.V. (Netherlands)		4.625		12/01/15		77,385
	50	Allstate Corp. (The) (See Note 6)		7.45		05/16/19		60,780
	60	Hartford Financial Services Group, Inc.		5.50		03/30/20		60,975
								199,140
		Multiline Retail (0.0%)
	25	JC Penney Co., Inc.		5.65		06/01/20		24,062
	49	JC Penney Corp., Inc.		6.375		10/15/36		44,835
								68,897
		Multimedia (0.1%)
	65	NBC Universal, Inc. (144A) (b)		5.15		04/30/20		67,505
	100	News America, Inc.		7.85		03/01/39		124,903
	45	Vivendi SA (144A) (France) (b)		6.625		04/04/18		50,183
								242,591

See Notes to Financial Statements
67

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Office Electronics (0.0%)
$	15	Xerox Corp.		5.625	%	12/15/19	$	16,108
	20	Xerox Corp.		6.35		05/15/18		22,578
								38,686
		Oil Companies - Exploration & Production (0.2%)
	45	Anadarko Petroleum Corp.		6.95		06/15/19		50,569
	35	EQT Corp.		8.125		06/01/19		40,787
	100	Gazprom Via Gaz Capital SA (144A) (Luxembourg) (b)		6.51		03/07/22		102,500
	30	Pioneer Natural Resources Co.		6.65		03/15/17		32,013
	45	QEP Resources, Inc.		6.875		03/01/21		47,475
								273,344
		Oil Company - Integrated (0.0%)
	80	Petrobras International Finance Co. (Cayman Islands)		5.75		01/20/20		83,405
		Oil, Gas & Consumable Fuels (0.0%)
	75	Hess Corp.		6.00		01/15/40		78,888
		Paper & Related Products (0.1%)
	25	International Paper Co.		7.30		11/15/39		28,578
	100	International Paper Co.		7.95		06/15/18		119,169
								147,747
		Pipelines (0.4%)
	55	CenterPoint Energy Resources Corp.		6.25		02/01/37		57,724
	75	Energy Transfer Partners LP		8.50		04/15/14		87,143
	35	Enterprise Products Operating LLC		5.25		01/31/20		36,472
	90	Enterprise Products Operating LLC (Series N)		6.50		01/31/19		102,354
	50	Kinder Morgan Energy Partners LP		5.95		02/15/18		55,146
	135	Kinder Morgan Finance Co. ULC (Canada)		5.70		01/05/16		137,363
	60	Plains All American Pipeline LP/PAA Finance Corp.		6.70		05/15/36		62,818
	60	Plains All American Pipeline LP/PAA Finance Corp.		8.75		05/01/19		74,575
	50	Spectra Energy Capital LLC		7.50		09/15/38		58,753
	55	Texas Eastern Transmission LP		7.00		07/15/32		63,613
								735,961
		Real Estate Management & Development (0.0%)
	45	Brookfield Asset Management, Inc. (Canada)		5.80		04/25/17		46,031
		Reinsurance (0.1%)
	60	Platinum Underwriters Finance, Inc. (Series B)		7.50		06/01/17		62,496
	60	Reinsurance Group of America, Inc.		6.45		11/15/19		63,433
								125,929

See Notes to Financial Statements
68

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		REIT - Diversified (0.1%)
$	115	Digital Realty Trust LP (144A) (b)		4.50	%	07/15/15	$	115,826
	75	Duke Realty LP		6.75		03/15/20		81,507
	20	Vornado Realty LP		4.25		04/01/15		20,209
								217,542
		REIT - Health Care (0.1%)
	60	Health Care, Inc.		6.125		04/15/20		63,272
	60	Healthcare Realty Trust, Inc.		5.75		01/15/21		60,122
								123,394
		REIT - Office Property (0.0%)
	40	BioMed Realty LP (144A) (b)		6.125		04/15/20		42,310
		Retail - Automobile (0.0%)
	40	AutoNation, Inc.		6.75		04/15/18		41,500
		Retail - Discount (0.0%)
	40	Wal-Mart Stores, Inc.		5.25		09/01/35		40,393
		Retail - Drug Store (0.1%)
	149	CVS Pass-Through Trust		6.036		12/10/28		152,865
		Retail - Mail Order (0.0%)
	70	QVC, Inc. (144A) (b)		7.125		04/15/17		73,675
		Retail - Restaurants (0.0%)
	60	Yum! Brands, Inc.		5.30		09/15/19		63,661
	5	Yum! Brands, Inc.		6.875		11/15/37		5,693
								69,354
		Schools (0.0%)
	65	Duke University		5.15		04/01/19		70,890
		Semiconductor Equipment (0.0%)
	45	KLA-Tencor Corp.		6.90		05/01/18		49,572
		Special Purpose Entity (0.2%)
	190	AIG SunAmerica Global Financing VI (144A) (b)		6.30		05/10/11		193,800
	140	Farmers Exchange Capital (144A) (b)		7.05		07/15/28		135,611
	65	Harley-Davidson Funding Corp. (144A) (b)		6.80		06/15/18		68,569
								397,980
		Specialty Retail (0.1%)
	90	Home Depot, Inc.		5.875		12/16/36		93,930
		Super - Regional Banks - U.S. (0.2%)
	155	Capital One Financial Corp.		6.75		09/15/17		178,861
	95	KeyCorp (MTN)		6.50		05/14/13		103,200
								282,061

See Notes to Financial Statements
69

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Telecommunication Services (0.1%)
$	50	Qwest Corp.		6.50	%	06/01/17	$	54,500
	40	Qwest Corp.		6.875		09/15/33		39,500
	45	Qwest Corp.		8.375		05/01/16		53,550
	100	Sable International Finance Ltd. (144A) (Cayman Islands) (b)		7.75		02/15/17		106,250
								253,800
		Telephone - Integrated (0.2%)
	45	Deutsche Telekom International Finance BV (Netherlands)		8.75		06/15/30		60,639
	70	Frontier Communications Corp.		8.50		04/15/20		76,825
	30	Telecom Italia Capital SA (Luxembourg)		6.999		06/04/18		31,811
	50	Telecom Italia Capital SA (Luxembourg)		7.175		06/18/19		53,582
	95	Telefonica Europe BV (Netherlands)		8.25		09/15/30		110,660
								333,517
		Therapeutics (0.0%)
	60	Warner Chilcott Co. LLC/Warner Chilcott Finance LLC (144A) (Ireland) (b)		7.75		09/15/18		60,900
		Tobacco (0.1%)
	50	Altria Group, Inc.		4.125		09/11/15		52,335
	60	Altria Group, Inc.		9.25		08/06/19		78,426
	50	BAT International Finance PLC (144A) (United Kingdom) (b)		9.50		11/15/18		65,895
								196,656
		Transport - Rail (0.1%)
	25	CSX Corp.		6.15		05/01/37		26,970
	60	Norfolk Southern Corp.		7.25		02/15/31		72,045
	40	Union Pacific Corp.		6.125		02/15/20		45,727
								144,742
		Transport - Services (0.0%)
	25	Ryder System, Inc. (MTN)		5.85		11/01/16		27,499
	35	Ryder System, Inc. (MTN)		7.20		09/01/15		40,182
								67,681
		Total Corporate Bonds (Cost $15,086,944)						16,078,481

See Notes to Financial Statements
70

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
		Foreign Government Obligations (0.3%)
$	230	Brazilian Government International Bond (Brazil)		6.00	%	01/17/17	$	261,395
EUR	95	Ireland Government Bond (Ireland)		5.40		03/13/25		90,916
$	25	Peruvian Government International Bond (Peru)		7.125		03/30/19		30,000
	105	Republic of Italy (Italy)		6.875		09/27/23		115,967
		Total Foreign Government Obligations (Cost $474,991)						498,278
		U.S. Government Agencies & Obligations (10.8%)
		Commercial Banks - FDIC Guaranteed (0.1%)
	200	KeyBank NA		3.20		06/15/12		207,549
		Diversified Financial Services - FDIC Guaranteed (1.6%)
	200	Ally Financial, Inc.		2.20		12/19/12		205,806
	1,200	Citigroup Funding, Inc. (See Note 6)		2.25		12/10/12		1,234,919
	300	General Electric Capital Corp.		2.20		06/08/12		306,824
	1,200	General Electric Capital Corp. (Series G)		2.625		12/28/12		1,245,224
								2,992,773
		Finance - Consumer Loans - FDIC Guaranteed (0.6%)
	1,000	John Deere Capital Corp.		2.875		06/19/12		1,033,609
		U.S. Government Agencies (1.1%)
		Federal Home Loan Mortgage Corp.
	150			3.75		03/27/19		155,550
	400			4.875		06/13/18		448,041
	250			6.75		03/15/31		321,083
		Federal National Mortgage Association
	350			4.125		04/15/14		382,013
	700			4.375		10/15/15		771,358
								2,078,045
		U.S. Government Obligations (7.4%)
		U.S. Treasury Bonds
	760			3.50		02/15/39		655,025
	960			4.375		11/15/39		965,250
	270			4.625		02/15/40		282,867
	1,320			6.875		08/15/25		1,764,675
	1,090			7.50		11/15/24		1,527,363
		U.S. Treasury Notes
	800			0.50		11/30/12		799,094
	2,900			1.75		03/31/14 - 07/31/15		2,920,827
	815			2.25		01/31/15		836,776
	800			2.375		08/31/14		828,875

See Notes to Financial Statements
71

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE	VALUE
$	2,411			2.625	%	12/31/14	$	2,514,410
	485			2.75		02/15/19		478,824
								13,573,986
		Total U.S. Government Agencies & Obligations (Cost $19,852,061)						19,885,962
		Asset-Backed Securities (0.2%)
	36	Brazos Student Finance Corp. 2010-1 A1		1.203	(c)	06/25/35		35,486
	175	Ford Credit Floorplan Master Owner Trust 2010-3 A2 (144A) (b)		1.96	(c)	02/15/17		180,343
	100	GE Dealer Floorplan Master Note Trust 2009-2A A (144A) (b)		1.811	(c)	10/20/14		101,500
		Total Asset-Backed Securities (Cost $310,586)						317,329
		U.S. Government Agencies - Mortgage-Backed Securities (0.0%)
		Federal Home Loan Mortgage Corp. (ARM) (0.0%)
	2			6.50		05/01/29 - 12/01/31		2,861
		Federal National Mortgage Association (0.0%)
	1			6.50		11/01/29		1,500
		Total U.S. Government Agencies - Mortgage-Backed Securities (Cost $4,026)						4,361
		Municipal Bonds (0.3%)
		Airport (0.0%)
	30	City of Chicago O'Hare Int'l Airport (Series B)		6.395		01/01/40		29,286
		General Obligation (0.2%)
	75	Chicago Transit Authority (Series B)		6.20		12/01/40		69,058
	70	City of New York (Series G-1)		5.968		03/01/36		70,129
	65	New York City Transitional Finance Authority		5.267		05/01/27		62,543
	45	State of California - Various Purpose		5.95		04/01/16		47,672
	30	State of California - Various Purpose		6.65		03/01/22		31,592
								280,994
		Power Conversion/Supply Equipment (0.1%)
	50	Municipal Electric Authority of Georgia Plant Vogtle Units 3 & 4 (Series 2010 J)		6.637		04/01/57		49,264
	95	Municipal Electric Authority of Georgia Plant Vogtle		6.655		04/01/57		92,610
								141,874
		Transportation (0.0%)
	85	Illinois State Toll Highway Authority 2009 (Series A)		6.184		01/01/34		83,912
		Total Municipal Bonds (Cost $547,284)						536,066

See Notes to Financial Statements
72

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

NUMBER OF SHARES			VALUE
		Investment Trusts/Mutual Funds (3.7%)
	42,500	iPATH S&P 500 VIX Short-Term Futures ETN (ETF) (a)	$	1,597,575
	49,000	iShares Barclays Aggregate Bond Fund (ETF)		5,181,750
		Total Investment Trusts/Mutual Funds (Cost $8,456,285)		6,779,325

PRINCIPAL AMOUNT IN THOUSANDS			COUPON RATE			MATURITY DATE
		Short-Term Investments (4.4%)
		U.S. Government Obligations (d)(e) (0.5%)
$	1,050	U.S. Treasury Bills (Cost $1,049,924)		0.093 - 0.134	%	01/20/11 - 01/27/11				1,049,924
NUMBER OF SHARES (000)
		Investment Company (3.9%)
	7,187	Morgan Stanley Institutional Liquidity Funds - Money Market Portfolio - Institutional Class (See Note 6) (Cost $7,186,645)								7,186,645
		Total Short-Term Investments (Cost $8,236,569)								8,236,569
		Total Investments (Cost $169,151,700) (f)(g)					99.9	%		184,437,467
		Other Assets in Excess of Liabilities					0.1			177,798
		Net Assets					100.0	%	$	184,615,265

ARM Adjustable Rate Mortgage. Interest rate in effect as of December 31, 2010.

ETF Exchange Trade Fund.

FDIC Federal Deposit Insurance Corporation.

MTN Medium Term Note.

REIT Real Estate Investment Trust.

EUR Euro.

(a) Non-income producing security.

(b) Resale is restricted to qualified institutional investors.

(c) Floating rate security. Rate shown is the rate in effect at December 31, 2010.

(d) Purchased on a discount basis. The interest rates shown have been adjusted to reflect a money market equivalent yield.

(e) A portion of this security has been physically segregated in connection with open futures and swap contracts.

(f) Securities have been designated as collateral in connection with open futures, foreign currency exchange and swap contracts.

(g) The aggregate cost for federal income tax purposes is $169,383,937. The aggregate gross unrealized appreciation is $17,529,968 and the aggregate gross unrealized depreciation is $2,476,438 resulting in net unrealized appreciation of $15,053,530.

Bond Insurance:

AMBAC AMBAC Assurance Corporation.

See Notes to Financial Statements
73

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

FOREIGN CURRENCY EXCHANGE CONTRACTS OPEN AT DECEMBER 31, 2010:

COUNTERPARTY				CONTRACTS TO DELIVER				IN EXCHANGE FOR				DELIVERY DATE				UNREALIZED DEPRECIATION
UBS AG - London				EUR	76,773			$	101,509			03/16/2011				$	(1,057	)

Currency Abbreviation:

EUR Euro.

FUTURES CONTRACTS OPEN AT DECEMBER 31, 2010:

NUMBER OF CONTRACTS		LONG/SHORT	DESCRIPTION, DELIVERY MONTH AND YEAR	UNDERLYING FACE AMOUNT AT VALUE			UNREALIZED APPRECIATION (DEPRECIATION)
	18	Long	U.S. Treasury Notes 5 Year, March 2011	$	2,118,937		$	4,743
	2	Long	U.S. Treasury Notes 2 Year, March 2011		437,813			(1,020	)
	1	Short	Euro-Bund, March 2011		(167,453	)		1,102
	8	Short	U.S. Treasury Notes 10 Year, March 2011		(963,500	)		(4,892	)
	12	Short	U.S. Treasury Bonds 30 Year, March 2011		(1,465,500	)		49,983
Net Unrealized Appreciation							$	49,916

See Notes to Financial Statements
74

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

INTEREST RATE SWAP CONTRACTS OPEN AT DECEMBER 31, 2010:

SWAP COUNTERPARTY	NOTIONAL AMOUNT (000)		FLOATING RATE INDEX	PAY/RECEIVE FLOATING RATE	FIXED RATE			TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Bank of America, N.A.	$	550	3 Month LIBOR	Receive		4.058	%	12/09/40	$	5,637
Bank of America, N.A.***	$	2,280	3 Month LIBOR	Pay		4.795		12/09/20		(3,716	)
Bank of America, N.A.***	EUR	2,840	6 Month EURIBOR	Pay		3.81		11/08/25		(98,218	)
Bank of America, N.A.***	$	2,716	3 Month LIBOR	Receive		4.828		11/08/25		28,844
Bank of America, N.A.***	EUR	3,523	6 Month EURIBOR	Receive		3.33		11/08/30		82,575
Bank of America, N.A.***	$	3,404	3 Month LIBOR	Pay		4.75		11/08/30		(5,242	)
Credit Suisse Group	$	3,690	3 Month LIBOR	Receive		0.80		10/28/13		39,298
Credit Suisse Group	CAD	1,185	3 Month CDOR	Receive		2.18		09/08/15		21,927
Credit Suisse Group	CAD	854	3 Month CDOR	Receive		2.208		09/08/15		14,737
Credit Suisse Group	$	1,545	3 Month LIBOR	Pay		2.098		10/28/17		(66,790	)
Credit Suisse Group***	CAD	1,388	3 Month CDOR	Pay		4.065		09/08/20		(14,423	)
Credit Suisse Group***	CAD	1,000	3 Month CDOR	Pay		4.123		09/08/20		(8,094	)
Deutsche Bank AG	$	560	3 Month LIBOR	Receive		4.39		12/20/40		(27,065	)
Deutsche Bank AG***	$	2,280	3 Month LIBOR	Pay		5.29		12/20/20		40,333
UBS AG	$	540	3 Month LIBOR	Receive		4.00		12/07/40		11,000
UBS AG***	$	2,280	3 Month LIBOR	Pay		4.65		12/07/20		(16,712	)
Net Unrealized Appreciation									$	4,091

CAD Canadian Dollar.

EUR Euro.

*** Forward interest rate swap. Periodic payments on specified notional amount with future effective date, unless terminated earlier.

CDOR Canadian Dealer Offered Rate.

EURIBOR Euro Interbank Offered Rate.

LIBOR London Interbank Offered Rate.

See Notes to Financial Statements
75

Morgan Stanley Variable Investment Series - Strategist

Portfolio of Investments n December 31, 2010 continued

ZERO COUPON SWAP CONTRACTS OPEN AT DECEMBER 31, 2010:

SWAP COUNTERPARTY	NOTIONAL AMOUNT (000)		FLOATING RATE INDEX	PAY/RECEIVE FLOATING RATE	TERMINATION DATE	UNREALIZED APPRECIATION (DEPRECIATION)
Barclays Bank PLC^	$	710	3 Month LIBOR	Receive	11/15/19	$	(84,489	)
Barclays Bank PLC^^		710	3 Month LIBOR	Pay	11/15/19		9,674
JPMorgan Chase Bank N.A. New York^		735	3 Month LIBOR	Receive	11/15/19		(81,562	)
JPMorgan Chase Bank N.A. New York^		1,330	3 Month LIBOR	Receive	11/15/21		(138,029	)
Net Unrealized Depreciation						$	(294,406	)

LIBOR London Interbank Offered Rate.

^ Portfolio will make payments of $275,331, $279,388 and $589,387, respectively, on the termination date.

^^ Portfolio will receive payment of $194,966 on termination date.

SUMMARY OF INVESTMENTS

PORTFOLIO COMPOSITION	VALUE			PERCENT OF TOTAL INVESTMENTS
Common Stocks	$	132,101,096			71.6	%
U.S. Government Agencies & Obligations		19,885,962			10.8
Corporate Bonds		16,078,481			8.7
Investment Company		7,186,645			3.9
Investment Trusts/Mutual Funds		6,779,325			3.7
U.S. Government Obligations		1,049,924			0.5
Municipal Bonds		536,066			0.3
Foreign Government Obligations		498,278			0.3
Asset-Backed Securities		317,329			0.2
U.S. Government Agencies - Mortgage Backed Securites		4,361			0.0
	$	184,437,467	†		100.0	%

† Does not include open long/short futures contracts with an underlying face amount of $5,153,203 and net unrealized appreciation of $49,916. Also does not include open swap contracts with net unrealized depreciation of $290,315 and open foreign currency exchange contracts with unrealized depreciation of $1,057.

See Notes to Financial Statements
76

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Morgan Stanley Variable Investment Series

Financial Statements

Statements of Assets and Liabilities
December 31, 2010

	Money Market			Limited Duration			Income Plus			Global Infrastructure
Assets:
Investments in securities, at value*	$	127,391,136	⁽¹⁾	$	66,472,687		$	216,050,068		$	74,996,072
Investment in affiliates, at value**		—			2,307,934			11,901,358			2,007,943
Unrealized appreciation on open swap contracts		—			143,728			549,238			—
Unrealized appreciation on open foreign currency exchange contracts		—			—			—			—
Cash		4,824			—			—			15,659	⁽³⁾
Due from broker		—			—			—			—
Receivable for:
Investments sold		—			—			—			—
Interest		34,821			474,728			2,939,360			—
Dividends		—			—			6,344			326,468
Interest and dividends from affiliates		—			16,145			116,375			379
Foreign withholding taxes reclaimed		—			—			—			28,982
Periodic interest on open swap contracts		—			14,151			48,293			—
Premium paid on open swap contracts		—			—			24,264			—
Principal paydowns		—			3,871			—			—
Shares of beneficial interest sold		—			—			—			—
Swap contracts termination		—			100,838			338,424			—
Prepaid expenses and other assets		6,876			5,850			9,000			7,777
Total Assets		127,437,657			69,539,932			231,982,724			77,383,280
Liabilities:
Collateral on securities loaned, at value		—			—			—			—
Unrealized depreciation on open swap contracts		—			745,506			673,364			—
Unrealized depreciation on open foreign currency exchange contracts		—			—			—			—
Payable for:
Investments purchased		—			—			—			—
Shares of beneficial interest redeemed		276,952			5,161			46,569			79,154
Investment advisory fee		15,900			17,338			79,814			36,948
Swap contracts collateral due to brokers		—			—			250,000			—
Periodic interest on open swap contracts		—			14,183			58,571			—
Variation margin		—			12,485			58,316			—
Distribution fee (Class Y)		—			11,471			25,856			3,361
Administration fee		5,415			4,688			15,496			5,240
Transfer agent fee		250			292			250			250
Premium received on open swap contracts		—			—			—			—
Accrued expenses and other payables		69,021			47,130			89,800			61,673
Total Liabilities		367,538			858,254			1,298,036			186,626
Net Assets	$	127,070,119		$	68,681,678		$	230,684,688		$	77,196,654
Composition of Net Assets:
Paid-in-capital	$	127,070,369		$	103,132,734		$	230,129,161		$	62,960,772
Net unrealized appreciation		—			193,900			13,641,040			8,734,174
Accumulated undistributed net investment income (net investment loss)		(166	)		1,500,506			11,785,302			1,836,870
Accumulated net realized gain (loss)		(84	)		(36,145,462	)		(24,870,815	)		3,664,838
Net Assets	$	127,070,119		$	68,681,678		$	230,684,688		$	77,196,654
* Cost	$	127,391,136		$	65,698,909		$	203,852,978		$	66,265,658
Affiliated Cost**	$	—		$	2,269,542		$	10,799,502		$	2,007,943
Class X Shares:
Net Assets	$	59,931,619		$	14,921,396		$	106,362,947		$	61,407,871
Shares Outstanding (unlimited shares authorized, $.01 par value)		59,931,709			1,927,058			9,443,414			7,555,874
Net Asset Value Per Share	$	1.00		$	7.74		$	11.26		$	8.13
Class Y Shares:
Net Assets	$	67,138,500		$	53,760,282		$	124,321,741		$	15,788,783
Shares Outstanding (unlimited shares authorized, $.01 par value)		67,138,666			6,967,943			11,081,988			1,949,313
Net Asset Value Per Share	$	1.00		$	7.72		$	11.22		$	8.10

⁽¹⁾ Including repurchase agreements of $32,402,000.

⁽²⁾ Including security loaned at value of $40,920.

⁽³⁾ Including foreign currency valued at $15,659, $46,227, and $2,198, respectively with a cost of $15,389, $45,844, and $2,175, respectively.

See Notes to Financial Statements
78

	European Equity			Capital Opportunities			Aggressive Equity			Strategist
Assets:
Investments in securities, at value*	$	71,282,198	⁽²⁾	$	277,351,972		$	32,994,808		$	173,059,958
Investment in affiliates, at value**		1,187,046			10,848,140			1,244,382			11,377,509
Unrealized appreciation on open swap contracts		—			—			—			254,025
Unrealized appreciation on open foreign currency exchange contracts		81,322			—			—			—
Cash		46,227	⁽³⁾		—			—			2,198	⁽³⁾
Due from broker		—			—			—			25,000
Receivable for:
Investments sold		—			—			—			14,742,377
Interest		—			—			—			375,777
Dividends		144,843			32,912			3,975			222,475
Interest and dividends from affiliates		215			1,308			154			7,935
Foreign withholding taxes reclaimed		94,576			—			—			—
Periodic interest on open swap contracts		—			—			—			16,328
Premium paid on open swap contracts		—			—			—			—
Principal paydowns		—			—			—			—
Shares of beneficial interest sold		—			—			2,419			—
Swap contracts termination		—			—			—			57,113
Prepaid expenses and other assets		8,961			7,412			4,061			7,649
Total Assets		72,845,388			288,241,744			34,249,799			200,148,344
Liabilities:
Collateral on securities loaned, at value		42,940			—			—			—
Unrealized depreciation on open swap contracts		—			—			—			544,340
Unrealized depreciation on open foreign currency exchange contracts		24,586			—			—			1,057
Payable for:
Investments purchased		—			—			—			14,622,700
Shares of beneficial interest redeemed		20,731			172,008			2,364			162,178
Investment advisory fee		46,354			101,019			19,065			63,520
Swap contracts collateral due to brokers		—			—			—			—
Periodic interest on open swap contracts		—			—			—			24,029
Variation margin		—			—			—			10,407
Distribution fee (Class Y)		3,787			14,354			3,944			11,902
Administration fee		4,949			19,465			2,298			12,513
Transfer agent fee		250			238			208			250
Premium received on open swap contracts		—			—			—			1
Accrued expenses and other payables		56,249			78,600			31,385			80,182
Total Liabilities		199,846			385,684			59,264			15,533,079
Net Assets	$	72,645,542		$	287,856,060		$	34,190,535		$	184,615,265
Composition of Net Assets:
Paid-in-capital	$	74,662,928		$	231,208,760		$	25,797,235		$	148,756,066
Net unrealized appreciation		12,542,683			84,994,019			10,450,361			15,044,113
Accumulated undistributed net investment income (net investment loss)		1,378,682			33,893			(33,495	)		3,145,376
Accumulated net realized gain (loss)		(15,938,751	)		(28,380,612	)		(2,023,566	)		17,669,710
Net Assets	$	72,645,542		$	287,856,060		$	34,190,535		$	184,615,265
* Cost	$	58,802,720		$	192,358,107		$	22,544,466		$	157,843,782
Affiliated Cost**	$	1,187,046		$	10,848,140		$	1,244,382		$	11,307,918
Class X Shares:
Net Assets	$	54,824,466		$	220,552,641		$	15,413,379		$	128,253,961
Shares Outstanding (unlimited shares authorized, $.01 par value)		3,415,095			5,504,243			795,545			9,898,792
Net Asset Value Per Share	$	16.05		$	40.07		$	19.37		$	12.96
Class Y Shares:
Net Assets	$	17,821,076		$	67,303,419		$	18,777,156		$	56,361,304
Shares Outstanding (unlimited shares authorized, $.01 par value)		1,115,047			1,692,197			990,430			4,367,613
Net Asset Value Per Share	$	15.98		$	39.77		$	18.96		$	12.90

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Operations
For the year ended December 31, 2010

	Money Market			Limited Duration			Income Plus			Global Infrastructure
Net Investment Income:
Income
Dividends†		—			—		$	6,344		$	2,765,324
Interest†	$	414,801		$	1,964,800			13,409,451			734
Interest and dividends from affiliates		—			94,656			759,366			2,799
Income from securities loaned - net		—			—			—			24,115
Total Income		414,801			2,059,456			14,175,161			2,792,972
†Net of foreign withholding taxes		—			—			—			198,402
Expenses
Investment advisory fee		638,257			220,744			1,023,539			443,924
Administration fee		70,918			58,865			194,960			62,305
Distribution fee (Class Y shares)		181,964			144,143			331,275			39,895
Professional fees		61,742			53,457			69,959			68,008
Shareholder reports and notices		69,054			37,710			80,192			46,379
Custodian fees		11,846			7,011			12,492			35,511
Trustees' fees and expenses		5,082			3,195			9,069			3,035
Transfer agent fees and expenses		3,000			2,583			3,000			3,000
Other		14,913			25,264			47,946			19,267
Total Expenses		1,056,776			552,972			1,772,432			721,324
Less: amounts waived		(650,827	)		—			—			—
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6)		—			(2,541	)		(5,649	)		(1,951	)
Net Expenses		405,949			550,431			1,766,783			719,373
Net Investment Income (Loss)		8,852			1,509,025			12,408,378			2,073,599
Net Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments		1,958			1,147,849			14,191,416			5,340,301
Investments in affiliates		—			95,775			757,944			—
Futures contracts		—			231,259			(592,251	)		—
Swap contracts		—			(534,575	)		(2,783,660	)		—
Options written		—			—			—			(20,534	)
Foreign currency exchange contracts		—			—			—			(115,115	)
Foreign currency translation		—			—			—			(89,985	)
Net Realized Gain (Loss)		1,958			940,308			11,573,449			5,114,667
Change in Unrealized Appreciation/Depreciation on:
Investments		—			(328,935	)		(2,115,445	)		(2,401,887	)
Investments in affiliates		—			(11,687	)		257,847			—
Structured investments		—			—			—			—
Futures contracts		—			(129,971	)		(757,762	)		—
Swap contracts		—			(339,724	)		166,333			—
Options written		—			—			—			23,542
Foreign currency exchange contracts		—			—			—			(55,094	)
Foreign currency translation		—			—			—			(1,943	)
Net Change in Unrealized Appreciation/Depreciation		—			(810,317	)		(2,449,027	)		(2,435,382	)
Net Gain		1,958			129,991			9,124,422			2,679,285
Net Increase	$	10,810		$	1,639,016		$	21,532,800		$	4,752,884

See Notes to Financial Statements
80

	European Equity			Capital Opportunities			Aggressive Equity			Strategist
Net Investment Income:
Income
Dividends†	$	1,942,892		$	1,985,600		$	235,094		$	3,012,462
Interest†		29			—			—			1,568,846
Interest and dividends from affiliates		2,069			10,984			1,522			104,062
Income from securities loaned - net		58,774			—			—			—
Total Income		2,003,764			1,996,584			236,616			4,685,370
†Net of foreign withholding taxes		182,342			69,813			8,318			193
Expenses
Investment advisory fee		620,605			1,090,095			206,246			792,088
Administration fee		57,067			207,637			24,626			150,874
Distribution fee (Class Y shares)		43,666			155,549			41,931			143,733
Professional fees		69,038			62,340			53,951			73,216
Shareholder reports and notices		41,223			91,652			22,050			57,309
Custodian fees		18,904			30,401			13,852			23,725
Trustees' fees and expenses		2,690			10,523			1,969			7,292
Transfer agent fees and expenses		3,000			3,446			2,500			3,000
Other		17,168			21,652			10,436			39,554
Total Expenses		873,361			1,673,295			377,561			1,290,791
Less: amounts waived		(115,288	)		—			—			—
Less: rebate from Morgan Stanley affiliated cash sweep (Note 6)		(1,506	)		(7,364	)		(1,141	)		(31,502	)
Net Expenses		756,567			1,665,931			376,420			1,259,289
Net Investment Income (Loss)		1,247,197			330,653			(139,804	)		3,426,081
Net Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments		(2,625,001	)		27,946,344			3,087,346			18,428,008
Investments in affiliates		—			—			—			(571,984	)
Futures contracts		—			—			—			100,165
Swap contracts		—			—			—			(381,188	)
Options written		—			—			—			—
Foreign currency exchange contracts		213,255			—			—			3,924
Foreign currency translation		(57,516	)		(52,328	)		(5,875	)		(1,364	)
Net Realized Gain (Loss)		(2,469,262	)		27,894,016			3,081,471			17,577,561
Change in Unrealized Appreciation/Depreciation on:
Investments		5,462,216			36,811,535			4,245,042			(8,014,676	)
Investments in affiliates		—			—			—			800,624
Structured investments		—			—			—			(1,536,374	)
Futures contracts		—			—			—			(9,781	)
Swap contracts		—			—			—			(124,993	)
Options written		—			—			—			—
Foreign currency exchange contracts		56,736			—			—			(1,057	)
Foreign currency translation		(259	)		(121	)		(15	)		(198	)
Net Change in Unrealized Appreciation/Depreciation		5,518,693			36,811,414			4,245,027			(8,886,455	)
Net Gain		3,049,431			64,705,430			7,326,498			8,691,106
Net Increase	$	4,296,628		$	65,036,083		$	7,186,694		$	12,117,187

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Changes in Net Assets

	Money Market						Limited Duration						Income Plus
	For The Year Ended December 31, 2010			For The Year Ended December 31, 2009			For The Year Ended December 31, 2010			For The Year Ended December 31, 2009			For The Year Ended December 31, 2010			For The Year Ended December 31, 2009
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	8,852		$	41,093		$	1,509,025		$	1,877,885		$	12,408,378		$	13,833,429
Net realized gain (loss)		1,958			3,704			940,308			2,468,081			11,573,449			5,583,226
Net change in unrealized appreciation/depreciation		—			—			(810,317	)		(118,469	)		(2,449,027	)		31,176,875
Net Increase		10,810			44,797			1,639,016			4,227,497			21,532,800			50,593,530
Dividends and Distributions to Shareholders from:
Net investment income
Class X Shares		(7,144	)		(27,542	)		(562,429	)		(750,368	)		(6,824,574	)		(5,671,232	)
Class Y Shares		(7,532	)		(13,660	)		(1,897,146	)		(2,578,098	)		(7,792,022	)		(6,874,880	)
Net realized gain
Class X Shares		—			—			—			—			—			—
Class Y Shares		—			—			—			—			—			—
Total Dividends and Distributions		(14,676	)		(41,202	)		(2,459,575	)		(3,328,466	)		(14,616,596	)		(12,546,112	)
Net increase (decrease) from transactions in shares of beneficial interest		(38,557,210	)		(61,899,672	)		(8,139,476	)		(2,885,461	)		(38,827,172	)		(21,134,851	)
Net Increase (Decrease)		(38,561,076	)		(61,896,077	)		(8,960,035	)		(1,986,430	)		(31,910,968	)		16,912,567
Regulatory Settlement Proceeds:		—			—			—			—			—			—
Net Assets:
Beginning of period		165,631,195			227,527,272			77,641,713			79,628,143			262,595,656			245,683,089
End of Period	$	127,070,119		$	165,631,195		$	68,681,678		$	77,641,713		$	230,684,688		$	262,595,656
Accumulated Undistributed Net Investment Income (Loss)	$	(166	)	$	3,616		$	1,500,506		$	2,072,916		$	11,785,302		$	13,986,311

See Notes to Financial Statements
82

	Global Infrastructure						European Equity
	For The Year Ended December 31, 2010			For The Year Ended December 31, 2009			For The Year Ended December 31, 2010			For The Year Ended December 31, 2009
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	2,073,599		$	2,670,875		$	1,247,197		$	1,879,463
Net realized gain (loss)		5,114,667			4,675,280			(2,469,262	)		(5,368,903	)
Net change in unrealized appreciation/depreciation		(2,435,382	)		6,249,227			5,518,693			21,084,750
Net Increase		4,752,884			13,595,382			4,296,628			17,595,310
Dividends and Distributions to Shareholders from:
Net investment income
Class X Shares		(1,869,792	)		(2,101,457	)		(1,420,614	)		(2,185,883	)
Class Y Shares		(440,577	)		(498,225	)		(416,655	)		(624,553	)
Net realized gain
Class X Shares		(5,105,356	)		(20,597,967	)		—			(2,763,964	)
Class Y Shares		(1,313,510	)		(5,301,817	)		—			(880,063	)
Total Dividends and Distributions		(8,729,235	)		(28,499,466	)		(1,837,269	)		(6,454,463	)
Net increase (decrease) from transactions in shares of beneficial interest		(5,393,355	)		13,974,171			(10,418,618	)		(6,200,158	)
Net Increase (Decrease)		(9,369,706	)		(929,913	)		(7,959,259	)		4,940,689
Regulatory Settlement Proceeds:		—			—			84,956			—
Net Assets:
Beginning of period		86,566,360			87,496,273			80,519,845			75,579,156
End of Period	$	77,196,654		$	86,566,360		$	72,645,542		$	80,519,845
Accumulated Undistributed Net Investment Income (Loss)	$	1,836,870		$	1,785,290		$	1,378,682		$	1,813,052

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Changes in Net Assets

	Capital Opportunities						Aggressive Equity
	For The Year Ended December 31, 2010			For The Year Ended December 31, 2009			For The Year Ended December 31, 2010			For The Year Ended December 31, 2009
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)	$	330,653		$	852,071		$	(139,804	)	$	(43,741	)
Net realized gain (loss)		27,894,016			(6,524,739	)		3,081,471			26,304
Net change in unrealized appreciation/depreciation		36,811,414			124,982,359			4,245,027			14,260,270
Net Increase		65,036,083			119,309,691			7,186,694			14,242,833
Dividends and Distributions to Shareholders from:
Net investment income
Class X Shares		(333,905	)		(639,379	)		—			—
Class Y Shares		—			(66,814	)		—			—
Net realized gain
Class X Shares		—			—			—			—
Class Y Shares		—			—			—			—
Total Dividends and Distributions		(333,905	)		(706,193	)		—			—
Net decrease from transactions in shares of beneficial interest		(43,247,359	)		(37,914,310	)		(5,434,742	)		(4,365,317	)
Net Increase (Decrease)		21,454,819			80,689,188			1,751,952			9,877,516
Net Assets:
Beginning of period		266,401,241			185,712,053			32,438,583			22,561,067
End of Period	$	287,856,060		$	266,401,241		$	34,190,535		$	32,438,583
Accumulated Undistributed Net Investment Income (Loss)	$	33,893		$	392,620		$	(33,495	)	$	(38,217	)

See Notes to Financial Statements
84

	Strategist
	For The Year Ended December 31, 2010			For The Year Ended December 31, 2009
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)	$	3,426,081		$	2,490,748
Net realized gain (loss)		17,577,561			7,795,921
Net change in unrealized appreciation/depreciation		(8,886,455	)		23,313,269
Net Increase		12,117,187			33,599,938
Dividends and Distributions to Shareholders from:
Net investment income
Class X Shares		(2,078,387	)		(3,009,491	)
Class Y Shares		(786,800	)		(1,156,509	)
Net realized gain
Class X Shares		(699,178	)		—
Class Y Shares		(311,234	)		—
Total Dividends and Distributions		(3,875,599	)		(4,166,000	)
Net decrease from transactions in shares of beneficial interest		(21,094,433	)		(19,679,309	)
Net Increase (Decrease)		(12,852,845	)		9,754,629
Net Assets:
Beginning of period		197,468,110			187,713,481
End of Period	$	184,615,265		$	197,468,110
Accumulated Undistributed Net Investment Income (Loss)	$	3,145,376		$	3,945,368

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Changes in Net Assets continued
Summary of Transactions in Shares of Beneficial Interest

	Money Market						Limited Duration						Income Plus
	For The Year Ended December 31, 2010			For The Year Ended December 31, 2009			For The Year Ended December 31, 2010			For The Year Ended December 31, 2009			For The Year Ended December 31, 2010			For The Year Ended December 31, 2009
Class X Shares
Shares
Sold		7,067,298			14,093,090			182,994			320,280			87,443			217,229
Reinvestment of dividends and distributions		7,144			27,542			73,810			97,959			646,266			574,011
Redeemed		(31,627,402	)		(45,050,887	)		(484,177	)		(379,007	)		(1,707,768	)		(1,994,330	)
Net Increase (Decrease) - Class X		(24,552,960	)		(30,930,255	)		(227,373	)		39,232			(974,059	)		(1,203,090	)
Amount
Sold	$	7,067,298		$	14,093,090		$	1,424,485		$	2,506,478		$	974,412		$	2,222,728
Reinvestment of dividends and distributions		7,144			27,542			562,429			750,368			6,824,574			5,671,232
Redeemed		(31,627,402	)		(45,050,887	)		(3,778,238	)		(2,959,936	)		(19,049,643	)		(20,079,631	)
Net Increase (Decrease) - Class X	$	(24,552,960	)	$	(30,930,255	)	$	(1,791,324	)	$	296,910		$	(11,250,657	)	$	(12,185,671	)
Class Y Shares
Shares
Sold		12,204,944			19,989,089			459,275			525,769			456,727			527,412
Reinvestment of dividends and distributions		7,532			13,660			249,624			337,447			739,983			697,250
Redeemed		(26,216,726	)		(50,972,166	)		(1,519,333	)		(1,262,117	)		(3,645,566	)		(2,115,187	)
Net Increase (Decrease) - Class Y		(14,004,250	)		(30,969,417	)		(810,434	)		(398,901	)		(2,448,856	)		(890,525	)
Amount
Sold	$	12,204,944		$	19,989,089		$	3,550,343		$	4,083,133		$	5,104,104		$	5,391,890
Reinvestment of dividends and distributions		7,532			13,660			1,897,146			2,578,098			7,792,022			6,874,880
Redeemed		(26,216,726	)		(50,972,166	)		(11,795,641	)		(9,843,602	)		(40,472,641	)		(21,215,950	)
Net Increase (Decrease) - Class Y	$	(14,004,250	)	$	(30,969,417	)	$	(6,348,152	)	$	(3,182,371	)	$	(27,576,515	)	$	(8,949,180	)
Regulatory Settlement Proceeds:		—			—			—			—			—			—

See Notes to Financial Statements
86

	Global Infrastructure						European Equity
	For The Year Ended December 31, 2010			For The Year Ended December 31, 2009			For The Year Ended December 31, 2010			For The Year Ended December 31, 2009
Class X Shares
Shares
Sold		46,011			38,571			7,727			24,684
Reinvestment of dividends and distributions		1,047,320			3,071,641			111,246			403,082
Redeemed		(1,462,098	)		(1,464,640	)		(672,452	)		(793,662	)
Net Increase (Decrease) - Class X		(368,767	)		1,645,572			(553,479	)		(365,896	)
Amount
Sold	$	379,861		$	350,423		$	111,210		$	337,718
Reinvestment of dividends and distributions		6,975,148			22,699,424			1,420,614			4,949,847
Redeemed		(11,546,584	)		(13,246,644	)		(9,737,700	)		(10,207,492	)
Net Increase (Decrease) - Class X	$	(4,191,575	)	$	9,803,203		$	(8,205,876	)	$	(4,919,927	)
Class Y Shares
Shares
Sold		41,158			114,210			19,373			9,175
Reinvestment of dividends and distributions		263,773			786,980			32,730			122,926
Redeemed		(416,792	)		(308,094	)		(195,961	)		(221,102	)
Net Increase (Decrease) - Class Y		(111,861	)		593,096			(143,858	)		(89,001	)
Amount
Sold	$	325,071		$	1,092,329		$	273,981		$	113,978
Reinvestment of dividends and distributions		1,754,087			5,800,042			416,655			1,504,616
Redeemed		(3,280,938	)		(2,721,403	)		(2,903,378	)		(2,898,825	)
Net Increase (Decrease) - Class Y	$	(1,201,780	)	$	4,170,968		$	(2,212,742	)	$	(1,280,231	)
Regulatory Settlement Proceeds:		—			—		$	84,956			—

Morgan Stanley Variable Investment Series

Financial Statements continued

Statements of Changes in Net Assets continued
Summary of Transactions in Shares of Beneficial Interest

	Capital Opportunities						Aggressive Equity
	For The Year Ended December 31, 2010			For The Year Ended December 31, 2009			For The Year Ended December 31, 2010			For The Year Ended December 31, 2009
Class X Shares
Shares
Sold		19,352			20,590			21,087			30,502
Reinvestment of dividends and distributions		10,719			26,421			—			—
Redeemed		(964,108	)		(1,215,413	)		(194,973	)		(195,172	)
Net Decrease - Class X		(934,037	)		(1,168,402	)		(173,886	)		(164,670	)
Amount
Sold	$	644,195		$	531,421		$	338,664		$	374,527
Reinvestment of dividends and distributions		333,905			639,379			—			—
Redeemed		(32,044,596	)		(28,719,023	)		(3,118,178	)		(2,305,220	)
Net Decrease - Class X	$	(31,066,496	)	$	(27,548,223	)	$	(2,779,514	)	$	(1,930,693	)
Class Y Shares
Shares
Sold		22,133			21,100			50,042			17,153
Reinvestment of dividends and distributions		—			2,776			—			—
Redeemed		(384,584	)		(466,830	)		(223,151	)		(229,185	)
Net Decrease - Class Y		(362,451	)		(442,954	)		(173,109	)		(212,032	)
Amount
Sold	$	704,927		$	497,162		$	800,661		$	238,698
Reinvestment of dividends and distributions		—			66,814			—			—
Redeemed		(12,885,790	)		(10,930,063	)		(3,455,889	)		(2,673,322	)
Net Decrease - Class Y	$	(12,180,863	)	$	(10,366,087	)	$	(2,655,228	)	$	(2,434,624	)

See Notes to Financial Statements
88

	Strategist
	For The Year Ended December 31, 2010			For The Year Ended December 31, 2009
Class X Shares
Shares
Sold		54,599			143,881
Reinvestment of dividends and distributions		229,551			274,839
Redeemed		(1,492,547	)		(2,013,942	)
Net Decrease - Class X		(1,208,397	)		(1,595,222	)
Amount
Sold	$	677,302		$	1,613,235
Reinvestment of dividends and distributions		2,777,565			3,009,491
Redeemed		(18,715,821	)		(22,149,953	)
Net Decrease - Class X	$	(15,260,954	)	$	(17,527,227	)
Class Y Shares
Shares
Sold		106,023			319,879
Reinvestment of dividends and distributions		90,972			105,907
Redeemed		(665,609	)		(611,314	)
Net Decrease - Class Y		(468,614	)		(185,528	)
Amount
Sold	$	1,342,545		$	3,458,405
Reinvestment of dividends and distributions		1,098,034			1,156,509
Redeemed		(8,274,058	)		(6,766,996	)
Net Decrease - Class Y	$	(5,833,479	)	$	(2,152,082	)

Morgan Stanley Variable Investment Series

Notes to Financial Statements n December 31, 2010

1. Organization and Accounting Policies

Morgan Stanley Variable Investment Series (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 is offered exclusively to life insurance companies in connection with particular life insurance and/or annuity contracts they offer.

The Fund, organized on February 25, 1983 as a Massachusetts business trust, consists of eight Portfolios ("Portfolios") which commenced operations as follows:

PORTFOLIO

COMMENCEMENT OF
OPERATIONS

PORTFOLIO

COMMENCEMENT OF
OPERATIONS

Money Market

March 9, 1984

European Equity

March 1, 1991

Limited Duration

May 4, 1999

Capital Opportunities

March 9, 1984

Income Plus

March 1, 1987

Aggressive Equity

May 4, 1999

Global Infrastructure

March 1, 1990

Strategist

March 1, 1987

On June 5, 2000, the Fund commenced offering one additional class of shares (Class Y shares). The two classes are identical except that Class Y shares incur distribution expenses. Class X shares are generally available to holders of contracts offered before May 1, 2000. Class Y shares are available to holders of contracts offered on or after June 5, 2000.

The investment objectives of each Portfolio are as follows:

Money Market				Seeks high current income, preservation of capital and liquidity.

Limited Duration				Seeks to provide a high level of current income, consistent with the preservation of capital.

Income Plus				Seeks, as its primary objective, to provide a high level of current income and, as a secondary objective, capital appreciation, but only when consistent with its primary objective.

Global Infrastructure				Seeks both capital appreciation and current income.

European Equity				Seeks to maximize the capital appreciation of its investments.

Capital Opportunities				Seeks, as its primary objective, growth of capital and, as a secondary objective, income, but only when consistent with its primary objective.

Aggressive Equity				Seeks long-term capital growth.

Strategist				Seeks high total investment return.

Morgan Stanley Variable Investment Series

Notes to Financial Statements n December 31, 2010 continued

On June 1, 2010, Invesco Ltd., a leading independent global investment management company, completed its purchase of substantially all of the retail asset management business of Morgan Stanley Investment Management (the "Transaction"). In contemplation of the Transaction, the Trustees of the Fund approved an Agreement and Plan of Reorganization (the "Reorganization") with respect to the High Yield, Income Builder, Dividend Growth, Global Dividend and S&P 500 Index Portfolios (each an "affected Portfolio"), pursuant to which substantially all of the assets of each affected Portfolio would be combined with those of a newly organized mutual fund advised by an affiliate of Invesco Ltd. (the "New Fund"). On May 11, 2010, the Reorganization was approved by the shareholders of each affected Portfolio at a special meeting of shareholders. On June 1, 2010, the Reorganization was completed and shareholders of each affected Portfolio received shares of the New Fund in exchange for their shares of each affected Portfolio. Accordingly, the financial statements of each affected Portfolio are no longer contained in this report but may be found in the report of their corresponding New Funds.

The following is a summary of significant accounting policies:

A. Valuation of Investments — Money Market: Portfolio securities are valued at amortized cost, which approximates market value, in accordance with Rule 2a-7 under the Act. All remaining Portfolios: (1) an equity portfolio security listed or traded on the New York Stock Exchange ("NYSE") or American Stock Exchange or other domestic exchange is valued at its last 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 ask 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 ask price; (3) all other domestic securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and ask price. In cases where a security is traded on more than one domestic exchange, the security is valued on the exchange designated as the primary market; (4) swaps are marked-to-market daily based upon quotations from market makers; (5) 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; (6) listed options are valued at the latest sale price on the exchange on which they are listed unless no sales of such options have taken place that day, in which case they are valued at the mean between their latest bid and ask price; (7) futures are valued at the latest price published by the commodities exchange on which they trade; (8) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Advisors Inc. (the "Investment Adviser"), or Morgan Stanley Investment Management Limited or Morgan Stanley Investment Management Company (each, a "Sub-Adviser"), each a wholly owned subsidiary of Morgan Stanley, determines that the latest sale price, the bid price or the mean between the last reported bid and ask price do not reflect a security's market value,

Morgan Stanley Variable Investment Series

Notes to Financial Statements n December 31, 2010 continued

portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Trustees. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Fund's Trustees or by the Investment Adviser using a pricing service and/or procedures approved by the Trustees of the Fund; (9) certain portfolio securities may be valued by an outside pricing service approved by the Fund's Trustees; (10) investments in open-end mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day; and (11) 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, which approximates market value.

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. Interest income is accrued daily as earned except where collection is not expected. Discounts are accreted and premiums are amortized over the life of the respective securities and are included in interest income.

C. Repurchase Agreements — The Fund invests 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 as earned. If such a decrease occurs, additional collateral will be requested and, when received, will be added to the account to maintain full collateralization.

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 values on the date such items are recognized. Distribution fees are charged directly to the respective class.

E. Foreign Currency Translation — 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 foreign currency exchange contracts are translated at the exchange rates prevailing at the end of the period;

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Notes to Financial Statements n December 31, 2010 continued

and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are recorded as realized and unrealized gains/losses on foreign currency exchange contracts and foreign currency translation. Pursuant to U.S. federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gains/losses 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 held.

F. Securities Lending — The Fund may lend securities to qualified financial institutions, such as broker-dealers, to earn additional income. Any increase or decrease in the fair value of the securities loaned that might occur and any interest earned or dividends declared on those securities during the term of the loan would remain in the Fund. The Fund receives cash or securities as collateral in an amount equal to or exceeding 100% of the current fair value of the loaned securities. The collateral is marked-to-market daily, by the securities lending agent, to ensure that a minimum of 100% collateral coverage is maintained.

Based on pre-established guidelines, the securities lending agent invests any cash collateral that is received in high-quality short-term investments. Securities lending income is generated from the earnings on the invested collateral and borrowing fees, less any rebates owed to the borrowers and compensation to the lending agent.

PORTFOLIO				VALUE OF LOANED SECURITY				VALUE OF COLLATERAL CASH⁽¹⁾
European Equity				$	40,920			$	42,944

⁽¹⁾ The Portfolio received cash collateral of $42,944 of which $42,940 was subsequently invested in Repurchase Agreements and Morgan Stanley Institutional Liquidity Funds, as reported in the Portfolio of Investments. As of December 31, 2010, there was uninvested cash of $4.

The Portfolio has the right under the lending agreement to recover the security from the borrower on demand.

G. Federal Income Tax Policy — It is the Fund's policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. The Fund files tax returns with the U.S. Internal Revenue Service, New York State and New York City. The Fund recognizes the tax effects of a tax position taken or expected to be taken in a tax return only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition

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Notes to Financial Statements n December 31, 2010 continued

of the benefit. The difference between the tax benefit recognized in the financial statements for a tax position taken and the tax benefit claimed in the income tax return is referred to as an unrecognized tax benefit. There are no unrecognized tax benefits in the accompanying financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statements of Operations. Each of the tax years filed in the four-year period ended December 31, 2010 remains subject to examination by taxing authorities.

H. Dividends and Distributions to Shareholders — The Fund records dividends and distributions to its shareholders on the ex-dividend date.

I. Expenses — Direct expenses are charged to the respective Portfolio and general Fund expenses are allocated on the basis of relative net assets or equally among the Portfolios.

J. Use of Estimates — The preparation of financial statements in accordance with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.

K. Indemnifications — The Fund enters into contracts that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

2. Fair Valuation Measurements

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures ("ASC 820"), defines fair value as the price that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund's investments. The inputs are summarized in the three broad levels listed below.

• Level 1 — unadjusted quoted prices in active markets for identical investments

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Notes to Financial Statements n December 31, 2010 continued

• Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

• Level 3 — significant unobservable inputs including the Fund's own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer's financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund's investments carried at fair value:

			Fair Value Measurements at December 31, 2010 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money Market
Short-Term Investments
Commercial Paper	$	48,989,094		—	$	48,989,094		—
Repurchase Agreements		32,402,000		—		32,402,000		—
Floating Rate Notes — Corporate		26,000,000		—		26,000,000		—
Certificates of Deposit		20,000,042		—		20,000,042		—
Total	$	127,391,136		—	$	127,391,136		—
Limited Duration
Assets:
Corporate Bonds	$	35,190,634		—	$	35,190,634		—
Foreign Government Obligation		1,541,351		—		1,541,351		—
U.S. Government Agencies & Obligations		12,721,768		—		12,721,768		—
U.S. Government Agencies — Mortgage-Backed Securities		1,246,475		—		1,246,475		—
Asset-Backed Securities		14,653,802		—		14,653,802		—
Collateralized Mortgage Obligation		406,603		—		406,603		—

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Notes to Financial Statements n December 31, 2010 continued

				Fair Value Measurements at December 31, 2010 Using
Investment Type	Total			Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)			Other Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Commercial Mortgage-Backed Securities	$	679,634			—		$	679,634			—
Municipal Bond		299,685			—			299,685			—
Short-Term Investments
U.S. Government Obligations		1,209,884			—			1,209,884			—
Investment Company		830,785		$	830,785			—			—
Total Short-Term Investments		2,040,669			830,785			1,209,884			—
Futures		82,345			82,345			—			—
Interest Rate Swaps		120,274			—			120,274			—
Zero Coupon Swaps		23,454			—			23,454			—
Total	$	69,006,694		$	913,130		$	68,093,564			—
Liabilities:
Futures	$	(98,837	)	$	(98,837	)		—			—
Interest Rate Swaps		(160,283	)		—		$	(160,283	)		—
Zero Coupon Swaps		(585,223	)		—			(585,223	)		—
Total	$	(844,343	)	$	(98,837	)	$	(745,506	)		—
Income Plus
Assets:
Corporate Bonds	$	207,532,708			—		$	207,532,708			—
Convertible Bonds		9,636,371			—			9,636,371			—
Foreign Government Obligations		1,960,964			—			1,960,964			—
U.S. Government Agency — Mortgage-Backed Security		1,604			—			1,604			—
Municipal Bond		635,628			—			635,628			—
Commercial Mortgage-Backed Securities		2,411,509			—			2,411,509			—
Convertible Preferred Stocks		1,130,487		$	1,130,487			—			—
Short-Term Investments
U.S. Government Obligation		1,259,878			—			1,259,878			—
Investment Company		3,382,277			3,382,277			—			—
Total Short-Term Investments		4,642,155			3,382,277			1,259,878			—
Futures		959,275			959,275			—			—
Interest Rate Swaps		549,238			—			549,238			—
Total	$	229,459,939		$	5,472,039		$	223,987,900			—

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Notes to Financial Statements n December 31, 2010 continued

				Fair Value Measurements at December 31, 2010 Using
Investment Type	Total			Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)			Other Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Liabilities:
Futures	$	(493,055	)	$	(493,055	)		—			—
Credit Default Swaps		(21,141	)		—		$	(21,141	)		—
Interest Rate Swaps		(652,223	)		—			(652,223	)		—
Total	$	(1,166,419	)	$	(493,055	)	$	(673,364	)		—
Global Infrastructure
Common Stocks
Airports	$	4,340,111		$	4,340,111			—			—
Communications		12,670,943			12,670,943			—			—
Diversified		3,622,070			3,622,070			—			—
Oil & Gas Storage & Transportation		25,935,840			25,787,554		$	148,286			—
Ports		1,254,891			1,254,891			—			—
Toll Roads		8,788,736			8,788,736			—			—
Transmission & Distribution		14,174,449			14,174,449			—			—
Water		4,209,032			4,209,032			—			—
Total Common Stocks		74,996,072			74,996,072		$	148,286			—
Short-Term Investment — Investment Company		2,007,943			2,007,943			—			—
Total	$	77,004,015		$	76,855,729		$	148,286			—
European Equity
Assets:
Common Stocks
Aerospace & Defense	$	1,282,929		$	1,282,929			—			—
Auto Components		1,347,785			1,347,785			—			—
Automobiles		1,231,219			1,231,219			—			—
Chemicals		1,469,622			1,469,622			—			—
Commercial Banks		8,375,482			8,375,482			—			—
Diversified Telecommunication Services		2,171,622			2,171,622			—			—
Electrical Equipment		1,930,849			1,930,849			—			—
Food & Staples Retailing		2,378,930			2,378,930			—			—
Food Products		3,835,311			3,835,311			—			—
Hotels, Restaurants & Leisure		1,040,834			1,040,834			—			—
Household Products		1,500,021			1,500,021			—			—
Industrial Conglomerates		2,477,145			2,477,145			—			—

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Notes to Financial Statements n December 31, 2010 continued

				Fair Value Measurements at December 31, 2010 Using
Investment Type	Total			Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Other Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Insurance	$	4,101,493		$	4,101,493		—			—
Machinery		3,151,140			3,151,140		—			—
Media		1,115,098			1,115,098		—			—
Metals & Mining		3,932,670			3,932,670		—			—
Multi-Utilities		1,400,320			1,400,320		—			—
Oil, Gas & Consumable Fuels		9,262,936			9,262,936		—			—
Pharmaceuticals		8,233,869			8,233,869		—			—
Professional Services		1,347,667			1,347,667		—			—
Specialty Retail		1,940,770			1,940,770		—			—
Tobacco		3,732,926			3,732,926		—			—
Wireless Telecommunication Services		2,678,329			2,678,329		—			—
Total Common Stocks		69,938,967			69,938,967		—			—
Preferred Stock		1,333,403			1,333,403		—			—
Short-Term Investments
Repurchase Agreements		9,828			—	$	9,828			—
Investment Company		1,187,046			1,187,046		—			—
Total Short-Term Investments		1,196,874			1,187,046		9,828			—
Foreign Currency Exchange Contracts		81,322			—		81,322			—
Total	$	72,550,566		$	72,459,416	$	91,150			—
Liabilities:
Foreign Currency Exchange Contracts	$	(24,586	)		—	$	(24,586	)		—
Capital Opportunities
Common Stocks
Air Freight & Logistics	$	6,361,118		$	6,361,118		—			—
Capital Markets		8,906,877			8,906,877		—			—
Chemicals		8,273,859			8,273,859		—			—
Commercial Services & Supplies		7,593,093			7,593,093		—			—
Computers & Peripherals		19,842,601			19,842,601		—			—
Distributors		8,436,522			8,436,522		—			—
Diversified Financial Services		21,136,449			21,136,449		—			—
Food Products		7,046,824			7,046,824		—			—
Health Care Technology		6,406,772			6,406,772		—			—
Hotels, Restaurants & Leisure		26,597,089			26,597,089		—			—
Information Technology Services		7,874,484			7,874,484		—			—
Internet & Catalog Retail		27,481,125			27,481,125		—			—

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Notes to Financial Statements n December 31, 2010 continued

			Fair Value Measurements at December 31, 2010 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Internet Software & Services	$	32,592,026	$	27,360,654		—	$	5,231,372
Life Sciences Tools & Services		14,984,556		14,984,556		—		—
Media		5,906,675		5,906,675		—		—
Metals & Mining		14,832,552		14,832,552		—		—
Oil, Gas & Consumable Fuels		12,673,648		12,673,648		—		—
Professional Services		14,433,688		14,433,688		—		—
Real Estate Management & Development		11,621,739		11,621,739		—		—
Semiconductors & Semiconductor Equipment		5,344,884		5,344,884		—		—
Software		7,539,576		7,539,576		—		—
Total Common Stocks		275,886,157		270,654,785		—		5,231,372
Convertible Preferred Stock		1,465,815		—		—		1,465,815
Short-Term Investment — Investment Company		10,848,140		10,848,140		—		—
Total	$	288,200,112	$	281,502,925		—	$	6,697,187
Aggressive Equity
Assets:
Common Stocks
Air Freight & Logistics	$	781,217	$	781,217		—		—
Capital Markets		1,071,723		1,071,723		—		—
Chemicals		995,573		995,573		—		—
Commercial Services & Supplies		929,012		929,012		—		—
Computers & Peripherals		2,387,589		2,387,589		—		—
Distributors		1,032,807		1,032,807		—		—
Diversified Financial Services		2,557,767		2,557,767		—		—
Food Products		847,907		847,907		—		—
Health Care Technology		770,916		770,916		—		—
Hotels, Restaurants & Leisure		3,220,397		3,220,397		—		—
Information Technology Services		967,054		967,054		—		—
Internet & Catalog Retail		3,325,319		3,325,319		—		—
Internet Software & Services		3,298,300		3,298,300		—		—
Life Sciences Tools & Services		1,824,913		1,824,913		—		—
Media		719,658		719,658		—		—
Metals & Mining		1,784,790		1,784,790		—		—
Oil, Gas & Consumable Fuels		1,556,431		1,556,431		—		—

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Notes to Financial Statements n December 31, 2010 continued

			Fair Value Measurements at December 31, 2010 Using
Investment Type	Total		Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)		Other Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Professional Services	$	1,753,194	$	1,753,194		—		—
Real Estate Management & Development		1,427,276		1,427,276		—		—
Semiconductors & Semiconductor Equipment		643,147		643,147		—		—
Software		922,548		922,548		—		—
Total Common Stocks		32,817,538		32,817,538		—		—
Convertible Preferred Stocks		177,270		—		—	$	177,270
Short-Term Investment — Investment Company		1,244,382		1,244,382		—		—
Total	$	34,239,190	$	34,061,920		—	$	177,270
Strategist
Assets:
Common Stocks
Aerospace & Defense	$	5,891,329	$	5,891,329		—		—
Capital Markets		2,354,240		2,354,240		—		—
Chemicals		4,209,124		4,209,124		—		—
Commercial Services & Supplies		5,419,706		5,419,706		—		—
Communications Equipment		2,407,370		2,407,370		—		—
Computers & Peripherals		9,353,225		9,353,225		—		—
Distributors		3,797,363		3,797,363		—		—
Diversified Financial Services		7,304,597		7,304,597		—		—
Diversified Telecommunication Services		5,687,410		5,687,410		—		—
Food Products		7,058,150		7,058,150		—		—
Hotels, Restaurants & Leisure		7,223,944		7,223,944		—		—
Industrial Conglomerates		5,377,443		5,377,443		—		—
Information Technology Services		4,995,926		4,995,926		—		—
Insurance		5,423,960		5,423,960		—		—
Internet Software & Services		2,504,700		2,504,700		—		—
Machinery		4,902,633		4,902,633		—		—
Multi-Utilities		6,271,635		6,271,635		—		—
Multiline Retail		1,563,481		1,563,481		—		—
Oil, Gas & Consumable Fuels		16,095,127		16,095,127		—		—
Pharmaceuticals		8,322,165		8,322,165		—		—
Real Estate Investment Trusts (REITs)		5,434,195		5,434,195		—		—

100

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Notes to Financial Statements n December 31, 2010 continued

				Fair Value Measurements at December 31, 2010 Using
Investment Type	Total			Unadjusted Quoted Prices In Active Market for Identical Investments (Level 1)			Other Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Semiconductors & Semiconductor Equipment	$	3,865,419		$	3,865,419			—			—
Software		4,114,989			4,114,989			—			—
Specialty Retail		902,269			902,269			—			—
Tobacco		1,620,696			1,620,696			—			—
Total Common Stocks		132,101,096			132,101,096			—			—
Corporate Bonds		16,078,481			—		$	16,078,481			—
Foreign Government Obligations		498,278			—			498,278			—
U.S. Government Agencies & Obligations		19,885,962			—			19,885,962			—
Asset-Backed Securities		317,329			—			317,329			—
U.S. Government Agencies — Mortgage-Backed Securities		4,361			—			4,361			—
Municipal Bonds		536,066			—			536,066			—
Investment Trusts/Mutual Funds		6,779,325			6,779,325			—			—
Short-Term Investments
U.S. Government Obligations		1,049,924			—			1,049,924			—
Investment Company		7,186,645			7,186,645			—			—
Total Short-Term Investments		8,236,569			7,186,645			1,049,924			—
Futures		55,828			55,828			—			—
Interest Rate Swaps		244,351			—			244,351			—
Zero Coupon Swap Contracts		9,674			—			9,674			—
Total	$	184,747,320		$	146,122,894		$	38,624,426			—
Liabilities:
Foreign Currency Exchange Contracts	$	(1,057	)		—		$	(1,057	)		—
Futures		(5,912	)	$	(5,912	)		—			—
Interest Rate Swaps		(240,260	)		—			(240,260	)		—
Zero Coupon Swap Contracts		(304,080	)		—			(304,080	)		—
Total	$	(551,309	)	$	(5,912	)	$	(545,397	)		—

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment's valuation changes. The Fund recognizes transfers between the levels as of the end of the period. As of December 31, 2010, securities transferred from Level 2 to Level 1. At December 31, 2009, the fair value of certain securities were adjusted due to developments which occurred between the time of the close of

101

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the foreign markets on which they trade and the close of business on the NYSE which resulted in their Level 2 classification. The values of the transfers were as follows:

GLOBAL INFRASTRUCTURE				EUROPEAN EQUITY				CAPITAL OPPORTUNITIES				AGGRESSIVE EQUITY
$	16,571,888			$	60,179,676			$	19,186,766			$	2,346,657

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:

	Capital Opportunities		Aggressive Equity
Beginning Balance		—		—
Net purchases (sales)	$	5,942,800	$	177,270
Amortization of discount		—		—
Transfers in		—		—
Transfers out		—		—
Change in unrealized appreciation/(depreciation)		754,387		—
Realized gains (losses)		—		—
Ending Balance	$	6,697,187	$	177,270
Net change in unrealized appreciation/depreciation from investments still held as of December 31, 2010	$	754,387		—

3. Derivatives

Certain Portfolios use derivative instruments for a variety of purposes, including hedging, risk management, portfolio management or to earn income. Derivatives are financial instruments whose value is based on the value of another underlying asset, interest rate, index or financial instrument. A derivative instrument often has risks similar to its underlying instrument and may have additional risks, including imperfect correlation between the value of the derivative and the underlying instrument, risks of default by the other party to certain transactions, magnification of losses incurred due to changes in the market value of the securities, instruments, indices or interest rates to which they relate, and risks that the transactions may not be liquid. The use of derivatives involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Derivatives may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. All of a Portfolio's holdings, including derivative instruments, are marked-to-market each day with the change in value reflected in unrealized appreciation (depreciation). Upon disposition, a realized gain or loss is recognized.

Certain derivative transactions may give rise to a form of leverage. Leverage associated with derivative transactions may cause the Portfolios to liquidate portfolio positions when it may not be advantageous to do

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so to satisfy its obligations or to meet earmarking or segregation requirements, pursuant to applicable Securities and Exchange Commission ("SEC") rules and regulations, or may cause the Portfolios to be more volatile than if the Portfolios had not been leveraged. Although the Investment Adviser and/or Sub-Adviser seek to use derivatives to further the Portfolio's investment objectives, there is no assurance that the use of derivatives will achieve this result.

Following is a description of the derivative instruments and techniques that the Portfolios used during the period and their associated risks:

Foreign Currency Exchange Contracts In connection with their investments in foreign securities, certain Portfolios entered into contracts with banks, brokers or dealers to purchase or sell foreign currencies at a future date. A foreign currency exchange contract ("currency contracts") is a negotiated agreement between the contracting parties to exchange a specified amount of currency at a specified future time at a specified rate. The rate can be higher or lower than the spot rate between the currencies that are the subject of the currency contract. Currency contracts are used to protect against uncertainty in the level of future foreign currency exchange rates or to gain or modify exposure to a particular currency. In addition, certain Portfolios used cross currency hedging or proxy hedging with respect to currencies in which a Portfolio has or expects to have portfolio or currency exposure. Cross currency hedges involve the sale of one currency against the positive exposure to a different currency and may be used for hedging purposes or to establish an active exposure to the exchange rate between any two currencies. Hedging a Portfolio's currency risks involves the risk of mismatching a Portfolio's objectives under a currency contract with the value of securities denominated in a particular currency. Furthermore, such transactions reduce or preclude the opportunity for gain if the value of the currency should move in the direction opposite to the position taken. There is an additional risk to the effect that currency contracts create exposure to currencies in which a Portfolio's securities are not denominated. Unanticipated changes in currency prices may result in poorer overall performance for a Portfolio than if it had not entered into such currency contracts. A currency contract is marked-to-market daily and the change in market value is recorded by a Portfolio as unrealized gain or (loss). A Portfolio records realized gains (losses) when the currency contract is closed equal to the difference between the value of the currency contract at the time it was opened and the value at the time it was closed.

During the year ended December 31, 2010, the value of foreign currency exchange contracts purchased and sold were as follows:

PORTFOLIO	PURCHASES		SALES
Global Infrastructure	$	91,328,371	$	112,098,382
European Equity		92,873,968		104,518,799
Strategist		254,666		310,260

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Futures A futures contract is a standardized agreement between two parties to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time. The value of a futures contract tends to increase and decrease in tandem with the value of the underlying instrument. Futures contracts are bilateral agreements, with both the purchaser and the seller equally obligated to complete the transaction. Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. During the period the futures contract is open, payments are received from or made to the broker based upon changes in the value of the contract (the variation margin). A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well conceived futures transaction may be unsuccessful because of market behavior or unexpected events. In addition to the derivatives risks discussed above, the prices of futures can be highly volatile, using futures can lower total return, and the potential loss from futures can exceed a Portfolio's initial investment in such contracts.

Transactions in futures contracts for the year ended December 31, 2010, were as follows:

Limited Duration:
	NUMBER OF CONTRACTS
Futures, outstanding at beginning of the period		243
Futures opened		1,355
Futures closed		(1,462	)
Futures, outstanding at end of the period		136
Income Plus:
	NUMBER OF CONTRACTS
Futures, outstanding at beginning of the period		864
Futures opened		5,469
Futures closed		(5,513	)
Futures, outstanding at end of the period		820
Strategist:
	NUMBER OF CONTRACTS
Futures, outstanding at beginning of the period		73
Futures opened		727
Futures closed		(759	)
Futures, outstanding at end of the period		41

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Options When a Portfolio buys an option, it buys a legal contract giving it the right to buy or sell a specific amount of the underlying instrument or futures contract on the underlying instrument such as a security, currency or index, at an agreed upon price typically in exchange for a premium paid by the Portfolio. When a Portfolio sells an option, it sells to another party the right to buy from or sell to a Portfolio a specific amount of the underlying instrument or futures contract on the underlying instrument at an agreed upon price typically in exchange for a premium received by a Portfolio. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well-conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.

When the Fund writes a call or put option, an amount equal to the premium received is included in the Fund's Statement of Assets and Liabilities as a liability which is subsequently marked-to-market to reflect the current market value of the option written. If a written option either expires or the Fund enters into a closing purchase transaction, the Fund realizes a gain or loss without regard to any unrealized gain or loss on the underlying security and the liability related to such option is extinguished. If a written call option is exercised, the Fund realizes a gain or loss from the sale of the underlying security or currency and the proceeds from such sale are increased by the premium originally received. If a written put option is exercised, the amount of the premium originally received reduces the cost of the security which the Fund purchases upon exercise of the option. By writing a covered call option, the Fund, in exchange for the premium, foregoes the opportunity for capital appreciation above the exercise price, should the market price of the underlying security increase. By writing a put option, the Fund, in exchange for the premium, accepts the risk of having to purchase a security at an exercise price that is above the current market price.

Transactions in options for the year ended December 31, 2010, were as follows:

Global Infrastructure:
	NUMBER OF CONTRACTS			PREMIUM
Options written, outstanding at beginning of period		595		$	29,784
Options written		1,243			34,530
Options expired		(670	)		(24,879	)
Options closed		(1,168	)		(39,435	)
Options written, outstanding at end of period		—			—

Structured Investments A structured investment is a derivative security designed to offer a return linked to a particular underlying security, currency or market. Structured investments may come in various forms including notes, warrants and options to purchase securities. A Portfolio will typically use structured

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investments to gain exposure to a permitted underlying security, currency or market when direct access to a market is limited or inefficient from a tax or cost standpoint. Investments in structured investments involve risks including counterparty risk and market risk. Holders of structured investments bear risks of the underlying investment and are subject to counterparty risk because the Portfolio is relying on the creditworthiness of such counterparty and has no rights with respect to the underlying investment. Certain structured investments may be thinly traded or have a limited trading market and may have the effect of increasing the Portfolio's illiquidity to the extent that the Portfolio, at a particular point in time, may be unable to find qualified buyers for these securities.

Transactions in structured investments for the year ended December 31, 2010, were as follows:

	NUMBER OF SHARES		COST
Structured Investments, outstanding at beginning of period		—		—
Structured Investments purchased		42,500	$	3,133,949
Structured Investments sold		—		—
Structured Investments, outstanding at end of period		42,500	$	3,133,949

Swaps A swap agreement is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Most swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). A Portfolio's obligations or rights under a swap agreement entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. Swap agreements are not entered into or traded on exchanges and there is no central clearing or guaranty function for swaps. Therefore, swaps are subject to credit risk, the risk of default or non-performance by the counterparty. Swaps could result in losses if interest rate, foreign currency exchange rates or credit quality changes are not correctly anticipated by a Portfolio or if the reference index, security or investments do not perform as expected.

A Portfolio's use of swaps during the period included those based on the credit of an underlying security that are commonly referred to as credit default swaps. Where a Portfolio is the buyer of a credit default swap agreement, it would be entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the agreement only in the event of a default by a third party on the debt obligation. If no default occurs, a Portfolio would have paid to the counterparty a periodic stream of payments over the term of the agreement and received no benefit from the agreement. When a Portfolio is the seller of a credit default swap agreement, it receives the stream of payments but is obligated to pay upon

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default of the referenced debt obligation. The current credit rating of each individual issuer is listed in the table following the Portfolio of Investments and serves as an indicator of the current status of the payment/performance risk of the credit derivative. Alternatively, for credit default swaps on an index of credits, the quoted market prices and current values serve as an indicator of the current status of the payment/performance risk of the credit derivative. Generally, lower credit ratings and increasing market values, in absolute terms, represent a deterioration of the credit and a greater likelihood of an adverse credit event of the issuer.

When a Portfolio has an unrealized loss on a swap agreement, the Portfolio will instruct the custodian to pledge cash or liquid securities as collateral with a value approximately equal to the amount of the unrealized loss. Collateral pledges are monitored and subsequently adjusted if and when the swap valuations fluctuate. Cash collateral is included with "Due from (to) Broker" on the Statements of Assets and Liabilities. Cash collateral has been offset against open swap agreements under the provisions of FASB ASC 210, Balance Sheet ("ASC 210"). For cash collateral received, the Portfolio pays a monthly fee to the counterparty based on the effective rate for Federal Funds. This fee, when paid, is included within realized gain (loss) on swap contracts on the Statements of Operations.

Upfront payments received or paid by a Portfolio will be reflected as an asset or liability on the Statements of Assets and Liabilities.

Transactions in swap contracts for the year ended December 31, 2010, were as follows:

Limited Duration:
	NOTIONAL AMOUNT USD (000'S)
Swaps, outstanding at beginning of period		24,683
Swaps opened		51,315
Swaps closed		(49,668	)
Swaps, outstanding at end of period		26,330
Income Plus:
	NOTIONAL AMOUNT USD (000'S)
Swaps, outstanding at beginning of period		5,665
Swaps opened		208,651
Swaps closed		(132,871	)
Swaps, outstanding at end of period		81,445

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Strategist:
	NOTIONAL AMOUNT EUR (000'S)		NOTIONAL AMOUNT SEK (000'S)			NOTIONAL AMOUNT CAD (000'S)			NOTIONAL AMOUNT USD (000'S)
Swaps, outstanding at beginning of period		—		—			—			18,882
Swaps opened		6,363		15,600			6,337			42,581
Swaps closed		—		(15,600	)		(1,910	)		(38,133	)
Swaps, outstanding at end of period		6,363		—			4,427			23,330

Currency Abbreviations:

CAD Canadian Dollar.

EUR Euro.

SEK Swedish Krona.

USD United States Dollar.

FASB ASC 815, Derivatives and Hedging: Overall ("ASC 815"), is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures to enable investors to better understand how and why a Portfolio uses derivative instruments, how these derivative instruments are accounted for and their effects on a Portfolio's financial position and results of operations.

The following table sets forth the fair value of the Portfolio's derivative contracts by primary risk exposure as of December 31, 2010.

PORTFOLIO		PRIMARY RISK EXPOSURE	ASSET DERIVATIVES STATEMENTS OF ASSETS AND LIABILITIES LOCATION	FAIR VALUE			LIABILITY DERIVATIVES STATEMENTS OF ASSETS AND LIABILITIES LOCATION	FAIR VALUE
	Limited Duration	Interest Rate	Variation margin	$	82,345	†	Variation margin	$	(98,837	)†
		Risk	Unrealized appreciation on open swap contracts		143,728		Unrealized depreciation on open swap contracts		(745,506	)
				$	226,073			$	(844,343	)
	Income Plus	Interest Rate	Variation margin	$	959,275	†	Variation margin	$	(493,055	)†
		Risk	Unrealized appreciation on open swap contracts		549,238		Unrealized depreciation on open swap contracts		(652,223	)
		Credit Risk	Unrealized appreciation on open swap contracts		—		Unrealized depreciation on open swap contracts		(21,141	)
				$	1,508,513			$	(1,166,419	)
		Foreign Currency Risk	Unrealized appreciation on open foreign currency exchange contracts	$	81,322		Unrealized depreciation on open foreign currency exchange contracts	$	(24,586	)

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PORTFOLIO		PRIMARY RISK EXPOSURE	ASSET DERIVATIVES STATEMENTS OF ASSETS AND LIABILITIES LOCATION	FAIR VALUE			LIABILITY DERIVATIVES STATEMENTS OF ASSETS AND LIABILITIES LOCATION	FAIR VALUE
	Strategist	Interest Rate	Variation margin	$	55,828	†	Variation margin	$	(5,912	)†
		Risk	Unrealized appreciation				Unrealized depreciation
			on open swap contracts		254,025		on open swap contracts		(544,340	)
		Foreign Currency Risk	Unrealized appreciation on open foreign currency exchange contracts		—		Unrealized depreciation on open foreign currency exchange contracts		(1,057	)
		Equity Risk	Investments in structured products, at value		1,597,575	††	Investments in structured products, at value		—
				$	1,907,428			$	(551,309	)

† Includes cumulative appreciation/depreciation of futures contracts as reported in the Portfolio of Investments. Only current day's variation margin is reported within the Statements of Assets and Liabilities.

†† The market value of investments in structured products is included in "Investments in securities, at value" in the Statement of Assets and Liabilities and reported separately in the Portfolio of Investments.

The following tables set forth by primary risk exposure the Portfolio's realized gains (losses) and change in unrealized appreciation (depreciation) by type of derivative contract for the year ended December 31, 2010.

AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVE CONTRACTS

PORTFOLIO	PRIMARY RISK EXPOSURE	FUTURES			SWAPS			OPTIONS WRITTEN			FOREIGN CURRENCY EXCHANGE
Limited Duration	Interest Rate Risk	$	231,259		$	(534,575	)		—			—
Income Plus	Interest Rate Risk		—		$	(2,546,409	)		—			—
	Credit Risk	$	(592,251	)		(237,251	)		—			—
	Total	$	(592,251	)	$	(2,783,660	)		—			—
Global Infrastucture	Equity Risk		—			—		$	(20,534	)		—
	Foreign Currency Risk		—			—			—		$	(115,115	)
	Total		—			—		$	(20,534	)	$	(115,115	)
European Equity	Foreign Currency Risk		—			—			—		$	213,255
Strategist	Interest Rate Risk	$	100,165		$	(362,604	)		—			—
	Credit Risk		—			(18,584	)		—			—
	Foreign Currency Risk		—			—			—		$	3,924
	Total	$	100,165		$	(381,188	)		—		$	3,924

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CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVE CONTRACTS

PORTFOLIO	PRIMARY RISK EXPOSURE	FUTURES			SWAPS			OPTIONS WRITTEN		FOREIGN CURRENCY EXCHANGE			STRUCTURED INVESTMENTS
Limited Duration	Interest Rate Risk	$	(129,971	)	$	(339,724	)		—		—			—
Income Plus	Interest Rate Risk	$	(757,762	)	$	(102,985	)		—		—			—
	Credit Risk		—			269,318			—		—			—
	Total	$	(757,762	)	$	166,333			—		—			—
Global Infrastructure	Foreign Currency Risk		—			—			—	$	(55,094	)		—
	Equity Risk		—			—		$	23,542		—			—
	Total		—			—		$	23,542	$	(55,094	)		—
European Equity	Foreign Currency Risk		—			—			—	$	56,736			—
Strategist	Interest Rate Risk	$	(9,781	)		—			—		—			—
	Credit Risk		—		$	23,798			—		—			—
	Foreign Currency Risk		—			(148,791	)		—	$	(1,057	)		—
	Equity Risk		—			—			—		—		$	(1,536,374	)
	Total	$	(9,781	)	$	(124,993	)		—	$	(1,057	)	$	(1,536,374	)

4. Investment Advisory/Administration and Sub-Advisory Agreements

Pursuant to an Investment Advisory Agreement with the Investment Adviser and Sub-Adviser, the Fund pays an advisory fee, accrued daily and payable monthly, by applying the annual rates listed below to each Portfolio's net assets determined at the close of each business day.

Money Market — 0.45% to the portion of the daily net assets not exceeding $250 million; 0.375% to the portion of the daily net assets exceeding $250 million but not exceeding $750 million; 0.325% to the portion of the daily net assets exceeding $750 million but not exceeding $1.25 billion; 0.30% to the portion of the daily net assets exceeding $1.25 billion but not exceeding $1.5 billion and 0.275% to the portion of the daily net assets in excess of $1.5 billion.

Limited Duration — 0.30%.

Income Plus — 0.42% to the portion of the daily net assets not exceeding $500 million; 0.35% to the portion of the daily net assets exceeding $500 million but not exceeding $1.25 billion and 0.22% to the portion of the daily net assets in excess of $1.25 billion.

Global Infrastructure — 0.57% to the portion of the daily net assets not exceeding $500 million; 0.47% to the portion of the daily net assets exceeding $500 million but not exceeding $1 billion; 0.445% to the portion

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of the daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.42% to the portion of the daily net assets exceeding $1.5 billion but not exceeding $2.5 billion; 0.395% to the portion of the daily net assets exceeding $2.5 billion but not exceeding $3.5 billion; 0.37% to the portion of the daily net assets exceeding $3.5 billion but not exceeding $5 billion and 0.345% to the portion of the daily net assets in excess of $5 billion.

European Equity — 0.87% to the portion of the daily net assets not exceeding $500 million; 0.82% to the portion of the daily net assets exceeding $500 million but not exceeding $2 billion; 0.77% to the portion of the daily net assets exceeding $2 billion but not exceeding $3 billion and 0.745% to the portion of the daily net assets in excess of $3 billion.

Capital Opportunities — 0.42% to the portion of the daily net assets not exceeding $1 billion; 0.395% to the portion of the daily net assets exceeding $1 billion but not exceeding $2 billion and 0.37% to the portion of the daily net assets in excess of $2 billion.

Aggressive Equity — 0.67% to the portion of the daily net assets not exceeding $500 million; 0.645% to the portion of the daily net assets exceeding $500 million but not exceeding $2 billion; 0.62% to the portion of the daily net assets exceeding $2 billion but not exceeding $3 billion and 0.595% to the portion of the daily net assets in excess of $3 billion.

Strategist — 0.42% to the portion of the daily net assets not exceeding $1.5 billion and 0.395% to the portion of the daily net assets in excess of $1.5 billion.

Under the Sub-Advisory Agreement between the Investment Adviser and the Sub-Adviser, the Sub-Adviser provides Global Infrastructure, and European Equity with investment advisory services, subject to the overall supervision of the Investment Adviser and the Fund's Officers and Trustees. The Investment Adviser pays the Sub-Adviser on a monthly basis a portion of the net advisory fees the Investment Adviser receives from each Portfolio.

The Investment Adviser has voluntarily agreed to cap European Equity's operating expenses (except for brokerage and 12b-1 fees) by assuming the Portfolio's "other expenses" and/or waiving the Portfolio's advisory fees, and Morgan Stanley Services Company Inc. (the "Administrator") has agreed to waive the Portfolio's administrative fees, to the extent such operating expenses exceed 1.00% of the average daily net assets of the Portfolio on an annualized basis.

Pursuant to an Administration Agreement with the Administrator, an affiliate of the Investment Adviser and Sub-Adviser, each Portfolio pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.08% (Money Market 0.05%) to the Portfolio's daily net assets.

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Under a Sub-Administration Agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund.

5. Plan of Distribution

Shares of the Fund are distributed by Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Adviser, Administrator and Sub-Adviser. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. Under the Plan, Class Y shares of each Portfolio bear a distribution fee which is accrued daily and paid monthly at the annual rate of 0.25% of the average daily net assets of the class.

The Distributor, Investment Adviser and Administrator have agreed to waive all or a portion of the Money Market Portfolio's distribution fee, investment advisory fee and administration fee, respectively, to the extent that total expenses exceed total income of the Money Market Portfolio on a daily basis. For the year ended December 31, 2010, the Distributor waived $181,964 and the Investment Adviser waived $468,863. These fee waivers and/or expense reimbursements are expected to continue until such time that the Board of Trustees acts to discontinue such waivers and/or expense reimbursements when it deems such action is appropriate.

6. Security Transactions and Transactions with Affiliates

Each Portfolio (except Money Market) may invest in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class, an open-end management investment company managed by an affiliate of the Investment Adviser, both directly, and as a portion of the securities held as collateral on loaned securities. Investment Advisory fees paid by the Portfolios are reduced by an amount equal to the advisory and administrative services fees paid by Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class with respect to assets invested by the Portfolio in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class. For the year ended December 31, 2010, the tables below identify, for each Portfolio that invested in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class, the amount by which that Portfolio's advisory fees were reduced in relation to that Portfolio's investment in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class.

In addition, the table also identifies the income distributions earned, if any, by each Portfolio for that Portfolio's investment in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class.

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Income distributions are included in "interest and dividends from affiliates" in the Statements of Operations.

PORTFOLIO	INCOME DISTRIBUTION EARNED		ADVISORY FEE REDUCTION
Limited Duration	$	3,495	$	2,541
Income Plus		7,715		5,649
Global Infrastructure		2,799		1,951
European Equity		2,069		1,506
Capital Opportunities		10,984		7,364
Aggressive Equity		1,522		1,141
Strategist		39,133		31,502

During the year ended December 31, 2010, each Portfolio's cost of purchases and proceeds from sales of investments in Morgan Stanley Institutional Liquidity Funds – Money Market Portfolio – Institutional Class were as follows:

PORTFOLIO	PURCHASES		SALES
Limited Duration	$	37,945,351	$	39,075,381
Income Plus		81,583,841		83,820,014
Global Infrastructure		25,351,734		23,622,711
European Equity		14,058,951		15,208,671
Capital Opportunities		80,594,828		77,254,953
Aggressive Equity		10,904,400		10,475,449
Strategist		28,320,969		59,131,083

Purchases and sales/prepayments/maturities of portfolio securities, excluding short-term investments (except Money Market), for the year ended December 31, 2010 were as follows:

	U.S. GOVERNMENT SECURITIES				OTHER
	PURCHASES		SALES/PREPAYMENTS MATURITIES		PURCHASES		SALES/PREPAYMENTS MATURITIES
Money Market		—		—	$	19,680,293,405	$	19,718,933,966
Limited Duration	$	29,588,130	$	34,493,331		33,239,011		36,948,948
Income Plus		—		42		125,129,696		166,496,072
Global Infrastructure		—		—		111,773,866		125,929,784
European Equity		—		—		15,187,989		24,731,057
Capital Opportunities		—		—		73,027,488		119,312,248
Aggressive Equity		—		—		8,138,497		14,158,092
Strategist		21,613,279		24,394,529		181,932,288		170,965,307

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The following Portfolios had transactions with the following affiliates of the Fund:

PORTFOLIO	ISSUER	PURCHASES		SALES		NET REALIZED GAIN		INCOME		VALUE
Limited Duration	MetLife Global	$	624,169	$	945,868	$	17,650	$	21,533	$	226,235
Income Plus	Allstate Corp. (The)		—		1,042,146		190,449		40,547		—
	MetLife, Inc.		—		1,099,318		187,754		150,592		1,296,422
Strategist	Allstate Corp. (The)		—		—		—		3,725		60,780
	MetLife, Inc.		86,929		219,929		19,766		4,790		55,334

The following Portfolios had transactions with Citigroup, Inc., and its affiliated broker/dealers which are affiliates of the Investment Adviser, Distributor, Sub-Advisers and Administrator for the year ended December 31, 2010:

PORTFOLIO	PURCHASES		SALES		NET REALIZED GAIN/LOSS			INCOME		VALUE
Limited Duration	$	625,031	$	2,629,009	$	78,125		$	69,628	$	1,250,914
Income Plus		589,815		1,992,991		379,741			560,512		7,222,659
Strategist		3,888,556		2,277,398		(591,750	)		56,414		4,074,750

The following Portfolios had transactions with other Morgan Stanley funds for the year ended December 31, 2010:

PORTFOLIO	PURCHASES		SALES		REALIZED GAIN (LOSS)
Capital Opportunities	$	2,486,640	$	1,235,988	$	176,978
Aggressive Equity		303,348		128,742		13,381

For the year ended December 31, 2010, the following Portfolios incurred brokerage commissions with Morgan Stanley & Co., Inc. and its affiliated broker/dealers which are affiliates of the Investment Adviser, Sub-Advisers, Administrator and Distributor, for portfolio transactions executed on behalf of each Portfolio:

GLOBAL INFRASTRUCTURE				EUROPEAN EQUITY				CAPITAL OPPORTUNITIES				AGGRESSIVE EQUITY				STRATEGIST
$	344			$	433			$	2,876			$	339			$	34,827

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For the year ended December 31, 2010, the following Portfolios incurred brokerage commissions with Citigroup, Inc., and its affiliated broker/dealers which are affiliates of the Investment Adviser, Sub-Advisers, Administrator and Distributor, for portfolio transactions executed on behalf of each Portfolio:

GLOBAL INFRASTRUCTURE				EUROPEAN EQUITY				CAPITAL OPPORTUNITIES				AGGRESSIVE EQUITY				STRATEGIST
$	65			$	846			$	1,098			$	132			$	717

Morgan Stanley Services Company Inc., an affiliate of the Investment Adviser, Sub-Advisers and Distributor, is the Fund's transfer agent.

The Fund has an unfunded noncontributory defined benefit pension plan covering certain independent Trustees of the Fund who will have served as independent Trustees for at least five years at the time of retirement. Benefits under this plan are based on factors which include years of service and compensation. The Trustees voted to close the plan to new participants and eliminate the future benefits growth due to increases to compensation after July 31, 2003.

Aggregate pension costs for the year ended December 31, 2010, included in "trustees' fees and expenses" in the Statements of Operations and the accrued pension liability included in "accrued expenses and other payables" in the Statements of Assets and Liabilities are as follows:

AGGREGATE PENSION COSTS

MONEY MARKET				LIMITED DURATION				INCOME PLUS				GLOBAL INFRASTRUCTURE				EUROPEAN EQUITY				CAPITAL OPPORTUNITIES				AGGRESSIVE EQUITY				STRATEGIST
$	2			$	390			$	1,184			$	195			$	48			$	3,146			$	188			$	1,251

AGGREGATE PENSION LIABILITY

MONEY MARKET				LIMITED DURATION				INCOME PLUS				GLOBAL INFRASTRUCTURE				EUROPEAN EQUITY				CAPITAL OPPORTUNITIES				AGGRESSIVE EQUITY				STRATEGIST
$	5,536			$	2,882			$	9,584			$	2,938			$	2,630			$	10,107			$	1,200			$	7,517

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 or she 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.

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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 GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for tax purposes are reported as distributions of paid-in-capital.

The tax character of distributions paid for the years ended December 31, 2009 and December 31, 2010 for all portfolios was the same as the book character shown on the Statements of Changes in Net Assets except as follows:

	MONEY MARKET		GLOBAL INFRASTRUCTURE
	FOR THE YEAR ENDED DECEMBER 31, 2010		FOR THE YEAR ENDED DECEMBER 31, 2010
Ordinary income	$	14,474	$	5,523,941
Long-term capital gains		202		3,205,294
Total distributions	$	14,676	$	8,729,235

As of December 31, 2010, the tax-basis components of accumulated earnings (losses) were as follows:

	MONEY MARKET			LIMITED DURATION			INCOME PLUS			GLOBAL INFRASTRUCTURE
Undistributed ordinary income	$	6,780		$	1,919,261		$	12,237,159		$	1,889,917
Undistributed long-term gains		—			—			—			3,987,253
Net accumulated earnings		6,780			1,919,261			12,237,159			5,877,170
Foreign tax credit pass-through		—			—			—			164,876
Capital loss carryforward		—			(36,112,884	)		(24,404,452	)		—
Post-October losses		—			—			—			(138,768	)
Temporary differences		(7,030	)		(3,659	)		(4,282	)		(185,539	)
Net unrealized appreciation (depreciation)		—			(253,774	)		12,727,102			8,518,143
Total accumulated earnings (losses)	$	(250	)	$	(34,451,056	)	$	555,527		$	14,235,882

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	EUROPEAN EQUITY			CAPITAL OPPORTUNITIES			AGGRESSIVE EQUITY			STRATEGIST
Undistributed ordinary income	$	1,488,780		$	327,516		$	—		$	5,458,324
Undistributed long-term gains		—			—			—			15,646,300
Net accumulated earnings		1,488,780			327,516			—			21,104,624
Foreign tax credit pass-through		60,688			—			—			—
Capital loss carryforward		(15,192,168	)		(27,708,593	)		(1,987,158	)		—
Post-October losses		(50,035	)		(2,750	)		(35,113	)		—
Temporary differences		(64,052	)		(12,830	)		(1,523	)		(9,542	)
Net unrealized appreciation (depreciation)		11,739,401			84,043,957			10,417,094			14,764,117
Total accumulated earnings (losses)	$	(2,017,386	)	$	56,647,300		$	8,393,300		$	35,859,199

As of December 31, 2010, the following Portfolios had a net capital loss carryforward which may be used to offset future capital gains to the extent provided by regulations.

	(AMOUNTS IN THOUSANDS)
AVAILABLE THROUGH DECEMBER 31,	2011		2012		2013		2014		2015		2016		2017		2018		TOTAL
Limited Duration	$	1,425	$	4,026	$	1,267	$	2,233	$	1,063	$	17,119	$	8,980		—	$	36,113
Income Plus		—		—		—		—		5,172		19,232		—		—		24,404
European Equity		—		—		—		—		—		—		11,884	$	3,308		15,192
Capital Opportunities		—		—		—		—		—		20,502		7,207		—		27,709
Aggressive Equity		—		—		—		—		—		1,612		375		—		1,987

During the year ended December 31, 2010, the following Portfolios utilized net capital loss carryforwards: Limited Duration — $448,541; Income Plus — $10,805,004; Capital Opportunities — $27,223,573; Aggressive Equity — $3,036,415.

At December 31, 2010, the primary reason(s) for significant temporary/permanent book/tax differences were as follows:

TEMPORARY DIFFERENCES

PERMANENT DIFFERENCES

POST-
OCTOBER
LOSSES

LOSS
DEFERRALS FROM
WASH SALES

FOREIGN
CURRENCY
GAINS/LOSSES

GAINS/
LOSSES ON
PAYDOWNS

Money Market

Limited Duration

•

Income Plus

•

Global Infrastructure

•

European Equity

•

Capital Opportunities

•

Aggressive Equity

•

Strategist

•

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Additionally, the following Portfolios had other temporary differences: Global Infrastructure, Strategist — income from the mark-to-market of foreign currency exchange contracts; Global Infrastructure, European Equity — foreign tax credit pass-through; Limited Duration, Income Plus, Strategist — capital gain/loss from the mark-to-market of futures contracts and/or options contracts; Limited Duration, Strategist — capital loss deferrals on straddles; The following Portfolios had other permanent differences: Income Plus, Capital Opportunities, Aggressive Equity — expired capital loss carryforwards; Aggressive Equity — net operating loss; Strategist — tax adjustments on real estate investment trusts sold. The following Portfolios had temporary and permanent differences attributable to book amortization of premiums/discounts on debt securities: Limited Duration, Income Plus and Strategist. The following Portfolios had temporary and/or permanent differences attributable to tax adjustment on swaps: Limited Duration, Income Plus and Strategist. The following Portfolios had temporary and permanent differences attributable to tax adjustments on passive foreign investment companies held/sold: Global Infrastructure and Strategist.

The permanent differences resulted in the following reclassifications among the Portfolios' components of net assets at December 31, 2010:

	ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)			ACCUMULATED UNDISTRIBUTED NET REALIZED GAIN (LOSS)			PAID-IN-CAPITAL
Money Market	$	2,042		$	(2,042	)		—
Limited Duration		378,140			(378,140	)		—
Income Plus		7,209			4,392,943		$	(4,400,152	)
Global Infrastructure		288,350			(288,350	)		—
European Equity		155,702			(155,702	)		—
Capital Opportunities		(355,475	)		103,943,460			(103,587,985	)
Aggressive Equity		144,526			10,098,754			(10,243,280	)
Strategist		(1,360,886	)		1,372,992			(12,106	)

8. Purposes of and Risks Relating to Certain Financial Instruments

Certain Portfolios may lend securities to qualified financial institutions, such as broker-dealers, to earn additional income. Risks in securities lending transactions are that a borrower may not provide additional collateral when required or return the securities when due, and that the value of the short-term investments will be less than the amount of cash collateral plus any rebate that is required to be returned to the borrower.

Certain Portfolios may invest in mortgage securities, including securities issued by Federal National Mortgage Assoc. ("FNMA") and Federal Home Loan Mortgage Corp. ("FHLMC"). These are fixed income securities that derive their value from or represent interests in a pool of mortgages or mortgage securities. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of a mortgage backed security and could result in losses to the Portfolio. The risk of such defaults is

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generally higher in the case of mortgage pools that include subprime mortgages. Subprime mortgages refer to loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their mortgages. The securities issued by FNMA and FHLMC that are held by the Portfolios are not backed by subprime mortgages.

Additionally, securities issued by FNMA and FHLMC are not backed by or entitled to the full faith and credit of the United States; rather, they are supported by the right of the issuer to borrow from the U.S. Department of the Treasury.

The Federal Housing Finance Agency ("FHFA") serves as conservator of FNMA and FHLMC and the U.S. Department of the Treasury has agreed to provide capital as needed to ensure FNMA and FHLMC continue to provide liquidity to the housing and mortgage markets.

At December 31, 2010, European Equity Portfolio's investments in securities of issuers in the United Kingdom, Germany and Switzerland represented 46.8%, 13.4% and 13.4, respectively of the Portfolio's net assets. These investments, as well as other non-U.S. investments, which involve risks and considerations not present with respect to U.S. securities, may be affected by economic or political developments in these countries.

9. Expense Offset

The Fund has entered into an arrangement with State Street Bank and Trust Company (the "Custodian"), whereby credits realized on uninvested cash balances were used to offset a portion of the Portfolio's expenses. If applicable, these custodian credits are shown as "Expense Offset" in the Statements of Operations.

10. Accounting Pronouncement

On January 21, 2010, the FASB issued Accounting Standards Update ("ASU") 2010-06. The ASU amends ASC 820 to add new requirements for disclosures about significant transfers into and out of Levels 1 and 2, which the Fund has adopted and made the required disclosures in the Fair Valuation Measurements footnote. In addition, separate disclosures for purchases, sales, issuances and settlements relating to Level 3 measurements is required for fiscal years and interim periods beginning after December 15, 2010.

11. Regulatory Settlement Proceeds

The European Equity Portfolio received $84,956 in a settlement of administrative proceedings against other unaffiliated third parties involving findings by the SEC of market timing and/or late trading of mutual funds. The settlement is recorded as an increase to paid-in capital in the accompanying financial statements.

119

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Financial Highlights


FOR THE YEAR DECEMBER 31 ENDED		NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME(a)			NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS		TOTAL DIVIDENDS AND DISTRIBUTIONS
MONEY MARKET CLASS X SHARES
	2006	$	1.00	$	0.045		$	0.005		$	0.050		$	(0.050	)		—	$	(0.050	)
	2007		1.00		0.050			—			0.050			(0.050	)		—		(0.050	)
	2008		1.00		0.020			—			0.020			(0.020	)		—		(0.020	)
	2009		1.00		0.000	(e)		—			0.000	(e)		(0.000	)(e)		—		(0.000	)(e)
	2010		1.00		0.000	(e)		—			0.000	(e)		(0.000	)(e)		—		(0.000	)(e)
CLASS Y SHARES
	2006		1.00		0.043			(0.003	)		0.040			(0.040	)		—		(0.040	)
	2007		1.00		0.050			—			0.050			(0.050	)		—		(0.050	)
	2008		1.00		0.020			—			0.020			(0.020	)		—		(0.020	)
	2009		1.00		0.000	(e)		—			0.000	(e)		(0.000	)(e)		—		(0.000	)(e)
	2010		1.00		0.000	(e)		—			0.000	(e)		(0.000	)(e)		—		(0.000	)(e)
LIMITED DURATION CLASS X SHARES
	2006		9.54		0.40			0.00			0.40			(0.45	)		—		(0.45	)
	2007		9.49		0.47			(0.19	)		0.28			(0.50	)		—		(0.50	)
	2008		9.27		0.36			(1.72	)		(1.36	)		(0.15	)		—		(0.15	)
	2009		7.76		0.20			0.24			0.44			(0.36	)		—		(0.36	)
	2010		7.84		0.18			0.00			0.18			(0.28	)		—		(0.28	)
CLASS Y SHARES
	2006		9.52		0.37			0.01			0.38			(0.42	)		—		(0.42	)
	2007		9.48		0.44			(0.19	)		0.25			(0.47	)		—		(0.47	)
	2008		9.26		0.34			(1.73	)		(1.39	)		(0.14	)		—		(0.14	)
	2009		7.73		0.18			0.24			0.42			(0.34	)		—		(0.34	)
	2010		7.81		0.16			0.01			0.17			(0.26	)		—		(0.26	)
INCOME PLUS CLASS X SHARES
	2006		10.49		0.51			0.05			0.56			(0.54	)		—		(0.54	)
	2007		10.51		0.53			0.08			0.61			(0.56	)		—		(0.56	)
	2008		10.56		0.53			(1.46	)		(0.93	)		(0.18	)		—		(0.18	)
	2009		9.45		0.57			1.50			2.07			(0.53	)		—		(0.53	)
	2010		10.99		0.58			0.39			0.97			(0.70	)		—		(0.70	)

See Notes to Financial Statements
120

									RATIO TO AVERAGE NET ASSETS(c)
FOR THE YEAR DECEMBER 31 ENDED		NET ASSET VALUE END OF PERIOD		TOTAL RETURN(b)			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME			REBATE FROM MORGAN STANLEY AFFILIATE			PORTFOLIO TURNOVER RATE
MONEY MARKET CLASS X SHARES
	2006	$	1.00		4.61	%	$	132,690		0.55	%		4.53	%		—			NA
	2007		1.00		4.93	(d)		111,478		0.55			4.79			—			NA
	2008		1.00		2.45			115,415		0.57			2.40			—			NA
	2009		1.00		0.03			84,486		0.40	(f)(g)		0.03	(f)(g)		—			NA
	2010		1.00		0.01			59,932		0.29	(g)		0.00	(g)(h)		—			NA
CLASS Y SHARES
	2006		1.00		4.35			102,296		0.80			4.28			—			NA
	2007		1.00		4.67	(d)		101,524		0.80			4.54			—			NA
	2008		1.00		2.19			112,113		0.82			2.15			—			NA
	2009		1.00		0.01			81,145		0.41	(f)(g)		0.01	(f)(g)		—			NA
	2010		1.00		0.01			67,139		0.29	(g)		0.00	(g)(h)		—			NA
LIMITED DURATION CLASS X SHARES
	2006		9.49		4.28			34,047		0.47			4.18			—			51	%
	2007		9.27		2.95			26,214		0.47			4.95			—			49
	2008		7.76		(14.91	)		16,405		0.48	(i)		4.27	(i)		0.01	%		54
	2009		7.84		5.76			16,889		0.49	(i)		2.61	(i)		0.00	(h)		105
	2010		7.74		2.35			14,921		0.55	(i)		2.25	(i)		0.00	(h)		88
CLASS Y SHARES
	2006		9.48		4.03			114,818		0.72			3.93			—			51
	2007		9.26		2.80			101,066		0.72			4.70			—			49
	2008		7.73		(15.22	)		63,223		0.73	(i)		4.02	(i)		0.01			54
	2009		7.81		5.56			60,753		0.74	(i)		2.36	(i)		0.00	(h)		105
	2010		7.72		2.22			53,760		0.80	(i)		2.00	(i)		0.00	(h)		88
INCOME PLUS CLASS X SHARES
	2006		10.51		5.69			183,594		0.56			4.95			—			38
	2007		10.56		5.99			155,879		0.55			5.02			—			125
	2008		9.45		(8.92	)		109,833		0.55	(i)		5.34	(i)		0.00	(h)		55
	2009		10.99		22.57			114,488		0.56	(i)		5.64	(i)		0.00	(h)		75
	2010		11.26		9.28			106,363		0.59	(i)		5.23	(i)		0.00	(h)		53

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Financial Highlights continued


FOR THE YEAR DECEMBER 31 ENDED		NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME(a)		NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS			TOTAL DIVIDENDS AND DISTRIBUTIONS
INCOME PLUS CLASS Y SHARES
	2006	$	10.47	$	0.49	$	0.05		$	0.54		$	(0.52	)		—		$	(0.52	)
	2007		10.49		0.50		0.08			0.58			(0.53	)		—			(0.53	)
	2008		10.54		0.51		(1.45	)		(0.94	)		(0.18	)		—			(0.18	)
	2009		9.42		0.55		1.49			2.04			(0.51	)		—			(0.51	)
	2010		10.95		0.55		0.39			0.94			(0.67	)		—			(0.67	)
GLOBAL INFRASTRUCTURE CLASS X SHARES
	2006		16.50		0.36		2.95			3.31			(0.37	)		—			(0.37	)
	2007		19.44		0.39		3.38			3.77			(0.39	)	$	(2.16	)		(2.55	)
	2008		20.66		0.40		(6.21	)		(5.81	)		(0.11	)		(3.44	)		(3.55	)
	2009		11.30		0.31		1.16			1.47			(0.38	)		(3.71	)		(4.09	)
	2010		8.68		0.21		0.18			0.39			(0.25	)		(0.69	)		(0.94	)
CLASS Y SHARES
	2006		16.49		0.32		2.95			3.27			(0.33	)		—			(0.33	)
	2007		19.43		0.34		3.38			3.72			(0.34	)		(2.16	)		(2.50	)
	2008		20.65		0.35		(6.20	)		(5.85	)		(0.09	)		(3.44	)		(3.53	)
	2009		11.27		0.28		1.15			1.43			(0.35	)		(3.71	)		(4.06	)
	2010		8.64		0.19		0.19			0.38			(0.23	)		(0.69	)		(0.92	)
EUROPEAN EQUITY CLASS X SHARES
	2006		19.82		0.36		5.55			5.91			(0.39	)		—			(0.39	)
	2007		25.34		0.47		3.48			3.95			(0.46	)		—			(0.46	)
	2008		28.83		0.63		(11.31	)		(10.68	)		(0.61	)		(4.22	)		(4.83	)
	2009		13.32		0.36		3.01			3.37			(0.56	)		(0.71	)		(1.27	)
	2010		15.42		0.26		0.76			1.02			(0.39	)		—			(0.39	)
CLASS Y SHARES
	2006		19.70		0.29		5.54			5.83			(0.34	)		—			(0.34	)
	2007		25.19		0.40		3.46			3.86			(0.40	)		—			(0.40	)
	2008		28.65		0.58		(11.25	)		(10.67	)		(0.52	)		(4.22	)		(4.74	)
	2009		13.24		0.32		3.00			3.32			(0.50	)		(0.71	)		(1.21	)
	2010		15.35		0.22		0.76			0.98			(0.35	)		—			(0.35	)

See Notes to Financial Statements
122

									RATIO TO AVERAGE NET ASSETS(c)
FOR THE YEAR DECEMBER 31 ENDED		NET ASSET VALUE END OF PERIOD		TOTAL RETURN(b)			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME			REBATE FROM MORGAN STANLEY AFFILIATE			PORTFOLIO TURNOVER RATE
INCOME PLUS CLASS Y SHARES
	2006	$	10.49		5.34	%	$	210,681		0.81	%		4.70	%		—			38	%
	2007		10.54		5.73			196,774		0.80			4.77			—			125
	2008		9.42		(9.11	)		135,850		0.80	(i)		5.09	(i)		0.00	%(h)		55
	2009		10.95		22.29			148,108		0.81	(i)		5.39	(i)		0.00	(h)		75
	2010		11.22		9.01			124,322		0.84	(i)		4.98	(i)		0.00	(h)		53
GLOBAL INFRASTRUCTURE CLASS X SHARES
	2006		19.44		20.32			142,721		0.71			2.05			—			19
	2007		20.66		20.34			133,507		0.70			1.90			—			8
	2008		11.30		(33.27	)		70,951		0.74	(i)		2.46	(i)		0.00	(h)		76
	2009		8.68		19.26			68,748		0.96	(i)		3.37	(i)		0.00	(h)		280
	2010		8.13		6.93			61,408		0.87	(i)		2.71	(i)		0.00	(h)		148
CLASS Y SHARES
	2006		19.43		20.03			34,305		0.96			1.80			—			19
	2007		20.65		20.04			31,780		0.95			1.65			—			8
	2008		11.27		(33.45	)		16,545		0.99	(i)		2.21	(i)		0.00	(h)		76
	2009		8.64		18.83			17,818		1.21	(i)		3.12	(i)		0.00	(h)		280
	2010		8.10		6.74			15,789		1.12	(i)		2.46	(i)		0.00	(h)		148
EUROPEAN EQUITY CLASS X SHARES
	2006		25.34		30.21			142,000		1.00	(j)		1.59	(j)		—			62
	2007		28.83		15.59			127,071		1.00	(j)		1.73	(j)		—			41
	2008		13.32		(42.70	)		57,734		1.00	(i)(j)		3.01	(i)(j)		0.00	(h)		15
	2009		15.42		27.73			61,197		1.00	(i)(j)		2.67	(i)(j)		0.00	(h)		26
	2010		16.05		7.23	(k)		54,824		1.00	(i)(j)		1.81	(i)(j)		0.00	(h)		22
CLASS Y SHARES
	2006		25.19		29.88			45,637		1.25	(j)		1.34	(j)		—			62
	2007		28.65		15.34			40,721		1.25	(j)		1.48	(j)		—			41
	2008		13.24		(42.84	)		17,845		1.25	(i)(j)		2.76	(i)(j)		0.00	(h)		15
	2009		15.35		27.41			19,323		1.25	(i)(j)		2.42	(i)(j)		0.00	(h)		26
	2010		15.98		6.96	(k)		17,821		1.25	(i)(j)		1.56	(i)(j)		0.00	(h)		22

123

Morgan Stanley Variable Investment Series

Financial Highlights continued


FOR THE YEAR DECEMBER 31 ENDED		NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME (LOSS)(a)			NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS			TOTAL DIVIDENDS AND DISTRIBUTIONS
CAPITAL OPPORTUNITIES CLASS X SHARES
	2006	$	28.46	$	0.02		$	1.15		$	1.17			—			—			—
	2007		29.63		0.21			5.57			5.78		$	(0.18	)		—		$	(0.18	)
	2008		35.23		0.03			(16.78	)		(16.75	)		(0.07	)		—			(0.07	)
	2009		18.41		0.11			12.99			13.10			(0.09	)		—			(0.09	)
	2010		31.42		0.06			8.65			8.71			(0.06	)		—			(0.06	)
CLASS Y SHARES
	2006		28.34		(0.05	)		1.14			1.09			—			—			—
	2007		29.43		0.13			5.54			5.67			(0.04	)		—			(0.04	)
	2008		35.06		(0.05	)		(16.67	)		(16.72	)		(0.05	)		—			(0.05	)
	2009		18.29		0.05			12.90			12.95			(0.03	)		—			(0.03	)
	2010		31.21		(0.02	)		8.58			8.56			—			—			—
AGGRESSIVE EQUITY CLASS X SHARES
	2006		13.77		(0.04	)		1.12			1.08			—			—			—
	2007		14.85		0.06			2.86			2.92			—			—			—
	2008		17.77		(0.04	)		(8.63	)		(8.67	)		(0.03	)		—			(0.03	)
	2009		9.07		0.00			6.30			6.30			—			—			—
	2010		15.37		(0.05	)		4.05			4.00			—			—			—
CLASS Y SHARES
	2006		13.61		(0.07	)		1.11			1.04			—			—			—
	2007		14.65		0.02			2.82			2.84			—			—			—
	2008		17.49		(0.08	)		(8.49	)		(8.57	)		—			—			—
	2009		8.92		(0.03	)		6.19			6.16			—			—			—
	2010		15.08		(0.09	)		3.97			3.88			—			—			—
STRATEGIST CLASS X SHARES
	2006		16.05		0.41			1.86			2.27			(0.44	)	$	(1.35	)		(1.79	)
	2007		16.53		0.46			0.92			1.38			(0.46	)		(1.90	)		(2.36	)
	2008		15.55		0.30			(3.76	)		(3.46	)		(0.10	)		(1.39	)		(1.49	)
	2009		10.60		0.16			1.90			2.06			(0.26	)		—			(0.26	)
	2010		12.40		0.24			0.59			0.83			(0.20	)		(0.07	)		(0.27	)

See Notes to Financial Statements
124

									RATIO TO AVERAGE NET ASSETS(c)
FOR THE YEAR DECEMBER 31 ENDED		NET ASSET VALUE END OF PERIOD		TOTAL RETURN(b)			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME (LOSS)			REBATE FROM MORGAN STANLEY AFFILIATE			PORTFOLIO TURNOVER RATE
CAPITAL OPPORTUNITIES CLASS X SHARES
	2006	$	29.63		4.18	%	$	370,757		0.54	%		0.06	%		—			111	%
	2007		35.23		19.54			331,243		0.54			0.66			—			55
	2008		18.41		(47.62	)		140,041		0.55	(i)		0.08	(i)		0.01	%		33
	2009		31.42		71.32			202,279		0.55	(i)		0.44	(i)		0.00	(h)		23
	2010		40.07		27.76			220,553		0.58	(i)		0.19	(i)		0.00	(h)		29
CLASS Y SHARES
	2006		29.43		3.92			113,707		0.79			(0.19	)		—			111
	2007		35.06		19.24			107,710		0.79			0.41			—			55
	2008		18.29		(47.75	)		45,671		0.80	(i)		(0.17	)(i)		0.01			33
	2009		31.21		70.85			64,122		0.80	(i)		0.19	(i)		0.00	(h)		23
	2010		39.77		27.43			67,303		0.83	(i)		(0.06	)(i)		0.00	(h)		29
AGGRESSIVE EQUITY CLASS X SHARES
	2006		14.85		7.84			30,720		0.85			(0.27	)		—			59
	2007		17.77		19.66			26,035		0.87			0.34			—			56
	2008		9.07		(48.86	)		10,289		0.90	(i)		(0.29	)(i)		0.00	(h)		33
	2009		15.37		69.46			14,898		1.01	(i)		(0.02	)(i)		0.01			23
	2010		19.37		26.02			15,413		1.09	(i)		(0.32	)(i)		0.00	(h)		27
CLASS Y SHARES
	2006		14.65		7.64			32,039		1.10			(0.52	)		—			59
	2007		17.49		19.39			29,837		1.12			0.09			—			56
	2008		8.92		(49.00	)		12,272		1.15	(i)		(0.54	)(i)		0.00	(h)		33
	2009		15.08		69.06			17,541		1.26	(i)		(0.27	)(i)		0.01			23
	2010		18.96		25.73			18,777		1.34	(i)		(0.57	)(i)		0.00	(h)		27
STRATEGIST CLASS X SHARES
	2006		16.53		15.01			258,164		0.55			2.53			—			36
	2007		15.55		8.63			217,265		0.54			2.84			—			34
	2008		10.60		(23.98	)		134,668		0.54	(i)		2.28	(i)		0.02			52
	2009		12.40		19.74			137,731		0.55	(i)		1.41	(i)		0.03			96
	2010		12.96		6.81			128,254		0.59	(i)		1.89	(i)		0.02			119

125

Morgan Stanley Variable Investment Series

Financial Highlights continued


FOR THE YEAR DECEMBER 31 ENDED		NET ASSET VALUE BEGINNING OF PERIOD		NET INVESTMENT INCOME(a)		NET REALIZED AND UNREALIZED GAIN (LOSS)			TOTAL FROM INVESTMENT OPERATIONS			DIVIDENDS TO SHAREHOLDERS			DISTRIBUTIONS TO SHAREHOLDERS			TOTAL DIVIDENDS AND DISTRIBUTIONS
STRATEGIST CLASS Y SHARES
	2006	$	16.03	$	0.37	$	1.86		$	2.23		$	(0.40	)	$	(1.35	)	$	(1.75	)
	2007		16.51		0.42		0.92			1.34			(0.42	)		(1.90	)		(2.32	)
	2008		15.53		0.27		(3.76	)		(3.49	)		(0.09	)		(1.39	)		(1.48	)
	2009		10.56		0.13		1.89			2.02			(0.23	)		—			(0.23	)
	2010		12.35		0.21		0.58			0.79			(0.17	)		(0.07	)		(0.24	)

(a) The per share amounts were computed using an average number of shares outstanding during the period.

(b) Calculated based on the net asset value as of the last business day of the period. Performance shown does not reflect fees and expenses imposed by your insurance company. If performance information included the effect of these additional charges, the total returns would be lower.

(c) Reflects overall Portfolio ratios for investment income and non-class specific expenses.

(d) The Investment Adviser fully reimbursed the Portfolio for losses incurred resulting from the disposal of investments. Without this reimbursement, the total return was 4.79% and 4.52% for Class X and Y, respectively.

(e) Amount is less than $0.001.

(f) Reflects fees paid in connection with the U.S. Treasury's Temporary Guarantee Program for Money Market Funds. This fee had an effect of 0.04% for the year ended 2009.

(g) If the Portfolio had borne all expenses that were reimbursed or waived by the Distributor, Investment Adviser and Administrator, the annualized expense and net investment loss ratios would have been as follows:

PERIOD ENDED	EXPENSE RATIO			NET INVESTMENT LOSS RATIO
December 31, 2010
Class X		0.62	%		(0.33	)%
Class Y		0.87			(0.58	)
December 31, 2009
Class X		0.59			(0.16	)
Class Y		0.84			(0.42	)

(h) Amount is less than 0.005%.

See Notes to Financial Statements
126

									RATIO TO AVERAGE NET ASSETS(c)
FOR THE YEAR DECEMBER 31 ENDED		NET ASSET VALUE END OF PERIOD		TOTAL RETURN(b)			NET ASSETS END OF PERIOD (000'S)		EXPENSES			NET INVESTMENT INCOME			REBATE FROM MORGAN STANLEY AFFILIATE			PORTFOLIO TURNOVER RATE
STRATEGIST CLASS Y SHARES
	2006	$	16.51		14.75	%	$	101,878		0.80	%		2.28	%		—			36	%
	2007		15.53		8.37			88,651		0.79			2.59			—			34
	2008		10.56		(24.20	)		53,046		0.79	(i)		2.03	(i)		0.02	%		52
	2009		12.35		19.44			59,737		0.80	(i)		1.16	(i)		0.03			96
	2010		12.90		6.50			56,361		0.84	(i)		1.64	(i)		0.02			119

(i) The ratios reflect the rebate of certain Portfolio expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as "Rebate from Morgan Stanley affiliate."

(j) If the Portfolio had borne all expenses that were reimbursed or waived by the Investment Adviser and Administrator, the annualized expense and net investment income ratios would have been as follows:

PERIOD ENDED	EXPENSE RATIO			NET INVESTMENT INCOME RATIO
December 31, 2010
Class X		1.16	%		1.65	%
Class Y		1.41			1.40
December 31, 2009
Class X		1.12			2.55
Class Y		1.37			2.30
December 31, 2008
Class X		1.08			2.93
Class Y		1.33			2.68
December 31, 2007
Class X		1.04			1.69
Class Y		1.29			1.44
December 31, 2006
Class X		1.07			1.52
Class Y		1.32			1.27

(k) During the year ended December 31, 2010, the Portfolio received a regulatory settlement from an unaffiliated third party which had an impact of approximately 0.14% and 0.14% for Class X and Y, respectively, on the total return. This was a one-time settlement, and as a result, the impact on the NAV and consequently the performance will not likely be repeated in the future. Had this settlement not occurred, the total return for Class X and Y shares would have been approximately 7.09% and 6.82%, respectively.

127

Morgan Stanley Variable Investment Series

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of
Morgan Stanley Variable Investment Series:

We have audited the accompanying statements of assets and liabilities of Morgan Stanley Variable Investment Series (the "Fund"), comprised of the Money Market Portfolio, Limited Duration Portfolio, Income Plus Portfolio, Global Infrastructure Portfolio, European Equity Portfolio, Capital Opportunities Portfolio, Aggressive Equity Portfolio, and Strategist Portfolio (the "Portfolios"), including the portfolios of investments as of December 31, 2010, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2010, by correspondence with the custodians and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Portfolios of Morgan Stanley Variable Investment Series as of December 31, 2010, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
New York, New York
February 25, 2011

128

Morgan Stanley Variable Investment Series

Trustee and Officer Information (unaudited)

Independent Trustees:

Name, Age and Address of
Independent Trustee

Position(s)
Held with
Registrant

Term of
Office and
Length of
Time Served*

Principal Occupation(s)
During Past 5 Years

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

Other Directorships
Held by Independent Trustee***

Frank L. Bowman (66)
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Trustees
1177 Avenue of the Americas
New York, NY 10036

Trustee

Since
August 2006

President, Strategic Decisions, LLC (consulting) (since February 2009); Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); Chairperson of the Insurance Sub-Committee of the Compliance and Insurance Committee (since February 2007); served as President and Chief Executive Officer of the Nuclear Energy Institute (policy organization) through November 2008; retired as Admiral, U.S. Navy in January 2005 after serving over 8 years as Director of the Naval Nuclear Propulsion Program and Deputy Administrator — Naval Reactors in the National Nuclear Security Administration at the U.S. Department of Energy (1996-2004); served as Chief of Naval Personnel (July 1994-September 1996); Knighted as Honorary Knight Commander of the Most Excellent Order of the British Empire; Awarded the Officer de l'Orde National du Mérite by the French Government; elected to the National Academy of Engineering (2009).

102

Director of BP p.l.c.; Director of Naval and Nuclear Technologies LLP; Director of Armed Services YMCA of the USA and the Naval Submarine League.

129

Morgan Stanley Variable Investment Series

Trustee and Officer Information (unaudited) continued

Name, Age and Address of
Independent Trustee

Position(s)
Held with
Registrant

Term of
Office and
Length of
Time Served*

Principal Occupation(s)
During Past 5 Years

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

Other Directorships
Held by Independent Trustee***

Michael Bozic (70)
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Trustees
1177 Avenue of the Americas
New York, NY 10036

Trustee

Since
April 1994

Private investor; Chairperson of the Compliance and Insurance Committee (since October 2006); Director or Trustee of the Retail Funds (since April 1994) and Institutional Funds (since July 2003); formerly, Chairperson of the Insurance Committee (July 2006-September 2006); Vice Chairman of Kmart Corporation (December 1998-October 2000), Chairman and Chief Executive Officer of Levitz Furniture Corporation (November 1995-November 1998) and President and Chief Executive Officer of Hills Department Stores (May 1991-July 1995); variously Chairman, Chief Executive Officer, President and Chief Operating Officer (1987-1991) of the Sears Merchandise Group of Sears, Roebuck & Co.

104

Director of various business
organizations.

Kathleen A. Dennis (57)
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Trustees
1177 Avenue of the Americas
New York, NY 10036

Trustee

Since
August 2006

President, Cedarwood Associates (mutual fund and investment management consulting) (since July 2006); Chairperson of the Money Market and Alternatives Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Senior Managing Director of Victory Capital Management (1993-2006).

102

Director of various non-profit organizations.

130

Morgan Stanley Variable Investment Series

Trustee and Officer Information (unaudited) continued

Name, Age and Address of
Independent Trustee

Position(s)
Held with
Registrant

Term of
Office and
Length of
Time Served*

Principal Occupation(s)
During Past 5 Years

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

Other Directorships
Held by Independent Trustee***

Dr. Manuel H. Johnson (62)
c/o Johnson Smick Group, Inc.
888 16th Street, N.W.
Suite 740
Washington, D.C. 20006

Trustee

Since
July 1991

Senior Partner, Johnson Smick International, Inc. (consulting firm); Chairperson of the Investment Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2003); Co-Chairman and a founder of the Group of Seven Council (G7C) (international economic commission); formerly, Chairperson of the Audit Committee (July 1991-September 2006), Vice Chairman of the Board of Governors of the Federal Reserve System and Assistant Secretary of the U.S. Treasury.

104

Director of NVR, Inc. (home construction); Director of Evergreen Energy; Director of Greenwich Capital Holdings.

Joseph J. Kearns (68)
c/o Kearns & Associates LLC
PMB754
23852 Pacific Coast Highway
Malibu, CA 90265

Trustee

Since
August 1994

President, Kearns & Associates LLC (investment consulting); Chairperson of the Audit Committee (since October 2006) and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since August 1994); formerly, Deputy Chairperson of the Audit Committee (July 2003-September 2006) and Chairperson of the Audit Committee of the Institutional Funds (October 2001-July 2003 and since August 1994 for certain predecessor Funds); CFO of the J. Paul Getty Trust.

105

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

131

Morgan Stanley Variable Investment Series

Trustee and Officer Information (unaudited) continued

Name, Age and Address of
Independent Trustee

Position(s)
Held with
Registrant

Term of
Office and
Length of
Time Served*

Principal Occupation(s)
During Past 5 Years

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

Other Directorships
Held by Independent Trustee***

Michael F. Klein (52)
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Trustees
1177 Avenue of the Americas
New York, NY 10036

Trustee

Since
August 2006

Managing Director, Aetos Capital, LLC (since March 2000) and Co-President, Aetos Alternatives Management, LLC (since January 2004); Chairperson of the Fixed Income Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, Managing Director, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management, President, Morgan Stanley Institutional Funds (June 1998-March 2000) and Principal, Morgan Stanley & Co. Inc. and Morgan Stanley Dean Witter Investment Management (August 1997-December 1999).

102

Director of certain investment funds managed or sponsored by Aetos Capital, LLC. Director of Sanitized AG and Sanitized Marketing AG (specialty chemicals).

Michael E. Nugent (74)
c/o Triumph Capital, L.P.
445 Park Avenue
New York, NY 10022

Chairperson of the Board and Trustee

Chairperson of the Boards since July 2006 and Director since July 1991

General Partner, Triumph Capital, L.P. (private investment partnership); Chairperson of the Boards of the Retail Funds and Institutional Funds (since July 2006); Director or Trustee of the Retail Funds (since July 1991) and Institutional Funds (since July 2001); formerly, Chairperson of the Insurance Committee (until July 2006).

104

None.

W. Allen Reed (63)
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Trustees
1177 Avenue of the Americas
New York, NY 10036

Trustee

Since
August 2006

Chairperson of the Equity Sub-Committee of the Investment Committee (since October 2006) and Director or Trustee of various Retail Funds and Institutional Funds (since August 2006); formerly, President and CEO of General Motors Asset Management; Chairman and Chief Executive Officer of the GM Trust Bank and Corporate Vice President of General Motors Corporation (August 1994-December 2005).

102

Director of Temple-Inland Industries (packaging and forest products); Director of Legg Mason, Inc. and Director of the Auburn University Foundation; formerly, Director of iShares, Inc. (2001-2006).

132

Morgan Stanley Variable Investment Series

Trustee and Officer Information (unaudited) continued

Name, Age and Address of
Independent Trustee

Position(s)
Held with
Registrant

Term of
Office and
Length of
Time Served*

Principal Occupation(s)
During Past 5 Years

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

Other Directorships
Held by Independent Trustee

Fergus Reid (78)
c/o Joe Pietryka, Inc.
85 Charles Colman Blvd.
Pawling, NY 12564

Trustee

Since
June 1992

Chairman, Joe Pietryka, Inc.; Chairperson of the Governance Committee and Director or Trustee of the Retail Funds (since July 2003) and Institutional Funds (since June 1992).

105

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

Interested Trustee:

Name, Age and Address of
Interested Trustee

Position(s)
Held with
Registrant

Term of
Office and
Length of
Time Served*

Principal Occupation(s)
During Past 5 Years

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

Other Directorships
Held by Interested Trustee***

James F. Higgins (63)
c/o Morgan Stanley Services Company Inc.
Harborside Financial Center
201 Plaza Two
Jersey City, NJ 07311

Trustee

Since
June 2000

Director or Trustee of the Retail Funds (since June 2000) and Institutional Funds (since July 2003); Senior Advisor of Morgan Stanley (since August 2000).

103

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

* This is the earliest date the Trustee began serving the funds advised by Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") (the "Retail Funds") or the funds advised by Morgan Stanley Investment Management Inc. and Morgan Stanley AIP GP LP (the "Institutional Funds").

** The Fund Complex includes all open-end and closed-end funds (including all of their portfolios) advised by the Investment Adviser (as of December 31, 2010) and any funds that have an investment adviser that is an affiliated person of the Investment Adviser (including, but not limited to, Morgan Stanley Investment Management Inc.).

*** This includes any directorships at public companies and registered investment companies held by the Trustee at any time during the past five years.

133

Morgan Stanley Variable Investment Series

Trustee and Officer Information (unaudited) continued

Executive Officers:

Name, Age and Address of
Executive Officer

Position(s)
Held with
Registrant

Term of
Office and
Length of
Time Served*

Principal Occupation(s) During Past 5 Years

Mary Ann Picciotto (37)
c/o Morgan Stanley Services Company Inc.
Harborside Financial Center
201 Plaza Two
Jersey City, NJ 07311

Chief Compliance Officer

Since May 2010

Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Chief Compliance Officer of the Retail Funds and Institutional Funds (since May 2010); Chief Compliance Officer of the Investment and Morgan Stanley Investment Management Inc. (since April 2007).

Stefanie V. Chang Yu (44)
522 Fifth Avenue
New York, NY 10036

Vice President

Since December 1997

Managing Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Vice President of the Retail Funds (since July 2002) and Institutional Funds (since December 1997). Formerly, Secretary of the Investment Adviser and various entities affiliated with the Investment Adviser.

Francis J. Smith (45)
c/o Morgan Stanley Services Company Inc.
Harborside Financial Center
201 Plaza Two
Jersey City, NJ 07311

Treasurer and Principal Financial
Officer

Treasurer since July 2003 and Principal Financial Officer since September 2002

Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Treasurer and Principal Financial Officer of the Retail Funds (since July 2003) and Institutional Funds (since March 2010).

Mary E. Mullin (43)
522 Fifth Avenue
New York, NY 10036

Secretary

Since June 1999

Executive Director of the Investment Adviser and various entities affiliated with the Investment Adviser; Secretary of the Retail Funds (since July 2003) and Institutional Funds (since June 1999).

* This is the earliest date the Officer began serving the Retail Funds or Institutional Funds.

134

Morgan Stanley Variable Investment Series

Federal Tax Notice n December 31, 2010 (unaudited)

For Federal income tax purposes, the following information is furnished with respect to the distributions paid by each applicable Portfolio during the taxable year ended December 31, 2010. For corporate shareholders, the following percentages of dividends paid by each Portfolio qualified for the dividends received deduction. Additionally, the following percentages of each Portfolio's dividends was attributable to qualifying U.S. Government obligations. (Please consult your tax advisor to determine if any portion of the dividends you received is exempt from state income tax.)

FUND	DIVIDENDS RECEIVED DEDUCTION%			QUALIFYING U.S. GOVT. INCOME%
Aggressive Equity Portfolio		0.00	%		0.00	%
Capital Opportunities Portfolio		100.00	%		0.00	%
European Equity Portfolio		0.00	%		0.00	%
Global Infrastructure Portfolio		9.85	%		0.00	%
Income Plus Portfolio		0.00	%		0.00	%
Limited Duration Portfolio		0.00	%		6.68	%
Money Market Portfolio		0.00	%		4.82	%
Strategist Portfolio		71.07	%		6.04	%

Each of the applicable Portfolios designated and paid the following amounts as a long-term capital gain distribution:

FUND	AMOUNT
Global Infrastructure Portfolio	$	3,205,294
Money Market Portfolio		202
Strategist Portfolio		1,010,412

For Federal income tax purposes, the following information is furnished with respect to the earnings of each applicable Portfolio for the taxable year ended December 31, 2010. The European Equity Portfolio intends to pass through foreign tax credits of $60,688, and has derived net income from sources within foreign countries amounting to $608,794. The Global Infrastructure Portfolio intends to pass through foreign tax credits of $147,972, and has derived net income from sources within foreign countries amounting to $1,449,290.

135

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Trustees
Frank L. Bowman				Joseph J. Kearns

Michael Bozic				Michael F. Klein

Kathleen A. Dennis				Michael E. Nugent

James F. Higgins				W. Allen Reed

Dr. Manuel H. Johnson				Fergus Reid

Officers
Michael E. Nugent Chairperson of the Board

Sara Furber President and Principal Executive Officer

Mary Ann Picciotto Chief Compliance Officer

Stefanie V. Chang Yu Vice President

Francis J. Smith Treasurer and Principal Financial Officer

Mary E. Mullin Secretary

Transfer Agent				Custodian
Morgan Stanley Services Company Inc. P.O. Box 219886 Kansas City, Missouri 64121-9886				State Street Bank and Trust Co. One Lincoln Street Boston, Massachusetts 02111

Independent Registered Public Accounting Firm				Legal Counsel
Deloitte & Touche LLP Two World Financial Center New York, New York 10281				Dechert LLP 1095 Avenue of the Americas New York, New York 10036

Counsel to the Independent Trustees				Investment Adviser
Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036				Morgan Stanley Investment Advisors Inc. 522 Fifth Avenue New York, New York 10036

Sub-Adviser (Global Infrastructure and European Equity)
Morgan Stanley Investment Management Limited 25 Cabot Square, Canary Wharf London, E14 4QA, England

Morgan Stanley Investment Management Company 23 Church Street 16-01 Capital Square 049481 Singapore

This report is submitted for the general information of 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.

Morgan Stanley Distributors Inc., member FINRA.

VARINANN
IU11-00315P-Y12/10

#40113A

Item 2. Code of Ethics.

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

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

(d) Not applicable.

(e) Not applicable.

(f)

(1) The Fund’s Code of Ethics is attached hereto as Exhibit 12 A.

(2) Not applicable.

(3) Not applicable.

Item 3. Audit Committee Financial Expert.

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

Item 4. Principal Accountant Fees and Services.

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

2010

	Registrant			Covered Entities(1)
Audit Fees	$	252,350		N/A

Non-Audit Fees
Audit-Related Fees	$		(2)	$	6,501,000	(2)
Tax Fees	$	39,743	(3)	$	1,350,000	(4)
All Other Fees	$			$
Total Non-Audit Fees	$	39,743		$	7,851,000

Total	$	292,093		$	7,851,000

2009

	Registrant			Covered Entities(1)
Audit Fees	$	400,800		N/A

Non-Audit Fees
Audit-Related Fees	$	—	(2)	$	6,909,000	(2)
Tax Fees	$	61,295	(3)	$	1,013,000	(4)
All Other Fees	$			$		(5)
Total Non-Audit Fees	$	61,295		$	7,922,000

Total	$	462,095		$	7,922,000

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

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

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

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

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

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

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

APPENDIX A

AUDIT COMMITTEE

AUDIT AND NON-AUDIT SERVICES

PRE-APPROVAL POLICY AND PROCEDURES

OF THE

MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS

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

1. Statement of Principles

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

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

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

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

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

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

2. Delegation

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

3. Audit Services

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

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

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

4. Audit-related Services

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

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

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

5. Tax Services

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

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

6. All Other Services

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

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

7. Pre-Approval Fee Levels or Budgeted Amounts

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

8. Procedures

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

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

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

9. Additional Requirements

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

10. Covered Entities

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

Morgan Stanley Retail Funds

Morgan Stanley Investment Advisors Inc.

Morgan Stanley & Co. Incorporated

Morgan Stanley DW Inc.

Morgan Stanley Investment Management Inc.

Morgan Stanley Investment Management Limited

Morgan Stanley Investment Management Private Limited

Morgan Stanley Asset & Investment Trust Management Co., Limited

Morgan Stanley Investment Management Company

Morgan Stanley Services Company, Inc.

Morgan Stanley Distributors Inc.

Morgan Stanley Trust FSB

Morgan Stanley Institutional Funds

Morgan Stanley Investment Management Inc.

Morgan Stanley Investment Advisors Inc.

Morgan Stanley Investment Management Limited

Morgan Stanley Investment Management Private Limited

Morgan Stanley Asset & Investment Trust Management Co., Limited

Morgan Stanley Investment Management Company

Morgan Stanley & Co. Incorporated

Morgan Stanley Distribution, Inc.

Morgan Stanley AIP GP LP

Morgan Stanley Alternative Investment Partners LP

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

(f) Not applicable.

(g) See table above.

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

Item 5. Audit Committee of Listed Registrants.

(a) The Fund has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are: Joseph Kearns, Michael Nugent and Allen Reed.

(b) Not applicable.

Item 6. Schedule of Investments

(a) Refer to Item 1.

(b) Not applicable.

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

Applicable only to reports filed by closed-end funds.

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

Applicable only to reports filed by closed-end funds.

Item 9. Closed-End Fund Repurchases

Applicable only to reports filed by closed-end funds.

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

Not applicable.

Item 11. Controls and Procedures

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

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

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

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 Variable Investment Series

/s/ Sara Furber
Sara Furber
Principal Executive Officer
February 17, 2011

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/ Sara Furber
Sara Furber
Principal Executive Officer
February 17, 2011

/s/ Francis Smith
Francis Smith
Principal Financial Officer
February 17, 2011